Some time since the Government appointed a commission of gentlemen composed in the first place of a leading gentleman from Australia, a man with very distinguished service both as regards customs and also taxation; a very prominent gentleman in the economic world of Great Britain ; then a leading business man of South Africa, a farmer, a lawyer and a representative of labour. The terms of reference of this commission were that they had to deal with wages and earnings and matters connected therewith, and also with industrial and economic conditions affecting the amount of those wages. There were two reports sent up by this commission, one signed by the chairman and by the leading economist and by the leading business man. That is called the majority report. The other is signed by the lawyer, the farmer and the representative of labour. That drawn up by what I may call for shortness the majority of the commission as it includes the chairman, condemns by implication the entire economic policy of the Government as it is being carried out at the present moment. They made recommendations entirely contrary to what the Government are doing, what they have done in the past and what as far as I can see they intend doing in the future. Consequently the recommendations of this commission—their own appointment, their own selection in every way and I presume the best men they could get, and I think one can say quite impartial men—their recommendations have been entirely ignored by the Government. Take the budget of my hon. friend the Minister of Finance, and also that of the Minister of Railways and Harbours. There are several proposals in each of these budgets which are entirely contrary to the recommendations of the majority of the commission. Take the proposal of the Minister of Finance, who has put forward again certain proposals in regard to the tariff—again I am sorry to say, increases—purely from the protectionist point of view, and for no other reason as far as I can judge. I would like to quote the commissioners who have had as much information as they require, and proceeded from here to Johannesburg and Pretoria and travelled pretty well over the whole of South Africa. This is what they say—

Exactly what I said last year, and it has not changed since then—

I think hon. members opposite, and all members who are engaged in private industry, should note that. This shows that in the opinion of this commission this policy is not going to bring any increase in the well-being and wealth of South Africa, and furthermore, is not going to bring any increased-employment. To give the Government full credit, it is their object to get increased employment. In the long run it will not provide more employment. The only result, in my opinion; of this policy and of anybody who has observed the working of a policy of this kind, is to increase the burdens on the country and the cost of living. It will also increase the burdens on the natural, industries of the country. I will not go into the tariff of last year, which is still in existence, but the Minister of Finance stated that there has been an increase in the cost of living. In most manufactured goods the cost of the raw material has fallen, such as in the case of wool and cotton, and consequently there has not been that marked increase which we expected, but if that is the case it has also prevented a drop in prices. If these increased duties had not been put on prices would have been lower than they are to-day. You cannot take £400,000 through the customs, but somebody has got to pay for it. On page 490 of the Votes and Proceedings you have the new customs proposals. Take sugar. The present duty is 6s. on candy, loaf, castor, icing and cube sugar, and 3s. 6d. on ordinary sugar. Now it is proposed to put another 3s. 6d. on in the shape of a suspended duty. Take another thing—ready-made clothing. It is proposed to increase it from 15 per cent, to 20 per cent., and with regard to ladies’ hats, it is proposed to increase it from 20 per cent, to 30 per cent. The Minister has gone out of his way to increase the costs of production of the industries of the country. Take chimneys and metal smoke stacks. They were free from Great Britain, but now it is proposed to put on 20 per cent. Who is going to benefit from that, except, perhaps, the iron works at Vereeniging, but that is all. I cannot make it out. There are industries that require smoke stacks, and they will have to pay 20 per cent. Is that the way to increase production ? There are 204 steam and motor-boats, such as fishing boats, round the coast and registered in South Africa, partly in Cape Town and partly in Durban, and yet it is proposed to put a duty of 20 per cent, on the spare parts of engines and motors for fishing and whaling boats, mercantile marine purposes, and trawling and whaling winches— which is a burden on the fishing industry. What benefit is to accrue to anybody from that in any shape or form ? Here is an industry which we want to develop, and if the Minister of Finance consults his colleague, the Minister of Railways and Harbours, he will tell him he is anxious to develop it. The fishermen are not the wealthiest people by a long way, as I know. There is another point. Take rock drill spares and metal liners for tube mills. It is proposed to increase the duty 17 per cent, which is a direct increase of the burden on the mining industry, and where is the benefit ? The mining industry is out every time to reduce the cost of working, and if they do not do that they cannot carry on some of the mines. Take the E.R.P.M.—mines just on the margin. An increase on the working costs is not a sound policy.

They can put up industries here.

Is that likely ? If you cause two mines to close down, where is the benefit ? It is no use increasing the working expenses of one industry and trying to start another industry down here—the loss is bigger by the fact that they cannot carry on some of these industries owing to the increase of the working expenses. Take structural steel work for the staging and platforms of industrial machinery. I do not know why you put that in. There is also the item, plates and frames for sugar filter presses. What is the good of putting on a duty to increase the costs of sugar I will deal, later on, with sugar, but I do object to some of their working costs being increased. They had to send 60,000 tons of sugar out of the country to compete on the open market. Then there are batteries—electrical—wet or dry, including accumulators, on which there has been an increase from 3 per cent, to 15 per cent. Then steam wagons were free formerly ; now there is a duty of 10 per cent. These are mostly used by divisional councils, municipalities and the like, for repairing roads. Why increase the burdens on these bodies ? I do not suppose these are made in South Africa Steam-wagon spares were free; now they are 20 per cent. It is difficult to understand the reasons why these increases have been put on. Then there is railway construction equipment, girders, etc. The increase is from nil to 20 per cent. Is the Minister of Railways going to pay this increase? Of course not! It is the small lines in the sugar districts and, as my hon. friend reminds me, on the brickfields that will have to pay. Why hamper these industries by increasing the cost of material ? Another item— tramway construction; iron bridge work, culvert tops, up to 20 per cent, maximum duty. Then there is the item—pipes and piping (earthenware)—also for municipalities for the most part, put up from 5 to 25 per cent. I would like my hon. friend to explain what is the good of increasing the burdens of the municipalities. And why increase the cost of building? If my hon. friend will look at this report which I mentioned, although I do not suppose he lays the same stress on it as I do, he will see the important part the cost of rent plays in the cost of living. In this list there are several things that go to increase the cost of building a house. Then in regard to carbonate of soda. I have already mentioned privately to the Minister that I have a friend in the Transvaal who, if he could get this cheap enough, could start two industries. And my hon. friend has not forgotten the printing trade. He has found one or two loopholes. He has stuck in pocketbooks.

There are great reductions in the printing duties as the hon. member will, see when I introduce the remissions and reductions.

What is the good of our having only one side of the story to deal with. Then there is felt, rubberoid and similar substances used for roofing, etc., increased from 3 to 20 per cent. It is difficult to find on what principle my hon. friend has gone in these proposals of his in regard to the tariff, and I must confess I cannot quite follow it, but there will be two results. It is going to increase the burden on the people and to hamper the natural industries of the country. Take sugar. At present my hon. friend proposes a suspended duty of 3s. 6d. on the ordinary sugar on certain conditions. I think from what he said that he has a proposal under which he is going to help the consumer to escape paying the duty, but I am rather incredulous about it. The output of sugar last year was 235,000 tons, of which the consumption in South Africa was 170,000 tons so that there was a surplus to be exported of 65,000 tons. I should have mentioned that there was also an excise of 1s. I would ask the Minister what provision he is going to make for the jam manufacturer. The fruit industry is rapidly increasing and a large proportion of that fruit goes to the jam manufacturer and your market is to-day over supplied. That is to say there is a surplus and must be a surplus with the enormous duty on sugar. You cannot export because you have to pay an artificial price for the sugar. How can you compete with the imported jam when your sugar pays even now 3s. 6d. and the proposal of my hon. friend is to eventually increase it. I believe there is a very big business to be done in jam; but so long as an artificial price is paid for sugar, you cannot develop that industry. That is an example to my hon. friend of how difficult it is to reconcile these various interests and I would advise him to stop trying. Furthermore the sugar industry is a growing industry. In the year 1924 there were 204,000 acres of sugar cane under cultivation and in 1925, 217,000 acres. The Union cannot consume its surplus, How can you put a tax on a product of which you have to export such a large surplus ? The only conclusion I can arrive at is that the surplus will be sold at world price. My hon. friend is putting a duty on the stuff consumed in South Africa, by South Africans, in order to make up the loss on what is exported, as they will have to sell the sugar at the world price, and yet the consumers in South Africa have to pay an extra price to enable the producers to sell the stuff overseas at a loss. Where is the justice in that? Furthermore, the consumption of sugar in South Africa is only about 45 lbs. per head. If we consumed the same amount as they do in Australia, namely, 138 lbs. per head, there would be no surplus to export. The only way to increase the consumption is to reduce the price. How can you expect the consumption to increase when you are putting up the price ? This exemplifies another result of protection. The great majority of people in South Africa have only fixed incomes, wages or salaries. When you increase the price of any article, the consumer as a rule has to buy less of it. If the cost of living were cheaper, far more fruit, butter and eggs would be consumed. People cannot afford to buy fruit at present. I now come to ready-made clothing, the duty on which has been increased from 15 to 20 per cent. According to a report in a newspaper the position of this industry of manufacturing clothing has been that the number of Europeans employed in the clothing trade was increased by 8 per cent, at Port Elizabeth and 16 per cent, in the Cape, but this was counterbalanced by a decrease of 4 per cent, at Durban, 3 per cent, on the Rand and 9 per cent, at East London. On the other hand the number of Asiatics employed in the clothing trade increased by 27 per cent, at Durban, 43 per cent, at the Cape, and 80 per cent, on the Rand. Without a word of explanation the Government has added to the burden of civilized labour in order to give further encouragement: to an industry which appears to be increasingly employing Asiatics. What, is the policy of the Government? The people of South Africa are paying to-day a duty of 30 per cent, on boots, 20 per cent, on clothing, 25 per cent, on shirts, 20 per cent, on men’s hats and caps, and 30 per cent, on women’s trimmed hats.

Have them made here.

Do you expect to save anything on the next suit you buy because it is made here? The saving that may be made by the small man by the increase in the exemption from the payment of income tax under £400 is going to be swallowed up by the increased charges he will have to pay for his clothes ; that is vary certain. The wealthy man will not suffer from this increase of the duty on readymade clothing as he generally has his suits made to order. One man who will suffer will be the farmer, as he has to send most of his products overseas. Last year we exported agricultural produce to the value of £29,266,000. We are a large producing country, and the overseas markets are absolutely essential to us. Do the farmers obtain extra for their products because they have to pay increased import duties? Not a sixpence. The manufacturers of the country are living, for the most part, on the earnings of the farmer. It is admitted that farming is, perhaps, the worst paying industry in South Africa, and the Minister of Finance deliberately set out last session and this session to make the position worse. Our farmers cannot afford to pay extra for their clothes.

The farmer does not wear ready-made clothing, his wife makes it.

The Economic Commission has pointed out that as the revenue per head from agriculture is much less than from any other branch of industry, the greatest care should be taken that a gain to any section of the community is not made at the expense of agriculture. But that is exactly what the Minister of Finance is doing. Can you be surprised that men are leaving the land ? That will be the result of the Government’s policy, for as the commission has pointed out, a protective tariff will strengthen the influence tending to drive the agriculturalist off the land. Yet at the same time, we are spending hundreds of thousands of pounds, on land settlement. That is what one Minister is doing, while another is making it more difficult for agriculturists to live. The Minister says that as a result of last year’s tariff 291 firms have benefited. Does he know that the total number of men employed during the seven months’ working of the new tariff shows an increase of 4 per cent, and of Europeans of only 3 per cent., so that the tendency is more towards the employment of non-Europeans than Europeans. The monthly bulletin of statistics for January last gives the result of seven months’ Working and a monthly index of industrial activity, with a comparison between January, 1926, and July, 1925. The index figure for July taken is 100. As regards the Cape Peninsula Europeans during that period of seven months just maintained their position, i.e., 100, but the figure for coloured is 107, natives 115 and Asiatics 101. The figures for Port Elizabeth were: Europeans 103, coloured 104, natives 125, Asiatics 102. The figures for East London were: Europeans 100 ; coloured 103 ; natives 110 ; Asiatics 100. The figures for Durban were: Europeans 99: natives 103 ; Asiatics 101. The position on the Witwatersrand was: Europeans 102, coloured 93 ; natives 100 ; Asiatics 118. These figures clearly show that generally speaking the increase in employment under the new tariff has been almost entirely confined to non-Europeans. I know that the Minister of Finance in laying, these increased burdens on the people, not only on the ordinary consumers, but also on the primary industries of the country, has for his object the increase of employment among Europeans in this country, but I think it is very clearly shown by the figures I have quoted that this policy is not succeeding. Another point is that the contribution made by manufacturers in South Africa towards the total income of the country is 16.6 per cent. The remainder comes, from the natural industries of the country, from professional individuals and from transport. So that hon. members will see what a small scope there is even in the best of times so far as the manufacturing industries are concerned, and the position to-day is that we are laying burdens on those who contribute five-sixths of the income for the sake of those who contribute one-sixth. My hon. friend may say that seven months is a limited period. Possibly it is, but, on the other hand, I would remind him that during those seven months things have been fairly prosperous in South Africa, as his own budget shows, so that people could afford to give employment in that period more than they could previously. To my mind the true policy that we ought to follow in this country, and the sound policy is to aim at agricultural development.

Free trade.

No, what I say is that we should aim at agricultural development and do all we possibly can to increase the population on the land. You cannot have the two things which are now being sought by the Government. The Minister of Finance is trying to develop one branch and the Minister of Lands is trying to develop another. You cannot have these increases of the tariff and at the same time have development of the land. You run the risk of failing in both and I would strongly urge the Minister of Finance and the Ministry generally to concentrate on agricultural development. The Economic Commission say that they are very much impressed by the scope that there is for agricultural development in this country. If you get your agricultural industry into a flourishing condition and going ahead, cither industries will grow up and have a fair prospect of success. The policy which my hon. friend, and the Ministers, generally, are following now is not benefiting the people you want it to benefit and that is the Europeans. You are providing more for the non-European than you are for the European. You are not only hampering industry in the manner I have mentioned, but also as a result of the operation of the Wage Act and the Conciliation Act of 1924.

The Wage Act has not begun to operate yet.

Well, then, we had better look out for the country when it does operate in full, because it is going to increase very largely the cost of producing these manufactured goods in South Africa. Take the building industry. As a result of the operation of the Conciliation Act, employers and employees in the building trade came together and fixed certain rates of wages, without taking the people who want to buy or build houses into consideration and the result is that the cost of building has gone up from 10 to 15 per cent.

