TRADE FACILITIES BILL.

HC Deb 04 March 1924 vol 170 cc1267-95

Order read for resuming Adjourned Debate on Question [27th February]. "That the Bill be now read a Second time."

Question again proposed.

Mr. A. M. SAMUEL

This Bill covers Measures which Involve an enormous amount of money—in the bulk no less than £91,000,000 sterling—an amount equal to the whole total of revenue of the United Kingdom at the time when most of us entered manhood. I am rather sorry to note that the President of the Board of Trade is not present, although I welcome the Parliamentary Secretary and also the hon. Gentleman representing the Department of Overseas Trade. The President of the Board of Trade might have considered it part of his duty to take part in this Debate in view of the fact that £91,000,000 are at stake. There is no lack of sympathy on this side of the House for this Bill. Many of us took part in earlier Parliaments in discussing the Measures with which this Bill concerns itself, and some of us went to considerable trouble to help the original Bills and then to help the administration of the Acts so that work might be found for our unemployed people. There are two sides to this Bill—the Trade Facilities in the first place, and the Export Credits in the second. I should like to deal first with the Trade Facilities side.

There are three particular criticisms which I should like to lay before the House on the trade facilities side, and then I will deal with the export trade side of the Bill. When the Export Credits Bill was introduced some years ago, I said that I did not think the Bill was likely to do much good, nor, I added, was it likely to do much harm. After having taken part in the administration of the Act by working in the Export Trade Act Committee which looks into the details of schemes put forward, I think I may say that events have shown that my forecast was justified. The Measure has not done much good and little or no harm, but it has done one other thing. It has, however, taught me certain lessons which I should like to put before the House. As I said, the trade facilities side of the Bill has to meet three criticisms. One of these is a minor point. I refer to the principle laid down in Clause 2 of the Bill, which in paragraph (c) states that the Treasury may, subject to the provisions of this section, undertake to pay to the said Government an amount not exceeding three-quarters of any interest payable in the first five years of the currency of the loan in respect of such portion of the loan as is to be expended in the United Kingdom, so, however, that the amount payable by the Treasury under this section shall not exceed one million pounds in any one year or five million pounds in all. May I say I do not like the idea of making a present of a good portion of the interest to the Dominions without our getting back some compensation by a funding process? I am quite eager to support the principle of helping the Colonies and Dominions in their development and in the development of our great overseas estate, but their debts for unpaid interest should be funded so that we may get at any rate a capital asset back to the Treasury which may or may not be valuable as years go on. This point should not be lost sight of in the possible success of projects when they have been brought to fruition owing to our financial support.

There is another principle which I should like to see examined. The question has been raised as to the increase of the amount to £65,000,000, from £50,000,000 already authorised. I believe that only £38,000,000 have been used, leaving £12,000,000 of the original £50,000,000. I am perfectly willing to accept what the Financial Secretary may have to say on this matter, but I should like to know what has happened to that £12,000,000 which have not yet been expended. Is it promised and not yet taken up? And what is it to be used for?

What then about the other £15,000,000? We have been put, as the lawyers say, on inquiry, and we have seen something happening during the last few weeks which makes us wonder whether the Government are going to use that money for the guarantee of loans for the building of merchant ships. I know as well as anyone in this House that the shipbuilding trades are badly off, and I am perfectly willing to do what I can possibly do here to help them, but there is a way of helping, and there is a way of hindering. We may do more harm to shipbuilding than good if we proceed along certain lines. No White Paper has been sent to us, though I do not press that very much—but we know nothing from up-to-date official information as to what this £50,000,000, which has been already voted, has been devoted. There were statements in the newspapers to the effect that the trade facilities guarantees had been used in various ways, from time to time. I hope the Financial Secretary or the President of the Board of Trade will issue a White Paper telling us how the details of the matter stand to date so that when we go into Committee hon. Members may know where they are and where the guarantees have gone, in relation to this Bill now under debate. I want to know whether this fresh £15,000,000 will go in whole or part into guarantees for mercantile shipbuilding. We have seen the Bank Line prospectus. The names of Messrs. Harland and Wolff and Messrs. Weir appear in it. They are two firms which are second to none in the respect in which they are held by everyone, and their credit is as high as that of any firm's credit in this country. There are no firms of whom we can say their credit is better or more Highly regarded by their fellow countrymen. They do not need to go to the Government to assist them to borrow money. Everyone is glad to lend them money. If they cannot borrow from the public £2,000,000 or £3,000,000 on their own account, then I say British commercial credit has gone to pieces. Of course they can borrow quite easily. Why do they come to ask for assistance under the Trade Facilities Act? Is it because they can get money slightly cheaper, so that they might save one and a half or 1 per cent. interest?

Am I going to be told by the Financial Secretary to the Treasury that these ships would not be built unless the Government put their name on the back of the paper for these issues? Is 1 per cent. or 1½ per cent. the whole crux? I think there must be some other reason why these firms have been eager to impress their views upon the authorities to get the Government to back their paper for these issues. I certainly do not say this in any unworthy sense. Perhaps it has been a clever bit of business, and they think that they will get this money with the Government's signature behind them more cheaply than without it, and that in competition they will be able to sell the ships more easily. These are not times when shipowners should play the game of "beggar my neighbour," because the shipping trade is too bad for that. We have been told that at the present moment not less than 1,000,000 tons of British shipping is laid up. I doubt it. But certainly there is 600,000 tons. In these conditions it is no use building, competitively, more mercantile ships, and it is short-sighted putting more ships on the water until much of that idle 600,000 tons has been dealt with. By adopting now a building policy you are only putting more ships on a crowded market. Already you have a freight market which cannot absorb the shipping now in existence, and yet you are helping to build more ships. I think we ought to wait until that 600,000 tons of idle shipping has gone down to about 300,000. As a matter of fact, it would pay the shipowners to sell all that shipping at whatever price they can get for it, and it would be better still if they broke it up.

