COTTON BILL

The noble Lord said

I should like to preface my remarks on this Amendment by offering my apologies to the noble Viscount, Lord Woolton, who is in charge of the Bill, for altering one of the Amendments at the last minute. I have had some difficulty in drafting these Amendments. I wanted to keep as near as I could to order—or such order as your Lordships insist upon, which is not very much—and I did not want to do anything 566 to disturb the principle of the Bill. In none of these Amendments do I seek to frustrate the desire of the Government to disband or dissolve the Raw Cotton Commission. The whole of my case in putting down these Amendments is this: that it is the intention under this Bill to dissolve the Raw Cotton Commission and to put nothing in its place, and to sacrifice the interests of the Lancashire cotton industry to the play of a speculative market at a time which I feel is ill-chosen. As I said on Second Reading, this Bill—and the whole of the Bill really is contained in the one clause which I am seeking to amend—could be called an effort of de-nationalisation. The noble Viscount, Lord Woolton, came to your Lordships with complete honesty and said: "The reason why the Government are introducing this Bill is because for them it is an act of faith"—as I said, the Ark of the Covenant of the Conservative Party. I do not think that a problem of this size can be treated as all black or all white. I said that I thought future events—and I think those future events are slightly nearer to-day than they were a fortnight ago—

THE CHNNCELLOR OF THE DUCHY OF LANCASTER (VISCOUNT WOOLTON)

They must be —a fortnight nearer.

LORD LUCAS OF CHILWORTH

Yes, that is so; but nearer, let me say, in reality than in anticipation—perhaps the noble Viscount will grant me that. I said that I thought future events were going to make look foolish the dogmatic or doctrinaire nationalisers, and equally foolish the anti-nationalisers. It is really a simple problem that I pose to the Committee. We believe that the best interests of this country in the future are to build up by all means the prosperity of our Colonies and the Commonwealth. This Bill shatters confidence, and I think the times ill become the action. I would say straight away that I have been in industry and commerce far too long to become dogmatic, even on bulk purchase and long-term agreements: in some cases they are good and in some cases they are bad. I believe that cotton growing in the Colonies and the Commonwealth has been materially assisted by the long-term contracts and hulk purchase arrangements that were instituted by the Raw Cotton Commission. The facts are on 567 my side, and the figures are on my side. I believe that the Government have got to face this issue. It has been, in principle, the will of Parliament, as expressed up to date, that the Raw Cotton Commission should be dissolved. But I hesitate to think that it is the wish of Parliament that we should do away completely with an instrument that has built up so successfully the cotton growing of the Empire, and contributed to the welfare of the Colonies and the Commonwealth. The noble Viscount who introduced this Bill was quite frank with your Lordships. He said that, while the Government intend to carry on with those two or three long-term contracts which have two or three years to run—how, he does not know, and by whom he does not know—

VISCOUNT WOOLTON

I do know.

LORD LUCAS OF CHILWORTH

The noble Viscount knows now. We have progressed one stage. The Secretary of State to the Board of Trade said that it should not be beyond the wit of man to devise a means; but a fortnight ago the wit of the Government had not found a way. I congratulate the noble Viscount. That helps considerably, because the same machine that is going to carry on the existing long-term contracts can, surely, be the machine that will enter into new contracts when those now in force expire. We on this side of the House view that matter with great seriousness. We believe that in many parts of the world the good name and commercial integrity of this country are at stake.

I see the noble Marquess, Lord Reading here, and he will not mind my mentioning this. We have for years been building up cotton production by the methods I have described. It has been said by Government spokesmen that nobody really objects to the doing away with bulk purchase or long-term contracts; but the one man who has raised his voice against it is the chairman of the Gezira Board. The noble Marquess, Lord Reading, holds a responsible position in Her Majesty's Foreign Office, and, if he will allow me to say so with respect, he has impressed this House by the manner and method with which he has dealt with some of the difficult problems in the Sudan. It would be unfair of me 568 to ask him what he thinks of the action of the Sudanese cotton growers who are now selling practically the whole of the Sudanese crop to Egypt. Immediately the Government proposals contained in this Bill were published, the Sudanese lost confidence in their future market in this country. These are serious matters. Take Uganda. We are just turning Uganda cotton into Japan.

VISCOUNT WOOLTON

"We?"

LORD LUCAS OF CHILWORTH

The Government, by this Bill. My information comes from what I think is an unimpeachable source, and I have spent the last two weeks in making a number of inquiries about it. I quoted the figures on Second Reading. Not many years ago we were buying £10 million worth of Uganda cotton and the Japanese were buying £250,000 worth. To-day the Japanese have increased their purchases hundreds per cent., while ours have fallen to £2 million. Why?—because there is no security. This Bill completely destroys the security that bulk purchase, long-term agreements and other agreements of a verbal nature have offered to the cotton growing countries that are so closely attached to us. The imports of Empire cotton have increased in this country from 8 per cent. of our total pre-war imports to 28 per cent. In some other places such as Nigeria and Nyasaland, they have increased by 100 per cent.

The right honourable gentleman the Colonial Secretary gave an interesting review of the long-term prospects in many of these countries. He said (OFFICIAL REPORT. Commons, Vol. 495, col. 174): In Uganda … it is hoped that it may be possible to raise annual production by 50 per cent. to about 450.000 bales per annum in the near future … In Tanganyika … by these means it is hoped almost to raise the annual cotton crop by about 80 per cent. to 90,000 bales. In Nigeria … it is hoped to expand Nigeria's production of American type cotton by about 300 per cent. to some 200,000 hales per annum in the next two years. In Nyasaland … an expansion of production to about 100 per cent. to 20,000 bales per annum should be possible. He then went on to use these words, which I have quoted before to your Lordships: Certain Colonial producers, namely Nigeria, Nyasaland and the Aden Protectorate, have entered into long-term contracts with the United Kingdom Raw Cotton Commission … 569 All that is now to be in speculation. I will not say that there will be no Empire cotton imported into this country, but it will never stand a chance until Colonial cotton is put on the futures market of the Liverpool Cotton Exchange.

Here, I must ask the indulgence of your Lordships; I shall have to touch upon a subject which is mentioned in another Amendment, but it is all wrapped up together. Before the war, the market in Colonial cotton on the Liverpool Exchange was practically nil, the reason being that traders could not tender Colonial cotton against a futures contract.

VISCOUNT WOOLTON

Does the noble Lord include Egyptian in Colonial?

LORD LUCAS OF CHILWORTH

No; I am talking about Colonial cotton. I do not make that statement without authority, because I quote as my authority the Chairman of the Council of the Empire Cotton Growing Corporation. He said this in June last year, so it is recent: Before the last war, and for many years, Colonial cottons were not allowed as tender-able against the Liverpool Contract and, in consequence, laboured under a serious handicap, which in effect drove the cottons into the mills of India and Japan instead of, as was intended, their coming to Lancashire. It is true to say that before the war a separate contract was made available for them, but it never really functioned, as, in effect, it placed a penalty on the cottons included in it, as compared with American cotton. I wish to submit that such growths as Uganda, Nigeria and Tanganyika, for instance, are not inferior in grade, staple, character or spinning qualities to American cotton. If I am right—and I have no doubt about it—I submit that the Committee that will have very soon to be appointed to deal with the matter, should take into its most serious consideration the inclusion of cottons equal: to American under the Contract on an equal footing. But that is not going to happen. The best we have had from the President of the Liverpool Cotton Association is that in twelve to eighteen months' time it might be considered feasible to make Colonial cottons tenderable against futures on the Liverpool Exchange. The reason why Colonial cotton was always at a discount before the war is because there was no security and no futures. All I seek by this Amendment—I am not wedded to its wording, because I am not a Parliamentary draftsman; I am but an amateur—is to have inserted in the Bill 570 a provision saying that the Raw Cotton Commission, with its cover scheme and with its contracts, shall not be dissolved until the Government have provided some machinery, either at the Board of Trade or in the Ministry of Munitions, by which it will be possible, if so desired (and, after all, contracts, long-term or otherwise are as between two parties and they have to be willing parties) to arrange for these long-term contracts and bulk purchases—because bulk purchase in cotton is essential, since cotton has to be bought in about six weeks, while the auctions are on, for the twelve months' crop. It is not an ordinary business transaction of buying throughout the year. What I want to see in the Bill is that.