There is a boom in the building industry to-day.

That may be, but there would have been a still bigger boom but for these increased prices. Take another industry in which through the efforts of the Department of Labour the employers and employees had a meeting and put up wages. The manufacturers of furniture have just issued a notice that the prices of furniture are up 15 per cent, all round. One can understand the Government interfering to put up the lowest wages, but here they have gone to work and assisted —I do not say it is through their own action entirely—to increase the highest wages. What is the result ? In the building trade to-day there are hundreds out of work because they cannot be employed except at a fixed wage. I am told that in the furniture trade there will be at least 400 employees who will either have to get reductions or be out of work. They simply won’t earn the wages which have been fixed. Then, furthermore, no firm can stand outside, because once an agreement has been I concluded with regard to wages the Minister comes along and makes it compulsory all round.

Who is responsible for the Conciliation Act?

The Conciliation Act is on the statute book and is being made full use of by the Minister.

Who passed the Act?

This House, I believe.

The South African party.

If the Ministry were out as, in other countries such as Australia, to endeavour to organize the lowest paid classes and get their wages increased, there would be something to be said for this, but, as I said, the result is simply to put up the wages of the highest paid men. The Economic Commission remarked that in South Africa, for skilled labour, the highest wages in the world, outside the United States of America, are paid. I am not against high wages, but you must give us the output at the same time.

Give the wage and you will get the output.

Hon. members seem to think I am against high wages. I am not ; but I am not going to pay high wages unless I get the output. The pity of it is that the output in South Africa for this skilled work is not equal to that in Canada or Australia or Great Britain.

What about your inefficient native labour ?

I am talking about skilled men. Here is the quotation—

The Wage Board will take care of them.

We shall see. What is going to be the result of all this? It mean in many cases, you are going to drive these people out of industry. The next thing will be my hon. friend the Minister of Finance will have them fitting on his doorstep wanting an increased tariff. The leather people have also met in the game way, so you will find the cost of your boots going up at the same time. They will then begin to ask the Minister to raise the duty. There is no end to this sort of business. Speaking of wages again, it depends entirely upon the volume of production. Increase your production and then wages must go up. The higher the production per head the higher the wages. That is the principle on which they work in the United States to-day. There is no restriction on the output. Why should we not do the same here That is the point. I am in favour of these high wages, but only if the output justifies it. I mention this to show how the policy of the Government is going to put up the cost of living in this country. There is another point I want to call attention to again, and that is the employment of European labour at uneconomic wages, that is to say, at wages higher than the value of the work given. It is only the Government and possibly municipalities, that can afford to pay wages of this kind. No private individual ever pays them. According to the Controller and Auditor-General’s report, the Public Works Department, Posts and Telegraphs, Forestry Department and the Irrigation Department—there may he others—are engaged on this at the moment. What the exact cost is to the country. I have not been able to ascertain. But we can get it in the case of the railways. Here I want to correct the Minister, because the figures he gave as to the cost of white labour are greatly understated. He put it down at £160,000 on open lines. The general manager of railways prepared a memorandum which was put before the Economic Commission, and lie states there—

If my hon. friend did a small sum he would find, taking it at an average of £55, that it works out at £400,000 extra cost for these men. The general manager also states in the memorandum that he estimates the increased value, the efficiency of the white labourers, at 15 per cent. After deducting that, say £60,000, it leaves it at £340,000. That is to say, the extra cost, making allowance for the increased efficiency, is £340,000 and not £160,000 as stated by my hon. friend. I think his officials must have failed to get quite the correct figures. The increased payment to European labourers in the general departments conies out or the taxpayers. The Minister of Finance will admit that ; and in the Railway Department it comes out of the users of the railway. If he gave this £340,000 away in rates he would have increased traffic. To pay for work wages more than that work is worth is to my mind only pampering the workman. How can a self-respecting workman take money that he knows has not been earned ; furthermore, it is unjust. The point is this, that this increased burden is also, paid in increased fares contributed to by the natives whom you put out of work. Where is the justice of that? It is only the Government and the municipalities that can afford to pay these wages. The ordinary employer who has to pay his way cannot do so and does not do so. I want to point out that these increased wages can only be paid in Government employ. It sets up a standard of pay for European unskilled which cannot be maintained. As soon as ever he leaves Government employ he cannot go and get the same pay. That, to my mind, is not good ; it is not sound. Furthermore, the European in South Africa has got to compete in the unskilled labour market. How can he live otherwise ? That is the position. As far as I can see there is no need for him to accept the same wage as the natives, because if he only puts his back into it and goes in for a higher standard of efficiency he can earn more money. I have got here a small pamphlet written by the Minister of the Interior some months ago. It is headed “The Retrogression of our People,” and it deals with the problem of the "poor whites.” It says—

That is a sound way of doing things—not the method of the Minister of Railways. The best thing the Government can do to assist these people is to reduce the cost of living to the lowest possible point, so that they can take these wages and compete with the unskilled native in the labour market. But now my hon. friend is doing nothing but handicap them by increasing the cost of living and also, to some extent, attracting people from the land, because people do leave the land ; there is no question about it. If they can get the wages paid by the Railway Department they will leave the land. I was very much struck by two matters which were mentioned by the Minister of Finance in his speech. He stated that he had not been able to get so much revenue from the mines because they had made less money on account of the deficiency of native labour. Well, that to my mind is a very strong statement. Has not my hon. friend, by that part of his speech, condemned the Government because the Government have, placed restrictions on admission of natives from the East Coast. Here my hon. friend confesses that he has got less by £70,000 on that account. As the Economic Commission points out, the importation of natives may be compared with the importation of capital. Both Ministers called attention to the increase of the public debt, not that they have decreased their requirements in any degree, and they are still asking for large sums, and much about the same as the last Government. Last year they spent £6,558,000 on railway works and £6,278,000 on other general works, or a total of £12,836,000 of borrowed money. The public debt increased by £7,600,000 and is now £222,000,000 altogether, of which the railways are liable for £137,000,000. The Minister of Railways and Harbours called attention to the large growth of the railway debt in recent years, and mentioned that there has been am increase of £50,000,000 since Union, but what astonishes me, and the reason I mention the matter is that while he deplores the very large increase he proposes to spend £6,000,000 on central workshops. That, I think, is the estimate. I am absolutely certain that that expenditure is never going to pay, in fact, it is going to be a serious loss to the department if he goes in for it. This expenditure aims at manufacturing our own rolling stock, trucks, coaches and engines. Let me tell the Minister and the House that trade varies in South Africa. Sometimes you require to make full use of all the rolling stock you have and require more—that is one side of the story—and perhaps a year or two after that you have rolling stock standing idle on the sidings you cannot make use of it, and of course you require no new stock. What are you going to do with the central workshops and the men employed there when you do not want coaches, trucks and engines?

Get ready for the time you do.

The report of the Railway Workshops Commission points this out on page 50, or that the problem of being responsible for employing men when there is no need for additional rolling stock demands very careful consideration. As things are, when things go bad you cancel what orders you can and cease placing more, and the burden then falls on the manufacturers on the other side. Overseas firms, if they cannot supply South Africa, may possibly be able to supply some South American Government or India, but we cannot do an export trade. My hon. friend will see the extreme danger of this thing. This proposition was put to me when I was Minister of Railways and Harbours, and I had not the slightest hesitation in promptly turning it down. Far rather spend the money on railways.

Are you speaking for your party ?

I hope I have shown the House that the economic policy of the Government is unsound, and is not in the true interests of the country.

What does your leader say about it ?

The Government are against the recommendations of their own commission. They spend the country’s money and pigeonhole the report. The result of the policy of the Government will not be seen at once. We have had a fairly good time, and that helps to hide it, but that the policy of the Government will bring bad results to the country I have not the slightest hesitation in asserting.

It is a little difficult to follow the hon. member for Cape Town (Central) (Mr. Jagger). He first spoke for three-quarters of an hour about the protection policy of the Government, and then for the last quarter he turned off to deal with a minimum wage. Now I would like to ask the hon. member, when he finally came to the conclusion that the policy of the Government is a policy of protection. That was our policy from the beginning, and in connection therewith, may I ask whether I should answer the hon. member personally or as the representative of the Opposition. In other words, does the hon. member speak in his own name or in the name of his party? Perhaps the right hon. member for Standerton (Gen. Smuts) will tell us later whether he agrees with the condemnation of protection made by the hon. member for Cape Town (Central). It was noticeable that, during the first three-quarters of an hour, we never heard any applause from hon. members of his party. We only heard the voice of the hon. member for Zululand (Mr. Nicholls), and he was not approving of what the hon. member said. I think he spoke on his own behalf. Last year also he said he spoke as an out-and-out protectionist. The Government has made its policy clear to the people, and the people know that we follow a policy of protection. There are difficulties. Firstly, expenditure will increase, but we are following a policy which we trust will occasion only temporary difficulties, and we hope the policy of the Government will, in the end, cause an improvement in the condition of our people. If anyone has a tooth drawn he has for a moment some pain, but eventually relief. We hope the same from protection. What did the hon. member for Dundee (Sir Thomas Watt) say last year ? He remarked that the hon. member for Troyeville (Mr. Kentridge) and I congratulated the Government on its attempt to introduce new industries and to improve existing ones. He said he was glad that the new Government was continuing the policy of the previous Government in this respect. He further said that the previous Government had from time to time fixed its customs duties in such a way as to ensure the establishment of new industries. The Prime Minister, as I read in Hansard, laughed at that, and who can blame him for it? When the previous Prime Minister came forward, two years later, with a policy of protection, the hon. member for Cape Town (Central) resigned, because he could not agree with it. Last year, and again this, the hon. member rises as the first speaker after the Minister of Finance, and he speaks to-day for three-quarters of an hour about protection and he criticizes it, speaking all the time for himself. I do not believe there is another member who agrees with him. The hon. member for Yeoville (Mr. Duncan) does not entirely agree, funnily enough either with the hon. member for Dundee, or with the hon. member for Cape Town (Central). The hon. member for Dundee said that the late Government was always in principle in favour of protection ; the hon. member for Gape Town (Central) resigned because that policy was adopted by his party ; and the hon. member for Yeoville said last year that the new policy indicated an extension of the policy which had been partially carried out previously. He said it was carried out now and then, but he is against the hon. member for Cape Town (Central). Can we be surprised that the Prime Minister laughed when the hon. member for Dundee said that this-was not the policy of the late Government? I believe that they, themselves, did not know what their policy was; nor do they know to-day. I have merely given an account of the views of the three late Ministers. The late Government never had any policy in this connection. We adopt a policy and carry it out. The hon. member for (jape Town (Central) further condemned a commission which had been appointed. I do not want to go deeply into that (there are other members who can reply), but I want to say that the members of the commission were wholly unacquainted with the circumstances of our country. They made certain recommendations, and these were a reversal of the policy of the late Government. Now my question is: Where has this policy landed us ? From year to year the position has become Worse; and we cannot follow that policy. The control during fourteen years by the late Government has shown us that the policy advocated by the commission is wrong. The only criticism that the hon. member for Cape Town (Central) has offered in connection with the general estimates, with the exception of the railway estimates, was in connection with a minimum wage, Now I want to ask him whether his party agrees with him ? Did he speak for himself? If he spoke in the name of his party, then I would draw his attention to one of the big speeches made in Pretoria in 1920 by the right hon. member for Standerton (Gen. Smuts), the then Prime Minister. He said in connection with conferences that they should first be held in groups and that they would be of great advantage to the trade, until eventually it became a national congress. He said further that one of the most important matters that had to be dealt with was the hours of work and a minimum wage. The leader of the Opposition in 1920 thus gave out that if the Government should be returned at the next election (and this occurred), one of the matters that they would have to attend to would be the regulation of the hours of work and the minimum wage. And now the hon. member for Cape Town (Central) talks for a quarter of an hour about the minimum wage, and opposes the principle adopted by his party, and it is said that expenditure will be increased. I am amazed at the hon. member repeating that now. He said this last year and on every opportunity. Our reply was that we were not convinced that the cost of living would be increased. Since studying the matter, I have Come to the same conclusion. Now I ask, after the experience we have had, who was right—the hon. member for Cape Town (Central) or we ? The cost of living has not increased. Now the hon. member predicts that, perhaps, if will increase next year. In connection with the fixing of the hours of labour, the hon. member spoke about unemployment. We have had a good Government. It is possible that, under the late Government, unemployment would have increased, but under the new Government it has decreased as compared with previous years. Many people have been placed in work on the farms and in labour colonies, and thousands taken into the railway service. This is one of the fixed principles of the Government. It strikes me that the hon. member for Cape Town (Central) is disappointed that he has nothing more to complain about. He offered no criticism of the estimates, and remembering what we heard as to what would happen when we came to the estimates, we are amazed. Members of the Opposition, when they suffered defeat at the last election, always had the consolation that they could criticize. They said it was easy to offer criticism, but the hon. member for Cape Town (Central) found nothing to criticize in the estimates. He merely mentioned two points on which none of his party agree with him. This is proof that our estimates are sound. The difference between us is that, when we were in opposition, we always had unsound estimates to criticize. When the hon. member for Yeoville (Mr. Duncan) was a member of the Government, he himself one day said that matters were not going as they should, and his argument was that his party alone was fitted to form a Government, and that, on our side, there were none suitable. This reminds me of a man who went to a shoemaker with a pair of old shoes and asked if it would be worth his while to have them repaired. The answer was—

The hon. member said—

We have respect for the knowledge of the hon. member for Cape Town (Central). I have come into touch with him a good deal and have respect for his knowledge, so if he can find nothing to criticise to-day, then our estimates must be satisfactory. In conclusion we continually hear the cry for a decrease in expenditure. I call that a parrot cry. It is the duty of the Government and I am not opposed to it, to attempt to reduce expenditure. I say, however, that that is not their only duty, nor the first young country must strive to progress, and we must spend money if we know that we will get it back again. I will apply this to a businesslike man like the hon. member himself. If he calls in his manager, he does not ask him whether the expenses have been lessened, but whether the receipts have increased. That is the real test. It is the duty of the Government to reduce expenditure, but its first and most important duty is to govern the country in such a way that taxation afterwards reduces itself. The first and most important duty of the Government is to manage things so that expenditure will afterwards reduce itself, and in this connection the Government has laid down a fixed policy, About that there may be argument. We can only learn by experience, in later years, whether the policy is good or not. What the old Government did, experience has taught us, is absolutely hopeless and we cannot go back to it. They had no policy at all. It was a policy of drift, of living from hand to mouth. I remember that Mr. Merriman, the late member for Stellenbosch, attacked his own Government in a most sarcastic way, and said their methods reminded him of the old proverb—

