TRADE WITH RUSSIA.

HC Deb 05 February 1930 vol 234 cc1923-89

Miss WILKINSON

I beg to move, That, in view of the grave state of unemployment in this country, particularly in the heavy industries, and the imperative need for new markets for British goods, this House is of the opinion that the Government should energetically explore every avenue which will lead to increased trade with the Russian Soviet Republic, and that, in order to put this trade on a stable basis, a commercial agreement should be arranged between the two countries at an early date. We have had many unemployment Debates in this House. I have no doubt that before this Parliament finishes we shall have many more. The facts with regard to unemployment are quite well known to every one of us. There is no need to recapitulate them once again, but I want to bring before the House this afternoon the condition of affairs in the heavy industries of this country. We shall be dealing with them in detail in the second Motion which we shall discuss to-day, but in this House I represent one of the heaviest iron and steel producing areas of the world. I want the House, if it will, to look at two pictures. I want it to look at the condition of our industrial towns, those towns with sufficient equipment to be the workshop of the world, that immense capital equipment, able to turn out all kinds of machinery and shipping, to turn out coal, and to turn out all those heavy industrial products on which the prosperity of the country has depended in the past. The fact is that unemployment is heaviest among those particular industries. Apart from the unemployment in those industries our total of unemployed would be below normal. It is the unemployment in these heavy industries that makes our unemployment abnormal.

The construction of new roads is no solution for this condition of things. Even rationalisation of industry in itself would be no solution for the difficulties in these industries, because rationalisation would still leave the men there out of work, and many more of them. It is not a case that these are all old-fashioned workshops, mills or factories about which the Lord Privy Seal spoke the other day. Many of these establishments, which are either partially closed or working only half of their capacity, are among the finest industrial works in Europe. Nevertheless, we have these thousands of skilled men out of work, and this valuable plant unemployed. What is this House going to do about it?

Let us look at the other side of the picture. The Lord Privy Seal has told us that the work that he is doing is necessarily slow, that the cumulative results must grow, and that the problem needs a great deal of very careful management, because it is so immense. It is all very well to say that, and we know that the right hon. Gentleman is doing his best, but these men are unemployed, and they want to know what is going to be done now, and we have to look to see what is going to be done now to relieve their position—something that will bring a quick return. Where are we going to find that? We are told that our markets are being closed against us: the Conservative party tell us that on every possible occasion. Where are our new markets to come from? I would ask the House to look at Russia, a country with 120,000,000 people, with territory representing one-sixth of the land surface of the globe, and with raw materials that are admitted to be illimitable. It is a country which is backward in its development. Ten years before the War Russia was beginning to equip itself with modern industrial plant. That country is being governed to-day—let us leave out of consideration for the moment the character of the Government, whether we agree with it or not—by a body of men and women who are determined that within a comparatively short space of time that great country, with its, millions of workers, is going to be thoroughly equipped as a modern industrial country. For this purpose they want locomotives, generators, tractors and machinery of all kinds.

I have presented to the House two pictures, one the condition of our own depressed heavy industries and the other the condition of Russia. If this House is to be considered as anything more than the Westminster Union Debating Society, it has to find some way of bringing these two countries into trading relations with each other. Russia offers to us just the kind of market that we want. Russia's demand is for industrial equipment. I will not bore the House with a lot of figures, but I will indicate a few of the things that are needed by Russia. Forty-two new power stations. Think what that would mean for the Metropolitan Vickers Company! New motor units for Leningrad and Nijni Novgorod. Twelve new blast furnaces for the Ukraine. These are plans that are being worked out now. On a conservative estimate from American sources it is calculated that within the next three years £180,000,000 will be invested by Russia in industrial plant abroad, and £60,000,000 in agricultural machinery. That is the sort of market that Russia is offering to the world to-day. It has taken us a long time to realise the value of this market, and it is time that we bestirred ourselves to secure it, because there is not much time left.

In 1924, when this matter was being considered by the previous Labour Government, Russia was begging for credit and for trade. Those Members of this House who were in touch with the Russians then and are in touch with them now know that Russia has no need to beg for credit and trade. Russia to-day can pick and choose where her trade shall go. America and Germany have reaped where we have sown. The figures of German trade with Russia show that in one year, in 1927, German trade jumped up from 329,000,000 marks to 403,000,000 marks. America and Germany are our two biggest industrial rivals. We fought the War in 1914 to smash one of those rivals, and we crippled her. We are a very generous people, and since that War we have not only left the biggest potential market in the world to Germany but we have lent her large sums of money in order that she can develop her Russian market. One of the principal industrialists said recently that the Russian market was one of the biggest factors in putting post-War Germany on her feet.

What are Germany and America doing to encourage Russian trade, compared with what we are doing? Take America. America has had Bolshevik scares, just as we have had, but the American business men are realists, and they have realised the potentialities of the Russian market. The General Electric Company, for example, has granted a loan of 20,000,000 dollars for five years, and in the very centre of its plant it has 60 Russian engineers who are studying every detail of its plant and equipment. The General Electric Motor Company does not consist of philanthropists. It is not doing that out of love for the Russian people. It has those Russian engineers there because the directors know that when those engineers have learned thoroughly the methods of that type of equipment they will go back to Russia as erectors of that type of equipment in Russia, and orders will folllow for the American concern. General Motors are doing the same thing. The Ford Company led the way in this exchange between Russian and American engineers. The International Harvester Company began by writing off a bad debt of 20,000,000 dollars which had been incurred by Russia some years previous to the War, and it has gone ahead with new Russian credits, and is now doing an enormous trade in agricultural machinery. Every one of these orders might have been placed in this country if we had desired them, and acted accordingly.

4.0 p.m.

I may be asked what the American and German banks do to discount Russian money. One of the leading American banks is doing that. Some of these big firms are themselves carrying their own credit. They are not only giving long-term credits themselves to Russia but they are encouraging the banks with which they are connected to give this credit. Germany is welcoming the Russian market with open arms. They granted a 300,000,000 mark loan for two years and when that was finished they gave another loan. What are we doing in this country? With our tremendous responsibility for our own unemployed men who are walking the streets of our big industrial towns, let us look at the Russian market. It is almost impossible to estimate the amount of Russian orders that has been lost due to the attitude that has been taken by this House. Just previous to the Arcos raid, as hon. Members know, arrangements had been made by the Midland Bank, under the Presidency of Mr. Reginald McKenna, to include a £10,000,000 loan which would have been used for credits for trade with this country. Within the last two months we have lost £2,000,000 of orders for heavy engineering works. I am giving these two cases only because I do not want to weary the House with long lists, but those are two examples. It has been stated on the authority of an important association of engineering firms trading with Russia that £10,000,000 of orders could be secured from the Russian markets if from three to five years credit were available.

Why are we outside this market? Of course there is this question of debts which has always played such a large part in the discussions in this House. Let us look at this question again. We can, I think, divide it into two categories. There are the public debts, that is, the Tsarist debts and the War loans—the money lent to Russia during the War—and the counter-claims by Russia for those little flutters which the right hon. Member for Epping (Mr. Churchill) indulged in. I want to point out that, as a matter of fact, neither the British nor the Russians have really refused to negotiate on a basis of claims and counter-claims. There would be at any rate probably something like a fifty-fifty settlement. The public debt is therefore practically out of the way. When we come to private debts I suppose most Members in this House have had this interesting document sent to them—"Russian debts. The case of British Holders of Russian Bonds. Issued by the British Union of Russian Bondholders." It is a very interesting document. It deals at great length with the unfortunate position of governesses and one dock labourer who lent a sum to Russia during and after the War. We on this side of the House are getting used, when there is any question of large bondholders or anything touching the pockets of large whisky distillers or railway companies, to hear only of the one widow with one share. Most of these small holders of Russian Bonds have been bought out by speculators at knock-out prices and the present holders are demanding the face value of their bonds.

Let me again remind the House that in 1924, when the Labour Government were negotiating with Russia, an actual agreement had been signed, or at any rate had been reached, that interest should be paid on a portion of these debts, and had that arrangement not come in 1924, due to a rather cheap intrigue, upon which I do not think either party on the other side look back with very much satisfaction, interest would have been paid ever since 1924. It would be possible once again to negotiate an agreement on those lines. Of course, the real trouble is the concessions and a child might just as well expect to get to the rainbow's end as for Members opposite to think that the Russian Government are going to hand back these concessions. They would not last one day if they did. The question of debts can be got out of the way. The question of compensation to concessionaires is a very different matter. If people are going to ask for compensation that can be dealt with, but not for the profits which might have been made if the Russian revolution had not happened. The whole problem centres round this question of credit. Trading facilities were smashed by the City of London which did not want competition.

I want to ask what really is the policy of the Government with regard to export credits, because it is, after all, their policy that counts. The Export Credits Committee is an advisory committee. The Export Credits Committee has taken the view that the Russian Government will probably only last 12 months, or at any rate, it cannot foresee what is likely to happen after 12 months, and it will only give a 12 months' credit. I understand that they gave that at from six to seven per cent. above the Bank rate of this country. It is perfectly impossible that any extensive trade can be arranged on terms of that kind. I would ask the Secretary to the Overseas Trade Department whether he can say how much trade has been done on that basis? When you talk with the experts they say, "We are not discriminating against Russia; we are not giving more than 12 months' credit, because it is not the banking policy in this country. Cautious English bankers do not like investing their money in long-term industrial credits such as is done in Germany. They prefer to be more cautions and to keep their funds liquid." I think the less we talk about the caution of the English banks after the revelations of the last few weeks, the better. Is it not a fact that the banks of this country are pursuing a policy of keeping funds in order to allow the Hatrys to gamble with them, instead of putting them into sound industrial concerns that will give employment to the people of this country? There are supposed to be super-men known as English bankers who are so wonderful that we must all bow down to their view without question. It is sheer nonsense. "By their fruits ye shall know them," and the fruits of the banking policy of this country are not rare and refreshing.

I am going to say, though I know that large numbers on the other side of the House will dispute it, that it is a fact that the Russian security is the best security in the world for trade. [HON. MEMBERS: "Oh!"] It is a fact. The important thing to remember, after all, is the fact that trade goes through one channel is in itself a guarantee. Here you have the security of these credits backed by a nation. I repeat that because of the ultra-moderation and the ultra-caution of this Government as of previous Governments, they are turning down the best security in the world, I have a letter here which was sent to me, I am glad to say, from the Junior Carlton Club by a gentleman who is the head of one of the biggest engineering firms in Russia. He says: As a business man with 33 years' experience in Russia, I am extremely interested in the Resolution which you are bringing before the House of Commons. During the last seven years, I have visited Russia on many Occasions for business purposes, and it is most galling to see how British manufactures are being ousted from the Russian market by our chief competitors, the United States of America and Germany. It cannot be too often reiterated that our engineering products are preferred in Russia to those of our competitors, but the latter have been and are giving to the Russians longer credit terms than they are at present receiving from Great Britain. Were the Trade Facilities Acts re-euacted, or had we some combination of the Export Credits Scheme and the Trades Facilities Acts in operation under which our manufacturers could obtain trade credits for Russian orders, say, from three to 10 years, thousands of our skilled workmen of all trades would at present be drawing wages instead of existing on the dole. As you are probably aware, the Soviet trading organisations have honoured every bill bearing their endorsement which means that we, as a trading nation, have not contracted a single bad debt with Soviet Russia since November, 1917. That is a record which no other country can equal. I am a Conservative in politics, but interested most of all in securing more export orders for this country, so as to mitigate the severities of our unemployment problem by increasing the activities of our half empty works and factories. The second part of my Motion deals with the question of commercial treaties. People have said: "Why do you want a commercial treaty? America has not got a commercial treaty with Russia, and why cannot the same apply to this country?" I want to say, first of all, that the conduct of Germany and America towards Russia has not been so erratic, to put it as mildly as possible, as the conduct of this country towards Russia. I quote the remark of the chief representative of Russia in this country at the time of the Arcos raid: If they raid our offices when we have diplomatic immunity, may they not raid for our commercial secrete? After all, trade cannot be conducted in the atmosphere of an Edgar Wallace thriller. That is really the sort of atmosphere that surrounds all Russian commerce in this country. It is really disgraceful that a paper of the standing of the "Times" should have a leading article on the very morning that we are going to have this Debate, and that such a reputable paper should begin its article by telling its readers, on the authority of its Riga correspondent, of the execution of White officers.

We happen to know something about "Our Riga Correspondent." I remember when I was in Russia in 1921 reading, if I may say so, in a more reputable paper than the "Times," another long article by "Our Riga Correspondent" which informed me that I was one of a batch of people who were being beseiged in hotels in Russia by starving people in Russia and that Mr. Trotsky was dying of cancer of the throat. As I had just listened to a three hours' speech by Trotsky, delivered at the top of his voice, and was at that particular moment sitting on a sunny boulevard in Moscow with people laughing and moving happily in front of me, it was refreshing to read the views of "Our Riga Correspondent." Now we have "Our Riga Correspondent" popping up in the columns of the "Times" this morning and saying that 200 White officers have been shot. That is just not true. [An HON. MEMBER: "It is true!"] I have the best authority for saying that it is not true, and I say that the "Times" ought to be ashamed of itself, publishing a letter like that on the morning of a Debate when we are really trying to do what we can to get better relations with Russia. It is like the story of the General who was kidnapped in Paris and spirited away in a specially constructed taxi-cab. It has now been discovered to be untrue. You get a two-column headline to put that thing across, but a little tiny paragraph in a back page to contradict it. [Interruption.] I think it would be better not to go further into that matter, because the General's friends now discover that they do not want any further inquiry.

Mr. HASLAM

The hon. Lady says that the story published in the "Times" of 200 naval officers being shot is not true. Is she going to give us the reason why she says it is not true?

Miss WILKINSON

I will give my reason. The authority I have is a telegram which has been received by the Russian Embassy in London from the head of the Government in Moscow with instructions to contradict it officially. I want also to raise the question of the commercial treaty with Russia. This is not merely a question for the Russian Government. I am not going to claim that every Russian is a perfect angel. If you are going to have trade negotiations they will not be between philanthropists with haloes but between hard-headed business men on both sides. We want a commercial treaty with Russia so that business men in this country will know where they are just as Russian business men will know where they are. May I quote an extract from the survey of overseas markets issued by the Committee on Industry and Trade: One of the most powerful weapons which Germany is using to re-establish her position in foreign markets is the commercial treaty. It would be an equally powerful weapon for this country. That is the case I want to put before the House—I am leaving the Amendment to be dealt with by the hon. Member who is going to second the Motion. I want to make an appeal to my own Front Bench on this matter and to remind them that they are a Labour Government and are not sent here by bondholders and concessionaires. Hon. Members on the other side will always remain the most admirable protectors of bondholders and concessionaires. This Government is sent here by the votes of working men and the votes of an enormous percentage of the unemployed, and when the time comes—I hope it will be long delayed—and they appeal to the country it will be no use going to the unemployed if they have taken up an attitude merely of benevolent neutrality, merely of saying, "We will do what we can," not that the question of credits cannot be settled by us. It can be settled by the Government; and it must be settled by the Government. It cannot be settled by anyone else.

