Export Credits.

Orders of the Day — Supply. – in the House of Commons am ar 22 Gorffennaf 1931.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Motion made, and Question proposed, That a sum, not exceeding £90, be granted to His Majesty, to complete the sum necessary to defray the. Charge which will come in course of payment during the year ending on the 31st day of March, 1932, for Guarantees in respect of Exports of Goods wholly or partly produced or manufactured in the United Kingdom, and for the Salaries and Expenses of the Export Credits Guarantee Department."—[NOTE: £10 has been voted on account.]

Photo of Mr Philip Lloyd-Greame Mr Philip Lloyd-Greame , Hendon

This Vote gives us an opportunity of criticising, both in principle and in detail, the export credit policy of the Government. I propose to confine myself entirely to one set of credits, namely, the credits which His Majesty's Government are giving to the Soviet Government. From every point of view, I think it will be agreed that that is the most important part of the Government's credit operations. [HON. MEMBERS: "Hear, hear!"] I am very glad that we are agreed so far. Probably it will not be denied either that, not only is it the most important part of their operations, but that it is the most contentious part of their operations. In volume alone it far overshadows all other credits which the Government are giving to all other countries put together, not excluding the British Empire. As far as I can see from the official figures, in the six months ended 30th May, 1931, the credits given to the Russian Government, amounted, roughly to £2,500,000, while the credits given to all other countries put together amounted to £1,419,000, and, as the President of the Board of Trade informed us recently in answer to a question, the Government now propose to give a very large further credit to Russia and that on extended terms as regards the length of the credit. In fact, it would appear that under the direction of the President of the Board of Trade, and the Secretary of the Overseas Trade Department, the Exports Credits Department is quickly becoming a branch of the Bank for Russian Trade.

I propose to examine this matter as dispassionately as I can, and to consider whether—taking the short view or taking the long view—these credits are in the interests of this country. I want to treat it entirely as a business proposition. I do not propose now to argue whether the granting of credits to a Government which has repudiated, and as we learned at Question Time to-day, still persists in repudiating, all its obligations, is a right or a wise move. The Committee know well the views which I have always held and expressed in that regard, and I may say that one of the best speeches which I ever heard on that subject was delivered by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) after The Hague Conference. In that speech the right hon. Gentleman said that you could never justify giving credits to any country which did not itself, create those conditions upon which credit must rest. Unfortunately, I was unable to be here earlier when the Foreign Secretary was answering questions, but I understand that an answer was given by the Foreign Secretary at Question Time as to the progress, or lack of progress in the negotiations on this matter.

Photo of Mr Philip Lloyd-Greame Mr Philip Lloyd-Greame , Hendon

I understand that the Foreign Secretary's answer as to the absence of progress in these negotiations, is a complete justification of the view which I and others have always expressed on this matter. I only add that for a country which lends all over the world, and which depends for its export trade on lending all over the world, it is doubly dangerous to grant credits to a country which repudiates, because it is an encouragement to other countries to repudiate, and it amounts to a declaration by the British Government that they are prepared to give, not commercial credit which is a matter of consideration for commercial firms, with their own particular advantages and their own particular reasons, but that they are prepared to give the cachet of British Government credit to a country which repudiates its obligations. I need say no more of that, except that it is an, encouragement to repudiation elsewhere and is a very dangerous policy for a country which is one of the creditor countries of the world and one whose export trade must depend on its continuing to lend, as far as it can, all over the world.

Nor do I want to consider, to-day, the moral issues involved although these are very important. I need only say that it is rather surprising that a Government and a party who insist on a Fair Wages Clause in all public contracts, should encourage, by every form of Government credit, semi-slave conditions in another land. It is, perhaps, enough to say that that is yet another example of what we have become very well accustomed to, namely, the failure of practice to correspond with precept. But I leave those issues aside, and I propose to deal with this purely as a commercial proposition considered in relation to the circumstances in which we find ourselves to-day. I wish, in the first place, to put one or two questions to the Secretary of the Overseas Trade Department, about the amount of the credits which are being given. I am not going to ask him to give details of any particular contract. That, he would not do, but he is entitled, and indeed bound, to give the Committee a general summary of the whole position.

I ask these specific questions. How do the credits which he is giving to Russia to-day compare with the credits granted to other countries, first, in the total volume or amount of the credit given, and secondly, in length of term? I understand that, starting on a six months basis, it has been gradually extended to 12 months and 18 months until, as the President of the Board of Trade said the other day, it is proposed to extend the new credits for as much as two and a-half years. [HON. MEMBERS: "Hear, hear!"] I am not at this moment criticising. I shall have something to say in criticism later, but I am asking now for specific information which the Committee ought to have in order to be able to conduct the Debate. The next question which I ask the hon. Gentleman is: How do the credits given to Russia compare, in extent, with other credits in this way? As I understand it, when you give credits, a proportion of the bill is guaranteed, either with or without recourse. In the case of the credits which you are giving to Russia, how do the proportions of the bills which are guaranteed—say, 60 per cent. or 70 per cent.—compare with the proportions guaranteed of the bills drawn on firms in other countries, and are you or are you not giving in this, and all other cases, a guarantee without recourse? The last question is: How does the rate of commission which you charge for the accommodation given to Russia, compare with the rate of commission which you charge to other countries? Those are general questions to which I think the Committee will wish to have an answer.

I now address myself to the general question of whether it is good business or not to give these credits to Russia. That must depend on two considerations and the first consideration is this. Leaving out the ultimate results of the trade which you are doing, is it or is it not necessary to give these credits in order to get the business which you are doing to-day. The second consideration is: What is the ultimate result of the credits which you are giving? Are they going to result in a large increase of mutual trade in the future, or are they going to result in something very different and much less advantageous?

Now let me take the first question. Is it necessary for you to give these credits? That is obviously the first question which anybody asks, because the sole justification of using Government credit is that, unless you use that credit, you cannot get the trade, and that the trade that you get by using that credit, and that you could not get without the use of that Government credit, is a trade which is of real and lasting value to you. In order to answer that question, obviously one must put another, and upon the answer to the other question the answer to the first depends. The test is as to whether Russia can do this business without credit. What is the balance of trade as between this country and Russia? There really the figures are most remarkable. I am going to give a certain number of detailed figures, for which I apologise to the Committee, but this question is so important, and it is so essential that it should be discussed in a businesslike and dispassionate way, that I want to found myself entirely on figures which cannot be controverted.

I take the Board of Trade figures for the year 1930. The imports from Russia to this country were £34,200,000, and the British exports to Russia were £6,800,000. The British re-exports to Russia—the President of the Board of Trade will correct me if I am wrong, but I think I am right—were £2,500,000. What does that mean? It means that if you take the trade, apart from re-exports, between this country and Russia, Russia had last year a balance of nearly £27,500,000 in her favour. Even if you bring in the re-exports, which I know the Soviet Government always wish to bring in, Russia, even so, has a balance in this country of just under £25,000,000, and that does not give the whole of the picture.

Photo of Mr Philip Lloyd-Greame Mr Philip Lloyd-Greame , Hendon

If the hon. Gentleman will allow me to develop my speech, I think he will find no figures that he can challenge—if he does challenge them, he can challenge the President of the Board of Trade, who is responsible for them—and I think he will find that I am giving, as regards facts, an absolutely fair and impartial statement; we can differ, if we must, about the deduction. But, as I say, that does not give the whole of the picture, because the exports going out from this country were not paid for in cash, or were not all paid for in cash. The exports going from this country are going out assisted by the Export Credits Department, and therefore the balance in Russia's favour was even larger than appears. But even that is not the end of the story, because certainly—I can give no figures, but I am sure the President of the Board of Trade will not dispute this—large numbers of exports from Russia which were not exported in the first instance directly to this country, found their way into Latvia, Germany, or Holland and then came, via those countries, into England, were sold in England and created a further credit in this country to the benefit of Russia.

Where you get a position in which Russia is selling for cash in this country more than four times as much as she is buying here on credit, what necessity can there be to find Government credit with which to do the business? So far from that being necessary, I am told on very good authority that the Russian Government have actually been buying up their own discounted bills in the City. They come and get the hon. Gentleman's signature on the back of their bills; they get his backing, the bills are discounted, and then they come and buy up their own bills because they have surplus cash here with which to do it. The same sort of thing applies in other fields. There was a sugar contract in which we gave credit for, I think, £1,000,000 to buy sugar in this country. The hon. Gentleman did not take the trouble, if I am rightly informed, to find out whether that sugar was going to be Empire or foreign sugar. I should have thought that, with the difficulties in which this Government were engaged in the West Indies, and when they were coming to this House to find money to assist the West Indies, he would have been at some pains to ensure that if he was giving credit it was going to be for West Indian or Empire sugar, but I am informed that no steps were taken to ensure that that £1,000,000 worth of sugar was Empire sugar, that, in fact, it was not Empire sugar. He gave that credit, but I do not cite it for that reason. I cite it for this reason, that I am told that at the same time that he was giving a credit of £1,000,000, for 12 months, I believe, which was to enable the Russians to buy sugar here on credit, and foreign sugar at that, the Russian Government were selling for cash in the border States adjoining Russia an almost equivalent amount of sugar produced in Russia or bought elsewhere.

When you get this kind of transaction, is it not fantastic to ask us to believe that Russia cannot buy here without having Government credit? Incidentally, I am told that actually the amount of business which has been done since the new Trade Agreement was made is less than the business that was done before the new Trade Agreement was made. I ask the right hon. Gentleman if these figures are correct. The new agreement was made in April, 1930. In the six months to the end of March, 1930—these are Soviet figures—the Soviet purchases were £9,000,000; in the six months after the agreement was signed the Soviet purchases here were £6,000,000, a fall of £3,000,000. It is also stated that the Soviet purchases in the next six months—that is, from October, 1930, to March, 1931—including re-exports, were only from £4,500,000 to £5,000,000. Therefore, the result of your priceless Trade Agreement and your extended credit is that you have in fact done less business than you did before.

So much for the position in this country, but let us see what the position is in other countries; and the important country to compare with this is obviously the United States of America because we are both doing the same kind of business with Russia, but on very different terms. In the United States, as is well known, there is not, and never has been, any recognition; in the United States there is no Government credit; in the United States, and indeed, I would add, in every other country in the world except this, there is a rigid control over Russian imports into the country. But with all those handicaps against them, how does the United States trade balance compare with our own? I think the House will be amazed. In 1928–29—I give the British figures and the United States figures for each year—Russia sold to Great Britain 192,500,000 roubles' worth of goods, and in that year Russia bought from Great Britain 45,000,000 roubles' worth of goods. What about the United States, with no recognition, with no credit, and with control of imports? Russia sold to the United States 38,400,000 roubles' worth of goods and bought 152,900,000 roubles' worth of goods.

Photo of Mr Robert Taylor Mr Robert Taylor , Lincoln

How much of those figures is represented by products not available here?

4.0 p.m.

Photo of Mr Philip Lloyd-Greame Mr Philip Lloyd-Greame , Hendon

I am coming to that question. It may be said that that was under the baleful influence of a Tory regime, that the Labour Government had not got into their full stride, and that gestures had not been made. Well, take the next year, 1929–30. Russia sold to Great Britain 237,600,000 roubles' worth and Russia bought from Great Britain 83,700,000 roubles' worth. Take the United States. In 1929–30 Russia sold there 44,500,000 roubles' worth, and Russia bought from the United States 280,000,000 roubles' worth of products. The hon. Gentleman has said, quite rightly, that it is very important not to take general global figures, but to see whether the goods were the kind which we could have sold there. I am bound to say that when I began to examine these figures, I thought I should find that a very large proportion of the purchases in the United States was for cotton, raw material and wheat, and that a comparatively small proportion was for manufactured articles which could be equally as well bought here, but I found that exactly the opposite was the case; in fact, the great bulk of purchases by Russia in the United States are purchases of exactly the same kind of articles that we could sell to them.

Let us take them in detail. A very careful analysis will be found in the "Statist" of 11th April. Take iron and steel and manufactures thereof for 1929–30. Russia imported from Great Britain 6,000,000 roubles' worth of iron and steel goods and from the United States 14,500,000 roubles' worth. Then there is a class called "Apparatus," which, I suppose, means equipment and so on, that is, fully manufactured products I gather. From Great Britain Russia imported 15,500,000 roubles' worth and from the United States 59,500,000 roubles' worth. Then we come to machinery and parts. The amount imported from Great Britain was 3,500,000 roubles' worth, and from the United States 41,000,000 roubles' worth. With regard to tractors—

Photo of Mr Robert Taylor Mr Robert Taylor , Lincoln

Will the right hon. Gentleman be a little more specific, and tell us what kind of machinery?

Photo of Mr Philip Lloyd-Greame Mr Philip Lloyd-Greame , Hendon

It is manufactured machinery, and I am perfectly certain that this country is in a position to supply practically all the machinery which can be supplied by the United States. [Interruption.] I do not in the least agree about tractors. I think that a great advance has been made in tractors in this country. We are exporting at the present time, and, surely, even if you take the view, which I do not take, that the United States can supply much better stuff than this country—I do not take as bad a view as that—but if you do take that view, what is the good of giving Government credit if you do not get some advantage out of it? The import of tractors by Russia from this country amounted to 600,000 roubles and from the United States 70,000,000 roubles. Take electrical machines—and the hon. Member will not say that in the electrical field we have not an export second to none, and can compete with anyone. The electrical machines from Great Britain taken by Russia amounted to 3,500,000 roubles, and from the United States 13,000,000 roubles. I am glad that the hon. Gentleman asked for a more detailed analysis, because it shows that the great bulk of this trade which is being done between the United States and Russia is not in those commodities which we cannot supply, but in those which we can supply.

The story does not end there. Of course, there is no Government credit in the United States, but I am informed that the length of credit which commercial firms in the States are giving is far shorter than the credit which His Majesty's Government are giving with so Utile advantage. In tractors, for example, it was stated in this series of articles that the United States are getting 50 per cent. cash and giving 10 months credit balance. How does that compare with the amount of cash and credit the right hon. Gentleman is giving to Russia? Perhaps he will tell us. We are told that on the electrical side there is a larger proportion of cash and shorter credit, and that generally the length of credit which is given by America seldom or never exceeds 7½ months. We have been told that the length of credits given here is already 12 months, and now the President of the Board of Trade proposes to extend it to 2½ years. There is a fair comparison as between the two countries. It may be said, as it has often been said from the benches opposite, that you must give this credit to Russia, because otherwise you will not get the business, that the whole of the trade in Russia is in the hands of the State, that the State can place its orders exactly where it likes or refrain from placing them, and that, therefore, we must take the terms which the Soviet Government choose to exact. The committee will observe that as the Government here become more pliable, the Soviet terms become more drastic. Really, is that a position which hon. Members in the Liberal party propose to take up? It is nothing but blackmail to be told that you have to take whatever terms are offered. It is not only blackmail; it is nonsense, to a great extent.

The remedy lies in our own hands. The Russian Government is at present selling in this country for cash four times as much as it buys here on credit. Why should you not say to the Russian Government, "You shall sell here for cash in proportion to what you buy here for cash?" Is not that a Free Trade principle? I always thought that the great canon of Free Trade was that an import should create an export. Here, where the whole of the trade is in the hands of the Soviet Government, and where, indeed so far as the Government are concerned, the trade here seems to be getting into their hands, too, they are the people who are giving the credit, and therefore they are the people who could make the terms. It is very strange that the man who goes for an overdraft should be the man who entirely dictates the terms. If that is the basis upon which the Secretary to the Overseas Trade Department is conducting the credit business of the Government, I do not think that it is likely to show a large profit, but I am sure hon. Members would be glad to transfer their overdrafts to his kindly consideration. Of course, the remedy lies in our own hands, and, if we choose to use it, we can see that these orders are placed here in increasing quantities, and are paid for in cash.

Therefore, the first of my considerations is that it is quite unnecessary for the Government to be giving these extended credits to get this trade. There remains a second consideration, and, I think, perhaps, almost more important. What is going to be the ultimate result of the trade which you are doing, and the credit which you are giving? The Government are always telling us that we must take the long-term view, that they have a long-term policy. The Secretary of State for Dominion Affairs was always great on a long-term policy when he wished to excuse the short-term failure. Let us take this on the long-term policy. There are many people who used to say, although I do not think there are so many now, that provided Russia could be re-established, you would develop the great purchasing power of people who had become prosperous, of people who would buy, and then the flow of mutual trade would start again. Bulging corn-bins would buy machinery, and so on. If Russia were a normal country, that might be true. But it is not the plan. It is not the way it is going to be allowed to work. The Russian people cannot buy anything; they are not even allowed to buy in their own country, much less to buy outside.

Russia is buying, not in order to create a mutual trade, but she is buying—she is a great deal better at this business than the hon. Gentleman, if I may respectfully say so—in order to make a success of her Five-Year Plan. That plan is not designed to create a mutual trade between this country and Russia. It is not designed to increase the purchasing power of the Russian people. The Russian people are kept starved, while exports are sent out of their country. Butter is being dumped here at a pretty cheap price, even allowing for the articles besides butter that are found in it. It is said to be 25s. a pound in Russia. The whole object of the plan—they make no bones about it—is to make Russia independent of foreign imports, and to launch an aggressive attack on the markets of the world by selling slave-made goods. Every other country except England is defending itself against that. Germany is giving credit to Russia, but when there was a threat to dump wheat in Germany, what did Germany do? Up went the duty by 100 per cent. I remember when I was in Berlin there was a proposal by the Russians to dump rye into Germany. The Germans were not going to have it, and, by a stroke of the pen, the duty was put up by 150 per cent. I suppose we are not driven to eating rye yet, but no doubt we shall be if the present Government remain in office, and the Russian rye will come here.

But the wheat, which nobody else will take, of course finds its way here. There is not a Member for an agricultural constituency who does not know what has already been the effect of Russian dumped wheat in the depression here. [Interruption.] The hon. Member does not sit for an agricultural constituency, which, no doubt, explains his callousness towards farmers. But there are other examples which may affect even his constituency in the long run. Take textiles. Already there is a beginning of dumped textiles, and I understand that representations by Manchester have been made to the President of the Board of Trade. I think that the President of the Board of Trade even went so far as to try to make an arrangement between the Russian Government and this country—I suppose a sort of gentleman's agreement—under which textiles exported from Russia made by Government credit machinery from here, should not be sold in this country or in the markets of the British Empire. I understand that an attempt of that kind was made. I understand further that it was not altogether successful, because, though there may not be a direct sale by the Soviet Government into this country or the British Empire—possibly he will be able to give very admirable figures to show that that is so—at the same time, the Russian Government are finding a convenient way round it, and are selling to agencies in foreign countries whose business is done with the countries of the British Empire.

We have sweets being dumped into this country. We have timber products in enormous quantities. We have soap which is being sold here in large quantities at from 20 to 30 per cent. below the price at which it can be manufactured. Then we have the famous butter beginning to come in with all its concomitants. We have coal. The President of the Board of Trade must be a little anxious about that. I am told that already in the markets of the Mediterranean you find yourself up against the threatened exportation of Russian coal. When the President of the Board of Trade finds that he cannot fulfil his pledges to the miners, and comes to this House and says that we cannot sell more than a fraction of the coal we produce, that our markets are going from us, and that we must take every step in our power to try and recover them, is it really good business for him to give subsidies to the export coal trade of Russia?

It may be said that these are isolated instances, but it is only the beginning. What is the objective? The right hon. Gentleman is far too intelligent to believe that at the end of the Five-Year Plan a great mutual trade is going to be created. He is far too intelligent not to know that the whole object of that plan is to launch an offensive on every market of the world, and to attempt to accomplish that which Communism has failed to do in this country and always will fail to do it by stupid propaganda, but which it can do in depressed times by an attack upon our standard of living and employment. Employment is directly taken away from our own people and from other countries, which, if we had been trading with them, would be doing a mutual trade with us. The little trade which we are doing at so high a price with Russia is nothing like as important as the trade we might be doing with the Scandinavian countries, where there is the desire and the will to trade. Nor will this attack leave untouched, nor is it leaving untouched, the great trade which we ought to be doing with the British Empire. A treaty has been made between Canada and Australia for the mutual intake into each other's markets at preferential rates. Why is not the President of the Board of Trade making a treaty of that kind, instead of making a treaty with Russia?

What does the right hon. Gentleman do? He comes down day after day to this House and gives us those interesting lectures—we all profit by them, and I think that we profit more than he does—and tells us that the productive capacity of the world is excessive, and that we must get national rationalisation and international arrangements in order to regulate and curtail the production of the world. Yet what is he doing? While he lectures us in that way, he and his Parliamentary Secretary go to Russia and deliberately give Government credit on a scale that no other Government is giving in order to stimulate new competition and to increase the productive capacity of that country; and to increase that productive capacity in order that it may, assisted by its conscript labour, with which we cannot possibly compete, launch an attack upon our labour conditions.

The right hon. Gentleman was pressed by his back benches to give credits in order to build ships in this country for Russia, and he refused. [An HON. MBMBER: "For any country!"] It was for any country, but naturally one would expect, judging from the quarter from which the appeal came, that it was for credits to build ships for Russia. The right hon. Gentleman said, "I will not give credits in order to build ships for Russia, or for any other country." He was perfectly right. But what was the reason behind it? The reason was that there was an excessive tonnage in the world to-day, and he was not going to use Government credit, even though it might bring some work to our own shipyards, in order to create a Russian fleet which would compete with the existing British fleets on the seas. If that was not the reason, I do not know what it was. That, at any rate, would have been a sound reason, and it was the reason generally attributed to the right hon. Gentleman, and it was the argument advanced to him by every opponent of the proposal to give credit. He refused to give credits for shipbuilding, but he is giving credits in cases which are creating competition in the iron and steel trade and every other trade. What is the conclusion to which one is inevitably driven by the policy of the Government? Taking the short view, the policy is unnecessary and foolish; taking the long view, the policy is mad.

Photo of Sir George Gillett Sir George Gillett , Finsbury

Before I answer the questions put by the right hon. Gentleman the Member for Hendon (Sir P. Cunliffe-Lister), there are several points with which I should like to deal in connection with the work of the Export Credits Department, which, although they may not seem to be an immediate answer to the questions which he has put, will to some extent, at any rate, help to explain some of the points that he has raised. I should like to protest against certain of the phrases used by the right hon. Gentleman in regard to the Department. He has talked about giving credits to Russia. The right hon. Gentleman surely recognises the actual mechanism of the work of the Department. What we are doing is to ensure for the business men of this country a certain proportion of the risks which they are taking in connection with their overseas trade in different parts of the world. The right hon. Gentleman at the close of his remarks said that we were giving credits to Russia in order to help her compete against our industry in different places. If that be the case, every transaction that we are doing in every part of the world is of exactly the same nature, because the whole of the work of the Department is confined to guaranteeing the transactions carried out by business men in every part of the world, except within Great Britain.

That is one of the extraordinary limitations of the work of this Department. Take the case of a business man in London who is going to export goods to Dublin and Belfast. He wishes in both cases to secure the advantage of insuring a certain proportion of those goods through the Export Credits Department. The answer is, "Certainly, we will do it with Dublin, as we will do it with Paris, but we cannot do your business with Belfast because Belfast is a part of Great Britain." Business with Scotland and Wales cannot be helped, but business with Germany, France, Russia and in other parts of the world, with one small exception, can be done through the Department. All I can say is that if we are assisting those who are competing with our industry, then the right hon. Gentleman was doing in all parts of the world exactly that which he complains we are doing in Russia. Under the Act of Parliament every proposal that comes forward has to go before an advisory committee. I hope hon. Members will note the word "advisory." The advice of the committee need not be taken by the Government, but as far as I am aware—the hon. Gentleman who occupied my position before me can say if it was his experience—there is no case in which the Government of the day has not followed out the advice given by the committee.

Who comprise this Advisory Committee? Some of my hon. Friends have complained at times that they are largely representative of the industry with which I have been closely connected, and therefore I am not in any way wishing to suggest that I am criticising the work of the Committee. It is most valuable, and the members, including the chairman and those who have served for a number of years, have spent an enormous amount of time in helping us to carry out this work. I should like to point out to the right hon. Gentleman that the committee, allowing for a few resignations that have taken place, consists of 10 members, eight of whom were members appointed by his own Government.

Photo of Mr Philip Lloyd-Greame Mr Philip Lloyd-Greame , Hendon

The hon. Gentleman is giving the Committee to understand that the question whether or not a credit is guaranteed rests with the Committee. That is true as regards particular transactions, but the policy of giving credits to Russia rests entirely with the Government.

Photo of Sir George Gillett Sir George Gillett , Finsbury

I am fully aware of that point, and I will deal with the special Russian question at the end. In the time of the right hon. Gentleman there was a limitation of trade with Russia, as there was in previous years on the trade with other countries; and while the limitations on the trade with other countries were removed by the last Government, this Government has removed the limitation in regard to Russia. I want to say by way of explanation, and in answer to possible questions that may be raised later by some of my hon. Friends who have criticised the composition of the Committee, that as three members have recently resigned, my right hon. Friend the President of the Board of Trade is making three new appointments, namely, Mr. Gilpin, director of Baker Perkins Limited, the large engineering firm; Mr. Arthur Pugh, C.B.E., general secretary of the Iron and Steel Trades Federation, and Mr. Francis C. Scott, managing director of the Provincial Insurance Company Limited. I want to remind the Committee that the real reason for the institution of this Department in the first place was not essentially to help to find work for the unemployed. I lay stress on this because, in connection with the premium charged by other countries for Russian business, and the premium charged by our Department, we have to recognise that in the case of Germany and Italy they may be looking upon the work of their departments as essentially a means for providing work for the unemployed.

Photo of Sir Granville Gibson Sir Granville Gibson , Pudsey and Otley

Is there any objection to the Department taking the same view?

Photo of Sir George Gillett Sir George Gillett , Finsbury

Certainly it is providing work for the unemployed, but there are two ways in which one can look at the question. The object of the Department originally was to assist trade with countries which had been damaged by the War, and the intention was that things should be run on a purely business footing. That has always been the line upon which the Advisory Committee have made their recommendations. They have looked upon their work as work that was to be conducted on that basis. If you go upon that principle and say that the premium should be made 1 per cent. or 2 per cent., as I think it was at one time in the case of Germany, though I do not think it is so low as that to-day, it is, of course, quite open for a Government which has a Department of this kind to say that it proposes to that extent to subsidise industry in the hope that it will give work for the unemployed. So far the Advisory Committee and the Government have not deliberately changed their policy. They are still following the principle which was started at the beginning. It has to be borne in mind that it does not necessarily follow that even if you do reduce your premium to the very low figure which has been used by Germany and by Italy that you necessarily are going to benefit any one exporter. If he can get a higher price the exporter does not necessarily reduce his price by the whole of the figure he is saving by the reduction of the premium.

