OVERSEAS TRADE (CREDITS AND INSURANCE) BILL.

HC Deb 29 June 1920 vol 131 cc260-345

Order for Second Reading read.

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Mr. Bridge-man)

I beg to move, "That the Bill be now read a Second time."

This subject has been discussed already at some length on the occasions when the Money Resolution has been before the House upon which the Bill is founded, and therefore I do not think it is necessary for me to go into any long explanation of the objects of this Measure. I think that anything we can reasonably do to assist the shattered countries of Europe which have been disorganised by the War to rehabilitate their trade is an object which this House would agree to readily. If we can carry out the intentions of this Bill, we shall not fail to do something to assist substantially those countries. The most important thing is to get machinery and arrange the transport of articles of all kinds which will enable them to start various branches of trade in their country. Their difficulty is the position of the exchange, and the intention is to enable them to have a long credit of three years, so that, by the end of that time, they may reasonably hope to find the exchange improve in their direction and be able to pay what it is impossible for them to pay at the present rate of exchange. I suggest that this proposal is desirable in the interests of the commerce of Europe, and still more desirable in the wider interests of humanity. It is also likely to be efficacious to the trade of this country, because it will enable new channels of trade to be opened up in countries where we have not hitherto traded, and as those countries improve the trade with them, I hope, will develop to a considerable extent and prove very remunerative to the traders of this country. I should like to remind the House of certain steps which have already been taken in this direction by the United States of America, who have established a War Finance Corporation, which has 1,000,000,000 dollars to use for this purpose. If we allow other countries to step in in front of us and secure the trade of those countries, we shall find it very difficult later on to make our way there.

Lieut.-Commander KENWORTHY

I am sorry to interrupt the hon. Gentleman, but is it not the object of this American Corporation to serve any country with which American business men may wish to enter into relationship, and not merely a few selected countries?

Mr. BRIDGEMAN

I am not sure about that. At any rate, that corporation will work with a much larger sum than we are asking for, and it will, of course, cover any of the countries that are mentioned in the schedule of this Bill. The shares of this Corporation are held by the American Government and the Secretary to the Treasury is chairman. It is not a private concern but a Government concern. Perhaps I may be allowed to say a word or two about the financial arrangements. In so doing I will answer a supplementary question asked by the hon. and gallant Gentleman opposite as to the authority under which the money already spent in this direction has been extended. The House will remember that the Prime Minister, on the 18th August last, stated here that the Government had decided to advance £26,000,000 for this purpose, and that it was intended to put that proposal into the form of a Bill. It was, in fact, put into a Bill, the Imports and Exports Regulation Bill, which, however, was withdrawn, but Treasury sanction was given to the proposed operation of the Export Credit Department, and a Supplementary Estimate was passed in this House, on the 17th or 18th March, for a sum of £100,000, which more than covers the expenditure for that year. Provision has been made in the Estimates in the Unclassified Services for £2,000,000 for this purpose out of the £26,000,000 which we may ultimately spend in this direction.

At present the amount spent is very small, something like £28,000. It is easy to understand why it is not larger. It is because trade has been so free in other directions that there has not been any necessity for traders to venture into undertakings where there is as large a risk as this involves. There has been circulated to this House a White Paper giving the conditions under which these credits will be granted. I will give an example of the way in which the scheme will work. A, we will say, is an exporter from this country; B is an importer in Rumania. A wants to sell to somebody in Rumania a machine which will cost, together with insurance, freight and commission, £1,000. If he cannot get credit through his banker, or in any other way, and wishes to take advantage of this scheme, A would be introduced by his banker to the Export Credit Department. He will say that a man in Rumania is willing to buy his article for, say, £1,200, and is willing to put up a security through his bank in Rumania, with our agent in Rumania, either in currency or in some other form of security which is satisfactory to our agents, and to repay the whole amount with interest within a period not exceeding three years. If the Export Department is satisfied by their own agent out there, they will pay an amount representing 80 per cent.7—they cannot go beyond that—of the cost price, including freight, insurance and commission, which is charged to the exporter in order to cover the expenses of the Department, and any loss which the Department may be involved in owing to bad debts. When the money is repaid to the Department, as it comes in it will be paid in the proportion of four-fifths to the Government and one-fifth to the exporter until the Government's 80 per cent. is paid off, and then the rest goes to the exporter. I do not think I need go into further details, all of which are clearly set out in the White Paper, and I hope the House—

4.0 P.M.

Captain W. BENN

Would the hon. Gentleman mind telling us about paragraph (b) of Sub-section (1) of Clause 1, referring to the business of insurance, and saying whether that includes insurance against variations of exchange?

Mr. BRIDGEMAN

No; against abnormal risks. It was originally adopted when there were greater risks than there are now, and it was intended to reassure traders who otherwise would be afraid of trading with countries where there was disturbance. As a matter of fact, only £15,000 has been insured, and there has been no loss. It is not intended in any way to go behind the ordinary insurance agents; it is merely intended to be a safeguard in case there be such disturbance in any country that the ordinary insurance agent will not take up the insurance except at a very prohibitive figure.

Sir WATSON RUTHERFORD

I beg to move to leave out the word "now," and at the end of the Question to add the words "upon this day three months."

I rise to move the rejection of the Bill, not, of course, on political grounds, and obviously not out of any hostility to the present Government, and much less to the Member of that Government who has introduced the Bill, and for whose invariable courtesy and hard work during the time that he has been at the Board of Trade we are all exceedingly grateful. We have never gone to him on any occasion without being received with courtesy and with attention. I very much regret to find myself in the position of being obliged to move the rejection of this Bill, but I do so purely as a business man and purely on business grounds. The objects of the Bill are to assist British trade and manufacture and to assist trade with specified countries whose names are mentioned in the Schedule. Of course, we all approve of those objects. There cannot be any doubt that if the State can legitimately assist British trade and manufacture, within limits we ought to do it, and there cannot be any doubt that each of the countries mentioned in the Schedule is a country where British trade is exceedingly desirable and where to a very large extent before the War that trade was with Germany. It is obvious that we ought to pick it up, to the advantage of our own trade and commerce, if there are any reasonable means of doing so. Consequently, though I entirely approve of these objects, yet there is a right way and a wrong way to do a thing of this kind. A Sub-Committee of the Commercial Committee of this House came unanimously to the conclusion, after carefully examining the whole situation, that the Board of Trade proposal was the wrong one. What does it involve? This Bill would set up at the Board of Trade a banking business with an initial capital of £26,000,000, provided by the country at a time when a sum of that amount is exceedingly important, and ought to be used in other directions, if it be not required in this direction. I do not think that it is, and I think the House will agree with me, when I have made my explanation of this project and how it ought to be carried out from a business point of view, that it is not necessary that the State should sink any portion whatever of this £26,000,000.

The Board of Trade are going into banking business. They are going to establish a very important bank with an initial capital bigger than that of any bank that has ever been started in this country. Necessarily, it will have to compete with existing banks in the financial market, and we have to ask ourselves whether we have any kind of experience of this sort of thing and whether anywhere an experiment has been tried from which we can learn any lessons. There has been such an experiment. It was tried in Germany for a period of from ten to twelve years before the War. They tried by a variety of means to carry out a scheme whereby the State could assist German traders and manufacturers. Eventually, after about two years experimental work, they perfected that scheme, and, when I tell the House that it enabled Germany in about ten years to double her foreign trade without finding a single penny of German money, I think it will probably agree that, if possible, these very desirable objects should be carried out in this country on similar lines and, without our setting up an enormous new Department necessarily with big salaries, because people do not manage banks on two or three hundred a year; you would have to get the best talent and pay very large salaries. We ought, in a matter of this importance, to take a lesson from experience, and I can only assume that the Board of Trade, in drawing up this scheme, have not known anything about that which was done in Germany during that period or, if there are any officials at the Board of Trade who knew about it, that they have not been consulted. What does this Bill do? It creates a new Department. The Board of Trade become bankers. They embark on a new line of business with a new army of officials, not only in London, but, as the hon. Gentleman has already pointed out, in each of the ten countries.

Mr. BRIDGEMAN

indicated dissent.

Sir W. RUTHERFORD

The hon. Gentleman forgets that a few moments ago he said that their agents or representatives would collect the proceeds of the goods and distribute them, one-fifth to somebody and four-fifths to somebody else. They could not go there and collect these moneys unless they were constituted agents or representatives. We are going to have all this paraphernalia of this new Department and all these huge salaries, and I can see a new building about the size of the Foreign Office arising on some new site to take up the enormous Foreign Trade Banking Department of the country conducted by the Board of Trade and its officials. This is no time to make such new Departments. There is no necessity to enter into competition with the existing banks. The object should be to assist the existing machinery and not to replace it. We had a Debate a few weeks ago upon the Financial Resolution of this Bill. That Debate, in which a number of Members took part, disclosed the fact that in various parts of the House there were considerable misapprehensions as to the objects of the scheme and also as to the method of carrying it out. We now have the White Paper of the Board of Trade to which the hon. Gentleman has referred, and it is called "Export Credits: Revised Conditions." We now know that the Board of Trade are to get £26,000,000 in British sterling, and we now know how they propose to deal with that money. I would, first of all, point out the countries to which the Bill refers. They are: Finland, Latvia, Esthonia, Lithuania, Poland, Czecho-Slovakia, Serb-Croat-Slovene-State, Rumania, Georgia, and Armenia. There are ten already, and the Board of Trade could add another ten. They take power by Order, which is to lie on the Table for a number of days, to add any other countries that they may see fit. Secondly as to the parties who are to receive the credits. Of course the new Bank could refuse to give facilities to any one or more of the countries that are named. Consequently, not a penny of this £26,000,000 might conceivably be used for any of these ten countries, but practically the whole of it might be used for some other ten countries of which we have not at present heard. That is an important matter, because everyone who is familiar with the practice of the House knows what becomes of Orders that lie on the Table for twenty-eight days. Both the Bill and these revised conditions disclose who are the parties to whom these credits may be given. We will take, first of all, the words of the Bill£ Persons domiciled in or companies incorporated by or under the laws of the United Kingdom. When we look in the conditions, we find, not the same words, but other words— Individual firms or companies domiciled or incorporated in the United Kingdom. This may seem a small point, and probably it is; but the House will see that there is obviously an inconsistency, and I think it is important that we should know exactly who is going to get the money. There are many such concerns which are foreign concerns, but which, to some extent, are domiciled in the United Kingdom. For instance, there is a well-known Paris house which has a very large business in all these countries mentioned in the Schedule, and which has a domicile in London. Under the Bill it could not get an advance, but under the Board of Trade Regulations just out it could. Is it too much to suggest that, when we are specifying the people to whom this £26,000,000 may be advanced, there should be no inconsistency or difficulty whatever with regard to the exact people who are to be put in a position to receive the money?

The third objection to this method of carrying it out is that there is a possibility of favouritism and discrimination. How are these credits to be allocated? The Bill says, "the Board of Trade, with the consent of the Treasury, may make arrangements". The conditions say, "the Government are prepared to consider applications". Both of these statements make it clear that the application may be refused, and that is quite right. There are, no doubt, many cases in which such an application should be refused. On what principle, however, is it intended that such applications shall be dealt with? Is each of the ten countries to have £2,600,000? Not at all; that is negatived by the power to admit other countries. Is it possible that three of the ten countries might get all the £26,000,000, so that none would be left for the other seven? Are certain individual firms or specified companies to get a preference, and, if so, to what extent? Who is to be the judge? How is it to be carried out? Is it possible that some firms or people might so ingratiate themselves with this new Department as practically to get all there is? I do not know. In any case, both the Bill and the revised conditions leave this subject absolutely undetermined.

Fourthly, there is a very strong objection as to the proportion of the money that is to be advanced—it is to be a proportion of the cost price and not a proportion of the invoice price of the goods. We have to study these revised conditions, and what do we find? The British-domiciled proposing exporter has to make an application in writing, and he must give the exact cost of the goods—not the value, not what he is selling them for, but the exact cost. He is allowed to add to such cost (a) the freight; (b) the insurance; (c) the Overseas Trade Department's Commission. When the application is put in, and is entertained by the new Banking Department of the Board of Trade, the applicant has at the same time to hand to the Department a bill of exchange drawn upon the foreign importer. That bill, of course, will not be for the mere cost, or the freight, or the insurance, or the commission; obviously it must be for the full price at which the goods are being sold. That full price must also include all the profit and expenses of the transaction, and all the interest and charges for, say, three years. Therefore, the bill of exchange must be for a very different sum from the cost and the other items which are dealt with at the commencement. The exporter next has to get an advance, from this new bank, of 80 per cent. of that cost, freight, insurance and commission. This 80 per cent. advance is made "without recourse," and commercial men in the House will understand at once the great difference between an advance made without recourse on security of a bill of exchange and an advance made by a banker who has the security of all the names on the bill. The British exporter parts with the bill of exchange and the bill of lading to the Overseas Trade Department, in exchange for the money, and he is also required at the same time to produce an undertaking signed by the importer's banker abroad, that the importer will accept the bill on presentation. Personally, I should have thought that this condition would, in practice, make the business almost impossible, as this banker's guarantee, according to the regulations and the bill, amounts to saying that the importer will forthwith put up the required security.

