Orders of the Day — Cocoa Prices Order

– in the House of Commons at 12:00 am on 14th May 1947.

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10.1 p.m.

Photo of Mr Frederick Erroll Mr Frederick Erroll , Altrincham and Sale

I beg to move, That the Raw Cocoa (Control and Maximum Prices) (Amendment) Order, 1947 (S.R. & O., 1947. No. 552), dated 28th March, 1947, a copy of which was presented on 1st April, be annulled. When I originally put down this Motion on the Order Paper I little thought that we should have to sit through an exhibition of Parliamentary democracy such as we have had tonight. The purpose of this Order is to increase the price of cocoa from an unspecified amount to 119s. per cwt., and allows the Minister of Food to raise the price still further. It is not surprising that this Order should have attracted the attention of the Select Committee appointed to examine Statutory Rules and Orders, and it is interesting to note that in referring the matter to our attention the Committee said: the special attention of the House should be drawn to the Order on the ground that it appears to make unexpected use of the powers conferred by the Statute. The evidence, as published, shows that we in Britain are having to pay a needlessly high price for our cocoa while the West African native grower is getting an extremely low price. It also shows that the Ministry of Food buy cocoa from the West African Control Board, and sell it to manufacturers in this country on a no-profit-no-loss basis. The Ministry trades on the average of the prices they pay and so, in the past, due to relief of stock bought at low prices, the United Kingdom prices have been below world prices. I understand that present prices are still below world prices, due to the lower price paid for some cocoa at the beginning of the current season.

The first problem we have to decide is of course, what is the present world price. Apparently, accordingly to the evidence, the West African Control Board regards the New York price as the free world price, since the United States take only one-third of the world crop. The amount which America can take from West Africa is limited to the quantity allocated by the International Economic Food Council, which decides exactly how much each consuming nation shall have and, incidentally, how much we in Britain should have of the crop grown in our own Colony. America takes one-third of the total West African crop. The price rise in New York does not, in present circumstances, attract more cocoa to America.

The New York speculators are quite aware, of course, of this, and they are buying up cocoa in New York in the sure knowledge that there will be a further rise in price. In the words of the Minutes of Evidence of the Report, the price rocketed when the price control was removed. New York may be a very long way from here, but this is extremely relevant to the subject matter with which we are concerned to-night. This may seem to be an argument in favour of price control, but, although the price movements were free and unfettered, the actual supply of cocoa was limited to a definite quantity.

Photo of Mr Charles Hale Mr Charles Hale , Oldham

Surely the hon. Member is aware that the whole of the prices in America have risen, even where a free market was established.

Photo of Mr Frederick Erroll Mr Frederick Erroll , Altrincham and Sale

Not in proportion. The fact remains that there has been a tremendous dollar pressure, and that has caused the American price to rise on a limited supply of cocoa. What the Americans do in their own country is their own concern, and there is no difference of opinion on that point. But we in this country are having to pay to West Africa the artificially stimulated New York price, and we are being forced to do so by the West African Price Control Board which is, strangely enough, controlled by the Colonial Office. We are on a merry-go-round which may become a spiral at any moment. I understand that the Ministry of Food has brought the strongest pressure to bear on the Secretary for the Colonies, and in this connection I would say that the Minutes make extremely interesting reading. The Minutes of Evidence say that the Ministry of Food spokesman said the Ministry have brought the strongest possible pressure to bear on the Colonial Office, and there have been meetings between the Ministry of Food and the Colonial Office, and so forth, in order to get a more favourable position for ourselves.

But for whom? Not for the British housewife. The Colonial Office has resisted that very strongly. We can only surmise how fierce was this unedifying squabble between two Ministers behind the scenes. The Minister of Food, in his position, lost, and the Secretary for the Colonies won, and the British housewife has suffered. What is the position? Only the Control Board gains. The native is getting nothing like the market price. These are not my own words but the words of the Minutes of Evidence. The Control Board has won and there is a difference, we are told, of something like £20 million sterling. It is said that this will be used ultimately for the benefit of the African natives. That is a fine hope. It is difficult to say why the Colonial Secretary won because for other West African agricultural products we in England pay prices well below the prevailing world prices. There is no central surplus being held in respect of any other West African agricultural produce. I would quote just two instances to illustrate this point. In respect of palm oil we pay a price of about £38 a ton whereas palm oil from the Dutch East Indies, of comparable quality, is costing in the free market £147 a ton. There is no question there of our having to pay £147 a ton for West African palm oil. As regards palm kernels the picture is much the same. We are paying £21 13s. whereas in the open market the price is of the order of £55 a ton. I should like to ask whether the Minister really did press the matter as far as he might have done. After all, these are telling figures. Was the greatest possible pressure really brought to bear upon the Colonial Office to be at least consistent in the matter of our food supplies derived from the Colonies?

I am very well aware that the surplus' of £20 million accumulated by the Produce Control Board is for the ultimate benefit of the native. I understand that some of this surplus will in fact be devoted to subsidising the price paid to him when world prices fall, but does so large a sum of money really have to be held—a sum which is extracted from British housewives at the present time? Can we justify asking the British taxpayer to give £3,250,000 to the Gold Coast through the Colonial Development and Welfare Fund. when that territory already lays claim to a very large proportion of the surplus extracted from us by the price charging policy of the Control Board? The ultimate good of the native is at the present time not enough. The native needs a high price now to stimulate production, and for a very interesting technical reason which was referred to in the report. The report makes it quite clear that production has been declining over the past two years, and on page five it says that an expert witness stated: Yes, the world supply was substantially below 'prewar. There is serious cocoa disease. This disease is called "swollen shoot," and I only bring this technicality into the House this evening because it is extraordinarily relevant to the whole question of price policy for cocoa. When a tree gets this disease it infects other trees and must be cut down. When the disease is visible the tree that is infected will bear one more crop and then die. Great pressure is brought to bear on the natives in the Gold Coast at present to cut down their trees as soon as the disease becomes visible, but with the low price paid for the crops from their farms the growers have a very great temptation to keep their trees going for one more year in order to get the final crop. That is fatal because it is during that last year of the life of the tree that the disease is spread to neighbouring trees, thus causing further mortality in otherwise healthy trees. By paying a high price now the native will have enough spare money to buy the imported goods he requires which are available to him—as they were not in wartime—at the relatively high world prices, and he would still be able to afford to cut down his trees as soon as they were visibly affected. At present however, he is unable to do so and does not do so save when the strongest pressure is brought to bear upon him.

Photo of Mr Charles Hale Mr Charles Hale , Oldham

In order to enable some of us to follow this argument, will the hon. Gentleman answer two questions? First, is it seriously suggested that the higher the profit per tree the more likely trees are to be cut down when they are diseased? Secondly, is the hon. Member really arguing in favour of the Order or against? He now says that the price of 6os. is too low. If he is in favour of a higher price he is in favour of the Order, and in that case the Prayer is out of Order because he has really put it down only as a means of discussing matters which are not relevant to it.

Photo of Mr Frederick Erroll Mr Frederick Erroll , Altrincham and Sale

It is quite obvious that if one has a fixed number of trees one can afford to cut down several if one is receiving a high price for the remainder. Economic circumstances are far harsher there than in England. As regards the hon. Gentleman's second point, it is obvious that I would not have put down the Prayer if I had not been proposing to argue against the Order.

Photo of Mr Frank Beswick Mr Frank Beswick , Uxbridge

Mr. Beswick (Uxbridge) rose

Photo of Mr Frederick Erroll Mr Frederick Erroll , Altrincham and Sale

I do not wish to detain the House and in any case hon. Members opposite will have an opportunity of contributing later. The fact remains that the present policy followed by the Secretary of State for the Colonies and the Ministry of Food does not encourage the elimination of the disease and will reduce productivity in British West Africa at the very moment when the world is crying out for more and cheaper cocoa.

10.17 p.m.

Photo of Sir Walter Fletcher Sir Walter Fletcher , Bury

I beg to second the Motion.

I should like to point out to the House that this particular product, cocoa, differs in the view of His Majesty's Government from almost any other produce in that in their plans for bulk purchase, which is part of their programme, they are able to exercise to the full their powers, because the native cocoa producer of West Africa is situate in a country which is entirely under their dominion. There is no possibility of action being taken against them as happened in Ceylon in the case of tea, or as happened with regard to oil seed. There is no possibility of their being challenged in any way by the producer, and it, therefore, makes it extremely important that one should examine the effect of this Order from the point of view of the producer. Fifty per cent. of the world's produce of cocoa comes from this area on which the Government can work their will without challenge in any way at all.

