§ 3.34 p.m.
§ Mr. Oliver Lyttelton (Aldershot)
I think that any matter concerned with Empire trade will commend wide attention in all parts of the Committee. It is becoming clearer every day that the expansion of Imperial trade, the building up of the interchange of goods and services between countries in the Empire, is our first road to economic salvation. If I may be forgiven for referring to my own past, I have spent a large part of my business life in trying to build up the supply of metals within the British Empire so that we could be self-sufficient. I have hardly spent a day without being in touch by cables or negotiations with Australia, Canada, India, Burma, South Africa and Malaya. And so I have a particular interest in the subject.
There will be other opportunities when we can debate the wider aspects of relations between the British Empire and Commonwealth and the United States, and the question of the freer interchange of trade in Western Europe. I want to focus the attention of the Committee this afternoon upon the direct subject of Anglo-Canadian trade. It used to be said 1412 that trade follows the flag, but it is equally necessary that trade should keep the flag flying. We all know that nothing can sever the ties which bind us to Canada in sentiment. Our hopes, ideals and loyalties are the same, as indeed are our doubts and fears, as theirs. But we must not allow trade relations to put a strain upon these higher relations, or to cross our common vision and purposes.
I suppose it would be true to say that the dislocation of war and the extraordinary upheavals which it involved will have shown that during these five years it has been the primary producer who has been able to call the tune. There has been a great shortage of raw materials, either of food for ourselves, or of raw materials to feed the workshops and plant of the world. The days when the consumer, the great buying markets like Great Britain, were able to some extent to dictate the terms of trade have, at least for the moment, been superseded. The bacon and wheat, the copper, nickel or lead, in the case of Canada, or meat, in the case of the Argentine, which we buy can no longer be regarded as exports to an indispensable market. If we had based our thoughts about trade on that idea, we should have fallen into an error. In these times, it has been a shortage of raw materials rather than of markets seeking to find buyers for them which should be engaging our attention. I return to the point that Empire trade between the countries of the British Empire and Commonwealth is the first road to salvation. This is not to put into the shade the question of our relations with the United States or with the countries of Western Europe, but is to repeat what I consider to be an economic truism, that the Empire is first.
The reason why we have taken this opportunity of putting down the subject of Anglo-Canadian trade is because our commercial relations, and indeed our commercial reputation, with Canada causes those of us on this side at least no little anxiety. The Canadians are prepared to forgive much, and I think they have forgiven much, and it is all the more necessary to look wide-eyed at some of our mistakes in our trading with Canada. There are four main causes for this deterioration. The first I put is the abrupt cancellation of food contracts a year or two after the end of the war. I put the second as the bad history of 1413 the paper contracts; the third, the propaganda, no doubt unintentionally carried on, by Ministers against British trade; and the fourth the further cuts in Canadian trade which have been necessitated by devaluation.
I should like to turn first to the abrupt cancellation of food contracts. I remember very well talking with Canadian Ministers in Ottawa in 1945 about the food needs of Europe and our own country, and underlining the difficulties under which we would labour in providing dollars with which to pay for these imports. When the Government came into power, these warnings were not given their proper emphasis. The impression gained by speeches from Ministers here was that the sky was the limit for food exports from Canada to Great Britain. It is quite true that the Canadians might have realised the difficulties that would have arisen, but they took most of these statements at their face value. I do not think the general situation with regard to food exports could be better expressed than it was by an article in " The Times " on 20th December, 1948. I quote what the article said:In recent months the public has become aware of growing differences and strains in the economic relations between Canada and the United Kingdom…. Whatever partial warnings there may have been in 1943, they were wholly effaced by neutralising assurances officially given at the same time, and still more by the continuous stream of optimistic forecasts of this country's capacity to take Canadian produce given by members of the United Kingdom Government during the first two years after the war. In 1945 Sir Ben Smith was appealing for more bacon and meat. In mid-1946 Mr. Morrison was in Canada asking that Canadians should push on with their food exports in the spirit of a ' battle against famine'; and in the same year it was officially stated that Canadian policy was maximum production of foodstuffs for the next four years,' in order to meet—The Times " puts the next word in inverted commas:agreements' for deliveries of food to the United Kingdom ' over a period of years.' Neither this declaration nor the statement only 15 months ago that Britain wanted from Canada during the next two or three years all the bacon, beef, cheese, and eggs which could be got' was ever contradicted or questioned from this side. It was in September last year, after the exhaustion of the American credit, that the clouds began to gather. At the first impact of the crisis, this country appears to have expressed the desire to take virtually no food other than wheat in 1948.1414The Times " then describes the various other cancellations such as canned salmon, apples—which resulted in the uprooting of 240,000 Canadian apple trees —poultry and so on, and goes on:Now it is feared that the new contracts for 1949 will not absorb even the reduced surpluses. …The article states in another part:Canadian farmers have so far lost confidence in the reliability of this country as a customer that they have reduced their raising of hogs and poultry just as surely as they have dug up their apple trees. The loss of confidence goes deep. It results not only from the steady decline in this country's purchases. There is much evidence that some contracts have been terminated with unnecessary abruptness, and that these affairs have been handled by the Ministry of Food and its representatives in Canada tactlessly and without any manifest sympathy for the difficulties of the producer.As always happens in a planned economy—and democratically planned at that—these statements are made with out proper realisation of what the difficulties may be. When the American Loan was exhausted years before the present Financial Secretary to the Treasury estimated, an abrupt cut in our whole food policy with Canada was made necessary and a bad impression resulted. These violent reversals of policy always seem to be necessary in our so-called planned economy, and so often the contracts and assurances of today become the repudiations and apologies of tomorrow. I say—and I do not think that it can be controverted—that the impression, with some justification, gained ground in Canada that our statements, assurances and undertakings were unreliable.
I now turn to the vexed matter of the paper contracts. I need not remind the Committee of the large investment of British capital in the Canadian pulp and paper industry. In all, Canada before the war supplied about one quarter of the newsprint requirements of the United Kingdom. Before the war some newspapers relied entirely for their supplies on Canada and Newfoundland. When the Scandinavian supplies were cut off by the war, Canada and Newfoundland became our sole suppliers. This supply was interrupted by the termination of Lend-Lease in 1945, and the contracts were-cut by Government order. We can hardly complain of such an action at that time.
1415 But after the American Loan had been negotiated, a new spirit seemed to animate His Majesty's Ministers, and new contracts were made which provided for a steady increase of supplies of newsprint to this country. The contracts were specifically confirmed and approved by His Majesty's Government. In August, 1946, the Board of Trade—the present Chancellor of the Exchequer was then President—wrote a letter in which they said:The Government would be prepared to provide exchange and import licences for 250,000 tons of newsprint in respect of 1948, and 300,000 tons in each of the three following years, and you could contract in Canada on this basis.What happened? Contracts were actually entered into for delivery of 150,000 tons in 1947; 180,000 in 1948 and 300,000 tons in each of the three years, 1949, 1950 and 1951.
These new contracts were again cut in July, 1947, after these specific assurances, and actually the permitted imports were 105,000 tons in 1947 against the contract figure of 150,000 tons, and in each of the years 1948 and 1949 instead of the 300,000 tons 100,000 were permitted to be imported. Finally, in January of this year the Government informed the Newsprint Supply Company that no imports of newsprint at all would be permitted in the first half of this year. I understand that negotiations are now proceeding with regard to supplies for the second half of the year.
