announced that the Committee on Standing Rules and Orders had appointed the following members to serve on the Select Committee on the subject of the Apportionment of Quitrent (Further Amendment) Bill, viz,: Messrs. Allen, Payn, Roux, G. C. van Heerden and Vosloo.

I move—

Agreed to.

I move—

Agreed to.

There can be no doubt of the very far-reaching importance of this Bill and the subject with which it deals, and yet I have never known a matter of such importance brought before the House with such scanty information as this Bill. A couple of weeks ago when the Minister of Mines and Industries was asked for information and papers, he said “Wait for the second reading. When the second reading came the Minister of Defence, who had taken charge of the Bill, laid piles of papers and reports on the Table, which we have been doing our best to plough through during the last week, but even as it is now, this House, in spite of the importance of this matter, and in spite of the fact that it will involve the country in millions of pounds of expenditure, is little informed about this matter, and we are very much in the dark about it. The country outside knows practically nothing about it. For years no subject has been one of more importance to this country, and no subject has engaged more public attention than an iron industry for South Africa. Ever since 1912, when this matter was mooted in the House, it has engaged the attention of Parliament from time to time. I may say without contradiction that the country knows nothing about this scheme. There are reports laid on the Table, but they are not for public information. Some hon. members have ploughed through them—but only a very limited number—and outside the House nobody knows about these reports. The country at large is entirely innocent about the information before us; and yet we are asked to involve the country in a large expenditure without its knowing anything about the matter. I think the way in which the Government has introduced the matter before the House and put it before the country deserves very strong criticism. In face of that, I see a statement was made by the Minister of Justice at Pretoria that this Bill was going to be forced through, and not sent to a select committee.

Before the election?

No, it was made the other day. I think this Bill deserves the most thorough discussion and ventilation in this House, and the Government ought to give us time for a thorough enquiry into the subject-matter of this Bill and the principles involved; otherwise I foresee only disaster. The Bill will run the risk of being stillborn, and the scheme brought before the country, however promising in other respects, may fail, unless an ample opportunity is given to us to discuss it in all its bearings. I have very limited time to deal with this matter. The Minister of Defence travelled over the historical course of this Bill. I can only confine myself to certain aspects of it. I want to take us back to 1922, when this House last dealt with this industry. In 1922 we passed a Bounties Act, and that Act was passed on certain assumptions which are well known, and which I just want to repeat to-day. The Board of Trade, at that time, had enquired into the matter, and had brought out a report which was published, to the effect that there was a place in this country for only one big iron industry. The market was limited, and the opportunity to build up an industry of that character was limited. They recommended that there was a very good chance for such an industry and that the technical conditions were favourable—we had the raw materials, and there was a certain limited market. They reported in favour of that industry and in favour of upholding that industry by a bounty system, which had been applied with success in other similar cases in other dominions. In Canada a very flourishing iron and steel industry has been built up on the bounty system, and in Australia I believe the same has happened. The Board of Trade came to the conclusion that we could do no better than follow that precedent, by giving bounties for the encouragement of that industry. The base of that industry was to be at Pretoria. There were the raw materials, and the technical reports were all in favour of Pretoria as its centre, but the scheme worked out, and to which the Act of 1922 applied, was one which took in the other industries which had been built up elsewhere. Even in 1922 iron smelting works had been established at Newcastle and Vereeniging, making steel mostly from scrap, and these had begun earlier. Then the trouble commenced. We had decided to support the scheme.

Which scheme?

The Pretoria scheme. A difficulty then arose over the financing of the scheme. Enquiries were made in Europe for the necessary money, and although the efforts made to secure the finances in England seemed successful up to a certain point, yet they finally broke down, and the English financiers and interests insisted on a guarantee instead of a bounty, which they thought was not sufficient to safeguard them against risk. At that stage enquiries were made in Italy by Mr. Delfos, who showed the greatest interest and energy in pushing the matter. Finally enquiries were made in Holland and Germany. The Government instructed our Commissioner for Commerce on the Continent to give Mr. Delfos such assistance as was possible. In that way it happened that the Gütehoffnungshütte became interested in the matter, and decided in conjunction with certain Dutch interests to send out a commission of enquiry. That commission came here in 1924, and made exhaustive enquiries, and their report was rendered to the Government early in 1925. This date is of importance as it shows that the Government have been sitting with this report in their pockets for two years, and have not communicated it either to the country or to the House, Now, without any notice to the country, and scarcely any notice to the House the Government are attempting to rush through this scheme based on that report. I have looked at the report, and it is clear that it is very strongly in favour of one big iron industry based on Pretoria. The report goes with the most meticulous care into all the technical aspects of the matter, and comes to the conclusion that there is from the technical point of view the strongest case possible for an iron industry based on Pretoria. That is the report which the Government have had in their possession since the beginning of 1925. The Government did not act upon it but kept it to themselves, and last year they passed an Act reviving the Bounty Act of 1922. Owing to the delay which had taken place in securing the necessary finance the Act of 1922 had practically lapsed. The big scheme had practically fallen through, Newcastle and Vereeniging had gone ahead and amalgamated into one, and they were well on the way to comply with the conditions of the Bounty Act, and to enable them to get the bounty the time was extended. Last year the Government amended the Act so that bounties could be paid in future. There could only be one object in passing the Act, and that was to give bounties to the Vereeniging-Newcastle concern—there was nothing else in the field. This year very suddenly a great change in policy took place. The Government having, so to say, given their imprimatur last year to the bounty policy for Vereeniging and Newcastle, changed right about and want once more to support the iron industry at Pretoria, but this time by way of a guarantee, It is clear we cannot have both. If this Bill goes through we shall be supporting two iron industries— one by way of a bounty and the other by way of a guarantee. Our information, the report of this technical committee, the German-Dutch committee, and all the reports are to the effect that there is place for only one iron industry but in face of that the Government says—

Last year they decided to support one industry by way of bounty, and this year they decided to support another industry by way of guarantee, and to use the country’s resources to set going two iron industries to fight each other and to kill each other, both industries being supported by the Government. If the Act of 1926 remains on the statute book as it is today, it will come into force in due course and we shall have to pay bounties to Newcastle and Vereeniging. Simultaneously we shall have to give guarantees to the industry at Pretoria. I have never seen anything more fatuous, stupid and foolish than this tangle which the Government have got themselves into. Starting from the idea that there is place for only one iron industry, we have now through this bungling actually to support two, and one against the other. It must be a case of one industry killing the other. So we are going to waste the taxpayers’ money. I think that is a very legitimate criticism. The Government must make up its mind, for we cannot have both the Act of last year and the Bill now before us. It will be necessary if the Government goes on with this Bill for them to change their policy and devise a scheme by which Vereeniging and Newcastle will be taken in so far as possible in order that confidence and security may not be shaken. We cannot forget that while Pretoria has been waiting for her chance these other places have gone ahead. Very large sums of money have been spent on them and since the Ministry has been sitting with that report in its possession half-a-million pounds have been spent on these two concerns. The Government has led them to believe that they are on safe ground. The Government has allowed the Bounties Act to apply to them and given them every encouragement possible, and it would be in every way impolitic if, after what we have done, we should not keep faith, but should introduce a new scheme intended to kill them. The Government is bound to bring before us, and to elaborate, a scheme to take in these interests which will not kill them after what has happened, the money which has been paid in and the confidence that has been extended to them. It is the duty of the Government to carry the one big scheme, to rescuscitate the old idea and return to it. If it is not done I foresee grave consequences. No industry will be safe. One industry will be supported by bounties, and the next day it will be decided in favour of a State trial and socialism, and they will use the money to kill industries in which private money is invested, all confidence will be shaken and there will be no confidence in the investment of capital. There must be an arrangement with Newcastle and Vereeniging. The German-Dutch scheme is being carried out without regard to what has happened in the meantime, and we as a State cannot afford to do so, and must keep faith with the interests which have grown up, and do our best to come to an agreement with them and give them a place in the system we are introducing. There is no place for two or more iron industries in this country. We must get back to the one big scheme which this Government has led the people to believe is a safe and sound one so far as the Government is concerned. As between the bounty system and the guarantee system, it is for me a question for consideration which is the better and more effective. In the Act of 1922 we applied the bounty system, and applied it on good precedents. We had technical advice, and we had good reason to think the bounty system, which worked well elsewhere, would work well in South Africa, too. We got the advice that we should have to come in for a guarantee system in 1924, and that is the advice the Government must go for now. It is a question for consideration. I am not wedded to the bounty system, if it is necessary to secure a big iron industry and we are advised to adopt some system of guarantee. I do not say I accept the guarantee embodied in this Bill. I think it will require overhauling. It will have to be considered very carefully. I am not wedded to the bounty system, but I would like to see a big iron industry established in this country, and if the bounty system is of no avail, and the guarantee system is necessary, I am prepared to consider that. But you cannot have both. The Act of 1922, revived last year, gave bounties and now this is intended to give a guarantee to another industry; well, you cannot have both. The Government must make up its mind to have one or the other. If you are going forward with a guarantee, do not leave the bounties on the statute book. Let us repeal the bounties. You cannot afford to give a guarantee and have a bounty as well. I have gone through the reports of the German-Dutch commission, and they are very favourable. They have been subjected to criticism by others, and they bear out the advice which was given to the late Government some years ago, that the best chance for a big iron industry in South Africa is at Pretoria. The facilities there in the way of raw materials, transport facilities, and market conditions are more favourable than anywhere else in South Africa, and from a technical point of view that is the soundest scheme we have before us. I have no technical knowledge, and can only be guided by the technical report, and the Government can only go on these reports. Even so, however, it is not enough that the technical aspects alone should have to be considered in a scheme like this. There are other features in this Bill, features which I dislike, and I wish to draw attention to them. I think the financial arrangements made in this Bill are entirely unsound. Do not let us spoil the good chance we have. Technically, the scheme seems a good one, and the position is favourable, but the Government has embarked on a financial scheme which, to my mind, will not bear consideration, and I want to draw attention to certain features of the financial scheme which can be criticised very seriously. This scheme is to be started by the Government, by taking up half-a-million shares in it, and thus giving half-a-million capital to begin the concern. Having done that, even then the scheme does not go to the public; the next stage is for the concern to issue debentures with a Government guarantee. The public does not come in at that stage. The Government starts it with half-a-million pounds, and that is followed by one-and-a-half million debentures, fully guaranteed by the Government. Supposing after that the public do not take up the three million shares necessary for its completion. What will happen then? The Government will have put two million pounds into this concern. It has started at the wrong end. It is started with the Government putting two millions into it. We can have no certainty that even when the two millions have been put into it the public is going to venture in and put its money into this concern. We are entirely gambling in this matter. It may be, after having put two millions of State money into the business, the public do not like the concern for one reason or another, and the private capital is not forthcoming. Have we then to drop the scheme, or have we to embark another three millions Government money into this business? I do not think much encouragement is given to private capital to come in at all. The control is given to the half million put in by the Government. The half million shares held by the Government have an absolute majority vote in all matters pertaining to this industry.

Is that the only financial interest the Government has?

No, but that is the only shares it has. I do not know whether the Government is going to take up the three million shares, too. In this Bill the absolute final decision is given to the Government vote of half a million shares, and the public who take up three million shares thereafter come in as a minority vote. I ask this House is there any reason to expect that people will embark their money on a scheme like this and put their money into it when they know that they are for ever doomed to a minority, that they can always be overruled by a Government vote, and that their own interests are not secured in regard to the money they have put into it. It seems to me that private capital will have no security against the vote of the State, and that being so, I am very doubtful whether the money will be forthcoming. I do not see what inducement there is under this scheme as we have it here for private people to come in and put their millions into this concern and to be for ever doomed to a minority vote as against the Government. It seems to me that the scheme is all wrong. Unless we are frankly facing the position that we shall have to give the whole five millions out of our own pockets as a State necessary for the development of this industry, I am very much afraid that this Bill takes us into a fool’s paradise. We are going to start with two millions of State money, or money guaranteed by the State and, as regards the other money, we have no assurance that we shall get it, but such indications as we have are rather the other way. The indication is, judging by this Bill, that private capital will be frightened off. I think the financial scheme of this Bill requires complete overhauling. Unless we want to start with something which will never come to any good and, instead of being a great asset for South Africa, will remain a millstone around our necks, I think the financial scheme of this Bill will require overhauling. Technically, the scheme may be sound, but financially it is all wrong. It begins with Government support, and I am afraid it will be doomed to be the monopoly of the Government for ever and a day. Look at it in this light. The Government get five directors in respect of their shares. The private shareholders will elect four directors. Now what is going to happen? To begin with, there are no private shareholders. The private shareholders will only come in, according to the Minister’s scheme, after the Government’s shares have been issued, and the debentures have been issued and, for two or three years at least, there will only be the five Government directors. There will be no private shares to elect the four private directors. If you go to the public after you have exhausted the two millions contributed and guaranteed by the State, then you may be sure that this company will go on for some years with its five State directors, and that there will be no private directors. It is only eventually, when private shares are taken up, that there will be private directors. It seems to me that nobody will have any confidence in a situation like that. Who is going to embark his money in that? Take another aspect in which, I think, this Bill is subject to very grave criticism, and that is the direct control which is given to the State here. As I have said, a majority of directors are given to the State. The Government will always have the control of this company. Besides that, it appoints the chairman, the managing director and, in fact, the Government can regulate almost anything in this company. I do not think that Clause 16 can really be serious in all the powers that it gives to the Government of this country. The Government can regulate the remuneration and appointment of members of the board, the appointment of officers and their remuneration, the conditions of employment, the nature and form of returns, the accounts to be kept by the board, and even the very management of the corporation is to be subject to the control of the Government. The position is this, in my opinion, that this body, which is started so completely in the clutches of the Government, from the outset will be nothing but a State concern. I am told—

There is the greatest difference between a body like the Electricity Commission and the board of management of an iron and steel industry. Electricity is largely a non-competitive business, a public utility, it is a sheltered industry, and we do not compete with all the markets of the world in respect of the electricity produced in this country. The iron and steel industry will have to stand the racket of the fiercest competition. If there is one industry on earth which is highly organized and well managed and where the competition will be as fierce as possible, this is the one. Well, we shall have Government management and Government control, and I would like to see what chance this otherwise promising industry has against the technical brains of the world making inroads here in South Africa and trying to capture and control our markets. If there is one industry where proper initiative and efficiency should tell to the utmost extent it is the iron and steel industry. We are going to put the dead hand of the State upon it. I do not know what policy of State will yet be applied to industry in this country, but if the policy which the Minister of Railways has applied to the railways is going to be applied to this industry, it does not stand a dog’s chance in this country against all the competition that will come against it. I am very much afraid that this scheme is going to be ruined by State socialism. I would go this length and say to the Government—

Here is a promising industry, all the technical reports tell us that it is a promising industry; do not let us spoil it. Let us give it the necessary financial support, and let us give it a start, but, having done that, let us tell these people that the whole management will be with them, and that they will have to work their hardest in order to keep themselves going and maintain themselves in face of the fierce hurricane of competition that will blow against them.

Then we may lose our money.

What is going to happen now? It seems to me that this idea which we have in this Bill is simply intended to placate certain interests on the Government benches. For years they have been urging it, and, at last, they have won. I remember, seven years ago, when we had under consideration a contract by which we intended to help the Pretoria Iron Works, the Minister of Labour, who was a member of the select committee, then moved that the State should take control.

