HC Deb 19 February 1931 vol 248 cc1613-24
Mr. GODFREY LOCKER-LAMPSON

I beg to move in paragraph 1, line 21, after the word "persons," to insert the words

"including persons who are British subjects."

This Amendment deals with the only point in the Bill to which I take exception. In other respects it carries out, substantially, the policy of my right hon. Friend the late Foreign Secretary. In order to explain the Amendment may I summarise what the Bill does. We are handing over £11,500,000 to the Chinese Government at once and during the next few years, and this sum is divided into four parts. We are giving £265,000 to the Hong Kong University—with which I agree—£200,000 to the Universities' China Committee in London, £7,000,000 to the China Purchasing Commission, and the residue, to the extent of £4,000,000, we are handing over to the Board of Trustees in China for purposes of mutual benefit to Great Britain and China. That, shortly, is what the Bill does. I have absolutely no objection to the first three purposes. In regard to the £7,000,000 which is being handed over to the China Purchasing Commission, the British Government will have a voice in the way that money is expended because the Commission will be nominated from a Board of Trustees, from a panel, recommended by the Secretary of State for Foreign Affairs.

My Amendment merely applies to the £4,000,000, that is to say, to the residue of £4,000,000 which is being handed over to China to be expended on purposes mutually beneficial to Great Britain and China. In regard to this £4,000,000, and this is really the main point, not only is the British Government not going to have any voice or say in the matter at all but there is nothing in the Bill to say that any British subject is going to have any voice in it. These £4,000,000 are to be absolutely under the control of the board of trustees, and the board of trustees is to be appointed by the Chinese Government. To be perfectly fair I should say that in the Notes that have been exchanged between our Minister in Peking, Sir Miles Lampson, and the Chinese Secretary for Foreign Affairs, this question of British subjects is mentioned. In the Note addressed by the Chinese Minister to Sir Miles Lamp-son there is this sentence: For the control, apportionment and administration of the above-mentioned endowment the Chinese Government will duly appoint a board of trustees in China which will include a certain number of British members. But that is a very casual and perfunctory statement put in at the end of a sentence. Sir Miles Lampson, when he replied to that Note, merely reiterated in identical words the promise made by the Chinese Government. Surely, when you are handing over £4,000,000 of British money "for purposes mutually beneficial to this country and China," statutory provision ought to be made for the inclusion of British members upon that board. I do not doubt in the least that the Chinese Government made that promise in perfectly good faith. I am sure they did. But Governments pass away in China as they do in this country, and in future a Chinese Government may arise which will put a different interpretation upon those particular words in the Note.

The difficulties of interpretation have already arisen in China in regard to the handing over by the American Government of their share of the indemnity. What happened was that a board was set up in China, composed under an agreement, of American citizens and Chinese citizens. Gradually as time went by all the American citizens were ousted from that board. I think I am right in saying that. At any rate, I know that when was in the Foreign Office that was the case. I do not know whether the Americans have been re-admitted, but when I was in the Foreign Office that board was composed solely of Chinese members. This is British money, to be used for the benefit of this country and China, and surely it is common sense that British members should feature as one of the provisions of the Bill.

The Bill is founded on the report of the Willingdon Committee and the subsequent report of Lord Buxton's Committee. At this late hour I do not want to trouble the House, but I could quote passages from both those reports showing that it was their intention that in the distribution of this money in China the board of trustees should consist of British members as well as Chinese members. This is the point where the Government have definitely departed from the policy laid down by the late Foreign Secretary. In the Bill which was prepared by my right hon. Friend, British members were included in the committee. Under that arrangement, the British Government were to have a voice, not only in the expenditure of the money upon railways, but in the expenditure of the money upon educational and cultural objects. I cannot believe that the Chinese Government would object to these words being inserted in the Bill. I should like to ask the Under-Secretary of State for Foreign Affairs whether the Chinese Government were ever asked, if they did object and, if they were asked, whether they declined to assent to this proposal? I do not believe that they would object to the promise which they made being put into an Act of Parliament. I know that the Under-Secretary may say that if we do insert these words here, they will not be binding upon the Chinese Government. I quite realise that. They will not be binding upon the Chinese Government, but I look upon them AS very valuable as a declaratory statement, and, if the terms made on these Notes and the promise included in our Act of Parliament should be violated at any time by the Chinese Government, this provision will give our Government a locus standi to make representations and protests. Without that statement in our Act of Parliament I do not think our Government would have any locus standi at all. As I have said, this Bill, in other respects, carries out the policy with which my right hon. Friend, the ex-Foreign Secretary and the late Government completely agreed, but Parliament ought not to pass this Measure without including definite words to embody the pledge given to our Minister in Pekin that British subjects should be on the Committee.

