HC Deb 14 March 1932 vol 263 cc85-107

Considered in Committee under Standing Order No. 71A.

[Captain BOURNE in the Chair.]

Motion made, and Question proposed, That it is expedient—

  1. (a) to authorise the Treasury to guarantee the payment of the principal of, and the interest on, a loan to be raised by the Government of Tanganyika not exceeding an amount sufficient to raise seven hundred and fifty thousand pounds, and to charge on the Consolidated Fund any moneys required to fulfil any such guarantee;
  2. (b) to authorise the Treasury to advance by way of loan to the Government of British Honduras sums not exceeding in the whole three hundred and twenty-five thousand pounds, the advances to be local loans within the meaning of the National Debt and Local Loans Act, 1887;
  3. (c) to authorise advances out of moneys provided by Parliament for the payment of such part, if any, of the annual or half-yearly charges in respect of the loans aforesaid for any of the first five years of the currency thereof as, in the opinion of the Treasury and the Secretary of State, the Government concerned are not in a 86 position to meet as and when those charges fall due."—(King's Recommendation signified.)—[Sir Robert Hamilton.]

The UNDER-SECRETARY of STATE for the COLONIES (Sir Robert Hamilton)

The Committee will, no doubt, like to have a little more information in regard to this Resolution than that which is contained on the Order Paper. Hon. Members will see that the object of introducing this Resolution is to enable the Treasury to guarantee a loan up to £750,000 for Tanganyika territory, and to advance a loan to the Government of British Honduras not to exceed £325,000. It would not have been necessary to bring this proposal before the House but for the economic blizzard which has been blowing all round the world, and has affected our Colonial Empire to a very considerable extent. Tanganyika territory, for which we have been responsible since the War, has made very remarkable progress since the year 1920, when the present system of administration was organised. It is an agricultural country, and during the War it suffered very heavily from the operations which were carried out throughout the length and breadth of the land, and subsequently suffered from famine. When we took over this territory, we had to make good a great deal of damage which had been done, and we had to frame a policy of reconstruction and development. That, of course, costs money. In the early years, during the first five years, the Treasury assisted Tanganyika to the extent of £3,000,000, and Tanganyika has since then borrowed £5,000,000 more under the Palestine and East Africa Loans Act.

6.0 p.m.

During recent years the country has made remarkable progress, and I will quote a few figures to illustrate that point which, I am sure, hon. Members will appreciate. The external trade of Tanganyika in 1923 amounted to £3,500,000; in 1929, it was £11,000,000, a very remarkable increase. The revenue in 1924–25 was £1,500,000; and in 1929–30, it was £2,800,000. It will be seen that Tanganyika during those years was rapidly progressive and showing very satisfactory results in regard to the work of development which the Government were carrying out. During the later period they were able to build up a surplus balance of £1,000,000, and also to expend a similar amount on works of capital expenditure. Unfortunately, about 1930 the price of exports began to fall. One of the chief exports of Tanganyika is sisal, and for that article they had been obtaining £32 a ton. The next year the price fell to £21 per ton, and the present price of sisal in gold is about £12 per ton. That will show hon. Members how greatly the main exports of Tanganyika have fallen in value, and, consequently, there has been a considerable fall in revenue. So much is this the case that while the estimated revenue for the current year was £1,900,000, the amount realised will be not less than 25 per cent. short of the estimated figure. The consequence is that the Government have become short of ready cash with which to carry on the business of the country. As I said just now, about £1,000,000 has been spent in works of capital development, such as the building of quarters, hospitals and asylums, telegraphs, and so on. All sorts of matters which, clearly, are rightly put to capital account, have been built up out of revenue, and now that the blizzard has struck the country and its trade has fallen, and with it the revenue has fallen, it has become necessary to strengthen the cash position of the country so that it can carry on. If this loan is made, it will be applied to paying for those capital works to which I have alluded, so that the result will be that they will be in the same position as if they had really been built up out of a loan instead of out of revenue, and the country will regain the cash that it has expended on this capital account.

