HC Deb 05 May 1930 vol 238 cc690-724

Order for Second Reading read.

Mr. GILLETT (Secretary, Overseas Trade Department)

I beg to move, "That the Bill be now read a Second time."

I think it will best suit the convenience of the House if I confine myself now to moving the Second Reading. I gave a very full explanation of the objects of the Bill when the Financial Resolutions were before the House. If it is desired to put any questions to me, I will answer them, with the consent of the House, towards the end of the discussion.


I cannot very well complain of the hon. Gentleman's attiude. If I did so, I am sure he would recollect that I did practically the same thing, at any rate I made very few observations when I moved the Second Reading of a similar Bill not many years ago. But I would remind him of the promise that he made in the discussion on the Money Resolution to deal with the question of long-term credits. Many Members of his own party demanded an explanation, especially with regard to business with Russia, and I hope he will not forget to give us his views in connection with long-term credits, especially as applying to that country. During the Debate on the Money Resolutions, I made several suggestions, and I hope he will also let me know his views on them. I will repeat one or two of them. In the first place, I asked him whether or not he would have prepared as a separate paper by the Exports Credits Guarantee Department the commercial accounts in the new form in which they are going to be presented. He told us that at present they are published in a Blue Book issued by the Public Accounts Committee, but that is not quite enough. It ought not to be necessary for anyone who is interested in insurance work to have to purchase a large volume containing many other matters in which he is not interested. It would be to the advantage of insurance as a whole, especially this kind of insurance, if these accounts were published separately by the Department. I am sure such a presentation of the accounts would be welcomed by many who propose to take up this work in the near future.

The second suggestion I made was in connection with the extension of the export credit guarantee system to include munitions of war, such as the construction of war vessels in this country for use by other countries. When I made that suggestion the right hon. Member for St. Ives (Mr. Runciman) said it was something akin to a parson praying that there would be no shipwrecks during the coming winter but, if there bad to be shipwrecks, let them be on the British shore. I do not think that is a very bad policy, and I take up that line in regard to the building of war vessels. If we do not construct them, and they are constructed in foreign shipyards, we actually lose. In the present condition of our shipyards, it might not be considered a very large extension to grant facilities to allow the construction of these ships to be helped by granting the facilities which are already granted in other countries. I know the hon. Gentleman will reply that he cannot do it because of the Act of Parliament, but it is possible to amend this Bill so as to enable those credits to be offered. I have been informed that certain vessels of war which used to be constructed here for certain other countries are no longer built here. We used to build ships for Turkey and Greece, and their construction has now gone to Italy, I am told, and that is very largely due to the fact that the Italian Government is giving financial assistance to the various yards. If that is so, it is very much to our disadvantage. If we can give some measure of assistance to enable us to get back the building of those ships, it will be very much to the advantage of our workpeople. I wish to make it perfectly plain that I am not asking the Government to construct these ships unless they would be constructed in any case elsewhere. In other words, the Government must satisfy themselves that these ships would be constructed by British instead of foreign labour. They must, therefore, be able to give a licence for every ship that is to be constructed in the same way that they do at present. I ask that, if they can give that licence, they should also give the credit facilities which I believe are being given in other countries and as the result of which we are losing this trade.

Another suggestion I made was in connection with the maximum credit outstanding at any one moment in connection with Russian business. I believe the Minister would be well advised to have a maximum. I pointed out on the previous occasion that, although Russia has met all her liabilities up to now so far as this scheme is concerned, if and when she failed it would be a huge failure as they were not dealing with individuals in Russia, some of whom might remain solvent, but with the nation as a whole, and thus every debt that was awed us from Russia would go. Therefore, especially in view of the very large volume of trade that is being done at present, it would be very wise to fix the maximum credit outstanding at any one moment.

I also asked the hon. Gentleman one or two questions which he has not answered up to the present. I asked whether there was any private company in this country that was getting nearer to the terms and conditions that are offered by the Export Credit Guarantee Department. There was an indication in the Report of the Committee of Experts that sooner or later this business should be taken out of the Government's hands and be given to private enterprise. When I was at the Department, there was a certain firm that was interested in this business. It is true it was insuring home business as well as export business, but they were prepared to give very great attention to this question of export credits. They were some distance off when I was there, but I should like to know whether they have moved any nearer and whether there is any chance in the near future of their offering the same facilities that are offered now by the Government.

I also asked the hon. Gentleman what was the present loss ratio. By that I mean the ratio that losses by bad debts bear to the premium income. When I was at the Department our losses were about 60 or 65 per cent. of the total premium income. That left about 40 per cent. with which to pay the administrative, expenses of the Department. That, of course, was not sufficient. I should like to know whether there have been any great losses which have put up that percentage. We have a right to know exactly what the financial position is; 40 per cent. of the premium income is not sufficient for administrative expenses, though it is possible that the hon. Gentleman may have been able to cut down those expenses sufficiently to pay his way. I hope he has, but I should like to know what the present loss ratio is.

My final question is this: Is Germany reducing the credit facilities that she has previously offered to Russian business? Some time ago there was a rumour to that effect. If that is so, we ought to know about it. There must be some reason for it. I think the hon. Gentleman might be warned, perhaps, by the attitude that is being taken by a foreign country which is a great deal nearer to Russia than we are, and probably knows more about the present situation. Russia appears to be the spoilt child of the British Government. We grant her facilities which we quite definitely refuse to other countries. Not all those facilities are granted by the hon. Gentleman's Department.. Most of them have been granted by the Foreign Secretary—for example, diplomatic immunity. Does Russia grant us any special terms or conditions in return for the special terms and conditions that we give her? I think the answer must be "No." They expect us to buy from them, but in return they seem to buy as little as possible from us. The latest comparative figures I can find in connection with trade between the United States and Russia and between Great Britain and Russia date back as far as 1927. We then bought from Russia. £21,000,000 worth of goods, and only sold £4,500,000 — balance £16,500,000. That balance, instead of being spent in this country, as one would hope, was practically all spent in the United States. In 1927 the United States bought from Russia only £2,500,000 worth of goods, and yet sold to Russia £13,000,000 worth. Those figures are very unsatisfactory. It appears as though Russia is trying to do as little business as she can and buying as few of our goods as she can. The hon. Gentleman might start with advantage to this country the slogan in Russia, Russia should buy from those who buy from them." I do not propose to offer any opposition to the Second Reading, but I hope the hon. Gentleman will answer the questions I have asked him, and pay some attention to the suggestions I put to him on the Money Resolution.

6.0 p.m.


