In rising to address the House for the first time, I do so with reliance on the toleration and sympathy which the House shows to new Members, particularly as this is one of the tare occasions when the new Member is one who formerly served the House in a rather more secure position in the Department over which your predecessor, Sir, presided, and has changed that position for the more risky and dangerous one of addressing this Assembly on the Floor. I think it is essential, in order to understand what precisely is wrong in reference to the subject under discussion, to say something about the causes which have forced Germany to sell wheat abroad at this moment. This is no new phenomenon. It has happened every year for the last five years. It happened before the War. Indeed, many years before the War it happened on a considerably larger scale than in the last year or two. It arises from the fact that East Prussia at this time of the year has a large excess of supplies of wheat, and, in order to keep the price steady in East Prussia, the East Prussian producers export, assistance being given to them by the German Government in the manner which the Minister has described. But that is not at all a nett export of German wheat. Germany, on the whole, is an importer, and for every ton of wheat which she exports now she will require to import a corresponding ton, in addition to her normal import demand, later in the year. It may comfort hon. Members opposite who speak for the agricultural interest to know that the more she exports now of wheat which comes into competition with our own home supplies, the more she will buy of foreign wheat later in the year, and, consequently, in a corresponding degree the larger the price which they will be able to get for such wheat as they hold over until the later months of this cereal year.
The situation, however, is intensified this year to some extent by the special difficulty in which Germany finds herself owing to lack of capital. This year, owing to events in America which I need not touch upon, Germany is exceptionally short of capital and therefore it has paid her to export this year rather more wheat than she has exported for the last year or two, in order to get the use of the capital coming from it during the next six months, knowing perfectly well that she will have to import, very likely at a higher price, later on in the year. But, as I have said, this is no new phenomenon. It is more serious and troublesome just at this moment because this country now, as compared with pre-War years, carries very small stocks of grain. In pre-War years grain merchants held considerable stocks and any appreciable dumping was met by adjustment in the stocks. Now, owing to the very considerable change which has taken place in the grain trade of the world and of this country, we carry scarcely any stocks at all.
This particular trouble is a symptom of the great change which has taken place in the grain trade and it is necessary to examine that change if we are to attempt to find any means of dealing with the case. In pre-War years the grain trade in this country and in the world generally, was still organised on the basis of a fairly free market. There was a multitude of sellers in the world, and there was a multitude of importing merchants in this country, and each of those merchants held stocks, large or small, so that there was a constant basis of stocks in the country and prices were kept steady by the play of the market, by selling between a multitude of sellers and a multitude of buyers. Since the War, in accordance with the movement of events and the tendency that has shown itself in many trades, the wheat trade has become highly centralised and the merchant of the old type in this country, the importing merchant, has largely ceased to function. Canada has centralised her selling in a great co-operative pool which handles millions of tons per year—something between 60 per cent, and 70 per cent. of the whole supply. Australia has formed similar pools in the Australian States. As far as Russia is concerned, when she comes into the wheat markets of the world she comes as one single seller. Although the Argentine and other South American countries have not formed co-operative pools such as have been formed in parts of the British Empire, yet actually 80 per cent. of the whole Argentine wheat is now in the hands of three international grain firms, one German, one French and Belgian and on occasion there is a certain cohesion in policy between these groups.
As regards the United States, in the last few weeks there has been legislation to enable the United States, on occasions when it suits that country, to go into the market as one single seller. No one quite understands what will be the effect of the new Farm Board Bill, but it is pretty certain that it will enable the United States to get a stable price inside by dumping her surplus wheat at any price, at any cost, on the world market, and for all practical purposes the main wheat market of the world is this country. We take about one-third of all the wheat sold in the world market and consequently any monoeuvres in the market from any of these sources come back upon us. That is not the end of it. Apart from this great concentration of selling in about four or five hands— a concentration which has not yet ended but will almost certainly be carried further—there has grown up in Chicago by a sort of reverse action a great and speculative market in wheat which, again, produces its effect on prices in this country. In the last few weeks we have seen some evidence of the disasters which may overtake stock markets by over-speculation in stocks. While there is heavy speculation in New York in stocks there is smaller speculation in wheat in Chicago, but apparently the American public has got into the habit of speculation and the disaster in New York will likely be followed by excessive speculation in Chicago.
