What is this Bill?

This is one of these ordinary annual Bills for confirming certain land transactions.

Bill to be read a second time on 4th April.

1. (1) Before I deal with the Estimates of revenue and expenditure for the financial year 1927-’28, I propose to review briefly the results of working the railways, harbours and steamships during the year 1926-’27, which closes to-day.

Why unfortunately?

It is unfortunate from a revenue point of view, not otherwise.

Not yet low enough.

They were, however, specially low rates.

Before the hon. Minister resumes his seat—we have had a number of figures showered upon us, and I would like to ask if the actual deficit is £146,424.

Yes.

In the first place, as I see the Minister of the Interior is there, I would like to ask him when we are going to have certain books, before we can properly discuss the Budget. We have had no year book beyond 1924. We have the year book for Australia for last year. I would like to ask the Minister of Finance when he is going to have the customs returns put in. I hope to have the opportunity of dealing with the Minister of Finance. I do not pretend to deal with the figures given by the Minister of Railways and Harbours— I shall have to read them in the quietness of the newspaper. I do not pretend to have been able to follow them. I must read the speech later on, as I have no doubt I shall do. I should imagine that this House and the country generally, when they have once got over the glamour of the large surplus, will be profoundly disappointed with the Budget. Yes, it is true—you can laugh as much as you like—I will give you my reasons. The country will want to know. The country will have noticed the flourishing state of the country as has been established in regard to the customs. They have gone up at a considerable rate, but they will also be well aware of the heavy burden of taxation on the people.

Who put it on?

What is the good of talking —as if the state of the country now is hot different from 1923-’24. Has my hon. friend been asleep? When you take out of the country £21,000,000 in taxation alone, exclusive of the £3,500,000 for the provincial councils, it makes a difference. I remember the time very well when we had a tremendous protestation from the other side about taxation; in fact, I have just taken the trouble to look up the speech of the hon. member who represented the financial side of the National Party in those days, and this is what he said—

This was spoken in April, 1963, by Mr. Fichardt, who was then, as Hon. members know—I speak of him with respect-representing the financial side of matters as far as the National Party was concerned. At that particular time we were taking out of the country £16,000,000 in taxation. Now we are taking out no less a sum than £21,000,000— last year.

What does my hon. friend pay for his suit and his shirt?—more than he did in those days.

Less than in 1921.

In 1923-’24 the total revenue from taxation, according to the Auditor-General, was £16,853,000; and in 1926-’27 I estimate it at £21,000,000, as the Auditor-General has not had it before him yet. We have also been told that we were going to have a reduction of taxation, but we have not seen it. In 1924 we had a reduction, patent medicines, £75,000; tobacco and miscellaneous, £104,000; in 1925 we had £200,000, tobacco; postal, £434,000, but we have had an increase in the tariff which brought in £400,000 additional. We have a reduction of 1 per cent. This is simply lamentable in a time of increased revenue and surpluses. The surplus in 1923-’24 was £225,000, 1924-’25 £807,000, 1925-’26. £722,000, and this year £1,150,000. With this improved revenue the total reduction of taxation is not £2,000,000, as has been mentioned by the Minister of the Interior, but only £721,000.

It is more than that.

Not if you make a careful scrutiny, and it would not amount to that if the duties through the customs had not been increased. The saving has to a very large extent gone into the manufacturers’ pockets. The Minister of Finance claims there has been a drop in the cost of living, but the fall is probably accounted for by decrease in articles of South African produce, such as potatoes, eggs, boer meal, etc. The fall is not accounted for by decrease in the price of clothing. The Minister contended that although we had imposed heavy customs duties it has not increased the cost of living, but the drop is not due to a reduction in the price of imported goods but to the lower price of certain articles of South African produce. Although there has been a reduction of prices in certain directions it has not been to the benefit of the consumer but to the benefit of certain manufacturers. Why has not the Minister followed the example of other countries and reduced taxation? The United States last year reduced taxation by £77,000,000—of course, I know it is a big Country. But take Australia which suffers from droughts as we do and has far bigger import duties than we have.

And far heavier taxation.

I have my doubts about that. In two years Australia has reduced its taxation by £4,400,000.

What is the amount of their budget?

That I could not say. In four years, however, we have reduced our taxation by about only £750,000. For the financial year ended March 1st, 1923, New Zealand reduced its income tax by 20 per cent., and in the following year by 33⅓ per cent. We have had no such reductions with the exception of a small rebate on incomes of married men up to £400 a year.

Australia’s income tax is much higher than ours now.

I don’t take over statements of that kind. Take Canada, which is a somewhat similar country to ours. It has made very substantial reductions in taxation and incomes up to £600 a year are entirely free of income tax. Then we are not burdened with the heavy non-productive charges which Australia has to face. Our non-productive debt is £49,000,000, which is not large. The total we have to pay annually towards non-productive debt is only £2,033,000.

It used to be very much more.

We must take things as they are in the year of our Lord 1927. Notwithstanding this, we have had no material reduction of taxation. The only inference we can draw is that the administration of South Africa is extremely costly. I should have thought that the Minister of Finance would have taken advantage of his present opportunity. I can, to some extent, understand his action in previous years, but with a surplus of over a million and with an anticipated expenditure of only £66,000 over the revised estimates of expenditure of last year, one would have expected that he would make a good solid cut in taxation-something tangible. I don’t think any Finance Minister, certainly not in South Africa, has ever had a better opportunity. This is very disappointing. Here is a party which made the welkin ring with cries about heavy taxation—and they were quite right. I did not blame them then, but I did expect that when they came into office they would take advantage of their opportunity and make material reductions in the cost of the administration, whereas practically nothing at all has been done. If a material cut in taxation had been made, it probably would have done more to advance the prosperity of the country than anything else, certainly more than the Minister of Labour is trying to do by providing employment. It is a well-known fact if you leave the money in the taxpayer’s pockets he is bound to make use of it, and it circulates and goes towards the development of the country. It is a pity an opportunity like this should be missed in not relieving the country in some degree of its excess burden of taxation.

On the motion of Mr. Jagger, debate adjourned; to be resumed on 6th April.

When the debate was adjourned last night I was giving my reasons why I could not agree with the amendment of the hon. member for Standerton (Gen. Smuts) to send the Bill to a commission instead of to a select committee. I was, as a matter of fact, pointing out that the chief reason given by the hon. member why that should be done, viz., because the natives could then be better consulted was not, in my opinion, a sound reason. I pointed out that with regard to the other point mentioned, viz., that there would not be sufficient time for a select committee was not, in my opinion, of much value, because if the select committee could not complete the matter during this session it could commence again during the next session and complete it. We must, however, go as far as possible this year in getting the measures dealt with. I raised the point, and it is a very important one as to what would be the value of any decision taken by a commission, and I think that hon. members, including the hon. member for Standerton, will have to admit that the value of a resolution on a report of such a commission would be nil.

And that of a select committee.

No, a select committee will give us a much better prospect of a satisfactory report than a commission would. What will a commission be? I admit that it will wholly or in part consist of persons who are not members of this House. Then I ask this question: If the leaders on that commission are not men who belong to political parties, who are they to be? I know precisely what will happen. Exactly what happened with the Flag Commission. No side will dare to support anything else than what they already know is supported by one party or the other, or one side or the other. We must not forget that the question is already historical. The Government holds a definite view, and, let me frankly say about the Government, that we are prepared to adopt amendments on matters of detail. We do not wish to make a secret of that. All the Government and I say is, that a solution must be sought and effected generally in the direction indicated by the Government. On the other side you have the hon. member for Standerton, the leader of the Opposition, who has just as clearly expressed his views, diametrically opposed to ours. If, therefore, a commission were to be appointed, does anyone think that the members will pass any other resolution, or accept any other view than what they consider to be the view of their leaders? Of course not. The result is that you will have an irresponsible body of men to draft a report, and the side which has a majority on the commission will, of course, draft a majority report, and the others a minority report. Then the marionettes will begin to dance, because everyone will go to his platform, the hon. member for Standerton to his, and I to mine, and each will advocate his on a view and will try to prove to the world—

That will be the result. What will be the result if the other way, that of a select committee, is taken? Here, at any rate, you find the two parties together. Even if the leaders are not on the select committee their point of view will prevail there. If unanimity cannot he obtained in a select committee, then the world need no longer ask what the leaders think of it, but the people will have the fullest right of accepting that the differences there are also the differences between the leaders. That is the negative side of the matter. From the positive side I am convinced that if we go to a select committee we shall feel that the responsibility resting upon us as members of this House to whom the people look up for action, will make us do something. We shall not only be doing something, but something will be done in a spirit which is more consistent with the national interests. In every respect a select committee is the only way out. After what has hitherto taken place outside Parliament there is now only one way to proceed with the matter, and that is through Parliament. Only through Parliament is there any possibility of tackling and getting the matter solved in a general, broad, national spirit. As for me, let me say frankly that I am prepared in the select committee, on which I hope to sit, to accept any reasonable solution in the interests of the people. Let me now return to the commission. I do not see how it can do any good, but now other people say that we should have a commission so that the interests of the natives can be properly consulted. As I have said, that is practically the chief point of the hon. member for Standerton. Now I want to point out that it starts with an entirely wrong and, therefore, false assumption, viz., that the interests of the natives have not yet been properly consulted, at any rate, not yet to such an extent that we can leave the rest to a select committee. But is that true? What are the facts? I want to point out that the Bills have now been about a complete year before the public. As to the natives, we have in the first place the fact that the Bills were submitted to the native councils in Pretoria. Fifty natives were present there, delegates selected from all parts of the Union, and they had every opportunity of discussing the matter. I was present myself to explain one Bill. In this respect there can be no doubt that we have done everything to consult them. I want to add that the members of the Native Affairs Commission were also present there to explain matters. The native council was, therefore, properly informed and consulted. In the second place we have the Native Affairs Commission which went round from province to province and explained the Bills at every place of any importance. Meetings were convened beforehand and everywhere in the Union the commission had resolutions taken, and the commission returned and reported fully to me all its finding and the resolutions that had been passed. That is surely a fairly good consultation of the wishes and feelings regarding the interests of the natives. But that is not all. In Cape Town there was a church conference in which natives also took part. The matter was discussed there, and I do not know how many papers read, and, after the conference had sat a long time, resolutions were passed and sent to me. That again is a fairly thorough consultation of the interests of the natives. But then we have in addition the joint council of Europeans and natives in Johannesburg, and at one or two other places. They dealt thoroughly with the Bills and even issued pamphlets and passed resolutions, not that the resolutions can particularly meet with our approval—I think that they were a good deal prejudiced—but that does not do any harm. They sent me two pamphlets which set out how they and other natives regarded the Bills. Thus again, as far as they are concerned, it cannot be said that they have not gone fully into the matter. But the native associations themselves have in numbers of places in the country held meetings and passed resolutions which have been sent on to me. As the hon. member for Waterberg (Mr. van Niekerk) said, they held meetings everywhere, and I doubt if there are many Europeans who have more carefully studied the Bills and know their contents better than the natives. But, apart from the native associations, the official associations, there are also ordinary meetings of natives held in the country where resolutions were passed and sent to me as well as published in the newspapers. Then, also, there are men like Professor Brooks and others who were specially invited to explain the Bills to the natives at East London and other places.