I think that it may be convenient to hon. Gentlemen opposite if I address the remarks which I have in mind to the House at this juncture, especially as I trespassed at, some length upon the patience of hon. Members on a previous occasion when the Money Resolution in relation to this matter was before the Committee. I am not in any way opposed to the Second Reading of this Bill. I look upon myself as one of the godfathers of the scheme. My right hon. Friend the Member for Chorley (Mr. Hacking) and I have watched at the cradle the growth of the scheme and have helped to bring it up to the point at which it now finds itself. We will, with all the good will in the world, try to help it forward. It must not be assumed that we shall either oppose the Bill—that is certainly not the case—or that we have any wish other than to help forward the policy which is in the mind of the Minister. This scheme performs a function of much greater value than merely providing the credit which is required for the export trade. It settles once and for all the possibility of complaints being made about lack of credit. It is a good thing to have this matter settled because it is as well to know where we are. If complaints are made, grievances must be removed. Complaint was formerly made that the export traders could not get sufficiently long-term credits from the banks to enable them to carry through their business where long-term credit was required. This scheme has knocked that grievance on the head. It has proved that traders can have no such grievance. Those who desired long-term credits could come, and did come, to the Committee and, with the exception of Russia and one or two other countries where it was not thought desirable to give credit, those who required long-term credit, if the proposed business was warrantable, received it. They received credit under the Export Credits Scheme.


Not beyond 12 months.


They obtained it under the Export Credits Scheme, after their applications had been examined by some of the most competent men in the City of London, not acting on behalf of the bankers, but on behalf of the Govern- ment. Speaking for myself and for my right hon. Friend, anxious as we were to make the scheme a success and anxious to get employment for our people, there was no intention to refuse credit under the scheme if it were on warrantable business. If the business was not warrantable it was turned down. Now we see by the amount of business actually done, that out of the £26,000,000 available, there never were outstanding at any time guarantees for more than £5,000,000 or £6,000,000, of the amount authorised. It may be inferred from that that very little business that was warrantable business failed to get the credit required. Therefore, I think the scheme, quite apart from the paramount purpose of giving credit where it was required, has served another and a better purpose. It has shown us—this process of elimination—that we are not losing business in any great degree because long-term credit cannot be obtained.

Mr. WISE rose


Perhaps the hon. Gentleman will allow me to proceed. I have been a long time in this House and I am not lacking, I hope, in courtesy. It is utterly impossible when an hon. Gentleman interrupts, for discussion on a difficult economic point to continue. I, like other speakers, wish to place myself at the service of the House, but if an hon. Member interrupts, he breaks the trend of thought of a speaker, who is, therefore, not able to do justice either to himself or to the House. I ask the hon. Member not to press me to give way. I shall be pleased to give way at the end of my observations, and if I have an opportunity of answering questions, I shall be glad to do so. In the meantime, I must ask the hon. Member not to interrupt me.

I want to know, as did my right hon. Friend the Member for Chorley, how the scheme is going to be operated? I am not going to indulge in any polemics about Russia, but the fact remains that half the amount of the risk outstanding—but in order to put myself strictly in order I will say only one-third, is used by His Majesty's Government to guarantee the credit of the Soviet Trade Delegation. In other words the scheme is a method to help His Majesty's Government to guarantee the credit of the Soviet Government. I would like to know to what extent the Government are going to take the risk of guaranteeing Russian credit? Supposing this was not the British Government but an insurance company. That company would not allow 50 per cent. of its eggs to go into one basket. No insurance company would let half of its risks lie with one insurer. Take such a place as the Wood Street area where there is supposed to be a greater risk of fire than in any other part of London. The greatest of British insurance companies, although that area is occupied by firms with warehouses containing volumes of goods owned by some of the greatest and most honourable firms in England, do not care to take much risk in that one district. Here you have, to use the simile, a very inflammable area called Russia where at any time the Marxian theory may bring down the whole financial structure of Russia to ruin through economic exhaustion. Therefore I do not think that it is wise for us to countenance the present large ratio the risks being left in Russia.

In a recent discussion we had in this House on the Cardiff Bill, it was said that the Treasury would lay down the proviso that if they were to have a municipal bank in Cardiff, not more than 50 per cent. might be left in the hands of the Cardiff Corporation for the local purposes of the corporation, but that 50 per cent. must be taken out of the local basket and put in Government Trustee stocks and only 25 per cent. used for local housing. Here you have a British corporation which is second to none in regard to its honour and solvency and yet it is thought in this House that it is not desirable to allow more than 50 per cent. of the deposits in its municipal bank to be left for local use. That fact reaffirms my contention that the Department of Overseas Trade should reconsider the question whether it is wise—and we do not think that it is wise—that the large present ratio of the amount of total outstanding risk should be in Russia or even in any other one country.

I will go further and say, that a map of the world ought to be plotted out so that each area could be examined in order to see what has been the loss experienced in various areas over a period of four years. I devoted part of three recent years to the work of the scheme when I had the privilege of being the secretary of the Department of Overseas Trade. I was also some years earlier on the Advisory Committee and I know the work well. I am also a member of the Public Accounts Committee and thus am in a position to view the whole scheme from the side of its losses. I speak now as a member of the Public Accounts Committee. We have just been through the trading accounts and balance sheets of this scheme, number 51, page 92, and the Civil Appropriation Accounts number 40, page 249. We do not know sufficiently—we do not want to know about the people or the firms with whom we lose money—about the districts and the countries where the money is lost. If this plotting out of areas were done, the position as far as losses are concerned, could be examined by Parliament much more minutely than we can examine the accounts as they are now put before us. I will take one country. We do not know, but we believe that a great amount of money has been lost in Rumania.. If money has been lost by us in Rumania, the Department of Overseas Trade should examine the position to find out whether it has paid us in the long run, not only the Department of Overseas Trade, but our merchants and manufacturers, to do business with Rumania and whether it is now worth doing at all on credit.

When you look over the period of the last so years and now see our investments abroad of £4,000,000,000 and think what our overseas trade balances have been on the credit side during those 60 years, you want to know what has become of all money left abroad that went out as exports in view of the fact that we are left with such a small amount as £4,000,000,000 as overseas investments. I think that we have lost a great deal of value in exports. What we thought was trade was never paid for and thus goods sold on credit have gone really in the form of gifts. I think that some of our export credit trade which has been done recently, and particularly in relation to Rumania, has been a loss to us. It would have been better to have said to Rumania, "Very well, we cannot let you have goods on credit. Take your credit business to other countries and God bless you! we would rather cry over our goods here than cry after them in your territory and not get paid for them." That is why I say that the world should be mapped out and the risks in each area examined to see whether it pays us to do credit business in those areas.

I should like to know whether it has paid us to do credit business in Brazil. I know that private people during the last year or so have been losing considerable sums of money in Brazil through bad debts. It is necessary for us to know whether the Department of Overseas Trade has lost more than a reasonable amount under its export credit facilities in relation to Brazil. And so with Mexico. I put a question on this subject to the Foreign Secretary to-day. It is my firm opinion that Great Britain has lost in Mexico a sum not far short of £150,000,000 sterling represented by exported goods. I say that the Department of Overseas Trade through this scheme can perform a very valuable function in indicating to every export trader whether it is worth while or not to give credit to certain countries. If the Minister says, "Oh, I cannot disclose these things; I must not disclose these things; it is against public policy to say that we have lost money," then I would remind him of the recommendation of Sir Otto Niemeyer's Committee that we should have a much more elaborate set of accounts. In our Civil Appropriation Accounts which came before the Public Accounts Committee—page 250—under the advances scheme, you see a loss of £1,759,000. The sum written off was £1,029,000. In future we want to know where it was lost, and not the name of the firm. We shall want to know which the countries are. Take the first Guarantee Scheme. The amount written off is £53,000, and the amount outstanding £158,000. Where is the money outstanding? Let us know where we are. It says in a footnote: (a) Further losses will result as outstanding operations are completed. We must in future examine more closely where our money is lost, and find out the districts on the map where losses take place so that we may keep out of those districts. This should be done not only for the benefit of the Department of Overseas Trade, but for the use of the general body of the trading population.

