HC Deb 30 May 1921 vol 142 cc749-75

Considered in Committee.

[Mr. JAMES HOPE in the Chair.]

Motion made, and Question proposed, That it is expedient to extend the Overseas Trade (Credits and Insurance) Act, 1920, to the giving of guarantees in connection with export transactions and to amend the said Act as regards the countries in respect of which it applies, and to authorise the payment out of moneys provided by Parliament of any sums required in connection with the giving of such guarantees, so, however, that the amounts outstanding at any time in respect of credits and guarantees shall not together exceed the amount now authorised under the said Act as regards credits, and of any expenses incurred by the Board of Trade by reason of such extension and amendment of the said Act as aforesaid."—[Sir P. Lloyd-Greame.]

Sir P. LLOYD-GREAME (Secretary, Overseas Trade Department)

This Resolution is to give effect to the policy which was announced and very fully debated on 9th March on the Vote on Account. It is the purpose of the Government to extend the Export Credits scheme in two directions. Firstly, the Government have been very strongly pressed to give a general extension. They decided to extend it beyond the immediate countries which we were entitled to operate under the Act to the British Empire, and the reasons which govern their decision were very fully stated on that occasion by the Chancellor of the Exchequer. The other direction in which it was proposed to extend it was this. At present the scheme operates by way of direct advance. It is now proposed to operate it by way of guarantee of bills of exchange drawn against shipment. I think that will appeal to everyone as a very practical extension, because it will enable business to be done in the ordinary business way with the maximum of Government assistance and the minimum of Government interference.

May I add one word with regard to the extension of the scheme to the British Empire? That, I think, was received with general assent and was very cordially welcomed, but in one part of the British Empire, certainly, there are certain considerations which require special treatment, and that in India and the British possessions in the Far East. There have been conditions operating there under which obligations were outstanding which have not been honoured to the full, and it is obviously extremely desirable that no facilities for credit should be extended if those facilities could operate in any way to prevent those engaging in trade from taking up their whole obligations. My right hon. Friend has been in consultation with the banks operating in those areas and with the India Office and the Colonial Office. It is not the intention, although the terms of the Resolution and the Bill will apply in general terms to the British Empire, to extend the operations of the scheme to India and the British possessions in the Far East, and we shall certainly not do so until conditions are such as to obviate those difficulties.

Lieut. - Commander KENWORTHY

Which are the mandatory areas referred to?

Sir P. LLOYD-GREAME

It extends to any areas over which the British Government has a mandate. [Interruption.] I think it is simple. I said India and the Far East would be excluded. That would exclude Ceylon and the Straits Settlements. The area is perfectly well understood, and, I think, generally appreciated. Also this further consideration applies. We do not give these Government advances where business can be done through the ordinary trade channels. They are supplementary and not in substitution, and when conditions are restored, if business can be done in the Far East and India through the ordinary banking channels it will be unnecessary to bring this into operation in those quarters. With regard to operations by way of guarantee, the reasons prompting that were very fully explained on the previous occasion. We have been pressed very strongly to put that into operation as quickly as possible, and we shall do so when this Resolution has received the assent of the House. I know there has been a certain amount of delay, but at the same time I am sure it is very important in a scheme like this to get general assent and to get it in the best possible form in which we could operate it, and one of the reasons why there has been a certain amount of delay is that a very full discussion has taken place with the Associated Chambers of Commerce.

The CHAIRMAN

The hon. Gentleman is now dealing with the administration of the Department. On the previous occasion Mr. Speaker ruled that that was not permissible.

Sir P. LLOYD-GREAME

I beg pardon. As soon as the House has given its assent to this Resolution, we shall proceed with the scheme, which, I think, has already commanded the general assent of the business community, and I feel sure will command the assent of the House.

Major BARNES

How much has been disbursed under the Act so far?

Sir P. LLOYD-GREAME

Contracts to advance about £2,500,000 have been made, and actual advances up to about £750,000 have, I think, been made. This proposal does not extend the amount of money which is authorised by the previous Act, but it enables us to operate with the £26,000,000 authorised in the previous Act in what I hope will be a more expeditious and convenient manner.

Mr. SAMUEL SAMUEL

There has been a great deal of correspondence with the Board of Trade in reference to the suggestion which is contained in this Resolution. I am surprised, after the last communication from the Board of Trade to the bankers, that they have brought this in at all, because it is wholly unnecessary so far as the British Empire is concerned. Apparently the Board of Trade are entirely ignorant or the banking methods of conducting business within the British Empire. Any firm or company whose credit is worth anything can get their shipments financed to any part of the British Emipre—any firm which has goods to ship to Australia, India, Hong Kong, Ceylon, the Straits Settlements, or North Borneo even which is not so well provided with banking facilities, or South Africa. There are British banks by the dozen which are willing to buy commercial bills on any of those places provided that the credit of the firm on this side is good. They do not even look at the acceptors of the bill.

I will give you one example to prove this, because the Overseas Trade Department sent out to different countries their representatives to give information to the merchants and manufacturers of this country. The result is, the Board of Trade know perfectly well, that large numbers of manufacturers received orders from native traders in India and China. The methods adopted were very simple. The native traders went to the representative of the Overseas Trade Department and asked to be put in communication with responsible people in this country to whom they could apply for commodities. They were put into communication and the traders sent orders and wrote to the manufacturers that they had opened credits with the National Bank of India or the Chartered Bank or one of the other large banks, and then the manufacturers shipped these goods and drew against them. These firms, with experience of trading in these countries, sent out samples and goods and drew against them.

After that, orders followed and credits were opened with these banks, which were acted on by manufacturers, but for a period after the War when everything was booming the manufacturers shipped out quantities of goods to these various markets, and other credits had been opened, and the firms drew bills on the native traders abroad. In the meantime while these goods were in transit the market went down, and when the goods arrived in India and other places the local merchants simply refused to take them up.

