HC Deb 15 December 1938 vol 342 cc2221-317

Order for Second Reading read.

4.21 p.m.

Mr. R. S. Hudson (Secretary, Overseas Trade Department)

I beg to move, "That the Bill be now read a Second time."

Perhaps the House will allow me to say a word or two about our export trade before I come to the details of the Bill itself. The figures which hon. Members will have seen in the Press this morning will, I hope, have been reassuring. When I spoke here a fortnight ago I called attention to the fact that although the invisible balance of trade against this country had been rising in the early months of the year, more recently that process had ceased, and that things had taken a turn for the better and I ventured to express the hope that that improvement would continue and be accentuated. The figures which are published this morning show that, in fact, the total visible adverse balance of this country this year is lower than it was at the corresponding date last year, and I think we are entitled to be thankful for that circumstance.

There has been a good deal of pessimism expressed about the state of our export trade. Many people would have us believe that the foundations of that trade are being cut away, but the figures published to-day show that for the third month in succession there has been an increase in trade. So far as volume is concerned that increase is concealed partly by the fact that there has been a decrease in prices, so that the actual increase as measured in volume is rather more than appears on the surface. That is an indication that our exporters are still actively pursuing their task. This is all the more satisfactory when one realises that world trade as a whole has continued to decrease. It has tended to fall owing, very largely, to increasing friction, quotas and impediments and above all I think to increasing lack of confidence.

It is appropriate, perhaps, that we should be considering this Export Guarantees Bill, because I think we can claim with some justification that the Export Credits Guarantees Department has served during these critical months and years to provide a certain measure of assurance to British trade without which, I am satisfied, a great deal of the trade would not in fact have been done. That applies more particularly to the comparatively recently-invented transfer risk guarantee, which undoubtedly has encouraged traders to continue to do business with those countries where, but for the possibility of insuring transfer risks, they would undoubtedly have taken the view that political considerations and uncertainties rendered transactions of that kind quite impracticable from the commercial aspect. There is an old saying that trade follows the flag. To-day, unfortunately, we are living in a period of what may be called power politics, where more attention is often paid to force than to reason. I do not think that we in this country want to imitate other people, but I do say emphatically that whereas it may have been true in the past that trade followed the flag to-day it is certainly true that trade is affected by national prestige. In a world of power politics undoubtedly the trade of this country is to a very large extent dependent upon the question whether or not the world believes that we are in earnest about our scheme of rearmament. I have evidence of that from all over the world.

Last year when I introduced a consolidating Bill I gave a short account of the work of this Department. I hope that hon. Members w ill not desire me to recapitulate, and it will perhaps suffice if I say that in the year 1937–1938 the policies issued by this Department were almost exactly double what they were two years previously. That figure is sufficient to show that the operations of the Department and the facilities that it affords have by now become an integral part of the whole of our export machinery. At the same time that we have made that satisfactory progress we have found by experience that certain of the restrictions which were contained in the earlier Acts, and repeated in the Consolidating Act last year, have become irksome. We find that modifications are needed, and we want now to try to get a system which is flexible and can be adapted without delay, and without the necessity of coming to Parliament for amending Bills, so that we can meet new circumstances as they arise, I was going to say, almost on the spot, but at least as soon as may be.

To give an instance, we found when we came to examine the details of the operations that were necessary under the Turkish Agreement that we required to guarantee services which I might describe as being ancillary to the actual export of the goods. It was necessary, for example, that consulting engineers should go out to Turkey to examine the various properties and draw up plans, and it was necessary for their fees and travelling expenses to be paid and guaranteed actually before the order was given. At the same time we found in other cases that it was desirable to guarantee maintenance contracts during construction and trial, and in certain cases we were asked to cover the expense of training in this country operatives from other countries who had been brought here to be taught the particular processes they would have to carry out when the machinery was finally installed in those countries. The two are covered by an alteration which I will mention in a moment.

We were faced with the fact that the total amount of liabilities which we could incur at any one time was likely in the near future to prove insufficient. The House will remember that we obtained authority last year to increase our limit from £26,000,000 to £50,000,000. At the present moment we have outstanding £20,000,000 in existing guarantees. We have £22,500,000 in contracts which we have undertaken and £1,500,000 in guarantees on offer, making a total of £44,000,000, which leaves us only £6,000,000, and we are now asking the authority for the House to increase that limit of £50,000,000 to £75,000,000. I should have explained that included in the £22,500,000 is £14,000,000 in respect of the Anglo-Turkish Agreement. No promissory notes have yet been guaranteed, but we anticipate that they will be, and we are bound to take account of them as a contingent liability.

In addition to what I have already mentioned, we found that certain modifications were desirable. A number of cases have arisen in which the members of the Advisory Council, who are all business men, felt that if they carried out their duties, according to their judgment of particular cases and purely and strictly on commercial grounds, they were bound to recommend that the particular transactions should be turned down. Some of these transactions appear to us to be transactions which, we fully agree with the members of the Advisory Council, should not be accepted on strictly commercial grounds, but are nevertheless transactions which, taking a long view, are in the national interest. Perhaps I might give a concrete example of the sort of thing that we have in mind. A particular proposal might come along in which a credit was desired by a firm or a country to be extended over four years. On a strictly commercial basis, one year would be the limit for which approval would be given but, taking a long view, it might appear to the Government that at the end of four years that country or that firm would be more prosperous and would have recovered in one way or another, so that it would be able to liquidate that particular contract. The mere fact that we had been willing to give them credit over the longer period and to trust them would redound to our advantage by gaining their good will. From the broad national point of view, the risk would be worth taking.

In Clause 4 we propose machinery to try to cover that type of case. I should like to make it clear that the operations under Clauses 1 to 3 are a continuation of the existing machinery, with modifications, to which I will refer later. They will contiuue under the supervision of the Export Guarantees Advisory Council of business men, and will contine to be governed as in the past entirely by strictly commercial principles and considerations. We and the manufacturing community in this country are deeply indebted to the businesss men who have formed that Advisory Council for the work which they have done. They have worked unremittingly for no remuneration and at great expenditure of their own time, and they have over a period of years succeeded in fostering and making possible this considerable volume of export trade. They have done it at no expense to the taxpayer; indeed they have done it so prudently and wisely that the Exchequer has succeeded in that period in obtaining what some people would call a profit but what I prefer to call the building up of a reserve fund against possible bad debts. So far as the machinery under Clause 4 is concerned, the accounts will be kept en- tirely distinct from those under Clause 1, and Clause 5 provides that separate returns will be made in regard to those guarantees. It is proposd to maintain this distinction in any accounts which are prepared regarding our export guarantees.

In addition, there are two important differences between the two classes of guarantee. In one classes I have said, the advice of the Advisory Council is taken on each application, and weapons of war are not included. The other class may include weapons of war, and the Council has no responsibility for giving advice regarding those guarantees.

Mr. Benson

Are the Council consulted?

Mr. Hudson

I would not like to give an assurance either way. A particular transaction may start as the sort of transaction which would go to the Advisory Council, but they may turn it down, on strictly commercial grounds, and it may then be transferred into the other class which requires Government consent on the ground that it would be in the national interest. It will then fall under Clause 4. The Advisory Council will not be asked whether or not it should be included in Clause 4. When we set up the machinery to work the Bill we shall also do what we reasonably can to see that the distinction between applications under Clause 1 and Clause 4 is maintained.

Now I would like to run briefly through the Bill and perhaps explain the various Clauses. Clause 1 (1) is a continuance of our existing powers. A proviso to this Clause alters the definition of weapons of war which has hitherto prevailed. Under the existing definition we found that we were prevented from covering a number of articles merely because in some cases they were to be sent to an arsenal or to a war department. That has prevented us in the past from guaranteeing mackintoshes for certain civilian staffs, and we might have to decline toothbrushes for use in certain barracks. Neither of these articles could be regarded as legitimately munitions of war. We, therefore, propose to alter the definition, and to say, instead of "munitions of war," weapons of war or other goods which in the opinion of the Board are constructed or intended for destructive use in war. Sub-section (2) confers on us general powers, but supplemented by the subsidiary paragraphs in Sub-section (3). Subsection (3, a) covers cases such as the erection and installation abroad of machinery imported from this country. Paragraphs (b) and (c) remove certain restrictions which we have encountered in practice. Paragraph (b) relates to sales to merchants intended by the purchaser for export. Paragraph (c) covers sales from stocks abroad which have already been exported. Paragraph (d) covers sale of goods sent by a firm in this country to a subsidiary registered abroad and actually sold by that subsidiary. Owing to present restrictions a good deal of unnecessary clerical work is involved. Under Sub-section (4) the power to give guarantees is in general terms and covers cases such as fees to consulting engineers.

Hon. Members will see, if they turn to page 3 and look at Clause 2 (1, b), there is a limit of £2,500,000 at any one time for guarantees under this Sub-section. Sub-section (5) replaces similar words in the existing Act. Clause 2 (1) refers to the authorising of guarantees not exceeding £75,000,000. Paragraph (a) substitutes a global limit of £7,500,000 in respect of the export of goods which are not home produced goods, instead of the existing limit of 25 per cent. of the cost in each individual case. That will give us more elasticity without increasing the total of the cover granted for re-exports. Clause 3 reproduces the existing provisions of Clause 3 (1) of the Act. In Clause 4, to which I have already referred, the House will know that we have provided a safeguard by requiring that a return shall be made every six months in order that the House may see what is actually being done under the powers conferred on us by this Clause. Clause 7 requires that accounts of the two kinds of guarantee shall be kept separate.

That statement, I think, covers the Clauses of the Bill. My right hon. Friend the President of the Board of Trade will deal with any particular question which may be put by hon. Members. I will venture to suggest, in conclusion, that this Bill represents only one of the methods that will have to be adopted by this country to meet the existing situation. New difficulties and problems are continually cropping up. Our competitors are continually extending and developing their methods, and it seems to me that we shall have as occasion arises to adopt new devices to meet the situation. They may be devices which we should not adopt in the ordinary circumstances. They may be novel, and they may well be without precedent in our history, but, so far as they are required for the protection of, and for developing, trade which is vital to the existence of this country, I am certain that not merely the Government but the House will not hesitate to give any powers that may be required.

4.44 p.m.

Mr. Pethick-Lawrence

It is little more than a year since the right hon. Gentleman came to this House and asked for the Second Reading of a Bill that considerably increased the possible guarantees in this country in the matter of the export trade. Then the amount was made £50,000,000. He comes to us again now to ask for a further increase in the total from £50,000,000 to £75,000,000 and for certain other considerable extensions and modifications of the law. Before we come to consider the Bill, I should like to know how far the innovations which were introduced when the matter was before the House on the last occasion have proved to be a success. The right hon. Gentleman did make a passing reference to one of the changes, but I should like to hear a little more as to how it has been justified. With regard to the other matter, which was not one for the Act itself, but one for interpretation—that of the introduction of shipbuilding into the things which could be covered by guarantee—he did not say anything at all. If the experience of the last 16 months has been long enough to form any judgment as to how far that opportunity is being taken advantage of, perhaps the President of the Board of Trade, when he winds up the Debate to-night, will be able to give us a few facts.

I propose, before considering the Clauses themselves, to say a few words with regard to the background of the Bill. I think the House ought to realise the complete change that has taken place in the position of international trade to-day as compared with what it was during the nineteenth century. We used in those days to speak of international trade, but really it was not trade between one country and another; it consisted almost entirely of trade between the nationals of one country and the nationals of another country—trade between Englishmen or Scotsmen and Frenchmen, trade between Englishmen and Russians, and, indeed, trade between the peoples of all the different countries. The great claim that was made by all those traders and by the manufacturers who produced the goods for trade was that they should be allowed to conduct their own business with as little interference of any kind by the Government of the day as it was possible to secure. This was notably the case with the cotton industry. The enterprise of British manufacturers and traders and the efficiency and skill of British artisans enabled the products of British industry to be predominant in the world, and gave the opportunities for building up in this country a population far in excess of what in other circumstances would have been possible within the small confines of the British Isles.

Before the end of the nineteenth century, certain changes were already beginning to show themselves. In the first place, there was the diplomatic assistance that was given to large firms by the suggestion in foreign countries that the placing of orders with British nationals was a good way of keeping on friendly terms with this country. As time went on, in the newer countries spheres of influence were devised which were sought for by diplomatic means wherein the trade of one country as against another would predominate. But even so, at that time the trade itself was still in individual hands, and finance was effected by institutions which were conducted on the principles of private enterprise. Last, but not least, the currency of nearly all the principal countries of the world was on a simple, straightforward and uniform basis and exchange was on more or less stereotyped lines.

Since the War, and more particularly in the last few years, the whole of this basis has changed, and, if the House will bear with me, I will just mention a few of the events which have contributed to this change. I will take them, not necessarily in the order of their importance, but, as is done in modern playbills, in the order of their appearance on the world's stage. First of all, there was the complete control of national trade in Russia, brought about by the Russian revolution and the coming into being of the Union of Soviet Socialist Republics. Then there was the currency chaos of the Central European Powers, and the deflation in Britain and in the United States. Then there was the world economic depression, and next the drive towards self-sufficiency throughout all the nations of Europe. Finally, there came the abandonment by this country at one and the same time both of the old Gold Standard and of our long-established Free Trade policy. Since then, most of the other countries have departed from the old basis of their currency. I will not say that they went off gold, because it depends upon what one means by being on gold, but for effective purposes they departed from the system that they had in the old days. Then there was the rise of the Nazi system in Germany—I am not dealing with its political side to-day, but am thinking solely of its economic aspect—carrying with it the complete control of German enterprise by the State, and the whole system of currency manipulation and exchange restrictions, carried out principally by Dr. Schacht, who is now on a visit to this country. I ought perhaps to mention in addition the diversion of the energies of the peoples of nearly all the countries of the world from the peaceful purpose of the building up of their commercial prosperity and comfort and happiness to the production of weapons of war.

How has our industrial life reacted to these events? I think I can say without fear of contradiction from any part of the House that they have completely changed its whole basis. As I have already said, in nineteenth century days there was a kind of dual control. The State dealt exclusively with political matters, and private enterprise was almost untrammelled in its control of industry. That duality has been completely shattered by the events which I have been describing. Laissez faire has no defender to-day. Its last gun was silenced when the hon. Member for South Bradford (Mr. Holdsworth) transferred his allegiance to the other side of the House.

Mr. Mabane

No, its last gun is now on the Front Opposition Bench.

Mr. Pethick-Lawrence

Certainly my right hon. Friend the Member for Gorton (Mr. Benn) is not a defender of laissez faire. That is quite a wrong way of describing him. Its last gun was silenced when the hon. Member for South Bradford transferred his allegiance from the ranks of the Liberal party to the benches opposite. I think the position is very clearly expressed in the book entitled "Recovery," written by the junior burgess for Oxford University (Sir A. Salter). It contains these words: The conditions no longer exist under which a freely working competitive system can secure an automatic adjustment of the world's economic activities to changing needs. It goes on to point out that we have not yet found a way to deal with the situation, largely because we have national authorities to deal with what is really an international problem. Manufacturers in the old days, as I have said, asked for no interference; they asked for a fair field and no favour. To-day there is scarcely a manufacturer in this country who is not asking for interference. Of course, he does not call it interference; he calls it help; the last thing he wants is to be hindered; but, in fact, intervention by the State throughout almost every one of the major transactions with which he is concerned is what he is demanding. Some manufacturers and traders want tariffs and quotas, some want subsidies, and some want other things.

We on these benches are not very fond of tariffs and quotas, but we do believe in export guarantees. There is a fundamental distinction between these two methods of helping the manufacturer and trader in this country. The first set of devices are designed to reduce and limit and restrict international trade. The second set of devices, namely, export guarantees, are designed to enlarge the field of international trade and to make it more successful. This whole system of export guarantees has been built up, as I have said on previous occasions, not merely with the connivance but with the active support of parties in all quarters of the House, and the President of the Board of Trade and the Secretary to the Overseas Trade Department know quite well that the Labour Government played its part, and a very important part, in building up this scheme. These methods culminated in the Act of 1937 to which I have already made reference.

The Secretary to the Overseas Trade Department paid a fitting tribute to the work of the various gentlemen who sit on the Advisory Committee, and I think that in the main they do their work well. In the early days of the Committee—I am not aware that it was their doing; I am not at all sure that it was—there was a certain amount of political bias, or national bias, exhibited. There was a time when Russia was excluded in effect from trade with this country. Those days, fortunately, have gone by, and in the last few years a very considerable amount of trade has been done with the Union of Soviet Socialist Republics, to the benefit, I believe, of both countries; and the export credits scheme has helped to build up that trade. There is room for a great deal more trade along those lines when the opportunity arises. I think I heard an hon. Member speak of re-exports—

Mr. Boothby

Not re-exports—all exports.

Mr. Loftus


Mr. Pethick-Lawrence

It is perfectly true that it is very important that we should encourage the export of herrings, in which I have an interest from the point of view of other parts of the country than Lowestoft. In my own constituency there has been very considerable disquiet owing to the failure of this export. The development of these export credits can do a considerable amount to assist in that direction.

I come now to the new features in the Bill. This Bill falls mainly into two parts. The first part deals with the extension of the sum and of the normal powers provided under the existing Act. Clause i is cast in a somewhat different form. The first differentiation, as the right hon. Gentleman has told us is in the proviso to Sub-section (1), relating to munitions of war. I think the Government are quite right in considering that the old form of words was too narrow, but I am not sure that the new form of words may not be a little too wide. Under the new proviso only definite weapons of war will be inadmissible for guarantee. All army clothing will be included as admissible. I am not saying whether that is desirable or not, but I think the right hon. Gentleman should have made it a little more clear exactly what would be admitted under the new scheme and how far it goes in respect of what is necessary for equipping an army of a foreign Power.

In Sub-section (2) of Clause 1, again, the words used are very much wider than those in the existing Act; but they are qualified, of course, by certain expressions later on, and may be justifiable. Subsection (3) contains a number of very considerable new departures, more particularly with regard to items (b), (c) and (d). We are entitled to a little more explanation than we have had on those points. Sub-section (4) is also a very wide departure although it is limited to the amount of £2,500,000. It says: Guarantees may also be given under this section in connection with any other matter which appears to the Board of Trade to be conducive to the establishing or encouraging of such trade or branch of trade as aforesaid. I think those are very wide terms, and perhaps we might have a little more explanation as to what the intention may be. I do not think I need say anything about Clause 2. Clause 3 is a reproduction of the provisions of the previous Acts, but I should like to say this. The question has been raised of what our commitments are with regard to exports to particular countries. With regard to the second part of the Bill we are to be told where the exports have gone for which the guarantees are given. I do not see why that should not be possible with regard to exports under Clause 3 as well as under Clause 4. Perhaps the right hon. Gentleman who winds up the Debate will explain that point.

Now I come to what is the main innovation in the Bill. It is in Clauses 4 and 5. They confer entirely new powers on the Board of Trade. The right hon. Gentleman who introduced the Measure, in the first part of his description spoke rather lightly of the very considerable changes that were being made, but just before he sat down he did admit that there were wide new powers. In point of fact, the House is being asked to give the Government exceedingly wide powers, and I do not think the effect of that can be minimised by the figure of £10,000,000, which is the limit of what they are empowered to guarantee under the present Bill. It would be quite easy for the Government to come to the House and say, "The £10,000,000, which the House accorded to us last year, is not enough." They will need only a small Measure to put the amount up to £20,000,000 or £30,000,000, or whatever the figure may be. I do not think we can be satisfied because the figure is not so very much—although £10,000,000, even in these spacious days, is quite a considerable amount. What is the power that these new provisions give? In the first place, in this part of the Bill the proviso with regard to munitions of war—or weapons of war, as they are called in the new Bill—is entirely removed. Therefore, the Government can give guarantees with regard to the sale of weapons of war to foreign Governments. The Government already have the power to allow weapons of war to be exported, subject to the licence of the Board of Trade. In that respect the Bill is not giving any new powers; all it does is to enable the Government to guarantee the payment. The right hon. Gentleman who is to wind up should give us an indication as to what part of this £10,000,000 it is proposed to devote to that side.

