TRADE FACILITIES AND LOANS GUARANTEE BILL.

HC Deb 06 December 1922 vol 159 cc1831-98

Order for Second Reading read.

The CHANCELLOR of the EXCHEQUER (Mr. Baldwin)

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

4.0 P.M.

I do not propose, having regard to the fact that this Bill was explained in some detail and debated in the small hours of yesterday morning, to repeat what I said to the House on the Committee Stage of the Financial Resolution. I will content myself with reminding the House that this is a Bill of three parts. Each part deals with a matter of some urgency, and they all have this in common that, if successful in their working, they will lead to the creation and improvement of trade in this country, an object which must be very near to the hearts of Members on all sides of the House. I have to show, before the general Debate begins, that this Bill carries into effect the provisions of the Financial Resolution debated and passed within the last two days.

Clause 1 of the Bill deals with the continuation of the Trade Facilities Act, 1921, its prolongation for another year to 9th November, 1923, and the placing at the disposal of the Government for that second period the same sum as was placed during the first period, namely £25,000,000, to be devoted to the aid of industry by guaranteeing loans made for the purpose of bringing orders into this country. The second Sub-section of Clause 1, which gives a reference to the Act of last year, in addition to extending the period, provides for the laying upon the Table of the House of reports of transactions under the Act for each year, so that the House may have full confidence in what is done by the Committee to which schemes are to be submitted for examination and approval.

I promised on the Committee stage of the Financial Resolution to say something about the matter embodied in Sub-section (3), which contains a proposal to give power to make a charge sufficient to cover the expenses of administration. I pointed out that the administrative expenses, particularly so-called, were very small. The chief expenditure in connection with the work of this Committee is in the legal costs in preparing documents embodying the terms of contract between the Government and the people to whom the facilities are given. It is, of course, impossible to say what these charges may come to. They depend upon the size of the applications, their number, and so forth, but I think I am giving a very safe estimate when I say that so trifling a commission as 2s. 6d. per £100, or ⅛th per cent., will more than cover any expenses which we think may be incurred.

The second Clause deals with the Austrian Loan. I may just remind the House that the subject of this Clause is the provision of a long loan, or rather the guarantee of a market loan, which it is proposed to raise in order to aid in the stabilisation of Austrian currency and the renaissance of Austrian finance. The amount of 650,000,000 gold crowns, in English currency, is just about £27,000,000 sterling. I notice in the report of my speech that I was made to say £47,000,000 sterling, and, having regard to the accuracy of the report, I am afraid that I must have made a slip and said £47,000,000 sterling. If I did, I regret it. I knew perfectly well that the sum was £27,000,000 sterling, and I ought not to have made a slip of that kind. The 650,000,000 gold crowns is provided in two amounts of 520,000,000 gold crowns and 130,000,000 gold crowns respectively. The 520,000,000 gold crowns represent the sum considered by the League of Nations, which arranged the terms of this contract, necessary to provide for the anticipated deficit in the Austrian Budget for the next two years, provided that all the measures which will be found specified in the Protocol which has been published are carried out, and I am glad to say that the Austrian Government have sanctioned the legislation necessary for the carrying out of those provisions, and that they have agreed to the appointment of a Controller who will be selected to undertake this great and responsible work. The guarantee of the 520,000,000 gold crowns is a joint one, amounting to 20 per cent. each from Great Britain, France, Italy and Czecho-Slovakia. The remaining 20 per cent. will be undertaken by other countries. Spain, Switzerland, and Belgium have already announced their willingness to participate, and I think there will be no difficulty in getting the small amount remaining taken up.

The amount of 130,000,000 gold crowns is guaranteed in thirds by Great Britain, France, and Czecho-Slovakia, and the amount is made up of advances which have been made to Austria before this date on the express understanding that they would be repaid out of the proceeds of the first foreign loan which that country might be able to obtain, and it is from that sum that we hope to get repayment of the last £2,250,000 which we advanced to Austria. The second Sub-section of the Clause refers to a matter of which I spoke on the Committee stage of the Resolution, and that is the deposit of securities in the hands of a Commission which would serve as a kind of further Collateral guarantee, if such were found necessary, to implement the guarantee already given when it comes to make arrangements for the floating of the loan. This does not in any way affect the original sum, nor does it in any way increase the obligation of the guarantee. It is purely a technical form to enable something to be done which might make it easier to raise the money. I do not think the next Sub-section requires any comment, and the point of Sub-section (4) is simply this. If, when the loan is issued, the practice be followed of redeeming the loan by annual drawings, it gives power to the Treasury to make similar arrangements for the redemption of any securities which may be deposited as collateral according to the second Subsection.

The third Clause, which deals with the guarantee of the loan to be raised by the Government of Sudan, was also dealt with yesterday on the Report stage of the Resolution at great length. Paragraphs (a), (b) and (c) of Sub-section (2) show very clearly the conditions which must be satisfied before the guarantee of this Government will be given, and I think the House will consider that they safeguard the position, so far as such position can be safeguarded. Paragraph (d) gives us power, in the very unlikely event of the Sudan Government defaulting, to charge on the general revenues and assets of the Sudan the repayment to the Treasury of what may be owing, and in the last line it says with interest thereon at such rate as the Treasury may fix. That will give the Treasury power not to accept such a low rate as might be obtained by the loan itself, but such rate as might be considered a proper and fit thing in the circumstances as they arise.

The fourth Clause, to which I also alluded on the Committee stage of the Resolution, is to make clear a point in the wording of the Overseas Trade Act, which has been in doubt, as to whether the words in that Act which give a specific date as the date up to which guarantees may be given is equally applicable to a general guarantee as well as to a specific one. The fifth Clause is the usual financial Clause making the requisite charge on the Consolidated Fund, and the second section of the Clause instructs the Treasury to lay before the Houses of Parliament statements as to any guarantees given, securities issued, and, in general, to keep Parliament acquainted with what is happening under the terms of this Bill.

The Bill itself, although short, is one that will be of great service both to this country and to Europe. We have within the three operative Clauses three matters of the very greatest importance dealt with. We have provisions for helping trade, provisions which have been found of the greatest utility during the past year, and which I believe will be found to be of cumulative utility as the year goes on. We have, in the second part, a great attempt made by the League of Nations, under the leadership of Lord Balfour, to settle some of the most difficult financial problems in one of the most distressed parts of Europe. We have in that part connected with Sudan a genuine attempt to render productive a large piece of territory which may be of the greatest use in growing cotton, one of the most necessary products for one of the greatest industries of this country. I am sure, speaking generally, that the Bill will give satisfaction to the House. I am sure that it will pass it, and I hope very much that within a very short time we may see the Bill become law and many operating upon it.

Mr. RAMSAY MacDONALD

It is perfectly true, as my right hon. Friend has said, that, in the small hours of the morning, this Bill was discussed. The small hours of the morning as a time for discussing a Bill of such great importance are not exactly the best hours to choose. I confess that, whatever enthusiasm I may have for the life of Parliament, I never feel inclined to discuss serious business at a time when every sensible man is sound asleep in bed; but the pressure upon the Government to get this Bill through, in order first of all to supplement its efforts for dealing with unemployment at home, and also in some measure to give Central Europe the chance of recovering itself so that it may become a normal market for British products, is a thing with which I sympathise. I only propose to deal with the first two Clauses of this Bill at present. The first part of the Bill extends the Trade Facilities Act, 1921. If hon. Members will take the trouble to turn up the OFFICIAL REPORT and read the speeches delivered by the then Chancellor of the Exchequer, speeches full of the most unbounded optimism, speeches which indicated that, as a result of that Bill, we were to give loans to foreign Governments, to Dominion Governments, and to private enterprise conducted by companies, corporations and individuals, and then turn from that glowing prophesy of what was going to happen to the result set forth in the modest Command Paper which has been circulated giving the actual amounts of the guarantees under the Act, and a list of those to whom the guarantees were given, the Members will see that the large expectations and the generous intentions have been watered down to very small dimensions.

It is always very dangerous for a Government to subsidise private enterprise. It is amusing to those of us who sit on this side of the House to listen to the occasional lectures and homilies from hon. Members on the other side against the deadly heresy of Socialism, and then, when the homily period is over, to hear these hon. Members asking us to vote State grants for private enterprise which is unable to fulfil its most elementary responsibility. I do not object to hon. Members on the other side becoming tipplers in Socialism. I only warn them that tippling in Socialism is probably a much more dangerous disease than taking the principle for what it is worth, and applying it in a scientific, consistent way, knowing exactly what you are driving at, and what is the value of the experiment in relation to the whole system with which you are experimenting. Let the House take the Command Paper No. 62, giving a statement of the guarantees which the Treasury have stated their willingness to give up to the 31st March, 1922, and they will see a very strange distribution of the guarantees. The Paper shows that £15,000,000 has been guaranteed, and three of the companies which have benefited by the guarantee absorb £13,000,000. On closer examination hon. Members will come to the conclusion that some of those guarantees must really have been useless for the purpose of the Act.

Will any hon. Member say seriously that a well-known, well-established shipbuilding firm, which has accumulated great reserves during the War, could only finish a ship which had been started by receiving a covering guarantee of £600,000? It is impossible to conceive it. No one who has looked at the balance sheets of this particular company can see any reason for such a guarantee. Nobody who takes the ordinary means of acquainting himself with the ordinary business position of ordinary shipbuilding firms can come to any other conclusion than that this guarantee was unnecessary for the purpose described in the columns of the White Paper setting out the reason why the guarantee was given. Moreover, we get such things as a guarantee of £100,000 for the building and equipment of a new factory for the manufacture of folding boxes at Thatcham.

Surely the Committee charged with the finance of this Act could have found far better ways of giving the guarantees, and a much greater variety of ways of disposing of their benefits, not merely for the purpose of patching here and patching there, but for the purpose of giving really substantial aid to industries and firms that would respond in a permanent way to whatever benefits might be given to them under the Act. I doubt very much the utility of much that has been done under the Act, and I hope that the Government in asking us to give not only £25,000,000 but £50,000,000 will see to it that the guarantees will be given in a more satisfactory way than has been shown by the various Papers issued giving information as to what has been done under the Act. I admit that on the face of it work has been provided, but the position I take up is that in order to appear to be helping industry and providing work it is not enough to make it merely easy for work to be done that otherwise would have been done, and could easily have been done if the loans were floated in the ordinary market.

As regards the second part of the Bill, which relates to the Austrian loan, I have very little to say, and what I have to say is in the nature more of a warning to the Government. The political territory now known as Austria is in its present unfortunate position very largely owing to the Allied peace policy. The settlement of its boundaries and the economic conditions imposed on it, the way it was, as it were, thrown up, and left, as a victim, not only to its own internal passion, but a victim to the small States created round about it is altogether the responsibility, and the blame, of the Supreme Council and the united Allies in pursuing the policy which they pursued in Central Europe since 1918. Therefore this House has got a great responsibility. I was very much surprised to find the right hon. Gentleman the Member for South Molton (Mr. Lambert) speaking the other night of this Austrian loan as though we had no responsibility whatever in regard to it, as though it were a mere monetary transaction which we undertook out of charity or a desire to engage in risky financial undertakings in Central Europe. That is not the position.

This House has got a great responsibility to Austria, a moral obligation to Austria, and in assenting to this Measure, as I am certain it will do, this House is only trying to undo very late in the day mistakes which it made earlier. But I am sure that my right hon. Friend must be aware of the great disquiet in Austria about some of the conditions which have been laid down in the Protocols that are the basis of the second Section of this Bill. The idea is that the Austrian Budget should be made to balance, that the printing of Austrian money should stop, that Austrian finance should at last be put upon a firm foundation. That is a most admirable idea. In order to carry it out it is essential that Austria should be guaranteed, and that there should be a certain amount of control, because Austria already has had loans, and Austria has spent them in such a way as to do itself no permanent substantial good. It is living from day to day and from hand to mouth. When it had money it had a balance in the bank, and it used that balance in order to live to the next day. That sort of thing can go on for ever, and then, in the end, Austria will not be redeemed from debt.

I welcome this as a serious attempt made by the officials of the League of Nations, in conjunction with Austrian Ministers, to put an end to that. This is a serious attempt made to give Austria the command of a sum of money which she will use, not as income, but in order to lay the foundations of a financial system which will hold together once it has been properly developed. That is good, sound financial and trade policy. In order to do this certain guarantees and certain control had to be taken from Austria. Upon that there has been considerable debate in the Austrian Chamber. May I read an actual sentence from a speech made by one of the most respected and influential members of the Austrian Social Democratic party, Mr. Sachs, whom I am sure the Noble Lord who has done so much for the League of Nations has met? He said: The aim we have set before us is to prevent Austria becoming merely a peasant State"— That is a criticism of the guarantees and of control, and he is opposing them on the ground that the effect would be to create an Austrian peasant State. He was speaking on behalf of his political party. The quotation goes on— and to keep it an industrial State, a State of culture and free people. So we shall fight to the end against Austria's bondage under international capital. That is the view of a very important political section of the Austrian Parliament. I refer to it not in any way to discourage this proposal, but for exactly the opposite reason. In order that this agreement should go through the Austrian Parliament, a two-thirds majority had to be registered. The party to which the leader I have quoted belongs could have prevented a two-thirds majority, but whilst protesting and dissociating itself from the conditions of the guarantee, he felt that it was so necessary for Austria to get this help that he was prepared, under the very greatest protest, to accept these conditions. The point I want to make is this: May I beg everybody who is going to take upon himself the responsi- bility of carrying through this guarantee, everybody in the League of Nations and in the various Exchequers of the countries that are to join in the guarantee, not to push to unnecessary lengths some of the conditions that Austria has unwillingly accepted? I feel certain that some of those guarantees will not be required to be put into force. I believe that if the impartial Commissioner whom the League of Nations is to appoint, to be resident in the Empire and to take charge of this work, shows good, sound common sense and gets the Austrian Government and the Austrian people with him, if he shows that, as a matter of fact, he is part and parcel of the Austrian Government itself, a colleague amongst colleagues, a well-wisher amongst co-operators, he will have no difficulty whatever in getting Austria whole-heartedly to accept its obligations and to do everything it can to put the guarantee into effect.