I must ask again, why is it that in our democratically planned economy it always seems necessary to make these abrupt reversals, and tear up solemn undertakings into which the Government recently entered? A natural question to ask is, is it in bad faith? I am quite certain that it is not in bad faith, but comes from basing the so-called plans on a number of assumptions which events invariably falsify. Again, the contracts " and promises of today become the repudiation, the excuses and the apologies of tomorrow. In this matter of newsprint an impression—and not without justification—gained ground that if Britain's word were as good as her bond. the bond must be subject to a considerable discount.
Thirdly, I turn to the harm done by ill-advised statements about British industry, and the successful propaganda—no less 1416 successful because I am sure it is quite unintentional—carried on by the present Chancellor of the Exchequer when he was the President of the Board of Trade and by his successor in that office, against British industry. It is sad to think that in North America the man in the street, certainly, and many leading business men besides, believe that British industry is hopelessly obsolete, riddled with nepotism, relies upon cheap labour and the minimum of mechanisation and machines, and is protected by an impenetrable wall of price-fixing trade associations on the one side and by the most restrictive practices by trade unions on the other.
His Majesty's Ministers complain that the name of Britain is often blackened abroad by travelling Britains and expatriates. Certainly none of us in this Committee would dissent from the rule laid down by my right hon. Friend the Member for Woodford (Mr. Churchill) not to criticise the Government of his own country or engage in political controversy in foreign lands or in the British Empire. It is certainly one which we should seek to imitate. Ministers do not realise the extent to which their statements, made even in speeches at home, are listened to in North America—the United States and Canada. This continual carping at British industry is often done by Ministers who would not know the difference between a drilling machine and a planer. It would sometimes become them more if they were to talk about such matters as the efficiency of our steel industry.
If hon. Members would like a quotation I will give them one. Speaking on 7th January, 1946, at Montreal, the Lord President of the Council—according to a report in the Montreal newspapers—said:Some of those industries, such as coal, iron and steel and transport, are in pretty bad shape. They are definitely a drag on other industries, and hamper the efficiency and enterprise of trades and industries to which we look for … development.That was not a good advertisement to give the steel industry at a time when its need for export markets and its capacity to fulfil its deliveries were all-important.
That kind of speech is one of the things that British industry is up against. It would be a good plan sometimes to refer to other things, like our leading position in the rayon and acetate silk industry, our 1417 lead in gas turbines, our lead in the efficient production of chemicals and our radar record, and sometimes to proclaim the fact that we can lick anybody for quality and costs on a whole range of engineering products specially built for the job—" custom built " is the American term. Whenever opportunity offers, the opposite lesson is rubbed in, and the whole apparatus of threats, working parties, development councils, too much price maintenance and high profits, is the almost daily dirge.
I really do not think that Ministers understand how much harm is done, and that they are the most successful anti-British trade propagandists in the North American Continent. It would be foolish to say that there is not some foundation for these criticisms. Of course there is. There are weaknesses and bad spots in everything. Criticism of them will do no harm, but only when it is set against the background of our splendid achievements in research, development, quality and low cost.
I have now discussed three of the reasons for the damage to our commercial relations with Canada. They are the abrupt changes and cutting back of food contracts at the time of the convertibility crisis; the repudiation of our paper contract; and, thirdly, the unhelpful, if unintended, propaganda by Ministers against British industry. Lastly, there is the greatly reduced trade which has now become necessary as a result of devaluation. It is fair to say that in a time of boom such as the present the damage to Canada has been much less severe than it might have been, but it has driven Canadian trade markedly more into the arms of the United States.
The figures from the Canadian official trade returns for January and February are significant. In January, Canada's total exports amounted to about 221 million dollars. Of this, her exports to the United States amounted to no less than 130,859,000 dollars and to us 48-1- million dollars. That is a proportion of 59.1 per cent, of exports to the United States and of 21.9 per cent. to ourselves. In February, the total exports were just over 201 million dollars. Of that quantity, about 130 million dollars went to the United States and thirty million dollars to us. These percentages are 64.6 to the United States and 15.2 to 1418 the United Kingdom. We will all agree that this tendency is serious, both to Canada and to this country.
I will now leave this part of the subject and I propose to turn for one or two minutes to other aspects of it. Before I do so I want to drive home the point that the first thing that is necessary in order to increase our trade with Canada is to try to restore our name for reliability.
§ Mr. A. Edward Davies (Stoke-on-Trent, North)
Before the right hon. Gentleman leaves that part of the subject I should like to ask him a question. I listened to him indicting His Majesty's Ministers for denigrating this country. Who has done more in that direction than the party opposite, and particularly its leader, in their speeches in this country saying that we have never fallen to such a low level?
§ Mr. Lyttelton
I was dealing with a point relating to British industry. am not aware that the party on this side of the House has ever engaged in denigrating—which is the modern word for " blackening "—British industry.—His Majesty's Ministers never get to their feet to speak on economic subjects without saying something of this kind. The President of the Board of Trade never speaks without referring to the " terrible days before the war," and so forth.
Now let me turn to the matter of export, but I would first remind hon. Members opposite that the impression to which I have referred is far deeper than they think. I have not much time, but I have quotations from lectures given by an American industrialist. I think they are perfectly ridiculous but they directly reflect the unconscious Socialist propaganda. If the Committee had the patience to hear them perhaps I would read them, but I think I had better spare hon. Members.
We have a large adverse balance of trade with Canada of about 401 million dollars, while Canada has a large unfavourable balance with the United States. Our imports from Canada amounted to 701 millions and our exports to 300 millions. Those are very large figures and they show how the adverse balance is made up. What is even more disquieting, or rather I should say what should spur us to still further efforts to export, is the 1419 fact that in 1938 we provided a little over 17 per cent of Canada's total imports and the United States 62.7, whereas today we provide only 11 per cent. and the United States 70j per cent. That is a direct challenge which we must take up. Perhaps in this market, as in other markets, over-emphasis is laid upon the export of goods for consumption. More stimulus should be given to the export of industrial equipment and of capital goods like machine tools, as well as to the export of raw materials. Canada will no doubt help by trying to buy more sugar, cocoa, and perhaps rubber, from the rest of the sterling area. A great market for raw materials is there, and we should push sales very vigorously.
The other items will be semi-finished materials, and the principal exports will be steel, coal and petroleum products. The steel record is very good, in spite of the fact that the Lord President of the Council described the industry as a drag on other industries and in bad shape. This industry increased its exports to Canada from 38,000 tons of finished steel in 1948 to 73,000 tons in 1949. In the first quarter of 1950 it shows an increased export of nearly double the figure for the same quarter of last year. If that is being in bad shape we could do with rather more of it and with rather less threats of nationalisation.
The situation in textile exports is disquieting. I am sure that the President of the Board of Trade will agree with that. I would trouble the Committee with some figures from the "Board of Trade Journal " of 8th April this year. They are sinister figures. They show that the imports of unbleached fabrics into Canada rose from five million lb. in 1938 to 22 million lb. in 1949. The imports of printed or coloured fabrics rose from under nine million lb. to 16 million lb. The level of imports from the United Kingdom last year were below their prewar level. The whole of the increase in unbleached fabrics came from the United States. Supplies from the United Kingdom fell from 2.7 million lb. to 0.6 million lb. Imports of printed fabrics from the United States rose from less than three million lb. in 1938 to nearly 9,500,000 lb. last year, whereas imports from this country dropped from 4,500,000 1h. to nearly 3,000,000 lb.