I would do the same to-morrow.

Exactly. That is the standpoint. This is what the Minister of Labour then moved in select committee—

When this matter came before the House subsequently, the member for Jeppe moved, and the whole Labour party voted with him, as follows—

[Time limit extended. ] This thing has been worked by the Labour party right through up to to-day, and now they have their victory, but it is a sorry victory for this country, sir. I cannot imagine anything the Pact has done more to the detriment of the country than a case like this where State socialism has to be invoked in order to, in my opinion, militate against the interests of the State and, perhaps, to throttle what might otherwise have been one of our principal industries. To my mind the position is simple. This Bill is based on the right idea, but it requires recasting. In the first place we cannot have both bounties and a guarantee system on our statute book. One must go if the other is to be adopted, and we must so re-cast, this Bill that it is possible to take in the other industries which have grown up with private capital under very great difficulty. It is quite possible to arrange such a scope of activity for both Newcastle and Vereeniging which will allow them to continue as part and parcel in this scheme. In the second place. I think the financial clauses in this Bill, the whole financial scheme, ought to be thoroughly revised and reconsidered. In the third place, I think that State control, State socialism, which, in my opinion, is going to be ruinous to this scheme, ought to be eliminated from it. I, therefore, think the Bill ought to be re-cast, and not passed in its present form, and I, therefore, move the following amendment—

seconded.

The complaint of the right hon. member as to lack of information in the matter of the subject-matter of the Bill strikes one as coming rather curiously from the very man who, some years ago, was responsible for the coming to South Africa of the very commission on whose report this Bill is based, and the vagueness with which he touched on the report of that commission and matters incidental to it seemed to indicate that we might expect from the Opposition further vagueness culminating in an opposition which I think would try by every means possible to delay the passage of this Bill. On reference to the terms of the motion of the right hon. member to have this matter referred to a select committee, it becomes abundantly clear that that is the real object of the motion. The right hon. member stated that the country knows very little indeed about this Bill or about the plans of the Government. That may be so, but in any case it is extraordinary that, notwithstanding the fact that the country is supposed to know so little about it, we have had a flood of articles condemning in the most emphatic terms possible, from practically all the Opposition newspapers, this Bill as State socialism, in fact, something so terrible that under no circumstances should it he passed. That, of course, is the way in which the Government is usually judged by the Opposition papers. I do not intend to deal in detail with what has fallen from the right hon. member, because I am afraid that the country will not take very much notice of what he has said. Three of the right hon. member’s own supporters slept very soundly indeed through his speech. The objections raised in the newspapers very shortly can be brought down to two points. In the first place, the country was told—the right hon. member has also told us—that it was out and out socialism. In the second place—this was also an undercurrent in his speech—we were told that this Bill meant ruination to an existing industry capable of supplying on an average scale all the requirements of the Union. As regards the first point, the right hon. member, by implication, very nearly admitted that the Electricity Act was on a par with the present Bill.

You were asleep.

As I understood him, the only difference he put forward as far as electricity is concerned, was that there is no question of competition, but almost in the same breath he assured us that in South Africa there is room for one steel and iron industry only. So where does the competition come in if there is room for one industry only? His plea for the Union Steel Corporation was largely based on this. It may interest hon. members to know that in Germany from 1905 to 1914, during the monarchy in a State where socialism was certainly very much at a discount, these mixed concerns —that is, concerns in which there is State participation—were very popular indeed, and were extremely successful, and if hon. members in addition to that care to read the report of the British Board of Trade for 1918, they will find there very strong arguments for the proposition that if there had been State participation in Great Britain, it would have done a great deal to put the British steel and iron industry on a sounder footing than it was then. I think the right hon. member himself indicated that the steel and iron industry was a key industry, and in his plea for the Union Corporation he certainly forgot to tell us that at a time when prices were high this corporation did not scruple to get out of the public as much as they possibly could for their products, emphasizing the danger in times of difficulty and showing how essential it is that such a key industry as iron and steel should be under Government control. The figures of the corporation selling prices go to show that from 1918 to 1925 they charged as much as £40 sterling for a ton of steel, where they bought scrap for £1 from the railways, and while stores, wages and other expenditure at war prices certainly did not go higher than 30 per cent.; a clear indication of how this privately-owned concern, at a time when prices were high, did its utmost to obtain from the public the very highest prices. It is also illuminating in that connection, and it bears on the question of capital in this country, that a farm purchased by Lewis and Marks for £15,000 appears in the books of the Union Corporation at something between £150,000 and £170,000. That simply shows how these private concerns can fix figures to suit themselves, and the public, of course, pays the piper. It is very significant that in connection with the share dealings of this particular corporation, I have been informed on very reliable authority that it is absolutely impossible to obtain any information as to the share dealings of this corporation on the Johannesburg share market, and that must have a reason. That, of course, must be the reason. Coming to the second point, I would like in the first place to consider the position at Newcastle, which has been described by Dr. Wagner, admittedly a very sound man, in these words—

It is difficult to find a condemnation more strongly worded from an expert than these words; but when one inquires into the working costs of Newcastle and their ore reserves, it is obvious why these expressions were used. The amount of ore in Natal, and I think this is not in dispute at all, on an economic production of 150,000 tons per annum, is stated to last not longer than four years, and the expert estimates ten years as the maximum life for Newcastle if 50,000 to 60,000 tons are produced per annum. It has been accepted in Great Britain by the leading authorities that, in Great Britain at any rate, a plant having a minimum output of less than 300,000 tons cannot possibly pay, but our own experts assure us that in South Africa, owing to the absence of competition, the position is more favourable, and that if there is an output of less than 150,000 per annum, it cannot possibly pay to run an iron and steel industry on a really economic basis. The ore from which Newcastle draws its supplies is on the lower Ecca beds, but only 40 per cent. to 50 per cent. is recoverable, and the most optimistic estimate is 2¾ million tons, yielding under 600,000 tons of pig iron. Cheap pig iron is the basis of any steel industry in this country, and cheap pig iron will lead up to the building up of a large foundry industry which will lend itself to almost indefinite extension. Water pipes will be of cast iron instead of being in their present form—if we have pig iron. But that is not the only drawback as far as Newcastle is concerned. The ore is not at Newcastle, but has to be conveyed for 64 miles from the pit to the master furnace, and compared with Pretoria, that means an additional cost of 7s. 1d. This iron, again, is not hematite, and cannot be used for refining. Newcastle is in the unfortunate position that coke has to be conveyed, making a difference in railage of 3s. 8d. Limestone, an essential ingredient, has to be drawn for 490 miles, making a difference of 5s. 10d. in the cost for every ton of pig iron. The net result of that is that if this pig iron is conveyed from Newcastle to Germiston, the cost is 36s. 7d.. as compared with 17s. 11d. from Pretoria. The actual cost at Newcastle runs to the enormous figure of £5 per ton, and when conveyed to Germiston another £1 railage has to be added, making it £6, and the experts agree that for successful steel works the prices of pig iron should not exceed from 60s. to 60s. As a matter of fact, I take it that some hon. members having been well primed by the Corporation, will he aware that the expert of the Corporation himself has definitely ruled out Natal, because of the heavy cost of haulage of the raw material. Major Butler himself, the chairman of the Corporation, has admitted that the blast furnace at Newcastle was established merely as an experiment, and that experiment has been something in the nature of a failure—a dismal failure. As regards Vereeniging, there is no blast furnace, and the pig iron has to be conveyed there from Newcastle, and the price works out at £6 per ton, or twice as much as it should cost if steel is to be economically manufactured. At Vereeniging the pig has to be reheated instead of going through one process. I want to make this clear under the flood of misleading articles in the Opposition press. In addition to that, there is a loss of furnace gases of 96,000 tons of coal, equivalent to 49,000 as far as the coke oven is concerned, or more or less £100.000 over that of Pretoria. Vereeniging must be losing £30,000 at least by having the blast furnace at Newcastle and the steel mill at Vereeniging. It is absolutely essential that the House should know whether the plant is adequate, and it is clear from these figures that Vereeniging is hopelessly inadequate. The only thing that the Corporation in its numerous pamphlets can tell us is that they are hoping for an extension in future. One has only to look at the rails produced by them to see that there is no hope of their being able to supply a large proportion of what is consumed in the country, apart from scrap being put through the plant and the erection of new plant. For the purpose of producing 80 lb. and 100 lb. rails, which would be the basis of any steel industry, they would have to erect entirely new plant. The Pretoria concern makes provision that 40,000 tons of the total output would be heavy steel rails, and the mill proposed to be erected would deal with the whole 100,000 tons. Vereeniging admits that under the present circumstances, with the present high cost of pig iron, they can carry on only if they have 50 per cent. scrap, and that they obtain under their contract from the railway. Hon. members will realize that Vereeniging, left to itself, really has no future. The total scrap in the Union is estimated at 35,000 tons per annum, which means that if Vereeniging goes on manufacturing steel, 50 per cent. will be scrap and 50 per cent. pig iron, and the most they will be able to produce is 70,000 tons, whereas the whole consumption is over 300,000 tons per annum. If there is any competition in scrap and any real competition should come in, Vereeniging would be in a position that it would have to close down. It is clear from this that Newcastle and Vereeniging combined are incapable of producing any real proportion of what is required in the country. The next question is does this measure really mean ruination for Newcastle and Vereeniging? Vereeniging, without war prices, bounties on steel and reduced railway rates, could be able to keep above water, but only if it continues to get railway scrap, and there is no competition. Under these circumstances I take it that if the Bill goes through, and it is going through, Vereeniging can either stay out and take the consequences, or there is no reason why the new corporation should not come to some arrangement with Newcastle and Vereeniging. It has been suggested that while the furnace at Pretoria is being erected, Newcastle could supply all the pig iron the mills require for the blasting furnaces at Pretoria. Then there is no reason why Newcastle, assisted by low rates and a bounty on export, should not keep itself going with the manufacture of ferro-manganese, for which there is a very large market. As regards Vereeniging, there is no reason why the existing furnaces there should not be converted to the purposes of the steel industry, and be carried on as a subsidiary interest, being fed from Pretoria. The Opposition has requested that the matter be referred to a select committee, but I hope the Minister will refuse the request. India has had a similar experience. Mr. Bury summed up the position when he said—

The Indian Government has based on this a programme of railway extension involving one hundred millions. The public will know that in matters of this description all classes whose pockets are likely to be touched will combine in opposition to the Government scheme. I am certain, however, that the country will watch very closely what happens in this House, and what lines the Opposition take.

Don’t terrify us.

If the country comes to the conclusion that all parties whose pockets are likely to be touched are combined in opposition to the scheme, the public will weigh up the Opposition and give its verdict at the next general election.

The hon. member for Zoutpansberg (Mr. Pirow) said that some members in their opposition to the scheme would undoubtedly be primed by the Union Steel Corporation. It is apparent, however, that if there is any man who has been primed on this occasion, it is the hon. member himself, whose principal instruction seems to have been—

He has done his best to belittle a company which has spent over a million in developing an important industry in South Africa. He has not touched on the Bill, but—following the usual practice of Government speakers when attacking the Opposition—has abused the South African party newspapers. His speech was very largely a flood of denunciation of South African party newspapers. He also said that the hon. member for Standerton (Gen. Smuts) spoke with a lack of information. As a matter of fact, the report of the German commission was not handed in until we left office. It is absolutely wrong to think that the amendment emanates in the slightest degree from a desire for delay. All the same, we do require further information. It is perfectly true we have had a lot of papers put on the Table, but every member of the House has not had an opportunity of going through them. It is absurd to ask the country to vote this enormous sum of money on the meagre information in the possession of the majority of the members of this House. Anybody who knew they had a good case would be only too glad to supply all possible information. When I suggested that the report should be printed, I was called to account in the interests of economy. Still, there is economy and economy. We are asked to spend £3,000,000, and it is only right that a few thousands should be expended on printing the report.

Your leader is satisfied.

It is only right that the taxpayers should know the full facts. For the hon. member for Zoutpansberg to say that the country should not take much notice of what the hon. member for Standerton has stated, is playing it rather low-down. The net cost at Pretoria for raw iron is 70s. a ton. The Union Steel Corporation has spent £1,200,000. The hon. member for Zoutpansberg has, to use his own expression, been primed, but in some matters he has not been correctly primed. We are told that Newcastle is a menace to this country, but not a single reason was given for bringing such a grave charge against the company. Why is it a menace to the country? We are also told that in order to make the concern pay, they will have to turn out 300,000 tons per annum. But even Pretoria will rest content with turning out 150,000 tons a year, and that is about as much as they will be able to find a market for. It is absolutely certain that it will not be able to sell 300.000 tons a year. The Minister of Defence may know all about his own department, but he has a good deal to learn about business. He drew a very graphic and rosy picture of the possibilities of this projected State enterprise, and I have not the remotest doubt the picture was correct. The German commission expected that the enterprise would, on a capital of £3,150,000, be able to pay a dividend of 14½ per cent. When I read that, the thought struck me, as an ordinary every-day business man, that if this is such a very good thing as the Germans think, there should be no difficulty in raising the money. If Germany will not supply it, there are scores of concerns in England and the United States which would be glad to put up the capital, for why should such a good thing go begging, if people can take the forecast as being absolute gospel? Vickers, one of the biggest concerns in Great Britain, the Armstrong-Whitworth Company and the Corner House, all went very carefully into the matter, but every one of them turned it down, because it was not good enough for them to put their money into. Surely these concerns could employ as capable men for investigation as the Germans. Yet the Government, who do not handle their own money, but the taxpayers’, rush into a thing of this kind.

Fools rush in where angels fear to tread.

The key to the position, as it is the key to most of the industries in South Africa, is the question of the market. We could turn out hundreds of thousands of tons of pig-iron and steel, but where are we to sell it profitably? The question of the market is always up against us. We can obtain the iron ore and the coal in big quantities, but where are we going to sell the stuff when we have made it? Every South African manufacturer complains that there is not a market for a big output, and that is what handicaps them. Supposing they put out, as the hon. member for Zoutpansberg (Mr. Pirow) said, 300,000 tons a year, and it cost 70s., and you want to export it, you would have to pay the carriage to the coast and the freight overseas. You cannot do it. No trade, agricultural, pastoral or industrial, can do any good if you cannot do an export trade and get markets overseas. You cannot turn out pig-iron at that rate and pay the cost to the coast and the freightage overseas and make it pay There is one quality of iron in England which is turned out cheaper, that is 74s., and not only is the local market very small, but it is already occupied by the Union Steel Corporation who are in the position to turn out 50,000 tons, they are not doing that yet, but they are in the position to do it, and I am told for some of that turned out they have not yet been able to find a market, because the market is so small. That is a concern which, in my view as a business man, started on sounder lines than this. They started on Mr. Harboard’s suggestion with scrap and developed into pig-iron. Of course, the essential difference was they operated with their own money, whilst the hon the Ministers are operating with the taxpayers’ money. That is an essential difference. This concern has invested in actual money £1,200,000, and from what I learn are producing to-day rails, girders and castings with a view to finding a local market for their pig iron. They are also forming branches or subsidiary companies to put out rod iron, wire, pipes and sheet iron. It is the only sensible way to do it. They themselves are going to create a market for their own products. There is only a certain amount of iron consumed in South Africa, a certain amount of barbed and plain wire, and a certain amount of iron sheets. This company has stopped now on account of the threatened competition, but if left alone would have been in a position to produce it all. What more do you want? I hope members will not think that I have any interest in the concern. I have not sixpence. I know some of the hon. members think if you say a good word for a concern that you are interested. I have not a sixpence in it. Here is a company the Government has come in to compete with. They are taking steps to develop the industry on the soundest lines, and the Government is coming in to compete. I agree with the hon. member for Zoutpansberg that there is no room for the two companies in South Africa. One must go under or come into amalgamation. How is that going to encourage The confidence of the people overseas? You have still to get a lot of capital from overseas. If you already have a concern with £1,200,000, and the Government comes in to compete with that, what inference will be drawn by the investors overseas? They will think it is a strange act of the Government. They will naturally say: Why not allow this one concern to go on and pay its way? The fact of such interference will be pretty well advertised overseas.

