§ The following Questions stood upon the Order Paper:
§ 88. Mr. DAVID MASON
to ask the President of the Board of Trade whether he can inform the House of the nature of the agreement between Germany and this country as to the payment by Germany of commercial debts owing to this country.
§ The PRESIDENT of the BOARD of TRADE (Mr. Runciman)
With your permission, Mr. Speaker, and by leave of the House, I beg to make a statement on the result of the negotiations for a Clearing Agreement with Germany.
The United Kingdom Delegation under the leadership of Sir Frederick Leith- 359 Ross, who have been in Berlin during recent weeks, have been negotiating with the German Government representatives with a view to reaching a reasonable basis for the settlement of the outstanding commercial debts and to ensuring the continuance, under acceptable conditions, of current trade between the two countries. For some time during the negotiations it appeared that no solution of the difficulties could be found except along the lines of a Clearing Agreement, in spite of the drawbacks of such a system and the hindrances which it inevitably places upon the flow of trade. A draft Clearing Agreement which, it was hoped, would avoid the major difficulties inherent in an arrangement of this kind and the pitfalls which have prevented the successful working of similar agreements between Germany and other countries, has been agreed with the German representatives and initialed.
Towards the end of the negotiations the German Government put forward an alternative proposal with the object of safeguarding payment for current exports of United Kingdom goods to Germany and enabling the outstanding debts to be liquidated without setting up a clearing system. The basis of this proposal is as follows:
The German Government will guarantee that 55 per cent. of the value of German exports to the United Kingdom shall be definitely earmarked for the payment of United Kingdom exports to Germany. This allocation should, according to the normal trend of Anglo-German trade, be sufficient to enable United Kingdom exports to Germany to be paid for in full.
As regards the liquidation of outstanding commercial debts the Reichsbank will provide immediately a sum of not less than £400,000 for this purpose and will also expedite their liquidation by the realisation of outstanding German commercial claims on the United Kingdom whether by a credit operation or otherwise. In so far as these measures are not sufficient, the Reichsbank will set aside an additional percentage (provisionally fixed at 10 per cent.) of the value of German exports to the United Kingdom sufficient to ensure the liquidation of all outstanding debts within 12 months.
360 The sondermarks standing in the Special Account under the Anglo-German Exchange Agreement of August last, as well as those waiting to go into that account, will continue to be sold by the Bank of England; and further arrangements will be made whereby, with the help of the credit operation and, if necessary, of a charge upon the 55 per cent. earmarked for current trade purposes, the sondermarks will be liquidated within a period of three months.
At the outset foreign exchanges certificates for the import of United Kingdom goods into Germany will be issued without restriction, but the German Government, after consultation with His Majesty's Government, may temporarily restrict in so far as necessary the issue of such certificates. But in exercising this control they will give special consideration to exports to Germany which are particularly important to this country, namely, coal and coke, herrings, yarns, tissues, and textile manufactures.
The German Government further agree that they will continue as from the 1st January, 1935, to pay full interest on bonds of the Dawes and Young Loans in the beneficial ownership of British holders on the 15th June last, in the same manner as provided for by the Anglo-German Transfer Agreement of 4th July last and that they will offer to British holders of non-Reich loans 4 per cent. Funding Bonds guaranteed by the German Government and exempt from transfer restrictions, on the understanding that the British holders who accept this offer take the Funding Bonds in full settlement of any coupons funded.
An agreement has now been reached with the German Government embodying these arrangements. This agreement embodies the principles which it has been the object of His Majesty's Government to attain with a view to safeguarding British interests as far as possible in the situation created by the German exchange measures. In case it should not prove successful and should have to be terminated, provision has been made for its replacement by a clearing arrangement, and letters have been exchanged placing it on record that in this event the clearing arrangement which has been initialed shall thereupon come into force. The text of the new agreement and of this exchange of letters will be published as a Command Paper this evening.
361 The agreement represents the best that could have been reached in all the circumstances. At the same time I should not like the House to think that it will automatically remove all the difficulties from the path of Anglo-German trade and I suggest to our exporters that they should continue to proceed with caution.
§ Mr. LANSBURY
I wish only to put a question to the Prime Minister on this statement, if Mr. Speaker will allow me. It has been customary until to-day to give the Opposition notice when a statement of this kind is to be made. I think that on nearly every occasion I have had a sight of the statement that was to be made, and, although I do not want to make any grievance of it because it is probably an inadvertence, I hope that the right hon. Gentleman will in future let us know when a statement of this kind is to be given.
§ Mr. RUNCIMAN
I apologise to the right hon. Gentleman and to the House. The circumstance in which it was necessary to make the statement now was as follows. A question was down in the name of one of my hon. Friends asking for information on this particular point, and it was just shut out owing to Questions having been rather long continued. It would have been a pity not to get the statement out at once for financial reasons which would occur, of course, to the right hon. Gentleman, and the only other way to get it out was by a statement now. I apologise for not having given notice before.
§ Mr. LANSBURY
We have had no opportunity of considering it in order to put questions. I am really asking that when a statement of this kind is to be made we should have a sight of it beforehand.
§ Mr. ALBERY
In view of the importance of the statement that the right hon. Gentleman has just made and the impossibility of gathering all that it contains merely from hearing it, will the House have any opportunity of discussing it?
§ Mr. RUNCIMAN
The Command Paper—a White Paper—will be available, I hope, this evening and will give all the information. Perhaps if my hon. Friend arid others will consider it, then we might consider whether it is necessary to carry it any further.
§ Sir ARTHUR MICHAEL SAMUEL
Will the right hon. Gentleman define rather more closely the words "non-Reich loans" given in the statement?
§ Sir MURDOCH McKENZIE WOOD
May I ask the right hon. Gentleman whether it would be possible to send a resuméof the agreement to East Anglia at once?