as chairman, brought up the report of the Select Committee on the Wesleyan Methodist Church (Private) Bill, reporting the Bill with amendments, and specially with an alteration to the Preamble, in accordance with the leave granted by the House on 1st March, 1927.

Report and evidence to be printed; Bill to be read a second time on 18th March.

announced that the Committee on Standing Rules and Orders had discharged Mr. Bergh from service on the Select Committee on Pensions, Grants and Gratuities and had appointed Mr. Terreblanche in his stead.

I move—

seconded.

I think we should be given a little more time.

Second reading on 14th March.

From what has already transpired and from what I and others have previously said, I think it is pretty clear that the second reading of this Bill must take place before there is any reference to a select committee. I want to resume where I left off last time. I was dealing with the criticism of hon. members opposite and especially of the right hon. leader of the Opposition in regard to the financial scheme embodied in the Bill. I want to say this, that no constructive criticism has been offered at all. Let us have it if there is any. Hon. members profess to share our view that this must be a national matter; let us have the financial scheme that they propound or propose, and we will answer their proposal in no captious spirit. The right hon. member did not deign to substitute or suggest anything in the place of what he has described as a fatuous scheme.

He suggested the Select Committee.

I would like the right hon. member through some other member of his party to tell us what they propose should be the financial scheme. Our advice is that the scheme as set forth in the Bill is sound, and that the fact that we propose issuing debentures as a start, seeing that the credit of the State is involved and is a security to the public, is in the circumstances fully justified. The right hon. member asked me if I had ever heard of a case where debentures were issued in the first place. I told him frankly, no; I do not know; there may be cases. I certainly admit quite candidly that it is not the usual procedure, but I want in turn to ask him, has he never heard of cases where a company’s original capital was fully subscribed and shares issued; where afterwards debentures were issued and where, after that, the capital of the company was increased and money obtained by the issue of shares increasing the capital of the company. Has he never heard of cases where a company is formed and shares are held in reserve and where the reserve shares were not issued until after the debentures had been issued and loans have been raised on debentures ? Surely he must know that is a thing of comparatively frequent occurrence. I can tell the House that people are already anxious to come in.

Guaranteed on the debentures ?

No, not alone on the debentures. Certainly the public are anxious to come in, and I tell the House that if the ordinary shares are not subscribed for this, Government is prepared to see the thing through. We are so convinced of the necessity of an essential key industry to the future prosperity and development of the industrial policy of this country that we are prepared to see the matter right through. With regard to the Act passed last year, I want to remind the right hon. member that the Government had not finally decided its policy.

When are you going to do it ?

We have decided our policy, and it is in the Bill before the House.

You give both a bounty and a guarantee.

I have explained the position with regard to that, and it is clear. As to the authority (Dr. Shadwell) quoted by the hon. member for Cape Town (Central) (Mr. Jagger), I ask does he not know of prominent firms in England which have practically become bankrupt in connection with iron and steel ? He asked what more can Vereeniging do than it is doing ? The grievance with regard to Vereeniging is that they have a glut of pig iron but this is because they are not converting it into steel, and that is what the country wants. That is what we propose to do with the industry in Pretoria. We have this ridiculous and uneconomic position that your blast furnace is in one place and your mills in another; the whole thing is uneconomic from a to z. The hon. member for South Peninsula (Sir Drummond Chaplin) has pointed out that, in his opinion, the objects of the corporation it is proposed to form under Clause 2 of the Bill are too wide. Major Butler was kind enough before lunch to lend me the memorandum and the articles of association of the Union Steel Corporation which exactly confirms what I said to the House last time. You can look at the articles of association of any decent company, and you see that they are practically worldwide.

Except to declare war.

Except to declare war, as my hon. colleague reminds me.

You need not labour that.

I am glad to hear the right hon. gentleman say that. It is for the Committee to deal with these little criticisms or defects —if they are indeed defects—

It is going to a select committee ?

After the second reading, yes. Can hon. members point to a single instance where this Government or the previous Government—I want to give them every credit—have ever interfered with the operations of the Electricity Commission ? Look at the large power stations they have put up and are putting up—here, at Colenso, Congella and Witbank.

You are taking far wider powers.

Oh, no. In Clauses 3 and 7 of the Electricity Act, I have already pointed out, the powers are as wide as you can conceive. I would like the hon. member, to point to a concrete instance.

You have power to fix the wages under this Bill.

The Government does not propose to interfere at any time with the corporation. It is proposed to run the corporation as a business proposition on business lines, but because the State is interested to the extent of £2,000,000, and as anticipated may possibly become further interested (which I do not think is likely to occur) it is necessary that the State should have protection and that there should be control if that contingency arises in connection with the ordinary shares—and there has been a precedent for such control. Reference is also made to Clause 17, and it was asked, why does this clause exclude the operations of the ordinary Companies Act ? Surely it must be pretty obvious that it was necessary to create a special corporation, and under these circumstances, it is impossible prima facie to say that the whole of the Companies Act will be applicable. It is clear that in a case like this there are parts of the Act which cannot be applicable. When the corporation is formed and the board has gone into matters, it will have to consider and the Government will have to consider exercising the powers in Clause 17 (2) of the Bill to apply to such sections or chapters of the Companies Act as may be desirable.

What about Clause 16?

Clause 16 deals with powers to make regulations, and if there are powers for making the regulations which are too wide, it is a matter that can be rectified. We are not too proud to take hints—otherwise there would be no necessity for any Opposition in the House. I hope the Opposition realize they ought to be there for some useful purpose. No, the “final” aspect of the Bill has been conceded by the right hon. member for Standerton, it is only on the “ moral ” aspect that he has endeavoured to attack the measure.

The Minister was about to continue his speech in Dutch.

I wish to draw the Minister’s attention to the fact that only the Minister in charge of the Bill may make use of both languages.

I beg to apologize for this little lapse, and I apologize to the House. I want to tell the hon. member for Heidelberg (Mr. de Wet) that he should not be unduly apprehensive about Vereeniging. I have already stated that the Government will deal as reasonably and sympathetically as possible with Newcastle and Vereeniging, and I want to remind him of what I stated concerning the interview I had with Major Butler—that under the Union Steel Corporation’s own scheme it would have occurred that by establishing their big works elsewhere, Newcastle and Vereeniging would necessarily have had to suffer, and if in that case they would have had to suffer, why should hon. members be so apprehensive, when the Government take steps? The effect in both cases would have been much the same.

In this case it is with public money.

That is quite another question.

It does not change the morality.

Then the hon. member for Newcastle (Mr. Nel) stated that we should have consulted the Union Steel Corporation re Newcastle and Vereeniging. Well, this is a new doctrine which is being enunciated. I do not know that such procedure has ever been suggested before, still less followed. Newcastle has been given every consideration in the past. Mr. Eaton approached the right hon. the leader of the Opposition when he was in power requesting that an official should be sent to inspect the Prestwick and other places. The previous Government did not feel justified in advancing money to Mr. Eaton for Newcastle. The hon. member for Newcastle knows that after this Government came into power we were approached and we got competent officers to report on the Prestwick and the Newcastle propositions.

We never saw the report.

As a rule these reports are confidential. We sent another inspector at their special instance and Mr. Eaton said—

We did so at considerable expense to the Government and the report was equally unfavourable. Quite recently we have had a report by Mr. Milne, the Inspector of Mines in Natal, on the situation. The report is dated February 23, 1927, and the situation is exactly the same. There is no material difference, the report being practically the same as his report of June, 1924. Mr. Milne says in this report—

Mr. Milne, in his report of June, 1924, said—

But the output we require is not 50,000 tons of pig iron per annum, but 150,000 tons. Mr. Milne’s calculation of 15½ years must, therefore, be divided by three, and thus the furnace at Newcastle can be kept going for only five years and a fraction. This is reliable information we have about Newcastle. Another point is this. It has been laid down definitely by all competent authorities that it is hopeless to build up works on successive accretions—there is only one way to do the thing: you must have sufficient capital to ensure the establishment ab initio of works on a large scale, and there is room in this country for only one large works. I am, moreover, advised that the steel plant and rolling mills at Vereeniging to-day are in material respects practically obsolete and inadequate. As regards putting off these matters indefinitely, I would remind hon. members of the view held by Sir Robert Kotzé concerning the life of the mines on the Rand. The mines are big consumers of steel and iron, and we must put the thing through while we still have the mines working at full tilt. The mines have not yet reached their zenith. Last year we had a better year than in 1925, and 1925 was the best year the mines had ever had up to that date. I am glad to say, however, that the present Government Mining Engineer differs very materially from Sir Robert Kotzé as to the probable life of the gold mines, and he has a far more favourable view of the mines on the Rand than that entertained by Sir Robert Kotzé. The Bill makes provision for the limitation of dividends, and that is a safeguard to the public. At the same time a fair margin is left—ten per cent, for the preference shares, and twelve and a half per cent, for the ordinary shares, and that is a great inducement to the public. The main object is to induce the establishment of subsidiary industries. There is nothing that smacks of the laws of the Medes and the Persians in the Bill. We are insistent on the establishment of these big works, but we welcome any genuine criticism as regards the mode of reaching our objective. These subsidiary matters are not “ articula stantis aut cadentis.” We regard the whole thing as a national matter, and we make an appeal to hon. members opposite—to some I need not appeal at all, because they are convinced that the thing is right and necessary and will be beneficial, and that the permanent interest of the country will be ensured by this measure—I make an appeal to other hon. members, and especially to those who are rather captious in their criticism, to regard this as a national matter, and not to regard it from a party standpoint. I have to thank the House for the indulgence that it has shown me in allowing me to speak for more than the allotted time.

The Minister of Mines and Industries has, with acute penetration, discovered from the speech of the right hon. member for Standerton (Gen. Smuts) several facts which are fairly obvious. He stated that the right hon. member for Standerton had conceded a great part of the Bill in that he recognized the importance from a national standpoint of an iron and steel industry; that he had admitted there was room for one industry only, and that he had further admitted that economically the site for it was Pretoria. Fourthly, in regard to the required Government support, the only difference between them and us was the manner in which the support was to be given. Take the first point, the recognition of the importance of this. The records of the right hon. member for Standerton in connection with this are open to the whole world, and he asked for years for the establishment, of such an industry in the interests of the country. Having tried British people who were interested, he then went to Germany, and it is owing to the right hon. gentleman that the German report was ever before the country at all. It is perfectly obvious he therefore recognizes the importance of this matter. He went so far that some of us thought he was going a little too far. The House will remember that the right hon. gentleman brought up the question of bounties, showing that he thought there was room only for one industry, and that was shown also with regard to the placing of a great deal of the railway order. That also was obvious. Then, with regard to the question of Pretoria being economically the place for the industry, I think after reading that particularly able German report, there could be no other question but that Pretoria was the place. Then with regard to Government support, that is where there is a difference between that side of the House and this side. The Minister will recognize there is an essential difference in the way these matters are being looked upon, particularly since the Government has been infected with the bacillus of labour.

Don’t put it that way. Say inoculated.

This side thought it was the duty of the Government to provide every facility they could for the people to help themselves. They showed that in the industrial legislation, where you had conciliation boards established so that they could come to conclusions themselves. This Government, infected with the labour bacillus—

It is a bacillus of long life.

That is one up to the hon. member. This Government interferes in these things, and the difference is, we stand for Government help to industries in a way that workers can help themselves, but on the other side it is direct Government control, and that is where the difference of opinion has come in. I do not think anything the Minister has said has gone to prove that there is no need for further inquiry before the second reading of this Bill is passed. The Minister gave as one of his reasons that the Government had had the report before them for two years, and yet in the same breath he wishes us to have it for one week, and says that is sufficient to come to a conclusion on the report.

Are you not sufficiently intelligent on the question ?

Yes, but we are too modest to be always saying so. It is only reasonable that more time should be given, seeing that the Ministry of all the talents has taken two years to digest it.

You admit the case is proved by the report ?

But what [ said was that so far as one could judge from the report, from a cursory glance at the report, it said Pretoria is economically the place where the industry should be started, but apart from that there are other points to be understood. I am sorry I did not make myself clear to the hon. member for Brakpan (Mr. Waterston). What I said was that the Minister need not think this would be an unsympathetic inquiry, but I submit that the need for the inquiry is perfectly clear. Not only Government money, but South African reputation is at stake. The public here, and possibly from overseas, are to be asked to put money in, and on the legal information given, so far, anyone putting money in will do so because the Government is up to its neck in this matter. The Government reputation is therefore at stake, as well as Government money. It is not ordinary support that is being offered in this Bill, but the Government is taking control, and as I said, the Government is up to the neck, thereby making it very necessary to have a further inquiry. Turning to the report for a few minutes, I would like to point out, with regard to the German report, these gentlemen were fully qualified to report on what could be produced here, but what were their qualifications to report on what could be done with the output ? That is one of the most important things in connection with this question. From talks I had with people in England thinking of putting money in this concern, they say that one of the things that weighed with them in putting their money in it was that they could not see the facilities for disposing of the output of the minimum production in order to run it economically. There seem to me in the report, in regard to this matter and the speeches of the two Ministers who have addressed the House, to be two assumptions. One is that the establishment of an iron and steel industry here is going to lead to the transfer of the whole of the business in certain directions to this country. I have seen a great many things in my time, a great many people starting in business who are going to do the whole of the business of a community. I have never seen them come off. No one is able to get the transfer of the whole of the business. I think there was a time when it was said that the De Beers Company were going to do all the diamond business of the world. It has not come off.

The German report does not contemplate doing the whole of the business.

Not the whole, it is true, but it does contemplate taking a full two-thirds in certain articles. It is said that the import is 183,000 tons, and they expect to do about 132,000 tons. You had in the tobacco industry a concern that was going to do the whole business of the country. It has not come off. I think you had in the Western Province some people who had the idea of collaring and doing the whole of the wine and brandy industry. I think the only thing that came off was disaster. I do not know whether Ministers realize that the industries spoken of as subsidiary industries are each one of them highly specialized, and that in other parts of the world no one tries to do them all through one industry. Take, for instance, fencing wire, which the report supposes will be produced in this country. Factories that make, for instance, smooth wire do not make at the same time barbed wire, and factories that make barbed wire do not make smooth wire. The same with regard to rolled and drawn wire. You will find that people in this country who are going to fence their farms and who want to get a really good fence will have English wire, and will pay something more for it because of its reliability. If my hon. friend the Minister of Railways were here, I would commend that to him in respect of some of his purchases. The same applies to galvanized corrugated iron. There is an assumption that galvanized corrugated iron will be made in this country. This is a highly specialized industry. Even in other big manufacturing countries in the world, there are only certain factories that make it. The bulk of it comes from England, and does not come all from one factory. If we act on the assumption that practically you have only got to start your iron and steel works and these other subsidiary industries are going to follow, we are acting on an assumption which, in my opinion, will not hold for a minute. The idea of the Minister may be that by putting on extra duties and by protection, the trade will be forced into these channels. Then I would like to ask whether the farmers of this country are going to pay more for a wire fence that they want to put up in order to keep up the iron and steel industry. I do not think that would be a sound position. I do not want to go into the matter of finance. I have never had anything to do with the floating of companies, and I hope. I never shall have, but as an ordinary business man, if I had any money to invest, which I have not, I would not be prepared to put it into this concern on this basis. I do not propose to say more on the financial aspect, but I am afraid, and will continue to be afraid until satisfied by a thorough inquiry, that in this matter we are again in danger of going ahead of our times. There are two matters on which we have undoubtedly gone ahead of the country, and those are the grain elevators and electrification. They could both of them well have waited for another term of years. Here there is again a danger of our plunging into a thing, because we believe it would be a good thing to have this industry, without making the necessary inquiries, and I think that the inquiry asked for by the right hon. gentleman (Gen. Smuts) should be granted. I could give another reason. This scheme is going to absorb necessarily a considerable amount of the capital of the country. There are things which we know in this country are crying out for capital. Even in our railways and harbours we know that every year there is a demand on the administration for more capital expenditure than the Minister can see his way to grant, and if that is the case and we are now to put an unlimited amount of money into this scheme, it is going to cripple other directions which are crying out for capital. I think that a case has been made out for acceding to the amendment of the right hon. gentleman, and I trust that it will be acceded to.

In connection with this matter the attitude of the Opposition is very instructive and very strange. We see that very largely the attack seems to be on the question of State control, the question of the control which the Government will have in this industry. In that respect they seem to be very much at divergence from their supporters in the country. Recently we had a by-election at Bethlehem, and there the South African party candidate who, I believe, stood as candidate on the recommendation of the right hon. the member for Standerton (Gen Smuts)—Mr. Davel— made one of the planks of his platform State industries. In the presence of Colonel Mentz, the previous Minister, he stated that that was one strong plank in his platform, and he mentioned the Harrismith woollen mill as an example of what he would bring under State control. But, of course, there are always an abundance of firewoods after an election, when so many planks are discarded.

You have had good experience of that !