VISCOUNT WOOLTON

What is it the noble Lord wishes to see in the Bill?

LORD LUCAS OF CHILWORTH

wish to see in the Bill the promise of some machinery whereby, if the Colonial growers desire, and if it is in this country's interest, provision is made for long-term contracts and bulk purchases, so that security may be given to Colonial growers. I think, and my noble friends agree with me, that this is a matter of vital interest. I do riot seek to upset the principle of the Bill, but I wait to ensure that when the Raw Cotton Commission go out of business the future and the fate of the cotton growers in our Colonies and Commonwealth shall not be left at the mercy of speculators and of a contract which is essentially American. I do not think that that is an unreasonable request. We, on this side of the House, will not permit it to go out that we are willing to allow the Colonies and the Commonwealth, upon which so much of the future of this country depends, to be dealt this blow. We may see a recession in the dollar position before the end of this year. Informed opinion is very apprehensive, and if the Liverpool Cotton Exchange does open on September 1, and is tied to an American base, then I say we are dealing a blow to the Colonial interest which we on this side of the House are not prepared to permit.

I hope, therefore, that the noble Viscount will accept my Amendment. As I say, I am not tied to the words. If he can accept it in principle, more qualified draftsmen than I am can work out the details. One thing is certain. I believe that current opinion in Lancashire is hardening on this point. Current opinion 571 in Lancashire is waking up to the fact that some of the mills must have this cotton and that it is in Lancashire's interest that they should have it. But we shall never have it until there is a machine providing for a system of long-term contracts, and until British Colonial cotton is brought to the futures market. I beg to move.

LORD OGMORE

In place of the present system the Government is instituting a remarkable system under which a man buys with money he has not got goods he does not want and, in fact would not know what to do with if he had them never having seen the goods, and never expecting to have any physical contact with them while the man who sells, not having had the goods and never expecting to have them, would in all probability not be in the position even to recognise the goods he sells if they were shown to him. In an uncivilised community that would be regarded as on the same basis as the operation of pin tables and fruit machines at fun-fairs. It appears to those of us who are perhaps still somewhat uncivilised as a purely gambling transaction. I do not know whether the noble Viscount, Lord Woolton, has a Nonconformist background like my noble friends Lord Alexander of Hillsborough and Lord Stansgate and myself; but, if he has, I am surprised to find that his name is associated with this purely gambling transaction. It is all very well for those noble Lords who are descended from cavaliers to come forward with a plan of this kind, but those of us who are spiritually descended, as I am sure the noble Viscount, Lord Woolton, is, from the Roundheads, must have a shudder of horror at the proposal.

Now, the long-term contracts, as my noble friend Lord Lucas of Chilworth has, very ably in my opinion, put before your Lordships in an excellent speech, are essential for primary producers. I see on the Benches opposite the noble Earl, Lord Munster, who occupies the post which I formerly occupied, and I am sure he has had exactly the same experience that I had when I was in his office 572 —namely, that if you want the development of primary products you have got to promise the producer bulk purchase and long-term contracts. Time after time I myself, and I am sure that he has had to do the same—incidentally he is, if I may say so, very active in his office and doing very well—tried to encourage production of cotton, tobacco, oil seeds, beef, pork, bacon, sugar, oil palms and oil kernels, and also cocoa. But on no single occasion in my experience, when I put forward a development plan of this kind either to a Colonial Government or to Colonial producers, did I have any response other than: "You must guarantee us a long-term contract. We must have guaranteed prices and bulk purchase." Invariably they said: "We cannot get the capital to develop these primary products or to extend their production unless we have the security of a long-term contract." And we cannot ask the native (if I may use the term, to distinguish the locally-born inhabitant from the European company producer) to invest his time, skill, land and so on in producing this particular product that we want without giving him security. To my mind this will be a crippling blow to the production of Colonial produce which it is so necessary we should see expanded.

It is not only I who say this: the Government said it, too. I will prove that out of their own mouths. The last Report before Parliament on the Colonial territories—a Report laid before us by the Secretary of State for the Colonies which is a review for the whole year—points out the sort of conditions under which the Colonial peoples are operating. They say—I quote from page 4: With the passing of the Korean boom and some deflation in the sterling area—and. indeed, in the world at large—the prices for many colonial commodities fell sharply and the value of trade declined. Despite this, production was well maintained, revenues continued buoyant, and reserves were increased. Development plans proceeded vigorously; ways and means of diversifying and strengthening local economies were the subject of intensive research. Now comes the operative part, but I wanted to read the first portion so that I could not be accused by the noble Viscount of reading only a part— Economic progress and the pace of development must, however, be viewed against a background of low standards of living, of 573 economies perilously tied to single products, and of agricultural systems already unable to grow all the food they need for increasing populations. Development is a conscious attempt to balance these factors, but it is a continuing process which cannot easily be measured from year to year. That is the assessment of the Government in a Report presented a year or so ago; and this is the system, of bulk purchase and long-term contracts, which they propose to end, with a devastating effect on the (as they themselves say) already low standard of living and the perilous economy of Colonial peoples.

On Page 44 the Report goes on: The implementation by Her Majesty's Government of the recommendations of the Hopkins Report (Cmd. 8510) whereby United Kingdom spinners were given the option of purchasing their requirements of cotton privately or through the Raw Cotton Commission, is of importance to colonial producers. Existing long-term contracts are of course unaffected I want your Lordships to note this— but, where they do not exist or when they terminate, fresh marketing arrangements will have to be considered. The main sources of production, Uganda and Nigeria, are fortunate in having strong marketing organisations backed by considerable price stabilisation funds. These will facilitate the maintenance of the policy of expanding production and guaranteeing each season's prices in advance. The West Indian Sea Island cotton producers are however in a more difficult position, and maintenance of production will depend en marketing arrangements now being negotiated with the United Kingdom fine spinners. But when they know that, far from existing long-term contracts being unaffected, in fact no more are to be made, I guarantee that those Colonial producers of cotton will be very upset indeed. In fact, they are already, as we know. In Jamaica, the public and the producers have commented in no uncertain terms on the Government's present policy of breaking bulk purchase agreements and no longer entering into long-term contracts. Unfortunately, I have not seen a report in the Press of a resolution passed in Jamaica last week.

VISCOUNT WOOLTON

About cotton?

LORD OGMORE

Generally about the Government's policy, not so much with reference to cotton.

VISCOUNT WOOLTON

I only wanted to know whether the noble Lord was speaking to the Amendment about cotton or not.

LORD OGMORE

Surely the greater includes the less. I was going to say that it was on the B.B.C. news that I heard a reference to protests from Jamaica. I have looked in the various newspapers, but I have been unable to find a reference. Therefore, I do not know to what products the protests refer; but I assume they refer to all Colonial products, including cotton, West Indian Sea Island cotton, which is produced in Jamaica—and not only cotton, but sugar and bananas also. I am open to be corrected, but I understand that is the position. This is a very serious matter indeed. Here we have Jamaica and the West Indies already protesting in no 'uncertain words at: the policy of this Government. It was this Government who, on every platform up and down the country when we were in office, used to talk about "bringing chaos into the Empire" and "scuttling from the Empire." These were the Prime Minister's words. We were told that there would be no Empire left after we had done. But what are the Government doing now? There are protests from Jamaica at their actions. If this Amendment is refused, that fact, in itself, will handicap the producers, and will be a very great blow to the Colonial territories.