A statement was made by an hon. Friend of mine on this subject. Hon. Members, having to follow the very great uncertainty of political life and stability in Central Europe—an uncertainty which unfortunately exists and will exist for some time—might imagine that one of the aspects of control, as mentioned by an hon. Friend who sits behind me, is that we have taken sovereignty away from Austria. I would assure the House that that is not the case. It is perfectly true that sovereignty may be either a verbal declaration which amounts to nothing, or it may be a substantial operation of political power. Here I make my appeal again. Will the right hon. Gentleman in charge of the Bill, will the representatives of the League of Nations, try to carry out the general declarations contained in the Protocol securing Austria in its sovereignty, and carry them out not merely in the letter, but in the spirit and in the substance of the pledge. The first of the Protocols contains a solemn declaration that the signatories will respect the political independence, the territorial integrity and the sovereignty of Austria. They will take no step and exact no economic or financial condition which will compromise that independence, and if the occasion arises they will refer the matter to the Council of the League and comply with its decision. There is a guarantee of Austrian co-operation. Knowing Austria as I do, I feel the great importance of this. I repeat my appeal that those words should be carried out generously and fully and not merely in a red tape sort of way. The League of Nations has got a magnificent opportunity, one of the greatest opportunities it has ever had, to show not merely its impartiality, but that it has the heart, the knowledge and the will to enter right into the kernel of the Central European problem and to take Austria by the hand, proving not only to Austria, but proving to every country with a grievance in Europe to-day, that the League of Nations stands for something above mere nationalism, stands for something great in the moral and reconstructive life of Europe.

I have ventured to intervene in the Debate only to raise those two questions. I hope the Bill will very soon become law. I hope that the first Clause will be more fruitful in its results than the parent Act. I hope that the second Clause will be more than merely fruitful. I hope that it will be the beginning of a too-long-delayed reconstruction based upon a totally new conception of our relations with Central Europe, a totally new conception of the League of Nations as a helper in our beneficent purposes in Central Europe. When that is done this Bill, small as it is, will be one of the most beneficent pieces of legislation that this Parliament can enact.

Lieut.-Colonel SPENDER CLAY

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."

The reason for moving this Amendment is my desire that we should obtain further information with regard to the object of the Bill before it becomes law. The Chancellor of the Exchequer, in his opening remarks, did not touch on one single point about which I desire to ask for special information. It is true that we had a long discussion on the Financial Resolution, but the majority of the speeches delivered on that occasion were not of a very instructive or very useful kind. Doubtless that was because of the time in the morning at which they were delivered. We all appreciate that the special circumstances of the case require novel measures, and treatment perhaps of a far-reaching character, in order to remove world-wide depression. But what we ought most specially to geek is that in every proposal which is made by the Government we are guarding against any possibility of waste. By unduly pledging the credit of the country you may injure the unemployed to such an extent as to outweigh any benefit which will accrue from your action. The first point I wish to make is this: If the State is prepared to take risks I do not think the fact that it is taking risks ought to be used as an argument for encouraging the general public to subscribe to an issue of shares in any of the companies which it may be desired to assist by this means. I am well aware that in order to comply with the Companies Acts it is necessary that it should be stated on the prospectus that the Government is financially interested. At the same time we ought to be perfectly certain that the Government in no way guarantee the financial stability of any of these particular companies, in order that we may protect unsuspecting, potential shareholders from investing their money.

Another thing ought to be laid down, I do not think that money ought to be advanced or credit given unless there are some tangible assets which give a fair possibility that the State's money is invested wisely. I wish to ask the right hon. Gentleman in charge of the Bill exactly the position of the State with regard to interest on these various proposals. Do they in fact become a prior charge on all the profits of any particular company? Supposing you have a company which has got £2,000,000 debentures. The interest on £1,000,000 debentures is guaranteed by the State and the other £1,000,000 debentures have been subscribed by the public. Suppose that the company makes a profit only just sufficient to pay the debenture interest on £1,003,000. Will the State pay the interest on the second £1,000,000? If it does not, observe what happens. The public will be subscribing, thinking that it is subscribing to a first debenture, when it will be really subscribing to a second debenture.

There is the question of companies which have got no visible assets. Perhaps the House will pardon me if I refer to a Bill which came before this House during the last Parliament. On the face of it it appeared very attractive, especially as it would give a considerable amount of employment. But in my opinion it was a Measure fraught with great danger to any unsuspecting person who put his money into it. It was the Grampians Electricity Bill. It will be recollected that the State guaranteed £2,000,000 debentures. The point I wish to make is that the company had no assets, no single customer. Power stations were to be erected with the help of the Government in the hope that factories on the banks of the Tay would require current. But the company would be in the position of having its power station erected, but with no customers. It would have to agree to whatever terms the factories proposed, because it had incurred great expenditure without any reasonable possibility of being able to sell its product.

Another point upon which I desire information from the right hon. Gentleman is as to whether any system exists to prevent overlapping of the various schemes. We have Trade Facilities, Export Credits, and the Unemployment Grants. My experience is that these various schemes may be worked in water-tight compartments. There may not be any liaison between one and the other, and in consequence there may be overlapping and waste. I understand a small Cabinet Committee composed of only three members is supposed to co-ordinate these various schemes. These three gentlemen have their own Departments to look after, and I do not think they can go thoroughly into the various proposals put forward. It would be a good plan if the right hon. Gentleman were to invite Members of this House, who are not financially interested in any of these schemes, to assist that small Cabinet Committee in going through the schemes and co-ordinating the work. When the late Government wanted to call in assistance, the chief qualification required appeared to be that the man called in should not be a Member of this House. That is not a great compliment to hon. Members, and if the Government require assistance Members of this House should be invited to give it.

I understand that when these plans are being considered, the percentage of unemployment in any particular locality or industry is taken into consideration, and special preference is given to what are known as the black spots in the unemployment world—places like Woolwich and Barrow which have received huge populations owing to War conditions, but which have no reasonable prospect of feeling the first effects of a revival of trade. I am inclined to think that system is unsound. By considering the percentage of unemployment and giving work specially in localities where unemployment is very bad, you are merely attracting labour to a place where there is no reasonable prospect of a trade revival. It would be far better to give employment in districts which have a good prospect of success in the future. You are more likely by this means to benefit those whom you wish to benefit in the long run. I know that labour is not fluid in the sense that capital is fluid. It cannot move about, largely owing to the cost of transport and also the shortage of houses. However, that is not a subject with which I will venture to deal to-night. I realise that these black spots have got to be dealt with, and that the men suffering in them have got to be assisted, but I do not think the mere fact that there is overwhelming unemployment in a particular district is a reason for preference being given under this Trade Facilities Bill to that district.

With regard to Austria, I think the right hon. Gentleman made a slip in the course of his speech. I understood him to say we had joint responsibility with the other countries named. Surely we are only responsible for the amount of our loan, and not jointly responsible with other countries. I do not wish to speak disrespectfully of any of our Allies, but I must confess to a certain amount of surprise in finding Italy and France able to guarantee a sum of any kind to any country when they are quite unable to balance their own Budgets. In another respect I am glad, because it shows that there is in one direction, at any rate, unanimity among the Allies. I hope this is a good augury for the conversations which I understand are commencing next Saturday and that unanimity may be attained on the other and greater problem of reparation. As to the Sudan, I took the trouble of looking up the previous Act. I find that in the Act of 1919 we only guaranted interest on the loan of £4,900,000. In this Bill we guarantee principal and interest. In that connection, might I respectfully draw the attention, of the right hon. Gentleman to his financial memorandum. The Government printers have not printed the word "principal" in the way in which one would expect to find it in a Government document. Possibly it was printed at the Harrow works I want to know this about the Sudan loan. I presume it will be paid through Lord Allenby to the Sudan Governmeat. What control will the home authorities have over the manner in which that money is expended? The history of this dam has not been a particularly happy one. I understand that now the business is in the hands of a very capable firm of contractors and probably all will now be well, but we certainly require that some control should be exercised over the completion of this work. It may be said that the points I have put forward are not of sufficient importance to justify a Motion for the rejection of the Bill. May I point out that, owing to the virginity of this House and also the loquacity of so many of its Members on the front benches on both sides, it would be almost impossible for an ordinary person like myself to have any other opportunity of expressing an opinion. Therefore, I hope that the right hon. Gentleman who has charge of the Measure will realise that I am not moving this Amendment in any spirit of hostility, but in the hope that we may have some guarantee, in connection with money provided by the State, that the taxpayer will be protected.

Mr. A. HOPKINSON

I beg to second the Amendment.

In seconding what is practically the rejection of the Bill, I must congratulate the hon. and gallant Member who has just sat down, upon his remarkable self-restraint in dealing with this Measure. I am afraid I cannot exercise quite so much self-restraint in dealing with a matter of this sort. The hon. and gallant Gentleman did not really go to the bottom of the question. The real trouble underlying a Measure of this sort is that it brings Departments of Government under the suspicion of the commercial classes of the country. Whether that suspicion be justified or not, it is a most disastrous thing to occur under any democratic form of government. We had in the last Parliament a case to which the hon. and gallant Member has referred, the case of the Grampians electricity scheme—a scheme so wildly impracticable, from a technical point of view, that I ventured to describe it on the Floor of this House, as nothing more or less than a ramp. I was taken to task for that description, and perhaps I was not fully understood in my use of that word. "Ramp," to my mind—I believe this is how the City of London would define it—is any public issue of capital which is not expected ever to return any interest whatsoever to those who take up that issue. I think we may say that in the particular instance to which I refer, the term "ramp" was attached to that Measure with full justification. We had a case where public money in very large amounts was to be spent in laying down a great water-driven generating station, and was to be spent in such a way that the output of that station would be so small that, even if the whole output were contracted for at once by customers—not yet existing—even then the interest and sinking fund on she capital outlay would have been so gigantic that it would be quite impossible for the capital ever to give any reasonable return to those who supplied it.

Surely—if we look at this question from the point of view of economics—the Government in proposing Measures of this sort have never considered whether it is possible to inflate credit in one direction, without restricting it in another. They seem to think—and I am afraid the late Prime Minister was the man who invented this system of economics—that it is perfectly possible when you have pawned your trousers in one pawnshop, to go to another pawnshop and raise money on them again without redeeming them in the first. They think there is such a thing as the "manufacture of credit"—one of those unfortunate cant phrases which have been so disastrous to the taxpayers of this country. They think that it is possible with pen and paper to make credit not already existing, without any further tangible assets to be the basis of that credit. Yet when one comes to consider the matter, if we guarantee issues of capital to the amount of £50,000,000 as this Bill suggests, there is nothing more certain than that we are restricting credit in other directions to that self-same amount. I can quite understand why the Leader of the Labour party gave a sort of modified blessing to this Measure. If any economic rottenness is proposed by a Government in this country, you can always guarantee that the Labour party will approve of it.

After all, this scheme of credits is exactly what the Labour party has always been putting forward as the true basis of Government and of economics in this country. It is simply a device for enabling people to live on capital instead of living on income. It is only that and nothing more. In other words, this Bill might have been drafted after a careful perusal of that remarkable pamphlet called "Labour and the New Social Order." What we who are engaged in industry in this country object to in this Measure may be stated as follows: The mass of the people engaged in industry, I am glad to say, would have nothing to do with proposals for credits of this sort. We, at any rate, have among us at the present time a considerable number of leaders in industry who really wish to make their own way in industry without sponging on the taxpayer by means of devices of this sort. Unfortunately in recent years there has grown up, simultaneously with the growing up of the dole-taker among the working people, a class of dole-takers among the capitalists of this country also. [HON. MEMBERS: "Where?"] In Birmingham mostly, and they have them also in Sheffield. A Bill of this sort and credits of this sort do not assist those who have some sort of regard for the future and the good name of the industries of this country, but they do assist those who have no scruples whatever about making profits at the direct expense of the unfortunate taxpayers.

5.0 P.M

Again, quite apart from the rotten principle upon which this policy is founded, the actual carrying of it out, as may be seen from the list of credits already provided for, has been almost ludicrous in many respects. Who would dream of guaranteeing quarry companies, if they had any regard whatsoever to the interests of the taxpayers—quarry companies, mining companies, brickworks, and similar industrial concerns, which are the most risky at the present time of any industrial undertakings that there are? Note this too, that the awful warnings the Government have had in the past as to what would occur have passed over them without producing the faintest effect. Let us take one example. There is a very large sum of the taxpayers' money at present invested in a company known as the British Cellulose Company, under very similar conditions to those governing these credits that we are giving to various concerns under this Bill. In that case the taxpayers' money was given, and the security was the whole of the present and future assets of the company, and then, at a late hour one night, we convert what is in effect a first mortgage on the whole assets of the company into preference shares. But that was not the end of it, for after a little bit we give back to the company half the value of those preference shares, and then representatives of the Board of Trade tell us, "The price of these shares has gone up; they are standing at a higher rate than they were before," when the amount of the capital concerned has been reduced by about one-half.

I cannot help believing that, if this sort of thing is going to become a regular policy of British Governments, we shall gat that most dangerous state of affairs in a democracy, namely, the distrust of Departments of the Government on the part of those who are engaged in industry and commerce in this country. Therefore, even at this late hour, even on the Second Reading of this Bill, I ask the Government really to consider whether it is not possible to give some sort of safeguard to the taxpayer in respect of these credits which we are guaranteeing. Past experience has shown the pernicious nature of this kind of legislation. The British Cellulose Company is only one example out of many, and at the present time, when we who are conducting legitimate industry in this country are finding it desperately hard to make ends meet and to keep our men employed at good rates of wages, it is a little hard that our hard-earned money should be taken from us and devoted to ramps such as some of those to which I have referred.