We have all had experience of it, I agree, but the Opposition is as much at fault as we are. The hon. member for Port Elizabeth (South) (Sir William Macintosh) said that we have been infected with the Labour bacillus and other speakers on his side have blamed this whole thing on to Moscow. They say the Labour people are to blame for this. I would like to read something for the benefit of hon. members opposite from a paper called “ The Friend,” published at Bloemfontein and supporting the South African party. This paper contained, a few days ago, an article headed “ The State as Ironmaster,” in which it was stated—

It cites this present Bill as an outstanding example! The paper also states that State control of the iron and steel industry is indispensable and, indeed, of many other key industries, and adds—

Now we learn in this House that we are following Labour. The press organs in the country tell us that we are following in the footsteps of the South African party. Where are we?

Yes, where are we?

I will tell the hon. member where we are not. We are not following in the footsteps of the South African party, as is shown by the speeches made the other day, when the hon. member for Standerton said that this whole thing was stupid, fatuous and silly. No, the times are past for us to shudder at anything in the nature of nationalization of a key industry. In the past Liberals and Conservatives in Great Britain shuddered when they heard of the nationalization of railways and mines. Not more than half a century ago, when people spoke of workers’ trades unions the Liberals and Conservatives in England shuddered at such a thing. To-day these things are accepted facts in our economic life. We should not to-day generalize and condemn every scheme just for the simple reason that we think it comes from Moscow. Let us take each question on its own merits. Let us take, for instance, the British Government. The British nation certainly is not Moscow-inclined. The British Government, although a Conservative Government, have been concerned in other State enterprises and in State investments, the very thing objected to by the hon. member for Cape Town (Central) (Mr. Jagger). They have followed a policy of imperial self-sufficiency. The British Government has made investments in certain enterprises which the hon. member for Cape Town (Central) would condemn as socialism. A number of years ago they took shares in the Suez Canal. It was a business undertaking, for political reasons, of course, the safety of the State, but at the rock-bottom you have the British Government taking part in business. In 1914 the British Government bought the controlling interest in the Anglo-Persian Oil Co. for the safety of the State and for certain other reasons which necessitated their stepping in. The principle is the same. My point is this, that the Government, in such cases, is taking a direct interest in certain vital industries. In the case of the oil the Government bought the controlling interest in the private company, and in 1921 they tried the same thing with the Mosul oil fields, but, at the conference of San Remo, they failed. The British Government, I believe, has also certain interests in cotton growing. Take also the “valorization” scheme. I believe there are 70 commodities where the British Government has stepped in and given its support to the financial interests concerned. I need only mention such a key industry as coal. Let us come to South Africa. This is the last country in the world where we should carry on such talk about socialism Take, for instance, our railways, which are now a State concern, and the principle is the same. Is there any hon. member opposite who would say: “ Let us go back to private enterprise in the railways?”

Yes.

Well, I have never heard them in this House. Why did they support the purchase of the New Cape Central Railway? Is the majority of the Opposition in favour of going back to private enterprise in the railways? No, we must be honest. Take the services in connection with our railways. No, they are not monopolies. Take the question of cartage. When you come to Cape Town station a man comes and asks if you want your baggage delivered—directly competing with private concerns. We have in the Cape Town station an institution brought about by the hon. member for Cape Town (Central) (Mr. Jagger) and known to-day as—

a wine shop, and doing business not just for passengers, but for the public, in direct competition with the other bars in the town.

That was started by Sauer.

Well, you are getting the credit for it to-day, because it is generally known as “ Jagger’s goldmine.” This wine-shop sells its wares at 50 per cent, less than prices in town and still makes a huge profit. That, surely, is State enterprise. There is no question of monopoly in these things whatever. There were many other matters. Take afforestation. Will my hon. friends opposite say there is a monopoly there? The State is doing business, to-day in forestry, competing with private concerns, and, I believe, making a big success of it. The Government is carrying on business in the guano islands in seals and guano. There is not a monopoly there; private firms have also the right to exploit certain of the islands. Take the question of our telegraphs and telephones. We had telegraphs started in 1860 by a private concern; 10 years later it was taken over by the Government. In other countries this is a private concern; the same with telephones. Has the hon. member for Cape Town (Central) ever stood up and argued that we should give back the telegraphs, telephones, railways, and all these other concerns? Take our steamships. We are carrying on business in competition with other firms by means of steamships. We have at present four steamships belonging to the Government, and during the year 1925-’26 we made a profit of £15,000. That is clear profit over an expenditure of £205,000. This sum includes interest on capital depreciation and everything. In all these matters we have State enterprise; we carry them on by means of the State. Why come and argue on the general ground and say we must condemn these things ? All these matters I have mentioned— have they been influenced by Labour ? They have not. Why throw all the blame on the Socialist party when we have other concerns in South Africa carrying on business in competition with private concerns ?

Why not apply it to farming ?

The State actually owns about 20 million morgen of ground in this country, together with all the settlement schemes, so that they are carrying on farming to a certain degree. I am not arguing that this or that, or everything should be brought under State control—by no means. My point is that we should take everything on its merits, and if you find that State railways are a paying concern, and are in the interests of the country, by all means have them; if you find that steamships or iron and steel are in the interests of the State when put under the control of the State, have it by all means. If my hon. friends opposite can show that it is not in the interests of the State to have iron and steel under State control, let them do so, but do not condemn it on the ground that it is socialism. The right hon. member for Standerton (Gen. Smuts) said there was a taint of socialism in it. I think I have shown that there must be a great difference of opinion between hon. members opposite and their constituents in the country, because the papers tell us that we are following the South African party, and hon. members opposite tell us we are infected with this bacillus. Let us come down to hard facts, and let us approach this question in itself. The right hon. member for Standerton has also argued about this question of guarantees and bounties. Supposing we should go on with the bounty system of 15s. per ton, and take it that the yearly production of the new works would be 150,000 tons per year. On this scale of bounties you would have an actual premium of £112,000, and in five years’ time the bounty paid would be more than the half million put in now. The Government would have spent the money, and we should have lost all this money. We say, no; where the State is spending the money in a business, let the State retain that control, so that we can know that the money is in the hands of the State, and the Government is ultimately responsible to the electorate of the country.

If the hon. member for Ladybrand (Mr. Swart) wanted to prove that the hon. member for Port Elizabeth (South) (Sir William Macintosh) was correct in his contention, he has succeeded—that is to say he has succeeded in proving that his party has been infected with the bacillus of socialism. We on this side of the House, proceed on the principle that if you want to make a success of an undertaking you must stick to business principles; sometimes you may feel that you want to get State aid, but let me say that while that may be so, you want to have as little State interference as possible. Now I listened with the greatest interest and attention to the Minister of Defence when he moved the second reading of this Bill, and I also followed the remarks of the Minister of Mines and Industries with the greatest interest. And I am encouraged to criticize by the fact that he invited criticism upon the Bill. He told us to look upon this Bill in a national spirit. I hope to do that, and I hope that the House will forgive me if, in doing so, I criticize severely some of the clauses of this measure. I do so only because I look upon this industry as a national industry which I want to see established, and I think it can be done. I should like to say, at once, that I have been interested in this iron industry for a very long time, and I have been indirectly interested in the Pretoria enterprise through the National Industrial Corporation on the board of which the Hon. H. C. Hull represented the Anglo-American Corporation, in which I am so largely interested. I have been quite ready to risk a good deal of money to see this industry established. I simply mention this to show that I am not hostile, and to show that I was prepared to risk some money to see this industry established, and I can say the same thing of other big financial houses in Johannesburg. If you look at the list of names of persons interested in the South African Industrial Corporation, you will find the name of Sir Evelyn Wallers, who represented the Rand Mines; you will find the name of Professor Lawn, who represents Barnato Brothers, and you will find the names of representatives of other mining houses as well. I should like to mention this so that I shall not be accused of being opposed to the industry in my criticism. Nothing is further from my mind. The gold mining industry has not only assisted and tried to assist the Pretoria iron industry, but they have also assisted subsidiary industries, such as the wire rope industry, which has been made quite a success, I may say, without protection. The mining houses, I want to emphasize, cannot be blamed if this industry is not established in Pretoria to-day. And no one blames the South African party, because, as the Minister of Defence said—

Let me say this, that a successful iron industry would be of the greatest benefit to the mining industry; but, on the other hand, an unsuccessful industry will be a very great handicap, particularly so if the iron industry is State owned. I say that an unsuccessful industry, particularly if State owned, will be a handicap, because the pressure to put on protective duties must be much greater than if it were owned by private enterprise. So there is a very considerable risk there. Then there is another point, and that is this—the House may know that the success of the gold mining industry, which the Minister of Mines referred to, has been largely brought about by the very great efficiency of the kind of drill we use on the Rand, and the success of that drill is due to the extraordinarily good quality steel used in its manufacture. The excellent quality was brought about by competition between the Swedish, the English and the American manufacturers of steel. That competition still continues, and from it we hope to obtain drills of even greater efficiency, which will make it possible to bring the lower grade ore within the region of payability. Therefore, an unsuccessful industry would be a handicap to the gold mining industry. I may mention that in the report of the German experts, it is assumed that one third in value of the steel produced in Pretoria would be consumed by the gold mines. So it is of great value that the lives of the mines should not be curtailed in any way by the production of very expensive steel.

Consumed not on the mines, but on the Rand.

It is the Johannesburg area, if you want to put it in that way.

A very different thing.

But this consumption in the Johannesburg area is a matter of great importance. Johannesburg has been built up round the mines and, therefore, we can certainly claim that the iron and steel consumed in Johannesburg is really due to the fact that the mines exist there. But I don’t want to refer to that. In the summary of the report, which I read again yesterday, it is mentioned that, for instance, in Johannesburg, rather higher prices can be charged for steel than in other places, because it is so much nearer to the place of proposed manufacture, and thus bigger profits could be made. I hope that this matter will be very seriously considered. I only mention this because I want to show the great effect which this industry must have on mining and farming and on every other industry. The repercussion of the steel industry will go through the country, whether successful or unsuccessful, and that is one of the reasons why I say that a select committee, before the second reading, is a matter of necessity. Then I would like to say this. The Bill is based on the very excellent report supplied by the German experts, a report which is very excellent indeed. I accept the conclusions of the report, but not for the reasons which have been given here. I do not attach the importance to the report for the reason which the Minister of Defence Has given, and I think the Minister of Mines as well. They said that this report is particularly valuable because it was by a potential buyer; that it was not made at the expense of the South African Iron Works, it was made at the expense of the potential buyers. But, of course, the South African Iron Company contributed, as far as the expenses in the country were concerned. The report was made by some one who wanted to buy. Well, if it had not been that the German experts had to give a copy of their report to the South African Iron Works, it would have weighed very much more with me. Is it not clear that if you send experts out to make a report, and you know that you have to give a copy of that report to the persons concerned, is it likely that you are going to tell the people that the thing is no good ?

It has frequently been done in the circumstances.

If you send out your consulting engineer to make a report, do you think it will be done? Surely the Minister of Defence, as a consulting engineer, would go to his principals and say—

and they would discuss matters, but they would not communicate that discussion to the South African Iron Works. The important thing is that something must have happened, some discussion must have taken place between the experts and their principals. We do not know what happened and what took place, we only know that they did not take it up. I mention it, not because I want to criticise the value of the report. I value the report because the gentlemen who were responsible for the report, and whom I had the pleasure of meeting, were men of the very highest standing. The report is particularly good, of course. But I say it is important to remember that their principals did not see their way to take up the business. The reason which the Minister has given is that Germany, at that time, was in a great financial depression, and, therefore, did not see its way of launching forth in a big enterprise outside Germany. Well, I accept that too. The Minister also told us that English and Dutch financiers were interested. My point is, why did not these people come forward? If this business was good, then I ask why have they not come forward now, three years afterwards. The American people have gone most carefully through the report, and they also have not come forward. Then again, as I have mentioned, the mining houses have gone into this. The mining houses, as we know, are not antagonistic, and I claim that we certainly are not bad business people. The mining houses have considerable resources and are interested in the development of the iron and steel industry; yet none of us, neither Barnato Brothers, nor the Union Corporation, nor any of the others were prepared to act on this report, a report which has been in their possession for a considerable time. I mention all these points, not because I want to belittle the report, but because I want to show the necessity of referring the matter to a select committee before we accept the principle of it. Neither the Dutch nor the English nor any of our own houses, made any effort to get this industry started.

What do you call the principle of the Bill ?

The establishment of works at Pretoria, under State control, that is the principle of the thing.

It is the establishment of big works.

I shall deal with that later. There may be excellent reasons why all these people have not taken up this enterprise. But in any case we should know why they have not done so. They employed engineers of great excellence and experience. Well, what is the reason why this money has not been forthcoming, and what is the reason why these people, who command resources, are willing to sell this enterprise for £200,000, that is £95,000 in cash and the rest in shares, to this new corporation. Then the third reason why I say that this Bill should go to a select committee, is the reason which the Minister just asked me—what is the principle of the Bill ? That is just my difficulty. The thing is this. If the principle of the Bill is as explained to us by the Minister of Defence, and the Minister of Mines, in his able speech—namely that the industry is to be an industry run by business men with State aid, I would have no objection. I would be in favour of it. But that is not the principle of the Bill. The principle as contained in the Bill is different. The principle in the Bill is that the State shall control the enterprise. But what about the shareholders under this scheme ? They are to be invited to put up money, but they are to have no say whatever.

They have no say now.

I say this: I have examined this Bill from the first clause to the last, and the only right which I can find that the shareholders will have, will be that they will have the right to recommend the appointment of auditors, and then the board could only appoint the auditors if the Minister agrees. That is the only right which the shareholders have. So it is State control. And then as to the directors—the directors are provided for by the Government and the shareholders are even told what people to put on the board. If there was a member of Parliament who wanted to finance the whole issue he could not sit on the board. Is there any reason why a member of Parliament should not sit on the board ? The thing is really this: If it had been proposed that we should start an enterprise with State assistance, the shareholders would be able to make their influence felt. That is the sort of company which has been described to us by the Minister of Defence and also by the Minister of Mines, a company which was State aided and controlled by business men on business principles; that was the sort of company which played a very useful part in the reconstruction of Europe after the war. That is the kind of company which has been created under the Dawes plan. The German Government were in this position, that, during their inflation period, they had taken on an enormous number of men on railway work. Finally, the position arose that they wanted to put their currency in order. The whole thing was examined, and they found that the only real asset which they had was their railways, and then they said—

The German Government welcomed the idea of the railways being used, and handed them over to private enterprise, because no Government, not even a socialistic one, could afford to risk the dismissal of hundreds of thousands of men, and the Government would rather that this task was transferred to a private company and that the railways should be placed in a paying position. The self-same principle was adopted in Belgium. The hon. member for Ladybrand (Mr. Swart) asked me if I believed in the private ownership of railways. Well, Mr. Speaker, I am told that Sir William Hoy will retire shortly. I hope that the Minister of Railways will ask him to write a political testament, and I am sure Sir William would recommend the railways being worked by a company so that there would be a counterweight to the ever-increasing demand for higher wages, and so that the political power would not be in the hands of one set of people, but in the hands of the whole public, and in that way a very different situation would be created. I am not so sure that Sir William Hoy would not recommend some such scheme as being the most satisfactory. Then we should have a railway company which would treat the men fairly, but would also earn dividends. Then my next reason is that the principles of the Bill, as they have been explained to us, are vitally different from the principles of the Bill as they are printed. I look upon the fact of directors and shareholders having no powers as a matter of principle, and that is one reason why the Bill should be referred to a select committee before it is read a second time and before this principle is adopted. The Minister has told us that one of the principles of the Bill is the limitation of dividends. That, I think, is one of the very worst principles that we can adopt— the limitations of dividends on ordinary shares. The Minister says that it is a principle which has been adopted in regard to the Reserve Bank. In the Reserve Bank this principle was adopted for the very reason that it was desirable to curtail their enterprise, as the Reserve Bank was supposed to be a bankers’ bank and was not supposed to interfere with the commercial banks They were not supposed to look for new business or to interfere with other banks, and for that reason that principle was introduced. But that should not be the case in a commercial enterprise. The important thing for us is not to have expensive steel. The important thing is to have cheap steel and as high a dividend as possible. That is perfectly reasonable. It is simply a question of turnover.

By limiting dividends the steel would be cheaper.