When we were in power we did everything we could to support and maintain the primary producers. This Bill is an indication of what is happening to the Conservative Party: it has been captured by the business men who have so much to say in its affairs. I am sure that many of the old Tories do not like this sort of practice, but the Conservative Party has been captured by the business men who finance it. They are smashing up a large part—the noble Marquess need not say "Oh, no."

THE MARQUESS OF READING

I did not say" Oh, no."

LORD OGMORE

The noble Marquess probably agrees with me.

THE MARQUESS OF READING

No, I merely did not want to interrupt the noble Lord.

LORD OGMORE

I see; I am sorry. A large part of the Colonial Empire and the poor people the poor peasant producers whose standard of living is 575 already so low, are going to be prejudiced —for what? To enable some bright young boys to make money on the futures market. That is the only reason for it.

LORD TEYNHAM

May I interrupt the noble Lord for one moment. Why is he so down on the business community of this country which carries the trade of this country on its shoulders?

LORD OGMORE

I am not at all down on it. I have every respect for the business community, but I do not regard gambling in futures as being a legitimate exercise of the business community. It will affect very few members of the business community. They will gamble in cotton futures, and generally speaking, people who gamble in cotton futures are not the sort of people of whom the business community are particularly proud. That is the sort of thing we have now. If one says," We do not like this aspect of commercial life; we do not like gambling in futures if it is going to prejudice the producer," immediately one is charged with making an attack on business. It is nothing of the kind. I object not to good business but to bad business. I regard this as bad business. This is not good private enterprise; it is bad private enterprise, the worst possible private enterprise.

LORD TEYNHAM

The Cotton Commission have lost something like £40 million. Does the noble Lord claim that that is good business?

LORD OGMORE

It may be necessary—I do not know. It may be worth while on the basis of supporting the primary producer. I do not know. You may lose ten times £40 million in the Colonial Empire if you do not enable the producers to produce the goods you need. You cannot measure this matter in terms of money. There is a great moral side to it. If you allow these people once more to become slums of Empire, as they were before the war, then you lose far more: you lose the souls of men. I would rather save the souls of men than enable a few "bright boys" to make an easy profit by gambling on the Cotton Exchange. The same thing has happened with television. This little gang have got hold of the Tory Party and are landing us in trouble all round the place. The 576 television debate was a very good example of that. We know very well that a great many people who are the old type of Conservatives hated and disliked the television proposals. I dare say that in their hearts many noble Lords opposite who have at heart the interests of the Colonies and these poor people—and there are many such noble Lords opposite; it is not only noble Lords on this side who have regard to the interests of the poor people in the Colonies—would agree with my noble friend and myself.

VISCOUNT WOOLTON

My Lords, I did not think that such a subject as cotton could produce so much eloquence, and that it could go so far from the Bill.

LORD OGMORE

No. We are on the Bill.

VISCOUNT WOOLTON

We have dealt with many materials, including television and my spiritual ancestry. With the very best intentions in the world, I do not think I need join with the noble Lord opposite in a discussion as to what my spiritual ancestry was.

LORD OGMORE

It might be very revealing.

VISCOUNT WOOLTON

It might be very revealing, but just a little off the target, if I may say so. What I am surprised at is this. The noble Lord who has just spoken is, after all, a responsible ex-Minister, a man whose words are followed with great care in the country because he has a long record of accomplishment behind him. I wonder whether he is serious when he suggests that the people who are engaged in the Liverpool Cotton Exchange are properly only comparable with people who gamble on pin-tables? He speaks here beyond my knowledge, because I do not know much about pin-tables, and I could not follow his analogy completely. But does the noble Lord really think that those people who have conducted a very responsible part of the cotton trade for many years in this country can in your Lordships' House be compared with gamblers on pin-tables?

LORD OGMORE

Is that a question?

VISCOUNT WOOLTON

If I may say so, I think the noble Lord would not like that to go out from the House as his opinion.

LORD OGMORE

Quite frankly, it is my opinion. It is no good saying that it is not my opinion. Provided that it does no harm to the Colonial people I do not mind if these people gamble. Presumably they will not be doing any harm to the people of this country. But if this harms the Colonial people, as I really think it does, then it is my duty to say so. I cannot believe in the idea that one has got to keep quiet about these things. If I feel strongly about something I say so. I very much regret if it upsets the noble Viscount's friends, but it is my opinion.

VISCOUNT WOOLTON

My friends will recover. I merely thought that perhaps the noble Lord's language and his analogy were not quite the best of choices. The noble Lord has compared a body of really rather distinguished people in many walks of life, who happened in the past to be also on the Liverpool Cotton Exchange, with the "bright boys" anxious to make money, and has posed himself as the person who is anxious to save people's souls. In doing that I think the noble Lord's native eloquence has rather run away with him. But when one comes down to the facts of the position, I do not think there was very much substance in what he was saying, although he spoke in such an attractive manner and, I am bound to say, held all our attention. If I may respectfully advise the noble Lord, I would not advise him to worry about the Conservative Party. The Party is quite capable of looking after itself, and is not looking to be financed by the people from the Liverpool Cotton Exchange. I make no further observation on that matter.

When I come to the noble Lord, Lord Lucas of Chilworth, I am riot quite clear just what he does want to do. He reminded me of the saying in regard to the person who was willing to wound but was afraid to strike. He says that he does not seek to interfere with the principle of this Bill, but that he thinks we want to subject this trade to certain risks. He claims, for some reason which I am sure is well founded, to know what is happening in Lancashire opinion. I spent a large part of my life trying to know what was happening in Lancashire opinion, and it varies a good deal. He says that he does not want to subject this trade to a speculative market, and, 578 although it was expressed in more measured language, I thought his point of view was not dissimilar from that of the noble Lord, Lord Ogmore, on this point. Let us be quite clear about the matter. If the noble Lord thinks that we are going to put the trade of this country to the risk of a speculative market which has no other interest than to aid "bright boys" to make money—he did not say that—

LORD LUCAS OF CHILWORTH

The noble Viscount is referring to what I said. I hope that he will confine himself precisely to what I did say.

VISCOUNT WOOLTON

I am glad to recognise that there is some division of opinion among noble Lords opposite: but the principle remains: that if the noble Lord thinks that this is wrong, there is no doubt where his duty lies—it is to vote against it, and I presume that is what he is going to do. But I beg him not to deride this fill because I said that it was an act of faith. It is a good thing that people in politics should have faith and should have firm beliefs. I have a firm belief in rescuing trade from the detailed control of Government; I have no belief in monopoly trade by Governments. That, if you like, is a matter of faith, and I am not in the least ashamed to confess that I have that faith, or to repeat the statements that I made on Second Reading. The noble Lord, Lord Lucas of Chilworth, says that he does not seek to interfere with the principle of this Bill. What does his Amendment come to? When we get down to the facts, he wants an arrangement to ensure, by bulk purchase, supplies of cotton both from the Colonies and from other countries. That is what he is asking for. I say that fiat goes right to the principle of this Bill, arid we on this side of the House, and certainly the Government, are bound to resist any Amendment that seeks to do that. The noble Lord has had the distinction and satisfaction of making for himself a position in the commercial world. He did not ask us to consider whether it was a good thing for the country that we should have this form of bulk purchase, long-term contracts and monopoly trading that in the last two years has involved us in a loss of close on £50 million. That is a proposition of which. I think we must 579 take account, especially when, fortunately, we have an alternative method.