Apart from that, in Clause 4 the control, or advice, of the Advisory Committee is no longer required. The Board of Trade are free to give this guarantee on their own initiative and without consultation, and, therefore, presumably without any idea that the transaction is a purely commercial one, or that it is certain, or even probable, that the Government will be recouped. I am not saying that this is wrong. We had a very important Debate in the House something like a fortnight ago, and in all parts of the House there was a considerable measure of approval given to what was said by the Secretary for Overseas Trade in his closing remarks. We do live in very strange times, times when it is necessary for Governments to take action in this matter of trade, and it is generally accepted that those methods have got to be something different from what they were in days gone by. In other countries, currency manipulation, exchange manipulation, blocked currencies and things of that sort may literally be described as weapons provided by Governments to secure trade for the nationals of their own countries.

If we are to spend money on making weapons of war, we should be prepared to set aside a certain amount of money to enable the Government to defend the economic life of this country, but we should have some assurance that these weapons are to be used solely for purposes of which this House as a whole would approve. I believe the intention of the Board of Trade is to use them on such lines. But I was speaking not long ago from this Box, the Prime Minister was sitting opposite me, and when I spoke of the intention, that he had referred to, as a pledge that he had given as to his conduct in the future, he interrupted and said that there was no question of a pledge in that case; that he had merely made a statement of fact. So even though the present intentions of the Board of Trade may be in accord with the wishes of the House, I am afraid the Prime Minister's interruption means that we need positive assurance that the Board of Trade will not, when the time comes, misconstrue the words in this Clause, which are that the Board of Trade will do certain things in connection with any matter in connection with which it appears to them to be expedient in the national interest that guarantees should be given. To be frank, what we are afraid of is that the time may come when it may appear to the Government to be in the national interest that guarantees should be given in reference to those countries which are acting, or preparing to act, in a way which is not in accord with the comity of nations. I do not want to specify nations individually—

Miss Wilkinson

Name them.

Mr. Pethick-Lawrence

—but I think everyone in the House will know the nations to which I am referring. We do not want the money which this country is putting up, and which is intended to protect our trade, to be used for political purposes in order to enable some policy of the Government to be carried through. That is the blunt, straightforward issue. When the President of the Board of Trade gets up to-night, I hope he will realise that the House is entitled to that assurance.

Mr. Boothby

The right hon. Gentleman said that he did not want these powers to be used to carry through some policy of the Government. Surely, he must have meant some policy of which he does not approve. There must be carried through a policy.

Mr. Pethick-Lawrence

The hon. Gentleman has asked me a question and I will endeavour to answer it. I think my meaning is perfectly clear to the President. The point I made was that this provision shall be exclusively used to further the legitimate trade of this country, and the guarantee should be given for the express purpose of improving that trade and not be diverted from the intention which this House really has in order to achieve some theoretical policy of certain members of the Government at some future time. I hope the right hon. Gentleman will realise that the House has a right to have that assurance from him, and that when he comes to make his speech in winding up this Debate he will give us that assurance, so that the support of the Second Reading of this Measure may be whole-hearted and without a Division in this House.

5.17 p.m.

Mr. Graham White

I would like to associate myself with one or two sentences which the Secretary for Overseas Trade mentioned at the outset of his remarks. A great deal of the alarmist and the unduly pessimistic talk about the future of British trade is to be deprecated at the present time. It is true that with the figures of the export trade falling, as they have this year, there is cause for concern, examination and action, but it is not helpful to make the pessimistic speeches which are made in some quarters. I am not sure that there is any merit in optimism, but I am sure that there is none whatever in pessimism. The course that we should seek to pursue is to examine the effect of conditions on our trade and the new conditions which are arising and base our policy upon them. Fresh apprehensions have arisen in the minds of all those who are concerned with studying the trade of our country through new developments in recent times. These fears have been increased since the changes which have taken place in Central Europe—the Anschluss with Germany and Austria and the transfer of Sudetenland to Germany.

If we consider these matters in relation to British trade, the main progress of the extension of the German export trade has been in South-Eastern Europe which is not a major field of, or of major importance to, British trade. Undoubtedly there are well justified fears that these new methods of trade, which are abnormal and unnatural, may spread from these relatively unimportant areas into the Near East, into Egypt and into other areas which are of very great importance to us. That is really the foundation of the anxiety which some people are more apt to express in words than they are to sit down steadily and consider the possibility of meeting these new threats.

Having regard to all these circumstances and the state of trade in the world, we certainly give a very cordial welcome to this Bill, which is an instrument that has been well tried and proved satisfactory for our export trade. The changes and the extension of powers seem to be desirable. We certainly want to have a larger volume of guarantee so that there may be a larger field of manoeuvre. The changes made in Clauses 1 and 2 are necessitated by experience which has proved that certain restrictions have hampered the free working of the scheme. The technicalities which would deny the guarantee in respect of goods consigned to a subsidiary company abroad and matters of that sort should be brushed aside, as they have been, and put right under the Bill. Like the right hon. Gentleman above the Gangway, I viewed with some little apprehension the withdrawal of the definition with regard to munitions of war, but when one comes to think that in some countries practically the whole population is organised in some way or another on a war basis and has to find a form of definition to deal with a situation such as that, one is at a loss to know what could be exported at all under the former definition of munitions.

With regard to Sub-section (4) of Clause 1, it is eminently desirable that the Board of Trade should in that Clause use language which is not too clearly drawn. In these times it is almost impossible to foresee in advance all the ancillary services which may be necessary for the development of the export trade. Therefore, I make no quarrel with the wording of that Sub-section on the ground of its vagueness. I think that we have full safeguards for the operations carried out under the Bill in the publicity which is provided for in other Clauses. As to Clause 4 and the new fields which may be opened up under these extended powers, it is clearly impossible that they should be operated or controlled by the Advisory Council. In matters which involve possibly greater risks, and certainly long periods of credit, the responsibility must rest with the Government. I hope that the financial outcome of these transactions which may be carried out under their responsibility will be no less satisfactory than those carried out under the advice of the Advisory Council. One of the most refreshing merits about the Bill, and certainly a very real one, is that it is not anticipated to place any fresh charge upon the taxpayer or the ratepayer, or, as in the case of so many Bills, upon both at the same time. It is almost a miracle that all these guarantees have been carried through involving transactions amounting to something like £180,000,000, and that there should be as a result of these operations not only no loss, but something with which to build up a reserve fund. Few commercial transactions carried on over a number of years could have led to such a very satisfactory result.

It is quite right that in these times we should endeavour to protect and fortify our international trade by whatever means seem to be called for by changing circumstances, even though some of these methods may be entirely foreign to our past practice, and even be repugnant to us, and though they may not seem to be the processes of trade which we consider normal and which are likely to lead to satisfactory relationships between the various countries indulging in them. I hope that in all these transactions and new methods which we may be called upon to consider, we shall not lose sight for a moment of the fact that there are still considerable areas in the world in which it is possible to hope for greater freedom of trade. We have had an encouraging instance of that in the conclusion of the Anglo-American Trade Agreement, and while we think of these more favourable features we ought not to lose sight of any means that we can possibly adopt to maintain and extend those areas where reason seems still to prevail in the sphere of trade. Whatever we may do or what Parliament may consider it wise to do, I hope that the Minister will not take any responsibility off the shoulders of the trade interests in this country. No matter what we may do in this House, there is nothing which could take the place of or be any substitute for energy, quick-mindedness and resourcefulness in the changing conditions of to-day, and especially I would emphasise the necessity for up-to-date methods of salesmanship and representation on the spot, and the investigation of markets. These things are very important.

I would again refer to the necessity for watching very carefully the tendency which has been taking place gradually for the last six or seven years for us to become dear sellers. There has been an increase in the selling prices of our goods in relation to the raw materials we buy for the purpose of their conversion and sale as manufactured articles. If that process were to go on indefinitely it is clear that the time would be reached when our customers overseas would come to the conclusion that it was doubtful whether we were not charging too much altogether for the services we were performing in transforming and converting raw materials into finished goods. That is a matter which should be kept continuously under observation by those who have responsibility in the Government and in the country for the efficient conduct of businesses of various kinds.

There is another matter to which I would draw the attention of the House. Will the Government exercise such influences as they may have when these guarantees are under consideration and negotiation to suggest to those who are going to have the transport of goods, that, where these guarantees are undertaken, the goods as far as possible should be carried in British ships? It would be unwise to attempt to insert a fixed and statutory provision of that kind in the Bill or in any other Bill. If that were done it would inevitably lead to the uneconomic carrying of goods and also might lead to the necessity for uneconomic voyages to be made, and might in certain circumstances hamper the very working of the scheme. But it is not too much to ask that such influences as possible should be directed to seeing that where these guarantees are in force the goods should be carried in British bottoms.

I should also like to invite consideration of the fact that the necessity for this Bill and for extraordinary trading measures have undoubtedly been advanced and increased by the development of new methods based upon the difficulties which have arisen through currency difficulties and exchange clearing arrangements. The extraordinary technical developments and devices which are based on these changes have become intensified, notably in Germany where they have lead to the creation of a great trading department employing hundreds of thousands of individuals. I think we ought to ascertain from Germany whether they really believe that these methods are the best and most advantageous they can adopt, and whether they are carrying them out because they believe so, or whether they are carrying them out because they believe, owing to currency difficulties and the monetary policy of other Governments, they are placed in such a position that they have to extricate themselves by adopting these methods. I was lately reading a speech by Dr. Schacht, from which it was clear that he, a man of very great business ability, economic knowledge and force of action, is by no means wedded to these policies on their merits. It is true he was speaking in reference to another matter, but I should like to quote what he said: We know very well that even if we succeed in replacing with artificial native products a number of raw materials normally supplied by the world market, we can do this only at high cost. So we ought to reject antarchy on principle, because it will necessarily lead to a lowering of the standard of life of the German people. It may be that, despite the change which has gone on since that speech was made, there is no longer any doubt in the minds of the German people as to the desirability of the trading methods they are now carrying out, but if there is any doubt on that matter I think we should find out, and if there is any possibility of changing these processes for those which are more normal, we should examine the position and see to what extent they can be obviated. In making a suggestion of that kind I am mindful of the extreme difficulties which lie in the way. I realise the danger and also the unpopularity of making a suggestion which might be interpreted as doing something which might help rearmament in Germany. But we must look forward to the time when there will be reason in the world, and neglect no opportunity. I do not know whether the presence of Dr. Schacht can afford some opportunity of making some inquiry on these matters. The Bill we regard as a useful Measure, among others, which can be adopted for fortifying our business credit which is vital to us and to our standards of living and is, in fact, the foundation of every effort we are called upon to make at the present time.

5.34 p.m.

Mr. Crossley

The hon. Member for East Birkenhead (Mr. White), who represents the Liberal party, is neither a pessimist nor an optimist, neither a Stoic nor an Epicurean. During the last few days my mind has been turning again towards optimism, particularly since the really magnificent speech made by the Secretary to the Overseas Trade Department in reply to a private Member's Motion the other day, a speech which, I am sure, caught the imagination of the House and the country, and showed quite definitely that we are not going to throw away the heritage our forefathers won for us in the export markets of the world, and that we are not going to sacrifice the standards of living of our people which depend in fact upon those exports. My right hon. Friend the Secretary to the Overseas Trade Department was thereby added to the distinguished role of those who have fallen under the stigma of Nazi disfavour.

Mr. Ellis Smith

That is to his credit.

Mr. Crossley

That may be so. In the concluding words of his speech the right hon. Gentleman said that this Bill is only a small measure of the reply of the Government to the German trade menace. I should not have said "German," because it is not confined to one country. There are a number of countries engaged in it, but the outstanding example in the last two or three years has, in fact, been Germany. The right hon. Gentleman's Department is not a very spectacular one, nor is this Bill very spectacular, but it is an extremely good Bill. It affords an opportunity of renewing the methods which are being employed against our exporters to-day, and it gives the Government a new method of combating one particular form of competition from which we are suffering in the export markets. I welcome the Bill wholeheartedly. The answer which the country must give to the methods employed against us in the export markets depends mainly on a far closer co-operation of groups of industries aided, abetted and assisted by a deliberate and intensified policy of the Government, and nothing less will bring the countries which are pursuing these methods to their senses. It is a severe task.

The method generally selected by them is to take a particular market and concentrate all their powers on that particular market. We ought not to forget that the Overseas Trade Department is not only under the Board of Trade but in many of its aspects is directly under the Foreign Office, and of recent years the question of trade has been forced upon us as a political issue. The right hon. Gentleman opposite in his comprehensive resumè of economic history during the past 30 years, said that we have in fact to reckon not with the competition of individuals but with the competition of Governments. Not long ago the Government made an agreement—a very good agreement with Turkey. The Department of Overseas Trade made that agreement, but the hon. Member for Wallsend (Miss Ward) deserves credit in this House and in the country for the observations she had previously made in the Debate on last year's Export Credits Bill on the question of Turkey placing orders for ships in this country. This led to a very valuable provision being inserted in the Bill covering the building of ships. She, I know, was thinking of her constituents, as she always does, but at the same time it did have the effect of drawing attention to what is in fact the great desirability of the closest possible friendship between this country and Turkey. The friendship of Turkey is possibly more important to us than the friendship of any other country except France and the United States.

We made that Agreement, but it had one fault. It contained a provision that no armaments should be supplied to Turkey through the credit guarantees which we gave. What has been the result? Turkey has to go to another country and get the credit there.

Mr. Bellenger

When we passed that Measure we also authorised the Government to advance £6,000,000 for the purpose of armaments.

Mr. Crossley

Yes, for certain naval ships, but the general trade agreement contained a specific provision that armaments should not be included. The present Bill gives the Government a most valuable power of allowing them to supply credit for what, in fact, are armaments. Under Clause 4 there is no doubt that armaments are not excluded, and I welcome that provision, because in these days I do not think we can afford to deny friendly countries what they want or that we can afford to deny armaments, provided it is done under the strictest possible Government supervision, as it is in this case.

Mr. A. Bevan

Can the hon. Member suggest any method by which friendship with this country can be assured after they have bought the armaments?

Mr. Crossley

Yes, by a firm, clear, direct and consistent foreign policy, which I have always advocated. As we obtain armaments ourselves we shall be able to apply a firm, clear and consistent foreign policy. There is another provision about armaments in the Bill which will clear away that ridiculous and anomalous little irritation to traders, in that they cannot provide things necessary for armies, such as khaki drills for the troops. As my right hon. Friend said, this will be of some value to Lancashire. There are two other provisions in the Bill which, I think, will also be of value to the Lancashire cotton trade. The other day we had more or less a debate upon the Lancashire cotton trade, and my right hon. Friend made a speech in reply. I was surprised yesterday to open a letter and find a resolution bitterly complaining of his speech. I think it is time cotton exporters got two things firmly in their heads, two things which they have never realised. The first is that their gains will be small and their losses will be big unless they organise themselves far more completely and far more closely than they have up to the present. The other thing which they will have to realize—during the last 20 years it should have been obvious—is that through competition, through self-sufficiency, through subsidies and through substitutes for cotton, they have, in fact, lost many markets, and the total limit of cotton exports is for all time in the future to be a comparatively low one. They w ill have to so organise their trade so that it can be prosperous within that comparatively low limit.

The optimism of the cotton trade has been appalling and disastrous for the last 20 years. It has never faced the facts. This Bill, in its small way, does two things for the cotton trade, and I should like an answer to one particular point. In Clause 1 (3, c) power is given to exporters to get their risks covered by a policy which can also cover a subsidiary company abroad. I should like to know whether that applies to the agent of a cotton shipping firm of merchants, who may be working in Malay or America, or some other foreign country. Strictly speaking, I suppose that agent would not be controlled by the merchant in Manchester, who tries to sell him his goods, but if the cotton merchant's agent abroad could be included in the scope of the Bill it would be of considerable value, as there has not been for years anything like bulk orders in the trade. I think I am right in thinking that the transactions between the cotton manufacturer and the cotton merchants would be covered by the Bill.

I should like to make one general observation with regard to methods. Strictly speaking, they are not dealt with in the Bill, but I am anxious, as my right hon. Friend the Secretary for the Overseas Trade Department, in his closing words, mentioned that other methods were to come later, to draw attention to two methods of our competition. The other day I saw a letter from the agent of a firm who was complaining very much of the lack of consideration by the Argentine Government for British traders and British goods. He said there was no desire on their part to buy from those who bought from them, but that there was a desire to hand over surplus exchange to other countries. Is it not possible for our Government to insist upon a greater amount of the money which we pay in large quantities for Argentine produce, being spent upon British goods, because in particular in the cotton trade we have lost very considerably in that market recently, and we are losing now very considerably in heavy engineering.

The other method to which I would refer is a method applied by Germany in regard to heavy engineering. We have in this country a provision in our tariff legislation about registered shipyards. Any goods delivered to a registered shipyard are let in free of duty, and amongst them are a great many marine engines. It is impossible for a British firm to sell small marine engines in a British shipyard without selling them at something like 20 per cent. under the cost of production price. That is due to heavy subsidies. The same methods were employed by Germany in the United States of America, so much so that the United States Government immediately put on countervailing duties. The German Government then went to talk with them just as, apparently, they are coming to talk with us, in answer to my right hon. Friend's fine speech the other day. The consequence of the Germans going to America was that they came to a perfectly good arrangement, and the countervailing duties were withdrawn. I should very much like my right hon. Friend to bear that consideration in mind for the future.

My right hon. Friend has done fine work in his Department, a fact which is borne out clearly by the figures. Just over a year ago the limit of the amount that might be granted and outstanding at any one time was £26,000,000. When this Bill has gone through it will be £85,000,000—an enormous difference within a comparatively short time. Even in the last year the amount guaranteed, namely, £43,000,000 worth of goods, has been three times the average amount guaranteed since the present scheme was adopted. The figure has steadily grown all the time since the scheme was adopted in 1926. We find the facts in the accounts. One notable fact is that the total claims paid since 1926 have been only just about £300,000, out of a total of £186,000,000 guaranteed. That shows the increasing importance of the export credits scheme as part of the commercial apparatus of this country, in days when more and more the Government has to play its part in assisting trade and industry. I congratulate my right hon. Friend on his speech, on the conduct of his Department, and on the fine work which this Government is doing in the service of the export industries.

5.53 p.m.

Mr. E. Smith

I welcome the introduction of this Bill as one who has benefited from such facilities as are being given in it, and as one who was kept in employment by them for a considerable time, along with thousands of others. I also welcome it as one who has benefited from the piecework arrangement made as a result of the kind of facilities given in this Bill. Therefore, I welcome it on behalf of the industrial workers. I should like to make a few suggestions in regard to the Measure. I doubt whether £75,000,000 will be sufficient to deal with the situation with which we shall be faced. The Treasury in this country have always been very conservative. They have, however been forced to adopt a different policy in regard to rearmament, due to the international situation, and I prophesy that they will be forced, whatever Government is in power, to alter their policy in regard to the allocation of the amount put at the disposal of the President of the Board of Trade in these matters, just as they have had to alter their policy in regard to provision for armaments.

The heavy industry, in the main, has benefited from these trade facilities, and I think the time has arrived when light industries should benefit to the same extent. Six months ago, when the Secretary to the Department of Overseas Trade spoke on this question, I raised the subject, and he said that light industry had benefited but not to the extent of heavy industry. Had it not been for facilities of the sort that are contained in this Bill, the markets which have remained open for our heavy industries would have been closed long ago. I now suggest that the same markets which have been kept open as a result of these trade facilities for the benefit of our heavy industries, should be open for our light industries.

