I move—

This is the third Bill which has been before the House and rejected in another place. In this case the second reading of the Bill was so rejected. For the same reason as in the case of the Precious Stones Bill it will be unnecessary to go again into all the questions which were dealt with so fully last session. There is no doubt that the speed of the successful industrial development of a country is dependent on the measure in which such a country economically manufactures its iron and steel. Iron and steel works are a key industry, and give rise to a number of other occupations. It is, therefore, necessary for every country to have such works. The amount we pay annually overseas is much larger than it will cost us to have our own works, and to give us reasonable interest or profit or dividend on the capital we invest. Our country is rich in the important primary products required to constitute such an industry successfully on a large scale, and the need of iron and steel in South Africa is large enough to create a market for the products of an industry which works on a sufficiently large scale to produce economically. The whole scheme of the Government as stated during last session is based on the fact that the business will only supply our own needs, and no account is taken of the possibility of export, i.e., we find that if we have created iron and steel works to supply our own need—to go no further and think of export—then it will be an economic paying proposition. For this reason it is necessary that without further delay we should establish such an industry in South Africa, and, to make it an economic proposition, it must be done on a large scale. The production must be 15,000 tons pig iron, and the pig iron must be converted into steel. This is important. It is not so much the production of pig iron but the need of converting it into steel, because the need for pig iron in South Africa is too small for economic production. If we establish works to produce only pig iron, it will not justify the State because the demand is too small. Now, whilst it is necessary to convert the pig iron into steel, this must be done at the same place. This is an incontrovertible fact on an economic technical basis. We have the peculiar and entirely uneconomic position that, whilst an attempt is being made to produce pig iron at Newcastle, that pig iron has to be sent, inter alia, to Vereeniging, and there smelted again to be turned into steel. The place where pig iron is made and converted into steel must, as far as possible, be chosen close to the centre which consumes the most, naturally bearing in mind the cost of transport of the primary products and of the finished article. Another view of this matter is that it would be unthinkable to establish a successful industry gradually in departments or in instalments. It must be tackled as one big job, and large capital is necessary. If we start it in dribs and drabs, and provide a little money one year and more in subsequent years, then it is universal experience that it is uneconomic, and we shall run a risk of failure. Our duty is therefore to start on a large scale from the commencement with the necessary, and a sufficiently large, capital. As private enterprise, of which so much is made, it has been tried and we found that it did not succeed in getting the necessary capital. When private enterprise fails then it is the duty of the State to step in, and so establish a live industry, Even the assistance which was granted by the Bounties Act of 1922, or what at any rate was contemplated by it, led to no satisfactory results. One can say that the Bounties Act was practically a failure. The works existing to-day to make pig iron out of primary products and to convert it into steel are on an entirely wrong and bad economic and technical basis, with regard to the supply of primary products as well as the place where the blast furnace is built, and the relation between it and the factory which converts the pig iron into steel. The fact that the blast furnace at Newcastle had to be closed is one of the strongest proofs of the incompetent way in which the policy of the development of this industry was applied. All the facts prove that it has now become time for the State to step in itself to take a part in the establishment of such an industry. This, of course, means that the State must accept a certain responsibility, and especially in so far as supplying the necessary capital is concerned. The State must also take care that the opportunity in connection with the establishment and development of the iron and steel industry in the country should not be used to pay as large a dividend as possible and thereby to stultify the main object of such an industry.

Will not a dividend be paid, then?

I am speaking of the dividend aimed at if the industry were left to private enterprise. It was argued that we should provide the money and then leave the industry to private enterprise, and that private enterprise would then see that the subsidiary industries in the country which need pig iron would get it at a fair price. No, the best guarantee of that is that the State should take a fair share of the profits. It is clear to me that the State must keep an eye on the business policy of the works, without adopting State management of the works themselves. I cannot do otherwise than mention again the case of the Electricity Commission where you have a public commission under an Act, the administration of which has been placed in the hands of the Government. The commission has hitherto done work worth £7,000,000 and as I have said, there is not a single proof that the State has ever interfered with its management. That is what I mean by my remark that State control of the industry must not be adopted. As a State, we are interested in the operations of the Electricity Commission and the power stations: which it has established, but we have never yet interfered with their practical management. We have the same aim in connection with the con‘trol which will established under this Bill if it becomes law.

Surely my hon. friend does not pretend to compare iron and steel works with the Electricity Commission’s works. One is a public service, which the world over is done by public bodies; but where can you point to this being done for iron and steel works? It is a different thing altogether. This Bill was thrown out by the Senate last session because they, and a large portion of this House, were against this particular State enterprise—of a highly speculative nature. It is proposed to put into this enterprise no less than 3½ millions of the taxpayers’ money in one form or another, and I have not the remotest shadow of a doubt that we shall lose hundreds of thousands of pounds. I understand that Sir Robert Kotze just before he resigned wrote a memorandum on this. Is this so; if so, will it be laid on the Table of the House? Then why has my hon. friend refused to pay the bonus to the concern which is now making iron and steel, which bonus is authorized by law?

I will answer. It has precious little to do with the Bill.

Does the Minister know that the position has entirely changed while he has been on his travels—since the last session of Parliament? Is he aware that very large iron ore deposits have recently been discovered at a place called Prestwick about 14 miles from Newcastle? Is he aware that the ore is of very much better quality than that of Pretoria? Is it also a fact that the Minister sent an engineer from the department to examine the deposits? Would he be good enough to tell the House the result of his examination? That ore does not require to be mixed like the Pretoria ore requires, and it is being worked now by the company. I say this discovery changes the situation.

You sent an enquirer down?

I heard that Mr. Wagner went over this ground and did not discover it; another man went over it and did discover it. Because Mr. Wagner did not discover it does not mean that it does not exist. You must alter your plans if this is correct. You have to mix the Pretoria ore with ore which you have to fetch 40 miles by train. I am hot against iron and steel works. We all want to see the resources of the country developed. It is in accordance with the policy of the late Government, as shown by its bonus policy and the low railway rates on the conveyance of raw material or manufactured products. I do not regard it as a key industry, but I want to see the resources of the country developed; we want to see it done by private enterprise, and not by the State. Private enterprise is the only economic method of working, but the Minister will not achieve that end by using taxpayers’ money for this purpose. That has been the experience the world over, it having been proved again and again that in the majority of cases State enterprise is most extravagant. As I will show by quotations from authorities when the Bolsheviks secured control of affairs in Russia they converted all large undertakings into State enterprises.

You quoted that last session.

It would have been as well if the Minister had taken this book with him on his travels and studied it. It shows that taking the basic figure of production at 100, production fell in Russia from 100 in 1912, which was before the revolution, to 15.9 in 1920, but in 1921 production increased to 24.9 and to 49 in 1924. When the imperial regime fell in Germany in 1918 the reins of Government fell into the hands of the socialists, but instead of immediately converting all large undertakings into State enterprises they appointed a commission, which unanimously held that the entire official organization, the conditions of appointment, promotion and pay, the budgeting and bookkeeping; in short, the whole system in the normal State undertaking with this bureaucratic conception involved serious obstacles to the economic exploitation of the State mines. Germany found that whenever the State takes control of an enterprise production becomes uneconomic.

What about the New Cape Central Railway?

That line was very much more economically managed under private enterprise than it is now under State enterprise, although when the line was owned by a private company it had to pay taxes which it does not now have to do. Then we have the example of Australia, which has gone in very largely for State enterprise with the result that a well-known economic authority has stated that the financial results of the State enterprises are disappointing, one of the reasons being that the men produce less than workers in private employment while there was political graft, the result being that the national service was a crying evil. We might say the same of this country, for we shall have very much the same position here. The Minister talks about economy, but he will not be able to produce his iron ore or steel on an economic basis. In brief, this is a highly speculative scheme, and, although it is the duty of the Government to take care of the taxpayers’ money, it is going to take millions of that money to attempt to develop an iron ore industry, notwithstanding the fact that at the present time such an industry is being developed by private enterprise.

Most efficiently—that is what you allege.

There is room for only one of these enterprises in South Africa to-day, and if this scheme is proceeded with it will mean the elimination of a perfectly justifiable private enterprise or the loss of a considerable sum of money by the State, as the market is not wide enough to justify two such undertakings. Close on £1,500,000 has been invested in the Union Steel Corporation.

What has the corporation done?

I don’t think the Minister knows what it has done.

For the simple reason that it has done nothing.

The Minister has never gone into the matter. He has been on his travels.

I knew that long before I went on my travels.

The Minister has been so long away on his travels that he does not know what has been happening in South Africa. A little time ago we passed a Bill authorising the appointment of another member of the Cabinet because the Government alleged that the work had increased to such an extent that another Minister was essential. The result has been that three Ministers have been gallivanting round the world, and we have to pay the piper. The privately-owned ironworks in South Africa are producing over 50,000 tons of pig-iron a year.

Then why have they closed down?

Because the demand is not sufficiently large, but the corporation has started other industries with a view to the further utilization of its output of iron ore. I quote—

Have they produced a single rail?