It is no secret that the markets in the East are simply flooded with British goods which it is impossible to sell, and on top of this we have the Government stepping in to say, "We are going to assist somebody else to intensify the fearful glut which exists."The intention of the original Bill was to deal with the cases of countries like Roumania, Esthonia, and others, where there were no banking facilities. The exchange in those countries was such that it was impossible to send any remittances to this country during a given period, and the Government wanted to assist trade for responsible merchants, who could put up security, until such time as the exchanges became more normal and they could remit or could ship goods against the goods which they got from England. A certain amount of that trade has been done through the intermediary of the Government, but a great deal of trade has been done without the assistance of the Government. Now that the Government wish to extend that system, I would refer the President of the Board of Trade to the commercial history of this country and of India. He will find that even in the times of the old East India Company there was an enormous amount of trade between this country and India, and now it has developed to even more gigantic proportions, and it is ridiculous for the Board of Trade to come forward to-day to interfere in the normal conduct of the business of houses that have been established for a century or more. Some 57 houses have been there for 100 or 150 years, and now that the Government come in these houses will not know where they are at all, because they will not know when the Government are going to interfere, and how the Government are going to interfere, and what adventurers are to be assisted. What the Government do not appreciate is that one of the causes of the stagnation in the export trade arises from the fact that the markets of these countries have been flooded and that owing to the poverty of Europe there is no market for their produce. If there were a market in the countries of Europe—in Germany, France and Italy, which are all virtually bankrupt now—for the seeds, jute and other articles produced by our colonies that would right exchange, and the normal trade would come back again as it has been for generations past. The more the Government try by artificial means to remedy the state of affairs the more they will make it difficult for those who have carried on the trade for generations to keep it going until conditions become normal again. It is absolutely useless to try and oppose this Resolution. There would be no possible chance of success, but I do enter on behalf of the bankers who have carried on that trade willingly, and are willing to carry it on, and also on behalf of the merchants, the strongest protest I possibly can against the interference of the Government with the trade that has been carried on successfully against the whole world.

Major BARNES

We ought to lodge a protest against a proposal of this far-reaching character being brought on at this hour. It is a proposal to make a very great change indeed upon the policy which the House approved when it accepted the original Bill dealing with this overseas trade. I wish also to make a further protest against the manner in which this has been placed before the House. The hon. Member in charge of the Resolution told us that the reasons for this very great extension of policy had been very fully stated on 9th March, and, therefore, it was not necessary to repeat them. I have turned up the records of the Debate on 9th March to see what the Chancellor of the Exchequer said on this subject. We voted a sum of £26,000,000 for a very definite purpose—to establish trade with countries in Europe which were in such a disturbed condition that the people in those places could not give the credit which our merchants thought they should have. To-day we are asked to extend this to all parts of the British Empire, including Protectorates and mandated territories, for reasons which the hon. Member who introduced the Resolution said were fully stated on 9th March. Let me read the whole of the reasons put forward in that Debate. This is what the Chancellor of the Exchequer said at the end of a long Debate on the original scheme: I think we should extend this, not merely to the derelict countries of Europe, but that we should give similar facilities in cases, say, of our own Dominions, where, after all, security is much safer and the business is in every respect just as good or better, and there is a greater quality of permanence about it."—[OFFICIAL REPORT, 9th March, 1921; col. 546, Vol. 139.] That is every word said on 9th March in support of this extension and change of policy. These are what are called by the hon. Member reasons fully stated. I submit that the object of this Resolution is to cover the ghastly failure of the original scheme. The position is that the Board of Trade has got £26,000,000 and they do not want to part with it. Within the last 12 months they have only got some £780,000 taken up, and there is some £2,500,000 given as a guarantee. They have £23,500,000 in their hands and they do not know what to do with it. They want our permission to spend this money, and the amazing thing is that we are asked to do this at a time when the next Motion on the Paper, which will come on in a few minutes, is to write off £23,000,000 wasted by the Government in speculation and trade. If hon. Members will look at the Paper they will see that the next Motion is to ask the House for permission to write off £23,050,000, a sum almost identical with what they have in hand now on the Overseas Vote. I submit that the only policy is to stop this amazing attitude with regard to trade. Let the Government pay this money back into the Consolidated Fund, where at least it will be set off against the money already lost. There is no reason in any shape or form that can be given for this extension. The object of the original proposal was to trade with countries which did not possess conditions of security which existed under the British flag; countries torn by revolution, devastated by war. These were the countries with which no trader could trade. It was to help trade with these countries that we agreed to the original proposal. Now it is proposed to extend the advantage to countries under the British flag. The Dominions, I understand, are included. In all these places there is security, and there is credit, and there is no more reason for giving people facilities for trading than there is for giving people to trade within the United Kingdom. Why should not people who want to trade with Hull or Scotland have advantages of this sort? I wish to ask the hon. Member a very pertinent question. Will facilities to all parts of the British Empire include facilities for trading inside the United Kingdom?

Lieut. - Commander KENWORTHY

Devastated Ireland!

Major BARNES

And Ireland. I understand that trade is not to take place with India. I submit that the Committee has not been treated with the frankness to which it is entitled. The reasons for the change of policy were not fully stated on 9th March, and before the House gives permission for this policy, I submit it is entitled to a much fuller statement of the case than we have had.

Mr. A. M. SAMUEL

I totally disagree with what has been said by the last two hon. Members. I expect we shall have further academic reasons from the two other hon. Gentlemen on my right, who have not been engaged in trade all their lives, so far as I am aware. They will tell us that traders ought not to have this proposed advantage. The hon. Member for Putney (Mr. S. Samuel) spoke from the point of view of the banks, and I do not regard him as I do the two hon. Gentlemen on my right.

Mr. S. SAMUEL

I speak from the letter of protest written by the Manchester Chamber of Commerce to the President of the Board of Trade.