The remarkable thing to which we have to devote our attention is the enormous gulf which is fixed in the price to the producer and what the consumer pays. The consumer of cocoa is not only the British housewife. It goes much wider than that, for cocoa and chocolate are considered one of the most concentrated forms of nourishment which is known. Therefore, in the rehabilitation of starving countries like those in Europe it takes a very high priority. I think we have a moral onus on us to see that we do not offer reasons, which are not crystal clear and which the Minister will have to make later on, in regard to the price which is paid by the rest of the world including, of course, the consumers in this country. That has been done in the case of other products with very dangerous results. One has to consider examples where there has been an artificial reduction in the price of produce throughout the world. Before the war a case in point was when America created an artificially high price by taking 11,000,000 bales of cotton off the market and so fixed a price that created some sort of a hothouse in which a surplus of cotton beyond the world's needs was produced. That produced an extremely bad effect as will this Order in the long run on the cocoa producer.

This Order goes against one paragraph of the Atlantic Charter. That Charter makes it absolutely clear that the peoples of the world shall have free access to raw materials. There is no free access to cocoa in West Africa. No nation at all can have a free access to that cocoa and go to the native producer and buy it, which was what I believe lay behind that Clause in the Charter. Now between the outside buyer and that native producer there stands this body, the West African Produce Control Board. It is admitted that this body interposes itself to a tune of £20 million between the producer and the consumer. How is it possible for the Atlantic Charter to be reconciled with that when it talks of the free access to raw materials? This body has made a temporary profit of some £20 million—I say "temporary," in all fairness, This fact provides a very strong argument against the Order.

The Order arrogates power to the Colonial Office and its officials. For them to say, "We propose later on to use this £20 million for the benefit of the natives of West Africa," is exactly the same argument that was used about the Road Fund a good many years ago. That fund was to be used for the benefit of the users of the road. That was not its eventual destination. [HON. MEMBERS: "Who robbed the fund? "] I have always held that it was a very wrong action, and I do not mind saying so.

The original sin may have been in one place, but the continuation is in another. The argument used on this matter is the one about the free market, but there is some lack of realism shown by the Government in that argument. It came out in evidence that they proposed to use the New York price as a basis of then price. That is not a free market or a true market at all. No market is free in which more than 50 per cent. of the main produce does not come on to the market at all and is in one set of monopolistic hands. The Government are very much against cartels and monopolies, but it is clear by the Order that they have 5o per cent. of the monopoly, and they arrogate to themselves the right to say that they can use that monopoly because they have it.

The hon. Member who interrupted about the general rise in prices in New York was not entirely accurate. There is the case of another large native produce, rubber, in which there has been a very large drop in price in the last 10 days or a fortnight.

Photo of Mr Charles Hale Mr Charles Hale , Oldham

The observation was made with reference to the price level ruling in New York and the variation in price levels. From figures that have been supplied to us from the White Paper there is 30 or 40 per cent. increase in prices in America, and a loss of something like £200 million.

Photo of Sir Walter Fletcher Sir Walter Fletcher , Bury

I am delighted to have been able to bring the knowledge of the hon. Member more up-to-date by telling him what has happened since the White Paper was published. It has a direct bearing on this question of cocoa but we should observe what happens when there is a true free market, as in the case of rubber. The native can market his rubber on any day. He gets 70 per cent. of the value advanced on the day he brings it in, without interest charges. The cocoa producer gets a price, against which he has already kicked in many cases, and between that price and the price which is paid by the consumer there is an enormous gap of 60s. The price is 119s. c.i.f. or 112s. f.o.b. That is the price which is being paid, and the gap cannot be justified.

The old story which will be used and which has been used in other cases is that the gap will be evened out later on. That argument does not meet the case at all. I can see a very good case upon an anti-inflationary basis for paying absolutely the full amount. His Majesty's Government, departmentalised into a profit-making concern, sees fit to fix the native prices, but the differential which exists today is infinitely too great. It may be very interesting to hear from the Minister, in view of the knowledge which he has and I have on the subject, how he will justify such an enormous gap, which will have a fatally bad effect upon the native producer. The services which the producer wishes to buy have risen not exactly parallel but to some extent pari passu with everything else. If he feels that he is being penalised at the same time by this rigorous control exercised over him by His Majesty's Government and against which he has no hope of appealing or aid from outside markets, as we have seen in other produce, he will turn away from those products. If, on the other hand, he were given sudden, and too great, maximum rises, then, I think, it might have a slightly inflationary tendency. One of the main vices of this Order is undoubtedly that when we get arbitrary changes in price, which are not based on the market's fluctuations, but on some form of calculations which it is almost impossible to follow—three jumps from about 55s to 119s in a fairly short space of time—then the result on the native producer must be deleterious and bad. The Government are trying to run control and bulk buying based on control, and, at the same time, to argue that they are basing it on a free and open market. That is a contradiction in terms. Whatever control methods against produce are used, nature, in the final analysis, will have the last say.

10.27 p.m.

Photo of Mr Edward Smith Mr Edward Smith , Ashford

It is usual for hon. Members addressing this House to declare whether or not they have an interest in the subject-matter on which they intervene. I used to be in the cocoa trade, but I left it 17 years ago, since when my only interests in it have been memories and a little knowledge. If anything were a-wanting to prove that we live in a world of commercial insanity, it would be this Order and its predecessors. I want the House to bear with me for a moment while I trace the recent course of the price fluctuations. From the outbreak of war until October, 1946, the price was fixed at 8.9 cents per lb., that is, approximately, £45 12s. 6d. per ton c.i.f. United Kingdom ports. That was a substantial, but by no means a very high price for cocoa before the war. I can recollect it being as low as £18 a ton, and as high as £60. The price fluctuation used to be 1½d a cwt., up or down. That was the unit of movement,—1½d. Why 8.9 cents per lb. was fixed as the first price is not clear. It may have been because the consumers' markets in Europe were narrowed as a result of the European blockade; but it is clear that that price was too low to enable the native cocoa grower to keep his groves in an efficient state, which is why the cocoa disease broke out.

It is interesting to note that while the price was, approximately, £45 12s. 6d. a ton c.i.f. United Kingdom ports, the native cocoa grower was only getting something in the neighbourhood of £15 per ton. In October, 1946, the price was raised to 14.5 cents per lb., or, approximately, £76 1s. 3d. per ton c.i.f. United Kingdom ports. Again very much less than that price went to the producer. The price was raised again under this Order to 119s. per cwt., or 20 cents per lb. In a sane world the prices of stable commodities do not double in amount overnight. It may be a convenience to the manufacturers who avoid the irritation of adjusting their prices to a gradually rising market, and, incidentally, it enables them to make gigantic unearned profits on the stocks which they possess and which are unsold. But I do maintain that it is monstrously unfair to the consumer.

The Ministry of Food buys its cocoa through the West African Produce Control Board, which is under the Colonial Office. That is why, no doubt, we see the two Under-Secretaries sitting blissfully together. The Ministry buys it on a "no profit, no loss" basis, and I understand that the view of the West African Produce Control Board is that it must do the best it can for its native producers. We shall see how it is doing this in a moment or two. The ceiling price is taken off in America, and the market rockets. The West African Control Board see to it that the Ministry of Food has to pay the market price. I do not know that I object to that. Some of my hon. Friends have done, but I think it might have been better if a real market price had been paid all along. We might have had a lower price than 8.9 cents per pound at the beginning of the war, but I maintain that, very quickly, that would have righted itself and the grower would have received higher returns on balance than, in fact, he has done through these arbitrary measures; certainly until October, 1946, when the price was revised.

