DIPLOMATIC AND CONSULAR BUILDINGS.— Class 1. (Hansard, 18 February 1918)

§ Mr. KING
There is one point upon which I should like to ask for an explanation. We are told that the sum of £l,000 is wanted for adverse rates of foreign exchanges. The total of the Vote is only £42,000, and I should like to know if the exchange rate is so much against us as to involve a loss of £1,000 on that total?

§ Sir A. MOND
The hon. Member must know that most of the exchanges are very adverse at the present time.

§ Mr. PRINGLE
But surely in estimating the. right hon. Gentleman's Department must have taken a too optimistic view on the point as to what the rates of exchanges were likely to be during the coming twelve months. There is another item in this Estimate on which I want an explanation: it is a sum of £l,800 additional to a total estimate of £11,400 for Consular buildings at Tsinanfu. The explanation given here is that the sum of £6,000 proved insufficient, owing to the works being completed more rapidly than was anticipated—a very unusual state of affairs—and I hope the right hon. Gentleman will be able to tell us why this happened? I should like to know whether this is confined to what has been regarded as the backward country of China? Is it that in China there is a new era under which they are able to do things more rapidly than is conceived of here? I think the whole item requires some explanation. 518 first of all, as regards the thousands of pounds having been due to the work having progressed more rapidly than v as anticipated, and, secondly, as to what are the unforeseen works that accounted for the £800.

§ Mr. KING
I suppose that the loss on the exchange or £1,000 is, as my hon. Friend (Mr. Pringle) pointed out, some-thing that might have been provided for originally. It is not only a question of being 2½ per cent. on the total amount, but it is 2½ per cent. more than the Supplementary Estimate, the revised Estimate which we had a few months ago.

§ Mr. PRINGLE
This £1,000 is only on rents, insurance, etc.

§ Mr. KING
I do not know about that, but as I see my right hon. Friend the First Commissioner of Works now in his place, and as he knows everything and is so capable to answer questions, I will give way to him.

§ Sir A. MOND
The reason why this Consulate has been proceeded with at all, contrary to the general policy of avoiding expenditure on diplomatic buildings where-ever possible, is that, first of all, this building is a very bad one, and, still more, that a great deal more work has been thrown on this particular office in connection with the employment of Chinese labour for war purposes and for payments to the families of the coolies who come over. The office accommodation was quite insufficient for the work, and that is the real reason why it is being proceeded with and why this money is being spent. My hon. Friend asks why the work has gone on more rapidly. I do not know that I can tell him that, but I am very glad it has done so. It is useful that it has, because my experience is that the more rapid the execution of work is the cheaper it is in the end. With regard to the adverse rate of exchange, my hon. Friend probably knows as well as I do that the Eastern exchange has been the most incalculable thing in recent times for anyone to foresee. The question of what the rate of exchange will be at a particular time is a thing that the Department has to take into account, but I do not think anybody in the present circumstances can make any point that such exchanges have been estimated correctly. I do not think anyone could give an accurate estimate twelve months ahead of these Chinese exchanges.

§ Mr. KING
This has brought out the fact that money is being spent on Chinese labour. There is nothing whatever in the statement to tell us that. It is only thrown in incidentally, but it is a matter of the very greatest importance to many of us. In view of this sort of thing, I think we shall be justified in continuing our criticism and interrogatories on the reason for these Votes. We really should be given as full a statement as possible as to why money is wanted and why these Supplementary Estimates are required. I really must protest.