My main observations will be devoted to giving evidence to show the need for this Bill, and even for a more comprehensive Bill dealing with trade. This Bill will lubricate the wheels of commerce, which are turning very slowly. In some parts of Europe and the world the wheels have almost stopped. I desire to produce evidence to show that, while this Bill is good so far as it goes, the Board of Trade will have to make a survey of the world situation in order that we may deal with the commercial aspect in the same way that we have had to deal with other aspects arising out of the international situation. I am speaking particularly for an industry in this country whose needs have not been looked after in this House to the extent they ought to have been. I find that in 1935 Czechoslovakia sent into this country £858,000 worth of pottery and glass, and in 1937, £1,140,000 worth.

One also finds that in Germany there is an average difference of 6s. 9d. per ton between the price of coal sold for export and that for home consumption, and that the railway rate is 14s. per ton less on coal sent to Hamburg for shipment than on coal consumed in the city of Hamburg itself. No matter what our political opinions may be, we have to realize that we are living in a relatively small country, whose population depends to a great extent on the export trade, upon the industrial development of the country, the maintenance of our markets and in taking advantage of all possible markets in the world. Therefore, we are bound to be concerned about the new methods that are being adopted. That concern is finding expression in all kinds of annual meetings that are being held. If I had time, I could quote from the speeches of chairmen at the annual meetings of the big banks and the big engineering firms. I will give one extract from one annual meeting, that of Messrs. Crossley Bros. held in Manchester. Sir Kenneth Crossley, after referring to the handicaps to our export business with foreign countries, and particularly to the effects of subsidised competition, said: This subsidised competition, chiefly German, is really a very serious matter, which surely must be tackled by the Government without much further delay. For some time it had been a great handicap in foreign markets, particularly in South American and South-Eastern Europe. What I ask at this stage is that the Board of Trade should not only come forward with a Bill the object of which is to lubricate the wheels of commerce, but also that they will also present a Bill which will enable us to hold our own in all parts of the world. During the last week-end, I made an analysis and examination of the trade and navigation accounts up to August, 1938. I find that in the case of tiles, sanitary ware and china, our exports are gradually going down. I want to refer to one method adopted by some our chief competitors which has enabled them to make inroads into some of our best markets abroad. I will give an example of what happens in the tile industry. One of our Dominions has always given a preference to British trade, and would indeed go a long way even in regard to the price in order to give that preference. There arrived in that Dominion a representative of a certain country, and he said that for a certain tonnage of tiles his firm would quote, say, 20S. The firms in that Dominion found that the figure was below the price which had been quoted them in the past, and therefore were concerned about it. A British representative then said that if the other country was quoting that figure, he would reduce his quotation; and the representative of the other country then made a further reduction. That went on until the representative of the other country received the order.

That is a method that is being adopted more and more. The industry is being organised, in the country which I have in mind, in such a way that the profits which the firms make are pooled, and the surplus profits in the pool are used to enable representatives of those firms in various parts of the world to undermine British commercial interests. I find that in the trade of which I am speaking, if one cuts out the Colonial and Dominion trade, and the American trade, very little is left. My point is that while our imports from other countries are as great as ever they were, our exports to the countries which I have in mind are being more and more reduced.

The other day I received a letter from a man who, I understand, is a very fine type of man; for years he has struggled on with his firm and has employed his workpeople under as good conditions as are possible, having regard to the social system under which we are living and the competition with which he is faced. His firm produces beautiful ware which is the admiration of all those who see it, and he and the workpeople employed by him deserve better treatment and better prospects than they have at present. According to the figures which this person submitted to me, at most he makes a profit of 2 per cent. on the capital that is sunk in the firm, although the departmental stores in this country, which simply hand the material over the counter, make profits ranging from 10 per cent. to 40 per cent., and run no risks comparatively speaking.

It is not fair and reasonable for manufacturers to have to pay for research and developments, to run the risks of trade and to have all the technical background to enable them to carry on production, and to make only from 2 per cent. to 5 per cent. on their capital, whereas those firms which simply hand the material over the counter make profits ranging from 10 per cent. to 50 per cent. I would like the Secretary to the Overseas Trade Department to make a note of this. I would like his Department and that of the President of the Board of Trade to make an examination of the situation into which we have drifted, with a view to seeing whether the time has not arrived when taxation on those large profits ought to be increased more and more, so that an increasing amount of the revenue that goes to the Chancellor of the Exchequer can be used for the purpose of enabling the industries of this country to hold their own in the markets of the world far better than they are at the present time.

There is another aspect of the matter. During the Coronation celebrations, a number of us met the Prime Minister of New Zealand and the Finance Minister, Mr. Nash, and one or two other representatives of the Dominions and Colonies. It was a treat to listen to these men and to hear them analyse the situation with which they are faced. I understand that while they were here, the Finance Minister of New Zealand, in particular, made a number of constructive suggestions to the President of the Board of Trade. As far as my knowledge goes—and I have followed the newspapers and trade journals very closely—no concrete reply has been made to those suggestions. I think we are not playing the game with New Zealand, Australia and the other Dominions and the Colonies, when we do not take more notice of the constructive suggestions which they make.

I have been examining statistics concerning the distribution of trade, and I want to quote from a table showing the value of the exports of United Kingdom produce and manufactures consigned to certain countries per head of the population of those countries. I emphasise that of the first eight countries in the list of countries which are our most valuable customers, six are either Dominions or Colonies. In the case of New Zealand, the exports per head of the population, in 1937, were £12 15s. 5d., and in the case of the Irish Free State, £7 5s. 9d. I would like here to say that I think the time has arrived when we ought to put our trading relationships with the Irish Free State on a more satisfactory basis than they are now. I am sure that if more good will were shown, if a different approach were made, if we were prepared to make allowances for some of their political considerations, a great increase in trade with that country could be made. In the case of Australia, the figure was £5 10s. 1d. I ask the President of the Board of Trade whether he will make examination of the distribution of trade per head of the population, because I am convinced that some of those countries have cause for having a grievance against Great Britain in this respect.

The hon. Member for Stretford (Mr. Crossley), in speaking of a certain country—and as we all know the country, there is no point in not mentioning it—said that just as we are spending millions of pounds on rearmament, so the same policy and drive must be adopted, and other methods must be followed, in dealing with that country in regard to trade. There is no use in not speaking openly. The time has arrived, with the world situation as it is, for plain speaking. The speech made by the Secretary to the Overseas Trade Department the other night was a speech which—unlike the speeches of lawyers, which can be taken two ways—could be understood definitely by the people, and it was for that reason that it was received in the way in which it was. I will give an example of what Germany is doing at the present time, and in doing so, I quote from the notes of the Financial Editor of the "Manchester Guardian" of yesterday. He has been making an examination and analysis of the methods adopted in Germany and other countries. Hon. Members, particularly those who represent industrial centres, know that the only way in which we can obtain our living, especially when we are not in this House, is by working for it. Therefore, we are bound to be concerned in this matter. The Financial Editor of the "Manchester Guardian" stated: Germany's trade relations with South Eastern Europe and German methods of giving and receiving payment in that region are described and discussed in a most stately supplement of 40 closely-written pages of the 'Frankfurter Zeitung' of 9th December. Two writers in that supplement wrote of the German trade system as of a method in course of perfection and not a makeshift arrangement. In other words, it is wrong to assume that those methods are temporary. That seemed to be the view of the hon. Member for East Birkenhead (Mr. White). He spoke of things that were out of date long ago. Just as he and his friends have been out of date with regard to other questions, so they are a little behind in regard to the problem which faces us at the present time. The situation is of such a serious nature that [...]e is only one way by which humanity can get out of it, and that is by accepting the principles and policy for which we on these benches stand. But it is of no use talking in that way now, for we are faced with a concrete situation, within the limits which exist at the present time; and therefore, it behoves us to make constructive proposals for dealing with that situation.

I was pleased to hear the language of the Secretary to the Overseas Trade Department in introducing the Bill. He said that new conditions demand new methods of dealing with those conditions. Therefore, I will conclude on that note by making a few constructive proposals. First, I suggest that the time has arrived when we cannot afford to allow industry to carry on without any State interference. As a matter of fact the National Government and others have admitted this principle by pouring out millions of pounds in subsidies during the past 10 years. But that is not good enough. I suggest that the time has arrived when the Board of Trade should take initiative more and more in getting industry together so that industry can be forced to hammer out its difficulties and to make constructive proposals in the way in which Lancashire has to do now, except that the Board of Trade ought to interfere more than they do at present so as to deal with the situation more quickly than at present. Secondly, the export trade should be got together in order that it might fix a maximum profit, and that profit should be thrown into a pool to enable the exporting industry to use the resources of the pool for the purposes of enabling it to hold its own in world competition.

Further, world trade is being more and more conducted on a barter system. Other countries have already taken advantage of these barter arrangements, and this country is being left behind in that respect. For example, I understand that Turkey is eager to build up commercial and trading relationships with this country. Turkey is in a difficulty due to its geographical position and the fact that it is not developed to the same extent as this country. One of Turkey's problems is to get other countries to take the amount of tobacco which has been grown in that country in the last few years. I understand that the Turkish Government are prepared to negotiate with various countries and this country in particular to arrange for the disposal of £2,000,000 worth of tobacco, in return for which they are prepared to take manufactured goods, particularly the products of light industries in this country. I understand that the same remark applies to Hungary and a number of other agrarian countries. If that be true, it goes to prove that loans in themselves are not sufficient. While the Bill is good as far as it goes and we welcome it, we consider that it does not go far enough. We think that the time has arrived when trade should be carried on not only on the basis of loans but according to the new method, of barter, and that can only be arranged by the Board of Trade taking the initiative on the lines I have suggested.

We are concerned with this problem from another angle. Too many people lose sight of the fact that there are in this country approximately 1,750,000 unemployed. There are great possibilities of getting those people into employment and there are also great possibilities with the improvement in methods of manufacture of the expansion of trade in this country, if we can only come to arrangements on the lines which we have been suggesting, to enable other countries to take our manufactured products. There is no need to remind the House that millions of our people are going short of shoes, clothes, food, and all that the industry of humanity can provide. Seeing that countries like Turkey and Hungary and other agrarian countries are in the position which I have described as regards the carrying on of normal trading relations, surely the time has come when this country should take the initiative as it has taken the initiative in the past. It should be possible for us now to take steps to develop the maximum amount of trade between our industrial centres and agrarian countries in all parts of the world which are eager to supply us with food, and with other materials which we need, if only we increase our trade with them on the lines already indicated.

6.19 p.m.

Mr. Gledhill

Like most of the previous speakers I support this Bill. I do so for two definite reasons. In the first place I entirely agree with the principle of export credit guarantees. Secondly, I can testify to the fact that business, giv- ing employment to many hundreds of people, has been brought to my constituency as a result of the facilities provided under the previous Act. But while I support the Bill, there are a few of its details which I wish to query and I hope that my remarks may be looked upon as constructive criticism. In the first place, Clause 1 continues the system of an advisory council and I wish to ask whether that is any longer necessary. The Secretary to the Department of Overseas Trade paid a tribute to the work of those gentlemen and I do not depreciate that work at all, but seeing that the system has gone on for so long and the principle is thoroughly well-established, would it not be possible to save the time of these gentlemen and speed up the process of dealing with the applications? It seems to me there are officials at the Board of Trade who could now carry on this work.

In regard to Clause 2 and the increased limit, like my hon. Friend below the Gangway, I feel that there is no reason why it should be limited to £75,000,000. If the demand is increasing as we are told in the Memorandum, and if an increased limit is required in order to deal with that increasing demand, why not go the whole hog and fix it at £100,000,000, or even £150,000,000? We are told that it will not involve any cost to the taxpayer. Why then limit it to this amount if the demand is still growing?

In Clause 6 the Board is empowered to defray expenses. Is there any power under that Clause to use Government funds for trade development? As I read it, the Bill deals only with the financing of orders once they have been obtained. It would be a great help if powers could be taken to use funds to help in obtaining orders, in other words to assist trading associations or other bodies to carry on propaganda abroad. I would suggest that if possible a small Sub-section might be inserted in Clause 6 for that purpose. Returning to Clause 1, I would draw attention to Sub-section (4). As the right hon. Gentleman who spoke earlier said, it is rather wide, and I hope the President of the Board of Trade in his reply will explain exactly how far the Government propose to go under that Sub-section. With regard to Clause 8. I suggest that it might he limited to goods wholly produced in this country. If [...] proposal is unacceptable, some definite percentage should be fixed so that the largest possible amount of benefit will accrue to manufacturers in this country.

Finally, I submit that the right hon. Gentleman should give the fullest possible publicity to this new scheme among the manufacturers of this country. In my visits to various parts of the country I find a great deal of misunderstanding of the scheme. I hear criticisms of the cost of working it and the cost of insurance. If we could give greater publicity to the benefits of the scheme and explain exactly what is the cost per £1,000 of insurance, I am sure that the full benefits of this Measure would be secured and the trade of the country thereby improved.

6.24 p.m.

Mr. Price

Behind this outwardly uninspiring Bill lie some very important issues. First, there is the issue of the maintenance of our threatened export trade, that trade which is so vital to a country like ours with a large industrial population. Secondly, there is the issue of how far the State should interfere in the operations of private industry. That is a question to which, I think, no reference was made by the Secretary to the Overseas Trade Department but it is an extremely important question and will become increasingly important as time goes on. Like every other Government at the present time, this Government must take into consideration the changed conditions under which foreign trade has to be conducted. There are increasing areas throughout the world in which free exchange is being stopped. There are areas which are already completely closed to trade. The war in the Far East is closing that area to trade. Central Europe is another area where trade is being restricted.

How far the regime existing in Central Europe is going to extend into the East and thereby impinge still further upon the areas of the world which are still free for trading purposes, is a serious issue. It is clear also, as has been shown by the fact that we have concluded with the United States a very important commercial treaty, that there are other parts of the world which are still free for trade. It is still possible to envisage a lowering of tariffs and restrictions as between the British Commonwealth, the United States, and large parts of the Southern American Republics, and large parts of Africa. In those cases we can look to a continuation of the old method of international agreement for lowering trade barriers. But we have also to face the fact that in Europe and in parts of Asia and in the borderland between those two continents, the issue is still at stake. We have still some trade in those areas, but we must do something if we are to retain it, and we ought to retain it, if only for political apart from economic reasons.

Over 100 years ago France, under Napoleon, tried to impose what was called the Continental system and to exclude this country from the trade of Europe. That attempt failed, largely, I understand, because of smuggling and because of the practical difficulties in the way of carrying on a Continental system of that kind. We have now in this twentieth century to face something much more serious than Napoleon's attempt to impose a Continental system. We have to face the Schacht-Funk system under the Nazi political constellation in Germany. It can be described, I think, as a constellation, because apparently it does not intend to confine itself to Germany, and those who have followed the writings of the Nazi leaders know that they have very big ideas. The so-called Rosenberg plan aims at creating a system of protectorates and economic dependencies among the Slav States in Eastern Europe—Hungary, Rumania, Poland, and Czechoslovakia, which is already gone, finally pressing right into the heart of Russia via the Ukraine. Hence the importance of the German refusal to permit Hungary and Poland to have a common frontier in Ruthenia, in that Eastern tongue of Czechoslovakia. From that point the Rosenberg plan is to be put into force as the spearhead of the attack, carrying German domination through Eastern Europe and into the heart of Russia.

All that is part and parcel of the Schacht-Funk system, the neo-Napoleonic system with which the German octopus is going to try and strangle the free trade of Eastern Europe and Western Asia. In other words, Europe and Asia are divided into free countries and economically enslaved countries, very much like the situation that arose on the Continent of North America prior to the Civil War, when the North were the free States and the South the slave States, and away in the West, across the great plains of the Mississippi and the Missouri, there were the territories for which the slave States and the free States fought and struggled, which led to the disaster of the Civil War. I hope the parallel will not be exact and will not lead to a similar disaster, and I think that the measures taken by the Government of this country will show that the democracies of the West, the free trading communities, are alive and are not prepared to submit to the dictation and the faits accomplish of the dictators in economic matters, but are going to stand up for their rights. Therefore, I do not despair.

There are, to my mind, two reasons why this Bill for granting special facilities for our export trade is extremely important. First of all, there is no indication that the extension of German trade in Eastern Europe is a result of any greater efficiency in production or salesmanship. It is rather an indication of greater ruthlessness and of the application of certain methods which have to be combated by other means than those which have hitherto been adopted. There is another reason too why this Bill is so important, and that is because it will have a political aspect and will deal with the political repercussions of the economic policy of Drs. Schacht and Funk in a way which would prevent the expansion of the Nazi system by economic methods.

I do not wish it to be thought that I think that Germany is not entitled to trade in Eastern Europe, nor even to a considerable expansion of trade there. It is not that that we have to fight, but it is the methods that we have to consider and their dangers, which I think this Bill will do something to meet. It is only natural that a great industrial country in the centre of Europe, bordered by agrarian countries on her Eastern flank, should attract the bulk of the trade between those two areas. It is a fact, if you examine the figures, that Germany's total trade with the seven countries in South-East Europe — Czechoslovakia, Hungary, Rumania, Yugoslavia, Bulgaria, Greece, and Italy—has risen, in regard to imports, from 15 to 22 per cent. in the last seven years, and in exports from 17 to 22 per cent. over the same period, and it is still rising. That is a perfectly natural development, but what we are concerned about is an artificial development brought about by these, if I may so call them, unfair trading methods.

The point that I wish to raise, which some of my hon. Friends have already raised, is this: Is it altogether enough to meet this problem by an increase of State guarantees for our exports? Is it enough even to increase the scope of our credit operations, as we do under Clause 4 of this Bill, whereby this credit of £10,000,000 is to be devoted to purposes which may have a not strictly commercial application? I think that more is needed. I think that if State credit is to be used in this extensive fashion, the State must exact more conditions as to the way in which the export trade is to be carried on. There must be greater efficiency and greater co-ordination of effort. We must, in fact, learn some lesson from the totalitarian States, not the methods which are practised, of which we are all complaining, but at least the lesson of co-ordination and the lesson that the export trades should stand together and speak with one voice when they are dealing with their foreign markets.

A change came soon after the War. It first came with the Russian Revolution. The Union of Socialist Soviet Republics was the first country, you might say, which started along the line of State control over the export trade. There, as so frequently in Russian history, when the giant suddenly awoke, after decades of sleep, it did nothing by halves and immediately nationalised the whole of its trade, import and export, and to-clay and right through the whole history of the U.S.S.R., through all its trials and difficulties, never at any time did the new revolutionary State in Russia relinquish its hold on the foreign trade monopoly. The foreign trade is now, and has been since 1917, organised under State trusts, in which the State holds all the capital and the management, and these State trusts are co-ordinated under a central planning committee. Of course, like many other things in Russia, they look well on paper and sound well, but they do not always work as efficiently as they sound, and the giant machine makes many creaks, but it is there, the principle is established, and you have at least the foundation of an ordered planning of their foreign trade.

In Germany to-day we have a somewhat different situation. Private pro[...] is allowed in the home trade and in the export trade, but there is control over it. Only up to a certain point are profits permitted. The ordinary shareholder is like a sleeping partner, and the State is the managing director. Not the whole of the production in Germany is permitted for profit. There is a definite control over profits. [An HON. MEMBER: "There are dividends."] There may be dividends, but there are not unlimited dividends. In the final result, the instrument of production in Germany is for the purpose of the military and political domination by the group which controls the State. Production is for the purpose of a military and a foreign policy which aims at the political domination of the continent of Europe and of as much else as it can control; and, if I may say so, it is a far more terrible and dangerous system than anything that has appeared in the last 100 years in Europe. The impact of the Nazi economy is bound to have its repercussions on all States and not least, I think, upon the democratic countries, which will have to wake out of their long sleep and modify the institutions which have grown throughout the nineteenth century and which have led to a considerable rise in the standards of living of the peoples of Western Europe and America in consequence.