It will be seen that reference is made in the White Paper to economies which have been effected, and to increased taxation. The economies have been on a very considerable scale. The programme of public works has been curtailed, and, indeed, almost brought to a standstill. There has been a reduction in military expenditure, and I am sorry to say also, but inevitably, in education expenditure; and there have been very considerable reductions in the cost of administration, which, unfortunately, but inevitably, have resulted in the retrenching of officers whom the Service were very sorry to lose, and who have been placed in a position in which I think they will have the sympathy of all Members of the House of Commons. On the other side, namely, that of increased taxation, a nonnative poll tax has been imposed, the cost of licences has been increased, and the officials have submitted to cuts in their salaries averaging somewhere about 10 per cent., but spread over the salaries as a whole, so that the smaller salaries at the foot of the scale are less hardly hit than those at the top of the scale. In addition to this, Sir Sydney Armitage-Smith is at present out in that part of the world engaged on a thorough financial inquiry with a view to assisting the Government of Tanganyika to secure its financial position, and, if possible, make further economies. On the other side of the picture, I think we can have considerable hope for the future. As soon as prices regain something of their natural value, Tanganyika, of course, will feel the full benefit, and it is notable that even during this very severe period of stress the volume of exports, in spite of the very low prices, has been maintained.

I will now ask hon. Members to leave the Red Sea for the moment and come across the world to the Caribbean, to British Honduras. As the Committee will remember, British Honduras suffered last September from a most disastrous hurricane, but, apart from that, the Colony was beginning to suffer before then from the effects of the blizzard to which I have referred. The hurricane struck her a vital blow in her one main town of Belize. The population of British Honduras is less than 50,000, and one-third of it is concentrated in the town of Belize. To give hon. Members an idea of the damage that was done, I may say that, of 4,000 houses in that town, mostly built of wood, 3,000 were completely flattened, and the remainder were all very seriously damaged. I have seen photographs of the town after the hurricane had passed over it, and it is as though a pack of cards built up in houses had been just flattened down. It was estimated that no fewer than 1,000 lives were lost, and some 700 people were injured.

As I have said, the damage was not confined merely to material damage, but the very life and centre of the country was struck, namely, the town in which 15,000 people out of a, total of 45,000 were living, and where all the main work of the Colony's business and government are carried on. It was so difficult to clear away the damage and remove the corpses that were underneath these ruined houses, that the Government had to resort to setting fire to some of these houses in order to avoid the dangers of pestilence and disease that might follow I should like to take this opportunity to refer to the very useful work that was done by the crews of two United States ships that were there, the "Swan" and the "Sacramento," who did all that they could to assist, as well as, of course, the officers and men of our own ship His Majesty's Ship "Danae." Whenever trouble occurs in any Colony in any part of the world, we are always glad to think that one of His Majesty's ships is on the spot very soon. Perhaps I might refer to the despatch of my right hon. Friend the Secretary of State, in which he said how much the spirit in which the Colony had met its difficulties was appreciated.


Will the dispatch be laid?


I have not quoted from the dispatch. It is a tradition in that part of the world, among the people who used to be known as the Bay-men, that they never gave in, whatever their difficulties were. In the old days of the Spanish wars, arid later, in the days of the French wars, whatever difficulties they were faced with, they stuck to their place in Belize. Those are the people for whom we are now asking for assistance. The manner of the assistance is referred to in the White Paper, namely, loans and grants to public authorities and mission schools. "Public authorities" means mainly the Town Board of Belize. The Town Board was getting along with considerable difficulty before, and now ruin has been brought upon the town. The streets have been broken up by water, for, after the hurricane, a great part of the town was submerged by a big wave, and to make the town at all habitable again it has been necessary to undertake very heavy expenditure. The mission schools are largely used by the Government for education, and most of them were laid low. Agricultural settlement has been reported upon 'as being extremely desirable, for the town, though a very small one, is much congested, and agriculturists believe that a great opportunity of improving the conditions of the Colony lies in entering upon a scheme of agricultural settlement. An officer of the Colonial Office is out in that part of the world at the present time, and he reports very favourably on the prospects of a scheme of that sort.

The amount that it is proposed to borrow is £325,000 as a maximum. It is not proposed that that sum should be borrowed necessarily at one stroke, but it is proposed that the money should be raised through the Local Loans Fund, as the most convenient way of doing it, and it will be issued from time to time by the Treasury to the local Government in British Honduras. The actual currency of British Honduras is the dollar, based upon the gold American dollar, so that the money would have to be raised here in sterling and remitted to British Honduras in dollars. If there are any further questions that hon. Members wish to ask in regard to the Resolution, we shall be able, I hope, to answer them satisfactorily.


