HC Deb 08 April 1938 vol 334 cc708-12

12.6 p.m.

Captain Wallace

I beg to move, That the Clearing Office (Rumania) Amendment Order, 1938, dated the twenty-eighth day of March, nineteen hundred and thirty-eight, made by the Treasury under the Debts Clearing Offices and Import Restrictions Act, 1934, a copy of which was presented to this House on the thirtieth day of March, nineteen hundred and thirty-eight, be approved. This Order is made under the same Act as the preceding one, and the same procedure is necessary. As there seems to be an idea in some quarters that I gave a rather inadequate and perfunctory explanation of the previous Order, perhaps I had better go back on this occasion a little further into Rumanian history. The original need for setting up a clearing arrangement arose from the restrictions imposed by the Rumanian Government on the transfer of funds out of Rumania which resulted, as long ago as 1934, in the accumulation of a large volume of blocked trade and finance debts owing to United Kingdom creditors. We attempted, as in the case of Italy, to liquidate these debts without setting up a compulsory clearing system, for, as my right hon. and gallant Friend has said, we regard clearings as a necessary evil but definitely as an evil. That attempt proved unsuccessful and we were obliged to set up a compulsory clearing in June, 1936.

The clearing worked very well during the following year owing to the high level of Rumanian imports into this country. A great part of the outstanding trade debts have been liquidated, the arrears of payment due on Rumanian loans at the reduced level provided for under the agreement between the Rumanian Government and bondholders were overtaken, and good progress was made with the transfer of payments in respect of the remaining financial debts due to creditors in the United Kingdom.

In May last year an amending agreement was concluded which changed the proportions between the amounts of sterling allocated to the different classes of debts, and owing to the large amount of sterling available it was possible, without prejudice to other creditors, to provide for a substantial increase of the amount of United Kingdom export trade and to increase the amount of free sterling placed at the disposal of the National Bank of Rumania. The existing arrangements are, therefore, based on the two agreements of 1936 and 1937 which were supplemented by two technical agreements signed at the same time, which govern the machinery of the clearing and into which the House will probably not wish me to enter.

The clearing continued to work well until towards the end of last year. Since then, there has been a considerable decline in the amount of Rumanian exports to this country and this, of course, has meant that less sterling has been put into the clearing with the result that there has been some danger of an accumulation of fresh arrears of payments—the very thing that the clearing is designed to avoid. In those circumstances the National Bank of Rumania, who were very anxious to maintain the commercial relations of our two countries on a sound basis, offered to make certain transfers of sterling from its free exchange resources outside the clearing to certain sub-accounts of the clearing which, under existing arrangements and owing to the decline in Rumanian exports, are at present receiving insufficient sterling to meet the calls due to be made upon them. The National Bank of Rumania offered to do this on the understanding that the sub-accounts would repay the amounts concerned when and to the extent that the clearing office and the National Bank should agree that an available surplus existed on those sub-accounts—in other words, when better times came.

This offer was very readily accepted by His Majesty's Government, but, unfortunately, it was not possible to implement it under the Orders then in existence because while the Orders did not prevent the Clearing Office getting an advance of money from the Rumanian National Bank outside the clearing, they did not empower the Clearing Office to repay anything. Therefore, it was necessary to sign a supplementary agreement embodying the proposal; this agreement was signed at Bucharest on the 25th February and appears in the Schedule to the Order. The National Bank of Rumania has already transferred £404,803 to the clearing under this arrangement up to this morning. The House will see that this Order is required to enable something to be done which is to the advantage of the trade of both countries. It is the only means by which the clearing can repay to the National Bank of Rumania the sums which they are advancing from their free resources of sterling at the present time and I hope therefore that the House will approve of the Order.

Mr. Pethick-Lawrence

I do not think that any exception can be taken to this Order. I believe it to be not only a workable but a satisfactory proposal and I have only one question to put to the right hon. and gallant Gentleman. He told us that the necessity for the offer by the Bank of Rumania arose from the fact that there had been a considerable falling-off in exports from Rumania to this country. It would be of interest to the House to know, first, in what commodity has the principal falling off taken place, and, secondly, why has the falling off taken place? I do not know whether it is due to any arrangement between Rumania and the German Government for closer co-operation in trade, but whatever the reasons may be, it would be of value to the House if the right hon. and gallant Gentleman were able to supply us with a statement of them in broad outline.

Captain Wallace

I am glad that the right hon. Gentleman has raised the point. In 1936, when this arrangement started, Rumania was fortunate in having a very good harvest, while harvests over most of the rest of the world were good. Prices of grain rose and Rumania was able to export exceptionally large quantities of wheat and barley to this country. Moreover the arrangements made in the Payments Agreement in favour of the oil companies encouraged the oil companies to send oil to this country. As a result, our imports from Rumania in 1936 were valued at £6,200,000, as compared with £3,200,000 in 1935. Unfortunately the Rumanian harvest of 1937 was a failure, except as regards wheat; but even the wheat did not come to the United Kingdom, because United Kingdom prices were not attractive and Germany was prepared to take the Rumanian supply. Oil production in Rumania also declined during 1937, and this decline was reflected in her export trade to the United Kingdom. The result was that our imports from Rumania fell from the large total of £6,200,000 in 1936 to £4,500,000 in 1937, and the decline, which was particularly marked in the autumn, has, I regret to say, continued during 1938. Of course it is obvious that it is to the advantage of this country that our trade with Rumania should go on, and the possibility of stimulating Rumanian exports to the United Kingdom is being actively considered, both in Rumania and in this country.

Mr. Benson

What is the amount of our exports to Rumania? What is the balance of trade?

Captain Wallace

Our total exports to Rumania in 1936 were valued at £1,120,365 and our re-exports at £45,224. In the same year our imports from Rumania were valued at over £6,000,000. The hon. Member will appreciate that those figures cannot be taken as conclusive, for there are such things as triangular and quadrilateral trade in the world. We are most anxious by every means in our power to increase our trade with Rumania and this arrangement which the National Bank has made to help the clearing should be advantageous.

12.17 p.m.

Sir Arnold Wilson

Taking my cue from the remarks made on the subject of the previous Order by the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence), I hope that nothing that is said in approving this Order will make Rumanians believe that we in any way approve of the way in which they are treating the Jews in Rumania at this moment. There has been a fresh recrudescence of the worst form of persecution in Rumania, contrary to the Berlin Treaty of 1878, of which we are signatories. While I share the desire that our trade should increase, I hope that the Rumanian Government will not think that in approving this Order we in any way give our consent or shut our eyes to what has been going on in Rumania and I fear is still going on in the matter of their treatment of minorities, particularly the Jews.

Question put, and agreed to.

Resolved, That the Clearing Office (Rumania) Amendment Order, 1938, dated the twenty-eighth day of March, nineteen hundred and thirty-eight, made by the Treasury under the Debts Clearing Offices and Import Restrictions Act, 1934, a copy of which was presented to this House on the thirtieth day of March, nineteen hundred and thirty-eight, be approved.