I beg to move, "That the Bill be now read a Second time."
In December, 1930, the Cunard Company, in pursuance of a considered policy designed to maintain their outstanding position on the Atlantic, decided to lay down a ship which in size and speed was unlikely to be excelled by any other in existence or in contemplation. It was to be of 75,000 tons gross, the largest ship afloat, and of such a speed as to maintain a programme of fortnightly sailings across the ocean during the year, which no other service can at present provide. The news was received with general satisfaction because it showed that it was the intention of this company to meet the challenge offered to it by other nations who were known to be desirous of outstripping us in our old supremacy. There was another reason why the announcement caused rejoicing. The laying down of this ship meant an expenditure of £4,500,000. This was to open the gates to some 3,500 shipbuilders, and to keep them in occupation for three years. It was not only on the Clyde that the benefits would be felt, but throughout the realm, in a large diversity of trades, men were to be engaged in making machinery and equipment—a vast diversity of trades.
It was with general consternation that the public learned a year later that credit difficulties had arisen and that progress had to be abandoned. It was universally felt to be a matter of concern not only to the company but to the nation that a project involving livelihood on so broad a scale and so closely associated with our predominance should be frustrated. The Government were pressed from all quarters in Parliament and from all denominations of the Press outside to come to the assistance of the company. Members of all parties pleaded with my right hon. Friend. Under the leadership of the right hon. Member for Hillhead (Sir R. Horne) hon. Members here outside the Government advocated such a course, and from the benches
opposite the arguments were reinforced. Perhaps their views are best indicated by a quotation which I may be permitted to make from a speech delivered by the hon. Member for Bridgeton (Mr. Maxton) who always sees these national matters in perspective with a keen insight. He said:
To us, the great maritime nation of the world, the greatest shipbuilding nation of the world, the fact that we should stop operations in such a way on this mammoth liner, which has attracted the eyes of shipping people throughout the world, will be a deadly blow which will have much wider repercussions."—[OFFICIAL REPORT, 10th December, 1931; col. 2185, Vol. 260.]
He also said with equal truth, and I am glad that his request is now being met:
This is precisely the type of problem with which the National Government are supposed to deal, a money problem to make it possible to carry on the ordinary business and industrial operations of the country, to make the necessary sinews of war available for industry."—[OFFICIAL REPORT, 10th December, 1931; col. 2184, Vol. 260.]
We were petitioned on all grounds—on humane grounds, because of those whose trades were at stake, we were told that if it were intended to encourage any form of public works this was no fruitless relief undertaking but reproductive. We were begged on national grounds to aid the work, and the precedent of 1904 was quoted, when £2,600,000 was advanced to the same company by the Treasury on similar security, when the "Lusitania" and "Mauretania" were built. It is instructive to look back upon those Debates. The hon. and gallant Member for Gainsborough (Captain Crookshank) and the hon. Member for Gorbals (Mr. Buchanan) had their less eloquent predecessors. We were told, or that generation was told, that the policy of the big ship, the mammoth luxury liner, was misconceived, that the finance was uneconomic and that loss to the taxpayers was inevitable. The policy of the big ship, however, prospered; finance proved to be well secured; the taxpayers have lost nothing. The interest has been duly met and the capital has been refunded in full.
It was in these circumstances that my right hon. Friend the Chancellor of the Exchequer was called upon to examine the suspension of this ship, the 534, and the plea for succour. What, if anything, could be done? He had to see that if aid were brought the money would not be wasted and that the course would be set fair for making a success of the risk. He came to the conclusion that if the problem were to retain the ascendancy of Britain on the Atlantic, ruinous competition between British firms should be eliminated as being a hindrance to the main objective, and that all our resources, skill and experience should be concentrated in one single channel. Therefore, he made it clear that financial assistance could be forthcoming only if the effective fusion of the North Atlantic shipping interests of the two rival companies were to take place.
Negotiations upon such a subject were complicated, and they have been long. Praise is due to those who have now brought them to the point of achievement. The merger company is, therefore, subject to the Vote of this House, to be formed upon the express condition that it shall be and shall remain British. My right hon. Friend's conditions are thus fulfilled. He made no secret of the conditions or of the plan which he had in view. He informed the House of Commons at every stage. The Government have concluded that what is to be done should be done in a sufficient manner. The merger company will be in possession of £3,000,000, payable as required, for the completion of the 534, and £1,500,000, payable as required, for working capital. If the money be not required it will not be drawn. But whatever be required within that total will be at the disposal of the merger company in order that it may do its business without apprehension or embarrassment.
I can understand those who may say that it is no concern of the nation that we should maintain our supremacy on the Atlantic, but, having decided to do it, I cannot understand the contention of my hon. Friend the Member for Gravesend (Mr. Albery), who says that the working resources of the company should be restricted. By a similar policy of giving the new enterprise an opportunity to justify the confidence we place in it, we do not withhold the possibility of assisting in the construction of a further ship or ships; and I would remind my hon. and learned Friend the Member for Central Nottingham (Mr. O'Connor) that the company could not maintain the service required without an addition to its fleet. The company would never have been formed, or would never be formed, except upon such an understanding.
Those are the arrangements, and the agreement is before the House. From the moment the suspension of work upon this vessel was announced to the time when the Financial Resolution was taken, no word of protest was uttered, although my right hon. Friend had made plain exactly what it was he was seeking. On the contrary, relief was expressed as the conclusion of the negotiations drew nearer and the prospect of a resumption of work became more imminent. We are now, however, confronted with an Amendment which complains that the devotion of money to private interests is unaccompanied by any guarantee as to its repayment. I invite hon. Gentlemen who make that complaint to read the agreement. There can, of course, be no absolute assurance that when you lend money it will be repaid. But one can obtain security. Here is a ship costing £4,500,000 to build, and in respect of which we are to have prior charges for £3,500,000. In addition, we have a charge on the assets of the Cunard Company for £1,000,000, and a charge on any sums allocated by the merger company to the depreciation of the 534.
Of course, whatever the security—and that I submit is adequate security—the prosperity of the company is the best and the only ultimate safeguard, and we are sparing nothing to ensure that success. The Amendment further says that we are to have no share of the profits. Here again is a misconception. We are not only to receive interest on our first charges, but on our second charges we are to rank ahead of the shareholders against the profits. On our first deben- tures in the merger, of £1,750,000, we are to receive interest at one-half per cent. below Bank Rate until 1940 and thereafter at such rate as is applicable to loans guaranteed by the Government. With regard to the rest of our advances on the £1,000,000 Class A Income Debentures, we are to receive 3 per cent. until December, 1939, and 5 per cent. thereafter. After these sums have been paid, and not until these sums have been paid, the shareholders are to receive a 3 per cent. dividend. Any remaining profit is then divided between the Treasury and the shareholders in proportion.
Further, if on the average the Treasury receives more than the full amount of the stipulated interest the surplus is to go to the redemption of these Income Debenture Stocks. In those circumstances, how can the hon. Gentleman opposite say that we have no share in the profits? All these charges in respect of interest are prior obligations of the company, and rank against the profits ahead of the shareholders. I think therefore it is the duty of the hon. Gentleman who is to follow me to withdraw that sentence from his Amendment. In any event, we are not shareholders in the company in respect of the money that we are advancing. We are lenders on mortgage, and mortgagees do not take out of a company more than the amount they have lent plus interest.
I now come to the third misconception of the hon. Gentleman, and that is that we have not adequate control. It is not the duty of a mortgagee to manage the affairs of a company as the Amendment suggests. Our control lies in the memorandum and articles of association which we have to approve, and in our control over the payment of the money which is to be devoted, and certified as devoted, to the purposes for which Parliament has voted it. I prefer to agree with the right hon. Gentleman the Leader of the Opposition who said that the company knew its own affairs best, and we do not intend to run a shipping company.
But the real gravamen of the Amendment is the objection that we have advanced money to private interests without nationalising them. That argument is a little belated coming from hon. Gentlemen opposite. When they advanced money or guaranteed money under the Trade Facilities Acts they did not make the nationalisation of the industries benefiting a condition. They even went so far during their last term of office as to pass an Act of Parliament under which we are committed to advance £11,000,000 to private interests, no less than £7,000,000 being to the railways, and hon. Gentlemen will observe that the railways are not yet nationalised. Therefore, their plea that we should accompany these advances of money with a stipulation as to nationalisation comes a little late in the day.
Whatever the merits of that particular nostrum may be it does not require very close consideration of the subject to realise that the nationalisation of the shipping industry would be involved in intricacies and complications, and the only effect of carrying the Amendment would be to delay the progress of this and a great deal of other work. It is because the policy of His Majesty's Government is to bring aid and bring it quickly; is to centralise our North Atlantic activities and to centralise them now, is to give employment and to give it now, that I ask for the Second Reading of this Bill. The resumption of work on this ship will be a symbol of our determination not to yield, whatever the obstacles, our rightful place on the Atlantic Ocean, and it is but one further instance of the Government's co-operation in the revival of British industry.
I beg to move to leave out from "That" to the end of the Question, and to add instead thereof:
whilst anxious to assist in providing employment and prepared to welcome the resumption of work upon vessel No. 534, this House takes exception to a proposal to vote public money for the promotion of private shipping interests without any guarantee as to its repayment and without conditions for securing public control over its disbursement, a share in any profits which may accrue, or the ultimate conversion of the shipping industry into a national undertaking.
I listened with very great interest to the speech of the Financial Secretary to the Treasury. I hope he will forgive me for saying that I was a little disappointed with his defence of the financial implications of this Bill. He put to me a series of questions which I did not find in any way disturbing, and I daresay it was easier for him to propound a certain
number of propositions to me, than to answer the propositions that have been addressed to him, and will yet be addressed to him in respect of what this Bill involves. The hon. Gentleman properly reminded us that this is not entirely a new proposition. As a matter of fact to get this proposal into its proper setting we ought to go back to 1930 when the Cunard Insurance Agreement Act was passed. Hon. Members will recall that that Act was concerned with insurance and insurance only. On that occasion the House was invited by the then Government, of which I was a humble member, to undertake heavy constructional and other insurance risks for this simple reason. We were assured that the insurance market could not undertake so grave and widespread a risk as was involved in insuring the construction of those ships.
The then Government however did not undertake the whole of the insurance. They rather made themselves responsible for that part of the insurance which was not taken up by the insurance market itself. Criticisms were advanced on that occasion which many hon. Members here present will easily recall. Without going into my own views, one way or the other, in regard to the arguments then advanced, I may recall that there were those who contended that an exceptional privilege was being extended to the Cunard Company. In response to that argument, there was the contention that the circumstances were exceptional, as indeed they were, and that the depression prevalent at the time justified exceptional provision being made. We were also assured that only insurance stood in the way of the construction of this ship. That is very material to our discussion to-day. We, the Government of the day, were invited to undertake that responsibility regarding insurance, after all, because private, or shall I say capitalist, concerns were unable to shoulder the burden entirely themselves. The Government therefore undertook a share of responsibility in regard to insurance, and about a year later, I think I am right in saying, though I confess I have not been able to put my hand on the exact quotation, the Cunard Chairman, I think in an interview, used words like these:
We will finish the ship ourselves. There is no doubt about that.
I have not the faintest doubt that that was their deliberate and honest intention at the time. We must admit that if a private company had undertaken the construction of a big ship of this sort they would, it is clear to everyone, have embarked upon a very big undertaking. It would have been a very courageous act on the part of any company, and to deny that would be to deny the obvious. Work actually did begin, as the House will recall, upon the ship, and then for some reason or other it suddenly stopped, and, as the Financial Secretary rightly said, the whole country at the time of the stoppage of the work was simply staggered at the information. The hon. Gentleman said to-day that the difficulties in the way were credit difficulties, and although that was true at the time, I should have some difficulty in believing that there are not adequate sums of money available to-day in the money market. Everyone knows that there are vast sums of unemployed money as well as vast numbers of unemployed people in this country, and it must be, therefore, not a shortage of money that occasions the continuation of the stoppage, but some other reason. I see the Prime Minister in his place, and perhaps he will recall that in December, 1931, he wrote a letter to my hon. Friend the Member for Plaistow (Mr. Thorne). I have the exact quotation from his letter, in which he said:
The trouble over this ship, however, is not to get her built, but to get the company to believe that when she is built she can be run with some chance of paying her way. There would be no, difficulty in getting money for building if there were any prospect at the moment of getting the interest repaid and the loan refunded.
The hon. Gentleman the Financial Secretary put me some questions, at least by implication, and I retort to him now: In submitting this proposal to the House, has he assured himself that he can now tell the House that the interest will be repaid and the loan refunded without any shadow of doubt whatsoever? After all if he is not able to assure us of that, then we are undertaking in a very large measure a gamble. Let us look at the prospect of this return. Two or three well-known facts must be kept in mind in our consideration of this matter. First, there is the staggering fact of declining traffic—really staggering. I have been
Consulting this morning Brassey's "Naval and Shipping Annual" for 1933, and I give two or three figures to the House just to make it aware of the exact degree of this decline in traffic. In 1922 the number of first-class passengers to North America was 80,555, and in 1931 they had declined to 62,963; second-class passengers had declined from 204,000 odd in 1922 to 88,000 odd in 1931; and third-class passengers had declined from 284,000 odd in 1922 to 113,000 odd in 1931, a decline in the total from 570,000 odd to 265,000 odd. There we have one fact that has a very serious bearing upon the prospect of this experiment being successful financially.
The next point that I want to make is that there is a tremendous competition in this kind of mercantile effort. Everybody knows that France has built enormous ships, that Italy and Germany have enormous ships built, that the Canadian Pacific Railway has a big ship built, and that the "Leviathan," belonging to the United States, is also competing for this very seriously declining North Atlantic traffic. That is another element in the consideration of the matter. A propos of this particular company, let me make this point clear: The Cunard chairman, addressing the shareholders in April, 1932, said that passenger traffic had reached low figures unexampled in a quarter of a century, and a similar state of affairs applied to freights, though not to the same degree. I believe it is true that the gross revenue of the Cunard Company dropped in 1930 by £1,480,000, in 1931 by £2,321,000, and in 1932 by £670,000, a drop of nearly £4,500,000 in gross revenue as compared with 1929. That is an element in the consideration whether this is likely to be a successful venture or otherwise.
There is another fact to be kept in mind. I believe it is true that the Cunard Company itself has a large number of ships that have been engaged in the North Atlantic trade that are at this moment not in employment, and as a consequence some of the larger ships have been diverted to cruises in parts of the world away altogether from the North Atlantic. I cite these points in order that we might get this proposition, as it seems to me, in proper perspective. These are very uncomfortable facts indeed, facts in which none of us takes any delight whatsoever. We should all be glad to be able to say, "Thank heaven, the Cunard Company is doing well and is prosperous. Thank heaven, the North Atlantic trade is booming." We should be very glad to be able to rely on such facts, but if those uncomfortable facts were not present, probably the Government would not be asked to make a contribution in the way that they are asked to do to-day.
In spite of the gloomy facts that I have just adduced, however, it may yet be arguable that as against those two considerations, two others are worth weighing in the balance; and they were cited by the hon. Gentleman who introduced the Bill. One is that the construction of the ship and its contribution to employment must be put on the other side of the balance-sheet. That is undoubtedly true, and I confess frankly that I cannot recall anybody in this House having raised a voice against this proposal, because naturally we are all of us exceedingly anxious to see some contribution made to the removal of unemployment in any part of the country. If we are assured that 5,000 or 8,000 people can get employment, that naturally makes an immediate appeal to our minds and hearts. I am sorry my hon. Friend the Member for Dumbarton Burghs (Mr. Kirkwood) is not in his place at the moment. As the whole House knows, he has devoted himself with a great intensity to this business of trying to secure the recommencement of this work in his constituency. I am bound to add that we as a party must look at it, perhaps, not purely from a constituency point of view, but from a national point of view, though my hon. Friend would have been doing less than his duty as a Member of Parliament if he had not directed attention to the claims of his constituency.
But the consideration of employment must be put on the other side of the balance-sheet, and there are ancillary trades which will be favourably affected by this proposal. Then there is the other point which the hon. Gentleman put, namely, that of national prestige. It is true that you cannot estimate that in pounds, shilling and pence. We are all very anxious, and would be delighted to know, that our own nation was retaining her priority as mistress of the sea, as it were; but however keen we may be about our nation retaining the blue riband of the sea, we must not be indifferent—I put it no higher than that—to those other considerations which must be present to our minds. I will finish with the first part of my Amendment by saying that we are all agreed whole-heartedly with the Government in regard to anything they may do by way of fostering employment in any part of the country. That is not the ground of our objection. We are entirely at one with them there.
