I beg to move, "That the Bill be now read a Second time."
The modern trend in the development of credit facilities has been primarily to meet the needs and convenience of joint stock enterprises. Agriculture, however, is an industry carried on almost entirely by small capitalists, dependent on the resources and administration of one man, and for that reason it has been left out of modern development and has been largely ignored in the framing of our banking credit system. The banking system of this country is in many respects a model to the world, but it has undoubtedly neglected the interest of the agricultural industry. In all the principal agricultural countries in the world governments have found it necessary to take special action to secure new credit facilities for agriculture. Germany and the Scandinavian countries took action many years ago, and more recently the matter has been dealt with in the United States and in various Dominions of the British Empire. None of these foreign or Empire systems is altogether applicable to our special needs and conditions in this country. Their experience and their legislative effort have shown that the problem of agricultural credit does not solve itself and that it can and ought to be dealt with by suitable Parliamentary action. The needs of agriculture in the matter of credit are two-fold. First, there is the need for fixed capital, for long-term credit, for the acquisition and development of land. Secondly, there is the need for working capital, short-term credit, for the growing, harvesting, and marketing of produce. These two sets of problems are distinct, and we deal with them separately in the Bill.
Our proposals in regard to long-term credits are found in Part I of the Bill. It has been generally recognised that post-War conditions call for amendment in the system not of land tenure, as is held on the other side of the House, but of land finance. Many landowners, through taxation or other causes, are unable to face the burdens and responsibilities of land ownership. Often, tenants feel it necessary to sink their capital in becoming freeholders, otherwise they would find their farms sold over their heads. We still believe that the landlord and tenant system is the best system, and it still applies to two-thirds of the area of this country. It supplies the fixed capital necessary to agriculture at a lower rate than it would be supplied by any other method, and we certainly have no wish to uproot that system where it exists. Unlike our opponents, we believe that nationalisation would not merely be unnecessary and undesirable but would be positively mischievous, because the control which it would involve would not be conducive to agricultural efficiency. [Interruption.] It is generally admitted that the agricultural efficiency of this country is equal to the agricultural efficiency of any country in the world. British stock raising and British arable agriculture has led in the van of world progress.
Our problem is to deal with the cases where a transfer of land to the occupier is necessary, and we want to give the occupier access to supplies of fixed capital on the most favourable terms. In the same way we wish to make available funds for intermediate credit in the form of improving the land. There, again, we believe that under private ownership improvement in the development of the land, where it is economically justified, can be carried out more cheaply and more efficiently under private enterprise than if it were fettered by the control of the State under a system of nationalisation. To provide the necessary long and intermediate term credits we are arranging to form a land mortgage corporation. We have rejected the method of a State institution as being alien to the traditions and needs of this country. Our great banks possess branches throughout the rural areas in direct contact with the farms, and it would be wasteful to duplicate their great machine if we could get the advantage of their organisation and the special experience which they possess. At the beginning of 1926 I approached the great banks, through the Bankers' Clearing House, to see whether they would help us in this matter. From the start they showed themselves most ready to place their resources at our disposal. We came to the conclusion that there was no case for a permanent subsidy from the State for agricultural credits. Given the necessary machinery, agriculture is just as well able to raise credit on its own assets and resources as other industries, and if the lender and the borrower can be brought together on satisfactory terms there is no more need for advancing State credits or by means of a guarantee, subsidising private credits, than would be the case in any other of Our depressed industries.
This Bill is to provide long and short term credits. It is not for providing subsidised credits. I will explain the distinction. We have arranged for the formation of a Corporation to lend on mortgage, secured either on land or on improvements. This Corporation will be formed by the generous co-operation of the great banks, led by the Bank of England, who have arranged to provide £650,000 of paid-up capital. The banks at the present time included in the scheme are the Bank of England, the Westminster Bank, Barclays Bank, Lloyds Bank, the National Provincial Bank and several of the other clearing banks, including Martin's Bank, Glyn Mills & Co. and Williams Deacon's Bank. [HON. MEMBERS: "What about the Midland Bank?"] The Midland have, so far, not come in, but we are not without hope that after further examination they may see their way to take part in the scheme. It will, obviously, be a great advantage to have the branches of the banks as agents in this new work. Instead of the farmer having to write to London to settle the business which he wishes to transact, he will be able to go to his local bank manager. I should like to say how disinterested and patriotic has been the attitude of the banks, because the return on their capital has been limited to 5 per cent. It is certainly no advantage to them to lock up their capital in this way, and the House should recognise the great debt of obligation under which they are placing us by the way they are helping in this scheme.
It is obvious that £650,000 of capital will be far too little to finance the longterm needs of British agriculture. The idea is that the money needed to lend to the farmer should be raised by means of debentures issued in the money market. These debentures, being dealt with on the Stock Exchange, will allow the farmer to tap a new reservoir of credit. He will no longer be limited to borrowing from the banks money lent to the banks for short terms, or raising the money which he needs for his land purchase by private mortgage. We hope that by these means large new sources of credit may be made available. Although, as I have said, we do not think there is any case for a permanent system of subsidising agricultural credits, we do hold that special assistance is necessary in launching this scheme. On the one hand, the farmers are just now heavily embarrassed by severe depression, caused by the persistent fall of agricultural prices. On the other hand, the early stages of the new organisation are bound to prove rather difficult. We are justified, therefore, while ensuring the permanent soundness of the scheme, in providing the farmers who wish to have recourse to it with the immediate possibility of borrowing at the most favourable rate.
At first, it is inevitable that the volume of business must be small, and while that volume of business remains small the cost of the new organisation must be unduly high. It will also take time to accustom the public to investment in an unfamiliar security. It is just in those early critical years, before the reserves of the new organisation can be built up, that the mortgages will be offered on less security, because the sinking fund will not have piled up and there will be much less security behind the Corporation, apart from the land, for the money which is borrowed. We are, therefore, proposing to help the Agricultural Mortgage Corporation in regard to the security which is offered and in the administrative costs. The success of the scheme and its attraction to the farmer must obviously depend upon the company being able to borrow cheaply. In other countries agricultural mortgage bonds, based on the same principles that we propose, have stood at a very good price in their money markets; but while those securities are unfamiliar in this country we must calculate on a certain amount of diffidence on the part of the investing public. That is why we propose to strengthen the-security.
The debentures will, of course, be secured on the whole of the assets of the Corporation, first, the land mortgage; secondly, the paid-up capital and, thirdly, the reserves. The assets behind the Corporation will steadily increase as the sinking fund piles up. In our proposals we are enabling the Corporation immediately to enjoy substantial reserves. We are providing a guarantee fund equal to the paid-up capital, which, as I have mentioned is £650,000 as at present arranged, with a maximum limit of £750,000. Incidentally, this provision will cheapen the borrowing of the farmer, as otherwise he would clearly in his interest payments have to make provision for building up reserves at a higher rate than will be necessary under our scheme. This guarantee fund to a maximum of £750,000 will be free of interest for 60 years. Let us see what that amounts to. Even if it only amounts to £650,000, it means £32,500 a year available for building up these reserves and for reducing the rate of interest payable by the farmer.
We have often been pressed during the examination of this scheme to assent to a Government guaranteed debenture. We have been told that as the State assented to the giving of guarantees under the Trade Facilities Act, they ought to do the same thing in this case. It has been suggested that £10,000,000 might easily be guaranteed on the first issue of debentures, to get the scheme started. That proposal, which for various reasons apart from those I am giving, was not acceptable, would be far less valuable to the Agricultural Mortgage Corporation than the arrangement which we are embodying in the Bill, because we are advised that the difference between a guaranteed loan and a loan of such a character as the Agricultural Mortgage Corporation will place upon the market will not exceed one-quarter per cent. This sum of £32,500 a year is one-quarter per cent, on £13,003,000, and there is no doubt that the assistance in the form which we are proposing will be more valuable to the Corporation than a guarantee of even £13,000,000, because this assistance will be permanently behind the Corporation, and will enable it to be in a very sound financial position from the start. Whereas a guarantee of debenture issue would be entirely temporary in its action, this method will be of permanent benefit to those borrowers who have recourse to this new organisation. We are making further proposals for Government assistance in the shape of underwriting the first issues of debentures to a maximum of £5,000,000. Of course that is not the limit of debentures, that will be issued by the Corporation, if there is a demand for such facilities, but that is the maximum which the Government feel justified in underwriting. In addition to underwriting, we are taking power to invest £1,250,000 of Government money in the debentures themselves. As the administration charges in the first years are likely to be high, we are proposing to contribute £10,000 a year for the first 10 years under that head.
Now I have outlined the machine, and I may perhaps describe how we expect it to work. The Corporation will be empowered to grant advances to farmers on the valuation of their land up to two-thirds of the value, to be repaid by equal yearly or half-yearly instalments of principal and interest spread over a long period. This is a new system; it is one, at all events, not previously applied generally in this country to the purchase of agricultural land. Mortgages, as we all know, are common; occasionally, there are cases in which money is repaid under an annuity system, and there are two very valuable companies which, on a smaller scale than we should have liked to see, are doing valuable work in this direction. This system, however, remains unusual. It is not the practice of the banks to give credit to farmers for a definite period, and to lay down in advance a rate of interest to apply throughout the whole term. This practice on the part of the banks is easily understood; as their deposits are their main sources for lending, it would clearly be inconvenient to them to lend for long terms, and to commit themselves to a rate of interest for a long period of years, while they are borrowing the necessary money for comparatively short terms. This system, however, which has not so far been applied to agricultural land to any great extent, has become the ordinary practice in the case of building societies, and we propose that the new Corporation shall apply to agricultural land the method which has been so successful with house property.
I expect that the limit of 66 per cent. of the valuation which may be advanced may disappoint a certain number of applicants who will have bought at high prices, but, after all, we made provision for farmers who bought in the boom period of the Corn Production Acts. In 1923 we made arrangements by which these purchasers should be given the advantage of State credit.
They had four years in which to apply. This offer was open until last year, and I cannot imagine that any men, seriously embarrassed by having bought their land at high prices, and not being able to finance it, would have neglected after four years to apply for the assistance which the Government was Offering.
They were invariably granted for the first four years, when the conditions were fulfilled, and when the £5,000,000, which the Treasury considered to be a reasonable limit, had been exhausted, it was felt to be time to bring the system to an end. The reason that we have decided on the figure of 66 per cent. is that that figure is the long established maximum for mortgages which are authorised to be held by trustees, and a favourable rate of interest for borrowers can only be secured by giving favourable security to the lender. It would clearly be undesirable that the bulk of borrowers should have to pay more than they need, just because a few borrowers wish to raise a larger proportion of the value of their land. Of course, the actual rate of interest at which the money will be lent will depend upon the state of the money market, and must be left to the decision of the new corporation. The rate will clearly vary from time to time, but, at present, I am advised that the corporation should be able to raise debentures at an interest rate of very little more than 5 per cent. We must add to that, of course, provision for the sinking fund. On the 5 per cent. table, sinking fund payments for 60 years amount to an annual payment of 5s. 5d. per cent., running up steeply for shorter periods. You must also add an unknown amount for administration and reserves, but, in view of the Government assistance in both these directions, I hope that the burden of the borrower will in these respects be greatly reduced.
I should think it ought to be well within 6 per cent. If the money is raised at a little over 5 per cent., and the sinking fund is 5s. 5d. per cent., I do not anticipate that the remaining charges will bring it up to 6 per cent.; but, as I have said, it is impossible to forecast the rate which the Agricultural Mortgage Corporation may find it necessary to charge. The corporation will be solely concerned with the long-period side of our agricultural credit scheme. They will have nothing to do with the provision of short-term credits.
I do not see why any such maximum will be necessary, but that is a matter which will obviously be dealt with by the corporation, and I do not think that it is one which we need deal with at this stage.
Credit for improvements will be dealt with by the Agricultural Mortgage Corporation, and they will have the benefit of the public Acts which have been passed to deal with this side of the question. We have, at present, the advantage of the work done by the Land Improvement Company, but they are working under private Acts. It is proposed that the Agricultural Mortgage Corporation will have also a right to work under the public Acts which have been passed to deal with credit for land improvements, and they will be able to use the resources of cheap money which they will be able to raise for this purpose.
We clearly cannot say anything about that. The first stage will be for Parliament to accept the principle, and then the banks must come together and put up to us the articles of association for the corporation. We cannot expect them to come to any decision as to the directorate at this stage.
It is proposed that the banks should have complete control. In the case of short term credits, there is no need for any new organisation to lend the necessary capital. It is a matter of altering the law so that agriculture may be in a position to mobilise its securities, and to borrow on its existing securities from the institutions and banks with which it now deals. At present, agriculture raises its short term capital partly from the banks, and partly from tradespeople. Banks are in the habit of financing the farmers partly by uncovered overdrafts, partly on the security of personal guarantors, and partly on the title-deeds of land and other assets, such as stocks and shares, and insurance policies. For the greater part, land is farmed by tenants, and they have no title-deeds which they can pledge, and many farmers find themselves limited in their security to their personal character, and to any life insurances, and so forth, which they can offer. Though the wealth of the agricultural industry in stock, in crops and in implements is very large, it is not now available as direct security to the banks for advances.
It is naturally difficult in this matter to make an accurate comparison with foreign countries, but the figures which we have obtained seem to show that the volume of short term credit, employed by the farmers in this country, and raised from banks, is much less than in the case of other great agricultural communities. Mr. Enfield, in the most valuable report which he prepared on this subject and which was published in our "Economic Series," has given various statistics on this matter, with a warning that it is very difficult to give an accurate comparison. The most interesting figure shows that in 1922 the gross value of our stock and crops was about £400,000,000 and the gross value of advances for trading purposes was just over £20,000,000, or only one-twentieth of these assets.
That is what I meant. In the United States of America the comparable figure of the bank advances in 1920 was one-sixth of the value of stock and crops; that is three times as much in the United States, in proportion to their agricultural output, as was the case in this country. Of course, this figure is supplemented by trade credit —credit from merchants, auctioneers, and dealers. This credit is rather clumsy and unscientific in its character. It consists largely in leaving bills unpaid for long periods. It is far from my thoughts to criticise the helpful action of the merchants in allowing the farmers the benefit of all this credit. In the absence of a better system, these tradespeople have undoubtedly performed a great and valuable service, but agriculture deserves to be financed in a scientific and modern way, and, after all, this tradesmen's credit comes ultimately from the banks. If the merchant under the present system is compelled to run an overdraft for the farmer's benefit, it is obvious that the farmer must pay the cost of the overdraft in the price of the commodity which he buys, and it is most unsatisfactory that the farmer should not know the cost of the credit he enjoys, because without that knowledge he cannot accurately measure how much short-term credit can possibly be employed in his industry.
We believe it is much better for the farmer to borrow direct from the bank. To do so, he must be enabled to borrow on the security of his stock-in-trade, to mobilise his credit on wealth in the making before it is fit for the market Part II of the Bill, therefore, enables farmers and agricultural co-operative societies to secure advances by creating an agricultural charge on their stock, crops, or other agricultural assets. We do not propose suddenly or violently to uproot the long-established system of tradesmen's credit. Therefore, we have been careful to include provision for protecting existing trading debts, with the object of preventing any danger of merchants feeling driven to secure their own position by pressing for payment.
No. We have tried to get it, and it is quite impossible. The figures vary very much, and it is so difficult to say what are the normal lags in payment and what are inordinately long periods of credit that I am afraid that any figure which I could give would be very misleading. Our system, therefore, is merely an alternative to the present method, and we certainly do not suggest that there should be any compulsion on a farmer to go to the bank and make an agricultural charge if he prefers to carry on with the system to which he is accustomed.
The proposals embodied in the Bill are the result of long negotiations. They have been considerably changed since I first discussed them more than two years ago, but in their final form they have been discussed with the banks, with the representatives of the various trading organisations, and with the farmers; and the National Farmers' Union write that they unhesitatingly say that, in their judgment, farmers ought to possess these facilities. Clause 5 defines what may be covered by a charge. The Bill does not prescribe the form of charge. That is left to be settled between the borrower and the bank. The remaining Clauses define the conditions of these proposed charges and lay down their legal relation to other liabilities. It is a matter of careful balance to avoid undue disturbance to the existing system and at the same time to furnish adequate security to the banks to enable them to take advantage of these new proposals. I am afraid that these Clauses raise some rather difficult legal points, and for that reason I have been fortunate enough to obtain the assistance of my learned friend the Attorney-General, who will be able to deal with these rather abstruse legal points. Under Clause 6 the farmer will be free to sell his property, subject to the charge, but he will be obliged to pay the proceeds of any sale into the bank in settlement of the debt, and if fraudulently he fails to do so, he will be liable to severe penalties. Clause 8 provides that the new charge will rank after rent, rates, and taxes.
I am very anxious that the right hon. Gentleman should not in his explanation skip Clause 7, which says:
An agricultural charge creating a floating charge shall have the like effect as if the charge had been created by a duly registered debenture issued by a company.
I should like to know exactly how that is going to work and whether there is to be the safeguard, in the case of the operations under this Bill, that applies to debentures of a company under Section 212 of the Companies Act.
The hon. Member knows that on certain events happening these charges become fixed charges. It may well be that this matter will need further definition on the Committee stage and further reference to other legislation, but I do not think that on Second Reading it would be satisfactory to the House that I should attempt to deal with these rather difficult legal questions. Under Clause 9 we propose that the memorandum of any charge in the prescribed form shall be registered at the Land Registry. It will be open to public inspection, but, the banks being the only lenders and the transactions being private as between them and their clients, we provide that the list must not be published in any newspapers. Clearly, if the farmer ran a risk of his indebtedness being publicly displayed, he would feel grave doubts about making use of the new system, and the agricultural charge would rapidly develop the stigma attaching to a bill of sale. Unlike a bill of sale, these charges do not affect the general public, nor do they affect the right of the farmer to sell, provided he pays in to the bank the money in reduction of the charge.
All parties—bankers, merchants, and farmers—have agreed that these provisions with regard to publication are reasonable, and I would say that the National Farmers' Union attach the greatest importance to this precaution against undue publication and the fear of the farmer that he might be pilloried. Indeed, I think I should not be overstating the case in saying that if we did not have this provision, the National Farmers' Union would probably take the view that it would not be worth passing this Part of the Bill at all.
Clause 12 makes provision against the danger, to which I have referred, that creditors already existing might press for payment owing to the fear that the banks might forestall their security in the case of their clients failing. We propose that there should be three years' protection for such trade creditors to allow the merchants to adjust themselves to the new system before the banks can exercise their full powers. I think I ought to make clear the position of the banks. No part of this Bill has been asked for by the banks. The long and short term proposals alike have been initiated solely on the responsibility of the Government, but the banks throughout have taken a public-spirited view, more especially in connection with the first Part of the Bill, where those participating are placing the whole of their great organisations at the disposal of the Land Mortgage Corporation.
I have now described, in broad outlines, the scheme, which we have based upon a careful and prolonged examination of the credit needs of the agricultural industry. It is intended to lay the foundation of an agricultural credit system on an adequate and up-to-date basis. It is not an emergency Measure being brought forward to relieve the present state of agricultural depression. This Bill does not touch, or profess to touch, the root causes of agricultural depression. It deals with an entirely different subject, and I want to make that clear, that we nowhere pretend that agricultural credits are going to be a remedy for agricultural depression; but, none the less, agricultural opinion, while recognising that credit cannot save a man who is already losing money, has unmistakably shown a conviction that the problem needs to be dealt with. Our critics outside the House and our friends inside the House have been equally impatient and active in pressing us to produce our scheme. This scheme is admittedly an experiment. Its further development and the amount of advantage which the farmers may take of it will depend upon factors which no one now can confidently forecast, but if, as I hope, it is successful in providing permanent machinery for long term credit and creating for that purpose a new channel by which savings can be made available to the agricultural industry through the medium of the money market, if we can enable the farmer to mobilise his stock in trade and secure his much needed working capital, the passage of the Bill will be amply justified.
I beg to move, to leave out from the word "That" to the end of the Question, and to add instead thereof the words:
this House, while sympathetic to all sound schemes for the encouragement of British agriculture, cannot assent to the Second Reading of a Bill which, in its financial provisions, involves further subsidy from the taxpayers without ascertaining, in terms of ordinary Income Tax return, the precise economic position of agriculturists, establishes unnecessary machinery for dealing with the problem of credit, enforces conditions which many of the most necessitous applicants would not be able to fulfil, and otherwise is quite inadequate for the objects which are in view.
I speak under rather difficult circumstances to-day because this Bill was published only a few days ago, and I think the right hon. Gentleman will admit that the details of it are so complicated and so technical, that it is a matter of extreme difficulty for any Member of the House, in the comparatively short time in which the terms of the Bill have been known, to form a really adequate judgment upon every part of it. I had hoped that the right hon. Gentleman the Member for Central Edinburgh (Mr. W. Graham) would have been here to address the House on the Amendment which stands in his name and my own on the Order Paper, and to deal, perhaps more technically than I can do, with the financial provisions of the Bill. May I say, at the outset, that we are very much obliged for the very full and detailed statement which the Minister has made in introducing his Motion for the Second Reading of this Bill? His statement has made certain matters a little clearer. I think we might well say that his statement to the House makes it quite clear that he has had a rather difficult two years in this matter.
The right hon. Gentleman said at the outset of his statement that the great banks met him from the very commencement with every desire to help him, but he indicated later on that the great bank presided over by such an eminent financial authority as the right hon. Mr. McKenna has not seen fit as yet to come into this scheme at all. I think the protracted nature of the negotiations—as shall hope to show in some detail later on—with the bankers, have raised a very large number of difficult and technical questions, as well, perhaps, as some general questions of policy. In fact we are inclined to think, after looking at the Bill and after listening to the Minister, in spite of his eulogies of the banks, that it is quite possible that the future name of this Bill will be not the Agricultural Credits Bill, but the Bankers' Protection Bill, for it seems to me that it is pretty certain that, whoever else loses under its arrangements, it will not be the banks. The need for agricultural credit is admitted in every part of the House. There is no division of opinion in any party in the House as to the need for the provision of a really sound system of agricultural credits, and I entirely agree with the Minister that agricultural credits are needed in order that the industry may be put upon a firm basis, not merely to deal with the temporary depression, but in order that the whole organisation of the industry may be put in a sound position.
