I move—

I regret to occupy the time of the House, but I feel that I must move an amendment to this Bill. However, I undertake not to occupy the time of the House for very long. My amendment is—

1. (1) eliminate unemployment by reducing in all industry the hours of work without reduction of the standard of living;
2. (2) secure the nation’s credit, currency and exchange by the institution of a State bank for that purpose;
3. (3) improve the standard of living of the people by removing taxation on foodstuffs and other necessaries, establishing a standard minimum rate of pay for all workers, and increasing old age pensions;
4. (4) more adequately compensate miners’ phthisis sufferers and/or their dependents.”

I commend the amendment to the tender mercies and good sense of the House. At the outset I want to express the most profound disappointment at the attitude of the acting Minister of Finance. It will be remembered that since I last addressed the House on the question of the gold tax, the acting Minister of Finance found it necessary to protest in the most solemn and most emphatic terms, against the methods of the Chamber of Mines. He more particularly directed his resentment to a considered statement issued by the Gold Producers’ Committee over, I understand, the name of Mr. Gemmili, who is unquestionably the mouthpiece of the Gold Producers’ Committee, which is the Chamber of Mines. It is the dominating body of the Chamber of Mines. I share the resentment of the hon. gentleman; it was an insult. It impeached the integrity of the Minister and, through him, that of the Government. As one who has a great regard for parliamentary institutions, I feel that we are all involved in the insult that was levelled against the Government. I, and all those who think with me, naturally differ diametrically in policy with the Government, but we always take up this stand: that the Government’s honour has to be protected and that we must range ourselves behind it in all matters of administration. When the Government expresses an intention, we have to accept it, and I demand from the country that that expression of intention on the part of the Government, whatever it may be, shall be accepted without cavil. Why I am so profoundly disappointed is because the Chamber of Mines is so emphatically administered that it is unmoved by expressions on the part of the Government. In short, the whole atmosphere created by them is suspicion of their motives and intentions. When that has been abundantly borne in on our minds and the mind of the acting Minister of Finance, he takes no action resulting therefrom. I do not mean that he should take punitive action or to take action to cut off the heads of those representing the industry, but arising from all past experience—and this is the culmination of that experience—the Minister should have imposed conditions and demanded guarantees of employment from the Chamber of Mines. My friend the Minister, when he replied in those very reasoned and restrained terms the other night, said, “After all, I or the Government, are not concerned with the Chamber of Mines, but we are concerned with the industry”. But, Mr. Speaker, is that not begging the question? Because the Chamber of Mines claims to be the industry; I have contested that over and over again and I have argued, justifiably, that the industry is comprised of two sections—one who control it and the other who work it. But the Chamber of Mines claims that it is the industry and it frankly admits—I know of no more callous expression—that it is always straining every nerve in the direction of improving the lot of the shareholders and that the lot of the workers engaged in the industry is only incidental thereto. That being so, I regret exceedingly that the Minister did not insist on guarantees, and, in view of the very clear-cut expression on the part of the Chamber or Mines. I say that now, even at this eleventh hour, the acting Minister of Finance should say: “I am satisfied now that I should be betraying the trust of the people if I were to leave it to the tender mercy of the Chamber of Mines to make an effort to decrease unemployment, to expand their industry, and to open and develop new gold-producing areas in the interests of the country”. The only ground for the continuance of the gold mining industry, or any other industry, is that it may provide avenues of employment for the citizens of the country. Otherwise, it is no use to us, and still less is it of use to us if it is built up on slave native labour, and not on free white labour of a comparatively high standard. Having said that, I desire to say no more with regard to the gold mining industry. But I say this, that the Minister is in an unfortunate, an invidious, position, and I feel that if he does not take drastic action, if he does not demand guarantees, in short, if he does not appropriate the whole of this gold mining premium along the lines I have suggested, namely, the normal output of gold, then he takes away from himself the only opportunity of using this money in the interests of the country. Because the Chamber of Mines never will. That should be taken as an axiom. It requires no proof. Last week was the culminating point of the proof, and now it is an axiom. I call upon the Gov- eminent to eliminate unemployment by reducing the hours of work. This is a subject which requires hours of time for its elucidation. There is not the time, and I will content myself with the mere enunciation of its requirements. But I would put this thought to hon. members, that it is being admitted by all thoughtful men and women who are considering the economic life of the world, that unemployment, so far from being ameliorated, must continue to increase. I think my friend the Minister of Labour will admit that to be a fact. I want to pause here to congratulate my friend the Minister of Labour upon his evident desire to get to the kernel of things, and if he wants to have conversations with myself on this world-wide matter, I shall be very happy. All our methods of production and manufacture are being more and more controlled by machinery, doing away with the human factor. Unfortunately, with their shortsightedness, those who control our operations seem to think that they can dispose of human material and still make the profits that they set out to gain. Quite the reverse happens. You are curtailing your consuming market, and as a natural corollary any further increase of unemployment must result in less and less of the goods produced being consumed. You are rapidly approaching a complete breakdown of the system. That is inevitable. There should be a realization that machinery has come to stay, and that machinery will continue to be improved, and that new forms of machinery will continue to be devised, all with the result of producing commodities at a quicker rate. I would not prevent it for a moment. I have no desire to prevent the onward march of machinery. But we have to provide for the consumption of those articles, or they are waste products. To that end, I say that we should immediately decide that this labour-saving machinery shall be really labour saving, and that we shall use it in the interests of mankind. South Africa is peculiarly appropriately placed to be able to give a lead to the rest of the world, and institute a progressive reduction of the working time of those engaged in industries until all are employed. The whole object of manufacture and production is for consumption. Otherwise, why do it? It is no use, as we have found over and over again with our mealies and various other commodities, to produce them if people are not able to purchase. Let us take it as read that the object of production is consumption. Then we have got to provide means of consumption, and, in order to do that, we must see that ali our citizens are employed, and the only way to do that is a progressive reduction of hours until they are all employed. I have done with that in brief. I will take another opportunity of endeavouring to inculcate in the minds of hon. members, and of the country, the necessity for a complete realization of this economic problem that is confronting us. My second point, and perhaps even more important than the one I have just dealt with, is to secure the nation’s credit, currency and exchange by the institution of a State bank for that purpose. King Charles’ head? I am used to having that hurled at me, but I will submit to all thoughtful persons that the real reason for the economic evils we have is that we have allowed the nation’s credit to fall into the hands of private owners, who only use it as taxgatherers. In other words, they lend us, as a nation, and they lend individual members of the nation, our and their own credit —not the bankers’, not the financiers’ own credit, hut the nation’s and the other peoples’ own credit, and they demand a return for it. By that means they have gradually wormed their way into the control of industry, so that they decide whether this or that industry shall flourish, or whether this or that industry shall exist at all. We have been singularly lacking in information of late of the very important enquiry that is being made in America into the J. P. Morgan banking and financial operations. It was regarded as a sensation, and the press, local and otherwise, splashed it in their contents bills and in their columns at first, but there has been a singular paucity of information with regard to it since. We have read enough, however, to realize that this is a most important enquiry. I would congratulate President Roosevelt upon his strong and decided action to free America from the domination of big finance, and of that close corporation which has worked its way into industry, and is con trolling it to the detriment of the people of that country. Our situation in South Africa is a replica of that in America. It may not agree in all its details, but in its methods of application it is exactly the same, as well as in its results. Let me deal with its methods of application. I said that these banking institutions —and these institutions are only the instruments that the controllers of finance utilize— issue to the country with which they happen to be concerned at the moment, and its individuals, the credit of the nation, and they could not issue that credit unless their methods were acquiesced in. I will give you a concrete example of what I mean, which I think will do better than all the argument to bring home to hon. members the really terrible state of affairs that we have reached. The Minister of Finance here, in this Parliament, last year announced two very important facts. One was that quite apart from our national debt, which is constantly increased, we were in the position of being in a continual state of overdraft, as a nation, to the banks—the Reserve Bank at the moment, a semi-private institution. In the course of three or four months the South African nation had overdrawn its account with the Reserve Bank by over £4,000,000. That is one fact of an important character he announced to the country. The other fact was that at the time we borrowed that £4,000,000 or more, from the Reserve Bank, the Reserve Bank had not got a penny-piece in its coffers. I am quoting, not the exact words but the effect of the statement made by the Minister of Finance. We borrowed from that bank over £4,000,000, and they had not got a solitary silver sixpence in their coffers. So far from their having any money in their coffers they had lost all their reserves to the amount of £800,000, and they had dissipated half of their capital. How did they lend us that money? By merely writing the amount in the ledger.

They had reserves.

No, their reserves were gone. My hon. friend did not listen to the Minister of Finance. It is no use burking the issue and trying to gloss over it. It is a fact that bankers create credit by writing it in the ledger, and we make it effective by drawing cheques thereon as if it were money in the bank. The Minister will not combat that statement. It is very well known now, although it was hidden in the past. A nation draws its cheques, pays its creditors, and its public servants, passes it into the public accounts, the cheques are drawn on this, the people endorse them, pass cheques, the whole circle is gone through, and not one solitary pennypiece is used throughout the whole gamut of the transaction. What is really important in the matter is this, what we borrow in paper we have to pay back in cash, and in addition, pay interest, mark you, for the accommodation. I say we are fools indeed if we do not use our own credit through the medium of a state bank, create the amount of currency which is required for the ordinary normal working of the ensuing 12 months, issue that, and destroy it when it has done its work. We would thus have real wealth in the country, the manufacture of primary and secondary products and articles and the consumption of them by our population. I need only point out that we have passed, during the last two or three days, estimates of £11,000,000 in interest alone to be paid by the 1,750,000 white people of South Africa, and we are keeping a financial rope around the necks of the people of South Africa. I say it is time we cried a halt to this stupid way of conducting our financial affairs. On the figures of ten years ago, I made an estimate that already the Railways have paid back no less a sum than £100,000,000 in interest alone— and we still owe every penny of the capital. If that is not foolishness, I have yet to learn what foolishness is. The acting Minister of Finance, whom I regard as a man who is, at all events, reasonable, will not say this is rubbish or use that once maligned word, socialism, because he realizes, as I do, that this is a matter of hard practical fact, and not something that is just visualized in the atmosphere; not something that has nothing tangible about it. It is enormously practical; and President Roosevelt realizes the danger into which his country has been drifting; first of all, because of the opportunities and powers it gives those who control our national finance to decide our national destiny, in the first place, and year after year to deal with the nation with which they are dealing financially in a way they have no right to deal at all. I do not propose to develop that argument any further at this stage.

Hoor, hoor.

I am not talking to the hon. member. There are some unthinking members in this House, and I hope they might at least pay a tribute to hon. members who express this point of view, and listen to these views, if they are within their mental capacity, and trying to understand and thinking about what the hon. member is saying. When they do so calmly and collectively and without prejudice they may, at all events, realize that there is something in the arguments I have been advancing this morning. Now as to number three, I ask the House that there shall be an improved standard of living for the people by removing taxation on foodstuffs and other necessaries. This takes various forms, and it will be remembered by the House that year after year we have been making some imposition on the cost of the foodstuffs of the people, either by means of an excise or by means of customs duties. It is of the latter that I desire to speak more emphatically; that is, the hidden method of taxation utilized by means of these duties. These have grown into our Government’s financial life as something that has come to stay, and it is now becoming not so much a protective method as a revenue-raising method, and, as such, it is bad in its incidence, ineffective in another direction, and above all things, a supremely costly method of raising revenue. For every pound you impose in customs duties the ordinary citizen pays at least £1 10s.; for this reason, that the importer, naturally being a commercial man and a profit-maker, makes his profit of 25 per cent. or 33⅓ per cent., as the case may be, on the landed cost, and that cost includes also freight and insurance, and then on the customs duties imposed by the State. The retailer has to have his profit in turn on the original pound; plus the profit the wholesaler is taking on the customs duty, plus his own profit on the two combined; and it is quite reasonable therefore to claim that the consumer has to pay 1½ times the amount of the original imposition. So, for the Government to get £8,000,000—I understand you expect £9,000,000 this year—the people have to pay £12,000,000, and it is too rough and ready a way and a cumbersome way of raising revenue and it makes the people pay through the nose. I want to remove that method, and to devise other ways of raising money. I have indicated in the past how we can do so. Another method of improving the standard of living is by way of establishing a standard minimum rate of pay to all workers. I know the House is getting tired, and I will not go into that further now; I have done so on many other occasions. Then there is the increasing of old age pensions. My hon. friend and myself have put this as part of our amendment for two reasons. One reason is that, from our experience—and we anticipated this—we find that old people who have done their whack for the country in one form or another, receive such a miserable pittance, or it is made to them, that they are unable to live under such conditions as can reasonably be associated with decent human beings. Well, we want to stop that. When we remember that we have been discussing whether we should put the Chamber of Mines on more velvet than they have been, and whether they should have £14,000,000 or only £10,000,000 additional profit, it comes as a very painful contrast to have to visualize the fact that many of our old people have to live on less than 10s. a month, and that some are getting nothing at all, and are entirely dependent on charity. I want to improve their standard of living by increasing the pension for all old people, irrespective of whether their children can assist them or not, and making it not less than £10 a month, which is little enough in all conscience, and which would be a godsend to the vast majority of them. They would be able to play their part in the distribution of money in the country, thus contributing very considerably to the general prosperity. My fourth point is better provision for miners’ phthisis sufferers and their dependents. There is a feeling of resentment in the country that the requirements of those people are not more adequately dealt with, and those whose father or husband has died from miners’ phthisis have been living in hopes, for the last 10 or 12 years to my certain knowledge, and had hoped that with this wonderful accretion of money, due to a stroke of the pen of the State, some of that money would be used to lighten some of their declining years. One of the reproaches that I have to hurl against the Minister and his colleagues is the fact that they have accounted their time of such value, they have regarded their comfort and their office work and the exigencies of administration as being so great and powerful and overwhelming as compared with the lives, the illness, and the suffering and the worry of literally several thousands of people who have practically given their lives to the development of an industry which is profiting so greatly to-day as the result of our changing our currency system. I have been as concise as I possibly could. I believe this amendment epitomizes the necessary acts of the Government in order to make this a happy country, and in that spirit I move it and ask the House to adopt it.

I wish to second the amendment. There is little that can be said except to express the view that the country as a whole will be bitterly disappointed with the efforts of the Coalition Government during this session, and I suggest that many members, particularly urban members, will have great difficulty in explaining to their constituents what has happened. After the election promises that have been given on many of these subjects by the urban members, I am afraid their explanations will be scarcely satisfactory to their constituents. The acting Minister of Finance made reference the other day to the attitude of the hon. member for Benoni (Mr. Madeley) and his desire to secure sufficient funds by printing notes. I would like to draw the attention of the Minister to the references made by the hon. member for Pietermaritzburg (District) (Mr. O’Brien) in discussing the position of the Reserve Bank. Is it not a reasonable thing to suggest that it would be better for the State to carry on this business of printing notes, if there is a profit in it, rather than allow it to be done by a semi-private bank? Notwithstanding the thousands of people who are to-day living on or below the starvation line, there is not the slightest effort made to alleviate the position with regard to the taxation of foodstuffs, and I have no hesitation in saying that it is a disgrace to this House that we should rise without having made some provision in that respect. In connection with the need for improving the position with regard to old age pensions, may I be permitted to explain to the Minister that he entirely misapprehends the feeling in this country in that respect? He stated the other day that definite enquiries had to be made as to the possibility of children supporting these old people. It is just that very dependence that we feel ought to be removed. The old people having worked for and served this country all these years are definitely a charge on the State. The State has a duty to perform and irrespective of family considerations, the State should accept that duty and improve the position regarding old age pensions. Great profits are now accruing to the gold mines, but the position of the men who have worked so hard, who have given their health and their lives to create that great prosperity has been entirely ignored. No section in this country can feel any satisfaction whatever in leaving that position as it stands to-day. I am quite satisfied that nothing more can be done in this House, except to express a feeling of grave disappointment and to say that the people will one day be roused and the Government will be called to account for the position they have taken up.

I will also be very concise, but I feel that if I did not voice the few points that I intend bringing before the House, I should be failing in my duty. In the first place, I would like to draw the attention of the acting Minister to the fact that owing to the very involved nature of the mines taxation, and to the publicity and agitation that have been stirred up by the press, and by disappointed speculators on the Witwatersrand, there is a great deal of uncertainty in the minds of the unemployed and the dependent section of the Witwatersrand as to what extent the mines will absorb them, under these new taxation proposals. I feel it is my duty to the House and to the country to bring this to the notice of the Minister and to demand from him an explanation and an answer to these people to satisfy them as to what extent they will benefit under the taxation proposals. There has been no direct means brought forward for the mitigation of unemployment. It has been argued that the £750,000 voted to the Department of Labour and the £200,000 for housing schemes and some odd thousands here and there, bringing the total up to about £1,000,000, has been ample provision for the alleviation of unem- ployment. I would like to draw the attention of the House to the fact that none of that million pounds is direct mitigation of unemployment, for the simple reason that £750.000 has been voted in the form of subsidies, and is subject to municipalities and other local bodies employing labour. On the other hand, I agree with the view of the Government that unemployment is not entirely a question for the Government to shoulder. I consider it to be a national question, and the municipalities and provincial councils should take their share of the responsibility. If this amount is voted by Parliament in the form of subsidies to these local bodies, then why should there not be some system to stop the influx from the country into the towns which takes place when work is thrown open in the towns? The farmers are receiving a very nice share of nearly £7,000,000 to mitigate their position. Granted it is only to keep them on the land, but this is being done in winter time when none of these farmers are working or can work. Immediately the municipalities or provincial councils take advantage of the subsidy and open work in the towns, you have these very farmers who have already received nearly £7,000,000 coming into the towns and having a jolly nice bite at our £750,000. Consequently, the actual unemployed on the Witwatersrand arc not getting anything at all. If you could guarantee to stop the influx from outside, at the same time as you give these subsidies, we would admit that to some extent provision was being made for the unemployed on the Rand. If the influx could be stopped, these municipalities would be only too pleased to do more for the unemployed, but we cannot continue in the way things are going on now. I want to present one method by which the influx could be dealt with. If you grant assistance to farmers, as you have been doing last year as well as this, it should be done on condition that they will not leave their farms, but that they will work them. That will put a stop to farmers taking a share of the Government’s generosity, and also taking a share of this little bit of generosity shown to the Witwatersrand. It is a shame, it is duplicity. The position is acute. It is only fair to say to the farmer: “If I am to assist you to remain on the land, then you must remain there.’’ Apart from voting this money, I think it is time that the Government seriously considered empowering municipalities to regulate and decide the ratio of natives and coloured in the towns, so that when municipalities throw open work for open competition by coloured and natives in the towns, that is to say, employment in which Europeans could be fittingly engaged, they should be able to regulate the position either by turning the natives out of the towns, or preventing their influx. I do not want to advocate that the natives should be just pushed out of the towns, and not looked after. We have to look after the native, we are responsible for him. If there are not settlements for the natives now, why does not the Government consider making representations, for the incorporation of Bechuanaland, and settling natives there?

There is more poverty amongst natives in Bechuanaland than anywhere in the Union.