Let us be quite clear about this. Long-term contracts, purchase on a large scale (I have never quite understood what the phrase" bulk purchase" means), are quite possible under this Bill. There is nothing to prevent the Lancashire spinners, if they so desire, from entering into long-term contracts with suppliers, or from entering into what the noble Lord calls bulk purchases, if they think this would be to the mutual benefit of themselves and the people from whom they buy. Let us, as I say, get the facts quite clearly in our minds. It is not true to say, as the noble Lord has said (I am sure with complete conviction; I have no doubt about his sincerity in this matter), that this Bill shatters faith in the Colonies. There is no reason why it should. The Raw Cotton Commission abandoned bulk purchase from the Sudan and Uganda in the last two years. Neither of those Territories, nor the spinners of Lancashire, suffered as a result. The noble Lord says that we are putting them to the risk of speculation in the future. If he will forgive my saying so, I think he has slipped a little here, because he said that he would be happier if these cottons were quoted on the Liverpool market—in this speculative pin-table area. Well, that would be putting them to speculation. I do not think the noble Lord can have it both ways. But perhaps they will.

We in this House do not open the Liverpool Cotton Exchange; that is a matter for the Liverpool Cotton Exchange to determine. All that we do is to give them the opportunity of opening. I have had conversations with them, as I gather the noble Lord opposite has, and they have indicated that they will seek to provide some means whereby this speculative cover can be obtained on Colonial cottons. They say that they may take twelve months to do it, or they may take eighteen months. If the noble Lord will join with me, I would say to the Liverpool Cotton Exchange that we shall be glad if they will do it a little more quickly than that, because we believe that the cover that they are providing for American cotton is a good thing and. therefore, we shall be glad to see it provided for the other growths of cottons. But do not let us get carried away by a 580 too depressive view about the Colonial cottons. They have come to stay. In this country they have established themselves on their own merits. In my view, neither long-term nor uneconomic contracts are necessary in order to maintain their position.

Look at the facts. The facts are these. In 1938, we were using in this country 13,000 metric tons of Colonial cotton; in 1951, 41,000 metric tons in 1952, 46,000 metric tons, and in 1953, 41,000 metric tons again. The figures have grown, and if noble Lords will acquaint themselves with the information which can be provided by Lancashire spinners, and by the people who will operate the Liverpool Market, they will find that those individuals have no doubt that on their merits and without adventitious support, these cottons have earned their place and will continue to hold it. The noble Viscount who is acting as Leader of the Opposition, said, I think," rubbish."

LORD LUCAS OF CHILWORTH

No, he said" bulk purchase."

VISCOUNT ALEXANDER OF HILLSBOROUGH

I was merely trying to indicate that these figures showing increases relate to periods when bulk purchase has been in operation.

VISCOUNT WOOLTON

I am glad to be assured that the noble Viscount did not say "rubbish"—it would have been unlike him to do so. I was ready for the point which he has just made. He will realise that, so far as Uganda is concerned, bulk purchase was voluntarily abandoned two years ago, and the people are still prospering. We could go on for a very long time with this defence that I am making of the Bill. I recognise from the closing words of the speech of the noble Lord, Lord Lucas of Chilworth, that he was concerned not so much with the political aspect of this question, as with the question of what really was going to happen to the Colonies. And that, of course leaving aside the general political banter of the noble Lord, Lord Ogmore, was what he, too, had mainly in mind.

But my Lords, how can anyone speak with absolute certainty about the future? All I can tell your Lordships is that the 'existing contracts will be carried out. The Ministry of Materials, has powers— 581 which, be it remembered, are powers conferred by Parliament—and although it may be that in the not too distant future the Ministry of Materials may cease to exist as an independent Ministry, there is no doubt that its powers will continue to exist. If it should be thought advisable that that Ministry should be amalgamated with some other Ministry, its powers will go with the amalgamation. That answer is preliminary to my next remark, which is that the Minister of Materials has the power to take over from the Raw Cotton Commission assignments into which they have entered, and—these are significant and deliberate words—will do so if desired by the Colonies. Negotiations are at the present moment taking place with Her Majesty's representatives in the Colonies with a view to seeing what they desire. I am quite satisfied that, once you give the freedom of the market that we are proposing in this Bill, it will be found that neither the master-spinners, the operatives in this country, nor the producers of cotton overseas, will be damaged by it. I hope that the assurances which I have given to the noble Lords opposite on this Colonial issue will set their doubts at rest—at any rate for the time being. But I greatly regret that I cannot accept the very far-reaching Amendments they are proposing, and I must ask your Lordships to reject them.

VISCOUNT ALEXANDER OF HILLSBOROUGH

I must say that in listening to the noble Viscount one is always tempted to give way to him because of the general benevolence and charm with which he puts his case but we have had evidence that that benevolence and charm in the past have not always been followed by the results which we expected. I think that that might be said with regard to an even wider circle than this House. When the noble Viscount tried to persuade us, at the last moment, that nothing would be done by the Spinners' Association, the operatives, or anyone else, that would be liable to prejudice the situation so far as Colonial peoples were affected in the future, I just wondered whether that was, after all, to use the noble Viscount's own phrase" an act of faith." With regard to what the noble Viscount said about the manner in which Lord Ogmore put his case, may I say that I could see 582 nothing whatever to complain of in Lord Ogmore's presentation of his case.

VISCOUNT WOOLTON

I did not complain.

VISCOUNT ALEXANDER OF HILLSBOROUGH

I do not know about that. The noble Viscount seemed absolutely shocked that the noble Lord associated with his criticism of Colonial policy the suggestion that it is either for or against the souls of men. I say that my noble friend has put himself right in the line of all reformers. I know that the noble Viscount, Lord Woolton, has himself a record in this respect. I know what a reformer he was before he became attached to a specific political movement. All reformers have had in the past the kind of charge made against them that is now made against my noble friend Lord Ogmore. That is nothing to be ashamed of. Indeed, it is something to be proud of. If you endeavour to get reforms brought about, you will always be put in a sort of special box in which you can be attacked. But that does not matter at all. What I am concerned about is that grave consequences to out country and to the Colonies may occur because of adherence to the belief that a return to free competition is bound to bring the right results.

In my experience, extending over a long lifetime, I have long since moved away from things about which I learned in my younger days. I have moved a long way from what I might perhaps call the Adam Smith type of economics. It really does not work at all. If you want to encourage recovery in the world at large, you have to see that the primary producers of the world have something at which to aim, and that they have the means of obtaining the necessary capital which is required to meet the situation to-day. Without the long-term view, without long-term guarantees—which the representatives of the Government seem determined all the time to upset—you are not going to get that investment in machinery and plant and in long-term programmes generally, without which there can be no recovery in this country or development of further production and prosperity in the Colonies and other countries overseas. That is why I think my noble friends have been right to put down this Amendment.

583 As regards likening dealings on the Cotton Exchange to pin-table gambling, I do not think we should be too tenderhearted about that being said. I am astonished that the noble Viscount, with his academic record and knowledge of this subject, has not replied to the charge made by my noble friend, that this means reverting to a system in which somebody is going to buy what he does not want himself from somebody else who has not got it and does not know whether he is going to be able to get it. That is the state of affairs on which our argument relies. My sixty-odd years of life have proved to me that we have not had successive booms and slumps, periods of comparative prosperity and of unemployment and poverty, because of the adoption of bulk purchase as a long-term policy, but because of the squeezing of the markets by persons for financial reasons, in commodities which ultimately they are not concerned in handling themselves. That is fact, and I would challenge anybody to disprove that that has been the situation over the last 100 years. That is the actual record of the position. We are not asking for any drastic amendment at this stage of the Bill. All we are asking in this very mild Amendment is that the Government should make a provision in the Bill that those who are going to have the freedom which the Government are now going to give them should be required at least to do something which will give the Colonies some hope in the future. Why should they not do so? It is not fundamentally against the principle of the Bill, much as I dislike it. It gives some sense of security, some guarantee to the Colonies, for whose interests we have such a great regard.