The point that I wish to emphasise is that the Government ought to exact conditions before the granting of these export credits. It is not right that the export industries should be split up into so many competing entities. I believe it is a fact that important export trades are still without a single organisation which can speak on their behalf. Moreover, it appears to me that it will be difficult for a State Department to know in what way to grant these credits unless there is some body which can speak for the industry as a whole. There are bound to be competition, difficulties, and friction unless there is some such body. Each branch of the export trade ought to form something of the nature of a non-profit-making company, or a company whose profits are limited, which can approach the Overseas Trade Department and which can then form some kind of a fund, out of a levy on its profits, for the purpose of developing export trade. I think conditions of that kind ought to be laid down by the Overseas Trade Department and the Board of Trade in the carrying out of this plan of export trade credits, because otherwise we shall not be able, I believe, to meet the serious competition which is bound to continue in spite of the fact that State credits are being granted.

This Measure, however, will be a step in the right direction. We shall have to consider whether it cannot be amended in Committee with a view to introducing some of these steps which I have mentioned. At any rate, if that cannot be done, it should be followed by other Measures which, if carried out together, would have the effect of dealing with the problem along the lines that I have indicated. International trade will be increased, not by one nation or group of nations trying to steal trade from another group of nations, but by developing that trade as a whole, and it is because I believe that this Bill will do something in that direction, although I think it must be followed by others, that I hope the House will grant it a Second Reading.

6.44 p.m.

Mr. Bracken

Anyone who has listened to this Debate might be forgiven for thinking that the much advocated National Opposition had at last been formed, for every Member of the parties opposite who has spoken has blessed the Bill, and there was only one small note of criticism, the criticism of Russia sounded by the last speaker on behalf of the Socialist party. I was very much impressed by the speech of the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence), who suggested—I think truly—that this Bill was another proof that we are living in a crazy world. A great part of the energy and wealth of the world is now being devoted to sterile and costly rearmament. All the Government's supporters and critics are in complete agreement that our Ministers have been forced, much against their will, to launch their rearmament programme. And they must also agree that the Government had no alternative but to provide a fighting fund to subsidise exports. To the President of the Board of Trade this is certainly a lamentable though unavoidable development. I cannot conceive that there is any other method of dealing with the novel, aggressive and rather disingenuous methods adopted by German exporters under their Government's direction. These methods include dumping, exclusion and discrimination. In spite of what has been said by my hon. Friend the Member for East Birkenhead (Mr. White) I think that exaggerated statements have been made as to the effect of those measures up to the present time. They have hurt our exporters, but they have not hurt them very seriously. I am bound to say that their limited success seems to have whetted the Nazi appetite for conquest.

It is now agreed that during the last few months Germany has been planning a vast drive against the trade of a number of important industrial Powers. This drive is partly due to the German Government's need for foreign exchange to finance their rearmament programme. Everybody in the House realises that this terrific programme requires a steady supply of imported raw materials, and in order to secure the supply there has been a great mobilisation of exporters in Germany. Production for export to countries with free currencies has now been given priority over military needs. In fact, exporters are now regarded as quarter-masters of the German Army. Exporters have been warned by Marshal Goering—and it is rather significant that the head of the German trade organisation is a field-marshal—that they will suffer severe penalties unless they take every opportunity of increasing the sale of German goods in important export markets. By dumping and credit rigging German exporters hope to obtain the free exchange necessary to buy the raw materials required for war preparations.

In the light of this Debate I think we are all agreed that this Bill is the result of the mobilisation of German exporters and in a sense must be looked upon as an essential part of our rearmament programme. The small criticisms that have been made against the Bill have been entirely based on the notion that the fighting fund it creates is inadequate. An hon. Member said just now that the sum should be increased by millions, perhaps by tens of millions, and the President of the Board of Trade ironically suggested the sum of £1,000,000,000. We should not judge this Bill by the amount that the Government have allotted to what must be described as a fighting fund. The Bill should be judged by its potencies rather that its powers, and we should remember that this fund must be really regarded as a revolving credit. If any further funds are needed it will be possible for the Government to come to the House and the House will, I believe, gladly supply them.

This Bill should certainly be regarded as an encouragement to all our exporters. It will help to remove the rather vicious pessimism about our export trade which is rampant in many quarters. There is a school of defeatists which maintains that our manufacturing costs are much too high and that they are beyond the means of well disposed foreign consumers. That view was put with singular force by the solitary speaker of the Liberal party, which is now unrepresented in the House. He harked back to the days of Cobden and gave us a mid-Victorian essay on the virtues of cheap exports. In some ways it was an essay rather unworthy of his party. The latter-day Jeremiahs, who are mostly Liberals, assert that one of the main reasons for our alleged high export costs is the automatic growth in the cost of our social services. The Liberal party has been the pioneer of the social services. My hon. Friend the Member for East Birkenhead ought to have realised that and ought, therefore, to have mitigated his criticisms. Anyone who criticises the cost of our exports as being due to the burden of our social services is taking a very short-sighted view. If we are always likely to be the only great industrial and exporting Power in the world which spends a large part of its national income on social services there might be some grounds for pessimism about our export trade. Fortunately, some of the greatest industrial and exporting nations are now copying our social services.

I remember when I v, as in America some years ago being lectured by many bankers on what they called a most menacing development in England. They said to me, "Sure, your country is a fine one, but it is going down the hill. Your people now prefer to live on each other and your social services will ruin you completely. They should take note of the strong spirit of individualism that prospers America." In the dark days of the slump an eminent Frenchman, M. Siegfried, came to see me with the proofs of a book called "England's Crisis." It was an excellently written book and it proved to the satisfaction of M. Siegfried that England was on the down grade, that we would be ruined by our social services and that old age pensions, unemployment insurance and the dole—which is always mentioned as though it did not relate to unemployment insurance—would be the end of England. To-day both America and France are busily engaged in reproducing our social services. I believe that the cost of these services will be mirrored in the prices of American and French exports.

I think that the exporters of this country should be heartened by this development. The more social services are adopted in foreign countries, the better it will suit us in extending our export trade. This Bill should convince exporters in this country that the Government are determined to do everything in their power to assist them. I agree with my hon. Friend the Member for East Birkenhead that the Government, with all the good will in the world, really cannot be expected to give more than limited assistance to our exporters. There is nothing in the Bill—and we ought to be grateful for it—which will lead anyone to conclude that the Government intend to spoon feed incompetent exporters with subsidies. Nor do I think that my right hon. Friend the Secretary for Overseas Trade will put his admirable officials on to the task of bringing orders on silver salvers to our exporters. Exporters must do most of that job of work themselves.

I was much impressed by statements in the Debate regarding selling methods in this country. There has been a great improvement in our selling methods during the last decade, but who can doubt that there is ample scope for improvement? I agree that the discouragement of exchange restrictions and all sorts of other recent impediments to trade have rather disheartened our salesmen, but it is remarkable that the Americans, who have been faced with equal discouragements, seem to have done rather better in overcoming them. The hon. Member for East Birkenhead did a service by suggesting that our selling methods could be improved. I think it is fair to say that if our selling methods were equal to the quality of our merchandise our export trade would sharply increase. It is a curious fact that despite our almost encyclopaedic educational system we do very little to teach the art of selling. That omission should be tackled straight away. Meanwhile, let us remember that the quality of British merchandise remains the highest in the world.

If one compares reports one receives on the quality of British goods which have been imported recently into South America or into Central Europe and relates them to reports one gets on the German goods imported to these parts—or for courtesy's sake let us call them totalitarian goods—one is bound to say that on the whole the quality of our merchandise has maintained its reputation and compares very favourably with the products of the totalitarian States. Some years ago, when people talked about our export trade, much criticism was directed against the design and range of British exports. Most of those criticisms have been met and the design and range of our goods are now probably equal to anything in the world. It seems to me, therefore, that we ought not to get too disheartened at the prospect of the much advertised German trade drive. Would it not be much better to start our own British trade drive? Let our first objective be to get back the trade we have lost since the beginning of the great slump in 1929. If we were able to secure a return of that trade there would be a very sensible reduction in our unemployment.

Anyone who discusses this Bill without paying a small tribute to its parents would seem to me to be lacking in gratitude. During the last few months the President of the Board of Trade has borne burdens greater than those of any other Minister, with the possible exception of the Prime Minister. His Department is scandalously overworked and the President uncomplainingly bears a large part of the burden of that work. It is a curious fact that when tributes were being paid in this House to everyone responsible for the Anglo-American Trade Treaty compliments were loaded on the Ambassadors and various diplomatic representatives, but there was very little mention of the splendid work done by my right hon. Friend. Everyone will agree that no man except perhaps that indefatigable idealist, Mr. Cordell Hull, has done more to speed the intensely difficult negotiations between Great Britain and America than the President of the Board of Trade. His boundless courtesy and perhaps one should say, his natural gifts of criticism, his industry and his understanding of the problems of England and America, have been priceless assets in the protracted negotiations. It is also right to say a word regarding his colleague, the Secretary for Overseas Trade, and it must be said of him that his intelligence, in- dustry and pugnacity, above all his pugnacity, have been very helpful to Great Britain. His recent speech on the problems of our export trade has infused new hope and courage into our industrialists. As I am not notorious for my undeviating support of His Majesty's Government, I particularly welcome this opportunity of saying that the work of my right hon. Friends who now sit at the Board of Trade has been very useful to their country.

6.58 p.m.

Mr. Stokes

Like other Members in the House, I welcome the arrival of this Bill. It will he much restricted in its effectiveness, however, if we are to rely upon loans themselves; and unless the Bill is supported by a change of attitude in our international trading relations, it will not achieve the results which it surely ought to achieve. I want to quote two examples which I have recently experienced in a short trip to South-East Europe. I want, first, to quote the position of Hungary. There, unless arrangements are made so that we take goods in exchange, any loan will be absolutely useless. At the present moment Germany takes 53 per cent. of the raw materials and foodstuffs of the country, and that constitutes 80 per cent. of the total export trade of Hungary. I have travelled a good deal of my lifetime and I have never found a people more anxious to trade with us. The two things they want to sell to us are swine and cattle. I would ask the President whether it would not be possible to make some readjustments which will redistribute the amount that is taken from Denmark and Argentina and transfer it to this central European country.

Secondly, the hon. Member for Stoke (Mr. E. Smith) spoke about the desire of Turkey to sell tobacco to this country. I entirely support what he said and, so far as our examination goes, it would seem that there would not he any great difficulty in introducing into the ordinary Virginia cigarette a little Turkish tobacco, which would not be noticed. [Interruption.] I agree that the Anglo-American Treaty may be a difficulty in the way. Turkey, in any case, is exceedingly anxious to trade with this country, and does not want to come under the domination of what has been referred to as the Schacht-Funk penetration scheme, but the position is doubtful there. The prices of our heavy machinery are 60 per cent. above what the Germans are quoting. While they are anxious to trade, the policy that we are adopting in lending money and not taking goods in exchange gives them no excuse whatever to place business with us.

Reference has been made to the policy of forming manufacturing groups and eliminating profits for the sake of maintaining a proportion of the trade. I can assure the House that there is no question of profit at all in the case of some of these heavy industries in their exports. All we are trying to do is to maintain contact, and we do not expect to get much out of it. But we cannot even maintain contact at present, and these export credits, useful and helpful as they are, are going to be rendered inoperative unless they are supported by other Measures which will make free trade between the countries concerned more possible. The whole tendency of the totalitarian countries is to get prices down, whereas, so far as I have observed it in the course of my business experience, the whole tendency of the policy here is to get prices up. I do not see how we are going to avoid very considerable further reduction in some of our exports in all parts of the world in face of the totalitarian effort unless some burdens are taken off industry. I urge that steps should be taken to reduce these burdens, and I ask the Government not to lose sight of the very heavy burden that industry is bound to bear in the terrible toll of £500,000,000 a year which they pay to the land monopoly.

7.5 p.m.

Mr. Pilkington

The hon. Member who has just spoken, and one or two others have emphasised the fact that this Bill in itself will not be sufficient to meet the situation that faces us at present. The Secretary for the Overseas Trade Department himself emphasised the fact at the end of his speech, and said the Government fully recognised that this was only one item in a general scheme. The right hon. Gentleman who spoke from the Front Opposition Bench went back some years over past history and gave a rather cursory account of the events leading up to the present position. I should like to supplement his account in one or two ways. In 1929, under the Conservative Government, the total volume of trade equalled £3,312,000,000, and that apex was succeeded by those disastrous years in which the Socialist Government were in power, and they left the policy that was represented by Mr. Baldwin's slogan of "Safety First" and pursued a policy of overspending with the collapse of credit and the withdrawal of foreign capital which inevitably ensued. [Interruption.] The right hon. Gentleman protests, and I do not blame him, but when we examine the situation as it is we have to take all factors into account.

Mr. A. V. Alexander

We have now 5s. 6d. in the £ Income Tax and another shilling in the pound on industrial profits, and you have added £800,000,000 to the debt. That is not exactly helping trade.

Mr. Pilkington

All those figures emphasise the very bad position in which the Labour Government put this country, and out of which we are now again managing to climb. When the National Government were appointed to deal with this terrible situation they had to take into account the increase in certain definite factors which were playing a bigger and bigger part in the economic life of the world. They had to take into account the fact that the great nations were becoming more and more industrialised, and that the market which in past years was completely open to our manufacturers was rapidly closing. They had to take into consideration the self-sufficiency that was being aimed at by various Great Powers, and they had to take into account the tariff system that has been erected by almost every Government except our own. They dealt with that situation, in collaboration with the Dominion Governments, by erecting round the British Empire a tariff system equal to that which already existed in other countries, and then they proceeded to make a series of commercial treaties with those nations with whom we were able to trade on a fair basis of economic equality. This policy was so successful that by 1937 we had got back a very considerable amount of the trade that had been lost between 1929 and 1931, but we have not yet got back to the position in which we were in 1929, because in 1937 the total volume of our trade was only £2,640,000,000, and we still have 1,750,000 unemployed.

It is to deal with this situation that the present Bill is brought in. At the recent conference of Associated British Chambers of Commerce speaker after speaker called on the Government to do something, and in the Debate that we had last week speaker after speaker asked for some action by the Government. We had that splendid speech by the Secretary for the Department of Overseas Trade, who said that unless industries in this country could trade with their opposite numbers in Germany on a fair basis, we were ready to take Germany on at her own game and beat her. This Bill is another part of the plan to deal with this situation. I believe that by the Bill, by the organisation that is necessary in industries, not by the nationalisation of industries which is preached by hon. Members opposite and carried out by the dictators, but by this method of organisation and co-ordination, we shall get back to the position that we were in formerly.

But what the Government have so far been able to do is only one side of the problem that faces us. There is, I am afraid, a very great weakness on the side of our manufacturers. It seems to me that they have been in the past too content with home markets, and with old markets. To give an illustration of what I mean, some years ago, when I was in Iraq, I heard of a large concern that wanted a big consignment of boot polish, and it wrote to firms in this country, France and Germany. The firm in this country did not reply. The French firm sent a letter asking for how long the order would hold good, what quantities were going to be asked for and what guarantees could be offered. The German firm sent back a large case of samples and a man with it to answer any questions that might be asked and, not unnaturally, it was the German firm that got the order. It may be said that such demands for trade as this are comparatively unimportant, but one thing leads to another, and a contract for boot polish to-day may be a contract for bridge-building to-morrow.

To take another instance. I regard it as a standing disgrace to this country that we take second place, and such a bad second place, in the motor car industry compared with America when considering the great markets of Europe, Asia and Africa. We take second place to a nation which is some 3,000 miles away, and at one time we used to be considered the greatest engineering country in the world. There, again, I feel that we have been too content to let what we consider to be unimportant markets go by the board. It may be said that, in the Middle East for example, there are very few roads and there is a comparatively small demand for motor cars, but, again, I would say that one thing leads to another and, if we can expand our markets in places where apparently the demand is not so great as in others, we shall be doing something, perhaps a great deal, towards getting back to the position to which we must get back. In general we have been in past years too content to rest on the laurels of our forefathers. There has been a bankruptcy of that go-getting spirit which was the characteristic of this country in the nineteenth century, but which to-day is more the characteristic of other Anglo-Saxon nations. Lord Baldwin said the other day that we ought to mobilise industry. That may be so, but I believe that we have to do more than that. We have to mobilise trade as well, and mobilise it at once.

7.15 p.m.

Mr. Tomlinson

I do not know whether I ought to apologise for butting in on this pan of praise, because I am not going to join in it. The hon. Member for Stretford (Mr. Crossley) suggested of another hon. Member that he had had his constituents in mind when addressing the House. I have had my constituents in mind when listening to the speeches this afternoon, and I also had them in mind when I was reading on a sick bed the Debate upon the export trade which took place about a fortnight ago. It is not difficult to be either optimistic or pessimistic in the House of Commons; it seems quite natural to assume either pose, according as your dinner has agreed with you or not; but it is a vastly different thing when you are in a constituency like mine. Reference has been made to the praise which was given to the speech made by the right hon. Gentleman in the House some days ago. If I got the meaning of that speech aright, it was that if a trade war starts we shall be in it and we shall win it. That sounds all right, but the right hon. Gentleman who made the speech represents a Lancashire constituency, and I wonder what he thinks it is that has been happening in Lancashire during the last 10 years. Has there been no trade war? What about the casualties I meet every week when I go home? Manufacturers who have given up, and employés who are walking the streets—what are they but casualties? Yes, and it is not just one now and then. One of the most familiar sights on Victoria Station, Manchester, week by week is a new sale bill. A mill is being put up for sale almost every week. I look upon these as casualties in the trade war which has been going on for some time.

It was suggested by the right hon. Gentleman in opening the Debate that the figures of our export trade show that we have something to be pleased about. There may be something for the country in the main to be pleased about, but in coming up in the train to-day I examined the figures for Lancashire's principal export trade, and I found that of 66 countries that were listed as taking our cotton piece goods, 12 show an increase over November, 1937, and 54 show a decrease. Over all, the figures show that our exports of cotton piece goods in November fell from 155,000,000 square yards in 1936 to 120,000,000 square yards in 1938. It has been suggested that we are looking for new markets and that this Measure will help us to obtain them. I am concerned about retaining some of the old markets which we have been losing and are losing.

I do not think the House realises the extent to which the Lancashire cotton industry has gone down. Figures have been quoted time and again, and it would appear as though the quoting of figures and the publishing of them in the OFFICIAL REPORT would get them into the minds of Members, but I am afraid that that has not been so. Only when we think of it in terms of firms and employés rather than in terms of yards of cloth do we begin to realise the decline. Day after day I receive letters from manufacturers in Lancashire asking when something realistic will be done. They read the speech made by the Secretary of the Department of Overseas Trade a fortnight ago, but I have not heard any laudatory comments about it from Lancashire. What they were asking was when the Government would get down to the task of dealing with things as they are now and not as they may be in the future. I have here a letter from a well-known merchant in Manchester pointing out what is happening within his own experience. It says: On Tuesday last the active director of the firm of Hilton and Nuttall, Limited, Albert Mills, Barrowford, Nelson, came in to see us. He is a comparatively young man and he stated they were closing down at once. This firm is an old-established one that had been running 650 looms and making better class grey cloth, particularly for the Indian market: He informed us that this was necessitated through the absolute neglect of the Government to aid the cotton export trade or to use their bargaining powers. In the same letter, which is dated 11th November—it is not an old epistle—it is stated: We heard on the Exchange yesterday that the old established firm of Joseph Eccles and Company, Fylde Road, Preston, who a few years ago were running 1,500 looms and manufacture all classes of fancy goods, lenos, brocades, etc., are closing down entirely. All this means that the export trade, upon which a good deal of the industrial life of this country has been built up, is "going west." What are we doing? It is said that we are doing all we can, but are we doing all we can? Take, for example, the trade with India which we have lost; there our losses have been the greatest. One of the things I was told before I came into this House, and I have heard it from time to time in Debates from individuals who back the Protectionist theory, was that we must defend ourselves, and that the imposition of tariffs would enable us to use a bargaining power which we never had before. If we are having Protection what about protecting the cotton industry of Lancashire a little? That has suffered all the time.

