House of Assembly: Vol38 - MONDAY 18 MARCH 1940

MONDAY, 18th MARCH, 1940. Mr. SPEAKER took the Chair at 2.20 p.m. SUPPLY.

First Order read: Adjourned debate on motion for House to go into Committee of Supply, to be resumed.

[Debate, adjourned on 14th March, resumed.]

†The MINISTER OF FINANCE:

For four successive days last week this House was engaged in a debate of the budgets submitted by my colleague, the Minister of Railways and Harbours, and myself. I think I can say that one of the outstanding features of that four-day debate was the paucity and the ineffectiveness of the criticism of the budget, as such, during that period. The function of a budget, as I see it, is to provide as adequately as possible for all foreseeable needs by raising funds in the manner least likely to affect detrimentally the country’s financial and economic structure. Now it is true that during those days we had many requests for further expenditure to meet foreseeable and unforeseeable contingencies, but as I have already said, there was very little attempt at budgetary criticism in the sense that I have defined the functions of the budget. The hon. member for Fauresmith (Mr. Havenga) made a serious attempt to provide such criticism. We had his criticism echoed by the Leader of the Opposition (Gen. Hertzog). It was a distorted and unsubstantial echo. Then the hon. member for Waterberg (Mr. J. G. Strydom) and the hon. member for Prieska (Mr. Geldenhuys) dealt with financial matters in a manner which made their remarks worthy of serious attention, and I have given their remarks on those points the attention which they deserve. But for the rest the criticism of the budget as a budget was almost entirely confined to strictures of our gold-taxation policy, strictures which were based entirely on premises which were in conflict with the premises which had been laid down by the hon. member for Fauresmith in opening the budget debate. I would also remark on the fact that for the first time in ten years, we have a budget introduced in this House to which no Opposition amendments have been tabled. It has come to be customary for the Opposition each year to put forward its financial policy as an alternative to that contained in the budget. On this occasion the Opposition has not ventured to do so. Quite obviously the Opposition is afraid to put before the country the financial policy which it would pursue in the very remote contingency of its being called upon to take office. The budget, therefore. I would claim, stands unshaken and unshakeable. This budget debate has been another of the Opposition’s failures during the current session. There are two hypotheses which can be advanced for the failure of the Opposition. The one is the unassailability of the budget, and the other is the incapacity of the Opposition. It would be unbecoming for me to choose between these two hypotheses, I prefer to leave the choice to my friends opposite.

Mr. BLACKWELL:

A mixture of both.

†The MINISTER OF FINANCE:

Now I want to deal first of all with one or two relatively minor matters raised by members who may generally be regarded as supporters of the Government. First of all the hon. member for Stamford Hill (Mr. Acutt) reverted to a question which had on a previous occasion attracted a great deal of attention in this House, the question of water supplies for the smaller municipalities. On that occasion the proposal was put forward that we should deal with the matter by the provision by the Treasury of sub-economic loans to assist such municipalities in the launching of such schemes. I raised certain difficulties in the way of that suggestion, but I also said that I would be prepared before coming to a final decision to await the report of the urbanised areas committee which had dealt with the matter. That report has since come to hand and as would appear from the quotation read by the hon. member for Stamford Hill, that report definitely turns down this particular method of approaching it, definitely turns down the idea of sub-economic loans, and says that sub-economic loans for this purpose would be unsound. But the report emphasises the importance of this matter, and makes further suggestions for dealing with it. In view, however, of the fact that the proposal in respect of sub-economic loans has been turned down, I no longer, as Minister of Finance have a primary interest in this matter, but hon. members may rest assured that the Ministers primarily concerned, that is the Minister of Public Health and the Minister of Irrigation, will give consideration to the alternative methods suggested in the report. The same hon. member raised the question of unhygienic bank notes. That is a matter which touches us all at one time or another, in so far as we are allowed to handle bank notes. May I just point out what the position is. The Reserve Bank is under its Act under an obligation not to issue notes which have been soiled by excessive handling, and it must make provision for the disinfection and sterilisation of notes. The procedure is that all notes coming into the Reserve Bank are sorted out, and those unfit for further handling are set aside and are not reissued; all others are fumigated and sterilised and are then reissued. This sorting might be described as a subjective process but of late the Reserve Bank has tightened up its standards, and is applying them more strictly. But there are many notes that do not reach the Reserve Bank, or take a long time to reach the Reserve Bank—they only go to the ordinary banks. There it is also the practice to sort out the notes and not to reissue notes that should not be reissued. And there, too, there is a tendency to tighten up the standards followed in the sorting process. Then the hon. member for Illovo (Mr. Marwick) raised the question of the auditing of the accounts of the control boards. He suggested that these accounts should be audited by the Controller and Auditor-General. The point is an important one, but I think I should point out that these boards after all are not handling state funds and there are provisions in the law, I think adequate provisions, for the auditing of their accounts. The mealie, wheat and dairy industry control boards have provisions in their statutory enactments requiring the auditing to be done by an accountant appointed by the Minister of Agriculture. In the other cases, in the cases of the other control boards, the auditing must be done either by an officer in the service, or by an accountant appointed by the Minister, and I can say that the Minister is very careful only to appoint people of the highest standing and firms of the highest standing to do that sort of work. Apart from that the Marketing Council has the power to examine any schemes under the control boards, and report to the Minister, and for that purpose may call up their books, and may appoint anyone to inspect their books. So I think we can claim that the position is adequately safeguarded. I would now like to come to one or two points that have been raised, which are of more general importance. The hon. member for Kensington (Mr. Blackwell) raised the question of the use of the post office as a taxing machine. He based his remarks on figures given by the Postmaster-General in his report. Those figures in turn are based on a pro forma account kept in the post office. To that account there are credited amounts for services rendered by the post office, and against it there are debited amounts for services received by it. That account has not, for some time at least, been scrutinised carefully by the Treasury and I think it can be said that it does not to-day really accurately reflect the position. In one respect undoubtedly amendment is called for. Since 1935 there has been provided on our post office vote an amount of £186,000 as a contribution to our loan account by way of allowance for the depreciation of post office assets. But since 1935 we have issued almost £6,000,000 of fresh capital to the post office and that provision is therefore to-day far from adequate as a provision by the post office for interest and depreciation charges. That item at least, therefore, calls for revision. I have asked the Treasury to consider very carefully that and other items in connection with the post office pro forma account. But when that has been done I am prepared to admit that we shall still have the position that the post office accounts will show considerable profits. We are still left therefore with the question of principle, whether the post office should be regarded as a taxation machine. In most countries it is so regarded, and that view has hitherto also prevailed in South Africa. There are undoubtedly certain things to be said for it. For one thing if the post office work should be carried on by a private monopoly, that private monopoly would have to contribute quite a lot to us in the way of taxation, and that also applies to the railways, a point which some of the critics of the railways, who are always asking for relief at the expense of the general taxpayer, tend to forget. But there is another aspect and that is that the post office, as an instrument of taxation, is an instrument which does lend itself to raising a considerable amount of money in a way not really felt very severely by those who contribute. Those points can be raised on the one side, but there are also points which can be raised on the other side. For my part I do not propose to pass final judgment, it is enough for me that in present circumstance we could not afford to do without the post office as a taxing machine. Now I want to come to what has been said in regard to the abolition of the 30 per cent. rebate on the income tax. There has been a certain amount of criticism on that point —perhaps a better term would be—a certain amount of disappointment. The criticism has been very mild criticism. I think I was justified in my statement in my Budget speech that the income tax payer could not, and in present circumstances did not, expect that he would continue to enjoy all the concessions he has been receiving in recent years. But there are some critics who think and who have said that this is a serious blow at the man of moderate income. I would have liked to have asked them how they define the man of moderate income. I am afraid most of us have a subjective idea when we are called upon to give a definition of that kind, just as our idea of what constitutes middle age, or old age, tends to be subjective. But what is the effect of this abolition of the 30 per cent. rebate? I do not want to say anything of its effect on the bachelor, because he at any rate gets very little sympathy here, but let us take the effect on the married man, the married man with two children who carries, say, an insurance policy with a £30 premium, and who pays in £5 to a benefit society. On that man, with an income of £600 this provision makes no impression, he pays no income tax and will continue to pay no income tax. If he has £700 per annum he will have to pay £1 2s. 7d. more than he does to-day. If he has £ 800 per annum he will have to pay £2 15s. 11d. more than he does to-day. So the blow to the middle-class man is not very serious, and when it is remembered that the total number of individual income taxpayers in South Africa is 68,000 I do not think it can be regarded as very serious—I think it will be admitted that the income tax does not go very far down into the middle classes. In that connection may I refer to a point raised by the hon. member for Germiston (South) (Mr. J. G. N. Strauss) who asked us to give a larger insurance rebate. At present the maximum insurance rebate is £50. Over and above that there is a £10 rebate in respect of contributions to benefit or friendly societies. When it is remembered that we have an initial rebate of £400 and that we allow £100 for each child up to the age of 21, I think our system to-day is a fairly generous one, and certainly in present circumstances it would not be possible to contemplate any further concessions of that kind. Now I want to come to what has been said about the excess profits duty. Here I would associate myself with the remarks of the hon. member for Troyeville (Mr. Kentridge). Undoubtedly it is better to prevent the earning of excess profits than to tax excess profits, and I would assure hon. members that the Government is doing its best along the first line —we are doing our best to prevent the earning of excess profits. Despite my interest as the tax gatherer, I have no desire to see this source of revenue yield very large amounts. But to some extent the rendering of revenue along these lines is inevitable. Some increased profits will inevitably be made, and those we must tax. Various points have been raised in regard to the basis of calculation. The hon. member for Springs (Mr. Sutter) raised certain points in that connection, and the hon. member for Illovo raised certain other points. May I say that I cannot for obvious reasons anticipate now what I shall say about the details of this measure in submitting the Ways and Means Resolution and in putting forward the Bill, but I do want to assure the House that we are most anxious to make the working of this new tax as equitable as possible. In the nature of things an excess profit tax is not a very satisfactory form of taxation. It is almost impossible to work it entirely equitably; it is almost impossible to meet the particular situation of every particular tax payer and of every individual. But we are doing our best in the light of the experience of the last Great War, and in the light of the criticisms raised in this House, and in the light also of points which have been brought to my notice and to the notice of the department, by correspondence and other representations, during the last few weeks, and I think we shall succeed in making this tax as reasonable and as equitable as can possibly be expected of us. And now I want to come to the representations made in this House, to the speeches made in this debate by the native representatives who have spoken. The hon. member for Transkei (Mr. Hemming), and the hon. member for Cape Eastern (Mrs. Ballinger), took part in this debate, and as usual they made very valuable contributions to our discussions. They spoke on certain aspects of native disabilities but they also raised the general question of poverty. They emphasised the need to conserve our human resources. I am not going to deal with the various detailed points they raised. They come more within the scope of my colleague, the Minister of Native Affairs, who will have another opportunity of dealing with them, but I do want to say that I agree wholeheartedly with them that we have failed in the past to pay all the attention that should be paid to the conservation of our human resources in South Africa, and when I say that, I think of non-Europeans as well as Europeans. But although I agree with them to that extent I am not prepared to go so far as to believe that the particular machinery proposed to be set up by the hon. member for Cape Eastern will be of very much assistance in dealing with this matter. I think in this Budget, as far as our nonEuropean resources are concerned, I have given at least an earnest of my agreement with that point of view, in the additional provision of £90,000 made for native education, and I am glad to say that of this particular proposal not a word of criticism has been raised from any quarter during the four-days debate. I think that reflects great credit on the House. Indeed the most powerful argument which could have been put forward in support of what has been done and in support of extending the provision which we are making came from the hon. member for Witbank (Mr. Bezuidenhout). He spoke to us about native hooliganism. There is only one final and effective way of eradicating native hooliganism, and that is by increasing the provision for education and social services. Well, sir, that is an advance which we have made in this Budget — this £90,000 even in these difficult times. Of course, it is but a small advance in relation to what those hon. members over in that corner of the House desire for that large section of the community they represent. But I want to say clearly, and unhesitatingly, that I accept the improvement of the native’s general economic situation as something desirable and necessary for South Africa as a whole. That improvement, sir, certainly need not take place at the cost of the Europeans. On the other hand I believe that from that improvement every section of our community is going to benefit. Keeping the native down is no contribution to the raising of the standard of our European community. On the other hand, one of the best ways of advancing European prosperity is by furthering the development of the native on sound lines. The hon. member for Cape Eastern also raised the wider question of poverty in relation to our population as a whole. Other hon. members also referred to that question of poverty. Indeed, to some extent, it has run as a thread through this debate. But may I say this? I think I have proved in this House by deeds, rather than by words, that I am anxious to make my contribution towards the solution of the problem. I think I can also say that I have more personal knowledge of what is meant by poverty and the struggle against poverty than is shared by many of those hon. members who spoke so glibly about this particular matter. This is a country with a very great deal of poverty. Sometimes it is called a rich country because of its mineral wealth, but as a whole it is not a rich country. It is a country which has not yet attained balance in its economic life. We have a large gold mining industry, and because of the nature of the product that industry has set a high standard of living and of state expenditure. As a whole the country has accepted that high standard. For the most part our other natural resources do not justify that standard. The essence of the situation, to my mind, is the creation of a more balanced economic structure in South Africa. That Cannot be done in a day, or in a year or in a few years. There is no golden key to unlock the door behind which lies the solution of this problem of poverty. We have heard a great deal about poor whites, and globular figures have been quoted. People love to quote such figures as 400,000 and 500,000, and we have heard them in this debate. But what is a poor white? He is not a white man who happens to be poor. There are other standards to be applied besides the economic factor. There are psychological standards, educational spheres and spiritual standards, and the problem of counting the number of poor whites is extremely difficult from the point of view of the statistician. These figures you get quoted here are very largely valueless. I do not know on what they are based. But while we politicians go on talking about the poor white problem a great deal is being done to solve that problem by people who are not politicians. I am referring to our industrialists. The politician and the political statistician love these globular figures, but many of those who are still regarded by the political statistician as poor whites are already established in the mining and secondary industries with a reasonably assured economic prospect for themselves and for their children. To a large extent the poor white of yesterday is the industrial worker of to-day, and by the testimony of our industrial employers he is a very good industrial worker too Industrial development is making a very large contribution to the solution of the problem. I would contend that the proposal which is now before the House for the establishment of industrial development co-operation is one of the biggest forward steps in dealing with this problem which any Government has taken in South Africa for a very long time.

†Now I would like to continue and deal with the points that were raised by my hon. friends opposite. I am first of all dealing with the points of minor importance, and points which do not affect the budget as such. First of all, I want to say a few words as Minister of Education. The hon. members for Graaff-Reinet (Dr. Bremer), Gordonia (Mr. J. H. Conradie) and Malmesbury (Mr. Loubser) mentioned important points in connection with the training of children in the rural areas in trades and in commerce. The hon. member for Graaff-Reinet referred more especially to the facilities for commercial training. Now it is one thing to establish a new type of school, and quite a different thing to make a success of it, because there you have to bear two aspects of the matter in mind. In the first place you must induce pupils to come to the schools, and in the second place, the pupils, when their training is completed, should be able to find a place in the industries. These two conditions cannot always easily be complied with. The Department of Education in our country, and educational authorities elsewhere have already had great experience of this truth. More particularly here in South Africa, there is a deeply ingrained educational conservatism. There are already too many people who still regard the matriculation examination as the only way of educational salvation. It is especially the work of the Union Department of Education to break down and weaken this lump of conservatism, and I may say that we have already obtained a fair amount of success in doing so. Let me just, in the light of that, consider the position of the rural commercial schools. When I became Minister of Education less than seven years ago, there was no commercial school on the countryside. There were only two commercial departments in the rural trade schools; at Christiana, with about 25 pupils, and Oudtshoorn, with about 50 pupils. To-day we have three large commercial schools, one at the Paarl with 240 pupils, one at Oudtshoorn, now a separate school, with 200 pupils, and one at Potchefstroom, which has replaced the Christiana school, and which also has more than 200 pupils. We have therefore made considerable progress during the seven years, and done so notwithstanding the difficulties to which I have referred. Seven years ago we were faced by those two difficulties. We could not get pupils, and the pupils after they were trained could not be placed in positions. To-day the position is that there are plenty of pupils wanting to come, and anyone after his training has been completed, can easily be placed. A great deal has therefore been effected in this respect, and we will continue on those lines. But the hon. member for Graaff-Reinet went still further. He spoke about our technical colleges. They exist, he said, only at the large centres. He possibly created the impression that so far as technical training was concerned, the rest of South Africa was being neglected. Therefore it is right for me to put the matter in the right perspective. Technical colleges must generally be placed in big centres; it could not be otherwise. In the main, technical colleges are institutions for continuation classes on a part-time basis. The pupils are, in the main, persons who are already at work in industries or in commerce. Therefore technical colleges can only be established at centres where there are extensive facilities for obtaining work, but that does not mean that the countryside boy and the countryside girl is being neglected in regard to technical training. In the first place, I want to point out that some of our technical colleges already have departments in rural villages. There is a department of the technical colleges at Witbank, one at Klerksdorp, and at Vereeniging, at Stellenbosch, at Somerset West, and probably within a short time, one will be established at Worcester. Then I also want to point out that we are making provision for rural children to go to the technical colleges in the big towns by means of bursaries. On the estimates this year an amount of £11,500 has been put down for that purpose. But then, and this is the most important parallel with the technical colleges, we particularly have in the rural villages, vocational schools. There are thirteen trade schools for boys and thirteen domestic economy schools for girls.

*Mr. WARREN:

What vocations are they taking there?

†*The MINISTER OF FINANCE:

The hon. member cannot expect me to go into all these things now. We are spending £270,000 to-day on the technical colleges, and that includes those rural departments to which I have referred, and also the provision which is being made in the technical colleges for rural children. We are spending £250,000 a year on our vocational schools with continuation classes in the large centres, and bursaries. Therefore I do not think that we can say that the balance is not fairly even. It can much the more be said because a very much larger amount in class fees is collected by the urban technical colleges than what is collected in the rural vocational schools. Other points have been mentioned in this connection. Various hon. members advocated more vocational schools. Our policy to-day is, properly to develop our existing vocational schools. The Union Department of Education inherited a large number of vocational schools from the provincial authorities and the churches and those institutions are, for the most part, small and not properly equipped. We consider it our first duty to put the vocational schools on a proper basis, and in that policy we are supported by the report which was made about a year ago by a commission, a commission which after enquiry into the position as a whole, very clearly recommended that before we established new schools, we should first of all put the existing schools on a proper basis. Then the hon. member for Graaff-Reinet, and also the hon. member for Gordonia commented on the apprenticeship system. I do not want to deal with that now. There is an Apprenticeship Bill before the House to-day, and it will be dealt with in the course of the session, and the matter can then be further discussed and dealt with by my colleague, the Minister of Labour. Then I come to financial matters, which are not directly connected with the budget. And first a few points of less importance. The hon. member for Victoria West (Mr. D. T. du P. Viljoen has reverted again to the farm telephone, lines. May I just say that for the last few years we have spent from £100,000 to £120,000 a year for that service, and we are going on with it, even in the present circumstances. Now I did not actually expect the hon. member for Victoria West to keep on raising this point, because in the past four years £30,000 has been spent in his constituency alone. He certainly should not be one of the first to complain about this matter. Then the hon. member for Christiana (Mr. Wentzel) put a question in connection with the transportation rebates on the railways. I said in my Budget speech that we were providing the same total amount, but there will probably be a change in the distribution of the amount. I said that a few of the branches of farming could; come out on less, and that others again would need more help. The hon. member rightly inferred from that that I was think ing of wool, when I spoke of the branches who would be able to manage on less. He asked whether the rebate on wool would completely disappear. We have as yet taken no final decision in connection with the division of the amount, but the hon. member can accept it that it is improbable that the rebate on wool will entirely disappear. The hon. member for Prieska (Mr. Geldenhuys) raised an important point. He referred to the fact that there was a loan of approximately £8,000,000 at 5 per cent., domiciled in London, which was repayable this year. With reference to the fact of our having had such a big success with our loan of £14,000,000 at the end of last year, he asked what our intentions were about that overseas loan, and he asked whether it could not be converted into or replaced by a local loan. I can only say that this matter is at the moment receiving very careful consideration. It would of course be desirable on general grounds, to repatriate that loan, and to replace it by a local loan. But we must not lose sight of the financial policy of our country at the moment. We must consider whether we can venture to repatriate the loan, and to repay the amount. I can only say at this stage that this matter is receiving attention. The hon. member also referred us to our trade balance. I could not quite follow his figures, but I want to call to mind what I said about our payments balance, which is mainly of importance in connection with that. I said this—

The gold reserve held by the Reserve Bank (including the premium actually paid on the gold which is bought) increased during the year by £5,963,000, while the sterling balances showed an increase of £724,000. The total increase of £6,687,000 in the gold and sterling reserves of the Reserve Bank represent approximately the Union’s credit exchange balance for the year.

We therefore had a credit exchange balance, and for a considerable amount. Then I want to say a few words in regard to the Land Bank. There the hon. member referred, in the first place, to the increased rate of interest. The rate of interest of the Land Bank was until recently 44 per cent., and that was fixed when the Government was able to borrow money at 3 per cent. But a year ago my predecessor tried to raise a loan at 34 per cent., but it was not a great success, and the result was that we had to conclude a loan at 3¾ per cent. To-day perhaps we could get a loan for slightly lower than 3¾ per cent. but it would not be at 34 per cent. or 3¾ per cent., and still less at 3 per cent. The 1½ per cent. difference which we formerly added to the rate of interest for which we got the money, was for administrative costs, and we therefore could not do otherwise than to increase the rate of interest. Then the hon. member said something which I cannot allow to pass unanswered, to the effect, namely, that previous loans of the Land Bank were unlimited, and that now owing to the policy of the Government the loans were limited to £1,500. That is another of the bogeys which is going about on the countryside. What is the position? First of all, there was a limit of £2,000 laid down in Land Bank loans by the Act. Then during the depression the limit was removed, and the matter was left to the discretion of the Land Bank. That position still continues. In the exercise of its discretion, the Land Bank has followed the policy of putting an administrative limit to loans at the sum of £1,500. This is no new thing, it has already been the policy for a few years. Loans up to £1,500 are therefore dealt with automatically, but the Land Bank is always prepared to consider loans for a higher amount when circumstances justified it. That has always been the policy. Now with regard to the amount which we are making available to the Land Bank, and which has not yet been fixed, I think that we can assume that the amount will be sufficient to allow them to continue on the same basis which they have adopted during the past few years, and perhaps they will be able to go a little further. Then a few words about the excise on brandy, which was referred to by the hon. member for Swellendam (Mr. Warren). He referred to the matter twice, and his first motion was that we should increase the customs duty on whiskey and reduce the excise on brandy by 2s. 6d. a gallon, with the object of assisting our farmers. But if we actually do that, then I doubt whether it will have any favourable effect on the farmers. As you know, we have such a surplus of wine every year, that it is enough to manufacture 2,000,000 gallons of brandy. Now the importation of whiskey is 400,000 gallons a year, and therefore even if we were to prohibit the importation of whiskey, then we should still only be able to absorb a fifth of the surplus in brandy. Then I want also to point out that the imports in whiskey are 400,000 gallons a year, but that is a figure which remains constant. In 1922 the figure was the same, but the production of brandy has since that time increased by one-third. That therefore proves that the excise on the importation of whiskey and other intoxicating liquor, has provided sufficient protection for our brandy. Then there is the fact that in 1926 the customs duty on whiskey was increased, and what was the result? In four years the importation of whiskey actually went down by 47,000 gallons, but the production of brandy also went down, and by 87,000 gallons. Accordingly, that step did not assist at all in promoting the production of brandy. Then I also want to point out that the hon. member’s motion to reduce the excise on brandy by 2s. 6d. per gallon will work out at about a half-penny per tot. Whether that is going to increase the consumption of brandy, I do not know. While, therefore, we should be losing £500,000 in revenue, I do not believe that it would help the farmers much.

