OVERSEAS TRADE [GUARANTEES]. (Hansard, 19 November 1928)

HC Deb 19 November 1928 vol 222 cc1436-93 1436

§ Considered in Committee under Standing Order 71A.

§ [Mr. JAMES HOPE in the Chair.]

§ Motion made, and Question proposed, That it is expedient to amend the Overseas Trade Acts, 1920 to 1926, by extending to the eighth day of September, nineteen hundred and thirty-one, the period within which new guarantees under those Acts may be given and by extending to the eighth day of September, nineteen hundred and thirty-six, the period during which guarantees given under those Acts may remain in force."—(King's Recommendation signified.)—[Mr. Hacking.]

§ Mr. DOUGLAS HACKING (Secretary, Overseas Trade Department)
This financial Resolution is the forerunner of a Bill, which will be known as the Overseas Trade Bill, which will be introduced as soon as possible after this Resolution has been agreed to. The Bill and the Resolution are necessary in order to redeem the pledge given by the Prime Minister on 24th July last, when he said the Government proposed in clue course to institute legislation extending the scheme of export credits for a further two years from September next year. He added: We shall also set up an inquiry into the administrative expenses connected with the scheme, as recommended by the Estimates Committee."—[OFFICIAL REPORT, 24th July. 1928; col. 1138, Vol. 220]. It will be noted that the Prime Minister gave two pledges on that occasion, first that the export credits guarantee scheme would be extended for a further period of two years, and secondly, that a Com- 1437 mittee of Inquiry should be set up. In April of this year the Select Committee on the Estimates, a Committee appointed by this House, reported, in a report issued on 30th April, as follows: As the result of a searching investigation, your Committee have come to the conclusion that the present facilities given by the Department are of great practical advantage to the development of the export trade of this country. This same Committee made several recommendations, amongst them one that an expert investigation should be made into the administrative expenses of the Department with a view to their reduction. There were other recommendations of what I might perhaps call a minor character, such as the consideration of increasing scale of premiums and also regarding the presentation of accounts, and the form of their presentation to the House. If we are going to set up a Committee of Inquiry into administrative expenditure, these other matters should also obviously receive the consideration of the same Committee of Inquiry. The demand of the Estimates Committee was for an expert investigation, and the Government have therefore decided to appoint a Committee of Experts of three persons. Sir Otto Niemeyer, late Controller of Finance at the Treasury, and a member of the Financial Committee of the League of Nations has agreed to be Chairman of the Committee.

§ Lieut.-Commander KENWORTHY
Is he the head of the Agricultural Bank too?

§ Mr. HACKING
Not to my knowledge, but he is connected with the Bank of England. The second member will be Colonel the Hon. Sidney Peel, who was at one time a Member of the House, and was at one time financial adviser to the Foreign Office. Colonel Peel is at present acting in an honorary capacity as Chairman of the Advisory Committee of the Exports Credit Guarantee Department. The third member will be Sir William Pleader, one of the foremost chartered accountants in the country, and an ex-President of the Institute of Chartered Accountants. Sir William has had great experience of Government Committees. The Secretary will be Mr. E. J. Holford-Strevens, of the Export Credits Guarantee Department. I am confident that the constitution of the Committee will 1438 command respect both here and also amongst the business men of the country. The work of the Committee will be very technical, and possibly difficult for the ordinary intelligence to comprehend quickly and completely. That is why only experts have been asked to serve. I hope the hon. Member for Middlesbrough (Miss Wilkinson) will not be very upset about its constitution. I hope she will not think it is another injustice to her sex. There are a few walks of life in which men may safely tread without undue competition from the ladies.

§ Miss WILKINSON
I was being quite quiet, but the hon. Gentleman has asked for it. Is he not aware that one of the most brilliant members of the National Debt Commission was a lady whose financial experience has commanded respect from the House on previous occasions?

§ Mr. HACKING
Yes, I am quite aware of that fact, but I do maintain that there is not a great number of ladies who can carry on investigations of this kind, and I understand that that lady is very busily occupied at the present time. All I was suggesting was that there are not many walks of life at the present time that men can safely tread, and men may still be able to remain members of an expert committee on credit insurance. The investigations will start almost without delay and the terms of reference will be as follows: To consider generally the administration of the Exports Credits Guarantee scheme in the light of the recommendation of the Select Committee on Estimates on the Export Credits Guarantee Department and to recommend what changes, if any, are necessary in the present system of administration and presentation of accounts, and to suggest any changes in the general working of the scheme which are likely to facilitate the final transference of the business from Government control. I ought to say a word about the concluding sentence, for many Members of the House perhaps disagree with that wording in the Terms of Reference. The views of past Governments and also of Committees that have considered this question of export credits and also my own views have always been that sooner or later this business of insurance against non-payment of debts should be handed over to private enterprise. Unfortunately, private enterprise is not yet 1439 providing the facilities which we offer and which are demanded by the trading community of the country. We are gradually proving, however, to private enterprise that this form of insurance is a sound business proposition. Certain insurance companies are coming much nearer to our present terms and conditions. Just as they are working towards us, so we must move in their direction, and that is why the Committee of experts are asked to suggest any changes in the general working of the scheme which will facilitate the final and ultimate transference from Government control. So much for the fulfilment of the Government pledges.
Before asking the Committee to pass the Financial Resolution, the effect of which is to give a longer lease of life to the Export Credits Guarantee Department, the Committee will naturally like to know something of the history of the Government's credit insurance scheme and of the nature and of the volume of the business which we have done. With regard to the history of the scheme and the nature of the business, I thought it desirable that nothing should be kept back from the House, and that every Member should be in full possession of the details of the facilities which we are offering. I have therefore circulated a booklet entitled, An explanation of the Facilities provided by His Majesty's Government for insuring and financing credits for exports. I hope that every Member of the House has had a copy of that booklet and that during the week-end he has taken the trouble to read it. If he has, it will save probably a large proportion of the speech which I should otherwise have to deliver.

§ Mr. MAXTON
Mine only came to-day.

§ Mr. HACKING
Better to have it late than never. I am sure that it is an interesting document and that the hon. Member has not wasted any time before reading it and that he is already in possession of the facts stated in the booklet. It is unnecessary to enlarge upon this official explanation except to draw special attention to contract "B," which provides, as the Committee will see, both the financial and insurance facilities. The 1440 exporter frequently desires two things. In the first place, he desires definite assurance that his bill, or, at any rate, a large proportion of his bill, will be met at maturity. Secondly, he desires to be able to borrow money in the meantime, before his bill is met, on favourable terms in order to carry on his business. Our latest scheme, known as contract "B," gives these definite facilities. It gives a definite assurance to the exporter, and it also gives an unconditional guarantee to the exporter's bank. The exporter is protected against the risk of loss through bad debts, and he is also given facilities for obtaining advances from his bankers at low rates of interest and without recourse to himself: On the failure of the foreign importer recourse is to the Department and not to the exporter. If the foreign importer fails, the bank is paid by the Department. The bank has recourse to the Department and not to the exporter, which is a very valuable concession to the exporters of the country.
The new contract "B" has only been in operation for a few days, and it is impossible to say yet how much it will be used by our exporters. It has, however, had a truly magnificent reception both by the traders and by the banks. Almost daily I have had letters of appreciation from the big banking people of the country saying how much they appreciate the facilities we are giving to them and the exporters of the country, and that they anticipate, by the numbers of forms for which they have been asked, that there will be a big demand for these facilities. It will fill a big need, and I believe that this contract "B" will be of very great benefit to those who are engaged in the export trade. The scheme has been devised and worked out by the manager and the staff of the Export Credits Guarantee Department., in conjunction, of course, with the big bankers in the country. I wish to pay my own personal tribute to all those who have striven so enthusiastically to make the new form of contract of real practical assistance to those who desire to use it. As I say, it is too early to give any results in connection with contract "B," but the Committee have a right to know something of the financial results of our efforts under the previous scheme. It will be remembered that in 1926 an expert Committee, after hearing much evidence, reported upon the desirability of the State 1441 continuing a scheme for credit insurance. The conclusions that that Committee reached were: That a demand existed for the insurance of credits for export trade. That the then existing facilities were not adequate to meet the demand. That the Government's guarantee scheme should be continued, but continued only subject to certain modifications being made. A new scheme was devised as a result of that Committee's Report. It was introduced in July, 1926, based upon the Committee's recommendations, but it was unfortunately born into this world in very unfavourable circumstances. During the first nine months of its existence, as the Committee will remember, it was hampered by the coal stoppage, the aftereffects of which continued to be felt for a very long time. Actually this scheme, devised as a result of that inquiry, has only been in operation under anything 'approaching normal conditions 'for a period of about 18 months. Since July of last year, up to the 3rd of this month—a period of, approximately, 70 weeks—contracts have been issued to the face value of £3,729,000, of which the Department's liability has been £2,271,000. The face value of the contracts issued during the past live weeks has been £489,000, or at the rate of nearly £100,000 a week. Some idea of the expansion of the Department's turnover may be obtained from the following statement: In the financial year 1925 we gave guarantees for £407,000. In 1926 we gave guarantees for only £307,000, the reason for the decrease, of course, being very largely due to the coal stoppage. In 1927, we gave guarantees for £1,025,000. For the six months ending September this year—they are the latest available figures—we gave guarantees for £714,000, or at the rate of £1,428,000 a year. These figures represent, not the face value of our guarantees, but they represent the Department's liability on the bills guaranteed, and I suppose that on an average we guarantee about 60 per cent. of the face value.
These figures are in themselves fairly satisfactory. They are certainly satisfactory inasmuch as they show a progressive increase during recent months, but the Committee will naturally desire to know how far this business is being conducted at a profit or at a loss to the country as a whole. I am afraid that my figures are 1442 not quite as satisfactory when I come to give an account of our financial result. I estimate that the existing scheme—when I say "the existing scheme," it is the scheme previous to contract "B" being brought into operation—is at the moment costing between £18,000 and £20,000 a year. This is the price paid for giving direct assistance to exporters to the value of approximately £3,000,000 a year. But it is also for giving indirect assistance to at least an equal amount by advice and information to exporters which does not result in business being done through the Department. We get a very large number of inquiries, and we give a very large, amount of advice, and that must be taken into consideration when you assess the loss of the scheme to the country. I believe that, on the whole, the country is getting fairly good value for this cost, but, naturally, the Department will not be satisfied until we can work without loss. That, of course, is the main reason for setting up this Committee of experts.
From the information in my possession, our loss of ratio is not above normal. It is between 60 and 70 per cent. of our premium receipts. But, in considering this loss ratio, we must bear in mind the restrictive character of our business. The basis of success of insurance work, as the Committee will fully realise, is that the wider the spread of business the less is the ratio of loss. That must always be so. When hon. Members consider that our business is restricted in character—we only do one kind of insurance business—and also that we do not reinsure our risks, they will realise that 60 or 70 per cent. of loss on our premium receipts is not really a very extravagant percentage.

Sir W. LANE MITCHELL
Is it on the premium receipts that you are making a loss?

§ Mr. HACKING
Yes. Our losses are only 60 per cent.

Sir W. LANE MITCHELL
Then you make a profit?

§ Mr. HACKING
Yes. We make a profit, but we do not take into consideration administration expenses. Whether our losses are because our premiums are not high enough' or our costs of administration are too high, we cannot say, and 1443 that is why we are setting up the committee of experts to inquire into the matter.

§ Colonel WOODCOCK
Can the hon. Member tell us the ratio of administration expenses to business done?