Lieut.-Commander ASTBURY

May I say, as a director of the Manchester Chamber of Commerce—

The CHAIRMAN

The hon. Member is not in order.

Mr. A. M. SAMUEL

I happened to be present when the representative of the Manchester Chamber of Commerce took part with the representatives of all the other chambers of commerce of Great Britain and Ireland, and if my memory serves me right Manchester expressed the same objection as the hon. Member for Putney, who said that the Government should not give credits by this scheme to India, as such credits would induce certain people in India to dishonour their obligations, as they had done in the immediate past, or, at least, not until these Indian importers had squared up their debts of the past. As attention has been drawn to the Association of British Chambers of Commerce—

Mr. S. SAMUEL

The Manchester Chamber of Commerce.

Mr. A. M. SAMUEL

I say that the representative of the Manchester Chamber of Commerce was present when the resolution was passed by all the chambers. I moved it and it was passed unanimously. There is no use telling me what I do know is not absolutely the whole position. I was actually present and a resolution was passed unanimously, which I myself moved, welcoming this proposal. It is on record. There is no getting away from that—although Manchester did demur to certain aspects in the proposals. If the channels of which the hon. Member for Putney (Mr. Samuel Samuel) tells us are available for the export trade, they will be used. The export merchants of this country will only be too pleased to use them, delighted to use them, because they do not want to be bothered with going to the State, with all its red tape regulations. They will only go to the Board of Trade when they cannot get the banks to deal with a matter. We can put aside all idea of the traders of this country wanting Government control or interference or help. They loathe it. They only turn to the Government to help them when their goods cannot be sold to foreign countries through the ordinary channels of credit, that is to say, the banks and financial houses which the hon. Member for Putney represents.

Mr. S. SAMUEL

Banks do not sell the goods at all.

Mr. A. M. SAMUEL

The hon. and gallant Member for East Newcastle (Major Barnes) says that no reason can be given for this proposal. I will give a good reason. We want the wheels of industry to go round, and you will not bring that about while the warehouses are blocked with goods that you cannot get out to the consumer, and we will not get those goods out if the credit of the various countries of the world is so bad that the banks will not endorse or take up the bills which traders must take from their foreign customers in payment for those goods. In order to sell the goods and to start the wheels again, and to employ labour to refill the warehouses and stop unemployment doles, the Government should be asked to come in and put its name on the back of the bills in order to get exports of goods restarted. I do not think that in the long run the Government will lose a farthing. Meantime, unemployment doles are a loss to the Government. The hon. and gallant Member for East Newcastle may make all sorts of ill-informed play about those credits, but let us get down to the facts. Exporters and manufacturers have gone into this position very thoroughly on two occasions, and, so far as I understand, the position, the importers abroad, who are going to buy these goods from Britain, will be compelled to put up a very large amount of security to entitle them to credit. That security will, in my opinion, cover whatever guarantee may be put by the Government on the back of the bills. Then the hon. and gallant Member for East Newcastle asks if Hull will benefit. Of course, every city in England will benefit. We live by our export trade, and if traders of Hull or any other city require to be assisted in a way which the banks cannot assist they can go to the Board of Trade and ask that those foreign bills should be taken up or guaranteed in the way the proposal provides.

Major BARNES

I do not think the hon. Member quite takes my point. My point was that the exporter in Hull would benefit as much as the exporter in Manchester, but why should the person trading with Canada have greater advantages than the person who is trading with Hull?

Mr. A. M. SAMUEL

For this reason: If the hon. and gallant Member had been in the export trade he would know that people trading with Hull find no difficulty in getting bills of Hull traders taken up for goods sold. Every one in Hull is known by the home banks, and Hull people's credit is infinitely superior to that of a foreign buyer.

Mr. S. SAMUEL

Or for goods sold for any of the British Colonies or possessions.

Mr. A. M. SAMUEL

Yes, they do. At the present time there are thousands of pounds worth of goods ordered, which we should like to send to Australia—and to people of honour and good credit in Australia. That is an answer to the hon. Gentleman opposite; but the firms at home cannot get the bills collected; you cannot get paid, because of the question of exchange. The hon. Gentleman opposite asked me if we were in difficulties with any other part of the British Empire. I have told him the bill position between England and Australia is in a frozen state. Exchange is blocked with Australia.

Mr. LYLE-SAMUEL

What! A question of exchange within the British Empire!

Mr. A. M. SAMUEL

Yes. The hon. Gentleman who has interrupted me shows his ignorance of the hampered way in which trade at present is carried on in this country with Australia. We have been into this matter for some weeks and considered it, and I stand here, not only as a Member of Parliament, but as representing the exporters and the Association of Chambers of Commerce, to say that we think this is a first-class measure, likely to benefit workpeople and manufacturers at no great cost to the Government, and we want it to go through.

Mr. LYLE-SAMUEL

I am really astonished at the speech of the hon. Member for Farnham (Mr. A. M. Samuel), because he seems to assume that when the hon. Member for Putney (Mr. Samuel Samuel) speaks of international trade and banking he is as well informed as himself, and as for the hon. and gallant Member for East Newcastle (Major Barnes)—and I have no doubt that I am included in the combination—we are so utterly unacquainted with commercial proceedings that in his presence apparently we are unworthy to speak. The hon. Member for Farnham has intervened to point out to the Committee the difficulties of the exchanges within the British Empire. What a master of the export trade! It is difficult to conduct business with Australia, because of the exchanges! And this is the master of finance, in whose presence less well-informed Members like my hon. Friend the Member for Wandsworth, who, I suppose, is an infant in business compared with the hon. Member for Farnham, ought to shrink! This great authority, is from time to time a protagonist of the popular cause of economy. May I draw attention to the fact that the sum involved here is £26,000,000, and that this is one-eighth—

Sir P. LLOYD-GREAME

I am sure the hon. Gentleman does not want to mislead the Committee. If this Resolution is passed, not one single farthing more will be voted out of public funds, because it is already included in the existing Act.