Yes, they are producing light rails. Does the Minister know that we require 60-lb. and 90-lb. rails—

That is not all. Stewart & Lloyds of Birmingham, through the influence of this company, have started works in South Africa to use this pig iron for the manufacture of iron pipes. There is also iron sheets, the manufacture of which, I believe, will be started in South Africa.

Why then are they negotiating for sale?

You must remember you cannot start these things in a day. It takes time. It will take Stewart & Lloyds until the end of next year to get properly going. All this has been done, and it is a singular thing the Minister knows nothing about these things. He comes and asks the House for three-and-a-half millions of money in cash and guarantees, and does not know what is being done in the country, and it has been done without costing the country sixpence. I ask every member of the House, where is the necessity for State enterprise? It is unwise. If these people have put in this money amounting to one-and-a-quarter million, and Stewart & Lloyds’ contribution will be half-a-million, and the contribution for making iron sheets will be another half-million, so that within twelve months from now two-and-a-half millions will be invested in this country in this industry, where is the necessity for the State putting money into it? It is not only unwise, but it is iniquitous and unjust. The State comes along and puts up a highly competitive concern, and there can be only one of two results—either private enterprise goes under, or the State will lose a lot of money. If this sort of thing is done, who is going to bring capital to South Africa? It does not offer much encouragement.

What about the last loan?

That is a different story.

It is the same story.

How can it be the same story, because in this case private enterprise puts in the money, and in the other case it is the State.

Industries are going ahead by leaps and bounds.

Oh, are they? Where is the excuse for putting State money into an enterprise of this kind; and what about the water supply at Pretoria, which is required for this thing?

I explained it all last session.

There is another thing the Minister does not seem to understand anything about, because they have been negotiating for water from the Haartebeestepoort dam. Does my friend not understand? We have spent one-and-a-quarter millions on the dam for irrigation purposes, and canals have been made, and now it is coolly proposed to take this water and use it for making pig iron. We gave this water supply for a definite purpose, and it is not right that we should enter into the biggest project ever tackled in South Africa, and then divert the water to an entirely new purpose which Parliament was never asked about, and was never asked to consent. The Minister of Agriculture at one time refused to agree to this, and I hope he will stand firm and will not agree. It is a monstrous shame that we should coolly spend money on this dam and then use it for another purpose.

The water was for the municipality. It had nothing to do with the steel works.

Why do they want a supply of millions of gallons daily if not for the steel works?

Because the town is growing.

It may be, but what do they want millions of gallons a day for if it is not for this purpose. That is my opinion. I cannot emphasize it too much. This scheme is entirely speculative. Armstrong and Whit-worths, and I believe Vickers and a German firm, went into this matter. The German firm examined it and gave a highly favourable report. The reason they gave for not taking it up was they lost through occupation of the Ruhr by the French, but it was a curious thing they bought iron mines in Sweden. They would not touch it. According to their report it was a favourable thing, but it was not good enough for them. Now the Government, whose duty, as I have said, is to be very careful about the taxpayers’ money, are going to invest that money where it is entirely unnecessary. Private enterprise is doing the work at the present moment, and will continue to do it and do it far more effectively and economically than the Government can ever hope to do it.

I am afraid the hon. member for Cape Town (Central) (Mr. Jagger) is rather old-fashioned. I would suggest that he should take tips from the more progressive member sitting behind him, the hon. member for Pretoria (East) (Mr. Giovanetti). I would like to know from the hon. member for Cape Town (Central) who his authority was that he quoted to us on nationalization and if it is a modern authority or, as I suspect, is it an old-fashioned authority?

Is not Shadwell quite recent?

I suspect that it contains views which were formulated many years ago. I would like also to quote some extracts which may be of value to the hon. member for Cape Town (Central). As he has come forward with a quotation from Shadwell which he also quoted at the last debate, it would be an advantage to the hon. member perhaps, if I quoted something more modern to him. I may ask the hon. member if he were a member of the House of Commons, on what side he would be sitting. Probably he would be a Liberal. Will the hon. gentleman answer? I think he would have been a Liberal if he had sat in the House of Commons.

It is no use speculating like that.

The authority I want to quote to the hon. member is an authoritative writer on Liberalism in England. I want to quote an extract from an article written this year by “Watchman,” a well-known writer in “The Nation and Athenaeum.” At any rate, he is one of the recognized protagonists of Liberalism in England. Before quoting from that article I would point out to the hon. member for Cape Town (Central) that it is not socialization or nationalization that we are dealing with in this case; it is part nationalization and part private enterprise. This is an enterprise partly controlled by the Government and, to a great extent, dependent upon the initiative of private enterprise. Private enterprise will be called upon to put money into this concern. (“Oh!”). These jeers confirm my impression of hon. members opposite. They have not taken any trouble to study this question. Let me read what “Watchman” writes on April 9th—

He goes on to point out the advisability in certain industries of having them controlled partly by means of nationalization, but, at the same time, not to lose the spur entirely of private enterprise, and to have private individuals interested in those concerns. I submit that that is no more and no less than the Government intend doing in this case. It does that because private enterprise in this country has failed.

Nonsense!

The mental horizon of the hon. member for Newcastle is obscured by the fact that he is the member for Newcastle.

What about Pretoria?

The Government in this particular concern is not acting on my advice or the advice of the hon. member for Newcastle. It is acting on the advice of the greatest experts that it could summon to its assistance to give advice on this question. I do not pretend to criticize the opinions of the experts in matters like this. They considered the relative claims of Pretoria and Newcastle. They cut Newcastle out mainly because Newcastle was too distantly situated from the markets, while Pretoria is situated at the door of the biggest iron market in South Africa—Johannesburg. One point that the hon. member for Cane Town (Central) made in his interesting speech to the House this afternoon was that ore in great quantities has been discovered at Prestwich near Newcastle. For that reason he argues that the Government must alter its plan. I do not believe this ore is of any greater value than the ore which is known to be in the vicinity of Pretoria, but, assuming that it is a rich find of ore, does that justify the removal of this proposed industry to Newcastle? Has the hon. member again made a study of this question? If he had, he would have found that the actual presence of a very rich ore is not an absolute necessity to the establishment of an industry at that particular spot. It would perhaps interest the hon. member if I were to cite the extremely interesting parable of the Tata Steel Works in India.

Private enterprise.

I admit that was private enterprise. Strangely enough, the Government of India opposed the establishment of that industry in the first instance. The fact remains that in India they were faced with practically the same problems that South Africa is faced with to-day. Not a ton of steel was being manufactured in India at that time. They were importing steel goods to the extent of 400,000 tons. They also had to make a preliminary survey of the ore contents of India before they could establish this industry. In the first instance an extremely rich strike of ore was made in Central India. In spite of the fact that the ore content was something like 65 per cent. on that particular strike, it was subsequently found with a discovery of ore which was not of equal richness near Calcutta that it would be of greater economic advantage to establish the industry on that particular site. The Tata experts who were called upon to report upon this particular find came to the conclusion that the economic advantage of being near a great consuming centre like Calcutta would be so great that they scrapped the first discovery, though it was the richer one. The industry in India in its initial stages was faced with the same trouble in finding capital as we have been. They first went to England for capital, and Tata himself, perhaps the greatest of all Indian industrialists, wrote as follows after visiting London to attempt to raise the necessary capital—

Very much like our experience in South Africa. (“Oh”) I distinctly allege that it is difficult to get money in England to establish manufacturing enterprises in South Africa, for an obvious reason.

The Union Steel Company have raised over a million of money.

They got it by means of debentures by a mortgage over the whole of their property. What did Tata do then? He went to America and there he was able to obtain the services of two great American engineers who subsequently placed this particular industry on its feet. In 1907 the actual capital was obtained in India itself, an amount of £1,613,000, and this is the way they obtained it. At that particular time a movement commenced in India called the Svadeshi movement, that is “India for the Indians,” a lesson that we might well learn in South Africa, and by means of that form of patriotism every penny of the capital was obtained for the new industry. The future of the industry was uncertain, yet by means of a patriotic appeal they were able to obtain their million and a half of money. They were not driven to the extreme to which we are driven in this country to-day. The industry was established at its present site at Jamshedpur and by 1911 the whole industry was on its feet and had commenced working. The site was without any buildings, and immediately the first difficulty with which the industry was faced was the building of a new city at a cost of over a million pounds. They commenced their industry with an operating crew of 2,000 Indians supervised by 175 Europeans.

At what rate of pay?

If the hon. member wants to know at what rate of pay, there is very little doubt that the Indian was paid a very low wage, but I can reply to the hon. member by quoting the very interesting observation made by the general manager of the works, an American by the name of Wells, who said this—

Apply that to the mines.

