CLAUSE 3.—(Financial provisions.) (Hansard, 8 February 1945)

§ The Deputy-Chairman (Mr. Charles Williams)
I ought to point out now that if this Clause is passed the new Clause [Amendment of s. 6 (2) of the principal Act] standing on the Order Paper cannot be called.

§ Mr. Ellis Smith
I take it that, within reason, we shall be able to discuss how the accumulated profits can be used in future?

§ The Deputy-Chairman
The accumulated profit is assigned under this Clause. If this Clause is passed, we cannot go back on that matter. This is the point at which to discuss the accumulated profit.

§ Mr. Smith
Thank you, Mr. Williams, for that advice. May I emphasise the observations that I was making about premiums, when I received the advice of my right hon. Friend? I happen to come from a locality which has probably taken more advantage of the facilities provided by this Bill than any other locality. In that area there would have been thousands more unemployed but for that fact. The chief complaint appears to have been that they considered the premiums too high. In industry one has constantly to have regard to the cost of production, yet there are charges of all kinds on the products turned out of the factories.
2289 This is a serious matter. If the Department are covering themselves one can understand them wanting to make a business proposition of it. The accountancy has probably been done as efficiently as in the best firm in this country, and the success of the management of this fund is probably an indication of the efficiency of British enterprise. I do not want anybody to misunderstand me. I believe that the Russians also have been concerned about the premiums which have been charged. Therefore, I think the Committee should be given some information on those points. I understand that the profits that have been made on the management of this fund have accumulated in the past to the extent of approximately £1,500,000. Is that so?

§ Mr. Dalton
Approximately.

§ Mr. Smith
I am optimistic enough to believe that if we pursue an economic policy in future that will enable this country to work to its maximum industrial capacity, the profits will be much greater than they were in the past—if there is a bigger turnover.

§ Mr. Colegate
There will be bigger risks.

§ Mr. Smith
I agree; but I hope that we shall profit by our past experience and avoid the effects of the international situation that we had before the war. If the big nations will pursue a policy of attempting to stabilise world conditions, the effects may not be so great as in the past. If that reasoning is correct—and I hope it is—the question will be, How are these profits to be used? The Secretary of the Overseas Trade Department referred to international merchanting. I believe that there will be an enormous amount of that after the war. One of the most important questions with which the world, and especially the big Powers, will be faced will be the use to which we put the accumulated surplus stocks that will arise, first, out of war conditions, and, second, from the increased mechanisation of agriculture after the war. Here is where the big Powers, in particular, can lay the foundations of an early restoration of international trade. This will become an urgent matter immediately upon the termination of hostilities, and I ask if these profits are going to be used to assist us to deal with these surpluses. I have a statement here which was presented to the House in 1941. In 1941 we had a number of 2290 those statements, which people are beginning to forget now. I think those were great steps forward in the right direction, but, unfortunately, as we have got through the critical situation we were in then, the same attention is not being given to these matters. These White Papers deal with the surpluses that we built up in New Zealand and in Australia.

§ Mr. Dalton
What is my hon. Friend quoting?

§ Mr. Smith
Command Paper 6188.

§ Mr. Dalton
What is the title?

§ Mr. Smith
One is a statement of policy in regard to New Zealand surpluses, and the other is a statement of policy in regard to the Australian surpluses. The accumulated profits should be used for facilitating after the war the same kind of co-operation that is taking place between the Commonwealth nations during the war. Here is where Britain can lay the foundation of a new economic policy, provided we are prepared to apply modern policies to our post-war needs. It was either the President of the Board or the Secretary of the Overseas Trade Department who stated that the risks within the Commonwealth itself would be relatively small. I readily accept that, but there will be great risks for some time with regard to insurance and shipping. Therefore, in these exchanges, concerns will probably want to utilise the facilities provided in this Bill to cover the increased charges that will arise out of the risks on shipping.

§ Mr. Johnstone
My hon. Friend made a point about the premiums which are charged. I hoped that my right hon. Friend and I had managed to clear up that matter on the Second Reading. One cannot take very abnormal premiums and make no profit. In fact, the trading accounts of the Department over a long period of years almost exactly balance. The reserve in hand of £1,250,000 is very modest, in view of the scale of operations of the Department; and before the war ends that will have been further reduced owing to abnormal losses which the Department has been bound to make during the war. I think it is fair to say that the premiums have been very accurately and efficiently fixed, so as to produce neither a severe loss to the Exchequer nor an abnormal profit to the Department, 2291 and I think we can congratulate the underwriters employed by the Department upon that fact. As to the use of this reserve—for that is what in fact it is—I should have thought it was clear that for the scale upon which the Department has been operating the accumulated reserve is only just about big enough to carry the business.
I should very much regret, and I think it would be very inappropriate, if this accumulated reserve were diverted to any other purpose. It would produce rather a peculiar state of affairs, because the objects to which my hon. Friend would like to devote any such profit—if profit it may be called—would remain every year in extreme suspense about what was going to happen the next year. Let us assume that one year the Department makes £100,000 profit—if profit you like to call it. Presumably that £100,000 will be allotted to the purposes, about which I am not clear, to which my hon. Friend would like it diverted. If in the following year the Department makes a loss of £200,000, is the beneficiary in the good year going to be made responsible, or what is to happen? Or is it only when a profit is made that the sum is to be allocated to this special purpose? If my hon. Friend has in mind some useful purpose which can be served, in connection with Empire trade, by the allocation of a sum of money, I suggest that it is not from this source that it should come. He made special reference to shipping risks after the war. There is no doubt that for some time after the war, as after the last war, there will be unusual risks from mines and so on, but it has never been the practice of the Department to go in for marine insurance, and we have no practice in it. We should have to acquire special underwriters, with marine knowledge. Marine insurance is a very great speciality of the United Kingdom, and I think it is adequately looked after by Lloyds and the companies.