Captain BERKELEY

I think it was generally agreed the other night that it was absolutely essential for us to reestablish or revive our European trade in order to make some contributions for meeting the problem of unemployment, and I take it that this Bill is designed partly to carry that into effect. From the point of view of my own constituency—and I think my hon. Friend the Member for Rushcliffe (Mr. Betterton) will also agree that it is important to him and his constituency—from the point of view of those who are concerned in the lace trade of Nottingham, it seems to me that both Clause 1 and Clause 2 of this Bill are likely to be extremely valuable. One of the great difficulties in that trade has been to carry on in the South American market owing to the uncertain state of things that has prevailed there, and I take it that Clause 1 of the Bill will provide means, asked for by the lace trade of Nottingham, which, if wisely applied, will enable them to meet those difficulties. Clause 2 seems to me to be equally important from their point of view, because one of their principal markets used to be Vienna, and the rehabilitation of Austria is, therefore, a very urgent concern of theirs.

I propose to deal briefly with the Austrian part of the Bill, because that is the part about which I personally know most—not that I know very much. If I may say so without impertinence, I was very gratified to hear what the Leader of the Opposition, the hon. Member for Aberavon (Mr. Ramsay MacDonald) said on the subject of the League of Nations loan to Austria. In fact, I think I may say that I agreed with everything he said, except when he seemed to me to be giving some authority to the allegation that the scheme was one which would bring about some kind of economic bondage of Austria. I do not think that that is well founded, and I venture to think that if the hon. Gentleman will refer to the very Protocol, part of which he read, he will see that so long as the functions of the Commission of Control are carried out in a proper spirit of responsibility to the Council of the League—and we must assume that it will be so—there will be no danger of any such economic bondage. The part of the Protocol to which I refer is this. It consists of a solemn declaration on the part of these various Governments—ours, the French, the Italians, and the Republic of Czecho-Slovakia—not only that they will respect the political independence, the territorial integrity, and the sovereignty of Austria, to which the hon. Gentleman referred, but, further, that they will not seek to obtain any special or exclusive economic or financial advantage, calculated directly or indirectly to compromise that independence. Surely, if the principles involved in that declaration are carried out, as we are all in this House entitled to assume they will be carried out by our own Government, it does not seem to me that there is any grave danger of Austria falling under the financial control of international financiers.

The hon. Gentleman raised another point in this connection. He talked about the question of sovereignty, and he seemed to be afraid that the powers that were being given to this Commission of Control were such that they might be tempted to exercise them in a manner which would prejudice the Austrian sovereignty. As far as my information goes, the provisional League Delegation—which has been in Austria, of course, for some considerable time, and, as I think the Chancellor of the Exchequer will agree, was very largely responsible for arranging the carrying out of the scheme, the Delegation that had to examine and decide upon the practicability of the proposals put forward by the Austrian Government—has always considered that its duty was limited to seeing that the reforms to be made in the Austrian State finances gave the necessary assurance of Budget equilibrium being obtained by 1924, which, as hon. Members who have studied the question will remember, is one of the terms under which it will be possible to make these loans at all, but that they never thought it necessary for them to interfere in the details of the working out of those schemes. They have not put forward programmes of their own; they have merely considered it their duty to examine and advise upon the draft programmes put forward by the Austrian Government itself.

Something was said in the Debate of a couple of nights ago about the stringency of the terms under which this loan was going to be made to Austria. I should like just to refer to the four terms—there are only four—under which the loans are to be made, and leave it to hon. Members in all parts of the House to decide for themselves whether those terms really are so stringent. In the first place, it was agreed in a perfectly amicable way that the Austrian Government, should frame, in collaboration with the Commissioner-General, a programme of reform calculated to secure Budget equilibrium by the end of 1924. Surely, no serious-minded person, no one who is prepared to consider this question divorced from partisan views, and in the light of business necessities, will contest the absolute necessity of a Budget equilibrium being assured before a great loan of all these millions can be made by one State to another. In the second place, it was suggested that the Austrian Parliament should enact legislation to give to any Government which might happen to be in authority full powers, within the limits of the programme, to take all measures to secure this Budget equilibrium during the period of two years. That, again, seems to me to be a very necessary and a very reasonable provision. It is merely designed to ensure that there will be some continuity of policy in regard to this loan, that it shall not happen that on the morrow, let us say, of the granting of the loan a Government shall go out of power and another Government shall come in and reverse the whole proceedings, bringing them to nothing. I am sure everyone will recognise that that is not at all a stringent provision.

The third provision was that there should be a Bank of Issue established, and that the issue of uncovered notes by the Austrian Government should cease-That was the only provision with regard to the cessation of the printing of paper money that was made. The Leader of the Opposition referred in passing to the prohibition of the issue of money, but the only prohibition of the issue of money that was implied was the prohibition of the issue of uncovered notes, which issue would only have the effect of still further depreciating the exchange and undoing all the good which the loan proposes to do. That does not seem to me to be a very stringent provision. The final provision was that Treasury Bills should be issued by the Austrian Government, secured partly in connection with the previous loan of the French, Italian and Czecho-Slovakian Governments, and partly-secured on the Tobacco Monopoly and the Customs, and the purpose of these Bills was to cover the deficit on the Budget to the end of the year.

So much for the question of the stringency of the terms under which the loan was made. I referred to that at such length because the suggestion of stringency was made by an hon. Member of the Labour party, and I only want to convince him that the stringency was not nearly so great as he, I thought, a few nights ago was inclined to suppose. What is the position to-day? The posi- tion is, as the Leader of the Opposition pointed out, that after considerable opposition the necessary two-thirds majority in the Austrian Parliament has been obtained, the Protocols have been ratified, the Bank of Issue is to open in December, the note issue has been stopped, and also, I understand, the inflation and the necessary plain pouvoirs have been enacted in favour of any Government which should succeed the present Government in the next two years; so that everything now is in as favourable a condition for the granting of these loans as we could reasonably expect, taking into consideration the very serious financial position in which Austria has been. I do not suppose it interests the House to know the manner in which these pleins pouvoirs have been secured; but with regard to the Bank of Issue, the capital is to be, so far as I understand, the sum of 30,000,000 gold crowns, 25,000,000 of which are to be kept on deposit in the principal banking capitals of Europe and America. There will be an administrative council, and there is good cover in the way of gold and stable foreign securities. I think that the best indication of the way in which this general scheme of financial rehabilitation of Austria is working is to be found in three facts. The first of these is that, since August of this year, the crown, I think I am right in saying, has been stable. In the second place, I think I am also right in saying that there has been a reduction of prices, especially in October and November; and, in the third place, the deposits in the banks are increasing. I think it is true to say also that the deposits in the savings banks are increasing. Those things being so, I hope that the House will agree that the position in Austria to-day is far more favourable than it has been at any time, certainly within the last year, and, I think, for an even longer period, and that the House will support this loan to Austria most heartily.

Mr. WISE

I am not antagonistic to this Bill in any way, but there are many points I should like to put to the Chancellor of the Exchequer. The most salient point is: Has he considered carefully Austria as she stands to-day as an economic problem? In the old days of Austria-Hungary you had the second biggest country in Europe. It had a population of about 50,000,000, and now, the new Austria, has come down to a population of 6,000,000 people, of which 2,000,000 live in Vienna. I cannot help thinking that in its present position it is not economically sound. The hon. and gallant Member for Central Nottingham (Captain Berkeley) seemed to think that Austria is in a favourable position, and has not depreciated in the last 12 months.

Captain BERKELEY

What I said was that Austria was now in a better position than she had been at any time in the last year, and that since August—I think it was the 26th or so—the crown had remained stable.

Mr. WISE

I am afraid I cannot agree with the hon. and gallant Member in any way. I do not know whether he ha" watched the inflation in Austria. The crown has not been stable. In pre-War days the loaf was half a crown, and to-day it is 6,000 crowns. The paper money alone is over 3,000 milliards of crowns, and last year it was 90 milliards of crowns. The Vienna exchange to-day is about 330,000 crowns to the £. A year ago, it was 11,500. That does not look as if it is in a favourable position, and, since the Armistice, this country has advanced to Austria £12,200,000, besides which, in the last 12 months, France has advanced to Austria 55,000,000 francs, Italy 70,000,000 lire and Czecho-Slovakia 500,000,000 Czecho crowns. My point is, that although we are suggesting, as European Powers, to advance 650,000,000 gold crowns, it is not sufficient, I believe, to do what we expect it to do, and it is no good going into a proposition like this unless you look at it in a broad and courageous way. Let me refer to the Protocol. A great deal of the money that has been lost in Austria has been upon State industries, and I invite the Labour party to read page 27 of the Protocol to see the amount that has been lost. Taking railways alone, the sum of 124,000,000 gold crowns was lost on their railways, while our railways are paying dividends. Besides that, you have the enormous number of State officials, a large number of whom, I understand, are going to be done away with. Will that help the economic situation in Austria? At the present time, Austria is advancing 3,000,000 paper crowns every week on unemployment.

Mr. SHORT

Can the hon. Gentleman say whether the railways in this country receive any subsidy from the State?

Mr. WISE

There is no subsidy. They are paying dividends anyhow. They are not losing money. I was referring to the unemployment in Austria. The total amount which is paid at the present time is 3,000,000 crowns a week, and that will expand. The State officials who are thrown on the markets will all, I suppose, come under the unemployment benefits. The Loan of 650,000,000 gold crowns is not to be an advance in the shape of feeding the children of Austria, or anything of that sort, but for balancing the Budget. An estimate has been made—so far as I know all Austrian Estimates have been wrong up to now—but an estimate has been made two years in advance to balance the Budget of Austria, and it is estimated that at the end of two years the Budget will be balanced. The Chancellor of the Exchequer referred to stabilisation. The Loan will aid stabilisation, but remember the danger of this immense inflation to which I have referred, and one of the most dangerous things is deflation. When deflation sets in, times will be more difficult. There will be more unemployment, and there will be more chaos in. the money market in Vienna.

What is the security for this loan? The Bill says it is secured by a charge. Is it a first charge? I understand by the Protocol that it is a first charge on the tobacco, but a second charge on the Customs. I do think we should have a first charge, and be certain, although we are taking great risks, that this charge is likely to bring in more or less the interest required on this loan. The "Times" issued a little pamphlet on the Austrian Bond Issue two days ago, and it referred to the fact which my hon. and gallant Friend the Member for Nottingham mentioned about the new bank. Do these 650,000,000 gold crowns go in subscribing to this bank? I notice that it states the interest is 9 per cent. If we are guaranteeing these bonds, are we going to pay 9 per cent.? It would be taken up readily even in this country. In this pamphlet it refers to 9 per cent., and I do think we should know something as to the interest which is going to be charged if we, as a country, are guaranteeing the loan.

I should also like to ask the Chancellor of the Exchequer whether Austria is helping herself? Has she had an internal loan? The Member for Central Nottingham referred to the deposits. Of course, the deposits are up. They are up by inflation. In Germany you have the deposits bigger than ever they were because of inflation. That is just an economic problem. I should also like to ask the Chancellor of the Exchequer who is on this Committee of Control? We had a very able adviser in Vienna, Sir William Goode, I should like to know if he is attached to the Committee. We have to realise that this is a big proposition. We have either got to do it properly or not at all. We have got to realise that every country in Europe except Czecho-Slovakia and Finland are importing more than they are exporting. What will be the position in a year's time if that goes on? I should like to refer to the American Ambassador's speech made, I think, on Monday. He says: The whole world is confronted with absolute peril, and unless this economic problem is put in a fair way towards solution at the meeting of the Allied Premiers, I do not know what is going to save the Continent of Europe from its wreckage. These are grave words, and we have to remember them before we advance our taxpayers' money, we have got to see that we are not throwing these golden crowns into a great sunken well.

My solution is divided into four points. No. 1 is that we should be satisfied that at the end of two years the Budget will be balanced. I do not think it will. I cannot see that with this inflation there is any chance of it being balanced. Then in respect of No. 2 there are the monopolies such as the tobacco monopoly, which we and other countries are taking as security. Why should they not be handed over to private firms? Why not deal with them as was the tobacco régie in Turkey. We would make far more out of them as private enterprises than we as a State or the Austrians as a State can possibly do.

Mr. KIRKWOOD

And still leave us more unemployed.

Mr. WISE

My third point is, Austria should endeavour to help herself by raising an internal loan. Some of the deposits might be put into the internal loan. It would help it, and they would possibly get a better rate of interest. My last point is, is there no chance of the United States of America helping us? I do not like the idea of going into this big proposition unless we have the United States helping us in some way. They came into the War, and I myself feel that once they came into the War they ought to come in and help us to save the wreckage of Europe. I think it is only by endeavouring to carry out the four points I have raised that we can get back confidence to Austria, and it is confidence which is required so that we may be able to resume the trade we had in 1914.

Mr. RHYS DAVIES

The few observations I am going to make are connected with the two main proposals of the. Bill now before us. We are considering at the moment increasing £25,000,000 to £50,000,000 under the Trade Facilities scheme. I wonder, Mr. Deputy-Speaker, how near or far the connection is between that £50,000,000 and finding work for our people, which, apparently, is the intention of the Government. There is nothing, so far as I can see, that will provide the unemployed of this country with work for some time to come in connection with the scheme now under discussion. The other day a good deal was said about finding employment for our people. I want to repeat, so far as I can see, from practically all the schemes outlined by the Government, that hardly any of our own unemployed will be found work under any of the schemes now outlined during the coming winter months.

I want to make a complaint relative to the Memorandum we, as Members of the House, have received, showing the list of firms who are to secure credits under this scheme. For instance, the location of the firms is not given. I should like to know their addresses; and some of us would be very interested to receive a complete list of the personnel of the directorate of each company. Those details would be very interesting, particularly to those sitting on this side of the House. I want to call the attention of the House to one of the companies to whom credits are to be given in this connection, namely, the Powell Duffryn Steam Coal Company. This company, apparently, is to be backed up by the State with a sum of £120,000 in connection with the erection of cottages. I know very little, in fact, I know nothing of the other firms included in the list issued for our use; but no more impudent claim was ever made by any firm or company in this country upon the State than that this firm should come to seek assistance from the State to erect cottages, apparently, for their own workpeople. I want to give the House one or two details to prove that statement.

