§ Captain WEDGWOOD BENNI beg to move:
That the operation of the German Reparation (Recovery) Act, 1921, be suspended.
§ Commander BELLAIRSOn a point of Order. Is it competent to an hon. Member to object to this Resolution being brought up half-a-dozen times during the Session on a Motion providing for the suspension of an Act by a Resolution of this House?
§ Mr. SPEAKERI do not think that there are many Acts like this. Under this Statute, there is a provision that the Act may be suspended by a Resolution passed by the two Houses of Parliament, and this procedure is in pursuance of the provisions of the Statute.
§ Captain BENNThis Motion gives me the opportunity of drawing attention to the very severe hardships suffered at present by British traders in occupied and indeed unoccupied Germany. I am very much obliged to the Chancellor of the Exchequer for coming here to answer on behalf of the Government. In 1921 we were engaged in negotiations with the German Government as to the amount of indemnity for which they would accept liability. There had been a conference in London at which no agreement had been reached, and agreement was not reached until the Conference in Paris later in the same year. At that time it was considered wise to have a Bill which provided that on all German goods reaching this country only a certain percentage should be paid by the importer to the German exporter, and the remainder of the price was to be paid to the Treasury by way of reparation, the German Government being invited to reimburse their own exporter by the amount which had been deducted by the British importer. It was believed that in this way large sums of money would be secured for this country. Alternatively it was argued that if the German Government refused to reimburse us, punitive sanction would force them to agree to some measure of reparation. When the Act was in passage in both Houses very optimistic estimates of the yield were made. The then Lord Chancellor, Lord Birkenhead, calculated 209 that in full operation it would produce £100,000,000 per annum to this country. We know quite well that many of the opinions then held turned out to be without foundation. Some of the criticisms that we offered were unfounded and many of the hopes of the Government were unjustified. In fact, the yield is about £7,000,000 or £8,000,000 for the two years that it has been in operation. Therefore, we can say that as a revenue getter it has not been very successful. That leads us to ask, who, in fact, is paying the duty? It is possible that a country which has all the advantages for export may, in practice, raise the price which would otherwise be charged, and cause the British importer to pay this so-called German reparation. That is, of course, a matter for argument and I certainly do not intend to dogmatise upon it now. All hon. Members will agree, however, that the yield has been very much smaller than anything hoped for by its promoters.
There is another general objection of importance. The Bill originally provided that any goods of 75 per cent. German ingredients, from whatever port or country exported to this country, should be subject to duty. We pointed out that the proposal was not practicable, that if the goods were bought by Dutch or Belgians and sent here, it would be impossible to examine them as they entered and say, "This article is more than 75 per cent. ingredient of German origin and is subject to duty." The then President of the Board of Trade laughed that objection out of court; he said that it was an objection of no weight. As a fact, the difficulties were so great that almost as soon as the Bill had been put into operation the Treasury made an Order that the duty should not be charged except on goods coming direct to this country from Germany, so that if a Belgian or a Dutchman became the genuine owner of German goods before exporting them to this country, he could export them and evade the duty altogether. What is the result of that on British trade? It means that a trade like the refining of chemicals, which might have been done here, or entrepot trade, was to some extent transferred from these shores to some country like Belgium or Holland, very much to the detriment of our own traders. There is no question about that; it is the source of common complaint. I 210 have dealt with two objections—first, that as a producer of money the Act has been a comparative failure and, second, that it has inflicted positive harm on British traders, by transferring to foreign countries some trade which might have been done here.
Now I come to the third objection, which is, indeed, the stimulus for this Resolution. Some months ago, the French occupied the Ruhr. With the general effect of that occupation on British trade in that district I cannot deal here, but with one aspect of it I can deal. The German Government said to British and German firms exporting from Cologne and to exporters generally, "If you take a French licence for the exportation of your goods, if you pay the 10 per cent ad valorem duty imposed by the Franco-Belgian authorities, then when your goods reach the shores of Great Britain, and you put into your bank the Treasury document entitling you to 26 per cent. reimbursement, we, in that ease will not reimburse and consequently you will only get 74 per cent. of the value of your goods." That is a very serious threat, and I was surprised to hear the representative of the Overseas Trade Department to-day declare that the Foreign Office had not any knowledge of this proceeding He said it had not come to their knowledge that the German Government refused to reimburse the 26 per cent. in those cases. So long as they reimbursed the instrument, clumsy and unproductive though it was, at any rate was an instrument of sorts. The moment they ceased to reimburse, it became something altogether different, and I was amazed to hear the Parliamentary Secretary to the Overseas Trade Department say that his Department had no knowledge of the German Government's decision. The Chamber of Commerce of Cologne know it perfectly well, and in their printed documents, including the little bulletin which they issue, they refer to this decision.
