announced that the Committee on Standing Rules and Orders had appointed the following members to serve on the Select Committee on the subject of the Union Native Council Bill, the Coloured Persons Rights Bill, the Representation of Natives in Parliament Bill and the Natives Land (Amendment) Bill, respectively, viz.: The Prime Minister, Mr. Barlow, Col.-Cdt. Collins, Messrs. Conradie, A. I. E. de Villiers, Duncan, Krige, Marwick, Moffat, the Rev. Mr. Mullineux, Messrs. Nicholls, Payn, Pearce, Rood, Gen. Smuts, Dr. Stals, Messrs. Steytler, Wessels and van Niekerk.

Before the first Order of the day is read, I wish to give my ruling with regard to the point raised on Thursday evening in committee on the Iron and Steel Industry Bill.

I want to ask you, Mr. Speaker, to save the time of the House, if a qualified amendment to Clause 3 would be in order. I had an amendment drafted, after the word “three”—

I think it would be better for the hon. member to put it in committee. I think it is always unwise to give a ruling on a hypothetical question.

I wish to give my ruling with regard to the point raised in committee of the Whole House on the Medical, Dental and Pharmacy Bill on the 24th March. The new Clause proposed by the hon. member for Heilbron not only seeks to limit charges and profits of registered persons but also to create a new punishable offence; whilst the second amendment of the hon. member for Namaqualand specifically seeks to limit profits. The proposed amendments involve new and important principles which cannot be embodied in the Bill without an instruction. I may say that the section of the law of the Orange Free State re-referred to by the Minister of the Interior applies only to medical practitioners, and does no more than declare what is the common law. I do not think on consideration that the fact that the section is being repealed by the Bill affects the question. The ruling of the Chairman is therefore upheld.

stated Mr. Speaker’s ruling on Clause 3.

On Clause 9,

I move—

I move—

I would like to eliminate the provisions in the Bill which provide that the dividend shall at no time exceed 12½ per cent. The reasons for my amendment I stated in the speech I delivered on the second reading of the Bill. It will be difficult enough in any case to place the shares, but limiting the dividend to 12½ per cent. will make the task doubly difficult, more especially as in the first years of the enterprise, little or no dividend will be paid. Therefore, the ordinary shares will not be a very attractive investment, especially as the debentures will take precedence of them. By limiting the dividend on the ordinary shares to 12½ per cent., the Government will make it much more difficult to raise the money to ensure the enterprise being a success. Then the mention of a particular rate of dividend must mislead the public. Government must be careful not to convey the impression that they are convinced that 12½ per cent. can be made. The evidence given before the select committee does not make it look likely that such a dividend will be earned, and it is wrong to suggest that the dividend be limited to this figure for by inference it is suggested that more will be earned. Then, if the directors know that nothing they can do will increase the dividend once they have arrived at the 12½ per cent. stage, they will say—

Anyone who has experience of industrial enterprises would admit that it is not in the best interests of the success of the undertaking that there should be this limitation. With reference to the proposal to delete the words—

it was felt in the select committee that such a provision would be unworkable. Suppose there is a surplus of 5 per cent.—that cannot be passed on to the consumers of steel and iron, but if it were not an action might be brought by the consumers against the corporation. The select committee was so convinced on this point that it actually added the words—

If the words regarding the using of excess profits for providing cheaper steel and iron are left in, it will be purely for window-dressing for political capital purposes, and so that a splash can be made by the members of one of our political parties by declaring that the object of the undertaking is also to secure cheap steel. But that is not the way to achieve that end. The board will only be too anxious to reduce the price of steel and iron to the lowest point so as to get the biggest consumption, for unless they have a large consumption, the industry will be a failure.

I must contest a certain portion of the hon. gentleman’s speech when he said that this is a piece of window-dressing in the interests of political propaganda. I assure him that not a word was said in the select committee to justify that statement. Nor is there any justification for the statement in the actual reason why subsection (c) was inserted. In the select committee it became apparent that there were difficulties in the actual wording of the clause as it originally stood. It was said that if it were not put to a fund it might be that any user of iron and steel might urge that a surplus of, say, £5,000 should be used to reduce the price. The object of establishing the industry is not merely that the directors should make 12½ per cent. but also that the industry should stimulate other activities by supplying iron and steel at the lowest possible price, compatible with a due regard to the interests of the corporation, and at the lowest possible figure obtainable under economic conditions. It is a useful provision indicating what Parliament aimed at in establishing the corporation. As to the other points, the hon. member has been very consistent, but it is one of those cases where we are of the same opinion still. I am afraid nothing he has said has carried conviction to my mind, and nothing I have said has carried conviction to his mind. He said there was no reasonable likelihood of paying 12½ per cent. I must differ from him.

I said in the first few years.

Then I misunderstood the hon. member.

I don’t think it will ever earn 12½ per cent.

According to the figures we have, there is a very much better prospect of earning 12½ per cent. than the hon. member appears to think.

I would like to see it.

Without questioning the hon. member’s sincerity, he will be one of the most disappointed men when he does see it.

I shall be one of the most astonished men in the country.

Hon. members have the document circulated by the Associated Chambers of Commerce, and I have had those figures investigated, and I cannot agree the figures nor can the department agree them.

They base their figures on £14 per ton.

There was one thing which appeared to me to be a bloomer in the report, and I did not mention it because I thought I would wait and see whether it was spotted. It has been spotted at this eleventh and a half hour. It is not exactly a bloomer, because the price was based on the price at that date. We have quite recently taken quotations from the leading merchants and dealers, and in every case, except one, the selling price has increased, and only in one case has it diminished.

That is the most important of the lot, though.

The position is a good deal better than when the report was made. There is nothing novel in this limitation of dividends. In the Reserve Bank it is limited to 10 per cent., and I should have preferred to have had it the same here. The hon. member suggested that it was scarcely honest to the public to suggest that 12½ per cent. can be earned. I think the Government is more convinced that 12½ per cent. can be earned than is the hon. member in some of his own companies.

Why don’t you guarantee the ordinary shares then?

We have had our discussion on that, and we are not going back to it. Another course has been suggested to me, namely to leave out the 12½ per cent. because the Government, having control, could, when the ordinary shareholders have got 12½ per cent. suggest to the directors to restrict it. That is more dishonest still. We have had this matter discussed in the select committee, and there is no likelihood of our getting closer together, so we ask the committee to accept this clause as it Stands there are two small amendments I made, one purely literal, and the other a phrase regarding preference shares which was not deleted in select committee. I hope the committee will not accept the amendment of the hon. member for Kimberley (Sir Ernest Oppenheimer).

The Government, having control, will be able to see exactly what steel and iron costs them, and can so regulate matters that shareholders get five or seven and a half per cent., and they can bring down the price of steel whenever they like. I have no confidence in this concern, because I feel that under Government control it will not pay. The Minister thinks it will be a success. If he wants the public to subscribe the way for the Government to prove that they think it will be a success is for each member of the Cabinet to take shares to the tune of £500, and if they will do that I will do it also.

That will not carry the capital very far.

I am still optimistic enough to think that if we appeal to the intelligence of the Minister sufficiently he will agree to the amendment of the hon. member for Kimberley (Sir Ernest Oppenheimer). There is no object in putting the 12½per cent. limit in. If you put that limit on the ordinary dividend, and the Minister’s prophecy comes true, that more profit still remains after provision for the reserve funds if that position ever does occur, the result will be that the corporation will be no longer interested in profits at all, and it is bound to lead to extravagance in administration and extravagance on the salary list of the higher paid officials, because there is no object in refusing substantial rises in salary because they have paid 12½ per cent,, and that is not only all they need do, but all they are allowed to do. It is not going to advantage the country in any way to limit the dividend to 12½ per cent. It will lead to general laxity in the control of expenditure. All these assumptions are based on the Minister’s prognostication that we will earn more than 12½ per cent. He may answer that you don’t believe it will make 12½ per cent., so why worry, and that would be a perfectly legitimate answer, but I am dealing with the Minister’s case. He believes it will pay that amount and leave a bit over. By putting this limitation in as it is he will get no advantage whatever because the money will be spent in various forms of laxity. If the Minister wants to deal with prospective profits over and above 12½ per cent. dividends, it would have been wiser to have put it this way: that half the balance of profit after paying 12† per cent. shall be paid to the ordinary shareholders and the other half, if you like, to the holders of Government shares or to extinguishing the debentures. He would then have had some prospects of getting something more than the 12† per cent. dividend. In the back of the Minister’s mind is the view that if you limit the dividend you are going to reduce the price of the commodity to the consumer. I would suggest that the whole of experience is in the opposite direction. Hon. members of the Minister’s party are always fond of quoting Henry Ford to us. That is a company which produces the cheapest article of its kind on the market and yet it pays the highest dividends in the motor industry. Experience is entirely opposite to the Minister’s view. The company which produces goods at the lowest price is the company which pays the highest dividend. You are not going to get low price steel because you limit the dividend. You are much more likely to get a low price to the consumer if you allow the administration of the company to share what profits are made as between themselves and the consumer, and therefore I feel, in the Minister’s own interests, that he should allow this amendment of the hon. member for Kimberley to go through.

I also agree that there is not much likelihood of this concern earning more than 12½ per cent. I would not worry about the extra amount, but it seems to me that it is an extra deterrent upon the public to take up these shares. In any case the Minister is going to find that the public is not going to be too keen to take up the shares. As the hon. member for Kimberley (Sir Ernest Oppenheimer) has stated, they will certainly go without dividend for 4½ years. If you limit their dividend to 12½ per cent., what hope have you got of the public taking up the shares? My trouble is that the Government will then have to take up these shares. As regards subsection (c), which the hon. member for Kimberley wants to delete, perhaps the same argument applies, and one need not possibly worry too much about the wording of the clause. The question was put in select committee, would not the Government be faced by law suits? That is the only trouble. It seems to me that one year, by a combination of circumstances, this company might have a fairly large profit. Then the price of steel will have to be reduced next year. That was the point made by the Chamber of Industries in their evidence.

Sub-section (c) protects that.

I am arguing on subsection (c). Supposing in one year there is a profit of over 12½per cent., a man might come to the company and say—

Next year may be an ordinary year, or a worse year, and you might make a loss that year. The trouble about the rebates, etc., is that the man who earns the profit is not going to get the benefit. I am not certain that this wording is yet right and I would like the Minister to consult somebody on the point.

I think that the point which my hon. friend, the member for Ermelo (Col.-Cdt. Collins) has made, is a good one. I have been looking at this clause, sub-section (c), and it is clear that in select committee an effort was made to get out of possible resort to the law courts by putting in certain words, leaving the matter to the discretion of the board. But if the Minister will look at the words, he will see that, although the discretion is left to the board as to the manner in which the reduction shall be made, the reduction must be made in any case. That is obligatory on the board. The manner in which it is made, the amount or the time, the details of the reduction, are left to the discretion of the board, but the reduction must be made and I doubt very much whether the words which we have inserted will really save the board from possible legal liability. I would, therefore, urge the Minister to look at the matter very carefully, because it seems to me that sub-section (c) under the circumstances, may very well go out. Let me say a few words about the other point under sub-section (b). I am sincerely anxious that this company should be a success. I am very sorry indeed that the Government has come to the decision about Government control, because I think it is a wrong decision upon a matter of cardinal public policy. But, apart from that, I am anxious, as I said on the second reading, to see this company a success, and my feeling is this, that the company will have a much more difficult task before it than the Minister seems to appreciate. The public, of course, have this fact before them that, although we have apparently a glowing report by the German experts, yet the Gutehoffnungshütte Company itself did not take it up. According to what one sees in the papers now, they are buying a mine in Sweden. Instead of taking up this wonderful affair in South Africa on which their experts reported so glowingly, they are dropping this plum and they are putting their money into a business in Sweden.

Do you think the two things are on a par?

I am arguing on this thing from a public point of view. If we want to make this company a success, as I am sincerely anxious and, I believe, almost all of us are anxious to see it made a success, we must make the shares as attractive as possible. I cannot conceive anything worse for this company than if after a couple of years it has to go to the Government and say—

The Minister of Finance has already told the House that the Government will, in the last resort, see the company through. If the public do not take up the shares, the Government is prepared to finance it. That may be the decision of the Government, but, looking at it from the point of view of the success of the company, nothing could be worse than that. We do not want to see this company become an incubus to this country, and unless—

How will that affect the success of the company?

If the public will not invest their money in it and the Government is compelled to spend public moneys on it, you see what a danger there is. You have got to do so, simply because the Government are already deeply involved in it. They will be already involved to the extent of £2,000,000 and they will be throwing a good deal of good money after the bad money put into it. If it is a good concern, the public will put their money into it. When the day comes when the Government has to keep it going with public moneys, this company will be in a bad way.

That will be long before the thing has had a chance of working.

Evidently the snowball will be rolling. The Government will already have put £2,000,000 of the country’s money into this thing, the public will not take up further capital and the Government will have to go the whole distance of putting £5,000,000 into this concern. The country, instead of supporting this concern, will come to look upon it as an incubus to it. That is the danger that will arise. I think we should give every inducement to the public to come in as shareholders, and I do not see how the public is going to be induced to do so by this limitation of 12½ per cent. profit. I do not think much of this 12½ per cent. myself. I doubt whether these profits will be realized.

You are going to promise them more in the hope that they will come in.