Let us examine what the grower is now receiving. Now that the price has reached the equivalent of 119s. per cwt. c.i.f. United Kingdom ports, according to the Ministry of Food, the grower is receiving 60s. per cwt., which is just half the market price. Where is the difference going? It is going to the West African Produce Control Board, who have accumulated a fund—it would be fair to call it a profit—in the neighbourhood of £22,000,000. I want to know what they are going to do with it. I hope that the Under-Secretary of State for the Colonies will address himself to that particular point. They must do their best, they say, for the growers. That is an admirable and, indeed, a pious expression which I cannot sufficiently praise, but does doing one's best for the grower include the retention of a fabulous sum of money which by right belongs to him? Is this £22,000,000 to be got through to the growers? If so, how is it to be got through to the growers and when? I have an uncomfortable feeling that the Colonial Office, through the West African Produce Control Board, will retain this huge sum and employ it in some way other than by directly paying the people who grow the cocoa and to whom it clearly belongs. They were the primary producers.

If that is so, I consider it would be a scandal of the first magnitude, into which there ought to be some sort of inquiry, because the grower was starved of a fair price from 1939 to October, 1946, and since then has received less than half the price which his goods have fetched in the world's markets. I want to know if this has been done because the producers are, in the main, natives, and might be assumed for that reason—probably most unjustly—to be incapable of using the money wisely and well. I say that the Colonial Office ought not to treat the native producer as if the Colonial Office were a Victorian parent docking his son's pocket money. Benevolent parentalism can be carried to something in the nature of a vice. I confess that I always suspect anything which is done by great and powerful Mr. "X" for what he calls "the good" of small and weak little Mr. "Y." I always suspect that his benevolence conceals a subtle form of exploitation. [HON. MEMBERS; "Hear, hear."] I am glad to receive approbation from all quarters of the House, and especially from hon. Members opposite. I hope that the House will annul this Order on its merits, unless we are about to get some very much more satisfactory reply than we have had hitherto received not merely from the Minister of Food, but from the Colonial Office, which is the real nigger in the woodpile.

10.37 p.m.

Photo of Dr Leslie Haden-Guest Dr Leslie Haden-Guest , Islington North

I hope the Under-Secretary of State for the Colonies will answer the question put by the hon. Member opposite as to what is to be done with the £22 million. It was stated that this was to be used for the ultimate good of the natives, but anyone who knows what actually happens in connection with the sale of cocoa in West Africa knows there is a chain of something like a dozen middlemen between +he Board, the United Africa Company or the Cooperative Wholesale Society, and the actual grower of the cocoa. What does the man who actually grows the cocoa get for his labour? While I was in Africa in 1939, I asked that question of well-informed people, but they did not know. I suspect that the price of 27s. 6d. a load, which is said to be the price received by the native, is actually the price received by the last man who sells the cocoa to the man who buys it on behalf of the United Africa Company or the C.W.S. I think that is actually what happens, but it would be interesting to know. This £22 millions is an interesting, and, it may be, a very important sum. I should like to ask the Under-Secretary whether there is any suggestion of the moneys being used to improve the method of cocoa marketing from the standpoint of the primary cocoa producer, and for his benefit, so that he gets more money and the intermediary less.

Photo of Sir Charles Taylor Sir Charles Taylor , Eastbourne

At the Select Committee when a question was asked as to whether the grower should receive more money for his produce, the hon. Member for Finsbury (Mr. PlattsMills), referring to the native grower, said that it might make him lazy, and then he would not work any more.

Photo of Mr James Callaghan Mr James Callaghan Parliamentary Secretary (Ministry of Transport)

May I say that I am sure that that remark was made ironically.

Dr. Guest:

To put the matter right, may I say that I heard the remark made, and that it was very ironical indeed. The hon. Member for Finsbury (Mr. Platts- Mills) was referring to the old Blimp idea that we should not do it, otherwise the blighter would not work. But that is not the line which would be taken by the hon. Member for Finsbury himself. This is a matter into which party politics of the ordinary type should not enter at all. This is a matter in which a particular Committee, charged with a duty, has made a report within its terms of reference. That having been done, and the matter having been brought before the House, we have an opportunity of going into the merits of this question. It is of the utmost importance that we should know what is happening. With reference to the £20 million, there is a great difference between the price in this country and the price paid to the native producer—I prefer to call him the African producer—and the price paid by different Governments. The matter needs clearing up. The organisation might be much improved, to the benefit of the African producer, to the benefit of the distributing organisation, to the benefit of the Ministry of Food, and to the benefit, also, of the housewives of Britain. The only persons who would be at a disadvantage, I think, if improvements in organisation were made, would be the various chains of middlemen. I hope that we shall get a satisfactory answer from the Colonial Secretary.

Photo of Sir Walter Fletcher Sir Walter Fletcher , Bury

Would not the hon. Member agree, in view of the remarks made about rice, that failure to make perfectly certain that the money is paid to the producer must have a fatal effect upon the production of cocoa?

Dr. Guest:

There is no doubt, from the evidence, that a very serious blow has been struck at the cocoa industry. The cocoa trees have not been properly looked after.

10.43 p.m.

Photo of Sir John Crowder Sir John Crowder , Finchley

First, I must declare my interest. I do not drink cocoa and I do not eat chocolate, but I think the Minister of Food should consider the interests of the consumer of chocolate in this country, and the Colonial Office should be solely concerned with the interests of the grower. We are informed that the maximum price of cocoa has increased to 119 shillings per cwt. but there is no explanatory note to show what the figure has increased from. There should be a comparison with the previous price. I notice in the evidence given before the Select Committee that the hon. Member for Nuneaton (Mr. Bowles) asked if we could not guarantee to take the whole crop, and the reply given by the Ministry of Food spokesman was that, we could take the lot, if the International Food Council would allow us to do so. Surely it is the business of the Government to do what they can for the benefit of the consumers in this country. Let them buy the cocoa and chocolate at the cheapest price which they think is a fair price and see that that money is passed straight on to actual workers and growers in West Africa. Instead, we seem to be working through various buyers, and ignoring what the actual grower gets in West Africa. I suggest that the Ministry of Food should do what they can to obtain the best treatment both for the consumers in this country and for the actual producers in West Africa, leaving out other considerations. If this were done, it would be fair to all, and the housewife here would be satisfied.

10.46 p.m.

Photo of Dr Edith Summerskill Dr Edith Summerskill , Fulham West

A rather curious situation has arisen here. The hon. Member for Altrincham and Sale (Mr. Erroll) has prayed against an Order made by my Department, but all the attack has been levelled against the Colonial Office. I do not know what may have been said before this Order was made, and the representative of the Colonial Office will be able to answer questions put to him as to the policy pursued, so far as the activities of his West African Produce Control Board is concerned. The purpose of this Order is simply to prevent the re-sale of raw cocoa, after it has been allocated to manufacturers, except with the consent of the Ministry of Food, and at a price which does not exceed the price originally paid.

I agree with hon. Members opposite that an examination of increases in the price of cocoa must lead any person interested in the matter to make careful inquiries. But, may I remind the House that the background to this rapid increase in prices is simply that there is a world shortage of cocoa. Estimated production for 1946–47 is about 612 thousand tons, against the estimated total requirements of 780 thousand tons to 800 thousand tons. Before the war, the position was exactly the reverse. For instance, in 1936–37, there was a peak production of 752 thousand tons as against a total consumption of 680 thousand tons. During the early part of the war, the sudden disappearance of the European markets limited the demands from the United Kingdom, and it was very difficult for the producing countries to market their crops. and prices tended to decrease. The hon. Member for Ashford (Mr. E. P. Smith) reminds the House of what was the position in 1944. But then production was falling owing to the ravages of the diseases mentioned by the hon. Member for Altrincham and Sale. But the rise in price which might then have taken place was kept in check by the maintenance of the American ceiling, which, as has rightly been said, stood at 8.9 cents per lb. From 1944 until the middle of 1946 the pressure of increased demand on supplies continued, and it was evident that the ceiling price would have to be raised. As a result of long negotiations with America, prices were fixed. The hon. Member for Ashford asked how this price came about. I would inform the House that no price is arrived at without long and protracted discussion—[Interruption]—Hon. Members opposite may accuse us of having arrived at these figures in an arbitrary manner, but I assure them that such is not the case. Most careful calculation is made before prices are fixed.

Photo of Sir Walter Fletcher Sir Walter Fletcher , Bury

Who takes part in these discussions?

Dr. Summer-skill:

Obviously the people interested take part. The hon. Member must remember that so far as the Ministry of Food are concerned we act in the role of customer.

Photo of Sir Walter Fletcher Sir Walter Fletcher , Bury

Was the trade consulted?

