FAR EASTERN TRADE

HC Deb 04 November 1948 vol 457 cc1092-134

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. J. Henderson.]

6.57 p.m.

Mr. Rhodes (Ashton-under-Lyne)

In the absence of the hon. Member for Brighton (Mr. Teeling), I wish to raise the question of Far Eastern trade? I had the privilege of being in Japan last October and November with the Parliamentary delegation which was sent out from this House. Since that time, I have taken a great deal of interest in the progress of the economic development of Japan. Some of that development, mainly textiles, concerns constituents of mine who work in cotton mills, the trade which I am engaged in, namely, the woollen trade, and also affects the rayon industry, real silk and the manufacture of it in Macclesfield.

It might be a good thing in developing my point if I were, in some slight measure, to go over the principal operation, the occupation of Japan, and what has happened since. When General MacArthur occupied Japan, after a series of brilliant victories in the Pacific, he had three main tasks: one, the occupation; two, the destruction of the military potential of Japan; and, three, the setting up of a new political entity and the introduction of democratic methods. The first—the occupation—was comparatively easy, because once the naval forces of Japan were destroyed, it was easy to separate the islands' control communications and take possession—so easy was it that when a force of 6,000 American Marines landed in Yokohama Bay there were 1,000,000 men under arms on the plains of Tokyo, and not a single violent incident happened.

The Japanese troops were ordered by the Emperor to lay down their arms and to submit without a struggle. The demilitarisation of Japan was then carried out. In fact, the Japanese outdid the Americans in their enthusiasm to get rid of armaments and military institutions. Immediately, Japan adopted a policy of non-violence on the lines advocated by Mahatma Gandhi in India. Indeed, it is true to say that since the occupation three years ago there have been only six known cases of violence against the American occupation troops. Very quickly the naval installations at places like Kure were closed down, and soon the Japanese war potential was destroyed.

The third objective, the political objective, was not so easy. General MacArthur knew that it would not be easy; he was under no illusion before he went to Japan about the difficulty of his task, and under the circumstances he has done a really remarkable job in the way he has carried out the occupation. Before he landed General MacArthur was given certain White House directives. One of the first on his list was that trade unions should be established. Again, the Japanese jumped to it to carry out the wishes of the Americans. So much was it the case that within 12 months of General MacArthur's issuing the edict there were 23,370 unions in Japan. A family could be a union on application. There are large unions in Japan such as those of the transport industry, but the majority of the unions are very small.

The Americans were rather handicapped in that they had nobody to explain trade union principles to the Japanese, so General MacArthur sent to America asking for volunteers from the unions in America to come out to Japan and help with trade union education. From that appeal they got one man, a gentleman called James S. Killan. It is rather significant to notice that James S. Killan is no longer there. In each of the three years since the occupation there has been the threat of a general strike in Japan. In each of those three years the strike has been tabooed by General MacArthur.

Mr. M. F. Titterington (Bradford, South)

Is not my hon. Friend aware that when General MacArthur sought to inculcate Western ideas of trade union, cooperative and general organisation, a gentleman named Mark Star, who was the education officer for the National Organisation of Garment Workers in America, was invited to undertake that work? When I was in Tokyo in 1946, he reassured me that he was undertaking the job in a manner consistent with European standards of trade union, co-operative and general organisation of labour matters.

Mr. Rhodes

I quite agree that when my hon. Friend was in Japan in 1946 Mark Star was there, but when we were out there he was not there; he had, for some reason or other, gone back to America, and James S. Killan was the only man that General MacArthur could get from unions in America—which, incidentally, was the A.F. of L.—to come to Japan to help to organise the unions there. I think my hon. Friend the Member for Norwich (Mr. J. Paton) will substantiate that, in the light of an interview we had with General MacArthur before we left.

James S. Killan set up inside the economic and scientific section a small department, which is presided over by General Marquat. When we were there the number of personnel was very small in relation to the size of the job. The trades unions themselves were, in the first instance, set up on A.F. of L. and C.I.O. patterns, as in America. During that time various discussions took place between the Japanese trade unions leaders, the Government and S.C.A.P. regarding labour conditions, wages, the fixing of prices, inflation and so on. But most of the good intentions that so characterised the first two years of the occupation have now been lost sight of, because within the last few months collective bargaining in Japan has been banned. Evidently the reform period is over.

We must take serious note of these things, because it is not a bit of use our going to workers in Lancashire and Yorkshire and inviting them to staff our mills unless at the same time we assume a responsible attitude to what is happening in Japan, and face the likelihood of competition and the difficulty the textile trades will be in when competition really begins. I shall show in a moment how it has begun.

There can be two phases. First, the banning of collective bargaining automatically puts back the power into the hands of the people who had it before—the Zaibatsu. Since the beginning of the occupation they have never been far away. I will give one illustration to show what I mean. During our visit we went to Kyushu in the south, where we visited a coalfield. There were 4,760 workers engaged in that particular colliery. We scrambled over coal and went down shafts for the whole day, and at the end of the day the American officer asked us whether we would like something to eat. He asked us whether we would like to go to the welfare club connected with the mine. We were happy to accept the offer because we thought that we should meet some of the workers during their off-time.

We went to a lovely house on top of a hill. After we had taken off our shoes, we saw an unusual man on the verandah. He was a very aristocratic-looking person, and someone whispered to us, "That is Baron Mitsui." As I was not keen to shake the hand of anyone connected with the Mitsui clan, I dodged the first introduction. But I noticed that it was not possible to sit down until Baron Mitsui had himself sat down. I was a bit puzzled where he came in. So I tackled a Japanese on my left and asked why Baron Mitsui was there. I was told that he was the head of the whole of the coal and fuel industry of Japan before the war, and that he had been purged. I asked why he was there if he had been purged. "Oh," said the Jap, "he is now the welfare officer." He was living in his own house, and to all intents and purposes was carrying on the supervision of his own business behind the scenes. The Zaibatsu are nearly back where they were.

The position now is that potential competition is worse than before the war. Then the Japanese economy was at least spread over the whole range of manufactured products, whereas today it is confined almost entirely to textiles. The Communists in Japan number approximately 80,000. What can we expect to happen when a trade union movement which started off with so much hope and promise suddenly finds itself cut off by the embargo on collective bargaining?

It means that as soon as the Zaibatsu phase is finished other difficulties appear from the extreme Left. I really do not wish to discuss the political side at all, but the danger to our trade which can arise as a result of the present set-up in Japan. Textiles are the most important exports for Japan, everyone agrees, and we are trying to fall in with 'the American plans as far as possible. We agree that Japan should be able to live, but how on earth we can forge a solid plan for Japan, with her increasing population at the rate of 1,800,000 a year, I really do not know. It takes us all our time to plan for our almost static popu- lation, let alone devise a plan for a situation of that kind.

The Japanese are a very disciplined race. It may be said that they would still have been a disciplined race if the Emperor had been removed, but I have thought all along that the retention of the Emperor was a very big mistake. I will give one illustration of the terriffic discipline of the Japanese. We went to Osaka to see the cotton and wool mills in that district. We were to go on the midnight train. When we came to the platform on the railway station we were met by the station master, an officious little man with a peaked cap. The train on which we were to proceed was on the right, and just as we arrived at the entrance to the platform a train drew in on the left and at least 1,000 people got out. The little station master, seeing that these people were likely to get in our way, blew his whistle. The incredible thing is that the whole of that crowd stopped dead and turned to see why the whistle had been blown. The station master waved them on one side, and pointing to us said, "Important people." They backed to the stationary train standing behind them, and bowed. Not a single person left that railway station until we had gone past. That shows the extraordinary amount of discipline that can be expected.

The Japanese are a very hard-working people, and they are a virile people. Despite the tremendous increase in population they are not losing their virility. During these last few days I have been given to understand that there is an increase in machinery development in Japan. The machinery potential there for textile machines is immense. There is one firm in Japan whose yearly production is equal to the maximum number of spindles installed by America in their peak year of 1937—namely, 732,000. Can we be told what is happening in this connection?

Last year S.C.A.P. had a plan to set limits to textile production as follows: cotton, four million spindles; woollens, 753 cards. There was also a limit to the tonnage in the staple rayon and continuous filament industry. Since then they have shifted their ground, and I understand that during the past few months a new five-year plan has been evolved. That plan was announced on 17th May. Some of us wanted to know exactly what it was, and eventually an inquiry went back to General Marquat asking him about the new levels for rayon and cotton exports and woollen goods, which were very high. General Marquat replied that no proposals had been made by the Japanese Government for larger exports of rayon than the S.C.A.P. programme, or their prewar levels. He said that many of the erroneous reports had gained credence through repetition, and were without basis in fact. Our information was based on figures taken from an official hand-out to the Press in Tokyo, on 17th May.