I would also like to make a few comparisons with regard to miners’ phthisis victims. There have been 16,565 miners’ phthisis victims, since 1902, and 66,264 dependents of those victims. Every year 375 deaths have occurred, due to exposure, undernourishment, under-employment and suffering. This is one of the most cruel cases which can be brought to the attention of the House. These people who have developed these mines have sacrificed their lives; after dodging falls of rock and escaping being blown to pieces by dynamite, these people eventually have to die by asphyxiation, by the choking of their own lungs, and apart from that they have to die a death of hunger, suffering and misery. I cannot force home too strongly the great suffering of these people. I cannot bring these matters too forcibly to the notice of the House, and I shall continue to do so as long as I have breath in my body, or until the necessary relief has been provided for these people. Of the 66,250 poor white dependents created by the gold mines of the Witwatersrand, created by the industry which is held up as the backbone, as the wealth, of this country, 36,861 are homeless and breadless. I say emphatically that the mines are doing more damage to the living soul of this country than they can ever compensate for. The large majority of these people of whom I have spoken go begging about the streets of Johannesburg, hat in hand. Let hon. members go to Johannesburg and they will see them, they will see them meet together in small numbers and go round asking for succour. These 36,861 homeless dependents of miners’ phthisis sufferers are looked upon to-day as constituting a mere bagatelle. And of these 66,250 victims of the mines—because victims they are in the real sense of the word, only 1,064 are employed by the mines and out of that the mines are employing 146 who are actually in receipt of pensions. The balance of these people are thrown on the shoulders of the State. Of the 7,804 victims, 6,740 are thrown on the shoulders of the State. Now let us pause to see what the result is. The State and the municipalities are employing a bare 240 at 6s. per day doing the most strenuous work that can be expected of any man—they do pick and shovel work, exposed to cold and all the inclemency of the weather. These people are undernourished because they have not sufficient money to buy the food to build up the strength which they so greatly need. Then we find that in the same period during which the mines were responsible for plunging 66,000 families into misery and degradation, they have made not less than £333,250,000 in profits. Óf that, the State has received the meagre portion of 17 per cent. and of that 1.8 per cent. has been spent on the relief of miners’ phthisis sufferers. The State has to carry the 6,740 souls who can be better described as wasted products of the State and, apart from that, the mines contribute to the coffers of the State only 17 per cent. of their £333,250,000. These are big figures, they are telling figures. I have always heard it said that the mines are the backbone of the country, but at the same time I have heard it said, without anybody contradicting it, that the mines are the property of the State. We know we have been told that the mines have removed one Government and have substituted another, and still we find that only 17 per cent. of the profits of the gold mines have found their way into the coffers of the State. Where, I ask, has the other money gone? I shall tell you—into the hands of a comparative few. No wonder that these comparative few can freely go to-day and agitate the multitudes against the new taxation proposals of the Government. The Chamber of Mines and their brokers have misled the people who have small savings in the bank, they have induced them to buy shares at a time when coalition was in the air, inspiring them with the hope that they would make a small fortune. And now again that self-same Chamber of Mines is inducing those people to sell at a low price so that the chamber may buy and when the time comes may be able to sell again at a high price. Do we hear of these profits made by the chamber? It is patent that this money has gone into the hands of the few who have become hell gamblers just in the same way as those people whom the Minister is legislating for in the Bill that we have just passed. This Chamber of Mines which is responsible for all our misery has the right to get up in this House and tell us what we are to do. Oh yes, they are amply represented in this House. They are amply represented everywhere. They speak through the press and through every channel at their disposal and condemn every medical discovery, and they even encourage those who are starving in the streets of Johannesburg to petition the Government to give up their good intentions in regard to their taxation proposals. Hundreds of thousands have been lost on the stock exchange and the people who have lost their money on the stock exchange have also made their contribution to the Chamber of Mines. Thousands of people have laid their lives on the doorsteps of the Chamber of Mines. Only the other day I saw a miner’s phthisis sufferer run into a shop, gasping for breath, asking for a glass of water. He was one of the victims of that Chamber of Mines. I maintain that we are giving them too much latitude. If the Chamber of Mines had said: “We shall use that money to develop other industries to take the place of the mines when they are gone,” I would have said, “Very well,” but they have failed to do so, they have failed to do their duty. I have made my contribution to the Chamber of Mines, through the loss of my health. And what do I get? I am boycotted everywhere, just the same as every other miner’s phthisis sufferer. The Chamber of Mines makes a point of it, to choose the best brains and the best physiques, not to represent them in Parliament, but to develop their mines. If there had been no gold mines, there might have been a very different House of Parliament to-day constituted of men who are to-day lying in their graves, dead, because they have helped to develop that chamber and its mines. And all the money, all the profits, go into the hands of a few. What always surprises me is that when anyone gets up here to plead the cause of the Chamber of Mines, it is always done on the poorest of excuses. I shall keep my promise that I will not take up much of the time of the House, but since the Minister of Mines has failed to reply to the same representations which I made before in the budget debate, I hope he will at least condescend to reply now.

I am also sorry that I have to delay the House. As I have to return to my constituency, however, within a few days and as I have to give an account in connection with the solution of the problems that we were called upon to tackle when we came to Parliament, I have to do so now. The problems which should have been solved are those of the farmer who is a tenant, of the person who sows on shares, of the farmer who has already been driven off his land, of the farmer who has not merely got a first bond on his farm and of the farmer whose bondholder is the commercial bank. All those people will come to me and ask me what we have done. Then there is the farmer who has been assisted in accordance with the Farmers’ Relief Act and who has to pay a high rate of interest; there are the large numbers of unemployed and the people who have bought properties in the towns. Seeing that those people will come to me, I do not want the Prime Minister to reproach us, who have made our requests here, that we put our requests with the object of creating false hopes or that we are simply talking with the intention of playing up to our voters. We do this because high hopes have been raised in the hearts of our constituents. When we broke up at the end of the last session, we said that we would put the party fight on one side, and that we were going to have only one object in view and that was not to let the people out side suffer any longer through party squabbles, but that we were going to provide prospects for them for the future. Great expectations were cherished, and had it not been for the great hurry with which matters were forced along, I would possibly not have waited so long in coming forward with those requests. I desire, however, to put a few questions to the Minister of Agriculture with a view tn securing some information on matters which come under the Loan Votes. During the consideration of matters in committee, I was unable to secure the opportunity of putting these questions. I wish to know what procedure is to be adopted to help those people whom it is proposed to help. There is an amount of £650.000 for tenant farmers and for indigent farmers. It is not yet clear to me how those people are to be assisted by means of that money. I am sorry that it is not yet quite clear to me, but I came to this greatest economic and monetary conference created in the Union in order to get that information. This Government has been approved of by the public outside. I had thought that we would have given time and attention to the distress and to the needs of the people. The hon. member for Zululand (Mr. Nicholls) spoke about the budget as a financial budget which is going to balance, but he does not call it an economic budget. He places all the emphasis on the financial side, the monetary side. I prefer the translation of “financial” to the translation of “monetary” Financial laws are, however, departed from by the measure that is being taken to reduce interest on farm mortgages. In regard to the reduction of interest I am not, as I have already said, as optimistically disposed as the hon. member for Oudtshoorn (Mr. le Roux), who tells us that half of his farmers will be benefited by it. It is only in respect of first bonds that the interest is being reduced. In addition to that an amount of £1,500,000 is being made available, which is looked upon as a subsidy on the interest on the total burden or mortgages of about £100,000,000. Bonds are being called up: to-day I have received information from my own constituency that within the last few days no fewer than six bonds were called up. The calling up of bonds is therefore distinctly going on. Those bonds are being called up because a certain amount of money has been placed at the disposal of the Land Bank to redeem certain bonds. If those bonds are called up, those people can apply to the Land Bank to have their bonds taken over. I have on a previous occasion pointed to the false basis of value on which those bonds were given out in the past. These are bonds which in most cases rest on the progressive parts of this country, and it is not merely the bonds that are on those parts, but there are other burdens as well that have been imposed on those individuals. With the best intention in the world the Government will not by means of this assistance achieve the objects which it has in view. In our economic life the other question also comes to the fore, the great factor in our monetary system, and that is our banking system. I am referring to this in order to show that the banks have contributed to impose those heavy, or rather unduly heavy, burdens on our farming population, and I want to show that it is to the credit of our banks that in consequence of the coki economic financial policy pursued by them in the past that none of the banks in South Africa was forced to close its doors during the depression. The South African banking system was so well organized that it was never found necessary to withdraw investments, except just before we left the gold standard, but that was a so-called “run” for speculative purposes. Furthermore, we find that they have so arranged their banking system, that they had as the greatest factor for the provision of credit facilities, a larger amount in circulation among the population than the biggest holders of first bonds. In spate of the small capital of their own which they had at their disposal, they maintained the confidence of the investors, and they succeeded in exploiting the people who wanted to develop the country. Although we have passed through a period during which there was only one industry in the country which could make an existence, viz., the mining industry, while all the other industries were making losses, the banks continued to show profits. We also found that when South Africa was driven off the gold standard, the banks still had about £8,000,000 at their disposal for distribution, if they had been prepared to do so, but we only found that after we had gone off the gold standard, they had nothing at their disposal in South Africa. I am not saying this with the object of attacking the banks, but I wish to point out what our banking system is responsible for, and I want to ask why the banks should be protected in those circumstances. Cannot we try by means of a commission or by some other means to get relief for those people who owe money to the banks? I am referring to the reduction of interest on overdrawn accounts, which the Prime Minister spoke of last night and for which the hon. member for Albert (Mr. Steytler) and the hon. member for Newcastle (Mr. Nel) have pleaded. The banks have seen to it that they have good security, and we find that in the past year— I am particularly referring to the commercial banks now—they have taken up bonds as further security and that they are now busy calling up those bonds. In my constituency I have definite cases of farmers who have been driven off their farms, where the first bondholder was a bank and where the second and third bondholders simply had to suffer the losses. Those farms are now being taken over by persons who can again take up those bonds with the banks. In those circumstances I ask that something should be done so that an arrangement may be arrived at between bondholders, creditors and investors on the one side, and the debtor on the other side. I feel that the land has no value without the farmer. It is true that the land is there as security, but it is the man who cultivates the land who makes it valuable. The same thing applies to any other undertaking, the value depends on the honesty, driving power, spirit of enterprise and sound policy pursued by such a person. This economic factor which is of greater value than the monetary factor gives its value to the land and makes it possible for the land to produce its interest; the land itself cannot do so. As the honesty and the spirit of enterprise of the farmer are still the same as they were when in the first instance he incurred his liabilities, he should be given the chance of remaining on the land, even if the market value of his security has dropped. Eventually we shall have to arrive at a revision of market values, and I am convinced that this will happen, as a consequence of which the rate of interest will also be reduced. I agree that reduction of interest cannot be achieved by legislation, and I do not expect that to happen, but we have to try and achieve the same thing here in South Africa as what the World Economic Conference is trying to achieve. That is a reduction of the basis of values on which we work. When I speak here about a revision of a basis of values, I notice that the Minister of Finance at the Economic Conference has already spoken of devaluation. Devaluation as such is essentia], it is what I am calling a revision of the basis of values, because by that means we can bring relief in the burdens resting on individuals who otherwise will not be able to meet their obligations. To-day it is practically only the possessor of a first mortgage who has security and not the possessor of the second or third bond. We must not try and improve the position at the expense of only one class. When the bonds were entered into, everybody had reasonable security, and everybody should get something and if necessary surrender something. One class should not be asked to sacrifice everything so that the one section shall get the full amount in respect of which the bond was given. And this will be achieved by means of devaluation. I have been called a Utopian before, because I pictured a restoration of economic conditions. But in spite of this I want to make an appeal to the Union as a whole, I want to appeal to creditor and debtor alike, so that both shall fairly and reasonably meet each other. I want to appeal to the Chamber of Mines to play its part willingly in these days of difficulties, seeing that the mines are making millions of additional profits, and seeing that the Government and the mines are the solvent bodies in our country. Let them all help to restore our population to that condition where it can stand on its feet again. Do not let us allow a condition of affairs under which, while rich treasures are coming out of the mines, another section of our population is going under. If we should become a people without fixed property, we should be opening the road to bolshevism. An hon. member said last night that if we were to look at what other countries are doing we would find that President Roosevelt in America had suggested that “reducing rates of interest advances an assurance for the future” was a means of restoring the position. There must be a revision of values in order to ensure the future. We gave £4,000.000 to the farmers to help them, and it did not help them; a year later the farmer was in exactly the same position, if not in a worse one. Temporary assistance in the long run only leaves us in the same position. I feel pessimistically disposed in this regard as to the assistance which we are rendering. I was always an optimist and I have always believed in right and justice. These are conceptions that are held in high esteem in the country in which we live, and I still hope that seeing that one section of the population is receiving certain privileges we shall not allow the other section to be submerged. I had first intended expressing myself in a different way on this Bill, but I do not want to say or do anything here that will prejudice any scheme which may assist the people. I only wish to bring those matters to the notice of the Government for their consideration during the recess, and in the meantime we are satisfied. If effective measures are not taken we shall find that hundreds and thousands of farmers will go under, and not merely they, but those who are dependent on them in the towns and villages will also go under. Do not let the Government rest content with what is being done here, but let it go out of its wav to do more.

I should like to put a question to the acting Minister of Finance. He has made concessions to the mining capitalists in regard to their objections to the manner in which they are taxed by the Government. He has also promised that the Government will keep the taxation on mining profits within certain limits for five years. I want to ask him whether he has done this after consulting the Cabinet? I also want to ask him whether he has consulted the Minister of Finance on the subject, before the latter’s departure for Europe, because the agitation engineered by the mining magnates had been started even then. I am of opinion that it was a mistake to make a member of a. Rand constituency Minister of Mines and this action has been aggravated by appointing him as acting Minister of Finance. One should not place a wolf in the position of shepherd. I am not saying this because I consider the Minister to be dishonest, or because I have a small opinion of him. If I were to choose a member of the Unionist party to make him a Minister, my choice would also have fallen bn the hon. member for Yeoville. But I would not have made him Minister of Mines. A member has to attend to the interests of his constituents. The hon. member has already been threatened by some of his constituents that he would be asked to resign if he does not pay sufficient heed to the agitation. And he has listened to them. He has agreed not to take more than £6,000,000 out of the premium of £19,000,000— and I believe that that premium in fact is £21,000,000.

That is not so. The tax will amount to 50 per cent. of the profits.

I am speaking of the extra profits, I am speaking of the premium and not of the ordinary profits. On those profits I know the taxation remains unchanged. The Government calculated that they would get £6,000,000 out of that premium by imposing the tax on a certain basis. According to this basis, however, the Chamber of Mines has discovered that the amount of £6,700,000 would be reached and it cannot be denied that the Minister thereupon promised to let them off that extra £700,000.

No.

I am quoting from the Cape Times. That £700,000 is not merely made a present of to the mining speculators, but they are allowed—and I am again referring to the Cape Times, a paper which surely will not exaggerate the case against the mines—that the concessions made by the Government to the mines still leave an extra amount of £7,500,000 to the mines to be used By them as they please, as additional dividends if they so desired.

I wish to draw the hon. member’s attention to the fact that there is a special Bill on the order paper providing for these excess profits.

I am of opinion, and I am entitled to discuss the matter at this stage, but if you prefer me not to do so, then I shall remain silent. The estimates would have read totally differently and they would have been much more favourable to the country if the assurance, which Ministers gave to the public that the country would get the excess profits of the mines, had been given effect to.

Who said that?

I inferred that, interalia, from the speech of the Prime Minister at Benoni. And did not the Minister of Finance only recently state that the premium belonged to the people? It was a profit secured only as a result of our departure from gold. I wish to be liberal towards the mines, and I do not want to take the whole of the premium for the people but I want to take enough to be able to meet the people in many ways. The farmers are taxed.

What taxes are imposed on the people this year?

There are no new taxes, that would be too bad. But the existing taxes remain. Is any provision made, e.g., for special concessions to the provincial councils? Is there any chance of the land tax in the Cape Province being reduced? Relief can be given in any respect if we only avail ourselves of the excellent opportunity offered to us by those unearned mining profits. But when I talk like that then I hear “dat vrye volk.” I those yappers and others screeching and screaming against me. There was a time when the mines had comparatively few advocates in this House. To-day they have very many, but I had half expected that. In several of my speeches during my election campaign I said that coalition would have its disadvantages as well as its advantages, and that the restoration of the economic position would not be one of those. Coalition has been brought about by means of the mining magnates, and would those people have acted as they did if it had not been to the advantage of their pockets? They knew quite well that the Nationalist party Government would tax them higher than a coalition Government. Without financial resources the Government can do very little. But I had certainly thought that we would have got more out of the mines as now appears to be the case. The object of my rising here, however, was not to deal at length with the question of taxation. I only wanted to put certain questions to the Minister and I hope he will answer those.

I have been a member of Parliament for many years now and during those years I have seen several Governments. We have heard here from time to time what will be done to improve the condition of the people, but so far we have not got beyond the discussion—the action has been lacking. Yesterday we again had the reply given to us that this Bill provides for the relief of distress given to the farmers to help them over their difficulties. I am very pleased that the farmers will, as a result, get a little help, and I must say that I do not know what would happen otherwise, although I am certain that a certain section of the farmers which should be helped are not being helped. My point is that the farmers are helped from time to time when they are in distress, but it does not lead to anything to place a person on a farm and then to tell him that he has to carry on his farming operations and to assure him that we are only going to help him when he is in dire distress. We must try to let them stand on their own feet from the very word go, and we must attempt to make men of them. Governments of the past have not done this, but the present Government is in a strong position. And because the Government is in a strong position it has tackled certain matters and I have no doubt that it will carry on with those matters. At the moment, however, we have the premium as a result of our departure from gold, and it cannot be denied that this premium belongs to the State. As it belongs to the State, I am of opinion that the Government has not taken enough of it. We have in this country two backbones, we have the farmers and the mines. The one stands solidly on its feet, but the other one should and must be helped. We can only tackle matters by dealing with them on a comprehensive basis. If we fail to do so, we shall have to avail ourselves to an ever-increasing extent of quack remedies and more and more farmers will be driven to the dorps, a fact which is not to the advantage of farmers nor of the community in South Africa. In regard to helping the farmers, I wish to point out that a public meeting was held in my constituency and it was said that in the opinion of those present the van der Horst scheme was a first-class scheme which should have the consideration of the Government, and if the Government could improve on that, or could substitute something else in its place, the people there would be satisfied. The matter must be dealt with on its merits. Farmers should not be helped merely when they are in distress, but we have to show farmers how they must set about matters in order to avoid their getting into difficulties. If we do that they will remain on their feet. Another point which I wish to refer to is in connection with the tax on whisky, which the Minister has withdrawn. As a matter of fact we are imposing a much smaller tax than is paid in England itself. Nobody derives any advantage from the reduction because the consumer does not pay 1d. less. To us it is not merely a question of the £29.000, but it is a question of principle, because we, as wine farmers, are being ruined, and, notwithstanding the fact that we are being ruined—a happening which everybody can anticipate—the importation of whisky into the country is being encouraged in exactly the same way as before. May I explain to the Government that if they do not help the wine farmer next year by some measure or another, be it a measure to relieve him of the Act imposing all sorts of restrictions on trade, and on his products, be it in the form of a different sort of assistance, thousands of wine farmers will be driven off the country into the towns and the dorps, as they will say that their only opportunity of making a living is in the towns and the dorps. These matters should be considered by the Government during recess and I hope that that will be done as the position is critical. We know what has happened during these days of droughts, we know how the sheep farmer has fared. I can assure the Government that things will go even worse with the Western Province if help is not extended to the wine farmers. Another question I wish to discuss is that of unemployment which has to be tackled and solved. Governments of the past have done a great deal to dam up our rivers and to turn out the water in such a manner that soil has come under irrigation where people have been settled. I am pleased that more money is being voted now for the construction of dams and for the prevention of soil erosion, and at the same time to provide work in that way for our poor. That kind of work is a good investment of capital for the country. I hope that the Government will not stop at that and that it will not rest content with the provision that is now being made. Where it is at all possible in our rivers, dams should be built and more dams should be built to stop the water from running into the sea, and to preserve it for the land. Land should in that way be brought under irrigation so that people can be placed there as settlers. We have to help people like that and it is no use merely helping them half way. What does it help us if we increase our production and if we have no market for our products? A market has to be created and we must not merely try to do so abroad, but we have to find markets in Africa itself because we have a potential market here irrespective of the markets overseas. The position in regard to unemployment is tragic in this country, and it is more so to-day than ever before—to-day more than ever we hear people talk of poor whites. I am deeply pained when I hear that expression because those impoverished people are often members of our best South African families, and it is heartrending to notice how men with names like Viljoen, van Heerden, and so on, come to one’s door and say to one: “Mr. de Villiers, please advise us where we can get a little work to do.” Men coming to one like that are sober, they are honest Afrikaners, but they cannot succeed in getting work in their own country. To us that is a disgrace, it is a disgrace to our country which is one of the wealthiest countries in the world. We send away all our raw materials in order to provide work for the workers of other countries, and in our own country Afrikaners are walking about unable to secure employment. I hope, further, that the Government will see to it during the recess that something is done to secure employment for those people. We are glad that the State has rendered assistance for the establishment of the iron and steel industry. Let the Government also give assistance to smaller factories so that they shall be able to extend and provide more work for our people. We cannot all become shopkeepers, advocates and attorneys in our villages or in our towns. Cannot we, e.g., ascertain what the world requires and what can be made of our asbestos? In the district of Kuruman there are mountains of asbestos, and the Rooiberg is, so to speak, pure asbestos, and if this commodity can be turned into a, commercial proposition, thousands and thousands may be employed in such an industry. Ceiling boards are already manufactured in our country from asbestos, but an enquiry should be made into the question whether more useful articles cannot be manufactured out of this commodity. We have the raw material here and it is our duty to engage the experts to help us in the manufacture of this raw material. Let us find out what can be made out of it, and factories will be established where large numbers of people can be employed so that the farmer, in his turn, will be able to find a market for his foodstuffs and for the other products which he produces. Then there is another raw material, such as manganese. At Posmasburg and Kuruman, there are large quantities of this mineral, could not this be exploited? A portion can be used for the iron industry, but, could not more be done in this respect? I am suggesting this so that we may attempt to make provision for the employment of our South African sons.