The attitude that this is a banking question and that they cannot do anything is really not good enough. I am not suggesting that this is what the right hon. Member is going to say; but that seems to have been the attitude in some quarters of the Government. It has not been the attitude of the Foreign Office. They have done extremely well in cutting through masses of red tape and putting their foot through a lot of nonsense in this matter. But what is the Department of Overseas Trade doing? That is what we ant to know. Representing as I do the unemployed in the heavy industries I want to know what the Government is doing in this matter. I was elected in 1924, during the Zinovey letter election, on the Russian Treaty question, and on nothing else. I talked about nothing but the Russian Treaty in that election and I was elected because they wanted trade with Russia, which is so imperative for the northern towns. I submit that when we have finished talking about Russian intrigues the real crime of the Soviet Government is that they have refused to allow Russia to become a financial colony of American and British bankers. We want credit; we want trade, that is What they say; and we are going to build up Russia for the Russian people, for the workers and the peasants of Russia. Hon. Members opposite may smile, but when the judgment of history is given those who have tried to put little obstacles in the way of this enormous experiment in human affairs will look extremely small.

It may be that we do not like the experiment, that some of us are afraid of it, but it is one of the biggest things in our life. It is an attempt, it may be of a small part of a great people—I will grant you that—to build up a planned State; to use its industries and commerce not merely as a matter of profit for a few individuals, and through enormous sacrifices to build up a new life for a devastated country. It Is a great experiment, even if we do not like certain parts of it. I appeal to this House to take a bigger view than they have taken. Russian internal affairs are no concern of this country. Russian religious affairs are no concern of this country, and every intervention we have made to try and interfere in the internal conditions of Russia has only made them more rigid in the course they are pursuing. What is our concern are the unemployed in this country. Here we have an opportunity of setting thousands of men to work. I appeal to the Government to be big enough to cut through all the red tape, all the old ideas and old prejudices, which surround this question and take a bold step towards making arrangements for giving credit to Russia and thus setting to work many of our factories which to-day are lying idle.

Mr. HORRABIN

I beg to second the Motion which has been moved by the hon. Member in so interesting a speech.

I represent a constituency the principal town of which depends largely on certain engineering works, some of which have been engaged on orders for machinery for Russia recently despite all the limitations and handicaps which trade has had to face since relations were so summarily broken off some years ago. My constituency also adjoins the large boot and shoe area of Northampton, which has only been engaged to the extent of 75 per cent. of its full capacity for several years. A leading manufacturer, however, the other day, speaking on a deputation to the Government, said that within the past few months they had succeeded in specifying for Russian requirements for a very extensive order save for just one single requirement—sufficiently good credit.

Mr. GRANVILLE GIBSON

May I inform the hon. Member that Russia does not purchase any boots and shoes from this country, but that they are exclusively manufactured in the national factories of Russia.

Mr. HORRABIN

I do not want the hon. Member to accept my own word for the statement and I can quickly produce sufficient Press reports of the deputation which waited upon a Government Department, and was addressed by two leading manufacturers, both of whom had visited Russia last year and had come back with orders and specifications in their pockets for some hundreds of thousands, indeed millions, of pairs of boots and shoes. The one thing which could not be settled was the question of credit. I merely mention that particular industry because of the geographical fact that my constituency borders on it. What traders and industrialists feel most keenly about this subject is that the fundamental issue, the economic realities, have been half hidden beneath a dead weight of fixed ideas and prejudices and preconceptions and, above all, of party political wrangles. I think it is Mr. H. G. Wells who says somewhere that international affairs in the nineteenth century were not made any easier by the habit which then existed of personifying various nations as tribal gods or, according to the point of view, tribal demons. People were called upon to fight for Britannia, for Germania, for John Bull, and so on, and there is something of that sort in the attitude of a great many of the opponents of trade with Russia and of many hon. Members opposite when they think about Russia.

Instead of seeing, as the Mover of the Motion described it, one-sixth of the earth's surface, instead of seeing a land which consists roughly of half of two vast continents peopled by 150,000,000 folks with their own opinions and habits and ways of life, instead of fixing their attention on these things, hon. Gentlemen always seem to see a sort of little band of rather melodramatic conspirators, the shadier sort of characters from an Edgar Wallace thriller, a thing which has little if any real relation to facts, a figment built up out of prejudices and fixed ideas. That atmosphere makes it impossible, apparently, for some people inside and outside this House to believe anything at all about Russia but the simple, melodramatic sort of stories which one would have thought would have been believed only by cinema fans or school-boys.

There is one other point on this subject of the difficulties in the way. I feel that a good many hon. Gentlemen opposite, in dealing with the subject of propaganda in relation to the Russian problem, do suffer from a certain inadequacy of his torical knowledge; they do appear to think quite often that Socialism is something that was invented in Russia, and that if only they can contrive somehow or other, in this modern world of intercommunication and wireless, and all the rest of it, to post a continuous line of police right along the full length of the Russian frontier, they will be able to arrest the spread of ideas. I want to remind them that Socialism was not invented in Russia, that a good deal of the propaganda which they, whether sincerely or otherwise, pretend to be so horrified at, had been carried on for half a century in this country before the Russian Revolution took place, that in large part Socialism evolved in this country, and that if they think they can defeat Socialism and get round Socialistic arguments by repeating silly stories, they are mistaken. They have to meet the arguments of Socialism on the Floor of this House and in other places in this country, and those arguments will be put forward by Englishmen who are 100 per cent. English.

All this atmosphere, as the Mover of the Resolution has suggested, has been made infinitely worse by the policy of a great many organs of the Press in this country. The hon. Lady made some comparison of American trading relations, especially with the Soviet, and our own relations with that body. Let me for a moment make a comparison between the way in which the Soviet and the big social experiment which the Soviet is making is handled in American newspapers, and the way in which what is called Russian news is handled in our own. The columns of such newspapers as the "New York Times" are filled with documented, detailed, and critical articles analysing at every stage the experiment, financial and trading, which Russia is making. It is assumed, apparently, that American readers are intelligently interested in knowing the developments that are taking place in this very large corner of the globe. In our own papers, with one or two honourable exceptions, the only news we ever got under the heading of "Russia" is the sort of silly stories about forged notes, kidnapped generals and wholesale executions, which seem to belong to the world of the cinema rather than to the real world. They are splashed with enormous headlines of type when first reported, and are contradicted in what I think the printers call little pica or minion in a back page later.

Sir WILLIAM DAVISON

Are the stories untrue?

Mr. HORRABIN

Ninety-nine per cent. of them are hopelessly untrue.

Sir W. DAVISON

The murder of Russian priests, for instance?

Mr. HORRABIN

Let me quote as a sample of the way in which Russian affairs, even industrial affairs, are dealt with in this country. This is from a bulletin which, in common with most Members, I have received. It is a bulletin called "The Anglo-Russian News." On two pages of the last issue of that bulletin I notice such headlines as these: Famine Prices. Rising Price Indices. Timber Exports: Plans Seriously Endangered. Industrial Plans Fail: Output below Expectations. Lena Goldfields: Labour Trouble in Russia. Precarious Position of the Soviet Metal Industry. Fuel Crisis Reported from all over Russia. Shortage of Foodstuffs in the Ukraine. I submit that that is not news; it is hysteria. I ask hon. Members to compare that sort of thing with the recent verdict and judgment of so eminently capable an observer as Dr. Dillon. Dr. Dillon's name and reputation will be known to hon. Members. He has recently written an absorbingly interesting book about Russia, and if after his tribute hon. Members still prefer the cinema stories, one must give them up in despair. Not only are these fixed ideas and prejudices rampant regarding the more purely political aspects of the question, but even when we come to the definitely financial aspect, we come up against the same kind of thing. We find an unwillingness to depart from finincial dogmas and rules which have been built up as a result of financial needs and customs at some date, but which are obviously not adapted to the needs of this particular case.

Whenever the financial aspect of the question is considered we have the old argument trotted out about the trade balance as between England and Russia—the adverse balance. It is referred to in the Amendment which is to be moved, though I am not quite clear from the phrasing of the Amendment in what way this particular balance is to be handled. It is surely impossible, and anyone who knows anything about international trade knows that it is impossible, to isolate the debit and credit account of two countries and get a complete picture of their relations from that bare statement. It is a truism at this time of day to talk about international trade being triangular. It would be truer almost to say that it is polygonal. It is impossible to isolate two countries on the basis of a bare statement of accounts and to decide whether that trade is beneficial to one side or the other.

In any case why is this argument only brought forward or most often brought forward in the case of Russia? There is an adverse trade balance with this country in the case of Belgium, Canada, France and the United States, and, as an hon. Friend remind me, in the case of the Dominions, But it is seldom argued that because of this adverse balance we should cease trading with those countries. It is, however, specially mentioned in relation to the Russian case. At least I would suggest that the most sensible way of making our trade balance would be to carry out the spirit and terms of the Resolution. If we can increase our exports to Russia that surely is the most effective way of redressing the adverse trade balance, and it is that which we suggest in the Resolution. I want to urge, as the Mover of the Resolution has done, that at this time of day the old "take it or leave it" attitude in regard to foreign customers is wholly impossible to our manufacturers. We do need to take some steps to meet the requirements of particular customers and markets, and to do our utmost to meet them in whatever way we can. So that I can be quite specific the House will, perhaps, permit me to read one or two details of orders—this is a list from Russian sources—which would be placed in this country if the question of credits could be satisfactorily settled

1. 1. Timber carrying ships with a total tonnage of 20,000 tons at a cost of £5,000,000.
2. 2. Thirty-six trawlers costing, roughly, £1,000,000.
3. 3. Tractors. From 3,000 to 5,000 Vickers-Crayford Tractors wanted at a cost, of £1,500,000.
1938
4. 4. Flax working machines of the kind made by Combe, Barbour and Mackie, at a cost of about £1,000,000.
5. 5. Railroad steel tyres, £100,000.

All those orders are waiting and can be secured now if in this matter of credits we can come to terms with the Russian trading representatives. The loan of £10,000,000 which fell through because of the raid on the Arcos offices would have meant—so a leading trade union official of our largest engineering union calculated—employment for 59,000 men for a year at a wage of £3 a week. I do not think there is need to stress these points further. I know that a great many hon. Members want to share in this discussion. What we are stressing is that a decision on these points is a matter of urgency, that orders are going at the present time to other countries and to our industrial rivals. Not only are orders going to those countries, but technicians from those countries are going to Russia, and Russian engineering students are going to those countries to learn their methods and how to use their tools and machines. This is a matter of definite urgency. We have factories which are not waiting to be rationalised before they can compete with German and American rivals, for they have been rationalised already and have the most up-to-date plant in the world. Yet they cannot get orders because of the failure of Government so far to give them the necessary backing in this matter of credit.

I appeal to the Government earnestly to deal with this subject as a matter of urgency and not to allow the conclusion of a commercial agreement with Russia to await the settlement of points concerning debts and other questions which have been raised in negotiations with the Soviet. A week ago we had a Debate on Empire Free Trade. I am speaking in this Debate as a Free Trader, but it seems to me that, in the twentieth century, Free Trade must mean something more than the merely passive thing Which is meant in the nineteenth century when circumstances were different. It is not a question merely of an absence of barriers and of our door being open. In the present state of world competition, we must be prepared to go out and ascertain the needs and requirements of our customers and endeavour to meet them. I appeal to the Government to give a lead to the traders and industrialists of this country to go out and capture this new market, instead of relying merely on the old alternative policy of putting a ring fence around the old ones.

Sir HILTON YOUNG

In what I have to say, I prefer to follow the example set by the hon. Member for East Middlesbrough (Miss Wilkinson) in the greater part of her speech, rather than that offered by the hon. Member who has just spoken. It is better that this Debate should be confined to commercial aspects of the question, and that we should turn away from political aspects and from the discussion of the merits of the Soviet Government's policy. If I do so, it is not because there are not deep feelings on this side of the House in connection both with recent events in Russia, and with the question of propaganda mentioned by the last speaker. It is because the commercial argument can only be prejudiced by the passions of the political argument and since there is, in our view, a complete answer to the arguments of hon. Members opposite, based on commercial grounds alone, that answer may best be given by itself.

That enables me to proceed to find what common ground there is between us. In the opening part of the observations of the hon. Member for East Middlesbrough undoubtedly there was common ground to be found. We on this side are as anxious as anyone to join in a search for any possible remedy for the evil of unemployment. I sometimes think that hon. Members opposite will never get quite the full value that can be got out of the proceedings of this House, until they are willing to realise the sincerity and earnestness with which the whole House is prepared to co-operate in the effort to find a remedy for unemployment. We recognise the gravity of the evil; we are earnest in searching for a solution, but, while willing to join with the Mover of the Motion to explore every avenue which will lead to increased trade we are not prepared—and no man of common sense can be prepared—to join in the exploration of avenues which lead nowhere. There is no more than a certain amount of time, no more than a certain amount of money, no more than a certain amount of effort to be devoted by any country to the curing of its evils and the restoration of its prosperity. What we deeply deplore in the Russian movement which is carried on by the Labour party is that in our opinion it is based on an illusion and can only lead to a waste of time, money and effort. That is the principal answer to the observations of the Mover and Seconder of the Motion. Though we sympathise with the purpose which they seek to accomplish, we say that the method by which they seek to secure that purpose is based upon a great illusion—the illusion that there is much help for our national difficulties to be found in the prospects of increased Russian trade.

It was once said that there is no tragedy so great as that of a theory killed by a fact. There is for us to-day a tragedy in the bitter fact which kills the rosy theories put forward by the Mover of the Motion. Hon. Members will realise the fact which kills the theory, that there is much hope for us in Russian trade, if they but consider the figures of Russian trade before the War. I will trouble the House with only one set of figures. Before the War, taking a five years' average up to and including 1913, our imports from Russia were less than 6 per cent. of our total imports and our exports to Russia were less than 3 per cent. of our total exports. [An HON. MEMBER: "What are the total figures?"] I could give figures, but I think the percentages are more instructive. That is the very maximum—that is the whole field of possibility in foreign trade which we are considering to-day. When we consider the scale, the volume, of the trade possibilities with which we are concerned in this Debate, it is clearly idle to base any such large hopes thereon, as are constantly held out in speeches on this subject from the Labour party. Our pre-War trade with Russia was of the same order and magnitude as our trade with Holland. How ridiculous it would seem if we were to hear of hopes for the redemption of the prosperity of the country, based on the expansion of our trade with Holland. Hon. Members may think that Holland is not comparable with Russia in regard to the nature of its trade with us. I therefore take another country which is similar, in the nature of its trade. Our pre-War trade with Russia was of about the same order and magnitude as our trade with New Zealand, from which we import raw materials and to which we export manufactured goods. I say with confidence that there is more hope for the future of employment in this country in the expansion of trade with New Zealand than in the expansion of trade with Russia.