In the buying of wheat for this country there has been an almost corresponding concentration, and now 60 per cent. or more of the whole wheat of this country is bought by one or other of three great firms—great milling combines. The effect of that is that the whole organisation of the wheat trade which existed before the War has completely collapsed. We carry no stocks or very little. We are subject to any change of policy, or any temporary difficulty on the part of any of these great combines on the one side or the other, whether sellers or buyers, and the result in every case comes back quite definitely on to the British farmer and British agriculture without any obvious or appreciable advantage to the British consumer. The whole wheat trade of the world has changed, whereas in our consideration of the matter, in the details of our organisation to-day in this country, we are going on as if things were just the same as they were in the middle of the nineteenth century. The result is a great intensification of variations in price. This year, from February to June, the price in this country dropped by 8s. 6d. a quarter and from 1st June to the middle of July it raced rapidly up by 13s. a quarter—which was very disastrous to the farmers who happened to act in the natural expectation that in May and June prices would probably be higher, as they often are. There was no advantage at all as regards the price of bread or flour to the consumer in this country.
The fact of the matter is that the organisation of the wheat trade has completely changed, and, our agriculture is at the mercy of foreign manipulations. The particular phenomenon of which complaint is made now, is merely one of them, and even if we were to deal with this one by the method which hon. Members opposite propose, it would not help us to deal with what may be a very much worse onslaught from one or the other infinitely stronger protagonists in this struggle on the other side of the Atlantic. Hon. Members opposite say that they are not proposing to stop anything except bounty-fed exports. I am not going to; argue whether in this case the method adopted by the German Government of balancing export licences by import licences amounts to a bounty. It may or it may not. It is a speculation to some extent and depends on what happens to the market, but I would point out that if you stop bounty-fed exports coming into this country, that does not at all touch the case, for example, of the Americans, under the new Farm Board Bill, deciding to sell, at whatever it will produce, a block of grain in the market in order to assist their internal prices. The market price here, of course, would be correspondingly diminished because of the fact that there were large supplies on the market.
Nor would it deal with the case in which, say, the Canadian pool found it-self temporarily embarrassed because it was holding stocks too long, and had to meet temporary financial difficulties. In that case, no protection of the kind proposed against bounty-fed exports to this country would help the situation. Nor would Protection of a more general kind. I am not going to argue the general case for or against Protection and it is not necessary to do so, since the other side do not venture to propose general protection of food imports. But I would point out that the whole circumstances are differing now. Even if you put a tax on British grain imports and pushed up the price of grain in this country—and it is only by that means that you could help the British farmer—it would not affect in the least the reasons which make it worth while for Germany to export at this moment and to import in three months time. Nor would it affect the situation of the United States Farm Board if it desired to get rid of a large excess of wheat at any price. The truth of the matter is that the whole of the arguments for both Free Trade and Protection are entirely irrelevant to this situation. It has to be dealt with on quite new lines. We have to adjust our fiscal policy, our import arrangements, our commercial and financial arrangements, to an entirely new situation. I was very much interested in what the right hon. Gentleman the Member for St. Ives (Mr. Runciman) said about the need of international action. I quite agree that this problem cannot be solved except, ultimately, by international action, but we have to put our own house in order first.