There is one other matter to which I would like to refer before I pass on to a question the right hon. Gentleman has raised. We are making the work of the Department of still greater benefit to industry. I need hardly remind hon. Members that the usual method of financing this work is by a bill transaction. Practically all the business is done through bills. The Department guarantees a certain percentage, varying usually from 60 to 75 per cent. of the bill—guarantees that percentage on the day when the bill falls due, provided the bill has not by then been met. For some time representations have been made to the Department that it would be much easier for the business world if the system of the "open account" could be instituted. That means that instead of having the financial transactions carried out by means of bills the exporter would arrange with the Department beforehand a list of names in the country with which he wants to do business, and arrange the limit of the financial transactions with each of the names, and then he would inform the Department at stated intervals of the amount of business he is carrying out; and when it has been proved that there has been a failure in regard to any of these transactions the guaranteed percentage would be met by the Department. We hope very shortly—in the next few weeks—to announce the full particulars in regard to this matter.

Another point I want to mention concerns, partly, the wider aspect of the problem the right hon. Gentleman has put to us as to finance provided in the United States for Russian trade as compared with the provision made in this country. In speaking on this subject on previous occasions I have referred to one of the facts that has impressed itself upon me since I have occupied this position, the difficulty that industry at times has in securing the credit necessary for transactions varying from about two to five or six or seven years. I was interested in reading the report of the Macmillan Committee to see a reference to this question: With the immense growth in the mechanisation of industry throughout the world the demand for longer credits for financing the production and sale of machinery of all kinds appears to be growing. The purchaser abroad requires very often two or three years before he can complete his payments and therefore contracts are likely to go to those sellers who can provide sufficiently long credits. Since we must look in the future particularly to exports in which skill and experience largely enter, we believe that facilities for financing exports of machinery of all kinds are of particular importance. At present, however, we do not believe that the facilities available here in the ease of foreign trade are so complete as those provided in some other countries, and we think that it would, in fact, often be necessary for British traders to obtain, either directly or indirectly, such facilities from foreign institutions. I draw the attention of the right hon. Gentleman to that paragraph, because to a certain extent it explains the different methods employed in this country and in the United States, and I suggest that, quite apart from the question of whether trade with Russia is desirable or not, we should find that already there is a problem in existence in financing these longer term credits calling for consideration from those interested in the trade of this country.

I trust those remarks may have explained the methods on which we are working, and I now come to the special point the right hon. Gentleman has raised. I would like, in the first place, to say that it is exceedingly difficult for the Committee, as the right hon. Gentleman himself will know, from having been for many years connected both with the Board of Trade and the Overseas Trade Department, to give too full particulars as to the financial transactions with different countries and different industries. Then, in the case of Russia, things are not as central as some hon. Members may think, and if we begin to go into too full particulars of either what the premium is in this country as compared with the premium in another country or the length of the credit given in this country as compared with the term in another country, the work of the Advisory Committee would become almost impossible. But I think that in the main I can give answers to the right hon. Gentleman, at any rate to some of his first questions, which do not go too closely into the points which the Committee have to consider.

There is no doubt that the Russian figures of the Department are as large as the figures for the whole of the rest of the countries concerned. I am perfectly willing to concede that point. At different times the comparison may have varied somewhat one way or the other. I have before me a period from about the end of September, 1929, up to 30th June, and the Russian business was rather larger than the business with other countries. But when we come to the question of comparing the term of the advances to Russia with those made to other countries, I do not feel it is possible to give really any more information than the right hon. Gentleman himself has communicated to the House. It is generally recognised that in the earlier days the Committee very wisely limited themselves to a very short period in regard to the length of credits for Russian trade. This period has been steadily lengthened, until we came the other day to the statement made by the President of the Board of Trade that in the case of the heavy industries requests for insurance would be considered up to a period of 30 months from the date of the order. How far this actually compares with other countries I feel it is quite impossible to say.

Photo of Mr Philip Lloyd-Greame Mr Philip Lloyd-Greame , Hendon

Does the hon. Gentleman mean that he does not wish to say or that he does not know?

Photo of Sir George Gillett Sir George Gillett , Finsbury

If the right hon. Gentleman meant to ask whether I could tell him exactly how that percentage compared, say, with the percentage of business done with Germany, I personally could not tell him at once; but if he was speaking of other countries generally, I can only say that I know that the Advisory Committee are considering long-term credits for other countries, are anxious to consider them and are prepared to consider them. I do not quite know what the right hon. Gentleman's point is. It seems to me the point he wants to know is what is really given in the case of Russia, and that I think I have said—

Photo of Mr Philip Lloyd-Greame Mr Philip Lloyd-Greame , Hendon

I hesitate to interrupt again, but what I want to know, and what the Committee want to know, is this. He has told us how the volume of business compares as regards Russia and other countries. We want to know how the conditions given to Russia—the length of credit, the proportion of the bill guaranteed, recourse— compare with other countries.

Photo of Sir George Gillett Sir George Gillett , Finsbury

In regard to the length of credit, I am afraid I could not give the right hon. Gentleman an answer without having notice of the question. I know that credits have been given up to four or five years, and that other countries are getting rather more of that kind of business than Russia. On the third point, with regard to the premium, there, again, it is exceedingly difficult to announce publicly what our premium is going to be or what it is at the present time in regard to Russia as compared with other countries. The right hon. Gentleman and other hon. Members opposite have a fair idea of what is going on. I do not feel it would be advisable to say whether that premium is very much higher than is being granted for other countries, and I trust the right hon. Gentleman will not press me on that point. The percentage that is being given on Russian business, which is somewhat similar to that being given to other countries, is certainly guaranteed without recourse. As to the premium, it is a question that I feel it is impossible to answer. A reference was made by the right hon. Gentleman to the question of sugar. I do not profess to be an expert in sugar, and from the way the right hon. Gentleman spoke I should hardly think he is either, but I understand that there are two different kinds of sugar and that the sugar he was comparing with the sugar the Department are connected with was of so different a character that really the comparison is absurd. It may pay the importer who is doing transactions of this kind better to sell the sugar he has brought from abroad rather than to sell the sugar that may come from the Dominions with the preference.

HON. MEMBERS:

That is no answer.

Lieut. - Colonel Sir FREDERICK HALL:

What about the sugar that was sold for cash and bought back on credit?

Photo of Sir George Gillett Sir George Gillett , Finsbury

I do not think the hon. and gallant Member takes into account the difference of the preference given to the Dominion sugar. If the hon. and gallant Member will look into that point ho will find that it does make a difference to the exporter whether he is going to sell sugar which he has got from abroad or the Dominion sugar that has come into this country under preference.

Sir F. HALL:

The point is this, that £1,000,000 worth of sugar was sold for cash in other countries and the sugar was bought back here on credit, and does the hon. Gentleman think that is a reasonable way of doing business?

Photo of Sir George Gillett Sir George Gillett , Finsbury

The hon. and gallant Member is suggesting that the sugar never went to Russia.

Sir F. HALL:

I did not say that at all.

Photo of Sir George Gillett Sir George Gillett , Finsbury

That was investigated, and there is no reason to believe that that was the fact.

Sir F. HALL:

I did not suggest that at all. I only want to know whether the hon. Gentleman thought that was the way trade should be done, whether he thought it was advantageous to the trade of this country. Does he think it fair and equitable?

Photo of Sir George Gillett Sir George Gillett , Finsbury

Well, I now pass on —[Laughter.] I have tried to explain it, but there are technicalities about the sale of sugar. I suggest that the exporter who has bought sugar from one of our Dominions, the sugar coming in under a preference, and also sugar from abroad, may find that it pays him better to sell the sugar he has bought from other countries rather than to sell the Dominions sugar.

Photo of Mr Philip Lloyd-Greame Mr Philip Lloyd-Greame , Hendon

Of course the gentleman who sold the sugar sold that sugar which it paid him best to sell. My challenge is not to him but to the right hon. Gentleman. I say that when he was giving £1,000,000 worth of credit why did he not insure that it was British Empire sugar that was being sold?

Photo of Sir George Gillett Sir George Gillett , Finsbury

Because we have to consider the proposition as it is put before us. I do not know whether it would have been worth while for the sugar exporter to have done the business if he had been dealing with Dominions sugar. The right hon. Gentleman talks to me as if I were dealing in sugar. I am not dealing in sugar. The Committee have a proposition put before them. That proposition dealt with sugar coming from another part of the world. Bringing that sugar into this country gave a certain work to British industry to justify it coming in under the terms of the Export Credit Department. That is the point we have to consider, and we think we were justified in giving the insurance.

Photo of Sir Philip Colfox Sir Philip Colfox , Dorset Western

As there was the actual amount of cash available, why was it necessary to grant any credit at all to exports from this country?

Photo of Sir George Gillett Sir George Gillett , Finsbury

We gave credit for about nine months, and that was the object of doing it. We are interested in getting work for the people of this country, and that was done by that transaction. That is the answer to the question which has been raised by the right hon. Gentleman the Member for Hendon. I now pass to the problem of the balance between this country and Russia. I am well aware that the figures given by the right hon. Gentleman are largely in favour of Russia, and the same applies to other countries, such as Canada, United States, Belgium and other parts of the world. We do business with those countries, although, in the ordinary course of transactions, the balance is not in our favour. The question has arisen: Is it possible to insist, seeing that these facilities are available in this country, upon reducing the insurance on our industry because the money is available? Hon. Members opposite are constantly looking at this question as something different from an insurance policy. All that we are doing is to insure the transaction if the industry concerned can make arrangements with the Russian Government who are the importers in that part of the world.

It is said that in the United States they have no department similar to that of the Export Credits Guarantee Department. This may be because their financial resources and organisation in the past have evidently been more efficient than in this country. The right hon. Gentleman said that what is being bought in America could just as easily be bought in this country, but he will find that many of these goods are raw materials of a kind which we could not supply.

In regard to agricultural implements, which the Russians have been buying in America, it will be found that efficient as our agricultural implement makers are, their machinery is rather more suitable for the smaller scale agriculture that exists in this country. In the United States you come up against an industry used to the great plains of America, and to machinery adapted to large-sized agricultural areas. In the last few months, and particularly since last August, there has been an enormous decrease in the orders given for agricultural equipment compared with the corresponding six months a year ago. This is partly due to the fact that the Russians were expecting that their two new factories, which have been opened in the last few months in Russia, would be supplying the tractors and other implements which they have been buying from the United States. With regard to the difference between the goods which are being bought in the united States and those which are being bought in this country, nothing that the right hon. Gentleman has said convinces me that he is justified in his suggestion that the goods could have been bought in this country. Suppose that that were so, even then we do not know how the prices compare as between this country and the United States. I do not see how it is possible that this Government can set itself to lay down the lines upon which Russia is to buy goods either here or in the United States.

I would like to refer for a moment to the figures which the right hon. Gentleman has given in regard to imports and exports between Russia and this country. If we take the total exports and re-exports together, we find that in 1924 they amounted to the figure of £11,000,000. Then they rose to £19,000,000. After that they fell to £14,000,000 and later on they fell to £11,000,000. At that time the diplomatic-break came under the last Government, and in 1928 the figure which had been £11,000,000 fell to just a trifle under £5,000,000, and it was just about the time that the Government with which the right hon. Gentleman was connected was helping to reduce the exports from this country to Russia that the Russians were making a new move in the United States. Almost within a few weeks of the time of the Arcos raid the representative of Russia went on a mission to the United States of America to see what they could get in the United States. If there is to be a comparison with the policy of the right hon. Gentleman in so far as it affects industry in this country, by which I mean that provision of work beneficial not only to those employed in factories but to those who own factories, all I can say is that a study of the figures and a comparison between this Government and the last Government justifies the action which we have taken. This question of trade with Russia which the right hon. Gentleman has raised certainly has been most carefully considered by the Members of the present Government. Does the right hon. Gentleman suppose that many of the things which are done in Russia are any more acceptable to those on this side of the House than those who sit opposite?

Sir F. HALL:

You would think so.

Photo of Sir George Gillett Sir George Gillett , Finsbury

Where is our trade going to be if we go all over the world saying that we disagree with this Government or that Government? Why should we say to some other country, the Government of which has not adopted Labour doctrines, that "we shall have no dealings with you" simply for that reason? Does it mean that whenever a Government which we may call Constitu- tional is replaced by a Dictatorship, that those of us who disagree with Dictatorship must terminate business with that country?

Sir F. HALL:

They do not repudiate their debts.

5.0 p.m.

Photo of Sir George Gillett Sir George Gillett , Finsbury

If we went all over the world making those statements, we should soon find that our trade would be reduced. Was there any suggestion made during the time of the old Russian Government, the Government of the Czars, when many of those who held views similar to my own were intensely dissatisfied, that we should terminate our business relations and not trade with Russia? Far from it. I remember that in one of the crises of that country it was the provision of money from this country that helped Russia to tide over their revolutionary movement at that time. The right hon. Gentleman is asking us to institute a new procedure in regard to our relations with Russia, a relationship that can be in no way beneficial to us. I recognise fully the extreme importance of the fulfilment of debt obligations and I recognise that at the present time negotiations are being carried on between the two Governments. I recognise the importance of a matter of that kind. I recognise also the extreme importance of our industry and commerce not being held up month after month and year after year while these discussions are going on. What is happening in the great Russian field to-day? Germany and the United States are sending in their machinery, in order that the German and American experts can develop new industry in Russia. It means, for instance, that when American machinery has got into Russia and they want new orders, the orders go back once again to America. We see exactly the same problem in China to-day. Vast fields are awaiting development. Are we to be held back simply because of these questions of international debt, which are affecting most of the nations of the world?

The policy of the Government, which has been carried out with very great care and after due consideration and consultation with the Advisory Committee, has been to extend the period of credit a few months at a time, bringing in one industry and then another, thereby providing work for our unemployed and helping industry. That is really a wise policy. This country has made great sacrifices, the industrial world has made great sacrifices for finance, and in the present industrial crisis it is necessary for finance to be used in order to rescue industry, which is in such a parlous condition in this country. That is one method that is before the Government. The Government would have made a great and outstanding mistake if for one moment they had allowed the differences about the repayment of debt to prevent them from stepping in and assisting industry on these lines.

Photo of Mr Ernest Simon Mr Ernest Simon , Manchester, Withington

The right hon. Member for Hendon (Sir P. Cunliffe-Lister) has called attention to what he describes as the most important and, as we have seen, the most contentious part of the work of the Export Credits Committee, the question of Russia. The first point that the House must be clear about is, do we want to sell to Russia or do we not? After listening to the right hon. Gentleman for half an hour, I do not know in the least whether he wants to increase our exports to Russia or whether he wants to stop them. It is an astounding thing in this House how the export trade of the country is neglected in our discussions. We have had endless discussions about increasing the home trade and developing it, but one rarely hears any mention of the export trade. Nothing has surprised me more than the speech of the right hon. Gentleman. Surely, everyone recognises that in the present desperate position of our industries the vital thing is the recovery of our export trade. Those who have read the Macmillan Report, with the addenda and reservations, will note that every member of the committee agrees about the absolute necessity of putting forth every effort possible to encourage the recovery and the extension of our export trade.

Obviously, we have in Russia to-day, in the Russian Government, the biggest single buyer of machinery in the world. In our relations with that big buyer we have had a very bad start compared with other countries, owing largely to the action of the Conservative Government. We have to-day about 250 technical men in Russia compared with 5,000 Americans and about 7,000 Germans. One cannot get business unless we send people to a country. That bad start is due to the action of the Conservative party when they were in office. No one will deny that. If we want to do trade with Russia, it becomes a question of what we can do to make up for the bad start that we have had during the last four or five years. The Export Credits Department is one means of helping in that direction, and I am glad that the Government have decided to extend the credits for heavy machinery to two years. The right hon. Member for Hendon calls that blackmail and nonsense. He seemed to think that they were doing that for fun. He ignored the elementary fact that the only reason that the Government have given those terms is that competing countries, Germany and Italy, with whom we are in the keenest competition, give in the one case 30 per cent. and in the other case 50 per cent. lower terms than we do, with the result that our unfortunate industrialists, struggling to maintain a standard of wages and living higher than that of those two countries, have been handicapped. Now that two years' credit is to be given, the right hon. Gentleman says that it is blackmail and nonsense. I do not know what he means.

If we want to do business with other countries, it is obvious that if the Government wish to encourage our trade, they are forced to give as good terms as other Governments give. The Government must either give as good terms as others, or say that they will not give so much credit. That is a totally different question. No doubt the right hon. Gentleman will do that when he gets the opportunity. In the meantime, if we want to encourage our export trade with the biggest buyer in the world, we are forced to give the same terms that other countries are giving. We must consider this matter as a business proposition.

I wondered as I listened to the speech of the right hon. Gentleman, what would be the attitude of any board of directors to-morrow on reading his speech and hoping to find in it some hint how to increase their trade. I fear that when they got to the end of the speech all that they would be able to do would be to throw it into the wastepaper basket, because there was not one suggestion or hint how to increase our trade with the greatest buyer of machinery in the world to-day. I realise that policy is a matter not for the Committee, but for the Government. The last thing that I want to do is to criticise the work of the Department or of the Committee. It is a purely voluntary Committee and has done valuable and devoted work. I should like to express great gratification, as an industrialist, at the fact that there are new nominations for the Committee. Hitherto, there has been one industrialist and nine financiers on the Committee. No doubt there should be a preponderance of financiers, but they do not necessarily know the needs of the exporter. I am glad that one gentleman who has experience of the export trade, and a representative of the trade unionists, who is also interested in employment, have been added to the Committee. I am sure that we are all grateful for those nominations.

What were the recommendations of the Niemeyer Committee which have been given as instructions to the Committee? They were that the Committee is to run this matter as a business proposition; that solvency is to be put first and that service to the export trade is to come second and to be conditional purely on solvency. Their final recommendation was that the Committee is to act in such a way as to facilitate the final transference of the business from Government control. In other words, this is an experiment in commercial insurance, and a very interesting experiment. The question is whether in the special circumstances of to-day that is all that that Committee ought to do, especially having regard to the peculiar conditions in Russia. The Secretary for Overseas Trade said that other countries, I think he meant Germany and Italy, have encouraged export credits as a means of providing work for their people. He said that that has not been our policy hitherto, and I regretted to hear him add that the Government have not changed that policy. Those who sit on these benches and I am sure those who sit on the benches opposite, regret to hear that announcement. Surely, here is an opportunity of doing something that will help our export trade by increasing it and doing something to provide employment. I hope that that was not a definite announcement that the Government have not changed their policy, and I hope that they will very seriously consider it.

What is the offer that is now made to business men in this country who want to export to Russia? I do not want to refer to the period of the credit, because that is now about the same as other countries offer, but I would point out that the charge that is made for ensuring that the money will be paid, the insurance charge, is approximately 10 per cent. per annum. That, on a two years credit, means a charge of 20 per cent. which has to be added to the tender price of the article exported. That is a tremendous charge. I understand that under an agreement made some time ago between Russia and the German Government their charge is about 2 per cent. per annum, or 4 per cent. for two years, against our 20 per cent. The Italian Government make an even lower charge—[Interruption.] That agreement may no longer hold, but it existed up to a few days ago. Certainly, the Italian arrangement is in existence. It may be said that the cost of borrowing in Germany is lower, and that it is possible to discount bills more cheaply in this country than in Germany, but against that we have the fact that wages are so much higher here. That means that our industrialists, given equal efficiency, are handicapped in competition with Germany and Italy. As a matter of fact our industrialists have to be much more efficient in order to compete on equal terms with those countries.

Under these conditions I have been told by two or three firms who have done a good deal of business with Russia that, if they want to use the facilities of the Export Credits Department, they have to add 15 per cent. to their tender prices. A certain amount of business has been done on those terms, but large firms tell me that such a handicap simply puts them out of the market, because they cannot compete on those terms. Our industrialists supplied the first motor omnibuses, about 200 of them, for Moscow. Then came this question of our large charge. On the other hand, the Italian Government make a lower charge, and I am informed that, on account of that difference, orders have gone to Italy, and that Italy is to supply the motor omnibuses for Moscow. I do not think that is getting all the assistance that we might expect from the Government. Is it good business to do this trade? Is it good business to charge 10 per cent., or would it not be desirable, if possible, to charge a lower amount?

We have been discussing housing and other things and we have continually made calculations. The right hon. Member for Penryn and Falmouth (Sir J. Tudor Walters) has shown that the more State assistance we give in the building of houses, thereby providing employment, the more profit we make owing to the saving of unemployment insurance. Only the other day the Government showed how keen they were to deal with this matter by passing a Rural Housing Bill, in which they are guaranteeing £10,000,000 out of a total cost of £14,000,000. That £10,000,000 will fall on the national and local exchequers. What is the position if a private firms gets an order for £1,000 worth of machinery to be exported to Russia. Wages represent 75 per cent., or £750. If that order is not secured, it means, under present conditions, more unemployment, and the unemployment insurance pay will certainly amount to £250. Therefore, an order for £l,000 from Russia saves the country £250 or more in unemployment insurance pay. I do not think that anyone can deny that. Under these conditions, surely it is worth the Government's while to take some small risk, to pay some small contribution, in order to encourage firms in this work.

It is not as though one could go to Russia and get orders at our own prices. Russia has a first-class buying organisation in every country, through which she can buy. She gets international prices, and is not only the largest, but probably also the keenest, buyers of machinery in the world. A few years ago prices may have been good, but to-day that is not the case for any competitive machinery, and, after all, everything that is supplied from this country is competitive. Suppose that we refused to supply anything in the way of machinery to Russia. That would not prevent Russia from getting all the machinery she wants from Germany, Italy, or the United States. We have no speciality to-day of any importance which could not be got equally well from some other country. The question is not whether Russia is to get these things, but simply whether we are to do any share, or a larger share, in the trade, or whether other people are to do it all.

Photo of Mr Arthur Samuel Mr Arthur Samuel , Farnham

May I ask the hon. Gentleman what there is that prevents him from selling a million pounds' worth of machinery to Russia if he likes? If he has not sufficient capital to enable him to give the required credit, that is his fault. There is nothing to prevent him from selling as much as he likes to Russia. He is asking someone to help him with credit facilities and that someone is the taxpayer.

Photo of Mr Ernest Simon Mr Ernest Simon , Manchester, Withington

The hon. Member will, perhaps, make his speech later on, but, as I have already pointed out, Russia is not only a big but a keen buyer, and, owing to the action of his party, other countries have very strong representation there, and have built up very large businesses. Industrialists in this country are trying, under great difficulties, to get back to an equality there, and to overcome the handicap on British industry which was imposed by the hon. Gentleman's party. As I have already said, every £1,000 order that we get from Russia means a saving of £250 in unemployment insurance, and I maintain that that is a reason why the Government should take some active interest in this matter, and, if necessary, should take some risk in order to help. Their committee has assessed the value of the risk in this Russian trade at 10 per cent. per annum. That means, as I have said, 20 per cent. on a two years' contract. Why is it fixed at 10 per cent.? Nobody knows; the committee can tell no better than anyone else. Everyone knows that, so far, the Russian Government has paid all the debts incurred by itself. It has been a very good payer, and the only question is whether at a certain point the whole thing may collapse. The present Government have not allowed that to happen as regards debts incurred by themselves. They know that if they did they would never be able to order any more machinery outside, and that is the best possible safeguard.

The fact is that we are not facing an ordinary commercial risk, but a political risk regarding what a government is going to do. Personally, I do not think it is very serious, and I suggest that it is a risk which the Government might fairly take. The percentage is merely a guess. If the Government want to encourage trade with Russia, they might fairly take the whole political risk of failure to pay. I hope that they will consider that question seriously. It is really quite unreasonable for them to charge four times as much as Germany, and five times as much as Italy, for this risk. It is imposing a burden on British exporters which they are unable to bear, and only exceptionally efficient people can get orders under those conditions, or those who are prepared to take the whole risk themselves. The Government ought to come down to the price charged by other Governments, as they have already come up to the period granted by others. We have heard many speeches about their desire to do everything in their power to help employment. Here is the best chance that the Lord Privy Seal has in the whole range of affairs.

Photo of Mr Thomas Johnston Mr Thomas Johnston , Stirlingshire and Clackmannanshire Western

The hon. Member must be aware, from his knowledge of these matters, that more orders are being booked now for the Russian market than ever there have been before. We are booking at the rate of £100,000 a day.

Photo of Mr Ernest Simon Mr Ernest Simon , Manchester, Withington

I am very glad to hear that; but is the right hon. Gentleman content with £100,000 a day?

Photo of Mr Thomas Johnston Mr Thomas Johnston , Stirlingshire and Clackmannanshire Western

No, certainly not; but the hon. Gentleman may be further aware that we have arrangements made for £6,000,000 worth of these orders this year.

Photo of Mr Ernest Simon Mr Ernest Simon , Manchester, Withington

I am very glad to hear it, but the Germans the other day made an arrangement for £15,000,000 worth of orders.

Photo of Mr Ernest Simon Mr Ernest Simon , Manchester, Withington

No; I do not know whether they will be or not; but I hope the right hon. Gentleman will not be content with £100,000 a day, or £6,000,000 a year, or with anything so long as he is putting a burden of 15 per cent. on the British exporter, in view of what exporters in other countries are carrying. I know that he is just as keen as I am on doing everything he can to prevent unemployment, but there is a certain lack of driving force on the Front Government Bench. They want to do these things; why have they not the courage to take the risk? What is the reason against it? If the Soviet Government does not default—and I am sure that most of them will agree that that is not likely to happen—they will lose nothing by reducing the cost of export credits, and then, instead of £6,000,000, we may see orders of the value of £10,000,000, £20,000,000 or £30,000,000. I hope that the Government will seriously consider this Export Credits Scheme, and will change their policy, regarding it not only as one means but as the most effective means in their power, of providing work in this country, and that they will consider taking the whole of the risk and really helping British industrialists to do their job and get on with their export trade.