We have heard a good deal about the new totalitarian menace to the trade of this country. It is not that menace of which I am speaking. We had begun to lose the greater part of the Lancashire export trade before they were practising the new methods which this Bill is intended to counter. We had lost it to other methods. Why did the Board of Trade take no cognisance of those methods? It seems to me that I have heard something of Japan insisting that for every bale of cotton she takes out of India she shall be allowed to send in cloth in return, and of her boycotting the Indian nation until she got her way. I am not suggesting that we are free to determine just how the Indian people shall carry on their government, I know there is a limit to interference, but surely there is some way in which we could use all the power we have over the Indians—at any rate the bargaining power which we have by reason of the commodities and the raw materials we take from India—in order to see that some of the trade which has gone from this country is brought back and that the trade which we are still doing shall be retained.

Again, it has been suggested that we have been compelled to come to agreements with countries in different parts of the world. Some little time ago I asked a question regarding an increase in the tariff in Egypt. There had been an increase of 100 per cent. in the tariff on Lancashire cotton goods going into Egypt. We were told that we could not interfere. I know that we could not prevent it being done, but discussions were started, I understand, with a view to an agreement. The position was that the Egyptian Government, by the increase of the tariff which was already in existence, had cut out a great deal of the trade which was then being done in Lancashire. I was told that we could not interfere particularly, and that it was not the Lancashire cotton trade which was aimed at but rather other countries but I know that a firm in my own little village immediately lost orders of the kind which they had been executing for the last 20 years and which had kept 150 looms at work.

I know that that is not much by comparison with the bulk of the trade that is done, but it was the livelihood of 50 individuals in a village which is becoming distressed because of these constant losses. That was the effect of the increase in the tariff by the Egyptian Government, and it is still the effect, because the position has not been altered in spite of attempts which have been made to alter it and of agreements which are in course of being reached. Prior to that increase in the tariff, cloth 115 yards in length and 36 inches in width cost 46s. per piece, plus 14s. 3d. duty. When the new tariff came in the duty rose from 14s. 3d. to 26s. 9d. In one sweep 12s. 6d. was added to the duty on a piece of cloth 115 yards long. The result is that the orders for such cloth have gone—they have been lost now for all the months that have passed since that new duty was imposed.

On one or two occasions I have raised in the House the question of re-exports. I know that agreements have been arrived at, and there has been a reference to the Argentine Agreement. There are ways in which agreements which have been made and which have been regarded as good bargains are broken. There are back-doors through which exports can go into some of the countries concerned. I have here a piece of what we call in Lancashire plain Burnley cloth, just a piece of common calico; but this is a piece of common calico which has been manufactured in Japan and sent over to this country for finishing. The price quoted for 500 pieces is 26s. per piece, and that carries an import duty of 20 per cent., which brings the price to just over 30s. The Burnley price, cut to the bone, is 31s. On re-exportation, when the import duty is returned, instead of the Burnley manufacturer being in the market he is out of it. It makes all the difference between being able to compete or not. This is cloth finished in this country and then returned and stamped "Made in England." This is a sample of what has actually gone to Buenos Aires. The finishing of it cost something like ⅜d. per yard. It is a cheap mercerisation and it goes from this country to Buenos Aires after it has been finished, as made and produced in this country. Then, again, I want to know what this Bill will do to overcome difficulties which have been met with in the past in regard to the importations into this country that are to pay for the exportations.

The President of the Board of Trade (Mr. Oliver Stanley)

I would point out to the hon. Member that the Bill deals with export credits and not with tariffs or trade agreements with another country, and that it is not fair to expect me to reply on these matters.

Mr. Tomlinson

I know that this is a Bill to deal with export credits, and I am criticising the Bill. I am also indicating how the trade which you are seeking to stimulate could be kept. Although hon. Members have welcomed the Bill, I am not sure that it will help the people whom I represent, and that is why I am protesting against it. I am suggesting methods that ought to and could be adopted, and steps that could be taken by the President of the Board of Trade. What happened with regard to the export trade with Colombia? It is not unknown, in Lancashire at any rate, that it is not so much a question of what the people of the countries want as what is determined for them by those who control the produce of those countries. Three years ago our exports to Colombia were in the neighbourhood of £3,000,000. Last year they fell to very much below £1,000,000. Three years ago our export of textiles to Colombia were £1,500,000. Suddenly they have stopped. Last year they were in the neighbourhood of £230,000. Why? I will tell the House; because it suited Elders and Fyffes, Limited, who control the banana industry in both countries, to transfer Jamaican bananas to this country in order to escape the duty. Those which previously had come from Colombia they sent over to America. Jamaica and Colombia took from us different types of produce. Colombia hitherto had received textiles, in payment as it were for those bananas, and when the trade changed, the textile trade went with it. It is not that the people of Jamaica were receiving benefit or that the people of Colombia were receiving benefit but that the people who were dealing with those exports were determining the matter for themselves and using Imperial preference as a ramp, I believe, for profit-making.

So I want to suggest that while it is necessary to provide these credit facilities in order that the export trade should be improved, steps should be taken immediately by this House, if the trade which we have is to be maintained and the people who are now walking the streets in Lancashire are to be put back to work. As we meet in this House to-night there is in Blackburn a torchlight procession and the employers and workers are marching together. They are asking that Parliament should do something realistic towards helping the people in that industry who have been walking the streets now for many years. I believe that the Government can do it if they will set themselves out to help an industry that has helped this country in days past.

One other word. Some little time ago we were told that it was necessary that we should come to an agreement with Ceylon. We came to an agreement with Ceylon and we said that it was worth while, in the interests of friendship between that country and our own. It was, in that sense, but that kind of appeasement should not take place internationally at the expense of small nations, or nationally at the expense of Lancashire. That is what the agreement with Ceylon has meant. I would refer hon. Members to a paragraph in the "Daily Despatch"—this is not the "Daily Herald" which I am quoting—on 16th November, 1938, saying that Lancashire's loss has been Japan's and India's gain. It was said by the Government that the sacrifice was necessary in order to preserve good relations with Ceylon, and they said at that time that it would not hurt the Lancashire market. Well, it has cost Lancashire £200,000 in reduced shipments. Lancashire's figures in September were 343,000 rupees, India's 359,000 and Japan's 362,000. I would point out to the Secretary for the Overseas Trade Department, with regard to the trade war which when he made his speech he envisaged and said might come and that we should win it, that the war started quite a long time ago and that we have not done much as yet to help the Lancashire people, who are suffering in it.

7.37 p.m.

Mr. Boothby

The hon. Member for Farnworth (Mr. Tomlinson) made a very interesting speech. I do not think it had a very close connection with the Measure that is before us, but I can understand that, because he is naturally very much concerned about the condition of his own part of the world. The hon. Member talked about the trade war. I have no first-hand knowledge of the Lancashire cotton industry, but I would ask him whether the trade war has been entirely confined to the external war so far as the Lancashire cotton industry is concerned, or whether it is a fact that the industry has been conducting an internal trade war ever since the last War; and whether that is one of the reasons why it has failed to recapture its export markets? I seem to remember stories in 1920 of gross over-capitalisation and of water flowing out of the mills, as well as of persistent refusal thereafter, year after year, on the part of the industry to remedy that state of affairs.

Mr. Bevan

That was done by supporters of the National Government.

Mr. Boothby

I am not talking politics. I believe that it is necessary to ration- alise, to be efficient and to organise the industry as one unit for export purposes.

Sir Joseph Nall

Low prices do not lose markets.

Mr. Boothby

Over-capitalisation, lack of organisation for export trade on the part of an industry which was made for export do lose markets. I remember Mr. J. M. Keynes going to Lancashire and conducting an inquiry. He is not an unintelligent man. I remember his coming back after some time and saying: "You simply cannot do it. In their present frame of mind it is no use going on arguing with those people." I believe there is reason to think that the views of the leaders of the Lancashire cotton industry are gradually becoming changed. When they have changed sufficiently no doubt we shall have legislation in this country. It is not the fault of the National Government; I am sure that His Majesty's Government would have introduced legislation long ago for the cotton industry if there had been a sufficient measure of agreement in the industry. The Government are only waiting for a sufficient measure of agreement. I agree with the hon. Member that we shall not reap the benefits from this Measure or any other Measure to stimulate our exports unless we have a thoroughly efficient industrial organisation inside this country.

I remember that I used to talk a great deal about rationalisation, in the early days when that word was almost new. We do not talk about it so much now, partly because, to a very large extent, it has come about. I shall never forget a conversation which I had in regard to our export trade with Mr. Fritz Thyssen as long ago as 1926 and in which he said, among other things, that the German industrialists were very anxious to come to an agreement with our heavy industries, particularly coal, iron and steel, in order to avoid cut-throat competition. "But," he said, "it is absolutely impossible to come to an agreement with your country at the present time, because there is nobody with whom to come to an agreement. If I want to come to an agreement with your iron and steel industry or your coal industry I cannot possibly do it. I have to go over to your country and meet 150 gentlemen, none of whom is on speaking terms with any other and all of whom are trying to cut each other's throat.

So long as you continue to run your heavy industries in that way, at any rate so far as export is concerned, you will never be able to make decent agreements in the modem world, and, what is more, you will find that your export trade will gradually dwindle. While those methods may have been all right last century when we had a fixed Gold Standard and Free Trade, under modern conditions it is impossible. I hope that the Government will not relax their efforts to persuade exporting industries of this country to organise themselves as individual units for export, and to make their internal exporting and sales organisations as efficient as it can possibly be made. Unless that can be done, we shall not reap the benefit from this Bill that we ought to have.

I was much entertained, as I often am, by the attitude of the Labour party as expressed in the speech of the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence), always vigilant where any extension of State activity or interference on the part of the Government with private enterprise is concerned, and always cautious when the State shows any sign of extending what, I think, is frequently a beneficent activity into the realms of private capitalism. The right hon. Gentleman could not have made a more cautious and guarded speech. He concluded by expressing doubts as to the policy which the Government might pursue under Clause 4 of the Bill. I suppose what he really meant was that he was afraid they would start giving credits to some of the dictators that he does not like, just as we, if we were in Opposition and he were bringing in the Bill, would hope that he would not give an undue amount of credit to Russia—unless, of course, Russia would at last come to her senses and buy a reasonable amount of herring. He hoped that the Government would not pursue a policy of which he did not approve. I suggest that that applies to many other Measures.

This is a very good Bill indeed, and it is a great relief to me personally—I do not suppose it is a matter of indifference to His Majesty's Government—that I am able to get up and express such wholehearted approval of His Majesty's Government as I do. I gladly join in the paean of praise that has greeted the Measure of my right hon. Friend. Even the Liberal party, during their brief and transient appearance in this Chamber in the person of the hon. Member for East Birkenhead (Mr. White), voiced their approval of the Measure. The hon. Member exhibited a rather joyous optimism when he gave a sort of picture of Dr. Schacht having come over here to lead us back to the old methods of Free Trade and laissez faire. He pictured Dr. Schacht saying that it was high time that this system of autarchy was brought to an end. I do not know whether that is Dr. Schacht's view, but I question very much whether it is the view of Dr. Goebbels or of Marshal Goering. It is certainly optimism if we expect to be led back by the German Government to the older and more staid methods of trade. I believe that the power behind the present trade drive of Germany is very considerable, and that we shall be lucky if we succeed in obtaining any slight modifications during the difficult months and years that undoubtdly lie ahead.

So far as the hon. Member for Stoke-on-Trent (Mr. E. Smith) is concerned, I agreed with every word of his speech. It showed me how much nearer in many respects the Conservative party is to the Socialist party than the Liberal party is to either. There were moments when he might have been, and no doubt was, talking orthodox Socialism, but there were many others when you could shut your eyes and imagine that you were listening to my hon. and gallant Friend the Member for Bournemouth (Sir H. Croft). He took very much my hon. and gallant Friend's view with regard to the Dominions. I disagreed with him profoundly, however, when he cast reflections on the industry of hon. Members. of this House. I have long held the view that being a Member of Parliament is the hardest worked and the worst paid profession in the world.

Mr. E. Smith

I did not say that.

Mr. Boothby

As far as I recollect, the hon. Member said that, when they were not being Members of this House, a lot of his hon. Friends thought it was a good idea to work.

Mr. Smith

The hon. Member entirely misunderstood me. What I said was that, before I came into the House, I had only been able to obtain my living by working for it, whereas some other people had been engaged in finance and so on, and had received their income through the letter-box.

Mr. Boothby

I think that what the hon. Member has just said rather bears out the point that I was making. If he has come to that conclusion, I am sure that in a very short time he will agree with me that he is working harder now than he ever worked before or is ever likely to work again, should it happen so unfortunately for him and for us, that he has to leave this House.

The hon. Member mentioned the question of what imports we could take from some of these countries with whom we want to trade, and that is a very important point indeed, because to some extent this new trade must be barter trade. An hon. Member opposite has mentioned particularly pigs and tobacco. I think that these are two vital commodities so far as our export trade is concerned, and I want to impress upon my right hon. Friend the desirability of making such arrangements that we in this country can take every year a very much greater quantity of swine and tobacco from Eastern and Southern Europe than we take at the present time. I do not think that this would be as difficult as it is very often made out to be. For one thing, our agricultural policy is, as my right hon. Friend knows, in an awful mess at the present time—in as bad a mess as his trade policy is in good shape. I think that that is generally agreed in the House, and we are all united in thinking that the Minister of Agriculture will have to re-design our agricultural policy, basing it upon some point of principle and making it a comprehensive policy. I cannot speak from any first-hand knowledge of the Lancashire cotton trade, but I have sat for a fairly big agricultural constituency for the last 14 years, and I would like to say to my right hon. Friend that, if our farmers can be secured a reasonable price for their basic cereal crop, and also reasonable prices for beef and mutton and other classes of home produce, I believe that every farmer in this country, with the exception of a negligible minority, would gladly make some concession where pigs and pig production are concerned, which, by comparison with cereals and beef, are a very minor and subsidiary form of agricultural production in this country.

Mr. Alexander

Would the hon. Member propose a variation of the present quota of imports of bacon from Denmark, or from Canada, or from the United States?

Mr. Boothby

I mean, of course, a modification and variation of the various quotas in an upward direction, but I would in the first instance extend the quota in respect of those countries with which we are particularly anxious for an extension of our trade such as this Bill is designed to promote. I believe that that would have to be done to some extent at the expense of our own pig producers, but I believe it would be a wise policy. We have come to a stage—this Bill is only a part of it, as my right hon. Friend knows very well—when we have to frame our economic policy as a whole. We cannot take just a section and deal with an aspect here and an aspect there. As a matter of fact, the reason why our agricultural policy has got into such a mess is that we have brought in ad hoc, save-your-life Bills to deal with commodities one by one when the situation got desperate, instead of planning a comprehensive, clear policy for agriculture as a whole. Where I think this Bill has appealed to hon. Members in all parts of the House is that it has given evidence that there is a clear line of policy behind the thought and action of my right hon. Friend. The Bill gives one the impression that the Board of Trade, at any rate, is pursuing a concrete, clear policy. I would only add, with regard to this question of imports of pigs and pig products, that we could get an enormous increase in our export trade with Central and Eastern Europe if we could import more of these products from those countries.

Then there is the question of tobacco. Tobacco is in the hands of a monopoly in this country, and it is also in the hands of a monopoly in many other countries; but that monopoly can vary, and in my opinion a little judicious pressure applied by my right hon. Friend to the tobacco companies in this country would very easily do the trick. In a modern and changing world, with the ever present threat, however remote it may seem at the present time, of a Socialist Government coming into power and introducing a policy of Socialism, it is possible to bring pressure to bear upon British industry in the national interest, and I think my right hon. Friend would be fully justified, at this critical time, in bringing real pressure to bear upon the tobacco companies in this country to buy a small proportion—it would only have to be a very small proportion—of their annual supplies from Eastern Europe. I believe that, if Wills's alone bought 2 per cent. of their tobacco from Greece and Turkey, it would make an enormous difference to our export trade with both those countries, and I do not believe it would make any appreciable difference in the taste of an ordinary Virginia cigarette; in fact, I think it would improve it, but that is a matter of personal opinion. I beg my right hon. Friend to bear this fact in mind, because we shall have to discover, if we are to take real advantage of the provisions of the Bill, ways and means of increasing our imports from some of these countries. I do not intend to delay the House by going into details of the methods which Germany adopts. I tried to describe them to the House a few weeks ago, and I think they are familiar to hon. Members. They are comprehensive, and they have been devised by extremely able men, who have absolute power, and particularly power of action. They involve, in the case of Germany, some manipulation of currency. At the same time, I think that this Bill gives us the necessary power to conduct at any rate an experiment on a wide enough scale, and I think it ought to enable us to compete far more effectively in these markets than we have hitherto been able to do.

A good deal of discussion has taken place on the methods to be adopted, and the Advisory Committee of the Export Credits Guarantee Department has been mentioned. One hon. Member suggested that the time has now come when we could dispense with this Advisory Committee, and let the Board of Trade and the Export Credits Department handle the matter themselves. I think that from some points of view there is something to be said for that suggestion, but, on the other hand, we cannot get away from the fact that the Advisory Committee, with limited powers and under rather rigid conditions, has done a very good job of work during the last few years. I am not sure that it is altogether a good thing that they have lost so little money. I should have liked to see a slight danger in the situation, because it would have shown that they had been a little more enter- prising than they have been. After a period of immense international difficulty, they have actually made a profit for the taxpayers of this country. That is a remarkable achievement, of which any business man might be proud, but it makes me wonder whether they have not been a little too businesslike. Perhaps the regulations under which they have been working have been too rigid, and certainly the present Bill will make them more flexible, which is all to the good.

I would say that an advisory committee is all right if it is content to be advisory, and if it does its work quickly and effciently and can be called together quickly to take decisions; but, in the wider field of trade and industry, I am sure we can never hope to compete with Marshal Goering by a series of committees, and I believe that, when the history of this period comes to be written, if some of the dire prophecies which have been made today come true, and the British Empire is found to have been shattered by the superior force of the totalitarian Powers, the historian of the future may well come to the conclusion that the reason why the British Empire failed was because of the number of committees that it had set up. If hon. Members were to go into the Library of the House of Commons and look at the number of committees that we in this House have set up during the last two or three years, they would be able to read for hours before coming to an end. In many cases those committees have not yet reported, and in other cases, where they have reported, nothing has ever been done. Certainly Marshal Goering does not work through committees. If a decision has to be taken, it is taken quickly, the orders go out, and the job is done. I am all for advisory committees provided that they are there and do not hold things up, but I am very glad that this Bill at any rate sets up no more committees than exist at the present time.