VISCOUNT HAILSHAM

When I was a little boy of seven my father used to come up and say "Good-night" to me, and often he would explain some of the simpler questions which occurred in the course of his legal practice. I can remember with the utmost clarity that in the course of one of his lectures he taught me the difference between buying on the futures market and gambling. I thought I understood it then and I think I understand it now. I am sorry I shall not have an opportunity of seeing the noble Viscount when he goes to bed and being able to explain it to him at greater length.

584 I pass from this very elementary point in economics, but I think it right that your Lordships should not pass from this Amendment without your attention being drawn to the extraordinary divergence of views and the remarkable inconsistencies in the three speeches in support of the Amendment to which we have listened. The noble Lord, Lord Lucas of Chilworth, who has some business experience, was at pains to claim that his Amendment was not designed in any way to hit at the underlying principle of the Bill. He rightly divined that if it had been designed to do so, it would have been pointed out to him that we are now in Committee, having given the Bill a Second Reading. When we come to analyse the arguments of the noble Lord, Lord Ogmore, and still more those of his Leader, we ascertain beyond any possibility of doubt that the purpose of the framers of the Amendment was to overthrow the underlying principle of the Bill. It was not that there was anything special about the long-term contracts of a particular class to which the Amendment purports to apply; it was that all forms of purchases of future goods on commodity markets in general, and possibly the cotton market in particular—although I understood the noble Lords' observations to be of a more general character —were gambling transactions which no good Nonconformist ought to accept and which were to be condemned as pin-table owners were to be condemned. In other words, the underlying purpose of the Bill to reopen this commodity exchange was wrong. Noble Lords cannot have it both ways. If the noble Lord, Lord Ogmore, is right in saying that that is the real justification for this Amendment, the noble Lord, Lord Lucas of Chilworth, is wrong in claiming that he does not wish to overthrow the underlying principle of the Bill.

The next thing which is rather remarkable about these speeches from the Opposition Front Bench is this. The noble Lord, Lord Lucas of Chilworth, drew a pitiful picture of the fate of Empire cottons in not being allowed to be tendered on the futures market. That was his complaint, and I must say I was very touched by it. I found it highly moving that our Empire cottons could not be tendered for in fulfilment of futures contracts in the market. But what is the noble Lord, Lord Ogmore, saying? Lord Ogmore 585 says that what his noble friend wants is something fundamentally immoral, which should not be allowed in any commodity at all. Again noble Lords cannot have it both ways. We must have a little plain thinking and a little consistent statement on the fundamental outlook of the Party opposite. One cannot say that Empire cottons are not capable of being tendered on the market in this way and then say that the market is something which should not be allowed in any condition. The Party opposite must say something all the time, even though we know it says a great number of divergent things most of the time.

When I come to look at the Amendment itself, I see why it is that there have been so many remarkable differences in the speeches in support of it. The Amendment is one of the most unintelligible I have seen intended to be inserted in a Statute. Before the commodity market is opened two sets of people, the Board and the Minister, must jointly certify "that suitable arrangements have been made" (how are they to know what arrangements are suitable?— we are not told)" to ensure the making of bulk purchases." What are bulk purchases? How can these words be inserted in a Statute? Would two tons of cotton be a bulk purchase, or 200 tons, or 200,000 or 2 million?

LORD LUCAS OF CHILWORTH

Would the noble Viscount like me to save his time? Unfortunately, I do not think he was here on Second Reading and he will not be able to follow the argument. His noble leader Lord Woolton has completely answered him, if he has listened to what the noble Viscount said. The noble Viscount, Lord Woolton, has assured us that for the purpose of carrying on the existing bulk purchase the Ministry of Materials are quite adequate. That is the arrangement envisaged for carrying on any future bulk purchase. We are not in court and we are not the subjects of a forensic display. Nothing to the purpose is served by trying to play off one against the other. This matter is far too serious for that. That is the answer the noble Viscount, Lord Woolton, has given us.

VISCOUNT HAILSHAM

The noble Lord is perfectly correct in saying that I have not followed the argument. That is because the argument is fundamentally 586 unintelligible. And is one not entitled to point out in Parliament that an argument is not intelligible, that the views in support of it are inconsistent, and that the language of an Amendment is unintelligible? After all, I must remind the noble Lord, in all seriousness, that these words may one day have to be interpreted in a court, where sense will have to be made of this Amendment, if it is inserted in the Bill and passed by another place. It is because I think your Lordships will be concerned, in spite of what the noble Lord says, with what a court may have to say about language of this kind when it conies to interpret it, that. I came to ask one or two questions about it. So far from being an answer to the points I was putting, the noble Lord's suggested answer, in fact, is an illustration of exactly why the Amendment is unintelligible.

Of course I was aware of what the noble Viscount. Lord Woolton, said, because I heard him say it with perfect lucidity and cogency. The noble Viscount in charge of the Bill said that existing contracts will be carried out. That is because they mean something definite. An existing contract is an existing contract. But I am discussing a proposed Amendment to the Bill which talks about the issue of a certificate by the Board and the Minister that suitable arrangements will be made to ensure the making of future contracts; and before they can issue that certificate they have to be satisfied that the contracts are for bulk purchases. I asked the noble Lord—and he has not answered the question —what is" bulk purchase" for this purpose. Is it 10 tons, 10,000 tons or 10 million tons? We do not know. The Amendment says," on long-term contracts." What is a long-term contract? Is it five years, ten years, twenty years, thirty years, one hundred years, or six months? We do not know. But at some time the Board and the Minister have to certify that suitable arrangements have been made for the making of bulk purchases on long-terms contracts.

One of the odd things I find in the Amendment is that these contracts have to be made—between whom we are not told— for the supply and distribution to manufacturers in Great Britain of raw cotton from 587 Her Majesty's Colonial territories and other countries …. What other countries? What does that mean? What has become of all this glorious intention to preserve the souls of the suffering peoples of the Empire, when we find that contracts have to be made for the distribution" from Her Majesty's Colonial territories, and other countries"? The real truth about this Amendment is that it is designed for the purpose of having a second Second Reading debate; and, to some extent, it has succeeded in that objective. Nobody complains that such an attempt should be made. But one hopes that the Party opposite, having regard to the extraordinary confusion which has fallen upon their counsels, will not carry the matter to a Division and have it seriously put down on record that these are the terms which the Labour Party would seek to be incorporated in this proposed Statute.

I close on this note. I quite agree with the noble Lord, Lord Ogmore, that there is a great deal too much ideology about political debate at the present time. For that reason, I must say that I deprecate the attack on the futures contract, as such. It is not true, as the noble Viscount, Lord Alexander of Hillsborough, suggested, that the futures contract is something which is responsible for the fluctuation in prices. The fluctuation in prices is something which is accentuated when there is -no market in future commodities; and it was precisely because of the intolerable effect of fluctuation in prices which existed without such a market that this country—and particularly the City of London, in other commodities, but Liverpool in cotton—during the course of our rise to commercial greatness, founded not only the commercial prosperity of this country but also the growth of agricultural enterprise abroad by the institution of commodity markets, the purpose and effect of which was to modify and reduce the fluctuation in prices.