Were they all satisfied?

So that is the point. The hon. member will never be satisfied with any report until the natives say—

Precisely. But does not the hon. member see that we shall not get any further with the commission? I am not prepared to waste my time on such a commission, and I fear that the hon. members do not really want it either. They want to waste time, and not to have the report of the commission to solve the problem. I ask again what there is further to be obtained by consulting with the natives? I want to ask the hon. member for Standerton (Gen. Smuts), who gave this as his reason, what, according to him, could be done, or ought to be done, with regard to consulting the natives? This adds more force to what I said last night. Why are the hon. members so concerned for the natives to be further consulted? Do the hon. members really want me to consult the natives of the Transvaal and the Free State to find out whether they want still greater rights than what they have been promised in the Bill?

It is too much.

Thus it must be acknowledged that further consultation is not necessary. If the natives oppose me in any, event, it is surely, after all the consultation, not necessary to do so any further. But let us look for a moment at the natives in the Cape Province. Why should they be further consulted, consulted more than the Europeans?

You proposed to take away his vote, anyhow.

There you have the hon. member for Fort Beaufort (Sir Thomas Smartt). He is one of their representatives. Is the hon. member unfit to defend their rights here?

You proposed to take away his vote without hearing him.

But why should I hear them? We have their representatives here. The hon. member for Fort Beaufort is just as much the representative of the natives as of the Europeans. Did they do their duty and consult the natives about what they thought of the matter? Is there one hon. member who will say that he did not do so? Will the hon. member for Fort Beaufort (Sir. Thomas Smartt) say that he did not do so? No, of course not. They did it, and they know, or ought to know, just as well as the natives themselves, what the feeling and opinion of the natives are about the matter.

Are you going to pay no account to his feelings?

We shall hear when we meet each other how far I am prepared to do so. But then the hon. member for Fort Beaufort, and other hon. members, must not come and tell me that we do not know what the natives want, and that we should consult them. As I said last night, I can in such event hardly come to any other conclusion than that they are not honest if they say that. They are representatives of natives, and it is clear to me that that is not a reason which will hold water. Let me tell the hon. member for Fort Beaufort that what I say here I do not in the least say in order to stir up any feeling in the matter. No, not in the least, but I want us, as soon as possible, to get rid of the misunderstanding and the points of misunderstanding that exist, so that we can see plainly and clearly what the issue is. Then I shall know what the position is, and then we should all have the feeling more when we come together that we shall be able to appreciate how we should act towards each other. It is not necessary for me to fully go into the various reasons of each supporter of a reference to a commission. The hon. member for Port Elizabeth (South) (Sir William Macintosh) said that he would like a commission so that members of the Senate could also sit on it. There is something to be said for that, but he will agree with me that if that is the only reason then it is a little too weak to make us depart from the usual course and appoint a commission. I think that the reasons against it are so overwhelming, that we cannot be induced to act differently. The hon. member for South Peninsula (Sir Drummond Chaplin) said that we should have people who would not deal with the matter from a party point of view. That is quite right, and I heartily agree with him, but, as I have shown, I fear that if the Bills are referred to a commission, then the matter will be very thoroughly dragged into party politics, and will give everyone who has the slightest desire a chance of running from platform to platform and talking nothing but party politics. I do not think that we shall obtain what he wishes by a commission. The reasons given for referring the Bills to a commission instead of to a select committee are not acceptable. I was not anxious to speak about the other remarks made here somewhat on the lines of a second reading debate. I will therefore, as far as possible, leave them untouched, but there are one or two observations I want to refer to. I think we can regard the arguments of the hon. member for Hospital (Mr. Papenfus) as typical of a certain series of arguments, viz., that the Bills are repressive, and that we should not venture upon repressive legislation. I do not think there is a single member in the House who can seriously tell me that he supports the proposition which was laid down yesterday by the hon. member for Hospital. He told us how he returned from a trip to Europe, and that he had become quite converted with regard to the question of the natives and the Europeans, and that he was now convinced that there should be absolutely no distinction between one and the other, and that that was the reason why he was opposed to this legislation. He wants to have no distinction, All I can say is that I cannot in the least subscribe to that view, and I repeat that I do not believe that there is any hon. member opposite who will seriously state that he holds that view. It is indeed true that the hon. member for Hospital was not the only one who spoke in that way, but no one did it with so much emphasis and dignity. He announced it as something new which he had discovered on the other side of the water. As regards the other hon. members, I should like to ask them a few questions. One of them was put yesterday to the hon. member for Hospital during his speech, viz., that if he did not wish any distinction between the natives and the Europeans, was he prepared to argue in favour of, the natives in the northern provinces in the Transvaal, Free State and Natal having the same rights on the same basis as the Europeans? Is there one hon. member opposite who is in favour of the natives in the Transvaal or Natal (I need not even mention the Free State) having the franchise on the same basis as the Europeans? If they are not in favour of it, then I ask what their opposition on principle amounts to, when they say that repressive measures are contained in these Bills? I want to go further. Is one of the hon. members opposite in favour of the natives of the Cape Province, or of any of the other provinces, being elected to take their places in this House? No, they are, of course, as quiet as death. I go still further. Is there any hon. member opposite who is prepared to give the native the same freedom as the Europeans to have possession of firearms and ammunition? Is there one of them? So I could go on with numbers of other questions, and they are not at all small matters. Where, then, do the repressive measures come in, or rather the determined opposition on the ground of objection to repressive measures in the case of these Bills? Where does the opposition come from, and on what is it based? I do not, of course, wish to accuse hon. members of hypocrisy, but what I do want to do is to say that these are matters which should be borne in mind, and if we do not do so, then we are not honest to ourselves and to the side which we represent ourselves as defending, when it is stated that the Bills adopt an entirely new and unheard-of method. I think that the hon. member for Hospital actually stated that it was an unheard of thing, and that it had never happened before. But was it not the hon. member for Fort Beautfort who said that? I have half an idea that it was.

I said nothing. I have been listening spell-bound to what you have been saying, and surprised at such remarks coming from a Prime Minister of this country.

I admit that it was not while I was speaking, but I again ask if it is right for hon. members now to go and make the outside public believe that something is happening here which has never yet occurred in South Africa, when they know just as well as I that they cannot take a single step in South Africa without drawing a dividing line between Europeans and natives? They also know that the natives are actually not able to go one step without being protected under special measures for their benefit. We must be honest, and we have no right to shout and to make the world believe that we are other than we are. Let me, with every respect to the hon. member for Hospital who has come from Europe to tell us what he learned there as to how the natives in South Africa should be treated, that I have the greatest respect for the Europeans. I can even have respect for them when they are fanatical, but then they must confine themselves to their own affairs. They can be as fanatical as they like about them, but the history of South Africa shows that as soon as they become fanatical about South African affairs, then it can lead to nothing but a mess. I do not go to Europe to learn what I should do in South Africa to make this country as attractive as possible to myself and the natives. No, it is for us to decide. The Europeans are the best people in Europe, of that I am convinced. When I, or any of us, go there, then we have to play second or third string, if we play the violin, but when Europeans come to South Africa, they are in the same: position as we are there. I am conceited enough to consider myself just as capable in South Africa as I am prepared to regard Europeans about their own matters in Europe. We must, however, not be deceived. What I wish is that we should no longer continue to shout as in the past. In Europe there are faddists to make it clear to other faddists that we are engaged in oppressing and ill-treating the native. That is not true. There is not a man in the House who dares to say that we in South Africa are ill-treating or oppressing the natives. No, we differentiate. Yes, we are doing this, but we are not ill-treating and oppressing them. I am entitled, and the white people are entitled, in the first place to defend ourselves, but that is no less in the interests of the natives themselves. If measures had not been taken, if free access to arms and ammunition had been given to them, what would have become of the natives? If the natives had been allowed the unlimited use of liquor, what would have become of them? For the same reason I say again that what is proposed in these Bills is in the first place proposed with a view to safety, my safety, but also that of the natives. And now hon. members come here, I do not remember who they were, but I think one was the hon. member for Hospital (Mr. Papenfus), and say that we must not do anything from fear. Let me say generally, I do not want to say it specially, to the hon. member for Hospital, that greater hypocrisy than for the white people in South Africa to say in its action regarding the natives—

has never yet been committed. The native is deprived of arms. Why? I should like to know why from the persons who are so heroic? Is it not out of fear? Here in the Cape Province the natives are deprived of things. The natives cannot come into this House. Why not? Is it not fear? There are the friends from Natal and the Transvaal—the hon. member for Zululand (Mr. Nicholls) was the first to say—

I ask him why the franchise was not given to the natives in Natal? Was that not due to fear, or was it merely for the pleasure of depriving the native of something he enjoys? Let us speak like honest men. Legislation as to 90 per cent. always arises from fear that something will happen, and in order to prevent it. That applies to all precautionary legislation. We have our police force and our defence force, all from fear. I am quite prepared to say what I said at Southfield—

Now I want to touch upon something else, something that we South African politicians have always had to deal with, and which has always been, since the day I entered politics, one of the most unpleasant things to my mind, and that is, the dishonesty towards the native and the coloured man. I repeat it. There is nothing which has made me so deeply grieved, and still makes me feel so from time to time, as the dishonesty in everything we do with respect to the native. Now hon. members speak of injustice towards the native and coloured person. Take the Cape Province. The natives have all the privileges here. Is it said here that he should be allowed to exercise the rights? Does the native to-day enjoy his rights? To what extent? Has not the white man in the Cape Province prevented his actually exercising the rights that he has on paper? Take the coloured person. How far have the white people in the Cape Province always stood in the way of their enjoying the rights they have on paper? Here, as well as somewhere else, the whites have in practice followed the policy of self-preservation, and they have said that seeing all these rights have been given they cannot preserve themselves if they allow them to exercise the rights, and that they are going to see that they are not exercised. That has happened in the past and still occurs today, and will continue until such time as we are honest towards the native and the coloured people, and we say and prove to them that we are prepared to give them every possible opportunity, and to assist them in every possible way to progress, but not in the way in which he will become a danger to us and threaten our existence. That is what I have always felt. Take the native territories. It is characteristic that the natives who have always enjoyed those rights in the Cape Province have not occupied any positions of any consequence in the native territories. What positions do they occupy to-day in the native territories of the Cape Province? Which positions, and how many? Has any attempt ever been made to really assist the people to obtain within their own territories among their own people a chance of filling certain positions which are to-day stiff occupied by white men? No, and I will tell you why. Is it not because if we were to do so, to-morrow or the next day, the natives would come here and want to do the same thing here? But if we go and tell the natives that in the future they will have their own magistrates for their own people in their own areas, then we shall be honest.