I remember well—the present Minister was on the Committee with me at the time and I was not then the Minister—that we examined a proposal that was made to us relating to a large order for English steel for bridges or railway material in some country in South America; it represented a large sum of money. We came to the conclusion that we would grant the credit facilities for the required length of time, and when the representative of the firm came to interview us we said: "Yes, go and get the order and you shall have the facilities that you require." I think the order would have run into something like £1,000,000. The firm could produce the goods and they had obtained the credit available for the length of time they required. But they failed to get the order. Again and again the Department of Overseas Trade tells the House, through the Minister, that so many millions of credits are running, and that we have committed ourselves to grant facilities for so many millions more. Yet much of the latter is never taken up. Why are the granted credits not taken up? That is a point at which the Department could be very helpful and could assist in finding out why we are not getting the orders for goods for which facilities can be granted, It will be found that price not credit is the reason.

To-day, I put a question to the hon. Member about an Indian order for 132 boilers and 66 cylinders; the goods were asked for by the Indian Stores Department. We lost the export order because we quoted 20 per cent. too high. We could supply the goods. There was no question of currency and there was no difficulty about shortage of credit, yet we lost the order. When an order of that kind has been lost, although all credit facilities could have been granted—in this case I do not think it came under the Department of Overseas Trade scheme, but in similar cases where orders are sought for and where prices are put in by British firms and credit arranged under the scheme of the Department of Overseas Trade and we lose the order, then the Department ought to make inquiries to find out the reason why we lost the order. Was it due to foreign tariffs, was it a case of wrong patterns, was it faulty salesmanship, or was it a question of price? If we can find the cause, then we can proceed to eliminate as far as possible the cause of our losing the export order. When I spoke on this subject in a previous Debate I said that the one great cause of our losing export business was that our goods were too dear. The hon. Member for Dartford (Mr. Mills) at once said: "You want to reduce wages." It makes it difficult if one has to debate in face of accusations of that kind. In a case like the one which I have just quoted, we do not fix the wages; the wages are fixed by the foreign buyer. He says, "What is the price of your locomotives"? We quote a price. He says, "I shall only give one-half, or as may be, 20 per cent. less than that price." We say, "We cannot sell the locomotives at that price; our men could not live at that price." The foreign buyer says, "I do not care twopence or less than twopence whether your men can live or not. That is my price. Take it or leave it. If you leave it, I will take my money elsewhere and your men can go on the dole." And he buys elsewhere 20 per cent. cheaper. Therefore, in these cases we do not fix the wages but the wages are fixed by the foreign buyer.

We have to see whether in all cases it is the fact, that we are losing export orders because the cost of production is too high, and we have to see why the cost of production is too high. There is 20 per cent. more export trade being done to-day in the world than ever before. Before the War we got 14 per cent. of that trade, and to-day we are getting per cent. Take the case which is now agitating our minds a great deal, the woollen textile trade. The world consumes more woollen textiles than ever before. The price for the raw material is a world price. Whether the raw material is required for the woollen trade in this country, or in Czechoslovakia, or elsewhere, the price is the same, but the wages in Poland, in France, Germany and Czechoslovakia are from 50 to 65 per cent. less than the wages here. I do not believe that if some of our mills were run rent free that we should be able to get some of the export orders. I am certain that in regard to some of our cotton mills if no charge was made for interest on capital, they would not get the export orders. The fact remains that we do not get the export orders and our men are out of employment. What is the reason? Is it lack of credit facilities? This is a Bill for giving export credits and for putting men into work. Therefore let us clear up for the benefit of the Lord Privy Seal, to whom we wish well, for he is trying to get work for us, all matters which are hindering our export trade. Let him know the reason why our export trade is bad. Let him know why, when one-third of our population depend upon the export trade, so large a proportion are out of work. Let him know that it is the cost of production that is losing export orders, not lack of credit facilities, and let us find out why the cost of production is snaking the price of our goods too high. He will find that, notwithstanding everything that he may do, notwithstanding our export credits schemes and the long-term credits that we are giving, we are not getting the orders. The reason why we are not getting the orders is not because we have not the money or means to provide the credits, and it is not a question of rationalisation, but simply that our goods are too dear. We must find a solution for that problem of price. In past years I had to earn my living in selling goods produced by my firm, and I know something about the difficulties of selling in foreign markets, and how easy is the making of bad debts. There are very few customers with whom it is worth while doing business if they want more than 12 months' credit. If a customer cannot meet 90 days' bills, he is not very strong in the back and able to stand shock if disaster should come to him.

We old-fashioned, solid business men connected with the great provincial firms were in the old days, and are still, the backbone of the trading class in this country. We knew nothing about stocks and shares. We often spent 24 hours a day for seven days in the week thinking over our business problems and solving them. [HON. MEMBERS: "Twenty-four hours!"] Yes, often 24 hours a day. I have been awake many a night thinking over what I was to do next day for my firm. We as employers in great firms did not work eight hours a day; we had our hearts in our work and in the problems before us, and we were willing to work long hours. We lived lives very much like the lives of our foremen.

We do not like to do business with people or with nations who want over 12 months' credit. They are living upon overdrafts. It is not genuine industrial business, it is finance. You are being asked to put capital into your customers' business. When people say: "You can- not get business, because you will have to give over 12 months' credit, and you do not like to give over 12 months' credit." I say that when you have to sell goods to people who want over 12 months' credit it is better to look round the world and see where you can deal with people who want 90 days or 120 days' credit. You will find in the long run that you will make fewer bad debts and do better in the end by doing business on sounder lines with shorter credit than if you give long credit to people who are not strong enough in the back to carry on business unless you provide their capitalisation. A big capital loss by bad debts soon swamps many years' profits. I am heart and soul in the scheme of export credits and I wish it every success. If I can do anything by my vote, my work or my advice to make the scheme more satisfactory and more successful, I shall be very glad to do it.