What is the result of this decision on the exporters, many of whom are British firms? I have one letter from a firm stating:
This firm is composed entirely of ex-service men—a major, a lieutenant, and a corporal—who, after demobilisation, found ourselves compelled to look to new channels. We therefore established ourselves as manufacturers' agents and merchants here in Cologne.211 It is not as though the penalty was falling upon the German exporter. I myself think that. the export of German goods to this country and a corresponding export of British goods to Germany is a good thing, and should be encouraged, but, in this case, if the penalty were only falling upon German firms, one could understand it, but it is falling upon British firms, and in the occupied districts considerable suffering is being inflicted. What is going to he the result of the continued levying of the duty? The result may be of two kinds. Either the German exporter, who knows he will not be reimbursed by his own Government, will put up the price, in which case the British consumer will be asked to pay his own reparation, which to some extent he is doing, or, failing that, the trade will cease altogether. In point of fact, that is what is happening. Owing to this and other impositions of the new régime in the Ruhr, British trade is being killed stone dead. Everybody says it is not alone the licences and the duties and the orders of all kinds, but it is the difficulty of moving goods which is killing an export and import trade which is of the greatest benefit to our own country. Moreover, if we levy 26 per cent. duty on these goods, we must remember that many of them are raw materials. The French themselves import them into their own country without levying a duty, and this duty merely means the giving of an advantage to the French in regard to these raw materials. I am grateful to the House for listening so patiently at such an untoward hour. The proposal in the Resolution is a modest one. It is a suggestion which was contemplated by the Government themselves if circumstances arose such as those in which we now find ourselves. The suggestion is that in view of the difficulties with which we are now faced, in view of the attitude of the German Government so long as this struggle between France and Germany goes on, and in view of the effects upon our trade, we should, for the time being, and until the situation is made clear, suspend the collection of this Reparation Duty. It will not by any means relieve all the hardships under which our traders are suffering—far from it—but it will do somewhat to alleviate those hardships.
§ Mr. FRANK GRAYI beg to second the Motion.
Probably at any time since the passing of the Act it would have been possible to have moved this Resolution, because the House was induced to pass the Act on certain representations which were then made, and while the Lord Chancellor was claiming that the result of the Act would be to bring into the coffers of the country a vast sum of money, the late Prime Minister was urging, at Bristol, that the, effect would be to strangle German trade, possibly a desirable end if it could have been achieved by such means, but it was never clearly explained how both could be right at the same time. A further representation that was made was that the other countries, France. Belgium, and others, had reserved to themselves to do what we proposed to do by the Bill, or Act as it became, of 1921. In point of fact, those countries have done nothing of the kind. Certain of the countries began to embark upon some such a policy, but they withdrew from that move, and they are no longer doing it, and France and Belgium particularly profited, to a considerable extent, as a result of the mistake which I believe we made by passing the Act of 1921. Furthermore, the provisions of the Act are detrimental to this country and should have been repealed directly the result was known. Whatever precise provisions you may make with a view to fixing upon a Government a tax of 26 per cent., it is found in practice that a part., at least, ultimately falls on the people who last handle the goods concerned, namely, the consumers.
But whatever strong grounds there may have been at all times to have passed this Resolution, there are very much stronger reasons to-day than at any previous time during the existence of the Act. Notwithstanding the Act of 1921, we have in fact been doing a considerable trade with Germany. The Act, fortunately, did not succeed in killing that trade. No doubt, for the benefit of France, Belgium and other countries, it diminished our trade, but it did not kill it, and until quite recently there was a considerable trade between the two countries, a trade which is not only presumably beneficial to merchants and employés in this country, but which, so far as it exists, must be claimed by the 213 Government to be beneficial to the State, inasmuch as the State benefits to the extent of 26 per cent.