Mr. LYLE-SAMUEL

I want the Committee to be aware of the extent of this business. £26,000,000 is little more than one-eighth of the total expenditure upon the Government of this country before the War. The Department has been working for two years and has actually expended only between £700,000 and £800,000 and has commitments of £2,500,000, and now it is proposed to extend its powers to give guarantees upon business which, as the hon. Member for Putney says, will, if it is good business, be done by the banks, and if it is not good business the finances of this country do not permit it to be done at the expense of the taxpayer. I should like to ask the Secretary to the Overseas Department how much trade his Department has been able to secure for British manufacturers or merchants which they would not have been able to secure in the ordinary way of business? The third Clause of this Resolution says that it is proposed that the Department shall be able to exercise these powers in the case of new guarantees before 8th September, 1922, and in the case of a renewal of a guarantee up to 1924. It is further proposed that no guarantee shall be enforced after 8th September, 1925. How long is this Overseas Department going on? September, 1925, is nearly 4½ years from now.

The CHAIRMAN

I do not quite see from where the hon. Member gets his dates. They are not in the text that I have.

Mr. LYLE-SAMUEL

Excuse me, I think they are in the third Clause. I was quoting from the Resolution.

The CHAIRMAN

I think the hon. Member is speaking of an entirely different Resolution.

Mr. LYLE-SAMUEL

I beg pardon, Sir.

Lieut. - Commander KENWORTHY

May I ask if in discussing the Resolution we are not entitled to quote from the explanatory memorandum which was issued by the Overseas Trade Department?

The CHAIRMAN

The hon. Member was discussing another Resolution and quoted certain dates as being in the third Clause of the Resolution, evidently having his eye lower down on the page.

Mr. LYLE-SAMUEL

I was quoting, of course, from the White Paper which has been issued, and with great respect I should have thought it was quite in order to refer to it. The object of this White Paper is to enable the Committee to judge as to the wisdom or otherwise, from a business point of view, of approving this alteration of the original authority being transferred merely from credits to guarantees. What is a growing opinion in the minds of commercial men is that the sooner the Government gets out of business altogether the better for business throughout the country and the better for the Exchequer. I do not think there is a responsible business man in this country but who would be very glad if, far from the Department of Overseas Trade having extended powers in the use of this sum of £26,000,000 which we are asked to vote, their powers were not merely curtailed, but if the hon. Gentleman knew within a certain limit of time, and the earlier the better, that the Department of Overseas Trade was to be wound up. It is a natural, I suppose an inevitable, result of the conduct of business in this country after the War; but it is not a healthy thing, and it is a sign of decrepitude in British business when we need a Government Department to enable our traders to trade overseas. The fact is that our British traders are capable of trading in every part of the world without the advice, the guidance, the leadership, the credit, or the guarantees of any Government Department whatsoever. If the hon. Gentleman can stand at the Treasury Box and reply to criticisms and say, "I will inform the Committee of orders of millions of pounds of trade which would never come to British business men save for my Department, I will tell the Committee of contracts for millions which have been secured through these credits; I can assure the Committee that if we had the powers we are asking we can give guarantees, and unemployment will be lessened—

Mr. A. M. SAMUEL

Representatives of the Bradford Chamber of Commerce came up to a meeting and they said in the presence of the Minister that they wanted to bid for a large amount of trade in the near East for which they could not get the ordinary credit from the bankers, and they asked for some scheme of this kind, and indeed they had drawn up one for the Government to adopt. Part of the present scheme has been adjusted to meet the views and needs of Bradford.

Mr. LYLE-SAMUEL

There is no need for the hon. Gentleman to interrupt me. I was asking the Minister to rise at the box and reply to questions. To whom were the credits given and to whom were the guarantees to be given. The authority for so large a sum as £26,000,000 ought to be given with the greatest reluctance by a Committee of this House in so far as it relates to British trade. It is without precedent and apparently it is without purpose or profit, and now they are asking for an extension because the Department has proved utterly futile in the creation of business which could have been conducted in the ordinary business way. At nearly five minutes to one the Committee is asked to discuss a sum of £26,000,000, one-eighth of the total expenditure of this country before the War, and the Minister has not given us one single bit of evidence upon which this Committee could rely in the way of business which has been secured because of the intervention of his Department; nor can he give this Committee an assurance of business which will be brought because of this extension of guarantees. I earnestly hope that with the country's eyes upon us when we are dealing with so vast a sum as £26,000,000 this Committee will refuse to pass it.

Captain EVANS

It is about time that somebody took part in this discussion who does not speak from the capacity of a business representative. If the best that can be said against this Resolution is what has been said by the last speaker as a business man, all I say is that I hope the Government will soon come to the rescue of the business community in this country. It would be difficult to imagine a more irrelevant speech upon this Resolution than that to which we have just listened. The hon. Member, who professes to speak as a business man, has asked the Minister in charge whether he can get up, and say whether any particular business had not been able to go through except by reason of the export credit system, and he was immediately given an instance by my hon. Friend the Member for Farnham (Mr. A. M. Samuel).

Mr. LYLE-SAMUEL

I asked whether it had happened.