While these new subsidised ships are being built, what will happen? You keep down the freight rates, and you discourage shipbuilders from building ships as a speculation if they think that the Government will come along and help other shipbuilders to build more competing ships. Under those circumstances speculators will refuse to build any more ships, and the new competition keeps existing tonnage from earning a living. I have refrained from putting down an Amendment to exempt mercantile shipping from the benefits of this Act until the unused shipping had fallen to 300,000 tons for fear my action might be misunderstood, but after what I have said, I hope the authorities will bear in mind that they will probably, by subsidising mercantile shipping at this juncture, do the men we want to help more harm than good, and I want to help the shipyard men. For many years we have had to face the competition of American shipping. I think it is very foolish for the Government, by a policy of guaranteed loans, to be parties to the subsidising of shipping here, because it gives the owners of American shipping an excuse for saying, "Why should the American Government refuse to help by subsidy United States Mercantile Shipping in face of the fact that it has to compete with subsidised British shipping?" This only gives them a handle to induce the American Government to subsidise their shipping. We could not compete with shipping which was subsidised by the American Government, with all its immense resources of wealth behind it. At the present moment some of their railways are granting certain advantages in their export freights if they go in American bottoms. I do not think we ought to give any excuse for other countries to subsidise their shipping, because if they do it will only injure us in the long run. I think that fact should be borne in mind when we are considering State guarantee of loans for British shipowners to build more ships.

I wonder why that view has not been taken by the British Treasury, It seems to me to be such a short-sighted policy to allow all these ships to be put into the water when we do not know what to do with our out-of-commission ships at the present time. I do not want to pursue the point of shipping any longer, but I hope those who are connected with the shipbuilding yards will lend me what aid they can by expressing their opinions in support of what I have said. A point was made last week by the hon. Member for West Lewisham (Sir P. Dawson), who argued that the Trade Facilities Act should be used to assist home railways to electrify their lines. I think this is a very foolish argument to urge upon the Government. I disagree entirely that home railways should be assisted under the Trade Facilities Act until we have exhausted possibilities of trade in the export channels. If we spend money electrifying railways, it is like taking in each other's washing. Our real object should be to stimulate our foreign trade in order to add to the wealth of the country. How can you justify the lending of this credit to the railways except on the ground that it will benefit the steel industry? And that only means that you transfer funds from railway pockets into steel or engineering pockets. You do not add to our wealth. This guarantee of money ought to be used to extend the productive power of our Dominions, and there is plenty of ways to use it in that direction. The profits of the export trade add to the ability of all home services to prosper and extend—such as the electrification of home railways—besides adding to our wealth. Let us use our trade facilities Act to help, primarily, export trade, and not primarily home enterprises whose prosperity depends on the success of our export trade. Focus on export trade. We ought to concentrate on two or three big schemes, and there is one now before us. I am not now going to deal with the allocation of the profit, and I am only going to deal with the financial side. I mean the development of the Gezireh scheme. It is a triangle of land with its apex at Khartum and its two sides the Bahr el Azrek and the Bur el Gazel. Here is a large area capable of producing 70,000 bales of cotton a year, all of which cotton will not only develop that particular country, but it will bring us business by our supplying the enterprise with equipment. There is another side to the whole matter, the supplement of our cotton supply and the effect over the dollar-sterling exchange. When we take up these projects we should realise that whatever the estimate is, and whatever the amount is we think we shall have to find, we should rest assured that whether we are building a house or taking a holiday we will always spend twice as much as we think we are going to spend. Even when you are building a London County hall the cost turns out to be considerably more than the estimate. We should always bear that in mind when we are dealing with any problem under the Trade Facilities Act, and we must make up our minds that we have to follow our money otherwise we may lose the sums already ventured It is no good tinkering with a thing, and we should bear in mind Disraeli's words; he said, "Damn all half measures." It is no good going into any great national matter with the idea that you are only going to spend a fixed £4,000,000 or £5,000,000, as the case maybe, because you will have to follow up your projects by finding more money for developing undertakings, and in a prosperous concern the capital account is never closed.

I support the view of the Government or rather the view of the last Government that we should go on with these Gezireh undertakings. I see another method of bringing employment to this country which is much better than electrifying the home railways. For the last two days we have been reading about the-Indian Budget and the decision to separate the railway figures from the general revenue figures. It is proposed now by Sir Basil Blackett to separate the railway administration from the general administration of India. A wise decision in my humble judgment. Here you have some 350,000,000 people, and yet the railway mileage of India is no bigger than it is in the Argentine with 10 million people. Here you have a great opportunity of advancing the prosperity of India by the extension of railway undertakings. [An HON. MEMBER: "By means of loans."] That is so, and with our guarantee under this Bill, but in the case of India railway development you have a good hold on the borrowers. If we give our guarantee to India it is on condition, under this Bill, that she takes the goods paid for by the loans, from us. What a splendid thing it is to be able to extend the railways in India because there is no greater civilising influence in any country than the extending of communications except the extension of the art of reading and writing. In this direction the extensions of rail and river services and canals have done more than anything we can think of, and you have now an opportunity of helping India, improving the condition of her people and at the same time, in due course, of putting money into your own pocket by extending the railway equipment of India. Directly you make India more prosperous, she has more produce to sell, and will be able to buy more, and if she does not buy from us she buys from somebody else. We get our share, if not by direct or triangular exchange, we get it even by polygonal exchange. Take the case of the Cautley Canal on the Ganges, the Chenab and Jhelum canals. Those three canals have been working beneficially and profitably in certain portions of Northern India. Let us go on with that policy for India and for our unemployed at home. That is how and where to use the guarantees under this Bill.