§ Mr. Granville
I am a little disappointed with the reply of the Secretary of the Overseas Trade Department and very sorry that he was not more responsive to the suggestion of my hon. Friend the Member for Stoke (Mr. Ellis Smith), who has been sitting through this Committee stage with great patience and has at last, with great Parliamentary 2292 skill, been able to demonstrate that the party for which he has been speaking is very anxious to promote Empire economic unity. We have had indications of this trend in that party in the speeches of the hon. Member for Seaham (Mr. Shinwell), and I gather that the Labour Party is now overwhelmingly in favour of finding some method, under this Bill or otherwise, of increasing and stimulating Empire economic unity.

§ Mr. Ellis Smith
This matter needs to be made quite clear. There has, unfortunately, been a great deal—

§ The Deputy-Chairman
This discussion is getting much too wide. The Debate has already gone very wide.

§ Mr. Granville
I intended only to refer to that matter. I hope the right hon. Gentleman will bear in mind the speeches on this subject, and will discuss it with the Dominions Office and the Colonial Office, to find some method of earmarking part of this fund for stimulating export trade from this country to the Dominions and to finance and assist some of the suggestions made during the Committee stage. I hope that the right hon. Gentleman's response to the suggestions of my hon. Friend are not the last word, and that he will give this matter further reconsideration.

§ Commander Prior
I have worked for over 20 years in the commodity markets in many parts of the world, and may I, therefore, be permitted to thank the President of the Board of Trade for having included primary products in this Bill? The usual manner of financing commodities is through the London money market. In pre-war years this market lost much of its elasticity and drive, and, in fact, during the Munich crisis, it practically closed and had to be prompted by the Bank. Although the British Empire is the greatest producer of commodities in 2293 the world, this is the first occasion on which primary products have been included in an export guarantee. Producers will be faced with a Herculean task to repair the ravages of war and to get their businesses under way again, for they are businesses on which depend the livelihood of very many persons. Here, in Great Britain, we are a great entry port of commodities for the whole of Europe, with the various businesses of wharfage, warehousing and exporting, quite apart from the questions of insurance and finance. Our whole civilised life depends upon an ample supply of basic materials, and any aid which can be given to the British exporter must, of necessity, improve the flow of his exports, and, in turn, not only benefit the British Empire but the whole world at large.
Many speakers in the Debate feared the competition of the United States, and inquired how we were to pay for our imports from that country. In years gone by, many of our imports were offset by the States' purchases of commodities in the British Empire. In Germany, I often argued about the very unfavourable balance we had, and I was immediately countered with the remark, "Look at all the raw materials we buy from your Empire." The Government have always been criticised when a Department makes a loss—

§ Mr. Deputy Speaker (Mr. Charles Williams)
This is a Third Reading Debate, and it has nothing to do with what the hon. and gallant Gentleman would like to see in the Bill, or with his experiences. These are matters which might be suitable for a Second Reading speech, but are unsuitable now. The hon. and gallant Member can only deal with the actual contents of the Bill.

§ Commander Prior
The only criticism that I would make of the Bill is that it is too small. Manufacturers have already written to me saying that they will use this Bill to a very great extent, and the President of the Board of Trade has already indicated that that difficulty may very largely be overcome. I desire to thank the President for having done so much to give help to a very deserving body of men, who, by their products and their exports, will do so much to improve and promote the prosperity of the world.

§ Mr. Ellis Smith
We welcome the introduction of this Bill, and we have facili- 2294 tated its passage through the House. I desire to thank the President and the Secretary to the Department of Overseas Trade for the courteous manner in which they have dealt with questions raised in the discussion.