Undoubtedly, if there is any chance, let them come in, because that is the only chance that I can see of making this company a success. I think this company is going to be a ghastly failure if it is to be entirely dependent on Government money and if the public are hanging back. When the people of this country see that millions and millions of their money are being used in the concern and the public will have nothing to do with it, it is a question whether the Parliament of this country will continue to support it. Many a concern has been started with glowing hopes, but these things somehow go wrong. The chapter of accidents in these industrial concerns is a very great one. I would say to the shareholders—

knowing perfectly well that their profit cannot be a very large one, because this concern will have to compete against the most highly organised steel industry in the world. It is not á case like the Reserve Bank, or the Electricity Commission, where there is no competition abroad. The world has been parcelled out by cartels and monopolies in regard to steel. Don’t be afraid that there will be undue profits. I would say to the shareholders—

On that ground I hope the Minister will consider the matter again. It looks, at first sight, attractive to limit the profits, but we must remember that the profits are going to be limited by a much more powerful factor, and that is foreign competition. The company does not claim the whole of South Africa for its productions. The Minister has explained to us how it has got certain areas in the interior which are going to be served. A large portion of South Africa, including the coastal belt, is going to be served by foreign producers, and if we are not careful the foreign competitors will soon be right inside the area which has been delimited for this concern. Listening to the arguments which have been adduced for the amendments by my hon. friend behind me (Sir Ernest Oppenheimer), I strongly support him and I think both under sub-sections (b) and (c) his amendments should be accepted.

I think the committee is very much indebted to the right hon. gentleman for having started off by telling us that he is anxious to help, because no one would have thought so from the rest of his speech. He is telling the public this industry will never pay and then he says—

One may say to him—

He is not only trying to kick the industry downstairs but he is getting all his friends to help him kick it downstairs, and that is how they show that they are anxious to establish a national industry in South Africa. He goes on to say that you need not be afraid of a 12½ per cent. dividend—it is never likely to earn as much as that. If that is so why is he afraid of limiting the profits to 12½ per cent. What is the objection to limiting the amount in order to show that the object of this industry is not that of a profiteering industry, as seems to be the attitude of our hon. friends on this side, but its object is to establish an industry for the purpose of developing South Africa and securing the investors in that industry a reasonable share of the profits. I can understand the hon. member for Kimberley (Sir Ernest Oppenheimer) and the hon. member for Newlands (Mr. Stuttaford) being opposed to this. They look upon this as futile. Twelve and a half per cent.—what is the good of that to the hon. member for Kimberley? We know the way they want to handle things. We had it before the select committee. They want £4,500,000 ordinary shares, of which 2,000,000 debentures guaranteed by the Government and £4,500,000 was to be given to the underwriters as fully paid up shares and thus creating watered capital. The gentleman who was negotiating that was a Mr. Davis, according to the evidence, who is apparently not unconnected with the Anglo-American Corporation. I will repeat the information for the benefit of the hon. member for Kimberley. The negotiations that were going on were on the basis of £4,500,000 debentures, and £2,000,000 was to be issued as fully paid up ordinary shares to the underwriters, and they were offering to the Government, by way of a bribe, £1,250,000 watered capital for the guarantee which the Government was to give, and the gentleman who was negotiating this was a Mr. Davis, who I understand was not altogether unconnected with the Anglo-American Corporation. When you look at the method which appears to have been adopted by private financiers I can quite understand that to them, 12½ per cent. is futile, and therefore they say—

But I think the people who will invest money in this will be satisfied with a reasonable return on what they invest, and not only that, but that they are doing something to help South Africa. Because of that it is definitely laid down in this clause that any surplus above 12½ per cent. must be devoted in such a manner as the board may decide to lowering the cost of the commodity. But if you do not limit the amount of the profit then it is conceivable, human nature being what it is, that the board may feel they have a right to show a very large profit instead of lowering the cost of the commodity, and then we shall be faced with competition from overseas. We want to obviate that. We want to obviate undue competition from overseas by providing that after the shareholders have received a reasonable return, any surplus shall be utilized in reducing the cost of the commodity.

The hon. member for Troyeville (Mr. Kentridge) and myself look upon business from rather a different angle. He has no respect for the Treasury, and I have. The hon. member does not care a bit if millions of money are taken out of the Treasury and invested in concerns where not only will there be no return, but the capital will be lost. What does he care? He does not care for the public; all he cares about is to prove that the Government can start State enterprises. It is not a good thing to establish State enterprises, and the hon. member in trying to raid the Treasury is not justified. I would like to quote what has happened in Queensland. One of our own well-known engineers, Mr. Carl Davis—not the Mr. Davis referred to by the hon. member; I will deal with that later—has sent me reports on the position in that country. The hon. member for Troyeville quoted the wonderful work which is being done there. For the benefit of the Nationalist party I would like to show what is being done in that country, run by labour.

I never mentioned Queensland at all in my speech.

Anyhow, here we are establishing a State enterprise, and I think we should try and save the Treasury from losing their money. Therefore, I wish to make it clear to the Nationalist party what is really happening in Queensland as the result of following the advice of the Labour party. This is an extract from a Brisbane newspaper of the 25th of February—

What party does that newspaper support?

I am only going to quote the speech of the Prime Minister, who is also Treasurer of Queensland, and who was in the unfortunate position of having to go to his Parliament to impose taxation. The Prime Minister, Mr. McCormack, said—

That is what the hon. member for Troyeville wants. He does not mind taking the money from the public. If it is a failure he will say “It is your own fault.” He does not care for the public. What he cares for is an experiment in Bolshevism.

Is this an experiment in Bolshevism?

You will find it is so, yes, and the country will find it so. Mr. McCormack goes on—

I would like to appeal to the Minister once more, that he should now alter his Bill in such a manner that the Treasury will not be called upon to supply all this money. He is rendering a very great disservice to the very cause that the Bill has at heart, that is, to establish an industry which ordinary commercial enterprise will not tackle by giving them State aid. Our Government have not yet gone in for State enterprise of this sort, that is why the Government is in a position to guarantee the money at 5½ per cent. Had we, like Queensland, gone in for these enterprises before, the Minister would have known we could not give this money at 5½ per cent. for forty years. In Queensland, run by the Labour party, you have a deficit of £12,000,000. Therefore it is of very serious importance that this country should not be saddled with £3,000,000 shares in this company. If the Minister has any regard for the finance of this country, for the stability of this country, he will shape the Bill in such a way that the money will be raised from those who are willing to risk it and who will do it with their eyes open. The Treasury will be committed once they take up the shares. There is nothing to prevent the corporation from cheapening the steel if they want to. I do not see why this other amendment should not be accepted. I make bold to say that the dividend will never be 12½ per cent. in this concern. I have consistently and persistently tried to make this Bill a workable Bill, and have tried to see the industry established. The Minister said there was some mistake which he had discovered in the Bill but he said there was something else which made up for that. I do not want to criticize, but even that “something else” is now in grave doubt. If that is so, surely, why should the Minister insist upon a sub section which is a pious hope, and to limit a dividend which will never be reached? He has six reserve funds if it is reached, and he need not pay out a dividend. Perhaps he might find it a useful thing to pay a higher dividend for the lack of dividends in previous years and, therefore, I think it most reasonable to appeal to the Minister to accept this amendment. If the hon. member for Troyeville (Mr. Kentridge) wants to quote the Anglo-American Corporation, it publishes the fullest accounts, and on the front page he can see all the people connected with it. He will find the gentleman to whom he has referred is on the front sheet. One of the gentlemen he has mentioned is a great financier and it is most improper for the hon. member to sort of blacken the character of a gentleman who, anyhow, has tried to raise money to develop the industry in South Africa. It is not fair criticism, and as he does not explain all the circumstances of the case, the hon. member leaves the House under a wrong impression. The only reason can be that the Minister does not want to accept an amendment from this side of the House.

The hon. gentleman who has just sat down would do well to take his own advice. He said that if the hon. member for Troyeville (Mr. Kentridge) was quoting instances of State enterprise, he should state countries in which it was in vogue. The hon. gentleman himself should study the conditions in Queensland, and not simply go by the speech made by the Prime Minister. I have no objection to that speech—it is perfectly correct. One must and does admit that the workers and the great mass of the community have been bred under this system of grab and selfishness, and do not give a fair test when it comes to community effort. 1s the hon. gentleman aware of the fact that during the Labour regime in Queensland the wealth produced has increased from 59,000,000 to 85,000,000 and manufactures have increased from 25 millions to 38 millions; farm products from £6,700,000 to £12,200,000 per annum; and the savings bank deposits—a true indication of the prosperity of a country—have increased—

I am sorry to interrupt the hon. gentleman, but he is departing rather far from the clause.

Hon. gentlemen on the other side have attacked this Bill, on the ground that it is State enterprise and a Bolshevistic measure, and to substantiate that the hon. gentleman who has just spoken has brought forward—

I have allowed the hon. member to go far enough. Let us return to the clause.

The bogey raised by the hon. member will not materialize if the Bill becomes law, because in countries where measures of this description and measures further advanced than this measure have proved beneficial to the community. The hon. member spoke of this being a Bolshevistic measure. I take it that he knows what he is talking about when he speaks of a Bolshevistic measure. Does he definitely know what “Bolshevism” is? Has he studied the Bolshevistic system?

Have you?

Yes, I have studied it. The Chairman would rule me out of order if I explained it here, but I should be pleased to tell the hon. member outside. I would like to ask, is the hon. member for Kimberley (Sir Ernest Oppenheimer) prepared here in South Africa to hand the post office back to private enterprise? Are hon. members prepared to hand the railway and telegraphs back to private enterprise? I would like to point out that in Queensland you have, as in this country, to serve a scattered community.

I have given the hon. member enough latitude now.

I would be very pleased to meet any hon. member outside in the lobby and explain.

What has become of the broadcasting?

We leave that to the South African party who are good broadcasters. I quite agree with the hon. member for Troyeville (Mr. Kentridge) that if the public are to accept the statements made by hon. members on the other side of the House, they will not put their money in the industry. I would like to ask these hon. members to think something of South Africa and of the benefits that will accrue to South Africa, and a little less of me financial institutions they represent in this House. Instead of fighting for greater and more profits for a few interests in this country, they should do a little more for the industries of the country.

I am surprised at the last speaker quoting from experience in Australia. Why should he run away six weeks before he should have, and act as the Government’s mbongo? When he spoke of the revenue in Queensland, he forgot to say what the increased taxation was.

The hon. member is going off the point altogether.

I am speaking in regard to State enterprise, and I want to point out that the hon. member who has just sat down knows nothing about it.

On a point of order, are we discussing State enterprise?

We are not discussing State enterprise now. Clause 9 is under discussion.

With one exception, State enterprise has proved an absolute failure in Australia.

I have taken a little trouble to find out whether there is any State iron and steel business in any part of the world, and I find only one—in New South Wales—known as the Bowen Iron and Steel Works. The last report we have on this in the House shows that a loss of £49,108 was made for the year ending 30th June, 1924. I believe exactly the same position is going to arise under the Government control of this corporation. I submit that the figures on which the Germans based their report as to the profits to be made, are totally incorrect. One item which the Minister said he knew about, but on which he was not going to give, information to the House—with regard to the prices of pig-iron—under the German estimate a profit of £71,882 is shown, but £60,000 has to be cut out of the German estimates. I think it is right that the House and the country should know exactly what the position is. The first item, on which the estimate is a total production of 30,000 tons—of heavy rails—I wipe off from the board, because the Government will control that price, and the Government can control the profit on this item in any manner they like, because in terms of this Bill the railways can be called upon to pay any price they are called to pay upon. With regard to heavy rails sold to private concerns, the estimate is 10,000 tons. The imports amounted to 4,689 tons in 1925, 4,618 tons in 1924, and 2,642 tons in 1923, or less than half the estimate of the Germans for the whole of the Union. These can be landed for £7 10s. at the coast, or the same as the work’s cost at Pretoria, so that they will be able to compete with imported rails in the Transvaal and the Free State. In other words, he could not estimate more than 2,000 tons per year in the Transvaal, and not the 10,000 tons as stated in the German report. Take the third item, sections, 14,000 tons according to the German estimate. The imports for 1924 and 1925 have averaged just under 7,000 tons per annum, and these sections are made up of a great many sizes and shapes, the great bulk of which it would not pay to roll here. Sections can be landed here or in Pretoria at £14 per ton, and not £18 18s. as stated. Most of these items are used at the coast, and not in the Transvaal. Take the next item—rod iron—23,000 tons, as stated by the Germans. The imports in bar bolt and rod iron and steel for 1925 were 22,543 tons. These will consist of many sizes which it would not pay to roll; also wrought iron of special quality, which will always have to be imported. The bulk of these items will remain near the coast. The estimate of selling at £20 10s. in Johannesburg is about £6 above the price now sold. The Transvaal Works have been underselling the imported article for many years. The Germans estimated that they could sell 20,000 tons at £16 17s. 6d. per ton at Johannesburg, or an average selling price of £14 12s. 6d., showing a profit of 22s. 6d. per ton. The imports for 1925 of galvanized wire all gauges, were 11,438 tons. Merchants are quoting No. 8 galvanized wire at the coast at £11 per ton. The railage to Pretoria via Delagoa Bay, 23s., Johannesburg via Durban, 27s. 6d. The respective prices today are £12 7s. 6d. Johannesburg instead of £16 17s. 6d., or £12 3s. Pretoria against their cost price of £13 10s. 6d., showing a loss of £1 18s. 6d. on every ton of wire sold; therefore, instead of showing a profit of £22,494, there would be a loss of £57,000, if they had a market of 20,000 tons that does not exist. There are wire works already in the country to produce, not only No. 8 galvanized, but all commercial sixes and barbed wire, with a capacity to take care of the requirements of the country. These works have cost over £150,000, and should be producing early next month, but these works will be run at a profit.

