i
176
1
(THIS DOCUMENT I S THE PROPERTY 0? HIS BRITANNIC MAJESTY S GOVERNMENT)
S E C R E T
C.P.(U7)
COPY NO,
525
9 t h December, 19U7.
CABINET
WHITE FISH INDUSTRY
Memorandum by t h e M i n i s t e r of Food
When t h e L o r d P r e s i d e n t s Committee a c c e p t e d , on
1 2 t h August ( L . P . (1+7) 25th M e e t i n g , Minute 3 ) , t h e m a j o r i t y
r e c o m m e n d a t i o n s of a s u b - c o m m i t t e e on t h e f u t u r e o f . t h e
White P i s h I n d u s t r y ( L . P . ( U 7 ) 1 2 9 ) , from which I d i s s e n t e d ,
i t was l e f t open t o me t o b r i n g t h e m a t t e r b e f o r e t h e
Cabinet.
I do s o now b e c a u s e I f e e l t h a t t h e C a b i n e t s h o u l d
review the m a t t e r b e f o r e a d e c i s i o n i s taken t o introduce
a B i l l f o r t h e r e - o r g a n i s a t i o n of t h e w h i t e f i s h i n d u s t r y
on t h e l i n e s p r o p o s e d b y t h e F i s h e r i e s M i n i s t e r s .
2.
My o b j e c t i o n s t o t h e s e p r o p o s a l s , which I have
e x p r e s s e d i n a number of p a p e r s t o t h e Lord P r e s i d e n t s
C o m m i t t e e , a r e of two k i n d s . .
3*
F i r s t , I have a g e n e r a l o b j e c t i o n t o t h i s t y p e of
p r o p o s a l f o r t h e " r e - o r g a n i s a t i o n " of an i n d u s t r y w h i l e
l e a v i n g t h e o w n e r s h i p of t h a t i n d u s t r y i n p r i v a t e h a n d s .
I
b e l i e v e t h a t i f we a t t e m p t t o " r e - o r g a n i s e " a l l i n d u s t r i e s
by a s y s t e m of d e t a i l e d r e g u l a t i o n and c o n t r o l , we s h a l l g e t
i n t o s e r i o u s t r o u b l e . ' I n s t e a d we s h o u l d s t e a d i l y p u r s u e o u r
p o l i c y of n a t i o n a l i s i n g one by one t h e b a s i c i n d u s t r i e s of
t h e c o u n t r y , w h i l e l e a v i n g a t l e a s t t h e d e t a i l e d o p e r a t i o n of
t h e s t i l l p r i v a t e l y owned i n d u s t r y open t o t h e f o r c e s of
c o m p e t i t i o n and t h e p r i c e mechanism.
As I s u b m i t below t h e
r e a l e f f e c t of any p o l i c y of g e n e r a l c o n t r o l by " P r o d u c e r
B o o r d s " w i l l b e , n o t an advance t o w a r d s s o c i a l i s m , b u t on t h e
" c o n t r a r y t h e c r e a t i o n of a system of p r i v a t e l y owned
monopolies with a s t r o n g b i a s towards r e s t r i c t i v e p r a c t i c e s ,
o p e r a t i n g under t h e p r o t e c t i o n of o u r own s t a t u t e s .
I am
c o n v i n c e d t h a t such, a p o l i c y i s a r e c i p e f o r making commodities
s c a r c e and d e a r t o t h e u l t i m a t e c o n s u m e r .
When one of t h e s e
commodities i s a f o o d s t u f f - in' t h i s case f i s h , t h e ,sole
-;
r e m a i n i n g major u n r a t i o n e d f o o d s t u f f - t h i s p r o s p e c t n a t u r a l l y
f i l l s , m e with alarm.
;
4* .
A g a i n , i t seems t o me most d o u b t f u l w h e t h e r , from
an. a d m i n i s t r a t i v e p o i n t of v i e w , we a r e w i s e t o c h o o s e t h i s
moment t o add a l a r g e new f i e l d t o our a d m i n i s t r a t i v e
responsibilities.
The p r o p o s a l s a s j ; h e y have" f i n a l l y emerged
from t h e s u b - c o m m i t t e e of t h e L o r d P r e s i d e n t s Committee, a r e
f o r t h e s e t t i n g up of n o t o n e , b u t two l a r g e new b o a r d s , one
on t h e p r o d u c e r s ' and t h e o t h e r on t h e d i s t r i b u t i v e s i d e of
the industry.
