Trade Facilities Act
The Trade Facilities Acts were a series of
Background
Following the end of the First World War, Britain saw a short period of economic boom, which then turned into
The political parties proposed differing solutions in their election campaigns of the 1920s, but governments of all flavours faced pressure from outside sources. As well as established organisations such as the Bank of England and the Federation of British Industries (FBI), there were new groupings pushing for solutions, including the Empire Development Union, established in 1922, and the Empire Industries Association, which followed in 1924. Major industries and the banks were represented by the Advisory Committee to the Board of Trade, who spoke directly to ministers, while the workers themselves had formed the National Unemployed Workers' Movement in 1921, to organise hunger marches and demonstrations, which were not always peaceful affairs. The Bank of England, in concert with the City of London, industrialists and the Treasury, were adamant that prices needed to be driven down to reverse inflation, and that this required lower taxation and less public spending.[3]
Trade Facilities Act 1921
Act of Parliament | |
Introduced by | Coalition |
---|---|
Territorial extent | United Kingdom and Colonies |
Dates | |
Royal assent | 10 November 1921 |
Status: Spent |
The government were caught between the Treasury, who believed their policies would provide a long-term fix for the economy, and the need to be doing something for the unemployed in the short term, even if that went against the requirement to reduce public spending.
By February 1922, three applications had been granted, for amounts between £100,000 and £1.5 million. A further ten applicants, requesting a total of £14 million, had been notified that their applications would be accepted, while five more applications for a total of £10 million had been considered by the Committee, and the applicants had been notified of the terms under which the Committee would recommend a guarantee, for their consideration. The smallest amount requested was just £4,700, while the largest was £6 million,[10] and by 30 September 1922, £22,243,645 had been guaranteed.[11]
Trade Facilities and Loans Guarantee Act 1922
Act of Parliament | |
Introduced by | Conservatives |
---|---|
Territorial extent | United Kingdom and Colonies |
Dates | |
Royal assent | 15 December 1922 |
Status: Spent |
In July 1922, the government set up a Cabinet Trade Policy Committee. The Colonial Office explained to the Committee the shortcomings of the existing Trade Facilities Act 1921, which only seemed to offer guarantees to projects in the colonies which could easily have been funded without them. They were pressing for much more substantial aid. The Trade Facilities Committee agreed with them that the guarantees did little to encourage development in the colonies. When these proposals were presented to the cabinet, they prevaricated, postponing any decision, but eventually agreed to double the amount of money that could be guaranteed under the Trade Facilities Act to £50 million, and to extend the period during which applications could be made by one year.[12] The coalition government collapsed on 19 October 1922, and a Conservative government took over, led by Bonar Law. The Trade Policy Committee was replaced by an Unemployment Committee, and as the bill for the revised Trade Facilities Act had not then been drafted, some of the more radical proposals for colonial aid were quietly dropped, though the extensions to the amount of money to be guaranteed and the time period were retained.[13]
By the time the bill was drafted, it had become a container for legislation covering five areas, to be called the Trade Facilities and Loans Guarantee Act 1922 (
Trade Facilities Act 1924
Trade Facilities Act 1924 | |
---|---|
Act of Parliament | |
Introduced by | Labour |
Territorial extent | United Kingdom and Colonies |
Dates | |
Royal assent | 15 May 1924 |
Other legislation | |
Repealed by | Statute Law (Repeals) Act 1977 |
Status: Repealed |
Within government, there were two streams of thought as to the role of the colonies. The Colonial Office was convinced that major investment into the colonies would result in them becoming self-sufficient economically, and thus no longer a drain on the British Treasury. Most of their allies saw the colonies as places that could be developed to buy British goods, and thus alleviate domestic unemployment. Philip Lloyd-Greame, the president of the Board of Trade, stated that the only long-term solution to unemployment was the development of new markets for British exports, and that the British Empire was the most likely source of these new markets. As a result of the large numbers of unemployed workers over the winter of 1922-23, Bonar Law asked the Board of Trade to propose new solutions. Their analysis showed that exports were 31 per cent lower than in 1913, when over one third of all exports had been to Europe.[16] They suggested that some £2 million per year should be made available to the Secretary of State for the Colonies, for a period of ten years, to fund development works which would ultimately create the new markets. Amery, the First Lord of the Admiralty, proposed raising this sum to £5 million per year, but the Treasury resisted, on the basis that unemployment was not as bad as it seemed, birth rates were dropping, there was a shortage of domestic servants, and much of the provision of the Trade Facilities and Loans Guarantee Act 1922 remained unclaimed.[17]
The Conservative government was replaced by the first Labour government, led by
Trade Facilities Acts 1925 and 1926
Trade Facilities Act 1925 | |
---|---|
Act of Parliament | |
Introduced by | Conservatives |
Territorial extent | United Kingdom and Colonies |
Dates | |
Royal assent | 27 March 1925 |
Status: Spent |
Trade Facilities Act 1926 | |
---|---|
Act of Parliament | |
Introduced by | Conservatives |
Territorial extent | United Kingdom and Colonies |
Dates | |
Royal assent | 26 March 1926 |
Status: Spent |
The MacDonald government was short-lived, as it lost a vote of censure in October 1924, the total amount of guarantees was raised to £70 million and it was raised again by the Trade Facilities Act 1926 to £75 million. By the end of 1925, £63,169,741 had been guaranteed, and it was estimated that the additional amount would be sufficient to cover further guarantees in 1926.