Photo of Dr Edith Summerskill Dr Edith Summerskill , Fulham West

Certainly. As a result of these discussions the price was raised to 14 cents, at which it was believed most interested parties, including the African natives, would be satisfied. Unfortunately, after 2nd October, 1946, when this new price came into operation, there was a change of heart and before the new price could be properly operated the Americans decided to remove all controls. That was on 23rd October, 1946. Although members may object to the removal of controls we have no power to dictate to a sovereign State.

Photo of Sir Walter Fletcher Sir Walter Fletcher , Bury

Had the Americans been consulted?

Photo of Dr Edith Summerskill Dr Edith Summerskill , Fulham West

Certainly. I have already told the hon. Gentleman that we had long discussions with the Americans.

It is the policy of the West African Control Board to sell to all purchasers at the same price, but in practice this means selling at the price obtainable on the New York market. At the beginning of the present buying season, that is, in October of last year, we endeavoured to obtain a contract for the whole of our requirements, roughly 100,000 tons, at the then American ceiling price. The Board was unwilling to contract forward, and sold us only about one-quarter of our requirements and at the same time sold a similar proportion to the United States. A further quarter was released by the Board to us and other countries in December, and the balance in January, and each time the price showed a steep increase.

Photo of Mr Edward Smith Mr Edward Smith , Ashford

That was a year's supply?

Photo of Dr Edith Summerskill Dr Edith Summerskill , Fulham West

Yes, from October, two quarters of the supply, and then a half. We have always followed, as the hon. Member for Altrincham and Sale said, a policy of "no profit, no loss," and the 119 shillings per cwt. at which we are now selling cocoa to manufacturers, will cover, but only just cover, the average price we have had to pay of 105s. per cwt. and, on top of that, the freight and distribution costs. Some of my hon. Friends asked when evidence was given before the Select Committee why we have stepped up this price from 51s. to 119s.; why we did not run it up more gradually, following the trend of world prices. Our reason for doing so is very simple. It is not practicable for the trade or 'convenient to the public to be constantly changing the retail prices of the finished article. Very elaborate calculations have to be made. Furthermore it is uneconomic. Wrappers and labels have to be printed, and price changes have to be given adequate publicity. And the trade made strong representations to us to step up the price from 51s. to 119s. in one stage.

Photo of Mr Edward Smith Mr Edward Smith , Ashford

Can the hon. Lady tell me whether there were lage stocks in the hands of the manufacturers? It is an enormous profit to give people—more than 100 per cent.

Photo of Dr Edith Summerskill Dr Edith Summerskill , Fulham West

No. I think the hon. Member knows—he is interested in the cocoa trade—I have answered questions about stocks. They are not very large. I may be able to give the Hon. Member some figures later on, but I have been informed that the stocks were not very large. I can assure hon. Members that, as far as manufacturers' profit is concerned, the public has been safeguarded. All manufacturers want to increase their margins, whatever commodity they may be selling, and the distributors of cocoa and cocoa products, during the next year, will be receiving a profit of £5 million in excess of that which they received last year, and, in our opinion, that is adequate. I think that, as far as the Ministry of Food is concerned, the House will agree that we had no alternative but to make this Order, and that no blame can be attached to the Department. I therefore ask the House to reject this Motion.

Photo of Lord William Scott Lord William Scott , Roxburghshire and Selkirkshire

Can the hon. Lady tell us whether this lifting of controls by the Americans last October, came as a surprise to the authorities in this country who were dealing with this matter?

10.56 p.m.

Photo of Sir Archer Baldwin Sir Archer Baldwin , Leominster

The hon. Lady seems somewhat disappointed that the attack has been on the Under-Secretary for the Colonies rather than on her Department. I do not presume to attack the hon. Lady, but I want to ask her some questions. I am sure that the consumers of cocoa and chocolate must be obliged to the hon. Member for Altrincham and Sale (Mr. Erroll) for bringing forward this question, and will be particularly grateful to him as this is another nail in the coffin of bulk buying. I hope that all that remains to be done now is to put on the lid and screw it down.

Photo of Mr Joseph Alpass Mr Joseph Alpass , Thornbury

What about Argentine meat?

Photo of Sir Archer Baldwin Sir Archer Baldwin , Leominster

I would like to ask what the Board which was set up has done to implement the purpose for which it was set up. The object was to secure among other things, fair prices for the producer and to stabilise prices year after year. In the Order issued in July last, the price was put at 51s. per cwt. In the Order issued in January, it was put at 119s. per cwt. If that is stabilisation of prices, I do not know what the term means.

It was also understood that the Board's operations would protect the producer, and a consumers' committee was set up in London to see that the consumer was protected. I would ask the hon. Lady whether, in fact, that committee did review the price of cocoa at 119s. per cwt. It would be interesting to know what was their comment on a rise of over 100 per. cent. The international body seems to make a mess of all the products which it handles. On 22nd January last, the hon. Lady said that it had no effective power to make recommendations to the member Governments. If they have not executive power, why should they interfere in the free play of the market? Their actions have been disastrous all along the line as far as the consumers are concerned. They have operated in allocating supplies of maize, and so forth, and bulk buyers have gone forth to buy in the Argentine, with the result that the Argentine have taken over the selling, and have been making 100 per cent. profit on everything they have sold. The International Emergency Committee was mentioned in the Committee's report, and that is the only excuse I have for raising that matter now. I want to make a practical suggestion to the Under-Secretary of State for the Colonies with regard to the huge sum of money which has been accumulated by the Produce Board. I am well aware that that huge sum of money should not be paid over direct in cash to West Africa. My suggestion is that it should be—

Photo of Mr Hubert Beaumont Mr Hubert Beaumont , Batley and Morley

The hon. Member may not discuss on the Prayer the question of the accumulated funds. That comes under the Colonial Office.

Photo of Sir Archer Baldwin Sir Archer Baldwin , Leominster

I will not pursue that matter, but I will suggest that the Colonial Office should set up an inspectorate in West Africa to tackle the question of disease among the cocoa trees out there, and that they should pay the West Africans for every tree which is diseased and which is cut down—

Photo of Mr Hubert Beaumont Mr Hubert Beaumont , Batley and Morley

That matter does not arise on the Prayer.

Photo of Sir Archer Baldwin Sir Archer Baldwin , Leominster

I bow to your Ruling, Mr. Deputy-Speaker. All I wish to say is that if the price that is being paid by the consumers of this country for cocoa were allowed to get through to the producers of cocoa, the result would be that they would be encouraged to produce, and the one thing that fetches down world prices is to pay a high price for the article so that the producers are encouraged to produce, and the price soon comes down to an economic level. If you do not allow free play of the market, you will have controls for ever.

11.3 p.m.

Photo of Mr James Callaghan Mr James Callaghan Parliamentary Secretary (Ministry of Transport)

If there is one clear lesson that the party opposite should draw from this Debate tonight, it is that never again should they appeal for the lifting of controls from food in this country. Here we have a situation in West Africa in which the price of cocoa is being doubled because of the removal of controls in America. Not an ounce more cocoa is going into anybody's larder.

Photo of Mr Frederick Erroll Mr Frederick Erroll , Altrincham and Sale

That is the whole point. The price of cocoa in West Africa is not being increased. That is one of our complaints. It is remaining at a low figure.

Photo of Sir Walter Fletcher Sir Walter Fletcher , Bury

Mr. W. Fletcher rose

Photo of Mr James Callaghan Mr James Callaghan Parliamentary Secretary (Ministry of Transport)

Perhaps if I am allowed to utter another sentence, I shall be able to give way to the hon. Member.

Photo of Sir Walter Fletcher Sir Walter Fletcher , Bury

The price has been increased by the arbitrary decision of the Board to increase its price up to that in New York. There was no compulsion on it to do so.

Photo of Mr Hubert Beaumont Mr Hubert Beaumont , Batley and Morley

That sounds very much like another speech by the hon. Member.