It has been proved that this method of governing the country plunged it into a sad state. Our Government has now come forward with a policy which we say is the best, but only experience will indicate in later years whether it is so or not. We follow the policy of protecting our industries. The hon. member is against that. The hon. member for Dundee (Sir Thomas Watt) said that this was the policy of the late Government, and the hon. member for Yeoville (Mr. Duncan) agrees with him to a great extent. I come now to farming. The hon. member for Cape Town (Central) says that we must concentrate on agriculture. What did the previous Government do for agriculture ? Did they merely-let it retrogress? And now I want to mention a few things that we have done to foster agriculture. We took off the tobacco tax. The hon. member for Yeoville laughs, but let him go to the Hartebeestpoort dam and see how hundreds of persons on the farms there were ruined as a result of the tobacco tax. I do not say I am opposed to a tobacco tax, but the mistake that his Government made, and now acknowledges, is that they imposed a heavy tax all at once so that they almost killed the industry. Our Government brought relief, but unfortunately the calf had already been drowned and hundreds of persons were driven from the farms. Our Government has effected an improvement and we have found markets on the Continent and in America. We have introduced new laws for making advances to farmers. Members of the Opposition, one after the other, say that our Bills are what were drawn up by the old Government. This is an argument which the hon. member for Standerton is glad to use, but why did they not themselves pass these Bills into laws ? The late Government was in charge of affairs for fourteen years, and during the last five I have been in Parliament. What has the late Government done? I am reminded of the curtailment of the Provincial Councils powers and of the indemnity Acts. These were the most important Acts that they passed. They had other Bills—I understand some had been drafted years ago, but they were hidden away, and spiders wove their webs over them. They had good Bills, but I would like to know whether it was due to the influence of the Unionists that they were not introduced? Then we have reduced the tariffs on agricultural machinery and in this way encouraged our farmers. The following are the four most important matters: We encourage industries, farming, we look after the workers and we try to reduce unemployment. As to the workers, we have improved their position. We have brought in the miners phthisis laws, the colour bar and the minimum wage. That is the fixed policy of the Government. To combat unemployment the Minister of Labour was specially appointed, and the same system was employed in connection with settlements and railways. I do not want to go into this, but to show the difference between the methods of the late and of the present Government. The late Government had a policy of drift, but the present Government acts. Take, e.g., the case of the provincial councils, and it will be seen that a great improvement has taken place. The criticism which the hon. member for Yeoville (Mr. Duncan) made of the late Government in this’ respect is the best criticism possible. He said that another important change was necessary with regard to financial policy, and that the financial relations between the Union and the provinces should be placed on a sounder basis. In 1917, so he went on to say, they made an attempt by passing an Act ; in 1921 again, and again in 1922. The late Government had difficulties with the provincial councils, he went on, and eventually the financial condition of the provincial councils fell into confusion. Each year the provinces had larger deficits, and did not know how to meet them. More than that I cannot say. The policy of the late Government in connection with the provincial councils brought them into such a hopeless position that they could not get out of it. The policy of our Government resulted in immediate agreement being reached with the provincial councils, and we have not yet had to pass an Act.

There has been a reversion to the position before 1914.

If the position in 1913 was so good, why then was there this bungling? To-day we are satisfied, and we shall not introduce a new law every year. I come back now to the question of the reduction of expenditure. This is not the first and only duty of the Government. The Government must have a fixed policy of progress for the whole country. If it is merely the duty of the Government to reduce expenditure, then we can do that easily. The Government can allow the policy of encouraging industries and agriculture to go hang and so save thousands of pounds, and similarly in the case of the destruction of locusts and scab. Railways that will not pay need not be built. I mention this to show that the Government can do all these things, and in this way reduce expenditure by 3O to 40 per cent. This is an instance of the cry that expenditure must be reduced and that the first duty of the Government is to manage public affairs in such a way that it will not be necessary later. With regard to the figures that have been mentioned, I may say that we hear of expenditure that has increased, and we hear of it from this side of the House as well. If we take the revenue of 1914 we see the total was about £106,000,000. This represents the revenue from the mines, agriculture and industries. In 1923 it was £17?,000,000 which works out at an average increase of £6,000,000 per year, and if we take these figures, then the revenue for 1926 will be £190,000,000. Of every £100 of income in 1914 the Government took £13 for State purposes, and in 1926 they took £14 of each £100 for State purposes. The actual difference is thus only £1 for every £100 of income. The expenditure is thus not so tremendous as we are told. I congratulate the Government on its policy with regard to debt redemption. I know that some hon. members opposite are still against this—that is to my mind strange—and I think that the hon. member for Cape Town (Central) will agree that the Government manages its affairs on a less unsystematic and undesirable manner than a private business man does. Year after year it was the custom to write off all the deficits and losses against loan funds. This has taken, place for fourteen years. Naturally the public did not know much about it. Hon. members regard themselves as satisfied, because otherwise the taxpayer has to suffer. Then we see on the other hand that the Government has paid off £24,000,000 of debt. Of the £24,000,000 £6,000,000 was taken over from the four old provinces, so that our Government, or rather the late Government, contributed only £18,000,000 towards the redemption of debt, and meanwhile the deficiency has mounted up by £16,000,000 between 1910 and 1924. So that really we have paid off nothing, or at any rate, a small amount of £2,000,000. Now the Minister says we are going to pay off £650,000 yearly. I was amazed to hear from the hon. member for Cape Town (Central) that that is too little. I wonder if he has ever gone into the figures ? The Minister is not only going to pay off £650,000 per year, but he is going to take every loss or deficit from year to year out of general revenue. Since 1910 on the old system £5,600,000 has been paid in redemption of debt, plus £400,000 per year out of income, viz.: £6,000,000. At the same time £11,600,000 was taken out of revenue in the last fifteen years for the redemption of debt. This was the old method. We have contributed £11,600,000, but in 1915 a deficit of £2,000,000 was written off and between 1921 and 1923 we took £2,700,000 of loan moneys to cover further deficits, and later on again a deficit of £1,100,000, making altogether £5,800,000 for deficits alone. To that must be added £1,600,000 paid out of loan money in respect of the cost of new loans to pay existing loans, and £3,000,000 lost on loan advances, flour speculations, etc., so £11,600,000 was contributed but £10,400,000 was taken away leaving a balance of £1,200,000 for the redemption of debt tout of revenue during fifteen years. That is £80,000 per year. That is not sufficient to cover the shortage on pensions. Now the hon. member for Cape Town (Central) says that £650 000 per annum is not enough. Vet his own Government contributed only £80,000 per year! Now I want to speak on our banking system. I do not recommend a State bank, but in any case I think it is an unwholesome Position that our banks are governed from outside South Africa. I admit that the banks can be governed just as well from outside as in our own country, when we consider the calamity that overtook the National Bank a few years ago. I nevertheless say that it is unsound that our banks should be governed from outside, because a period of stress may arise. We can always remedy this by legislation, because, if the banks do anything to the injury of the people and South Africa, the Government can take steps. For our own sell-respect, however, and from our own point of view it is unsound that our banks are governed from outside. And what is more unsound is the fact that we only have two banks, which are so hand in glove with one another that there is no healthy competition between them. I have in mind the position a few years ago in connection with the export of wool. The banks refused to pay out the drafts on wool, and this was a calamity for South Africa. They had an excuse, viz.: that South Africa had not reverted to the gold standard. The following year there was another calamity because the banks reduced credit. Hon. members will remember that they gave credit year after year, but then they did not see their way clear to giving it. The excuse was that too much had already been allowed and that they must reduce credit. We may accept the excuse, but it shows that the Government needs some system or other by which it can control banks and credit. The Government must not later on say that the banks had an excuse, but they must see that there is a system by which the difficulty can be avoided. Then there is the matter of the banks asking eight per cent, discount on notes. Is this reasonable and fair if we consider what is asked in other countries? Our Government does its ; best to encourage industries, and industries can be encouraged if the banks also do their share. They make their profits in this country and it is their duty to contribute. I am sure they could do it cheaper than 7½ and 8 per cent. I come now to the Reserve Bank, which could be worked more satisfactorily. The question is whether the Reserve Bank is sufficient for the purpose for which it is instituted? I think it is merely because it does not answer its purpose that we have a demand for a State bank. I am not going to plead for it.

Why not?

There is the difficulty in the giving of credit and it is said that it would be a great danger for any Government to adopt that policy. I do not say whether I am for or against that. This can only be tested by experience, and I offer no criticism of the Government or of the Minister of Finance for not taking the risk. There are, however, things which our Government can do. The giving of credit is not the only thing that the bank can do. There are a number of other things, and these can be carried out by the Government through the medium of the Reserve Bank or one of the other banks. These are, e.g. fixed deposits, savings bank business, issue of bank notes, raising of loans, investments of trust money, agricultural credits, loans to industries, discounting of, notes and making of advances in cases of distress. The Reserve Bank, the Land Bank and the Government deal with fixed deposits by loan certificates. The post office carries out the business of a savings hank. The issue of notes is regulated by a Reserve Bank. The raising of loans is done through the Treasury, and investments are made by the Debt Commissioners. Agricultural credits are effected through the Land Bank. There is, however, an improvement that might be introduced, and I want to show the Minister how. If loans are raised they go through the Treasury. Investments are made through the medium of the Public Debt Commissioners. Last year our Government raised a loan of 10,000,000 in England. The Public Commissioners had £1,000,000, and when the Treasury wanted £10,000,000 the £1,000,000 could not be handed over except through the medium of a bank, and in this way we lost £23,000. An improvement can be effected in this connection. A change can be made in the law so that if our Public Debt Commissioners have £1,000,000, this can be immediately paid over to the Treasury without the loss of £23,000. I would like Minister to go into that. For loans to industries we have no State institution, and I would like to show the Minister that we can hardly expect the ordinary banks to make such loans. We know that the risk is somewhat large, and that repayments must extend over a long period. I think the Government ought to make provision for industries, just as is done in the case of agriculture, by way of loans. There remains still the discounting of notes. The Reserve Bank can do this quite easily. It is said that the Reserve Bank is not a State bank. The profits are limited to 10 per cent, and the chief officials on the board are appointed by the Government, so it is really almost a State bank. The Reserve Bank is, however, afraid of commercial business, and it is compelled to do business only through banks. There is a wide field open to the Reserve Bank. Drafts in connection with imports and exports are usually quite sound, and I think that the Reserve Bank can do that kind of business. This would result in the reckoning of interest by the banks being brought lower than it is to-day. This matter should be gone into. There was a commission of enquiry consisted of Drs. Vissering and Kemmerer. They made certain proposals and I would very much like to know if the Minister intends to carry out these proposals, and if not, what he is going to do. The chief criticism against the Reserve Bank is that the managers of the banks are thoroughly satisfied with its policy as laid down by the Government of the Reserve Bank. This reminds me of Bismarck, who said that if his opponents abused him he was certain he had done right, but that when his opponents were satisfied he felt he had done something wrong. I think the time has come for the Minister of Finance to consider how he can improve the system. The question can perhaps he suggested why a bank is not established which can, do everything. Some of our friends on the cross benches plead for a State bank. We have all the separate Government institutions, necessary for the different kinds of business, and perhaps they can do it better. Experience alone can teach us. I think the Government should concentrate its attention on each institution, and see that each does a little towards making a success of the matter. If this, happens, the demand for a State bank will disappear. I think that the system of the Reserve Bank must be so improved that where the banks fail us the Government can come in.

All sides of the House will agree that the Minister is to be congratulated on the very able way in which he has converted the figures supplied by the officials into an almost interesting budget. He is also to be congratulated on the fact that the trade cycle, at present on the upward trend, has not yet reached its summit and has enabled him, and I hope will enable him for years to come, to show that the finances of the country are satisfactory. He is also to be congratulated on the ineptitude of the Opposition. We all anticipated a very virulent attack on the budget from the Opposition, both for what it contains, and what it does not contain, but what, do we find? We find the hon. member for Cape Town (Central) (Mr. Jagger) again reverting to the old philosophy of free trade. He criticizes the Government on two points, their policy with regard to the tariff and their policy with regard to civilized labour. These are the very two points on which both sections of the Pact are definitely united, and I think the Minister is to be congratulated that the Opposition has chosen such a hopeless battleground for their attack on the budget. Whilst I was listening to the hon. member I must say I commiserated with the right hon. member for Standerton (Gen. Smuts), because I remember in. 1924, when the hon. member for Cape Town (Central) resigned from the Government, one of the reasons was the supposed differences, existing between them on the protection of industry. The right hon. member for Standerton made his battle-cry during that election—protection for industry. He also spoke very vigorously about the need for having a white South Africa; and here we have the hon. member for Cape Town (Central), who is the spokesman for the South African party, preaching doctrines which are diametrically opposed, not only to what was preached by the right lion, member for Standerton, but to the general policy of a very large section of the South African party. The whole trend of his speech shows that he is speaking obviously for himself, and is certainly not expressing the opinion of the majority of his party. The only thing he could light upon was the report of the Economic Commission. When we realize who were the three gentlemen who signed that report, we cannot expect anything else. When the names of these gentlemen were announced anyone could have written the report without hearing a word of evidence. The hon. member has relied for his, attack upon what was called the majority report. We know perfectly well that the chairman of that commission, while one of the ablest statisticians in Australia, is certainly not an economist, except in the sense that he is a definite follower of free trade policy. Professor Clay is one of the principal exponents of free trade policy in Manchester, and Mr. Martin is probably one of the ablest exponents of capitalism in South Africa. I certainly did not expect any other report. The only criticism that can be made is that a mistake was made in going outside South Africa to get people to advise us on our economic situation. The Minister of Defence must have been a sad man when he read the report. I think it is futile for the hon. member to say because these three gentlemen, who are definite free traders, definite believers in a cheap labour policy, have reported against any attempt to extend the avenues of employment of white labour, because it implies extra expenditure ; that that must be regarded as a condemnation of the policy of the Government, and that the views they have preached must he views to be applied to South Africa. The chief point the hon. member relies upon is the question of wages, and he goes on to point out the effect of the Wages Act and the effect of the Conciliation Act. As far as the Conciliation Act is concerned, be is in the same position as the Minister is in in regard to the Economic Commission. The hon. member cannot escape responsibility for that Conciliation Act. He said in a very plausible manner that this House passed it. We know that, but he was the driving force in the late Government, and he, possibly more than anyone, was responsible for the passing of the Conciliation Act in the hope that peaceful settlements would be made in certain industrial disputes. That Act has reacted against certain views of the hon. member, and I hope the Wages Act will also do so. But he cannot get away from the fact that he has become a convert to the idea of higher wages. I congratulate him. The hon. member is beginning to realize that higher wages are not a bad thing.