It is quite obvious that this increasing fluctuation in prices, this danger of sub-ordinating at any moment the interests of the British farmers to the chances or the profits of speculators in Chicago, or the American policy with regard to the Farm Board, or the temporary necessities of Germany, or the fact that American loan security has temporarily stopped— it is obvious that this is a situation with which it is the duty of any Government to deal. Hon. Members opposite had plenty of time to deal with it in the years when they were in office, because although one hon. Gentleman said the import of German wheat this year was 20 or 25 times what it was the previous year, two years before that, in 1925–6, it was over 30 times what it was in 1927–8, so that they had plenty of time to consider the problem and suggest their remedies. The truth of the matter is that already, as I have said, 60 per cent. of the grain coming into this country is in the hands of three great milling combines, and it is quite plain that sooner or later two at least of those combines will come together. The same tendency is observable in most other European countries. We are faced, on the one hand, with a combination of sellers, and we are and shall be faced, on the other, with the necessity of meeting that combination—not in any hostile spirit, but in a co-operative spirit, because this constant fluctuation and un-certainty of prices is by no means more profitable to the American farmers than it is to ours—by adjusting our commercial arrangements accordingly; and the alternative is either a millers' monopoly, a combine monopoly of import in this country, or some other scheme of import monopoly which would give this House and the consumer in this country a far greater feeling and perhaps reality of security.
I am in a position of greater freedom than the Minister on the Front Bench in dealing with remedies, but it is well known to the House that proposals have been made in Labour reports on this subject, and I want to submit to the House that those proposals are the only practicable business methods of dealing with the situation, whatever may be their political implications, which have been put forward. Selling is becoming concentrated; buying has to become concentrated too. That is the only possible way of putting the supply of wheat to this country on a reasonably steady and secure basis; it is the only possible way of protecting the farmer in this country against dumping. The proposal we have made contemplates the setting up of an Imports Board, representative of the trade, representative of the farmers, and representative of the consumers, acting for the Government and people of this country, as a business like concern in supplying the needs of our people in wheat. The requirements from year to year are practically stable; the world price from year to year, taking the average, is very steady. What we have guard the farmer and consumer against is this constant variation and fluctuation of prices from day to day, intensified rather than diminished by the concentration since the war on selling, and secure a steady supply of wheat at a steady price. Then we shall be in a position to guarantee to the farmer a secure and steady price for his grain, based on average world prices.
I suppose it may give a larger return to at least two-thirds of the farmers, varying according to the chances from year to year, according to whether a farmer has sold in a favourable week or in an unfavourable week. As things are, there is a margin of about 25 per cent. between the best week in the year and the worst week in the year, and it is quite obvious, if one may judge from the figures and factors involved, that it is beyond the knowledge and beyond the opportunity and experience of farmers generally, when they take their wheat to market, to know what is happening on the other side of the Atlantic. Things such as have been happening there in the last two or three days may be within the knowledge of the great grain firms, but very seldom are they within the knowledge of the vast majority of farmers. The fact is that at this moment the farmer wants a new sort of Protection. He wants protection against the wheat market manipulator, he wants protection against the chances of dumping; and the consumer requires to be protected also, to secure that when wheat does come into this country at a comparatively low price —though we know quite well we have to pay a higher price correspondingly later in the year, when, for example, Germany comes into the market to fulfil her needs —the consumer generally gets the advantage of that reduced price.
I do not suppose for a moment that, if we centralised our import, it would stop there. Other countries have been and are considering a similar plan. It will be within the knowledge of some hon. Members of the House that that is the proposal which is at this moment under acute discussion between the parties in France who are discussing the question of the succession to office. They are faced with the same difficulties as we are, though our difficulties are infinitely more acute, because we are dependent for our wheat to the extent of 75 per cent, from abroad, while their percentage is very much lower. I submit to the House that the lines we have suggested, which would make it possible to carry through those international arrangements which the right hon. Member for St. Ives has suggested, are the best practicable lines that have been put forward up to this moment, and that they should be considered on their merits as the only available way, so far as I am aware, of giving the farmer the amount of protection, of the Kind I have indicated, for which he is entitled to ask, and at the same time safeguarding and assisting the interests of the consumer.