TRADE FACILITIES BILL.

HC Deb 17 March 1926 vol 193 cc523-50

Order for Third Reading read.

Motion made, and Question proposed, "That the Bill be now read the Third time."

Mr. RILEY

The Bill which is now being submitted for Third Reading brings the total liabilities under the Trade Facilities Acts up to a sum of £75,000,000, and, in addition to that sum of £75,000,000, there is a further £26,000,000 referred to in the Bill under the Export Credits Scheme. This means that, when this Bill passes its Third Reading, we shall be committed to a total liability of £101,000,000 guaranteed to traders, both as to capital and as to interest, for the credit of which this nation, directly, is to receive no benefit whatever. In the course of the discussion in Committee, an Amendment was moved from these benches seeking to secure that, in these guarantees of State credit, there should 'be some arrangement whereby the State gets some direct recompense for the enormous credit which it is offering to traders.

When the Bill passes, we shall be committed to a total guarantee of £ 101,000,000. It is reasonable to assume that the traders who get the benefit of the guarantee obtain an advantage of at least 2 to 3 per cent., as against the price they would have to pay if they borrowed on the money market. That means that the State aid is worth something like £2,000,000 to those who enjoy the advantage of it. In view of the issues which have been raised to-day in connection with the Economy Bill, whereby we are told we must do everything we can to minimise the State liability, this principle of affording State credit without any recompense is going entirely contrary to the policy that has been outlined to-day. I want, therefore, to urge the Government to give some consideration to this aspect of the matter. In individual cases, as set forth in the returns of the grants that have been made, I see sums amounting to as much as £2,000,000 to individual firms, which means a clear gain to the companies concerned of £50,000. Many of these guarantees will have to run for many years. I understand in some cases at least 20 years will run before the guarantors will be free. Who knows what

is going to happen in that period? The guarantees are given in some cases to firms who are doing work for new States, such as Lithuania and others, whose financial stability is not of the highest and safest kind. It is only common prudence, when the nation has been committed to such a vast sum as £100,000,000, which will be outstanding for 20 years, that some steps should be taken whereby the nation is safeguarded against the losses that are almost certain to ensue. Therefore I hope consideration will be given by the Government to seeing that there shall be some direct recompense to the State. If only l per cent. was earmarked as a return, that would be a substantial recompense to the State of something like £1,000,000.

The only other point I want to urge is whether something cannot be done in connection with the granting of facilities to remove the embargo that has hitherto obtained on transactions with Russia. From the outset it has been the policy of the Government to rule out of consideration any facilities for trading transactions with Russia. That policy is entirely out of line with the Act of Parliament that governs trade facilities. In the Act of 1920, whilst Russia was not excluded, the countries for which credit was afforded were specifically named. They were eight in number and they were only Allied countries and not countries that had been fighting as our enemies. In 1921 the Act was amended and that limitation was entirely removed, and in place of the limiting words transactions were permitted with any country. Why does not that apply to Russia? The Act does not bar Russia. It is a piece of administration which one does not wish to see dictated by political bias. Trade is being done. I notice in the Coal Report that in 1913 no less than 13,000,000 tons of coal were exported to Russia. Last year, I believe, only 2.000,000 tons were exported to Russia. If there had been the same willingness on the part of the Government to trade with Russia as obtained before the War, there is little doubt that, as far as the coal export trade is concerned, considerably more business might have been done, to the assistance of our depressed coal industry. I therefore urge that in these two matters favourable consideration may be given, and an end put to the animosity that has characterised this Government in its dealings with Russia.

Mr. DENNISON

I desire to make a few observations on one point which did not to my mind receive the consideration of the Front Bench during the Committee stage. I refer to the guarantee that was given to the Appleby Iron Company of £600,000. I have no objection to the Government giving facilities to any particular industry where the evidence goes to show that it is in need of it, and I know of no industry where that assistance is more needed than the iron industry, but when I say that I am entitled, as one of the representatives of the workpeoples' side in the industry, to say that the Government is rightly and justifiably asked to state the grounds on which they single out any particular company for special treatment. There may be reasons for it. I do not know. We have never had any explanation, nor was any satisfactory statement made by the Government last week, as to why this company in particular should receive that preferential treatment. And even if it is going to be given, what is the composition of the Committee that advises the Government to give this special treatment to one company, or to the industry? We do not know who they are. For all we know on this side of the House they may be the most competent people to judge as to what it is right to do for the industry or any particular branch of it.

What policy, for instance, did the Government pursue in making this £600,000 grant to this company? Are the work-people engaged in the industry to have a say as to what is to be done with the money equally with the shareholders? If we are going to pursue a policy of subsidising the industry, or any branch of it, it is only fair and equitable that the whole industry should be consulted—not necessarily every unit but the representative section of the industry—as to whether it is wise to give a subsidy or a guarantee in respect of credit. We have considerable grounds of complaint as to the manner in which this business has been done. I know from inside information that the grant the Government made to the Appleby Company has caused a considerable amount of discontent amongst the workpeople and considerable apprehension on the part of manufacturers in the same industry. For instance, there is at least 50 per cent. more capacity for the production of iron to-day then there was prior to the War. We were told when the. £650,000 was guaranteed to this particular company, that it was in order that they might develop their plant and bring their plant up to modern requirements. There is a tremendous amount of modern plant lying idle to-day in the steel industry. It is false economy to guarantee sums of this kind, for you will have to pay the bill, make no mistake about it. When economies are being effected at the present time at the expense of the workers, it is unwise to guarantee a sum of £650,000 to a company of this kind.