Photo of Sir John Allen Sir John Allen , Liverpool, West Derby

The remarks which I shall address to the Committee on this subject will be on purely economic lines. The hon. Member for Withington (Mr. Simon) has been referring, naturally, to the development of industrial orders, and I take it that he is referring to the heavy engineering industry, which he represents. In studying the question of credits, however, we have to look at three or four rather important questions. The first question that we have to consider is as to the kind of industry to which these credits are given. It is, of course, mainly the heavy machinery industry. I do not know that the Russian Government wants to purchase heavy machinery only, but the point that we have to consider is as to what orders will be given to this country; and, in considering the question of heavy machinery, we have to bear in mind the fact that this machinery is going out to Russia to industrialise Russia, and, consequently, ultimately to react upon us. The argument has been pressed a good deal that we are really creating a Frankenstein to destroy our-selves in the future, but we have to remember that we have been doing that in the heavy engineering industry for the last 50 years, and we are now beginning to reap what was sown then, up to a point. I can understand that that is a perfectly sound argument at the present moment, but we are in the midst of a very severe crisis and, while it may be said that the long vision is the wider vision, it is very difficult to have a longer vision when people are starving. Therefore, I can understand the argument that we want to develop these exports as far as we can, whatever their ultimate result may be, and if we are prepared to shut our eyes at the present moment to the fact that we are doing something which is going to react upon us later on.

Then the question arises, who is the buyer that we are supporting in this way? I noticed with interest the way in which the Minister skimmed round the points, and talked about insuring the liabilities. There is, however, very little in that point, because you are guaranteeing the buyer, and in that way are giving credit for the benefit of the buyer. There may be fine distinctions, and some of us know that there are, whether in insurance or in banking. We can understand those fine points, but, when you come to the general question, you must wipe away those fine points, because the ultimate result is just the same. We are helping to find a buyer for our machinery, and the question is, who is the buyer? I think that the hon. Member for Withington rather overlooked the fact, and it has been overlooked by others, that the difference between dealing with Russia and dealing with any other country is that, in dealing with Russia, we have to deal with one buyer and at the same time with one seller—not with individuals, but with a Government.

I am not going to raise any sentimental questions, however important they may be, but the fact is that we are dealing with a Government which has conscripted everything and everybody. The fact is that in Russia the Government has collared the land, has collared the labour, has collared every means and source of production and of transport. It has marketing, financing, and all other arrangements of its own, and you are dealing, in effect, with one big firm. Therefore, in considering to whom we are giving this credit, we have to remember that we are giving it to this one firm, and, surely, we have to see that this firm is buying from us as well as selling to us. My right hon. Friend the Member for Hendon (Sir P. Cunliffe-Lister) has pointed out that as an ordinary business transaction the thing is absurd. It is preposterous to talk about one side of the transactions with one firm, and to say that you will give that firm credit for a quarter of the business that it is doing, while you are doing four or five times as much the other way round, so that, while there is an enormous cash balance on the one side, credit is given for the small balance on the other side. That is not business; it is not common sense; and my right hon. Friend brought out that fact very fairly. From the economic point of view, in dealing with a big firm in this way, it is childish folly to give that firm credit for its small purchases and to pay cash for all that you buy from it. From an ordinary broad business point of view it is nothing but folly.

The question now arises as to why these credits are required at all. That is where the shoe pinches to a certain extent. The only answer I can see to this question is that, in the first place, other people give them. If it is merely because other people did it, it is a profoundly foolish commercial argument unless the other people are in the same commercial position as yourself and are dealing with the same kind of transactions, which they are not. The real truth is that Russia will not buy from us unless we give them these credits, and I do not think the other side will deny it. Italy has said, "You will buy from us what we buy from you," and Italy has got a mutual, reciprocal agreement. That is common sense. [An HON. MEMBER: "It is very simple."] It is simple, and the simpler we are in these matters the better. We are sometimes too subtle.

Photo of Mr George Strauss Mr George Strauss , Lambeth North

I have studied the agreement with Italy very carefully, and I can see nothing about mutual trade-on the lines suggested by the hon. Gentleman. Has he any further evidence?

Photo of Mr Edward Wise Mr Edward Wise , Leicester East

Actually, Russia sells to Italy five times the amount that she buys.

Photo of Sir John Allen Sir John Allen , Liverpool, West Derby

I know the hon. Member is an authority on these matters, but I am speaking as I am advised. In any case, it is a common-sense arrangement and a very simple one. But I do not wish to deal with the whole question of our trade with Russia, because it is a very broad question. I only want to deal with it in relation to the question of credits. I cannot see, as at present advised, that we have explored every way out. I cannot see why credits are necessary. The firm we are trading with has cash down from us, and they are using it to finance the other people. We are financing the other people. I am not arguing for a moment that we should say we will have unemployment here and give employment elsewhere. That would be folly. But these credits are not really called for if the Government are prepared to take a firm line and definitely say, "You have the money there. If you are going to buy more from us we can arrange for it," but at present it is absurd that we should be asked to give credit while we are paying infinitely more than any other nation.

I did not intend originally to speak on this subject, because I am on a committee of the Chamber of Commerce which is studying the question, and I do not want to pre-judge the issue, but, as this matter has been raised here, I am anxious to put the case as clearly and simply as I can before the Committee, because I am satisfied that the credit is not necessary for any reason whatever, except possibly the reason that you will lose all the business if you do not give these credits. [Interruption.] It sounds so simple that I do not wonder that hon. Members laugh, but it makes me laugh in a very uncomfortable way when I think of Russia pocketing £20,000,000 of British money and coming cap in hand and saying, "Give us credit, or we cannot trade with you." We ought to realise that and see what we are up against. It is quite easy where you are dealing with ordinary business transactions, but this is not a business transaction in the ordinary sense.

Photo of Mr Benjamin Riley Mr Benjamin Riley , Dewsbury

It is buying and selling.

Photo of Sir John Allen Sir John Allen , Liverpool, West Derby

No, it is a question of giving credits. It is really a difficult question. The matter calls for very close consideration. I do not believe the Government are acting soundly in going on ignoring the fact that there is no call for this credit at all.

Photo of Mr Robert Taylor Mr Robert Taylor , Lincoln

The hon. Gentleman has taken the argument put forward by the right hon. Gentleman who opened the Debate and has denied that, because of a favourable trade balance according to the Board of Trade returns, there is any necessity for the granting of this credit for the purposes of Anglo-Russian trade. I am astounded to hear the hon. Gentleman, who has been so closely associated with the work of the Associated Chambers of Commerce and must know that the very distinguished ex-president of that body is a member of the Advisory Committee, criticising his distinguished colleagues in such terms, because I take it that Sir Gilbert Vyle, if there were no adequate reasons for granting credit, would not have been a member of the Advisory Committee.

Photo of Sir John Allen Sir John Allen , Liverpool, West Derby

I did not criticise the Advisory Committee. On the contrary, I pointed out that the matter was not one for the Advisory Committee, but was a matter of policy.

Photo of Mr Robert Taylor Mr Robert Taylor , Lincoln

Surely the hon. Gentleman knows that all these transactions have to be individually submitted to the Advisory Committee, and we may reasonably assume that the distinguished members of the committee are not going to waste their time in a matter of that kind unless there is some commercial justification for it. It is extremely unfair that criticisms of the kind we have heard from the Front Bench opposite and from the hon. Gentleman should have been made. I should like to have had an opportunity of asking the former President of the Board of Trade whether or not he was speaking for his party in this matter and whether or not, if they were returned to office they would once again reimpose an administrative bar through the Export Credits Committee, against Anglo-Russian trade transactions, because that is an extremely important question. One of the things that are responsible for preventing the -development of Anglo-Russian trade along normal lines is the constant vendetta carried on by members of the Conservative party which disturbs the minds of those who are entering into great liabilities in connection with the export of goods to that market and disturbs the mind not only of British manufacturers but of the Russian representatives and makes them chary of entering into economic arrangements with this country which are essential for large-scale business between a State organised as Russia is and a number of individualist manufacturers.

It is time the Conservative party, in the interests both of international peace and in the commercial interests of the nation, dropped this stupid vendetta that is constantly carried on, not only in relation to matters which are legitimately subject to differences of opinion but in relation to purely commercial matters. We have to-day seen a distinguished Member of the Conservative party, whose mental agility and gifts we all admire, deliberately using his gifts of speech, not to give us a full picture of the difficulties, but just to give us selected facts which are an absolute travesty of the important elements in this problem, which would lead people to assume, if they did not know the right hon. Gentleman, that he knew nothing whatever about the processes of international trade. I should like to ask him whether, if the Conservative party were returned to power, they would reimpose the administrative boycott of Anglo-Russian trade transactions which was in operation during their last term of office?

Photo of Mr Philip Lloyd-Greame Mr Philip Lloyd-Greame , Hendon

I do not know what the hon. Member means by administrative trade boycott. We should see that business was done on businesslike lines.

Photo of Mr Robert Taylor Mr Robert Taylor , Lincoln

I will be a little more precise, and perhaps the right hon. Gentleman will answer more precisely. I have here a booklet issued by the Export Credits Department during the time of the last Administration on the expansion of the facilities provided by His Majesty's Government for ensuring financial credit for exports. It sets out the various facilities that are available and it expressly states: Guarantees may be given in respect of all the markets of the world with the exception at present of Russia. That was the position during the lifetime of the last Administration, and it did very serious damage to the commercial interests of the city that I represent. It was at that time quite impossible to get any proposal considered at all, and I should like to know whether it is the intention of the Conservative party to go back to that position if they are returned to power. Is it their intention to break off diplomatic relations with Russia and to prohibit the importation of Russian goods into this country? If the right hon. Gentleman is unable to give an answer to those questions, surely he and the Leaders of the Conservative party ought to be thoroughly ashamed of their propagandist activities in relation to this matter, because they must realise the great damage they are doing to commercial interests. I am all the more surprised because in this unfortunate depression almost all other markets—our great Dominions, our Colonies and other great areas of the earth—are suffering from acute depression. Many of those orders have ceased altogether to flow into this country, and the one market where we have had an increase in British, exports during the last year is the one that is singled out for special attack by the Conservative party.

I congratulate the Lord Privy Seal upon the energy, courage, initiative and persuasiveness with which he has tackled this problem. I am glad to say that in my constituency this arrangement has had immediate results, and that we have booked a substantial order during the last week which will take some of the men off the streets and off the Employment Exchange, and put them into work at a job to which they are accustomed, and enable them to earn their livelihood, instead of being compelled to go to the Employment Exchange against their will.

I should like to ask the right hon. Gentleman whether he seriously suggests that all countries with whom we have an unfavourable trade balance ought to be shut out from the benefits of the export credits machinery? Does he suggest, for instance, that because the United States of America sells us twice as much as we buy from her, taking the last 10 years, no export to America ought to be subject to the provisions of this scheme? Does he suggest that because Canada sends us very much more than she buys from us—I think about three times as much, or round about that, if you take the figures for the last 10 years—the Export Credits Advisory Committee should not be allowed to consider applications in respect of exports to those countries? Take, again, a country like Belgium. In our transactions with Belgium over a period of 10 years we have an adverse balance on the Board of Trade returns of £62,000,000. With regard to Canada the adverse balance in 10 years amounts to £295,000,000, and in the case of the United States of America £1,891,000,000 is the adverse trade balance during the last 10 years. But the right hon. Gentleman knows as well as anybody in this Committee that the recorded figures in exports and imports in the Board of Trade returns do not completely disclose the commercial relationships as between two countries, or as between one country and the rest of the world.

If the right hon. Gentleman will look a little more closely into this matter, he will find that the situation is not quite as one-sided as he led the Committee to believe during the course of his speech. First of all, I would remind the Committee that during the last 10 years over £300,000,000 worth of business has been done between Great Britain and Russia, and, as far as I know, not a single British firm has lost one penny piece in their transactions either with the Russian Government or with any trading organisation. Surely an experience of that kind, built up painfully and laboriously in spite of all the difficulties of the situation over a period of 10 years, should justify the extension of credits upon terms that are reasonable as between buyer and seller. I have been into the figures, and I find that when you make allowances for a considerable proportion, amounting to no less than £35,000,000 during the course of 10 years, of Russian imports into Great Britain which are re-exported, for Russian purchases from various parts of the British Empire, and for Russian purchases on the London market of goods despatched from the country of origin, and when you take into account all the invisible exports which have to be considered in arriving at an estimate of the proper relationship between two countries, the situation is not at all that which the right hon. Gentleman would have us believe.

From the revenue derived from the importation of Russian goods into Great Britain, Russia has to pay the whole of the staffs which are employed in connection with their trading organisations in this country, their wages, and salaries, pay rents and rates, dock charges, transport charges of various kinds, freightage on cargoes, very often carried in British ships—a high proportion of the Russian exports are carried about the world in British ships. When you make allowances for invisible exports of this kind, the total balance-sheet as between the British Empire and Russia comes out very nearly, within £1,000,000 or £2,000,000, an absolutely equal transaction. When you make allowances for all the factors which I have mentioned, your wonderful trade balance disappears. Even an elementary school child in these days knows perfectly well that under modern conditions you cannot isolate the relationship between two particular countries and judge merely from recorded imports and exports of the value of the trade as between one country and another. If Russia makes purchases of tea in India and transfers to an Indian buyer the purchasing power with which to buy an oil engine from the factories of Lincoln, then that Russian import is equally valuable in creating a demand for British goods as if the money was used for the specific purpose of some direct export to Russia. The right hon. Gentleman knows that perfectly well. But I fear that in this matter he is absolutely incorrigible. It is impossible to get either him or his leader to consider any Anglo-Russian problems on the basis of reason, and it appears to be treated with prejudice.

I want to put a question to the Minister. He gave us rather a lengthy quotation from perhaps the most important Government blue book that has been issued during the last decade. The Macmillan Report on Finance and Industry has a great deal to say which is of very great importance to the future of this country in relation to our financial machinery for the financing of British exports. In paragraph 393, and in the immediately following paragraphs, the Committee have a great deal to say about the inadequacy of our present financial arrangements for the financing of British exports. They draw our attention to the fact that with the increasing mechanisation of the world longer credits are being required for the more complicated products of the machine age and that very often it takes buyers two, three, four and even five years in which to pay by instalments for the products of industrial countries. I was astounded to find that a responsible committee like that was able to find at this time of day that British exporters were actually driven to foreign countries to get the necessary financial facilities to enable them successfully to conduct an export trade. It can be demonstrated beyond denial that a great deal of the money which has been used to finance the import of goods from Germany into Russia, and from Italy as well, on long-term credits has been found by patriotic British subjects who can make more out of the exploitation of low-paid German or Italian labour, and who prefer to divert the business to that country rather than to give our own people an opportunity of working in our own factories. That kind of thing has been dealt with by the Macmillan report. I should like to draw the attention of the Minister—no doubt he has already seen the reference—to page 171. In the middle of the page he will see that in relation to long-term credits for the financing of foreign contracts for things like the construction of railways, docks and so on, the Macmillan Committee make this statement: It is true that longer credit facilities are needed in such cases than it is customary for banks to give. A little lower down he will find this rather astounding statement: Foreign contractors undoubtedly obtain such facilities more easily than British contractors, and it would be a misfortune if the latter were, on account of their inability to obtain the financial assistance required, to have to withdraw from a field in which Great Britain has been so prominent in the past. In the next paragraph there is another statement which is well worth the attention of the Committee. The report says: We believe that there is substance in the view that the British fianncial organisation concentrated in the City of London might with advantage be more closely coordinated with British"—

The DEPUTY-CHAIRMAN:

I am afraid that we are getting into a general Debate upon international finance. The question before the Committee is that of export credits as it concerns this Department. We cannot have a general discussion upon the question.

Photo of Mr Robert Taylor Mr Robert Taylor , Lincoln

I am sorry if I transgressed, but if you will permit me to finish the quotation I will relate it to the work of the Department, because I regard this as an extremely serious matter in which, perhaps, we can do more for the employment of the British people than can be done by a great many of the relief schemes upon which we are spending so much money.

The DEPUTY-CHAIRMAN:

If the hon. Member simply wishes to make a suggestion to the Department of Overseas Trade that comes within its purview, then it will be legitimate, but it is taking him a long time to come to that point.

Photo of Mr Robert Taylor Mr Robert Taylor , Lincoln

I am extremely sorry if I have transgressed, but I will leave what I have already quoted from the report in order to support the point which I want to put before the Committee. It is clear that there is a weakness in relation to our financial machinery for the conduct of large-scale export undertakings which involve, say, four or five years for completion. That is proved by the report, and it is proved by a great many other facts within the knowledge of the Minister. The Export Credits Department derives its powers under the various Overseas Trade Acts, and at the present time the full use of the powers conferred upon this Department by Parliament are not being used. It is possible for this committee to grant credits up to five years for certain classes of exports.

6.0 p.m.

Photo of Mr Robert Taylor Mr Robert Taylor , Lincoln

Yes, up to nine years, but I was thinking more particularly of that particular class of export in regard to which five years would be a relatively adequate period. As I understand the present situation, the Export Credits Committee have laid it down as a matter of principle arising from the terms of the Niemeyer report that they shall not, as a matter of fact, consider those relatively long credits. I want to have an assurance from the Minister that this problem is being considered, and that the Department are not necessarily committed for all time merely to the policy of financing relatively short-term credits. I want an assurance that this committee in the near future will reconsider its policy and that applications in respect of long-term credits up to five years will be eligible for consideration.

Photo of Colonel Ralph Glyn Colonel Ralph Glyn , Abingdon

I am sure that hon. Members have listened with great interest to the concluding words of the hon. Member for Lincoln (Mr. R. A. Taylor). We all recognise that in the matter of export credits, and, indeed, in any matter connected with subsidies or credits, we are speaking as trustees of the national purse and realise that the nation's money should be used in such a way by us as to bring advantages to the great mass of the people. Everybody realises the wonderful work done by the advisory committee, there has not been a word of criticism said of that body, but I wonder whether the work of that excellent committee has in fact added any extra credit to the total volume of credit of this country for the benefit of trade. The Secretary to the Overseas Trade Department indicated that in his view the United States in the matter of credits had superior machinery to that possessed by this country, even with Government assistance, and he pointed to the fact that the United States had been able to do a larger amount of business with Russia without any assistance from Government credits. We have also to remember, in the matter of credits and guarantees, that it is utterly wrong to use national money to the benefit of individual firms if there are other firms doing the work without that assistance, and I happen to know that there are certain firms doing business with Russia, quite successfully, without having to go to the Government or to the committee for any assistance.

I should like to see in this country a grouping of firms in different industries which would enable them to make offers which might be more successful when you are dealing with a great monopoly such as. Russia is now, Russia is a State monopoly, and she would, I think, recognise the right of private enterprise to organise itself in another form of monopoly which would lead to the work being spread throughout the country in the various firms within the particular industry. It would be an admirable thing for British trade and credit if we had large mergers. It would mean that the most up-to-date firms would remain, and the less efficient would go to the wall. This scheme was introduced 10 years ago, and when the first five years had gone by we had pledged £100,000,000 under these various schemes. I often wonder whether, if we had pledged that amount in the development of the British Empire to assisting territories under the British flag, it would not have been more successful than giving it in the way we have to help in competing with foreigners in the limited world markets in Europe or the Far East.

Putting that aside, and coming to the particular point of the Debate, that is, the question of Russia, I am certain that it is fatal to approach this subject with any party prejudice. This must be a matter of business, and my right hon. Friend the Member for Hendon (Sir P. Cunliffe-Lister) said he was not going to bring politics into it at all. So far, we have happily achieved that object. Surely it is foolish to consider that Russia will remain, as some people have imagined, as she has been during the last few years. A new generation is growing up in Russia which will know no other circumstances than those which exist to-day. You have an enormous country, composed of different races, who are attempting to work out one of the greatest experiments of modern times. It is a most colossal experiment, and if we do not supply the goods to meet their demands—you cannot shut Russia out from the rest of the world—someone else will unquestionably supply those goods. I was in Russia before the War and during the War, and for a short time last year, and it is interesting to compare the Russia of today with the Russia of years ago. I am convinced that the most vitally important thing for us is to study the psychology of young Russia, the outlook of these young people, who one day will be the competitors of our children in world trade.

The statement made by Mr. Stalin a few days ago is extremely significant. Contrary to the views held by some of my hon. Friends, I do not think it is a sinister declaration. I think it shows that Russia is turning over towards the movement which we in this country were the first to introduce, that is to say, controlled monopolies and public utility. We are advancing upon a road which will bring us to the point of junction. You find in Russia a great many Americans and Germans and very few British, and if you talk with these few British you will find that their one lament is that there are not more of their compatriots there trying to guide the people on lines which we believe to be right. Surely that is a good thing. I do not think it is right for any party to attempt to put obstacles in the way of our experts going to any country to help them to develop on proper lines. The more British there are in Russia to-day, the more chances there are of British work being used in Russia and for Russia to develop sanely politically along British lines. Whether I am right or wrong in thinking that we have lost those attributes which we used to possess of helping countries to find their level and to work out their own salvation, I still believe that there are people to-day who are quite as capable of giving that assistance to Russia as was given to the more backward countries. It is not right to put Russia beyond the pale.

While I deplore the fact that Russia has not met her debts, and that she has used political means of propaganda which are unfortunate, it will never stop until some other people stop political propaganda against her. One side stirs up suspicion and doubt and the other side attempts an answer, and so critical is the general financial condition in the world, and in Europe especially, to-day, that if we are to save the world for our children and give some hope to those upon whom we are spending such a great deal of money in education, we have to face these facts without prejudice and to treat the thing as a great problem, possibly the greatest problem that this country has had to face for over a century. We shall never do it if we allow our minds to be confused by what we think is the possible and what is the actual position. Russia has had a chequered career. Recent events would never have occurred under the present regime unless under the previous regime the people had been accustomed to suffering. It is the accumulated suffering of hundreds of years which has found its outlet in many disastrous actions which have removed many people who were personal friends and whose loss is the gravest loss that Russia is suffering today. But surely, when we are considering a question of export credits and pledging the credit of this country to help another series of races, such as Russia is, there can be no doubt where our duty lies.

Our first duty lies to the taxpayers of this country, and no undue risk should be taken with British credit, no matter what our desires may be. That is the first thing. We are trustees for the British taxpayer, and we have no business to play ducks and drakes with the credit of the country. The second thing is that by no action shall we do anything which will assist inefficient manufacturers to compete with efficient manufacturers, who have not called for this assistance; and, in the third place, to find out what are the things which Russia most wants to bring her out of her trouble and difficulty, to bring modern means of civilisation into all parts of that great and vast country. It is more foolish for us to sit in this island and maintain that Russia will not work out her own destiny than it was for King Canute to forbid the sea to lap around his feet. Of course she will. The question is, with whom? With whom is it best that she should work out her destiny? Is it with the United States or with other nations, who so far have not shown themselves so able to guide and lead? Is it with those who so far have shown themselves unable to throw off political prejudices, and whose tendency is towards war and trouble, and not towards expansion and peace? I hope we shall show that we are anxious to help and assist. We want to see not only Russia but China and Persia, and Turkey, and all those countries with whom we were once so friendly, again in close association with us. We want to help Russia not to continue to refuse to pay her debts but to get her on her feet, when she will want to pay her debt to those who went to her assistance during the period of her adversity.

Photo of Mr George Strauss Mr George Strauss , Lambeth North

It is very unusual in a Debate on Russia to have such a spirit of felicity. This is the first Debate in which we have had an atmosphere which has been fair and judicial, and where the subject has been considered purely on a business basis. Without doubt the speech of the hon. and gallant Member for Abingdon (Major Glyn) has been one of the greatest speeches on the subject of Russia delivered in this House for many a long day. It is remarkable what effect a visit to Russia appears to have on everyone. I am not suggesting that the views of the hon. and gallant Member were formed by his visit to Russia last year. But it is a fact—I was over there for some weeks last year—that one's outlook is changed to a very considerable extent when one sees for oneself new things and new ways, when one is among people and sees at close quarters what they are doing and how they are attempting to do it. We all welcome very heartily the high moral tone and spirit with which the hon. and gallant Member spoke, particularly when we contrast his speech with some of the wild utterances which usually are heard when Russia is discussed in this House. When I was in Russia I frequently heard regret expressed that there was not more contact with England and the English people, and that there were not more English people living in Russia getting contracts with Russians, and it was continually stated—that is really more germane to the Debate—how difficult it was in many respects to do trade with England and to buy goods from England owing to the hostility with which traders and previous Governments here regarded Russia, compared with other countries, and the comparatively inefficient manner in which English goods were advertised in Russia.

Photo of Mr Carlyon Bellairs Mr Carlyon Bellairs , Maidstone

Does the hon. Member know that there is only one English newspaper correspondent in Russia, and that that is not by our choice?

Photo of Mr George Strauss Mr George Strauss , Lambeth North

I fail to see what that has to do with the question. There are many correspondents out there, and I have not a doubt that if the hon. and gallant Member or anyone else went out as an accredited correspondent of an English newspaper he would be welcomed if he acted in a fair way. The arguments put forward to-day regarding export credits for Russia can be boiled down to this: As Russia sells to us more goods than we sell to Russia, why are export credits necessary? That question was really answered by the hon. Member for West Derby (Sir J. Sandeman Allen), who said that there appeared to be no reason except that without these export credits we could not get the orders. That is obviously the fact. As has been explained by an hon. Friend on this side, there are many countries which send more goods to us than we send to them, the United States and Canada in particular, but we do not exclude from consideration the giving of export credit to those countries. There is not much in the argument which says that it is desirable that, between two countries, there should be an exact balance of trade. That would be ridiculous. The position surely is this: Russia is in the position of a young country developing and opening out, in the same way as some years ago were Canada, Australia and South America. No young country can develop without credit. If they want to make railways or to build factories so as to become industrial nations, they must have credits. England as well as other European countries came forward on those occasions and gave long-term loans, either to the State itself or to particular enterprises. We ourselves lent hundreds of millions of pounds.

Photo of Mr William Lane-Mitchell Mr William Lane-Mitchell , Wandsworth Streatham

And there was security all the time.

Photo of Mr George Strauss Mr George Strauss , Lambeth North

I am not dealing with the question of security at the moment. So far Russia has not defaulted on any of these credits. As I have said, England came forward in those past days and loaned probably thousands of millions to those developing countries. It was for England's own advantage. It has proved to be to England's advantage. At that time no one asked, why is it that you are loaning large sums of money to the Argentine, allowing them to have railways on credit and at the same time paying cash for all their goods? The argument heard to-day seems therefore to be irrelevant. Russia is in the position of needing credits if she is to develop at all. She also needs all the cash that she can get to buy the goods that she wants. Some hon. Members seem to fear that the result of all this will be that Russia will flood the world with cheap goods. That is a ridiculous argument to any one who has studied the position at all. The situation in Russia to-day is that the people are clamouring for goods, for clothes, for better food and all sorts of commodities. The Russian Government has decided deliberately on its policy, and has told the people, "You must sacrifice the present for the future. You must go without extra suits of clothes, you must make your boots last longer."