I s t h i s t h e moment t o make t h i s m a j o r i n c r e a s e
in o u r n a t i o n a l a d m i n i s t r a t i v e o v e r h e a d ?
I s t h i s t h e moment
f o r our a l r e a d y h a r d p r e s s e d Government machine t o assume t h e s e
l a r g e new t a s k s ?
T h e i r a s s u m p t i o n i s , i n my view t o t a l l y
unnecessary.
F o r h e r e a t any r a t e i s one i n d u s t r y which i s
p r o s p e r o u s , which i s r u n n i n g on t h e whole p r e t t y s u c c e s s f u l l y
on i t s own, where s u p p l y i s somewhere n e a r demand a t c u r r e n t
p r i c e s , and where l a r g e r e t u r n s a r e b e i n g r e a l i s e d "by b o t h
t h e e m p l o y e r s and t h e employees - t h e y a r e i n many c a s e s t h e
same p e r s o n s working on a c o - o p e r a t i v e b a s i s .
Ought we n o t
t o b e t h a n k f u l t h a t i n t h i s c o s e we can l e a v e c o m p a r a t i v e l y w e l l
a l o n e f o r a few y e a r s a t any r a t e ? .
5.
My s e c o n d o b j e c t i o n t o t h e F i s h e r i e s M i n i s t e r s '
p r o p o s a l s i s t h a t t h i s p a r t i c u l a r scheme f o r t h e r e - o r g a n i s a t i o n
of an i n d u s t r y w i l l i n e v i t a b l y hove r e s t r i c t i o n i s t consequence;.;.
6.
I e n d o r s e t h e view of t h e M i n i s t e r of H e a l t h t h a t
any P r o d u c t i o n B o a r d , however good i t s i n t e n t i o n s , would b e
i n a h o p e l e s s p o s i t i o n u n l e s s i t s u b m i t t e d t o t h e w i s h e s of t h e
p r o d u c e r s ; and i t i s t h e t e n d e n c y of p r o d u c e r s t o r e s t r i c t
s u p p l i e s t o t h e amount which can. b e h a n d l e d and s o l d w i t h t h e
least inconvenience.
Without c o m p e t i t i o n , t h i s i s normally
the smallest quantity that will maintain existing returns at
maximum p r i c e s .
:
7.
Under t h e p r o p o s e d scheme, t h e P r o d u c t i o n Board
would have c o n t r o l n o t o n l y of home-caught f i s h b u t a l s o of
importsSo no c o m p e t i t i o n from t h i s s o u r c e c o u l d b e b r o u g h t
t o t h e h e l p of t h e c o n s u m e r , .and f i s h s u p p l y p o l i c y would b e
e n t i r e l y i n the. hands of t h e P r o d u c t i o n B o a r d .
In t h e s e
c i r c u m s t a n c e s " i t i s . d i f f i c u l t t o s e e what u s e f u l f u n c t i o n t h e
M i n i s t r y of Food and t h e D i s t r i b u t i o n Board c o u l d p e r f o r m .
Any r e d u c t i o n i n d i s t r i b u t i v e c o s t s would b e n e g l i g i b l e compared
w i t h t h e l e v e l of f i r s t hand p r i c e s b a s e d on r e s t r i c t e d s u p p l i e s .
D i s t r i b u t i o n c o s t s a r e a t p r e s e n t a b o u t 100%.
The h o u s e w i f e
p a y s , t h a t i s t o s a y , a b o u t d o u b l e t h e p r i c e r e a l i s e d by t h e
f i s h e r m a n on f i r s t s a l e .
Considering the highly perishable,
s e a s o n a l , ' d i v e r s e and g e n e r a l l y d i f f i c u l t c h a r a c t e r of f i s h as
an o b j e c t f o r d i s t r i b u t i o n , t h i s compares v e r y f a v o u r a b l y w i t h
t h e d i s t r i b u t i o n c o s t s of m a n y . f a r e a s i e r c o m m o d i t i e s , s u c h a s ­
w i r e l e s s s e t s o r motor c a r s .