Photo of Mr James Callaghan Mr James Callaghan Parliamentary Secretary (Ministry of Transport)

The fact that hon. Gentlemen are very ready to interrupt me seems to indicate that I might be saying something to which they take exception in their propaganda in the country. The hon. Member for Altrincham and Sale (Mr. Erroll) is quite right. The price in West Africa is not being increased to the Africans by the same extent as it is being increased on the American market. Of course, it is not. The speculator in the American market wants to pocket it himself. He is not giving it back to the Africans. Everyone knows—as indeed the evidence says clearly—

Photo of Mr James Callaghan Mr James Callaghan Parliamentary Secretary (Ministry of Transport)

In the report. When the Director of Cocoa was called, and my hon. Friend the Member for North Islington (Dr. Guest) asked him about this profit and he said: I do not think the American manufacturers are particularly enthusiastic about it. I should think not. The cost to them is being doubled. Indeed, they are not enthusiastic: It is the Wall Street brokers, who see chances of making quick profits. [Interruption.] You can grumble and mutter as long as you like—

Photo of Mr Hubert Beaumont Mr Hubert Beaumont , Batley and Morley

I must inform the hon. Member that I was not grumbling and muttering, but even if I were, the hon. Member should not comment upon it.

Photo of Mr James Callaghan Mr James Callaghan Parliamentary Secretary (Ministry of Transport)

Of course, Mr. Deputy-Speaker, your benign countenance shedding its rays upon us could never be exposed to that criticism. I was referring to hon. Members opposite who are keeping up an undercurrent of grumbling because they are, at last, being exposed on this issue. If there was any more cocoa to be produced as a result of the increased price being paid, there might be something to be said for it. If the African was going to get the benefit of an increase in price, even though there was no more cocoa to be obtained, there might still be something to be said for it. But in a situation in which the profits go to the speculator, and the costs go to the man who is going to buy his bar of chocolate, and the housewife who is going to buy her tin of cocoa, there is little to be said for an increase in price of this nature.

My hon. Friend the Parliamentary Secretary to the Ministry of Food argued that we had to follow American practice in this matter. I do not see why the British taxpayer should be mulcted of this sum merely because the Americans are being foolish. The situation is that they take off controls and their prices soar to undreamed of heights in the cocoa market. Why does the British taxpayer then have to pay the same price as the Americans are paying? The defence case says; "You cannot differentiate, because then you will be securing for yourself a preferential position in your Colonies." That argument might be valid, if we were talking in normal times about a normal market where the supply and demand for cocoa were approximately equal. But I see no reason why we should be quixotic in this matter, and it seems to me that with the vast accumulated fund—into whose details you have ruled, Mr. Deputy-Speaker, we may not go—it is bad policy to suggest that we should concede an increase in the price of cocoa which would practically double the price of a 3d. bar of chocolate at a time when we ought to be engaged in keeping down prices.

I wonder whether part of the real reason for this increase is that the Ministry of Food are anxious to recoup some of their losses incurred by subsidising other food stuffs, from chocolate. I think it is highly possible. It might be a good stroke of business, and I would not exactly disagree with it, but if it is the case, let us know what is the policy in this matter and let us be able to adjudicate on it. The fact remains 'that this increase in price will not get us another ounce of a singularly inelastic commodity like cocoa. It takes five years for a cocoa tree to come into bearing, so that any increase in price today cannot possibly be reflected in the increase in the amount of cocoa we are going to get until about 1952. My personal opinion, is that the rewards that the African farmer is getting today, by comparison with the return he got before the war, are so great that he needs no further encouragement to grow more cocoa. That part of West Africa where the cocoa is grown, in the Ashanti territories—as we who went there at Christmas saw—is one of the most fertile and prosperous parts of Africa. The market at Kumasi would have brought tears to the eyes of any British housewife, and we were delighted to see it, because there is no reason at all why we should make a profit out of the African, as we have been doing. By all means let us pay him a fair price for his produce. There would be agreement from both sides of the House on that. There are occasions when paying a fair price can descend to a quixotry, and I believe that is what is happening today. Other countries have discriminated against us in this matter of international trade. When the record comes to be written, the history of the Argentine will make very interesting reading indeed.

I do not think for a moment that there is any reason why this country should be compelled to pay a ridiculous price for its cocoa because we want, automatically, to follow the American market, especially when I recall that the chairman of the board which sells us the cocoa is sitting on the Front Bench. The Under-Secretary of State for the Colonies is, of course, the man who is responsible, and he is assisted by his Permanent Secretary, the head of the West African Department. If he suggests he cannot control the activities of the West African Produce Board, I think he will expect us to take that suggestion with a grain of salt. I think there are good grounds for annulling this Order, and for putting before this House another Order containing a price which will be a reasonable increase over the existing price, which will not have the effect of nearly doubling the 3d. bar of chocolate that we buy, but which will have the repercussive effect of keeping down prices at a time when we want to keep them down.

11.11 p.m.

Photo of Commander Sir John Maitland Commander Sir John Maitland , Horncastle

; I am a little reassured by the speech of the hon. Member for South Cardiff (Mr.Callaghan), who has just returned from West Africa. But I think that there is a feeling in the House of anxiety to be reassured by the Under-Secretary of State for the Colonies—as I hope we shall be reassured—that the primary producer in this case is getting a square deal. I intervene for a few minutes to remind the House of what happened before the war. The Parliamentary Secretary to the Ministry of Food surprised me by saying that the peak year of production was 1936–37. I must admit, I have not the 1937 report of the Cocoa Commission with me tonight. However, I should like to remind the House, and particularly the Under-Secretary of State for the Colonies. of what happened when the cocoa producers in West Africa decided that there was a cocoa ring against them. They refused to produce cocoa, and they also refused to import goods from Lancashire; and on that occasion, Lancashire lost trade to the tune of £2 million.

It may be that all is well now, but that report—which I am sure the Under-Secretary has read—brought out very clearly that, quite rightly, the West Africans are very highly organised, and that they can introduce trade pressure. It may well be that there is a world shortage of goods for West African importation at this moment, and that, therefore, they are taking our exports. But the Under-Secretary may be assured, on the evidence in that report, that if there has been an unfairness in this matter, our export trade will undoubtedly suffer in future. I think it only right to draw attention to that piece of previous history, which was a most devastating episode for Lancashire, and I hope the Under-Secretary will reassure us that it will not happen again.

11.14 p.m.

Photo of Mr Ralph Assheton Mr Ralph Assheton , City of London

I am sure the House is grateful to my hon. Friend the Member for Altrincham and Sale (Mr. Erroll) and the other hon. Members who have drawn attention to this Order. It is useful to remind the House that, in the Report of the Select Committee, the opinion is expressed that the special attention of the House should be drawn to this on the ground that an unexpected use is made of the power conferred by the respective Statutes. That is what have given rise to this interesting discussion, which has been over a fairly wide field. I want to make clear to the House and to the Government the reason why we object to this Order. We are not necessarily complaining, as the hon. Member for South Cardiff (Mr. Callaghan) was complaining, that the price is too high. What we are saying is, that if the consumer is having to pay this high price, he should not be denied the advantages which are gained from a high price, namely, the encouragement of the production by the producer. What the Government are doing here is to pay a greatly increased price—it is an enormous rise, from £45 to £119 a ton—but that enormous rise is not bringing about the increased production, which, in its turn, would lead to a fall in the price level, because the producer in West Africa is not getting the advantage of it. All this money is going into the hands of this Board. One day, we are told, some use is to be made of the money by this Board for the benefit of the West African producer. It seems to us on this side of the House that we are getting the worst of the bargain all round. The consumer at home is going to pay a heavy price; the Colonial producer is not going to get a price sufficiently high to tempt him to increase his production. We do not see the advantage of all this to us, though we see the advantage there may be to certain interests in other countries. We can understand that.

I should like to challenge what the hon. Member for South Cardiff said when he was referring to the New York brokers. In studying the minutes of evidence in the Fifth Report of the Select Committee on Statutory Rules and Orders we see that very point was put to the expert witness by my hon. Friend the Member for Ashford (Mr. E. P. Smith. I quote from the evidence: It is not really going to the American market?—No it is not going to the Americans.Not to Wall Street speculators, or anybody of that sort?—No. It is going to the West African Control Board; and I hope they use if wisely. The Control Board are getting this increased price, and not giving it to the producer.

Photo of Mr James Callaghan Mr James Callaghan Parliamentary Secretary (Ministry of Transport)

What I intended to say, and I think did say, was that, whereas the Ministry of Food is selling this cocoa at approximately £115 per ton, which is 119s. per cwt., American speculators have been selling it at 30 cents a pound—approximately £167 a ton. It is that margin of £52—approximately 50 per cent. more than the price at which the Ministry of Food is selling—which is going to the pockets of the speculators.