The Trade Facilities Act 1926 again increased the time period for guarantees made under the Overseas Trade Acts, 1920 to 1924. Mr McNeill, speaking to the House of Commons in February 1926, stated that it was difficult to estimate the precise number of people who were now employed as a result of the provisions of the various Trade Facilities Acts, but that it probably exceeded 100,000.[25] The 1926 Act became law on 26 March 1926.[26] There were attempts to revive the concept of the acts in 1927 and 1929, championed by industrialists and some ministers, in order to fund industrial reconstruction, but both attempts failed, due to the reluctance of the government to become involved in the fate of specific industries.[27]
Effectiveness
The Trade Facilities Act 1926 lapsed on 31 March 1927. Shortly afterwards, Winston Churchill summarised how the total of £74,251,780 guaranteed under the five acts had been allocated, by industry.[28]
Trade | Guaranteed | Per cent |
---|---|---|
Shipbuilding | 21,640,585 | 29.1 |
Railways Construction and Equipment (Electrical) | 12,583,000 | 17.0 |
Railways Construction and Equipment (Other) | 6,230,000 | 8.4 |
Electrical (Hydro Electric) | 7,000,000 | 9.5 |
Electrical (Generation, Distribution and Traction) | 8,004,600 | 10.8 |
Coal Mining | 4,291,000 | 5.8 |
Paper and Pulp Manufacture | 2,535,000 | 3.4 |
Dock Extensions, Quays and additional Harbour Facilities | 3,375,345 | 4.5 |
Sugar Beet Factories | 2,420,000 | 3.2 |
Chemical Works | 2,000,000 | 2.7 |
Iron, Steel and Engineering | 1,161,050 | 1.6 |
Miscellaneous | 3,011,200 | 4.0 |
While the effects of the Trade Facilities Acts on levels of unemployment were disappointing,[29] and an analysis of its effects on the shipbuilding industry suggest that they were at best contentious,[30] there were some benefits to the scheme, which are still being enjoyed by Londoners. In 1921 Lord Ashfield, by then chairman of the Underground Electric Railways Company of London, submitted an application for guarantees to enable parts of the London Underground to be extended and upgraded. He needed £5 million to construct tunnels to join the Hampstead Tube at Camden Town to the City and South London Railway at Euston, to build an extension northwards from Golders Green to Edgware, to enlarge the tunnels between Euston and Clapham, and to purchase 250 new cars to equip the extended railway, which subsequently became the Northern line in 1937. Private funding by that time was not an option, as the interest on loans was around 5.5 per cent, and the deep tube lines were only generating a 2 per cent return, even in good times.[1]
The guarantees enabled money to be raised by issuing 4.5 per cent debenture stock, which was a cheaper way of raising capital than conventional loans. When the original scheme was extended by the Trade Facilities and Loans Guarantee Act 1922, Lord Ashfield applied for more guarantees, to fund more extensions to the future Northern line. The Hampstead Tube and the City and South London Railway were linked at the southern end, by constructing new tunnels from Charing Cross (now Embankment) to Kennington, and the line was extended by tunnelling southwards from Clapham Common to Morden, where a new depot for stabling the trains was constructed.[31] The number of cars expanded from 250 to 521.[32] When John Moore-Brabazon, the junior Transport Minister, opened the extension to Morden on 13 September 1926, he said that further tube extensions would only be possible if the system was well-used and earned the required dividends. Ashfield said that this would require 14 million extra passengers, but knew that it was never likely to happen.[33] The evidence also appeared obvious to some Members of Parliament. Arthur Comyns Carr, speaking in early 1924 about the extension to Edgware, said that he expected the Treasury to have to pay out on the guarantees in due course, as such projects rarely if ever paid their way. Since the price of land along the new routes always rose significantly he suggested that the railway could have financed itself by using this increase as security.[34] Days later, Sir Robert Horne said that some £14 million had been guaranteed for improvements to the tube railways, and that these projects would not have begun without the promise of cheaper loans, as a result of the Acts. He recommended that the 1924 Act should be adopted, because the tube extensions funded by the previous acts had provided employment for thousands of men.[35]
Bibliography
- Bruce, J Graeme (1968). Tube Trains Under London. London Transport Board.