If the Government intend to continue the policy of giving grants to any firm or any branch of a particular industry, especially in the iron and steel industry, of which I know something, they would he well advised to take into consultation the whole of the representatives of the manufacturers in the industry on the one side, and riot to ignore the representatives of the workpeople on the other side, because they are just as much interested, if not more interested, in the industry than those who merely invest their money in it for the purpose of making profit. I hope that the observations which were made on this subject in Committee, and the observations that I have made this evening, will give some indication to the Government of the resentment at what they have clone and the manner in which it has been done. If this policy is to be continued in the future, I hope the Government will have some regard to the criticisms that have been made from this side of the House, and from the other side also.

Mr. S. ROBERTS

I rise to express the hope that this may be the last occasion on which this House will discuss Trade Facilities Bills. I do not think that I should be justified in voting against the Third Reading of the Bill, because for many years one has been supporting, silently, Measures of this kind, and as I did not raise any protest on the Financial Resolution or on the Second Reading of this Bill, I shall not vote against the Third Reading. Sometimes one's eyes can be opened in regard to these matters, and my eyes have been opened very much in regard to what I consider the evils of the Bill when we come to the particular question of the grant of £2,000,000 in regard to Kent coal. I look upon that as a very rash transaction from the point of view of the Government. Kent coal has been heard of and has been worked for many years, and never with success. I feel that it is a big gamble to put State money to the extent of £2,000,000 into a transaction which may possibly mean very serious loss, possibly the loss of the whole £2,000,000 and interest for many years to the taxpayers of this country.

If, on the other hand, the Government does not lose its money and the coal is produced, and put on the market, it will be in competition with coal produced in other districts in this country. We have at the present time trouble in the coalfields. The trouble is not that there is too little coal, but that there is too much coal. Therefore, you are subsidising production of what is not needed and which if it goes into the market will only interfere with and make more difficult the conditions in various other coalfields. In order, problematically, to find employment in Kent, you are possibly doing something to interfere with employment in Durham, South Wales, Northumberland, Yorkshire and other districts. The whole prospect in regard to the coal industry is so problematical at the present time that I think it is very wrong to subsidise one particular branch of the industry to the detriment of the others. This is, undoubtedly, a subsidy.

The money required for the development of the Kent coalfield could not be raised on the market at 5 per cent. without a Government subsidy. I doubt. if it could be raised at 7 per cent. If it could only he raised at 7 per cent. this guarantee means a grant from the general credit of the country—the credit of the country is not unlimited, and if it goes in this direction it will not he available to go elsewhere—of at least £50,000 a. year for a long period of years to this particular firm, in order that they may carry out their very desirable experiments in regard to Kent coal. I believe that if there is a. good proposition in regard to coal, the money could be found without coming to the Government; it has been found in the past, and if it is a sound proposition it will be found in the future. Although this scheme may give a little bit of employment at the moment in providing machinery and work for sinkers and those who are developing the shafts, it will ultimately mean competition against other districts. It may be serious competition if this venture proves successful, and if it does not prove successful it means the loss of a very large amount of the taxpayers' money. I do hope that this is the last occasion on which we shall hear of Bills with regard to trade facilities.

Mr. TAYLOR

I wish to enter my protest against recent development of the policy governing the guaranteeing of trade facilities. We have heard from both sides of the House criticisms of the recent proposals to grant guarantees in the case of the Kent coalfield, and in regard to developments in the iron and steel industries. In both those industries at the present time there is more capital and labour than can usefully be employed. I do not think it was intended that the credit of the country should be used for the purpose of giving preferential treatment in the raising of capital in the money market to competitive industries which will compete with existing home industries. I urge upon the Government the necessity in the future administration of this Act of consulting the employers and the workpeople's organisations before projects of this kind are entered upon. If they cannot see their way clear to alter the composition of the actual Committee, I feel sure that it would be for the benefit of the country and of the taxpayers if they would consult the representative organisations in the trade that are likely to be affected, as far as any new proposals are concerned.

It is with some apprehension that one agrees to the continuance of legislation of this kind, because of its effect upon our national finances in other directions. It was stated, I think, during the Debates in the early stages of this Bill, that our floating debt is something like £ 700,000,000, and that within the next four years loans will mature for something like £1,000,000,000. In so far as the machinery of this Act is used for the purpose of creating new gilt-edged securities in the money market, so far will it be a disadvantage to the finances of the State when they come to convert outstanding loans. If we are to have legis- lation of this kind in existence at all, it seems to me that the only justification for it is that it should meet exceptional circumstances and should not be invested in competitive home industries. I suggest that in the administration of the £5,000,000 which we are now voting by this Bill, the Government might pay particular attention to the establishment of new enterprises and new industries in the areas that are suffering from abnormal unemployment.

The problem of the necessitous areas is not altogether the same problem in each area. Each area has its own particular kind of problem. There is no doubt that in some of these areas the industries on which a large number of people have formerly relied for a livelihood have practically disappeared, any hope of resurrecting them is passed, and if the Government should use the national credit we are now creating for the purposes of dealing with abnormal unemployment in these areas by using this subsidy to start and attract new enterprises in these areas and alter the balance of employment and assist them to recover, that is the kind of use to which this Act may be put.

I want to take this opportunity of dealing a little more closely with an argument that has been used from the Government Benches by the Parliamentary Secretary to the Department of Overseas Trade and later by the President of the Board of Trade. During the course of the Debate on the 22nd February, in reply to requests that were made from this side of the House and, indeed, from the other side of the House as well, for a more sympathetic handling of the problem of Anglo-Russian trade, we were told by the Parliamentary Secretary that the export of Russian goods to Great Britain in 1924 was £20.000,000 and that Russia took from us £11,000,000. She had, therefore,£9,000,000 of credit with us. In 1925 Russia sent to the United Kingdom £25,000,000 worth and took from us £19,000,000, leaving themselves with a credit of £6,000,000. Therefore, in those two years, according to the Parliamentary Secretary, they had £15,000,000 at their disposal for purchases in Great Britain. The President of the Board of Trade, speaking in the House on 11th March, endorsed that point of view. I am not anxious to score debating points on this matter, but I do want to ascertain the real facts, because there is a great disparity between the facts as I have collected them and the statements made from the Government Bench, and I should be very glad if some explanation of this disparity could be given.