I come to the second part of my Amendment, and devote myself a little more closely to the point which the hon. Gentleman made. A year ago the Cunard Company wrote to its shareholders in a communication to this effect. It said that during the post-War years 1919 to 1930, depreciation to the extent of £15,000,000 odd has been written off the Cunard Company's own ships. In the case of subsidiary companies figuring in the Cunard Company's balance-sheet the depreciation has been on similar lines. During the post-War years the depreciation written off by the subsidiary companies has amounted to £16,000,000 odd. Thirdly, it said that between the years 1919 and 1930 the Cunard Company and its ancillaries have paid more than £6,000,000 in Income Tax. Those are the Cunard Company's own statements. In addition to that, undoubtedly it paid heavy Excess Profit Duty, and I know that it has paid very good dividends in that time. I would also ask the hon. Gentleman whether I am right or wrong in supposing—I have little to go upon except the presumption that this company has done what every other company does—that, as a result of years of very successful business which proceeded more recent years, the Cunard Company has built up a substantial secret reserve? If so, has the Treasury satisfied itself that this reserve fund could not have been drawn upon more substantially to relieve the Government of some part of the responsibility which they have accepted?
I turn now to the provisional agreement itself. The hon. Gentleman said, quite rightly, that £3,000,000 is to go to complete the building of No. 534, £1,500,000 for the new Merger Company for working capital, and £5,000,000, if the Government and the company so agree, to build another ship or ships later. We have already insured under the 1930 Act of Parliament. Now we are called upon to pass on to the next step, that is, having accepted insurance liabilities, we are invited to take a larger share in the actual task of construction as a second step, while £1,500,000 is to be devoted for working capital for that purpose. Now as to securities—I am hurrying through this, because I do not want to delay the House unduly—there is £1,000,000 in debentures of the Cunard Company, £6,750,000 in debentures of the Merger Company, £1,000,000 income Debenture Stock A of the new Merger Company and £750,000 of stock B of the new Merger Company, making £9,500,000 altogether. We are told that the £1,000,000 which I first mentioned is to be issued to the Government at par value, but the Cunard shares do not command par value at this moment. They are secured by mortgages on the Cunard Company's ships, but 15 of that company's ships are to be handed over to the new Merger Company, and those, I believe, are the biggest and the best of the Cunard Company's ships. They are to be handed over free of encumbrances to the new Merger Company. In that case, what is to be the effect upon the shares of the Cunard Company when the ships are transferred?
Yes, I am sorry if I did not make that clear. It seems to me to be obvious that the debentures cannot be at par value. They will be depreciated by it. As regards the debentures and stock to be issued by the new Merger Company, no one knows what the capital of the new Merger Company is going to be, or the value of the 15 ships to be taken over, or the value of the 10 White Star ships to be taken over. So that you are in the position of talking about a new company, the value of the actual assets of which you do not know. There may be some understanding in private, but, so far as this House is concerned, we do not know. Let us remember that many of these ships have been built some years. Take the "Mauretania." She is now 26 years old. [An HON. MEMBER: "Twenty-six years and two weeks!"] I will leave out the two weeks. Clearly a ship of that sort must be approaching the end of her useful age. She must be approaching the scrapping point. Therefore, while some of the ships are good, others are negligible from the point of view of the present North Atlantic trade.
May I carry this point a little further. With regard to the £1,000,000 of debentures of the Cunard Company and the £6,750,000 debentures of the new Merger Company, this is the position. Up to 1st January, 1940, the interest will be one-half per cent. below the Bank of England discount rate from time to time in force—not the present one, of course; but, whatever that rate may be from time to time, the interest will be one-half per cent. below it. At the present time, I believe, it is 2 per cent. On £1,000,000 worth of Debenture Stock A, it is to be 3 per cent. up to 31st December, 1939, and 5 per cent. thereafter; but it is only payable, as I understand—I speak subject to correction—if the Merger Company makes a profit sufficient to pay it, and it is entirely contingent upon the earnings of the new company. I have submitted to the House already that the earnings of the company are dependent upon our being able to secure a larger share of a rapidly declining trans-Atlantic traffic as things are now. Of course, there may be an improvement in the coming years, but no one anticipates for some years to come, if at all, a revival of the vast traffic that used to prevail. The third-class emigrant traffic has pretty well gone for many years to come, and the only traffic for which you can compete is a slight increase for some years in second-class, cabin or first-class traffic as the case may be. On the basis of those, shall I say, fortuitous earnings, we are secured in regard to the Merger Company.
I have nearly finished what I have to say upon this matter. I have tried to be as restrained as possible. I frankly confess that I can see the difficulties of the Government. I can see that the Government wanted to help, as far as they could, employment. I can see that our national prestige was a matter of vital importance, and incidentally it may have implications at large for everybody. I want to reassert that we are exceedingly anxious to assist employment in the engineering and shipping industries. But this method, I submit, is open to serious objections. It takes great risks, with no means of safeguarding ourselves against them. Let us hope that it will not happen, but suppose that in the coming years this traffic does not increase. We know that very big ships are already on the sea equally well appointed with the new ship that is proposed. There is the "Ile de France," of France; the "Rex" and the "Savoia," of Italy; the "Bremen" and "Europa," of Germany; and a new ship being built by a French company, the "Normandie"; all of which are competitive. Suppose we do not get this very much larger share of the traffic, is it not inevitable that this company will not be able to make both ends meet, and that we risk, shall I say, £5,000,000 or £9,000,000 as the case may be, and shall we not be induced, because we have invested this money, to throw other good money after what we regard as already bad?
We shall be committed, I fear, to further subsidies, and it is that to which I very much object unless—and I make my last point—the Government have some larger share in the directive policy and control. The hon. Gentleman thought I was asking for something which was unique and unusual. We are going to vote into this business £9,500,000 without any word at all in the policy of the company. We are entirely in their hands. We may even be involved in the coming years in a new call for subsidies in order to save the money we have invested. It is fair that the Government should now ask for its proper place on the board of directors so that they will know precisely in what direction this company is going and know in advance at what point to stop financial aid when the ship has been built. A friend of mine called my attention this morning to an aspect of the matter which I had not seen. In order to put the point clearly, I will read from his private letter:
Another serious question which I do not think the public, and more particularly the taxpayer, realise is that in the formation of the new organisation, Cunard White Star Line, the 38 per cent. allotted in this organisation to the White Star Line interests is not in the possession of Britons but belongs to the International Mercantile Marine Company of the United States to which organisation some £2,350,000 plus several years of interest is still due in connection with the purchase of the White Star Line from that organisation some years ago by the Royal Mail Steam Packet Company. Consequently this large foreign interest in the new organisation will prevent it being regarded as a British com-
pany while over and beyond this, while the present holding of 38 per cent. is in the hands of a friendly co-operative organisation, such as the International Mercantile Marine Company, that company may find it necessary to dispose of this holding, and if same should be sold by it to some foreign country, say Japan, Germany, etc., that would be the position and how would the taxpayer feel in reference to his national line?
I do not know what the answer to this communication will be, but it is material from the point of view of the speech made by the Financial Secretary apropos of subsidies. The Cunard Chairman, addressing the shareholders two years ago on the 6th April, 1932, said:
The Cunard Company is not yet forced to ask for Government help to run its existing ships on its trans-Atlantic service, but it is obvious that if its main competitors have treasuries as their bankers this will eventually become inevitable unless the Government solves the problems in the background for which they and they alone are responsible, and so restore profitable intercourse.
That is an indication of a forthcoming demand in certain eventualities for subsidies not only for these new ships, but for existing ships as well. It is a policy which we view with some apprehension, and I can only invite the Government to remove, if it is possible, those misgivings which we honestly entertain concerning the financial implications of the policy they have presented to us this afternoon.
I rise to support the Bill. When the right hon. Gentleman the Chancellor of the Exchequer announced some months ago that the Government were prepared to help in the completion of No. 534, I asked whether the proposals would include any reference to the question of building a sister ship, for I felt at the time that more than one new ship would be needed for keeping up a regular service with the United States to compete successfully with the lines operated by other countries. I was invited to wait and see, and in the interval I have had some conversations with the representatives of various shipping companies, both British and foreign, which had large interests in the North Atlantic traffic. These conversations have brought to light very interesting facts, the conflicting nature of which have rather weakened the con- viction I formerly held that the immediate—I do not mean ultimate, but the immediate—construction of a second ship is necessary. It is not surprising perhaps that such varying opinions should be held when one bears in mind the great differences between countries operating North Atlantic services. Not the least of these differences is the geographical position of each country, the regularity of their services with the United States being directly dependent on the distance from New York.
By this argument, Italy is the country most affected. The fine new Italian ships, the "Rex" and the "Conti di Savoia," to which reference has been made by the hon. Member for Caerphilly (Mr. M. Jones), maintain between them a fortnightly service to New York, and though present traffics hardly seem to warrant the belief, it was considered that a monthly service, which was the most that one boat could maintain from Italy, was not sufficient. I believe that the principal reason for this contention lies in the fact that shipping companies are anxious to secure return passengers as a guarantee of traffic; but the average traveller will not purchase a return ticket if he has to run the risk of waiting a month before he can be brought home by the same company that took him out. These two ships, which are the newest on the ocean to-day, are attracting the cream of the traffic, such as it is, but they are not paying. This is hardly surprising in view of the fact that the Italian Government advanced the money for their construction at 7½ per cent. interest as opposed to a rate varying from 1½ per cent. to 3 per cent. in the present Bill. The North German Lloyd has two well-known express lines—the "Bremen" and the "Europa"—which I understand were built without direct Government assistance. They are about the same size and speed as the Italian ships and maintain a 10 days' service in each direction.
The fact remains that only from England and France would it be possible to maintain a weekly express service with two ships of this speed. The "Bremen" and "Europa" which have been and still are deservedly popular, have suffered naturally very much from the slump, the effect of which has been that neither of them has been full on any voyage for the last three years. Yet the company assured me that their experience shows that the aggregate takings of the two ships, in proportion to their cost, is higher than the takings of one. On the other hand, the experience of the Canadian Pacific Company is quite the contrary. I was told by that company that the "Empress of Britain" has never failed to pay her running costs on any voyage, however bad, but that if they had had two ships of this category, the result would not have been so good. A possible explanation of this fact may be that Quebec and Montreal are closed by ice for four or five months a year, so that the Canadian service can only be operated for seven or eight months in the year. I am bound to say that this argument seems to be invalidated by the fact that ships which cannot be used on their normal runs are put on cruises, which I believe are a paying proposition.
I mention these conflicting views because I hope that every consideration will be given to them before a decision is taken whether or not to build a further ship or ships. I am well aware that the Government are in no way committed to this, and that they will doubtless err on the side of caution, if not of actual delay, in deciding whether or not to subsidise the building of further ships. I mention these views to the House because I would like to hold the balance between the view that the sister ship should immediately be started and the view that the whole scheme should be abandoned. The fact remains that No. 534 will be able to maintain a fortnightly service between England and New York if her speed is put as high or higher than the German or Italian ships, which we have been told will be the case. Of course, this will mean working at fairly high pressure, and consequently a long period for the annual overhaul would be necessary. The ship will probably carry over 3,000 passengers, as opposed to 2,000 carried by the German and Italian ships. Even though the travelling public block to the latest ship, there must be a considerable recovery in the volume of traffic before a fortnightly capacity of 3,000 is required.
The hon. Member for Caerphilly gave some interesting figures showing the decline in these traffics, but he did not tell the whole story. I have more faith than he has in the power of recovery of these traffics, although the position to-day is worse than he made it out to be. Taking 100 as the figure representing all North Atlantic carryings for all classes in 1913, the comparable figure for 1920 was 55; for 1929, 59; and for 1933, 26. It is true that 1929 was a year of great prosperity in the United States, and that American travellers were responsible for 70 per cent. of the traffic. In 1929 the first class was nearly as full, and the cabin, second and tourist classes were fuller than they were in 1913. The average therefore has been brought down by the falling off in the third class, which in 1929 was only 35 per cent. of the 1913 level, and to-day is 15 per cent. of that level. The explanation, of course, is that emigration, which before the War was the bread and butter of the shipping companies, has practically ceased. I repeat, however, that I have greater faith than the hon. Member in the power of recovery of the North Atlantic traffic, and I have no doubt that this year has already begun to show an improvement.
I would like to direct the attention of the House to the fleets of the Cunard and White Star Companies which will form the assets of the merger company. It is gratifying to know that these fleets will be taken over at their depreciated and not their book values, because after the completion of No. 534, and more especially after the completion of a sister ship, it is difficult to see how those ships will fit into the picture. There is a saying in the shipping world that you cannot have a fleet of hares and tortoises, and though I would not care to suggest that the "Olympic," and more especially the "Mauretania," are tortoises, they are, to say the least, rather elderly hares. Faced with the competition of their own 534, these ships will become redundant except for cruises, and during the period of the annual overhaul of No. 534, which I believe might last as long as two or three months. They therefore seem destined for the scrap heap.
I would therefore like to know why the merger company should be encumbered from the start with so many obsolete ships, for out of the 25 which it is going to take over only two are really up to date, the "Georgic" and the "Britannic." Indeed, of the six existing express liners in the two companies four are pre-war, being 20 years old or more, and three, as is well known, are German ships which were handed over under the terms of the Peace Treaty. I am sure that hon. Members in all parts of the House have much sympathy with the hon. Member for Dumbarton Burghs (Mr. Kirkwood) and his constituents, who have suffered much from the hardships imposed upon them by the suspension of work upon No. 534, but there is this consolation to be derived from it, that the new French ship "Normandie," the largest ship in the world, will be put into service at least one year before No. 534, and an opportunity will thus be afforded of learning something about the operation of such a ship. I hope that we shall benefit from any mistakes they may make, because nobody knows anything at all to-day about the behaviour of a 70,000-ton ship.
The conclusion to which I come is that a fortnightly express service by a ship carrying 3,000 passengers is amply sufficient for present requirements, but that a return to the 1929 level of traffics might well justify a weekly service. It should be borne in mind that in that year, indeed, until quite recently, there were two express liners a week, one operated by the Cunard and one by the White Star. A return to the 1929 level might well justify the operation of two ships of the size of No. 534. If this course were decided on it would mean the laying down of a second ship, but that construction would take some three years, and the board of the merger company and the Government would therefore have to anticipate this revival if they are to be in a position to take advantage of it when it arrives. I further conclude that owing to the decline in emigration, which looks like being permanent, the designers of these ships must provide a maximum accommodation for the cabin, second and tourist class passengers; and, finally, I conclude that the completion of these new ships, which I consider highly desirable in the long run, must necessarily condemn to the scrap heap a number of the old. Indeed, some of them should have gone there long ago.
I welcome this new ship not only for the good which it will bring to my own constituency but for what I really believe it means to the shipbuilding and engineering industry of this country. I believe that as long as this ship, now known as No. 534, lies like a skeleton in my constituency so long will depression last in this country, because as it lies there in Brown's shipyard it seems to me to shout "Failure! Failure!" to the whole of Britain; everybody looks upon it in that light. I wish to make the House and the country right with the Labour party, because some of our opponents might make capital out of what we are doing here to-day. The Labour party are not obstructing the passage of this Bill, and they supported the Financial Resolution. It is perfectly true that they have moved an Amendment, but that is to safeguard our position as Socialists. Nevertheless, in view of questions which have been put to me, and the discussion we have had to-day, it will be better if I put the House in possession of what is really happening here and what we are doing to-day.
We are not asking for £9,500,000 at all. We are not being pledged to £9,500,000. I and the shipbuilding and engineering workers whom I represent here and for whom I speak are only concerned with the building of this ship, and all that is asked for that is £3,000,000, and £1,500,000 for working capital. There is nothing new about that. We voted away £20,000,000 to carry on an industry, and T supported it, as I will support anything which will feed and clothe the people for the time being. I do not believe in making a change in society in the midst of chaos. I believe it is possible for us to carry out our own ideals in the midst of abundance and in order, and I believe this is one of the ways in which that can be done.
It has been said here and elsewhere that there is not the traffic on the North Atlantic to warrant such a tremendous expenditure. One would think that the individuals who are running this business were apprentices. They are the most astute business men not only in this country but in the world, those men who are projecting this merger company; none most astute, none more capable. They have had this idea before them for four years; the actual planning and designing extended over four years before they signed the contract for construction. The length of the vessel is 1,018 feet—300 feet longer than the "Mauretania"; and she is not 75,000 tons gross weight, but 73,000 tons gross weight.
Our backs are supposed to be against the wall, and it is in such a state of affairs that this great project is brought before the British public. It is quite an easy matter to bring forward a big project when everything is prosperous and all is well in the country, but at the present time it takes what I have asked every Government since I came here 12 years ago to have—courage. Here are a body of men who have courage. They do not agree with me politically—they never did and never will—but they have got the most essential thing to-day either in statesmen or business men, and that is courage, and courage at a time when it was never more essential for it to be demonstrated, because actions speak louder than words. They are making an endeavour to give Britain the necessary fillip. I am not one of the individuals—I never was—who stand up for every other country but their own. I have stood here and pleaded time and time again for extended credits for Russia. If Russia were getting this to-day there would be a different tone in the House from what there is at the moment. And just as I am in favour of Russia getting extended credits, because I believe that would be beneficial to my native land, so I am welcoming this Bill and welcoming the construction of these great ships, which I believe to be inevitable.
