TRADE WITH RUSSIA.

HC Deb 31 January 1934 vol 285 cc375-440

3.46 p.m.

Mr. ANSTRUTHER-GRAY

I beg to move, That this House urges His Majesty's Government to take active steps to correct the present unsatisfactory balance of trade between the United Kingdom and Russia in order that British manufacturers and producers may secure a more adequate share in the markets of that country. On Monday the Prime Minister gave the House an assurance that we should be given an opportunity of debating the Anglo-Russian Trade Agreement. I am thankful that we have been afforded this opportunity for the House to voice its opinion on the proposed Trade Agreement before that agreement has been signed, so that any remarks we may make may perhaps bear fruit and not be, as is so often the case, in the nature of vain regrets or unprofitable criticisms or a fait accompli. In considering the question of Russian trade, I am afraid that we must recollect that we are dealing with an avowedly hostile State. It is unnecessary to emphasise that point, which is not denied by responsible Russians, and which is borne out by the columns of the "Pravda" or the "Izvestia," the official organs of the Soviet State, almost every day. In considering doing trade with a country like that——

Sir ROBERT HAMILTON

On a point of Order. May I ask, Mr. Speaker, whether it is in order for an hon. Member to refer to Russia as an avowedly hostile State?

Mr. SPEAKER

It is not customary and it is crtainly undesirable to refer to any country which is friendly with us, in that way.

Mr. ANSTRUTHER-GRAY

If I may proceed—[HON. MEMBERS: "Withdraw!"] My own inclination is to have no dealings with that country.

Mr. MANDER

On a point of Order. Is it not usual for an hon. Member in those circumstances to withdraw the remarks that he has made?

Mr. SPEAKER

It is customary to make some reference to my Ruling.

Mr. ANSTRUTHER-GRAY

I apologise to you, Mr. Speaker, and, if I am out of order in referring to that country in those terms, I will certainly withdraw. My own inclination would be to have no dealings with that country, but when we consider that that would mean sacrificing an export market for some million pounds worth of goods then, speaking as one who represents one of the hardest-hit industrial constituencies in the West of Scotland, I should find it very difficult to convince myself that we were right in neglecting any export market. My object in moving this Resolution is not to express my, perhaps, rather half-hearted agreement with the Government's policy but rather to urge that, having decided to come to this Trade Agreement, they should press forward with all speed and make every endeavour to conclude the agreement as promptly and as satisfactorily as possible. I deplore the fact that since the negotiations were recommenced on the 1st July, when the embargo was lifted, seven months have been allowed to drag on without the agreement being signed. When one looks at the reason for that, it is not far to seek. During the first six months after the embargo was lifted the balance of trade between Russia and ourselves has been six to one in favour of Russia; that is to say, Russia has imported into this country £12,000,000 worth of goods, and we have only exported to Russia £2,000,000 worth of goods.

There is no incentive for the Soviet Government to conclude a trade agreement so long as the trade position remains so thoroughly satisfactory from their point of view. Indeed, when we recollect that no trade agreement giving a balance of trade so heavily in favour of Russia could possibly be acceptable to this House, we have the very strongest incentive for Russia to postpone the signing of this agreement as long as she can. I do not blame the Russian Government, but I call in question most seriously the action of His Majesty's Government in permitting this state of affairs to go on. A solution, moreover, is at hand. We have a weapon. We have only to announce that unless by a certain date, say the 1st March—it might well have been the 1st November or the 1st October—Russia signs the Trade Agreement we will restrict the import of Russian goods into this country to the amount of goods that we are allowed to export to Russia, and there is a cogent and practical incentive to the Soviet Government to hurry and sign this agreement without delay. If, as the Government hold, this agreement is going to be a benefit to this country, if it will provide work for some of our unemployed, then I submit that we should not hesitate to use whatever powers we have with resolution in order to obtain the agreement without delay.

Then there is the question whether the agreement is likely to be satisfactory. It seems to me that we hold the trump cards. I am prepared to admit that we want the Russian export market, I am prepared to admit that we do want some timber and oil from that country, although there is everything to be said in favour of obtaining these commodities from the Dominions and other foreign countries. But when you look at the list of imports into this country for the last year you find that no less than £1,700,000 worth of butter was imported from the Soviet, largely, I understand, by the co-operative societies. Further, there were imported £1,300,000 worth of wheat and £500,000 worth of salmon. Surely these are commodities which we might produce in the home market, or certainly obtain from the Dominions. I submit that if it comes to restrictions we have a very fertile field here where we can restrict Russian imports without doing ourselves any harm at all. I grant that we have something to gain from the Russian trade, otherwise we should not be seeking a trade agreement with that country. I agree that we want to sell them steel and machinery and herring, but I submit that their market is in no way vital to us, that the welfare of our people and the prosperity of British industry does not depend on our selling goods to Russia.

Let us look at the position from that point of view. The industrial development of the Soviet Union is dependent on her importing capital goods and machinery from foreign countries. I do not say that she has to import them from Britain, and, actually, when I was in Russia in 1932 I gathered, from such engineers as I met, that for certain reasons, geographical, industrial and political, they rather preferred German and American goods to British machinery. But the point remains that she has to purchase these capital goods from foreign countries somewhere, and that these purchases have to be paid for by exports. When it comes to exports the United Kingdom is by far the most important export market the Soviet Government have got. I will not weary the House by reciting many figures, but may I say that in 1932, which is the last full year for which we have figures, the United Kingdom market accounted for no less than one-quarter of the total Russian export trade, and, further, that we purchased from Russia more than Germany, although Germany was permitted to export into Russia three and a half times as much as we were permitted to export.

The point I want to make is that the British market is infinitely more important to Russia than the Russian market is to this country. One figure alone will illustrate that point, and that is that we represent one-quarer of her export markets whereas she represented in 1932 only one-fortieth of the British export markets, and if you take the figures of the latter half of this year she only represented something like one-hundredth part of the British export market. Mr. Litvinov may go to Washington, he may achieve recognition for the Soviet by that country, but he will not be able to persuade the United States to buy Russian timber or to purchase Russian oil. I believe that Soviet Russia would find it almost impossible to replace the British market; and therein lies the strength of our case. Lest we on our part should be over anxious in scrambling for the Russian market, we should analyse very carefully what that market is likely to amount to in the future. If my contention is correct Russia would, in fact, prefer to buy machinery from Germany and the United States and does not really wish to purchase British herring. That seems to me to be amply borne out by the fact that however much she may need them she did not purchase any British herring during last year, although there is nothing to prevent her doing so with or without a Trade Agreement.

If my contention is correct, it is clear that any purchases the Soviet make from us are going to be in the nature of a bait to capture our export market, and as such we must count upon them as being always the minimum. We must also remember that future orders and purchases will be principally in capital goods, and are, therefore, likely to decrease. As each instalment of capital plant places her a step nearer economic independence, so also will the incentive to meet her financial obligations be propressively reduced. This, I submit, is a very relevant point, when we remember that Russia is demanding greater credit for her purchases. All these points make it perfectly clear that, although selling goods to Russia may be trade of a sort, it is certainly not the best sort of trade. It is incomparably worse trade for us to sell goods to Russia for credit than it is for Russia to sell goods here for cash. It is a gamble whether we are to be ultimately paid for the goods or not. Then there is the fact that, since she is not a willing buyer, she is certain, for political as well as for financial reasons, to seize the slightest opportunity to discredit any goods which she purchases. Lastly, but not least, we have the consideration that if British engineers are to be sent to Russia, they are liable at any time to be seized and imprisoned without just cause. It seems to me that we must guard against making the mistake of putting too high a value on this Russian market, when we remember that we are proposing to purchase it at the expense of our own British market, which is an object of envy, an object desired by every exporting nation in the world. Surely, then, the House will agree with me, that when it comes to negotiation, we are in a position to demand a quid pro quo on every single point, to insist on fair play for British creditors and to demand at least an equal balance of trade.

4.3 p.m.

Mr. BOOTHBY

I beg to second the Motion.

It has been ably and interestingly proposed by my hon. Friend. I do not know whether my sentiments before I have finished will be exactly the same as his, but, at any rate, we can subscribe together to the Motion, and I think that we can agree on quite a number of points. At the outset, I wish to say that I am not at all impartial on this matter, as some hon. Members know. I do not claim to be impartial. My constituents, to a large extent, are engaged in catching herring, and it is well known to hon. Members that the Russian market is vital to their industry. Before the War, the export trade in herring to Russia amounted to about £1,000,000 a year. These herring, or the vast bulk of them, must be cured and exported, they are caught in such vast quantities and over such a short period of time.

Sir R. HAMILTON

Was not the quantity 1,000,000 barrels?

Mr. BOOTHBY

I should have said 1,000,000 barrels, the actual value being more. We cannot expect to dispose here of the annual catch of herring, which are nearly all landed either in the early summer or in the autumn. There are only about three or four months of really busy fishing. You cannot dispose of anything like the total catch in the home market, or in any other market expect the European, and one of our difficulties at the present time is that these herring are being shut out of so many European markets in addition to Russia. Take Germany, for example. The German Government, as is well known, are bent upon making Germany as far as possible into a self-supporting economic unit. They are making it very difficult for us to export, and, indeed, by subsidy they are building up a herring fishery of their own in order to catch their own herring and market them inside their own country. That means that, in the course of time, we have to face up to the possibility that perhaps a second market for our export of herring is going to be closed. I, myself, after nine years' study of the herring industry, have no hesitation in saying, that unless we can recapture a market for these herring during the next three or four years, the industry is doomed. I do not for a moment say that that justifies us in making every sort of concession to Russia that we ought not to make; and if it were in the national interest not to resume friendly relations with Russia, I would unhesitatingly say that the herring industry should be sacrificed to the national interest. At the moment I am merely pointing out the economic facts of the industry.

Mr. KIRKWOOD

You would sacrifice the Scottish fishermen?

Mr. BOOTHBY

I say, if it were in the national interest to do so. The hon.

Member for Dumbarton Burghs (Mr. Kirkwood) would, no doubt, be prepared to sacrifice the millionaires of this country if it were in the national interest to do so.

Mr. KIRKWOOD

The millions—not the millionaires.

Mr. BOOTHY

I would, however, point out that the drifter fleet, which constitutes the herring industry, is a vital necessity to us in time of war. During the War we had the highest testimony that the drifters were absolutely necessary for the maintenance of our Grand Fleet, and I say that if we cannot, somehow or other, restore foreign markets to that industry, this House, in the national interest, will have to face up to the necessity of affording some direct financial assistance to the herring fishing industry, which is an essential part of our national defence in time of war. You cannot allow the whole population round the cost of Scotland to be thrown out of employment, and forced away from the sea. I do not think that that is a solution of this problem, to whatever other solution we may come, to which this House or country would ever agree.

Having established the fact that, as a representative of this industry, I am thoroughly partial in this matter of trade with Russia, I do feel that it is very necessary that all speakers in this Debate should guard against saying anything that would weaken the hands of my hon. Friend and the Government in the negotiations which are at present going on with the Soviet Government, or prevent those negotiations being brought to a successful conclusion. We want to strike the best bargain we possibly can, and nobody is more interested in striking a good bargain, as my hon. Friend who moved this Motion pointed out, than those engaged in the herring industry. I want to see the best bargain struck for our people that we can possibly get, and I have always maintained, as hon. Members who do not agree with me on some other aspects of this question will agree, that the balance of trade during the last seven or eight years between this country and Russia has been hopelessly wrong, [...]op-sided, and ought to be corrected.

I would like the Secretary for the Department of Overseas Trade to tell us, when he comes to reply, what it is that is holding up these negotiations. They really are interminable; they have been dragging on and on. We all know that it is the practice of the Oriental, the Easterner, to spin out negotiations as long as possible, but I think the hon. Member must admit that seven months is a long time, a good allowance. I want to know whether the hitch has occurred about one or two specific points, or whether it is on the general question of the balance of trade between the two countries. If it is on the general question of the balance of trade between the two countries, then I think my hon. Friend is perfectly justified in holding out, and, if necessary, breaking off negotiations altogether; but, if it is on a specific point, I am not so sure that he is on sound ground. Take, for example,—and here I am only quoting rumours—the case of the Lena Goldfields. That is a question which involves a private company and not the nation as a whole, and all that it is necessary for us to do at the moment is to establish a principle, for example, the principle of arbitration; but I do not think that haggling over figures at the present time in connection with that particular company and the affairs of that company will justify the holding up of a general agreement covering the whole field. I would add that I do not believe that in the future the best way or the right way of our conducting business with Russia is by means of concessions held by us inside Russia. I do not think that that will ever prove to be satisfactory in the long run, and we ought not to seek for these concessions. If people do so, it should be entirely at their own risk, because it has been made perfectly clear over a considerable period of years that the Soviet Government do not, desire what they would call capitalist companies operating under concessions inside their own territories, and I think we should have nothing to do with that method of conducting business with the Soviet Union.

Is there any business to be done along other lines? Here I disagree with my hon. Friend. I believe that there is a substantial business to be done between Russia and this country; for instance, agricultural machinery, machine tools, and last, but not least, railway development and transport development. I read the other day a most interesting interview which Mr. Duranty, the brilliant correspondent of the "New York Times" in Moscow, had with Mr. Stalin. He asked him: What, at the present time, is the most important problem of internal policy in the Soviet Union? and Mr. Stalin replied: The development of trade between city and village, and the strengthening of all types of transport, particularly railroad. The solution of these questions is not so easy, but easier than those which we have already solved, and I am confident we shall solve them. I do not know whether it has occurred to hon. Members that a not inconsiderable part of the wealth of this country during the last century was built up by developing transport facilities in foreign countries and in the Dominions. I would ask hon. Members seriously to consider our position in the economic situation of the world at the present time—on the one hand, the development of transport facilities and new methods of communication of all kinds—the world telescoped geographically; and, on the other hand, the steady growth for the last 10 years of economic nationalism and isolation on the part of the nations, which have been shutting us out from the export markets we used to enjoy, and upon which our whole industrial system has been built up. We are one of the few countries in the world which has got to have an export trade.