Yes, accompanied by high output.

That is perfectly true, but the mistake he makes is that he places high output as a preliminary condition of high wages. I say, and I think one has with one the majority of modern economic opinion, that output is not the preliminary of high wages, but high wages invariably are the preliminary to high output. After all, you have to accept the position that where your output is not high it is not always the fault of the worker. The latest statistics from America show that over 50 per cent, of the responsibility for low output is due to inefficient management, and less than 25 per cent, to labour, including strikes and lock-outs. I would commend to hon. members a book on the movement of wages and future of prices that has been issued by the School of Economics of Columbia University, and was written by Professor Douglas. The conclusion at which Professor Douglas arrives, and which we can accept, is that wage increases seldom cause or precede price increases, and that price reductions are seldom brought about by wage reductions. That appears to be the conclusion arrived at by all who have studied economics in America, and of those who are taking part in the industrial development of America. I would commend to the hon. member and to all who take an interest in these matters, that it is time to get away from the theory of low wages. As you increase wages you will impose such an incentive on the employer to increase his output that he will go in for more efficient management, which will result in increased output, and that will result in keeping the prices down. I am not a great believer, I may say, in what is going on in America at the present time, because, in spite of those facts, the tremendous production, and the high wages, the position there to-day is, according to the official figures, that 10 per cent, of the workers are regularly unemployed.

High protection.

They have no such high protection in England, and yet they have many unemployed there. Whether you have high or low output you must, under your present economic arrangements, have a margin between the wages you pay and the cost of production to make up your profit, and that margin reduces the spending power of the community, so that they cannot buy back the goods they produce, and the result is that every few years you have a glut in the market. The same result follows under a protection or free trade policy. You reduce the spending power of people because you reduce their opportunities so that they cannot buy goods manufactured in their own country, or goods sent from other countries. Whether you go in for a policy of protection or free trade you must have something with which to pay for your imports, and you can only do so by exports, which have to be manufactured in your own country. The whole question ultimately resolves itself into this: That, unless the workers —the majority of the people—are placed in a position to buy all they require to satisfy their needs and wants adequately, you must, whether under protection or free trade, have unemployed as the result of under-consumption. The Minister is also to be congratulated on the fact that he has at last accepted the advice, I will not say pressure, of members on these benches, and of the National Council of the Labour party, to increase the abatement of incomes taxed for income tax purposes to £400 per annum. I think that is something which will re-act favourably on the community as a whole. It will not only benefit the 10,000 taxpayers who are being relieved of that burden, but it will benefit agriculture and industry generally, because the moneys these people would otherwise have had to pay—£205,000, according to the Minister—will be available for spending on the necessaries of life. When the Minister resisted the suggestion that the abatement should be increased to £500, he delivered himself of a statement with which I am sure everyone in this House agreed. He said that a further increased abatement would violate the fundamental principle of taxation, that taxes should be paid in proportion to the respective abilities of the subjects. That is an excellent principle often preached, but never practised. The Minister, in laying down this very sound proposition, has not followed the theory and practice he has laid down. Before you start taxing those who are in receipt of the smallest incomes you should see you get the taxation from those who are better able to pay. Concurrently, with the increase in the abatement, which he might have made £500, the Minister should have graded to a very considerable extent the incomes of those sections of the community who are in enjoyment of £2,500 or more per annum, or the super-tax payers. In 1922 they paid £772,000 ; in 1923, £773,000: in 1924, £1,025,000; and in 1925. £1,125,000, so that it is obvious that all the time their incomes are increasing to a considerable extent and no further burdens have been put on them, and if you are to carry out the policy of paying in accordance with ability, you should, before taxing the poorer sections, have no hesitation in taxing the wealthy sections to the utmost limits. Let us compare the individual in receipt of £600 per annum with the one in receipt of £20,000 per annum. If you tax the former £5 a year he is still worse off than the latter would be if his income were reduced by taxation to £15,000 per year. It is desirable, in order to carry out the principle which the Minister himself has enunciated, but flagrantly broken, to consider the whole question as to whether you should not increase the abatement to a considerable extent and make steeper the taxation in respect of the wealthier, sections of the community. There is another aspect that should not be overlooked. There are other assets in the country which are definitely, suitable for taxation. I refer to deceased estates and the tax which could be applied through the death duties. Last year the Minister raised the exemption, I think, to £2,000.

£7,000.

I think in 1924 the returns showed that estates to the value of £13,000,000 were left, and the total taxation came to something like £500,000. The tax on estates, the value of which exceeds £2,000, should be made much steeper than it is. The principle of taxing that source has been accepted everywhere, and was accepted many years ago by Sir William Harcourt in England. The principle was also submitted to this House by Mr. Hull, who was probably the ablest Finance Minister we have ever had in South Africa. The other aspect that is overlooked is that when we talk about income tax payers having to bear their share of responsibility, we overlook the fact that direct taxation is only a very small source of our revenue at the present time. According to the Minister himself, excluding the mining companies, the income tax payable for the year 1926-’27 will be £3,650,000. As against that you have customs duties amounting to £7,700,000 ; excise, £1,802,000; postal revenue, £3,430,000 and so on, so that every individual citizen, whether he is in receipt of £300 per annum or £500 per annum, is paying very considerably through the customs duty. We do not cavil at that; but they are paying considerable indirect taxation, and should be exempt to a very considerable extent from direct taxation. There are two items which I want to mention at the moment which I am afraid will react detrimentally, particularly on sections of the community which are in receipt of low wages. One is the duties being imposed on flour. I do not share the Minister’s confidence that, as a result of that duty, the price of bread will not go up to the consumer. I am very much afraid it will. In cases where it has been kept down, this has, perhaps, been due to a fight between, conflicting interests and, as soon as there is an opportunity to increase the price and, at the same time, keep the business, there will be some arrangement whether between the bakers or the millers, to see that they get the benefit of this duty, and the consumer will have to pay. And I am afraid the duty will not adequately assist the farmer, because he is, to a considerable extent, at the mercy of the milling companies. In spite of the duty which you are imposing, the milling companies can so organize their forces as to compel the farmer to accept a price less than the amount of the protection he is getting, and similarly the consumer is at the mercy of the milling companies, because he depends entirely on the price which the milling companies will charge for flour to the bakers, and indirectly on the price the bakers will charge for bread. Whilst I have always been definitely in favour of the policy of protection, I believe in the case of certain commodities that the best method of protecting industry is by a bounty system, and I think wheat and flour are two of the commodities which should be protected in this way, so that whatever happens, an increased price will not have to be shouldered by the consumer. Further, if the wheat farmer is to be protected, and the consumer also, any protection given by the Government, to this particular section of industry should be definitely accompanied by an arrangement for the control of the imports required in connection with this matter, so that the Government can fix the price for wheat or flour, and say to these people we will supply you with your requirements conditional on the price you will charge. To a certain extent the same remark applies to the duties on sugar. I am afraid, in spite of the statement of the Minister, that there will be some arrangement for controlling prices, the sugar magnates will find some method by which they will be able to put up the price. Sugar should be protected by means of a bounty and not by tariff. If there is one industry which has escaped the attention of the Government unduly it is the sugar industry. Clause 4 of the tariff should be applied to it, so that the sugar growers may be compelled to pay adequate wages, and thereby encourage the employment of more civilized labour, while the industry should be forced to limit the price to the consumer. I cordially agree with the additional duties which are to be placed on rock, drills and spares. The lion, member for Cape Town (Central) (Mr. Jagger) argued that these additional imposts will close down the mines. We have been accustomed for so many years to hearing of the mines closing down that, that argument does not very seriously affect either the House or the country. No one wants to see the mines close down, nor do we desire to see the mines exempted from taxation which affects every other section of the community. The Government, having rightly accepted the principle of encouraging industries by means of the tariff, the mining industry has no right to ask to be exempt from the burden which falls on the ordinary consumer. An interview has been published with a gentleman who appears to speak with authority for the mining industry—an excellent example of the impertinence of high finance—and the Chamber of Mines demanded that these extra duties should not be imposed. It was added that if the Government dared to adhere to the proposed increases, the mines would punish the manufacturers of drills by buying the articles from oversea, even if they cost more than they do now in South Africa.

Where did this appear ?

It appeared in the “Argus yesterday and in the “Cape Times” also. It savours very much of the attitude the mining industry has always taken up. What the Minister fails to concede to friendly recommendations, I hope he will not surrender to the bullying of friends of high finance. I say this seriously, because I am rather nervous about the position, as to a certain extent the mining industry has fared fairly well at the hands of the present Government. I remember the Prime Minister definitely stating, during the last election, that the new Government would stop the importation of East Coast labour. That has not been done, although the importation may have been slightly curtailed. I have no doubt that the mining industry was able to persuade the Government that its policy in this respect was a wrong one. When we talk about the ability to bear taxation we find that the mining industry has been able to persuade the Minister in such a manner that, not only has no additional burden been placed on the mining industry, but the Minister has relieved it of taxation to the extent of £180,000. There may, therefore, be a danger of the new proposals being withdrawn by the Minister. I hope, however, that he will accept the position that the mining industry does not govern the country, which, unfortunately, has been the position in the past.

The old gag.

The gentleman, whose remarks I have been quoting, stated that the other alternative was that, in order to freeze out the manufacturers who were likely to derive benefit under the new tariff, the mining industry will manufacture its own requirements. That, at any rate, is an indication that it is satisfied that such an industry can be established here, and is, in itself, a justification of the tariff proposals. I am not concerned personally whether A; B. C. or D. under the present arrangements run the industry. In the long run it comes to very much the same thing, though I would go the length of saying that possibly if the mining industry were to establish a factory to provide its own requirements it would, doing it on a large scale, be able to do it more efficiently and more cheaply. This brings me to another point on which I would like to touch, that is the question of an iron and steel industry. I will not labour that matter, but I would just say this, that the Minister of Justice, I believe it was in 1924, before the general election, stated that one of the first things that would be done by the new Government would be to establish an iron and steel industry in South Africa. We are still waiting for it, but I hope, from what I can gather, that something will be done. For the year 1924 the value of imports into South Africa of articles which could be manufactured here, such as rails, wire, fencing and various kinds of commodities, if we had our own iron and steel industry, came to £5,430,000 at the source of manufacture. If you add to that the cost of freight, which we may take at £1,000,000, it means that we are sending out of South Africa something like £6,500,000 in respect of commodities which can be manufactured in this country. Evidence was given before the Railways and Harbours Select Committee that an iron and steel industry would provide employment for from 2,000 to 3,000 white people, which on the basis of 5 to a family means provision for 10,000 to 15,000 white people. The people who gave evidence before the select committe regarding their efforts to put this industry on proper basis, said they had been unable to get the money in Europe to establish the industry. They had been met with refusals from people who are engaged in the industry in Europe, who, quite logically, said that they could not he expected to provide money to establish an industry in South Africa which would take business from them. They then went to the banks, but they found that the banks to-day were interested in most of these great industries. At last they found themselves forced to go to Armstrongs, who offered to provide a certain amount of money under conditions, however, which rendered it impossible to talk about the establishment of an industry of that kind in South Africa. The conditions imposed by Armstrongs were that of a capital of £2,000,000 a sum of £800,000 was to be provided by South Africa, and a sum of £1,000,000 by means of a bounty of £125,000 per annum for eight years, and over and above these conditions the firm insisted that the South African industry was to undertake to buy all its requirements from Armstrongs at the ordinary market price plus 10 per cent. Iron and steel being a key industry upon which agriculture and subsidiary industries are entirely dependent, it is essentially an industry which should be established by the State and it should not be left to private people to go to Europe and beg for money from their competitors. I know that the hon.member for Cape-Town (Central) (Mr. Jagger) will say that State enterprise is a failure, but the State has proved in other directions that industrial enterprise can be successfully conducted by it.

Where?

Your own railways and your post office. As a matter of fact, apart from the question of unemployment, which is a very great evil of private enterprise and the tremendous poverty which exists in this and every other country where your economic arrangements have remained as they have done, private enterprise itself is hopelessly breaking down in every direction.

No.

Let my hon. friend take the case of Hugo Stinnes. The great Stinnes broke down hopelessly.

What about Henry Ford?

With all the excellent work that Henry Ford is doing, the reports that have been issued show that what is happening in Henry Ford’s factories is that the people who are working there, though they are getting good wages, it is true are becoming mere automatons, mere machines. That is not a desirable position. You cannot make the human factor a mere machine. I want to quote to my hon. friend the case of one of the biggest cotton mills in Lancashire—the Belgrave Mills Co. The “Daily Mail” gave details of how that huge company failed to the extent of £3,500,000, The liquidators definitely came to the conclusion that the failure was due to carelessness and inefficiency. Let me take the case of Vickers Limited, one of the greatest concerns in Great Britain, which was reorganized. A committee of enquiry was appointed. The committee consisted of Mr. Dudley Docker, Sir Wm. Plender and Mr. Reginald McKenna, a former Chancellor of the Exchequer. What did that committee report? It reported that the management had not the sufficient experience required to direct and control so large and varied a body of industrial undertakings, particularly during a period of protracted and severe industrial depression. I am drawing the inference which the hon. member is always denying, that when you talk about private enterprise being the only people who can do something, that is not the case. Private enterprise is continually failing. It is perfectly true there may be cases where state enterprise has not proved successful, but in the main, if you are going to judge by one industry or another not being successful, then you must judge private enterprise by the same standard.

There is one difference—in private enterprise people lose their own money.