It has been said of every great ship that was ever built—I have heard it for 40 years—that it was too big, too ponderous, etc. When we introduced compound twin cylinders 40 years ago it was said that the idea was all nonsense, that it was quite impossible for a ship to contain such an engine: but we have never gone back to the single cylinder. We have gone from large to larger; never gone back from large to small. I do not believe that Britain is down and out. This body of men, after careful consideration and deliberation, cast round Britain to see which was the best firm to undertake the construction of this ship, and they selected one who in my opinion is one of the greatest shipbuilders in the world, Sir Thomas Bell, to do the job. He is the managing director of John Brown and Company. He realised at once that this was a gigantic undertaking and that it devolved upon him to build the best that Britain could produce. He tapped all the skill and all the technique at his command in Britain, and the result has been that in the deserted hours of night heavy lorries have been lumbering over distant roads bringing materials from every part of England to Clydebank for the construction of this ship.
Giant castings and forgings have come from English foundries and forges. Seven turbo-generators are being built now in Rugby; they are powerful enough to supply light and public service to a large town. Walsall is sending 400 tons of high-pressure tubes. When the Bill goes through to-day, and the word goes forth to go right ahead with the ship, the Potteries will have to male for her 200,000 pieces of crockery. Sheffield will have to make for her 100,000 pieces of cutlery; having already supplied heavy castings and forges up to a weight of 1,000 tons. The cases for the rotary—some of the finest casting that has ever been done—have come from Sheffield, milled and machined in Clydebank to the limits of 1,000½ up and 1,000½ down, in which will be placed hundreds and thousands of blades set by hand by Scottish engineers to the thousandth part of an inch.
Liverpool has an order for £10,000 worth of glass for myriad windows of the ship. The propellers come from a Mill-wall foundry, in London. A Darlington forge supplied the stern frame, one of the greatest engineering feats in castings that have been accomplished in the history of the world, a casting weighing 190 tons. When it was leaving Darlington by rail they had to take it on a cylinder, and it closed up the whole way. It took six hours to convey it 20 miles to the neighbourhood of Middlesbrough, where it was transhipped. Practically all Darlington turned out to see the wonderful feat of transport of 190 tons along that railway. The casting was then transhipped to the Clyde. I have seen those pieces myself in their place. Sir Thomas Bell, and practically everyone who understands engineering and castings are delighted. Sir Thomas Bell points out the wonderful formation of the stern part and the stern frame, the contour and finish of it, and how it fits in as if it had been a forging and not a casting at all. Hundreds of Southampton men have carved out of the earth a dock—the greatest dock in the world—in which the ship may rest—the world's greatest maritime achievement. Among other things that will be required—and these all come from England—are miles of anchor chains, miles of carpets, miles of curtains and tens of thousands of electric globes and bell-pushes. The ship will require equipment for 15,000 meals every day while at sea. From 9,000 to 10,000 men will be employed right away, all over the country. Within a week, in Clydebank alone, anything from 1,000 to 1,500 men will be started.
The nation has felt the challenge to the shipbuilding and engineering skill of Britain, and to her prestige on the Atlantic, and the challenge could not be ignored. The reply should be as conclusive as possible. The Treasury, once a conservative and isolated institution, has become a pool into which the prosperous pay and from which the distressed draw. In theory that may be all wrong, but in practice, in these changed times, it is the only way to prevent disintegration and decay. It is not sentimentalism that leads me to say that, but the march of men to honest work. That, in my opinion, is the sign of a nation's strength. The march of the same men to honest idleness is a sign of a nation's weakness. After weakness comes decay, and after decay comes disaster. The Government are involving themselves in an expenditure that may seem huge, but this nation, as I have said time and time again from this part of the House of Commons, has spent thousands of millions of pounds upon war. If it came to war again, it would spend thousands of millions of pounds again.
No doubt about it, this is a wonderful nation. Unless we agree to this proposal there will be dislocation, depression and poverty such as followed the War. What have we done since the War? We have set aside £100,000,000 per year for the unemployed and distressed people, and it has meant life to millions of men, women and children. War is death; work is life. This £9,000,000 proposal means life, new life, to the shipbuilding, engineering and heavy industries of Britain. It may mean new life, if once again Great Britain becomes the queen of the Atlantic. Therefore, I am grateful to the Government that they have seen their way to make this proposal, and I hope that the House will receive it as generously as it has been made.
—after the very patriotic oration of the hon. Member for Dumbarton Burghs (Mr. Kirkwood), and his interesting disquisition upon the various articles which are going from all over the country to build the ship. I am sorry that we could not have a news film as well. There is much that is of very great interest in this Debate. The Labour party have put down what is, apparently, not a rejection of the Bill, but a "taking exception" to it, because the words do not say that they decline to give it a Second Reading. They merely take exception to the Bill. When the Money Resolution was being discussed they were all in favour of it. Perhaps they were shamed by the hon. Member for Gorbals (Mr. Buchanan), and this is the result. Unfortunately, they have put their Amendment in such a form that many other hon. Members who do not care about these proposals are prevented from supporting the Labour party, and thereby a good many hon. Members will no doubt be able to salve their consciences very much more easily than they otherwise would.
It is not only that which is of interest; it is of interest to see who is and who is not taking part in this Debate. I should have thought that the Minister most interested and most concerned—certainly the one who has most knowledge of these matters—would have been the President of the Board of Trade, but his name is not even on the back of the Bill. I do not question why he is not here to-day. No doubt he has some other appointment. It is very strange that he should not be supporting the Measure by putting his name on the back of it. The Financial Secretary to the Treasury said just now in his speech that one of the prime movers in this matter has been the right hon. Gentleman the Member for Hillhead (Sir R. Horne), but he has not been present either during any of these Debates.
I saw in the Press this morning that at a meeting of a body of which I have never previously heard, and which is called the Parliamentary Shipping Committee, only yesterday there was a dis- cussion whether they were to receive a subsidy, apparently for tramp shipping. I do not know if any Members of that committee are to favour us with their views to-day. On the Money Resolution Debates no one spoke who had any specific knowledge of shipping problems, or who sat for any constituency concerned more directly with shipping than, for example, my own. The House has had no guidance in this matter. I do not like to comment on my fellow Members, but it is a pity, in a case like this, that we should have had no guidance from hon. Members who have expert knowledge which they ought to put at our disposal.
There are two different problems in regard to this Bill. There is a financial question, and there is the whole question of policy. The policy question is as to whether there should be such big ships. Of course, the hon. Member for Dumbarton Burghs naturally wants the biggest ship, because it employs the most people. If you could have a ship of a million tons it would employ practically the whole population of his country—not a bad idea. From the point of view of practical politics, the Bill resolves itself into this House trying to answer two questions. First, is this big ship policy the right one? Having settled that question—upon which I submit we ought to have far more views from hon. Members who are capable of giving them to us—and granted that this is a useful policy, there is the question as to whether this idea of providing £9,500,000 of money loaned by the taxpayers is the right financial policy to adopt.
Those are two entirely separate questions, and they are both linked in this Bill. On the point in regard to big ships, the Financial Secretary had nothing to say except that this matter had been going on for a long time and that no one had protested until the Government came down to the House with a Money Resolution. That may well be the case. I hope that it is not to be assumed that Members of Parliament have to protest about what they see in the Press or perhaps what they see in question and answer in this House. Surely it is admitted that the right time for this House to take cognisance of matters of this kind is when the Government take upon themselves the introduction of a Measure.
Many hon. Members are very fond of grandmotherly legislation. A great number of us are nosey Parkers who put our noses into all sorts of things that are no concern of ours. I do not think that we ought to be blamed for not doing it. It is time enough when the Government bring down Measures, for any observation or criticism that has to be made to be made then. The Financial Secretary to the Treasury as much as said that those of us who are not sure about this ought to have said something about it long ago. He surely forgot that the text of the agreement which has been reached has only been published and printed for a very short time. When we come to the question of the finance of the Bill and whether this is a right policy to adopt, it is very relevant to consider the agreement in the form in which we have it.
I hope I am an orthodox Conservative, and I must say that one of the things which have distressed me most about this episode so far has been that what we Conservatives always said would happen, if the State started interfering with industry, has happened. During the Debate on the Money Resolution not much advice was forthcoming from those who are expert in shipping with regard to this policy, but there was an indecent rush on the part of Members for different shipyard constituencies to put in claims that the second ship should be started forthwith, and more particularly in their own area. We always said that that would happen, and that is one of the incidental reasons why I deprecate the Government coming into this business. They are bound to be subjected to all kinds of pressure, and, although the Chancellor of the Exchequer said the other day it was no use setting out to skin the bear before it had been shot, I am not certain that there is not going to be a good deal of repetition of such claims to-day.
When the hon. Member for Dumbarton Burghs tells us about the height of unemployment in his constituency, I would remind the House that there are many other places where it is very bad also. The hon. Member, unfortunately, has not a monopoly of that. But he has had what many people have not had, for during the last 12 months no less than £3,000,000 worth of Admiralty orders have gone to the Clyde. That must make some slight difference to the situation as compared with what it was 12 months ago, and, therefore, to that extent it is not so necessary to press this proposal from the point of view of Clyde unemployment. I think that that must be the case on the figures. Would not the same sort of amount of employment—I do not know; I just put the question—be or have been available supposing it were agreed, which apparently it is not yet, that a mammoth vessel of this size is not particularly good policy, but that it would be much better to build two smaller ones, about which there is far more agreement in technical circles, as far as I can make out, than about this very large vessel? If that were so, it would dispose, within certain limits, of the first question.
Therefore, I would ask the Government, before the Debate ends, if it should happen that no private Member proves the case, to state definitely what their expert advice is on the question of big ships. What is the advice that they get? Surely the Board of Trade must know something about it; surely, at any rate, they could get some sort of information, though it would not be exactly the same kind of advice, from the Admiralty, on a problem of this kind? When the Financial Secretary says that we are only rehashing the Debates of 23 and 24 years ago, and that the hon. Member for Gorbals and I both had our predecessors then, I feel rather sorry, because I thought that my hon. Friend, the hon. Member for Gorbals, and myself were unique. I regret to think that there were people like us 23 or 24 years ago. But, surely, there is one essential difference, and that is that, when those Cunarders were laid down with the assistance of the State, it was surely common knowledge that they had a cruiser value in the military sense. Indeed, they were used as such, or certainly some of them were, during the War, and it was always at the back of the mind of the House at that time that they would be of some use in that way. We have to take our minds back to 23 years ago, when the German menace was coming along. To-day there is nothing of that kind at all, because nobody in their wildest moments would imagine that a 72,000-ton ship could be of any military use at all, and, therefore, we are dealing with a rather different set of circumstances from those of the previous occasion. I would ask, and I think one is entitled to ask, for some expert guidance on the technical side with regard to the big ship policy, about which nothing, so far, has been said in these Debates.
As regards the other matter, I do not want to repeat what I said before, and so I leave it that I do not think it is wise, at this moment of time, to hypothecate £9,500,000 of the taxpayers' money for the purpose of this policy when we are still going through an economic crisis. Certainly, we have had nothing in the way of budgetary assistance to make us think otherwise, whatever may be coming in the future. We are still very strictly rationed in our public expenditure, and no one can hold out any hope that, if this is made as a loan, the amount will ever be repaid. Further, we are up against this difficulty, that at the present time the chief competitors in the big-ship policy, and the Americans more especially, are considering—I understand that Mr. Roosevelt has announced that he is going to reconsider—the whole question of subsidising shipping and also, as he is doing now, air transport and the like. If, at the very moment when the people who are to-day subsidising their shipping, as I think all countries are doing in one way or another—France, Italy, Germany and the States—if at the very moment when one of them is just about to consider knocking off some of the subsidy because they think it is an uneconomic proposition to carry out that policy, we in this country go in for subsidising these big ships, it will certainly act as a deterrent to their taking off any of their subsidies, and will probably bring them into a further subsidy war and lead to disadvantages on all sides far greater than the advantages which are envisaged by the Government.
I end with a reiteration of one point that was made by the hon. Member for Caerphilly (Mr. Morgan Jones), because it struck me as a point on which the Financial Secretary might perhaps give us information. That was his statement that the equity in the White Star Line does belong to an American concern. If that is true, and if it is of any value, I think the Government ought to tell us whether they have any intention of dealing with it or not, and, if so, on what lines. It may be that the hon. Member for Caerphilly has got hold of a mare's nest, or it may not, but, if there is anything in it, I hope we shall have a very clear explanation of what the situation is with regard to any possible United States interests in the merger company. We cannot say that the Government have been rushed into this policy, because it has been in the air, as the Financial Secretary said, for a long time; but I, for one, regret that they have not given far more adequate reasons to the House for embarking upon it at the present time, and I think it is a pity, to put it no higher, that, when we do not yet see our way to getting the cuts restored and taxation reduced, we should now launch out on a vast amount of public expenditure on what must be a speculative venture—because, if it were not speculative, the people concerned would have no difficulty in getting all the money they want in the City of London.
I cannot claim to be able entirely to fill the bill required by the hon. and gallant Member for Gainsborough (Captain Crookshank), but possibly I can add one or two words to the Debate which may be of interest to the House. The hon. and gallant Member has asked whether the Government are quite sure that the big-ship policy is a proper one. I think the House will agree with me when I say that the Cunard Company, who have had great experience of large ships on the Atlantic, and who years ago built large ships like the "Mauretania" and the "Aquitania," were at that time charged with the very same doubt with which the Government are being charged to-day in connection with the promotion of the building of these two vessels. The Cunard Company were charged at that time with building vessels which were too large, and the same thing is happening again. But, whatever the layman may think, the fact remains that for the Atlantic and for these long-voyage trades the ships that get the cream of the traffic are undoubtedly the largest vessels. In the South American trade it is perfectly well known that all that the Latin population of that part of the world care about is getting on board the largest vessel they can find and getting to the other side of the Atlantic, or wherever they may be going, as quickly as possible.
The hon. and gallant Member for Gainsborough said that this new vessel, and another vessel built on the same lines, would have no value as far as war-like purposes were concerned, and that no one could imagine that any ships of this size would be required in time of war, as they would be too large. I am not complaining of what he said, but only endeavouring to answer it. The answer, surely, is that during the War the ships that were of the most use to the Admiralty on the long-voyage trades in bringing troops, especially from America, were undoubtedly the large Cunard and White Star vessels. Indeed, they were not confined to the Atlantic, for it was they that took the larger part of the troops to the Mediterranean and Gallipoli, and, indeed, the Mauretania acted as the largest hospital ship. Therefore, from that point of view, it cannot but be said that the large ship is undoubtedly an asset in time of war, as, indeed, in time of peace. I certainly hope that there may be no more war, and that these ships may not be required for that particular purpose, but war was a long way off when the "Mauretania" and "Lusitania" were built, and they proved to be very useful factors in the Great War.
So far as this Bill is concerned, I personally, as a shipowner, am in general agreement with it in so far as it promotes and is for the benefit of the shipping trade in general. I may not be allowed by the Rules of Debate to go far outside the Bill, but in the building of this ship the national prestige is undoubtedly at stake, and anything that we can possibly do to retain that national prestige ought to be done. Whether it is done wholly by private enterprise, or by private enterprise supported by the State, I hold that it ought to be done, and that the Government are perfectly right to come in at this present moment and promote the building of the vessel. Certainly, it is said that if it were a good venture the shipowners would do it themselves. The shipowners did start it themselves, but the state of trade in the Atlantic, and, indeed, in the world, was such that they thought it advisable for their own good reasons to stop the building of the vessel, and no doubt to-day, if it were not for the fact that employment is so bad in the shipbuilding centres, the chances are that they might quite possibly defer it for perhaps another year, until things got better. As things are, I think the Government, in view of the desperate condition of our shipbuilding centres, were quite entitled to come in and say to the Cunard Company, "If you will go on with this vessel now, we will come to your aid and give you some assistance."
The building of this vessel will cost some £4,500,000, a very large sum no doubt, and I should like to know from the Financial Secretary to the Treasury how the House is to be informed before the second vessel is to be proceeded with. The Government may be, and I think they are, wise in insisting so far that the second ship is not to be proceeded with. The experience that they will get from the present vessel will undoubtedly be of great value to them, and it might be that they might find that in some respects she was not quite satisfactory, and, therefore, they might change their minds and build something entirely different. Therefore, I am glad that there is evidently no commitment other than the authority that they have taken under the finance part of the Bill to proceed with the second vessel.