So far as the party for which I am speaking are concerned, they have, in their agricultural policy, from the commencement advocated a sound system of agricultural credits but, so far as I have yet been able to examine the Bill, and in spite of the very earnest effort of the Minister this afternoon, I think that the structure of the Bill can hardly be said to achieve that object. First of all, I believe that the whole structure is far too complicated to ensure any sufficiently rapid and permanent improvement in the organisation of the industry. I believe that a simpler form of procedure could have been adopted. The next point I want to make is this: The Minister went to some pains to tell us that there was no question of subsidy in the scheme which is adumbrated in this Bill, but, as one listened carefully to the remainder of his speech, one could see all the time that a subsidy was actually to be made. Let hon. Members take, for example, the question of the administrative expenses. It is provided that £10,000 a year shall be spent for fen years. That is a direct subsidy of £100,000 during that period. [Interruption.] I do nơt complain. The Bill makes it clear that the provision for the underwriting of debentures will cost the Treasury £62,500, and it is perfectly plain that if you are to put up what the Minister called reserves, but what will be equal to the subscribed capital of the Agricultural Mortgage Corporation free of interest, then the State will contribute, during the period of 60 years referred to in the Bill, something like £2,000,000.
I think it is very difficult to arrive at that figure of £2,000,C00. Certainly, if you take all the interest and pile it up, it will come to about £14,000,000, but that is not the proper basis on which to approach it. It is quite true that the banks will receive in one way and another nearly £1,000,000, but it is not reasonable to take any particular period and assume that the interest which would have accrued during that period is to be taken as the measure of Government assistance. I think we can only measure this matter by taking the actual money which goes out from the Exchequer.
I am obliged for the attempted explanation of the right hon. Gentleman, but I am taking the right hon. Gentleman on his own speech, because he endeavoured to show to the House that he would be able to cheapen the money rate to the borrower because of the provision of these reserves at interest free, and that, in meeting the needs of borrowers, the figure of £32,500 a year would mean a saving of one-quarter per cent. Obviously, that £32,500 is to be the cost to the Treasury of putting money up year after year, so that I do not think that I have over-estimated in saying that in 60 years the cost to the State would be £2,000,000.
I am taking the figures upon the Minister's own statement. So that from the point of view of the various contributions that are to be made, I think it would be very difficult for the Government to suggest; that there is nothing in the way of a subsidy in this Bill. In fact, it is quite plain that a considerable grant is to be made—
Perhaps I did not make my point clear. I think we are differing only in regard to the use of a word. I would distinguish between subsidising the banks, which we are undoubtedly doing, and subsidising individuals, as we have often been asked to do. I do not think we would attempt to use State money to subsidise the individual borrower, but we would allow him to borrow at rates lower than the market offers to the banks.
That entirely agrees with my point of view, and with the statement that I made earlier, that the Bill will be known as "The Bankers' Protection Bill," because a subsidy is now admitted, although the subsidy is to be paid to the bank and not to the individual borrower. As I said before, it is plain that whoever else loses on this Bill, it will not be the banker, and I am glad to have confirmation of my point of view from the explanation given by the right hon. Gentleman.
The hon. Member will recognise that though we hope the banks will not lose, they cannot gain. They cannot make more than 5 per cent. on the paid-up capital they put into the concern. The hon. Member is well aware that banks have investments which would bring them in a far higher yield than that of 5 per cent.
I think it would be very valuable for the banks to have one certain investment guaranteed to bring in 5 per cent. I have no doubt, of course, that the great banking institutions have investments which bring them in more than 5 per cent., but it is very useful to the operations of a bank to have a fairly large sum invested which is guaranteed to bring in 5 per cent., because of the aid of a Government subsidy. I do not want to pick a quarrel on the subsidy, but I want to know exactly how the Government stand. I remember the White Paper of the Government in regard to their agricultural policy. They said that a subsidy was impossible. I do not want to go into all the details, but they practically said, in their White Paper policy, that they could not consider a subsidy for one moment. I remember a Debate that was opened last December by the hon. and gallant Member for Caithness (Sir A. Sinclair), and I remember the remarks that fell from the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) when the right hon. Gentleman opposite spoke about the subsidy. The right hon. Gentleman the Member for Carnarvon Boroughs said, "I am not afraid of subsidies." Speaking personally, I confess that generally I have no love for subsidies. We on this side of the House would say, however, that we are not afraid of subsidies in certain conditions, and those conditions are that the subsidy, if given by the State, will secure adequate control on behalf of the public, and that it must be proved before it is given that it will secure the object for which it is voted, it is very largely upon that basis that we shall have to come to some judgment of the proposals that are indicated in this Bill.
May I say that it appears to me, in regard to the report to which the right hon. Gentleman referred—the report of Mir. Enfield upon agricultural credits, which he justly eulogised—that in considering that report the right hon. Gentleman does not appear to have adopted in this Bill all the suggestions then made I It is true that in this Bill there is some small provision that agricultural co-operative societies shall be able to obtain advances on floating charge, but there is in the Bill really nothing of any substance which will help to develop what we regard as vital—really co-operative institutions in regard to the finance of the agricultural industry, although it is quite clear to me, from my reading of that report, that although very strong support was given in it to making rather more use of the joint stock banks than has been done in the past, the report also stated that there were very strong arguments to be adduced in favour of a proper co-operative development.
I have another word of criticism which I shall go into in more detail later on. It is this: I think the proposals made in the Bill are not likely to afford assistance to that section of the agricultural industry which is most obviously in need of it. I seem to sense a fellow-feeling on that point from the hon. Member who, from behind the Minister, just now twice interrupted him. May I come to the first part of the Bill, which contains proposals to set up an Agricultural Mortgage Loan Company to deal with long- term credits? I should like to have much further time to go into it, and I hope that, between now and the Committee stage, we shall have opportunities of giving more technical consideration to the matter than we have yet been able to do; but at first sight it appears to be a clumsy and complicated procedure to secure long-term credits. The first thing I would say is that the reply of the Minister just now to the hon. and gallant Member for Pembroke (Major Price) makes it clear that, although this considerable amount of State aid is to be given to the agricultural mortgage corporation, there is to be no representation at all of the State on the board of directors who will govern it. I regret very much that the right hon. Gentleman has made that public statement today, before he has concluded his final negotiations with the banks on the articles of association and the general structure of the company. It certainly raises a question of cardinal importance to people who are voting public money, and there is no question about the fact of the voting of the money, because we are going to deal with the Money Resolution tonight.
It seems to me a very serious point of criticism of this Bill that this money is to be voted, and that we are to have no actual public representation upon this board of directors. Although the Bill has been made public only a comparatively short time, I have heard a considerable amount of criticism of the proposal to make the debentures trustee securities. I can understand that if the Minister wants to see his scheme successful, he wants to attract the largest volume of subscriptions to the issue of these debentures, and to make the issue a trustee security, because of the Government's backing, will, no doubt, facilitate that course, but surely when we are considering these matters we must be fully seized of the effect of a step of this kind on the general credit of the country. The creation of a still further new class of trustee securities will have a considerable effect upon our public credit position when we go on to the market for the conversion of existing debt. It must not be forgotten that this is only one of a, series of Measures by the present Government which, in fact, continually increase the contingent lia- bility of the State. We had the beet-sugar subsidy. I am not going to criticise it this afternoon, because it would be out of order to do so. I only want to deal with its effect. It is evident from the repeated visits which Ministers have had to make to the House in order to get new Votes, that when we voted that Measure, first of all, we were not really in the position of being able to estimate accurately what would be the contingent liability of the State.
Take the question of the Budget proposals for dealing with the relief of industry. We are going to create a very large contingent liability, it seems to me, with regard to the relief of rates. I agree that in the case of agriculture it is only going to be in relation to one-fourth of the assessable value, but that is because we have already given the other three-fourths. There is still the increase in the contingent liability of the State. Now we propose, at any rate as a first step, a scheme under which another £5,000,000 of debentures are to be earmarked as trustee securities with the backing of a State guarantee. [HON. MEMBERS: "No!"] I agree that the guarantee is not directly behind the debentures, but you can only make them trustee securities because of the Government assistance.
No. May I make it clear. Their claim to be trustee securities is that they are on all fours with mortgages. Mortgages are trustee securities, provided they do not represent more than 66 per cent. of the value of the land, and there is no conflict in principle between accepting mortgages up to the same proportion of the value of the land, and accepting the new debentures with exactly the same security behind them. The Government guarantee does not enter into it in any shape or form.
It is a public scheme for a new issue of trustee securities. It is a scheme which you are placing before the public. There is to be an additional issue, on the general market, of trustee securities and the greater the issue of these trustee securities, the greater the difficulty we will have in regard to general conversion issues. I do not think I can put it more fairly than that. As to the particular point of long term credits, I should be
glad to hear from the Minister whether he thinks the banks hold the view that they will be able to work the scheme successfully, and that it will do the work which the Government claim it will do —that is relieve the people who are at present overpressed by burdens in respect of existing holdings, or assist the people who desire to become owner-occupiers in acquiring their holdings. I notice a comment in the "Times" City Notes of 8th May as follows:
Generally speaking, the banks do not think that the scheme will go very far towards solving the problem of the agriculturist though it should make it possible for the farmer to obtain long-term credits at more favourable rates of interest.
What is the view expressed to the Minister by the banks? Apparently they have expressed the view, just stated to the City correspondent of the "Times." I hope I am not putting presumption too far, but I think these correspondents are, usually, fairly well informed, and apparently the bankers have expressed their view that the scheme will not go very far towards solving the problem.
I made it clear in my explanation of the Bill that we do not think it is going to solve the problem of agricultural depression, and I take it that that is what is meant by "the problem of the agriculturist." But, as the reference which the hon. Member has just read out says on the authority of the banks, we think it will help the farmer to get cheap long-term credits on a new basis, and reducible mortgages, which are not open to him at the present time.
A little cheaper than they have been. Perhaps that description would meet the case. This correspondent refers to "the problem of the agriculturist," and I take it the problem is to get sufficient credit to put the industry on a firm basis. [HON. MEMBERS: "Prices!"] I will deal with that point in a few moments. In my view a much more simple method would have been an adequate effort on the part of the Government to stimulate the formation of co-operative credit societies under State supervision, if desired, and with State assistance where such was found to be necessary. The Bill proposes, by means of grants, which are to be made to this mortgage loan company, to give what amounts to a very considerable subsidy. I submit that the Government do not appear to have given sufficient consideration to the conditions existing to-day. In view of the financial and industrial position generally, there is a danger of our public credit being prejudiced, to some extent, by the contingent liability to which. I have already referred.
Nor does the Bill provide for any steps being taken to ascertain the actual financial position of the farmers who are to be granted assistance, and I should like to say something in detail on this point. There is no doubt about the depressed condition of agriculture and the very serious experience through which the majority—shall I say?—of our farmers are passing. But I still think a considerable number of farmers in the country are doing fairly well. Of course, much may depend on particular circumstances, such as proximity to a specially favourable market, like a seaside town or the character of the holding. The condition of farmers is also accounted for, sometimes, no doubt, by their original capital position, and their ability to deal directly with the banks for credit. But we have no real information as to how this scheme will work as between the two classes of farmers, the class which is quite well off, and the great majority who are not nearly as well off, if they are not actually in dire distress. We submit from this side that a scheme of this kind ought not to be advanced in such a form until we have come to the reform of the Income Tax assessment. The Royal Commission in 1920 after taking a considerable volume of evidence reported quite clearly and unmistakeably that the law should be amended so as to transfer the assessment of Income Tax of farmers from Schedule B to Schedule D. In 1920, however, all that was done as the result of that report was to change the assessment so that, while keeping it under Schedule B,, it only altered the incidence from one-third of the annual rent to the basis of the whole of the year's rent. I ask hon. Members to read for themselves the recommendations of the Royal Commission on Income Tax on that point and to note how strong is the report in that direction. We ought not to be voting public money which can be used to help those who do not need it and yet will often not be available to those who most need it.
May I remind my hon. Friend that the idea of long term credits is to facilitate land purchase and not to assist agriculture directly '? I gather from what he says that he is giving the impression that we on this side are endorsing the process of facilitating the speedy transformation of the present farmer tenant into an owner of land, and I do not think we are.
Reference was made just now to the question of prices in connection with the recovery of agriculture. We want to complain to the Government that in the introduction of a scheme of this kind there is, apparently, no effort to secure that better prices shall be obtained by the farmers. In other words, our point is that if you are going to introduce a widespread scheme of this kind you ought to introduce at the same time something which will facilitate the reorganisation of the production and marketing of agricultural produce, so that we can move more rapidly towards something like a stabilisation of prices. As long as the present chaotic conditions of marketing prevail, then you may have your credit scheme and you may advance large sums of money on long-term credits, either for existing holdings or to enable occupiers to buy holdings, but, with the violent fluctuations of price that take place, there will be no permanent remedy for the agricultural industry as such. We regret the lack of any concrete suggestion on that point to-day.
The Bill, in our judgment, does practically nothing to assist the people who are most urgently in need. They are the farmers who purchased their holdings during the period of enhanced prices which prevailed during the currency of the Corn Production Act. I want to explain how I think the Measure is likely to work, and why I am confirmed in my description of it as a Bankers' Protection Bill. If the Minister turns to Clause 2, Sub-section (3 b), he will observe that conditions are to be laid down for the regulation of loans. It seems to me that what will happen to the people who to-day are in the hands of the banks and who are the most hardly pressed people will be this. The banks will say to them, "Now we have a new scheme, and you already have a very large advance from us, based upon the purchase' price of your farm in 1919 or 1920. We think it necessary that we should have a re-valuation." I take, for example, a farm for which £6,000 was paid and against which the bank advanced £4,000. If we take present values, it may be said that a re-valuation now would not place the capital value of such a farm at more than £4,000.
Then, in connection with any new proposal for a loan they would be bound under this Measure to advance only two-thirds of the new valuation. The Attorney-General seems to dissent from that view. Of course you may call this a mortgage corporation but, in fact, with these long term credits, it is acting very largely as a land bank. That bank will re-value the farm and will say, "We will only advance you, under the Act, two-thirds of the revaluation and in regard to the advance already made, there is a considerable balance of your loan unsecured."
I dare say they do not do so at the present time out of consideration and because there is not, at present, actual provision made in an Act of Parliament of the kind I am about to indicate. I would like the attention of the Minister of Agriculture to this point. If there is a revaluation and a reduced amount is advanced under this Measure, on the new valuation the banker will say to the farmer "There is still a large portion of your original account outstanding. Now we are going to ask you, under this Act, to secure that as a floating charge on other assets." Has the Minister considered that point?
Mr. ROY WILSON:
Is not the hon. Member confusing two things? The bank, in the first place, would be one of the joint stock banks which had given this advance of £4,000. The debtor of that bank need not go to this agricultural loan institution unless he likes and therefore it is not a question of the bank being asked for these advances.
How can you avoid the fact that when this scheme comes into operation the banker will be in a position to say to the farmer, "You have an overdraft in this matter which we think now, on the new value of your land, is not fully secured. Therefore that overdraft has to be called in. There are now new facilities to be obtained from the Agricultural Mortgage Corporation. Therefore go to the Agricultural Mortgage Corporation." Then the overdraft is called in and the Agricultural Mortgage Corporation will not place the value on that land, which was placed upon it by the bank in 1919–1920. Of course not. That is not the present value and when the much smaller ratio has been advanced from the new corporation and the man goes to the bank to be financed for the rest of the credit he needs, they will say, "Oh, yes. We will finance you if you give us a charge on the rest of the assets, provided for in the second part of the Act." Anyone who thinks over the position must see that that is the kind of thing most likely to happen. The bankers themselves will be the first to say that they are not in the banking business because they are philanthropists, nor can anyone say that bankers to-day feel sure about all their outstanding commitments in connection with the farming industry or that they will not welcome an opportunity of putting themselves in a more secure position by the legislative facilities afforded in a Measure of this kind? In a case like that, the very person who is most in need of help, will in fact get no further facilities at all for credit. The effect of the Measure in most cases will be to dry up the credit that the farmer was already getting. Anybody who has given thought to the matter must see that that is a very great danger. If it is not so, will the Minister tell us that there is a guarantee from the banks to the Government that that course will not be adopted?
Since the hon. Member asks me that question, I will say that at our conference with the banks, the merchants and the National Farmers.Union, I put it straight to the banks. I said that fears had been expressed by the merchants that the banks might use the agricultural charge, not to issue further credits but to secure existing credits which are now held to be insufficiently secured. I asked if that was in the minds of the bankers and the idea was ridiculed by the bankers. They said there was far too much competition among the banks for any such thing to be possible and that they certainly would not dream of administering this new power except for the purpose of giving more money to the farmer. It was the opinion of the banks in that conference that the agricultural charge would make available to the farmer a larger volume of credit than he now enjoys.
That does not give us any guarantee at all. I should have been much more satisfied if there had been a firm agreement, with an actual letter to the Minister, stating that they did not propose to take any such procedure as I have suggested. I cannot for a moment regard the reply of the Minister as being satisfactory. It is obvious that the first part of the Bill will operate in a very large degree, if it operates at all, in favour of the landlord who wants to effect capital improvements to land. We join issue with the right hon. Gentleman on the statement he made that the landlord and tenant system is the best possible system that could obtain in this country. He knows quite well that that is not our view. The condition of agriculture in this country to-day, although we agree that it is depressed in some other countries as well, is pretty bad in spite of the excellent arrangements which the right hon. Gentleman says exists for the conduct of the industry upon the landlord and tenant system. It is perfectly plain that when advances are made at favourable rates for land improvement, with the help of the Government, that the capital value of the land will increase, and if the landlord and tenant system is maintained there is no guarantee at all that rents will not be raised against the farmers, and, on the other hand, it will also mean the raising of the capital value at a time when the landlord is going to sell. The Minister did not seem to shut that out of his mind altogether; because he said that if the farmers could not be assisted towards purchase they were always in danger of having the farms sold over their heads. We know that it has happened again and again in the past. If this Bill is used by the landlords as we anticipate it will be used they will be put in a favourable position; and if that be so, then the State ought to have some means of taking back to itself the improvement in the capital value of the land. There is, however, no provision for that being done.
I would like to say a word about another Clause which I mentioned while the Minister was speaking, but about which he is unable to give me an answer. Clause 7 says:
An agricultural charge creating a floating charge shall have the like effect as if the charge had been created by a duly registered debenture issued by a company.
I understand that the Attorney-General will reply later to points of this character, and I would like him to give his attention to Section 212 of the Companies Act, 1908, and let us know exactly whether it is intended that there shall be equal protection to creditors under this Bill as is afforded by the Companies Act. Section 212 says:
Where a company is being wound up, a floating charge on the undertaking or property of the company created within three months of the commencement of the winding up shall, unless it is proved that the company immediately after the creation of the charge was solvent, be invalid, except to the amount of any cash paid to the company at the time of or subsequently to the creation of, and in consideration for, the charge.
It seems to me that under this Bill you are going to create a floating charge which will have the same effect as a debenture issued by a company; in the event of the person going into liquidation there is no protection at all to creditors, except those to whom the debenture has been secured. That is a point of serious criticism from the point of view of the existing creditors. Then I would like to say a word about Clause 12. The Minister attached some importance to it, and I have no doubt
the Clause has been a subject of considerable negotiation between himself and the merchants who supply the needs of the agricultural industry. Clause 12 practically gives priority to the existing trade creditors over the banks who are dealing with short term credits over a period of three years. I suggest this Clause is likely to make this part of the Bill largely inoperative. I am not at all sure that it will not be worse than that. I asked the Minister during his speech whether he could give me anything like an official estimate of the volume of credit outstanding in the agricultural industry from private traders. He gave us the figure of the bank advances as something like £20,000,000 or £25,000,000. I think the Enfield Report said something like £25,000,000 in 1926. The Enfield Report was issued in 1926, and since then we have had two bad harvests, and I should say that it is not unreasonable to estimate that the amount of credit outstanding in the agricultural industry, in addition to bank advances of £25,000,000, would be something approaching £100,000,000. What is likely to be the effect of this Bill if it becomes an Act? I suggest that the other people who are creditors of the farmers to the extent of this £100,000,000 will say, "There is an Act which is going to change the basis of the credit system. We are given three years in which to get the money. If we do not get it before the end of the three years, we are going to become only second claimants behind the banks who are given definite security." The merchants will then say, "We must press for the money now." Hundreds of farmers will be forced into liquidation. Those interested in agriculture ought to examine the Bill from that point of view. I should think it is a point of view which has not yet been considered by the Minister. It shows the strength of the case put by Mr. Enfield in his 1926 Report when he suggested that a period of severe depression was the least opportune time to introduce a new credit system. This Bill is not intended, as the Minister said, to cure depression; it is a move to set the industry on a proper basis. It is quite probable, in view of the bad harvests since 1926, and that the industry was already in a bad condition, the virtual statement to the merchants, "You have three years in which to get your money and no longer,
and after that you will have only a second preference to the bankers," will mean that there will be a wholesale closing in upon people in debt and a very large number of people forced into bankruptcy. From that point of view the Bill appears to be entirely unsatisfactory.
The next point I want to make is that where other countries have been successful in organising a sound agricultural credit system it has been largely for the reasons stated in the Enfield Report. There has been adequate machinery for mobilising the productive wealth of the industry upon which the credit can be advanced. What effective steps have been taken in this country to have the productive wealth of the agricultural industry so mobilised that credit can be effectively issued upon it? Practically no progress has been made in that direction. During the term of the Labour Government in 1924 there was an Empire Co-operative Conference at Wembley. The right hon. Gentleman the Member for North Norfolk (Mr. Buxton), who was then Minister of Agriculture, was in the chair when a resolution was carried unanimously by representatives of the agricultural industry from all over the Empire stating that it was essential if these things were to be done that there must be a development of co-operation amongst farmers themselves. Since that date, the Horace Plunkett Foundation has been engaged upon research throughout the world, and it is perfectly plain to me, as a result of their researches, that we are the only great civilised country in the world in which substantial progress has not been made in agricultural co-operation. While every one of the countries referred to in their reports has made substantial progress, in this country, although there may be bright spots here and there, and I do not want to understate the case, I am not at all sure that in the last four years we have not gone back in the matter of agricultural co-operation. In my judgment the National Farmers' Union, which has apparently given the Minister its blessing upon this Bill, if it has not actively discouraged, has certainly not shown any very active sympathy towards the development of co-operation in agriculture.