You have already started to do that to prejudice the position.

The Government seem, for some reason or other, which is difficult to understand, determined to start this as a State enterprise and start it, let me say, at all costs. I can only say they are being pushed into it by the Labour party. My hon. friend can smile, but it is the only reasonable thing to think.

Then let private people come in and do the thing properly.

My hon. friend the member for Standerton (Gen. Smuts) read an extract, and I think I can quote another one. What I am reading was moved by Mr. Sampson and was seconded by Mr. Kentridge as you can easily expect. It was moved on the report of the select committee on the contract in connection with the Railway Department and the Union Steel Corporation when it came before the House. This, that I am reading, was moved by Mr. Sampson in a Committee of the Whole House—

It was identical with that moved by the Minister of Labour in select committee, and that is exactly carried out. We cannot help being suspicious that this is being forced on the Government by the Labour party. I am perfectly aware that it is in accordance with the Labour principles. It agrees entirely with Labour principles. My hon. friend the Defence Minister said it was going to be run as a business concern, but that is not according to the provisions of the Bill. Whatever they intend to do we can only go by the Bill. That is clear. The Government put up half a million of money and this guarantee as to capital and interest-one and a half millions of debenture. They have gone the wrong way to work. How can you now bring the public in unless you have a Government guarantee for the other shares offered to the public? They have the preference before them in the shape of the debenture holders, and is it likely the public will come in without a guarantee? If you want to raise any more capital, after you have raised the one and a half million debentures, you will have to guarantee the other shares offered in the same way. My hon. friend is not finished with this by any manner of means. He does not know what he has put his foot into.

I will have to get four millions for the Electricity Commission.

I wish you were as certain to see your money on this as the Electricity Commission.

What is the difference in principle?

It is a different story altogether. One is a public utility, and a monopoly that is not the case here.

It is less of a monopoly than this is going to be.

You have come to an arrangement with Cape Town and Durban and the Victoria Falls Power Company. In the case of iron and steel you will put the tariff up and the people will have to pay. You appoint the chairman in this concern and the managing director, and you fix the period of office, and you go down even to the details by fixing the time of the meetings. Then you fix the remuneration of the directors and the officers of the corporation.

You are objecting because the Government does not have the Auditor-General in it.

The Minister takes good care to keep the Corporation outside of the company laws. Why has he done it? Has he the permission of the Minister of Justice before he put this in?

Oh, yes.

I suppose the conditions of the Companies Act are a little inconvenient for the Government. It is clear, as anyone will see who has read the Act, this is going to be a concern entirely controlled by the Government. There is no question about that. I think you can judge by the experience of other countries that Government control of industry has always been bad and disastrous, and on the continent of Europe to-day it is absolutely condemned. Take Germany. When the war was over, as hon. members know perfectly well, the monarchy was overthrown on November 10th, and who came into power? The social democrats, the socialists, and the president of Germany himself was a socialist. Instead of going like a bull at a gate and bringing in socialism, as they did in Russia, for instance, and they knew they had got to do something, they had not worked out any plans or even thought of any, they appointed a commission to see how they could best nationalize the principal industries in Germany in terms of their own principles. This commission was appointed by the Government and consisted, for the most part, of socialists and economists. One of the conclusions to which they came was—

That is the point I would like to lay stress on. the bureaucratic control. This is the report of a commission in a country where the Government was composed avowedly of socialists. The commission further states—

That is their experience.

Are you going to sell our railways?

We are not dealing with railways to-day. I am prepared to discuss that question on another occasion. I would like to quote further—

What book is that?

It is “The Breakdown of Socialism,” by Shadwell.

A very interesting book.

made an interjection.

There it is, always attributing some motive. This man has written more books on economic subjects, for instance, "Industrial Efficiency,” “The Socialist Movement,” “The Communist Movement,” etc., than, perhaps, most men. This was written in 1926, only last year. I would like to give another quotation from this book—

That is the position. I have come to one conclusion, and that is that our Labour party are behind the times. They see the enormous change that has taken place on the continent of Europe in matters of this kind. They do not now socialize, or nationalize, as they prefer to call it, for the purpose of putting industries under the Government; that has gone out. Hon. members here who represent the Labour party appear to have got behind the times.

They have got behind the Government, anyhow.

This system of Government control or Government management is everywhere condemned. It is no use for my hon. friend, the Minister of Defence, to come back and say: “That is not what we intend to do.” Don’t come and say one thing here and say another thing in the Bill. That is what we complain of. We can only take the Bill as it stands and the Bill is as clear as anything can be that this is going to be Government control.

Certainly.

Very well, you will make a mess of things, that’s all. Let me mention another case, Queensland, an English-speaking community. They had in Queensland a Labour Government, and they went in for Government enterprises. For instance, they went in for State stations or ranches—that is the biggest— State butcher shops, State produce agency. State hotel, etc. Up to date, the net loss on these little businesses, as stated in the “Brisbane Courier” of 30th October, 1926, is £766,000. Some they have made money on, but taking the whole of the businesses they have lost £766,000. They have had to write off over £800.000 as bad—irrecoverable. That is evidence all tending in the same direction, that there is not the slightest doubt that State management is always bad, inefficient every time. In face of all this experience the Government contemplates establishing a State industry —my hon. friend cannot deny it—involving three millions of money. The report of the Germans is based on the assumption that it is going to be done by private enterprise. They never dreamed it was going to be done by the South African Government. Even supposing it could be made to pay under private enterprise, that is by no means a guarantee that it could be made to pay under Government control. I know in which I would put my money if I were compelled to choose one or the other. I would prefer by far to put it in the private enterprise. The only conclusion I can come to is that this has been forced down the throats of the Nationalist party and the Government by the Labour party. Another thing, this is going to involve a precedent. When you have once given way on these matters it always goes against you. We already have one application for assistance from the Free State—the wool industry. I know there are any number of these companies struggling along, and those in low water will come for assistance. I only hope my hon. friend will stand firm and resist the pressure which will come. I only mention that to show the far-reaching effect of this Bill. If it is going to be run as it is in the Bill it is going to cost this country millions of money.

One always listens to the hon. member for Cape Town (Central) (Mr. Jagger) with a great deal of interest and respect, but as far as this Bill is concerned I think that even his friends behind him will admit that he has taken up a different attitude from that of the right hon. member for Standerton (Gen. Smuts). The right hon. member for Standerton admits that it is imperative that we should have an iron and steel industry in South Africa, and he admits from his own personal knowledge and from the investigations carried out by the experts he invited to this country, that Pretoria is the only suitable place for the establishment of such an industry. But what attitude does the hon. member for Cape Town (Central) take up? He says we must have nothing of the kind. He goes on to his favourite pastime of holding up the bogey of socialism, creating a bogey, and then knocking it down. What does he do? He quotes Dr. Shadwell as an authority against State enterprize. I might equally well quote the hon. member as being the final authority against the policy of protection. Would this House accept him as such? Then he goes along to his favourite pastime of quoting the newspapers, and he quotes the case of Queensland. But he forgets that in Queensland prices have been made lower than in any other part of Australia; effective wages have been made higher, and unemployment lower. After all, the best judge of the position in Queensland is not the hon. member, hut the voters, who, on several occasions, have re-elected the Labour Government. Then he goes on to talk about the difference between the Electricity Commission and the present proposal. I see very little difference between the two. The only point he attempts to make is that there is no competition in the case of the Electricity Commission, but that is equally true of the iron industry. The iron and steel industry is an industry upon which the future prosperity of South Africa depends, and it is imperative that if it is to be a success it must exclude the possibility of a lot of little industries growing up round it on watered capital. I would also draw the attention of the House to the case of the Reserve Bank. There is no difference between the Reserve Bank and the scheme now before the House. The principle of State participation and State control applies to the Electricity Commission, the Reserve Bank and the scheme now before the House. I would like to ask the hon. member what the shareholders of the Reserve Bank think of the proposition? The value of the shares is going up day by day as the result of the financial success of that institution. What is the position taken up by the right hon. member for Standerton (Gen. Smuts)? He says we have always wanted this industry; in fact, since 1912 we have clamoured for it, but now that we have the chance of establishing it the right hon. member and his party say—

That is the attitude they are taking up. He says we must have this industry; Pretoria is the only place for it, and then he goes on with a few small criticisms not worthy of the right hon. member. I feel sorry for him. He speaks against his real convictions and his knowledge of the subject. The right hon. gentleman says—

After all, if the key industry is essential, if the right hon. member admits that, as he has done, and that Pretoria is the best place, surely, because there happens to be another small industry established, and during the whole period they knew the right hon. gentleman was negotiating for an industry in iron and steel to be established at Pretoria—-surely that is no argument against establishing such an industry. The exports invited by the right hon. gentleman as well as our Government experts condemn Newcastle and Vereeniging. I will not dilate on this. The hon. member for Zoutpansberg (Mr. Pirow) has fully and lucidly dealt with the technical part of the question. I can go further and quote the finding of the Board of Trade Committee in England, the report of which was issued in 1918. Members of the board were not socialists, or even Labour men, with the possible exception of Mr. John Hodge. I think the right hon. member was a member of the British War Cabinet at that time, and was perhaps responsible for getting these investigations set on foot—they were going into post-war reconstruction. That report showed how unmistakably the position in England was unsatisfactory, and it stated—

Surely the right hon. gentleman would not suggest that out of the goodness of our hearts we should take the taxpayers’ money, about which he and the hon. member for Cape Town (Central) (Mr. Jagger) are so solicitous, to buy out the Newcastle and Vereeniging concerns? In this they take up the charitable attitude; but from the practical point of view there is no reason whatever why the point made by the hon. gentleman should be taken up at all. I agree with the hon. member for Zoutpansberg (Mr. Pirow) that if the new corporation comes to the conclusion that it may be possible to enter into an arrangement with the institutions that exist, nobody in this House would have any objection, except to see that it does not pay for watered capital. It must be laid down that whatever is taken ever must be taken over at its actual value, and not its paper value. With regard to the right hon. gentleman’s point that the financial propositions contained in the Bill are not sound, I hope that the Minister will keep an open mind on the matter, and give the Corporation sufficient elasticity so as to enable it to decide as to the time and the order in which the money shall be raised. But, after all, the chief answer to the points that have been raised is that private capital has refused so far to go into the matter because it has not received sufficient watered capital to enable it to make huge profits. I think this watering of capital has been one of the evils to a great extent of some of the mining and other companies of South Africa, and that it has kept private capital away. As far back as 1907, in a report dealing with the mining industry, that point was made very clear. All the negotiations which have taken place in connection with the present company have also made it very clear. Evidence was given before a select committee that the Armstrong-Whitworth Company was prepared to finance the concern on most onerous terms—so onerous that the latter could not consider them. When the public realizes that here we are going to have an institution where there is no room for watered capital, the public will be more prone to put up their money than with a private company which starts by putting up watered capital. The experts who were brought out by the right hon. member for Standerton (Gen. Smuts) came to certain very specific conclusions— that all the raw material for a sound iron and steel works was available in the Union and calls for development, and that the consumption of such iron and steel products as can from the outset be manufactured is of such dimensions as to warrant the establishment of an iron and steel industry. Why, then, keep these assets idle? Why keep these resources idle, and the people idle who may be employed in the industry? Surely, from a national point of view, it is desirable to take these natural resources, and get them developed at the earliest possible moment, and thereby help to develop subsidiary industries which may benefit, and also benefit thousands of people who, as a result, may get employment. As to the question—

the experts have come to the conclusion that there is ample market in the Union for the products of an iron and steel industry. In any case, I say, create your own home market, which is very much better than seeking for markets overseas. The German experts also stated that they were satisfied that we can establish an industry in South Africa which can compete with overseas industries without protection. The estimates they put forward have been held to be very conservative indeed by owner experts by whom they were examined. When you remember that these German experts made their investigations not merely as consultants, but as the agents of principals who were considering the establishment of the industry, you can take it for granted that the experts dealt with the matter on a very conservative basis. I don’t think it is right or competent for hon. members to set themselves up as experts in this matter. Suppose the matter went to a select committee that would have to judge the findings of the experts. On a previous occasion the hon. member for Standerton (Gen. Smuts) said the iron and steel industry is the backbone of every civilized country, and I agree with him, but it is rather strange that he should keep postponing the day when South Africa is to have a backbone. He lays down admirable principles, but immediately proceeds to run away from them. The main objection that appears to be raised to the Bill is on the question of State control. On this matter there are two conflicting points of view. We on the cross benches desire State enterprize, while the Opposition objects to anything with which the State has to do. From a socialistic point of view, the Bill is very meek and mild.

I wish to call hon. members’ attention to the fact that it is improper to read newspapers in the House.