I take it also that the action of the Government in taking this interest in shipbuilding is a foretaste that they are going to take much more interest in shipping and the general shipbuilding of the country than they have so far taken. The shipping trade is in a desperate position. Not very long ago we owned at least 50 per cent. of the world's shipping. Now the total is something like 27 per cent. It ought, therefore, to be the business of the Government—and I hope it will be eventually—to come to the general assistance of shipbuilding in order that the industry in general may be assisted. £4,000,000 would build 100 tramps and would spread much more employment over the length and breadth of the land than if spent on one vessel. I do not say, "Do not proceed with the second Cunarder when the time comes." All I say is that I take the Bill as being the forerunner of further assistance to the shipping industry, not for the sake of the industry itself, but in the national interest. I carefully noted the words of the Financial Secretary that Britain ought to hold her rightful place on the Atlantic and that this House should show its general interest in the renewal of British industry. Undoubtedly the step that the Government have taken to promote the building and finishing of this ship is in the interest of British industry, and I hope it is the precursor of similar measures which may be introduced.
The last speaker has emphasised the point that he was able to approach the subject in a paternal way, because he knew that an extension of the benefit was likely to come along; and we find from our own Front Bench an Amendment brought forward by way of honest criticism of the great business merger, one of the finest business mergers that I have ever known brought forward from the point of view of high finance, and one which certainly calls for close examination by business men. I thought it was a well reasoned statement that the hon. Member for Caerphilly (Mr. M. Jones) placed before the House when he dealt with the great financial assets of these companies and also the responsibility which must naturally follow in regard to the question of the merger. But business men, whether representing the Treasury or the Cunard or Oceanic companies, at least know something of business. They thought the tripartite arrangement was a matter of arrangement from a finance point of view, and I cannot believe that men associated with great shipping interests and those associated with the Treasury have not a knowledge of high finance.
I have a greater knowledge of poverty than of high finance, and I am at a loss to understand why men are not at work. Although we may have textbooks laying down certain lines which must be followed in good times, when it is a matter of emergency and there is a call for action, many theoretical principles have to disappear. While it may be wise to find out the dangers from the financial aspect, I am in this unfortunate position, that there are not financiers in my particular district and the people there want bread and butter. I understand that, as far as this merger is concerned, 1,500 men will get employment. Suppose of that 1,500 men at least 1,000 are artisans and mechanics who have been continually unemployed, who have a knowledge of the handling of tools and will be able to get back to the lathe and to the understanding of the mechanism of the shop, we shall be doing a great useful national work.
I am told that this job is to last a year or two years. Suppose we take it that for the artisans it is a year. When I realise how many people are hanging round the docks not able to get work, I wonder whether something of this kind, although £9,000,000 may be at stake, is not beneficial to the nation. When I realise that a thousand men at £3 a week will mean a large saving in the rates, at least that is something that is going to benefit Glasgow. I regret that it is not going to Liverpool.
I am at one with my friends when it comes to a question of Merseyside. The building of the dock at Southampton took the great liners down there and was a great loss to us. I also realise that men will be wanted to man the boat, and there are many men who will be able to take a sea-going job again. I am anxious that proper precautions, as set out by my hon. Friend, may be taken into consideration, but I am more anxious still that men in the mercantile marine, engineers, and others in ancillary trades shall resume their occupations. In my younger days I watched the progress of the "Alaska," the greyhound of the Atlantic. The Merseyside, which had been absolutely derelict, felt that a new era was coming. I feel that an impetus to shipping can be given by the building of a 73,000-ton liner. I am convinced that the best mechanical skill and brains will be brought to bear upon the construction of 534. I realise that, whether we are competing in the workshop or with the nations of the world, that nation can only be great and prosperous which is best able to take care of its own people. If the question of the mercantile marine is not attended to, if our shipping goes off the sea, if owing to foreign subsidies we are not able to compete in the markets of the world, our decay will soon be at hand. I believe that only on the sea are our men to be made fit and proper. It is the history of the sea that has stood to our credit. Everything that concerns us is a question of the sea. It is because I feel a new impetus is to be given to shipping, because I can see a resurrection and a new life, that I have great pleasure in supporting the Bill.
The Debate has been mainly concerned with the wisdom of the Government proposals from a financial point of view, and on these I am not qualified to offer any opinion. My anxieties and those of my colleagues, the Northern group, for whom I speak, lie in another direction, and I should be very grateful if we could have a specific reply to the two points that I am going to raise. First, in view of the magnitude of the Government's financial obligations, if it is finally decided that there shall be a sister ship, or two ships, built, are the Government reserving to themselves the right to have some say in the placing of the contracts. I have no intention of being the leader in the skinning of the bear, but I should like to know whether the Government are reserving to themselves such right. I appreciate that it will rest with the Government to say whether the additional £5,000,000 provided for in the financial Resolution will be paid to the Cunard Company or not, but am I right in saying that the interpretation of the words contained in the Financial Memorandum, "within the discretion of the Government," carries with it the implication that the money will be paid on certain specified conditions, one stipulation of which might well be that the contract should be placed, for a variety of reasons, on one particular river? I think it is not unreasonable to suggest, in view of the very real benefits which will accrue in a variety of directions as the result of the placing of this contract, that those benefits should not be confined to one area.
It has been very often stated, I think quite rightly, that Admiralty contracts are always allocated on the lowest tender. I think it is fairly obvious that, when you have a full yard, with your overhead charges considerably reduced, a firm in such a happy position must necessarily be able to lower any tender that it may make in any specific contract. For instance, a firm like John Brown & Company, having obtained such a vast amount of assistance from the taxpayer, will be able, as one of the firms contracting for Admiralty work, to make at any rate a very good showing when it tenders for the new cruisers, an invi- tation to tender for which, I understand, has recently been sent to various firms. For that reason, as well as for many others, I should very much like to know whether the Government are taking into consideration the position of all the firms all over the country who have to tender in competition with the firm which is now building the No. 534 hull?
The second point I would like to put is whether it is really the intention of the Government to wait until No. 534 has been launched and completed and put into operation for a sufficiently long period to find out whether she is really a paying proposition or not. I would, perhaps, if I may, remind hon. Members that expert opinion rather holds the view that had the building of the No. 534 not been held up, France would never have undertaken the building of the "Normandie." I feel very strongly, whether it is wise or whether it is not, if we have decided to go out to capture the blue riband of the Atlantic and to regain our lost prestige, that we should do so immediately, courageously and in no halfhearted manner.
I should like to offer my congratulations to the Clyde, but I think that it is perhaps necessary on behalf of the Tyne to rectify one or two misapprehensions on the part of some of my hon. Friends. As the Chancellor of the Exchequer very neatly put it when he laid the original Financial Resolution before the House, there has been a great deal of discussion as to which may be the fortunate district to obtain the building of the sister ship or sister ships, and many of my hon. Friends have asked me whether it is possible for the Tyne to undertake the building of such a large ship if we were fortunate enough to obtain the contract. I think, in all fairness to the Tyne, that I might say that we have two yards which are in a position to undertake the work.
I am not going to say anything more with regard to the Tyne, except that we have heard a great deal of discussion this afternoon as to the economic possibilities with regard to the running of No. 534, and perhaps it might be of interest to know that the most economic ship of the whole of the Cunard fleet is the "Mauretania," which was built on the Tyne in my division. I appreciate, in the same way as I think do all hon. Members in the House, the tremendous hope which must have been given to the Clyde by the announcement of the Government. Coming as I do from a very depressed shipbuilding area, I am very glad indeed to think that, at any rate, one part of the country which is dependent entirely upon the shipbuilding industry has received this great fillip to its basic industry. But I would in all seriousness, and with all the power at my command, say to the Government that if we are in the future to preserve the peace and sanity of Tyneside, we expect in some form or other—that, I am naturally only too glad to leave to the discretion of the Government—that the Government should not be long before they bring forward a constructive policy dealing with the deplorable condition of shipping and shipbuilding.
I am, perhaps, in the fortunate position in that my constituency is in the West Riding of Yorkshire and far away from any port, and consequently I have no lively hope or expectation of the Government for the future in this matter. I do not wish to delay the House with a discussion of the general principle of this Bill, but merely to emphasise one or two points which I do not think have been brought out in the Debate yet. The Government are insisting on a merger between the White Star and the Cunard. One of the reasons given for the merger is that it is going to put a greater number of people into work on the Clyde and elsewhere in the building of this new ship, and that we may all applaud. But mergers are uncomfortable things. I, personally, dislike them, and I believe that the Lord President of the Council, from certain speeches he has made, dislikes them also, for they result inevitably in the dismissal of a great number of clerks and other loyal members of the staffs of the companies before they are merged. If we are in this House taking a step which results in the wholesale dismissal of clerks and other loyal members of the staffs of the Cunard Company or of the White Star Company, it will be absolutely deplorable.
We have a grave responsibility in this connection, and I would therefore like to make a suggestion that the Treasury should insist—and I think that we have a right and a duty to see that the Treasury insist—that these two companies and the merger company when it is formed should make every effort to see that every man possible should be retained, and that no more dismissals should take place than are absolutely inevitable. I would go further and say that they should pursue this policy even as far as a small diminution in their profits. In the course of my business I come into contact with a great number of the staffs of the White Star Company and with a certain number of the Cunard Company, and I would like to testify that, in my opinion, there is no finer, more loyal or more able set of men than the staff's of these two companies. Therefore, I would like to urge upon the Treasury that they should bear that fact in mind. I am convinced, from my knowledge of the managers of these two companies who will naturally form the personnel of the new merger company, that they have no wish to see the dismissal or the discharge of their staffs.
I should like to make a further small point which rather interests me personally. I have for some time been asking questions in this House as to the desirability of removing the large charge made to Americans for visas to visit this country. I have always received from the Foreign Office an uncompromising "No." Now the Treasury are going into a form of financial partnership with this new company, and are therefore going to benefit or not as this company trades profitably or not. I know that not only the Travel Association, but also the experts in this company are in agreement that the high visa charge of 10 dollars to each American citizen visiting this country is an actual detriment preventing American tourists coming to this country. The Continent is far wiser in this respect and welcomes eagerly, with small or even no visa fee, American tourists. If I have the opportunity to raise this question again with the Foreign Office, I shall hope, and indeed I shall expect, the active support of the Treasury, as they will be financially interested in this question. I hope that I shall not be disappointed.
There is no doubt, as the hon. Member for South East St. Pancras (Sir A. Beit) said, that the success or otherwise of this venture depends upon the return of prosperity to the United States and to this country, and more especially to the United States. Given that prosperity which we all so desire, I see no reason why the new merger company should not, with this mammoth vessel, carry the British flag not only with honour but also with profit on the North Atlantic services.
I should like very cordially to support the hon. Member for Sowerby (Mr. McCorquodale) in what he said with regard to the question of the charge made for visas to those who visit this country. Many hon. Members of the House may not be aware, or they may have forgotten, that the Secretary to the Overseas Trade Department acts as chairman of the executive committee of the Travel Association, and this matter came specially under my attention when I occupied that position. I hope that this Measure may result in the abolition altogether of the charges which have been made. I entirely sympathise with the hon. Member on the first point which he raised about the hardship inflicted upon the staffs of organisations when an amalgamation takes place, and I very much hope that he will press that matter forward if he becomes a Member of the Committee and is present at the Committee stage of the Bill. At the same time, I congratulate the Government upon having insisted that the amalgamation should take place. I cannot help thinking that, in many of the industries to-day—we know the view held in connection with the cotton trade and the steel industry—unless some outside compulsion is brought about, it is impossible to bring together the firms, which is felt to be absolutely essential for their prosperity. I conclude that the delay which has stopped the continued building of this vessel has been largely due to insisting on amalgamation taking place.
I congratulate the hon. Member for Dumbarton Burghs (Mr. Kirkwood) on his speech, and wish to say how very much I enjoyed it. I know nothing whatever about engineering. It always seems to be so dull and uninteresting. The only time I am interested in the romance of engineering is when the hon. Member speaks. No other hon. Member in this House who represents engineering inspires me with enthusiasm so much as the hon. Member for Dumbarton Burghs, who always makes such a romance of the industry by his devotion to it. At the same time, I do not agree with the hon. Member if he thinks that the Amendment which have been moved from the Front Opposition Bench is not liable to delay the Bill. He himself stated that it was not intended to delay the Bill, but it is obvious that it could have no other result.
The suggestion is that instead of the Bill being now read a Second time we should pass the Amendment. If we did that the effect would be that the Bill would be dead, the money would not be advanced, and the men who are to benefit would not be paid. Therefore, we are confronted with the extraordinary fact that hon. Members opposite intend to support an Amendment which would virtually mean that thousands of men would be prevented from getting employment. In support of the Amendment they have brought forward side issues which have been fully explained before. We know the views of hon. Members opposite regarding the organisation of industry, but to suggest that those things can be brought into operation at this time is absurd, when what is wanted is the money to pay the men who are to be found work.
I listened to the hon. Member who moved the Amendment. He went into a long disquisition about the financial question and whether it was sound or not. One might almost have thought that the hon. Member was a banker, but I would not wish to insult the bankers by thinking that he was one. Speaking as a banker, I should like to say that he was wasting his time in discussing the financial question in the way that he did. It was needless to go into the financial question in that way. If it was a financially sound transaction the money would be advanced in the ordinary way on the money market, and there would have been no need to come to the Government for the advance that is to be made. That proves conclusively that there is something about the scheme which in an ordinary business way has an air of uncertainty and doubt. Therefore, the way to provide the money is by the Government coming forward and advancing it. That has been the whole basis of any scheme under the Trade Facilities Act, where guarantees have been given because there was doubt in the financial world, and the financial machine was not functioning. Here, once again, we are in exactly the same position, and the financial machine is not functioning.
The question is, is the vessel to be built or not? If it is to be built, it must be built by money virtually provided or guaranteed by the State. That, I take it, is the simple question which we have before us. I am very glad that the Government have been able to compel these two companies to amalgamate before they were willing to find their contribution. It seems to me that the hon. Member for Dumbarton Burghs answered the other question that was raised. The hon. Member who moved the Amendment asked how was the Government to be assured that the control and management of the new combine would be efficient. The body of men who have been so eulogised by the hon. Member for Dumbarton Burghs are responsible for controlling the combine, and what he said seemed to me to prove conclusively that the control is in the hands of men who are best qualified to direct a great concern of this kind. I hope that the hon. Member for Dumbarton Burghs will assure his hon. Friend who moved the Amendment that he need have no concern on that score, because he is fully qualified to testify that the men who are going to direct the combine are admirably qualified to do so.
That being so, we come back to the main point. We need not go into the full financial position. We know exactly where we stand. The only question that we have to decide is, are we to pass this Bill and provide the money in order that thousands of unemployed men may have work? That is the question before us. The Amendment could only have the effect of delaying the provision of work. I am interested to see hon. Members opposite taking this course. We in London go through stormy times at our political meetings, and hon. Members have given me a very good excuse at the meeting which I have to attend this evening for saying that we have had an extraordinary sight presented to us of money being provided by the Government with the object of finding work for the unemployed, and Members of the Labour party going into the Lobby against it.
I, in common with everyone in the House, welcome the objects of the Bill. We all want to regain supremacy on the Atlantic, we all wish to assist employment, and we are only too glad to assist the Cunard Company or any merger company in bringing that about. The chief objection which I have had to the Measure up to the present is not because of what it seeks to do, but the manner in which it proposes to do it. When I came here to-day I intended to listen to what the Government spokesmen would have to say on the general side of the problem, that is, the information which I expected he would give to the House regarding the prospect of this scheme being successful, and then I proposed to make a few remarks about the financial aspect. Unfortunately, the information we looked for has not been forthcoming. No one from the Government Bench has told us anything whatever as to their information, or the steps they have taken, or what reason they have for feeling convinced that the wisest thing we could do, even with the great objects in view, is to continue the building of this large vessel.
Reference has been made to the "Lusitania" and the "Mauretania." That appears to me to be quite a different matter. When the loan was made for the building of those two vessels—and I believe in addition an annual subsidy was granted—they were built under Admiralty supervision, and there were special conditions that they should be so constructed as to be able to be fitted with guns for Admiralty service afterwards, if necessary. There is a great difference in the building of the "Lusitania" and the "Mauretania" and the proposal now before the House. The "Mauretania" and "Lusitania" were built as a result of the skill, foresight and ability of designers in this country, and we were going to give a lead to the world. We built two vessels such as had never been built before. They took a definite lead on the Atlantic and maintained it for many years. We are proposing to do something to-day quite different. There are four or five large vessels already on the Atlantic, and commercially it is admitted that, owing mainly to the prevailing conditions, they are not financial successes. The ship which we are proposing to complete was laid down a considerable time ago, and there is no reliable reason for assuming that when that ship is completed, or when any other similar ship is completed, it will give us anything like the lead in the Atlantic trade which we obtained by building the "Mauretania" and the "Lusitania."
I have never professed to be in any way an expert in shipping, and I would not have said as much as I have said if the information that we want had been given to us. We ought to have more information. I should like to ask the Government whether it has been made a condition of the granting of the subsidy that the merger company shall proceed with the finishing of the large ship No. 534, or have the company been given the option of building two or three smaller ships, but with not less speed? Has it been made a definite condition of the granting of financial assistance that they must proceed with the ship now on the stocks, whether they believe that to be the best thing to do commercially or not? I hope that the Minister who replies will give us a definite answer on that point.