*Mr. WARREN:

is that a difference of £500,000 in the excise on brandy?

†*The MINISTER OF FINANCE:

No, it would be the loss if we were to carry out the two motions of the hon. member. Now’ the hon. member has brought up an alternative proposal. At the moment a rebate in the excise of 3s. a gallon has been granted on brandy which is three years old. The hon. member moved to change it so that the rebate can be 10s. for brandy which is ten years old. I do not know how that would assist the farmers. At the moment there is not sufficient storage accommodation to store brandy for three years. At the moment full use is not made of the concession on the three years basis, and, therefore, I think that the time for further concessions has not yet come. Then the hon. member for Waterberg (Mr. J. G. Strydom) raised two points which are important. In the first place, he referred to the question whether it would not be advantageous to sell our gold not in London, but in America. My hon. friend will admit that that is, to a great extent, a technical point in connection with which I must in the main, allow myself to be guided by my technical advisers, and especially by the president, of the Reserve Bank, who probably has more knowledge of this question than anyone else in our country. That question has repeatedly received the consideration of the president of the Reserve Bank, and I have often discussed it with him. I put it before him a few weeks ago in order to get a definite opinion. He expressed the view that at that period it would not be in our interests to sell our gold in America. He first of all referred to the fluctuations in the insurance rate between here and America, and in the second place to the high commission which was charged by the Federal Bank of America. For those reasons he could not recommend a proposal of that kind. Then another matter in this connection was touched upon by the hon. member for Graaff-Reinet, a matter which is of the greatest importance to South Africa, and which is of the greatest importance to the future of South Africa. The hon. member for Graaff-Reinet put the question, if there was no danger that there might not be any market for our gold in consequence of the accumulation of gold in America. If that were to occur, then the consequences to South Africa would be disastrous. It would be a great misfortune to us. That question has often been raised. We cannot decide it, but it has often been discussed in America. I have tried to keep myself au fait with what has been published in America on this subject. I may say that the official view is against any step which would have that effect, and that view has not changed; on the contrary, it has become stronger owing to the war. Therefore, in my budget speech I said that the position of gold was considerably strengthened. I have in my hand here an official commentary on the matter, and they are replies which Mr. Morgenthau gave to the Secretary for the Treasury in answer to questions which were put by Senator Robert F. Wagner, chairman of the Bank and Currency Committee of the Senate. I want to quote a few words from these questions and answers which were given on the 23rd March, 1939, that is about a year ago. The question was put to Mr. Morgenthau—

Why does the Treasury not stop buying gold?

His answer was as follows—

A simple way of stopping gold from coming into the United States would be for the Treasury to announce to the world that we will not buy any more gold for the time being. But such a step, taken unilaterally, would have disastrous effects on our economy. It would disrupt the foreign exchanges and gold bullion markets and would very soon cause such drastic disturbances in international trade and even in the domestic sphere as seriously to impede the recovery of business.

He said in addition—

We can be certain of at least one thing — that no country would benefit from the ensuing international monetary disruption.

He then continued and said—

A closely related question that has frequently been asked is: “Should not the price of gold be reduced? Is not $35 an ounce too high a price for gold?”

And his answer was as follows—

It would have disadvantages serious enough to render resort to any such action most unwise…. The economic effects on our economy of the change in the foreign exchange value of the dollar would be little short of disastrous. The 40 per cent. increase in the price of American currencies to foreigners would constitute a severe handicap upon our exports.

And this was his summing up—

The danger that gold will no longer be used as a medium of international exchange is so remote as not to merit serious consideration.

That was nearly a year ago, and in the meantime the war broke out. Now, I have before me here the report of the annual meeting of the Chase National Bank of the City of New York. Some hon. members opposite know how important that institution is, and how important such a document coming from such an institution is. The chairman of that bank, in his speech, also dealt with this question. He referred to the problem of the United States in consequence of the accumulation of gold, and he said this, inter alia—

Several suggestions have been advanced for dealing with the immediate problem. The crudest of all is that the United States should cease buying gold altogether. Not only would this action be reflected immediately in the demoralisation of the foreign exchange market and in violent disturbances to domestic and international trade, but it would lead to foreign nations to stiffen still further their controls over trade, and so detach gold yet more widely from its normal functions of redressing trade balances. Somewhat allied to this suggestion is the proposal that the United States make a drastic cut in the price it is prepared to pay for gold.

Then he gives certain reasons against it, and he concludes with this—

Finally, in testing the validity of this suggestion, we should not lose sight of the fact that we ourselves are the largest owners of gold in the world. To scale down the value of one of our most important national possessions, seems an unduly expensive way to go about the correction of our difficulties. It has been estimated that the loss would amount to about half a billion dollars for every dollar by which the price of gold is reduced below its present level.

He mentions a few other suggestions in connection with this problem, and then he says this—

I have not listed these various suggestions for the sake of dismissing them, but rather for the purpose of indicating the size of this problem of gold. However much we may deplore the raising of the price of gold in dollars in the first place, time has run too far to permit us to return to the former price. We must keep the price where it now is. But I do not propose that we do nothing. On the contrary, it seems to me that we should proceed to take measures of so firm a nature that we will be able to retain for ourselves and for the world a stable monetary value for gold. We are already the possessors of 60 per cent. of the world’s monetary gold stock. Before peace can be achieved this share may have risen further. In a large sense we are and will be the conservators of the world’s monetary system. It is for this reason, as well as for ample reasons of our own, that we must take action now to preserve the monetary character of gold.

In the light of that statement, I do not think that we need worry ourselves much about this. A word about the criticism of a general nature that was made here. It was said more especially by the hon. member for George (Mr. Werth) that this was not a Budget for the poor man. I should have liked to have exchanged a few words with the hon. member for George. He made a quotation from what I had said in connection with last year’s Budget, and his quotation was the following—

This is certainly not a budget for the poor man. When we look at that £600,000 which I have already referred to, and which is being used as a rebate on income tax, from the point of view of relief, then it could surely also have been used with much greater effect for the less privileged class of the community than for the 65,000 income-tax payers. This Budget is doing very little for the poor man as a consumer.

There my hon. friend stopped. He did not quote any more. What did I say further in that connection? I gave reasons why we could not do more for the poor man than for the consumer, and I then ended with this—

I will, however, admit that what the poor man can expect from a benefit budget is mainly in respect of improved and extended social services. Well, there are very few in this budget, and in the accompanying estimates of expenditure which indicate any intention of extending social services. The vote for social welfare, after making allowances for transfers to and from that vote, to and from other votes, shows really a reduction of expenditure, and that, apart from the money which is being saved by the abolition of the system of rural rehabilitation and housing. The present tendency is apparently rather to curtail than to extend our social services. I thought that this was a matter about which we ought to be sorry when we have to deal with a budget which exempts 65,000 income-tax payers from the payment of an amount of approximately £600,000.

That my hon. friend did not quote, and it is typical of the way in which hon. members like the hon. member for George are guilty of distortions. Last year I rightly criticised the budget on this point. We had given a rebate to the income-tax payer, and we had reduced the amount for social services on the five votes which are mainly concerned in the social services, by £47,000. This year we are increasing the income tax, in other words, the rebate of 30 per cent. is not being granted, but, notwithstanding that, we are giving a further £26,000 on those five votes which deal with social services. I leave it to those figures to speak for themselves. It is not necessary to say any more on the question of the poor man. I only want, in addition, to mention that notwithstanding the fact that we are importing large quantities, in view of the prevailing circumstances, we have imposed no additional burdens which will have to be paid by the poor man. Other statements have also been made in this connection to which I must refer, because there is no ground for them. One hon. member spoke about the reduction in the social welfare vote. There is no reduction, but actually there is an increase of £100,000. I am mentioning these matters here because that is the kind of thing which is being published on the countryside, and that is why we cannot let them pass here. The hon. member for Lydenburg (Mr. N. J. Schoeman) pleaded for more district surgeons and for more district nursing services. They are being provided for in this budget. There is £6,000 more being provided for district surgeons, and there is an increase of 25 per cent. in the provision which is made for district nursing. Speeches of that kind create the impression in the country that this Government is not doing these things, and yet this budget shows that those things are being liberally done.

*Mr. WARREN:

What about the Bill you promised to introduce?

*The MINISTER OF FINANCE:

The hon. member asks what about the Disability Bill which I promised to introduce. During the period that I have been a Minister, the Government decided to appoint a departmental committee to go into the whole question. That committee made its report last week, and in the light of that report the Government will, during the recess, consider the necessity of introducing legislation next session. Now I want to come to the criticism that was made on the budget as a budget. I am taking the speech of the hon. member for Fauresmith (Mr. Havenga) as a guide. I do not want to coniine myself to his speech, because other hon. members went more fully into the points which he mentioned. I will deal with those points in the sequence of the budget speech. In the first place he referred to the way in which the surplus was being spent this year. He objected to it, to a certain extent, and more particularly he expressed the hope that we, in future, would not depart from the sound policy that the accounts of each year should stand by themselves, and if possible, should balance. I only want to point out that my hon. friend himself fairly often departed from that sound policy. Allow me, in the first place to say this—we are dealing this year with a surplus of £350,000. During the year 1927-’28, there was a surplus of £1,250,000, which was carried forward to pay for taxation reductions during the next year. In the year 1929-’30 a surplus of £400,000 was carried forward to the following year to cover an expected reduction of income. In the year 1934-’35 a surplus of £500,000 was carried forward to cover the supplementary estimates of the following year, and to make provision in regard to a reduction of income tax. In 1937-’38 £400,000 was carried forward to cover certain expenditure in connection with the mealie scheme the following year. In 1938-’39 £550,000 was carried forward for reductions in taxation the following year, and £2,000,000 on behalf of the additional defence account. I say, therefore, that the hon. member for Fauresmith has fairly often departed from that sound principle. I admit that it is a sound principle from which there should only be a departure in special circumstances.

*Mr. HAVENGA:

I always had good reasons for doing so, but you have given no reason for doing so.

†*The MINISTER OF FINANCE:

It would have been more orthodox if I had carried the surplus forward to the loan account, and if I had then drawn £2,350,000 out of the loan account instead of £2,000,000. That, however, made no difference in reality. The reasons for my action were no less good than the reasons which were previously given for a similar line of action. The hon. member for Smithfield (Gen. Hertzog) was however not satisfied with this. He carried the case a little further. This is what he said—

I want, in the first place, to refer to the way in which the Minister of Finance acted here in using the surplus to pay for the war and the expenses of the war out of it. I can hardly imagine a prinicple which could be more detrimental to any sound financial policy than that. We need only look back just a little into history to see what was done in the past with that surplus. That surplus went and went quite correctly, not to cover the current expenditure from year to year, but as a matter of fact, to serve as a redemption of our national debt. What was gained by that in the past we all know. It went into the coffers of the debt commissioners. That is the reason why the Union has since 1924 always adopted the course that the surpluses would be used for the purposes I have already indicated and not for the current expenditure of the year,.

Just imagine, when my hon. friend opposite became Prime Minister, the law of the land was that the surpluses every year should be used for reduction of debt. That Act his government amended, and not only did they amend the Act, but I have mentioned the five cases here where they, in consequence of the amendment of the Act, disposed of the surpluses in a different way, or rather, did not use them for the reduction of Our capital debt. Take last year—£2,000,000 out of the surplus was taken and used for dedence purposes. The hon. member enlarged so sharply and violently on the way in which we were spending this surplus of £350,000, and he has forgotten how that £2,000,000 was used last year. When he was talking in that way, I felt that we could not regard him as a serious critic on financial questions. Now we come to the criticism that was made in connection with the estimates of expenditure. I come, in the first place, to the two points which were mentioned here in connection with which no provision has been made. The hon. member for Fauresmith said that we had taken no count of the probable request that would come from the staff of the public service in connection with the increased cost of living. I will return to this again in a moment. I only want to say here that I think that my hon. friend knows very well that we cannot in a budget make provision for expenditure which may happen to come. At the moment no case has been made out for provision being made of that kind. The Government recently asked the Director of Census and Statistics to go into the question of the increase in the prices. The following is his report. In the first place we are only taking foodstuffs, and we are taking the whole of the year 1938 as a basis with 1,000 as the index figure. In January, 1938, the figure was 1,013, and in January, 1940, it was 1,000. If we take foodstuffs, fuel, light and house rent, and we again take, the whole of 1938 on the basis 1,000, then we have the figure in January, 1938, of 1,005, and in January, 1940, 1,0004. There was a small reduction. If we take the further figure for food, fuel, light, house rent and various, and again put the index figure at 1,000 for the whole year 1938, then we find that the figure in January, 1938, was 1,003, and in January, 1940, 1,012. No great increase as yet, but an increase of less than 1 per cent. The Director of Census, in addition, added to that—

While not wishing to seem presumptuous or dogmatic about this matter (as we do not know what the future has in store for us), my own personal view is that, as far as our figures go, this rise is at present too slight to warrant serious consideration of an increase in wages on a national scale. Control of prices (where practicable) would seem to be economically a sounder measure.

It is the policy of the Government to prevent the increase in the cost of living. I quite agree with what the Director of Census said, that it is much better to control the rise in the cost of living, than to increase salaries and wages. If salaries and wages are increased, there inevitably follows a movement in the direction of a further rise in the cost. But we cannot shut our eyes to the fact that notwithstanding all the steps that we are taking to control prices, there may nevertheless possibly arise later on a considerable increase in prices. This matter concerning the public service, was discussed a few months ago by the advisory board of the public service, a body which represents all the officially recognised bodies of public servants, and the board said—

The board appreciates the fact that the Government has instituted an organisation to control retail prices, and agrees that the principle of controlled prices is preferable to uncontrolled prices with increased salaries.

But the board quite rightly also pointed out that a rise in the necessaries of life could not be eliminated, and asked that machinery should be created in view of that possibility. The Government considered the matter, and we decided to comply with the request of the board that an organisation should be instituted within the public service, regularly to review the price tendencies, and consider the taking of such steps as may be possible to comply with any considerable and continuous rise in the cost of living, in so far as it affects public servants. The Public Service Commission has therefore been authorised to appoint a special committee to enquire into the implications of the subject, as they may develop during the war period. All communication between that committee and the Board of Control over national supplies, and the Government, shall take place through the Public Service Commission, and the Public Service Advisory Board shall be kept acquainted with things in regard to all recommendations by the committee, and steps which are being taken in connection therewith. Now I want to come to another possible neglect to which my hon. friend referred. He said that the budget did not take account of the assistance which may possibly be necessary in connection with the loss of exports, so far as surplus products of farming were concerned. That surely is not an unfair representation, but on the other hand, I want to say that this budget makes precisely the same provision as the hon. member’s previous budget made for assistance to farmers. Although it is a fact that in a few departments of farming an improvement is noticeable in comparison with last year, the provision has been made, but in addition to that there is the fact that it certainly is not customary to make provision for services in the budget before you know what provision has to be made, and how much. There are, however, hon. members opposite, who were not satisfied with that reasonable representation of the hon. member for Fauresmith. The longer the debate lasted the more was the Government attacked because they were doing nothing for the farmers. The climax was reached when the hon. member for Witbank (Mr. Bezuidenhout) said that the Government was so busy playing at soldiers that nothing was being done to assist the farmers. If there is one thing which does not assist the farmers, then it is that kind of irresponsible statement. The same hon. member said that the cost of the production of mealies had risen by almost 100 per cent. I do not even need to reply to that. Other hon. members also have something to say about the increased price of agricultural requirements, and even there we had a considerable amount of exaggeration. Agricultural requirements which had gone up 100 per cent. in value were referred to. I do not know anything about it.

*Mr. WARREN:

Bags.

†*The MINISTER OF FINANCE:

Bags did not go up 100 per cent., but 70 per cent., according to the figures which were supplied by the Department of Agriculture. It is, of course, very difficult to find an average index figure in connection with agricultural requirements. It fluctuates between one section of the industry and another, but I think that it is not unfair to say that the rise on the whole, was not more than 25 per cent. But we are told that the Government has done nothing for the farmers. Is that true?

*Mr. WARREN:

Yes.

†*The MINISTER OF FINANCE:

Precisely the same provision, in the first place, is being made in the budget that was made last year. I am continuing the policy that was followed in the past of making provision so that help can be granted to individual farmers. The hon. member for Ladybrand (Mr. J. C. de Wet) read something out in connection with what happened in his constituency. We have already replied to the letter, and already pointed out that the Farmers’ Relief Board existed, just as it did before, to assist the farmers in connection with their difficulties. But apart from that, what about the new problems and difficulties which have arisen? New problems and difficulties have arisen since the outbreak of the war. Has the Government done nothing in that matter? Will the hon. members say again that the Government has done nothing? No, they are silent. Let me mention the facts. The citrus farmers were in difficulties. The Government guaranteed a loan of £800,000 to the Land Bank to be issued to the Citrus Control Board in connection with the stabilisation of the industry for the next year and for the ensuing years. The deciduous fruit farmers were in difficulties. They came to the Government. The Government guaranteed a loan of £300,000 to the Land Bank to be issued to the Deciduous Fruit Control Board to put them in a position of being able to make advances to their farmers in connection with this year’s harvest. In addition to that, we have made £150,000 available out of our loan votes for those deciduous fruit farmers, to provide the necessary loans in connection with the manufacture of their products.

*Mr. A. L. BADENHORST:

At what interest?

†*The MINISTER OF FINANCE:

The hon. member must not try to get away from the point now. The hon. member said that nothing was being done for the farmers. The dairy farmers also were in difficulties, and the Government gave the Land Bank a guarantee of £250,000 to put them in thé position of empowering the Dairy Board to grant the necessary assistance. In addition, the Government, so far as the mealie farmers are concerned, gave a further guarantee of £250.000 to the Land Bank, to enable the Mealie Board to buy mealies, so that we could keen enough mealies in the country, and also stabilise the price. The grain farmers were in difficulties. The Government made provisions for loans of £100 for the purchase of seed wheat, fertiliser, fuel and feeds for stock. That will mean an amount of between £100,000 and £150,000. The raisin and sultana farmers were in difficulties. The Government in this case also guaranteed a loan of £30,000 to enable through the Dried Fruits Board to assist them in connection with the sale of the surplus raisins and sultanas. And then hon. members come and say that the Government is doing nothing to assist the farmers. Is it true? The Government will not leave the farmers in the lurch, and the farmers know it, whatever may be said on the other side. They can depend on the Government, and we have given them sufficient proof of that in the last seven months. The farmers can depend on the readiness to help of the Government, and they can rely on it that we will continue on those lines. One point more in this connection. The hon. member for Potchefstroom (Mr. H. van der Merwe) made a very wise remark. He said that one of the permanent solutions of the farmers’ difficulties was an increase in the consumption. The Government is now taking steps in that direction. The gold mining policy will serve to increase the consumption of the produce of the farmers. The industrial policy, as embodied in the legislation which has been referred to, will operate in the same direction. While hon. members opposite say that the Government has done nothing for the farmers, they know that what they are saying is not the truth. Another point in connection with our expenditure. Take our defence expenditure. The hon. member for Fauresmith referred to it, but here again other hon. members have gone considerably further than we did. Emphasis has been especially laid on the largeness of the amount, namely, £14,000,000. I want first of all to repeat what the hon. member for Troyeville (Mr. Kentridge) said in connection with the defence expenditure, namely, that the expenditure was not interfering with the ordinary activities of the state. In addition to that I want to say that apart from the gold mining taxation, the reduced rebate on income tax and many small alterations of the customs tariff, the additional expenditure lays no additional burden on the shoulders of the taxpayer. When hon. members there talk so much about the matter, what is the impression that they probably want to make in connection with it? The impression is that we are spending the tremendous amount of £14,000,000, while South Africa had remained out of the war it would only have been necessary to find the normal amount of £2,000,000 for defence. That is the impression they want to create.

*Mr. WARREN:

Possibly a little more, but not £14,000,000.

†*The MINISTER OF FINANCE:

That is what they want to make the country believe. Is it really so? If we had remained neutral, would our defence expenditure have remained at £2,000,000 or a little more? The hon. member for Gezina (Mr. Pirow) said that his defence policy was based on the basis of neutrality, not on waging of war. Only six years ago, five years before the war, in 1934, he introduced a scheme under which we would have paid more to carry it out than what we are now asking for in this Budget. That was his neutrality policy. In 1938 the hon. member for Gezina, with his neutrality policy, asked for the approval of the House of his financial needs in connection with the carrying out of a part of Eus plans, such as supplies, munitions, coastal defence, but not supply of aeroplanes and training of men. That was the £6,000,000 scheme. Of the £6,000,000 we have to find £5,500,000 in this Budget. The cost has in the meantime gone up considerably. More than half of the additional £11,750,000 is represented by the carrying out of the 1938 programme, which itself was only a part of the neutrality policy of five years before the war. We have a right to say that even if South Africa had not entered the war, it would have been necessary to make provision for practically the same amount.

*HON. MEMBERS:

Nonsense!

†*The MINISTER OF FINANCE:

It is not only belligerent countries who are incurring heavy expenditure to-day. There are countries which are to-day paying a very high price for neutrality. It will be said, and it has been said, that they are nearer to the war. Well, South Africa, although farther away from the scene of the war, would even if we had remained out of the war, also have had to pay a high price, and the hon. member for Gezina was prepared to pay more than £14,000,000 for the neutrality policy.

*Mr. WOLFAARD:

In one year?

†*The MINISTER OF FINANCE:

That was the scheme which he submitted for the training of men, the purchase of aeroplanes, equipment, etc.

*Mr. PIROW:

You know well enough that you are not putting the position correctly.

†*The MINISTER OF FINANCE:

The scheme of 1934 does make provision for them.