Was not a railway built for the purpose of exporting manganese?

But that is exactly what I do not want. I prefer that the raw material should be exploited here so that your son and my son can be given employment.

But if it goes overseas we get money for it.

That money will not be of so much use as the money that will be given if those raw materials are exploited here. If those raw materials are developed here they will be worth more money.

*The ACTING MINISTER OF RAILWAYS AND HARBOURS [inaudible].

My hon. friend does not catch my point. I want that article to be worked here so that there will be work for our people and our children. We must ascertain what is possible to be manufactured out of manganese and asbestos, and we must give assistance so that such factories shall be established here. Then there is another matter of the greatest importance. We know that there are thousands of backward Afrikaners in our country; why should they be in that backward condition? In the first place, they are in that condition because years ago they did not enjoy a great deal of education. They are 35 years of age right up to 50 years of age, and they never got beyond standard two or three. People like that soon drop out on their farms, and they drift to the towns and the dorps, and there they have to compete with the young men of to-day who have passed their matriculation and their position is desperate, they find it impossible to compete with those young men. It is quite hopeless for them, and a man like that gets into a state that it is no longer possible to help him at all. The policy, however, appears to be that people are not to be assisted until they are in the direst of dire distress. My contention is that we should make an attempt to help those people, and I hope that this Government will prove itself strong enough to be able to help those people. We should put a stop to the continued existence of poor-whiteism. It may be asked what I suggest. I suggest in the first place that we should ascertain how many pupils leave the school after standard six. Those of us who have read the report on this matter will realize the numbers there are. The children who leave school after standard six cannot find work, they are not even able to make application for a position in the police service. We further find that those people go and do work which is unnecessary. We should in co-operation with the provincial administration, establish schools where those standard six people are taken away from their parents in the villages, so that they may be placed in a school outside those villages. At those schools they can receive agricultural and technical training. Even if a man has not passed his matric we could make him take a course of a few years so that he would know enough about book-keeping and arithmetic so that he would not have to stand back for anybody else when the time came. If he has learned a trade, nobody can tell me that when he leaves the school and if he has also passed his matric, he will not be able to hold his own in South Africa, and that he will not be able to find work. I had a most interesting experience when I was in Germany. I called on a doctor to be examined and when the doctor had finished with me he asked me whether I wanted to buy some furniture. I asked him whether he was a furniture dealer; He took me to his backyard and showed me a place where two young men were busy making furniture. He took off his coat and said: “I have finished with you now,” and be went off to manufacture magnificent furniture. He told me that competition was so severe that unless he also made furniture he also would be unable to make a living. If our sons who have a certain amount of book knowledge were also taught a trade, it would not be necessary for them to go and work on a dam at 3s. or 4s. a day. They will then be able to hold their own in South Africa. Finally there is another matter of the greatest importance and I hope that the Government will say that it is prepared to tackle it, although nothing has been laid down in the agreement on this subject. That is the native question. That question should now be tackled as we have the opportunity to do so. The native and the coloured man in South Africa live in a condition of uncertainty. We have to solve that question, even if it means that we have to segregate the native in his own territory and if we leave him to collect his own taxes. Prof. Brookes tells us that we cannot do this, but if the native can develop there in his own sphere he will be a great asset to us. He will be able to buy the products of our factories, our boots and shoes and our blankets, and so on. Skins or wool will no longer have to be sent overseas because our own sons will be able to manufacture articles here in our own factories. We have the opportunity to-day of solving the native problem, and if we fail to do so I say that a time will come when the native will rule South Africa.

Business suspended at 12.45 p.m. and resumed at 2.20 p.m.

Afternoon Sitting.

I do not wish to speak at any length on this financial Bill, and I only wish to make a few remarks. I want to start off by saying that we are passing through an extremely difficult time as we all realize, but I do not helieve that the feeling of dissatisfaction should be encouraged by anybody. I am of opinion that all sides, the Government as well as ourselves, should try to do something good from the financial point of view for our people. If we look at our own budget, which amounts to £34,000,000, which is the amount the Government proposes to spend on the country’s affairs, we should compare this with the estimates of other countries in the world so that we may be able to see South Africa in a true perspective. If we do that we shall see how many reasons we have to be grateful. I should like to give a few interesting figures to compare South Africa with other countries in the world. We can be grateful that our budget balances if we see that a country like Hungary is faced with a deficit of £5,700,000, and a country like Poland, which is not a big country, has a deficit of £13,100,000. A country like Chili, in South America, which is an agricultural country principally, has a deficit of £18,500,000, and a country with powerful industries, like the United States, is budgeting for a deficit of £33,000,000, while France, which was so prosperous, has a deficit of £77,500,000 on its estimates. I consider that the South African Government, as well as the people of South Africa, have cause to be grateful that we in those circumstances have a budget which balances. In order to make it balance the general public will not be taxed any higher than it was last year, practically speaking. The countries which I mentioned, and other countries which have tried to make their budgets balance, were forced to increase their taxation very considerably. I want to mention a small country like Belgium as an instance which was forced to increase its taxation to the extent of £7,500,000 in order to come out more or less level. Take a country like Denmark, which has many points of similarity with us, except that it has no gold mines. Conditions there were so difficult that last year, instead of imposing income tax on the basis of four quarters of the year they made the people pay on six quarters, with the result that the income tax went up by £1,500,000. I also mention countries like Norway and Sweden, where the condition is not attributable to the gold standard, because they are off gold, and yet they have had to economize a great deal. I want to point out that Sweden on its Agricultural Vote alone, had to economize to the extent of £1,500,000. In a country like Chili, several departments had to be totally abolished because they could not afford them any longer. I maintain that we in South Africa will understand our position better if we see it in the perspective of other countries which are in the same difficulties. We get countries like Poland which even, with extra taxation and economies, were unable even to get close to balancing their budget, and which had to borrow to make their budget balance. There are countries, too, like Greece, which are not even able to pay their foreign loans, and we know that Germany has declared a moratorium and is paying nothing in the way of interest and redemption. I particularly want to refer to the United States, where Senator Borah made the following remarks—

The position is so difficult that, although taxation has been raised, the revenue has gone down. Furthermore, he makes the remarkable statements—

The income of this great and powerful country has gone back by more than half—

And listen to this sentence—

The total revenue in the United States is eaten up by taxation and interest which they have to pay. It would be desirable for us to look a little more to countries which find themselves in that position. We find countries like Greece and Roumania, which no longer even rule their own country. In Roumania a council of three foreigners has been appointed to supervise and see to it that the finances are more or less properly attended to. Our condition cannot be compared with that condition. I consider that when hon. members come here and point to the state of affairs in our country, this should not be done with the object of preaching revolution against the Government, or with the object of creating discontent in the country, but merely with the object of helping the Government. So much has already been said here about the mining taxation, that I do not wish to say any more about it, except that I do not think that the country is very sympathetically disposed towards a well-organized agitation started by the mines against the taxes. We have taken steps here to help the farmers and some hon. members here in the House, and a portion of the public, are of opinion that the Government has gone too far. I wish to point out, however, that there are other members who wish that the Government had gone a great deal further. I want to quote another two instances of the position in other countries. I am quoting here from “Foreign Affairs about Poland”—

That is what we are going through—

That is something which is being done here as well—

I want to point out that other countries are taking the same measures we are doing and are going even further to help the farmers. I also wish to point out what is being said about Finland—

In this respect they are going further than we are doing. They take over the burdens resting on the farmers—

I am reading these quotations for the information of the public outside, and also for the information of hon. members of the House who are of opinion that we are asking too much in connection with the farming population passing through such a difficult time in South Africa. I proceed to quote—

There are other countries, too, which have taken steps. Practically every country has taken steps to reduce rates of interest. Here in South Africa such steps have been taken by specially dealing with interest on farm mortgages. Japan has taken steps to provide money chiefly to the farming population, and in Chili, Poland, Denmark and Italy steps are being taken to assist the farming population. Italy has reduced interest to 4 per cent. and Denmark to 3 and 3½ per cent. My comment in regard to the measures which we are taking in South Africa is that it affects the interest burden, and that it is intended to make the position easier for the farmer. The farming population is grateful for this. We feel, however, that unless there is a rise in the price of primary products, this measure of ours which is only of a temporary nature—it has been admitted from all sides that it is only a temporary measure—these steps, as is the case with all temporary measures, will tend to aggravate the position of the farmer in the long run. Any temporary measure which has as its object the giving of money will eventually fall more heavily on the farmer unless world conditions improve to such an extent that prices also go up. We must not merely think of temporary relief, we must definitely start thinking of the relief of the capital burden resting on the farmer. At the moment we are only dealing with the burden of interest, and we are not touching the capital burden. Yet there are people in the country who object to this, and who are opposed to what the Government is doing. The people who are objecting are mostly those sections of the population who are in receipt of salaries, or who live in the towns and the dorps and who do not appreciate the real position of the fanning population. In order to prove what I am saying here, I just wish to mention one point. A short while ago we passed legislation with a view to assisting the farmer by means of relief loans. What was the object and the tendency of that Act? It was to assist farmers who were on the verge of ruin, and who could not help themselves. The object was to help people who were on the brink of a precipice and who would have fallen over. We are very grateful for being able to help those people. What, however, is happening in these difficult times? The stock of the farmer, who has been assisted, has been attached. Nobody objects to that, but in all the difficulties in which that man finds himself, the stock which he has to keep as security for that loan is dying off in their hundreds. I want to say this to members representing rural areas. What is the prospect for a man who finds that the stock which is pledged under the Act for those loans, and for which he is responsible to return to the State, is dying off now as a result of the drought? What has he left to make his payments with? For that man the future is dark indeed. Hon. members who criticize the assistance given to the farmer, the man who is on a salary who objects to that, does not realize what the position of the farmer is. In consequence of the drop in prices, those people are buying more cheaply, and they find life easier, but the farmer, who has to produce the primary products, is the man who has to pay the piper. And that is not only the case in our country, and, in order to show what is going on in other countries, I wish to mention two instances here. In 1932, from June to December, 12,100,000 bags of coffee were burnt in Brazil. Let us imagine what it means. That coffee was produced, it was handled, but there was no market for it, and the farmer was forced to countenance this coffee being burned, so that he might get some sort of a price for the balance. In Denmark the position is so serious that stock has to be destroyed every week in order to ensure a reasonable price being secured on the meat market. The condition of the world to-day is a most terrible one. What do the farmers get when they send their hides and skins to the coast? I can tell you what they have been receiving in some instances. Instead of being paid, they had to pay in something. The condition in which people find themselves to-day is unprecedented. Many a farmer who, in the past, had a good income from his wool cheque simply has to pay it over to the bondholder, and even then it does not do as much as pay the interest. Where he used to have wethers in the past, which he was able to sell, so that he might put aside a little bit, the position in the Cape Province, in the Karroo, in the Free State, and in the Transvaal, too, is that the wethers are so thin and miserable that either they cannot be sold at all, or they simply die of starvation. The position is extremely precarious. The farmer, however, is grateful for every step that is taken to help him, and for that reason they are grateful for the measures that were passed during this session. I am sorry that I have to say that the steps that are being taken in connection with the drought are not effective. I have referred to this on previous occasions, and I do not propose saying a great deal about it now. Several classes of persons have been mentioned here who will not be assisted by the Government’s proposals. Other members have already referred to the position of the tenant, and in connection with that I should like to make a little suggestion. In my constituency, Colesberg, there are a great many tenants, and in some cases the rent is higher than it is anywhere else in the country. One farmer pays as much as £1,200 per year in rent.

Did he rent the whole of the constituency?

High rents are paid and what I want to refer to is this: where we are now making provision to help the man who pays interest on his farm, the people who pay rents remain in the same difficult position in which they were before. There are farmers who have entered into leases not for three or for five years, but in some instances for 15 years. In some cases the person letting out the land is not prepared to meet these people, and we are taking no steps to help those individuals who are not able to raise the money for the rent. Let us ask every tenant to negotiate with the landlord so that he may try to get a reduction of his rent, especially in view of the fact that the landlord and the owner of a farm are receiving concessions in regard to interest. If the landlord is not pre pared to meet the man, we shall have to set the vigilance committees in motion. The tenant should go to the vigilance committee through the magistrate, and in that way pressure can be exercised on the landlord. If we do this throughout the country, it will undoubtedly have its effects. I wish to express the hope that members of Parliament, together with the Government, should point out to the landlord that as we are busy reducing the interest on his debt, he from his side must also meet the tenant. It is not correct to say that the tenant invariably is a man who only pays a rent of £50 or £60. He sometimes pays an enormous amount in connection with the rent of his farm. Then I wish to say a few words on the question of unemployment. We are grateful for what is being done, and I must say that we are very grateful that the Government was able to do as much in view of what has already been done. I agree with what some members have said here, viz., that we are not all doing our duty in connection with this question. There is one other matter in respect of which I wish to put in my plea, and that is that we should make these people work 5½ days per week and pay them 5s. per day. That is little enough and it can he done. If the man has a family of from six to eight whom he has to support, let us think how he is able to do it. The man who lives in the town and has to pay house rent and has to support a family cannot possibly do so on a wage of 4s. per day. I do not even know how a man can do il on 5s. per day. Those people cannot get credit, and they are unable to get anything on credit in a shop. There is no credit in existence for that type of man. In spite of all the measures and all the suggestions that we make a large portion of the people will continue to remain in a precarious position so long as the world remains in its present condition. For that reason I finally wish to make another comment with all the earnestness that is within me. I hope that our people and our Government will be very grateful for the position in which we are to-day as compared with that in which other countries find themselves. I further want to say this, that in future we should make our hopes rise somewhat a little higher and that we should not always merely look to the Government. I imagine that our people will appreciate it if the Government asks them to take heed of Clause 1 of our constitution. Let us point out to the people that it is just as necessary for them to carry out the provisions of that clause as it is to carry out the provisions of Clause 137 of the Act of Union. Clause I of our constitution says: “The people of South Africa recognize the sovereignty and the guidance of Almighty God”. I think that our people and our Government will realize that there is a great importance attached to that clause. Let us, therefore, point out to our people that they must aim somewhat higher, their hopes must be directed to a higher sphere, than what they are doing to-day. I want to conclude by congratulating the Minister of the Interior on the fact that in connection with Afrikaans spelling he has laid down a definite course by saying: “That is the course we are now going to pursue”. By doing that he is rendering a great service to our people. He shows them that he has decided on a definite course and I congratulate him on having done so.

We have had almost a second budget debate on the second reading of this Bill, and at this stage of the session I do not think that hon. members will expect me to enter into a full discussion of all the points that have been raised by hon. members who have spoken. I do not think they expect that themselves. But I can say this, that as far as I am concerned, I will lay to heart what they have said. Many of the points which have been brought up are worthy of attention, and they will receive our attention during the recess. We do not consider and take upon ourselves the credit that we have evolved a scheme to remove all the difficulties of farmers in the country. No one can expect that of us, but we shall take these matters into consideration during the recess. If some more effective method of meeting the difficulties can be found, if an improvement in prices takes place, which will relieve difficulties, we shall do what we can towards that end. The present measure does not profess to be anything more than a measure of temporary relief intended to keep on their feet and on the land men who are not yet hopeless. There are one or two points I wish to deal with. We have had speeches which indicate to my mind that a sort of propaganda is being instituted throughout the country by hon. members who came here as supporters of the coalition Government, with promises on their lips and reservations in their hearts. The two aims of this propaganda appear to be these: first that the Government has done wrong, has betrayed the national interest is not appropriating the whole of the premium which has come from the gold mines, and secondly, that they have done wrong in not adopting what is known as the van der Horst scheme for the relief of farmers. With regard to the question of the gold premium I would like to say a few words to the hon. member for Piquetberg (Mr. de Waal). He brought before this House a suggestion—he did not say so in so many words— which ended with a question. The suggestion was that I, as a member for a Rand constituency, had been so moved by the pressure brought upon me by my constituents, and particularly by the mining industry in Johannesburg, that I had given away valuable concessions to the mining industry and had withdrawn the original gold mines excess profits taxation, without even consulting my colleagues. Could a more ridiculous suggestion come from the mind of any sane man? I should be absolutely incapable and unfit to hold the office I do if I committed the Government to assurances such as that without any consultation on my part. I have given the answer, because I know what these things are. The Government gave these concessions only after full consultation with, and approval of, all the Ministers now here. He tells the House that the gold premium coming from the gold mines is £19,000,000 or possibly £21,000,000. The figure on which we have worked is 19.7 million pounds, because we assumed the price of gold was 120s. I know it is a little more than that now. He tells you that out of that premium the Government is only going to get £6,000,000. | J do beg my hon. friend not to use figures at all, unless he can use them more correctly. What is the position? If you ask yourself what is coming to the State out of the premium, not out of the increased profits, you must take into account not only the excess profits tax which has been imposed, not only the additional income tax which you get from your normal income tax on those profits, but also the increased rentals which you get from the leases of gold mines, owing to the premium which has come from the price of gold. All these you must take into account, to arrive at what part of the premium is to come to the State. All the sources of revenue must be taken into account, because they all come out of the premium. I admit that the rentals for these leases do not belong to the shareholders, and are not part of the profits, but when you are asking how much of this premium has gone to the State, and how much is left to the shareholders, you must take all those things into account. If you do that you will find it is not £6,000,000, but over £9,500,000. Do not let this propaganda, for what it may be worth, be backed up by misleading figures. I do not hesitate to say that we should have been doing a great injury to the national interest of South Africa if we had appropriated the whole of this premium to the State, and left nothing for the development of our gold mining industry, and for the increased employment that should flow from that. We should have been false to the national interest if we had taken the whole of the premium into the coffers of the State. I hold, and I am prepared to take responsibility for it, that what we are taking for the State on the one hand, leaves the shareholders sufficient of the premium to enable them to undertake expansion and to give the increased employment for which we are looking, and on the other hand, is not too small a share for the State to have taken for use in other directions for the benefit of the country. We have adopted the course of safety, and in the long run of the national interest. There is one other point I want to deal with. The hon. member for Vrededorp (Maj. Roberts) made a moving appeal in regard to miners’ phthisis sufferers. Everybody in the House sympathises with them, but the hon. member backed it up with figures, which, if they are taken literally by the public, will convey a most misleading impression. In giving the number of phthisis sufferers he gave the figure, which I gave the other way, which represents, as far as our records go, the whole number of the people who have contracted miners’ phthisis since 1902. That is a period of more than 30 years. These men and their dependents are scattered over that period, and you must remember that it is practically only since 1919 that provision has been made for pensions for phthisis sufferers in the second stage. When he estimates what has been paid out by way of compensation, it is misleading to go right back to 1902. The cumulative effect may not have been understood by some people who do not follow the position very clearly. The hon. member for Benoni (Mr. Madeley) has moved an amendment. He moved that supplies should not be granted until various things have been done. It is the old programme, the reduction of working hours, the regulation of credit, and so on; I admit that these things are more and more attracting the attention of the world, but surely, we cannot hold up supplies until all these things which the world has been trying to put right, have been dealt with. The hon. member also passed certain comments on the recent statement by the Chamber of Alines, and as those comments will no doubt be published in the press, I think it is only fair that I should read to the House a telegraphic statement which I received from the president of the chamber in answer to what I said the other day—

And he goes on, of course, to say that these concessions do not go far enough.