In what connection is the hon. member quoting these figures?

On the question of profits. I submit I am entitled to discuss and analyze the basis on which the German report has been made. I want to show that the profits are not going to be anything near those stated in the report. In fact, I believe the undertaking will never show a profit at all.

I regret that the hon. member for Kimberley (Sir Ernest Oppenheimer) has been so annoyed at what was said by the hon. member for Troyeville (Mr. Kentridge). I can understand him being annoyed at anyone attacking the sacred ark of private enterprise. But it is not fair to say that the hon. member (Mr. Kentridge) does not care for the interests of the treasury, because it is not true. One of the witnesses before the select committee stated that, to underwrite the scheme, certain people wanted 2,000,000 fully paid up shares.

That was not my scheme.

But it was the scheme of the friend you are so proud of. Birds of a feather flock together, and you are known by the company you keep. The hon. member should not attack the Labour party and say they are against the treasury. If there is anyone against the treasury it is the hon. member’s friend. The hon. member who has quoted Queensland should read a book called “Practical Socialism,” by Dr. Christopher Anderson. The hon. member for Newcastle (Mr. Nel) is quite right to fight for his constituency, but does he know that there are 1,500 coal mines in England which are extremely badly managed? If State enterprises were so badly managed as Vickers, Ltd., or Armstrong Whitworth, there would have been a most serious outcry.

Do you know of any State coal mines which pay?

I know lots of State enterprises which pay. There is a State insurance company in Queensland that is an absolute success.

The hon. member is now discussing the general principle of State enterprise.

No, I am not. I am discussing the question of profits. The hon. member has laid down that profits cannot be made because the Government has control. But I am pointing out that Government can make these profits. However, I will send these papers to my hon. friend to read for himself.

May we now return to Clause 8? My objection to the limitation of dividends to 12½ per cent. is not because I feel that that figure will ever be reached, but because the limitation is a suggestio falsi. I think the Government is not justified in allowing the public to believe that in a reasonable period of time 12½ per cent. will be earned. If the steel industry is going to be a success we shall have to get thousands of subsidiary companies to come here and to turn the raw products into the manufactured article. But they will say that as soon as they get going Government will seek to limit their profits to 12½ per cent.

I do not think the committee recognizes the extraordinary rectitude which has animated the Minister of Defence. He objects to allowing the shares to receive more than 12½ per cent., because he and his friends are naturally going to place some of their hard-earned money in the enterprise, and they would not like to be accused, with their socialistic doctrines, of having shares in a concern that pays more than 12½ per cent. There is another side to the question. If there is anything which it is necessary to have as cheaply as possible it is iron and steel. If this clause goes through the consumers of this country, largely the agricultural community, will have to pay a higher price for their agricultural implements and things necessary to carry on their business. It will affect the two primary industries, mining and agriculture, very much indeed. I have no objection to an industry of this character, but when I read the clauses I am filled with the idea that in the development of this country we shall have to pay a great deal more money than before in the construction of railways and the development of any industry requiring iron and steel, and it will, therefore, be detrimental to the interests of the country. The hon. member for Brakpan (Mr. Waterston) said that if there was no limitation put on the amount of interest paid on the ordinary shares, that the returns might be very much more indeed. I entirely disagree with him. The hon. member for Kimberley (Sir Ernest Oppenheimer) has pointed out the change of policy which the Labour Prime Minister of Queensland has introduced into the Queensland Parliament, owing to the extraordinary failure of Government enterprise in Queensland. I call hon. members’ attention to the “Pasturist” of the 16th February, 1927. He questioned the hon. member for Kimberley, and so I will read to my hon. friend the advertisements of the Queensland Government to show where the information came from.

I hope the advertisement will have something to do with Clause 9.

It will show there is no necessity to move for the limitation of 12½ per cent. to be taken off, because I am going to show that State enterprises of this character have paid nothing at all, but have lost 12½ per cent. and more. The Government of Queensland advertise the sale of 16 stations, cattle and general stations. They had also tried their hand at breeding horses. These stations extend over 25,000 to 30,000 square miles in which they have 207,000 head of cattle, and they are going to be sold, in the words of the Prime Minister of Queensland, because they have become a ghastly failure. It is the same with all Government enterprise. We hear about railways, and I agree they are admirably managed here, and they are a success, but it is because they are a monopoly, and there is no possibility of limiting the amount of money they charge.

The hon. member is out of order now. I must follow the Chairman’s ruling on the speech of the hon. member for Bloemfontein (North) (Mr. Barlow) and ask the hon. member to keep to Clause 9.

I was trying to explain that this being a Government concern, I do not think under the circumstances, unless customs duties are largely increased, it will be possible to pay anything in the vicinity of 12½ per cent., and if you have any idea of asking the public to come in under Clause 9, and the inducement is held out they are to receive 12½ per cent., then I say that it will be necessary to increase the import duties, and you are going to put an incubus on every industry in the country which requires iron and steel.

If the contention of the hon. member for Fort Beaufort (Sir Thomas Smartt) means anything, then it means that the limitation of the dividend to 12½ per cent. will not benefit the public using iron, it means that they will have to pay more for the product. The hon. member for Kimberley (Sir Ernest Oppenheimer) warned us, saying that these measures are bolshevistic and socialistic. He endeavoured in vain to frighten us with that. We still have enough knowledge of business on this side of the House to know that if a business may only distribute 12 per cent., and not 25 per cent., and that if the second 12½ per cent. has to be applied towards reduction of prices, that that must benefit the consumer. I cannot understand the contentions of the hon. members of the Opposition. It reminds me of a driver who continually whips the near horse while holding the other back, with the result that the cart turns round in an interminable circle. With regard to myself and this side of the House, we are in favour of private enterprise. But what are the facts? Since 1912 attempts have continually been made to establish an iron and steel industry by means of a spirit of private enterprise. The iron trusts of the world smothered these attempts, however, and refused to finance them. They were not able to obtain money, and now the Government is tackling the matter. The people of South Africa are of the opinion that an iron industry is necessary. The hon. members, however, in their zeal for private enterprise, have changed front, and say that the industry will be a failure. The hon. member for Kimberley said that a profit of 12½ per cent. would never be reached. But then why are they against the limitation of profits to 12½ per cent.? The hon. member for Standerton (Gen. Smuts) tells us that he heartily supports the scheme, but in the meantime his speeches on the question are calculated to make people afraid of the measure. We may not be quite so clever on this side of the House, but we are not so stupid as to allow ourselves to be frightened with words like bolshevism, etc. Do hon. members on that side of the House wish us to be dishonest and stipulate that the Government should secretly, by means of its majority on the board of management, limit the distribution of profits to 12½ per cent.? I doubt that, and because they do not wish to do that they ought to support the section.

I would like the Minister to explain the meaning of these words in sub-section (3) “or the regulations” in lines 58 and 59. The clause reads—

Section 12 provides that the board may establish, create, and maintain any dividend equalization fund, price equalization fund and reserve funds, and this clause provides that the profit shall be applied, first of all, in paying dividends on preference shares. After paying dividends on the preference shares, the clause goes on to provide that a dividend of 6 percent. shall be paid on A and B shares, and afterwards, if any profit still remains undivided, it shall be paid up to 1.½ per cent. on A and B shares. Then we are told that any surplus after appropriation in that manner is to be applied to the reduction in the price of iron and steel. The introduction of these words—

gives the board power to apply the profit in some way not disclosed in this clause.

Look at Section 16 (f).

That does not carry us any further.

That is why the words are put in.

The hon. member has not read Section 12, which enables the board to establish these funds referred to in Section 16 (f). I want to know, supposing the board make regulations for the disposal of any profits—supposing these dividends are paid—if the balance of profits goes in the reduction of the price of iron and steel, what do these words “or the regulations” mean? Do they mean that the board may pay a bonus on shares? I think the words ought to come out, but I hesitate to move the deletion, because the Minister might be able to explain these words.

The hon. member for Hanover Street (Mr. Alexander) indicated to the hon. member for Dundee (Sir Thomas Watt) that the words referred to were indicated in Section 16 (f). The whole clause is subject to Section 12. They give the board power to make regulations for the maintenance of any fund or funds established. I am not a lawyer, but as a common-sense man, it seems to me to be fairly plain. We have been two hours on this clause, and we have discussed it fairly fully. That I am not replying to the hon. member for Newcastle (Mr. Nel) on the figures he quoted must not imply that I agree with him. I don’t. I would put it to the committee that, having so fully discussed this matter, there is a clear difference of opinion, and I do not think any more discussion will bring us closer together. I think I may say that perhaps the discussion has taken just a little bit generous a view of the implications of Clause 9. I would now ask the committee to come to a vote on this clause.

In putting this amendment, Mr. Chairman, I take it that the amendment of the hon. member for Kimberley (Sir Ernest Oppenheimer) will be put in this form, that the words proposed to be omitted stand part of the question. Would you put the words down to “exceed”? That will settle the question of the hon. member’s amendment, and leave the way open to me to move another amendment.

We must first settle the earlier amendments. When we come to the amendment of the hon. member for Kimberley, I will tell the hon. member (Mr. Stuttaford) what we will do.

I will now put the amendment of the hon. member for Kimberley on sub-section (b). There is an overlapping amendment by the Minister. In order to test the amendment of the hon. member for Kimberley, I will put the question—

Upon which the committee divided:

Ayes—67.

Alexander, M.

Allen, J.

Badenhorst, A. L.

Barlow, A. G.

Basson, P. N.

Bergh, P. A.

Beyers, F. W.

Boshoff, L. J.

Boydell, T.

Brink, G. F.

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 Wet, S. D.

Fick, M. L.

Hattingh, B. R.

Havenga, N. C.

Hay, G. A.

Hertzog, J. B. M.

Heyns, J. 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.

Pirow, O.

Pretorius, J. S. F.

Raubenheimer, I. v. W.

Reyburn, G.

Roos, T. J. de V.

Roux, J. W. J. W.

Snow, W. J.

Stals, A. J.

Steyn, C. F.

Steytler, L. J.

Strachan, T. G.

Swart, C. R.

Terreblanche, P. J.

Te Water, C. T.

Van Heerden, I. P.

Van Hees, A. S.

Van Niekerk, P. W. le R.

Van Rensburg, J. J.

Van Zyl, J. J. M.

Vermooten, O. S.

Vosloo, L. J.

Waterston, R. B.

Wessels. J. B.

Tellers: Pienaar, B. J.; Sampson, H. W.

Noes—43.

Arnott, W.

Ballantine, R.

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.

Louw, G. A.

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.

Payn, A. O. B.

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.

Question accordingly affirmed, and the first amendment, proposed by Sir Ernest Oppenheimer, dropped.

The remaining amendment, proposed by the Minister of Defence, put and agreed to.

I move—

The Government have decided they will not guarantee the ordinary shares, and we are still strongly of opinion that it is absolutely necessary to give some inducement to the ordinary shareholders to put money into this company. As the matter stands at present, the position is this, that in the initial stages it will be necessary for the Government to get a subscription of roughly between £500,000 and £600,000 in ordinary shares about three years before the company comes into production. That will mean that those persons who subscribe will have to go for three years without any dividend at all. At the end of three years it is estimated by the Government’s own officials that it may be possible for the company to pay a dividend of 10 per cent. That means that the initial subscribers to the ordinary shares will only get a dividend averaging 3⅓ per cent. per annum. If the Minister will refer to the evidence of Dr. Bruwer, on pages 45 and 46 of the select committee’s report, he will see that Dr. Bruwer agrees that there will be only that 3 per cent., and Dr. Bruwer, on page 46, goes on to say—

Their own official recognizes that it is not economically sound to ask the general public to invest their money at 3⅓ per cent. per annum. Further than that, as has been mentioned already, you may have a year which for certain reasons has turned out badly; you may have a year in which the dividend, owing to certain losses—there may be losses by fire, or a thousand different ways; there may be strikes —the dividend of 12½ per cent. may not be paid perhaps for a year or two. The dividend may have to be cut down to 6 per cent. or 7 per cent. The object of my amendment is to say that the limit of the dividend of 12½ per cent. shall be effective; that is, provided the company makes a profit, the ordinary shareholder shall have sufficient evidence that he will get 12½ per cent. for his money, provided the profit is made. I suggest to the Minister that the people who are going to invest first in the ordinary shares are the people who should have the most consideration. As the clause stands to-day, the people who invest first will have the least consideration. The whole inducement, as it stands to-day, is for a man to stand out and say—

But to the man who comes in, say, in two years’ or three years’ time, the position is that he cannot get more than 3⅓ per cent. per annum for these three years. That is an unreasonable thing to ask any man to do. As Dr. Bruwer states, it is unsound to ask for that. That is the position of the Reserve Bank. It practically came to the same thing. The Minister of Finance will remember there was a limit to the dividend of 10 per cent., and as it was perfectly clear that they would not earn 10 per cent. in the first two years, the Government had to take up a very large block of the shares, but immediately the Reserve Bank put itself in the position of earning 10 per cent., the public came in and took the shares up. You are going to have exactly the same position here. The public will hang back until you come to the producing stage. As the thing stands to-day, the plant will have to be erected entirely with Government money, unless the Government agrees that the 12½ per cent. dividend shall be what I may call “retrospective,” or that the people who pay their money in in the earlier stages shall be able to receive a maximum dividend of 12½ per cent. from the time of the issue of the shares.

