(c) crown copyright
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PHIS
DOCUMENT
IS
T H E PROPERTY
Printed
OF
H I S
BRITANNIC
for the Cabinet.
July
MAJESTY'S
GOVERNMEHT
1947
Copy N o . 4 \
SECRET
C M . (47)
66th Conclusions
C A B I N E T 66 ( 4 7 )
CONCLUSIONS
of a Meeting of the Cabinet held at 10 Downing
on Thursday,
31st July, 1947, at 10 a.m.
Street,
S.V/.
Present:
T h e R i g h t H o n . C. R . A T T L E E , M . P . , P r i m e M i n i s t e r (in the
Chair).
The Right Hon. HERBERT MORRISON,
M . P . L o r d P r e s i d e n t of t h e Council.
The Right Hon. ERNEST BEVIN, M.P.,
S e c r e t a r y of S t a t e f o r F o r e i g n
Affairs.
T h e R i g h t H o n . A R T H U R GREENWOOD,
M.P., Minister without Portfolio.
T h e R i g h t H o n . S i r STAFFORD C R I P P S ,
K . C . , M . P . , P r e s i d e n t of t h e B o a r d
of T r a d e .
T h e Right Hon. VISCOUNT JOWITT,
L o r d Chancellor.
The R i g h t H o n . H U G H DALTON,
The R i g h t H o n . VISCOUNT ADDISON,
S e c r e t a r y of S t a t e f o r C o m m o n w e a l t h
Relations.
The R i g h t H o n . A . C R E E C H J O N E S , M . P . ,
S e c r e t a r y of S t a t e f o r t h e Colonies.
The Right Hon. J . WESTWOOD, M.P.,
The R i g h t H o n . G . A . ISAACS, M . P . ,
The R i g h t Hon. E. SHINWELL, M . P . ,
M i n i s t e r of L a b o u r a n d N a t i o n a l
Service.
The R i g h t H o n . A N E U R I N B E V A N , M . P . ,
M i n i s t e r of H e a l t h .
M.P.,
Chancellor of t h e E x c h e q u e r .
The R i g h t H o n . A . V . ALEXANDER,
M . P . , M i n i s t e r of Defence.
The R i g h t H o n . J . C H U T E R E D E , M . P . ,
S e c r e t a r y of S t a t e for t h e H o m e
Department.
S e c r e t a r y of S t a t e f o r Scotland.
The
Right
Hon.
THE
EARL
OF
L I S T O W E L , S e c r e t a r y of S t a t e f o r
I n d i a a n d S e c r e t a r y of S t a t e for
Burma.
M i n i s t e r of F u e l a n d P o w e r .
The Right Hon. ' . WILLIAMS, M.P.,
Minister
of
Agriculture
and
Fisheries.
T h e R i g h t H o n . GEORGE TOMLINSON,
M . P . , M i n i s t e r of E d u c a t i o n .
T h e following w e r e also p r e s e n t :
The R i g h t Hon. J O H N W I L M O T , M.P.,
M i n i s t e r of S u p p l y (Item 4).
The R i g h t H o n . J O H N STRACHEY, M . P . ,
M i n i s t e r of Food.
The R i g h t Hon. A L F R E D BARNES, M.P.,
M i n i s t e r of T r a n s p o r t (Item 4 ) .
The Right Hon. WILLIAM WHITELEY,
M.P.,
Parliamentary
Secretary,
T r e a s u r y (Item 1).
Secretariat:
M r . W . S. M U R R I E .
M r . S. E . V .
LUKP
CABINET
66
(47)
CONTENTS.
Minute
No.
1
Subject
Page
179
Parliament
B u s i n e s s i n t h e H o u s e of C o m m o n s .
E e p o r t of t h e C o m m i t t e e of P r i v i l e g e s .
2
A b s e n c e of P r i m e M i n i s t e r
3
Palestine
....
....
....
J e w i s h I l l e g a l I m m i g r a n t s f r o m S . S . President
War
K i d n a p p e d B r i t i s h N o n - C o m m i s s i o n e d Officers.