May I refer to one—and only one—of many examples of how the thing is working up to the present? This case was the subject of a question which I put to the Under-Secretary of State for Foreign Affairs as far back as 28th February. A British firm has paid in respect of goods to be delivered from Germany £1,800 out of a total of £2,500. Part of the goods was stopped, and ultimately sent back to the place where they were despatched, and the other part has since, been lost, or disappeared in some way or other. What will be the result to the British firm in respect of that I do not know. Since I put the question, I have had the advantage of the earnest co-operation not only of the Under-Secretary of State for Foreign Affairs, who is concerned, presumably, not only to get this 26 per cent., but also to protect English trade, but I have also had the co-operation of the Board of Trade. The firm concerned has carried out every instruction that has been issued with a view of co-operating with the Under-Secretary of State for Foreign Affairs to get this put through. Unfortunately. I find that the two Ministers concerned have no greater influence, and certainly no greater power, to do this in the occupied territory than I myself have, though I am sure they are actuated by the greatest desire and goodwill. They are endeavouring, quite unsuccessfully, to get delivery of these goods, but it appears quite certain that we shall not get the delivery of the goods. The concession which has been got only applies to goods where there has been a completed contract, I believe, before 25th January, and as to other goods despatched before 20th February. But there is not one provision which has been made by the British Government to deal with any future contracts, or to permit British traders to continue a trade which has been profitable to them, and—if there be any foundation at all for this Act—presumably profitable to the Government. That future trade, apparently, the Government have agreed entirely to forfeit and abandon.
I are not suggesting that the difficulty at the present time is solely confined to the payment of the 26 per cent., although, as my hon. Friend has pointed out, the German Government will not adhere to 214 the arrangement to reimburse the exporter the 26 per cent. which is deducted from the purchase price. The difficulty is not only the 26 per cent., but also a German tax and a French tax, and I am speaking now of the export and import trade. The German employés and. the French employés in turn, under different, circumstances, refuse to handle the goods, even after the three taxes have been paid. The Government might have helped, and may help in several ways. For instance, when they made a concession with regard to the question of occupation they might at least have secured a quid pro quo when they were in a position to bargain.
§ Mr. DEPUTY-SPEAKER (Mr. James Hope)I would remind the bon. Gentleman that we are only discussing British trade in the Ruhr, not the general question of reparation.
§ Mr. GRAYIt was far from my intention, Mr. Deputy-Speaker, to get away from the point. My object in mentioning other cases was to show they centred round the 26 per cent. duty which is being paid under the Act of 1921. What I desired to argue was that if the Government for the time being would realise the necessity for doing what we ask, suspend the payment of this duty, that they would at least give the British traders an opportunity that has been forfeited in other directions—of competing with the French and an inducement to the Germans to co-operate with us in benefiting the trade of this country.
§ The CHANCELLOR of the EXCHEQUER (Mr. Baldwin)I make no complaint at all of the hon. and gallant Gentleman raising this point. I had the pleasure of hearing him on it 20 months ago. He is entitled to raise it, and probably the House will be glad to have some information upon it. My hon. and gallant Friend will remember that the ruling given in the Debate on 21st July, 1921, restricted its scope considerably, and the discussion was really confined to the point whether or not ground could be shown for the suspension of the statute. The hon. and gallant Gentleman put forward a three-fold objection. The House will remember that at the time of the passing of the Act the money realised by the 50 per cent. duty came in very slowly, and three or four months after the passing of the Act the present rate of 26 per 215 cent. was by agreement substituted. The Act is the only Measure which has ensured the cash payment of reparations to us. It was accepted by Germany, and has been, on the whole, worked by them fairly and honourably.