Once I have satisfied myself that, in the interests of the country, key industries are necessary, I would rather see them established under conditions which do not altogether consort to my point of view than not to have them established at all. On the other hand, the South African party says the industry should not be established, because of a very small detail which differs from the lines on which they desire to see it started. The Labour party is taking up a more patriotic point of view than the South African party. Then they develop their objections to State control. I wish to put an ordinary business proposition to the hon. member for Cape Town (Central) (Mr. Jagger). The hon. member for Standerton (Gen. Smuts) has admitted that a Government guarantee is necessary and desirable or else a bounty. The company in England, to which I have already referred, wanted a bounty of £125,000 a year for eight years, making a total of £1,000,000. Others said the Government must guarantee not only the interest, but the capital. Suppose someone went to the hon. member for Cane Town (Central) and said they wanted him to put money into a concern, I wonder what he would say if they added that, on no account, must he have any voice in the control. That is, undoubtedly, an unbusinesslike attitude due entirely to the prejudices of hon. members, sometimes interested prejudices. The principle of State control has been practised ever since governments have existed. Every item of legislation, whether in the nature of bounties, factory legislation, wage control, and so on is State control and interference. That being so, it is too late for hon. members to say that in this particular instance Government must depart from all the principles they have been carrying into effect for many years. The best thing we can do is to go by the experience of England in connection with this matter. The English Committee, to whose report I have previously referred, came to a number of conclusions, one being—

If that is true of England, how much more true is it of South Africa which is thousands of miles from any country from where we can import iron and steel and is dependent on shipping combines for freight. The report to which I have referred proceeds—

If that is the position in England, what possible chance have we of private enterprise establishing an industry in South Africa to compete against the American or continental combines? The committee came to this further conclusion. They said the committee are of opinion that it is no longer safe to entrust the very life of the iron and steel industry entirely to the efforts of private enterprise, and that the creations of individual energy are powerless in face of the activities of organized trade combinations. The hon. member for Cape Town (Central) (Mr. Jagger) knows that private enterprise has broken down in the way that he understands it. He knows that competition is dead. Industry is now controlled by groups, cartels and combinations and by trusts. Competition is dead to-day, and that being the case, when we consider a question like this, we must consider it from the facts we have before us to-day, and not the conditions of a hundred years ago. We know that when orders are placed by this country we have no control as to whether they are carried out in Germany, England or elsewhere, because there are combinations existing in those countries, and it often happens that tenders are sent in so as to result in a portion of the trade going to the Continent and only a portion to England. That is what Mr. Smit discovered. When I was chairman of the Johannesburg Town Council that was the experience of that council. We found that tenders were put in such a way that only a portion came from England, and I remember when a contract was signed with a British firm this firm sub-contracted a large portion of the order to a Swiss firm as a result of trade combinations. Are we justified in placing ourselves in South Africa under control of such trade combinations or in the hands of private enterprise which might find itself swallowed up by big combinations overseas? You must clear your minds of any question of socialism and look at it from the national standpoint, and if you do you cannot avoid supporting the measure before the House. The hon. member knows, and we know, what has recently taken place in connection with the iron and steel industry. I have before me “The Economist,” which I think the hon. member for Cape Town (Central) reads with respect. In one issue there is a detailed statement of the continental steel cartel which has been entered into, and in subsequent issues in January, this year, are two illuminating articles dealing with the effects of that steel cartel, and showing that Britain will have to seriously consider whether it shall become a partner of the continental steel cartel, or join the American Steel Corporation, and the articles point out that in any case she will be a very junior partner. The only course that would be ultimately open to Great Britain would be the development of the dominions, and even if that takes place, according to the writer in “The Economist,” the industry will develop in England, and the dominions will have to content themselves with being the suppliers of raw material. That position has been shown by another factor, the negotiations which have taken place in connection with the raising of money for the present concern. The evidence given before a select committee of this House showed that the British Iron Masters were disinclined to support the development of the industry in South Africa as being against their interests. Those in the industry in England said—

Then the Pretoria people went to the British Trade Facilities Advisory Board for financial support, and the British Treasury stated that it was against any such proposals as it was not justified to employ public funds in building up an industry outside Great Britain that would have a detrimental effect on British industry. Are we justified in putting South Africa in that position that of restricting output because our industry may be swallowed up by external corporations? The tendency everywhere is to restrict output. The hon. member for Kimberley (Sir Ernest Oppenheimer) knows something about this policy in respect of diamonds. My hon. friend knows that it pays not to produce diamonds sometimes and to restrict the output, and the same principle will apply to the iron and steel industry. That is the object of these steel cartels and trusts, and once it is done we are definitely at the mercy of foreign capital outside South Africa as to whether we shall develop the industry and the subsidiary industries upon which we are dependent or not. When the British Treasury said they would not advance the money for this purpose, the Pretoria people went to private capitalists, and they said they must have £2,000,000 of watered capital before entertaining the idea. Members may say there is no such thing. Sir Alfred Mond, who is a great authority, you will remember, only recently was responsible for establishing the British chemical combine with a capital of over £50.000,000, and certain news-papers in England, and they were not Labour newspapers, criticized that arrangement because it said, taking the balance sheet into consideration, it indicated clearly a tremendous amount of watered capital. Sir Alfred Mond replied, as reported in the “Edinburgh Evening News,” a conservative daily paper, on the 16th December, 1926—

I commend the statement of the commercial morality which prevails in private enterprise to the attention of the House. But there is a further aspect connected with the raising of any money for the development of industries in this country or in the other dominions or undeveloped countries. The policy has been adopted in England, Germany, America and elsewhere, that they will only advance money in future on the basis that that money is spent in the lending country for the manufacture of plant or whatever is required. This House has got to decide whether it is going to put a stop to any possibility of encouraging the industrial development of South Africa, or whether we are to develop the natural resources of this country and establish industries. If we are to do that we shall have to carry out the policy which is indicated by the Bill before the House. I want, in conclusion, to give just one more reason why, in South Africa more than anywhere else, it is imperative that we should establish this key industry and that the State should have some measure of control over it. According to the report of the British Board of Trade, it is laid down clearly that the British railways are largely responsible for having brought the iron and steel industry in England to the unfortunate position in which it is. This report shows that the railways in England charge much more heavily on iron and steel products and materials used in manufacture than the railways in the United States of America and Germany. The report goes on to say—

If the British railways, the patriotic gentlemen carrying on railways for the sake of private profit and private enterprise, if they are prepared to place the industry in England at a disadvantage in comparison with the industry in America or Germany, what possible hope have we in South Africa unless this industry is controlled and developed for the benefit of the State, and not for private advantage? [Time limit extended.] I would go further and point out the effect of shipping combines on the position of that industry. It is stated in the report of the Board of Trade that the Argentine trade in iron has been transferred from Great Britain to Germany, because of the lower freights charged between Germany and the Argentine, as compared with the rates between England and the Argentine. It is shown that freight has been reduced from 50s. to 35s. from Germany to Buenos Aires, but kept at 50s. from Liverpool, although steamers went to Buenos Aires via Liverpool. We are much more dependent on shipping for the requirements of a steel and iron industry than England is, and that being so, I submit that it is imperative that we should establish our own industry and have such control over it that it does not get into the hands of outside companies. The Board of Trade, in their report, on page 39, also refer to the favoured position in which German exporters are placed in New Zealand in regard to shipping rates. The New Zealand Shipping Company has a special freight rate for German goods of 35s. per ton. They collect the goods from Antwerp and brought them to London at their own expense and the goods are then transhipped in London, making a through rate of 35s. per ton for German makers to New Zealand, whereas, if the shippers in England required to ship goods to New Zealand they had to pay 45s. per ton. The same applies to the trade with Mexico. For the shipment of the same classes of goods from England, British manufacturers were being charged by British steamship companies more than they charged for the transportation of German goods of a similar kind. Canada has been placed in the same position. The Canadian Government appointed a commission to inquire into the North Atlantic shipping combine, and it found definitely that the combine was acting in such a way as to prejudice the trade of Canada in favour of foreign trade. I would like to quote one other case, that of Australia. On the 5th January, 1927, a statement appeared in the “Glasgow Herald” which would seem to show that the transport of wheat was held up because there was a shortage of shipping, but some few weeks previously the “London Times” published an article dealing with the same matter in which they stated—

Even in a country like Australia, the farmers have been held up to ransom by the shipping companies. Is not that a sufficient reason why this House should say that a key industry, such as we are discussing to-day should be in no jeopardy whatever from these big combines concerned? In conclusion, I would say that there is only one alternative. Either you are to establish a State shipping service to do the work for you, or you have to make yourself independent of shipping combines, and if this country is to be saved from control by shipping or other combines of foreign financiers, it can only be done by establishing your key industries in South Africa with Government participation and control by utilizing your raw products here, by developing them, and thereby helping the establishment of subsidiary industries so as to make South Africa independent of foreign countries, and open avenues of employment for the thousands of people in this country who are walking about looking for employment.

The hon. member who has just spoken has expended a great deal of eloquence on trying to put the argument into our mouths that we are opposed to the formation of an iron and steel industry, and secondly that we are opposed to a grant to any industry that may be set up. The right hon. member for Standerton (Gen. Smuts) made it perfectly clear that we on this side are very much in sympathy with the proposal to have an iron and steel industry established in South Africa on a large scale. The question we have to consider is how that is going to be done, and we have also to consider how far assistance should be given and how far control should be exercised by the State over the industry when it is set up. The hon. member for Troyeville (Mr. Kentridge) is naturally enthusiastic about the merits of State control. He has stated that the railways in England, which, of course, are privately owned, are responsible for a good deal of the bad times through which the iron and steel industry in England has passed. He talks about watered capital and so forth, but if he had studied the question at all he would have known that the dividends paid by the railways have become extremely small, and the tribunal which presides over the railways, a statutory body, has recently authorized the raising of the rates, in order to pay some return on the capital invested in the railways. Then he indicated that the reason it was not possible to go further with this proposal in the last few years was that British companies were disinclined to help to start works in this country on the ground that it would compete with their own trade in England. He quoted the negotiations with the Trades Facilities Board, which refused to recommend it to the Treasury on the ground that it might interfere with trade in England. But the board was only used as a temporary measure, and its object was to provide occupation for people in England. If the Treasury refused to assist an industry in this country, it may have been because they were not sure that the equipment for that industry would go to British manufacturers. Nothing is more common than to find industries in England or other countries starting branches in some other country under the protection of a tariff or some other form of Government assistance. I have very distinct recollections of discussing the matter with the representative of one of the largest English firms two or three years ago. The upshot of what he told me was that considering the comparative smallness of the home market, and that if iron and steel were produced on a large scale, it would be necessary to look for an export market, he considered it necessary that some adequate protection should be afforded if an industry were founded. My informant at that time was looking a good deal to the question of tariff protection. In the course of two or three years, if this Bill goes through, we shall have a demand for it in respect of this industry; for instance, it is shown in the clause providing that the railways shall buy for 15 years from the industry. It may happen—it happens every day—that things do not go well with a particular industry; the industry turns to the Government and asks for more and more protection, and the cost to the public of the article produced becomes prohibitive. Then there is a revulsion of public feeling, and the Government is compelled to go back upon what it did before. It is the uncertainty of that kind of thing which has in the past militated against the establishment of the industry in this country. We have started it on a small scale; it started on the basis of scrap, and it has been expanded. Of course, it is not an enterprize of the kind which is contemplated by the Bill, and I admit that if a larger enterprize is started, the existence of a smaller enterprize cannot be allowed to block progress. But if an industry is started by private enterprize, it is a matter of business competition, but if competition is furnished by the Government out of public funds, the case becomes very different. Because we then have the Government of the day setting up in competition with an existing industry, and giving possible investors in the country to understand that the will of the Labour party has prevailed and there is no industry to which it might not be applied. That is a very important matter. I am given to understand that the prospects of getting money for private enterprize are considerably better now than they were two or three years ago. It is precisely on that point that we are badly in need of information. We do not know whether there have been any further negotiations with the Union Corporation; we do not know, for example, whether they would agree to move their works to Pretoria, if that is the most suitable place; we do not know whether it is certain they cannot get the money they require to expand their industry on a large scale. Obviously, if they could expand their industry on a large scale, and it was common ground that the industry should be established at Pretoria, there would be no need to pledge the Government’s money and credit, with the undesirable features of this Bill. We have no information on the matter, and before we come to a decision, it is desirable that the Government should give us the information. As far as we know, the Government have not inquired, but are going on. They have the German report, which apparently is a good one, but I make bold to say that there is no one in the House who is competent to say whether it is a good report unless we have time to consider it, and that we have not had. I read the summary, and I agree it is more convincing than the report of Mr. Bury, who may be a good authority, but his report reads more like that of an advocate than that of a consulting engineer. We do not know, and I think it is quite material that we should know, what negotiations there have been with these people. Has the Government put that report to other people in England, America or elsewhere? Has the Government come to any arrangement or understanding with them as to plant?

No arrangement has been made whatsoever.

But the Minister will admit that we have no knowledge of it. Anyhow, the Government having got this report, seem to think they have got hold of a very good thing—

is to be prevented from making profits, there is to be no watered capital, and so forth. But if this thing is so good, how does it come about that the Minister has justified the proceeding of the Government by stating that it is impossible to get the money by private enterprize? The Minister cannot have it both ways. Personally, I would much prefer to see assistance given by way of bounties or by tariff protection—although that, I admit, is a considerable disadvantage too, but that would be a great deal better than the system now proposed, because an enterprize like this presents some very real difficulties which have to be faced by those responsible for the enterprize, whether it is a Government or private enterprize. It is going to cost a great deal of money, and we know it is very difficult at the early stages to get an adequate supply of trained men. When I once went to Sheffield, nothing surprised me more than to learn how one occupation goes down from father to son and from generation to generation. That is a thing we cannot build up here in a day. Mr. Bury, I see, makes light of that, and says that during the time the works are being constructed people can be properly trained, but I think this is somewhat doubtful. There is the question what in future the demand is going to be for the product. It is assumed there is going to be an unlimited demand, but I think that is a considerable assumption. I do not know whether the gentleman who wrote the report that stated that the life of the Witwatersrand would be 50 years had read the report of Sir Robert Kotzé on the mining industry, or whether, if he had, he would be so comfortable about it. It is not as if this industry is going to facilitate the mining industry. In any case, it does seem to me that there is a certain risk to be undertaken in assuming that there is going to be an unlimited demand. Another matter has to he faced, and that is the vagaries of the Government’s labour policy, and we do not know what the Government are going to do. The result may be that the cost of labour will be put up. While the present Government is in office I think the prices of labour will continue to go up. We know the Minister of Defence in practice does not give effect to all the things he advocates. Before he used to sit on those benches, and when he still occupied the cross-benches, he said that there would be no native labour in the mines—

I never made that statement in my life.

I understood the Minister of Public Works the other day said he was making an experiment and paying 1s. an hour to natives, that is, 8s. a day. If the Minister is going under this Bill to pay natives wages of 8s. a day, it is going to make a material difference in the estimates, as the German report contemplates paying unskilled labour 3s. 3d. per day, and there is the cost of civilized labour, too. If it were necessary under these circumstances to come to the relief of the corporation an appropriate vote would have to be taken. We do not know whether the Government is going to have recourse to this sort of treatment. We know perfectly well, however, which will be the more economical course, and the proposal is perfect nonsense. The other day, when the arrangements for clearing a site for a hospital in the Cape were under consideration, the Hospital Board had to obtain a subsidy because the Government insisted on the work being; done by white labour. There is another point. In a business of this kind there must be a certain amount of by-products. At Sheffield, for instance, the by-products of steel manufacture could be utilized by making them into knives or something of that nature, but we cannot do that here unless ancillary industries are also going to be created. This is a very real difficulty which has to be faced It may be that we shall find in a year or two, if the measure goes through, that the Government will say that these ancillary industries have not sprung up and, that to encourage their establishment they must also be protected. If we once start protecting industries in this fashion, the Lord alone knows where we shall stop. The advocates of the scheme say that these difficulties are not very serious. Professor Bury, for instance, says—

That involves an assumption that may, or may not, be correct. Suppose it is not, what will happen? We shall then be face to face with competition with people who have been longer at the game, who are more skilled and cleverer in marketing their products than we shall be If all these difficulties have to be met, they should be faced by private capital. If that chooses to come here and take the risk, then we shall have no responsibility. The Government propose to control the scheme, and if these dangers become realities and the venture is not a success, the taxpayers will suffer. Does anybody seriously contend that Government control is more likely to make a success of an industry than private control is? I do not think the experience of other countries proves that. Reference has been made to Government enterprize in Queensland, but I very much doubt whether the indirect benefits of those enterprizes are any compensation for the loss of money involved by the establishment of those industries. The whole tendency of railway development in other parts of the world is to dissociate railways from the Government. Belgium has gone back from the Government control of railways, but I admit that in South Africa we cannot go back to private control of our railways.

Why not?