7.0 P.M.

Railways and canals have rendered famine half as deadly to the Indian people as it was before. Indian railway and irrigation schemes should be our first policy under this Bill. It is all nonsense talking about the electrifying of lengths of lines here, and taking in our own washing, when you have got India in front of you and when, to help to develop the railways of India benefits not only us but the India people as well. I would go further, and say I would help Nyasaland, Rhodesia and even certain parts of Australia to extend the growth of cotton and tobacco. That is why I would help the Gezireh project quite apart from the private profit. The more we can reduce the immense amounts we have to pay America for cotton and tobacco, by so much do we reduce the one-way strain on the dollar exchange. When you reduce the strain on the dollar exchange, the sterling value of the dollar goes up, you get more cents and more dollars for your pound and the result is, that every mouthful of food which comes here from America goes into cur people's houses at a cheaper rate than it does now. I would stimulate production of cotton and tobacco in Nyasaland and Northern Rhodesia, and I would do the same in Australia. But I want to warn the House that if we are going to help Australian Governments or Australian settlers with guarantees of loans for development, we must bear in mind that we do not lend our credit for projects coming under the Land Act of Queensland of 1920. That Act is a very dangerous Act and until it can be repealed, readjusted or put on a basis which we in this country consider an honest basis, I should advise no man to venture lending any of his money to the Queensland Government, and the British Government should risk no money for enterprises in Queensland. The Premier of Queensland is over here to-day seeking to renew loans for £24,000,000, which the people of this country lent to Queensland. He will not get a bob as things now stand. [HON. MEMBERS: "Shame!"] These loans have been floated by the Queensland Government at 5, 4, 3½ and 3 per cent. They are not held by the bankers. That is the fallacy of hon. Members opposite. Bankers do not hold these loans. They are held by innumerable small investors and little men in this country. Nearly every man in this House, especially my hon. Friends on the other side, hold small life policies in various life insurance companies. These companies invest in Colonial Loans, and if these Colonies break faith or anything goes wrong, hon. Members opposite with their little life policies will feel the pinch far more than the bankers.

Mr. N. MACLEAN

Has Queensland not paid the interest on the loans previously raised in this country?

Mr. SAMUEL

That is not the point. The point is that She has now to repay the capital. She has contracted to pay large sums of money in 1924. There is a 3½ per cent. and a 4 per cent. loan which she contracted to repay in 1924, and she can only pay it by re-borrowing from us But we say to Queensland "you have broken faith with the pastoral settlers in Queensland," and when Queensland comes here to re-borrow money to repay that £24,000,000, Mr. Theodore, the Premier, will see that he will have to say "I will either play an honest game or I shall be obliged to default on my obligations."

Mr. MILLS

Is it in Order, Mr. Speaker, to refer to the Premier of one of the Dominions as a dishonest person? [HON. MEMBERS: "No, no."] Yes, the hon. Member did so by implication.

Mr. SPEAKER

The hon. Member was criticising the policy of a Dominion. That, I think, is an undesirable thing to do in this House, and on that ground I would ask the hon. Member not to pursue the subject.

Mr. SAMUEL

I will not pursue it, Sir, in deference to your ruling, but in not pursuing it I would like to make this reservation, that if we have to put money down to help in the extension of our national estate I would ask hon. Gentlemen on the Treasury Bench opposite, who have to decide such matters, that they should look askance at lending credit for money which is to go to Queensland while the practice of breaking contracts is countenanced.

I would like to refer now to Clause 3, and I hope the House will forgive me if I take some little time, because I think I am now the only Member of the House who has taken part in administering the Export Trade Acts. The Financial Secretary to the Treasury said the other night that the National Manufacturers' Union had asked him that the Act should be brought more vividly before the imagination of the public, that it should be brought more to the notice of people. I think it was also said by the Financial Secretary that it was asked that some arrangement should be made to help Russian trade under this scheme. Another hon. Member said that the little man must be helped, and that some people who applied for the help of these loans failed in their applications because they were afraid of disclosing their financial interests to their trade competitors. That, I think, was said by the hon. Member for Central Hackney (Mr. Franklin). What does the hon. Member know of the administration of the Act? He has never been present at the working of the Committee. So far as I know, he has never been present at any of its meetings, and to say that the little man has not been helped or that we are not willing to help the little man is simply untrue. It was not right to make such statements. They only made people think the Committee is not doing its work well and cause people not to go to the Committee, whereas the real truth is that when a man comes and puts a proper proposition before the Committee, if he will come along with a proposal for only £10 worth of help. We undertake, if the proposition be a sound one, to see the thing carried through. Nor is it right to say that a man will not come to us because he does not like his affairs to be seen by his competitors. What competitors? I have attended the work of the Committee week after week. It is a mistake to suppose that this Committee is composed for the most part of others than bankers. There are only two non-banking members of the Committee, their names have only to be mentioned to command universal respect and confidence. These are all I have ever seen. One is Mr. Stanley Machin, a past chairman of the London Chamber of Commerce, a man of proved experience, public spirit, and discretion. The other is Sir William Pearce, a man who is held in the highest respect, and by everyone who knew him when a Member of this House, and a third man is myself. The other members are connected with the great banks and discount houses. The very men the public turns to normally.

When a man comes to us, we try with the best will in the world to help him and to do everything we can to carry through any sound proposition which he has submitted to us, however small the sum involved. If a man thinks he can get an order for £50,000 or £100,000 he goes to his bank and says, "I have the opportunity of offering to sell to a State or railway company abroad, or to a firm abroad, railway material, or textiles, or pen holders, or whatever the goods may be, to the total of £50,000, and I shall get bills and be paid for them in three or six months. I have £10,000 of my own, can you help me?" The banker says, "We know you, we know the people you are going to deal with, and we will give you the necessary facilities." If they do give him those facilities, the proposition does not come on from the bankers to us. The money which is lent by these banks is not, as some hon. Members seem to think, the money of the shareholders, it is the money of the depositors. Take Lloyds Bank, Lloyds has perhaps £350,000,000 or £400,000,000 deposits, That money does not belong to the shareholders. The shareholders have about £10,000,000 of capital, and £10,000,000 reserves. The rest of the money belongs to the depositors, and the banks must lend that money in such a way that they can get it back when the depositors want it.

Mr. SPEAKER

The hon. Member is rather discursive. If his example be followed by Members on the other side of the House, I do not know to where we shall get.