It is a repudiation of the Chamber of Alines’ statement.

In view of what the hon. member said, I think it is only fair to place that before the House. I do not wish to delay the House any further and I now move the second reading.

Question put: That all the words after “That”, proposed to be omitted, stand part of the motion, and a division was called.

As fewer than ten members (viz., Col. McArthur and Mr. Madeley) voted against the question Mr. Speaker declared the question agreed to and the amendment proposed by Mr. Madeley dropped.

Original motion put and agreed to.

Bill read a second time; House to go into committee now.

House in Committee:

Clauses and schedules put and were agreed to.

House Resumed:

Bill reported without amendment and read a third time.

I move—

I am very sorry that I have to inflict myself on the House twice in one day.

So are we.

But I am bound to do so. When the acting Minister of Railways spoke on the Railway Vote I told him that if he carries on the railways on business lines, he will have my full support. I beg to draw his attention to page 22 of the Estimates of Expenditure on Capital and Betterment Works for the finanical year ending 31st March, 1931. It is proposed to spend £100,000 on the electrification of railways. I view the position of our railways with very grave concern. We shall have to readjust matters and take stock of the position. Evidently the Minister of Railways and Harbours is of the same opinion, for he is arranging to appoint a commission to go thoroughly into the position. As a result of the investigation of that commission probably it will be necessary to wipe off some of the capital invested in our railways. We have made a capital outlay on the Union railways of £160,000,000. That capital has to earn interest. We shall be called upon, I am sure, after this commission has reported, to readjust our capital commitments in order to reduce them to such an amount that it will be possible for the railways to show a return on this reduced capital, whatever that figure may be. In the face of this disquieting state of affairs, we propose to spend £100,000 more on the electrification of the railways. While I quite agree that it is necessary to invest more capital in order to earn more money, I feel certain that next year the Minister will tell us that the department has underestimated the cost of this proposed electrification, and he will ask us for an additional vote. May I remind the House that it costs £2,500 a mile to electrify the railways. It will cost £2,500 per mile for the 60 miles which are to be electrified, so that the amount on the vote should have been £150,000. If it were absolutely necessary to electrify as far as Harrismith, I would have no objection, but I do object to that being done, because all that is necessary is to electrify to Van Reenen. The Electricity Supply Commission want a market for their current in Harrisimith and neighbourhood, I admit, but, as far as service to the railways is concerned, I am going to support the Minister in the electrification of the fine to Van Reenen. Why have a capital expenditure of £2,500 per mile to electrify to Harrismith when the line to Harrismith requires no electrical power? An electrical unit will take a load of 1,500 tons, but an electrical unit will not alter the grade from Brakwaal to Van Reenen. For the further distribution of their current, the Electricity Supply Commission can put up a line which will only mean about 20 miles of straght line at £50 the mile in order to give Harrismith all the power required. I am very much concerned about an investment the Railway Department have already made at Van Reenen. They have their own land, and they have spent £50,000 during the last year in order to facilitate their business, accommodate their men, and to secure ample yard space and free water, all of which Harrismith has not got. Harrismith is short of water. They have not had it for a number of years for their own town. They are always curtailing their supply. For those reasons, I ask the Minister, who is only spending £20,000 this year, to go fully into this matter, in order to ascertain whether there is any adequate reason for spending £150,000 to electrify the line to Harrismith, seeing that as far as the Railway Department is concerned, an expenditure of £75,000 will do all that is required. You do not want to spend the money and then ask for a write-off afterwards. I suggest to the Minister that he should electrify the railway as far as Van Reenen, and make it an effective proposition.

I deeply deplore the “duty bound” attitude of the hon. member for Bethlehem (Mr. R. A. T. van der Merwe). In his opening remarks he mentioned that he felt himself “duty bound” to speak, and I should like to go into the history of that “duty bound”. He entered into negotiations to hold a meeting at Van Reenen, and I imagine that the hon. member in his arguments was scared in the first place that Bethlehem might suffer damage, but having made sure that this was not the case, he felt himself so duty bound that at a meeting with another person, who is as great an expert on financial matters as the hon. member for Bethlehem, he came to the conclusion that the electrification to Harrismith would be tremendously expensive and that therefore he must oppose it. It is clear that the hon. member for Bethlehem is envious of Harrismith, seeing that the line is to be electrified now. I want to point out that what is being proposed now was approved of two years ago, but could not be put into operation on account of the bad financial position. The late Mr. C. W. Malan enquired into the matter and was entirely in favour of it. This means that this railway line will effect a saving of £26,000 to the railways, while if the line is electrified only as far as Van Reenen we shall only save about £10,000. If, in addition to the saving, we take into account interest and redemption on locomotives, the saving will be £40.000. The hon. member for Bethlehem put a question here the other day as to how many locomotives were in service on that line. It was clear to me even at that time that he would oppose this motion to the end. He now says that it is an unsound financial policy, but I know why it is that he is so duty bound to oppose it. When the hon. member had not yet become a member of Parliament he addressed a meeting at Van Reenen on railway matters in such a manner and he made such promises that a number of people got the impression that he was the future Minister of Railways and that he would see to it that the electrification did not go beyond Van Reenen. I hope that the House will not take much notice of what the hon. member for Bethlehem has said.

I am thankful to the hon. member for Harrismith (Mr. Cilliers) for having answered the hon. member for Bethlehem (Mr. R. A. T. van der Merwe), because T think the former put the case very well. There seems to be a difference of opinion as regards railway matters between the hon. member for Bethlehem and the railway administration. I am prepared to take the advice of the officials who are responsible for carrying out the work. As the hon. member for Harrismith says, if you go only as far as Van Reenen, you will save only £10,000 a year, but if you go to Harrismith, you will save £26,000 a year. As a small sum in arithmetic I would just like the hon. member for Bethlehem to work it out and see whether it would not have been very unbusinesslike for us to stop at Van Reenen, and not save another £16,000 a year by going on to Harrismith. The hon. member for Bethlehem is doubtful as to the cost of this line, and he quoted a rate of about £2,500 per mile. That was the rate for the construction of the Glencoe section, but the cost of construction has been brought down considerably from the time that line was put down. The hon. member need not worry about the cost of construction not coming reasonably within the estimates which have been framed with regard to it. I feel certain that in these circumstances I can have the hearty support of the commercial representative of Bethlehem.

Motion put and agreed to.

Bill read a second time; House to go into committee now.

House in Committee:

On Clause 1,

In the previous debate this—

The hon. member cannot refer to the debate on the second reading.

Am I not entitled to do so on the preamble?

The hon. member can do so on the motion for the third reading.

Clause put and agreed to.

Remaining clauses, schedules and title having had been agreed to,

House Resumed:

Bill reported without amendment.

I move, as an unopposed motion—

Mr. NEL seconded.

When this Bill was presented for the second time, I said I owed the acting Minister a duty and I was in “duty bound,” but it was not the “duty bound” referred to by the hon. member for Harrismith (Mr. Cilliers); and with reference to the accusation levelled at my head by him, of having attended a meeting in his constituency, I may say that I was invited to attend that meeting to discuss railway matters, and I did not say that I expected to hold the position of the Minister of Railways and Harbours, or the likelihood of that either. I am interested in railway matters as a business institution, and, as one who is interested in railway matters, I attended that meeting, which was at van Reenen, where there are farmers who develop traffic on the railways and play the game with the railway administration. That farming community does not allow any of their cattle to go down the mountain on the roads, but have them conveyed by the railways. The farmers there have developed a health resort to which thousands of people come from the coast, but have gone so far as to refuse to receive people coming by car; they must come by railway. In Harrismith, however, you see motor lorries in competition with the railways, day after day. What I am looking after is the interests of the Railway Department. It has been pointed out that my action is one of jealousy of Harrismith. There is nothing for us to be jealous of in regard to Harrismith. We have the water, and everything we want as far as railway matters go. We have got everything we want, that is, as far as railway matters are concerned. I am talking about railway matters. I am not losing sight of the fact that on the figures given it is a good proposition to increase revenue by £16,000, but I am not losing sight of the other fact that when you come back next year after the commission has reported, you will ask this House and the taxpayer to increase the amount to be written off to make favourable, at the expense of the taxpayers, the unfortunate position which we are going to create.

Motion put and agreed to.

Bill read a third time.

I move—

I do not think it necessary again to go into all the points that have been raised in this House and outside the House in oonnection with this excess profits tax since it was first mentioned in the budget of the Minister of Finance. It has already been discussed on two occasions in this House; it has been discussed on the budget debate and on the Committee of Ways and Means and this Bill is the result of the resolution taken in Committee of Ways and Means. There are, however, one or two general points I should like to deal with before I come to the Bill itself. First of all, in regard to the assurances that were given by me on behalf of the Government as to the effect of the imposition of this tax in future years and the effect of our taxation of these premium profits. From the telegram which I read a few minutes ago, it will be quite clear that the Chamber of Mines now withdraws any implication that might have been gathered from the statement they made. They withdraw any imputation against the good faith of the Government and make it clear that no such imputation was intended. They also make it clear that they appreciate the assurances that have been given with regard to the limitation of the tax in future years, but they go on to say that this is not enough. They reiterate the request which they have been making since the discussion began that £2,000,000 should be given up out of this year’s revenue. That is a request to which the Government cannot agree. The Government is not prepared to limit further the operation of the tax either as regards this year’s imposition or subsequent years beyond what has already been done. I think it right to call attention to the fact that the figure which lias been published by the Chamber of Mines as representing the total amount that we are taking out of the mining industry by taxation and by the rentals of the leased mines for the calendar year, is a figure with which the revenue department do not find themselves in agreement. I want hon. members to be clear about this figure because so many figures have been quoted that people are apt to get confused. When the nature of this tax became known the Chamber of Mines published a statement to show that for this calendar year the Government were taking out of the output of the gold mining industry a sum of £16,000,000. The estimate put forward in the budget was an estimate for the current financial year, not for the calendar year, and therefore there was a difference of period which I have already explained to this House and there was a difference in the incidence of the tax, because in our financial year the income tax on these excess profits does not apply in the case of all mines to the full year’s receipt of premium profits. Our estimate for the current financial year of the total amount that will come to the Government from all these sources was 13.8 million pounds. I come to the Chamber of Mines figure in respect of the calendar year. That figure, as I have said, has been put forward as £16,000,000 and to that figure, I understand from a recent statement attributed to the general manager of the Gold Producers’ Committee, they still adhere. The calculations of the Revenue Department bring us to the conclusion—and I can see no reason to differ from it—that that figure is overestimated for the calendar year by about £1,500,000, so that the figure should not be £16,000,000 but £14,500,000. They give the following details by which they arrive at £16.000,000. They say the excess profits tax will bring in £6,500,000 and the other taxes, and the rentals of leased mines, £9,500,000, making £16,000,000. As regards the excess profits tax, I have said again and again that we do not intend to take more than £6.000,000, so there is a difference of £500,000 there, but on the other items, income tax and rentals of leased mines, the figure of £9,500,000 is considered by the Revenue Department to be over-estimated by £1,000,000, which is attributed to the fact that various deductions allowed in income tax assessments have not been taken into account and that as a result of that they have over-estimated the effect of the income tax by £1,000,000, and that, with £500,000 over-estimated on the excess profits, brings the total over-estimate, as we consider it, to £1,500,000. If that is correct, and I see no reason to differ from it, the £2,000,000 by which they ask the tax to be reduced, might be found in a revision of their own calculations. I hope so at any rate. This Bill proceeds on the lines which have already been explained to the House. The tax is levied on excess profits due to the premium on gold and that premium has been taken, for the purposes of our estimate, as the difference between 85s. and 120s. The figure of 120s. has been taken for the purposes of these estimates and this tax, but hon. members of course know that for some time past the price of gold has been in excess of that figure. So that there again the mining industry is having the benefit to the extent to which the actual price of gold has gone up, as it has done for some time, and is now in excess of 120s.

It may be the other way; it may drop.

I do not think that that affects my remarks. Now the excess profits are arrived at by calculations which are set forth in Clauses 3, 4 and 5. The excess profit is arrived at by taking first of all, the standard profit, and that is defined as the profit which would have been earned in respect of a mine during a certain period, if the gold recovered therefrom during that period had been valued at the standard value of gold, plus 2½ per cent. of the profit, for every one-tenth of one pennyweight, whereby the average yield of gold for each ton of ore from the mine milled during that period is lower than the average yield of gold for each ton of ore from the mine milled during the months of November and December, 1932. Then there is a proviso, which unfortunately has been omitted inadvertently from this clause, but which will be moved in committee, that when there is a lower limit than 2s. 6d. per ton, it will be made up to that. That is to say, the tax will start from the lower limit of 2s. 6d. per ton. That was part of the original scheme and the proviso to be added will give effect to that. Then Clause 4 provides that certain deductions shall be made. Sub-clause 2 provides that, in the calculation of any share of profit due to the Government no development shall be deemed to be excess development in the case of these mines under Act 30 of 1908, so long as the provisions of the other section remain in force, that is to say that so long as we are off gold excess development will be allowed as a deduction for income tax purposes. Then Clause 5 also deals with deductions which can be allowed. I want to draw special attention to paragraph c” which provides that deductions shall be allowed for all expenditure actually incurred during a period in respect of equipment and shaft sinking undertaken in accordance with plans approved by the Minister of Mines after a report from the Government mining engineer; that is to say that if that expenditure is made from ordinary revenue, from current revenue, and has not been taken into account in the determination of the profit in respect of the mine for such period, a deduction shall be allowed. But if the expenditure is greater than the excess profits, as calculated for such a period, or should there be no excess profits for such a period, the excess of such expenditure over such excess profits shall be carried forward and shall be set off against the excess profits for any later period of assessment. Then there is another provision in the grants to non-producing mines, and there are a number of other points in regard to setting-off of excess profits. In order to arrive at the excess profits we have to fix the rate of duty, and that is fixed under Clause 6. That clause fixes the rate of duty at 1 per cent. for each penny by which the rate of actual profit per ton in respect of that mine, for that period, exceeds the basic rate of profit per ton attributable to the mine for that period. Now that, I think, is a simple calculation. Sub-sections (2) and (3) show how the actual profit and the basic profit are respectively arrived at, and the allowance is also provided for. Clause 7 deals with exemptions and says that there shall be exempt from the duty chargeable under this Act the excess profits derived from any mine for the 12 months ending December 31st in any year, during which the profits in respect of that mine did not exceed £5,000. That is to allow for the exemption of small mines where the profits do not exceed £5,000, and the object of that is to encourage small mines in various parts of the country. Then Clause 8 deals with the restriction of the total levy to £6,000,000. I have already dealt with that point. The other clauses deal with machinery for carrying out the assessment, and I do not know whether it is necessary for me to go into those points. If so I shall be glad to answer any questions in committee.

I have already, on a previous occasion, made my acknowledgments to the Minister for the assurances which he gave regarding the new tax, and I need not repeat those acknowledgments. I wish to say that there are some further improvements in this Bill which will, I think, further alleviate the situation. They may be of small importance, but they will help. I drew attention on previous occasions to what I consider are the three great defects of the measure before os, and these are, in the first place, that the tax is much too harsh on the whole industry, and that it will have the effect of retarding the inflow of capital into South Africa, and will check the expansion of mining which we had looked forward to. In the second place the method of applying the tax is such that it imposes the burden unequally on the various mines, and falls with undue harshness on the lower grade mines; and, thirdly, it has the effect of discouraging the mining of low grade ore. I think in this last respect some attempt has been made to alleviate the position, but not with entire success. Now it is mainly to the second point that I wish to return this afternoon, that is the inequality of the burden on the various mines, and particularly on the lower grade mines. I have indicated previously that, the tax plus income tax varies to the extent of 30 per cent. of the total profits to double that figure and even more, for while some of the lower grade mines will pay a tax of 63 per cent., some of the richer mines will pay 30 per cent. I will take a typical case of a low grade mine to indicate how the tax falls on it and how burdensome the impost is. The case I will take is that of the famous East Rand Proprietary Mines. Judging from the results of the first five months’ working of this year, the mine will make a profit of £71,000 a month. If it continues at this rate for the next seven months it will make a total profit for the year of £852,000, of which the State, under the new scheme together with income tax will receive about £515,000, or approximately 60 per cent. The shareholders will be left with £337,000, but from that sum various deductions will be made, so that there will probably he available for dividends £150,000 to £200,000, representing a dividend of 1s. or 1s. 3d. a share. So that with a gold production of nearly £3,000.000, the shareholders will get less than £200,000. At one time E.P.R.M. shares were regarded as a gilt-edged security. In 1910, the £1 shares stood at £5 each, but owing to the gradual falling-off in ore values, the dividends decreased, and in 1917 they ceased entirely. For 14 years no dividends were paid, with the exception of a small one in 1924. Since then two small dividends have been paid; one distributed last year amounted to only 6d. a share. The company was reconstructed and the shares fell to 7s. When the gold premium came into existence, the E.R.P.M. shareholders were imbued with new hope.

They are going to get a 10 per cent. dividend.