I am sorry to remind my hon. friend that a few days ago when we were talking about the Insolvency Bill he said These losses are always passed on to the public.

He cannot have it both ways. The Sunday “Observer,” which is edited by Mr. Garvin, and the “Financial Times,” both commented upon this position of Vickers, Ltd. The “Financial Times” of the 10th of December, 1925, said—

These are not socialistic doctrines. These are conclusions to which one is logically forced by the failure of private enterprise. I say to the Minister in connection with his proposals for the protection of the wheat farmers and millers, that the best method of protecting and assisting the wheat farmers and the consumers would he for the Government to establish a State mill, and as to the sugar industry the best thing you can do for the planters in Zululand would be to establish a State sugar mill. Similarly the iron and steel industry should be established by the State. I want to draw the attention of the Minister to another point made by the hon. member for Cape Town (Central) (Mr. Jagger) and that is one with which I cordially agree. He referred to the fact that during the last seven months of working of the new tariff there had been an almost infinitesimal increase in white employees in industry, and the principal increase has been where native and Asiatic labourers are concerned. According to the Minister’s figures the total average increase of workers engaged in industry is 4 per cent, and of white and coloured only is 3 per cent. I am afraid that when you divide up the white labour and the coloured, native and Asiatic labour you will find that as far as the white population of the country is concerned you have benefited very little in regard to opening up avenues of employment. I say to the Minister that the board of trade should take some drastic steps to see that section 4 of the Tariff Act should be rigidly enforced, and where an industry takes advantage of the tariff, and does not create a proportionate increase in the employment of whites in this country, that that industry shall, not enjoy protection from the State. The more avenues of employment you open up for people, living at a high standard of life the better it is for the community as a whole. The late Lord Milner stated that very clearly. He said—

It will thus be seen that if you benefit workers by providing adequately paid labour for them you will not only benefit them, hut you will benefit the factories and industries of the country as a whole. But all these things, I submit, should be done with a sufficient amount of control on the part of the Government to see that this policy is being given effect to, and that the wage-earners shall not be at the whim of the great employers, but that they shall have a right to work, which is in other words the right to live. Whatever industry you take you find yourself faced with the same position—how to get the necessary money to finance it. The day of small industries has passed away—they will have to join up with some big trusts or they will be squeezed out. The struggle to-day is not between socialism and private enterprise, or between socialism and the small manufacturer, but it is between state capitalism and private capitalism. The question that the small industrialist, the small manufacturer, the small business man and the farmer should consider is whether they would not be better off under the interests of the State than at the tender mercies of the trusts and high finance. What has led to it is that the financing of industry to-day is in the hands of a few people—they are at the mercies of the banking institutions, who say whether a small man should get credit or not. When the banks decide to restrict credit they do so, and you have deflation and many insolvencies ; and when they decide to give credit you have inflation ; and in either case you have decreased employment. The opinion I am expressing is that which is being expressed by economists, and in a moment when Mr. McKenna forgot himself he told you the same. On January 25th at the annual meeting of the shareholders of the Midland Bank he stated—

And the position in South Africa to-day is that it is the banks which are dealing with the money and the credit of the people. On January 30th, 1926, the deposits with the banks in South Africa amounted to £61,310,000, and the advances they made were only 63 per cent, of that. Of course that is “business”; and it is very good business. I say it is wrong to restrict the development of the country, and the control of the monetary policy of the country should be taken away from private banking institutions. The State should go in for a State bank and the control of credit by the community. My friend the hon. member for Cape Town (Central) (Mr. Jagger) groans at that. I did not expect him to do anything else, but I do expect the Minister to do something. I want to say very frankly that I am very much disappointed, and his friends are very disappointed, that the Minister has not seen his way to concede our demand—or request, shall we say. There are two aspects of it—as a preliminary the establishment of a State bank to carry on the business of the country.

He wants a little bit more gingering up.

The Commonwealth Bank of Australia was started in 1915, I think, with £10,000, which was voted by the Commonwealth Government for its ordinary preliminary administrative expenses. The result of the work of the Commonwealth Bank of Australia was twofold., It kept down the rate of interest, and by competition with the, private banks enabled the, private citizens of the country to get facilities at a low rate of interest, which was kept down to 6 per cent. It saved the Government ’ a large amount of money in raising loans, and during the period 1920 to 1924 the bank made an aggregate net profit of over four million pounds. There were a large number of banks competing, and I see no reason why we in "South Africa should not do it. It would have this effect; by taking away the business of the Government, municipalities, co-operative societies and provincial administrations, the private banks, even if they continued to function, would be forced to lower their rate of interest, and would be forced to seek business instead of controlling it. But this is not sufficient. You must definitely take in hand the control of credit ; so that in issuing your currency in accordance with the requirements of the community, and to finance public works, agriculture and industry, you will be able to create the necessary credit for the community in accordance with the wealth which is created from time to time. I know the Minister is looking rather indifferent. But after all he controls the policy of the Government, and in urging him to realize that the time is overdue for the establishment of a State bank and for the definite acceptance of the policy of national control of credit. I am not preaching to him a socialistic doctrine. I am preaching the doctrine preached by the Prime Minister in May. 1924, in his manifesto speech at Smithfield. The Prime Minister then said that the desirability of establishing a State bank was being urged more and more and that this ought, to be one of the things to which the next Government should devote its attention without delay. He said the great loss to a people to have its credit restricted and controlled by private persons and private banks had never been shown up so clearly and effectively as during recent years. On the available credit of a country, he said, depended in the first place what the price of commodities and produce is to be and also the state of unemployment. To leave it unrestricted to private enterprise as to what the available credit was to be at any moment, he continued, had proved not to be justified ; even Gen. Smuts, he said, had voiced the need of better credit facilities through a State bank, but General Smuts seemed to have confined himself to a commercial bank, whereas in the Prime Minister’s opinion there was need for a bank with extended activities and powers. In reply to interjections this is a friendly argument between friends. I am not putting this position to the Minister to find out what he thinks of my opinion or my policy, but I am asking him what he thinks of the policy of the Prime Minister. Having regard to this manifesto pledge, I want to know whether the Minister will continue to be, influenced by conservative officials and by high finance, or whether he will not agree with me that the time has arrived, for the honour of the prime Minister and the Government, to see that the pledge then made is carried out without delay ; particularly when one realizes that there is certainly a majority of the members of the Cabinet who are in favour of giving effect to the pledge. I put it seriously to the Minister that it is his duty to tell us where he stands, and whether he intends to carry out the policy of the Government or the policy of high finance. I think that is a reasonable question that one is entitled to put to the Prime Minister after two years. I am sure no one will, for a single moment, suggest that the Prime Minister does not honestly intend to carry out that pledge. Let me quote further from the Prime Minister’s speech—

As the result of our fifteen years’ experience of the South African party we have no doubt as to the correctness of the last statement. I have no doubt that the pledge of the Prime Minister is intended to be carried out, but if so, it should be done without delay.

I intend having a few words with the Minister of Railways. I ask him to give us his undivided attention and that when replying to criticisms he will, for a change, remember that he is not on an election platform, but that we require our criticisms answered in a manner which will enable us to understand what the policy of the Government really is. For a long time past the Minister has been indulging in political propaganda instead of replying to questions. Seeing that the country is faced with an enormously increased expenditure we have not only the right to criticize the Government’s methods, but to expect that our criticisms should receive serious consideration. The Minister’s chief concern is for the present only ; apparently he does not trouble much about the future. He is spending very fast. He has not yet told us why he has not fulfilled some of his many platform promises, and has not enlightened us as to what his position is in regard to the users of the railways. They should receive some special benefit from the increased revenue of the railway. When the Minister of Railways sat on this side of the House he spent most of his time, when he criticized the railway budgets, in demanding that rates be reduced, insisting that unless that were done the farming and other industries would suffer seriously. Well, the ex-Minister of Railways, when the position of the country was not flourishing, reduced rates by £4,000,000 in three years, but his successor—who started with a large surplus arranged by his predecessor—has succeeded in reducing rates by only £1,000,000 in 21 months.

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

At the adjournment I was requesting the Minister to exercise a little more care in regard to expenditure so as to enable the users of the railway to get some benefit. We are faced this year with an enormously increased expenditure, the increase being £1,617,000, making in all an increase of £2,197,000 since 1924-25. In other words, the expenditure has increased by not less than 12 per cent, in two years. We know there is a large increase in traffic, and that expenditure very likely also increases with the increase of traffic, but in this particular instance the expenditure is increasing at a very much larger ratio than the income on the railways. From April to December 31st, while the increased traffic was 11.1 per cent., the increased expenditure rose to 13.3 per cent. At Union the gross expenditure compared to gross earnings was 54.3 per cent. This gradually increased to 82.7 per cent, in 1922, but that was explained by the general manager as follows: The principal cause is expenditure in connection with staff in respect of basic rates (estimated at £1,500,000) ; improvements in general conditions of service (£2,000,000) ; cost of living allowance (£7,500,000) and the eight-hour day scheme of work (£1,000,000), making a total of £12,000,000. Between 1914 and 1921 the expenditure increased from £9,500,000 to £22,000,000, or 137 per cent. Efforts were made to retrieve the position and steps were taken to reduce the difference between expenditure and income by introducing higher rates and fares, but in spite of economies which it was sought to introduce, the expenditure kept mounting up and the cost of living allowance was withdrawn. Notwithstanding the withdrawal of the cost of living allowance, the employees were still better off by 33½ per cent, than they were before the war. The Conciliation Board were called in to assist in this matter, and they decided to reduce the scales of pay by 6½ per cent., but only new entrants were affected by that. Then we come to the two following years. The then Minister of Railways brought the percentage down to 74 by very carefully handling the railways, and by seeing to every source of expenditure being cut down where it was possible to do so without injury to anyone in particular. During that period he was able to reduce the rates by £4,000,000. The present Minister, during his first year of office raised the percentage from 74 to 77.5. We have not been able to get the precise figure for the present year, but it seems clear that the percentage will be well over 80. The position of working expenditure in relation to earnings is naturally a very serious one. The general manager remarks in a report—

I think that is something that everybody in this House accepts. The general manager further remarks—

I think the Minister should understand that if the railway traffic in any way drops, he is not able to reduce expenditure immediately, whereas, on the other hand, if the traffic rises and the position improves there would be very lit the necessity of increasing expenditure. I feel that the traffic has not increased to such an extent as to justify an increased expenditure of 13 per cent. While the traffic has not increased ten-fold, the staff has increased by 9,308, or 12£ per cent. No doubt the Minister finds it easy to increase the staff, and to better their conditions. We do not grumble in regard to that policy, but, while increasing the staff and bettering their conditions, he should always have his eye on the expenditure and income of the railways, so as to see that they balance. We have now an immense organization in our railways, and, sitting up in the select committee year after year, and listening to what goes on there, I cannot but recognize that the time has arrived when we admit that the undertaking is far too large for the management of one man. Here we have an expenditure of £27,000,000 per annum, 52,000,000 train and engine miles, a capital expenditure on railways of £123,000,000 and on harbours and lighthouses of £13,000,000, an additional annual expenditure on labour and material of £331,000, increments increasing annually by £233,000, repairs increasing annually by £35,000, maintenance increasing by £88,000, and so forth, and it seems to me that an organization carrying all these burdens is quite beyond the management of one man. I feel that the time has arrived when the Minister must very seriously consider whether part of the management at least should not be taken out of the hands of the general manager ; and I would suggest that as the Defence Department, practically a small department, have found it necessary to take the financial work away from the ordinary routine work of the department, the financial part of this great organization should be taken out of the hands of the general manager of railways. Last year I drew the Minister’s attention to a very interesting report on the railways in New South Wales, in which it was strongly recommended that the finance department of the railway should be entirely separate from the other departments. I hope the Minister will read that report, for I think that he will see that some change at least should be made in this matter.

Where there is a divergence of opinion among the heads of departments, I think that could easily be overcome if a system were arranged whereby monthly the general manager, the assistant general managers and the civil engineers were to meet and discuss the policy of the railways. At that meeting I would suggest that a record be kept of the views of every man present. I suggest that because, both in regard to the inquiry on the Durban grain elevator and the electrification of railways, there is a divergence of opinion expressed after the event which it is difficult to get at the bottom of. One says—

Others deny it. So it goes on. If we had these monthly meetings or quarterly meetings, where they can freely discuss the policy in regard to that particular undertaking, we would then have the views of all the heads of departments, the experts. I would urge the Minister to consider that. I would suggest with regard to the electrification of the lines of the Peninsula that, instead of following the old policy of having the consulting engineers doing all the work, the proper position is that the technical advisors of the Railway Department should take entire charge, and be guided in consultation by the consulting engineers. If that is done I have no doubt matters will go more smoothly. We find at present that there is undoubtedly a certain amount of friction, because there is a policy which deprives the technical advisors, men of very great merit, the right to do this work. We come to a remark made by the Minister on the 5th of January. He said—

Let me put it to the Minister: Has he strictly adhered to that policy? He has not reduced the rates as quickly as he might have done. A few years ago, when there were very heavy deficits, with a great depression of trade, in spite of making a reduction in the accumulated deficit of £1,250,000, the previous Minister made a reduction in rates of no less than £4,000,000; and now this Minister, notwithstanding the opinions expressed by him, namely, the whole industry of the Union is dependent upon efficient and cheap railway transportation, that much still remains to be done to lighten the burden of the cost of rail transport upon the whole country ; that we are all agreed upon the vital importance of cheap rates for agricultural produce and the requirements of the agricultural industry, notwithstanding the huge profits he has been making lately, notwithstanding the fact that trade is flourishing and agriculture is prosperous, has in the last 21 months been able to reduce the rates by only £1,000,000. I really think the Minister must give this matter more attention, because the users of the railway are paying a tax out of all proportion to all others in this country. The time has arrived when they should be relieved of some of this taxation. The ordinary burden is quite heavy enough. I think the Minister could go very much further than he has gone. If he wishes to encourage producers, the only way is by reducing the rates. There is an increased staff, but an increased staff cannot be maintained unless we also get increased traffic. The only way is by reducing rates to such an extent that people will use the railway freely. We have even the general manager advising this very strongly. He says—

I would urge the Minister to consider the general manager’s opinion in conjuction with his own opinions expressed from time to time. If he follows his own opinion he would now set about reducing the rates very much faster than he has been doing during the last 21 months. There are several other ways in which users of the railways are suffering. We have had it pointed out that money was being used from present income instead of using monies from loan income. Take the cost of raising loans. We have the position of the improvements at Walvis Bay Harbour. There the interest on the cost will be recovered, but no provision is made for charging the South-West Administration for the cost of raising the loan, a very considerable sum. In the same way we have given the Electrical Supply Commission the rights to acquire the Colenso electrical works, but no provision is made to allow the cost of raising the loan for building the works to be charged to the commission. That again is quite a considerable sum. Then there is the old question of the renewals fund, and I would like to remind the Minister that £14,000,000 were taken out of revenue to pay for renewals, whereas the real stock replaced was of the value of only £1,500,000. We also have the cases of appropriation for working capital on which the administration is losing £10,000 per annum. The insurance reserve has now risen to £300,000— an accumulation at the expense of rates. We come to a point on which I am not certain whether the principles laid down by the Minister or by the Prime Minister are being followed. We find that on fast trains now the coloured employees in charge of bedding equipment are being replaced by Europeans. The evidence as to this is of the best.