*Mr. PIROW:

I will give you a little information in the Committee stage.

†*The MINISTER OF FINANCE:

We shall always be glad to receive information from the hon. member for Gezina, because it always costs him dear. I say again he wanted to incur that large expenditure on a basis of neutrality. Those who are to-day supporting neutrality cannot use it against us that we have to-day practically to find the same amount for the carrying out of the war policy, as we would have had to find on the basis of a neutrality policy. I want to give as an example what other countries have to spend, and I shall quote Switzerland as an example.

*Mr. WARREN:

Why do you not take Holland?

†*The MINISTER OF FINANCE:

No, my hon. friends know what the position is in Holland. Switzerland in June, 1939, had voted £10,500,000 for defence over and above their ordinary military budget. After the outbreak of the war, they voted £140,000,000 for that purpose. How are those expenses covered in Switzerland? In the first place by a tax on war profits, as is also done with us. In the second place by a turnover tax.

*Mr. WARREN:

We know it.

†*The MINISTER OF FINANCE:

Yes, we know it in the Transvaal, but not here in the Cape Province. In the third place, by a national defence tax in the form of an additional income tax over and above the ordinary tax, and in the fourth place by a special contribution for national service in the form of a capital levy on capital of individuals and companies. We may well say: Happy South Africa. We should especially realise this point which is the chief cause of this increased expenditure of ours. It is not the fact that we are a belligerent country, but simply the fact that a state of war is existing in the world to-day. That is what Switzerland, Holland, Denmark and Belgium experienced, and what South Africa also would have been experiencing now if we had remained neutral.

*Mr. PIROW:

What about the Argentine?

†*The MINISTER OF FINANCE:

The policy of the hon. member for Gezina on the neutrality basis is the proof of my statement. Now I want to say something more about our defence policy. The hon. member for Marico (the Rev. C. W. M. du Toit) pointed out that we were asking Parliament for a blank cheque. To a great extent that is true, we are not giving an explanation of the destination of the £14,000,000. In time of war that is unavoidable, but we are also following the example which was set last year by our predecessors, and that was done in peace times. Last year they asked for a blank cheque for £3,000,000 for the creation of an additional defence account, and how was it described? That £3,000,000 could be spent according to what the House was told, inter alia, on aeroplanes, engines, arms, equipment, training establishments and on or in connection with other defence measures. That also, therefore, was a blank cheque. Now I come to what has been said on the opposite side about our taxation proposals. In the first place, the hon. member for Fauresmith said something about the increase of the customs tariffs. He said that the feminine portion of the population would settle accounts with me. Well, even that threat will not worry me very much. I attach more importance to what the four women members in this House say, but not one of them has said anything by way of a protest.

*Mr. WARREN:

How can they do so, they are all on your side of the House?

†*The MINISTER OF FINANCE:

No, one is on your side. We are accustomed to hear from that side that the people, or some section or other of the people, will settle accounts with us, and this dressing down with which I am now being threatened will worry me just as little as all the others. Then my hon. friend said something about the income tax, but I have already dealt with that, and I will not refer to it again. But now I come to the gold mining taxation, and here perhaps we had the most important criticism on the Budget. I would like to deal with this matter in two parts, in the first place the so-called change of policy, and in the second place, the financial results of the so-called change of policy. I call the first point the so-called change of policy. The hon. member for Fauresmith made the statement that I had departed from the policy which he had given notice of on the 30th August. He mentioned what I said in my Budget speech in connection with that notice. But I said clearly that I only approved of that statement in the light of the circumstances which prevailed at the time. He also expressed his surprise that my colleagues also were now approving of the policy set out in my budget speech, although previously they had supported his policy. He referred to the great pressure of business that there was, he spoke of Cabinet crises, and the hon. member for Smithfield went further, and insinuated that other reasons had influenced my colleagues. Let me say that there is no truth in that, and that the Cabinet in preparing the Budget, followed my advice, just as the previous Government acted on his advice on the 30th August. While I approved of his policy, and said that I would have done the same thing, I said very clearly that it was done in those definite circumstances. That Cabinet could do nothing else under the circumstances. They could not propose a scheme such as I have done, because the data were not available. It cost us weeks to prepare a scheme like that, and the hon. member for Fauresmith could not, at that time, propose such a scheme.

*Dr. N. J. VAN DER MERWE:

Did you not say that you would get this scheme?

†*The MINISTER OF FINANCE:

No. I said the same thing in October that I have said in my Budget speech, that, in the circumstances that prevailed at that time, I had approved of the proposal. The advice that the hon. member for Fauresmith gave to the Cabinet was the best that he could have given in the circumstances, and in the same way, the advice that I have given in the Cabinet was the best advice when we got on to a stable basis. The hon. member for Smithfield pointed out that the declaration of policy of the Government was made on the 30th August, and he apparently wants to create the impression that that declaration of policy should be regarded as a permanent statement of policy. Well, I have read that statement repeatedly, but I can find nothing of this kind in it. I may say that so far as I personally am concerned, my reaction to that was that I — within 24 hours after I assumed the post of Minister of Finance, that was a week after that statement of policy — spoke to the Secretary of Finance, and said that that appeared to me the best policy in the circumstances, and that I could not have done better, but thought that it was done to gain time until the matter could be put on a permanent basis. But is that declaration of policy of such a nature that we should assume that it was intended as a fixed policy? I will read it out. In the first place, it points out that the Government will keep to the sterling basis, and then it says—

The Government cannot, however, close its eyes to the fact that the present rise in the price of gold is abnormal and results from disturbances in international relations, which may have a far-reaching effect on the economy of the Union. The tendency of this rise to create widespread speculation in gold shares is obvious. Such a speculation superimposed on the highly fluid international situation, cannot but be very harmful to the broader interests of the country. The Government is also of opinion that the higher yield of gold in terms of sterling resulting as it does from the disturbed international situation, should be used to meet the inevitable difficulties in the position of the country, which will be caused by such disturbances. It is, therefore, hereby announced that in order to curb such undesirable speculation, and to conserve such excess profits for national purposes, the Government will, in the course of the next ordinary session of Parliament, seek power to appropriate to the consolidated revenue fund, apart from the present taxes on gold mining, the whole of the proceeds from the realisation of cold above the figure of 150s. per fine ounce.

Is that a permanent declaration? No, I would like to see how my hon. friend can affirm that. What were the reasons which were given for this statement? In the first place, to get more money for public purposes, and in the second place, to prevent speculation. It goes without saying that that statement does not in any way exclude the acceptance of a different policy which will practically bring in the same amount to the state and not give rise to undesirable speculation. Such a change of policy is therefore not a contradiction of the statement, but it is in conformity with that statement. There is no inconsistency between the statement and our policy. It is therefore not necessary to come to the House with farfetched theories about the alteration of the policy. I said that our policy conforms to the condition that undesirable speculation must be prevented, and it is possibly a good thing for me to say something on that point, because a great deal has been said on the other side about the so-called “boom” on the exchange, and about speculation. My colleague, the Minister of Mines, has already dealt with that.

*Mr. HAVENGA:

But is it really denied that all we have read in the Press was true?

†*The MINISTER OF FINANCE:

I will give my hon. friend the figures, and then he can see whether there was any such undesirable speculation. What is the position? It is that a recovery, a partial recovery has taken place of the pre-war position. I have analysed the figures of 48 of the most important gold mining shares, and I have taken the market prices for those shares on the 31st July, 1939, on the 28th February, 1940, and according to the quotations of last Friday. In the case of 34 out of the 48 the shares dropped between the 31st July and the 28th February. There was a considerable drop in some of those shares. In fourteen cases the price rose, but in most cases where the shares rose there were special reasons, such as extraordinarily good results or big developments. In six cases the rise in price was practically negligible. Out of those six securities there was one which had risen since the Budget by 20 per cent. That was the T.G.M.E., one of the country mines which we wanted to assist. The others rose by 6 per cent. on the average. A tremendous rise! There were eight others out of the fourteen where there was a fairly large rise in price between the 31st July and the 28th February. In one of these cases there has been a rise in price of 20 per cent. since the Budget, mainly Western Holdings, and in the other cases the rise in price was 3 per cent. on the average. A tremendous rise!

*Mr. CONROY:

Why then did they sing “Happy days are here again”?

*The MINISTER OF FINANCE:

I am speaking about facts here, and not about what people sing. There were 34 other securities, and there was an increase in the price level between the periods before the war and the 28th February, just before the Budget was introduced. What happened there? I want to draw a comparison between those shares on the 31st July and to-day. One stands at precisely the same figure. Nine of them are higher than they were before the war. The average figure is 3½ per cent. Twenty-four, that is half of the 48, are lower than they were before the war, an average of 8 per cent. lower than on the 31st July. A tremendous boom! On the average those 24 shares are 5 per cent. lower than the amount at which they were quoted before war was declared.

I am therefore fully entitled to say that we have attained our abject, and that was to cause no illegitimate speculation.

*Mr. HAVENGA:

Then this Budget is worse than what I stated it was.

†*The MINISTER OF FINANCE:

It had precisely the effect I expected, and I therefore had the fullest right to say that we attained what we wanted to attain, namely, that there should be no unlawful speculation. The hon. member for Fauresmith is apparently still concerned about this change, and accordingly I now want to say a few words about the reasons for the change. Our reasons for the change were precisely the same reasons as those which he gave in 1933 for the change in his policy, and those reasons that he gave were the lowering of the grade of ore and the extension of the life of the gold mining industry. If those were good reasons in 1933, why then are they no longer good reasons to-day?

*Mr. HAVENGA:

Are we then to go on depreciating our money?

†*The MINISTER OF FINANCE:

I will come to that. My hon. friend must not be in a hurry. Now what have we effected by this change of policy? The gold mines are on a sound footing; difficulties in connection with provision of capital have to a certain extent been reduced. The four mines which were threatened with having to close down, had their lives prolonged; they were put out of danger. The life of the industry as a whole has been prolonged, and confidence generally has been restored. The general position of trade and industry in the country has also improved in consequence thereof.

*The Rev. S. W. NAUDÉ:

And yet he did not take any less from them!

†*The MINISTER OF FINANCE:

No, nothing less than was taken on the old basis.

*Mr. HAYWOOD:

Why then did the rise take place on the Stock Exchange?

†*The MINISTER OF FINANCE:

I have just dealt with that point, and the hon. member was probably not here when I did so. Now I come to the second point, namely, the financial consequences of the policy which we adopted. Before I come to that I first want to say this. I have referred to the reasons for the alteration that was made. But what now about the reasons which my hon. friend gave for the attitude which he took up on the 30th August? He mentioned two, reasons for the policy which he announced. One was the stabilisation reason. It looks as if that word “stabilisation” threatens to become a blessed word, just like the word Mesopotamia. I could understand my hon. friend’s reason if he had broken the connection with sterling. But he did not do that. If he had done it then there was a question of stabilisation, but he did not do so, and that being so, why then have stabilisation in connection with gold and not stabilisation in connection with other produce?

*Mr. HAVENGA:

But there is no comparison.

†*The MINISTER OF FINANCE:

He means that the level of prices of gold is not fixed in the same way as that of other products. If that is so, if he wants stabilisation, why then does he stabilise at 150s.; what is the blessed value of 150s., and why not 130s. or 140s.?

*Mr. HAVENGA:

It must surely be done somewhere?

†*The MINISTER OF FINANCE:

It must be done somewhere, but why at 150s.? He further says that it is wrong to get those benefits which I have mentioned here, at the expense of the depreciation of our currency. He had precisely the same benefits in 1933 at the cost of the depreciation of our currency. I think that what my hon. friend actually meant was that you must not get this kind of benefit in consequence of a deliberate depreciation of the currency. He did not in 1933 or on the 30th August, depreciate our money in a deliberate way in order to get advantage out of it. It would have been wrong to do so. If we are going deliberately to depreciate our currency in order to get those benefits, then I agree with him that it is wrong to do such a thing. But we did not do so. What we did, we did in consequence of the policy which we have always yet followed, namely, to keep our currency linked up with sterling, and then if in consequence of our policy certain benefits accrued, if in consequence of our policy certain benefits were obtainable, and we were not following the policy simply to get benefits out of it, why then should we not make use of those benefits?

*Mr. HAVENGA:

Do you not contemplate any limits?

†*The MINISTER OF FINANCE:

I am coming to all those points which my hon. friend is mentioning. My hon. friend is a little impatient. I now come to the financial effect of this change. I made it very plain in my budget speech that we would get the same amount on this basis as on the previous basis. On this point the hon. member for Fauresmith expressed himself very reasonably. I will revert to what he said, but those on the opposite side who followed him became a little bit out of hand. In the wildest and most irresponsible manner, they referred to this matter, and the hon. member for Smithfield set the example. I just want to quote what the hon. member for Smithfield said here. He said, inter alia—

On the 30th August a statement was made by the then Minister of Finance, my hon. friend on my left, and it was expressly stated, as approved by the whole Cabinet, that that money belonged to the State and to no one else….

Had that been said? No, it was not. He went further—

And that these moneys should go to the State and to no one else, not to the mines or the shareholders. We agreed— the whole Government, all the Ministers and all the members—we all agreed and recognised that it was public money.

When was that done? It was not stated in that declaration. He went further—

No, it is for this reason that I say that a fatal step was taken here by which the State is giving away £3,000,000 a year.

Where is it admitted that this money is public money? But let us assume now that it is public money. What then about all that money which came after 1933 in respect of the price of gold over 84s., was that not also public money, and why then did my hon. friends opposite give away all that money which the mines got in the meantime? The hon. member for Smithfield referred to £3,000,000 in this connection, but I think I have made it very clear that all that £3,000,000 is not in any case being given to the mines by way of a rebate. I have made it plain that more than half of that amount in any case would go back to the mines in consequence of the effect of the formula of taxation under the old system. If we want to consider the matter on that basis, then they get less than £1,500,000. But with the Leader of the Opposition it was £3,000,000 at first, and at the end of his speech it was £3,500,000, and several of the hon. members opposite who followed him, as for instance, the hon. member for Bethlehem (Mr. R. A. T. van der Merwe) put the figure at £3,500,000. In the rural areas of the country it will probably be £5,000,000 within a little while. Other hon. members also improved in other respects on what the hon. member for Smithfield said here. They said that the mines have benefited by £3,000,000; a gift of that amount had been made to the mines; why is not the same amount being given to other producers? Allow me to put the matter very clearly. In consequence of the policy which was followed in connection with our currency, the mines are now receiving £10,000,000 more for their product. Of that they get £3,000,000 which just covers the increased cost. They get £3,000,000, and we get the balance of £7,000,000. That is the position. The wool farmers are receiving £3,500,000 more for their produce. It costs them—let us say— £500,000 more to deliver that produce, but they do not only get that £500,000 but the full £3,500,000. That is the difference. I think that the mines would very much like to be treated on the same basis as that on which the wool farmers are being treated. But my hon. friends opposite make these statements, and the impression is created that we are actually making a present to the mines of £3,000,000 without its being taken into account that the working costs will probably be increased by £3,000,000. While they are engaged in making those statements, I want to give them the reply which the hon. member for Fauresmith gave to it. He put the matter quite correctly, and they are putting it wrongly, and before they go to the country with those statements, I would like them to read what the hon. member for Fauresmith said about it, and to go and tell that to the country as well. He said, inter alia—

The Minister in his budget speech pointed out that the previous scheme was coupled with an undertaking which he gave that the mines would not be worse off if there was an abnormal rise in working costs, and that an arrangement would be made to compensate them in that respect. But that point was raised with me immediately after we had come to the decision in August of last year, by one of the two representatives of the mining industry, when I informed them of the Government’s intention, and I told them that, although I was not prepared to give a guarantee such as they wished, I was nevertheless prepared to tell them that if that position were to arise, then it would only be fair for the Government to consider the matter on the merits, and that compensation should be made. I do not, therefore, want to make any objection to that general principle which has been laid down by my hon. friend, namely, that this arrangement involves the obligation on the part of the state to act fairly.
*The Rev. S. W. NAUDÉ:

But did that position arise?

†*The MINISTER OF FINANCE:

Of course, it arose. And then during the Minister of Mines’ speech the following exchange took place. The Minister said—

The costs of production would probably not have risen.
*Hon. Members:

No.

†*The Minister of Mines:

No, they would not.

*Mr. Havenga:

We undertook to deal with the costs of production in a different way.

He undertook to deal with the increase in the costs of production in a different way, but now that we are undertaking to deal with it in this way, it is said that it is a gift to the mines. The hon. member for Fauresmith said further that it was true that the present system would produce the same this year as had been received on his basis. Where then is the gift? He asked about the future, but he frankly admitted that there would be no loss of revenue this year. I leave it to the hon. member for Fauresmith to give a little more information to the hon. members behind him in regard to this matter, before they go and make statements on the countryside. But the hon. member put two questions to me, and they were fair questions, and call for a fair answer. He asked me, in the first place, how this £3,000,000 was calculated—how did we arrive at £3,000,000 as the probable amount of the increased working costs? I gave an indication of that in my budget speech. I said that we had acted in the light of our experience during the last war. On that basis we had reason to expect that the increased working costs would, for the first year, be more than 5 per cent. Inasmuch as the working costs had to be calculated on a probable tonnage of 60,000,000 tons for next year, I valued the increased working costs at £3,000,000. I personally was originally of the opinion that 5 per cent. would possibly be too high, but when I went into the figures of the actual working costs so far as they were available, I came to the conclusion that that was not the case. We examined the figures for months and months. In August, before the war, that is to say August, 1939, the working costs were 19s. 2d. per ton. Five per cent. of that would be something under 1s. In December, four months later, in consequence of an improvement in the service conditions of the staff, and in consequence of a rise in the price of supplies, etc., the working costs had already risen to 19s. 10d., or already more than two-thirds of the rise expected by us before the beginning of this year. I think that my calculation of 5 per cent. was not unfair. Then he….

*Mr. HAVENGA:

That does not include any increase of wages?

†*The MINISTER OF FINANCE:

There had already been a certain improvement.

*Mr. HAVENGA:

Yes, certain additional benefits were given, but there was no specific increase of wages.

†*The MINISTER OF FINANCE:

Nothing specific is included in it.

*Mr. HAVENGA:

Then it was not contemplated?

†*The MINISTER OF FINANCE:

The hon. member then also asked: “What about the future?” He says that I will get the same amount this year, but he asks what the position will be if the price of gold goes higher. I have already replied to that in my budget speech, when I said—

It is of course always a possibility, in the present circumstances, while the currency of the Union is linked up with sterling, for further fluctuations to occur in the price of gold. Such fluctuations will be an, important consideration in this connection. It may be expected that the industry’s share in the proceeds of small and steady increases will be absorbed, as was the case in the past, by a further reduction of the grade of ore that is being worked. If the increase is large and rapid and that arrangement does not take place, an alteration in the basis of those contributions can be employed the following year, as a compensatory method. If there were to be any danger of a serious dislocation, then the Government could in case of need, still use its powers under the Currency and Exchange Act, 1933.

What does that amount to? We retained the powers which the hon. member for Fauresmith exercised in August. We can and we shall in case of need, exercise those powers if circumstances necessitate it.

*Mr. HAVENGA:

In other words, go back again to the old policy?

†*The MINISTER OF FINANCE:

The hon. member said that it would be too late, that we would be locking the stable door after the horse had been stolen. The stable door is not being locked. It was not locked on the 30th August, and we remain in precisely the same position, and retain the same powers which my hon. friend had of acting in extraordinary circumstances. He asked, what about the future under my proposals? I want to ask what the future would have been under his policy? It would have meant: closing down of mines, the drying up to a still larger extent of the stream of capital, the stopping of development where it is still possible to-day, and ultimately, in consequence of the increased working costs, which he himself introduced to arrange for, the disappearance of the increased revenue which the state will get from that source. But this answer to the question is possibly only a partial answer.

*Mr. HAVENGA:

Very partial.

†*The MINISTER OF FINANCE:

These proposals start from the assumption that the price of gold will remain more or less what it is to-day. Now the hon. member asked what my policy was going to be if sterling dropped still more. I will answer by saying that my policy is precisely the same that his policy was. What did he say in regard to his policy—

It is therefore the policy of the Government to connect the South African monetary value as closely as possible with sterling, as closely as the circumstances of the two countries will justify. It is certainly not the policy of the Government to follow sterling to whatever lengths it may go. If there is a further serious depreciation of sterling, it is not the policy of the Government to follow it, irrespective of what the interests of the country may prescribe.

That is also our policy. We retain our liberty to act as the interests of South Africa require. It is certainly not in the interests of South Africa to break away from sterling to-day, just as little as it was in our interests to do so on the 30th August. If my hon. friend asks when it will be in our interests, at what stage, then I think he will admit that it is just as unreasonable to expect an answer to that now as it was unreasonable to expect an answer from him to the same question a year ago.

*Mr. HAVENGA:

If you do that, what happens to the mines, what happens then to your argument?

†*The MINISTER OF FINANCE:

One thing has clearly appeared from what the hon. member has said, that while our currency has further depreciated since the 30th August, the hon. member is still just as determined as ever in his opposition to deliberate depreciation, which would have the effect of temporarily benefiting the exporter. The hon. member for Waterberg (Mr. J. G. Strydom) spoke on the same lines. He pointed out, and I am glad that he did so, that more than half of the agricultural produce were not export products, but were consumed in South Africa. Inasmuch as more than half are consumed here, a depreciation will have a bad effect on the producer who produces for home consumption, as the hon. member quite rightly pointed out. Up to the present the effect of the control measures has been comparatively small, but if they had gone much further the farmers would undoubtedly have felt it. I think that the hon. member has rendered a service to the country by pointing out the fact that a remedy which would possibly assist a minority of the farmers, would not be in the interests of the majority of our farmers. I am glad that the hon. member for Waterberg is very definitely opposed to the depreciation quack method which the hon. member for Gezina quite recently preached at Swellendam. I am very glad that the hon. member for Fauresmith, in the course of his speech, repudiated the speech of the hon. member at Swellendam, and I am very glad that I can associate myself with his repudiation.

*Mr. HAVENGA:

What then happens to the mines?

†*The MINISTER OF FINANCE:

I just want to express the hope that his party will not under the lead of the hon. member for Gezina repudiate him (Mr. Havenga) in connection with the matter in future.