If hon. members cannot see the difference between the conditions prevailing in South Africa and Belgium, I am sorry for them. We have adopted on our railways the policy of the employment of civilized labour, and unquestionably we have less discipline on the railways than we had before. Then we do not know what the Government will do regarding the control of the steel and iron industry. Will they apply to the directors the same treatment they have applied to members of the Public Service Commission, and will the directors be changed when the Government is changed? The only example of Government control of this nature that has been put forward is the case of the Electricity Commission. I do not think there is much resemblance between the two, and I am not much in love with the Electricity Commission, but it has its good points. It prevents a certain amount of overlapping, and has curbed the desires of some of the hon. members on the cross benches who spent a very large sum of money on electrical works at Johannesburg and were prevented from spending more by the Electricity Commission. If hon. members will look at the Bill under which the commission was established, they will see at once how little resemblance there is, and that the powers proposed to be given to the controllers of the new iron and steel industry are nothing like those given to the Electricity Commission. The latter has first to call for tenders from private enterprise. That is some check, but no check is given to this corporation, which has power to acquire and control factories and chemical works and may acquire any business which may seem directly or indirectly to benefit the corporation. There seems no limit and no check in this direction, and this is a very dangerous power. As far as the financial side of the venture is concerned, it is obviously hopeless in its present form, and we are asked to vote Government money without any guarantee that it will be supplemented by money from private persons. If not we are to begin with what is practically £2,000,000 of Government money and the Minister will wait for the public to take up shares, but, if the public do not subscribe, is the money already embarked in the venture to be wasted, or is Government going to risk still more of the taxpayer’s money? Under the Bill, apparently, there is to be no limit. I think if we are going to allow that, and allow it to go out to the world, that that is the sort of finance the Government go in for, we are going to create a bad impression which will deter people from putting money in this sort of business. In my opinion, it is a highly complicated business enough for private enterprise, and doubly difficult for the Government to manage. I am not satisfied that money cannot be raised to-day from private capital. It is not our fault if we complain about this, because the Government have given us no information at all. If we could obtain the money by private enterprise then either a new enterprise could have been started to compete with those in existence—that would probably have been an unfortunate move, but if people choose to risk their money there is nothing to prevent them doing so—and the other thing is to see if the people responsible for the present enterprise are willing to negotiate—I do not know whether they are or not—to see if their industry can be built into a new scheme and the impression avoided that they are going to be pushed out. It is, therefore, reasonable to accept the motion and allow the matter to go to a committee so that the country will be in a better position to judge if the scheme has any merits or whether it is merely a scheme to satisfy the clamourings of the gentlemen on the cross benches which is going to lead the country into trouble. All we want to see is enterprise flourish and, if we make a mistake at the start it will mean that the whole country is going to suffer.

The prosperity of South Africa must depend mainly on agriculture, and secondly on the gold industry of the north. I have no axe to grind on this question of a steel industry, but I have had association with the steel industry in England, and I speak with a certain amount of knowledge of the ramifications of steel. I have no particular love for the Union Steel Corporation, because I do not think they fulfilled their obligations they undertook in 1912. I have the greatest admiration for the plucky man who ventured his all in establishing an iron industry in Newcastle. He believes in his ideas, and put every bean he had in the world in starting that blast furnace. I have no knowledge of the South African iron and steel corporation. The only knowledge I have is one of continuous record of failure. After this record of failure, the Government is going forward and is asking the country to put in two millions of money. In common with everybody else in the House, I am anxious that an iron and steel industry should be started in South Africa, but those with a little brain want to see this industry founded on some kind of business-like principle. As far as I can gather, the Government brought forward these proposals on the report made by a very qualified German, and we are told the reason why his company did not follow up his report, was that the occupation of the Ruhr had ruined the lot of them, and they had not the money to put into the concern. I know a, bit about the monetary affairs of the steel people in England, and I am perfectly sure if they were satisfied they were going to get a return of 13 per cent or 14 per cent or more, then the money would be forthcoming at once. Many years ago I sent over to the steel magnates of Sheffield every document I could get hold of on this question, and I asked the firm which I represented not to treat this matter on their own, but to call a meeting of the big Sheffield ironmasters with the idea of starting a steel and iron company in this country. They met before the war, when they were full of money and wanted an outlet, and they found that to start the affair would require £2,500,000, and that to go on with the industry would cost another £2,500,000, and in the end they came to the conclusion there could not be a market in South Africa to justify the expenditure of so much money. Just as the English masters said in 1912, the German masters said in 1926; they would have come in cheerfully if they had been assured of the success of the undertaking. When I listened to the Minister talking about steel he spoke about turning out crude steel billets, but that is only the beginning of the steel industry in this country. Each piece of steel has to go through its proper treatment before it is fitted to do the work required. You cannot handle steel like a piece of dough, it is not homogeneous, it is made up of all sorts of imperfections. Even on rails, I would not like to travel faster if they were made from steel by any kind of person. We have had an experience just now. We have had steel rails coming from Belgium, and we have had a lot of trouble. The making of a cast steel billet does not end there. Take this knife. How long will it take the steel industry in this country to build up a knife like this? Years—twenty years.

Business suspended at 6 p.m. and resumed at 8.7 p.m.

When the House adjourned I was trying to show that whatever the amount of steel we produce in this country, half the manufactured products of steel, in value at least, would have to be imported. The many intricacies or vagaries, I might call them, are such that in order to convert steel from the rough to the manufactured product, thousands of different vocations are necessary, so that, however successful we may be in producing steel, it is quite certain that half of four requirements in the manufactured state would have to come from abroad. It is no good simply to say that you are going to make steel and going to sell steel. You have to get the steel manufactured into these thousands of different articles before you can produce for a profit. We can never hope to do away with imported steel articles in one form or another. From that point of view I would counsel the Government to walk very warily in this matter of the foundation of the steel industry. The steel industry in Great Britain has been built up from generation to generation and, as the hon. member for South Peninsula (Sir Drummond Chaplin) said, from father to son. I would remind the House of the history of the gold mining industry. Gold mining has been in existence, I suppose, since the world began in one form or another, and on the Witwatersrand we have now arrived at being probably the best-equipped and most developed gold mining community in the world, after very slow progress, after a process of very slow evolution, and at the cost of a good many blunders and mistakes. We have now got the gold mining industry of the Rand up to a pitch of perfection which cannot be beaten in any part of the world. That has been reached by a very slow process, and yet gold has never offered the difficulties which the simplest bit of steel has offered. I can quite understand the Government producing this Bill before the House. It is an attractive proposition to put before the people of South Africa, very attractive indeed, and everybody would like to see their own country producing its own steel. That is an ambition which is worthy of everybody’s care and attention, and, therefore, it has very good reason to succeed, but I do not believe, as we are told, that it is going to offer such a tremendous amount of occupation for our white youths.

Why not?

Because, unfortunately, you have to consider the economic factor, and if you think for one moment that steel is going to be produced in this country by paying white labour £1 a day, you had better not start making steel at all.

What are you to do— start importing Chinese again?

No. I have no doubt it is a very attractive proposition to put before the public. Having finished my jeremiad, if I may so call it, about the steel industry, I would now like to touch upon what is, perhaps, the brighter side, because there really are in this country the elements of success. We have at our very doors the component parts of high-priced steels, manganese, antimony and, above all, chromium. Chromium is the chief ingredient to-day of the steels which are called stainless steels. While I believe that we shall never be able to compete in the world’s markets in the lower priced steels, I do believe that in South Africa we have an opening for the higher grade steels which ought to enable us to get a market for those goods outside the boundaries of the Union. After all, it is a matter of value and not of weight so much. So, in that respect, I do think there is a very good reason why the steel and iron industry of this country should be successful. We know that capital has not been attracted by the bounties we offered and the promises of protection. It is very unfortunate that this is so, and, therefore, I quite see and quite agree that you cannot successfully establish an iron and steel industry within the Union except with Government help. That is an unfortunate thing, but it is there, and we have to realize that if we wish to have it started the Government have to come to the help of those who wish to start the scheme. Here I differ somewhat from my leader in his suggestion that a select committee should be formed—although I believe that would be a good course—but I believe a quicker plan would be to have a meeting of representatives of the Union Steel Corporation and the Pretoria concern and our Government Engineer, together with a man who knows the technical points of steel and another who knows the manufacturing side of steel, and tell the representatives of both steel companies that they have to agree; that the Government is quite willing to help them with £500,000, or even up to a million in debentures bearing no interest to put the concern on its feet and then wash their hands of it entirely. I feel that is the only successful way and I believe that if we did that we would get within three weeks a certain plan upon which they could all agree and neither one company nor the other would suffer. With regard to the Union Steel Corporation, I would like to say to the Government that you cannot strangle and destroy a corporation which has filled the bill, as they might have done in the past; they have shown that they are anxious to go on with steel-making on a larger scale, and a scale that ought to meet the immediate necessities of the Union. Those investors who put their money into the concern knew that it was not really a Government concern, but that it was in a measure, because it was protected. Above all, the Union Steel Corporation is a growing concern. They have rolling mills, hydraulic presses, steam hammers and many other things in their works, I am told, which are up to date and are in use every day. Therefore, I say to the Government you have to halt here and hold the pendulum of justice so that it swings neither on the Pretoria side nor against the corporation. I cannot too strongly impress on the Government the fact that these people have been through the mill. They know what it is to convert ordinary scrap into rough castings. Just lately in the papers we see they have made an arrangement with certain of the biggest tube companies in England, and we see they are coming out here and are going to start pipe making in this country. That is a great advance; I believe they will be able to make them infinitely cheaper than we could import them. I am told they are going in for a plant for wire drawing; that is another factor in their favour. They are also making another venture to make bolts and nuts. It would be a very good beginning if we could get these two concerns together, and with the money it is proposed to give them they could begin their buildings on the best site in Pretoria, and the Vereeniging and Newcastle works could be kept full steam ahead producing the articles that are saleable in the Union. When they have got the walls up and the buildings ready for occupation, they will know from practical results what our ore will do, and that is the most important thing in the world. I believe that the only fair solution is that these companies should be brought together; that the Government should tell them—

That is the only way we can look forward to a successful steel and iron industry in South Africa.

I must admit I was considerably surprised this afternoon at the speech made by the hon. member for Zoutpansberg (Mr. Pirow). He allowed his local patriotism to run away with him. If one contrasts his speech with that made by the Minister of Defence when he introduced the Bill, one would see a very considerable difference. The hon. member apparently went out of his way to try and damage the existing iron and steel industry as much as he possibly could. I say that is uncalled-for. It is not my intention to in any way decry Pretoria. I was very much taken aback when I listened to the venomous speech made by the hon. member. I leave it at that. It is very seldom he speaks in this House, but we all know when he gets up what to expect. I think it is necessary to give to the House a short history of the position from the inception of this industry up to the present. The Minister mentioned that in 1910 the late Government were anxious to assist the establishment of an iron and steel industry in South Africa. With this end in view they started by encouraging the manufacture of steel from scrap iron, and a scrap iron agreement was entered into at that period with the Railway Department upon the condition that the Union Steel Corporation Company, Limited, were to make steel from scrap and start smelting works and exploit local iron ores. The intention then was that we should eventually use local iron ores in the production of our iron and steel. The industry has developed, I submit, out of the scrap iron into the use to-day of the iron ores of the country. The existing industry has had to meet tremendous difficulties. They have, however, notwithstanding all these difficulties, proceeded with confidence and determination, and they have gradually built up an industry on sound lines. They have proceeded step by step; they have not made a mad rush into forcing the position. The existing industry has been built up practically upon the assistance of the Government of this country, not only the late Government, but of the present Government. The late Government proceeded to grant further assistance, for in 1922, after careful inquiry, they passed the Bounties Act. Upon that Act the Union Steel Corporation, Limited, proceeded to develop, got fresh capital, and extended their operations. Within the last two years no less than £600.000 has been subscribed by people in Europe and this country who have confidence in this country, confidence in the industry, and who to-day, if this Bill is passed, have to meet a position which means practically ruin to the existing industry. That industry has been built up upon the encouragement of the S.A.P. Government as well as the present Government, because only last year the present Government subscribed to the policy of the late Government by actually extending and setting back the dates of the Bounty Act—I say with the deliberate intention of assisting this very industry. It could not have been with any other object, because there was no other iron and steel industry in View, and I say the present Government is party to the extension and development of the present industry because, since the extension of the bounty last year, further capital has been spent in extending the industry. Last year no less than 40,438 tons of steel were produced in this country by the four operating concerns. It is common knowledge when the negotiations took place some years ago between the three interested parties— Pretoria, Newcastle and Vereeniging—that an arrangement was come to in England with the assistance of Messrs. Armstrong, Whitworth and Company, Limited, who became directly interested, but that failed owing to the Government of the day, I understand, failing to guarantee the interest on the capital that was required, and because the conditions that had been imposed by Pretoria were such that unless they were relaxed it was impossible to proceed with the scheme. Efforts were made to get the Pretoria Municipality to ease the conditions which were objected to, but the municipality refused. I have no information whether the original terms as laid down by Pretoria have now been amended—it is possible and probable that they have been. The Union Steel Corporation, Limited, upon the failure of the amalgamation, proceeded on exactly the same lines as agreed upon under the terms of the amalgamation. The intention was to develop Newcastle and Vereeniging, so that both concerns would be able to reap the bounty under the Act of 1922, so that each concern would be in a position to produce 50,000 tons of pig iron and steel respectively. Vereeniging has gone further—they are to-day on the point of producing wire, as they have put up machinery to produce 10,000 tons of it per annum. Instead of importing men to manufacture wire, they are training men in this country. The factory has been so devized that they can increase it to double its present capacity without difficulty and great expense. The existing industry at Vereeniging has entered into an agreement with Messrs. Stewart and Lloyds to form a subsidiary company to produce pipes and pipe fittings.

Is that a definite agreement? I was told it was tentative.

I am informed that it is definite. My information is that Vereeniging were on the point of entering into an agreement with the company in England to produce iron sheets and galvanized iron, but owing to the Bill being introduced, these negotiations have been suspended. When the time comes for the greater production, there is no reason why the existing industry should not be used. It is inconceivable that the Government should have introduced this Bill without in any way consulting the existing industry—there has been no consultation whatever. They have not had any information from the Minister, and I would like to know whether it is the intention to export any pig iron or steel from this country. I have heard it mooted that we have a splendid market in Italy. I am certain and positive that on making an investigation it will be found that there is no market there for pig iron or steel. Nor is it likely that there will be any export of pig iron or steel to any other country. The existing industry has continued production without any protection whatsoever. They had to compete against the imported article from foreign countries which have debased currencies, and they have built up an industry without any assistance whatever, except the bounties under the law of 1922. They have no preferential railway rates, and as the Secretary of Mines in 1925 said—

Can anybody with any sense of fairness and right say that this Bill is fair and just to the existing industry? I challenge any hon. member on the other side to tell the House that it is not against the existing industry. But there is a little more—a little politics that does not meet the eye; and I say that for the reason that during the elections the Minister of Justice sent a message to Pretoria—

There you have a pointer of what is going to happen. Speaking at Bloemfontein, the Minister of Justice said—

There is no doubt that is the policy of the Government—the iron and steel works for Pretoria and the railway workshops for Bloemfontein. When the hon. member for Jeppes (Mr. Sampson) proposed his resolution in 1920, when the agreement between this same company and the railways was under consideration, which resolution was read to the House by the hon. the member for Cape Town (Central), not a single hon. member of the Nationalist party voted for it. What has happened is that the Nationalists have become tainted by hon. members on the cross benches, and this philandering with hon. members on the cross benches has completely altered the outlook of Nationalist members. The country to-day is on the threshold of the nationalization of our industries. Labour throughout the world demands the nationalization of industry by fair means or foul.

Not by foul.