- ISBN 978-0-7146-3204-9.
- Garside, W R (2002). British Unemployment 1919-1939: A Study in Public Policy. Cambridge University Press. ISBN 978-0-521-89254-4.
- Johnman, Lewis; Murphy, Hugh (4 March 2008). "Subsidy and Treasury: the Trade Facilities Act and the UK Shipbuilding Industry in the 1920s". Contemporary British History. 22: 89–110. S2CID 154875131.
- Lee, Charles E (1967). Sixty Years of the Northern. London Transport Executive. ISBN 978-0-85329-013-1.
- Wolmar, Christian (2004). The Subterranean Railway. Atlantic Books. ISBN 978-1-84354-022-9.
References
- ^ a b Wolmar 2004, pp. 220–221.
- ^ Constantine 1984, p. 77.
- ^ Constantine 1984, p. 78.
- ^ Constantine 1984, pp. 80–81.
- ^ Wolmar 2004, p. 221.
- ^ Constantine 1984, p. 83.
- ^ "Unemployed (Statistics)". Hansard. HC Deb, 19 December 1921 vol 149 cc383-5
- ^ Garside 2002, p. 190.
- ^ "Westminster, 10th November, 1921". The London Gazette. No. 32515. 11 November 1921. p. 8928.
- ^ "Trade Facilities Act". Hansard. HC Deb, 13 February 1922 vol 150 cc606-7
- ^ "Trade Facilities Act (Guarantees)". Hansard. HC Deb, 27 November 1922 vol 159 cc304-5W
- ^ Constantine 1984, pp. 85–86.
- ^ Constantine 1984, pp. 86–87.
- ^ "Trade Facilities and Loans Guarantee [Money]". Hansard. HC Deb, 4 December 1922 vol 159 cc1383-470
- ^ "Westminster, 15th December, 1922". The London Gazette. No. 32777. 15 December 1921. p. 8865.
- ^ Constantine 1984, p. 88.
- ^ Constantine 1984, pp. 88–89.
- ^ Constantine 1984, p. 94.
- ^ Garside 2002, pp. 191–192.
- ^ "Trade Facilities [Money]". Hansard. HC Deb, 19 February 1924 vol 169 cc1594-660
- ^ "Westminster, 15th May, 1924". The London Gazette. No. 32936. 16 May 1924. p. 3927.
- ^ d'Ancona, Matthew (25 January 2004). "This is not what Mr Blair meant by a place in history". The Daily Telegraph. Retrieved 9 April 2018.
- ^ Garside 2002, p. 192.
- ^ "Westminster, 27th March, 1925". The London Gazette. No. 33033. 27 March 1925. p. 2111.
- ^ "Trade Facilities [Money]". Hansard. HC Deb, 22 February 1926 vol 192 cc158-61
- ^ "Westminster, 26th March, 1926". The London Gazette. No. 33146. 30 March 1926. p. 2271.
- ^ Garside 2002, p. 217.
- ^ "Trade Facilities Act (Guarantees)". Hansard. HC Deb, 16 May 1927 vol 206 cc917-8
- ^ Garside 2002, p. 193.
- ^ Johnman & Murphy 2008, Abstract.
- ^ Lee 1967, p. 24.
- ^ Bruce 1968, p. 114.
- ^ Wolmar 2004, p. 224.
- ^ "Trade Facilities [Money]". Hansard. HC Deb, 19 February 1924 vol 169 cc1638-39
- ^ "Trade Facilities Bill". Hansard. HC Deb, 27 February 1924 vol 170 cc574-574