Captain EVANS

I fancy there is scarcely a Member of this House who has not had instances of such difficulties brought to his notice. I represent a constituency which has no very large business concerns, but even I constantly have my attention drawn to cases of businesses unable to export their goods, because of the difficulties and the lack of an export credit system such as proposed. Therefore it is idle to talk of challenging the Minister to get up, and make a statement of the character he has been asked to make. Curiously enough the hon. Member introduced the question of economy into his speech. One hears a very great deal of economy. We all join in criticising the Government on the subject of extravagance, and in pressing them to exercise economies, but it is time that we realised that the public suffers from extravagance in business as well as from extravagance in Government Departments, and that the public will benefit by the effecting of economies in business just as it will benefit by economies on the part of Departments and public authorities. Anything that will assist business and its economic administration at the present time will be helpful. Now we have this export credit system. It was first started because it was realised that one of the most important necessities of the country at the present time is the re-establishment of trade. [HON. MEM BERS: "Hear, hear!"] I am very glad to get that admission from so distinguished an authority as the hon. Member for Hull. This Resolution is intended to extend that credit system and improve the trade conditions of this country. While apparently the hon. and gallant Member for East Newcastle (Major Barnes) did not object to the original system for improving trade conditions between Great Britain and Central Europe, he now objects to improving the trade conditions between Great Britain and the rest of the Empire. Surely that is a most extraordinary position!

1.0 A.M.

Major BARNES

The point I was making was that there was necessity in the one case, and no necessity in the other.

Captain EVANS

Most hon. Members know that there is a necessity for the extension of this system to parts of the British Empire as well as to countries in Central Europe. If the Government is prepared to establish a system of this character for improving trade conditions, with a view to helping the business concerns of our own country, surely it is only commonsense and common business to seek also an extension of these facilities to other parts of the British Empire. I had some doubts with regard to this Resolution when I first saw it on the Paper, but I am completely satisfied after hearing the objections which have been taken. If certain hon. Members who have spoken speak as representatives of the trade and business of this country, it is a very serious position in which we find ourselves. I agree that we did hear something a little more relevant and material from the hon. Member for Putney (Mr. S. Samuel) than from the other two speakers. He was, however, speaking rather from the point of view not only of the bankers, but also of the large concerns which have none of the difficulties in obtaining facilities from the banks that small traders experience. Large concerns can look after themselves. Small concerns which cannot get these facilities from the banks are experiencing very great difficulties at the present time. I have listened to many discussions affecting the trade and business of this country. At first I was inclined to put trust in the statements made by those who claimed to speak on behalf of the business community, but my experience has been that, on the whole, perhaps, they are not very safe guides for a House of this character, whose paramount interest is the safeguarding of the interests of the ordinary members of the public. If a man is bitten once by a dog it may be his misfortune; but if he is bitten a second time by the same dog, that is evidence of negligence on his part. I have, therefore, come to the conclusion that one must not accept the advice of those who claim to speak as business men too readily and I am not sure whether, as far as the small trader is concerned, it is advisable to follow the advice they put before the Committee. I am certain, from my own experience, that the policy involved in this proposal will considerably help the small trader, considerably help the public, and do a great deal towards improving trade conditions.

Lieut. - Commander KENWORTHY

I hope the hon. Member for Cardigan (Captain Evans) will favour us with more such speeches, and with most of it I am sure I agree, in spite of the party attack on my two hon. Friends. We can quite understand the way he talks about the great need of restoring trade and industry. I wish he would talk like that to-morrow when we have these ridiculous Financial Resolutions for safeguarding industries. In a few hours' time the hon. and gallant Member who introduces this Motion will be advocating the imposition of a 33⅓ per cent. duty on goods of countries which have collapsed exchanges, thus putting obstacles in the way of these countries recovering, although we are coming to the overburdened Exchequer and demanding money to subsidise trade for abroad. It is perfectly true our warehouses are blocked with goods. It is perfectly true we are paying unemployment doles. At the same time there are millions of people in Europe who are naked, bootless, and without the machinery and transport with which we could supply them if only the collapse of the exchanges could be got over. As I have said before, this is only sticking plaster to cover a terrible ulcer. We have seen the ulcer grow grow deeper and larger and the sticking plaster become more inadequate. This Resolution shows the total failure of the Government in its foreign policy. There are unemployed in the streets, and the very existence of the bureaucratic Department—the Department of Overseas Trade—all these things and this Resolution show up the ghastly result of the policy of the "never-enders" and those who favoured the "knock-out blow." They ruined Europe, and I fear that what was the commercial system of this country in the past is smashed beyond repair. Anything which will help British traders I will support. Still, I feel this is inadequate. I feel there will be the same restrictions of guarantees as there were of credits, which is shown by the fact that there was only some £2,500,000 applied for. That shows the system was drawn on too rigid lines.

I have taken the opportunity before of putting with great diffidence what I think is the ony possible cure with the collapsed exchanges, and that is for the Government themselves to trade. This system of guarantee is only scratching at the problem. You run the risks, but you really do not restart the wheels of industry which is absolutely necessary at the present moment. I have one or two practical suggestions to make within the limits of the present hole-and-corner scheme. I still believe, as I said two years ago, that it is a mistake to confine these credits and guarantees entirely to so-called manufactured goods. I put this point with some earnestness to the hon. Member. I believe that the need of these devastated countries is nearly as much for raw materials as for manufactured goods. They want cotton and rubber and sheet iron, and simply to confine the scheme to manufactured goods is a shortsighted policy. If they can produce themselves the problem will be simplied. My second suggestion is with regard to the countries to which this system is to apply. First of all, we have the Border States round Russia, Poland, the Baltic States, Finland. Is Georgia still in? Georgia and Azerbaijan were originally in, but Azerbaijan was taken out. Does the hon. Gentleman still wish to give guarantees to traders to trade with Georgia? And if you are to give guarantees to traders to trade with Georgia, why not with the great Empire of Russia? We have now signed a trade agreement with Russia since the original overseas trade credit scheme was introduced, and that has very much modified the system. We had a Division in Committee on the very question of including Russia, and at that time the defence of the President of the Board of Trade was that as soon as the trade agreement was signed the Government would favourably consider the inclusion of Russia. The hon. Member for Farnham, who talked about providing work for the unemployed, objected to the trading agreement with Russia. In spite of the fact that there have been great difficulties in trading with Russia so far, since that trading agreement was signed £5,000,000 worth of British goods have been paid for in this country, a very difficult matter in view of the fact that the ownership of Russian gold was not settled by the Courts. Therefore, if later on I propose the inclusion of Russia, I hope the hon. Member for Farnham (Mr. A. M. Samuel) will support me.

