HC Deb 24 March 1920 vol 127 cc559-68

Considered in Committee.—[Progress, 23rd March.]

[Lord E. TALBOT in the Chair.]

Motion made, and Question proposed, That it is expedient to authorise the granting of credits and the undertaking of insurances for the purpose of re-establishing overseas trade and the payment, out of moneys provided by Parliament, of any sums required for granting credits for such purpose up to an amount not exceeding at any one time £26,000,000 and of any expenses incurred by the Board of Trade in connection with the granting of such credits and the undertaking of insurances so far as those expenses are not defrayed out of sums received by the Board by way of commission in respect "of credits or by way of premiums in respect of insurances."—[Mr. Baldwin.]

The PARLIAMENTARY SECRETARY to the BOARD OF TRADE (Mr. Bridgeman)

I am sorry I was not here last night when this question arose. I was not aware that it was going to be taken. I understand that the Committee desire to have some short explanation of the object which the Resolution seeks to carry out. I think everybody was agreed last year that it was desirable that something should be done to re-establish our trade connections in the disorganised parts of Europe. It will be good for them if we find some means of exporting to them machinery; rolling stock for railways, and other goods, enabling them to start trade again, restart the employment of their people, and provide exports. It will be good for us if we are enabled to establish ourselves in markets which, perhaps, have not been used by us before, and to get there as soon as, if not before other countries. Therefore, this scheme was devised for lending money to sellers in these countries, to enable them to wait for three years before they got payment from the countries to which they were exporters. Arrangements were made to advance up to 80 per cent. of the value of the articles exported. Against that the purchasers in other countries deposited currency up to an amount agreed upon with an agent authorised by this country, the idea being that the exchanges might during the next two or three years improve and that the payment would become easier for the purchaser. It was in order to tide over that time that this proposal was set on foot. It came into operation on 8th September. It was applicable to various countries, including Poland, Finland, the Baltic Provinces, Czecho-Slovakia, Jugo-Slavia, Rumania and the South-eastern part of Russia, which was then in the occupation of General Denikin. The full application could be extended later to other countries if the Board of Trade thought fit. The total amount involved has been explained in the White Paper. It is £26,000,000. That is repayable to the Treasury, and every transaction which takes place has to be settled within six years, that is by September, 1925. It is thought that this will be a self-supporting scheme. The seller in this country has to pay us a commission, and he has to pay a certain percentage on the money lent to him. Those sums it is thought will be sufficient to pay for the initial expenses, and also form a reserve in case any bad debts are incurred. I ought to say the Resolution includes power to insure against abnormal risks. The actual advances which have been made under this scheme up to the present are somewhat disappointing.

Lieut.-Commander KENWORTHY

Are we to understand that money has actually been advanced under this scheme?

Mr. BRIDGEMAN

Yes, and the amount was put in the Supplementary Estimate. The advances sanctioned up to now amount to £299,000. One reason why the scheme has not proceeded more rapidly is because the exchange has gone so very much worse since the time when the scheme was first introduced. This scheme is not in any way intended to interfere with the operations of banks. These transactions have to be done through the banks of the manufacturers ill this country, and it is quite possible that the very fact of starting this scheme has caused a certain number of manufacturers to embark in enterprises of this kind on their own. I hope this resolution will be given us to-night, so that we may proceed with the Bill which is to be founded on it. It is a measure which has been foreshadowed for a long time, and was in all its essential points contained in a larger Bill previously introduced, when no opposition was advanced against this particular part of the measure.

Colonel PENRY WILLIAMS

I hope the House will stop to consider what they are doing before they agree to give the Government this Financial Resolution tonight. We have been discussing all day how we are to point out a way to the Government to save even a few million pounds, and here is an opportunity to prevent the expenditure of £26,000,000 which is proposed to be invested by the Government in a sort of commercial undertaking that no commercial men in the City of London would look at for one moment. I think the scheme stands condemned by the statement of the hon. Gentleman who has just spoken, when he says that it enables the Government to lend money on goods to be shipped to these foreign countries, payment for which cannot be collected for two or three years.

Mr. BRIDGEMAN

I did not say that. They may be collected at any moment.

Colonel WILLIAMS

I took down the statement made by the hon. Gentleman, and I think he said that the credits might run for two or three years. That is a proposition which no business man would look at; and, if it be not good enough for an ordinary commercial man, surely it is not a transaction that the Government ought to enter into with the money of the public. They are the custodians of the money of the public exactly in the same way that the banks are the custodians of, the money of their shareholders, and, if the business be not good enough for ordinary commercial men, it is really not one that should be entered into by the Government without any consideration at all. If the Government want to encourage exports they might encourage them to countries that can afford to pay for them, and pay for them properly. In making shipments to America, there is no difficulty whatever in opening a credit on the other side. The exporter produces his bill of lading and his policy of insurance, he passes them through the bank, and the money is advanced to him at once and is collected at the other end on delivery of the goods. There is no question of waiting two or three years, and I cannot see the advantage likely to accrue to the Government from encouraging trade in quarters where it is doubtful whether people can afford to pay for the goods. That is not the sort of speculation to be undertaken by the Government.