I think the Under-Secretary of State for the Colonies is a very bold man to come forward and ask for these loans from the British taxpayer at this moment. He is asking that we should guarantee a loan of £750,000 to Tanganyika and a loan of £325,000 to British Honduras. He is also suggesting to the British taxpayer that these Colonies should not be asked to pay any of the principal or any interest upon that money up to the end of the first five years. This is being done at a, time when conditions are worse in this country than they have ever been. The Under-Secretary has told us that sisal, which is the main product of Tanganyika, was sold at £32 a ton in 1929, and that, as a result of our going off gold, it is now sold at £12 a ton. In the previous Debate we heard some remarkable speeches about the condition of this country as a result of its going off gold, but, if every Colony or Protectorate is to come to the British taxpayer for help to make up its losses in this way, the British taxpayer will be milked even beyond the possibility of any product coming from him.

I realise that we have a responsibility. In 1920 we undertook the Mandate for Tanganyika under Article 22 of the Covenant of the League of Nations. In Article 3 of the Mandate we agreed to promote to the utmost the material and moral well-being and the social progress of the inhabitants of that territory. I am anxious, having had a little experience at the Colonial Office, to say and do nothing which would in any way detract from our responsibilities in regard to that territory. But I am also a representative for a constituency in this country, and I think we should have first regard for our people at home, who are suffering so much. The hon. Gentleman says that the public debt has been raised to £11,000,000 during the last few years.


The total amount so far is £8,000,000.


I should like to ask what is the limit that Tanganyika is able to borrow, what has she already borrowed under the Palestine and East Africa Loans Act, and is this the final sum that she will be able to borrow? I should like to know a little more as to the purpose for which the money is to be used, whether it is for public works and, if so, for what kind of public works? Is it to be used for schools or for the improvement of the health services? I realise that a good deal has been done during the last few years. We have had possibly the wisest Governor in Tanganyika for the last five or six years, up to last year, that we have in the Colonial service, a man who has done a great deal and has had a very enlightened policy. I should like to know, further, if there has been any change in the native policy since Sir Donald Cameron left. I want also to know if the Labour Department has been cut down. I saw an article in "East Africa" a week or two ago dealing with what is taking place there, and bitterly complaining that the Labour Department was being cut down, that the natives were going two and three months and more without being able to get their wages and also that their conditions are not being looked after as well as they might be. I think it is due that we on this side should ask what are the native conditions, whether there is any change, and whether the Labour Department is being cut down and the interests of the natives are suffering? If we are going to guarantee money, we have a right to ask for what purpose it is going to be used, and whether or not this Government is maintaining the conditions that were in existence up to a few months ago, or making them considerably worse than they have been for some time past under the enlightened governorship of Sir Donald Cameron.

With regard to British Honduras, the whole world was aghast at the disastrous hurricane a few months ago, with the sad loss of life and destruction of property involved. There is no doubt that the condition is far from being satisfactory as a result of what took place. There is a large amount of undeveloped land in British Honduras. Is it intended to use some of this money for developing that land and making it useful and profitable? Again, I want to know what are the labour conditions there. If we are to support proposals of this sort, we are very anxious to know that the conditions of the natives are of the best, and we should also like to know if the native policy as outlined in the White Paper in 1930 is still the policy of the Government. I also wish to know if there is any guarantee to be given as to buying British goods by either Tanganyika or British Honduras. Here is a market which should be a permanent market, and our Colonial Empire ought to be a better and a more reliable market in the purchase of British goods than any other. It is due to us to know where they buy their goods. If they are to be guaranteed loans of this character, they ought to give us a guarantee that they will buy what they need from this country.

There is another matter to which I wish to call attention. We are in a worse condition that we have ever been. The Government will provide no money for public works in this country. They have put a stop to it. Housing is not being carried out, and we have hundreds of thousands of building operatives out of work. We have cut down the allowances to the unemployed. There are 1,500,000 of our people who have had to go to the Poor Law. When we are in a condition like this, the British taxpayer is asked to pay more than £1,000,000 over to the Colonies. A case like this cannot be allowed to pass without comment, and I should like to hear what the supporters of the Government have to say regarding it. At the same time, I am bound to say that British Honduras is in a shameful condition and needs assistance, and Tanganyika is struggling to be a star in the firmament of our Colonial possessions. While I do not oppose the Vote, I think there is good reason why we should know what is the policy of the Government towards the native races in these parts, and what they intend to do in further development work in the interest of the people living there.