Lieut. - Commander ASTBURY

The great part of the £5,000,000 was for foodstuffs, and not for goods.

Lieut.-Commander KENWORTHY

I could go into that matter, but I may mention that some of it was for locomotives and chemicals. I could look up my notes on the matter, but off-hand I would not like to answer the question in detail. I remember Sir George Barker, of the firm of Vickers, saying that the greatest field for British trade to-day was Russia. He is a man with a great knowledge of Russia, and a distinguished member of a very flourishing British concern. If he says that why does not the Department of Overseas Trade back him up and extend the scheme to Russia. That is a practical suggestion that may help unemployment. Why have we not also included Austria?

Sir P. LLOYD-GREAME

We have included it.

Lieut.-Commander KENWORTHY

I am very glad to hear it. Then is it wise to extend this scheme to the mandated territories? We are in honour bound not to give any preference to our own subjects in mandatory territories. It may be that a case has been made out for British territory, but has a scheme been made out for the mandated territories? It may be rather far fetched, but if the hon. Member will look again at the Treaty he will see that it is carefully laid down that there is to be no preference in trade and commerce given to the nationals of the mandatory Power, and I question whether we are wise to extend this scheme. It may be a scheme which will be followed to our detriment in the mandated territories of foreign countries. I do not really know whether to divide against this. It very much depends upon the reply of the hon. Gentleman, and I am averse to doing anything which will assist these wretched countries and our own wretchedness, but I feel that this is altogether too inadequate.

Mr. A. GREEN

I have listened with some interest to the speeches which have been made on this Motion this evening. I have just returned from an extensive tour of the British Colonies and the Dominion of Australia and I can only say that I hope the Committee will see their way to support the Motion. If there was one mistake made when the matter was before the House formerly it was that the House did not at that time include our Colonies and Dominions and Protectorates. Whatever may be said with regard to the success of the scheme so far as the devastated parts of Europe are concerned, I am perfectly certain that has not been because of any lack of sympathy on the part of the Overseas Department, but it has rather been because of the exceeding difficulties of the exchanges which make it almost impossible to do business with certain portions of Europe at the present moment. The hon. Member for Central Hull (Lieut.-Commander Kenworthy) has referred to the starving millions in Europe who are not able to pay Great Britain because of their financial condition. If he will make a careful survey of the financial condition of these people he will find that most of them are in that position because of the doctrines of Lenin and Trotsky rather than because of the present lack of industry. As this particular Motion deals more especially with our Colonies and Protectorates, I can only say that in Australia and Canada there is great need for co-operation on the part of the whole of the people of the Empire in order that our relationship should be more closely cemented. We have heard the views of hon. Members who represent the banking interests. The banking interests are not inclined to help in all cases unless there is absolutely gilt-edged security for any money that they advance. I could give an illustration of an Australian firm with a turnover that would exceed the amount that is asked for even in this particular Resolution, and with individual directors, I have no doubt, each of whom could sign a cheque for a quarter of a million. One of them happened to be stranded in this great city, and he could not get from his bankers, in London an advance of £1,000 to enable him to carry on and to pay his passage and pay his way through this country and back to Australia. What he had to do was to borrow that money from a firm in Sydney that had credit, and to pay an excessive sum for it. During the tour I took I had the sum of £175 due to me from a Sydney house, and they were not allowed to send the money to England. They were not allowed to send more than £100 at a time, but, as always happens in those cases, they were clever enough to outwit their bankers, for they sent me one draft for £100 and another for £75. That sort of thing is perfectly absurd. We cannot at the present time get the credit that is necessary for building up trade between the Mother Country and the Empire which will enable us to employ people who are out of work, and any one who had the opportunity of taking the tour that I took, and seeing what I saw, and hearing the expressions of opinion that I did as to the credit between the Mother Country and the Empire, could have no doubt that he ought to give the Government whole-hearted support, trusting that this is only the beginning of an extensive effort on the part of the Government to develop not only the financial relationships but the commercial relationships between the Mother Country and the different parts of the Empire.

Mr. KILEY

When such distinguished supporters of the Government as my Friend the hon. Member for Putney (Mr. S. Samuel) and my Friend the hon. Member for Farnham (Mr. A. M. Samuel) differ as widely as they do, one rather hesitates to intervene, but if I do so it is because the Member for Cardigan (Captain Evans) dwelt in some degree on the small trader. As a small trader I am glad to be able to get his sympathy, and to express my regret that I did not know what a lot I was missing as a small exporter in not knowing that Cardigan was a county that had much to export. I will, with his permission, study that problem at an early date.

Captain EVANS

I said that it had not.