Why do you not do it?

For, precisely, the same reason that the hon. member’s Government did not do so, owing to fear. And it is not a justifiable timidity. I say again that we are acting on the principle of self-defence in the first place, and under the existing laws the position is that in South Africa we as white men follow the policy of self-defence and exclusion of the natives, when hon. members speak of oppression what are they referring to? The fact that the franchise will no longer be exercised by the native just the same as today? Hon. members only mention that limitation of the franchise, without mentioning the advantages to the natives which are contained in the Bill. Now I want to ask hon. members if that is right. I do not ask if it is right towards me, but if it is right towards our people to bring home to the native, that what is now proposed, is oppression. Is it right? Is it right to give the impression to the world that we are out to oppress and ill-treat the natives simply because the Bill starts from the view that the way in which the native exercises his political rights to-day in the Cape Province is not the proper one, either for the native or for the white man? If we are not agreed upon that point, well and good, but don’t go and say that we are doing something which has never yet been done by a civilized people, which has never yet been done in South Africa, as the hon. member for Hospital (Mr. Papenfus) said. I notice that the hon. member is now present. I am glad because I want to congratulate him. I should like to ask him to give a reply to me on the following points. In the first place whether the hon. member is prepared to give the natives in the Transvaal the franchise on the same basis as the whites?

No, I never said that.

No, of course not. But what you did say was that you had been on a visit to Europe and had come back converted in regard to the measure of distinction between white and black.

But you were also “oprecht” when you came back a converted man, but evil influences were unkind to you.

I ask the hon. member for Hospital if he did not say that he did not wish to make any distinction between white and black.

The hon. member for Brakpan (Mr. Waterston) interrupted me, and asked me if I wanted to give the franchise to the natives. My answer was that in so far as I was concerned the vote was too cheap and that consequently there were many white persons who did not understand how to exercise a vote, and that my policy was to make the vote more difficult to obtain. As a result thereof we shall find that the best of every section of the population will have the vote, and in this way a buffer will be created between us and the natives, between the civilized and the uncivilized.

I am pleased to hear that the hon. member does hot wish equality to be given to the natives. I am glad he does not go so far.

The hon. member actually wants it but the qualification must be raised. *

Oh, so, and then the enlightened native and the enlightened white people must have a vote? I see. The hon. member for Hospital is one of the “Parktown dwellers.” He belongs to the aristocrats and, therefore, wants the aristocratic principle to be applied to the franchise, that the qualifications should be raised.

The qualifications are much higher in the Cape Province.

Yes, I know the level of the qualifications in the Cape Province. As the hon. member for Stellenbosch (Mr. J. P. Louw) once said, the man signs his name to-day, but the next day he has forgotten how to sign it. It almost seems to me as if the hon. members possibly unconsciously are basing their opposition to the Bills on the ground that under my proposals it will no longer be so easy in the future for a man, who can sign his name today but cannot do so to-morrow, to vote. But I think that the hon. member for Fort Beaufort will admit that that is undesirable and the sooner it is removed the better. I want to repeat again that I think it is deplorable that we should, on account of our opposition to what is proposed in some parts of the Bills, allow ourselves to express views which will do us no good and which we shall subsequently regret. Further, if we do not meet as people who are all keen on doing what is in the interests of South Africa and ready to discuss the whole matter from the standpoint of national Welfare of natives and coloured people no less than of the white men, and to try to find a solution, then we shall only the more certainly bitterly regret it later. I repeat what I said at the beginning, viz., that I am convinced that we can refer the Bills to a Select Committee. We can there meet each other as men who can regard the Bill as above party interests, and we can deal with it in that spirit. I only hope that when we meet many of the reasons which we have mentioned here and have sometimes made us say things which perhaps we ought not to have said, will be forgotten, and we shall then try like persons of common sense and without any passion to consider the whole question with a view to finding a solution.

I think the best way of dealing with the amendment is to put the question that the words “and the Bills withdrawn” be inserted after “discharged” and if that is carried the further amendment can be put. If it is not carried the further amendment drops.

First part of amendment put, as proposed by Gen. Smuts,

Upon which the House divided:

Ayes—46.

Arnott, W.

Ballantine, R.

Bates, F. T.

Buirski, E.

Byron, J. J.

Chaplin, F. D. P.

Close, R. W.

Deane, W. A.

Duncan, P.

Geldenhuys, L.

Gilson, L. D.

Giovanetti, C. W.

Grobler, H. S.

Harris, D.

Heatlie. C. B.

Henderson, J.

Jagger, J. W.

Krige, C. J.

Lennox, F. J.

Louw, J. P.

Macintosh, W.

Marwick, J. S.

Miller, A. M.

Moffat, L.

Nathan, E.

Nel, O. R.

Nicholls, G. H.

Nieuwenhuize, J.

O’Brien, W. J.

Oppenheimer, E.

Papenfus, H. B.

Payn, A. O. B.

Reitz, D.

Richards, G. R.

Rider, W. W.

Robinson, C. P.

Rockey, W.

Smartt, T. W.

Smuts, J. C.

Struben, R. H.

Stuttaford, R.

Van Heerden, G. C.

Van Zyl, G. B.

Watt, T.

Tellers: Collins, W. R.; de Jager, A. L.

Noes—69.

Allen, J.

Badenhorst, A. L.

Barlow, A. G.

Basson, P. N.

Bergh, P. A.

Beyers, F. W.

Boshoff, L. J.

Boydell, T.

Brits, G. P.

Brown, G.

Christie, J.

Cilliers, A. A.

Conradie, D. G.

Conradie, J. H.

Conroy, E. A.

Creswell, F. H. P.

De Villiers, A. I. E.

De Villiers, P. C.

De Villiers, W. B.

De Wet, S. D.

Du Toit, F. J.

Fick, M. L.

Fordham, A. C.

Grobler, P. G. W.

Hattingh, B. R.

Havenga, N. C.

Hay, G. A.

Hertzog, J. B. M.

Heyns, J. D.

Hugo, D.

Kemp, J. C. G.

Kentridge, M.

Keyter, J. G.

Malan, C. W.

Malan, D. F.

Malan, M. L.

McMenamin, J. J.

Moll, H. H.

Mostert, J. P.

Mullineux, J.

Munnik, J. H.

Naudé, A. S.

Oost, H.

Pearce, C.

Pienaar, J. J.

Pretorius, J. S. F.

Raubenheimer, I. v. W.

Reitz, H.

Reyburn, G.

Roux, J. W. J. W.

Sampson, H. W.

Snow, W. J.

Stals, A. J.

Steytler, L. J.

Strachan, T. G.

Swart, C. R.

Terreblanche, P. J.

Te Water, C. T.

Van Broekhuizen, H. D.

Van der Merwe, N. J.

Van Heerden, I. P.

Van Niekerk, P. W.le R.

Van Rensburg, J. J.

Van Zyl, J. J. M.

Visser, T. C.

Waterston, R. B.

Wessels, J. B.

Tellers: Pienaar, B. J.; Vermooten, O. S.

First part of amendment proposed by Gen. Smuts accordingly negatived and second part dropped.

Original motion put and agreed to.

I move—

It is quite clear that the original intention of the Bill as explained by the Minister of Defence was to encourage the production of raw iron and steel, and the intention was, from what I understood according to his speech, that this corporation would not enter into the finishing industries. The matter is of considerable importance in so far as the finishing industries are concerned. There are a considerable number of industries already established in the Union which are producing a considerable portion of the finishing industries. Unless there is some restriction upon the corporation to be established under this Bill in regard to its operations it will have this effect, that nobody with capital will embark upon the establishment of the finishing industries. In other words, if the amendment I propose is accepted it would have the effect of stimulating the establishment of any further necessary finishing industries, and by the time the corporation is producing pig iron and steel it will have the finishing industries established and ready to purchase the products of the corporation. If, on the other hand, the Minister is not prepared to accept the amendment it is going to mean that after the company gets to the producing stage they will have no immediate outlet for their products. With regard to the idea which the Minister put forward originally of encouraging the production of iron and steel in the raw state, I do not know whether that intention is to be carried out or whether the intention of the corporation will be to go in for the finishing industries. In other words, is it the intention of the Government that there shall be an absolute monopoly to this corporation? That is, the corporation will produce not only iron and steel, but will go further and will establish the industries for the production of all the finishing industries. If that is done it is going to hit very hard a number of industries already established in this country. I do not know whether it is the intention of the Government to smash and kill the enterprise already established, or whether its intention is to assist and protect these industries. It is a very important matter, that the country should have a clear statement from the Minister as to whether the corporation is to also embark upon and establish the finishing industries, if so, no capital in this country or from overseas will establish any finishing industries, with the result that when the corporation reaches the producing stage they will find themselves in exactly the same position as Newcastle is in to-day; they will find they, will have over-production, not only of pig iron but also of steel, and it is essential that some protection or guarantee should be given now that the corporation are not going to enter into the finishing industries. I submit that is quite a reasonable proposal. If at any future time it is found that these finishing industries are not carrying out fairly and squarely the production of these industries or are treating the consumers unfairly then I say it will be time for a resolution to be passed by this House agreeing to the corporation going in for these industries. It seems to me to be perfectly reasonable. It seems to me that under the powers granted to the corporation here they could even go in for foundry works and engineering, for any kind of work in which steel or iron is used. I would like to draw the attention of the House to the report made by the Chamber of Industries, in which they very strongly urged the Select Committee to take into consideration the point stated by them in that memorandum. It was this—

I made inquiries as to the products of ordinary steel industries in other countries and I found in every instance that none of these industries produced the finishing article. It is always left to a separate industry altogether. Where a steel industry is established it is confined merely to the products of a rolling mill. I hope that the Minister will be prepared to accept this, because I believe it will be to the benefit of the corporation itself. If this amendment is accepted the effect of it will be that capital will come forward and start the necessary finishing industries which will be ready to receive and purchase from the corporation its products of iron and steel. [Time limit.]

I certainly hope the House will not accept this amendment. I think the hon. member himself, in the discussions we have had in committee, will see that it is quite impossible to accept such an amendment. It would defeat entirely its own objects. It would hamper and tie up the board of this corporation in such a way that it would be perfectly impossible for them to really conduct their business and to make any business deal with anyone who wished to start a subsidiary industry.

Why not?

Because they would be entirely deprived of any bargaining power.

I do not see that.

The hon. member will, if he considers. Imagine ourselves in the position of people undertaking a colossal expenditure to produce iron and steel. Suppose somebody approached this corporation and proposed starting galvanized iron works. If you forbid by Act of Parliament the rolling and galvanizing of iron sheets, they can do no bargaining at all, and you place them in the hands of the undertakers of the subsidiary industry. One of the objects we hope to achieve by this is greatly to encourage the establishment of subsidiary industries in this country, and the board will, no doubt, take that into consideration. They must, first of all, consider the financial stability of their own concern. If the hon. member consults the hon. member for Kimberley (Sir Ernest Oppenheimer), I am sure he would never consent to tie his hands in that way.