I have kept the House longer than I desired to do, but I wanted to say a word on that point and perhaps more will have to be said on another occasion, because it is perfectly plain from the experience gathered by those who have been engaged in research that it would have been better for the Government to move along co-operative lines—with State assistance, if necessary, to give it a start —and to develop amongst agriculturists here the same spirit of co-operation and of effort which upon the Continent has made such an enormous success of the Rauffeisen Credit Banks of those countries. I believe, first, that time will prove that this Bill will not provide the increased credit which the Minister hopes it will. Secondly, I believe that it will not help those who are most in need of help, those who bought their farms at peak prices, and that it makes no provision for public control of money voted by this House. It is not likely to be of real assistance to those who want to become occupying owners. It is introduced in such a way that it may bring an immediate financial threat to those who are at present under the burden of private merchants' credit. Though we welcome any sound proposal for assisting agricultural credits in this country, we very much regret to say that we do not think this is the best kind of scheme or one worthy of the fullest support.
I beg to second the Amendment.
In moving the Second Reading of this Bill the Minister of Agriculture said he had been discussing this question with the banks for more than two years. That reminded me of the Speech from the Throne in 1926, when the Government suggested that credit facilities were under discussion and were likely to be provided at an early date. When I reminded the right hon. Gentleman of that during this year he rather deprecated the idea that this matter had been under discussion for so long.
Oh, no. The hon. Member is mistaken. I perfectly well remember that this was one of the very first subjects I took up when I went to the Ministry, and I would remind the hon. Member that when the Speech was made from the Throne at the beginning of 1926 we had no means of foreseeing the trade stoppage, which was the definite ground on which the banks advised us that it would not be advisable in those' circumstances to go on with the examination of the question or to anticipate an early introduction of the scheme.
The banks did not refuse. The banks had gone a long way towards agreeing, but we were advised by the banks during that stoppage that it was hopeless then to attempt to work out the basis for a permanent scheme of agricultural credits. They advised us that for a very long period after that stoppage the money market would be so disturbed that it would be launching the scheme with an impossible handicap to attempt to legislate under those conditions.
Which in no way deprives me of my point of view, that had it not been for the refusal of the banks, prior to the introduction of the King's Speech in 1926, credit facilities on the lines of this Bill would have been made available. My point is not that 1926 was less hopeful than 1925, or that 1928 is more appropriate than 1927, but that it has taken the right hon. Gentleman and all his colleagues more than two years, and a gift of approximately £2,400,000, to persuade the banks even now to take part in this credit scheme. The right hon. Gentleman interposed when my hon. Friend the Member for the Hillsborough Division (Mr. A. V. Alexander) made the statement that this was a subsidy of approximately £2,000,000 to the agricultural industry. If he takes the bare rate of interest on the £750,000 at 5 per cent. for 60 years, without compound interest at all, plus 10,000 per annum for 10 years, plus E62,000 for underwriting, he will find that the actual subsidy, in terms of hard cash, is over 22,400,000. Whether it seems an extraordinary figure or not, there it is, and I do not think he will he able to refute it. Like my hon. Friend, I do not object to a subsidy in certain circumstances. What I am suggesting, however, is that slowly and surely, over a period of two years, the right hon. Gentleman has been persuaded by the banks to make such a financial contribution as would induce them to come into the scheme.
The right hon. Gentleman said that the landlord and tenant system in this country.was the best. How does he reconcile that statement with his persistent endeavour to increase the number of owner occupiers. If the landlord and tenant system is the best, why try to create more owner occupiers at the expense of the State? The right hon. Gentleman cannot have it both ways. He laid particular stress on the wonderful Report issued by Mr. Enfield. I agree that it is a remarkable document, and I would commend it to every Member of the House and to all those outside who are interested in agriculture. But may I ask the right hon. Gentleman why he and his Department have been so anxious to give effect to the recommendations of the Enfield Report of 1926 relating to credits, while at the same time refusing to consider the Enfield Report of 1925 relating to the marketing of agricultural produce and the stabilisation of prices, which alone could have made the Enfield Report of 1926 a real, practical, living possibility and a real support to the agricultural industry? He has welcomed the Report on credit facilities, but, apparently, has put into the background the Report upon stabilisation, which alone could make Part II of this Bill workable. On page 64 of that Report, Mr. Enfield states:
Credit can only play its part in the economy of the farm efficiently when its functions are fully recognised and when its uses are adequately measured. The problem of agricultural credit in its wider aspect cannot he solved by machinery alone; the machine will always need a high degree of skill in its use. Like other productive industries, agriculture requires not only a scientific but an economic technique.
He also quotes Mr. J. A. Hobson on the question of the credit system in this or any other country:
The financial basis of the whole credit system is the estimate of earning capacity, the ability of the actual business apparatus to market goods at such a rate and at such a margin over cost as wilt enable a profit to be made.
I would like to ask the right hon. Gentleman whether before he introduced this Bill he paid any attention to the exposition of the subject of credits which I have just read. Does the right hon. Gentleman feel that, with the present fluctuation in prices, and the speculative business in which farmers are engaged, one out of every 50 farmers can guarantee that the ultimate price will provide the means to repay the interest on their credits and leave an actual profit? Mr. Enfield states definitely in his Report that the basis of all sound credit schemes must be that the producer or the farmer can so estimate the value of his produce, or the ultimate price, that the use of credit is going to be useful to him. I suggest that, desirable as new credit facilities may be, unless they are coupled with a definite co-ordinated marketing system where the ultimate price can be estimated, no farmer could, under Clause 2 of this Bill, feel safe in accepting the credit facilities determined under Part II of the Bill. We feel that the permanent agricultural problem and not a period of depression, is being dealt with in the wrong way. If the Government have £2,000,000 to spare to help agriculture to place itself on a scientific basis, they would do better by spending the money in organising a more perfect marketing scheme, and until that takes place I do not see how this credit scheme is going permanently to help the agricultural industry.
With regard to the first part of the Bill, we do not think that huge financial subsidies should be granted to any industry without some guarantee to the nation either that such a procedure is warranted by the economic condition of the industry, or unless or until there is a definite guarantee that a proper marketing scheme is to be undertaken. The Labour party do not think that Part I of this Bill is going to have the effect desired by the Minister of Agriculture. First of all, the person most in need of credit facilities is at the present time so far involved with banks or merchants, or with both, that not a penny will be available to that individual under the terms of this Bill; and, as Mr. Enfield writes, the other section of the farming community can obtain terms with their banks or accommodation on terms equal to those offered under this Bill. The result will be that the only party to whom this Bill will prove advantageous will be the person who never gave the serious side of agriculture any consideration but wants to become an owner-occupier. This Bill is going to create an opportunity for certain persons to become owner-occupiers. I know the Minister of Agriculture does not agree with that argument, and he contends that the landlord and tenant system is the best. From the point of view of credit facilities it seems to me that this Bill will fail in its purpose, and the persons most in need of assistance will not obtain any advantage from the Bill.
I suggest that the Labour party policy, either with regard to credit, the ownership of land, or finance, would be superior to the scheme of this Bill. The Minister of Agriculture has often said that we have no recommendations to make. I know the right hon. Gentleman has behind him Mr. Enfield, and when one refers to the Labour party agricultural policy as affecting credits, we say there that the nation should make up its mind between long and short-term credits, and there should be a special loan fund administered by the Ministry of Agriculture through the county agricultural committees. Mr. Enfield argues against that policy on account of publicity, but Clause 10 would compel all agricultural charges under Part II to be registered, and that is valuable information for any person who cares to pay the price of examining it. The argument about publicity does not hold good. The county agricultural committee, which has some knowledge of agriculture and the applicants for credit facilities, would meet applicants fairly and sympathetically, and I am convinced that the experience gained would enable the Minister of Agriculture, working through the agricultural committees, to provide credit facilities for farmers without that publicity which has been referred to.
We think that short and long term credit facilities could be supplied without the hybrid body which is to be established under the Bill. I do not think short term credit facilities ought to be used to bolster up the present obsolete system of farming and marketing. Those are principles by which we are prepared to stand. We feel that this Bill is one, of many which the Government have introduced, which is not likely to be of any permanent good to the agricultural industry. More credit is required in the agricultural industry, but the reason why that credit has not been forthcoming is that the farmers have no guarantee that their income is going to provide means by which the interest on the credit can be paid. In the past the farmers have dealt with banks, merchants, dealers and so forth, and in this way they have involved themselves in an almost infinite variety of obligations. The difficulty of the Minister of Agriculture and the nation at this moment is to provide ways and means whereby the farmers can escape from the obligations into which they have entered over a long period of years. We want to divert the farmer from the merchant, the dealer and the auctioneer, but we do not want to drive him to some other authority equally vicious in his treatment of farmers.
Probably the banks would be the best authority. I am convinced that if the merchant, who has got the farmer entirely in his power, gives him credit on the understanding that all the produce is to be sold hack to the merchant at the merchant's price and at such time as the merchant thinks fit—if we are not going to free the farmer from such individuals they will, as a result of Clause 12, take the earliest possible opportunity of demanding the £100,000,000, and the inevitable result to the farming community will be disastrous and will send thousands of farmers into the bankruptcy court. I am sure the Minister of Agriculture would not like to see that occur. While we do not feel that this Bill is going to have the desired effect, we do feel that it will ultimately prove disastrous to the farmers unless it is greatly improved during the Committee stage. I feel that the principle of the Bill as a whole is bad. It gives a financial subsidy without guarantees to the nation, and that is a thing which on this side of the House we are not prepared to support. We do not think that the farmers who need credit facilities most will be able to obtain them under the terms of this Bill; and under Part II of the Bill we feel the danger of disaster is greater than hopes of any real benefit to the farmers.
I should like to compliment the Minister of Agriculture upon two things. In the first place upon the two speeches which we have just heard attacking this Bill, because if they represent the most damaging criticism against this Measure, the right hon. Gentleman has succeeded beyond his wildest dreams in producing a Bill which will meet with general acceptance. Secondly, I should like to tell my right hon. Friend what I think is really a substantial achievement, and that is the ingenuity with which he has contrived to arrange a financial scheme whereby so relatively a small State contribution will have so large an effect upon the initiation of a new system of credit. The hon. Member for the Don Valley (Mr. T. Williams) said he thought the principles underlying this Bill were wrong. I should like to say straightaway, as a farmer, that I think the principles of this Bill are right. No one thinks that a Bill of this kind, or any Bill which can be introduced dealing with agriculture is going to relieve the farmer of all his difficulties, or is going to put his balance sheet into a position in which it will show a profit. I am convinced that one of the advantages of agriculture in the past has been a system of long-term credits under which, so long as the annual or half-yearly instalments were duly paid, the farmer was under no risk in regard to his borrowing or of having his loan called in, or of having his rate of interest increased. That was a system under which the capital amount of the loan outstanding diminished year by year as provided for under this Bill.
The second thing that was badly needed was relatively easy access to short-term credit—in other words, working capital—at rates of interest which the farmer understood. Let me take the long-term credit first. So far as regards long-term credit for purchasers, it is not a question of promoting a Measure like this to encourage the creation of occupying owners, or to promote the purchase by individual farmers of land which they have occupied as tenants; it is merely a matter of facilitating and cheapening the borrowing of money by a man who has bought, or must buy, and, giving him a better chance of getting over that transaction without financial difficulties than he has had in the past. At present, long-term credit is quite foreign to our English banking system. The banks have done a very great deal for agriculture, but it was quite outside their normal business to lend money repayable by gradual instalments over a long period. They never have done it; it would upset their system; and it has, therefore, been necessary to form a new organisation. It is not the first organisation that Parliament has set up for that purpose. As my right hon. Friend mentioned, there are already two statutory companies doing this very thing in a small way, and I am going presently to say a word or two about the work of those companies, because it has a very distinct bearing upon the problem that is in front of the new corporation which will be set up under this Bill. Before I refer to that, I want to deal with a point which has been raised by both of the speakers from the opposite benches, who have suggested that this Bill, so far as long-term credit for improvements is concerned, is merely a device to help the landowner at the expense of the tenant. I cannot follow their argument, but—
I do not think that the hon. and gallant Gentleman can refer to any statement of mine in which I said that the Bill was designed to help the landlord against the tenant.
I owe the hon. Member an apology. It was the hon. Member for Hillsborough (Mr. A. V. Alexander) who said that, and one of his colleagues, I think, in an interruption suggested it. I must apologise to the hon. Member for the Don Valley. At any rate, it has been suggested twice from the benches opposite that this was a device to help the landlord. Let me tell the House what happens now under the Improvement of Lands Act. The common practice is for the tenant to come to his landlord and say that he wants some new buildings, or he wants a new cowshed to bring his buildings within the requirements of the Milk and Dairies Order, or he wants a Dutch barn, or a silo, or something of that kind, and he asks the landlord, will he put it up for him? The landlord says, "I am perfectly willing to put it up for you if I can borrow the money under the Improvement of Lands Act. I will provide the security by charging my property for the loan, and I will pay the increased Schedule 14 assessment to Income Tax, while you who will have the use of the improvement for which you ask, will pay the loan charge." That is being done every day scores of applications for such loans are passing through my hands in the Lands improvement Company's office every week; and, although it is true that the tenant is paying the loan charge, it is not true to suggest that he is paying for the benefit of the landlord. The landlord, on the other hand, has charged his property in order to provide security for the erection of a new building or improvement which the tenant wants. That is working exceedingly well, and I very much welcome the inclusion of land improvements within this Bill, because anything that will tend to cheapen the rate at which money can be lent for these improvements will facilitate a system which I believe to be thoroughly useful and to have no serious drawbacks. As far as I can estimate, it should be possible, as a result of this Bill, for the rate of interest at which money can be loaned for improvements to be reduced by something like 10s. per cent. It may not, perhaps, be quite as much as that, but I hope and think that it will be as much as Ms. per cent., compared with the interest rate at which money is obtainable for this purpose to-day.
The hon. Member for Hillsborough gave an extraordinarily tangled account, or interpretation, of the effect of Part I of this Bill. So far as I can understand it, and I think my interpretation is correct, the Government are trying to ensure that this new corporation, which is being formed for this purpose of longterm agricultural credit, shall start off without the impediments with which a new corporation would be faced, and for which they would have to charge in the form of an extra rate of interest to their borrowers, if they had not their reserve fund and so on built up for them. The result of the Government underwriting the first block of £5,000,000 of debenture; or bonds to be issued will be, not that the corporation will itself get the benefit, but that it will get the whole amount of its first issue. If it issues, say, 5 per cent. bonds at par, it will get the whole £100 available for lending to the farmer. But for the Government's assistance, it would only get £97 or £97 10s., or something like that, out of the £100, and, in order to be able to redeem the bonds or debentures at maturity, 50 or 60 years hence, it would have to add slightly to the rates of interest, in order to build up a fund to cover the difference between the 97 per cent. which it receives in cash and the 100 per cent. which is the face value, and, presumably, the figure at which redemption would take place.
It is a great advantage to the borrower that his loan should not be saddled with that extra charge in order to make up the premium of 2 or 3 per cent. In the same way, the Government grant of £10,000 a year for 10 years should suffice to cover the unremunerative expenses of administration which are inevitable before a new organisation gets on to the most economical lines, and that, also, will avoid any necessity for putting an extra charge upon the borrower in order to cover what I might call the inevitable errors of a new administration. Exactly the same argument applies to the reserve. A new lending corporation would be bound to take steps to build up a reserve fund rapidly, and that would mean a quite substantial addition to the annual charge made for loans, in order to create that fund to provide against default. What the Government have done is to do away with the necessity of making that extra charge for a reserve fund, by themselves opening the reserve fund at the commencement of the undertaking. I think I have interpreted my right hon. Friend's intentions correctly, and I think that, by so doing, he has, as I said before, done more to start the new credit organisation on a sound basis than could have been done by any other use to which he could have put so relatively small a sum as it is proposed to provide.
Now may I say a word or two about the short-term credit which is dealt with in Part II of the Bill? The hon. Member for Hillsborough was very critical of this part of the Bill, because he fears two things. One is that it will lead to the existing trade creditors of the farmer putting the screw on and producing a great deal of trouble and bankruptcy among farmer borrowers; and the second is that he thinks the banks will take advantage of this new form of charge in order to get additional cover for their overdrafts. Surely, both of those arguments lose sight of the existing position of the farmer with regard to trade credit. No one can form an opinion as to what is the aggregate of the debts of farmers to tradesmen. I very much doubt whether it amounts to the £100,000,000 suggested by the hon. Member for Hills- borough, but, even if it does, that figure does not alarm me at all. Anyone who has studied the official Return of Agricultural Output, which was made, I think, about two years ago, will recollect that it was estimated there that the production of new wealth each year on our farms, in the shape of crops, flocks, herds and so on, amounts to a figure which is put at £200,000,000. To that must be added a certain amount of movable property which is not new wealth, such as machinery, vehicles, tools and things of that kind, all of which is chargeable under Part II of this Bill. Therefore, it appears that there is at least £200,000,000 worth of security available for loans of this kind.
The loans from tradesmen, which take the form of extended credit, or leaving bills unpaid, as my right hon. Friend expressed it, are, surely, a very undesirable form of credit. The farmer very seldom knows what rate of interest he is paying, he has to tie up himself and his crops absolutely in the hands of the man from whom he has bought his manures, his seeds, or other requirements, and in any case the amount of credit that he gets from the tradesman is always limited to the value of the goods which that particular tradesman has supplied. In the production of that £200,000,000 of new wealth summer by summer, the seeds, manures and things of that kind, which the farmer buys from the tradesman, and for which he gets extended credit, form only a relatively small part of the expenditure in producing those crops, and so on. This new form of charge will, as I understand it, enable the farmer to get a credit which will not only cover the purchase of his manures and seeds and so on, but his expenditure on labour. It will mean that, as the new wealth and the new crops come into being, so will his borrowing capacity increase, which is what is desired. Anyone who has had any experience of practical farming knows how frequently it happens that a crop is spoilt or, at least, is much less satisfactory than it might be, merely because the farmer in the later stages of its growth runs short of money. We all know the occasion when the crop is backward, when an extra dressing of nitrate of soda or sulphate of ammonia will just get it going again, and when, in a wet summer, a few extra hands engaged in connection with the crop of sugar beet will make all the difference between a first-class crop and an inferior one. Those are the times when the average farmer needs the extra short-term credit which he does not get now and cannot get now, but which, I hope, he will be able to obtain under this Bill.
What I am not quite clear about is, whether the banks—in this case it is the banks and not the new corporation that is concerned—will find that they are able so to extend the aggregate of their lendings as to meet the increased payments which may come in for loans on this new class of security. I cannot see that their deposits are likely to increase materially owing to the operations of this new scheme, and, as far as I understand their banking methods, the amount of their loan will necessarily be limited and will have to bear some relation to the amount of the deposits they receive from their depositors. Thus the banks will be asked, no doubt, to increase the ratio above the figure to which they are accustomed now, and whether they will be able to face the position time alone will show. Perhaps my hon. Friend opposite will throw light upon it. Possibly it may lead to an inquiry as to whether the operations of the Bank Charter Act, as far as the limit of the issue of currency is concerned, may require some investigation and variation in view of the increased demands of the credit facilities which this Bill will, no doubt, induce.
There are two other matters to which I want to call the attention of the House. Up to the present I have said that I think the Bill is a good one in principle, but I cannot let that go without one or two criticisms on minor points. It is quite true, as the hon. Member for Don Valley said, that this Bill will fail to bring assistance in the form of credit to some of those farmers who need it most grievously. I am afraid that that is inevitable. At least it will be inevitable, unless the Government are able to pledge the State's credit to a very much larger extent than they can safely do under existing financial circumstances. What the farming community really need in the shape of long term credits is, that the advances should be for a far higher proportion of current value than the 66 per cent., which is the limit in this Bill. I quite realise and I accept the statement that such a thing is impossible, but it will be a disappointment, no doubt, to many greatly interested in agriculture, and it will, for that reason, fail to help many of those who need our help most.
There is one other point with regard to Part II—it may be said to be a Committee point—with which I hope the Attorney-General will deal. I would not trouble the House very much but for the fact that I know that he is going to answer legal points. Am I right in assuming that as Part II is drawn it will exclude the benefits of the short term credit system from farmers who operate in a partnership or who operate as a private company? There are very many farmers or groups of farmers who carry on their operations as private companies, and I hardly think that it can be the deliberate intention of the Minister to exclude them from the benefits of this Bill merely for that reason. I mention the point so that it may be dealt with now. I hope I may be wrong and, if so, that the Attorney-General will correct me.
Lastly, I want to say a word about the relationship of the new corporation which this Bill will set up, with the existing statutory bodies to which my right hon. Friend the Minister of Agriculture referred in his speech—the Lands Improvement Company and the Farmers' Land Purchase Company. These two bodies, one of considerable age and the other relatively new, were set up by special Act of Parliament to do the very work which this new corporation will do. I hope that use will be made of their organisations for carrying out the work of the new corporation, and that the Minister will make representations to that effect to the prospective board or committee of bankers who are to organise the corporation. My reasons for doing this are two-fold. In the first place, this making of loans repayable by annuity over a long term is quite a new thing to the banking community. It is rather a highly specialised form of business which, I think, cannot be picked up very rapidly or very readily, and to get that experience will be rather a costly and painful process. That applies whether one is talking of the mortgage or of the improvement side, and, particularly in regard to the improvement side.