§ Mr. HACKING
It is clear we ought not to make a loss. Our costs of administration may be too high, or our premiums may be too low. That is why we are setting up the committee of experts to investigate, and I hope that their report when it comes to hand will be satisfactory, and something upon which we can act. As far as I am concerned at the moment, I feel that we must leave it at that. I believe that the broad basis of the scheme meets with the general approval of this committee, but certain criticisms were made during the Debate on the Address which I should like to answer now, if only to save repetition by hon. Members. The first criticism was why this scheme should not be extended to Russia.

§ Mr. KELLY
And to India.

§ Mr. HACKING
I will deal with the question of India and the Far East later. For the moment, I am dealing with Russia. In the first regulations which were ever published in connection with export credits, as far as the Government were concerned, it was positively laid down that it was not intended to apply the scheme to Russia. There are, of course, political reasons, and I am not ashamed of the political reasons; and there are questions of policy; but my Department is really a non-political Department, and I am speaking from that point of view. We are a business Department. That is the only reason why I do not wish to go into the political side of the question to-day. I believe the reason why we get such uniform support from Members in all quarters of the House is that we do not interfere with politics, and that we do not know what politics are in my Department. We are a business Department, and we deal with business matters. I do not want to use political arguments to-day, but I wish to give purely common-sense business reasons. Our Department is always a business Department whatever party happens to be in power. I do not admit that we do not have more trouble with 1444 some parties than with others. Anyhow, I want to-day to give purely commonsense business arguments. It is unwise to stand under a scaffold which is crumbling. That is common sense. I certainly am not going to stand under such a scaffold.

§ Mr. MAXTON
Why does the hon. Member not stand at the top of it?

§ Mr. HACKING
I do not aspire to such heights. Our loss at present is causing me concern, and I am not prepared to risk an even greater loss. That, again, is common-sense business. Why is there a greater risk if we extend our scheme to include Russia? Russia has to-day—I hope the Committee will agree with this argument—no exportable surplus of grain. Her credit is steadily going down, as it must do when she has fewer exports with which to pay for her imports. Her position must obviously grow much worse in the not too distant future owing to two factors (1) the failure of her crops, certainly in some parts of the country, and (2) on account of the complete break-down of her grain collecting policy. Her credit is not good now. What it will be like in 12 months time when our bills might become due for payment, nobody knows. This I do know, having spoken with many business men in this country, that few taxpayers would take the risk as individuals and it is certainly not the Government's desire to lose the taxpayers' money for them.

§ Miss WILKINSON
Can the hon. Member state one tiny instance of any bill that the Russian Government has not honoured since the Revolution?

§ Mr. HACKING
The hon. Member is now bringing in politics.

§ Miss WILKINSON
I am merely asking a question as a business concern.

§ Mr. HACKING
I am dealing with the position as I see it at the present time.

§ Miss WILKINSON
You must deal with facts, and not with your prejudices.

§ Mr. HACKING
Russia is not in a very healthy condition. I think I have proved that her condition is rapidly growing worse. At any rate, there is very great risk that in the future the position may be a great deal worse than it is now, and I do not think hon. 1445 Members would be satisfied to run a risk, seeing that matters are not improving in Russia, but are steadily growing worse.

§ Lieut.-Commander KENWORTHY
Are these political reasons or business reasons?

§ The CHAIRMAN
I must point out that we are in Committee, and that Ministers and hon. Members can speak more than once. I do suggest that the Minister should be allowed to make his statement without further interruption.

§ Mr. HACKING
I pass from Russia to India and the Far East. Hon. Members have asked, the hon. Member for Rochdale (Mr. Kelly) has asked me to-day and the question was put in the Debate on the Address, why India and the Far East are excluded from the scheme as far as textiles are concerned? The hon. Member for Rochdale said—I hope I am not misrepresenting him, for I have not his speech before me now—that several representations had been made to him that this scheme should include India and the Far East. Why are India and the Far East excluded as far as textiles are concerned? The answer is because in spite of what the hon. Member has said that there is a demand for these facilities, exporters of textiles to these Eastern markets do not, in fact, require our assistance. The "Manchester Guardian," a week or so after our new contract was first introduced, published a leading article on this question, in which the following statement appeared: It should be explained that although this form of contract, known as Contract B, is new, the exclusion of India and the Far East from its operations, so far from being new or in any way directed against the interests of the Lancashire cotton trade, has been a part of the scheme ever since it came into operation, and was decided upon as the result of representations by the Manchester Chamber of Commerce and other Chambers interested in the exportation of textiles to those countries. The article proceeds: On 9th November, 1921, the executive committees of the China and Far East Section and of the India Section of the Manchester Chamber passed the following Resolution. I will not read the whole of the Resolution, but one part of the Resolution says: Such extension is not only unnecessary, but it would prove harmful to the interests 1446 of traders in those markets, the existing financial facilities and highly organised banking arrangements being deemed amply sufficient to meet all the requirements of safe trading. That was in 1921. In 1924 my Department, possibly during the time that the hon. Member for Rothwell (Mr. Lunn) was in charge, wrote to the Manchester Chamber of Commerce saying that representations had been made to them from various quarters and asking for its views as to whether the time had not then arrived for extending the scheme to India, Ceylon and the Straits Settlements. The reply received was: My Committee are of opinion that the export credits scheme should not be extended as suggested, since it would he extremely unlikely that its operation in the markets concerned would lead to any helpful development of British trade. I have no reason to believe that there has been any change in the attitude of Lancashire since then. When there is considerable demand for our facilities I can promise that we shall do our best to meet the demands. We are anxious, as we always have been, to assist trade and not to hinder it, but we will not butt in when we are not wanted. Hence the exclusion, as far as textiles are concerned, of the Indian and Far Eastern markets.
There is nothing further to say about the scheme. I have taken the Committee fully into my confidence. I have provided them with a White Paper, with a booklet and with a long speech. I hope they are satisfied with the two former, and I trust that the latter will have been of some assistance to them. I cannot resume my seat without an expression of appreciation of the Chairman and Members of the Advisory Committee who have placed their great knowledge of finance and insurance so freely at the disposal of my department, and have worked so strenuously, without fee or reward of any kind. They have been responsible for judging each individual application on its merits. Without this voluntary advisory committee, of which the hon. Member for Finsbury (Mr. Gillett) is a member, it would have been quite impossible to have carried on our work. The very least we can do is to express to them our grateful thanks. I apologise for having kept the Committee so long, but I hope that 1447 the length of my statement will have the effect of shortening other speeches, and that we may pass the Financial Resolution without undue delay.

§ Mr. LUNN
The Minister has been very honest with us, within the limits and restrictions of the scheme which he has put before us, but I am sure that the matters with which he did not deal will call for many speeches. I cannot understand why on every occasion the coal stoppage is blamed for whatever may have happened. It is the Zinovieff letter of the Government. Every Minister, whether he be a Cabinet Minister or an Under-Secretary, seems to bring in the coal stoppage, without regard to conditions. I think the hon. Member will agree with me that the conditions have considerably changed since early 1926, and they are responsible, perhaps, more than anything else for any development that has come in this particular scheme. A few minutes ago we decided on the Third Reading of a Bill to give relief for unemployment; not to provide employment, but to give relief to those for whom the Government have failed to provide employment. Now we are discussing a Bill which ought to be providing employment, but I am sure that it can be considered only as a mere drop in the ocean. Some £26,000,000 of the taxpayers' money has been provided for the purpose of being used by the Government to facilitate export credits. The highest amount of business mentioned by the hon. Member was £100,000 a week. Why has not more business been done, with industry in its present condition and with unemployment as it is to-day? Is it because the scope of the scheme is so narrow, or because the administration is so narrow that we are not able to make use of the £26,000,000 for our export trade, in order to assist and to develop it? The hon. Gentleman ought to have told us something more of the employment which has been provided under this scheme, and how far it has assisted industry. He ought to have given us the figures for each year, not for a period of 70 weeks as he has done, as to the trade which has been done under the export credits scheme.

§ Mr. HACKING
I did not want to go hack to the old scheme which was 1448 scrapped before 1926, but to consider what had been done under the present scheme; not under the old original scheme.

§ Mr. LUNN
I am not speaking of the old "advances" scheme, because conditions have improved under the guaranteed schemes which we are now considering. I am not asking for information with regard to the old scheme, although I think we are entitled to know how much money is outstanding in connection with it. It is important that we should have all the facts before us, especially when we are asked to extend it for a further period of two years. Then, I think, we ought to know the classes of goods for which guarantees are given. Are all kinds of goods and all kinds of producers considered by the Advisory Committee or are they limited? We should also like to know the amount guaranteed for each class of goods; how far they are prepared to go with regard to particular classes of goods and whether any restrictions are placed upon one class of goods as against another? I should also like the hon. Gentleman to tell us what is the total staff of the Department at the moment? Has it been increased during this period or not? There has been an extension of the scheme as regards insurance, and it would be as well to know whether there has been an increase in staff and in the cost of administration up to the present.
We should also like to know the constitution of the Advisory Committee which deals with this matter. Has there ever been any change in the personnel? The Committee should know the names of the people who are dealing with these matters on behalf of the taxpayers of the country. The hon. Gentleman ought to have made some reference to them by name as well as in bulk. Many questions can be put with regard to this scheme, and when the Bill is introduced I have no doubt there will be some discussion as to how it can he extended to smaller producers. We have not been told whether it is the large producers or the small producers who take advantage of the scheme; whether the smaller people are considered at all. Then there is the question: How many applications have been before the Committee for guarantees and how many have been 1449 turned down this year? I think some applications have been turned down which ought to have been granted. The hon. Gentleman might tell us the facts with regard to this. He referred to the Report of the Estimates Committee, but I do not think they recommended the latter part of the Terms of Reference. The Estimates Committee recommended an inquiry into the present system and administration, but I do not think they recommended this part of the Terms of Reference: Suggest any changes in the general working of the scheme which are likely to facilitate the final transference of the business from Government control. I do not think that was in the mind of the Estimates Committee, but I suppose it is in line with the policy of the Government to take this scheme out of Government control and hand it over to private enterprise. That part of the Terms of Reference ought to be struck out; the Government should retain control. There should be no question about Government control in matters where the taxpayers' money is concerned, and we ought not to hand over this scheme in this easy way. When the hon. Member does appoint this committee of three, men well known in finance who may merit all that he has said about them, I think he ought to have considered the appointment of women on the committee. It is not always the Minister who objects to the appointment of women; it is sometimes the people who are to be appointed. They resent the meddling interference of women, as they call it, and are not prepared to grant an equal status to them. I think he should have appointed one or two women on the Committee as they would have been of great service.
With regard to the question as to whether the scheme is to be extended or not, a Debate was held in this House on 1st March, 1926, on this point and on that occasion, it is quite safe to say, seven out of 10 speeches delivered from all parts of the House urged an extension to those exporters in this country who desire to do business with Russia. If we want to provide work for our people, are we satisfied to be continually raising millions of money for the Unemployment Insurance Fund? Why not take advantage of any and every country that is prepared to do business with us? Trade with Russia 1450 was supported in March, 1926, by many hon. Members opposite, and now that this scheme is in such a condition that there is hardly any likelihood of any very great financial loss to the taxpayer, I think the question of trade with Russia might be considered by the Government. I am sure that we shall not do worse with Russia than with certain other European countries and, personally, I should like to see the scheme extended to Russia. I hope the Government will be able to say, not only to hon. Members on this side of the House who are interested in industry and the provision of work for our people, but to hon. Members opposite who are also interested in finding work for our people, that they realise there is a possibility of doing business with Russia and that, therefore, they are prepared to encourage an extension of the scheme to Russia as well as to any other country.
To me it seems that political hatred is the only reason why Russia is excluded from its operations. In my opinion, the extension of the principle of the Export Credits Scheme to exporters to Russia would not only benefit those who do business with Russia, but would also help to improve our relations with other countries. It would bring about a better understanding between us and all other countries. We are not opposing the extension of this scheme. We wish to see it further extended, because it will then be mach more useful than it is now. It is only a drop in the ocean, as I said before. The present Government, by their actions since 1924, have stripped industry of most of its clothing, and it has only a fig-leaf left to cover its nakedness. But even a fig-leaf is very welcome in times like these. In that respect we accept this extension and shall vote for it, because it does provide a little encouragement; though not to the extent it would have done if it was applied to every part of the world.