I entirely agree with Members of my own party who put the development of Empire trade first. I say let it come first every time. I wish that far more active steps were being taken at the present time to extend, consolidate and organise trade within the Empire and to develop our export trade in this field. But I do not think that this is enough if we are to maintain the workers in our exporting industries at a decent standard of life in the next 20 or 30 years; and I do not think that we can afford, unless compelled to do so, to ignore what is potentially, and, I think, likely to remain for many years to come, the greatest market in the world for capital goods, and the only market left for us to exploit in this direction. I use the term "exploit" in no disparaging sense, but in the legitimate sense. [Laughter.] You can use the word "exploit" in a perfectly legitimate business sense, and I think that we should exploit the Russian market, and get as much money out of it as we possibly can. The hon. Member has pointed out that there are risks. Of course there are risks. They are always attendant upon the conduct of trade under our present system, at any rate, and are likely to remain attendant upon it for many years to come. But would we have built up our industrial supremacy if we had not taken any risks?

I would point out to hon. Members who are frightened of doing trade with Russia that from 1924 to 1929 a passion amounting almost to mania developed in the City of London for lending money to Germany. Money poured into Germany from the City in millions, into German municipalities, German bonds and industrial undertakings, and the Government of this country never raised a finger to check that outflow of capital. On the contrary it, received the active assistance of the Export Credits Scheme of that time. I was not averse at the time, and am never averse, to our lending money. I think it is the basis of our export trade. But I do think it was overdone with regard to Germany at that period, and I am particularly irritated when I reflect that to a large extent the Germans passed on the money straight to Russia in the form of extended credits, taking a rake-off of from two to five per cent. In the last resort who defaulted, the Germans or the Russians? Hon. Members know it was the Germans. The Russians on a debt incurred directly by the Soviet Government have never yet defaulted. If you are to assess risks I say that undoubtedly in the period from 1924 to 1929 the German risk was the greater of the two.

I come now to a few words about the general political situation, as apart from the economic situation. It is naturally a delicate question, and I propose to tread warily, especially as I see the Lord Privy Seal present. I think we would all agree that while the situation has taken a sharp turn for the better in the last 24 hours, if we were to look for two danger-spots in the world to-day, from the point of view of international peace, we would probably turn to Japan on the one hand and to Germany on the other. Our chief interest at the moment is to preserve peace, but if we take a survey over the whole field of international policy those are two of the danger-spots. Whether we like the Soviet Government or dislike it, there is one point upon which we can all agree, and that is that the Soviet Government has an even greater interest than we have at the moment in preserving peace; because the Russians have said, and know perfectly well, that the one thing which would jeopardise the Soviet regime, the one thing which might easily bring about the fall of the whole of the Socialist-Communist system, would be to engage in war on any large scale. For this reason I think that, if we can do it, the establishment of more friendly relations between Great Britain and Russia would be a stabilising factor in international politics and a safeguard for peace. We want every safeguard for peace that we can get.

I ask my hon. Friend the Secretary to the Overseas Trade Department to answer one question: Does he really want to establish more friendly relations with Russia? Is that the objective of the Government, or in fact do they not want to establish friendly relations and trading relations with Russia at all? He cannot, of course, answer on details, but on the question of principle I think that that is a fair question, because there are many people who are in some doubt about it. There is no question that in the past the Russians have been guilty of something a great deal worse than mistakes. The imprisonment of our engineers was a wicked thing to do. But I am not certain that the faults are entirely on one side. Looking back over the last 10 years I do not think it can be said that our handling of the Russian problem has been uniformly happy. In retrospect the Arcos raid seems to become more and more a senseless and foolish business.

It would be a good thing if we could try to wipe out the past, and make a fresh start in this business of our relations with Russia. We cannot altogether leave out of account the fact that there is a great difference between the foreign policy and outlook of Mr. Stalin and that of Mr. Trotsky. Indeed, what they actually broke upon was that Trotsky held out to the bitter end for active measures being taken by the Soviet to bring about world revolution, whereas Stalin always held that their immediate objective should be, and should remain for a long time to come, consolidation, development and organisation inside Russia, and no interference with anyone beyond the boundaries of Russia. No doubt, while propaganda, perhaps inevitably, has not entirely ceased, the anti-British propaganda outside Russia is infinitely less and less harmful to-day than it was several years ago.

In these circumstances I submit to the House that the time has now come when we should endeavour to establish more friendly relations and better trading relations with Russia, and make a genuine attempt to get the whole of our relations upon a better footing so as to make a fresh start. After all, the Soviet Government at this moment is carrying out a gigantic experiment. In this country we do not agree with the economic side. For my part I am not at all convinced that some of the experiments that the Russians are making at the moment in the scientific and sociological field will not be of tremendous and permanent importance in the future and have a great effect upon the destinies of the whole human race. At any rate, whether they are good or bad, we ought to know about them, and I think we ought to be in closer touch with them than we are. I was amazed the other day when I was in the United States, before America reestablished relations with Russia, to read full, interesting and by no means necessarily friendly reports of what was going on in Russia. Those reports appeared in all the American newspapers and were from their correspondents in Moscow. They were by no means invariably favourable to the Soviet Government, but they were very interesting. Take what happens in this country. Our greatest newspaper, the national newspaper, the "Times," has no correspondent in Russia at all, and we get in it no first-hand information of what is going on in Russia.

Sir WILLIAM DAVISON: Why?

Mr. BOOTHBY: It is a question I would like to have answered. I can only say that I think it is unfortunate that our Press should be so inadequately represented in Soviet Russia, and that our information as to what is going on there should be so scanty. There are two experiments going on in the world to-day, one in the United States and the other in Russia, which are bound to be of great importance to us in the future. We ought to know what is going on in both countries, so as to learn from their experience what to follow, and, still more important, what to avoid. The more we can find out and the closer we can get from the point of view of cultural relations to those two countries, the better for us in the long run. I would ask my hon. Friend the Secretary to the Overseas Trade Department to answer my two questions: Do the Government want better relations with Russia as a matter of principle, and, secondly, what is the cause of the long-drawn-out delay in arriving at a satisfactory agreement?

4.25 p.m.

Mr. CHARLES BROWN: I beg to move, in line 1, to leave out from "That" to the end of the Question, and to add instead thereof: in view of the urgent necessity for a mutually satisfactory Anglo-Russian trade agreement, this House urges His Majesty's Government to take active steps to that end, leaving any other matters in dispute to be settled by separate negotiation. I am certain that the two speeches to which we have just listened echo to some degree the sentiment of my Amendment. We are in agreement to some extent with both the Mover and the Seconder of the Motion in stressing the necessity for an immediate Trade Agreement with Russia. The hon. Member for North Lanarkshire (Mr. Anstruther-Gray) was torn between two opinions. Perhaps I ought not to have put it quite in that way, however. His first impulse was to have nothing to do with Russia, but I was very glad when his political prejudices seemed to be overcome by his recognition of economic realities. That was at any rate a mark of some importance in our discussion to-day. The hon. Member recognised the importance of the Russian market. I want particularly to ask the Government what are the reasons for the delay in making a new Trade Agreement with Russia? To some of us the delay seems quite unwarranted and unnecessary, and we cannot help feeling that there are perhaps matters of which we have no knowledge which are playing a part in these negotiations and which ought to be ruled out entirely, especially when one looks at the matter from the standpoint of urgency, which has already been stressed by the Mover and Seconder of the Motion.

No one can deny the fact that the absence of a trade agreement and the embargoes placed on Anglo-Russian trade between April and July, 1933, had a disastrous effect on our exports to Russia. For instance, in the nine months ended 30th September, 1932, the exports to Russia were £7,000,000. In the corresponding period of 1933 they amounted to only £2,784,000. During the same period there was a corresponding fall in our re-exports to Russia. I know it may be said that there has been a decline in Russian imports generally and that what has happened is only part of that general decline. I do not know whether it would be possible to defend that point of view, because if we had had amicable trade relations with Russia I do not think that we need have suffered in the way that we have done in the decline of our exports to that country. It is obvious that Russia wants a trade agreement with Britain. I do not think the Secretary to the Overseas Trade Department will deny that statement. In this connection I want to quote from a speech made by Mr. Litvinov, Commissar for Foreign Affairs, in the course of a speech before the Central Executive Committee on 29th December last. He said: Our relations with Great Britain cannot boast either of stability or continuity. There are no objective reasons for this. I am quite certain that the British people as a whole desire to live in peace and friendship with us, but there are elements there which are still wrapped in the sweet dreams of a general capitalist struggle against the Socialist country, dreams from which the United States has just shaken itself free. They will be unable to destroy or even to shake our Socialist country. Consequently, in view of the well-known practical character and common sense of the British, one cannot help being astonished that amongst them there should still be some quixotic snipers and partisans. In so far as it depends on us we are ready, and we should like to have, as good relations with Great Britain as with other countries, for we are convinced that sincere and good relations between great Powers are not only a necessary condition but are a guarantee of general peace. It is expected that a temporary trade agreement will be signed shortly which, removing as it will certain misunderstandings, we hope will make possible better relations between ourselves and Great Britain.

Obviously there is a sincere desire on the part of the Russians for the immediate signing of a trade agreement and I do not think that any hon. Member here is prepared to deny the importance to us of an agreement with Russia. However much the hon. Member for North Lanark may dislike the Russian economic system, I am sure that when he surveys the situation in industrial Scotland he realises that a trade agreement with Russia must benefit the areas which he has in mind. I take it that he assents to that proposition and that we are agreed generally as to the necessity and importance of an agreement with Russia. We want to know, therefore, why these negotiations have been so prolonged. What is the difficulty in the way of bringing them to a satisfactory conclusion? Everybody knows that the number of the friends of the National Government is rapidly diminishing, but there are some people who remain loyal to them, through thick and thin—even people of importance and among these is Mr. J. L. Garvin of the "Observer." He is very loyal to the National Government and I shall quote something which was written by him in regard to this matter, on 10th December, 1933. Time was, not very long ago, when Mr. Litvinov could hardly get himself reported in any newspaper outside Moscow. His views are now sought and studied in most countries. … The truth is that as Russia has turned the corner in her domestic economics, so she has achieved an important, in some ways cardinal, position in the present phase of high diplomacy. Commenting on the speech of Mr. Litvinov to which I have just referred, Mr. Garvin goes on to say: Much of what Mr. Litvinoff said on Friday needed saying. The time has gone for financial polemics of the Krassin era. Events have placed the diplomacy of Moscow in a key position both in Far Eastern and in European affairs. Every serious person shares his regret that Anglo-Russian relations have not yet permitted him to complete his Washington mission of last month with an equally good understanding with Britain. There is another article on 14th January this year in which Mr. Garvin writes that every week brings new evidence of the importance of Russia's part in high diplomacy. The fact that Mr. Garvin is an enthusiastic and consistent supporter of the National Government ought to add weight to his views on this subject as far as the Government are concerned, especially having regard to the fact that they are now surrounded by an ever-increasing number of enemies. The position of the Government in regard to this matter was stated by the Secretary to the Overseas Trade Depart- ment on Monday last. In reply to a question put by the hon. Member for East Birkenhead (Mr. Graham White), the hon. and gallant Gentleman said he was not yet in a position to make any further statement on the negotiations for an agreements, but, later on, in reply to a question put by the hon. Member for South Kensington (Sir W. Davison) in reference to the Lena Goldfields Company he said: An intimation has been received from the Soviet Government that if the company were to inform the Concessions Committee that they had not been able to accept the former offer made to them but were ready to resume negotiations, the committee would respond favourably. It was added that the mere fact of a resumption of negotiations would indicate a mutual amendment of terms. His Majesty's Government have accordingly advised the company to send the Concessions Committee a letter proposing to send representatives to Moscow to discuss the claim on the understanding that the terms would be materially amended on both sides. The company have decided to adopt this course."—[OFFICIAL REPORT, 29th January, 1934; col. 39, Vol. 285.] Further questions were put, but the hon. and gallant Gentleman maintained his ground and refused to go any further. I wish to ask him now: is it not a fact that such an arrangement as this could have been made almost two years ago? Why was not that which now appears to have been accepted, accepted two years ago?

Sir W. DAVISON: It was.