I do not know why hon. members jeer at the remarks which I have quoted by the actual manager of this particular works. It was in spite of the employment of cheap labour that the industry became a success. Hon. members on that side of the House with their doctrines must, of course, jeer, but the fact does remain that Mr. Wells, the general manager of the Tata Works, said that Indian labour was not cheap at the price. I would advise hon. members before they jeer to read up something about this subject. This concern commenced with 2,000 workmen and 175 Europeans in 1911. By 1921 the numbers had risen to over 24,000 men employed in the works and by 1925 the numbers had again in creased: 36,000 workmen employed at the actual works: at the collieries, 4,000 men; at the iron mines. 8,000 men, and at the limestone and dolomite quarries, 4,000 men, a total of 52,000 employees of whom 150 were Europeans. The original output in 1911 was 160,000 tons of pig iron and 100 000 tons of steel. By 1925 this concern manufactured 600 000 tons of pig iron and 570,000 of steel. The industry in India was faced with practically the same difficulties that we are faced with in South Africa, but they had the courage there which apparently members on the Opposition benches have not, but a courage which luckily, this side of the House does possess.

The courage of ignorance.

I have been trying to prove that is the perquisite of that side of the House. I hone the hon. member for Cape Town (Central) (Mr. Jagger) will benefit by the quotation I have given him. I need not urge upon the Minister to go ahead. I know this Rill will become law and I also have the optimism which leads me to say that in spite of hon. members on that side trying to prevent this Bill becoming law, it will become a measure for which South Africa eventually will be extremely thankful.

I am rather surprised at the attitude of the hon. member for Pretoria (Central) (Mr. te Water) in jeering at the hon. member for Cane Town (Central) (Mr. Jagger) because of his age. Let me assure him, speaking as a young member, that it is very much out of place. I was hoping we would have heard something new from the Minister. I was hoping that the Minister would have followed the advice which was given before the select committee of appointing a special independent commission to go into this matter very fully so that we could have advice from men in the country; not experts from abroad. What a terrible shout there was when the late Minister of Railways appointed an expert from overseas, but in this particular case I say that the Minister should have adopted the suggestion to appoint experts in this country who would inquire here on the spot and give us their advice on this question. The experts that were appointed were appointed to advise upon only one concern, that is Pretoria.

Where are you going to get them in South Africa?

There are experts here. The experts who came to report on Pretoria were confined only to Pretoria. They did not have an open commission to advise us as to the best economic place in South Africa in which to establish this industry. The commission was not a free commission; it was restricted. The German report goes to show that the total tonnage which will go into Pretoria will be 1,030,250 tons every year. The products from that will be 132,000 tons of rolling mill products and 175,800 tons of waste products. Only one-seventh (that is, 158,000 tons) of the total raw products that come into Pretoria will be supplied from the district of Pretoria and the remaining 872,250 tons will have to be imported from various parts of South Africa. I had hoped that the Minister would have appointed an independent commission, because Newcastle feels that it has not had a fair deal, as the existing industry there has never been thoroughly investigated. I would like to ask the Minister whether the Inspector of Mines in Natal has recently sent him a report on the iron ore mine at Prestwich, and if so, whether he will tell us what is in that report. I understand that that report has been made and that it has been a revelation to the Mines Department as to the quantity and quality of the ore in this particular area. I go further. I am told that Sir Robert Kotze also made a report before he retired, but we have never seen that report. Why has this report not been placed before the House?

How many members are going to put to me the same question?

Until we get the reply.

I have to repeat these questions otherwise we would never get a reply. I would like to ask the Minister whether any offer of settlement was made by the existing industry to the Government. Do I understand the Minister to say yes?

I am not going to answer questions in fractions across the floor of the House.

This is a very simple question and surely the Minister will extend the courtesy of telling me whether or not that offer has been made.

I stated last year that an offer had been made which was utterly impossible, and so far as I know, if that offer has been repeated it is equally impossible.

I would like to read that offer to the House so that the House and country can judge whether it is such an impossible offer. It is right this House should be acquainted with the terms of the offer and that the country should also know what it is. The offer was made only very lately, and is as follows—

1. (1) A new corporation to be formed with the sympathy and co-operation of the Government to take over the assets of the Pretoria Corporation and the Union Steel Corporation, the terms in regard to the Pretoria Corporation being as in the Bill and the Union Steel Corporation shares being taken over at par;
2. (2) the new corporation would then operate on a large scale immediately and would not have to wait for the completion of the proposed new works which would mean a delay of some years.
3. 3. To obtain Government co-operation and sympathy it is agreed to erect steel works at Pretoria, though it is by no means clear that this would be the right course economically. The site for the development of the pig-iron and finishing industries could be decided in the light of experience.
4. 4. The business to be controlled by a directorate consisting of two nominees of the Government, two persons elected by the shareholders and one appointed at the request of the corporation by the Iron and Steel Institute, which is the acknowledged institute of the steel trade throughout the world.
5. 5. The distribution of ‘surplus profits, if any, after provision for depreciation, redemption of debentures, reserve funds, etc., and a dividend of, say, 10 per cent. on share capital, to be a matter for discussion. In any case it would be in the power, of the Government to prevent excessive profits due to high prices by means of the Customs tariff.
   Should the Government be willing to allow without prejudice a round-table conference on these lines, it is unlikely that other difficulties would prove insurmountable.

The terms offered here appear to be eminently reasonable. It is the duty of the Government to see that this industry is met in some way or other, and that some reasonable and fair arrangement can be made whereby the existing industry can be saved from destruction. Under the Bounties Act it was provided that any company or corporation which set itself out to produce 50,000 tons of pig-iron or steel would receive a bounty from this country. The good faith of the country was staked on this policy, and when it became law there was no opposition from any party in this House. Following upon and as the result of that Act the present industry came into existence, and has spent an enormous amount of money on development. They have made an honest effort to carry on that development. To-day to destroy that industry which came into being on the invitation of the people of this country, would be wrong and unjust. Even this Government has reaffirmed the bounty policy as late as June, 1926, when this House affirmed the Bill introduced by the Minister of Mines and Industries which set back the dates of the Bounties Act to enable the existing industry to reap the full benefit of the Bounty Act. The existing industry was doubly reaffirmed as regards the continuity of the policy laid down in 1922. There was no suspicion or any indication from the Government that there was going to be a complete change of that policy. The existing industry after the present Government came into power in 1924 spent £700,000—in development. Had the Government shown the existing industry sympathy and assistance, it would within a short space of time have had sufficient production to meet all the requirements of the country. In December, 1916, the Minister of Defence was in Newcastle and inspected the works. He received the hospitality of the people there, but he never said a word that the next month there was going to be a complete change of policy and that the Government was going to introduce a Bill like this. The existing industry has achieved all that I am going to refer to, without one penny of the taxpayers’ money being paid, or one penny of protection to meet overseas competition. The Ministers said they had done nothing; but they have started and have successfully produced pig-iron at Newcastle which is reported by the users to be equal to the best imported. They have got to the stage of over-production, and have 35,000 tons of pig-iron lying on the veld and for which there is no demand, as there is no subsidiary industry to absorb it.

Why do they not make it into steel?

They are going to do so. They have extended their operations at Vereeniginig, and by the end of 1928 they will absorb the whole of the pig-iron produced at Newcastle. They entered into an agreement with Messrs. Stewart & Lloyd, to form a subsidiary company to produce tubes, pipes and pipe fittings. After they became aware of the Government’s intention they gave Stewart & Lloyd’s an opportunity of cancelling this agreement, but this firm has decided to carry on. At the present moment a factory is being put up at Vereeniging, which will turn out tubes and all the pipe fittings required in this country. In Durban a movement is on foot to put up a factory for cast-iron pipes which will be ready I hope at the end of next year. At Vereeniging the wire factory now completing erection will be able to produce 30,000 tons of wire, and at Durban 15,000 to 20,000 tons of pig-iron will be absorbed. We were told that the Newcastle blast furnace was a farce, and by the Mines Department we were told that they could not produce pig-iron at Newcastle under £5 per ton. It is being produced at £3 18s. per ton to-day. If there had not been this Government interference they could have produced, by duplicating the blast furnace, pig-iron at less than the Government can produce it at Pretoria. The iron ore coming from Prestwich is equal to the best that can be found in the world. It is highly carbonized, contains practically no silica and is very easy to smelt. They find that they use very much less coke in smelting it than they ever dreamt of, and if the Government had not interfered the Union Steel Corporation could have produced steel more cheaply than the Government can at Pretoria. I am advised that coke ovens are to be erected at Newcastle, with the result that with the price of coke considerably reduced, there will be a further reduction in the cost of production of pig-iron. The Minister and the hon. member for Pretoria (Central) (Mr. te Water) told us that there was no iron ore in Newcastle to speak of.

I did not say so.

I understood the hon. member to say so. Dr. Wagner said there was practically none. I have had an opportunity of personally inspecting the mines, which have turned out a wonderful proposition, and where the reef was under 18 inches on the outside skirting of the hill, to-day it is seven feet deep, and this iron ore is highly carbonized. It is estimated that there will be from 50 to 60 million tons of iron ore. In Pretoria they have to mix Buffelshoek ore with Pretoria ore.

That is not imperative or absolutely necessary.

That is what the German report implies.

That report is full of “ifs.”