The UNDER-SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Dalton)

As the right hon. Gentleman has said, the words which he desires to include, are based on a passage in the Note of the Chinese Government, which is No. 1 of the series in the hands of hon. Members and the Chinese Government have clearly expressed their intention—which we accept without any question at all, after the friendly negotiations between the two Governments—of appointing certain British members on the board of trustees. In my view, the right hon. Gentleman's Amendment is unnecessary, but I appreciate the fact that he may attach importance to it for the reasons which he has explained, and, in view of the fact that he considers this to be the only respect in which our Bill can be improved, I have no objection to accepting the Amendment.

Amendment agreed to.

Mr. LESLIE BOYCE

I beg to move, in page 2, line 2, to leave out the words "United Kingdom," and to insert instead thereof the words "British Empire."

This Bill is founded on an agreement concluded between His Majesty's Government and the Chinese Government on 22nd September last. At that date there had already accumulated an indemnity fund of approximately £3,515,000. Under the terms of the agreement and of this Bill, a sum of £465,000 is to be devoted to Chinese education in this country and in Hong Kong, and the balance, which is slightly in excess of £3,000,000 is to be allocated to a Chinese Purchasing Commission in London—which is to be constituted under the Bill—for the purchase of railway and other materials for China and those materials must be manufactured in this country. I have no objection whatever to that proposal; on the contrary, it is an admirable one. It is mutually beneficial to the Chinese and ourselves. It means that, after setting aside an appropriate amount for education, the balance of the Indemnity Fund is to be applied on the one hand to the rehabilitation of the internal transport system of China—an object which is important and desirable from the point of view of trade in China, in this country and throughout the Empire—and on the other hand to giving orders to our depressed heavy industries.

There is a further sum of slightly less than £8,000,000 which is payable by the Chinese Government between 22nd September last and 31st December, 1945, when all the Boxer indemnity payments are due to cease. About one-half of this sum is to be allocated to the Chinese Government Purchasing Commission in London and is to be applied in the same manner as the £3,000,000 which has already accumulated, namely, for the purchase of materials for China which must be manufactured in this country. I agree with that proposal also. But the other half of this £8,000,000 is to be paid to a Board of Trustees which is to be appointed by the Chinese Government, and is to function in China. That money is to be applied to objects which are described as "mutually beneficial to China and the United Kingdom." It does not follow that a single penny of that money will ever come to this country.

By my Amendment I simply substitute the words "British Empire" for "United Kingdom." My Amendment does not apply to any part of that £7,000,000 which is being allocated to the Chinese Government Purchasing Commission in London. It applies to the £4,000,000 which is at the disposal of the Board of Trustees in China. If my Amendment were accepted it would mean that purchases of Australian hardwood for railway sleepers might be made by the Board of Trustees in China. Australia is rapidly building up a valuable trade with China, a trade which is almost entirely in commodities which do not compete in any way with the trade of this country. In the years 1924–25 the exports from the Commonwealth of Australia to China were of the value of £525,000, and in the following year they rose to £746,000. Owing to the disturbances in China, they fell in 1926–27 to £410,000, and in the following year to £310,000, but in 1928–29 they jumped to more than £1,117,000. Thus we see that the trade between Australia and China, despite the internal disturbances, almost doubled in the remarkably short space of four years. Australian hardwood sleepers are well known in China. The Kowloon-Canton railway which runs from Canton to Hong Kong is in two sections, one Chinese and the other British, and the whole of this line was built on sleepers from New South Wales. All the sleeper replacements since the beginning of that line have always been made from timber from New South Wales. This fact is sufficient proof of the suitability of this timber for this purpose. Another line which runs northwards from Shanghai is laid partly on sleepers from Western Australia, which have also been used for replacements. There is a further line from Shanghai which is laid wholely or partly on Tasmanian sleepers.