§ Sir ROBERT HAMILTON
I regret very much what the Secretary to the Overseas Department has said with regard to extending the scheme to Russia. He told us that he was going to found his remarks on common sense, and not on politics. Let me draw his attention to the fact that one of our great industries is languishing to-day because it has not got access to the Russian market, which it is very desirous of getting 1451 back. The difficulties in selling our herrings to Russia are thoroughly well understood by those in the trade, and they will assure anyone that the herring fishing industry can never recover its former vigour until it gets back into the Rusian market. On what grounds do the Government stand in the way of our selling our herrings to Russia? The hon. Member says on the ground of common sense, but surely it would be the acme of common sense to allow any application to trade with Russia to be submitted to the Advisory Committee? I am not suggesting that vague and unlimited credit should be extended to Russia or the Russian Government. I am only asking that the Government shall not put a ban on the Export Credits Scheme being used to allow claims to come before the Advisory Committee and let them decide whether they will allow the taxpayers' money to be used for this purpose. That is sound common sense. If the hon. Member could extend the scheme in that direction, he would be conferring a great benefit on an industry which is largely in need of the assistance which he alone can give.

§ Colonel WOODCOCK
I should like to congratulate the Secretary to the Overseas Trade Department on the speech he has made to-day, and also on the interesting pamphlet which has been circulated to hon. Members. It explains a great deal of the working of the Export Credits Scheme. I do not intend to follow the hon. Member for Rothwell (Mr. Lunn) in the speech he has just made, but I agree with him that the Secretary to the Overseas Trade Department should have given us many more details of the working of the scheme. Hon. Members in all parts of the House will, no doubt, be satisfied that exporters will be very grateful indeed for the new Contract B which is worth rereading: This new form of Contract is therefore a valuable asset to an exporter who wishes to obtain credit in order to give credit in developing sound export trade, and at the same time wishes to strengthen his own position by insuring the credit risk. These facilities are going to Assist export traders in expanding their turnover without increasing their total liabilities. 1452 6.0 p.m.
Contract B is going to he of the greatest service to exporters and traders of this country. But if the scheme is to be of any practical good whatever it must be run on business lines. The Secretary to the Department has stated that the whole of these export credit schemes was considered by the Estimates Committee, and the Estimates Committee brought out many points which appear in their Report and also are referred to in the Terms of Reference. There is no doubt as to the usefulness of this scheme to exporters, but it cannot be carried out if it is going to entail a large financial loss to the ratepayers of the country. If we are to carry out the scheme at all, it should be carried out in a business-like way. It will be within the recollection of many that in 1919 there was a scheme of a somewhat similar character, aril when it was closed down in 1921 it then showed a total loss of £1,100,000. I admit that the bulk of the debt was on one transaction. I understand that the present scheme is rather different, in that it is going to distribute its risks and its business over a far wider area. The Government in this insurance scheme are undertaking a commercial and highly technical business, and if they are to carry it out in a business-like way they should consider two or three things which the business houses would have to maintain. The Minister referred to administration expenses. The Report of the Estimates Committee said that these were unduly high for the work that was being done. One of the recommendations of the Estimates Committee was that the administration expenses should be greatly reduced, and that the staff should be brought down to a ratio to the turnover of the business done, just as a commercial house would look into the numbers of its staff in relation to the expansion or otherwise of business.
The Minister has told us to-day that there has already been great expansion in the business. He said that in 70 weeks the face value of the contracts was over £3,700,000, and that even during the last five weeks it was an amount of £489,000. But when the Estimates Committee looked at the general working of the scheme, they found that the total premiums for the last year were £39,000, and that 50 per cent. of that sum was 1453 for administration. Largely increased figures have been mentioned by the Minister to-day, and if he has not reduced the ratio of expenses of administration a great deal, we shall have to face a far greater loss than his estimate of £18,000 to £20,000 a year. It was pointed out on the Estimates Committee, as far as could be ascertained, that 12 per cent. loss on the total turnover had been incurred under the scheme from its commencement. Unless that 12 per cent. is greatly reduced on the greatly increased turnover, we shall have a very much larger loss than £20,000 to the Government. I think we should consider whether we cannot reduce administration expenses to bring them within a measure that will make this a paying scheme, or at least balance the accounts. The Government should consider whether they are able to raise the premiums to an adequate amount so as to balance accounts in that way.
The Government are giving a great deal besides money under this scheme. In the first place, there is no expense of office accommodation to add to the administration expenses. That is one item to its credit. Then the whole of the credit of the Government is behind the scheme and should make it effective and as cheaply run as possible. I hope the scheme will be a success, but I do not want it to be at the same time a success and also a great burden to the taxpayer. As the scheme grows I hope that the Government will watch the growth of administration expenses. Although it is a good effort to make for the trade exporters of this country, we should not agree to its being carried on at an exorbitant loss. If to the traders it is worth having, it is worth paying for. They are getting these great facilities, and I feel sure would not be averse to paying some small extra premium so that the Government could run the scheme without incurring a financial loss. I hope the Minister will give us some more particulars as to the staff that the increase of business has entailed, and, as to what he thinks the percentage of loss is to be on the whole of the increased turnover.

§ Miss WILKINSON
I can congratulate the Minister on one piece of very excellent work. The Report which he 1454 has issued is certainly a credit to the Department. But the speech of the Minister hardly did credit to himself or his department. He has continually appealed to us to conduct these discussions on business-like lines. Those who heard that part of his speech which dealt with the expansion of the export credits scheme must have been amazed to hear so excellent a Minister merely produce a collection of platitudinous prejudices. Not once did be bring forward an argument—not one figure, not one fact. All he said in a very kind way was that the collection of bills in Russia had not proved a success. In fact he hoped it would be a failure. He did not say that, but when he was dwelling with something like pleasure on the prospect of failure in. Russia, one could not help feeling that he was expressing a hope rather than a fear. What are the facts? We have not had them from the Minister. I am not giving Labour authorities for what I am about to say. I refer the Minister to a very prominent business man, Sir Philip Nash, who is the chairman of Metropolitan-Vickers. Through his firm he has had as large dealings with Russia as has any firm in this country, and he says that the Russian Government has met its bills quite properly. Quite recently there was a dinner of. London business men interested in this subject, and the Chairman at that dinner pointed out that. the Russian bills had been met.
Obviously, even if all the Russian Government were the appalling kind of people, with horns and tails, that Ministers think of in their worst moments when addressing a, frightened electorate, it would be simply suicide for the Russian Government, with things as they are, not to meet their bills. It is because of that that the Minister cannot produce a single case where the Russian Government has not met its bills. That being so, I would ask the Minister whether he is taking into consideration not merely the Government's rather narrow interpretation of the export credits scheme, but the whole field of the industries which it is supposed to help? Just before the Minister took his place on the Front Bench this afternoon we were engaged in voting another £10,000,000 to his colleague, the Minister of Labour, for the Unemployment Insur- 1455 ance Fund. We go on voting such amounts. But that is not dealing with the problem. We are merely frittering away on the fringe of unemployment. Even from the Government's own point of view, what this country wants is markets, and we cannot begin to solve the unemployment problem until we deal with that need. The Minister and others are going up and down the world saying, "We want markets." What are the facts? Many of the markets to which we supplied goods before the War are now making those goods themselves, and are doing so behind high tariff walls.
The markets that we most need are in agricultural and more or less undeveloped countries that need our engineering products. We find two things. The industries in this country that are most needing markets are the basic industries, like iron and steel and engineering. Representing, as I do, one of the largest iron and steel producing areas in the world, an area that is devastated by unemployment, I can tell the Minister that the business men of that area are asking what the Government are doing with regard to unemployment in the iron and steel industry. It is not enough to pass a Vote for a mere bagatelle of £10,000,000, when that £10,000,000 is merely to be dropped into the endless abyss of unemployment benefit. If the Government were looking for means of extending our markets, especially where iron and steel and engineering goods are concerned, they, could not find a better market than Russia. Let us leave out for the moment the question of the particular complexion of the present Government in Russia. No doubt if I was sitting on the Government side of the House with the Minister, my political prejudices would be as violently against Italy as the present ministerial prejudices are against Russia, but my prejudices about Italy or the Minister's prejudices about Russia have no more to do with the case than the way in which Mussolini and Stalin part their hair. The whole point is whether there is a possible market for British goods in Russia and whether the export credits scheme can help us to attain those markets.
In Russia there are 100,000,000 people, of whom over 90 per cent. are peasants. They are needing engineering goods of 1456 all kinds, and the fact is that the Russian industry, even if it were working more than it is, is not sufficient to supply the need. Surely there is there a tremendous market for just the kind of thing that we are anxious to sell? For example, take Metropolitan - Vickers again. When certain orders for Russia came to an end not long ago the firm had to go on half time. If the hon. Member for Lincoln (Mr. Taylor) were here I know he would be able to speak with equal force with regard to the agricultural implement industry of the City of Lincoln. There, again, when the Russian orders ceased, there was great unemployment. Then with regard to Middlesbrough, with its great iron and steel works, especially constructional iron and steel, we want openings for the sale of our products. That is much more important than tinkering around with tariffs. We want to sell our goods. In these 100,000,000 peasants of Russia we have an unexampled market, and it would have been better if we had been giving £10,000,000 a year for export credits to Russia.
Germany has got a large proportion of these orders. Are the Government's prejudices against Russia so strong that they would prefer to see those orders going to Germany rather than to this country? If that is their attitude, it may do very well here, but I should not like the Minister to go to Middlesbrough, or Lincoln, or any of the other industrial areas affected and put that point of view before the unemployed men. There are thousands of engineers in this country who could he employed to-day if it were not for the black political prejudice of this Cabinet and the Minister. The Minister opened his speech with a great eulogy of the three experts whom he was appointing on the Committee. He said that Sir Otto Niemeyer, Sir William Plender and the other gentleman, whose name I forgot, were persons who would command respect. If that be so—and far be it from me to object to the statement—why cannot the Minister leave it to these experts to decide whether this is a good business proposition or not? Surely it is insulting their intelligence if at the same time as you appoint these three men, whom you describe as of such outstanding intelli- 1457 gence that no mere woman must even look near the seats of the mighty—if you say, "Here are the three men of all men who must command respect" and you appoint them—and then you do not even allow them to decide on the merits of the case.
These three business men, because they are business men and practical men who look at this matter not from the point of view of politics, but from the point of view of common sense, might conceivably consider this proposition and say, "Why not give credits to Russia?" Russia has met her bills; she wants to buy engineering goods; there are thousands of pounds' worth of Russian oil and petrol in this country as security if it comes to that. But the Minister says: "No, this is a matter that cannot be decided by common sense it must not be left to the experts and the business men, it must be decided by politics. These three men must not be allowed to recommend export credits for Russia." And before they go into their room to decide on this highly technical subject, these experts are to be told that there is an absolute bar, and that, however good a business proposition they may think it, they cannot be allowed to give export credits to Russia. I shall have great pleasure in pointing this out to some large meetings of the unemployed which I propose to address in the near future. It think it would be rather interesting to address one in the Minister's own constituency. Here is the Minister quite calmly stating that his prejudice, the Cabinet's prejudice and the prejudices of the people in control of the Government are such that they would rather see engineers—like the men who are making those heavy wagons which would be extremely useful to Russia—receiving unemployment pay than use this money in order to open up credits with Russia.
The Government are much more concerned about having a sort of unofficial blockade of the present Russian Government than about getting our people employment. If they go to the country with a statement like that and expect support in the industrial areas, they will find they are putting their money on a very wrong horse. I believe the country is utterly sick of the Government's hysterics about Russia. After all that the Government say, the fact remains that the Russian Government to-day is 1458 one of the strongest in the world. It is much more broadly based in the interests of its own people than the present Government in this country. It may be the fault of the Russian people, but the fact is that the Government have been in power longer than the present Government of this country and longer, I believe, than any of the present Governments in the world.