I go further, and I say, while they demand this, they themselves refuse to be nationalized, and they adopt the principle of might is right. Apparently that principle is to be adopted if this Bill is passed. The Nationalists have held themselves out as the apostles of freedom, and I say this Bill has proved that they have become apostates from that. If this Rill passes into law, it will sap the vitality of all our industries. It is the writing on the wall. The railways are a separate institution, and are run on their own. Under this Bill, if there is any deficit, it has to come out of the general revenue. When the post office was not showing a profit they immediately made the consumers pay for it by making them use two penny stamps. The Electricity Commission is also run on its own, and decides what the consumer has to pay. It is not a charge made on the whole of the country. This Bill is thoroughly unsound. It may start in heaven for the Pact, and will end in disaster for the country and taxpayer. The Minister drew a fine picture of the wonderful industrial future this country is going to have, and was radiant with optimism; but I say, let the country have a select committee of practical men and not of theorists, and I am certain this radiant optimism of the Minister will dwindle away into a dark cloud. I now want to go into a few details of the Bill. I am sorry the Minister of Railways and Harbours is not here to-day, because Section 14 is going to affect the railways very materially if it is passed in its present form. Under the existing agreement which came before this House only last year for consideration, and which the Government insisted upon remaining when I endeavoured to have it cancelled, the railways agreed to purchase their steel and iron requirements at the price at which they can get it delivered at any port they choose. There is machinery to provide that in case of dispute the Auditor-General has to decide. Under this Bill no port is decided upon at which the price is to be determined, and the railways will have to pay railage from the port to the particular point at which the steel or iron is required—

—which seems to me rather meaningless. I take it that the corporation are not going to import steel or iron. The difference is going to be an enormous charge on the railways, for under the present agreement ostensibly the railways would charge themselves with a special rate of one farthing per ton per mile. This will make a difference of two or three pounds a ton on railage alone. In addition to that, a dumping duty is to be imposed; it is not clear whether it is to be counted and added to the price when it has not been proclaimed, but apparently it is, otherwise it would be included in the landed cost. If the clause is passed, it will be difficult to resist the demands of other industries for similar treatment. The corporation is to be very heavily capitalized, and it is bound to feel the necessity of monopolizing the industry, and the time will come when it will claim heavy import duties as protection. That time, I submit, will not be very long, and the Government will be confronted not only with heavy import duties, but lower railway rates. I consider that under the agreement by which the railways will purchase their requirements from the corporation, it will cost the railways £400,000 to £600,000 a year extra if all this new protection is to be allowed. Another point I wish to emphasize. There is nothing in the Bill fixing the price to be paid by the public for iron and steel. The experience of other countries which have gone in for such enterprizes is that the cost of production is greater under Government control than under private enterprize. This has been proved in the case of Queensland and New South Wales and other countries, where State enterprize in industry has been embarked upon.

What about the New Cape Central Railways?

The New Cape Central Railways have nothing to do with it. Will the Minister tell me if that line is paying to-day?

We had to take it over because the rates were too high.

Are the Doornkop Estates paying to-day? If the price of the raw material is increased the finishing industries will suffer very materially, and the time will come when they will also ask for high protection, in fact protection will be asked for on every side. If the finishing industries receive protection, then the cost of wire to the farmer and iron tubes to the townsman will go up tremendously. I am making a prophecy which will come true. The Labour party is the mother of this Bill, which is revolutionary. They had tempted the Nationalists in the same way that Eve tempted Adam. The Labour party are the people who are responsible for this Bill, and not the Nationalists, who, in 1920, voted against a motion proposed by the hon. member for Jeppes (Mr. Sampson). What is their position to-day? They have turned a complete somersault, and now say the Government must be bound to one industry, and that industry is to be a State enterprize. There is no similar legislation on our statute book. Some of our public bodies control utility works, and in every case they have a monopoly. I submit that that will happen in this case. This industry will eventually claim an absolute monopoly.

You want it to-day.

I don’t. I say there should be an open field and no favour. The Secretary of Mines was quite right when he told the select committee in 1925 that it is difficult to start industries to control the manufacture of an article which is very widely used throughout the country. There is another novelty in the Bill—State control of an industry in competition with an existing industry. If the Bill is accepted, what is to prevent hon. members on the cross benches again using their influence with the Government to get them to embark on other industries? There is an industry in Harrismith crying for assistance. A woollen industry is just as much a key industry as iron and steel is. Why try and smash an existing industry which is proceeding on sound economic lines? This Bill transforms the whole of our economic structure. It gives unlimited powers to the Government. In fact, it empowers the corporation to become colliery proprietors, buyers and sellers of coal, exploiters of by-products of coal and steel, and so on. In my constituency there is a by-product of coal industry on which over half a million pounds has been spent. Is that also to be treated in the same way as the iron industry? On the present financial methods set out in the Bill, I doubt very much whether the Government will receive any private capital except the shares to be issued to the S.A. Iron and Steel Company, Limited. I believe the new industry will be purely a Government concern. No doubt the Minister of Defence will be very glad if that happens. The House should not grant without considerable amendment the autocratic powers which the Bill seeks to confer on the Government. Even the articles of association cannot be altered except by Parliament; then the corporation is not to be subject to the Companies Act. Is the Minister afraid to bring the concern under the searchlight of the Companies Act, which is a measure to protect the investor? I would like to know whether, when Mr. Delfos went to Europe, he submitted the same terms and conditions for the raising of capital as was done under the agreement the Minister mentioned the other day? Are the conditions imposed by the Pretoria municipality also the same? I believe, from the documents placed on the Table, that if this matter were handled by men who understand how to do it, the necessary capital could be obtained in Europe, without State intervention. I believe these conditions, which were submitted by the South African Iron and Steel Company, Ltd., were very onerous, and more onerous than those completed with the hon. Minister. I would like to know whether this is to be a purely white industry. What about all the vaunted declarations about the wonderful white industries they are going to establish? Is the Government afraid of making this a white industry? I would like to have an answer when the Minister replies. In Newcastle there has been considerable development. People have built houses to accommodate the employees of the industry, and the corporation have increased the water supply, and many industries have been improved because of the iron and steel industry. Have these to be cut off ruthlessly without any consideration whatsoever? If the Government wants to proceed with this Bill, why not make provision for amalgamation before they proceed further with the Bill, so as to protect the existing industry and provide for its continuance? Surely this is fair and just. No right-thinking man should agree to the overthrow of an industry which has been established without some attempt being made to see that industry is kept above water and continues to exist. Apparently no steps have been taken to try and arrange an amalgamation between the different interests. It was recognized by these companies themselves in 1920, and if one reads the report of Mr. Bury, he recognized that the people who have put their capital in this industry should be protected. There are over 1,200 shareholders in the existing industry. It is not, as some members opposite imagine, a one-horse show, a concern simply run by capitalists. If the Minister had approached these people on the right lines and made an effort to see if there was a chance of amalgamation, then he would have acted in a statesmanlike manner. He has simply cast aside all consideration of the existing industry. Labour has no soul. They say the capitalists have no souls, but what about Labour?

But they have got a heel.

I am not against the Bill in principle, but have some difficulties which I should like to be cleared up by the Minister before I vote for it. It is known that we already have certain iron and steel factories in the country, at Vereeniging and Newcastle. As for Vereeniging, I can say that the industry there is progressing very well, and the fear exists that as a result of this Bill it will suffer. Therefore, I should like to be reassured by the Minister. The public of Vereeniging which falls in my constituency are afraid that the establishment of the industry in Pretoria will damage that at Vereeniging, and not only the industry there, but also the public in the neighbourhood. This factory has been in existence for some years, and has progressed well. Approximately 600 white men, mostly Afrikanders who have been trained to do the work, are employed there, and this means much to the neighbourhood. Whatever happens, I hope the Minister will try to maintain at Vereeniging a branch of the big industry at Pretoria. If I were to express an opinion, I should rather advise that the industry be created at Vereeniging, but I shall be satisfied provided there is a branch of the industry at Vereeniging. I do not know much about Newcastle, but I understand that the factory there has made great progress. As we stated two years ago that our Government would push local industries, it would be a pity to do anything which would cause a shock to existing factories, so that in future other factories must not be established. I hope, therefore, that the Minister will satisfy me, so that I can vote for the Bill.

The hon. Minister will doubtless give some attention to the request of the hon. member for Heidelberg (Mr. de Wet), and I have no doubt if the Newcastle interests approach the Government in the correct way they will be treated equitably and will be listened to, as a concern of that nature should be listened to.

Are you sure about that?

I think so. The Pretoria interests have approached the Minister already, and they have been listened to, and the Minister has, I understand, accepted an offer by them in reasonable terms. I think the Newcastle people should obtain the ear of the Government in the same way. In following the member for Newcastle (Mr. Nel), I have a difficulty in striking the right note. His pessimism has had an extraordinarily depressing effect on the members of this House. Nevertheless, I ought to answer one or two challenges he threw out. He made a strong point that the Nationalists are not responsible for this measure, and that the whole blame from his point of view for this Bill ought to be thrown on the shoulders of the Labour party. When I cast my memory back to the last elections of 1924, the Minister will bear me out, the establishment of an iron industry was a plank of the Nationalist members in their platform in the Transvaal. This is a question which the Minister of Justice continually dealt with in his election addresses, and it was a definite promise of the Minister to the Transvaal in the event of the Pact Government coming into power. That is my answer to the hon. member for Newcastle, in saying this Bill was forced on this party by the Labour party. The Bill has the whole-hearted support of both our parties. If the Bill has one merit it is that it has put an end to the tinkering, a phrase which describes the history of the iron business; to the playing with the idea of establishing this industry. I use the phrase advisedly, when one thinks of the efforts of the last Government over the last fifteen years to place this industry on its feet— the granting of the railway contract to the Pretoria Company—the scrap contract to the Vereeniging people—and the subsequent subsidising of both these industries by the Subsidy Act of 1921 and 1925. If members have made a study of this question they must come to the conclusion that the Government has played with this subject in the past. One remembers the futile efforts on the part of these two companies to amalgamate, and one has seen the melancholy spectacle of the attempt of the Pretoria company to obtain capital overseas—and at last the production of a few thousand tons of pig-iron by Newcastle on a site which is declared by the experts to be uneconomical, and at the expense of heavily mortgaging the assets of the Vereeniging estates. The effect of the amendment proposed by the hon. member for Standerton (Gen. Smuts) seems to be that it will merely postpone the fulfilment of the establishment of this industry to the Greek Kalends. I listened very carefully to the right hon. member’s speech and I failed to hear any new suggestion given to the House. He took up the stand that when he was in power himself he left this question to develop along its own lines. The policy of the late Government was a policy entirely lacking in courage, and I would like to remind the hon. member of the parable of the timid and unprofitable steward who buried his talent, and, for his pains, was cast into the outer darkness where there was wailing and gnashing of teeth.

There is no gnashing of teeth on this side.

Now if there is another merit which attaches to this Bill I submit it is that it finally prevents the monopoly of an industry of national importance. The experts have clearly pronounced that in South Africa there is only room for one iron industry, not for two. If the Vereeniging and Newcastle companies were allowed to proceed, there is no doubt that eventually, if they could succeed, the position would be reached that the whole of the steel industry would be in their hands, and I submit that would be an undesirable state of affairs. We have seen the effect of monopoly in America, We have seen the type of legislation passed there forcibly dissolving trusts and preventing price-fixing associations under penalty of fine or imprisonment, and at the same time we have seen in Great Britain the increasing danger of monopoly in iron and steel industry. From statistics on the subject, I find that in spite of a 50 per cent, increase in production in England since 1914, the number of iron and steel producing firms has decreased by nearly half. The hon. member for Troyeville (Mr. Kentridge) has already dealt with the question of the international cartel which came into being last year under which an amalgamation of the German, French, Saar, Luxembourg and Belgian producers was formed with the apparent object of keeping up prices by preventing production responding fully to any expansion in demand. A dangerous position may will be created in South Africa if the steel industry were in the hands of a single concern, that pressure could be brought to bear upon such an industry, and the corporation in whose hands the industry was would be forced to act at the dictation of such a cartel. There are some hon. members in this House who will remember the debate on the scrap iron contract in 1912, and I think that some of the speeches delivered on that occasion will be of interest if I quote them now. Mr. Merriman made rather an extraordinary prophecy. The debate was on the subject of the scrap iron contract to be granted to the Union Steel Corporation, and it was questioned on the ground that it was granting a monopoly to this company. Mr. Merriman then said that the steel monopoly in Canada had cost that country hundreds of thousands of pounds. He further remarked that we had had some experience of monopolies in this country, and he wondered what the spirit industry in the Transvaal cost South Africa. He then said—

We have reached the stage to-day when undoubtedly the Government will have to pay very heavily for what was done in that year. On that occasion also the hon. member for Cape Town (Central) (Mr. Jagger) made this remark—

Apparently, in 1912, the hon. member was not against the Government establishing a steel and iron industry in South Africa.

It depends upon what the terms were.

Those are the words of the hon. member for Cape Town (Central) in 1912. This House has listened to what the hon. member had to say on the subject this afternoon.

What is the difference?

In 1912 the hon. member said he was not against the Government establishing a steel industry—exactly what the Government is doing to-day.

But on very different terms.

The hon. member did not mention the terms in 1912. Undoubtedly this Bill has put an end and will put an end to the danger of a monopoly of the steel industry in South Africa. To come to the question of what the hon. member for Standerton (Gen. Smuts) calls this—

In listening to speeches of members of the Opposition one felt that they were suffering from what one might call a socialism complex. Suspecting that this would be the case, I referred to a debate which took place in this House in 1872 when the Cape Town-Wellington Railway Purchase Bill was passed. If ever there was a full-blooded socialistic Act, it was that Act. That was the commencement of our State railways. In those days hon. members were not afraid of socialism, and they looked facts in the face and judged them for what they were worth. Not a single speech was made on the lines that hon. members opposite are following this afternoon and this evening. Luckily for this country the measure passed, and that commenced the socialization of our railways in South Africa. A very interesting sequel to that Act of 1872 is to be found in the Auditor-General’s report on the South African Railways for this year. On page 15 reference is made to the purchase of the New Cape Central Railways, and you have a rather interesting contrast in this respect of the Auditor-General between a Government-owned railway and a privately-owned railway. This is what the chief civil engineer’s report was on the condition of this privately-owned railway, a concern run by private interests for their own private ends, the sort of concern that members opposite are so pleased always to support. The chief civil engineer gave his certificate on the 31st July, 1925, and he said this—

In another passage he says—

That was while the line was in the hands of a private concern. Since our railways took this particular line over and ran it along State lines, they have done everything in their power to eliminate the dangerous condition of the line, and above everything else, rates and fares have come down. I want to emphasize this point, because it seems to me the main attack from the Opposition benches has been upon the question of the socialistic taint in this Bill. I would again refer to the report of the departmental committee on the iron and steel trades in England so ably dealt with by the hon. member for Troyeville (Mr. Kentridge) this afternoon. I do not think that the report will suffer in the repetition of certain paragraphs. It says this—

What does it recommend?