No, it is a question of turnover. The fact of the matter is that if you have a set of people controlled by Government and they are told that they cannot pay more than 12½ per cent. on ordinary shares, their energy and enterprize will be gone. They will say why should we work and take big risks? This is the fundamental principle— we want cheap steel and as big a turnover as possible, and for that reason I would not limit the dividends on ordinary shares. As a matter of fact, I maintain that is a very essential point if the ordinary shares are to be placed at all. I am in rather a difficult position when I speak about the finances of the proposed company, because I do not know whether the Government has approached any company and has come to any arrangement to have the issue underwritten. If it has been underwritten, then the Government have done good business; but if everything is still in the making, and if everything is still in the position of having to be considered, then I think it is worth while considering this point. I hope I am not wearying the House. I will try to analyze the position as it appears to me, and I will try to show how long the ordinary shareholders must wait before they can receive any return at all on their capital invested. First of all, you have £500,000 ordinary A shares subscribed by the Government. Then £1,500,000 B shares offered to the public at par, unless required for payment of right acquired; then £750,000 7½ per cent, cumulative preference shares without voting power, and £750,000 participating preference shares with a non-cumulative preference dividend of 7½ per cent., plus 1 per cent, for every 1 per cent, ordinary dividend over 10 per cent., so that they can earn 10 per cent, when the ordinary shares earn 12½ per cent. These snares have voting power. After 10 years they can be converted into 7½ per cent, cumulative preference shares, and after 25 years they become cumulative preference shares at 6 per cent. By the issue of £1,500,000 of debentures, the capital will be brought up to £5,000,000. On the face of it, it seems perfectly all right, if the ordinary sequence in the issue of shares and debentures had been followed. The Minister says that they were first going to issue per cent, guaranteed debentures to the public, and after that £1,000,000 of preference shares to the public. Then only in the third instance would the Government take up the £500,000 ordinary shares. The Minister said that they were first going to issue the guaranteed debentures at 5½ per cent, and the Government guaranteed the interest on the capital. He said that after that they would issue £1,000,000 preference shares to the public which could be either partially or fully paid. And then only, in the third instance, would the Government take up the £500,000 ordinary shares. That is how I understood the Minister to explain it. And then I suppose the Minister would issue preference shares, or £250,000 ordinary shares.

The ordinary shares will come after the preference shares.

Now assuming for a moment, and I don’t think that is very wrong, that the profit-earning life of this concern would start five years after the building operations—I don’t think there is anything very terrible in assuming that—the Minister has told us that the first money, the £1,500,000 of debentures, would last for 12 or 18 months. So that the position would be that by the time this concern comes to the profit-earning stage, roughly about four years of debenture interest will have accrued and will have to come out of the Treasury, or have to be paid by the company, or the consolidated revenue fund can make it up. If the Treasury pay the interest, it would charge the company with the amount, plus 5 per cent, interest. It really will have to be paid by the Treasury. So reckoning it out, I contend that £330,000 mortgage interest will have accumulated by the time the company starts producing.

That is rather high, put it at quarter of a million.

Well, I have not the details here, but something like £300,000 of arrear interest will have accumulated. Then we also have some three years of accumulated preference dividends —accumulated preference dividends against ordinary shares, that is, £168,000. I have ignored the non-cumulative shares, because the company will not be obliged to pay anything on them at the start, as it will not be earning anything. The non-cumulative shares will be issued two years before the company can produce, and that is a very weak point in the scheme. You are asking people to subscribe to a non-cumulative preference share, knowing well that for two years they cannot get anything on these shares at all. Thus between £400,000 and £500,000 of arrear interest will actually have accumulated by the time the company starts producing. The first money is to be raised by debentures and the interest has to be paid by the company, or by the Treasury, for four years, which is £330,000. Well, the Minister says it is £250,000. Still an amount in the neighbourhood of £300,000 will have accumulated against this company. You will have an accumulation altogether, which whatever it is, will be £400,000 or £500,000, and perhaps in practice it may be a, bit more. Now let us take the earning capacity of this company. The Minister said that his report showed a working profit of £450,000 per year. Now clearly provision will have to be made for the redemption of debentures, presumably for a pension fund—it says so in the Bill—renewals, depreciation, and the various charges which always have to be provided for, and I do not think it is too high, or too much, in an industrial undertaking like this, to say that £100,000 will have to be taken, will have to be deducted, before arriving at the distributable profit. Then the next thing is that you have, to pay income tax—presumably the company will have to pay income tax—and that will swallow up £50,000. Now as soon as you start producing you have to pay 5½ per cent, interest on the 1½ million debentures, and per cent, on the preference shares, making a total of £200,000—£82,500 and £112,500. That leaves £100,000 to the ordinary shares. Now, I have shown the Minister that £500,000 has accumulated against the ordinary shares, so that five years after the company starts earning profit there will be no dividend for the ordinary shares. In fact, I challenge the Minister to say that there will be any dividend for the ordinary shareholders for six or seven years. All these things have to be paid. Clearly that money has accumulated and has to be paid, and therefore no dividends can be paid until these debts are wiped out.

Do you think you would work it that way if you were chairman of such a company?

I would never start such a company. I say that a scheme like this, which issues the debentures first, when there are no assets, and issues the preference shares when you can pay no dividends—I say that anyone who can do that does not know the rudiments of finance. I say this scheme as it is impossible. The Minister may have had excellent advice, but the manner in which these shares are to be issued, the system on which the shares are to be issued, is a mockery of finance, it is not finance at all. Say we had to work a gold area. For instance, take a Government mining lease where large sums have to be spent in shaft sinking and in proving the property. In that case the Government insists that sufficient capital must be provided for the unproductive period, so that there may be no risk of discontinuance of operations. But the Government also insists that this capital must be found by the issue of ordinary shares— not debentures. These shares carry all the risk. If exploitation discloses ore bodies which will yield a profit, then there is no difficulty in issuing debentures to equip the property. That is the stage at which debentures should be issued or a loan raised. I say that if this scheme is to be improved, the only possible thing is for the Government to take the risk on what is the riskiest part of this investment, and that is the ordinary shares. The ordinary shares require the attention and the aid of the Government, and I would not have any preference shares, cumulative or non-cumulative. This is an enterprize where debentures can take care of themselves. The Government could make the ordinary shares secure by running a smaller risk than on the debentures.

How must the Government make the ordinary shares secure?

The principle must be this, that the Government must be prepared to guarantee the interest on the ordinary shares for a very long number of years.

And if there are no divisible profits?

You issue the ordinary capital, and the Government guarantees the interest, knowing that it cannot be interest-producing for a number of years. If the Government is anxious to get the business established, that is the way to do it. The Government can say that they will take payment in additional shares until it does earn

So then you would water your capital ?

No, Watering capital is this. If we had accepted £1,000,000 for the Pretoria Iron Works and got 1,000,000 shares for it, that would be watering the capital. The ordinary shares are the riskiest part of it. If the Government is anxious to have the ordinary shares subscribed for, let the Government take the risk on the ordinary shares, and let there be no limitation of dividends, then the shares might be subscribed for. The guarantee for the debentures is, under those circumstances, not necessary. If you have £2,000,000 assets and you want to raise another million, leave it to the discretion of the directors; they will find the ways and means of raising the money.

What is the difference in principle between the debentures and the ordinary shares being guaranteed ?

The difference is this. That the Government expect the public to subscribe for ordinary shares against which an enormous debt has accumulated and when they have no chance of paying dividends. Well, the public would not do it, and the Government may as well give the money at once. That is the position, that the ordinary shares must be issued first, and the Government must take some risk. The Government assume that they could get the capital for the ordinary shares from the public, and that they are going to run no risk at all except for their £500,000. It is an enormous difference. If the Minister of Mines does not see it, I am sure the Minister of Finance does. I want to say this, that this scheme can be improved and made a success of, if the Government is prepared to guarantee the interest on the ordinary shares until such a time as the company can be soundly and properly established.

If the public won’t come in, we shall provide the money for the ordinary shares.

Then I hope that the Minister will realize that for seven years he will get no return. As a matter of fact, I ask the Minister of Finance to consult his experts and find out whether my figures are substantially wrong: there can be no dividend on the ordinary shares for seven years.

You say seven years from the date of issue ?

Well, it may be six years, but anyhow it will be a very long period. Here we have a Bill in which we lay down exactly how we are going to raise the money. Ordinarily, if you raise money, you first of all go to the issuing house and discuss your financial scheme, and only after that do you formulate your definite scheme and get it underwritten. That is a system which was followed in regard to Union Loans. Now we lay down a hard and fast law as to how we are going to get this money. But assuming that the terms are considered unfavourable, what then ? I say that if we enact the terms on which the money is to be obtained, then the scheme will never eventuate. This thing requires much more enquiry before we pass the second reading. I say we want as little State control as possible; that I hold to. We want as much control by business men as possible, as much power to the directors as possible. We want also to have a financial scheme which will ensure that the ordinary shares are issued first. That is essential. If it is done on those lines, then I believe it can be made a success, and then I think it will be possible to establish a great industry. State control, I say, will not answer.

Yet you want State control for alluvial diamonds?

I have not come to the Government and said—

But let me say this, that if the Government does not act promptly with regard to the alluvial diamonds, you will very soon have no diamond mining industry in this country.

Is not that State control?

No, that is a different thing. I would like to make just one suggestion with regard to Newcastle and Vereeniging. These people have spent a great deal of money. They have erected a plant and they are entitled to some consideration. There is a precedent in regard to their case. We have the case of the E.R.P.M., in respect of which a commission was appointed—the E.R.P.M. and the Cinderella. A commission was appointed; they had no power to force the companies to come together, but they had the power to examine the one and the other. They took no minutes at all; but finally they came with a complete scheme to the Government. As it must take a long time to get this plan into working order, I say that if such a commission were appointed, composed of people anxious to find some means of preventing injury being done to people who have started an enterprize, a solution might be found. I want to appeal again in conclusion that this Bill should be referred to a select committee before the second reading. The Minister says that he is prepared to discuss these principles of State control in committee. There are other questions to be discussed as well, and we should not be committed to these principles before going to select committee. The Minister says he has an open mind and is prepared to amend various clauses. Many of these clauses do affect principles. Nearly every clause is capable of adjustment. The Minister of Mines knows that we are willing to assist in having this national industry established in Pretoria. The whole Bill is in a state of flux, and the only definite thing about it is the title, and in the circumstances I cannot vote for the second reading. If the Bill is passed as it stands, it can be nothing but a farce.

The hon. member for Newcastle (Mr. Nel) said he was not affected by the wants or desires of his own particular constituency. That was very considerate of the hon. member. It happens to be that the Pretoria iron mines are within the constituency which I represent, and I am not going to say that that will not affect the position I take up. One would be suspect at once if one made a plea that the immediate prosperity of one’s constituents did not come into a question like this. We come to the principle of this Bill which the hon. member for Kimberley (Sir Ernest Oppenheimer) has quite misunderstood and quite misstated. The question at issue really is whether the people shall institute their own key industry or hand it over to company promoters and financiers. The hon. member has threshed out the details very minutely as a financier, but the main principle of the Bill is State control of a State industry, and that principle is for us to decide. There is good reason why the State should take up an industry such as this and why we should not go to financiers? Underwriting is what they look for as their constant reward; when they go fishing it is fish they want, not sport. He says in effect if you take it from the scope of underwriting where shall we finance experts be ? He never told you that the “rudiments of finance” are simple. Yes, underwriting is a clever process. The State wants two millions for a particular purpose, they come to “ us ” and “ we ” underwrite. “ We ” then go to the people and get them to put the money up. The principle here is that the Government go straight to the people and they say here is your own native ore; put up your money and use it to institute your own industry. When one looks back over 35 or 40 years of this country’s history, we see what it owes to its mineral wealth, not to the companies that have worked that mineral wealth, but what it owes to the mineral wealth itself. We have, up to the present time, extracted £1,000,000,000 worth of gold, we have exported £300,000,000 worth of diamonds, and we are extracting our mineral wealth at the rate of £55,000,000 to £60,000,000 per year. With that amount of wealth extracted, even under the inefficient results of private enterprise, is it unreasonable for the people of the country to say—

If we went to the people to-day and asked whether they would back this Government in taking a risk, an experimental risk, or leaving it to private enterprise, we would get a substantial vote in favour of Government taking some of the wealth it is interested in and experimentally using it for the creation of further resources. We have had some experience of that kind. When it was proposed some years ago that we should take up an asset which we owned and the Government said to the financial gentlemen—

That proposal was carried into effect with extraordinarily good results. We have directly shared profits derived from our own assets, and from gold we have got £8,000,000, from diamonds (our 60 per cent, partnership in the Premier Mine) another £3,000,000, and from bewaarplaatsen we have had quite a substantial amount. Altogether at least £12,000,000 has resulted from direct partnership with financiers and competent mine managers. As we have made £12,000,000 profit by that process— I am not referring to indirect revenues—why, should we not go a step further now and say—

Opposition to the partial partnership system came from the same class of gentlemen as those opposite. I remember the fight then put up. It was a disastrous departure they said from a company flotation. Nobody would put capital into an enterprise so divided in regard to profit.

Who passed the Premier diamond business?

I give credit first of all, if credit is desired, to Mr. H. C. Hull, who, I regret, is put aside from active business at the present time through illness. To his foresight we owe the £8,000,000 we have got from our partnership up to the present, increasing as time goes on.

It was done by the Crown colony Government.

I am coming to that. Sir Percy Fitzpatrick and the hon. member for Yeoville (Mr. Duncan), I think, together are responsible for retaining our 60 per cent, partnership in the Premier Mine, but, at all events, I can honestly say retention of the 60 per cent, had the same opposition from the same class of men. Why should we not take some of our profits, and the asset we own and develop it for ourselves, and let us see where we come out? The State can afford to lose where the individual cannot. If you hand this industry over to financiers, and they see a loss sticking out, they rush to the Stock Exchange and stick somebody with that loss. Therefore, there is a much greater risk, as far as the public is concerned, of failure in private hands than there is in the hands of the Government. May I point out to these short-sighted gentlemen that in their opposition they lose sight entirely of the fact that if profit is produced for the people from their own assets to that extent we heed not impose taxation either on incomes or on products or anything else. Supposing we are making three to four millions a year from partial mining partnerships, we do away with the necessity to take that sum out of the pockets of the people. In other words, you are using the assets of the people for the people, and can go even further, as this Bill provides, and use the credit of the people to enrich the people and not professional market manipulators. I am sure if it were put to the people whether they would or would not accept a measure of this kind, certainly 90 per cent, would express willingness to make the experiment. I do not despair of experiments of this kind. All wisdom is not in the heads of the financial pundits, wise as they believe they are. Often they have difficulty in getting money, and often fail in getting sufficient capital to ensure success, and then resort to all sorts of dubious market schemes, which tell against the credit and reputation of this country. They themselves often destroyed the country’s credit, and destroy every chance of getting sufficient capital for new ventures and development requirements. The right hon. the member for Standerton (Gen. Smuts) is in favour of one big industry. He has stated now and always, I understand, that he is in favour of a centralized iron and steel industry, but he is of two minds as to whether one such centralized industry should be established by actual guarantee, as provided for in this case, or by a bounty system, which was the plan, I understand, that he and those with him favoured. The hon. member generally is in two minds in regard to anything concerning protection or free trade, and will be so as long as he is linked up with the hon. member for Cape Town (Central) (Mr. Jagger). The bounty system is the halfway house to nowhere. There is nothing in the bounty proposals except the wish of those who want to prevent our having industrial enterprises, and others who are half converted from free trade. The free trader, when half-converted, turns to the idea of bounty as a very nice expression to conceal the steps he is taking which must ultimately lead him to protection. We want to take the full step right away. I defy the right hon. member for Standerton (Gen. Smuts) to show a substantial and largely successful industry established on bounties. What is the history of bounties? Wherever it exists one finds that when the enterprise comes up to the point of obtaining the bounty the enterprise usually fails. Those who wish to avoid the State going into the steel industry, and giving a guarantee, talk glibly about bounties, but never when you challenge them will they tell you where a bounty system has proved a success. It only causes delays, and that is shown in this very enterprise of iron and steel production. The hon. member is very cautious and extremely careful in regard to risking the people’s money in what may be a doubtful venture, but he was quite satisfied with forty millions for war. Oh, yes! This country could quite easily stand under the debt burden of forty millions for war.

Where were you in the war ?