Mr. BROWN: I think we had better await the official reply from the Secretary to the Overseas Trade Department. The question of what is preventing the conclusion of a Trade Agreement is a very interesting one. The hon. Member for South Kensington who puts quite a number of questions in the House on the subject of the Lena Goldfields Company—as he is quite entitled to do—will probably take part later in this Debate if he catches your eye, Mr. Speaker, and consequently I want to make some references to the Lena Goldfields business. It is not my intention to go into the merits or demerits of the dispute. I understand that the most recent reply of the Soviet Government on the matter is as stated by the Secretary to the Overseas Trade Department on Monday. But I ask the Minister: is it a fact that throughout the negotiations the Soviet representatives have maintained that the Lena Goldfields case is a separate matter, and that in agreeing to the various terms of an agreement they have acted on that assumption. The hon. Member for East Aberdeen (Mr. Boothby) stressed the fact that there are matters of this kind which require to be arranged between our Government and the Government of Russia, but which ought not to be allowed to interefere with the general Trade Agreement which is being negotiated at the present time. Let us hear Mr. Garvin on the Lena Goldfields case. In the "Observer" on 21st January, 1934, he wrote: Let the National Government be as resolute as President Roosevelt in its decision to make a big settlement with Soviet Russia. By comparison with the new world-issues which have arisen, all minor disputes like that concerning the Lena Goldfields should be swept out of the main business. They should be the subject of separate and subordinate negotiation. I do not think it has ever been taken as a matter of principle that disputes between British investors and foreign Governments or nationals—which are not unusual—should interfere with such agreements. Since when has the signing of Trade Agreements been made conditional on the settlement of such claims. I should like the Secretary to the Department of Overseas Trade to answer that question. Has any British Government ever made the conclusion of a Great Britain-United States Trade Agreement, for instance, conditional on a settlement of the claims preferred against certain Southern States of the United States in regard to their pre-Civil War and post-Civil War bond issues?

If the non-settlement of the Lena Goldfields claim is holding up the conclusion of an agreement, we are entitled to examine the composition of the company. It is not without interest in view of the important part which it has played apparently behind the scenes in connection with this question. The largest shareholder and noteholder of the company in December 1929, when the dispute with the Soviet Government arose was a Mr. Benenson. This was admitted by the chairman of the company on 16th December, 1929. Mr. Benenson is not a British subject, but a gentleman of Russian extraction and American citizen- ship. The chairman of the company, Mr. Herbert Guedella, admitted at a meeting of the note-holders of the company on 27th December, 1930, that Mr. Martin Coles Harman had been a member of the Note-holders Committee of the company. Mr. Martin Coles Harman was sentenced on 15th November, 1933, to 18 months' imprisonment for defrauding the shareholders of the Chosen Corporation Limited. The Lena Goldfields Company at the close of 1925 and the beginning of 1926 raised a loan of £750,000 at an annual interest rate of 8 per cent. The loan was issued at the rate of £80 for £100 nominal value and, after all deductions, the company only received about £550,000. This loan was placed by the Rock Investment Company Limited, of which the notorious Mr. Martin Coles Harman was chairman at that date. I do not want to go into any further details or to take up the time of the House further on that aspect of the matter, although there are further details just as interesting as those I have given. The point I wish to make is this. Are the general trade interests of this country which are likely to be affected by a Trade Agreement with Russia, being held up merely because of certain things which have happened in connection with a particular company in Russia run by a group of cosmopolitan financiers? How far is that fact influencing the Government?

There are certain other factors which we have to face in view of the long delay in making this agreement. Let us recollect that the United States and Russia have entered into diplomatic relations quite recently—on 17th December, 1933, to be precise—and that ambassadors have now been mutually appointed by these two countries. Everything goes to prove that an understanding with Russia has been welcomed in America. Some of the advisors to the American Government speak about an annual export to Russia amounting in the future to the equivalent of £100,000,000. It is true that in other quarters this is regarded as an exaggeration, but the fact remains that in 1930, when there were no diplomatic relations between the two countries, the United States exports to Russia amounted to the equivalent of £23,500,000. Even if the figure of £100,000,000 is an exaggeration it is not without importance to us that some arrangement is being made with the United States.

Also let us note the improvement in the relations between France and Russia. Why are we always the last in the field. Why have we allowed the United States and France to get the advantage of us. This Government is supposed to be a Government of action, a Government which does things quickly in the national interest. Why all this delay? What are the obstacles in the way of an immediate arrangement with Russia? Everybody knows that the Soviet relations with many other countries are quite good. Real statesmen—and I imagine there are many people who would claim that we have some in the National Government—should not allow themselves to be controlled by the mere circumstances of the moment. They ought to look ahead. If they are really going to further the ultimate interest of their country, they should have regard to the possible circumstances of the future in determining their policy.

I agree with the hon. Member for East Aberdeen as to the future possibilities of the Russian market. It is customary in some circles to contrast the general conditions among the masses of the people in Russia with the conditions which obtain in Great Britain. Obviously, that comparison is made in such a way that it shows to the disadvantage of Russia, and it would be strange if it did not. We have had in this country an industrial civilisation for nearly 100 years and if we had not raised the general standard of life of the mass of the people, the indictment that could be drawn against that industrial civilisation, would be even more powerfuul than it is to-day. But the real comparison is not between the condition of the masses of the Russian people and the masses of the British people. The real test is the difference between the condition of the Russian people to-day and the conditions which obtained in the days of the Tsars. Judged by that test, there has been a considerable rise in the standard of life among the masses of the Russian people. I have quite a lot of facts and figures on that matter that I could quote if I wanted, and I do not think I should have any difficulty in proving my point. The hon. Member for South Croydon (Mr. H. Williams) shakes his head. I am afraid that he is far more actuated by political prejudice than was the hon. Member for North Lanark, who moved the Motion, but perhaps some day his economic sense—and he has some—will come to the surface on this Russian matter.

In my view, among all the great masses of the people in Europe, it is only in Russia where at the moment the masses of the people have a rising standard of life. It is very doubtful if in any other Western European country at this moment the standard of life of the masses of the people is improving at all. You may very well tell me that the Russian standard is below ours. I agree, but in Russia there is a definite, steady improvement in the standards of the great mass of the people. In this connection, when I am hearing discussions on this matter, there frequently comes into my mind a passage that I read in a brilliant little monograph on the life of Tolstoy in the years before the War. It was in the introduction to that little book, and I have never forgotten it. The writer, when he wrote the passage, did not envisage the Great War nor the Russian Revolution at the end of the War, but this is what he wrote: The twentieth century will be the century of the Russian. By the time the twentieth century has run its course we shall have in the area called Russia an aggregation of some 300,000,000 of human beings. I know that mere numbers do not matter very much, but there are Members of the Government who do attach great importance to numbers in this trade connection. For instance, there is the President of the Board of Trade. I know he is in a difficult position in these days. I know that he is haunted by his Free Trade past and surrounded by die-hard Tories, forcing him into reactionary policies, but sometimes he looks away to the East and sees these teeming millions. I have heard him in this House talk about the anarchy in China and the disastrous consequences of that anarchy to trade and commerce, and he has even looked forward to the day when the anarchy in China will be swept away, when order and peace will come in that distracted country, and when China will be a potential market, vast in extent and able to absorb large quantities of the manufactured goods which we can produce so freely in this country. There is no anarchy in Russia. There is a population there of 170,000,000 human beings, whose demand for goods will constantly increase in the days that lie ahead. Why not seize the advantage we have at the moment to cater for the needs of these millions of human beings? China at the moment is nearly beyond our reach. Why not seize this opportunity? Why not hasten the making of this trade agreement with Russia?

The right hon. Gentleman the President of the Board of Trade, although haunted by his Free Trade past, has made speeches here in which he seemed to envisage the time when the seven seas would be filled again with busy shipping, and because of that fact I have some little faith in him, if he does not yield to this unseen pressure from somewhere that is holding up the signing of this agreement. The President of the Board of Trade is quite different in some ways from other members of the Government. The Minister of Agriculture, for instance, visualises the time when the last ship will have come home to port, when we shall be making everything that we want in this country, and when shipping and trade will be a thing of the past. So long as that idea is influencing the Government, I can understand that there are people who do not want a trade agreement with Russia, but I do not think that applies to the Secretary of the Overseas Trade Department. At least, I hope it does not.

Consequently may I urge upon the Government the importance of making this Trade Agreement with Russia at the earliest possible moment? Let them not be actuated by secondary matters like the Lena Goldfields and other things that may be behind the scenes. Let them for once think of the engineers on the Clyde and in Lincoln and Gainsborough; let them think of the toolmakers in various towns and cities throughout the length and breadth of this country, and I am certain that a trade agreement——An hon. Member mentions the herring fishermen. Let me put in a word for the hon. Member, who will be putting it in for himself later, no doubt. I would gladly see herring going to Russia in considerable quantities; and I would, in conclusion, urge on His Majesty's Ministers to make this Trade Agreement which in the end, when it is signed and working, will be to the mutual satisfaction of two great peoples.

4.54 p.m.

Mr. JOHN WILMOT: I beg to second the Amendment.

I think there is very little to add to what was said by the hon. Member for East Aberdeen (Mr. Boothby), who appeared to be speaking in favour of the Motion, but was, I am sure, really speaking in favour of the Amendment; and those of us in whose names the Amendment stands are indebted to him for the powerful arguments that he put forward as to the necessity for carrying out the policy envisaged in the Amendment. I was not at all sure that the Mover of the Motion, the hon. Member for North Lanark (Mr. Anstruther-Gray), was really desirous of securing a trade agreement, and perhaps some of his hon. Friends will tell us later what he had in mind. I think the time has come when Members on all sides of this House should put away their political prejudices and consider this thorny business of Anglo-Russian trade as a trade and economic matter. We all desire to adjust the present unsatisfactory balance of trade and that that trade, both in imports and exports, should be vastly extended, but the cause of the unsatisfactory balance and the large excess of imports into Britain from Russia over exports out of Britain to Russia is the fact that there is no satisfactory trading arrangement.

Mr. HERBERT WILLIAMS: Will the hon. Gentleman explain why the same condition, in general terms, prevailed when the Socialist Government were in power, and there was what they regarded as a satisfactory trade agreement?

Mr. WILMOT: I shall be pleased to deal with that point a little later. It arises from the fact that owing to the unsatisfactory arrangements at present and the unsatisfactory series of events that have taken place with regard to Russian trade, there are not adequate credit facilities, which, if they did exist, would adjust this unsatisfactory balance. We have always to remember that Russia is a country of vast extent, primitive in many ways, and being developed, as South America was developed, as the hon. Mem- ber opposite pointed out, but with this difference, that we are granting to Russia no long-term loans such as were granted to South America. The capital development of a primitive country has always been carried on by long-term lendings from the industrialist countries of Europe, and Great Britain's financial as well as her industrial supremacy has very largely been built up, as the hon. Member opposite pointed out, by a combination of foreign long-term lending and the supply of capital goods. It is the absence of long-term credit facilities to Russia which makes it essential that, in that absence, there should be short-term facilities.

It is no good pretending that Russia desires to sell her produce in British markets at knock-out prices because she enjoys doing it. Russia is under the necessity of securing foreign currency to meet her indebtedness, and the only method by which she can secure that foreign currency is to secure it from the proceeds of the sale of her goods. In this respect it is no use talking about tariffs, because so long as the absence of longterm credit facilities exists, Russia will be bound to supply herself with currency to meet her debts, at whatever price she is forced to sell her produce. I think it is necessary, having regard to the effects of the sale of commodities at unduly low prices, to have regard to the effect of the lack of credit facilities on that part of the difficulty. The essential thing is that Anglo-Russian trade arrangements should be got down to a trading level and that we should shut the door once and for all on these periodic political disturbances. There was the Arcos raid, there was the embargo, and then there was the blow-up and bother over some cock-and-bull story about notes coming from a bank being found on gunmen; and every year or two we get an interruption and a pulling down of all the bases which have been established with regard to Anglo-Russian trade.

Sir W. DAVISON: Whose fault?

Mr. WILMOT: It is everybody's fault. The real fault lies in the fact that two nations who have economic systems which are diametrically different, but who nevertheless need to trade with each other. We need to trade with Russia every bit as much as Russia needs to trade with us, and if you ask whose fault it is, I answer that the fault lies in a failure to understand that trade has got to be done, and however difficult it may be, some economic and reasonable financial basis has got to be laid down. When the embargo was put on and the agreement was broken, what happened? It meant that the orders for British manufactured goods which would otherwise have been placed in this country were placed abroad, but it is interesting to remark that those orders for foreign-made goods were financed with British money in the City of London, and the only effect of the embargo was to raise the rate of the financing and to ensure that British funds were employed in granting credit to Russia, for the purpose of finding work not for British workmen, but for Italian workmen, and bills of exchange drawn on the Russian Government and endorsed by Italian banks were current coin in the discount market in the City. Very large sums were employed in discounting bills in the City of London in payment of goods manufactured in Italy, Czechoslovakia, and elsewhere.

The view which this House seems to take, that Russia is some sort of pariah with whom no business can be done, is not shared by business people. The City is full of people who run after Russian business when they can get it, and the only effect of the political disturbances is to raise the profit on the business which they do. There is the remarkable arrangement which was come to, very largely as a result of a refusal to provide the orthodox trade facilities, whereby the Russians managed to unfreeze the frozen German credits for British factors—a most remarkable transaction where the Russians received payment for their goods in blocked marks which could not otherwise be realised. Such curious backdoor methods are the natural result of refusing to put Russian trade on the same sort of basis as any other trade. My belief is that the best thing would be a system of long-term loans to Russia because in the long run it would be to our advantage, and we should get a better deal that way than by these short-term arrangements.