1420 There is obviously a great opportunity here. I am not levelling any criticism at the Government for being unaware of it in the matter of textile exports. There have been some complaints about shoddy goods being supplied from here, and I believe that, in some cases, Lancashire admits that that is so. I am not surprised when so many mills have had difficulty in getting exactly the right type of cotton to spin in their mills, which have been equipped for that type. That is no doubt a contributory factor. We really have to make an effort there. I should also like to compare the record of the cement industry, because it has also been threatened with nationalisation. In this industry the United Kingdom share of Canadian imports rose from 12 per cent. in 1938 to 20 per cent. in 1949.
I have indicated some of the challenge to our exports, and we should certainly take up that challenge with enthusiasm. An adverse balance of 401 million dollars is a very big one. It may never be possible to close that gap entirely, but I am convinced that over a period of years we can reduce it to manageable shape. We shall want help from the Canadians in doing that. The reimposition of some of the textile duties lately, although they are due to guarantees and promises given to their manufacturers when they were taken off in the war, will be a further handicap.
Nevertheless, we may be sure that in peace as in war we shall get help from the Canadians in our task. Their loyalty to the Crown and to the Empire and to our ideals has been written in the blood of their sons twice already in this century. In matters far less important, namely, trade but of which we must take care, I am sure their record will be equally good. We in Great Britain must begin by making sure that we carry out with the highest scruple every assurance and undertaking which we give to Canadian industry and to the Canadian people.
§ 4.3 p.m.
§ The President of the Board of Trade (Mr. Harold Wilson)
The subject which has been raised this afternoon by the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) is one on which I am sure both sides of the Committee are in absolute agreement, at least so far as concerns the importance of realising the objectives which the right hon.
1421 Gentleman has mentioned. I could not say that I agree with by far the larger part of what he said as to his reasons for the difficulties, but I do not want to be drawn too far into debating the points which he has raised because there are a number of facts about Anglo-Canadian trade which I feel I ought to tell the Committee. Certainly I should express my disagreement with what he has said about some of the causes of the difficulties.
The right hon. Gentleman made many complaints about statements by Ministers. He said that I have never got on my feet without talking about the grim days before the war. I can tell him that I made 76 separate speeches in Canada last year and never once referred to that subject. Indeed, I am bound to tell the Opposition that on the many occasions when Ministers do pay tribute to individual industries they do not, of course, get anything like as much publicity. On certain occasions when I have made statements in defence of British industries which have been attacked abroad, I have been taken to task by right hon. Gentlemen on the Opposition Front Bench in this House for doing so.
Only a few months ago when at Annecy, in answer to a very leading question from an American journalist about the level of our prices, I certainly refused to go on record as saying that our prices were too high for competition, the right hon. Gentleman the Member for Bristol, West (Mr. Stanley) came to this House and, in a most condemnatory speech, attacked me for having said that our prices were not in general too high. Had it been the opposite and I had said that our prices were too high, we should have had a chorus of disapproval from the right hon. Gentleman and his colleagues saying that I was always condemning British industry. I was certainly not going to make the task of British industry more difficult abroad by saying that their prices were too high. There were enough people saying that at that time.
One point on which the right hon. Gentleman and ourselves will be in complete agreement, is that we want to conduct our trade with Canada at the very highest possible level. We have every reason for wanting that to be the case. The amount we can buy from Canada, is, 1422 as the right hon. Gentleman half suggested, limited by what we can pay for it. There is no question—I do not think anyone would suggest it—of a bilateral balance of trade or of payments between the United Kingdom and Canada. Even before the war our exports and our reexports paid for only 30 per cent. of our imports from Canada. The remainder was paid for in other ways. In 1949 the figure had been raised to 36 per cent., but in 1949 there was a very much bigger absolute gap still to be filled, and also in 1949 there were not available the means of bridging that gap which we had before the war.
Canada has been affected by a similar problem, but, as the right hon. Gentleman said, although her surplus with us increased from 220 million dollars before the war to nearly 400 million dollars in 1948, her deficit with the United States worsened from 146 million dollars to 284 million dollars. I am quite sure that the Committee knows the main reason for the change in the position of Anglo-Canadian trade, though the right hon. Gentleman did not say very much about the main reason. Before the war, as I said, we paid for only 30 per cent. of our imports from Canada with our exports and re-exports. The remainder was paid for with United States dollars which were earned partly by investments but came mainly from the dollar earnings of the sterling area countries other than the United Kingdom.
It was the famous quadrilateral system, which has often been referred to in this House. Canada had a large trade surplus with us and a large deficit with United States We had a deficit with Canada and a large surplus with the rest of the sterling area. The rest of the sterling area had a deficit with us and a large surplus with United States. From the, dollar earnings arising from that surplus we were able to pay Canada's surplus with us, and thus enable Canada to pay the United States. In addition, out of the same dollar earnings we were able to make a considerable contribution to the dollar needs of Europe.
As the Committee knows, the war and the effects of the war have knocked away one of the fundamental props of this system. Taking the rest of the sterling area outside United Kingdom, in 1937 they had a favourable balance with North America of 190 million U.S. dollars. It 1423 is true that in 1938, thanks to the American recession, that fell to a slight deficit, but against that surplus or slight deficit of pre-war days the rest of the sterling area in 1948 had a deficit with North America of 360 million dollars and last year one of nearly 350 million dollars. With those figures, the whole financial and trade relationship of United Kingdom and Canada is bound to be affected because we have to pay for what we have imported.
So, however much we want—we desperately want them—Canada's exports of wheat, timber, aluminium, other nonferrous metals, woodpulp, newsprint, meat, bacon, dairy produce, salmon, apples, and so on, the amount we can import has been limited by what we could pay for it, and it is impossible to get away from that single fact. I join with the right hon. Gentleman in his concluding words about the close link between Canada and this country, and about what Canada has done for us and with us in war and in peace alike. If ever we needed a reason, quite apart from that of economic interest, of friendship and kinship, to make us more keen to develop Anglo-Canadian trade and to take everything we can from Canada, we have the reason there, as the right hon. Gentleman mentioned; but we cannot get away from the brute facts of the dollar shortage.
The dollar problem, as I have said, is not a problem of our own creation. The Committee knows what attempts are being made to recover from it. But the problem of the dollar shortage remains. There are some, of course, who will suggest that the whole responsibility for removing the dollar problem in our relations with Canada rests on our shoulders alone. There are some who say—and I heard it said in Canada on a number of occasions—that if we, the United Kingdom, would make sterling convertible, that would solve all the problems, as though the present absence of free convertibility of sterling into dollars were the cause and not one of the effects of the fundamental change in the dollar position which I have mentioned.
This problem is undoubtedly our problem, but it is Canada's problem too, and it is the problem of many other countries in all parts of the world. I think the recent most helpful speeches by 1424 leading Canadian statesmen—the Prime Minister and other Ministers—in Canada have shown how fully that fact is realised and how keen are the Canadian Government and people to play their full part in solving what is a common problem. If it were not for that willingness on the part of the Canadian Government and people, a willingness which has already been manifest in so many different ways, our Canadian dollar problem would be a good deal worse even than it is. I need only mention the 1,250 million dollar line of credit granted in 1946.