But he prefers that a venture calling for four millions in the interest of the country is one which should he left to the hon. member for Kimberley and his financial associates. These big combines and trusts are non-competitive and discredited. People have lost confidence in companies, and these have difficulty in raising money. The hon. member for Kimberley (Sir Ernest Oppenheimer) referred to business principles, but stocks and shares are an absolute gamble, the counters of which are moved by the most astute people in the world, not gamblers themselves, for they operate with loaded dice. For that reason confidence disappears, and so it becomes incumbent upon Government, and will become even more incumbent in future, to take enterprises in hand, because the confidence the investing public had in limited liability concerns is fast passing away. Big finance is playing a very suicidal game as far as that is concerned. The hon. member for Liesbeek (Mr. Pearce) introduced into the Companies Bill a useful provision, and a very common-sense one, which would have tended to restore confidence to shareholders. It was simply that the value attached to the assets of a company should be declared in their accounts from time to time, together with the value of share holdings in other companies. Could a more reasonable provision be put forward to give confidence to the public? But when it got to “ another place ” (the Senate) it was knocked out, so far as that clause was concerned. Financiers would not have it at any price. It was fatal to them, because they do not wish the public to have knowledge of the actual position of companies which they control, and it is because of that wish for concealment that it will become more and more necessary for the State to take a hand in big ventures. The hon. member for Troyeville (Mr. Kentridge) pointed out that there is really no competition in the steel trade, big trusts and combines having so arranged their spheres of influence. That alone is a reason why we should do what the State can for the people, independent of individual enterprise. I will not follow the failure of individual enterprise, although it is most interesting to pursue the subject to show where we are getting to in what is called international finance. Big banking institutions of New York and other centres are linked with the Bank of England and practically all the big banks of the world, our own Barclay’s included, with the defined object of breaking down the protective systems of the nations. Why? Not because the protective systems are not to the advantage of the respective peoples, but because they are. Financiers have realized at last that a community may be self-supporting, self-sustained, prosperous and happy with comparatively very little export and small imports. It is so already in the United States. If the British commonwealth of nations pursues a similar policy of reasonable and wise action they can then develop the whole of the empire in the same way, and by the same system of practically preferential dealings with one another as the several states of the United States have. But the bankers have found they would then lose their commissions and exchanges, because if you decrease the imports and exports of a country there is less necessity for exchange charges, and it is out of those exchanges that they have made a very good living It is international finance. The hon. member for South Peninsula (Sir Drummond Chaplin) is also not against a big industry. It is very good and patronizing of him. He also favours bounties. He represents the hereditary ultra-conservatism which has found its expression in so many ways. I remember in the Parliament of the Transvaal the hon. member opposed us giving the Cullinan diamond to the Crown jewels, and his party based objection on this, that it could not be afforded, and he voted against it with the others who took the same view. It cost 9d per head to give the Cullinan jewel to the Crown, and was uneconomic. “ Whatever you do, save your money, and let us invest it for you. This Bill is rightly labelled socialistic. It is socialism in its very best form, and members on the other side are horrified by it. Let them read the leading article in the “ Cape Times ” of this morning, where it declares itself socialist, and recommends socialism as a study. Let hon. members opposite study its many good points—

Key industries must come State control even if they do not become State monopolies. In England the State is running its own ship-building yards, and its own foundries and factories at Woolwich and elsewhere for the conversion of raw material, because it is essential that the defence of the State should be in its own hands. Here it is equally essential for the country to control its iron industry. Pessimists ask for a wider market. It is at your doors, and can be expanded to any extent. South Africa needs steel rails, bridges, girders and so forth— everything in iron—and can be supplied from our own resources. The history of the iron industry in this country is lamentable as one of lost opportunities. I had some small hand in the Pretoria industry. We had satisfactory laboratory experiments, but could not prove it was a demonstrable commercial success. The effect was dying away when I succeeded in persuading the late Mr. Beckett that, in the interests of Pretoria, £2,000 should be found, and the final sum required was found by a concern in which we were both interested. The experiment was entered upon as a commercial venture, and the first smelter put up. Much time and money was wasted in trying to find capital. The thing was so good on its prospects that, naturally, we could not get the money for a big equipment. Was America going to find money to ensure competition with itself ? Was Germany, Belgium or England going to do so? No. The reports showed that we should be able to export steel against America itself. The explanation is simple. In America semi-skilled labour costs from 18s. to 22s. a day, Great Britain 8s. to 12s. per day, and in South Africa we get unskilled labour from 2s. 6d. to 5s. per day. That is the reason why they are afraid of our developing an iron and steel industry. I have no wish to destroy the Vereeniging and the Newcastle enterprises. I, too, am in favour of one big industry, and in favour of treating these interests on favourable terms to them. The late Mr. Marks struggled and strove to give us an industry of this kind, and his memory deserves veneration if for nothing else. They have deserved to be considered, and will probably have the opportunity of coming in under reasonable terms, or of standing out if they prefer to do so. If they choose to stand out well and good; but if they desire to come in, I ask the Government not to be caught and pay for what is not there. Do not purchase “ water.” We need to make very careful scrutiny. The association I was with would be happy not only to get their money back, but prospective profits as well. I beg the Government not to lend themselves to any operations of a stock market nature. Make it a fair deal and see that they are rewarded for their enterprize and the great risks they took. The satisfactory results of expenditure in my own constituency prove that they deserve a fair return. They turned out pig iron equal to the Scotch article, and showed that it could be a great commercial success. But do not fling away the peoples’ money on what is not there. The hon. member for Kimberley (Sir Ernest Oppenheimer) would be looking out for 40s. for the 5s. he put in. Let the venture be for the people. I trust that the Minister of Defence will see to it that some provision is made for employees participating in profits, so as to ensure the efficiency that is got by that inducement. The hon. member for Newlands (Mr. Stuttaford) recently brought forward an insufficient proposition for dividing profits with employees.

Why didn’t you vote for the Bill ?

Because it was an absolute hypocrisy. We don’t want to see the savings of the workers put into the pockets of the employers, and, when bad trade comes, for the workers to be told that there were no profits, and their savings had disappeared.

The hon. member must not discuss that Bill now.

Perhaps I was led into it by being in his bad company. We have always the unanswered statement of Abraham Lincoln—

In the same way, if we develop this iron and steel industry the cost thereof will be circulated in South Africa, but we cannot achieve that end if we leave the undertaking to the private individual—the adventurer—who has hitherto used South Africa as a country to squeeze, and produced the result that people do not desire to invest money in South Africa. An insurance company actuary lecturing recently on the question of investments said that insurance companies are investing abroad five millions of South African capital. Money belonging to us withdrawn. This is an illustration of what is going on. But if we persuade people to support State enterprize our savings will remain in the country for profitable investment. I trust that the Minister of Finance will go all the way in the direction of protection, and realize that as other countries have prospered through protection so can we. Then we shall be on the real road of progress on which we have only just started.

We have sat through this debate trying to get some arguments from the other side of the House, but up to now we have listened in vain, the remarks of the hon. members opposite having been contradicted by themselves, and their arguments being so thin that it is practically impossible for this side of the House to put up any arguments at all to contradict them. I think, however, it is necessary to review the position as far as we are concerned. What is the measure and what is the necessity for it? I understand that the object of the Bill is to introduce a new industry into South Africa. We have the hon. member for Port Elizabeth (South) (Sir William Macintosh) saying that the efforts of the other side have been aimed in the same direction, and he went so far as to point to the record of the hon. member for Standerton (Gen. Smuts) in this matter. What are the records of the hon. member in regard to the establishment of an iron industry in South Africa ? I refer to the time when he, as first Minister, was in charge of the affairs of the country. We had years in which the hon. member for Cape Town (Central) (Mr. Jagger) gave away railway scrap iron at a cheap rate to the producers of iron.

I was not Minister at that time.

The hon. member for Cape Town (Central), who was Minister of Railways, entered into a contract and gave away that scrap iron.

No.

The next step displayed a little bit of luminosity on the part of the hon. member for Standerton. He said he had come to the salvation of South Africa by introducing the bounty system, and that we were on the high road to have an iron industry—the key industry. The hon. member went so far as to say—

That was after the party on the other side had gone into the question and had come to the conclusion that the bounty system was going to produce an iron industry. But what are the actual facts ? I am afraid that the memory of the hon. member for Standerton is very short, for he does not remember the Board of Trade’s report. The facts are not as they were stated in this House, but very different. The facts are that the hon. member and his Government gave instructions to the then Board of Trade, the chairman of which was Mr. Howard Gorges, Mr. H. E. S. Freemantle, and Mr. Walter Marshall, so that there can be no question about this being a kindergarten board. The board reports as follows—

Yet the hon. member for Standerton told us that his Government favoured a bounty system, because the Board of Trade reported that that was the only satisfactory basis upon which to proceed. I regret to say that the hon. member for Standerton (Gen. Smuts)—I do not know whether his memory was at fault when he made that statement—misled the House. That is, as far as we are concerned, we were under the impression that the bounty system had been weighed in the balance, and was the only system that was going to save the country. The country has got to the position, after years of the bounty system being tried in which no bounties have been paid out, when a small amount of iron is being produced. The world, and this country, is not standing still, and we have now an intelligent Government brought into power by the change of the last election, and they have found the only way to have an iron industry in the Union of South Africa is by the State taking a direct interest in it. What are the reasons for this ? Members know that in the southern hemisphere geographically situated. South Africa is one of the dominions that has all the conditions which can give it the whole of the iron industry of the Empire. We have the coal, the iron ore and the geographical position, yet the hon. gentlemen say we must not embark on this scheme because there is a danger of socialism and high finance, that high finance the hon. member for Kimberley (Sir Ernest Oppenheimer) is such an expert of. I ask the hon. Minister not to take notice of these ethical methods of finance. He must know the hon. member for Kimberley is—

of finance, and that is not the way we are going to do it. The hon. member said the mining houses could not be blamed if the iron industry is not in Pretoria to-day. They had done all in their power. The exact facts are that the “ whole hoggenheimers ” of finance are in default on this question of establishing an iron industry. They have not taken an interest in it because they were on the scenes of their plunder at the time. I happened to be in Australia as one of the delegation a short time ago, and I saw what the mining financiers living in Australia had done. In a place called Newcastle I saw that out of the proceeds of the Broken Hill Mine, they have erected a big iron industry. There the mining financiers have not defaulted, so that it has not been necessary for the Government of the country to come to their assistance, because they devoted the money made in the Broken Hill and these mines to building up the iron industry in Newcastle. We saw the blast furnaces going and the iron ore brought down to be smelted; we saw the steel plates brought out and being distributed; we saw the electrical plant and trucks being built from a to z out of the products, thus developing Australia with money made by the mining magnates of Australia. Yet the hon. member for Kimberley has the impertinence to come to this House and offer the Minister advice about the financing of this industry. These gentlemen have made quite enough money from the mining industry for them to say that they will not call upon the State to put the money up at all, yet he questions it with all his power, and suggests a scheme for backdoor finance instead of a straight scheme in which the shareholders would be guaranteed by the Government for the capital they put up. The Government has stated that the capital will be guaranteed for a number of years, until the iron industry comes to the production stage. The hon. member for Kimberley said it will be about six years or longer before it pays. The hon. member said he was interested in the Rand mining industry, and that they didn’t pay dividends for five or six years until shafts were sunk. I will tell you what they did in the recent flotation of the Geduld East. They issued the first shares, which were not open to the public of South Africa to subscribe, at par, and to-day they are standing at 34s., and you cannot get them. These gentlemen move the shares upwards and they lower them when they think it is necessary, having off-loaded them on to the public, and then buy them back again. I hope the Minister is going to carry forward with his scheme and guarantee anybody who puts money into the iron industry, and if he does I am convinced he will get a large amount of capital from the public. Coming back to the principle of the Bill, I would like to say that I do not think we could get better conditions, time, opportunity or place than there are in South Africa at the present time. From a technical point of view, we have large quantities of easily mineable high-grade ore, coalfields to develop our coke and by-products, and practically all the ingredients for producing cheap pig iron in the country, and also for producing cheap steel and the attendant metal required in the secondary industries arising from it. We have at the present time on our borders the Argentine. The consumption of iron in the Argentine is 150,000 tons at the present time, and at the present time the iron ore supply in Great Britain has to be augmented from Spain and Sweden and anywhere else it can be got from. It is known that the iron deposits in the north of England have reached so low a grade that England has to cast about to get the ore to smelt from. We are doing no more than we are called upon to do when we embark upon this trade and collar as much as we can for South Africa. Unless we are prepared to embark upon it on a large scale, the scheme is bound to fail—is doomed to failure. The hon. member for Newcastle (Mr. Nel) has pleaded for the Newcastle works, and I admire the way in which he has put up his fight for them. It gave me the impression that it was merely a question of bargaining what was to be the take-over price. The same applies to Vereeniging as regards the secondary works. The Minister has stated that it is merely a question of bargaining as far as Vereeniging is concerned. Having eliminated those two, there is nothing left except the question of this report which deals with the most central and the best spot in the Union for the establishment of this industry. I listened to the right hon. the member for Standerton (Gen. Smuts) very carefully, and he gave me the impression of having to do an egg dance as far as the merits of Pretoria are concerned. I notice that the hon. member for Pretoria (East) (Mr. Giovanetti) has been particularly silent on this matter. I hope we shall hear from him as far as this question is concerned. Speaking on the merits of the Pretoria occurrences, I may state that I have personally from the republican times been acquainted with these deposits in Pretoria. There are practically inexhaustible supplies of rich iron ore. The figures are quoted in this German report, and it is unnecessary for me to labour them. As far as the report itself is concerned, there is no question about what the future of the industry is going to be when once it is established. The whole question as far as the Opposition is concerned is the question of finance. I hope that the House will not be side-tracked by any arguments in regard to the financial provisions of the concern. Those provisions as put forward in the Bill are quite plain and quite simple. The Government are taking control under certain conditions which are highly necessary. The control which the Government would exercise there is no greater than the control which the Government laid down in the Electricity Act. The hon. member for Kimberley (Sir Ernest Oppenheimer) will remember that the 60 per cent. interest in the Premier Mine has never suffered from any attempt at Government control. They have been allowed free scope there as far as the direction of the Premier Mine is concerned, and in view of the fact that this mine will probably be closed down in six months from date, I am not called upon to say whether this has been wise or not. Coming back to this question of control, I do not think the Government have shown that it is taking any undue share. For instance, under the Electricity Act, where the powers assumed by the Government are more extensive than those taken in this Bill, the Government have not exercised any measure of control. That measure was put forward by the late Government, and as far as this Government is concerned, they have loyally kept to its spirit. The Electricity Commission is functioning to-day with a minimum amount of interference or anything else, but, as has been stated by the Minister, it is necessary in starting an enterprize of this description to take the necessary powers to provide for eventualities. There is not a single company launched to-day, either under the aegis of the hon. member opposite (Sir Ernest Oppenheimer) or one of our Johannesburg magnates, which does not take more powers under its articles of association than the Government take under this measure. The Minister has made it clear that so long as the concern is carefully and economically run, there will be no interference as far as the Government is concerned. I do not think that under these conditions it is right for hon. members opposite to try and have it both ways. They must tell us either that they are against the measure or that they are for it. As far as we are concerned on this side of the House, the Minister has our whole-hearted support in this measure. It is a measure which has been before the country for years, a measure that the country has been crying out for, and a measure that the country demands. We have the ore and we have the coal, and now we are going to get the money, and I hope that we shall have the pluck and perseverance to carry this project through.