I feel that the Bill is only a first step, and not a last step. We have now embarked upon a course of policy, rather late in the day, but letter late than never. It will, of course, involve, I will not say ever-increasing interference by the State with industry, but ever-increasing cooperation between the Government and industry in this country. The real truth of the matter is that, if we are to survive, the Government cannot get on without industry, and industry cannot get on without the Government. We have come to the stage when their co-operation will necessarily become closer and closer, until perhaps we reach that wonderful day when there is no longer any division between us and hon. Members on the Benches opposite.

7.57 p.m.

Mr. Bevan

While I have been listening to this Debate, I have been torn between two impressions—between the impression of a fairy story and that of a lunatic asylum. I have not been able to follow a great deal of the reasoning which we have heard, and I am unable to share much of the alarm which has been expressed. I believe it would have been possible to find in the Debates of pre-War years, many examples of the same sort of speeches that we have heard to-day about German competition. Exactly the same kind of alarm was then expressed from various directions. My first experience of a political meeting was when I was taken by my father, at the age of seven or eight, to such a meeting, and heard a hack speaker of the Conservative party declare that British industry was being ruined by the imports of hinges from Germany. He threw out an example, which hit me on the head, and probably influenced my political thought for the rest of my life.

I am unable to share the apprehension which has been expressed, although I must not be taken to be expressing any support for the peculiar methods used by totalitarian States. I was speaking to a General of the British Army the other day, and he said to me that before the War Germany was the most formidable country, but now he understood that the Generals were running the country, and he did not think we should have much trouble with them now. It seems to me that the idea about Marshall Goering standing at the head of Germany and giving what one must suppose to be divinely inspired orders as to where German exports shall go and where German imports shall be bought from, although it is most frightening, is mistaken. I do not believe that the position is so formidable.

There is one feature of this Bill which appeals to me. It is an attempt on the part of the Government to meet a situation which has been developing for some time, and which would have developed if totalitarian States had never come into existence. They have only introduced a new and ingenious method of trade competition. It would be possible to show that in the nineteenth century the methods of trade pursued by Great Britain were as much resented by other countries as we now resent the methods of trade adopted by the Nazis. We used all kinds of diplomatic and political advantages to get trade for our people in the nineteenth century. The fact is that a great deal of our trade followed the loans which were placed by this country, very often by methods subversive of the sovereignty of the countries which borrowed the money. Goods followed the money we lent, and other countries complained bitterly. We used our Imperial advantages, our financial power, our diplomatic prestige, to force our goods right throughout the world; and it is a fairy story to suggest that into this condition of perfect fairness and equity these villains arrived with new methods. We adopted methods as repugnant to the world as those which we at present condemn. We have, all through the years, used our diplomacy, finance and prestige, by all kinds of underground methods, to push our goods.

Mr. Boothby

My hon. Friend must admit that the method of currency manipulation is quite new.

Mr. Bevan

The only currency manipulation now taking place is that between America, France and Great Britain, by means of which certain people here are forcing certain Governments upon France. The hon. Member knows very well that the balances in London have risen and fallen as the fortunes of the French Governments have changed, and if we have refused to control trade and money it is because people here are anxious to have freedom of movement between those three financial centres.

Sir Arthur Salter

Does the hon. Member say that this is the only form of currency manipulation in the world?

Mr. Bevan


Mr. Boothby

You did say that.

Mr. Bevan

If I gave that impression I must immediately correct it, but I do not think I did. But I know that on our part at that moment we imposed an Exchange Equalisation Fund, in order to prevent gambling in currency—

Mr. Boothby

I suppose the hon. Member will say that we did so in order to throw out M. Blum.

Mr. Bevan

No, but we used it for that purpose. It is too much to have Great Britain's finance and trade represented as a sort of Sir Galahad rescuing princesses who have been captured by these terrible ogres in Central Europe. There is no reason why we should not arm ourselves with powers to meet methods which are undermining the well-being of this country. It is much better for us to look at the matter from that more reasonable basis. The Bill before us has certain merits, but it is a very poor Measure. It does not accomplish the purpose which we had in mind, which is to try to establish some form of control over the movement of goods to and from this country; because what is in the modern world injurious is that some decision of some Government in another part of the world, or that some failure on the part of some merchant in Great Britain to sell his goods in another part of the world, should inflict idleness and poverty on a number of people in this country: in other words, that the ebb and flow of world commerce should proceed unhindered and that quite innocent individuals should have to bear the consequences of economic conditions over which they have no control.

What we, on this side, want to do is to introduce some form of economic planning in the division of labour into which we are around to enter with the rest of the world. All I see here is a number of weapons to enable this country to engage more successfully in a trade war with other countries. I see no directions in the Bill, and I have heard nothing from the right hon. Gentleman, which will lead me to believe that the Board of Trade has produced the blue prints, as it were, of the economic relations which should exist between us and the rest of the world. As long as a firm goes to the Board of Trade and is able to say that it is able to sell its goods, and as long as the Board of Trade believes that it is desirable to push those goods in some part of the world, guarantees will be given for the purpose. I thought the hon. Member for North Paddington (Mr. Bracken) used the wrong phrase when he spoke of subsidising exports, because I do not believe that that is the intention. I believe the intention is to extend over a wider field facilities which already exist. There is no intention to bring in any regularisation of trade between us and the rest of the world.

What Germany does at the present time, if I understand the position correctly, is to average out the rate of profit among all her traders, in the home trade and the export trade. The burden of maintaining the export trade of any country in the modern world cannot always be borne by the resources of the exporters themselves, and, in consequence, the profit fund of the whole of the traders is mobilised for the service of the export trade, so that those engaged in the export trade and those engaged in the home trade have an average rate of profit. This means that the whole of industry takes up the shock which is aimed at one particular part of the export trade, instead of one part of an industry in one particular part of the country having to bear it. These funds are economic and financial shock-absorbers, which are established between the particular country and the rest of the world. It is, in fact, an attempt to insulate the trade of the country as a whole from the consequences of disaster to any particular part of it.

It is not surprising—I am only surprised at the hon. Member for East Aberdeen (Mr. Boothby) suggesting that it was—that this committee did not make a loss. It was rather to be expected that it should not do so, because the larger the scale of operations the less the likelihood of a loss. Particular firms may make a loss, particular guarantees may be sacrificed, but, on balance, the guarantors cannot fail. A better analogy is the Russian export system. Certain references have been made by hon. Members to the success of our scheme, but the Russian export scheme is infinitely more successful. If the Russians had failed, that failure would have registered itself in a complete collapse of Russian credit; in other words, there would have been a complete failure by Russia to get into its possession enough foreign currency to pay for its exports, or any credit from the rest of the world; because any failure on the part of a particular contract in Russia is spread over the whole of Russian industry, and so long as Russia can maintain her total balance of payments the scheme is successful. So you would have only to extend the guarantee to the whole of British export trade, and the only way that failure could then express itself would be in a long-term failure to balance our trade. It seems to me, therefore, that we are giving kudos where it does not belong; that the kudos belongs rather to the instrument itself than to those who have been in charge of the instrument.

It seems rather strange—and that is why I thought for a moment that I was in a mad-house—that there should be some peculiar virtue in an Englishman doing trade with somebody in another part of the world, talking a different language and of a different colour, while there was something wrong with an Englishman doing trade with another Englishman in the same way. We have heard how desirable it is to have a system of barter. I know of colliers in South Wales who are perfectly prepared to barter coal with their friends in Lancashire, who are prepared to let them have cotton in exchange. Does the right hon. Gentleman suggest that the Lancashire cotton operatives are consuming all the coal they could consume if they could afford to? And the two of them are perfectly prepared to barter their goods for boots produced in East Anglia. If there is any merit in barter between workers in different countries I should imagine that those merits belong equally to barter between the workers in the same country. It seems astonishing that we should have pleas in the House of Commons to arrange a barter system between us and other parts of the world when we have in Great Britain at the present time over 1,750,000 workers who have within themselves all the power of production which would make possible a system of barter between them—because, in the last analysis, all trade is barter.

Mr. R. S. Hudson

The hon. Member knows as well as I do about the two very interesting schemes which were initiated when I was at the Ministry of Labour, and with which I had a great deal to do, to see whether we could not establish a system of barter for the unemployed. I thought that the scheme was most promising, and that it would be successful, but, unfortunately, it did not work.

Mr. Bevan

If you restrict your barter scheme to such narrow limits it is quite impossible. But all trade is barter.

Mr. Hudson

The hon. Member put forward a suggestion that the unemployed operatives in Lancashire should exchange cotton goods in exchange for coal from miners.

Mr. Bevan

It is done in the world, and it has been done before. It is suggested by an hon. Member on that side that we in this country should take from another part of the world large quantities of swag, and that we should export to them something else. That is the suggestion from your own side.

Mr. Boothby

I never suggested that that should be the basis.

Mr. Bevan

But the suggestion is that each country has a certain amount of goods surplus to its own requirements, that a certain number of goods exist in another country of a different kind surplus to requirements, and it is possible to express these two surpluses in terms of money value but not in terms of money itself. The goods are exchanged and passed into the currency system of both countries. It was done in Germany and in Central America, and it can be done here, and if it can be done between countries, it can be done between the workers in the same country. There is not the slightest reason why we should not enter upon such a system in Great Britain. I know that it cannot be done by the right hon. Gentleman because he would have to abandon his own social economic system in order to do it. That is the difficulty. One million seven hundred and fifty thousand people in Great Britain have by their idleness to pay the price for the orthodox economy of the Conservative party, and that is why this House has to listen to the rubbish—[Interruption.]—I say the rubbish-that there are advantages in two foreigners trading with each other but that there is something wrong in two men of the same nation trading with each other.

Although there are certain merits in connection with this Bill, the limitations of the Bill are the limitations of the system under which we live. It is merely devising methods for a new, vicious and very perilous trade war. It is in itself unique evidence of the condition into which we have sunk under the leadership of the National Government. It is merely one aspect of the international anarchy of which they are the architects. If they go very much further along these lines we shall find that the trade war will be followed by a world war. It is because I do not believe that it is desirable that I think it is necessary to introduce some qualifications into an almost universal paean of praise which we have heard in this House this evening.

8.17 p.m.

Mr. Lewis

I am one of those who for some years past have from time to time complained in this House of the unnecessary ambiguity in the language of Government Bills and the unnecessary difficulty that we have in understanding their purpose owing to the practice which is usually called legislation by reference. I should therefore like to preface my remarks in this Debate by congratulating the right hon. Gentleman who moved the Second Reading of this Bill and his Department on the unusual clarity of language of this Bill and the simplicity of its drafting. There appears to be a most remarkable unanimity in all quarters of the House on the necessity for the Bill. I listened very carefully to the speech of my right hon. Friend who moved the Second Reading, and he certainly made out a very strong case for the Bill, but I could not help thinking that he might have made an even stronger case if he had been a little less secretive. His Department always seem to be terribly afraid of telling the House of Commons anything. I have noticed it in these Debates before. No doubt there are many matters with which they are conversant, to which it would be most unsuitable to give the greater publicity of debate in this House. After all, they come to us for authority to spend or to risk money, and they are required to give some account of their stewardship.

There are one or two simple questions which might be asked in this connection on this Bill, and to which we might reasonably expect an answer. It is unfortunate that the accounts for the last year of the Department are at the moment, I understand, in the hands of the auditors and therefore not available to this House. We cannot blame the Minister for that. He does not regulate the order in which Bills should be taken in Parliament. But it is information which, I think, he could easily give us, and which would enable us to get a clear picture of what is happening. We are discussing what is in essence a system of insurance. The first thing which anyone who is asked to join a firm engaged in insurance would want to know would be the result of the trading of previous years. Did the receipts fully cover the outgoings? That is to say, did the premiums not merely cover the actual losses they had to pay out but did they provide cover for all bad or doubtful debts? That is information which we have not been given. We have not been told what, at the present time, is the amount outstanding or overdue, possibly, no doubt probably in part, likely to be paid, but still the amount which in fact should have been paid in respect of goods supplied and which is overdue and stands therefore as a risk.

Mr. R. S. Hudson

I think I gave my hon. Friend that information in answer to a question. I think the figure was £45,000.

Mr. Lewis

No, Sir. My right hon. Friend did answer a question of mine yesterday on the subject. The answer was, no doubt, unintentionally rather disingenuous. The answer says that about £45,000 is expected to result in claims. That is not the amount overdue. The amount overdue may be a million pounds, but the right hon. Gentleman's Department may be feeling rather optimistic and they may say that we shall get the bulk of this and that it is only about £45,000 that we shall not get. That is not what I asked him. I did not ask what they feared they might lose in respect of these overdue grants. I asked what was the total overdue amount. I think that that is a question which it is reasonable to put in this House.

Mr. Hudson

Surely my hon. Friend would not like to suggest to the House that overdue amounts must be regarded as losses at this stage. We have had a very long experience now in the Department and we are in a position to estimate—I do not say with complete accuracy, but with a very fair amount of accuracy—how much, having regard to all the circumstances, the proportion of the overdue amount of indebtedness which is likely to result ultimately in loss. I told my hon. Friend that, on our present information, out of the amount that is overdue, the loss that is anticipated will be about £45,000, and I think I have given him all the information he really requires. It will not help to know on any particular date what the particular amount was.

Mr. Lewis

The more reluctant my right hon. Friend is to give the information, the more I feel that it is information which the House should have. I cannot see why we should not have it. We are told in regard to some of these questions that we must not ask about certain things, because it may help our competitors. How could it help any competitor in any country if we knew in regard to these transactions what is the amount that is overdue? There is another side to the question. We may presume that there is a surplus which has accumulated through the operations of these transactions up to date. We are told that the operations have been satisfactory, and no doubt there is a surplus. A year ago my right hon. Friend told us that the surplus amounted to £2,000,000. We are entitled to ask him to-day whether since then that £2,000,000 has diminished or whether it has been increased. Have we now a bigger reserve against potential loss? Has the result of trading during the past 12 months diminished the reserve of £2,000,000 which we had built up? It does seem to me that this question is more germane to the Bill, and I find it difficult to understand the reluctance of my right hon. Friend to give us the information. I am not asking for specific figures regarding specific trades or specific countries, and I cannot see what objection there can be to giving the figures. If the state of affairs is, as it may very well be, highly satisfactory, then the right hon. Gentleman will strengthen his own case by giving the figures. I would appeal to the President of the Board of Trade to say something on this matter in his reply.

In regard to the new proposals in the Bill, there has been some criticism of the drafting of that part of Clause 1 (1) which seeks to define war weapons. It may be said that there is difficulty in defining goods of such an infinite variety in terms suitable for an Act of Parliament, but it occurs to me that there are some difficulties in the definition which is given in the Bill. The language used in the Bill is: weapons of war or other goods which in the opinion of the board are constructed or intended for destructive use in war. I would call attention to the phrase, "destructive use in war." Take gas masks, for example. It would be quite wrong to suggest that a gas mask was intended for destructive use, but it may not be desirable to utilise the machinery of this Bill to supply a potential aggressor with a good supply of gas masks. This is a matter to which we might well direct a little further attention in regard to the exact wording.

Far the most important of the new proposals come in Clause 4. My right hon. Friend the Secretary to the Department of Overseas Trade, speaking in this House in June, 1937, referred to the Export Credits Advisory Council as a strong expert committee, and added that we are entitled to look to them to see that the Department takes no undue risks, having regard to all the circumstances of the case with regard to any particular item. In the opinion of the right hon. Gentleman they have done their work excellently. If so, it seems a thousand pities that we should seek to take a section of this Bill out of their purview. I am not the only Member of this House who is puzzled as to why the Government want to do that. The right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) threw out a suggestion that it might be possible that the Government desire to use these powers for political rather than strictly commercial purposes. I should be sorry if the Government laid themselves open to that allegation, as I think they do, by suggesting that the Council should have no power over the transactions in Clause 4. The hon. Member for Halifax (Mr. Gledhill) went much further, and said that we ought to be able to do without the Council altogether. That appeared to me to be even worse than what the Government suggest. Here we have a body which has assisted us to conduct a difficult business, apparently with a very great measure of success, and it does seem a pity that we cannot utilise their powers to the full in the future.

The right hon. Gentleman gave an example of the way in which their influence might be restricted in the case of credit. I cannot help feeling that in a matter of that kind they might be very good judges as to what was the wise thing to do. He further mentioned the question of armaments. I do not see how that can affect the question, unless we were deliberately supplying armaments for which we never hoped to be paid. It would be possible for us to say that a certain amount of these credits might be used for the supply of weapons of war, and for that to be done under the supervision of the Council. I am a little perplexed why the Government want to throw over the assistance of a body which, on their own showing, has been doing its work extremely well. If we throw aside the advice of these experts in the export trade and take a political view as to what is likely to occur, we may find that after a certain number of years in which we have made a modest profit we shall end up by incurring a heavy loss.

We have never heard that at any time the Government have in mind any maximum sum which they consider it might be advisable to guarantee in any given country. They are handling very large sums, and considerations of that kind are just the sort where the Advisory Council might save us ultimately from very heavy losses. Perhaps the President of the Board of Trade will throw a little light on the question as to what is the prime reason of the Government in wishing to minimise the use of this council, which on their own showing does its work well.

There is great significance in the attitude of the House to this Bill. There are many shades of opinion in the House on the subject of trading methods. There would appear to be almost complete unanimity that in the changing conditions of to-day we have to improvise methods to which we have never been accustomed in the past, for the purpose of fostering our export trade. The export trade of this country is not to us a luxury. It is not even, as some hon. Members are inclined to stress, a means of livelihood for many of our people. Much more than that, it is the means by which we ultimately buy those absolute necessities of life, including food, without which we could not support the population in these islands. No more important matters could be brought before this House than suggestions for the improvement of our export trade. The Bill, it is true, touches only a small part of that subject, but it is an important part because it deals with a field in which, owing to various causes, we were falling away and losing trade which to some extent we have recovered under the previous Bill, and more of which we hope to recover under the Bill which is before the House this afternoon.

8.36 p.m.

Mr. David Adams

I agree with other speakers that this Measure is but a very small part of the requirements which the country will need if we are, in the new circumstances, to safeguard our exports, and therefore our import trade. It is indisputable that we are confronted with a new trade technique, a nationalised subsidised competition. The totalitarian States can in certain cases afford, and are affording, to eliminate profits altogether, all their trade returns are averaged over the whole of a particular branch of the industry. Further, their wages are admittedly lower and hours longer and more strenuous. I was privileged last week to interview an Austrian, now a German manufacturer, in London. He was boastful of the perfect methods which Germany had adopted with regard to trade. He indicated that before he was permitted to leave Germany and seek out his old markets and new ones in this country, he was subjected to an investigation as to every detail of his business. His previous balance sheets were examined, and his prospective profits were required to be indicated to the authorities in Germany, and at the end he said he was only permitted to bring with him to this country little more than would suffice for his personal expenses. Surely that indicates the very close grip which the German authorities have over the industries of Germany, and that there is a degree of unification and co-operation which is quite unknown in this country. Therefore this Measure, excellent as it is, will require to be materially improved in the process of time if we are to hold our old position, and perhaps increase and amplify it in the days to come.

I believe that the Measure, if it is fully utilised, should be of great advantage to our basic trades, principally to shipbuilding, engineering and possibly the coal trade of the North-East coast. I am interested in the welfare of that part of the country, and I shall be interested to hear from the President whether facilities have been extended to the shipbuilding trade and every oppor- tunity placed at the disposal of shipbuilders to extend their industry. I say that because in the year 1931 I had the privilege as the civic chief of Newcastle of entertaining the first Russian Trade Delegation to this country. I took them round the various industries on the North-East coast and finally brought them to town and interviewed the Government Departments upon this very question of greater facilities for trade. They indicated that they were prepared to place numerous orders for various types of ships which Russia then required, provided the shipbuilders were given the necessary credit facilities for the building of these vessels. The result, however, of numerous interviews with Government Departments was that credit facilities would be granted for heavy steel and kindred exports but nothing for shipbuilding for Russia. As a result, many orders were transferred to Germany and Italy which at that time were prepared, and in fact, did grant credit facilities for shipbuilding to other countries.