I cannot agree with the Minister’s view. I take it that although under the amendment I propose the corporation would not be entitled to establish finishing industries, they still have a monopoly in the production of pig-iron and steel, and they could still dictate any terms they wished to impose on the consumers for the finishing industries. Is there anything to stop them making any provision they like? Under my amendment, it would give, at all events, some guarantee to private enterprise starting those industries. Under the provisions of my amendment the effect is that private enterprise would have some safeguard in establishing or extending the finishing industries. We have had exactly the same experience as far as the Union Steel Corporation is concerned. Last year this House granted an extension of the bounty system and this corporation has since considerably extended its operations. This year a totally new policy is adopted, with the result that that industry may be completely effaced from its operations.

Why cannot they come to some agreement with the corporation?

Suppose the corporation proposes conditions which are impossible. What guarantee has the existing industry got that this corporation will not themselves extend its operations to all the finishing industries? I submit the amendment is quite a reasonable one, and if accepted, it means that by the time the corporation is producing iron and steel, it will have the finishing industries ready to purchase Its products.

I think it will be evident to anyone who has any knowledge of commerce that the principal reply to the suggestion made by the hon. member for Newcastle (Mr. Nel) is that the capital of this corporation is so limited as to make it almost impossible for it to go into the subsidiary industries the hon. member proposes. When the corporation cannot increase its capital without coming to Parliament, this is the best guarantee that these people can have. This clause virtually takes the place of the memorandum of the articles of association of an ordinary corporation, and the hon. member for Kimberley (Sir Ernest Oppenheimer), the hon. member for Beaconsfield (Col. Sir David Harris) and other hon. members who know about company promoting will tell the committee that the articles of association are generally made so wide that the company can do almost anything.

Here it is the taxpayers’ money.

It is necessary to have the opportunity of bargaining. It is quite conceivable that private enterprise, anxious to upset the success of this corporation, may act in such a way as to make it impossible for the corporation to carry on. There is a case in point which is worth quoting to the committee. This is in connection with a big private corporation—Henry Ford. There is a very big fight going on in Detroit between Henry Ford and the commercial people. They are refusing to buy his motor-cars. When he raised the wages of his employees he was immediately answered by the storekeepers raising the prices of commodities. He, by way of answer, started to sell these commodities to his employees, and to the general public, at lower prices than the storekeepers, and he still made a profit. I do not suggest for a single moment that it is necessary for the corporation to do any of these things, but unless it is able to exercise its rights it will be unable to retaliate against anybody taking undue advantage of his opportunities. I hope the committee will not try to accept the amendment, which would be vitiating the principles which the House has accepted on the second reading.

A considerable amount of money has been invested in the iron and steel industries at Newcastle and Vereeniging. Is the Minister prepared to negotiate with these corporations with a view to their inclusion in the new undertaking? Otherwise a serious blow will be struck at these people under the Bill, and this will shake the confidence of people who would invest in industrial undertakings, especially those established with a view to taking advantage of legislation giving bonuses to certain industries. If the existing companies have to compete with the new corporation they will be forced to go to the wall, the market being so small. Is Government right in taking up the attitude that it does not care what happens to people who have put their money into the Union Steel Corporation? Would it not be more statesmanlike to Work with the people who have made heavy losses in trying to establish this industry, and who, to a large extent, have succeeded?

I am glad the Minister has decided not to accept the amendment. The hon. member for Newcastle (Mr. Nel) has expressed the same views as people who gave evidence before the Select Committee on behalf of the South African Federated Chamber of Industries which represents private interests. We have always heard a lot from the Opposition benches with regard to the sacred law of supply and demand. Why should it not be allowed to operate in this case? As far as the workers are concerned it does not matter whether they labour for private enterprise or the Government.

Are you opposed to private enterprise?

Yes, of course, I prefer State enterprise and unless we are equipped to fashion our raw products into articles for which there is a demand, and which we shall require for our own use, we shall have to buy our raw material back from the manufacturers at a big price. If private enterprise can make a success out of manufacturing these things, so can the Government. All over the world wherever iron and steel manufacture is carried on there is a huge ring, and that ring will extend its operations to South Africa if it receives the slightest encouragement. As an example of what happens in England, I quote the following from a Labour white paper, “Facts about the Combines,” No. 3—

Only State enterprise will save this country from that sort of thing.

The Government’s position is still what I stated at the second reading, when I said that if the Union Steel Corporation approached the Government before the Bill became law with a proposal to entering into an arrangement with a view to its absorption, we would be prepared to consider the matter provided the terms were reasonable, but that when the Bill becomes law all the negotiations will have to take place with the board of the new corporation. No proposal has come to us, and I have very good reason to believe that they do not contemplate any such an arrangement of absorption. It is very easy to say that it is desirable that negotiations should be concluded, but there are always two parties to a negotiation. When the corporation is formed we shall impress upon the board the Government’s wish that they should examine the position, and see if any arrangement is possible. It depends, however, upon the reasonableness or unreasonableness of either party. I do not think it would be advantageous to either corporation that the Government should tie the hands of the board in making any arrangements.

You cannot expect the Union Iron and Steel Corporation to do anything further in the way of development unless they know where they will stand three or four years’ hence, by which time it is expected that the new concern will have reached the productive stage. It would be advantageous if the Government could come to some understanding with them, and let them know whether the Government was going favourably to consider eventually coming to terms, and then they might have confidence and go ahead with their development. Otherwise I think they would be foolish to spend another sixpence on development.

It seems to me to be quite evident that the Government has no intention whatever of meeting these people. Every possible effort has been made to come to some arrangement with Government, but nothing has eventuated. If the proposal I have made is accepted, I believe the whole thing will come right, but I believe, and it seems evident to me, that it is the intention of the Government to make this a State industry from A to Z, and I predict this will happen. Not only will they produce iron and steel, but they will go into all the finishing industries in addition. If that is not the intention, my amendment would have been accepted. There is nothing to stop this corporation from entering into any agreement with the finishing industry, and there is nothing in my amendment to stop it. I submit that if the amendment I have proposed is not accepted, nobody would have confidence to start in the finishing industries. It is evident that so far as the Labour party is concerned, that this shall be a State industry from A to Z, not only for the production of iron and steel, but also for the production of all the finished articles. It is to be a complete State enterprise and monopoly.

I sympathize with the hon. member for Newcastle (Mr. Nel) who has put up a good fight for his constituency. I have yet to learn that it is the policy of the Labour party to squeeze out the little man. That is the American principle, and it makes no difference to the Americans if they squeeze out the little man and ruin him in a night so long as they get command of the trade. The Government is in a more favourable position, because they not only have public money to command, but they would also take care, through the different departments of the post office and the railways, to buy as much as they can in order to increase the profits or cover up the losses. I think it is unfair to stifle public enterprise and ruin concerns that have secured money to establish industries in this country.

It is not a question of private enterprise, versus State enterprise, but of establishing an industry to manufacture iron and steel, but the hon. member for Newcastle wants us to stifle it and fetter it in such a way at the beginning that it will be stillborn. It is intended that this corporation will be managed by a board of directors, and the hon. member for Newcastle (Mr. Nel) is asking us to tie the hands of the board of directors before the industry has been created by Parliament. I would rather see the powers of this board extended so as to give it a greater opportunity of making a success of the industry. If the hon. member’s amendment was carried there will be no steel industry in the country at all. The country has been crying out for years for such an industry, but if we tie the hands of the directors we would get no industry at all.

In reply to the hon. member for Germiston (Mr. G. Brown) consider Cape Town, where for many years we have had a wire and fencing industry, and they have often appealed for more protection. They are already in existence and under this Bill this powerful corporation with State money behind it will be in the position to smother that industry and all the private capital invested will go by the board. Unless this iron and steel industry is meant to be a main undertaking only and all subsidiary industries, the making of wire, fences and gates, and other articles are to be industries apart from the main industry. How is private enterprise to be encouraged when you know that power is given to the Government corporation not only to carry on the main industry but every subsidiary industry. What is going to be the result? The result is going to be this, that if the Government with its great powers, finds in connection with the subsidiary industries that it cannot make the stuff at the same price and make it pay, they will clap on more protection at the ports and the farmer will have to pay the piper. The consumer is going to pay in the end.

I must say I have a great deal of sympathy with the point of view of my hon. friend the member for Newcastle (Mr. Nel). He foresees that this corporation with the weight of Government support and Government capital behind it—because we have been told by Ministers that if the present capital is not sufficient they will take care that more is provided by the Government—that the corporation so fortified will squeeze other industries out of existence. That is a very natural fear and I must say I am rather amused to hear on the cross-benches the hon. member for Salt River (Mr. Snow) and the hon. member for Troyeville (Mr. Kentridge) advocate that that course should be followed, because it is perfectly easy to imagine what they would have said if they had found the corporation without Government support attempting in the ordinary course of business to do anything like the same thing. But while I have, as I say, a great deal of sympathy with my hon. friend’s point of view, at the same time I do not think it is possible to support the amendment, at any rate as it stands, because the only chance that I can see of this venture proving a success is if the corporation has power to take part, if necessary, in subsidiary enterprises, without which subsidiary enterprises the whole affair cannot possibly succeed. That just shows the dilemna we are in in consequence of this scheme. On the one hand the Government has got in effect to use its power and its weight of capital in squeezing out of existence, and consequently discouraging, private enterprise and, on the other hand, if it does not go in for and encourage subsidiary industries the whole enterprise is bound to fail because, as was pointed out in the debate on the second reading of the Bill, it is not sufficient to turn out pig iron or steel, it is not sufficient even to make rails, because if we only do that then there will be a vast amount of waste of material and waste of effort, and the only way in which a large enterprise can be made to pay is if your material which is not used for the coarser work is used for other industries. All these other industries can only be started by the expenditure of large capital sums. Large and valuable plant will be required and then there will be the necessity of getting out from Europe or America skilled men, a skilled staff, skilled engineers and experts of all kinds, who do not reside in this country and who will have to be brought out at very great expense. That is the dilemna we are in; either we have got to encourage methods which the hon. members on the cross benches would have denounced if they had been attempted by any private corporation or we have got to allow this corporation to use its power and to take part in all these subsidiary enterprises. I have great sympathy with the effort of my hon. friend (Mr. Nel) to prevent the smaller enterprises being frozen out of existence, but at the same time in the interests of the concern which is also going to be, by virtue of the decision of the Government, the interest of the country and of the taxpayers, we are bound to give that corporation power to do such things as may prevent the enterprise being a failure.

I move—

I move—

With regard to the amendment of the hon. member for Kimberley (Sir Ernest Oppenheimer), the substitution of “three” for “four” and “four” for “three” would appear to affect the control of the company, and I would like to draw your attention to Mr. Speaker’s ruling on this matter on page 11 of the select committee blue book. The ruling is as follows—

I submit, therefore, that if a question is ruled out of order in select committee, a motion in this committee to alter a principle settled at the second reading is also out of order.