The hon. member for Vredefort (Mr. Munnik) made an attack on the right hon. the member for Standerton (Gen. Smuts) and said that he had done nothing towards establishing an iron and steel industry in South Africa. He must surely be aware that the right hon. member had a great deal to do with the first scrap iron contract that was entered into. It was not the hon. member for Cape Town (Central) (Mr. Jagger) who, when Minister of Railways, gave that contract away, as the hon. member for Vredefort has stated. The hon. member for Cape Town (Central) was a private member at that time. Then the hon. member for Standerton was responsible for the contract that was entered into between the Government and the Pretoria company, this same company which is, under the Bill, handing its assets over to the Government, or the new company which is to be formed when the Bill passes. Besides that, in order to encourage the steel and iron industry, the hon. member for Standerton proposed the bounty system, which this House adopted. It was owing to his action that these German experts were brought out to this country. What more the hon. member for Standerton could do than he did to foster this industry, I do not know. The hon. member for Vredefort. I think, went out of his way to throw aspersions on the hon. member for Kimberley (Sir Ernest Oppenheimer), who is known throughout the business world as a straightforward and honourable financier, and for the hon. member for Vredefort, in his place in this House, to cast aspersions upon him is unworthy and ought not to be countenanced in this House. On the contrary, the hon. member never tried to answer any of the strong arguments and convincing statements made by the hon. member for Kimberley. I am surprised also that the Minister of Finance has not tried to reply to these arguments, because, after all, it is a matter which concerns his department most intimately. He will be responsible for finding the money, not only the £3,500,000, but much more as we have been told that the additional money which may be required will be forthcoming from the Government to keep this thing going. Surely the Minister of Finance must have looked into this matter very closely. Would it not be advisable for him to give us his views and take up the points made by the hon. member for Kimberley ? So far the Minister has not taken part in the debate, but I hope he will, and I hope he will deal seriatim with his points, because they are very important. The whole success of the State company, if the Bill passes, will depend to a great extent upon the financial aspect, and this ought to be dealt with by the responsible Minister. The hon. member for Vredefort (Mr. Munnik) told us that when in Australia he looked into the iron question, and he found a successful iron and steel industry had been started by private enterprise. I wonder if he looked into the question of the State iron and steel industry there, because the hon. member for Cape Town (Central) (Mr. Jagger) has said that that enterprise has been run at a great loss. The last figures that I saw showed that the loss made by the State steel and iron works in Queensland amounted to £584,000, and on the whole of the State enterprises they made a loss of £1,335,000, because when the Labour party came into power in Queensland they declared a new Heaven and a new earth, and they started all kinds of State enterprises, but the result has been rather disastrous. The hon. member for Pretoria (West) (Mr. Hay) made rather a peculiar statement, that the right hon. member for Standerton (Gen. Smuts) was responsible for spending many millions in pursuing the war, and that he ought to swallow this Bill involving an expenditure of three, four or five millions, without any examination. Could a more childish argument be advanced ? Are we to vote blindly ? What are we here for but to examine these Bills and financial measures ? I would like to emphasize, if it be necessary, what was said by the right hon. member for Standerton, namely, about the absence of information. It is a very serious charge, because we are asked to make an entirely new departure on insufficient information. Very voluminous reports have been laid on the Table. I have been trying to look into some of them, but it is quite impossible to grasp the whole thing, and I do think the Government ought to have prepared a precis; they could easily have turned on two or three men for the purpose for the information of hon. members. When a new railway is being built we are fully supplied with information, but in this matter, involving an entirely new departure, where one would think that more information than usual would be supplied, we are referred to a bundle of papers which no man can assimilate in the course of a week’s study. The Government are in default in this matter. We have had a good many statements made by Ministers and by hon. members on the other side regarding this matter, mostly quoting from the documents to which I have referred. We have been told that an estimated 14 per cent. was likely to be paid on the ordinary shares. That was an estimate made in 1924, but conditions have altered. We have a Wages Act now; we had a Minister putting up the price of unskilled labour to 8s. a day. Many things are different to-day from what they were in 1924, and I do think it is very necessary that we should have a select committee to look into this matter before we accept the principle of the Bill. We have not been told this—which, I believe, is a fact— that this company, when established at Pretoria, will have to get its coke from Natal. There is no coal in the Transvaal, as far as I am aware, which is suitable for coking, and the consequence is that, although they have a deposit of iron at Pretoria, they have no coking coal nearer than Newcastle, and it is going to cost them, on the present rates, about 6s. of 6s. 6d. a ton to bring that to Pretoria, as against 1s. 6d. a ton to bring the same coke to the Newcastle furnaces. I am not opposed to the establishment of an iron and steel industry in Pretoria, but I do say that the Government should refer the whole question to a select committee sitting in a calmer atmosphere upstairs, where we can go into the whole matter and discuss it calmly and as reasonable business men. Because, if an hon. member stands up here and criticizes the Bill, the Minister and his supporters immediately think we are antagonistic to it. Their prestige is somewhat involved; they want to carry their point. It would be more difficult for the Minister of Defence if he takes the Bill in the Committee of this House to accept amendments on the lines suggested either by the right hon. member for Standerton or any other member, than it would be upstairs in the committee room, where it would be much easier to look at the matter from all sides, and where we could weigh and consider it better than we can here. We would get far better results if the Minister would only realize that we want to help him; we want to see this industry established just as much as he does, but we want to bring the best brains possible to bear upon the subject. After the very lucid and valuable speech made by the hon. member for Kimberley (Sir Ernest Oppenheimer), would it not be advisable for the Minister, even at the eleventh hour, to say: “ We will discharge this order and let it go to a select committee,” seeing that the Opposition—if we can be so called in this case—are imbued with the same objects as the Minister ? We want to help him, but we can help him much more effectively in the select committee room than we can in the House. I want to draw attention to another point. I spoke about the absence of information. We heard nothing about this question of coke already mentioned. The hon. member for Zoutpansberg (Mr. Pirow), who made a speech on this matter, quoting no doubt from a document, said that the railage on pig iron from Newcastle to Vereeniging was 20s. a ton. It may have been 20s. a ton when this information was compiled, but it is 14s. 4d. to-day, which is a considerable difference. The fact that even that figure alone is not applicable to present conditions throws doubt upon many of the figures quoted in this House taken from these reports. Then, again, the hon. member for Zoutpansberg (Mr. Pirow) threw discredit on the Union company’s valuation of the farm Kromdraai, quoting again from the reports. He will be surprised to learn that the German experts were only at Kromdraai for two hours, but another gentleman called Kay, employed by the English company, spent a month there and made a report which varies very considerably from the report of the German experts. Mr. Kay said that there was sufficient ore containing over 50 per cent, of metallic iron to produce 150,000 to 200,000 tons per annum for 50 years. That report was made for the company which afterwards became a part of Messrs. Armstrong, Whitworth group. This should be enquired into. We are asked to take this Bill, and I suppose it will be impossible to amend it, because Ministers have their ideas about the financial arrangements, and will stand by them, as a rock, and will be blindly supported. We ought to go into this as business men.

You have been going into it since 1919.

If the hon. member was giving me his attention, he would see that conditions have altered very much, even since 1924. There is every reason why we should have an investigation. The Minister did not tell us that this scheme involving bringing iron ore from Buffels Hoek meant a distance of 147 miles from Pretoria, because the Pretoria ore is highly silicious, and cannot be used for smelting purposes alone. This company will have to bring two-fifths of the ore 147 miles in order to make pig iron, we have been told, and I am told it is a fact. The Minister of Mines and Industries quoted Mr. Bury’s report. This Mr. Bury is, I believe, a highly qualified technical man, but he was the consulting engineer of the S.A. Steel Works of Pretoria, He was not employed by the Government, and did not report to the Government.

Yes, he did. He was not the consulting engineer of the Pretoria company when we consulted him.

I accept that. Then we have been told by the Minister of Mines and Industries that Major Butler has a very poor opinion of the prospects of his company— the Union Steel Corporation. I happened to be at a function given by the municipality of Newcastle when this gentleman made a speech in which he drew a most optimistic picture of the future of his company. Apparently he told the Minister one thing, and the public meeting another thing.

Perhaps you dined him too well.

I believe he drank only soda water. The Minister has quoted Mr. Reece’s report, in which he is said to have thrown cold water on the Newcastle iron works. I have tried to get that report, but I cannot find it. I was told it was amongst the papers, but when a search was made it could not be found there. Why can’t we have it? Then we have had quotations from Dr. Wagner’s report, and he, like all the other experts, knows something about iron and steel, but Mr. Steart, in his report, puts down the quantity of iron ore available at 2¾ million tons. Dr. Wagner says that this gentleman is probably mistaken, and boils down his figures to such an extent that the ore would last only for nine years at the rate of 50,000 to 60,000 tons per annum. But if the former’s figures are correct, there is sufficient ore to keep the Newcastle works in full blast from 35 to 40 years. That is a matter on which we should have some evidence, but apparently we are not going to get it. I must say I feel very nervous about the Government’s going in for this competitive industry, because it is not the function of the Government. The function of the Government is to look after law and order and the well-being of the community. The Government should not interfere with industry unless a very strong case can be made out. There are public utilities that we all acknowledge ought to be managed by some central authority, but in regard to an industry such as this, experience has proved that you have the Government “ stroke.” In the first place, you have the employees feeling that they are Government men and in a privileged position. In a short time we shall, no doubt, be asked to provide pensions for these men. Men in the railways and harbours and other Government services do not work so hard, and they have a softer time than those working for private employers. The artizan would rather work for the Government than for a private individual, because he gets as much money, knows he has an easy time, and that there is the Government “ stroke.” The Government is practically the employer here. We shall have plenty of red tape, rules and regulations. It would be quite impossible to get rapid decisions. Someone has said—

But in America—the most prosperous country in the world—even the railways are privately owned; the Government protects the public from being squeezed by trusts and combines, but leaves private enterprise alone. Surely America is a better example to follow than Russia, where State enterprise has been found to be wanting, and they have gone back to private enterprise. In America private enterprise gets a free hand, and the State, if it does control industry at all, controls the large combines in the interests of the consumer. In this case it has not been proved that private enterprise cannot establish an iron and steel industry in this country. I think we ought to assist private enterprise in this matter, but I do not think the State ought to take control, as is proposed in the Bill. Surely we must give the people at Newcastle and the Union Steel Corporation credit for their enterprise. They have spent thousands of pounds, suffered heavy losses and experienced failures, but now they are on the way to make their industry a success. Yet, at this juncture, the Government propose to set up a State industry in opposition to these people, without trying to negotiate with them. Surely the Government might have said to them—

Government should have formed a plan for working with the Union Steel Corporation.

You have changed your views on that.

No, the question of State assistance has never been before the country before. I am not aware that I have previously expressed any opinion in regard to State enterprise of this nature. I say, without hesitation, that the Government should assist private enterprise in starting this industry. It will be very unsettling to the business world, and will scare away capital if the Government ruthlessly blot the company out. I am told that 600 shareholders in the Union company reside in South Africa. It is immoral for the Government, without making some attempt to work with these people, to establish a rival industry and ruin them. It does not affect me personally, as I have not a penny invested either at Newcastle or in the Union Steel enterprise, but in the public interest it is not advisable to say—as the Minister of Mines said—if the companies go down, it cannot be helped. For the sake of the good name of South Africa, the Government should do its best to work with these people. It is not as if the company had done nothing. It has made steel rails, bolts and nuts, sheet iron, angle iron and so on, and it is now putting more money into extending its works. In every way the company has shown enterprise which ought to be supported.

What do you suggest ?

Is that not a question for the select committee to take evidence on ? We want to be fair to the company. I object to the Bill because practically it nationalizes the iron and steel industry. The Minister has said there is no room for two organizations, and if the new company is to be backed up by the illimitable financial resources of the Government then the existing company must go to the wall, assuming that the Government maintains its present attitude of aloofness towards it. I object to our having a State-managed industry of this nature. The Government will be called upon to find year after year hundreds of thousands of pounds, and once we are embarked on it, any succeeding Government will have to continue the enterprise, as it would be a very serious matter to cut the loss. We are committed to a very large expenditure. It involves 3½ millions, but it may be 7½ millions.

Who mentioned 7½ millions ?

I say it may be, and I prophesy that this company will not pay. If the company is to be started on a vast scale it is bound to make vast mistakes, and consequently there will be very heavy losses. Later on the Government may take it into their heads to establish what they may describe as another key industry, shipbuilding, for instance. If somebody commences to build ships in Cape Town, he may, in a short time, find Government saying that it would be a good thing to start a ship-building yard at Durban where the Government may say conditions are more favourable for a national industry than in Cape Town. If iron and steel are a key industry, I suppose food and clothing are also key industries, so why should not Government control the food and clothing industries, as was done in Queensland ?

That was in war time.

We are now in peace time.

I wonder if the Minister of Mines noticed that the Minister of Posts and Telegraphs recently said that he would take care that no private person made any money out of iron and steel.

Did you hear him say that ?

It was put to the Minister, and he did not deny it. I would be very glad to hear a denial from him. When he used to sit in that corner of the House he used to amuse us a good deal by his irresponsible conduct. It was simply Madeley’s fun, but now that he is a responsible Minister surely he ought to curb his loquacity and remember he is at the head of one of the largest business institutions of the country and have some sobriety. It makes one wonder if men realize their responsibilities when you hear such idle chatter. If Parliament is going to be guided by common sense and by weight of argument this order ought to be discharged and this Bill should be sent to a select committee so that members can be properly informed and instructed about his matter. We all want the same thing, why cannot we come together and thrash out a scheme ? The Government will object to any amendment suggested by the hon. member for Kimberley (Sir Ernest Oppenheimer) who does know what he is talking about. I do not know much about high finance, but the hon. member for Kimberley can give us information, and I hope the Government will profit by it. I think they will be more successful in getting a workable Bill in the select committee room than on the floor of this House.

After all the arguments in favour of the Bill during the past few days, one would have expected that hon. members of the Opposition would have been convinced that it is a necessary measure. Such is especially the case after the lucid and clear statement of the position by the Minister of Mines and Industries which, in my opinion, was more lucid and clear than that of the hon. member for Kimberley (Sir Ernest Oppenheimer). I agree with the hon. member for Dundee (Sir Thomas Watt), that we do not know much about high finance and mining matters, but if we listened carefully to the speeches of the Ministers of Defence and of Mines and Industries, and the hon. member for Zoutpansberg (Mr. Pirow), then I think we have obtained a fairly good insight into the object of the Bill. I therefore wish to appeal to the Opposition to get away from the attitude they have adopted to-day, because I do not think we could have a clearer explanation of the position than the Minister of Mines gave last night. Everybody appreciated the clearness of his explanation. The hon. member for Standerton (Gen. Smuts) got up, but it was clear to me that he had great difficulty in speaking about the matter. He spoke, hesitated and spoke again, so that everybody could see that he was between two stools. He wanted to assist Pretoria, and he wanted to remain with his party. The two horses which he was riding are those we are already accustomed to, one is that the people know nothing about the matter. I want to tell the hon. member that he has already broken the back of that horse to such an extent that no more attention is paid to it. It was the same with the flag question, and also with regard to the reform of the Senate. We who went through the Transvaal second war of independence heard talk at that time of the iron ore in the Transvaal, and of the schemes that existed for the development of the ore deposits. If we do not appreciate the importance to-day of developing those deposits, then we shall never do so. To say, therefore, that the public knows nothing of the matter is an argument which is of no avail whatsoever. The second horse is the allegation of socialism. I should like to quote what a man like Dr. Kuyper has said about the matter. If there ever was a man opposed to socialism, then it was Dr. Kuyper, the well-known anti-revolutionary statesman in Holland. He says—

He says very clearly that if the enterprize cannot be undertaken by the subjects, then it is the duty of the authorities to act. That is what is said by a man who was always the opponent of socialism. It is therefore folly to try and frighten the people with socialism. We have the ore in the country, and attempts have been made for years to develop it. The attempts have not succeeded, and now the Government must act and say that this is an occasion to make the sources of iron ore useful to our people and country. The people must not now be told that the Government have socialistic schemes. Most of our people do not know what socialism means, but the Opposition want to make a bogey of it in order to frighten the people. It is not a question of socialism, but it is in the best interests of South Africa that our iron ore should be developed and used in the interests of the people to whom we belong. The hon. member for Newcastle (Mr. Nel) spoke about the iron industry at Newcastle. We all feel that his argument is earnest, because he represents Newcastle. It is not, however, a question of Newcastle or Vereeniging, but of South Africa. We must deal with the matter from a broad South African standpoint, because otherwise we shall never get beyond local interests. We are here to maintain the interests of South Africa, and therefore we ought to attack this matter with all our power. We must not attach too much importance to the prophecy of the hon. member for Newcastle. It seems as if he has taken over the mantle of the late Nicholas van Rensburg as a prophet, but I want to tell him that prophecies often go wrong. The hon. member wants to follow in the footsteps of the hon. member for Standerton, who has made many prophecies, none of which have ever been realized. The hon. member should therefore be careful not to prophesy so lightly, because it may end unhappily. I want to make another quotation from Dr. Kuyper regarding the years 1914 to 1919. He says—

Take e.g., the trade in tobacco and matches in France and opium in China. There the State intervened and introduced monopolies.

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

At the adjournment I was just representing that this is not a socialistic matter, but one in the public interests. I mentioned how in France, e.g., the State had introduced a monopoly of tobacco and matches, and in Holland and Java a monopoly of opium. But let us look at a State like Denmark. Everybody will admit that that is one of the busiest countries in the world, and very highly developed in industrial matters. In Denmark in connection with the army there are 20 public undertakings where more than 3,000 workpeople are employed, other industries such as cotton mills, the manufacture of gunpowder, porcelain, etc. Take Holland. I do not think we shall call Holland socialistic. There we have the State coal mines, “ Queen Wilhemina ” and “ Queen Emma,” and a State lottery. The same applies to Italy. There you have 19 undertakings carried on by the State. France has State industries of matches, tobacco, gunpowder, metal, porcelain gobelins. Austria, tobacco, salt, lotteries, mines. Germany, to which the hon. member for Zoutpansberg (Mr. Pirow) has already referred, was, before the war, the country which we should least of all call socialistic. Prussia was the most aristocratic country in the world. Vet there are State mines, and mines which make astonishing profits. From 1900 to 1904, the profit of those State mines was £34,000,000, and from 1905 to 1909 £21,000,000. We therefore see that in Germany, when in the Imperial days there was the greatest opposition to socialism, there were State undertakings in the interests of the country, and we find that more than 104,000 workmen were employed in them. No member of the Opposition has said anything about the other Dominions. Just let us look for a moment at New Zealand. How many State undertakings exist there? There is a State monopoly for coal, and quite a number of other products. We find a large number of State undertakings in all prosperous countries. Of all the nations in the world, New Zealand represents the maximum of State undertakings. Why, then, does the hon. member for Standerton speak of perfect socialism? He has no ground for it. We find State coal mines in Germany, Holland, Hungary, New Zealand, and a lot of other countries. We have not to do in this Bill with a State undertaking, but with one which will be supported by the State. The hon. member for Standerton mentioned that grants were previously given to the undertakings at Newcastle and Vereeniging. In this case we are not introducing a State undertaking, but one which will have State support, and we feel that it is indispensable and necessary for the prosperity of our country. The hon. member for Standerton said that technically the undertaking was sound. I say that the undertaking is financially quite sound, because the State guarantees that it will actually be a complete success in the future. I do not want to go into the matter further. I am not an expert, but I merely feel that the principle is one which is necessary for developing our country. The undertaking will not only benefit Pretoria or the Transvaal, but the whole country. Hundreds of people will find work there, and the industry will supply the mines, the railways, the tramways, etc. As for the local interests of Newcastle and Vereeniging, the Minister clearly said that they should approach the Government, and that the Government would help them where possible. Let them make an offer to the Government, who will then see if it can help. I do not think it is in the interests of the Government to undermine or crush any undertaking, but it is only, as Dr. Wagner points out, because public money would be in danger, that action on these lines has been taken. I trust that everybody in the House, after all the explanations from all sides, will see that it is in the interests of South Africa, and of the South African people, that this industry should be created, and that they will therefore heartily support it.