I quite agree it is full of “ifs.” We were told that the Union Steel Corporation would not produce pig-iron at Newcastle under £5 10s. a ton, but they are actually turning it out at £3 18s. a ton. Had it not been for Government interference the existing industries would have obtained all the money required for development purposes, and they could have supplied all the needs of South Africa. Had Government waited only for a year the existing industry would have been in a sound position. If the Minister wants to try his hand at establishing a State industry why not start in a field which is not occupied by private enterprise, and in order to satisfy the whim of his Labour colleagues he might begin by extracting oil from coal, for South Africa can be held to ransom as far as oil is concerned, as we do not produce a gallon of oil.

Oil is not the question under discussion.

I am trying to point out that if the Minister wants to use taxpayers’ money in developing a State enterprise he could do so by endeavouring to extract oil from coal.

The hon. member may in passing, refer to the oil industry, but he should not go into details.

The Minister has told us that there was plenty of water in Pretoria, but a short time ago there was an article, I think, in the “Pretoria News” stating that efforts were being made to induce the Minister of Agriculture to allow the Pretoria municipality, owing to the shortage of water, to obtain supplies from the Haartebeestepoort dam, but that the member for Pretoria (North) (Mr. Oost) and the farmers were bitterly opposed to the proposal.

We have heaps of other water—we can get six million gallons a day from Rietfontein.

Where is the ignorance now?

I think it is over there. I was only quoting what I saw in the paper.

Do you believe everything you see in the papers?

Seeing this in a Pretoria paper, I believed it. Why does Pretoria want to go to Haartebeestepoort?

That is an alternative.

So it is another one of the “ifs.” Another point is the coke and coal question. I have been advised by competent men in the Transvaal that it is impossible to make good coke from Transvaal coal, and the German experts advise that the Transvaal coke will have to be mixed with 50 per cent. of Natal coke. It takes four tons of coal to make one ton of steel. The proper place for a steel foundry is where you have coal and water. Even the German experts admitted that one of the essentials of success is cheap coke. Again, Pretoria is one of the most expensive places in the Union.

Only nominally so.

Northern Natal is the most economic district in the Union in which to establish the railway workshops, so the Government experts reported. That being so, there was ample reason for Mr. Eaton selecting northern Natal as the site for his blast furnace. The German experts have made some errors; for instance, they said the selling price of pig iron would be £14 a ton. They also said that Pretoria should buy a controlling interest in the Uitspan Colliery, but I am told that that colliery will peter out very shortly. The action of the Government, so far as the existing iron industry is concerned is disgraceful, and no sane and honest Government should have taken the action the present one is taking. I had hoped that the Minister, after thinking the matter over calmly, would not have been so adamant as he usually is, and would, at any rate, have extended the hand of friendship and come to some satisfactory agreement with the Union Steel Corporation. It is a great pity that that corporation never had a fair opportunity of giving evidence before the select committee. Had it been able to state its case the Government would have had the other side of the story clearly put before it, and probably it would have seen that its contemplated action was wrong. When the matter was discussed in the House in 1922 the then Labour party proposed that if the Government gave any assistance to any iron and steel industry, the Government should control it. But that proposal was voted against by the whole of the Nationalist and South African parties. To-day, however, there is a complete change of front, and the Minister says it is necessary for the State to have control. That is a very serious statement coming from a Nationalist Minister. As to the control of prices, it is quite easy to do that, and under any circumstances the world’s competition will prevent overcharging. The hon. member for Pretoria (Central) (Mr. te Water) said that the cartel would raise the price, but the price of pig iron has fallen since Parliament last met, until it is now sold in Belgium at £3 5s. a ton. This has been effected notwithstanding the existence of the cartel.

That will not be the price when the cartel is in proper working order.

It is necessary that the Government should have a revised estimate—in view of the fall in prices—of the possible profit from the establishment of a Government steel and iron industry, so that we may know what the true position is. My hon. friend opposite talked about political influence, but when the Provincial Council elections were on earlier in the year he went to Pretoria and used the proposed establishment of an iron and steel industry in that town as hard as he could. He went with a message from the Minister of Justice that they should see what the Government has done for the Pretoria people, and that he would judge by the result of the elections whether Pretoria appreciated this. That clearly shows that political influences have a lot to do with this concern. For political purposes it is being made a stalking-horse by members on the other side. If the Minister forces this Bill through it will not result in the wonderful picture which has been painted. There will be heavy losses, and the taxpayer will have to pay for them. Instead of the Government assisting an industry already started, and on the way to success, they are doing their best to break the industry, and I say it is wrong.

Things have been said by the hon. member for Newcastle (Mr. Nel), as well as by the hon. member for Cape Town (Central) (Mr. Jagger), on the water question, which I cannot allow to pass. It was said that negotiations had taken place with the Minister of Agriculture for water from the Hartebeestepoort dam, and that Pretoria wants water from this dam for the benefit of the steel industry. The farmers living below that dam will not give up any of the water without a hard fight. In the first place the water was intended for irrigation, and there is sufficient first-class ground for use below the dam, more than can be watered. In the second place, Pretoria has more than enough opportunities to get water, and it will be unnecessary to surrender that from the Hartebeestepoort dam. Works can be carried out at Rietvlei which will yield more than 6,000,000 gallons a day. Then there is a possible scheme at Klipdrift, on the Pienaars River, where a large dam can be made, and there is also the Bon Accord dam. There is more than enough water, or rather, there is ample opportunity to get more than enough. There is no need to reckon on Hartebeestepoort dam, and I shall not advise anyone to touch it. The hon. member for Cape Town (Central) has shown that in this respect he is not well informed. This scheme has nothing to do with the Irrigation Department. There is ample water from the Pretoria outflow, together with the water of the Apies River, to provide for the needs of an iron and steel industry. That is more than enough, because the outflow from Pretoria is over 2,000,000 gallons a day, and the industry will only use about 2,000,000 gallons a day. The water question is pure camouflage. An objection was also raised in another place that this industry would cause too much smoke in Pretoria.

Yes, for aesthetic reasons.

In this House neither aesthetic matters, nor the smoke screen, nor a dam of water will be able to stop this industry. The people want it, and they are behind the Minister, and not behind hon. members opposite.

That is a surmise.

It is by no means a surmise, and to prove it, I suggest that if there is an hon. member from the North, from the Transvaal, or the O.F.S. who is opposed to this Bill, and is anxious to make a test, let him resign and have a by-election on the point. We will show him what’s what. I was also surprised at certain remarks of the hon. member for Cape Town (Central) (Mr. Jagger) on the financial side. He made a point in his attack on the undertaking of there being no capital available for this industry. This point was cleared up in select committee. Mr. Delfos, the man who has done a great deal for the establishment of a steel industry in South Africa, was asked a question on the 10th March, 1927, and we find the following answer on page 5 of the report—

That is the real point. We cannot expect that the big steel kings overseas will give capital for an industry in South Africa which is going to cut off their own heads. It is strange that the hon. member did not see this, or have we to do here with mere make believe? I repeat that the people are standing by the Government, and if hon. members opposite want to retain a little support they must vote for the Bill.

I do not wish to say much, but during last session you made it clear in your ruling, Mr. Speaker, that the industry established under the Bill is constitutionally a State enterprise. I want it to be understood that we, on this side, support the development of the resources of our country. In that respect there is no difference between hon. members on either side. We, however, object to a State industry being established entirely with public money. Hon. members must understand that according to the Bill, and the knowledge which the House has got from financial sources outside, it is certain that private money will not be put into this undertaking. The Minister of Finance stated clearly to the House that if the money was not got elsewhere the Government would be prepared to vote £5,000,000.

I also said that.

We know that the House, on the basis laid down in the Bill, must be prepared to supply the necessary capital for the development of this scheme. Capital from outside will not be invested, because at the basis of this matter is the principle that it is a State industry. The Minister said: “Why talk about dividends? You must not expect dividends for a number of years. Then you will see how the industry develops, but to talk of dividends in the beginning is not in the interests of the scheme.’” Who then will invest money? If a private person invests in any business he wants dividends. When he looks at a prospectus he must be certain that he will get interest on his money. In this case we can be certain that the State will have to find all the money. Moreover, hon. members know that a business costs 100 per cent. more when run by the State than when run by private persons. Do you think that shrewd business men will invest their money in a business run entirely by the State, and where the management consists of public servants? We hear of 1,000 public servants who will be created under the scheme. Everyone in the industry has a vote to influence the Government. If it were not for the pact with the Labour party we should never have seen this Bill. The Minister of Agriculture laughs, but in his heart he agrees, because he is as conservative as I am. He knows that it is not in accordance with the business traditions of our people to pass legislation of this kind. We know what it will mean if thousands of public servants are created. It will result in political influence. If one looks to the real interests of the country, then State capital should not be used to create votes for one party or another. I may add that the 10,000 public servants will cause bitter fruits to the people. It will not always be the case that the Minister of Agriculture sits there and I sit here. If we change our point of view, or a realignment of parties takes place, then we shall gather the bitter fruits of this Bill, although it is said that it is in the interests of the healthy development of South Africa. The difference between us is the socialistic trend of our legislation. I have nothing more to say against it, but I object to an unlimited liability being put on the responsible taxpayers. £5,000,000 will be spent before the scheme comes into operation. We as taxpayers, have to pay the capital and be responsible for it. The public debt is being burdened with millions to start the scheme, which is one of one fundamental objections I have to the Bill. My second objection is that we already have private industries at Newcastle and at Vereeniging where more than £1,000,000 has been invested. The hon. member for Cape Town (Central) (Mr. Jagger) discussed that matter. What does the Minister of Mines and Industries say? He says—

Is that the way for a responsible Minister to talk of an investment of private capital for the development of the country? Where does it lead to? An attitude like that is taken up today against capital invested in the iron and steel industry, and to-morrow it will be applied to agriculture. No consideration is being shown for more than £1,000,000 already invested in (he iron and steel business, and the Minister sneers at the expenditure of the private undertakings. The hon. member for Newcastle (Mr. Nel) quoted facts about what has already been done and what the private undertakings intend to do at Newcastle and Vereeniging, but it seems that the Minister is ignorant of the facts.