There is another point in this White Paper on which we ought to have some explanation. The Government seem to have opened an insurance office against abnormal risks. I do not quite understand what is the meaning of "abnormal risks." Is it a risk from mines or from capture at sea by the enemy, or what is the nature of the risk? I notice that the Government, having opened this office, with, I presume, a large staff to conduct the business, find that the only function left to them is to point the way to private enterprise, and that they have done no business whatever. It seems to me, if that be so, that they might as well wash out altogether this insurance business. How are the exporters to be selected? Is any man who wishes to export goods to South-East Russia, and thinks that he can do so at a profit, entitled to come and claim that the Government should take over up to 80 per cent. of the manufacturing cost of the shipment that he is making, or is it left to some Committee of the Board of Trade to select who are entitled to receive this subsidy and who are not? I should like an answer to that question before this Resolution is allowed to go through. I do appeal to the Government to drop this matter altogether. This is not a time when they can afford to risk £26,000,000 of the taxpayers' money on a wild-cat adventure. They have to be careful, and we have had before the Select Committee which is now sitting upstairs, evidence, which is open to anyone to read, that the financial position is getting into a very serious state. The banks have been compelled to ration capital to their customers, and the position is one which is likely to create considerable trouble in the financial world. The Leader of the House the other day said the Government had stopped borrowing. I have known a good many people do that, and the reason I fancy is about the same, they either have to pay an exorbitant rate of interest or they cannot find people willing to lend the money they require. If the House passes this Resolution to-night it will be doing disservice to the country. It should put a brake on the extravagance of the country. I do not care whether the expenditure is likely to be recouped in two, three or four years or not I say it is expenditure which ought not to be undertaken, and therefore I trust the House will refuse to allow it.

Lieut.-Colonel MALONE

I hope hon. Members will press for further details of this Vote I join with the last speaker in asking how this sum is to be given out to merchants in the City of London or elsewhere, and where the particulars of the conditions are to be obtained. I should like to draw the attention of the House to the disadvantages of this scheme. We are approaching the question of trading with these countries on an unsound basis entirely. It is not in the interest of this country to advance large sums of money without recognising these new States. The hon. Gentleman in introducing the resolution said it was proposed to operate in Poland, Finland, the Baltic States, Czecho-Slovakia, Jugo-slavia, Rumania and South-East Russia. Some of these States have been recognised, including Finland, Czecho-Slovakia and Jugo-Slavia, but as regards the remainder—the Baltic Provinces, Poland, the States in South-East Russia, the Ukraine, the Georgia, the Caucasus and others—we have not yet recognised them. We have recognised Esthonia de facto, and also Poland in an ambiguous manner, but before we commence trading with these countries we should take official steps to recognise that they exist. It is unbusinesslike to lend money to a country which we have not yet decided is a definite or specific State. It would be far better if, instead of wasting this money on these wild adventures, we were to give complete recognition to the small countries which have been formed out of the late Russian Empire. May I remind the House that we are not following the example of one of our Allies. Italy has already recognised Esthonia, not only de facto, but also de jure, and has sent a representative there. If we are going to approach this matter seriously, and are really in earnest in desiring to resume trading with these countries—and there is not an hon. Member who does not realise the need for opening up trade and commerce with Eastern Europe as soon as possible—let us approach the matter with greater earnestness, and let us decide once and for all to recognise these States, not only de facto, but de jure. Having done that, we may consider what financial assistance may be given to them. My right hon. Friend informed us that up to the present £299,000 has been actually sanctioned in connection with commerce in those countries, but that up to the present advances have only been taken for £13,334. The smallness of those figures shows the opinion of financial and commercial people towards this undertaking. Those countries, and especially the countries in South Russia—Georgia and Azerbaijan—are teeming with undeveloped resources, and those small countries are in anxious need of financial assistance. It would be better, if the Government decide to spend money at all in assisting their commercial development, they were to supply that money for Government loans, or perhaps currency loans, to the de facto Governments of those countries. In my opinion, that would lead to a much speedier development of commerce and industry in those countries. I do not believe in proposing a loan of this sort simply to support private interests, without dealing with the fundamentals at stake, and I shall certainly vote against the Motion before the House.