Mr. SAMUEL

I would like to explain my reason to you, Sir, for being thus discursive. We were told that the reason for unemployment was that manufacturers and merchants cannot get credit. I am trying to show that it is not the case so far as the Export Credits Act is concerned. There is credit under that for long periods and the banks give all the credit for short periods that is wanted. What credit they cannot give, is because too long dates are required, for banks must so have the money for which they are trustees that it will be there when the depositors require it back. In those long dated cases traders come to us under the Export Credits Act, and say to us: "Help us to carry through certain commitments for which we need long credit." I have got the figures here: Up to February, 1925, we sanctioned £18,000,000 to help unemployment. Of that £18,000,000 only £8,000,000 has been taken up. The other £10,000,000 has been cancelled or lapsed. It is therefore not true to say that there is no credit, at any rate, so far as the Export Credit Act is concerned. My point, Mr. Speaker, is that there is plenty of credit, it is granted after application and examination, but the orders are not coming in to use it, and so it lapses or is cancelled. The firms fail to secure orders. Lack of credits is not to blame as a cause of lack of employment. That is the great lesson we have learned in connection with this Act. I would explain to the House why, as it seems to me, out of the £18,000,000 we sanctioned, because we thought that prospects were good, only £8,000,000 was taken up. These projects come to us through the banks, as the length of credits asked for cover too long a period for the bank to be able to handle. The security is to be assumed to be satisfactory. The Committee look at them, and we say, "Yes, you, Messrs. A. B. C. and Company, say you can sell £10, or £1,000, worth of shoes, or penholders, or bridges, and we will help you through. Go and get the orders." Having heard from us that they can get accommodation, they go abroad and try to get those orders, but they often fail; and who will make goods if he cannot sell them, or borrow if he has no orders? Why do they fail? The credit is there, but there are no orders We are there to help under the Act, the goods can be made, everything in this country is at their disposal, but the orders do not come in. That is the lesson that we learn from these figures. Unemployment will certainly not be remedied by an increase of credit. The necessary credit is there; inflation of credit to remedy unemployment will not get orders.

Mr. MAXTON

Could the hon. Member say why the orders do not come in? He has left us suspended in mid-air at the point where we are most interested.

Mr. SAMUEL

I will tell the House why it is, in my opinion, but I hope hon. Members opposite will not be impatient with me. Recently a quotation from this country, in connection with a lost South African tender, was 30 per cent. too high. Our quality is better than can be obtained anywhere else in the world. Whatever an Englishman sets his hand to he can do better than anyone else. Why was this quotation 30 per cent. too high? I hope hon. Members will be patient if I tell them my honest opinion. The President of the Board of Trade said that we quoted too widely, and it is quite possible that we did. The reason for that is that firms are so afraid that, in the middle of their work, they will be held up by, we will say, disputes, or a rise in cost prices, or something or other which may put their costs up to such an extent that they dare not cut prices fine. Imagine a man tendering for a bridge at £500,000. Through no fault of his own there may be a dock strike, his goods may be held up and his money may be running away in interest and demurrage, things may be getting spoiled, his materials or coal may not come in, his men may be thrown out from no fault of theirs or his, wages are running along, and interest on capital borrowed from the Government or from the bank. Consequently, he dare not cut his price too fine. The delay in delivery brings penalties and disappointment to the foreign customer who has to wait.

Mr. MACLEAN

What about the strike clause?

Mr. SAMUEL

That is all very well, but when foreign countries buy from us they say, "A fig for your strike clause; we will go where we can get our goods punctually delivered and perhaps cheaper and without any trouble." I am talking about our export trade and export credits.

Mr. MAXTON

Do workers in other countries never strike?

Mr. SAMUEL

The other countries get the orders and often at lower prices than ours. There is another impression which has developed in my mind since I have seen the working of this Act. I mentioned it the other day in reference to the question of Russian trade. If you read the "Arabian Nights" you will find that you cannot get anything done in the East without greasing somebody's palm. When we grant these credits to our firms, our people do not seem to be able to get the orders, for reasons which exist in Russia and in the East. Our traders are confronted with the type of foreign customer who would, if he could, compel our people to descend to methods which we consider degrading, and which we will not touch—methods of corruption. Such a condition of affairs exists not only in Turkey, Persia and the East, but in South America and Central America, and one reads in to-day's newspapers about it elsewhere. One of the reasons why we lose orders which should come to us under the Export Credits Act is that we have to face methods which decent Englishmen will not have anything to do with. I think the Export Credits Act has certainly exploded the theory that inflation will help to remedy unemployment. Here is a letter which Mr. McKenna wrote to Mr. Strachey with regard to unemployment. He said: A policy of inflation or deflation should never be adopted, as you justly say, except as a corrective, and the degree of unemployment at any given time will always furnish the test of the right medicine to be applied. Here you have a test—unemployment is to be the test of whether to apply inflation—but we do not know who will apply the test; Mr. McKenna does not tell us that. He says that inflation of credit or inflation of currency is the medicine for unemployment. We say that no inflation, either of credit or of currency, will help the trouble with which we have to deal, and that is one of the lessons which we have learned. The medicine is: Get the orders. The credit is here already. I have spoken too long, but I should like to say one or two things further on this matter. I think that this letter of Mr. McKenna is proved to be ill-judged by the working of this Act. The Act also proves something else. We are continually told that the re-opening of the Cunliffe Committee's policy and tinkering with the gold standard would put unemployment right, but it proves that inflation of credit is not necessary, because we have enough credit. It also disproves the Cambridge theory, the theory of Mr. Keynes, that a re-fixing of the value of the £1 note might put trade right. Our £1 paper note is worth to-day 101 grains of gold. It should be worth 113. Mr. Keynes suggests that unemployment might be put right if we re-fixed the £1 note at a new rate, say 100 grains. I say there is no necessity for that; it would be better to leave inflation alone if you want to put unemployment right. No, it is orders we want, not inflation; and no debased sovereigns to replace the paper pound.

Mr. SPEAKER

If we went on in that directions we might be led into Bimetallism.

Mr. SAMUEL

I agree that it would not be in order, but it would be an interesting discussion. I shall take an opportunity later on of saying what I wish to say on the McKenna error, and the Keynes or Cambridge theory of the re-fixing of the paper pound value, especially in connection with unemployment. It is a vast and useful subject. This Bill and its proposals have my sympathy, and will have the sympathy of most hon. Members who sit near me, but we make one or two reservations. I think the Export Credits Act has done good in its way, in so far as it has found work for people, has kept them in good heart and courage, and has kept them from the demoralisation of the dole, which they hate just as much as we do. The £9,000,000 which has been spent has done good in that it has enabled our goods to be put into other countries and kept OUT good will alive abroad, and I see no harm at all in anything that is contained in the Export Credits Act, while the lessons we have learned from it have certainly been valuable. The Trade Facilities Act has also done good, but I wish to say, with all the strength I possess, that I am against any portion of that Act being used for helping the home railways to electrify their branches until the potentialities of our foreign trade are absolutely exhausted. I am also against helping to build mercantile shipping until 300,000 tons of our laid-up tonnage is sold or broken up, or until the shipping industry has got into a better state. I am much obliged to you, Sir, for your leniency in permitting me to talk very widely, and to the House for being so patient in listening to my long speech.