I move as an amendment—

The board may think it better to run an over draft or borrow money in some other way before issuing debentures, and I think it may facilitate operations. I had intended moving another amendment to this clause, namely—

but I will not move that at this stage.

I think the hon. member is under a misapprehension. In Clause 11 we have provided for that. The board may in anticipation to issuing debentures borrow money.

I only want to make the position clear. It is true that Clause 11 does make it clear. As it might take a month or two to get debentures subscribed, I thought it might borrow money.

That is provided for. I will put the point to the law advisers. In the select committee it did not strike any of us. If it is embarrassing we can deal with it at the report stage. With regard to the second part of the amendment of the hon. member for Kimberley (Sir Ernest Oppenheimer), I often want “may” turned into “shall”; but “may” gives the authority to do so, and the intention is that it shall be done. I prefer “may”

I do not see why the Minister wants the word “initial”. How does it help him? It is open to the interpretation that the Government is compelled to begin with the issue of debentures, whatever it may do afterwards. If the word is taken out, it would not in any way hamper the Government and interfere with the plans and it would do away with the implication that they must begin with a debenture issue.

I have no prejudices one way or the other. The hon. member for Yeoville (Mr. Duncan) thinks it has some limiting effect. I will be perfectly willing to have it deleted, and consult the law advisers. If there is any good reason for it we may alter it at the report stage.

I move—

The question of the payment of debenture interest during construction from capital and charging it to capital account has been tried in the courts elsewhere, and it has been clearly held in test cases that it can be done, but the legal advisers are not quite sure that the question has been settled in our courts, and so to put the matter beyond doubt we propose this new clause.

I feel pleased that the Minister has moved this clause, for the Bill as introduced provided that the interest on debentures should be taken out of the revenue of the corporation, and failing that, out of the consolidated revenue fund. I argued, quite rightly, that no dividend could be paid on the ordinary shares for some considerable time. The Minister said I was absolutely wrong, but I am very pleased that he has found that I was not so wrong after all

The object is to prevent other people falling into the mistake that the hon. member for Kimberley (Sir Ernest Oppenheimer) fell into, and that the position should be made clear to less intelligent persons than he is. The law would have perfectly admitted the charging of interest to the capital account, and that was always intended.

There is a common law right to do this, and the amendment only puts the matter beyond all doubt.

The original Bill made it quite the opposite.

The Bill will only say what was implied by common law.

I don’t object to the new clause. It is not a question of stupidity on my part, for I simply interpreted what was clearly printed. The legal position is put in order by having this amendment, which shows that my argument was right and the Minister’s was wrong.

No it doesn’t.

I move—

Many people reading the clause might criticize it by saying that the select committee amendment means that the clause is all eyewash, but my amendment is based on the assumption that the Government intends to give a very valuable consideration to the corporation. Under this clause the Government is giving a fifteen years’ contract to the corporation, which, however, will not come into operation for about five years. That means that for twenty years from to-day the whole of the purchases of the Railway Administration are going to be mortgaged and handed over to this corporation. That means that for twenty years the Government are going to hand over all their rights to purchase iron and steel manufactures in this or any other country to the corporation. These purchases will amount to at least £500,000 a year. The way I arrive at some rough idea of the value of these is by taking the report of the department officials. They say that the Government consumption is 72 per cent. of heavy rails—£412,000 a year; 54 per cent. of iron construction and sections, amounting to £116,000 a year, and other items amounting to £867,000 and by working out the percent ages, the Government proportion of these imports, I reckon it is well over £500,000 a year that you are going to hand over to this corporation for a period of 15 years from the date they come to production.

£500,000 turnover?

Yes. I give that as a minimum. Probably the Minister will say the figures are entirely wrong, and that you are giving a great deal more, but I want to be on the conservative side. I want the House to consider whether it is wise to tie yourself up for twenty years on the important matter of iron and steel products for the Railway Administration. Thousands of things might happen in twenty years, yet you are going to tie yourselves up beforehand to limit your purchases to one corporation. In this connection I would like to refer to one or two witnesses who dealt with the matter in select committee. Mr. Laite’s evidence on page 102 says—

Any business man having anything to do with the purchasing of any commodity would take up the same position. It is madness for the Railway Administration to say that for twenty years we are going to put our purchases in the hands of one corporation. For twenty years the railways are to be bound, but my view is that the railways have been one too many for the Minister of Defence and have put in a clause which means nothing—which is really eyewash. I take it the Government are to carry out this clause and give the requirements of the railways to this corporation. There is another important point brought out by Major Butler on page 82 and that is the suggestion—-you will remember in the first draft of this Bill the suggestion was that the corporation was to have the orders provided they did not exceed 10 per cent. in value above the lowest overseas tender or any other tender —they were to have an advantage of 10 per cent.—but Major Butler pointed out, correctly, in his evidence—

That is an important factor all members have to recognize in this House. If this industry does not pay on economic lines we shall be gradually forced into making it pay at any cost. That is the danger of this railway contract. The railways will be made to make the iron and steel industry pay because when they have the control of over half a million a year in purchases, the price at which these things are going to be sold to the railways is a very material factor—namely, whether a profit is going to be made by the railways or whether the profits are going to be made by the iron and steel industry. Major Butler goes on to say, and I particularly want the attention of the House to this—

I submit, is there anything in that evidence of Major Butler that would not be endorsed by every reasonable man in the country—that Government purchases are to be open for tender and subject to the preference always given to South African products, and when I talk of South African products, I do not mean only the products of one concern but of any concern that might be in competition. I say that is a natural position to take up and the only sound position. The Government should not give 100 per cent. of their requirements of a given line to one corporation only. [Time limit.]

It will be noticed that a few of us voted against this old clause, but it was more on the question of monopoly. I realize in order to assist and encourage this industry one should not take up that attitude exactly. One should take up the attitude that this House agreed on a former occasion, I believe for the old Pretoria company, to give them 50 per cent. of the requirements.

You have given 50 per cent. to someone else before.

The Minister might be right, but it is quite impossible for anything else to live if this clause is agreed to by the House. I know it is said only one iron and steel industry in this country can be established and be made payable. We are limiting ourselves here to fifteen years, and in the past we have found very quick progress made in many of our industries. If we accept Clause 14 as it stands, where all the Government railway requirements must be bought from this company, we are limiting ourselves too much, and, as the hon. member on my right pointed out, the tendency would always be, all things being equal, to give State requirements to State-aided industries. Why exclude altogether any other industry that may arise, and which may have a prospect of success? Why exclude, for instance, Vereeniging and Newcastle, where they might manufacture the same articles, or some of the same articles that the railway requires? It seems to me very unfair, and I do submit that if we limit this to 50 per cent., it is all this company can ask. The House should not lend itself to a monopoly.

I just want to point out what the position is. In the original clause of the Bill, we simply proposed that the railway should carry out in respect of this corporation what actually is the policy of the Government, that is, they give 5 per cent. preference to articles manufactured here from materials not produced in the country, and 10 per cent. preference to any article produced here, the materials of which are the product of the country. We have altered that in due deference to the wishes of the railway administration, and hon. members will see that we first of all said that—

a contract shall be entered into with the railways. Obviously, that cannot be operative until the works are producing, five years hence. For the first five years the railways will buy where they like. In sub-section (3) we clearly lay down that in that contract the standards of quality to be specified, the price to be charged for such articles supplied by the corporation to the Administration, and the manner in which such prices shall be computed. The whole contract will be the subject of negotiation between the two parties. If the corporation cannot produce goods of the quality the Administration requires, then the Administration is as free as air to go where it likes for its stuff. Surely it is not unreasonable to say that this corporation which is being set up very largely at public expense shall have the first chance of supplying one of the principal iron and steel consumers of the country, and that is the railways, also belonging to the Government. There is nothing whatever which in any way prejudices the railways, because they will lay down their tests of quality, they will have to calculate what prices they can pay which will pay them, but it does give a security to that corporation to know that at this price it has got a steady customer.

A monopoly.

To all intents and purposes it is, and it is common cause among the witnesses who gave evidence before the committee that there is only room for one big iron and steel-producing concern in this country.

Not for the next 20 years necessarily.

We have just been accused by the other side of being too sanguine, but hon. members now want to assure us that big steel works are going to spring up all over the country, and that they are going to compete with one another.

But there are existing works.

But those existing iron and steel works are not on lines which we are proposing to establish. They were based on scrap, and to-day they have very little addition to scrap. I am surprised at hon. members who are so nervous, so sceptical about the prospects of the corporation, so intensely desirous of not limiting the dividend, although they feel that these dividends will never be reached, and of holding out every possible inducement to the investor to put his money in this enterprise—why, I ask, should they object to this particular clause, which will ultimately have to be ratified by Parliament, encouraging people to invest in this enterprise which will, at all events, have one certain consumer for its products. I hope the committee will accept this clause, because it is a most necessary and a most advisable clause to have. Parliament has full control, because this contract will have to be ratified by Parliament before it becomes operative.

The Minister of Defence, in his remarks in reference to the preference under this contract, has omitted to tell the committee that, under sub-clause (b), in addition to the 10 per cent., the railways are to be saddled with “the cost of transport thereof by rail, at rates ordinarily chargeable therefor to the corporation.” The Minister has not indicated to the country or the House what the extra cost is going to be to the railways of this transport from the coast to the appointed destination. The ordinary rate which the railways pay to-day for goods which they import is, I understand, ¼d. per mile, but that is not to be the amount which the railway will pay. They are to pay the ordinary rate which will be chargeable to the corporation, and, in my opinion, it is going to make a tremendous difference to the cost, so far as the railways are concerned, in fact, it is going to be far more than the 10 per cent. allowance which is being made by the railways. We have had no figures from the Minister showing what the extra cost to the railways is going to be under this clause. The Minister has told us that, so far as the existing industry is concerned, it will not be possible for them to supply any of the requirements of the railways. Let me say this—that, if what the Minister states is correct, why be afraid of the existing industries? Why not allow 50 per cent. of the requirements of the railways to be open to ordinary competition by concerns which are supplying the requirements of the railways? If Newcastle and Vereeniging can produce the requirements of the railways at a price less than those articles can be produced at Pretoria, why should not the railways be entitled to purchase from them? I submit that if the Minister will only give us a chance and not close the door entirely to the existing industry, if he will give us a chance, so far as the railway requirements are concerned, it is quite possible that existing industry will be able to supply a considerable quantity of the railway requirements. Why close the door? The Minister has said that the existing industry did not count, and will not be able to supply the requirements of the railways. If that is so, the Minister has nothing to fear, but if he is wrong, and the existing industry can supply a considerable quantity of the requirements of the railways at a price equal to or less than the price at which the corporation can supply, why should the door be closed against them? Is it the intention of the Government to entirely smash and obliterate the existing industry? I put it to every fair-minded man in this House whether they consider it is fair to do so? Why should the door be absolutely closed to the existing industry? The corporation is going to have a tremendous pull on the existing industry it is going to have the taxpayers’ money behind it, and direct Government support. If the Minister had any sense of fairness towards the existing industry he would allow at all events 50 per cent. to be open to the ordinary tender of any concern producing the requirements of the railways. Might I point out that in 1920, when the existing contract was made between the South African Iron and Steel Company and the Government, and when it was discussed in this House, the Labour party took up the view that it was a mistake for the Government to be tied down to any particular industry, that, in the interests of the railways, it should be open to competition of all concerns producing railway requirements. Apparently to-day the Labour party have run away from that attitude. Today the position is entirely changed The Labour party are in favour of an absolute monopoly. It is not going to make any difference to the corporation if they are able to produce better and cheaper goods than the existing industry. If they cannot, why should not the existing industry be allowed to supply some of the railway requirements? I think it is a perfectly reasonable request to make. I submit another point. What I am asking for is only in terms of the Act of Union, which laid down that the railways are to be run on business lines. I submit that if the amendment is accepted it will only be giving effect to the idea of the Act of Union, because if any existing industry can produce an article required by the railways at a cheaper price, why should they not be entitled to do so? I hope the Minister will accept the amendment, because I think it would be only fair and just to the industries already in existence. The existing industry has not been created in any illegal or unfair way. It has been created at the express invitation of the previous Government and the existing Government. Since the existing Government came into power they have extended the bounty system, and to-day to absolutely close the door to the existing industry would be very unfair and very unjust. I hope the Minister will accept the amendment.

I do not quite understand this clause. It is a rather remarkable one, not only in its wording, but in its intention. It begins by saying—

And that contract, as my hon. friend was perfectly correct in saying, is going to regulate the supply of iron and steel to the railways for 20 years, because, although the corporation may not be in a position to supply iron and steel to the Railway Administration for the next five years, still the contract has got to be entered into immediately the corporation is constituted. Therefore, it is quite correct to say that it is going to deal with the supply of materials to the Railway Administration for a period of 20 years from now. I think it is a most extraordinary provision to lay down as a mandatory requirement that this contract shall be entered into, and that it shall govern the supply of all these requirements to the Railway Administration for 20 years from now. The Minister says—

If that is so, I do not see what the use of the contract is. If the railways are entirely protected, what is the value of the contract going to be to the corporation? If that is so, if that construction is correct, then what the clause says is that the Administration and the corporation shall enter into a contract on terms they may mutually agree upon. If that is all it comes to, there is no need to put it in the Bill at all—they can do that in any case. But if it has any real meaning at all, I think it must mean something more than that. What is it? What is the precise effect of sub-section (3)—

I would like to know in what way that qualifies the mandatory requirements of sub-section (2) requiring the two parties to enter into a contract. If the two parties are left entirely free to agree on the standard of quality and on the price it does not seem to me that this clause takes the position much further. I should have thought that the proper line to proceed upon would have been not to protect this corporation against competition inside the country—surely we are all anxious to see a steel and iron industry going ahead in the country—but if necessary to protect it against competition from outside the country by laying down a certain percentage giving them a certain preference over the imported article. If the clause had been something to this effect, that a contract should be entered into whereby they were to supply to the Railway Administration at a price not exceeding so much over the imported price, one could have understood that. That would be fixing a measure of protection or preference to the South African products as against imported products, but that is not what it says. I entirely agree with what has been said by my hon. friends behind me. It is all very well to say that there is room for only one iron and steel industry—that is probably true—but why should we go so far as to say that there should be only one? Why should we not give a chance to others to make headway against this corporation? It is one way of keeping State enterprise up to the mark, not leaving matters to the whole of their field, but having a little wholesome competition—so long as the industries are in the country and use our own material. It does not say in the clause that it is to be approved by Parliament. It says it must be laid on the Table. The contract will be, or may be, entered into while Parliament is not sitting, and Parliament will not have the power of varying or rejecting it unless by moving a vote of no confidence in the Government.