†I have completed my examination of the criticism of the Budget. I make no apology for returning in conclusion to the most important feature of the Budget. I refer to the change in regard to the method of dealing with the gold mines. I asked what did we seek to secure in making that change? Have we secured it? In the first place we wanted to get the same amount of money for the state. We are going to get it and the hon. member for Fauresmith admits it. In the second place we wanted to stimulate the outside and the developing mines; of our success in that regard there is already the clearest possible evidence. In the third place we wanted to lengthen the lives of the threatened, that is of the short-lived mines. In the case of every one of these mines an improvement has already taken place. You can see it if you like by looking at the prices which are quoted on the Stock Exchange which reflect the anticipation, not of greater dividends, but of longer lives. In the fourth place, it was our aim to make possible the lowering of the grade of ore worked in the industry, and so to extend the life of the industry. By what we have done we have brought no less than 500,000,000 tons of ore within the level of payability, and that on the present basis by production of the mines means an average extension of the life of the industry by no less than eight years. Further it was our aim to encourage the investor in South Africa, not the speculator but the investor as a whole. We have succeeded in that. The fact that within a fortnight £5,500,000 has been taken up in respect of three municipal loans at a low rate of interest amply proves that. And finally it was our aim generally to administer a much needed tonic to commerce and industry in South Africa. We have done that too. I am going to quote a short statement given to me by a prominent independent Pretoria business man in whom my hon. friends opposite, the hon. member for Smithfield and the hon. member for Fauresmith, have on several occasions shown their confidence in the past. He has recently visited the Transvaal, the Cape and Natal, and these are his impressions—

The opinions expressed by men of commerce and industry is that the Budget is sound.
†Mr. SPEAKER:

I am afraid the hon. the Minister is not entitled to quote from a document outside the House.

†The MINISTER OF FINANCE:

I would then merely say that this gentleman, an independent outside authority, has as a result of what he has seen in three provinces of the Union, given me an assurance that the effect has been of a tonic, of a most stimulating character, that while before this commerce and industry were tending to be depressed, they have now been placed on a sound basis, that confidence has reasserted itself, and that confidence which is an absolute necessity in these troubled times, may be counted on for our further progress. I shall leave it at that. We set out in this Budget to do certain things. We have done those things, we have done more than those things, and I think it is coming to be clear that it will be possible to say of us that in making this Budget we have builded better than we knew.

†*The MINISTER OF RAILWAYS AND HARBOURS:

I am glad to think that the extent of the debate on the Railways Budget was not such as to call for a reply from me either of the magnitude or the importance of that by my colleague, the Minister of Finance. If I may say so, his reply was an impressive and complete performance. It was a reply not only to the Budget debate but it has set forth the economic position of this country in this time with a clarity that all the loose thinking and all the hot air of our opponents will find it very difficult to dim. I have no complaint that the House shewed little interest in the Railway Debate. I find it completely natural that gentlemen opposite should have complete confidence in my administration, and I find it equally natural that they should hesitate to get up and say so. The hon. member for Gezina (Mr. Pirow) made a brief reference to railway matters, and he stated that my Budget was really a twin of his own. I think that was the hon. member’s subtle way of paying himself a compliment. But it need not surprise hon. members opposite that our Budgets are as sound to-day as they have been during the last six and a half years. This Party has been governing this country for six and a half years, and in God’s good providence and with the assistance of the hon. member for Gezina, I believe it will continue to govern this country for many years. It is not we who have changed, it is the hon. member for Gezina and some of his friends who have left us, and have passed over into what I might now describe as the somewhat lonely shades of Opposition. Now. Mr. Speaker, the hon. member for Gezina also asserted that in my budget I had made no provision for meeting any possible increased cost of Jiving allowance, which the future may demand. This matter, I may say, has already been dealt with by the Minister of Finance, but I should like to emphasise the point that to do so at this stage would be quite unsound. You cannot, in your estimates, make provision for nebulous and indefinite sums to meet hypothetical liabilities. My method of meeting that position is very much better. The hon. member for Gezina’s own arguments support my methods. If this Lability does hang over us then the proper course is to strengthen our reserves so that when it does materialise, if it does materialise, we shall have the wherewithal to meet it. Regarding the proposal that we should anticipate a rise in the cost of living in this country, I can only express astonishment that any hon. member should seriously make this suggestion at a time when economists are united in warning us against the danger of raising wages prematurely, and thereby bringing about a rise in the cost of living that we want to avoid. That is the way to start the vicious spiral. By that method instead of wages chasing after living costs, we would have a worse position of living costs chasing after wages. What the end of this would be, and who would suffer most, is too obvious to need elaborating at this stage. The railway workers who remember the Jagger cuts are determined to set their faces against such a policy. I hope that they will be helped to find a saner and a more permanent solution of the problem. Speaking generally, there are I think two things we must keep in mind in dealing with our wage policy in war time. In the first place, wages cannot be increased in arithmetical proportions to present wage levels without defeating the very purpose of such increases. What we are concerned with is that real wage levels should remain constant; that actual increases in living costs should be met, but that such increases should be measured on the real wage levels ruling at the time our present scales were fixed, so that we do not artificially inflate wages beyond the point justified by any rise that may come about. The second point is that when increases have to be met in this way, then those of our workers who are nearest the bare subsistence level must be helped first and in greater proportion than those who have a better margin, and those whose wage is proportionately less affected by a rise in the necessities of life. It is not my intention to go into this matter in detail now, but I feel the statement of what I believe to be the right policy should be made in these general terms at this time. Let me, however, make it clear that I am only dealing with the problem of meeting the higher cost of living that may arise out of the present war, and not with any particular wage level which may now be too low for other reasons. If what I say is kept in mind. I am satisfied that our workers will get full compensation for any increased costs they have to face without the very unpleasant aftermath experienced in the last war. I am agreeable, so far as the railways are concerned, to the establishment of a staff committee, if such can be worked into our arrangements, on the lines indicated for the public service by the Minister of Finance. It was said. I think by the hon. member for Fordsburg (Mr. B. J. Schoeman). that we had done nothing for our staff. Surely in building up a reserve we provide security for our staff; not only does the building up of a reserve give security for the payment of wages, but also for the continuance of employment, which is even more important than the wage level. The hon. member for Fordsburg was one of the few hon. members who really made some contribution to the railway debate. I commend the hon. member for his moderate statement, and useful and constructive speech. I do not wish to flatter myself, but I would say that most of his speech echoes past speeches of my own. I can only conclude that the hon. member for Fordsburg has gone to the best school for learning about railway matters. The hon. member accused me of going back on what I previously said in respect of my railway policy. There I find it a little difficult to follow the hon. member. I have not yet discovered in which direction I have gone back. If my policy is not as sound as he expects it to be, I can only ask the hon. member to remember that Rome was not built in a day. It takes a little time to change a policy and to build up sound finance, and these things cannot be done too hurriedly. The hon. member also referred to a question which I raised last year, namely, to our keeping too much money in floating balances and not paying it over to the Public Debt Commissioners. I should like to say that the hon. member is not justified in accusing me, as he has done, of capitulating to the forces or reaction in this connection. In the last few months, I have paid back to the Public Debt Commissioners no less a sum than £2,900,000, and, in spite of that fact, our standing funds are lacking nothing in the way of contributions. We have, in addition to paying back £2,900,000 to the Public Debt Commissioners, reduced our stock account by £500,000. So hon. members will see that the policy which I advocated in the last Budget debate is now being carried out by me. In addition to the £2,900,000 paid to the Public Debt Commissioners this year, I anticipate being able to, do even more next year.

Mr. B. J. SCHOEMAN

[inaudible].

†The MINISTER OF RAILWAYS AND HARBOURS:

The rates equalisation fund does not get credit for interest at all. The only funds which get interest credited are the pension funds and interest on other amounts are credited in a special fund. The hon. member for Fordsburg (Mr. B. J. Schoeman) also raised the question of our betterment and renewals funds. He seemed to think that we should not put so much into these funds, and he made the allegation that our renewals fund was not being used legitimately for the purpose of renewals, but was being used to finance new works. To begin with, the South Africa Act lays a duty upon us to provide a betterment and renewals fund. The South Africa Act does not make specific provision for writing off of our capital. We keep our assets up to date by means of the betterment and renewals fund. We have a capitalisation in the South African Railways in round figures of £170,000,000. Of that amount £100,000,000 is represented by wasting assets. It is vital if our finances are to remain in any sort of shape, that we should make adequate provision every year for betterment and renewals of these assets. It is quite true that here and there new works are financed out of the renewals fund. But that is only when renewals money is lying against an asset which is being replaced by a new one. If it is the case that the Minister of Railways is abusing these funds and using them for purposes other than those for which they are intended, the hon. member, as a member of the Select Committee, is neglecting his duty. That is one of the purposes for which we appoint a select committee. Further, the Controller and Auditor-General is also neglecting his duty. It is for those gentlemen to point out any malpractices which are indulged in and any misappropriation of funds which occur, but, as a matter of fact, they do not occur. If it were not for the fact that we financed our new works in this particular way, capital and interest would mount up on such a scale that the whole of our revenue would be absorbed in interest charges alone. I would point out that we took over these Railways in an unsound position. After Union it was difficult to get revenue to make adequate contributions to the betterment fund. For this reason it is quite possible to-day that our betterment and renewals fund contributions are on a high scale. We are faced with this fact that much of our permanent way, which was laid down immediately after the Boer War, has now reached the end of its life, and much of our rolling stock, which was placed in service at the same time, is also reaching the end of its usefulness. That is the reason for these heavier contributions at the moment. Having regard to the enormous expansion of our trade, no one can reasonably hold that such contributions as we make to betterment and renewals, are out of proportion to our investment.

Mr. B. J. SCHOEMAN:

Why not increase your annual contributions?

†The MINISTER OF RAILWAYS AND HARBOURS:

I do not follow the hon. member. The hon. member raised an important issue when he referred to the grant in aid which the South African Railways gave to the motor services. I am very much in sympathy with the hon. member. I feel that the grant in aid now given to the motor services is not entirely justified, and there is no good reason for it, inasmuch as if the Railways are to contribute to the motor services for what they bring to the Railways, the motor services should also contribute to the Railways for what the Railways bring to the motor services. I shall, however, ask the General Manager of Railways to go into that question and give it very careful consideration. Personally, I think that that particular allowance should be stopped for the future. Its only effect is to delude Parliament as to the correct state of affairs so far as the motor services are concerned. In regard to the question of making an allowance to the elevators account, I do not think that is an important point. It is a very small matter, almost insignificant, and if we were to try and give the elevators credit for such savings on railage as are actually made, the amount would be very small, and in fairness we would have on the other side to charge them with quite an amount of work which is done gratis and for nothing on behalf of the elevators. I do not think there is much in the point. As to the financial advisers’ department not having enough to do, I can assure the hon. member that his information, wherever he got it, is quite incorrect. As a matter of fact we tried at one stage to bring the financial advisers’ department under that of the chief accountant, but at that time it did not work and we had to revert to the present state of affairs. That matter, sir, is now being investigated under an arrangement made some time ago, and it is possible that to some extent we may be able to meet the point made by the hon. member. The hon. member for Germiston (South) (Mr. J. G. N. Strauss) referred’ to the fact that I was budgeting in the coming year for a surplus of £3,000,000, and he compared that with the £1,600,000 surplus which I had this year, over and above our estimates. As several newspapers have talked in the same way I would like to make it perfectly clear that they are under a misapprehension. The £1,600,000 surplus which I had this year was a surplus over our estimates. I am not budgeting for such a surplus at all next year. I am budgeting for a balanced Budget, and I will be quite satisfied if we do not have any surplus over and above the normal proportion of our usual contribution to betterment and other funds. I hope we may have a surplus, and if trade is rather better than we anticipate, we may have a surplus over and above that, but it is a mistake to talk about a £1,600,000 surplus this year and £3,000,000 next year, because the two figures are not the same thing at all. The hon. member for Germiston (South) also dealt with the question of low-rated traffic. This is an old question, and I think it ought to be understood by hon. members that when they come forward and complain that we are carrying so much lowrated traffic for the benefit of the state, that we ought to get a contribution from the Treasury to cover the cost, they ought really to understand what they are proposing. It is quite true that the South African Railways are a business undertaking, and it is very desirable that they should be run, as far as possible on business lines, but business undertakings develop turnover in low-rated goods, in goods upon which they incur a loss, provided they get a turnover as a result. No business, sir, runs its whole concern at a profit, or very rarely so. If you want to develop a turnover, you have to take the bad with the good and you have to adjust your charges according to what is the capacity of the goods to carry. If you don’t do that, you lose so much in turnover that your standing charges rise so rapidly in proportion to the little business you are left with that you inevitably lose money. Therefore, it is quite a sound business proposition to carry goods even at a loss if as a result of that you are carrying your overhead charges and other expenses. The attitude of some hon. members is that the South African Railways should carry everything at a profit, and whenever they make a loss they should go to the Treasury and demand that the Treasury should cover the loss. Well, I know what my colleague the Minister of Finance would say if I said to him I am only going to do such services as make a profit and I am not going to do such services as mean a loss.

Mr. B. J. SCHOEMAN:

What did you say last year?

†The MINISTER OF RAILWAYS AND HARBOURS:

His reply would be that if he is going to carry my loss, he would also want a share in the profits. He would also say: “If you are going to incur losses by a certain policy and I have to pay those losses, I insist on having a say in that policy.” In other words, the Railways would be in fact in the same position as the Post Office is to-day, and I understand there are many members who disapprove of that, and I am perfectly certain the House would not like railway finance conducted in that way. That is the obvious position, the Railways must carry the normal losses incurred in the development of the transport business of this country. If it is legitimate transport business, it is the business of the Railways to carry it. That, of course, does not mean that there are not cases where the Railways should be assisted from public funds. Section 131 of the Act of Union still prevails. It has been my view, for instance, that in regard to some of our air services the Railways are being called upon to bear a load which is borne not for railway purposes, not for transport purposes, not for the development of any particular trade, but for purely national reasons, and in that case, the Treasury, I think, is probably prepared to admit the position and the matter is going to be investigated. It is, however, wrong to think that every time we do anything at a loss the railway users should not bear that loss. The hon. member for Germiston (South) has also referred to question of our subsidising of white labour. I don’t know what the merits of the particular case he referred to are, it seemed to be a fairly bad case, but speaking generally I am very anxious myself to expand the field for white labour, but I agree that so far as the Railways are concerned, that policy must be pursued with the greatest care, with the greatest moderation and it must be pursued without injustice to other races. The hon. member for Pretoria (West) (Mr. Wallach) referred to the low-grade ore rates. My colleague the Minister of Mines has already replied to that, and I do not need to say much more, but if any industry is indebted to the Railways, that industry is the manganese ore industry to-day, because we are carrying ore for the sake of this industry at a price which is completely and totally unpayable as far as the Railways are concerned. Let us also remember this, it very often happens that where the Railways reduce a rate to help an industry, the shipping companies immediately increase their freights by that amount, so that all that happens is a transfer of profits from the Railways to the shipping companies, and neither the buyer nor the seller of the commodity gets any benefit whatever. It is, therefore, of importance in regard to the cutting of these rates that we should be very careful. The hon. member for Victoria West raised the question of cold storage at Hutchinson and De Aar, and I will undertake to look into that. Also a question relating to the Transportation Board was raised by the hon. member for Bethal (Mr. C. J. van den Berg). As this House knows, this board is quite independent of the Railway Minister and any representations the hon. member has to make, it should be made direct to the chairman of that board. Now, Mr. Speaker, that is all I have to say in regard to what I consider a very satisfactory Railway Budget debate.

Motion put and agreed to; House to go into Committee now.

House in Committee:

The CHAIRMAN:

The Committee has to consider the Estimates of Expenditure to be defrayed from the Consolidated Revenue Fund and the Estimates of Expenditure to be defrayed from Railway and Harbour Funds, during the year ending 31st March, 1941.

Estimates of Expenditure fromRevenue Funds.

On Vote No. 1.—“His Excellency the Governor-General,” £26,190,

†*Gen. KEMP:

We notice on this vote an increase of £190 in connection with travelling and subsistence expenses. I should like to know from the Minister what the explanation of this increase is, and I should also like to nut a few questions to him. First of all. I should like to know what this increase is for. We have been told that the cost of living has not gone up, and I should like to know whether in this particular case that cost has gone up. Further, I should like to know in regard to the three aides-de-camp and the five clerical assistants for whom provision is being made, how many of them have been imported from overseas and how many of them are thoroughly bilingual. The late Government appointed a citizen of this country as Governor-General, a man who is thoroughly bilingual. As the head of the state he should set an example to all departments, to the public and to all officials, in complying in every respect with the requirements of the law of the country on the matter of bilingualism. But, to my regret, we find that officials are being imported from overseas, and while we have to pay them and have to provide certain pensions, we find that they are not bilingual. I feel it to be our duty to see to it once and for all that the law of the country shall be given effect to and that we should start with the highest in the land. Those officials of the Governor-General are there to serve both sections of the country, and they should be thoroughly bilingual so that the Afrikaans section of the community can also obtain its rights. The officials of the Governor-General’s staff who were appointed in our own country are thoroughly bilingual, but those who have been imported from overseas are not bilingual. We are now told that a sufficient number of them are bilingual and that we should not be so petty. I say that the time has come for us to see that our country, and especially a section of the population are no longer fobbed off in this way; we are not satisfied with being told that one section is able to attend to us, and that they need not all be bilingual. That does not satisfy us, and we refuse to be satisfied with it, and we demand our rights under the Constitution and under the Public Service Act. If we are unable to obtain those rights in our own country, we should not be blamed if we come along later on with the request that an end should be put to the Governor-Generalship and that the Prime Minister should do that work — which be could do just as easily as the Governor-General. If we are not, granted the rights to which we are entitled, we shall have to go further and ensure our rights in a different way. I am nutting these few questions and I hone the responsible Minister will give me the necessary information before I go any further.

*Dr. VAN NIEROP:

I believe that it is usual to allow this Vote to pass without a great deal of discussion, but it would be wrong for us to allow this occasion to pass without giving our support to what the hon. member has just said. It is strange that thing the Governor-General has done, the Rules of the House prevent, one from doing in this House if one wants to criticise anyso. All one is allowed to do in this House is to vote a lot of money for the Governor-General. Now we have to pay his salary, we have to pay for his house and so on. In a time like the present when this country is in a state of war, one would have thought that economies would be introduced wherever possible. Many people die or are killed during a war, and one does not expect such tremendous amounts to be voted for social entertainments and things of that kind. One especially does not expect that from a person representing the King here. I should like to draw the attention of the House to the fact that the Governor-General is each year costing the country £26,190, and of that amount £5,500 goes into entertainment. In this period of rising costs of living, when there is a possibility, a likelihood, of unemployment increasing, one would expect every penny that can be saved to be saved, yet we find £5,500 on this Vote for entertainment. That is in addition to the Governor-General’s salary of £10,000. I should, however, like to be given a little information in regard to certain matters which even people whom one would expect to know something about know nothing of. We are asked here to vote £1,450 for the Governor-General’s secretary, in addition to which there is an administrative secretary costing £800. What is the difference between those two secretaries? What do they do? Then we find the Controller who gets £800, and in addition to that there are the Aides-de-camp. What do these people do? Apart from any party politics, and apart also from the question of who should take his place I want to ask whether the Governor-General is worth this tremendous amount of money to South Africa. I think he will admit that he is not worth all that. With all due respect I want to say that the Minister of Finance is worth more to this country, judging by the work he does, his work on the budget, his administrative work and so on. He is worth more than he gets in comparison with the Governor-General who really is only a figure head. And what do those people do whom I have mentioned —apart from the question whether they are bilingual? The time has come when we should not only stop the spending of such a large amount on entertainment allowances, but the time has also come for us seriously to consider whether we should not do without a Governor-General in South Africa.

†*The MINISTER OF FINANCE:

I should like to answer the questions which have been put to me; first of all the hon. member for Wolmaransstad (Gen. Kemp) wants to know why the subsistence expenses have been increased by £190. The reason is that in the past no provision was made for the subsistence expenses of the secretary of the Governor-General, as he was supplied with free lodging. That is no longer being done now, so provision has to be made for subsistence on the ordinary tariff. A question was also put in connection with the Aides-de-camp, and I was asked how many are being appointed locally and how many come from overseas. As used to be the case in the past one of them still comes from overseas, the one who is responsible for the Marine division. Unfortunately, there are no officers in South Africa able to fill that post. The clerical assistants are all appointed locally, and as a matter of fact that also applies to the other officers, the other Aides-de-camp. They come under the Public Service. In regard to the hon. member for Mossel Bay (Dr. Van Nierop) I may inform him that the secretary of the Governor-General, is his private secretary and the general adviser. The administrative secretary is in charge of the administrative department. There is a department of clerical assistants and they are under his control. He is in charge of the administrative side, the administrative business of the Governor-General in his capacity as chairman of the Executive Council. The entertainment allowance is the same as in previous years. The hon. member has raised the question of unemployment in this connection. I want to tell him that in the past the argument was used that a reduction of this allowance would lead to unemployment.

†*Gen. KEMP:

The hon. the Minister says that the secretary of the Governor-General used to have a house and that this £190 has now to be provided for house rent. What has become of the house which he had? Has it been broken down?

*The MINISTER OF FINANCE:

It is being used for other purposes.

†*Gen. KEMP:

For what purposes? We get so many instances of war expenditure being hidden away. This possibly may be another instance of that kind. Where is this house? What is it being used for now? Is it being used for defence purposes? The Minister also said that one of the aide-de-camps still had to be imported from overseas, namely the one who had to deal with the marine division. We have been busy for years getting our own young fellows trained in the marine division. They are good enough to be sent overseas to take part in a war there. That being so, we should make some arrangement to see that in future our own young fellows will be appointed for that particular work—young fellows who are bilingual. They are good enough to go and fight and give their lives for the Empire, but when there is a position open they are not good enough to be appointed to such a position. I hope that their services will be employed in future, and that the Minister will assist us to put an end to this position as soon as possible.

Vote put and agreed to.

On Vote No. 2—“Senate,” £44,585,

The MINISTER OF FINANCE:

I move—

That the Chairman report progress and ask leave to sit again.

Agreed to.

House Resumed:

The Chairman reported progress and asked leave to sit again; House to resume in Committee on 19th March.

SECOND ESTIMATES OF ADDITIONAL EXPENDITURE. †The MINISTER OF FINANCE:

I move—

That the House go into Committee on the Second Estimates of Additional Expenditure to be defrayed from Revenue and Loan Funds during the year ending 31st March, 1940.

It has become necessary to ask the House to approve of second estimates of additional expenditure for the year now coming to an end. I do not think I need discuss in great detail the matters which appear on these estimates. For the main part they are entirely minor matters, and the amounts involved are small. They are, however, as far as expenditure from revenue fund is concerned, two items of some magnitude. The one is the provision under the vote Commerce and Industries where the main item is an amount of £50,000 which is proposed to be spent by way of assistance to Finland through the purchase of South African produce which will be sent to that country. I doubt if it is necessary to say much in this House to commend the proposal. It was decided on by the Government in accordance with a decision of the League of Nations which asked the various member states to consider what assistance they could render Finland in her resistance against aggression. When this decision was taken the state of war between Finland and Russia was still in existence. Since then the war has come to an end, but although that war is no longer being waged the Government feels, and I think the House will feel, that we should not abandon this project of sending these provisions which were so badly needed.