I was ultimately advised that powerful shipping interests in Parliament and out of it had prevented the facilities being granted to the Russian Trade Delegation, and that the way was effectively barred against the use of credits for this purpose. It seemed to me an extraordinary position. We were prepared, as we are still, to build vessels for any country in the world, and it was certain that as Russia had come upon the international competitive scene almost for the first time she would require this tonnage, and was determined to possess it. It was certainly a short-sighted policy on the part of the Government to refuse to permit these vessels to be built in this country, only because additional competition would thereby have been created against our shipowners at that time. The conflict was admittedly one between the shipowner and the shipbuilder, and as the shipowner at that time was the more powerful force he was successful in the matter. Although I was privileged to bring delegates representing all trades and industries on the North East Coast, with the Mayors of Tyneside, to support the pleas which were made at that time, we were quite unsuccessful. I was not then a Member of this House otherwise I should certainly have taken the opportunity of raising public protests against this costly or futile policy. The result was that the Tyneside, and Wear shipbuilders remained idle and unemployed draughtsmen engineers walked the streets of Newcastle and other great centres of population.

I should like to make one or two remarks upon Clause 4 which says that the Board of Trade may, with the consent of the Treasury, make guarantees to individuals carrying on business in the United Kingdom. That is a very singular proposition. I think that the Secretary to the Overseas Trade Department, in introducing the Measure, ought to have given us some details as to what this means. The individuals are to be treated as though the grants were made for the export of goods from this country; and although we are advised that this new and original proposition is in the national interest, I think we ought to be told what is the extent of the amount which individuals may obtain, what examination there is to be as to their capacity to introduce new business, and so on. There is a whole diversity of questions on which information ought to be given to the House. I would like also to ask one or two questions about the Advisory Council. Is this Advisory Council to have the final decision, or not? Is there to be careful-protection against prejudice of any sort against any form of trade or industry? Will the Board of Trade occupy an overruling position even after the Advisory Council has come to its decision?

I should feel much more contented if, instead of there being an Advisory Council, the matter were left to the judgment of the Board of Trade. There can be no question that our civil servants are quite as well versed in trade matters as any number of private individuals grouped together in an Advisory Council. I would also like to know whether any trades have been refused grants from the Advisory Council. How does the Advisory Council operate and what methods of investigation does it adopt? May we be told what are the rates of insurance, and what other charges are made? Certainly, a year or two ago there was lamentation as to the very high charges for insurance that were made under the Trade Facilities Acts.

I am anxious to have an assurance that this Advisory Council will have no power to act in any preferential manner. I had the privilege of approaching the Advisory Committee under the Trade Facilities Act with a proposition from the North East coast regarding the building of vessels for short trade of the value of over £1,000,000. The Advisory Committee took a remarkable stand, and although those vessels were to be used for the Transatlantic trade primarily, also for Continental trade, and therefore, in the view of the owners, coal would be the best fuel for use in them, the Advisory Committee laid it down—and said they were quite immovable from their decision—that oil-burning vessels alone would receive a grant under the Trade Facilities Acts. The result was that that business went to other countries and the coal trade was injured seriously thereby. I feel that I am entitled, from my personal experience, to express the fear that unless the Board of Trade has a close grip upon the Advisory Council an injustice similar to that which I have indicated might occur again. As a result of that decision of the Advisory Committee, the North East coast suffered considerably. Some of the vessels were to be built there and some were to be built on the Clyde and they would have done us, as a shipbuilding nation, a substantial amount of good.

I am glad to support the Bill. It is a beginning, and it ought to be considerably extended. Simultaneously, there will need to be an investigation into the whole trade organisation and facilities of this country. There will need to be the elimination of the unfit, or the bringing of the unfit up to proper standards. It is admitted that unification is necessary. There has been some unification in the coal industry and in ship-building. All other trades ought to be brought under national purview, for in that way only I believe, we shall be able to defend our position in the markets of the world.

8.52 p.m.

Mr. Simpson

As the representative of a Lancashire constituency, I would like to add my plea to those which have already been made in regard to the state of the cotton industry, and to say a word of commendation in regard to this Measure in so far as it is calculated to assist the cotton industry. Opinion seems to be somewhat divided as to the degree of assistance which the Measure is likely to afford, but in so far as it may give any help and hope, it is certainly to be welcomed at the present time. I think it was Oliver Wendell Holmes who said that it does not matter where we stand so much as in what direction we are moving. I feel that the spirit and purpose of this Measure is moving in the right direction. Not only are there intrinsic merits in the Measure, but it also implies co-operation, which seems to me to be a necessary feature of any reform and improvement in the position in Lancashire. We must have co-ordination, confidence and co-operation in the industry itself, and as related to the Board of Trade, if any effective remedial steps are to be taken. Those features are necessarily implied to some extent in this Measure, and therefore, apart from its intrinsic merits, these other implied advantages render the Measure worthy of commendation.

It is a somewhat extraordinary thing to be reminded that in the twentieth century we are doing something so unscientific as to have a torchlight procession in Lancashire to-night, composed of employers and employés—indicative, surely, of the desperate plight of the cotton industry. What some of us feel concerning that plight is that if the decline continues, the deterioration in the productive efficiency of the industry will be such that it will hamper its possibility of recovery even if world trade conditions should improve. If conditions continue as they are at the present time, there will inevitably arise within the industry itself factors that will definitely hamper any possibility of real recovery. There is a limit to the loyalty and heroism of the operatives, and they are loyal and heroic indeed. I came across an operative recently w ho had been in the cotton industry all his life. He had been out of work or only partially employed for some time and he then secured a position under a municipal authority. The wage offered to him was not a princely one, but it was certainly an improvement on his old conditions. Yet, in spite of the fact that this offer represented a substantial improvement, he sought an interview with the mill manager before he could finally decide to leave the industry with which he had been associated all his life. Fortunately, the manager was sufficiently realistic to advise this man to jump at the new job and overcome his sentimental attachment to his old industry.

There is, as I say, a limit to that kind of loyalty. It is definitely limited by the capacity to live and if existing conditions continue there will be, it seems to me, a social disintegration in Lancashire which is unnatural, unnecessary and undesirable and will be a disaster, not only to that great county, but to the country as a whole. According as we are optimistic or pessimistic, we had different opinions on the amount of advantage which may be derived from this Measure. As a gesture, as an instalment, as some element of hope in what is otherwise a rather hopeless situation, I commend the Measure. I hope that it may bring some improvement to an industry which is in a desperate plight, and which needs every encouragement and help that the Board of Trade can give it at the present time.

8.58 p.m.

Mr. Benson

I shall be glad if the President of the Board of Trade will answer one or two questions. In Clause 1 there is a reference to "sales and agreements for sale." I would like some information on that phrase "agreements for sale." I do not understand exactly what it is proposed to do under that power. I can conceive of an exporter, having received a specific order for a specific type of article involving certain expense in preparation or production, being faced with the fact that before the sale has taken place, the purchaser has gone bankrupt. But surely that cannot be an occurrence of sufficient frequency to require insurance. Then the right hon. Gentleman who moved the Second Reading mentioned that under Clause 5 half-yearly accounts were to be published as a safeguard. That is in regard to the particular powers which are given under Clause 4, but, as for all the other amounts the accounts, according to Clause 3, are to be published quarterly.

Mr. Stanley

Not quite in the same form.

Mr. Benson

I am glad to hear that, because I must say that in their present form the accounts dealing with export credits are absolutely unintelligible. I hope that they will, in future, be presented in such a form that anybody who is not acquainted with the details may be able to gain some impression of what is being done. As it is, these accounts may be perfectly intelligible to the Department, but I defy any outsider to draw any conclusions whatever from them in the form in which they are published. With regard to the question of amount the right hon. Gentleman the Secretary to the Overseas Trade Department mentioned a sum of £14,000,000 in connection with the guarantee to Turkey, but the Anglo-Turkish guarantee extends only to a loan of £10,000,000. Is the other £4,000,000 for private trade or is there something else of which we do not yet know? I should be glad if the right hon. Gentleman will deal with those points.

9.1 p.m.

Mr. Alexander

I think it is fairly clear that the House has heard enough arguments to justify this Bill receiving a Second Reading, and although there have been criticisms here and there in relation to the special circumstances of certain constituencies, in the main the general purpose of the Bill has been welcomed. The position, however, is such that I do not think we ought to allow the President of the Board of Trade to refrain from making some comment upon the introduction of this Bill on the present condition of our national trade. The Secretary to the Department of Overseas Trade in moving the Second Reading referred to what he regarded as signs of improvement. He talked about a slight upward tendency, a tendency more in our favour in the visible balance of trade and things of that kind. I desire to put to the President of the Board of Trade this broad position. Compared with eight years ago, taking the figures for November of the last year during which my own colleagues were responsible for the government of the country, we have this position. We have now about 1,840,000 unemployed compared with a figure of about 2,260,000 in November, 1930. But there has been an adjustment of the basis of these figures in the meantime, which accounts for about 200,000, so that there is really no more improvement in the position to-day, as regards trade and employment—in which our export trade is also concerned—than this, that we have about 265,000 fewer unemployed than we had in 1930.

Mr. Stanley

How many more in work?

Mr. Alexander

I was going on to say that that is in spite of the fact that you are now certainly employing more than 1,000,000 people directly upon that extended portion of the armaments programme which is over and above the normal Service Estimates, and also in spite of the additional personnel taken into the Army, Navy and Air Force as a result of considerable expansion in those three Services. Therefore, I shall be interested, in the first place, to see how the right hon. Gentleman regards this Bill as a definite Measure in relief of our unemployment position. If there is within sight—and I hope that it may be so—such a return of mutual confidence in international affairs that we may be able to stop the mad race in armaments and the suicidal expenditure upon it, we ought to be thinking of something constructive and not merely of palliatives, in regard to the recapture of our world trade and the maintenance of industry and employment. I recognise that the Bill in its first three Clauses is intended solely to extend the amount to which the Board of Trade Advisory Committee can go for the time being. Nevertheless, I should like to hear from the right hon. Gentleman what he has to propose, in a wider and more constructive form, to deal with the great national and oversea trade problem with which, in the light of the figures I have already mentioned, we are bound to be faced. The Board of Trade is shut out during a large part of the year from discussion in this House though it seems to get a rush of special questions at particular times, and I never fail to welcome an opportunity of hearing a contribution to our Debates from those responsible for that Department.

The next point that I want to make is this, that the Parliamentary Secretary was quite bold in his utterance and, I think, quite brutal to his leaders when he referred to the need for British prestige if you are to get a real improvement in world trade. He spoke about the effect of British prestige upon trade, and I joined with him very much when he said that we could do a very great deal to improve our general standing in relation to world commerce if we were to rehabilitate some of the prestige which the National Government have lost for us. I do not wish to pursue that further at the moment, except to say that I welcome the frankness of the Parliamentary Secretary.

With regard to the general working of the first part of the Bill, that part which expands the total credit advance-able by £25,000,000, I welcome the fact that that increase is to take place, although I do not think it will take the place of a real reconstruction in industry. There is a great deal to be said from the point of view of the accountant who recently addressed a general meeting of the Associated Chambers of Commerce in this country on the trade position, when he pointed out that in the case of a man who wished to finance additional export trade of £1,000,000 a year, it might be assumed that an extra £1,000,000 to the average manufacturer could easily finance extra business of £1,500,000. If he had to pay 1½per cent. more than usual, it would cost him £15,000 to do an extra turnover of £1,500,000, or 1 per cent. on his turnover. Certainly, when dealing with the large figures of export trade, the cost of actual credit as credit is very small indeed on a largely expanded turnover. I should hope that in dealing with this expanded method of credit, the Board of Trade would urge upon industry generally not to rely solely upon credit for the rehabilitation of British trade, because it is not the only thing by any means, and I have been rather upset this afternoon at hearing the sort of complacency with which the present standards of outlook and organisation in British industry are regarded.

I do not think that we shall have satisfied by any means the standards required for a really wide, expanding movement in world markets for British products until that side is tackled. The House only needs to bear in mind in that respect the recent attacks that were made upon the Russians with regard to the progress of their trade arrangements with us under the trade agreement that they have with us, when they had to point out, in reply to complaints, that the figures would have been very much more favourable to us but for the fact that goods to the value of nearly £2,500,000, due for delivery a month before, were still being held in this country. The Parliamentary Secretary smiles, but that is no answer, and if he wants the actual figure, I will give it to him. The figure was £2,262,000. For the first nine months of the year the recorded exports to the Union of Soviet Socialist Republics amounted to £4,386,000, and if it had not been for goods not being ready for delivery by British producers on contract dates, that figure would have been £6,648,000. That kind of thing is very important 4n the maintenance of our markets overseas, and that kind of thing, as well as actual credit facilities, needs attention. I hope, therefore, that the President of the Board of Trade will make it quite plain to British industry that whatever effort he makes to extend credits, that is no solution of the problem although we want help to keep part of our overseas purchasers perhaps from sliding away because of the amount of credit they can get from this country.

I should like to say a word in reply to the hon. Member for Widnes (Mr. Pilkington). I apologise if I interrupted him rather hastily to-night, but I was very interested to find that, in dealing with a position like this, he was anxious to say that most of our present trade troubles resulted from the advent of a wicked Socialist Government into office from 1929 to 1931. Really, if that is a sample of the kind of speech that is made upon the more obscure constituency Tory platforms in the country, I can understand how so many electors are completely misled.

Mr. Pilkington

I was basing my argument upon figures. I gave the right hon. Gentleman the value of the volume of our trade in 1929 and that to which it descended under the Socialist Administration. I was basing my argument upon facts.

Mr. Alexander

I do not mind facts and figures. What I mind is the accusation, which was that the Socialist Government were responsible for those figures, and on that point I would like to say a word or two about some of the factors in relation to export credits that led up to that trade position. There was a short Parliament in 1924, with a Labour Government, and during the General Election that was forced upon that minority Government at that time, there was a tremendous discussion about our loans for trade to Russia, and a great deal of reference was made to the inclusion of that country, unless we made a special Labour Government proposed loan, in trade facilities The then Leader of the Tory party, now Lord Baldwin, making one of the principal speeches in the campaign, in October, 1924, put this before the country. He said, in effect, I have no belief in Russia as a market for this country, not because I am necessarily against the political regime in Russia, but because I believe it to be the natural market for Germany, and in any case, while I am not specially against the political regime in Russia, it would be much better for Europe to see the recovery of Germany rather than to see the special development of the kind of regime that there is in Russia to-day.

During the whole of the period of office of the Government under Mr. Baldwin, as he then was, there were no credits to Russia, but you made all kinds of loans to Germany, and Germany gave the credits to Russia, and Germany had the trade and supplied the goods; and when, after the Hoover moratorium in June, 1931, it first became feared in Germany that France might occupy the Ruhr again, and they started exporting capital, there was a run on gold in London on those very investments that City men in this country had borrowed from Paris and New York, at a very great profit to themselves, to finance Germany to supply goods to Russia. You would have had more sense if you had used export credit facilities at that time for a straight deal with each of the markets that you were entitled to have under that regime.

That brings me to say a word or two to the President of the Board of Trade in support of the point put to him by my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence). I regret, perhaps as much as anybody, that we should have been brought to a position of affairs where, while there might not be a declaration of belligerent war, the Secretary to the Overseas Trade Department declared a trade war some days ago—I understand the circumstances—and this part of the Bill is a direct logical consequence of the policy then adumbrated by the right hon. Gentleman. I would like to ask the President of the Board of Trade whether he will be specific in his reply to the Opposition about the way in which he intends that it should be administered. We are anxious that it should not be used for purposes that are not present to the mind of the House tonight, as being the real intention of the Bill. The explanation was made by the Secretary to Overseas Trade this afternoon with regard to munitions, but I am not thinking only of munitions or articles that can be supplied to belligerent countries which are at present defined as munitions. I do not mind which way you have it.

I am concerned about the general use of this credit. Having regard to the experience we have had on this side and the undoubted bias that has been displayed by the Government and by their friends in the past right up to the present in their attitude to the supply of arms to Spain, I hope that we may be given a complete assurance in answer to questions put by my right hon. Friend, that the purpose for which the powers of Clause 4 will be used will exclude special help to those countries whom I might describe as engaged on policies which are inimical to our general trade, and which sometimes are described as totalitarian. I hope that we shall get an effective assurance on that point. It would be a tendency to depart from that line of action which would make us very critical of that part of the Bill in Committee. While I think it is true to say that my hon. Friends on this side welcome both parts of the Bill in the main, the subsequent stages of discussion will depend to a large extent on the assurance which the President is able to give in regard to the administration of the scheme under Clause 4.

Suggestions have been made to the right hon. Gentleman to-night with regard to some of the details. I hope that he will not be led too quickly to adopt the suggestion of the kind made by the hon. Member for East Aberdeen (Mr. Boothby). He is always polemical in such Debates as this. He was supported to some extent by an hon. Friend on my side of the House when he said that if only we could begin upon the import of swine and cattle from Hungary as the basis of improving and developing the amount of trade clone, it would be a good thing. I have had experience in an organisation in which I am not unknown in regard to the product of the swine in the agreements which operate between say Denmark and this country, and the connection of this country with Canada under the Ottawa Agreements in connection with bacon; and I know of the difficulties in the quota arrangements that have arisen from time to time. I have yet to see the full detailed results of the first contract period under the Bacon Industry Act, but I know that under the agreement with the United States of America some arrangements are being made for extending the quota of bacon imports.

I shall be anxious to know whether the Government will be moved by such suggestions as this and how such suggestions will affect what is usually termed the Most-Favoured-Nation Clause. If the Government are going wholly to depart from the Most-Favoured-Nation Clause and have a new kind of agreement with other countries, we shall know where we are, but if they have to deal with a whole set of agreements in which the Clause is recognised, they had better be careful before monkeying about with separate quotas from various countries. I should like a little assurance on that point. I do not offer any comment upon the tobacco suggestion. I do not know enough about Turkish tobacco. My Friends on this side probably know more about the smoking of the gasper. The suggestion is made that Turkish tobacco could be mixed with the Virginian content of cigarettes. That may be done, but I know of no special solution of the problem of trade in South-east Europe by such a method as that. In any case, it must be remembered that in the light of the treaty we have just made with America, the important point of the trade of America with this country will again require careful consideration before we enter into a special bilateral ex-parte arrangement in such a matter as that. Having said so much about the Russian position, perhaps I might ask the President whether the Government have not had, in connection with Russia, a trade agreement and a credit running for the last two years, and whether, with a view still further to improving our export trade with that country and developing our trade arrangements with it generally, the time has come for extending that credit. We welcome the general principle of the Bill, but we especially ask for assurances of the kind for which I have mentioned on Clauses 4 and 5.

9.23 p.m.

Mr. Stanley

I am sure that my right hon. Friend and I have every reason to be satisfied with the reception that this Bill has had during the Debate. Neither he nor I pretend, nor have we tried to pretend, that there is contained in this Bill a general solution for all the problems of our export trade. We do not even say that it is a solution for a major part of those difficulties. All we claim for it is that it is a definite advance upon one, and only one, of the paths along which we must advance if we are to put our export trade upon that basis of stable expansion that all of us would desire to see. I would say to some hon. Members that it is a little unfair to criticise this Bill for something which is not contained in it, and for something which it was never intended to contain. This is not a tariff Measure or a Measure to give subsidies to industry. It is not a Measure for the internal reorganisation of industry. It is a Bill to extend and, to some extent, to alter the existing system by which we are able to guarantee and safeguard the trader against loss on particular consignments to foreign countries.