Their hopes of increased dividends are pretty well dashed to the ground, and their expectations are not going to be realized. I would like, for a moment, to turn aside to compare results of what might happen in farming districts if similar taxation to this were imposed on farmers. The E.R.P.M. is a very large mine. Its output and its importance to this country are equal to those of several large districts in this rich Western Province. It is larger than Malmesbury alone, and one should throw Malmesbury and Caledon together to compare their achievements with those of the E.R.P.M. The E.R.P.M.’s enormous production of nearly £3,000,000 worth of gold is distributed throughout the country, with the exception of the small dividends, and only a portion of those go abroad. The mine gives employment to a large number of people, and also sustenance to a very large number of men in addition to those directly employed by the company. Supposing that in the Malmesbury and Caledon districts, we had 2.000 farmers each raising produce to the value of £1,200 a year, out of which they made a profit of £100 each, or a total of £200,000, which would be comparable to the profits of the E.R.P.M. before we went off gold. Let us imagine that the farmers’ produce so increased in value as to show a profit of £300 a year to each farmer The total profits of the two districts reaching £600,000. What would these farmers say if the State now said to them, “It is not through any action of yours that you are getting this extra £200 a year each; therefore the State is entitled to the whole of that additional profit.” Naturally such a proposal would be regarded as preposterous, intolerable and an act of spoliation. I agree, but it is equally intolerable in the case of a low grade mine like the E.R.P.M. The cases are parallel in many respects. The farmers have had very lean years during which they made no profits. The shareholders of the E.R.P.M. have been in the same sad plight, and for 14 years received only one small dividend; losses balanced gains, and left nothing for the shareholders. If it is an injustice to tax the farmers in this way, it is equally an injustice to tax the low grade mines to the extent to which they are being taxed. I have no objection to the mines being taxed to some extent, but I do draw attention to the harshness of this proposed impost. The Government takes 2s. out of every 3s. the mine would have made and leaves a balance of 1s. to the shareholders. One must dismiss from one’s mind all this talk about Hoggenheimer and the mining magnates. Where are they in the case of the E.R.P.M.? They do not exist. But what do exist are shareholders scattered throughout South Africa, England and France, these shares being very widely distributed. These shareholders have been waiting for dividends for many years. Many people invested all their savings in E.R.P.M. shares, but after the debacle of 1912, they lost nearly all they had. Now, at last, they think they are going to get something, but the State steps in and deprives them of what they were hoping for. I have enlarged upon the E.R.P.M. in order to instance how the tax operates harshly upon its shareholders; but the other low grade mines are in very much the same position, and the shareholders will feel the injustice of the burden placed upon them to the same extent. The Government, in looking at the general effect of this tax upon the industry, has ignored the fact that in individual cases of mines it falls very harshly, while in other cases it may not fall so harshly; but on some it does fall harshly, and the Government has not given sufficient consideration to this aspect of the matter. The Government has abandoned the time-honoured and sound principle of taxing those who can best bear the burden, and of taxing in such a manner as to do the least possible injury to the body politic. Tn saying that they have not taxed those who are best able to bear it, I wish to illustrate it. If we had remained on gold this year, it is quite certain that we should also have had to face a deficit in our budget. That deficit would have been met by placing further burdens on the mines. The income tax would have been increased beyond 2C per cent. On whom would the burden have fallen? Obviously, it would have fallen on the richer mines rather than the low grade mines. The income tax is on the profit, and the more profitable mines would have had to pay most of the tax. But what have we done in going off gold? We have reversed that process. We have placed the burden too heavily on the lower grade mines, and not so much on the richer mines. That, to my mind, is an injustice. Further, I wish to call the attention of the Government to the fact that low grade ore mining is not encouraged by this proposal. In the case of the E.R.P.M. that is so. If the costs of the E.R.P.M. are from 20s. to 21s., it cannot afford to mine ore that gives a return below 24s. Generally, the duty of seeing that the mining of low grade ore is encouraged falls upon the Government. There is very little profit to be had out of mining low grade ore. It is not an attractive proposition to capital, and therefore it will never be looked upon very favourably by capital. Therefore the duty falls all the more on the Government to encourage the mining of low grade ore. I think the Government has missed an excellent opportunity of doing so, and has discouraged it by the measure that is before us. I will come to the details of the Bill later, but there is one proposal which I wish to make to the Minister, which I think would, if adopted, alleviate the position of these lower grade mines to some extent, and that is a provision to the effect that the amount to be levied by the State in the form of this tax, together with the amount levied under the Income Tax Act, shall not exceed 50 per cent. of the profits of the mine as defined in the Act. This is another application of the 50-50 principle of which we have heard so much. It would alleviate the position of these lower grade mines very substantially, and perhaps not affect the yield of the tax very much. If the Minister thinks that 50 per cent. is too much, and that the yield would be seriously affected thereby, he might consider that the tax to be levied, together with the income tax, shall not exceed 55 per cent. That would afford relief, as the extreme ease is now 62 per cent. I would earnestly commend this to the Minister for his consideration, both with regard to the position of the lower grade mines, and also for the purpose of making a friendly gesture to the industry, which I think would be very well received. As to the details of the Bill, I shall come to them when the Bill is in committee, and I will not now draw attention to any particular items; but I am glad to note that there are two principles embodied in this measure, and that those are that excess develop ment in the future will be regarded as includable in working costs, and that the total amount to be levied on this industry shall not exceed £6,000,000.

I propose to say only a word or two in support of what the hon. member for Springs (Sir Robert Kotzé) has said. Before I do that, let me allude to what was said this morning by some of my hon. friends on both sides of this House. One cannot resist the feeling that were any one of those hon. gentlemen in a position of responsibility or power they would not dare to go one inch further in the direction of mining taxation than the Government has already gone. But not having power, and not having the responsibility that attaches to power, they are prepared, for purely political reasons, and in order to make a political appeal, to suggest in certain quarters of this country that the Government should take the whole of this goldmining premium. They are prepared to make speeches as irresponsible as that which was made this morning by the hon. member for Piquetberg (Mr. de Waal). The hon. member knows that there is not the remotest possibility of any of these speeches being taken seriously by anybody. Even if you take the speech of the hon. member for Benoni (Mr. Madeley), if he were Prime Minister he would not dare to bring forward the proposals he made in his amendment to-day, and he would not dare to exact the whole of the premium. It is wicked propaganda, because they know that the only thing that is saving this country from absolute ruin, and absolute degradation, is the mining industry, and the confidence that is possessed in that mining industry. My criticism of the Government, of the acting Minister of Finance and his department, is that they are running a very grave risk of jeopardizing that confidence by their proposals. That is a matter of opinion, and the acting Minister of Finance does not agree with me. He may be right and I may be wrong, but there can be no difference of opinion whatever that nobody having any sense of responsibility for the future of the country would dare to take the step of taxing the mining industry and jeopardizing it and its future development by making proposals which go even further than those of the Government; and yet that is what these hon. gentlemen have been advocating in this House. I will leave it at that. It is cruel, and I go further and say it is definitely unpatriotic and calculated to jeopardize the best interests of the country. To come to the present Bill, surely the Minister must have been shocked at the figures given by the hon. member for Springs (Sir Robert Kotzé), and it is in essence a shocking thing to say to the shareholders of any concern for whom for fourteen years the outlook has been hopeless and capital has been lost, and by a sudden turn of the wheel of fortune, those who have hung on at last see themselves able to make something out of it, and then see the Government turn round and say: “No, we are going to limit you in such a way that instead of making a very handsome profit and a series of dividends which will recoup you for fourteen years’ losses, we will take the whole lot, except that we graciously allow you 10 per cent.” Let alone farming, take the case of an ordinary business struggling along for years—

Do you know what the 10s. shares are standing at to-day?

I am not interested in that; I am interested in the dividends they will earn.

What do they stand at?

24s. 6d.

They were £5.

Many years ago.

Exactly. Now, taking the case of an ordinary business, which has been losing for years and suddenly, through altered conditions and possibly through legislative action, this business is able to pay handsomely. Is it fair for the Government to take a major share of the profits it is making; ignoring entirely the losses which were made in the past? Take the City Deep, to which I referred last week. They lost £500,000, and the Government allows nothing as an offset for that loss in their share of the profits; surely the fair thing to say to the shareholders of that mine would be: “When you have recouped yourselves for the losses incurred in keeping that mine going, we will tax your profits.” What would happen if they had thrown in their hands, given up the unequal fight and closed down that mine two or three years ago? The Government would have got nothing. I do not propose to keep the House longer. It is a matter of fundamental importance, and my views on this are so well known that all I have to do now is to express my concurrence with the hon. member for Springs that the greatest error the Government have committed is to make these proposals and take too large a slice of this premium.

Every hon. member sympathises with the difficulties of the acting Minister of Finance—difficulties not of his own making—and we all have the desire to help him through in his extraordinarily difficult task. I think a great many of those difficulties might have been avoided if a course had been taken which was not taken; if there had been full consultation between the Government, between the Treasury officials and the mining authorities, before these proposals were framed. We know that in the case of another very important Bill—that of relief to farmers— the utmost care was taken by the Government to consult everyone concerned. They consulted bankers, trust companies, mortgagors and mortgagees, experts and especially farmers. But there was no consultation beforehand with the mining authorities on this very intricate subject. We are all losing by that—not only the Government—but also those who are interested in mining. Up to this moment there is no individual, whether he represents the Government, the Treasury or the mining authorities, who can say what the effect of this taxation will be; and we have only very vague ideas about it. In a matter of this sort very little makes a difference between profit and loss, and it is all important that we should know what this taxation means to each individual mine. But no one can tell us what the result of this taxation will be with any certainty whatever, and this is much to be regretted. Another point which has not been emphasized sufficiently, although the Government and the mining industry have said that they have two main objectives, one, to ensure that development and expansion is not checked, but will go on at increased rates. The mining authorities say that by extending their business, they will help to solve the question of unemployment by this means, and their estimate was that within a measurable time they would take on 4,000 additional Europeans and a matter of 40,000 more natives. We are told now that all that has been checked because the proposals of the Government are so difficult to understand that it will be impossible for capital to be attracted to the extent that was anticipated. So, again, in addition to dampening down the problem of giving more employment, we have to anticipate a checked inflow of capital, and if there is one thing required it is the extensive treatment of low-grade ores in order to prolong the life of the mines to the greatest extent. We heard from the best authority we know (the hon. member for Springs) that the policy of the Government will not encourage mine managers to develop a larger amount of low-grade ore in the future; and that is very regrettable. So we have the strange position that two sets of people, the Government and the Government officials on the one hand, and the mining authorities on the other, with the same object in view, utterly failing to achieve that object, so far as can be ascertained at present. I do hope it is not too late for this matter to be gone into and have a consultation with the experts, so that it will be found possible so to modify this legislation that the objects, which are so dearly desired by both, will be achieved. I am told, and with some reason, that it is most unfortunate that the Minister of Finance is not here himself to see this matter through. T am sure it would have been better—not only for this country but for the World Economic Conference—had he remained here, because I am sure he would have seen that his proposals would not carry out the object greatly desired for the expansion of trade, the greater production of gold, and that is very important indeed to help world conditions. We would have the right to ask him why he has departed from the policy which he announced so clearly two years go. He was asked why he did not wipe out the existing deficit by increasing taxation, and he replied in his speech on 22nd April, 1931—

The very things which the Minister deprecated so strongly have come to pass. Capital is being prevented from being put into the industry, and there is lack of confidence. I cannot put the matter better than by quoting the remarks of Sir Lionel Phillips, who has spent a lifetime in the industry—

That aspect does not seem to be considered with the weight it deserves, but there is no doubt that it is weighing heavily on the capitalists who were prepared to put large sums into the industry, if the taxation had been more reasonable. I submit that the Government have been rather shortsighted in this matter; they have not met the industry fairly. Controllers of the industry announced that they were quite prepared to contribute a due share to the general necessities of the country, but naturally, they did not expect that the taxation proposals would be as severe as they have proved to be. There is a lack of confidence for the future, and there is a prevention of capital being put into the industry, which would lead to greater development and to the benefit of the whole country. We have freely put our hands into the pockets of the State to help the farmers, and there has been no serious objection, but surely we must look upon this as temporary relief—as a dose of medicine, if you like to relieve and strengthen the patient until nature asserts herself and he is able to lead a normal, economic life. The development of mining would have helped the sale of farm products on a big scale. Two or three years ago the Australian Government was subsidizing the production of gold to the extent of £1 per ounce. Here we are doing precisely the reverse. The severity of it, the complicated nature of the proposals, and the inability of experts to agree what the effect will be is, I think, a very bad feature in connection with this scheme. I hope it will be straightened out. I greatly regret that the Government is unable to give any promise of substantial relief from this heavy taxation in years to come. I hope the Minister may see his way to modify, in committee, some of these proposals where it can be proved to him that they are harsh and will not have the effect, which is desired, of preventing the expansion of the industry, of leading to employment, and of lengthening the life of the mines by enabling low-grade ore to be worked extensively.

I had not intended speaking on this matter, but the question of the gold mining taxation is of such importance to the people of South Africa, that I feel that T would be neglecting my duty if I failed Lo express my views here. None the less I am very sorry that when a matter of euch importance to the country is being discussed, so many members are absent, especially farming members representing farming constituencies.

Speak for yourself and leave other members alone.

Yes, there are a few farming members left, 15 out of 58, but when a matter of such importance is being discussed I consider it is the duty of all members to be present in the House. It is not my intention, however, to go into that. In the past we have always had difficulty in levying taxes on the mines in accordance with their ability to pay, owing to the fact that the mining magnates, with the assistance of their financial powers have exercised so much influence on the Governments of the country. Consequently, it was always very difficult to impose taxation on the mines. We can thank the Government on behalf of the country for the fact that this national Government has taken it upon itself to impose these taxes on the gold mining industry, particularly in view of the fact that that industry is so strong, and is so strongly represented in the House. It is only right that the Government should have imposed this taxation, seeing that the gold mines belong to the country, and it is only right that the people of the country should receive a share of the profits. For that reason I am sorry to hear the representatives of the mines pleading for the mines, and stating that they are not willing to bear that taxation.

On a point of order, Mr. Speaker, I am not opposed to our being described as representatives of the mining industry, but we are not representatives of the mining groups or companies, and I personally am the representative of the constituency of Springs.

The hon. member plays with words. Springs has a large and rich mine and it is quite clear that the hon. member represents the interest of that mine when he discussed the interests of his constituency. It is no more than right and just that he should do so seeing that he represents that constituency in this House. I am very sorry that the hon. member has raised that point, as I did not mean it in the spirit in which he has taken it up.

You wanted to be offensive.

No, I did not mean it in that way, and the hon. member for Cape Town (Central) (Mr. Bowen) would do better if he remained silent so that he can learn something in this House. I further want to refer to what was said by the hon. member for Cape Town (Gardens) (Mr. Coulter) during the de bate. He said that there was a time when the farmers flourished and he wanted to know whether the Government would have dared taxing the farmers in the same way as the mines are now being taxed. In the first place I want to point out that there is a great difference between the profits of the farmers and the pro- fite of the mines. If the farming population makes profits, those profits are put back into the development of the country and the country is made richer in that way. The profits which the mines make, however, take the wealth out of the country, and the country is in consequence made poorer. There we have the great difference between the profits of the farmer and the profits of the mines. I am convinced that the Government acted wisely in regard to the mining taxation. Possibly the Government might have taken more of these mining profits, but I want to tell the Government that I am grateful, none the less, that it has the courage to lay down the principle that the mines must at least pay their share of the country’s taxes, and must make their just contribution to the Treasury. In spite of what the hon. member for Kensington (Mr. Blackwell) has said, viz., that certain members are only busy making propaganda by pleading for more taxation here, I want to say that we, as members representing the rural areas, realize our duty and that we shall do our best to place more taxes on the mines in future if we regard this to be necessary, and if the mines are able to stand such additional taxation as I think they are.

Would you do so if you were in the Cabinet?

It depends on circumstances, and if the mines make more profits I should certainly be prepared to take more from them, that would only be right. We know what the experts tell us, they tell us that the mines will be exhausted within a measurable period, and South Africa will then be left with the holes. Whom shall we have to fall back on then? We shall have to fall back, naturally, on the farming population of the country, but the farming population will not be there if we do not see to the development of the country now. Hon. members who are so strongly pleading the interests of the mines must be reasonable, and they must realize that it is only right that these taxes should be imposed on the mines. It was not more than the duty of this national Government to impose those taxes. Grievances were naturally aired here in connection with the provision made by the Minister in his Bill that for the next two or three years, or at least as long as the present Government is in power, no higher tax will be placed on the mines. I agree with that provision, and T give my approval to what the Government has done in this respect. That action will inspire people with a certain amount of confidence, particularly while we have people in the House who are always crying out that capital is being driven out of the country if the mines are taxed. The speeches that were made here can only have one object and that is to drive capital out of the country and to scare the people who wish to invest money in the mines. It is argued that it is no use investing money in the mines as the investor does not get the interest on his money which he is entitled to. Let us look at a few of the mines to see what the real position is. Let us take the Government Areas, the original shares were 20s. of which 5s. was paid out; to-day those shares stand at 46s. 9d., and the last dividend declared was 4s. 6d. Since our departure from the gold standard we may take it that they will pay at least another 1s. But let us take the 4s. 6d. which the investor gets on his money; it means that he gets £22 10s. on an investment of £240. So the man who has invested his money in the mines is getting an interest of 10 per cent. I ask you, if we in South Africa have such cheap money, and I make bold to say that it will be very difficult in future to get good interest on one’s money, that man still gets 8 to 10 per cent. on his money. How can hon. members come to the House and try to tell the House that the dividends are so small that nobody will risk investing his money in the mines. No, I hope that hon. members and especially the hon. member for Springs (Sir Robert Kotzé) who has put up a valiant fight for the mining industry, will be reasonable. If they consider the matter in their own hearts they will have to admit that the tax which is imposed on the mines cannot only be justified, but is a fair tax. It is a tax which is not merely in the interest of the mining industry, but also in the interest of the future of the country. I hope that we shall not in days to come have to listen to arguments, like those of the hon. member for Cape Town (Gardens), who wanted to make comparison between farming and the mines. The hon. member for Springs also drew a comparison and he stated that as a result of our departure from gold, farmers also were greatly benefited as he tried to show to the House. Let me say that our departure from gold only benefited certain interests, and I can assure the hon. member that it benefited the interests of the farming population very little indeed because the farmer who was helped by it in any way, or who received a little advantage through it, has to pay in other respects, e.g., by way of higher costs of living and through the higher prices which he has to pay for those things which he has to buy in rural areas. That comparison, therefore, does not apply. I do not wish to delay the House any further, but I just want to say that I think that we can be very grateful that we have placed a national Government at the head of affairs because we have succeeded in any case in adopting the principle that the mining industry must contribute its share to the Treasury, even if it has not to pay it all to the Treasury.

I do not think it necessary to take up much time in reply to the points that have been raised during this debate, because most of them have been dealt with previously; if hon. members are still unconvinced, I cannot take the matter any further. I would like, however, to refer to the case quoted by the hon. member for Springs (Sir Robert Kotzé), because the picture he paints of the effect of this new taxation on the East Rand Proprietary Mines is considerably darker than, I think, is warranted by the actual facts. He told us that, of an annual profit of about £850,000, which that mine is now earning, the Government is proposing to take about £515,000, leaving about £300,000 to the shareholders, who would receive a dividend of 1s. or 1s. 3d. a share, although for years past the most they got was 6d., so at any rate, they are not worse off than they were before, for the value of their shares has considerably increased. According to the figures I have the amount the Government will take from the E.R.P.M. during this year is not £515,000, but approximately £353,000, leaving £500,000 more or less to the shareholders, so that the state of this mine is not so bad as the hon. member has made it out to be. The reason for that is that the mine will not pay any income tax, for the losses which will be carried forward on the income tax assessment will wipe out the mines’ liability for income tax, also certain capital expenditure will be allowed for. That explains the difference between the figures the hon. member gave and the figures which I am told are correct, so the particular instance the hon. member gave is not so black as he painted. Even on the hon. member’s own showing, that mine will benefit very considerably, after the Government takes its share, as the result of the Union having gone off the gold standard. If the Government takes a share of these premium profits, the result naturally will fall more heavily on the mines, which owe the whole of their profits to the premium, than on mines which earned very handsome profits before we went off gold. The hon. member for East. London (North) (Brig.-Gen. Byron) deplored that there was no consultation between the Government and the representatives of the mining industry, before these taxes were imposed. I explained on a previous occasion what bad happened, but that was in the nature of a private conversation, and I only referred to it because other hon. members mentioned it. The hon. member must see that it would be putting very severe responsibility on one or two of the leading members of the mining industry, and would place them in a very invidious position, if beforehand they were put in possession of a scheme of taxation which would make a profound difference to the value of various mines. I think the Government was right in thinking it best not to consult them.

You could have consulted them without disclosing the scheme.

The whole point of the hon. member’s remark was that consultation with leading representatives of the mining industry would have enabled us to evolve a more workable scheme, but how could we do that if we did not disclose the scheme to them? All the consultations that could take place did take place.

Motion put and agreed to.

Bill read a second time; House to go into committee now.

HoUse in Committee:

On Clause 1,

On the motion of the acting Minister of Finance, an amendment was made in the Dutch version which did not occur in the English.

Clause, as amended, put and agreed to.

On Clause 2,

Has the Bill been examined and criticized in detail apart from the general taxation by the mining industry; has the Minister had the benefit of the industry’s criticism of the actual machinery set out in the Bill?

There has been time for the Bill to have reached Johannesburg, and I have had telegrams commenting on the fact that this limit excess profit of 2s. 6d. had not been provided for in the Bili.

That is the only criticism?

Yes.

Clause put and agreed to.

On Clause 3,

I move—

Will you explain what that means?

It means that the standard profit must be at least 2s. 6d. on every ton milled.

I move as an amendment—

I would like to call attention to the fact that the steps are too large. My amendment will reduce them, but we get the same rate of progression, proceeding by smaller steps.

I am quite willing to accept that. I believe it is more acceptable to the mathematical mind than it is to the mind of the man in the street.

Amendments put and agreed to.

Clause, as amended, put and agreed to.

On Clause 5,

I wish to draw attention to sub-section 1 (c) of this clause, which provides that all expenditure on underground equipment and shaft sinking which is undertaken in accordance with plans approved by the Minister of Finance, after he has considered the report thereon by the Government mining engineer, shall be deducted. It is left entirely vague as to what principle the Minister is to proceed upon in deciding whether he approves or disapproves. In the case of work which has been undertaken during the first half of this year, I would point out it is impossible to give advance plans in regard to such work. The words in the third line of “C” can be safely deleted. I move—

I quite see the point of the hon. member for Springs (Sir Robert Kotzé) in regard to expenditure on work already in course of progress, which has not been approved, but I think we should be careful not to alter this clause in such a way, or to pass it in such a manner that it may mean that the expenditure will take place first, and the mine will have to get approval afterwards.