As my father told me when I was seven—and I now venture to repeat it to noble Lords opposite, although it is not yet their bedtime—there is no more truth in the sneer that the purchase of futures is, of necessity, gambling, than there is in the sneer that life insurance is, of necessity, gambling. All those who have been 588 connected with the law know of life insurance contracts which have, in fact been pure wagers; and most of us have known contracts which, although on the face of them contracts for the purchase of goods in the future, have really been pure wagers, because they were not carried out for the primary purpose for which they were intended. But a life insurance contract, and, indeed, any contract, although, in a sense, a wager, because you wager on a future event which may happen at a particular time, is yet really the opposite of a wager because it is designed to cover the insecurity of human life and human chance. That is the purpose of these commodity markets. It is a melancholy reflection that in this House of Parliament, in this country, which has grown great upon the development of commerce based on institutions such as those, we should, in the middle of the twentieth century, be treated to an argument on economics which really could be ridiculed by a small boy of seven.

I must add this. It is true that many arguments may exist in future as between Government purchase on contracts over an extended period and as between the finance of industry and agriculture by a private entrepreneur. These are matters of high politics between us. But it is a matter that ought not to be darkened and cheapened by foolish sneers at those who take part either in the one or in the other. So far as these Empire agriculturists are concerned, it must be stated, and stated quite plainly, that the reason for the market in futures, in the absence of bulk purchase over extended periods (which, as I say, is a matter of high politics), consists in the fact that after the completion and harvest of his crop the farmer requires cash, very often before the merchant is prepared to sell to the consumer. Those who come in and take up the slack between the date at which the merchant sells to the ultimate consumer and the farmer requires his cash, so far from being sneered at as the owners of pin-tables, are among the very people who built up the commercial reputation of this country.

LORD OGMORE

I must say that I was pleased to see the noble Viscount, Lord Hailsham, on his feet. We have had quite a good debate to-day. It is 589 always interesting to listen to the noble Viscount. We always like to hear him, whether it is on the television screen or in this House; and the fact that be so rarely agrees with his own Party makes it an added pleasure to find him doing so to-day. Of course, one is told things at the age of seven; but at the age of seven one has perhaps a gullibility and innocence which is not present at a later age. The arguments of the noble Viscount are nineteenth century arguments.

THE SECRETARY OF STATE FOR COMMONWEALTH RELATIONS (VISCOUNT SWINTON)

Some truths are eternal.

LORD OGMORE

I agree with the noble Viscount that some truths are eternal—but not this one. This is not an eternal truth. This is a nineteenth century argument when, in economics as in everything else, the machinery which man had evolved was primitive. To-day, with our marketing arrangements, our bulk purchase and our long-term contracts, and with the sort of marketing boards that we have in the various Colonies to cushion the producer, we do not need the sort of service that the noble Viscount is talking about, which in any case very often did not operate on the Lancashire Exchange at all. It operated in West Africa through Armenian and Levantine merchants who, at all events, whatever their qualities, were never regarded in quite the same light as the noble Viscount regards them to-day. They would have been surprised to hear themselves described as he has described them, and it will no doubt warm them in their nineteenth century graves to learn that they performed such a useful service for such a high reward. The point is that this is twentieth century mechanism. We are not claiming all the credit for it. It was partly evolved by the late Colonel Oliver Stanley who knew a great deal about it. I have no doubt that the noble Viscount, Lord Swinton, also helped when he evolved the economic department of the Colonial Office. But it was Colonel Stanley who did a good deal of work in this field.

THE LORD PRESIDENT OF THE COUNCIL (THE MARQUESS OF SALISBURY)

Is the noble Lord arguing for or against the closing of the Liverpool Cotton Exchange?

LORD OGMORE

I am sorry. The noble Marquess has not been here very long, and has not followed the argument What I am saying is that this mechanism is a new mechanism, evolved in the twentieth century. We make no claim to be the sole originators of it. It has been partially contributed to by Colonel Stanley. He did a lot of work in this field in the way of supporting the crop—subsidising the crop, if you like—of the primary producer, which is done in three ways. It is done, first of all, by the marketing boards which cushion him and pay him as soon as the crop is reaped or even before this stage—they have a reserve for that purpose. Secondly, it is done by long-term contract and, thirdly, by bulk purchase. Now why, when we have a perfectly efficient system, to which contribution has been made by both the great Parties, should we go back to the nineteenth century inefficient system which did not do nearly as well as the twentieth century system? I cannot understand it, and neither the noble Viscount, Lord Woolton, nor the noble Viscount, Lord Hailsham, has persuaded me one iota that we are wrong in our attitude.

VISCOUNT SWINTON

I had not the least intention of intervening in this debate—it is in very able hands—but the noble Lord has been good enough both to challenge me and to pay me a compliment by saying that I had something to do with cotton-growing in East Africa.

LORD OGMORE

I said the noble Viscount did considerable work when he evolved the economic department in the Colonial Office, which was built upon by Colonel Stanley.

VISCOUNT SWINTON

I am obliged. I will tame it down a little. It is quite true that there was no economic department when I went into the Colonial Office. Bat, believe me, I had nothing whatever to do With bulk purchase. I do not know why it is relevant to this discussion.

LORD OGMORE

It is relevant in this way: that I did not want noble Lords opposite to think I was claiming that my Party were the only people who had done anything in this field. I said that it was a continuous process to which both Parties had contributed. I was trying to be fair. It now seems to me that I have done something wrong. I was agreeing that 591 both Parties had contributed in this field, and the noble Viscount himself had contributed by bringing into the Colonial Office the machinery which, to some extent, operated in this way. Without that machinery, the plan which was started in Colonel Stanley's time would not have evolved. Colonel Stanley was of a good Tory family, and not one of the" bright boys" who are now coming into the Party.

VISCOUNT SWINTON

I do not know whether my noble friends Lord Woolton or Lord Hailsham are included among the" bright boys" who are now coming into the Party. They are all bright and they are all welcome. Some of them have been in the Party quite a long time and, oddly enough, stay in the Party quite a long time. It is nice of the noble Lord to join us all up in this family party, and I am sure we all like that. It is rather a change to listen to a number of the orators on Imperial affairs in another place. You would think the Labour Party had discovered the Empire—like young Columbuses. It is always nice to find a new Party learning something about an old subject. I do not wish to make exaggerated claims, but I was father of the economic department in the Colonial Office. That is true, and I am glad that everybody who went there carried it on. All I was venturing to say was that it had nothing on earth to do with bulk purchase. What we are concerned with to-day in this Bill—and the debate on each Amendment seems to range extraordinarily wide—is whether or not we should reopen the Liverpool Cotton Exchange or conduct a business of bulk purchase which, incidentally, as my noble friend has shown, has cost not the Government but the taxpayer (in whom I am rather interested) an enormous amount of money. I am sorry if the noble Lord is shocked at the idea that private enterprise, private venture and individuals should take some risk. There are quite a lot of people, not only in the Labour Party, who find themselves in the transitional stage—just occasionally in the Conservative and Liberal Parties—who would like to be kept and cushioned and would like never to have to undertake any risk. Believe me, that was not the way in which ventures were undertaken, or the way that the British Empire or 592 British enterprise, or anything else, was built up.

We are dealing to-day with the individual subject of cotton, and what the noble Lord is really saying is that you cannot have successful cotton-growing in the British Empire, the British Commonwealth or the British Colonies, unless you have bulk purchase. With the greatest respect, that is absolute nonsense. I was greatly concerned in the 'twenties and 'thirties, both when I was President of the Board of Trade for seven years or more and as Colonial Secretary, with the development of cotton-growing in Uganda, which is where the great bulk of the cotton was grown. I am glad that that is now spreading elsewhere. The Liverpool Cotton Exchange existed at that time. People engaged in private enterprise. There was never any bulk purchase. I never bought any cotton. The Chancellor of the Exchequer (there was no Minister of Materials at the time) never bought any cotton. What did happen was an admirable thing. Under the auspices of the local Government, and under the æegis of the Cotton Growing Corporation, wise systems of growing cotton were established. The growers were taught, with the combination of private enterprise and a benevolent Government, the kind of cotton to grow, and co-operative ginneries were established. It was a co-operative undertaking. The noble Viscount, Lord Alexander of Hillsborough, must teach Lord Ogmore and his colleagues the difference between co-operation and bulk purchase. They are really not the same thing at all.