4
Iron a n d Steel I n d u s t r y Bill
....
....
179
179
field.
180
1. T h e C a b i n e t w e r e informed of t h e business to be t a k e n i n
t h e H o u s e of C o m m o n s i n t h e following week.
Parliament.
Business
in
On 4 t h A u g u s t , t h e t w e n t i e t h a l l o t t e d S u p p l y D a y , t h e r e would
be a d e b a t e on Germany and Austria.
I t w a s also proposed to t a k e
t h e R e p o r t S t a g e of a l l o u t s t a n d i n g V o t e s ; t h e C o m m i t t e e a n d
r e m a i n i n g Stages of t h e Isle of Man (Customs) Bill; a motion to
a p p r o v e t h e Purchase
Tax (Charges)
(No. 2) Order;
the Lords'
a m e n d m e n t s t o t h e A griculture
Bill, a n d the f u r t h e r L o r d s ' amend­
m e n t s to t h e Transport
Bill.
On 5 t h A u g u s t t h e L o r d s ' a m e n d m e n t s to t h e Electricity
Bill
a n d t h e Town and Country
Planning
(Scotland)
Bill would be
considered.
On 6 t h a n d 7 t h A u g u s t t h e Appropriation
Bill would be t a k e n
a n d t h e r e would be a d e b a t e o n the S t a t e of t h e N a t i o n . T h e P r i m e
M i n i s t e r , the Chancellor of t h e E x c h e q u e r a n d t h e P r e s i d e n t of t h e
B o a r d of T r a d e w o u l d be t h e G o v e r n m e n t s p e a k e r s .
D u r i n g t h e week a n y o u t s t a n d i n g business would be t a k e n as
o p p o r t u n i t y offered. On a convenient d a y the P r i m e M i n i s t e r would
propose a M o t i o n of T h a n k s to the Civil a n d M i l i t a r y Services of
t h e C r o w n in I n d i a .
I t w a s h o p e d t h a t it w o u l d be possible for t h e H o u s e to a d j o u r n
for the S u m m e r Recess on 8 t h A u g u s t , a n d P a r l i a m e n t would then
s t a n d a d j o u r n e d u n t i l 20th October, w h e n t h e r e w o u l d probably be
a formal m e e t i n g for p r o r o g a t i o n . Should it be necessary in t h e
public i n t e r e s t t o recall t h e H o u s e a t a n e a r l i e r d a t e d u r i n g t h e
a d j o u r n m e n t t h e S p e a k e r w o u l d be able to do t h i s on r e p r e s e n t a ­
tions b e i n g m a d e to h i m by t h e G o v e r n m e n t .
t h e H o u s e of
Commons.
Report
of t h e
Committee
of
Privileges.
A b s e n c e of
Prime
Minister.
The Lord President
d r e w the a t t e n t i o n of t h e Cabinet to t h e
R e p o r t of t h e C o m m i t t e e of P r i v i l e g e s o n t h e e n q u i r y into t h e
allegations a g a i n s t M e m b e r s of P a r l i a m e n t m a d e by M r . G a r r y
A l l i g h a n , M . P . , in a recent a r t i c l e i n t h e World's Press News.
The
n o r m a l p r o c e d u r e w o u l d be to afford t i m e for an early debate on
the Comrnittee's findings, b u t in v i e w of M r . A l l i g h a n ' s absence
a b r o a d i t w o u l d n o t be possible t o hold a full d e b a t e before t h e
Summer Recess. T h e H o u s e should, however, h a v e a n o p p o r t u n i t y
before t h e Recess of d e c i d i n g w h a t a c t i o n should be t a k e n on t h e
Committee's findings i n r e g a r d to t h e e d i t o r a n d political correspon­
d e n t of t h e Evening Neivs, w h o h a d refused to divulge t h e n a m e of
t h e Member t o w h o m t h a t p a p e r m a d e a weekly p a y m e n t in r e t u r n
for political a n d i n d u s t r i a l i n f o r m a t i o n .