In the six years from 1920 to 1925, according to my information, Russia bought from Great Britain approximately £66,000,000 of commodities and sold to us £63,000,000. In those years Russia actually bought, on the bare figures alone, £ 3,000,000 of commodities more from Great Britain than she actually sold to us. But to come to the two particular years mentioned by the Parliamentary Secretary to the Overseas Trade Department, the years 1924 and 1925. According to my information Russia bought in Great Britain in those two years £42,000,000 worth of commodities and sold to us £45,000,000 worth. At first sight it looks as though there was a balance favourable to Russia of some £3,000,000; but let us examine the facts in relation to the Anglo-Russian trade. In order to arrive at the actual amount Russia derived from the sales she made to us it is necessary to deduct certain items and certain necessary expenditure. In the first place the freight charges from Russian warehouses to the place of actual sale in Great Britain must be taken into account. The insurance charges from the Russian warehouses to the place of actual sale must also be taken into account. Then the warehouse charges in Great Britain must be included, also brokers' commission and banking charges, and the whole Russian foreign trade, which in 1925 amounted to £114,000,000, was insured in London, or at any rate in Great Britain.

I am informed that the total effect of all these considerations would mean that a minimum of some 10 per cent. would have to be deducted from the actual selling price in order to arrive at the actual amount that would be left available for purchases. In order to arrive at the actual amount spent by Russia in Great Britain it is necessary, because Russia makes her purchases f.o.b. at British ports, to add freight charges to Russia, insurance charges and banking charges, and this would make it necessary to allow for a deduction of 10 per cent. from the figures I have quoted. The net result, if my figures are correct—if they are incorrect I shall he very glad if the Parliamentary Secretary will give us the real facts—is that if we take Russian purchases in Great Britain for the years 1924, 1925, and add to that amount 10 per cent, for the costs I have mentioned, she purchased about £46,000,000. That is adding to the actual £42,000,000 a sum of £4,000,000 to cover the costs I have indicated. Then, if you take Russian sales in Great Britain in 1924 and 1925 and deduct from them the necessary costs that have to be paid for the services I have outlined a minimum of 10 per cent., deduct from that £45,000,000 approximately £4,000,000, the effect is that instead of there being a balance of £15,000,000 in Great Britain available for the purchase of British goods, there is actually a favourable balance to Great Britain of some £6,000,000 on the transactions between Russia and Great Britain. That is as against the £15,000,000 which the Parliamentary Secretary said was available for the purchase of commodities in Great Britain, and which both he and other Government spokesmen have been using as a substantial argument against. the extension of these facilities to Anglo-Russian trade.

I hope we shall have the full facts placed before the House and that. before long the antagonism and misunderstanding and difficulties between the two countries will be cleared up by a new Treaty which will settle all outstanding questions between the two countries and allow us to get down to the work of developing full economic co-operation between the two. As I have said in the course of previous Debates, I do not believe that all the faults arise because of the prejudice and stupidity of the British Government, although I think that in many directions they have shown a very mistaken idea as to our national interests, both on the trade and political side, in the handling of this problem. I believe and hope that Russia on her side will recognise that it is impossible for full economic co-operation to take place between nations, whether capitalist or Socialist, if there is not recognition of the sanctity of trading contracts between individuals. or nations. I am sure that Russia oil her side would not continue to send tint her goods unless she were cer- tain that the British importer would honour fully any obligations into which he entered. It is just as essential that that should be understood and provided for on the other side as it is in the case of Great Britain. If the Government could see their way to state definitely the principles on which they would be prepared to enter into new negotiations, and the principles upon which a general settlement could be negotiated, I am sure that the conditions are such that a settlement would be possible between the two countries.

RADFORD

I am just as opposed to this Bill as is my hon. Friend the Member for Hereford (Mr. S. Roberts), who spoke a few minutes ago. As I have not been fortunate enough to he able to sneak in the earlier stages, I wish now to detain the House for a few minutes. Although, if there is a. Division, I shall vote for the Third Reading, I should be sorry to do so without having put on record the fact that the Measure is one of which I do not approve. One very objectionable feature of it is the exhaustion of the national borrowing power. The capital of the country may he visualised as coming from three separate springs. No. I spring is the capital belonging to persons who desire a big return on their money, and who do not mind running the risk of losing their capital. No. 2 spring belongs to the class of people who arc prepared to run a certain amount of risk, and for whom such securities as the debentures of these commercial concerns would be an attractive and reasonable proposition, showing possibly 7 per cent. on the money. The third spring is the spring of money belonging to people, trustees, or those who for special reasons must have absolute safety for their capital, and are content with a small return, of 4¾ or 5 per cent. In the ordinary course, but for the Government intervention with these Trade Facilities, such issues as the Government have been guaranteeing the capital for would have come out of spring No. 2, belonging to those who are prepared to run a small risk if they can receive about 7 per cent.—prepared to lose 20 per cent, of their capital on occasions. But by giving these guarantees we are drawing on spring No. 3, the gilt-edged investor spring, and there is not an unlimited amount of capital available in that spring, nor does it fill up quickly.

9.0 p.m.