I would point out to the Minister that my amendment does not prevent the corporation giving the whole of the business to the Railway Administration, provided they get it on price and quality—on merit My amendment only goes to this point— that the Government shall not to-day bind themselves up to the year 1947, that they will give the whole of their business in iron and steel products to this corporation. If this corporation satisfies the Railway Administration that the balance of their requirements can be handled better by the corporation than by any competitor, let them have it by all means. There are many matters that can happen in twenty years. In the select committee one week we had expert evidence that the district surrounding Newcastle could have no more than a certain number of tons of iron ore; and in another week we had expert evidence that the amount was five times that quantity. Possibly these experts are wrong. Within the next ten or fifteen years iron ore may be discovered a great deal nearer the coast. One difficulty in this country is the enormous distance a product has to be carried to its market. One point In favour of Pretoria is its nearness to its greatest market. A large proportion of the market is on the coast, and that means that heavy railage has to be paid. Sea freight, I need not remind the Minister, is a mere bagatelle compared with rail freight. If iron ore is discovered near the coast it may be of advantage to put up an iron and steel industry there, and it may be possible within ten to fifteen years to keep two iron and steel industries going. But then you are immediately going to be faced with the proposition that you have promised the whole of your business to the Pretoria industry. It is absolutely unreasonable to do such a thing, and there is no necessity for it. It is simply tieing your hands without any reason whatever, and is also making it impossible to help another industry. I do suggest that this debate has shown us the difference between handling a private industry and handling a Government industry. The Minister refuses to accept a reasonable amendment when it is only going to help the industry. The Minister might consider that some other people have certain views which may possibly be right.

I think the committee will be well advised to accept the precautionary amendment which my hon. friend has moved, because, after all, how do we know what is going to happen during the time over which this contract holds good? We have not the slightest idea of the things this corporation will be able to supply. I think it is common cause that the corporation will not do any good unless it is able to deal with all kinds of ancillary industries. We have not the slightest idea what the corporation will be able to do as regards the manufacture of these other articles; we do not know what their quality will be, and so forth; and here we have committed ourselves, subject to certain terms, to a contract which will be binding on the country for twenty years. Of course, the effect will be that the Government, being responsible for a large amount of Government money in the undertaking, will use the railways as a means of saving the situation, and there will be a repetition of the civilized labour policy. We shall never know what it is costing us, and we shall find that we are committed, not merely to finding the capital, but to increased working costs of the railways in supporting this undertaking. I very much prefer, if any support is to be given by the railways, that it should be on a contract on the lines previously proposed. If the railways are limited to a certain percentage, assuming the corporation can produce good products, good and well. We shall be running a very considerable risk if we go in blindly and say that the railways are to buy— subject to very illusive safeguards—the goods the corporation may be able to produce.

I would like a reply from the Minister to the points I put forward. If the existing industry is permitted to tender for 50 per cent. of the railway’s requirements, then it will be possible for it to compete with the corporation. Is the Minister afraid that the existing industry will be able to supply the railway with cheaper and better goods than the new corporation will be able to do? The iron ore at Newcastle is equal to the best iron ore produced anywhere else in the world, and it can be made without having to mix with it ore from other places.

We are not at all afraid, but it is common cause on all sides that there is only room for one big steel works in this country.

To-day.

I quite agree that so long as this Government is handling the affairs of this country we may expect very rapid expansion, but even we are not so sanguine as to expect that in the next 15 years we shall make room for half-a-dozen steel industries. At present there is room for only one big steel-producing industry in South Africa. Major Butler gave us clearly to understand that, seeing that it would be four or five years before the corporation arrived at the production stage, there would be plenty of time for the Newcastle enterprise to adjust itself to the changed circumstances.

Then you exclude them by this very clause.

No, no. This sudden discovery of another 60 million tons of ore rather reminds me of the miraculous draft of fishes.

Do you doubt the evidence?

Such a very timely discovery induces a certain amount of suspicion. As the Government is embarking on this very important enterprise, it is only fair and right that the railways, which are the biggest consumers of steel and iron, should, if possible, come to an agreement with the corporation which, however, is safeguarded, and it will not buy an ounce of steel from the corporation unless it is up to standard and the price suits the railway. I do not know whether the hon. member for Ermelo (Col.-Cdt. Collins) is moving his amendment.

If you meet us here, I will meet you on the other point.

As hon. members are so sanguine as to expect other industries to start, then I am quite willing to accept 10 instead of 15. 1 am afraid I cannot accept the suggestion to delete the clause, but will accept the amendment of the hon. member for Ermelo.

The Minister has already told us he is half convinced, as he wants to compromise.

No, only one-third.

I hope before I have finished he will be firmly convinced. Now we are only talking against a stone wall, and not even the echo comes back. The hon. the Minister said there is only room for one industry in South Africa, and that it must be established at Pretoria. Why? Because they have iron deposits, and are in a better position to establish it. It is reasonable to say, therefore, Pretoria is the best place. But that does not preclude some other iron deposit being found in other places which might be better, and might be situated still nearer to the coal mines, where it might be in a position to manufacture iron cheaper than Pretoria. If Newcastle and Vereeniging cannot live because Pretoria is better situated, then why protect Pretoria against some possibly better place in the Union? If another deposit is found better than Pretoria, Pretoria must take its chance and go down. Who is going to pay for this enterprise? The farmers, eventually, will pay for it. Last session I ventured to speak for the farmers, and a Nationalist paper went for me severely for doing so. Perhaps I can speak for the farmers now. I think I am the largest landowner in South Africa to-day, as we have bought three million acres of ground. Perhaps now I shall be allowed to talk in the interest of the farmers. The gold mines must come to an end, but farming will continue, and if this industry is a failure the farmers are going to pay for it in the end. The Minister of Agriculture will not always laugh when he realizes what the result of this enterprise is going to be. Is it reasonable to create a monopoly for Pretoria? It must take its chance with regard to any future discovery, in just the same way as Newcastle and Vereeniging. I too am very much surprised at this large discovery at Newcastle. It came at a very opportune moment, but it might be right, and it might be better ore, and if it is, why should they be debarred from having an industry? Does the Minister of Defence realize he makes iron ore deposits on any farm valueless, so long as this is passed in its present form? I understand a new deposit has been found, and very near to Cape Town—vanadium—and if it is true, it is possible that better ore might be found. If the railways are eliminated from the new industries, they are handicapped badly. Only a fortnight ago the hon. member for Wakkerstroom (Mr. A. S. Naudé) approached me, and said they had a deposit of iron ore of a higher grade, and that just illustrates that iron ore deposits might exist on other farms in the country. It was stated that this deposit was 75 per cent. iron, but I understand it contains impurities and is not as good as the Pretoria deposit, but it demonstrates that the farmer takes an interest in the matter, and will finally blame the Government if this law is passed which prevents him getting the benefit of any deposits on his farm. What harm will it do to make the contract 50 per cent., and if there is no other industry the Minister can still buy his 100 per cent. If there is another industry, why should it not get a proportion of the requirements? The Minister says he will accept 10 years, but not the other, and the fact that he accepts that shows that there is a spark opening up in his brain, that he is coming to realize the fact that a new discovery might be made, and that there is something in the argument. If it is reasonable, I do not know why he should not say, after all, as there is no other industry, Pretoria gets the benefit. It will be wrong to pass the Bill giving this contract to the railways, which consume one-third of the steel required in the Union, and at the same time debarring any other industry from participating in the event of any new discovery. If there was a new discovery, it might have the effect of keeping iron and steel down, but if you debar it, you will be forced finally to put unties on iron and steel in order to keep the Pretoria works going, and all other industries, mining and farming, will have to pay for what we are doing now. I appeal to the Minister, and point out to him that this is not obstruction, and not mere frivolous criticism, but an attempt to make the scheme workable. If he sees no objection, and he has shown no reasonable objection to it, and yet he still persists, what is the use of talking—if the Minister, without rhyme or reason, says he will not listen to you? The clause proposed originally has been dropped completely, and the new clause has been drafted by the general manager of railways, and we didn’t even get his evidence.

You got his memorandum.

The Minister can meet us without doing any harm to the Pretoria enterprise, and give Newcastle a chance if they are able to compete. Personally, I think Pretoria is in the better position, but why prevent those who have put their money in this concern, why prevent them, by artificial means, from making it a success? If nature has been unkind to them, we need not pass laws to prevent them getting their money back. It can only be because of the greatest obstinacy if this amendment proposed by the hon. member for Newlands (Mr. Stuttaford) is not adopted.

The whole argument of members on this side of the House is directed towards making this enterprise a failure. I only want to call the attention of the hon. member for Kimberley (Sir Ernest Oppenheimer) to the evidence given by Major Butler, who knows more about iron and steel than the hon. member for Kimberley, and has more interest in it.

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

When the committee adjourned for dinner, I was dealing with the fact that Major Butler, the chairman of the Union Steel Corporation, had made the definite statement to the select committee that it would be a disaster to the country to have two industries of this kind in South Africa. The whole tenor of the criticism which is being levelled against the clause now under discussion has been directed towards giving another industry a chance in this country, towards creating the possibility, instead of having one industry, of perhaps having two or three, as the case may be, in spite of the fact that the only expert who gave evidence before the select committee was definitely of the opinion that the creation of two industries of this kind would be a disaster to the country. That being the case, surely it is only right that the provision made in this Bill should be of such a nature as to encourage the industry which is being established, and to discourage the possibility of other and smaller industries coming in and competing, and making both the corporation provided for under this Bill and any new industry that may come in failures. We are told that the position is different in this case, because the public will have to pay. Well, the public pays in any case, whether it be a Government corporation, or whether it be a private industry. We know from such a high commercial authority as the hon. member for Cape Town (Central) (Mr. Jagger) that that is so, for he told us last session that when a business lost or went insolvent, it did not, lose the money, but the burden was put on the public. There is another aspect, and it is this, if you have more than one industry it means more overhead charges. I believe that as the Bill stands to-day, there is a likelihood, from the evidence we have had, of this industry being established successfully and for the benefit of South Africa as a whole, but if the amendment now before the committee is carried, it means that you will be encouraging others, without any real chance of success, to come and compete and lose their money, and at the same time you will be making it more difficult for the corporation to become successful and profitable. If the Opposition really have, as they say, the interests of this corporation at heart and they desire to see this industry a success then they should encourage the provisions in the Bill, so as to obviate the possibility of another industry coming in. I hope the Minister will adhere to the clause as it stands, and thereby give notice to others that we accept the evidence not only of the German experts, but also of Major Butler, that in dealing with this matter you must have regard to the fact that South Africa can only successfully maintain one industry of this kind.

While we all realize that at present there is practically only room for one big steel corporation in this country, most of us know quite well that if that one big concern is going to be a success you have got to have subsidiary companies to work the steel which that one big concern is going to make. We have tried during the debate this afternoon on this Bill to get a little commonsense into the Minister and those behind him and I am bound to say that we have failed and failed miserably. I wonder myself very often whether this is a House of Parliament or a cinematograph show, whether on the other side of the House they are all white-robed saints, or whether we are all double-dyed villains on this side, but, whether we are double-dyed villains or not, we have tried to give a lead in this Bill to the Government so that when it becomes an Act it shall as far as possible fulfil all the requirements that it ought to fulfil in regard to the big industry to be established in this country. I cannot quite see the mental attitude of the Minister, but he seems to say—

And now the last straw on the camel’s back is that he is going to give to this corporation, this Government-floated company, the sole right to supply the Railway Administration with material for 15 years. Now the Minister knows as well as I do, or he ought to know, that if this scheme is going to be a success it will be dependent very largely on those subsidiary companies which are going to come in here and use up the steel which this corporation is going to manufacture, but if this corporation is going to take all the plums of the pudding then I say it would be useless for any of the subsidiary companies to come here with any kind of certainty that they are going to have a square and fair deal. We have already seen that the Minister and the party behind him are going to try and squeeze out the corporation which has been in being for a good number of years. As I have said before, I had no particular love for that corporation and I have not now, but I have some love for the principles of fair play, and if you are going now to squeeze out a company which has been in being for some years and has to some measure fulfilled the requirements of the Rand, then I say it is a very bad augury for those other subsidiary companies that we may wish to invite to come here to develop the steel industry of this country. The steel business in this country can only be instituted and maintained by a real desire to work with the people of the country. If you are going to take the railway supplies away from the corporation all you have to do is to put duties on the requirements of the Rand. But who is going to pay for all this? Primarily and finally, the farmers. Take ordinary wire fencing. I have some fencing to do, and what I shall have to pay when this steel corporation comes into being Heaven alone knows. That goes through the whole agricultural and mechanical supply. Unless you have subsidiary companies to work up your steel you cannot hope to succeed. Steel is one of the most difficult things in the world to handle. If you are going to make a success of this thing I say scrap this clause relating to the railways. Let everyone come in, and if you cannot succeed you do not deserve to succeed. If you are going to develop this, one thing is certain—you have to work up the subsidiary companies. Unless you are prepared to offer the people who come here to invest money, terms to come here, then I say the iron and steel industry of South Africa is bound to be a failure, and nothing can prevent it.