Where was the evidence given?

Why need I say. I say it has been given. Does the Minister deny it ?

Of course, it is not true.

Well, let me tell the Minister I am dealing with what the general manager said.

I am dealing with facts.

His facts were that you were replacing these men at a cost of £15,000 per annum to the administration. There again the users of the railway are suffering. I want to ask the Minister whether he considers that is part of his policy of civilized labour, or whether it is even the policy enunciated by the Prime Minister at Malmesbury, when he said, as regards the coloured man, he must be placed on the same footing as the white man. Here is an example where it is costing the administration £15,000 a year merely for this replacement.

You are wrong.

Then the general manager of railways must be wrong. This is a pretty state of affairs if the Minister says that what the general manager says is absolutely wrong. Then we have again the enormous loss to the country of the so-called civilized labour policy in general. It was pointed out this afternoon that the cost is very much higher than the £160,000 stated by the Minister. I also could bring evidence by the general manager himself to show that the cost to the Government is much more than that this year. Let us first consider the statement by the Economic Commission. Of course it is claimed that men brought from overseas at great expense are men whose word must not be taken, because they are not South Africans. It is difficult to understand, if that is so, why the Government went to trouble and expense in appointing anyone not South African. The commission says—

Is it not a fact that the best coloured workers you are getting now are men brought from the farms ?

No ; quite wrong.

Well, I hope that certain evidence will be printed, at any rate, before this House rises, and I shall then satisfy even the Minister that he is wrong or, shall I say, somewhat uninformed as to what is going on in his own department.

Is the hon.member referring to evidence given before a select committee ?

I have been quoting from the report of the Economic Commission. Just at present I am regretting that I am not able to quote some of the evidence being given before a select committee.

The hon. member is referring to evidence which he says is to be printed shortly. He must not make use of evidence given before a select committee which has not yet been printed.

I put it to the Minister, and I submit that he will not deny that this is the position—that the only class they have on the railway to-day who are, as a whole, a success are those drawn from the farms.

Nonsense.

When the evidence is printed I shall be happy to meet the Minister again. It is not an opinion but a fact, We have a difference of opinion between the general manager and the Minister, and that must be put right. The Economic Commission reports that a higher rate of pay is paid by the State than is paid by private firms on what is a—

and it is—

I know of no other public department, than the Railway Department, where they have this policy, and it is an enormous burden on the users of the railway. The time has arrived when we should consider very carefully that the Government, as a whole, takes over the responsibility, and in spite of what the Minister has said, that no one will come after him who will change that policy, he should, himself, in his own interest, consider a change of that policy. If this policy is to be continued, why has the Minister appointed a committee to investigate the whole problem, and why does he hold that an investigation of any kind is necessary? In his first speech the Minister said the committee was to investigate the whole problem, but when he came to his budget speech he qualified it, and said, the committee must investigate, not the policy, but the best method of carrying out that policy. Then the Minister stated that his civilized labour policy had the wholehearted support of the officers of the administration. Does he mean that they are giving him wholehearted support in what has been declared to be the policy of the Minister, or that their opinion is wholeheartedly in agreement with the Minister’s policy. If the latter then I join issue with him. I would refer him to the general manager’s report of this year, page 117—

The coloured employees get a lesser wage and get none of the privileges mentioned by the general manager which the white employees are getting. On page 142 we find that the civil engineer has made a report that considerable difficulties have been experienced by the construction engineers in getting a suitable class of man. A large proportion of the men recruited by the white labour department proved unsuitable on heavy work, where there is a large wastage as a rule. It is most difficult, he reports, to estimate what the works are likely to cost before the type of employees is ascertained, or to give the additional cost of carrying out works with white labour. It should be noted that he says “white labour.” He states further—

Again I say, what does the Minister mean when he says the policy has the wholehearted support of the officers of the administration? If he analyses the evidence of the general manager before the Economic Commission, we find it goes very much further than he goes in his report, and in paragraph 37 of his evidence he says—

So I could go on. I have given several extracts from the carefully considered report of the general manager, which was handed in to the Economic Commission, and I fail to see that the Minister can claim he has the wholehearted support of the officers of his administration. I not it to the Minister that when we are able to produce certain statements by officers it will be found that not one agreed with him—some have given evidence so strong that even the Minister was surprised. I regret I cannot use that evidence now, but I shall be in a position in a few weeks to use it and then I shall show that there is not one of the principal officers of the administration who is in accord with the policy as a policy. They are carrying out their instructions loyally, of course, and are giving the Minister their wholehearted support in carrying out his policy, but there is not one who will say, or has said, that it is a policy with which he agrees.

Do you suggest that they have been asked ?

The Minister knows that they have been. I am stressing the point that the Minister said he has the wholehearted support of these heads of departments in his policy.

You do not dispute that.

What actually does the Minister mean? Does he mean that they are whole-heartedly carrying out his policy?

They are carrying it out.

That is a different story. Naturally we know that the staff is sufficiently loyal to carry out the Minister’s policy, but that is a very different thing to saying that they are in agreement with that policy. I am glad the Minister admits he gets good service and I knew he would ; but the position remains that these men mostly concerned with the work do not agree that this is the correct policy: namely that the railways to bear the whole burden. I do not think there is another Minister who agrees with him either. So far as the agricultural department is concerned, they will not look at the policy. We know from the figures we had this afternoon, that the Government as a whole is not increasing the number of white labourers. It is only the Minister of Railways, and he is doing it at the expense of a section of the community, and that I strongly object to.

There are 1,000 white men on forestry.

That may be, but the total number has not been increased during the last two years, as is the case on the railways. Between all the other ten Ministers, they cannot show any increase in the white employment ; whereas the Minister of Railways shows a large increase. You had the figures this afternoon—

They are not correct.

I feel that by these different policies there is an unnecessary burden on the users of the railways and that the time has arrived when these users have the right to claim that the matter should be put right and that they should have some relief along the lines of lessening the rates, and I would urge the Minister to consider this position very carefully. I know that if, in replying, he could forget the coming election for a little while and forget that there are people outside listening to him and refrain from making political propaganda, we would get a statement from him that he is beginning to think over the matter and will give this important matter very careful consideration in the near future.

Just prior to the dinner interval, the House had the pleasure of listening to a learned and eloquent speech from the hon.member for Troyeville (Mr. Kentridge). I would like to make brief reference to two points in it before coming to the speech of the Minister of Finance. He told us that whatever differences there might be between the different parties to the Pact, there was one thing on which there was unanimity and that was their policy of protection, through the customs, for industry, and then he proceeded to go into detail to show us how entirely he differed from the tariff proposals of the Minister of Finance, tearing them to tatters pretty well, wishing to substitute bounties for duties, and so on. That was understood as unity by hon. members on that side and is the sort of unity we are accustomed to see on that side of the House.

Have you unity on protection on your side ?

Are you a free trader or a protectionist ?

The hon. member for Troyeville went on to give us a learned disquisition on State banking, and said he really could not understand how it was that on both sides of the House hon. members were unable to understand the position. That should not have puzzled him. Surely it was perfectly simple ; it showed that there was only one wise man in the House, and he was in the position of the Irish juryman, when the jury could not agree on a verdict, who said—

But to refer to something more serious. The Minister of Finance, in introducing his budget, started off in a most pugnacious manner, very much to my surprise. He spoke about clearing the decks for action, and I began to think that probably somewhere there was a drop of Irish blood in his veins, and that he was waiting for the Opposition to—

I suppose really it was the heady effect of having a surplus. I understand that has a very heady effect very often, but that is not the only test of efficiency in a Minister of Finance ; which I will come back to later, and try to apply one or two other tests. But with regard to the Minister being so polemic and pugnacious, I do not see any reason for it. There has been no want of generosity on the part of the Opposition in recognizing, at the time, any of the good work the Minister has done. There has been no captious criticism and, for my own part, I would say frankly that when it was evident that there was to be a Nationalist Government formed, my opinion was that the two offices that would be most difficult to fill efficiently were the Minister of Finance and the Minister of Railways. I still think they could be more efficiently filled from this side of the House by hon. members to my right and left ; but at the same time I would say that if the country must have a Pact Government these two Ministers compare extremely favourably with a great many of their colleagues who sit on the benches here. Of course, if the offices could be filled from this side we should have a sounder policy and better administration but things being as they are, that is my opinion. I think both the Ministers could do even better if they were free from the influence of their labour colleagues, for I assume that the Labour Ministers being in the Cabinet do have some influence on finance, and if one knows of the weird suggestions put forward by the Minister of Posts and Telegraphs, who is not here to-night, and if one thinks of the attitude of the Minister of Labour at the time this country was going through the dismal time of the slump, and when his slogan all the time was “Spend, spend, spend, no matter what happened”—

In South Africa, not Europe.

And if we think of the attitude of the Minister of Defence. I have a vivid remembrance of him and his queer ideas of economics. On one occasion, prior to one of the elections, when it was evident that there must be deflation and wages were at their zenith and anyone with any vision must have known that there must be deflation, and Mr. Burton made a statement to that effect, the Minister of Defence from his place there, in the way of declamation which he has, said nothing would be allowed to go—

So it is a relief to us to know that at the Treasury bench and in control of the Treasury there is at any rate a man with a balanced mind and backbone who is able to say “No " when occasion requires it. It is sometimes interesting on these occasions to study the records of the House. I do not mean those dreary volumes we call Hansard. Incidentally I think it would be a good thing if a volume of Hansard were added to every penal establishment in the country. But I refer to these bright and sparkling Votes and Proceedings which are supplied to us every day. Looking back I find that in 1921 we had a gentleman whom we were all sorry to miss, by his death, Mr. Fichardt, who was the spokesman of the Nationalist party on finance and one of his lieutenants was the present Minister of Finance. In 1921, when the motion was moved to go into committee on the Estimates, Mr. Fichardt on behalf of his party moved “to omit all the words” and so on and to substitute—

That was the position of the Pact party then. I turned up to see what the burden of taxation was in 1921, taking the white paper which shows the different sources of revenue and separating taxation from the other. The taxation in 19121 was £18,980,000; the revenue estimated to be received from taxation sources last year—1925—the present Minister’s year— was £19,110,000. The revenue estimate to be received this year from taxation only is £19,522,000, an increase this year of over£400,000 and of £1,500,000 compared with the time when hon. members opposite considered the burden of taxation had reached a point beyond which it was not safe to go. The Labour position is even more interesting be-cause these Labour gentlemen are the self-styled champions of the poor. I say self-styled be-cause they are not accepted as such in all parts of the country. In Port Elizabeth they never have been so accepted. There the people never have been prepared to take the hon. gentlemen at their own valuation and they are less likely to do so since the exhibition at the recent Labour conference.

Will you try a by-election there?

Yes, any day you like. Such an exhibition was given at the Labour congress of recriminations, jealousies and greed that all chance of the party being taken as the champions of the poor has disappeared for many years to come. It often interested me in days gone by to speculateas to how much was genuine feeling and how much might betaken as bluff of what the hon. gentlemen, who now sit on the Treasury benches, used to say when they sat on the cross-benches. We listened then to the declamations of the pre-sent Minister of Defence, to the plaintive pleadings of the Minister of Labour, and to the ebb and flow of the Minister of Posts and Tele-graphs, wondering how much was frothy eloquence and how much was real feeling. Now, for the first time, these hon. gentlemen have an opportunity of using their influence in seeing what can be done in the direction they have put before the House on previous occasions. Once again I turn to the Votes and Proceedings to see what was put forward in those days on behalf of the Labour party. In 1921

Take 1804.

The hon. member is getting nervous. In 1921 an amendment was moved on behalf of the Labour party by Mr. Sampson, who was then the leader of the party. He moved that the House do not go into Committee of Supply until a definite assurance was received from the Government that it would introduce legislation providing for the abolition of taxation on flour and wheat, the raising of necessary revenue by means of a tax on the unimproved value of land, and the more adequate relief of employment by railway construction, irrigation and afforestation and other schemes of national development. In 1922 Mr. Boydell moved on behalf of the Labour party that there be a steeper grading of income tax, a differentiation between earned and unearned incomes, and more adequate relief of unemployment. Yet in 1926 we find these gentlemen taking collective responsibility for a budget which does not provide for the abolition of any duty on flour and wheat, but does provide for increasing the duties on wheat, flour and sugar. I presume that is what the Minister of Labour means when he talks about—

Although the eight hours day has been turned down, the claims of the public service have been turned down, and heavier taxation has been placed on the necessaries of life, these three hon. gentlemen sit on the Government benches in perfect contentment in the unwonted dignity and affluence of office. They remind me of nothing so much as three sleek Persiankittens sitting on a sunny wall. The Minister of Finance has shown a grasp of the finances of the country, but so far it has all been sailing on a summer sea with a surplus gambolling around. It was Becky Sharp in “Vanity Fair”who said how easy it would be for her to be perfectly moral if she only had £10,000 a year. That is rather the position of the Minister. A woman can drive as well as a man until something happens. So far nothing has happened, and th Minister has been able to get along perfectly well. I am very pleased that there should be a surplus, but a fairer test of the capabilities of a Minister of Finance is accuracy in budgeting. The Minister should arrive at the amount he requires to spend and impose taxation just sufficient to meet that, and no more. I would remind him of what the late Mr. Fichardt used to say of the budgets of the previous Government: That there was deliberate over-estimating of expenditure and under estimating of revenue, thus bringing out a surplus.