I want to make a few remarks regarding the peculiar circumstances which arise in the Financial Resolution on which the Bill is based. Some hon. Members have referred to them as if they were customary or similar to those which have been put forward on previous occasions. They do not appear to me to be at all similar. When the Government decided to give assistance to the companies engaged in the North Atlantic trade, I expected that they would have an adequate and substantial guaranteed loan against the securities which were available. Under the present financial proposals they are doing something quite different. The Financial Secretary to the Treasury cannot have it both ways. He has assured the House that we are finding money on security, and he has also assured us that we are shareholders in this undertaking. On examining the financial proposals, one finds that we are giving a very considerable subsidy. We are lending money at one-half per cent. under the Bank Rate, and we are lending other money at three per cent., or a possible five per cent. That represents a very handsome subsidy.
There is another point in the agreement which astonishes me still more. There is Income Stock A, and I find at the end of the agreement that Income Stock A ranks only in the event of liquidation, which I hope will not happen, pari passu with the ordinary stock of the merger company. If that is the case, it would have been plainer and more easy to understand if the rest of the money had been put up not as Income Stock A but, frankly, as the Government taking so many shares in the merger company. I do not advocate the Government being shareholders in a commercial enterprise of this kind, but if it is to be done, I would rather it was done in that way than in the way it has been done. If we are to have a share in industry, and if we are to be definitely interested in it, we are entitled, I will not say to some measure of control but to some measure of what one might call intimate information. That would not be entirely a novelty. We have at present shares in the Anglo-Persian Oil Company and on the board of that company there are directors representing the Treasury. It seems to me, taking the matter broadly, that our position in regard to this merger is far more similar to our position in the Anglo-Persian Oil Company than it is to the undertakings in which the Treasury has merely used its credit facilities for the borrowing of cheap money by commercial concerns.
I hope that before the Debate finishes we shall get from the Government, or, if not from them, from some hon. Member or hon. Members, information as to what the prospects are likely to be in building these big vessels. The hon. Member for Southampton, (Sir C. Barrie) made an interesting speech, but he did not give us any real lead. I hope that the Government will be willing to consider Amendments in Committee, and are not going to inform us that on account of agreements which have been Made, or which are proposed to be made, it is quite impossible for them to consider any Amendment.
I should like to offer a few observations on the finance of the Bill. Clause I (3) says:
All sums received by way of interest on advances made under Sub-section (1) of this Section shall be paid into the Exchequer, and all sums received in repayment of such advances shall be applied, in such manner as the Treasury may direct, to the redemption of debt.
In the Second Schedule to the Agreement it is provided that:
The security shall be constituted and secured by an issue at par of debenture stock of Cunard, Limited.
Later on, the Agreement provides:
The debenture stock shall mature for payment on the 31st December, 1975, with an option to Cunard to redeem the same in whole or in part in sums of not less than £10,000, or multiples thereof, at any time on giving one month's previous notice of its intention so to do.
In regard, therefore, to repayment there appears to be an option to the Cunard Company, but there is no obligation on the part of the company to repay. Therefore, I would like to ask whether it is not possible to have some form of sinking fund created which would be some guarantee for the taxpayer. We all in this House represent the taxpayer, although some hon. Members seem to bear their own constituencies particularly in mind. But is it not possible by an Amendment in Committee, to give, in addition to this option to the Cunard Company to pay off when they feel inclined, some obligation on their part to create a sinking fund whereby the taxpayer who is to advance this money might have a guarantee of the repayment of his advances? The hon. Member for Caerphilly (Mr. M. Jones), in proposing the Amendment, said that he was prepared to welcome a resumption of work on the vessel No. 534, but he devoted the greater part of his speech to arguing, apparently, that we should not go forward with the proposal. He pointed out how in these depressed times it was impossible for the Cunard or any other company to issue debenture stock. The revenue returns have been so dreadful that it is impossible to raise the money. Therefore, if we want to do this as a fair venture, there is only one possible way of raising such an enormous sum of money, and that is by the State stepping in.
There is also in the Bill provision for the creation of the board. There is one principle to which we all subscribe, and that is that where public money is involved there should be some form of public control. I think that in a company such as this there should be a representative of the Treasury on the board. If we are going to advance £4,500,000, possibly £9,500,000, we are entitled to have a representative on the board of the company. It could be easily provided for. We are advancing public money, surely then there should be some measure of public control. I offer these two suggestions, which I hope are not of a useless character, for the consideration of the Government.
I am rather inclined to agree with the last observation of the hon. Member for East Edinburgh (Mr. D. Mason). It may be desirable to appoint a representative of the Government to the board of this company if only that he may be in a position to ascertain for himself at first hand, on behalf of the taxpayer, exactly how the company is doing from a financial and commercial point of view, so that the Government should have immediate and first-hand information. I do not oppose the Bill, although I regard it with some apprehension, which has not been allayed by one or two of the speeches made this afternoon. We shall have to see how it works out. We are not for the first time in this Parliament giving assistance to a very speculative enterprise at the expense of the taxpayers of the country, and I am much alarmed about one point raised by the hon. Member for South East St. Pancras (Sir A. Beit), to which I hope the Financial Secretary will pay some attention, that is, the number of obsolete ships which have been transferred to the merger company. The only two absolutely modern ships which are paying their way are the "Georgic" and the "Britannic," and I am not convinced that under existing conditions, with competition from Italy, France, Germany and the United States, ships like the "Majestic" and the "Berengaria," which are capacious but by no means fast, are every likely to pay their way again. A great many of these ships which are being transferred to the new merger company will be like a millstone around their necks under modern conditions in the North Atlantic. I should like to have the opinion of the Financial Secretary on that point.
Then there is the question of speed. I believe that ultimately the success or failure of this venture will be decided by the speed. The hon. Member for Southampton (Sir C. Barrie) pointed out that experience in the South Atlantic trade showed that people nowadays would do almost anything to get taken quickly from one place to another, and I should like the Financial Secretary to tell us what the speed of this new vessel is likely to be. I agree with the hon. Member for Gravesend (Mr. Albery) that we have not had much information from the Government as to whether they think this ship is going to pay its way; and why. That is the real point upon which the House is most anxious to have an answer. We shall have to make up our minds, sooner or later, upon what principles we are going to conduct the financial relationships between the State and industry.
We have entered now upon an absolutely new economic era. Many of us regret the virtual disappearance of free markets, and the consequent necessity of State control of production and prices. In existing conditions the State is bound to be involved in the conduct of finance and industry. We have felt our way step by step, according to some sort of rough principles and some sort of plan, but this House, I think, ought to demand with increasing emphasis from the Government in the course of the next few months what economic principles govern their action in cases of this kind, or, for example, in the case of the hydrogenation of oil from coal, which we are shortly to consider. Why do the Government choose these particular industries for financial assistance? Why not tramps? The Government could build 100 tramp steamers for this one Cunarder. I am not saying that they are wrong in choosing the Cunarder as against the tramps; but why? That is what we want to know. What are the principles governing their actions in this new economic policy?
The hon. Member for Southampton, in a speech which I think was alarming, made a confident plea for the subsidisation of the entire shipping industry of the country. If he is going to continue on that line, some of us will have a lot to say regarding the fishing industry. We shall want a good subsidy. And where is the process going to stop? Who decides what industries are to receive this financial assistance? Is it the Board of Trade? If so, by whom are they advised? There was a body set up by the Prime Minister called the Economic Advisory Committee. Do they ever meet? Perhaps the Financial Secretary can tell us whether they meet, and, if so, what happens? Has it been called upon to advise in matters of this kind? This is a question upon which its advice might be valuable. We are now proceeding down a very difficult and dangerous path, so far as economics are concerned, in a very haphazard, almost careless way. I feel that the Government should, if not in this Debate, at any rate at an early date, give us the general principles which are guiding them at the present time in framing this particular aspect of their economic policy.
Lieut.-Colonel Sir WILLIAM ALLEN:
In this Debate I have heard of the Clyde, the Mersey and the Tyne. My home is in Belfast. I expect that hon. Members are all thought-readers, and know exactly what I am going to say. In the first place, I should like to congratulate the Government on introducing this Measure and also the hon. Member for Dumbarton Burghs (Mr. Kirkwood) on having secured this for his constituency. We should all like a little of the good things that are going. The merger company has been formed by the combination of the White Star Line and the Cunard Line. Practically all the big ships of the White Star Line have been built in Belfast. I think, therefore, we have a claim that when the sister ship is to be built, Belfast should produce it. I see no reason why Belfast should not have the first claim. At least that is my opinion, and I believe it is the opinion of the Belfast people.
My constituency would have only an indirect interest in seeing the ship built at Belfast, for I happen to represent one of the six counties that does not touch the sea. But we consider that Belfast is the hub of the six counties area in Northern Ireland, and when Belfast is busy it means grist to the mill of all the counties in Northern Ireland. Therefore, we do look forward to the time when some of the big yards in Belfast will secure either the sister ship, or, if the Government finally decide to build two ships instead of one, that we shall get at least one. I do not think there is any doubt as to the capability of Belfast to carry out the work successfully. I am glad that in this Debate there have been no references made to statements which have from time to time appeared with regard to the Government of Northern Ireland subsidising any shipbuilding companies. Those statements were misleading and untrue. When any of the Belfast shipbuilding companies enters into competition for the building of any of these ships it enters the market on the same level as all other shipbuilding concerns in Great Britain. That, I think, has been said once and for all, and in a manner very satisfactory to the people of Belfast.
There has been a lot of pessimism with regard to the building of this big ship. If the same ideas and the same pessimism had filled the minds of the directors of these great companies in the past there would never have been any large ships built. We cannot tell whether this ship is to be a success or not, nor could any other shipbuilding concern ever have said that any of its ships would be success. I was a very small boy when I first wrote in a copybook the words "Nothing venture, nothing win." That is what we are going to try again with this big ship. There is one thing which seems to have been forgotten in this Debate, and that is that the ship is largely constructed already and ought to have been completed long ago. I certainly think that the majority will welcome the fact that the work is being undertaken now. I am sure it is the desire of the entire nation that the ship will be a conspicuous success. The hon. Member for Dumbarton Burghs may rest satisfied that there is not the slightest jealously on the part of Belfast people because the ship is being built on the Clyde. We are delighted that unemployment is going to be assisted to that extent in that part of Great Britain, and we hope that in time our turn will come.
When the Financial Resolution was being discussed I ventured, as one coming from the Clyde area, to offer some criticism of the Resolution. I claimed that those who were Members of this House had a right to criticise, and that it was our duty to criticise. In my case it was not an easy duty. I hope the House will give me credit for representing my constituency and my people as ably as most Members of this House represent their constituents. When a thing is not unpopular—indeed, is popular—in my constituency, if I oppose it it is from a sense of duty. The Labour party have moved a constructive Amendment to the Motion for the Second Reading. It is an Amendment which has been prepared with great care and ability and I intend to vote for it. Without speaking in support of the Amendment, I would venture a criticism of the Bill itself.
I remember that the last time the Noble Lord the Member for Hastings (Lord E. Percy) and I crossed swords in Debate it was on the subject of patronage. The Noble Lord was then extremely critical of certain proposals in the Unemployment Bill which he thought might lend themselves to some form of patronage. I hope that the Noble Lord now sees that if ever there has been a display of patronage, it is in the proposal now before us. The Government are handing out forms of patronage, and each district is giving almost a contemptible display in trying to share in the patronage at the expense of other districts. If Wallsend gets, Birkenhead loses. If the Clyde gets the ship Barrow loses, and the prosperity of one, it might almost be said, is the misery of another. I never conceived it as part of my Socialist principles, to secure the prosperity of Gorbals at the expense, say, of South Wales.
When I heard the Financial Secretary say that we are not committed to go on with another ship, I asked myself what are the facts? This is a Bill which enables the Government to spend £4,000,000 on a second ship. The moment the Bill becomes law every shipbuilding Member of this House will press the Government to go on with the second ship. Each district will hope to get the order. The constant day-to-day grind and pressure will be there. The result will inevitably be that the Government will be brought into it. It has been said that to give this first ship a chance it is necessary to have a second ship, that the success of the scheme cannot be tested with one ship. We are told that while one ship is crossing the Atlantic going westward there must be another of similar size and speed doing the reverse journey.
The argument has been used from the Labour benches that this proposal will provide work. No one denies that. Last night an hon. Member urged the growing of bananas as a means of providing work. The late Mr. John Wheatley, when Member for Shettleston, used to say, "Start to dig a great tunnel to New Zealand and it will provide work." If the provision of work is the main argument there is a much more formidable case for Admiralty ships than there is for this ship. The Admiralty ship is a nationally-owned ship. It is a ship of machinery. It is entirely under national supervision. It is very often built at a national yard, and practically every penny spent on it is spent on labour. If the demand is for work and work alone the Labour movement must support the building of armaments and a great fleet of ships.
There is to be £9,500,000 spent. Give that £9,500,000 to the unemployed and it will provide work. Every unemployed man would get a new pair of boots and a new suit, and to that extent he would be a richer and a better man. The money then will have been given to the people who needed it most. But the Government have chosen to do the other thing. One fact that has never been mentioned is that this company now owes the nation £1,000,000 of money, and it has never repaid one penny piece. The £9,500,000 is a large sum. When we asked for 3s. a week for the maintenance of a child the proposal was scrutinised and debated in minute detail. But here the sum is £9,500,000 for a company which owes the nation £1,000,000. If any Member of this House was owed £10 by another person, would he dream of extending his loan to £100 if no payment of the £10 had been made?
But the security here is the same as the security for the £1,000,000, on which the company has paid nothing. The company asks now for £9,500,000. What is the object? It is to build a great liner. We have been told again and again that it is to uphold the prestige of Britain. My ideas of prestige are different. I remember the late Mr. Keir Hardie saying that the prestige of a nation was not in its great ships, but in the happiness of its men and women and children in their homes. When these ships are built the nation's commitment does not end. Suppose that the nation puts £9,500,000 into this venture and it does not pay. The question will be asked at once, how can it be saved? The Government will then put in more money in order to save the money that is already in. It is said that there is good security for this money and that it is good business. If so, what about the London money market? To-day, I am told, everybody is looking out for investments. The cinema trade is being ruined by overbuilding, because people are taking the risk in that trade, owing to the fact that there is no other outlet for their money. Every form of investment which can show the slightest return is being over-subscribed. But there is not a man in this House who, looking at this proposal and knowing its history, would put a penny piece of his money into it, and you have no right to do with the nation's money what you would not do with your own.
As regards the provision of work, in my view in the long run it will not provide any additional work at all. Take the reverse case and assume that these ships prove a success, and that you get your money back. You put on these two ships which are faster and finer than the ships which they displace. What does that mean to the workman? Unemployment. You put on two ships, two fine machines which move faster and carry more people than the existing ships. While you have succeeded in getting a certain number of men to work in the building of the ships for a year, in the ultimate resort you drive a number of other ships off the seas. Whatever else may be said for this scheme, taking the long view—as the Labour and Socialist movement is entitled to do—it will not ultimately fulfil even the function of finding more employment.
I make this last criticism. This will be a rich man's ship. Even what may be described as the comfortable section of the community, doctors and teachers and people of that sort, will not be able to travel on it. It will be outwith their means. It will be a ship exclusively for the extremely well-to-do. I ask hon. Members to look over the passenger lists of similar ships at the present time, and they will find that the overwhelming majority of the passengers belong, not to the middle class but to the extremely wealthy class. You are putting on to the sea a ship that can only be used by the rich.
Does the hon. Member intend that we should remain in a stagnant state of society? We want to find work for these people who are unemployed, and this is a way of finding it.
If that is to be the argument, then I suppose we shall have a campaign to help the poor millionaires by building mansion houses and thus employ a lot of people as servants and so forth. That is the kind of argument which I heard demolished when I was little more than a boy, and when I first came into the Socialist movement. I am not going to follow that line at all. I repeat that this £9,500,000 is for the building of a rich man's ship. At the moment there are a hundred and one more desirable ways of spending that money, each one of which would ensure the provision of ordinary work, and each one of which would give greater social value and would bring greater prosperity and happiness than this project.
As regards the number who are to be employed on the building of this ship, I think that the figures in all these cases are exaggerated. We are told about so many thousands getting work but there has never been any proof of that. It may be that it will employ 10,000 men but I remember that when the ship was previously under construction on the Clyde and when £1,500,000 was spent upon it, the figures for unemployment rose all the time. It may be that they would have risen higher if the ship had not been under construction but in connection with my own trade I hear rumours of What is going on. I am chairman of my union, members of which are in one of the trades affected. How many men did we get employed? Comparatively few. If you are taking money from the community for purposes like this, you can always push up the figure of those who will be given employment. I cannot dispute the figure of 10,000. If you made it 40,000 or 100,000 I could not dispute it, because I have no proof. Neither has anybody else.