We are seeking, and our policy is dictated by this, to close the gap in trade and to find a balance—not a balance at the lowest possible figure by a sheer restriction of imports, but a balance at the highest possible figure of Anglo-Canadian Trade, by expansion of exports. The right hon. Gentleman gave one or two figures of the present trade gap. In 1947 it was 779 million Canadian dollars; in 1948 it was 600 million Canadian dollars; and in 1949 it was 536 million Canadian dollars. In the first quarter of this year it has been running at an annual rate of just over 200 million Canadian dollars, although that is profoundly affected by temporarily favourable seasonal factors. Nevertheless, if we take the figure of last year, the gap of 536 million Canadian dollars, it gives us some indication of the size of the problem still ahead of us.
We are trying to bridge a good deal of this gap with our own exports—this gap which is due to the disappearance of those pre-war dollar earnings from the rest of the sterling area; although I do not think any hon. Member of this Committee would expect us to close the whole of the gap by our own dollar exports from this country. We hope to rely on increased earnings from invisibles, particularly tourism, and also we must count, I hope, and the right hon. Gentleman mentioned this, on some recovery in the dollar earnings of other countries in the sterling area. The right hon. Gentleman mentioned the possibility of additional Canadian purchases of cocoa, rubber and so on.
I should say that every suggestion—and we get many suggestions from people of all political parties—for increasing our imports from Canada at this time, however much we should like to take those increased imports, means an increase in 1425 the size of the gap which we still have to bridge, unless, of course, those imports of themselves lead to a further increase in exports which would not otherwise have taken place. The general problems of Anglo-Canadian trade and payments are, of course, as the Committee knows, under continuous review between the two Governments. There is the AngloCanadian Standing Continuing Committee and there are very frequent exchanges of views between Ministers. I do not think there is any lack of close liaison so far as that is concerned, and there are no items in our imports from Canada which are not discussed regularly and frequently between the two Governments.
I should like to turn for a few minutes to the question of our imports from Canada, because the right hon. Gentleman dealt with that subject before he turned, as I hope to turn, to the question of our exports to Canada. As the Committee will be aware, there are certain imports which we are taking on a scale considerably in excess of pre-war and which have to come out of the dollars available for Anglo-Canadian Trade. As the Committee knows, last year we took 3.7 million tons of wheat, against 1.9 million tons in the average for the five pre-war years, an increase of nearly 90 per cent. In wheat meal we took almost double what we were taking before the war.
§ Mr. Wilson
Wheatmeal, including flour; wheatmeal and flour together. I.should make it clear that the first figure which I quoted, 3.7 million tons, was for wheat only; the second figure is for wheatmeal, including flour.
§ Mr. Wilson
Yes; practically double. As for aluminium, we are taking eight times as much as before the war. We are taking nearly double the amount of asbestos 23,000 tons against 13,000 tons. In wood pulp, to which the right hon. Gentleman referred, we are taking 31 times as much as pre-war; and in plywood we are taking 78 per cent. more than pre-war. There are those items to be taken into account first, because this increase requires far more dollars to maintain our imports, quite apart from 1426 any increase in prices. There are, of course, many items which, to the regret of the entire Committee, are down by comparison with pre-war. There is, for example, tinned salmon which was referred to by the right hon. Gentleman; there is newsprint and there is, of course, softwood.
I should like to say a word about softwood because the Committee and the House have at all times shown great interest in the question of softwood imports from Canada. Last year we took 258,000 standards of softwood against the prewar average, for the five immediate prewar years, of 428,000 standards. There has been a serious fall in quantity, although, in fact, the proportion of timber we are taking from Canada, as a proportion of our total imports, has increased by comparison with pre-war. In 1949, though there was a fall compared with 1947 and 1948, the figure was still higher, as a proportion of our total imports, than before the war.
Taking quantity, before the war about 18 per cent. of our softwood came from Canada. Last year the figure was about 211 per cent. and in the previous year 29 per cent. Taking the c.i.f. value of the timber, before the war it was 18 per cent. and last year it was 25 per cent. Although Canada has suffered, and we have suffered, through our inability to buy more softwood, it cannot be said that we have been discriminating against Canada in the sense of taking a lower proportion of our imports from her.
Before I come to what I think is the key to our trading relations with Canada. the question of exports, I should like to say a few words on what I think is a prevalent fallacy on Anglo-Canadian trade, a fallacy from which I think there are one or two hon. Members opposite who are still not entirely free. It is the suggestion that if we had diverted oar steel exports from other markets to Canada in the past year or two, in a period when steel was in very short supply indeed, it would have enabled us to import far more timber from Canada, using the dollars we had earned through selling steel.
I dealt with this when I was in Canada, because I think it is a view which is held on a very wide scale in Canada; and I think I did something to satisfy them that there was, in fact, very little indeed 1427 in this point. There are, however, some people here who still believe in it vehemently. Last Thursday when I stated the position as fully as was possible in answer to a supplementary question, the hon. and gallant Member for Perth and East Perthshire (Colonel Gomme-Duncan) characterised my statement quite tersely as " rubbish."
Because this is one of the fundamental points in Anglo-Canadian trade I should like very briefly to show that my statement was not rubbish. The proposition usually takes the form that we have sent too much steel to Northern and Eastern Europe under bilateral agreements, that we should divert some of that steel to Canada and that we should use the proceeds for buying timber, virtually on a barter basis. If we take the actual figures of exports to these other countries in the last two years, I think we can show how little there is in this argument. For instance, the amount of steel sent to the principal timber supplying countries of Northern and Eastern Europe—Finland, Sweden, Russia, Poland land Yugoslavia —in 1948 was 157,000 tons, some of it in forms which Canada would not have taken.
If we had been able to divert that steel to Canada and to use the proceeds, at current prices, for buying softwood, that 157,000 tons would have bought about 163,000 standards of timber from Canada. In fact, the amount of timber we obtained under the bilateral arrangements, of which that steel forms a small part, was, not 163,000 standards, but 475,000 standards; so that had we broken off those bilateral arrangements and diverted that steel to Canada, we would have had far less timber at the end of the day.
In 1949, the amount of steel which went to these European countries was 129,000 tons, a figure smaller than that of 1948. This would have bought, at current prices last year, about 131,000 standards of timber from Canada had we diverted the steel there. In fact, the softwood which we obtained from those European countries amounted, not to 131,000, but to 800,000 standards. This shows that we should not have had any gain, but that we should have had a great fall in the amount of timber which we were getting from those countries, had we diverted the steel to Canada.
§ Mr. Russell (Wembley, South)
Could the right hon. Gentleman explain what he means by " steel "? Does he mean iron and steel and manufactures thereof, namely, Group C in the Trade and Navigation Returns?
§ Mr. Wilson
No. I have separate figures for iron and steel and manufactures thereof, but, as the hon. Gentleman will be aware, that category does not cover all the steel exports. There are, of course, in other sections of the trade returns, such steel items as tyres, axles, wheels and so on, which play a quite important part and, as the hon. Member will probably know, a growing part year by year, particularly in our trade with Canada. So far as last year is concerned —and I made this point in the House last Thursday—Canada did not take—
§ Mr. W. Robson-Brown (Esher)
Is the President satisfied that the steel industry of Great Britain is doing all that it can to satisfy the needs of Canada in the matter of supplies of steel; and was his answer to a question the other day, when he said that increased steel production in England would have made a great difference in the tonnages of steel going to Canada, in fact not correct, for reasons which he knows perfectly well?
§ Mr. Wilson
If the hon. Member succeeds in catching your eye, Major Milner, no doubt he will be able to develop that point. The answer which I gave is perfectly correct. The time when steel could have been sent to Canada in greater quantities than was sent was 1947 and 1948. Had we had more steel available, then of course we could have been able to supply more and would have been glad to do so. In 1949, however, such efforts were made, and the supply position had improved so much, that Canada did not take all the steel that we were in a position to supply.
