Orders of the Day — Textile Industry

Part of the debate – in the House of Commons at 12:00 am on 26th March 1952.

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Photo of Lieut-Colonel Wentworth Schofield Lieut-Colonel Wentworth Schofield , Rochdale 12:00 am, 26th March 1952

Before the conclusion of this debate many expressions of opinion will have been voiced about the causes of the depression which has overtaken the cotton trade of this country. There is no doubt that many of those opinions will be completely at variance one with the other. But however much we may differ on the question of causes, there is at least one thing upon which I feel hon. Members on both sides of the House can agree; and that is that we all share a common anxiety about the increased unemployment which has occurred as a result of the persistence of this depression.

In examining the problem, the first thing upon which we should be clear is that this depression is not peculiar to this country. It is world-wide in extent and a similar anxiety is being expressed in other countries as well. Therefore, we should look outside rather than inside this country for the causes of this depression.

As the hon. Member for Rossendale (Mr. Anthony Greenwood) pointed out, in Belgium and in other European countries, short-time working is now the order of the day. France has banned any further importation of Japanese cloth. Many firms in France are working fewer than 30 hours a week. In the United States of America a very limited off-take is reported.

It may be of interest to hon. Members that whereas last year American cotton spinners consumed more than 10,500,000 bales of cotton, it is expected that this year they will consume fewer than nine million bales. That shows at once that there is a total loss of production, over the whole of the United States, of more than 15 per cent.

Even in Japan troubles are so great that the Japanese Government have decided to force on the industry a reduction in production of something like 40 per cent. Although this question of recession, or slump, is being argued in many quarters at present, there are people not unfamiliar with the textile scene who are firmly of opinion that the recession in Lancashire need only be a temporary recession.

They hold the view that this recession is the direct result of choking up of the pipeline which has become over-stocked with goods largely as a result of the panic buying which took place because of the war in Korea. There is no doubt that until that pipeline begins to clear itself in some way a resumption of buying must, of necessity, be on a restricted scale.

Another important factor is the "bearish" sentiment which exists about the future trend of raw cotton prices. In the case of Egyptian cotton, the general belief is that the Alexandria market is on a completely false basis and that, in spite of the efforts which are being made by cotton interests in Egypt to bolster up an artificial price, Egyptian cotton will have to suffer a considerable reduction in price if it is to attain parity with world values for other cotton.

When we remember that about one-half of our total number of spindles are engaged upon the spinning of Egyptian or Egyptian type cotton, it is easy to understand the extent to which the uncertainty about cotton prices affects the trade of Lancashire.

In the other parts of the industry where American or American type cotton provides the raw material, there, again, there is a feeling that the prices for the raw material are too high, though not for the same reasons as those which obtain in respect of Egyptian cotton. Lancashire spinners have been complaining for a long time that the price charged for American cotton by the Raw Cotton Commission is higher than the world value.

This places Lancashire spinners and manufacturers—the whole of the trade—at a grave disadvantage with foreign competitors who can buy the same type and quality of cotton at a price lower than that which the Raw Cotton Commission charges Lancashire spinners.

The reason for that is the dollar shortage. Because of the stringency in the supply of dollars the Raw Cotton Commission has had to search the markets of the world for non-dollar cotton which may be used as a substitute for the more popular American cotton. The demand which has thus been engendered by buying those cottons has forced up the price of non-dollar cotton to such an extent that the average price for the whole of the cotton bought by the Commission is higher than world prices.

A short time ago the price charged to British spinners by the Raw Cotton Commission for American cotton was as much as 6d. a lb. higher than the world price. But today, because of the lack of demand caused by the depression, the price of those outside growths has receded until the average price of cotton now quoted by the Commission is only 1d. a lb. higher than the world price.

But even that is too much. It is quite enough in the present position, when there is such a scarcity of business, to push what business there is into the hands of our foreign competitors. Indeed, any price higher than the world price is too much if Lancashire is to hold its own in the fight for world trade.

When buying is resumed exactly the same conditions will prevail once more unless dollars can be made available with which to buy the American cotton which Lancashire needs. I suggest that this is one way in which the Chancellor of the Exchequer can help, by ensuring that the endeavours of the cotton industry are not hampered in future by an insufficiency of dollars with which to finance her raw material needs.