I think it would be a great mistake for the new corporation to lose the opportunity of utilising the existing organisa- tion of these old statutory bodies and the experience they have gained. In the case of the Lands Improvement Company it is an experience extending over a period of 79 years. Further, these statutory companies have certain advantages—I do not want to exaggerate them; they are not very great advantages—but they have certain facilities and advantages under their private Acts which the public Acts do not give, and it is desirable, I think, that every advantage should be available for the new corporation so that they may lend under the very best auspices. My only other reason for calling attention to these bodies is that of avoiding hardship and injustice. These two bodies have been financed by public-spirited people who have invested money in taking up partly paid shares. These people have gone into these companies, not for the purpose of making large profits but in order to enable useful work to be done. These bodies are practically public utility companies. Without the assistance which the Government are giving to the new corporation they will not be able, in the future, to compete successfully with the operations carried on by the new corporation if there is no cooperation between them.
What I mean is this: I said just now that I thought the new corporation would be able to lend for capital improvements at 10s. per cent. less than the Lands Improvement Company. The Lands Improvement Company has to get its money without the assistance of the Treasury, and it has to pay the whole cost of its own administration, and, of course, has to collect that payment from its borrowers. These two companies have considerable sums of money. The Lands Improvement Company has nearly £1,000,000 out on loan, and some of these loans extend over a considerable period. The longest loan will only be wound up in 59 years from this year. Therefore, these companies have to maintain their organisation for the purpose of collecting and passing on to the insurance companies, who provide them with their funds, the instalments during the whole of this period. If they have to do that without the capacity of doing any new business, it will simply mean that they will be carrying on at an inevitable loss a work which they cannot legally stop, and that loss will have to be met by call after call upon the uncalled liability of the existing shareholders. That would be an obvious injustice, and I hope that, from whichever point of view it is regarded, whether from the point of view of the advantage to the new corporation or from the point of view of justice to the old companies, the Minister will represent to the new corporation the desirability of utilising the organisation of these two bodies, both of which have offered their services, because they exist to serve precisely the same purpose for which the new corporation is being called into being.
The House always listens to the hon. and gallant Member for Rye (Sir G. Courthope) with very great interest whenever he addresses it on agricultural subjects. I think we may bestow on him the highest praise that in a Debate of this kind the House can offer. We all, with one accord, know that he knows what he is talking about. He has given the most unqualified support to the scheme. I am afraid I cannot give unqualified support to it, but I can be friendly to it, for this reason, that I have examined it purely from the point of view of the farmer, and I cannot see that he can be worse off, and he may possibly be better off. That is rather lukewarm praise, but I hope to show it is not too lukewarm. Even if he is better off, it is in the interests not only of agriculture, but of the country as a whole that we should endeavour to tide him over extremely bad times, and leave him in the future a freer man than he is at present. In the first place, the long term part of the scheme, which is to provide for a 66 per cent. loan—that is 66 per cent. of the capital involved—is not going to give as much relief, I believe, to the farmers who bought their farms as many of us suppose.. The men who are really in difficulties, who are occupying owners, are those who bought in time of inflation. They are not singular in that respect. In all sorts of businesses men paid far too much for their property, for their works and their equipment during the years 1918, 1919, 1920 and 1921. They are not in a peculiar position, but many of them are very gravely embarrassed, and some of them are the most enterprising farmers of the country, men who have really done a great deal for the development of agriculture not only on their farms, but in their counties.
If we can help these men, by all means let us do it, in so far as it is consonant with the public interest. But the 66 per cent. is not to be two-thirds of the price they originally paid. It can only be two-thirds of the present value of the farm, otherwise the security for the debentures would be diminished below its true market value, and there could not be economic flotation. As many of them are still sadly embarrassed, there will obviously be a large gap to be filled. I hope nothing that is provided for in the scheme will disable them from finding other accommodation. It may be a very difficult thing to do, but I trust the Minister and his financial advisers will be able to meet their case somehow or other, and at all events leave them no worse off in the future than they have been during the last year or two. The difficulties that can arise over these fluctuations of value are very well known to the hon. Member who has just spoken. He, in his own experience as chairman of the Lands Improvement Company, had to deal with a somewhat similar situation, and I can imagine no better adviser than the hon. Gentleman when the Ministry or the corporation come to actual grips with the problem with which they will be faced. Is the right hon. Gentleman satisfied that he is going to provide through the corporation money at a really cheap rate? I do not know how he has made his calculations, but I cannot see much below 6 per cent. in what he has laid before the House, and 6 per cent. is a high rate of interest for an occupying owner who bought in bad times, and even those, perhaps, who have a gap left entirely uncovered and unprovided for. I am not quite sure that the farming community will be very grateful for a 6 per cent. advance. I appreciate the difficulty of seeking gratitude from them upon any terms, but I do not think 6 per cent. will prove attractive, and I trust there will be some means by which the advance will be much nearer 5 than 6.
There is another consideration into which, I have no doubt, the right hon. Gentleman has gone very fully. That is that the provision he is making through the Financial Resolution is, in fact, subsidising what, in truth, will be a statutory debt of a privately owned Corporation. I submit that when the State is paying a subsidy to any Corporation, no matter what it is, it is entitled to representation on the management of the Corporation, and I hope the right hon. Gentleman will not be too antagonistic to the idea of providing for a representative of the State upon the Board of the new Corporation. I cannot imagine that those who are to provide the bulk of the money for the Corporation would resent such a nomination. After all, the banks have not gone into this scheme because it was evolved in their own board-room. The initiative has not come from the banks. Some of them have undertaken to play their part in the scheme somewhat reluctantly, and only because the right hon. Gentleman and the Chancellor of the Exchequer appealed to their public spirit. I do not agree with the hon. Member for Hillsborough (Mr. A. V. Alexander) that this can be called a Banking Protection Bill. I think he a little overstated the provisions that are made against the possibility of loss by the banking investors. I am sure he has not forgotten that the banks are not investing the money of the directors themselves. They are investing the money of their depositors. They are in the position of trustees, and they are entitled to as full protection for the money they put into this experiment as they would get if they were putting it into trustee securities. It is as much incumbent upon the directors to look after the depositors' interest as it is upon us to look after the interests of our constituents.
There is this subsidy, and there ought to be public representation on the Board of the Corporation, and I think you can count on the banks, in so far as it lies within their power, doing what they can to facilitate the smooth working of the scheme. But do not let us shut our eyes to the fact that it is going to be most difficult, and that it is quite possible that it will not be very popular. We can only make a trial of it. It is experimental, and I hope if the experiment does succeed, either the right hon. Gentleman or his successor at some early date will provide some further and better means by which the occupying owner can survive during times of serious depression. I have not the same objection to helping the occupying owner that is held by some hon. Members above the Gangway. I believe there is no land system better in the world than that in which the farmer who is tilling the soil should also be the owner of the soil.
I do not think we need go very far in what we each believe will be the most admirable form of land tenure, but in the countries where the occupying farmer owns the soil he shows more inclination to put permanent value into the soil and to strive to get more out of the soil, and on the whole he is more successful, than in countries where you have more complicated tenure. We have to accept that what we have in this country is governed to a large extent by past history and tradition. We can improve on it from time to time. One direction in which there has been considerable improvement within the last generation has been in the large increase of those actually tilling the soil who now own the freehold.
When one comes to the next portion of the Bill I am not sure that the farmer will be as well off in some conditions as he is at present. The financing of farmers nowadays is done primarily by their own banks, and in a secondary degree by their merchants, who supply them with seeds, or implement makers, who are prepared to take payment in instalments, and by others who give them credit. A considerable list, no doubt, has been in the note hooks of the farmers all over the country—seed merchants, feeding stuff merchants, merchants of chemical manures, potato merchants who sell potatoes for seed, and, very important in some parts of the country, cattle dealers who sell cattle for stocking or lean cattle for fattening, and accept their payment not all at once but generally over the whole season, and makers of engines, and last but by no means least in these mechanical days, those who repair engines and machinery, and do not ask for their payments cash down immediately they have rendered service or supplied material but mostly receive payment in the last three months of the year. The hon. Member for Hillsborough thought the amount owing to the merchants might reach the large total of £100,000,000 a year. I do not know how he arrived at that figure. It may be right, but I suggest to him that there is a qualification to that estimate, and that is that during December, January and February the £100,000,000 is materially reduced. It may be a comparatively small sum and in ordinary seasons, with ordinary farmers, a great many of their debts disappear during the period when they are realising their stock and selling off some of their crops.
That is probably true, but I also pointed out that since 1926 we have had two very bad harvests and as a consequence the merchants are in a much worse position than they were previously.
The farmers are in a worse position and I dare say, indirectly, the merchants are also. They have not such large security as they had before. As I said just now, we have to accept, in the farming custom of the country, traditions which have grown up, and relationships which have been built up as the result not only of the hardships of the time but the amount of personal knowledge in the country districts as between bankers, merchants, auctioneers and farmers. It is this personal knowledge which has been the very essence of credit in the agricultural areas. Do not let it be imagined for a moment that the banks have not been giving accommodation. They have been giving it to an enormous extent all over the country. It has been perhaps a little more difficult, under the new joint stock system and under the big amalgamations, for the local bank managers to keep in as close touch with personal customers as it was in the old days. If they are moved about too freely it is possible that they lose the enormous advantage of personal knowledge, but where that personal knowledge exists it is a far more valuable security than even a chattel mortgage. That is the essence of banking business, especially in farming. If there is going to be anything which will tend to divert the farmer away from intimacy with the bank manager and with the auctioneer, if there is anything that is going to make either the auctioneer or the bank manager feel he is not having a full disclosure—if there is a full disclosure being made elsewhere but not to him—he will not have that personal confidence which is so essential for good banking in rural areas. The Bill provides, I know, for the registration of the chattel mortgage, and I am not at all sure it does not also provide that the only lenders who are to be entitled to the charge are to be the banks. Perhaps the right hon. Gentleman can let me know if that is so.
If that is so, that places the banks in a preferential position over other creditors, and I am not altogether sure that is a justifiable step to take. I trust the right hon. Gentleman will be amenable to reason on the point and I have no doubt representations will be made to him by those interested. I am far from wishing to see banks put to a disadvantage, but they ought to be put on exactly the same footing as other creditors, and not be given an advantage which is withheld from others. The scheme is imperfect, but it is the best we can get. It is certainly sadly needed. If we do not have this scheme we must have something better, but, while the present Government is in office I do not hope for anything better. If this scheme to to be set working, I hope that all those who have the cause of agriculture at heart and all those who will be asked to co-operate in working the scheme, such as the great banking institutions, will do all they can to give greater facilities to the farmer.
Mr. ROY WILSON:
I should like, at the outset, to congratulate the Minister on producing this Agricultural Credits Bill. I know something of the schemes with which he has been faced since the first announcement of the Government's intention was made, and I wish to pay my tribute to his capacity in introducing a Bill which, though it may not give the farmer all he wants, will certainly, under some circumstances, be of real help to some sections of the farming community. As the Minister has explained, this Bill deals with two distinct classes of agricultural credit. The first section deals with long term credits, and the second section deals with short term credits protected by chattel mortgages. I propose to confine my observations exclusively to that section of the Bill which deals with long term credits. The Minister has explained to the House exactly what the Government's liability is in connection with this new agricultural institution which is to be formed. They are going to provide, over a period of three years, £750,000 towards a guarantee fund, and £100,000 over a period of 10 years towards the cost of the administration of the company, and they are going to underwrite the first £5,000,000 of debenture bonds.
I would ask the Minister one or two questions, which seem to me to be very important, and as to which we who are interested in the farming industry will want to have information when this comes into operation. First of all, if this new agricultural institution is to be of any use at all, it must be in a position to make advances to farmers upon a reasonable rate of interest and upon such other terms as have been referred to this afternoon and which really must be of benefit to the farmer and must not impose a hardship upon the borrower. The first question I should like to ask the Minister to consider—I do not know if he can reply to it to-night, but I would like him to consider it when the scheme is gone into more in detail—is, what are the fees which are to be paid by the borrowers? If these fees are to be very high scale fees, if the borrower has to meet very heavy fees for valuation and registration, and he is a small man, that is going to add materially to the cost of his borrowing. I entirely agree with the right hon. Gentleman who has just spoken, that we must really regard this scheme as one which—for the time being, at any rate—is applicable mainly to new borrowers.
I am sorry to have to say it, but I do not think that, under this scheme, the man who is to-day and who has been for some time heavily in debt to his bank on mortgage in respect of his farm land or property, will be able to obtain advantage under the scheme. But, that notwithstanding, I do want the scheme, when it is launched, if it is to be a permanent scheme, to be a thoroughly well thought out scheme in all its details, so that, if it does not meet with the immediate success that some of us hope will attend the flotation of this new company, it will, at any rate, be based on a sound and reasonable foundation, which the farming community can look forward to as a permanency and as a real advantage, if not now, at any rate, in the future, to their industry. I have spoken of valuation fees, and I am sure hon. Members who are acquainted with the valuation fees charged in country districts will confirm my opinion that these valuation fees can be very heavy and very onerous. In Egypt, for instance, where agricultural banking is a very important part of that great agricultural country's banking operations, valuation fees are paid on a very low scale—£1 per £1,000 of the value of the land, with a minimum sum of £4. In a, country like that, where charges are high, that works out at a very modest sum for valuation. The question of registration fees is also an important one.
One of the most important things in connection with this new bank, if it is to function properly, is the question whether the borrower has the right to repay his loan before the expiration of the period of 60 years. I do want to press upon the Government to make full representations to the banks, who are going to form this agricultural institution, on this vastly important point because, if the borrower is to take a loan for a period of 60 years and he is to be bound during the whole of that period to pay the interest and sinking fund on his loan with no right to redeem, it is going to be not only a hardship on the borrower but, in my judgment, a perfectly impossible position to adopt. I am sure the Minister of Agriculture knows this, and that the banks in London, the "Big Five," who are going to undertake the formation of this company, know it too. In Egypt, when a borrower goes to these mortgage banks for these loans, he has a right to redeem at any time upon the forfeit of six months' interest on his loan.
Another important point is this: Some hon. Members on the Labour side have questioned the desirability of the Government contributing such a large sum of money as -£250,000 per annum towards what the Minister has described as a guarantee fund. I attach the greatest importance to a guarantee fund being built up by this new institution at the earliest possible moment, and for this reason: I hope that, when the scheme is launched, we shall find that there is to be some provision made by this new agricultural institution that a borrower, who has unfortunately made default with his interest, does not lose his property without notice, and is not put in the position of seeing his property foreclosed upon by the new institution at a moment's notice. If a procedure of that sort is adopted, it will not only be a great hardship upon the borrower, but will also be a grave reason for further depreciation of agricultural property and land in this country by reason of too rapid foreclosure in the case of default.
It is for that reason that it is essential, in my judgment, that this new company should at the outset have a substantial reserve fund. This reserve fund should, among other risks, provide for a sum of money for all contingencies in the first few years of the bank's operation. I should like the bank, at any rate during the first few years of its existence, to arrange that where a borrower defaults, the bank will not at once foreclose upon his property, but will do what the agricultural banks in other countries do—give the borrower time, and in the meantime, under certain circumstances and conditions, if they are entirely satisfied with the security, nurse the property until such time as the borrower has had a reasonable chance to get back into a sound position or until such time as a purchaser at a real market value is found. The hon. Member for Hillsborough (Mr. A. V. Alexander) was saying a few minutes ago that it could be done within five days. That is not the position at all. That is the position in Part II of the Bill with regard to chattel mortgages, but not with regard to long term credits.
For those reasons I attach the greatest possible importance to seeing that a reserve fund should be built up, and that the borrowers should feel, in embarking on this new undertaking formed under Government auspices, that the new bank is going to move quietly and slowly until it finds its feet, and is going to move on a system of long term advances, akin to the system which has been proved and tried in a great country like Egypt, where the borrower can feel that he will have reasonable treatment and is perfectly safe in entering into this arrangement. I know something of the difficulties surrounding the formation of an institution of this sort and, notwithstanding the fact that we in this country—by which I mean the banking community in this country—know really very little about agricultural land, I feel quite satisfied in my own mind that it will succeed, if it is launched on sound, cautious lines, and if, during the beginning the rules and regulations laid down—and I hope that the Minister, as he is contributing a large sum of the taxpayers' money, will have a voice in this—will be such as will cause no hardship to borrowers, but will give them the very best consideration possible.
The Minister has definitely said to-day that it is not the Government's intention to have a nominee on the Board of this new institution. I for one rather regret that statement. I am not sure that some other way might not be found for some form of Government supervision if the Government are not to have a nominee on the Board of the new institution. If the decision not to have a Government nominee is definite, I should like to think that, in some sort of way, the operations of that bank can be reviewed by the Minister or Department of Agriculture so as to satisfy the Minister that the bank is proceeding on the right lines, particularly in matters like foreclosure and valuation, so that no hardship shall be caused to those who undertake these operations.
First of all, may I add my congratulations to the Government on bringing in this Bill and thereby fulfilling the last of their election pledges? The various associations connected with agriculture have had plenty of time to think about this Bill, and I know that the Central Landowners' Association has worked out its scheme. I would like to look at it from the point of view from which we worked out our scheme. The first thing we thought about was that, if the credit scheme was to be of any use, it must not entail payment of more than the annual value of the man's holding. If you have a holding worth £1,000 bringing in £50 a year, you must be able to borrow money at a rate which is not more than £50 a year. I rather doubt whether this Bill meets that stipulation. The other thing that seems to us essential is that, if too large a part of the purchase price is asked for, many farmers whom we want to help would not be helped by this Bill. Having considered those two matters, we thought that neither of those two conditions would be fulfilled unless the State arranged a low rate of interest in some way or other with their Credits Bill or guaranteed to the bank the repayment of their loan. I understand that had that attitude been adopted, we should have been able to look forward, even if we had not been able to get a lower rate of interest, to being able to borrow up to 80 per cent., instead of only up to 66⅔ per cent. on our holding.
I would impress upon the Government that this scheme will not be used by many of those who need it most. A constituent of mine told me a few weeks ago that when his landlord was selling his estate he was enabled through his own landlord to be able to purchase his holding at 4 per cent. The landlord again finds himself in trouble and he has called in that money. This man, one of the best farmers, is again put in the position of having to borrow money. He cannot afford to find £2,000 of the £6,000 required. He must borrow nearly the full amount, otherwise the place will be sold over his head. He is the type of person who needs help and one whom we should like to help. If the Minister cannot give better terms than 66⅔ per cent., the Bill will not fulfil the objects for which it is promoted. Before we knew what would be the memorandum and articles of the new company, we were doubtful whether we should be informed as to the rate of interest that was likely to be charged; but I am glad that we have been informed that the rate of interest is to be something under 6 per cent.—5¾ per cent., if possible. I hope the Government will be able to do something to reduce that amount. With the weight of the Government behind the issue, I cannot see why the debenture holders who will take shares in the new company should not be satisfied with a less interest than 5 per cent.
I would emphasise what has been said by other speakers as to the necessity of popularising this form of loan, especially at the beginning of the credit scheme. If the banks could be induced, perhaps by way of example, to take bonds in payment of their loans, in order to popularise the new credit scheme, it would he a very good thing. Although I am afraid that many people will be disappointed that they will not be able to make use of the scheme, I trust that it will be given a fair trial, that the Bill will receive a Second Reading and that in Committee many improvements will be made which will make it a useful Measure for all those who require help.
I congratulate the Government upon bringing forward a Measure which has been a long-felt want in this country. As one who has continued to urge upon the Minister of Agriculture the necessity of bringing in a Measure of this kind, particularly including a provision for short-term credits, I am very glad to find that the Bill does include short-term credits for farmers. The hon. Member for Hillsbrough (Mr. A. V. Alexander), who spoke on behalf of the Opposition, opposed the Measure very forcibly and very eloquently because the administration was to be in the hands of the bankers, I welcome it for that very reason, because I have great admiration for and confidence in the banking system of this country, which I consider to be second to none in the world. I would far sooner see the administration of any scheme of this kind in the hands of people who have proved themselves capable of administering a great organisation, rather than it should be in the hands of a Government, particularly in the hands of a Socialist Government, because if any party has proved itself incapable of understanding or showing any sympathy towards the agricultural industry, which this Bill is supposed to assist, it has been the Socialist party.
During their tenure of office, which was, of course, a brief one, the Socialist Government provided no means what- soever of alleviating the difficulties of the farming community, although they do take credit for having introduced a Measure which added very largely to the burdens which farmers have to bear. I refer to the Agricultural Wages Board. I grant them full credit for that Measure, but what they failed to do in bringing forward a Measure which lays down a minimum wage for farm labourers, was to provide means by which those wages were to be paid. In that they were only following the precedent set by the Liberal party who, in the Budget of 1909, increased the Death Duties to such an extent as to lead to the break up of the landlord and tenant system in this country, and provided no means for the tenant farmer to purchase his land. One would have thought that before introducing any Measure which, as was stated at the time, was intended to break up landlordism, the first thing they would have considered would have been some means of replacing that system. Means should have been provided for farmers to obtain credit in order to purchase their holdings. That provision was not made, and in many cases farmers were unable to purchase their land and landlords were unable to keep their estates together, with disastrous results to the tenants.
This Bill does provide the means whereby farmers may obtain considerable relief, providing it is administered in the proper way. On this point I would emphasise the suggestion made by the hon. Member for Lichfield (Mr. Roy Wilson), that if this is to be a scheme with considerable financial support from the Government behind it, the Government should have some representation on the administrative body. I hope that that suggestion will be considered by the Minister of Agriculture and that the taxpayers will have some representation on the governing body of the Mortgage Corporation. One hon. Member asked why farmers want credit at the present time? I am only dealing with short-term credits, and I have found many cases where farmers who were very urgently in need of credit were unable to obtain it under the present system. Over 80 per cent. of the holdings in this country to-day are in the hands of people farming 100 acres or under. Therefore, it is absolutely necessary that loans should be obtained on growing crops, on improvement of stock and on the purchase of new stock. That is a provision which is not made at the present time, with the exception of loans that farmers may obtain on occasion through dealers and other people. That is what I consider to be the reason why the short-term system of loans should be provided by this Bill.