2. The Prime
Minister
i n f o r m e d t h e C a b i n e t t h a t in h i s
absence on h o l i d a y the L o r d P r e s i d e n t w o u l d act for h i m . A r r a n g e ­
ments would be m a d e to e n s u r e t h a t he w a s k e p t informed of m a t t e r s
of i m p o r t a n c e , a n d for m a i n t a i n i n g speedy c o m m u n i c a t i o n w i t h h i m .
Palestine.
3, The Foreign Secretary
recalled t h a t , in s p i t e of our efforts
to p r e v e n t it, t h e President
War field h a d succeeded in sailing for
P a l e s t i n e from a F r e n c h p o r t w i t h some 4,500 illegal i m m i g r a n t s
Immigrants
on b o a r d . T h e s e J e w s h a d secured forged Colombian t r a v e l docu­
from
m e n t s ; a n d t h e s h i p itself h a d s a i l e d w i t h o u t p r o p e r clearance.
S.S.
President
H e h a d t a k e n t h e m a t t e r u p i m m e d i a t e l y w i t h M . B i d a u l t , who h a d
TVarfield.
a
g r e e d t h a t , if w e w e r e successful i n i n t e r c e p t i n g t h e ship, h e r
(Previous passengers
m i g h t be r e t u r n e d to F r a n c e . T h e President
War field
Reference:
h
a
d
been
i
n
t
e
r
c
e
p
t
e
d
off
t
h
e
P
a
l
e
s
t
i
n
e
coast
by
a
n
a
v
a
l
p
a
trol a n d
C M . (47) 42nd her passengers t r a n s f e r r e d t o t h r e e o t h e r ships, w h i c h w e r e now i n
Conclusions, h a r b o u r at P o r t de Bouc. T h e illegal i m m i g r a n t s h a d , however,
M i n u t e 3.) refused to d i s e m b a r k v o l u n t a r i l y a n d i t w a s clear t h a t , w i t h o u t t h e
co-operation of t h e F r e n c h a u t h o r i t i e s , i t would be impossible t o
compel t h e m t o do so. H i s M a j e s t y ' s A m b a s s a d o r a t P a r i s h a d
r e p o r t e d t h a t t h e F r e n c h G o v e r n m e n t w e r e n o t p r e p a r e d t o afford
[34133-3]
2
Jewish Illegal
B
such co-operation, a n d t h a t f u r t h e r r e p r e s e n t a t i o n s to them would
be unlikely t o p r o d u c e a n y successful results. I n these circum­
stances h e h a d discussed w i t h t h e o t h e r M i n i s t e r s concerned what
a l t e r n a t i v e a r r a n g e m e n t s m i g h t be m a d e for the disposal of the
illegal i m m i g r a n t s . I t h a d been a g r e e d t h a t t h e r e could be no
q u e s t i o n of s e n d i n g t h e m to P a l e s t i n e or C y p r u s , a n d the Secretary
of S t a t e for t h e Colonies w a s c o n s i d e r i n g w h e t h e r accommodation
could be f o u n d for t h e m in a B r i t i s h colonial t e r r i t o r y , while he
himself w a s looking i n t o t h e q u e s t i o n w h e t h e r a n y m i g h t be sent
to t h e B r i t i s h Z o n e of G e r m a n y . Some of these J e w s h a d in fact
come from t h e U n i t e d S t a t e s Zone, a n d i t m i g h t be possible to
a r r a n g e for t h e i r r e t u r n there. H e h a d n o t yet been able to reach
definite conclusions, a n d h e p r o p o s e d t o consult w i t h the Prime
M i n i s t e r before a decision w a s finally taken. N o h a r m would be
done by l e a v i n g t h e t h r e e t r a n s p o r t s a t P o r t d e Bouc for a few days;
a n d t h e r e w a s a possibility t h a t t h e i r passengers might decide
e v e n t u a l l y t o go ashore peaceably.
The C a b i n e t T o o k n o t e of t h e F o r e i g n S e c r e t a r y ' ^ statement.