In an effort to beat the depression, both spinners and manufacturers in Lancashire have already taken their medicine and have already reduced their prices to the absolute minimum. The operatives, for their part, have also taken a knock by the short time which they have worked and which, much to their credit, they have accepted without embarrassing in any way the efforts of the industry to deal with the situation.

For a long time Lancashire has been Egypt's best customer for Egyptian cotton. It is now up to the cotton interest in Egypt to decide how much of the knock they are prepared to take and how far they are prepared to reduce their prices to bring them in keeping with world parities and thus restore the confidence in raw cotton prices which is needed.

Also, we must not forget how the cotton trade is affected by the balance of payments crisis. That the crisis extends far beyond the shores of this island and that there is no easy and comfortable way of dealing with it has been brought to our minds in no uncertain manner recently by the action which has been taken in other parts of the Commonwealth. The sudden decision of the Australian Government to bring their imports to a virtual standstill was a forceful reminder of the widespread nature of this crisis.

Though no one can dispute the right of Governments to deal with their own problems in their own way, there is no denying that this decision by the Australian Government was a grievous blow at Lancashire's textile trade. Though consignments which are actually in transit are to be admitted into Australia, they will have to be counted against future quotas.

But that does not alter the fact that there are still large orders which have been placed, which are not yet completed and for which the raw material has been secured. The manufactured goods made from these materials will finish up in the warehouses and the cellars on this side of the world unless something is done to find some outlet for them, and I can assure hon. Members on both sides of the House that that is much easier said than done. It is actions of this kind by Governments which make the cotton industry, dependent as it is for its welfare upon a healthy export trade, particularly vulnerable, and, if this sort of thing is to be allowed to develop, then efforts to stimulate and expand the export trade will be rendered meaningless.

My hon. Friend the Member for Bury and Radcliffe (Mr. W. Fletcher), who is just coming into the Chamber, has put forward on many occasions a point which is troubling all sections of the cotton industry at the present time, and particularly the exporting section of the industry. It is the apparent disregard which is being shown by Governments for the sanctity of contracts. The recognition and carrying out of contracts is virtually the corner stone upon which all trade is built, and the moment Governments or individuals cease to recognise that salient truth it will be the end of all honourable trading between Governments and individuals alike.

In what way can the Government help in this crisis? Lancashire does not expect the Government to place defence orders merely for the purpose of stimulating trade. Nevertheless, I was glad to hear from the President of the Board of Trade the assurance that there will be no undue hold-up in the placing of these defence orders, and I hope that instructions will be given to the responsible Government Departments that a fair share of these orders will be given to the textile industry by placing as many orders as possible with the Lancashire mills at the earliest possible moment.

Now, may I say a word or two which I hope will be heard in the Colonial Office? During the past few years, when the sellers' market prevailed and Lancashire's order books were full and long-dated, the Colonial Office was anxious to ensure that the populations of the Colonies were not kept short of essential supplies of cotton goods, so they arranged for extensive importations of cotton goods from Japan. In the Lancashire cotton trade today, there is a considerable fear that the Colonial Office in London and the various authorities in the Colonies are not fully aware of the change which has taken place in Lancashire during the past few months, and that they do not realise that all the facilities are available in Lancashire to supply any amount of cotton goods to the Colonies which they may require.

Reports have been received in Manchester giving the impression that further orders are liable to be placed with Japan, unless some action is taken to prevent it. It would certainly give great satisfaction indeed if the Government would tell Lancashire quite plainly that steps are being taken to limit the import of Japanese cotton goods into the Colonies and to direct as much of that trade as possible to Lancashire.

Finally, I should like to stress this point. It must not be assumed by anyone that Lancashire has lost heart. Today, the cotton industry of Lancashire is far stronger, from the point of view of technical efficiency and organisation, than ever before in its history and, being aware of this, it is facing the situation, which is a difficult one, with realism and determination. All that it asks from the Government is that the Government, in their turn, shall also play their part in the way which Governments can do, and that the Government will deal with this problem in the same spirit and temper, and with no less realism and determination, than that which is being shown by the industry itself.