Mr. T. JOHNSTON

I will not attempt to follow the hon. Member for Farnham (Mr. A. M. Samuel) in his very interesting, though perhaps somewhat discursive, rambles round the world. I imagine he has furnished material for about a dozen Debates. He criticised Mr. Theodore, the Prime Minister of Queensland, and perhaps, somewhat later, we shall see his defence taken up. The hon. Member must be aware that the taxation of the pastoral leases in Queensland was regarded as so popular and honest a measure in Queensland that the Government that did it was returned to power by a hugely increased majority. I will not attempt to follow the hon. Member in his essay on deflation and inflation, nor on most of the other hares that he started, but I observed with considerable interest that, when he came to speak about Clause 4 of this Bill, the Clause which authorises a further guarantee of £3,500,000 to the Sudan Government, or to the Sudan Plantations Syndicate via the Sudan Government, the hon. Member very carefully said—I hope I do not quote him wrongly—that he would not in any way attempt to justify the finance of this Bill, that he would not in any way attempt to justify the division of the profits.

Mr. SAMUEL

The hon. Member is not very far wrong, but what I meant to say was that I did not want to deal with that aspect. I did not say I would not justify it; I said I did not want to deal with it.

Mr. JOHNSTON

He did not want to deal with it.

Mr. MACLEAN

He washed his hands of it.

Mr. JOHNSTON

He washed his hands of it, like Pilate of old. Why?

Mr. SAMUEL

Because I know nothing about it.

Mr. JOHNSTON

Excuse me, the hon. Member does know something about it. He knows so much about it that he, for one, would not get up in this House and justify it. While refusing to justify the division of the spoils, he proceeded to say—I am not quoting him exactly—that this was going to be a never-ending sink, that we were not finished with the £3,500,000 now being proposed, but that there would be a never-ending demand for fresh capital issues in this Sudan cotton growing scheme. I think the hon. Member said that; I do not profess to be giving the exact words.

Mr. SAMUEL

I did not say it was Government money. I laid it down as an axiom that, with a prosperous undertaking, the capital account ought never to be, and never is, closed.

Mr. JOHNSTON

Why should a prosperous undertaking, that can pay a 35 per cent. dividend, come to this House? If it was wrong in the opinion of the hon. Member, that a prosperous concern like Harland and Wolff should get public credits and public guarantees, then, surely, it is equally, if not more, wrong that a concern capable of paying a 35 per cent. dividend to its shareholders should come here for a grant of public money. That is why the hon. Member refused to justify it. No one has yet attempted to justify it; it is not justified on our own Front Bench. The Financial Secretary to the Treasury did not justify it. He said that if we were starting afresh—

Sir ROBERT HORNE

If the hon. Member will forgive me for interrupting, I do not think there is any proposal at all that the shareholders are to get a 35 per cent. dividend on their capital. The proposal is that the profits which may be made shall be divided in the proportion of 35 per cent. to one section of people, 45 per cent. to the Government, and I forget how the rest is to be shared. There might be only a return of £5, which would be divided in those proportions—35 per cent. of the £5 would go to the shareholders, and 45 per cent. to the Government. There is no suggestion that a dividend of 35 per cent. is going to be paid to the shareholders.

Mr. JOHNSTON

I am afraid the right hon. Gentleman is not so well acquainted with what is going on in the Sudan as he might be. In 1922 35 per cent. was paid to the shareholders in cold cash.

Sir R. HORNE

What shareholders?

Mr. JOHNSTON

The shareholders of the Sudan Plantations Syndicate.

Sir R. HORNE

That is a totally different matter. What we are dealing with now is a barrage which is being built.

Mr. JOHNSTON

This is ostensibly a guarantee given to the Sudan Government. We know that the Sudan Government have passed on the contracts to the Sudan Plantations Syndicate, Limited, and we know that the Sudan Plantations Syndicate, Limited, is already paying 35 per cent. to the shareholders. There is no dispute on that.

Mr. W. GRAHAM

I am very reluctant to interrupt my hon. Friend on the point, but it is important for many reasons that we should be quite clear as to the facts. It is true that in two years in the boom period, round about the time he mentions, 35 per cent. was paid by this syndicate, but I ought to point out that its operations are not confined to this particular enterprise. What the House ought to bear in mind is that, during the 20 years this concern has been operating, the average dividend has been a fraction more than five per cent., and that was information we were bound to take into account in coming to a decision.

Mr. JOHNSTON

My hon. Friend made that statement when last the Measure was before the House. I am not concerned, and the House is not concerned, and the British taxpayer will not be concerned with what happened 20 years ago. Consider what happened in 1918, 25 per cent. was paid. In 1919, 25 per cent. was paid, in 1920 35 per cent. was paid, in 1921 15 per cent. was paid, and in 1922 35 per cent. It is no interest to me that on an average of 20 years there is 5 per cent., or that 20 years ago they did not make any profit. What we are interested in is that within recent years they are able to make 35 per cent. profit, and they come along here and get a public guarantee through the Sudan Government of another £3,500,000. Last year, when the right hon. Gentleman who was recently Prime Minister, but was then Chancellor of the Exchequer spoke, he was evidently of the opinion that the £3,500,000 being proposed then was the last. But we come down a year later and the Financial Secretary to the Treasury asks for £3,500,000, and the hon. Member who has just spoken gave the House a very clear indication that this is not the last £3,500,000.

Mr. A. M. SAMUEL

No. I hope it will not be.

Mr. JOHNSTON

Now we are getting on. Up to date £13,000,000 of public credit has been guaranteed. I do not profess to be a financial expert like the hon. Member.

Mr. SAMUEL

I do not mean that they will come to the House for the money, but it is a British undertaking, and I say God bless it, and I hope it will prosper. This £3,500,000 is for a barrage. If the Sudan Plantation's people can raise other millions in England, I hope they will, and so produce more cotton. Neither the hon. Member nor I would say one word against it. We should help them.

Mr. JOHNSTON

I hope those of us who are not too deeply mixed up in the affairs of high finance will not allow ourselves to be side-tracked. The fact is, that £13,000,000 of public credit has been guaranteed to this concern, and the hon. Member indicated that there was a possibility of their asking for more.