Kidnapped
British
Non-
Commissioned
Officers.
The Secretary
of State for the Colonies informed the Cabinet
t h a t the H i g h Commissioner f o r P a l e s t i n e h a d n o t yet been able to
confirm or deny t h e r e p o r t t h a t t w o B r i t i s h non-commissioned
officers, w h o h a d been k i d n a p p e d some days previously, had been
executed by the I r g u n Z v a i L e u m i .
The C a b i n e t Took n o t e of t h e s t a t e m e n t m a d e by the Secretary of State
for the Colonies.
Iron and Steel
Industry Bill.
(Previous
Eef erence:
C M . (47) 64th
Conclusions,
Minute
2.)
4. T h e C a b i n e t considered a m e m o r a n d u m by the Lord Presid e n t a n d t h e M i n i s t e r of S u p p l y ( C P . (47) 215) summarising the
a l t e r n a t i v e courses of action discussed a t t h e i r m e e t i n g on 24th July.
The Lord President
recalled t h a t t h e Cabinet, at their meetings
on 2 4 t h a n d 28th A p r i l ( C M . (47) 3 9 t h Conclusions, Minute 6, and
4 0 t h Conclusions, M i n u t e 2), h a d reached t h e conclusion that any
comprehensive a c q u i s i t i o n of t h e p h y s i c a l assets of t h e iron and steel
i n d u s t r y o n t h e lines a d o p t e d for t h e coal i n d u s t r y would involve
g r e a t complications a n d could only be effected over a long period.
T h e y h a d t h e r e f o r e decided t h a t t h e m o s t p r a c t i c a l method of
s e c u r i n g p u b l i c o w n e r s h i p w a s by t h e a c q u i s i t i o n of all the shares in
selected c o m p a n i e s o n t h e l i n e s s u g g e s t e d in C P . (47) 123. If the
G o v e r n m e n t proceeded on t h e s e lines, however, the energies of many
of t h e a c t i v e p e r s o n a l i t i e s in t h e i n d u s t r y would be diverted from
steel o u t p u t a n d development schemes t o o p p o s i n g t h e Governments
p l a n s or c o n s i d e r i n g t h e i r own f u t u r e . T h e r e would thus be a
d a n g e r t h a t in t h e c r i t i c a l p e r i o d a h e a d the n a t i o n a l economy would
be seriously h a n d i c a p p e d t h r o u g h a c o n t i n u e d shortage of steel. We
could n o t afford t o r u n t h i s risk, a n d i t m i g h t therefore be argued
t h a t t h e G o v e r n m e n t should t a k e n o action a t all for t h e time being.
I n his v i e w t h e r e could be n o w o r s e course to pursue, since the
p r o l o n g a t i o n of u n c e r t a i n t y w o u l d p r e j u d i c e t h e efficiency of the
i n d u s t r y w h i l e a t t h e same t i m e e n c o u r a g i n g t h e intransigence of
its leaders. P o l i t i c a l l y , i n a c t i o n w o u l d be r e g a r d e d a s a sign of
w e a k n e s s a n d m i g h t prove d a m a g i n g to t h e Government. I n these
c i r c u m s t a n c e s h e t h o u g h t t h e r e w a s a s t r o n g case for the solution
o u t l i n e d i n C P . (47) 212. T h o u g h the scheme there proposed
w a s unlikely t o lead to t h e a c q u i s i t i o n by the Government of any
s u b s t a n t i a l p a r t of t h e i n d u s t r y i n t h e lifetime of the present
P a r l i a m e n t , it w o u l d give t h e G o v e r n m e n t full control of the
i n d u s t r y a n d t h e necessary t e c h n i c a l knowledge to enable complete
socialisation to be effected, if it w e r e t h o u g h t desirable, during the
next Parliament.
M a n y G o v e r n m e n t s u p p o r t e r s were doubtful
181
G.M.