I hate to say anything against the dealers and merchants in this country; they have done a great deal for farmers in many cases by helping them, but in many instances that have been brought to my notice recently, farmers were entirely in the hands of dealers and were unable to make any profits whatsoever from their stock. It is well known that while the farmer is in the hands of his dealer, as far as loans are concerned, it is at the discretion of that dealer whether the farmer retains his stock until markets are favourable or whether the dealer presses him at an unfavourable time and insists upon him paying back his loans, with the result that he has to dispose of his stock at a time when there is no possible chance of making any profit from it. It is absolutely necessary that some provision should be made for those cases. Instances have been brought to my notice of small holding farmers who, on their existing production of milk and dairy produce, were unable to make sufficient profit on the turnover to carry on. They have pointed out to me that if they had a little more capital with which to increase their stock, and thereby increase their milk production, they would be able to make their holding pay. They have found difficulty in obtaining that credit because the banks would not advance money for the purchase of stock. I have urged upon the Minister that he should make some provision to meet cases of that kind and I am glad to see that in the second part of the Bill provision is made for loans for the improvement and purchase of stock. It is well known that in some cases farmers have stock which are not of sufficiently high grade to produce sufficient milk to make their dairies pay. It is necessary in these cases to weed out the existing stock and replace it with new stock. Therefore, a loan is necessary, and I hope that by this Bill those farmers will be able to get the necessary assistance.
There is a growing demand in this country for short-term loans. Although I do not hold out very much hope that this Bill will be of any great assistance to the long-term borrower, I do think that if the system is properly administered there will be a great opportunity for improving the lot of the smallholder and the small farmer. I should like to see the system extended to the cottage holder and to the smallest land holder in the country, in order that the greatest possible number may benefit and that the Bill may bring about an improvement in agricultural conditions generally. I should also like to see the system extended to co-operative farming. There is scope for a Measure of this kind to assist in co-operative farming, which has been neglected up to now. Farmers are, however, beginning to realise that they must co-operate if they are to compete with their competitors overseas. It is being brought home to them that, though the individual farmers may be efficient in this country—and I believe they are as efficient as individual farmers in any other part of the world—they are not competing with individual farmers in other parts of the world, but with combinations of farmers. Therefore, it is up to them to combine in the same way, and only by co-operation can they attain that end. Co-operation must have a lead from the Government, because farmers themselves, I am afraid, are rather suspicious of each other and very slow in taking the lead in supporting any cooperative societies. I have heard it expressed on many occasions that if the Government would only do something towards setting up co-operative dairies or co-operative boards of some kind, with some supervision, farmers would be willing to give it support. For these reasons I heartily welcome this Bill, and I hope that the right hon. Gentleman will do everything possible to see it carried through at the earliest possible moment. I am sure that the agricultural community will welcome it.
I do not think the Minister can be impressed by the support that the Bill has received in the House, although there has been a good deal of lip service rendered to it. I was amused at the halting support of the right bon. Member for West Swansea (Mr. Runciman); probably the shadow of a county constituency looming in the distance may have induced him to look more kindly on the Measure than he would have done had he been remaining in an urban constituency. I should not be anxious to give support to a Measure if I could not say any more for it than he has said, because, after all, there is this to be borne in mind that the passing of this Measure may prevent a more satisfactory Measure taking its place. What is it that the Minister wants to do? I gather he wants to supply credit, long-term credit especially, to a greater extent than it can be obtained at the present time, and at a better rate. That is the problem which we have before us.
The first question that comes up is, what body is to control the administration of this credit, when it has been obtained? I approach the question with some hesitation, because it engenders a certain amount of heat in some quarters. Would not the Minister have been wiser if he had kept control of the body, which is to administer this credit, entirely in his own hands? I do not want to raise the question of bank nationalisation, but I want to put this side of the question to the House. Every Member knows that there are certain things for which, automatically, we consider the State is better adapted than private enterprise. There are also certain things that are administered by the State, because nobody else cares to do it. One of the reasons the Minister comes here to-day is that, for some reason, private enterprise is not supplying this need, if private enterprise was providing the credit long enough and cheap enough, the Minister would have no problem before him. Therefore, virtually we are facing the fact that private enterprise does not consider it is worth while doing this.
We get then to the point that the Minister is anxious to see that this credit is supplied. He goes to the banks. The position of the banks is this: the large banks do not want to have anything to do with long credit, because the banks do not want to lend their money on long term. They are only doing it to oblige the Minister. If he put up another institution to supply long term credit, the banks would not object, because they do not want to do it; they would only be too glad to be relieved of long term loans. By not having control himself, the Minister is going to lose any driving force that he has got. If he kept it in his own hands, he would keep asking himself, "Is this credit getting into the right hands?" But he is putting it in the hands of a body of people who will lay down terms on a financial basis. If this scheme could have been done on business principles, the Minister would never have had to do it. He has to do something that is not going to be based on ordinary business principles, otherwise the bank, or some other business concern, would have satisfied these demands before.
I have had some experience on a Committee dealing with co-operation and credit, and I have seen some of the weaknesses and difficulties of a credit scheme in co-operative societies; but still I wish this thing could have been done through a co-operative system somewhat on the lines that it is done in Germany. The Minister has a very good illustration in the Export Credits Department. The export credits are financing certain trade requirements, because no private concern will do it. No one calls that Socialism, and it is doing very useful work. I believe, if the Minister had said, "No one is doing this satisfactorily, and I am going to run a Land Bank," he would have been acting on the same principles as those on which the Export Credits Department is run. If it is too late to alter the lines on which the scheme should be run, I hope he will see that he himself is represented on the board of this corporation, in order that some driving force may be given to it. It is only fair that where you have money contributed by the Government, the Government should be represented. I come to the question of interest. I confess that when I heard the rate at which the Minister was going to advance a long loan, I very much doubted whether the scheme was going to do very much good. What is wanted are not only long loans, but cheaper loans than farmers can obtain now. The Minister has recognised that, because he is giving a subsidy. In that respect he has passed away from the ordinary business footing.
A friend of mine, who has for a number of years been connected with the farming interest on the banking side, told me that what was wanted most of all in the county with which he was connected were loans of the amounts of £2,000 or £3,000 provided at as cheap a rate as possible. The rate he mentioned was, not 6 per cent., but 4½ per cent. The Minister may say that that is impossible, but would it not have been better if the subsidy which he is providing could be used to cheapen the rate of money? That is really one of the things that hon. Members sitting behind him have said. In their support of the Bill they have qualified that support by a number of "buts," one after the other. If the Minister could not see his way to use the subsidy to reduce the rate of money, I suggest that he might have met the difficulty that was raised by the last speaker. He said that he wished that, instead of the proportion being the orthodox figure of two-thirds of the value of the land, loans might be advanced on a higher percentage than that. I put it to him that, if he does not care to use the subsidy for artifically reducing the rate of interest., could not it be used for artifically increasing the proportion to be advanced on loan? It seems to me that what the Minister is doing is that, having first of all said that something will have to be done by the Government, he has gone to the bankers for their advice, and the bankers have given him sound business advice. He recognises that the bankers are not able to do it, and yet he is now taking their advice in order to make the scheme a success.
I cannot help feeling that when the new corporation comes into being, it will be found that the subsidy has not been definite enough for the scheme to be sufficiently novel to provide the needs of those who want it. Hon. Members opposite said that the very people they want to help are not to be helped. The only help that could be given would be by some kind of subsidy, but the Minister is not doing that. The Minister is trying to do two things, and is falling between the two of them. The right hon. Gentleman mentioned the sum of about £20,000,000 as the amount advanced by bankers upon short terms. Although actually these are the correct figures, when you come to the practice of banking, really more money is being advanced. The banker knows that the farmer has certain stocks, and makes the advance without having technical cover. Therefore, we cannot actually judge how far the proposals of the Government, while they may increase the actual figure, will increase the amount of money lent by the banks to the farmers.
In conclusion, I cannot help feeling that there are many flaws in this scheme and that the Minister has not been nearly bold enough in his attempt to tackle this problem. I should like to know what is the actual position of the Government with regard to the new Corporation. Sup posing it fails, I take it that the bankers' money will be lost. The second point I should like to know is this: technically, I suppose the Government guarantee is not being given with respect to the money that this Corporation will raise. It is hoped that the Corporation will have such a high standing that it will get money at the rate at which the Government can borrow, but actually it will not have got the Government's guarantee. If this thing went fairly well and some £10,000,000 or £20,000,000 was finally floated on the terms suggested by the right hon. Gentleman, and if the Corporation got into difficulties, does the Attorney-General think that this Government or any Government would dare to allow a corporation that had all this official backing to fail? It would be said that the Government had subsidised the Corporation and were, therefore, behind it, and the claim would be made on the Government to see that the Corporation was put upon its feet.
It seems to me that we are in the unsatisfactory position of proposing a new Corporation with Government backing, and yet it is not actually being guaranteed, although in an emergency we might find that we were committed to support it. My own feeling is that the rate of interest is too high and that the terms are not bold enough, and I cannot help thinking that when the right hon. Gentleman tries to work this scheme he will find that it fails in helping the people whom he most wants to help. I think the success of the scheme is so doubtful that in a few years' time we shall see that the Government have accomplished hardly anything by these proposals.
The hon. Member for Finsbury (Mr. Gillett) made the observation that this Bill had been received with faint praise. I cannot agree with him. I think the criticism that has been levelled at it has been criticism of detail and has been such as to show that at heart there is a strong feeling that here at all events is a real effort being made to deal with a pressing problem in a practical way. I
do not propose to add either praise or criticism with regard to the positive provisions of the Bill. I rise, I am afraid, merely to express my very great regret at what is omitted from the Bill. I think it is a real misfortune and a very great mistake that this Bill should be confined only to England. It is clear that some day and somehow it is intended to have a similar machinery set up for Scotland. Indeed, it would be impossible that such an intention should not be in the mind of the Government, because I find, on refreshing my memory of the Government White Paper on the subject, that this paragraph comes at the close of that document:
The provision of long term credit is equally important to Scotland, where occupying owners are increasing.
Therefore, it must be taken that the Government do intend to apply at least the long-term credit system to Scotland. I can quite understand that, with regard to Part II of the Bill, it might have been convenient to have a separate Bill for Scotland, in view of the difference of Scots law, but that argument has no weight with regard to Part I compared with the grave practical disadvantages which are obviously incurred by dealing with this matter in two divisions, one for England and one for Scotland.
I make this point here and now for this reason, that my right hon. Friend the Minister of Agriculture, in moving the Second Reading, correctly pointed out that the early years of the Corporation will be years of considerable administrative expenditure, and that was one of the reasons why a grant of £10,000 a year is given. Surely that argument is of immense importance and ought to prevail when it is a question of whether you are only going to have one Corporation for the whole country or separate Corporations for England and Scotland. Similarly, all of us who have watched the development of this policy with interest and with hope are very well aware that it has taken the Minister of Agriculture two years to persuade the English banks, if I may use a colloquial phrase, to get a move on. I shall be glad to hear if I am wrong, and I hope that if I am wrong it will be stated before the Debate closes, but, as I understand it, no effort at all of any sort or kind has been made by the Secretary of State for Scotland to get in touch with the Scottish banks in this matter, and I think it is extremely likely that at. least the same period, a couple of years, will have to be spent before the Scottish banks will be prepared to follow in the wake of the English banks in this matter.
I confess that in view of the sentence of the White Paper that I have read it seems to me a very great misfortune that Scotland should be kept probably two years behindhand in getting the advantages of a long credit scheme, which, as the White Paper said, is of great importance to that country. Further, I cannot see—and I have heard no arguments in private discussions on this matter—why the whole provision of long-term credit should not have been done by one Corporation covering the two countries. Everybody knows that the connection between several of the Scottish banks and the English banks is close, and in any case why should not the Bank of Scotland, for instance—which, I gather, has no opposite number in England or no amalgamation with any English bank —have been negotiated with at the same time as the English banks and been one of the participating banks in this scheme? I venture to say that this is a very grave piece of slackness and idleness on the part of those who are responsible for developing in Scotland a policy which is approved by the Unionist Government, and it is one of the examples which I very much regret for this reason in particular, that I do not believe you will readily be able to institute in Scotland a separate.Corporation such as is going to be instituted in England, and I very much doubt whether in Scotland a Corporation of the limited size that you must necessarily have will have anything like the same confidence on the part of the public as if there had been one large Corporation in which the important Scottish banks found their place as well as the English banks.
I hope that the Attorney-General will be able to explain to those Scottish Members who have been, to the best of their ability, furthering the Government policy of long term credits for farmers, why, when at. last this long delayed birth takes place, Scotland has been entirely left out of a policy which I, for one, think will be a fruitful policy, and which, in the actual form in which it is put before this House, although there may be ground for detailed criticisms, yet seems, particularly so far as the long term credits are concerned, to deal with the problem in a way that may very well be highly successful. That is all the more reason why an explanation is needed as to why this policy has been so rigorously confined to England, and why we who are Scottish Members, and who, I think, care not less than English agricultural Members for the welfare of the industry in which so many of our constituents are interested, are having no assistance in this matter.
I welcome this Bill very warmly, even though it probably does not go nearly as far as I should like it to go, but I value its introduction chiefly for one reason, a reason which was given very clearly and lucidly by my right hon. Friend the Minister of Agriculture himself in introducing the Bill this afternoon. He said quite clearly that the scope of the Bill was not drawn wide enough to give to agriculture as a whole a loophole out of its very serious state of depression, but he did say that it provided hope for the future, in that the State was going to recognize by this Bill the fact that the operation of the cultivation of the land of this country has not been sufficiently recognized in the past as a channel for investment for the financial resources of our country. It is perfectly certain that in agriculture, the industry which above all industries has the slowest turnover, a free flow of credit is an essential if that industry is to prosper, and anything which can be done to stimulate the flow of credit to agriculture as an industry must be of very great value.
I should like to say a few words about the long term credit part of the Bill. The right hon. Member for West Swansea (Mr. Runciman) and, I think, other speakers in the Debate, have urged the representation of the Government on the Board of the Corporation that is to be set up. I will not express any view as to the wisdom or otherwise of such representation, but I would like to feel that there should be on the Board of this Corporation some representation of the agricultural industry..I feel that the presence on that Board of somebody representing the industry would add great force and weight to the Board's deliberations, and that such a repre- sentative might act as a sort of liaison officer between those who were financing the scheme, on the one hand, and those who were the borrowers, on the other hand. Therefore, I suggest that there should be added to the representation of the Board of the Corporation, in addition to the nominees of the banks themselves, a representative of the farming community.
The success of the long-term scheme will depend, I think, on several very clear points, most of which have been mentioned in the Debate. The financial cost must be kept as low as possible. The fees for registration must be kept low. In Clause 8, there is express provision made that the agricultural charges shall be exempt from Stamp Duty, and I should like that privilege to be extended to long-term credits. As regards mortgages which will come into force with the long-term credits, there should be no Stamp Duty, or, if it is necessary that there should be a Stamp Duty, it should be specially reduced to meet this case. The low rate to be charged for interest and sinking fund is a matter of vital importance. As it has been already alluded to by several hon. Members, I will say nothing further about it except that, in view of the fact that the corporation will have this capital sum behind it, which will form the reserve fund or the beginning of the reserve fund, and that the corporation has the assistance of the Government towards meeting its administrative expenses, it is not unreasonable to suggest that when the bonds are issued to the public they will take them up at something under 5 per cent., in which case it would be possible for the corporation to lend at something like 5½ per cent. to include the sinking fund. I hope that that is not too optimistic a view to take of the operation of the scheme.
The hon. Member for Lichfield (Mr. Roy Wilson) mentioned two other important points, namely, that the terms in the event of default should be reasonable, and that sales in the event of default should not take place immediately, but that there should be a reasonable lapse of time and power to redeem at the option of the borrower. I hope the Minister will be prepared to accept in Committee an Amendment in that sense. It does seem a hardship that the mortgagor who has found it necessary to borrow money to finance his operations of farming, if the wheel of fortune should turn, or if he has had a series of successful years, should not be able to reduce the capital charges against him. The last point which I would bring before the House has been mentioned several times, but it is almost the most important one in connection with the long-term part of the scheme. It concerns the limit to which the corporation may lend, that is to say, to two-thirds of the value of the land on which the mortgage is to be placed. I am aware that I shall be met with the argument that the Trustee Act, 1925, Section 8, clearly lays it down that trustees may not lend trust funds to a greater limit than two-thirds of the value of the land, and that they have to have that value certified by an independent and responsible valuer or surveyor. But that difficulty might very easily be overcome. If, in the ordinary way, it was possible for a trustee under the Act of 1925 and under previous Acts to invest the funds up to to that limit, surely it is not unreasonable to say that, under the special advantages attaching to mortgages issued by the corporation, it will be perfectly safe to permit the corporation to lend money up to a greater limit than two-thirds of the value of the land. The corporation is to be launched under Government auspices. It is true that the Government are not actually guaranteeing the bonds, but they are doing something more valuable: they are actually providing cash to form the nucleus of a sinking fund at once. That being so, it does seem reasonable to say that it would be safe for the corporation to advance to a higher limit than that of two-thirds of the value of the land.
Land, in legal phraseology, is known as real property, and there is a deep significance in that expression. Land cannot run away: it is a tangible security; it is something which stands almost in a class by itself as compared with almost all other forms of security. There is this also in connection with land as a security that, in spite of recurrent periods of depression, almost invariably, in due course, the wheel comes round full cycle and the value of land is restored again to something like its former level. It is only natural that land values should move in cycles, just as ordinary trade moves in cycles. Therefore, when we are setting up this machinery at a time of acute depression, when our land values are almost at their very lowest, surely that is an argument why it should be safe to permit the corporation to lend money to a higher level than two-thirds. I have no doubt there are hon. Members who have acted as trustees and who have had an opportunity of looking into the trust funds which come within their purview. If they will look into the funds of some trusts, perhaps family trusts, which were created, say, in the middle of last century, they will find that the trustees of that time very often divided trust funds in two, and placed one half in mortgages on land and the other half in trustee securities. They will find that there has been no greater loss in connection with the money advanced on land, in spite of the two terrible periods of depression during the last half century, than there has been in connection with the funds invested in ordinary trustee securities.
The rise in the rate of interest during the last half century brought down even the most gilt-edged securities to one-third in value, whereas land has nearly always in due course managed to recover its value. Therefore, I put that forward as another argument why it is not unreasonable to think that it would be perfectly safe to permit a wider extension of advances than is allowed for in the Bill. I will not detain the House any further except to say, in connection with this Bill, that, although I think there will be a sense of disappointment in the minds of a not inconsiderable section of agriculturists throughout the country, I feel that all farmers, even though they are embarrassed—and unfortunately some of them are deeply embarrassed at this moment—will have to take the long view as they usually have to do. I feel that they will welcome the Bill, limited even as it is in scope, as giving a sign that a prospect is opening up in the future of what has been far too much lacking in the past, namely, a steady flow of capital into agriculture from the financial resources of the country.
I approach this Bill in the same spirit of candid, critical, perhaps even rather frigid friendship which was shown by the right hon. Gentleman the Member for West Swansea (Mr. Runciman). We on this side cannot initiate legislation and we are not responsible for its details. The Government bring it before the House, and we have to accept it or do our best to reject it. As the right hon. Gentleman the Member for West Swansea said, some farmers may benefit from this Measure and none need find themselves in a worse position than they are at present; but I am not at all sure that some eventually will not find themselves in a worse position than they are in at present. As the hon. Gentleman the Member for Hillsborough (Mr. A. V. Alexander) said, it is very difficult to form a judgment on this very intricate Measure, which involves so many intricate questions of finance and law, in such a very short time as we have had to consider it. The general impression which I gather from the Debate seems to be that this is regarded as a real, but not a very hopeful, effort to deal with a very difficult problem. Still, it is a real effort, and I think the Bill ought to go to a Committee to be examined there, and, possibly, as a result of our discussions it will emerge in a more hopeful and helpful form.
My first criticism of it is that sufficient help is not given to the man who needs it most. Take the case of the occupying owner. It is particularly sought to assist him under the Bill. As has been shown, the first thing that will happen to him is that when he wants credit his assets will be revalued. At the present time he is borrowing from a bank. Probably he is known to the banker as a hard-working man who is doing his best, and the banker allows his loan to run on, but when he comes before this new Corporation, the banker will then be bound to act according to certain rules laid down by the Corporation. People may say that it will be the same bank manager, but it makes a great difference under whose authority that bank manager acts. I know instances of bank managers who gave very generous terms of credit to their clients, until one day the bank was absorbed into one of the great combinations, and immediately the bank manager was told that his new masters were not content to rely as implicitly as his old masters had been upon the will and knowledge of that local bank manager. He was told he had to reduce his loans and draw in his horns, and this he had to do, to the embarrassment of a number of clients. The same kind of thing may well happen to occupying owners when they come before the bank managers asking for loans under this scheme. They will find their assets revalued, and they will be unable to obtain the credit which they need.
I noticed that the hon. Member for Lichfield (Mr. Roy Wilson) agreed with the right hon. Gentleman the Member for West Swansea—and the hon. Member speaks with the authority of a man who is prominent in the banking world and has practical experience of these problems—that the Bill does not hold out much prospect of helping the men who need it most, namely those who are at the present time in debt. The tenant farmer only gets an indirect benefit under this Bill, to the extent that his landlord is capable and willing of taking advantage of its terms. He cannot go to this new Corporation and obtain credit. Yet it is vital to agriculture that the progressive tenant farmer, with his knowledge of the requirements of his farm—his sole interest being the prosperity and progress of the industry—should be allowed access to this board and should be able to get long term credits to make the improvements which he wishes to make on his land. The Minister made a very striking speech in December last. I thought it was an excellent speech, and I thoroughly agreed with it, because it said, in far better language than I employed, the things which I have been saying for many months past. The right hon. Gentleman preached the lesson of adaptation. He said that what was needed now was adaptation to the new needs and to the new conditions in which the industry has to function. Who understands adaptation better than the farmers of the country who are up against these new conditions?