There is no more important aspect of our national finance than that in the next two or three years, as our loans mature or are due for repayment, or the Government acquire the option to repay and convert, cur borrowing power should be at its highest and that spring No. 3 should be full and overflowing. Within the next three years there will be something like £3,000,000,000 of our National Debt either becoming due for repayment or the Government will have the option of converting. If at that time our supply of money for gilt-edged securities is full and overflowing, and the Government can convert their loans at a saving of something like 1 per cent., it will mean £30,000,000 a year off our national Budget without any repudiation or dishonourable taint at all attached to the action. We have been discussing for the last two days an Economy Bill. Hon. Members have laughed at its title. Of course, economies ate very difficult to make. As the Chancellor of the Exchequer pointed out, the first two-thirds or three-quarters of the £800,000,000 expenditure could not be interfered with honourably. But here is £30,000,000 that can be honourably taken from it if we can keep the national borrowing power unimpaired.

The next point is that the borrowing, or the guaranteeing of borrowings, is exclusively for large concerns. I am not imputing the least wrong motives to the Committee of Inquiry, but the very nature of the methods by which the money is raised puts it outside the reach of the smaller companies and concerns; those for example. with £10,000 or £20,000 of capital. There are hundreds of such concerns which could do with further capital. If a concern with a small capital wishes to borrow £10,000, even if the application were considered favourably by the Committee of Inquiry, the cost of going on the open market to borrow the money, even with the Government guarantee, would be prohibitive. A cost of £2,000 or £3,000 or £4,000 when you are borrowing £250,000 or £500,000 is a comparatively small percentage, but if you want to borrow £10,000 and you have to advertise and to make a public issue through the Stock Exchange in order to have the security marketable, the cost becomes prohibitive, and probably 30 per cent. of the amount will go in expenses. There are hundreds and thousands of firms whose prosperity and development are just as important for the absorption of labour and the development of industry as these large concerns, but they are shut out entirely under the present system of administration of the Trade Facilities Act.

In this connection, in every part of the House, there is an earnest desire that the best relations shall exist between employer and employed, between capital and labour. I am sure that all Members who have any experience of industrial matters agree that small concerns are infinitely preferable to big ones for that good relationship to exist. It is my privilege to be connected with one or two small concerns, where the men and the directors are all intimate together, and understand and trust one another. That is not possible where you are dealing with big concerns, with £1,000,000 to £5,000,000 of capital. I do not, know whether it would he possible, in the period laid clown in this Rill, for the hon. Gentleman in charge of the Measure to see whether, by any limitation of the machinery or procedure, smaller concerns can raise, say, a minimum of £10,000, without incurring the expense of advertising and making a public issue. If that could be done, I am sure that it would further trade and employment.

If there is a Division to-night I shall vote for the Third Reading of the Bill, but I think it only my duty as a loyal supporter of the Government to gay that I shall be unable to give my support to any further extension of it. My last point is this. We refer to the Government's liability under these guarantees being extended from £70,000,000 to£75,000,000. I may have read the Bill inaccurately, out it seems to me that our liability may be anything in excess of £75,000,000, because under Clause 1 £75,000,000 is the maximum limit, on the aggregate capital amount of loans which may be guaranteed, but if we guarantee a loan which is not repayable until 1953 or some such period, the amount of interest for which we are incurring liability is more than double and may probably be treble the amount of the loan. Therefore, it is conceivable that in extending these figures from £70,000,000 to £75,000,000 we are agreeing to the extension of a liability which may reach £150,000,000 or £200,000,000.

Mr. CHARLES EDWARDS

The hon. Member for Hereford (Mr. S. Roberts) opposed this Bill because of some of the uses to which guarantees have been put. I am in favour of this Bill. I believe a Bill of this kind can be a, useful thing, and the fact that it is put to uses, with which the hon. Member does not agree, is not in itself an argument against the Measure. To-night, two cases have been mentioned. One was mentioned by an hon. Member who can speak with some authority on the steel industry. He complained that £650,000 was being given to some company for the purpose of bringing their works up to date, while many steel works, whose equipment is of the very best and most up-to-date type, are idle or are working short time, and so, he argued, there was no necessity for the guarantee. The other case mentioned was that of the Kent coalfield, and in connection with that I make this assertion. I do not believe it will be necessary to sink another pit for The next 50 years—and that is looking a long way ahead.

I believe there are already sufficient pits to supply all the output that we shall require for that period and even beyond that period, and that many of the existing pits have much better seams than will ever be found in Kent. If their equipment could be brought up to date, they could supply all the output necessary for a long time to come. I observe in the Report of the Commission which has just been issued that it is pointed out that many collieries are badly equipped. We have urged that point for a long time, but very little attention was paid to us. I say now, that if any guarantee is to be given it should be for the better equipment of the present collieries. There are, I suppose, scores of pits in this country with splendid seams which are idle or are working short time. There are others from which a large output could be developed at any time, and if guarantees are to be given at all, they should be given for the better equipment of those pits which have already been developed or which have shown the possibilities of being further developed.

I think it a pity that a beautiful county like Kent should be developed in this way, unless there is an absolute necessity for it, and I submit that there is not such a necessity. I may point out that this scheme involves moving large populations from places where there are already houses and all the amenities of our mining towns and villages. In order to provide for them, we shall have to use a class of labour which is already fully employed. I think it is not only a blunder but a scandal that a guarantee should have been given for this purpose, and I am afraid that influence and wire-pulling have been more effective than the desire that we should take steps to get a general outlook on the whole position. I venture to think that if decisions were to be taken now on one or two points which have been decided in this House in the last week or two, those decisions would be different. However, I support the Bill in general. I think its objects are good, but I think more care should be taken in the selection of the objects to which the credit of this country is being devoted under the Measure.