It is very gratifying to welcome the hon. Gentleman as an economist. I should like to think that we are getting from the Labour Benches some little support for economy. I did not notice it much in the last Parliament, but better late than never! I hope they will follow on and watch the interests of the British taxpayer, about which they seem to be concerned now. I have been trying to preach economy for 10 years without any effect, and I am glad that I am getting a few disciples. The White Paper says that Tanganyika raised a loan of £2,007,000 in 1928 and a further £3,000,000 in July, 1931. That is £5,000,000 in about four years. I should like the Government to give us some information about these various large loans. Without wanting at all to disparage Colonial development, I must really enter a protest against this constant responsibility being thrown upon the British taxpayer.

The SECRETARY of STATE for the COLONIES (Sir Philip Cunliffe-Lister)

I want to make one thing perfectly clear, which, obviously, the hon. Gentleman who spoke before did not understand. As far as Tanganyika is concerned, I am not coming here to ask for any new money or for a farthing of new expenditure. The whole of the £750,000 has been spent out of revenue. What I am doing is to ask that what the late Government spent out of revneue I may now raise as a loan.


That alters the complexion of affairs. I was not aware of that. I am very glad to have that explanation, and I will not attempt to pursue my argument. My hon. Friend said that they had had an economic blizzard in Tanganyika. We have had an economic blizzard in this country, and I want the right hon. Gentleman to remember that. But, as this is merely to put right something that has been spent, I will content myself with entering some kind of protest that these loans to. Colonial territories cannot go on without-the back of the British taxpayer being broken.

6.30 p.m.


I intended to rise originally to raise the same point with which the right hon. Gentleman has now dealt, and to ask if there is any new money concerned in this proposed guarantee of a loan to Tanganyika. I want to ask what exactly is the position with regard to the money that Tanganyika has borrowed in the past? Was it all originally loans in the form described here as loans in aid, and were the previous loans to put right the amounts of money that were originally given, and on what terms were those previous loans raised? One is hound to examine the requirements of Tanganyika rather differently from those of British Honduras. In the case of Tanganyika, we are dealing with a mandated territory. I was rather surprised that the hon Gentleman below me asked a question as to whether British goods alone were being dealt with. It is clear that, in a mandated territory, there can be no preference of that kind at all. Consequently, when one sees a figure of £8,000,000 borrowed in the past few years, either in the form of raising loans or of grants-in-aid, or however it may have been secured, one is inclined to ask what the money has been spent upon and what portion of it is the remunerative expenditure, what portion of it, in fact, is capital expenditure on which the Colony is earning a return? It would be very valuable if we could know what exactly has happened to this £8,000,000, and whether a large portion of it may justly be classed as capital expenditure of the kind that brings in a return. I would add that it is going to be a little difficult to understand the ability to raise a loan when there is already a deficit of over £900,000. It seems to me that there is very great reason for expecting that for the next five years there should be economy, and that they should he able to meet the interest on the loan. I am not going to oppose the guarantee, but I think that the Committee are entitled to ask what is the Government policy in regard to increasing the expenditure in mandated territories, which, we have been told, exceeds £8,000,000.

With regard to British Honduras, the position is very much simpler. I do not think that there will be any desire on the part of Members of the Committee to question the desirability of giving this money. One realises that it is a small Colony very closely associated with the Mother Country, and that it has suffered from a very exceptional disaster. The amount of money which is required is not in the ordinary sense very large, yet it is large when one has to consider the question of economy. The only question I would ask is, whether there is, in fact, a possibility, even after five years of the guarantee, of the charge of £16,000, or whatever it is, every year in interest, plus the repayment of a portion of the loan, being met. It is well that the Committee should face quite frankly these various loans and the circumstances in which they are given. Here is a sum of only £325,000, but are the resources of the Colony such as to enable it, within the period of 40 years, to repay the amount, plus whatever other loans it has, and to find, even after the first five years, the interest of £15,000 or £16,000, or whatever it may be?

I am glad that the Money Resolution does not insist that charges on these loans shall rank ahead of everything else. That is the sort of thing to which I objected in the case of Mauritius, because I thought that it was putting an undue burden upon the colony. The Financial Memorandum states that it takes priority over any charges not existing at the date of the passing of the Bill. I ask the Colonial Office whether they are seriously considering that such a regulation may not make the actual carrying on of the Colony extraordinarily difficult in the future? Their resources cannot be very large. I should be glad to know if that point of view has been considered, and whether in passing the Money Resolution the Committee may feel satisfied that the money will really enable the colony to be put upon its feet, at any rate, from the point of view of the disaster of last year, and also enable it to carry on in the near future along the road towards prosperity?