§ Mr. Petherick
I do not think the Ministers concerned are other than happy at the progress which the Bill has made and the speed with which it has been carried through the House. I would like to say one or two things, even at the risk of being accused of having said them before, but I think they are rather vital. The first point is that it is not enough merely to raise the money to be given in export credits under this Bill. Its success will depend on administration, and I hope that, in future, rather more care will be taken to divert as much as possible of the guarantees Which are to be granted under the Bill to the Empire rather than to foreign countries. The total amount is limited, and I am very glad that it is, but I am not sure that it is not too large, in relation to the rest of the finance of the nation and its trade after the war.
I hope that as much as possible will be used in respect of guarantees for exports to the Empire, and, on that subject, I would like to make one point. It has been said that this is unnecessary, because the risk is such a good one and there is very little default. In some cases, of course, there will be exports for which the term will be long, and, perhaps, repayment is not due for four or five years, or, indeed, longer, and there, in the case of a private firm, will enter the question of solvency. Therefore I hope that, if there is any doubt, in a case in which it is desired to use the export guarantee, and in which a manufacturer makes application and his exports are to go to Empire countries, he will, if possible, even if the total amount available in respect of export credits at that moment happens to be small, be given preference over an exporter who is sending his goods to some foreign country.
There is one more point, and, though I think it is a repetition, I think it is very important. I hope that these guarantees will not be given in the case of those countries which have a favourable balance of trade with us. If a country has a favourable trade balance of, say, 2295 £20,000,000, that is to say it exports £20,000,000 worth more to us than it buys from us, that country will have £20,000,000 sterling available for use in buying British manufactures. There is no necessity whatsoever, so far as I can see, to give further export credits on top of that, and our Government should tell that country, "You can use up your £20,000,000 sterling which you have got in buying goods from this country."

§ Mr. Benson
May I interrupt my hon. Friend? A moment ago he said he hoped that the export guarantees would be directed towards the Empire. Now he says that any country with a favourable balance with this country should not be allowed the guarantee. There is no single Colony or Dominion that has not a very large credit balance in this country, and my hon. Friend's proposal would cut out this guarantee completely with regard to the Empire.

§ Mr. Woodburn (Stirling and Clackmannan, Eastern)
The hon. Member has raised a very important issue of trade. If his arguments were accepted, would it not mean that there would only be bilateral trade? If there is multilateral trade, the payments by export balances may not be made at all, because they may be paid for indirectly.

§ Mr. Petherick
My argument was only applied to foreign countries. I am quite aware that some Colonies have favourable balances with us, but some of them have not. I confined my argument to the case of foreign countries, and I said that, if one has sufficient sterling at its disposal with which to buy British goods, we should not pledge British credit by giving further export guarantees that are not necessary. I do not expect a positive guarantee from the right hon. Gentleman in reply to that, but I hope that the Export Guarantee Committee will consider the matter and not be too liberal in the direction I have mentioned.

§ Sir William Wayland (Canterbury)
I congratulate the Government upon the Bill. As one connected with the export trade, I can say that it will be a very great benefit, especially to those who are not possessed of very much capital. Hitherto, those who have been offered very large orders from foreign countries 2296 have had to consider whether they could afford to finance them. If a business man thought he could make up the 10 or 15 per cent. balance which was required by depositing his documents, he could accept the order, but if he found he could not get that 10 or 15 per cent. balance, presumably, he had to refuse the order. Under the conditions of this Bill, that will not take place, for he would then be able to go to the Committee and say, "Here we have received an order from a foreign country"—South America or anywhere else—"and we have to find £100,000. We cannot find it, and we cannot accept the order, but, if you can advance or guarantee, say, £90,000 or £95,000, we could find the other £5,000." That is where the great benefit of this Bill will come in.

§ Mr. Dalton
I am grateful to my hon. Friends who have participated in the Third Reading discussion for their good wishes and for their support of the policy in this Bill. My hon. and gallant Friend the Member for Aston (Commander Prior), whose support I was very glad to have, has personal experience in regard to the value of Clause 2. I am greatly obliged to my hon. Friend opposite for the way in which he, and those who work with him, have assisted the passage of the Bill. I am also much obliged to my hon. Friend the Member for Canterbury (Sir W. Wayland). On the point raised by my hon. Friend the Member for Penryn and Falmouth (Mr. Petherick), he will not expect a firm commitment or a new declaration at this late stage. But what has been said will, I am sure, be pondered by the Advisory Council. Indeed, I shall ask them to read all the Debates on this matter carefully before setting forth upon their new and extended responsibility for the extension of credits which I hope this House is now going to approve.
We have had some very useful and interesting Debates, and with a final word on Empire trade, I will close. There is no difference of view anywhere in this House now as to the great importance of expanding and extending Empire trade by whatever means possible. If it was ever controversial, it is controversial no longer. There are still differences of view on the best way to do it. Whether this Bill is the mechanism for doing it, or whether it should be achieved by other 2297 means, we are all agreed on the broad objective, and if there is anything that I can do, and that we can do in our Departmental work, we shall do it. I hope that the House will now give us the Third Reading of the Bill and I wish to express thanks to all those who have contributed to the discussion and illuminated the subject.