Last night the Labour party—I think rightly—voted against the beet-sugar subsidy. It provides work. Once you embark on this business, there is no answer to the argument. "Why not a subsidy for coal, a subsidy for merchant shipping or a subsidy for anything else?" I say, taking all the aspects of the question into consideration, in my view there is here an organised public ramp. You are using the misery of 10,000 men; you are saying there is work here for 10,000 men who are miserably poor and you are using that as a pretext for taking £9,500,000 of public money. The same thing could be said about going into war. It could be said "There are to-day, so many thousands colliers unemployed. We will give them work, provided we can rob the State of a certain sum." To proceed along those lines is, I think, altogether wrong. If this nation must enter into shipping, and if we have £9,500,000 to spend, let us enter into it properly and let the country own the ships. Let this concern be run, as the Amendment suggests, as a national concern. But I object to this sum of public money being handed over to private enterprise to be used by them for whatever purpose they may see fit, while at the same time we deny the right of the community to own that which the community has provided.
I am sure that all hon. Members recognise the sincerity of the hon. Member for Gorbals (Mr. Buchanan) in speaking as he has just spoken. As he has truly said, there are in his constituency many people who would be favourably affected by the construction of this ship. I feel that that makes it the more incumbent upon me to express the reasons why I support the proposal in the Bill because, excepting the constituency of the hon. Member for Dumbarton Burghs (Mr. Kirkwood) there is no constituency more intimately affected than that which I represent. Before coming to my reasons, however, may I mention one argument used by the hon. Member for Gorbals which I heard with great pleasure? He called attention to the fact that hon. Members representing shipbuilding areas had been suggesting the desirability that any future ship under this proposal should be built in one or other of their constituencies. The hon. Member described that as an undesirable form of patronage. I agree, and I welcome his remarks, because I have never heard a more damning indictment of one of the evil results which would follow the nationalising of the means of production, if we ever committed that folly.
I pass from that point to state as briefly and as clearly as possible my reasons for supporting this Bill. There is, of course, first the question of the direct employment involved. I am not going to enlarge upon that aspect. Every hon. Member knows what it is for a district which has had bitter experience of unemployment, to find that things are becoming a little better, and I welcome the fact that I am able to support the National Government in a policy which is going to make things better for the constituency which I represent. Secondly, there is the question of prestige. I do not think that that is merely a matter of sentiment. It seems to me to be a matter of real importance that at sea we should retain the name and reputation which we have enjoyed in the past, because if we lose that we shall also lose the wherewithal to keep our shipyards going. That is of vital importance. We cannot build these big ships unless we can keep the confidence of the travelling public sufficiently to attract the passengers who will keep the ships employed. In this Debate speeches have been made as to the general principle which ought to be followed by the Government in a matter of this kind. I submit that this is not a case for the application of any general principle. We are not considering this proposition de novo. We are starting from the point at which this ship, having been partly constructed, having had £1,500,000 expended upon it, was abandoned on the slipway. We are not deciding here whether it is desirable or not to build big ships. We are far more directly concerned with the question of whether this particular ship now in a half-finished state, should be completed or not.
The third point which I wish to submit is this. I have mentioned already the advantages to constituencies lying near the shipyards in the Clyde. I do not think that is by any means the end of the matter. Possibly from the national point of view it is not the most important aspect of the case. The Chancellor of the Exchequer is rightly regarded as the careful guardian of the public purse. When the Government, through the Chancellor of the Exchequer, say that they are in a position to support a proposal of this sort, the reaction throughout the country is enormously beneficial, and among the people who are encouraged by it are individual traders and producers. I should have thought that they would have had the support of my hon. Friend the Member for Gravesend (Mr. Albery), who appears to find many objections to this proposal. To me, apart from the direct advantage of getting this ship finished, the most important advantage is that it does in a very real measure restore confidence to producers throughout the country, and I believe that in the long run the indirect effects will be as valuable as the direct results of having this ship completed.
I have not heard, from any quarter of the House, except from those who represent shipping divisions, any real enthusiasm for this Bill. Naturally, from those who represent such divisions, there is a chorus of praise, with the exception of the speech of the hon. Member for Gorbals (Mr. Buchanan). There has also been praise from other Members representing shipping and shipbuilding divisions, in anticipation of possible favours to come. The hon. and gallant Member for Dumbartonshire (Commander Cochrane), who has just sat down, pointed out, quite rightly, that there was no question of principle involved in this matter; it was a matter of practice and of business. I am afraid that the Government and many Members of this House have rather found themselves in the position of a man who has put his head through the railings, who cannot get it back again, and who has to squeeze his body through in order to get away. This ship was laid down, a great deal of money has been spent on it, and in the circumstances, rather than that we should lose the prestige which we certainly should have lost by leaving the ship to decay, we have decided to finish it, with the consequent increase in employment which will arise.
The hon. Member for Gorbals seemed to object very much to the Bill on the ground that it was a bad investment, and I can understand that view. I think it is a hazardous investment, but at the same time both he and the hon. Member for Caerphilly (Mr. Morgan Jones) and his friends are always urging us, not only to take over all shipping companies, most of whom find themselves in an extraordinarily bad position now, but all the rest of the industries of the country, however unsuccessful and in whatever financial state they may find themselves. I join my voice with those of the hon. Members who, in the course of this Debate, have urged that the Government should say what information of a technical nature as to the advantages or disadvantages of these big ships the Government have at their disposal. I do not think it is entirely immaterial, merely because this ship has been laid down and is in course of construction. I think it is very important, and I think it is information which ought to be laid before the House. Up to date we have had very few details given to us of any kind, except those of a purely financial nature given to us by the Financial Secretary to the Treasury.
There are other points covered by the Bill, apart from the broad issue, to which I would like to refer. I should like to know why it is necessary to provide £1,500,000 working capital. Presumably, the two companies involved have a certain amount of working capital left. We know that they have had very bad times, in common with other shipping companies, but £1,500,000 seems a very large amount to advance as working capital to carry on with, in addition to the amounts that are being advanced for the completion of this ship and the amounts that may be advanced to build a sister ship. It rather appears as though this £1,500,000 is being advanced to pay off existing creditors of the two companies, and I should like to know if that is the case, because it is laid down in the Memorandum of Agreement that the assets will be taken over free of encumbrances.
On page 10 of the agreement, in the Second Schedule, there is a reference to £1,000,000 Cunard debenture stock secured by a trust deed in favour of a trustee or trustees nominated by the Treasury. It seems that it is a specific charge on the assets, and further on it says it ranks behind the specific flotation charges. Where is the interest to be paid on this amount to come from? As I understand, it is unlikely to come from the reserved assets, and consequently it can only come from the interest paid on the capital of the merger company, on the 62 per cent. of the shares held by the Cunard Company. That is a small and rather technical point, but I hope the Financial Secretary will see that there is some provision with regard to the payment of profits, in the event of profits being made, otherwise I do not see where the interest on this sum is to come from. It would not be very satisfactory, supposing the merger company made a considerable profit and merely put it into reserve and did not distribute it. I cannot find any provision of this nature. I would like to say, in common with other hon. Members, that I think it is advisable to have some Government representation on the board—it may be only one member—simply to hold a watching brief. After all, the Treasury, and through the Treasury the country, is very largely interested in the fortunes of the new company.
Finally—and this is another technical point—perhaps the Financial Secretary would say why the terms on which we are advancing this money are not stated in the Bill. It seems to me that there is rather an unfortunate practice growing up of leaving this sort of detail out of the Bills which we have before us, so that when in future one is obliged to refer to them, one will have to consider also a large number of other documents. Although I feel very gravely doubtful about the steps taken by the Government in this matter, there are compensations for the dangers involved and the risks to the capital which the country is putting up. We are getting compensation in the form of more employment and of additional prestige, and in the form of the chances of gaining an enormous preponderance in the shipping trade of the Atlantic.
I rise to support the Bill, and I would like to congratulate the Government on the successful conclusion of their efforts over the last year to bring about a settlement between these rival shipping companies. The last speaker has said that he did not look on the Bill as a question of principle. I very much hope that we may look upon it as one of principle, and a very important principle too. I take the action of the Government as an acknowledgment of their realisation of the great national importance of the shipping industry and of our mercantile marine to this country. If I may say so with all respect, many of the speeches which have been made this evening have been very parochial in character. They have been concerned as to whether the Government are quite certain that all this money is going to be paid back, that the interest is going to be paid, that the taxpayers' money is not being wasted, and that every precaution is being taken. It is quite right that when the Government advance money they should get security, and they have got security in this Bill.
We are deeply concerned about our shipping industry to-day. For centuries we have held pride of place, leading the world in our shipping, in the matter of ship construction, in the matter of the efficiency of the personnel, and in the lead which we have given to every other nation of the world in the matter of appliances for the safety of passengers and crew in the mercantile marine. Now, due to various causes, our shipping industry is in a very serious position. We have lost the leading position which we held, and it is not a question in this Bill as to whether the Government are endeavouring to bolster up some particular shipping company, or whether that company is to be kept going, or whether interest is to be paid on the money. The point is as to whether the Government are going to do something in order that we may be assured that the shipping industry of this country shall not be destroyed by the machinations of the foreigner.
Reference has been made to subsidies, and it seems to me that there are hon. Members of this House who are afraid of subsidies. The hon. and gallant Member for Gainsborough (Captain Crookshank), who I am sorry to see is not in his place, raised the point and said what a dangerous thing it was for this country to start subsidising our merchant shipping, and that it would create retaliation from the foreigner. What nonsense. It is the foreigner who has started the subsidies, and unless we in this country are prepared to use subsidy against subsidy, there is no question but that our shipping industry will be destroyed by the foreigner. The hon. and gallant Member for Gainsborough is, I understand, a supporter of tariffs. The arguments which were used before tariffs were introduced were to the effect that the foreigner would retaliate, that we must not put a tariff against any foreign article because that would be very dangerous. Well, in point of fact, immediately we started our tariff policy in this country, the foreigners all came on their knees to make trade agreements with us, and they reduced their tariffs against us. That is a fact. The hon. Member for Orkney and Shetland (Sir R. Hamilton) laughs, but we shall laugh the longer, because that is a fact, and our trade is increasing enormously in consequence of tariffs. Exactly the same arguments can be put forward with regard to the use of subsidies for shipping. As soon as we start to use them, the foreigner will take notice, but until we do, he will do nothing.
As a matter of fact, this matter is of vital national and Imperial importance. I would remind hon. Members of what happened during the War, so far as our mercantile marine was concerned. The right hon. Gentleman the First Lord of the Admiralty, in a speech some months ago, drew attention to the enormous volume of commodities and foodstuffs which must be delivered day by day in the ports of this country. After the War, we made up our minds that never again should we be so dependent on the foreigner for food and other vital commodities as we found we were in 1914. But there is no difference in principle between relying upon the foreigner for food and relying upon the foreigner for the merchant shipping to bring that food here. If it is dangerous to rely on the foreigner for food, it is equally dangerous to rely on the foreigner for the shipping which is to bring the food to our ports. The whole of the strength and power of this country have been built up upon our sea power, and I am thankful that the Government are showing by this Measure that they have realised the importance of sea power, which implies a great mercantile marine as well as an efficient Navy, in order that security may be given to this country. If we are not to have a mercantile marine, it is useless having a Navy; if we are not to have a Navy, it is equally useless to have a mercantile marine.
It is of the greatest importance, so far as this particular ship is concerned, that she should be built; we should at once regain the blue riband of the Atlantic service. There is a tremendous psychological aspect to this problem; people will travel by the largest and most up-to-date ship which is put upon the sea; no matter what it costs them, they will do that. It is absolutely essential for the future of the passenger traffic of this country that this ship should be built. The hon. Member for Gorbals (Mr. Buchanan) disagrees with this Bill, because he says that this is a ship built for rich people. I should not have thought that it mattered in the slightest degree to the hon. Member what the ship was built for, provided that the ship was built and gave employment to our shipyards and to the people employed in all the subsidiary trades throughout the country. I should have thought that every hon. Member of the Socialist or of the more extreme party, would be only too thankful to the Government for giving really productive work to industry. The hon. Member for Gorbals said that in his opinion it would be better to give the money to the unemployed for them to buy boots with. It would be much better to give the unemployed work, and productive work, so that they do useful productive work as well as buy boots and other things. I welcome this Bill as an indication of the policy of the Government, not only with regard to this big liner but also with regard to mercantile shipping in general; that the Government recognise that it is of national importance, and that the whole security of this country depends upon the continuation of our mercantile marine.
I shall not attempt to deal at all with the questions of shipping policy raised in this Bill. It has indeed been a somewhat strange Debate to which we have listened to-day. The proposal to invest what may amount to about £9,500,000 has been admirably made by the Financial Secretary, who is a member of a party which has long been associated with the opposite financial policy. The hon. Member for Dumbarton Burghs (Mr. Kirkwod) treated the House to an almost lyrical oration upon the glories of private enterprise. One of the most Gladstonian arguments which I have ever heard was put forward by the hon. Member for Gorbals (Mr. Buchanan); one might at least have expected him to be enthusiastic about any Bill which had anything to do with shipyards.
I rise to bring forward one or two other points of a more general character. I welcome the introduction of the Bill and shall have no hesitation in voting for it, but I recall just over a year ago that some of us in this House and outside began to urge upon the Government that from a general economic point of view a policy of increasing expenditure of capital upon production would be wise and salutary. At that time, of course, the Government were not able to meet us. We were told that it was necessary to conserve the national resources by every possible saving that could be made, and in spite of the growing difference between the rate of national savings and the rate of national investment, which is the main cause of the depression to-day, we had a continued resistance to any form of increased capital expenditure. Some hon. Members of the Government were sympathetic towards us, but on the whole the Government continued to follow a largely deflationist, and at any rate a careful, policy about fresh capital investment.
I take it, therefore, that this Bill marks the determination of the Government to end that policy. It can have no other meaning. I also hope, however, that if the Government are determined to end this policy, the Bill means that the Prime Minister and his colleagues, with the help of the best economical and technical advice available, have arrived at some kind of a definite plan as to the basis upon which they will embark on large capital expenditure; what is to be the order of precedence of schemes, which schemes are more socially or economically desirable or beneficial to the country than others.
I will not go into the technical questions raised in this scheme. I have no particular objection to Transatlantic shipping. It is rather a speculative business; so speculative that it has not even frightened the ardent hon. Member for Gorbals to think that national money should be invested in this direction. I submit, however, that hon. Members are entitled to claim that, if the Government are to to say that the time has come to abandon the policy of conserving the national revenues and to embark upon a new policy in national expenditure, the House shall be given some kind of control over what new kind of movement the Government are to finance. We must be certain that, merely because someone says that something is a rather good scheme and £9,000,000 should be put into it, the Government do not say that they will not build any more houses, or clear any more slums, or continue to do other things which are more desirable than the new undertaking. Nevertheless, I welcome this Bill because it will be impossible for the Government in future to put up the orthodox strict deflationist defence line which during the last two years they have brought before the nation on other proposals.
Secondly, there is the question of the relation between the State and industry. I take it that in that sphere also the Government are prepared to move into a well-considered and carefully thought-out plan. There are two possible attitude: one is to maintain the old laisser-faire policy; to say that the Government are to have nothing to do with industry, that industry must solve its own problems, and that the Government are not to take any activity in that direction. The chief apostle of that view at present is the President of the Board of Trade, who has been absent from these Debates. Considering that this Bill more closely affects the Board of Trade than almost any Bill which one could imagine, I am rather struck by the fact that we have not yet been favoured by the Minister whom one might have thought was chiefly responsible for this matter. Nevertheless, that is one view which it is possible to take. I have sometimes been criticised because I have ventured to hold the view that the State can wisely adopt what one might call a helpful and co-operative attitude towards industry, but I did not go anything like so far as large investments of Government finance without control, such as are recommended by this Bill. Nevertheless, I take it that the Bill means that we are to have some considered policy.
The best part of this Bill, in which we must support the Government and recognise that they have been successful, is that the President of the Board of Trade has all along made it a condition of financial support that there should be a rationalisation between the two companies engaged in Transatlantic shipping. We welcome the fact that the Government have persisted in holding to this policy of not giving financial support except on condition of the merger of the interests of these two companies. Whether the financial merger is sound I do not propose now to debate, but the principle on which the Government have insisted is sound. On the other hand, as in the first sphere, of capital expenditure, so in the second sphere, of the State and industry: if the Government are to take this particular attitude towards a particular industry, they cannot continue to resist the pressure which is put upon them to take some constructive notice of the other great industrial problems—those of iron and steel, coal, or textiles. They cannot preserve that purely laisser-faire attitude upon one side of the question and then embark from an entirely different point of view upon another set of problems.