Mr. KILEY

We will discuss that a little later. The reason I intervene now is that it is something like two years since the proposals now before us for further consideration were first presented to the House. At that time there certainly was need for something to be done in order to promote trade and to find employment for the great mass of men who were coming back, and when the proposals were before this House I did my best to point out to those who were in charge that they were of such a character that they would defeat the object the promoters had in view. I must say, not with much satisfaction, that it has taken the Government two years to act upon the advice that was then given to them. I join issue with the statement made by the hon. Member for Putney. No doubt he was speaking on behalf of the great millionaire firms whose credit is so good and whose resources are so great that they can trade practically without any assistance, but I would like him to imagine the case of the ordinary City of London trader. He sells his goods to India at the top price, based on the exchange of the rupee at 2s. 6d., but when the goods have arrived the rupee had dropped to 1s. 6d. Therefore, instead of the trader having to find 100,000 rupees, he has been called on to find something like 200,000 rupees. He was unable to do this, and did not take up his bill. What did the bankers in this country do? They at once came to the person from whom they purchased the bill, and they said, "The bill has not been taken up; will you hand over the cash that you have received?" In vain did the trader say, "If this man has not taken up the bill, let it be renewed for another 30 days, or another 90 days." The bank said, "We will renew the bill, but will you first hand over the money?" In a limited number of cases that has been done, but it was not possible for every single trader, with his limited facilities, and it would have been a godsend to many of them if the Government scheme had been in opera- tion. What is the position out in India to-day? It is true that there are vast quantities of certain goods, but only of certain goods, and India is wanting British goods very badly, and so are other parts of the British Empire; and this credit can do something to enable trade to be resumed with Australia until such time as the Australian Government remove their embargo on cash remittances from the other side. It will do something to assist unemployment in this country. One could enlarge and mention other places in the British Empire where these proposals will be very valuable, on one condition, and that is that the rigid system which has been so long enforced by the Overseas Trade Department shall be modified to some extent. It is absurd that in 2½ years the Overseas Trade Department have only been able to make advances totalling about £750,000 sterling; but if they will modify their restrictions, it will do something to promote and encourage trade, and, in my opinion, be far more valuable than the other proposals that we shall be considering in a few hours.

Sir P. LLOYD-GREAME

I think there are two or three points on which the Committee may be under some misconception, those Members, at any rate, who have not heard the full discussion, and I should like those points clear. In the first place, this Resolution does not ask for a single penny of new public money which is not already included under the Act. In the second place, reference has been made to the White Paper and to the dates mentioned therein. These dates were merely printed in order to give under the new proposal the exact limit of time which this House has already sanctioned under the Credits Act. There is not an extension of a single day. The proposals of the Government were economical while not extending any of our obligations. Nobody is asked to come into this scheme who does not require it. If the banks can do the business the banks will do the business. As a matter of fact these are not the terms on which this business is done. All applications under the scheme must be passed through the Department by the bankers, whose recommendation must be attached.

Mr. S. SAMUEL

The point I put was that the bankers at the present moment are so full of goods that they have little money to dispose of now that the Government advance the money to traders.

Sir P. LLOYD-GREAME

If the bankers can do the business the bankers will do the business. At the present moment there lies in the portfolios of the Department an application from a certain very distinguished company which has created trade with Rumania in which the hon. Gentleman's (Mr. S. Samuel) firm has an interest, and which has applied for a considerable advance under this Department's scheme.

Lieut. - Commander KENWORTHY

Why bring that up?

Mr. S. SAMUEL

As the hon. Gentleman mentions that, I may say that my firm were asked to finance this business, and as we did not want to put up several millions sterling, we said very plainly we should not finance it except with the Government guarantee.

Sir P. LLOYD-GREAME

I heartily accept that proposition. If it is business which is good enough and which the hon. Gentleman is prepared to do in partnership with the Government, that is business of which the Government need not be afraid.

Lieut. - Commander KENWORTHY

Why mention it at all?

HON. MEMBERS

Why not?

Sir P. LLOYD-GREAME

I think I am quite justified in mentioning that.

Mr. S. SAMUEL

There is no harm in it.

Sir P. LLOYD-GREAME

Absolutely no harm. It is the type of business which the Department can do and which I feel sure will be very sound business. It has been suggested that this is interference with the banking interest. This scheme has been discussed over and over again by the President of the Board of Trade with the bankers, and what is the objection that has been raised? Not that this is interference with ordinary banking business. That was not the difficulty we had in coming to terms. The difficulty we had with the bankers was that they saw that here is business which they agree ought to be done, which is very desirable to do in the interests of British trade, but they think the Government ought to take the whole of the risks, and you ought not to call upon the banks to take any of these exceptional risks. That is the real position. We now come forward with this as a practical proposal. Finally, if we are to get the views of the business community—we get isolated views put forward—I do not think we can get it better than from the considered opinion of the chambers of commerce, and the hon. Member for Farnham (Mr. A. M. Samuel) has reminded us that the Associated Chambers of Commerce regard this as a practical suggestion and promised to give us, as I know they will, their wholehearted support in the working of the scheme. I will only say one word in regard to credits to the British Empire. Is it really unreasonable to extend this to the British Empire? Is it really unreasonable that we should treat with the best markets that we can get, both actual and potential? I make no hesitation in asking the Committee, as I hope they will, now to come to a decision, after a very full Debate?

Lieut.-Commander KENWORTHY

I think the hon. Member knows me very well by this time. [HON. MEMBERS: "Agreed"!] I have had one or two passages at arms with him across the floor, but I want to put two specific questions. First of all, is this scheme going to be extended to Russia, which is a great potential market to the British manufacturer, and secondly, whether he has considered in any way the question of possible objections to extending this scheme to mandated areas? The whole question of mandates looms very large on the other side of the Atlantic.

Sir HAROLD SMITH

hink you are talking nonsense as you always do. You talk nonsense every time you get up.

Lieut.-Commander KENWORTHY

I am not talking nonsense on this occasion. The hon. Gentleman is not only rude but wrong on this occasion. The whole question of mandated areas is being very closely examined on the other side of the Atlantic and our enemies are very anxious to find any pretext for attacking us. One of their protests which they find extremely useful is under the guise of mandates, that we are trying to make exclusive markets for our own commercial interests.

Sir H. SMITH

Agreed!

Sir P. LLOYD-GREAME

As to mandated territories, I do not think any suggestion can be made that we are exploiting mandated territories. As regards Russia, we do not propose at the present stage to extend the export credits facilities to Russia.

Lieut. - Commander KENWORTHY

Why not?

Sir P. LLOYD-GREAME

I will explain the reason. The basis of credit must be the acceptance of the honouring of obligations whether in the past or the future. I think it would be hardly reasonable to ask the Committee at the present stage when we do not yet know to what extent Russia is going to acknowledge obligations to include Russia.