The British trader gets that 80 per cent. advance, therefore, not on the amount of the bill, but on the cost, freight, insurance and commission, and he has to furnish the Board of Trade, when he gets that money, with a banker's guarantee from the foreign country in question that the importer will accept the bill and put up all the security indicated in the conditions. The effect, as I think the House will see, is to make the transaction almost prohibitive. By Clause 6, the security is to be large enough to cover the amount, not of the advance, but of the bill of exchange, together with a reasonable margin, and the further we go into this the more we see how likely the whole business is to be made impracticable. Again, what is this security to be? The security is to be by deposit of currency, hypothecation of produce or of government securities of the foreign country, or a banker's guarantee, and it has to be deposited with the Department's agent in the foreign country. This new bank of the Board of Trade has, therefore, to have in that foreign country an agency, who are to take the responsibility for receiving the security, and, of course, for its value, amount, and stability. It is quite evident that they will have a considerable responsibility, and will, therefore, require to be correspondingly remunerated. I think—and a number of other business men who have looked into this matter agree with me—that the conditions as to the amount and nature of the deposits are absolutely unreasonable.

In order to make the matter quite clear, I should like to take a simple illustrative case. Suppose that a British exporter wants to sell goods to a purchaser in the country mentioned by the hon. Gentleman, that is to say, Roumania; and suppose that the goods have cost him £1,000. The freight on iron or other heavy goods of that description to the value of £1,000 would be, say, £400 from Liverpool to Galatz. The insurance would be, say, £40, and the Overseas Trade Department's commission which this bank is going to charge, namely, 12 per cent. for three years, would be £120. Those items add up to £560. Then we have to add three years' interest, because interest must be added up to the date when the bill is due. Such interest is to be 1 per cent. above Bank Rate, and I will take it at 8 per cent. On that basis the interest would be £240. What is the British trader to get for his profit, risk, expense, and the deferred payment of half his money for three years? He must get something for that, and I put it down at the very modest sum, on this transaction, of £400. The consequence is that you have a bill of exchange for £2,200 representing the invoice price of the goods. It does not matter, for the sake of the illustration, whether these figures are absolutely accurate or not; they will serve to explain to the House what the nature of the transaction is. This new bank of the Board of Trade is to allow the exporter to add the freight, insurance and commission to the £1,000 of cost, making, as we have seen, £1,560. Then the new bank is to advance 80 per cent. of that sum, namely, £1,248, which is just about half the amount of the bill of exchange which the exporter has to draw. I hope the House realises what that 80 per cent. means, namely, that it is not 80 per cent. of the amount of the bill, but 80 per cent. of the cost, freight, insurance and commission. I would also ask the House to note that the security to be given to this new bank is not limited to the £1,248 advanced; it is to be, under these regulations, a security for the £2,220, with a reasonable margin. What is a reasonable margin? I suggest that we might put it at 10 per cent., and in that case the security would have to be for £2,420. Moreover, according to the conditions, that security has to be maintained intact and valid for the whole of the three years, and I invite the House to consider what that means. In Roumania, which is the country given by an illustration by the hon. Gentleman in introducing this Bill, the exchange might wobble up and down between 37 and 260. At the present moment I believe it is about 160. The consequence is that it would be almost impossible from one week to another to know what the value of the security was in terms of British sterling, and there is no provision anywhere that I can find, either in the Bill or in the Board of Trade conditions, which gives the slightest indication as to how this security is to be maintained, especially having regard to the fact that there may be an alteration in values of almost cent. per cent. due to variations in the exchange one way or the other from day to day.

I have given one or two reasons why the procedure indicated in these conditions is objectionable, and why, unless it is radically modified, no business man could, in my judgment, agree to it. We are told that, without Parliamentary authority, and in anticipation of this Bill, transactions amounting to some thousands of pounds have actually been entered into. It would be interesting to know how far these objectionable features which I have referred to have been adhered to or relaxed in the actual transactions so far carried out. Another, and a serious, feature is the indication that this Department of Overseas Trade and this new bank is to have agents in each of these ten foreign countries who are to receive the proceeds of the goods. They are not only to have the responsibility of assessing the value of the security that is originally given, and of seeing that that security is maintained, but when the goods are sold they are to have the responsibility of receiving the proceeds. This is very disquieting. It means a staff of new and extra officials in this country: it means another staff in each of the ten countries mentioned, with which there are transactions to be carried out; it means their salaries, and we see at once eleven more sets of officials somewhere or other. Taking this business out of the hands of the financial people who are ready and able to do it at present, and to set up this bank, is a wrong way to carry out these transactions, and is creating another army of officials and another swollen set of salaries which will have to be large because business of this kind cannot possibly be conducted by inferior people with small salaries.

What was the system under which these identical objects were achieved with so much success during the ten or twelve years before the War in Germany? Fortunately, it will not take more than five minutes at the outside to explain what that German system was eventually, when it was perfected over a course of ten or twelve years from the manner in which it originally started. The German Department for the Increase and Advance of Foreign Trade had a staff, obviously. That staff was brought up in the commercial schools which were established for the purpose, and all the boys who distinguished themselves in those schools were drafted abroad to get business and to report openings for trade. That is exactly what we want. That is what the commercial community has been crying out for in this country for the last twenty years. It has been crying out for trade experts who will go to these different countries, and when they find an opening for this or that class of goods will report it so that this country can get some of the trade. The Commercial Committee of the House of Commons, which consists of men representing all shades of opinion on different sides of the House, has been agitating for this for years. We brought our complaints to the notice of the Board of Trade and the Foreign Office, but it was found that our diplomatic representatives abroad were either too proud or perhaps they were not authorised to deal with matters of business, or to do practically anything to help the trade of the country. At all events, they did not do so, and during the ten or twelve years before the War whilst we had no such facilities Germany had a fully equipped system for carrying out the expansion of German foreign trade, and they did it with very great effect and very great success. That is what we want, and that is exactly what the Bill does not give us.

Upon these reports being received in Berlin from the trade emissaries they were submitted to and examined by a committee of bankers. They consisted of the big German banks, namely, the Deutsche Bank, the Disconto, the Dresdner Bank, etc. There were a very considerable number of these banks. They joined together from a patriotic point of view, and also for the benefit of their business, to support German trade and German exports. The bills of exchange drawn upon and accepted by the foreign importers were arrived at exactly in the way I have described in the early part of these remarks. When accepted they were laid before that committee of German banks for the purpose of their foreign trade, and were discounted by them on one condition, that the trade representatives of Germany in the particular country where the goods were going gave a certificate that the transaction was a bonâ fide one, that the price was reasonable, and that the purchaser was a reasonably good man. Those were three simple conditions, and when you got a bonâ fide transaction and you got an authorised trade representative in the country who was prepared to give a certificate upon those three points, is it not clear to every business man that it would be reasonably good business to dis- count that bill? The committee of German bankers discounted those bills, and they had a guarantee from the German Government of 75 per cent. of the whole of their risks. I investigated this matter thoroughly on the spot and elsewhere whenever I could find any particulars of it, but it was kept very secret. The bankers never lost any money by discounting those bills, for the simple reason that they charged a commission of 3 per cent. on the discount, and that commission formed a pool of reserve, and when there were a few losses they were charged against the pool, and the consequence was that on the whole of the transactions the German bankers never lost sixpence, and the State never lost anything, as far as I can make out. The result was that the German exporter or manufacturer, as the case may be, was able to get, not 80 per cent. of his cost price, but the whole proceeds of the bill, and to get them without recourse. He had not to wait for three years, and take in driblets a fifth now and a fifth then as the goods were sold. He got the whole of his money at once, whereas under the scheme we are considering, instead of getting the whole of the money down, he only gets an advance of practically a half of the sum for which he is obliged to draw the bill.

Incidentally also I may mention that the German Banks who discounted these Bills, were able to rediscount them in London and thus English money was used for German business and enabled German traders to cut out their English competitors.

I shall probably be told that this Bill is a serious effort first to assist our own manufacturers and traders and secondly to assist the trade of these named countries, and that I am opposing excellent and worthy objects. I am not opposing those objects. I admit most frankly that the objects of the Bill are objects which we all support, and which we all ought to have at heart, but there is a right way and a wrong way to carry them out, and the Board of Trade have unfortunately chosen the wrong way. What we want to do is to help our British trade and manufacture. We are crying out for trade representatives and trade agents in all countries. We were told the Overseas Department would do this. They made a somewhat serious effort, I think, about 18 months ago. What exactly caused it to be relaxed I do not know, but it was intimated in general terms that the Treasury, I think, was opposed to some of the salaries proposed to be given. If so, it is a penny wise and pound foolish policy. This country ought to have in every other country in the world an accredited trade representative and staff, so that everything which can possibly be done for British trade and manufacture should be done, and we should get business in this country if we possibly can. For the finance of such a scheme we do not want a new bank. There is no bank required at the Board of Trade. The Board of Trade is the very last place in London at which there ought to be a new bank. We want an authorised committee representing the existing British banks, which. will meet, say, once a week, and will discount acceptances against shipments of goods to those countries in all cases where the transaction and the bona fides of the consignee are certified, and where the transaction is approved of by the Overseas Trade Department representative. The Board of Trade having got their financial Resolution of £26,000,000, surely our country can go as far as Germany went before the War, and be willing to give a guarantee to the committee of bankers on foreign trade of 75 or 80 per cent. of the amount of the bill. I shall probably be told that our British bankers will not appoint a committee and will not work together. I am afraid there is a considerable amount of truth in that suggestion. All over the world, where there are manufacturers of certain classes and where there are bankers, we find that people in different countries, including France, Italy, and America, are willing to co-operate together and to do things for the common benefit and to make a pool of the proceeds. But in England the spirit of competition is still so keen that I may possibly be told our banks in London would not form such a committee and would not work together. Have the bankers been asked to form such a committee, and, if so, what was their reply? I shall also be told that discount "without recourse" is impossible in England, and no doubt that was a great feature of the German system. It is also true that our bankers do not practise it, and that British banks will not discount bills, as a rule, without recourse. I believe they would if it were put to them with a government guarantee and as a complete scheme. In any case, if the existing British banks were to refuse, I think the City of London is strong enough to form a new big bank, and that there is money, without Government assistance, for this purpose, and I know some people who would undertake to do something of that description if they had the opportunity. But in the first place, business of this patriotic importance, of this banking importance, ought to be undertaken by the existing machinery. If not, we should be able to replace it.

Finally, I submit with confidence that State participation is not wanted in banking and in finance. However important it may have been at one time to have have had State control in coal—a nice mess they have made of it-or in food—a nice mess they have made of it—and other things, I am satisfied that there is no necessity whatever for our country and our Board of Trade to embark upon the field of banking and finance. No new Department is necessary. The procedure of the Bill, with all its machinery and its officials is entirely misconceived. In moving the rejection I realise that the objects of the Bill are so important, so desirable in themselves, that I would ask whether it would be too much for the Government to appoint a small Committee to see whether these objects cannot be carried out on somewhat similar lines to what we know they were carried out in another country, and whether we could not save the idea of having to make this new gigantic bank for foreign trade, with its £26,000,000 of capital, and save all this army of officials with which we are now threatened, leaving to the commonsense of the financial and banking interests of this country to conduct their business which, I believe, if they were properly asked and properly organised, they would be quite willing to do.

Lieut.-Commander KENWORTHY

I beg to second the Amendment.

I am somewhat surprised to find myself seconding the Motion of the hon. Member for Liverpool, and I want to say from the little I know, mostly through travel abroad, of the operations of British business methods in foreign countries, that I entirely agree with every word he said. As I was called out of the House, I am not sure if he supplemented his remarks by drawing atten- tion to the great need to-day of an efficient and reorganised Consular Service, with much wider powers, with better pay, and more expert members, which ought to be an integral part of our foreign trade. I do not like to hear of these new agents being appointed for the Board of Trade in foreign countries. If the Consular Service was reorganised and brought up to date, and if efficient commercial attaches were appointed to the principal countries of Europe, it would go far to encourage that British trade which we all wish to encourage in every possible way. I would also draw attention to the fact that the Financial Secretary to the Treasury to-day admitted, in answer to a question, that the banks of this country have been requested by the Government, for reasons that have not been explained to this House, to call in credits, and to refuse further facilities even for legitimate export trade. When the Treasury admits that that is being done, it is extraordinary that the Board of Trade should come forward to-day to ask for £26,000,000 for a scheme of this sort to artificially bolster up certain firms in trade in foreign countries. That shows an extraordinary lack of co-ordination between two great Government Departments. You have the Treasury actually encouraging the banks to refuse credits to legitimate trading interests, and you have the Board of Trade coming down with what I think is a crack-brained scheme for artificially bolstering up trade. If the Government really have the welfare of British trade and industry at heart they should at once assist the banks, if necessary, by giving them extra backing or guarantees, and encourage them in every way to assist our export trade, and get trade started in our own industries and in the interests of the shattered countries of Europe and Asia Minor.