Mr. WARREN:

Are you dividing the amount up?

†The MINISTER OF FINANCE:

I think it will be better if in committee my hon. friend were to ask the Minister concerned about these details; he will then be able to see what the items are. I think the House will agree that we should go forward with this project. I can only say that the resistance which Finland has offered to aggression is something which will be regarded as a possession for all time by all those who have a regard for the principles of liberty. Then, there is provision for defence. The House is here asked to vote another £750,000 as a contribution to the additional defence account. I would like to take this opportunity of explaining how we have been financing our defence expenditure during the current year.

Dr. VAN NIEROP:

Is this in addition to the £14,000,000?

†The MINISTER OF FINANCE:

We are asking the House to vote £14,000,000 for next year. I am now going to explain how we have been financing our defence expenditure during the current year. Last year on the ordinary defence vote there was provided an amount of just under £2,225,000 and on the additional estimates there has been added an amount of £4,250. Of that amount of £2,225,000 £300,000 were set aside as a contribution to the additional defence account. In addition to that, £800,000 was voted on the last loan estimates to the additional defence account, and further, the amount of the surplus for the previous year, less the amount of £550,000, which was carried over in connection with the increased income tax rebate, was also in terms of clause 1 of the Defence Act made available for the additional defence account. That means that rather more than £3,000,000 was available in the additional defence account. I have already explained to the House this afternoon in another debate how wide was the definition of the purposes to which that account could be applied. It could be applied for any purpose in connection with our defence, and therefore after exhausting the ordinary provision on the revenue account, we have been using that account to finance expenditure during the current year. We have also made certain purchases out of the aircraft replacement fund which still stood at £102,000 at the beginning of this financial year, and out of the artillery and machine gun fund which stood at £250,000 at the beginning of the year, but after that we are still £750,000 more or less—rather less than more—short in respect of the expenditure required this year, and it is that £750,000 which the House is being asked to vote. The votting of this £750,000 together with this balance in the two replacement funds to which I have referred, and the revenue provision in the main estimates for this year, and the provision made for the additional defence account, the total amount so available for defence expenditure will be just under £6,150,000. We expect that our expenditure will fall short of that by a small amount, but we are asking the House to vote the round sum of £750,000 which will cover our needs up to the 31st March. I may say that when I submitted my Budget these items which appear on the second additional estimates were allowed for, including the £750,000 for defence, to which I referred specifically, but not the £50,000 for Finland. That has come on later. That means that the revised estimates now stand at a figure of £50,000 in excess of that which I gave in my Budget speech. Our estimated surplus is reduced pro tanto, but I have no doubt, in the light of indications at present available, that we shall actually get an submitted by me in my Budget speech which amount in revenue more than our estimate will exceed that £50,000. So that we shall still have £350,000 as a surplus to carry forward. With regard to the expenditure from loan funds, which the House is asked to vote, there I think the position is in the main self-explanatory. I would refer to two points. In the first place, we are asking for an additional amount in respect of the building at Baviaanspoort internment camp. That, however, does not mean any increase in the final provision. It means that the work has gone on faster than we anticipated. We vote more this year, and pro tanto, we shall vote less next year, There is also provision of £58,000 for the purchase of a property in Johannesburg, which adjoins certain property held by the state. It is important that we should have this in connection with developments in regard to the work of the post office. These additional amounts go not affect the estimates I have given in the past. We are spending £89,800 more than I previously thought we would spend, but on the other hand, the saving will be at least that amount greater than the amount in the estimates on a previous occasion. I now beg to move the motion, and I hope the motion will be adopted, and that the main discussions on these matters will take place in Committee.

Mr. PIROW:

It was suggested that even if we had kept out of this war our defence expenditure for the next year would have been more or less the same as that asked for by the Minister of Finance in his Budget speech. On this particular motion I cannot deal with that. On this motion I am precluded from dealing with the speech — I should like to call it the perfectly preposterous speech — of the Prime Minister last Thursday. I shall, however, deal with that later. At this stage, Mr. Speaker, let me admit that even if we had remained neutral there would have had to be a certain amount of tightening up, and a certain amount of co-ordination, and certain new machinery would have had to be created in connection with our mobilisation plans. I am, therefore, for the moment, not stressing the fact that additional estimates have had to be tabled, nor am I concentrating on this amount of £750,000. We have so very little by way of detail before us that it is impossible to say whether the amount is excessive or not. I take this opportunity, seeing we are dealing with defence expenditure that has already been incurred — I want to take the opportunity of dealing with a most disquietening feature in connection with our defence system, and in connection, in particular, with the defences of Cape Town. That will involve me going back a little to indicate to the House what was originally contemplated, and what the present position is. In other words, what the position is to-day in connection with which portion of this £750,000 has had to be spent. As far back as 1928 we came to, the conclusion that the Cape Town defences were obsolete. The Lion Battery, which is the chief defence of Cape Town, was held by a committee of the Committee of Imperial Defence to be obsolete. At that stage a far-reaching defence scheme was drawn up by that committee, dealing with Cape Town, Durban and other ports. It was decided, so far as Cape Town was concerned, that the least that could be done was to modernise the Lion Battery. In view of the favourable international position that matter was left in abeyance for quite a number of years. No steps were taken to carry out the report of the Committee of Imperial Defence. During the time of the past government the Defence Department took this matter up with the War Office and the Admiralty, both as regards Cape Town and Simonstown. So fat as Simonstown is concerned, sufficient progress has been made for me to leave that scheme where it is at the present time. So far as Cape Town is concerned I would emphasise what was then agreed to between ourselves and the British Government. It was decided that we should carry into effect this modernising of the Lion Battery, and that we should provide new mountings for the 9.2-inch guns, mountings which would increase the range of these guns very appreciably. They were to be these new mountings and a new type of ammuntion. These new factors were regarded as sufficient for the purpose, on the recommendation of the Committee of Imperial Defence. At a later stage, hon. members will recollect, there was a considerable amount of “to do” in Cape Town, because, when we attempted to fire these guns with full charges, considerable damage was done to buildings in the vicinity. In the course of years Green Point had encroached more and more in the direction of the battery, and in regard to houses that were near the guns, the firing of the guns with full charges inevitably resulted in damage to property. It was, therefore, decided to close down this battery, and keep this battery simply on a basis of care and maintenance. In so far as any practice would take place at all, it would be subcalibre practice. The main point is this, that these guns thereafter were not to be fired with full charges, or used for that purpose, and no practice was to take place along lines on which they would have to be used, in case you had to deal with a mutual enemy. No target practice was to take place after that date.

An HON. MEMBER:

What date?

Mr. PIROW:

About a couple of years ago, when we decided that this battery was to be regarded as being under the basis of care and maintenance. We definitely decided, and instructions were given that no full charges were to, be fired in view of the damage done to property. We then decided that the defence of Cape Town would be allocated as follows: A battery on Robben Island and on Duiker Point. The battery on Robben Island was to have 15-inch guns, and the battery on Duiker Point — afterwards called the Apostle Battery — was to have 9.2-inch high-angle guns. That was a Cabinet decision, and was communicated to the House, and everybody was satisfied that it was the right thing to do. It was realised, however, that a considerable time would have to elapse before either Robben Island Battery or the Apostle Battery would be in working order. To tide us over this very dangerous period, a period when the only defences of Cape Town would be a battery of 9.2-inch guns, which it was decided not even to use for practice purposes, I obtained the consent of the British Government to give us the loan of the Erebus. That was not my own idea. It was the idea of a man who knows South African waters intimately, and he was one of the most distinguished seamen connected with the British Admiralty, namely, Admiral Evans. He made the suggestion, knowing all the requirements of Table Bay, that the best way to bridge the intervening period was by means of the Erebus with 15-inch guns. The Admiralty was persuaded to agree, although they thought that 15-inch guns in Cape Town was an over-insurance, but they rather welcomed the idea of over-insurance as opposed to under-insurance. It has been suggested, and I have seen it in newspapers and heard it from other sources, that the Erebus would have been of no use in Cape Town.

An HON. MEMBER:

Who said that?

Mr. PIROW:

I do not care who said it, but it has been suggested that the Erebus would be no use in Table Bay. All that I can say is that a man with the experience of Admiral Evans considered it would be of the utmost use, and in pursuance of his advice, and after consultation with the Admiralty, it was decided that we should make the necessary provision at Robben Island to cradle the Erebus, and provide shelter for her in case of rough weather, and enable her to fire from that position. It was worked out in detail by the Admiralty that in those circumstances Cape Town would be adequately defended, even against battleship attack. The Erebus is not the only monitor in existence. She is a sister ship, identical in every detail, with the Terror. For years the Terror was used for exactly the same purpose at Singapore, for which we wanted the Erebus in Cape Town, while the big guns were being erected. The parallel is virtually complete. The Terror was used by the British Admiralty for the very purpose for which we intended using the Erebus, and with the facilities we intended to provide at Robben Island, the Erebus would have been available in bad weather as well as good weather. There was no question of firing it in the new basin, as it would blow away half the docks, or upset two-thirds of the people of Cape Town. I do not think I shall be far from the mark when I say to-day that the Terror is probably doing service along the lines which we had marked out for the Erebus, doing service by way of protecting a particular locality, while the big guns are being erected. All this information can be found in Hansard. The Cabinet’s decision was communicated to the House and debated at length on the floor of the House. The Erebus, I understand, has been handed back. There may be many reasons for handing back the Erebus, but to suggest that the Erebus should be handed back because it would be useless in Cape Town is making a statement which would be preposterous. As I say the matter was thoroughly gone into, and I am not speaking now according to hear-say. I am speaking according to conversations which I had myself with one of the Sea Lords and his advisors. They were of opinion that we were over-insuring by bringing 15-inch guns here, but they were also of opinion that the Erebus could be of the very greatest assistance to us, and would inevitably tide us over that period when Cape Town, for all practical purposes, would be defenceless. The Erebus has now been handed back. It may be that we were over-anxious to oblige the British Government, and there may be other sound reasons which have not yet been disclosed, why it was handed back. One thing is certain, that is that Cape Town, at the present time, is undefended. At the present time Cape Town is being defended by guns which were closed down even for target practice purposes. The only defence is this ancient battery of ancient 9.2 high-angle guns, and mountings to be fitted to those guns. Those guns are in a condition that we closed down the battery. Cape Town, at the present time, is the strategic point between East and West, and it is at the present time being defended by ordinary 9.2-inch guns, which can be outranged by any modern 6-inch gun on any modern cruiser.

Mr. DERBYSHIRE:

Thank God for the British Navy.

Mr. PIROW:

I am very glad that the hon. member on this occasion finds something to be thankful for, even if it is in connection with the British Navy. What I would emphasise is that we are entitled to an explanation from the Prime Minister as to why he departed from that scheme, which I understand in all other respects he has taken over from me, in respect of one matter which is absolutely vital as far as Cape Town is concerned. And I want to say again there is no question of the Apostle Battery being completed, there is no question of Robben Island Batteries being completed. We are, and we shall for some very considerable time ahead, unless all speed records are going to be broken, which is very unlikely in time of war, we shall be defended in Cape Town exclusively by these 9.2 guns, which can be, and will be outranged by any light cruiser with modern 6-inch guns. Now, the right hon. gentleman may have had a very good reason for doing Great Britain the favour of handing back this boat, but we have not yet heard that reason, and I want to put it to the House that this departure of his from the original programme may have results which will be little short of a major disaster as far as Cape Town is concerned. I have heard it suggested that the Graf Spee did not attempt to bombard Cape Town because it was afraid of these guns. Imagine 11-inch guns with a range of 30,000 yards being opposed by these 9.2-inch guns with a range many, many thousands of yards short of the range of these 11-inch guns.

An HON. MEMBER:

What is their range?

Mr. PIROW:

I am not going to say what their range is. It is many, many thousands of yards short of 30,000. I know what their range is, and I suggest, Mr. Speaker, that we are entitled to a clear explanation from the Prime Minister as to why this has been done. I have already indicated that to suggest that the Erebus would have been useless here is preposterous. I have the authority of Admiral Evans and of my own conversations with the Lords of the Admiralty and their experts that the Erebus, so far from being useless, would have been of very great use to us.

Mr. BLACKWELL:

Did you get the Erebus for nothing?

Mr. PIROW:

She was handed over to us on condition that we refitted her and spent £100,000 getting her into that condition when she would be of use to, us.

Mr. BLACKWELL:

Did you get it for nothing?

Mr. PIROW:

It does not matter. I agreed to the proposal, recognising the importance of this in the defence of Cape Town.

Mr. GILSON [inaudible].

Mr. PIROW:

I am afraid I cannot be fatuous.

Mr. BLACKWELL:

Did you get it for nothing?

Mr. PIROW:

Hansard will show that we got her handed over to us to use her as long as we liked, subject to refitting her at a cost of £100,000. That was because Great Britain recognised how important it was that a strategic point like Cape Town should be adequately defended. I ask the Prime Minister the reason for putting Cape Town into this utterly defenceless position by giving up the Erebus. May I suggest that it is no reply that for many years before these guns were still there. Undoubtedly they were, but conditions were different and it was because we realised the risk that Cape Town would run in the intervening period that we agreed to this proposal. Cape Town is supposed to be defended to-day, but we are really inviting the enemy to regard Cape Town as being undefended, because in fact any light cruiser with modern 6-inch guns could completely outrange any guns we have in Cape Town.

†The MINISTER OF DEFENCE:

I am sure the House is very much touched by the solicitude of the hon. member for the defence of Cape Town. I do not know why he again developed so much heat over this subject because it is a matter upon which we can keep perfectly cool. It is indeed a simple matter, and I am going to state the simple facts. The original recommendation of the Committee of Imperial Defence in respect of the defence of Cape Town was that Cape Town should be defended by 9.2 inch guns.

Mr. PIROW:

Modernised.

†The MINISTER OF DEFENCE:

And that is the proposal which I am now carrying out. When war broke out the Admiralty informed me, or rather the First Sea Lord in the British Government, informed me that although they had, against the advice of the Committee of Imperial Defence, agreed that we should depart from the original recommendation and have a defence of 15 inch guns at Cape Town, the Admiralty was still of the same opinion as before, namely, that 9.2 inch guns were all that were necessary for the proper and adequate defence of Cape Town. They said that no single battleship with 15 inch guns would venture to attack Cape Town in view of the defences already existing in the Peninsula, and that if an attack were made it would be made by a battle fleet, and there was no earthly chance of a battle fleet to-day coming to attack Cane Town. They said in those circumstances although they had agreed to depart from the original recommendation and to lend us the Erebus they still thought it an excessive precaution. Cape Town did not need it, and they were at the present in need of the Erebus which they had lent us. In view of these facts they asked us whether we would not reconsider the matter and adhere to the original proposal of the Committee of Imperial Defence which still remains the opinion of the Admiralty. When I received this request, which I thought a fair and proper request. I asked our experts here dealing with Coast Artillery, what the position was, and I was informed by my department that the Erebus could not be used here, that if it were used it had to be moored, that the only place it could be moored was in Table Bay Docks, and that if it were fired from Table Bay Docks the result might be disastrous not for the enemy but for Cape Town.

Mr. PIROW:

Did they tell you about the plan in connection with Robben Island?

†The MINISTER OF DEFENCE:

Well, I am telling the House what the opinion of my department was. The hon. member was very solicitous on a previous occasion that I should follow the opinion of my officers, and blamed me for the reason that I did not praise them sufficiently and did not think sufficiently highly of them. I am now giving him an instance where even against his superior wisdom I followed the advice of my experts, and they said it was not only useless but it would be dangerous to use the Erebus in these circumstances. Accordingly I thought as the British Government were anxious to have the Erebus back and as she was not useful for us and it might be dangerous to use her, and as the Admiralty who are our expert advisers in naval defence still stuck to their original proposal of 9.2-inch guns. I thought it as well to fall in with the proposal of the British Government and revert to the 9.2-inch scheme of defence. In doing this we are saving this Government a great deal of expense. The defence of Cape Town by 15-inch guns at Robben Island under the scheme proposed by the hon. member for Gezina would have involved us in enormous expense.

Dr. VAN DER MERWE:

You need the money for internment camps.

†The MINISTER OF DEFENCE:

We should have been involved in very heavy costs, far out of proportion to what we shall have to pay under the 9.2-inch scheme.

Mr. PIROW:

What are the defences now?

†The MINISTER OF DEFENCE:

The hon. member has stressed the point that he had the concurrence of Admiral Evans in the use of these guns. Admiral Evans was not a gunner, and the hon. member knows that. The hon. member does not tell us that Admiral Evans’ two successors here at Simonstown both disapproved of the scheme which they said was not only excessive, but wrong. Under these circumstances I think that with the advice of my own department, and that of the other Admirals before me, considering the vast cost which we would have been involved in, together with the request of the British Government, I thought I was doing the right thing, and I am sure I did the right thing in scrapping this grandiose scheme of the hon. member.

Mr. PIROW:

How are we now defended?

†The MINISTER OF DEFENCE:

And reverting to the scheme of defence settled by the Committee of Imperial Defence. As to how we are now defended, ask the Graf Spee. Here was a battleship, here was the very case which the hon. member wanted to provide against. Here was a battleship near Cape Town on two occasions, but the Graf Spee for reasons of her own, perhaps she thought discretion the better part of valour, did not attack Cape Town.

Mr. PIROW:

She could have outranged us by 16,000 yards.

†The MINISTER OF DEFENCE:

I think we did right in agreeing to the request of the British Government, and I am sure we have saved this country an enormous amount of perfectly useless expenditure in abandoning the grandiose scheme of the hon. member.

Mr. PIROW:

The only defences are those two old guns.

†*Mr. OOST:

Before we pass this motion I wish to read to the hon. the Minister of Defence a report which to my mind is of the utmost importance in present circumstances. I shall read it very briefly for the information of the Minister of Defence.

*The MINISTER OF FINANCE:

Wait until we are in committee because he cannot answer you now.

†*Mr. OOST:

I shall read the report now, then the Minister can reply to me later. The matter is undoubtedly of great importance, because this letter relates to a reply which the Minister of Defence gave in this House on the 6th March; it was a very important straightforward reply given by the Minister here in connection with questions which I had put to him in the House regarding his department. The question I put was to this effect, whether he was prepared, and whether he was able to deny that officers of the Citizen Force, before receiving their appointment, were expected to state that they were in favour of the Government’s war policy as laid down in the Resolution of the House of the 4th September, 1939. That was the question put to the Minister of Defence, and his reply so far as clarity was concerned, was entirely satisfactory. His answer was as follows: In the appointment of officers to the force which may be used not only inside the borders of the Union, but also beyond the borders, the question is put to them whether they are prepared to carry out that policy. I interjected with a question: “What about the commandants of rifle associations?” and to this the hon. minister replied: “In regard to men joining the field forces and who may be sent further away, this is not compulsory service, and in their case that question is put to the officers. The question is whether they are prepared to state that they are in agreement with the Government’s policy. The Minister of Defence, as stated, was quite clear on this point, but now I have before me a report from a most trustworthy source, a report which in regard to clarity leaves nothing to be desired. From this report it appears that the Minister of Defence is not properly informed in regard to his own department. With your permission I should like to read the letter at once, and I should be prepared to give it to the Minister if he wishes me to do so. I want to read the letter but omit the names because I do not wish to create the impression of having any personal intentions or of desiring to reduce this important subject to anything reminding one of the political propaganda. Let me say first of all that I sent the reply which the Minister gave here twelve days ago to this friend of mine.

†*Mr. SPEAKER:

If the hon. member now wants to reply to what took place in previous debates I must say that he cannot do so.

†*Mr. OOST:

This is the information which I want to give to the Minister of Defence, and if the Minister wants to give a reply later on he surely will be able to do so.

†*Mr. SPEAKER:

The hon. member said just now that this letter which he received is based on information which he has sent to people in that area.

†*Mr. OOST:

Yes.

†*Mr. SPEAKER:

Then it is in reply to what the Minister of Defence said in a previous debate. The hon. member cannot now reply to what has taken place in a previous debate.

†*Mr. OOST:

This is a statement resulting from an answer to a question put by me. May I be allowed to read this letter? This is what it says [translation]—

In connection with your letter of the 7th March I wish to inform you that the incidence of the appointment of an officer here has nothing to do with field service as a volunteer. The position is as follows: We were entitled to two lieutenants in accordance with the number of members belonging to our rifle association. We had one lieutenant. This was Lieutenant B, you know him well. We have been busy for some considerable time asking for a second lieutenant—this has been going on since long before the war started. Now our new commandant comes along and tells us that we can now have a second lieutenant. Our new commandant is V. In the past he used to be a captain in our commando. He then said that he was not going to allow us to elect a lieutenant but we could recommend people and he would then see to it that one of them was appointed. Two people were recommended but the second man who was recommended thereupon stood back for the first. He made it clear to the commandant that the first man recommended would be more suitable for the position, and also lived in a more central place. The commandant thereupon accepted his explanation. So only the first man was left and everyone was satisfied with him, and I want to tell you that he was the right man. The commandant thereupon produced a circular and read out a certain paragraph in which it was stated that all new officers who were appointed had to fill in a form and sign it, in which it was stated that they supported the war policy of the Government. This man was not prepared to do it. He is opposed to the war policy. Two other people were thereupon recommended who, according to their statements, supported the Government’s war policy. The one was the man who had stood back. Now one of them is going to be our officer. I cannot tell you everything else in connection with this commandant, because I am unable to find out everything. You know it is difficult to get to know all these things but what I do know is this: The officers of our commando held an officers’ meeting at D which was attended by a senior officer from Pretoria. Among other proposals, a proposal was asked for a commandant. Why that should be so I could not say. Our commandant is still able to serve. He has not yet reached the age at which officers usually retire. Anyhow two people were proposed, commandant H. and Captain V. The officers present at the meeting voted on those two people. They voted secretly by means of ballot papers. The result was that commandant H. obtained nine votes and Captain V. five votes. Commandant H. was put off although he had received the majority of the votes and Captain V. with the smallest number of votes was appointed as our commandant. As I understand he is close to retiring age. He supports the Government’s policy and the commandant who was put off does not support the war policy. Now. Oom Harm, this information which I am giving you is correct. I was personally present when this lieutenant’s case was dealt with. The incident in regard to the commandant was told to me by my captain who attended the meeting. He is my brother. He is our captain.