I think your whole speech is based on ignorance.

We know that the Minister thinks he has a lease of universal wisdom, but I want to tell him it was his duty to go to Newcastle and Vereeniging to see what the position is, instead of going to Canada.

I did visit Vereeniging.

Was it your duty to go to a technical congress which was not a political congress? It was your duty to stop here and look after the interests of the country. You could have sent the technical head of your department, but you should have looked after this matter, and after the diggings in this country.

There also I did my duty.

The Minister despises the capital now invested in private enterprise. We, who respect property and private enterprise, protest against his conduct. This is a fatherly warning, and the Minister can take it as he likes. I do not speak on industries as a man of great business experience, but I ask the Minister whether he has enquired what the best business brains in the country, what the chambers of commerce think of the scheme.

Their ignorance is as great as yours.

Here we again have the great wisdom.

It is ignorance about this particular matter.

This proves the Minister’s attitude when he says that of the chambers of commerce who have made a success of business.

They know nothing of the principles of this measure.

I can tell the Minister that he stands alone in this respect. Hon. members opposite do not agree with him either.

I am speaking of their knowledge of this particular matter.

We all know about this particular matter. The Minister says the chambers of commerce are useless. Their business brains are not able to go into the matter and express an opinion. The Minister alone is able to do it. The industrial congress was recently held in Durban, but the Minister was then on the water, and presumably knows nothing about it. It is a congress which owes much to him because he is trying to assist them in every way to build up an industry with the assistance of a protection policy. Will that congress oppose in the strongest and most direct terms the policy proposed in this Bill. They do not at all agree with its business principles.

They were looking after their own interests.

No, they are developing industries, and nothing else. They say that the class of State undertaking proposed in the Bill is in conflict with the development and spirit of a sound industrial life. Yet they are indebted to the Minister.

That is not the point. It is a general statement. None of them has investigated the matter.

Any man who differs from the Minister is despised, but I can tell him that the people will yet teach him a lesson.

I shall allow the people to decide.

We have heard so much about the German view of the matter. The hon. member for Pretoria (North) (Mr. Oost) has just spoken, and I understood him to say that the Treasury in England had refused to provide money. Is that so? The hon. member said so. The English Treasury has nothing to do with industries here. Even if English capital was refused, where is the German capital? The Germans had the opportunity of coming in. Here we have the report of the German capital, but where is it? No, it went to Sweden and Norway.

This is another of the old stories.

The Germans are business men, and they have as much business brain as the Minister, perhaps more, and that is the cause of their not investing here. Another point is that a State enterprise of this kind will be subject to the competition of the world. It is not a railway or an electricity business, which is practically a monopoly. The position in Europe is such that France, Germany, Belgium and Czechoslovakia came together to form a ring. They did so because the industries did not pay. They want to restrict production because the production of the separate undertakings must be regulated, that is why a combination is formed. Here we are going to risk millions of public money, and be subject to the competition of an overseas ring, well organized and with years of experience behind it. If this industry does not pay, then it will result in protective tariffs. The farmers and business men who require the articles will have to pay for them, while now they get them in free. No, I say that we are taking a leap in the dark. We, on this side of the House, are in the minority, and all we can do is to protest against this contravention of the old principles of South Africa. We are not accustomed to this sort of legislation. It is foreign. If the Minister had not been driven into a corner by his socialistic friends, he would not have introduced the Bill. In his heart he agrees with us that this legislation is not in the best interests of South Africa. We are actually doing nothing else than speculate, and the State has no right to speculate with public money. We talk every day about economy, and of our pure economic life, but this sort of legislation conflicts with it. I, myself, and hon. members here may protest, and I am certain that a large number of our Nationalist friends opposite agree with us, that the day will come when they will try with us to get out of the difficulty.

The Minister told us this afternoon that this is the third Bill rejected by the Senate that they want to put through. I think this Bill is certainly the most important, because the other Bills can be amended. If this one however is passed, and if the Government carries out its intention of immediately establishing the industry, then there will only be one way left for any future Government—like a man who has jumped into the stream, he must swim or sink. Any future Ministry will have to continue. The Minister seems to think that he is the only person with commonsense, but I think that anyone with commonsense in the House, and in the country, can see what such an industry will mean. I am thinking of the words of a wise statesman, the late Mr. Sauer, who said in reply to a question about the high cost of a certain State enterprise—

Mr. Sauer was right. That was his experience, and is that of everyone who has to do with State undertakings. Here the Government is going to do something which is a serious matter for everyone who owns anything in the country and is a taxpayer, the State is going to spend millions of pounds on an undertaking for which private capital cannot be found. An opportunity will be given to private individuals to take shares, but I am certain that not one of the Ministers or hon. members opposite will apply for any shares in the concern. If that is so, then it shows that they have no confidence in their own undertakings. If the business is once commenced it must be carried on, and the result will be that the taxpayer will have to bear heavier burdens, both direct and indirect, because when once the industry is established, protective customs duties will be required. The protection will result in a higher cost of living, and the public will therefore have to pay for the industry. An argument which is used on country platforms and in the House is: Why can the State undertake other State occupations and make a success of them. Then the railways and the posts and telegraphs are mentioned. They are not at all parallel cases. It is true that our railways are a State business. No one denies that it is a good and necessary thing, but as soon as there is a deficit the rates are put up and each person using the railway service must pay more for railage. In that way the railways get even again. If there is a shortage in the postal service we put 2d. on a letter instead of 1d. and pay 1s. 3d. for a telegram instead of 1s. What however is the Minister going to do if the steel industry cannot compete with the imported articles? If there is a deficit he cannot increase the price, because then the article will not be sold. The result will be customs duties, and the country will be obliged to buy tremendously expensive articles of iron and steel. That will not push the country ahead, but send it back. It is said that the Opposition of the S.A. party is a proof that it is opposed to the industrial development of the country. That may sound well on country platforms, but anybody with commonsense will see that it amounts to nothing. According to the arguments in the House I think that we are here taking a lean in the dark. I cannot give one answer to the question why the Government is proposing this enterprise. I can illustrate it by an example. When a horse’s hack itches then he goes and stands next to another horse and bites him on the place where he is itching and the second horse bites the same place on the first horse’s back. In that way the first horse gets his itch removed. The Labour party is keeping the Government in power, and because they are scratching the Nationalists’ back the Nationalists must do the same for them. That is one of the fruits South Africa is reaping from the Pact. It is a small agreement which will certainly cost this country millions of pounds in the future and will be most expensive. It is inexplicable to me that the public outside cannot see through it, and are so content to follow the Government, and to say that the Government thinks that the undertaking is economically sound, and that they are therefore satisfied with it, that it will establish an industry in the country and give many people work. It is true that many people will get work, but the Nationalist party need not think that they themselves will get the support of the workers. It may be so for the first or second year, but later they will all vote for the Socialists. One of the results will be that we shall soon have a Socialist Government governing the country, and no one but our Nationalist friends will be responsible for it. They were fourteen years in the desert, and when they could not get out in an honourable way—

The hon. member cannot insinuate that hon. members acted in a dishonourable way.

I withdraw, but I want to say that they could not do it in a constitutional way. They could not alone put out the S.A. party, and so called in the help of the Socialists to defeat us. They said that the co-operation would end on the night of the election, but if it did then it started again the next morning, and it is one of the bitter fruits we now have to pay for.

This is your report speech.

I am a little slow in seeing a point.

You are just as stupid in understanding the Bill.

I am not certain whether the hon. member is right. He used to be our clown, but he learnt wisdom later and commenced to behave sensibly. The fact remains that we have most important legislation before the House to-day and that hon. members opposite, who represent the population that possess something, do not say a word. When we sat there, they so often told us that we were not allowed to speak. I do not know that we were ever told to be silent. Certainly not in my case, and I do not think it ever happened. I think, however, that hon. members opposite have been told to remain silent, because not a single word is said on an important matter which greatly concerns them, and the taxpayers. They remain quiet and everything is passed.