§ Sir FRANK MEYER
Have they held an election?

§ Miss WILKINSON
Have the Italian Government held an election? What business is it of ours whether the Russian Government have held an election or not. We are told by the Minister that politics do not enter into this question, but the hon. Member for Yarmouth (Sir F. Meyer) proposes not to extend export credits to Russia because the Russian Government have not held an election on the lines which he would approve. I am not pleading for political approval of the Russian Government. All I am asking is that this matter should be decided on a business and commonsense basis. I represent a constituency which is devastated by unemployment. I represent men who have been unemployed for four or five years. I represent an area where great iron and steel works are idle and blast furnaces have been put out, and I say that this Government ought not to allow any political prejudice to stand in the way of finding markets for our goods and of using this credit scheme wherever it is possible to put it into operation.

§ Mr. E. C. GRENFELL
I am in agreement with the last speaker in this respect, that I should like to have this question decided on purely business lines. I should like to keep all hysterics on either side out of the consideration of this important subject. When we read these criticisms of the management of this Department, it seems to me that it is entirely divorced from business lines. When the scheme was started, the whole of Europe was in a state of chaos. No exporter sending goods from here to the Continent knew in what manner he was going to be paid for his goods, while the importer on the Continent had not the slightest idea of how he was going to get exchange to pay for those goods. It was then necessary for a scheme— 1459 possibly an unbusinesslike scheme—to be proposed, Europe being, as I say, in a state of chaos and importers on the Continent not knowing where to turn for exchange. In the last 10 years, mainly through the influence, I believe, of the Central Banks, that state of chaos has been removed. Generally speaking, with the exception of Russia, the state of Europe financially has considerably improved. Exchanges have been put in order; in practically every country exchange can be bought and sold freely and the exporter and the importer know, the one that he is going to obtain payment, and the other how he is going to make payment.
Ten years ago no ordinary business firm or company was prepared, on a large scale, to take these risks, but a small company was started by some very intelligent men who understood their business and who, in touch with the Board of Trade, wished to make a contribution towards solving the unemployment problem. They started a small company to do this sort of business. One of the criticisms of that company then was that the facilities supplied were so small as to be quite ineffective in helping to deal with unemployment. In the course of 10 years this small company has developed from a capital of £40,000 to a capital of £250,000. It has managed its affairs, I presume with ability—indeed, of that I am sure in view of the people who conduct it. It has not been able to make large profits. It has been paying, at one time 5 per cent. and at another time 6 per cent., on its capital, which is not a very large return for what is believed to be risky business and a business started in order to deal, in some measure, with the unemployment situation and help the Government in that respect. To-day one of the criticisms made against that company has been answered. It is prepared to-day to take individual risks, that is one risk at a time, up to £250,000, which is a considerable figure. It is prepared to take quite a number of risks up to £250,000, and it can do so because it has been developed upon very intelligent international lines.
I think the Committee will agree that few Government Departments, even though they have diplomatic representatives and other persons in their employment abroad, can judge of the financial 1460 status of people in foreign countries as well as local bankers or financiers in those countries. This company, I believe, has allied itself with similar companies formed under its auspices in almost every country in Europe, and a condition has been made that if it guarantees credits or exports to an importer abroad, the foreign company associated with it in that country shall, first, inquire into the circumstances and credit of the importer, and that, if they report favourably to the English company, the foreign company shall take a share of that risk. If you have this international agreement between financial institutions to help each other and report on the people in their own countries, you get better and more reliable information than the Government can get from their representatives. In addition to that, this company has been able to earn some small profit—at any rate it has been able to avoid the losses which the Government have made.
This company has been willing to afford the Government every advice, and I believe has done so, but it finds that the Government, now that Europe is stable, is still going on with this scheme which was founded only as a temporary scheme. Each Minister, in turn, has said that it was to be temporary and the Financial Secretary to the Treasury said so quite lately. I think most business men feel that this matter should be conducted on purely business lines. If the Government have facilities for making inquiries and doing safe business, it ought not to undercut financial institutions working possibly on a small profit, but at any rate without loss. I remember this company being started and I was very doubtful of its being possible for it to do business without loss. It has proved itself efficient by results and I think it is possibly doubtful policy for the Government now to continue this work, at times cutting the rates against these business companies, when perhaps—we cannot speak with assurance—there are institutions, ably managed, ready to take on this business themselves.

§ Mr. HACKING indicated dissent.

§ Mr. GRENFELL
The Minister shakes his head. It may be that he is taking risks or is prepared to take risks which these companies would not take; but I am bound to say that the risks that have 1461 been taken by the Government in the past have not resulted in a profit. In fact they have resulted in a loss to the Government. Purely as a matter of economy I regret that it should be necessary to continue this scheme.

§ Mr. GILLETT
The Minister in his closing remarks made a very kind reference to members of the voluntary committee including myself. I do not think I personally justified his remarks because my duties here and elsewhere prevented me attending the committee in the way I should like to have done. At the same time, his remarks about the work done by the chairman and vice-chairman and certain members of the committee are entirely justified. We owe a debt of gratitude to them for their work and advice. The hon. and gallant Member for Everton (Colonel Woodcock) said he wanted the scheme to be run on business lines. I think he has forgotten one thing which at any rate was always present in our minds. We were given to understand on the committee that, if any business came before us that we thought could better be done by the banks advancing the money—perhaps without requiring actual insurance—that in that case we should not attempt to compete with banking institutions which might do the work. Therefore, hon. Members who judge this as a purely business concern should remember that, as a matter of fact, it was not a purely business concern, but was definitely started, as the hon. Member for the City of London (Mr. Grenfell) has said, with the object of trying to help remove unemployment. At the same time, it was understood that we should not try to compete with institutions that might be affected by the work we were doing. That is a fundamental principle that has to be remembered in connection with the whole consideration of this scheme. An hon. Friend speaking from these benches asked whether small sums were considered, and I can assure him that large numbers of small sums are agreed to at every meeting of the Committee.
In regard to the statement made by the Minister as to the appointment of a Committee to investigate the whole of the management of the undertaking, I should like to say, in the first place, that while it may be advisable to investigate 1462 the cost of the scheme, it should be remembered that a, great deal of work has been done by the Department in investigating many cases which afterwards have been passed on to private institutions and, therefore, do not appear among the figures as work done by the Department. There has also been a large amount of exceedingly valuable information gathered by the Department.
The hon. and gallant Member who introduced the scheme stated that the Committee would be asked to investigate the question of the transfer of the Department to private hands. It seems to me that the hon. and gallant Member has forgotten his principle about not introducing politics, because I cannot conceive that anything except pure politics would induce the Government to ask the Committee to investigate the question as to whether the Export Credits Scheme should be handed over to private hands. It is rather like pulling up a plant that has been planted for only a short time, in order to see how the roots are getting on. What is required at present is not to consider whether the scheme should be handed over, but how the work can be extended and what can be done in order to help the export trade of this country.
The hon. Member for the City of London has put up a plea for private institutions, but I cannot see any institution, unless it is infinitely larger than the one to which he has referred, that can in any way undertake the work that the Export Credits Scheme has undertaken. I believe there is a fundamental difference between the work of an insurance society and this scheme. As hon. Members know, most of the finance of the scheme is carried out by bills. The Department lays it down as a principle that if a bill that they have guaranteed is presented and fails to be met by those who have made themselves liable, then the Department will at once pay the exporter from this country the amount of the liability. As I understand it, the insurance company to which the hon. Member for the City of London referred does not do that. I understand that to a large extent that company says that ultimately, if the exporter does not get his money, it will pay him. Anyone who has contracted bad debts in foreign countries knows that it may he months 1463 or even years before you know that the person who has failed to pay your bill is insolvent, and that is the vital difference between, I will not say the society referred to by the hon. Member for the City of London, and this scheme, but at any rate between societies that are competing with the Export Credits Scheme. A wealthy firm may be able to carry on if it knows that it will get the money in the end, but for the smaller firms it is vital to know that when they find that a bill has not been met, the Government will at once step in and pay the money.
The next question that comes up is as to whether the Government scheme is undercutting other institutions. I do not believe that a private concern can compete with the Government scheme, and that is why I believe the Minister is making a great mistake in thinking that he is going to be able to hand it over. There is one very important matter that is essential in connection with a scheme of this kind, and that is to be able to get information. That is where one or two hon. Members who are on the Committee have been of so much assistance, because they have been able to give information obtained from one or two large institutions. On the other hand, the Government themselves have also been able to obtain a large amount of information, and it has always seemed to me, speaking as a member of the Committee, that whenever the Department wanted to get information from other banks, there has never been the slightest hesitation on the part of the banks, which have been perfectly willing to give the Department all the information required. I should like to ask the Minister, when he considers the question of private enterprise, if he thinks that a private concern will be met in the same way by all these other institutions. After all, they know that this scheme is not out to make a profit, necessarily. It is hoped that it will meet its expenses, but they know that the main object is to help the trade of the country and to remove unemployment. Therefore, they are quite willing to give information which is of great value in order to assist the scheme, but if you are going to put it on a purely money-making basis, and the concern asks for information in order to get a larger dividend, I doubt very much 1464 whether you will find private concerns meeting it in the same way as the Government Department has been met. Therefore, I think it is a fundamental mistake for the Government to attempt to hand over the work of this Department.
In connection with the very interesting new proposal that has been made, one of the difficulties in some quarters that has had to be faced, though possibly now the difficulty is not so great as it was soon after the War, has been the difficulty of getting long-term credits, and I believe the Department to some extent is meeting that difficulty. The second point in regard to the scheme that the hon. and gallant Member has mentioned is the arrangement by which the banks are being brought more closely into the whole of the plan. I gather that it will tend to make a larger amount of banking credit available for the use of firms which are unable now to get financial assistance because some of their previous business ventures have not proved altogether successful, and they may have for the time being got some of their goods in cold storage, so that the banks hesitate, without further basking from some outside source, to lend them further money. With the assistance of the Government, if a business is thought to be satisfactory, I understand that now credit will be forthcoming which would not otherwise have been forthcoming. It seems to me that that is a very important proposal.
I regret that the Minister did not explain more fully why the restriction in regard to trade with India is still kept in existence. I always understood that this restriction was put on because, after 1920, when there was the great fall in prices, tremendous quantities of goods that were intended for Indian consumption were in store, and the merchants were unable to dispose of them. Therefore, it was felt undesirable at that time that any new scheme should be put forward to compete with these goods, and I understood that that was the reason why this restriction was put upon India. I should have thought that now, eight or ten years later, the matter might have been reviewed. In regard to the explanation of the hon. and gallant Member in which he referred to a statement made by the Manchester Chamber of Commerce a few 1465 years ago, I thought that that seemed to be hardly up-to-date, and I should be glad to know if he has consulted those engaged in this trade in Manchester and elsewhere to find out if this embargo is still required.
As to the question of our relationship with Russia, I should like to remind the hon. and gallant Member, who talked about the condition of Russia and said we had been expecting that there might be a financial or political collapse in that country for some time, that a large amount of the trade done in connection with this scheme is carried on by bills at three months, and if you are going to apply the same limitation in your credit advances to a three months' bill, possibly the disaster to which the hon. and gallant Member referred might not come as quickly as he thinks. I could not help being reminded of a quotation which was brought to the notice of this House, when we last discussed this scheme, by the hon. Member for Orkney and Shetland (Sir R. Hamilton). The quotation was from no less a person than the right hon. Member for Hillhead (Sir R. Horne), who, speaking about the Russian position, is reported to have said that however much we might dislike the Russian Government he thought it was a fundamental mistake to allow this to govern our relations in business concerns. He said: Nevertheless, you are not going to create any advantage to the world by permanently seeking to ostracise a people, and I held the view which I hold to-day that the best way to create a change in that country, if you disbelieve in their methods and in their principles of government, the best way to create the change you desire to see would be to enter into amicable relations with its people. That seems to me to be a very sound principle, which the hon. and gallant Member might carefully consider in reviewing the position. I should like, in conclusion, to say that I think we might appeal to the Press of this country to give as wide a circulation as they can to the new scheme that the hon. and gallant Member has brought before the Committee to-day. After all, this may seem a very small thing; the figures may be small, but it is an attempt to help our export trade in order to try to remove some portion of the great mass of unemployment, which is baffling all our minds to-day. If this new scheme can be made 1466 widely known among the banks, it will be of great assistance. I believe there is a future for this scheme, and I should like to see it extended. I can only hope that; the committee which is to investigate it will not confine its investigations to seeing if they can save money here and there, but to seeing how the whole scheme may be enlarged and improved, and made more efficient.