I do not wish to dwell on the serious economic crisis which is confronting Australia. Never before in the history of the Commonwealth has she been in such dire need of orders from overseas. A considerable quantity of sleepers, I have no doubt, will be necessary in the utilisation of the materials which the Chinese Government will purchase with the £7,000,000 which is to be expended entirely on the manufactures of this country. If the hon. Gentleman can see his way to accept the Amendment, I can assure him that all those who are interested in the welfare of Australia and in the building up of the promising trade between that Dominion and China, will be extremely grateful to him.

Mr. HANNON

I beg to second the Amendment.

The case which was made out by my hon. Friend must have appealed to the Under-Secretary of State. The House is gratified at the way in which the hon. Gentleman has dealt with this question since the Bill came before the House. There are not many things on which we can congratulate him, but the process of this Bill through the House, the attitude of the hon. Gentleman towards the Bill, and the response which he has given to appeals made from this side of the House, has earned our gratitude. We want a declaratory statement in the Bill that part of the money which is recoverable before 1945, and is at the disposal of the Chinese Government for expenditure overseas, shall as far as possible, be expended in the British Empire. I associate myself with my hon. Friend in what he says about the contribution which Australia can make, and it would be a genuine gesture of friendship to the Australian people if this declaratory statement were put in the Bill, and would show them that even in small matters we are thinking of them at a time when they are in great difficulty. I would not support this Amendment if it were in any way calculated to interfere with orders that might come to this country. My hon. Friend has made it clear that his Amendment relates only to that part of the indemnity which accrues between last September and 1945, and which is available for expenditure entirely at the instance of the Chinese Government overseas.

Mr. DALTON

The hon. Members who put forward this Amendment have made it clear that it would not operate in any way to divert from this country the moneys which will accrue to it under Clause 2 of this Bill, namely, the £3,000,000 of accumulation after deduction of the education grants, and the further £4,000,000, which will be paid over to the Purchasing Committee in London. The Amendment will apply only to the £4,000,000 which will become disposable by the Board of Trustees. The Government and I personally are very glad to do what we can by way of a gesture of friendship towards Australia, and, indeed, towards other Dominions which might be interested in this Bill. We all know the merits of Australian hard-woods and possibly if some other speaker were to give tongue, he would praise Canadian soft-woods. I am perfectly willing and glad to accept the Amendment, and in the event of the Bill passing into law, we should of course be able to assist Australia or Canada or any other part of the Empire through our commercial and diplomatic representatives in China. Hon. Gentlemen clearly realise that we cannot bind or unduly press the Chinese Government, but we are hopeful that there will be a balanced programme for the rehabilitation of the Chinese railways, and if orders for locomotives and steel rails come to this country, there might naturally be orders also for sleepers, which we hope might be supplied from one or other of the overseas Dominions.

Amendment agreed to.

Mr. ARTHUR MICHAEL SAMUEL

I beg to move in page 2, line 2, at the end, to insert the words: Provided that no disbursement shall be made under this section for the purpose of purchasing railway material until an arrangement has been arrived at about the arrears of interest, and provision made for the service, of the Shanghai-Nanking, Hu-Kuang, the Tientsin-Pukow, the Lung-tsing-u-hai, the Canton-Kowloon, and other Chinese railway loans issued in Britain and now in default. I am moving this Amendment in order that we may straighten up the position of these railways. I have received a good many communications asking me to bring forward certain points. Proposals are now in the hands of the Government, and they have not met with the opposition of the Chinese Government; in fact, they have raised no objection whatever to the proposed arrangements. Perhaps the Minister will give us more information about those proposals. The Chinese Government will have no objection whatever to the Under-Secretary tellin us, on behalf of H.M. Government, as much as he can. It would enable us to see where we are. I have received a very interesting letter on this subject from a man quite unknown to me which I can show the Under-Secretary. This man says very truly in this letter: I subscribed to these bonds of the Tientsin-Pukow railway and for years have not had a shilling for my interest notwithstanding certain specific contracts made on the bonds when the loan was issued. Such a state of affairs cannot go on. Hon. Members must remember that we owe a great deal of our overseas trade to generous lending overseas. When we lend new money overseas, part of that money goes out in the form of exported goods. It is a good thing for the exporter when new money is borrowed here. [Interruption.] It is not for the benefit of the export trade that, when securities are launched here on the overseas market, those documents should become valueless. What happens? Later on, when other borrowers come here, the investor does not lend the money and the manufacturer does not get the orders. We should not sit down in this way. [Interruption.]