I consider this matter to be of so serious a nature for two reasons, first of all because this statement says that the Minister of Defence does not know what is going on in his department. It is clear from the circular which was issued that it is laid down specifically that any new officer who is appointed, before being appointed, has to sign a declaration in which he states that he supports the Government’s policy. That is clear although the Minister of Defence has deliberately told us that this only applies to officers who may later on be sent out in the service of a foreign power, for instance to the north of Africa. One of the papers, The Argus, recently also stated, with great jubilation after the defence debate, that the Minister was so thoroughly conversant with the affairs of his department, that he had such a consummate mastery of the facts. I am afraid that that does not apply in this instance. But there is the second point which is worse. It is clear from what I have just read that it is demanded not only of a commandant, but even of a simple lieutenant, that he shall agree with the Government’s policy, failing which he cannot be appointed. This is in conflict with the policy announced by the Minister of Defence, and I am glad that the Minister, according to his statement, does not agree with that, because I can hardly conceive of a more dangerous situation. Have we not sufficient trouble and division in this country? Are we going to allow that division which we have in political matters to-day to penetrate further and to cause a split in our Defence Force? If that is so, then I fear for the future. Some of us who are somewhat older and who have passed through many of the troubles of this country, who have witnessed the bitterness of the past, who perhaps still bear our wounds caused by those divisions in the Defence Force — because those were the causes — regard it as our duty to protect the present generation from the dangerous consequences of a fresh split. The Minister of Defence can avoid this, and we should assist him in that respect. We have gone to our constituencies, and I have done so myself, to tell our people not to be disloval to the laws of the country, and to be faithful and true in the defence of the country. But what would be the consequences of an order such as the one I have read out? The consequence will be that a large section, possibly the majority of the platteland, will be prevented from becoming officers — they will only be able to serve as helots, white Kaffirs, but they will not become officers. The result can only be that we shall have a split in our Defence Force, a political split, and the cause of such a split will be a circular such as I have referred to — not issued by the Minister himself, that I admit — but a circular sent out by his head-quarters. But in the end the Minister of Defence will be responsible. For that reason I ask the Minister, and I want to urge him, to make a statement here to reassure us. Is he prepared to tell us that he stands by his statement of twelve days ago, that only such officers as will have to go to the north to serve under another power will be called upon to sign a declaration that they are in accord with the Government’s policy? That I would be able to understand. But this order issued by his headquarters simply means that any citizen who does not agree with the Government’s war policy can never become an officer. They should be at liberty to pursue any policy they like, whether they want to support the Government or the Labour Party, or any other party to which they belong. Failing that, I am afraid of serious consequences in South Africa during this present war condition. I have this letter here, and I shall hand it over with pleasure to the Minister, so that he may know the names which I have refrained from mentioning. I again urge the Minister to regard this matter as being extremely urgent.

†Mr. BLACKWELL:

One finds it difficult these days to understand the hon. member for Gezina (Mr. Pirow). He has just this afternoon raised what he described as a matter of the first importance to this country, namely the defence of Cape Town. He made his speech, put his points and now as usual he has disappeared. The House does not see him: he is no longer here to take his part or to listen to the discussion he has provoked. His usual habit appears to be to raise something in this House and then go away and give the answer to a meeting on the platteland. I do not know whether he has left here in order to go and address another meeting on the platteland, or whether we are to be favoured with his presence when the House resumes. If he does favour us with his presence, there are certain questions I want to rut to him, and my first question is — why Cape Town only? Does South Africa consist of Cape Town only? Is Cape Town South Africa’s only port?

An HON. MEMBER:

It is the most important one.

†Mr. BLACKWELL:

Are we concerned only with the naval defence of Cape Town? Do hon. members forget that we have Durban, a port of even greater shipping capacity than Cane Town, and are we to forget the existence of Fast London and Port Elizabeth? I am going to ask the hon. member for Gezina what he did, what he proposed should be done in regard to these other ports: but fascinating though that subject is. I do not flunk I shall pursue it at this moment — I am afraid you will interrupt me. Mr. Speaker, at 6 o’clock. But if we are favoured with the presence of the hon. member for Gezina after the resumption at 8 o’clock, a point on which I have considerable doubt, then perhaps as he has started the ball rolling, I shall continue rolling the ball and put a few questions to him.

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

Evening Sitting.

†Mr. BLACKWELL:

Mr. Speaker, when the House adjourned at 6 o’clock, in the few brief moments I had at my disposal before the adjournment, I was voicing my regret at the absence from this discussion of our much esteemed friend, the hon. member for Gezina (Mr. Pirow). It is a matter for regret that the hon. member is so often absent from our ranks, especially after he has started a discussion on a very important matter, the matter that is now before us this evening, for instance. I was wondering whether the hon. gentleman thinks it is beneath his dignity to listen to any reply to what he has said in this House, except possibly from so august a person as the right hon. the Prime Minister. Perhaps he thinks it is only the Prime Minister who is sufficiently exalted to reply to any remarks that he may make. The hon. gentleman reminds me of the jingle—

Here’s to glorious Boston, The land of the bean and the cod; Where the Lowells speak only to Cabots, And the Cabots speak only to God.

Perhaps the hon. member thinks he should speak only to Smuts and God! Having to continue my remarks in the much regretted absence of the hon. gentleman, I propose to put a few questions, and perhaps they will be conveyed to him by some of my hon. friends I see before me to-night. What is the grievance of my hon. friend? His grievance is that we have not at this moment anchored off our shores at Robben Island, the monitor Erebus. I am not competent to discuss the technical dispute between the hon. member for Gezina and the present Minister of Defence, and I shall not attempt that task. I shall not attempt to judge whether we can use the Erebus or not, neither shall I attempt the task of endeavouring to settle whether the Erebus is a loss to us or whether if she had been brought here she would be more of a nuisance to us than what she is worth. There are, however, certain political aspects of the matter which have been raised by the hon. member for Gezina that are worthy of our attention. I shall refer to some of the things he said to-day in his speech, and, by proxy, I shall ask him one or two questions. The hon. member began by saying that as far back as 1928 the then Government of the day, the Government of which he was then a member, I think, or if not a member about to become one in a short time, came to the conclusion that the defences of Cape Town were obsolete. They came to that conclusion on the report of a body known as the Committee of Imperial Defence. I shall ask the House to note those words, and to note that title — “Committee of Imperial Defence.” In other words, it was a committee set up in Great Britain in collaboration with the self-governing dominions, to work out and devise a scheme for the common defence of the Empire.

An HON. MEMBER:

No.

†Mr. BLACKWELL:

The hon. member shakes his head. At any rate, it was to advise the dominions how best they could fit themselves in with some such common scheme of defence. I do not suggest that the scheme went beyond that. That committee was officered by highly technical gentlemen sent out to this country by His Majesty’s Government in Great Britain.

An HON. MEMBER:

Do you quarrel with that?

†Mr. BLACKWELL:

No, I do not quarrel with that, but I quarrel with the sequel. I shall show the hon. gentleman the sequel, and tell him what happened. The Government of the day were advised by the committee in 1928 that the defences of Cape Town, and indeed the whole coastal defences of the Union, were entirely obsolete. We have now the hon. member’s admission that nothing was done to implement the report and carry out the recommendations of that committee for ten solid years. It was only about two or three years ago that they woke up. The hon. member then goes on to say that as far as Cape Town is concerned, he would emphasise what was then “agreed to between ourselves and the British Government.” That is two or three years ago. What was agreed to by the hon. member for Smithfield, the late Prime Minister, and the British Government. I would have thought that if this was an independent sovereign state with no concern with any other country but our own, looking after ourselves and our own defence, then we did not need to make an agreement on purely South African defence, the defence of Cape Town, with any other people than our own people. What did we do? I will emphasise what was agreed to — an agreement with the British Government. I do not say it was an agreement in writing, but an agreement in the sense of an agreement then come to. What was this arrangement?

An HON. MEMBER:

A good understanding.

†Mr. BLACKWELL:

No, I am sorry my hon. friend was not here when the hon. member for Gezina was speaking. I shall now tell him what the agreement was. It was far more than a good understanding. The agreement, so far as Cape Town was concerned, was this. I will read the words of the hon. gentleman—

The agreement was that we should carry into effect the modernising of the Lion Battery; provide new mountings for the 9.2 inch guns,

and then provide another battery elsewhere. The hon. member then goes on to say that these batteries were regarded as sufficient for the purpose of meeting the recommendations of the Committee of Imperial Defence. Again, you have this country honouring the recommendations of the Committee of Imperial Defence. Then two or three years ago he came to the conclusion, having consulted with Admiral Evans, that 9.2 inch guns were not sufficient, more particularly because of the circumstances he told us about, about the battery on Lion’s Head, and he goes to the British Government and asks them for the loan, for the free loan, of the monitor Erebus. He goes to the British Government, and from them he gets the loan of the monitor Erebus. He says that he did that on the advice of one of the most distinguished servants of the British Admiralty, Admiral Evans, who at that time, or shortly before, had been admiral in charge of Simonstown. After that he goes to the British Government, and on his request the British Government, which has granted every request so far as I can make out ever made to it by the hon. gentleman, then the Minister of Defence, agreed to give him the free use of the monitor Erebus.

An HON. MEMBER:

On certain conditions.

†Mr. BLACKWELL:

Yes, but those conditions did not involve the payment of any money to the British Government. Those conditions were that this Government should spend £100,000 on making that ship adaptable, not to the purposes of the British Government, but to our own purposes out here in South Africa. The point I make is this, that three times when the hon. gentleman was speaking I put a question to the hon. gentleman, “What did you pay the British Government?” and I got no answer. But I know the answer. The answer is that we paid the British Government nothing. The hon. member goes on to say that on the occasion of the last visit to Europe, he had long consultations, with whom? With the Lords of the British Admiralty, on this very question of the use of the Erebus. They told him, and confirmed what he had been told in Cape Town, that these guns were really not strictly necessary for the defence of Cape Town. They were in the nature of an over-insurance, but his scheme got their blessing, so he says, and he was told to proceed. Then, sir, this wicked Prime Minister, his successor, the present Minister of Defence, after he had made all these arrangements, after we had started reconditioning the Erebus, and bringing it into order, what does he do? Through overanxiety to please the British Government, mark that, Mr. Speaker, he hands back the Erebus! Mr. Speaker, how ungracious those words sound coming from the hon. member for Gezina. For five or six years we were accustomed to hear him stand up and testify to the liberality and generosity with which he was received by the British Government on all possible occasions when he went to them asking for supplies; how, again and again, hundreds of thousands of pounds, millions of pounds worth of equipment were given to him for nothing or at a normal figure, and yet, when on the outbreak of war, the British Government said, “We really don’t think you need the Erebus and we do need it” and the present Minister of Defence agreed that it should be taken back, the hon. member parades it before this country as an instance of Smuts Imperialism and “over-anxiety to please the British Government.” He goes on to say, “I am speaking now not according to hearsay, I am speaking to conversations I myself had with the Sea Lords and their advisers.” Then in another part of his speech he emphasises that the whole reason why the British Government was willing to hand over the Erebus to him, and the reason apparently why he asked for it was this, that Cape Town was and is an important link in Imperial defence, Cape Town is a governing link in the scheme of Imperial communication and defence. If hon. gentlemen opposite doubt that statement Hansard will verify it. It will show that what we got the Erebus handed over for was to use her as long as we liked subject to refitting her at a cost of £100,000. That was because “Great Britain recognised how important it was that a strategic point like Cape Town should be adequately defended.” You have heard this from the hon. ex-Minister of Defence, the present member for Gezina, the story of the Erebus. And now I have a question to ask him. I regret more than I can say that he is not here to-night to answer that question—he never is here when you want to put questions to him. The question is this, did he tell Admiral Evans and the Lords of the British Amiralty, did he tell anybody that he was asking for the Erebus not in order to maintain and protect an essential link in a scheme of Empire defence, but for a country that was fore-ordained and fore-determined, in his mind at any rate, to be neutral. That is the question that half South Africa is waiting to ask the hon. member for Gezina. But as soon as awkward questions can be put to him in this House he runs away to a funkhole at Piquetberg, Franschhoek or Robertson. He is never in this House when we want to put these questions to him. Perhaps some of my hon. friends at the back will put that question to him. This is a matter of South Africa’s honour. If I could have Admiral Evans sitting beside me in this seat to-night, Admiral Evans, who has been paraded in this House by the hon. member for Gezina, what would he say about the action the hon. gentleman took in September, and what would he say of his actions in the last six months in endeavouring not to promote a scheme of defence but to sabotage such a scheme? What does the hon. member want? He wants South Africa to be neutral. If South Africa is to be neutral we don’t want monitors, nor do we need anybody to defend us. Who is going to attack South Africa from the sea if she is neutral? No, sir, he cannot have it both ways. He cannot come here this afternoon in the guise of a defence critic, criticising the Minister of Defence, because he does not go far enough, because the defences of Cape Town are not good enough, and then by every possible means endeavour to torpedo the work the hon. gentleman is doing in building up the defence organisation of this country. No, sir, there is only one answer any honest man, whatever his political convictions may be, can give to that question. In pursuance of what policy was this Erebus scheme undertaken? Why, sir, did the Leader of the hon. gentleman (Gen. Hertzog) again and again proclaim that we were taking part in discussions of Imperial defence and proclaim his open exaltation that when time of war came we had Great Britain to stand behind us. Again and again in speeches in the country and in this House the present Leader of the Opposition, the then Prime Minister, proclaimed his delight, his gladness, that no matter what trouble came upon us we had the British Navy and all the forces of the British Empire behind us. If hon. members doubt that I will quote it. He said not once but a dozen times, twenty times, he justified participation in those discussions of Imperial defence on that ground. And what, sir, must people think of South Africa, what must these very people whom he called to witness this afternoon, Admiral Evans and the Lords of the Admiralty, what must they think of a Minister of Defence who year in and year out led us to suppose there was only one part that South Africa would play when the time of testing came, and when that time of testing came travelled the opposite path.

*Mr. D. T. DU P. VILJOEN:

The speech of the member for Kensington (Mr. Blackwell) consisted of only three points. His first point was that he felt hurt that the hon. member for Gezina (Mr. Pirow) was not in his seat as he wanted to put certain questions to him, and as a front bencher he felt most indignant that the hon. member for Gezina did not come here to listen to him. From the beginning to the end of his speech he complained of this fact. The second point which the hon. member made a terrible fuss about was that the hon. member for Gezina had got so far as to have borrowed the Erebus free of charge from the British Government. I would have thought that the hon. member would have been grateful that the former Minister of Defence had so much influence that he was able to keep the expenditure for South Africa so low by getting that ship free of charge. Another point which the hon. member made a great point of was that the hon. member for Gezina had gone to the extent of consulting British experts in connection with our defence. We find in our everyday life that we consult people, and every sensible man is anxious to consult others as to what he should do. It does not mean that one always accepts the other person’s advice.

*An HON. MEMBER:

It does not mean that there was any agreement.

*Mr. D. T. DU P. VILJOEN:

He consulted those people but that naturally does not mean that there was an agreement as members opposite want to make us believe. There was no agreement, but only advice was asked for, which is something every sensible man will do. He further said that everything tended to show that the previous Minister of Defence wanted to hide behind the protection of the British Navy. But the hon. member should not forget that the Prime Minister told us, and we believed him, that South Africa in certain circumstances would take part in England’s war if England should be attacked. We have not had anything of that kind, and we have to take this into account in studying the attitude of the hon. member for Gezina. I now want to refer to a very serious matter which the hon. member for Pretoria (District) (Mr. Oost) again raised here this afternoon, namely the appointment of officers on certain conditions. He went so far as to show us that lieutenants and other officers who will also have to defend the country within the borders of the Union, are only being appointed on certain definite conditions. Experience has taught us that when we have to appoint people in any sphere of work or in any trade we have to take two factors into account; first of all the individual has to have the ability and secondly the qualifications. If we apply those two principles in other respects we should also do so here, because experience has taught us that if we do not take those factors into consideration the appointment which we may make may later on lead to such a trade or industry becoming a failure. Take a calling such as education. If we appoint people because of their sentiments and not because of their qualifications and ability the eventual result must be failure. There can be no doubt whatsoever, judging from what we have been told here this afternoon, that the final result of those appointments is going to mean failure. We have again had the experience here this afternoon that people on the platteland are being appointed not because of the principles, or factors which I have mentioned, but solely on the ground of their possessing these two Qualifications—first of all they have to support the Government’s policy. Their ability is not considered. Ability is a secondary consideration. The Minister of Lands may laugh. The most competent people are not necessarily those who support the Government’s policy. We have some very competent men in this country and in this respect perhaps the ablest people are those who do not support the Government’s policy. They are not considered at all. A second consideration is this. The more red they are (the more Imperialistic) the better. This reminds me of the old Dutch saying: “Hoe rooier hoe mooier” (the redder the nicer). But here we have this position, that the more red, the more Imperialistically disposed a person is, the easier it is for him to be appointed. Possibly the time may come when those officers who are to-day being appointed in such an inconsiderate manner will have to defend the country, and we may then possibly have to fall back on those people who are now being passed over. Later on we may get the position that it will not stop at officers, but we may get so far that a man can only become a corporal if he supports the Government policy. What is going to be the result? Bitter discontent. That we cannot get away from. Bitter discontent among the citizens of the country. The next result will be that those people will lose absolute confidence in the Defence Force, and this reminds me of a report which I saw in last Saturday’s paper in connection with a regiment in Pretoria, the members of which were asked whether they would be prepared to go and fight outside our territory. We notice from that report that 185 out of 215 absolutely refused to do so. They refused to go beyond the Union borders, and I hope that this will serve as a warning to the Prime Minister that he must go about things very carefully if such a percentage throughout the Defence Force is not prepared to go and fight beyond our borders. If we go on in this way and allow confidence in our Defence Force to go to nought, it may afterwards have the result that those people will not be prapared to take the field under the officers who are now being appointed. They are now refusing to go and fight voluntarily outside the Union, but assuming our Defence Force should have to fight in this country itself, there is a possibility of our citizens having lost complete confidence in their officers who are now being appointed, and that will be a most unfortunate state of affairs.

*Mr. SUTTER:

In which paper did you see that?

*Mr. D. T. DU P. VILJOEN:

You know quite well. If you did not see it I only want to tell you that it is a report from Pretoria which appeared in last Saturday’s issue of Die Burger. Naturally, anything appearing in Die Burger is wrong, and anything appearing in the other papers is the truth. The very opposite has, however, been proved on several occasions. Furthermore, I want to put a question to the Minister of Defence. As the hon. member for Gezina has said it had been laid down that South Africa was to have spent £100,000 on the equipment of the Erebus. Now I should like to know whether that amount has already been spent. If it has been spent and the ship has been returned and we have had no value for that money, are we going to get that £100,000 back?

*The MINISTER OF FINANCE:

We have already got it back.

*Mr. D. T. DU P. VILJOEN:

I am glad to hear it. Now that the ship has been returned we are told that the defence of Cape Town is in a hopeless condition. What is the defence that we have provided for? Can we face any attack made on Cape Town? The Minister of Defence strongly emphasised the fact that the hon. member for Gezina in his deefence plan provided for 120,000 men on the reserve list, who would be ready if necessary to take their part in the defence of our country. I take it that this was a reference to the members of rifle associations throughout the country. We know that the Defence Force has had a great deal of shooting practice during the last few months. Shooting practices were held regularly throughout the country under the control of the previous Minister of Defence. So far as I know members of rifle associations were even able to obtain cartridges to enable them to practise at home or elsewhere. I understand, however, that all this has now been stopped, and there is no opportunity for these people to keep in practice. Is any attention to be given in future to the training of those 120,000 men—if there are such men? Most of the members on this side of the House are members of rifle associations. Are we going to have the opportunity of continuing the practice which we used to have under the former Minister of Defence? Are we going to be able to obtain the cartridges on the same conditions as applied in the past in respect of shooting practices? In the past the policy used to be that peace had to be preached, peace was preached in the schools, in the Press and so on. We naturally have in mind the neutrality policy which we stood for. And in the meantime the defence of the country was attended to and put in uroper order, but the Minister of Defence has now emphasised the fact that the equipment was inadequate.

†*Mr. SPEAKER:

The hon. member must not go into that question on this debate.

*Mr. D. T. DU P. VILJOEN:

I am only asking how much of this £750,000 which we are voting here is to be used for equipment? What is the Government going to do? Is it going to use portion of this money for the equipment of members of the Defence Force? And if the war should come to an end to-morrow, what is going to become of the money then? Are they going to use this money further for the equipment of our burghers, or is the equipment to lie there and rot? Is it to be eaten by the moth, or are we going to get another wholesale sale of the stuff to Jewish shopkeepers who are going to make great profits? That is what we experienced after the last war when the shops advertised the stocks of equipment which they had, and which they had obtained cheaply. Are we going to have another waste of money like that? Finally I should like to bring the cadet system to the Minister’s notice. I hope that portion of the £750,000 will be used for the smartening up of the cadet system which used to be in vogue from 1914 until about 1932. I am speaking from experience and I say that in our small towns we had the best cadet system we could have expected to obtain in the circumstances. Those cadets were well trained and they received their training at the most suitable age.

†*Mr. SPEAKER:

The hon. member must not go into that question. He can only discuss increases coming under this vote, and not questions of policy.

*Mr. D. T. DU P. VILJOEN:

I only want to know whether part of this money is to be used for the cadet system?

†*Mr. SPEAKER:

The hon. member can put the question but he must not discuss the policy.

*Mr. D. T. DU P. VILJOEN:

I only want to put the question, whether this very valuable cadet system is going to be reintroduced?

*Mr. BEZUIDENHOUT:

The speech made by the hon. member for Kensington (Mr. Blackwell) once again was only a poor attempt to carry on the campaign of suspicion mongering against the hon. member for Gezina. At this stage I wish to remind the hon. member of an old Dutch saving which is to this effect, that no matter how fast a lie travels, truth will overtake it. The speech made by the hon. member for Gezina is being distorted here, but settlement time is coming and I feel that we have already had a bit of a settlement in this House this afternoon. What do we find? After the hon. member for Gezina has been accused repeatedly of not having made any attempt to place South Africa’s defences on a proper footing anywhere. We had the statement by the rt. hon. the Minister of Defence this afternoon that the defences devised for Cape Town were excessive. He used the word excessive. We want to emphasise here this evening that as a result of the return of the Erebus to Great Britain Cape Town has to all intents and purposes been left without any defences.

*Mr. J. M. CONRADIE:

Are you getting scared?