Duchess of ATHOLL:

Asking them to starve.

Photo of Mr George Strauss Mr George Strauss , Lambeth North

There has been no shortage of bread, but the Russian people have been deliberately asked to sacrifice the present for the future, and they are doing so. They are doing without many things that they want. Naturally there is a certain amount of grumbling and discontent, but on the whole the people seem to be shouldering the burden exactly as we did in war-time. The Russian people are Lightening their belts in the belief that in the end they will win. But they want these goods badly, and at the first possible moment they will demand them. When the five years plan is over, and Russia's internal demand will be so strong that her Government will be forced to supply the 160,000,000 people with some of the goods which they are doing without at the moment before they can even consider flooding the rest of the world with Russian products. Flooding the world is not their policy, but even if they intended to do so, they could not carry out such a scheme because the borne demand for generations to come will be much too strong. At the present moment the Russians want to export goods so that they can import goods for building their factories.

The right hon. Member for Hendon (Sir P. Cunliffe-Lister) the ex-President of the Board of Trade, asked why it was possible for America to do so much more trade with Russia and have larger exports to Russia than England without the help of any Government export credit scheme. There are two answers to that question. The first is that America did not sell more to Russia than England until after the Arcos raid. Before that raid England sold many more goods to Russia than did America. After the raid the exports from England quite naturally went down to about one-third, and the exports from America to Russia went up. The other reason is that there is a different political atmosphere in America. The factories in America, the big firms, are willing and anxious to send their men to work in Russia and to have Russian engineers in America to work there. The political atmosphere is altogether different. In America there are not these appalling attacks from responsible people on Russia. They have not an ex-President of the Board of Trade or Secretary of State for Commerce making speeches such as the speech made this afternoon by the right hon. Member for Hendon, creating such an atmosphere that amicable trade relationships are very difficult. That is why we are so behindhand at the present time in our trade with Russia.

As I see the situation, the future trade position of Britain is very precarious. For many reasons, into which I do not want to enter now, we have lost many of our old markets. In Europe we have had tariffs, in China we have had civil war, in India political action. We are no longer a lending nation on the same scale as before the War. At the same time there does not appear to be any new market which we can conquer or in which we can do more trade. I do not believe that as nations we should be competitors with each other and try to out each other's throats. I think we should try to co-operate the one with the other. I am sure that that is the most advantageous policy for all nations. But looking at the matter from the selfish point of view, Russia is the one part of the world where a vast new market is growing up, a market of 160,000,000 people who are beginning to demand goods, who never wanted these goods before and were unable to buy them. They are demanding those goods. In fact the demand is such that the Soviet Government even now find it very uncomfortable to deny them. The Russians want goods and more goods. There is a market where we can step in to fill the breach, where we can sell our manufactured goods and take in return the goods which they have to offer. If we stand aside now and say that we will not encourage trade with Russia, from a purely commercial point of view we shall lose the only new market which is open to this country. From every point of view I think that would be a great tragedy. I agree with the hon. and gallant Member for Abingdon that it would be a tragedy if other nations co-operate in future with Russia, and England is left out. I believe that the prosperity or doom of a large section of our trade depends on the extent to which we, during the next year or two, foster trade between England and Russia, on the extent to which we co-operate with Russia in her big developments.

Photo of Mr Carlyon Bellairs Mr Carlyon Bellairs , Maidstone

The hon. Member for Withington (Mr. E. D. Simon) advocated a much extended credit for Russia. At any rate he has not converted the Manchester Chamber of Commerce.

Photo of Mr Ernest Simon Mr Ernest Simon , Manchester, Withington

I did not advocate extended credit, but different terms.

Photo of Mr Carlyon Bellairs Mr Carlyon Bellairs , Maidstone

Extended facilities for credit. At any rate the hon. Member has not got his Chamber off Commerce with him, for on 28th January this year the Manchester Chamber of Commerce passed this resolution: This Chamber feels that Russia should give proof of a genuine intention to conduct her policy on acceptable lines; otherwise the alternative is protection and prohibition, designed to place an impassable wall between Russia and the rest of the world. With that resolution I cordially agree. That is my answer to the hon. and gallant Member for Abingdon (Major Glyn), who was clearly out of order in half of his speech. The policy of Russia is not "on acceptable lines." For that reason I would advocate a most salutary form of embargo on Russia, such as is advocated in America. The hon. Member for Withington is not entitled to cavil at those who urge barter. We are opposed to any specially favourable terms such as are given to Russia. There is no doubt whatever that specially favourable terms are given to Russia, in this sense that the export credits given to Russia have been greater than those given to the rest of the world combined, including our own Empire. Reference has been made to the fact that there are 5,000 American experts in Russia as against about 250 British, but hon. Members may not be aware that both the New York State Chamber of Commerce and the New Jersey Chamber of Commerce have passed resolutions in favour of an embargo on all trade with Russia and in favour of stopping all experts going to Russia. I think we shall see a great change in public opinion on this question before long, if Russia does not change her methods and her propaganda, and pay her debts. In America they have already an ordinance against prison labour and against timber imported from the northern forests and on 1st January next an ordinance comes into effect against all forced labour. That will raise the whole question affecting every single export from Russia to America. I believe that if we gave the example of an embargo, we should find other countries following the example. I believe in what Lord Morley said and what anyone might have said: An exploit in which no one will consent to go first remains unachieved. If we consented to go first in this matter, we should see a very great change in the attitude towards Russia of America and the world generally. I am sorry that the Secretary of State for the Dominions is not in his place, because I claim that he is on my side in this matter. Not long ago he attended a dinner in connection with the Wheat Conference. This was on 20th May, 1931, and he was reported in the "Times" as having used these words—which could only have had reference to Russia as this was a wheat conference: Whatever economists might say—and he was tired of them"— I do not know whether that is a reference to the Chancellor of the Exchequer or not— they were not entitled to continue a system which enabled us to be supplied with any commodity when the price and the wages paid for it did not give a decent standard of living for the producer. According to that statement, nearly everything which comes from Russia should be excluded from entering this country. We rightly determined to ruin Liberia in order to free Liberia from slavery—

The DEPUTY-CHAIRMAN:

The only question before the Committee now is whether export credits to Russia should be extended or not, and we cannot enter upon a general survey of the whole question of Russia.

Photo of Mr Carlyon Bellairs Mr Carlyon Bellairs , Maidstone

I was dealing with the general principle, and, after all, exports are governed to a large extent by the imports which come into this country, but I drop that point. I would say this, however, in regard to the Government's policy of export credits—that the mischief does not end altogether with those export credit themselves, because the Government's example is followed by private traders. They say, "What is good enough for the Government is good enough for us," and, therefore, a great many more credits are given to Russia, in consequence of the extended facilities afforded by the Government What is the security behind these export credits? Hon. Members opposite keep on, parrot-like, repeating that Russia has never repudiated one of these contracts under a Communist Government. If hon. Members read the history of Russia they will find that Russia has repudiated every single one of her obligations in her own time, and when it suited her to do so. They have repudiated their debts, they have repudiated concessions which they have made like the Lena Goldfields concession and the Harriman concession because the time came when it suited them to do so. They have repudiated the Tsarist officers who fought for them, and they have always bitten the hand that helped them. There is only one debt I believe which they have ever paid, and that was the debt to the Wholesale Cooperative Society. The Soviet Government recently authorised the payment of that debt simply to unlock the millions which the co-operative organisation could lend to Soviet Russia. In spite of all these things the present Prime Minister in 1922 expressed himself as being "an unswerving hopeful" regarding Russia and the Moscow Government, and said: When we humbler and more cautious Socialists come into office we may find the way prepared for us. The right hon. Gentleman has indeed found the way prepared. He has made Moscow his Moses—

The DEPUTY-CHAIRMAN:

The hon. and gallant Member is now discussing the question of diplomatic relations, which is a matter for the Foreign Office and has nothing to do with the Vote before the Committee.

Photo of Mr Carlyon Bellairs Mr Carlyon Bellairs , Maidstone

I am only making the point that the sole aim and object of Russia is to get cash from us, and that the export credits serve her purpose in that respect. The present Prime Minister also declared that the resumption of diplomatic relations would make our trade with Russia larger. Has our trade with Russia been much larger since the resumption of diplomatic relations? The truth of the matter is that we have had nothing but promises from Moscow. The trade delegation which went over there about the same time as the Prime Minister made the speech to which I refer were promised £150,000,000 in orders.

Photo of Mr Carlyon Bellairs Mr Carlyon Bellairs , Maidstone

At any rate, that was the prospect which was held out to them but they never got it. They were also told that they would get options for £200,000,000 and new concessions, and nine months afterwards came the case of the Lena Goldfields, in which the company were swindled out of about £20,000,000. The right hon. Gentleman the Secretary of State for Foreign Affairs in a Debate on 5th November, 1929, cited the fall in exports from £6,240,000 in 1925, and said he expected that diplomatic recognition would bring the exports up to that figure again. The actual figure of exports is £6,800,000 in 1930 so that we have only gained by this policy of export credits £500,000 more than was expected to result from diplomatic recognition. That is all we are getting for all these export credits amounting to £7,500,000. The thing is laughable. That is all that you are to get for swallowing slavery and prison labour and revolutionary propaganda.

The hon. Gentleman the Secretary to the Department of Overseas Trade speaking at Lincoln on 14th November, 1929, also expressed the hope that as a result of diplomatic recognition we would get back to the figure of £6,000,000 worth of exports. What then is the result to be shown for all these export credits? The official Russian figures for 1929 show that this country had given 60 per cent. of all the credits which Soviet Russia had got, while Germany was responsible only for 10 per cent. and the rest of the world for 30 per cent. Allowing for the lag, all we have got in 1930, is the ludicrous figure of £6,789,000. What are the Russian imports into this country which create such a large credit for her? Let me remind the hon. Member for Lincoln (Mr. R. A. Taylor), who spoke recently on this subject, that when he says that the surplus of imports over exports is discounted by a number of things, he forgets to add on to the imports from Russia the credits which we give to Russia. If you add the invisible exports of Great Britain to Russia, then, on the other side, you ought to add to the amount of the imports from Russia to this country the credits which we give to Russia. It that is done it more than balances the whole cost of insurances and freight so that the excess is actually much larger than, at first, appears.

As a matter of fact, this country takes probably 30 per cent. of Russia's exports. It is true that the figures for 1930 show only 23½ per cent., but a great many Russian exports find their way into this country through Holland, Latvia and Germany. We take, altogether, 80½ per cent. of the butter which Russia exports; 55 per cent. of her sawn timber; 44½ per cent of her tinned goods; 76 per cent. of her barley and 33½ per cent. to 39 per cent. of other cereals, and we show an excess, even on the published figures, and leaving out of account what comes through Latvia, Germany and Holland, of imports from Russia over exports to Russia during 18 months of £36,000,000—as given in an official answer the other day.

We would do much better trading with the Sahara Desert, because all these imports would have to come from other countries which would not pick and choose, as Soviet Russia does, what we should export to them. Other countries do not pick and choose particular machines which they are going to use for an economic war on this country. All that we ever send to Russia, if machinery which they are going to use for that economic war upon us. As I have said, Russia has had a £36,000,000 surplus of her imports over our exports to Russia in the last 18 months, and we give her credits in advance on all she sends to us. The butter credits for this year amount to £530,000, given by the Union and Cold Storage, and other companies, like the Co-operative Wholesale Society. The timber credit given in advance was something like £8,000,000, and on 1st April of any year, there is always something like £12,000,000 of credits advanced to Russia on what she is going to export to this country. That sort of thing had much better be transferred to our own Empire and that is the policy of this party. We give more export credits to Russia than we give to the whole of the rest of the world combined. Surely the love of the party opposite for Soviet Russia is something that defies all understanding.

Let me turn to America. America has a very large excess of exports to Russia over imports from Russia and it has no export credits for Russia of any kind. Why do they get this large amount of trade? It is not because of their superior facilities but because America does not cringe and fawn at Soviet Russia. The Americans do not behave like men who are acting under some compulsion which we do not understand. The policy of America is that set out in a letter of Mr. Secretary Hughes to the Soviet Government on 18th December, 1923, in which he said that if the Soviet Government were ready to pay debts and restore confiscated property or compensate they could do so. He added: It requires no conference or negotiations to accomplish these results which can and should be achieved at Moscow as evidence of good faith. Orders are placed in America by Russia to create political opinion there in favour of Russia, and it seems to be the case that the more you go against Russia the more they like and help you and I believe that we would do a much better trade with Russia if we showed that we were determined to stand no nonsense and that we—to use the words of the Prime Minister when he addressed an Albert Hall meeting some two years ago—were not going to have any "monkey tricks" from Moscow. Let me extend that reference. Amtorg, which is the equivalent in New York of Arcos, estimates that during the nine years to date America only invested in Russia £3,700,000, and after deducting accumulated profit only £630,000 of real American money was sent there. For nine years only that insignificant figure was sent, and they took no risks whatever. We are not merely taking financial risks, but we are flouting world opinion, we are alienating our Empire, and all for a trade in which the exports to Russia are on the same par as the exports to Ceylon and considerably less than the exports to Nigeria.

Photo of Mr Edward Wise Mr Edward Wise , Leicester East

I do not wish to ask the Committee to attempt the quite impossible task of trying to persuade, by facts and arguments, the hon. and gallant Member for Maidstone (Commander Bellairs), for nothing could ever persuade him that anything could possibly be good or sound or worth while that concerns Russia. In any case, most of his arguments were entirely irrelevant— all those arguments about what we should or should not do with our imports—and his policy is perfectly simple, logical, and understandable, once you accept all his hypotheses. He talks with hopefulness of what he calls the cordon sanitaire. "Let us," he says, "go on as if Russia did not exist; let us put a ring fence about a fifth of the land surface of the globe, with a population as large as those of this country, France and Germany put together; and let us persuade the rest of the world to do the same, and then it will not exist."

Never was more preposterous folly propounded to this House or any other Assembly. Even if it were possible for us, there is not the slightest chance—as he knows, if he has any knowledge, as I am sure he has, of European politics—of our example being followed. The whole economic history of the last three or four years is that of a steady but definite increase of Russian trade relations with Germany, with Italy, with Austria, with the Scandinavian countries, and with the Baltic countries, a growth based, not so much on, though it is affected by, political considerations, as on the sound economic reason that those countries cannot do without Russian trade, cannot do without Russia as a buyer of their products and a supplier of raw materials and foodstuffs for their people.

He seems to have forgotten that in 1927, when Russia was much more weak than she is to-day, when unemployment in those European countries was infinitely worse than it is to-day, after the Arcos raid, an attempt was made—I do not know whether by the Government of this country, but certainly by a considerable number of business interests closely in contact with the Government—to create a sort of cordon sanitaire or world blockade, and it hopelessly and dismally failed. There is not the slightest chance of it succeeding now, and if it did succeed, there is no serious student of international affairs who does not know that it would be the worst catastrophe that could befall mankind at this moment. It would make war inevitable in Europe and Asia, and it would ruin any hope of any return of prosperity in Europe or in Asia. It would solve no problem, but it would create innumerable new problems.

When I came down to-day I intended to speak, if I spoke at all, on various general questions of export trade, but in view of the interest always shown in Russian trade in this House, it may be worth while to give one or two facts about the present situation which seem to bear on the problem with which the Committee is confronted. I do not contend that there is not an extremely difficult problem as between ourselves and Russia, a problem of the adjustment of one economic system to another, of one racial mentality to another, of one point of view to another. It is a very difficult problem, a problem on whose solution depend not only the prosperity of many industries in this country, but possibly the peace of the world. It will not be solved by small-minded and factious criticism on irrelevant points, by the magnification of isolated quotations, by the attempted building up in the minds of people in this country of the conception of a great anti-British plot, which has no existence at all except in the minds of a few misguided hon. Members opposite.

Let us face the facts as they are. They are difficult enough, they are serious enough, they are worth the serious attention of this House. The right hon. Member for Hendon (Sir P. Cunliffe-Lister) referred to the Five-Year Plan, perhaps the most vital and important economic and political fact in the world as it is at this moment, and he pretended that the whole purpose of that Five-Year Plan was, in some curious and extraordinary fashion, to do harm to this country. Russia, he said, was determined to make herself independent of all imports, of all supplies from the rest of the world, for the purpose, as he said, of dumping immense masses of goods on the rest of the world. Was there ever such economic folly? The right hon. Gentleman at all events ought to give credit to those who are concerned with the control of the economic affairs of Russia at this moment for ordinary common sense. If they are going to export, would they do it merely in order to make vast presents or cheap gifts to those whom he supposes they regard as their permanent and perpetual enemies?

The fact of the matter is, so far as I am aware of the facts in connection with the Five-Year Plan, that in the conception and working out of that plan the idea of its possible uses for foreign trade never entered into the minds of those responsible until hon. Members on the other side denounced it in extravagant terms as a world menace. The explanation of the plan, and the reasons for it, are perfectly simple. Russia, industrially, economically, financially, was the most backward country in Europe. Its production per acre of cultivated land before the revolution and in 1924, or thereabouts, was about one-fifth of that in Western Europe; its industries were the most backward, the standard of life of its people was the lowest, its balance of industry and agriculture was the most distorted, its dependence on foreign manufacturers and suppliers for essential goods was the most extravagant of any country in the world.

The purpose of the plan, and it was a perfectly proper purpose—there is no one in this House opposite who could possibly quarrel with it—was, to use a phrase with which we are familiar, to eliminate those anomalies, to enable Russia herself to produce from her own abounding resources the goods that her people wanted, to increase her agricultural production, and, primarily and foremost, to improve by 100 per cent. the standard of life of her population. It is vital that the Committee should realise this point because they provide the key of the whole problem with which the Russians, as they saw it and as we in our trade with them are bound to see it are confronted—that insistence on the vital need of doubling the standard of life of the whole population—wages, housing, education, social services, facilities, the whole of them. If the right hon. Member has studied the plan, he cannot be unaware of that fact, because that is the essential apex about which the whole scheme resolves, its essential and main purpose, and all the rest is subsidiary and complementary to it. The plan involves an immense increase of the productivity of Russian soil, an immense development of the production of Russian minerals and raw materials, and an enormous advance, as compared with pre-War standards, in the industrial capacity of the country. But the purpose of that industrial expansion is very far from that suggested by hon. Members opposite—to flood the world with goods.

Let us look at the figures. The total Russian exports of industrial goods and agricultural goods last year were about 2 per cent. of the total world foreign trade. If the plan succeeds—and the probability is that it will succeed, broadly speaking—Russia's foreign trade will still be not more than 5 per cent. of the whole foreign trade of the world. In the 2 per cent. of last year, 90 per cent. of her exports were raw materials and unmanufactured goods, and in the 5 per cent., when it is completed, at least three-quarters—I have not the exact figures, but I think I have underestimated it considerably—will still be raw materials and unmanufactured goods. Let me point out another vital fact bearing on the argument of the right hon. Gentleman and on my own argument. In the second year of the plan—that is, last year—90 per cent. of Russian imports were plant and machinery and raw materials for industry; in the fifth year of the plan, according to the scheme worked out, 40 per cent. of the whole imports will be consumables, textiles, tea, and boots, and leather, and other manufactured goods required by the population. In the first year, £10,000,000 of imports of that sort; in the last year of the plan, £60,000,000 to £70,000,000 worth of imports of that sort.

7.0 p.m.

These are facts in the Plan. If you are basing your argument on this menace, at any rate find out precisely what it is, find out what are the facts. It is perfectly true—it is the essential part of it—that the effect of this will be that Russia will be a much heavier producer, and a much heavier consumer, both of agricultural goods and of manufactured goods. Industries will be expanded at least twofold and perhaps threefold. Hon. Members opposite say, "What a terrible catastrophe this must be for the rest of Europe! Fancy the unwisdom of exporting machinery and plant, so that the Russians may increase their industry." But the whole of the production of that industry and much more besides—the increased imports to which I have referred—are needed and urgently required for the consumption of her population. The industrialisation of a country does not, as experience has well shown, diminish, but tends to increase its dependence on the rest of the world. During the latter part of the 19th century and the early part of this century, we witnessed, to a much larger extent than has yet entered the dreams of any Russian, the rapid and enormous industrialisation of America and Germany. Yet those two countries in the years before the War at the end of that period and since the War have been and are two of our very best markets for manufactured goods. The industrialisation of Japan has not diminished Japan as a market for British goods, but has improved it. The industrialisation of a great country, with 160,000,000, and in three or four years 170,000,000 people, which will all the time increase its productivity and therefore buying power, and which will improve the standard of life of its vast population, is the most valuable, most significant and most important factor in the way out of the appalling morass into which the trade of the world has fallen.

I ask hon. Members opposite what would be the position if Russia collapsed and fell again into chaos? Would it help British trade or any trade? It would be the most appalling economic disaster that could befall us. Hon. Members, pursuing their argument further, say that this is a terrible menace, and the most terrible thing is that it is being built up and created by British money supplied by the British Government. But let them reflect on the facts for one moment. Russia imported last year something like £90,000,000 worth of manufactured goods and of raw materials, including somewhere between £50,000,000 and £60,000,000 worth of machinery from all the countries. The total contribution of British export credits to that total was somewhere in the neighbourhood of £4,000,000. It this stopped altogether, Russia would still have got about £56,000,000 worth of machinery from other sources, and the possibility is that she would have got the total £60,000,000. In any case, if hon. Members are alarmed about the development and industrialisation of Russia, the imports of British machinery, important though they may have been, are infinitely less important than the collection of capital and the creation of capital resources inside the country for the development inside the country of Russia's new productive capacity.

Russia, according to the best estimates that I have available, is putting into new capital construction at this moment practically the sum which we are invest- ing in this country with about four times their national income, Russia is investing somewhere in the neighbourhood of £400,000,000 to £500,000,000 per annum, and about 80 per cent. of that is capital accumulated inside the country from Russian labour and Russian resources, the product of the direct and deliberate planning of the Government, with the knowledge of the whole population and with the approval of a substantial proportion of the population, a far larger proportion than that which is included in the ranks of the Communist party. This inevitably involves an immense amount of present stringency, and the same sort of willingness to go without things, immediately needed, that this country and every other country engaged in the War endured during the War. The £4,000,000 short-term credits from the export credits scheme, useful and valuable though it is both to Russia and this country, is a mere drop in the bucket compared with the tremendous effort of capital reconstruction which is proceeding at this moment inside Russia.

I beg the Committee to realise that the fact of that immense development is there. It is no good taking out isolated sentences either from what Stalin said in 1029 or from what Mr. Gladstone said in 1870, or isolated extracts from the Russian papers. The hon. and gallant Member for Abingdon (Major Glyn) said a very wise thing when he said that the Russian propaganda in this country would continue as long as there is a body of persons in this country who believe it to be their duty to this country to put every kind of obstacle, political and economic, in the way, and to put every sort of abuse and insult on Russia. Which is cause and effect, I do not know, but they are very directly connected. The House and the country should apply themselves to the problem which this new chain in the financial and economic structure of the world creates. Other countries have realised it. Germany has realised it; Italy has realised it; a very large body of opinion in America has realised it, even if the New York Chamber of Commerce, for reasons connected with local politics, has ignored it. Other countries are endeavouring to co-operate with Russia to her and to their advantage. Here, in the last two weeks, the Government have happily taken a decision in that direction which should increase the degree of co-operation which this country can afford in increasing our export credits to Russia.

This country is in a very favoured position in that respect, or would be if we could use it, and if we had not partially destroyed it by political folly in the last five or six years. The goods of this country are still reputed in Russia as the best available in the world. The personal friendship of individual Russians for the people of this country is still an abiding and, I am glad to say, a very vital factor in the relations between this country and Russia. Although there are political difficulties arising from the fact that we and Russia are inevitably rivals in Asia and elsewhere, the best way to find the solution of these political difficulties and to prevent them leading us or the world into disaster is to endeavour to develop our relations in those matters in which we can co-operate to their advantage and ours. In any case, whether we co-operate or whether we do not, the essential fact is that this development of Russia is proceeding, and, so far as those competent to observe on the spot and outside Russia can say, to their almost unanimous agreement, will continue to proceed. Therefore, the right course for this country is to use the opportunities we have, the repute of our goods, the organisation of our manufacturers, and, most of all, the factor which we have got but which the Germans have not got, easy and cheap access to finance.

Russia is one, and perhaps the biggest, factor in the export trade problem of this country, but there are others. All parties in the House agree that the most important commercial problem with which we are faced at this moment is the diminution in our export trade. I wish the Government and the Export Credits Department could feel that it was their duty to take a much stronger initiative in that matter—I am speaking broadly, and not referring to Russia in particular—than they have taken in the past. The job of the Export Credits Department is, by all means in its power, to develop our trade. That capital of £26,000,000 under the Export Credits Guarantee Scheme ought to be an enormously valuable instrument for developing export trade, not only with Russia, but with other countries, with the Empire as well as with Asiatic countries. Let us not overlook the fact that, before this present slump started and made all the statistics rather misleading, the rest of the world—and practically every European country was included—had increased its export trade by 20 to 30 per cent. above pre-War, while our export trade was 20 per cent. less than pre-War.

The reasons for that are well known. There is hardly any doubt about it. One reason, the financial reason, arising from the return to the gold standard, is more or less admitted. There are others. Commissions and committees have been sent out by the Overseas Trade Department to South America, China, Egypt and elsewhere. All of them in their reports have stressed the inadequacy of our commercial organisation, the haphazard competition, the waste of effort, the lack of any co-ordinated or worked-out plan for holding our own and increasing our trade as other countries have done in those countries. At the same time, owing to the chaos of our competitive system, they have pointed out the impossibility of coming to an agreement with the organised exporters of other countries. We are very familiar in this House with these matters in relation to the problem of coal, but the criticisms apply to the iron and steel industry, to the cotton industry, to the worsted and woollen industry.