The farmer is the man who wants to make improvements. Sometimes—I do not say always—the landlord is not anxious, but the farmer is always anxious to improve if he can get the money, the credit, the security, and the assurance of compensation for his improvements. He is always anxious to carry forward the industry upon which he depends for his livelihood; but he will not, do it unless he can get security of tenure. I am sure the right hon. Gentleman the Minister does not intentionally misrepresent our views, but he does not seem to grasp the question of tenure. I, for my part, have never said that a reform of tenure is a panacea for all the ills of agriculture, but unless you have a reform of the system of tenure which will give the farmer security, and under which he will receive compensation for improvements, it is impossible for him to do his part, even if you provide him with credit—and you do not do so under this Bill. You cannot do so under this Bill, because you will not give him the security of tenure which is the foundation of an effective system of credit. If he cannot get that security it is impossible for him to play his part in carrying out that adaptation which, as the right hon. Gentleman sees, is vital to the progress of agriculture.
The right hon. Gentleman said that the landlord and tenant system was the best system of tenure in the world. I believe that, at its best, it is just about the best system in the world, and at its worst it is just about the worst. There are too many estates in the country where the tenants suffer from conditions in which it is impossible to carry out adaptation, or even to carry on the industry at the comparatively low standard which exists in many parts of the country. If the landlord and tenant system is always the best system, why place this emphasis upon the acquisition of land by the tenants? Why is it necessary to bring in a Credits Bill, one object of which is to facilitate the acquisition of land by the tenants? Is it not the case that this system is breaking down, and that the tenants are suffering from insecurity of tenure and are being affected by the purchases and sales of land which are going on all over the country. Is not that the reason why the right hon. Gentleman finds it necessary to bring in a Bill to facilitate the acquisition of land by means of credits? There is a great deal to be said for occupying ownership but the real magic of ownership is not in the ownership of title deeds, but in the ownership of the produce of the soil, the produce which a man has grown on the holding which he occupies. I spoke to a young smallholder some time ago and he said when he entered his holding one morning in the spring, saw the crop growing for the first time, he could hardly realise that it actually belonged to him.
That is the real magic of ownership, the real pride in the things which a man himself has produced; and in order to have it, title deeds are not necessary. But it is necessary that the man should have security of tenure. The right hon. Gentleman said that under a system of private enterprise—apparently meaning the present system—improvements could be carried out more cheaply and efficiently than under any other system. In another part of his speech, however, he said that many landlords could not face the burdens and obligations of ownership. That is true, but obviously the tenants on those estates are not in a position to acclaim private ownership as a system under which improvements can be made cheaply and efficiently. We have also to face the fact that very often the landlord who ought to take advantage of Part I of the Bill to carry out that adaptation mentioned by the right hon. Gentleman is not interested in agriculture. Very often he has paid a high price for his estate, not because he is interested in agriculture but because he is interested in sport. Sport, however, can be carried on without interfering with agriculture. The hon. Member for Thirsk and Malton (Sir E. Turton) delighted and enthralled the House the other day with a speech on the Rabbits Bill. In that speech, speaking of some estates, he showed how sport could be carried on in such a way as to he no hindrance to agriculture, but he alluded to other estates where the reverse conditions obtain. I would refer hon. Members to a striking series of articles which have just begun in "The Nation and Athenaeum" showing how in one case, that of a large estate in the North country, some five or six large farms were being absolutely sacrificed to the interests of sport. Therefore I think the power of carrying out this great policy of adaptation—I appropriate the expression used by the Minister—should he entrusted to the tenant. Of course it should be free to the landlord, if he is interested in agriculture, to take the lead if he wishes.
I am replying to a reference made by the Minister himself to the subject of tenure, which obviously lies at the root of this question. I am also dealing with Part I of the Bill and pointing out that its advantages should be available to the tenant as well as the owner. I am sorry if I am taking up too much time, but if I may say so the hon. and gallant Member has only prolonged the agony by his intervention. In order to take up what I said, I must repeat myself. The tenant farmer ought to be given, under Part I of the Bill, the opportunity of carrying out the policy of adaptation. Then there is the case of the farm servant, or the owner of a smallholding. The man who is admirably qualified, who has experience and a love of the soil but who lacks capital. It is vital that there should be made available for him commencing credits to enable him to enter on the cultivation of the soil. The Agricultural Tribunal of Investigation appointed by Mr. Sonar Law's Government in 1923 reported that that was one of the directions in which it was important to advance at the present time. In the country thousands of applicants are clamouring for land, and the Ministry of Agriculture has told us that there is an even greater latent demand which is not reflected in the actual figures of the number of applicants, It is important to them that they should have those commencing credits, and I hope that provision will be made for including them in the Bill.
Then there is the case of the farmers wanting short term credits. I would press a little further the argument of the hon. and gallant Member for Rye (Sir G. Courthope) in the admirable and lucid speech which he gave us. His argument was that the banks are limited in the amount of facilities which they can extend under Part II, limited by the amount of their deposits. There is no reason to suppose that, as a result of the passing of this Bill, their deposits will be increased, and, therefore, the credit which they can give will be strictly limited. But the banks are the only people who are entitled to this new floating charge. Supposing a farmer has obtained a certain amount of credit under this Bill and has given a floating charge. Where else can he get more credit in the future? At the present time he can get a certain amount—perhaps in undesirable ways; but, at any rate, there are fairly elastic methods of getting credit. He can get more when he wants more. Under this proposal, if he gets a fair sized loan from a bank and then wants more, and goes to the bank, the bank will say, "No. We are very sorry. Our facilities are extended to the limit and we cannot give you more." Where can he then get more credit? No one will lend him money so long as the bank has that floating charge upon his assets. Other points, such as the very high interest which the farmer will have to pay, 6 per cent., and the fact that he can only mortgage up to 66 per cent. of the value of his security, have been dealt with by previous speakers, and I will not take up time with them. But it seems to me that in respect of all those limitations to which I have referred, and of the cases particularly of the occupying owner, the improving tenant farmer, the farm servant, the man who is qualified for a small holding and desires commencing credits, and the farmer wanting short term credit, the position is not improved by this Bill.
My second point of criticism is that there is in this Bill no sign of a really constructive policy on the question of credit I believe the only constructive and hopeful line of advance is along the line of cooperation. I would have liked to see provision made in this Bill for setting up in all parts of the country centres of co-operation under the guidance and direction of the right hon. Gentleman's Department and with, in the early stages, a measure of State assistance. I believe that if you did that now you would effect a great improvement. I do not want to go into the details of the proposals which we have made in another form—[Interruption.] If the hon. and gallant Gentleman wants me to, I am quite prepared to do so.
I apologise to my hon. and gallant Friend. It was another hon. and learned Member who tried to lead me on, but for the sake of the hon. Member's feelings I will not respond to that invitation.
If a policy of that kind were entered upon now, with a certain amount of State assistance in the early years, you would at the end of five or 10 years be able to kick away the prop of State assistance, and you would find that you would have in the marketing centres of the country valuable centres of co-operation and of credit.
My last word will be in support of the protest made by the hon. Member for East Perth (Mr. Skelton) against the exclusion of Scotland from these proposals. The right hon. Gentleman the Minister for Agriculture, in introducing this Measure, said: "The problem of credits does not solve itself and can and ought to be dealt with by Parliamentary action." As the hon. Member for Perth pointed out, Scotland is mentioned in the White Paper, but why is it not being dealt with by Parliamentary action at the present time? The right hon. Gentleman knows, or if he does not know I will tell him, that Members of his party are going up and down Scotland saying that a great credits Measure is going to be introduced to help Scottish farmers. In my constituency one of them said only a few weeks ago that the agricultural policy of the Government has now almost completely been put into effect. A shudder of incredulity ran over the audience, because nobody had noticed it. He went on to say that there was one coping stone to be affixed, and that was the credits scheme. Apparently he is deceived. Why is this credits scheme not ready. This question can be approached from two points. There is no conceivable reason why Part I should not apply to Scotland. It may or may not be good. I am a little doubtful, and I have given my reasons for being doubtful, but I think it ought to go to a Committee and be considered. But if the right hon. Gentleman, after having given months and years of consideration to this Bill, believes it to be so thoroughly sound and helpful to agriculture, why is Scotland denied it? As regards Part II, it is quite true that the law in Scotland is different, but why should not the same kind of consultations as the right hon. Gentleman has been carrying on with the Eng- lish banks not have been carried on by the right hon. Gentleman's colleague the Secretary of State for Scotland with the Scottish banks, and why should he even now not be ready with the scheme under Part II? There is no possible reason for not applying Part I to Scotland, and I would like to know why a scheme under Part II is not ready. I can hardly believe the libellous statement of my hon. Friend the Member for East Perth when he tells me that there has been no consultation between the right hon. Gentleman the Secretary of State for Scotland and the Scottish banks. If so, the right hon. Gentleman has disgracefully neglected and flouted the interests of Scottish farmers. I agree with the hon. and learned Member that if those are the facts there has indeed been gross negligence and slackness on the part of the Government in dealing with the interests of Scottish agriculture.
I do not want the hon. and gallant Member to get excited about nothing. There is no intention of leaving out Scotland. But we had to begin somewhere, and negotiations were difficult enough as it was. If we had had to have three-cornered negotiations covering the entirely different Scottish position at the same time, we should never have got to a conclusion in time to introduce a Bill this session. If this Bill goes through, it is the intention of the Government to found a Bill on suitable terms for Scotland upon the experience of this Bill.
The explanation of the right hon. Gentleman only makes the case more extraordinary, because apparently he admits that no effort has been made to carry on between the Secretary of State for Scotland and the banks the same negotiations as he has been carrying on in England. In spite of that Government speakers have been going up and down Scotland saying there was ready on the stocks a Bill for Scotland and that it was going to be drafted exactly the same as for England. There is no reason why these negotiations should not have been conducted. There was no need for three-cornered negotiations. You could have had two sets of negotiations, one between the Minister of Agriculture here and the English banks, and another between the Secretary of State for Scotland and the Scottish banks. There is no reason why that procedure should not have been followed, and the interests of Scottish agriculture not been flouted by the refusal of the Government to deal with the case of Scotland at the same time as they were dealing with that of England. The people of Scotland have been deceived by Tory speakers, most of them, no doubt, acting with the very best intentions and according to the information with which they were supplied by their headquarters and their own Government. The Government are responsible for the deception. I am not blaming the actual speakers, but the people of Scotland have been grossly deceived. I have approached this Measure in a somewhat critical frame of mind, but I think it should be threshed out in Committee, and I hope it will emerge in a form which will benefit agriculture in this country, and if that be the case, I hope the Government will not delay in bringing forward a similar Measure for Scotland.
I do not propose to follow the hon. and gallant Member for Caithness (Sir A. Sinclair) in the abridged statement of the Liberal Green Book. The whole of his speech might have been put into the last few words, which were in praise of the Bill and with the hope that it would be applied to Scotland.
I think we may take it that his real grievance was that Scotland is not included in this Bill, which he thinks is a very excellent Bill, although in parts of his speech he attempted to disguise that view. One of his criticisms was that the Bill did not provide for all those people who want mortgages, especially those who bought their farms at exceedingly high prices. He thought they should receive special favour. I quite agree that they ought to receive special consideration, but no one who has considered the matter has ever disguised from himself the fact that it would be impossible for a Government to lend money in excess of the present value of the farm. The Government could not take a few selected people and, at the expense of the rest of the community, get them out of a very bad bargain. In the shipping and other industries men have bought at high prices and have suffered by the decline in values.
The whole object of the Bill, as I understand it, is to enable a particular fund to be created to which a farmer can apply for a mortgage which he can be quite certain is not going to be called in for a long period of years, and with all the recurrent expenses of mortgage fees, valuation, and the like. One welcomes the Bill, not as being everything that one could wish for, but as an insalment and an earnest of the Government's attempt to meet a very difficult situation. When we look at the Clauses of the Bill and see that a fund is to be set up whereby, through the organisation of a corporation, mortgages can he granted, we are all agreed that that is a very excellent way of doing it, because it enables all the advantages of private enterprise to get to work on this business.
I think the Government should be represented upon the board of the Corporation. It is very essential that in the working of the Corporation there should be a good deal more decentralisation than we appear to be getting. The Minister said that instead of the farmer having to write to London, in future he would be able to go to his local bank manager. Unfortunately, the big joint stock banks are not in the habit of giving too much latitude to local bank managers. It is essential in carrying out a scheme of this kind that the person who is borrowing as well as the security should be considered, and there should not be merely a formal application sent to the board of the Corporation in London, and they should be the entire judges as to whether they will grant the loan upon this formal application. I wonder whether it would be possible to have working with the directors some local members who know the circumstances of the borrower, and who know whether the borrower could, from his own resources, provide the money which he is asking the Corporation to provide. I think that would be very helpful, and it would be a practical measure to carry out what is at the back of the whole scheme.
With regard to the two-thirds limit, I do not think enough consideration has been given to the fact that the mortgage is gradually being paid off on the annuity principle. Where you have an annuity mortgage, under the annuity system you invariably have a higher initial advance than under an ordinary mortgage system. The ordinary security is two-thirds of the value, but that does not provide for the repayment of the capital. It is a permanent mortgage for a permanent loan which the farmer hopes some day to be able to pay off. In this particular form of loan you have the permanent mortgage repayable by the annuity, and yet the main advance is to be only two-thirds. I do not quite follow the reason for that. It has been suggested that it is because it happens to be a trustee security, but it is the debenture that forms a trustee security. The mortgage is for the portion that secures the debentures, because in addition to the mortgage and a portion of the debenture security there are other assets. There is the whole of the capital of the company and the Government security fund, and that shows that, taking the capital of the company at 2750,000, and the Government guarantee at £750,000, you get £1,500,000. You have to add to that the £10,000 per annum for the first 10 years forming part of the security. To that you must add the whole of the security provided by the £7,500,000, and in that way you get very nearly £9,000,000 security for an advance of £5,000,000. If the Minister of Agriculture will carefully consider that point, I think he will see that it is possible, without in any way endangering the security of the debenture holders, to be a little more generous in his advances.
Under the Smallholdings Act, which was recently passed, the smallholder is entitled to go to the county council and obtain an advance up to 90 per cent. of the value of his farm, providing it is a small holding under £100. I think the gap between 90 per cent. and 62⅔ per cent. of the value is too great, and I hope the Minister, when he considers this point later on, will be able to make the percentage 75 per cent., because that would still enable the security to be a real gilt-edged one, and the debenture holder will be perfectly safe. The Bill itself does not go very far, but, as far as it goes, with the exception of the long-term credit, I quite approve of it. I think the Measure will be exceedingly helpful to the farmer. Undoubtedly it is difficult to-day for the farmer to find money at a low rate of interest on mortgage. There are many reasons for this state of things. The field of investment during the last 20 years has greatly increased, and the increased money earned in investments other than farming is considerable. At one time land was looked upon as a premier form of investment, but, owing to political activities, and the legislation which has been directed against anybody who owns land—the landlord has been treated almost as if he were a criminal—
Hon. Members opposite blame us for the difficulties which they have created themselves. The difficulty now is to get these private mortgages because the cash is required in other and more profitable directions. I hope the Minister will be able to let us see the form of mortgage which he proposes, in order that we may see the terms upon which the borrower will be asked to go to the proposed company. We shall then be able to go through all the points which have been raised by speaker after speaker in this Debate. I hope provision will be made, so that after a period of 10 or 15 years the rate of interest may he reconsidered. I hope we shall be informed about the terms upon which the borrower can redeem. Another point I wish to put is in connection with the costs of the loan. I know that under the Agricultural Credits Act the costs went up enormously. I know cases that took 18 months to settle: lawyers had to be employed, and the Public Works Loan Commissioners had to be consulted, and all sorts of extremely difficult requisitions were put in. The result was much delay and expense, and I hope that will be avoided under this Bill. I trust that the valuers under this Measure will be the ordinary valuers and not Government valuers, who have to consider the whole district and not a particular locality.
The other point to which I should like to call attention is with regard to the short-term credit. The Minister stated that he had great doubts whether farmers would utilise this part of the Bill at all
if there were publicity, and I would ask the Minister to give his attention to this point. Sub-section (4) of Clause 9 says:
The register kept and the memoranda filed under this Section shall at all reasonable times be open to inspection by any person on payment…of the prescribed fee, and any person inspecting the register or any such filed memorandum on payment…of the prescribed fee may make copies or extracts therefrom.
That means that anybody can-inspect the register and make his extracts as long as he pays the fees. As regards the question of publication, Sub-section (1) of Clause 10 says:
It shall not be lawful to print for publication or publish any list of agricultural charges or of the names of farmers who have created agricultural changes";
while Sub-section (4) says:
For the purpose of this Section, 'publication' means the issue of copies to the public, and 'publish' has a corresponding meaning.
We all know that there are trade organisations which issue to their members the names of those who have registered bills of sale, and, so far as I can see, under this Bill as it stands at present, there is nothing whatever to stop any chamber of trade, or chamber of commerce, or any trade organisation whatever, from sending to its members a list containing the name of every person in their locality who has registered a charge; and anyone who has experience of country localities knows that, if one tradesman knows that a charge is registered against John Jones, the whole parish knows it next week or even next day. It seems to me that, if publication is to be avoided, there must be some different type of prevention of publication than is provided by the Bill itself.
If a farmer has a charge with the bank under the terms of this Bill, I cannot see why the general public should be allowed to go and see that he has such a charge, or, rather, that anybody has got such a charge. I quite understand that it might be impossible to avoid a search being made in the name of a particular farmer, and that particular farmer's entry on the register being handed to the person making the search; but, under the Bill, anyone who wants to make a search has a roving commission over the whole register; he can see everyone who is registered, and not merely the particular person in respect of whom he is going to search. If a farmer goes to a tradesman, and if he has registered one of these charges, the tradesman can ask his trade organisation to have a search made for the name of a particular man of a particular address; but, where anyone has a right to go into the registry and search the register, it seems to me that any question of privacy is done away with, and that the very thing that the Minister says would prevent the farmer from utilising this for his own benefit would be in operation.
I know that the question of short-term credits is a very difficult one, and I do think, having regard to the fact that under the Bill the banks are to be the only people to grant short-term credits, and that under the Bill the only people who will be interested in operating the long-term credits are also the banks, that it is more essential than ever that a Government representative should be on the Board of the proposed Corporation. As I have said, I welcome the Bill as far as it goes. I know that the whole path of agricultural credits is exceedingly thorny. The agriculturists, through their union, have asked for short-term credit, and I believe that they are satisfied that this method, subject to what I have said, is one of the best ways of granting it. Whether it would be possible to extend the right to obtain this charge to others than the banks is a matter which I expect will he explained to us later. If it can be extended to others, I hope it will be, because one does not wish the banks to have an entire monopoly of farming credits. I am exceedingly glad that the Bill has been brought in, and I hope that, before it has passed through all its stages in the two Houses, it will be made a really workable Measure and a benefit to agriculture.
My right hon. Friend the Minister of Agriculture must be considerably gratified and encouraged by the general approval with which this Bill has been received by the right hon. Gentleman the Member for West Swansea (Mr. Runciman). The right hon. Gentleman never referred to the wonderful Green Book of his Leader, but, when the hon. Baronet the Member for Caith-ness (Sir A. Sinclair) spoke, he took up a rather more hostile attitude. He said that he gave the Bill candid, critical and frigid consideration. I think it is hardly to be wondered at that he, who is generally supposed to be the author of the new Tartan Book, should show that his thoughts were running more in that direction than in the direction of the policy of the Government. To-night we are considering a very interesting scheme, and one which I think is a necessary part of the policy of any Government which desires to help agriculture at the present time. Long term credits are almost necessary after the history and experience of the Corn Production Act and its abandonment. By the abandonment of that Measure, many farmers were put in a most unfair position. They bought their land at prices at which they were entitled to expect it to continue, according to the Government's guarantee, and, after the Government broke its word, I think it is only right that those men should now get some little protection in the shape of this Bill.
Of course, we all want to see the rate of interest and the payment of sinking fund fixed at as low a rate as possible. If the Government issue these debentures at something like 5 per cent., and if the repayment of capital is spread over 50 years, and, accordingly, only comes to something like 5s. 5d. I feel that the total interest and sinking fund payment should not be much more than 5½ per cent. If that be so, we may, perhaps, find that this Measure will be largely taken advantage of, not only by men who bought their farms at high prices, but by others who may come in later as buyers. I think it would certainly be wise, not only that the Government should be represented on the directorate of this corporation, but that the agricultural interest also should be directly represented. We want to see this scheme meet with success, and, the more we keep the connecting link between the industry and the banking authorities, the more likely it will be that the Bill will work successfully. As regards Part II of the Bill, which deals with short term credit, that is a much more difficult problem. Traders and merchants, as has been said, have given, and are giving, an immense amount of credit to the farmers. As the banks can give credit only accord- ing to the amount of their deposits a position may be created as a result of which the banks may not be able to help any more than these private traders have been doing. Therefore, I am not so hopeful about the beneficial results of Part II of the Bill as I am about Part I.
As a Scottish Member, I regret that Part I of the Bill is not made applicable to the Northern Kingdom. We have seven banks in Scotland, and five of these banks act in conjunction with the five big English banks, and, therefore, from the banking point of view I can see no difficulty in the way of this Corporation acting in Scotland as well as in England. The Scottish farmers will certainly think that they have been badly treated if they are left out of this scheme. I only hope, after the general and, I think, unanimous expression of opinion of all the Scottish Members who have spoken, that the Government will look at Scotland in a sympathetic manner and take it into the scheme as far as Part I is concerned. The hon. and gallant Member for Caith-ness and Sutherland condemned the Bill in one sentence, but in the very next sentence he asked why it was not being given to us in Scotland. I think deeds are generally worth more than words, and when we see the hon. Baronet anxious to get the Bill for Scotland, we do not need to pay so very much attention to his criticism. With these few words I, as a Scottish Member, thank the Government for adding this coping-stone to their agricultural policy, and I only hope that my right hon. Friend the Minister of Agriculture will consult the Secretary of State for Scotland and that conjointly they will bring Scotland into the scheme as regards Part I of the Bill.