Mr. ROY WILSON
I am sorry to have to say that I do not find myself in agreement with the hon. Member for the City of London (Mr. E. C. Grenfell) in his criticism of this Export Guarantee Scheme. With my knowledge of overseas banks, I can say definitely that there is a great future for both these schemes, the Export Credits Insurance Schemes now adopted by the Department of Overseas Trade. While some criticism has been made both in the House to-day and by the Estimates Committee, of which I am a Member, of the administrative charges, we must remember that anything like a thoroughly efficient guarantee scheme to be run by the Government must involve a thoroughly efficient and- up-to-date departmental management. We are apt to lose sight of the fact that the Export Credit Guarantee Scheme only started in July, 1926. While it may be true that during the first 20 months of that scheme it did not bring all the business and all the premiums some of us could wish, nevertheless it got a good start. Undoubtedly, it has been of some benefit to exporters, and I ask the Committee to remember that assistance to exporters by means of credit insurance has been adopted in Germany by the Government with enormous advantage to the German exporters. I am not exaggerating in saying that it has been one of the principal factors in the rapid recovery of the German export trade; they have had a thoroughly good guarantee scheme supported and run very largely by the German Government.
I should like particularly to congratulate my hon. and gallant Friend upon what is termed Contract B. Contract A, that is, the Guarantee Scheme which has been in force since July, 1926, while being quite a useful form of insurance for the exporter, is a restricted form of insurance; and while it certainly guaran- 1467 tees the exporter against loss in connection with his transactions, it is not in the ordinary course a transferable insurance through which he could get additional credit facilities. Contract B, which the Government have now brought forward, will, if it be properly handled, prove a great stimulus to the export trade of this country, because the essence of that contract is that the exporter can go to his bank and say, "Here are my bills of exchange with documents attached, and here is an undertaking of insurance on the part of the Government that the bills will be paid, as soon as they are accepted, upon their due dates." In that way, the exporter is enabled to get larger credit facilities than otherwise he would have been able to obtain.
It is all very well for people, who, perhaps, are not closely associated with the financing of overseas operations to say, as some people say to me, that any business with hills of lading for goods attached for shipment overseas ought, provided that the customer is respectable, to be business which any bank should, with pleasure, undertake; but those of us who are engaged in overseas banking know that, however good the customer may be, there is bound to be a limit to the extent of credit that that customer can obtain from the bank, and in this new contract we find a ready and safe means through which the bank can grant to their exporting customers additional credit which no doubt will run to a considerable amount, and be of advantage to the exporter and, I hope, to the manufacturing trade.
Another good feature of the scheme, and one which should relieve some of the doubts of my hon. Friend the Member for the City of London, is that before the Department give this guarantee, they must be completely satisfied by reports from, the exporter on the standing of his customer, and from the bank, which is to discount the bills, that the business is a reasonable and a fair one. I believe that this closer association which is now to be introduced between the Export Credits Department and the banks, will undoubtedly be a good thing for trade generally, and will substantially increase the turnover which we shall receive from 1468 these export transactions. My hon. and gallant Friend the Secretary to the Overseas Trade Department will, I am sure, agree that already he has received, not only from the distinguished people who are connected with the Advisory Committee of the Export Credits Department, but, since July, 1926, the greatest assistance and co-operation of the banks in the matter of reports upon the risks which the Export Credits Department are undertaking.
I had not intended to enter into a discussion about trade with Russia, but I find it difficult to understand why hon. Members of the Labour party should press all the time for the Government to take the risk, of with credit transactions Russia. Surely we lose sight of what is an all-important point; there are no business houses, as such, in Russia. When you are shipping your goods to a business house in Russia, you are taking the credit of the Russian Government. I do not want to be dogmatic on this question, but in common with every-body in the House, I should like to see a flourishing trade between Russia and Great Britain, and I should like to see this trade increasing on a fair, reasonable and safe basis, hut unfortunately we have to face facts. The hon. Member for East Middlesbrough (Miss Wilkinson) and another hon. Member said that no Russian bills of recent years for goods shipped from this country have been dis-honoured. Do they realise that in practically all these transactions, representing considerable sums of money, gold has been deposited in London for a large proportion of the credit risks which are being taken? I urge, but not as a party man, this upon the people in Russia, that if they would only convince His Majesty's Government that credit can be given with safety and assurance to Russia, I, for one, would support the Government extending these credit insurance schemes to Russia as to other countries; but until this country can be satisfied—and I 'am certain that manufacturers take the same point of view—that the contracts of the Russian Government will be honoured in the spirit and in the letter, I cannot see how the Government can extend the export credit scheme to business with that great country.
1469 I congratulate my hon. Friend upon the little pamphlet explaining the facilities provided by the Government for financing these credits through insurances, and I would make a suggestion. I am one of those who believe that it is all very well launching a scheme like this, and getting, as I am certain we shall get, the co-operation of the Press to advertise it, but my experience tells me that you want to get the co-operation, not only of the head offices of the banks in London, but of every individual bank manager in all the large towns where the exporters have their businesses. Too often these; important things are circulated through a London channel, and perhaps sent to the provinces, reaching a busy man with a mass of documents from his head office, and in consequence are not read. I should like the Department to send a ropy of the memorandum, with a supply of the forms, to each individual bank manager in all the industrial towns of the country, with a letter asking him, not only to take in all the details of it, but to do his best to bring it to the notice of his customers direct. He might also get the chambers of commerce to take this pamphlet up, to consider it at their meetings, and do their utmost in the large towns to circularise their members. If this were done, I should have a great deal more hope of this thing being rapidly adopted and getting known, than I should have if I thought that it were merely to be sent from his Department to the head offices of some, of the banks.
I believe that Contract A has done its part and that Contract B, if it be properly understood by the merchants and exporters, will add materially to our business. I am not without hope that the example which the Government have given in this very excellent insurance—because it is a much better insurance than Contract A—may persuade big insurance companies, who have been behind the times very largely in the matter of credit insurance, to take it up. In that way we shall have a more powerful means of assisting our export trade than we have ever had.

§ 7.0 p.m.

§ Lieut.-Commander KENWORTHY
I wondered when the hon. and gallant Gentleman was introducing his Motion why he trailed his coat, and seemed to be looking for trouble, and I had to wait until the hon. Member for the City 1470 of London (Mr. E. C. Grenfell) spoke before I discovered the reason. At first I thought that it was the natural pugnacity of the hon. and gallant Gentleman man, who does not get many opportunities of speaking for his Department, and that he was making a night out of it, but I find that he wanted to drag into the discussion the hon. Member for East Middlesbrough (Miss Wilkinson) and, if possible, the hon. and gallant Member for Wycombe (Sir A. Knox). Criticisms of the scheme of the most damaging kind from the point of view of the City of London would thus be lost sight of. It was not his natural liking for a scrap, but in order to get a few red herrings drawn across the discussion so as to keep off the trail the hon. Member for the City of London. What does the hon. Member say of the scheme? This is a business, it must be remembered, in which the Government first engaged in 1920, and not in 1926 as this booklet says. It was then a very risky business to export to Europe at all, and it was quite right therefore for the Government to pledge the taxpayers' credit and to reinsure and guarantee a merchant's risks. The hon. Member for the City of London, who is a distinguished banker, speaking for the high finance of the commercial capital of the world, says that there is not much risk in Europe now, except in Russia, that currencies are stabilised, and that Europe is settling down, while the ordinary arteries of commerce are opening again. He says that a small company with a capital of £250,000 has been started, and that it is therefore wrong for the Government to continue a business in which they did the pioneer work now that it has become profitable. He says that this profitable business must be handed over to this private company. There you have the mind of the City of London. I am not criticising the hon. Gentleman. He is representing his constituency as I try to represent mine. He is representing the mind of the leaders of the City of London. Any business that begins to pay must be handed over to private enterprise, and must not be left in Government hands. One day it is wireless; now it is overseas credit. In spite of the fact that the Government have taken the risk and done the pioneer work, this business, with its experience 1471 and goodwill and trained personnel, should be handed over to some private bank or company in the City of London. This is the philosophy of the Conservative.

§ Mr. E. C. GRENFELL
What I say is that now the sky is blue and everything is easy the Government do not seem able to do the thing. If they cannot do it now, they never will.

§ Lieut.-Commander KENWORTHY
I would point out to the hon. Gentleman that the Government in 70 weeks have done a total volume of business of £3,700,000 with overhead charges of £20,000. It is obvious that under contract "B" they are going to increase the amount of business and that the overhead charges will not form such a high percentage. When this scheme was first introduced in 1920—it is not an invention of the present Conservative Government, but is a proposal which was first brought forward by the Coalition Government at a time when things were extremely difficult in Europe—I remember standing on this same spot where I am now and criticising it, not on its merits, but on the ground of its inadequacy. I remember the words I used at the time, eight years ago, when I said: It was a plaster to try and cure an ulcer. At that time our trade was hampered by difficult conditions in Europe. Now we still have the trade slump and the unemployment, but we have more stable conditions in Europe. I can see great possibilities in this Department. I was glad to note that the Overseas Trade Department itself is not to be wound up until after the next election, according to the Prime Minister. I do not think he will have the opportunity of acting in the matter then. I admit that, even if the Overseas Trade Department were wound up, this particular business would then be under the control of the Board of Trade. Apparently, the Government have hesitated to wind up the Overseas Trade Department largely on account of its work which we are now discussing. I hope that, far from its being wound up, it will be enormously extended. Under contract "B" we are going to give a guarantee to the exporter which he can take to his bank and get credit from his bank at a fine rate of interest without 1472 recourse to himself. I would like to see us go a great deal further than that. If we are going to use Government credit to guarantee the exporter's bank, why should the hank take that profit? Why should not the Government Department guarantee the money itself, and take the profit for the Treasury? If we are going to go so deeply into the acceptance business, why should not this Department, with its trained civil servants and its means of information, go a little further and act as an acceptance house altogether?

§ Mr. GRENFELL
The Government have not the money.