Surely the time has come, and surely our need is so great that, in the present emergency in which we find ourselves, we should throw aside those traditional limitations on Government initiative which hamper the efforts of that department. Take the Export Credits Scheme. Here you have an organisation like a private banking organisation with a capital of £26,000,000, and you have an export trade languishing for lack of resources, of initiative and of organisation. During the whole course of their existence they have never utilised more than £5,000,000 or £6,000,000 of the £26,000,000 capital with which they are provided. What would you do with the directorate of a bank that put on one side and failed to use about 80 or 90 per cent. of its available resources? What would you think of the business policy of such a bank? The truth is that no plan or scheme has ever been thought out for this Export Credits Scheme. It was thrown, as it were, into the City at a time when everything was doubtful, when Europe was in chaos, but the department has never sat down and thought out what its function ought to be. It it unnecessary as a fifth wheel of the coach of the City of London. What it ought to be and what functions it ought to perform were indicated by the Minister this afternoon. It should provide the machine, the instrument for providing a class of credits, namely, those intermediate credits for which the City of London, for various reasons, has so far failed to equip herself.

I go further than that. In China, South Africa, South America, as well as in parts of the Empire, the reports of the various commissions which have examined the problem have made it clear that we want a much more co-ordinated and organised attempt to sell British goods. We want to establish centralised selling agencies unifying instead of diverting the efforts of our exporters. The funds, the cheap credit, the resources and the organisation in the Export Credits Department and in the Overseas Trade Department ought to be used for creating that kind of organisation. At the present moment, there is no sign of any considered comprehensive plan to develop export trade. I am not one of those who believe that the possibility of maintaining and developing our export trade has diminished. I think that that is a profound fallacy. There is plenty of scope, and there will be in the new world that is emerging. It is the job of the Overseas Trade Department and the Export Credits Scheme, as one of its most valuable aids, to provide the natural driving force that will enable our trade to-day to hold in the world that place to which its merits and resources entitle it, and which is vital to the continued standard of life and prosperity of this country.

Mr. FRANK OWEN:

The hon. Member for East Leicester (Mr. Wise) has done something to bring the Debate back to the point at which it should be, and that is the objective consideration of export credits and not the anti-Russian assault with which we are so familiar. Unhappily for the realities of the Debate in this House, every speaker in the party above the Gangway, with one honourable and notable and—if I may say it—very brave exception, has led us back to the realm of bogey politics and baby economics. The hon. and gallant Gentleman the Member for Maidstone (Commander Bellairs) told us in almost the same breath, certainly in two successive breaths, first of all that in the united States of America they did far more trade with Russia because they had no credits, which he commended to us, and then that there was a great move on in the United States to have no trade at all with Russia. That is not untypical of the methods of the party above the Gangway. About 18 months ago, when the facts of the Russian plan became known to the world, they laughed at it and considered it a subject for ridicule. Now they have changed their tune, and say that it is the most terrible menace to trade and the stability of society that ever was.

The ex-President of the Board of Trade expounded his view that under Free Trade exports pay for imports. It is a very good thing that he has arrived at last at that point. Russia is an almost classic example of that doctrine. She has no shipping to speak of, no insurance, and no investments abroad, and every machine that goes into Russia has to be paid for by goods that are sent out because the credits that she has been able to obtain in the capitalist world are quite inadequate for her need. It is, of course, true that exports pay for imports, but not between each separate country. Free Trade is not a system of barter, but a system of scientific exchange, and it is a good thing that the ex-President of the Board of Trade is beginning to realise that fact.

The whole of the attack against granting further credits to Russia has been launched by the party above the Gangway because they say that this country is either being swamped with Russian goods, or is about to be swamped with Russian goods. What are some of the facts? Last year we imported from Russia £34,000,000 worth of goods. Before the War we imported £35,000,000 worth. I am taking the average for the years 1905–1912. This is less than we are importing at the present moment. It is true that where we exported before the War £11,500,000 worth, now, and largely owing to the propaganda of Members above the Gangway, we are exporting only £6,000,000 worth. Another point has not been brought out; that in 1928 the figures of exports were £2,000,000 and the percentage increase of our exports to Russia is far higher in the last three years than the percentage increase of Russia's exports to us. It was the folly of the Arcos raid which put back our trade with Russia, but even so we advanced from £2,000,000 to £6,000,000, while their advance has been from £21,000,000 to £34,000,000. [An HOST. MEMBER: "They are getting credit!"] Of course they are getting credit, and I will explain why it is necessary that they should.

Part of the attack has been that this country is being inundated with Russian butter, and the ex-President of the Board of Trade again dragged in the Russian tick. Last year we imported from Russia 165,000 cwts. of Russian butter. In 1928, the last full year of the Tory administration, we imported 336,000 cwts. Let us take the last five months of the Tory administration and the five comparable months of this year. Under the Government of the farmers' friends above the Gangway, we imported from Russia, between January and May, 1929, 67,000 cwts. of Russian butter. This year, over a comparable period, we imported only 32,000 cwts. Take eggs. Hon. Members above the Gangway have not yet discovered a tick in the egg, but it is only a matter of time. There will be some extraordinary creature found within an egg which has come from Russia, I have no doubt. In 1928, we imported from Russia under the Government of the farmers' friends, 1,700,000 great hundreds of eggs. In 1930, the last year for which figures are available, we imported only 81,000. That disposes of the idea that this country is being swamped with Russian agricultural products.

Photo of Sir Granville Gibson Sir Granville Gibson , Pudsey and Otley

Can the hon. Gentleman give the wheat figures?

Mr. OWEN:

I have not the figures here, but I know that we are importing from Russia far less than we imported before the War, and I can tell the hon. Gentleman that we are buying Canadian wheat at a lower price than we are paying for Russian wheat, and that for every bushel of Russian wheat that is dumped —if you call it dumping—into this country, four bushels are dumped at a higher price from Russia.

Photo of Sir Granville Gibson Sir Granville Gibson , Pudsey and Otley

Those figures do not agree with the figures which have been given by the President of the Board of Trade.

Mr. OWEN:

It is the fault of the President of the Board of Trade if his figures do not tally with mine. My figures are taken from the Trade and Navigation Returns, and I am giving them in perfect good faith. Let us take the question of Russian timber. A great outcry is going on, led by the hon. and gallant Member for Maidstone, about Russian timber being dumped. What is the truth about that? We had a big Baltic trade in timber. Russia offered us a £7,000,000 contract at a lower price, and a great capitalist firm, the Central Softwood Buying Corporation, took it. We have been receiving no more soft wood timber from Russia than when the hon. Gentlemen above the Gangway were in office. In 1929, during the last five months of the Conservative administration, we received 106,263 loads. In 1931, during the comparable period, we received 106,174 loads. That does not suggest that there is any terrific dumping. Because of the outcry that has been raised by hon. Gentlemen above the Gangway, semi-public corporations like the Metropolitan Water Board, are buying more highly priced Swedish timber rather than Russian timber, for no other reason than that they subscribe to the general anti-Russian propaganda.

What has happened? The Swedes, who are the embodiment of all that is desirable in trade, have now undercut the Russians, and Mr. Montague Meyer, representing the Central Softwood Buying Corporation, has taken himself to Russia to induce the Russian Government to cut down their contract price to the price of Swedish timber. I hope that he has succeeded, for timber is a valuable raw material of the industries of this country. I do not want to go into the question of wheat, because that is not being discussed, and the wheat flood for the moment has stopped. I would like to tell the House, however, that I am glad to learn that some of the staunchest Conservative farmers in my part of the world, which is Herefordshire, sent from London Bridge the other day 600 shorthorns and Hereford bulls to replenish the Russian herds. If they were fed upon cheap Russian corn, they did an extraordinarily good deal.

We have heard this afternoon that Russia has repudiated her debts. She has not repudiated a single debt into which she entered since the Communist Government took over. [An HON. MEMBER: "What about before?"] You cannot expect any firm that takes over a completely derelict property to pay the debts of the last firm. Why should they? Will hon. Gentlemen above the Gangway complain about France, who has repudiated four-fifths of her debt? She has only one-fifth of her financial burden left, which is apparently enough to satisfy the financial probity of the party above the Gangway. We have been asked how the credit which we allow to Russia compares with the credit which we allow to other countries. That is not very relevant to the subject we are discussing. The relevant question is, How does it compare with the credit which is allowed to Russia by other countries? Take Italy, which is an example of a capitalist corporative State; she has done a very good deal with Russia. She is offering Russia credit at a far cheaper rate than we are offering; the periods are far longer, and the percentage cost is far lower. The same thing is happening in Germany. If in the United States there is not Government backing to traders, it is for the good reason that private traders in the United States have more money than we have. They have a good deal of money that should be in this country. Since there is financial stringency in this country, surely it is the duty of the Government to stand behind our traders and to help them with special facilities. Italy is doing better trade with Russia for the reason, among others, that there is a complete schedule drawn up of all the commodities which can be traded to Russia. The Italian merchant knows before he enters into negotiations with the Russian Government exactly how much support he can count upon from his Government. If our Government intends to trade with Russia, I recommend that we should draw up a complete schedule of the credits—the length of the credits and the rest—in which we are prepared to back our traders.

We are told sometimes that the Five-Year Plan has crashed, and sometimes that it is going stronger than ever. I had the good fortune to be in Russia a few weeks ago, and my view, for what it is worth, is that I am quite confident that the plan will go through, and it is a very good thing that it should. I do not share the views of hon. Members above the Gangway about it. That plan is being put through at terrific cost and sacrifice to the Russian people, and the cost and sacrifice are the heavier for the reason that Russia is exporting raw materials and buying manufactured goods, and there is a greater lag in the fall in the price of manufactured goods than in the fall in the price of raw materials. Russia is in the position of the farmer—the producer of raw materials—all the time, in that she always loses more heavily on a falling market. So far from Russia being the cause of the world slump, Russia is the one great nation that has suffered more than anybody else owing to the break in world prices. Heaven knows that the pressure upon the Russian people was hard enough before the break came, and now it has been increased tenfold and the Russian people are very nearly cracking under the strain. If any hon. Members want anarchy in Russia, they are very near to seeing their hopes achieved. I do not share the view that anarchy is a good thing in Russia. I think Russia in order would be far less of a menace than Russia in chaos. Militant Communism, which is the dangerous Communism, the Communism which may be at the gates of France to-morrow morning, is far more of a menace than ordered Communism. Militant Communism—making a predatory appeal—thrives upon poverty, want and destitution. That is the kind of Communism which is the real menace, and that is the kind of Communism which will be provoked again in Russia if this plan crashes.

It is nonsense for hon. Members to think or hope that they can ever achieve the cordon sanitaire. It has been tried and has failed, because it is not in the nature of capitalism to present a united front. Sooner or later some enterprising capitalist, adventuring his money according to the best accepted capitalist principles, will break that line, will jump in and will scoop the pool. It was only the other day that the right hon. Member for Bewdley (Mr. S. Baldwin) was at the Albert Hall taking part in a great demonstration for peace. He is more realist than some Members of this House suppose. There was one interesting passage in his speech, to which I listened with great attention, in which he said that the League of Nations could never fulfil its mission in this world until it had been completed by the adhesion of two great nations, one in the East and one in the West. He was referring to Russia and the United States of America. Of couse, it is impossible to organise the world if you are going to try and pretend that one-fifth of that world does not exist, when you are trying to imagine that there is no country and there are no people between the Baltic and the Yellow Sea, that there is nobody living between the Arctic Circle and the passes of India. Those who in this country make it more difficult for the Russian people to come into the comity of nations do a great disservice not only to this country but to the rest of the world. I am for any scheme which may help us to achieve a better commercial understanding and better political relations with Russia than now obtain. In that we shall have the support of the party opposite, we shall have the united support of all Members of this party, and when it comes to the final issue I believe that we shall find with us more Members of the party above the Gangway than would appear from this Debate.

Photo of Mr Robert Boothby Mr Robert Boothby , Aberdeenshire and Kincardineshire Eastern

I will not say more about the speech of the hon. Member for Hereford (Mr. F. Owen) than that I agree with a good deal of what he has said, except the opening statement in which he remarked that, according to the tenets of his party, Free Trade, as conducted in the world to-day, is a system of the scientific exchange of goods as between nation and nation. I should very much like the hon. Member to point out where the scientific exchange of goods as between nation and nation is going on in the world at the present time. It seems to me that as a result of Free Trade the condition of world trade since the War has been reduced to something like chaos. As I listened to the hon. Member for East Leicester (Mr. Wise) unfolding, as he is well qualified to do, the main proposition embodied in the Five-Year Plan, I could not help feeling a certain sense of apprehension. He told the Committee that in the course of the next few years industrial production in Soviet Russia would be expanded two or threefold, and that agricultural production would also be expanded on a vast scale. His speech ought to make the President of the Board of Trade and those responsible for our economic policy at the present time address their minds to some of the major economic problems confronting this country and the world to-day—the problem, for example, of glut.

If we are going to be faced—and this is a question which the hon. Member for East Leicester never attempted to face—with this vast expansion of agricultural and industrial production in Russia and over the world, the problem of over-production which exists at the present moment in certain basic industries will become acute over the whole field of economics. If this is to be the situation, if there is to be a continual and steady expansion of production on this enormous scale, not only in Russia but in every other country, we in this country must address our minds to the central problem of over-production of basic commodities and see how it has to be faced.

Photo of Mr Edward Wise Mr Edward Wise , Leicester East

I tried to make it clear that every producer in Russia is going to be a very much larger consumer. That is an essential factor of the situation.

Photo of Mr Robert Boothby Mr Robert Boothby , Aberdeenshire and Kincardineshire Eastern

I agree, and if I thought the Russians would consume a greater part of this new production themselves inside Russia I should be very much happier about the future situation. It is because of certain of the details of the plan that I am a little apprehensive. Obviously the ultimate solution of over-production is a great increase in consumption, and that is what we are not getting in the world to-day, and that is, perhaps, the root cause of our economic trouble. There is another question to which the President of the Board of Trade might well address his mind, and with which I hope he will deal when he comes to reply, and that is: Has the Government considered, from an economic point of view and from the point of view of the advantages to this country, the whole question of export credit in relation to internal credit and the advisability of continuing loans and exports of various kinds overseas on a scale anything like that on which it was done before the War? Figures have been produced recently, and notably by the late Financial Secretary to the Treasury, which go to show that of the capital which we invested abroad we have lost £3,000,000,000 and I think it is arguable that lending overseas by means of direct loans from the City of London or by means of export credits does not necessarily do a great deal of good even to the country to whom these loans and credits are given—in the long run.

The hon. Member for East Leicester urged us to continue on an even greater scale the policy of export credits not only to Russia but elsewhere, but I would point out that during the last 50 or 60 years we have been carrying out on an enormous scale a policy analogous to the one he suggests. I will not say how many hundreds of millions of British capital have been invested in Australia one way or another during the last 60 years. I wonder how much good that has done to Australia? To what extent has it prevented Australia from developing herself upon sound economic lines? We have made her flush of capital at a given moment, and therefore inclined to break out into all sorts of unnecessary developments, but in the long run it was saddling her with a millstone of external debt through which she is virtually being sunk at the present time.

In a Debate of this wide and far-reaching character we have to go to the roots of the economic problem, and before we finally decide the best economic policy to pursue with regard to Russia we must consider some of the fundamental economic problems of the time and particularly the two questions I have attempted to put before the Committee, the question of over-production on the one hand and the question of exports and export credits and investment overseas on the other hand. They are two aspects of the world economic situation which deserve the very close attention of any Government of this country. I want to come to the actual trading figures, which I think are alarming. Since 1924 the trade surpluses of the Soviet Government against this country have amounted to £138,000,000, an annual average of £20,000,000. Nobody can say that that represents profitable trading so far as this country is concerned.

The figures which the President of the Board of Trade gave the other day for the period between 1st October, 1929, and 31st March, 1931, showed a balance of trade favourable to the Soviet Government of £36,771,202. That is a formidable figure. What the bon. Member for East Leicester did not tell us was that, according to the Plan, the Russians are going to increase their exports, if they can manage it, by 165 per cent. by 1933, but propose to increase their imports by only 80 per cent. This favourable trade balance which they plan for themselves has to be attained, presumably, at the expense of somebody. I believe we ought to do everything in our power to foster trade with Russia. I am not one of those who believe in isolating Russia either politically or economically, but what I am concerned about is that I do not wish the Five Year Plan to be built up primarily at the economic expense of this country.

I want to see us get a larger share of the import trade of Russia. I have a special problem in my own constituency. I am now arguing very strongly in favour of an increase of Russian trade, but when I look at the figures of the industry in which I am particularly interested I cannot help feeling more disheartened than ever, because if we compare the figures of herring exports to Russia this year or last year or in the preceding year with the figures before the War, we see the clue to the unparalleled depression in the herring fishery industry of Scotland at the present time. It seems to me to be awfully hard that the Russian Government should secure a favourable trade balance of £20,000,000 a year, and still refuse to buy an article like the herring which they know that we are extremely anxious, from a national point of view, to send to them. I ask the President of the Board of Trade what be is going to do about it? If the right hon. Gentleman is going in for a policy of export credits to Russia, why does he not approach the Russian Government, and say, "Why do you not take our herrings in far larger quantities?" The right hon. Gentleman may say that I am advocating the principle of barter, and why not? That is an old economic principle which is not obsolete at the present time. It has been applied in a treaty with Russia, and it has been singularly successful. Here we have an article which we catch in immense quantities, and which we are particularly anxious to export to Russia, and, on the, face of it, I think it is intolerable that Russia does not take our herrings in larger numbers, especially in view of the fact that they have a favourable trade balance of £20,000,000. The position taken upon this question is one which cannot be defended by any Government.

I should dread the consequences of the complete political or economic isolation of Russia, for without world economic co-operation, about which we have heard a good deal during the last few days, not only will Communism and Capitalism go down, but as a result the whole of humanity will suffer. I say further that without some national economic planning this country will go down as a great economic unit in the world. I am the last person to say that Soviet Russia should be the only country in the world which should have the right to plan economically on a national scale. That has to be done by this country, and I do not see why it should not be done. Why should not this be done by a Socialist Government? I do not think I ever knew a body of men more reluctant to make any experiment than the present Government. All they do is simply to wait for the next crisis to come. The Government have no fixed plan or direction, no aim, and no hope, and, when a crisis arises, they come down with proposals of a purely palliative, stop-gap character, like these export credit proposals.

How do the Government think that an individual industry in this country, like the herring industry, can hope to secure justice or fair-play conditions from a vast organisation like the Soviet Government without the active co-operation of the Government of the day? On this side of the House we are opposed to Government ownership of industry, or to Government direction of industry, but we have never opposed Government assistance. [Interruption.] I am not advocating financial assistance for the herring industry. Why should the Soviet Government benefit to the extent of a £20,000,000 balance in trade against this country? If we are going to continue to take Russian goods, the Soviet Government ought to be prepared, in equal measure, to take the goods which we are ready to send in exchange. I could develop this argument still further, but the reason why I shall not do so is that it would not be in order on this Vote, because my suggestion would require legislation. Unless the Government are prepared to exercise some influence over imports, I do not see how they are going to help exports, though even without obtaining powers to impose duties or prohibition I feel certain that a great deal more could be done along ordinary administrative lines. But, so far as I can make out, no practical suggestions in that direction have been made by the Government.

In the Overseas Trade Department there is a machine which can be extended in many directions for the benefit of trade. Take, for example, the work done by President Hoover when he was Secretary of Commerce for the United States, and presided over a Department very similar to our own Overseas Trade Department. I do not think anybody would claim that President Hoover was a Socialist, or that the assistance which he gave to American industries was in any way Socialistic, but what he did was of inestimable value to American industries. I do not think that anyone will deny that statement. I have seen figures which show that the work done by Mr. Hoover while he was Secretary of Commerce for the United States benefited American industries to the tune of £500,000,000. I do not think that the Government will achieve anything like that result by granting export credits in a haphazard way. Export credits may find their place in a national planning scheme, but without demanding any quid pro quo, and without co-ordination, they will not be very successful.

The Government, through its innumerable Departments, is fiddling about with our export trade without sufficient power, and nearly all those Departments are overlapping. We have the Empire Marketing Board, the Overseas Trade Department, and various other committees scattered about under the control of the President of the Board of Trade. They are all working in the same direction and along the same lines, but it cannot be said that they are not overlapping. I believe that by co-ordination among all these various Departments, sub-departments, and committees, much might be achieved, and such co-ordination might be carried out at this stage. I shall be grateful to the President of the Board of Trade if he will deal with the points I have placed before the Committee when he comes to reply.

8.0 p.m.

Photo of Mr Leonard Matters Mr Leonard Matters , Lambeth Kennington

Some of the speeches from the Conservative benches have given encouragement to the belief that the leaven of commonsense is influencing that party. Although the question before the House is export credits, the Debate has ranged over a much wider field, and some speakers have dealt with the Russian Five-Year Plan. We have also had a suggestion from the hon. Member for East Aberdeen (Mr. Boothby) that the Government should take some cognisance of the herring industry. The speech of the hon. and gallant Member for Abingdon (Major Glyn) was quite refreshing to those who sit on this side of the House. There was underlying it very good commonsense and a great understanding of the international problems. The speech of the hon. Member for East Aberdeen again brought up a factor which seems to dominate the party opposite. They take the figures of trade between this country and Russia and see what appears to be an unfavourable trade balance against this country and they argue in the most extraordinary manner from that fact. The hon. Member reminded us that in the last 10 years the balance of trade in favour of Russia has totalled something like £138,000,000. He deduced from that fact, as far as I understood him, the argument that we should no longer consider the question of extending export credits to those of our own people who want to trade with that country. As I pointed out on a previous occasion, in another Debate, if that argument holds good in the case of Russia then, in logic, it must hold good throughout the world.

Photo of Mr Robert Boothby Mr Robert Boothby , Aberdeenshire and Kincardineshire Eastern

I did not suggest that we should cut down the export credits. I suggested that we should take every step to secure a greater amount of the imports into Russia.

Photo of Mr Leonard Matters Mr Leonard Matters , Lambeth Kennington

I accept the explanation of the hon. Member and I am obliged to him for it. That statement, however, was made on his side of the House and that argument was used this afternoon. I want to repeat that if there be any logic or reason in that argument it must apply all over the world. What does the hon. Member and his colleagues say of the situation which exists between this country and the Argentine Republic, where in the past 10 years the balance of trade in favour of that Republic against this country would approach more closely to £500,000,000? If they look at Denmark they will find that the balance of trade last year in favour of that little country was over £42,000,000. We have heard no argument in favour of limiting or denying export credits to those countries with which our traders are in business relations where those enormous trade balances exist. That argument is another form of expression of the political prejudice with which the whole question of our economic relations with Russia is always approached by the Conservative party.

The ex-President of the Board of Trade used some extraordinary arguments, among which was this, that we should, by some means or other, which he was not good enough to outline, deal with Russia on the basis that she must get credits only to the extent to which she was prepared to deal with this country in the matter of the purchase of our manufactures. Without wishing to misrepresent him, I would say that the effect of his statement was that she should be held to buy for cash to the extent to which she sells for cash. If that argument were good economics and if logic were at the basis of the criticism from the other side, then surely it should apply also to other parts of the world. The Argentine Republic in 1929 sold to this country something like £85,000,000 worth of goods and got cash for it, while on the other hand she bought goods to the value of £30,000,000, leaving a balance in her favour of £50,000,000. There was no suggestion that we should apply this new principle of international trade in her case. The Argentine Republic and many other Latin American countries have for years past been demanding from this country much longer credit than it is now proposed to extend to Russia. That sort of argument is only brought forward in this House when the party opposite approach that question of our relations with Russia.

Coming back to the fundamentals of the problem, I would like to ask those who speak, if that be possible, for a united Conservative party, precisely whose guidance we are to take in the question of trade with Russia and credits to Russia. I have here the report of the Anglo-Russian Committee, of which the hon. Member for Hampstead (Mr. Balfour) is shown to be still a member. Another Conservative Member or ex-Conservative Member was also on that body. That Committee sent a delegation to Russia in April, 1929. If the present Government take the responsibility or the credit, as I hope they can, for bringing about a new era in our relations with Russia, they can very well cite this document in full justification for their policy. On that delegation were 84 British business men, under the chairmanship of Sir Joseph Isherwood. The delegation represented 1,500 British firms, with a combined capital of £700,000,000, and after a close investigation of the situation in Russia they came back and produced their report, one of the conclusions of which says: The committee is satisfied that there is a great volume of business available for Great Britain, subject to diplomatic recognition being afforded, and if arrangements be made for the financing of the business on long term credit or otherwise. We on this side like to feel, and I think we are justified in so doing, that the advent of the Labour Government in June, 1929, began a new era of good will and good sense in the relationship between this country and Russia, and this document advocates precisely what the present Government have done on the two main points. The Government established new diplomatic relations with Russia and proceeded to bring Russia within the purview of the Export Credits Scheme. More recently they have very wisely extended the terms of those credits. We want to know whether those critics in the Conservative party of what has been done repudiate the advice of their own business people. We are always being told that in such matters we should follow the guidance of hard-headed business men. We have that guidance in this document and the Government have followed it, although I think that the recommendations contained in the report were at an anterior date the recommendations of the Labour party, and were in the programme upon which this party fought at the last election.

The whole question comes to this, are we or are we not to continue trading with Russia? Are we or are we not, in our own interests, to take every possible steps to develop the trade which now exists? That the trade can be extended and that there is no menace in the fruition or fulfilment of the Five Year Plan, is plain to all of us. We on this side, at least those of us who, like myself, happen to be happily acquainted with the working of the Department of Overseas Trade, are not prepared under any pressure whatsoever to depart from the intelligent, common sense programme which the Government have adopted. We desire that in every direction possible they will extend the system of the credits which have been granted in the case of trade with Russia. I would remind the Comimittee that those credits are asked for by the business people of this country and not by Communist representatives nor representatives of the Soviet Government. The pressure to give those credits or the request for those credits comes invariably from those actually selling goods to that country. When hon. Members opposite raised the question in this House as they do ad nauseam on Mondays and Wednesdays, they should be reminded constantly that it is the Conservative business men of their own party who want these credits. I want to know whether any representative of the party opposite is prepared to say that that system shall be abandoned.

Photo of Lieut-Colonel Alfred Todd Lieut-Colonel Alfred Todd , Berwick-upon-Tweed

We are told that this is a matter which should be considered on purely economic grounds, but I must say that I was surprised at the reply given by the Minister to the opening speech by the right hon. Member for Hendon (Sir P. Cunliffe-Lister). In the speech of the right hon. Gentleman some straight economic questions were put, to which we were entitled to very straight answers, but, so far as I can recollect, the Minister avoided giving any definite reply. The only warmth that he showed was in his defence of his friends in Russia. We can all become hot if we choose. I am one of those who can get hot on the question of Russia. I have not a short memory and I sometimes wonder at a great Christian country dealing with the Soviet system. However, that is not the concern of this Debate, and I want to raise one or two economic points. More than one speaker has pointed out that other nations besides Russia has big credits from this country, but they have very carefully avoided pointing out that those nations, for instance, the Argentine and Denmark, are not spending those credits definitely in competition with our industries.