*Mr. BEZUIDENHOUT:

We do not know what it is to be scared. Why did they take away Cape Town’s defences? According to what the Minister of Defence said it was because the British Government was anxious to have the Erebus. That is the reason. So now Cape Town has practically no defences, and I want to make this charge, that once again the interests of South Africa have been made subordinate to the interests of the Empire, because on account of the fact that the Empire required the Erebus, that ship was taken away from here and Cape Town was left without any defence. If I understand the position correctly this means that the safety of South Africa is simply being played with. What defences are there in Cape Town? What surprises me even more is that the Minister of Defence should come and tell us that it would have cost such a lot of money to have moored the Erebus. This is the same Minister of Defence who only recently told us that the country was prepared to pay any price for the safety of the state, yet he comes and tells us now that it would have cost such a lot to defend Cape Town. Now I should like to make a few general remarks on the subject of these estimates. I was somewhat surprised on going through these estimates when I found that the Minister of Finance stated that at the request of the League of Nations he had made provision for an amount of £50,000 for the relief of Finland. But why should that amount be put under the heading of “Commerce and Industries”? The point I want to make is that we are not given a correct reflection of the actual expenditure in connection with defence. Here under the vote “Defence” an amount of £750,000 is put down, but here we have another £50,000 which is provided for under the heading of “Commerce and Industries.” Is not this £50,000 intended to preserve the goodwill of Finland in this time of crisis? It may be that this was done at the request of the League of Nations, but why should this provision be put under the Department of Commerce and Industries?

*The MINISTER OF FINANCE:

Because they have to buy these things.

*Mr. BEZUIDENHOUT:

Very well, I accept that statement, but although the Department of Commerce and Industries is entrusted with the purchase of these goods, the amount should still appear on the estimates under a different vote, and not under Commerce and Industries. We know that hon. members on that side of the House will go through the country after the session and will tell the people in the country that this Government is spending another £50,000 for the sake of commerce and industries. That sort of thing will create a totally wrong impression. And that is not by any means the only item. Under the heading of Justice there is an amount of £4.000 additional expenditure, and I contend that this £4.000 should also have been debited to the Defence vote.

*The MINISTER OF FINANCE:

Why?

*Mr. BEZUIDENHOUT:

Because these people are specially employed to carry on this smelling-out campaign.

*The MINISTER OF FINANCE:

No, that is ordinary expenditure of the Department of Justice.

*Mr. BEZUIDENHOUT:

Then I should like to know whether the police are not being used for this smelling out.

*The MINISTER OF FINANCE:

The police do not come under the vote of Justice.

*Mr. BEZUIDENHOUT:

I beg your pardon. I shall come to that at a later stage then. Can the Minister give me the assurance that this increase has nothing to do with the smelling-out process?

*The MINISTER OF FINANCE:

Yes, I give you that assurance.

*Mr. BEZUIDENHOUT:

I accept that. But now I come to the Police vote. Here an extra £3,000 is asked for for additional police expenditure, and I want to know from the Minister of Finance whether this expenditure will have anything to do with the smelling-out process.

*The MINISTER OF FINANCE:

No, it will not.

†*Mr. SPEAKER:

The hon. member must confine himself to what is stated here, “Internment camp at Windhoek.”

*Mr. BEZUIDENHOUT:

This internment camp is the outcome of the state of war in which we find ourselves. If we had not been at war we would not have had internment camps, and for that reason I contend that this £3,000 should come under the Defence vote. That is what I want to say, that different amounts which are spent in connection with the war are being hidden away under some other vote. It is shown here that the additional £3,000 is required under the Police vote for the internment camp at Windhoek. I hold that it should not appear under the Police vote but under the Defence vote; if it were placed on that vote the country would realise how much money is actually being spent for that purpose. Now let us take another vote. Under the Public Works vote a similar case crops up. Here we have a vote of £79,800, and if we check this up on the page where it is accounted for, we find that there is an additional expenditure of £24,000 in respect of Baviaanspoort. I again say that this is in connection with internments resulting from the war situation, and I say that it is wrong for this amount to be placed under the Public Works vote. And then we find these “ja-broers,” like the Minister of Labour, because he is also a “ja-broer” now, going round the country telling people, “See what a good Government we have; we have spent so much more on public works,” and then they mention the figures appearing on the estimates, and all the time that money is being spent in connection with the Government’s war policy. I ask whether that is the right sort of thing to do so far as the people in the country are concerned. We have to emphasise these matters. I therefore have to say to the Minister of Finance that although he is asking for £750,000 for the defence of the country he is in actual fact asking for £895,000, almost a million of money. I think it is necessary that we should be told what this soldiering game which the Government is indulging in is costing the state. We shall not be able to find this out, and the public will not receive the information it is entitled to if the Government is allowed to come here and get the House to vote these amounts under different votes. Now I want to ask why all these tremendous items of expenditure are being incurred. Will the Minister of Justice tell us who the potential enemy is in respect of whom we are making all these preparations, in respect of which we are going to tax the taxpayer with millions of pounds? Who is the potential enemy? And I want to, ask the Minister of Justice who the people are against whom we are going to fight. We have always said that we are prepared to defend South Africa, and if we incur any expenditure it should be incurred for the purpose of defending South Africa, and, as a matter of fact, a resolution in accordance with that policy was passed by us some time ago,. We have been at war six months now, and we are anxious to know against whom we are going to spend all these millions of money. We want to know who the real enemy is. It is impossible for Germany to attack South Africa. We believe that it is for the protection of the Union that this money is being spent, but I ask again who is the enemy against whom we are going to fight? It is not Germany; Germany is being blockaded, and it will be impossible for her to come and attack us here. Against which potential enemy are we preparing ourselves by spending these millions of money? There is another point in respect of which I should like to support the hon. member for Pretoria (District) (Mr. Oost). The hon. member for Pretoria (District) has shewn here very clearly in connection with certain circulars which were issued in regard to the appointment of officers for our commandoes what the position is, and I want to ask the Minister of Justice as we are dealing here with citizens of the Union, not to differentiate on account of the political opinion held by these people, because there is no one in South Africa who will not be prepared to defend the Union. But we are not willing to go and play at soldiering in the north, and that against an enemy whom the Minister is unable to name. When it is a question of the defence of the Union of South Africa, every citizen will be prepared to defend the country. I want to ask the Prime Minister not to differentiate on account of a man’s political opinions when appointments are made, whether he be a lieutenant or any other officer. Let us realise that where we stand for the defence of South Africa and South Africa only, no bad blood should be created among members of the same commandoes. I want to ask the Minister of Defence to give his serious attention to this matter. There is no doubt that as a result of these appointments a very bad impression has been created in various districts. I want to assure the Minister of Justice that an appointment was recently made at Witbank which no decent man can be satisfied with.

*Mr. SUTTER:

Witbank is satisfied.

*Mr. BEZUIDENHOUT:

The hon. member may say so, but I can assure him that many of his constituents are no longer satisfied with their member, and I want to tell the Minister that when this campaign of the khaki knights and others is over, he will find how unwanted the hon. member for Springs (Mr. Sutter) is.

*The Rev. S. W. NAUDÉ:

We have had conflicting statements made in this House, among others by the Prime Minister, and by the former Minister of Defence. I feel that the House and the public are entitled to know what the truth is. We got a statement from the Prime Minister as to the condition our defences were in when he took over.

†*Mr. SPEAKER:

We cannot go into this matter again.

*The Rev. S. W. NAUDÉ:

Well, I should like to know what the real truth of the position is, and I feel that we are entitled to go into this question. As I do not want to, and am not allowed to speak on this subject now, there is another matter which I wish to bring to the notice of the Prime Minister. Under the Defence Vote I put a question to him when the matter was under discussion on a previous occasion — it was a question in respect of three young fellows in my constituency who were brought before the magistrate after they had refused to appear on parade. The finding was that those young men had joined up voluntarily, and the Government was, therefore, not guilty. I have affidavits in front of me by members of the Rifle Association in Pietersburg who had joined up voluntarily, but are now being compelled to attend parades. I have a statement here by a Mr. Nel of Pietersburg in which he says that he had never understood that he would be compelled to attend parades, and as there was a possibility now of their being sent away — he did not know where — he had asked to be relieved. He is thirty-three years of age. His request was refused. I have the letter here which he received from the captain of the Botha Regiment, and that letter reads as follows—

Your letter to Lieutenant Kruger has been handed to me. You joined voluntarily and you have to stay in the regiment. There is no such thing as withdrawal. The Botha Regiment is not a body like the “Girl Guides” or the “Boy Scouts” where one can join one day, and leave the next. You received your notice to go to camp, and to leave on Saturday, and if you are not on the train and fail to arrive at Cronjé Mine, I shall have you fetched and delivered at the camp under police escort, and what is more, if you again absent yourself from a parade without leave, I shall have you prosecuted. If necessary this letter will be used as evidence, as this serves as a final warning to you.

May I be allowed to assure the Prime Minister that a condition of uncertainty is prevailing to-day, but in addition there is a feeling of excitement and consternation among the people outside. Those people joined up voluntarily, but unlike those young fellows of the R.N.V.R. who knew where they were going, those other fellows did not know where they might be sent. Now they are threatened and told that police will be sent to arrest them if they do not attend parades, and they are threatened with prosecution. I hone the Minister will give his attention to this, because this is a matter which is causing a great deal of feeling in the minds of people. I fear that the right hon. the Prime Minister has not been listening to what I have been saying, but this is a serious matter. Those of our people who joined up voluntarily with the Defence Rifle Associations are being commandeered to attend parades and to go to the Premier Mine. I have other sworn statements here, all of which are more or less in the same trend. Those people are refusing to attend parades, and I should like to know from the right hon. the Prime Minister to what extent our law compels these people to go.

*Dr. VAN NIEROP:

I should like to put a few Questions to the hon. the Minister in regard to certain particulars which he did not explain in his introductory remarks. In connection with Baviaanspoort he said that we were going to alter this came and that more money was to be spent on it, but that the budding work bad been completed faster than had been provided for, and that consequently more money was required. Now I should like to know how many people that camp is being arranged for, and I should like to know whether the Minister could give us the number more or less of the people that are interned there. This is the first time that provision is being made for expenditure for an internment camp at Windhoek. £3,000 is being provided for that purpose, and I should like to know from the Minister why, as South-West Africa has its own Government and its own management, the Union should pay for the internment camp in South-West Africa? Then there is the amount of £50,000 to be presented to Finland.

*The MINISTER OF FINANCE:

That is for food.

*Dr. VAN NIEROP:

Is it for the celebration of peace, or what? If an ordinary member of this House approaches a Government department or approaches any Minister and asks for such a thing as an increase of pension, he is straight away told that there is no money, and that it is impossible to do anything for the people concerned. I recently made representations about a case where the people had nothing at all. The father had gone away, the mother was ill, and the children had been left uncared for. This has been going on for months, and these people have not been given any relief yet. Yet £50,000 is being provided for food for Finland, although we have not even declared war against Russia. Here in South Africa we hear about school children who are underfed, and about people living below the bread line; if we have £50,000 available to spend on food, we should in the first instance look after the people in our own country who have no food to eat. It appears to me that our loyalty is beginning to affect our brain. We are more concerned over the people in Finland than over starving families in our own country. If the Minister of Commerce and Industries wants to spend that money for people in our own country he will have the support of this side of the House.

*Mr. J. M. CONRADIE:

Move that it be deleted.

*Dr. VAN NIEROP:

There is complete silence on the other side of the House about this amount. If the hon. member over there wants to take the initiative and wants to move that this amount be deleted I shall second it. So far as I am concerned I should prefer to see that £50.000 used for the purpose of feeding the people in our own country, because blood is thicker than water. Here is an item of £250 which concerns the department of the Minister of Lands, and I want to ask how the Government can expect us to vote that money if we are being treated as unfairly as the Minister of Lands is treating us? After I had put a question to the Prime Minister the Minister of Lands said that we were busy negotiating with people who were Nazis, and who wanted to disturb the peace of this country. He said that we were engaged in conjunction with the Greyshirts, the Blackshirts, or whatever they might be, causing a revolt in this country, inciting people to revolt. Can one be expected to vote money to a Government which acts in such an irresponsible manner? I want to say again in connection with the internment camps that we are not going to vote this money unless the Minister tells us where we are going to draw the line. An amount of £75,000 is asked for here, and we want to know when we are going to stop building in those camps; we want to know what the size of the camp is going to be, and how many further camps are going to be built. I want to know from the Minister how many people there are in those camps, and whether they are now to be enlarged because the British Government has asked us to intern people there who have been captured at sea, and that despite the fact that the Minister is not able to tell us what the British Government will pay us in connection with the expense of interning those people.

†*Mr. R. A. T. VAN DER MERWE:

I should like to express a few views on these further Additional Estimates up to the close of the financial year, up to the end of this month. These Additional Estimates of expenditure amount to something like £818,000 and the loan estimates amount to £89,000, so that the additional amount totals close on £1,000,000. There are some slight increases on several votes, but on a few votes there are colossal increases. This is largely due to the fact that when the original estimates were drafted last year there was no question of a war. War has come and many additional items of expenditure are now included in these estimates. I want to treat these additonal estimates from the point of view which I have always adopted towards our Budgets, and when I was a member of the Opposition against the United South African Nationalist Party Government I laid down certain doctrines by which I still stand to-day. So far as defence is concerned my position has always been that South Africa should do all that was necessary for its own self-preservation. I still stand by that doctrine which as a matter of fact has been the attitude of the Nationalist Party throughout, that is to say that we must prepare our country to be able to defend itself. South Africa must be placed in a position to be able to defend what is her own. We have been listening in this debate to what has been said, and even the right hon. the Prime Minister, who in the past supported the policy of the previous Minister of Defence, now comes along and emphasises the defects which existed at the time, and tells us what has to be done in order to correct these defects, and to bring about the necessary enthusiasm, animation and zeal. I do not complain of the wish that our country should be prepared to defend itself, because we have our Defence Act and that Defence Act has to be carried out; but what I do want to ask is this, was the resolution passed on the 4th September aimed at defending our country? That is what we have to keep in mind when we listen to the charges that are being made against the hon. member for Gezina, even by the hon. member for Kensington (Mr. Blackwell) and by the right hon. the Prime Minister. The hon. member for Gezina was busy preparing our country to defend itself. And it is self-evident that he would have gone to look for advice from that country which is our friend, and which, because it is an island, has to busy itself continually with coastal defence. It is common sense that he would go for advice to a friend like that in respect of the defence of his own country. But we also know that the world position has developed to such an extent that defence methods of a few years ago are no longer of any use under the conditions prevailing at present, and methods prevailing at present in regard to war. War methods become obsolete and are replaced by better ones. I also criticised the hon. member for Gezina in the past, when he was a Minister, but in that respect my attitude is that he acted in accordance with what common sense told him to do. I want to point out that on our loan account expenditure appears in connection with the condition of affairs created on the 4th September. I further want to point out that we took over the police service of South-West Africa in those days, and I wish to emphasise that the system of book-keeping in connection with the expenditure relating to the police service is complicated to my mind. It is an instance of bad book-keeping. The Minister of Finance juggled very nicely with figures here. I have on previous occasions referred to this and at a later stage I shall again point out how he juggles with figures in connection with the country’s expenditure. To-day I want to confine myself to the question whether it is not necessary for a country to have a sound Opposition so that the Government shall be conducted in the right manner; the Opposition is there to compel the Government to pursue the best policy for the country. But what of the future? When this session of Parliament is over, after the Budget debate is over, and after the war measures have been passed, what is going to happen? The Government is then going to govern by means of proclamation. That being so it is essential for us to give our attention to all the steps that are being taken and for that reason a strong Opposition is essential to draw attention to all the bad things that are being done.

†*Mr. SPEAKER:

The hon. member must confine himself to the subject before the House.

†*Mr. R. A. T. VAN DER MERWE:

We again have a tremendous increase of expenditure, amounting to almost £1,000,000 simply because we have to see the war through. If the country had remained neutral we would not have had all these difficulties. We have to take note of the movement which is going on in respect of economic, social, national and also international affairs, so far as this Government is concerned, and it is because of that that I have got up here to refer to these two points.

†*Lt.-Col. BOOYSEN:

May I be allowed to explain that the absence of the hon. member for Gezina (Mr. Pirow) has been caused by urgent business and that he was unaware of the fact that the hon. member for Kensington (Mr. Blackwell) was going to make, I would almost say, a barbarous attack on him. Although the hon. member for Kensington is not in his seat at the moment I none the less wish to make a few comments on what he has said here. It would appear to me that the hon. member for Kensington is not so very much concerned about what the hon. member for Gezina has said—it would appear to me that in his very heart he is not so deeply interested in the Empire as he is in himself as as aspirant judge, but he feels it incumbent on himself to pose here as such a great champion of the Empire in order to give the Prime Minister the desired impression for his own personal self-seeking objects. Why does not the hon. member for Kensington accept the challenge issued by the hon. member for Gezina? He has not said a word about that, he has carefully evaded it. The hon. member for Gezina said straight out in a manly and honest fashion that he challenges the Prime Minister to lay the official documents on the Table of the House. Why does not the hon. member for Kensington get up to induce the Prime Minister to lay those official documents on the Table? He avoids doing so.

†*Mr. SPEAKER:

The hon. member is now discussing a matter which was dealt with on another debate.

†*Lt.-Col. BOOYSEN:

Yes, I may possibly not be dealing expertly with the allegations made by the hon. member for Kensington but the hon. member for Kensington dealt with these matters and freely stated what we wanted to say.

†*Mr. SPEAKER:

Order, order!

†*Lt.-Col. BOOYSEN:

The hon. member for Kensington did not say a word about the inexplicable action of the Government in sending back the Erebus. The Erebus was required here. The British Government had handed that ship over to South Africa, but possibly the Empire realised that it had greater need of the Erebus than South Africa, and for that reason the ship had to be sent back. That arrangement was made by the former Minister of Defence with the knowledge of the Cabinet, because the Minister of Defence was no dictator. Everything he did in connection with his defence programme was done with the knowledge and the approval of the whole Cabinet, and now the Prime Minister wants us to believe that he was a dictator, and that he alone was responsible for the programme and its execution. By making those remarks the right hon. the Prime Minister casts blame on himself, on the previous Cabinet, and on the general staff. In regard to the discharge of officers, what has happened there reminds me of what is taking place in Russia, and the best officers have disappeared from the service.

†*Mr. SPEAKER:

Under which item does the hon. member wish to discuss that point? On these Estimates he can only discuss increases.

†*Lt.-Col. BOOYSEN:

In regard to the internment camp in the Mandated Territory of South-West Africa I wish to draw attention to the fact that South-West Africa stands under the League of Nations, and the Prime Minister is now setting up an internment camp there where citizens of South-West Africa are being interned, and that is being done at the expense of the country. I want to ask the Prime Minister whether he has the consent of the League of Nations to do this? We realise that Great Britain is not the League of Nations, even though it was Great Britain’s main object to try and take the lead and to be top dog in the League of Nations, but in actual fact a large number of smaller states constitute the League of Nations, and they have never given permission for the internment of citizens of South-West Africa and for those people to be treated as prisoners. All this is being done with money belonging to South Africa. It is illegal and the League of Nations is not aware of it. I also want to protest against the expenditure of £50,000 which is being so liberally presented to Finland. I agree with the previous speaker that it is unfair to South Africa to take this public money and to give it to another country in which South Africa has no interest, and in which it will never have any interest. How can the Government take this money out of our depleted Exchequer, take this money from this impoverished country and present it to another country? The people are upset at this waste of money. We feel that public money is being spent recklessly and hon. members must excuse us if we get the impression that a process of exploitation of the State is being indulged in under which the Exchequer is being robbed of money for the sake of the “see the war through” policy of the Minister of Defence. We strongly protest against this, it is a crime against South Africa which is suffering many hardships and which has a population which is being greatly impoverished. It is time for the whole of the people, Afrikaans-speaking as well as English-speaking, to say “so far and no further.” It looks to me as though the whole of South Africa has to be exploited for the sake of the Empire, while the real interests of South Africa are being ignored.

†*Mr. VERSTER:

When listening to the hon. member for Kensington (Mr. Blackwell) I was reminded of something which happened here in Parliament a few days ago. A father brought his young son to the gallery to watch the proceedings. The young fellow was very inquisitive, and when you, Mr. Speaker, came in he asked who you were. His father replied that you were the Speaker. When you got up to read prayers he asked what you were doing, and his father said that you had seen the Government and that you were now praying for the people. I think it will be very necessary on many occasions in future to pray for the people on account of our having been brought into this war. We are now asked to vote £50,000 for Finland, and two hon. members on this side of the House have stated that they are not quite satisfied that this amount should be spent on behalf of Finland. My thoughts, however, went back to the past, when my people were anxiously watching whether any assistance was forthcoming. As we know, a few hundred thousand pounds were collected which were placed at our disposal in order to help us over our difficulties. It is for that reason that I wish to express my thanks for this amount being put on the Estimates, and I do so for this reason, that South Africa is showing that we have sympathy with other small nations which are being oppressed. I feel that South Africa is dong a great deal more in this connection than the Allies did when they saw that Finland was hard pressed by a nation for whom no one has any time. The worst of all was that the towns in Finland were bombarded, and women and children were killed by those murderous attacks. England was prepared to let 200,000 volunteers go to help the Finns, but nothing came of it. We were all pleased when we heard that peace was to be declared between Finland and Russia. I listened to the news service, and I heard to my astonishment that it was being broadcast that peace had come and that the peace conditions were not as drastic as had been expected, and then the announcer added “Thanks to the attitude of Great Britain.” That same evening, however, we read in the Press that peace had been concluded but that the peace conditions were very severe. I wondered what the announcer would have to say about it, but he fortunately kept quiet. The next day we found that 50,000 men were to have gone to Finland, but it stopped at their being prepared to go and nobody actually went. For that reason I was not surprised to hear that Mr. Tanner, the Prime Minister of Finland, complained that their friends had left them in the lurch. As our Government is prepared to render every possible assistance to Great Britain I hope they will learn their lesson here, and that if a small nation requires aid they will not only be ready to help, but will actually help and will not leave such a small nation in the lurch. We heard a great deal about the Erebus here. We sent from thirty to forty men from Wynberg to go and fetch the Erebus, but when the ship got here the Prime Minister decided to send her back to Great Britain. The reason given is that the Erebus would have tossed about too much. I do not accept that statement, but I believe that England needed the Erebus very badly, and if the Prime Minister sent the ship back for that reason, we can understand his attitude. But that would tend to show that South Africa is not as badly equipped for defence purposes as we have been given to believe. There is another point in connection with this matter. It has been stated that the aeroplanes intended for South Africa have been sent to Finland, and I have proof of that, but that is also further evidence of the fact that South Africa is not so badly equipped as we have been told, because if we had been so badly equipped, the Erebus and those aeroplanes would have been sent here. What surprises me most of all was that the Prime Minister got up and repudiated practically everything that he and the hon. member for Gezina had jointly decided on in the past. It amounted to three points. This is what the Prime Minister said: “I do not know the hon. member for Gezina, I repudiate everything he says; I detest him, I do not know him.” And then he boasted of his own achievements.

†*The MINISTER OF FINANCE:

The first part of the debate concerned itself exclusively with defence matters. The Minister of Defence has already replied to the most important points raised and the other points can be dealt with in Committee. Consequently there are only a few points left for me to deal with. I wish to express my disappointment, however, at the fact that a discordant note was struck in the House in regard to the purchase of food for the Finns.