VISCOUNT ALEXANDER OF HILLSBOROUGH

I would also wish to teach them the difference between co-operative and collective buying and gambling on Change.

VISCOUNT SWINTON

The co-operative societies have from time to time taken part in—I will not call it a gamble, but, shall I say, in a somewhat speculative enterprise, and have not always been wholly successful. Really, the noble Lord must not mislead the House. He is too intelligent to do that. We know the way in which places like the Liverpool Cotton Exchange and the London Metal Exchange function. Go to Mr. Strauss in another place and ask him whether the operations of the London Metal Exchange 593 (in which Mr. Strauss was such a distinguished ornament) were a shocking example of pin-table gambles. Of course they are not. They are necessary markets which exist in this country for the convenience of traders. You cannot prevent a man every now and again having a little bit of a" flutter." The amateur who goes in and has a" flutter is the gentleman who generally burns his fingers by so doing. We have built up the whole of our cotton growing in the Empire, not in the least on a system of bulk purchase or Government trading or anything of that kind but by teaching people the right kind of cotton to grow. I should like to draw on my own experience of twenty or thirty years ago to tell the House that, whatever may be the merits of this Amendment, it has not the slightest thing to do with developing cotton-growing in the Empire. Cotton-growing in the Empire was well developed before the noble Lord even began to learn about bulk purchase, and it will go on very well after the Liverpool Cotton Exchange has been reopened.

LORD LUCAS OF CHILWORTH

We have had an interesting debate. I think many of us are better informed now than we were at the beginning. There is one comment that I should like to make on Lord Hailsham"s speech. Doubtless he was carried away by the force of his own eloquence but I felt that his speech was rather below his usual standard of fairness. I began my remarks to the noble Viscount in my first preamble by saying that I was not wedded to these words: I am not a Parliamentary draftsman; I am an amateur. The noble Viscount is an eminent member of the Bar. It did not seem to be quite playing the game to make such sport of somebody who was trying to do something which he was ill-equipped to do. So, when the noble Viscount talks about the Amendment being" unintelligible," perhaps on reflection he may think that he might have used a more suitable term. I will leave it there.

VISCOUNT HAILSHAM

If the noble Lord will tell me a more suitable term for" unintelligible" than" unintelligible," I will certainly substitute it.

LORD LUCAS OF CHILWORTH

Perhaps the noble Viscount will get 594 somebody else to tell him that that kind of thing can be, at times, cheap. May I now turn to the real discussion and get back to the point which I tried to get the noble Viscount to see. If he will forgive my saying so, the noble Viscount was not quite in accord with the facts.

VISCOUNT WOOLTON

Oh!

LORD LUCAS OF CHILWORTH

I did not quote my knowledge of the facts; I (rioted people who were far more informed. The noble Viscount's right honourable friend the Colonial Secretary will answer the noble Viscount, Lord Swinton, too. The noble Viscount, Lord Swinton, said that it was not long-term contracts that built up Colonial cotton-growing. His right honourable friend in another place said this: Certain Colonial producers, namely Nigeria, Nyasaland and the Aden Protectorate, have entered into long-term contracts with the United Kingdom Raw Cotton Commission which, by offering a stable market for some years ahead, serve to encourage expansion of production. So, when the noble Viscount says there is a divergence of view between my noble friends—I am answering the noble Viscount, Lord Swinton —

VISCOUNT WOOLTON

I am sorry. Let us be precise about this. The noble Lord said that I spoke without the facts.

LORD LUCAS OF CHILWORTH

I am coming to that.

VISCOUNT WOOLTON

Is the noble Lord talking about me or about my noble friend Lord Swinton? Let us know who is" in the dock."

LORD LUCAS OF CHILWORTH

I am coming to that in a minute. So, when great play is made about the supposed differences between my noble friends Lord Ogmore, Lord Alexander and myself, perhaps the members on the Front Bench opposite had better remove the mote—

VISCOUNT HAILSHAM

The beam.

LORD LUCAS OF CHILWORTH

—from their own eyes before they attempt to get the beam from ours—or vice versa. No doubt the noble Viscount, Lord Hailsham, is an authority on motes and beams. The facts are—and the figures have been published by Her Majesty's Government—that in 1938 Empire cottons were 8 per cent. of the 595 total of our cotton imports, and they are now 26 per cent. It has been stated by authorities that that growth in these last ten years has been due to the encouragement, continuity and stability given by long-term contracts and bulk purchase. If there are any noble Lords—except, of course, the noble Viscount, Lord Hailsham—who do not know what bulk purchase is, I will give them an example. The Raw Cotton Commission purchased every year the whole crop of Sea Island cotton from the British West Indies before it was planted. That is bulk purchase.

To come down to the essence, what I said (and this is where I think the noble Viscount was not quite accurate) was that there was no market for Colonial cotton in Liverpool before the war because there were no futures. That was stated—I quoted my authority—by the Chairman of the Council of the Empire Cotton Growing Corporation. There will be no market for Colonial cotton in Liverpool until it is tenderable against futures because nobody will dare take the risk. The noble Viscount was quite right there. The noble Viscount has said that there might be one—he repeated my words—in twelve to eighteen months' time. What is going to happen in the meantime? If his friends have been showing during the past two years, when the ban has been lifted, when they had the option of opting out of the Raw Cotton Commission, the enterprise he fondly imagines they are going to show in the future, why is it that in Lancashire to-day the warehouses of Liverpool are not full of Sudanese and Uganda cotton? My information is that the only stocks of Sudanese and Uganda cotton in Lancashire to-day are those held by the Raw Cotton Commission. His friends who opted out have had two years, and they could have done all this. Why did they not purchase American cotton for sterling, as they could have done during these last twelve months under American aid cotton? They did not even have the enterprise to do that. I am informed by the authorities that there is no stock—and I will deal in a minute with the question of stocks—in Liverpool to-day outside those of the Raw Cotton Commission. There can never be any real hope of any Colonial market in Liverpool until Colonial cotton 596 is tenderable against futures—and immediately the Raw Cotton Commission is wound up the only futures market will be based upon an American standard.

With all the interesting by-play that we have had this afternoon, that is the simple issue. We on this side of the House say, quite frankly, that we are not prepared to let go, without a protest, what we consider to be, and what a lot of the best informed opinion considers to be, the stability of a long-term contract, which has been the main cause of the growth of Empire, Commonwealth or Colonial cotton—call it what you will—in these last ten years. We say that it is a simple thing for the noble Viscount to do. The Committee may argue very sweetly, with a practised legal mind, in regard to the wording of this Amendment. I ask the noble Viscount, Lord Woolton, to accept the principle of the Amendment. I accept what he says—and I am grateful to him for saying it—that the existing contracts will be carried on under the machinery which exists at present in his Ministry, the Ministry of Materials.

VISCOUNT WOOLTON

If necessary.

LORD LUCAS OF CHILWORTH

Yes, if necessary. And if, as I put it rather humorously to the noble Viscount, he commits suicide as Minister of Materials, he has said that this responsibility will quite probably be transferred to his right honourable friend the President of the Board of Trade. I am sure that everybody will be grateful to the noble Viscount for what he has said. He has given us that assurance, that these contracts will be carried on by that method. That is the simple method that I was asking for. The purpose of my Amendment was to make provision whereby it would be possible, if it were so desired, to have future long-term or bulk purchase contracts. I asked simply that this be incorporated in the Bill. Now we have parted company. The noble Viscount has said, quite frankly, that he cannot accept that. We on this side of the House must therefore ask the Committee to express in the Division Lobbies, their opinion as to whether or not we support the Colonies.