I have another objection to this Bill, and it is that it has been conceived on a totally wrong basis. It is the old attempt to distinguish in Europe the sheep from the goats. Credits can only be given, apparently, for trade with certain selected countries mentioned in the schedule. Many months ago the Government stated with commendable courage that it was their desire that trade should be re-opened as soon as possible with the countries of our late enemies. That is a necessity which even the most rabid protectionist in this country will accept. We cannot possibly expect to sell to these countries unless we buy from them. The great need of this country and of Europe to-day is to get the machinery of trade started again. If this scheme is so good, as the hon. Member who introduced the Bill maintains, why has it not been extended to other countries? Take, for example, the most glaring case—the case of Austria. Our newspapers are filled to-day with advertisements of a very harrowing description asking the benevolent to subscribe money to relieve the starving population of Austria. Austria is being spoon-fed to-day. She is depending upon charity, but Sir William Gould and Sir George Paish, the Commissioners in Central and Eastern Europe, have told us that this charity must be looked upon purely and simply as a stop-gap, and that at the earliest possible moment we must let these people help themselves. It is possible to demoralise a nation by charity just as it is possible to demoralise a human being by charity. Nations can get out of the habit of depending on their own exertions and out of the habit of frugality, and the sooner they can help themselves the better. I cannot understand why the Board of Trade have not included Austria in the schedule. Would it be possible to enlarge the schedule now and include that country?

I interrupted the hon. Member who introduced the Bill by asking if it was not a fact that the American Committee which has been granted very large credits by the Government of the United States for encouraging trade in this way does not deal in all countries, but he was unable to inform me whether that was so or not. My information is that this American Committee deals in all countries. They have carte blanche to make all the arrangements they can, mainly with the object of encouraging American trade and in, "the wider interests of humanity," to quote the hon. Gentleman's own words, I am told that Americans are going about in Austria buying up factories, mines, forests, estates, and in some cases whole townships, and they are getting them at very good prices from the American point of view. To use a vulgar expression, they are scooping the pool. If there is anything in it to attract American business men, and if American business men are able to avail themselves of the Government's scheme, we in this country ought to have the same oppor- tunities and be allowed to extend into our late enemy countries or any countries where it will pay us to enter into business relations with those countries. The same thing applies in a lesser degree to Germany. Surely to-day it is realised that the great industrial commercial machine of Europe will not get going again until Germany is producing and working. What is the use of the hon. and right hon. Members declaring that our need is greater production if they only preach it as regards our own people and our own factories? We must have the whole world producing, or else we shall never get down prices and we shall have slump after slump and trade crisis after trade crisis. It is common knowledge that it is an urgent necessity that these countries should be put on their feet and set to work, and I think the key country for the whole of Europe, owing to her position and her means of transportation, is Germany. Whether we like it or not, we have to realise that it is in our best interests that Germany once more should take her place as a great working and distributing country in Europe. The sooner that is done the better will it be for Europe. I regret that the Government have not seen their way and have not had enough courage to include Germany in the schedule.

5.0 P.M.

The same thing applies to Hungary, Bulgaria and Turkey, when at last we get some sort of settled conditions in Turkey. I would remind hon. Members that Turkey was one of our most lucrative and valuable markets in the past, and it will be a bad day for the industries of Yorkshire and Lancashire if the Turkish Empire is to be permanently estranged from this country. I regret very much that Turkey has not been included in the Schedule. I suppose it is partly due to prejudice against an old enemy country. I could understand that, but I cannot understand another obvious intention of the Government. This Bill is an attempt to put a cordon sanitaire round Russia, and I am going to prove it by drawing attention to one glaring case of omission from the Schedule. Take the Republic of Azerbaijan—a rich country with some of the most flourishing oil-producing wells in the world—Baku. Azerbaijan was recognised de facto at the same time as Georgia by His Majesty's Government. It was recognised in a fit of panic after Denikin's army collapsed. Azerbaijan has chosen the form of Government which is apparently wished for by the majority of the Tartar population of that country. It is as highly civilised as the neighbouring Republic of Georgia, and was recognised at the same time, but I suppose it has committed an unpardonable sin by entering into relationship with the Soviet Republic of Russia. In that respect Azerbaijan has followed the lead of His Majesty's Government. Why has it not been included in this Schedule, unless for the reason I have suggested—that we are simply attempting to form a cordon sanitaire in the commercial world as well as in the naval and military world? The natural resources of Azerbaijan are richer than those of Georgia, yet Georgia is included in the Schedule and Azerbaijan is left out. If the reason is that Azerbaijan has committed the unpardonable sin of entering into relations with Russia, which apparently we only are to be allowed to do. What about Esthonia? She has made complete peace with Russia and is one of the chief means of entry for considerable quantities of commercial goods that are entering Russia. Why is Esthonia in the Schedule? I suppose because this Bill was drafted some time ago and the Government cannot find an excuse for keeping Esthonia out. The same thing applies to Armenia. Armenia is in relationship with the Moscow government. If my information is correct, something like a maximalist government has been formed in Armenia, and if that is a valid reason for leaving Azerbaijan out of the Schedule why has her neighbour Armenia not also been left out? For want of some better explanation we must conclude that the choice of the countries to which these credits are being extended is purely political with a political object which could not be openly expressed to the people of this country.

Then why, I would ask, subject to some arrangement being made between His Majesty's Government and the Government of Moscow, is Russia not included? The Prime Minister again and again during the last few months told us how necessary it is—I think one reason he gave was in order to smash Bolshevism in this country—that we should once more trade with Russia. He told us that we trade with cannibal countries and therefore we should not hesitate to trade with the Russian Republic. He told us it is quite necessary from the point of view of the food supplies of the world that we should get food from Russia and that there are in Russia raw materials which are quite essential to the trade of this country, for instance, timber which is so badly needed for housing. Those timber supplies alone would have enabled the Government to give some assistance to trade in the Soviet portions of Russia, which are now practically the whole of Russia provided, of course, that the arrangements can be carried through. I am not here attacking the long delay in entering into these relations, I hope to do that at the appropriate time, but I am complaining that if the Government of this country really want to assist British trade as they say, and we are not blinded by political prejudice or actuated by political motives, which cannot be explained openly to the people of this country, they should be prepared to give credits to commence trade with Russia. That is the country with the greatest possibilities, where possibly the insurance rates for trade to it are highest and where probably business men would have the greatest difficulty in getting credit to make a fresh start. Unless the Government can explain the omission of Russia from the Schedule of this Bill, the House should reject the Bill. Otherwise it is a condemnation of the Government's own policy as explained by the Lord Privy Seal and the Prime Minister.

I am going, in conclusion, to make what I hope is a constructive suggestion. Something much more than this is needed if we are going to make up the awful results of the Government's policy since the Armistice. Europe is staggering on the brink of terrible disaster. We do not know how many countries will have actually gone bankrupt within the next twelve months, or how many revolutions will have taken place. There are whole areas of desolation, starvation and misery. What is required is not isolated action by this country, or possible rivalry to isolated action by France or the United States. What is wanted is international action, and that should take the form of an international loan to supply credit, possibly on the lines as laid down in this Bill, to enable countries of Central and Eastern Europe to start to trade themselves. Trade cannot be started by simply supplying credit. To this end we have got to set these people going. If they have nothing to send to us they cannot buy our goods. That is elementary economics. The whole policy as indicated in this Bill shows a prejudiced outlook on the part of the Government. They have not yet learned to think internationally; until they learn to think internationally and get other countries to do the same, international trade cannot be started. Until international trade is started all round there will not be a basis of security established anywhere and these countries that I have mentioned will totter over the brink of the precipice. We are all roped together and they will haul us with them. I beg to second the Amendment.

Mr. HILTON YOUNG

The hon. Member for the Edgehill Division of Liverpool (Sir W. Rutherford) has directed against this Bill in two particulars very powerful criticism. The first part of his criticism was directed against the machinery of the Bill as set out in the Regulations of the Board of Trade. With that, I may say with all deference, I am in cost cordial agreement. The scheme has not proved so far of much practical utility. The cause is fully established by those considerations which the hon. Member has advanced. The terms are too hard. They are too severe in those two particulars in particular—the amount of security which is demanded which is placed on the higher scale instead of the lower scale, and the rates of commission, etc. With those criticisms many Members who cordially support the Bill would probably be in agreement. But these are criticisms directed against the actual terms of the scheme under the Regulations, and it is quite in accordance with the actual principles of the Bill that such conditions should be amended, and I may express the most earnest hope that the officials and the Ministry concerned should consult with the members of the banking community—of course, I know that there have been many consultations already—to see whether it is possible to ameliorate those terms.

The hon. Member proceeded to direct criticism against the principle of the central framework of the Bill, and I could not but think that there was in his mind a certain misapprehension as to what the purpose of the Bill is. It seemed to me at one time as if he were criticising this Bill, not for failing to achieve its own purpose, but for not being a perfectly different Bill, for not being a Bill simply for the expansion of British trade abroad. That would be a most desirable Bill, which I would hope to see very much on such lines as he described. But we are up against an immediate urgent necessity which has to be dealt with in a brief period of time. If we had to wait to deal with that emergency until such time as we could complete the education of a rising generation on the subject, obviously we must wait until a time when the emergency would be left to settle itself. It is a very urgent practical necessity of the day how to restore trade with these ravaged countries.

When I grasped the suggestions put forward by the hon. Member for what he thought to be the more superior and more practical way of dealing with it, I could not but think also that here, too, there was something in the nature of a misapprehension as to what the real crux in the matter is. The German scheme so admirably designed and organised, as all such schemes were in Germany, and so effective as he truly said, had this feature—that it was a scheme for the promotion of trade in ordinary times and to deal with ordinary risks. For those purposes the recommendations referring to the insurances, reserve funds, etc., were perfectly adequate. But the situation in which we are differs from that situation in just this particular, which makes that scheme inappropriate and useless that the risks are not ordinary. They are too great. The prospect of loss, if I may say so, is too certain to make it possible for the banking and commercial community to deal with this unassisted out of their own resources. That I take it to be the real necessity for the introduction of State action in the present circumstances.

Nobody could agree more readily than I with the hon. Member in his lack of sympathy for any fresh appearance of new Government Departments in any fresh sphere of industry in all cases, and more particularly so when it involves the establishment of a new bureau and new salaries. But when there is work to be done which can only be done by the introduction of the strong hand of the State, with the State working with banking and commercial community, then it is the greater good of the country against a lesser evil. That is how it would work out. In reference to the voluntary committee of the bankers to which he referred, I am afraid that the answer must be given which he anticipated, that the work has not been done because it could not be done. It is because we are brought up against the actual magnitude of the risks involved, and that people are quite rightly considering their own security and their own immediate necessity that they could not be justified in taking this on without a guarantee.

I may refer to two other things which appear to me to be imperfect in the structure of the Bill. They are both already well known to the house, but need emphasis. One of them was brought up in the criticism of the hon. Member. That is the difficulties of the variation of exchange. It is true, as he says, that these excessive variabilities of exchange in present conditions must reduce many of those provisions, particularly when the security takes the form of currency, to an absolutely nugatory state. There will be losses. This is recognised, and that is why the Bill is introduced, but it goes deeper. If one takes a somewhat wider view, one cannot but see that this effort to restore international trade with countries in such a state of disorganisation can never be successful until another work first has been undertaken. That is the restoration of some stability in international exchanges and in currency. It is needless to labour that. It is almost unnecessary to go so far afield from the broad issue to embark in discussions on losses due to exchange. It will not be denied by those who have sought to be humble students of this question that the difficulties and enormous risks and the actual impossibilities of making bargains which are involved in foreign trade in the ravaged countries because of the variations of exchange, must paralyse trade until, after some international effort, something has been done to establish again in Europe either stability in the main currencies involved, or possibly a standard currency, a currency for reference in international trade. That is one thing which, I believe, is recognised as standing in the way of the restoration of international trade on these lines.

Let me join my voice in what has, I understand, been something of a chorus in previous debates and has been referred to in this Debate—the chorus on the subject of the restriction of this Bill to commerce in manufactured articles. Quite apart from any controversial issues, I think it is something in the nature of an absurdity to approach customers with offers to trade and to refuse to sell them the only things they want. I am not in the least putting this wholly from the point of view of foreign nations. I do not think there is real antinomy between the two aspects of the question. May I put it in this way? By selling them manufactured articles we may relieve their temporary necessity, but we do not put them in the way of earning a living; we do not put them in the way of earning enough money to pay us for what we sell them. Here are countries whose industries need to be restarted. In order to restart those industries they need two things. With an ingenuity which I admired, the representative of the Government responsible for the Bill put his case in the strongest way possible by referring to the sales of machinery. You cannot work machinery unless you have something to work in the machinery. The second necessity is raw material. As long as we confine, or seek to confine, our supplies to these countries merely to manufactured articles, so long will we give them no true encouragement in setting to work to make a living and to earn money with which to pay us. We must see that they get their fair share of the supply of raw materials. There is one trifling point on which I invite information. It will be of great interest if we can be told a little more about what I might call the financial history of the credit which is going to be used in these operations. What will be the nature of the fund, the banking fund on which the Government will draw? Is it to be that hard-worked fund, the Civil Contingencies Fund, of which such strangely novel uses have recently been made? If not, is a new fund to be established?