§ Mr. Wilson
An important point concerning the suggested barter arrangement of steel for timber is that the steel which went to the European countries did not pay for the softwood which we got. It was essential to secure agreements; but the softwood itself, not to mention other supplies which we received under those bilateral arrangements—wood pulp and paper from Finland and 1429 Sweden, iron ore from Sweden, large quantities of grain from Russia, and so on was paid for not with the steel, but with sterling, the sterling being in the form of other United Kingdom sterling area goods which those countries could, and would, take, and goods which, if we had not supplied them to Europe, would not have been taken in increased amounts by Canada. Therefore, there has been no diversion from Canada by the pursuit of trade with Europe. In the case of Russia, it has not been the steel which has been paying for the timber and the grain; it has been for the most part sterling area products such as wool and rubber.
These bilateral arrangements are getting a good deal looser as trade is settling down to more normal channels, and certainly the steel position is a good deal easier. The figures of exports of steel to Canada in 1947 were 23,000 tons, on the basis which I have just explained to the hon. Member; in 1948, 42,000 tons and last year, 79,000 tons. In 1950, the quantity should be very much greater indeed than last year and, indeed, greater than in 1938. For the first three months of this year shipments of steel to Canada have been nearly double the first three months of 1949. As I said in the House the other day, the industry and the Government are confident that we shall be able to meet all the orders for steel from Canada, apart from one or two specialities, which Canadian consumers may care to place in this country.
As far as steel is concerned Canada is a highly competitive country, with imports from the United States and a well developed industry of its own which is considerably bigger than before the war. If there were time I could, perhaps, deal with another similar suggestion on which there has been a great deal of misunderstanding; the suggestion that we should have diverted tinplate to Canada from Russia and bought salmon from Canada in consequence. I need not point out to the Committee that the tinplate was not used to buy the salmon; it was used to wrap it up. The position with Canada was that we did not have the dollars to pay for more salmon than we have actually been able to take in the last year or two.
As I think I have shown, and as the right hon. Member for Aldershot himself 1430 made clear, the solution to this problem rests in an expansion in our exports to Canada. But before I come to that I should like to say a few words about tourism. Canadian tourists in this country can make a very big contribution indeed to our balance of payments, and of course we shall be delighted to see them on other grounds also. Last year over 33,000 Canadians came to this country. That was an increase of about one-third on the previous year, and we are hoping that this year the figure will go beyond the 40,000 mark, subject to what is at present the limiting factor—transport facilities across the Atlantic.
I should like to turn now to the main export drive. The dollar value of our exports to Canada has shown a steady increase in the last three years. The figures for 1947 were 180 million Canadian dollars; in 1948, 290 million; and in 1949, 301 million. Last year we were continuing to expand with our exports but, of course, the falling off in trade and the falling off in orders just before devaluation reflected themselves in a serious fall in our export figures, which went on until the fourth quarter of last year. That, of course, reflected the cancellation of orders of which I saw something when I was in Canada. In the first quarter of this year, however, trade has picked up again very well. It is now up to 79 million dollars in this quarter and there has been a steady rise in the daily rate of exports in each month of this year. We are now beginning to see the results of the drive which has taken place over the last two years or more by industry and by the Government.
The two industries which are making the biggest contribution to these high figures are wool and motor cars. Our exports of wool goods, which has always been a traditional staple trade to Canada, are keeping steadily up in increasingly difficult market conditions. Certainly the easier selling conditions of 1948 have now disappeared. Our exports of motor cars, the biggest single new item in our trade, really have been spectacular. In 1938 this country exported 584 motor cars to. Canada; in 1948, just short of 15,000; in 1949, 31,000; and in March of this year our shipments reached an annual rate of 77,000 cars. I actually should not attempt to place too much on a single month because obviously—
§ Mr. Wilson
I thought the Opposition showed no sign of voting against this last week. Certainly, Mr. Lord should be thanked.
§ Mr. Wilson
Mr. Lord and the men have been thanked on numerous occasions because of this, but, of course, this has not been confined to that particular factory. Other motor car firms have done extremely well.
§ Mr. Wilson
Yes, and Sir William Rootes, if we are to have the whole catalogue. The motor car industry as a whole has done a first-class job in Canada. Although it is difficult to foresee the future, as far as exports there are concerned, we should expect to find a big increase this year, even over last year.
But there have been other important successes as well. Last year, with the support of my Department, the agricultural machinery industry sent out a mission to Canada, at the invitation of the Canadian Federation of Agriculture. The suggestion came from the prairie farmers themselves, who wanted to buy more British agricultural machinery. The hon. Member for Fife, East (Mr. Henderson Stewart) was a member of the mission. I well remember meeting him in Vancouver. The Report of this mission has resulted in a considerably increased effort by many sections of that industry in what is, for obvious reasons, an extremely difficult market, and, in the first quarter of 1950, we shipped more agricultural tractors than in the whole of 1949. I have every reason to believe that this is the beginning of a very large flow.
§ Mr. Wilson
I will get the figures for the right hon. Gentleman. There have been equally encouraging results in recent weeks from other industries as well. For instance, the cotton industry to which the right hon. Gentleman referred—
§ Mr. Lyttelton
Before the right hon. Gentleman leaves this subject, perhaps he will get us some figures about it. According to the " Board of Trade Journal." the 1432 export of tractors is, I think, specifically referred to as four in 1949, so doubling that would not be very great.
§ Mr. Wilson
I am sorry to say that I have not the figures with me, but I will certainly see that they are provided. I can certainly tell the right hon. Gentleman that exports in the first quarter were a good deal more than before—
§ Mr. Wilson
—as the hon. Member for East Fife will tell the right hon. Gentleman. The cotton industry has been facing great difficulties in Canada, partly due to the diversion of orders to the United States during the war of a very high proportion of our normal trade. But the industry has recovered following the pre-devaluation slump and in March of this year it did pretty well. So have many other industries which were feeling the draught considerably in the spring and summer of last year.
Against this background, the suggestion we are getting in one or two sections of the Canadian Press that our export drive is losing influence can be seen to be wrong. There is every sign that our export drive is really getting under way in Canada. In no industry is this more true than in that referred to by the right hon. Gentleman, the engineering industry. In terms of United States dollars, the engineering and vehicle industries have increased their exports to Canada from 40 million in 1947 to 114 million last year. Following the pioneer work of the mission headed by Sir Harry Gilpin, who continues indefatigable in this cause, many sections of the engineering industry have attempted to establish themselves in Canada.
With the help of the Export Credits Guarantee Department, permanent group representation for certain sections of the engineering industry has been established in Canada and, as a result of the discussions which the Gilpin Mission has aroused, many of our leading United Kingdom firms have been stimulated to extend and develop their own direct individual representation there. These developments also, of course, are being assisted by the Export Credits Guarantee Department. In addition, representation of this country at the Canadian International Trade Fair—which is to be held 1433 next month at Toronto—will exceed that of any other exhibiting country, not excluding Canada herself.
§ Mr. Wilson
I though there was something wrong. In fact, in 1949 it was 105 a month and in 1950 it will be 200 a month-
§ Mr. Wilson
—and it should be much more before the end of the year.