I feel I must agree with the Minister as to the ruling given by the chairman of the select committee. That ruling was based upon rule 165, which says at the end—

There is no doubt that this amendment is in conflict with the principle which the House adopted when the Bill was read a second time, and, therefore, I am unable to follow it.

You have ruled these two amendments out of order, Mr. Chairman, but with all due respect to your ruling I would be very pleased if the ruling of Mr. Speaker were obtained. I submit that the title of the Bill simply provides for the promotion and development within the Union of an iron and steel industry. It does not provide for State enterprise, and I submit that the impression created in our minds when we went into select committee was that we should do our best to see this industry successfully established. As a matter of fact, State control— if it was a principle of the Bill—I submit, is not endangered by changing the number of directors; control is not challenged in any way. The hon. member for Germiston (Mr. G. Brown) this afternoon told us that what was wanted in this Bill was not State enterprise, but a company to produce iron and steel, and that the directors should have the widest powers. Whether the number of directors is three or four does not affect the principle of the Bill at all. I therefore move—

stated that he had been ordered to report progress, in order to obtain Mr. Speaker’s ruling on his decision.

May I state the reasons for asking your ruling, Mr. Speaker? The amendments have been explained to you. It is a question of changing the number of directors appointed by the Government and the number appointed by the shareholders. The effect would, of course, be that the shareholders would have more directors than the Government, but I submit this does not offend against the principle of the Bill, which I take to be as stated in the title of the Bill—

Taking it for a moment that State control were a principle of the Bill, even then I submit that my amendments do not infringe that principle. There are many other safeguards in the Bill far more efficacious; the Government at all times retains their 500,000 “A” shares, and therefore they have the majority voting power, and can always make their voice felt. I submit it was never a question of having a Government controlled industry, because when I spoke at the second reading and made that statement, the Minister of Defence interrupted me and said it was an industry for the promotion of steel and iron in this country. The Minister of Mines and Industries made it clear that it was never meant to be a purely State enterprise. Everything has been done, and everything has been done in select committee, to make this a workable measure. These amendments would improve the efficiency generally of the works that are to be established. I submit it does not offend against the principle, even supposing the principle were State control.

I would point out that the principle of Government control is entirely destroyed in all efficacy by the amendment of the hon. member. He mentions that in spite of that, the “A” shares held by the Government would give them greater voting power, but it is common knowledge, and it is the intention of the Act, that the management of the corporation shall be exercised by the Board, and if the Government directors are always in a minority on the Board, they will not control. It seems perfectly clear that for the Government to have effective control they must have a majority of the directors, and this amendment impairs that vitally. You have before you your ruling on this matter, which takes note of the fact that it was precisely this principle which was challenged by hon. members over there in their amendment on the second reading.

No.

It was distinctly challenged in the amendment on the second reading, and the House determined against the views of hon. members opposite, and that State control should be exercised through a voting majority on the board of directors was one of the vital principles of the Bill which the House affirmed at the second reading. It appears to me it is very clear that if you have a corporation in which your representatives are in a minority, you can, by no stretch of imagination, assume that you are controlling that corporation.

The hon. member for Kimberley (Sir Ernest Oppenheimer) is quite right in saying that the principle of the Bill is not attacked in any way. I would like to refer to an allegation made by the Minister that this principle was already established on an amendment at the second reading. On page 239 we have that amendment—

There are three separate reasons given there why the climax to the resolution that the order be discharged should be the course adopted. There are three entirely separate reasons for the substantive part of the resolutions, viz., that this Bill should be discharged and the subject-matter referred to a select committee at once. The House had to vote, and they voted as a matter of fact purely on the substantive part of the resolution, and did not vote on any of these reasons. Merely turning down the resolution to discharge the Bill does not establish any one principle in these three separate reasons that were given. To find out what is the principle of the Bill we must look to the title—

The House refused to adopt that amendment, and passed the second reading; but no inference can be drawn at all from the action of the House in so doing that they adopted the principle that either the combination was bad or the financial scheme was bad, or that an equitable arrangement should be arrived at. As an illustration that I am right—the financial scheme has been very much altered indeed. On the line taken by the Minister of Defence, the financial scheme could not have been altered in committee, because that was one of the reasons given why the Bill should be discharged; yet in committee the financial system has been altered, in other words, as originally proposed it was a bad one, though on the Minister’s contention it could not have been altered by the committee at all. I do submit that no inference can be drawn as to what was the principle on which the House refused to discharge the Bill.

Mr. Speaker, I submit to you, it appears to me that the most important question raised here is—

And whether the point raised by the hon. member for Kimberley (Sir Ernest Oppenheimer) can be considered a matter of principle. Now let me first take this point—it seems when you, sir, ruled in regard to the point raised in select committee, you were then influenced by the amendment moved by the right hon. the member for Standerton (Gen. Smuts) at the second reading. But don’t you think, Mr. Speaker, that the cardinal motion is not the amendment moved at the second reading, but the second reading itself. Once the second reading is adopted a certain principle or principles in that Bill are then approved, apart from any amendment that might have been moved and negatived at the second reading. In this Bill it appears to me that the principle appears to be to establish in the Union and develop an iron and allied industry and for that purpose to constitute a South African iron and steel industrial corporation. If you refer to Clause 1 you will see that—

and the details of this corporation are to be incorporated in the subsequent clauses. The main principle is the establishment of an iron and steel industry. Then, in order to obtain the object, a certain trust deed is put before us and incorporated in this Bill. We are dealing with a matter of detail in that trust deed by which the Government seeks to control this corporation. As was correctly pointed out by the hon. member for Kimberley, already in the committee, the financial clauses of the trust-deed were altered. If those financial clauses are not matters of principle, do you not think that the Chairman curtailed our rights considerably by ruling that we cannot amend the personnel of the directorate of this trust deed? To my mind, if the ruling should go against the committee, then apparently whatever is contained in this Bill as a matter of machinery dealing with the so-called trust deed could be held to be principles, and the question is in this instance—where does the principle commence, and where does it end? I am afraid that if we once depart from this, that the Bill’s main principle is the establishment of an industry, and whatever follows is a detail and machinery, this committee’s work will be rendered nugatory and futile, and I would strongly submit that, after all, even if it is a matter of principle, this committee has the right of eliminating every clause from this Bill. The committee can strike the title out also.

It was done last week.

If the committee has the power to eliminate every clause from the Bill, would the committee not have the power to amend the clauses dealing with machinery sought to be established in order to carry out the main principle of the Bill? It is a very important point at stake. Of course, the Chairman was faced with the fact that there was the ruling given by you in the select committee. In any case, I was going to ask you, sir, to be called in, as the matter is so important that we desire to argue the matter with the Chair in order that we might, perhaps, throw some more light on the subject, and that it might be possible for you to uphold the contention of the hon. member for Kimberley.

I do not see how it can be held that Government control is laid down as a principle of this Bill. It is nowhere contained in the Bill as a principle. The title of the Bill refers merely to the establishment of this industry, and it does not mention Government control as an essential part of the object of the Bill. It is said that the amendment moved by me at the second reading perhaps made it a principle. I said that too much Government control was given, and that was only one of the objections to the Bill as drafted. My amendment was negatived, but that did not make Government control the principle of the Bill. I objected also to the financial control, and that was also negatived.

The question of contribution by the Government—has that been altered in any way? The money to be supplied by the Government? Has any alteration been made to that?

No.

Yes, there are changes. I do not know how far the financial clauses are changed, but if Government control was the principle of the Bill it might have been held that the financial clauses, too, could riot be touched. It is quite clear, from what took place at the second reading, that at that stage, Government-control was not viewed as the cardinal principle of this Bill. After all, the Minister of Defence is only acting in courtesy for the Minister of Mines and Industries, and has said so himself in his speech. The Minister of Mines and Industries, in his speech on the second reading, was clear and plain on this point. The Minister of Mines and Industries said, replying to what I had said—

Then I asked—

The Minister of Mines and Industries replied—

That is exactly what happened. The Minister who will be responsible for this Bill when it becomes an Act says explicitly, in answer to my statement that this is a matter of principle a subordinate matter—not a matter of principle. What is a matter of principle is that there should be this industry established. We, relying on this, felt safe, but in the select committee it was ruled that it was not a subordinate matter. I submit, sir, that, although you gave an opinion to the committee, you should not be unduly influenced by that opinion, because you gave that opinion without consideration of these facts mentioned here. This is the first opportunity of hearing the pros and cons stated. It is perfectly clear that this matter of a Government majority was a subordinate matter, and it could be dealt with in select committee. To say now in face of all these statements that we are precluded from considering this point because it is a matter of principle, would be a mistake. On these grounds I think we are justified in claiming that the matter should be reconsidered.

I would like to submit that what the Minister of Mines said in the second reading debate has nothing to do with the case. The decision rests in your hands, and in order to find out what the principle of the Bill is you will not consider the speeches of Ministers or members at the second reading, but will look to the provisions of the Bill. Hon. members have asked you to decide this point by merely examining the preamble of the Bill. I submit that is a bad principle, for the only way to ascertain the principle is to view the Bill as a whole. The side note to Section 3 reads—

In order to test whether the principle lies in Section 3 you should look to the other provisions of the Bill, particularly I submit to Section 17. Section 17 asks for the non-application of the Companies Laws to the corporation, and it does this because of the control which exists in Section 3 of the Bill. If it were for a moment contemplated that this corporation should be an ordinary private company Section 17 would never have been inserted.

I agree with the chairman that the whole essence of the Bill is one of Government control. If it were not we should not be discussing the Bill, for no one would come to Parliament for permission to erect a private steel works. We are deliberately giving a certain amount of money in exchange for a certain amount of control. The amendment, deliberately attempts to remove that control. No select committee should take greater powers than those enjoyed by the House, The House has approved of the general principle of the Bill, which is one of control. A select committee cannot take away what the House has already passed.

Mr. Speaker, you ask if anything had been done in the committee effecting changes in the financial proposals of the Bill.

I asked whether anything was introduced contrary to Government contributing a certain amount of money.

The Select Committee has deleted the proviso to Clause 8.

What has been substituted for it?

Nothing. Material changes have taken place in regard to the Government’s financial interests in the proposed corporation. As the proposal was originally laid before the House provision was made for debentures, preference shares and (a) shares which were to be subscribed for afterwards for the Government. The Select Committee has altered that procedure entirely, (a) shares can be issued at any time and Government is bound to pay them up before July 1st, 1930. I submit that is a material alteration by the Committee in the financial proposals. My right hon. friend has referred to the views held on this point by the Minister of Mines. I would call your attention to that portion of the Minister’s speech which is reported in column 855 of Hansard, more particularly the following passage—

Are the members of the Committee of the House entitled to deal with Clause 3, and if they are so entitled does the whole Bill fall to pieces if the clause is deleted? I consider that that is a very important point. If the Committee are entitled to delete Clause 3, surely, they are entitled to alter Clause 3, and if they are entitled to delete but not to alter surely Mr. Speaker’s ruling must be that if the Committee deletes Clause 3 the whole Bill falls away. But that would be taking away from members privileges which they have at all times possessed in dealing with matters of control. The title of the Bill refers in no way whatsoever to Government control, but to the establishment of an iron and steel industry.