Mr. WALLHEAD

My hon. Friend who has just spoken has pressed a point of view which is rather important. We must consider the areas that may be brought into decay by the fructification of the Kent coalfield scheme. It is all very well to spend money in developing an area like Kent, in a manner which, as my hon. Friend has pointed out, is not required by the economic circumstances or even by the demand for coal, but if that area is to be developed at the expense of other areas and if it is to be developed because it will get its capital cheaper than other collieries, then it is not merely a question of moving workmen from one place to another, but it means ruin to a large body of traders. It involves loss to people who have put their life savings into various trades or occupations which have grown up around the existing pits and these people will not be compensated by the fact that land values and other values have been created in a place like Kent where they are not required by the economic circumstances. It seems to me the Government have been in a hurry to advance this very large sum for the Kentish coal area. I agree that, if it can be avoided, Kent which has been called the "Garden of England" should not be converted into a desolate area such as some of those areas we now know. I it will be said that the development will be carefully watched. We may watch, only to discover while we are watching that we lack the power of control. The Government may watch carefully and may desire that no disturbance or disfigurement shall interfere with the natural beauties of a county like Kent, but in spite of their desires the power may not be in their hands to prevent the ruin being wrought.

I suppose the Government will get its vote to-night and that this Bill will pass away from the House of Commons. One can only hope that the Government will use the additional powers which it obtains wisely and well. I suggest that in this case consideration might be given to one view expressed from these benches. We have just been discussing national economy, and the Chancellor of the Exchequer has told us he will shortly present a Budget for an enormous sum. The demands upon which that Budget will be based have accumulated through various causes. During the Committee stage of this Bill I suggested that consideration should be given to the possibilities of export trade with Russia. I used certain figures which have been pressed home to-night by the hon. Member for Lincoln (Mr. Taylor). There is one point in that connection. Fresh markets are required by this country for its export trade, but there is no good in trying to shift a market from one place to another. We want to extend the market, to make the market wider and deeper, and more receptive of the goods which we can supply. I suggest that there is an opportunity for selling to the reviving Russian State and to the Russian people, with their huge demands, some of the goods which we can produce here. We have a tremendous volume of unemployment. The Chancellor of the Exchequer yesterday indicated the extent of it, and I think we may take it that; he indicated as well that there is not much chance immediately of solving the problem or of reducing the number of unemployed to any material extent.

With regard to the burdens that we have to carry and the need for economy, I am not going into the rights or the wrongs of the question, but it has been stated in this House more than once that we have expended on certain adventures in Russia something like £100,000,000. At 5 per cent. the interest on that is £5,000,000 per annum, and if it be true that the expenditure upon the adventures of Admiral Koltchak and General Denikin cost this country £100,000,000, which we advanced for their counter-revolutionary war, and if that money is costing us £5,000,000 a year in interest, that interest has to be provided by the British taxpayer this year and every year. I suggest that taking up the question of export trade with Russia is the one way whereby we can get a return upon that gigantic sum of money which has been lost, and that there might be some means of recuperation, so far as the taxpayer is concerned, for the £5,000,000 which he must disburse every year in interest upon these ill-fated expeditions. I noticed the other day that a writer in the "Times" was arguing that there can be no trade with Russia until Russia has recognised the sacredness of contract. I agree that that is absolutely desirable and that, under the circumstances, it must be established as a fact, but I have evidence in my possession, which I offer to the House, to go to show that the responsible people in Russia are quite agreeable to accept that point of view.

The change in Russia took place under very peculiar circumstances. One revolution was followed by another, the second revolution being more extreme in its economic aspects than was the revolution of Kerensky in the early part of 1917, and at the end of 1917 the second revolution did take place upon a. basis of the confiscation of property in Russia. That is agreed. Whatever may have been the ideas of tine Russian Government that was set up after the revolution, at any rate constant touch with western Powers and the necessity for establishing contacts has demonstrated clearly to them that, whatever dispute there may be between the British Government and the Russian Government with regard to what might be termed governmental securities, at least the industrial securities will be recognised, so far as the Russian Government is concerned. As far as I understand it, and from statements that I have seen made by responsible Russian statesmen, they are prepared to recognise their liability in that direction, but, having said that, this must be remembered, that the British Courts will give no legal sanction to the idea that there is anything of an illegal character in the Russian Government carrying out a policy of confiscation. Here is a statement by an eminent British statesman upon that particular point: It is one of the most important principles of the Law of Nations that a stranger visiting a foreign country virtually binds himself to a temporary and qualified allegiance to its laws and submits to their observance, however unwise such laws may appear to be to him, however harsh and oppressive they really are, and however they may be at variance with his own notions of political liberty or with the impressions of a happier experience. Such an individual has no right to complain of the operation of the laws of a foreign State upon himself if they are executed impartially and in the same manner in which they would operate upon native subjects. The fundamental principle is this: an Englishman going into a foreign country accepts the authority of its legislation, abdicates for a time the benefits of British jurisprudence, and subjects himself to all the consequent inconvenience. That is the statement of George Canning, who was the Secretary of State for Foreign Affairs, on 27th February, 1823. For over a hundred years that has been extant, and it is curious to notice that I got that quotation from the Russian Year Book, which was published for the edification or guidance of British business men trading with Russia, up to the year 1916. Up to that year the Tsar's Government was in full control, yet here was this explicit statement of a former British Secretary of State, George Canning, put into the Russian Year Book as a guidance for British public men. Why the Russian Government allowed it to go in, I cannot say, and whether they had any fear that there might be something happening of the kind that has since happened there, I cannot tell. There was, I believe, always a fear that something of the kind might happen, but it is very strange indeed that in the Russian State Year Book, up to the year 1916, this warning to British traders trading in Russia should appear as an authoritative statement. But I want to say again that this, I am quite sure, will have no effect whatever upon, and will not be considered or acted upon by, the existing Russian Government. As a matter of fact—and I say it with all due respect to hon. Members present—if hon. Members would study the Treaty which was drawn up between this country and Russia in the year 1924, I think they would discover evidences there of the explicit wish of the Soviet Government to meet these demands of British investors in Russia. I can say quite emphatically, explicitly, and clearly that, as far as I know—and I have spoken with some of them very recently when they said it—they would be prepared and only too glad to do all they possibly could, for the small investors particularly, and for all investors in general they would be prepared to do whatever they could. On that point I would like to point out that on 21st December M. Tchitcherin, in the course of an interview, said: I have not even an idea as to whether the British Government wishes to enter into an agreement with the Soviet Government. The proposed Anglo-Russian agreement made with Mr. MacDonald's Government has been rejected by the present Conservative Government. My Government has yet to learn the grounds upon which that was done, and what was objected to. And M. Rakovsky had, I understand, already informed Lord D'Abernon, when he was British Ambassador in Berlin, that the Soviet Government were thoroughly desirous of entering into friendly relations with Great Britain, but until his Government were informed what the British Government's objections were to the Treaty negotiations with Mr. Mac-Donald's Government, his Government could not make new proposals. If that be so, then I suggest with all due deference that, if some slight indication from some source were given that negotiations could be opened up again, it would not only be of great importance so far as our own immediate donut stir situation is concerned, but of great importance for the international situation as well.