§ Lieut. - Commander KENWORTHY
Why not? It is the same thing as guaranteeing the money. There is not much difference in principle. The Overseas Trade Department, with its ramifications all over the world, linked up as it is with the Consular Service, should have great means of intelligence from our commercial attachés abroad. That Department is taking a certain risk, so why should it not provide not only the credit but the money too? What is the objection? I can see the hon. Member for the City of London objects, because it will be competing with the banks, but the Government are now competing with other companies, with the acceptance houses, and with this company, which the hon. Member described, which engages in reinsurance transactions for exporters to-day. Therefore, if the principle of the Government engaging in a form of banking is accepted, why not go a little further and use Government credit for the assistance of the export trade? I would much rather use £50,000,000 of the taxpayers' money for this purpose than have men standing about in the street doing nothing. I believe in employment, and I am not concerned with the happiness of the bankers and insurance managers of the City of London who look after themselves very well.
I am thinking about the poor fellows in my constituency, not in the City of London, but in the city of Hull, who cannot get work at the present time because our export trade has been languishing. If I could use £50,000,000 a year of Government credit to help our export trade, I would far rather do that 1473 than pay it out to unfortunate young men at 17s. a week, which is just enough to keep them from starving. I suppose that my suggestion is without precedent, and that, because it was not done in the reign of Queen Victoria, therefore it must not be done now. I throw out this suggestion not to the present Government, but to my friends, who, I hope, after the next election will be able to put it into force. I do not want to disappoint the hon. Member for Wycombe. I know he was squirming, figuratively speaking, when the last hon. Member said we ought to do as much trade as possible with Russia. Does the hon. Member want to do trade with Russia? No. He shakes his head. Neither does the Secretary of the Overseas Trade Department.
I always understood that this scheme was not for the benefit of the foreign merchant or consumer, not for the benefit of the German or Italian or Chinaman, but for the benefit of our own people. However, because the Government so hate the present Government in Russia, and are so prejudiced and so hysterical about it, they are quite prepared to injure our own people if only they can hurt the Russians. So much has been said about this subject that I really approach it with reluctance, but, after all, I represent one of the divisions of a city which has always done its principal trade with the Baltic. We in Hull have in the past kept ourselves going and become very prosperous and busy on Russian trade. I challenge the hon. Member for Wycombe to go down there, and address a popular audience and say it is wrong to do trade with Russia.

§ Sir A. KNOX
I did address a popular audience there on the occasion, of the hon. Member's election.

§ Lieut. - Commander KENWORTHY
Well, we see the result. It is a fact, too, that the Conservative Members for Hull do not adopt that attitude at all. They dare not. They say that we ought if we can to trade with Russia. When the Bill is printed, I hope it will be possible to move an Amendment to cut out this prohibition against guarantees to Russia. I hope it will be moved and that we shall divide the House on it. I am quite prepared to defend the posi- 1474 tion that I have taken up in the country, and I have spoken on it during many a Debate in this House. I say it is very wrong indeed for the Government shamelessly to use a political argument in order to prevent British merchants for the sake of British work-people from doing trade with a country with whom we can do trade. It is appalling to hear the hon. Member in charge of this Department standing at that Box, where such great figures have stood, and gloating over the fact that the harvest has failed in Russia, rubbing his hands with delight—[Interruption.] Is he sorry that the harvest has failed in Russia?

§ Mr. HACKING
Of course, I am sorry.

§ Lieut. - Commander KENWORTHY
Then why not guarantee the export of reaping machines to Russia? Why should there be this inhibition on that perfectly honest trade? Not munitions, of course. I was responsible for the Amendment in the original Act forbidding munitions to be sent, and I am very glad I took that course, because some of the hon. Members opposite would have benefited, though not through sending munitions to Russia, of course. I do not make any attack upon the hon. Members for Birmingham. The hon. Member representing the Government says the harvest in Russia has failed. Has not Russia anything else to export? I have heard a great outcry raised by his friends, and especially by some hon. Gentlemen not now in the House, against exports of oil from Russia to this country. Has not Russia got timber, and many other things At present the Union Cold Storage Company is giving credits to Russia for the import of dairy produce into this country —eggs, cheese and so on—and are doing a very fine business; and some of the best firms in this country, like Mather and Platt, people whose credit at Lloyds is A A A A, and to whom the hon. Member for the City of London would give a loan up to any amount at any time, have been doing business with Russia on a credit basis and have not had a complaint of a single protest of any bill given on behalf of the Russian Government. I should not be doing my duty to the men of the constituency I represent if I did not protest against this inhuman and stupid policy of cutting off our noses to spite Russia's face.

1475

§ Major-General Sir ALFRED KNOX
I hope the Minister will stick to his guns in spite of the terrible threat of the hon. Lady who sits for East Middlesbrough (Miss Wilkinson) to carry the fiery cross into his constituency. The hon. and gallant Member for Central Hull (Lieut.-Commander Kenworthy) challenged me to go to his constituency and speak on the subject of trade with Russia. I went there when he was elected to this House, and I confess that I had a most rowdy audience, but I always attributed that to the popularity of the hon. and gallant Member, and not to any disagreement with the few remarks I ventured to make. I listened with great interest to the speech of the hon. baronet the Member for Orkney and Shetland (Sir R. Hamilton), who was very anxious that his constituents should be able to sell their herrings to Russia, but I would like to point out that there is nothing to prevent the Russian Government, who are the only people trading in Russia, from buying the hon. Baronet's herrings if they wish to do so. In the nine months ending 30th September we purchased from Russia goods to the value of £13,500,000, whereas Russia purchased from us goods to the value of £2,250,000 only, so that Russia has a credit balance, which she might spend in this country, of something under £11,500,000. Why should not Russia spend that money in buying herrings from Scotland, or buying other goods? Why should we give Russia further credit when she has got this large credit which she does not choose to use. I do not suggest that she should use that money in supporting the Third International, though some of it does go in that way, or in creating chaos in other countries, though some of it undoubtedly does go for that purpose also.
I quite understand that hon. Members of the Opposition who sit above the Gangway take a particular interest in Russia, because Russia is an example of nationalisation pushed to its extreme end, and they naturally want to bolster up Russia in order to make it appear that that system is a success, though it is quite impossible that it should be Derjinski, a few hours before his sudden death, in 1926, explained that the whole system had failed and was about to crash. It may totter on a little longer but we do not know how long. There are other reasons, apart from 1476 this large credit which Russia has in this country, why I am opposed to using the national credit to extend trade with Russia. We ought to remember how the Russians have robbed our nationals. There are in this country many British subjects in a state of starvation because their goods were stolen in Russia and their factories taken. Is it realised that a great part of the oil which Russia exports, at any rate half of it, conies from wells which were sunk with British capital, and that these have been taken by the Russian Government. who have made no attempt to pay for them? The Russian Government are now touting all over the world for loans with which to get their tramways working in Kharkoff, Kieff, Moscow and Leningrad. Why do they not pay the British shareholders who in former years put their money into those municipal undertakings.
I am astounded that the hon. Member for the City of London (Mr. E. C. Grenfell) should recommend us to extend these facilities to a trading organisation, for it is nothing else, which has gone bankrupt. If that is the idea of high finance in the City of London, I say, God help this country! I have heard a good deal about cold-blooded capitalism on the other side. Surely this exceeds cold - blooded capitalism. Why should we give money to people who have robbed our people and who are engaged all over the world in a propaganda directed against the very existence of this Empire? For the reasons I have stated I hope the hon. Gentleman will stick to his guns and refuse any extension of credit.

§ Mr. R. RICHARDSON
I had not intended to say anything in this Debate, but what has occurred since it began impels me to say a word in support of the appeal to the Minister to extend these facilities to Russian trade. I listened with interest to the hon. Baronet the Member for Orkney and Shetland (Sir R. Hamilton) putting forward his case on behalf of the fishermen in the far North of Scotland. I would make a similar plea for the miners in the North of England. We who live in the mining districts there know only too well what we have lost by not trading with Russia. I can recall a previous occasion when times were bad and when mothers and children were starving, and the opening of the ports brought prosperity to the North-East 1477 Coast. The present Foreign Secretary declared on one occasion that when we accepted Reparations from other countries we could not prevent some of our countrymen from being hit. Why should we refrain from trading with Russia because we do not agree with the politics of Russia? Their politics are no concern of ours, and we should demur if they interfered with politics here. I want trade with all. I want new markets. Everyone knows that our miners are out of work because of the lack of foreign markets. Time was when 6,000,000 tons of coal went from the North-East ports, coal which came largely from Durham and Northumberland. To-day we reckon the exports in thousands, or less than thousands—probably in hundreds. I believe this trade can be brought back with the assistance of our Government. Despite all that has been said by the hon. Member for Wycombe (Sir A. Knox), not a penny has been lost by any people who have been trading with Russia during the last five years. Let him ask the great co-operative movement about that. Goods worth thousands of pounds have been sent from co-operative societies here to Russia, and every bill has been honoured. A few years ago, when the coal trade was down and out, one large colliery company in Northumberland took its courage in both hands and exported coal to Russia, in that way keeping its pits going when others were lying idle. It did not lose one penny piece!
We cannot go on cutting off our nose to spite our face. The constituents of the hon. Member for Wycombe are taking no harm; they are not in the position in which my people in Durham and Northumberland find themselves. We are committing one of the greatest crimes which it is possible for legislators to commit; we are starving people. That is what is happening as the result of the stupid policy of trying to avoid trade between one country and another. What matter to us what are Russia's politics? Would any shopkeeper refuse to serve a customer because he held different ideas from his own on politics or on matters of local administration. The shopkeeper would be only too glad to have the trade. Until this country makes up its mind that markets must be found in order to keep our workers busy here, I am afraid, and more than afraid, that their misery 1478 and starvation will continue for some months to come. Suppose we did make a loss on trade with Russia. If as the result of that trade we could set 250,000 miners to work we should save far more money than ever we should lose on our guarantees. I am with the hon. Member for East Middlesbrough (Miss Wilkinson) in her plea for Ireland, and if the. Government will only keep its mind on the question of credits and forget its political prejudices I am sure that in a short time we shall have better times in England than we have to-day.

§ Major HILLS
I can reassure the hon. and gallant Member for Central Hull (Lieut.-Commander Kenworthy) on one point. He pleaded for the use of Government credit to support our export trade; that is just what this scheme proposes. Credit up to £26,000,000 is set apart for our export trade. But he went on to plead for the use of Government cash as well as Government credit., and I must ask him why the Government should lend cash when the exporter can equally well get the money from his bank upon the Government's insurance of credit? Contract B fills the gap between insurance and finance which existed previously. Under Contract B a banker who lends money upon the bill which the exporter takes, knows that if that bill is protested he will get the money on default.

§ Lieut. - Commander KENWORTHY
From the Government?

§ Major HILLS
From the Government, so the Government have done a very great thing for the export trade.

§ Lieut. - Commander KENWORTHY
May I ask the hon. and gallant Member to explain why, if the Government back the exporter's bill, they should not also take the profits of lending that money?