66
(M)
about t h e a d v i s a b i l i t y of p r e s s i n g f o r w a r d w i t h complete soeialisa­
t i o n a t this stage, b u t w o u l d welcome proposals w h i c h would
r e p r e s e n t a definite a d v a n c e t o w a r d s socialisation w i t h o u t the r i s k
of j e o p a r d i s i n g steel o u t p u t . I f h i s proposals were accepted, i t would
be necessary to define t h e a g r e e m e n t w i t h t h e i n d u s t r y by a n
e x c h a n g e of letters w i t h t h e I r o n a n d Steel F e d e r a t i o n .
The Minister
of Health s a i d t h a t a decision by the Govern­
m e n t to abandon t h e i r i n t e n t i o n of i n t r o d u c i n g legislation in t h e
1947-48 Session for t h e full socialisation of the iron a n d steel
i n d u s t r y would cause g r e a t dismay a m o n g t h e i r s u p p o r t e r s in
P a r l i a m e n t , who w e r e e x p e c t i n g t h e m to show vigorous l e a d e r s h i p
in d e a l i n g w i t h t h e p r e s e n t s i t u a t i o n . I n his view, to a t t e m p t t o
j u s t i f y a d e p a r t u r e f r o m t h e C a b i n e t ' s e a r l i e r decision on t h e
g r o u n d t h a t the economic conditions r e n d e r e d i t i n o p p o r t u n e w a s a
n e g a t i o n of t h e p r i n c i p l e s of t h e P a r t y a n d w a s t a n t a m o u n t t o a n
indefinite p o s t p o n e m e n t of a n y real m e a s u r e of socialisation. T h i s
w o u l d have a deplorable effect on the w o r k e r s in t h e i n d u s t r y a n d
w a s m u c h more likely to l e a d to a loss of o u t p u t t h a n a d h e r e n c e to
t h e decision a l r e a d y t a k e n t o g e t h e r w i t h a resolute use of t h e powers
of control which t h e M i n i s t e r of S u p p l y a l r e a d y h a d . I n a n y event,
it would be u n w i s e to a g r e e to a n y d e p a r t u r e from t h e scheme
a l r e a d y a p p r o v e d u n t i l M i n i s t e r s h a d h a d an o p p o r t u n i t y of
s t u d y i n g t h e full i m p l i c a t i o n s of the economic s i t u a t i o n a n d of t h e
measures w h i c h would h a v e to be t a k e n to meet it.
The Secretary of State for Commonwealth
Relations
said t h a t
i n p r e s e n t circumstances i t w o u l d be u n w i s e to proceed w i t h t h e full
scheme of socialisation p r o p o s e d in C P . (47) 123. H e saw n o reason
to suppose t h a t t h e a d o p t i o n of t h e proposals m a d e in C P . (47) 212
would open the G o v e r n m e n t t o the c h a r g e of weakness. I n the
i m m e d i a t e f u t u r e t h e r e w o u l d be a m p l e need for courageous
decisions in other d i r e c t i o n s , a n d it could be a r g u e d t h a t t h e scheme
set o u t in C P . (47) 212 c o n s t i t u t e d a definite step t o w a r d s the
u l t i m a t e objective. T h e essential p o i n t w a s t h a t n o action should
be t a k e n which m i g h t result in a fall in steel o u t p u t .
The Chancellor
of the Exchequer
s a i d t h a t , t h o u g h he still
f a v o u r e d t h e scheme set o u t in C P . (47) 123, he h a d come to the
conclusion t h a t it would be i n a d v i s a b l e to i n t r o d u c e the necessary
legislation in the 1 9 4 7 - 4 8 Session, w h e n t h e G o v e r n m e n t would be
faced w i t h m a n y more u r g e n t problems. H e saw no a d v a n t a g e i n
a d o p t i n g t h e proposals i n C P . (47) 212, w h i c h would, in h i s view,
be unacceptable to G o v e r n m e n t s u p p o r t e r s . Moreover, it seemed
probable t h a t it w o u l d be necessary for t h e G o v e r n m e n t to seek
emergency powers to m e e t t h e p r e s e n t economic s i t u a t i o n , a n d , if so,
t h e r e would be no a d v a n t a g e in i n t r o d u c i n g special legislation t o
control the iron a n d steel i n d u s t r y . A g a i n , t h e r e w a s no reason w h y
t h e t r a n s f e r of h i g h l y qualified staff from Steel House, w h i c h was
one of t h e m a i n elements i n t h e compromise proposals, should not
be effected by a d m i n i s t r a t i v e action.