When I mention the figures of our Russian trade before the War, namely, 6 per cent. of our total imports and 3 per cent. of our total exports, as representing the maximum volume of trade with which we are dealing it must not be forgotten that, already, a large proportion of that trade has been recovered. In the matter of hopes for the future we are dealing with a much smaller volume of possible increase in trade than that indicated by those figures. We have already got back a large proportion of our pre-War trade. I will trouble the House with one more comparison in figures. Unfortunately the whole of the figures for 1929 are not yet available, but we can base a rough estimate of Russian trade in 1929 on the figures for the first nine months. On that basis, there is reason to expect that our imports from Russia in the course of 1929 will prove to have amounted to about £21,500,000, and our exports to Russia will prove to have amounted in the same period to about £4,500,000. Already we have recovered half of our pre-War import trade from Russia and one-third of our pre-War export trade to Russia. That means that the whole possibility upon which these hopes, as I say, these illusions, are based, is represented by a figure of 3 per cent. only of our total import trade and 2 per cent. of our total export trade. Anybody who realises the actual percentage increase in foreign trade which would be necessary to restore prosperity and give work to our unemployed, will realise also from those figures that the remedy proposed in the Motion is totally inadequate to the actual scale and nature of the disorder which it is proposed, to cure.

Let us take the matter one step further. Supposing that there is still this 3 per cent. of import trade and 2 per cent. of export trade to be recovered, in comparison with pre-War times, what is the prospect of our ever being able to get back to the figure of pre-War trade with Russia? There is very little prospect indeed. There are many strong reasons why we should not be able to do so. There is the most obvious reason of all, that the Russia of to-day is not so big a country as the Russia of those days; and, what is very important in that connection is that the parts which have been lost by Russia are some of the richest and most civilised. For instance, Russia no longer includes Russian Poland, including some of the most fertile field of agricultural production on the Continent of Europe, many of the richest mineral deposits, and part of the most highly organised productive and industrial regions in Eastern Europe. That is lost to Russia. Then Finland has been lost, with all its forests. The Baltic States have been lost, with their important centres of trade, transport and distribution. Here is one obvious and strong reason why we cannot expect to get the same amount of trade with Russia as we got before the War. There is another and, perhaps, an even stronger reason; that is the shattered condition of the economic organisation of Russia. Of late, some advance has been made in its restoration by the reintroduction of a certain amount of the odious and detested capitalist system, but the whole economic organisation of the country is still reeling under the destruction wrought by war, the blows of the Revolution and the effects of 10 years of Communist government. The transport system is in a much more backward state than it was at the time of the Revolution. The industrial system is languishing and in a state of decay. More important than either of these is a matter that concerns the real basis of Russian wealth, that is agricultural production. Agricultural production is confined and depressed by the present system of administration. The greatest wealth of Russia always was, and always will be as far as the future can reasonably be foreseen, its agricultural production. Since the coming into power of the present Russian Government, that production has been discouraged by many means. At the present time—if I may break my self-imposed rule and make a momentary reference to Russian politics—we cannot affect to be ignorant that the Russian Government is embarking on a fresh campaign for the suppression of the prosperous peasant. In these conditions, it is idle optimism to expect that the conditions of trade with Russia can be even as good as they were before the War. In fact, it is very probable that we have seen about the maximum of the trade that can be conducted under present conditions with Russia, and that many long years must elapse before it will be possible to increase that trade considerably.

5.0 p.m.

There are other factors at work, a realisation of which must prick this bubble of illusion about the possibilities of Russian trade—factors which have no particular relation to the political history of Russia, but which relate to the whole economic history of Eastern Europe since the War. I invite anybody who doubts them to consider, for instance, the nearest comparable foreign country. It is very hard to find any country completely comparable with Russia in order to conduct a test-experiment as to what trade with Russia is likely to be, but I will take Russia's nearest neighbour, Rumania. Rumania had the same general character of trade with us before the War; that is, we got from it raw materials and sent to it manufactured articles. If you look at the history of our trade with Rumania since the War, you will see that it has languished, and, allowing for the difference in the value of money, it is now less than it was before the War. The reason, as is well known, is that during the War Eastern Europe learned to supply itself from other sources than the British producing machinery, and so it has been with Russia. That part of the world now has learned to get its supplies elsewhere. In the hope of recovering trade with Russia, you must reckon with that turn of the general stream of supply. Nobody has been able yet to see any way of rediverting it from other countries towards our factories. Equally hard is it to see any way of rediverting hither the stream of Russian demand.

An important aspect of trade with Russia is undoubtedly the aspect of indirect trade. Something, no doubt, can be done to make the Russian market more important to this country by the restoration of the social and economic fabric of Russia, but the probability is that that will not be expressed in the form of direct trade with this country, but that it will be expressed in the form of indirect trade through foreign countries and through our Dominions. If that be so, the whole of this propaganda, directed to the encouragement of direct trade with Russia, is beside the mark. What we should do is to seek to foster the more favourable markets, trusting to the general increase of the world's prosperity to bring Russia along too.

Let me turn to the contention in this Motion that there should be a commercial treaty with Russia. Why. we ask, should there be a commercial treaty? We manage to trade with most of the other nations without special treaties of the sort. The attitude of every party, I imagine, is this, that if trade with Russia can be increased on the ordinary lines by which trade is conducted with other countries, by all means let it be so. But why should there be special treaties with Russia? It appeared quite clearly from the speech of the hon. Member for East Middlesbrough that, in advocating a special treaty with Russia, she is prepared to advocate special favours to the Russian purchaser. The Russian purchaser, under the working of the Russian State, is the Russian Government, so that the Proposer of this Motion, and I suppose, the party opposite, are prepared to advocate special favours for the Russian Government, and that means special credit favours.

That brings us to a consideration of those outstanding facts of "he credit history of the Russian Government which it is impossible to ignore. think the matter deserves, I will not say more serious treatment, but more considered, and, I think, more sympathetic treatment than was given to it in some of the observations of the hon. Member for East Middlesbrough. Why should one brush aside so lightly the misery, the disappointment of legitimate expectations, the bitter sense of wrong, which have been brought to tens of thousands of industrious, honest folk, not only in this country, but in other countries of Europe, by the repudiations of the Russian Government?

Miss WILKINSON

I should be the last to wish to give the impression that I was brushing aside these disappointments lightly. My point was that an agreement had been come to on debts, which was upset by the 1924 Election, and that it could be come to now.

Sir H. YOUNG

That is a point which I will deal with in a moment. I received an impression from some of the hon. Member's observations about governesses that she made light of the matter. I am happy that she should have corrected the impression. These were bitter wrongs. See what the actual facts were! At the time of the revolution, the economic system of Russia derived some of its most hopeful factors from actual properties owned and run in Russia by foreign owners, from factories which gave an example of efficiency to the industrial world of Russia, from mines developed as properties by foreign owners, with enormous sums of capital, without which those natural resources of Russia could not have been developed, and from forests and similar estates. They have been nakedly confiscated.

As to the alleged willingness to make good this wrong, I speak with some experience, having taken part in prolonged and difficult negotiations to find some way out of that attitude of the Russian Government, at The Hague, in 1923. Now, the hon. Member for East Middlesbrough speaks very lightly about the possibility of a settlement of this matter by compensation. If it be possible, why, in the name of all that is equitable, has it not been done? On the first occasion on which I ever appeared in a Law Court, I was retained to defend a limited company which was in debt, and against which a winding-up petition had been brought. I proved, to my own satisfaction at least, that the company was quite capable of paying its debts; whereupon the Judge replied, "You have proved to me that the company can pay its debts. Now tell me why it does not." That is the question which should be addressed to the Russian Government. If it is in a position to settle, why does it not do the honest thing and settle at once?

Mr. R. A. TAYLOR

Is it not a fact that, in the Addendum to the Trade Agreement of 1921, Russia agreed in principle to pay compensation, that in the Preamble to that Agreement it was distinctly stated that the Agreement was to be considered as preliminary to a general agreement to be negotiated between the two countries, and that we have never given the Russians an opportunity to carry out that pledge?

Sir H. YOUNG

The hon. Member has only stated one side of the case. I will attempt to state the other side, and that is this, that the substance of that Agreement was that the British owner was to be compensated out of British money—

Mr. TAYLOR

Not in the trade agreement of 1921.

Sir H. YOUNG

—and that is an arrangement that has never appealed to the sense of justice and of honesty of the greater part of the nations.

Mr. WISE

Will the right hon. Gentleman refer to any clause or phrase in any Treaty or Agreement or draft Treaty which in any way justifies his statement that British creditors were to be repaid for money subscribed to loans made to Russia by this country?

Sir H. YOUNG

As the hon. Member knows well, he must study the whole effect of the Agreement proposed by the Labour party at that time. If he does, he will come to the same conclusion that I do, and that is that the effect of that Agreement is that there would have been no payment of a single penny of compensation unless funds had been provided by the British taxpayer to pay it.

Mr. WISE

The right hon. Gentleman is expressing an opinion, and that is all there is to support his statement.

Sir H. YOUNG

To get a fair account of the basis of that opinion, I must read the whole of the Agreement through, as one always must, in any big international negotiation. I willingly give way to the hon. Member, as I know he has an intimate knowledge of these questions, but he must really bring that knowledge to my support in an account of the matter which is patent on a reasonable construction of the whole negotiation.

Let me turn to the question of debts, which is, I think, deserving of rather more serious consideration that that which it has received. There are three categories of these debts, as to which the Soviet Government have made the most conspicuous, the most inexcusable, of all repudiations that have ever occurred in the history of international credit. There are, first of all, the debts of the Imperial Government. Those debts were borrowed largely for social purposes; they were borrowed inter alia for famine relief and for the construction of productive works. The defence of their repudiation of these by the Soviet Government is contained in one word used by the hon. Member for East Middlesbrough, when she referred to the "Tsarist" debts. Is that a real answer? Is any responsible Member of this House going to give support to the contention that there is no continuity of responsibility in a great nation because of a change of government? The argument of the Soviet Government, that it is entitled to repudiate the Tsarist debts, is precisely on the same footing as the recent pronouncement of the Congress in India. Is any hon. Member opposite going to support the contention, raised by the Indian Congress, that they will be entitled at some future time to repudiate the National Debt incurred by the Imperial Government of India?

The second category of debts is municipal debts. The municipalities, including the two greatest cities of Russia, Petrograd and Moscow, borrowed money in this country upon which they based their modernisation and to which their present inhabitability by the Russians, among others the officials of the Communist party, is due. The third category is the most glaring case of all: it is the money borrowed from the savings of the British investor to develop the economic system of Russia in its most vital aspect, namely, in its transport system. At the present moment the people of Russia and the Government of Russia are enjoying the proceeds of those loans. Day by day money obtained from the investment of the savings of small British investors is pouring into the pockets of the Russian Government. Is there any justification in equity for this repudiation?

But is this entirely a case for the consideration of the interests of the particular British investor only? It is not at all. The hon. Member for East Middleshrough referred with scorn to the fact that these debts have been bought up by speculators. I believe that to be absolutely at variance with facts. I cannot accept the authority of the green pamphlet in the hand of the hon. Member. But even if it were true, is there not a bigger question than that of the rights of particular British investors? What is the position of this country in the great world of international finance? We are still one of the greatest creditor nations of the world. Our prosperity, our solvency, is based upon the payments we receive from foreign nations for our investments abroad. A little calculation made the other day showed that the greater part of the maintenance of the unemployed in this country could be paid, as a matter of scale, out of the return we get on our foreign investments in tin and rubber. It is to that extent that our social scheme is based upon foreign investment. Foreign investment is based upon the sanctity of international obligations.

The economic structure of this country is built upon an arch, the keystone of which is credit, and credit is based upon nothing more nor less than the obligation to repay a debt. Could there be a more deliberate act of suicide on the part of the British nation than to perform any act which would have the effect of furthering the idea that credit can be dealt with lightly and that international obligations can be disregarded? It should be the forefront of the policy of this nation rigidly to enforce whatever sanctions there may be to secure the sanctity of international credit. There is only one sanction by means of which it can be enforced, and that is that if anybody repudiates a debt he shall get no further credit until he has purged his fault.

Let me say a word on the extension of the export credit scheme to Russia. The nature of that scheme can be seen from the title on the outside of a little book issued by the Department to explain the scheme. It is a scheme for insuring and financing credits for exports. It is a credit insurance scheme, so that what the British Government have agreed to do under this scheme is to insure the credit of the Russian Government. I applaud that feature which the hon. Member for East Middlesbrough criticised, that some special restrictions have been imposed upon the extension of credit to Russia. The general scheme extends to five-year general credit. It is plain to anybody practically acquainted with such transactions that a scheme for insuring finance and credit for general transactions over a period of five years would be nothing more or less than an indirect way of giving a loan to the Russian Government Let us remember that there are no other importers in Russia than the Government, which monopolises foreign trade. So I welcome anything which will tend to restrict the removal of what I have described as the only sanction we have to enforce the sanctity of international obligations. There is very curious reading in this pamphlet for those who are contemplating extension of the scheme to Russia. I find in it one passage that says that the Department of Overseas Trade will not in any circumstances encourage trade with speculative, doubtful or irregular customers. I must leave the question of speculation in connection with the Russian Government for hon. Members to decide for themselves. May we not, however, justly describe the Soviet Government as a doubtful customer! [HON. MEMBERS: "No!"] Even in that there seems to be a difference of opinion. Rut there can be no difference of opinion that Russia is an irregular customer. There has been a certain irregularity without doubt in the discharge of the debts of Russia, and certain irregularities in regard to its behaviour towards foreign property. There is another provision in the scheme; I should like to invite the Secretary of the Department to explain how it is to be fulfilled. The provision is that everybody who brings in business to he guaranteed under this scheme is to supply "a recent report on the purchaser." Of course, the purchaser in this case will be the Russian Government. I should like to urge upon the Secretary of the Department to put the reports which he receives upon the Russian Government at the disposal of the House, both as regards the speculative nature of the transactions and the regularity of the customer.