I think the hon. member’s point will be met by consideration of the fact that any mine which intends to claim a reduction on account of its expenditure, will be careful to get its plans through before the work starts. They will go to the Government mining engineer and get his approval before they undertake the work, if they are sensible.

Amendment put and agreed to.

On the motion of the acting Minister of Finance, an amendment was made in the Dutch version which did not occur in the English.

In sub-section (3) it is provided that expenditure on shaft sinking shall include all expenditure which in the opinion of the commissioner is necessary for the completion of the shaft and its equipment as a working unit. I would suggest that the proper authority to do this would be the Government mining engineer. I suggest that an alteration should be made accordingly. Perhaps the Minister will accept that? I move accordingly—

I have no doubt that the commissioner will take the advice of the mining engineer. The commissioner is the authority responsible for the collection of the tax, and he will naturally consult the mining engineer, but as he is the authority responsible for the making of the assessment, I would rather leave it in his hands.

Amendment put and negatived.

Clause, as amended, put and agreed to.

On Clause 6,

I move, as an amendment, a further proviso, as follows—

I have spoken on the second reading about this proviso, and will move it formally now.

I am sorry I cannot accept that amendment. To begin with, the percentage of 50 is too low, and involves too large a diminution in revenue. It was suggested I might make it 55 per cent. and produce about the same amount of revenue which we expect now. I am not prepared to adopt that. It seems to me you will increase the difficulties of administering this tax very much if you do this. The principle of this tax is a separate tax on excess profits, and it seems desirable to keep the taxation on those separate from that of the ordinary profits of the mines.

Amendment put and negatived.

Clause, as printed, put and agreed to.

On Clause 9,

I would like to ask the Minister if he has any objection to the returns not being made twice a year. As this imposes a considerable burden on mine staffs, I would suggest annual returns.

The same point was raised with regard to the income tax, but in that case I stated to the House that the change was made in regard to companies. It does not seem to me that we are putting a very serious burden on them to make the returns twice a year.

It means a tremendous amount of work to the mines.

Clause, as printed, put and agreed to.

On Clause 11,

I see the Minister proposes here, in cold blood, for a mine which is late in its payment to have to pay 10 per cent. per month of the amount in arrear, which is a perfectly unconscionable fine. It is carrying the thing to absurdity. The Minister will remember that the provincial council of the Transvaal used to impose that particular penalty.

They do so still.

No, and that is what I am coming to. We passed a Usury Act and limited them to those rates. I suggest to the Minister that the penalties should be those of the provincial council of the Transvaal in respect of arrear poll tax and arrear income tax, where the penalty was reduced from what it used to be. I move as an amendment—

This penalty is certainly very severe, but it is intended to be severe in the cases to which it applies, and it will apply only in cases where there has been some fraud or attempted fraud in the opinion of the commissioner. Sub-section 2 makes it clear that if there is no intention to defraud the revenue the whole or part of the fine may be remitted.

With leave of the committee, amendment withdrawn.

Clause, as printed, put and agreed to.

Remaining clauses and title having been agreed to,

House Resumed:

Bill reported with amendments which were considered, and the Bill, as amended, adopted and read a third time.

I move—

The object of the first amendment is to provide for a few small companies which work land and each member of which is actually a farmer. The next amendment is to allow the Bill to apply to certain leases, mostly in Natal, I believe, where land is held under long lease and is pledged by mortgage but the lessee is not the actual owner. The next amendment is to connect up, so to speak, the definition of “farm mortgage” with the definition of “farmer”, that is to say, a mortgage held over a farm is not a farm mortgage unless that farm is held by a farmer as defined in the Bill. The other amendment is consequential.

Is the Minister quite satisfied, dealing with the case of leases in Natal, that a lessee can specially hypothecate the lease of such a farm? May I say, in regard to the Minister’s amendment, which cuts out the one I had intended to move, that he has in mind the case of where two or three farmers may have combined to carry on business with the protection of limited liability, but he has not provided for the case, almost certain to occur, that in addition to these there may be nominal shareholders concerned. Under the present law, two persons may constitute a company, but under the older law, seven persons were required. I would suggest that we might add some such words as “holding more than one share each.” I want, however, to move the amendment standing in my name on page 124—

The effect of the amendment is this: assets of a farmer may be in course of administration in insolvency. Under the definition here he might be still carrying on the business of farming or farming might be his only means of livelihood. Then the benefit of the tax proposed under section six or seven would be refunded by the Minister to the trustee or liquidator.

That will be paid by the trustee or liquidator into the pockets of concurrent creditors, and not into the pockets of the farmer at all. I do not think that that is intended. I think I have stated the effect of the situation correctly, and if that is so, the definition is unsatisfactory. The object of the measure is to assist those who are still solvent and not those who have become insolvent. Yon may have a case where a company may have been in liquidation for some considerable time. You may have a case of a company under judicial management, and there the distribution of moneys under the Act which we passed last year must be in the same order of preference as in insolvency. I hope the. Minister will accept the amendment which I have proposed.

I have been asked at this stage to put the following question to the Minister: Say that a farm belongs to the deceased estate of a farmer and that the executors are carrying on the farm in the interests of the estate. Is such a farm included? Will the estate have the advantage of this provision?

The amendment moved by the hon. member for Cape Town (Gardens) (Mr. Coulter) affects the position of a farmer whose estate is under sequestration or statutory assignment, and I am prepared to accept it in this form, to add at the end of line 55 the words “whose estate is not under sequestration or statutory assignment.” I think that that will meet the position.

I should like to mention a few cases which I think should be provided for under the Bill. I am speaking now of actual instances. There are farmers who have bought farms under deeds of sale before the 1st of April. A condition of the deed of sale is that within a certain number of years they will have to pay the amount due and in the meantime they pay interest in accordance with the deed of sale. According to this clause, these farmers are “out” entirely. It might be argued that the farmer can pass a bond for the amount of the deed of sale, and that that will fall under this clause. The position is not always met in that way. The position in the particular case which I have in mind is that a farmer will not be allowed to take transfer because a certain amount of money has to be paid on the deed of sale before the seller will consider that he has sufficient security to give transfer. Further, if the seller should allow him to take transfer, the farmer would have to go and pay transfer duty which he cannot do at the moment. That would be met if the Minister would accept a small amendment after line 30 to insert a new clause to deal with that position. I shall bring up the amendments which I want to propose later on. In the second class of cases which I have in mind—it may be a rare case, but it is one which has actually occurred in my constituency—the position is that two brothers have bought a farm, and they are liable under the bond. In the meantime, the one brother goes insolvent, or is not able to meet his obligations, and the other brother has to take over his share of the farm. The original bond was registered years ago, but when the second brother takes over, it has only been registered after the 1st of April. It might be argued that under sub-clause (1), line 37, the joint and several liabilities of the remaining farmer would cover that, but in any case that is a debateable point, and I am certain that those are cases which the Government would like to meet. I would suggest after the word “debtor” in line 38 there should be inserted the words “or joint debtor with another farmer or farmers.” Now the third point which I would like to mention is also a case such as would occur rarely, but I am again speaking of a case which actually occurred in my constituency. It was the case of a man who had bought a farm. He intended to sell his own farm to pay the purchase price of the other one, and not wanting to go to the expense of a bond, he went along to his friends and relations and got them to endorse a promissory note for him. He was not able to sell his farm, and now he has a promissory note secured by all his relations. I would suggest in the end of this paragraph to insert certain words which would meet the case. I hope the Minister will agree that my suggestions are reasonable, and that he will accept the amendments which I have drafted. Perhaps the Minister, who has had a great deal to do, would be prepared to consider these amendments at the report stage.

I do not think that an estate which is under sequestration can be regarded as being entitled to the benefits of this Bill. The hon. member for Senekal (Mr. Visser) put up three points. One was that a deed of sale which provided for the payment of the purchase price should be regarded as coming within paragraph 3. I do not think that can be agreed to. I do not see any difference between an obligation arising from a document like that and any other obligation. Then there was the question of two brothers liable under a bond; one became insolvent and the other took over the bond. I am sorry, I cannot allow that either. Still less can I allow the case of a farmer who went round among his relatives obtaining signatures to promissory notes.

I should like to bring definition of “farmer” to the notice of the Minister. Under the Bill a farmer is somebody who, in the opinion of the Minister, usually makes his living in part or wholly out of farming carried on by him. The difficulty which I bring to the notice of the Minister is this: the custom among our Afrikaner people in the rural areas is that the farmer purchases the land for his son. The farmer is a “sleeping” farmer, or a business man. The son farms on the land, but the farm remains in the name of the farmer, and the father also takes a bond on his own name, although in reality it is the son who does the farming and who pays the interest. Actually, he is the man who is responsible for everything. What of a case like that? It appears to me that a case of that kind does not fall under that definition unless the Minister uses his discretion and says that in such a case the owner is also a farmer. That sort of thing is done by the farmer to help the son, and it is the custom on the countryside. The father keeps the farm in his name for the sake of security, and, in addition, the bond is in his name.

I understand that an estate will not get the benefit of the subsidy. Take the case of a man owning a farm on which there is a bond for £1,000; he dies and bequeaths the farm to his son, the widow to have a life interest in it. In this instance will the estate not get the benefit of the subsidy?

That certainly does not come under the Bill as it stands, and I am not at present convinced that one should alter the Bill so as to bring it in. The hon. member for Ladybrand (Mr. Swart) raised the question of a man who owns a farm and has a bond on it. He intends the farm to become his son’s and allows the son to occupy it. I am afraid that such a case is not covered in the Bill. I do not see that the son in this case is in a different position from that of a man who rents a farm. The son occupies that land by the will of the owner, but the bond is in the owner’s name, and the owner is not a farmer, so that I do not see how this case can come within the Bill.

Surely, the widow and children have been farmers, and nothing else? The estate must be carried on. These people will suffer a serious hardship if they do not get the subsidy.

Is the bond still in the name of the deceased man?

Yes, but the position is that the whole of the farming operations are being carried on as they have been during the last ten years.

In the early stages of the Bill I raised the question of the definition of “farmer,” and I asked the Minister how he proposed to deal with a case where a person has some business in a town, and at the same time is a bona fide farmer. Under the definition in the Bill the matter rests with the Minister to be decided, and I would like to know on what principle it is to be decided. How are you going to decide which is a man’s principal means of livelihood?

In reply to the hon. member for Cape Town (Castle) (Mr. Alexander), it is impossible to lay down any hard and fast line. With regard to the case of the estate brought up by the hon. member for Willowmore (Mr. Steyn), the Bill, after all, leaves the decision in the hands of the Minister.

The hon. member for Gardens (Mr. Coulter) has already pointed out to the Minister the anomaly of having the words as proposed by the Minister now. In the Cape I know of many farms that are run under lease. It would mean that a person who runs under lease will have to register that lease before he can get a mortgage. I move, as an amendment—

I am unable to put this amendment, as it is inconsistent with the context of the clause.

May I remark that this clause applies to a mortgage already in existence? These mortgages are in existence upon leases.

Leases can be mortgaged. If for longer than 10 years they are registered, and you pay transfer duty on them. Many of these leases are 99 years’ leases, and are registered in the deeds office.

I do not know if the Minister has quite appreciated my point. There is the case of two brothers, one of whom has to take the farm over, and has had his difficulties increased. If both brothers were solvent to-day, then they would automatically fall under the law. Now the one who remains has a double load to bear. I am not pressing my amendment now, but I am going to give it to the Minister after the committee stage and I hope he will consider it at the report stage.

May I be allowed to make an appeal to hon. members? It is impossible, surely, to deal here with all cases that may happen. Does my hon. friend really think that it is possible to move an amendment which will provide for all cases? We must not lose sight of the fact that we want to help a certain class of individual here, and that is the individual who is on the land and whom we want to keep on the land. It must be left to the Minister to decide this and I think I can assure hon. members that no person, who has the slightest claim to assistance, will be excluded. I do not think, however, that we can provide for everything by means of amendments.

I move, as an amendment—

I cannot accept that amendment. I am prepared to consider the matter at another stage, but not now. Paragraph (c) of the definition “farm mortgage” was inserted to deal with a definite class of land tenure in Natal with long leases upon which there are notarial bonds. As far as I know, such leases exist hardly at all, outside Natal. I am not prepared to ccept the amendment.

I should like to know whether the amendment proposed by the Minister will have the effect that in cases where the owner of a farm, the mortgagee is not a farmer himself, no relief will be given. If that is the effect, it will be a very serious matter.

That amendment has been approved of.

May I make an appeal to you. We were so confused that I did not hear that the amendment was passed, cannot we be allowed to revert to it?

The hon. member can discuss it under “B” where the same words are found. The hon. member can move an amendment of the amendment at the committee stage.

I want to withdraw my amendment which appears on the order paper, and to substitute—

Amendment proposed by Mr. Steyn withdrawn.

Amendments proposed by the acting Minister of Finance and Mr. Coulter put and agreed to.

Clause, as amended, put and agreed to.

On Clause 2,

I move—

If that is accepted Clause 3 will fall away altogether and a consequential amendment will arise in Clause 4. The purpose of my amendment is to make sure that this subsidy shall be paid to the farmer debtor and not to the creditor. This from the point of view of the creditor is one of the most important amendments that may come forward. There are many objections to the system proposed by the Minister. My amendment is designed to cut out Clause 3. Now this clause has been very carefully considered by those whose duty it will be in the course of every-day business to administer the Act. I dare say that my view will be supported by a large number of trust companies, and I imagine it will be supported by the principal banks of this country for reasons which I shall refer to. There is no privity of contract between the creditor and the State. The debtor is a farmer debtor and it seems to me that it is going a long way for the State to step into a contract which has been entered into between the creditor and the debtor and to say that as far as the rate of interest is concerned, the creditor shall have the duty of applying for a portion of the interest due to him to the State. As I said yesterday, in the interval between the payment by the farmer of a portion of the interest there may be a death or an insolvency, and while the creditor is entitled to the payment of one and one-half per cent. by the State, complications may arise which may react on the creditor. May I say that to throw the burden of collecting this one and one-half per cent. on institutions which may have, like some of the big banks, investments in every district of the Union, is first of all to ask that a sum of money due to them, which may in a single half-year in the aggregate run to £30,000 or £40,000, shall be collected from the Government. Even in Pretoria, our Government departments are not notorious for the promptitude with which they deal with business matters, and in the case of an Act like this, there may be delay, in the first place owing to the Act being new, or through other causes, and in the case of an institution which may have £30,000 or £40,000 to collect, a considerable loss of interest will be involved. Apart from that, if the onus is thrown on the creditor, he will have to comply with a large number of regulations that will have to be laid down by the department administering the Act. A number of returns will have to be furnished and many details will have to be supplied. Application forms will have to be filled in, proof of identity, proof of the existence of a mortgage bond, etc., will have to be supplied, and it will take a long time for a third party such as an institution of the kind which I have referred to to get that information. The debtor, so long as he has an interest in collecting that 1½ per cent. will be very quick in providing that information, and he will do everything in his power to see that his application, therefore, is in order.

Business suspended at 6 p.m. and resumed at 8.5 p.m.

When the House adjourned I was referring to the difficulty bondholders would experience in collecting from the Government a share of the interest on farm mortgage bonds. There is another point which is very important: we have throughout the country a large number of small bondholders, people whom we may call unorganized investors. I would not like to guess whether they have not a larger amount invested in farm bonds than have the moneyed institutions like trust companies. We cannot fairly ask these small investors to wait for a considerable time for their 1½ per cent. from the Government, in addition to having had their interest reduced to 5 per cent. I think the Bill will work the greatest hardship on these small investors, and as a result some of them will have to reduce their standard of living. I ask the Minister to say that the farmer who, in the past has been compelled to pay the whole of his interest, should not be left under the impression that it is sufficient now for him to pay only 3½ per cent., and to leave to the bondholder all the worry and trouble of having to collect the remaining 1½ per cent. from the Government. There is a risk, under the Government’s proposal, of an impression getting abroad that the proper rate of interest on farm mortgage bonds is only 3½ per cent. The Government will add to its difficulties if it does anything to encourage that idea. The responsibility should rest on the debtor of paying the full 5 per cent. and of obtaining a refund of 1½ per cent. from the Government. If the Minister considers the practical and equitable side of the question, he will appreciate that what I suggest is fair, and will meet every legitimate request of the farmers.

I am sorry that the hon. member for Cape Town (Gardens) (Mr. Coulter) should now attempt to put the onus on the farmer to pay the full 5 per cent. interest and that he wants to leave it to the farmer to get the 1½ per cent. from the Treasury. I want to refer him to the position in which the farmer finds himself. The fact that the Government pays him per cent. interest subsidy is evidence of the fact that the farmer is powerless to pay the 5 per cent. If we throw the onus on him, I want to tell the hon. member that the majority of the farmers will not be in a position to pay 5 per cent. I should also like to put a question to the Minister. What is proposed in this clause is a most complicated affair and I should like to see that the bondholder is paid 5 per cent. interest on due date, and for that reason I want this clause to be made as simple as possible. Every magistrate in a district knows the extent of the bonds in his district, and he knows how much money is due on these bonds. He deals with the income tax returns of every farmer, and he knows exactly which farmers have bonds on their properties. I now want to ask the Minister whether it would not be possible so to amend this clause that the farmer, before paying the interest on his bond, has to go to the magistrate and hand the 3½ per cent. to him. The magistrate has to give him a cheque for the other 1½ per cent. of the interest which the Treasury is contributing. He hands the 3½ per cent. to the magistrate who gives him a cheque for the balance, and in that way the whole amount is sent on to the bondholder. In the case of the Land Bank, we have already had the experience that even with the best intentions in the world that institution cannot carry on without delay if all the business has to go through one channel. I do not wish to say that there must be delay in connection with the payment of interest. If we arrange matters so that the magistrate can pay the subsidy on behalf of the Treasury, it will greatly facilitate the position because the work of every district is then done separately, and it does not have to go through one channel. I hope that the Minister will see his way to take this into consideration and that he will make an attempt to make the payment of interest as simple as possible so that it can be carried out as expeditiously as possible and with as little delay as possible.

This amendment of the hon. member for Cape Town (Gardens) (Mr. Coulter) depends on a further amendment, which he is about to move, being adopted. The object of these two amendments, as he has told us, is that the farmer should, in the first instance, pay his 5 per cent. to the bondholder, and then he should be in a position to claim the subsidy from the Treasury. This is a matter to which I know the trust companies and others attach the very greatest importance. They have pointed out that a great hardship will be imposed upon them if the farmer is simply allowed to pay 3½ per cent., and not be compelled to take any further action with regard to allowing them to obtain the 1½ per cent. They will not be in a position to know whether he is a bona fide farmer or not, and whether they are entitled to the 1½ per cent. or not. On the other hand, we have come to the conclusion that it would not be reasonable to put the farmer under an obligation to pay the 5 per cent. before he can obtain the subsidy. We have an amendment on the paper later on which provides that the Minister can issue a certificate to any farmer declaring that he is a bona fide farmer. The farmer will get that certificate, and when he pays the 3½ per cent. he will take that certificate with him to the bondholder, and that certificate will enable the bondholder to obtain his 1½ per cent. We do not want to put any difficulties in the way of the trust companies, and still less in the way of the private bondholders, but we are not prepared to go as far as the hon. member asks us. I therefore am not able to accept the amendment.

I would just like to know whether, in the report stage, there is any possibility of making this compulsory upon the farmer? Up to now the trust companies have treated us very well, and I am informed that this point will be of tremendous importance to them. If it be made obligatory upon the farmer, the farmer will not object to apply for a certificate, and, after the certificate has got to the bondholder, the latter will know that he is going to get his l½ per cent. without delay.