Photo of Mr Ralph Assheton Mr Ralph Assheton , City of London

It is not going to the pockets of the speculators so far as it appears here, however.

Photo of Mr Ralph Assheton Mr Ralph Assheton , City of London

I am glad the hon. Gentleman agrees. The hon. Lady said there was no alternative to making this Order. The hon. Member for South Cardiff agrees there is an alternative to making this Order. The alternative, to my mind, is to get rid of the control exercised by the International Emergency Food Council. That body is the nigger in the woodpile here. It does the allocating, but does not fix the price. It allocates a certain amount to the United States. There is no free market in the United States, because if the price rises, no other supplies can come forward from West Africa, because of the allocation made by the International Emergency Food Council; and, therefore, the free market that we, on this side of the House, would like to see does not even exist in New York.

Photo of Mr Reginald Paget Mr Reginald Paget , Northampton

If we have a free market of that sort it means we do not get any cocoa at all.

Photo of Mr Ralph Assheton Mr Ralph Assheton , City of London

Not at all. We should get an increased production of cocoa

Photo of Mr Ralph Assheton Mr Ralph Assheton , City of London

If we could have our way, we should let the producer get an increased price, and he would then be tempted to produce more. I agree with some of the observations of the hon. Member for North Islington (Dr. H. Guest). He knows about these things in West Africa—the difficulty the producer had in getting a fair price, owing to the very large number of the middlemen who came between him and the price paid by the consumer. If the Colonial Office were going to make some good use of these funds by establishing, perhaps, an agricultural mortgage bank to get these producers out of debt, then we should begin to make some progress. It is the fact that they are now in debt that has been the trouble. That is the difficulty with which the Colonial Office has been trying to cope, but they have not yet been able to do it. I look forward to the Under-Secretary saying they have found a way of getting round this difficulty. I want to make it clear that we on this side of the House do not like the principle of bulk purchase. We think it will get us into trouble, and we do not like the way it has been done. We object to this Order under which the consumer is paying a high price, and the grower is not getting a price which will encourage him to produce more.

Photo of Mr Frank Beswick Mr Frank Beswick , Uxbridge

Would the right hon. Gentleman address himself to the point that when the question was asked in the Select Committee why the increased price was not given to the producer in order to encourage him to produce more, the reply was that if the native had any more at this time, it would merely lead to inflation? They could not buy any more commodities, and it would not benefit them and, presumably, they would not grow more.

Photo of Mr Ralph Assheton Mr Ralph Assheton , City of London

I have heard that argument, and I should imagine that whoever used it was hard put to find an argument. I do not agree with it. It has been consistently said that people will not work any harder, because they will riot have anything to buy, but if that is told to an ordinary working-man, he will say it is not so. It is just the same with the West African. West Africa wants a lot more of our cotton goods from Lancashire. I do not think we shall have anything more to say until the Colonial Secretary has spoken, but we may then have some further comments to make. The House will expect to hear some very good reasons why the Order should not be annulled, otherwise hon. Members on this side of the House will have to go into the Lobby against the Government.

11.23 p.m.

The Under-Secretary of State for the Colonies (Mr. Ivor Thomas):

When I saw this Prayer on the Order Paper I had a feeling it was directed less against my hon. Friend the Under-Secretary to the Ministry of Food than against myself. Hon. Members opposite may say with the poet: Euphelia serves to grace my measure, But Chloe is my real flame. I think I also detected a slight note of envy amongst the hon. Gentlemen opposite who have a responsibility for directing businesses. I felt that if they had been chairmen of companies which had built up reserves of £20 million, of which £7 million were built up in the past six months, they would feel rather pleased With themselves. I am in that position, though only by virtue of my office and not by virtue of my own abilities, and I feel that I can fully justify the actions of the West African Produce Control Board. Possibly hon. Members might like to know of whom the Board consists. I will not spend time this evening in giving all the details, but the Board consists of the Parliamentary Under-Secretary as Chairman, three members of the Colonial Office by virtue of their posts, one representative of the Nigerian Government, one representative of the Gold Coast Government, three members appointed by the Secretary of State for their knowledge of the oil seed trade, and one member appointed by the Secretary of State for his knowledge of the cocoa industry, with a Director of Cocoa Marketing and an Acting Director of Oil Seeds Marketing who do the day-to-day work.

The question has been asked: why has the price risen to the present height? I think it has been sufficiently explained that the world price of cocoa is determined by the price that the Now York buyers are prepared to pay. The cocoa production of West Africa is about 300,000 tons, which is about 45 per cent. of the world output. Of that, about 40 per cent. is taken by the American market—a very substantial proportion. In the early years of the war there was a surplus of cocoa. In fact, large quantities of cocoa had to be destroyed. That is the reason why, in those days, the United States was able to fix a relatively low ceiling price. There was an abundant supply of cocoa in the world, and they could get it fairly cheaply. More recently, cocoa has gone into short supply, as they say in the jargon of the trade. One reason is that there was little planting of new trees during the war. I do not think that anyone would dispute that this was inevitable in the stress of war. Then again, a large number of old markets have been reopened, and have taken the supplies which had gone to other countries during the war. Then there is the question of disease. The trees have been particularly affected by swollen shoot. I ought to point out that this is a physical factor, and has nothing to do with any financial question as has been suggested. It might, I suppose, be compared with phylloxera in vines, if I may venture to make such a comparison. I do not know whether cocoa drinkers have yet begun to talk about the virtues of the pre-swollen-shoot vintages.

These are the reasons why cocoa has gone into short supply, and it was inevitable, when the control was lifted in the United States, that buyers should be prepared to pay a great deal more than had hitherto been the case. The United States price determined the world price. That price rose to £150 a ton at the highest, and has subsequently dropped to about £120 a ton. If hon. Members have followed me to that point, they will next ask why is it that we could not charge a lower price in this country than the world price. Indeed, that question has been put by several hon. Members on both sides of the House. The reason is that, in the first place, we could not discriminate against the United States in such a matter. It would be morally wrong to do so, to try to reap such an advantage for ourselves. We are also committed by the proposals which we have accepted as a basis for discussion in the negotiations for the International Trade Organisation. It would, therefore, not have been possible, on the ground of discrimination against the United States, to have charged a differential price in this country. There is an even deeper reason—which I am sure will he appreciated by hon. Members opposite as well as by those behind me—and that is that we are trustees in this matter for the Colonies, and it would be wrong for us to try to get a lower price for ourselves than could be obtained in the world market, especially when, under international arrangement, the quotas of cocoa which go to the various markets are determined by the International Emergency Food Council

I have, I think, carried hon. Members with me to this point—that we could not have charged a lower price in this country than the world price.

Photo of Mr Reginald Paget Mr Reginald Paget , Northampton

Surely it is a dangerous principle first to limit the supply to a particular market, then to let the market inflate because of the limited supply, and to say these inflated prices shall be the yardstick to measure the world price.

Mr. Thomas:

That argument, if I apprehend it correctly, is really based on a misunderstanding. It is not possible by any means of this character to increase the world supply of cocoa. We are exceedingly anxious to sell all the cocoa we can to the U.S. Cocoa sold to the U.S. brings in dollars, a point which I am surprised has not been mentioned tonight. Anyone who can obtain dollars is a very popular man at No.11, Downing Street, these days. I am not at all ashamed that in the current cocoa season we have obtained in hard currency the equivalent of fifty million dollars from the sale of cocoa. The next stage in my argument is this, and I think that all hon. Members will agree with it: the surplus realised from the sale of cocoa must be used for the benefit of the inhabitants of Africa.

Photo of Mr Ralph Assheton Mr Ralph Assheton , City of London

When the hon. Gentleman says "inhabitants," does he mean the inhabitants at large, or the producers of the cocoa?