This firm figured very largely when evidence was given before the Coal Mines Commission in 1919. I want to read a short statement showing the financial position of the firm, and I trust that no Member of this House, to whatever party he belongs, will be unmoved on hearing it. The Powell Duffryn Company (so it appears from the statement) had an ordinary share capital in 1919 of £541,000, with £115,000 preference shares. It disclosed profits, after deducting depreciation, Income Tax, Excess Profits Duty, and coal mines excess payments for the 15 years ending 1919 of 5¼ million pounds. These 5¼ millions were the profits made in 15 years on a share capital of a little over half a million, out of which over £3,000,000 were paid out in cash dividends, in addition to which £1,100,000 bonus shares were distributed as free bonus.

Mr. LYLE-SAMUEL

Is that 5¼ million pounds got by adding together the entire dividends and profits for the 15 years? If so, why calculate in that manner and not on a percentage?

Mr. DAVIES

Yes, that is so. I want to show how colliery companies take out of the mines so much profits and then come to this House to seek the assistance of the State. I think it is very unfair that shareholders who do not live in the district at all, who never go near the coalfields, who live in the seaside resorts of this country and in other nice places, who live in comfort and luxury, should take in 15 years 5¼ million pounds out of one single company with probably six to ten coal pits, and then come to the Government seeking assistance to build cottages for their workpeople! There never was a bigger scandal, a more audacious claim, or a more impudent request ever made by any group of people in this country. I hope that the House will condemn them. Let me point out exactly what it means, and I hope my hon. Friend below the Gangway (Mr. Lyle-Samuel) will follow this point showing how the profits work out. A chartered accountant stated in regard to this company—

Mr. DEPUTY-SPEAKER (Mr. James Hope)

The hon. Member is perfectly in order in producing arguments why this company should not participate in the scheme, and T think he will be in order in reviewing its operations generally, but not in the quotations which he seems about to make.

Mr. DAVIES

I think I have said sufficient to convince hon. Members at any rate that companies of this kind should not secure financial support from the State. They should rather use the profits they have received to erect cottages for their workpeople. I think something else ought to be said. The last Government had, and I presume the present Government will have, a housing policy. I fail to understand why the Government should admit any claim for a credit of £120,000 for employers to erect cottages for their workpeople. I placed a question upon the Order Paper to-day asking the Minister of Health if he could do something to prevent the tyranny of Lever Brothers in connection with the cottage property they hold. Employers who erect cottages for their workpeople as tenants very often take advantage of the workpeople to dismiss them as tenants, because they sever their connection with them as employés.

I have yet to learn that companies ought to be financed at all in this way. I find that in 1895 there were 16,928 companies registered in this country with a paid-up capital of £962,000; and in spite of the greatest war the world has ever seen, in spite of the destruction of capital all over the world, yet in 1918 the number of registered companies had increased to 59,855 with a paid-up capital at that date of £2,532,000,000. In spite of all that, we get a wealthy colliery company like the one I have mentioned, which has made huge profits, which is now, I understand, making decent profits, coming to the Government and asking for £120,000 to help them to erect cottages for their workpeople. I protest against that sort of thing happening in connection with the nation's finances. I want to ask why does the Government grant facilities so easily to erect cottages to private capitalists when they are so very, very keen in preventing local authorities building houses?

I want to say, too, that so far as I understand the finances set forth in the documents which have been placed before us to-day, it would have been more honourable and better for the community, it would have been cleaner work altogether, to grant—if you like—£20,000,000, or the whole £25,000,000 we are to-day setting aside, to the local authorities to build cottages for the people, to lay out road schemes, to build schools, and to provide work in that way for the unemployed. It is absolutely dishonourable for the Government to set aside State moneys for private capitalist firms who have made huge profits out of the community and still are making profits.

I pass for a moment or two to the loan to Austria. I do not oppose this loan. I think it is the best feature in the Bill now before us. On grounds of humanity I support it, but I would like to ask one or two questions of the Chancellor of Exchequer. I fail to understand in the printed documents submitted, the difference in the wording on two pages of the White Paper. We are told in one part of the White Paper that a Sub-Committee of the Council of the Allied Powers is asked to nominate without delay the High Commissioner, and then we are informed that the Austrian Government has decided that it will accept the nomination of the League of Nations. I should like the Chancellor to explain to the House how it comes about that in one part of the document the Council of the Allied Powers decides upon a High Commissioner, whereas Austria itself apparently is only willing to accept a nomination made by the League of Nations. The wording is not very clear, and I should like an explanation on the point.

The House, I think, will understand the significant fact that we are, practically speaking, in lending this sum of money to Austria, determining at the same time the State Budget for the Austrian people. That is what we are doing. In fact we are placing Austria in pawn. Let us see exactly what we are doing, and, if it be correct, as I believe it is, that the Allied Powers, supported by our own Government, are determining the Budget of Austria for several years to come, it is a very strange coincidence that the Budget of Austria compares in every detail with our own. For instance, this is what the landlords are going to pay in Austria under this scheme. Forests and domains, 1,000,000 gold crowns; tobacco, 40,000,000 gold crowns. That, is a significant difference on the receipt side. Take the expenditure side and see how that again corresponds in its character with our own expenditure. The public debt and interest on war loans in Austria will receive 52,000,000 gold crowns, whilst pensions, health services and education services will receive, not 52,000,000, but 23,000,000 gold crowns. We believe on these benches that the social services of a country ought to have first call, and that the people who have lent money for wars ought to have their quota reduced as soon as possible. Nevertheless, I wish to protest against placing Austria in the position that her social services will be less expensive and, therefore, less efficient, than services in connection with the public debt and the army.

I am greatly disappointed with the Government's attitude towards unemployment, because, after all, this Bill is brought forward ostensibly to increase trade, to facilitate commerce, and to provide work for our people. It is an astounding fact that our people are poorer to-day than ever they were, and, unfortunately, the rich of the country are richer than they ever were before. [HON. MEMBERS: "No!"] Let me put it in this way. A question was asked in this House not long ago as to the number of persons in this country who were in receipt of £5,000 and over per annum in 1914, and how many were in that category after the War. May I point out that, in spite of the fact that hundreds of thousands of our people gave their lives and their blood in that war, the number of persons receiving £5,000 a year and over at the end of the War was three times the number it was in 1914.

This Bill may possibly do something to alleviate unemployment; and so far as we on these benches are concerned, we say that these advances to Austria, trade facilities, and housing and similar schemes will be of no avail unless they really assist the problem of unemployment. We still hold, on these benches, that when a man is unable to find work and is willing to work, it is the duty of the State to maintain him in decency.

Sir PHILIP PILDITCH

I do not in any way desire to underrate the part of the Bill as to Austria which has been referred to by the hon. Member, but for a few minutes I would ask the Chancellor of the Exchequer to look at another point which arises out of the discussion. I have listened with interest to what the last speaker has said about the inefficiency of palliatives; the question is what can be done to help unemployment effectively under this Bill. I suppose we ought to keep in mind that this Measure is intended as part of the Government scheme for the alleviation of the unemployment problem. From that point of view, I would ask the House to allow me to make a suggestion which is a continuation of the suggestions made by the Seconder of the Amendment. I felt a little in an awkward position after hearing the speeches of the Mover and Seconder of this Amendment, because they appeared to be a little, ill-matched. The Seconder appeared to have a root-and-branch objection to the whole Bill, which I should have imagined would have found a much better expression in connection with the Acts of 1920 and 1921, when the Bill was originally brought forward. So far as my economic studies have gone, the general principle which the Seconder has put forward with regard to the granting of one1 credit preventing another it is not the result which I have arrived at. On the other hand the speech of the Mover of the Amendment was directed towards the more practical issue as to how the Act should be administered, whether it had been administered effectively in the past, and how it could be improved. I gathered, however, that he was decidedly in favour of the Bill as it stands, and that he did not desire the rejection of the Bill. I also gathered that what he wanted, which is what I and other hon. Members desire, is to be assured upon various points connected with the administration.

One thing desired by the hon. Member was that there should be no undue encouragement to private investors arising out of the Government guarantee, and that there should be, as a general rule, tangible assets with respect to credits and any advances we make. That is a very sound thing, although we must remember that if we are too meticulous in requiring assets of a certain character, and only touch in regard to these credit operations gilt-edged securities, we shall not be fulfilling in its entirety the object for which the Bill was brought in. Those are the suggestions made with regard to the administrative principle of the Trade Facilities part of the Bill which has, I am glad to say, been put into operation in my own constituency, but I want to ask the Chancellor of the Exchequer if he can say something with regard to the operation and the administration of the last part of the Bill which has not yet been referred to, and that is Overseas Credits. In connection with the Trade Facilities part of the Bill, we have received from time to time a good deal of information. Statements have been made as to how many credits have been offered and taken up, and how far those guarantees have been used. From those Papers we gather that out of the £25,000,000 which the Government was authorised to use in this way, £22,500,000 has been used.

I want to ask if the Chancellor of the Exchequer can give us any similar information with regard to the working of the Overseas Trade credits, the part of the Bill which is directed immediately to fostering our overseas trade. As far as I know up to the present, no information at all has been supplied in this connection. I do not want to go into this matter at length, but perhaps I may use as an illustration the instance brought closely under my notice in connection with a visit some of us paid to South America during the last recess, a subject which has already been referred to. I should like to point out that our trade with those great countries of South America which have in the past been such excellent markets for British trade, and for the employment of British working men, was very seriously reduced during the War. I should like to ask the Chancellor of the Exchequer whether the credit system set up by this Bill has been used and to what extent to correct this in those great markets.

During the War we last, quite naturally, almost the whole of the trade we did in those markets, and immediately after the War efforts were made to regain that trade. Unfortunately some of our competitors were better placed and they got there before us, with the result that our trade in South America has not replaced itself into anything like the position it was in before the War. Some of the causes of that have no connection with the operation of this Bill and I only refer to them in passing. The bad rate of exchange and the preferences which the Brazilian Government has given to some of our competitors have had an exceedingly bad effect upon us. But what I want to point out is that our principal competitor in those markets has had it more within her power since the War to finance trading operations there, and the consequence is that whilst our trade has only recovered to the extent of two-thirds, the trade of the nation in question, which has been financing trading operations freely, has doubled compared with what it was before the War. Finance is more than ever essential to Trade.

6.0 P.M.

I hope that this Bill will be passed. I should like to draw the attention of the supporters of this Amendment to the fact that if it is not carried, not only will the subjects dealt with in the first part be prevented from coming into operation, but also the overseas credit part of the Measure, against which there has not been a single criticism. Whilst I think it is hardly necessary to urge the House to reject the Amendment and pass the Bill, I think it may be of some use if I ask the Chancellor of the Exchequer to give us the information I have asked for. These old markets of ours are capable of almost indefinite expansion, because, to speak of two of them only, they concern something like 40 millions of people, very largely with European needs, whose scale of civilisation is rising very rapidly and deserve our making the greatest efforts to retain. It is because of that fact that I have interposed in the Debate to say a word in support of this Bill, particularly the overseas credit part. I have asked these questions in order that public attention and the attention of the House may be better directed to these great markets of ours, which are so important considered in connection with the question of unemployment, a subject which fills all our minds. I hope the right hon. Gentleman will be able to give us some information on these points. The information I received to-day was that we had already, through the operation of the overseas credits part of the Act, been able to give credits to the extent of nearly £10,000,000 to the Argentine, Brazil, Chile and Ecuador. I do not say that the whole of that sum is being made practical use of at present. Operations have only just begun. Moat of these credits are in connection with great engineering works, and I believe that the credits given under this part of the Bill to those British traders who are the agents of British industry and the British working man overseas are going to help towards solving the problem of unemployment even during the coming winter. What I am anxious about is that, having regard to the general feeling which has become obvious in this House during the Debate, that this question of unemployment is not a temporary one, but is more or less permanent, the Government should give us the information I have asked for, and take advantage of every proper opportunity to maintain operations under this portion of the Act, so that our markets in different parts of the world may benefit, and at the same time unemployment be relieved.

Mr. HERBERT FISHER

We have listened to a series of very interesting speeches on this Bill. Some of them, including the his interesting one, have been framed in terms of approval; others have been frankly hostile, while others have been inspired by a spirit of friendly and temperate criticism. But I have listened in vain for an adequate expression of the importance of the League of Nations' settlement of the Austrian question, and of the great and distinguished part which was taken in connection with that settlement by our representative on the League—Lord Balfour. We all profess to desire the reconstruction of Europe. Many vain and fantastic schemes have been put forward from time to time by well-meaning and eminent persons for the attainment of that end, but here we have a well-considered scheme framed by practical statesmen under circumstances of great difficulty, which promises to achieve what all other efforts have failed to achieve—the reconstruction and the elevation of a country far sunk in financial trouble and perplexity. I listened to the eloquent speech by the Member for Aberavon (Mr. Ramsay Mac- Donald) with great interest. The hon. Gentleman seemed to show indications of a feeling that the financial settlement of Austria was a matter of great European importance and interest. He said, and others have said it before him, that the British Government were now taking steps to undo the evil which has been done by the Treaties. The hon. Gentleman took the view, and it is a common enough view, that it was a great mistake to dis-sever the Austrian Empire. I think most historical students would have desired, at any rate, to see the economic unity of the old Austrian State preserved. Most historical and economic students would have desired to see some kind of federal arrangement for the old Austro-Hun-garian State on lines such as were devised by Smerling in 1860, which gave adequate weight to the Slavonic element as against the German and Magyar elements. The fact remains that the passionate spirit of nationalism among the T[...]hecks, the Slavas and the Southern Slavs, was so strong that statesmen, even if they had desired to do what was philosophically, economically and historically sound, would have been quite incapable of effecting it.