The President of the Board, of Trade said t h a t h e was i n general
a g r e e m e n t w i t h t h e views of t h e Chancellor of the E x c h e q u e r . I f
t h e proposals in C P . (47) 212 w e r e a d o p t e d , they would be r e g a r d e d
as the G o v e r n m e n t s final solution of the problem of socialising t h e
iron and. steel i n d u s t r y . T h e y would also t h r o w a heavier b u r d e n
on the a d m i n i s t r a t i v e m a c h i n e t h a n it could bear u n d e r e x i s t i n g
conditions.
H e t h e r e f o r e t h o u g h t t h a t t h e G o v e r n m e n t could
p r o p e r l y t a k e the line t h a t t h e necessary control of the i n d u s t r y
could be secured b y t h e use of general emergency powers.
The Minister of Food s a i d t h a t he u n d e r s t o o d t h a t t h e C a b i n e t
would have an o p p o r t u n i t y of c o n s i d e r i n g t h e question w h e t h e r
emergency powers o u g h t t o be t a k e n by the G o v e r n m e n t to meet t h e
p r e s e n t economic s i t u a t i o n . I f such legislation were enacted, i t
would no doubt r e n d e r easier the effective control of t h e steel
i n d u s t r y on its p r e s e n t basis. Nevertheless, h e d i s a g r e e d w i t h the
compromise proposed by t h e L o r d P r e s i d e n t . D r a s t i c measures
would shortly h a v e to be i n t r o d u c e d which would fall h a r d l y on the
g e n e r a l mass of t h e p o p u l a t i o n . T h e G o v e r n m e n t s position would
be g r e a t l y weakened if they a p p e a r e d a t the same time to be
r e t r e a t i n g in t h e face of t h e opposition of t h e I r o n a n d Steel
F e d e r a t i o n . A f u r t h e r p o i n t w a s t h a t t h e a d m i n i s t r a t i v e difficul­
ties involved i n a full scheme of socialisation seemed to have been
seriously e x a g g e r a t e d .
The Minister
of Agriculture
said t h a t in view of the need to
o b t a i n the m a x i m u m steel o u t p u t i t w a s essential t o avoid any action
w h i c h would a r o u s e serious controversy w i t h the i n d u s t r y . For this
reason he s u p p o r t e d t h e p r o p o s a l p u t f o r w a r d by the Chancellor of
t h e E x c h e q u e r t h a t no legislation dealing w i t h the iron and steel
i n d u s t r y should be i n t r o d u c e d in t h e 1947-48 Session.
The Minister
of Defence said t h a t inaction a t t h i s stage would
be r e a d a s m e a n i n g t h a t t h e G o v e r n m e n t h a d a b a n d o n e d their inten­
t i o n to i n t r o d u c e legislation for socialising the i n d u s t r y during the
c u r r e n t P a r l i a m e n t . I n h i s view, such a decision would have serious
p o l i t i c a l consequences and, if i t w a s felt impossible to introduce
l e g i s l a t i o n on t h e lines o r i g i n a l l y contemplated, he hoped it would
be decided to a d o p t the solution p u t forward by the L o r d President
a n d the M i n i s t e r of S u p p l y . T h i s would be a n i m p o r t a n t step
t o w a r d s t h e u l t i m a t e socialisation of the i n d u s t r y .
The Minister
ivithout Portfolio
supported t h e views expressed
b)^ t h e Chancellor of t h e E x c h e q u e r . T h e adoption of the compro­
mise solution would be a b i t t e r d i s a p p o i n t m e n t to Government
s u p p o r t e r s w h o w o u l d i n t e r p r e t i t a s final abandonment of the
policy for t h e full socialisation of t h e i n d u s t r y .