The hon. member (Sir Thomas Smartt has, I am sure quite unconsciously, misled Mr. Speaker in regard to the amendment to Clause 8, He seemed to imply that nothing was substituted for the words deleted, whereas the portion that was deleted provided in a general way for the manner in which Government had to provide certain moneys. A very specific mandate was given by which the money had to be paid not later than July 1st, 1930, so that if anything, the duty of the Government was made very much more definite and mandatory than it was in the words deleted. The alteration made more clear the fact that Government had control.

I understand the argument of the Government is that because the number of members originally mentioned in the Bill as constituting the board was nine, any alteration of that number which would reduce the Government nominees below five would be taking away the control of the board from the Government. The argument proceeded that if you reduce the number of directors so that the Government has a lesser number of directors than those representing the private shareholders, you remove Government control. Where does this Bill provide that five out of the nine directors will control the board and in such a way represent the policy of the Government? How then are these five members to control the board? I presume by exercising one vote each; but where does this Bill confer a single vote on a member? I cannot find any provision by which any director has one vote, but I find the only reference to voting power is that the chairman may—and here I refer to Clause 5 (1)—have a deliberative vote and in addition, in the event of an equality of votes, a casting vote. The principle of control is here found by implication. It is not expressed in the Bill, but it must be implied. Apart from implication the Bill, as it stands, sets out that this company is to be constituted without any provision that any director, except the chairman, has a vote. Does the question of control then arise on this point? We cannot say control is conferred by this Bill on a board of directors consisting of nine directors, of whom five are appointed by the Government, unless it is provided that each director is provided with one vote. We cannot deal with the Question by implication. We have a Bill which provides there shall be nine directors and that only one director shall have a vote. The holders of “A” shares may cast more votes than any other shareholders, but there is no provision conferring one vote on each director and one vote per share held by each shareholder. The Minister has forgotten to provide for it. I venture to think the Minister at a later stage will rise and propose that each director shall have one vote and each shareholder shall have one vote subject to the special provision entrenching the “A” shares.

Giving each shareholder the right to speak at the meeting?

I am not dealing with that question at the present moment. As the Bill stands now to alter the number of directors to represent the Government will make no difference to the question of control. To confer that control will require an amendment and obviously, if it requires an amendment, the question of control has not yet been settled. You are not entitled to find by implication the principle of the Bill. If there is a principle to the Bill, it must at least be expressed. So far as the question of control is concerned the provision at present is that there shall be nine directors and they, as they stand at present, can cast one vote between them. That cannot mean control and this amendment will not effect the position.

You have been asking, sir, what amendments have been put in by the Select Committee qualifying the financial clauses—

No, not qualifying, but directly in opposition to what was contained in the Bill.

I can give you three instances. One instance is that the select committee has raised the maximum interest payable to the preference shareholders from 10 per cent. to 12½ per cent. which directly decreases the security of debentures. If you pay the preference shareholder more than in the original Bill—the maximum there being 10 per cent., and under the amended Bill they can be paid 12½ per cent.—then the difference between the two amounts will result in there being less cash, as security for the debentures, thereby decreasing the security the Government holds on debentures. Another clause interferes with the Governor-General’s right. Under the amended Bill we deny him the right to acquiesce in the issue of debentures at any rate of interest exceeding 5½ per cent. Under the original Bill he could give consent to issue debentures at any rate of interest, but we have qualified his right of control in the interest on debentures. I also suggest in another clause we have insisted on the establishment of a sinking fund for debentures which amounts to a very considerable amount of money, and decreases the possible dividends which the Governor-General will receive on his “A” shares. In these three instances alone we have altered the right of the Governor-General in this Bill fundamentally.

I want to help you, sir, and the point I want to raise is so important that I feel justified in broaching it. It is a question of whether the appointment of five members instead of nine by the Government does not affect the question of control. They appoint five out of nine members of the board and those members owe a duty, not to the Government, but to the company. In the first place they may take instructions from the Government, and in the second place they may act in direct opposition to the wishes of the Government because the only point they have to consider, once they are appointed by the Government, is what is their duty to the company of which they are directors.

I found my argument entirely upon the question of what I consider to be parliamentary practice. If State control is meditated in Clause 3, should that not be reflected in the title? How can we apply State control if the title does not disclose it? If Clause 3 is a main clause that reflects Government control, then that clause ought in some form or other to be reflected in the title, and if not, the title should be amended. If you look at Clause 2—we speak about principles, the principles contained in Clause 3—but look at Clause 2—where it sets forth the objects of the company? Would you rule that we cannot amend Clause 2 and cannot eliminate the paragraphs of Clause 2—strike out certain parts of Clause 2—and if the objects of the company are eliminated, then what has become of the company?

It would be perfectly in order to eliminate Clause 2, but not in order to substitute a clause to establish some other industry than that of iron and steel.

Will your ruling go so far that we cannot rule out paragraph (a) of Clause 2?

You never dealt with hypothetical cases when you were in the chair.

This is an important question. The main object of the Bill is to establish an iron and steel industry, and we, as a House, must lay down the machinery, and if the title gives any guidance, the title clearly states that the object is to establish such industry to be constituted as the South African Iron and Steel Corporation, Limited, and now we lay down the conditions on which the corporation has to be carried on. I submit that that is a matter of machinery for this House to settle. If Clause 3 is a principle, then I say is Clause 2 not also a principle? If you are to apply the matter of principle, then you must take every clause dealing with machinery in the establishment of this corporation to be a principle. With all due respect, I submit that if this committee is to be barred from amending Clause 3, it could be barred also from amending any other clause, for instance, dealing with the objects of this corporation.

Does it automatically follow that the Government having the right to appoint certain members of the board, has the control of this company? Are these members going to be merely servile figureheads to carry out the instructions of the Government? I do not think that is the intention of the Bill. What would happen if these nominees, the Government members of the board, took decisions contrary to the will of the Minister, for example, or of the Government? Assuming that some question came up before the board, and the Government in united Cabinet took a decision directing the members of the board to do certain things, and those members refused, can they be ejected from their position? The mere fact of their being Government nominees, does not give the Government control. I take it these directors are not going to be mere puppets, mere servile figureheads, who are going to carry out the behests of the Government. Unless that is so, then there is no Government control. It seems, as the Bill stands, that every Government nominee has the fullest right to disagree with the Government and refuse to carry out Government instructions if he thinks it is in the interests of the company that those instructions shall not be carried out. Neither in the title nor in the Bill is the Government given control anywhere. Government control means that the Government has the right to intervene, and tell these nominees what they are to do. I hold that once this board has been appointed, the Government has no further say in the matter. That board is going to run the company, and the Government cannot force its wishes or its will upon the board. Where then is the principle of Government control laid down in this Bill?

What’s all the fuss about then?

We are told by the Minister that the question of Government control is a cardinal principle in this Bill. I hold that nowhere in this Bill is the Government given a vestige of control. The sole right the Government has is that of nominating certain members, but he would be a poor specimen who would accept membership on the board if it is implicitly or explicitly laid down in this Bill that he has blindly to carry out the behests of the Government.

I do not want to multiply counsel by putting views before you. I have no doubt you will hardly pay serious attention to what the last hon. member has said. He tries to point out that in this Bill there is not a vestige of Government control, and yet a large portion of the right hon. gentleman’s amendment on the second reading and a large portion of the opposition to this Bill was precisely that this Bill did give the Government control. If there is one way in which control is exercised of companies, it is the control that they have in the power to nominate the majority or a sufficiency of directors to control it. That is running through the whole of this Bill. The whole raison d’etre of this Bill is that the Government pledge the State credit and pledge themselves to subscribe money, and in virtue of that it is in the interests of the State that it shall have control, and, although there is no idea of placing puppets on that board, its members may be presumed in managing that company to have regard to the interests of the State, as it is financially involved in that enterprise.

I would like to call your attention to Clause 16, where provision was made in the Bill for the appointment by the Governor-General, in other words the Government, of officers of the corporation and their remuneration and conditions of employment, including provisions as to minimum wages and hours of labour. It might very well have been argued that these wide powers and control were also principles of the Bill. That principle of fixing a minimum wage and the Government nominating the employees has now been eliminated from the Bill. To my mind it might just as well have been argued that that was one of the principles of the Bill. I see no difference between this clause and the clause dealing with number of directors the Government have the right to nominate.

I think the matter has been very fully discussed, and I shall give my ruling later. In the meantime, I would suggest that the clause stand over.

stated Mr. Speaker’s ruling.

I move—

I move—

The effect of this amendment is that there should be a time limit on the appointment of directors. As the thing now stands, it seems to me a director might be appointed for life. I hardly think that is the intention. The House will notice that in another clause the Minister has the right to approve of the remuneration of directors by private shareholders, and also to fix the conditions of appointment. It seems to me three years would be long enough, but I think under the circumstances one had better not make it less than five years.

I have no objection; I think it is immaterial. The only little doubt I have in my mind is that it might be necessary to get a managing director of very high standing from some other country, and the question is whether it would not hamper one to make it five years.

He is eligible for reappointment.

Yes, but you know what men in very solid positions are. They do not very much care about giving, up a very good job for something that will be problematic after five years. Normally speaking, however, I dare say five years would be all right—I have no particular objection to it.

I move—

If the Committee accepts the amendment which I moved to clauses 3, a consequential amendment would be necessary to this clause. I therefore move—

I move—

and in line 14, after “rights” to insert “or property”.

I move—

The effect is that when a company is inaugurated under Section 1 the Government will immediately become shareholders. The present position as the Bill stands now is this that when the company is inaugurated, on the day of the proclamation and possibly for a considerable time thereafter even up to the first day of July, 1930, there may be a company which has no shareholders; which has no capital and the only thing it has got as far as I can see is four Government directors. That company, without any capital and without any shareholders, is going to enter into a contract seemingly with the Pretoria concern for the purchase of their assets. They are going to pay them £95,000 plus £105,000 in shares: That may be the first moment at which there are any shareholders, and thus you would get the extraordinary position that the Pretoria vendors would hold shares but the Government would not hold a single share and yet they would have four directors. There is another curious omission in this Bill. We understand that the Government has an option over the rights of the Pretoria company, but there is nothing in this Bill saying that the Government will hand over that option to the new company. Suppose public shareholders do come in for the sake of argument. They have no undertaking whatever that the company has a legal right to acquire the rights of the Pretoria company. I can see a smile on the Minister’s face, and the provisions of this Bill do make us smile. It is an extraordinary Bill, and a regular nightmare to see the extraordinary way some things have been left out and the extraordinary way other things have been put in. Let us start the company with some shareholders, and that is why I suggest the nominal amount of 1s. The Minister can make what profit he likes out of the option. I do not think the Minister, with his record of social work, would consider it right to make any profit whatever out of an option. The amendment is the minimum one can ask.