We have to face the facts as they are. We are now confronted with a small Austrian Republic about double the population of Switzerland and containing potentialities of wealth more than double those of Switerland. Austria is the great banking centre in that part of Europe. It is a great railway centre. It has rich resources in its water power. It has mineral resources, and it has, outside Vienna, an industrious and capable population. I spoke to many Austrians and Swiss when I was at Geneva on the question of the future of Austria. The Swiss observers have a very sound judgment on the economic potentialities of their neighbours, and they take a sanguine view of the economic possibilities of the Austrian Republic, even with its present contracted frontier. The position of Austria would be entirely hopeless, however, without the assistance of some such foreign loan as is provided for in the Bill before the House. The hon. Member for Ilford (Mr. Wise) asked why Austria could not raise an internal loan. That, I am sure, is quite impossible, but at the same time Austria has her Customs and her tobacco, and her revenue from those sources, which has been calculated at £4,000,000, should be sufficient for the service of the debt. Then there are industrial resources in Austria which can be readily developed as soon as the currency is stabilised. The problem, therefore, before the League of Nations was, in the first instance, to get the interested Powers to express a willingness to guarantee a loan sufficient to enable the Austrian Government to balance its Budget. That, however, was not enough, for, as the hon. Member for Ilford said in the course of his interesting speech, we have already sunk a good deal of money in Austria without getting any return, and that, no doubt, is a highly discouraging circumstance.

Let it be observed, however, that the money contributed to Austria hitherto has been furnished for the purpose of nourishing her starving population, and has not had any direct reference to the reconstruction of the economic power of the Republic. Further, we have to remember that the Austrian Government has, by reason of its weakness, been driven to- a number of uneconomic expedients. Austria has a large body of civil servants to support, because, at the end of the War, the civil servants from every part of the Empire flocked into Vienna and called upon the Government to employ them. Then again the army in Austria, being recruited from the lowest elements of the Viennese population, is reputed to be unreliable. The Government is afraid of street riots and is constantly being compelled to take steps which its sober judgment knows to be thoroughly disastrous. One has further to realise that in Austria you have a population, ranging from the modern to the mediaeval, with a sharpness of contrast almost unparalleled. You have a peasantry which is perhaps the most conservative in the world. On the other hand you have in the towns and in the villages an artisan population filled with all the new ideas upon political and economic reconstruction. The result is that unless you have a Coalition Government in Austria, representing on the one hand the conservative peasantry and on the other hand the artisans, it is difficult to secure the conduct of business-on a wise and economic footing. In order, therefore, to secure the restoration of Austria, it was absolutely necessary to create some form of Coalition Government. I had many conversations with the Austrian Foreign Minister, who said in effect: "We cannot do the sensible thing even if we want to, and what is required is someone in Vienna who will tell us that if we do not behave sensibly we shall not get any money." That argument, he suggested, would appeal to the Austrians and enable the Government to do their duty.

Of course, it was very difficult, first, to arrange for a loan and, secondly, to arrange for a form of financial control which would be acceptable, not only to Austria, but also to the various Powers who imagine that they have some kind of political or economic claim on Austria. It was a very delicate task. I know that Lord Balfour has received well merited praise from many quarters of the civilised world for the splendid work which he did at the Washington Conference. Having seen his work at Geneva very closely and knowing the difficulties with which he was confronted, I think that he had here a task of even greater perplexity. I venture to say that anyone with powers less conspicuous than Lord Balfour's could not have brought the matter to so successful an issue. When you consider the jealousies, when you consider the aversion even to guaranteeing a shillingsworth of loan to a country with a recent financial record like that of Austria, when you consider the difficulties of establishing and commending to the Austrian people a reasonable plan of guarantee, you can obtain some measure of the great difficulty of the task which confronted the British delegate Lord Balfour was the Chairman of the Committee of the Council which carried through the whole business. Without his driving power the matter would never have been carried out, and I have risen in order that I might put before the House the claim which Lord Balfour has in this connection, not only to the recognition and gratitude of his, own country, but to the recognition and gratitude of all good Europeans, and, indeed, of all good citizens all over the world, who here see what I believe to be unique in the annals of mankind—a body of nations combining together after a great war to relieve and reconstitute one of the nations they have conquered.

Sir FREDERICK BANBURY

The right hon. Gentleman who has just sat down is in favour of advancing certain moneys to Austria, and his reasons are that Austria has been engaged in uneconomic enterprises during the last two or three years, that we have already lent considerable sums of money to Austria, and that Austria, as I understand, has had or is about to have a Coalition Government. All of these reasons seem to me to be very good reasons why we should not lend any more money to Austria. What is the position of the taxpayer at the present moment—I mean the taxpayer in England, from whose pocket this money will have to come which is to be advanced to Austria? The position of the taxpayer in this country is by no manner of means good, and, if the loan to Austria has to be advocated on business principles, I do not think the right hon. Gentleman has shown any very good grounds for making such a loan. In considering the question whether we are to reconstitute nations whom we have conquered, ought we not to ask ourselves whether we can afford to do these things? After all, what has put us in this position? We have been put in this position because Germany and Austria declared war upon us, or, rather, took action which compelled us to go to war. [Interruption.] Does any hon. Member who has studied even the history of the last six or seven years doubt that? If it had not been for the action of Germany, and the support given to Germany by Austria, we should not have been in the position in which we are to-day. We should probably have been at peace with all the world, we should not have had a debt of £7,000,000,000, and many of us who have lost their relatives would not be in that position now.

In these circumstances, is it very wise to be so extremely charitable, especially if we are going to lose the money? I would much prefer to let Austria suffer for her own acts, and not deplete our impoverished resources any further by advancing this money. An hon. Member, I think for a Welsh constituency, spoke just now from the Labour Benches. I do not see him in the House at the moment, and here I would venture, very humbly, to say that the modern practice of an hon. Member getting up and making a speech and then immediately leaving the House, is not what used to be done in earlier years. I think that, if an hon. Member makes a speech, he ought to stay, if only for a short time, to listen to the criticisms that may be made upon it. The hon. Member to whom I am referring was, apparently, very angry because the Government had lent money to the Powell Duffryn Company, and his reason for being angry was that the company was a prosperous one. But that is the very reason why you should lend them money. You do not want to lend money to people who are going bankrupt, but rather to lend it on good security to someone who will be in a position to repay it. Apparently the hon. Member is angry with the Government for having exercised a little wise discretion, which I hope they will continue to do. Apparently he would rather they lent our money—because it is our money, it is the taxpayers' money—to an impecunious firm who, when the time came, would be unable to repay it. That is the first statement of the hon. Member with which I venture to disagree. He next read out some figures with regard to the incidence of the payment which was to be made by Austria in respect of interest on this loan; and, as I understood it—I am not quite sure that I recollect the exact figures—he said that the amount paid in interest would be £52,000,000, whereas the amount paid for social services would be only £25,000,000. He said that, if he himself were carrying out this transaction, the amount spent on social services would come first, and the interest on the debt last. Who on earth would lend money on those terms? I am certain that the Labour party would not lend their own money on those terms.

I should now like to say a word or two with regard to the question whether or not it is advisable to increase the Trade Facilities loan from £25,000,000 to £50,000,000. I agree with my hon. Friend the Member for Mossley (Mr. A. Hopkinson), whom also I do not see in the House. He said that there were two reasons against the advisability of this increase. His first reason is that it creates communications between the Government Department and business people. That is a bad thing. Human nature being what it is, it is not a good thing that the Government should have it in their power to pick out A or B and say: "I will lend to you, B, money to carry on your business; but I will not lend it to A." The House will, of course, understand that I do not say for a moment that anything wrong has occurred or will occur with the present Government, but this sort of thing might occur. It has occurred in other countries, and, if this method of the Government subsidising private industry is continued, then I am very much afraid that something of the sort might occur. Again, are we quite certain that the Government, in choosing people to whom they are going to lend the money, will choose people who are financially sound? My experience in business is that if you are financially sound, and if it is good business to lend you money, you can go to any of the banks and get the money. If it is good business to lend the money, the person who wants to borrow it can generally get it. If it is not good business for a bank to lend the money, it is not good business for the taxpayer to lend it. I was very much against this proposal in the first instance, and I am certainly not in favour of increasing the amount.

We are told that this is done in order to relieve unemployment. It was stated yesterday by an hon. Member that unemployment is likely to be with us for some time. I do not venture any opinion on that, but I hope it is not the case. I hope that unemployment will cease quickly. There does, however, seem to be a general opinion among people who should know, that this unemployment is not going to cease, and, if that is so, are we doing any good by doing this sort of thing? Are we not merely opening the door to another loan of £25,000,000 or £50,000,000, and, if so, where is it going to stop? If we make this increase from £25,000,000 to £50,000,000 now, is it going to be the last? If it is really going to do away with unemployment, I should not be against it, but if it is merely to be a palliative, which may lead to the evils which I have mentioned, and will not make a permanent end of unemployment, I think the Government would be wise to reconsider their policy.

Lord STANLEY

It is with very great misgivings that I rise in this Debate to take my part for the first time in the proceedings of the House. I only do so in the hope that the House will extend to me the tolerance and kindness that it usually does show to Members making their maiden efforts. Clause 3 of this Bill raises a matter which is of the very greatest interest and importance to all Members, and especially to all Lancashire Members, who are interested in the cotton industry, and who wish to do what they can to ensure a regular supply of raw material, so that the mills of Lancashire shall never be stopped for want of it. The House is probably aware that in former years America has been able to supply us with as much raw cotton as we have been able to use; but, during the last year or two, this supply has decreased very rapidly. In the first place, America is using more and more of her own raw material for her own purposes; and, secondly, and perhaps to an even greater extent, the American crops have been attacked by a most virulent pest, for which no remedy has up to the present been found. Whatever the causes may be, the shortage is very serious, and as soon as trade gets properly settled again, and the whole of the spindles of Lancashire are working full time, this shortage will be found to be acute. We have, therefore, now to look about m other parts of the world to find new fields to replace the old one.

The possibility of this danger of a shortage was realised in Lancashire about 20 years ago, and an association was formed there, the money for which was subscribed both by employers and employed. That association, which was known as the British Cotton Growing Association, has only one aim in view. It has no idea of making a profit. It simply wishes to ensure that Lancashire shall get a regular supply of raw cotton so as to keep her mills working. At the same time they wish to ensure that the native cotton grower shall receive fair treatment. They realise that unless he has confidence the whole of our scheme will be ruined. Hon. Members opposite have told us that private enterprise has not been ready to embark on the rather treacherous seas of cotton growing. This is far from the case. This is private enterprise at its very best, where employers and employed are agreed together. They have taken the initiative as private enterprise always does. They have taken risks which are essential when you are dealing with these new undertakings. And it is only now, when practically the whole of the spade work has been done, that they are appealing to the Government for assistance.

Under the auspices of this Cotton Growing Association, cotton is grown in practically all countries in Africa—Natal, Tanganyika, Uganda, Egypt and in the Sudan. Of all these the Sudan is far the most important. The others will be of assistance to us and we shall get a certain amount of raw cotton from them, but it is from the Sudan alone that we shall be able to get really large quantities, and from all the reports of the experts it is safe to assume that the Sudan is capable in time of filling the place which America has always filled in the past. It has been stated during the Debate that part of the land of the Sudan has become less productive because the soil has got stale. I do not think that is the fact. In fact all the experts say the soil of the Sudan is the best possible for cotton growing and it is there alone where you can grow the best types of cotton—that is long staple cotton. This is really a matter of life and death for Lancashire. We are bound to have the very fiercest competition in the future from India and Japan in the cheaper counts of cotton and the future of our Lancashire cotton industry lies in the finer counts, and it is in the Sudan alone where this long staple cotton can be grown in sufficient quantities to keep our Lancashire industry going. This necessity is realised by members of all parties. In July last a deputation went to the Foreign Office on the subject to see what could be done for the development and irrigation of the Sudan. It was led by the Leader of the Independent Liberal party, and two of the speakers were the right hon. Gentleman the Member for Platting (Mr. Clynes) and the present Secretary of State for War, three minds which in all other matters are extremely divergent in their views, but on this one occasion at any rate they had one single thought. That goes a great way to prove the strength of our case. Another argument which has been used against this guarantee was that it is better to spend the money on schemes for unemployment. I do not think that is an argument which has been very carefully thought out. In the first place, it is very probable that this loan of £3,500,000 will never be called on. On the other hand, although it is only doing very little directly for unemployment at present, it is a very real and a very sound insurance against unemploy- ment in the cotton industry in the future. There is no doubt at all that if this scheme fails it will not be long before many mills in Lancashire will have to shut down for good and all because there will not be enough raw material to keep them going. I do not think for a moment that the scheme will fail. I think it is perfectly certain to succeed, and I hope not a single Member in the House will hamper or oppose it in any way, because by doing so they would only be imperilling the future security of thousands of men and women who are engaged in one of the greatest industries of the country. If there is a shortage in our raw material, thousands of them will be thrown out of employment, not temporarily, but for good and all. I very much hope there will be no opposition of any kind to this particular Clause of the Bill.

Mr. T. SHAW

May I congratulate the Noble Lord on a most successful maiden speech. It comes like a breath of fresh air to a Lancashire man to hear once now and then someone speak about a thing that he knows something about. There is no trade in the country less understood than the textile trade of Lancashire. It was before the War, and I hope it will become again, the largest exporting trade in the country. It is vital to the economic life of the Country, and yet we have a mass of ignorance concerning it, which is simply appalling. If this trade is to be saved for the country, there will have to be either national measures taken or exceptional measures taken in Lancashire itself. The Weevil pest in the States has not been conquered, and there appear to be no signs that it will be conquered. If the ravages of that pest continue, there will be in the very near future the gravest possible danger of a catastrophe happening to this great industry of ours, and I have risen because I particularly want to associate the organised workmen and women of the textile trade with the views which have just been expressed by the Noble Lord. The organised employers and workmen of Lancashire are at one on this matter. Whatever our views may be as to other things, there is no difference in this. We must look to our bread and butter, and we want all the development possible so far as the growing of cotton is concerned.