I t i s , . I am a f r a i d , a c o m p l e t e
i l l u s i o n t o t h i n k t h a t t h e r e i s any l a r g e s a v i n g t o b e q u i c k l y
made i n t h i s d i s t r i b u t i v e f i e l d . . . 1 do n o t c o n s i d e r , t h e r e f o r e ,
t h a t a D i s t r i b u t i o n Board i s n e c e s s a r y o r c o u l d b r i n g , any
important advantages.
8.
The u l t i m a t e s o l u t i o n i s , i n my o p i n i o n , t h e
n a t i o n a l i s a t i o n of.the wholesaling function;
we c a n n o t , I t a k e
i t , do t h i s i n ' t h e p r e s e n t P a r l i a m e n t .
But t h i s does n o t mean
t h a t n o t h i n g can b e d o n e .
In L . P . (h7) 133* I have s u g g e s t e d
c e r t a i n i m m e d i a t e m e a s u r e s , amounting t o t h e s e t t i n g up of a
" F i s h E x e c u t i v e " a n a l o g o u s t o t h e " V e g e t a b l e E x e c u t i v e " which
has j u s t been c r e a t e d .
9.
I f t h e p r o p o s e d D i s t r i b u t i o n Board would b e of l i t t l e
V a l u e , t h e p r o p o s e d P r o d u c t i o n Board would i n e v i t a b l y be
a c t i v e l y harmful.
However a d m i r a b l e were i t s p l a n s i t would
be s u r e t o become r e s t r i c t i o n i s t i n p r a c t i c e .
The o n l y
e x p e r i e n c e which we have i n r e g a r d t o t h e a c t i v i t i e s of B o a r d s
a p p o i n t e d by t h e F i s h e r i e s D e p a r t m e n t s i n t h i s f i e l d i s t h a t
of t h e H e r r i n g I n d u s t r y B o a r d . - T h i s e x p e r i e n c e i s n o t
e n c o u r a g i n g t o "the view t h a t such Boards w i l l a b s t a i n from
restrictionist practices.
The H e r r i n g I n d u s t r y Board imposed
r e s t r i c t i o n s , on, f i s h i n g on e v e r y day i n J u n e t h i s y e a r b u t two,
and f o r a b o u t h a l f trie month o n l y half, t h e f l e e t was a l l o w e d t o
f i s h . . As a r e s u l t , e x c e p t i n t h e f i r s t t e n days or so of t h e
s e a s o n , which began on 1'0th May, and e x c e p t f o r a s m a l l q u a n t i t y
o n . 1 0 t h J u l y , no h e r r i n g s were p u r c h a s e d f o r o i l and meal a t
t h e Moray F i r t h p o r t s i n s p i t e of t h e o f f e r t o "buy t h e whole
s u r p l u s s u b j e c t to the c a p a c i t y of t h e f a c t o r i e s .
This degree
of r e s t r i c t i o n h a s a r i s e n from t h e f a c t t h a t t h e Board e n t e r e d
i n t o an u n d e r s t a n d i n g w i t h t h e Moray F i r t h h e r r i n g , f i s h e r m e n
t h a t t h e Board would r e s t r i c t t h e i r f i s h i n g t o what i t e s t i m a t e , , ,
would produce c a t c h e s j u s t s u f f i c i e n t t o s a t i s f y t h e f r e s h ,
k i p p e r i n g and e x p o r t m a r k e t s w i t h o u t p r o d u c i n g any h e r r i n g s for.
t h e , t o my mind, v i t a l p u r p o s e of p r o d u c i n g o i l f o r m a r g a r i n e
and meal f o r a n i m a l f e e d i n g s t u f f s .
T h i s u n d e r s t a n d i n g and t h e
h i g h l y r e s t r i c t i o n i s t p o l i c y which h a s r e s u l t e d from i t , h a s ,
in f a c t , meant t h a t o n l y v e r y s m a l l q u a n t i t i e s of h e r r i n g s have
been a v a i l a b l e f o r r e d u c t i o n f o r m a r g a r i n e o i l and f e e d i n g s t u f f s .
10.,'
In t h e l a t t e r p a r t of t h i s y e a r , owing t o s t r o n g
r e p r e s e n t a t i o n s by my D e p a r t m e n t , t h e H e r r i n g I n d u s t r y B o a r d s
p o l i c y h a s become .somewhat l e s s r e s t r i c t i o n i s t .
1
11.