I understand that the Russians are desirous of repairing large tracts of railways and of opening up new tracts of railways for hundreds, perhaps thousands, of miles of railway. My hon. Friend the Member for the Kings Norton Division of Birmingham (Mr. Dennison) has pointed out—and he speaks with unequalled authority on this question—that 50 per cent. of our steel plant is lying idle and that there is not in sight any hope by any orders extant of placing the men upon full time There are in the steel trade about 45,000 men unemployed, and 50 per cent. of the steel plant is idle. Yet, in this one country in the world, they are anxious to develop large tracts of railway that would take hundreds of thousands of tons of steel for the railways and they would consequently want an enlargement of their transport materials, like wagons and engines. Here, by opening friendly negotiations, we may get a chance of joining in the supply of steel to them for the work they are desirous of carrying out.

Surely that is something which every Member here, whether on these benches or on the benches opposite, could join in helping to bring about. I have no interest whatever in any trading concern. I am animated solely by a desire to see an end put to this deplorable unemployment in our steel trade. I represent Dowlais, where there is an immense steel plant, and where the men have been unemployed month after month, year after year. They have only been employed for a week or two intermittently now and then. I would gladly see those works going full blast again. If I could say one word which would assist in that, I would gladly say it. I hope that as a result of these Debates and these appeals, we may start trading with them and supplying their needs. We have been joined by Members on the other side of the House in making this plea. I hope that something may be done to bring about a happier relationship. That could be dome if the Government would make some inquiries as to how far and to what extent the present Russian Government are prepared to meet their just claims that there should be a recognition of the losses incurred through their action in the revolution. I am sure they are ready to meet those claims, and that a move could be made in the right direction of bringing employment to our people.

The FINANCIAL SECRETARY to the TREASURY (Mr. Ronald McNeill)

The criticisms, or perhaps I would more rightly call them comments, for I do not think I could call them criticisms, have divided themselves roughly into two categories. Some hon. Members have directed their remarks to the criticism of the individual undertakings which have been guaranteed under this plan. Others have gone further and have directed some criticism against the principle of this legislation altogether. Those are two quite separate lines of criticism. I do not think that it is necessary for me to follow those Members who have devoted attention to individual undertakings, or at all events not in detail, because it may be remembered that, when I was speaking on the Financial Resolution some little time ago, I reminded the Committee which we then were, and I would like now to remind the House, that when this original Act was under discussion in the House of Commons in 1921, the Chancellor of the Exchequer of that day told the House of Commons that the procedure and machinery which was to be set in motion then was that an Advisory Committee was to be set up to examine applications that might come before it for Government guarantee, and that they would make their recommendations to the Government.

The Chancellor of the Exchequer then said, too, that the Treasury was going to be outside the picture altogether, and that the committee's recommendations would be accepted by the Government. I do not feel, therefore that I am called upon to defend in detail any particular recommendation that has been made by this committee. I would submit this suggestion to hon. Members. If I am not prepared to defend every recommendation of the committee, first of all the reason is, that it stands to reason that I cannot, and I think no Government Department can, have the necessary detailed information which would enable them to say that the committee, which they have set up, in any particular case is right or wrong.

Mr. DENNISON

That is a. very important question. Has any member of the advisory committee, who advises the Treasury in regard to these guarantees, had any knowledge of the iron and steel trade. as such? Was there any member on that committee who had such knowledge?

Mr. McNEILL

That is a question I cannot answer, because I do not know the mental equipment of the gentlemen who form the committee. If the hon. Gentleman asks me if any member is engaged in the industry, then the answer is in the negative.

Mr. DENNISON

Have they any knowledge?

Mr. McNEILL

How can I say?

Mr. DENNISON

How do we know, then?

Mr. McNEILL

What does knowledge of an industry consist of? Probably they have knowledge derived from personal experience, but it is obvious that, if you are going to deal with industry in general, not merely in this country but abroad, you could not have any Committee which would have personal direct knowledge of more than a small proportion of the industries with which they will be called upon to deal. I do not think that sort of knowledge is at all necessary for the purpose. Obviously, there must be always differences of opinion as to the merits of any particular guarantee that may be given. Some hon. Members on both sides of the House have objected to the guarantee for this new coalfield in Kent. There are others, I believe, although they have not spoken here to-night, who think that of all the guarantees that have been recently made, that is the most commendable, because they think it is likely to lead to a large amount of employment. It seems to stand to reason, that whatever action a Committee of this sort take, there must be difference of opinion as to whether in any particular case they are right or wrong.