§ Major HILLS
Because the Government do not want to go into big banking business. It is far more profitable to the Government to let the banks do that business. It is the business of the banks, and the Government would want a very big capital if they embarked on it. My imagination stands appalled at the thought of the Government financing all our export trade. All that we need is to give the man who sells the goods two 1479 securities, first of all that if the man who buys does not pay the Government will pay, and secondly that they will pay as soon as the money becomes due. Then he can go to the bank and get what he requires. That has a very good effect and it applies also to the long term credits. When a man sells a machine or steel or iron or even ships he is often paid by instalments during a period of 2, 2½ or 3½ years. Therefore it is very important that during that time he should be able to get money from the bank. In the old days the companies selling these goods possessed large reserves, and they used to put these bills in their strong box and they stood out of their money; but no company is strong enough to do that at the present time.
I was chairman of the committee which was set up to inquire into this question, and from the report of that committee Contract B originated. I want to pay a tribute to that committee. It was composed of representatives of all aspects of business and finance, and I do not think an abler body of men ever met. I wish to thank them all for the care and skill which they showed in examining into a very difficult subject. We got an agreed report, and one of the terms of that report was that the scheme should come to an end in September, 1929, and therefore I am debarred from pleading for an extension of that date because I consider that, having got that agreed report, I must not urge for an extension.
I wish to point out the magical spread of insurance of credit. Twenty years ago nobody expected that the biggest insurance people in London would be risking large sums in the re-insurance of credit regularly, but that is happening and they are making a profit upon it. This credit insurance has been extended partly through the operation of the Government and; partly by the well known company which has been referred to by the hon. Member for the City of London (Mr. E. C. Grenfell). It has spread all over the world and all over Europe, France, Germany, Italy, and even Spain has now got a system in working order. The more the system spreads the more safe it becomes. The great difficulty in insuring credit is that you must have accurate information about the position of the importer and when you can apply to organisations 1480 across the seas and they are in a position to get information about their own national, it is quite clear that the position of the exporters is very greatly strengthened, because they get to know whether the importer is good for the money or not. Nobody would have believed a few years ago that the insurance of such a personal thing as credit was possible, but it shows that insurance can do anything, and it is now one of the big things in modern industry. The system will be extended, and the company referred to, started in the City of London by a very able man, shows that you can insure credit with profit.
When people criticise the Government project and say it is too expensive and contrast it, as the hon. Member for the City of London did, with the fact that it makes a loss, while a public company makes a profit, I ask him to bear in mind the stringent conditions under which export credit is granted. Our system can only guarantee the export of goods, and they must be wholly or mainly of British manufacture. Therefore it can only guarantee on export. The company referred to can guarantee any commercial; transaction or any bargain between two foreign countries, and it need not be export of British manufactures. Moreover, under our system you cannot pay a commission to push a business in the same way as a public company can do. I think we ought to be allowed to pay a commission. I happened to come across the other day one of the most important insurance agents in the City and I asked him why they did not push the facilities granted by the Export Credit Departmbent. He replied, "Why should I push them when you do not pay me anything for doing so." As we have started an undertaking like this, I think we should allow the department to pay commission.
On the question of Russia I stand between two fires. I do not agree with the hon. Member for Wycombe (Sir A. Knox) or with the hon. and gallant Member for Central Hull on this question. It seems to me that whether we insure credit in Russia or not is purely a matter of terms. So long as we do trade with Russia, I do not see that it is very dishonourable to sell things to Russia and very honourable to buy £13,000,000 worth of goods from Russia. I do not think that there should be a 1481 bar on either of those transactions. But since Contract B has been started, the whole loss will fall on the Government in case there is default on the maturity of the bill. Of course they must go to Russia to collect the money from the Russian Government and that is a very difficult position because we are not at all satisfied about the courts of Russia. I believe a large number of people in this country would like to see the trade of Russia open to our nationals because Russia requires the articles which we can supply, and they happen to be those articles manufactured by the trades in which there is a large amount of unemployment at the present time. Unless you can make certain that you can get paid, of course the risk is very great, but I would like my hon. Friend to make inquiries.
Credit is being insured in the City in the heavy trades over long terms, and so much is this credit now being sought after that I am told that the cover available is taken up three years ahead. I do not put an absolute bar on trade with Russia, but on the other hand I do not want to make a bad bargain for the taxpayer. I believe it might be possible to charge a premium which would make the insurance profitable, and if the Secretary to the Overseas Trade Department inquires, I think he will find that this kind of business is being done. An hon. Member opposite said that the firm which has been referred to did not pay on default and only paid when the action had been brought and legal proceedings taken, and that might take two or even three years. The company concerned are now issuing policies payable on default, and so their practice and that of the Export Credits Department are identical.
Just a word or two about the question of expense. I believe you can run this business at a profit, and I do not think you ought to make a loss. I think your loss ratio plus your expenses ought to be inside your premium income. Of course, the more you spread the business and the bigger the premium income is, the smaller the comparative weight of the overhead charges. I hope that this kind of business will spread. I am not sure that this business itself can go to any private company, for it should not be forgotten that it is not a general guarantee of credit; it is only 1482 a guarantee for export trade and a guarantee for the export of British manufactures only, and I do not think any company would undertake that business. I am quite convinced that the system ought not to continue indefinitely, but I am not much impressed with the possibility of persuading any company to take it over. Insurance of credit generally has spread very rapidly in the City, and those insurance managers who first stood aloof in the big offices are now devoting large sums to be the re-insurance of credit, and there is no fear now that the insurance world is not getting its fair share of this new business. I welcome what the Government have done, because they have done something which will be of immense benefit to British trade and especially to those trades that are depressed.

§ Mr. SHORT
I do not pretend to possess any profound knowledge of the ramifications of financial matters, but I desire to approach this question from a new standpoint. I think we have heard sufficient from the Secretary to the Overseas Trade Department and other speakers on both sides of the Committee to warrant our extending our warmest support to the scheme which is now before us. Any doubts that might have existed in my mind were dispersed when I heard the hon. Gentleman foreshadowing that this public development might at some time in the future be handed over to private enterprise, and I am glad to think that the hon. and gallant Member for Ripon (Major Hills) indicated, as, indeed, other speakers have indicated, not merely the danger, but the almost impossibility of any private enterprise undertaking carrying out these functions. This scheme originally was mainly for the purpose of facilitating trade, and thereby lessening in some degree the numbers of our unemployed.

§ Major HILLS
That was the first object.

§ Mr. SHORT
That was the first and a very substantial object of this scheme; but, while we have resorted to many methods, such as this and the encouragement of trade facilities, unemployment has increased alarmingly, and to-day the figure stands, I think, at over 1,372,000 upon the live registers of our Employment Exchanges. Consequently, there is all the greater reason for giving impetus 1483 and encouragement to this scheme, provided that it will assist in the development of our overseas trade and put more of our unfortunate workpeople who are to-day unemployed into our factories, our mines and our workshops. It is from that point of view that I look at the matter. I would like to emphasize the point made by my hon. Friend the Member for Finsbury (Mr. Gillett). I would like the Secretary to the Overseas Trade Department to explain, if he will, why it is necessary to continue the embargo upon the textile trade—to which I understand it is confined—with India and the Far East. I speak with great humility upon these matters, and must admit that I do not know much about them, but when I read in the papers and when I hear in this Chamber that there are thousands of textile workers unemployed, when I learn that attacks are being made on their wages with the object of reducing them, when I find that our great cotton manufacturers have difficulty in maintaining their well-equipped factories, when I read of the poverty of India and of the poverty of the peoples in the Far East, I wonder why it is that we should adopt this policy. Why should we not give them greater encouragement, and extend this scheme so that the peoples of those countries might benefit? It may be that that view is founded upon wrong evidence, and that there is no justification for it; it may be that the policy is perfectly sound; but, as a member of the community who knows very little about these matters, who looks upon them purely from the point of view of the man who is unemployed, and who has experienced unemployment himself for months together, I think we are entitled to ask that some further information might be given upon this embargo so far as India and the Far East are concerned.
I come to Russia. We have listened to a very bitter speech from the hon. and gallant Member for Wycombe (Sir A. Knox). It has not been a helpful speech. The hon. and gallant Member may have a grievance. He may represent a handful of people in this country who have a grievance, and their grievance may be a very just one. But, surely, the grievance, no matter how great it may be, of the individual, should not cloud his vision and close his mind 1484 to the great human problem that exists here in this country, with 1,372,000 unemployed and with that number growing, as it was a little while ago, at the rate of 30,000 a week. This is how I look at the problem. I see a population in Russia of some 160,000,000. I believe that they want something which the people of this country can produce, and that they are in a position to buy from us. We have the skill, the capacity, the will and the anxiety to produce the things that Russia requires, and I have yet to learn of any reasonable objection to the extension of this scheme to Russia.
I represent a great industrial constituency, consisting of three towns. The unemployment there is tragic, it is deplorable. I can never go down into that constituency without being moved at the sight of good men wasting their time and their energy, physical and mental, walking the streets. In my constituency they make nuts and bolts, tubes and fittings, pipes, railway wagons, engineering work of all kinds, iron and steel—almost everything of an industrial character is manufactured almost within the boundaries of my great constituency, and we have large numbers of unemployed. They could make the nuts and bolts and all the other things that Russia requires. They could assist in the manufacture, either fully or in part, of the articles that Russia requires. The attitude of the Government on this problem does not create confidence, but hostility, and we all know that, as a result of the policy of His Majesty's Government, orders have passed from this country and gone to Germany or the United States. We know that we have lost orders because of the political hostility that has been displayed towards Russia. While we pursue that course, our own people are unemployed in thousands, and we see the army of unemployed increasing.
My hon. Friend the Member for Lichfield (Mr. Roy Wilson) talked about gold having been planted in this country, in support, I understand of some orders that were given, but, I would ask, how does the working man look at it? In my constituency, not long ago, a big order from Russia was given and completed. They know that the work came from Russia; they know 1485 that it provided employment; they know that it provided wages. They know that the work was done and sent to Russia, which is all that they are concerned about, and they know, also, that it was paid for. With a practical example like that before their eyes, it is folly for these financiers to split hairs and try to create doubt and suspicion in the minds of the working class. Hon. and right hon. Gentlemen opposite really ought to face up to this problem. In this case we are not asking them to trade with Russia, if I understand the principle aright. Reference has been made to the committee of experts, very able and clever men. I have read sufficient about them to be convinced that they know all that there is to be known about finance and its ramifications. We are only asking, if I understand this scheme aright, that they shall have the opportunity of testing the proposition that is put to them. That is all. But they are being denied that opportunity, and yet all around we see poverty increasing, destitution increasing and the army of unemployed increasing.
Surely, we ought to have regard for our own citizens and for the great army of industrial workers, the majority of whom, unhappily, are working for low wages, many of them are working short time, many of them are afraid that they will get the sack. They do not know when that sword is going to fall upon them, and, when they get out of work, many of them will not know whether they are going to get another job; they do not know where to look. In my own constituency, the clerk to the board of guardians tells us that it is no use men from Wednesbury going as far as Birmingham to look for work, because people living in Birmingham will be given preference. They have, he says, been flung off the Employment Exchanges, and find relief through the West Bromwich Board of Guardians. All this kind of thing is going on, and yet we have the Government coming down here with a scheme which they say is a good scheme, which is being fruitful in results, which has assisted and facilitated our trade and commerce; and they say that it is all right to apply it to some countries, but not to the great country of Russia, with its 160,000,000 people who might be taking our agricultural implements and so on and find- 1486 ing work for our people up and down this country. I would beg the hon. Gentleman to try to shake himself free from this political prejudice. If he cannot do so to-night, let him see if he can use his influence with the Cabinet so that this scheme may be extended to Russia, and may provide a little more work, which is so urgently required in this country, so that our people may find employment at remunerative rates and under proper conditions.

§ 8.0 p.m.