You never had a surplus!

The Minister, in his budget speech last year, anticipated a deficit of £455,000, but there was actually a surplus of half-a-million, so that he was only £955,000 out in his estimate. It is quite clear that last year there was no need for any extra taxation, or to take £400,000 more upon the people through the customs ; there was no need for that shabby action in reducing the amount of the British preference. I feel ashamed of my country at what I look upon as the shabby action we took in reducing that preference. It is not a goodthing for a country when it is prepared to take all the benefits it can derive from the imperial connection, to give as little as possible in return, and to give it with a grudging hand.

Now sing “Rule Britannia.”

I still have hopes that we may restore our self-respect. I have hopes of the Prime Minister when he goes to the Imperial Conference. I gladly admit that the position in all these Imperialmatters of the Prime Minister, since he took office, has been strictly correct, and I am in hopes that when he returns from the conference his attitude will be strengthened. I am not quite clear what the Minister of Finance meant when he estimated that there would be a deficit of £455,000. Is that correct?

Yes.

My memory was that the Minister had not such a big sum as £455,000 to be met out of savings, so I turned up Hansard, and I saw that last year what the Minister said was that the deficit on the basis of the then existing taxation would be £457,000. He had made certain remissions on tobacco. £200,000, and on postage, £135,000, which made the gross deficit £737,000, but he looked to increased revenue from the new customs tariff. £400,000, and income tax. £200,000, leaving a deficit of £187,000 only to he met from savings. I think that is what the Minister said.

Yes, but supplementary estimates came in subsequently.

I was really trying to help the Minister. I now turn with pleasure to what I look upon as the eminently sound points in the Minister’s budget in the way he has dealt with finances. The first is his dealing with the surplus, his filling up of holes which had been made in lean times, and in his provision of a sinking fund towards our national debt. The exact method is really a minor matter. So long as our finances are good, and are being carried on in a sound way, I think the lenders really care very little, but it is a sound thing, and it is good for us to have a standard that we are going to live up to In times of stress, of course, these things go by the board. We imagined that we had been paying that £400,000 every year on the Transvaal loan. In a way we have, but when we do away with the bewaarplaatsen and apply them to revenue and take a surplus that had already been handed over to the Public Debt Commissioners, and bring it back into general revenue, we were not really providing that £400,000. In regard to the question of the £660,000 that the Minister is going to provide each year for the sinking fund, I would like to ask him to make it clear whether he intends to provide that this year.

No, £584,000 this year.

The amount of the public debt is not a matter that I am able to feel the anxiety about that some of my friends feel. The whole of our development is carried out with borrowed money. In one way the measure of our public debt is the measure of our development. If we stop borrowing, we stop developing. So long as the money is expended on sound projects that can be entirely approved of, the question of our public debt increasing is not one that ought to unduly worry us. I think the Minister has been quite wise in showing caution as to the amount that he expects to get from his customs dues. We do not know yet what the effects of the drought are going to be. The volume of trade in general at the present time is big. I would like to refer in passing to the change that is going on in regard to the distribution of goods up-country, for here we see that the old order seems to be passing. It is one of the chief functions of Government to hold the balance equally between different sections of the people, and there are two ways in which I consider that the Government is not holding the balance fairly. In the first place, I do not think that proper consideration is being given to the consumers of this country. That is a matter which can be discussed more fully in Committee of Ways and Means. The less the Minister has to do with these scientific tariff innovations the better it will be for the country. The Board of Trade made a report as to the policy that should be carried on by the Government. When they had written their report they found they had made no mention of the consumer, and they then began to scratch round. If hon. members will refer to that report, they will find that, as a result of the scratching round, about the two most important things that could be referred to, from which the consumer would benefit, were sanitary paper and perambulators. I think that all this constant tinkering with the tariff is unsound, and it always means an increase on matters affecting the cost of living. Take the patent medicine tax, which was so unpopular A tax on patent medicine is a perfectly sound tax, but the mistake in tactics and policy was the way in which it was applied. I remember the Minister of Labour talking on this question with tears in his eyes, but to-day, with perfect equanimity, he can see a tax put on wheat and flour that will be used not once a month, but every day. I recognize that the policy of protection of the Minister of Finance has been accepted by the country, and it has been recognized that the people wish to have manufactures, and that they are willing to pay. It is just the same economic position as the man who makes up his mind to grow vegetables in his back garden. Do not forget that, in the long run, it is agriculture and mining that are having to pay, and that will have to pay. My complaint about it is that we are being called upon to pay far too much for it. I referred to the medicine tax for this purpose. If we had, in a similar way, a label put on every article used, showing the amount taken out in customs dues—for instance on clothing —I believe that that full knowledge would create such a feeling that it would sweep away scientific tariffs and the scientific gentlemen at the back of them, into the obscurity from which, in my view, it is a pity they ever emerged. I had two small examples before me the other day. Under the late tariff hoopiron for the baling of wood is admitted free, but on that hoop-iron there are little iron clips which have to pay 20 per cent, coming in under general ad valorem. Representations were made to this scientific Board of Trade in the assumption that this had just been a slip, and that it would be removed. The answer was that it was possible for these things to be made in the country and, therefore, the 20 per cent, must remain. So you have this ridiculous position. These are the silly things that you get in a scientific tariff. The serious part of it is if, by this policy, we think we are making this a manufacturing country, we are deluding ourselves; we are not doing anything of the sort. We are making it possible to manufacture at an increased cost for our own requirements, but we can do no export trade. Take our next door neighbours at Kenya. None of our manufactures can go there. Take the shining example of the manufacture of boots and shoes in Port Elizabeth, excellently made, but when they are made behind the sheltering wall of 30 per cent, nothing can be done, except supplying our own people. The healthiest chickens are those that have to scratch for themselves. We are making it too easy, and I do not consider we are getting sufficient benefit from what we are having to pay. Further than that, a serious matter is the effect this policy is having combined with other policies, which have been embodied in Acts before the House, the colour bar and different things. It is bringing people into the towns from off the land. Combined with the policy of forcing the natives out of the towns, I am afraid it is going to draw white men from the land and put them in these manufactures, and drive the natives back on to the land. In a country like this, in the last event, it is the man who is on the land who is going to have the say. The other item in which I think the Government is not holding the balance fairly between different sections, is in regard to the way the co-operative system is being worked in this country. I am all in favour of co-operation, but when, you get cooperative societies which are formed and which are given special privileges in order to be able to deal on the cheapest possible terms with the products of their own members, being allowed to act as ordinary joint stock companies, to go and compete for trade and are yet exempt from taxation and allowed to undercut people who have spent their lives in their business, say, in wool and mohair, then I say it is absolutely unfair. Let it be one thing or the other. If they want to do this trade let them pay the same taxation as the ordinary trading company. I wish the Minister would look into that. There is also, in that connection, this question of compulsory co-operation. It seems a contradiction in terms. I would like to read to the Minister a considered opinion upon this—

That is the opinion of a colleague of the hon.member—a letter written by direction of the Secretary of Agriculture. Here again we have this idea of unity as exhibited on the other side. I hope the Minister will take some note of this. I must in fairness to my constitueney have a word or two with my friend the Minister of Railways and Harbours. In his budget he referred to a report he had laid on the Table upon the possibilities and the necessities of Port Elizabeth for harbour requirements. The report is entirely satisfactory. Every argument that has been put forward for years from the midlands was upheld by the report, and as it was put to me, the report might have been written by the Port Elizabeth Chamber of Commerce, and it could not have been put more clearly. This came from three members who were chosen because they could not possibly have any personal interest one way or the other—and here I would like to acknowledge the courtesy of the Minister in connection with the matter. The Minister spoke to me about the personnel when he was about to appoint the commission. They have had the best hearing and the greatest courtesy, and it would be the wish of the midlands deputation that I should acknowledge it. The justification of the expenditure was agreed to, and it is pointed out that this is not only a local matter, but that it is in the interests of the State that this harbour should he built. The extreme urgency of the matter is also dealt with. That is all satisfactory. When it comes to the Minister’s statement I must confess to a distinct disappointment. He had intimated weeks before that he was going to make a statement when he laid the report before the House, and later again he said he was to make a statement. What he did say was satisfactory so far as it went—the Minister was strictly correct. But, as a midlands man himself who has so often taken part in deputations and has knowledge of how long the thing has been delayed and how it is overdue owing to ignorance and prejudice, which have been wiped away, I think that the Minister might throw prudence to the winds and let himself go. I was distinctly disappointed that he did not do so. It is true that the Act of Union requires that the full plans shall he put before the House. The Minister says he will put on the estimates a sufficient sum to get a detailed survey, but that means that there must be at least another year’s delay. I do ask the Minister to consider the urgency of the matter. It is true that the commission does say on page 5 it is important that the expenditure to be incurred should be determined with some accuracy, and they recommend a small expenditure, but that is the only place where they mention any delay. When they warm up right through there are references to the urgency of the matter, and they go on to talk about the primitive style in which the work is done at the present time. They say that the possibility of delay in the completion of the north pier is not contemplated by them. They say—

Shocking waste of money, is it not?

They lay great stress upon the fact that it is an absolute necessity for the fruit trade. The Minister may wait a year, two years; but the fruit-trees are not going to wait. They will go on bearing all the time. This report says they are of opinion that the prospects of the fruit export trade form the deciding factor in the desirability of having a protected harbour. That is the only point on which I disagree with the report. I think it is necessary, even if there were no fruit trade. They say a deciduous fruit industry forms one of the most striking illustrations of how an industry can be hampered in its development by want of harbour facilities, and that it is practically impossible to satisfactorily organize an important fruit export trade otherwise than through the nearest port available to the grower. And all through they are stressing this question of urgency. Dealing with irrigation, they say that the provision of proper transport facilities is a sine qua non, and “We wish to add harbour works to the list.” The biggest irrigation schemes in the country are round in that part. The report goes on to say that the data are sufficient to convince them that the necessary expenditure is sufficiently justified by the advantages to be gained; that fruit farming depends almost entirely on harbour improvements as the capital already invested in that industry will be in danger if better arrangements are not made for export. Nothing could be stronger. The history of the thing shows that we have been held back by prejudice through ignorance of the conditions. That has been swept away. We have been most unfortunate. A scheme for a breakwater was brought forward in 1913. Then came the war and only works already started could be continued. Then the question was raised as to whether there were engineering difficulties, so my hon. friend, Mr. Jagger, got out a competent engineed, and the engineers reported on the engineering position, and said they could not speak about the trade. So my hon. friend, the Minister, appointed a commission to see about the trade and that has been satisfactorily answered. What else is there to wait for? Why cannot the Minister say something more definite than he has done ? He is a midland man himself. This agitation must continue. There was a conference representing no less than 35 districts of the midlands and so strongly did they feel about this matter that they said, let us concentrate on this harbour and pass one resolution asking for it, and nothing else, because we think it is a thing that is necessary. One knows the natural rivalry between different districts, and it is remarkable for a thing like that to happen. Unless the Minister says something more definite, we must keep on pushing. If he is able to make even a small start let him say so. I am afraid I have kept the House an unconscionable time, but in justice to my constituents I had to bring this matter forward. I shall not say anything about the railways, except that I am very pleased to see that the Minister is following the policy of his colleague and using his surplus to put right the pension funds and other things that were depleted during the war.