The Toronto Fair will enable the industry to put on what is the biggest concerted exhibit of British production of that type ever seen in North America and the Canadian buyers will for the first time have a real chance of seeing what our machinery and equipment, such as machine tools, scientific instruments, woodworking machinery and handtools can do. No one expects our engineering exports to Canada to reach the levels which the right hon. Gentleman and I hope we shall see in a matter of a few weeks or even months.
As Sir Harry Gilpin said recently, " You cannot neglect a market for 30 years and then think you can make a spectacular entry into it overnight." There are many difficulties to be overcome. One of the biggest related to the different standards of the electrical engineering industry, and as a result of special discussions last year, arrangements have been made for speeding up the procedure for getting the necessary approvals for our electrical products in the Canadian market. Until that was done a great flood of possible exports from this country was being held back.
In many other directions the engineering industry is getting away quickly. In recent months, large and important contracts have been secured for television equipment for the first two transmitting stations of the Canadian Broadcasting Corporation, for mechanical handling equipment, telecommunications and heavy electrical equipment, the results of which will not be reflected in the trade accounts for many months to come. As a result of activities both by Government representatives and by the trades concerned, with E.C.G.D.'s support, United Kingdom engineering firms are getting opportunities to tender for some of the major trans- 1434 portation and development schemes in various parts of Canada. But in engineering--hon. Members who have been on these missions to Canada will confirm what I am saying—so much depends on the individual Canadian engineer who, in the past, largely because of his technical training, has automatically looked more to the United States than to the United Kingdom as a source of supply. I felt this very strongly indeed when I was over there and it is a point made in the report of the Gilpin Mission.
During my visit to Canada last year I had a number of meetings with representatives of Canadian universities and professional institutions to see what could be done to bring far more Canadian engineering students to this country at some time in, or after, their period of training. Representatives of the Ministry of Education and from the industry are at present in Canada discussing ways and means of doing this with the appropriate Canadian authorities, and to follow up their work we are inviting the Canadian engineering faculties to send over as large a representative team as possible of professors and deans to follow up these questions with British industry and British technical institutions, because, looking to the future, there is no more important development in our Anglo-Canadian trade than the possible development of engineering.
I am certain that no single thing can contribute more to increasing orders for British equipment than a much greater awareness on the part of Canadian engineer and buyer of what this country can do and a more automatic tendency to think in terms of what this country can do rather than the United States. I am sure the Committee will join with me in hoping that these discussions will bring something really fruitful later in the year.
I am sure the Committee would want me to join in what the right hon. Gentleman said about the welcome our efforts have had on the part of the Canadian authorities and the Canadian people. Throughout my visit—and I think I was the first British trade Minister to go right across Canada, to every single province except, I am sorry to say, Prince Edward Island—
§ Mr. Geoffrey Lloyd (Birmingham, King's Norton)
At the time of the Ottawa Conference the then President of the Board of Trade did so.
§ Mr. Wilson
I am delighted to hear it. He would find, as I did—I found it perhaps even more in view of events since then—the greatest good will towards British trade exports. In the Maritime Provinces one found the greatest willingness to develop trade in all kinds of commodities. In the Prairies, we found the farmers only too desirous of taking more and more British goods, whether machinery or consumer goods, in order to make permanent the market for their own products, and in order, for quite noneconomic reasons, to increase the volume of trade. In British Columbia there was the traditional feeling which we have always seen there. Among the keen buyers of the industrial areas of Ontario. and Quebec, provided that our prices are reasonable, our delivery dates satisfactory, that we maintain our traditional quality and are prepared to study the market and send to Canadian buyers what they want, we found the same willingness to give our exports every possible chance.
There is a general realisation in Canada that not only a possible increase but the maintenance of their volume of exports to this country depends upon Canadian willingness to take more imports from us.
§ Mr. Wilson
Time is getting on, and I should like to sit down very shortly. Perhaps my hon. Friend will be fortunate enough to be called upon to speak later. I have mentioned many parts of Canada but I did not mention Ottawa. Certainly in Ottawa we found on the part of the Canadian Ministers, and indeed among members of all parties, great willingness to further the progress of Anglo-Canadian trade. Mr. St. Laurent has himself said recently:it is very strongly in our national interest to import from Britain.He has also stated that although British exports to Canada, with the assistance of sterling devaluation, may affect Canadian industries:we must not attempt to deal with it in a way that would shut out such imports from our country.Members who have been on trade missions will know what our trade commissioners are doing there, and they will join in paying tribute to the value of the work of our Senior Trade Commissioner in Ottawa and our trade commissioners 1436 throughout Canada in helping the British exporter and in supplying information to this country of possible openings for trade. Those who have made use of its services would also desire to pay tribute to the Export Credits Guarantee Department in the special help it is giving in insurance against the special risks involved in getting into the Canadian market. Already the Department has issued policies for these special purposes to a total of £31 million for dollar exports, a fair proportion of them for Canada. Taking together all E.C.G.D. business, the Department guaranteed about £10,500,000 of British exports to Canada in 1949-50.
The work of the Dollar Exports Board is too well known to require me to say anything about it. I am sure that here again hon. Members in all parts of the House would wish me to say how much we value the work being done in Canada by the Dollar-Sterling Trade Board of Canada under the chairmanship of Mr. James Duncan, to make Canadian buyers aware of the part they can play, and the advice and help it is giving to our dollar exporters in selling their goods in that highly competitive market. If, in terms of quality, price deliveries, styling packaging, advertising and what our Canadian friends call " merchandising," we will provide for the Canadian market what that market wants we can greatly increase the volume of our exports.
It is a difficult market and a highly competitive one. What it is not is a temporary market. There are still many who feel it is temporary and not worth risking money, time, trouble and enterprise in trying to get into it. But it is a market which is vital to this country. The great developments that are going on in that country provide a tremendous opportunity for our exporters and an assurance of a permanent market for them. There are electric power development for the great new oil fields of the West, iron ore and other raw materials, great new schemes of irrigation, drainage and transport—all these will develop to a tremendous extent Canada's production and standard of living.
These developments make Canada not only a land of great opportunity for Canadians, but a land of great opportunity for our exporters, an opportunity which is as unbounded as the good will there is in Canada for this country and her 1437 exports. If we approach this question in that spirit, and all our exporters do so, I am certain that the problems referred to by the right hon. Gentleman, and those which we all have so much in mind, can be solved to the greater benefit of this country, Canada and the whole world.
§ 4.46 p.m.
§ Miss Hornsby-Smith (Chislehurst)
I am grateful for the opportunity to address this Committee and the House for the first time. I do so with considerable diffidence, following as I do the two distinguished speakers who have opened this Debate today. I ask the customary forbearance which this House has granted so generously to so many of my colleagues in this new Parliament.
The subject of Imperial trade has been one of my prime political studies ever since I interested myself in politics some 17 years ago. But the subject is so vast, and the commodities in the many countries so diverse, that all too often in debate and discussion on Imperial trade one can deal only with wide general principles instead of with practical proposals. I therefore welcome the opportunity which this Debate provides to confine our arguments to Anglo-Canadian trade which, as the President of the Board of Trade has said, has special features and problems of its own that do not apply to other Dominions and colonial territories.
Even if one disregards the ties of kinship and sentiment—intangible as they are and incalculable as they proved to be in 1939—there is still the practical consideration that Canada has wheat, newsprint, aluminium, bacon and timber—all goods that we want. We on our side have capital equipment, steel, motor cars, high-quality textiles and china, goods that Canada wants. We are Canada's best market, and for three centuries trade has flowed between Canada and this country. But Canadian trade is dollar trade, and although last year we imported goods from Canada to the value of £224 million, our exports to that country, as has been pointed out by the two right hon. Gentlemen who preceded me, amounted only to £79 million.