If we study the development of Soviet Russia we find that they are spending every farthing they can lay their hands upon to lay down plant, build factories and power stations, to produce in competition with this country. It concerns us very much when we realise that as a direct result of our financial support, the Soviet Union is producing, and will in future more rapidly produce, commodities in competition with ourselves. That is a point we should bear in mind. In my view and in the view of most hon. Members on these benches, without in any way wishing to be hostile to the Soviet Union, we claim that all the credits that we have should be given to the countries that not only are not building up industries in competition with ours, but are prepared to give us markets. I can think of many parts of the world, not only within but without the British Empire, where, if we gave them further credit, they would give us further trade and they would not spend the money in building up rival competing industries. This is a point that has not been stressed in the Committee, but it ought to be remembered.

The present Government have given clear proof that they are not making any effort to give trade to those countries that will give us trade. The question of Empire sugar was brought up in the Debate. They had a very definite opportunity of using £1,000,000 of British credit to assist our West Indian Islands, but the Minister in his reply gave no conclusive answer as to the reasons why that credit was not given to the West Indian Islands. I think he pointed out that the real object of a credit was to find work in this country. Surely, if we had insisted that that million of British money should be spent on West Indian sugar, that sugar would have needed refining in this country, just as much as foreign sugar. Therefore, not only one but two very worthy objects would have been achieved, with no further expenditure of British money or the risk of British capital.

We just also look at this question from the point of view of the British taxpayer. We want to be quite certain that the money which we are risking and which belongs to the taxpayer is being safeguarded, and we very naturally look at other countries and see their treatment in comparison with ours. We have only to look at America. Most of us on these benches have begun to wonder at the discrepancy. How is it that we do not get as good terms as the United States of America? They have never toed the line to the Soviet Government. They have refused recognition, and yet we find that they get better trading terms than we do. They get 50 per cent. down and the remaining 50 per cent. at the most in 10 months. I do not think that anyone will deny that not only the United States but other nations are getting better terms from the Soviet Union than we are. That seems to suggest that, the weaker you are in treating with these Russian leaders, the worse terms you get, and I believe that we are failing in our duty to the British taxpayer unless we take some means to protect his interests. We find that, instead of stiffening the terms, the present Government are lengthening the credits steadily—that, learning our object lesson by studying these other circumstances, we are actually giving longer terms to the Soviet Union.

Two or three speakers have suggested that we do not get on so well with the Russians because we do not study them. Personally, I think it is rather ridiculous when hon. Members, after two or three weeks in Russia, come back as if they know all about it, and tell us that they are convinced that the Five-Year Plan is going to be a success. I do not believe, to begin with, that one of them can speak Russian, and, if they were there for five years under the present system, they would see nothing that the Soviet officials did not choose that they should see. It is very easy for them to tell us that we do not understand the Russians and do not choose to get in touch with them, but I would ask any hon. Member, how am I to get in touch with the Russians? If I took a ticket to Moscow to-morrow, I should not be in touch with the Russians, hut merely with the autocrats who, at the moment, are ruling Russia, and I should be wasting my time if I imagined that I was learning anything about their country or their system. The moment that I went outside the prescribed route, I should be tapped on the shoulder and told to mind my p's and q's. It is ridiculous to suppose that we are at fault because we cannot get in touch with that great nation. Without any ill will to the great Russian nation, would it not be wiser, more in the interests of the British public, and more in line with the dignity of the British Empire, if, instead of blundering on, accepting insult after insult, and remaining the one Power in the world that has to give everything and take nothing, we put down our foot and said, perfectly honourably but firmly, that we would insist on the decent treatment that other nations get, and that we are prepared to trade with the Russians just in so far as they are prepared to trade with us?

Photo of Sir Granville Gibson Sir Granville Gibson , Pudsey and Otley

The hon. Member for East Leicester (Mr. Wise) began his speech by stating that, when he came to the House this afternoon, he intended to speak on the general question of export credits, but in view of the fact that the Debate had become more or less concentrated on the question of export credits to Russia, he would deal with that matter alone. As far as I am concerned, I look at this question of export credits, not from the point of view of politics at all, but from the point of view of a business man who has dealings with many markets in many parts of the world, and mainly from the economic point of view. In my opinion, it is from that point of view that we ought to look at this question of export credit guarantees.

I want, first of all, to compliment the Minister in charge of the Overseas Trade Department on some parts of the report which I have been reading. I want to compliment him on the success of some of the missions which have gone to various parts of the world, and, in particular, the one that recently visited Scandinavia in connection with an industry with which I myself am intimately connected. As I have told the hon. Gentleman in a private conversation, I was so impressed by the report that was issued by that delegation when they returned to this country that I propose to spend part of my time during the Recess in visiting those countries, looking up various customers, and combining business with pleasure. A very great service has been done to my particular industry by the Overseas Trade Department, and, on behalf of that industry, I want to express my gratitude to the Department.

At the same time, I do not think that the Department is to be regarded as altogether free from criticism. I do not want my criticism to be of a carping nature, but to be constructive and helpful to the Department. The Minister stated at the close of his speech that we are interested in getting trade for people in this country, and, if that be so, I would ask, why does not the Department show a little more enterprise than it has shown already? The hon. Gentleman went on to point out that Italy and Germany have schemes which were originated with the object of helping the unemployed, and, surely, if our export credit guarantees scheme has any object at all, it is to help unemployment, and, therefore, to assist in keeping off the unemployed market people who might find employment as a result of the assistance given by the Department to industry.

So far as I am personally concerned, I have no Russian bee in my bonnet, but at the same time we cannot overlook the very important and salient fact that, as has been admitted by the Minister this afternoon, the credits granted to Russia amount in the aggregate to more than the credits granted to all other countries of the world. We must remember that, as has been pointed out already, while there may be 160,000,000 people in Russia, at the same time there is a great world of many countries outside Russia which are of great interest and importance to those of us who have to find markets in various parts of the world. We cannot overlook the fact that, for some reason or other, the moneys which have been advanced in respect of trade with Russia exceed in the aggregate the amounts that have been expended in all other parts of the world.

It has been suggested in some quarters that one of the reasons is that on the Russian business the Overseas Trade Department makes a bigger profit in respect of premiums than in any other part of the world. It has been stated that they charge as much as 13 per cent. On the other hand, it has been stated that the reason is that behind that business guarantee there is the Russian nation, whereas, when credits are given in respect of private firms or individuals, there is not the same backing that there is in connection with trade with Russia, where the only one who can default is the Russian nation. I have often heard hon. Members opposite state, and it has been stated this afternoon, that so far Russia has never defaulted. I certainly hope that Russia never will default, but she has defaulted, and has been the greatest defaulter of any nation in history. As a business man, if I had £50,000 owing to me, I would rather that it was spread over 50 debtors than that it should be owed to me by one party, because my liability would be limited in each individual case. Apparently, however, the Government are satisfied to take this risk, so that at the present time an amount is owing to us, or, at any rate, there are liabilities hanging over the head of the Government, probably approximating to £3,000,000 or £4,000,000.

My complaint against the Overseas Trade Department is, as I have already indicated, that they do not take sufficient risks in connection with private individuals. Only this morning I was speaking to a gentleman who exported many thousands of pounds worth of goods year by year to the Argentine, and he told me that one or two years ago, when commercial, industrial and financial conditions became so acute in the Argentine, his agent there wrote to him and said that he could not longer pay 25 per cent. del credere deposit on the goods, when they arrived in the Argentine, out of the 5 per cent. commission which he was receiving from the manufacturer in this country, and so the manufacturer approached our Export Credits Department and asked them if they would cover 50 or 60 per cent. of the amount involved. It was turned down by the Overseas Trade Department and that trade was lost to this country because those goods to-day are being supplied to the Argentine by Germany. The manufacturer told me this morning, "The result is that I have lost the trade, because I dare not take the whole 100 per cent. If the Government had even come up to 50 per cent., I should have been quite satisfied to take the other half myself."

I discussed a matter with the hon. Gentleman a little time ago in connection with a firm of woollen manufacturers in the Leeds district. In March, 1930, they had an offer of an order for £2,000 from a firm in Constantinople. They immediately made inquiries, and the reports were to the effect that the Constantinople firm was both financially and morally the best firm dealing in woollen goods in that city. They were in a very big way of business, and they always bought in bulk and cheaply, and so obtained a distinct advantage over their competitors. My friend applied to banks who had been given as references, and Lloyds Bank gave an excellent reference, stating that they were of good commercial morality and of good means. This woollen manufacturer made application to the Export Credit Department to cover part of this order. At first they said their books were full up in this particular direction, and later on they refused absolutely to cover the debt at all. In this order of £2,000, over £700 was represented by direct labour alone. It was cheap woollen goods selling at about 2s. 6d. a yard, and more than a third was represented by labour in the manufacturers' mills, but apparently the Export Credits Department were prepared to see men go on to the unemployed army rather than take an additional risk in ensuring against a bad debt. The manufacturer has since that time taken smaller orders than he could have done if he had had this assistance from the Government, but he has never had a single bill that has not been met.

The Minister might say the committee may have been advised not to allow credit in this case, but, if the risk is a little larger than normal, they could charge a higher premium, because every business man in the country to-day is having to take greater risks than normal in order to win foreign trade wherever he finds it possible. If the Export Credits Department expect to help industry to the fullest extent and they cannot carry part of the insurance on a low premium, let them charge a higher premium for a higher risk. A gentleman told mo this morning, "The Government Department are only prepared to carry the risk that I dare to carry myself." A representative of the Overseas Trade Department went to Glasgow some time ago where the Department had quoted 1¼ per cent. premium in one particular case. The man in Glasgow did not take up the insurance, and the representative of the Department went there a little later and asked him why he had not taken advantage of the offer. The man in Glasgow said, "If it was so good that you could do it for 1¼ per cent., it was well worth my taking the risk."

The Overseas Trade Department cannot rest content and cannot contend that they are achieving the success that they ought to aim at when they are turning business down in connection with which there is only a fair amount of risk. I hope the Minister will give the matter his careful consideration and in various parts of the world, where undoubtedly business is difficult, and where the risks to be taken are greater than normal, at any rate in the main the manufacturers will be quite prepared to pay a small additional premium in order to have the support and cover of the Export Credits Department, and, by doing so, I am sure the Department will be justifying themselves in the eyes of the people of the country more than they have done hitherto, though I must admit at the same time that they have done excellent work in the past.

Photo of Mr James Lockwood Mr James Lockwood , Shipley

Having listened to the Debate throughout with a considerable amount of fortitude and patience, I am relieved to hear the practical speech of my hon. Friend. Almost at the start the Debate seemed to resolved itself into a series of lectures upon the Russian position and the state of internal affairs in that country. So far as I know, we are debating the work of the Export Credits Department from the point of view of the benefit it is conferring upon British trade, and how its general working can be made more effective so as to improve the export trade. I listened with considerable interest to the learned disquisition by the hon. Member for East Leicester (Mr. Wise) on the Five-Year Plan, and I listened with considerable interest to the praise that he seemed to give to Russia and all that Russia stood for. He was fortified by almost every speaker on the Government Benches. With that, of course, I disagree, for solid and substantial reasons. I think the whole basis of the present Russian position is wrong, and I do not agree that we should risk trade with Russia unless we know they are going to honour their obligations.

Several hon. Members opposite have suggested that we are unfair in our view of Russia. I know of one particular concern engaged in the export trade which had to close down its business entirely, simply because at one period of its existence it had invested surplus money which happened to be in Russia in Russian Government securities. They were confiscated, and nothing has been forthcoming since that time. I can mention another case of a British factory in Russia conducted by British people and by experts from this country. Hon. Members on the other side throughout the Debate have been urging that we should send experts and business men to Russia in order to try and increase trade. This factory which belonged to English people was confiscated, and nothing that our Government have been able to do at any time has brought any recompense whatever to the owners of the factory. I was very much surprised to hear the statement of the hon. Gentleman the Member for East Leicester that the industrialisation of Japan had not meant any loss of trade to this country.

When I listen to Debates in the House of Commons which involve a knowledge of industry and of trade and commerce I am astonished at the colossal ignorance of people who venture to get up and express opinions upon matters in regard to which they have no practical knowledge whatever. This afternoon's Debate is an illustration of the lack of practical knowledge concerning the Minister's Department. I and my hon. Friend the Member for Pudsey and Otley (Mr. G. Gibson) have had personal knowledge of the Department of the Minister, and I believe that the work of the Department is useful work and should be encouraged. The giving of credit, or the possibility of firms being able to insure against possible bad debts in these times of stringency, very often means the difference between accepting and refusing an order. There might be an element of risk, but, with the capital afforded, a particular firm could accept or do the business desired. If we can do anything in that direction, whatever our politics may be, it is our duty in these times to do it. I wish to point out, however, that clearly the mere extension of credits of this kind, while enabling us to undertake and to keep certain business, is not doing very much towards increasing the total amount of the export trade of this country. I have heard remarks this afternoon which induce me to think that some hon. Members opposite are of the opinion that this Department is able to influence contributions of a really substantial character towards dealing with unemployment. In the report to the Minister published in 1929 it was pointed out that, although our total trade at that time amounted to £725,000,000, the only amount involved in export credits in this Department was £4,000,000, an inconsiderable sum.

The Debate this afternoon seems to have gone wild upon the Russian question. Our whole trade with Russia at the moment is not so considerable that we should waste a day's debate upon it in Parliament. It will never be unduly profitable to this country. It will never repay the Lord Privy Seal to grind his sheet anchor on trade with Russia. I should like him to take serious note of that. If he can induce anything for the benefit of the heavy engineering trade well and good. The work of the Overseas Trade Department, I think the Minister will agree, is not concerned with huge engineering schemes and the building of railways, but with the marketing and sale of the productions of our mills and factories, and more often than not of the character of textiles and small goods. It was never contemplated in the mind of the Advisory Committee that the work of the Department was to ensure credits for the building of reservoirs and railways and the undertaking of public works of that kind abroad. We on this side would be very sorry indeed if any of the measures which the Lord Privy Seal has at heart were to be interfered with through the absence of credit facilities, but I am sure that he would agree that this Department, or this system of providing money, is not what he or the Government have in mind for public works of that character.

I ask the Minister, when he replies, to deal with some of the points raised in the report of his predecessor in 1929. I take the view that if there is one thing which is going to help forward business to-day it is to get the transactions of purchase and sale upon a, shorter credit system. We should not require as much capital, and the risk of bad debts would not be so great. It is within the knowledge of this Department that the losses of some of the trading communities in Yorkshire and elsewhere in South America, the Argentine, Brazil, and Central Europe have been colossal. The losses to the textile trade of Bradford alone in bad debts through trying to market goods in Brazil, the Argentine and Central Europe—

Photo of Mr James Lockwood Mr James Lockwood , Shipley

Not Russia. I have not got Russia on the brain. The losses through trying to market our goods in those countries have been colossal. It cannot be said that our lack of trade is due to our inability to market our goods or to find markets for them. It is problems such as that which this Department has to consider. It should endeavour to introduce conditions in order to make credit shorter, as is outlined in the report which I hold in my hand. It says: We think the scheme should remain one for relatively short credits. Long credits involve entirely different risks, and it is not, in our view, desirable that such applications should in general be entertained. Some of his difficulties would be minimised if he could give shorter credits in business transactions. I could give illustrations of dealers in textile goods in the Central States of Europe who require at least 90 days credit, and often take more. They buy on these terms and gradually build up a stock, but when the time comes for payment they are unable to produce the cash. It is the dealing in goods by people who have not sufficient capital to carry on their business in a logical and businesslike way which causes so many of the bad debts in Central Europe and in some of the South American States.

I shall be glad if the hon. Member will inform us whether his Department has been able to carry out the other recommendations in this report—namely, to introduce a greater elasticity in the acceptance of risks—as suggested by the hon. Member for Pudsey and Otley, and whether he has been able to effect such economies or increase the volume of business so that the rate charge for this insurance may be on a smaller scale. We have heard a great deal as to the causes of the shrinkage in our export trade, but the main cause is that we are unable to produce at the prices which are necessary to market our goods in these countries. I should be out of order if I digressed upon what I think is the solution of the question, but my solution is a simple one, and it is that instead of searching abroad for all these markets with all this trouble I should make sure of our own home market. That is out of order and, therefore, we must consider whether this Department can do anything to help the export trade. I do not think it can do much if the premium to he added to the cost of goods shipped abroad is 10 per cent. That means that if the Department can only accept the risk at a cost of 10 per cent., which was the figure given by the hon. Member for Withington (Mr. Simon) in his halfhearted and weak speech—

Photo of Mr Thomas Johnston Mr Thomas Johnston , Stirlingshire and Clackmannanshire Western

It is a pity that story should be repeated and bandied about. It is not 10 per cent.; it works out at 5 per cent.

Photo of Mr James Lockwood Mr James Lockwood , Shipley

I quite agree, and I am glad that the Lord Privy Seal has drawn my attention to the fact, but he will agree that that was the figure mentioned by the hon. Member. I am considerably relieved to hear that that figure is not the usual rate charged, but again I come back to the report. If the Minister can by the exercise of economy in his Department and by increasing the business reduce the premium it will be a great gain.

Photo of Mr Herwald Ramsbotham Mr Herwald Ramsbotham , Lancaster

My hon. Friend the Member for Shipley (Mr. Lockwood) seems a little surprised that so much of the Debate has been concerned with Russia, but that is not remarkable when it is remembered that the credits granted to Russia by the department have been double those granted to the rest of the world. I want to say a few words about the statement made by the President of the Board of Trade a fortnight ago when he envisaged a new departure in policy. He said that the department were now prepared to consider sympathetically applications for guarantees in respect of orders for heavy engineering materials and would allow credits up to 30 months. It may be interesting to relate this new policy to the very remarkable and interesting speech made by Mr. Stalin a fortnight before the President of the Board announced this new departure, and if the Committee will bear with me I will quote one or two extracts from that speech, a very frank and extremely interesting speech. Talking about his policy, Mr. Stalin said: We must immediately proceed to the mechanisation of the most arduous labour processes, developing this to the full (in the timber and building industry, coal mining, loading and unloading, transport, heavy metallurgy.) This does not mean, of course, that we have entirely to give up manual labour. … But it does mean that the mechanisation of the processes of labour is that new and decisive force without which it is impossible to maintain either the tempo or the new scales of our production. Later on he says: We know from the history of capitalist countries that not one young State which wished to raise its industry to a higher stage was able to do so without aid, in the form of long-term credits or loans. He then proceeded to inform his audience that: We have not only restored industry; we have not only restored agriculture and transport, we have already began the gigantic work of reconstructing heavy industry, agriculture and transport. Of course, we have spent tens of milliards of roubles on this work. Where did these milliards come from? From light industry, from agriculture and from Budget accumulations. And then he says—and this is most significant: But to-day things are quite different. If, previously, the old sources of accumulalation sufficed for the reconstruction of industry and transport, to-day it is quite apparent that they are beginning to fail. The question to-day is no longer that of reconstructing our old industry. The question now is that of creating a new technically equipped industry in the Urals, in Siberia. He went on to point out that: Agriculture is a no less rich source of accumulation, but, at the present time, during the period of its reconstruction, agriculture itself requires financial aid from the State. With regard to Budget accumulations. … they cannot and must not be unlimited. What remains, therefore? There remains heavy industry. It is perfectly clear from the tenor of his speech that his difficulty is to obtain credits. What he requires from credits and loans is to be able to equip his heavy industry, to build his iron and steel works and textile mills. That is what he wants from this country, or from anywhere else where he can get credit. The credit for 30 months which is suggested, though longer than the other credits, is still a short-term credit. I hold that for the class of work for which it is obviously required by the Russian people the term is far too short. It is useless to expect to build up and finance a big heavy industry, such as iron and steel or textiles, on credits of 30 months, or indeed three or four years. We required in this country 10 years or 20 years loans, and even longer loans. In giving these people 30 months credit for heavy plant we are doing a disservice and we are encouraging the Russians to do very much what Germany has done, in other words we finance their industries and their shortage of capital and their heavy industries on comparatively short-term credits which, when nervousness supervenes, are called in and cause general disaster and bring the whole credit down.

Therefore, I suggest that before this policy of giving credits for new and heavy machinery and the building up of heavy Russian industries is financed to any extent, the question should be very carefully considered whether or not in time, in the event of any commercial failure in Russia, we may not lose the whole of the money we advance, and bring about in Russia very much the same position as has already occurred in Germany, and for very much the same reasons. There is also the question whether it is wise to give this artificial stimulus to the heavy industries in Russia. The result must be, of course, if the scheme is successful, to creat industries which will compete with ours. I am well aware that we have done that for the last 50 or 60 years, and that it is too late to go back upon a policy of that kind, but in this case we are giving State credit to people who must inevitably become competitors, no matter what the hon. Member for East Leicester (Mr. Wise) may say in regard to the Five Year Plan. One always listens with great respect to what the hon. Member for East Leicester says, because he is so closely associated with Russian industry and has a first-hand acquaintance with its ramifications and its needs. At the same time I suggest to the Minister that, taking the long view, it may not be altogether a wise thing to take special steps in order to stimulate, by the credit of our State, the heavy industries of another State.

Russia is 80 per cent. agricultural, and it may be said with some truth that Russia is possibly in much the same kind of state as Australia is, in other words that the desire for economic self-sufficiency which has already so much upset the industrial balance of Europe, is being carried still further in Russia, and will create much the same position there as in Australia. Australia is a country which is primarily agricultural, and it can do the best for itself agriculturally, but in order to achieve self-sufficiency it indulges in an industrial programme. I feel some diffidence on this point, because for generations we have supplied other countries with industrial equipment, and in some ways now we are feeling the effect of it. I remember that four years ago, in my own constituency, at a by-election I had a very troublesome meeting of mill hands. I was asked what advantage it would be if the capitalists of Great Britain financed and equipped the mills of Shanghai, which were then taking the business that these same mill hands used to do. I found it a little difficult to answer to their satisfaction. Naturally, I told them that the business gave employment and profit to English people, and that if we did not do it, someone else would do it. But that answer did not "go down," and I lost a lot of votes as a result of it.

That is a point which may still be put to the Minister with some force, because, although we cannot go back on our policy of supplying capital equipment all over the world wherever we can get the business, yet I am not sure that the State should go out of its way to provide credit for such supplies. If it is a question of supplying goods on credit, by all means let us supply them, say, for Lancashire textiles, but I am not so much interested in supplying them for textile machinery. There are grave risks, in any event, in the course that we are taking, and although it is perfectly true that no losses have yet been sustained and that the Russian Government has stood to its bargain, yet conditions may shortly arise when the Russian Government, with the best will in the world, may not be able to stick to its bargain. I have not yet heard from the Minister a satisfactory explanation as to why it is good business, when the Russian Government has from time to time very large credits here, that is money lying to its credit in London, to provide them with additional credit facilities. It is perfectly feasible for the Russians to pay cash for the goods they require. The Minister himself, if he was supplying an overseas customer with goods and if he knew that that customer had large deposits here, would certainly endeavour to secure payment out of those deposits rather than draw a Bill on a customer abroad.

9.0 p.m.

There are three questions that I want to ask. Will the Minister state the proportion of the credits as between light goods or non-capital goods, and capital goods, in the last three years? Is there any differentiation to show how much has been advanced in respect of capital goods and how much in respect of non-capital goods? Secondly, has the Minister figures differentiating the credits given in respect of the export of Lancashire textiles and Lancashire textile machinery? Thirdly, has he figures to show, for the last three years, the proportion of the advances to Russia compared with the rest of the world? There is one further point I wish to put to the Minister. He gave us a very interesting account of the work of his Department, but a Debate of this kind has very naturally gravitated largely upon Russia, and we have heard very little indeed of his view as to the present situation in Russia. After all, Russia is his customer, and I suggest that he should give the House his view as to the credit risk, as to what progress Russia is making, just as he would expect to have that information if he himself were making an advance to one of his own customers.

Duchess of ATHOLL:

I do not wish to detain the Committee long, but I should like to make some comments upon one or two of the arguments advanced during this discussion from the benches opposite. First, may I say that the hon. Member for Lancaster (Mr. Ramsbotham) has done a real service in this discussion by emphasising the difference between the two types of industries, namely, capital or heavy industries on the one hand, and on the other, light industries, making articles for general consumption? That is a distinction which has been too much ignored in speeches made from the opposite side of the Committee. Industry as a whole has been dwelt upon by various speakers without any consideration being given to the question of the type of industrial products which Russia is asking from us and for which exports credits are being given. In Russia, however, that distinction is clearly kept in mind and industry is divided into two grades, grade A being the heavy or capital industries, and grade B the light industries, producing articles for general consumption. The policy of the Five-Year Plan is, openly and avowedly, to do everything possible to develop grade A industries, even at the expense of the grade B industries.

It was, therefore, with amazement that I heard the hon. Member for East Leicester (Mr. Wise) tell us that the aim of the Five-Year Plan was to produce the goods which the Russian people want, and further that Russia's purpose was not to flood the world with their products but to meet the needs of their own people. If Russia's aim in the Five-Year Plan is to produce the goods which her people want, we may well ask why, when she has increased her output of wheat and cereals, instead of keeping them for her own people, she sends them to us; why she sends us large quantities of canned salmon and other fish when fish has vanished from the ration cards of her own people for some time past; and why she is sending us soap and chemicals, which are badly needed in Russia, and therefore increasing gradually, as I believe, from month to month, the privations that her people have been enduring for the last year or two. If one wants to know the purpose of any venture in life, the best thing to do is to find out what is said about it and written about it by those who are responsible for it, and if one turns to the book of Mr. Grinko on the Five-Year Plan, we find at the outset this very frank statement: The Five-Year Plan is an important part of the offensive of the proletariat of the world against capitalism; it is a plan tending to undermine capitalist stabilisation; it is a great plan of world revolution. If anybody wishes to understand the Five-Year Plan, I commend them to this book. In face of a statement such as that which I have quoted, and other statements with which this book teems, it is quite impossible to accept the view that the purpose of the Five-Year Plan is to improve the standards of living in Russia. It is quite clear that the intention is, not only to make Russia more industrial and to balance better her industries and her agriculture—an aim with which we would all sympathise—but that the emphasis is always on the heavy industries. In fact, labour has been taken from the light industries in order to provide a sufficiency of labour for the heavy industries, and it is obvious, from reading the book from which I have quoted, that the purpose of the plan is to make Russia, as far as possible, independent of other manufacturing countries in the world.