We understand, however, that the statement by General Marquat did not quite square with the facts as the five-year plan is now established. The five-year programme in respect of rayon, cotton and wool is very much in excess of the S.C.A.P. programme for last year. I would like to know whether this five-year programme is authentic or not? What are the export targets for the rayon industry? The published figures are in three groups. It is difficult for anyone to ascertain the export target. I would like to know what are the floor prices of Japanese textiles? So far as I know, they have not been determined. I have a letter here which was addressed by an American gentleman, who is in this country at the moment, to Mr. R. D. Hugentobler, representing the National Wool Textile Export Corporation, in New York. The writer says of floor prices: It will be the seller's responsibility to see that the price is not below his minimum permitted price. He says that the new plan implies much more general and less detailed control over Japanese business by the American authorities in Tokyo, and involves a much larger degree of responsibility and discretion for the Japanese firms themselves. I would like to know how these floor prices are agreed. Are they arrived at on New York prices, or on a loose general assumption that the prices are reasonable? Unless we can get some information about the type of competition that we are to expect from Japan, we must be careful not to mislead the people we want back into our own mills. If I am told: "Produce your proof that there is any competition." I have here a letter from a South African merchant, who says: The danger is not theoretical; it is both actual and factual, and the root cause of the trouble lies with the American authorities in Japan in permitting such competition. We may say that this competition is directed with equal efficacy to the cotton piece goods and the rayon piece goods trade, and that it will not be long before Yorkshire and Lancashire begin to feel the effects of this competition, because offers from Japan are coming in in most tempting form so that the local buyer is compelled to purchase the stuff if he is going to be at all competitive in this market. The outlook is a most unpleasant one. The Americans have certainly unleashed a Frankenstein monster upon us—the same that made trading conditions in this country a plague before the war. I have a list of six specifications of Japanese clothes, which are undercutting ours in South Africa. When I was there in March last, I set my face against being influenced by talk that we were being subject to unfair competition. I said, "Produce your samples and evidence; let me see what there is in it. It is no use my going back to Britain and merely saying that there is a lot of competition. Let me have a look at what you have got." I have now six different samples, which can be seen if anyone is interested. The South African merchant I have just mentioned also wrote: We would heartily encourage these facts being brought to the attention of the British Board of Trade, because it seems to us that short of governmental action vis-à-vis the American occupational authorities in Japan nothing practicable or helpful can be achieved. It is the simplest matter in the world for the British Board of Trade to obtain, through their representatives in Japan, exhaustive details of the woollen production and offerings of Japanese manufacturers. Before sitting down, I should like to mention one other matter, and that is that some time ago an announcement was made to the trade that the most-favoured-nation treatment was being extended to Italy. That rather shocked a lot of people, particularly the people concerned with the rayon industry. The effects of it have been seen since, not only in South Africa but in New Zealand and in Australia. At this juncture, under no circumstances should the most-favoured-nation treatment be accorded to Japan before the trade and the responsible people have had an opportunity to have a say in the matter and present their case. That is all I wish to say on that subject at the moment.

With regard to the question of possible competition from other countries in the East in textiles, may I mention China. Some time ago we were apt to overlook the productive potential of China. While the new plan in Japan envisages 5.9 million spindles working three shifts, with a production of 170 pounds of cotton yarn per annum per spindle, it is interesting to note that present spindleage in China is in the region of four million. This year they are hoping to increase by a substantial amount exports of cotton goods to the United States, which last year were in the region of 30 million dollars. I would say to those responsible that that particular aspect needs watching as well.

I have nothing more to say on this subject at the moment. I notice that the hon. Member for Brighton, who has his name down for the Adjournment, is now here. I do not know what he is going to say. I had intended to answer him, but unfortunately he could not open the Debate owing to business elsewhere.

7.34 p.m.

Mr. William Teeling (Brighton)

Mr. Speaker, I should like to apologise to you and to the House for not being here at the moment when the Adjournment was moved. As no doubt many hon. Members will know, at the present moment in this country there is a delegation from the Finnish Parliament, and not unnaturally that delegation wished to meet my right hon. Friend the Member for Woodford (Mr. Churchill). The only rime that that could take place was at seven o'clock this evening, and as I led the delegation from this Parliament to Helsinki a year and a half ago, I wanted to go with them. However, the hon. Member for Ashton-under-Lyne (Mr. Rhodes) knowing this, was kindly prepared to take my place. He has said many interesting things and gone in great detail into a number of points with which no doubt the Secretary for Overseas Trade will be able to deal.

When I originally put my name down for this Adjournment it was in September during the last Session. Since then much has happened. I put it down for a specific purpose connected with trade in the Far East which I wanted to have brought to light. However, there is now no need for a discussion on that particular subject, as I gather everything is being gradually eased out and the situation put straight. That in no way made me wish to give up the Adjournment, especially on a night like this when there is so much time to spare. As the hon. Member for Norwich (Mr. J. Paton) and others have recently pointed out, the subject of the Far East is one which gets terribly little time in this House—far too little time in comparison with its great importance not only for this country but for the whole Commonwealth.

Since we came back, at least two Members have spoken in the Debate on the Address on the subject of the Far East and I do not think—I certainly have missed it if it has happened—any responsible Minister has answered any of the points that were put by those Members, nor indeed did they ever answer them when I put somewhat similar points in previous Debates in previous Sessions. Why they do not seem willing to answer I do not know. It may be that they feel there are only a few people in the House who are interested, and, therefore, do not bother the House with such technical details when the final summing up takes place in the Debate. On the other hand, it may well be they would rather let sleeping dogs lie, being not at all too happy about the position. It is only on the Adjournment that we can nail the Government down and get an answer even in a short time.

The hon. Member for Leek (Mr. Harold Davies) on Friday last took up the question of Japan from a foreign affairs point of view and got a ten minutes' answer from the Under-Secretary of State. To my mind it was not at all a satisfactory answer, but at least it did show that the Foreign Office definitely wanted a peace treaty as soon as possible. By asking the hon. Member for Leek to give them any suggestions as to how to set about getting it, other than the memorandum which was sent to the United States Government as far back as December, the Foreign Office showed that that was the only idea they had as to what they should do. By asking the hon. Member to make some suggestions, the Foreign Office seem to show that they are a little nonplussed as to what to do next about a peace treaty. Now we come to another discussion on the Adjourn- ment which is more on trade, and we hope to get the Board of Trade to give us an answer from their angle.

I am inclined to think that the most important thing with regard to Foreign Affairs in the East is trade, and, therefore, I am more than glad that we shall have an opportunity of getting a fairly lengthy reply from the Board of Trade, not only on the few questions which I have to put, but as to what is going on out there by way of trade. People in business in the City of London and in the North of England, members of associations of traders connected with the Far East, and bankers concerned have been almost all at a loss to know what is going on, because it is so difficult to get information out of that part of the world. It was so especially with regard to Japan where, at one time, it was almost impossible to wire or communicate with any person without having to go through the S.C.A.P. So, pretty well everything passed through the Board of Trade or the Foreign Office. More than in the case of any European question, we have been in the hands of the Government through shortage of private contacts, and we must ask them for some details as to what is going on.

The hon. Member for Ashton-under-Lyne spoke in great detail about Japan. In a few minutes I, too, wish to speak on Japan. But there are other aspects of the Far East that have to be looked into and thought about. It is a most vital area for Australia and in many ways for the United States. It is particularly vital to Yorkshire and Lancashire, while people are apt to forget that it is vital also to France. All those countries are interested in what is going on there at the present moment. Can we therefore be told about how far we are in touch with the Governments of those countries in regard to the moves that we make?

One area which is never discussed or talked about is the Philippine Islands, which have a population of more than 13 million. They were under the United States until about 10 years ago. They got their independence more or less on commonwealth lines and today they are completely independent. The United States have, of course, got them inside the dollar area, and trade with them very considerably. The Philippines have a tremendous possibility. They have gold mines and a number of things vitally necessary for the whole of the world. The United States are not willing to put too much money into them and are not responsible for all that is going on there.

I am not at all happy about what Great Britain is doing. I feel that she is not paying enough attention to those islands and to the possibilities that can be realised there. France is doing far more. Do we realise that the quickest way by far to the Philippine Islands is to go by Air France? Yet to do so, one has to start from England. One can get there in half the time taken by any British line. The French are very proud of this arrangement and are now talking of the possibility of some arrangement being come to with Indo-China whereby they will practically hand over Indo-China to the Indo-Chinese, getting one small town on the coast not very far from Hong Kong. They intend to turn that town into a second Hong Kong, as a second great trading centre. They are hoping to trade with the Philippines from there and with Siam. Are we watching that development to see what is happening?