After listening to the remarks of the last speaker, I cannot help feeling that the attitude adopted on this side of the House has not been appreciated. Our attitude is not one of opposition to the establishment of an iron and steel industry in South Africa. I am surprised that the Minister of Mines and Industries, after he has heard member after member pointing out that the information tendered by him is inadequate, should say this afternoon that the second reading must be passed, when the Bill would be referred to a select committee. Our attitude was urged in no unfriendly spirit, but with the desire to feel that if we do embark on this scheme there will be no mistake in the method adopted. It seems to me that if we do pass the second reading, we make it impossible for the select committee to consider how far the principle of State financial assistance under this scheme can, or cannot, be ruled out. It also makes it impossible to deal with the question of State control and, what seems to me to be almost as important, if the matter goes to select committee in the form in which the Bill now stands, there will be no prospect of dealing with that part of the Minister’s speech which deals with the proposed acquisition of the rights of the Pretoria company. Therefore, the position would be this, that upon adopting this Bill without further inquiry, the committee would be precluded from going into details into that portion of the speech where the Minister spoke of what the intentions of the Government were in regard to the Pretoria Iron Works. If the demand made in this part of the House that an opportunity for investigation should be accorded is not reasonable, and if I am right in thinking that the passing of the second reading will largely close the door to that inquiry, perhaps the next step for me would be to deal with is how far that demand for time and information is reasonable. What opportunity has the country had of considering this vast scheme upon which the Government desires to embark ? The Minister has told us that for two and a half years a suppliant at the door of his office has received no information, which means, of course, that the country also has had no indication of the intentions of the Government. The first mention of it as far as this House is concerned was in the Governor-General’s speech. Then we had the Minister of Defence propounding in detail his Bill and supporting it by references to certain reports. All these reports were favourable to the scheme, but does the Minister wish us to understand there were no reports adverse to it ? That strikes me as very remarkable, because we know that in business circles a great deal can be said for and against the scheme. If there is anything which can throw light on this aspect of the proposal, it is the duty of the Government to put it before the House. If it were referred to a select committee, there would be an opportunity for calling for that information and for weighing it side by side with the other information which has been used to support the scheme.

Are you suggesting that we are in possession of reports that are adverse, and that we are suppressing them ?

I asked whether it was possible that such reports existed.

There are no such reports.

Do you suggest we ought to get an adverse report?

If I were embarking upon a business venture of this magnitude, I should be careful as a business man that I learnt the other side of the picture. Is it possible that the Ministers have been careful to shut their ears to any possibility of an adverse report? We only find now, after this cross-examination across the floor of the House, what views they entertain on that point. The Minister must know there are other people who entertain a different view from his own. If we were to take our stand on these reports alone which have been referred to, we find ourselves entirely unprepared to deal with their context, because the only available information, in fact, I think the only available copy of the report, was put on the Table on the day of the second reading speech of the Minister of Defence. I rather gathered from his speech that he himself had not seen the English version of it until 48 hours previously. I may be wrong.

Yes, you are quite wrong, as usual. I said it was only 43 hours before that that I knew there was another English version besides the one I had been studying.

Well, this is the point I want to bring home to him. Is it possible he had the only copy and his colleagues had no opportunity of studying it? Thus we find that the Ministry has not had an opportunity of studying this report, which is the sole ground upon which the country is asked to accept this proposal. It is not fair to ask the House to take responsibility for what is described as a national matter, and to withhold information of that character when the Minister has the assurance over and over again from this side of the House that the matter is not being approached in any captious or in any party spirit. The attitude of the Government in laying this report on the Table and insisting upon the House being party to this Bill without sufficient opportunity to consider the matter, is in effect to keep the true facts from the country as a whole. To avoid that criticism, which may become a very damaging one, I do ask the Minister to reconsider his previous decision. I say it may be a damaging criticism because if the scheme is to be a success, it must depend, to a large extent, upon public support. Hon. members of this side of the House have not had an opportunity of considering the scheme, and are therefore bound to withhold their approval; the reaction of that may operate adversely to the prospects of the success of the scheme. Therefore, I do urge the Minister to consider the request made from these benches, that before the second reading is adopted, he should allow the matter to be made the subject of a full and impartial investigation. The Minister of Mines and Industries himself admitted that he did not feel fully competent to speak on the matter, and if he feels unable to show the House that he has a mastery of all the aspects of the matter, he can hardly expect this side of the House to support him when it feels even more acutely the lack of information. If I must take it ?s final from the Minister that the Bill must pass the second reading first, and then go to a select committee, I should like to draw his attention to some aspects of the Bill, approaching it now entirely from the point of view of the private investor. Let me remind him that a very large number of these prospective investors would be found in the Cape Peninsula and the Western Province. As the Minister of Finance will bear me out, that when a prospectus is issued for a Union loan the fullest support it gets in the Union is from the Cape Peninsula. Therefore, I am entitled to approach this matter from the point of view of one of those investors, and I am entitled to say that if a fuller information is refused I can only regard the opening speech of the Minister of Defence as the official prospectus of this venture. I am putting certain points to him with the object of showing him that the request for a full and unfettered inquiry is a reasonable one. The speech of the Minister of Defence was eloquent in its omission of vital facts which might go to assist an investor who was considering putting money into this scheme. The very first question that will be put by the anxious investor is with reference to the assets it is proposed to acquire from this Pretoria company. If the Minister were really anxious to enlighten the country, he would have told it of what the assets and liabilities of that company consist. I wonder if there an any “ dry dead bones ” in this venture at Pretoria. I notice that although the total capital of the selling company was £350,000 he proposes to pay £200,000 for the rights £150,000, therefore, is to go by the board. What do the remaining assets consist of that he should pay this £200,000? This House knows nothing whatever, from any statement made by the Minister, of what they consist. If the matter goes before the select committee they will, by our practice, be debarred from investigating that matter. We are thrown back upon the information available to us as to what those assets consist of. I notice this company has spent £98,000 of its working capital on administration; the profit and loss account has not been disclosed. Is it fair to ask this House to commit itself to purchase the assets of the company and have to confess that no balance sheet has been put before the House, or will be ? Is there any “ water ” (of which the Minister spoke with such aversion) in that purchase price ? I hope the Minister will tell us, because I understand there is to be no “ water ” allowed in the scheme. Yet there seems to be no objection to paying the vendors a substantial profit. The Minister did not tell us, but I gather that it is an essential feature of this scheme, that there should be an adequate supply of coking coal, and from the German report I notice that the Minister had to assume—in fact, he has said it—that a supply of coking coal is available on the spot. I notice that that assumption may not be at all justified on the report of the advisers on which he places so much reliance. The information is that at a place called Klipplaat, within reach of Pretoria, the company has certain rights in respect of some coal measures which may be found suitable for coking coal. The Minister said they were suitable. Where does the Minister think the coal is coming from ?

There are capital coal measures in Timbuctoo.

If that is the spirit in which the Minister has approached the matter, I find an additional reason for a proper enquiry. I do not think the Minister knows himself. According to the German experts, this coal may have to be purchased in Natal, and from the districts of Vryheid and Dundee. What a remarkable thing it would be if these supplies were found to belong to the rival concern! I do not think the State could expect much sympathy if it has to go into the market to purchase its coal from the other concern. This report indicates that if this coal had to be brought from these districts, it can only be conveyed under at a preferential tariff, and the report indicates that the Government would be called on to grant a preferential tariff for the encouragement and support of the iron and steel works at Pretoria. I gather this might apply also to the conveyance of limestone. I heard the hon. member for Newcastle (Mr. Nel) inform the House that these preferential rates might involve the country in a large expense, something between £400,000 and £600,000. Let me take it that it is a large sum (which I cannot name) because the amount of coal required for coke is 340,000 tons per annum, according to the German experts, and if it is to come from the much-derided territory of Natal—

Who derides it ?

It is very unpopular in Pact quarters. Hon. members of the right wing of the Pact sometimes claim they represent the inland consumers. The burden of this preferential tariff will be borne by these inland consumers represented by these poor, patient oxen treading out the corn at the behest of their friends on their right—and I wonder when they will tire of it—and who are called on continually to assume these burdens in order to promote schemes of this character which fill with joy the heart and illuminate, as we all must notice, the countenance of the Minister of Posts and Telegraphs to such a remarkable degree. And, sir, what exactly are these rights that have been obtained from the Pretoria Town Council? I notice that some further rights have to be obtained. Will the Minister proceed to that council and negotiate with it after purchasing the company’s rights ? It does not seem exactly a businesslike course to pursue. Then I would like to ask the Minister, where is the water supply to come from?

From Natal.

I rather gather that the Minister thinks also that that is coming from Timbuctoo! But what I understand from the report of the German experts is that this supply is coming either from the sewage outfall works, or from some water supply which remains to be investigated and which is some distance from Pretoria. What is the amount of water required ?

It is in the German report.

They make no allowance for the washing of the coal. It is not quite clear from the report. Does the Minister intend to draw any of the water from the Hartebeestpoort Dam ? If that water is to come from this source, we have an additional item to be charged to the capital cost. I have been told on good authority that the existing supply at Pretoria is utterly inadequate to meet the demand, and it will be necessary to draw water from that dam or from some other source. When I first came into the House this afternoon I felt that the Minister would be driven by the force of argument in this House to say that the capital commitment of the Government was not to be limited to £2,000,000, but involved an under-writing of a further £3,000,000 of capital, and the Minister of Mines and Industries, scattering millions, as he did, did find it necessary to give the assurance that the Government would go the whole hog. He will have to amend the Bill, as it does not provide for that. I wonder whether the expenditure of the initial £2,000,000 was undertaken in the same light-hearted way! It struck me it was a hasty statement on the part of the Minister. The management of this concern is to be governed either by the provisions contained in the Bill, or by regulations promulgated later on by the Government. Will it be possible to get a quotation on the London stock exchange? Has the Minister considered whether these shares will be marketable? Under the rules of the exchange, with a concern of this kind, where the majority of the shareholders has no right in the determination of the policy of the company, will the committee allow the stock to have an official quotation? That may prove to be a very serious defect in the scheme. There are certain rules in regard to the constitution of a company before its shares can be quoted on the London stock exchange. Does the Minister think that he has sufficient interest to secure a quotation on the London stock exchange, notwithstanding that the Bill infringes the rules under which that institution permits the shares of companies to be quoted in its official list? And coming to the question of control, let me point out the essential difference between the control of this company and that embodied in our Electricity Act and in, for instance, the Electricity Act passed by the British House of Commons. In the latter case the British Government has constituted a corporation with a board of seven members with a right to raise a capital up to £35,000,000. No private capital is employed by either our own Electricity Commission or the British Electricity Commission. The distinguishing difference between these schemes and the scheme embodied in this Bill is that the electricity commissions sell to the private undertaker and do not exterminate him; our Electricity Commission has never threatened an undertaker with extermination after declining to purchase his undertaking. Lack of opportunity to the shareholders of the new company to express their views foredooms the scheme to failure. The auditors whom the Minister is to appoint, on the recommendation of the private shareholders, are not to be charged with the duties which auditors ordinarily are compelled to discharge, but only to the extent that the Minister may decide will the auditors be bound to disclose any matters which may come to their notice in the course of their audit. Is there any reason for that? If this country is to be put to an expenditure of £5,000,000, surely Parliament is to have some say in the matter. This vast amount of public money, which may eventually extend to £7,500,000, is to be completely divorced from the control of the House. Is there any precedent for that? This is a fundamental departure from the principles of public finance which the House should be very slow to endorse. I would like to come to another point on which the Minister of Defence may enlighten us, and that is the basis on which he arrives at an estimate of a profit of 14½ per cent.

I never mentioned 14½ per cent.

I don’t suppose the Minister will repudiate the statement of the Minister of Mines.

He quoted from the report.

Apparently the authority for that statement is the report, which is hopelessly wrong by the way in regard to the cost of coloured or native labour. That report concludes with a statement that the dividend to be expected is 14.4 per cent. This Government is prepared to stake its reputation—

That would be staking very little.

We will say its slender reputation for finance, on the authority of three experts who were in this country for three months, and who would have to be expert not only as to the manufacture of steel, but in some extraordinary manner are expected to have acquired sufficient information to be able to tell us that a company of this kind under local conditions will be able to earn a dividend of 14.5 per cent. If the Minister of Justice were present I might ask him how he combines this blind faith in imported Prussian brains with the interdict he would like to pass against all imported brains. The Minister assumes that as soon as operations start the new company will immediately capture two-thirds of the trade. Apparently the total business to be done in the internal market is 180,000 tons a year, yet the Minister expects the new company to capture two-thirds of that trade in face of competition with the keenest industrial concerns operating from other parts of the world. How does the Minister propose to obtain that trade ? Has he stopped to consider that trade is sometimes tied or does he imagine immediately he comes into the field the South African market will rush helter-skelter to him? [Time limit extended.] I would like to say in conclusion that I believe that the competition that will ensue on the establishment of the new works will be very severe, although it will not be conducted on the maxim—extraordinarily callous—laid down by the Minister of Mines that if the competition results in the extermination of one of two competitors concerned in the Bill it cannot be helped. Is he prepared to stand the racket of that competition, or are we to have a series of preferential rates on the railways and protection for the sake of this industry ? This concern with a capital of £5,000,000 will literally struggle for its existence, and I do not think there will be any profits.

That is why you want the limit removed.

If the Minister wants to overcome these difficulties let him draw from the fund of information available on this side of the House—something that may help him to run the concern. The biggest hole ever blown into any Bill was blown this afternoon by the speech of the hon. member for Kimberley (Sir Ernest Oppenheimer). The ship that is about to be launched is likely to leak very badly. Despite the fact that the Minister of Defence finds so much amusement in the speeches from this side of the House, he will be compelled eventually to revise the whole of the clauses regarding the capital and some of the suggestions from) this side of the House will have to be adopted. Yet he refuses us a proper inquiry. This is not being treated as a party matter. Member after member has risen from his seat on this side of the House and has told the Minister that he would like to have the opportunity of dealing in Select Committee unhampered by restriction with the details of the Bill, yet notwithstanding this statement this plundering and blundering Government .... I am glad that hon. members opposite recognize the description—persist in proceeding on these lines to which we object. The responsibility must rest upon them, but the bitter reflection is that in 1929 when the sorry mess comes to be put right we on this side of the House will have to turn to and attend to it.