I think that the present Session of Parliament will, in one respect at least, go down to history as a most remarkable one. We have a Parliament controlled, I suppose, to the extent of three or four-fifths by the defenders of private enterprise, and during the whole of this Session we have had a constant stream of applicants from private enterprise seeking State assistance in order that they may be able to carry on their various industries. They have been of a most varied assortment. We have had the manufacturers of motor cars looking for tariffs, and getting them. We have had the employers in the heavy industries seeking relief from rates, and being promised it. To-day we have agriculture seeking assistance again from the national purse to enable it to escape starvation and ruin. When a member of the working class has to seek relief from public funds, the first thing he is expected to do is to prove his poverty. He is put through a very keen inquisition to show that he is on the verge of destitution, and that it is in the national interest that he and his should have this public relief. On that principle I would have expected this evening that the first evidence in support of the Bill that would have been presented to this House would have been the necessitous condition of the applicants. As far as I am aware, and I have listened to most of the Debate—unfortunately I missed the opening remarks of the Minister of Agriculture—no attempt at all was made to prove that the farmers and those interested in agriculture, financially or otherwise, are in any greater poverty than the general public from whom assistance is sought. Indeed, I thought that agriculture in this country was doing very well under the Conservative Government. I have a clear recollection of a speech delivered by the right hon. Gentleman in the course of last year, in which he made the assuring announcement that agriculture had turned the corner; that agriculture was now on the threshold of prosperity.
I did not say so. I should be very much interested if the right hon. Gentleman can give me the reference of the speech I made last year containing these words.
I will undertake to give the right hon. Gentleman the reference which he requests. As I said, we have had no evidence at all submitted that agriculture is in the ruinous condition in which it has been pictured this afternoon. We have evidence to the contrary. I have in my hand a pamphlet issued in April last by the Miners' Federation in South Wales. They quote certain figures which, they state, are taken from the reports issued by the income Tax Commissioners. They give us some remarkable figures. For instance, they tell us that the profits of farmers, market gardeners, nurserymen, etc., under Schedule B, amounted to £17,500,000 in 1913, and to £49,000,000 in 1925–26. When you find the profits of an industry rising, even allowing for the difference of values, from £17,000,000 in the last year before the War to £49,000,000 in 1925–26, you are not, at any rate, struck with the impression that that industry is in the ruinous condition of, say, the mining industry. I think there is a remarkable feature about this application for aid which is before us to-day, and it ought to be emphasised. During the past 10 days we have had an announcement from the Government that they intend to abolish rates entirely on agriculture—that the remainder of the local rates is to be abolished under the scheme the Chancellor has submitted. So much for public assistance.
We are asked to-day again to grant money free of interest and generally to give in various ways assistance from the public purse and the public credit to this same industry, but everyone knows the greatest burden on the farmer to-day is the rent he has to pay to the landlord, and while the public -have to listen to an incessant demand for assistance for the farmer out of their purse, we never hear one word raised from the other side about the farmer being relieved of the burden imposed on him by the landlord. I find in this report that during the same period as stated above the landowners have increased their share by over £80,000,000. Obviously the landlords are doing fairly well. We have no evidence that the farmers are in poverty. Of course, there will always be farmers in poverty. In a competitive system there are always, necessarily, people in poverty in every industry. But even compared with the figures of insolvency for a period of 23 years before the War, the average number of farmers who went into bankruptcy annually is less in 1926. But you must have farmers doing well. On the whole, you must have a condition of prosperity much greater than in pre-War times in view of these figures I have quoted.
Coming to the Bill itself, I think we ought to have a statement from the Minister as to the total amount of capital the farmers have in the agricultural industry. That is very important if you are to judge the probable results which will accrue from the addition to that capital that is being made by these credit proposals. Of course, the idea always behind the proposals of the parry opposite is that if you get a little more capital into the industry, somehow or other the industry will prosper. They always overlook the fact that agriculture is suffering to-day, not so much from the lack of the necessary capital, as from the fact that it is not able to receive a fair price for its produce from the industrial districts. The Liberals ought to be the very last to talk about the condition of agriculture. The Liberal party ruined agriculture during the 19th century. They wanted cheap labour for their big industries, and they got it from agricultural districts by pursuing a policy in the period of their political power that brought about the necessary poverty and drove the people to the industrial districts, where labour was required. And, for the great defenders of free competition to come forward and tell us that what agriculture needs is co-operation with State assistance, is the greatest political humbug that has been preached to the House during recent years.
I notice that, one after another, speakers on the other side appealed to the Minister to see that there was a Government representative on this board that is to be set up. I wondered for a moment why all this anxiety for a Government representative. For the moment I thought that perhaps the Tories, like the Liberals, were about to change their view with regard to individualist or collectivist control and wanted the first step towards Socialism taken, that they were thinking of inserting the thin end of the wedge and gradually driving it home till you have that complete Government control which we on this side have so long advocated. But if you reflect for a moment you will see that what the party opposite seek in this Government representative on the board is not so much Socialism for the good of the nation, as just that little morsel of Socialism that will ensure the safety of the money that is invested in this credit scheme. If you had one Government representative on the board, he would not do much harm. He would be controlled by the vast majority that represent private enterprise and private property. But the very fact of his being there would make the Government to some extent a guarantor, not merely to the extent stated in the Bill, but a guarantor for the whole operation of the Corporation, and if in the future, having put, say, £5,000,00, £10,000,000 or £20,000,000 into the agricultural industry, it was found, as is happening in some parts of Ireland, that the farmers could not pay and that there was a danger of the investment proving unprofitable, indeed proving a complete loss, the very small representation the Government has on that board would put on the Government a moral responsibility to see that the investors did not suffer.
I said we ought to have had a statement as to how much capital there was in the farming industry at present I do not claim to have any first-hand knowledge of the subject, but I am reliably informed that the amount of the farmers' capital in England and Wales alone is not less than £400,000,000, and, remember, you have to add to that figure all the credits they are receiving at present from traders and banks. The scheme starts with a proposal to add £5,000,000 to the capital. Let us say they added £10,000,000, £20,000,000, £30,000,000 or £40,000,000. Is it to be seriously argued that where you have anything between £400,000,000 and £800,000,000 invested to-day, the addition of another £5,000,000 or £10,000,000, even if it is money the interest on which is guaranteed by the Government, is going to make the industry prosperous? There is really nothing in this scheme for the farmers themselves. Not only this House is being humbugged, but the farmers are being humbugged. If you wanted to relieve the farmer you would come out boldly and say the land that cannot maintain its cultivators and pay rent at the same time should be relieved of the obligation of rent.
That should be the first test. The first claim on the agriculture of this country should be the labour put into the cultivation of the land. The farmer ought to get a decent return for his labour, and the agricultural labourer should have a decent standard of living. That should be guaranteed—and guaranteed by the Government—to these workers as a first charge on land, and only after that and similar legitimate charges have been met should the claim of the landlord be considered at all. All these efforts either to delude the people or to use State money to bolster up an arrangement which is crumbling to the ground in every direction, are bound to end in failure and, willy nilly, the farmers and agriculturists.of this country will be driven to side with those who want to emancipate the industry from the grievous burdens which it is bearing to-day, the burden of the landlord's rents.
My main object in rising is to correct a mistake made by the hon. Member for Hillsborough (Mr. Alexander) in regard to a statement made by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), who unfortunately is not able to be here to-day. The hon. Gentleman's statement, I am sure, was made without the necessary investigation, which very frequently happens in regard to statements made by my hon. Friends above the Gangway on this side of the House. The right hon. Gentleman who has just sat down (Mr. Wheatley) is one of those wealthy Socialists who believes that interest should be obtained from certain industries, but that the landlord should not get any interest. In my part of the country—[An HON. MEMBER: "What does he do?"] If the hon. Member who interrupts knew as much about agriculture in Wales as I do, he would agree that the landlord is one of the poorest members of the community. We are a land of what I might call smallholders. In Wales we have 40,000 farms of under 50 acres, so that we are a nation of smallholders, and the owners of these farms are men who really do not get a bank interest on their money. I know scores who are not making any more than 3 per cent. per annum. That was the reason for the anxiety of so many landlords to clear out during the War, when the price of land, like the price of everything else, went up, and that is one of the reasons why farmers are in distress to-day. They bought their holding because it happened to be their home. They paid, unfortunately, uneconomic prices for their farms, and they got the money mostly from the banks at the value obtaining at that time, and to-day they are paying an inflated interest, most of them double the rate which they paid in pre-War times.
I should like to ask a question of the right hon. Gentleman. I am going to give my blessing, for I thoroughly approve of the Measure which he has brought forward. I do so because of the dire necessity of many of the farmers in my country. I should like to ask the right hon. Gentleman one question. I do not quibble so much about the interest, because farmers are already paying 6 per cent., and I do not think many of them could get it at very much less. Under this scheme, will the farmers be able to get loans at the values at which they bought the farms If they do not, they will be placed in a very serious position. If they are to borrow money only at the present values, it will be much lower than the price at which they bought their farms and the money which they borrowed from the banks. Therefore, these smallholders will find a serious gap between what they paid for their holdings and the money they are able to borrow to-day. I should like to have an assurance from the right hon. Gentleman on that point.
In regard to the second part of the Bill, undoubtedly anything that can be done to place the farmers in an independent position is welcome. To-day, under the vicious system they are forced to adopt, of borrowing money from middlemen, they are in a position of dependence which is almost intolerable. They are almost told at what price they may sell their produce. The producer, not merely in agriculture but in all branches of industry, to-day is the one who is suffering. It is the middleman who is making the profit. It is the same in agriculture, and I should welcome this Measure if it were for no other reason than that of placing the farmer in a position of independence and of getting money from some other source than the person to whom he is bound to sell his produce. Having said that much, I should like to deal with the point which brought me to my feet, which was the statement made by the hon. Member for Hillsborough. This is what he said:
The right hon. Gentleman the Member for Carnarvon Boroughs stated in a Debate initiated by the Liberal party that he did not object to subsidies.
That is a very serious statement to make and I am sure the hon. Gentleman, on reflection, will withdraw it, particularly when I read to him actually what my right hon. Friend did say. The hon. Gentleman did not indicate the occasion of the statement, except in a vague way, but I assume he was referring to the right hon. Gentleman's speech on the Consolidated Fund Bill in December last. It arose apparently in this way: The right hon. Gentleman the Minister of Agriculture put this question to my right hon. Friend:
Do I understand that the right hon. Member for Carnarvon Boroughs is in favour of direct assistance by means of subsidy?
My right hon. Friend replied:
The right hon. Gentleman asks me that question now, but I intend to speak later in the Debate. He asks me whether I am in favour of State assistance of agriculture. I certainly am…"—[OFFICIAL, REPORT, 20th December, 1927; col. 311, Vol. 212.]
Then my right hon. Friend made a speech a little later on in the Debate, and from what he said the House will see that it certainly does not mean he believes in subsidies:
One of the greatest farmers in the county of Essex said to me the other day, 'When you come to deal with marketing it is no use leaving it to the farmers themselves. It is not that they are incompetent. It is purely because it is very difficult to organise the farmers of the country for a purpose of that kind.' Everybody knows it. In Denmark the Government took the organisation of marketing into its own hands very largely and promoted it. It is a question of transport; it is a question of collection; it is a question of improving the roads and of expending money. You must spend money to start it. I said so in reply to an interruption of the hon. Gentleman. I never though that you can extricate agriculture from its present position unless the Government are prepared in the first instance to spend a considerable sum of money in order make up the deficiencies of the past."—[OFFICIAL REPORT, 20th December, 1927; col. 352, Vol. 212.]
The hon. Gentleman will see at once, from this statement, that my right hon. Friend did not state that he believed in subsidies. Therefore, I hope that the hon. Gentleman will do my right hon. Friend the justice of withdrawing that imputation. I should like to congratulate my right hon. Friend on the very sincere effort he has made to help the farming community. There can be no doubt from the eloquent speeches of the
right hon. Member for West Swansea (Mr. Runciman) and the hon. and gallant Member for Caithless (Sir A. Sinclair) that the situation is very serious both in England and Scotland, and I can assure the House from my personal knowledge of agricultural conditions in Wales that it is equally serious there. Therefore, I thank the right hon. Gentleman for this effort, although it does not go as far as some of us would like.
The hon. Member for the Hillsborough Division (Mr. A. V. Alexander), in moving the Amendment, expressed some difficulty in understanding the provisions of the Bill, owing to its late appearance. Perhaps that difficulty in understanding the provisions of the Bill accounts for the rather turgid character of the Amendment which he has proposed for its rejection, combining, as I shall try to show, several perfectly inconsistent reasons for taking that course. I suggest to the hon. Member and to every hon. Member who has found difficulty in understanding the provisions of the Bill that a very little study of it will show it to be singularly simple and free from complications in comparison, at any rate, with many of the Measures which the House has to consider from time to time. The first part of the Bill is, I think, understood by everybody criticisms have been made upon its particular provisions, but the main purpose of Part I and the way in which the purpose is to be effected are perfectly intelligible to everybody.
The plan which the Government have deliberately adopted is that the capital which is necessary for providing the long-term credits, with which Part I of the Bill deals, should be provided by the banks and by the Government in the first instance, in partnership, and that the rest of the money should be provided by debentures, which are to be subscribed by the investing public. The Government think that by that expedient they will introduce to the investing public a new form of security which will attract the savings of the nation as they have never yet been attracted into the agricultural industry.
The first criticism with which I wish to deal relates to the part which the Government plays in providing £650,000 or £750,000. The criticism which the hon. Member for Hillsborough made, and it was repeated by the right hon. Member for West Swansea, was that it was desirable or, indeed, essential, that if the Government are to provide some of the money the Government should be represented upon the management of the Corporation. That is a perfectly fair and reasonable criticism. It is a criticism which my right hon. Friend the Minister of Agriculture had, even considered before it was made in Debate. I do not think I am going too far when I say that my right hon. Friend will not close his mind to the suggestion, but at the same time I am bound to say that our present impression, and I believe my right hon. Friend's present impression, is that the control which it is suggested can be obtained by Government representation on the Board of this Corporation, is capable of being obtained by much more satisfactory methods, that such control is not of a very satisfactory character in so far as it could only be exercised by one member of the Board representing the Government, and that the provision in Clause 2 of the Bill by which the Government have to approve the Articles of Association in all their details, Articles which can only be altered with the consent of the Government, is much more satisfactory and complete than any control to be obtained by the representation of the Government on the Board by an individual member. That method of Government control would have this disadvantage, that it would begin to approach the system of State banks which, at any rate, we are not prepared to contemplate.
A criticism, which is one of substance, has been made as to the amount and character of the advances which are proposed to be made by the Corporation under Part I of the Bill. Nothing is easier than to say that while it will be of use to the industry that 66 2/3rds should be advanced but that it would be much more useful and attractive that 75 per cent. or even 100 per cent. should be advanced; but the Bill is ambitious enough to claim to be a business proposition. It is a feature of this scheme that a new type of agricultural security should be brought into existence, and I should like to ask any hon. Member to consider for a moment what would be the chance of obtaining public subscriptions to these new securities and what would be the chance of maintaining these debentures at a proper figure in the money market if the security for them were mortgages up to 100 per cent. of the value of the farms. The right hon. Member for West Swansea and one or two hon. Members opposite who raised this suggestion cannot have contemplated the result of their proposal.
If any hon. Members behind me made the suggestion it would be met with equal disfavour. Contemplate the result of a suggestion that 100 per cent. of the value of farms based, moreover, upon the value at a time when farms were more valuable than they are to-day, should be advanced. It would lead to a disaster in this enterprise which would be absolutely fatal to it. The proposal that the company must be able to borrow cheaply in the market is really inconsistent with the suggestion which has been made that advances should be made beyond 66⅔ per cent. I was not surprised to hear the right hon. Member for Swansea, West, make that proposal, because I understand that he is not in favour of some of the proposals contained in a book recently published, "Land and the Nation"—the Green Book. The hon. and gallant Member for Caithness (Sir A. Sinclair), who made himself responsible for the proposal that 66⅔ per cent, is not a sufficient advance to put in Part I of the Bill is, I understand, a supporter of the policy proposed in that Green Book. In that book is the following statement:
No wise advisor of investors would encourage a mortgagee to risk an amount greater than two-thirds of the present real value. Mortgages beyond this amount must be regarded as being highly speculative.
I should be very sorry to think that the hon. and gallant Member for Caithness is not to be considered a wise adviser of investors, but really no business man would ever contemplate for a moment that in connection with mortgages upon land anything ought to be considered beyond the limit of 66⅔ per cent. of the value of the property. It is said that this provision will not do anything for almost the most needy class of the agricultural community to-day—the people who bought their farms, say, in the days after the Corn Production Act, and
people who were compelled to buy their farms at prices then prevailing. It is the habit of some people to spend their time looking back. This Bill does not attempt to restore the lost capital of the agricultural industry. It is not an attempt to bury the dead of the past; it is an attempt to keep alive in the future those who are alive now, and if we were to attempt, by taking the lost values of 1920 or 1921, to help the agricultural industry, we should be in great danger not only of ruining the banks or the corporation which will be brought into existence to give that assistance, but we should be very unlikely to give any real assistance to agriculture. Every industry has been forced to write off the losses suffered at times when prices and values were very different from what they are at the present time. I do not know any reason, except sympathy, which would lead us to set up a financial corporation to lend to people who had really lost their capital in the industry, sums which would be insufficiently secured.
The landlords have written off almost as much as any industry in the country. The next criticism made, again by the hon. Member for Hillsborough, was that the advantages proposed by Part I of this Bill would fall on the undeserving, as well as on the deserving, that they would be available for the prosperous farmer as well as for the necessitous farmer or landowner. I find it a little difficult to imagine that the man who is not in want of financial assistance will apply to this new corporation for it. It is the needy landowner or farmer who will apply to this corporation for the assistance which the corporation is brought into existence to give. Therefore, I cannot find very much substance in the criticism that, if advantages are given by this Bill, they will be given to persons who do not need them. Suppose that prosperous people do mortgage their land through this new corporation and give 66 per cent. of the value of the land as security. Will not that be an added strength to the corporation, which is to assist needy people? It will have excellent security which it can offer to the public for the debentures in which the public will be asked to invest. So far from regarding it as a criticism of the scheme that it will attract persons of substance and prosperity to borrow sums which they will be more certain to repay, I should have thought it was an argument in favour of the scheme.
A still less justified criticism of the hon. Member for Hillsborough was given when he protested against the addition of new security for the money market. I understand that he objects to the provisions of Clause 3 of the Bill, which makes debentures trustee securities. I think that if the House reflects for a moment, it will be seen that there is ample security entitling these debentures to be treated as trustee securities. There will be the mortgages based upon a sound proportion of the properties charged; there will be the land improvement charges behind them; there will be the share capital contributed by the banks; there will be the Government contributions; and there will be the reserves. If ever a security was entitled to be put into the category of trustee securities, I suggest that these debentures are of that character. The hon. Gentleman protested against the suggestion that a new security should be put on the market, suggesting in some way that that would diminish British credit, or make it more difficult to engage in those conversion operations which are the particular anxiety of the Chancellor of the Exchequer. If we are to refrain from creating new securities, we may as well close down our business altogether.
The burden of the hon. Gentleman's other criticism was that, instead of setting up a new organisation to confer these boons upon agriculture, the Government should have done the work themselves. Hon. Members opposite would have been certain to approve of some method of that sort. It is interesting to observe that the Amendment speaks of the Bill establishing unnecessary machinery, and yet the hon. Member wants a Government Department to be set up! If the necessary steps for the assistance of agriculture could be taken without the creation of a horde of officials I should have thought that that would be congenial to the hon. Member, who does not want to see the creation of any unnecessary machinery. The next suggestion was that we should have adopted the expedient of co-operative credit societies, which have been tried with great success in Germany and other countries. I know that the mere use of the word "co-operative" is grateful to the hon. Member for Hillsborough. If only we had called this organisation the "Co-operative Corporation," I almost think that he would have given this Bill his blessing, but nobody knows better than he does that a serious effort was made some years ago to use the system which has been so successful in Germany, and that it failed entirely in this country. It is no more likely to succeed to-day than two or three years ago, for a very good reason; either from habit or prejudice the British farmer will not engage in mutual guarantees. He will not do it, and it is no use attempting to force on agriculture the thing which, it has been proved, it will not accept.
I think that the plan which we have adopted is better than either of these two proposals—better than a. State bank, better than co-operative societies which the agricultural community is not prepared to have. The banks have their great organisation, with which we are all familiar, all over the country. There is hardly a town of any respectable size that has not two or three banks competing for the custom of the farmers and traders of the district. We have a whole network of organisation right to our hands for the application of the funds which the investing public, the Government and the banks are going to provide for the agricultural industry. Is not the use of that organisation an advantage in itself? Is not this an expedient by which we may find the enormous capital which would cripple such a scheme as hon. Members opposite have in mind? The use of these local branches and the Corporation which it is proposed to set up, coupled with the personal knowledge which the bank managers will have, as the right hon. Gentleman the Member for West Swansea (Mr. Runciman) rightly said, of the people for whose assistance it is designed will bring, with the substantial help which the Government is offering, real assistance to the harassed members of the agricultural industry.
I know that it will not be everybody in the industry who is likely to be able to avail himself of the advantages which Part I of the Bill offers, but there will be, at any rate, one great advantage of the long-term credit which those who can use the Bill will enjoy, and that is a freedom from the harassing alteration of mortgages which many people have to suffer—money advanced upon mortgage which the lawyer or the client calls in at times and in ways inconvenient to the borrower. The farmer in future will avoid the repetition of the burden and the cost of changing his mortgagee by enjoying the long-term credit which Part I of this Bill offers to him.
My hon. Friend the Member for Lichfield (Mr. Roy Wilson) asked a question which perhaps I ought to answer. He asked whether the amount of the fees would not be such as to make this boon a very slight one. The bankers, after all, who are going into this great business will be charged in their own interests to make it a success, and I do not suppose that they are likely to spoil the ship for a ha'porth of tar, or that they are likely to charge such fees as to make the organisation which they are offering to the agricultural community a failure. I can say no more about that. It would be obviously quite impossible to put in the Bill any limitation on the fees to be charged for the proper services of the banks, nor could any such limitation be put into a Bill if the expedient of a State bank proposed by hon. Members opposite were adopted.