The House will be familiar with the method of working under the Act. The trader in England who has German goods invoiced to him pays to the Customs 26 per cent. of the invoice price, and sends the receipt with the account to the trader in Germany, deducting from the invoice value the amount which he has already paid. The amount is then made good to the German trader, in consequence of the undertaking given by the German Government, and, from that day to this, I have no reason to believe that the German Government have evaded their responsibility and undertaking. I listened with some interest, as an old Parliamentary hand, to what my hon. and gallant Friend said about the forecasts made as to the results that might arise from this Measure. He mentioned one by the late Lord Chancellor, whom, though a man of extraordinary intellectual power, I should never have regarded as an authority on finance. If we repealed every Act which failed to realise the anticipations of those who originally advocated it, how many Acts would remain on the Statute Book? I do not think there would be many. I have had the advantage to-day of consulting with the Customs, who, of course, are the authority which advises me with reference to what is going on under this Act; and the information I have from them is that, so far as they know, the German Government is certainly carrying out its undertaking, and there is, and has been for some little time past, a remarkable freedom from complaints of any kind from traders as to any hitch in the working of the Act. The House may remember that in the early days of the Act frequent complaints came before the House by way of question, and the matter was also raised in Debate. There was a good deal of trouble before traders were able to shake down under the new conditions, but I repeat what I have been told only to-day by the Customs authorities, that for some time past they have had, and they are having to-day, no complaints from traders on that score.
§ Captain BENNMay I ask the right hon. Gentleman a question? I do not know whether he is going to deal with the point in a minute, and perhaps I am premature, but I have received a letter from the British Chamber of Commerce at Cologne, in which they say:
The German Government will not refund the German reparation recovery receipts against goods exported on such licences,that is to say, French licences.
§ Mr. BALDWINI may say a word about that. As regards the fiscal side of this Act, the actual amount of money—it is not large, I admit—that has been received from the passage of the Act to the present time is rather over £11,000,000, and since the 1st April last we have received a little over £7,000,000. It may be taken, therefore, that at present we are receiving between £7,000,000 and £8,000,000 a year, and when it is realised that this is the only cash, so far as I know, that is being paid in any form of reparations, except for such cash as is secured towards the maintenance of the armies of occupation, and when one reflects, further, that, if this money were not coming in, it would have to be raised in some form or other by the taxpayer, I think the House as a whole will be very reluctant to see this Act pass into oblivion.
§ Mr. FRANK GRAYI should like to ask the right hon. Gentleman—because I did not gather it from what he said—whether the goods are coming through at the present time, and if there is any prospect of this revenue being continued? That is the basis of the complaint that we are making—that it is stopped.
§ Mr. BALDWINI would remind the hon. Gentleman that I have been engaged elsewhere all day, and I have got my information this evening from the Custom House Authority. In answer to that question, what I am advised is this, that up to now there is no sign of the trade as a whole from Germany falling off. I do not say signs may not appear, but not so far.
I should like to say a word or two on the third point raised by my hon. and gallant Friend, and that is the question of the Ruhr. I paid particular attention to the letter which he read out. It is natural 217 at a time like this that traders should take alarm. It may he that there will be trouble in coming to arrangements to facilitate trade movements from that district in the near future. I do not know, I think, probably. But at present we have certainly had no advice of any kind that I am able to trace—I cannot speak for the Board of Trade—that such things as are alluded to in that letter are, as a matter of fact, being done. The House may rest assured that it will be the most earnest endeavour of the Government, in all these matters, to do everything in their power to facilitate trade with the occupied districts, and to try, so far as they are able, to get over diffi-
§ culties which undoubtedly will be put in our way, and must be put in our way, owing to the troubled circumstances which prevail in that district at present. But I can hardly imagine that it is a reason to us, that because the French are now occupying the Ruhr district—an action the wisdom of which we have always questioned—we should therefore forego this very useful contribution to the revenues of our country which is being made in cash to-day by way of reparation from Germany.
§ Question put, "That the operation of the German Reparation (Recovery) Act, 1D21, be suspended."
§ The House divided: Ayes, 77; Noes, 142.