Mr. Thomas:

I mean the producers primarily, but any benefit to the producers will be reflected, of course, in the economy of the Colonies at large. The surplus realised from the sale of cocoa must be held in trust for the people of Africa who produce it. Whether that surplus should be passed on at the present time is one of the points to which I must particularly address myself in replying to this debate. Here I think we come up against what struck me as a fundamental fallacy in the constructive speech which I was glad to hear from the right hon. Gentleman the Member for the City of London (Mr. Assheton). If we passed on to the Gold Coast and Nigerian producers the high sums now being received for cocoa, that would not lead to an increase in the quantity of cocoa produced. It would result in inflation. The right hon. Gentleman particularly mentioned textiles. I was very glad that he did mention them, for one of our problems is that the African Colonies have a great need of textiles, but we are not able to supply them with the quantities they want. If we made available this large surplus at the present time to the West African colonies they would not have the consumer goods to buy, and the result would be inflation. There is no National Savings Movement in the African Colonies and no ingrained habit of saving as there is in this country, and, inevitably, the result of releasing this large quantity of money in the Colonies would be very serious inflation. I hope that I have carried hon. Gentlemen to this point, that the large surplus which has been realised must be held in trust for the people of the producing colonies. What are we going to do eventually with this surplus? That is a question which has been raised several times in the debate. The answer has, in fact, been given, in Command Paper 695o, "Statement on the Future Marketing of West African Cocoa," and I will read, if I may, paragraph 15: It is apparent that the accumulated surplus will provide the organisations with the initial financial resources to maintain a steady purchase policy. The primary purpose for which it is proposed that these funds should be used is to serve as a cushion against short and intermediate term price fluctuations in the world market price of cocoa; but it will be within the discretion of the Boards to allocate funds at their disposal for other purposes of general benefit to the cocoa producers and the industry, such as research, disease eradication and rehabilitation, the amelioration of indebtedness, the encouragement of co-operation and the provision of other amenities and facilities to producers. This document was laid before Parliament in November, 1946. The right hon. and learned Member for the City of London mentioned in particular the question of agricultural indebtedness, and I was very glad he did so because it is a major problem in many Colonies. That is laid down in this White Paper as one of the things for which this surplus can be used.

Photo of Mr Douglas Clifton Brown Mr Douglas Clifton Brown , Hexham

The White Paper is not under discussion now.

Photo of Mr Robert Hudson Mr Robert Hudson , Southport

On that point of Order, Mr. Speaker, may I call your attention to the fact that in the Minutes of Evidence referred to earlier, the Committee state that special attention should be drawn to this point, and ask what is to be done with the money accruing?

Photo of Mr Douglas Clifton Brown Mr Douglas Clifton Brown , Hexham

This is quite out of Order in this discussion. The distribution of the £20 million surplus cannot be discussed here.

Photo of Mr Robert Hudson Mr Robert Hudson , Southport

I was not challenging that, Mr. Speaker, but the main reason for the increase which we are discussing in this Prayer was given in evidence before the Select Committee, and the Government are, presumably, trying to justify their actions. I respectfully suggest that the reasons for the increase, if not the results, are relevant to this discussion.

Photo of Mr Douglas Clifton Brown Mr Douglas Clifton Brown , Hexham

That is a matter, I think, for the Colonial Office Vote.

Mr. Ivor Thomas:

In view of your Ruling, Sir, I cannot discuss the matter further, but I have been asked how the surplus would be used. In any case, hon. Members will have the reference now, and can pursue the subject for themselves. I think that I need only add a word about future organisation. In a very short time, both in the Gold Coast and in Nigeria, Cocoa. Boards will be set up to take over the marketing arrangements for this commodity. The reasons for this step are constitutional, as we do not think that we should keep indefinitely the arrangements by which these prices are settled in London. These prices are to be settled in the Colonies concerned by boards which will be mainly representative of the producers, but with an element of consumer representation. The boards will set up in London a joint selling organisation to help in the disposal of their products, and the Secretary of State will set up a Consumers' Consultative Committee here. I hope that I have satisfied hon. Members that there is a good reason for the increase in the price, and that the surplus realised will be used in the best possible way in all the circumstances. Therefore, I think we should not divide on this matter, but rather go home and drink a cup of steaming cocoa.

Photo of Mr Ralph Assheton Mr Ralph Assheton , City of London

The hon. Gentleman has referred to the inflationary effects of the West Africans in having this money to spend. Does he really think that if the natives spent the dollars which they might receive there would be an inflationary tendency?

Mr. Thomas:

The dollar resources of the Commonwealth are pooled, of course, and the Commonwealth get their own proper allocation out of the pool as is calculated best to serve Commonwealth interests.

11.40 p.m.

Photo of Mr Robert Hudson Mr Robert Hudson , Southport

I do not want to transgress your Ruling, Mr. Speaker, but I am bound to say that I find it very difficult to reconcile what the Under-Secretary said with the evidence given by the Director of Cocoa. I think it raises a very important point of international relations. If the hon. Gentleman looks at the Minutes of Evidence he will see that the reason given by our people in New York on 2nd October, 1946, for suggesting an increase in the ceiling price of about 8.9 cents, was that at that time there was a strong feeling that the African native was not getting sufficient for his cocoa. That was the official reason given by the representatives of His Majesty's Government to the United States Government for increasing the price of cocoa. Now I submit that any reasonable person reading that would imagine that the United States representatives who were given that reason naturally assumed, if they agreed—as they did judging by the contents of the Minutes—to an increase in price, that that price would in fact go to the native African producer. We are suddenly told tonight that that is not going to be the case; far from going to the African native producer, it is being accumulated as a fund to be used for some wider purpose. I suggest that is the reasonable conclusion to be drawn from the remarks we have heard tonight. I do not hesitate to say in view of what we have heard that the Ministry of Food has "pulled a fast one' over the United States.

Photo of Mr Reginald Paget Mr Reginald Paget , Northampton

Is this designed to be helpful to Anglo-American relations?

Photo of Mr Robert Hudson Mr Robert Hudson , Southport

It is very much better that we should protest against this, than that the United States should learn tomorrow from the Under-Secretary's remarks, that a fast one had in fact been put over. It is much better that we should protest than that the State Department should protest.

Photo of Mr James Callaghan Mr James Callaghan Parliamentary Secretary (Ministry of Transport)

Does the right hon. Gentleman not know that this Board has been in existence since about 1941? The Americans have seen the White Papers. I have one in my hand, and one was published as long ago as September, 1944, dealing with the surplus and the fact that it is going to the fund. There is nothing new about this.

Photo of Mr Robert Hudson Mr Robert Hudson , Southport

I dare say there is nothing new—

Photo of Mr James Callaghan Mr James Callaghan Parliamentary Secretary (Ministry of Transport)

The right hon. Gentleman said, "Suddenly tonight we learn."

Photo of Mr Robert Hudson Mr Robert Hudson , Southport

The Under-Secretary in answering the question put by my right hon. Friend said this announcement was made in the White Paper of what was going to be done from the increased price in November, 1946. But on 2nd October, or soon after that, the Americans were desired to agree to a higher ceiling price.

Photo of Mr Robert Hudson Mr Robert Hudson , Southport

I am only going by the Minutes of Evidence, which say that there were discussions last summer, between us and the Americans, as to the advisability of increasing that ceiling price. This must have been the argument put forward by our representatives because there was a strong feeling that the native African was not getting sufficient for his cocoa"—

Photo of Mr Robert Hudson Mr Robert Hudson , Southport

I will: and there was also the complication of the Brazilian market; and we felt that if we could fix a figure which was more reasonable, it might commend itself to the Africans and be acceptable to the Americans. On the basis of that, they went on—

Hon. Members:

Read the whole sentence.

Photo of Mr Robert Hudson Mr Robert Hudson , Southport

I have read the whole sentence.

Photo of Mr James Callaghan Mr James Callaghan Parliamentary Secretary (Ministry of Transport)

I think the right hon. Gentleman is misrepresenting the matter.

Photo of Mr Robert Hudson Mr Robert Hudson , Southport

If the House thinks I am misrepresenting the case, I will read it all again: There were discussions last summer between us and the Americans as to the advisability of increasing that ceiling price, because at that time there was a strong feeling that the native African was not getting sufficient for his cocoa, and there was also the complication of the Brazilian market: the Brazilians would not abide by so low a figure as 8.9 cents., and we felt that if we could fix a figure which was rather more reasonable, it might commend itself both to the Africans and to the Brazilians, and be acceptable to the Americans. Finally, after much discussion, it was agreed that the American ceiling price should be increased to 14.5 cents. Anyone reading that must agree that the basis on which we suggested increasing the price to be paid by us was that the Africans should get more, yet we are told that this money, instead of going to the individual Africans—and, presumably, the Americans expected it to do, from the statement issued in November—is going into a pool, some of which may eventually reach the individual Africans. I do suggest that the explanation given by the Parliamentary Secretary is prima facie evidence that we have put a fast one over the Americans.