The right hon. Gentleman the ex-President of the Board of Trade mentioned some results of this great emphasis on the heavy industries. He told us that Russian anthracite is beginning to undersell British anthracite in the markets of Europe. It has also begun to undersell us in the United States. A report made a few months ago to Congress told how British anthracite had held the field in the United States, but that now Russian anthracite produced under conditions which no British miner would tolerate, and which none of us would tolerate, is beginning to undersell British anthracite in that important market. There is also greatly increased production of pig iron. According to a statement of M. Stalin, whereas the production of pig iron in Russia in 1926–27 was 2.9 million tons, it was expected to rise to 5.5 million tons in 1929–30, and the aim has beer frankly stated, to bring that production up to 17,000,000 tons at the end of the first Five-Year Plan, while a preliminary statement which I have seen in reference to a second Plan, shows that they aim at raising the production finally to 60,000,000 tons. The biggest production I think in the world at the present time is in the United States with 42,000,000 tons, so that even though Russia may not realise all her ambitions, it is perfectly clear, from everything said and written about the Five-Year Plan by those responsible for it, that it is on the heavy-industries that stress is laid and that her ambitions in that direction are continually increasing.

Therefore, it is difficult to take seriously what the hon. Member for Leicester has said about Russia's intentions in this matter, and his reference to Russia's imports of such things as textiles and hoots. If Russia wants boots and textiles—and from all accounts she wants them badly—why does she not import them from us now instead of beginning to send us textiles. I have recently read of a new boot factory which has been started in Russia specially for export purposes. I notice that the Lord Privy Seal smiles but I do not suggest that Russian boots are coming over here. This factory, however, has been established for the production of boots which are likely to be exported to Asiatic countries. I feel that I must say to the hon. and gallant Member for Abingdon (Major Glyn) that I take a very different view from his of the speech of M. Stalin. The hon. and gallant Member deprecated putting any sinister construction upon that speech, and I do not wish to put any particularly sinister construction upon it, but I want to look facts in the face.

In the first place the speech is an unequivocal statement that voluntary recruitment for industry in Russia has broken down. That is very interesting when we remember that only within the last three months, the hon. Member for Lincoln (Mr. R. A. Taylor) told us that there was no forced labour in Russia. We also had an official denial much to the same effect a month or two previously, but now we have the dictator of the Soviet Union telling us frankly that voluntary recruitment for industry has broken down and that, in future, industry-is to be recruited by conscript labour supplied under regular contracts by the collective farms. We are told that regular contracts for this have been entered into between the trusts which manage the various branches of State industry and the collective farms into which members of the poorer and middle classes of Russia have been pressed in a very harsh way in the last year or two. That is the first thing—a frank admission that Russia's industries for the Five-Year Plan are to be supplied with conscript labour. I do not say that necessarily that will be less efficient labour, but it is an indication of the length to which Russia's rulers will go to ensure getting the labour necessary for their plan.

The second very interesting thing about that speech is that it indicates the completion of the process of paying the Russian worker according to the work he does which was introduced some years back and which now apparently is to be established and made universal in Russia. Most people would agree that paying men or women according to the value of the work which they do, is an excellent way of getting the best work out of them. Therefore that proposal, though it mentis the abandonment of a principle with which, one believes, a Socialist community would agree, of paying everybody equally without regard to the work which they do, is one of which we must take note for this reason—that it certainly affords the rulers of Soviet Russia the prospect of getting more efficient labour than they have been able to count on in the past.

There are other announcements in that speech, as, for instance, that the continuous working week may be abandoned in order that each worker may be more completely responsible for the state of the machine that he works, because when you have a continuous working week you cannot be sure that you do not have different workers working on the same machine on different days. It is evident that one of the purposes of the new proposals is to fix more clearly individual responsibility on each worker for the quality of the work which he turns out. Finally, opportunities that have hitherto been denied to those not of the Communist faith are to he given to them of promotion to important posts, such as those of managers in factories. That again is evidence that the promoters of the Five-Year Plan are, very sensibly from their point of view, determined to call to its service merit and capacity wherever they can be found.

Therefore, so far from seeing in the recent speech of Mr. Stalin an announcement of no very great interest, or even, as some of our newspapers have said, an abandonment of the Five-Year Plan I think it is clear to those who read the speech carefully that it means the continued prosecution of the Five-Year Plan -which is to be followed by a second Five-Year Plan and possibly by a third —and the summoning to its aid of all the methods that capitalist employers and capitalist countries have universally found most successful in the past. There should be no doubt in this country that the Russian Five-Year Plan will continue, with better methods of securing efficiency than have prevailed in the past. [HON. MEMBERS: "Hear, hear!"] I am only too pleased that the Russian worker should be efficient, but I want him to be a free worker and nobody can say that he is that now, seeing that conscript labour is now being adopted.

I submit that that places a very grave responsibility, from the point of view of morality and humanity, on a Government that does anything to ensure the prosecution of the Five-Year Plan, based on conditions such as those that I have mentioned. If the British Government proposed to run a five-year plan or any plan in any British dependency based upon conscript labour, as in Russia, just imagine what would be said by the people of this country; and if it were done by a Unionist Government, which it never could be, imagine what hon. Members opposite or hon. Members of the Liberal party would say, if they were faithful to what they have said in the past. No Government in this country could possibly propose such a thing for a moment. I submit that Mr. Stalin's frank admission that the Five-Year Plan is to be based in future on conscript labour places a very grave responsibility on those who give credit to the Soviet Government and buy the products of that labour.

The point for us to remember to-night is this, that the export credits which we are considering, and which are going to be given on longer terms than before, and on longer terms, I understand, than those on which any other foreign country gives credit—I believe that Germany does not give credit for more than 18 or 21 months—

Photo of Mr Thomas Johnston Mr Thomas Johnston , Stirlingshire and Clackmannanshire Western

The Noble Lady is quite wrong. As a matter of fact, the terms which we have just given to Russia for heavy engineering goods only bring our length of credit for these goods up to the limits that had already been fixed by the German manufacturers.

Duchess of ATHOLL:

That may be so. The right hon. Gentleman, of course, has access to information that I cannot pretend to have. My information has been otherwise, but still the Government have to take the responsibility of saying whether they are ready to continue to assist a plan based on labour conditions such as those that we now know prevail in Russia, But whatever the conditions under which the plan is being prosecuted, the Government cannot get away from the fact that it is a plan for increasing the heavy industries of Russia, and that Russia, to that end, has already made tremendous efforts to increase her output of coal, iron, and steel. She has already increased tremendously heir output of tractors—14,000 tractors produced in the first six months of this year, compared with 13,000 in the whole of last year—and we cannot hope in such circumstances to get our share of supplying machinery to Russia in the future as in the past. Therefore, we on this side feel that this policy of giving credits to Russia for the only kind of good that she will buy from us, namely, machinery., is a very short-sighted policy and one which is likely before long very gravely to add to the difficulties of industry in this country which already, as we know, are tremendous.

Photo of Sir Geoffrey Mander Sir Geoffrey Mander , Wolverhampton East

The Noble Lady has been referring to the future of the Five-Year Plan and its effects, but no one is more responsible for the introduction of that plan than herself and her friends in this country and in other countries who, by their constant attempts to isolate Russia and to make Russia feel that if their will succeeded, she would be cut off from the rest of the world and a cordon sanitaire erected, have made Russia feel that she must do something to protect herself in the event of such a policy being carried out. It is the people of the Right, the Whites of the Right, who are responsible, more than anybody else, for the policy which Russia is adopting for self-preservation to a large extent at the present time.

Attention has been called to the recent most interesting speech of Mr. Stalin, and I have no doubt that what he was then saying was simply putting into words what has been the policy for a long time in Russian factories. Surely we ought to be pleased to find that they are simply-adopting the well-known capitalist practices which have been found necessary in this country to make business run on successful lines. I think it will be necessary in future, when the Five-Year Plan succeeds, as I believe it will, for the capitalist countries of the world so to organise themselves as to be capable of competing with a system of State Socialism in Russia, or else those capitalist countries will cut a very poor figure before the new era that has been started by the experiments in Russia.

Something has been said in this Debate about the question of barter, and I know the idea is popular in some circles that we should insist on trade between Russia and this country taking the form of barter. That, of course, could be carried out—theoretically, it is quite sound—but the essential obstacle to it is that the Russians say that they will have nothing whatever to do with it, that they find that they can buy the goods which they require, without anything of the kind, suitable in quality and price, in other parts of the world. In these circumstances, they are not prepared to consider the question of barter. It has been pointed out by another hon. Member to-day that when you come to examine the trade balance in the light of the invisible exports and questions of that kind, you find that really you are getting practically a balance at the present time.

I should like to say a word strongly in support of the admirable speech made by my hon. Friend the Member for Withington (Mr. Simon) earlier in the Debate, when he made the one definite, practical proposal that has been put before us today, namely, that the manufacturers of this country should be put in the same advantageous position as traders in Germany and Italy at the present time, in which countries the credit insurance which they have to pay is something between 1 and 2 per cent., as against 10 per cent. in this country.

Photo of Mr Thomas Johnston Mr Thomas Johnston , Stirlingshire and Clackmannanshire Western

That is a misapprehension. If you take a 9 per cent. insurance rate for 60 per cent. of the orders, and that is all that the export credits scheme charges, it works out at about 5 per cent. per annum.

Photo of Sir Geoffrey Mander Sir Geoffrey Mander , Wolverhampton East

That is not my information. But even taking what the Lord Privy Seal has said, I cannot see why our manufacturers should have to pay five times as much as their competitors in other countries. Many of us on these benches were very disappointed at the reply given by the Minister. He said that the policy of the committee had not been changed. Its policy is to look at these things from a strictly businesslike point of view, when the problem should be looked at from a political point of view. The Government ought to take courage in both hands and decide to bear such risk as there may be. No doubt the particular Advisory Committee which the Government have got to consider the question, looking at it as they do from the traditional business point of view, think there might be some risk, but a committee of bankers is not a particularly suitable body for considering the question of what is not a business but a political risk. I should have thought that the politicians of the Government of the day, with all the knowledge at their disposal, are much more a body to decide whether there is likely to be default in the business that Russia may do than anybody else.

The Government should try to get rid of the timidity complex that so unfortunately affects them, and not be continually seeking after the freedom of the City of London and popularity in that quarter. They should do what would command the support and unanimous opinion of that side of the House and of these benches, and decide that they will take the risk themselves—for it is a very small risk; indeed, there is no reason to think there will be any risk at all—and do what would lead to very much increased employment in this country and place manufacturers in a position they do not occupy at the present time. I was very glad to hear the Lord Privy Seal say that he had been successful in arranging large orders with Russia. I hope he will be still more successful, but I hope he will go the whole way, and decide to adopt a new course of policy which will lead to very much more extensive orders.

There is one point on which I should like to ask for some information. If this insurance has been going on for the last 10 years or so, and there has been no default of any kind, presumably there is a very considerable sum available. I do not know whether the right hon. Gentleman would be prepared to say what that sum is at the present time, and what is being done with it.

Photo of Mr Thomas Johnston Mr Thomas Johnston , Stirlingshire and Clackmannanshire Western

It is used as a reserve against losses. There have been losses in other parts of the world, but none in our Russian trade.

Photo of Mr Thomas Johnston Mr Thomas Johnston , Stirlingshire and Clackmannanshire Western

I could not say offhand. We have built up a reserve fund.

Photo of Sir Geoffrey Mander Sir Geoffrey Mander , Wolverhampton East

Then this reserve, as far as it affects Russia, is being used to pay losses incurred in other parts of the world. That is a very interesting development. The only other point to which I want to refer is the fact that we have got so few Englishmen in Russia at present occupying positions of technical or managerial responsibility. There are a very large number of Americans and Germans there, but very few Englishmen. My hon. Friend the Member for Withington gave certain figures. The figures I have do not quite correspond with his, but the proportion is about the same. In reply to a question put by me the other day, the Minister stated that there were 57 Englishmen occupying certain technical positions in Russia. There is no reason at all why there should not have been during the last five or 10 years at least as many Englishmen as Americans and Germans operating there. It is of enormous advantage to those countries. Their machinery goes there, and when fresh machinery is wanted or repairs are wanted, they naturally go to the country from which the machinery came, and it is ordered through the instrumentality of the nationals of those countries who are there in very important positions.

I believe that the reason why we are not better represented ill Russia in that way is because of the intense prejudice that has been excited in this country by anything to do with Russia. That is, apparently, the reason why such a stiff attitude has been taken up by the Advisory Committee of financiers in regard to the insurance rate. I remember reading a statement not long ago by a very well-known cycle manufacturer in this country who said he had had an offer to go to Russia to set up a great factory there on the same sort of scale as is being done by Americans. He had turned the offer down, obviously for political reasons. All this agitation about which we hear so much from hon. Members above the Gangway is doing this country an immense amount of harm in business affairs.

Englishmen should be encouraged to go to Russia, and I hope the Government will do all they can to see that in these new great industries which are arising there, there shall be Englishmen in the key positions, and not only Americans and Germans, so that in that way we shall receive our share of the business that is bound to be distributed. I think that the trouble has arisen through the violent political prejudice excited in certain quarters whenever the question of Russia is mentioned. The reason why-Americans have gone there and are there in such large numbers, with great credit to their country, is because while the American Government may have strong feelings of prejudice against Russia, the American business man has none whatsoever. When he sees a good thing, and particularly when it may be on a large scale, he goes after it, whatever form the Government of that country may take. It is lamentable that the business men of this country have not seized the opportunity that is awaiting them as much as the nationals of other countries who have gone to Russia and established themselves in the predominant positions.

On the main question, the last plea I venture to make to the Government is this. The Lord Privy Seal has admitted that our manufactures are paying S per cent. as against the 1 and 2 per cent. of Germany and Italy. I trust the Government will reconsider the matter, will summon up their courage and not be afraid of not being toasted at City banquets for having gone forward in strict line with the best Conservative opinion in the City. Let them get rid of the fear and timidity which, unfortunately, distinguish some of their actions, and let them strike a blow for employment in this country which will place our manufacturers in at least as good a position as those of Germany, Italy and other lands.

Photo of Mr Henry Muggeridge Mr Henry Muggeridge , Romford

The last speaker talked about charging 10 per cent. for underwriting the obligations which Russia enters into for contracts placed in this country. I cannot understand why a usually so well-informed Member misrepresents so completely the situation with regard to these credit facilities. The 9 per cent. is not on the total value of the contract, but, as has been explained more than once in this House, on the 60 per cent., which is the proportion of the debt covered under the scheme.

Photo of Mr William Lane-Mitchell Mr William Lane-Mitchell , Wandsworth Streatham

You charge 10 per cent. on the risk you take.

Photo of Mr Henry Muggeridge Mr Henry Muggeridge , Romford

It is 9 per cent. on 60 per cent. of the value of the order taken. That is entirely different from, the way in which it was put by the hon. Member who has just spoken, and by another Member of his party, who made out that we charged for two and a half years something like 25 per cent. of the value of the order. That is not so. If you take 9 per cent. on 60 per cent., it is obvious that the total charge that the manufacturer who accepts the order will have to pay is something in the neighbourhood of 5 per cent. It is a well-known fact that the manufacturer can, discount bills in this country at a much lower rate than manufacturers in Germany can discount bills in their country. The result is that when you put the lower cost of discounting a bill in London on to the cost of underwriting by the Government, the percentage comes out less in many cases than the percentage charged by the Germans in fulfilling their orders. The hon. Member for East Wolverhampton (Mr. Mander) shakes his head. He is one of those who, having made a point, cannot abandon it when a Member on the other side of the House attempts to put the case in a light which is more in accordance with the facts.

Photo of Sir Geoffrey Mander Sir Geoffrey Mander , Wolverhampton East

I based my case, after the Lord Privy Seal intervened, on the 5 per cent., and even then I showed that it was five times as much as their competitors in other countries.

Photo of Mr Henry Muggeridge Mr Henry Muggeridge , Romford

The hon. Member did not deal with the fact that I have mentioned, that a manufacturer in London can get a very much lower discount rate for cashing a bill, 60 per cent. of which is underwritten by the Government, than a manufacturer can get in Germany. We all know what is done with these bills. They are not treasured up for two years in a manufacturer's office. They are taken as soon as possible to a discount house or a bank, and discounted, so that a manufacturer may bring the cash which they yield into his own business. When you consider the facilities in London for discounting a bill compared with the facilities in Berlin, I challenge contradiction of my statement that it can be done so much cheaper in London. The proof of that is in the fact that, according to my information, Russia in the case of the heavy engineering goods which she wishes us to manufacture, has accepted these terms, and has been pleased to get the business in spite of the terms. When we know that the heavy engineering business has been cut into by countries like America and Germany, we can realise that our terms cannot be very onerous if we are able, in spite of what the hon. Member regards as deterrent terms, to get Russia to place her orders with us for heavy engineering goods. Over and over again it has been stated that our Government are overcharging, and for that reason I have tried to represent the position correctly.

I want to draw attention to the whole question of Russia, but not as it exists in the minds of Members on the benches below the Gangway. They carry about with them an obsession that Russia for some unearthly reason is an enemy of this country. They remind me of the sort of thing which many of us experienced during the War when there was an air raid. We all felt, especially a man with a family like myself, that the invader was aiming at us individually. Everyone had that sort of feeling. One's chance of being hit was one in a million; nevertheless, one had the uncomfortable feeling that the design of the wicked person who came over with his lethal weapon was himself. That, I have no doubt, correctly represented the state of mind of large numbers of people during an air raid. The party opposite is unfortunate. I regard as unfortunate all people who have an obsession. Some have an obsession to such an extent that they are put under restraint, but others have sufficient control over themselves to be allowed to be at large. That is the unfortunate state of hon. Members opposite. I have come to the conclusion that they really do believe that for some unearthly reason Russia is in a conspiracy to attack us and to ruin us—not America or Germany or some other country, but us.

Hon. Members are in the state of mind in which we were during the black days of the air raids. They really think that Russia is aiming at England. Why should she aim particularly at England? If she has any reason at all, it is supplied by hon. Members themselves. For instance, their one-time leader—one does not know whether he retains that position—actually attacked Russia. He spent hundreds of millions of pounds in direct hostile attacks upon that country, and for that reason perhaps Russia may be said to have specific designs upon this country. Perhaps, however, hon. Members are thinking of their own language, and of their constant nagging at Russia. Their many questions remind me very much of a nagging wife; it is one constant nagging. Every time Russia is mentioned they immediately try to think of some catty observation to make. The only thing they do is to expose the state of their own minds.

We feel that they are to be pitied, and we could, in many cases, suggest a remedy. If hon. Members wish for a little comfort at nights, I will do my best to assuage their terrors. By and by, when they grow up a little, and get accustomed to the idea that Russia is not that terrible creature with a wild beard and glaring eyes which they have in their minds, but that an ordinary common or garden Russian is very much like the ordinary common or garden man we meet outside, they will get back into their more sober senses—[Interruption]. They are intoxicated with their own terrors. I am not suggesting that they are intoxicated in any other sense. Let me see whether this terror is really well based. In the course of this Debate I have tried to find out what they have on their guilty consciences about attacking Russia, a country with which we are at peace. They cannot expect Russia to love us when they call her the names they do, and when they take up the attitude which is so constantly adopted not only on the back benches but on the Front Benches where, presumably, responsible statesmen, or statesmen who one day will be responsible, are to be found.

What is the indictment against Russia? I have been trying to sum it up while listening to this Debate. It is a very mixed performance. The Law Courts demand a very much better case than is considered good enough for us here in the highest Court in the Realm. In the mind of the Noble Lady the Member for Perth (Duchess of Atholl) one proof is that Russia is wicked enough, when placing orders in this country, to prefer heavy goods to light goods, capital articles to articles that are for immediate consumption. She thinks it is a sign of the deep designs of the Russian people that they come here to ask for heavy machinery. Can we be surprised that they ask for heavy machinery? They see from our attitude that it is unsafe to be dependent upon us for year to year supplies of goods. They do not know politics as well as we do—our politics—and they never know when the Opposition will come in, and when that occurs think we shall discontinue relations with Russia, according to what they say, and these supplies of goods will suddenly be cut off. Why has Russia asked for heavy machinery? In order that she may become more and more independent of this country, that she may have the capital goods with which she can produce, by and by, for her home requirements. But according to the Noble Lady that is a proof that the Russians are conspirators. "Oet animal est très méchant: quand on l'attaque il se défend." It is a wicked animal because it defends itself when it is attacked. That is exactly the view of the Opposition, that Russia is wicked because she defends herself when attacked. In all these matters I can see nothing but defensive steps taken by Russia.

Another count in the indictment is that the Russians have sent goods here. That is another sign that they are engaged in a prolonged and deep conspiracy against us. If it is not soap, or butter with bugs in, it is good corn at a low price. What a deep, designing people—to send us good corn at a low price! It is only providing us with the very thing we sometimes ask the Almighty to provide. We ask for a good harvest, and when the Russians send us part of their good harvest we say they have a deep design against our welfare. I cannot understand the reasoning, and barely the sanity, of the other side. Why should not they send goods here? In what other way are they to keep a clean sheet in the matter of credit as regards the goods they have contracted to buy from us if they do not send goods here? Do hon. Members opposite want their roubles here? Would they like them to pay us in their paper roubles? How are they to pay us unless they establish a credit in London? The only way in which they can do it is by sending us goods. With the aid of that credit they are able to finance their obligations to our manufacturers as and when they mature.

The Opposition go even further. They say we ought not to have even a nodding acquaintance with Russia until she has paid all her obligations, whatever they may amount to, entered into during the days of the Tsar—all the debts that Russia owed while there was a Tsar to incur debt. Most of the debt was incurred to put down the revolutionaries and to make the Tsar and the autocratic bureaucracy which belonged to him independent of the Duma, that pale imitation of this House which they set up at St. Petersburg. The Tsar borrowed the great bulk of that money in order to be independent of the Duma, and ultimately smashed the Duma and brought about the revolution, to all intents and purposes. Can we wonder that they do not acknowledge that debt? If a man attacks me with a very expensive weapon, am I to be asked to pay for that weapon if I manage to avoid any shots at myself? That is what we are asking Russia to do—to foot the bill that was incurred in order to beat the people who were asking for freedom in the days of the Tsar.

Supposing our own Government and Russia were able to come to some sort of modus vivendi with regard to Russia's indebtedness to us and our counter-indebtedness to Russia, and there was a balance that Russia had to pay us, how would Russia pay it if we are to exclude all Russian articles, from butter to corn? There are no means of paying except by sending her commodities here. Therefore, we are asking her to make bricks without straw. We are asking her to meet her debt, and yet knocking out of her hands any possible means by which she could pay it. Are we so scrupulously particular as never to trade with people of a lower morality than ourselves? Have we never traded with Arab traders who were selling poisonous drinks to natives? Everybody knows that we have not asked what country is to be the destination of our goods; have not asked whether the country to which our goods were going was sound on the principles of the Constitution, or whether the people could repeat the Athanasian or any other creed. "Can they pay?" is all we ask. If they can pay they can pray to what God they like; they can do what they like to subordinate classes; we will go on supplying them with our goods.

Now, in the light of the whole world, which knows our history, a history of which we are both proud and ashamed, we are asked to take up a high moral tone and to say that we cannot touch anything that is Russian, not merely because there are bugs in the butter but because their religion is unsound, and because in many other respects they do not come up to our high suburban standard of what is right in industrial matters. I am surprised that hon. Members can sink to such a level as that. In the matter of the payment of debts, we have already come down to what may be the wiping out of a debt that is bigger than the Russian debt if the terms can be agreed upon, and I am certain that it is larger than the sum mentioned in this House. I will give a quotation, not from the "Daily Herald," but from the "Financial Times," which everybody opposite respects, and which is only received with suspicion on this side because we have no money to invest. What does this paper say: The Stock Exchange Council once more draws attention to the notorious default of the eight Southern States of the American Union, and on this occasion gives an historic survey of one of the most glaring and indefensible examples of repudiation—that by Mississippi. It is a long time ago, but does that make it any better? If it is a question of time, the Russians will keep you waiting a long time and then you will write off that debt. When the Government come to negotiate with a Union of Soviet Asia, Europe and Africa in the future, they will not insist, as we do not insist when we approach the United States, that those defaulting States shall pay what they incurred years ago. Let us live in a world of realism, and remember that with our population so largely unemployed, where we have a chance of being paid our current debts, any field should be exploited to the utmost in order to provide our unemployed workers with work.

Another reason why the Russians are suspect and why the Russians disturb the sleep of hon. Members is that they are convinced in their simple minds that Russia has engaged in this Five-Year Plan—this stupendous output of united effort to overcome its low standard of life—as another deep conspiracy against this country. At one time we were told in regard to this plan, "Look, it has not succeeded." Now it is felt that it is succeeding, and, the more it succeeds, the more convinced hon. Gentlemen and right hon. Gentlemen opposite are that it is a conspiracy.

Photo of Mr Archibald Skelton Mr Archibald Skelton , Perth

Does the hon. Member agree with that plan?

10.0 p.m.

Photo of Mr Henry Muggeridge Mr Henry Muggeridge , Romford

No, I do not. What was my country doing in the early 19th century when we were undergoing an industrial revolution? There is a text which is written in every book on economics which says, "Let us become the workshop of the world." That was the text which inspired Cobden and those associated with him in Lancashire. They tried to enforce that system upon the rest of the world, but that was not considered a deep design, and it was not directed against the interests of the rest of the world. At that time we felt that we were fulfiling our destiny, and, whatever the consequences, we went on improving machinery, increasing productivity, and sending our goods abroad. Of course, all that was bound to come to an end. What is Russia doing to-day? Is she seeking to suborh the rest of the world or trying to ride roughshod over all our customs? Nothing of the kind. Russia is simply fulfilling her destiny, and, in working out her destiny and making good her place among the nations of the world, she is showing the path which we may ultimately have to tread.