On behalf of those I represent I congratulate the Government on bringing forward this measure, and more particularly on its determination as expressed by the Minister of Mines to put the matter through notwithstanding any boycott or other opposition by the financiers. Despite the legal thunder of our friend who has just sat down I say that the Government is in this matter going to maintain its reputation as a Government of action. Anyone listening to the speeches of hon. members opposite would come to the conclusion that the iron deposits of South Africa had been discovered only within the last few months and that Government was rushing in before private enterprise had had an opportunity of working those deposits. As a matter of fact for years past the existence of these deposits has been known and the last Government attempted in its own way to develop an iron ore industry. But the efforts depended on the exertions of private enterprize and not only proved absolutely futile but wasted several valuable years. A number of the people who are objecting to the Government participating in this matter are the same people who objected to the Government participating in the working of the mines, vet the Government share of profits in the gold mines last year have just realised £2,700,000. In passing I would like to say that I think this money should be spent to develop other minerals. In the discussion the Opposition has endeavoured to gain some sympathy for the companies at Newcastle and Vereeniging. We are told that these people were first in the field, and that we should allow them to continue, but the experts tell us there is only room for one big iron and steel industry in South Africa, and that the best site for it is Pretoria. We will all regret if those interested in the Newcastle and Vereeniging concerns should lose money, but the first business of this Government and this House is to establish an iron and steel industry and not consider private individuals. The individuals concerned went into the industry for profit and it turns out badly for them, then it is a pity, but we cannot be stopped in our development or have the whole interests of the country jeopardised because of private enterprize. There has been a good deal of discussion on the financial arrangements in the Bill. I will not venture to set my experience against that of the hon. member for Kimberley (Sir Ernest Oppenheimer) on the ethics of floating companies; but speaking from the public point of view I am certain the public will much prefer to leave themselves in the hands of the Government than in the hands of the stock exchange. At any rate the question of how much money the Government should put up and how much control it should exercise are only details of the scheme. The main fact is that on all sides it is admitted we have all the essentials for a successful iron and steel industry which can be made a great boon to the country and provide a large measure of employment to skilled Europeans. In all new industries the question of prospective profits must be a matter of opinion, but the Government in this instance is safeguarded by the expert advice obtained. Everybody agrees that the German experts who reported on the iron industry knew their work from top to bottom, and they told us there was a probable profit of 14½ per cent. It should also be remembered that they were representing people who wanted to buy our iron deposits and as buyers their estimate was naturally a conservative one. The estimates of profit given by other experts to the late Government were far higher than 14½ per cent. If expert opinion is worth anything then the industry must be successful financially. I am delighted that the Government is going to take this industry over because they are not only going to see the industry developed, but under their control the workers are going to get fair play. In industry it is necessary to have fair profits, but it is also essential, if we want the best results, that the workers must have fair conditions which will lead to harmony and cooperation. A lot of the opposition to the Bill has been brought forward because, as stated by the hon. member for Standerton (Gen. Smuts) there is a taint of socialism about it, and Queensland was mentioned as a place were socialism is rampant and the country is being ruined by State enterprises. Queensland is the only place where labour policy and state enterprize has been long enough in existence to be tested, and I think that an investigation of the circumstances will be very discomfiting to the gentlemen opposite. Opponents of State enterprize can fairly be said to have their vision bounded by account books and they can not be got to understand that if a balance-sheet shows a loss it is possible to put a different complexion on the whole matter. For instance State enterprize at Queensland in some cases showed a loss, but at the same time, there was a great profit to the general public. The State butcheries showed a loss on the balance sheet, but during the time they were in existence the price of meat in Queensland ruled 2d. to 3d. a lb. lower than in Victoria or New South Wales, and whilst the State butcheries lost a few thousand pounds, the general meat consumers in Queensland saved three million pounds. It is true that some State enterprizes had been closed down. It was found that State enterprise was a practical scheme, but the promoters did not allow sufficiently for the personal element. The Queensland Tory party and its press so consistently condemned State enterprizes on the ground that employees would not give a fair day’s work for their wages that the men engaged in the industries eventually came to the conclusion that something of that sort was expected of them, and they slowed down. The Labour Government of Queensland showed a good deal of courage in dealing with this position and said to the employees—

In this action the Queensland Government did a great service to the principle of State enterprise for it showed the workers that they must play the game, and give a fair return of labour, for without this no industry can continue. The state industries in Queensland which have been suspended will no doubt be resuscitated, and with legal co-operation there is no reason why they should not be very successful. We heard from the hon. member for Port Elizabeth (South) (Sir William Macintosh) that some people were inoculated with the Labour bacillus. This seems to be the case in Queensland, where the Labour Government has been in power for fifteen years, and at the last election every Labour man who retired was returned again. Whether there was a Labour bacillus or not the people on the spot who must know more about local conditions than the gentlemen opposite sent the same people back.

Tell us of one single State enterprize which proved successful. You cannot tell us of one.

Neither can you.

I want to quote a few figures with regard to Queensland to show why labour retains the confidence of the people. During the last ten years the population of Queensland increased from 670,000 to 850,000; manufactures increased from £25,000,000 to £38,000,000; farm products increased from £10,500,000 to £19,000,000; savings bank deposits from £10,000,000 to £21,500,000. The deposits in the savings bank of a people who we are told are ruined by State enterprize, increased per head from £14 19s. 6d. to £24 19s. 1d. and the assets in all the banks increased from £24,500,000 to £60,000,000—not a bad performance in a “ ruined ” country. It is not fair to compare South Africa or England with Australia, so I will compare the position of Queensland with the remaining five states in Australia. In the other states they have been swayed by the influence which we have on the other side of this House, and, generally speaking, excepting railways, posts and telegraphs, etc., State enterprizes are confined to Queensland. Yet compared with the other states the average interest on loans is lower in Queensland than anywhere else, and the average expenditure on loans per head is also lower. We also find that the railways have increased from 4,438 miles to 6,014 miles, the largest mileage per head of the population than anywhere else in the world, and that expenditure on trains per mile is 8s. 6d. in Queensland, 10s. in New South Wales, and 10s. 9d. in Victoria. There has also been a smaller increase on freights and fares in Queensland than in any other state. These are all financial reasons which should appeal to the Opposition, but the main question that appeals to these benches is whether the conditions are productive to the health and happiness of the people. Let us therefore compare Queensland’s social conditions with the rest of Australia, and I am sure everyone must agree that the conditions in Queensland are very good indeed. Wages are higher than anywhere else in Australia; working hours, 44 per week, are shorter, and a smaller percentage of women and juveniles are employed in industries. The cost of living is lower; they have the highest birth rate and the lowest death rate and the longest average duration of human life in the whole of Australia, and finally there is a greater percentage of house owners in Queensland than in any other part of the world. Generally, in Queensland, it must be admitted, State enterprize has assisted to raise the standard of human life and working class conditions higher than in any other place in the world. This is the—

of Queensland, and we are solemnly told that if we follow it we shall bring ruin to South Africa. If State enterprizes are going to bring a result like that of Queensland to South Africa I hope the Government will go full steam ahead. I hope, that having started upon this industry the Government will go on, and that they will make it an accomplished fact with the least possible waste of time.

We have heard a lot about the Bill, and I want to make it clear that I do not believe that there is one hon. member on this side of the House who wishes to oppose industries in South Africa. It is the principle of the South African party to push industries. What has surprised me very much is that the hon. members for George (Mr. Brink) and Riversdale (Mr. Badenhorst) who represent farmers have remained so quiet. I feel sorry for the hon. member for Riversdale, because this is another of the big matters where the Nationalist party have to do the bidding of the Labour party. I should like to know whether the hon. member for Riversdale, and other members opposite have already explained the Bill to their constituents.

Of course.

I congratulate the hon. member in that he had an opportunity of doing so, because we have not yet had a chance of teling the public what principle the Government now wishes to introduce. It is certain that if the public outside know the game that is being played here, and that millions of pounds will be taken out of the Treasury, they will not be satisfied. The motion of our hon. leader merely asks the Government to give more opportunity to properly investigate the matter. Why cannot the Government grant that ? What danger will there be in doing so ? Why cannot the Bill first be referred for enquiry to a Select Committee? I am certain that the hon. member for Riversdale has not yet looked at the report. It is a very voluminous document, I have looked at it here and there, but we have not yet had an opportunity of studying it properly. The Minister of Mines and Industries said it was a very good report, and I believe it, but there are only two copies, and the Minister said that it was not printed because it would cost too much money. I am in favour of the Government economising as much as possible, but we have to do here with a very important matter about which the people should decide. I have here a blue book on the Liquor Bill of the Minister of Justice. The Dutch edition cost £1,261, and then there is the further cost of the English edition, which is still more. For that, money could easily be found by the Treasury, but here where the House ought necessarily to know what is going on, it was not possible to have the report printed. I admit that the report was laid on the Table, but few hon. members have had a chance of reading it. The clever members of the House have been reading it so much that the farmers have had little chance. No one would be more pleased than I if a large iron industry is established in Pretoria, if it were hot that this dangerous principle is being applied here. I honestly think that Pretoria is a very suitable place for it. My constituency takes in a part of the district of Pretoria, and it will be a good thing for my constituents, but I should be neglecting my duty if I did not oppose the principle of the Government.

How many shares will you take?

No, I would rather invest my money elsewhere, because I do not trust this company. I am afraid of State undertakings, and other investors will also be afraid. The reason is that we are dealing with the principle which oppresses private under-takings that have invested hundreds of thousands of pounds and have commenced iron industries. The Minister of Mines and Industries said that that did not mailer to him. How can anybody take shares in such a company ?

You prefer the diggings don’t you ?

The hon. member can go and dig himself if the diggers will allow him there. I am sorry for the Nationalist party which is being ridden by the Labour party. The principles of the latter are, that everything must be done by the State. To-day it is iron, to-morrow something else, and later on, agriculture will also be made a State under-taking. In my opinion a Government which listens to the Labour party cannot do anything properly. In Johannesburg the Labour party once had a majority on the town council, and they wanted the town council to undertake everything. I want to make it clear to the hon. member for Riversdale, because I want him to go and tell it to his constituents.

What about the importation of flour ?

They wanted to undertake a creamery and a butchery, but could not quite manage it. The only industry that was started was brick-making, and the bricks cost £14 per 1,000 instead of £2 10s. and £3 for which private people made them. The Government will want to carry on this great iron and steel industry on the principle of the Minister of Posts and Telegraphs. How will it end of unskilled workmen even natives are to be paid 1s. an hour ? That principle has been laid down by the Government for the whites and natives in the building trade. What will be the consequence of that on the iron and steel industry ? I think it would be very fair if the Minister accepted the motion of the hon. member for Standerton. The Minister of Mines and Industries said that the Minister of Defence introduced the Bill because he (Mr. Beyers) was away in India. Why then did not the Minister of Defence put all the data before the people ? Why should the people be kept in ignorance. When hon. members opposite were in Opposition they said that the S.A.P. Government introduced a Bill of which the public knew nothing. Here comes the Government, however, with a Bill which involves the spending of millions of pounds from the Treasury, and the public is not enlightened about the matter. Things may perhaps better than I think, but I think the undertaking will never pay, and that the tax-payers will be the sufferers. The hon. member for Riversdale spoke about the importation of flour, but that was a case where the Government meddled in the business of private people, and they made a mistake. Now I do not want the present Government to make the same mistake. The greatest objection I have to the Bill is that private companies who have invested hundreds of thousands of pounds in the iron and steel industry are now being damaged by the State. It will drive all the capital out of the country. Foreign investors will in time not want to invest here at all. Hon. members can say what they like, but where should we have been to-day if it had not been for foreign capital? The S.A.P. Government laid down the principle of leasing mines to private companies. The hon. member for Riversdale must therefore go and tell his electors that the former Government did that and that the State got a cheque for £2,700,000 for the share it had in the mine. Hon. members opposite must admit that the S.A.P. Government did a good thing.

Yes, it did a good thing in resigning.

The Government must not establish a State mine. During the elections the Labour party were shouting for State mines, and the hon. member for Vredefort (Mr. Munnik) was one of the ringleaders, and said that as soon as the Pact Government came in there would be State mines. The Government has acted very wisely in giving no effect to that up to the present. It was one of the promises made to the Labour party, but it has not been fulfilled. We have, however, already placed laws on the statute book with a socialistic principle, which the people will yet regret e.g. the Wages Act. Here we have the same principle, and the taxpayer’s money will be invested. I am not well up in financial matters like some hon. members of the House, but I do not think that the shares of the company will be taken up. The iron industry is really one of those that should be assisted. The former Government undertook to give bonuses, and the people who relied on that, established factories, invested their money in the industry and tried to push the country ahead as much as possible are now being ruined by a stroke of the pen. I ask if that is just ? The Minister of Mines and Industries said that he did not mind at all. Where is it to end ? The Minister said that the South African party had stated that the credit of the country would receive a shock, but that had not yet taken place. I admit the new Government has always obtained the loans for which it asked, but the reason is because investors are afraid of putting their money into private concerns, because there is a party in power who do not mind attacking private property. If this principle continues it will not only stay here, but the landowners will also be affected. I hope the Minister will listen and send the Bill to a Select Committee before the second reading so that proper enquiry can be made. It will not take too long, and the Bill will come up for disposal this year. Evidence ought to be taken so that we can come to a proper judgment about the matter and we can go to our voters to make it clear to them. The Minister of Defence said that the Bill would be put through. He flatters himself that he is a big man, but the people will decide about that later on. It would be a great pity if millions of pounds are lost, and the industry is not even put on its feet. It is a good matter, but I disapprove of its being undertaken in this way. I am convinced that there is no better iron ore and other accessories than in Pretoria, but why must private people be so frightened off from investing their money in it?

They were frightened in the past because there was no guarantee.

What guarantee can the hon. member for George (Mr. Brink) give? If a factory is established and the Labour party has to decide on the policy with its high wages, then no one would be willing to invest money in it. Therefore I think we ought to be careful and I hope hon. members will take time to think over the matter and not run after the Minister of Defence. I am surprised that the Minister of Defence has introduced the Bill. We have, however, seen that it was not very long before he had to call in the Minister of Mines and Industries to explain the Bill. I give every credit to the Minister of Mines and Industries for understanding the matter well, but I hope the Government at the last moment will take the sound line and have the question gone into so that public money should not be lost and the industry will not go wrong.

I think it is very wise of hon. members of the Opposition to go into the matter thoroughly and then express their views, and I should also be glad to hear the views of those hon. members in the Opposition who represent the farming population. I admit that their number is very small, but there is still the hon. member for Bethal (Lt.-Col. H. D. Grobler) and I should be glad if he also will give his views. The point is that while the hon. member for Johannesburg (North) (Mr. Geldenhuys) was still complaining about the lack of information, people on his side made use of information which was supplied them in writing which almost looks like abuse. I will quote what the hon. member for Cape Town (Gardens) (Mr. Coulter) said with reference to Pretoria. The hon. member asked the Minister whether there would be a shortage of water in Pretoria for such an industry. The hon. member has the same report in English that I have here in Afrikaans, and on page 48 it says—

The hon. member spoke of blunders and blunders, but as regards this report, and he has certainly not read it very well, he has blundered and blundered. What the farming population is interested in, is, of course, how the capital is to be obtained, but especially how farmers’ interests will be affected by the industry. In connection with this I want to quote certain figures which in my opinion the farming population ought to have, because in the first place it concerns their interests. The great point in this connection is what articles the new industry can deliver to the farmers. [No quorum.] I wish to point out that in consequence of the establishment of the iron and steel industry the farmers will be able to obtain a large number of articles much more cheaply than hitherto, and that this will benefit the countryside very much. Take the supply of wire. The basis on which the quantities of the various kinds of wire are calculated is, I understand, No. 8. In our country 55,000 tons were used in 1924, and 51,000 in 1925, at a price of not less than £17 6s. per ton. which amounts in a year to £950,000. In various parts of the country compulsory fencing has been introduced, and it is therefore a point of great importance to the farmers. Further, there are the fencing standards, of which 26,000 tons were used in 1924, and 17,000 tons in 1925, which is another great item. Then there are pick axes. 171,000 of them were used in 1925 to a value of £13,000, and 143,000 in 1924 valued at £11,500. Then there are spades, of which 391,000, valued at £48,000, were used in 1924, and 456,000, valued at £51,000, in 1925. These are only a few examples. The question is asked whether Pretoria is actually the right place, and besides the water, I want to point out that there are various large dams in the neighbourhood of Pretoria, such as the Hartebeestpoort dam, and the Bon Accord dam. Then there is a large number of farms with intensive farming in the neighbourhood of Pretoria, but up to to-day there was no market for the produce in Pretoria. It happened that people took vegetables to the market for which they did not even get railway freight. As regards my constituency, it is further of great interest to see from the report that in Pretoria North, at Marble Hall, the right kind of limestone is found which the industry will require, and I hope, also, that the railway there, for which we have asked so long, will now be built. The hon. member for Kimberley (Sir Ernest Oppenheimer) has said that a great deal of the steel now produced in South Africa is used in Johannesburg, and he gave the figure of 32.4 per cent, or about one-third. The result of the establishment of the industry at Pretoria will be that Johannesburg will have an opportunity of being better supplied by Pretoria, and I can see the day dawning when Johannesburg will be an important suburb of Pretoria, An important point is the providing of work as the result of the establishment of the industry. We find on page 40 of the report a statement of the number of persons who will be required immediately the industry is established. It will be a staff of 64, plus 350 tradesmen and 573 assistant tradesmen, together approximately 1,000 persons. And let me say here at once that as regards the assistant tradesmen, those people can be directly recruited from our poor whites, who although they are possibly not so well suited for farming, can become excellent tradesmen if they only get a chance of being trained. The total number of workmen who will be required when the factory is working is about 4,000, which will bring about an increase in the population of Pretoria of 16,000, if we reckon that each man has a family of three persons on an average. It will take three years to build the factory, and during those three years many workers in the building trade will find work. I just want to point out that in the solution of the poor white problem the establishment of industries is of great importance. Only 5 per cent, of our population are employed in industries, while the percentage in England is more than 50. The remarks made by hon. members of the Opposition with regard to this Bill are hardly worth the trouble of answering. I should therefore like to hear what the hon. member for Pretoria (East) (Mr. Giovanetti) has to say about this matter, and whether he will agree with his leader that we are here concerned with a matter which is tainted by socialism. He sits so silent there, but I think that he at any rate ought to express his opinion on this occasion. Then much noise is being made about the poor towns, Newcastle and Vereeniging, which have factories, and hon. members try to raise sympathy for those two towns. The Government will doubtless do justice to them. But what I cannot quite understand is that those combines, such as that of Vereeniging, still dare to appeal to the Rand for sympathy. Because what has the combine done in Western Transvaal. They have sub-divided various farms they own into small portions in order to get as large a number of claims as possible on the alluvial diggings. Are they entitled to so much sympathy where they have exhibited such a lack of sympathy towards the public—I will not say by robbing them—but by depriving them of as many claims as possible ? The Opposition ought to point out the mistakes in the Bill, and I hope that other hon. members and, especially the hon. member for Pretoria (East) (Mr. Giovanetti) will follow in the footsteps of their leader and throw stones in the way of the motor which the Government has put into motion.