I understand that the hon. Member who is to reply may not have authority to speak for the Government as a whole upon such grave matters. If, however, the Government are to survive the immediate work that they have done so admirably and effectively, and to carry out effectively the work of the next two years, that work must, both in the economic sphere and in the sphere of the relations of the State towards industrial reconstruction, be preceded by a coherent plan and not consist of a series of sporadic moves.
To return to the Amendment, only one speaker, the hon. Member for Caerphilly (Mr. Morgan Jones) has as yet emphasised its chief purpose. We do not take exception to the assistance of the building of this vessel, because it is providing work; but we ask the House to recognise the position in which the Government, when they have done that, have put the country. We are providing money for a private enterprise without any control at all. We recognise in this House that private enterprise in certain spheres of work cannot carry on; yet, according to the Government's view, that work is essential. The Government want to hold that supremacy of shipping that has been held in the past, and owing to the failure of private enterprise the Government have to step in. Having recognised that principle, the Government ought to say that, if private enterprise cannot succeed, then for practical purposes it ought to get out of the way. The hon. and gallant Member for South Paddington (Vice-Admiral Taylor) made a very striking speech. He coupled the Navy and its function of protecting the trade routes with the work of the Mercantile Marine, saying that the Mercantile Marine ought also to be protected and to have money found for it. I wish, however, that the hon. and gallant Member had brought a little common sense to bear upon his remarks. The Navy is financed by public money and is under public control. If he says that the Mercantile Marine is to be under the same heading and that public money must be given for it, I entirely agree with him; it is essential that we should have supremacy in this respect. Having, however, recognised the failure of private enterprise, the Government ought to come to our way of thinking and say, "Very well, we agree with your point of view and we will take over control of all the business that is to be carried on."
I hope that the Prime Minister has recognised where he is being led this afternoon. Speaker after speaker from every side of the House, after lauding what the Government have done, has wondered how to get in his advocacy of his own constituency. At the end of every speech I have waited to hear the hon. Member recognise the debt that he owes to his own constituency and urge the Government to recognise its claims. The hon. Member for Wallsend (Miss Ward) made a very nice speech, but running right through it was the question of when Wallsend would get a share of the Bill. Other hon. Members followed on the same lines, and then reached the question of the whole shipping industry being subsidised by the State. The Prime Minister, therefore, whatever else he must recognise—and I am glad to say that he has been here during practically the whole of the Debate—must recognise the drift of what is taking place in regard to the control of enterprise.
Surely hon. Members must all see now that owing to the exceptional conditions prevailing, no private concern can say how long it is going to carry on. Yet we recognise in this House that private enterprises must go on, and must have some subsidy. We cannot keep away from subsidising different enterprises—a subsidy for this, a loan for that, a grant for the other—on every hand, to keep up the supremacy of the race, or the nation. Every industry is calling for assistance. Yet hon. Members on the other side of the House failed to recognise that we must get money for each industry; they failed to recognise that we ought to adopt this controlling policy. We are urging that in this Amendment, for the latter part of it says
this House takes exception to a proposal to vote public money for the promotion of private shipping interests without any guarantee as to its repayment and without conditions for securing public control over its disbursement, a share in any profits which may accrue, or the ultimate conversion of the shipping industry into a national undertaking.
If the Government meant to do that we could agree with the proposal that they put forward. If private enterprise gets money from the Government, it ought not to be left in control. If the help succeeds, private enterprise gets the benefit; but, if it fails, private enterprise loses nothing, and the loss falls on the State. May I take hon. Members back to a historic Debate in 1923 when Lord Snowden, who was then Mr. Philip Snowden, moved a Motion in favour of Socialism? Lord Melchett, who was then Sir Alfred Mond, defended private enterprise, and it was his contention that when it failed to succeed on its own account it should cease to exist. To-day private enterprise can no longer carry on in many of the great industries, but it does not cease to exist there; it comes instead to the State for help. The State recognises the plight of these industries, and we on these benches, recognizing that men are in danger of being thrown out of work, sometimes forget our principles and support the State helping these industries in order to keep men in work.
In my own constituency works are being closed down and I could appeal to the State for a subsidy to help them carry on, and no doubt I should get some benefit for my constituency. That is not the way the House of Commons ought to look at the problem, however. We must take a broader view ante recognise what such assistance means to the State as a whole. I believe that the help that is being given by the Government in this instance may be made with the best intentions, but it is a step in the wrong direction. The State has no right to grant large sums of money to private enterprise without taking over control. If an industry is necessary, the State ought to have control of it. I hope that we shall be able to get into our Lobby a sufficient number of Members to-night to prevent the Government taking any step in this direction in future.
I will not follow the hon. Member for Leigh (Mr. Tinker), although I agree with him as to the thorough badness of these Debates in which we have pressure put on the Government from one private Member after another to get work for their constituencies. We have heard a great deal about the employment of men in the dockyards which will follow the granting of this subsidy by the Government, but are we to be assured that all the officers and men employed on this ship will be British? We know that some companies are good in employing British officers and men, and that others are not so good. There will be no excuse in this case, and we should have the clearest assurance from the Government that only British officers and men will be employed.
I would like to say something about a point that is exercising my mind. I have a definite objection to subsidies on the one hand and to inaction on the part of the Government on the other hand, and in this Debate I find it almost impossible to weigh up the objections to the subsidy and the objects to inaction on the part of the Government. There are many points in favour of the subsidy. There is the point that throughout our history shipping has been necessary for the protection of our prestige and that shipping is essential to an island nation. I agree, therefore, that it is important that in some way or other we have to do something for shipping. It is not a new thing for shipping to be put on a different basis from all other industries. In the time of Queen Elizabeth the Government forced certain landowners to grow oak trees for the shipping industry. That concern for shipping has been shown through our history, and I am prepared to take a line with regard to shipping different from that which I should be prepared to take on every other subsidy.
We have heard all the bad points against subsidies pressed in this Debate. One hon. Member said he had nothing to do with shipping, but he wanted to ensure that if the merger took place there should be as little reduction as possible of the staffs of the two companies. What is the good of a merger unless it reduces overhead charges? There is no other use for it. Then we had a collection of speeches asking that the ship should be built at Belfast, on the east coast, at Liverpool, and at other places. Each hon. Member who spoke in this way apologised and said he did not want to press the Government, but on the whole he was certain that this sister ship should be built in his particular division. I am not blaming them. I am not going to ask for anything of that kind. As a matter of fact, there are two shipyards in my division, although hon. Members would possibly not know it because we are more modest than they are. We are here primarily to look after the interests of national finance.
I and many other Members supported the Government so that they could give us on the Floor of the House the best information that they have got. I am not speaking disrespectfully of the Financial Secretary or of the other Under-Secretaries because they know that I appreciate their capacity. The Financial Secretary is an absolute genius in the newspaper world and in other ways, and if I wanted to deal with that kind of thing I would seek his advice. I want on this occasion the advice of the best shipping expert I can get. I want to know if, as a supporter of the Government sent here to secure sound finance, I can get sound financial advice from the Government through a Minister who knows the shipping world inside and out. Nothing will induce me to vote for this Bill unless I have the opinion in the House of the President of the Board of Trade. We have a right to that. We know all about the theory of Government unity, but it is one of the things that causes the House of Commons to lose in prestige when the Government contains a man of great and special ability and we do not have the privilege of hearing him on these points. It may be unpopular for me to say so and it may be disliked in certain circles. I am sure it will not be misinterpreted by the Financial Secretary. I have nothing against him or against whoever is to reply to this Debate. It is not in the interests of the National Government that, because of the weakness of the Opposition, they do not bring forward their chief and best people. I am not voting for a Measure of this kind until the House of Commons can be treated with the respect which it deserves. We have in the Government a great shipping expert, a man who knows exactly how the money ought to go and what is the best way of restoring the shipping industry; and we are being asked in this Bill to give something over £9,000,000 possibly—I say possibly advisedly—for the assistance of one or two ships. Whether that is the best way of helping the industry I do not know, but we have a right to have the opinion of the best authority in the House.
This is the first time that I have had the privilege of addressing the House. The hon. Member for Leigh (Mr. Tinker) spoke of the failure of private enterprise. I would like to ask him why he considers that private enterprise has failed, because to me the position seems to be that foreign Governments have been giving large sums of money to help their shipping lines to carry on, and we have to do the same for ours. If we are to go on the basis of allowing other Governments to do that without doing anything to assist our own shipping industry, which is one of the vital industries of the country, it is time we stepped down. But we have no intention of stepping down. In the part of the world from which I come our people want to go ahead, and a subsidy is absolutely necessary in self-defence when other countries are paying them. France is paying shipping subsidies to the extent of £5,000,000 a year, and America to the extent of £10,000,000 or £15,000,000, and perhaps more. These things have to be taken into consideration when we want to get this big boat finished. I am very glad that the Government are going to help to get it finished, and if they help in the building of one or two others as well, so much the better, because one cannot do the work. Two ships are needed, one going either way, on the Atlantic line.
We ought to back up our shipping industry more than we do. There has been quite a Debate on whether we should subsidise private enterprise. I hold that private enterprise in these matters has not failed, because we have always had the best mercantile marine in the world. We have not as large a percentage of the world's shipping now as we used to have, because of foreign competition and the subsidies given by foreign Governments, and it is our duty to hold up our own industries when they are menaced by foreign competition in that way. If another nation were to threaten us or to send a fleet against us we should back up our own people to the last penny, and we have a right to back up what is, after all, our staple industry, because without our mercantile marine we cannot exist. As one hon. Member has already reminded us, we have to bring such a large percentage of our food from across the sea that we require a mercantile marine second to one. I come from a constituency in which a great many working people find their occupation in the shipyards, and we rejoice that this work is coming among shipyard workers—in the sister isle—because it means that there will be fewer unemployed. The lending of this money to carry on the construction of this vessel on the Clyde will mean that less money will be paid out by the Government for nothing—for the unemployment insurance money is, to a large extent, money paid out for nothing. Here we shall be paying out money for something; because it is an asset to our State when we pay out money in wages. I have very much pleasure in supporting this Bill, and I hope that those who gain employment as the outcome of this action on the part of the Government will find constant jobs.
I am sure the House will thank me for expressing its appreciation of the gallant way in which the hon. and gallant Member for West Belfast (Captain Browne) has over- come the ordeal of a maiden speech. It had evidences of a pugnacity which I am sure the House will get to know better in his subsequent interventions in Debate. I am in the same position as many other hon. Members who have expressed their anxiety this afternoon at the absence of information on this matter, and I join with them in asking for further enlightenment. If that request can be satisfied I am sure the whole House will be pleased, because there are apprehensions in the minds of many hon. Members over the irrevocable step which we are about to take. Hon. Members will have read the Bill, the Financial Resolution and the agreement between the shipping companies concerned. The language is correct and respectable, but it conveys very little information, even to those who are accustomed to reading such documents. I have read this document—Command Paper 4502—from the preamble right through, to the end, and I am still baffled. I understand in a general way that an agreement has been reached between two large shipping companies, and that having come to that agreement between themselves they later arrived at an agreement with the Treasury. The agreement with the Treasury provides for advances of money which may total £9,250,000.
All that is quite simple; but though there are words and phrases in abundance there is no real guarantee that we shall ever get repayment of these advances at any time. There is no real substance in any of the so-called guarantees, and in expressing my own dissatisfaction over that position I feel that I am also expressing the dissatisfaction of many other hon. Members who have spoken. The Financial Secretary to the Treasury will certainly assist the House if he will tell us what, to his mind, is the guarantee that we have. What I wish to know is, What shall we get in return for what we are to give? I would like to submit the following five questions to my hon. Friend, and I hope he will forgive me for putting them to him at this late stage: (1) What is the exact nature of the guarantee we are to receive in return for these considerable advances? (2) What policy is to be pursued to safeguard the Treasury against possible loss? (3) Is any limit contemplated for the new kind of risk which the Government have undertaken? (4) Are we in this Measure incurring a risk of further commitments? (5) Is this to be regarded as an instalment of a plan for the modernisation of our liner fleets? Answers to those questions are vital to us in the consideration of this Bill. This is not a matter of expediency, something done to meet a temporary emergency; this is a vital decision on a policy which may carry us very far beyond the financial limits of this Bill. We have had speeches from shipowners which have given us fair warning as to the limits to which they wish to go. One hon. Member now sitting opposite has spoken very candidly on this question, and, having heard this Debate, we are very much more concerned regarding the real implications of these proposals.
The Financial Secretary to the Treasury criticised our Amendment in advance, but I am sure he will agree with me that it expresses a general apprehension felt in the House, as indicated by speeches which have come from hon. Members in all parties. I would ask whether this proposal is designed solely, or mainly, as an aid to employment, or does the policy of the Government carry them further? Have they in their mind's eye a much more comprehensive policy than the mere filling of a gap in the employment market, the mere provision of a sop to the unemployed for the time being, with no policy for their continued employment—I refer to the question of the modernisation of the liner tonnage of the country? We could understand a Government helping in the organisation of what is, after all, a very important national industry, embracing not only the large ocean liners—those sumptuous floating palaces—but the tramp steamers which are the mainstay of the sea for the people of this country. We might have had a policy for the scrapping of obsolete tonnage and the building of new tonnage to take its place in order to ensure the modernisation of our shipping fleet; but this Measure affords no hint of any policy in that direction.
Is this policy to stop after two ships have been built? If that is to be the end, then not very much will have been accomplished. If the men on Clydebank are now to be sent back to work only to find themselves out again after these two ships have been completed, how much shall we have gained in the long run? The hon. Member for Dumbarton Burghs (Mr. Kirkwood) must have been driven almost to despair by the twin spectres, rivalling each other in their gauntness and their grim tragedy, furnished by the daily assembly of the unemployed at the Employment Exchange and the skeleton of the giant Cunarder, both bearing witness to the folly and anarchy of the competitive system, which we are now seeking to stimulate into fitful activity. We can sympathise with the hon. Member in his desire to see the men back on the ship, but, with the assistance of the wonderful machines now used in shipbuilding, the vessel will soon be off the stocks, and the hon. Member will then have to start his agitation all over again, and the problem of the unemployed will be as difficult as before, if not more difficult. The hon. Member who staked a claim for Belfast wants one ship, and we shall hear the voices of the Tyne and other shipbuilding centres in due course.
I was not referring to the hon. and gallant Member but to the bon. and gallant Member for Armagh (Sir W. Allen) who spoke earlier in the Debate and said that he did not know whether this big ship would pay. That is the problem. It is on account of the uncertainty regarding the earning possibilities of big ships that the Government have had to undertake this risk. If this had been a certain investment this Bill would not have been before the House to-night, because the London money market would have advanced the money to the companies readily enough. It is only because there is a risk that large ships cannot earn the money that this responsibility is being placed upon the State. I thought the hon. Member for Gorbals (Mr. Buchanan) made an excellent speech to-night on the question of employment. He revealed the fallacies which have appeared in the arguments of other hon. Members when he showed that this sum of money could have been spent much more beneficially by granting the unemployed an addition to their purchasing power. The unemployed people could make their own purchases if they had the purchasing power. If wages are paid—even from Treasury funds—to a man employed to do work we are only enabling him to make purchases in the shops and we should achieve the same end, that of enabling the unemployed to make purchases, if we added directly to their purchasing power. I think the hon. Member for Gorbals put that point very clearly.
The hon. Member for Stockton (Mr. Macmillan) does not understand the Government's policy. He appears to be constantly hoping for some national system of planning and has endeavoured to instruct the House in his own views, and to instruct the country outside by the publication of a book on the subject. The hon. Member speaks with sympathy and with a great desire to alleviate the lot of the unemployed, but if he wants a national planning policy, or a policy at all, he must seek a new Government. This is not the kind of Government to avow a policy of planning. This is a kind of Government to make a start, as they have done, in a variety of directions and not to know how far they intend to go. In this instance we are not told how far they intend to go. The Government will go a very long way before they come to the conclusion, as we have done on this side of the House, that they have gone utterly in the wrong direction. That is why the hon. Member is likely to be disappointed. The Government have no policy or comprehensive idea of national planning, or, if they have, they have not taken the House into their confidence, and we await a further declaration on that policy to-night.
We do not put forward this Amendment as a mere formal gesture of opposition; we are concerned with dangers which the Bill effectively conceals. The language of the Bill is correct and respectable, but the principle underlying it is one of the assumption of the risks of a great industry by the State in the direct interest of a large company, and with only a possibility of bare repayment for the advances provided in the Bill. There is no safeguard or guarantee for the men who are to be employed on the ships, or assurance in a single line of the Bill that the pledging of the national credit will lead to prosperity in the shipping industry. We shall vote for our Amendment as an alternative to the Government's policy.