We are satisfied with the Bill.

They can tell us that they are satisfied, but we know better. One hears things outside, although in the House they say that they are satisfied. We know that they cannot be so. Even if we are going to have it thrust on us, because the Minister in his great wisdom said that the Bill would be pushed through, we want to protest against it so that it cannot be said that we were silent. We say that the matter is so serious that even if the Government does wish to force the other two Bills through, it should allow more time for this Bill for further consultation. Then the Government may still come to its senses, and not do such a fatal thing.

I am surprised that farmers or persons representing farmers on the opposite side of the House can speak against this Bill. We have factories which buy up and manufacture our scrap iron, but can hon. members opposite tell me of a single harrow or plough made out of iron and steel produced from our own ore. No, our farmers must import the articles at the prices prevailing there. Yet hon. members say that the Bill is unnecessary. They admit that we ought to have a steel industry, and the whole dispute apparently is about who should start the industry. Then you want to keep the road open for the capitalist while the Government says that we can no longer rely on him and that the State must assist in the matter. Attempts were made in Pretoria to create a steel industry with the assistance of the capitalists. In the commencement they promised assistance and money, but at the most dangerous period they left the industry in the lurch. Only the old scrap iron is manufactured and nothing is produced from ore. Yet the hon. member for Cape Town (Central) (Mr. Jagger) asks why the bounty was not paid to them. It was not the object of the iron bounty to support this kind of undertaking. The hon. member for Colesberg (Mr. G. A. Louw) and other hon. members opposite make such a fuss about this Bill, why did they not issue a warning against the electrification of the railways? The experience of the railways with the ’buses in England showed what our railways could expect. Nor did they issue a warning against the grain elevator losses. Men are imported for the work from overseas and large sums of money are lost. Money has been wasted, but now they are making a noise, and expect the farmer to vote against this Bill because forsooth it is socialistic. Even if there were no Pact a purely Nationalist Government would have had to introduce this Bill. Hon. members opposite can apparently not understand that this is a matter of interest to the farmer. They say that silence has been imposed on us. That is not so, but we realize that it is in the farmers interests to have a steel industry of this kind established. We have to import all our articles of iron. Take the case of motors, we pay thousands annually overseas. Are we to go on with this for ever and never allow our own people to do the work? We surely want some day to be economically independent, but it seems to me that hon. members opposite want us continually to be exploited by oversea capitalists. They grudge our poor people the work which will be available in such a steel industry. They have done nothing for these people, and now throw mud when the Government is doing something for them. This action will result in the S.A.P. in two or three years being a thing of the past in South Africa, and that only the old Unionists will sit opposite. If the S.A.P. does not keep in touch with the farmers the farmers will not keep in touch with it, and will reject it. The farmer will settle accounts with the S.A.P. if that party compels them by rejecting this Bill to pay oversea prices for their requirements.

I think every member is heartily in accord with the suggestion for the establishment of an iron and steel industry in this country, but where we join issue with the Government side of the House is as to the method under which it is proposed to initiate such an undertaking. We on this side are heartily against any form of nationalization of any industry in this country. Our contribution to the establishment of this industry was the initial assistance we gave by bringing out the experts of the Gutehoffnungshütte to investigate the possibilities. We appreciate, as much as anyone, the great advantage it would be to our country if we had an established industry on an economic basis which would give considerable employment to our youth. But we are not quite so optimistic as the Government seems to be. A very good indication of the ministry’s unbalanced optimism in this respect was afforded the other day at Oudtshoorn when the Minister of Agriculture, addressing a meeting in that town, said that one of the great advantages of the proposed iron and steel industry was that it would ‘ employ 20,000 poor people, and they would consume the marketable products of the farmers. That is the kind of stuff that is being “put over” the public of this country. The industry is a good one, and should employ a good deal of labour, and, naturally, the farmer would benefit indirectly by obtaining a market for his produce, but the report of the experts which the Minister of Agriculture should have read, puts an entirely different complexion on the matter. These experts estimated that when this industry got into full working order, it would employ 64 officials, 350 skilled Europeans, 573 semi-skilled Europeans and 760 natives, a total of less than 1,800. Yet the Minister of Agriculture goes round the country saying that 20,000 people are to be employed. That is an indication of the attitude the Government is taking in regard to the whole of this business. The Ministers are suffering from extreme optimism, and that, if allowed to continue unchecked, will land the country into serious difficulties before we have finished with this iron and steel project. We particularly criticize the methods of raising the money which the Government proposes to adopt to establish this industry. We feel certain that the Government will have to provide the whole of the £5,000,000 capital required. In addition to that, if the expenditure of that £5,000,000 does not place the industry oh a profit-earning basis, we shall be faced with the problem whether we shall provide an extra one or two millions in order to save our initial expenditure of £5,000,000. In other words, the Union will have to decide whether it will cut its loss, or find extra money. Again, the Government has insisted on the absolute Government control of the whole of this industry. No private individual will subscribe money to an enterprise which is to be run on the lines proposed. Under the Bill, the Government even take away from the private shareholder the ordinary protection which he obtains if he invests his money in any other concern—the protection afforded by the Companies Act. There is no provision in the Bill for the protection of the ordinary shareholder, as he is now protected under the Companies Act passed in 1926. The Government goes even further. If, in the unlikely case of individual subscribers putting up £3,000,000 of share capital, and the Government remaining with guarantee of the debentures only, the Government do not propose to allow the private shareholder to have any final say in the control of the company. The Government, under this Bill, insist that it shall have four out of the seven directors, so that Government has control from the very start. In addition, the Government insist upon appointing a chairman, but, not satisfied with that, it also retains to itself the right to appoint the managing director. This individual, in addition to being an ordinary member of the board, is to be the chief executive officer of the whole of the concern. A Government managing director is likely to look very carefully to the wishes of the Government in power rather than to the wishes of the company. It is only natural that he would be subject entirely to the ministry for the time being, and that his views would be influenced by the known wishes of the Minister of Mines and Industries of the day. Therefore, this company will be entirely under the heel of politics. There is one point I would like to remark upon with regard to the select committee. The select committee ruled out the leading of any evidence regarding the value of any other iron proposition. No other proposition was investigated and another great hardship was this—that there was only one expert called before the committee who had first-hand knowledge of the management of the iron and steel industry, and that was Major Butler, and the Government have not taken the advice given to them by the one expert who actually managed an iron and steel industry. Major Butler, in his evidence, suggested that before doing anything the ordinary business precautions should be taken and a committee should be appointed to investigate the various propositions in South Africa and decide which of these propositions was most likely to be financially successful. Major Butler did not suggest in any way that he insisted that his proposition was the best one. He was perfectly prepared to accept the verdict of an independent commission of technical men who could decide the point. If the Government are so satisfied that their proposition is the soundest and best proposition-for this country to embark upon, why did not they accept the advice of Major Butler and appoint a commission? If they had appointed the commission at the time it was asked for, last March, that commission could have gone a long way in its investigations, and we should have been in possession of some sound business advice as to which proposition we should take, and whether any proposition was likely to be financially successful with the incubus of having the Government on its back all the time. Another great drawback to this proposition is the position of the railway. Under the Bill the railways have to give the whole of their requirements to this new industry. If the Government are satisfied this new industry would be successful and satisfied they are going to produce iron and steel cheaper than anyone else, why could not they have left it open to the railways to give 50 per cent. of their requirements to other industries, to other steel industries operating in this country who can only get the business by fair open tender. It does not look as if the Government are quite sure of their stroke when they tie the railways up by an agreement of this kind. I say if this company is not financially successful the railways will be made to hand out orders in order to keep this company going, and the ordinary taxpayer of the country, and very largely the taxpayer in the up-country districts, will be made to pay, to keep the concern going, through the railway rates. One or two members, particularly on the other side, have mentioned the question of water in Pretoria, and there was surprise expressed by the Ministers on the front benches that such a thing had crossed the mind of anyone that the Hartebeestpoort dam should be drawn on in order to provide an extra supply of water for Pretoria. Last session, before the select committee on public accounts, this matter came forward. It was a matter of public knowledge that the Pretoria municipality had applied to the Government to allow them to take certain water from Hartebeestpoort dam. I quite agree with what the hon. member for Cape Town (Central) (Mr. Tagger) said, either that the Haartebeestpoort dam was wanted for agricultural interests or it was not. Anybody who agrees it was wanted for agricultural interests should stand up and refuse to allow the water to be used for any other purpose. There is no doubt that when the money was voted for the erection of this dam no one i n this House had any idea the money would be used for quite a different purpose, and that, to provide the necessary extra water required for Pretoria in order to establish an iron and steel industry.

Your people built it to hide the unemployed.

If anybody was hiding the unemployed the hon. members on the other side know much more how to do that than the South African party ever did, arid they can be congratulated on the successful way in which, up to the present, they have been able to bamboozle the country, on the matter.

I do not get my knowledge from Adderley Street.