Then I pass to Part II of the Bill. This, at first sight, appears to be a little more complicated, but I think that any hon. Member who will look at it will find it not at all difficult to understand. There is a very good reason at the present time why the large amount of credit which the agricultural industry possesses is not employed. It is impossible, as everybody knows, for the farmer to mortgage or charge his live or dead stock without granting a bill of sale. The mere mention of the words "bill of sale" is enough to impair the credit of the man who is giving it. The publicity attending it, the formalities involved, everything connected with a bill of sale is odious, and it is an expedient that is resorted to only when the state of the borrower is desperate.
There are other difficulties in the way of the farmer charging his property. There are provisions in the Bankruptcy Acts with which lawyers are familiar in connection with reputed ownership which prevent a farmer from charging his assets. This Bill makes an alteration of the law so far as to make inapplicable the provisions of the Bills of Sale Act to the transactions which we propose. Similarly, when the farmer has given a charge over his live or his dead stock-in-trade, the doctrine of reputed ownership will not come in to interfere with the security which the lender would enjoy. When one has realised that this Part of the Bill is largely engaged in getting over the legal difficulties which the farmer has up to this time experienced in turning his credit into cash, then I think he will appreciate that the rest of Part II of the Bill is merely intended to promote fair dealing between the lender and the borrower. For instance, it is fair that if a farmer charges his stock to a banker he shall not sell his stock and use the money for some purpose other than paying off the banker.
So you will find, in connection with the Clauses dealing with both fixed charges and floating charges, provisions that the farmer must deal fairly and squarely between the banker and himself. There is nothing rigid or cast-iron about the business. It is provided that they may make such terms as the two parties are prepared to agree upon, that they may make such alterations in the terms of the charge or the application of the money as to result in the realisation of the stock-in-trade as the two parties may determine. Some hon. Member may ask what is the difference between a fixed charge and a floating charge. A fixed charge, if I may put it in simple, layman's language, is a charge upon everything, upon the whole property which the borrower possesses or which is put into the charge at that moment, and if other property takes its place, it will not be included in the fixed charge. A fixed charge applies to the scheduled property which is the subject of the charge. A floating charge, on the other hand—and I realise that this part of Part II is more likely to be used than that dealing with fixed charges—allows the farmer to change the property. That is to say, he may sell his herd, or his flock, or his machine and replace it without more formality, and the floating charge will apply to the substituted flock, herd, or machine, just as it did to the property he originally possessed. Part II will appeal to anybody who understands that the whole object of it is to render available for the farmer that enormous reservoir of credit which at present is absolutely idle in his hands. We have simply sought to remove these legal obstacles to the use of this credit, which are familiar to every lawyer who has had to deal with them.
The hon. Member for Hillsborough asked one or two questions. He asked a question, which is a very technical one, as he will appreciate, as to the application of Section 212 of the Companies Act. That Section is a provision which prevents companies giving a floating charge to secure past or dead debts within three months before going into liquidation. The object of it is to prevent something almost akin to fraud on the part of companies that are shortly going to be wound up. So far as I can give the hon. Gentleman an answer, that provision does not apply. I do not think that the words of Clause 7 would import that provision into this Bill. I should like to say this further, that I think that sentence at the beginning of Clause 7 will require consideration in Committee, and probably amendment.
Is not the operation of Section 212 of the Companies' Act, as a matter of fact, not merely for the prevention of fraud, but for dealing with the bare fact of a debenture having been given; and is it not serious for people who are creditors or people who will be getting, say, the further loan under this Bill, not to have the same protection if a debenture is created under Clause 7 as a person would have under Section 212?
I do not want to get into a discussion of Section 212. It is shortly, as I have stated, to prevent a company giving a floating charge within three months of going into liquidation, if it has not really got any fresh assets which would be available for the creditors. Whether or not that applies is probably a question on which there might be some difference of opinion, having regard to the present form of Clause 7. All that I say about it is that, as the hon. Member has mentioned it, it reinforces a doubt which I myself had felt as to whether the opening words of Clause 7 are in as satisfactory a form as Clause 7 ought to be in. It is exactly a point which the Committee which has to consider this Bill will properly undertake, and I can promise the hon. Gentleman that it will receive the most careful consideration and that any help which he can give will be welcomed. The hon. Member for Rye (Sir G. Courthope) asked whether companies, and farmers who carry on business in partnership, will be excluded from the facilities given by the Bill. It will be seen that a farmer is stated to mean "any person not being an incorporated company or society." A good reason for not making this part of the Bill applicable to incorporated companies, or to limited liability companies, is that they can borrow now on their assets, and it would be superfluous to make this Bill apply to a company registered under the Companies Act. But there will be no difficulty for farmers carrying on business in partnership receiving assistance under the Bill.
The right hon. Gentleman the Member for West Swansea raised a doubt about Clause 12. He said that the Bill would result in tradesmen immediately calling in their debts from farmers. I think the answer is simple. The suggestion is that traders who are creditors of farmers will call in their debts and so ruin the farmers, and I venture to think that anybody who makes that criticism knows very little about the rural community in which farmers live. The traders, who are at present, in many cases, the financiers of the farmers, have in turn received their credit from the banks. They are the middlemen as it were, between the banks and the farmers. What interest would the tradesman have in ruining the farmer upon whom his business largely depends? It is surely better to get 20s. in the £, with the assistance of the bank, than to ruin a debtor and get 10s. in the L. Inasmuch as the trader, in order to give this extended credit to the farmer, has had to resort to the bank to obtain credit, it is not very likely that there will be a conspiracy on the part of the trader and the bank to destroy the business of the people whom both the trader and the bank are anxious to foster and protect. I think that should satisfy anybody that the fears which have been expressed as to the traders calling in their debts are ill-founded.
Does the hon. and learned Member say that the merchants themselves have not made representations to the Government on exactly the lines which have been stated?
The merchants have not only been considering this question with the Government, but they have given assurances to the Government that they are not in the least likely to take the extravagant course which have been suggested. We have been reproached for putting the cart before the horse and for not stimulating marketing before we brought in our scheme for giving credit facilities. How are you to revise your marketing system if in too many cases the farmers are bound hand and food to the trader? The first step is to release the farmer from the bondage which he is now in to the people who are giving him credit. This is the first step which will enable him to rearrange his marketing as a result of the relief which he is to be given by the Bill. The hon. Member for Hillsborough complained that this was a bankers' protection bill, and he said that it would not be the bankers who would lose. What a curious conception of finance hon. Members opposite have, if they think that a Bill that did not take care that the bankers would not lose would be of any help to the agricultural community ! Do they realise that no intelligent person would set up a corporation or bank that is meant to help agriculture, without taking care that the help would not be given at the expense of the bank itself? The stability and security of the bank is the justification and the safeguard and the bulwark of the whole system.
The hon. Gentleman really made a criticism which I welcomed when he said that the banks are not to lose. Of course they are not to lose. The corporation is to be strong enough, we hope, to give assistance to agriculture at the cheap rates that everybody desires. You do not suppose that a, tottering bank that is losing by the Bill would be able to give cheap facilities. The stronger the corporation, the better the credit of the corporation, and the more their position is safeguarded the more likely is it that the corporation will be able to lend money on long term credits at less than 5 per cent. I shall be curious to see how hon. Members
opposite, should they attain not only to power but to office, are to set up the agricultural industry by devising a bank which shall be the loser by the operation. The Amendment is a composite one. It begins with what I suppose is a gesture to agriculture, when it says that:
This House, while sympathetic to all sound schemes for the encouragement of British agriculture…
But the sympathy is only skin-deep, as is seen by the next sentence, which says that the House is asked to refuse to give a Second Reading to a Bill which involves further subsidy from the taxpayers without, ascertaining, in terms of ordinary Income Tax returns, the precise economic position of agriculture. So sincere is the sympathy which hon. Gentlemen opposite are anxious to express, that they suggest that the farmer is an Income Tax dodger, and that, if only his real position could be revealed, he would be found to be not a deserving mendicant for our bounty, but a prosperous Super-tax payer, and that it is not proper to give him assistance under this Bill until he has been forced to disgorge through Income Tax returns. If that is the idea of the hon. Gentleman opposite of the state of agriculture at the present time, I do not wonder that he approaches the Bill in this way. An industry which is in that position would not need the help of this or any other Bill. I should like him to go to the country and tell a meeting of the farmers—
obtain help from the Labour party until they make out honest Income Tax returns. The hon. Member seems to be a little conscious of this in the Amendment, because he goes on to say that the Bill
enforces conditions which many of the most necessitous applicants would not be able to fulfil.
The Income Tax dodger disappears, and the beggar then appears, and the Amendment says that the Bill is
quite inadequate for the objects which are in view.
The hon. Gentleman should make up his mind what the facts are before he gives expression to opinions of that sort upon the Bill. The Government have a very simple object in view. Their object is to provide for agriculture that mobilised credit which every other industry possesses. The Government believe that by this Bill they are going to do something to pour into the empty cisterns of agriculture the irrigating water which the industry requires. We shall be quite content if, with the practical sympathy of the farming industry which its provisions justify, the Bill proves a success, not because it is bolstering up a decaying industry, but because it gives that help which is available to every other industry in the country except the agricultural industry. With the help of the House, in amending such provisions as may be found defective, we think it can be made a real contribution to the development of this great industry.
|Division No. 115.]||AYES.||[10.16 p.m.|
|Acland-Troyte, Lieut.-Colonel||Brass, Captain W.||Chapman, Sir S.|
|Agg-Gardner, Rt. Hon. Sir James T.||Bridgeman, Rt. Hon. William Clive||Charterls, Brigadier-General J.|
|Albery, Irving James||Briggs, J. Harold||Christie, J. A.|
|Alexander, Sir Wm. (Glasgow, Cent'l)||Briscoe, Richard George||Churchman, Sir Arthur C.|
|Allen, J. Sandeman (L'pool, W. Derby)||Brlttain, Sir Harry||Clarry, Reginald George|
|Astbury, Lieut.-Commander F. W.||Brooke, Brigadier-General C. R. I.||Colfox, Major Wm. Phillips|
|Atholl, Duchess of||Broun Lindsay, Malor H.||Couper, J. B.|
|Baldwin, Rt. Hon. Stanley||Brown, Col. D. C. (N'th'i'd., Hexham)||Cowan, D. M. (Scottish Universities)|
|Barnett, Major Sir Richard||Brown, Brig.-Gen. H. C.(Berks, Newb'y)||Craig, Sir Ernest (Chester, Crewe)|
|Beamish, Rear-Admiral T. P. H.||Brown, Ernest (Leith)||Crawfurd, H. E.|
|Beckett, Sir Gervase (Leeds, N.)||Buckingham, Sir H.||Crooke, J. Smedley (Deritend)|
|Bellalrs, Commander Carlyon||Burman, J. B.||Crookshank, Cpt. H. (Llndsey, Galnsbro)|
|Bennett, A. J.||Burton, Colonel H. W.||Culverwell, C. T. (Bristol, West)|
|Betterton, Henry B.||Cadogan, Major Hon. Edward||Curzon, Capt. Viscount|
|Blrchall, Major J. Dearman||Carver, Major W. H.||Dalkeith, Earl of|
|Bird, E. R. (Yorks, W. R., Sklpton)||Cassels, J. D.||Davidson, Major-General Sir J. H.|
|Bourne, Captain Robert Crolt||Cayzer, Sir C. (Chester, City)||Davies, Dr. Vernon|
|Bowyer, Capt. G. E. W.||Cecil, Rt. Hon. Sir Evelyn (Aston)||Dawson, Sir Philip|
|Dixey, A. C.||Lloyd. Cyril E. (Dudley)||Sassoon, Sir Philip Albert Gustave D.|
|Drewe, C.||Lougher, Lewis||Savery, S. S.|
|Eden, Captain Anthony||Luce, Maj.-Gen. Sir Richard Harmar||Sheffield, Sir Berkeley|
|Edmondson, Major A. J.||Lumley, L. R,||Shepperson, E. W.|
|Edwards, J. Hugh (Accrington)||Lynn, Sir R. J.||Simon, Rt. Hon. Sir John|
|Ellis, R. G.||MacAndrew, Major Charles Glen||Sinclair, Major Sir A. (Caithness)|
|Erskine, Lord (Somerset, Weston-s-M.)||Macdonald, Capt. P. D. (I. of W.)||Slaney, Major P. Kenyon|
|Everard, W. Lindsay||Maclntyre, Ian||Smith, R. W. (Aberd'n & Kinc'dine.C.)|
|Falls, Sir Charles F.||McLean, Major A.||Smith-Carington, Neville W.|
|Fermoy, Lord||Macmillan, Captain H.||Smithers, Waldron|
|Flelden, E. B.||Macnaghten, Hon. Sir Malcolm||Somerville, A. A. (Windsor)|
|Forestier-Walker, Sir L.||Macquisten, F. A.||Spender-Clay, Colonel H.|
|Forrest, W.||MacRobert, Alexander M.||Stanley, Lieut.-Colonel Rt. Hon. G. F.|
|Foster, Sir Harry S.||Makins, Brigadier-General E.||Stanley, Hon. 0. F. G.(Westm'eland)|
|Foxcrft, Captain C. T.||Manningham-Buller, Sir Mervyn||Steel, Major Samuel Strang|
|Galbralth, J. F. W.||Meller, R. J.||Strauss, E. A.|
|Garro-Jones, Captain G. M.||Merriman, Sir F. Boyd||Styles, Captain H. W,|
|Gault, Lieut-Col. Andrew Hamilton||Meyer, Sir Frank||Templeton, W. P.|
|Goff, Sir Park||Milne, J. S. Wardlaw-||Thorn, Lt.-Col. J. G. (Dumbarton)|
|Graham, Fergus (Cumberland, N.)||Mitchell, S. (Lanark, Lanark)||Thomas, Sir Robert John (Anglesey)|
|Grant, Sir J. A.||Monsell, Eyres, Com. Rt. Hon. B. M.||Thompson, Luke (Sunderland)|
|Greaves-Lord, Sir Walter||Moore, Lieut.-Colonel T. C. R. (Ayr)||Tinne, J. A.|
|Greene, W. p. Crawford||Moore, Sir Newton J.||Tomlinson, R. p.|
|Gretton, Colonel Rt. Hon. John||Morrison, H. (Wilts, Salisbury)||Turton, Sir Edmund Russborough|
|Griffith, F. Kingsley||Morrison-Bell, Sir Arthur Clive||Waddington, R.|
|Grotrian, H. Brent||Murchison, Sir Kenneth||Wallace, Captain D. E.|
|Guinness, Rt. Hon. Walter E.||Nail, Colonel Sir Joseph||Ward, Lt.-Col. A. L. (Kingston-on-Hull)|
|Hall, Lieut.-Col. Sir F. (Dulwich)||Nelson, Sir Frank||Warner. Brigadier-General W. W.|
|Hall, Capt. W. D'A. (Brecon & Rad.)||Neville, Sir Reginald J.||Warrender, Sir Victor|
|Hamilton, Sir George||Newman, sir R. H. S. D. L. (Exeter)||Waterhouse, Captain Charles|
|Hamilton, Sir R. (Orkney & Shetland)||Nuttall, Ellis||Watson, Rt. Hon. W. (Carlisle)|
|Hammersley, S. S.||Oakley. T.||Watts. Dr. T.|
|Hannon, Patrick Joseph Henry||O'Connor, T. J. (Bedford, Luton)||Wayland, Sir William A.|
|Harland, A.||Owen, Major G.||Wells, S. R.|
|Harrison, G. J. C.||Pennefather, Sir John||White, Lieut.-Col. Sir G. Dalrymple|
|Hartington, Marquess of||Penny, Frederick George||Wiggins, William Martin|
|Harvey, Major S. E. (Devon, Totnes)||Peto, Sir Basil E. (Devon, Barnstaple)||Williams, A. M. (Cornwall, Northern)|
|Haslam, Henry C.||Price, Major C. W. M.||Williams, Com. C. (Devon, Torquay)|
|Headlam, Lieut.-Colonel C. M.||Radford, E. A.||Williams, C P. (Denbigh, Wrexham)|
|Henderson. Capt. R. R. (Oxf'd, Henley)||Raine, Sir Walter||Williams, Herbert G. (Reading)|
|Heneage, Lieut.-Colonel Arthur P.||Ramsden, E.||Wilson, R. R (Stafford, Lichfield)|
|Hills, Major John Waller||Rawson, Sir Cooper||Winby, Colonel L. P.|
|Hope, Capt. A. O. J. (Warw'k, Nun.)||Rees, Sir Beddoe||Windsor-Clive. Lieut.-Colonel George|
|Hope, Sir Harry (Forfar)||Remer, J. R.||Winterton, Rt. Hon. Earl|
|Hopkins, J. W. W.||Rentoul, G. S.||Withers, John James|
|Hore-Belisha, Leslie||Rhys, Hon. C. A. U.||Wolmer, Viscount|
|Howard-Bury, Colonel C. K.||Rice, Sir Frederick||Womersley. W. J,|
|Hume, sir G. H.||Richardson, Sir P. W. (Sur'y, Ch'ts'y)||Wood, E. (Chest'r, Stalyb'dge & Hyde)|
|Hurst, Gerald B.||Roberts, Sir Samuel (Hereford)||Wood, Rt. Hon. Sir Kingsley|
|Hutchison, Sir Robert (Montrose)||Rodd, Rt. Hon. Sir James Rennell||Woodcock, Colonel H. C.|
|Ilifte, Sir Edward M.||Ruggles-Brise, Lieut.-Colonel E. A.||Wragg, Herbert|
|Inskip, Sir Thomas Walker H.||Rye, F. G.||Yerburgh, Major Robert D. T.|
|Jephcott. A. R.||Salmon, Ma|or I.||Young, Rt. Hon. Sir Hilton (Norwich)|
|Jones, Sir G.W. H. (Stoke New'gton)||Samuel, A. M. (Surrey, Farnham)|
|King, Commodore Henry Douglas||Samuel, Samuel (W'dsworth, Putney)||TELLERS FOR THE AYES.—|
|Kinloch-Cooke, Sir Clement||Sandeman, N. Stewart||Captain Margesson and|
|Lamb, J. 0.||Sanders, Sir Robert A.||Major the Marquess of Titchfield.|
|Lane Fox, Col. Rt. Hon. George R.||Sandon, Lord|
|Adamson, Rt. Hon. W. (Fife, West)||Davles, Rhys John (Westhoughton)||Johnston, Thomas (Dundee)|
|Adamson, W. M. (Staff., Cannock)||Day, Harry||Jones, Morgan (Caerphilly)|
|Alexander, A. v. (Sheffield, Hillsbro')||Dennlson, R.||Jones, T. I. Mardy (Pontypridd)|
|Attlee, Clement Richard||Duncan, C.||Kelly, W. T.|
|Baker, J. (Wolverhampton, Bllston)||Glllett, George M.||Kennedy, T.|
|Barker, G. (Monmouth, Abertillery)||Gosling, Harry||Kirkwood. D.|
|Barnes, A.||Graham. D. M. (Lanark, Hamilton)||Lansbury, George|
|Barr, J.||Graham, Rt. Hon. Wm. (Edln., Cent.)||Lawrence, Susan|
|Batey, Joseph||Greenwood. A. (Nelson and Colne)||Lee, F.|
|Bondfield, Margaret||Grenfell. D. R. (Glamorgan)||Lindley, F. W.|
|Bowerman, Rt. Hon. Charles W.||Grundy, T. w.||Lowth, T.|
|Bromfield, William||Hall, F. (York., W.R., Normanton)||Lunn, William|
|Bromley, J.||Hardle, George D.||Maclean, Nell (Glasgow, Govan)|
|Brown, James (Ayr and Bute)||Hartshorn, Rt. Hon. Vernon||Malone, C. L 'Estrange (N' thampton)|
|Buchanan, G.||Hayday, Arthur||Maxton, James|
|Cape, Thomas||Henderson, Right Hon. A. (Burnley)||Mitchell, E. Rosslyn (Paisley)|
|Charleton, H. C.||Henderson, T. (Glasgow)||Montague, Frederick|
|Cluse, W. S.||Hirst, G. H.||Morrison, R. C. (Tottenham, N.)|
|Clynes, Rt. Hon, John R.||Hirst, W. (Bradford, South)||Murnin, H.|
|Compton, Joseph||Hollins, A.||Naylor, T. E.|
|Connolly, M.||Hudson, J. H. (Huddersfield)||Oliver. George Harold|
|Cove, W. G.||Jenkins, W. (Glamorgan, Neath)||Palin, John Henry|
|Dalton, Hugh||John, William (Rhondda, West)||Paling, W.|
|Parkinson, John Allen (Wigan)||Smillie, Robert||Watson, W. M. (Dunfermline)|
|Ponsonby, Arthur||Smith, Ben (Bermondsey, Rotherhlthe)||Watts-Morgan, Lt.-Col. D. (Rhondda)|
|Potts, John S.||Smith, Rennie (Penistone)||Webb, Rt. Hon. Sidney|
|Purcell, A. A.||Snell, Harry||Wellock, Wilfred|
|Richardson, R. (Houghton-H-Spring)||Snowden, Rt. Hon. Philip||Welsh. J. C.|
|Rltson, J.||Stamford, T. W.||Wheatley, Rt. Hon. J.|
|Roberts, Rt. Hon. F. O. (W. Bromwich)||Stephen, Campbell||Williams, T. (York, Don Valley)|
|Robinson, W. c. (Yorks, W. R. Elland)||Stewart, J. (St. Rollox)||Wilson, R. J. (Jarrow)|
|Rose, Frank H.||Sutton, J. E.||Young, Robert (Lancaster, Newton)|
|Scrymgeour, E.||Thorne, W. (West Ham, Plalstow)|
|Scurr, John||Thurtle, Ernest||TELLERS FOR THE NOES.—|
|Shepherd, Arthur Lewis||Tinker, John Joseph||Mr. Charles Edwards and Mr.|
|Shiels, Dr. Drummond||Varley, Frank B.||Whiteley.|
|Shinwell, E,||Viant, S. P.|
Bill read a Second time, and committed to a Standing Committee.