Mr. A. M. SAMUEL

The position I take up in regard to this Bill is rather paradoxical. I agree with every word of what was said by the hon. Member for Liverpool (Sir W. Rutherford), but I will support the Bill. I hope the Secretary to the Board of Trade will not take it amiss if I say that I am of opinion that the Board of Trade has come down here with the Board of Trade tongue in the Board of Trade cheek to offer this Bill to the House. They tell us that after a few months they have lent no more than £28,000. That is because no one will take the trouble to borrow money under any Bill of this kind, full of red-tape provisions. The whole thing reminds me very much of the annuity and insurance proposals of the Post Office Savings Bank, which used to be advertised in jejune ways in the old days in the books and all the literature that came out of the Post Office. What was the result? No one invested in Post Office annuities or insurance. They could get the same thing much better and much cheaper in the great British insurance companies, in the Alliance or Phœnix, or Royal. The same thing will happen here. No one will trouble the Board of Trade to borrow money, when there are all these hedgments, restrictions, and provisions. They will render it so difficult to get the money that people will prefer to go without the loan. I do not think there will be many solvent people who will be refused loans by the banks. If those people who are worth lending to go to the bank they can get the money right enough; it is only the people who are not worth lending to who do not get the money, provided, of course, it is for legitimate export trade. I myself, if I were at the Board of Trade, would not lend money to Rumania at present. If the Board of Trade wish to subsidise Rumania, well and good. She has been our Ally, and we have helped her through all her financial troubles, but at present I do not think that Rumania takes the trouble to maintain her own Government credit in this country. How, then, can a trader expect to get his money back from traders in Rumania if the Rumanian Government does not take the trouble to pay to British holders their interest on Rumanian Government loans?

The hon. Member for the Ancient City of Norwich (Mr. Hilton Young) has asked how this money was going to be dealt with. I take it that the £26,000,000, if used as credits, will not be disbursed in cash by cheque. The Government will write its name across the bills and put the bills on the market. I should have thought the Government would be better advised not to put these credits in circulation until it is found that these credits do represent values or goods which will come back from abroad in due course. The hon. Member for Norwich also spoke about the necessity for exchanges being adjusted. I do not think you will ever get trade to work properly in Eastern Europe or Middle Europe until you have adjusted the exchange. It is impossible to carry out trade with other countries when the exchange is loaded seven times against those other countries. Speaking on broad lines, my view is that this Bill will not do nearly as much good as the system adopted by the East India Company in the early days of the 17th century of going back to ordinary common barter. Let us send our goods to Rumania, or Constantinople, or the Crimea, in ships sent out by the manufacturers, and let them be there under the control of a. super-cargo, and let him find goods there to bring back here. I am entirely with the last speaker in the view that we can never re-establish trade on broader lines with these East European nations until the question of exchange has been dealt with, and we cannot stabilise exchange with Germany, or Russia, or any Eastern country while they are continually flooding their markets week by week from the printing press. I will vote for this Bill, though I entirely agree with the statement of the hon. Member for Liverpool. It is a silly Bill. I believe that it will never come into operation to the extent planned. It will simply die of neglect. It is merely a sop to public opinion, like the Profiteering Bill, a sop to those who imagine foreign trade can be re-established impersonally, and without human skill and risk.

There is the question of agents who are to act for our Government abroad. How can Government officials be found to do that? Our own banking institutions abroad, with their agents, will probably do the work for the Board of Trade. Why not, therefore, leave the whole of the business to the banks? If you like to guarantee the banks a small proportion of their losses, do so. I do not agree with the hon. Member for Liverpool in his statement about the way in which German banks set up credits for their manufacturers before the War. I have for 20 years studied the whole of the machinations of the German banks through their overseas branches. Berlin then found out how the foreign branches were able to open export business abroad. But the great German banks were in closer connection with the great manufacturing industries in Germany than our banks are with our great manufacturing interests. In many cases the banks in Germany have members of their own board of staff on the boards of these great manufacturing companies. They knew what was going on in German manufacturing circles, and they knew from their own directors what the companies were doing in foreign countries. Then, again, in this country we do not like the "trustification" of businesses. In Germany they have the system of cartels. The German banks had not to deal with small individual, first-class private firms, as we have them in this country—there are hundreds of them, with £100,000 or £200,000 capital, and they are the backbone of this country. German banks could very well lend money to these great cartels or accept their bills. They went further. After they had taken the bills and put their names on the backs of them they did not go to the German Government to guarantee those bills. They came to Lombard Street and handed them round from bank to bank. Why? I am not a banker, but I think the banks in this country are very ignorant in the way they carry on foreign business. They leave the acceptance trade to the great accepting houses in this country. What they should do is to learn, not to lend money, as they have done, because of the names on the bills, but they should learn to lend money on the merits of the trade. In the past they were content to lend British money on foreign bills with the names of German banks to guarantee their payment; they relied on the German investigations which warranted German banks to accept or endorse, and did not care to take the trouble to do the same for British manufacturing exporters. They took the line of least resistance. They could in their own organisations have a department looking into the type of trade offered to them or credits asked for, just as the Board of Trade proposes to do under this Bill. When the British banks have learnt to understand the merits of the trade abroad which is offered to them, they will willingly, with the knowledge they have, grant credits to the great British exporters, and we shall not need then to have a Bill like this brought down to the House of Commons. But in any case, with exchange in Eastern Europe in confusion, the easiest and safest way to reopen trade is to take out goods. barter them on the spot for native products, raw or manufactured, just as we did in the early days of the John Company, till trade itself provides its own credits without Board of Trade help. However, I shall vote for the Bill, as it discloses to the public a good object lesson how not to do the thing.

Major BARNETT

I desire to support the Amendment. My hon. Friend (Mr. A. M. Samuel) professed to support the Bill, but he damned it with the faintest of faint praise, and I think every argument he used was an argument strongly in support of the Amendment. There is one statement of his which I desire to challenge, and that is the statement that the British manufacturer of good credit and standing will always do trade in countries like Rumania, or Spain, or Italy. I say that in the years before the War the Germans took our trade from us in those countries by their banking methods, and by their banking methods alone. In a country like Rumania or Spain, where credit is the one thing that the shopkeeper wanted, the German found cut what goods were required and the quality, and he offered credit. The British merchant and manufacturer got no assistance whatever from his bank, and he had to insist on cash as against shipping documents, whereas the German could rely on his own banks with the guarantee of the German Government behind them. What happened? His paper came to London, and our money on deposit at 4 per cent. went to finance the German manufacturer and the German merchant. That is exactly the state of things we want to avoid. The hon. and gallant Member for Norwich (Mr. Hilton Young), in a very lucid and interesting speech, seemed to me to prove rather too much. He said that we were up against an urgent financial problem owing to the condition of these countries, and there I agree; but what is the inference he draws from that? It is that we ought to have a new banking system set up by the Board of Trade, which knows nothing of banking, with this capital of £26,000,000. If the problem is an urgent one, and I do not deny that it is, why should we not utilise the banking experience that at present exists rather than improvise banking in the Board of Trade? It would suffice to have a Government guarantee to meet an abnormal situation.

There was a Debate on the Financial Resolution in connection with this Bill on the 12th April last, and in that Debate the question was raised as to the way in which the facilities were to be given. I am bound to say, having read that Debate very carefully, that I do not think the Bill meets what was then stated. The hon. Baronet the Member for York (Sir J. Butcher) asked this question: Do I understand they [that is, the credits] are only to be given to British firms, or are they to be given to foreign firms as well, or are the credits to be given to foreign Governments? The President of the Board of Trade replied: It is perfectly clear that credits will only be granted to British firms. Subsequently in the same Debate the Parliamentary Secretary said: The hon. and learned Member for York asked whether this would be limited to British firms and sellers in this country. Yes, the advances will be so limited."—[OFFICIAL REPORT, 12th April, 1920, Vol. 127, Cols. 1414 and 1419.] I ask the House now to look at the Bill, Clause 1 (1) (a), which says:— Make arrangements for granting to persons domiciled in or to companies incorporated by or under the laws of the United Kingdom credits in connection with the export to any country specified. That is a very different case. We have heard from the Mover of the Amendment that there are rich and influential firms domiciled in this country which could not be called British firms. I venture to say that the pledge which was given to this House was that the facilities were to be given to British firms or to companies incorporated under British law, and we should always insist on a certain proportion of the capital being held by British shareholders. This is a Committee point, but it is a point which will have to be very closely looked into in that stage. The hon. and gallant Member for Hull who seconded the Amendment would, I think, be satisfied if the Schedule of the Bill were recast. His objection seemed to me to be chiefly levelled against the non-inclusion in the Schedule of certain late enemy countries.

Lieut.-Commander KENWORTHY

I supported the hon. Member who moved the Amendment on the purely business side as well.

Major BARNETT

As to the Schedule, it was made clear that the object of this measure was to give facilities to trade with Allied countries or parts of enemy countries which would have been allied if they had had the chance. I think we are doing the right thing here in the wrong way. I do not think it is necessary to set aside such a large sum as 26 millions for these credits. If our Government were prepared to adopt the German system and back its own banking people, then I believe that without finding a single sovereign it would be able to help our trade a very great deal more than trade is helped under this Bill. The Bill at one and the same time tries to do too much, and does too little. It sets out with the noble and chivalrous purpose of lending 26 millions to help trade with these countries, and then a cold fit seems to come to the Board of Trade, and every possible precaution is taken to save the taxpayer from any conceivable loss. There is not a farthing being risked, and I am afraid that the credits are so thoroughly safeguarded that comparatively little business will be done. In the discussion on the Finance Resolution it appeared that we had been doing business in a provisional way for months past, and that the credits then amounted to £290,000. Some people were surprised that so little had been asked for, but I think it is surprising that so much was asked for under the conditions then laid down, and which are now set out in a White Paper. Those conditions involve the putting up of security out in Rumania or Georgia, or Poland, or Czecho-Slovakia to the full amount plus a margin of 15 per cent. Is it not perfectly obvious that if a merchant in one of those countries, in spite of the depreciation of the currency, is in a position to put up the full amount of the purchase money plus the insurance and the margin of 15 per cent., he would say "Thank you for nothing, I will pay for my goods." In order to protect this 26 millions against any possible loss, we have made business entirely problematical. There is one class of people in a country, say, like Poland or Rumania whose necessities have not been considered. There is the case of the old-standing firm that has always kept its engagements, but which may have been hard hit by the War. When you get that information from a responsible person on the spot as the Germans did, then take those peoples' bills instead of saying, "We are going to give you credit, and will you kindly put up security for the full amount of the currency, plus 15 per cent." There never was credit offered to a starving and almost bankrupt people on such terms. That is why I say it is very surprising that £290,000 should have been applied for. Whether my hon. Friend persists in the Amendment or not, I hope that the hon. Gentleman in charge of the Bill, and here I desire to associate myself with every word said in his praise, will reconsider the Bill in the light of the criticism offered in this House, and if the Bill gets a Second Reading, then in the Committee stage we may make it a more workmanlike and useful measure.

Mr. WILLIAM GRAHAM

We hardly ever have the consideration of an economic problem without the charge being levelled at Members of the Labour party that they are somewhat unorthodox in their views on these matters. The hon. Member for Farnham (Mr. A. M. Samuel) made the statement that what we ought to do in Europe was to go back to a system of barter. I confess in the study of this particular Bill that was a very interesting statement, because we all recall in the study of barter that the main objection which was offered was that it did not lend itself to the necessary mobility and fluidity which was essential for world commerce. In the consideration of European economic problems at the present time, it is precisely that fluidity and mobility which we require. Barter may seem to some a short cut and a ready means of overcoming the undoubtedly great difficulty of exchange, but I do not believe personally that it offers any solution at all. We on the Labour Benches, having considered this much criticised Measure, have come to the conclusion that this Bill ought to be supported, but supported with so many reservations that we are really in the last resort among the opposition. The principle is undeniably sound, but the method by which the Government embarks on the task is unsound in seven out of eight heads. May I try to indicate what we on the Labour Benches had in mind when the European War concluded, and when we were confronted with the economic reconstruction of Europe and indeed of a large part of the world as well.