The Lord Chancellor said t h a t he w a s in a g r e e m e n t with the
p r o p o s a l s in C P . (47) 212, w h i c h r e p r e s e n t e d a n i m p o r t a n t advance
t o w a r d s t h e G o v e r n m e n t s m a i n objective.
The Home Secretary
s u p p o r t e d t h e views expressed by the
Chancellor of t h e E x c h e q u e r .
The Secretary
of State for India s u p p o r t e d the proposals in
C P . (47) 212 on t h e g r o u n d t h a t they would give a n incentive to
h i g h e r p r o d u c t i o n by the removal of t h e i m m e d i a t e threat of
socialisation, w h i l e a t t h e s a m e t i m e securing complete control over
t h e i n d u s t r y t h r o u g h t h e t r a n s f e r of the technical experts from Steel
H o u s e to the M i n i s t r y of S u p p l y .
The Minister
of Education
s u p p o r t e d the views expressed by
t h e M i n i s t e r of H e a l t h . A decision a g a i n s t t h e introduction of
l e g i s l a t i o n in the 1947-48 Session would cause grave disappoint­
m e n t to G o v e r n m e n t s u p p o r t e r s a n d give t h e Government no greater
powers t h a n t h e y a l r e a d y possessed.
The Minister
(47) 212.
of
Labour
supported
the proposals in
CP.
The Minister of Fuel and Power said t h a t , since t h e scheme for
full socialisation b a d been d r a w n u p , conditions b a d changed com­
pletely. W h i l e , therefore, h e s a w no reason t o d e p a r t from the
o r i g i n a l scheme, he t h o u g h t t h e r e w e r e s t r o n g g r o u n d s for adopting
t h e course proposed by t h e Chancellor of the Exchequer, on the
u n d e r s t a n d i n g t h a t g e n e r a l emergency powers would be taken and
used to t h e e x t e n t necessary t o e n s u r e the m a x i m u m o u t p u t of steel.
T h e p r o p o s a l s in C P . (47) 212 would, in h i s view, have no
advantages.
The Secretary of State for the Colonies
t h e Chancellor of the E x c h e q u e r .
s u p p o r t e d the views of
The Minister of Transport
s a i d that, if emergency powers were
t o be t a k e n t o meet t h e g e n e r a l economic situation, i t would be
p r e f e r a b l e to defer special a c t i o n i n r e l a t i o n to the iron and steel
i n d u s t r y . H e a r g u e d t h a t t h e t r a n s f e r of control over an industry
t o t h e G o v e r n m e n t inevitably involved some t e m p o r a r y administra­
tive d e t e r i o r a t i o n a n d t h a t t h e r e w a s therefore the risk t h a t steel
o u t p u t m i g h t be adversely affected if the scheme of full socialisation
w e r e p u t i n t o force.
The Minister of Supply p o i n t e d out t h a t a decision to defer a n y
action in t h e i m m e d i a t e f u t u r e would leave the i n d u s t r y i n a s t a t e
of prolonged u n c e r t a i n t y , w h i c h would be p r e j u d i c i a l to efficiency.
I t w a s to meet t h i s difficulty t h a t t h e p r o p o s a l s m a d e i n C P . (47) 212
h a d been devised. U n d e r e x i s t i n g a r r a n g e m e n t s the i n d u s t r y looked
to Steel H o u s e for d i r e c t i o n , a n d t h e I r o n a n d Steel B o a r d could
exercise no effective influence because it lacked t h e t e c h n i c a l
experience a n d knowledge. U n t i l it w a s e v i d e n t t h a t real control
over the i n d u s t r y h a d been t r a n s f e r r e d p e r m a n e n t l y t o t h e G o v e r n ­
rnent, the staff a t Steel H o u s e could not be expected t o change t h e i r
loyalties.