I need not emphasise to the Cabinet the consequences
which would ensue i f we do a l l o w t h e w h i t e f i s h i n g i n d u s t r y
os w e l l a s t h e h e r r i n g I n d u s t r y t o be p u t i n t h e hands of a
B o a r d , t h e i n e v i t a b l e b i a s of which w i l l b e t o r e s t r i c t i t s
a c t i v i t i e s and so t o m a i n t a i n t h e p r i c e of i t s p r o d u c e a t t h e
highest possible level.
The r e s u l t w i l l i n e v i t a b l y b e , a s I
s u g g e s t e d i n L.P.(U&) 28k, " o s m a l l , c o s y , h i g h l y p r o t e c t e d ,
0­
enormously p r o f i t a b l e f i s h i n g i n d u s t r y which has e x c l u d e d
c o m p e t i t i v e new e n t r a n t s .
By so d o i n g , i t would p r e v e n t us
e v e r a c h i e v i n g an ample s u p p l y of cheap f i s h t o t h e w o r k i n g c l a s s
of t h i s c o u n t r y - which s h o u l d s u r e l y b e t h e o b j e c t of t h e whole
business".
12.
C o n f i r m a t i o n t h a t t h e b i a s would be r e s t r i c t i o n i s t ,
can b e found i n t h e F i s h e r i e s M i n i s t e r s ' o r i g i n a l p r o p o s a l s
c o n t a i n e d in L . P . ( k . 6 ) 2 8 3 .
I point out t h i s r e s t r i c t i o n i s t
b i a s i n t h e n o t e appended t o my L . P . ' ( k 6 ) 28k.
I t w i l l - "be seen
t h a t the F i s h e r i e s . M i n i s t e r s ' f i r s t proposal i s t h a t the Fish
P r o d u c t i o n B o a r d s h o u l d " d r a s t i c a l l y r e d u c e t h e number of t r a w l e r
o w n e r s " , w i t h t h e o b v i o u s i n t e n t i o n of r e d u c i n g c o m p e t i t i v e
p r e s s u r e i n t h e a c t u a l c a t c h i n g of f i s h . . A s t a t u t o r y monopoly
of t h e r i g h t t o f i s h i s . t h u s t o be g i v e n t o c e r t a i n s e l e c t e d
t r a w l e r o w n e r s , t h u s e x c l u d i n g newcomers and s m a l l men from t h e
industry.
(See a l s o p a r a g r a p h 3 of my n o t e , p o i n t i n g out t h e
b i a s . a g a i n s t t h e modern e f f i c i e n t H u l l t r a w l e r w o n e r s b e c a u s e
t h e i r a c t i v i t i e s t e n d e d t o r e d u c e ' t h e p r i c e of f i s h ;
also
p a r a g r a p h k a s t o t h e , i n my v i e w , t o t a l l y u n n e c e s s a r y c h a r g e of
£11 m i l l i o n which i s t o f a l l on t h e T r e a s u r y as an a s s i s t a n c e
for re-equipping the fishing f l e e t ) .
13*
I believe t h a t ' t h e F i s h e r i e s Ministers are s t i l l
i n f l u e n c e d by t h e e x p e r i e n c e of t h e i n t e r - w a r y e a r s when demand
f o r f i s h c o n s t a n t l y f e l l below s u p p l y w i t h , a d m i t t e d l y , most
p a i n f u l consequences to the i n d u s t r y .
They have f a i l e d t o t a k e
i n t o a c c o u n t f u n d a m e n t a l changes i n t h e s i t u a t i o n .
In t h e
f i r s t p l a c e , o t h e r f o o d s a r e much l e s s p l e n t i f u l and c h e a p , and
w i l l , u n f o r t u n a t e l y , c e r t a i n l y remain so f o r many y e a r s t o come.
T h i s i n i t s e l f ; w i l l g r e a t l y i n c r e a s e t h e demand f o r f i s h .
But
s t i l l more i m p o r t a n t t h a n t h i s f a c t o r i s t h e r e - d i s t r i b u t i o n of
income which we have b r o u g h t a b o u t .
T h i s means t h a t t h e t o t a l
money demand f o r f o o d s t u f f s i n g e n e r a l and f i s h i n p a r t i c u l a r
p o s s e s s e d by t h e p o p u l a t i o n i s - how f a r l a r g e r t h a n e v e r b e f o r e .