We join with hon. Members in all parts of the House in desiring to see the kind of planning which the Government have in their minds for the revival of shipping and for the upbuilding of an effective and efficient national fleet for cargo traffic and passenger traffic, but we do not believe that the shipping industry can be improved by building large, sumptuous floating palaces for the enjoyment of a limited class of people in this and other countries. The Government might as well guarantee the expenditure and undertake the risk of building half-a-dozen large first-class hotels in London. That would find employment for waiters and commissionaires, dressed in any way you like, and for the building trade. There would be employment for people in the indulgence of a limited class, but no guarantee that that kind of hotel would be successful. There is no guarantee that the floating luxury hotel, which this ship will be when completed, will confer a service upon the shipping industry. We urge the Government to consider the terms of our Amendment and to see whether we can fashion in this House a policy which will give the nation a voice in determining the course of the shipping industry and in providing that industry with a fleet which will hold the seas for many years to come.
The hon. Member for Gower (Mr. D. Grenfell) habitually speaks with such clarity and unmistakeable intention that I must sympathise with him to-night in his endeavour to engage in a feat which is unusual to him, that of riding two horses at the same time. He was at once anxious to avoid the reproach of rejecting this means of employment, and to obtain credit for firm and unshakeable adherence to socialist principles. I am sorry, if there be in this Motion something of which he disapproves in detail, that he should use it as an excuse for chastising the Government as severely as he did. The hon. Member evidently forgets his own record and that of his hon. Friends in this matter—not that it is in the least blameworthy. He speaks to the House as if there were not behind him memories of many grants made at the expense of the taxpayer to private enterprise, of the nationalisation of which there was no question at the time, whether it were the beet sugar industry or the railways.
He will forgive us if we have not taken up a policy which he himself, when in office regarded as perilous. He told us that the Amendment, to which he referred so equivocally and so half-heartedly that I am not yet sure whether he is supporting it or not, expressed the apprehension of the House on this Measure. If there be any apprehension it is lest the Amendment advocating nationalisation should ever, in a day more fortunate for himself though less fortunate for other people, become the established practice of this land. I recognise that the question whether or not our position upon the Atlantic should be a subject for governmental action, whether or not there should be a unification of our interests upon that ocean, and whether or not we should embark upon a policy of big ships, are matters of judgment and opinion.
I do not flatter myself that even if I repeated such arguments as I have been able to adduce in moving the Second Reading of the Bill—I now ask the indulgence of the House, speaking as I do for a second time—and if even I were to supplement them or embellish them with every example and illustration that my ingenuity could command, I should persuade such hon. Friends of mine as the hon. and gallant Member for Gainsborough (Captain Crookshank) that the matters to which I have referred are desirable. Nevertheless, the prestige of our shipping position has been a matter of concern to previous Governments, and we are not ashamed to follow in that tradition. We believe that in this instance that prestige can be most effectively and practically secured by a unification of the two interests which now sail the Atlantic, and accordingly we have decided to assist the formation of this merger company.
It must be obvious to the House that large economies will ensue. That is but one of the advantages of adopting such a Measure. It must be obvious that there will be a reduction in overhead costs, that the organisation will be simplified, and that the offices can be amalgamated, to say nothing of the additional advantage which we achieve by enabling this company to stand up against the rivalry which it has to encounter from foreign nations. We did not embark upon such a policy spontaneously and without advice. We did not come down, as has been suggested in one or two critical speeches this afternoon, to hurl this proposal at the stunned heads of hon. Members. The complaint about us hitherto has been of our delay, and we cannot now be reproached with having failed to consider the pros and cons and the alternatives of such a policy.
The hon. and gallant Member for Gainsborough, who is so ingenious and yet so witty, asked me to prove conclusively to the House that a big ship was better than a smaller ship. He said that, failing the appearance of any one who knew anything about the subject—a claim which he did not make on his own behalf—to defend me, he would look upon me to defend myself and to satisfy the House that large was greater than small. Happily there appeared out of the earth, as it were, a veritable army in my protection. The hon. Member for Southampton (Sir C. Barrie), whose shipping interests are so vast, and whose experience is so great, was joined by the hon. and gallant Member for South Paddington (Vice-Admiral Taylor), who, at any rate, does know something about the sea. They explained to the hon. and gallant Member for Gainsborough the real advantages of the big ship. What better justification could we have than that the Cunard Company, holding the predominant position which it does, is of opinion with all its knowledge and experience that the big ship is better than the small? I should have thought that their argument upon this point and their view upon the matter would be conclusive, when it is joined, as it is joined, by the similar view of other experts who have been consulted. I do not think that we can be blamed for following the best advice that was open to us.
The criticism of the big ship relates, of course, to the volume of traffic which it has to carry. This brings me by an easy transition to the speech of the hon. Member for Caerphilly (Mr. Morgan Jones) which was not in the least overstated but was admirably, cogently, and statistically argued. He was in some difficulty in relating his premises to his conclusions, for he did not forget that the first part of his Amendment was a compliment to us for having found so much employment, a part of the policy of which he approved. All that he would do would be to deny to us the means of carrying it out. Though the scheme was so admirable in outline and apart from the details, and he was so anxious to support it, he thought that it was inevitably destined to failure. Why? There recurred at proper musical intervals throughout his discourse the refrain that we were confronted with "the staggering fact of declining traffic," a statement which he amplified by reference to the best informed authority and the most reliable figures. Having demonstrated that there had been—which nobody was disposed to contest—a decline, even a staggering decline, in traffic, he made a remonstrance against the Government that the late Mr. W. Graham, introducing the Insurance Bill to cover the Cunarder, told the House that the Cunard Company only required that insurance before proceeding to build. Why, having been told that by Mr. Graham, the hon. Gentleman asks me, are the Cunard requesting something more? His own refrain supplies the answer; something has happened since those balmy days of the Government of hon. Gentlemen opposite—there has been "the staggering fact of the decline in traffic."
He asked me why, if there were credit difficulties at the time when the Cunard work was suspended, those credit difficulties should operate to-day. But something has happened in the meantime to the shipping companies, who have been under very heavy weather, for there has been, if I may quote the hon. Gentleman again, "the staggering fact of declining traffic." He asked me if I could assure him that these loans would be repaid in full, to the last farthing. Of course, if "the staggering fact of the decline in traffic" becomes a permanency, his prognostications may prove correct, and shipping will not be so profitable as we trust it will be. I can give the hon. Gentleman no absolute guarantee as to the future. It is easy to make promises when you are dealing with the time to come, but the time to come can only demonstrate whether our hopes are falsified or not, and there is no reason to assume, in my judgment, that the traffics on the Atlantic will not improve as conditions improve generally. That, at any rate, is an aspiration; it is not a prophecy. Having decided that that conditions would not improve, the hon. Gentleman turned to an examination of the finances of the Cunard. He spoke of their reserve funds, and, I believe, actually quoted from some previous balance sheet. He wanted to know—
I think his suggestion was—he will correct me at once if I am wrong—that the Cunard Company might have reserve funds of its own to dispose of; why did it not use them?
am glad to have the hon. Gentleman's concurrence in that. The answer is that the Cunard has already expended nearly £2,000,000 on No. 534 out of its own resources and have not felt able to draw upon them further to continue operations. If they had done, there would have been no question of coming to the Government, and surely the hon. Gentleman must be impressed, as other hon. Members have been, by the desirability of rescuing this hull from ruin and enabling it to be completed into the structure originally designed. The hon. Gentleman also, as regards the finances of the Cunard, feared that our debentures would not stand at par, because, he told us, there was a discount on the first debentures, which have precedence over our own. It is perfectly true that there is a slight discount upon the first debentures of the Cunard, although the interest, I believe, has been regularly met, and we are concerned here with the interest rather than with any market quotation, particularly as our debentures will not be quoted on the market at all. All that we have to satisfy ourselves upon is whether or not we are provided with adequate security. The existing Cunard debentures are secured by specific mortgages on certain of the ships. These ships will be transferred to the new merger company free of encumbrances, but the Cunard will receive, in place of them, 62 per cent. of the shares in the merger company, and the whole of the assets of the Cunard after the merger—these and its other assets—should be sufficient, or at any rate reasonable, security on which the Government might advance £1,000,000.
Might I ask the hon. Gentleman one question? Is it not true that these 15 ships have been transferred from the Cunard Company to the merger company? Does the hon. Gentleman argue that that transfer of the 15 ships will not have a deleterious effect upon the value of the Cunard shares in the market?
I should think that exactly the contrary would be the case, because, first of all, there comes, through the Government advancing it, to the Cunard Company, £1,000,000; and, for that sum together with their ships, the Cunard Company will have a 62 per cent. interest in the new merger company, which is provided with other assets. I should think, therefore, that the answer to the hon. Gentleman's question would be exactly the reverse of what he anticipated it would be, and I should have thought that that was so upon the simplest mathematical principles. Having examined the finances of the Cunard, the hon. Gentleman assumed that—
Certainly; any dividends received by the Cunard Company are at the disposal of those who have claims on the Cunard Company—firstly the debenture holders, and then the shareholders. I trust that that is a clear answer to the hon. Gentleman. I was about to say that the hon. Member for Caerphilly assumed that the interest on our advances as a whole would only be payable if there were profits. In that, of course, he was mistaken, and I am anxious so to inform him. The interest on all our first charges, and on our second debentures in the Cunard, is payable as an absolute obligation; no question of profits arises there. As the hon. Gentleman asked his question quite genuinely, I have given him an answer quite frankly, trusting that it will remove any doubt that has been troubling him.
Having dealt with the finances, the hon. Gentleman desired to know what would be the character of the shareholders. He spoke of foreign interests; and his curiosity made a sufficient impression upon my hon. and gallant Friend the Member for Gainsborough for him to insist that I should reply. Whatever foreign interests may now exist in the Oceanic Company, it is specifically provided, or it will be provided, in the memorandum and articles, that the merger company shall be and shall remain under British control. It is not necessary to examine the details of the present shareholding in the Oceanic Company; I trust that that absolute assurance on my part will appease any qualms that the hon. Gentleman may have had.
He next wanted to know why we were not to be represented upon the board, and here he was supported by my hon. Friend the Member for East Aberdeen (Mr. Boothby) and by the hon. Member for East Edinburgh (Mr. D. Mason). I endeavoured as lucidly as I could, in moving the Second Reading, to explain that we are mortgagees, and not shareholders; and it is not customary for a mortgagee to administer the property. That, I think, is a well established principle. I might add to that that we are not shipowners, and here I would repeat again a very convenient phrase used by the Leader of the Opposition—the Cunard Company know most about their own business. We trust them—if we did not trust them we should not be advancing this money—to conduct their fleet in the most economical manner possible. Their accounts will be open to us, and they will give us all the information that we may require.
No one ever suggested for a moment that the Government did not trust the Cunard Company. I imagine that they trust the Anglo-Persian Oil Company also, but in that case they have representation.
That is an entirely different matter. I do not want in the least to be dogmatic, but I was genuinely interested, and I think the House as a whole was, by my hon. Friend's philosophic examination of the future relationship between government and industry, and I think that is a matter which has to be thought out. Various methods will be adopted, of control or otherwise, whatever may be thought suitable. I do not want to lay down any hard-and-fast rule, but I think that in this particular instance we have found the best method of control in the national interest.
My hon. Friend, who has such a vast experience of companies, knows that his question does not in the least destroy what I was saying. I shall examine before I sit down, with the greatest conciseness I can command, our situation in relation to the merger company, but I should like first to continue to deal seriatim with the points that were raised. The object of the board will be to operate, as one single unit, the North Atlantic fleets, which are now divided into two. The board will therefore take over a number of ships, some of them obsolescent, as my hon. Friend the Member for East Aberdeen pointed out, following the informative speech of my hon. Friend the Member for South-East St. Pancras (Sir A. Beit). If the board is to be the one single authority, it must take over all the ships. It cannot expect to leave behind in the hands of the existing companies all the ships which are of no use, and only take those which are of use. The board will take all the ships. It will then examine what ships it requires, and it will have the benefit of selling for scrap the ships that it does not require. It is an obviously logical sequence, from the conclusion that all the ships should be under one control, that this new merger company should have vested in it all the ships, whether they be good, bad or indifferent.
I come now to subjects of greater detail, and I trust that the House will find my arguments sufficiently in sequence. My hon. Friend the Member for Gravesend (Mr. Albery) wanted to know whether it was a condition of the grant we were making that the company should proceed with No. 534, or whether they could have built other vessels. The answer is that the 534 was half built, and that is what the company desired to complete. It is for that reason and for no other that the 534 is referred to in the Agreement. My hon. Friend the Member for East Edinburgh (Mr. Mason) desired to ascertain the reason why the option to the merger company to redeem debenture stock in multiples of £10,000 should not be reciprocated, so that the Government itself might enjoy a similar option. It may be better in the interests of the Government that the company should set aside money for depreciation and reserves than that we should claim sums in repayment at times which may not be convenient. The clause to which my hon. Friend referred was agreed to by both sides and is perfectly satisfactory to the Treasury. The hon. Member for Dumbarton Burghs (Mr. Kirkwood), who has been such a pioneer in this enterprise, has asked me whether the fair wages clause would apply. The answer, to use a common Parliamentary form, is in the affirmative.
The hon. Member for Penryn and Falmouth (Mr. Petherick), like the hon. Member who has just spoken and my hon. Friend the Member for Gravesend, were in some doubt as to how we stand exactly with regard to these debentures, and I think there was some misapprehension. The first £10,000,000 of Cunard second debenture stock is a second charge upon the Cunard assets, ranking immediately after charges given to secure the existing first debenture stock. It is a misapprehension to think, as I believe my hon. Friend did, that this is not an absolute obligation upon the Cunard Company. It is an absolute obligation upon them, and it is secured by their investments and by their holding in the merger company. The merger company's first debenture stock, of which we take £1,750,000, is a first mortgage upon No. 534. The £1,000,000 of income debenture class A stock, like the £750,000 of class B stock, is a second mortgage upon 534. The working capital which we are advancing is not for paying off existing creditors of the Cunard Company or anyone else. I trust that that simple analysis of where the capital is secured will satisfy my hon. Friend's curiosity.
The point that I was trying to make was with regard to the interest on the £1,000,000 which was advanced directly to the Cunard Company. Where does the interest on that £1,000,000 come from? Suppose a profit should be made by the merger company and they should decide not to distribute, the Cunard will have presumably no money coming in to pay for interest on that £1,000,000 advanced direct to them.
I am sorry that my hon. Friend still has any doubt left. I thought I had said that this was an absolute obligation upon the Cunard Company charged upon all their assets, their investments, their buildings and other resources, and, if they do not receive any dividend from the merger company, they have other resources out of which they can pay the interest upon this loan. My hon. Friend may depend upon it that the Treasury has well examined that matter and is satisfied that the security is reasonable and the interest is likely to be forthcoming; otherwise, they would not have made the proposal to the House.
On the assumption of losses being made by the separate Cunard Company and profits being made by the new merger company, is there any guarantee that the independent Cunard Company has means of access and control over the profits of the merger company?
I now think I can claim to have answered the five specific points that the hon. Gentleman put to me. What is the exact nature of the guarantee? I have answered that question. Is any step being taken to safeguard the Treasury against loss? I think I have answered that. Only the future can show whether or not the security proves adequate and whether the company will be prosperous enough to meet all its obligations. Is there any limit of money? £9,500,000. Are there any further commitments? No. Is it our policy to modernise the Atlantic fleet? Certainly, and this Bill is a proof of our intention.
I should like to address one word to the House upon what the hon. Member for Gorbals (Mr. Buchanan) calls patronage. I regret to have to inform the hon. Member for Wallsend (Miss Ward), persuasive and pleading as she is and en- titled to all the benefits that she can get for her constituency, that this company is going to be run upon commercial principles, and, if it is decided to have a sister ship, no right is reserved for placing the order. I repeat that commercial principles alone will be taken into account. The same answer applies to the hon. Member for Armagh (Sir W. Allen) and to others whose constituencies are seeking for these favours to come. I will leave the argument of how suitable this question of patronage is in the mouth of the hon. Member for Gorbals to be answered, as it was so effectively answered, by the hon. Member for Dumbarton in view of his contiguity to the place where the ship is to be built when he said that, if this was an illustration of patronage helping one shipping company and bringing it within the sphere of Parliamentary questioning, how much more patronage should we suffer under if every industry were nationalised. I hope I have dealt with every question, however complicated, which has been addressed to me. At any rate, I trust that I have forgotten none.
I did not endeavour to answer any question addressed to me by the hon. Member for the simple reason that he stated in the most categorical language that he could command that nothing that I said and that nothing that anyone said except the President of the Board of Trade would lead him to vote in favour of the Bill. Therefore, I trust that he will not waste the time of the House and put me to any inconvenience by asking a question the answer to which can have no effect whatever upon his parti pris. I have not addressed myself to the more general question raised by the hon. Member for East Aberdeen and the hon. Member for Stockton (Mr. Macmillan) when they spoke about future policy. We are concerned here with present policy, and such criticism as we have undergone makes us realise all the more that the courage that we have shown in undertaking this policy and the confidence that we have, which is unshakable, in the ultimate recovery of British industry is rightly placed.