There is another point which I would make. How is the money going to be spent on the railways in China? Is the money to be used for railways financed with British money or for Chinese railways? Take the case of the Hankow-Canton railway which, after leaving Hankow, goes up to Canton through two or three hundred miles of very sparsely populated country. Any development of that railway with this money would be of very little use to China. It could only be for military purposes, and the money would be spent on labour in China and not on materials in this country. Will the hon. Gentleman tell us how the money is to be spent—on Chinese railways or on British financed railways, on labour in China or on British material? I am not going to press the matter to a Division, but I hope that this Amendment will give the Under-Secretary an opportunity of making an explanation to the House on this matter.

Mr. BOYCE

I beg to second the Amendment.

Mr. DALTON

I must condole with the hon. Gentleman on his loss of voice. I do not know whether it is due to electioneering activities or to some other cause, but, whatever the reason, I condole with him. I am glad he is under no illusions as to the possibility of our accepting this Amendment. This Amendment would lay down the extraordinary argument that we should keep large numbers of Englishmen out of work and keep British industrialists out of getting any profits until a large number of persons, not all British, had received their pound of flesh in interest on their bonds. That is a proposition which the Government could not entertain for a moment. This Amendment would ruin the Bill. But I would like to reassure him and to draw his attention, since he has raised the point, to a passage in the note from Dr. Wang to Sir Miles Lampson saying that, in view of the urgent necessity, in connection with the reconstruction and development of China, for the reconstruction of the existing Chinese railways, the Chinese Government would take the necessary steps to apply a part of the accumulated funds and the payments due shortly to the rehabilitation of those railways—and I call his attention to these words: especially those lines in which British financial interest has been principally concerned, to which lines attention will first be given. Consequently, we have an undertaking from the Chinese Government that their programme will be devoted, in the first instance, towards re-establishing the lines to which the hon. Gentleman has referred. It is a necessary condition of a financial settlement of these outstanding claims that there must be an actual physical rehabilitation of the railways so that traffic may run.

Mr. SAMUEL

What does the hon. Gentleman mean by the physical rehabilitation of the railways? A large amount of rolling stock has been commandeered and engines have been taken away. That does not mean that a large amount of money is to be used solely for the purpose of making the track good. It must be used to replace the commandeered rolling stock.

Mr. DALTON

No doubt that will be clearly in the mind of those drawing up the programme. My point is this. If we are to say that we cannot spend the money on rehabilitation of the railways until interest begins to flow on these bonds, then we are moving in a vicious circle. We have to provide this money for the rolling stock and the permanent way, and then we shall have much more hope that the Chinese Government will be able to make proper arrangements with regard to these bonds. As has already been stated, Sir Miles Lampson is actively engaged in pursuing this matter. We, following the principle accepted by the previous Government, have taken the view that we must keep perfectly separate the negotiations regarding debts of all kinds and the negotiations regarding this indemnity. We cannot for a moment link up these two questions together as they would be linked in the Amendment, but, although they are separate, they will both be pursued. Sir Miles Lampson, as the hon. Member knows from answers in the House, entered into conference with the Chinese representatives in November of last year, and an outline was sketched out for the settlement of these outstanding questions of debts of all kinds. Sir Miles Lampson has since been collecting data as to the exact total of claims under various heads, their distribution, and so forth. As soon as he is armed with this information, Sir Miles Lampson will return to the charge and enter into a further discussion with the Chinese representatives. If this Bill passes in its present form, that will be a very good prelude to successful negotiations on this other separate matter. The negotiations are not advanced to a stage at which I can give details. Sir Miles Lampson is actively collecting material for a formal and precise presentation of our claims. He will continue on that line, and the hon. Member may take it, as the Foreign Secretary has said on a number of occasions, that we shall give it full support and hope the result may be satisfactory. Beyond that the hon. Member will not expect me to go.

Mr. SAMUEL

In view of what the Under-Secretary has said, I beg leave to withdraw the Amendment.

Amendment, by leave withdrawn.