T h i s demand w i l l p r o v i d e a m a r k e t of s u c h a s i z e t h a t t h e f i s h i n g
i n d u s t r y can work f o r i t w i t h o u t f e a r of g l u t .
1
Hi'.
This yearns experience is p a r t i c u l a r l y i n t e r e s t i n g
in t h i s connection.
On 14-th March of t h i s y e a r t h e F i s h e r i e s
M i n i s t r i e s ( s e e L . P . ( 4 7 ) 5 1 , A p p e n d i x , page 4 , column 6 ) , s a i d
"we f e e l t h a t t h e M i n i s t r y of Food i s t o o o p t i m i s t i c i n
a n t i c i p a t i n g a s h o r t a g e of f i s h r e l a t i v e t o demand".
This
p h r a s e r e v e a l s c l e a r l y t h e g e n e r a l a t t i t u d e of t h e M i n i s t r i e s ,
i n which t h e y c o n s i d e r t h a t a s h o r t a g e of f i s h r e l a t i v e t o demand
i s s o m e t h i n g t o b e hoped f o r .
I t f u l l y c o n f i r m s , I . submit,­
my view t h a t t h e i r b i a s i s and w i l l i n e v i t a b l y remain r e s t r i c t i o n i s t .
B u t , i n a d d i t i o n , i t r e v e a l s what has p r o v e d in t h e e v e n t t o b e
a m i s t a k e n f o r e c a s t of t h e s u p p l y and demand s i t u a t i o n t h r o u g h
1947.
In s p i t e of l e a v i n g t h e w h i t e f i s h ( a s opposed t o t h e
h e r r i n g ) i n d u s t r y f r e e of r e s t r i c t i o n i s t p r e s s u r e , t h e r e h a s b e e n
no g l u t w h a t e v e r of f i s h .
On t h e c o n t r a r y , p r i c e s have b e e n
-at or a b o u t t h e maximum t h r o u g h o u t t h e s e a s o n and we have a c t u a l l y
had t o r a i s e some f i s h p r i c e s t h i s autumn.
I am c o n f i d e n t t h a t
t h e f e a r of a new and - r u i n o u s g l u t of f i s h which i s t h e r e a l
r e a s o n b e h i n d t h e p r e s e n t p r o p o s a l s , i s b a s e d on an e q u a l l y
f a l l a c i o u s f o r e c a s t of t h e s i t u a t i o n i n 1948 and s u b s e q u e n t y e a r s .
RECOMMENDATIONS
I therefore
recommend:­
(1)
t h a t we do n o t p r o c e e d w i t h p l a n s t o i n t r o d u c e
l e g i s l a t i o n f o r t h e r e - o r g a n i s a t i o n of t h e w h i t e f i s h i n d u s t r y ;
(2)
t h a t i n s t e a d we s e t up a F i s h E x e c u t i v e on t h e l i n e s
of t h e r e c e n t l y c r e a t e d i n t e r - d e p a r t m e n t a l V e g e t a b l e E x e c u t i v e
f o r t h e p u r p o s e of c a r r y i n g o u t t h e i m m e d i a t e p r o p o s a l s s k e t c h e d
i n my L . P . ( 4 7 ) 1 3 3 ;
(3)
t h a t as a p o s s i b l e p a r t of o u r programme p u t -"before'
t h e E l e c t o r a t e i n t h e n e x t E l e c t i o n , and t o b e c a r r i e d out in
t h e n e x t P a r l i a m e n t , we s h o u l d p r e p a r e , d e t a i l e d p l a n s f o r t h e
n a t i o n a l i s a t i o n of t h e f i s h w h o l e s a l i n g f u n c t i o n .
F o r .1 would
a g r e e t h a t i t i s p o s s i b l e , t h o u g h by no means c e r t a i n , t h a t many
y e a r s h e n c e t h e c o n d i t i o n s of o v e r s u p p l y r e l a t i v e t o demand
m i g h t r e - a p p e a r i n t h i s - i n d u s t r y , and t h a t t h e r e would t h e n be a
g r e a t a d v a n t a g e i n c o n t r o l l i n g t h e s i t u a t i o n b y a p u b l i c monopol;.
of w h o l e s a l e d i s t r i b u t i o n .
J . S.
M i n i s t r y of Food, S.W. 1.
9 t h December,
1947.
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