Mr. SAMUEL

Not public money.

Mr. JOHNSTON

What has not been attempted in the House, nor, as far as I am aware, in the Press, where there is a heavy silence about the Sudan Plantation Syndicate, is to prove that it is possible out of 100,000 feddan, which is all they propose to cultivate, to earn the interest and sinking fund on £13,000,000. I know gentlemen outside the House, who have considerable knowledge of the subject, who declare that it is absolutely impossible. I have made the statement in the House, and it has never been denied, that between £5,000,000 and £6,000,000 have already been wasted, and have been sucked up by a man called Alexandrine Is the House aware that the first contract for building this dam was on a 10 per cent. basis of cost? The contractor was to get 10 per cent. on everything he spent, including his wages bill, and it was after the Sudan Government had become aware that this money had been wasted that they cancelled the contract, and paid him a heavy sum in compensation for cancelling it, and came back to this country and got a reputable firm—Lord Cowdray's firm—to undertake the contract from which they had expelled this man Alexandrine. What docs the House know about this £13,000,000? [Interruption.] I do not know what became of Alexandrino. For all I know to the contrary he may be one of the financiers of the war chest of the Liberal party. I want to get to the point raised by the last speaker. It is stated in the Press—in the "Daily News" to be precise of last Saturday, in the financial columns—that the £1 shares of the Sudan Plantations Syndicate are now standing in the market at £7. They have risen 5s since the Debate in the House the other night. A concern whose shares stand on the market at £7 does not seem to me to require the benevolent support of the British Government, particularly of a British Labour Government.

Mr. BALFOUR

On a point of Order. Is this matter in any way connected with the Trade Facilities Act? Is it not the case that this Syndicate has nothing whatever to do with any advances made to the Sudan Government for the purpose of these irrigation works, but is simply a trading syndicate which benefits by it, the same as anyone else in that area?

Mr. SPEAKER

I do not think that is a point on which I ought to pronounce.

Mr. JOHNSTON

Every one who knows anything about the subject knows what the facts are. The hon. Member is entirely in error. The other night when this subject was before the House, the Under-Secretary for Foreign Affairs declared quite frankly that he was willing to give us an inquiry into the three points upon which we were most deeply interested. First, he said he would give us an inquiry into the way the natives had been, and are being, treated in the Sudan, and into the way the natives have been taxed. I wish to ask my hon. Friend to make his promise on this point more precise and more detailed. Would he tell us, for example, if inquiries will be made into the total amount of taxation which these poor natives suffer, and their wages? Is it the case that they pay £250,000 for sugar tax alone? Is it the case that they pay a but tax, and an animal tax—that every animal they have is taxed? Is it the case that they have to pay a crop tax, and that if there are three crops of cotton in the year they have to pay three taxes on the crops? My hon. Friend also said he would give us an inquiry into whether or not it was possible at this late hour of the day to insert in the agreement between the Sudan Government and the Plantations Syndicate a clause compelling the syndicate, which is getting a monopoly in the Sudan, to offer their cotton for sale in the British Empire? I should have thought hon. Members opposite would agree with that. British Empire cotton growing—you are sinking public credit. Would you believe it? The gentlemen who have drafted this agreement, who have poured out the public credit, have no guarantee that a single bale of that cotton, when it is grown, will be offered for sale in the British Empire. A business Government! [An HON. MEMBER: "Why should not America do the same thing?"] I am concerned with the British taxpayer, the British Government, the British House of Commons, and the British people, who are being asked to put up the £13,000,000, and I do I not believe the individuals who are running the Sudan Plantations Syndicate would offer a single bale to Lancashire if they could get a higher price for it outside the British Empire.

The third point on which we asked for an inquiry was whether or not it was possible, in order to limit the price of cotton, to limit the profits of the Syndicate. If we are handing out public credit why should it not be to something in the nature of a public utility company? If this raw material is essential to one of the vital industries of the Empire, the nation's cotton, why should we not restrict the profits of the monopoly, and treat it like a gas monopoly and allow it to pay no more than a 6 per cent. profit? The Under-Secretary, if I understood him aright, said there would be a difficulty in limiting the selling price of the cotton. What we were after was an attempt to limit the profits the syndicate made from 38 per cent. to 6 per cent., and if possible give the natives and the British consumer of cotton the benefit. I have here a circular sent out by a large firm of stockbrokers in London to potential investors. Dealing with the affairs of the Sudan Plantation Syndicate shares, they say this, dealing with the profit: The syndicate's 25 per cent. interest can be estimated as over £330,000 per annum. This calculation is based on cotton at 10d. per lb. The present price of Egyptian cotton is 1s. 5½d. per lb. Every 1d. over 10d. per lb. on 100,000 feddans at 300 lbs. per feddan (a conservative estimate) means £31,000 per annum extra profit to the syndicate. The 300,000 feddans are after all only an experimental proportion. The total area possible of cultivation is much greater. The chairman in his speech at the last annual meeting of shareholders said: We are to-day only in our infancy. These people are in control of a new undeveloped land under the British flag. The lives and fortunes of millions of fellow subjects are in their control. Nothing is ever reported to this House as to the treatment of the natives. They do not come under the purview of the Colonial Secretary. It is not a Colony; it is not a Dominion. It is a "Condominium," half controlled by Egypt, which has now got Home Rule and is away from the control of this House, half controlled by some unspecified officials in some unspecified Department in Whitehall. They have got this huge monopoly. They came last year for 3½ millions, and they come this year for 3½ millions of credit. The hon. Member for Farnham (Mr. A. M. Samuel) did say most distinctly that this would be a continual call for now credit. If they cannot pay the interest on this 13 millions, I submit that sooner or later the British taxpayer will be called upon to make it good. Before we give this money we ought to have the most rigid inquiry, and the results of that inquiry given to this House.

I do not want to blame our Front Bench. [HON. MEMBERS: "Oh, oh!"] There is no necessity for any jeers about it I am willing to go to a division, even if I go alone. I will not have my name, for what it is worth, associated with this. I implore the present Government, before they get in this thing up to the neck, before their hands are stained, to give us this inquiry first. Let them tell us if the Sudan Government's balance sheet balances. Tell us if every charge that the Sudan Government has to meet is in the balance sheet. Tell us if there is a penny of the charges in that balance sheet for military defence, and whether it is because there is no charge for military defence in the balance sheet that the balance sheet is able to balance.