It is an illusion which leads to a waste of effort to suppose that anything that the British Government can do, or anything which the British nation can do can much increase trade with Russia. That is a matter dependent on the actions of the Russian Government, It is within their power to break the ice block, to pull down the barricades, to do away with the ridiculous monopolistic restrictions by which they make trade difficult, and to get rid of that blot upon their escutcheon which makes credit impossible. There are two things which may serve to increase trade with Russia. The first is the restoration of Russian credit by the recognition of obligations; the second is that the Russian Government should open once more the natural courses of trade by abolishing the monopolistic organisation which makes foreign trade difficult, and by setting free once more for the purpose of trade that which all Russian trade has been based upon in the past, the initiative and the credit of the Russian peasants. As long as the credit of the Russian peasant is abolished by the monopoly of foreign trade, there can be no firm basis of trade with Russia; but were that credit to be set free we could see a return to the maximum trade possible, although that maximum would not meet the dreams of hon. Members opposite.

Our reason for resisting the Russian propaganda of the Labour party expressed in this motion is not in the matter of its professed object: we seek the same object, which is to relieve unemployment. The reason is disbelief in the illusion that there is any such great hope in Russian trade as the Labour party hold, and a firm conviction that the whole of this propaganda serves only to waste effort by concealing the true direction in which efforts should be made, the direction of trade within the British Empire.

Mr. STRACHEY

I wish to address my remarks to the benches in front of me rather than to the benches opposite, for, happily for the future of trade between this country and Russia, and, indeed, happily for the future of British trade in general, the future of intercourse of the two nations is in their hands rather than in the hands of the benches opposite. I would, however, address one or two of my opening remarks to the speech to which we have just listened. We on these benches must agree that it was a speech on the subject of Russia slightly less pathological than the speeches from those benches to which we are accustomed to listen. On the other hand, it had a factor in it which seemed to me perhaps even more depressing than that pathological hysteria on this subject with which we are familiar—that element in it which I can only describe as the most abject economic defeatism which I have even encountered. The main argument appeared to be that our trade with Russia before the War was very bad and very small, that now it was even worse, that there was practically no hope of restoring it even to the level at which it was before the War, and that really it would not be much good even if we did that.

Sir H. YOUNG

I did not say trade with Russia was bad or small; on the contrary, I said that it was normal.

Mr. STRACHEY

The right hon. Member's point was that the normal trade with Russia was extremely small. I realise that the party opposite always has some difficulty in modernising their ideas and bringing them up-to-date, but one might suppose that a change so striking as the change which has taken place in Russia between now and before the War would not wholly escape their notice. As a matter of fact, it is the greatest mistake in the world, as every active, forward-looking industrialist knows, to belittle the Russian market. I have here a few of the actual figures of our export trade. We are at present exporting £725,000,000. Our biggest customer is India, which takes £83,000,000. Australia takes £55,000,000, the United States £46,000,000, Germany £40,000,000, Canada £34,000,000 and the Argentine £31,000,000. These are our big bulk customers, and their purchases amount in the aggregate to £290,000,000. The whole of the rest of our export trade—£435,000,000 worth—goes to countries which, individually, take quite a small amount of that trade, and it is the greatest mistake in the world to belittle any particular market, even though that market to-day is a small one. The Russian market has been since the War as large as £6,000,000. That compares very favourably with the purchases of a great many of our other customers. No one on these benches is pretending for a moment that Russian trade in itself will cure unemployment. There is no such grotesque suggestion, but we realise that this trade, even at its present volume, and certainly because of its potentiality, is one of the really hopeful and important factors in an immediate improvement in our industrial situation.

To turn from the benches opposite to the point of view of the Government on this matter, it causes a good deal of surprise on these benches that the Government have not been more active in pushing British interests in this market. We have had from the Ministers who are charged with the conduct of industrial affairs strong speeches subscribing to what I may call the "export trade" view of British prosperity. The Lord Privy Seal, in particular, has been particularly strong in pressing that the only cure for our industrial difficulties is an increase in exports. I cannot share that opinion with him. I have never been able to understand why in some mysterious way it is considered that a factory is doing real work if it is providing shirts for China-men, while it is not really working if it is providing shirts for the inhabitants of the town in which it is situated.

While, however, I cannot subscribe to the tremendous emphasis on our export trade, I should be the last to suggest that every effort should not be used by the Government to maintain our export trade—not so much with the hope of so enormously extending it as to provide a remedy for unemployment, but rather because I think that we shall have to fight very hard to maintain it at its present level; and any new possibilities which may be opened up deserve our most earnest consideration. The short and obvious answer to the speech to which we have just listened is not an academic consideration of whether the Russian market is smaller or larger than it, was before the War, or whether the Soviet Union have lost such important economic territories as off-set the growth of population in the last 15 years, which the hon. Gentleman omitted to mention. That might be an interesting consideration into which to go. What is much more practical is that the actual orders are waiting; that we know that, given successful commercial and financial arrangement", the actual orders are there ready and waiting, orders which, I make bold to say, could within 12 months lift our export trade to Russia far above what it was in 1913.

Mr. HASLAM

Are the payments ready?

Mr. STRACHEY

Yes, the payments would be arranged in precisely the same way as the payments for other exports—a certain percentage of cash-on-delivery and the payments arranged over a period Is the hon. Member really suggesting that we export for cash in the other markets of the world? A more preposterous statement could not be made.

Mr. HASLAM

I was speaking of payment by Russians for goods we send them.

Mr. STRACHEY

Certainly; and I was suggesting that the Russian Government, or the Russian co-operative organisation which makes these purchases, would pay in precisely the same way and under the same commercial arrangements as other purchasers from this country. I was suggesting that those orders are actually ready to be placed in this country if sufficient financing can be given. What is the criterion as to whether that financing is some special favour to Russia or not? What criterion have we that we are striking a good enough bargain? We have the perfectly clear indication of what the other industrial countries of the world are giving Russia. Orders are not being placed in this country, but are being placed in Germany and in the United States of America. Do hon. Members opposite really suggest that American and German exporters and finance houses are doing this out of philanthropy, out of sympathy with the Russian Government? If it pays great firms like General Motors of America and the General Electric Company of America to extend credit on such terms, surely that is a fairly clear indication that it would pay this country to do the same. The absolutely businesslike and sensible market value for Russian orders can be established by the price which the Russians can get elsewhere. [Interruption.] I hear the right hon. Member for Epping (Mr. Churchill) asking me why we do not do it. That is just the question I am going to ask our Front Bench.

Mr. CHURCHILL

No, I said, what is stopping our traders from doing it?

Mr. STRACHEY

Our traders are doing it up to the limit of credit which they can give. Individual firms are taking very considerable orders from Russia. We have had an example of that from the hon. Member who seconded this Motion. Vickers are taking orders from Russia. They are taking those orders at the competitive price—and the competitive price for the credit, too. But, of course, an individual firm can only extend credit up to a certain proportion of its capital—that is so in any market, whether it be Russia or the Argentine—and our firms, individually, are not to-day in a position to extend credits on anything like the scale which the vast American organisations are able to give. The General Electric Company of America are at present executing an order for the Russian Government by which they supply £1,000,000 worth of electrical machinery per annum over a period of five years, and have spread the credits over a long time. It would be perfectly impossible to ask that of any British firm—I think I may say that safely; even the strongest would not have the free financial resources, unless backed by a Government credit institution or a British finance house, to make an arrangement of that sort. That is the real crux of the matter, that in this country individual firms cannot grant these long credits, as is the case in America. And in Germany, of course, the Government guarantee the payments, and guarantee them at a very low rate indeed.

Here we have at last extended our Export Credits Scheme to Russia; we must give credit to the Government in that respect, at any rate. Whatever hon. Members opposite may think of that, it is quite clear what the industrialists of this country think of it, because ever since they have been besieging the export credits scheme. They seem to consider the method to be of value to this country. But I want to draw the attention of the Secretary of the Department of Overseas Trade to two decisions which have been taken by the Advisory Committee. Those two decisions appear to me very largely to nullify the whole effect of the Government's own decision to extend the export credits scheme to Russia. One decision limits credits to Russia to a period of one year, a disastrous limitation, which means that all the bigger business is lost to British firms; and the second decision, has put Russian orders in the category of orders for which the total charge of insurance of the credit and the credit itself comes out to something like 12 or 13 per cent. Unfortunately, those two conditions make our credits too expensive; the Russians can get cheaper credits in America and in Germany. It is simply a hard business question, and, therefore, we are getting only the fag-ends, the small bits of business. Hon. Members opposite ought not to think we get this large percentage, this large profit, out of Russia; not at all. It is not Russia that has to pay that 13 per cent.—these usurious terms. It is the unfortunate British firms who have to pay. They have to pay that high sum, and if they attempt to get it back in the price of their goods then, of course, they will limit drastically the amount of business they can do.

I suggest to the Government that the time has come when they should review this position. If they meant anything by their decision of last August extending the Exports Credits Scheme to Russia, surely they ought not to be willing to see that decision very largely nullified by these provisions? I am not suggesting that the Exports Credits Scheme is an ideal method of doing business with Russia; I do not think it is, but even under that Scheme, which is all we have got at present, we could obtain, I make bold to say, at least £10,000,000 worth of new orders at once, but for those two decisions. The Government cannot escape from their responsibility in this matter by putting it on to any Advisory Committee. It is for the Government to make up their minds whether those orders should be placed in this country, whether that work should be done in British factories by British workers, or should be done elsewhere. It is fairly clear what credit terms will have to be granted to get those orders; it is easy to see that by noting what credit terms are given elsewhere, and also, of course, what credit terms are given here to-day by individual British firms up to the limit which they themselves can afford to give. In rough figures, it is a charge of about 8 to 9 per cent.—the credit and the insurance taken together—with a five years' term. It is not a question of opinion, of what I say or of what any other hon. Member says.

Mr. MACQUISTEN

I know that Becos grant a bill which is discounted by Arcos on which the percentage works out at 12½ per cent. It is so with respect to some of the biggest transactions.

Mr. STRACHEY

Some individual transactions may have been done on that basis, but it is very easy for the hon. Member to look up the actual facts as to the vast bulk of Russian business, both with this country and elsewhere, and I think he will find that, with certain exceptions, it averages up to about the figure I have mentioned. That is the figure at which Russia can buy in the world market to-day, and if we wish to do business we shall have to do it somewhere about that figure—dependent, of course, upon the class of business and the particular article and all the other considerations which attach to an individual transaction.

I want to turn to a very curious reaction which has come in the world today through our refusal to give credit to Russia. What have Russians to do in the present condition of credit blockade in order to get any purchases from the outside world? They have to pay for them under the method of barter, that is to say, they must at all costs export goods from Russia in order to pay for the goods they import. They have to force their exports all over the world, exports they can ill-afford to send abroad and which they should keep in their own country and use for their own purpose, as they undoubtedly would if they could get credit. Recently I came across a very curious reaction which is taking place as an indirect result of our credit blockade of Russia. The Lord Privy Seal has talked a great deal abort what he is doing for us in the Canadian market, more especially on the subject of the export of British coal to Canada. He has given us some rather hopeful views on that subject, which we Lope to see materialise; but I was somewhat shocked to find, in conversation with a Canadian who imports coal, that at She moment he is not importing British coal, but Russian coal—a very startling fact when you think of the geographical position of the two countries. I have his letter here: Dear Mr. Strachey, Referring to your conversation regarding Welsh coal. Welsh cobbles cost about 9 dollars 52 cents c.i.f. Montreal; Russian, same size, about 10 dollars, 77 cents; but the degradation of the Welsh coal is 25 per cent. and of the Russian coal 12 per cent., and therefore Russian coal is actually cheaper than the Welsh at Montreal. That has been brought about by the fact that Russians have had to export coal, or anything else, at all costs, and almost at any price, in order to pay for their imports, because they have been unable to get reasonable credits from this country. That is a curious reaction which the Lord Privy Seal and the other Ministers responsible for our economic fortunes should not fail to bear in mind. I think the Government have shown an undue timidity in this matter. I cannot help feeling that the overwhelming majority of opinion in this country is very strongly in favour of an active trade policy towards Russia. I think the last speaker was quite wrong in supposing that the majority of even the business community in this country are much concerned to-day about debts of 15 years ago. If there has been anything which has built up this country as a business nation it has been the capacity to cut our losses and not to cry over spilt milk, but go forward with a possibility for new business. Outside this House, in the industrial community and amongst the great manufacturing class of this country, that is the spirit which exists to-day. I ask the Government to take their courage in both hands and to listen to the voice not only of the industrial workers, but also to the voice of the business community seeking above all else for new markets for this country. It is only want of confidence which is preventing a renewal of large-scale business relations between this country and Russia.

I feel that we are in a deadlock at the moment. We have our diplomatic relations, but they are a preliminary. The Government now seem to be afraid to go forward; they are waiting for some further developments and there is a feeling of risk about a more active economic policy for the revision of the export credit scheme, and the devising of a wholly new scheme or something else stops them from doing so. I would ask them to balance one risk against another. Is there no risk in staying as we are? Is there no risk in leaving our industrial areas, in leaving unemployment as it exists to-day without something to offer to the country in the shape of a concrete step such as the proposal we are discussing would undoubtedly give? I am reminded of another occasion on which a Government was pausing and afraid to go forward towards better relations with a foreign country. It was in this House nearly 100 years ago that one of its greatest Members, Charles James Fox, when Mr. Secretary Dundas had told the House of his refusal to make peace with France addressed the House in these terms: He said that the Government was pausing in what he called a state of probation Gracious God, Sir, is war a state of probation, is peace a rash system? Is it dangerous for nations to live in amity with each other? Cannot this state of probation be as well undergone without adding to the catalogue of human suffering? Those words apply to the present circumstances. The catalogue of human suffering is being added to every hour while there is no true relationship between this country and Russia. Behind the cold statistics of frustrated commerce lie the devastated areas of Middlesbrough and the industrial north on the one hand and on the other hand the bitter needs of the Russian masses to-day. These sufferings are hardly less than the sufferings of war—of which Fox was speaking: Why is this man expiring? Why is that other writhing in agony? What means this implacable fury? The answer must be, You are quite wrong, Sir, you deceive yourself—they are not fighting—do not disturb them—they are merely pausing—this man is not expiring with agony, that man is not dead, he is only pausing. Lord help you, Sir, they are not angry with one another; they have no cause for quarrel; it is nothing more than a political pause.' To-day we are experiencing a political pause, a pause undertaken only for political reasons in the increase of our trading relations with Russia. There are those on these benches who look to the Government to end that political pause and to bridge over the gulf which separates the industrial workers and producers of this country and the agricultural consumers of Russia, who look confidently for action along those lines and who will very soon demand action along those lines.