219| Division No. 66.] | AYES. | [11.55 p.m. |
| Adams, D. | Hamilton, Sir R. (Orkney & Shetland) | Parkinson, John Allen (Wigan) |
| Adamson. Rt. Hon. William | Hardie, George D. | Potts, John S. |
| Ammon, Charles George | Harris, Percy A. | Richardson, R. (Houghton-le-Spring) |
| Barnes, A. | Hartshorn, Varnon | Ritson. J. |
| Benn, Captain Wedgwood (Leith) | Henderson, Rt. Hon. A. (N'castle, E.) | Roberts, C. H. (Derby) |
| Bonwick, A. | Herriotts, J. | Saklatvala, S. |
| Bowdler. W. A. | Hill, A. | Salter, Dr. A. |
| Brotherton, J. | Jenkins, W. (Glamorgan, Neath) | Shinwell, Emanuel |
| Brown. James (Ayr and Bute) | John, William (Rhondda, West) | Simon, Rt. Hon. Sir John |
| Buckle, J. | Johnston, Thomas (Stirling) | Smith, T. (Pontefract) |
| Burnie, Major J. (Bootie) | Johnstone, Harcourt (Willesden, East) | Snell, Harry |
| Butler, J. R. M. (Cambridge Univ.) | Jones, Morgan (Caerphilly) | Stephen, Campbell |
| Buxton. Charles (Accrington) | Jowett, F. W. (Bradford, East) | Sullivan, J. |
| Chappie, W. A. | Lawson, John James | Thomson, T. (Middlesbrough, West) |
| Charleton, H. C. | Leach, W. | Warne, G. H. |
| Darbishire, C. W. | Linfield, F. C. | Watson, W, M. (Dunfermline) |
| Dunnico, H. | Lunn, William | Watts-Morgan, Lt.-Col- D. (Rhondda) |
| Ede, James Chuter | MacDonald, J. R. (Aberavon) | Weir, L. M. |
| Edwards, C (Monmouth, Bedwellty) | Maclean, Neil (Glasgow, Govan) | Welsh, J. C. |
| Emlyn Jones, J. E. (Dorset. N.) | Marshall, Sir Arthur H. | Whiteley, W. |
| Fairbairn, R. R. | Maxton, James | Williams, T. (York, Don Valley) |
| Gosling, Harry | Middleton, G. | Wilson, R. J. (Jarrow) |
| Graham, D. M. (Hamilton) | Millar, J. D. | Wood, Major M. M. (Aberdeen, C.) |
| Grenfell, D. R. (Glamorgan) | Muir, John W. | |
| Groves, T. | Murray, R. (Renfrew, Western) | TELLERS FOR THE AYES.— |
| Grundy, T. W. | Oliver, George Harold | Mr. Gray and Captain Berkeley. |
| Hall, G. H. (Merthyr Tydvil) | Paling, W. | |
| NOES. | ||
| Agg-Gardner, Sir James Tynte | Churchman, Sir Arthur | Gaunt, Rear-Admiral Sir Guy R. |
| Amery, Rt. Hon. Leopold C. M. S. | Clayton, G. C. | Greene, Lt.-Col. Sir W. (Hack'y, N.) |
| Apsley, Lord | Colfox, Major Wm. Phillips | Guinness, Lieut.-Col. Hon. W. E. |
| Archer-Shee, Lieut.-Colonel Martin | Cope, Major William | Gwynne, Rupert S. |
| Ashley, Lt.-Col. Wilfrid W. | Cory, Sir J. H. (Cardiff, South) | Halstead, Major O. |
| Astor, J. J. (Kent, Dover) | Craig, Captain C. C. (Antrim, South) | Hannon, Patrick Joseph Henry |
| Baird, Ht. Hon. Sir John Lawrence | Davidson, J. C. C. (Hemel Hempstead) | Harrison, F. C. |
| Baldwin, Ht. Hon. Stanley | Davidson, Major-General Sir J. H. | Harvey, Major S. E. |
| Balfour, George (Hampstead) | Davies, Alfred Thomas (Lincoln) | Hay, Major T. W. (Norfolk, South) |
| Barnett, Major Richard W. | Davies, Thomas (Cirencester) | Hennessy, Major J. R. G. |
| Barnston, Major Harry | Davison, Sir W. H. (Kensington, S.) | Herbert. Dennis (Hertford, Watford) |
| Bellairs, Commander Carlyon W. | Dawson, Sir Philip | Hogg, Rt. Hon. Sir D. (St. Marylebone) |