I will only say one word with regard to the guarantee for the Kent coalfield. One of my hon. Friends on this side of the House suggested that it was a very bad transaction from the point of view of the Treasury, and that the security was, or might be, very shaky. I do not think I ought to allow that particular comment to pass, because I do not think there is any foundation for it at all. [An HON. MEMBER: "But there is!"] I do not know whether the hon. Gentleman opposite is aware of what I am going to say, or has any particular knowledge on this point, but however much that transaction might be open to criticism from any point of view—and one hon. Member approached it from the aesthetic point of view, and said it was a great pity to destroy the Garden of England and turn it into a black country—a point of view with which I have a great deal of sympathy—there is no foundation for the suggestion that, as a mere matter of security, the Government guarantee will be in any danger. There can be no doubt whatever that the actual assets of the undertaking, whether they come fully up to expectation or not, are an ample guarantee for the sum of £2,000,000, and, as the assets of the whole undertaking are a direct security for this guarantee, I do not think the hon. Gentleman need be under any misapprehension on that point.

Mr. MARDY JONES

Will the right hon. Gentleman give an indication of what is the nature of the securities of which he speaks? I understand that in the last few days Pearson and Dorman Long have appealed in the Press for £5,000,000, including the Government's £2,000,000, without which they would not get the other £3,000,000.

Mr. McNEILL

That is a point with which this Bill is not concerned at all. All I am concerned to show is that the assets which are security for this £2,000,000 are very ample for the purpose. There is only one other aspect of criticism in detail upon which I wish to say as short a word as possible, and that is on the subject of Russia. Three or four hon. Members have, not by any means for the first time, expressed objection to this legislation on the ground of the bad treatment, as they think it, which Russia is receiving. In these Debates hon. Members, time after time, have said, as if it were almost an axiom of the controversy, that the Government were actuated by political bias, political prejudice, and that if they only would clear themselves of that mischievous political bias, then a useful commercial transaction would follow. I think the political bias in this matter is entirely with hon. Members opposite, because you can have bias in one direction or you can have bias in the other, and I very much doubt whether hon. Members would ever have displayed this consuming interest in the question of Russia if it had been merely a question of Russian trade, as of Brazilian trade, Argentine trade, Chinese trade or any other trade. I think their real interest in the matter arises from the political events that have taken place in Russia.

Mr. RICHARDSON

Let me assure the right hon. Gentleman that so far as I am concerned that is not so. In the North of England we relied largely on Russian trade, and that is denied to us.

Mr. McNEILL

That is no argument against the observations I have just been making. It is not political bias that is the motive of the Government policy in this respect. Hon. Members sometimes seem to assume that the Government are preventing trade being done with Russia. There is no sort of embargo. There is nothing to prevent anybody doing trade with Russia, just as much as with France or any other country. There is nothing to prevent them, if the traders of this country think they have sufficient security for their money, and if the conditions in Russia are such as to make trade with that country possible.

Mr. RILEY

Will they have trade facilities?

Mr. McNEILL

The hon. Member who preceded me read out a warning, as I understood, that has appeared in the Russian Year Book. I do not quite understand what inference he intended to be drawn from that warning. I gather that that warning was issued with the approval or consent of the Russian Government.

Mr. WALLHEAD

Up to 1916—not the present Russian Government.

Mr. McNEILL

I do not care whether it is up to 1916 or 1926; it does not affect my point. The point is, I understand, that a warning was made that if any foreigner went to Russia, he must abide by the conditions which he finds there. I imagine it is precisely because our people are acting on that warning that comparatively little trade is being done with Russia. They know perfectly well that if they go to Russia or trade with Russia they will have to submit to the conditions that obtain there, and the more they know of those conditions the less they like them. There is a Treasury point I would like to submit to the House with regard to this whole trade with Russia. Hon. Members know that in the great balance of trade upon which our whole commercial existence depends, there are what we call invisible exports, consisting, among other things, very largely of the interest payable on investments abroad. It is because we have that large body of invested capital abroad that we are able to subsist, because it is by means of the payment of that interest from abroad that our food and our large body of imports come, and, therefore, our existence, one may say, not merely as a commercial nation, but as a people, depends upon the protection and the maintenance and the encouragement of those interests, and exports.

A very considerable sum before the War was invested in Russia. Large sums of money were owing and are owing by Russia to this country, and if that debt were acknowledged, and if the interest were being paid upon it, it would come to as in this country, not necessarily from Russia itself, but from some other part of the world, as imports into this country already paid for, because of the money invested abroad. Russia has repudiated that debt, and all that the hon. Member for Merthyr said just now with regard to the possibility of trade appears to me to be entirely beside the mark. I am not contesting the accuracy of his facts. So long as Russia says that all British money that is invested there is wiped out, with no acknowledgment of the capital debt and no payment of the interest upon that debt, she is putting upon this country the commercial necessity of making good that large body of imports upon which she otherwise could have depended from other sources. We have to make it up by exports from some other source.

Mr. WALLHEAD

Will the right hon. Gentleman deal with the point that I made, that the Russian Government have expressed their desire and willingness to discuss the whole question and come to the settlement?

Mr. McNEILL

It is not discussion we want. If the Russian Government, through their proper diplomatic channels, announce to His Majesty's Government that they no longer repudiate their debts, then I have not the least doubt that my right hon. Friend the Foreign Secretary will have something to say upon the matter. I want before I sit down to deal with the larger subject, namely, the objection to this legislation as a whole. Certain hon. Members on this side of the House have stated that, they object to the whole principle of this legislation. I do not very greatly dissent from that point of view. I do not deny, I think few hon. Members of the House will deny, that in 1921, under the conditions which then obtained, and as art expedient for dealing with unemployment at that time, and the very high rate of interest, that this, particular expedient probably was necessary—at all events, it was useful. I agree it has remained useful, though perhaps in a decreasing degree up to the present moment,. I do quite agree, as I have said before, that on principle it is unsound. It can only be a question of when conditions change to make it obligatory upon this legislation to be dropped.