Dr. BURGIN

For 10 years past I have been actively concerned in trading relations with Russia, and as the Motion contemplates the conclusion of a commercial agreement between the two countries, perhaps I may be permitted to give to the House one or two instances of genuine difficulties that exist in the extension of that trade which we all desire to see between the two countries. I trust that the intervention of an international lawyer will not strike a discordant note in what is really a commercial discussion. It is necessary for all those well-wishers of extended trading relations with Russia to bear in mind some elemental facts. On these benches we are whole-heartedly in favour of extending our trade relations with Russia. In the course of the six contested elections which have taken place since 1921 I have placed this matter prominently in my election address, and I hope to show the House that I have tried to put that pledge into practice by actually facilitating trade.

One of the great difficulties in trading with Russia is that there is a vast difference between Russia as a seller and Russia as a buyer. Russia is a great continent covering a large portion of Europe and an immense tract of Asia, and it is endowed with enormous natural resources. As we all know, some 98 per cent. of the platinum of the world is located in the Ural mountains, and the whole of our jewellers' supply of platinum without exception practically comes from Russia. Russia has enormous forests, vast quantities of ply-wood and wood-pulp, and almost undeveloped metal and mineral resources. When Russia is a seller, little difficulty is presented because she delivers the goods and payment becomes a simple matter. When, however, Russia is buying—the whole purpose of the Motion is to increase our own export trade—we then enter the realm of credit. Credit involves documents; documents depend upon law, and the information which I have to tender to this House from my practical experience is that the Russian system of law is not quite what hon. Members of this House would expect.

Prior to 1851 in this country no party to an action was entitled to give evidence, and the astonishing result of that was that the only parties who had a knowledge of the facts were precisely those who were excluded from contributing information to the Court. In Russia to-day, under the law of the Soviet Republic, no party to a dispute is entitled to give evidence, and therefore all our trading community who take part in export trade to Russia must be informed by our Government and must be protected in this respect by clauses in any commercial agreement. They must be told that it is far more important to know the attesting witness than it is to know the party with whom you are doing business. If you make a contract neither you nor the party concerned can give evidence, but if you have chosen a remarkably good attesting witness to your signature he would be able to give evidence.

In other words, there are provisions under the Russian law which, in any commercial agreement between this country and Russia, necessitate consideration as to whether there should not be inserted clauses which will assist the members of the trading communities in countries where the law is quite different. It is most important that any British firm that proceeds to trade on any large scale with Russia should make it clear that even-stage in the transaction is confirmed by some notarial document. Some of us know that much the same rule applies to some of the Central European States, and you have to be prepared with what is called the contre-partie, a statement of fact in document form which can take the place of the oral evidence of a witness. It is a considerable restriction on liberty if every State may, at some subsequent time, call in question some transaction which has to be proved by a document, and it is necessary that that document should come into existence contemporaneously with the transaction. The seller should also be aware of the necessity of the point which I am putting to the representative of the Government, who, I understand, will intervene later in the Debate.

Will the Government be prepared in considering a commercial agreement to use the result of the experience of trading firms who have been dealing with Russia during the last 10 years? I think we are entitled to say that the Government should include some sort of provision that will prevent the unwary finding themselves possessed of documents which they are unable to prove, and rights of action which they cannot enforce, and they will be dependent solely on diplomatic remedies. I am not speaking at large. I am dealing with facts which are available and which I can, if necessary, communicate to the House. I need scarcely say in an assembly which includes a large number of Members of the commercial community that if your only remedy is a diplomatic remedy, you may write off the transaction as a bad debt.

Mr. WISE

This is a very important point about the Russian law, and I should like to have it put right. The hon. Member for Luton (Dr. Burgin) is proably aware that nearly all the contracts of purchase made by Russia in this country are made with British firms acting on behalf of Russia and are entirely subject to English law, and therefore the particular point to which the hon. Member has referred does not apply to 99.9 per cent. of the business done, or is likely to be done with Russia.

6.0 p.m.

Dr. BURGIN

I am much obliged to the hon. Member for that statement, because his qualifications to speak on this question are well known to all of us. The point had not escaped me in the least, and I at once admit that, in all cases where contracts are made in England, which are governed by English law and capable of enforcement here against a Russian trading organisation, the difficulty to which I am referring will not arise. That is not what I am saying. I am talking of export, and perhaps it would be wise for me to make a limitation. Let me say at once, taking up the intervention of my hon. Friend, that with regard to transactions with Russian organisations in this country, I have, of course, no quarrel whatever. We know that they are carried through, and that, if there is any difficulty, there is recourse to our courts, and the judgment of our courts will be observed and upheld. I, however, am addressing myself, and with practical data in my possession, to difficulties which have been experienced and are being experienced now, and which are being keenly felt by British exporting firms. I am calling the attention of this House to the fact that you cannot, with your documents of title, your bills of exchange, your agreements and contracts, prove these in a Russian court of law by verbal evidence, but that, in proceedings there, you will be dependent upon documents, and that every step in the chain must be proved by a separate document.

That, however, is not all. Those of us' who have experience of export trade with Russia, as distinguished from export trade with Russian government trading organisations in this country, have met with a further difficulty. The control of the Soviet is such that, in the nature of things, it is difficult to obtain independent legal advice. Who is there in one of the great Russian trading centres to-day who will accept a brief in litigation against the Soviet Government? Who is there who, with any sort of professional secrecy or independence of view, or impartiality, or effective contribution, will be able, against a Government Department, against one of the great Services, or in a Court of Law, to accept such a responsibility? I am not saying that this is an insurmountable difficulty, but I am asking that this House should take it into account, and should not assume that trading with Russia is merely shelling peas. It is not. There are formidable difficulties, and, if these are to be overcome by relevant provisions in a commercial agreement, so much the better. If so, we shall be all the wiser and the better informed by their having been freely and frankly discussed across the Floor of this House.

There is one other point to which I might, perhaps, call the attention of the House. I do not accept the suggestion that has been made by a previous speaker that the only buyer from a British exporting house will necessarily be the Russian Government. I discount that possibility altogether. I can recall instances where large Russian trading concerns have been the buyers. Whether they obtained authority from the Russian Government to enter into the transaction or not, I know not, but I know that the contract between the British exporting house and the Russian has not been with the Russian Government or the Russian organisation, but with a Russian trading firm. The point that I want to put is that, if you have credit transactions which involve an economic pause before the date of payment arrives, you may find that, between the placing of your contract and the date of the maturity of the bills, something may happen to the financial position of the buyer.

There are ordinary commercial risks. The risk of insolvency is an ordinary commercial risk. But I wish to call the attention of the House to the fact that the risk which to-day besets and watches over Russian traders is that they may find that at the last moment, at the moment of maturity of the bills, or when the time arrives for performance of the contract by themselves, some claim may be made by the Russian Government itself in respect of arrears of taxation or some other State liability. That is a contingency of which the exporting house will have been wholly unaware, which will not have been taken into account, and which, in all probability, will not have been adequately insured against. The risk that the whole of the assets of a Russian trading concern may at any particular moment be capriciously commandeered by the Russian Government in respect of some outstanding claim for taxes or Government liability is a very real risk. I have, as I said at the beginning, been a friend of trade with Russia for the last 10 years. It has been one's desire to see that the 130,000,000 or so of people in Russia should be supplied, as far as possible, with raw materials, the tools of their trade, and manufactured articles, from our own exporting centres; but it would be idle to blind ourselves to the fact that these difficulties exist. It is only sound business common sense if we sit down to face these difficulties, and endeavour as far as possible to overcome them, in the interests of our trading community, in any commercial agreement that may be made between our country and Russia.

Mr. ALLEN

I beg to move, in line 5, to leave out from the word "Republic" to the end of the Question, and to add instead thereof the words: and, in view of restrictions imposed by the Soviet Government on imports into the territory of the Soviet Union, urges His Majesty's Government to negotiate with the Government of the Union of Socialist Soviet Republics with the object of effecting an agreement which will secure an approximate balance of exports and imports between Great Britain and the Soviet Union. I feel that in substance this Amendment differs very little from the original Motion on the Paper, except that it puts down a practical suggestion instead of merely a pious hope. In submitting the Amendment to the House, it is my desire to approach the question of trade with Russia from a definitely realist point of view. I think I may say that there is a common desire among all parties in this House to increase exports, with the object of relieving the ghastly burden of unemployment. Whether we are going to export harps to Heaven or fireirons to the nether regions does not really matter, so long as we are increasing our exports and thereby giving employment. In Russia we have a potential export market which at any rate exists and which may be capable of some kind of expansion. Opinions differ as to its value. Personally, with some practical experience of Russia, I scarcely agree with the extraordinarily optimistic views expressed by Members on the opposite side of the House. I think it is a market with some small possibilities. I happen to represent a constituency which is particularly interested in that market, and is also interested in seeing it stabilised and, if possible, developed. The linen industry before the War was partially dependent on the Russian market for its supplies of flax, and the present unreliable conditions in regard to Russian trade are obviously not favourable to stability in the price of that raw material, and are, therefore, unfavourable to production costs in the linen industry. Further, there is in my constituency a very large concern which exports machinery to Russia. It employs about 1,000 men, and, in a constituency where there is very serious unemployment, any scheme which may help a firm in that constituency to take on a few more men is, from my point of view, as the representative of that constituency, well worth considering.

On the other side of the picture we find that the Soviets, while anxious to secure financial assistance for the purpose of reorganising their industries, and. incidentally, of reconditioning a market which might be useful to us, set up difficulties which do not exist when we have to deal with any other country. I should like, for the sake of my argument, to recapitulate those difficulties, although previous speakers have referred to various aspects of them during the afternoon. In the first place, the Soviet Government have repudiated liability for State debts, and have nationalised the property of private companies. Until the Soviets have acknowledged those debts, and have come to a reasonable compromise upon them, it is, to say the least of it, unbusinesslike to consider any kind of large capital loan to them. At the same time, if we recognise that we can make no loans to them until they admit their international obligations, we must not set the international creditors of Russia before our own export trade and before the interests of employment in the constituencies. On this question of debt repudiation, I would venture in a way to differ from the point of view expressed earlier in the afternoon. The United States of America, a country with the finest credit in the world, has, as a matter of historic fact, repudiated more debts than any country with the exception of Soviet Russia.

The question of a debt settlement with Russia must obviously, as a business proposition, precede any large capital loan. That is plain common sense. If they come to the City for money, and the City has not been paid its old debts, it is hardly likely to grant new loans. In the meantime, however, we are entitled to examine whether we are able to stimulate our export trade with Russia without recourse to subsidised export trade based on risking large capital loans. In this connection, I think we might be well advised to follow the policy pursued by Signor Mussolini in negotiating the Russo-Italian Treaty of 1924, when it was found possible to arrive at a basis for the stimulation of Russo-Italian trade, while at the same time the claims of Italian creditors of Russia were entirely reserved, and Italy received certain definite trade advantages without there being an Italian loan to Russia. Among these advantages were facilities for trade on the Black Sea, which has largely strengthened the Italian mercantile marine, to the disadvantage of British and French lines.

If we examine the figures for trade with Russia during the last seven years, we find that Great Britain is a far more valuable market to Russia than Russia is to Great Britain. The Soviets sell in this country on an average about £20,000,000 worth of goods a year, while, on the other hand, their purchases of British manufactured goods have amounted on the average to less than £5,000,000 a year. [Interruption.] I am coming to specific figures in a minute. In the first three-quarters of 1928, the Soviets sold to us over £13,500,000 worth of goods, and they purchased from us less than £2,250,000 worth. The products that they sell to Great Britain are petroleum, manganese and other minerals, timber, furs and flax. They are, in fact, articles of commerce which we can obtain from regions of the world outside the Soviet Union. They are raw materials of which, generally speaking, in the present state of economics, there is world over-production, and the British market for these products is vital to the Soviet Union. If that market were closed, the economic life of the Soviet Union would become seriously embarrassed.

I am not suggesting for a moment that it is practical politics to close that market, but, at the same time, I am a business men engaged always in selling in markets where there is over-production. I know that I am at the mercy of my customers, and I know that they know it. I give them, therefore, courtesy and consideration, and, whenever I can, reciprocity. It is an established canon in business, and a very wise one, to buy by preference from those who buy from you. I am not suggesting that we should close our markets to the Soviets, but I would point out that we could close our markets to the Soviets and buy elsewhere without the slightest inconvenience to any section of the community except those few who take caviar and vodka with their supper. We are, in fact, the buyers, and in the business world it is the buyer who sits down with his back to the window, and the seller who has to face the light.

What is the position? The Soviets, through their foreign trade monopoly, control all exports from Russia and all imports into Russia. As a State, they have chosen to assume the position of a trader, and, as a State, they must come down into the market-place like a trader. If they desire to retain the freedom of our market, we must have the freedom of theirs. It is, in fact, in another form, the proposition which the hon. Member for East Leicester (Mr. Wise), whom I am glad to see in his place to-day, put before the House the other day in relation to Canada. The hon. Member has wide knowledge of Russia and, I think, is one of the ablest economists in the House, and I suspect he is a realist to boot. What is fair for Canada is fair for Russia. To put it in the hon. Member's more euphemistic way, I would suggest that we should say to the Soviets, "Here are we in a position to take £20,000,000 of your goods per annum, and we expect you to take our goods in exchange." A system based on this idea of mutual advantage could be perfectly easily worked through the establishment of some kind of clearing house system or an Anglo-Soviet bank. I understand that the American Chase Bank already has some such system operating.

Mr. WISE

The hon. Member has made a very interesting proposition. Do I understand that he proposes that we should extend to Russia the same sort of general conditions in regard to our trade as we extend to the Dominions? In the case of most of the Dominions we make large loans, with which they finance their purchases in this country.

Mr. ALLEN

I am in favour of much stronger preferences and loans to the Dominions than hon. Members opposite would support. I was merely suggestsing that the treatment that my Amendment outlines for Russia is at least as fair as the one the hon. Member was outlining for Canada. I understand the American Chase Bank has some such clearing-house system, which facilitates Soviet-American trade. Soviet sales of petroleum, or flax or manganese in this country would be credited to the Soviet account at the clearing-house or bank, and their purchases of British manufactures would be debited against them, the clearing-house being responsible for regulating the balance. By this means the value of British exports to Russia could be brought to an approximate balance with Soviet exports to this country and, instead of British exports to Russia being £4,000,000 a year, they should rise to £20,000,000 if the Soviets maintain their present level of imports. In fact I would go so far as to suggest—though I do not for a moment wish to associate with me those whose names appear on the Paper with mine—that should this system work satisfactorily for a year or two, the Government might consider the financing of additional exports to the Soviet to the extent of, say, 25 per cent. of the annual credit established by the Soviets in this country. Thus, if for the year 1931 the Soviets, by the sale of goods here, were to establish credits to the extent of £28,000,000, that is 40 per cent. in excess of their present imports, the Government might consider guaranteeing British firms a further £7,000,000, that is 25 per cent. of their credits created, thus securing total exports to Russia of £35,000,000, which would be a figure approximating to the ambitious annual purchases in Britain forecasted under the Soviet five years plan.