11.48 p.m.

Mr. Ivor Thomas:

If I may reply briefly, the date of November when the statement was issued is not really relevant, as the policy was adumbrated in a White Paper issued in 1944 (Cmd. 6554) by the Government of which the right hon. Gentleman was a Member. With regard to the question whether the surplus will go to the local producer or not, it will go eventually to the local producer, and will do him more good if it goes in the manner we suggest than if it goes in the manner proposed by the right hon. Gentleman. With regard to the quotation which he has made from the Minutes of Evidence, it is the case that we represented that the American ceiling price ought to be raised, and the price was eventually raised, but these discussions are also irrelevant, because, a little while afterwards, the ceiling price was taken off by the Americans themselves, and the free market price rose to more than double the ceiling price, which, I think, proves that we were not asking too much.

11.50 p.m.

Photo of Mr Frederick Erroll Mr Frederick Erroll , Altrincham and Sale

It I might have the right of a brief reply to a most interesting discussion, I should like to say that there are some points with which the Under-Secretary has not dealt adequately. First, as to the question of consistency in the marketing policy of the West African Produce Control Board, the Under-Secretary said it would not be fair to discriminate in Britain's favour when selling West African produce, but that is precisely what he does in regard to other produce from West Africa. We get a much more favourable price for palm oil and groundnuts, and cocoa is the only product for which we do not have a favourable price arrangement. Secondly, it is said that it takes five years to grow a new cocoa tree. That is quite true, but the Minister's present policy will not encourage the growers to plant any new trees. The item in the evidence which is so striking has been glossed over rather cleverly. It is that there is also the complication of the Brazilian market.

That complication is a complication of increasing productivity because of a healthy price structure.

Photo of Mr Frederick Erroll Mr Frederick Erroll , Altrincham and Sale

It is the free market in Brazil which is causing the increase in productivity in Brazil. The growers are planting fresh trees, and production is increasing, whereas in West Africa, where the natives are getting a low pegged price, production is steadily declining year by year, as the Minutes of Evidence show. My third point is in regard to the £20 million surplus. Of course, we are familiar with the White Paper that was issued in 1946, but we are sure it was never intended that the surpluses would be of the order of £20 million available for distribution in the manner described in that White Paper. For these three reasons, we feel that we shall have to press the matter to a Division.

Question put, That the Raw Cocoa (Control and Maximum Prices) (Amendment) Order, 1947 (S.R. & 0., 1947. No. 552), dated 28th March, 1947. a copy of which was presented on 1st April, be annulled.

The House divided: Ayes, 43; Noes, 14o.

Division 214.]AYES.[11.51 p.m.
Agnew, Cmdr. P. G.Hare, Hon. J. H. (Woodbridge)Ramsay, Maj. S
Assheton, Rt. Hon. RHaughton, S, GScott, Lord W.
Baldwin, A. E.Hope, Lord J.Smith, E. P. (Ashford)
Barlow, Sir J.Hudson, Rt. Hon. R. S (Southport)Spearman, A. C. M.
Bromley-Davenport, Lt.-Col WHurd, A.Stoddart-Scott, Col. M
Buchan-Hepburn, P. G. TKendall, W. D.Studholme, H. G.
Callaghan, JamesLangford-Holt, J.Taylor, C. S. (Eastbourne)
Challen, C.Lloyd, Selwyn (Wirral)Teeling, William
Conant, Maj. R. J. E.Lucas, Major Sir J.Thorp, Lt.-Col. R. A. F.
Crowder, Capt. John EMackeson, Brig. H. R.Wheatley, Colonel M. J.
Davidson, ViscountessMaitland, Comdr. J. W.Williams, Gerald (Tonbridge)
De la Bère, R.Marshall, D. (Bodmin)
Dedds-Parker, A. DMellor, Sir J.TELLERS FOR THE AYES
Drayson, G. BNoble, Comdr. A. H. P.Mr. Erroll and
Fox, Sir G.Orr-Ewing, I. L.Mr Walter Fletcher.
Gage, CPete, Brig. C H. M
NOES.
Adams, W. T. (Hammersmith, South)Collindridge, F.Fairhurst, F.
Allen, Scholefield (Crewe)Comyns, Dr. L.Fernyhough, E.
Anderson, A. (Motherwell)Corbet, Mrs. F. K. (Camb'well, N.W.)Fraser, T. (Hamilton)
Awbery, S. S.Corlett, Dr. J.Ganley, Mrs C. S
Ayrlon Gould, Mrs. BCorvedale, ViscountGilzean, A.
Barton, C.Crawley, A.Glanville, J. E. (Canton)
Bechervaise, A. EDaggar, G.Goodrich, H. E.
Ballenger, Rt. Hon [...] JDavies, Harold (Leek)Greenwood, A. W. J (Heywood)
Berry, H.Deer, G.Griffiths, D. (Rother Valley)
Bing, G. H. CDelargy, H. J.Guest, Dr. L. Haden
Binns, J.Diamond, JHaire, John E. (Wycombe)
Blackburn, A. RDobbie, W.Hale, Leslie
Blyton, W. R.Dumpleton, C. W.Hannan, W (Maryhill)
Brook, D. (Halifax)Dye, S.Henderson, Joseph (Ardwick)
Brown, T. J. (Ince)Ede, Rt. Hon. J. C.Holman, P.
Butler, H. W. (Hackney, S.)Edwards, John (Blackburn)Hoy, J.
Champion, A. JEvans, John (Ogmore)Hubbard T
Janner, B.O'Brien, T.Stubbs, A. E.
Jay, D. P. T.Oliver, G. H.Summerskill, Dr. Edith
Jager, G. (Winchester)Paget, R. T.Swingler, S
Jeger, Dr. S. W. (St. Pancras, S.E.)Paling, Will T. (Dewsbury)Symonds, A. L.
Jones, D. T. (Hartlepools)Pargiter, G. ATaylor, R. J. (Morpeth)
Jones, Elwyn (Plaistow)Paton, J. (Norwich)Taylor, Dr. S. (Barnet)
Jones, P. Asterley (Hitchin)Peart, Capt. T. FThomas, D. E. (Aberdare)
Keenan, W.Platts-Mills, J. F. FThomas, Ivor (Keighley)
Kenyon, C.Popplewell, E.Thomas, I. O. (Wrekin)
Kinghorn, Sqn.-Ldr. EPorter, E. (Warrington)Thomas, George (Cardiff)
Kinley, JPorter, G. (Leeds)Thorneycroft, Harry (Clayton)
Lang, G.Pritt, D. N.Ungoed-Thomas, L.
Lavers, S.Pryde, D. J.Vernon, Maj. W. F.
Lewis, A. W. J. (Upton)Ranger, JWalkden, E.
Lewis, T. (Southampton)Reid, T. (Swindon)Wallace, G. D. (Chislehurst)
McGhee, H. G.Ridealgh, Mrs. M.Watson, W. M.
Mack, J. D.Roberts, W. (Cumberland, N.)Weitzman, D.
McKay, J. (Wallsend)Ross, William (Kilmarnock)Wells, P. L. (Faversham)
Mackay, R. W. G (Hull, N.W.)Royle, C.Wells, W. T. (Walsall)
McKinlay, A. S.Scollan, TWest, D G.
McLeavy, F.Segal, Dr. S.Whiteley, Rt. Hon. W.
Mallalieu, J. P. WShackleton, E. A. AWilley, F. T. (Sunderland)
Mellish, R. J.Sharp, GranvilleWilliams, D. J. (Neath)
Middleton, Mrs. L.Shawcross, Rt. Hn. Sir H. (St Helens)Williams, J. L. (Kelvingrove)
Monslow, W.Silverman, J. (Erdington)Wills, Mrs. E. A.
Moody, A. S.Skeffington, A M.Younger, Hon. Kenneth
Neal, H. (Claycross)Snow, Capt. J. W.Zilliacus, K.
Nichol, Mrs. M. E. (Bradford, N.)Soskice, Maj. Sir F
Nicholls, H. R. (Stratford)Sparks, J. A.TELLERS FOR THE NOES:
Noel-Baker, Capt. F. E. (Brentford)Steele, T.Mr. Pearson and Mr. Simmons
Noel-Buxton, LadyStokes, R. R