I came to the House to-day with some anxiety, and expected that this afternoon and evening we would hear the two great offensives of the Opposition. I am disappointed, the whole House is disappointed. This has been the dullest opening day of a budget debate that I have heard in the eleven years that I have been in Parliament. I regard it as a compliment to the Minister of Finance that his budget was so sound that the Opposition could say so little against it. I thought we should hear some sound criticism from, at any rate, the financial expert of the Opposition, the hon. member for Cape Town. (Central) (Mr. Jagger), something about the general financial policy of the Government. To our dismay, however, he limited himself to protection. As the hon. member for Wonder-boom (Mr. B. J. Pienaar) has said, he stands alone, or a voice crying in the wilderness, and he has no influence in this House. As that was his great point we might have expected that other hon. members in his party would tackle matters of general importance. But we have already had two speakers of his party following him, and they have told us nothing useful. The hon. member for Cape Town (Harbour) (Maj. G. B. van Zyl.) spoke only about a few railway matters, and dealt with a matter in which he is not well posted, and that is the question of providing work for coloured people in the railway service. I would like to say to the hon. member that if he will take the trouble to make a journey on our railways, he will see that what he has said is not right. During the recent vacation I made a journey into the interior, not merely to the north and back, but to the north, then to East London and back, and I did not come across a single white man handing out bedding on the trains ; so the allegations made by the hon. member are unjust. The hon. member for Port Elizabeth (South) (Sir William Macintosh) reproached the Government, or the Nationalist party, that when that party was in opposition, its members complained that the burden of taxation was becoming too great. He gave figures to show that the exports of the country are 1½ million more than they were at that time, and that the country is thus more heavily taxed than before. The taxes have not increased by this amount, but the revenue has. He said this was not a sound way of governing. All revenue is raised by means of taxation, direct or indirect, and still it falls lightly on the population, because how is it possible for us to take off an enormous amount of taxation such as the tobacco tax, the return to penny postage, the medicine tax, the income tax, the repeal of the turnover tax and the occupational tax in the Transvaal and others? The argument that we are taxing the country more heavily does not hold water. The country is naturally in a sounder condition under the Nationalist Government than it was under the previous Government. We have been careful and followed a policy which produces revenue, and not one that results in a deficit each year, as was the case when hon. members opposite were at the head of affairs. And so the argument of the hon. member is wrong. He made play over the position occupied by the Labour party in this House. I can leave that to the hon. members of the Labour party, for they are well able to defend themselves. Mention has also been made of the fact that the Government promised to carry out its pledge “to deliver the goods,” and I think the Government has done so, and in such manner that this country is now in a state of peace and prosperity. What does one want more from the Government ? I think the people can be well satisfied. I object to the imputations made by the hon. member for Port Elizabeth (South), because he said that the policy of the Nationalist Government in introducing protection in this country is a “shabby act.” I do not see how a line of policy whereby the Government protects the industries of our country can be shabby. If we had done this to Germany and France, nothing would have been said about it, but because it affects the British empire hon. members opposite think that we do not favour the trade between our country and the British empire. The hon. member for Cape Town (Central) made a remark which in my opinion is important, with reference to the farming population. He asked whether we, as farmers, realized what we would have to pay for protection, and it we knew that we would have to pay more than before for all the things that we imported. I will tell him that we realize that. I think it is necessary that we farmers should make clear what our view is with regard to a protection policy. We know in theory it is said that the best way to carry on business, particularly for the farming population, is to sell in the dearest market and to buy in the cheapest. This is a theoretical speculation which most people, and more particularly the hon. member, would approve, but there is another side of the matter. Theory does not always coincide with practice. No country can apply itself exclusively to foreign trade. It has become clear in the past in all countries that the best trade is domestic trade. We understand that in times of war, large strikes or depression in other countries, it is a great advantage if a population can buy its requirements in its own country, and if the trade in the country can support itself. We in the Union export as farming produce, something like £30,000,000 worth per year, but the total production in our country is about £90,000,000, so the consumption is twice as great as export. With a small population of not quite two million we consume twice as much farm produce as we export. We must not therefore try to import things as cheaply as possible. What will it help if a large portion of the people cannot make a living? If our people are placed in a position to be able to sell their produce they will be able to live up to a better standard. In an indirect way the farmers get back what they pay for protection. The same applies to white labour. I acknowledge that we farmers have to pay higher rates as a result of the employment of white labour, but we are willing to pay, so that other people can make a living. If the people who get work in this way become good citizens instead of vagrants, we get back in an indirect way a portion of the money that we have had to pay for their labour. Our Government, and also the previous Government, was sympathetically inclined towards the farmers, and we were given relief in many ways. We have a splendid veterinary department. We have the Land Bank and many other advantages, to say nothing of the advances for irrigation works. In addition, some of our products are protected, such as wheat, wine, ham, etc., against the imported product. And because our protection policy is reasonable we can expect from the inhabitants of the large towns that they will in future support it. I agree with the hon. member for Cape Town (Central) (Mr. Jagger) that protection can be taken too far. He wants no protection. This is his practice as a business man and it is to his advantage to be able to import goods as cheaply as possible and to sell them again as cheaply as possible. Therefore he is against protection. If he would become a partial protectionist and keep his eyes open to see that it is not carried too far, then we farmers would be thankful. It is in the interests of all that it should not be carried too far. We can see to that in Parliament, but I think the time has arrived when the farmers can demand that a practical farmer should be on each commission involving large economic questions, such as the Trade Commission, the Railway Board and the Loan Board. It may be said that farmers know nothing about these things, but a farmer with a sound understanding is usually able to protect the interests of his brother farmer, and his opinions will be of importance on economic questions. If we drive protection too far the whole country will suffer. I think that in the speeches still to come from the Opposition we shall hear some more about the slight increase in expenditure. The hon. member for Port Elizabeth (South) (Sir William Macintosh) has already commenced with that. I agree with what the hon. member for Wonderboom (Mr. B. J. Pienaar) says, viz.: that it is not the only duty of the Government to see that expenses do not increase. So far as that is concerned, we can be shortsighted. I think the Minister of Finance is a conservative man. He is careful and would rather see revenue and expenditure balance, and many people will say that a Minister who follows such a policy is a good Minister. Our country is still young, and there must undoubtedly be progress. It is our duty as a party, and as a Government, not to be afraid of an outcry from the Opposition if we spend a few thousands or a few millions more than they did. I think the people outside have come to the conclusion that we now have a Government which is not afraid to tackle business, and a Government that does it in a practical manner. I think everyone must acknowledge that our financial position is more rosy now than when we first came into power. The provincial councils which are engaged in educating our children have now been placed on a sound basis. We introduced the Loan Act, and are now busy dealing with the Indians and the native question. Industries have been revised and placed on a sound basis. I have recently thought a good deal about another matter in the direction of progress which we must carry out. And the hon. member for Port Elizabeth (South) has already referred to it, and it is this, that we cannot build up a strong nation if we do not increase the productions of the country, not only industrial, but also agricultural. I think the production of the platteland must increase, and, in my opinion, this policy must go in the direction of increasing the population. The pith of the matter lies in the provision of water. In my opinion the Government should say this: We are ready to spend, say, £20,000,000 over a period of, say, twenty years, that is to say, £1,000,000 per year on irrigation works and settlements under irrigation. We have splendid soil and rivers. I have in mind the Grootrivier, the Vaalrivier and the great Karoo with its splendid rivers, and even in the north of the Transvaal there are millions of morgen of ground which can be irrigated and become fruitful areas. There are, say, 10,000 persons to-day in the platteland who have not reached the stage of production that they ought, and which they can never reach under existing conditions. Hon. members on the opposite side are usually afraid when we talk of the inaction of the platteland. They have not much sympathy with them and think that the people lack ability, but the old generation is passing away and the younger is better educated with every prospect that they will make a greater success of it. We must, I think, encourage immigration, and we need not to-day be afraid that we will not obtain the right class. I think that a certain measure of national feeling is growing up, and even the stranger feels that this is his country, and that he should do his best for it, and not make such frequent use of the word “home,” but rather to associate himself with the people and learn its language. Thus, a South African nationalism, which is of great value to the country, is growing. I think the American system a good one, viz., a system of a pro rata percentage of immigrants from each country, so that a certain number of English, French, German and other immigrants may come here. To-day the position is unsatisfactory, so much so that a portion of the population is leaving. And what class of immigrant comes in ? They are from eastern Europe, and particularly Lithuanians. These are not people who come here to do anything towards the improvement of the position in the platteland, but they settle in the towns as parasites. We need a different class. We need people from Germany, Belgium, Holland, Scotland. Ireland and Denmark, who in the past have shown that they are good citizens, and who are in a position to make a living in the platteland, and who will help to improve the condition of the people. That is the policy we must follow, and it will be for the general good. For the farmers the increase of produce will, indeed, be of great value. The greater the production the easier it will be to send the produce overseas, and the cost of export will be cheaper. Some hon. members may think I am rash and, perhaps, ten years before my time, but the time will come when our public will feel that we must make progress in this direction, and I think that the time will come when no member of the Opposition will dare to oppose such a policy. At present the condition is such that there are people living on the land who have great difficulty in making a bare existence, and the water meanwhile flows uselessly to the sea. As a representative of farmers, I want to say that generally the population of the platteland is satisfied with the financial position which the Minister has placed before us. They are glad of the reduction of the income tax, and pleased that the Government is going to protect our own produce, and they approve the increase of the tax on imported whisky. I hope the Minister will go on in that direction, so that next year it can again be shown that the Nationalist Government can govern properly, and will.

I wish to take advantage of this occasion to make brief reference to a few matters which I consider to be of public interest. During the recent election there was a good deal said by members on the other side, amongst them the Minister of Defence, of the institution of labour colonies. There is in this country a by no means inconsiderable class of those who are known as “unemployables,” who are either mentally defective or a thriftless and shiftless class. Most people will have heard the couplet in the mouth of the negro in the United States, when he says—

Hon. members have probably heard of the Irishman who was defending his countrymen against an accusation of laziness and who said—

The class to which I referred falls in that category. The poor white class in the United States are numerically far less in comparison with the population than they are in this country. We have biblical authority for saying—

If he will not work, and will not do anything for his advancement, I say, these labour colonies should be instituted, so that these people can be taken there and at least work for their own subsistence. I hope the Government will go on with that policy, and bring forward legislation to being this about. I am satisfied that they will get a considerable amount of support from this side of the House. The hon. member for Cape Town (Central! (Mr. Jagger) referred to the treatment meted out to the primary industries under this tariff —mining and farming. We know that the mines have been, and will always be, fair game for plunder, but that can be carried to excess, and from what I have heard, and it is my considered judgment, there is a grave danger of killing the goose that lays the golden eggs. The Minister shakes his head, but there is no doubt that there is a breaking point. With regard to farming, the Government, before they came into power, had as one of the principal planks of their platform the more sympathetic treatment of the farming industry. Is that being carried on ? There is no doubt the lot of the farmer in this country is a hard one, and I can speak with authority. When I embarked on a farming enterprise, a mutual friend remarked to another mutual friend that he had always considered me an intelligent man, but he would have to reconsider his opinion as he heard that I had embarked on farming. He said so humorously, no doubt, but there is a great deal of truth in that. Farming is a gamble, and the farmer is the plaything of the middleman. The farmer is heavily taxed through the customs. The hon. member for Cape Town (Central) referred to it to-day. There is a popular belief that the farmer pays no taxes, but the amount of taxation he pays is forcibly brought home to him if he takes his produce, hides and wheat, or whatever it may be, to Europe. He takes it to Europe and sells it for cash, and with this cash he buys commodities. When he comes back to this country, he finds he has to pay, in respect to these commodities, duties running from 40 down to 15 per cent. Then he realizes how heavily he is taxed. Farming machinery is terribly expensive in this country. The taxation on farming machinery constitutes a very heavy handicap on farming.

It is the rings which are formed.

Agricultural machinery is free now. It is not taxed.

There is some taxation threatened. If not how is it that mining machinery is not admitted wholly free? But in any case there is freight, insurance and so on, and, when machinery gets here—the Minister may laugh, but it is a very heavy item for the farmer to buy.

That is a different proposition from being heavily taxed.

The two things go together. Then the farmer is also harassed by the income tax. I have been told, and I would like to know from the Minister whether there is any truth in it, that the money spent in collecting the income taxation from the farmers hardly covers the amount which is received. If it is the case, is it worth while harassing farmers with this income tax return ? The Minister laughs ; but farming is such hard work in this country, and requires so much capital that I agree with the hon. member for Cape Town (Central) (Mr. Jagger) that every encouragement should be given to the farmer and a reliable class should be encouraged to settle on the land. We have heard a great deal about this new legislation in regard to colour and wages board and so on not being applied to farming, but as a proof that the Factory Act is being applied to farming I want to bring a case of a Natal farmer engaged in the wattle industry. He has sent me several letters which have been sent him by the director of factories. It was understood by everybody at the time the Factories Act was passed that farming operations should be excluded. I will refer to this correspondence and then come to the exemptions under the Act. This man produces wattle hark and cuts up and sells the poles left after the tree is stripped. One letter he received from the inspector of factories says—

The next letter stated that all premises in which power is used to prepare articles for sale must be regarded as a factory and registered under the Act. Sub-section (2), however, allows for the exemption of farmers, but only in respect of produce grown or animals kept for sale for human consumption.

Sawing timber is not farming.

The timber is an agricultural product and because the farmer saws with machine power he falls under the Factory Act. If, however, he uses the same machine for sawing up the sides of bacon he would not come under the Act. This was never contemplated when the Act was passed. A further communication told the farmer what the department’s requirements were. The first was a reasonable one, and that was to see that the workmen are protected so far as the machinery is concerned. The next requirement was that “the normal hours for working shall not exceed 8½ hours a day or 50 a week.” In the ordinary way work on a farm is from dawn to dusk. Any work in excess of the stipulated number of hours, the letter proceeds, must, under the regulations, be regarded as overtime and paid for at the rate of time-and-a-quarter. In addition the payments have to be kept in a register, a copy of which has to be forwarded every month to the department. A further requirement was that adequate sanitary accommodation must be provided for all employees of the factory, which, of course, they will never use, and who is going to look after these places ? I would ask farmers to consider and consider gravely whether in regard to this threatened legislation and which is the direct result of the influence of the left wing of the Pact, they will not find that they are roped in under it. Here we have a concrete case of an unsuspecting farmer, who was told at the time that it did not apply to farming operations, suddenly finding that the inspector of factories was down upon him and he is required to make all these nonsensical and harassing provisions on his farm. A few weeks ago there was a motion tabled by the hon. member for Troyeville (Mr. Kentridge) advocating that the State should go in for the establishment of an iron industry. When the matter came up for debate, we found that the hon. member ran away from the motion and it was withdrawn. I would like to say a few words in regard to State socialism or State enterprise and to say emphatically, God forfend that the heavy hand of the State should ever be mixed up with these things, because wherever State enterprise has been attempted it has resulted in failure of varying degrees and at times in national disaster.

Always?

Yes, invariably, my authority says. There is a book in the library which I would recommend to the perusal of members, called “State Socialism in Practice” by Archibald Hurd. It gives a compendium of the various efforts and various attempts made in regard to State socialism. For instance, there is a chapter dealing with nationalization of land and one on banks and industry. Then the writer deals with the nationalization of the mines and shipping under the State.

He makes them all failures?

He does not make them failures ; they are failures. I would like the Minister, when he speaks, to tell the House of any particular instance in which State shipping has been a success. I have not heard of any Certainly one of the most disastrous enterprises in regard to State shipping was undertaken by the United States of America. Then there is a chapter on State-owned railways. I think the best examples one can give as to the deleterious effect of State control and State socialism is in regard to coal mines. In England there has been a constant demand for nationalization of the coal mines, and in this case, fortunately, theory has been tested by a considerable body of practice. In 1915 the coal output of the United Kingdom was 253,000. 000 tons. Thereafter the State assumed control and, in 1920, the output had dropped to 229,000,000 tons. The number of employees in 1915 was 950,000; in 1921 it had risen to 1,250,000. In 1915 the output was 258 tons per man and in 1920, it had fallen to 183 tons. There is your State-controlled coal mine. Let us take the case of Germany. Before the war there was nationalization of some of the mines in Germany. The results of State interference may be summarized under four heads. Firstly, the rate of production was slower than previously ; secondly, the cost of production was higher; thirdly, the price of coal was higher; and, finally, the wages of the miners were lower. I would like to quote from Hurd’s book—Dr. Schmidt Essen, a recognized expert, says—

The doctor proceeds—

After the war changes were inevitable. The Weimar Republican Government, in 1919, appointed a commission to consider the question of the nationalization of coal mines. The commission was unable to agree as to the form and extent of the proposed socialism, and was suspended, but a report was issued, and it was held unanimously that the entire management by the State on the ordinary bureaucratic lines would certainly interfere with their economic exploitation. Take next the case of Russia.

On the motion of Mr. Papenfus, debate adjourned ; to be resumed to-morrow.

announced that the Committee on Standing Rules and Orders had discharged Mr. Waterston from service on the Select Committee on the Subject of the Areas Reservation and Immigration and Registration (Further Provision) Bill, and appointed Mr. Fordham in his stead.