I suggest that we should let the farmer pay his 5 per cent., and if afterwards he applies for a certificate, and it is issued by the department, then the position is perfectly clear. The Minister is cutting down the rate of interest, but why go further and cut into the contract by throwing an additional burden upon the creditor. I suggest that we should throw upon the debtor the obligation of obtaining the certificate. It will not prove to be a difficulty. As the Minister knows, interest notices are sent out, although this half-year they may be rather rate. Creditors would naturally help former debtors to complete the forms. My experience is, and has been, that everywhere throughout the country mortgagees have done everything in their power to meet debtors, because it is in their interest to do so. Let the Minister allow the onus to remain on the debtor. There is no natural antagonism between the mortgagee and mortgagor; their interests are mutual, and every creditor will go out of his way to facilitate the recovery of the 1½ per cent. subsidy. To pass the section as it stands means delay and difficulty, and throughout the whole country the impression will go forth that the farmer need provide no more than 3½ per cent., and they will be lulled into a false sense of security. It is not the case that every mortgagor is in default. I have told the House already, and I repeat, the experience of the vast majority of bondholders is that debtors have carried out their obligations. The proof is in the reports of large concerns like the South African Mutual, and the Colonial Orphan Chamber. They recently had their annual meetings, and when you compare their reports with the doleful accounts which have been given here of the state of farming you see that they cannot be reconciled with the fact that a small proportion of interest only is outstanding. In the case of the South African Mutual it was surprising to us to see how little interest is in arrear. In the Minister’s memorandum it was stated that of £100,000,000 outstanding no more than per cent. was said to be in arrear. Therefore the idea that the farmer to-day cannot pay his interest does not appear to be in accord with the actual facts of the case. I feel that the matter is so important, from the business point of view, that I venture to press strongly on the Minister the acceptance of my amendment. Why does not the Minister accept the principle that this House will not go one step beyond what is actually necessary in interfering with contractual rights? It will mean that the onus is thrown on the farmer; and it is and should be the farmer’s burden. I cannot follow the argument of the hon. member for Hoopstad (Mr. Conroy) when he suggested that the farmers could not shoulder this burden.

It is so.

I cannot believe it is so. All that is called for is a little energy, and I cannot believe that mortgagors will not stir themselves when they find that 1½ per cent. can be obtained if they take the necessary steps to do it. If you give the farmer to understand that the total rate of interest he has to pay is 3½ per cent., and next year a demand arises in this House, when this legislation will come to an end, to give permanent effect to that view, the Government will have forged a weapon with which it will be beaten. There probably will be a strong demand put forward to that end. It will be said that the Government has reduced interest to 3½ per cent., but, in fact, it is not so.

Under this clause, may I ask the hon. member for Cape Town (Gardens) (Mr. Coulter), will not the creditor be entitled to claim his full 5 per cent. from a debtor?

Of course he can.

Cannot he say to the debtor: “If you do not produce, or give me, a certificate I will issue summons against you”. Cannot the debtor be compelled to produce that certificate by pressure from the creditor?

I think the hon. member for Cape Town (Gardens) (Mr. Coulter) is in the position of an astronomer, who is looking at the farmers’ position through a telescope, and he sees the farmer far away like the stars. I suggest that the hon. member look at the farmers’ position through a microscope. I know of farmers who have depleted their stock and who have sold their sheep for 3s., 4s., or 5s., to pay their interest. They have taken loans on their policies—to pay interest on bonds due to the same life insurance companies. But this thing has come to a dead stop. If we could have foreseen these bad times, this law should have been passed sooner. I can speak for farmers in my part of the world, and say that they are at the end of their tether. The trust companies, whom the hon. member represents, will not give them more credit, nor will the banks do so. Where I make an appeal to the Minister is, to make it as easy as possible for the trust companies to get their money. I introduced my amendment out of consideration for the farmers, because I recognize that the trust companies have dealt very fairly with them, but they are not fully aware of the position in which our farmers are. The trust company reckons that that farmer is quite all right, because 85 per cent. of farmers have paid their interest. It does not realize the sacrifice of capital and of earning capacity which farmer Jones, and farmer van der Westhuizen, have made in order to pay their interest. It is impossible for more than half the farmers to raise 5 per cent. The farmers are in the position in the drought-stricken areas that they are buying fodder for their cattle, and by the time they have saved them those cattle will have cost more in fodder than they are worth. Even this 3½ per cent. will be more than most farmers can pay. I wish to be in a position that when times improve, I shall be able to go again to the trust company and ask for a loan on a farm, and therefore I would not come here and paint a black picture if it were not so. But it is so. Therefore I sincerely ask that this reiterated demand that farmers must scrape together 5 per cent. be abandoned.

While I agree with most of what the hon. member for Cape Town Gardens (Mr. Coulter) has said, we are faced with an extraordinary position to-day and must view matters keeping that in mind. While we are anxious to do everything in our power to help the mortgagees, they must make up their minds to assist in this matter as far as they possibly can. I am connected with a large concern and the manager told me that there would be no very great difficulty in most cases in collecting the interest, but where the difficulty came in was when they had to go to a farmer who is in a position such as the last speaker has described. This company has not called up any bonds, they have tried to help, but the farmers are gradually getting further and further in arrear. If a farmer cannot pay 6 per cent., he will not be able to pay 5 per cent. If the Minister will accept the suggestion that if the farmer is able to pay 3½ per cent. he should at the same time get a certificate from the magistrate, and if the Minister will arrange that the magistrate pays out the other 1½ per cent. straight away, I do not think any lending company will object. I do not like this Bill, but I see the necessity of helping. The method I think bad but apparently this is the best scheme that could be worked out in the time at our disposal. If one lending company can see its way clear to help in this respect, why cannot they all do the same? It has been said that the outstandings are small, but I know of one company which has capitalized practically all the interest owing to it in the Free State. I ask the Minister to go to the length of accepting the suggestion because I am sure that the lending companies would then be satisfied, but if they are made to wait for the extra l½ per cent. I do not think they will be prepared to accept the scheme.

We have just had from the hon. member for Senekal (Mr. Visser)—and I believe every word he says—a description of the conditions in the Free State. The conditions, however, are not the same all over the country. There are farmers who themselves hold bonds, and they are well enough off to do that. There are farmers who would far rather continue paying the interest they are now paying—the average down our way is 6½ per cent.—they are quite ready to pay that interest, and would much rather do so than have their bonds called up. Farmers generally will, I think, prefer to continue on the bonds which they have at present if they receive decent treatment from the people who have lent the money. I can say frankly that there are very few of these companies that have pressed the farmers to pay where the least inclination has been shown to pay a portion of the amount due. They have waited to get what they could later on. I am sure that if some means could be found by which those farmers who desire to do so might carry on with the bonds they have now, it would be very much better than for each and all of these farmers to go to the Land Bank and ask it to take over these farms.

That has really nothing to do with the clause under discussion.

The subsidy is represented by the per cent., which is being deducted from the interest.

That is on a later clause.

I do feel some change should be made by which farmers who desire it can continue with the bonds they hold at present as long as they are fairly treated by the bond holders.

The hon. member cannot continue, he is quite out of order.

I think that the points raised can be met without putting in any further provision. After all, the onus is on the farmer to prove that he is entitled to relief under this Act. The farmer has to make application and has to satisfy the Minister that he is a farmer under the Act, that his land is mortgaged, and I cannot see that there is any difficulty. I cannot see that there should be any difficulty between the bondholder and the farmer as to arrangements being made for the farmer to bring up the necessary certificate when he pays his three and one-half per cent. interest. In the majority of cases the bondholder will use the hold which he has in the ordinary way to say to the farmer, “When you bring me the 3½ per cent. you must bring me at the same time a certificate to show that I must get the 1½ per cent.” It is of course not possible to let the magistrates issue that certificate. I think that as the Act stands there may possibly be some difficulty about the first payment, but I am quite sure that when it gets into working order there will be no further difficulty and there will be some sort of standing arrangement such as I have indicated. The farmer when he pays the 3½ per cent., will simply bring along a certificate.

Why could not the magistrate be authorized to pay out the per cent. in the same way as he pays out witness fees and makes other payments on behalf of the Government. That would obviate a lot of difficulty.

I did not say that the magistrate could not pay out the 1½ per cent. but the Minister must issue the certificate.

Yes, but the certificate is only issued once. If the magistrate is thereafter authorized and satisfies himself, what difficulty can there then be? I am talking about the country districts now and the magistrate knows the farmers of the district.

The payments cannot be made until the certificate is issued and the certificate must be issued by the Minister. Once the man has established that he is a bona fide farmer there will be no difficulty.

The Minister assumes that under this Act provision is made whereby the creditor can apply for the certificate. On the contrary, there is no such provision, the only person who can apply is the farmer-debtor. Section 3 (1) merely provides that payment of the subsidy is to be made to the creditor. Now, how is application to be made. There is no power on the part of any authority to make payment of the subsidy unless application is made by the farmer. The farmer has to make application which must come before the Minister or his deputy and proof has to be given of various matters under the heads laid down. Then to show how delay will occur you will notice that every application for the payment of subsidy made and signed by the farmer must be lodged with the officer prescribed by regulalation, etc. The suggestion that a creditor will be able simply to say, “I have received 3½ per cent. from the debtor, send me a cheque for 1½ per cent.” is not warranted. The grant of a certificate is only for one purpose and that is to satisfy the Minister that the farm is mortgaged, but the farmer would still have to apply under section 4, and then the creditor would then have to produce an application made in the name of the farmer and thus there would still be this delay I anticipate.

It seems to me that the Minister overlooks the fact that no payment can be made under any application until the Minister has had the opportunity of discharging the duty laid upon him by this Act and that is that he must determine what bonds shall be entitled to this subsidy. I am afraid that the hon. member for Cape Town (Gardens) (Mr. Coulter), will have to be satisfied that there must inevitably be some delay.

The farmer to get this relief must get a certificate from the Minister to certify that he is entitled to it. He presents that certificate plus 3½ per cent. to the creditor. The Minister says that that is not sufficient because the creditor can always sue unless he gets full satisfaction for 5 per cent. of his bond. What will have to happen is that the farmer must satisfy the Minister that he is entitled to l½ per cent.

The hon. member cannot discuss that point at this stage. That is a point which should be discussed on Clause 4.

It is a point which is material to this section.

No, that particular point has to be dealt with under Clause 4.

Cannot the hon. member refer to Clauses 3 and 4 here? I referred to those clauses myself. I proposed this amendment in older that Clause 3 should fall away.

My ruling is quite clear. The hon. member cannot discuss this except in so far as it concerns the question to whom the amounts shall be paid.

Amendment proposed by Mr. Coulter put and a division called.

As fewer than ten members (viz., Messrs. Alexander, Bowen, Coulter, R. J. du Toit, Wares and Waterson) voted in favour of the amendment, the Deputy-Chairman declared it negatived.

Clause, as printed, put and agreed to.

On Clause 4,

I move—

I move—

I propose this amendment on behalf of the hon. member for Queenstown (Mr. van Heerden) and in this instance I am sure I will have the support of every farming member of the House. In the case of those farmers who reap their crops once a year, it is felt that three months will not be sufficient and that it should be extended to six months. I wish to introduce a means test so that the subsidy will not be paid to farmers who have no need for it and I move further—

1. (c) and in the case of an individual farmer that the taxable amount of His income for the purposes of the Income Tax Act (No. 40 of 1925) for his last preceding year of assessment shall exclusive of any deductions allowed in terms of section 15 of the said Act be less than £300 per annum and in the case of a company registered or incorporated under any law that its means during that period were insufficient to enable it to make payment of any interest due on such farm mortgage.

In my opinion, the greatest defect of this measure is the proposal to pay the subsidy to farmers whose lack of means do not call for the payment of a subsidy. I believe a large number of farmers are not satisfied to be placed in the position contemplated in this Bill, and who ask why they should receive from their fellow citizens support which they have not asked for and do not require. I believe the House would like to assist the farmer in an equitable form. Is it reasonable that the farmer with a taxable income of at least £300 a year should receive a subsidy from the State which they can invest in any way they like or use for pleasure? It is possible that they will get these subsidies at the expense of a creditor who may be in a far worse position than they are. Later on I contemplate proposing an amendment to deal with the poorer creditor. I do not know how many farmers there are who have a nett taxable income of £300 a year, but if I listen to the hon. member for Senekal (Mr. Visser) I should take it that not a single farmer in the Union has a taxable income of £300 a year or over.

There are some in the Western Province and a few others like them.

I can safely assure the committee, on the strength of the statement of the hon. member for Senekal, that no farmer will come under my amendment. We have been told here that no farmer can pay more than 3½ per cent.

The difference is that you want to force the farmer to pay the 5 per cent.

Slowly the hon. gentleman is coming round to my point of view. It must be the experience of many members of this committee that the inequity of this Bill will create a feeling of resentment which may go a long way to convince people that a coalition Government, which came into Parliament with the cry of equality of sacrifice, is showing that equality is a very one-sided virtue. When I desire to take out of the operation of this measure those who do not need to be on the dole, is the hon. member opposite going to stand in my way?

The MINISTER OF COMMERCE AND INDUSTRIES [inaudible].

I would ask the Minister of Commerce and Industries whether he is prepared to stand up and say that, in his case, as a farmer, if he were well able to pay his interest, he would think it right to ask the rest of the community to pay him a subsidy? I imagine that his sense of public duty is such that he would immediately refuse. I will alter my first amendment to read—

In Clause 4 (2) it is provided that the application has to be made within three months. Then it says that the Minister may, in special circumstances, extend such period. Does that mean that where a man is unable to pay the 3½ per cent., an extension of time will be given?

He has got to prove that he is a farmer. With regard to the three months, it has been put to me by one or two hon. members that the period of three months is too short. Well, there is power for the Minister to extend the period, but I am informed that, in a large number of cases, in ordinary practice, the farmer should be allowed to wait until the harvest has been reaped or his clip has been sold. I think the period of twelve months proposed by the hon. member for Gardens (Mr. Coulter) is too long, but I am quite prepared to accept the proposal of the hon. member for Queenstown (Mr. van Heerden). If any hon. member will move six months, I will accept it. This relief is to be given to farmers, and a farmer is defined as a man who, in the opinion of the Minister, normally derives his sole or principal livelihood from farming. That, I think, means that, except in a comparatively few cases, the man who qualifies as a farmer under this Act will be a man who legitimately can claim relief in the matter of interest. To put in a means test would be onerous and invidious.

I move—

Amendment proposed by the Acting Minister of Finance and by Mr. Struben put and agreed to.

Amendments proposed by Mr. Coulter put and negatived.

Clause, as amended, put and agreed to.

Clause 5 put and negatived.

New Clause 5,

I move—

5. Any money paid after the date of the commencement of this Act, in respect of interest under any farm mortgage shall, unless the person making the payment has in writing expressly declared otherwise, be appropriated so far as it may suffice for the purpose in the payment of interest which may then have accrued and be due and payable in respect of any period after the thirty-first day of March, 1933, without prejudice to the right of the creditor concerned to recover any interest that fell due up to or prior to the thirty-first day of March, 1933, or to exercise the remedies available to him because of the failure to pay the same punctually.

The object of section 5, from the point of view of the Minister, is to make it clear that the subsidy will be paid only in respect of interest which has accrued up to the 1st April, 1933. But beyond that I do not think he desires by section 5 to disturb the position in the least, and therefore I have tried to express it in a way that puts it beyond doubt. I deal with the money paid after the commencement of this Act. Suppose the money has been paid monthly during April, May and possibly during the month of June of this year, what exactly will section 5 mean in relation to payments of that kind? It will lead to a good deal of complication. Therefore I suggest that section 5 should apply to moneys paid after the commencement of the Act. In other words, a debtor cannot pay in advance. I want to make it perfectly clear that the creditor can still recover arrears. The last sentence of the amendment refers to that. If you provide a debtor can pay the interest on his bond for the three months up to June 30, 1933, would he be still in legal default because he was in arrear prior to 31st March, 1933? I want to settle that point beyond doubt. Surely there could be no objection to saying that, where you have a statutory appropriation against the will of the creditor, he can still exercise any remedies open to him because a debtor has failed to pay what he owed before the 31st March, 1933.

I want to draw the Minister’s attention to this: The law requires that if a payment is made on account of several amounts due, and no specific debt is mentioned then the most onerous debt must be credited. Here we allow the debtor to decide not between two different kinds of debts but in regard to payments on the same debt. If the present interest due is to be credited what about past interest owing? The Minister must consider very carefully the question of loss of preference in case the debtor is forced into insolvency. I do not know whether the Minister appreciates my point, which is a very important one. We are depriving a man of his rights, and what is worrying me is the possible loss of preference in a case of insolvency.

I do not quite know why the hon. member for Cape Town (Gardens) (Mr. Coulter) takes the date of the Act. What about interest payable before? I should have thought that the points he made would be met at the end of the clause. I am quite prepared to accept the clause with the substitution of “commencement of this Act” for “thirty-first day of March” in the penultimate line.

I should like the Minister to reply to the point I raised. You force a man to accept interest due on a certain day and to leave outstanding arrear interest. Preference in the case of insolvency may thus be lost. You should make some provision in regard to this.

I should like to amend my proposal by substituting “31st day of March” for “date of the commencement of this Act” in the first line and the substitution of “that date” for “the thirty-first day of March, 1933,” in the second line from the end. The new clause will then read—

Would not the objection of the hon. member for Sea Point (Maj. van Zyl) be met by other clauses of the Bill, where the bondholder is allowed to capitalize the interest? That is something which has done much to make this measure very acceptable as far as certain farmers are concerned. If bondholders are willing to accept this in the spirit in which it is meant—to capitalize the interest, which is going to make it more workable than any other thing, an enormous benefit will be conferred on the farmer. I can assure the hon. member for Sea Point that that would be a great relief to those farmers who lie awake of nights dreaming of the interest they have to pay, if it could be capitalized If it is possible for these companies to do that it will save an enormous amount of unnecessary worry. No man does not pay interest because he does not want to pay. This overdue interest is a haunting spectre.

The hon. member is out of order.

Even if the bondholder would like to capitalize this amount he cannot always do so.

New clause proposed by Mr. Coulter put and agreed to.

On Clause 6,

I move—

1. (1) There shall be levied upon every creditor under a farm mortgage a tax upon any amount which—
   1. (a) has been received by him after the thirty-first day of March, 1933; and
   2. (b) is interest due under a farm mortgage, or, in any case in which the circumstances described in sub-section
2. (2) or (3) of section 1 exist, is in terms of either of those sub-sections deemed to be interest due under a farm mortgage; and
   1. (c) has accrued after the said date in respect of any period after that date.

There is nothing new in regard to this sub-section, except it is drafted in order to make the incidence of this tax more clear. I think hon. members will see that it does not impose any new burden or materially alter the intention of the sub-clause. Then I nave an amendment not on the paper to add at the end of the clause a new sub-clause (6) the intention of which is to provide for the point that was raised during the debate on the second reading. Hon. members raised the point that where a creditor whose interest exceeded 5 per cent. and who suffered a deduction of the excess of 5 per cent., would be liable to pay income tax on the whole amount of interest to which he was entitled without any allowance for the deduction. The new sub-clause is—

I should like to know whether the amendment the Minister has just read covers the same ground as that covered by my amendment to insert a new sub-clause (7). If that is clear, then I do not propose to move my new sub-clause and therefore I should like now to move that there be added to Clause 6 new sub-clauses 7, 8 and 9, altering the number of my original new sub-clause 6 to subclause 7. I therefore move To add at the end of the clause the following new sub-sections:

1. (7) The word “creditor” wherever used in this section shall not include any holder of a farm mortgage whose nett income as determined to the satisfaction of the Minister for the period of twelve months immediately prior to the last day of the period for which such interest has been paid shall be less than the nett income of the debtor as determined to the satisfaction of the Minister under the said mortgage during the same period or where the levy of such tax is shown by such holder to the satisfaction of the Minister to occasion him undue hardship greater than that likely to be sustained by the said debtor if such tax is not levied.
2. (8) No interest received by any such creditor upon which a tax shall be levied as aforesaid shall be included in the taxable income of such creditor under the Income Tax Act, 1925 (Act No. 40 of 1925), or taken into calculation in the assessment of any provincial tax on income.
3. (9) The provisions of this section shall not apply to any creditor who has agreed with the debtor under the farm mortgage held by him to waive any right to the payment mentioned in section 7.
4. (10) Any creditor on whom such tax shall be levied may, notwithstanding that the capital debt secured by such farm mortgage is by its term repayable on a fixed or ascertainable date, require repayment thereof by the debtor thereunder on giving reasonable notice, not being less than three months in length, to that effect.