*Dr. N. J. VAN DER MERWE:

Where is it being bought?

†*The MINISTER OF FINANCE:

In South Africa. The Finnish nation has compelled the sympathy and the admiration of the whole world and I thought that we in South Africa too sympathised with them. I want to associate myself with what the hon. member for Zwartruggens (Mr. Verster) said. We were prepared in the Anglo-Boer War to accent the help of other countries, but the hon. member for Namaqualand (Lt.-Col. Booysen) has apparently forgotten that it is more blessed to give than to receive. I am sorry that this discordant note should have entered into the debate. Another point was raised by the hon. member for Mossel Bay (Dr. Van Nierop). He complained of the expenditure in connection with the internment camp at Windhoek and he asked why this matter appeared under the heading of “Police.” The reason is that the internment camp at Windhoek is being controlled by the police. Under the Act passed last year we have taken over full responsibility of the police expenditure in South-West Africa. The hon. member also asked what provision we were making in connection with the internment camps at Baviaanspoort and Leeuwkop. I want to explain the position once again. The House on passing the first Additional Estimates approved of this extension of Baviaanspoort, but we thought that we would only spend £10,000 in the course of the current financial year. We are still engaged on the work but it has progressed faster than we had anticipated, and that is the reason why we shall require £34,000 this year. In regard to the accommodation, there will be accommodation in the two camps for 1,000 persons, but after the war too there will be space for ordinary prison purposes.

Motion put and agreed to; House to go into Committee now.

House in Committee:

The CHAIRMAN:

The Committee has to consider the Second Estimates of Additional Expenditure to be defrayed from Revenue and Loan Funds during the year ending 31st March, 1940.

Expenditure from Revenue Funds:

Vote No. 4.—“Prime Minister and External Affairs,” £209, put and agreed to.

Vote No. 5.—“Justice,” £4,000, put and agreed to.

Vote No. 9.—“Police,” £3,000, put and agreed to.

Vote No. 13.—“Provincial Administrations,” £1,050, put and agreed to.

Vote No. 14.—“Miscellaneous Services,” £625, put and agreed to.

On Vote No. 20.—“Commerce and Industries,” £50,014,

*Dr. VAN NIEROP:

I would not have got up to speak again, but I cannot allow this matter to pass after the manner in which the Minister of Finance has spoken and has distorted our reasons for objecting to this expenditure of £50,000. Whether we approve of the attitude adopted by the Finns or whether we admire them, does not affect the position. The reason why I object to this expenditure of £50,000 is not that I have no sympathy for the Finns or do not admire them, but the reason for my objection is that we have people in this country who require this sort of help even more than the Finns do. It is therefore not a matter, as the Minister tries to insinuate, that we are pro-Nazi, or on this occasion pro-Russian. That is not the case, but it is invariably stated that we have no money for our own poor, yet the Minister comes along and by a stroke of the pen spends £50,000 for the Finns. I hope the country will appreciate the fact that I have no objection to spending the money for the sake of people who are starving or are in great trouble, but that is the very reason why we object to this money being sent out of the country.

Vote put and agreed to.

On Vote No. 21.—“Defence,” £750,000,

*Mr. OOST:

I should like once again to raise the point which I brought forward earlier on. I want to repeat briefly that this is a definite fact in regard to officers of rifle associations that when new officers are appointed they have to fill in a form and they have to sign that form in which it is stated that they support the Government’s war policy. This applies not only to lieutenants but even to commandants. It is quite clear that this demand is embodied in the circular sent out by headquarters in Pretoria and in one instance a staff officer was even appointed in Pretoria to see to it that the instructions were properly carried out. Meanwhile it appears from the statement made here by the Minister of Defence on the 6th March that this is not in accordance with his own policy in regard to officers. He explicitly stated on the 6th of March that only such officers as were intended to be sent beyond our borders as volunteers would be asked to sign a statement that they supported the policy of the Government. Not only we in this House but the whole country is entitled to know from the Minister of Defence what the position is. I repeat the request which I made on a previous occasion that he should reassure the country in regard to this matter. It will undoubtedly become the cause of considerable uneasiness, which may lead to very much worse things unless the Minister of Defence steps in at once to carry out the policy which he himself laid down in this House and to see to it that his staff officers, or whoever may have done the damage, have it made clear to them that they are acting in conflict with the policy of the Minister of Defence.

*The MINISTER OF DEFENCE:

I am sorry I was not able to reply sooner to the question put by the hon. member. He put his question, however, after I had replied, so it was impossible for me at that stage to reply again. His question is quite reasonable and I shall give him an effective answer. The position is that this matter, as I explained in the House a few days or a week ago, is quite correct. That declaration is only demanded from volunteers who want to joint the mobile field forces for services inside or outside the Union. It is applied to them only and to no one else. The rest of the Defence Force falls under the ordinary law, and no declaration of that kind is demanded of them. I shall be pleased if my hon. friend will give me that letter, not that I want to make any use of it except to see where the mistake has crept in—if there has been any error. And it is possible that in this particular instance the lieutenant was a volunteer. I should like to look into that. If he was not a volunteer no such declaration should have been demanded of him. The position is perfectly clear and there is no room for any misunderstanding. If I may be given the letter, I shall be able to trace the whole position, and if a mistake has been made in my department, the position will be put right.

*Mr. OOST:

I can assure the hon. the Minister that I personally and all of us on this side wish to give him our hearty support in seeing to it that our Defence Force and our commandoes shall remain one united body and shall not be split. He will agree with me that if there should be a split in our commandoes it would be fatal for the future. The Minister and myself have been through too much together not to realise that. I know the people who wrote this letter and I can assure the Minister that they have not the slightest intention of joining up as volunteers. That question has not been considered at all. My great objection is, and I want to emphasise this, that the action taken in this case has been taken on instructions from headquarters and without the knowledge of the Minister, and I should like to have the whole matter enquired into and the instructions withdrawn; and I hope that they will carry out the policy laid down that so far as defence matters are concerned, we do not know any politics.

†*Lt.-Col. BOOYSEN:

I notice that the original additional estimates were for an amount of £2,241,870. These additional estimates are for an amount of £750,000, so that the revised estimates amount to £2,991,817. Well, I feel that this amount is exclusively for the defence of the Union, and therefore I am in agreement with it. What, however, is not quite clear to me, is this. If volunteers join up they can be sent to any part outside the Union borders to go and fight there. I want hon. members to follow me—for the defence of the Union there is no need to ask for volunteers. The volunteers are those units which will be sent across the Union borders. I have no objection if they want to be so generous as to go beyond our borders to fight for another country or another power. Let them go, but in that case let the country requiring their services pay for them, pay the expense. I want to know whether these estimates exclusively cover costs for our own defence, or whether they also have to cover the costs in respect of those who have to go and fight beyond our borders?

*The MINISTER OF DEFENCE:

This is expenditure which has already been incurred; this does not refer to volunteers.

†*Lt.-Col. BOOYSEN:

Do I understand the Minister to say that the volunteers who are to go beyond our borders to fight for another country will have their wages and their expenses paid by that other country which uses those men?

*The MINISTER OF DEFENCE:

That does not come under this vote.

Vote put and agreed to.

On Vote No. 22.—“Lands,” £250,

*Mr. D. T. DU P. VILJOEN:

I should like to know in connection with this allowance of £250 for the Chairman of the Central Land Board why it is so essential that this should appear on the additional estimates. Is it retrospective, and why could it not have appeared on the ordinary estimates?

*The MINISTER OF LANDS:

This £250 is a special allowance to the Chairman of the Central Land Board. Under the Act he is only entitled to £1,000, but my predecessor thought fit to grant him this additional £250, and it is this supplementary amount which is being provided here.

Vote put and agreed to.

On Vote No. 32.—“Printing and Stationery,” £5,800,

*Mr. WARREN:

I should like to know from the Minister whether this amount of £5,800 is the additional amount since the last additional estimates were passed. I take it that this is in regard to, printing and stationery because the prices of these materials have gone up, but I should like to know whether this amount only relates to the past six weeks or to the period since the outbreak of war?

*The MINISTER OF FINANCE:

This relates to the whole period.

*Mr. WARREN:

Why is it only brought up now?

*The MINISTER OF FINANCE:

Because these goods have only been delivered now.

*Mr. D. T. DU P. VILJOEN:

I should like to know in regard to this tremendous amount for stationery whether we could not reintroduce the system which we had during the last war under which envelopes and things of that kind were used twice? Paper and articles of that nature have gone up considerably in price and if it goes on like this the expenditure in respect of stationery will go up still further.

*The MINISTER OF FINANCE:

That is a matter which I am already going into.

Vote put and agreed to.

Vote No. 36.—“Industrial Schools and Reformatories,” £3,500, put and agreed to.

Expenditure from Loan Funds:

On Loan Vote B.—“Public Works,” £79,800,

†*Gen. KEMP:

I notice that provision is made here for £50,800 for the purchase of Hillbro House. The revised estimate was for £56,800, and an amount of £50,800 is now being asked for. I should like to know from the Minister whether this place is now going to cost us £107,000. I also want to put a question in connection with Baviaanspoort —not that I object to it. The estimated expenditure was £34,000. The revised estimate was £45,100, and now an additional £24,000 is asked for. Do.es that mean that the work is going to cost £58,000?

†The MINISTER OF PUBLIC WORKS:

In reply to the question with regard to Hillbro House, it was purchased for £50,800. They originally wanted £60,000 and it was eventually bought by the department for £50,800. The £6,000 is for alterations to make it available to, the Post Office.

Mr. BLACKWELL:

Where is it?

†The MINISTER OF PUBLIC WORKS:

In Johannesburg.

Mr. BLACKWELL:

Whereabouts?

†The MINISTER OF PUBLIC WORKS:

Close to Marshall Square. The total amount will be £56,800 after the building has been converted to post office purposes. With regard to Baviaanspoort camp the total cost will be £45,100.

The MINISTER OF FINANCE:

We already voted £10,000.

†The MINISTER OF PUBLIC WORKS:

We are now spending £5,000, which is wanted to connect up with electricity supply from Pretoria. The department came to the conclusion that it would be cheaper to connect the camp up with electricity from Pretoria, instead of having its own supply.

*Mr. WARREN:

I understand the Minister to say that the purchase price is £50,800 and that the £6,000 is required to convert the place into a post office.

The MINISTER OF PUBLIC WORKS:

The place was purchased with the object of converting it into a post office.

*Mr. WARREN:

I understood the Minister to say that the place had been bought for £50,800. The amount of £6,000 is added to the purchase price in order to convert the place into a post office. Now another £50,000 is being asked for, so that the place will altogether cost £107,000

The MINISTER OF PUBLIC WORKS:

No.

*Mr. WARREN:

The additional amount to be provided is given here as £50,800 and the first estimates were for £50,800, making a total of £101,000.

†The MINISTER OF PUBLIC WORKS:

The position is as I have explained. The purchase price is £50,800, which we have to pay before the end of March. An extra £6,000 is required to convert it for the purpose of post office work. That money will be spent in the new financial year. The total cost is £56,800 after it is converted.

*Mr. WARREN:

Then I should like to know from the Minister in what way this place was bought. Was it bought by public auction or was it valued? The Minister will recollect the difficulties that were experienced in connection with the Cape Town post office. That being so it would be well if he were to tell us how it was valued when it was bought.

†The MINISTER OF PUBLIC WORKS:

The purchase was undertaken by the department. The original price asked was £60,000, and as a result of negotiations the department eventually bought it for £50,800; and let me say that it is a bargain.

*Mr. WARREN:

That does not answer my question.

†*The CHAIRMAN:

The hon. member must confine himself to the additional estimates.

*Mr. WARREN:

If this is additional expenditure then I want to know how the purchase was made. The Minister’s reply is not satisfactory. If I want to sell a place worth £5,000 to the Government and I ask £10,000 and I come down £2,500 afterwards, I am still getting £2,500 more than the place is worth. On what basis was this place bought? If it was bought under the Department of Lands the Minister of Lands will be able to tell me. I take it.

*The MINISTER OF LANDS:

It was valued by the Land Board.

Vote put and agreed to.

Loan Vote D.—“Lands and Settlements,” £6,000, put and agreed to.

Loan Vote F.—“Local Works and Loans,” £4,000, put and agreed to.

The MINISTER OF FINANCE:

I move—

That the Chairman report the Second Estimates of Additional Expenditure from Revenue and Loan Funds without amendment. Agreed to.

House Resumed:

The CHAIRMAN reported that the Committee had agreed to the Second Estimates of Additional Expenditure from Revenue and Loan Funds without amendment.

Report considered and the Second Estimates of Additional Expenditure adopted.

Mr. SPEAKER appointed the Minister of Finance and the Chairman of Committees a Committee to draft and bring up the necessary Bill in accordance with the Second Estimates of Additional Expenditure as adopted by the House.

The MINISTER OF FINANCE brought up the Report of the Committee, submitting a Bill.

SECOND ADDITIONAL APPROPRIATION BILL.

By direction of Mr. Speaker, the Second Additional Appropriation Bill was read a first time: second reading on 19th March.

EXTENSION OF OPERATION OF FARM MORTGAGE INTEREST ACT, 1933. The MINISTER OF FINANCE:

I move—

That this House resolves that under Section 16 of the Farm Mortgage Interest Act, 1933 (Act No. 34 of 1933, as amended by Act 63 of 1934, Act 52 of 1935, Act 20 of 1936 and Act 24 of 1939), the operation of that Act, as amended, shall be extended until the 31st day of March. 1941.

It is essential that this motion should be adopted before the 31st of March. If this is not done, the Farms Mortgage Interest Act will practically lapse; there is no need for me to repeat the history of this legislation, I believe hon. members are familiar with it. In 1933 Parliament passed a Bill in respect of interest on farm mortgages, the object of which was to reduce the interest on farm mortgages to 3½ per cent. so far as bona fide farmers were concerned. There was, however, provision in the Act that this would only be in operation for one year, but that the Act could afterwards be extended by further legislation or by proclamation. In consequence a motion has been introduced into this House every year extending the provisions of the Act for another year. Last year, in 1939, however, an amending Bill was passed by Parliament, the object of which was to amend in certain respects the provisions of the principal Act or to extend those provisions: that Bill, however, was on the same basis as the principal Act, namely that it would only be in operation for one year, with the proviso that it could be extended by resolution of both Houses. The Act, therefore, lapses on 31st of March and in order to extend its operations for a year it is necessary for this motion to be accepted.

*Mr. WARREN:

I want to make an appeal to the Minister and to ask him in connection with this Bill to take account of the conditions prevailing to-day in regard to farming. In his reply to the budget debate he stated that this remedy was of a temporary nature in order to assist farmers who during times of plenty had paid high prices, and bought farms — the object was to help them over the bad times which had come after these times of plenty. In otherwords: to help them in view of the fact that we had gone off gold and in view of the fact that the prices of land had gone up and that they, were over-capitalised. It was then found necessary to adopt a temporary measure of this kind to assist farmers to remain on their land. I believe the Bill applied to bonds entered into up to the 31st of March, 1933, and the Minister has stated that that period could not be extended at this stage, unless it could be proved that there were circumstances warranting the extension of the provisions of the Bill to the present. I want to make an appeal to the Minister to review his decision because I can assure him that the farmers are passing through very difficult times. Before the war, farmers were getting very little for their products, but their working costs were very much lower and the costs of their requirements were also lower. Things have now changed, however, and there are many farmers who cannot even earn the amount of their interest, not merely because the prices of their products have not gone up, but also because this year’s prospects are very bad. Costs of production have also gone up, and if the Minister takes all these facts into consideration, he should be able to extend the date in respect of which the subsidy is given, up to the present date.

*Mr. D. T. DU P. VILJOEN:

In regard to this question of interest subsidy, I want to appeal to the Minister not to restrict the period for which the provisions of this Act are extended to one year, but to consider the question of extending the Act for a longer time. The Minister now has to come to Parliament every year to extend the Act for another twelve months and a sword is always hanging over the heads of the farmers in connection with this matter—there is always the danger of the interest subsidy being cut off at the end of the year. The farmer has no fixed basis and does not know how to calculate matters. Any business firm knows what it can depend on and what its expenditure is going to be, but here we have a state of uncertainty. Could not the Minister instead of extending the provisions of the Act for one year, extend them for three or five years? The farmer would then know where he stands. I further want to bring to the Minister’s notice, as I have done on other occasions, a somewhat unfair position in connection with the allocation of the interest subsidy; that subsidy is granted to some farmers and not to others. The Minister of Lands is in his seat and he is well acquainted with conditions in the North-West and he will agree with me that there are young farmers to-day who are compelled to buy land in order to make a living. Some comments were made on a previous occasion when I said that they “were compelled,” but I repeat that assertion because they are unable to carry on unless they do so. Prices are higher to-day than they were when the interest subsidy was granted and I want to ask the Minister whether he does not consider it fair that these young fellows who have to pay such high prices should also be granted the subsidy? They have to compete to-day against farmers who get the interest subsidy, against farmers who have even purchased their land more cheaply. There is one further point I wish to raise. As the Minister knows, if a person was entitled to the interest subsidy in respect of a bond on his farm, and if he sells his land, the man who takes over the bond is also entitled to the subsidy. The department, however, does not seem to be disposed to recognise such a bond for interest subsidy purposes, if between the time of the sale and the registration of the fresh bond there should be a lapse of a short period of say, two, three or five months, I want to bring to the Minister’s notice that, as he knows himself, there are many difficulties. One buys a farm, not because one wants to speculate, but because one is obliged to buy a farm. I have brought several instances to the Minister’s notice. It then takes a few months before the old bond is replaced by a fresh one, and then the subsidy is not allowed. I want to ask the Minister whether he is not of opinion that in such cases the new bond should also have the benefit of the subsidy.

†*The MINISTER OF FINANCE:

I want to explain again that this motion only aims at extending the application of the existing law for twelve months. That is all we are able to do by way of resolution under this Act. What hon. members are now asking for can only be done by an amendment of the Act, and that we cannot do at this stage. We can only discuss the extension of the Act to-day. If it should be necessary to introduce an amendment of the Act I should be quite prepared to give my attention to that aspect. But so far as the application of the Act to bonds is concerned which were entered into after the passing of the original Act. I must refer hon. members to what I said on a previous occasion when I explained the reasons why we could not accept such an amendment. I think hon. members should acquiesce in that. So far as the other amendments are concerned I am prepared to consider them, but under the motion now before the House we can only discuss an extension of the existing Act. I hope, therefore, that the House will now pass this resolution.

Motion put and agreed to.

BOSPOORT IRRIGATION DISTRICT ADJUSTMENT BILL.

Second Order read: Second reading, Bospoort Irrigation District Adjustment Bill.

†*The MINISTER OF LANDS:

I move—

That the Bill be now read a second time.

This Bill provides for and applies to a small area along the Hex River in the district of Rustenburg, Transvaal. It provides for the proper division of water in that area. The small settlement there is probably one of the oldest of its kind in the Transvaal. It has been in existence for a number of years and the people there have never had any assistance from the Government. They have cleared the ground and they have turned the water from the Hex River over their land by means of furrows for irrigation purposes. Unfortunately they never had an irrigation council and they worked on their own. So far as the division of water was concerned there has always been difficulties. The upper riparian owners have taken as much water as they wanted, and sometimes they have had all the water, and the lower riparian owners have had no water at all, so that for years they have been suffering considerable hardships. Since 1908 the water of the Hex River has been decreasing, with the result that those people have been faced with a great deal of difficulty, particularly owing to the fact that there was no adjustment of any kind. In 1921 one of the upper riparian owners obtained a judgment from the Water Court under which he was given permission to take a certain quantity of the normal flow of the river. The finding of the court was that he could take a certain percentage and that finding laid it down that Bospoort could take 8½ per cent. and another settlement 9 per cent. while the farm Kafferkraal received 4 per cent. The land, however, was not surveyed, nor was the quantity of water, and that being so the judgment of the court was of no value for all practical purposes. In the same year another owner, Mr. Marais, also obtained a judgment but that did not help either for all practical purposes. There was no way of measuring the water or of saying what percentage of water any riparian owner had taken. This led to considerable difficulty every year and in 1928 a dam was built 25 miles higher up. When that dam was built the position of those people at Bospoort became worse; the water decreased and their position became serious. They thereupon approached the department for assistance and the Irrigation Commission recommended the building of the Bospoort Dam. That dam was started in 1932 when conditions on the settlement were very precarious. The Government provided the money for that dam in the way of relief work on a subsidy basis, and most of the people living in those settlements worked on the dam. The dam was completed in 1934 and cost £34,000. The Government immediately wrote off an amount of £19,000 from that £34,000 and left the amount of £15,000 as a debt on the dam at a rate of interest of 5 per cent. for 40 years. The first instalment became due a number of years ago but up to the present not a penny has been paid. The amount of interest had accumulated to £1,600 in 1938 when the Government asked the Irrigation Commission to make an enquiry into the position. The Commission then made a final recommendation that £11,000 of that £15,000 should be written off, and under this Bill provision is being made for writing off that amount for reducing the £15,000 to £4,000 without interest. Provision is also made for a levy to be paid, a water rate per morgen, in respect of the farm Bospoort. The amount thus payable will be £6 per morgen by each owner every six months. The idea is that they will not pay any interest and until the amount of £4,000 has been collected this will go on, but the matter will then again be reviewed. Provision is also made in the Bill to the effect that after five years the Minister will again be able to make an investigation into the position. I only want to say that there are 300 morgen under irrigation, and if hon. members look at the annexure they will see that most of the erven are half a morgen and part of a morgen. There are a few others, one is 43 morgen, and one is 33 morgen, and another one 109 morgen, but there are many erven of one half morgen, one morgen and a couple of morgen. 300 people are living on those 300 morgen and it is proposed to make the necessary provision for these people under this Bill. The land is being surveyed although in the past there was no survey, and the water was allocated by way of estimate. It has now been surveyed and a Board is to be appointed to control the allocation of the water on that settlement. I hope the division of the water will then be properly arranged. This water comes from Bospoort Dam where the settlers have had a very difficult time over a number of years, and I hope that many of their difficulties will now be solved. I therefore hope that hon. members will be prepared to pass this Bill.

*Mr. WENTZEL:

Will there be enough money to maintain the furrows?

†*The MINISTER OF LANDS:

There will be 5s. per morgen available for the Board and an amount of money to a maximum of £100 may be spent on sluices. I believe that sufficient water will be available for the scheme. By means of this 5s. per morgen they will be able to keep the scheme in good condition and I feel that the position of those farmers will be greatly relieved by this measure. Those people will be in a much better position than they were before.

*Mr. WARREN:

I want to move—

That the debate be now adjourned.
Mr. SAUER:

I second.

Agreed to.

Debate adjourned; to be resumed on 19th March.

On the motion of the Minister of Finance, the House adjourned at 10.27 p.m.