The Noble Lord opposite (Lord R. Cecil) will not think me irreverent if I say that we attach tremendous importance to the success of the League of Nations on two points. First of all, we believe that it would be a great political ideal, and a practical ideal, and in the second place we believe that it would speedily bring into being some great and comprehensive economic programme, and with the political ideal on the one side and the economic ideal on the other, we should be able to establish a set of world conditions which would make the recurrence of war impossible and contribute at the very earliest moment to the reconstruction of all forms of healthy and beneficent enterprise. That is the ideal which we hold. Now let us at the moment ignore the political considerations, which after all are not relevant perhaps except to a minor extent, and let us look at the problem of economic reconstruction in Europe. I confess that when we view that great problem, applying to all the countries, to our late enemies as well as to those who were associated with us in the conduct of that great campaign, when we view that great, comprehensive problem, this Bill amounts to very little more—I do not use the word offensively—than a farcical attempt to meet the situation, and it is farcical mainly because it ignores elementary, plain, humble, economic considerations which we in the Labour movement readily understand. The Bill proposes within the limits of £226,000,000 to give credit to a certain number of exporters to countries, countries in the main, I think, associated with us or broken off from other countries, and it proposes to give that credit to such exporters upon a more or less elaborate set of conditions.

Many of us study from week to week the "Economic Review," which gives a generally faithful account from the foreign Press of economic conditions in Europe, and I find in that journal a great mass of contradictions. I find, side by side with the terrible economic conditions in Europe, in many parts of Europe waste and luxury and great expenditure, in the midst of sorrow and death and destruction of the most awful kind, shameless and profligate waste of resources. That is a very striking fact to begin with, but I suppose from the time of the decay of the Roman Empire onwards, if not before, that has been true of human society. That is the first consideration; and then there is another consideration which emerges from the study of these reports. It is this, that what many of these countries require is not machinery, not manufactured articles, not the finished products of this country in any shape or form, but raw materials. That is actually what they require, and I admit that it is rather odd to find that desire for raw materials in some of these countries where they themselves in the past were large producers of these very raw materials which they now urgently require, but which, for one reason or another—labour troubles, financial troubles, or general economic unsettlement—they are unable to turn out at the present time. If we are going to reconstruct industry and commerce in Europe, I think it is altogether the wrong way to go about it to establish a scheme which is only going to apply to manufactured articles, and that within comparatively narrow limits, and to say that that is to be practically, for the purposes of this Bill, the beginning and the end of our contribution. On a minor point, have we ever decided in the economic structure of this country what is raw material and what is a manufactured article? I remember well the tremendous controversies of 1903 onwards to the effect that many of the so-called manufactured articles were really the raw materials of industry. Who is going to decide, for the purposes of this Bill, where the line is to be drawn, and on what footing are we going to make the best contribution we can to these distressed countries?

There is to my mind, however, a far larger criticism. I have been very much impressed recently, not only by the speeches of hon. Members opposite and of this side of the House as well, but also in the study of current economic literature, by the continual reminder of the fact that if we are going to save Europe, and, indeed, save the world, we shall require to pool our resources of all kinds. We shall require to pool not merely our resources of character, of ability, and of talent, not merely our resources of credit, but also our resources of raw materials and manufactured and partially manufactured articles. That campaign, to whatever extent we may carry it, is believed to be absolutely necessary if we are going to re-establish industry and commerce, and if we are going to save the world, not merely materially, but, what seems to me to be far more important, intellectually and morally as well. If these things are true, and if we are going to pool our resources in Europe, is it not clear beyond the shadow of a doubt that we cannot have regard to a measure of this kind, introduced in the British House of Commons, without asking ourselves what contribution to these countries and to other countries is being made by other lands out of their resources, whether they have been badly penalised by the War, or whether they have been associated with us in the conflict and have been victorious, and are now directing their minds to substantially the same aims as ourselves? When we have regard to facts of that nature, surely every hon. Member must agree that what we require is not a Bill of this kind, with £26,000,000 applied to a limited number of small countries, but some comprehensive scheme.

I am very willing to admit, not without sorrow and regret, that probably in these matters we cannot wait for the economic side of the League of Nations. The Supreme Council, or whatever it is called, may not help us very much in the interval, but surely we should be able to devise at a comparatively early date some general, sound, and yet comprehensive policy of the kind of principles we are going to adopt, and the kind of campaign in which we are going to engage, at all events, to give Europe a chance. We have not heard from the hon. Gentleman representing the Government anything at all on that very important side of the problem. I agree, because I wish to be perfectly fair, that it is perhaps asking too much to get a mass of information of that kind, but I press the argument now for this reason, that I am not sure that the indirect and certainly not the intentional result of a measure of this kind, assuming a similar activity is embarked upon by other countries, will not be to give an excessive amount of credit and provision to certain parts of Europe, and to leave other parts of Europe struggling for credit and the means of life, whereas, as a matter of fact, it is in our interests, to put it no higher than that, that they should be encouraged and revived at the earliest possible moment. How far has the proposal of this Bill been considered strictly and seriously in the light of international considerations, and more particularly in the light of an international and certainly a European economic policy? I am going to support the Bill because I think its intention is good, but it is too humble, its proposals are so very moderate, that I have no enthusiasm at all in the task, and I only give my vote because I hope the Government will embark upon a wider scheme, and make provision on the international lines which all of us, whatever our views of our late enemies or friends may be, believe to be absolutely necessary for Europe and the world at the present time.

Lieut.-Colonel WILLEY

Unquestionably firms of strong credit who wish to do business with any of the countries in the Schedule to the Bill can obtain the necessary credit from their bankers to enable them to do that, if they like to take the risk of long credits which it involves, but the money is lent to them not upon the wisdom or justification of the foreign trade, but upon the strength of their own name. Therefore, the point we want to consider here is the case of the small firms who are struggling to develop our foreign trade, who perhaps before the War had built up a small business which was only able to carry out transactions of a relatively small nature. They to-day wish to renew their relations which they had before the War with firms possibly of good standing in those foreign countries, but they are not able to do it because they cannot get from their banks the accommodations which larger firms can get. The aim of this Bill, therefore, should be to assist those smaller firms in participating in the volume of business which is going gradually to build up the total international trade which has been so strongly pressed upon the House as a desirable aim to keep before us at the present time. The hon. Gentleman who moved the rejection of the Bill led the House into considerable details regarding the commercial transactions involved under the conditions of this credit, and he clothed the difficulties which any exporter would face in the way of arranging the acceptance of bills with such a lurid aspect as almost to frighten anybody not familiar with the usual procedure by which this is carried out. Surely this business is for the most part the resumption of the normal trade of this country with those countries on the Schedule, and, with regard to the Schedule, may I interpose here this, that objection has been made that we do not go far enough and that we should include other countries, but surely we want to begin by giving assistance to our friends and not including promiscuously our late enemies as well. I therefore urge that the Board of Trade, in spite of appeals that the list should be extended, should limit it strictly to countries which were our friends during the War. With regard to the volume of business which it is contemplated will be covered by this Bill, surely the drawing of a bill on any of these countries does not necessarily involve so intricate a procedure as has been suggested. The objection was made that the bill would have to be drawn for the amount of the invoice, plus all expenses and profit, but surely in this particular transaction the exporter can draw for what he likes, and if he likes to put on a charge 50 per cent. above the cost price of the commodities, surely that is his business and is no fault of the scheme.

6.0 P.M.

May I refer to the complaint that has been made that the whole Bill is unnecessary, because if a firm is in a position to put up a collateral security or get a bank guarantee it clearly is not in a position of requiring the assistance which this Bill gives? Surely one of the objects here is to provide a means of getting over the difficulties of the exchange. Surely in the event of a manufacturer in any of these countries wishing to obtain a manufactured article or component parts, the whole object of this Bill is that he should be able to obtain the commodity on a basis which does not involve payment in sterling until such period as he may be able to re-export. On these grounds I take exception to the objection which has been made there. May I examine the claim that the ordinary procedure ought to permit of this without the assistance of the Bill? Is not the position to-day that no joint stock bank in London will accept for discount a bill drawn on any of the countries in the Schedule—at any rate, not on the ordinary lines which existed before the War? Before the War these bills did not necessarily form a portion of the overdraft, but formed a portion of the accommodation which fell within a man's discount and not his overdraft. There is no joint stock bank in London which will discount paper drawn on any of the countries in the Schedule as they would before the War. The additional point, therefore, which has been made, that ordinary banking procedure should be sufficient, inasmuch as the banks themselves could make possible some procedure of this kind for providing accommodation to the exporter with a State guarantee—I see that the hon. Member who moved the rejection of the Bill nods assent. The State, then, through the Treasury, is to assume a contingent liability to any extent which the joint stock banks might discount bills under this Bill. The bankers do not feel justified in getting together and asking the Exchequer to give a guarantee? Why? There are many exporters in this country who formerly did business with firms of good standing in the countries named in the Schedule whose credit rate in currency is fully equal to what it was before the War, but whose rate of sterling to-day is negligible because of the depreciation in the currency. They are not prepared to do any business, because while the exporter here is prepared to take the commercial risk, he cannot face the political hazard, and that is the whole difficulty. If it is not possible for the Exchequer to give a guarantee, obviously the banks would not themselves assume that responsibility.

I would like to associate myself with the plea made by hon. Members on the Labour Benches, with others also, that this scheme should be extended to raw material or that some analogous scheme should be introduced, and I hope the Parliamentary Secretary to the Board of Trade will explore the possibility of expounding a scheme which will include the possibility of raw material. At the present moment I would limit it to Empire-produced raw material. Many difficulties which exist in this country at the present moment with regard to the high cost of living, result directly from the fact that machinery, which formerly produced goods which competed in countries to which we exported, is to-day standing idle, because of the impossibility of the owners of these factories purchasing their raw material. Therefore, the consumer is compelled to buy at a high price, and that produces very largely the wide margin between the cost of the article and the selling price, which, by a false term, has been branded as profiteering by the manufacturer. Manufacturers are unable to distinguish between the exported article and the article used at home. The justification of having this extended to raw materials would appear to appeal particularly to the Labour Benches from the desirability of avoiding what exists to-day. Countries which owe us money, or, anyhow, which owe money to countries which owe us money, are to-day compelled to see their industrial population out of work, and drawing out-of-work pay, and are piling up State indebtedness, and thereby reducing their position to meet their obligations.

There are three points of detail in the working of the scheme to which I would like to refer. Difficulty has been expressed that the importer is compelled to use a bank which might be selected by the Department, and which might not be the bank with which he ordinarily does business. It would be perfectly easy to visualise the disadvantage of that procedure. Facility should be given to the importer to use the bank with which he normally does business, and not be tied down to the bank which the Department indicates that he should use, because the bank in the importing country, not normally being in business relations with the importer, says, "Here is an opportunity to bleed this customer," and charges excessive rates, which make it much more difficult for business under the scheme to be put through. With regard to deposits of currency, surely some modification should be given in the terms laid down with regard to the percentage of currency to be deposited above the full amount of the bill drawn, particularly in the case of the wide fluctuations of the exchange. There is a further aspect. This Bill provides the credit for three years. Therefore it is possible that indebtedness by the importer will not be cleared off and be finally remitted to the exporter until the end of that period. Meanwhile, the Inland Revenue must insist that the full face value of the bill shall be included in the trading result which will rank in the succeeding year for Income Tax. It is therefore conceivable that money may have to be paid out to the Income Tax authorities which has only been earned on paper, and which will not be cashed until three years afterwards.

Finally, I would like again to lay emphasis on the need of this Bill on the ground that it is going to make possible the employment of machinery on the Continent, and in that way we are going more rapidly than in any other way to reduce prices in this country of many commodities of universal need, the high price of which results not, as is so often represented, from the wickedness of the manufacturer in charging excessive prices, but because of the price he is forced to charge in order to avoid discrimination between the export and import trade, and if competition in neutral markets, resulting from the employment of machinery now standing idle in those countries, comes about, that will assist very materially in reducing the cost of living in this country.

Captain W. BENN

We have had an extremely valuable Debate this afternoon from different points of view. We have had a great deal of extremely practical experience brought to bear by hon. Members who are highly qualified to speak, and who, in matters of detail, are able to instruct the House in a manner I would not even presume to do. But, looking at it from this narrow point of view—and I am trying to envisage it from a much wider aspect—it is interesting to remember that, although the scheme has been going on for some time with a good deal of money at disposal, it has been, from the standpoint of practical results, a failure. Out of a large sum of money put at the disposal of the exporters of this country only £28,000 has actually been taken up. The Parliamentary Secretary of the Board of Trade talked about a similar scheme in America, but is it not a fact that exactly the same failure dogged the steps they took there? Perhaps the right hon. Gentleman will subsequently, through the Department, provide an answer. I am informed by a very good financier that the scheme has broken down. Even those who have had no great experience in these matters realise that when you get a Government Department dealing with trade matters, it is bound to make such narrow arrangements, and to take such care about mistakes or losses which might be criticised by the public, as really to eliminate from the business all that element of adventure which is the real essence of success. Consequently you find that, while what we knew under the old title of "merchant adventurers" making a success of their ventures, Government concerns cannot make a big success.