I think it would be more business like if the Government do subscribe for the shares they are taking up. It is more satisfactory for the company, the debenture holders and the general welfare of the institution that they should know that the funds for 500,000 shares are to be forthcoming. The Minister may call it window-dressing, but it is not like that, because the debenture holders will then know that there are £2,000,000 assets. If they know there is something more than the £1,500,000 provided by the debentures, he will find it easier to have other shares subscribed later On.

I was really rather inclined to accept the amendments on the very pleading representations made by the hon. member for Newlands (Mr. Stuttaford). But the suggestion put forward by the hon. member for Kimberley (Sir Ernest Oppenheimer) that we were doing this to ensure putting up the money as we might not be in office in five or six years rather deters me. To be serious, I look upon it as the most obvious window-dressing. But I am inclined to pay a good deal of respect to the hon. member for Kimberley, who has probably a wider experience of establishing contact between the public and shares than any other hon. member in this House. If the Committee wishes to put it in, the Government has no objection.

I move—

Does this not increase the guarantee?

I do not think it increases the guarantee, as far as I can see.

In order to explain what I am aiming at, I will say, the original proposal really was to have the company of £3,500,000, of which 500,000 would be subscribed by the Government, £1,500,000 by preference shares, either cumulative or non-cumulative, and £1,500,000 in debentures. We changed the scheme in committee. The capital remains at £3,500,000, but we did away with the sequence and the hard and fast scheme of having preference shares, cumulative and non-cumulative, and instead we had a capital of £3,500,000, £500,000 of which to be underwritten by the Government, and which, I am pleased to say, will be actually taken up by the Government, and the Government guaranteeing £1,500,000 of debentures. They must be taken up in the first instance. Once that is done and a preference charge is created against the ordinary shares it must be very much more difficult to place these ordinary shares as this is a new enterprise, but by the time the ordinary shares will be issued the company will have spent the debenture money and a portion of the £500,000 subscribed by the Government and they will go to the public for more money. If the Government really wants to help the scheme it should really guarantee the ordinary shares, which are much more speculative than debentures and will be more difficult to get subscribed. I wish to give the board and the Government two alternatives. They can get the initial capital by means of £1,500,000 debentures guaranteed by the Government for forty years, or by issuing £1,500,000 in ordinary shares guaranteed for twenty years. This will not throw any additional responsibility on the Government. On the contrary, if the board found that it could float the ordinary shares they would save ½ per cent. interest per annum, and it would be very much easier to raise the money. It is quite true that the reason the Minister wishes to issue debentures first is that the interest on the debentures can be charged against capital.

It is common law.

It is not yet law. If the Minister accepts the amendment he can make the interest on the shares also payable from capital. I am quite sure that the board will welcome the change which is outlined in the amendment. If the Government says it does not want to guarantee the ordinary shares because the risk is too great, that is the very reason the Minister should do it If the board cannot place debentures without the Government guarantee then it cannot place the ordinary shares without the Government guarantee. If the Minister desires to give the corporation a chance he should give the board the option I have outlined. The amendment will assist the scheme and will prevent the Government being called upon to take up all the ordinary shares itself. We have seen in the electrification of the Natal railways, and in the carrying out of other Government enterprises that frequently the capital outlay is in excess of the estimated amount. This also happens in mining. I predict that the Minister will have to pay more than five years’ interest on the debentures, not all out of capital, but out of the funds of the corporation. The scheme will be far sounder if £1,500,000 were raised by ordinary shares with a guarantee from Government for twenty years. It will be an economy for the Government, as its liability will be reduced from forty years to twenty years, and there will be no capital to pay back. In brief, my amendment will assist the Government and the scheme.

The Minister stated that the guarantee was 5½ per cent. and the hon. member moves to guarantee a minimum dividend of 5 per cent. on the deferred shares. But according to Section 10, 5½ per cent. is a maximum and not a minimum payment. Does this guaranteeing of a minimum dividend mean an extra charge on the Treasury?

As I read it appears to me you guarantee the minimum dividend of 5 per cent. and if a person receives money equal to that 5 per cent. he has no claim on you at all. The Governor-General cannot guarantee an annual minimum dividend of more than 5 per cent. That is the very plain meaning.

What guarantee is there at present?

There is no guarantee on the shares, but a guarantee on £1,500,000 debentures.

Under the debenture guarantee it is not only 5½ per cent. interest, but it is also the capital. The reduction in the guarantee is terrific. The debenture guarantee is a guarantee of per cent. plus the whole of the capital, and this is a guarantee of 5 per cent. instead, and no guarantee of capital at all.

Does not this guarantee increase the liability of the exchequer?

No, on the contrary it decreases. I hope the committee will not accept this amendment for a moment. I am always prepared to treat with respect any suggestion from the hon. member from his long experience of the public and in their relation to shares, but I think he is a bit out of his depth in dealing with a company in which the Government is greatly interested, both by shareholding and by its guarantee of debentures. Indirectly, of course, I am perfectly certain the amendment very much increases the probability of the Government having to pledge its credit further to bring this enterprise to a sound condition. The Government guarantee £1,500,000 debentures, and after that they subscribe another £500,000 so that the Government have practically pledged themselves to £2,000,000 in this enterprise. I think it will be better to get the 1,500,000 shares subscribed after the Government have shown their confidence in the concern, than to go to the country now and ask them to subscribe the shares. It is impossible to say whether two years hence you will be able to place 7 per cent. preference shares or ordinary shares, and we are leaving it to the board to substitute preferential shares, accumulative or otherwise, according to the condition of the money market. We have given more discretion to the board and I cannot entertain the idea that this mode of guaranteeing 5 per cent. on the first £1,500,000 of shares is going to be better than to get the £1,500,000 subscribed, after the Government have guaranteed and taken up £2,000,000. I hope the hon. member will not press it. If he was floating the company himself he would favour the guaranteeing of the debentures.

I submit, Mr. Chairman, that there is a great deal in the point of order raised by you on the amendment of the hon. member for Kimberley (Sir Ernest Oppenheimer). It is increasing expenditure for the reason that under his amendment interest is directly guaranteed by the Governor-General, while in section 10 of the Bill the debentures have in the first place the security of the assets of the company, and only after exhausting the assets will the guarantee mentioned therein operate.

Look at sub-section (2) of Clause 10.

And read it slowly.

Yes. [Sub-section read]. That I take it means that the guarantee does not operate until the security has been exhausted. Under the amendment proposed by the hon. member it stands to reason that there may be increase of expenditure.

On the last point it seems to me, and I submit it is the correct view, that it is perfectly clear that the amendment moved by my hon. friend does not increase expenditure. The Bill as it stands proposes to authorize the Governor-General to spend money in carrying out a guarantee to the extent of 5½ per cent. interest and principal. It may be, as suggested by the hon. member (Mr. te Water), that that guarantee may never be called upon, but it does authorize the Government to incur expenditure for the purpose of paying 5½ per cent. interest and principal. The amendment proposed by my hon. friend only authorizes the Governor-General to guarantee 5 per cent. interest on 1,500,000 shares. Therefore, I cannot see how it can possibly be regarded as increasing expenditure or as increasing the authority which the Bill gives to the Governor-General to incur expenditure. On the merits of the amendment, I do not think the Minister has given that full consideration to the proposal which it deserves. He said that the proposal of the Government will ensure the debentures of £1,500,000 being taken up because they were guaranteed by the Government. Undoubtedly they will be taken up under the Government guarantee. My point, as against the hon. member, is this, that the Bill authorizes the Governor-General to incur expenditure up to 5½ per cent. interest on £1,500,000 and the principal. The amendment proposed by my hon. friend only gives an authority up to 5 per cent. interest on £1,500,000 and nothing as to principal. It may be that the guarantee will never be called upon, because the assets of the Government will be enough. But that doesn’t matter. The question is what authority is given under this Bill. To come back to the other point, the Minister says that if the Government guarantee debentures on the scheme proposed in this Bill, the public will readily take them up. Of course they will. They won’t look to the assets of the company; they will look to the guarantee, but when they have been taken up, these debentures will constitute a first charge on the assets of the company. That surely will make it mere difficult for the company to go to the public and say that they now want £1,500,000 subscribed in shares. The issue of the debentures guaranteed by the Government does not constitute any encouragement to the public to take up any shares. Unless the prospects of the company are extremely flourishing, and offer an extremely good return on the shares, then the issue of these debentures will prejudice the case of the person who wants to put in money as a shareholder. I think there is a good deal to be said for the proposal put forward by the hon. member for Kimberley (Sir Ernest Oppenheimer).

In order to make the matter quite clear on the question of expenditure, I move—

That puts the question beyond doubt as to whether it would be increased expenditure. May I say this to the Minister that this clause, as proposed, leaves the board the option to do the one or the other. It does not bind the Government to guarantee the shares and not the debentures. By committing the Treasury to twenty years at 5 per cent. interest, it seems to me that you would have a greater chance of making a success of the undertaking than where the Treasury is committed to interest for a longer period and the capital. Even if he accepts this clause he only gives the board more power. Surely the Minister should think very seriously before he turns that down.

I think the Minister is making a mistake. At first sight I did not very much like the proposal, but on reflection anyone can see that this is to the benefit of the country and of the Government. The investor will not come in on these terms. He will say—

The Government will come out on top. It would be a better proposition for raising the money if the Government simply guaranteed the ordinary shares and let the debentures take care of themselves. Then they would show the public the confidence they had. It stands to reason, if my hon. friend will think it out thoroughly, that it is the only way he can raise money—on the ordinary shares. What ordinary investor in South Africa or London is going to put a sixpence in this concern when the Government have a bond and a prior claim; whereas if they say—

that will be the best way of raising money that I can see. My hon. friend is making a mistake in not accepting the amendment.

I would suggest to the Minister that he accepts the amendment. If necessary he can reverse it at a subsequent stage. The amendment is entirely in his own favour. The amendment does not prevent him from carrying out exactly what he wants under the debenture clause. It gives him another option. Surely the Minister is not going to shut one gate against himself? I am very glad to see the Minister of Finance here, because this is going to be a very important matter for him. Under the amendment suggested by the hon. member for Kimberley (Sir Ernest Oppenheimer) I think we are likely to get £3,000,000; under the debenture scheme you are only going to get £1,500,000. Under the suggestion of my hon. friend you are going to guarantee the ordinary shares and get them subscribed to the extent of £1,500,000. If you then raise £1,500,000 by debentures you have that covered 100 per cent. over by the assets. You have £3.000,000 which you are going to invest in your undertaking, and the debenture holders have a security of £3,000,000 worth of assets. You have to raise £3,000,000 under the scheme as it is to-day. You are going to raise £1,500,000 in debentures, but then you have not started. You have to go on and raise the ordinary share capital. You give all your security you are going to give away, and you have nothing to offer the public, and they are going to leave you in the cold. The Minister of Finance is going to be called upon to pay the £1,500,000.