| Berry, Sir George | Duncan, C. | Holbrook, Sir Arthur Richard |
| Betterton, Henry B | Edmondson, Major A. J. | Hopkins, John W. W. |
| Blundell, F. N. | Ednam, Viscount | Howard, Capt. D. (Cumberland, N.) |
| Bowyer, Capt. G. E. W. | Elliot, Capt. Walter E. (Lanark) | Howard-Bury, Lieut.-Col. C. K. |
| Boyd-Carpenter, Major A. | Erskine, Lord (Weston-super-Mare) | Hume, G. H. |
| Brass, Captain W. | Erskine-Bolst, Captain C. | Inskip, Sir Thomas Walker H. |
| Bridgeinan, Rt. Hon. William Clive | Falle, Major Sir Bertram Godfray | Jodrell, Sir Neville Paul |
| Brown, Brig.-Gen. Clifton (Newbury) | Fawkes, Major F. H. | King, Capt. Kenry Douglas |
| Sruton Sir James | Formor-Hesketh, Major T. | Kinloch-Cooke, Sir Clement |
| Buckley, Lieut.-Colonel A. | Ford, Patrick Johnston | Lamb. J. O. |
| Burney, Com. (Middx., Uxbridge) | Foxcroft, Captain Charles Talbot | Lloyd, Cyril E. (Dudley) |
| Butler, H. M (Leeds, North) | Frece, Sir Walter de | Lorden. John William |
| Button, H. S. | Furness, G. J. | Lorimer, H. D. |
| Cadogan, Major Edward | Gaibraith, J. F. W. | Lougher, L. |
| Chamberlain, Rt. Hon. N (Ladywood) | Ganzoni, Sir John | McNeill, Ronald (Kent, Canterbury) |
| Maddocks, Henry | Peto, Basil E. | Sparkes, H. W. |
| Manville, Edward | Privett, F. J. | Stuart, Lord C. Crichton- |
| Margesson, H. D. R. | Rankin, Captain James Stuart | Sturrock, J. Leng |
| Mason, Lieut.-Col. C. K. | Rawlinson, Rt. Hon. John Fredk. Peel | Sugden, Sir Wilfrid H. |
| Mercer, Colonel H. | Rees, Sir Beddoe | Sykes, Major-Gen.Sir Frederick H. |
| Mitchell, W. F. (Saffron Walden) | Remer, J. R. | Terrell, Captain R. (Oxford. Henley) |
| Molloy, Major L. G S. | Rentoul, G. S. | Thompson, Luke (Sunderland) |
| Moore-Brabazon, Lieut.-Col. J. T. O. | Reynolds, W. G. W. | Thomson, F. C. (Aberdeen, South) |
| Moreing, Captain Algernon H. | Richardson, Lt.-Col. Sir P. (Chertsey) | Tryon, Rt. Hon. George Clement |
| Nail, Major Joseph | Robertson, J. D. (Islington, W.) | Vaughan-Morgan, Col. K. P. |
| Nesbitt, Robert C. | Roundell, Colonel R. F. | Wells, S. R. |
| Newman, Sir R. H. S. O. L. (Exeter) | Russell, William (Bolton) | Wheler, Col. Granville C. H. |
| Newson, Sir Percy Wilson | Samuel, A. M. (Surrey, Farnham) | Whitla, Sir William |
| Newton, Sir D. G. C. (Cambridge) | Sanders, Rt. Hon. Sir Robert A. | Winterton, Earl |
| Nicholson, Brig.-Gen. J. (Westminster) | Sanderson, Sir Frank B. | Wise, Frederick |
| O'Grady, Captain James | Shepperson, E. W. | Wolmer, Viscount |
| Ormsby-Gore, Hon. William | Shipwright, Captain O. | Yerburgh, R. D. T. |
| Paget, T. G. | Simpson-Hinchliffe, W. A. | Young, Robert (Lancaster, Newton) |
| Parker, Owen (Kettering) | Singleton, J. E. | |
| Pease, William Edwin | Skelton, A. N. | TELLERS FOR THE NOES — |
| Penny, Frederick George | Somerville, Daniel (Barrow-in-Furness) | Colonel Gibbs and Captain Hacking |
| Perkins, Colonel E. K. |
§ The remaining Orders were read, and postponed.
220§ It being after half-past Eleven of the Clock, Mr. DEPUTY-SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.
§ Adjourned at Twelve o'Clock.