The Foreign Secretary
said t h a t the workers in the iron a n d
steel i n d u s t r y could be t r u s t e d to p r o d u c e t h e m a x i m u m possible
o u t p u t w h a t e v e r decision t h e G o v e r n m e n t m i g h t reach. H e felt t h a t
t h e a r g u m e n t s w e r e evenly balanced. A n y r e d u c t i o n in o u t p u t or
delay in development would have deplorable consequences, a n d i t
w a s clear t h a t the a d m i n i s t r a t i v e m a c h i n e w a s seriously over­
burdened. On t h e o t h e r h a n d , t h e proposals in C P . (47) 212 w o u l d
be r e g a r d e d by G o v e r n m e n t s u p p o r t e r s as a m o u n t i n g to t h e a b a n d o n ­
ment of t h e full socialisation p l a n in deference t o t h e resistance of
t h e I r o n a n d Steel F e d e r a t i o n . I n h i s view, the n e x t s t e p should be
to consult the t r a d e u n i o n s concerned, who h a d so f a r h a d no o p p o r ­
t u n i t y of c o m m e n t i n g on the n e w proposals. T h e G o v e r n m e n t should
not r e t r e a t from t h e e a r l i e r decision, a b o u t w h i c h t h e u n i o n s h a d
been informed, w i t h o u t t a k i n g t h e u n i o n s i n t o t h e i r confidence.
The Prime Minister s a i d t h a t he could not a g r e e t h a t t h e post­
ponement of legislation t o give effect to the scheme a p p r o v e d by t h e
Cabinet would a m o u n t to a b e t r a y a l of t h e G o v e r n m e n t s p o l i t i c a l
principles. I n d e c i d i n g on t h e L e g i s l a t i v e P r o g r a m m e for e a c h
Session t h e G o v e r n m e n t h a d to t a k e full account of the p r e v a i l i n g
circumstances, a n d , s i n c e t h e C a b i n e t s decision h a d been t a k e n , t h e
d e t e r i o r a t i o n in the economic s i t u a t i o n h a d c r e a t e d problems of
g r e a t complexity, w h i c h would call for d r a s t i c a n d f a r - r e a c h i n g
measures a n d impose new d u t i e s on a n a d m i n i s t r a t i v e m a c h i n e t h a t
w a s a l r e a d y overburdened. Both t h e o r i g i n a l socialisation scheme
a p p r o v e d by the C a b i n e t a n d t h e c o m p r o m i s e suggested by the L o r d
P r e s i d e n t w o u l d impose a d d i t i o n a l responsibilities on t h e D e p a r t ­
m e n t s concerned, a n d both would leave t h e i n d u s t r y in a s t a t e of
as much u n c e r t a i n t y a s if legislation w e r e p o s t p o n e d to a l a t e r
Session. T h e i m m e d i a t e n e e d of increased p r o d u c t i o n could be
ensured by t h e use of e x i s t i n g or n e w emergency p o w e r s of a g e n e r a l
k i n d , a n d t h e r e would be justifiable criticism if t h e G o v e r n m e n t s
a t t e n t i o n a p p e a r e d t o be d i v e r t e d from t h e i r m a i n t a s k of d e a l i n g
w i t h t h e g e n e r a l s i t u a t i o n in o r d e r to b r i n g i n t o effect a scheme of
socialisation which could n o t be shown t o be a necessary p a r t of t h e
p l a n s for overcoming our economic difficulties.
I n view of t h e
v a r y i n g opinions expressed in t h e discussion, he a g r e e d w i t h
t h e F o r e i g n Secretary t h a t t h e n e x t step should be to consult t h e
t r a d e u n i o n s concerned. I t should be m a d e clear t o t h e m in t h e
consultations t h a t t h e C a b i n e t h a d not yet reached a n y decision.
The Cabinet—
I n v i t e d t h e L o r d P r e s i d e n t a n d t h e M i n i s t e r of S u p p l y t o
a s c e r t a i n t h e views of t h e t r a d e u n i o n s concerned.
Cabinet Office, S.W. 1,
31st July, 1947.