It recommends this: The creation of a syndicate for distributing foreign iron ores in Great Britain, and that the Government should take part in the undertaking either by way of a loan or an interest in the undertaking. To this report I find there was only one dissentient. He chiefly dissented on the ground that he was against intervention by the State, which should only take place if overwhelming evidence of its necessity could be proved. That is the position I take up. I submit that the State should interfere in private enterprise when the need is shown. I, for one, cannot understand the type of mind which is prepared to guarantee interest or capital and, at the same time, would eliminate control. The proposition which I am prepared to enunciate, and with which I submit members of the Opposition could agree, is this: That the State should, as a last resort, interest itself in industrial undertakings. In this country we have seen State interest in numerous undertakings. I would refer the hon. member for Yeoville (Mr. Duncan) to an undertaking which has not yet been given as an example in this House, and that is the railway manufacturing workshops. Hon. members on that side, with the exception of the hon. member for Cape Town (Central) (Mr. Jagger) pronounced in favour of the establishment of these workshops. It is difficult to conceive an industry in which competition would be keener. Manufacturing railway workshops would manufacture engines and rolling stock, and competition from overseas would undoubtedly be extraordinarily keen. Now, assuming for a moment the necessity for establishing this steel industry in South Africa, and I submit no one will deny that necessity at this stage, it hardly becomes necessary for me to enumerate the advantages which such an industry will bring to this country. There is the employment that will result, and on that point I would like to answer the hon. member for Newcastle (Mr. Nel), when he wanted to know whether this industry would be a white one or a black one. I would like to give him these figures from the reports which I have studied. There will be four whites employed to every three natives in this industry. I would like the hon. member to give me figures of what the proportion of whites to blacks are in the industry with which he is so concerned. If he cannot give me them, I can give them to him. At Newcastle the figures are one white man to three natives. That is private industry. There will be so much employment given that it must be of advantage to South Africa.

What authority have you for that statement as to the proportion?

I have the authority of the reports laid on the Table of the House, and if the hon. member had studied them as closely as I have done he would find the figures there. Another advantage will be the wages and salaries, which will mean, of course, money in circulation and keeping money in South Africa which otherwise must go abroad, increased revenue to the Treasury and railways, a general fillip to industrial development, and above everything it will result in the replacement of the vanishing gold industry by an industry of even greater value than the one that will have vanished, say, in 30 or 40 or 50 years’ time. Nevertheless, in spite of these advantages, it becomes necessary to examine the essentials necessary for making this undertaking a success. Three essentials appear, from reading the reports; firstly, the existence of the necessary raw materials; secondly, the ability of the proposed industry to compete with the overseas article; and thirdly, that the industry should be established at an economic centre. The first two have been gone into so closely by the experts, that anything I might say would be redundant, but I would like to say a few words with regard to establishing this industry at its proper economic centre. I take particular interest in that subject, because I represent a constituency which will be directly benefited by the establishment of this industry in Pretoria. The experts all agree that the richest ore occurrence is found in what they call the Pretoria series, and Dr. Wagner goes so far as to say that the occurrence in the Pretoria municipal area is one of the richest in the world. All the fluxes necessary for the industry are in the neighbouring dolomite areas; there is the proximity of Pretoria to the Witbank coal fields, from where coal can be obtained at a cheap rate; the water supply is assured, and the municipality itself is prepared to extend every privilege to the industry. There will be no housing difficulties, and all social amenities are to be found in Pretoria for the workmen working in the industry, and that is no small point to the advantage of Pretoria. It cost over one million of money to build a town in which to house the workmen in the Tata iron works when they were established in India in 1913. Perhaps the greatest advantage of all is the proximity of the industry to the greatest market in South Africa, which is Johannesburg, and that is illustrated by the fact that the mines consume over 40 per cent, of iron products in this country. Pretoria has the economic advantage in railway rates of over £220,000 over Waschbank in Natal, and of over £49,000 over Witbank in the Transvaal, based on an industry producing at the rate of 150,000 tons of iron per year. With regard to the speech made by the hon. member for Zoutpansberg (Mr. Pirow), I am one of those who think it was necessary for the hon. member to have pointed out the disadvantages of Newcastle; and the boosting in the press of Newcastle necessitated the speech made by the hon. member. It is undoubtedly an uneconomic proposition, and large scale production has been proved to be the only one that will be successful in this country. The English departmental report, on page 19 states—

The plant in Pretoria is designed to produce 150,000 tons per annum, on a scale that will enable it continually to expand to meet every eventuality. It would be interesting to hear the report of the technical adviser to the Union Steel Corporation (Mr. Reece), who says—

Coming from the technical adviser of the Union Steel Corporation, this seems to be a complete answer to Newcastle to have the industry established there. Finally, I would like to refer this House to the words which appear at the end of Dr. Lilge’s excellent report. He said this—

What an industry like this means to a country can be measured by the fall of imports of steel goods into India after the establishment of the iron industry there. In 1913 the steel imports dropped from 1,018,000 tons to 480,000 tons in 1926. Also the fillip given to the coal industry by reason of the expansion of the steel industry can be measured by the consumption of coal in England. In 1839 in England the coal consumed was 34,000,000, and in 1854 64½ millions, so that from whatever aspect one views the case, it must be a matter of tremendous importance to this country to have the immediate establishment of this industry, and for that reason one feels disappointed at the attitude adopted by the right hon. the member for Standerton (Gen. Smuts) saying—

When did he say that? You must have been asleep.

That must be the obvious implication of the right hon. gentleman’s words. It seems to me in South Africa we are afraid to move, and it is always a question of procrastination—

—rather than direct affairs. I for one, welcome this Bill and the courage of the Minister who has taken charge of it, and I think there is very little doubt, from what I know of the sentiments of the country, that the country will be behind him in this attempt to establish a steel industry on an adequate scale. After all, one can only find out if a thing is right by doing it.

The hon. member who has just sat down seems to have entirely misunderstood the criticism from this side. No criticisms have been offered from here to Government supporting the iron industry or to Pretoria having the iron industry, but what we have said is that Government should give us full information before asking the House to adopt the scheme. We also say that as far as we have been allowed to have any information, the conditions under which the Government have agreed to start the Pretoria industry are most onerous, in fact they amount almost to blackmail. Should anybody in the future read the Bill, they will say that it was a measure intended to nationalize the iron and steel industry, and in order to do that they said to the good people of Pretoria, where there is an excellent prospect of starting a prosperous industry—

Next the Government propose to say to the investor—

I think that the people of Pretoria, if they accept the bribe offered by the Government, will do one of the worst day’s work they have ever done for themselves. If they allow an industry which has all the possibilities of great success to be handed over bound hand and foot to the Government, nobody will regret it as much as the people of Pretoria, who will thereby have transferred a great asset to be frittered away by the Government. If the Government can find any body of people to buy the shares, the investors will lose the money if they accept the Government’s conditions, and such a big failure will set back the development of industry in South Africa for several years. As a matter of fact, to put the position perfectly plain, the Government are paying £2,000,000 in order to experiment in the socialization of industry. If that did not entail any other drawbacks, it might be a cheap thing to pay £2.000,000 in order to wipe off the slate of South Africa for ever all these socialistic ideas. No one on this side of the House has minimized the importance of the iron and steel industry to this or any other country. I believe, indeed, that we on this side of the House have a fuller idea of the importance of that industry than have the members on the other side. The right hon. member for Standerton (Gen. Smuts) has spent years trying to get the industry established on a sound basis. What is going to happen now? All the work of these years is going to be stifled by an experiment in State socialism. I very much doubt if the German and Dutch experts who suggested that 14½ per cent. profit could be made out of the industry would have ventured upon that prophecy if they had known that the industry was to be worked under Government control. These experts would have had a very different idea indeed of the financial prospects of the industry if they knew that it was to be worked under the conditions now proposed. What hope have shareholders under this Bill?

None at all.

I echo the hon. gentleman’s sentiments. After the Government has put up £2,000,000, the first thing it will have to do is to induce the public to subscribe about £3,000,000. What justification has the Minister of Defence for thinking he is going to obtain that money? The peculiarity of his speech in moving the second reading was the extraordinary number of omissions in it; the things that really mattered we heard nothing about. We should like to know if the capital has been underwritten, and what is there to show the investor that the company will really be floated and not sunk? I remember reading a little while ago that, speaking somewhere on the Rand, the Minister of Posts and Telegraphs said he was going to see that no private individual should make any money out of the iron and steel industry.

I said that?

If the Minister had seen the Bill he was perfectly right, for no private individual will make money out of it. He was very honest to tell the public what the position was before they had an opportunity of seeing the Bill.

One of the Minister’s bursts of candour.

Supposing the hon. Minister can get this three million underwritten and gets the capital. What chance is there of success? What chance have these people got to see any dividends or to see their capital back. Under the Bill the shareholders cannot appoint any directors that matter, because there are always five directors against their four. Then the Government is not satisfied with that amount of control, but go further and say: Not only are we going to appoint five directors, but we are not going to allow them to appoint from amongst themselves the man they think fit to be chairman. We are going to appoint the chairman ourselves, and they say further we will not trust them to appoint a managing director—the very man responsible for the success of the business, the technical man who must make the decisions which make for success or failure. They will not trust that to the shareholders. It has got to be a Government appointment. I see one satisfactory provision of this Bill, and that is that no member of Parliament can be a director of this concern, but there is nothing in the Bill to say that a member of Parliament shall not resign his seat and immediately become chairman or managing director of this concern. The only provision is that you cannot be a member for Parliament and be on this board at the same time. The Government even decides the remuneration of the directors. The shareholders are not allowed to decide that. As the right hon. member for Standerton (Gen. Smuts) pointed out, however few shares the Government hold, they have one vote more than the whole of the shareholders put together. That is what my hon. friend the Minister and the members of the cross-benches call freedom. The right of the majority. They have only to keep quiet while the Government puts its foot on their necks. That is the only right given by the gentlemen who are represented by three seats in the Cabinet. The Government controls all the appointments, all the labour and all the conditions of labour. Before they can make any decision they must go to the Government first and ask what they think of the matter. I would like to know, the hon. member for Newcastle (Mr. Nel) asked it, another very important omission. Why are the shareholders not allowed the protection of the Companies Act of 1926? We spent a large portion of last session giving shareholders and the country protection against unscrupulous directors and bad promoters and when we get a Bill of this kind, with all the vices of a bad prospectus, we are told the 1926 Act is abrograted and does not apply. What is the inner meaning of all this? What is the catch? It can be nothing except to take away the last vestige of control from every foolish individual who puts his money in the concern. There is no control in the issue of the prospectus, no list of members has to be provided to the registrar, no one can know who really are the members of this concern and no protection of shareholders in the event of reduction of capital and no provision for the holding of a statutory meeting, and then, of all things, there are no provisions for liquidation. That is a very important provision. The regulations for liquidation should be laid down clearly and distinctly, because unless we are going to vote funds every year to keep this concern afloat, it will sink in a very short time. Why do not the people who put up £750,000 in preference shares have any voting power? They have no vote at all. Then I don’t quite understand his English. If the hon. member will refer to Clause 7, on the top of page 8, he will see these preference shares without vote or power have dividends reducing to 6 per cent. cumulatively after 25 years from date of issue. I have read this upside down and right side up, and have never seen such a statement in any prospectus, and I do not think any one can tell you what is meant. The Afrikaans version may give some enlightenment, but the English version is unintelligible. The Government are going to put up £500.000 in ordinary shares. They have put a limit of 6 per cent. on the dividend—the maximum dividend is 6 per cent. The Minister of Finance will have to find the money and will have to pay 5 per cent. for it, and he is going to loan it out at 1 per cent. advance, and take the whole of the risk of the £500,000. If that is what the Government call a business transaction, I do not think any other business man in the world would think so. For 1 per cent, they are taking all the risk of £500,000. They are taking the whole risk of £1,500,000 without any margin at all. Apparently they are going to put up £1,500,000 plus £500,000 to provide the money to start the concern. As the Bill stands to-day it would be very much better for this country if we were to put up the £2,000,000 on mortgage, providing the right to take over the whole concern if we have to pay up our guarantee to the debenture holders and leave the company entirely free to exercise all the powers under the ordinary limited liability laws. You then know that you are risking £2,000,000, you have got a lien on the £2,000,000 if anything goes wrong, and you are, at any rate, giving the company freedom to make profit if they can. You are giving it an open fair chance in the world’s market to make a profit, and you are very much more likely to come out with your £2,000,000 at the end of ten years than you are under the present Bill. It seems to me that this Government has sacrificed all financial profit in this concern to which it is justly entitled in exchange for socialistic conditions of control. They are not getting any financial return on their money, and they are taking grave risks and they are doing it all in order to get socialistic conditions of control. I would ask the Government, do they thoroughly appreciate what the effect of this Bill is going to be on investments in this country? Do they recognize that if you crush the private enterprise which is at present working, the responsibility does not end there? You have not finished it by simply crushing that enterprise. You are crushing all private enterprise in South Africa, because the capitalist who would otherwise invest money in this country is going to fight shy of this country for years to come. It is not one industry you are crushing; you are crushing the chances of other industries that would otherwise be founded from time to time. Under this system your great difficulty will be that you will never be able to get decisions in time to carry out your undertakings. The managing director and the chairman will always have the shadow of a Minister behind them, and be afraid and hampered in carrying on any of the work, and the great problem that is going to face this industry, the key problem is to find a market for its output. Unless you give the board and the managing director absolute freedom to find their markets, and handle and take advantage of their markets, you are going to ruin that company, even though its product is satisfactory. I cannot see why the members on the other side will not and do not accept the amendment suggested by the hon. member for Standerton Gen. Smuts), and thoroughly thrash this matter out in Select Committee before we make the gravest mistake in our lives.

I think I good many remarks and observations have been made since the right hon. the member for Standerton (Gen. Smuts) spoke this afternoon, which have gone rather far afield. I propose dealing with the points that he dealt with this afternoon. I want to make this observation, that the right hon. gentleman has evidently not studied his brief very well in certain material respects. It is, of course, a difficult subject, and if you go to the root of the matter, very few of us are competent to speak upon it. I do not profess to be competent to speak about it in many respects. I do not think a single member of this House will make bold to say that he is competent to deal with all the difficult aspects of a big industry like this.

You can deal with the Bill all right.

And I propose doing so. One thing has resulted from the fact that the right hon. member for Standerton (Gen. Smuts) opened the debate this afternoon, and that is that he has conceded the whole clause so far as the principal object of the Bill is concerned. The object has been conceded; the modus has been criticized, and that is, comparatively speaking, a subordinate matter. I do not want to detract from the importance of the financial aspect, but I am glad to find that the right hon. member has admitted that this industry should be established and that the site should be Pretoria, although the site is also, comparatively speaking, a secondary consideration. But it was rather amusing to notice the conflict, that old conflict, between the right hon. member and the member for Cape Town (Central) (Mr. Jagger) on matters industrial emerging again. Really it is amusing to notice the material variations of conceptions on the part of the right hon. member and some of his own party. For instance, the hon. member for Parktown (Mr. Rockey) stigmatized this effort as clap-trap. What is the value of such criticism when you have such material variations? I come to the points raised by the right hon. member. He says there has been a dearth of information. He says we have deliberately sat on this report for two years and not divulged it. It is true we have not published it, but I can tell him this, that a prominent director of the Union Steel Corporation has practically sat on the doorstep of the Government for the last two and a half years, and he has been constantly warned and told that the Government had not arrived at a decision; that it was considering the whole matter, and that it was an important matter that might involve a very large sum of money, and that whatever the Union Steel Corporation Limited might contemplate they must always bear in mind that if the Government came to a decision it would be guided by only one criterion, and that was what was in the interests of the country; and if the effect of that criterion was unfortunately to injure or damage Vereeniging or Newcastle or both, that it would be regrettable, but it could not be helped. The hon. member for South Peninsula (Sir Drummond Chaplin) admitted that the interests of the State should overrule the interests of any private industry existing today, and that is the only sound basis to go upon, and I take it the right hon. member for Standerton accepts that basis also. It is the Only inference you can draw from his argument.