I was particularly glad that at the beginning of the Debate my right hon. Friend took the opportunity of saying one or two words about the present position of our export trade, which, I think, rather redressed the perspective in which both in the House and the Press the position of our export trade has been discussed in the past few weeks. Admittedly we have to meet a great difficulty. Admittedly we are faced with new methods which, serious to-day, may, if not in their turn met by new methods, become even disastrous to-morrow. But we must not let that lead people to believe that the position of the British export trade to-day is both hopeless and helpless. In fact, against a concatenation of difficulties almost unexampled, we see the export trade standing up in a remarkable way and indeed, as my right hon. Friend pointed out, even in the last few months making slight progress, whereas the tendency of world trade as a whole is in the other direction. I do not think it is a good thing to adopt the modern theory that, if ever you say anything good or hopeful or cheerful about your country or your trade or your prospects, you are being complacent. It seems to me that, while we ought to realise and to be prepared to face the difficulties and the disadvantages, we ought equally to make quite plain the advantages and the successes when they are apparent.

I feel almost like apologising to the House, after an extremely interesting Debate which has led us almost all over the globe, I think into every country into which British exports penetrate, and has roamed over nearly every side of our social life, for saying a few words about the Bill for the Second Reading of which we are now asking. The right hon. Gentleman who spoke last made a very interesting and a very concise speech. I wish he had spent a little more time on one matter that he touched on early in his speech, because it was a theory that interested me very much. As I gathered, he was expounding the theory, partly a matter of foreign policy and partly of trade, that, if only we went to war, in doing so we should restore our prestige and, by doing that, benefit our export trade.

Mr. Alexander

That interpretation of what I said is in the best Oxford Union manner, but it is not what I said at all. I said I was glad to notice the courage of the Secretary to the Overseas Trade Department in acknowledging at this time that British prestige is of such importance to world trade. I am sorry that the National Government has brought it so low.

Mr. Stanley

The right hon. Gentleman, I think, is evading the point. We believe that by our methods we have maintained the prestige of the country and, by maintaining peace, have maintained its export trade. He believes that by war he will increase prestige and also benefit trade. He also referred at considerable length to the question of our trade with Russia. It is not strictly relevant, of course, to the actual content of the Bill, but it is an interesting subject on which I should like to say a word or two. I notice that he had a document in his hand which has been given to other Members, and he was referring to the complaint that the figures in the trade balance would look much better if there had not been some delay in the delivery of British goods beyond the due delivery date. If he will add to the figures of goods which have already passed the goods that have been delayed, he will still see, as far as goods manufactured in this country are concerned, that is the goods which give the wage-earner of this country wages and employment, a very great disadvantage.

Mr. Alexander

May I ask whether, in fact, the actual arranged ratio of trade under the British Russian Trade Agreement has not in fact been met?

Mr. Stanley

Yes, I have often said that it has been met in the letter. It has been met to an extent which was never anticipated by re-exports. I do not believe hon. Members opposite either thought it would be or think it should be met by these re-exports which merely give this country the small profits of an entrepot trade rather than by the purchase of goods produced in this country which give wages and employment to our workmen. When he asks me to do what I can to expedite these deliveries, if he will do all he can to persuade those responsible for the placing of Russian orders to place in this country a proper ratio of orders which will give employment for the people of this country, I will guarantee that my right hon. Friend and I will be able to see that deliveries are expedited.

Mr. Alexander

I gather that the right hon. Gentleman does not make any denial that there was lateness in delivery and, if there was, is not my point made good?

Mr. Stanley

Lateness in delivery is always taking place in commercial transactions, but I am sure the right hon. Gentleman will be glad to accept my suggestion. I will guarantee that delivery is expedited if he is able to use his influence to see that orders of a more substantial character and more in keeping with the ratio are given to the industries of this country.

Mr. Shinwell

This point was raised in a previous Debate and no answer was forthcoming. Can we have some explanation, if the information is in the right hon. Gentleman's possession, as to why goods to the value of £2,500,000 were late? Is that not an allegation against the exporters which ought to be dealt with?

Mr. Stanley

I am afraid I cannot give any explanation because the gentlemen who are responsible for these things, who might, of course, have come to my right hon. Friend and given those figures to him, have chosen to give them to hon. Members opposite, who have not the same facilities for making the inquiries that we have. I should be only too glad if those responsible for Russian trade would come to us to try to find out what the reasons are and to put these things right.

Mr. Mabane

Is my right hon. Friend aware that at present considerable quan- tities of machinery in Huddersfield are awaiting delivery to Russia and that we cannot get it passed by the Russian inspectors?

Mr. Stanley

Interesting as this point is, and fully as we shall no doubt have to discuss it on some later occasion, it is not, perhaps, wholly relevant to the Bill, but I thought it was only courteous to the right hon. Gentleman that I should reply to him.

The right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) opened the Debate for the Opposition in an extremely interesting speech. He began with some review of the changing course of international trade since the nineteenth century. I wish that considerations of time had enabled him to start his historical survey a little earlier because—again, perhaps, it is not wholly relevant to the Bill, although I think it is the sort of subject that we ought to have more opportunity of discussing—I look on the nineteenth century, not as it was looked on then, or even now, as a prelude, but as something of an interlude. If you go back beyond the nineteenth century, you find in the eighteenth very much the same difficulties that we are finding and the same remedies that we are applying to-day. In the nineteenth century, owing to a concatenation of circumstances which do not exist to-day, and may never recur, you had what was an interlude, I say, of the freest trade this world has ever seen. I am sorry that the Junior Burgess for Oxford (Sir A. Salter), who made a fleeting appearance in the Chamber only to leave again, was not here to hear the right hon. Gentleman include his book "Recovery" among the major economic disasters of post-war years.

Mr. Pethick-Lawrence

I am sure that the right hon. Gentleman is only making a joke. I quoted from it in support of my argument. That was the only reference I made to it.

Mr. Stanley

I am sorry if I became a little confused in the juxtaposition of various parts of the right hon. Gentleman's speech. I myself have vivid recollections of the book, an interesting book, though not, it seemed to me, entirely conclusive. As far as I remember, the Junior Burgess for Oxford conclusively rejected Karl Marx, reluctantly abandoned Cobden and was inclined to find the new economic saviour of the world in Mr. Kruger, of Swedish match fame, although between the first and the second editions events occurred which necessitated some amendments. The right hon. Gentleman pointed out that my right hon. Friend in the Measure of 1937, had made an alteration which permitted these credits to be given to shipbuilders and asked to what extent use had been made of those facilities. Actually they have not yet been made use of in ordinary circumstances. I understand there have been certain inquiries, but none have yet come to a head, but under the special Turkish Export Credits Agreement, I am glad to say that orders for ships have been placed, mainly I think on the north-east coast, to the value of £1,800,000, and it is clear that the Amendment we then made is proving of great assistance to the hard-pressed shipbuilding industry.

The right hon. Gentleman also complained that Sub-section (4) of Clause 1 might prove rather too wide. We have deliberately taken the precaution of drafting this Sub-section in the widest possible terms but, as the House will notice, with a restriction upon the amount which can be guaranteed under it. That is because we do not want to come back to the House with another list A, B, C and D, of small machinery Amendments to meet conditions which we have found in the course of experience hamper the working of this system, and which either have to be remedied by an Act of Parliament, thus unnecessarily taking up the time of the House, or have to be allowed to continue with some disadvantages to the scheme. Therefore, we deliberately take power in the widest terms under Subsection (4), and then proceed to limit it by reference to the amount. The right hon. Gentleman also referred to the innovation made in Clause 4, and pointed out that the powers under that Clause were exceedingly wide and could not be minimised. It has never been the desire of my right hon. Friend or myself to minimise them. We admit frankly that the powers we have taken are wide, that they are exceptional and largely unprecedented, but we claim that the circumstances of the day are such that unless we have powers which are wide, unexampled and unprecedented we shall not be able to meet them.

There are cases, of the kind which will occur to everyone who has been engaged in private business, where a transaction, judged simply on its own. merits, may be of doubtful commercial stability. It is the sort of transaction, in fact, which the Advisory Council, with their great reputation, with their business knowledge, and with the instructions given to them that each transaction must in itself be a complete economic and profitable transaction, would feel bound to refuse; and yet there may well be cases where that risk, once taken, may lead in the future to great advantages for the trade of this country, and where, if it is not taken, the breaking of the link between ourselves and that market may result in the most disastrous consequences. We all know that in business it is necessary at times to throw a sprat in order to catch a whale, if I may put it like that. We know how often we undertake a transaction not so much because of the value of it but because we think it may lead us into a new market which may be profitable and helpful. Therefore, we feel that under Clause 4 there may be openings for an issue of credits of this kind to maintain our connections with old markets and enable us to break into and make contact with new ones.

I agree with the anxiety expressed by both right hon. Gentlemen opposite on behalf of their party and felt, I am sure, by hon. Members on all sides, as to the manner in which these powers under Clause 4 are going to be used. The right hon. Member for East Edinburgh put his case, obviously, in the least provocative and least controversial form possible and he refrained, actuated solely by those motives, from naming any specific countries, confining himself to suggesting that these credits should not be used for countries which were violating international law or whose interests appeared at the moment to be hostile to ours. I will follow his example. I, too, do not want to name any names. [Interruption.] If the hon. Member had given that advice to himself in the last few years and followed it he would occupy an even higher position than he does now.

Mr. Shinwell

In the last few years?

Mr. Stanley

I think the machinery under this Bill is going to last for a very long time, but I hope that potential enmities and causes of enmity which we see in the world to-day are not going to last as long. I do not want to lay it down to-day that for the duration of this Bill certain countries will always be our enemies and certain countries our friends—that would be a dangerous and unnecessary thing to do—but I do want to go as far as I possibly can to meet any fears which are felt on this subject on any side of the House. Although the countries were not named by the right hon. Gentleman I have a fairly shrewd idea of which they are, and I can only say that not only have those countries never asked for credits of this character under a Clause such as this but it is not in contemplation that credits of this kind shall be given. Secondly, I would point to Clause 5, which I inserted, as the hon. Member noticed, in a different form. These returns differ from the returns under the ordinary procedure because they both specify the countries and specify the classes of goods, and under that we can distinguish the export of munitions. That will give to the House every few months the opportunity of seeing which countries are benefiting by this scheme. I certainly can give this pledge, that it is our desire and intention to use the Bill when it has been passed—I hope it will be passed with the general approbation of the House—in a sense which will be welcomed by the House as a whole, and that every few months the House will have the opportunity of seeing the list and of judging from it how far we have carried out the assurance that I am glad to be able to give to hon. Members this evening.

Now let me pass to the speech of the hon. Member for East Birkenhead (Mr. White) who, I am sorry, has not found it possible to stay for the answers to some of the questions which he put to me. Of the various items that he raised there is only one I need answer now which will be of interest to hon. Members generally. The hon. Member suggested that we should not lose sight of the opportunity which the granting of these credits gives us of trying to get the cargoes carried in British ships. I should like to assure him that that is already the practice of the Export Guarantees Committee and that they do make the suggestion and do their best to enable British ships to be used. I would point out that in the Turkish Agreement there was a specific Clause dealing with this point and which ran: Every contract shall provide … that shipments shall (except in cases where a Turkish ship would be sailing from a port in the United Kingdom under ballast) be made in British bottoms whenever available at prevailing market rates. That will show that in these agreements we are doing what is possible for British ships.

The speech made by the hon. Member for Stoke-on-Trent (Mr. E. Smith) interested the whole House and I was horrified to find that I agreed with most of it. I do not know whether that was because he is moving more in my direction, or I am moving more in his.

Mr. Alexander

I have not noticed your moving.

Mr. Stanley

Then it must be that the hon. Gentleman is coming over to us. I will not deal with the more general and important of the points which he raised but will attempt to deal only with one specific point. He felt that not enough benefit was going to the light industries and that too much was going to the heavy industries. As a matter of fact, I am informed that consumable goods—which, after all, are a product of light industry—account already for over 50 per cent. of the transactions under this scheme. That will show him that they are getting very considerable advantage from it.

The hon. Member for Halifax (Mr. Gledhill) made some comment as to whether it was desirable still to retain the Advisory Council under the machinery of the first part of the Bill. He suggested that because the system had been in existence for some time and, as he put it, the principles were established, there was no longer any need for the Advisory Council. I am sure that the House will disagree profoundly with that suggestion. Not only has the Advisory Council played a most important and valuable part in the past, but it is playing an important and valuable part to-day. There was no question of a system 'or principle being established, but it is a question of a number of specific applications for credit. It is necessary to judge in the circumstances of the moment how credit-worthy the consignee of the goods is going to be. That makes the existence of a strong committee of business men who have available to them all kinds of sources of information about the credit-worthiness of countries, firms and individuals, absolutely indispensable to the proper running of the scheme. When he complained that not enough propaganda was done for the Department, I should like to tell him that the Department is now opening branches in various parts of the country for the express purposes of bringing home to industrialists in the localities the advantages which the scheme can offer.

A speech was made by the hon. Member for Ipswich (Mr. Stokes) to which my right hon. Friend has already referred. On the strength of a short visit to the Balkans he has come back to us with entirely new proposals for strengthening our export trade. His idea is that it would be easy to get a considerably larger trade in the Near East if we denounced our trade agreements with Denmark and the Argentine. I do not think it is good policy to sacrifice old friends in order to make new friends, or to throw away existing trade in the search for new trade. I prefer a method which retains the trade which we already have and at the same time tries to acquire new trade and new customers.

I must deal with the speech made at very great length by the hon. Member for Farnworth (Mr. Tomlinson) in which he attacked the Bill because he said it did nothing for the cotton industry. The hon. Gentleman is obviously ignorant of what takes place under the Bill. I would like to tell him that the Manchester district is the district in the whole country which is the biggest user of the facilities which have hitherto been granted, and that the cotton textile trade is, I understand, one of the biggest customers of the Export Guarantees Department. Therefore this machinery has been of considerable use in the past and will be of use in the future. At the same time, I recognise the very difficult position of the Lancashire cotton industry to-day and the fact that while other trades are beginning to show signs of improvement after the recession that has taken place, the Lancashire cotton industry is still extremely depressed.

I will deal with some of the points which he raised. First, with regard to the trade which we have lost in India. The hon. Gentleman knows as well as I do, because he has asked a number of questions and I have answered them, exactly what is the position of negotiations with India. We have been negotiating for a very considerable time and we are waiting now for the decision of the Government of India. I have already expressed in this House and outside that His Majesty's Government are not prepared to accept any new trade agreement with India unless it gives what I consider a satisfactory deal to the Lancashire cotton industry.

Mr. Shinwell

What about other industries?

Mr. Stanley

I say the Lancashire cotton industry, because I believe it is the industry in the country which needs most help to-day, which is in the most difficult position and which can most benefit from a satisfactory agreement with what used to be, and should still remain, its best customer. With regard to the question of Egypt, there again the hon. Gentleman knows the position. As soon as those tariffs were put on with the object of protecting the Egyptian cotton industry against Japanese competition, but incidentally doing great injury to our export trade, the Government here took the matter up with the Government of Egypt. As a result, there was the visit of a commercial delegation to Egypt and an arrangement was come to there for a quota of British cotton exports to Egypt based on the reception by Lancashire of the export of Egyptian raw cotton. When put into force that agreement will give Lancashire a bigger share of the global imports of cotton into Egypt than they have had in the past. We are awaiting ratification by the Egyptian Government of that agreement which they signed with the commercial delegation.

Mr. Tomlinson

Has there been any undertaking to remove the additional tariff which was put on?

Mr. Stanley

No, they dealt with it by a quota system rather than by reduction in the tariff, and the Lancashire interests represented were satisfied that that quota system was the best way of dealing with the position and, as I say, they signed this agreement with the Egyptian Government.

The hon. Gentleman did not refer to the Cotton Industry Bill. I do not know whether that is because he is opposed to it, or because he does not think it is of any importance, but a considerable num- ber of people in Lancashire are in favour of it and think that it is important I nave already explained to the House that we are reaching the final stage in the drafting of the Bill, and I hope in a comparatively short time to be in a position to submit the Bill for the approval of the industry. I want to make it plain that I do not expect, and do not desire, 100 per cent. agreement upon it, but I think the Government and the House are entitled to know, since the professed object of the Bill is to enable the Lancashire cotton industry to govern itself, that it has the support of a substantial majority of the industry, because obviously, unless it has such support, it will be ineffective and inoperative.

Mr. Crossley

Would my right hon. Friend answer the question that I put to him?

Mr. Stanley

I cannot answer that question without knowing what special type of firm it is that my hon. Friend has in mind. If the firm is a subsidiary of the exporter, it is covered, but if it is merely an independent merchant firm acting as agent, it would not be covered. I think it would be best if my hon. Friend would consult with my right hon. Friend and give him particulars of the sort of firm that he has in mind, when my right hon. Friend will no doubt be able to give him the information he desires.

With regard to the remarks of my hon. Friend the Member for Colchester (Mr. Lewis), I cannot give him to-night the actual figures, which will be out, I think, some time next month, but when he sees them he will find that they show an improvement as compared with last year. In reply to the question of the hon. Member for Chesterfield (Mr. Benson) as to an agreement for sale, the difference in drafting as between an agreement for sale and the sale itself is purely a technical difference. It depends upon the time at which the property passes—whether at the actual time of the sale or at some later date. As to the difference between the figure of £10,000,000 and the total of £14,000,000, that is accounted for by interest.

I think I have dealt with all the major points that have been raised in the discussion, and will conclude with a few words on the general position. The hon. Member for Gorbals (Mr. Buchanan) declared that my right hon. Friend, in his speech the other day, which was received with so much approval both in this House and in the country, had declared a trade war upon Germany. That is not so. We do not declare a trade war upon anyone, and we do not want to have a trade war with anyone. As the right hon. Gentleman opposite very rightly said, this Bill is only one part—my right hon. Friend referred to another part—of what the right hon. Gentleman called economic rearmament. The economic rearmament which we are trying now to undertake is exactly like our other rearmament. We never want to have to use it, but we know that, if we are in a position to use it if necessary, we are much less likely ever to have to put it into effect. I would sum up our position with regard to this question in the words of an old music-hail jingle of the nineteenth century: We don't want to fight, but by jingo if we do, We've got the men, we've got the brains, we've got the money too. I think it is only right that we in this House should make it quite plain, after the discussions we have had to-day and a fortnight ago with regard to possible competition in the export markets, that we have no desire at all to prevent other countries from having their fair share of the world's trade. Nobody in this House has any idea of some sort of economic blockade of Germany which would prevent her from trading with the outside world just as we are doing. She has as much right to trade, and by trade to live, as we have. What we have in mind is the position when the methods of trade are such that the competition which they present to other countries becomes unfair, and tends to deny us our fair share in the world's markets and our right to trade. We do not want that to happen; we do not believe that there is any need for it; we believe it is better both for us and for Germany to come to amicable agreements with regard to the sharing of markets which will enable us both to carry on a fair trade at a fair price, instead of the ridiculous and ruinous cutting of prices which we see to-day. We are hopeful that it will be possible to reach an agreement of that kind which will be of mutual benefit to both of us, but, if we fail to reach the agreement which we are sincerely desirous of reach- ing, we might find it necessary to put into operation those methods with which we now feel it is right that we should arm ourselves. This is only one small part, as hon. Members in all parts of the House have pointed out, of the big effort that is required, both from the Government and from industry, for the rehabilitation of our export trade. But, small as it is I believe it is valuable, and, because it is valuable, I commend it to the House.

Question, "That the Bill be now read a Second time," put, and agreed to.

Bill read a Second time.

Bill committed to a Committee of the Whole House for Monday next.—[Mr. Furness.]