Perhaps we might be told a little more about the present position in Hong Kong generally, and about its position vis-à-vis China. I remember that in the previous Session an hon. Member who was in China at the time that I was in Japan, made what I considered a rather strong speech on the subject of smuggling from Hong Kong. We ought to be intensely proud of Hong Kong, which has done extremely well since the war and has kept our flag flying in the East. All the talk about smuggling with China is deeply resented out there. We know that there is a black market attempting to evade Chinese customs and regulations—or there is supposed to be—but we should realise also that Hong Kong is doing everything it possibly can to assist the Chinese Government to carry out their own regulations. Hong Kong has introduced controls to regulate the imports of Chinese produce which are passed through Hong Kong. She has stopped the import of Chinese currency and has done other things to support the Chinese authorities. She has agreed to an inspection service operating in Hong Kong territory and territorial waters so as to prevent smuggling.

I believe that I am right in saying that nowhere else in the world can it be shown that the Government of a territory have gone so far to assist the Government of another and neighbouring territory in the enforcement of their own regulations. It is time that we gave a bit of credit for what is being done in that matter instead of making criticisms and suggestions about smuggling and the black market, which show a grave lack of fairness. The economic and political instability in China has undoubtedly diverted to Hong Kong a large number of Chinese, something like one million people. Some part of the entrepôt trade which was formerly carried on in Shanghai has been diverted to Hong Kong. But it is wrong to think that instability in China is in Hong Kong's interest. That is not the case. The long-term prosperity of Hong Kong will always march together with that of China as a whole.

We realise when we are thinking of trade in the Far East that Hong Kong cannot really carry on without China, at least to no very great extent. Equally, China needs Japan. Japanese industries cannot carry on without China. As a market, those two great countries and the small island of Hong Kong should be considered together in any plans and arrangements made by the British Government for trade development out there. In the years to come we can get from the Far East all sorts of things like oils and groundnuts, as we are trying to get from Africa, if only we can get some form of peace in China and for Japan.

Therefore, I should like to ask the hon. Gentleman who is to reply to tell us exactly what is happening with regard to our policy, from the point of view both of the Board of Trade and the Foreign Office. I know that the hon. Gentleman cannot answer for the Foreign Office as such, but I would like a little assurance that the Foreign Office and the Board of Trade see eye to eye on all these problems. I have my doubts about it because I feel that the Foreign Office look upon the question of a peace treaty with Japan rather on the lines that the healthier and stronger Japan is—I am not talking in the military sense—the better is it likely to be in the long run for the whole Far Eastern position. They are a little apt to be impatient of the feelings of nervous- ness in Australia and in Lancashire and Yorkshire.

I have met even some English people in Japan and in the Far East who refuse to allow that Lancashire and Yorkshire have a proper case to put. That is a dangerous position from our point of view. It is absolutely vital that we should have a friendly agreement as well as a friendly trade agreement with Japan, but that we should, if possible not give away too much even if we are requested to do so by another great nation. The argument of the United States is that they have been pouring a lot of money into countries in Eastern Europe and elsewhere. Peace treaties have come, and the U.S. have left these countries, where Communism has since developed fast and furious. All their money has, in a sense, gone down the drain. If today they were to walk out of Japan after having poured much money into it, presumably there is a risk that the Communists would take over and that in some way Russia would gain control. That argument is strongly used by a large percentage of people in the United States, and indeed by an element in Japan at the present time.

Another argument which is also used by the United States—this is more by business elements—is that they have poured money in and that until they can get some of that money back they have no intention of getting out. Others say, "We are now pouring in this money and we must go on doing so, but if we do we see no reason why Japan should not have most-favoured-nation treatment in other parts of the world, which we are helping with the Marshall Plan." From the United States point of view that is quite reasonable, but frankly I do not think that it is the idea of either General MacArthur or President Truman, and I am inclined to look hopefully at what has happened in the last few days in the United States from the point of view of the future peace treaty with Japan. I believe that this desire to look at the matter from an entirely financial point of view will possibly diminish, and that we may, in the not far distant future, find the United States more willing to agree with our ideas as regards peace.

Exactly what are our ideas in that respect? Is it to be the Foreign Office idea of giving perhaps a little too much to Japan, or the Board of Trade idea—I hope it is the Board of Trade idea—of making sure that some agreement is made whereby in some way we in Lancashire and Yorkshire shall be protected as far as possible, or that at any rate something shall be done in the Far East which will help our own trade with Japan. Since 1946, Great Britain's position in Japan has considerably improved. It was pretty bad, in all conscience, in 1946, and was none too good in 1947 when some of this House were there. But it is gradually improving, slowly but surely. Whether the American position is not improving by that much more, so that we still remain relatively as far behind as previously I do not know, and I should like some enlightenment.

We know that there have been trade talks about Japan, and we know that they have reached the stage of a trade agreement, which is to be announced—at some future date. I understood in July that it was almost on the verge of being announced. September came, and I put down another Question to see how things were going. Again I was put off, and the information was that the announcement was to be in the very near future. Rumour now has it that the announcement is to be in the even nearer future; it may be in the active future by now. I should like the Minister to tell us, if he can, whether that is to come about in the near future. If it is, in view of the fact that there is unlikely to be another opportunity such as this for a full discussion of the subject, could he give us just a few points as to what is likely to be in that agreement? How far can he go in telling us how far our traders can be helped; whether it is possible, for example, to have some kind of agreement about the exchange value of the yen, which is vitally important for the traders if we are really to get down to business. We also want to know what type of goods we are to get and, if he can tell us, what will be the position of Japanese goods from the most-favoured-nation aspect which the hon. Member for Ashton-under-Lyne raised.

I do not think that total peace is likely in the immediate future, but some kind of token peace could be brought about whereby the Japanese could again carry on, with reparations cleared up, and with definite arrangements made for the future regarding the repayment over a period of all the debts and loans of the past. I believe that Australia would like that. We might even be able to get China to agree to it, and it is also possible, in the long run, even Russia. All these things are quite possible.

Before closing, I should like to pay my tribute to what I have noted, since I came back from Japan a year ago, of the great success which our Ambassador there, Sir Alvary Gascoigne, has been able to achieve, with the aid of the Board of Trade officials out there, slowly but surely, to improve the position of the British trader in Japan. More than that he cannot be expected to do. The rest must be done in Washington and London. What is undoubtedly outstanding is what he, and also those remaining troops of the British Dominions under General Robertson, have been able to do in their own way to bring about a better understanding and a better position in Japan.

7.56 p.m.

Mr. Fairhurst (Oldham)

The hon. Member for Brighton (Mr. Teeling) has addressed himself in a rather sweeping way to the ramifications of foreign trade, and I shall not be able to follow him in detail. He has touched upon so many aspects of foreign trade that I should find it invidious to attempt to select more than one point upon which to touch. That point is the one raised by my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes). Hon. Members know that my hon. Friend is greatly interested in the textile industry of this country, Furthermore, he has sought much information from Japanese sources, and has tried to inform himself about what is taking place in Japan. Consequently, he has been able to give the House much valuable information. I was deeply interested in what he had to say about the possible future development of the Japanese textile industry and its likely repercussions upon our Lancashire textile industry.

Long before the war Lancashire had felt the full blast of the developing and progressing textile industry in Japan. This had affected Lancashire considerably, and I well remember how difficult it was proving in those days to meet Japanese competition. The participation of the Japanese in the last war, and the dropping of the atomic bomb in the closing stages of that war, put a stop to that state of affairs for a period, but we cannot expect such a situation to continue for any length of time. My hon. Friend also told the House that the Japanese, as a people, are virile, disciplined, ambitious, and a well-ordered race. That is a solid basis for any nation to work upon, and we must not close our eyes to that. In addition to that I would say that they have a textile industry which is as efficiently machined as the Lancashire industry. There, again, is another solid fact which we cannot ignore. How are we to prevent, in a competitive world, Japanese competition from once again matching up to what Lancashire can do in the world market?

My hon. Friend also told us that for a period since 1945 collective bargaining had been allowed in Japan. But after two years it was stopped. He ought to have told us—or asked the question—by whom was it stopped? We must face the fact that it must be in the interests of the United States to develop Japanese textiles because they want to sell their cotton. If we cannot purchase the volume of cotton which they can grow obviously they want to sell somewhere else. Again, there was developing in the Japanese textile industry the tendency for the vertical method of production on a most ambitious scale. The industry was being developed from the bale of cotton to the final product, and much waste was being cut out. In other words, they were making use of modern methods of production, and that is another point we cannot afford to ignore in whatever may happen in the future.