As far as the Treasury is concerned it makes no difference.

The Minister will be in the position that he will have to put up £1,500,000 for ordinary share capital for which he will have to pay the public 5 per cent.— which is exactly the 5 per cent. hon. members here ask for. It is not preventing the Minister carrying out his initial scheme at all. It maybe an easy thing for the Minister of Finance with his Treasury overflowing with money, but it is going to be a difficult thing to raise your ordinary share capital. The hon. member for Kimberley (Sir Ernest Oppenheimer) says, take the option of raising this money in two different ways instead of binding yourself to one way. Surely the Minister of Finance is not going to shut the door on one method he can utilize to raise capital.

I am really very serious about this scheme, and I am sure my scheme is far more workable than the scheme as it stands now. It is perfectly certain that the ordinary shares will not be subscribed if you create this debenture debt on this company.

Let the public show their confidence. If they do not, the Government will see the thing through. Let the public have a chance.

Give the public a chance. The Government will become a company promoter and will ask the public to subscribe the ordinary shares which shall not earn more than 12½ per cent., thereby clearly conveying to the investors that there is a chance of earning more than 12½ per cent. Suppose, however, the company is not able to pay a dividend. The Minister says that we require iron and steel works and mentioned incidentally that we ought to be able to manufacture rifles. The Government will certainly require these rifles to face the 20,000 irate shareholders who will not be able to get the dividend the prospect of which was held out to them. I think people will be sporting enough to say they will not mind risking their money as they at any rate will get the capital refunded in 20 annual instalments of 5 per cent., so that although they may lose the interest, they will at least retain their capital. The board will be able to raise debentures without the assistance of the Government if my scheme is adopted With the £3,500,000 capital, which they will find easy enough if my scheme is followed, they will bring the iron works to a productive state without difficulty. For the-life of me I cannot see why the Minister should refuse my amendment. It may require re-wording, but I would like the board to decide whether what I suggest is, real business. We were not able to examine one financial witness in the select committee. If Mr. Clegg, the Governor of the Reserve Bank or Mr. Leisk of Barclay’s Bank or the general manager of the Standard Bank had been called, they would have said that my proposal is by far the better way of raising the money. At any rate, give the board the opportunity to decide whether I am right or the Minister is right.

I am sorry I cannot accede to the hon. member’s impassioned appeal. These £3,000,000 of assets will not be worth anything unless the corporation is a success, as the security for the debentures will be nil—

You are no worse off guaranteeing shares than guaranteeing debentures.

Are you going to guarantee the shares to be issued after the first 1,500,000 have been issued?

You won’t require the money.

You are going to borrow you say £1,000,000 against shares to be issued later. What is the value of those assets unless the enterprise is a success? I treat with the greatest respect the hon. member’s suggestion, but I cannot see any advantage in this, but I can see something essentially unsound. Part of his suggestion is that for every pound the Government has to pay in fulfilment of the guarantee it is going to take as many shares in the capital of the company, so that you are paying your dividend and interest out of the capital. Now under the one method you know what your liabilities are going to be, but every time you pay dividends in this way out of capital you are going to increase your share capital. I am inserting the clause referred to for the reason that the legal advisers are uncertain whether that point has been determined in this country or not, but the courts have laid down that interest on loans is as much a cost of the construction of the work as the wages paid to the workmen. When you raise the one and a half million debentures in this way and pay up the half million on “A” shares you will be able to see whether there are reasonable grounds for being sure the enterprise is going to be a success, and if it is, it makes it a good deal more attractive to the public and you have less difficulty afterwards in placing your shares. I would rather rely on the prospects of the success of the enterprise to attract the public partly by means of preference shares and partly by means of ordinary shares. But the Government should guarantee the debentures.

You can do it either way through what we propose.

I have an objection to this paying of dividends out of capital.

My hon. friend seems to have a considerable amount of prejudice even more than he imagines. Supposing that this industry is not a success.? What is the position of the Government in connection with the £1,500,000 of debentures? They are liable to pay the 5½ per cent. and if it is a failure they are liable to pay the capital. If they accept this amendment they are liable for the interest at 5 per cent., and if it is not a success, the Government has not got to pay the capital: I cannot understand why the Minister of Finance does not shake up the Minister of Defence because it is his duty to look after the interests of the State which the Minister of Defence does not seem to be looking after.

I think in this matter we want a certain quantity of accuracy. The Minister has told us that he wants £4,500,000, whilst his own statement in the select committee was that he wants £3,672,000 to bring this business to the producing stage. Now what does he want? There is only a difference of £900,000 which seems to be a bagatelle to the Minister. My suggestion is that if he gets £1,500,000 debentures, £1,500,000 ordinary shares, and the Government put up £500,000 for A shares, then you have got £3,500,000, and therefore, according to his own statement in the select committee, he would only be overdrawn £127,000 when he starts work. I cannot understand the attitude of the Minister of Mines and Industries. Here we are discussing a Bill dealing with four or five millions of money, which is going to be put under the case of the Minister of Mines and Industries, who is going to be responsible for it, and he even cannot waste time in this House by looking after it. It is a most extraordinary position to be in. We are dealing with probably the most important Bill concerning his department which has been brought forward this session, and he cannot even be present in this House while this Bill is being discussed. Perhaps the colleague of the Minister of Defence disagrees with him. I do suggest to the Minister of Defence that, in order to help his colleague, the Minister of Mines and Industries, who some day or other may take the trouble to read the Bill and show some interest in it, he should give way on this question and accept the amendment of the hon. member for Kimberley (Sir Ernest Oppenheimer). The Minister would not be restricting himself in any way; he has all the powers that he has under this Bill, and he has additional powers put into his hands. Surely it is only reasonable to suggest that the Minister should accept the amendment.

I should like to ask the Minister whether, as a result of the amendment, the Government will be compelled to pay something which the Government would not be compelled to pay under the present terms of the Bill.

The hon. member has altered the wording.

The hon. member has not accepted that.

Yes, I accept that. My amended amendment will then read—

If the Minister is satisfied that this does not increase the charge on the Exchequer, I shall have to accept the amendment, though it seems to me there is such an extra charge.

If you think there is an increased charge, it is for you to rule upon that.

I do not think the Minister has given us sufficient explanation of the point I put to him. Some hon. members think it would be to the advantage of the scheme to have this clause in the Bill. This is only a permissive clause. Surely there can be no question that the Minister would be giving the board more power and a greater chance to make this thing a success, in other words, making the arrangement more elastic. If the wording of the amendment is not sufficiently clear it could be put right at the report stage. I would appeal to the Minister again. Even if he thinks it would be wrong to guarantee debentures he does not bind himself here, but he gives the board a chance to consider which of the two courses would be more satisfactory.

I would suggest to the Minister that he allows this clause to stand over and consults the Minister of Mines and Industries to-morrow as to whether he would like this clause to be in the Bill. We are in this unfortunate position that there is going to be one Minister of State who has to handle the working of the Bill, but unfortunately he has not been able to spare the time this evening to give us the benefit of his advice. I think it is only courteous to the Minister of Mines and Industries to give him a chance of saying something about a Bill he has to work himself. If the Minister of Mines and Industries is unable to be present when Bills relating to his department are before the House we should give him the chance of expressing his opinion at some other time. I suggest the Minister should allow that clause to stand over. I move—

Now that the Committee has the advantage of the presence of the Minister of Mines and Industries, perhaps you, Mr. Chairman, will delay a little so that the Committee may have the advantage of the views of the Minister of Mines and Industries on this important question.

May I just explain to the Minister of Mines and Industries what the position is. As the Minister knows, we have so changed the financial Clauses In the Bill as to give the board the very greatest elasticity. I pleaded with the Minister of Defence that he should allow me to put in a clause to give the board a chance of changing this scheme by guaranteeing either £1,500,000 of debentures, or £1,500,000 in shares, or a proportion of the debentures or of the shares, so that the total guarantee would not be more than £1,500,000. The Government would be responsible for twenty years instead of forty, and 5 per cent. instead of 5½ per cent., and would be responsible for no capital funds if the company is a failure. It is not a question of asking it to do one thing more. If there is the slightest doubt it is all the more reason to guarantee the ordinary shares rather than the debentures, which can take care of themselves. The board should be given a chance to decide. We have not had the opportunity of examining a financial authority on these clauses of the Bill.

For the benefit of the Minister of Mines and Industries, I would like to repeat what I said before—

The hon. member is not allowed to repeat the same argument.

It is for the benefit of the Minister of Mines and Industries.

The hon. member said—

and repetition is not permitted.

I may point out that the Minister of Mines and Industries is not in charge of this Bill. I am.

Of course if you won’t allow me to go on, I will sit down.

Proposed new clause put and the Committee divided.

Ayes—23.

Arnott, W.

Buirski, E.

Close, R. W.

Coulter, C. W. A.

Giovanetti. C. W.

Krige, C. J.

Lennox, F. J.

Louw, J. P.

Moffat, L.

Nel, O. R.

Nieuwenhuize, J.

O’Brien, W. J.

Oppenheimer, E.

Payn, A. O. B.

Pretorius, N. J.

Rockey, W.

Smartt, T. W.

Smuts. J. C.

Stuttaford, R.

Van Heerden, G. C.

Van Zyl, G. B.

Tellers: Collins, W. R.; de Jager, A. L.

Noes—46.

Badenhorst, A. L.

Basson, P. N.

Bergh, P. A.

Boydell, T.

Brink, G. F.

Brits, G. P.

Brown, G.

Christie, J.

Cilliers, A. A.

Conradie, J. H.

Oreswell, F. H. P.

De Villier A. I. E.

De Villiers, P. C.

De Villiers, W. B.

De Wet, S. D.

Fick, M. L.

Grobler, P. G. W.

Havenga, N. C.

Hay, G. A.

Heyns, J. D.

Hugo, D.

Kemp, J. C. G.

Kentridge, M.

Moll H. H.

Mostert. J. P.

Mullineux, J.

Oost, H.

Pearce, C.

Raubenheimer, I. v. W.

Reyburn, G.

Roux, J. W. J. W.

Sampson, H. W.

Stals, A. J.

Steytler, L. J.

Strachan, T. G.

Swart, C. R.

Terreblanche, P. J.

Te Water, C. T.

Van Broekhuizen, II D.

Van Heerden. I. P.

Van Niekerk, P. W. le R.

Van Rensburg, J. J.

Van Zyl, J. J. M.

Wessels, J. B.

Tellers: Pienaar, B. J,; Vermooten, O. S.

Proposed new clause accordingly negatived.

On the motion of the Minister of Defence it was agreed to report progress and ask leave to sit again.

House Resumed:

Progress reported; House to resume in Committee to-morrow.