I suggest to hon. Members opposite and below the Gangway, who profess to be keen business men, that it is their business even more than it is ours to demand the most rigid and particular examination of the finances of this Sudan adventure before there is another penny of public credit voted by this House.

Mr. W. GRAHAM

I can only speak again in this Debate to-night by leave of the House, and I want to say at once to all Members in all parts of the House that I only rise with great reluctance, because I know there are many who are anxious to take part in the Debate, and that so many have not so far succeeded in doing so. I want to try first of all to reply briefly to the criticisms of the hon. Member for Farnham (Mr. A. M. Samuel) in regard to the two sections relating to Trade Facilities and Export Credits. With regard to the criticism of the trade facilities part of this scheme, the hon. Member for Farnham drew attention to the payment of a sum equal to three-quarters (that is the maximum figure) of the interest on any loan raised in this country by the Dominions in order to engage in work of a temporary character. He asked what kind of consideration we were getting in return. I ought to say frankly to the House that there is no return to which we can point in this country in connection with the repayment up to a maximum of three-fourths of the interest which we propose to make. But I would remind the hon. Member that this was a recommendation of the Imperial Conference which was designed to try to help employment in this country and to facilitate the undertaking of work at an earlier date than it would otherwise have been undertaken in the absence of assistance of this kind. I very much hope, if I may speak for myself, that this is only the beginning of certain schemes of co-operation between the Colonies and Protectorates and this country which will help us to undertake useful remunerative work and to provide employment both in this country and in the Colonies and Protectorates themselves. It is important to remember that if we give for a period of five years this sum of three-fourths of the maximum of the interest up to a total sum of one million in any one year and assuming that the loans under that will be raised at about 5 per cent., a sum in the aggregate of £26,000,000 or £27,000,000 will be available for work of this public utility character which, I think it will be agreed, will employ a very large number of men. That is a consideration of importance which we had in mind in supporting this proposal.

My hon. Friend also referred to the guarantee which has been given to certain shipping concerns in Great Britain in order to undertake work and provide employment. It is true to say that out of the £38,000,000, which we have so far placed at the disposal of undertakings by way of guarantees, about £8,500,000 has gone in guarantees to shipping companies. I quite recognise that, from some points of view, that is a large sum, but clearly there was a great deal of distress in shipping centres, and, above all, there was the protection of a very powerful Advisory Committee in this matter, which I have no doubt had before it all the circumstances to which the hon. Member drew attention.

Mr. A. M. SAMUEL

When the right hon. Gentleman says the Advisory Committee paid attention to the question of whether shipping should be helped, is he right in saying it lay in the power of the Advisory Committee to do anything? Could not the Treasury say, "We do not like this policy. We do not leave it to the Committee. It is not for the Committee to say what the policy is going to be"?

Mr. GRAHAM

The hon. Member knows that the general policy is indicated in the Act of Parliament under which these guarantees are given, but I submit to the hon. Member that it is quite impossible for any public Department to appoint a strong Advisory Committee of this kind and then to tie its hands in the matter of the guarantees which it is going to give. You would not get men to serve under conditions of that kind. We have entrusted to them, with very great success, a large responsibility. Their administration so far is the best proof of the wisdom of our course. I see no reason for departing from that at the present time. The hon. Member also criticised us on the ground that there is nothing to show where the £38,000,000 of guarantees have already gone. On the contrary, fairly complete reports have been presented from time to time to the House of Commons; and let me say that there is available a full list of the guarantees under this Act of Parliament, and I will be delighted to place it at the disposal of any Member who wants to see it, and also to consider if necessary the question of its publication. I will take that into consideration, because it is important that the House-should know exactly what is being done under these guarantees. The hon. Member also suggested that the railway companies do not need these guarantees, and that in any case the provision of the guarantee enables companies to get money on rather cheaper terms. That may be so, but I am not satisfied personally that that is an undesirable thing. I should have thought this policy was in the national interest at the present time, and that to get money for useful purposes on the cheapest terms on which it can possibly be obtained was a good policy. I want to remind the House that this system of guarantees has so far not involved the State in one copper at all, with the exception of that one loss of rather less than £4,000 in connection with one failure under the Trade Facilities part of this scheme. That should be taken in view when we consider a matter of this kind.

8.0 P.M.

Then the hon. Member said there was little imagination in a Government Department. The practical reply to that is that the questions are really settled by the Advisory Committee, and, as he knows, that is composed of very eminent business men who are not likely to suffer from any lack of imagination. They have a real freedom. They have very wide powers. They are bound by the terms of the Act of Parliament, which I think provide adequate safeguard from our point of view and which confer upon them the maximum freedom to discharge the duty we have entrusted to them. The hon. Member opposes the suggestion to give any guarantee to railway companies in this country. Obviously, of course, under the Act it must be a guarantee in respect of capital expenditure. So far, two guarantees have been given in connection with railway enterprises. I entirely agree that British railway companies as they now exist under the Act of 1921 are a different proposition. As the House knows, they have a formal guarantee of their net revenue of 1913, and they have recourse to the Railway Rates Tribunal in the fixing of rates and charges in respect of the capital expenditure on which they embark or may embark in future. That is a point the House of Commons must keep in view in giving further guarantees to the railway companies. Let me add that any enterprise of a capital character which is put forward is, of course, at perfect freedom to go to the Advisory Committee, and we could not at this stage debar any undertaking from doing so, especially when we look to the provision of employment, provided we are satisfied as to the security and general standing of the concern.

My hon. Friend also asked, Why not concentrate on one or two very large schemes? That, however, would be foreign to the whole policy we have in a Bill of this kind, and I think it would be very undesirable from the point of view of the provision of employment. We want those guarantees, in so far as they are taken out, to flow out evenly over the whole country. I do not want to sea in the hands of one or two large undertakings a kind of concentration of the guarantee. It is common knowledge at the present day that a very large number of undertakings would not be in a strong position, and the firms would not be able to undertake the work without those guarantees, although they are not debarred from doing so. We must see that the guarantees cover all parts of the country and all kinds of enterprises.