We are told that Japan is developing industrially, and that the population is growing rapidly. Who are we to say that it should not? Are we to ask the Americans to stop them by economic pressure so as to make it impossible for them to feed their people? Of course, we cannot do such a thing. In this world of competition if we are to sell our goods in the international market we must build up a machine to do it efficiently and economically, and meet their competition. That is a very difficult thing to do when one compares the Japanese standards and our own, but it is a thing to which the Government must give serious consideration. Lancashire will have to face it in the not-distant future.

We are indebted to the hon. Member for Ashton-under-Lyne for bringing forward this point. I am very interested in the future of the Lancashire cotton industry. I want to see it flourish, and it is obvious to me that if we are to maintain an efficient textile industry in this country we are in duty bound to see that it is developed to the highest point of efficiency, both from the point of view of manpower and of machines. Otherwise—and there is no argument about it—we shall fail in this competitive race. We must realise also that in the future there is a place for the Japanese textile industry and a place for our textile industry. It must be secured by the developing of the social status of peoples throughout the world, especially where they are under-nourished and where standards are low.

I remember being told years ago that if the Indian people had an extra inch in length to their dresses, it would keep the factories going day and night for years to come. But the tendency is to cut some off and not to lengthen—even in spite of the "New Look." The fact remains that in India and in China, and among those peoples whom I might describe as the submerged peoples, where social conditions and standards are very low indeed, the Japanese, American and British textile industries could have a developing and progressive industry by building up the social standards of those peoples. We must see to that. It is a point that ought to be discussed, not only by our Government but by all the Governments interested in building up social standards throughout the world.

8.5 p.m.

Mr. Drayson (Skipton)

I listened with great interest to the speeches made by the hon. Member for Ashton-under-Lyne (Mr. Rhodes) and the hon. Member for Oldham (Mr. Fairhurst). I appreciated the speech of the hon. Member for Oldham very much more than that of his colleague. The hon. Member for Ashton-under-Lyne likes to try to mesmerise the House with textile technicalities, but I have never heard him get down to the actual problem at issue. I listened very closely to see whether he would put forward any solution to the problem of Japanese and Chinese competition, but I failed utterly to find any constructive suggestion.

On the other hand, the hon. Member for Oldham did ask the question how we were to prevent or overcome this competition. Towards the end of his speech he gave what I thought was the solution, that we should develop our efficiency to the maximum, both from the point of view of machines and men. I was also interested in his comments on his experience of the vertical side of the industry in Japan, which, he said, had many advantages over the horizontal grouping. I have always understood that it was the implied policy of the Socialist Party to favour horizontal grouping in the textile trade and that that was why they brought in their Spinning Subsidy Bill.

They thought that if they could get the whole of the spinning section into nice big groups of 500 spindles or more, then when they came to nationalise the industry it would all be ready for them to do so. They might have said, "While we will not nationalise certain sections, perhaps the small weaving sheds, at least if we have all the spinning in the hands of big groups we can take those over, and all the rest in the trade are dependent in the first instance on them for their yarn." I hope that the hon. Member for Oldham will talk to his colleagues about this and stress the advantages in the textile trade of the vertical set-up rather than the horizontal.

In Lancashire and Yorkshire, when the word "Japan" is mentioned, our minds immediately turn to possible competition. In other parts of the country or the world, the word "Japan" may mean something else, but to us in the textile country it means nothing but the fear of competition. Only today Reuters sent out a message pointing out the increasing competition from Japan, and from China—which is now a new factor in the textile trade—against our products in the Far East, and particularly in the Netherlands East Indies. I gather that China has already had orders placed with her for, I think, 35 million yards of cloth at a very much reduced quotation compared with anything that the Americans were able to offer.

I thought that the hon. Member for Oldham put his finger on the right spot when he said that it might be in the American interest to build up the textile trade with the Japanese, because they would be among the biggest buyers of American cotton. We naturally hope that the dollar position will so improve that we in this country will once again be able to take our full share of the finer American cottons, rather than having to go elsewhere as I believe we do at the present time. In the Press almost every week we see some mention of the fear of Japanese competition. At Geneva the other day the International Labour Office discussed this problem. The representative of the United Kingdom described the situation now developing in Japan as a danger to the other producing countries. We hope that the Government will be able to tell us how they hope to deal with this situation.

I am sorry that the hon. Member for Ashton-under-Lyne is not here at the moment, because he may wish to elaborate my next point. He said that we could not sincerely ask people to go back into the mills unless we could give an answer to this problem. Those people say, "We come in, but what guarantee have we that the Government are tackling this problem"—if they are capable of tackling it—"so that we can he assured of continued employment in the industry?" I have heard the suggestion that the immediate objective in the textile trade should be to man all our idle machines. Undoubtedly that is most desirable. If we are manned up to capacity and do not have idle machinery, at least we shall reduce our overhead charges by a small amount and we shall slightly decrease the overall cost of our cloth.

I venture to say, however, that even additional machinery in operation cannot reduce prices to enable us to compete with Japanese goods. The assurance that the industry should give to those who enter it is that everything is being done and that the Government are helping in every way to re-equip the industry with modern machinery. The other day the President of the Board of Trade said that in Lancashire we wanted 30,000 more automatic looms. I do not say that the automatic loom is necessarily the solution of all our problems; but at least that was a constructive suggestion. Any improvement that could be made towards increased production by raising the existing labour force should be encouraged in every possible way.

I wish to raise another question which came to my notice recently. I ask the hon. Gentleman to make inquiries about an allocation of convertible sterling which was made to the merchants in Cyprus with which to buy Japanese cloth. I understand that the other day the merchants in Nicosia were invited to inspect the conditions of an offer of £15,000 of Japanese textile goods for which the British Government had made available credits of £15,000 in what I think must have been convertible sterling. They found to their consternation that the prices of these Japanese goods were about 15 per cent. or more below the cost of goods which they had been buying elsewhere. They realised that if they brought these Japanese goods into the island then their existing stocks would have to be drastically written down. My information is that the merchants formed a committee and decided to boycott the offer of the British Government to assist them in making purchases from Japan. This is a most serious point, and I hope that the Minister will look into it.

8.15 p.m.

Ms. John Paton (Norwich)

I am sure that the House is indebted to the hon. Member for Brighton (Mr. Teeling) for having put this subject down for discussion on an Adjournment Motion, and I congratulate him on having had the good fortune to put it down on a night when the Adjournment has come so early. I do not propose to follow the detailed arguments about the textile industry which have been the theme of most of the speeches we have heard. They have been necessary speeches, dealing with a most important problem which this country must face in the conditions brought about by the emergence of a new Japan.

Before I come to my main comments, I should like to join with the hon. Member for Brighton in the tribute he paid to our diplomatic representative in Japan, Sir Alvary Gascoigne—whose guests both he and I were for some delightful weeks last year—for the excellent work he has done and is still doing on behalf of this country in his difficult assignment in Tokio. I am very pleased to be able to join in the tribute, which I am sure is well deserved. I do not want to repeat the main arguments of a perhaps over-lengthy speech which I was privileged to make only last week in the Debate on the Address, when I spoke of the general situation in Japan and the Far East. My purpose tonight is rather to stress points which I think of great importance and which I did not touch upon last week.

Before I do that, I should like to deal with one matter raised by the hon. Member for Skipton (Mr. Drayson) and by my hon. Friend the senior Member for Oldham (Mr. Fairhurst). I refer to the over-inflation of the Japanese textile industry which is taking place now. So far as one can see, that industry is scheduled for almost indefinite expansion. Last week I drew particular attention to this matter. Tonight I wish to re-emphasise it in relation to what has been said already. The present tendencies in Japan under the economic controls of the American control organisation show a desire to develop a textile industry that would be immensely greater than it was before the war, with all the menace that that would hold to the many countries in the world that suffered from Japanese competition. That would be the gravest possible disservice to Japan itself, because it would result in a Japanese economic system which was completely unbalanced with, I think, about three-quarters of the entire economy of the country resting on the one industry of textiles and, therefore, liable at any time to the severest shocks from the movement of world trade.

I have previously made reference to an idea which I believe to be wholly unfounded. It appears to be thought that this emphasis in Japan upon the development of the textile industry is necessarily bound up with American self-interest in expanding fields for the disposal of their own stocks of raw cotton. I think that is quite a wrong idea. I am sure, from my own observations in Japan, from my discussions with economic experts on the American staff and with similar experts who were themselves employed in the Japanese textile industry, that that idea is founded on a misconception.