To redress that lack of balance we have, unfortunately, as my right hon. Friend the Member for Aldershot (Mr. Lyttelton) has pointed out, cut down our 1438 imports of food, broken our contract for newsprint, and eliminated our purchases of barley, oats, and milk products, amongst other things; in short, a curtailment of Anglo-Canadian trade which hit the Canadian producers very severely. One wonders what would have happened and what would have been the reaction in the Argentine under similar treatment, when one remembers the hullabaloo that arose recently when the Minister of Food remarked somewhat trenchantly, and I feel with some little justice, that we expected a square deal from that country. We have treated our sister Dominion Canada badly. We accepted her most generous gifts after the war; gifts which per head of her population, were, I believe, even greater than those we received from the United States. On the one hand, we have taken those gifts, and on the other—no doubt regretfully—we have cancelled many of the orders which we promised to her.
I most sincerely believe that to restrict trade with the Canadian market and with the colonial territories and to switch the purchase of essential foodstuffs from the Empire countries to foreign countries is a bad policy. Experience should have taught us that foreign markets are rarely as secure, nor are they generally as favourable to us, as are our Empire markets. At a time when we have the gravest possible warnings from the Chancellor of the Exchequer that when Marshall Aid ends there is no other source from which we can sustain our standard of living or maintain our employment except by increased production and trade, we should be fostering Empire trade by every means in our power, and not spurning it.
I am one of those people who believe that Britain's recovery depends on the widest possible extension of inter-Imperial trade. A long-term policy for the expansion both ways of Commonwealth trade is long overdue. I believe that we want another Ottawa Conference. In his concluding remarks the President of the Board of Trade pointed out very truly that in Canada there is an expanding market, that she has an increasing population, that there are vast resources as yet untapped which will demand capital equipment and absorb more and more consumer goods. If at this stage we start to restrict the goods we buy from 1439 Canada; if we buy from the foreigner before we buy from Canada; if Canada is forced to find new outlets for her primary products, then we must expect her to buy the plant and capital equipment and the greater supplies of consumer goods, which she will so shortly need in opening up this vast terrain, from those who have treated her more generously.
We deceive ourselves cruelly if we imagine that we can maintain our present standard of living, to which we all subscribe, the social services and, not least, our present level of employment, unless they are in fact based on a solid foundation of Empire prosperity and inter-Imperial trade. The Canadian market can be both lasting and expanding. The foreign market is often transitory. Many of those things which we sold to devastated Europe in the years immediately following 1945 we cannot sell today in competition with Belgium, Germany and Italy.
In this connection, may I join with those who view with real concern the sinister and progressive whittling down of our rights to grant Imperial Preference to our own Dominions and Colonies under the General Agreement on Tariffs and Trade, generally referred to as G.A.T.T., or " Gatt "? I believe that " gatt" is the slang term for a gun. It is about time we turned this one away from the head of the British Empire—at which it is principally aimed—and killed the Havana Charter in so far as it denies us our right to conclude agreements with our own Dominions and Colonies.
Mercifully, we have not ratified the Havana Charter, and I do not believe that hon. Members on either side of the Committee, on the second thoughts which have occurred, or indeed other signatories, hope that the original pact ever will be ratified. We should remember that that Charter imposes a condition to buy at the lowest world price. Such an attractive slogan provides no safeguard whatsoever for the nation with a high standard of living or a high standard of social services and wages. In effect, it opens the market for the nation working the longest hours at the lowest rates of pay; and paying the lowest Income Tax and levies for its social services. How long will our standards be retained if we accept these discrimina- 1440 tory terms and destroy our very valuable Empire trade?
So far as Anglo-Canadian trade is concerned, I agree with all that has been said by the previous speakers in regard to extending the market and the desire to see that neither dollars nor distance shall divide us. We need Canada's market and she needs ours. Let us go out and win it. We start with some very material advantages. Canada does not want to be commercially absorbed into the United States. She is encouraging the entry of British goods through the Imports Division of the Foreign Trade Service, and she is short of United States dollars. As proof of her desire to buy our goods, it is true to say that last year —with a population roughly one-tenth of that of the United States—she bought as much from this country as did the United States. The atmosphere is therefore good.
Devaluation has made our prices in Canada more attractive and a " buy British " policy reflects Canadian awareness that it is in her long-term interests to buy more from us in order to safeguard her own future sales to us. To me it is a great tragedy that, even if she wishes, she cannot under the present stringency of " Gatt " offer us any preferential help. Our goods were denied to the Canadian market during the war years and we have to acknowledge the fact that we have to compete with some of the smartest salesmen in tit world from across the United States-Canadian border. We can, however, win on quality, price and service.
I agree with the right hon. Member for Aldershot that there has been much adverse comment against British manufacturers which has been widely publicised in Canada and used against us. First, we should recognise that we cannot compete in the cheap, mass produced article, for the production of which the United States and Canadian industry is specially attuned. We can, however, hold our own in high-quality goods in which we specialise in this country.
I am particularly interested in woollen textiles and linens, and it is on that subject that I wish to conclude. The President of the Board of Trade, if I understood him aright, mentioned that we have a certain resistance to meet in competing with our woollens and textiles. I believe that we must give our manufacturers every possible chance to win their way in that 1441 market. To do so, we must encourage them to have their salesmen on the spot. Canadian tastes cannot be judged from a Bradford office, nor can orders be won from the fastness of a Belfast linen mill. Our salesmen, our technicians and our executives must have knowledge of the markets, and most of our go-ahead employers are very anxious that they should have such knowledge.
We must have representatives on the spot. Too often in the past we have expected a trade catalogue deposited in a Toronto head office to sell goods in Winnipeg in competition with a high-pressure American salesman, standing on the office mat. We must have our resident salesmen not only in the eastern provinces, but out west in Calgary, in Victoria and Vancouver. In this connection, particularly with reference to the granting of currency allowances, I hope that the Treasury will recognise that many a fat order is clinched over a good dinner —and it strengthens the position of the seller considerably if he has enough money in his pocket to pay the bill.
American competition is keen and every magazine bears American advertisements, which in many respects are more akin to Canadian taste in colour and design. They have always encouraged prompt delivery and personal service to a very high degree. The increasingly difficult market for British worsteds is one which is of very great interest to me. We must remember, however, that the United States sells in the home market and then exports its surplus, often at reduced prices. Here, our policy is the reverse. We make it as difficult for ourselves as possible by imposing a heavy Purchase Tax on the home market and making home sales almost impossible. What should be a spring-board to boost exports is a bed of nails, each nail a new tax driven in by the Chancellor of the Exchequer.
Our export prices are, therefore, relatively higher than those of many of our competitors. If, for example, we could cushion our exports of linen by making ten gross of dinner sets for the home market, then the next ten dozen of the same weave on the same loom could be sent abroad at a more competitive price. Similarly, if one weaves a fine worsted, knowing that one can launch 100 pieces on to the home market, then one has a greater opportunity to be competitive with 1442 the next 100 pieces in a foreign market. But on. fine linens and worsteds we levy a Purchase Tax of 664 per cent. There is little home sale to enable us to close the margin against foreign competition.