The Lancashire working men and women have subscribed over and over again large sums for experiments in the growing of cotton within the Empire. Employers and employed alike have provided these funds, not for the purpose of profit, because they knew that profit was excluded. The sums were spent in order to develop new areas within the Empire and to tempt them to grow cotton by guaranteeing a fair price for what they grew. When the cotton was grown it was put upon the market in the ordinary way, and the only intention of the Lancashire people has been to get cotton grown at a fair price for the grower who grew it And a fair price for the industry that used it. We are now at the parting of the ways. There is the gravest possible danger. I think I can speak both for the organised employers and workers, and they will welcome anything that can be done to obviate what we should consider to be a calamity without measure for the county to which we belong. The Lancashire textile industry has asked very little from Parliament. During the War it was the one great industry which had to suffer all through. Whilst other trades were working overtime with high wages and everything else, the cotton trade was doing badly because we could not get supplies of raw material. We did not badger and pester the Government day in and day out with our unemployment. We built up, with the help of the Government, it is true, what was known as the Cotton Control Board, which took the whole of the responsibility for unemployment and met the cost of it by a levy which was laid on the looms and spindles which were working. We managed our own affairs without the cost of a farthing, so far as I know, to the State, and I think now we are fairly entitled to ask Parliament for the fullest and the most generous possible consideration of the claims that Lancashire makes, both' employers, employed and merchants, for what assistance can be given in what appears to be a grave national emergency.

Mr. LYLE-SAMUEL

I wish it were possible for me to support the Amendment, but, having a reasonable regard for consequences, and respecting the obligations to which we are already committed, I shall not be able to do so. I think this Debate has proved that nothing can be more unfortunate for the reputation of this House as a deliberative assembly, for its constitutional traditions and its importance before the world, than that we should be assembled to discuss the relations of the British Treasury to privately-controlled industrial concerns. [An HON. MEMBER: "Why not?"] Because it is altogether outside the functions of Government to be financing industrial concerns, to be promoting legislation which relates to particular industries and to be mixing up the general well-being of the Commonwealth with the particular interests of separate industrial enterprises. It is also very unfortunate that we are compelled either to support this Bill or to oppose it, in view of the fact that there are parts of it which we should wish to support and there are also parts which we might oppose. The speech of the hon. Member who has just sat down was in the nature of a plea ad miseri-cordiam for a special industry. [An HON. MEMBER: "Why not?"] Because this House is not assembled for the purpose of considering special industries. [An HON. MEMBER: "Question!"] It ought not to be here assembled for that purpose. If that really is in the minds of hon. Members, the more they pluck up their courage to support the Amendment the better for the future of the House. We are not here to promote any separate industrial interest. If we are, let everyone of us present our case. I could give the name of a firm which I should like to see printed in this Bill where there are, and have been for two years, 2,000 unemployed, who would be very glad of relief. We cannot go on like this. It is not the purpose for which this House assembles. The speech of the hon. Member for Preston (Mr. T. Shaw), which was a special appeal with regard to the cotton trade, is the very last sort of appeal to which this House ought to respond. The British taxpayers will have to provide the money under this guarantee, as the right hon. Member for the City of London (Sir F. Banbury) said, the more readily and the more willingly if they are soundly advised, but the more reluctantly if it is an appeal to sentiment to bolster up an industry which is economically incapable of standing upon its own legs. I do not believe that that is the position of the Lancashire cotton trade.

Through a friend and associate of mine, I have had placed at my disposal expert opinion with regard to the growing of cotton in the Sudan, and I say without hesitation that I am advised, and by those whose judgment and experience is such that one ought to accept it, that the circumstances of the guarantee of this sum that is being found by the Government are; such that no commercial or banking institution would find the money. The money is badly invested. The investment is a bad investment. I know it is dangerous to prophesy, but I say that this is a bad investment, and that the House will know it within the next three years. [HON. MEMBERS: "Why?"] Hon. Members will know why if they read the reports as to the soil and the experience over the last 20 years. Let the House remember that this is not a new experiment. The question of growing cotton in Egypt is an old question. All the soils have been tested. In some cases there are 20 feet of mud within a short space of where there is nothing but soil of the lightest character. These business undertakings are not undertakings for which this House ought to be responsible. They are undertakings for which the merchants and bankers of the City of London ought to be responsible.

I want to support various parts of the Bill, but I have to approve or disapprove of the whole Bill, and by supporting the Government in this matter I have to agree to this extremely ill-advised, unwarranted, unjustifiable, and, as I am putting my reputation; as a prophet to the test, this bad investment, as the House will know it to be within the next three years. I regret these Government investments in industry. One hon. Member pointed out that the history of the Government in the last four years, in regard to industrial investments, was not only an unfortunate one in so far as the Government was concerned in the investment of public money, but that it had been unfortunate for the general community, because when prospectuses were issued and it was stated that the Government were subscribing for large parts of the capital, people thought that an enterprise which was good enough for Government money was good enough for private money. Those people have been sadly disillusioned. If the House will turn back to the debates in the last Parliament, they will recall to their minds the fact that the Government has lost millions of pounds by investment in private enterprise. They have made this House a place where we discuss the value of investments in concerns with which this House has nothing to do. I ask the Government where this principle is to stop. If the principle is to be extended, and if we are to be told that this is the idea of the Government, and that we can come here and barter for our own interests, then I will be an advocate for my own interests in my own constituency, and I will bitterly complain that a big engineering firm in my own area—in which I have no financial interest, but in which I have great political, interest, if we are to bring in political interests, because 2,000 men are out of work—does not appear upon this list, and I will complain that we cannot make our claim and have it supported by the Government. It is utterly wrong—

Mr. NEWBOLD

Good old political parties!

Mr. LYLE-SAMUEL

If my hon. Friend has his way, there would be nothing for us to discuss, and nothing for us to divide. There would be nothing to charge upon or to receive from. I am not interested in his views. We ought to have from the representative of the Foreign Office or from the Chancellor of the Exchequer a very clear statement on this matter. We are now playing our part in the League of Nations. We are making this important guarantee, and I am glad we are, but I am sure that the House feels that it is impossible for the League of Nations to function, and impossible for the League of Nations to provide its resources and exercise that authority which we wish it to exercise, unless America is part and parcel, and an active partner in the League of Nations. By the Treaty of Versailles we were committed and we consented to the League of Nations being incorporated as part of the Treaty. We were committed to that to which we might not hav been committed were it not that it w-as part of the price which we all agreed to pay when the President of the United States insisted that the basis of that Treaty was the establishment of the League of Nations. It was then understood that if things did not work out as well as was hoped that, having got the League of Nations as an integral part of the Peace Treaty, the machinery would be established by which to adjust these things.

America, for reasons which we need not discuss, because they do not concern us, walked away. She left Europe in the position in which Europe stood. She is, in her present position, outside direct concern for or obligation to Europe, but I would like to say, as one who knows America, do not believe that the whole of the American people are not interested in the misfortunes of Europe. Do not believe that because the political situation makes it impossible at the moment for the people of America to do their share that they are, therefore, lacking, and that when the testing time comes we shall not get from America, not merely sympathy, but resources to help to reestablish Europe and the whole world. It is a great misfortune for the world that America is not in the League, and I wonder whether we are right to have made so large a financial contribution at this time, in view of the fact that America is making none. I am not suggesting that we should try to shame America into a generosity which does not belong to her, for that is the last thing that is required. I am not suggesting that we should claim that because of the signature of the American President there rests upon her an obligation which she is not able to exercise, in view of party political considerations, but I am saying that our relations with America ought to be such at all times—

Mr. SPEAKER

I do not see how all this comes within the scope of the Debate.

Mr. LYLE-SAMUEL

What we are asked to do is to support a decision which has been made that we are to be guarantors for a sum of over £6,000,000 of a loan to be raised by the Austrian Government under the authority of a Commissioner-General appointed by the Council of the League of Nations, and I was merely suggesting that we should consider whether or not we ought at this moment to be responsible for so large a sum under the ægis of the League of Nations, in view of the fact that the League of Nations was established with America as an active partner, and that at this moment we are not only not receiving anything in relief of our own burdens of taxation from reparations, although within this fiscal year we have paid 100,000,000 dollars to America in interest, ' and at the same time we are to uphold the dignity and honour of our own signature to the League of Nations.

Mr. SPEAKER

That is ingenious, but too far-fetched.

Mr. LYLE-SAMUEL

If that be your decision, Mr. Speaker, I will pass from that aspect of the question, and will merely say that I am glad that in any circumstances in the difficulties in which we are at this moment we find ourselves able to make so large a contribution to the League of Nations' solution of this problem, and I am glad, difficult as it is for us with our heavy burdens of taxation, that we have braced ourselves to our responsibilities, that we are paying our own debt abroad, and are able by this Bill to make so large a contribution towards the rehabilitation of Austria under the ægis of the League of Nations. I want to say one final word to the Government. I am sure, whether the Government thinks so or not, and however well established they think the Overseas Trade Department and other trading Departments of the Government may be, that the British commercial community resents Government Departments interfering with British trade. There is nothing that the commercial community in this country desires so much as that there should be no Government Department interfering with any single business in this country. I hope that the Government in pressing upon us to support them in this Bill—this omnibus Bill, which is, in parts, so diffuse, so varying that a single vote might not represent our opinion on any single part— will realise that they are exasperating the country by this interference. I could speak of a certain Measure—but having been warned that I have wandered further than I ought to do in the Debate I will leave hon. Members and the Treasury Bench to call to mind the name of the Bill—where the Government have interfered with hundreds of businesses.

I want to know how much more of the money which is voted will be in any way invested in private enterprise or in any way used to cause Government interference with the free control of private enterprise. When the House was asked during the last Parliament to vote sums of money, it was on the ground that the industries concerned were vital for the safety of the Empire. We heard about new industries. We have now heard about unemployment. There is a sinister Clause in this Bill which says that fees are to be charged for the examination of business and commercial proposals. One would imagine that there is to be an institution and office like that of the Public Trustee. One would imagine that there is to be a permanence about it which this House hopes will not exist. One would imagine that the Government thinks it is necessary to interfere in private business, and I say that private traders do not wish the Government to interfere. Although one cannot support this Amendment because of previous commitments, I do hope the Government will realise, when they get their majority to-night, that the overwhelming sense of the House is that the less Government interference there is with private enterprise the better.

7.0 P.M.

Lord ROBERT CECIL

The hon. Member who has just sat down says he is against Government interference with private business. No one agrees with him more heartily than I do on that, but I am not sure that his allegation w^*as very well based on this particular Bill, because nobody is bound to take the advantages offered under this Bill unless they choose. Therefore, there is no need for any Government interference in business except by the will of those who are engaged in the business. I agree with what the hon. Member said about the danger of any distribution of Government assistance to private enterprise. The danger is quite obvious. There is always the danger that by some means or other the exercise of patronage of that kind will not be altogether free from suspicion. I agree that it is a very great danger, and one that this House ought to watch with the greatest care. I have no right to speak for the Government, but I am sure that they also will agree with that. On the other hand, we have to consider that we live in a very exceptional time, and that we cannot altogether be guided by the strictest rules of propriety when there is a vast mass of unemployment with which we have to deal.

I did not rise to deal with these parts of the Bill, and I think I ought to say a word on that portion which refers to the Loan to Austria. I wish to express my personal gratitude and gratification to the Government for the prompt action they have taken in this matter. I agree very largely with what fell from my right hon. Friend the Member for the Combined English Universities (Mr. Fisher). In one respect I think he was rather hardly dealt with by my right hon. Friend the Member for the City of London (Sir F, Banbury). He was describing the great difficulties under which Austria had to labour and, amongst others, he mentioned the necessity of having the Coalition Government. The right hon. Member for the City of London seemed to think he was basing on that a claim for assistance to Austria, but I am sure that that was very far from the meaning of the right hon. Gentleman. The one point, as it seems to me, in the criticism made by the right hon. Member for the Combined English Universities, the hon. Member for Eye (Mr. Lyle-Samuel), and the right hon. Member for the City of London, is that they regard this as an act of generosity to Austria. If it were that, or only that, I agree that, in the present state of our finances, it would be a matter which the House would scrutinise very closely. The point really is quite different. It is that we have got, if we can, to set Austria upon its legs. That is absolutely vital, and the first practical step which has yet been taken in that direction is this proposal to give assistance to Austria. Therefore, when the right hon. Member for the City of London utters that cry from the heart against charity, especially where we are not going to get anything in return, he is really alarming himself unnecessarily. We shall get ample return if we can actually show the world that a country like Austria can, by the united efforts of the members of the League of Nations, be set upon its legs. It will be a great ray of hope in the very dismal outlook which we have at present before us.

A great deal has been said, and said rightly, about the advances that have been made to Austria—£12,000,000 that we have advanced, and very considerable sums advanced by America. It is quite true. Personally I was never very much in favour of those advances. They were advances given mainly to feed the starving population of Austria. They really were charity, and it is very doubtful to me whether they have actually produced any adequate benefit, even to the population of Austria. This is quite a different proposition; it is absolutely distinct. I want to press that very much upon the House. It is, to me, extremely important, both, because I believe it to be the first step upon the real road towards the reconstruction of Europe and, secondly, because it seems to me to be a great achievement of the machinery of the League of Nations. The difficulties were enormous. There was all this history, which I need not recount, and the fact that the Supreme Council had abdicated in this matter. They had said they could do no more to help Austria, and had handed it over to the League of Nations. There was the fact that all the other nations on the borders of Austria were extremely jealous of her. Without their consent and co-operation nothing effective could be done to assist her. Then there was the financial difficulty, which was very grave. The right hon. Member for the City of London, speaking of another part of the Bill, protested against the Government ever advancing money. He said that if from an economic point of view the money ought to be advanced, private enterprise should do it; and if it were not right from an economic point of view to advance the money, then the Government ought not to do so. It is true up to a certain point, but it is not true altogether, and we find a very good example of the limitations of the truth in that observation.