This is intended to deal with the case where the creditor who is liable under the earlier part of the section to pay tax on interest above 6 per cent., is in an inferior position in a financial sense to his debtor. I should like to bring to the notice of the Minister the very numerous cases which have come within my knowledge where this tax in excess of 5 per cent. is going to cause the greatest hardship. The Minister has been in touch with what I might call organized capital investors but I doubt very much if he is aware of the large number of bonds which have been granted by private agencies to farmer debtors where the investor may have invested his or her all on the footing that 6½ or 7 per cent. would be paid. A deduction of 2 per cent. on a loan of £3,000 is equivalent to £5 per month. If £3,000 represents the life savings of a pensioner, or the capital amount left to a widow by her husband, he or she is invited to contribute £5 per month for the benefit of a debtor who may be infinitely better off than the creditor. Can any one tell me that that is right or just? These are cases of hardship which are bound to crop up. The Minister may say that we cannot make omelettes without breaking eggs but I wish merely to give him the discretion to cover really hard cases. If he had adopted my amendment in regard to debtors who do not require assistance, he would in a sense have had a balance in hand with which to compensate this. In such a case as I have put to him, which I believe is typical of hundreds throughout the country, he should be in a position to say to the farmer who does not want the benefit that it shall not be taken away from someone who cannot afford it, for the benefit of someone who does not want it. Now I want to come to the matter raised by the hon. member for Port Elizabeth (Mr. Kayser). I want to suggest to the Minister that the right to contract out of sections 6 and 7 should be given to the mortgage creditor and the mortgage debtor. We have been told that a large number of bonds have been called up. In some cases this may have been induced by the pessimistic speeches of some hon. members who represent farming interests, but the bonds may be called up for another reason, that the creditor may find it absolutely impossible to continue to let them stand under the circumstances that will arise when this Bill is passed. It may surprise the hon. member for Senekal (Mr. Visser), to know that there are some mortgagees who have debts to pay and obligations to meet and in a case like this such a man may be driven to call up the bond. That case would be frequent and then there may be the case of the wily investor, the sort of ogre, whom the hon. member referred to, who thinks that this Bill presents a good opportunity to pass off a bad investment on to the Government. Let me tell the Minister that that £4,000,000 of the Land Bank will be exhausted very soon. I do not think that it will go very far and when it is exhausted and the Government can no longer finance applications for money, and the creditor has been compelled to call up his bond, then this Act will prevent him from coming to an agreement with his debtor to continue the bond on the old lines. The creditor and the debtor may be quite willing to come to an arrangement but they cannot do so. Why should the right of these two people to contract out be interfered with. We do not compel anyone to contract out. Let me say that a bond is called up and that loan money is not to be bad, what will my hon. friend do then?

There will be a collapse. They can pass a new bond.

We do not want to pass legislation, when at the same time we are leaving such a loophole. Why not let us give the opportunity for contracting out? At the same time I want the Minister to be debarred from coming along and saying: “I don’t care what you have arranged with your debtor, I am going to have the difference between the 5 and 7 per cent.” Then I want to deal with another point, and that is the point about the State interfering with a fixed term obligation. Where such interference occurs as is taking place to-day in the compulsory alteration of interest rates, the person lending out the money should be able to call up his bond. A person should not be prevented from getting back his money if he himself is interfered with by the State. There may be hard cases created. In a sense this Bill is a moratorium; it is an interference with the light of the creditor against the debtor. Take the case of a farmer who has sold his farm and who has taken a bond for part of the purchase price for, say, five years. The purchaser has agreed to pay him 7 per cent., and he in turn has borrowed money at 6 per cent. from a bank or some other institution. Now the State steps in and says: “You cannot have more than 5 per cent.” He in turn is paying out 6 per cent. to the bank. Well, he should be able to say: “The State has interfered with you, let the State take care of you now, I cannot do so any longer. I must have my capital.”

In regard to the point that was raised on the amendment which I moved in connection with the exemption from income tax, the wording of the sub-clause is that this interest shall be exempt from normal tax and that automatically carries with it exemption from super tax. I am afraid I cannot accept the amendment of the hon. member for Cape Town (Gardens) (Mr. Coulter). I cannot imagine anything more likely to give rise to difficulties and trouble than that the Minister should have to compare the nett income of the creditor with the nett income of the debtor and make up his mind on whom the greater hardship rests. It would mean a most difficult investigation. There may be a lot of hard cases, but I am afraid it will be impossible in a Bill. such as this, to provide for every hard case. Then the hon. member proposes that in sub clause (8), the parties should be empowered to contract out of this provision of the law, that is to say, where a debtor and a creditor agree to allow the additional interest over five per cent. to stand, the provisions of the law shall not apply. I admit that at first I was rather attracted by that proposal but on further consideration I am just afraid that it will open the door in many cases to coercion being exercised by the creditor on the debtor to force him to agree. Take the case of a farmer who owes money on a bond to a storekeeper and that storekeeper has an account against the farmer. He will be able to put an undesirable amount of pressure on the debtor to allow the bond to stand and to be exempt from this provision. It think it would not be wise to adopt that course. The other amendment which the hon. member proposes is that where a mortgage is for a fixed term, the creditor should be empowered to call up the bond in spite of the fact that the time for the repayment of the bond has not yet arrived. We do not want to encourage the calling up of bonds, if we can possibly avoid that being done, and this interference with contracts provided for in this Bill is intended to meet a temporary emergency, and let us hope that it will be temporary in its application provision will be made that it will only be extended beyond the end of next year by resolution of both Houses of Parliament. Having regard to the fact that the creditor who has a bond outstanding on a long term will not be the only person to suffer, I think that on the whole the balance of expediency is to leave the matter as it stands.

The amendment of the hon. member for Gardens (Mr. Coulter) may lead to undesirable loopholes. I am one of those members who is able to return home at week-ends. On the Saturday morning following the delivery of the budget speech, I went back to Worcester, and three of my farmer friends came to me and said: “For goodness sake, do not disturb our bonds. You pay a high rate of interest to the bank for the money advanced to us under these bonds.” They realize that if this clause is passed it is inevitable that their bonds will be called up. Of the £100,000,000 invested in farm mortgage bonds in the Union, only £25,000,000 are held by organized capital, such as trust companies. Let us assume that another £25,000,000 are held by insurance companies, so that £50,000,000 will have been advanced on farm mortgages by individuals and commercial houses. In the case of the latter, the money is lent, not because the commercial houses had it available, but to assist the Government to keep the farmers on the land, and as security for debts owed by the farmers. Business houses and country attorneys hold these bonds not only so as to have some security for the debts owed them by the farmers, but to stabilize their banking account. The position is this, a man who holds a bond as security from a farmer will, under this Bill, be compelled to be content with 5 per cent., but he will have to pay 7½ per cent. to the bank on his overdraft. In addition, he will have to pay income tax and surtax. I have had to pay income tax on the interest accrued, although I have not been paid the interest due on these bonds. On Saturday I received instructions to call in bonds in the Worcester district to the value of £100,000. A serious position will be created unless the Minister allows the farmers to contract out of the Bill.

I appeal once more to the Minister. Farmers feel that if this Bill goes through, their bonds will be called up. About six months ago, a man came to me, in my capacity of a representative of a trust company, asking for a loan, but he wanted to be certain that the bond would not be called up unexpectedly. He obtained from us money for three years certain, at 6½ per cent. interest. It is unfair that the farmers should get the reduction at the expense of the bondholder. Is the Minister going to protect the storekeeper against the widows who have lent money on farm mortgages, and many of whom will suffer severely if their rate of interest is reduced?

The hon. member misunderstood me. I am not protecting the storekeeper.

Some arrangement should be made by which farmers who prefer to pay 6½ per cent., rather than run the risk of having their bonds called up, should be allowed to do so. Otherwise the Government will make it imperative on bondholders, some of whom live overseas, and some of whom have only their interest to depend on, to call up their bonds, with most unfortunate results to the farmer.

I think this difficulty could very easily be disposed of, by moving that the constituencies of the hon. member for Worcester (Mr. J. E. J. Krige) and Port Elizabeth (North) (Mr. Kayser) be excluded from the operation of the Bill altogether.

It is quite obvious that the Government is endeavouring to reduce the rate of interest throughout the country, and in that case it would be folly to permit farmers to contract out of the Bill. All the same, unnecessary hardship is going to be inflicted by this measure on people who live on the interest they derive from their farm mortgage bonds. I notice that this section is retrospective; what about people—retired civil servants, widows and others—who collect their interest quarterly, and live on it? The effect on them will be that money which they have collected and spent they will now have to disgorge. I suggest that if the date be made the 30th June next, there would be no hardship on the farming community, whereas a great concession would be made to these small bondholders.

Amendments proposed by the Acting Minister of Finance put and agreed to.

Amendments proposed by Mr. Coulter nut and negatived.

Clause, as amended, put and agreed to.

On Clause 9,

I move—

Agreed to.

Clause, as amended, put and agreed to.

Clause 10 having been agreed to,

I wish to move as a new clause—

The object of this clause is that where a farm mortgage bond has been ceded by the person to whom the bond was passed as security for an advance, the cessionary shall not be entitled to claim moie than 5 per cent. interest. I fear that unless you do that, in view of the number of bonds that have been ceded, there will be a tremendous upheaval, and that many bonds will be called up.

I suggest that the hon. member move this at the report stage.

I don’t know whether I shall be allowed to bring in a far-reaching amendment like this at the report stage.

It can be moved as an amendment at the report stage.

On Clause 11.

There is one point that I want to ask a question upon, and that is with regard to the words “creditor and debtor” in line three. I don’t know whether this will apply to the legal representatives of the creditor and debtor. The Minister might consider whether that is a point he can deal with by regulation. I move—

I want to suggest to the Minister that it should be made perfectly clear that capitalized interest cannot be taxed. It seems to me that it would be very hard on a creditor who has to capitalize interest if he has to pay income tax upon it. When he receives it of course he must pay, but until he receives it, it seems hard that he should have to pay normal tax, although this has not actually been received. So I move—

1. (3) The amount of interest added to capital in terms of this section shall not until it be actually received by the creditor be deemed to be taxable income under the Income Tax Act, 1925 (Act No. 40 of 1925), or taken into calculation in the assessment of any provincial tax on income.

I hope the Minister will accept this amendment. One cannot pay a tax out of something you have not got. That is the principle, really, of the income tax—paying on something you get. Tn some of these cases it may be problematical that you get the money. If this amendment is accepted it will result in many bondholders capitalizing their interest, which they might otherwise not have done. It might very well turn the scale and prevent the calling up of bonds. As regards the other point raised by the hon. member, in any case it is preferent. As I read this clause, it will prevent any more interest than two years’ being capitalized.

I read this clause in exactly the same way as the hon. member for Cape Town (Gardens) (Mr. Coulter) has done. After the interest for two years has been added, there is a new capital amount, viz., the old capital amount, plus the interest for two years, and then preference can be obtained in addition for interest for another two years. Let us assume that the bond is for £1,000. With two years’ interest added the whole capital will be £1,100, and on that preference to an amount of £110 can be secured. For that reason I hope that the Minister will be prepared to accept the amendment proposed by the hon. member, i.e., that where the debtor and the bondholder agree to capitalize the interest this cannot be done in a way which would be irregular, e.g., in the case of an individual who is on the brink of insolvency. It should not be possible in a case of this kind to create preference in this way as against the other creditors.

I am quite prepared to have that provision put in. With regard to the point about income tax, I am sorry I am not prepared to agree to that. The income tax law at present brings under the scope of income tax taxation on incomes received and incomes accrued and capitalized. Interest is now, under the law, liable to income tax, so I do not see why we should exempt from income tax this capitalized interest.

First part of amendment put and agreed to; second part put and negatived.

Clause, as amended, put and agreed to.

New clause to follow Clause 11,

I move—

The object of this clause is to provide for the Minister issuing a certificate to a debtor under a farm mortgage for the purpose of satisfying the creditor that the mortgage is recognized as a farm mortgage, and that the regulation has been complied with.

Proposed new clause put and agreed to.

New clause to follow new Clause 12,

I move—

1. 13.
   1. (1) Any proceedings instituted after the commencement of this Act in any court of law for the recovery of any moneys owing under a mortgage bond, general bond or notarial bond shall be stayed upon the filing by the defendant of a certificate signed by the Minister or a person thereto authorized by him stating that such bond is a farm mortgage.
   2. (2) Such stay of proceedings shall cease to operate—
      1. (a) upon the filing by the plaintiff of a certificate signed by the general manager of the Land and Agricultural Bank of South Africa stating that the defendant has applied to that bank for an advance for the purpose of redeeming such bond and that such application has been refused; or
      2. (b) upon the expiration of a period of three months reckoned from the date upon which the certificate referred to in sub-section (1) was filed: Provided that if before the expiration of such period there is filed by the defendant a certificate signed by the said general manager stating that the said bank has granted an advance to the defendant for the purpose of redeeming the bond under which the proceedings have been instituted, but that the bond to be passed in favour of the said bank to secure such advance has not yet been registered and that it will not be possible to effect registration of such bond before a date stated in such certificate, the stay of proceedings shall continue to operate until the date so stated, provided it appears from such certificate that the application for such advance was received by the said bank not later than one month after the date upon which the certificate referred to in sub-section (1) was filed.

The object of this clause is to avoid a debtor having his bond called up by his creditor before the Land Bank has had time to consider whether it will or will not make an advance to him in order that he may pay and satisfy his creditor under his bond. It is obviously undesirable, in a case where the Land Bank is prepared to take over a bond, that the debtor should be sued and have his property executed upon before the Land Bank has had time to go through the necessary formalities to take up the bond and pay out the creditor. The first step is he presents a certificate signed by the Minister or some authorized person to say that this bond is a farm mortgage. The debtor who wishes to stay proceedings against him for the enforcement of the bond, must go to the Land Bank within three months and get a certificate that the bank is prepared to grant the advance. If the bond is not registered at the end of three months, the general manager can give a certificate to state that they have agreed to make the advance and asking that the stay of proceedings should still continue so as to give time for the registration of the bond to take effect. This is not an unreasonable position and does not impose undue hardship on the creditor, because it is obviously undesirable that where a bank is prepared to grant an advance, merely because there has not been time to register the bond, the bondholder should be able to enforce the bond.

While I do not wish to criticize the principle of this clause, I would like to draw the attention of the Minister to one or two points in its phrasing which might help to improve it. In sub-clause (1) line 4, there is the word “filed”, but where that is to be filed is not stated. It is to be presumed that it is in court.

Yes.

Well, that should be made clear. I should like to move—

The sub-clause, as it stands, is going to open the door to some interference with the rights of bondholders, because in every case, where a debtor desires to obtain three months’ grace, he will consult his attorney and he will be able, under this amendment, by writing a letter to the general manager of the bank, to secure a stay of proceedings.

No, he has to get a certificate signed by the general manager.

Where is the provision that application must be in a particular form? Then surely three months is too long; it should be two months. Then in regard to a certificate issued by the general manager of the bank I move—

It is most unreasonable to leave it to the general manager, who may have the most amiable intentions towards the debtor and be antagonistic to the creditor. He might give a certificate fixing a date six months afterwards. In the meantime the mortgagee is left in the end to sue. Whatever you may do for the benefit of the debtor is going to act to the detriment of the creditor, who, in turn, may have heavy obligations. He may have to get money at all costs to discharge those obligations. For the sake of saving a debtor any difficulties, are you going to crush this creditor?

Before you put the amendment to the vote I would like to say a few words. As I have said before, we are very grateful to the Minister for proposing this new clause. If there is one thing where an amendment is necessary, it is a clause to protect the farmers against the calling up of their bonds. I want to make an appeal to the committee not to accept the amendment proposed by the hon. member for Cape Town (Gardens) (Mr. Coulter) and not to reduce the period from three months to one. If that is done, it will so shorten the time that it will be practically impossible for the farmer to get a bond from the Land Bank before he will be pressed. This will bring him to court and involve great expense. I feel, however, that the difficulty of the hon. member for Cape Town (Gardens) can be met by the insertion after the word “notification” in the new clause of the following words: “But not for a period of more than four months inclusive of the said period of three months.” The longest time, therefore, that such an individual can make use of the Act will be four months. I move accordingly —

I want to move an amendment—

There are many people, widows and others, with limited resources, who hold bonds on farm properties, and who depend for their livelihood on the income which they receive from those bonds. Clause 13, as it is printed, will constitute a very great hardship on these people if they have to wait so long for their money. If for example a certificate is given to the effect that an advance has been agreed to by the bank, but that registration of same cannot be effected till some future date, the delay might easily extend to 5 or 6 months. The hon. Minister of Finance in his budget speech stated that there was no intention of proclaiming a moratorium, but the clause as it stands appears to provide for a limited moratorium. I trust, therefore, that the hon. Acting Minister of Finance will see his way open to accept the amendment which I have prenosed.

The amendment moved by the hon. member for Prieska (Mr. Geldenhuys) aims at practically the same thing as the clause itself does, with the addition moved by the hon. member for Cape Town (Gardens) (Mr. Coulter) prescribing that the certificate shall not be for longer than a month. I am not prepared to accept the amendment to reduce three months to two, but I think that the amendment to reduce the period in the case of the other certificate to one month can be accepted. In regard to the reference to the Land Bank, and the regulations of the Land Bank, I understand that the Land Bank has no regulations governing its advances. The amendment, therefore, would not carry us any further.

I thought everything the Land Bank did was covered by regulation. When these proceedings are stayed, and the stay ceases to operate, what about the costs? Should not something be said about the right to recover costs? You may have a creditor very much out-of-pocket in endeavouring to recover the interest due to him. I move—

I do not quite appreciate at the moment the effect of the words, “as if the stay had never been granted”.

May I just point out that in the first line of paragraph 2 (a) there is an important difference between the English and the Afrikaans text. I take it that the English text is correct and that the word “eiser” should appear in the Afrikaans text.

Yes, this is only a clerical—a drafting—error, and it will be corrected.

I suggest to the hon. member for Cape Town (Gardens) (Mr. Coulter) that he should omit from his amendment the words, “as if the stay had never been granted.” I will move that they be omitted and the words “as to the Court may seem just” substituted.

I am afraid I cannot accept this amendment by the hon. member for Cape Town (Gardens) (Mr. Coulter). I do not see the necessity of it.

With leave of committee, amendment proposed by Mr. Geldenhuys withdrawn.

Amendment proposed by Mr. Chalmers and amendments proposed by Mr. Coulter, in lines 10 and 13, put and negatived.

Amendments proposed by Mr. Coulter, in lines 4, 8, 15, 16 and 23, and new sub-section (3), put and agreed to.

New clause, as amended, put and agreed to.

On Clause 12,

I move—

I suggest to the Minister that it should read “Certificates referred to in sections 12 and 13.” I move—

Agreed to.

Amendment, as amended, put and agreed to.

Clause, as amended, put and agreed to.

New Clause to follow Clause 12,

I move—

I move—

Agreed to.

New clause, as amended, put and agreed to.

On Clause 13,

I move—

That is, in order to give Parliament power if they think that the circumstances are such as to require a continuance of this emergency legislation, to give effect to that. I propose to substitute this new amendment for the amendment on the paper. That is, to preserve the equity of the Act in the case of interest which has become due or has been paid before the date on which the Act expires.

Amendment put and agreed to.

Clause, as amended, put and agreed to.

On the title,

The amendment which has just been adopted in new Clause 13 needs an amendment of the title. I move, as an amendment—

Agreed to.

The title having been agreed to,

House Resumed:

Bill reported with amendments and especially an alteration to the title.

Amendments to be considered to-morrow.