The hon. Member in introducing the Resolution spoke of the matter in a very favourable light, but I am bound to say that I look upon the position with very grave disquiet. In his statement he said that the gross receipts of Tanganyika since 1919–20 were something like £21,000,000, and that the gross expenditure was £20,000,000. On the face of it that sounds a very favourable report, but how is the £20,000,000 gross expenditure arrived at? Hon. Members will find on examining the position that £15,500,000 was raised by taxation from within the territory. That, in itself, is all right.


I did not quote those figures.


The hon. Member did not state how those gross receipts were obtained, and I am telling him and the Committee. As I was saying, £15,500,000 was raised by taxation in the Colony. £2,000,000 was raised by loan outside Great Britain and guaranteed by Great Britain. £3,500,000 was raised from the Imperial Government, and of this sum a little over £2,000,000 was devoted to capital expenditure in respect of which interest and sinking fund have been paid. A sum of £408,109 was a grant-in-aid, and £1,750,000 was a loan granted free of interest, the question of repayment to be considered in 1933. If hon. and right hon. Members consider that that is a favourable report, I am afraid that I must differ from them. The financial position of Tanganyika at the present time is very serious indeed. They have been on the dole ever since 1919. There has not been a year since 1919–20 when that Government have balanced their Budget. They have carried on by means of grants-in-aid from the home govermnent, or by loans. At a time of very serious financial depression in this country, when the home Government are obliged to make severe cuts in expenditure, it is a serious thing to be called upon, as they are being called upon practically every week, to guarantee loans or to give grants-in-aid to mandated territories or to colonies. When the home Government are faced with a deficit in their Budget they do not go to other countries to borrow money to balance the Budget. They face up to the situation and by economies and increased taxation manage to balance their Budget. Is it asking too much of our colonies, and particularly of our mandated territories, which are entrusted to us, that they should do what we have to do? If we are going to encourage mandated territories and colonies to go on year after year upon the present system of finance, where is it going to end? I am also concerned because of the fact that the loans have no relation whatever to markets in this country.

The hon. Member for Rothwell (Mr. Lunn) asked what this country was getting in return for those loans in the way of markets? Tanganyika last year imported from the whole of the British Empire only 60 per cent. of her total imports, 42 per cent. of which was obtained from the United Kingdom. I do not consider that to be a fair proportion of imports to come from the Empire, and certainly not from the United Kingdom, to whom she always appeals when in financial difficulties. Not only does she come to the Colonial Office for loans and grants-in-aid, but she has had grants-in-aid and loans from the Colonial Development Fund and also from the Empire Marketing Board. The May Committee in their report referring to Colonial Development Fund Loans to these mandated territories said: On reviewing the schemes which have so far been assisted we find that in a fair number of them the element of benefit to the trade and industry of this country which is an essential condition of advances under the Act, is somewhat remote. Under existing financial conditions this country cannot afford to adopt a policy of mere subsidy by relieving the local government of its obligation to provide a decent and reasonable standard of administration in the matter of public health, housing, transport, etc., nor yet a policy of developments which will bring no appreciable benefit to this country for a long time ahead. That has been borne out by the facts. The central Government of Tanganyika should follow the example of some of the native Governments. The Colonial Office report on Tanganyika for 1930 said: Although the general economic depression was reflected in the case of many Native Administrations by a short fall in the revenue for which they had budgeted, they adapted themselves to the circumstances, and were in a sound financial position at the end of the year. Those are the native administrations of Tanganyika. I commend that policy to the central administration, because it is obvious that they cannot go on indefi- nitely in the way they have in the last 10 or 12 years by borrowing and appealing for grants-in-aid in order to balance their Budgets.

I have very little to say with regard to British Honduras. The sum of money is a loan to make good the ravages of the hurricane which took place there a short time ago. Anybody who has witnessed the results of a hurricane in any of the West Indian Islands, as I have, cannot help feeling sympathy for any people who have had to undergo those awful calamities. As part of this loan is for rebuilding purposes, I hope that it will be emphasised that when new houses are built, they will be made a little more durable than has been the case in the past. I visited one of the West Indian Islands shortly after a hurricane two years ago, and I found that most of the natives, instead of putting up more substantial hutments or homes, were shoving up mere bivouacs, which, if another hurricane came, would not he seen again. If money is to be granted as loans to rebuild the ravages of a hurricane, I would suggest, even though it might mean an increase of the loan, that it would be far better that they should build well. I know that this particular Colony was always considered to he outside the hurricane belt, but what I have seen of the West Indian Colonies it is very hard to say what Colony might be ravaged next as a result of a hurricane.