I think the explanation is far simpler. The American economic organisation in Japan is developing the textile industry, out of all relation to the rest of the Japanese economic system, more or less from pure necessity. They are striving in every conceivable way to reduce the extraordinary burden now being borne by the United States alone in sustaining the Japanese population in these difficult times, and they have naturally come, as we would come in that situation, to the easy development of textiles in an industry which has largely escaped the destruction of the war which other industries suffered, and for the products of which there is a ready market over great areas of the world. It is really from that purely expediency point of view that this overdevelopment of the textile industry in Japan is going on; but that does not m any way diminish the dangers that such a policy holds for the Japanese economy itself, for our own economy and for the economies of every other textile country throughout the world.

Here we have, undoubtedly, something of very great importance indeed. I think that, in our attitude to what has been happening in the Far East, we have been suffering very largely from the fact that our policies have been of a negative kind. We have never attempted, so far as any evidence that is available shows, to pursue a positive policy. I think we have been obsessed by the very apparent weaknesses of our position in the Far East. Anybody who has been in Japan and who has seen the inevitably overwhelming effect of the United States effort, against the tiny effect of any efforts that we can make, is very well aware of the position, but I think we have accepted the difficulties too readily. After all, when I have been making this appeal so often in this House, I have not been doing it only from the point of view of the resources of which we dispose in this country. I have been talking all the time of an attempt being made by the Ministry, in relation to this problem of the Far East, to mobilise, not the rather limited resources of the United Kingdom at this moment, but the much greater and more powerful resources of the British Commonwealth of Nations. These resources and powers are by no means meagre, and, more particularly, should be directed to policies devoted to the idea of trying to establish our position in the Far East.

Before I leave this phase of the subject, I would like to say a word or two on one aspect of the question of textiles which has emerged from the preceding speeches. The last hon. Member who spoke asked why it is that we on this side of the House, as he charged us, offer no solution of the difficult problem of textile development in Japan. I think he did far less than justice to the hon. Member for Ashton-under-Lyne (Mr. Rhodes), who has an immense and profound practical knowledge of all aspects of the textile industry, and who, therefore, speaks with authority upon this subject. Surely, the answer is that no one on these Benches would ever attempt to suggest that we ought to try by special devices to cushion Lancashire against the effective competition of other textile countries in the world? I am sure that no textile representative on this side of the House would ever dream of making such a suggestion; but what Lancashire is wanting is some assurance that she will not be subjected, in the markets into which she is entering in the world, to the completely unfair competition which she could not by any device hope to meet, and to which she was subjected by Japanese textile manufacturers before the war.

That was a competition not only based on the incredibly low standards of life of the Japanese labour force, but one that was bolstered and sustained by heavy State subsidies, by means of which prices were enabled to be cut in every part of the Western world, so that the textile industries of every advanced country found themselves unable to stand up against such competition. Lancashire has a right to expect protection from that kind of thing. I think that in the existing circumstances of Japan we now see the beginnings of an effective kind of protection. One of the results of the catastrophic destruction in Japan and of her occupation by American troops and our own has been that, in Japan now, there is, at least on paper, an extremely effective code of labour, welfare and social relations, with safeguards and regulations that ought to give to the Japanse workers, for the first time, the freest opportunity to organise and develop their collective power for the purpose of lifting and maintaining a good standard of life.

Before the war, the peak figure of membership of the Japanese trade unions, away back in 1934, never exceeded 500,000. Now the membership of the Japanese trade unions exceeds six million, and they are operating despite the recent military security regulations which I understand have been brought into operation. They are operating perfectly freely, just as freely as any trade unionists in this country, on all matters affecting industrial employment. Therefore, we have that great potential measure to begin with, and the opportunity now for the consolidation in Japan, as time goes on, of a really effective labour movement which will continuously raise the standards of life of the Japanese people and maintain them against anything which it may be possible for the employers to do.

The second thing, surely, is this. Japan, in the new circumstances in which she is operating, will no longer find it possible to bolster her export goods with vast sums of public money which formerly constituted one of the factors in maintaining the competitive levels at which she operated throughout the world. On these two foundations, we ought now to be able to base the possibility and hope that Japan will no longer be able to exploit her people in the thoroughly merciless manner which she employed before the war, to the detriment of the other trading nations of the world.

But there is a bigger factor than that to which I want to refer, and which for nearly three years I have already urged upon the Government on a number of occasions in this House, without ever yet having elicited any kind of effective answer. Surely, it ought to be obvious to the Government, as it is to anyone who studies the situation, that we cannot hope to build up or revitalise Japanese industry, as we must in order to allow the Japanese people to live, if we think of Japan in terms of a Far Eastern vacuum? The reorganisation of Japan, and the building up of such a level of industry in Japan as will give her people the opportunity of reasonable standards of life, cannot be done in isolation. They can only be done when Japan is viewed, as she ought to be viewed, as an integral part of a great Far Eastern economy affecting, for good or ill, every country in that vast area of the Pacific, and, indeed, every other industrial nation in the world.

On every opportunity I have had in this House during the last three years, I have pleaded that, in the whole of this matter of the policies to be pursued towards Japan in the future we should, first, have a clearly perceived objective, and, secondly, a policy of sound plan- ning which would integrate the new Japanese economy, at the level of industry considered sound and necessary, into the economies of all the countries around her, and which are so plainly affected by all her industrial and economic activities. It is only by that combination of central, long-sighted planning for the emergence of a Japan that will be economically viable, and, at the same time, no menace to her neighbours throughout the world, combined with the internal developments that I have mentioned, that we can find safeguards against unfair competition emerging once again from that territory.

There is one further point I wish to put to the Minister. It seems to me that, on this question of the level of industry in Japan, the discussions that have so far taken place have been discussions on a level that is altogether too low. The agreement that seems to have been reached by the Far Eastern Commission is that the future level to be aimed at in Japan is one roughly corresponding to that which obtained in the years 1930-34. Those years in Japanese economic history were years of depression, just as they were in every other country in the world. Therefore, they are not a fair test, so far as the welfare of the Japanese people is concerned. Yet those very years are taken as the standard for purposes of the level of industry. Let us think of one or two things which we ought always to keep in mind.

The population of Japan at that time was 68 million. She had numerous colonies which she was ruthlessly exploiting for purposes of her own interests and her home population. Yet, in that year, as we all know, she had a deficit economy compelling her to import large quantities of food which could only be purchased by a continuous and expanding export of competitive goods. Today, the Japanese population is 78 million, in islands on which the agrarian economy is scarcely capable of any marked extension, in islands whose great fishing grounds, on which the people's food so much depends, have been greatly circumscribed as a result of defeat. Russia has closed one great prolific fishing area to her for ever. There, in those islands, with a population 10 million greater than it was in the period taken as the standard, and with colonies, and all the opportunities for their exploitation gone, we have now to make provision for that enhanced population which is increasing every year by nearly two million.

It can only be done, if it is going to be a viable economy, knowing as we do that the possibilities of expansion of food production in Japan are strictly limited, along the lines I have suggested. It can only mean that any viable standard of industry in Japan must take account of the fact that she will now have to import greater quantities of foodstuffs and raw materials than she ever found it necessary to import in 1934. Therefore, she will find it necessary to export vastly greater quantities of competitive goods in order to keep her people and her industries alive. We must keep these factors in mind, because they have an enormous bearing on the central idea which I have been trying to insist on in this House, the need for clarity of objective and for skilled detailed planning as to the kind of industry permitted. That industry must be varied over a large range instead of being concentrated on one particular commodity. It is with that sort of treatment, thinking of Japan as the industrial centre of a great area, partly industrialised and with great potential industrial possibilities, a Japan integrated into the system of that area, that I want to see our Ministers concerning themselves. I want to finish by asking a specific question.

Mr. Fairhurst

Is my hon. Friend assuming that Japan is to be subject to American supervision for some years to come, because if such is not the case, and the Japanese begin to administer their country once more, what is to prevent a future Japanese administration from subsidising the textile industry in Japan? Secondly, is my hon. Friend also assuming that we, along with America, must begin to assist, in every possible way, the industialisation of Japan in order to enable her to feed her ever-growing population?

Mr. Paton

With regard to my hon. Friend's first point, I must ask the House not to press me to deliver again a large part of the speech which I made last week, and which my hon. Friend can, of course, read for himself in the OFFICIAL REPORT. If he does that, he will find what I said in regard to his first point. I made the suggestion that it would be necessary, even after the occupation of Japan came to an end, to have a supervising agency acting on behalf of the Allied Powers in order to ensure the fulfilment of the plans which we make. As to the second point, whether we are going to assist in the industrialisation of Japan, I am not suggesting that. All I am asking is that the already industrialised Japan shall be allowed such a level of industry as will ensure her people the means of life. That is a proposition which I should have thought was acceptable, not only to every Socialist, but, indeed, to every hon. Member in this House.