I would like to ask the Minister when he takes part in the Debate to tell us just what the Government have in mind with regard to this agreement. I believe it is true that the Lena Goldfields diffi- culty has been got out of the way; it would be a monstrous thing if a dispute with the Lena Goldfields were used as an excuse to hold up the Trade Agreement. Why should we take a different view with regard to the Lena-Russia dispute, than we do with regard to Cosach Bonds, Mexican tramways or German bonds, or any other bonds that are in default. If we are going to hold up trading relations with every country which is in default in its indebtedness we shall cease trading altogether. We are anxious that these things should be settled and that there should be an adjustment in the balance of trade, but the best way to secure a settlement of these difficulties is to get our trading relations on to a normal basis as soon as possible. My hope is that it will be possible within the next few days to get an agreement with Russia which will provide a long-term arrangement and give us a three-part agreement which will last for some years so that everybody will know where they are in dealing with Russia and so that the whole business will not be subject to fluctuations and alarms and excursions—a three-part agreement having regard to the essentials of the business, namely, the imports, the exports and the credits. If we can get that done, and if we can come to a reasonable trading agreement on these three main points, much of our troubles will disappear and we shall find in Russia and Russia will find in us a satisfactory trading partner to our mutual advantage.

5.4 p.m.

Mr. MALLALIEU: I apologise for inflicting my views on this question upon the House, because I cannot profess to be an expert in any sense, either on Russian affairs or on the large questions of trade which are involved in this discussion. I confess it is rather because I am bewildered by some of the statements about the balance of trade which I have heard that I wish to put what appears to me, as a completely inexperienced person in these matters, a view upon the figures as presented by the Board of Trade. I hope that when the Minister joins in the Debate he will put me right if I am wrong on some of the figures and some of the deductions which I try to draw from them. For the 10 years, 1921 to 1930, the adverse balance between Great Britain and the Union of Soviet Socialist Republics has been some- where in the neighbourhood of £100,000,000. From that fact the unwary—in which description I must include the mover of this Motion—would deduct that Russia sells to us just so much more than we sell to her.

Mr. ANSTRUTHER-GRAY: The figures in those 10 years show that Russia had a trade balance of something like two to one in her favour. The position about which I complained in my speech is that during the last six months of last year the balance in Russia's favour was no less than six to one.

Mr. MALLALIEU: I will come at a later stage to the last six months, but apparently I have interpreted the hon. Member aright when I said that he would deduct from those figures that Russia sold to us in that period £100,000,000 worth more goods than we sold to her. During the same period, apparently, the adverse balance of trade between Canada and this country was no less than £295,000,000. An even more staggering figure is the adverse balance between this country and the United States which was £1,891,000,000.

Mr. MACLAY: Is the hon. Member including invisible exports?

Mr. MALLALIEU: I am taking the visible, direct transactions. Although there are these large adverse balances with Canada and with the United States, we have never had a murmur that there should be prohibition or anything in the nature of prohibition of the trade between this country and Canada or even betwen this country and the United States.

Mr. H. WILLIAMS: The adverse balance between the United States and this country has been heavily reduced as the result of the policy of the Government.

Mr. MALLALIEU: That does not alter my point. I concede that for one reason or another the figures have changed in the last few years. During 1932 there was still a visible adverse balance of £9,000,000 with Russia and in the first nine months of 1933 it was some £7,000,000. I wish to point out that there is still such a thing as indirect trade, and without wishing to dilate upon the benefits of indirect trade to this country I will, if the House will allow me, quote a statement by the City Editor of the "Times" on this subject, in which he says: In no small part, the abnormal unemployment in this country is to be attributed to the absence of Russia from the economy and comity of nations.… The direct trade may not be important, but the indirect trade is just as important to this country as to those immediately concerned. I do not dissent from that. On the contrary, I endorse it. I do not think there is any magic in the balance of trade being exactly equal, and I can see very serious inconveniences from attempting to arrange that it should be so. If these figures are those commonly accepted as showing the correct reflection of the trade position between this country and other countries, it may be interesting for such persons as are ignorant on these subjects, as I am, to examine what they purport to show. I do not wish to attack the Board of Trade for their figures because I think they are accurate. What I criticise is the deductions which are drawn from those figures by persons of the unwary class. There is absolutely nothing in the Board of Trade figures, as far as I can see, to reflect the effect upon the position of trade between this country and Russia of freights paid to British shippers by Russians who use our ships, of storage and packing charges, and of dock charges. I believe it to be a fact that all Russian cargoes all over the world are insured in London or in this country. As far as I know, there is nothing about all that in these figures which relate to visible balances; and yet, of course, they are all items of income to somebody in this country and ought, therefore, to be shown in a correct reflection of the position of trade between this country and the Soviet Union.

London being the great market of the world for some purposes, Russia very frequently orders in London goods to be shipped direct from the country of origin to London. All this involves a commission for someone in London. That is, again, income to this country which is not reflected in the figures. As an example of that, I would refer to Egyptian cotton or Indian tea, large quantities of which are bought by the Soviet Union in London. I do not think it would be far wrong to say, taking these considerations into account, that the adverse balance would be somewhere in the neighbourhood of £30,000,000, and not £100,000,000. If one takes, again, the re-export from this country of imports from Russia to this country, it is probable that in the 10 years even that £30,000,000 would be wiped out. I do not profess to be an expert, but if these things are not correct, I hope the Minister will correct me. I think that if there be this bogey of unbalanced trade between countries, the bogey lives in Canada, and should be tackled there, and not in the Soviet Union. The fact that it is tackled in the Soviet Union leads me to believe, as the House rather inferred from the speech of the mover of the Motion, that there were political rather than economic motives behind the Government's lack of energy in the matter of having a trade treaty with Russia.

The Government should not allow their policy to be dictated by any foreign country, or even any Dominion of the British Empire. I think that by now it is exceedingly probable that they are ashamed of the agreement they allowed themselves to make with Canada on the subject of the frustration of preferences. I do not think there is any evidence of any such frustration as is claimed by Mr. Bennett to have taken place, yet under the agreement, if I read it aright, his view is the one which must prevail. But I have no doubt that that very clause has been a subject of great difficulty in the negotiations which are still dragging on between this Government and Russia. Already the Government have by one means or another insisted upon a reduction of the amount of Russian timber brought into this country by the British distributors of Russian timber to the tune, I believe, of something like 850,000 standards in one year.

If that be so, and if it be the fact that the new Russian agreement involves a rough balance, visible I suppose, between the trade of the two countries, and insists upon it, we come to this position, that we are reducing the purchases of timber from Russia by a stated amount, 850,000 standards, I think. Under the new agreement Russia would be obliged to purchase goods in this country to an equivalent value if they were allowed to sell the same quantity of timber as be- fore. Let the House consider the effect on the herring industry if, as I understand, the Russians would have to purchase in this country the equivalent value of 850,000 more standards of timber. Why, that one item alone would put the herring industry on its feet. The Canadians complained so bitterly that the price of timber from Russia was uneconomically low that now the consumers of timber in this country have to pay no less than £2 a standard more. Of course, the Russian exporters were quite willing to oblige, and they put up their prices, although they knew they could sell at profit to themselves at £2 a standard less than the price at which they are now selling.

I think that the Ottawa Agreement, so far as Russia is concerned, so far as the frustration of preference is concerned, should be got rid of by this country at the first possible opportunity as a practical measure towards setting trade going again between this country and Russia. If the Government were more concerned with the expansion of trade than with its contraction, things would go very much better for this country. The Government are apt to tell us on these benches that it is a mere platitude to say that trade abroad must be expanded as a remedy for our present economic ills. It is a platitude, but like many other platitudinous truths it has not sunk into the minds of the present Government. Here, I submit, is a good practical suggestion. Let us get an agreement with Russia regardless of any political motives which may tend to make it hang fire. Do not let the mere desire to save the face of the Canadian Prime Minister with his own producers, or any such factor as the privilege of allowing our Embassy representatives in Moscow to eat expensive foods in front of the rather more simply fed population of that town, hold up an agreement. Let us get an agreement as soon as possible, with economic considerations alone in view. That is all that the Amendment is asking the Government to do, and on those grounds I would like to support it.

5.19 p.m.

Mr. MACLAY: Personally, I should have liked to see the Amendment added to the original Motion rather than moved as a substitute for it, because I find that I am in agreement with both, but it lies out of my power to secure that fusion, and I will detain the House, therefore, for only a few moments with two main points. The first is that negotiations ought to be hurried on to as early a conclusion as possible. The hon. and gallant Gentleman who is to reply for the Government must be getting tired of this question, and it seems to me the whole point of the Debate is to impress upon him that there is restlessness in the country over the long delay. The second point is that when he comes to reconsider the question of credits to Russia, he should do his utmost to see that they are as large as possible and for as long a period as possible compatible with the risk, which he and his Department are best able to gauge. We have been negotiating for seven months, roughly, and those of us who come from industrial areas have engineering trades "at us" all the time asking whether this Trade Agreement is any nearer fruition, and we have really no answer to give except to say that we hope it will shortly be concluded. Therefore, I ask the Minister to give us some hope, or, at any rate, some reason that we can give for this long delay.

It is almost unnecessary to mention again the question of the Lena Goldfields, because I honestly cannot conceive of the Government holding up the Trade Agreement because of that question. It would cause the greatest resentment in the country if it were suspected that such a matter were holding up a general trade agreement. Private traders have lost in other countries a good deal more than is owing to the Lena Goldfields, and yet trade agreements have not been ended on that account. Too many extraneous matters have been brought into this question of a Trade Agreement with Russia. The internal government of Russia is none of our business. If Russia starts trying to impose Communism on the United Kingdom, we know how to act, but, so far as her own Government is concerned, I do not think we can make its political complexion a question to be considered relative to a trade agreement. I had the opportunity of spending one short month in Russia last year, and I was amazed at the feeling among the Russians with whom I spoke that everyone in this country was hostile to Russia and wanted her downfall. I do not honestly think that that represents British feeling, to-day at any rate. It may have been a feeling at the time of the revolution. One has different feelings in a time of revolution from those one has afterwards, when time has mellowed things.

It is impossible to impress upon Russians at the moment that Britain is friendly disposed towards Russia, and not only Britain but every other capitalist country. The ordinary Russian person has no chance of reading outside newspapers and knowing the truth. Every statement made in this House which can he twisted so as to be hostile to Russia is broadcast across the Russian continent in an effort to show how the capitalist class is doing its best to bring about the downfall of Russia. It would be greatly to the benefit of this country if we could show that we were doing nothing except to exercise as friendly a spirit as possible towards Russia and to try to get as much trade going as passible. We know the dangers we run. We know that the tactics of Russia were to make propaganda for a Communist revolution, but that they were a failure, and that therefore they are now proceeding to try to make a successful Communistic State and in that way to spread Communism over the world. That is a risk which we must take, but it is not likely to come in our day, and I would not let any fear of that stop our trade with that country.

I suggest that the Russian Trade Agreement should be carried out exactly as an agreement with any other country. The only two exceptions in that respect are, first, that the Russian Government have sole control of entry into and exit from their country, which makes many technical difficulties; and, secondly, that we are often apt to think of Russia as a European country, whereas really she is, as someone has said, the most western of eastern countries rather than the most eastern of western countries. It does make a difference if we bear that in mind when we are discussing Russia. It has been said that Britain has a strong position, and I hope we shall use that strong position to the utmost, in the same way as would any other country.

I agree with the last speaker regarding the balance of trade. A great deal has been made of the balance of trade. I do not agree with what the proposer said. I do not think we could get anywhere near a perfect balance of trade with Russia. The Department know very well that the disposal of Russian credits alone makes that almost impossible. I do not think we can hope at the present moment to obtain a perfect balance of trade, though it is important to keep that point in mind, and to press it as far as possible. I would respectfully ask the Government, when they are arranging this Trade Agreement, to watch that they do not, by trying to help our exporters, correspondingly hurt our importers and consumers. That is very apt to happen in trade agreements. One group of people is helped, and then, after a year or two, we find that almost as much harm has been done to another group of people. I am certain the Government will bear that in mind. What I ask is that they should hurry the negotiations as far as lies in their power.

I come to my last point. An impartial observer going about Russia and remembering the vast number of unemployed in this country and noting the vast amount of work to be done and machinery required in Russia, would naturally have a vision of some co-operation between the two countries. It is lack of credit which to a very great extent is holding up that co-operation. Practically every other nation in the world but Russia is to a large extent self-sufficing, and we are kept out of other markets because other nations can make goods for themselves. Russia is one of the few markets with great possibilities which is left, but the possibilities seem to be limited by what the Government estimate to be the risk of credits. There is any amount of trade for our engineers if satisfactory credits could be arranged. As has been said by one hon. Member, the whole railway system of Russia needs renovating, if only we could get some means of arranging credits. The question is, What do the Government consider a wise risk? No one who has studied Russia will doubt that the Russian Government, if they remain in power, will not willingly default. So far as one can judge, those in charge of affairs in Moscow are competent business men, if they are nothing else, and therefore our only risk is how long will the Russian Government remain stable. Inside that question I would ask His Majesty's Government to stretch the commercial risk as far as possible, in order to make the credits as long as possible and for as large sums as possible, because to my mind Russia is one of the few countries left which can provide employment for the workers of this country in supplying machines and goods. I ask once again that the hon. Gentleman who is to reply for the Government will give us some more satisfactory answer than he has given so far as to what is holding up this agreement.

5.29 p.m.

Sir W. DAVISON: I have been in the House all the afternoon and have heard every speech, and all the speeches, with the exception of that of the Mover of the Motion, are so out of keeping with what one knows has happened recently that I felt that I had been wafted away to Alice in Wonderland. I can understand the hon. Member for Mansfield (Mr. C. Brown) accepting M. Litvinov's arguments and theories as to why relations are not as good as they might be between the Soviet authorities and ourselves, but I cannot understand my hon. Friend the Member for East Aberdeen (Mr. Boothby) in what he said. So far as I know, we all agree that it would be most desirable to have good relations between Russia and this country—I have never heard any difference of opinion about that—but the surprising thing is that the hon. Gentleman opposite, and apparently also the hon. Member for East Aberdeen, suggest that the reason for any faulty relations lies with this Government and our funny ways, and not with the idiosyncrasies of the Soviet.