I wonder if the Minister of Mines has come to the conclusion that he made a mistake in not printing the experts’ report after he has listened to the criticisms of the opponents of the scheme. It is quite evident that they have derived all their material from the propaganda in the press and not from the reports which have been laid on the Table. The speech of the hon. member for Cape Town (Gardens) (Mr. Coulter) was a pure propaganda speech in favour of special vested interests, and it rather surprised me after the speeches of the leader of the Opposition and the hon. member for Kimberley (Sir Ernest Oppenheimer) for they had already said that they had gone into the report and that they were quite prepared to admit that from the point of view of a national industry, Pretoria was the most suitable place, their only concern being with the financial aspect of the scheme. I would like to remind hon. members opposite who have stated that the South African party have done nothing to assist this industry, that the South African party Government arranged for this commission to come to South Africa. That Government approached Mr. Spilhaus (after finding that they could not raise the capital on the Continent or Great Britain) they asked the German firm to send out their experts, with the idea of establishing an industry. The hon. member for Cape Town (Gardens) said it was impossible for these experts to prepare this report in two months, as men who had been in the country for years were not satisfied as to the possibilities of this iron and steel industry. But it must be remembered that the commission was assisted by the technical advisers to the Government, and that they took back with them to Germany 600 tons— (not a mere carpet bagful—) of samples of ores and fluxes, and make the most exhaustive tests of them. Therefore they were in a better position to report than men who simply went to the farms and walked round prospecting with a little hammer. The hon. member for Kimberley stated that he was satisfied that a key industry could be built up in Pretoria. I with others as some of you know, have been interested in this scheme, not financially interested, so I approach it from a purely impartial point of view. I happened to be mayor of Pretoria at the time this lease was entered into, and I went into the matter fully with Mr. Delfos, and we were satisfied with the report of Dr. Wagner that a big industry could be built up in Pretoria. The hon. member for Parktown (Mr. Rockey), in his speech last Monday, said Pretoria was associated mainly with failures. The Select Committee in 1925 went into the Pretoria iron agreement, and Mr. Warington Smyth and Sir William Hoy and others said that Pretoria had carried out their side in the most business-like manner, as Pretoria usually does. They took a lease of the property, and then went on to prove the property, and the, expert advice was that if they wished to compete with the world in iron and steel they must go for the big thing or nothing. The gentlemen who have been responsible for the propaganda in the newspapers say, that you must start on a small scale and build up, but they know nothing about it. You have to go for a big scheme or keep your money in your pocket. The Pretoria people began to look for the coal, limestone and fluxes, and came to the conclusion that you must go for the big concern. At the close of the war we found that prices were up, and the cost of raising machinery was far beyond what the Pretoria people could afford to put in. The scheme did not come to fruition because they expected to buy some big iron works erected on the Continent and have the machinery shifted to Pretoria. It is possible they would have bought obsolete machinery. With the report of the German experts they will probably be able to buy up-to-date machinery and save a lot of money through this three or four years wait. If the competition had started three or four years ago it would have meant a fair and open field, and possibly the three concerns would have failed. The Union Steel Corporation scheme has proved that it is impossible to start on those conditions to-day. They cannot work 300 miles apart from the supply. In the German report the estimated cost of producing pig at Pretoria is £3 4s. 6d. as against £6 per ton, which is the cost of producing at Newcastle to-day, then they rail their pig iron at a cost of another £2 per ton to Vereeniging. That is the scheme these German experts found on coming here, and they said you will have to go for the big concern and put it on a site where the ore and coal is and where you can get a market. I am sorry the Minister did not print the report which is an overwhelming case for the establishment of this industry at Pretoria. It would have cleared up the doubters who have not read the report but who have based their criticism on newspaper reports. In a national industry like this it should be supported whole-heartedly, and there should be no party division. I would like to deal with one or two criticisms with the idea of clearing up the differences which have arisen in the minds of hon. members. The hon. member for Cape Town (Gardens) (Mr. Coulter) is now in his place, and he was inclined to criticise this report with the idea of supporting the industry at present in existence. It is clear he did not read the German report thoroughly or he would have learned it was impossible to carry on the business on such small dimensions. He said there was no coke or coal in Pretoria. It was true the German report was based on the washing of coal at Witbank, and even then they showed it was cheaper to establish the industry at Pretoria. Since the report in 1924 Professor Nellmapius has been experimenting with the coal at Witbank, and has shown there is 50,000,000 tons of good coking coal to be obtained there. There is no question of iron ore at Pretoria. There are millions of tons on the town lands, and it is simply a question of mining it in the open workings. There is enough ore to last for the next 125 years. Then the hon. member said that there was no water supply there. It is estimated that they will require on these works about 2,000,000 gallons a day. The municipality has a dam on the site that holds about 10,000,000 gallons. A new dam is being erected on the site at Skinner’s Spruit. This spruit rises from a spring on the town lands. The judges of the water court have already given a decision in favour of Pretoria that it is possible for them to build a dam and utilize this water for the purpose of the industry.

What is the flow?

It is continuous, and the dam will contain anything from half a million to one million gallons. Then Professor Bury has gone into the matter. We have water-borne sewage at Pretoria, and it is possible to use the effluent from this for the purposes of the steel industry. The question of markets has arisen, and probably it is just as well that I should deal with that point at once. The Board of Trade in Great Britain in its report in 1916 went into the question of the iron industry there, and it estimated that a plant should be put up to run an output of at least 300,100 tons per annum. It is estimated that the South African Industry, with a production of 150,000 tons of pig-iron which could be converted into 132,000 tons of steel, will be sufficient for the present, and that with an approximately 40 per cent. increase of machinery, you can double your output. There is, therefore, no question of output. It is estimated we could produce pig-iron at Pretoria at £3 4s. 6d. per ton. In 1924 the price at Antwerp was £4 13s. In June, 1925, the price for pig-iron in Great Britain was £4, and in America £4 18s. 3d. These estimates were, as I said before, based on the most conservative figures. At the time when these gentlemen were preparing these estimates they were potential buyers. This report only came into the hands of the Government after they had decided not to buy.

Why did they decide not to buy ?

At the time when they made this report this company had its iron works in the Ruhr district. The French had occupied this area. These gentlemen were endeavouring to raise money for this concern when they found that they had to raise money to keep their own concern going. The hon. member for Kimberley (Sir Ernest Oppenheimer) who has been interesting himself in these matters for years, is not a gentleman who makes a statement without considering it. He stated that when this German firm put forward a report it was something that you could stake your money on. They would not put their name to a report unless they were satisfied it was a correct one. Then Professor Bury who is also a big man in the old country—

Was he the consulting engineer of the Pretoria people?

He used to be. Is there any objection to that ?

No.

Would you like to hear what your own engineer said about your coalfields ? He stated that the natal coalfields as far as present information indicated contained no suitable iron ore deposits within economic distance, and that the cost of transferring the ore was prohibitive. That is the view of Professor Reece, the consulting engineer of the Union Steel Corporation of which the Newcastle Steel Works is a subsidiary company. This is not a question of Pretoria versus Newcastle. The question is whether we should establish an iron and steel industry on an economic basis, and I am quite prepared to take the report of the people who know, not the report of professors who write to the papers and put up a case. After all I am convinced at any rate that if we can get an industry of this sort started in South Africa we will get rid of quite a lot of our troubles, and a number of little subsidiary industries which the Minister of Finance has helped to bolster up will probably wither away under this big industry. I want to say a word about the markets. The total imports from 1909 to 1923 were something in the neighbourhood of £58,000,000. The average during the war years was a little over £5,000,000. In 1925 our imports were 370,000 tons: that included all the big roller mill stuff such as girders, rails, etc. and 43,000 tons of galvanized iron. The f.o.b. value of that was £1,750,000. The estimated cost of 130,000 tons produced at Pretoria was about £1,289,100. The estimated cost of producing this was on the high side, because these experts when they got out their estimates were expecting to get their manganese from India. Since this report was given manganese has been found near Kimberley you can take off 8s. 6d. per ton. in connection with the Pretoria cost of production. Heavy rails for the Government are about £7 7s. per ton; the price in Johannesburg to-day is £8 19s. The cost of private rails is also £7 7s. and the public are paying £12 4s. On steel sections the cost of production is £7 16s. and the selling price in Johannesburg is £13 5s. Rod production is £13 17s., and the selling price is £12 12s. For galvanized wire the cost of production is £13 17s., and the selling price £15. Galvanized sheet iron, the cost of production is £12 12s. and the selling price in Johannesburg is £15 11s. The hon. member for Cape Town (Central) (Mr. Jagger) said that if we were to go in the production recommended by the Board of Trade, viz., 300,000 tons, we would have to go in for export. We are only estimating at present to provide for 132,000 tons, so the market lies within our own doors. The hon. member for Newcastle (Mr. Nel) backed by the hon. member for. Gardens (Mr. Coulter) said it was going to cost, the Railway Department in preferential rates about £400,000 a year. It shows they have not read the report at all. Pretoria has been selected because of its proximity to the mines. Of the estimated turnover of 150,000 tons only 35 per cent. comes down to the coast. The whole of the market is up in the Transvaal.

What are you allowing for railway rates ?

Pretoria is close to Johannesburg, and our big market is there. The German report states that Pretoria is the most favourable situation for the erection of the iron and steel industry, and is situated in the midst of the richest ore. It is in close proximity to other rich ore deposits. It is favourably situated, near the largest centre of consumption, which is Johannesburg, and on the main trunk line to Cape Town and Rhodesia, It is close to the coke and coal of Witbank. As to water supplies, the Pretoria Municipality is prepared to offer water in addition to the dam about to be built at 5d. per 1,000 gallons. The site of the works on the present railway line makes mining easy, and the plant can be built to produce economically. As to flux, it is in close proximity to the works and adjacent to a mine itself. An extensive hinterland is being developed as regards agriculture. The Minister of Finance, when he was in Great Britain, had the opportunity of seeing this report, but he thought he would get another opinion, and he asked Professor Bury for an opinion. His report on the German proposal was—

1. A. The firm commands industrial respect.
2. B. The report is conservative in every respect.
3. C. They approached the Pretoria project as buyers, and as buyers they employed four experts for nine months.
4. D. The Pretoria proposal has been soundly conceived.
5. E. The position as to reserves of ore, good coking coal, water supply, power plants, use of gas and by-products have all been considered.
6. F. The reports are reserved and cautious in every respect as regards running costs, choice of materials, choice of plant, markets, selling price, and all the main essentials of a successful steel industry.
7. G. The company has approached all considerations from the standpoint of the purchaser, which was the actual position at the time of the inquiry.

In 1925 the Pretoria people were dealing with this report, and they had hopes that this company would commence operations. The Select Committee on Railways took evidence from Mr. Warington Smyth and Sir William Hoy. Mr. Smyth stated that his department had taken the greatest interest in the matter. He also said that the Newcastle works were not satisfactory, as a legitimate industry could not be justified at that place. Sir William Hoy said that Pretoria was the most economical site. The establishment of an iron industry was most important, but production could be successful on a large scale only. Sir William added that the Government should substantially support the iron industry. I hope, in conclusion, that the Minister will be prepared to consider in Select Committee any proposal brought forward from this side.

After the manner in which the hon. member for Pretoria (Mr. Giovanetti) has knocked the bottom out of the argument of his own side in respect of the intrinsic value of the scheme, it seems hardly necessary to follow him on that point. There are, however, one or two side lines which are worth following. Both the hon. member for Gardens (Mr. Coulter) and the hon. member for Dundee (Sir Thomas Watt) complained very bitterly that the Government was holding back essential information. I would like to give a little instance showing how the last Government dealt with this matter. In the Hansard for 1925 session I find on page 1262 a number of references to the manner in which the S.A. Party Government dealt with the Newcastle iron and steel works at the time of the general election of 1924. Those references were made in a speech by the Minister of Mines and Industries. I think it as well to recall some of these remarks. On February 26th. 1924, Mr. Lane, secretary to the Prime Minister, Gen. Smuts, wrote asking the Minister of Mines to give a reply on the question of the Newcastle Steel and Iron Works. The Minister’s secretary, Mr. Warington Smyth, wrote back—

Then, on April 15, there is a letter from the Board of Trade and Industries, which says—

Then, on the 1st May, 1924, there is a letter from Mr. J. K. Eaton to the right hon. the member for Standerton (Gen. Smuts)—

On May 8th, 1924, Mr. Lane wrote back—

Then, on the 9th of May, Mr. Lane wrote to Mr. Warington Smyth—

Just a day before this gentleman had stated that he had unintentionally misled Senator Greaves. Let us go on. On May 9th a telegram was sent from “ Mineralogy ” (the Mines Department), Cape Town, to “ Mineralogy,” Pretoria saying—

In another letter, dated 12th May, 1924. Mr. Smyth writes to Mr. Lane—

-Now enters the hon. member for Dundee (Sir Thomas Watt). He is interested in this matter. It is election time. In a letter to Mr. Warington Smyth, dated 22nd May, 1924, he asks Mr. Smyth when he gets the estimate of the tonnage of available iron ore to give this to the Government Engineer and get his report on it. The letter adds—

I do not think it comes well from members of the South African Party to accuse this Government of attempting to withhold information. I am very pleased indeed that I have an opportunity of supporting this particular measure. I have always been a believer in State control in place of private enterprise, for I believe that under State control it is possible to do far better and far more in the interests of the country. I want to give one or two instances of what happened to the people of this country when private enterprise had got its grip on the mineral resources of this country. About 1892 Sir Lionel Phillips, a well-known mining magnate in this country, acquired a number of blocks of claims on the Rand. The cost of those claims was something in the neighbourhood of £3,000. A concern was floated, called the Johannesburg and African Exploration Syndicate, and that syndicate acquired the claims for, roughly, £3,000, the practical owner being Sir Lionel Phillips, then Mr. Lionel Phillips. He was afterwards knighted for his services to the nation. On January 13th, 1892, an agreement was entered into between this particular syndicate and another syndicate. Another syndicate, called the Rand Deep Gold Mining Company, was formed to float these particular claims into a company. This company, which was merely Lionel Phillips again under another name, floated a company of £250,000 shares. The vendors—that is, Sir Lionel Phillips—got 71,500; there was £50,000 working capital and £40,000 reserve shares. A bonus was given to the promoters and guarantors—Sir Lionel Phillips—of 86,500. So out of this £250,000 shares company which bought a £3,000 property, he got no less than £160,000 worth of shares. Two years after operations were started the shares were standing at £7. It is estimated that when he sold out he sold at the rate of £3 per share. So by private exploitation one man alone, on a capital of £3,000, made a profit of £350,000 before anything had come out of the earth. That is big business. That is one of the reasons why the big business men on the other side of the House do not want the Government to get control of the minerals. There is no “ rake off ” for the financiers in Government businesses. Let me give another little instance a little nearer home a little later. The “ Rand Daily Mail ” on February 14th, 1927, published the following interesting little paragraph—

These are areas which we, the Labour members, have continually asked the Government to develop themselves. The man who stood in the way was Sir Robert Kotzé, the late Government Mining Engineer, the man who consistently reported against the risk involved in the Government entering into this enterprise. Sir Robert Kotzé, according to the “ Rand Daily Mail,” of January 24th, on leaving the Government service, stepped into a directorship in the Union Corporation, which controls the Geduld Proprietary Mine and East Gedulds. The following day the “ Rand Daily Mail ” says—

On the following day they actually came on; the market at 33/- the £ share, before an assay was declared! The additional 13/- went, to whom ? To the people who were going to work the mines? Not one penny. It went to the proprietors—the speculators in the mineral resources of this country. What we want is more Government, more State enterprize. This particular company or association is not new in the history of the world, and we have a very large number of similar associations in Europe. Most of the German electrical companies have large holdings—of the majority of the shares—owned by the Government or municipalities, and the majority of the directors controlled by the Government or municipalities. The same thing happens in Switzerland with electrical, salt and other works. It is amusing to think that even to-day—in the year 1927—there should be members of this hon. House who do not believe in State enterprise. One realises that State enterprise is coming on by leaps and bounds—almost in an unparalleled way. Municipalities and Governments are taking over more and more public services. Private enterprise is breaking down, and the State is stepping in. If one reads books like E. Davis’s, one sees that the Government of Japan is running mines and owns steel and iron works. There is State enterprise in the production of raw materials, food and drinks, minerals, power, workshops, cold storage, abattoirs, grain elevators, and so on. Do any of my colleagues in the Pact Government want to hand over the grain elevators to private enterprise ? The whole history of the past 25 years has been the turning away of the people of all countries from private to State enterprise. The mere fact that the people of Queensland have returned for five successive elections labour Governments show that they do want State enterprise. This Bill is really the first serious Bill and the most important to be brought forward so far this session, and it means the beginning of the change of the system; which will enable the people to have a better time than they have had in the past. I hope more opportunities will come, and that the agricultural people will have an opportunity—a State marketing system. We have made an excellent start, in the meantime, and I am perfectly certain that the people of the country, when they see this thing running and see its benefits, and that they get employment, will bless the Pact Government; and the S.A.P., if they stop it, will have to bear the burden on their own heads.

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