It has been a constant complaint of the House on this subject—and it was reiterated tonight by the hon. Member for Brighton—that there is such a paucity of news from the Far East that it is extremely difficult for ordinary Members to keep themselves properly informed on all the important matters that are taking place there. But, occasionally, we see in our newspapers matters that seem to us of great importance. One such notice appeared in "The Times" last July. I want to ask my hon. Friend about it. I have talked tonight a little about the need for mobilising the powers and resources of the British Commonwealth of Nations in a common policy with regard to the Far East. According to the report in "The Times" of 13th July this year, it seems that something of the kind was actually in process in Tokyo, because the report stated—and this is the gist of what it conveyed—that secret negotiations had taken place in Tokyo between Inter-Allied Headquarters and a number of countries of the British Commonwealth—the United Kingdom and her colonies, Australia, New Zealand and South Africa—the object being to extend trade between Japan and certain parts of the sterling area.

If that is true, it is, of course, an extremely important statement. I would like to know from the Minister tonight whether, in fact, it is true because, if this statement is true then here is something of the kind I have been asking for—the preparation of a concerted policy upon which the whole of our power could be mobilised. It was stated, however, that the countries taking part were pledged to divulge nothing. That seems to me to be quite an extraordinary state of affairs—that there should be meetings of representatives of all these Powers of the British Commonwealth, dealing with a matter of fundamental importance to this country and all the other countries concerned, while apparently the peoples in those countries, or the Members of Parliament, are to learn nothing whatever about it.

"The Times," however, seems to have discovered from somebody something of what took place, because the article went on to say that the countries which were taking part decided that the crux of the negotiations was a clause in the sterling payments agreement by which sterling acquired by the Supreme Commander of the Allied Powers in Japan in excess of amounts which can reasonably be expected to be spent in the near future will be convertible into dollars at regular semi-annual dates. Of course, it was generally felt that this clause would impede British trade with Japan unless a carefully balanced trade could be worked out. All that, of course, is right along the lines of the suggestions I have been making.

What I want to know now is, firstly, whether it is possible for this House to be given what I believe to be vital information on which to form its judgment and make up its mind about these most important matters? It was further stated in this connection that high Japanese officials have said that Japan would be satisfied to receive sterling, not dollars, from British Commonwealth countries, since the possession of sterling would enable Japan to expand her trade with the sterling area, which was formerly one of Japan's most important markets as well as a great source of her raw materials. In fact, while we were in Japan last year, I had this point made to me several times by Japanese—their extreme willingness to go into trading arrangements on a sterling basis with British Commonwealth countries.

In the same report is was stated that New Zealand was prepared to supply Japan with wool, hides, skins casein and seeds in exchange for raw silk, plywood, silk, rayon and cotton manufactured goods. Similarly, I was informed that Australia is very anxious indeed to develop her own wool trade with Japan on a sterling basis. Here we have a report—none of us yet knows whether it is well founded or ill founded—of important negotiations of this kind taking place in Tokyo. The Minister may say that since all the countries were pledged to secrecy he is unable to satisfy my curiosity. That would be a reasonable attitude, but surely we can ask him whether it is true that the negotiations took place. Obviously that could not reveal anything which is confidential.

Secondly, may we assume that out of the negotiations all these countries did arrive at a single concerted policy upon which they are prepared to deploy their strength and resources in the Far East? This second question, too, it seems to me, does not infringe any pledge of confidence. Thirdly, so important, in my view, is this information which I am seeking that I would ask my hon. Friend to convey to his right hon. Friend the desirability of securing the agreement of the other countries concerned in the negotiations to this House being fully informed of their purport and their result. I ask the Minister to give me an answer to these specific points, and I hope he will take advantage of the opportunity which this Debate, early in the evening, has given of replying to all of us fully on the general statements which have been made.

8.46 p.m.

Major Gates (Middleton and Prestwich)

The House will be relieved to hear that all the points I wish to make have already been made. I wish to emphasise the point, which was originally made by the hon. Member for Ashton-under-Lyne (Mr. Rhodes), that there are thousands of people in Lancashire who will be dependent on whatever policy His Majesty's Government assists in formulating for the trade of the Far East. I must support him when he says that we are not justified in pressing for further recruitment to the textile industry until we, as a House, have made up our minds on this important question of policy. It must be quite evident from the very able speech we have just heard from the hon. Member for Norwich (Mr. J. Paton) that this honourable House is starved of authoritative and comprehensive information as to what is the attitude of His Majesty's Government towards the whole of this very important subject. I want to add just one further appeal from these Benches for an authoritative and comprehensive statement from the Secretary for Overseas Trade tonight.

8.47 p.m.

Mr. Leslie Hale (Oldham)

It is typical of the resilience of this House that we should find ourselves discussing tonight, thanks to the hon. Member for Brighton (Mr. Teeling) and the hon. Member for Ashton-under-Lyne (Mr. Rhodes), a topic of first rate importance, and not one of us need apologise for keeping the House sitting to discuss a topic of this kind.

I think everyone will sympathise with the Secretary for Overseas Trade in having to reply to this Debate, because everyone realises that this is a problem upon which it is much easier to postulate questions than to provide the answers. It is a problem of the greatest gravity involving very real world considerations. If I may deal, first, with the limited aspect, I will deal with one or two remarks made by the hon. Member for Skipton (Mr. Drayson)—who already has "skipped" and I have to reply to him in absentia—because it has never been the policy either of His Majesty's Government or the Lancashire cotton industry to oppose the vertical industry. The proposals to which he referred were based on the existing situation in towns like Oldham where use has to be made of existing mills and improvements made where practicable. Industry is anxious to develop on those modern lines.

I myself a week or two ago visited a modern mill in Adelaide where weaving and spinning takes place, in the same rooms, where they have their 40-hour week under the Socialist Government there, where wages are £8 to £9 per week, where conditions are really admirable, where there are treatment centres for injuries on a scale that would make some of our national hospitals look really ashamed of themselves, and where they are deeply and anxiously concerned about this problem. I am glad that in this House the view has been freely expressed that there is no point in talking in terms of a Carthaginian peace. The real problem postulated is the very real problem which modern war creates. Modem war involves a situation in which the first job of the victor seems to be the economic revival of the vanquished. Indeed the economic circumstances of the vanquished nation, not bound to maintain the burden of armaments, place them in a position of ultimately having a greater economic recovery than the victor nations can expect. Everyone wants to see Japan have an opportunity to feed her people, and to maintain and balance her standard of living.

Then we come to the next contradiction, which is implicit in this problem, that an expanding standard of living for the hundreds of millions of the peoples of the East is utterly impossible in the world situation for years to come, because the world is not producing the food to feed them. Then we have the position of Socialist Australia, with her 7,000,000 population scattered over a whole continent, with the inevitable fears that are predominant in that part of the world, for she has not a very numerous community, and the whole of her northern territories are depopulated, and she is utterly indefensible with one of the longest coastlines in the world. She has built up a standard of living equal to any in the world, and has, in all those circumstances, to look to a possible revival of the industries of this very great, highly populated and highly intelligent nation. On the other hand, Australia herself would join with us in wishing to find a way out of the problem, and in doing what one has to do rightly for Japan, as far as one can, to try to restore her standard of living in the interests of world peace.

Then we come to the next contradiction, which is also an important contradiction. Because we at the moment are endeavouring to deal with the dollar gap and the export gap, we arc actually exporting an overwhelming proportion of our textile machinery manufactures to industries throughout the world which will enable them to compete on better terms with us. That is also an inevitable policy at this juncture, because the export of machinery is vital to the maintenance of our life here. But it is a problem. I am not going into detail on the point tonight, but many people in Lancashire are really grieved at the little use that is being made of the Act to provide cotton subsidies, and at the few orders being placed at the moment for new machinery to re-equip and reinvigorate the textile industry of Lanca- shire. As I have indicated before, I believe there are means which the Government could consider of stimulating that industry.

There are two smaller considerations on which I should like information if possible from the Secretary for Overseas Trade. I want to reinforce what has been said on every side. We do not get enough information about what is happening. We do not know what has been happening, and we do not know who decides what is happening. It is natural that America, in considering the problem of Japan, should consider her own cotton industry. That is natural. It is natural that we should consider our own home textile industry. But who has the power to make decisions? I do say that Australia is very concerned. The battle for the Pacific was largely a battle between Australia and Japan in the sense of the battle for territory, and Australia is very concerned at the little extent to which she appears to have any influence in deciding future policy on this matter. I would remind the Secretary for Overseas Trade of, and congratulate him on, the very real success of the recent Empire Conference. I have pressed him on more than one occasion, when he was Under-Secretary of State for the Dominions, to try to establish Empire planning and Empire economic co-operation on a wider scale.