The same question arises here as was asked by the hon. Member for Rothwell, namely, what do you expect to get in return? If one looks at the trade returns, one sees that only 13 per cent. of the imports of the Island of British Honduras came from Great Britain last year, whereas over 34 per cent. came from the United States of America. The same sort of thing applies to practically every British Colony. I was very glad to hear the statement made by the Chancellor of the Exchequer the other day, and I hope that it was the forerunner of a new policy in the administration of British Colonies. Up to now the administration of British Colonies has been lamentable. Loans and gold have been handed out without any relation whatever to any market which this country might obtain as a result of such loans or grants. The West Indian Islands were encouraged to grow sugar, and at the same time we were pur- chasing sugar in this country from the Dutch East Indies, Cuba, Porto Rica, and from every Colony but our own.

I hope that as a result of the statement which was made by the Chancellor of the Exchequer the other day this state of things may be remedied. I hope that in future in respect to any loans that may be made to British Colonies, there will be a Clause laying it down that any expenditure incurred as a result of the loans will be expended in this country. If we pursue that policy in the future, I can foresee some return for all this vast expenditure that has been poured out of the British Exchequer to British Colonies and mandated territories in the past, but if we do not pursue that policy, there will be no hope of these Colonies facing up to realities, and trying to balance their Budgets, as any sane Government that wishes to have sound finance would do.


I should like to say a few words about British Honduras, and in some respects to answer what has been said by my hon. and gallant Friend the Member for the Isle of Wight (Captain Macdonald). In the first place, I should like to pay a tribute, which I understand has already been done by the Minister, which will be supported by every hon. Member, to whatever party he belongs, to the magnificent example of courage, self-sacrifice and, above all, regard for law and order which was shown by the people of one of our oldest Colonies in a time of unparalleled disaster, when the strain upon individuals must have been almost too terrible to contemplate. Hon. Members may have read the most interesting and vivid account by a former Governor of the Colony, which appeared in a well known review, showing the great fortitude which was displayed by the people.

On these grounds, although they may be mainly sentimental, the Committee will be anxious to help the people of British Honduras, but the matter goes much further than that. There are two Colonies, and two Colonies only, under the British flag in the Continent of South America—British Guiana and British Honduras. It would not be in order to deal with British Guiana on this Bill, but it may be useful to observe that for many years past both these Colonies have been described as the Cinderellas of British Colonies. Although British Honduras and British Guiana possess immense resources, for one reason or other they have not advanced in an economic sense in the same way as the West Indian Colonies, even though in the West Indian Colonies there have been periods of great depression. It would not be in order to go into the main reasons for that fact, but it is useful when we are discussing this loan to say a few words about the question of the development of British Honduras. Under the terms of the loan, among the other purposes to which the money is to be applied, is that of agricultural settlement. I did not hear the Minister's speech, but I understand that he did not say anything on that point. Perhaps my right hon. Friend the Secretary of State for the Colonies will say something in regard to it.

I hope that a proportion of the money, or as large a proportion as can be spared, will be used for reproductive purposes and not merely for replacement purposes; not merely for replacing houses and other buildings which have been destroyed. I agree with the hon. and gallant Member for the Isle of Wight that it would be desirable, if it can be done and can be afforded, to put up a more substantial type of building than that which has hitherto existed. I hope that a portion of the money—one is encouraged to believe that it will be so. according to the White Paper—will be used for agricultural settlement. It might be worth while, when times are a little better and it is possible to afford the money, for the Government to send out an official committee to inquire into what could be done to develop British Honduras and the neighbouring Colony of British Guiana. I have spoken, as others have spoken, with American citizens, well disposed to this country, and they have expressed astonishment at the backwardness of British Honduras. They have been inclined to blame this country.

My hon. and gallant Friend the Member for the Isle of Wight says that only 13 per cent. of the total imports of manufactured goods into British Honduras are of British origin. He might, however, have regard to two facts in that connection, (1) the element of propinquity, because British Honduras is much nearer to the American Continent and is well within the ambit of American business, and (2) it has been the policy of the United States of America, of France and many other countries with Colonial territories to do everything possible to develop their Colonies by giving them a large preference for their goods in their markets, whereas it is only in very recent years, in fact it was not until the recent Act was passed, that anything has been done by this country in that direction.


What has that to do with this loan?