I would, however, say this in regard to Russia in general, that the establishment of any really satisfactory trade must depend on their capacity to consume and on their capacity to create exports. The present Russia is very different from the pre-War Russia. When we compare our present trade with our pre-War trade with Russia, we must remember, above all, the secession States. Our trade now with Poland, the Baltic States, Finland, and part of our Rumanian trade, represents trade with regions that formerly constituted part, and an important part, of the Russian market. The Russians have furthermore lost the most highly industrialised parts of the old Russian Empire, that is the regions around Warsaw, Lodz and Lvoff, a great textile centre, and all the Baltic ports except Leningrad. Furthermore, the important luxury market, which absorbed a fair proportion of high-class textile and leather goods, has completely disappeared. But even in the pre-War years our trade with Russia was not great. Russia is now a much reduced market. She has lost a European population of 30,000,000 to 40,000,000, although that market still exists for us in the form of the new secession States. Russia's important industrial regions are now really reduced to Leningrad and Moscow, the Kharkoff area, and the petroleum and mining towns in the Caucasus, the Urals and the the Donetz basin. There is no luxury market. Though that may be a matter of satisfaction to hon. Members opposite, I am afraid the fact that the luxury market has ceased to exist seriously affects our export trade. There is really no market under the present Soviet fiscal system for the cheap manufactured goods of the type consumed by the people. There is an immediate market for industrial plant and agricultural machinery, as hon. Members opposite have observed, and it is really only by the reorganisation of mining and agriculture that the Soviete can develop exports which will pay them. Their present policy is like that of so many countries which have taken to tariffs before they have a sufficiently developed industrial system.

There are certain real possibilities, I believe, in the Russian market, though they are limited ones, and really the position now, from the point of view of exports, is about the same, probably no worse than that of the South American Republics 100 years ago after the war of liberation. We have to remember, too, that in addition to the Russian market there is access only through Russia to the great and almost undeveloped markets of Central Asia and to the remote provinces of Western China, which are fairly thickly populated. These are markets which are now virtually the monopoly of the Soviets, but they are inefficient and under-developed and they cannot supply those markets and cannot stimulate production. I feel that there is a great and, eventually, a real potential market for British goods among the masses of the common people from the Pripet marshes right up to the great wall of China. All these people are poor, miserably poor, but they are all potential consumers of the cheap goods which we can produce in abundance—the goods which the Soviets, with all their ambitious schemes of industrialisation, will not be able to supply in the sort of quantities which may be consumed in the next 50 years, if they last that long. After all, these people, poor as they are, have as much purchasing capacity per head as the inhabitants of parts of Africa and China. I should like to give an illustration of one of these under-developed Eastern markets which, I think, is very similar to the Russian market, that is, Turkey. The conditions in Turkey are similar to those in Russia. There is an agricultural population with a very low standard of living. The country is extremely impoverished and, though there are virtually no manufacturing industries, there are very high tariffs. Yet the people are waking up. They are quite different from what they were before the War. They are beginning to move about. They are actually wanting to be cleaner. They are beginning to shave. There is a big movement on for shaving. It is an extraordinary thing that in the remoter districts of Anatolia I can buy Eno's Fruit Salts in Sivas, there is a traveller for Crosfield's soap in Trebizond, and it is a pleasure to see in almost every village inn British-made gramophone records of Turkish songs.

If the Anatolian Turks are coming on, I feel that there must, even with the bad conditions there are in Russia, be a certain limited market which we could and should supply. In Turkey, as in Russia, you have a demand, you have a consumer capacity, and it is the organisation of credit that is needed, both to supply these people, to finance exports to them, and at the same time to stimulate their productive power and thus to increase their potential, growing consumer capacity. There are particular and special difficulties with regard to Russia. I confine myself to the export problem and have not referred to the very real atrocities that exist and which hon. Members opposite do not seem to believe in, possibly because they have not actually been there. Communist propaganda is a tedious and worrying problem, but it is not relevant to the question of exports. After all, we have had propaganda of various kinds in this country for the last 300 years and they have not been very successful—even the prohibition propaganda. I should think-there is a good deal more money spent on prohibition than on Communism. The best answer to Communist propaganda is increased employment.

Again, the debts question is an international question requiring international agreement, and it stands apart, like the German debts question, and we can approach the question of exports to Russia in the same spirit as has already been done by the Swedish and Italian Governments in reserving the debts question and dealing only with export problems. In the meantime we have the whip hand over Russia. We control a market which is vital to them. We can dictate our terms, and we can dictate in terms of work for the unemployed. I should like to see the Government consider establishing this clearing-house system, by which the Soviets, through their annual sales in Great Britain, could establish credits to be reserved for the purchase of British manufactures to an equivalent amount. When this clearing house system was working, I think the Government might consider going further. I think they should, if they did give any further assistance, combine with financial assistance an arrangement whereby the Soviets should make a drastic reduction in the tariffs on British goods, a preferential reduction, in consideration of having received some kind of assistance. This reduction should be made in all cases where the Soviet could not supply their own market.

I would again emphasise that in this question of trading with Russia, it is we and not the Soviets who hold all the trump cards—every one of them. We can cut off the most vital markets for their goods if we choose. We have the money that they need and we have the goods that they need. I have had some experience of the Bolsheviks—I have actually sat in the Cheka and wondered rather what was going to be the next step—and I know that while they exploit the slightest sign of weakness, they have a certain amount of respect for honest realism. Whatever else they have been, they have always been realists. To sum up, if I may use poker parlance, I should say that we have a straight flush, and we must not allow ourselves to be bluffed by a pair of red knaves.

Major-General Sir ALFRED KNOX

I beg to second the Amendment.

I would like it to be understood at the outset that I second the Amendment as it stands on the Paper, and that I do not associate myself with some of his remarks, especially those remarks which were greeted by applause from hon. Members opposite. I am very strongly of opinion that Communist propaganda as practised by the Third International is a definite deterrent to trade. After all, this question of trade with Russia is merely a matter of credit, as I have understood from the many speeches which I have heard from the opposite side of the House. Russia, of course, is an enormous potential market. The only thing wanting is that they have not the money to pay for the goods which the people of the country would like to have. That fact, and the intervention of the Soviet organisation, have taken all foreign trade from them. I gather from some of the speeches that hon. Members opposite want their own Government to extend Government credits to further British exports to Russia. I shall be very much interested to hear the reply of the hon. Gentleman on the Front Bench and to learn what action the Government are going to take. Politically, I can imagine no object that would rouse greater indignation amongst the people of this country than the idea that we should give credit to the Russian Government as it stands at the present time. There was nothing which produced greater indignation in the General Election of 1924 than that one point.

Why does the City not give credit? If the credit is good the City will give credit. If the credit is not good enough for the City, why should the taxpayer's money be pledged? The hon. Lady who moved the original Motion said, I think, that Russian credit is the best credit in the world. Is there any case of the trade unions of this country, which, I believe, look for good investments, putting their money into Russian loans? The hon. Lady rather skated lightly over the facts about the English creditors of Russia. She must know from the green pamphlet which she received that 28 per cent. of the bondholder creditors are people who have under £100 invested, and that 70 per cent. of the creditors are for amounts under £500. These are not big people. They include governesses, gardeners and even dock labourers. They are not the detestable capitalists about whom we hear a lot. I think that these people ought to be looked after and their interests, too. Personally—and here I disagree with my hon. Friend whose Motion I generally support—I think that the British Government have no right to give credit to Russia until the Soviet Government have come to some satisfactory arrangement with their British creditors.

There are many countries, if you could give them enormous credits, which would buy largely from Great Britain. What about China? The wants of China are, no doubt, very great. If you could arrange credit you could give them all they want. The people in Central Africa no doubt want credit. You could arrange large schemes of exports to many Republics in South America if you could give credit. I want to know more about this credit. There was a delegation who went out to Russia six or seven months ago, namely, the Anglo-Russian Committee. They left this country with a great flourish of trumpets. They came back rather quieter and in a more subdued mood. I have a copy of their report. They sent one to me. I read in that report that M. Pictikov, when he received them in Moscow, said that he had £150,000,000 to give in orders to this country. That was something to make their mouths water. I have read since that the present Ambassador, M. Sokolnikov, in an interview or article in the Press in Moscow, said: For every £100 we get of industrial machinery from abroad we want at the same time £375 of free money credit. That free money credit is required to build houses for the workers, factories to put machinery in and to buy raw material. If you calculate what it will cost to sell your £150,000,000 worth of stuff to Russia, you will find that it comes to £712,500,000, that is if you calculate the £375 of free money credit for every £100 worth of British products sent out. I do not know whether M. Sokolnikov, now that he has become Ambassador to this country, agrees with what he said then. There are several things in Russia, which limit the purchasing powers of Russia. I spent nine or ten years in Russia. I was for two months under the Bolshevist regime, and I knew a good deal of Russia before, having travelled all over it. It is really the iron hand of the Communist that has changed the whole thing. [An HON. MEMBER: "What about the iron hand of the Tsar?"] I am talking about Russia as it is now. Take the year when trade with Russia reached its peak since the Revolution, the year 1925. In that year, the exports of British manufactures to Russia amounted to £6,250,000. Our total exports that year were £619,000,000. Therefore, we sent about 1 per cent., and that was the peak year since the Revolution in Russia. There are certain things in the organisation which have really decreased the purchasing power. I would like to quote from great industrialists, or the officials in Russia. I do not want to quote the opinions of any hidebound Tory who went there. Take Dyerzhinsky before his mysterious death three years ago. Here is what he said concerning the system or organisation in Russia: We are smothered in bureaucracy; our system and practice of administration are in themselves sufficient to paralyse efficiency and restrict output. For instance, one simple question by the chairman of the rubber trust concerning prices had to pass through 32 various stages in the same office. That is what Dzerzhinsky said a few hours before he died. There are the supreme heads of the economic Soviet. I would like to quote from Rudzutak. Last year or the year before he quoted the case of the Odessa Engineering Works which made thousands of ploughs, which when tested in the fields fell to pieces. He quoted the case of the Sugiew glass factory. This factory was constructed at a place to which they had to bring the sand from a distance of 100 miles and the wood from a distance of 300 miles. It struggled on for six months and made a debt of half-a-million roubles and was then closed down. Then you had M. Bykov who mentioned a few days ago the case of a cotton factory. He said that the factory was built at a place four or five versts, about three miles, from the railway, and 17 versts, about 13 miles, from any water. There were no houses for the workers. He ended by saying: It looks as if the very worst and most inconvenient spot in the whole Soviet Union. has been selected. Are these the sort of people to whom it is suggested we should lend British capital which is so much required in this country. Of course, they have no money. The average holding in the saving banks in Russia to-day is one rouble per head of the population. How can a population like that afford the luxury of foreign imports? Russia, which before the War was one of the greatest grain exporting countries in the world, in 1928 imported from 150,000 to 200,000 tons of grain from abroad, and there have been several famines since the Revolution. I would implore hon. Members opposite to study the question of exports to other countries beside Russia. As my right hon. Friend the Member for Sevenoaks (Sir H. Young) explained very fully, with all his knowledge and experience of the world, they are really pursuing a phantom. We cannot increase our exports to Russia to any sufficient extent and bring about any appreciable amelioration of unemployment in this country.

There are other reasons why we should give less consideration to the Russian market than to other parts. No hon. Member can shut his eyes to the persistent massacres which go on in that country. I would like to know whether the Soviet Embassy will deny the confiscation of the holdings of the so-called rich peasants, the peasants with two or three horses or two or three cows who are turned out on the roadside and have their goods confiscated. Is that the Government we want to support by British credit? Of course, we want to help to reduce our unemployment. Let us go to other markets which give greater promise, where government is not the absolute tyranny it is in Russia. As was said by Mussolini in reply to their attack on Fascismo: It is a system that supports dictatorship on a pile of corpses.

Mr. GILLETT (Secretary, Overseas Trade Department)

I am placed in a peculiarly difficult position in answering the arguments which have been raised on this subject by hon. Members opposite, by reason of the extraordinary contrast which has been presented in the arguments in favour of the definite Amendment used by the hon. Member who proposed it, and by the hon. and gallant Member who seconded it. I felt inclined almost to have accepted the Amendment as it was moved by the hon. Member for West Belfast (Mr. Allen). There was so much in his speech that was helpful and hopeful, in entire contrast to the speech of the right hon. Member for Sevenoaks (Sir Hilton Young). The right hon. Member for Sevenoaks compared the opportunities of Russian trade to such opportunities that might ultimately be received from countries like Holland and New Zealand. The hon. Member for West Belfast had a vision of the great lands of Russia and the opportunities that lay there, even if at the present time they are not being developed. When I turn to the speech of the hon. and gallant Member for High Wycombe (Sir A. Knox), I notice that he dissociated himself from having anything to do with the speech of the hon. Member for West Belfast, except that he agreed with the terms of the Amendment.

The right hon. Member for Sevenoaks made a statement at which I was very much surprised. I was expecting that the right hon. Gentleman would lay great stress upon the importance of the settlement of financial affairs. It shows how utterly hopeless is the position of the Conservative party on this matter, if what the right hon. Gentleman stated is also the principle that is held by that party, namely, that no trading relationship, no credit facilities should be guaranteed, even, as I understood, after the settlement of finances, unless the Soviet Government are prepared to say that they are willing to throw over the whole principle on which trade in Russia is carried on. They must be willing to alter their system of trading in order to do business with this country. That is an interference with the Government of any great country which it is quite impossible to justify. It would be exceedingly difficult to carry on the conferences and the trade between any nation if there was to be interference on the lines suggested by the right hon. Gentleman.

I did not follow fully the whole of the legal points raised by the hon. Member for Luton (Dr. Burgin), but no doubt in the negotiations that take place those concerned will look into his proposals. I think that he accentuated the dangers of the position. To a large extent the export business of this country is done with firms that are virtually representative of the Soviet Government, and to a great extent the difficulties mentioned by the hon. Member might almost have been overlooked. The right hon. Member for Sevenoaks gave a description of the trading position in Russia. He asked me whether my Department, as being responsible for the export credits, had asked from those who were going to receive our guarantees whether they would give us an account of the condition of things in Russia. I do not know that we have done that; at any rate, I have not seen a report to show that we have done it, but we have done what is often done by very go-ahead business firms, we have sent out a man of our own to investigate the position on the spot. I should have thought that the action which His Majesty's Government have taken in renewing relationship with Russia and so having our own representative in Russia, would commend itself to the right hon. Gentleman.