I should like to mention one other point before I come to the point on which I want to conclude. I was informed some months ago that the Board of Trade intended to send a trade union delegation to Japan to take part in the modernisation of the Japanese trade unions, and in educative and social work in the trade union sphere. I do not know, but, so far as I know, that delegation has not gone. I hope to be told it has, but if it has not—and I understood that it was the intention to send it—I think the House ought to be told frankly just why it was not sent, and whether there is any hope of its going now.

The only solution of this problem, is the Socialist solution. It can be based only upon world planning. The world has turned very rapidly in the last few hours in the direction of world planning. It is exceedingly important that we should recognise that the very remarkable results in the last few hours in America are based upon the fact that the Americans have realised that the taking off of controls, and the reversion to unfettered capitalistic enterprise have placed a very heavy burden on her citizens. The American Election is a verdict for planning, and it is a verdict for controls, and it is a verdict for the possibility of real international planning at a high level and on a very large scale.

I believe we have taken great steps in the last few weeks to that end. We have taken very real steps in the direction of Empire planning. We find that India today is talking with a new vigour and a new realisation of world problems, and with a disposition to partake with the other Dominions, given a lead in that direction. We find that British industrialists today are being treated in India infinitely better and on better terms than they were before. Before, they were regarded as the envoys of a dominating Power. We have to take up on this basis of international planning, as the first problem, the problem of raw material allocation and raw material distribution, and of these vital things one is cotton.

I should like to conclude on this note because I think it ought to be said. Many Members have spoken of the difficulty of employment in Lancashire today. It is a very real difficulty. We appeal to people to work in cotton mills in conditions which certainly cannot compare with the conditions in many other industries. There is no question about that, and it is quite idle not to recognise the fact. It is quite obvious that one can work in a modern radio factory in conditions infinitely better than the conditions of a Lancashire cotton mill. When we appeal to people to go into the cotton mills they recall the experiences of 1922 and 1923. They say, "We were appealed to do more work then, and we were told that the world was denuded of goods. Then in 1923 came the slump which brought so much tragedy and suffering to Lancashire's towns."

The problem today is not quite the same as it was in 1922 and 1923—I am not dealing with it politically—for employment in the cotton industry today is only 250,000 as against 750,000 in 1913; the production of textiles could largely be absorbed by our own population; our textile exports, important as they are—and they are substantial—are nothing like what they were in the years before the war; there is the increased purchasing power of the peoples of the world, and the production of vast new industries; and there is really a very grave fear that we shall not find a very ready market for our textiles.

It is right that we should bear in mind that Australia has just embarked upon one of the greatest food producing schemes ever undertaken in the history of the world. There has been the reallocation of enormous areas in Queensland for the production of food for the home market of Britain. The Secretary of State for the Dominions and the Minister of Food ought to be warmly congratulated upon the initiation of that great scheme, but this means that Australia will have a surplus which will continually increase her sterling balance to a large extent, and we have got to plan our own exports to Australia to see that there is maintained a stable balance of trade between that part of the world and our country.

Mr. Drayson

Before the hon. Gentleman sits down, I should like to put a point to him. He mentioned that the textile manufacturers—the spinners—are not making use of the subsidy. Would he not agree that one of the difficulties is the fact that there is no certainty that the new machines for re-equipping can be delivered before, perhaps, two years? Would it not be better if the Government arranged for instant delivery of machinery?

Mr. Hale

So far as I remember, that position only applies to a small section of the main textile machinery. I can say, speaking on behalf of the towns the representation of which I share with my senior colleague, the hon. Member for Oldham (Mr. Fairhurst), which have probably the biggest production in Britain of textile machinery, that manufacturers there are deeply concerned about the few inquiries which they are getting from Lancashire mills, and also about the high proportion of machinery sent for export.

9.1 p.m.

Mr. Bottomley (Secretary for Overseas Trade)

I join with other hon. Members in paying tribute to the hon. Member for Brighton (Mr. Teeling) and the hon. Member for Ashton-under-Lyne (Mr. Rhodes) for initiating this Debate tonight. While the hon. Member for Brighton was engaged on other valuable services for his country, the hon. Member for Ashton-under-Lyne intervened to get the Debate going. I agree with the general observations made that this is a most important subject, and we are fortunate that time tonight has permitted of rather wide discussion.

I am sure hon. Members will understand that it is not possible—although I do not deny that some of the things mentioned are in some way connected with trade—to answer all the points raised because they are outside my province. I shall take this opportunity of dealing, so far as I can, with the question of trade. I at once give the assurance that His Majesty's Government are just as much concerned as any hon. Member in the House about this matter. That concern has been shown by the way in which tonight hon. Members on both sides have joined in making similar representations. I ask the House to understand that the trouble in the Far East is such that it is difficult to extend trade in the way we would wish.

The importance of traditional trade between the United Kingdom and the Far East is of great value. There is a potential market there far greater than we can meet, perhaps for a long time to come. Until we can see some end to this rather abnormal period we are not likely to have a free and rapid development of trade. May I try to deal with the countries of the Far East, not precisely in the way in which they have been raised this afternoon, although I hope before I sit down to cover them all. Let me deal first with the first country mentioned by the hon. Member for Brighton, which was China.

In the case of China we are doing everything possible to revive and develop the healthy links which once existed, but our opportunities are very limited. The Government in 1946 sent an official trade mission to the country and we received an extremely useful report. That report was published in January of this year. I regret to say that our prospects of further trade are limited until normal conditions are restored. The country at the moment is in the throes of civil war. The Chinese have been for a long time fighting inflation, and therefore I am afraid trade on normal lines has been more or less impossible. In spite of these difficulties, when we take the export figures for China for the year 1946 we find that our exports were £7.8 million; in 1947, £12.8 million and for the eight months of this year £8.4 million which, if the same rate of development continues, will mean an annual rate of £12.6 million. This compares with exports of £4.4 million in 1938.

If we take imports we find that in 1946 imports from China were £2.7 million; in 1947, £7.1 million, and for the first eight months of this year £5.6 million, which, if continued, will make an annual rate of £8.5 million as compared with imports of £7.1 million in 1938. The Chinese Government, like many others, including our own, have their balance of payments difficulties and for that reason they have had to limit many imports—goods that were normally sent to China, and which we would still like to send. Consequently we have not such a wide market as we would wish. Indeed, China has an unfavourable balance with the United Kingdom, but she has a favourable balance with the sterling area as a whole. We are receiving tea, tung oil, oil seeds, bristles, etc., and in return, although unable to send some of the goods we should like to send, we have found a substantial market for wool tops, iron and steel manufactures, electrical machinery and reasonable supplies of what are known as "less essential goods." The prospects of economic stability in China do not look as bright as they did a little time ago, and until we can see more clearly how things are going to develop the outlook for future expansion of trade with China is not as good as we would wish.

The hon. Member for Brighton, in connection with China's trade position, mentioned Hong Kong. As he rightly said, the interests of Hong Kong are closely connected with those of China for trade. The physical trade done between the United Kingdom and Hong Kong shows a deficit on the part of Hong Kong. Imports for January to August, 1948, were £81 million approximately, while Hong Kong only exported £60 million. To examine the figures only in that way would not be correct, because Hong Kong renders very valuable services, such as shipping, banking and insurance, and by that means gets an overall balance. I agree with the observation made by the hon. Member and repeat this for the record, as he wished me to do.

A good deal of discussion has centred on Japan. Japan is a defeated enemy that ended the war in a state of economic collapse. Japanese production is still 50 per cent. below the low period of 1934 production to which the hon. Member for Norwich (Mr. J. Paton) referred. May I say, in connection with the observations made by an hon. Member about most-favoured-nation treatment, that we certainly have not at the moment been committed to any such suggestion, and, if we were to be committed in the future, the House can be assured that there will be full discussion and consideration before there can be any decision upon that matter.

Mr. Teeling

When the hon. Gentleman says that there will be full discussion, does he mean in this House?

Mr. Bottomley

I cannot say whether it will be in this House or not. There are many parties involved but, of course, this House will be kept informed. Mostfavoured-nation treatment is, of course, rather linked with the peace treaty, and there are no two views about the peace treaty. But peace treaty or no peace treaty, it is the determination of His Majesty's Government to look after United Kingdom interests, and that we shall do all the time. I suppose that if Japan is to be a nation free from the difficulties mentioned this evening, she will have to build up her industrial capacity, and certainly restore her foreign trade. The Japanese are something like ourselves: they have to export to live; they cannot be, any more than we can, for ever dependent upon international charity or aid from the United States. The industrial development of Japan today is far from satisfactory. Her coal production in 1948 is not expected to be more than 36 million tons, which is about three-fifths of the pre-war level of production; iron and steel production is now running at an annual rate of about one million tons, which is roughly one-third of the pre-war production; cotton textile production, which before the war amounted to 45 million yards, is today only 720 million yards.