Just be fair.

I am coming to the “fair” aspect in a moment. It only shows how careful we were before we actually decided the matter and decided to act upon the report, and I am glad no attack has been made upon these reports. The right hon. member made much of the fact that we had, last year, introduced an Act shifting forward the years during which the bounty might be drawn under the Act of 1922. I do not see any inconsistency whatever in that. Assuming the effect of this Bill will be to crush Vereeniging out of existence then they can never become entitled to the bounty, and therefore, there can be no question of two concurrent things, the bounty and the corporation.

Then the Act you passed last year is a mere mockery.

No, it is not a mockery, but if we establish the corporation—and that main point is conceded by the right hon. member— and the effect is to wipe out Vereeniging, then there is nothing to pay the bounty to. You may laugh, but it is perfectly obvious and perfectly moral.

And perfectly callous.

On the other hand, if Vereeniging can manage to brave the storm there is no reason, seeing that the right hon. member was responsible for the introduction of the Act, why the bounty should not be paid, but it does not follow for a moment (and I dare the right hon. member to tell this House that when he in 1922 introduced that Act and authorized the Government to pay that bounty he for ever abandoned and renounced the right to bring forward legislation of this nature). That big works at Pretoria should not be established by others or by the State solely or as participator in a scheme for such a key industry. There has been no volte face at all. I agree with him that there is a place for only one big works, and that is what the Government has decided. That is the technical advice, and that is what our common sense points to, so that it is rather far-fetched to speak of this policy being fatuous and a waste of the taxpayers’ money. And then he turns round in the same breath and after approving of the report, and after surrendering on the main issue, the right hon. gentleman has the effrontery, shall I say, to suggest that we must go out of our way to absorb Newcastle and Vereeniging. Our advice, and the advice in the report of which he so strongly approves, is that both Newcastle and Vereeniging are economically unsound. Now I ask him, are we going to waste the taxpayers’ money, and embark upon a “fatuous” policy in propping up Newcastle and Vereeniging if they are economically unsound?

Why wipe them out?

It is not our object to wipe them out, but if this is the effect of the Bill we cannot help it, and I am glad that the hon. member for South Peninsula (Sir Drummond Chaplin) admitted that. Any business man must admit that. In ordinary business life any company or concern is exposed to competition, and there is no moral obligation on the part of the State—

It is not an obligation.

To act in any way otherwise than ordinary people competing in business, so long as the action is honest and fair.

It is not fair.

Then we have the old bogey of frightening away capital. We have had that so often that I need not dwell upon that. It has been sufficiently refuted by facts and events since this Government occupied office.

Principally in the provincial council elections.

The right hon. gentleman says—

On what basis does he suggest this if we have come to the conclusion that both these concerns are economically unsound? Then the right hon. gentleman says that at this rate no industry will be safe, of course generalizing from the particular, a general sweeping assertion such as we always get from him. The country does appreciate that we ought to have to-day a key industry in regard to which the hon. member himself said that all strong countries must possess an iron and steel backbone. That is why we are doing what we are doing

It is your method that is quite wrong.

We have got rid of the objections to the object of the Bill and only the method is being attacked and, that is broadly speaking a secondary matter.

Why can’t we get that right?

There is an enormous difference between what we propose in these exceptional circumstances of an essential key industry, and what one would ordinarily do. We have to do with a key industry an industry which will give rise to many subsidiary industries and will give this country a push forward such as it has never had before. The right hon. gentleman then proceeded to criticize the financial arrangements and said the order was all wrong, because we propose first of all getting money on debentures, then obtaining money for the preference shares, leaving the ordinary shares for subscription in the last instance. He said we were putting the cart before the horse, but he did not state his reason for this statement. Well, I think the reason for the Government proposals are pretty obvious and can be gathered from the face of the Bill. The persons who will draw the 5½ per cent. interest on the debentures have that and nothing else to look forward to. The others who subscribe for the ordinary shares—at the fag end so to say of a period of three and a half to four years, when the industry is about to start operations—have the opportunity of getting a very substantial dividend if success follows, and you cannot compare that prospective dividend to the limitation of 5½ per cent. in the case of the debentures. Therefore it is perfectly natural that the public will subscribe for the ordinary shares.

Does any company start issuing debentures before it issues shares?

We are not tied down by precedent. The whole of this Bill is an exceptional one. Really I don’t think there is any point in the fact that as a rule debentures are issued later on. These circumstances are exceptional. The right hon. member (Gen. Smuts) says we are passing this Bill not on public confidence but on Government aid. The report of the Board of Trade of England shows that even in England they have long ago come to the conclusion that these things can succeed only with Government aid.

No, you are wrong.

For the last fifteen years no complete company has been established in England for iron and steel and they have come to realize that Government aid is necessary, that it may be a case of Government participation and Government control. It is so in Germany, Holland, and the Dutch Indies, and such propositions have been attended with a considerable amount of success. Then his other grievance was, we have a Government majority and the ordinary shareholders will be everlastingly subject to Government control; that we have five Government directors at the start, and there being no private shareholders at that stage. I suppose he means the ordinary shares not being subscribed for, it will be a Government concern.

Is that not so?

Yes, he who pays must call the tune. In any case it is a subordinate matter. The Government are prepared to consider, in Committee, any suggestion put forward. After the second reading this Bill will be referred to a Select Committee, and these things can be considered then. Hon. members opposite have really been dealing with the second reading as though it was the committee stage. The hon. member said there was no comparison between this Bill and the Electricity Commission. Well, we have the Railways and the Reserve Bank and the Electricity Act. In answer to the observation of the hon. member for South Peninsula (Sir Drummond Chaplin) I want to refer him to Sections 3 and 7 of the Electricity Act, No. 42 of 1922, where you have the widest possible powers given to the Electricity Commission. Mention has been made also of the objects of the proposed corporation in this Bill being very wide. You take the articles of association of the most model private company and you see at once you can, as regards its objects and powers, travel from China to Peru. When members opposite deal in the committee stage, with any particular object they think too wide in which the powers of the corporation should be contracted, we shall be willing to deal with it then. I think they will find it difficult to contract the objects of the corporation set forth in the Bill. The right hon. member (Gen. Smuts) went on to say—

He said these things, but they are delightfully inconsistent because if we give financial support then what comes of the argument to leave it to private enterprise entirely? What becomes of this plea on behalf of Newcastle and Vereeniging? No, this opportunity is being seized simply to trot out the old and one of the very few arguments that gentlemen opposite have of “State socialism.” Then the statement that we have introduced this Bill merely to placate certain interests on the Government benches is so ridiculous that it repudiates itself. Ever since this Government attained to office this question of iron and steel works in Pretoria or any other suitable place has been a matter of serious consideration. I have constantly dealt with the matter, it has been constantly before the Cabinet and every Minister in the Cabinet has taken an active interest in it from the very start, and the mere suggestion that it has been imposed upon us by our Labour colleagues is too ridiculous for words. I do not care what opinions they may have expressed individually previously. This matter would have been in my hands solely as regards its introduction into the House but for the circumstances that have already been mentioned by my hon. colleague the Minister of Defence. I want to tell this House about an interview that I had with Major Aubrey Butler, who represents the Union Steel Corporation, and that happened only about a week ago. My hon. colleague the Minister of Defence was present. What was the result of that interview? Mr. Butler is also concerned about Newcasle and Vereeniging. Naturally, we can understand that concern. It is no light thing for this company to have this occurring, although, as I say, I warned Mr. Isaac Lewis for the last two and a half years that if he increased the capital of his company, if he enlarged his works he was doing so with his eyes open and at his own risk, and that the Government would not consider itself morally bound in any way, even though the Act of 1922 made provision for bounties, to refrain from taking such action as it might deem necessary in the interests of the State. What did Mr. Butler admit? He admitted first of all that large iron and steel works are now necessary or, at any rate, that the time is impending when they should be erected. Secondly, he admitted that his corporation, the Union Steel Corporation, was revolving in its own mind the desirability of erecting such large works at Pretoria. They were still considering whether Pretoria should be the site. Thirdly, he admitted that Newcastle, according to their own calculations, had a life of only ten years. He also admitted that Newcastle would, if Pretoria were the place for establishing their large works practically have to be scrapped and might be utilised for the manufacture of ferromanganese. He admitted that under similar circumstances Vereeniging could only be utilized for finishing off. It was pointed out to him that, if that were the case, it was perfectly open to the Union Steel Corporation to take part in this present Government scheme and put money into it, as indeed ex hypothesis, on Mr. Butler’s own showing, they would have to do in any case if they erected big works in Pretoria. The only answer to that was yes, but you have this Government control. In any case, he admitted that big capital would have to be provided by the present Union Steel Corporation if they decided upon establishing big works in Pretoria or anywhere else. He had also to admit that the Vereeniging works were by far no model—they were not the worst in the world, but no one ventured to call them first-class works, or anything in the way of being adequate, taking into consideration the circumstances of the country. He also admitted that the blast furnace in Natal was an experiment, and his main grievance, or so it appeared to me, he did not say this in so many words, was that we, by our action, had usurped the chance the Union Steel Corporation had of utilizing Pretoria to establish their big works; in other words, the grievance is we have stepped in their place, as it were, in erecting big works at Pretoria, and we should have left the chance to them. Now we come to the main statement of our technical advisers, that Newcastle and Vereeniging are economically unsound. What is the opinion of the Germans in their report of Newcastle ? They say it was an unpardonable folly to put up a blast furnace in Newcastle. The report is available, and the right hon. member for Standerton (Gen. Smuts) and the hon. member for Cape Town (Central) (Mr. Jagger) have read it. Of Kromdraai they say—

So much for Kromdraai. If this is the case, what becomes of Vereeniging, which has to rely upon Newcastle for ore and pig? But next to our own technical advisers and expert, Mr. A. K. Rees has already been quoted this evening by the hon. member for Pretoria (Central) (Mr. te Water). Now we come to Dr. Percy Wagner, one of the ablest geologists, whose services we have unfortunately lately lost. He says in a memorandum or report on the Newcastle Iron Works, dated 18th July, 1926, a copy of which has been laid on the Table of the House—

He goes on to compare statistics, and says that in the case of Newcastle assembling the raw materials and transporting pig iron would cost 36s. 7d. per ton, as compared with 17s. 11d. at Pretoria, taking Germiston as the centre of distribution. He goes on to say—

Then he deals with the available resources of iron ore in Natal, and he goes on to say—

He goes on—

Then he concludes his remarks by saying—

The hon. member for Cape Town Central (Mr. Jagger) this afternoon said these words have been quoted, but no reason had been assigned for the opinion thus expressed. This document is on the Table of the House, and every line is a reason for that statement. Now he (Dr. Wagner) says—

If there is any question of dealing fairly with Newcastle and Vereeniging then I submit that the onus lies on them to approach the Government and to make proposals. There is no obligation whatsoever on the part of the Government to go to them with any proposition. We are quite willing to consider any proposals they may make, and to consider them sympathetically, but we cannot answer any appeals made ad misericordiam, and from a feeling of sentiment waste the taxpayers’ money. Dr. Wagner wrote this report on July 18th, 1926, but I find that in the time of the right hon. the Leader of the Opposition (Gen. Smuts), Dr. Wagner also wrote a report, or a memorandum, dated July 18th, 1923, directed to the Secretary for Mines and Industries, in which he refers to what he and Professor Stanley had already written on the subject of iron and steel, in 1919 Dr. Wagner says it was very gratifying to be able to record that their conclusions had received independent endorsement from Mr. A. K. Rees, engineer to the Dowlais Coal, Iron and Steel Company, Mr. E. Bury, consulting engineer to the Skinningove Iron Works, and consultant to the Tata Iron Mines, India, and the representative of Messrs. Armstrong, Whitworth and Company. In the same report he says that Newcastle is altogether out of it, and as a matter of fact if we look at the original memoranda which are in print, written by Dr. Wagner in 1919, we shall find that they have been wonderfully confirmed by the German experts, although presumably they never had his memorandum before him. Now it is said that the hon. member for Zoutpansberg (Mr. Pirow) has abused Newcastle and Vereeniging. My whole speech shows that I have not been abusing them to-night. Have I done so, or has the hon. member for Zoutpansberg (Mr. Pirow) done so ? We have simply stated the clear and definite opinions of men who are presumed to be able to judge. Then the point was raised—I think by the hon. member for South Peninsula (Sir Drummond Chaplin) why did this thing go begging? The answer is very obvious—for years past no capital could be secured. The right hon. member (Gen. Smuts) knows that. Attempts were made to get private capital, but it could not be done. For years past the public of England have been most averse to investing capital in iron and steel companies, even in England itself. England is not going to encourage the opening up of any industry in South Africa or elsewhere which may, in the future, check the export of its products. [Time limit.]

It would appear that the Minister of Mines and Industries has a great deal of information to impart to the House, of the utmost value.

So have we all.

I move—

Agreed to.

It is a fact, and the right hon. member (Gen. Smuts) will know about it too, that under the Trade Facilities Act of England, under which millions have been loaned to British possessions and Dominions for industrial purposes, only with a view of obtaining a market for English products, and quite naturally too, that the Board of Trade of England recommended the loan for our big works in South Africa and it was proposed on fairly onerous terms, namely that, they would advance 1½ millions on the conditions that we, as a Government advanced 1½ millions, and that the order for machinery was placed in England, and even then the British Treasury turned the proposition down, actuated by the consideration that they were not going to allow the establishment of an industry which was going to come into competition with their own industries were already badly off. Do not let us cry stinking fish about this business. That is the impression several members have made on the opposite side. They are already crying stinking fish in regard to the establishment of important industries in our country. The hon. member for Cape Town (Central) (Mr. Jagger) has elaborated the point of markets and the opportunity for an export trade and he has been studying this German report thoroughly and carefully. One of the first things that strikes one on reading it is that they have made the report recommending the proposition on the basis of our own internal requirements, on the basis of our own home consumption, and it has nothing to do with our export trade. If one day we succeed in having an export trade, well and good. They calculated this Corporation would produce 132,000 tons of steel and on that basis it would be a very payable proposition. Now, as was rightly interrupted by the Minister of Finance, we have already advanced (although under the Act of 1922 the Electricity Commission is competent to borrow money in a way set forth under the Act) £4,000,000 to the Electricity Commission. I want to know what is the difference in principle between the two cases. The hon. member for Cape Town (Central) (Mr. Jagger) said that one day we would have to put up the tariff and people would have to pay more. I hope no such necessity will arise, but the Bill distinctly limits the margin of profit. Beyond a certain percentage no dividend can be paid and if there is any surplus it must go to reduce the price of iron and steel in the country. The whole object of this is to produce the raw material for subsidiary industries in the country such as wire drawing, corrugated iron and similar industries. The hon. member for South Peninsula (Sir Drummond Chaplin) has made the statement that he was not satisfied private enterprise could not get the money. The proof of the pudding lies in the eating. The money could not be raised by private enterprise. This must have been realized some years ago when he (Gen. Smuts) was still Prime Minister of this country.

Business interrupted by the Deputy-Speaker at 10.55 p.m.; debate to be resumed on 2nd March.

The DEPUTY-SPEAKER adjourned the House at 10.56 p.m.