The hon. Member for East Aberdeen began his remarks on this point by saying that it would be most desirable if a great newspaper like the "Times" had a representative in Moscow. Why have they not a representative there? Because the "Times" representative would not be allowed to report freely upon what he saw and what was going on. You do not suppose that a great newspaper like the "Times" desires to have an enormous country like Russia cut off from news coming to the paper. Of course it does not. It would be only too glad to have a representative in Russia. No wonder that I said that I feel as though I were with Alice in Wonderland. Why has the "Times" no representative in Russia? For the simple reason that such a representative would not be allowed to report what he saw.

Hon. Members suggested that it would be a mad thing to hang up a Trade Agreement in order to assert the rights of some British citizens whose property had been taken away from them. I will not say that I have never heard that argument in this House, but I have never heard it from the Conservative benches before, and it is a most monstrous suggestion. Another hon. Member said that this matter was no different from bondholders being involved in a default. It is very different indeed. I will give an answer to the hon. Member for Mansfield in regard to the facts about Lena Goldfields in a moment. I agree that where people invest money in a foreign concern and the thing goes phut, we should not rush in and make demands, but when our citizens go to a foreign country at the invitation of that country and invest money there, and then have their capital confiscated without any return being made to them, it is unquestionably the duty of the British Government, before entering into another agreement with that same Government, to see that our own citizens are protected. We realised that, in regard to the engineers of Metropolitan Vickers. Thank God the British Government are not so emasculate as to let our own citizens be murdered in a foreign country. We stood up for our own citizens and said: "These are British citizens, and we will have nothing more to do with you until these men are released." We very soon secured their release. Although the British Government will not allow British citizens to be murdered——

Mr. KIRKWOOD: On a point of Order. I would like to ask the hon. Gentleman when there were British citizens murdered in Russia?

Mr. DEPUTY-SPEAKER (Sir Dennis Herbert): That is not a point of Order.

Mr. KIRKWOOD: They were not murdered.

Mr. DEPUTY-SPEAKER: The hon. Gentleman must hope for his chance to reply. What he has raised is not a point of Order.

Sir W. DAVISON: —apparently they do not look upon the seizing and robbing of property in the same light. I would like to know what is the object of this Trade Agreement. Why is it required? We have heard from the hon. Gentleman who moved the Motion—and this was stated in the House yesterday afternoon by the Parliamentary Secretary to the Board of Trade—that imports from Russia during December totalled £1,317,000 and exports from the United Kingdom to Russia £216,000. What is the object? We are told that the Russians cannot buy herring or machinery, but they have an enormous trade balance in this country. Why cannot they spend their trade balance? What are we doing to prevent them from buying herring? An hon. Gentleman apparently suggested that we should feed herring on sawdust, or something of that kind. That is another Alice-in-Wonderland remark. Why do we want this Trade Agreement with a country that has such a large trade balance in this country? We are only too glad to trade with Russia. Some of us do not like their system of government, but we recognise that it is established there, and I do not believe that any Member of this House would interfere with it in any circumstances. We say that we want to be sure that when we have dealings with that country those dealings will be carried out.

Coming to the Lena Goldfields: The contract was entered into by the very same Government that is negotiating the Trade Agreement to-day, and if the Trade Agreement is signed, it will be signed by the same people who signed the agreement with Lena Goldfields. As I have said in the course of questions in this House, "What is the use of entering into any agreement with people who, a few years ago, signed an agreement with your own nationals and have declined to carry it out because it did not suit them?" That is my argument, put forward not because I dislike the Russian Government or anything else; it is a matter of common sense. The hon. Member who moved the Motion asked, "If this Lena business is capable of arrangement by negotiation, why was that negotiation not started long ago?" and I said I would tell him. I will tell him. The whole story was told to the House by the Lord President of the Council, in reply to questions from myself on 13th March of last year. He recited the whole story, and you will find it in the OFFICIAL REPORT for that day.

The right hon. Gentleman began by pointing out that in 1930 this arbitration was held, in accordance with the terms of the agreement. Russia, after appointing a representative upon the tribunal, withdrew that representative. The court was appointed in accordance with the terms of the agreement, and the sum of, roughly, £13,000,000—a little less than that—was given by way of award. Then the Lord President of the Council continued by telling how the Soviet Government suggested that they should meet representatives of the company in Berlin with a view to arriving at a settlement of the case by direct negotiation. These negotiations, however, which began in July, 1931, broke down in September of the same year, since the company's representatives, though willing, for the sake of an early and satisfactory settlement, to accept a great reduction in the amount of compensation awarded by the arbitration court, were unable to obtain from the Soviet representatives anything beyond a purely derisory offer of £800,000 in settlement. The company were then requested by the right hon. Gentleman the Member for Clay Cross (Mr. A. Henderson) who was then Secretary of State for Foreign Affairs—I think he was, but anyway, the company were requested by the Government—to go to Berlin. They stayed in Berlin for three months negotiating, and at the end of it the Soviet said: "We will pay you £800,000 in exchange for the arbitral award of £13,000,000. The Lord President of the Council went on: It was nevertheless felt desirable, in order to explore every possibility of effecting an amicable settlement, to authorise His Majesty's Ambassador at Moscow to discuss unofficially with the then President of the Chief Concessions Committee, Monsieur Kameneff, the prospects of a settlement at a sum of £3,500,000, representing approximately the proved capital losses of the company"— that is to say, all their interest and the value of their claims and their organisation, was to be wiped out. Simply what their losses were, their capital losses. Then the Lord President went on to say that these efforts also proved abortive. Hon. Members say that it is very unfortunate, when this Trade Agreement is greatly desired by both parties, that it should be hung up by this Lena matter, and ask if we cannot arrange it in some way. The Lord President of the Council, in his reply to me, sets out at length that it was the fault of the Soviet. One last opportunity of settling the case seemed to have arrived when the Soviet Ambassador in London represented last month that it would be unfortunate if public agitation on this question should take place in this country on this matter, and my right hon. Friend then informed His Excellency that it lay with the Soviet Government to prevent that danger by offering an early and satisfactory settlement, which would effectively contribute to that spirit of confidence in the relations between the two countries which it is the object of the negotiations to promote."—[OFFICIAL REPORT, 13th March, 1933; col. 1596, Vol. 275.] Finally, the Lord President of the Council told me that unfortunately those negotiations also came to an end, and the Government repeated their claim on behalf of the company, that of the arbitral award of £12,965,000.

So far from holding up this company to—what shall I say?—approbrium, as has been done in a great many speeches to-day, the company's reasonableness is extraordinary. I have just made inquiries, since it was stated that the company were all foreigners. I had no idea how the company were made up, but I am told that 80 per cent. of the shareholders are English. I know nothing about who they are, and, even if they were foreigners, this is a British company, established in this country, and a British Government should protect foreigners who invest their money in a British company. I have no interest in it; I have not one farthing in it. I never heard of the company until this matter came up. The people with whom I have negotiated have been British to the backbone—very much British, and as I say, even if they were foreigners, if they invest in a British company they are entitled to the protection of the British Government.

The company have very great cause to complain of the way in which they have been treated. I said that the Lord President of the Council told me in March that the British Government had reiterated their demand for the payment of the arbitral award of £12,965,000. Without any consultation with the company, and in the course of the present negotiations with the Board of Trade, in order to facilitate the signing of this Trade Agreement, the British Government have told the Russian Government, that they, the British Government, will advise the Lena Goldfields Company to send yet another delegation to Moscow to negotiate, and that they, the British Government, will advise the Lena Goldfields Company substantially to reduce the already minimum claim put forward of £3,500,000, which is simply the actual capital losses of the company. The British Government said to the Soviet, without consulting the company, that they had advised the company to do that. That is not what we would expect—a British Government not standing up for its own nationals, and telling a foreign Government that they were advising the company, in regard to the claim where there was an arbitral award of £13,000,000, to take less than £3,500,000 in order to settle the matter and pay the capital losses that had been incurred.

I earnestly hope that we may have an assurance from the Secretary to the Department of the Overseas Trade that a limit will be put upon these negotiations. It is quite clear that M. Litvinov desired Lena Gold Fields to be taken out of the way, so that this urgently desired Trade Agreement should be put through at the earliest possible moment. The British Government have all the cards in their hands in this matter. If the five-year or the 10-year plan is ever to materialise to any extent, the Soviet Government must have the use of the British market. It is therefore absurd for the British Government not to formulate just demands for the protection of their nationals.

I have spoken about Lena Gold Fields. I must now put in a word for the claims of British nationals who have been robbed of their property in Russia—nothing political about it at all—simply robbed of their property. When I raised this matter in the House of Commons on 10th July, I asked the Foreign Secretary what Clause was going to be put into this proposed new Trade Agreement to protect the claims of British nationals, which had been under negotiation for so many years, and whether he had received a memorandum from the association of those claimants. In reply the Foreign Secretary said: I have considered the memorandum, and the association were informed on the 20th March last that it was the intention of His Majesty's Government to make it clear in the course of the commercial negotiations with the Soviet Government that they maintain and assert British claims; that the negotiation of a permanent treaty with the Soviet Government must be accompanied by a satisfactory settlement of these claims; and that any commercial agreement made pending a final disposal of the question must be regarded as being of a temporary and transitional character."—[OFFICIAL REPORT, 10th July, 1933; col. 736, Vol. 280.] I want to know from the Minister whether that is still the policy of the Government and whether he will see that a definite period is put to this temporary agreement, so that these claims may not hang on indefinitely without being dealt with. It is idle to say that they will be postponed until a final agreement is made. Does anyone suppose that the Soviet Government, when they have got a temporary agreement, unless it includes a clause saying that it will only run for, say three or six months, will ever negotiate for a final agreement, by which they have so much to lose? It is trifling with the House of Commons and with these unfortunate creditors, many of whom are, to my own knowledge, very poor people. [Interruption.] The hon. Member for Dumbarton Burghs (Mr. Kirkwood) is as warm-hearted as I am, and, if he knew these people as I do, he would be just as indignant as I am. He is indignant when unfortunate men on the Clyde are out of work, and if anything can be done for them he will do it, and so will I. These are not wealthy people. There is a man in my constituency who was a bank clerk in Petrograd. He had some £70 or £80 on deposit, which was all his savings, and that has been taken. There are dozens of cases like that. There is nothing political about the matter at all; it is sheer robbery. British Governments in the past have always stood up for the weak, and have always stood for the British citizen being able to reckon on the strength of Britain to support him, however humble or poor he may be. It would be discreditable for the British Government to sign a paper the counterpart of which will be signed by the very same people who have already repudiated another agreement, until they are sure that these British citizens have been safeguarded.

Nothing changes. I have here the Protocol bearing the signatures "Arthur Henderson" and "V. Dovgalevsky," which was signed on 3rd October, 1929. We shall soon have a White Paper giving an account of the present negotiations, and, as far as I can understand, they are almost identical with the previous ones. The Russians then desired a resumption of relations with the British Government, and the right hon. Gentleman the Member for Clay Cross was most anxious, and rightly so, that they should come to terms regarding these British creditors before relations were resumed. Again and again he tried to get them to come to some agreement, but they would not do so, and finally he signed a protocol which contained this paragraph: Negotiations between His Majesty's Government in the United Kingdom and the Government of the Union of Socialist Soviet Republics for the settlement of the above-mentioned questions"— namely, inter alia, the claims of British nationals— shall take place immediately on the resumption of full relations, including the exchange of Ambassadors. What was the result? It is true that the negotiations were resumed after a time, and the Goschen Committee was appointed, which sat and argued about these claims for something like 12 months, at the end of which time the Foreign Secretary informed me that the Russian Soviet representatives had not defined their attitude towards the claims. It was not a question of saying that these claims were exorbitant, or too high; there was no question of disputing the claims; but they had not defined their attitude as to whether they would recognise a claim such as that of the bank clerk to whom I have referred, and others.

Mr. WALLHEAD: I know that the hon. Gentleman will be quite fair. He knows that there are counter-claims on the other side.

Sir W. DAVISON: I quite agree. Whether I approve of the counter-claims or not is neither here nor there; of course they are entitled to say, "You claim £250,000,000, and we have claims that we would like to put forward in respect of A, B, C and D." Certainly; but that was not the position. What the Foreign Secretary told me was that they had never defined their attitude, and the same thing is going on again. M. Litvinov is again behind the scenes, and a very able gentleman he is. I have never had the pleasure of meeting him, though I should like to do so. He is a very able man, and again he is the person behind the scenes now. Anyone who reads Command Paper 3418 of 3rd October, 1929, will see that exactly the same thing is taking place here. I ask the Government, will they assure the House that this time they will not allow themselves to be fooled as the right hon. Gentleman the Member for Clay Cross was fooled when he resumed diplomatic relations, but will see that a time limit is fixed regarding these claims and the claim of the Lena Goldfields Company? Personally, I do not think that any such agreement is required. The Russians have a large trade balance in this country, and could quite well purchase any herring that they require. The Government, however, are better judges on that question than I am, but, if it is needed, I would urge them to put a time limit upon it, and say that it shall run for, perhaps, six months, and that, unless it is ratified and a final agreement is arrived at within that time it shall fall to the ground. I would ask for an assurance to this effect, because otherwise the House of Commons, the country, and all those poor people who have suffered so badly will be fooled again.