Photo of Sir Douglas Hacking Sir Douglas Hacking , Chorley

Before dealing with the policy of these Estimates, upon which the Debate has centred during the whole of the day, I desire to ask a few questions of detail with regard to the Estimates themselves, and I shall be glad if the hon. Member in charge of the Estimates will turn to page 62 of the Estimate, sub-head III, B, Travelling and Incidental Expenses. There, the hon. Member will find a sum under legal and other expenses estimated at £6,500 for the year 1931, whereas in 1930 the sum involved was only £l,200. That shows an increase of £5,300. That sum appears to me to be out of all proportion to the increase of payments under the guarantee, or to the increase in the premiums. I should be glad if the hon. Member would give rather more details of this increase in the Estimate. There is an item C immediately below the one I have just mentioned: Provision for implementing guarantees given in respect of goods wholly or partly produced or manufactured in the United Kingdom. That provision has increased from £127,000 to £150,000, showing an increase of £25,000. That increase cannot be the estimated loss on the Russian business for one bad debt in Russia would wipe out the whole value of the policies in force. If it is not due to Russian loss, has the volume of trade with other countries increased or is the Department running a greater risk? If we are told that an increase in the business insured with countries other than Russia is the cause of the increase in the Estimate, we can more accurately determine whether the Estimate is a fair and reasonable one. With repect to the item Sub-head E, Appropriations in Aid on page 63, I would ask the hon. Member if he can tell me the proportion of the £60,000 premium in 1931 which was in connection with Russian business and also what proportion of the £l79,878 in 1931 was in respect of Russian business.

Having asked these questions of detail, I will return to the policy which has been discussed throughout the day. My right hon. Friend the Member for Hen-don (Sir P. Cunliffe-Lister) dealt with the Export Credits Scheme and devoted a large portion of his speech to dealing fully with the Government's recent announcement with respect to credits for the export of heavy engineering material to the Soviet Union. The Minister in his reply, or his attempt at a reply, to the speech of my right hon. Friend dealt with practically none of the arguments put forward. He led me to believe, however, that there was nothing really new in the announcement which was first made by the Lord Privy Seal at a meeting upstairs, and which was repeated later in the House of Commons by the President of the Board of Trade on 9th July. The Minister for Overseas Trade has said to-day that every transaction still has to go before the Advisory Committee, and he added that that was by Act of Parliament. If ail the transactions have still to be considered by the Advisory Committee, it seems difficult to believe that there is anything new in the announcement made by the President of the Board of Trade on 9th July. If, however, there is nothing new, why was the announcement considered so important as to warrant its being made at a party meeting? My own view, for what it is worth, is that there is a departure from the usual practice and, moreover, it is not a desirable departure. The old custom when I was at the Department of Overseas Trade, which I imagined had existed ever since, was accurately stated by the Minister in reply to a question on 4th November, 1929. He was dealing with the length of credit, and he said: The Advisory Committee have always preferred the shorter rather than the longer periods of credit facilities. A number of applications for the longer periods have, however, been approved. Then came these significant words: I do not propose to interfere with the discretion of the Committee and their consideration of these proposals."—[OFFICIAL REPORT, 4th November, 1929; col. 605, Vol. 231.] That statement was made by the Minister approximately two years ago, but it would appear from the answer given by the President of the Board of Trade that there has been considerable interference, and I would ask the Minister if he is sure that the Government have not, in fact, given an over-riding instruction to the Advisory Committee that credit must-be given for a period of 30 months. If they have given that over-riding instruction, I contend that it is very irregular. It does seem to be the case, for the statement made by the President of the Board of Trade contains these words: It has been arranged that the Export Credits Advisory Committee will be prepared to consider sympathetically applica- tions for guarantees in respect of orders for heavy engineering materials, provided that credits up to 30 months from the date of the order could be arranged. That certainly gives one the impression that 30 months has to be arranged before the Advisory Committee will consider these applications. If that is not so, why did we have these closing words in the right hon. Gentleman's statement: The Soviet representative for his part has agreed that in his ease he is prepared to regard the question of the length of credit as settled. The Soviet representative is convinced that these transactions with Russia in connection with heavy engineering materials have to be on credit, the length of which must be 30 months. That is clearly the impression created in the mind of the Soviet representative, and I imagine from the first part of the statement that it is also in the mind of the Minister. The Advisory Committee was set up to consider applications, and to recommend three things, (1) the proportion of risk they would recommend to be acceptable for cover; (2) what credit should be given in each case; and (3) the rate of premium. Each of these has a bearing upon the other two in determining a sound insurance policy, and you cannot alter the proportion of risk or the length of the credit without affecting the rate of premium. Up to now the length of credit for Russian business has been originally six months and later 12 months. I do not know what the period was just previous to the present arrangement, but I presume that it was somewhere between 12 and 18 months. Therefore, the length of credit for Russian business has been 12 to 18 months, and the proportion of risk accepted has been 60 per cent. of the face value of the contract. The premium which has been charged has been based on 12 or 18 months' credit, and 60 per cent. of the total risk. The premium was considered fair and reasonable on this basis.

Now that the length of credit has been increased to 30 months, I would ask whether the premium charged remains the same. Will the advisory committee increase the rate of premium? Have the committee already increased the rate? The hon. Member for Withington (Mr. Simon) said that they have. It is true that his statement was contradicted by the Lord Privy Seal, but we do not yet know definitely whether or not there has been any change in the rate of premium charged. If there has not been an increase, that is an admission that the previous rate of premium was too high. If, on the other hand, the advisory committee do increase these premiums, the exporter from this country is gaining nothing, for what he gains by the extended period of credit he loses in the increased premium that he has to pay for this insurance. Unless the Minister will tell the Committee the existing rate of premium with the 30 months' credit, and the previous rate of premium when the credit was only for 12 or 18 months, it is impossible for any Member of this Committee to know whether our exporters are gaming anything under the terms of the recent announcement.

Frankly, I am suspicious of the new arrangement, for, when the Minister was speaking, he told us that there had been three resignations from the advisory committee. I would like to ask the Minister who were the three members who resigned. We have had a list of the members, and I think we are entitled to know the names of the three who have resigned; and I think it is also fair to ask the cause of the resignation in each case. It is quite clear that in the past the committee was never in favour of long credits, but was always in favour of short credits, especially in the case of Russia, and I want to know why there has been this sudden change of mind. While I am dealing with this question, let me refer to a remark made, I think, by the hon. Member for Hereford (Mr. F. Owen). He said that he knew as a fact that Italy gives far better terms to Russia than we do. Is that true? I do not ask for details, but I think it is only fair that the Committee should be informed whether or not there is another country in Europe that is giving better terms to Russia than we are.

The Minister has often been asked, especially by Members sitting behind him, whether a bad debt has ever been contracted by the Export Credits Guarantee Department as a result of insuring Russian business, and a cheer always goes up from the benches opposite when the Minister gives an answer in the negative. Hon. Members on that side of the House seem to take a delight in hearing that all the Russian business is done by the Russian Soviet Government, but I think it is only reasonable to ask another question of the Government: Has any money been lost by the Export Credits Guarantee Department as a result of insuring exports to any other Government in the world? Of course, the answer is "No." There has been no loss at all in any transaction with any of the Governments of the world. That, at any rate, shows that other Governments are no worse than the Soviet Government, but the risk of trading with Russia is undoubtedly there all the same. When we are dealing with other countries, we are dealing, in the main, with individual importers—a very large number of individual importers; and, if one importer happens to go bankrupt, obviously the loss is very small. But when you are dealing with Russia, you have all your eggs in the one basket, and with one single failure the value of all your outstanding policies is lost.

The choice appears to be this: If, on the one hand, Russia does not go bankrupt, if she succeeds in her Five Year Plan, partly on account of the fact that we are giving her those credits, she will undoubtedly play a great part in ruining this country by her competition. If, on the other hand, she goes bankrupt, we suffer a serious financial loss through non-payment for our exports. It is not a very happy ending, whichever view one takes, to our trade relationship with that country. Already it has been said that it is difficult to see the necessity for giving special export credit facilities to Russia when there is such a large credit balance in her favour in London at the present moment. There is no doubt that, if Russia had the desire to purchase our goods, she could do so without these facilities, but, without that desire, it is difficult to offer her any inducement which would be large enough to satisfy her.

That there is a very strong inclination on the part of Russia to purchase from the United States of America is obvious. The Minister has a very poor opinion of our industries when he says, as he said this afternoon, that we would never convince him that we could provide the material in England that is sold to Russia by the United States and that that was why it is being purchased from the United States. He went on to say that the possibility was that the price of the goods that they purchased in the United States was lower than the price that they would have to pay in this country. If that is so, it is a very high testimonial for him to pay to a protected country. But it is a curious thing that these large quantities of goods are being bought by Russia from the United States in spite of the fact that the United States has no diplomatic relationship with Soviet Russia, that it only bought a very small quantity of Russian goods in exchange and that there are no facilities offered by the United States Government to their exporters who desire to trade with Russia in the same way that this Government helps our exporters.

I asked a question a few days ago about these facilities that were given by this country in connection with Russian business and I further asked whether any similar facilities were given in the United States. The hon. Gentleman replied, as I thought he would, that there were no facilities of a like kind given by the United States Government. Then I asked him: In view of the fact that the United States sell far more goods to Soviet Russia than we do, what is the necessity for us giving such assistance? The reply I got from the Minister was a very extraordinary one. He said: I think it is quite obvious that the answer is that there seems to be need for some financial support if the goods are to be sold."—[OFFICIAL REPORT, 20th July, 1931; col. 1053, Vol. 255.] I have read that answer several times, and I have failed yet to see that there is any sense in it. Apparently, if it was interpreted into ordinary English, it would mean that it is necessary for us to give this financial assistance because it is necessary for us to give this financial assistance. That is really the only sense that I can see in the answer. He could surely do a great deal better than that.

When some two years ago diplomatic relations were resumed between this country and Russia, and when the Export Credits Guarantee Scheme was extended to include business with Russia, those two announcements were made by the Government with a fanfare of trumpets. Not only would greater friendliness accrue between the two countries, but trade would expand and unemployment would be reduced. We were told by the Secretary of State for Foreign Affairs in the Debate on the Address that There could be nothing more paradoxical than the fact that, while the Russian people are in a position to supply us with the things that we need, we have our own people languishing, as it were, and suffering from serious hardships and privations when they could be engaged in factories and mills, sending to Russia, in exchange, the very things which we ourselves can make."—[OFFICIAL REPORT, 5th July, 1929; col. 419, Vol. 229.] In the Address it was clearly laid down that diplomatic relations would be reopened with the Soviet Union. I have extracts from several other speeches delivered in connection with the same matter, but I do not intend to read them all. But there is one which was delivered by the Chancellor of the Exchequer on 23rd May, 1929. Speaking in Sheffield, he said: A great field for export trade was Russia. The traders of this country, backed by export credits, could trade with Russia to the great advantage of the engineering, textile, boot and motor and all the other trades which produce goods urgently needed by the population of Russia. The position is that the traders of this country, when backed by exports credits, can do little trade with Russia while the traders of the United States of America, not backed by export credits, can and do trade with the Soviet Union in immense quantities. I ask, where is this friendliness, where is this great increase in trade which we were promised, and this great reduction of unemployment due to the huge volume of trade we were going to do with Russia? There has been an increase in trade between the two countries. There has been a great increase, but it is not an increase which will greatly help employment in the United Kingdom. It is an increase which will find employment for the Russian masses, if, in fact, the work such as they are doing at the present moment can fairly be described as employment. It is an increasing trade which does very little for our own people at home.

In spite of the Export Credits Guarantee Scheme being extended to Russia, during the six months up to March, 1931, we exported to her goods only to the value of £3,185,000, while during the same period we bought from Russia produce to the value of over £21,000,000. In 1928, when there were no export credit facilities for trade with Russia, the balance in favour of Russia was £18,000,000. That was high enough in all conscience, but in 1930, after the Government had extended the scheme to include Russia, the balance of trade in favour of Russia rose from £18,000,000 to £27,000,000. I contend that these figures in themselves are sufficient proof chat the resuming of diplomatic relations with Russia has not really been of any assistance to us in the past, and may well be a real danger to us in the future. Owing to the Export Credits Scheme, Russia is getting this country into her grip. She can sneer, she can jeer, she may create mischief in our Dominions and she can create disaffection in our midst here, and what is our remedy? Whatever the provocation may be, we can never break off diplomatic relationship with her unless we sacrifice a large amount of money.

Russia has insulted us already in connection even with the settlement of the Russian Debt. The Secretary of State for Foreign Affairs is greatly disappointed, we were told this afternoon in the House, to find that so little progress has been made in connection with the settlement of the Russian Debt question, and that the Soviet delegates do not yet appear to have submitted any proposals for a settlement. The Secretary of State is so angry that he is going to see the Soviet Ambassador to-morrow, and he is going to talk to him, apparently, very seriously. Really, is not the position rather absurd? Have we not placed ourselves in a very weak position to bargain with Russia, in an almost impossible position to dictate to her, as she should be dictated to treating us as she does? We are all anxious to do fair trade with Russia, or with any other country, if it is going to help our people at home, but it should be made perfectly plain to Russia that we are not prepared to purchase from her quantities of goods out of all proportion to the quantity which she buys from us. I doubt very much whether the Government have the courage to act. If they do not act the balance of trade will get worse and worse until, finally, they will be compelled by the force of circumstances, not through any courage they may possess, to put an end to this policy which they are pleased to call mutual trade with Russia.

Photo of Sir George Gillett Sir George Gillett , Finsbury

Several questions have been asked during the course of the Debate to which I should like to reply before the discussion closes. In the first place, it would be a good plan if the right hon. Member for Chorley (Mr. Hacking) before making a speech would decide upon which line he proposes to make his attack. He first of all complained that a certain amount of business is going to be done with Russia by the Government, and then having read quotations he asked, "Where is this business?" A little while afterwards this small minute amount of business is going to put us absolutely within the grip of Russia, according to the right hon. Member. I can understand the right hon. Member telling us that the amount of business we are doing is too much and sticking to that line of argument—

Photo of Sir Douglas Hacking Sir Douglas Hacking , Chorley

I am very anxious as to the amount of business the Government intend to do with Russia.

Photo of Sir George Gillett Sir George Gillett , Finsbury

That does not help the right hon. Gentleman's argument. He first of all says that the amount of business we have done has put us in the grip of Russia; then that we have done no business at all. When the right hon. Gentleman has decided upon which line he is going to make his attack I shall be pleased to give him our answer. His speech was as illogical as that of the Noble Lady. The Noble Lady has only to throw her mind back to the industrial history of this country to know that what she complains about in the case of the present Government, that is, supplying Russia with machinery to manufacture goods which are afterwards to compete with our own goods in the markets of the world, is what the industrialists of this country have been doing without a word of protest for the last 100 years. The principle is precisely the same. It may be correct to say that our industrialists are providing machinery by which another country can compete with us, but what is the answer? If we eliminate Russia altogether, what is the answer? The answer is that the country is determined to buy machinery to manufacture certain goods, and they are going to get that machinery from England or America, or some other country, and it is no use saying that our people are not to make this machinery. We feel that the wisest course is to provide this machinery in all parts of the world; that our employers and workers should have the benefit of these orders.

Duchess of ATHOLL:

Has there ever been a case of this country supplying large quantities of machinery to be used by conscript labour?

Photo of Sir George Gillett Sir George Gillett , Finsbury

I should not like to investigate the labour conditions of many of the countries for the last 50 years to which we have been supplying machinery. On the spur of the moment I cannot give a specific answer to the question, but I am absolutely convinced that we have supplied machinery to countries where the labour conditions would not commend themselves to any hon. Member. Then the right hon. Gentleman has become unduly alarmed as to what we have been doing in connection with the latest agreement, in connection with the announcement made by my right hon. Friend about the arrangement for Russian industry. I have no doubt that when the right hon. Gentleman was Secretary of the Overseas Trade Department he found that Members and others constantly came to him and brought to his notice certain matters when they were dissatisfied with some decision of the advisory committee; and sometimes no doubt the right hon. Gentleman drew the attention of the advisory committee to their decision and asked whether they were quite satisfied that it was really necessary for such a decision to be adhered to, or the right hon. Gentleman may have asked simply why that decision had been reached. At any rate, whether the right hon. Gentleman did that or not, that has been my experience during the last two years.

I have received from business men and from hon. Members requests on those lines, and I have conferred with the advisory committee, through the officials, on various points. Of course, in the case of Russia, where you have practically a single buyer, problems have come up on which I certainly have several times made representations to the Russian Government and have seen the Ambassador or special representative dealing with trade matters, and have discussed with him various problems connected with the Export Credits Department. But in no case have the Government ever taken the line of saying to the advisory committee that we overruled their decision. The only line that has been taken has been that we have conferred at times with the chairman of the advisory committee and have discussed these various matters. What took place in the final stage and led to the announcement made by my right hon. Friend the other day, was that there had been a discussion between the Russian representative and the Lord Privy Seal, who discussed the Russian business also with the chairman of the advisory committee. Finally, the advisory committee were asked whether they felt that the Russians could be told that, having regard to the special class of heavy industry, the committee would be willing to consider applications made by exporters to cover a longer period than the period which had so far been granted, up to a maximum of 30 months. That is the whole of what took place. There has been no overruling of the advisory committee. There have been consultations with them, and the committee finally agreed to take that course.

Photo of Sir Douglas Hacking Sir Douglas Hacking , Chorley

Is it not a fact that previous to this pressure has been brought to bear upon the advisory committee to give longer credits? Why is it that, when they have opposed longer credits in the past, quite reasonably, they have now suddenly come to give the 30 months?

Photo of Sir George Gillett Sir George Gillett , Finsbury

During the whole of the period since we have been doing this business, constantly either my right hon. Friend, or myself on his behalf, have been in touch with the advisory committee regarding the length of period which should be allowed. I cannot say that there has been any change, except that in the earlier stages, as I have said, the first advances made to Russia were limited to a few months. The advisory committee extended that period, and all that has taken place since is that the period has been lengthened.

Photo of Sir Douglas Hacking Sir Douglas Hacking , Chorley

Has the premium remained the same?

Photo of Sir George Gillett Sir George Gillett , Finsbury

In regard to the premium, I may say that the hon. Member who spoke from the Liberal benches was not quite correct as to the figure.

Photo of Sir Douglas Hacking Sir Douglas Hacking , Chorley

Has it remained the same?

Photo of Sir George Gillett Sir George Gillett , Finsbury

I cannot give the right hon. Gentleman full information because of the difficulty which we are faced with, in regard to not going into too great detail in regard to these matters. All I can say is that if there has been any change it has been downward and not upward.

Photo of Sir Douglas Hacking Sir Douglas Hacking , Chorley

Before the hon. Gentleman leaves the subject of the Advisory Committee, will he give the names of the members who resigned and the reasons for their resignation?

Photo of Sir George Gillett Sir George Gillett , Finsbury

Two of the resignations were of Members of this House. One was the right hon. and gallant Gentleman the Member for Ripon (Major Hills), who had been a member for many years and was chairman of one of the special committees. He intimated that he had not time to attend, and asked to be excused. My hon. and gallant Friend the Member for Portsmouth (Captain W. G. Hall), who had been a member for a short time, was also unable to attend the meetings, and he also asked to be excused. The third member who resigned was Mr. Pulbrook, who was connected with the insurance business. They have not all resigned within the last few weeks. The resignations have been spread over some time.

Photo of Mr Irving Albery Mr Irving Albery , Gravesend

Can the hon. Gentleman state why the last-mentioned member resigned?

Photo of Sir George Gillett Sir George Gillett , Finsbury

I am not quite certain whether he gave any definite reason, and I should not like to answer that question without consulting the officials concerned and finding exactly what reasons, if any, were given when he sent in his resignation. Passing to other matters, the first definite question asked by the right hon. Gentleman dealt with the increase from £1,200 to £6,500 in legal and other expenses. One of the new methods introduced by the Committee has been due to the fact that they, as well as myself, were concerned to find that the business connected with other nations had not been increasing in the way we would have liked. The Committee came to the conclusion that it was advisable that those who were agents or were interested in the insurance business should be paid commission if they introduced business to the Department in the same way as they would be paid if they introduced business to a private company. That system has been instituted recently, and provision is being made in this figure for money which may have to be paid to those agents who introduced business to the Department.

There is one other matter to which I should like to refer, that was mentioned in the Debate and that was referred to again by another hon. Member, in connection with the sugar problem mentioned by the right hon. Gentleman. As I said then, and as the hon. Member who spoke afterwards seemed to have failed to appreciate, the reason why sugar that came from countries other than the Dominions was used was the fact, as I explained, that when sugar is being exported, there is a repayment of the duty paid on entry, and that fact means that the exporter, when it comes to re-exporting sugar that he has bought from abroad, has to export sugar from a foreign country rather than from the West Indies. If he exported sugar from the West Indies, he would be exporting sugar which afterwards would cost him more than sugar that had come from foreign countries. That is why the exporter uses foreign sugar, and the fact of the matter is that this transaction, as I understand, would have been impossible, if the exporter had been exporting sugar from the West Indies.

With regard to the allegation that the Russians were selling sugar of their own production at the same time, from inquiries made in the Department it has been quite impossible to find that there is any truth in that statement, and it would be interesting to know if those who have made the assertion from the Benches opposite, or who have believed it, could give us any evidence to enable us to ascertain whether or not there is any truth in it. We have made careful inquiries, and we cannot find that there is any truth whatever in the statement that they were selling sugar of that kind at that time.

Several hon. Members have asked certain questions which it is very difficult to answer. One hon. Member, for instance, asked about the proportion of business done as between capital goods and non-capital goods, but we have not got the various items sufficiently classified for me to be able, on the spur of the moment, to give an answer to that question. The same hon. Member asked whether much business was being done with Russia in textiles. Very considerable business is being done with other parts of the world in that class of goods, but very little in connection with Russia. The hon. Member also asked whether I had any views in regard to the position of Russia at the present time from a financial standpoint. It seems to me that the internal condition of Russia, looking at it from the standpoint of anyone who, like myself, is responsible for a Department of this kind, practically hardly counts, except in this emergency, that with a country standing in a dire state of distress there might be a revolution. Of course, a revolution might not necessarily mean that those who came into power would be less hostile to this country. The position with which we are faced is that of a country that is entirely secluded, and by its financial system all that it buys abroad it has finally to pay for by the goods that it exports.

Therefore, when we look at the problem, the question is, Will Russia have enough goods to export in order to get sufficient money to meet the various bills as they mature all over the world? As far as one can see, there is no more reason than there was a year ago to doubt that Russia will be in a position to export these goods, in spite of the fall in prices that has affected Russia in the same way as other countries. There is no reason whatever to think Russia will not be able to export sufficient goods to get the necessary money to pay the debts which she has incurred. The only chance of a failure or default would be due to the fact that she might have anticipated a larger revenue from the goods she was going to export than was actually the case, owing to a heavy fall in prices which might possibly mean that that figure would not be realised and in that case there might be certain difficulties. If that were going to take place, in all probability we should have been aware of it before and my own opinion of the financial condition of Russia, looking at it as one who is responsible for this Department, is that certainly there is no greater risk to-day in carrying on this business with Russia than there was when we started it.

I can only say, in conclusion, that I have listened with much interest to the speeches made by hon. Members opposite. One or two Members, who have been closely connected in a business way with the work of the Department, have made speeches referring to special cases which have come to their notice. I should like to inform them that we shall certainly take note of the points they have raised. I have also noted with very much interest certain speeches from hon. Members opposite which in no way correspond with the speech made by the right hon. Gentlemen who opened the Debate. There was the speech of the hon. Member for East Aberdeen (Mr. Boothby), who always watches over the fishing industry with so much care. I can assure him and other hon. Members that the suggestions they have made to-day and at other times will receive our attention. The speech which impressed me as much as anything was the profoundly interesting one made by the hon. and gallant Member for Abingdon (Major Glyn), who expressed a view which most of us would wish to support in regard to the relationship of the two countries. If we could more and more enter into the spirit of his remarks, we could secure an understanding between two great peoples—the Russian people and those of this country. I am fully convinced that nothing but good would come to both nations, and that the result of the steps we are taking here cannot be anything but beneficial both to Russia and this country.

Photo of Mr Arthur Samuel Mr Arthur Samuel , Farnham

I should like to refer to the note in the second report of the Select Committee on Public Accounts of which I have the honour to be a Member. Hon. Gentlemen opposite will notice that my colleagues and myself took exception to the way in which some of the accounts were presented. If they look at page 12 they will see a note relating to the second guarantee scheme: In making up the account relating to the Second Guarantee Scheme, the Department has made a deduction of £5,000 from its gross administrative costs, this being the amount estimated to be attributable partly to the closing up of earlier schemes, and partly (to a larger extent) to the non-commercial side of its operations. The President of the Board of Trade, who held the position on the Committee that I now hold, knows that we look into these matters with no partisan eye, but with a view to getting them straightened out so that no point is overlooked. We went on to say that we could not agree as a general principle to the removal of such charges from the public accounts. We thought that this £5,000 ought to be disclosed in the accounts so that, if occasion arose, the matter could be discussed on the Floor of the House. We went on to say: Your Committee are prepared to acquiesce in the wishes of the executive committee, provided that the costs attributable to work additional to that required for the administration of the Second Guarantee Scheme are shown on the face of the account explicitly as a deduction to be made from the gross cost, the calculation being inset and the net figure being carried out into the body of the account. This is a matter of deep interest, and it is necessary that we should see on the Floor of the House everything which arises and becomes a charge upon the public purse, so that it may not be hidden away in the general body of the account. I think it my duty, on behalf of the Public Accounts Committee, to ask what arrangements have been made to amend the accounts in accordance with the Committee's recommendation. I am somewhat surprised that, as the matter was dealt with in the report which came out three or four weeks ago, no reference has been made to it in the general explanation by the Minister. He is responsible for this account, and I should like him to give us some explanation as to what he proposes to do. I should like him to give us some assurance that the wishes expressed by us in our report will be meticulously carried out when the next accounts are presented to the House.

Photo of Mr William Graham Mr William Graham , Edinburgh Central

The hon. Gentleman will recognise that it is quite impossible to say to-night what steps will be taken with regard to any recommendation of the Committee. When the report of the Public Accounts Committee is published, the comments that relate to the different Departments are considered by those Departments with a view to effect being given to the proposals in the subsequent publication of the accounts. I can only say that this will be done in this case. I am sure that this recommendation was not made without careful consideration, but I cannot to-night give a pledge as to the form in which it may be carried out, if carried out at all; but it will be reviewed at once.

Photo of Mr Arthur Samuel Mr Arthur Samuel , Farnham

The accounts are already in our hands and I have here Civil Estimates Class VI, which were published on the 2nd March. The report of our Committee was issued only three weeks ago. Do I understand the President of the Board of Trade to tell me that he will withdraw the Export Credits Estimate—

It being Eleven of the Clock, the CHAIRMAN left the Chair to make his Report-to the House.

Committee report Progress; to sit again To-morrow.