When I heard the right hon. Gentleman's account and I compare it with some information which we have received, I confess that I think he painted the picture too dark. I sometimes wonder whether we in this country sufficiently appreciate the important events that are going on in Russia; the great experiment which the Russian Government is undertaking at the present time and the importance of the results of that experiment to the nations of Europe, if it should prove to be a success or if it should end in failure. The Russian Government are engaged in what is known as a five-years' plan, a great plan of industrial and agricultural reorganisation. For this purpose they are making extraordinary efforts to export anything that they can possibly spare in order to raise credits outside their country. My hon. Friend who moved the Motion said that it was quite easy for Russia to get credits, but one of my hon. Friends on this side, who spoke later, was more accurate when he pointed out that it is not quite so easy for Russia to get credits as the hon. Member for East Middlesbrough (Miss Wilkinson) suggested. That is one of their great difficulties to-day.

If we are asked how far their internal conditions are likely to justify the efforts that they are making, we get a varied picture of success and failure. The pessimists who constantly wrote in the newspapers used to tell us that the Russian oil production was never likely to be greatly increased. I understand that to-day that oil production is higher than it was in the pre-revolution days. We know that recently they have greatly increased their export of timber. On the other hand, they are faced with difficulties due to shortage of coal, which is partly explained by the inefficient equipment in their mines. They had a good harvest last year. At the moment they are engaged in their new scheme for agricultural production, which has aroused considerable opposition among the peasants. The success of the experiment will probably depend to some extent upon how far the Russian Government can succeed in pacifying that element in Russia. It indicates the difficulties with which the Russian Government are faced when we see reports which appear in the Russian newspapers saying that the tractors badly needed for this agricultural experiment are in many cases in an unsatisfactory state of repair.

We have to link up any review of Russian trade with the fact that they are very anxious to secure credits overseas for the purpose of their great experiment, particularly in order to buy the necessary machinery that they require. A further problem before them is the home problem. Will they, having control of the whole of the property of the country, and a national system of wages, be able to hold out through the difficult years until the scheme begins to fructify and gives them the return that they are hoping for? That is their problem, and it is most important that we in this House, whatever our political views, should understand and appreciate that a Motion of the kind now before us is of very considerable importance in the relationships between the two nations. The financial problem and our view of the financial relations between the two countries will be the key, to a large extent, to the solution of the difficulties.

On account of the desire of the Soviet Government to be able to purchase machinery we find that the imports into Russia, compared with 1928–29, show a reduction from £94,000,000 to £86,000,000. On the other hand, their exports rose from £77,000,000 to £90,000,000. By this means they altered an adverse balance against them of £17,000,000 to a balance in their favour of £4,000,000. To a great manufacturing country like the United Kingdom it is of special interest to note that of the £90,000,000 worth of goods that were exported into Russia from different countries about 50 per cent. were for machinery or plant connected with it, while 40 per cent. was largely raw material. It therefore means that we, with our special interests, have the field before us, along with the other nations of the world, of 50 per cent. of those exports into Russia of machinery and plant, representing £45,000,000 worth of goods, which Russia is needing and which she will need from the industrial world which makes machinery.

It is quite likely that in the five years scheme the present year 1930 will be the critical year. At the end of this year we shall be better able to see how the scheme is going to work out. I think we shall find that this year the Russian Government will have to be prepared to spend £45,000,000 for goods of the class that we can specially supply. Our two chief competitors in this class of goods are Germany and the United States of America, and it is interesting to note that the German exports to Russia for the year ending 30th September, 1928, amounted to £25,000,000 while for 1929 the figure was £19,000,000. The exports from the United States were for 1928, £19,000,000 and for 1929, £15,000,000. 7.0 p.m.

Against those figures, the figures for 1929 of Germany of £19,000,000 and of the United States of £15,000,000, our figure for goods exported to Russia is only about £6,000,000. In connection with that there is one point made by the right hon. Member for Sevenoaks (Sir H. Young). When he was attempting to argue that the openings for trade with Russia were extremely small and gave figures for the pre-War position and then compared it with the figures to-day, it seemed to me that he did not take any note of the effect of the altered value which I think ought to be taken into account in considering the question he was placing before the House.

The question which has been addressed to me by my hon. Friend is the question as to what the Government have done to try to help forward and encourage trade with Russia. It is well known that the negotiations with the Russian Government were opened shortly after the present Government came into office and there is seen already, in some of the figures, a small beginning as the result of a better feeling existing between the two peoples. If you take the six months ending November, 1929, the second period of which was largely covered—though not entirely—by the activities of the present Government, you find that the exports and re-exports rose from £2,300,000 to £3,400,000. If we take the orders that have been placed in the United Kingdom during October, November, and December of these years we find that in 1928, when the last Government were in office, under the policy which they were following with Russia, the orders amounted to £1,700,000. In the three months when the Labour Government were in office those orders amounted to £4,700,000. That is briefly the financial position between the two countries. Before I take up the larger question of finance I would like to refer to the second part of the Motion which was moved by my hon. Friend, a Motion which has my entire support. She dwelt there upon the importance of having some commercial agreement entered into between the Russian Government and the Government of this country. I may perhaps be allowed to read to the House a statement of what has actually been done by the Foreign Office in regard to this matter: One of the primary objects sought by His Majesty's Government in resuming diplomatic relations with the Soviet Government was an expansion of trade between this country and the Soviet Union. His Majesty's Government are, therefore, entirely in sympathy with the Motion before the House and for their part are moving as quickly as circumstances permit towards the conclusion of an instrument which will regularise the relations between the two countries. The negotiations adumbrated in the Protocol of 3rd October have been proceeded with ever since the exchange of Ambassadors and have now readied a stage when detailed discussions of the necessary documents can be assured. In those circumstances, I can assure my hon. Friend, as regards the second part of the Motion, that the Government is doing all that is possible at the present time to enter into some commercial agreement on the lines which she has suggested.

Turning now to the first part of the Motion and reverting to the financial question, the Government announced some time ago that it would be quite impossible for them to consider guaranteeing a Russian loan on the same lines, or on any other lines as a matter of fact, as had been suggested when the Labour Government were last in office. That means practically that, if Russia desires to raise credits in this country, a settlement with the City on the various debt questions and other questions that still exist and are awaiting settlement is a fundamental necessity if any large amount of money is going to be obtained from this country. It is quite obvious when we look at the condition of the London money market to-day, faced as it has been with losses in the recent financial crisis, faced as it has been with the effects of the great slump in the United States, that for all countries at the present time there are special difficulties in raising loans upon the London money market. Therefore His Majesty's Government with their financial commitments have to bear these matters in mind and it is impossible to expect this Government to be responsible to any great extent for financing any other Government under the present conditions.

The right hon. Member for Sevenoaks in dealing with this question of a loan brought up once again the argument that as a matter of fact the Government by their export credits scheme are giving a loan to Russia. I venture entirely to dissent from that argument. Certainly from a financial standpoint there are very great differences between the export credit scheme now in force and the granting of a loan of money. We know perfectly well, in the first place, that the guarantee of the repayment of a certain proportion of bills that are going to be drawn in connection with the transaction would apply to some one definite transaction dealing with certain definite goods. On the other hand, if any country raises a loan on the London money market, it is at liberty to buy any goods it likes and—what is even more important and of very great importance when we are considering the position of the London money market—there is no guarantee that that money need be spent in this country. It may be spent by the Russian Government either in Germany or in the United States, resulting in all probability in the withdrawal of money from this country with the result that that would have on our exchanges. Therefore to compare a guarantee, which is more in the nature of insurance, with a loan that is raised on the London money market seems to me to be playing with terms, and to anyone so well acquainted with finance as the right hon. Gentleman it would, I should have thought, been quite impossible to have suggested that they were in any way the same.

I should like to say a few words in regard to the export credits guarantee scheme as during the last few weeks a number of questions have been addressed to me on this subject It is on this scheme that some of my hon. Friends have pinned their hopes of getting more credits for Russia. I might remind the House that it was made available to Russia on the 1st August last year. From 4th September, when the scheme really began to work, to the present time contracts have been entered into with Russian interests to the amount of £603,000. Some of my hon. Friends may naturally say that is a small figure. What I want to point out to them is that the export credits scheme is really only in the first years of its existence, that it is to a large extent a new movement in the world of credit and that, if you take the whole transactions in the last year, they only amounted to a sum of about six or seven million pounds, spread over the whole of the world.

Mr. DOUGLAS HACKING

Is that the Government's share of the risk or the total business?

Mr. GILLETT

I might explain when I mentioned "contract" that that means the actual business which was done and which is important from the point of view of labour. The contract is the amount of business done. Then the Government guarantee the repayment of a certain percentage varying from 50 to 75 per cent. so that the actual liability the Government has entered into will be a percentage of the figure I have given to the House. In regard to the business that has been done, there is undoubted evidence that a large proportion of it is new business and probably could not have been undertaken without the assistance of the Department. The point, however, which my hon. Friends are really pressing for is that of longer terms. I was asked the other day in a supplementary question whether the treatment of the Russian Government was different to that of other countries and I stated that it was not. As a matter of fact, when the Advisory Committee are considering an application, in the ordinary way among the things considered is the country to which the goods are going. With some countries we have decided that no more business shall be done, at any rate for a period; with other countries it has been decided that it is undesirable to grant anything but short credits; to others we give short or long credits. The long term credit is limited in any case by the Act of Parliament to a period of five years.

The working of the scheme has had the result that most of the business done so far—I might almost say to the extent of at least 80 per cent.—is done on the short term credit. Therefore what has been done with the Soviet Government is really similar to a great extent to what the scheme does with other countries. As a matter of fact, oven if a company gets a guarantee of the export credits department they have to raise the money, and if the period is for a long one of three or four, or five years, there is no doubt that a certain amount of difficulty arises in procuring the necessary financial assistance. This problem of long term credits is by no means confined to the case of Russia. During the few months I have occupied my present position I have been impressed by the information which has come to me of the difficulty of manufacturers who want to export goods all over the world in arranging for the payment being spread over four, five, six or seven years. The Lord Privy Seal in the many investigations he has carried out, has found exactly the same difficulty. In Germany, Switzerland, Sweden and America provision no doubt is made for their manufacturers to a far greater extent than by the financial interests in this country. Hon. Members opposite who have experience on these matters will, I am sure, agree with me. Therefore, we are up against a problem which is not connected solely with Russia, but we are up against the problem which needs to be faced, and, as a matter of fact, is being considered by the Lord Privy Seal at the present moment.

Mr. HACKING

This is really an important matter. The hon. Member spoke about short-term credits to Russia, but he did not say what the maximum short-term credit was. Is it a maximum of one year?

Mr. GILLETT

It has always been the custom, even when the right hon. Member occupied my present office, to be very cautious how far any information of that kind was given out publicly on the Floor of the House.

Mr. HACKING

I am not asking for the amount in regard to any particular deal, but as to the length of the transaction.

Mr. GILLETT

The point he is asking me is whether any definite time has been fixed by the Advisory Committee as to short-term credits. I think it is rather a dangerous question to put, and if I give a definite reply there may be occasions when I shall be asked a similar question in regard to other countries.

Mr. HACKING

The hon. Member has said that five years has been given in the case of one country. I only want to know the maximum that has been given to Russia.

Mr. GILLETT

I said that five years was the maximum laid down under the Act. I hope the right hon. Member will not press this question.

Sir W. LANE MITCHELL

The House has a right to know.

Mr. R. A. TAYLOR

I gather from what my hon. Friend has said that it is the custom and practice in the Department to consider long-term contracts for any countries over a period of 12 months. Am I to understand that it is the intention of the Department to review the present position with a view of altering the present practice and scheme?

Mr. GILLETT

I cannot say that there is any intention of altering the present practice or scheme. All I can say is that they are considering what is manifestly a deficiency in our present financial organisation, but what the decision will be I cannot say at the moment. The action of the Labour Government in opening negotiations with Russia has already resulted in an increased export trade, and what is equally, if not even more important, in better relations between the two nations which will lead to better results in the future. The amount of Russian business that has been done under the export guarantee scheme, although the figure is small, is at any rate, as far as the scheme itself is concerned, one of the largest; amounts of business done with any country in the world. We hope shortly to get a commercial agreement between the two countries, and it may be that as a result of these negotiations a settlement in regard to the vexed question of the debt may be brought about. We see from the financial transactions which have been carried out by people interested in the City, a readiness in that quarter to discuss the whole question. Whatever views may be held about the Government of Russia, or on some of the matters mentioned in the Debate to-night, the only wise policy for us to pursue is to endeavour to get into the closest business relationship with the Russian Government. As far as we are concerned, we shall certainly do everything to improve that relationship, and thus increase the export trade with the ultimate object of securing work for the unemployed, which I can assure the hon. Member for East Middlesbrough (Miss Wilkinson) we are all most sincerely anxious to provide.

Colonel HOWARD-BURY

Owing to the growing habit of hon. Members making rather longer speeches than usual on private Members' day there is very little time for a large number of hon. Members who wish to take part in this discussion. The Secretary for Overseas Trade has told us that we are sending about £4,500,000 of goods every year to Russia and taking from Russia £21,500,000. Therefore, Russia is establishing a large credit in this country. He also told us that America and Germany are sending a far larger amount of manufactured goods to Russia than they take from Russia. Therefore, with the credits which Russia is establishing in this country she is buying goods from America and Germany. That is the point of this Amendment, that some kind of clearing house should be set up in this country to enable the credits which Russia has established in this country being utilised for the purpose of sending goods from this country to Russia. That should be perfectly possible. We have to realise that in trading with Russia we are trading in a totally different fashion to any other country in the world. Russia directs the whole of her import and export trade under a Government department. We are free to send our exports by private enterprise to every country in the world. The Russians, by the Government monopoly, for political reasons, can direct their exports to this country or to any other country. What they send us is chiefly oil and wood, and they do not have a monopoly. They are dependent on our open markets, and we could bargain with them and say that if we take so much of their oil and wood they must take so much of the agricultural machinery or motors which we manufacture.

It is on these lines that we should try and come to some form of agreement with Russia. That can be done at once. It does not need a settlement of the debt question. They have established a definite credit in this country, and we ought to make use of that credit for the

purpose of financing our depressed industries and sending them machinery, which they need so much, and which today they are buying in Germany and the United States. The problem as to how we can expand our Anglo-Soviet trade is prejudiced by the question of propaganda. The surplus money which Russia is getting to-day from this country is being spent on propaganda against our interests throughout the world. For my own part I do not wish to have any particular dealings with the present Russian Government. I allow hon. Members opposite to have their share of any transactions, but in the case of a government that can act as the Soviet Government have acted in the past, establishing the worst persecution of Christians in the history of the world, I should like to wash my hands of them.

Mr. R. A. TAYLOR

The churches are better attended in Moscow than in London.