I believe that merely as a financial proposition the Loan of £27,000,000 to Austria on the security offered is perfectly sound. The revenues that are pledged are much more than sufficient to pay the interest and sinking fund on that Loan. If that had been the only thing to be submitted to the financial world there would have been no difficulty whatever in obtaining the money. The difficulty was purely political. What the financiers said was: "We dare not advance this money because, although it is perfectly sound in itself yet, unless there is some reform in the political situation in Austria, and unless we can have some guarantee for stability in Austria, we cannot do it." The proposition which was submitted to the League of Nations was: "Is it possible to devise such political security as to convert a financial proposition from a dangerous one into one which, so far as one can see, is perfectly secure?" Let me remind the House what was done. In the first place, they got this self-denying ordinance agreed to by all the surrounding States— surely a very remarkable achievement. An hon. Friend of mine who sits on the Labour Benches said, in a Debate the other night, that this was only an additional restriction on the sovereignty of Austria. That really is a mis-reading of what was done. The point was, would all the States round Austria agree that they would make no attack on the-sovereignty of Austria, so that there would be no danger of political disturbance in Austria during the period of the Loan? That was agreed to by all the surrounding States. In the second place, there was the appointment of the Controller, who was to deal out the money in return for the necessary reforms which would give stability to the financial position of Austria.

I listened with great interest and admiration to the speech of the Leader of the Opposition. I agree that it is very important that no undue interference with the sovereignty of Austria should take place. I can assure the hon. Gentleman—I had nothing whatever to do with these negotiations myself, although I heard something about the matter when I was in Geneva—that that was present every hour in the minds of the negotiators in Geneva. If the hon. Gentleman reads the provision, he will see that the powers of the Controller are limited entirely to securing the financial position, and are not to interfere with the sovereignty of Austria one inch more than is necessary for that purpose. They are only to last for two years, or for such shorter period as may secure the financial security and solvency of Austria. Therefore, I do not think there is any unnecessary interference, and the hon. Gentleman may be quite certain that no excessive use of those powers will take place. He must remember that there is an appeal to the Council of the League of Nations, and at such an appeal the representative of Austria will be entitled to be present and be heard. I do not say that that is the whole of what is necessary to restore Austria. No doubt one of the things that very much wants doing is to break down the tariff barriers between Austria and the Succession States. That was very present in the minds of those concerned with these proposals, but the political difficulties in its way are very great. Another most important thing is to get the railways of the old Austrian Empire running under one command. That also, is a matter which will be very present in the minds of those dealing? with this question.

That, really, is broadly the scheme. I want to say one word as to the way in which it was done, and as to the speed with which it is done. This was done solely by the machinery of the League, which I need not describe to hon. Members. It was done in the shortest time on record for a diplomatic transaction of that character. It took a few weeks. It was begun on 31st August and completed by the end of September. There is nothing in the least comparable in the whole history of diplomacy to a negotiation of that complexity being accomplished in that time. I agree entirely with the right hon. Member for the Combined English Universities that the person who is entitled to the greatest credit for that is Lord Balfour, who was a member of the Government to which I was bitterly opposed. I should like to add another name, that of Dr. Benes, the Prime Minister of Czecho-Slovakia, who worked with unfailing energy and great farsightedness and freedom from national prejudices in securing this arrangement. An hon. Member sitting near me expressed grave doubt as to the possibility of this plan succeeding. Doubts in such a quarter are well worth listening to and attending to. He described what, after all, is familiar to this H6use, the immense difficulties which Austria has to face. He said, with great force, "Why lend money to a State in such a condition? If you are going to lend money, ought not you to lend much more in order to secure good results?" I am not competent to cross swords with my hon. Friend on a question of finance.

I would like to remind him, however, that this was a matter which was very carefully considered by some of the best financial authorities in Europe, who were collected at Geneva. They were not great financiers in the ordinary sense of the word, it is true, but they comprised such gentlemen as Sir Basil Blackett, of the Treasury here, who certainly does not err on the side of being unduly rash or reckless in financial matters. He and others examined the whole position, and it was on their advice, and on their advice solely, that the Committee of the Council of the League of Nations thought that an advance of this character, agreed to under those conditions, was capable in two years of bridging over the transition period between the present financial insecurity of Austria, and the financial stability and the balancing of the Budget which they were confident would be achieved by proper financial reform in that country. The figures are given in the documents which are published, and anyone can examine them. I am not competent to say whether they are right or wrong. They were arrived at by men eminently qualified for a decision, after making full inquiries into the position in Austria, and with a knowledge which will compare favourably even with that of any hon. Member in this House. Though I should not like to say that this plan is certain of success, it does seem to me that the probabilities of success are considerable.

But there is one thing which is undoubted. The moment we get Austria on the road to financial stability we shall have greater difficulty and greater unemployment in Austria probably than she has had for a long time. I do not believe that it can be avoided. As long as a country is content to go on increasing its inflation and diminishing the value of its currency it lives well, because it is living on its capital. The moment it puts an end to that process it lives less well, because it is forced to live upon its income, and I am afraid that there is bound to be a period of great difficulty and doubt which can only be solved by the experience as to whether there is sufficient grit in the Austrian people to go through that-period for the sake of recovering the solvency of their country. I believe that the measures taken for the appointment of a Controller and the other measures sketched to the House do enable that to be done if the people have courage to go through the difficulties which will inevitably occur.

I welcome this first constructive measure. I think that it should have been taken long ago. A similar process could have been carried out two or three years earlier with much greater success, but still it is going to be a step forward. It is a real attempt to put in operation the united effort of the members of the League in order to accomplish a great work which is in the interests of the whole of Europe and, indeed, of the whole of humanity. I welcome that effort immensely, and I hope earnestly for its success. I venture to say to the Government: Do not falter in this work. Accept the League of Nations as the basis of your foreign policy, but, having accepted it, do not try to go back and work upon the old and different system. That way failure lies with absolute certainty. You must adopt one way of dealing with foreign affairs or the other. You must accept the principle that the affairs of each nation are the interests of all, or you must go back to the, old system of alliances and counter-alliances. You cannot have any compromise between the two.

Therefore I earnestly hope that, having adopted what I believe is a sound principle, the Government will press it forward with all their strength. They are, we all know, about to enter on the solution of a much more difficult subject, the subject of reparations. It would not be in order to say more than this. I believe that they have the opportunity of applying the same principles—I am not dealing with machinery—for the solution of this difficulty, which they have applied for the solution of the Austrian difficulty. Only-yesterday I read a very remarkable speech by a French statesman, M. de Jouvenel, with whom I was in contact at Geneva, in which he openly advocates the transfer of the reparations question to the League of Nations. That is a very important suggestion, coming from such a quarter, and I trust that the Government will be able to make use of it. I would urge them to recognise that this is only a first step on the new way of dealing with European affairs, and to advance boldly on that road, fully confident that on that road, and on that road only, is a solution of the difficulties which oppress the peoples of Europe, and that nowhere else can a safe and satisfactory solution be found.

Colonel WEDGWOOD

This year Austria, next year Germany, I suppose. I wonder what there is about modern civilisation by which the victor in a war has to pay compensation to those whom he has conquered. I remember that the end of the South African War we were to get £30,000,000 compensation out of the Rand and out of the Boers. Instead of that, Mr. Chamberlain went to South Africa and returned to England, not with £30,000,000, but with a promise to pay them £30,000,000 compensation for the de- struction done in South Africa. Here we are getting exactly the same result My only regret is that we have not got on these benches one extra Member, Mr. Norman Angell, to see the proof which has been given of his prognostications as to the results of war between civilised communities. But the Noble Lord in dealing with the Cromerisation of Austria—that is what it amounts to—missed one point It is not enough for the League of Nations simply to guarantee loans to Austria or to control the Austrian Budget. In addition to financial help, if Austria is to pull through, she will have to have from the League of Nations political assistance. It is impossible to confine the assistance of the League to the Austrian Government to finance and the control of finance.

You have not only to protect them from all those surrounding Powers, particularly the Hungarian Kingdom, but you have also got to see that the special interests of some of the great Powers are not used further to exploit that country. I observe, for instance, among the securities for this loan are the tobacco monopoly and the Customs House. Nothing is said of the railways. It would be disastrous to Austria if the railways also have to be mortgaged to one particular great Power in order to raise further financial assistance, because I think that we are hopeful that if we are beginning this is not going to be the end. Just think of what the position of Austria is to-day. The exchange has fallen to 320,000 kronen to the £. The exchange has been more or less constant there ever since August and unemployment has been increasing daily. To-day there are 85,000 unemployed in Vienna. On the 1st of January we learn that various factories in Vienna are to close down. As the Noble Lord said, up to now, with a constantly depreciating exchange, industry has found it possible to find employment for all these individuals in Austria, but the stabilisation of the exchange in Austria, although it makes the finances sound and although, indeed, it is the only hope of reconstruction, must inevitably result in the unemployment and destruction and break-up of the industrial system in Austria.

About a year ago in the neighbouring Kingdom of Hungary a Finance Minister came into power and determined to do his best to re-establish Hungarian finance. He introduced various Measures, among others a capital levy, and for a short time Hungary looked like developing into a sound financial country. The exchange even now is far better than the Austrian exchange. I think that it is 11,000 to the £, as against 315,000 to the £, but directly the Hungarian exchange was cheeked in its fall exactly the same thing happened. Thousands of men were thrown out of work and the experiment of trying to stabilise the exchange was dropped. The Finance Minister was thrown over, and the country went back to the good old lines of living on credit and postponing the debts to posterity. If you are going to make this a success, if this loan and a subsequent loan on further security that may happen to be made through the League of Nations are going to be a success, we have got to realise that the whole nature of the Austrian society has got to be changed. Up to now it has been an industrial society. Vienna, with 2,000,000 inhabitants, has been an industrial town surrounded by a peasant people. I am afraid that the stabilisation of the exchange in Austria and the reconstruction of Austrian finance must mean the conversion of that State from an industrial State into a peasant State such as Switzerland.

Having got the inevitable results of the destruction of civilisation, there is no longer any need for the labour of the people in the town. The difficulty will be effecting the change so that the industrials in the towns are not driven by starvation into riot or revolution, and are facilitated in the transfer from industries to agriculture. It is going to become a land problem in Austria, how to get the 2,000,000 people in Vienna back on to the land or else, which is just as important, how to enable them to escape from Austria and emigrate to other countries. With the exchange as it is at the present time, a man requires to be a millionaire in Austria to get out of the country. It may very well be that the League of Nations will have to facilitate emigration, and also settle men upon the land in Styria and Upper Austria, as well as to control the Budget, and to see that there is no wasteful expenditure of the limited resources of that country. The difficulty of the position for the Austrian people is, naturally, that cromerisation involves the surrender to a certain extent of your sovereignty.

The people of Austria are no longer in a position to say that they will have unemployment benefit for their unemployed in Vienna. They are no longer in a position to say how their money shall be spent. They are no longer in a position to say what expenditure they will meet when their annual Budget comes up for discussion. So far as finance is concerned, they have surrendered their sovereignty. It is, therefore, urgently important that the League of Nations, in conducting these experiments, should watch Austria, particularly those classes in Austria who are bound to suffer, with the most unfailing kindness and sympathy. We have got to see that the Socialists—the industrialists of Vienna are Socialists, but unfortunately they do not take part in the Government in Austria at the present time—and to see that their interests arc-looked after. It rests with the League of Nations to watch those interests, because the power of the Government, so far as finance is concerned, has been surrendered, and the experiment now being made may be repeated in future, and it is urgently important that we should watch and learn from the experience of Austria what we may have to do with Germany in future.

I agree with the Noble Lord that when we deal with the German problem it should he left to the League of Nations, which is the only method we have found of dealing with Austrian problems. The less then will be our expense, our liabilities and our damage, when we have to, as we shall have to, take up the same position with Germany as with Austria, and though there will have to be controlled loans, and though the restoration of civilisation there will mean very largely the reconstruction of society in Germany, all being paid for by us, all that will cost less the sooner it is taken up. I beg the Government, in the interests of this country, because the expense will fall on us and because employment here can never recover until our customers revive on the Continent, for the sake of this country to hand the work over to the League of Nations and get it away from French Imperialism as soon as possible, and, above all, to consult with the United States of America, because, though we may be able to shoulder the Austrian loan without their assistance, it is obviously impossible that we can ever tackle the greater problem in Germany without real co-operation and assistance of America.

Only a fortnight ago hon. Members on the Labour benches were being derided for proposing a capital levy, and the principal argument used against them was that a capital levy would inevitably result in driving British capital abroad. We were referred to Switzerland, where, we were told, the mere threat of a capital levy was driving capital abroad. The capital levy was held up to us as a most awful bogey and a disaster to British employment and trade that could not be measured. I ask hon. Members to look through the instances in this Bill in which assistance is given, and then to observe that, so far from driving capital abroad being a crime, it is considered to be a virtue which will lead to additional employment in this country. You cannot drive both horses. Which is it to be? With the assistance of the Government we invest £500,000 to help the Calcutta Electric Supply Company in putting up new power houses. Good! That is all right for Calcutta. But is not that investing British capital abroad, which a moment before we were told was a crime against the British working man? T do not know whether investing British capital abroad is good or bad, but of one thing I am certain, and it is that it is much better to invest capital abroad because it pays to invest it, and not because the Government directs the position where it shall be invested abroad.

The whole of this scheme suffers from the particular vice that the Government knows so much better than the individual where money is to be invested. The result is that we see Powell Duffryn being assisted to build cottages, although anyone holding that company's shares knows that it made huge profits during the War, and that bonus shares have been issued to the lucky shareholders. Beardmore's are being assisted to build a ship. What ship except a battleship can cost £600,000 to finish I cannot imagine. During the War Beardmore's made fortunes. Harland and Wolff are helped as if they were paupers. If ever there have been companies which have prospered, particularly during the War, and have piled up their profits, they are the companies which are now needing assistance. I believe it is a lamentable misfortune for this country when a single officer of State or a single office in the Administration is able by a stroke of the pen to make fortunes one way or the other. I cannot imagine anything more unfortunate than that one firm should be able to get terms out of the Government which enable them to raise capital cheaply, while another firm should be deprived of that opportunity because they were not the first in the field, or perhaps because they could not use the same influence in order to get the same assistance.