When we were discussing the Financial Resolution a short time ago, I think it was stated by the Minister that it was the intention on the Second Reading of the Bill to make a statement on the policy of the Government in relation to the problem of long-term credits so far as it affected our export industry. It would have been of advantage to the House if we could have had that statement from the Minister at an early stage of the Debate. We should then have been able to judge as to whether or not we could see our way clear to give whole-hearted support to the Bill. I should like to deal with a matter which has been referred to by the hon. Member for Farnham (Mr. Samuel) and other hon. Members with respect to the Board of Trade figures of imports and exports between this country and Russia which show, apparently, a very heavy trade balance in favour of Russia. It is, therefore, said that there is no need for long-term credits to Russia, and that Russia can buy with the proceeds of her imports into this country a very much larger amount of British goods and manufactures than she does at the present time. We on this side of the House would be glad to give unqualified support to the Government in anything that they can do to make a special agreement with Russia to ensure that a larger proportion of credits raised by her imports into this country are spent in the purpose of British goods. If it is possible for a special trade agreement to be arrived at on that basis, we shall expect our friends to support the Government in that action.

I want to draw the attention of the House to the real facts in relation to the trade balance of Anglo-Russian relations. Following the signing of the trade agreement in 1921 and down to the end of 1928, according to the Board of Trade returns, Russia imported into Great Britain goods to the value of £131,000,000, while the exports, including re-exports, that is, Russian purchases in Great Britain, were recorded in the Board of Trade returns as amounting to £73,000,000, leaving an apparent balance in favour of Russia of £58,000,000, but the Board of Trade returns do not disclose the whole story so far as it affects the economic relationships between the two countries. Imports are calculated on the basis of declared values at British ports of discharge, while exports and re-exports are calculated on the basis of declared values at British ports of loading. This £131,000,000, representing the value of Russian imports into Britain, was therefore the value at the British port of discharge, but apart from the Board of Trade returns certain charges have to be met out of the values raised by those imports. For instance, in order to conduct business, a number of Russian trading organisations had to be set up in Great Britain, and to maintain those organisations rent, rates and salaries had to be paid and equipment had to be provided. During the eight years under discussion, payments under those heads absorbed £7,000,000. In addition, Russia during that period paid for banking credits in the form of interest and so on £2,750,000. For the insurance of cargoes, many of which were carried in British ships, she paid in London something like £1,000,000. Then there were payments for freight, loading, unloading, storing, packing and sorting. All this has to be deducted from the value of the imports in order to get at the amount which is available for the purchase of British goods. These charges amount to a further £10,500,000.


From where do these figures come?


They are calculated on the Board of Trade returns.


Were these sums paid to us?


They were paid to those British people who are engaged in the services of shipping, of insurance and so on, and as salaries and wages, and in the other ways I have indicated. They have to come out of the amount raised by the import of goods from Russia into Britain. I purposely refrained from interrupting the hon. Gentleman when he was trying to develop what he regarded as an intricate economic argument, and I hope that he will permit me to develop my argument, in order that the facts, as we see them, may be fully before the House. Russia, like other countries, has had to purchase from time to time gold and silver and other precious metals, which has absorbed during the period of which I am speaking another £10,500,000, so that by these items we are able to account for £32,000,000 out of the §58,000,000 excess. The hon. Gentleman, with his great experience of international trade, knows that London is the international centre where purchases are made, not only of goods produced in Britain, but of goods produced in our Dominions and in foreign countries. If that business is financed in London, there are items such as brokerage, insurance, freights—all of which must be included in estimating the advantages to Britain of trade between Russia and this country. If Russia buys raw cotton from Egypt or tea from India on the London market, that is giving to India, or to Egypt, purchasing power with which they in turn can buy British goods. From the point of view of the people employed in a factory in Lincoln or elsewhere in this country, if Russia buys tea from the East Indies, that creates purchasing power in the East Indies for the purchase of machinery from the factories here. Thus, that trade, instead of being a disadvantage as hon. Members opposite would seek to make out, is an exceedingly good thing for the people of this country. Those facts must be well understood on the other side of the House, and I am surprised that hon. Members opposite should find it convenient to overlook them when discussing this question.

I wish to put a number of questions to the Minister. First, I ask him to say clearly and definitely, and without any equivocation, whether or not it is the intention of the Government, if this Measure reaches the Statute Book, to allow the maximum use of the credit terms which it provides. In other words, are the heavy engineering industries to be allowed to place before this advisory committee applications for credits relating to the sale of constructional engineering goods for periods of two, three, or four years, or whatever may be convenient and usual in the case of the particular classes of goods concerned? Are they to be allowed to put these proposals forward with any chance of acceptance? Is it the intention of the Government to use the machinery of this Measure to meet the problem? If it is not their intention to use it in that way, I suggest that the best thing for a Labour Government And a Labour party would be to drop this Bill. It has already been stated in the Report of the Niemeyer Committee that the very people who are to be responsible for considering applications for credit guarantees under this Bill are themselves definitely of the opinion that the use of State credit for this purpose is not justified as a permanent feature of our credit system. On page 9 of the Report the opinion is definitely expressed that the permanent use of State credit is not desirable, and the Committee further express the opinion that the scheme should remain one of relatively short credits. They go on to point out that the major portion of the business was limited to short-term credits extending to about six months, and quite definitely we have had from the Front Opposition Bench approval of this Bill, because the scheme is ultimately going to be handed over to private enterprise when the proposition has been made a paying one.

The fact has already been pointed out from the benches opposite that in the first scheme of this kind, out of guarantees amounting to £1,750,000, the State were landed with a, liability of over £1,100,000 in the form of bad debts. That was not the scheme of a Labour Administration. That was in the days of the Coalition of glorious memory. There we had British capitalists unloading on to the British taxpayer risks which they would not have taken themselves, and the major portion of the transactions which took place resulted finally in the taxpayer having to back the Bill. I know that that remark relates to a previous scheme and would not be applicable as a criticism of the present arrangement, but I respectfully point out that here is a Department which two or three years ago was threatened with extinction and which now accounts for just over £500,000 in our Estimates; its total turnover represents less than £6,000,000 worth out of a total export trade of £725,000,000, and we have to face the fact that hon. Members opposite are willing that this experiment should continue for another five years, because it is possible that losses will be incurred, while the people who are sitting on the advisory committee and those who are to constitute the new executive committee have quite definitely expressed themselves in favour of so restricting the work of this committee to short-term credit operations that it will be absolutely impossible for the Department to secure sufficient premium income to cover administrative expenses.

In my opinion, the intention of Parliament when it passed the Overseas Trade Acts was to use the credit power of the State to promote employment in this country and, through the use of our State credit, to bring work into the factories of Britain which otherwise would not be likely to come there. The only possible justification for this Measure at all is that it puts unemployed men into work. If hon. Members who have blessed this Bill, and if those who are going to be responsible for its administration, are absolutely determined to prevent this machinery being used for long-term credit purposes the whole thing is useless. It is simply a subsidy—in many cases to bolster up inefficiency—and the Government might as well drop the Bill. We have seen in the D'Abernon Report a statement of some of the causes of our difficulties in relation to the sale of our goods abroad. These difficulties do not arise out of anything for which the workers can be held responsible. They are difficulties for which the captions of industry and the salesmanship of our industrial organisation are responsible; and we cannot hope by methods of this kind, by tinkering about with £4,000,000 or £5,000,000 worth out of £720,000,000 worth of export trade, to deal with those difficulties. Looking around the world to-day, we realise that the hope which we held of recovering our position when the purchasing power of our formal customers had been restored, was never justified. World trade has increased something like 20 per cent. above its pre-War volume. Great Britain is still suffering from prolonged depression and the problem in our great export industries is the problem of being able to sell their goods abroad at prices which the foreign purchaser is willing to pay.