5.55 p.m.

Mr. KIRKWOOD: The hon. Member for South Kensington (Sir W. Davison) said that in Russia British citizens had been murdered under the present regime, and he went on to make references leading to the inference that it was those engineers of Messrs. Vickers, meaning the trial of Messrs. Thornton and Macdonald. I would advise the hon. Member that the less said in this House about that trial the better. [HON. MEMBERS: "Why?"] I am asked the question "Why" I will answer it. I have gone carefully over the whole of that trial, the report of which was sent on to me by the Russian Government. It is the fact that this Government interfered in a trial that was going on in another country. It was only because it was Russia that they interfered in the manner that they did—a manner not creditable to this country, which claims that it does not interfere with the internal management of any other country. They did it in no uncertain fashion in regard to that trial, and it was only because the Russians are so anxious to be at peace with this country that they modified everything that they did in connection with that trial.

Miss HORSBRUGH: Did not hon. Members on those benches urge His Majesty's Government to interfere in another case in Germany, a little after that case?

Mr. KIRKWOOD: I do not think the two cases are comparable. A journalist was being harassed by the Hitler Government, and he was a poor man. We were taking the part of a poor man. In the other case it was the opposite; this powerful Government of ours took the part of the rich. The hon. Member for South Kensington made great play with the Lena Goldfields, but everything that was done as far as the Lena Goldfields Company was concerned was under the regime of the Tsar.

Sir W. DAVISON: No. They were there originally under the Tsar. They then left, and they were specially requested by the present Russian Government to return. Having been bitten once, they felt rather shy and they said, "We will only return if you will enter into a special agreement under which, if we are stopped in any way, there shall be an international tribunal"—I think it was to consist of an Englishman, a German and a Russian—"to decide any point of dispute." It was the present Russian Government that they fell foul of.

Mr. KIRKWOOD: My answer is this—I have stated it in the House time and again—that, as far as the past regime was concerned, to get them to come into the War this country agreed that, if Russia would come into the War, we would give Russia Constantinople. I want to know if this Government is prepared to give them that as a quid pro quo for the concession that they require regarding the Lena Goldfields?

The hon. Member for Paisley (Mr. Maclay) stated that there would be plenty of work for engineers, and that, that being the case, he is very much in favour of an agreement with Russia at once, but his trouble is as to how long the present system of government in Russia will last. There need be no fear about that, because it is the most stable government in the world. The Russian Government is the only Government that has held its sway ever since the War—nearly 20 years—without a change. No other Government in the world has a record like that. Behind all this is the fear that, if we give Russia credits, the Russians will not meet their liabilities, that the Government will collapse; but—and this is the most substantial guarantee that any country in the world can give—behind that Government is the whole of Russia. You are not dealing with a private individual; you are dealing with the Russian Government, and the whole wealth of Russia will back whatever Russia transacts in this country or any other country.

The hon. Member for East Aberdeen (Mr. Boothby) said something which I as a Scotsman resent very much. I said at the time that he had no authority for making such a statement. He said that, if it came to a choice between our fishermen and the well-being of this country, he was prepared to sacrifice the fishermen. He had better go and ask the fishermen, because ever since the War there is no section in Britain which has been sacrificed to the same extent, and because of the attitude the Government have taken up regarding Russia the fishermen round our coasts are well nigh starved to death. He went on to try to justify it when I pulled him up, because he knows that he will have to justify his statement when he goes to Aberdeen. No section of the community had such a terrible task put on them in guarding our coasts during the War. They sacrificed everything. They were away for six years and they came back to discover that all their gear and their boats were destroyed and a new race had arisen which had no experience in fishing at all, and they are now left stranded and the Government have thrown them to the wolves.

Duchess of ATHOLL: Does not the hon. Member remember, in fairness to my hon. Friend, that he went on to say that, because the fishermen had rendered such great service to the country in the War, he felt that they had a claim on the Government for special help?

Mr. KIRKWOOD: I said he tried to cover up his statement when I pulled him up.

The hon. Member for North Lanarkshire (Mr. Anstruther-Gray) started off in a very strange manner. It was very difficult for me to follow him, because I know he has given the subject some thought and he has been to Russia to see for himself what was going on. He made some very alarming statements which are absolutely contrary to the information that I have. I have never been to Russia, I have been invited by the Russian Government time and time again, but I have always refused to go at their behest or at that of any one associated with them, so that it could never be imputed to me that I got any concession from them. But I am very much interested, because I can see in Russia a great outlet for the work that we can do in this country, and Russia is very anxious to get it. The hon. Member said Russia was a hostile State.

Mr. SPEAKER: The hon. Member will recollect that the hon. Member withdrew that statement.

Mr. KIRKWOOD: Although he withdrew it, he believed it. Am I not allowed to refer to it although he withdrew it?

Mr. SPEAKER: It is no use referring to a statement which has been withdrawn.

Mr. KIRKWOOD: The hon. Member went on to say something which, I think, has to be repudiated. He is not the first to say it. The first person I heard stating it in the House was the Lord President of the Council, who, in my hearing said that the natural avenue for trade with Russia was through Germany. I do not believe that. Following that, the hon. Member for North Lanarkshire said that from his experience, having been in contact with engineers and others in Russia, the Russians preferred German and American machinery. I deny that in toto on the authority of the last Ambassador that Russia had here, who informed me that one of the prime reasons why his country was so anxious to deal with us in heavy engineering was a rolling-mill which I helped to produce 30 years ago, and which is the finest mill working in Russia yet. They have had to adapt it to changing conditions, but the foundation remains intact, and it is a monument to our engineering. The Russians are now anxious to deal with the firm that made it.

It is, therefore, not true that they have any preference for Germany or America as far as the quality of their material is concerned. I am speaking on behalf of the Amalgamated Society of Engineers, comprising almost 200,000 organised engineers. We are in a position to state officially that Russia wishes to place orders where she has placed them already in this country, not tapping new firms at all, for machinery of all descriptions. There is no boiler in Germany or elsewhere to compare with those that Babcock and Sterling and Company have produced. There is no plant, on the Russians own admission, to compare with the electric equipment that we have put up, even having regard to the fact that the Russians were forced to take action against British engineers who were in key positions. Even after all that has happened, they state officially to my union that the finest electrical equipment that they have in Russia has come from this country. Further, Russia is very anxious to deal with this country in locomotives, and we are most willing to supply them as far as the workers are concerned. I am astonished that the hon. Member should come out with such strong language.

Mr. ANSTRUTHER-GRAY: I never suggested that in my view American or German machinery was in any way comparable with British. I said Russian engineers had told me that, for geographical, industrial and political reasons, they preferred in many cases to use German and American plant to our own and, if the hon. Member will look at German imports into Russia as compared with ours in recent years, he will find that that statement is borne out.

Mr. WALLHEAD: If that is true, I can give the hon. Member my assurance that it is a recent development, because to my own knowledge up to very recently the Russians would always prefer British machinery to that of any other country in the world.

Mr. KIRKWOOD: I should be very sorry if the hon. Member thought I was misrepresenting him. I am very glad he has taken the opportunity to counteract the statement that the Russians prefer German and American engineering work to ours. He has now denied it, and I am quite satisfied.

The idea is abroad that Russia would not meet her liabilities. I want to appeal to the House. I have appealed to practically every Member of the Cabinet privately, because it means so much to us. The hon. Member for North Lanarkshire says that, if you examine the returns of machinery exported from Germany into Russia as against ours, it will prove that his statement is correct. There may be something in it, but it is because this Government has put the screw on so that Russia cannot get orders into this country. It has stopped those orders coming into the country. The firm that I have already mentioned, Messrs. Duncan, Stewart, quoted for forging presses, and Russia was anxious that they should be made on the Clyde. There were four forging presses, two with from 700 to 800 tons of pressure and two with 8,000 tons of pressure. We were anxious to get the two great monster presses, which would have kept the firm employed for two years, but all that we got were the two small presses because, on the authority of Lord Invernairn, they were not able to quote the price that was being given for the German machines. The cost was just the same as for the bare castings, without any machining, and without any workmen's time being placed on them; the Germans quoted so low. Further than that, in order to enable them to do it, the money came from the City. London advanced money to Germany to enable them to cut us out, and the Russians were loth—those are their own words—to give that contract to Germany. Because the price was so low, and because of the hostility of the present régime in Britain, Russia gave the order for those great presses to Germany. They were made by Krupps at Essen. That is what happens to us.

Let us look at Russia. Russia is a great country, a Continent extending from Moscow right away through to Vladivostock over against Japan, 6,000 or 7,000 miles of continuous territory, undeveloped, and with mineral resources second to none in the world waiting to be developed. We have everything that Russia requires. We have skilled men. Russia lacks skilled men. We have tech- nicians. We are a greatly organised country capable of giving Russia the machinery she requires for the development of her great country. The Russians are anxious to get in contact with us and to keep in friendly relationship with us in order that they may be able to develop their country. Why cannot they do this? This is what this country, this House and this régime have to face. Why do we not trade with Russia? The Chancellor of the Exchequer definitely stated that this House will have to choose sooner or later between Russia and handling our great unemployment problem. Russia is the way out; but in encouraging Russia we shall enable Russia to work out its Socialist system. The Chancellor of the Exchequer has pointed out that they have a great advantage, and that their on-cost is entirely different from ours. There is no private profit made in Russia. Therefore, if they succeed in Russia it will undermine the whole of the capitalist system throughout the world. It is for the Government to decide whether they are to have a way out of their present unemployment troubles or whether they are to continue the present unemployment troubles and keep Russia back to the best of their ability. They have to choose.

The hon. Member for Kinross and West Perth (Duchess of Atholl), time and time again, has spoken in this House in regard to Russia, and, in common working-class Scottish phraseology, she is death on Russia. Time and time again she has made great capital out of slave conditions in Russia. The Noble Lady does not require to go away from the Highlands of her own native land to find conditions as bad as any there are in Russia.

Duchess of ATHOLL: I should be very interested if the hon. Member would indicate where conditions in the Highlands, or anywhere in the United Kingdom, or in the Empire are as bad as conditions in Russia.

Mr. KIRKWOOD: I am very sorry to say that it would be the easiest thing in the world for me to do.

Duchess of ATHOLL: Do it then.

Mr. KIRKWOOD: No more independent set of men ever drew the breath of life than those to whom I was referring in my own country, and this Government is going to throw them on to the public assistance committee. The Secretary of State for Scotland stood at that corner there and replied to me that that was the only way out.

Duchess of ATHOLL: Does the hon. Member realise that in Russia there is neither unemployment benefit nor public assistance committees?

Mr. KIRKWOOD: That is just where it comes in. I raised the question with the Secretary of State for Scotland, and drew his attention to the fact that there is no assistance for fishermen when they are thrown out of employment. They have to go for parish relief, thus reducing my race to the level of mere beggars. It used to be one of the outstanding features in my country that rather than ask for public assistance they would beg, and now they are doing it systematically. No one knows that better than the hon. Member for East Aberdeen (Mr. Boothby), if he had the courage to stand up against the powers that be and state the truth.

Mr. BOOTHBY: The hon. Member has now deliberately misrepresented me three times. I must ask him to withdraw a statement which he has twice made in this House that I am prepared to see the fishing fleet sacrificed. I give an unqualified denial of such a statement, and categorically deny that the condition of the fishermen resembles in any way the condition of the people in Russia.

Mr. KIRKWOOD: That may be all right, but the OFFICIAL REPORT to-morrow morning will show the hon. Member for East Aberdeen that he stated that if he had a choice to make between this country and the fishermen he would sacrifice the fishermen.

Captain RAMSAY: Surely the logical conclusion to be drawn from what the hon. Member is saying, is he himself would sacrifice the whole to save the part; whereas my hon. Friend merely states that, if it came to a pinch, he would sacrifice the part in order to save the whole.

Mr. KIRKWOOD: It would be all right for me to say that I would sacrifice myself. The hon. Member for East Aberdeen could say that he would sacrifice himself if he liked, but he had no right to say that he would sacrifice them. He knows that they have been compelled to sacrifice so much, and time and time again he has stated their case well because he knows that they are being sacrificed so much. I was speaking about the Noble Lady. She makes a great plea about the slave conditions in the timber industry, and that Russia would not meet its liabilities. Her husband—his Lordship—[HON. MEMBERS: "His Grace."] I will not quarrel about titles. I know him fairly well. He is only a man to me, the same as the rest of you. It is not so long ago that he went out to Brazil and the Argentine. What for? Because in the Argentine they were not meeting their liabilities. Was any question raised in this House of breaking off negotiations? No fear. What did they do? In order to keep in with the Argentine they sent out the Prince of Wales to make friends with the Argentine. Would you send the Prince of Wales to Russia? [Laughter.] And why not? Here are greater natural resources lying untapped and a population of over 160,000,000 waiting to get the material that we can supply, and yet no attempt is made to make friends with them. There is nothing but hostility. I respect my opponents if they are honest about matters. Let them be honest and tell the people in Britain that we will not trade with Russia because there is a Socialist regime in Russia. [HON. MEMBERS: "No."] It is because they fear Socialism, and it is nothing else.