This scheme depends entirely on the idea that if you take the financial resources of the country and invest them in some other part where they would not be invested normally, you thereby create additional employment. When you take £500,000 from this country and invest it in Calcutta, you prevent it being invested in this country to help employment in this country. You are not making anything fresh, but re-directing the quarter in which that money is to be spent. In the last part of the Bill, where you facilitate export trade by bonuses, there is an admirable example of the gradual conversion of the Government to the Socialist principle. Under the export trade facilities scheme the Government frankly takes the place of the banks and finances schemes of export which the banks would not touch. The State becomes for the purpose a State bank; it discounts bills and assists trade. My only objection to it is that the Government accept the trade which the banks will not accept. So far as that sort of Socialism is concerned, I think it would be better if they took a few lessons from this side and started their Socialism on lines that would be likely to pay instead of on lines that may lead to disaster.

The PRESIDENT of the BOARD of TRADE (Sir P. Lloyd-Greame)

The hon. Gentleman who leads the Labour party suggested that in this Measure we were tippling in Socialism. The last speaker appears to attack it on the grounds that it is a subsidising of private enterprise. It cannot be both. T quite agree that it gives the guarantee of the State to private enterprise, and I think it is to be warmly supported on that ground. What are we told constantly from the Labour benches? That when we deal with unemployment we should provide work, and not doles. Yet when we make a definite proposal which puts the credit of the Government behind sound economic productive enterprises, and creates employment instead of giving doles, we are told that we ought not to do it because it is unduly favourable to private enterprise. The suggestion that the Government guarantee is being given unnecessarily is without foundation. Hon. Members will appreciate that there are many firms which, although they have done very well in the past, are to-day actually short of working capital, and are certainly short of capital for new developments and extensions. Furthermore, there are firms requiring to raise that capital which, with the Government guarantee behind them, can raise it at a lower rate of interest, and because they can so raise it, are enabled to engage in work which otherwise they would have to put off until a period when prices have fallen further. Therefore I claim that this is not only a useful but a businesslike proposal.

I would say, in reply both to my hon. and gallant Friend the Member for Ton-bridge (Lieut.-Colonel Spender Clay) and to my right hon. Friend the Member for the City of London (Sir F. Banbury) that, so far from this being looked upon with grave suspicion in banking quarters, the contrary is the case, for when we were considering this Bill for the first time in the late Government, the Chancellor of the Exchequer and I had a meeting with the bankers who said that they regarded this as the soundest and most businesslike proposal yet put forward for dealing with unemployment.

Lieut.-Colonel SPENDER CLAY

I did not say anything about the banks.

Sir P. LLOYD-GREAME

I thought there was in the hon. and gallant Member's speech a suggestion that this was rather an unbusinesslike action to take. At any rate I feel sure that, whatever intention my hon. and gallant Friend may have had in his mind when he moved his Amendment, the assurance I have given him will completely convert him. It has also been said, and I think rightly, that the Government ought to be careful of the kind of thing guaranteed. We were told that we should not guarantee the ordinary shares of a company which was likely to be a failure. If my hon. and gallant Friend will look at the Bill he will see that what the Government have authorised is the guarantee of loans, and not ordinary share capital, and that in all cases that means that it is a debenture or something in the nature; of a debenture that is guaranteed. In all cases the Committee looked very carefully at what are the assets and what security is behind the loan. The best insurance that the House has that the schemes will be judged not only fairly but in a thoroughly businesslike way is in the personnel of the Committee which assisted the Government in the work. I cannot speak too highly of the gratitude which I feel that the whole country owes to Sir Robert Kindersley, Sir William Plender and Colonel Schuster for the work they have undertaken. They have had something like 100 meetings to investigate schemes. Apart from those meetings they have spent a great deal more time in bringing schemes into line and in helping people to mould their schema into a more definite form. It has been a labour for which they are entitled to the thanks of the community. The fact that all schemes go to that Committee, which has an unfettered discretion in the way it deals with them, is a complete answer to the anxiety felt by the right hon. Member for the City of London that there might be any undue preference given by a Government Department to one firm or another.

Let me deal briefly with the criticism of the hon. Member for Mossley (Mr. A. Hopkinson). He would not have Clause 1, Clause 2, Clause 3, or even a short title. What does that mean? The hon. Member objects to doles, and to guaranteed work, and his contribution to the solution of the unemployment problem is the survival of the fittest, tempered by the minimum amount of pauper relief which can be granted. I do not think that is a proposal which any Government would venture to make in dealing with a pressing problem. It has been suggested that there might be some overlapping between this scheme and the export credit scheme. That is not the case. They cover ground that is perfectly distinct. The first guarantees the capital issue; the other can be used to guarantee bills drawn against shipping documents for goods which are sold outside this country. Considerable credits have been sanctioned for South America in order to develop trade.

Colonel WEDGWOOD

Is it to help export from Chile to this country or the contrary?

Sir P. LLOYD-GREAME

To guarantee bills for the export of manufactured goods from this country to South America. May I say a few words about the Sudan loan? The conditions are set out in the Bill, and I think they ensure adequate security for the Treasury. I most sincerely echo the views expressed by my Noble Friend the Member for Fylde (Lord Stanley), who by his speech showed that he was not only an acquisition to this House, but an acquisition to his county and to the great trade of that county. Anyone who is acquainted with the position of the cotton trade, and has noticed the rising price of cotton the moment there is a shortage, and this at a time when the industry is not full of orders, must feel that it is not only in the interests of Lancashire but absolutely vital to the whole export trade of the country that we should, wherever possible, develop cotton growing in those countries which are physically capable of producing cotton.

In conclusion, I wish to refer to the third part of the Bill, which contains the provisions dealing with Austria. It has been said in some quarters that those provisions are too hard. It has been said in other quarters that they are not hard enough. It may well be, and I think it is the fact, that those who, in an extraordinarily difficult situation, had to devise this scheme, and devise it with rapidity, have trodden the solid road between those two extremes. I commend this scheme to the acceptance of the House because it is the first big constructive scheme of an economic kind that has come from the League of Nations. Even were the scheme open to much more criticism than it is, I should ask the House to deal readily with it, because it is their first achievement. It is, however, an achievement which not only comes from a good source, but is well worthy of the source from which it comes. All sections of the House, I believe, will join in the tribute which was paid by my right hon. Friend the Member for the Combined English Universities (Mr. Fisher) to Lord Balfour for his work. The right hon. Gentleman might also have mentioned, although he is too modest to do so, that he was not without some share in achieving this result.

Many points of detail were raised which might be more conveniently dealt with in Committee were they to be dealt with at all. It is possible for anyone to say that had they helped to make this agreement they would have made it rather different here or rather different there. Faced with the difficulties with which Lord Balfour was faced, any Member of this House who secured an equally good agreement might well be proud of his work. What we have here is an agreement which we have to take or leave, and I commend it to the House most emphatically as an agreement which we should take. My right hon. Friend the Member for the City of London asked why should we help Austria. He said after all we fought against Austria and Germany in the War; indeed they brought us into the War, which caused us terrible suffering and loss. That is quite true, but I am sure the right hon. Gentleman will not think I am saying something which is merely trite when I say that we have not only got to win the War, but to win the peace as well. On the lowest ground—I say nothing about other reasons for helping Austria—but on the very lowest ground, it is good business for us in this country to take this scheme and put it into operation in order to get trade going. Before the War, I believe something like £200,000,000 of trade used to go through Austria. The one chance of pulling these Central European countries together lies in getting co-operation between the great financial and technical skill which is to be found in Austria and the physical resources of the countries which are round about it. That is essential, and you have in this proposal, not only an agreement signed by Czecho-Slovakia, but a loan jointly guaranteed by Czecho-Slovakia, which but a short time ago was a country animated by a desire to build barriers against Austria.

That surely is the best guarantee that a new spirit of co-operation and not a spirit of exclusive nationalism is coming into this part of Europe. My hon. Friend the Member for Ilford (Mr. Wise) whose views on a subject like this must tell greatly, questioned the wisdom of dealing with this Austrian position, because in dealing with Austria we were not dealing with an economic entity. I agree we are not, but I say also, is not the best way of converting Austria and the countries adjoining it into an economic entity, consistent with their national aspirations and national desires, by giving, not only our approval, but our assistance to this scheme? It is a scheme to which one of these countries has subscribed, and also desires, and I believe it will produce exactly that communion of interests which will make these countries the economic entity which the hon. Member desires to see. I appeal to the House to give this Bill its Second Reading. We have had a very full discussion and we have had that discussion at a time when discussion is more fruitful, perhaps, than in the long hours during which we discussed the Financial Resolution. I think I have dealt with most of the broad points raised in this Debate, and any points which have not been dealt with, can I believe be dealt with during the Committee stage.

Lieut.-Colonel SPENDER CLAY

The right hon. Gentleman the Chancellor of the Exchequer was understood to say that the countries were jointly responsible. Is that so?

Sir P. LLOYD-GREAME

I am obliged to the hon. and gallant Member for drawing my attention to this point. We are jointly responsible—that is to say each country is responsible for its own share and for no more. If there is default by somebody else, we are not in any way responsible for that. I think from the speeches which have been delivered, it is apparent that apart from some details here and there, the general sense of the House is strongly in favour of the Bill, and I therefore ask that it now be given its Second Beading.

Mr. HAYDAY

I desire to raise one or two points which are not altogether unimportant in connection with the trade facilities portion of the Bill. It is within the memory of Members of this House that last week when the Minister of Labour announced the Government schemes for assisting trade, he mentioned that the capital figure was increased by £25,000,000, in respect of which these trade facilities were being given, and the House cheered in a manner which left no room for doubt that the extension of the amount, from £25,000,000 to £50,000,000 was felt to be a step in the right direction judged purely from the point of view of the number of unemployed it would absorb. The loans or amounts guaranteed up to 31st March, 1922, according to the White Paper amounts roughly to £15,000,000, and 7½ million pounds has been guaranteed as between March and the time the Minister made his statement last week. I am desirous of knowing if Government Departments go into the conditions under which these facilities are granted, and ascertain how they work out in the direction of absorbing the unemployed. I have information here which will indicate to the Government the point of view I am desirous of impressing upon them. I am informed that two of the very large schemes which have had Government help—one being the Underground Electric Railway which I find in the White Paper have received guaranteed facilities to the extent of £5,000,000–have a general system operating in the employment of workmen of two shifts of 12 hours each. Of course, men working at tunneling and working in compressed air could not possibly work a 12-hour shift, but I refer to those working in the free air. There is no reason why the Government should not be able to say, "This money is guaranteed as a means of assistance in absorbing the unemployed, and there should not be permitted any such thing as two shifts of 12 hours, but rather there should be three shifts of 8 hours each."

I have every reason to believe the authority from whom I got my information, and I am informed that if three shifts of eight hours were instituted on the London County Council scheme and the Underground Railway scheme, at least 5,000 more adult workmen would be employed in London and the immediate suburbs. That number may not appear to be very large, but it is; very important, when the Government is guaranteeing money, to prevent men having to 6ign the registers at the Employment Exchanges, and to enable them to retain their physical usefulness by being in employment, that some good reason should be given for the continuance of this 12-hours shift which is now in operation upon these schemes. One reason given is that the custom of working two shifts of 12 hours is a very old-established one and that, as a matter of fact, the shifts are not of 12 hours' duration but of 10 hours, and that no overtime is paid for them. As to why the contractor carrying out the work for the London County Council could not engage men on eight-hour shifts, this astounding reason was given—that the job is a prime cost one, and therefore any additional cost brought about in consequence of employing more men by reason of the institution of an eight-hour shift, would have to be raised by the London County Council, and in their case the total extra coat of instituting three shifts of eight hours in the place of two shifts of 12 hours each was £6 4s. per week, and the extra cost of £6 4s. per week was allowed to stand in the way of absorbing at least one-third more men. In the extension of these guarantees to other great undertakings, the Government should be able, if it has not already that power, to put it to the people who are asking for these facilities that, where a continuous period of 24 hours is being worked, instead of having two shifts, there should be three shifts of workmen, so that the purpose of granting these facilities may be more effectively carried out.

8.0 P.M.

I would also like to raise one other point. Some railway companies have a condition that no male adult over the age of 40 years shall be employed. Many of the principal sufferers through unemployment are men from 40 upwards, with big family responsibilities, and I think that, if any such restriction exists on any work for which the Government make a grant under this scheme, such limit should be wiped out, in order that men may be taken from the Employment Exchange registers, who, whilst they are over 40 years of age, have larger responsibilities than many of those who are under 40. During the Debate upon the whole of these facilities, and in looking through the White Paper, I have found no trace of any great undertakings seeking facilities to employ any large body of female labour, and I want particularly to mention this, in the hope that facilities will be given, should there be applications for approval from some of our own home industries employing female labour. I hope some special attention will be given in that direction, because in all the provisions outlined by the Minister of Labour there cannot be absorbed more than 5,000 of the women at present unemployed, and when we remember that there are over 200,000 women signing the live register in this country, I hope the Government, if applications for these facilities come from any industry employing large bodies of female labour, will at once give those facilities in order that the women, at all events, who have as great responsibilities as the men and the youths, may at least participate to the extent of being employed under these schemes.

Mr. TREVELYAN THOMSON

In the White Paper which has been submitted, out of £14,000,000 spent, there is not one single local authority which figures as receiving a loan for assistance under this Measure, and I want to contrast the difference in treatment which is meted out to local authorities and to the private enterprises which are receiving these grants from the Government. I submit to the Government that, whilst they are, I think, perfectly rightly extending the facilities by this Bill, they should give more sympathetic attention and consideration to those large local authorities in large industrial areas which are in the most necessitous conditions. I may be told that they have other measures for dealing with them, but I submit that those measures are quite inadequate, and that they should be extended on as large lines as these are being extended. The hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood) said there were 85,000 unemployed in Vienna. We have in our large industrial cities in the North of England a much bigger proportion of unemployed than that, and I submit that, if you would only revise and amend the grants that you have made on a small scale to these districts to enable them to get on with public works, you would find infinitely more employment and relieve the situation to a much greater extent than you can do under the whole of these Measures. Whilst I do not under-rate the needs of Austria. I submit that our needs here are as great and as clamant, and I hope the Chancellor of the Exchequer will not close his mind against the claims of large industrial areas throughout the country, which should have as sympathetic consideration and as liberal treatment as private enterprise is receiving under this Bill.