It has a great deal to do with the loan. I understand that one of the points is that the loan of this money will eventually assist us. My argument was directed to show that under the system now in operation as a result of the Imports Act, the development of a, Colony like British Honduras in the way of agricultural settlement will eventually benefit us materially. In the old days before the War, when loans of this character came up and we pleaded for a system of reciprocal trade between this country and the country to whom the loan was being made, we were greeted almost with jeers. It is our long neglect of the situation which has led to the unfortunate position of British Honduras and of many other Colonies to-day. Therefore, I am glad that a portion of the money that we are lending to British Honduras will be used in a way which will benefit us as well as that Colony. But even if we got no return, we are really only paying a debt which we owe for past neglect.

It is not fair to put the matter merely on a monetary basis and to say that we have lent money in the past. What have we done in the past to assist their economic development? We have now taken a step, and I suggest, with all respect, now that we have a new imperial economic system, that this is the time when we may look with complete favour on proposals to assist British Colonies with loans. My only reason for rising was to refer to British Honduras and to express the sympathy which I and everyone feels with that Colony. Speaking for myself and for many other hon. Members I wish that hard-pressed people more prosperity and good fortune than they have had in the immediate past and to say that we, their fellow subjects here, will watch their future with interest and with the hope that they are going to make that Colony the prosperous place that it ought to be.


We have had a very interesting Debate, but, if I may respectfully say so, some of the speeches would have been more relevant and more in order had I come forward to ask for a guarantee of a loan for new expenditure in Tanganyika, instead of merely to repay expenditure which has taken place in the past out of income account and which ought to have come out of capital account. If it had come out of capital account it would have had to be paid for by a, loan. All that we ask is to be able to repay to income account the money which was raided in order to make this capital expenditure. If I were asking the Committee for a guarantee for new expenditure in Tanganyika, I should require to be very well satisfied, not only that such expenditure could be adequately secured, but that it would be reasonably remunerative. It would not be in order on this loan to deal with that matter.

I give this clear undertaking to the Committee, that I think it is right in any development expenditure which takes place to see that that development expenditure is related to some probable market in this country. I do not think we should be limited in using our credit, where we can use it wisely in the development of the Colonial Empire, but I do think that all development expenditure should be related to the probability of getting a market in this country particularly, and also markets in other parts of the Empire. No discussion on that subject, however, is relevant to the particular proposal now before us, which is merely to repay to income account money in respect of something which has been done in the past. It is good business from the point of view of the Treasury and the taxpayer that we should do that. This is not a case of asking the Treasury to assume some new liability. On the contrary, the result would be that if we did not raise this loan there would be no unexpended balance which this mandated territory could use in its forthcoming budget, and the result would be that it would come upon the Treasury for a grant-in-aid. It is, therefore, much sounder finance from our point of view that we should repay this money to the income account in order that the cash balance of the territory may be restored to what I hope will be adequate for its needs. That disposes of the point raised by the right hon. Member for South Molton (Mr. Lambert).

I do not need to go into elaborate details in regard to the works for which the money was originally required, because I think the hon. Member for the Rothwell Division (Mr. Lunn) was very well satisfield about it at the time, but I think that with regard to this past expenditure a sum of £3,000,000 was for what I would call repairing the aftermath of war. That was expenditure which was financed by Treasury grants. The balance of £5,000,000 was sanctioned by this House at the time for ports, harbours, railways and other transport facilities. It is not quite fair for the hon. and gallant Member for the Isle of Wight to say that this mandated territory—I am now defending something for which I was not responsible—engaged in lavish expenditure quite irrespective of whether or not it could balance its budget. That is not so. From 1925 up to 1931 the mandated territory always balanced its budget. I think I am right in saying that.


How did it do it? By raising loans.

7.0 p.m.


No, That is untrue. I hope the hon. and gallant Member will not make statements which he cannot substantiate. As I understand it, the local government did not borrow for current expenditure. They did borrow this £5,000,000, but that was for capital expenditure for new development. The ordinary Budget expenditure of the Services of the country was defrayed out of income. I think I am right in saying—I may be mistaken, and, if so, it can be corrected at a later stage of the Bill—that from 1925 up to 1931 this Territory was, in fact, balancing its Budget. Indeed, that was why it had a surplus balance, out of which the hon. Gentleman opposite got the £750,000. It not only balanced its Budget, but was able to get from the cash balance £1,100,000 to spend on capital development. That is a rather better position than the hon. Gentleman led the House to believe.