If you did you would have a little more. The gravest objections I have to this Bill are the socialistic and nationalistic doctrines that are embodied in the Bill, and the, to my mind, very gravest defect of this Bill is the unwisdom of destroying private capital already invested in the industry. I hold no brief for the present industry, but I do say whether it is iron and steel or the gold industry, or any other industry, if you once shake the confidence of the man who is prepared to put up money for industry, that he will not reap what he sows, then the position of this country is going to be very seriously harmed. The Minister has never put up a really sound reason why the Gutehoffnungshütte Co. did not proceed with the proposition. His argument has always been that they happened to be financially worried with the Ruhr position and, therefore, did not proceed with the proposition. He never explained why, if that was the case, they went ahead and developed a proposition in Sweden.

They did not erect a factory in Sweden; they bought iron ore deposits.

That does not answer the question at all. The Minister’s point was they had a marvellously good proposition, but they could not go ahead with it because their financial position was not as strong as they would have liked it to be. When anybody is in that position, they don’t buy something else. According to the Minister, they had plenty of money to buy the iron deposits, but they had not got the money to proceed with this other proposition, on which, I would point out, according to the statement of the Minister himself, they had spent £15,000 on investigations here. Here is a company that has spent £15,000 on investigations, a very considerable sum of money, and yet, after consideration, they are prepared to waste or throw away the whole of that £15,000 rather than go ahead with the proposition. I do suggest that this question does require a little bit more serious argument than simply wiping it away by saying that the Ruhr district was in a very unsatisfactory state at the time.

These people lost. £1,750,000.

Yes, but they had money to buy the Swedish investment.

That was a distinctly small thing.

There is another point I would like to emphasize. One strong point of the Minister of Defence, who was in charge of the Bill last session, was that the German company gave a very favourable report on this scheme and that subsequent to that report the conditions had even improved, the prospects were even better. With water supply, coke and ferromanganese, the Minister was very strong that the position was very much better than was supposed when the experts reported. Now the Minister says this, that a company who believe in a scheme, who have spent £15,000, in simply investigating it, who subsequently find that the scheme is even much better than they thought, still say—

Your own leader attaches the greatest importance to that report.

I am attaching all the importance I can to the report. I say this, that the Government say that that report is not optimistic, that it is rather conservative, and that the conditions have altered since that report, and all those conditions are more favourable to the industry than they were at the time of the report. Ferro-manganese has been found, coke can be procured nearer to the works, and the water position is quite clear. With all these favourable factors the German company kept out of it. What the ordinary man in the street wants to know is why they kept out of it. He wants a very much better reason than the one which, up to the present, has been given by the Minister of Mines and Industries. There is another point which does not seem to me clear at all. It appears to me that if the profits that are estimated to be realized are realized, there will not be any reduction in the price of the raw material to the subsidiary industries. Therefore, the subsidiary industries that are running to-day in the country will not be any better off than they are now. They will not be able to get their product any more cheaply than they can import it. These subsidiary industries are very much exercised in their minds as to what is the future position in regard to them. What they fear is that with this Government proclivity for nationalization the Government will proceed, after swallowing up the present iron and steel industry, to swallow up the subsidiary industries one by one in order to keep their industry going. There has been a strong feeling on the Rand amongst the subsidiary industries that their industries are also in danger. Referring once more to the railways, the whole basis of the contract with the railways is that the prices quoted by the steel industry must be competitive with prices that can be got overseas. I ask the Minister how he is going to get the best competitive prices. He first of all says to the similar industries overseas—

Does the Minister really believe that anybody is going to give him a price under those conditions? Of course not. They will give him any price that comes into their heads and the Pretoria industry will get that price, and the taxpayer of the country will pay for the difference between this price and the lowest price through the taxation levied on the railways. I have no use for this nationalizated form of industry, and I have no sympathy for it. I believe that the duty of a Government is to stimulate private enterprise and take away every impediment in the development of private enterprise. I believe you have to impress upon every individual that what he sows he shall reap, that if a man has the pluck to go into a private enterprise you have to give him confidence that he will get the results of his labour. The tendency of this Bill is diametrically opposed to those principles, which I believe are the only principles which are going to make this country an industrial country, and I believe that this Bill will be a very severe setback to private enterprise, and that the principle of throttling the private industry already working is going to react most deleteriously to any future development on a big scale in this country. Therefore, for those reasons, I believe that this House is not justified in passing the second reading of this Bill.

I approach this question with some diffidence because the projected enterprise happens to be in my own constituency. More than that, I have been personally associated with it as far as it has gone. Without boast of any kind and merely as a statement of fact, it was largely due to my efforts that the final £2,000 was got together to make the £20,000 which turned the laboratory experiment into a demonstration of practicability from a strictly commercial point of view. It was very difficult indeed to get the first £20,000. It was up to somebody to try and get together money enough to prove that while this immense ore deposit had sufficient metallic contents it was also commercially possible to work it. All connected with it did not want really to put up the money. First of all we knew we had 13,000,000 tons of ore in sight carrying a sufficient metallic proportion to make it payable. You must give the Pretorians credit that they put up their money believing they might lose it, just to demonstrate that production of saleable pig-iron was practicable. This was done. When the war ceased and prices fell from £9 a ton to £3 10s. it was only on a large scale that outside competition could be met, but it is to the credit of these business men that they demonstrated it was commercially practicable. Private local enterprise, up to that point, had been a success, but we cannot expect the ironmasters of the world to interest themselves in a competitive industry when one can show and prove to them that they can be beaten. That is the position, and I am sorry to say it is largely owing to cheap labour. I would like the Minister to say something as to the proportion of white labour to black that will be employed as most extravagant statements have been made. While I am at one with those who are for employing as much white labour as possible, we have also to recognize the economic advantage of native labour. Well, what do we now find? Once more, as in the past, there are a number of financiers, not unrepresented in this House, who say, “give us your assets, give us your public credit, and hand everything over to us.” That is a very charming thing for those clever people. What do they really do? They take our assets and our credit, get the public to subscribe the capital, and then start market manipulation of shares running them up and down, and by and by we have the millionaire. I welcome the change of policy by which we have instituted partnership with the State. We have that position in regard to the Premier Mine. We have it, too, on the East Rand. It has proved satisfactory except for one thing—Government ought to have preserved their right to proportional representation on the directorates as they have done in this Bill. I am glad indeed that the State is going to have a majority of directors in this enterprise. The hon. member for Cape Town (Central) (Mr. Jagger) does not mind how much we spend on the port of Table Bay. Yes, of course, that is “another question”! This is the people’s question. If we listen to those opposite who professedly are incurable optimists, but are really unconvertible pessimists, the country would not go ahead at all. We admit that at first this industry may not pay, but in time it will be payable. In any case, if we went to the people of this country and said: “Shall we take on this experiment?” we should get an overwhelming opinion in favour of developing these resources for the country. The people at Pretoria have done their part and are entitled to assistance. The Transvaal provides all our gold; it provides more than half our diamonds; it practically produces the mineral wealth of this country. Is it not entitled therefore to say, “We want a million and a half spent in our province for the further development of its mineral resources.” What of the future? We have certainly in the gold, and possibly in the diamonds, a wasting asset. The basis of the progress of this country is resting insecurely on a vanishing asset. Read the official reports. They are almost alarming. Even though the new State mining engineer holds out better hopes it is only on an average of fifteen years’ prosperous production—and then? Well, we come forward and say build up a more solid asset, the iron and steel that the world wants and which we shall want to a greater and greater extent. Why should we not have enough for export and enough to meet all the present and future requirements of South Africa? Bridges and rails and so on mean an enormous demand. I know it is asserted that this projected mill and the whole of this industry as far as Pretoria is concerned could in four months working supply the yearly wants of the Union. Supposing it did, no one can venture to put a limit to the future wants of South Africa in regard to iron and steel. The modern system of reinforced concrete demands cheap steel and cheap iron, and all we have to do is to see that we have our proven resources developed; to see that the dumping does not go on which merchants welcome They love to have dumping, because they have cheap stuff to put into the market and they don’t care what happens to local industry, and the workers employed therein. It would be very proper indeed for the State to protect itself against dumping competition. In the long run it is the consumer who is made to pay for any temporary cheapness. I hope this House will show it has faith in the country and is willing to put that faith into practice; that we shall be willing to put “South Africa first,” and that many of us may still live to see the wants of South Africa in iron and steel supplied by itself. An increase in the purchasing power of the people is necessary under present conditions. The Minister of Finance says he has no money for necessary police additions, land settlement, or, in fact, any purpose whatever; financiers have knocked fear into him; and the consequence is we have a pessimistic Minister of Finance. If we are going to have a country worth living in, a country of real sovereign independence, we must be more largely independent of the rest of the world for our requirements. There is real need to go in for the development of every possible means of production. I hope the Opposition will not have the face to challenge a vote on this Bill and, for once, they will say that they are quite content to let it pass into law. In committee they may have certain suggestions to make, but let them say that on the general principle they will be willing to assist Government in the development of the country.