I think the hon. member for Troyeville (Mr. Kentridge) has seemingly entirely misread the evidence of Major Butler on this very question of railway requirements. I will read to the House what Major Butler says. In reply to Question 254, he said—

If any evidence is put in the very clearest terms I am certain that evidence is. That is the evidence of a technical man and the only thing he asks for is that any other undertaking in South Africa should have the opportunity of tendering. I say it is grossly unfair and very unwise of the Government to take up any other position, and that is the reason why I ask them to only guarantee to take the railway requirements up to 50 per cent. of those requirements.

Why 50 per cent. at all; why any allocation at all, if your criticism is right?

I quite agree with the criticism of the Minister of Mines and Industries, but unfortunately he was not in charge of the Bill. If he had been I think we should have convinced him that it was entirely wrong to put this clause in. We cannot get his colleague, the Minister of Defence, to see that point of view. The Minister of Defence cannot see the point of view of the under-dog, the man in the country working to-day, putting his money into the industry. We say when you come to railway requirements you have no moral right to use the enormous power of those railway purchases in order to prevent other competition from other South African manufacturers. We say that if some other South African manufacturer likes to start the manufacture of any of these products, he should have a fair and square right to tender for these requirements, and if, on quality and price, he can beat the other people, he should be allowed to do so. That is perfectly clear, but we cannot convince the Minister that that is the fair, right and moral way of doing business, but now I hope the Minister of Mines and Industries will take up the cudgels on behalf of the man who is trying to work an industry in this country and is prepared to put his own money into it, not the taxpayer’s money. You must remember that these other people who are going to tender are people who are going to tender with their own money, and the only thing they ask is that even with Government capital against them they shall have the right to tender. That is the only thing they ask. We may possibly come to this extraordinary position: you may come to a position, if the Government continue with this clause, that you actually get a tender from a South African manufacturer for some of these goods at a lower price than the price arranged in this contract between the Government and the corporation, and the Government will be bound to accept the higher tender because they have a contract insisting that they shall do so. It seems to me an absolutely wrong policy to pursue; it stifles all enterprise and it prevents the development of any of these allied industries which might be of use to the country. I think the Minister of Mines and Industries might persuade his colleague to give way on this amendment.

I think the hon. member for Troyeville (Mr. Kentridge) has put the case, from the Government point of view, very clearly. What the hon. member desires to convey to the House and to the country is that there is to be only one industry, that we must eliminate all competition, that if there is any competition it would be suicidal, and that the only way to ensure success for this new corporation is to eliminate all competition. It is quite clear from the speech of the hon. member that the dead hand of socialism is to control this industry and all other competition is to be absolutely eliminated. The Minister this afternoon agreed to reduce the period of the monopoly to this corporation to ten years. I say that is no concession. What it means is that he hopes that ten years will be sufficient time to absolutely kill the existing industry.

You have got murder on the brain.

I have not got murder on the brain at all, and let me tell the Minister I cannot appreciate the attitude taken up by the Government in this matter. I cannot, as a conservative, appreciate the dead hand of socialism being used; I cannot appreciate the attitude of the Government in so far as existing industries are concerned. That is why I feel that grave injustice is being done to people who, practically at the invitation of Governments of this country, established this industry. I desire to protest against what, to my mind, is an unjust and unfair method of dealing with an existing industry. I feel that right throughout this existing industry has been treated very unfairly by the Government, and to-day when a small concession of this sort, to allow 50 per cent. of the railway requirements to be open for competition, is asked for, the Government refuses to agree to it. It seems to me to be a very reasonable request. I cannot understand why there should be opposition, why the Minister will not agree to accept this very reasonable amendment. I asked the Minister to give an explanation, but he has not given any real explanation as to why the amendment cannot be accepted. I feel that this Bill, unashamedly and deliberately, contains methods by which the existing industry is to be killed. I would like to ask the hon. member for Heidelberg (Mr. de Wet) whether he agrees to this clause or whether he has been absolutely gagged by the Pact, whether he agrees on behalf of his constituents to allow the whole of the railway requirements to go as a monopoly to this corporation? His constituency has a far greater interest than mine. I would also like to ask the hon. member for Losberg (Mr. Brits) whether he has anything to say on this question, whether he agrees. Is he going to remain silent, or is he going to support the attitude I take up? I challenge him and the member for Heidelberg to get up and say they agree with the Minister. I am certain that if the hon. members for Heidelberg and Losberg got up they would tell the House that they entirely agree with everything I say.

The hon. member for Newcastle (Mr. Nel) nearly persuaded me to agree with him, but he should never forget that the ventures at Vereeniging and Newcastle had every opportunity, under the existing law, of developing to a point enabling them to provide the country with the necessary iron and steel articles. Now he gets up and wants to cripple the industry started with State moneys in order to assist undertakings which could not justify their existence. There is a bigger market for iron and steel articles outside the railways, because there is the huge mining industry which can spend much more money on iron and steel than the railways can. The railways do not present as big a demand as the mines, and therefore I cannot understand why the Minister should concede this point. I entirely agree that the existing ventures should not be smothered, but the needs of the country are great, and the railways do not present the only market. The whole country needs iron and steel articles. The new venture will be able, in two years, to manufacture ploughs and utensils, while the existing ventures are at the present day not even able to make a spade. I think that the hon. member for Newcastle is just letting off steam and that he is not in earnest. If he goes into the matter thoroughly he will see that it is the right thing for the country, that the railways should get all its necessities from the new iron and steel venture.

Question put: That the word “quantity” proposed to be omitted, stand part of the clause.

Upon which the committee divided:

Ayes—64

Alexander, M.

Allen, J.

Badenhorst, A. L.

Basson, P. N.

Bergh. P. A.

Beyers, F. W.

Boshoff, L. J.

Boydell, T.

Brink, G. F.

Brits, G. P.

Brown, G.

Cilliers, A. A.

Conradie, D. G.

Conradie, J. H.

Conroy, E. A.

Creswell, F. H. P.

De Villiers, A. I. E.

De Villiers, W. B.

De Wet, S. D.

Du Toit, F. J.

Fick, M. L.

Fordham, A. C.

Giovanetti, C. W.

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.

Madeley, W. B.

McMenamin, J. J.

Mostert, J. P.

Mullineux, J.

Naudé, A. S.

Naudé, J. F. (Tom)

Oost, H.

Pearce, C.

Pirow, O.

Pretorius, J. S. F.

Pretorius, N. J.

Raubenheimer, I. v. W.

Reyburn, G.

Rood, W. H.

Roos, T. J. de V.

Roux, J. W. J. W.

Snow, W. J.

Stals, A. J.

Steyn, C. F.

Steytler, L. J.

Strachan, T. G.

Swart, C. R.

Te Water, C. T.

Van Hees, A. S.

Van Niekerk, P. W. le R.

Van Rensburg, J. J.

Van Zyl, J. J. M.

VosJoo, L. J.

Waterston, R. B.

Wessels, J. B.

Tellers: Pienaar, B. J.; Sampson, H. W.

Noes—32.

Ballantine, R.

Bates, F. T.

Blackwell, L.

Buirski, E.

Coulter, C. W. A.

Deane, W. A.

Duncan, P.

Geldenhuys, L.

Grobler, H. S.

Heatlie, C. B.

Jagger, J. W.

Krige, C. J.

Lennox, F. J.

Louw, G. A.

Louw, J. P.

Marwick, J. S.

Miller, A. M.

Moffat, L.

Nel, O. R.

Nieuwenhuize, J.

O’Brien, W. J.

Oppenheimer, E.

Reitz. D.

Rider, W. W.

Rockey, W.

Smartt, T. W.

Smuts, J. C.

Struben, R. H.

Stuttaford, R.

Van Heerden, G. C.

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

Question accordingly affirmed and the amendment proposed by Mr. Stuttaford dropped.

New sub-section (3) put, proposed by select committee.

I move—

I would like to ask the Minister this question; I am not quite certain whether there is sufficient power for creditors of this corporation to get redress. Perhaps the Minister will explain to the committee.

I have satisfied myself and taken the law advisers’ opinion on the matter. No inconvenience at all is apprehended from this clause.

I move that the following be a new clause to follow Clause 15—

16. (1) At the expiration of 10 years after the date of the promulgation of this Act, the Minister shall publish a notice calling for tenders to be received by a date to be specified in the notice, for the acquisition of the shares in the corporation, registered in the name of the Governor-General. On payment of a fee to be specified in the notice, full information shall be supplied to bona-fide tenderers relative to the position of the corporation.

(2) The Minister shall, upon receipt of the tenders, consider whether any one of them should be accepted or not, and shall make a recommendation to the next ensuing session of Parliament. If Parliament approves of the tender, the tenderer may be required to enter into such recognizances for the satisfactory fulfilment of the tender as Parliament may decide.

(3) The terms of any agreement made for acquiring the shares registered in the name of the Governor-General shall be subject to the approval of Parliament, and shall contain such a provision safeguarding the interests of ordinary and preference shareholders, the interest payable on debenture shares and the repayment of loans as shall be approved by Parliament.

(4) In the event of neither the Minister nor Parliament considering that any tender is satisfactory, a further notice calling for tenders shall be published five years after the first notice, and thereafter every five years until a satisfactory tender is obtained.

(5) Upon the acceptance of any tender, the corporation shall be carried on as a private undertaking.

With the permission of the committee, I would like to withdraw the following words in the first paragraph—

I understand that they are out of order, and that a private member has no right to propose a fee like that.

With leave of the committee, the words were withdrawn from the amendment.

The committee will see it is proposed in this clause to establish the same principle as laid down in the Electricity Act. I am sorry I cannot point to any evidence in support of this clause, as the chairman would not allow me to put questions in regard to this evidence in the select committee. We did not press to take Mr. Speaker’s ruling; therefore, I cannot give any evidence to support my contention. It is clear that the intention is, after this corporation has existed for ten years, that the Government will put up 500,000 “A” shares for sale. It will be noticed that this proposed clause provides that it is entirely in the hands of the Minister to look into the matter, and to see if he is satisfied with any tender or offer, and he may make a recommendation to Parliament. The clause covers the Government in any details; for instance, conditions can be laid down as to the voting power in case the first parcel of shares is sold, and the clause provides further that if there is no successful tenderer at the first time of asking, a further notice calling for tenders shall be published five years after the first notice— automatically every five years—until a satisfactory tender is obtained. A private concern will have the right to acquire the Government business in this concern. I am not going to ask whether it is in the interests of the country to have a privately run industry or a Government controlled industry. To us on this side of the House there seems that there can be no question about it. The argument used by the Minister of Mines was that the Government tried to have it run by private enterprise, but, having failed, it must be a Government enterprise. I take it from that that private enterprise comes first, and Government enterprise second.

South Africa first !

The hon. member thinks if a man can make a few pounds out of an industry, he must share the proceeds with the crowd who have done nothing to assist in earning the money.

No. I will lend you a book on socialism.

I am doing nothing more than plead for the inclusion of a clause similar to that which exists in the Electricity Act. The less we have of State enterprise, and the less we stake the country’s finances on concerns like this, the better the credit of the State will be.

I am afraid I cannot fulfil the hon. member’s hopes. The idea of the Government every five years hawking these shares about the world, asking for tenders for them, and saying, “For goodness’ sake, take this off our hands,” is a ridiculous one. Suppose we did this, and this concern was a success, do you mean to say that it would not be worth while of these big cartels to tender for a very high figure, so as to shut the enterprise down, and then we should have to do it all over again? The hon. member referred to the Electricity Act. After the expiration of five years from the commencement of operations, if the Minister informs the commission that the undertaking would be more advantageously worked—that means at a greater benefit to the community—

You have got it first time.

I don’t think it was the consumer’s interest which was really prominent in the Opposition’s mind. The clause in the Electricity Act goes on—

Hon. members opposite don’t even propose that the board should advise the Minister.

We have given up hope.

You don’t mention anything about the consumers or the railways; no, it is simply a question of advertising that the Government shares are for sale, and the hon. member and his friends would be inclined to buy them if they are good. Possibly they would be competing with the steel trust and cartels. Has the hon. member for Kimberley (Sir Ernest Oppenheimer) ever heard of a diamond mine being bought to be closed down, or its working eased off at all in the interests of something else? What a pity it is we have not the Diamond Control Bill under discussion. How the hon. member would support an amendment giving the board the power to hawk about the Diamond Syndicate’s powers every five years. I don’t think the hon. member is serious in this.