If the matter succeeds, well and good. If it fails, the official knows he will have to bear the whole burden on his own shoulders. So that I think one may, even from the business point of view, say that there is a very great deal of criticism to be urged against this Bill. I will not deal with such matters as possible favouritism of firms, or of a very, unsatisfactory character of individual dealings between Government Departments and firms. Take, for instance, the matter of export licences. Many people in this House and the country generally were highly dissatisfied with the Government for the way in which this matter was carried out, for there was the possibility of some firms succeeding in their application, and others failing; yet both were at the time convinced that they were quite qualified to receive the paper. There is something else objectionable in the machinery. We are setting up or extending—I suppose it is the latter—an Overseas Trading Department. I suppose that is the machinery. It means the employment of a great many people and the expenditure of a good deal of money. There are a great many people in the country who are getting alarmed at the number of Government employés, and the extension of their activities to the particular trades of these people. But this is my point: In the Post Office, which is the largest trading enterprise in which this country indulges, the receipts and expenditure are both shown in the accounts presented to this House. If we wish to criticise we see that every Member's salary is put down, and is, therefore, known to the House. We have the facts to go upon. As I understand it, however, by reading the conditions which have been published in connection with this scheme, it is intended that the scheme shall be self-supporting, and the expenses of the Departments set up shall be defrayed out of commissions taken under the scheme. That really means that we are putting the credit of the State at the disposal of the Department, and are permitting the Department to charge such rates of commission as may be considered proper; and we are considering it as a trading concern which is not coming under the detailed scrutiny of the Supply Committee of this House. There seems to me to be some explanation required from the Government. It seems to me to be a very serious encroachment upon the privileges of this House.

The real criticism that I make on this Bill follows much the lines of my hon. Friend the Member for Central Edinburgh (Mr. Graham) and the hon. and gallant Member for Central Hull (Lieut.-Commander Kenworthy). It is conceived in much too narrow a spirit. The hon. and gallant Member who preceded me said quite frankly: "Of course, we must use our own money to assist our friends. That is his conception. Every line of the Bill is stamped with the narrowness. My conception is that if we are to reconstruct Europe economically it must be done in the light of the principle that Europe is an economic whole—that we are members one of another, and that one part of Europe cannot possibly suffer unless the other parts suffer also, whether these people happen to be our old enemies or our Allies. I would criticise the restrictions on the import of manufactured articles, the preference as between the different classes of manufactured articles—those in which it can be shown that the greater part of the manufacture has been done in this country. Surely such a way of dealing with a matter may operate very foolishly. Suppose a man making an article, the very best in the world, finds that the ingredients he requires can only be obtained outside this island. Suppose, on the other hand, there is a man who makes an inferior article, using for that manufacture things that in various respects are made in this island. The one man who is damaging our shipping by discouraging importation, and damaging our reputation in foreign countries by the inferiority of the article, gets the preference if he can show that even a single ingredient of the manufactured article is produced in this country. Surely this is much too narrow a way to deal with this important matter. If the hon. Gentleman opposite reads the Regulations I think he will agree that that is precisely their effect.

I venture to suggest first that to consider such matters is taking a very limited view of what is required; and, secondly, to say that raw material comes in the way it does within the scope of this credit scheme is really ignoring one of the greatest needs of the moment. There is one point I should like to know and question the hon. Gentleman about once again, and that is in regard to insurance against a falling exchange. I understand Sub-section (2) of Clause 1 has been put in as an insurance against a falling exchange— Subject to the provision … any sums repaid to the Board of Trade in respect of credits … may be applied by the Board for the purpose of any further credits so granted at any subsequent date. As is said by Sir W. Goode in his Review of the "Economic Conditions in Central Europe," people will not take bad money in exchange for food or coal. Perhaps the hon. Gentleman will speak about this matter when he comes to reply to the Debate.

We have had two very important Reports on the economic conditions of trade in Europe. One is the Report of the "Economic Conditions in Central Europe," by Sir Wm. Goode, and the other a Report by Professor Starling as to the "Food Conditions and Economic Condition of Germany." If we look at these Reports, we shall find—and I do not want to take up too much of the time of the House in going into details of these matters—that what these countries require at the present time is certainly machinery and, in some cases, manufactured articies, but much more do they require raw materials. Let us take the case of the present economic conditions in Central Europe. If we look on page 6 of the Report, we find that Sir Wm. Goode lays it down that the things required for the future of Europe east of the Rhine is (a) restoration of peace; (b) credits—(i) food in most countries, (ii) raw materials in all countries, (iii) stabilisation of currencies. Sir Wm. Goode then goes on to refer to the need for transport. and he also refers to economic solidarity, about which I shall make a few remarks later. Let us look at page 10 of this Report. Sir Wm. Goode speaks about the need for raw material and for manure. He also speaks about the "spectre of unemployment" and its great danger. Dealing with the CzechoSlovak Republic, it is stated in the Report that President Masaryk had pointed out in October, 1919, that it was impossible to put his people to work without wool and cotton for the factories, and that if raw material were not forthcoming the industrial population would have to leave the country. There was a review in "The Times" newspaper that I read only a few days ago. Speaking about the economic reconstruction of Europe, they pointed out much the same as this Report. Speaking about Czecho-Slovakia again, it is stated that what was required within an area of 50,000 miles is raw materials. Then we come to Poland, and what Sir Wm. Goode says about that country. On page 10 we find the following: Raw materials in great demand include cotton, wool, iron and iron ore, canning materials, fertilisers, jute, chemicals, rubber, vegetable oils, and high-speed steel. I should like to ask the Secretary to the Board of Trade, in finis connection, whether it is possible that credits can be, or have been, obtained for the purpose of purchasing munitions for Poland? We have had rather unsatisfactory answers to questions on this matter. When we have put questions, we have had—I do not want to use the word "evasive," because that might be considered offensive, but we have asked concerning the export of munitions, and I ask now whether travellers from abroad have been asking for assistance to establish munition factories. The hon. Gentleman who is in charge of the Department has dealt rather lightly, and not in a very illuminating manner, with these queries. Is there any possibility of a credit being got from his Department for this purpose? This suggested establishment of munition factories is a very serious question, and one that certainly deserves the utmost scrutiny of this House. There are other countries in the Bill. Take the case of Rumania. If we look at page 11 in the Report, which I am quoting, there is a reference to Rumania, which says that what is required is cotton and wool manufactures, and clothing, iron and steel, and other machinery. Take the Serbs. We read that cotton, wool, and clothing material, also salt, fertilisers, and oils, are badly needed. Then there is Esthonia, Latvia, and Lithuania dealt with on the same page of the Report. It is all the same story. It is obvious that it must be so. The main thing that all these people need is raw materials to start their industries and get their economic health re-established.

I come to the question as to why certain countries are given preference over others. One of the States was in communication with the Soviet Republic in Russia and the other was not. The one that is not, is rewarded for its virtue by being made available for the credits of this country, but the one that has established relations with the Southern Republic of Russia is cut out. I am coming to that in a moment, but it is impossible to evade certain conclusions in this matter. Why are Hungary and Austria left out? I do not want needlessly to go into details, but I see again Sir Wm. Goode in his Report makes it perfectly clear that raw material is wanted here, and "The Times," in the same economic survey to which I have alluded, reinforces that opinion. Again I ask, why is it that some countries were put in and taken out again? I say it is impossible to evade the conclusion that it is because this Bill is endeavouring to do what used to be the policy of the cordon sanitaire. In the Schedule of the Bill there is a list of States, and the hon. Members will find that they form one geographical line from the Baltic to the Black Sea. We are supplying, to use the words of the Prime Minister, a string of small States with the necessary equipment to set up a real barrier against an invasion by force of arms. There you are speaking in a military sense. Now we find that the economic policy of the Government is being shaped in exactly the same mould. This is to assist and encourage those forces which are opposing Bolshevism. Those are the words of the Secretary of State for War.

I do not approach this question of what should be our trading relations with other countries from the point of view of sympathy with the system in Russia, for which I have hardly any sympathy at all. I approach this matter from our own point of view and the good of this country, and I ask whether, in allowing the policy of the country to be shaped by the War Secretary to suit his own schemes, we are not really damaging the needs of this country. There was a return made to the House of Lords which gave some very interesting particulars about the food production of the world and the needs of the world. It showed that there was a slight decrease in production, and at the same time a rise in our own needs. Figures were given of the enormous production of the countries admitted to this Schedule before the War. With regard to Russia, M. Krassin, although he did not indicate that the transport was ready for the export of the goods, stated that in his opinion there was a surplus of 15,000,000 tons of wheat which might be exported front Russia.

Surely, in the interests of this country, one may ask that this scheme, which professes to settle the economic conditions of Europe, why it is that Russia is excluded, more especially when we need all these enormous sources of supply in order to reduce prices in this country. The reason is that the Government are in fact carrying out a blockade of Russia. Of course, there is no real blockade, but the hon. Gentleman has told us that he does not issue export licences to a man who wishes to sell anything in Russia. I understand it is a fact that no one is allowed to know where the mines are in the Baltic, except with the approval of the British Admiral. We have heard a great deal about the desirability of establishing trade relations with Germany, but she is not included in this Schedule. I do not know how you have to proceed if you wish to get another country added to this list after the Bill is passed, but why is Germany not included? Is it because we do not wish to re-establish trade relations with Germany, or because we are pursuing the idea that because we object to Germany we have to carry on a sort of silly spiteful economic quarrel?

Why not take the common-sense and manly course? In our own interests the sooner we establish trade relations with Germany the better. The result of this sort of thing is only creating difficulties for ourselves in Germany. First of all, we insist upon a rigorous adherence of the terms of the Peace Treaty, including the pursuit of the War criminals, a policy which led to the Kapp putsch. By such a policy as this in Germany you create such conditions of hardship that one acts upon the other, and you get a state of affairs which is the main cause of our troubles to-day. Instead of adopting a sensible policy you have set one section against the other, and you find it almost impossible now for Germany to re-establish itself. What Germany requires first is food, and then raw material, and then quiet. I stayed in Germany a few weeks ago and they all say there, "Leave us alone and let us get to business." Surely it is in the interests of this country that we should establish business with Germany as soon as possible. I do not wish to enlarge upon that point.

A report has been issued by Professor Starling and it is a most illuminating document. With regard to food, whereas the right quantity in Germany is represented by 3,300, the actual amount is 1,700, and under those circumstances what is the use of talking about the economic reconstruction of Europe when you have an enormous industrious country nourished on that scale? The figures of the death-rate are equally surprising. There was an increase of the death-rate among civilians from a percentage of 9½ in 1915 to 37 in 1918. What is the good of killing all these people who might be making goods to interchange with us, and who might be assisting us in economic reconstruction. I will not mention the increase in the mortality among children, but it is most affecting and appeals strongly to anyone who knows the real state of affairs. We have annexed the Island of Nauru, from which the Germans got their phosphates, and we are pressing them for a big indemnity. Professor Starling says: There are no marked feelings of resentment against the Allies, especially against the English, and they are ready to work for whoever will feed them and clothe them. There is, in fact, in Germany a magnificent business paralysed for lack of working capital, and to be controlled by anyone who will supply this working capital. That is a summary of what should be done for the economic restarting of the Germans. That, I think, is a conclusive argument to advance against the Government for not including Germany in the Schedule. In conclusion, I want to say what, in my view, would have been the right way to deal with this question, and I wish to reinforce what has been said by my hon. Friend behind me. I suggest that this partial treatment, this differentiation between what the hon. Member calls our friends is, if not actually, very nearly a breach of our Treaty obligations. In the Note which we sent to Germany we said that: The Treaty of Peace should be based upon the 14 points of President Wilson's Adress of 8th January, 1918. … These are the principles upon which hostilities were abandoned in November, 1918, these are the principles upon which the Allied and associated Powers agreed that peace might be based, these are the principles which have guided them in the deliberations which have led to the formulation of the conditions of peace. One of the fourteen points was: The removal, so far as possible, of all economic barriers and the establishment of an equality of trade conditions among all the nations consenting to the peace and associating themselves for its maintenance. Here we are using the credit of the country and bringing in a Bill in order, as the hon. Gentleman who spoke last said, to assist our friends. We want a much wider conception of this question. We would much rather look forward to the Conference at Brussels representing all the countries in the world, which, although it is not associated with the members of the Council and the League of Nations, yet it will be the most complete representation of the League of Nations we have yet had. We believe that it is by action on their part which will include an economic survey of the whole of the needs of Europe, and which may include some joint international action for the purpose of providing the necessary credits that will bring down the economic barriers in Eastern Europe. We should use the credit of the League of Nations to prevent these new States setting up economic barriers. That is what we think is the right way to go to work, and not by means of a measure which may be harmless in many of its aspects, but far too narrow, and which ignores the fundamental fact which is the essential to economic unity of the whole of the Continent of Europe.

Lord ROBERT CECIL

After listening to the speech of the hon. and gallant Member who has just sat down, I am rather surprised at the conclusion that he is going to vote against this Bill.

Captain BENN

No, I am not going to vote against this Bill.