If we can accelerate the sale of engineering products abroad we can make an immediate and considerable contribution to the solution of our unemployment problem. Taking a comparison in volume, our engineering industries in 1929 exported 3,000 tons of machinery less than they did in 1928 and the export of engineering products was 126,000 tons less than in 1913. Depression in certain branches of this industry is chronic and I want to know whether the Government intend to use this Bill, or whether they have any other proposals to put before the House, for the purpose of meeting the difficulty which, in spite of the experience of the right hon. Gentleman opposite and the views which he has expressed, I know to exist to-day. Those who have intimate knowledge and long business experience recognise the existence of that difficulty.

One of the great reasons we cannot sell the products of our heavy industries abroad is that we cannot offer sufficiently long credits to the Russian market, which, in view of the difficulties that exist in our Dominions and in other markets, at the moment represents the most hopeful market for these products; and one of the great reasons we have been left behind by our competitors and Germany and America have been building up their imports into Russia is that they have been able to offer better credit facilities than we have. The reason for that is that our banks have not been willing to give the same accommodation to firms engaging in Anglo-Russian trade that they have been willing to give in the case of trade with some countries and individuals where they were running far more risk than they would be in dealing with organisations whose payment is virtually guaranteed by the Russian Government.

We are to have under this Bill an Advisory Committee of 15 members, and I want to know whether it is the intention of the Government to revise the constitution of this Committee. I believe that either 12 or 13 of its members are connected with banking and financial interests and the interests of the iron and steel trade from the employers' point of view. The intention of Parliament was that this machinery should be used to promote employment, and if the Advisory Committee are refusing to allow perfectly sound business, which would provide work in British factories, if the length of credit exceeds 12 months, and if they are to continue to refuse these applications, it is time the Government dropped this Bill and let the Export Credits Department be closed up. Therefore, I ask the Minister whether it is the intention of the Government to place on that Advisory Committee some other representatives than those of banking interests, who will be able to look at it from the point of view of the original intentions of Parliament, in order that those intentions may be carried out.


I am, at any rate, in agreement with the hon. Member for Lincoln (Mr. R. A. Taylor) in this, that I think it is very unfortunate that the Minister should have introduced this very important Measure without any explanation whatever, in view of the many questions which have been addressed to him recently at Question Time, and in view of the definite reference to this matter in the recently concluded trade agreement with Russia. It is practically admitted that one of the main reasons for extending the scope of this Overseas Trade Measure is to enable further credits to be given to Russia, and a great many of us wonder what is the need of special Government assistance being given to Russia for the purchase of goods in this country, when she has a very large trade balance standing to her credit which is available for the purchase of goods here, if she is willing to use it. I understand there is at present a trade balance in favour of Russia in this country of about £36,000,000. The hon. Member for Lincoln gave us a very elaborate statement which would go to show that there is only £26,000,000, and in making that calculation, he took into account the fact that Russia had to make allowances for the purchase of gold, and insurances, and other matters.


I was referring, not to the present balance, but to the experience over the years 1921 to 1928. The reason I did not deal with the existing situation was that I had not the figures, but the same principles would apply.


In any event, over that period of years Russia had a balance of about £26,000,000. She commenced with £58,000,000, and she had the various items to which the hon. Member referred, amounting to £32,000,000, which would give her still a trade balance of £26,000,000. Why is it necessary, from her point of view, for us to give these further credits, and how shall we be better off? We have repeatedly asked whether the present Government adhere to the principle of the previous Government that no further loans will be granted to Russia until she has made arrangements for the payment of the debts which are due to this country. Many of us find great difficulty in understanding what is the difference between a loan and a guaranteed credit. To me, it seems to be a distinction without a difference.

In the last, few weeks we have had the new trading agreement with Russia, and in the Protocol attached to that agreement there are very definite provisions with regard to credit. This Protocol has not been inserted for nothing. It is signed by the Foreign Secretary and by Mr. Sokolnikoff, and we certainly expected that the Secretary to the Overseas Trade Department would have dealt specially with the Protocol in asking for a further extension of this Measure. Let me remind the. House of the wording of the Protocol: In concluding the present Agreement the Contracting Parties are animated by the intention to eliminate from their economic relations all forms of discrimination.… In accordance with the above principle, trade between the United Kingdom and the Union of Soviet Socialist Republics shall be eligible for consideration on the same basis as trade between the United Kingdom and other foreign countries in connexion with any legislative or administrative measures which are or may be taken by His Majesty's Government in the United Kingdom for the granting of credits to facilitate such trade. What is the precise meaning of that, and what difference is it intended to make in the practice which has obtained hitherto? We understand that the practice of the Ministry during recent years has been that not more than 12 months' credit should be given to Russia. Under this Protocol is it intended to make a longer credit than 12 months? It is a very im- portant matter, upon which we should be informed before passing the Second Reading of this Bill. We have had America referred to, and in some statistics published the other day the imports from Russia to America were shown to be only £2,000,000, but the exports from America to Russia were about £22,000,000. America has no trade agreement of any kind with Russia, and there is no export credits scheme. If America can do this large and increasing business with Russia without either a trade agreement or an export credits scheme, we want some further explanation from the Minister as to why the extension of this scheme is needed, at any rate so far as Russian credits are concerned.


We have heard from the hon. Member for Lincoln (Mr. R. A. Taylor) a very interesting statement as to what I should call short long-term credits to supply the needs of the Russian Market, and he pressed the Government to give a credit scheme for that purpose. I was very much interested in what the hon. Member for Farnham (Mr. A. M. Samuel) said about the original conception of the scheme. I wanted to ask him, as he developed his argument, what he meant by long-term credits, but as he proceeded I saw that he meant certainly not what is meant on this side or, I think, generally in financial circles. I think he based a little too much of general principles on his own particular experience in a trade in which no doubt 90 days is a perfectly convenient and usual form of credit. There is a phrase, which I think he will recognise, that "there is nothing like leather," but if you suppose that the experience of the leather trade must be applied to the whole range of trade, you are likely to get into a mess.

What may be suitable for leather or shoes is clearly unsuitable, and has always been regarded as unsuitable, for agricultural machinery, shall we say, in which in nearly every country in the world the International Harvester Company was selling on a basis of credit of two harvests, or a, year and a half or two years, before the War, and in which since the War they have re-created their trade. Obviously that is inapplicable in the case of heavier machinery, engineering appliances, constructional plant, and so on, and I think the failure of the Export Credits Scheme to realise the purposes for which traders and working people wanted it, that it would really help the export trade, is largely due to the fact that the hon. Member for Farnham, who played so large a, part in framing the scheme, could look at nothing except through spectacles made of leather, and they rather obscured his sight.

7.0 p.m.