It is rather difficult to speak when one is so easily ruled out of order. The suggestion that people would step in and buy up the concern in order to close down, is a figment of the Minister’s imagination. Then we have this extraordinary comparison with the diamond trade. The control of the diamond industry is based on the control of output, and keeping prices at such a figure that the trade shall be carried on successfully. This, however, is a different thing, for here you are dealing with an absolute necessity, and the idea is to produce as much steel as possible at the cheapest possible price. How the Minister can compare the diamond trade and this Bill I cannot understand. I have been extraordinarily careful not to refer to diamond matters either inside or outside the House while the trade is under a cloud, as it might have a very bad effect on the diamond trade generally. We are not seeking to amend the principle of the Bill, as in one clause it says that the shares shall not be sold without the consent of Parliament, implying that at some time or other the shares should be put up for sale. All that we propose to do in the amendment is to provide the machinery for the sale of the shares. The Minister of Finance said that we could borrow very cheaply, and that people had confidence in our credit. Why? Because we don’t go in for enterprises of this sort as a rule. The Government should welcome an arrangement by which, at some time or other, they could divest themselves of the responsibility of running a steel industry. The sentiments which the Minister of Defence holds may not permit him to view such a departure with fervour, but another Government may.

They could pass a new Act.

All we have attempted right through is to make the Bill as workable as possible, and to provide for contingencies. Is it better to have the machinery, or is it better should a would-be buyer go to the Minister and carry on negotiations behind closed doors? It is better that there should be machinery for the disposal of the Government’s shares when the time comes and when the industry has been soundly established, and the Government would have had the credit of running it, and of having done its duty. In the Electricity Act provision is made whereby the commission, before it erects works, has to advertise in the “Gazette” and if somebody can do the work cheaper than the commission, the latter does not erect the works.

Did you see what Dr. van der Byl told us about this?

If a man is in charge of a job he does not want to lose it. I remember distinctly what Dr. van der Byl told us. We simply want to get back to the fact that if the shares are to be sold we shall have machinery laid down as to how the sale is to be effected.

Where does it say the shares have to be sold?

Section 8 (2).

No, it simply says they cannot be sold without the consent of Parliament.

Surely Parliament must have envisaged the possibility of having to sell the shares. It is against the spirit of everything we have done. I do not see why the Minister should continually refuse amendments which give additional powers to the Government. The wording of the clause is not perfect, but the Minister can alter the case to meet his purposes. If the Government really feel the shares should be sold, there can be no harm in our knowing how the Government is to go about the sale. The Minister should show us that he is not always working on the idea that he has a majority of 22, and they can do anything they like. That is not the way to start a national industry. The Minister creates antagonism by turning everything down from this side of the House.

If one could forget the history of this country the remarks of the hon. member would be effective. If ever this industry passed from the Government into private hands, one has only to look at the history of this country to know that history would repeat itself because it would only be a short time before the steel industry was closed down, and within a short time again it would be reconstructed, and every shareholder would get one share for every three held. The same thing would happen over and over again, and, instead of having a key industry, we should have a continual gamble with shares. If we could shut that out of our minds there would be something in what the hon. member says. Seeing this is a key industry established under the control of the Government it is for the Government to keep control, and to see that the consumers in this country, and, if we export, in other countries, get their commodities at reasonable prices.

I want to put it on a point of order whether this amendment is really in order. This amendment makes provision for the elimination of Government participation after a particular period. A second point is that of Government control. In sub-section (5) of this amendment—

If that is accepted you will have in the same Bill Clause 3 making provision for Government control. Supposing after the time contemplated in this amendment you came to the position where these shares are sold by tender. You will still have the provision that the Government has control of the industry, because Clause 3 will still be standing. Surely that is contradictory. I submit to you that this whole amendment is out of order, and should not be allowed.

Will the hon. member for Ermelo (Col.-Cdt. Collins) say what he thinks about this clause, whether he thinks it is in order or not.

The principle of the Bill is to establish an iron industry. We are at issue already on whether we should have Government control or not. I say no, but I am bound by Mr. Speaker’s ruling this afternoon. It is not a principle of the Bill, however, that it should remain forever a Government-controlled concern. Therefore, I do not think it is out of order.

I would like the Minister to say what he considers with regard to Clause 8, sub-section (2)—

This proposes to transfer these shares. Will the Minister give us his opinion of that?

I have not raised the question of order, although I was doubtful about it. Having passed Section 8, we have already resolved that the shares held by the Governor-General shall not be transferable, otherwise than by the authority of an Act of Parliament, and this clause shall be subject to the approval of Parliament. That may be conveyed by resolution or an Act. It is, therefore, in conflict with what we have already passed, namely Clause 8, unless, of course, you interpret—

to be “an Act of Parliament.”

I submit it simply lays down the procedure to be followed under Clause 8. Clause 8 provides that shares can be sold. All the clause here does is that it lays down the procedure as to how they ought to be sold. It does not touch control, and does not say anything about changing the number of directors.

It is not necessary to lay down an Act of procedure, because it is clearly laid down under Clause 8, by Act of Parliament, and you do not require an explanatory clause to show how it must be done.

I cannot follow the reasoning of the hon. gentlemen opposite. It seems perfectly clear under Clause 8 (2). It is inferred that the shares will be sold at some time or other, and it is suggested that they can only be sold after the passing of an Act of Parliament. The new clause now suggested simply says that the procedure shall take place ten years after the date of promulgation and thereafter every five years. It is an explanation of the same principle as under Clause 8 (2). If the hon. members opposite want the words “Act of Parliament” put in sub-section (2) of the new clause, it can be put in. They have restricted their objection now, so that, under the new clause, the tender can be accepted by resolution of the House, whereas, under Clause 8 (2), it can only be accepted by Act of Parliament.

It seems to me that sub-clause (2) of Clause 8 gives much wider powers than the proposed amendments of the hon. member for Ermelo (Col.-Cdt. Collins). Sub-clause (2) means that at any time next year, or in two years’ time, Parliament can pass an Act providing for the transfer and disposal of the shares registered in the name of the Governor-General. Now you propose to restrict it to a period of ten years, so that really the effect of the proposed amendment is to restrict Clause 8, and clearly the amendment is in conflict with Clause 8, because, while the proposed amendment contemplates approval of Parliament which may take place by way of resolution, Clause 8 (2) clearly contemplates a formal Act of Parliament. The two are therefore, palpably inconsistent. I agree with the hon. member for South Peninsula (Sir Drummond Chaplin) that even if you pass the amendment you can, next year, repeal it or modify it. You can amend. Naturally, that is the power that Parliament always has.

I do submit that the only thing which should be done now in order to put the new clause into order is—

This means that if it is decided to sell these shares, then it will be subject to Clause 8. which includes the necessity of passing an Act of Parliament. It seems to me that that covers the whole objection.

It appears to me that this clause is inconsistent with Clause 8 (2), so I have to rule it out of order.

I move—

It is very clear what the intention of this amendment is. In the clause as now worded we say that the company law shall not apply to this corporation. Now I think, and some of my friends think with me, that we ought to express it conversely in this Bill—that the company law shall apply everywhere except where it is specially excluded by regulations or where it is repugnant to this Act. I think we are all agreed on one thing, and that is that we have a very good company law, which was passed last year, and it seems to me that we shall be doing very wisely to state in this Act that the company law shall apply everywhere where it is not specially excluded by the Governor-General by regulation, or is not repugnant to this Act. I think we would be on safer lines if we were to say that the company law is applicable, except where it is specially excluded.

I move—

We discussed this matter raised by the hon. member for Ermelo (Col.-Cdt. Collins) in the select committee, and we took different views. I think really that, if the hon. member for Ermelo would just put himself in the place of the Government, he would adopt the course that we are taking here.

No, I would not.

I think if the hon. member were responsible for the inauguration of this company, he would take just the opposite course to what he suggests. The course we are taking is that we say we will take power to apply from time to time these sections of the Companies Act. The Companies Act is a very long and a very full Act.

A very good Act.

A very good Act, I believe. A very large portion of it is of a restraining character. I am speaking as one who is not familiar with the Companies Act, but I have taken the advice of those who understand the matter, and that advice is in favour of the action we are taking.

That is what the legal advisers tell you?

Yes, my advisers.

Legal advisers?

Yes, certainly. Supposing now one excludes a certain number of the provisions of the Companies Act, according to the plan of the hon. member, and one has got to exclude others which may give rise to a good deal of trouble in the actual working of this company, where are you? You have got to go on excluding, excluding, excluding. It will be noticed that in this we have taken no power to withdraw under proclamation anything we have already proclaimed as being applicable, and the shareholders in this company should know that when by proclamation we have applied certain provisions of the Companies Act, that is not again by other proclamations going to be withdrawn. Therefore, we shall be careful in applying to apply as it seems necessary. He starts off with the idea that he is protected by this, that or the other and presently he finds that this section he thought protected him has been excluded by proclamation.

I do not know why it should be assumed by the Minister that the application of the Companies Act to this particular company would cause so much difficulty and confusion. Why should it? It is the law we make for every other company in the country.

What about your Reserve Bank?

Every ordinary private company—let us put it that way—has got to act under this law, and it is a law made for the protection of shareholders and for letting them know exactly what their rights are and what their position is. Under this I do not see what protection the shareholder has at all. There is not a word in this Act to say there shall ever be a general meeting of shareholders. The Minister tells us he is going to apply a number of the sections of the Companies Act to this corporation but, of course, we do not know what they are going to be, and one of the most elementary conditions of a public company is that it shall be compelled by law to have a general meeting every year and that the accounts of the company shall be laid before the shareholders for their approval or otherwise. Then there are a hundred and one other things which have been put into the Companies Act because it has been found they are necessary for the proper working of companies and for the protection of shareholders. I should have thought that the course suggested by my hon. friend was a reasonable one, that this company should be subject to the ordinary company law of the land but that certain provisions of that law which are not strictly applicable to it would not be applied to this company. That was the way to proceed rather than to leave it out entirely and to give the Government power from time to time to say what provisions of the law shall be applied to it.

I see this company is going to be a limited liability company. Does not that ipso facto make it part and parcel of our company law? What is the meaning of “limited” in our company law? When a company is limited the word “limited” has no legal meaning outside of our Companies Act. What is the meaning of calling this company a limited liability company? What virtue has the word “limited” outside our Company Act? What is the liability of shareholders unless this company comes within the four corners of the Companies Act? What is the meaning of “limited” in this particular Bill if the company law is to be excluded? It seems to me it is unanswerable. You can only call this a limited liability company if it is limited within the terms of the Companies Act and none other. How are you going to exclude this company from the Companies Act? How are you going to sue a shareholder if he does not pay up his shares? There is a multitude of other things. Look at the confusion that will result if you are going to play the cat and the mouse act, so to speak, with this. One moment the Governor-General may proclaim certain sections of the companies law to apply to this company; the next week he may repeal them. The public will never know where they are. Is it not much sounder to have the provisions of the company law applied to this company and if there are sections in the law that are inconsistent to exclude them? It seems to me the procedure suggested by the hon. member for Ermelo (Col.-Cdt. Collins) is a much sounder one both legally and from a business point of view than the one in the Bill as it stands.

I take it the main aim and object of the Government in this Bill is to enlist as great a measure of public confidence as possible. If the public do not subscribe for the shares—as it is hoped they will—where are we? It is left as a purely Government institution and if so it might as well be left a department of State, like railways or posts and telegraphs, and have no Act at all. If you want to enlist the greatest degree of public confidence and support surely there can be no two opinions as to the wisdom of the course suggested by the hon. member for Ermelo. What does he say in effect? He says let the public outside know that you start off with the proposition that the whole of the Companies Act shall apply except such portions as may on examination be found not to be required for this company. The Minister says he has already faced that problem because he is in the course of preparing a list of those sections of the Companies Act which he thinks should be applied. I venture to think that a list of those sections of the Act which should not be applied would be very much smaller than the one he is contemplating. If the investing public were told that the whole of the Companies Act would apply except as to certain portions I am certain the investment would appear a very much more attractive one in their eyes. The Minister of Mines and Industries will bear me out that it is the usual practice to take what they call Table A, annexed to the Companies Act, and take that as the basis of the articles of association of any new company, and merely go through Table A and pick out certain portions perhaps not suited to the needs of the company, and specify those and the alterations to them. We lay down on the Companies Act that except in so far as Table A is expressly excluded, it applies. If that is so in the case of ordinary companies, why not here? The solicitor to the company promoters makes inquiries how the company is to function and then with that in his mind goes through Table A. That is the principle which this House adopted when it passed the new Companies Act last year. Why cannot the Minister do the same here, and say to the investing public that the whole of the Companies Act shall apply, but the Governor-General shall have power to modify or alter such portions of it as he thinks unsuitable. Very little of the Companies Act will be found unsuited. The Reserve Bank is a banking institution and regulated in the main by banking and currency law. The Minister of Defence seemed to think that sub-clause (2) was amended by him—the words “from time to time” being inserted—would have the effect that once the Governor-General had so applied it, it would never be gone back upon. I do not know whether the Minister of Mines and Industries shares this belief or not. Without giving the matter the thought I would like to have given it, I think that these words imply alteration or cancellation from time to time. I doubt very strongly whether would-be shareholders would be content to rest on the assumption that once applied it could never be altered. The Minister evidently agrees with us on this side of the House to this extent—that the public want some finality on the matter, and do not want a constitution which will be changed from day to day or from month to month. As I am advised tonight, I certainly think that the clause would mean he could vary that constitution in any way he likes, and at any time he likes.