I trust, at all events, it will not be my fortune to defend another Bill of this sort. I think I am justified in saying that before the House of Commons is asked to pass another Bill similar to this that the matter will be very carefully considered by the Government with a view to determining whether such legislation is or is not necessary. I hope that the House, which has shown no hostility to the principle of the Bill—no marked hostility—up to this particular moment, will now allow us to have the Third Reading.

Mr. PALING

Have the Committees Which investigate these questions any power to lay down the conditions when they are asked for a grant, and before giving it?

Mr. McNEILL

It is possible for them to negotiate with the people who are making application for the loan.

Mr. RITSON

What I am anxious about in this matter is that in the neighbourhood of my constituency, in Durham, Messrs. Dorman Long and Company have four or five collieries, and I was speaking to Mr. Dorman only a fortnight ago —hon. Members will see that I keep respectable company sometimes!—and he said that, so far as they were concerned. it was taking them all their time to keep their collieries going. They have iron ore very handy in the North of England. Now we are going to guarantee that firm to the extent of something like £7,000,000. I had a complaint from one of the right hon. Gentleman's supporters the other day, a coalowner in my own area who has large interests in Kent. He said to me: "Is it right that the Government should give a guarantee to a big firm opening out in Kent while we who are interested in the Kent coalfields have companies which have not paid a penny for the last few years?" I quite agree, it is not. If you are going to transfer men from the Durham collieries down into Kent because the owners have got guarantees, what are you going to do for the men? They have already houses built. They have their families settled, and they have been settled for years and years. We in Durham feel the matter very keenly. One of these collieries, belonging to Messrs. Dorman Long and Company, has been standing idle for six or seven weeks. It reopened a little time ago, and we find to our dismay the present situation. We in the North of England were teaching ethics when you in the South were running about stark naked. I say we feel it very keenly. We have the coalowners today who are weeping across our necks as to what is going to happen in May. They tell us there is no market whatever in the world to-day. Then the Government comes along to transfer the burden from one shoulder to another.

We hear a great deal about the mining industry that is not very hopeful, but it will last a long time after the pessimists are dead. Science is moving in our direction and helping us in regard to the matter if we can get the finance out of the way, and we take up the cash value, not only of the, industry itself, but the people working in it. I have the greatest confidence that the mining industry will live on. But if you begin to transfer it from the North to a place like Kent which is beautiful—it is a very beautiful county—well, we cannot help but make this protest on behalf of our people who are getting very anxious about it. While I am one of those supposed to be levelheaded labour men, I always have a doubt about the level-headed man at any time, because when I was working in the pit, whenever I was supposed to get a good level I found myself invariably working wet, which seems to indicate that there is water on the brain. I want our people to be contented up till May. I want them to be contented after May. But do not allow the good feeling that would seem to be abroad to come to an end after a few weeks by encouraging a great big octopus like the Dorman Long Company to take away the men and their families from homes in the North of England to Kent.

Mr. ROY WILSON

In the Debates on this Bill during the last 10 days reference has been made to the attitude of the banks in regard to credit for trade with Russia. I want to assure the House of this, and I say it deliberately, that have the best reasons for believing that the attitude of the banks in regard to trade with Russia is exactly the attitude which they took up about 19 months ago when the same subject was first broached. It seems to me that memories here are very short. It was not only a pronouncement by the bankers of London that no credit should be given to Russia so long as she persisted in the repudiation of her debts, but it was the unanimous vote of all the Chambers of Commerce in all the big cities in Great Britain, bodies which are free of party or political bias, that credit should in no case be extended to Russia until she had admitted her liabilities to this country. The reasons which prompted the bankers in the City of London to issue their manifesto nearly two years ago, and the reasons which prompted the great Chambers of Commerce to make the same representations, are these, and they cannot be too often stated: that once we in this country depart from the principle that we will grant no credit to a defaulting debtor who repudiates his liabilities, we strike immediately at the great edifice of credit upon which this country has built up its tremendous overseas trade and which has established this country's reputation amongst the nations of the world.

Let me give this humble advice to the hon. Member for Merthyr (Mr. Wall-head), or any other Member who really desires to assist in re-opening the whole question of credit with Russia. The hon. Member for Merthyr told the House he had evidence, in his possession that Russia wanted to get upon proper credit terms with this country. If that be the fact, and I have no reason to doubt it, my advice is, let the Russian Government make their representations to His Majesty's Government through the proper channels. Let them say here and now to His Majesty's Government that they have withdrawn their repudiation, not only of their War debts, but those pre-War debts incurred by municipalities in Russia. with private investors in this country, and I, for one, am perfectly certain those representations will be received in a proper spirit by His Majesty's Government.

Mr. MACKINDER

I would like to ask the hon. Member one question. He speaks with very great knowledge of the decision of the banks. May I ask him if the Anglo-Czech Bank is not supported by British banks, and if the Anglo-Czech Bank is guaranteeing trade with Russia; and if it is supported by British banks, what is the difference between the British banks doing it themselves and the Anglo-Czech Bank doing it with their money?

Mr. WILSON

With your permission, Mr. Speaker, and with the permission of the House, I will answer the question. I suppose the hon. Member refers to the Anglo-Austrian—

Mr. MACKINDER

No, the Anglo-Czechoslovakian Bank.

10.0 P.M.

Mr. WILSON

I do not know much about the operations of the Anglo-Czechoslovakian Bank, but I do know that no responsible bank in this country to-day is granting any credit to Russia where the risk depends upon the person in Russia. If they have a first-class customer at this end who will take the responsibility, and who is good for the responsibility incurred, that is their security, and they look to the security of that customer.

Bill accordingly read the Third time, and passed.