Mr. A. Edward Davies (Burslem)

Will my hon. Friend give the figures for pottery?

Mr. Drayson

Is it 45 million yards? Surely it is 4–5,000 million yards. To what period is the hon. Gentleman referring?

Mr. Bottomley

The hon. Member is quite right; it is 4–5,000 million yards. If we take that figure, it means that today the Japanese are operating two million spindles compared with eight million before the war. In connection with textile production, it is of interest to note that whereas in 1930–34 exports averaged 1,200 million dollars per annum, in 1948 they will not reach 280 million dollars; the United States estimate that by 1953 they should reach a figure of just under 700 million dollars. I understand that figure is not likely to be reached, but even if it were it would be only seven-twelfths of the very low pre-war figure for the years 1930–34.

Mr. Paton

I am sorry to interrupt, but this point is rather obscuring the real issue. Although these figures of diminishing quantities can be produced now, we nevertheless already hear groans of agony from territories like Hong-Kong about being flooded with Japanese textile exports. What matters is, not only the relation to the total production but the compulsions that are put upon the Japanese Government to throw out everything they can produce into other people's markets.

Mr. Bottomley

I will deal with that as I develop my case; it is a most useful point, and I shall not miss it.

To go back to the point I was making about the figure of seven-twelfths of the low pre-war production, and to pick up to some extent the point made by the hon. Member for Norwich, Japanese exports in 1947 were £44 million, which is less than one-third of her imports, and Japan really must pay for her imports if she is to do the trade which we want developed in the best interests of this country, of Japan and of the world generally. As I say, it is the intention of S.C.A.P. to try to make Japanese economy viable by 1953; but that viability means the pre-war low level to which the hon. Member for Norwich referred, and upon which there may be conflicting views. Yet in spite of tremendous efforts in the last three years, it has not been possible to get anywhere near the standard expected, and therefore, with the best will in the world, it will probably be physically impossible to reach a higher standard than the one I have mentioned.

The hon. Member for Norwich asked about an agreement which had been reached. It is true that in August of this year, after rather long negotiations, there was a payments-agreement with the sterling group whereby payments could be made in sterling although any deficit must be met in dollars. I am speaking only from memory, the House was not sitting then, but I think I can say that in the Board of Trade Journal and in information from trade associations that was made known in order that our own industry could take advantage of the situation. In connection with the other agreement to which the hon. Member referred, it is a fact that for the first time—and I think it is to be welcomed—the United Kingdom, the Colonies and the Commonwealth countries of Australia, New Zealand, South Africa and India have been negotiating to get a trade agreement for one year whereby we can have an opportunity to get a balanced trade. In this way, as long as we can send goods to Japan and can get goods in return, trade can be expanded to the fullest.

I am not in a position tonight to announce the terms of that agreement, nut I can, as a result of the invitation of the hon. Member for Brighton, say that we shall have in that agreement an exchange of goods. Raw wool, raw cotton, iron ore, some cereals, petroleum, rubber and other things will be going from the sterling area into Japan, and coming out from Japan will be cotton textiles, raw silk, industrial machinery, rolling stock, caustic soda and other things. My hon. Friend the Member for Norwich has obviously not been watching his Questions as carefully as usual, because he hon. Member for Brighton has been repeatedly asking when this agreement will be made public. Until the agreement has been reached it is impossible to make it public, but I think I can say that next week an announcement will be made—I hope that I shall not have to put off the hon. Member again.

Mr. Teeling

Will that agreement in any way include or affect the question of Japanese shipping, about which there are considerable rumours in regard to it being allowed to extend as far as the Gulf of Persia?

Mr. Titterington

Will my hon. Friend make some observations on woollens and worsteds, as distinct from cotton?

Mr. Bottomley

I cannot say precisely at this moment what will be the position. At this moment I would emphasise that cotton textiles are included. The others may or may not come in. I cannot say anything about the shipping clause at this moment, and must ask the hon. Member for Brighton to await the announcement. So far I have been talking about direct trade with Japan but I must also mention indirect trade. In Japan we have merchant houses that had a large stake in the development of Japanese exports. It took us a very long time to convince S.C.A.P. of the value of the services rendered by these British houses, but now, I am very glad to say, there is a more accommodating attitude. We now have between 25 and 30 firms re-established in Japan which are covering services, such as shipping, commercial banking, and other things of that nature. In addition, we have been able to get United Kingdom businessmen into the country. One hundred and thirty of these people have been in the country according to my last figures. I think we can say that these United Kingdom businessmen will do much to help the Japanese in the export trade, and at the same time will give some measure of assistance in regard to our own interests in Japan.

We have also been able to appoint a commercial Minister in the country, and there has now been established an advisory committee made up of representatives of British business interests. Together with the Commercial Minister, they will be able adequately to protect British interests. My hon. Friend the Member for Ashton-under-Lyne talked a lot about the danger of Japanese competition. As has already been said on earlier occasions, we have to bear in mind that we have to make Japan's economy viable while watching to see that the Japanese no longer engage in pre-war methods of unfair competition. We have to enable Japan's economy to develop in order to give the Japanese a reasonable standard of living and enable them to take their place in the comity of nations, while at the same time preventing them from being the aggressive Power they were before and violently undercutting prices. Japanese trade is developing reasonably satisfactorily, and we hope that the trade arrangement which is to be announced in due course will be of mutual advantage to Japan and ourselves.

Mr. Hale

My hon. Friend the Member for Ashton-under-Lyne said that the right of collective bargaining had been denied to Japanese trade unionists. I asked whether we intended to send a trade union delegation to Japan to help the trade unionists there. Can my hon. Friend say whether that delegation has gone and, if not, why not?

Mr. Bottomley

I refrain from answering that question because I do not think it comes within my prerogative, but if my hon. Friend wishes to press the matter, I will take note of it and see that he gets a reply.

I should like to say a few words about the Philippines. That country is a desirable market, and we would like to do much more trade with it. The country is a hard currency market, but does not afford us the best opportunity for trade with it. For instance, the Philippines have a preferential tariff whereby goods from the United States enter duty free for the next eight years, and for 20 years thereafter enter at a diminishing rate of preference. But so that we can facilitate trade we have sent a Minister to the Philippines. We have told him how important we consider that country, and he is now preparing a report on the export trade. When that report is ready we shall see that United Kingdom manufacturers have a chance of trying to expand trade with that country. Although our imports have decreased compared with pre-war, our exports have gone into the Philippines at an encouraging rate though not, of course, as large as we should wish. There will be a chance of developing trade when opportunities are more favourable. We hope that the new import licensing restrictions in that country will not be too obstructive. They are a sovereign Power, but in due course our Minister will make representations illustrating how trade can be developed by removing restrictions and obstructions as far as possible.

I should like to say a few words about Indonesia, which is also an important area. We are doing our best to push trade with that part of the world, because we want particularly their edible oils, and many other raw materials, and we know that they are anxious to get from us textiles and other similar goods. We are doing 50 per cent. more trade with Indonesia than last year. This week a Board of Trade official is going to Indonesia to see how trade can be still further expanded.

There is another country which is within the orbit of those which have already been mentioned—Siam. That country is also a desirable market, and in order that they can see what goods we have to offer we have invited a Siamese mission to come to this country. It will be our job to see that that mission sees what goods we have to offer, and what favourable trading facilities exist for any country which is anxious to trade with us.

Finally, I come to Burma, whose Commercial Minister visited me today. Burma has already taken a good many of our textiles. They want other goods, too, and it will be our endeavour to meet their requirements so that they can play their part in growing great rice crops which can help to feed other peoples in that part of the world, and encourage trade to prosper. I hope I have, in the time at my disposal, covered the main points put to me. If there are any other questions which I have not answered, I shall be only too happy to do so if I can.

Mr. Paton

I should like to ask the Minister for clarification on one point. I welcome very much, as I am sure the whole House has done, the statement about the Commonwealth trade agreement. I would like the Minister to say whether that means that there is now a Commonwealth common policy with regard to the long-term economic development of Japan.

Mr. Bottomley

I cannot answer that question because it is on a subject with which I am not familiar. I can only answer questions with regard to trade.

Question put, and agreed to.

Adjourned accordingly at Twenty-Six Minutes past Nine o'Clock.