I must say I have a great deal of sympathy with the criticism of the Minister, I agree with him that the suggested amendment of sub-clause (2) in Clause 17 does not help the ordinary shareholder at all. I feel we should delete sub-section (2) of the amendment of the hon. member for Ermelo (Col.-Cdt. Collins). Then it puts the thing on a proper basis, and it is perfectly clear what everybody means—that the Companies Act shall apply, except as qualified by the terms of the Bill. The private shareholder then knows where he is. I agree with the criticism that you cannot expect a man to invest his money where the conditions may change from day to day. The ordinary shareholders have enough shocks in this Bill, without asking them to take any more. We are going to say that the Companies Act—framed by your own Minister of Justice—does not apply, and these people are to have no protection. There are a hundred ways in which the Companies Act protects shareholders against the directorate. I do suggest we should be reasonable, even at this late hour, and deal with this clause in a sensible way. As an amendment to the amendment of the hon. member for Ermelo, I move—

I hope the Minister will accept the amendment of the hon. member for Newlands (Mr. Stuttaford). During the whole of the second reading debate on this matter, the Minister of Defence did not give a single real reason why the Companies Act should be excluded. For nearly eight years this Parliament was engaged in examining this question of company law, and at last, only a year ago, a measure was submitted which is the law of the country, and an excellent company law. Almost every provision was made, and here we have a measure, avowedly a Government measure, which excludes that law, which we took such a time to pass. I hope the Minister will accept what is an eminently reasonable proposal.

It seems to me perfectly clear, from sub-clause (1) of Clause 1, that a corporate body is created, not by registration under any Companies Act, but by this very Bill, when it becomes an Act of Parliament, and when the contemplated proclamation is issued, and the clause simultaneously declares that the liability in respect of the shares taken in that corporation shall be limited. I think the hon. member for Port Elizabeth was entirely wrong in his conception of this clause. When you come to examine the amendment of the hon. member for Ermelo (Col.-Cdt. Collins) re Clause 17, you see you would be worse off if it were adopted. One of the first duties of the Government will be to apply certain portions of the Companies Act, but if you reverse the position you would apply an Act of 231 clauses, not knowing what would be the effect of a particular section, and possibly creating very great difficulties. Still worse, you could whittle away the whole Companies Act subsequently by simply excluding from time to time certain portion’s of the Companies Act. In the interests of the public who will subscribe for the shares, the procedure suggested in the Bill will be far safer. It is inconceivable that this corporation will be formally proclaimed without the simultaneous proclamation parts of the Companies Act which will be made applicable to the corporation. I cannot agree with the hon. member for Bezuidenhout (Mr. Blackwell) that sub-clause (2) means that the-Governor-General could apply certain provisions of the Companies Act to the corporation to-day and repeal them to-morrow. Regulations and by-laws may be changed from time to time, but once you apply portions of the Companies Act, they will stand until changed by Parliament, and certainly not by the Governor-General. All that the words—

mean, is that when the corporation starts, a proclamation will be issued applying certain portions of the Companies Act, and should you later on find that other provisions of the Companies Act are desirable, they can also be applied. That being so, the course we propose is by far the safer one. As to the argument that no provision is made for the transfer of shares, holding of meetings, and so on, I think there is an inherent right to do this under the common law, and the shareholders could always have recourse to the courts. It is absolutely essential that a proclamation be issued, and it will be issued, before the shares are offered to the public. To show that this procedure of ours is preferable, I need only mention that if you apply the whole of the Companies Act, you would necessarily apply provisions regarding winding up and alteration of capital which would be totally inappropriate to the corporation. Therefore, it is far better to make the whole of the Companies Act inapplicable.

Question put: That the words “none of”, on page 16, proposed to be omitted, stand part of the clause,

Upon which the committee divided:

Ayes—65.

Alexander, M.

Allen, J.

Badenhorst, A. L.

Barlow, A. G.

Basson, P. N.

Bergh, P. A.

Beyers, F. W.

Boshoff, L. J.

Boydell, T.

Brink, G. F.

Brits, G. P.

Brown, G.

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.

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.

Madeley, W. B.

Malan, D. F.

Malan, M. L.

McMenamin, J. J.

Mostert, J. P.

Mullineux, J.

Naudé, A. S.

Oost, H.

Pearce, C.

Pirow, 0.

Pretorius, J. S. F.

Raubenheimer, I. v. W.

Reyburn, G.

Rood, W. H.

Roos, T. J. de V.

Roux, J. W. J. W.

Snow, W. J.

Stals, A. J.

Steyn, C. F.

Strachan, T. G.

Swart, C. R.

Te Water, C. T.

Van der Merwe, N. J.

Van Hees, A. S.

Van Niekerk, P. W.le R.

Van Rensburg, J. J.

Van Zyl, J. J. M.

Vermooten, O. S.

Vosloo, L. J.

Waterston, R. B.

Wessels, J. B.

Tellers: Pienaar, B. J.; Sampson, H. W.

Noes—30.

Ballantine, B.

Blackwell, L.

Buirski, E.

Chaplin, F. D. P.

Coulter, C. W. A.

Duncan, P.

Giovanetti, C. W.

Grobler, H. S.

Jagger, J. W.

Krige, C. J.

Lennox, F. J.

Louw, G. A.

Louw. J. P.

Miller, A. M.

Moffat, L.

Nel, O. R.

Nieuwenhuize, J.

O’Brien, W. J.

Oppenheimer, E.

Pretorius, N. J.

Rider, W. W.

Rockey, W.

Smartt, T. W.

Smuts, J. C.

Struben, R. H.

Stuttaford, R.

Van Heerden. G. C.

Van Zyl, G. B.

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

When this clause was ordered to stand over op 31st March, the following amendments had been moved by Sir Ernest Oppenheimer—-

In view of the ruling given by Mr. Speaker this afternoon, I shall not put the first amendment proposed by Sir Ernest Oppenheimer.

New sub-section (3) put, proposed by select committee.

I move, as an amendment to this amendment—

The hon. member for Kimberley, I presume, will still move to delete sub-section (4). With regard to my amendment, the clause at present states that no person shall be qualified to be appointed by the Governor-General as a member of the board who is a member of the Senate or of the House of Assembly or of a provincial council, or who is a member of the public service or of the railway administration. I do not see why we should be limited in that way by the exclusion of members of the public service or the railway administration. There might be many occasions when a vacancy required to be filled, and a member of the public service or the railway administration who is admirably suited to do good service there might be seconded for that purpose. With regard to the proposed deletion of sub-section (4), we have discussed that in select committee at great length, and I am not at all sure that it is a provision against a danger which might not be entirely imaginary, and for my part I have got a perfectly open mind on the matter, and I propose to leave it to the committee.

I would like to explain briefly the object of the amendments which I propose. The first amendment which I am now allowed to move is to delete the provision which enables the Governor-General to appoint the managing director of this company. The next amendment gives this power to the board of directors once they are appointed. The last amendment is to delete sub section (4), which prevents anyone engaged in the iron and steel business from serving on the board of the corporation. I would like to state that it has been admitted in select committee that the executive officers of the corporation should be appointed by the board of directors. The managing director is described in Section 5 (3) as the chief executive officer of the corporation, and if it is admitted that the board should be responsible for appointing the executive officers, etc., then surely it must follow that the chief executive officer should also be appointed by the board, because otherwise it really stultifies the provision that the appointment of officials, etc., is left to the discretion of the board. We have heard a great deal about the fact that the Government is putting up some money and is guaranteeing a still further sum, but the fact still remains that the guarantee which the Government supply and the money they put up is far less than the sum which the public will be called upon to subscribe. For that reason I think the Minister ought to accept the amendment. With reference to the deletion of subsection (4), the position really is that, at the present moment, it is laid down that no person who is connected with any company engaged in the production of iron and steel shall be appointed as a director of this corporation. I think the powers of both the Governor-General and the private shareholders are needlessly limited in that direction. We have heard the argument put forward that someone might be appointed who is in the employ of some other iron and steel works, and who would use his influence against the best interests of this corporation. That seems to me very far-fetched. I do not think anyone would have the Machiavellian idea of getting on to the board of the corporation and then setting about for the purpose of ruining the company. It reflects really on the Government itself, and on the cleverness of the shareholders, to think you must make provision that they must be protected against this, against their better judgment. It may be there is a man who is engaged in iron and steel, and who is a really useful man and would render great service to the corporation. Why should he be debarred because he happens to be connected with an allied concern? I think it would be reasonable to accept the amendment. It does not affect anything in the way of control; it merely carries out the promise that the board shall be free and unfettered. The board will appoint everyone from the chief executive officer down to the lowest worker almost. With reference to the amendment moved by the Minister of Defence, in select committee, we felt the Government had the right to appoint the majority of the directors, and once they are appointed, they will not be influenced unduly by any Cabinet Minister.

Is that the way you control a company?

Once a director is appointed, I certainly do not control his actions. This is different from the ordinary company. It is almost a law unto itself. The majority of the select committee felt that if this was to be an independent board, then they should be unfettered, and we felt that a civil servant who retained his position in the civil service was not a free agent. It would be useless if four civil servants or four railway servants were appointed, and retained their positions. We quite understand that you might have a civil servant or a railway servant who would be very excellent to serve on a board like this, but he should cease to function in his capacity as a civil servant before taking up this position. It is no reflection on the civil servant; it is merely to ensure his independence of action and his unfettered position on the board. If being excluded is no reflection on a member of Parliament, it cannot be a reflection on a civil servant. I commend my amendments to the Minister, and I think they are reasonable in every way.

I move—

The effect of this is quite clear. I simply want the clause put in by the Government, which I look upon as a very sensible one, to be effective. As it stands to-day, it is simply a pious thought. An hon. member has only to hand in his resignation to Mr. Speaker one morning and in the afternoon he can be a director of the corporation. The Government intended that there should be no temptation placed in the hands of hon. members of the Senate and of the House of Assembly, and that temptation would be entirely taken away if you put in the words I suggest. In select committee it was suggested that I reflected to a certain extent on the honour of Parliament, but the reflection, if any, was placed on Parliament by the Minister who drafted this Bill because he is responsible for putting in this clause that no member of the House of Assembly or of the Senate should be a member of this corporation.

You ought to make it general, and to apply to anything.

I hope the committee will not accept the amendment moved by the hon. member for Newlands (Mr. Stuttaford). Members of Parliament ought not to be pilloried as persons who take a year for purification before they are fit to be put on the board. We don’t want the Government appointing members of Parliament as their nominees; but to go beyond that and to put them in a lazaretto before they are eligible, is neither necessary nor fitting. As my hon. friend the Minister of Mines and Industries reminds me, a good many judges have been appointed from the benches of Parliament, and I do not think there is any suspicion, because they have been members of Parliament within a year. With regard to the amendment of the hon. member for Kimberley (Sir Ernest Oppenheimer), I think our stipulation here, as we arrived at in select committee, is one that ought to remain. I do not think the hon. member brought up that matter in select committee, of the board appointing the managing director, who is a most important member of the board. I hope the committee will not accept the amendments of the hon. members for Newlands or Kimberley.

The Minister should acknowledge that sub-section (4) is quite useless. Why put in the limitation?

I shall not call for a division if you get it down on the voices.

Amendments proposed by Sir Ernest Oppenheimer in sub-section (1) and amendment proposed by Mr. Stuttaford put and negatived.

Amendment proposed by Minister of Defence put and agreed to.

Question put: That sub-section (4) proposed to be omitted stand part of the clause,

Upon which the Committee divided:

Ayes—56.

Alexander, M.

Allen, J.

Barlow, A. G.

Basson, P. N.

Bergh, P. A.

Beyers, F. W.

Boshoff, L. J.

Boydell, T.

Brink, G. F.

Brits, G. P.

Brown, G.

Cilliers, A. A.

Conradie, J. H.

Conroy, E. A.

Cresswell, F. H. P.

De Villiers, A. I. E.

De Villiers, P. C.

De Villiers, W. B.

De Wet, S. D.

Fick, M. L.

Fordham, A. C.

Grobler, P. G. W.

Havenga, N. C.

Hay, G. A.

Heyns, J. D.

Hugo, D.

Kemp, J. C. G.

Kentridge, M.

Madeley, W. B.

Malan D. F.

Malan, M. L.

McMenamin, J. J.

Mostert, J. P.

Mullineux, J.

Naudé, A. S.

Oost, H.

Pearce, C.

Pienaar, B. J.

Pirow, O.

Raubenheimer, I. v. W.

Reyburn, G.

Roos, T. J. de V.

Roux, J. W. J. W.

Snow, W. J.

Stals, A. J.

Strachan, T. G.

Swart, C. R.

Te Water, C. T.

Van Niekerk, P. W.le R.

Van Rensburg, J. J.

Van Zyl. J. J. M.

Vosloo, L. J.

Waterston, R. B.

Wessels, J. B.

Tellers: Sampson, H. W.; Vermooten, O. S.

Noes—29.

Ballantine, R.

Blackwell, L.

Buirski, E.

Chaplin, F. D. P.

Coulter, C. W. A.

Duncan, P.

Giovanetti, C. W.

Grobler, H. S.

Jagger, J. W.

Krige, C. J.

Lennox, F. J.

Louw, G. A.

Louw, J. P.

Miller, A. M.

Moffat, L.

Nel, O. R.

Nieuwenhuize, J.

O’Brien, W. J.

Oppenheimer, E.

Pretorius, N. J.

Rockey, W.

Smartt, T. W.

Smuts, J. C.

Struben, R. H.

Stuttaford, R.

Van Heerden, G. C.

Van Zyl, G. B.

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

When this clause was ordered to stand over on 31st March, an amendment had been moved by the Minister of Defence—

I move—

I would like to move in line 10—

I am sorry, but according to the rules of the House, the hon. member cannot propose an amendment which is antecedent to an amendment on which a vote has already been taken. The amendment voted on is at the end of the section. The hon. member may, however, propose his motion at the report stage.

I move—

I move—

I object.