Colonel PENRY WILLIAMS

I remember very distinctly the original Resolution dealing with this export credit matter. We were assured then that there was an enormous demand for several of these devastated areas in Central Europe. Now they come to this House and say that there is no demand from Central Europe, but there is an enormous demand from the British Colonies. We have heard no fact proving that there is any necessity whatever for extending the scheme to the British Empire. I merely rise to ask whether this scheme is to apply to Australia. I understand that there is an embargo on remittances of capital from Australia to this country. How can you have any guarantee system of bill payment between two countries one of which has an embargo on the export of credit in that way? It appears to me that if Australia has an

embargo on the export of credit it is impossible to trade with her either by way of guarantee through the banks or Government, or in any private capacity. I believe myself that the whole of this business can be done through the existing banking organisations as is proved by the fact that this scheme has failed in dealing with Central Europe, and so will it fail in dealing with the British Empire. I would like to point out that, this Financial Resolution clearly indicates that the Board of Trade can sanction this scheme as between people in this country—people who are shipping goods from Newcastle to South Wales can obtain the same facilities as if they were exporting to a foreign country. I would like the Department to give an answer to that, and I should like to have some proof that this extension of the overseas credit system is necessary.

Question put, That it is expedient to extend the Overseas Trade (Credits and Insurance) Act, 1920, to the giving of guarantees in connection with export transactions and to amend the said Act as regards the countries in respect of which it applies, and to authorise the payment out of moneys provided by Parliament of any sums required in connection with the giving of such guarantees, so, however, that the amounts outstanding at any time in respect of credits and guarantees shall not together exceed the amount now authorised under the said Act as regards credits, and of any expenses incurred by the Board of Trade by reason of such extension and amendment of the said Act as aforesaid.

The Committee divided: Ayes, 88; Noes, 9.

Division No. 125.] AYES. [1.45 a.m.
Agg-Gardner, Sir James Tynte Evans, Ernest Kerr-Smiley, Major Peter Kerr
Astbury, Lieut.-Com. Frederick W. Eyres-Monsell, Com. Bolton M. Kidd, James
Atkey, A. R. Ford, Patrick Johnston Kiley, James Daniel
Baldwin, Rt. Hon. Stanley Forrest, Walter King, Captain Henry Douglas
Balfour, George (Hampstead) Foxcroft, Captain Charles Talbot Lindsay, William Arthur
Barnston, Major Harry Fraser, Major Sir Keith Lloyd-Greame, Sir P.
Benn, Sir A. S. (Plymouth, Drake) Gibbs, Colonel George Abraham Lorden, John William
Betterton, Henry B. Gilmour, Lieut.-Colonel Sir John Loseby, Captain C. E.
Blades, Sir George Rowland Glanville, Harold James Lowther, M.-Gen. Sir H. C. (Penrith)
Borwick, Major G. O. Green, Albert (Derby) McLaren, Hon. H. D. (Leicester)
Bowyer, Captain G. W. E. Hacking, Captain Douglas H. Molson, Major John Elsdale
Boyd-Carpenter, Major A. Hailwood, Augustine Moore, Major-General Sir Newton J.
Bridgeman, Rt. Hon. William Clive Hamilton, Major C. G. C. Moore-Brabazon, Lieut.-Col. J. T. C.
Broad, Thomas Tucker Hannon, Patrick Joseph Henry Moreing, Captain Algernon H.
Bruton, Sir James Hennessy, Major J. R. G. Murray, John (Leeds, West)
Buckley, Lieut.-Colonel A. Holbrook, Sir Arthur Richard Murray, William (Dumfries)
Casey, T. W. Hood, Joseph Nall, Major Joseph
Chamberlain, Rt. Hn. J. A. (Birm., W.) Hope, Lt.-Col. Sir J. A. (Midlothian) Neal, Arthur
Churchman, Sir Arthur Hunter, General Sir A. (Lancaster) Newman, Sir R. H. S. D. L. (Exeter)
Coats, Sir Stuart James, Lieut.-Colonel Hon. Cuthbert Nicholson, Reginald (Doncaster)
Colvin, Brig.-General Richard Beale Jones, Sir Edgar R. (Merthyr Tydvil) Parker, James
Davidson, J. C. C. (Hemel Hempstead) Jones, Henry Haydn (Merioneth) Percy, Lord Eustace (Hastings)
Du Pre, Colonel William Baring Jones, J. T. (Carmarthen, Llanelly) Raw, Lieutenant-Colonel Dr. N.
Roberts, Samuel (Hereford, Hereford) Sutherland, Sir William Wilson, Lt.-Col. Sir M. (Bethnal Gn.)
Robinson, S. (Brecon and Radnor) Thomas, Sir Robert J. (Wrexham) Wise, Frederick
Samuel, A. M. (Surrey, Farnham) Townley, Maximilian G. Young, E. H. (Norwich)
Sanders, Colonel Sir Robert Arthur Ward, William Dudley (Southampton)
Shaw, Capt. William T. (Forfar) Wheler, Col. Granville C. H. TELLERS FOR THE AYES.—
Shortt, Rt. Hon. E. (N'castle-on-T.) Wild, Sir Ernest Edward Mr. McCurdy and Colonel Leslie
Smith, Sir Harold (Warrington) Williams, C. (Tavistock) Wilson.
Stanley, Major Hon. G. (Preston) Willoughby, Lieut.-Col. Hon. Claud
NOES.
Gillis, William MacVeagh, Jeremiah Wilson, James (Dudley)
Hayday, Arthur Morgan, Major D. Watts
Kenworthy, Lieut.-Commander J. M. Smith, W. R. (Wellingborough) TELLERS FOR THE NOES.—
Lyle-Samuel, Alexander Waterson, A. E. Colonel Penry Williams and Major
Barnes.

Resolution to be reported To-morrow.