The manufacturers generally are finding—and this applies not merely to Russia, but to South America and to trade with various countries in the East—a real difficulty in financing orders which require from two to five years' credit. These are not long-term credits in any general sense, and they are not short-term credits; they are intermediate. Before the War it was not very difficult, because manufacturers generally were able to meet the situation from their own resources, but in this country at this moment, in the great engineering trades, in the steel trade, and in many big manufacturing trades the manufacturers simply have not the capital resources to carry that length of credit. The London market, the London financial machinery, is not really equipped for dealing with the problem. For real investment the issue houses can meet the situation. For short term credits the joint stock banks are admirably equipped. For short trading credits, three months, 90 days or six months, the sort that the hon. Gentleman on the Front Bench opposite had in mind, there is a very admirable machinery in the City of London in the accepting houses. But there is no existing machinery which is capable easily of assisting the manufacturer in dealing with the export trade that requires from one year to three or four years' credit. So far as our main commercial rivals are concerned, that machinery exists. In Germany the relation between the banks and the industry is so intimate that, partly through special trading concerns which the banks set up, the manufacturers can get the finance for that purpose. In America a great bank like the National City Bank has working side by side with it the National City Company, which provides manufacturers with the finance for one, two or three years necessary for that sort of purpose.

But the whole position of the London money market has been that banking and manufacturing must be kept distinct and apart, and consequently for these new manufacturing trading problems, which the manufacturer is now unable to cope with, the City at this moment is unable to provide him with adequate assistance. The result of that is that British traders and manufacturers in the engineering trade and similar trades are losing business in various quarters of the world. In the present state of our export trade it is a very serious problem to which the attention of the Government ought to be directed. Under the powers taken under this Act, and properly used in a broadminded way but not with microscopic examination lest a few pounds might be lost here and there in bad debts, to which the hon. Member opposite attaches so much importance, the needs of British trade can be assisted.

Anyone who examines the figures of our export trade knows that now is not the time to try to build up our trade on 100 per cent. security. Now is the time for the export trade to begin to show a greater enterprise in making up the ground that has been lost. We have been carrying on for the last 10 years under the assumption that the world trade is at our feet and that we can do what we like about it. The hon. Member opposite constantly reiterated that we should examine this point, so that we should not lose anything. That is the way to lose everything; that is the shortest and simplest way to bring our export trade into an even worse position than it is in at the present moment. I hope, therefore, that the Minister in the administration of this Act will really use it, as it can be used, as a very effective instrument to help British manufacturers in a position in which they need help and in which no other help can be provided. It cannot be obtained easily or conveniently from financial organisations or from the banks at this moment.

I hope also that he will take a broader view of the whole problem of our export trade and its development. I wish he would give some attention to the manner in which Mr. Hoover developed the functions of a precisely similar department in the few years that he was Secretary of Commerce in the United States. He did not spend his time in discovering reasons why he should not do this or that; he visualised the task of his de partment as effectively to take the lead in developing the trade of America all over the world. As everyone knows, American export trade has increased in the last few years, while our trade has been stagnant or has diminished by leaps and bounds. I am not pessimistic about the possibilities of British trade, provided we are prepared to take a broad and comprehensive view of the problem, and provided we are prepared to take the view that it is worth while to lose a few pence or a few pounds or even a few thousands of pounds here and there in developing a trade that will bring us hundreds of thousands of pounds, perhaps millions, later on.

British export trade was built up in a spirit of adventure. Hon. Members opposite would kill it in a spirit that is afraid to take any risks or any responsibility for leadership or anything else. That way lies destruction. I hope that the hon. Member who now presides over the Overseas Trade Department will realise the tremendous opportunity he has, with this financial assistance at his elbow, for setting in motion schemes of reorganisation of the export trade and export traders which shall have regard, not merely to the possibility in five or 10 years' time of the banks or some of the financial houses being able to make a profit out of this class of business when they have been able to accustom themselves to it, if the export trade then exists, but will have regard to the vital importance of using all the resouroes of the State in assisting trade on big and broad lines. He has the powers there, and I hope very much that he will be able to tell the House that he proposes to use them.


The various subjects which have been raised by different speakers are in some cases so large that if I were to attempt to deal with them all, I am afraid it would occupy a very considerable time. I have had a number of definite points put to me, and, in the first place, I had better answer those specific points. The right hon. Gentleman who spoke first from the opposite Bench asked me whether I would be willing to consider that the commercial accounts might be published as a separate Paper and not in the Blue Book as at present. I cannot give him any definite undertaking, but I am quite willing to take up that point with the De partment concerned and ask whether it would be possible, when next the accounts are published, to have separate documents supplied as well as having the accounts published in the Blue Book with other accounts of that description. The next point brings up the question on which hon. Members on the Front Bench seem to argue one way and then, having argued one way, produce another argument. The hon. Member for Farnham (Mr. A. M. Samuel) has been especially distinguished in that way. He expressed his great appreciation of the work of the Advisory Committee. He said that we have the advantages of the services of a number of gentlemen of very great experience in regard to matters of that kind. I entirely agree with him. Having said that, he then asked why it was that we did not let him know a great deal more about the work of the Committee and he said a good deal more which seemed to indicate that, though he had profound confidence in the opinions of those gentlemen, he was not satisfied with the way their recommendations were carried out by the Minister in charge of the Department. As to the point about the maximum for trade with Russia, I might explain that the Committee, when they have before them applications for credits for different countries, are always considering the amount of credit they have granted to those particular countries and the same thing is being done in regard to Russia by the Committee in the ordinary course of their deliberations. I do not think that the hon. Member is suggesting that any different policy should be carried out in connection with Russia to what this very competent Committee, according to the hon. Member, are doing.


This Committee has various functions to carry on and its powers are limited at present by the Department of Overseas Trade and the Government, by Act of Parliament and by regulation. What I am suggesting is that there might be a limit fixed to the amount of money risked in any country, including Russia.


Yes, but that is just the point we are not proposing to do. My hon. Friend complained that we are being guided by the Advisory Committee. Now, when we are guided by the Advisory Committee and say that in the amount of credit to be given to Russia at present we have not seen our way to diverge from the recommendations of that committee, the right hon. Gentleman opposite criticises us because virtually we are leaving the matter to that committee. It is a very unfortunate position for the Secretary of the Overseas Trade Department who, so to speak, falls between two stools. He is blamed by those opposite because he does not follow the recommendations of the Committee, by those behind him because he does. Now on the point as to private companies. There is a fundamental difference between the work of our department and any private company now in existence. Under this system, as I informed the Committee when the Financial Resolution was under discussion, the method of granting the credit is virtually to ensure a certain percentage of a bill and, when that bill is dishonoured, a few days after that event has taken place we pay up the definite amount we have guaranteed. No private concern is doing business on those lines. I do not think the hon. Gentleman wants me to detain the House by a full description of the methods of private concerns. That is a most important principle which will be clearly understood by any business man in this House. You know that a few days after the bill has been dishonoured that particular percentage of the money will be given to you by the department.