§ Mr. CONNOLLY
I want, first of all, to congratulate the Secretary to the Overseas Trade Department on getting the period of operation of this scheme extended. On the last occasion when I raised this matter in the House, his answer was that there would be no extension of the period of the scheme beyond September of next year, but the Prime Minister announced a little later, in July, that there was to be an extension for two years. I am very pleased indeed that that is so, because all who have, studied this scheme have seen that success has attended it in a very considerable measure. What we are concerned with here, however, is the question of the restrictions that the Government have placed upon the scheme—restrictions so far as its scope and the countries included are concerned. It is on that heading that I want to speak. Russia has been mentioned a good deal, but I want to put one or two questions regarding other countries. With regard to India, the little booklet that has been issued tells us that only textiles are excluded from the operation of the scheme. Is that really so? Textiles may be specifically excluded, but in effect are we not excluding everything else, because the booklet tells us it is against the policy of the Department to encourage the granting of longer credits than are customary with the trade of the country concerned. We know that 90 days credit, is in operation with most of our trade with India, and if the policy that is pursued under the scheme means that no longer credit than 90 days can be given to India, it certainly means the exclusion not only of textiles but of everything else. That is the view I take. If there is another view of it the Minister might deal with it. It appears to me that India is being penalised if the 90 days 1487 credit is in operation. There is also the question of interest. We know that a very heavy interest percentage is charged, and that is one of the reasons why we on these benches should like to see Indian trade brought in under the scheme. The booklet also tells us that all countries are included in the scheme with the exception of Russia, India as far as textiles are concerned and the Far Eastern markets. Is Rumania included? Because she has been excluded, and if the booklet is up to date we may take it that Rumanian trade is brought under the purview of the scheme. I do not know whether it is or not and I should like the Minister to tell us.
We have been told that Russia has a favourable trade balance with us. Last year in round figures we bought from Russia £13,000,000 and she bought from ns £2,000,000, and therefore she has a balance of £11,000,000 with which she could trade in those things that she needs, particularly agricultural implements. But this trade balance is not held by the people who would trade with us under the scheme. That is the trouble. We are not asking, as some hon. Members seem to think, for something for the Russian Government. It is not the Russian Government that is trading with us. It is not even the Russian people we are asking it for. The credit guarantees are not for Russia, or even for Russian traders, but for British traders who may have potential customers whose stability will bear investigation and who with the help of the credit may place orders in this country. So that it is merely talking round the subject to say we will not give to Russia for this and the other reason, or we will not even give it to the Russian people. It is not the Russian people we are asking it for, but the traders in this country and our own unemployed.
The hon. Member for Wycombe (Sir A. Knox) gave as a reason why we should not extend the scheme to traders with Russia in this country that the Russian Government has not met her debts. I do not see Russia in the same light as he does at all. He says it is a great example of an attempt to establish nationalisation. What I see in Russia is a country which was for centuries 200 years behind every other race 1488 in Europe. I see in the Russian nation an example of die-hard Conservatism. It stood rigid until it broke and it has to be built up anew, and it has gone and is still going through an agony. To talk about us on these benches being concerned with the Russian people building up a system of nationalisation because we believe in it is simply talking nonsense. What we are concerned with is the unemployed in this country. I would ask the hon. Member to examine his own conscience in the matter. We are often told from those benches not to allow politics to enter into industry. What is it that is preventing us from trading with Russia but politics? It is politics that is depriving the unemployed of work that could be had from Russian orders, and nothing else. That is the obstacle and we want it overcome. Do we want a settlement of the debt question, which seems to be such a bugbear with some hon. Members opposite? If we do why do we not negotiate? She has asked us to negotiate upon a certain basis. If that basis is not right let us try to have another. They are quite eager to get the thing settled. They have said quite plainly that, provided we are ready to take certain offsets, they will do the same, and they will sit round a table and settle the matter.
I know the Minister is very greatly interested and active in this question of the credit guarantee scheme. I should like him, after his success in getting the Government to extend the period, to put forward efforts for a bolder policy with regard to the scope of this Measure. I have spoken at least half-a-dozen times about the Tyneside and the possibility of orders for ships. Three times I have had the Blue Book of the Russian Mercantile Marine, showing that they are 1,800 ships short in the Baltic and the Caspian. They are working this trade with ships 30 and 40 years old, and there are responsible people there, not the Russian Government, but stable houses which would trade with our country if they were given the benefit of this scheme. Eighteen hundred ships short, and we are waiting for orders and our people are drawing unemployed benefit. Cannot there be some attempt to get this question of Russian debts and the disability the Russian nation is under wiped out so that we can open up trade with that great country and bring employment to our 1489 people? I think the Government is standing in its own light. I am sure if a Labour Government comes into power at the next election the credits guaranteed scheme will be extended. We will take risks, and the Government ought to take risks. A bold policy is necessary, having regard to the fact that the unemployment figures are not diminishing but are getting greater and greater. The Government in its own interest ought to try to get the matter satisfactorily settled.

§ Mr. HACKING
The hon. Member for Rothwell (Mr. Lunn), who takes a very big interest in the scheme, asked what kind of goods we had insured. The answer is all goods that are wholly or partly, manufactured in the United Kingdom. None except those laid down in the small handbook are excluded. We include coal. The hon. Member asks if we have any classification of goods that are to be insured. We have no classification by goods up to date, and I do not think the considerable work involved would justify the expenditure. Then he asked whether we insured large and small amounts alike. We make no distinction from this point of view at all. We treat all alike, and many bills which I have actually seen myself have been for less amounts even than £50. The hon. Member also asked for the number of refusals by the Advisory Committee.

§ Mr. LUNN
My point was how many applications have been granted and not taken up?

§ Mr. HACKING
I cannot give an answer without notice. In the early days there were certainly a large number when we had the sanctions system in operation, but now it is a very small number. The hon. Member asks the amount of salaries paid in the Department. In the financial year 1925 it was £12,600, in 1926, £12,300, and in 1927, £16,000. At present it is about £22,000. Of course, the Committee must take into consideration the increased volume of business, which necessitates a larger staff. The number of staff in 1925 was about 35 to 40, in 1927, 61; and in 1928, 73. That includes everyone, including cleaners and messengers. The hon. Member asked about the loss on the Advances Scheme which was in operation in 1921. It amounted to over £1,000,000. The loss on the first 1490 guaranteed scheme, which started in 1921, is estimated at about £31,000,

§ Lieut.-Commander KENWORTHY
On a total guarantee of what?

§ Mr. HACKING
I could not give that without notice. I should think, from memory, about £3,000,000 to about £4,000,000. The hon. baronet the Member for Orkney and Shetland (Sir R. Hamilton) naturally asked about the herring industry, about which he is anxiously concerned. The Scottish herring is exported in large quantities to the Baltic Ports and we are open to consider such business, but very few application have actually been received. When such applications are received we will certainly give them our careful consideration.

§ Sir R. HAMILTON
Does the hon. Gentleman mean to Russia?

§ Mr. HACKING
Not necessarily to Russia. Russia would be excluded. I was also asked to give the names of the members of the Advisory Committee. It is rather a long list. I do not know whether the hon. Gentleman will allow me to circulate it, and save time now.

§ Mr. LUNN indicated assent.

§ Mr. HACKING
The hon. Member for Rothwell also asked one other question about the position of the Advisory Committee, about the changes that were effected from time to time. The Committee was appointed in 1926 for this new scheme and it contained several members of the old Committee, and one or two leading business men with very special knowledge have been added since that time. The hon. and gallant Member for Everton (Colonel Woodcock) who is not in his place just now asked about the cost of administration. That is the reason for setting up this Committee of Experts. He asked whether the cost of office accommodation was included in the estimate of annual loss made by the Estimates Committee. The answer is, that all the cost of office accommodation and everything else is included in the loss. My hon. Friend the Member for the City of London (Mr. E. C. Grenfell) spoke of an insurance company—he did not mention the name, but I think I know the insurance company of which he 1491 was talking—doing our form of credit insurance. He is not quite accurate. No company is providing the facilities which we are providing, and which are being demanded by the traders of this country. I need not go into details, especially when my hon. Friend is not in his place, but one difference was dealt with by the hon. Gentleman the Member for Finsbury (Mr. Gillett). He said that these outside companies do earn a profit. That is quite true. The outside companies to which he was referring have earned some profits, but the question is that the company, the one I am speaking about, does not confine itself to our form of business. It has many other kinds of business, such as domestic business, which I understand may be about 60 per cent. of the total, import business, and it has purely foreign business, Japanese bills on America and other business of that kind, and consequently with a large business of that kind, widely spread, it is more inclined to make a profit than we are with restricted business. The hon. Member for the City of London said that we should not quote terms to undercut a private company. We do not know exactly what are the quotations of any other company, but I can assure him that we are not deliberately trying to undercut any other company, and naturally would not try to prevent them doing business.

§ Lieut.-Commander KENWORTHY
Do I understand that if the Minister or whoever runs this Department found that they could do business profitably at a certain price, and get plenty of business on those terms, that if they were undercutting some private concern they would raise their rates at once?

§ Mr. HACKING
Oh, no, we are not deliberately undercutting. We were charged this afternoon with deliberately undercutting private enterprise. That is not our intention. We work on our own quite independently. We do not know whether we are undercutting, because we do not know their quotations. The hon. Member for Finsbury asked me to review the extension of the scheme to India and the Far East. I said in my opening remarks that we have had no demand brought to our notice for this extension, 1492 but I repeat that if there should be a considerable demand we will try to meet it. The hon. Member for Lichfield (Mr. Roy Wilson) made some suggestions which he had also sent to me in writing in connection with the wide distribution of booklets and other literature. We realise the great importance of advertising, and that had already received consideration before I received his letter. Nevertheless, we are very grateful for his suggestion. The hon. and gallant Gentleman the Member for Central Hull (Lieut.-Commander Kenworthy) asked why we should not advance the money to exporters instead of the banks doing so. All I can say to him—and I am sure he will agree with me when I say it—is that he would not be satisfied with anything less than the nationalisation of the banks, and that is what his scheme would amount to.

§ Lieut.-Commander KENWORTHY
It would not be until I had a Civil Service to take them over.

§ Mr. HACKING
Yes, and that is nationalisation of the banks. The hon. Member for Wednesbury (Mr. Short) asked why we did not extend the scheme to India and the Far East as far as textiles are concerned. I gave a long explanation and made a statement, and if he will do me the honour to-morrow to read what I said I hope he will be satisfied.

§ Mr. SHORT
The hon. Member says that there is no demand. Is there likely to be a demand if it is the intention that this scheme shall not be extended to India as far as textiles are concerned? Will he intimate that the embargo is lifted, and that any demands that come along will be considered?

§ Mr. HACKING
What the hon. Member has described as an embargo was placed on the scheme at the request of people specially interested in this trade. If they ask for the embargo to be raised, we shall undoubtedly reconsider the whole position. We do not want to hinder any trade. We are anxious to help it. The hon. Member for Newcastle East (Mr. Connolly) asked if there was a limit to this credit, and the answer to that is that each case is dealt with on its merits, 1493 up to five years as far as the heavy industries are concerned, and otherwise in accordance with the customs of particular countries, and up to six months with regard to textiles. In fact, I think that we have done trade with India up to 12 months credit. Not under Contract B; there has been no business under Contract B. All these cases are dealt with on their merits by the Advisory Committee who work most efficiently and go into consideration of every case that is brought before them.
The hon. Member also asked, "Is Rumania included in the scheme?" There is no exclusion of Rumania, and there again every case which is brought to our notice, any request which is made for the extension of the scheme in Rumania will be attended to. Each individual case will be dealt with strictly on its merits. Rumania is not debarred. I think I have answered all the questions which have been put to me, but before I sit down I would like to say this in connection with the assistance we have had from various parts of the country, that the banks have been specially helpful to us not only in London but also in the provinces. All the big banks have welcomed Contract B, and they believe that it will be of assistance to them. I would like to thank them for the great assistance which they have given to us in the past, and particularly to thank them for their assistance with regard to Contract B. I hope that they will find it useful to themselves, and in finding it useful to themselves that it will be of great assistance to the export trade and to the country as a whole.

§ Mr. CONNOLLY
Has the hon. Gentleman anything to say with regard to Russian trade?

§ Mr. HACKING
It has been discussed so very much this afternoon and answers have been given—I have already given an answer in my original speech—that I did not think it necessary to say anything more about Russia. I can only repeat that Russia will be debarred from the scheme.

§ Question put, and agreed to.

§ Resolution to be reported To-morrow.