The hon. member who has just sat down has argued the case as if we, on this side, were against any development at all of the iron and steel industry. He seems to think that there is no alternative to the adoption of a scheme such as is now before us and absolute stagnation. I do not agree with that. I think it is quite probable that if this scheme had not come before the country and the Government had not made up its mind to force this thing through Parliament we should have seen a fairly rapid development of the iron and steel industry in this country without help on the part of the Government. I do not say the development would have been as rapid as under this scheme, but the risk would be less, and the industry would, in all probability, be built up on a much more stable foundation. We have read speeches during the recess of Ministers; we have not had one from the Minister of Mines and Industries, as far as I remember, who has been engaged in other parts of the world, but I do not think we have had put before us any more solid argument in favour of the adoption of the methods proposed by the Government than were given us during last session. We have asserted certain fundamental objections to the scheme. We objected, first of all, to the Government taking such a large liability. First of all, £500,000 is to be subscribed by the Government to take up what are called “A” shares, and they put £1,500,000 into “B” shares. Some may be preference shares, if the Government so desire, and there are to be debentures of £1,500,000 guaranteed, principal and interest, by the Government. It is perfectly obvious that they can get money on those terms. It is like issuing a loan in London, and the only question is the terms on which it is taken up, and they will, in all probability, be very much the same as those on which we borrow money in London. The terms on which the £5,000,000 were recently borrowed in London have not been disclosed to the taxpayers, and no statement has been made by the Treasury. The newspapers have merely told us the loan has been subscribed, and that now it is at a small premium. Thus there will be a Government liability of £2,000,000 to begin with. It was admitted by the Minister that it is not nearly enough to get this enterprise to the producing stage, and £1,500,000 more at least has to be provided. The Minister told us that if the public did not provide that, the Government would have to do so. It would be extremely interesting if the Minister were able to tell us whether he has made any provisional arrangement for the financing of these 1,500,000 shares. There are all sorts of rumours as to what the Minister is relying on for financial support, and the statement has been made that iron and steel industries are to be started in other parts of the Union. I think it would be a good thing if the Minister would make a statement, and say whether he has made arrangements for getting any support for the provision of the money required to take up these 1,500,000 shares. But there is another factor. Supposing the amount required proved more than the amount provided by the issue of these shares. Those who have had to do with mines know very well it is an extremely common thing to have capital expenditure exceeded, and that more money is required. If it is found that another £2,000,000 are required, and the public do not show any anxiety to subscribe, this country has to find the money, and its liability is unlimited. This is a serious defect in the scheme, and a second defect is that the adoption of a policy of this kind is undoubtedly going to discourage private enterprise in this country. There is the question of the people who are already conducting this industry. As the hon. member for Cape Town (Central) (Mr. Jagger) said the Union Steel Corporation have spent well over a million in starting their industry, and they are going on with it, for it will be four or five years before any iron or steel will be produced by the suggested new undertaking. It is a very doubtful policy to utilize the credit of the State to start a scheme in opposition to an existing industry and for the Government to say to it in effect: “We don’t care about you, but if you like to sell us your enterprise on breaking up terms, we will take you over, but if you should not like that we will break you.” This is not merely a question of being unfair to an existing enterprise, but it is an object lesson to people who may be thinking of establishing other new industries. This explains the fact alluded to by the hon. member for Newlands (Mr. Stuttaford) and to which I think I gave expression last session, that one of the clauses of the Bill—it is Clause 2 (a)—gives the corporation the most extraordinarily wide powers. It empowers the corporation to carry on the trades or businesses of ironmasters, steel makers, steel converters, colliery proprietors, coke manufacturers, miners, smelters, engineers and iron founders in all their respective branches, and to manufacture, manipulate, buy, sell, exchange and otherwise deal in iron and steel. In fact, there is nothing connected with the iron and steel el industry which this corporation cannot embark upon if it so desires. The fact that the Government may interfere in this matter is going to act as a deterrent to people who might be willing to start industries in connection with the working of the iron and steel industry. This is certainly a blot on the scheme. There there is the broad question which divides us from a good many hon. members opposite, although, no doubt, that many of them if they spoke their minds would support our view, and that is whether it is a good thing for a large enterprise which is not a public service to be under the control of the Government and will be in fact managed by Government nominees. The Government takes power to appoint the majority of directors, including the chairman. That gives the Government control of the board. The Minister, no doubt, will say that as Government is putting so much money into the scheme it must have control. I agree that that consequence follows, but that merely shows the inherent viciousness of the original scheme. The probability of this enterprise being efficiently worked is infinitely less under Government control than it would be if it were a private enterprise. In the first place, there will not be the same necessity for the new undertaking to earn dividends, for the Minister says he will limit the dividends to 12½ per cent. The mere fact that there will be no incentive to pay dividends is bound to affect efficiency. It has been argued that the same objection could be laid against the railways, the post office and so forth, but if the railways were under private enterprise the probability is that they would be more efficiently managed. I quite admit that this is no reflection on the people who manage the railways. At the same time it must not be overlooked that the State railways escape a great many charges which fall on private railways. For instance, the Government railways do not pay income tax or even local rates, and in addition, all their imported material comes in free of customs duty. In many respects the railways reap an enormous advantage through being treated as a Government department, but if the expenses which they are now saved were added to their working costs the financial result would be very different. If this is the case in a matter of a public utility like a railway it is more likely to be the case in the matter of a commercial undertaking. This again is a blot on the scheme. There is a further blot. We have been told that the industry is expected to employ 20,000 men—what proportion are to be Europeans and what proportion natives I do not know, but the impression was that they should be largely Europeans. We hope that the enterprise if started, will be a great success, but the fact remains that if the Government is going to employ some thousands of men in one place the probability is that it will not be long before political influences will permeate these men. That, again, will not make for efficiency and economy. The Minister has already foreseen that the industry will be in need of support, so he has put in the Bill a clause stating that the railways are to take as far as possible the products of this industry. This liability is unlimited. Supposing it is found that these wonderful estimates are erroneous and that the cost of production is a good deal more than is anticipated, the Government cannot shut the industry down. If it were a private enterprise, and it did not pay, it could be closed, but a Government enterprise will have to go on producing iron and steel no matter whether the article it produces is greatly in excess of the cost of the imported article. Consequently, the element of competition is going to be weakened and the effect of that will re-act on the efficiency and economy with which the enterprise is conducted. Supposing that the estimates are wrong and that the cost of production is much more than is anticipated, the railways—and I assume the public works—will have to go on taking the products of the industry, and in order to make the position of the industry secure, I suppose the duties on imported iron and steel manufactures will be increased considerably. Then the taxpayer is going to be responsible for the interest on the capital. The taxpayer is going to pay more for the steel and iron, and the taxpayers as users of the railways are going to pay more in rates and fares than they would otherwise have done. We may be told on the other hand that we shall manufacture so cheaply that it is going to be a benefit to the country. We hope if it is started that will be the result, but, judging from the experience of other enterprises, we know at the best it is going to be several years after the enterprise starts producing before it is going to produce at the best rates. Its best efficiency will not be reached for several years. For such an industry as this we have not got in the country the men to run it. We shall have to start importing a large number of men, and that will mean a big expense. We shall have to build up the personnel necessary for this industry, and anybody who has been to any of the great iron and steel centres in other countries will know that in these places the personnel is built up by the experience of generation after generation. The people have been born and bred to a particular industry, and they have the conditions of the industry in their souls. We have not got that, and we have to start it. That constitutes a considerable liability direct and indirect. It would have been far better to let private enterprise bear the burden of the risk than that we shall attempt to start an enterprise on this large scale at this very high cost and by a short cut put ourselves in competition with the great manufacturers in the steel industries. It is a very great risk to take. I hope, as we all do, that our fear that these things will happen will not be realized, but the experience of the world shows these things as a rule do happen, and I feel myself, I am sorry to say, apprehensive that before this enterprise is running in such a way as to be able to produce what is required for the country at a lower price than it can now be obtained at, we shall have gone through a considerable period of financial alarm, and we shall have anxiety to face in the future. I hope it will not be so. The proof that there are defects in the scheme is shown by the fact that the Minister is prepared to give assistance, and that so far we have not seen here the development of the industry on the scale now contemplated. I have heard the story of the Germans and the Ruhr which hardly seems worth considering. It seems to me that if this thing had been so good as appears from the report, the people interested would not have been deterred by the fact that they had lost money on the Ruhr. They would have found others to help them to come in and start this enterprise. If it had been left to private enterprise it would have been built up with the assistance of the Government at a much more rapid rate. It would not have been started on the same scale as under the scheme submitted by the Minister, but it would have started on a more secure foundation and the risk of the taxpayer would have been infinitesimal. For this reason I still think the Government have not been wise in making this departure, and they are running a great risk in carrying this Bill through the House and forcing it on the country.

I move—

I hope the Minister will accept it.

seconded.

I hope we shall get on with the second reading on Monday and conclude it. I have no objection to the adjournment.

Motion put and agreed to; debate to be resumed on 24th October.