The next question I was asked was in regard to German credits. I believe the information the right hon. Gentleman has given the House, so far as I can gather, is correct and that the German credit scheme was terminated a short time ago. I ought to say that my information is not absolutely definite, and I should not wish the statement to be taken as literally correct. That is my information.


Is that as far as Russia is concerned, or generally?


I understand that the scheme terminated was the one applying to Russia. Then the next question the right hon. Gentleman asked me was as to the loss ratio. As I stated, we have only published one definite set of accounts on a commercial basis, and that is for a period of about, 21 months. Those are the only figures we have had. The figure is 63.4. I explained in ray speech last time why the following year's accounts had not yet been published, and therefore we have no other figures beyond that one. The next question was the one about war materials and whether these credits should be used for the purpose of helping the building of battleships. As the right hon. Gentleman stated, we cannot do so without an Act of Parliament, and we have no intention of asking the House to give us the powers. I suggest to the right hon. Gentleman that even though we had these powers they would be of little use in regard to the case he has mentioned. It was obviously long-term credit almost amounting to a bounty that, was received and decided the destination of the order. The other point he has asked me to deal with was long-term credits. This is the point on which I wanted to say a word or two. Broadly speaking, I agree with what my hon. Friend the Member for East Leicester (Mr. Wise) stated in regard to the need for long-term credits in connection with our export trade. He referred to the facilities given by the German banks, which are different from those provided by our banking system; he also pointed out that in the United States they have special companies which provide these credits for three, four or five years. These were the points upon which I desired to lay stress in connection with the remark that I made when I last spoke on this question in the House.

Quite apart from the question why the Export Credits Guarantee Department have not granted long-term credits to Russia, I want it to be made quite clear that other parts of the world and other sections of our industry want a similar kind of credit. I also want to point out to my Friends who have been disappointed that Russia has not had long-term credit, that the Advisory Committee to a very large extent have usually taken, what might be termed the short-credit view of the situation. It has really been their usual policy to tend to refrain from granting long-term credits to any countries; and it is no change of policy when we find them hesitating to make these long-term credits. This really brings us up against the whole problem as it has been outlined by my hon. Friend. It has been increasingly impressed upon me, in a number of interviews and otherwise with business men, that the provision of long-term credit is a real need; and I feel that it is a matter that wants to be taken up and investigated by those interested in industry and finance. I am convinced that the matter is receiving the attention of my right hon. Friend the Lord Privy Seal, and I very much hope that something may be done to help to supply what is an undoubted need in connection with our export trade.

With regard to the speech of the hon. Member for Farnham I shall not be lured away from the main problem into a discussion of the reasons for the decline in our export trade. The reasons are so many and varied, that I do not think that I can venture to go into that subject.


I should like the hon. Gentleman to analyse the position when we make a bid for a contract, in cases where his Department will give the required credit, when we find that we do not get the order. Why not face that difficulty and see whether our goods are too dear or not? Quite apart from the matter of facilities of long credits, our goods, as were shown to-day by the answer which the hon. Gentleman gave me—


The hon. Gentleman has already made a speech.


I just want to point out that it was not lack of credit, because the hon. Gentleman showed that we lost this engineering store order because it was 20 per cent. too dear. That is a point about which the Department ought to investigate. Are our goods too dear or not?


As a matter of fact, this is going outside the scope of the Bill which we have before us, but I informed the hon. Member in regard to that question that we are investigating the matter. With regard to the main question as to why firms are failing to secure contracts, I am afraid that opens up a vast field. As the hon. Member has indicated, there may be a question of wages, and there may be questions of tariffs and finance, and any number of questions may be brought up, and how can this Department be supposed to enter into all these problems which go right into the heart of a, mass of political questions? I do not agree with the hon. Member in thinking that it is possible to give more information publicly in regard to the conditions of some of the countries with whom we have been doing business. I rather regret that he mentioned certain countries because I do not think that a discussion of this kind is very helpful. Although there have been difficulties in connection with one of the countries that he mentioned, I do not think that they apply at the present time. He knows perfectly well, as he was a member of the Committee, that the position of a country fright change; we might find at first that we could do business with it, and then circumstances might arise which made it undesirable to continue to do business. It would be impossible to go and tell the business world these things publicly, but the information is supplied either indirectly or directly by their contact with our Department when they come to ask for information.

My hon. Friend the Member for Lincoln (Mr. B. A. Taylor) put one or two questions, but I am afraid that. I cannot answer him any further than the statement which I have already made with regard to the position of long-term credits. There has been no change so far in the policy which is being followed by the Advisory Committee. This policy is constantly receiving our careful consideration. When he states that if we are not prepared to extend the length of these credits the Department ought to be, closed, I would point out that a larger amount of business is being done with Russia than with any other country, and if we have not exactly provided the credit for which he is anxious, the credits that have been given have been successful in opening up increased trade with Russia. The hon. Member for South Kensington (Sir W. Davison) asked why we give these credits to Russia, but I think that the object is so evident that he must have appreciated that we are anxious to open up trade in order to assist our export trade, and also to find some work for the unemployed.


I was referring to the large trade balance in favour of Russia.


I agree that we have these figures, but the hon. Member has perhaps forgotten the actual goods that are being purchased. If he investigates the figures, he will find that several millions a year are being spent, or were being spent, by Russia in purchasing raw cotton, and it is raw materials to a large extent that Russia is purchasing in America. It is obvious that this country cannot supply these raw materials. Russia has to get its raw materials, and it cannot get them in this country, and the only other question is how far it is possible for Russia to buy more of her machinery and articles of that kind from us. That is a matter which is receiving the attention of the Government, and I hope that more purchases may be the result of the better understanding which has been brought about owing to the renewal of relationship between this country and Russia. I should like to draw the hon. Member's attention also, seeing that he asked a question as to the difference between loan and credit, to the statement of the Vice-Chairman of the great Imperial Chemical Industries, whose authority I am sure he will recognise. At the annual meeting of that body, when he was seconding the reception of the report, the Vice-Chairman made this statement: Publicity has been given in many newspapers to the contract we have made with the Russian Government, but I would like to remove what is possibly a misconception in the minds of our shareholders. It has been stated in one or two papers that we are giving a loan to the Russian Government. It is not so. What we have done is to sell our products on extended terms of credit, which, however, in our opinion, are quite satisfactory, for any possible risk is adequately covered by insurance. The hon. Member and the hon. Member for Farnham have been arguing for some time that we are making a loan to Russia by these export credits, and I hope that the words of an authority like the Vice-Chairman of Imperial Chemical Industries will show them that there is something in the case which we have nut forward. If the hon. Member for Farnham is unwilling to accept those words. I feel, at any rate, that we have a good authority at the back of us.


The hon. Gentleman the Secretary to the Overseas Trade Department has complained that owing to the suggestions that have been given to him from both sides of the House, he is likely to fall between two stools. I suggest that it would in those circumstances be better if he sat firmly on one. If he follows out not only the line that he has made in his speech but also the line laid down in the White Paper before us, falling between two stools is what is likely to happen. Those of us on this side of the House who have pressed for an increase in the period during which export credits should be given—and we have had Russia chiefly in mind—welcome this Bill, but feel that the effect of it will be largely nullified if we are to take as representing the mind of the Government the statement of the Secretary to the Department that they have never in fact deviated from the advice of the Advisory Committee and inferentially that they do not propose to deviate from it. On page 11 of the White Paper they do not suggest any change in the composition of the Advisory Committee.