The other part of my hon. Friend's criticism referred to that part of the Bill which is more particularly the province of the Board of Trade. I refer to the Export Credits Scheme. No doubt in the Committee proceedings on this Measure there will be an opportunity for hon. Members to discuss this part of the scheme, and I must leave it to my hon. Friend and other representatives of the Board of Trade to reply. But on one point I might mention that we pointed out on Second Reading that, of the £26,000,000, only about £8,500,000 had originally been taken up. I desire to pay the warmest personal tribute to the work which has been done by the Advisory Committee and other bodies, but I think the difficulty lies in the fact that we have had a great deal of dislocation over which we so far have had very little control. That explains a very great part of the difficulty under the Export Credits part of the scheme. I am perfectly satisfied that any hon. Member taking that into account would probably agree that, while the scheme is not 80 well known as it should be, it is surprising that even £8,500,000 has been taken up, small though that sum may seem to be.

Now I will touch very briefly on the question raised by my hon. Friend the Member for Stirling (Mr. T. Johnston) in regard to the Sudan guarantee. I have already told him, in the clearest language that any Scotsman could use to a fellow Scotsman, that we succeeded to this legislation, that in point of fact we had not an opportunity, as he knows, of considering this in any way as a new proposal, and we had to make up our minds whether, in all the circumstances of the case, we should give this additional guarantee of £3,500,000 or leave the money to be found by some other method by the Sudan Government and probably run some risk from the point of view of the irrigation of the Gezireh Valley and the supply of the 70,000 bales of cotton for Lancashire which we hope will be available in 1925. That, I think, is the underlying and general consideration which even the strongest of the critics on our side of the House will have to take into account in considering our action. As regards the 35 per cent. earned by the Syndicate during the year 1922, I said to my hon. Friend that there was originally another syndicate before the Sudan Plantation Syndicate came into existence. In point of fact, the operations of the Syndicate are not confined to this particular scheme, although no doubt it is a very large part of their enterprise. It is true that during the two years in question a high percentage was paid, but may I remind my hon. Friend that there is a very great difference between the dividend paid on the nominal capital and on the actual sum subscribed by the shareholders in this Syndicate. If we want to arrive at the facts of the Sudan Plantation Syndicate, between 1904 and 1911, no dividend at all was paid, and, if I remember rightly, that was the state of affairs in 1916. It is a very fair argument to take the average dividend paid on the actual money subscribed by shareholders in this undertaking over the 20 years and see whether, having regard to all the circumstances, they have got anything like an adequate return. The average is just a fraction more than 5 per cent. Although I do not profess to be an authority on what should be considered a fair return, I am bound to say that, everything considered, that is not a very high rate, especially if you look to the considerable risk which at all events over a considerable period was involved in this undertaking in the Sudan.

Let me make it clear that this £3,500,000 is the end of the story as far as the British Government are concerned. That is our final contribution to the guarantee, and the contract, which is timed to conclude in 1925, provides for the overtaking of that work at that date and the planting of the cotton crop as soon as may be thereafter. I see no prospect of any further guarantee being given, but it is our duty now to ask what would happen if we withheld this surviving portion of I £3,500,000. It may be argued that the Sudan Government might try to raise it themselves. I do not rule out the possibility of their doing so, but let us remember that this guarantee has not so far involved us in one copper of expenditure. If they had to raise it, it would be on terms more onerous than would be the case if we gave the guarantee. It would rebound on the Sudan Government and its finances, and on the syndicate, and have an effect on the £9,500,000 which the British Government have put up. We are bound to look at all the circumstances. I hope I have made it plain that this is the end of the story, and that it will be a matter of business and of ordinary caution to give this guarantee, realising that we will have a return in this country in due course. My hon. Friend says that £5,000,000 or £6,000,000 was squandered in the earlier contract. I do not defend the early contract in any shape or form. It was on a cost and percentage basis. The practical point to us is that the contract is no longer on that basis. We now have this on a definite economic foundation, with a guarantee that the work must be overtaken in 1925. That is the practical point for the House of Commons. Let me add on that point that there is a very strong opinion in Lancashire—and it is not confined to one side of politics—that we must get this supply of cotton, and get it at the earliest possible moment.

Mr. MAXTON

Do you guarantee that we will get it?

Mr. GRAHAM

We cannot, under the proposal, get any guarantee from the Sudan Government at this stage that the whole of this cotton supply will come to Great Britain. I am not sure that we have the power to compel the Government or the Syndicate to give us such a guarantee, but all the cotton so far raised has come to this country, and, everything considered, I see very little chance of a departure from that policy when the larger supply is available. Questions were asked, but I cannot take time to deal with them now, as to the position of the native, as to his taxation, and other problems of that kind. I certainly believe that the question we have addressed to the Government of the Sudan will bring us the information my hon. Friend desires, and I ask him at this stage, in view of the shortage of the time at disposal, to leave it at that, on the understanding that we will have a further opportunity of dealing with it at a later stage. I ask hon. Members to bear with me in what is a difficult appeal. The Trade Facilities part of the Act, giving the power to guarantee, expired as from the middle of November last. It is very important that we should get this legislation without delay. We have had considerable discussion on the Financial Resolution. We have had a good deal of debate on Second Reading, the Bill is to be taken in Committee of the whole House, and I make a fair offer to all Members that they will have a full opportunity to discuss the Clauses during Committee stage, and that they will have an opportunity of further discussion during the Report stage and on Third Reading. We are very far behind. A very great deal of employment turns on this Measure, and, in view of the fact that further opportunity for discussion will be available, I ask the House to give us the Second Reading now.

Mr. WADDINGTON

I desire to support the Second Reading of this Bill, and as a Lancashire representative and a member of the Empire Cotton Growing Association, I would like to make some observations on the criticisms which have been offered on the Sudan Clause. The hon. Member for West Stirling (Mr. Johnston) has made three or four speeches in this House completely misrepresenting the facts so far as they relate to the position in the Sudan. The loans which have been granted by this House have not been associated with the Sudan Syndicate to the extent of a single pound. They have had no benefit whatever from the expenditure which has been authorised. Not only that, but in the making of their profits they have received no benefit from what the Government have expended in the Sudan. There is not a farthing of the expenditure so far that is productive.

It being a Quarter-past Eight of the Clock, further Proceeding was postponed without Question put, pursuant to Standing Order No. 4.