§ Mr.PRINGLE
I think the explanation which my right hon. Friend has given makes it necessary to go into this matter somewhat more fully. He has told us that at Tsinanfu it has been necessary to establish a much larger building for the Consulate, for the purpose of recruiting Chinese labour and for paying separation allowances to their wives and families. We naturally wast.to know whether these new and larger buildings are buildings on a permanent basis. We are told that these new Consulate buildings were started before the introduction of Chinese labour in the West was under contemplation, but apparently they have been hastened and put up on a much larger scale because of this introduction of Chinese labour. We want to know whether the Government have erected these buildings for the purpose of dealing with these Chinese recruits on a permanent basis. Obviously the building will not be necessary for the ordinary work of the Consulate if in the future we are not going to recruit Chinese labourers for work in the West. On the other hand, if they have put up permanent buildings on this basis, then it will be clear that there is a permanent policy of the recruitment of Chinese labourers for the purpose of work in the West here. I am sorry my right hon. Friend dismisses the question of the exchange in the airy manner he does. I would point out that the difference in the exchange only refers to sub-head D, not to the original Estimate of £38,775, but only to the £8,850 under sub-head D, rents, insurance, etc. A thousand pounds is an increase of 12 per cent. on the original Estimate. That seems a very extraordinary situation, and I think that some better explanation should have been offered of it than that which my right hon. Friend has given. There is also given an adverse rate of exchange under sub-head B, which is somewhat similar. It says: 520 Provision of safes and adverse rates of foreign exchange. This sub-head deals with maintenance and repairs. Apparently under sub-head B, which is an estimate of £20,950, the difference on the rate of exchange, and allowing for the provision of safes, amounts only to £600. Why is it that on B, which is a larger Vote, the difference which covers both safes and rates of exchange only amounts to £600, while on the relatively smaller Vote D of £8,850, the right hon. Gentleman has to ask for a Supplementary Estimate of £l,000? I think that shows some serious mistake, either in his Department or in the Foreign Office, and that, instead of covering it up in this way, he should give the true explanation of this extraordinary difference.

§ Sir A. MOND
I do not know why my hon. Friend should think there is any mystery about it. The matter is quite a simple one. I have already explained that this expenditure is in connection with offices in China. The variation in the Chinese exchange has been 20 per cent.; when the Estimates were made, the fact that there would be a variation of 20 per cent. was not foreseen, and the fact that there has been a variation of 20 per cent. has caused the difference. I have already pointed out that I do not think any financial authority in the City of London would have been able to foresee the exact rate of Chinese exchange, for a more incalculable thing I do not know. As regards the question of the buildings, it is not the fact that it has been put up merely to serve as a pay office for the Chinese seamen. That is only one reason for proceeding with it now. This Consulate has been a bad one for a number of years, and is in one of the most important trading centres in China. I think my hon. Friend will admit that in the past we have been rather mean about our Consular buildings, compared with the Germans, in the East, and that the new policy of having better Consular buildings more in accordance with the new scheme of developing our Consular Service is a good one.

§ Mr. PRINGLE
I think my right hon. Friend has not dealt with the point I made. It is only under this sub-head D that you have this figure about the exchange, that the Estimate has been wrong to the extent of £1,000. Under B, where you have maintenance and repairs, and which provides for an Estimate of 521 £20,950, the difference, covering the provision of safes and adverse rates of exchange, is only £600. Why, on an Estimate of £8,850, should you have a difference of £l,000, while on an Estimate of £20,950 you only have a difference of £600, and nothing whatever on the original Estimate of £8,975 for new works?

§ Sir A. MOND
The hon. Gentleman is not doing credit to his own intelligence. I thought I pointed out that the variation of 20 per cent. must make a much bigger amount in respect of the Estimate of £8,850 than on the £20,950, the expenditure in respect of which has been in a country in which the rate of exchange is not so much against us. Therefore, you only have a difference of £600. In the one case the bulk has been spent in China, where the rate of exchange is much more adverse, and where, therefore, you get a much larger difference.

§ Mr. PRINGLE
Are we to understand that under sub-head D, rents, insurance, etc., the great bulk of the £8,850 covers buildings only in China, and that there are really practically no insurance of our buildings in other foreign countries accounted for under this sub-head D? I had not the original Estimate here, but my recollection of former Estimates is that they cover insurance of Consular buildings on all the Continents, and consequently to say that the great bulk of this £8,850 has been spent in China is really a mistake on the part of my right hon. Friend. I should be inclined to think that in respect to proportions the proportion attributable to rent and insurance under D is very much the same as the proportion attributable to repairs under B, and, if that is so, the explanation which my right hon. Friend has given does not cover it.

§ Sir A. MOND
I have given the best explanation I can.