We have the most powerful Government in the world at the moment without a doubt. They tell us in this House as they do all over the country, in the Press, and in other ways that we have got round the corner. We have stabilised our financial position. No country in the world has come out of this crisis in such a way, say the great orators of this Government. We are practically one of the most powerful countries in the world and are prepared to extend the hand of friendship to, and to assist, all the other countries, for instance, Austria. We have also thrown money into Germany, our late enemy. They were never an enemy of mine. No fellow-man is an enemy of mine. They were the enemy of the present regime, who have said time and time again, "Never again will we have anything to do with Germany." They would trade with Old Nick as long as he did not interfere with their private profit. Rent and profit are the gods that the powerful classes of this country worship night and day. If they were honest enough to tell the people of this country that they are not going to trade with Russia because Russia is a menace to capitalism we should know what to do. Until then we must just do the best we can. It is terrible for me, because I realise the serious plight of members of my union, which has spent £10,000,000 in the last 10 years in supporting the unemployed. We have done everything we could possibly do, investigated every case, and negotiated with employers. We have kept back any trouble—there never was more peace in our industry—in order that there should be no industrial war in this country, with a view to trying to get round the terrible times that we are in.

The workers are the only section of the community up to now that has made some sacrifice. The difficulty is not a matter of sacrificing a few pounds or of being kind to an individual, or of asking the Government to give concessions here and there—they will do that—but to sacrifice their individual ego, to sacrifice their ideas of how society should be run. That is a most difficult thing for us to ask the Government to do, but they have to choose, because the unemployed in this country are not going to lie idle and know perfectly well that Russia is prepared to give our country work, and yet the Trade Agreement with them is delayed. The Secretary to the Department of Overseas Trade knows a great deal about this subject. No one knows it better because his firm—it is his firm when he is not in the Government—have done trade with Russia time and again. One of the departments of Colvilles, of Clyde Bridge, on three different occasions last year was kept running solely on Russian orders. Had it not been for those orders the men would have been on the streets, unemployed. I could give innumerable instances. The hon. and gallant Member knows that there are ships to be built, tramp steamers, with the definite object of carrying Russian grain and timber. Let me say a few words about timber.

Mr. H. WILLIAMS: Let somebody else have a chance.

Mr. KIRKWOOD: It is well that the House should know of it. I had a letter from one of my constituents, a Tory, an opponent of mine in Dumbarton. He had taken on the job of contracting for a housing scheme in Greenock, but between the time when the schedule was drawn up and the starting of the work the present Government came into power and cut off Russia. The Trade Agreement with Russia was broken, and McDougall of Dumbarton had then to be asked to use wood coming from Canada. The firm found that they could not use Canadian wood because it was too expensive. My constituent then wrote to me and asked me to negotiate with the President of the Board of Trade, which I did, to see if the Government would make up the difference of the money that was going to be charged if Canadian wood was used instead of Russian timber, which had been scheduled. The President of the Board of Trade—I have his letter—replied to me, in writing, to the effect that this question would require to be decided by the Crown lawyers. At the present time negotiations are going on between that particular builder and the town council of Greenock on the question who is to pay the difference in price caused by the change over from Russian to Canadian timber.

I could give innumerable cases where housing schemes and other work schemes are being held up in different parts of the country because there is no trade agreement with Russia. If the Government wish to justify their position they have an opportunity to extend the right hand of fellowship to a country that will give us work. America has already stepped in, America and other countries are cutting us out and they will continue to do so unless the House can make the Government change their attitude of approach to Russia. The way which the Prime Minister proposed in 1924 was "friendly." He said: "I approach this Russian question in this fashion. I say to Russia, Let us shake hands and be friends, and now that we are friends, we will discuss terms." I suggest to the Government that that is the line of approach to take now.

6.35 p.m.

Mr. HARBORD: I suppose this is the last opportunity we shall have of speaking on this subject before the ratification of a new Trade Agreement with Russia. I am particularly concerned for the lot of the fishermen and all who are engaged in that great industry, and I hope that the spokesman of the Government will be able to give a favourable response to the questions that I propose to put to him. I hope that the claims of the fishermen and the fact that their livelihood is at stake will be considered with due care in the framing of a new Trade Agreement and that as a result a market will be provided for their fish. The importance of this question will be seen when I mention that prior to 1914 the Russian Empire, as it then was, absorbed three-fourths of the total herring catch of the United Kingdom. To-day the quantity of our catch absorbed by Russia is a negligible quantity. We are very anxious for a return to more favourable conditions than those which exist now and which have existed for some years.

The fishermen year after year have suffered from adverse seasons and poor fishing. In the last autumn fishing Great Yarmouth and the sister port of Lowestoft finished very badly, although I think the Yarmouth boats did a little better than the Scottish boats. Many of the Scottish boats went back with earnings in no sense sufficient to maintain them during the dead winter months. It is not a question merely of the failure of one fishing season but largely a question of the failure of the export market, over which the fishermen have no control. The Scottish fishermen in common with the English catchers have tried to avoid some of the difficulties by making the fishing season shorter. The last fishing season started later and finished up sooner, in order to avoid a glut and the stocking of the English markets with unsaleable herring; but despite this course the catch of the fishing fleets in the great ports largely remains unsold. It is a very serious position and I hope the Government will be able to give us some message to-night which will alleviate the prevailing mental distress and lift the pall of darkness and disappointment from that great industry.

I am anxious that we should avoid anything that will separate us in coming to a Trade Agreement with Russia. While I am confident that the Government will weigh up the relative claims of all industries, I am sure they will weigh in the balance the serious plight of the fishermen and the fact that the fishing season has been a failure—that many of those concerned are bankrupt and that the men who remain are tottering on the verge of ruin. That is not an exaggerated picture and it can be confirmed, and I believe it is being confirmed, by inquiries at the fishing ports in the United Kingdom. If it is a question of the Lena Goldfields that is obstructing a settlement, that must not be allowed to weigh unduly in the balance and to hold up any longer the Trade Agreement. There is a growing belief in the House and in the country that that is the obstacle, and there is solid reason for that belief.

The Government are a National Government and while they have a duty to protect their nationals, they have an imperative duty to consider the livelihood of the people of this country and the fact that thousands of fishermen are unable to make headway or to pursue their calling. Therefore, they are in duty bound to protect their interests. The Government must bear in mind the great debt that the country owed to the fishermen during the War, how they hazarded their lives in mine laying, mine sweeping and other ways in order to keep the seas free for our cargo ships and help us to win through the great War. I hope that the answer to-night will be such that the fishermen will feel satisfied that their claims have been and are being considered and that the chances are that within the next two weeks a Trade Agreement will be satisfactorily settled between the two great countries of England and Russia.

6.44 p.m.

Mr. DAVID GRENFELL: The hon. Member for Yarmouth (Mr. Harbord) has spoken with his usual eloquence and warmth of interest in the people he represents. It is no new thing to see the hon. Member moved to the uttermost depth of his sentiments in sympathy with the fishermen. It is a remarkable feature of this Debate that the prospective relief for the industrial classes we represent depends not so much on any action that we can take in this country but on the prospects of international action which will enable our national trade to recover and ensure prosperity once more for all classes of our fellow-countrymen. The hon. Member for Yarmouth, representing the fishing in- dustry, followed an hon. Member who represents the great engineering and shipbuilding industry of Clydeside. Wherever we go, from district to district, from industrial area to industrial area, we find the most wonderful unanimity in regard to the advantage of bringing about the strongest measure of trade agreement with Russia.

It is a revelation also of the changes which time works even in the minds of Members of Parliament. This Debate has been an almost unanimous expression of the belief that even Russia is no longer to be left outside the bounds and scope of international fellowship and international co-operation. We are more united on this subject than we were when discussing a domestic question yesterday and the day before. This is no doubt owing to the innate common sense of the people of this country, and it should be a comfort to those who believe in the great future of this country to find that, in spite of all misrepresentations or concealment of facts, in spite of the purveyance of deliberate false information, the people of this country are not, generally, being misled, but that their native common sense is leading them to realise that the great things which are taking place in Russia cannot be ignored for ever, and that the feelings which may have been created in our minds at one time or another in regard to Russia have no real foundation.

I approach the question of a resumption of trade with Russia from that standpoint. One or two arguments are still being brought against it. The hon. Member for South Kensington (Sir W. Davison) displays a constant interest and sympathy with a certain class of people, but to my regret I have never heard the hon. Member express himself with an eloquence so natural to him upon the condition of the people of this country. I have never heard him speak on the means test; his sympathy has always been with a few people, relatively an insignificant proportion of the people of this country, who have been foolish enough to invest their money in a risky foreign enterprise and who have been the victims of sharp practice by some financiers in this country.

Duchess of ATHOLL: Does not the hon. Member realise that many of those interested in the Lena Goldfields are in dire poverty owing to the seizure of their money by the Soviet Government? They are people who are now absolutely penniless, but they are not eligible for unemployment benefit.

Mr. GRENFELL: I was referring to the hon. Member for South Kensington's reference to the Lena Goldfields Company. We know that it was a company formed under very doubtful auspices in the City of London, with which was associated a person who is now enjoying detention by His Majesty's Government in a certain place, and other people who have not yet been brought before the law. The organisation of companies of this kind is of doubtful advantage to this country, because it brings into disrepute the financial means by which these companies operate in all parts of the world. I am not making an attack on the hon. Lady or the hon. Member for South Kensington, but there is ample scope at home for an expression of the sympathy which they pour out upon people abroad. I have not noticed the Noble Lady shed tears about the condition of the people in this country with anything like the readiness with which she bewails the condition of people in other countries. Mr. Harman and his associates, who encouraged the enterprise of the Lena Goldfields, have led a large number of susceptible people into an adventure which has resulted in a loss. I hope that the Government will take notice of these things more frequently. While they cannot recall the trouble caused by the promotion of the Lena Goldfields Company, there may be no remedy, I hope they will take note of the discussion and the loss and suffering that has ensued so that such things may be prevented in the future.

Let me deal with the arguments against a renewal of the Trade Agreement. The agreement came to an end in October, 1932, under circumstances which we can all recall. Since then there have been attempts to renew it. Negotiations have taken place fitfully; there have been delays, suspensions, postponements and reopenings. We have been told of new obstacles in the way of the agreement, of new causes of difficulties arising from time to time, but I hope that now that the Lena Goldfields question seems to be on the way to settlement that there is no other subject which will be account- able for further delay in this matter. In the arguments against a renewal of the Trade Agreement I believe there is something more than political prejudice, although that counts for a great deal. There is something in the argument of the balance of trade. The average man does not understand the intricacies of trade, and there is possibly an argument against the continuance of what appears to he a one-sided agreement. But really that argument does not carry one very far. The hon. Member for Bradford gave us some figures as to the trade we are conducting with other countries, which I think should help hon. Members to get rid of the bogey of the balance of trade.

It is true that the adverse balance in 1931 in our trade relations with Russia was £23,000,000, rather a substantial amount having regard to the total amount of trade between us. But the adverse balance of trade with the United States was £79,000,000, with Germany £32,000,000, with Denmark, a small country, £37,000,000, and with the Argentine also £37,000,000. In spite of these large adverse balances the President of the Board of Trade has been conducting negotiations with these countries, and has found means to bring about a trade agreement, first, with Germany with a much larger adverse balance of trade than exists between us and Russia, next with Denmark, with an equally large adverse balance, and then with the Argentine, with an equally large adverse balance of trade. If it is possible for the President of the Board of Trade to arrive at these Trade Agreements, for which the Government take credit, and by which it is hoped to bring advantage to this country, why cannot he bring about a trade agreement with Russia? The same principles apply. In these agreements figures are inserted to show the volume of trade, the quantities and the products they are to take from us. The President of the Board of Trade has successfully overcome the difficulties and has entered upon a system which is going to regulate and determine the quantity and character of the trade between this country and a large number of other countries where at present and for some time to come there must be an adverse balance of trade against us. The argument of the balance of trade, therefore, cannot stand in face of these facts, and the successful agreements which the right hon. Gentleman has already accomplished.

These agreements are to be carried still further, more agreements are to be made. If the ambitions of the right hon. Gentleman are carried through we shall find ourselves in the end with a definite agreement with all the important trading countries of the world, by which in advance we shall know what quantities we are to receive from them and what quantities they are to receive from us. This revolutionary change has been achieved by the President of the Board of Trade with an air of impeccable respectability. He has done more revolutionary work in this country than any Minister in any country in Europe. Stalin and the revolutionary heads in Russia are simply carrying on a condition which they found existing before they came in, but the President of the Board of Trade, without turning a hair, without arousing any measure of suspicion, is making an entire change. He has swept away all the canons of Free Trade and is embarking on a system of trading, which is just as much a system of government trading as that in Russia, to which hon. Members opposite so much object. Indeed, I think we shall find, as we proceed, that we shall be much more exact and accurate in our control of trade than the Russian Government can possibly hope to be for some time to come.

But all this revolutionary work at home may cause some suspicion in the minds of people in other parts of the world. We are suspected, our methods are questioned, and we in this country, therefore, should not be too respectable to overlook the difference in principles of government and regulation of trade which exist in other parts of the world. The whole world is in a state of flux and changing conditions, and we who have embarked so boldly on large changes of policy should not be too particular if other people also try to change their economic conditions. The President of the Board of Trade has done great things. In his Trade Agreements with Denmark and Germany he has succeeded in every single case in getting a certain volume of trade, but in no single case has he been able to expand the volume of trade, it has always been an agreement to exchange trade on a smaller volume than it was in 1929. But here is an opportunity offered to him as the champion of Trade Agreements, and to the Government who take credit for embarking on this policy of government regulation of trade, to secure an expansion of the volume of trade.

Miss HORSBRUGH: Does not the hon. Member know that there has been an expansion in some trades, such as the jute trade, in the Danish agreement?