The previous Government which was notorious in its bitter antagonism to any extension of Russian trade appointed an Advisory Committee. Naturally they appointed the sort of gentlemen whose general outlook agreed with them. Naturally I should be surprised if they had not done so, but from their point of view they took jolly good care what its report was going to be before it was issued. I suggest that this Advisory Committee has very faithfully carried out the general views of the people who appointed it, but I cannot understand why, with the exception of a trifling change or two since the present Government came into power, we are still to have that Committee dominating the position in regard to trade with Russia. If we extend the facilities but allow the same Committee to have exactly the same power as before, and say beforehand that we are going to take its advice, I fail to see that the position will become very much better.

I am particularly keen on this matter, because I represent a constituency which is desperately keen about it. The heavy constructional iron and steel industry there is very much depressed, and we feel that the Government ought not merely to take up a position of benevolent neutrality or gentle friendliness towards this question of Russian trade, but very actively set out on the job of seeing how this trade with Russia can be extended in every possible direction, in order to secure business for the heavy iron and steel industry. We do not want an attitude of benevolent neutrality and of gentle friendliness, a feeling that it would be very nice if trade could be done. We expect the Government to make it clear to the bankers that there is a change of policy because this Government have come into power. I am not blaming the bankers. The bankers do not represent the unemployed of this country, but this Government do. The Government are continually concerned about unemployment, but I suggest that in leaving the question of policy so very largely in the hands of this committee, appointed by the previous Government, they are nullifying their own intentions as expressed in this Bill.


Is the hon. Lady aware that a new advisory council has been appointed by the Department of Overseas Trade?


May I refer the hon. Member to page 11 of the White Paper where it states: We do not suggest any great change in the position of the Advisory Committee.


But a new advisory council has been appointed; there is a new personnel.


I think that the hon. Gentleman has not read the whole of page 11. If he will read it with the care which he usually bestows on these matters, he will see that what is happening is that a small executive committee is being appointed because it is difficult to get so many members of the whole committee together. At the same time it is definitely stated: We do not suggest any great change in the position of the Advisory Committee. That is the point to which I am objecting. I suggest that unless there is a very radical change in the position of the advisory committee the effect of this Bill will be largely nullified. An hon. Member raised the question of why Russia does not make use of the large credit balance she has in this country for trading with this country. The same point was raised when I brought up the question of Russian trade on a previous occasion. The hon. Member forgets that our trade balance with Canada is five to one against us and that our trade balance with the Argentine is three to one against us. If we are to follow that line of argument we should not finance trade with either of those countries, with which, as a matter of fact, we do a large export trade. It has been repeated ad nauseant, though these gentlemen who have this obsession about Russia will never be convinced, that the reason for this trade balance is the fact that Russia finances through London banks and houses the whole of her purchases of wool, of Egyptian cotton, of tin and of various other Empire products, and wages are paid in London because of that financial business which is going forward. In addition, there are all the visible exports. There is the cost of storage and the cost of transit of these goods, all of which is financed out of what appears to be a large credit balance, and it is utterly irrelevant to say that that sum of money, which is being used for those purposes, can be used to facilitate the sort of trade we want to do with Russia.

I ask the hon. Member to realise the position of those of us who come from the great northern areas which are decimated, one might say, by unemployment. Whatever the Lord Privy Seal does in the way of road making and bridges will be all very well in its way, but we shall be only touching the fringe of the problem unless we get new markets. Over and over again we have been told in this House and by the newspapers that foreign markets are closed to us partly by tariffs and partly because those countries are now manufacturing goods for themselves. Here is a market that is not closed to us. It is a country which is anxious to trade: it is an almost ideal market, if only we will look at it free from political prejudice. It is a country with 100,000,000 peasants, largely engaged in agriculture, a country starved of the very goods which could be produced in this country and the sale of which could be assisted by this Bill.

I, myself, have seen the peasants there ploughing with wooden ploughs—and this in the richest agricultural country in the world. It is a country which could supply us with raw materials which we need, and there are possibilities of trading which would go a long way towards solving the problem of unemployment in this country, which has become so top heavy industrially. What has stood in the way of that trade is the invincible determination of hon. Members opposite that, come what may, the workers' Gov- ernment in Russia shall not be allowed to succeed. That is what it boils down to. The Russian Government have over and over again offered to open negotiations with regard to the question of debts, but whenever there was a chance of those negotiations being successful the party opposite have taken jolly good care that political interference made it impossible. That is why I plead so desperately that we should use this Bill to the uttermost; it should not be put in swaddling clothes at its birth and prevented from growing by allowing the advisory committee to remain as it is.

Our hundreds of thousands of unemployed cannot afford to see the position left as it is. Future generations will be astonished at the utter foolishness of men who were so short-sighted that they could not see that here was a possibility of doing a trade which would remove many of the difficulties with which we are faced in our own country. The Russian Government of to-day is one of the most conservative Governments, in the best sense of the word, that there is in the world. I do not use "conservative" as indicating the somewhat irresponsible and adventurous gentlemen who are called Conservatives in this country. I use it to indicate a Government which has set out really to conserve and to develop the interests of the people whom it represents. This five years' plan, this rebuilding of a country, is one of the most fruitful ideas there is in the world to-day, in a world where everything is suffering from the chaos of individualism, is suffering from the muddle that capital has made, wherever we may look, whether in Germany or the United States or in any other country.


I think the hon. Member is going very far beyond the terms of this Bill.


I beg your pardon, Mr. Speaker, and I will come back to this point. The rebuilding of a country is going on, and there is a demand for the goods that we can make. Here is a Bill which can be used to finance trade with that country. It will make it possible, on the one side, for that country to be re-equipped, and on the other side it will help us to tide over the period of which the Lord Privy Seal has spoken, the terrible period of rationalisation. This Bill is the bridge which can be used to bring the solution of those two problems nearer. When first I saw this Bill I regarded it as a must hopeful thing for unemployment, and that is why I was so terribly disappointed on hearing the Secretary of the Overseas Trade Department say and in reading in the White Paper that very little change was to be made in the advisory committee. If it be not too late—and we are only at the Second Reading stage of the Bill—may I appeal to the hon. Member to take into further consideration both this White Paper and those words of his? May I appeal to him to make radical changes in the advisory committee; or, if he feels that the committee are quite the best collection of gentleman that can be produced, will he make it clear that at least the policy behind the committee shall be changed? It is only a change of policy which will make this Bill do what we want it to do, and that is to bring some hope to the thousands of unemployed men who the looking for this Government to provide work.

Question put, and agreed to.

Bill read a, Second time.

Bill committed to a Committee of the whole House for To-morrow.—[Mr. Gillett.]