Lord R. CECIL

Then his speech has merely been a demonstration against the Government. Let me compliment him upon the skill with which he has intro- duced even such a matter as the Kapp putsch into this question of the export of British goods to certain countries. As to what has been said about the exclusion of enemy countries, I think it would be quite a mistake to say that in your treatment of enemy countries it is improper to assist them from an economic point of view. If that were the basis of the exclusion of enemy countries from this Bill I should be entirely against it, and certainly when it comes to the Committee stage there is a great deal to be said for including all those countries and giving them an opportunity and the right to trade with us. There are some countries who are not in a position to trade with us at the present time, and which we could not properly think of dealing with under the provisions of this Bill. For instance, I doubt very much whether it would, from a business point of view, be practicable to apply the provisions of this Bill to Russia. It is not practical to suggest you can assist exports from this country to Russia. I do not think it is a business proposition. That the Government have not been moved in this matter by a narrow view of the economic situation of the world is shown by the fact that many friendly countries, including France and Italy, are omitted from the Schedule of the Bill. There might be a case for assisting them. There are many similar cases that might be mentioned. I think the Government would be perfectly right to consider with an open mind any proposals that may be made to extend the schedule, subject, of course, to this: that if you have only a limited sum of money to deal with, it is no use trying to cover too wide a field. I do not follow the hon. and gallant Gentleman who last spoke in his view of the general political and economic situation of Germany. I agree, however, with what has been said in several quarters, and I think the Government themselves will admit that they are disappointed at the comparatively slight use which has hitherto been made of the facilities already provided, and I hope they will consider whether something cannot be done to extend those facilities. As a general proposition it is a bad thing for a Government to interfere in matters such as this, but even my hon. Friend who is so very strong on this point, does not think that the thing can be done without Government assistance at all. This is not really, strictly speaking, a commercial proposition, and that lies at the foundation of the whole situation. You must bring the Government in to some extent.

Objection has been taken to the conditions laid down in the White Paper. I am inclined to think that the proposals of my hon. Friend could be carried out under the Bill if the Government chose to modify the White Paper in that direction. With a trifling alteration of the wording of the Bill he could do everything my hon. Friend desires. The real point is, do we think, broadly speaking, it is desirable that the Government should come to the assistance of these countries, or, as I would prefer, of the whole world? Is it right for the Government to come to the assistance of the commercial world in this terrific crisis, or should we leave it entirely to private enterprise? I do not believe anyone will say you can hope to set the industries of Europe going without some assistance, direct or indirect, from State effort. The only question is, are the conditions right? I hope the Government will allow me to say I share the view of a good many of its critics that the conditions in the White Paper as they stand are too severe. I may be wrong, but I cannot help feeling that this is a case in which the purists of the Treasury have taken rather too academic a view. The whole case for the Bill is that you cannot leave this to unassisted commercial effort. It is no use, therefore, making your conditions so severe that no risk is incurred at all. If you do that, ordinary private enterprise can do the work as well as the Government. The excuse for Government interference is that this is a matter in which private enterprise cannot be expected to take the great risks involved, and therefore your conditions must be such as to make it possible for private individuals to deal with those dangers themselves.

I hope the Government will take the greatest precautions against possible favouritism. I am told I am rather fanatical on this point, but I feel that the great danger of Government intervention is this, that the most energetic, the most skilful, and the most powerful are likely to get the most assistance. That is a very grave danger, and any suspicion of that kind would be absolutely fatal to the success of this scheme; it would do infinite harm not only to the Government, but to the whole commercial and political life of this country. I trust, therefore, that my hon. Friend will, as indeed I am sure he will, take the greatest precautions to prevent any possible favouritism. Another criticism is based on the fact that the operation of the Bill is confined to manufactured articles, and raw material is excluded. I quite agree there is a great deal to be said for that on paper, but my hon. Friend is mistaken in thinking that the main want of these countries at this moment, apart from food—which is not a thing that we can supply, because we do not grow any surplus for export—is manufactured articles, such as boots, clothes, agricultural and railway machinery, iron pipes, boilers, and so on. Someone was telling me only the other day of the immense quantity of boiler tubes required for the repair of locomotives, and, looking at that particular aspect of the question, I quite agree it is very desirable that we should help in every way. Surely, if we could get the transport system of Europe working, you would not only supply machinery from this country, but you would better facilitate the supply of raw material than by any other plan? Transport all over the world has broken down. An immense part of the difficulties of Germany are due to lack of transport. The same may be said of Austria, while as regards Russia the trouble is almost wholly one of transport. There is plenty of food there, but the problem is to distribute it. The same is to a very great extent true of all parts of Europe. When my hon. Friend quotes passages from the report of Sir William Goode and Professor Starling to show that there is a great want of food and raw material, he must not forget that one cause is the breakdown of transport and other facilities. Therefore, I think it is quite a legitimate thing to begin by saying we will facilitate the export of manufactured goods. The great point, however, is to take anything we can get at the moment, to build up the economic position of Europe. I quite agree that this Bill is not going to solve the economic problem for Europe; indeed, the Government do not suggest that for a moment. That is a very much wider question than is covered by this Bill.

7.0 P.M.

The case for the Bill is really overwhelming, and I desire to express my warmest thanks to the Government for introducing it. It is a delusion to suppose that this Bill has been introduced under the malign influence of the Secretary of State for War. I do not possess an absolutely unequivocal admiration for that distinguished statesman, and in this case I think he is guilty of some suggestion of this kind. I will not tax my memory as to the exact facts, but I thing a suggestion of this nature was made a year or two ago by a body quite free from the influence of the Secretary for War. I refer to the Supreme Economic Council of Paris. Some plan of this kind, that the Government should use its credit in order to facilitate exports to Europe was a proposal made, I believe, by the Economic Council. I agree with the hon. and gallant Gentleman who spoke last as to the necessity for taking a wide outlook in this matter. I agree that the case for this Bill can be based on humanity, but I think it may also be based on the strictest grounds of economy. At the present moment what are we doing all over these countries? We are supplying them with food and other materials by charity. That is really what it amounts to. It is a fatal policy. I am not asking that it should be discontinued. I admit it is essential; it cannot be avoided, but it is not only not doing good, it is doing harm to those people who are compulsorily unemployed, and it only makes for further disaster. The only thing to do is to get them back to work, and for that raw material and machinery are needed. On the grounds of economy it is desirable that we should assist in every way to restore the economic position of Europe, and get people back to work. I entirely agree that we cannot stand alone in a world which may go to rack and ruin around us without injuring us. That is a fantastic theory, only less fantastic than the theory that a disaster in some foreign country is, for some mysterious reason, a commercial advantage to this country, That is a pure delusion. The prosperity of the whole world is inter-dependent. It is merely self-interest—enlightened self-interest that should induce us to do everything we can to set the whole of Europe on its legs, and enable it to resume its commercial life, and in saying that I include not only the countries that fought with us, but enemy countries as well. I am, therefore, most fully of opinion that the case for this Bill has been established. I agree with the hon. Member for Central Edinburgh (Mr. W. Graham) that this Bill is not enough, but it is a step in the right direction. Do not let us say that half a loaf is worse than no bread. I agree with my hon. Friend that this is not a matter that can be effectively tackled by this country alone, and I endorse everything he has said as to the place of the League of Nations in this as in so many other matters. I think, however, that he was, perhaps, not quite just to that body. It has done something. It has begun to make an economic move. Personally, I wish it would make that move more rapidly, and that the Economic Conference had already met, instead of being always going to meet. Still, I believe that the Economic Conference is likely to do more than anything else that can be done to set Europe on its legs; but that is in the future. Who knows what will happen when the Economic Conference meets? It may take a long time to arrive at conclusions, and its conclusions will necessarily, I suppose, have to be submitted to the League of Nations and the Governments which compose it. There must be delay. Here is a little thing which the Government has induced the financial authorities of the country to sanction. It will do some good; it will make some improvement in the situation. I think the House would be reckless if it did not welcome this proposal, strengthening and amending it by all means in Committee, but giving it a Second Reading at the present time.

Mr. HASLAM

I am sure the House is much indebted to the hon. Member for Edge Hill (Sir W. Rutherford) for his excellent speech. I think that every point of his speech deserved consideration. After considering it myself, I have not come to the conclusion that it is desirable to go the length of this Bill. I should like to add that, when the hon. Member mentioned the Commercial Committee, he was referring to the decision of a Sub-Committee, and not to the whole Committee. The matter was considered by the Sub-Committee, and the conclusions they came to were those which he mentioned. The hon. Member for Farnham (Mr. Samuel) opposed this Bill at every point, and said that it would serve to show the Government the kind of Bill that they ought to avoid in future. That may be desirable in the case of a child; it may be well in teaching a child to walk, to allow it first to fall. But, when a large commercial and industrial proposition like this is being dealt with, I think hon. Members should take it more seriously. My commercial instincts are opposed to this Bill, but, at the same time, as the Noble Lord the Member for Hitchin (Lord R. Cecil) said, we have to consider the particular circumstances of to-day. These circumstances demand that we should help to put on their legs those countries which are suffering the most through the War, and we can do that best by affording them the means of getting the machinery which they require for conducting their business in the future. It cannot be done by means of doles or charity.

One fear that I have with regard to this Measure is that it is a precedent. It appears to me to be a bad precedent to set up a Government Department for banking purposes. We never know where such a change in our financial relations may ultimately lead. I think that that is a real danger, and I trust that in Committee some words may be found which will make it distinctly understood that the Government will in future undertake to provide banking facilities. I agree with the hon. Member for Edge Hill that a far better plan would have been for the Government to associate themselves with the banks of the country. That, I understand, has been successful in Germany, and possibly in other countries. The hon. Member for Farnham referred to barter, and I agree that, in the present state of the exchanges, there is practically no other way of trading with those countries than by sending shiploads of goods, and knowing what goods are going to be obtained in return. The exchanges vary from day to day, and, as long as those countries continue to increase their fiduciary paper issues, those difficulties will continue. At the recent Commercial Conference in Paris a resolution was unanimously passed, by the representatives of twelve nations, to the effect that immediate steps should be taken to prevent a further issue of paper currency in those countries where there has been a large increase owing to the War. Nothing would do more to stabilise our trading relations with those countries than some international measure whereby the issue of paper money would be in some way prevented from increasing. In Germany, for instance, it is being increased from day to day. How, under those circumstances, can we expect the exchange to be right? On the whole, I have come to the conclusion that this Bill, provided that it is amended in Committee, has just reason for its introduction. I hope that when it reaches the Committee stage it will be so amended as to make it quite clear that in the future a Banking Department will not become one of the principal attributes of the British Government.

Mr. LORDEN

Everyone who has dealt with this Bill has done so from the point of view that something needs to be done, but I do not think that that something has been absolutely defined in the Bill. I agree with the Mover of the Amendment that it would be a mistake for the Board of Trade or for the Export Credits Department to enter into a banking scheme. That would mean the creation of a big Department, and probably they would have to cast about all over the place for men to run it. The result would be another huge Department carried on by men who do not understand the work, and that is the gravamen of the whole case. I think that Section 1 (1) (a), which deals with advances, might be eliminated, and the Bill confined to dealing with insurance. Any of the people who would apply for these advances would find their own banks just as ready to advance the money, provided that there was some guarantee as to the political situation, about which, however, the Government are really the only people who know. If the Government would set up an insurance scheme on the lnes of their insurance scheme during the War, others would come in when they knew that the Government were ready to do so. The Bill itself is largely unobjectionable, but the White Paper makes it absolutely ineffective. The safeguards in the White Paper are of such an extreme nature that hardly anybody would entertain them. The hon. Gentleman in charge of the Bill said, in his opening remarks, that, although this has been in force for nearly twelve months, only £28,000 has been taken up, and he rather made light of the insurance part of the scheme, stating that only £15,000 had been insured. It has already been pointed out that the sum of £26,000,000 is inadequate, even for the countries included in the Bill. That £26,000,000 would only represent a volume of business, on a pre-War basis, of some £8,000,000, which would be a very small amount to divide amongst the various countries. If the scheme were limited to insurance or guarantee, that £26,000,000 would do £500,000,000 worth of business. The White Paper must be amended. I do not suppose that anyone in his sober senses would undertake to leave the matter, as provided in Section 12, to the caprice of a Department. I do not think any trader, however high his opinion may be of Government methods, would feel comfortable under that Clause, which states that— At any time after the maturity of the Bill, or after any default, the Department will be entitled to close a transaction and transfer the bill of exchange and relative security to the exporter—any proceeds which may have been received being allocated on the lines indicated above. It is true that that is modified by Clause 13, but even then, it does not give the security that is wanted. The merchants who export will be prepared to arrange with their bankers, and it is only in cases where the banker has taken very large commitments in a particular country that he would ask the Government to make any advance. The hon. Member for Edge Hill suggested that the Government should cone suit a Committee, and I think it would be very wise to get together a Committee of experts who would be able to advise as to what is really wanted. Everyone who has spoken has agreed that something must be done, and if that could be limited to an insurance scheme I feel quite sure that the House would vote unanimously in favour of its being carried out. Many people have laboured the point with regard to including or excluding certain countries. The Board of Trade in the White Paper leaves that quite open. They suggest certain countries, and they go on: Any variations which may be made from time to time in the countries to which the scheme relates will be announced. They leave it open in that respect, and therefore there has been too much made of that point, because when you have worked this £26,000,000 out, and you find you are going to embrace other countries, you will want a great deal more. I hope the Government will limit it very severely to simply an insurance scheme.