Mr. GRENFELL: The hon. Lady has not contradicted the contention I made: that under the agreements the specified quantities of products to be exchanged between us and other countries are in almost every case lower than they were in 1929.

Miss HORSBRUGH: Almost, but not always.

Mr. GRENFELL: The hon. and gallant Gentleman has imagination of knowledge, I feel quite sure that he will not dispute my contention that here, given proper auspices, there is a chance enormously to enlarge the trade between us and Russia. It will be possible from the first year, if the hon. Gentleman likes, to lay down quantities on both sides, reducing the adverse balance and the limits within which the adverse balance shall be allowed to exist, but there is also the chance to make a Trade Agreement which will enable a large and increasing volume of trade to be carried on in Russia during the next five years, ten years, or whatever period the Government choose. Let all the Ministers, and the hon. Gentleman who has just come in, take notice of this. I am convinced that we have not the old Tories opposite us at the present time. I am a little apprehensive of this Government; it is so difficult to describe or to identify. It is not the old Toryism, it is removed from Liberalism, and there is a semblance of Socialism in it—it is difficult to know what it is.

An HON. MEMBER: It is the Loch Ness monster!

Mr. GRENFELL: While they take enormous risks, I shall not be dismayed by any risk they may take. I shall support any attempt to solve the world economic problem, and to further the common weal of the people. There is no prospect of expansion of trade in any of the countries with which we already have Trade Agreements, but there is a possibility of great expansion of trade with Russia, China, and other so-called backward and—I speak without offence—undeveloped countries of the world. If you could but remove political prejudice, advantage would automatically accrue to both countries. The hon. Member for East Aberdeen (Mr. Boothby) and myself have been to Russia. Perhaps he saw the Russian problem a little more clearly after his visit; I did, and I came back after five weeks' sojourn in that country with a conviction of the great potential capacity of Russia not only to produce itself but to be the largest of all consumers of the products of this country. We have a small population in a small territory; we have too much machinery for production and too little for consumption. For an outlet for our large productive capacity we must send goods overseas, and the place to which to send them is a country with a large consuming population.

Russia is the one country preeminently fitted for our products at the present time. It has a vast extent of territory with thousands of miles of railroads needing great machinery and equipment—all the consuming capacity that this country wants. It has 160,000,000 people and an extent of territory inconceivable to an Englishman, who is accustomed to reach the limits of his country by train in one day.

Here is an opportunity for the Government to make an agreement with Russia. It is one of the faults of our Government, in common with the average Englishman, that they think in terms of individual gain and of commerce. The Government are limiting and contracting trade in a manner contrary to the system upon which our trade agreements have been built. In Russia, however, there are 160,000,000 or 170,000,000 people working together with as much enthusiasm as people in any part of the world. Contrary to the belief of hon. Members opposite, all those people are working for the community with no thought of personal profit in an effort to build up a larger community life. Their efforts are directed to the common good of all their people. The Government of Russia are striving to build up a standard of living for 160,000,000 people. With that Government the hon. Gentleman opposite me has the opportunity to negotiate, and I believe that he will succeed.

An hon. Member said earlier in the Debate that Russia needs peace. There is not a country in the world so conscious of the advantages of peace as the great country of Russia. It can lose everything in a war in which it is involved; it can lose everything that it has planned, without the slightest advantage to any other country which may be responsible for its downfall. What advantage can we gain from the downfall of the present regime in Russia, from any check in its development? Its people are poor compared with the peoples of the West, because they have not the mechanical equipment which has been built up here in the last 50 or 100 years. Russia needs the assistance of the West to build up an industrial system for itself, by which it can reach a standard comparable with that of the United States, ourselves, Germany and the leading countries of the world. It cannot do that of its own accorrd, but only by our assistance. There are no two countries in the world so mutually necessary, so complementary, so supplementary, as this country and the great community of Russia.

I do not think there is a division of opinion on the general merits of the question that we have discussed this afternoon, but I urge the Government not to hesitate, not to delay. In this troubled world the main cause of international complications is the indecision of Governments. Governments in the main have a clear understanding of what they intend or desire to achieve, but they suffer from this fatal timidity, this fatal hesitation. Opportunities have been lost time and time again, and this great opportunity of accommodating ourselves to the new world conditions as exemplified by Russia we should be very careful indeed not to lose.

The world may, under the most favourable auspices, be spared the catastrophe which sometimes looms over the horizon; the possibility of another war. That would be a final dashing of all our hopes for world reconstruction for some time. But as imperatively necessary as the negative peace of which we speak is the positive work of peace, the work of re- construction, which I feel is close to the hearts of hon. Gentlemen opposite. On the ground of immediate advantage to our own country; on the ground of advantage to world prosperity and of the stability of the world economic fabric, the general structure of world commerce; on the ground of advantage to the cause of world peace, which we all desire to serve, this opportunity is vital to the interests of this country, vital to the interests of Russia, but almost as vital to the interests of the whole world.

7.9 p.m.

Lieut.-Colonel J. COLVILLE (Secretary, Overseas Trade Department): We have had an interesting Debate, and we cannot complain of its nature in any way. I have particularly little reason to complain of the speech that has just been made by the hon. Member for Gower (Mr. D. Grenfell). I welcome his eloquent tribute to the recent Trade Agreements made by the President of the Board of Trade. On one point I should like to correct him, for he did them rather less than justice; he indicated that those agreements would not in his opinion provide for a growing trade; that they fixed trade at its present level. That is not the case. In all these agreements the whole aim is to increase the export trade of Great Britain, and already, in the few months that have elapsed since the signature of the agreements and in almost every case in which an agreement has been reached, the export of British goods has gone up.

The subject of export trade with Russia always arouses interest in this House; an interest which is sometimes, I think, out of proportion to the volume of that trade in relation to the total trade of the United Kingdom. Of the many questions that I have answered on the subject of overseas trade in the last two years the number of questions on Russia has far exceeded the number on any other country. Yet our total exports to the Soviet Union in the best year, which was 1932, were valued at £10,500,000, whereas our total exports to all destinations in that year were over £416,000,000. Many countries such as India, Australia, South Africa, France and Canada, of which the export trade has been of considerably greates value, have attracted considerably less interest on the part of assiduous questioners in the House of Commons. I do not want to suggest that a trade of £10,500,000 is not of value, but we must keep a sense of perspective in the matter of our overseas trade. The interest is to a large extent political, because of the special circumstances reigning in the Soviet Union. For instance, I am at a loss to understand the tremendous enthusiasm which members of the Labour party always show when they come to this subject. The enthusiasm that they show for Russia is greater than that which they show for any other country, with the possible exception—I think we have to stress the word "possible"—of their own. I take it that the political circumstances in Russia are the cause of the special interest which the subject attracts.

I was asked the view of the Government as regards relations with Russia. There I must answer that the foreign policy of His Majesty's Government is to cultivate and maintain good relationships with all foreign countries, to which policy Russia is no exception. That is our policy, and I am glad to have the opportunity of saying so. For my own part as a trader, if my hon. Friends from the North will forgive me, my point of view is a purely Aberdonian one. That is to say, I do not ask myself whether I agree or disagree with the composition of the Russian Government and the political views of the Soviet Union, but whether there is or is not profitable business to be done betweent Russia and our country. Here again, I think that the business will be a good deal more profitable for both sides if it can be carried out in an atmosphere of good will. Judged from that standpoint of trade, the question is undoubtedly of interest, as the trade, from its complementary nature—which has been pointed out—is one that should be capable of development; but it has in fact for a number of years been so one-sided that it is the duty of His Majesty's Government to make every possible effort to correct the balance.

An HON. MEMBER: That applies to other countries.

Lieut.-Colonel COLVILLE: His Majesty's Government's policy applies to other countries also, where, by our Trade Agreements, we are in fact improving the balance of trade between those countries and ours. I am quite in agreement with the hon. Gentleman who interrupted me that the Soviet Union are in a much better position to assist in improving the balance than any other country, because we have to supply them with goods to correct the balance which is in their hands. The figures illustrating the balance of trade show that the excess of visible imports over exports for 1930 was £24,900,000; in 1931 it was £23,100,000; in 1932 it was £9,200,000, and in 1933 it was £13,200,000. These figures indicate that in the two years during which the National Government have been in office the balance has been closer than in previous years. None the less, the excess of imports over exports during that period is such as to call the attention of the Government to the question of whether a better balance cannot be secured.

It has been suggested that the falling-off of our export trade to Russia in 1933 was due to the action of His Majesty's Government and to the absence of an agreement. I should like to correct that impression. In point of fact the total Russian imports from all sources during that year were greatly curtailed, due to the policy of the Soviet Union for financial considerations.

To illustrate this, let me give the Soviet figures. The total monthly average of imports into the Soviet Union from all sources in 1932 was 58,000,000 roubles, while for the period April to November, 1933, the average was only 28,000,000 roubles, or a reduction of 50.9 per cent. of the total imports. Comparing a similar period, the reduction in the United Kingdom exports to Russia amounts to 62 per cent. That shows that we have lost some ground, but it also shows that the real loss in volume of trade was due to a reduction in total imports on the part of the Soviet Union for financial reasons. Even taking this into account, the United Kingdom share of the Russian market in those months of 1933 was 10 per cent., a higher percentage than in the years previous to 1932, when the Labour Government was in office. It should be noted that the share which we obtained in the contracted market in this year was higher than in any other year except 1932. But, as I have said, the whole trade had to some extent contracted. Moreover, except for the period when the embargo was in force and when the relations on both sides were undoubtedly abnormal, there was nothing to prevent the Russian Government from placing orders in this country during that period, and in fact the sales here were very considerable and no action was taken to limit them. When it is suggested that it was the fault of the Government that the orders were not larger, hon. Members are not really considering the full facts of the case.

Let me turn to other points that have been raised in the Debate. We are asked, why have an agreement at all? In the experience of the Government trade relations with countries which have agreements are more satisfactory than with those which have not. But we must have an agreement which is satisfactory from the United Kingdom point of view, and the agreement which we gave notice to determine was not in our opinion one which was wholly satisfactory from the United Kingdom point of view. Quite apart from the question of certain provisions in the Ottawa Agreement which have been referred to, there is also the fact that an agreement of the ordinary most-favoured-nation type was not applicable in the ordinary sense because of the specialised and centralised nature of the trade, in which the Russian Government have power to select exactly what they will purchase. So in the negotiation of the agreement it was our purpose to obtain one which on all grounds would be more satisfactory to United Kingdom trade.

Let me turn now to the actual negotiations for a new agreement. Here I am at a disadvantage which I think the House will appreciate. Scripture tells us that in certain circumstances we must not allow our right hands to know what our left hands are doing. Certainly in negotiations that is a consideration which we have to regard. It is a fixed principle of our commercial negotiations that official statements as to the agreements in prospect should not be made until they can be published simultaneously by both negotiating countries. That rule has been adhered to in the case of Denmark, Iceland, Norway, Sweden, Finland, and the Argentine, and in the negotiations with Estonia and Latvia the rule is being firmly adhered to. There is no justification for departing from it in this case, nor do I believe that the interest of securing an agreement would be served by departing from it. So on all the questions which have been asked about the possible provisions of the agreement and what parts of the negotiations are fraught with difficulty, I can only give the answer "Wait and see." But I do say that I believe hon. Members will not have long to wait, that the negotiations are in an advanced state, and that many of the difficulties have been removed. I hope that the House will have confidence for a little longer and that we shall be able to present it with an agreement which will give better opportunities for United Kingdom trade with Russia. Our desire is to secure an adequate share in the markets of that country. I have been asked, why so much delay? There has been a long and important negotiation for the reason I have explained, and I cannot go into details, or give a full answer. I can only say that it takes two to make an agreement, and that we could have had an agreement some time ago if we had been content to take one which we did not think satisfactory from the United Kingdom point of view. We have worked our way with a considerable amount of patience towards an agreement which I think the House will consider satisfactory. Now I ask the House to have a little confidence in what I believe to be the concluding stages of the negotiations.

As to the Lena Goldfields Company, the negotiations are shortly to be commenced, and for that reason I shall now say nothing which will in any way prejudice the chance of those negotiations. I will state only that they will be watched with close interest by the Government. Finally, I would assure the House that we have not lacked for advice during the carrying on of our negotiations with Russia. I have been associated with several sets of negotiations, as the House knows, and in no case has the advice been more voluminous or varied than in the present case. It has poured in from all sides, from trade organisations, from trade unions, and from private individuals who varied in their views from those who would cut off Russia altogether from the society of nations to those who would hand over all the funds of the Treasury to enable Russia to place orders in this country It reminds me of the old tale of the miller and his son and an ass, and what happened to one who tried to please everybody. We have pursued a steady line of policy, and when it is possible to put before the House the details of the agreement on which we are working I have reason to believe that the House will not be disappointed.

Mr. THORNE: Can the hon. and gallant Gentleman state why, during the negotiations, the Government have cut down by 80,000 standards the imports of what is known as Russian soft timber?—

Lieut.-Colonel COLVILLE: The negotiations in regard to timber have gone on quite separately from the negotiations in regard to the Trade Agreement, and have not delayed it in any way.

Mr. C. BROWN: In view of the general tone of the Debate and the several expressions of opinion in favour of the Amendment, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Main Question put, and agreed to.

Resolved, That this House urges His Majesty's Government to take active steps to correct the present unsatisfactory balance of trade between the United Kingdom and Russia in order that British manufacturers and producers may secure a more adequate share in the markets of that country.