VISCOUNT WOOLTON

With the indulgence of the Committee, may I correct an error that I made? I believe I 597 spoke of millions of tons; I should have said thousands.

A NOBLE LORD

We understood so.

VISCOUNT WOOLTON

With your. Lordships' consent I will arrange for the correction to be made in the OFFICIAL REPORT. I apologise to the Committee for the error. May I say just one other thing, following the very conciliatory speech of the noble Lord, Lord Lucas of Chilworth? Do not let us get unduly alarmed if the stocks of cotton are in the hands of the spinners who are going lo use them, rather than in the Liverpool warehouses. The noble Lord is quire right in saying that at the present time the stocks in Liverpool, where a futures

VISCOUNT HAILSHAM

That is exactly what I said. What I was objecting to was that the noble Lord's noble friend, so far from recognising the distinction, proceeded to splash any one who indulged in a futures market with exactly that kind of opprobrious language which the noble Lord has now quite correctly reserved for those who abuse it.

LORD LUCAS OF CHILWORTH

I did not read that into what my noble friend said. Of course, if one wanted to make a very good debating point—and of such matters the noble Viscount, Lord Hailsham, is a past master; we all admire the way he makes them—one could pursue this matter further. The noble Viscount, Lord Woolton, knows as well as I do that there were speculators who came into the Liverpool futures market before the war and, as my noble friend said, never saw the goods. They just came in to make a quick "rake-off." That was not what the futures market was ever intended for. But let no one be so simple as to think that it did not happen. I am not one of those people who think that the Stock Exchange is a den of vice. But, heaven knows, some pretty shady things go on in it! So let us look at this futures market as it was operated by the Raw Cotton Commission.

You cannot get anyone to buy Colonial cotton on a long-term basis unless he can hedge. I have made investigations into some of these facts. Two speeches were made during Second Reading from the Back Benches on the Government 601 side of this House—I will not mention the names of the noble Lords who made them because they are not here now—by speakers who wanted your Lordships to believe that the banks would quite readily finance these stocks. Nothing of the kind is true. A futures contract is as much a bank security as it is an insurance for the spinner or the manufacturer against a future fluctuation in price, and the banks will adopt the attitude—unless of course some other security is offered— "No futures contract, no money." And you could not blame them. It is difficult to understand how anyone can stand up and say, as was said in your Lordships' House, that the banks would find a way of doing this. The banks will not do any such thing. The banks do not give money away. They are not in business to back gambles, and it would be backing gambles if they provided finance in those circumstances. So I have great apprehension as to whether these small unit mills will get the finance to carry these stocks. Twice or three times the amount of money which was required before the war will be required to-day.

A futures market, like an insurance company, can operate only on a wide spread of risk. I do not believe for one moment that the big spinners' combines that are now in existence will ever use the Liverpool Cotton Exchange. They will be able to finance their own risks. They will not want insurance against price fluctuations. What will they do, as they will be tied very largely to America? And do not forget that the alteration of the rules of the Liverpool Cotton Association is such that they can now have 49 per cent, of foreign capital. We may find that these big spinning combines will go direct to America and make their purchases there, direct, without any recourse to Liverpool futures. On that, I am certain that the noble Viscount, Lord Woolton, will agree with me. These are some of the legitimate fears that we have. So this Amendment seeks to ensure simply that there shall be stocks for some of the mills of the small unit type, and that the Board of Trade shall run a cover scheme. I think I am right—the noble Viscount will correct me if I am wrong—in saying that before the advent of tie Raw Cotton Commission, before it was formed, the Board of Trade did run a coverage.

VISCOUNT WOOLTON

I will try to satisfy you on this.

LORD LUCAS OF CHILWORTH

After all, the Board of Trade do it with overseas business. There is the Export Credits Guarantee Department of the Board of Trade, which is, in effect, only an insurance company, and the Board of Trade are quite competent to run futures: cover. That is why I was rather disappointed that the noble Viscount did not accept my first Amendment. I consider that it really offered a way out of this difficulty of getting Colonial and Empire cottons; and would help to keep them established in Lancashire, and to supply Sudanese cotton to the mills of Bolton, where till fine cotton is spun. And if you have got to do this to help the industry, you cannot afford to throw away an organisation like the Raw Cotton Commission which has carried stocks for so long.

What are we going to do? Arc we going to have spot buying? There must be stocks. What I am afraid of—and I tell the noble Viscount this quite frankly—is that if we have a trade recession the tendency will be for the Lancashire people to run their stocks down. That will not be so in the case of the big spinning combines, but it will be done, I think, by the small unit mills. Therefore, the purpose of this Amendment is to see whether we cannot carry a sufficient pool stock of cotton. If people want to buy it direct, let them. But all those who want to do so should he allowed to contract-in to buy their cotton from a central exchange that will run a futures market until such time as the Liverpool Cotton Exchange does have a Colonial futures contract. It will be in the interest of Lancashire that we ensure that Colonial and Empire cottons continue to be served. The business has always been run on credit, and it always will she run on credit. The noble Viscount, Lord Woolton, knows as well as I do that the financing a stock before the war was always done by the hanks on a 10 per cent. deposit and a futures contract. If there is no futures contract, the banks will not advance the money. Of that I am certain because that is their security that the cotton will eventually be sold. That is the simple point of this Amendment.

I am apprehensive about one thing. At the present time there is a carrying commission 603 of 2d. in the pound on spot buying. That means increased prices. I have an unhappy feeling that so soon as the Raw Cotton Commission are dissolved, the price of cotton will soar. After all, merchants are not in business for the benefit of their health, and if the commission is 2d. a pound now, it may become higher. Before the war, when Sudanese cotton was 7d. a lb., the discount was 2d. a pound, because there was no futures market—I am talking now about pre-war days. The whole thing is wrapped up in futures coverage, adequate stocks and continuous supplies. Until all these safeguards can happen in the ordinary way of trade, somebody should be responsible for seeing that the relatively small spinner has adequate stocks and coverage. I beg to move.

VISCOUNT HAILSHAM

I intervene to make one or two observations about the noble Lord's Amendment, since he referred to me at the beginning of his speech. The last thing I want to do is to criticise the drafting of the Amendment, as drafting. The noble Lord was so disarming about the incompetence of the draftsmanship that I can add nothing whatever to what he has said in its dispraise. In my experience, deficiency in draftsmanship is almost always not simply incompetence but a cloak to muddled thinking. One can nearly always detect muddled thinking in an Amendment when the deficiencies in draftsmanship are pointed out. The noble Lord has said frankly that the purpose of this Amendment is to encourage the holding of adequate stocks by small spinners. But that is not its effect. I cannot quarrel with the noble Lord when he assures us that that was its purpose, but, as I read it, the object of the Amendment is to give a privileged position to a class of person who may want stocks of cotton. There is nothing in the Amendment about his being a small man, or about his wanting Empire cotton. He gets this privilege if, prior to September 1, 1953, he bought all or a substantial part of his total purchases of raw cotton from the Raw Cotton Commission.

604 Apparently, that mystic date, like the Flood, is to go on dating things for ever, because, if this Amendment be passed, for ever after that class of person is to have a privileged position. One thing the noble Lord has not said is why he should get a privileged position at all.

LORD LUCAS OF CHILWORTH

May I tell the noble Viscount now? Perhaps the noble Viscount is not conversant with all that has been going on. This is the date when the option to contract out was legalised. The people who contracted out were, in the main, big spinning combines. The people who were left in were those who had not the finance to carry their own stock