Mr. KILEY

I have followed the Debate with considerable interest, as I was anxious to ascertain what was the primary object of the proposal. Was it to help British trade or to do something to restore the ten different countries named in the White Paper? If I gather aright the sense of the views of those who have taken part in the Debate, the primary object which we should have in view is to do what we can to help those countries which have been allied to us in the War. If that is so, the question I put to myself and to others is, are we proceeding on the right lines if those lines are those which are specified in the White Paper. If the White Paper is adhered to our labour this afternoon will be in vain. That has been clearly demonstrated by the fact that during nearly 12 months the magnitude of the operations which have been performed has been limited to something like £28,000, and if that has been the case in the year that has passed what possibilities are there of that amount being increased in the year to come if the conditions which have been in operation continue? The Minister in charge of the Bill would be well advised if he were to scrap the conditions in the White Paper altogether, and take some other action with a view to assisting the object which the Government has in view. One point to which I would call attention is the period of credit. Credit can be carried on for a period of three years. See what position an importer would be in under those terms. If he sends his goods to Rumania the exchange is in the proportion of 7 to 1. On what basis does he dispose of them? On the basis of his cost at the exchange of the day? If so, he is quite safe. If not, he has six times the exchange against him. Would he be justified in taking that risk on the chance that by the time payment became due the exchange would have resumed its normal condition? I do not think any prudent man would conduct his business on those lines. Therefore he disposes of them at the current market rate. If he has done that, why are we to pay? Why should he be using our money? That appears to me to be a very serious drawback.

After all, we want to be practical. If this Bill is to be useful in any way we must remodel the proposal altogether. I suggest that the Minister might seriously consider the setting up of a small advisory committee. There are enough Members in the House or outside it to advise him, and they would submit practicable proposals to him. The hon. Member (Sir W. Rutherford) said he had no doubt whatever that he could find in the City of London banking firms who would do what financial business was necessary for the operations of the Bill. If that is so, it would be better for the Government and the country at large, if they want to accomplish anything, to have a serious and practical scheme in operation, and for that purpose the Minister should seriously consider scrapping the conditions which are being placed before the House and setting up an advisory committee. One of the serious drawbacks in the Bill is that all the operations are to be conducted by practically one individual. I am not saying a word against him. I have no doubt he is a person of considerable standing and knowledge, but to place all the operations in the hands of one individual, however capable, extending as they will to many transactions with many different countries, is a very serious proposition and one which I am not inclined to be enthusiastic about, whereas if the Government will seriously consider the advisability, before taking any further action, beyond obtaininig the Second Reading, of withdrawing the conditions which they have submitted to us and the setting up of an advisory committee, something useful might arise out of the Debate.

Mr. SAMUEL SAMUEL

I do not oppose the Bill in any way, but I feel bound to criticise the principle of allowing the Government to go in for further credits. We have an enormous debt and we are asked to provide another £26,000,000. We are providing money for our Allies, but are we in a position to provide further money? There is absolutely no liability on the part of the borrowers in this country for repayment. It has been suggested that if the Government would introduce a system of insurance the banks would be able to finance the operation. That is absolutely impossible. There is no bank which would trade with the money deposited with it and lock it up for five years. The Bill nominally gives a credit for three years, but the people in the different countries mentioned in the Schedule have a right to extend that credit to five years. The hon. Member (Mr. Kiley) suggested, that if they sold their goods at the price of the exchange of the day they ought to be able to remit the money to this country, but if he knew human nature he would know perfectly well that in these countries, if once they get hold of £26,000,000 of British money, they are going to keep it and utilise it in trade all over the world if it pays them to do it. They are not going to realise it and send it to this country when the Government has given them five years. There is nothing in the Bill at all. It is merely an authority to the Government without stating any terms, but the White Paper, which, I presume, is not binding on the Government, because it can be altered to-morrow, provides for interest to be paid, and as the interest in these different countries varies sometimes up to 9 or 10 per cent., that is another inducement to these merchants who are receiving the credit not to remit the proceeds, because even if they utilise the money locally and lay it out again, they can make almost double the interest they are paying. Under the circumstances, I think the whole principle of the Bill is a mistake, and it is being introduced not so much in the interest of the manufacturers of this country as of the merchants in the different countries named in the Schedule. I should not be surprised if the Bill had been suggested by interested people in this country, and I should very much like to see a Clause introduced in Committee, by which every three or six months a list is to be published of the companies or individuals who are taking credit under this authorization.

The suggestion has been made that up to the present only a very small use has been made of this vast credit. It is not because the goods are not wanted in these countries or that there are no buyers. The principal reason is the lack of transport. You cannot transport goods to Poland. Throughout the whole of the country you have to go through there is a shortage of rolling stock. The Bill has not been passed by the House of Commons yet. The Government have taken advantage of the intention of the House to pass it to put it into operation by advancing money twelve months ago. We do not know to whom, but from what I can hear the people who are doing this business are not the people who were trading with those countries before the War, but people who have established business for the purpose of taking advantage of this £26,000,000. Consequently it would be most interesting if the Committee would introduce a Clause to enable the public to know who are the people who have been taking advantage of this financial facility. The ostensible reason is to help our manufacturers, but, as a matter of fact, they get very little benefit from it, and the people who will derive the benefit are almost entirely foreigners. We were told by the Chancellor of the Exchequer that the House of Commons was responsible for the extravagance of the Government, and that the expenditure in all directions was under the control of the House of Commons, but in this Bill, as in all others, opposition is impossible. The Government is going to invest £26,000,000. On other occasions they want to engage in expenditure on all sorts of things, and they tell us, "This is not a free Vote. If you do not vote for this we are going to resign." If financial questions are made subject to the Government not allowing the House a free Vote the House and the country must lay the onus for the expenditure on the Government, because we have absolutely no control in the matter. I am not opposing the Bill in any way, but on behalf of the commercial community I feel I am justified in entering my protest.

Mr. G. ROBERTS

I ought to tender an apology to the House for intervening at this stage, especially as I have not been able to follow the Debate. However, I can advance as a justification that I am acquainted with the origin of the proposal in regard to this Bill. As the House will be aware, for over 12 months I was the representative of this country on the Supreme Economic Council, and it was from that Council that the idea originated. Therefore it is proper that I should say that many of the remarks made today are wholly unfounded and that at any rate the central proposal of the Bill had a perfectly pure origin. On the Supreme Council we were constantly engaged in devising methods of alleviating the lot of the people in the distressed countries of Europe—charity, as the Noble Lord has described it, and correctly so. Whilst engaged in the work I often felt that the outlook was almost hopeless, for neither this country nor a combination of countries could engage for very protracted periods to supply these people with the essentials of life. The real idea that animated us was simply to give them a start and encourage them in the restoration and upliftment of their countries; but undoubtedly, if we were to continue to undertake the task of supplying these people with the necessities of life, we should deprive them of the incentive which alone can make for the restoration of these countries. Therefore we conceived the idea that credit was essential for this purpose.

Lieut.-Commander KENWORTHY

Why is Austria not in?

Mr. ROBERTS

I will endeavour to state my case in my own way. I recognise the criticisms that can be advanced against the limitations of the Bill. We on the Supreme Economic Council had a more comprehensive scheme that we would have liked the Allied and Associated Governments to undertake, but it is common knowledge that this country has had to bear the greater portion of the burden. It is not for me to detail the reasons here, because that would take too long; but we have to recognise that the people of this country have borne the supreme burden during the War, and it is a burden they cannot continue indefinitely. Therefore we came to the conclusion that the proposals to be submitted to our Government must be reasonable in character and that they must have some regard to the position of our own people. As the representative of this country it became my duty to submit these proposals to the consideration of the home Cabinet, and I have only intervened for the purpose of stating how the idea originated; that I am responsible on behalf of the Supreme Economic Council for urging this proposal, not the actual amount provided for the purpose of credit, but the idea itself, and also for getting my colleagues to put it forward.

We have never had in contemplation the possibility of the complete rehabilitation of the whole of Europe. That is a task which cannot be undertaken by this country alone. We could not be expected to undertake it. It is a task for the Allied peoples and the Associated peoples of the world, and also for those who were neutral during the War, and whose abilities are far greater, proportionately, than ours at the present time. This in no way denies to the bankers and business men the right to make arrangements of their own. If they feel they can do better than the Government contemplates doing in this proposal it is for them to demonstrate how to do it. We were assured on all hands that, owing to the state of insecurity in Europe, private traders could not and would not undertake this work unless they were given some form of Government guarantee. I am grateful to the Government for introducing this proposal, and I feel that the Government is entitled to credit in so far as they have gone, and they ought to carry with them the general support of the House. Our experience in investigations were made through Sir William Goode and others, and it was found that it was not so much a question of the actual food itself in these countries as the ability to transport that food about the country. It was my duty as the Minister of Food to suggest to the Government the possibility of securing supplies from Russia, a proposal which now merits the approval of my hon Friends on the other side of the House. I felt that if we could re-establish trade with Russia we should be doing something to help that country and something that might be beneficial to our own country in the matter of food supplies; but whilst I satisfied myself that there was food in Russia, I had to come to the conclusion that the difficulty of collecting and transporting that food was insurmountable at the moment, and that the only possibility that lay within our power was to place within reach of these foreign countries means of credit whereby they can reconstruct their transport system and make available to the world the supplies that may be surplus to them and which would be acceptable to other countries.

Mr. BRIDGEMAN

I have nothing to complain of in the nature of the criticisms which have been offered. Many of them have been strong, but they have been friendly to the general principle of the Bill. The House has been prolific in criticism, but it has not been prolific in suggesting any substitute for our proposals, and that is proof that the House recognises the extreme difficulty of the position. The House has also recognised that this does not pretend to be a grandiose scheme but a beginning, a tentative effort to see whether something cannot be done in this way to help trade in the distressed countries of Europe. It has been said that it is too extravagant, and on the other hand it has been said that it is not extravagant enough. The only alternative that has been proposed is a kind of insurance scheme or guarantee in which the Government may lose but the trader cannot lose at all. That is a very fine speculation for the trader but not a good one for the Government, and I do not call it a very sporting offer. Under this scheme the trader has to take the risk of 20 per cent. of the original cost of what he is selling, and I hope he will be sportsman enough to take that risk. It is quite a mistake to suppose that the Government are trying to take the place of banking institutions. We do not want to do anything that the bankers are ready to do. We only want to come in and help where the bankers are unable or unwilling to assist, and where we think there is sufficient safeguard for our money. Some hon. Member asked about the staff, and my hon. Friend (Sir Watson Rutherford) drew a lurid picture of ten officials in each of the ten countries drawing enormous salaries and with a head office here. The agents in the foreign countries will be bankers in those countries who will derive whatever profit they require for their service from the importer in those countries. That will cost this country nothing. There go the hundred officials. The staff here consists of nine people, of whom two are messengers, and they cost £7,000 a year, which sum is already provided in the Estimates and will be open to the criticism of this House. Other criticisms could perfectly well be raised in Committee. One question relates to the countries which ought to be in the Schedule. It is suggested that this has been drawn up in conclusion with the Secretary of State for War and that it is a sort of military cordon round Russia. The Government will go into Committee with a perfectly open mind to consider the demand for the admission of any country now or at any time. To admit some countries, Russia for example, would be impossible at the present time. The same remark applies to Turkey, with whom we are still at war; but when the time comes for any of these countries to be let in, the Board of Trade will have a perfectly open mind.

Lieut.-Commander KENWORTHY

What about Austria?

Mr. BRIDGEMAN

That is a question which we can debate in Committee. One of the strongest criticisms was directed against the White Paper. The White Paper is not sacro sanct, but is open to alteration. It was said that the Regulations are too strict. There is a great deal of force in that criticism. On the other hand, we have to do our best to see that this country does not lose in these transactions. If we had a great number of bad debts, the commissions we charge would not be enough to cover the expense. We wish to do this without any charge upon the taxpayers of this country. Therefore, we cannot be too easy in our terms; but we are perfectly ready to reconsider them, and, if possible, to arrive at some conditions which may be more acceptable to all parties. A flaw has been discovered in the Bill as to people domiciled in this country. That can be attended to in Committee. We were asked about favouritism, and how applications were dealt with. They are dealt with as they come in. The one that comes first, provided it fulfils the conditions and safeguards that we require, gets the first chance. There is no favouritism in dealing with this matter. The hon. Member for Norwich (Mr. Hilton Young) asked how the x00A3;2,000,000 estimated for this year is to be paid. It will be paid out of the Consolidated Fund voted in the Estimates, and paid in the usual way. I think that I have answered some of the detailed criticism that has been made. More criticism might be, and I hope will be made in Committee, but I trust that the House will give a Second Reading to the Bill in order to get a start with this experiment, and I think that the experiment will be successful if we can all join in making the conditions as suitable as we possibly can.

Sir W. RUTHERFORD

I ask leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Main Question put, and agreed to.

Bill accordingly read a Second time, and committed to a Standing Committee.