Colonel HOWARD-BURY

In a certain Burmese village where they are all Buddhists and it is a sin to take life, they throw all the burdens of their sins on the fishermen and sportsmen. It is an old Jesuitical doctrine that it pays you to do evil in order that eventual good may result. Possibly, this may eventuate in helping unemployment, but for my own part I wish to have nothing to do with the transaction. By using the credits that Russia has established in this country for the purposes of trade we have a lever by which we can compel Russia to make use of those credits for the purposes of our trade.

Miss WILKINSON rose in her place, and claimed to move, "That the Question be now put."

Question put accordingly, "That the words proposed to be left out stand part of the Question."

The House divided: Ayes, 243; Noes, 139.

Division No. 143.]	AYES.	7.30 p.m.
Adamson, Rt. Hon. W. (Fife, West)	Angell, Norman	Beckett, John (Camberwell, Peckham)
Adamson, W. M. (Staff., Cannock)	Arnott, John	Bennett, Capt. E. N. (Cardiff, Central)
Addison, Rt. Hon. Dr. Christopher	Ayles, Walter	Benson, G.
Aitchison, Rt. Hon. Craigie M.	Baker, John (Wolverhampton, Bilston)	Benthant, Dr. Ethel
Alpass, J. H.	Barnes, Alfred John	Bevan, Aneurin (Ebbw Vale)
Ammon, Charles George	Batey, Joseph	Birkett, W. Norman
Bowen, J. W.	Jenkins, W. (Glamorgan, Neath)	Romeril, H. G.
Broad, Francis Alfred	Johnston, Thomas	Rosbotham, D. S. T.
Bromley, J.	Jones, F. Llewellyn (Flint)	Rowson, Guy
Brooke, W.	Jones, Henry Haydn (Merioneth)	Runciman, Rt. Hon. Walter
Brothers, M.	Jones, Rt. Hon Leif (Camborne)	Salter, Dr. Alfred
Brown, C. W. E. (Notts, Mansfield)	Jowett, Rt. Hon. F. W.	Samuel, Rt. Hon. Sir H. (Darwen)
Brown, James (Ayr and Bute)	Jowitt, Rt. Hon. Sir W. A.	Samuel, H. W. (Swansea, West)
Buchanan, G.	Kelly, W. T.	Sandham, E.
Burgess, F. G.	Kennedy, Thomas	Sawyer, G. F.
Buxton, C. R. (Yorks, W. R. Elland)	Kirkwood, D.	Scrymgeour, E.
Buxton, Rt. Hon. Noel (Norfolk, N.)	Knight, Holford	Scurr, John
Cape, Thomas	Lansbury, Rt. Hon. George	Sexton, James
Carter, W. (St. Pancras, S. W.)	Lathan, G.	Shakespeare, Geoffrey H.
Charleton, H. C.	Law, Albert (Bolton)	Shepherd, Arthur Lewis
Chater, Daniel	Law, A. (Rossendale)	Sherwood, G. H.
Clarke, J. S.	Lawrence, Susan	Shield, George William
Cluse, W. S.	Lawrie, Hugh Hartley (Stalybridge)	Shiels, Dr. Drummond
Clynes, Rt. Hon. John R.	Leach, W.	Shinwell, E.
Cocks, Frederick Seymour	Lee, Jennie (Lanark, Northern)	Short, Alfred (Wednesbury)
Compton, Joseph	Lees, J.	Simmons, C. J.
Cove, William G.	Lewis, T. (Southampton)	Simon, E. D. (Manch'ter, Withington)
Daggar, George	Longbottom, A. W.	Sinclair, Sir A. (Caithness)
Dalton, Hugh	Longden, F.	Sinkinson, George
Davies, E. C. (Montgomery)	Lovat-Fraser, J. A.	Sitch, Charles H.
Davies, Rhys John (Westhoughton)	Lowth, Thomas	Smith, Alfred (Sunderland)
Denman, Hon. R. D.	Lunn, William	Smith, Ben (Bermondsny, Rotherhithe)
Devlin, Joseph.	Macdonald, Gordon (Ince)	Smith, Frank (Nuneaton)
Dickson, T.	McElwee, A.	Smith, H. B. Lees (Keighley)
Dudgeon, Major C. R.	McKinlay, A.	Smith, Tom (Pontefract)
Dukes, C.	MacLaren, Andrew	Smith, W. R. (Norwich)
Ede, James Chuter	MacNeill-Weir, L.	Snell, Harry
Edge, Sir William	McShane, John James	Sorensen, R.
Edmunds, J. E.	Malone, C. L'Estrange (N'thampton)	Stamford, Thomas W.
Edwards, C. (Monmouth, Bedwellty)	Mansfield, W.	Stephen, Campbell
Edwards, E. (Morpeth)	March, S.	Stewart, J. (St. Rollox)
Elmley, Viscount	Marcus, M.	Strachey, E. J. St. Loe
Foot, Isaac	Markham, S. F.	Strauss, G. R
Freeman, Peter	Marley, J.	Suillvan, J.
Gardner, B. W. (West Ham, Upton)	Mathers, George	Sutton, J. E.
George, Major G. Lloyd (Pembroke)	Matters, L. W.	Taylor, R. A. (Lincoln)
George, Megan Lloyd (Anglesea)	Maxton, James	Taylor, W. B. (Norfolk, S. W.)
Gibbins, Joseph	Melville, Sir James	Thomas, Rt. Hon. J. H. (Derby)
Gibson, H. M. (Lancs Mossley)	Messer, Fred	Thorne, W. (West Ham, Plaistow)
Gill, T. H.	Middleton, G.	Thurtle, Ernest
Gillett, George M.	Mills, J. E.	Tinker, John Joseph
Gossling, A. G.	Milner, J.	Tout, W. J.
Gould, F.	Morgan Dr. H. B.	Townend, A. E.
Graham, D. M. (Lanark, Hamilton)	Morley, Ralph	Trevelyan, Rt. Hon. Sir Charles
Graham, Rt. Hon. Wm. (Edin., Cent.)	Morris, Rhys Hopkins	Turner, B.
Gray, Milner	Morrison, Herbert (Hackney, South)	Vaughan, D. J.
Grenfell, D. R. (Glamorgan)	Morrison, Robert C. (Tottenham, N.)	Viant, S. P.
Griffith, F. Kingsley (Middlesbro' W.)	Mort, D. L.	Walker, J.
Griffiths, T. (Monmouth, Pontypool)	Mosley, Lady C. (Stoke-on-Trent)	Wallace, H. W.
Grundy, Thomas W.	Muff, G.	Watkins, F. C.
Hall, F. (York, W. R., Normanton)	Muggeridge, H. T.	Watson, W. M. (Dunfermline)
Hall, G. H. (Merthyr Tydvil)	Murnin, Hugh	Wellock, Wilfred
Hall, Capt. W. P. (Portsmouth, C.)	Noel Baker, P. J.	Welsh, James C. (Coatbridge)
Hamilton, Sir R. (Orkney & Zetland)	Oliver, George Harold (Ilkeston)	West, F. R.
Harbison, T. J.	Oliver, P. M. (Man., Blackley)	Westwood. Joseph
Hardie, George D.	Owen, Major G. (Carnarvon)	Wheatley, Rt. Hon. J.
Hartshorn, Rt. Hon. Vernon	Palin, John Henry	White, H. G.
Hastings, Dr. Somerville	Paling, Wilfrid	Whiteley, Wilfrid (Blrm., Ladywood)
Haycock, A. W.	Palmer, E. T.	Whiteley, William (Blaydon)
Hayday, Arthur	Parkinson, John Allen (Wigan)	Williams, David (Swansea East)
Hayes, John Henry	Picton-Turbervill, Edith	Williams, Dr. J. H. (Llanelly)
Henderson, Right Hon. A. (Burnley)	Pole, Major D. G.	Williams, T. (York, Don Valley)
Henderson, Arthur, junr. (Cardiff, S.)	Potts, John S.	Wilson, C. H. (Shefield, Attercliffe)
Henderson, Thomas (Glasgow)	Price, M. P.	Wilson, J. (Oldham)
Henderson, W. W. (Middx., Enfield)	Pybus, Percy John	Wilson, R. J. (Jarrow)
Herriotts, J.	Quibell, D. J. K.	Winterton, G. E,(Leicester, Loughb'gh)
Hirst, G. H. (York W. R. Wentworth)	Ramsay, T. B. Wilson	Wood, Major McKenzie (Banff)
Holline, A.	Richards, R.	Wright, W. (Rutherglen)
Hopkin, Daniel	Richardson, R. (Houghton-le-Spring)	Young, R. S. (Islington, North)
Hudson, James H. (Huddersfield)	Riley, Ben (Dewsbury)
Hunter, Dr. Joseph	Ritson, J.	TELLERS FOR THE AYES.—
Isaacs, George	Roberts, Rt. Hon. F. O.(W. Bromwich)	Miss Wilkinson and Mr. Horrabin.
NOES.
Acland-Troyte, Lieut.-Colonel	Aske, Sir Robert	Balniel, Lord
Albery, Irving James	Atholl, Duchess of	Beaumont, M. W.
Alexander, Sir Wm. (Glasgow, Cent'l)	Atkinson, C.	Bellairs, Commander Carlyon
Allen, Sir J. Sandeman (Liverp'l., W.)	Balfour, George (Hampstead)	Berry, Sir George
Amery, Rt. Hon. Leopold C. M. S.	Balfour, Captain H. H. (I. of Thanet)	Bevan, S. J. (Holborn)

Birchall, Major Sir John Dearman	Glyn, Major R. G. C.	Oman, Sir Charles William C.
Bourne, Captain Robert Croft	Gower, Sir Robert	O'Neill, Sir H.
Bowater, Col. Sir T. Vansittart	Grattan-Doyle, Sir N.	Penny, Sir George
Bowyer, Captain Sir George E. W.	Grenfell, Edward C. (City of London)	Percy, Lord Eustace (Hastings)
Bracken, B.	Gretton, Colonel Rt. Hon. John	Peto, Sir Basil E. (Devon, Barnstaple)
Briscoe, Richard George	Gulnness, Rt. Hon. Walter E.	Pownall, Sir Assheton
Brown, Col. D. C. (N'th'l'd., Hexham)	Gunston, Captain D. W.	Ramsbotham, H.
Bullock, Captain Malcolm	Hacking, Rt. Hon. Douglas H.	Rawson, Sir Cooper
Burton, Colonel H. W.	Hanbury, C.	Reynolds, Col. Sir James
Butler, R. A.	Hannon, Patrick Joseph Henry	Roberts, Sir Samuel (Ecclesall)
Cadogan, Major Hon. Edward	Harvey, Major S. E. (Devon, Totnes)	Ross, Major Ronald D.
Carver, Major W. H.	Haslam, Henry C.	Sandeman, Sir N. Stewart
Castle Stewart, Earl of	Heneage, Lieut.-Colonel Arthur P.	Savery, S. S.
Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)	Hennessy, Major Sir G. R. J.	Skelton, A. N.
Cazalet, Captain Victor A.	Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.	Smith, Louis W. (Sheffield, Hallam)
Chadwick, Sir Robert Burton	Howard-Bury, Colonel C. K.	Smith, R. W.(Aberd'n & Kinc'dine, C.)
Chamberlain, Rt. Hn. Sir J. A. (Birm., W.)	Hudson, Capt. A. U. M. (Hackney, N.)	Smith-Carington, Neville W.
Chapman, Sir S.	Hurd, Percy A.	Smithers, Waldron
Churchill, Rt. Hon. Winston Spencer	Iveagh, Countess of	Somerset, Thomas
Colville, Major D. J.	James, Lieut.-Colonel Hon. Cuthbert	Somerville, A. A. (Windsor)
Crichton, Stuart, Lord C.	Jones, Sir G. W. H. (Stoke New'gton)	Steel-Maitland, Rt. Hon. Sir Arthur
Croft, Brigadier-General Sir H.	Kedward, R. M. (Kent, Ashford)	Stewart, W. J. (Belfast, South)
Crookshank, Cpt. H. (Lindsey, Gainsbro)	Kindersley, Major G. M.	Thomson, Sir F.
Croom-Johnson, R. P.	Knox, Sir Alfred	Tinne, J. A.
Culverwell, C. T. (Bristol, West)	Lamb, Sir J. Q.	Titchfield, Major the Marquess of
Cunliffe-Lister, Rt. Hon. Sir Philip	Law, Sir Alfred (Derby, High Peak)	Train, J.
Dalkeith, Earl of	Leighton, Major B. E. P.	Tryon, Rt. Hon. George Clement
Dairymple-White, Lt.-Col. Sir Godfrey	Llewellin, Major J. J.	Wallace, Capt. D. E. (Hornsey)
Davidson, Rt. Hon. J. (Hertford)	Lymington, Viscount	Ward, Lieut.-Col. Sir A. Lambert
Davies, Dr. Vernon	Macquisten, F. A.	Warrender, Sir Victor
Davies, Maj. Geo. F.(Somerset, Yeovil)	MacRobert, Rt. Hon. Alexander M.	Waterhouse, Captain Charles
Davison, Sir W. H. (Kensington, S.)	Makins, Brigadier-General E.	Wells, Sydney R.
Dawson, Sir Philip	Margesson, Captain H. D.	Williams, Charles (Devon, Torquay)
Duckworth, G. A. V.	Mason, Colonel Glyn K.	Wilson, G. H. A. (Cambridge U.)
Dugdale, Capt. T. L.	Merriman, Sir F. Boyd	Windsor-Clive, Lieut.-Colonel George
Eden, Captain Anthony	Mitchell, Sir W. Lane (Streatham)	Winterton, Rt. Hon. Earl
England, Colonel A.	Mond, Hon. Henry	Womersley, W. J.
Everard, W. Lindsay	Monsell, Eyres, Com. Rt. Hon. Sir B.	Young, Rt. Hon. Sir Hilton
Falle, Sir Bertram G.	Moore, Sir Newton J. (Richmond)
Ferguson, Sir John	Morris-Jones, Dr. J. H. (Denbigh)	TELLERS FOR THE NOES.—
Fielden, E. B.	Muirhead, A. J.	Mr. W. E. D. Allen and Captain
Forestier-Walker, Sir L.	Newton, Sir D. G. C. (Cambridge)	Sir William Brass.
Gilmour, Lt.-Col. Rt. Hon. Sir John	Nield, Rt. Hon. Sir Herbert

Bill read a Second time, and committed.

Resolved, That, in view of the grave state of unemployment in this country, particularly in the heavy industries, and the imperative need for new markets for British goods, this House is of the opinion that the Government should energetically explore every avenue which will lead to increased trade with the Russian Soviet Republic, and that, in order to put this trade on a stable basis, a commercial agreement should be arranged between the two countries at an early date.