Mr. TYSON WILSON

This proposed loan undoubtedly will affect the industries of the country in one way or another. I come from a part of the country which depends to a large extent upon the export of its manufactures, but I have yet to learn that the cotton manufacurers of Lancashire are in any way asking for assistance in their export trade. If I read the newspapers aright, the reports in connection with that industry are to the effect that orders are booked up which will keep the industry going for some five years. I take it that they have booked those orders without any knowledge that the Government were taking steps to assist them in the export of their manufactures. They are satisfied themselves to take the risk of getting payment for the manufactures they export. In Lancashire, also, coal is got, and I have yet to learn that the colliery proprietors have any difficulty in securing orders, or payment for those orders. What other exports have the Government in mind in proposing to lend £26,000,000? I know there is textile machinery, and there are very large textile machinery manufacturers in Lancashire, but I have yet to learn that they have any doubts as to being able to get payment for the machinery they have tendered for, or for the orders they have accepted. I think the Government ought to make much more clear the reason why they propose to advance £26,000,000 to aid the export of various manufactures of this country. But there is something more. This House granted a charter to a company whose main object was to develop trade with foreign countries. What is that company doing which has the backing of the Government and the country behind it? The House is entitled to a fuller explanation of what is at the back of the minds of the Government in proposing this expenditure. If it can be shown that it is going to be spent with the object of further developing the industries of the country it becomes not only a manufacturers' but also an industrial question, affecting the working people of the country. But if manufacturers are so full of orders and are prepared to take the risk of securing payment for these orders, I fail to see why the Government should have £26,000,000 of national money to insure against risk and also to finance exporters. If the hon. Gentleman will explain more fully what manufacturers it is proposed to finance and show what industries are going to benefit by it, I should be probably inclined to vote with the Government, but last night and to-night we have had no full explanation of the real objects of the Government, and I certainly think they will be well advised to postpone further consideration of the Resolution—there is no great hurry for it—until not only the Government is prepared to state more fully what is the object in asking the House to grant £26,000,000, but also give us a further opportunity of considering and digesting what this really means.

Mr. BRIDGEMAN

I endeavoured to explain what the intentions were with regard to the kind of goods which were to be exported. They were to be especially manufactured goods, and the manufacture of them would give employment to the workpeople of the country. I stated, as an example, locomotives and rolling-stock for railways and agricultural machinery, and, as a matter of fact, there have been applications from cotton and textile manufacturers to the Board of Trade to make use of this scheme. The only real condition is that the goods to be exported should not be raw materials, but manufactured articles giving employment in this country Applications are to be made to a special Department of the Board of Trade through the bankers of the manufacturers who want to do this trade. Of course, if the manufacturers are quite able to get all the trade they want without this scheme they will not have recourse to it, but the object is to enable them to start in countries where the state of disturbance has been so great that they cannot be expected, owing to the state of the exchange, to get immediate payment. We think that is good for us and for those countries, because it will start a trade which we may not have had before, and it will revive those countries, not only with regard to the particular article that we export to them, but through that will enable them to expand and develop in many other directions.

Colonel WILLIAMS

Is there any power to give assistance to the trader.

Mr. BRIDGEMAN

The Board of Trade have to go into the cases and to decide according to the merits of each case. The hon. and gallant Member (Lieut.-Colonel Malone) rather Messed the scheme then found fault with it. Although it did not seem to him to be wide enough in its application, yet so far as the hon. and gallant Member went, he gave it his approval when he said that he thought that it was most desirable to enable these countries to recover their trade at the earliest possible moment. In regard to the question of insurance against abnormal risks, it is in order to give a safeguard against ordinary insurance people asking too high premiums, and therefore preventing business. It is a safeguard against risks. It is thought advisable we should continue the power to make this insurance in order to prevent exorbitant charges being made, as might happen if we left it entirely open.

Mr. T. THOMSON

Whatever may be said for a scheme of this sort under some conditions, at the present time there is absolutely no need for anything of the sort. Anyone connected with the industrial and manufacturing trades of the country knows that manufacturers have not to seek orders for export; they are simply thrown at them to a greater extent than they can execute them. The difficulty is not to get orders, but to execute them and to take advantage of the orders now being offered. The hon. Member (Mr. Bridgeman) was not particularly fortunate in the illustration he gave to the House, especially following the Debate which took place earlier. He suggested that manufacturers of locomotives and rolling stock might be assisted by this scheme in regard to exports and thought the great difficulty we were working under at the present time was the shortage of rolling stock and locomotives for our own industries in order to keep our own works going. It is highly undesirable that, having regard to the present state of affairs, any scheme should be brought forward for helping locomotives and rolling stock to be sent out of the country. At a time like the present, when economy is so absolutely necessary, the Government should hesitate before they make a departure from sound financial precedents by attempting adventures of this sort. The English manufacturer as a whole is able to look after himself and he knows his own business better than any State or Government Department can know it. If the risk is not one that any manufacturer or trader or his agent will undertake it is surely not one that the Government at this juncture ought to step in to assist. We need to conserve our resources as far as possible and not to further them away in any possible hare brained experiments where considerable risk is involved and considerable finance is at stake. I appeal to the Government not to press this matter. It is an undoubted risk and one involving millions of money at a time when they are enjoining economy not only on the country as a whole but on their own Departments. It is hardly carrying out the spirit of the famous letter which the Prime Minister addressed to the various Government Departments, asking them ruthlessly to keep down all their expenditure and to economise wherever possible. The best application of that advice would be to follow it in this particular Department, and to withdraw the Vote that is the subject of discussion to-night. It is necessary to increase the balance of our exports over our imports in order to stabilise our trade and to re-establish the exchange, but at this particular time, when export orders are available for all manufacturers to a much greater extent than they can possibly execute them, there is no need whatever for the Government to go forward with this scheme.

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

Committee report Progress; to sit again To-morrow.