With regard to native administration, we have to economise all along the line, and you cannot leave one Department alone. There is no change in the policy or in the general intention. In everything we must cut our cloth according to our measure. In order to ensure that the financial resources of this Territory are as wisely husbanded as possible, and that we get economy—by that I mean both saving where we can and seeing that we get full value for our money, as economy includes both—I have arranged with the Chancellor that Sir Sydney Armitage-Smith should go out to the Territory. He is now on his way there and he is to make a full report on the finances of Tanganyika. The right bon. Gentleman said he hoped that these territories were going to "buy British." I am glad to find a supporter for my peculiar cliché. Tanganyika, as he knows, cannot give a preference since it is a mandated territory, but it does give a voluntary preference, and in the case of all the Government orders, which are placed on Government account, are placed with British firms and shipped in British ships so that the maximum that can be done is being done. As regards the preference given by British Honduras, which by the way the hon. and gallant Gentleman called an island, it is true it has had this unfortunate inundation, but it is not yet entirely separated from the land.


It is part of the West Indies group of islands.


I do not see how it can be part of the West Indies group of islands when it is part of the continent of America.


Is it not the duty of the Secretary of State, when he finds any colony to be an island, to notify His Majesty?


I believe that is correct. Unfortunately, I have not to move in that respect. With reference to this main land dependency, it is a little hard that he asks why they cannot do something for British goods. I believe that British Honduras gives a 50 per cent. preference to this country, certainly, a considerable preference.


I did not ask why this main land dependency did not buy more British goods. What I said was that they only bought 13 per cent. of British goods last year, and that there was great scope for British development in that respect. I was not blaming them.


The Committee rather understood him to say, "Why do you ask for money for this island when they do not buy more British goods?" I understand him now to say that he hopes that this country will in future make better use of the opportunity offered by British Honduras, offered not recently, but for many years. One hon. Gentleman put to me a question as to whether the colony would be able to repay this loan. I think that in spite of the disaster they sustained, the future is not without hope particularly under the new dispensation. It is important that this money should be spent not simply on domestic reconstruction but on economic development as well, and it will be so spent. You have to get the houses rebuilt, but there is going to be this land settlement, and there is a proposal, too, that the chief company in the colony, which runs the saw mills and mahogany logging industry, should be lent money on proper security for reconstruction. There is a real hope that, instead of sending that mahogany as lumber to America, as happened in the past, now that we have this 10 per cent. preference they will get a sawmill established there so that the mahogany may be sawn there and brought into this country as sawn timber instead of its passing to America as lumber. There really is the hope of the development of a prosperous industry in this way.


Does the land settlement apply to existing inhabitants in British Honduras or to people outside?


At present, it is intended for existing inhabitants. I do not think there will be enough money to do a lot. I cannot speak as to the future, but at present certainly it is confined to the existing inhabitants. As regards agricultural development, the island produces the very best type of grape-fruit. They had the wisdom to get the best and are growing it with great success. They may also be able, too, to grow other vegetable crops, such as tomatoes. They are also cultivating a tree there which produces a very valuable nut, since, if you can crush the nut without breaking the kernel, you get. one of the most valuable oils in the world. I have also anticipated the advice my hon. Friend gave me to get someone on the spot who would be able to advise the local government in their agricultural development. Mr. Stockdale has had a wide experience in all these agricultural problems and, when I knew we were likely to pursue this policy in the West Indies, I thought it would be well to have Mr. Stockdale on the spot to give the authorities advice as to how best to pursue that policy. I think I have now answered all the questions raised in this interesting Debate.


I only wish to draw the attention of the Committee to two facts. I have been really shocked in the Debate by two speeches. One was that of the noble Lord the Member for West Sussex (Earl Winterton) who recommended a committee of inquiry. He was going back to the days of two years ago when every mugwump wanted a committee of inquiry. I hope the noble Lord will not go sliding back into mugwumpery and want the Government to do this sort of thing. The second was the speech of the Secretary of State far the Colonies, who came smiling down to the Committee within six months of the election and recommended borrowing. I realise that the position of some of these Colonies and Dominions is very bad at present, but, when we cannot borrow money for things we want in this country, as a matter of common fairness, I hope that the Minister will resist these demands and will impress upon the Dominions, and on the Mandated Territories particularly, that they should endeavour in every possible way to put their finances on the same sound financial basis as this country. I do not blame him for the position in which he is, but I was shocked to find him to-day wanting to borrow money. I realise that, if it were not for the efficiency of his administration in the last few months, things would be far worse, but in a year's time the House will not be in a frame of mind to advance money to any Dominion or Colony. Although I do not oppose the grant, I think it is a, pity that the Government should come to the House for this grant at the present time.

Resolution to be reported To-morrow.