The manufacturer has to provide a very wide range in competition with America. Canadian importers want to see many patterns and to have a wide choice. The manufacturer in this country is at a grave disadvantage if he knows that every piece of fine worsted which he makes, if it is not of a pattern which sells abroad, will stay in his storeroom here, because the 664 per cent. Purchase Tax upon it will make it increasingly difficult to sell it. That hinders his ability to provide that breadth and variety of range which is part and parcel of the textile trade.
I should like to express my thanks for the opportunity of addressing the Committee on this subject. I am grateful to the Committee for the courtesy and forbearance which has been shown me. To sum up, I would say that Canada wants goods and she wants money. Let British, as well as American, money be invested in Alberta and Labrador, because from such investments we gained much of our strength in,pre-war years. Secondly, I hope that the limit of £1,000 per family for those who wish to emigrate can be raised, because if Canada is to open wide this new territory she will need technicians and professional men, and more and more population. What better aid to that than the raising of it from British stock?
Canada needs goods. We must supply them by every means in our power. She needs money. We would do well to invest in her great new development. She needs people. Again, I ask, what better than encouraging family emigration from our own shores? Let us lend our endeavours to our great sister Dominion. Let us join forces with her in mutually expanding trade and in providing tangible resources which will help to give to the British peoples lasting prosperity.
§ 5.4 p.m.
§ Mr. J. P. W. Mallalieu (Huddersfield, East)
The hon. Lady the Member for Chislehurst (Miss Hornsby-Smith), who has just addressed the Committee most effectively for the first time, was preceded into this House by a very lively political reputation. Certainly, we on this side 1443 of the Committee, and, I should think, hon. Members in all quarters, have been waiting for her maiden speech with expectant anticipation. Not one of us has been disappointed this afternoon. If she will allow me to say so, her speech sounded every bit as attractive as she herself looks. I am not sure that I should call it a non-controversial speech. At any rate, if it was non-controversial I shall look forward eagerly to the moment when she plunges into controversy. I am sure that I can say, on behalf of political friend and foe alike, that we heard her with great interest and that we shall look forward to hearing her many times in future.
I wish I could say the same about the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton). I am bound to say, in a phrase of the Lord President of the Council, that the right hon. Gentleman's speech was, " a bit rough." He was introducing a subject about which there is great interest on both sides and about which, so far as aim is concerned, there is complete unanimity. But he chose to open this objective survey with a series of charges which were replete with blind bias. For example, he said that our export trade was being interfered with—was being diminished—by speeches, allegedly denigrating British industry, which were being made by His Majesty's Ministers.
I simply do not believe that buyers in Canada will be put off buying British goods because we on this side say that, before the war, certain sections of British industry were inefficient. What, however, I do think is possible is that they might be put off by some of the remarks which have fallen from the lips of the right hon. Gentleman the Leader of the Opposition. It was not His Majesty's Ministers, but the Leader of His Majesty's Opposition who told the world that Britain was becoming a nation of " tired Tims and weary Willies." He said that on the ground of the Wolverhampton Football Club, of all places.
§ Mr. Mallalieu
I know the Wolverhampton Football Ground very well. I have often seen players on that ground put the ball through their own goal but I have never seen a player perform that feat and be pleased about it afterwards. Apparently, the right hon. Gentleman was so pleased that he repeated it. An even more damaging thing that he said was that the mainspring of British productive enterprise had been broken. People do not want to start having business dealings with a country whose mainspring of productive enterprise has been broken. These sort of speeches are to be discouraged, from whatever quarter they come.
I was worried, too, by the right hon. Gentleman's main approach to this question. He quoted a number of examples where, in his view, we had seemed to let Canada down. One of the examples he quoted was that of the Canadian newsprint contract. I remember speaking on that subject in the last Parliament. I myself greatly regretted that that contract was broken; but we should be missing the point if we thought that, by breaking that contract, we were doing down Canada. We were not. We were doing down ourselves. The Canadians would not have the slightest difficulty in selling all their newsprint to the United States. One of the great fears I had was that we should lose the last Empire source of newsprint. There was a danger that that would happen. It was suggested that, so that Canada might help Britain a bit, we should be allowed to maintain that Canadian contract, but, because of the desperate need to save dollars, we should cut down our consumption and resell the surplus abroad. That would appear to me to be a perfectly feasible transaction and a perfectly sensible way out of the serious dollar difficulty. But it was not Britain who turned that proposal down. It was, in fact, the Canadian Government.
Then the right hon. Gentleman went on, at some length, to bring up the old story about the deals in bacon. I think it is a non-controversial statement, one on which the majority of us will agree, that if we possibly can, rather than import our eggs and bacon, it is much better to produce them here, but that if we are to do that we must have feedingstuffs. In 1445 the first two years after the war, it was virtually impossible for us to import feedingstuffs. They were rationed. We were told that if we took coarse grains, we could only do so on the understanding that they were to be used for human consumption. It was impossible to build up the numbers of livestock and the pig industry in this country to anything like the extent that we should have liked, and we were therefore forced to import bacon.
When we made the deals with the Canadians, we made it perfectly clear that it could only be a temporary arrangement, and that it would continue until the feedingstuffs position began to improve. We gave them the fullest possible warning, and I say that because I happened to have a sort of office boy connection with that Ministry at that time, and I was interested in this matter. I remember that very clear notice was given —I do not know about it being given privately, but certainly through the medium of the Press.
§ Mr. Mallalieu
We are, because we still cannot get all the feedingstuffs we need; as we import more, so our imports of bacon will go down.
§ Squadron-Leader Burden
Canadian bacon producers are made fully aware of the situation by reason of the transfer of purchases elsewhere, and there will be resentment if the Canadian bacon producers are unable to sell their products.
§ Mr. Mallalieu
I quite agree, and we ought to publish more about the facts of trading between the two countries. One of the troubles is that Canadians do not seem to understand, as many people in America do not understand, that unless they are willing to buy our goods we cannot afford to buy theirs. The more and more that that fact can be made public in this country, in Canada, the United States and elsewhere, the better it will be for all concerned. It is not fair, in my view, to charge the Government with shilly-shallying about the bacon contract, because it was a perfectly legitimate and straightforward deal. It was only made on a temporary basis.
§ Mr. Mallalieu
My right hon. Friend said that it was only for six months, and made it clear why it could not be a longterm arrangement. Where we have entered into long-term arrangements, we have made long-term contracts.
So far as I can remember, the right hon. Gentleman the Member for Aldershot did not refer to one long-term contract which has been an extraordinary boon, both to the Canadian producers and to ourselves, and that is the wheat contract. May I recall to the Committee, though I am sure that most hon. Members will remember the details, that as a result of that contract, we in 'this country achieved immediate benefits in the first two years after the war, because we were able to buy our wheat at prices far below the world price, and I do not think that, at any stage, we were over that level in terms of price. The Canadian producers could have offered to sell their wheat in a free market and might have got a better price for it. Then we, in our turn, would have had to pay a very much larger sum. Therefore, that particular contract was a tremendous boon to us on this side of the Atlantic. It was equally a boon to the Canadian producers.
One of the curses of primary production the world over has always been its uncertainty. High prices have restricted demand, and low prices have often involved the producers in loss. This longterm contract has lasted for four years, and for the first time on record has brought a little stability into a most uncertain trade. I think this particular longterm contract was a typical example of the kind of efforts which the Government have been making to try to secure better trading relations with Canada, and I believe that that contract was the first serious attempt, since all the centuries ago Joseph of Egypt built his granary to introduce a little common sense into the grain trade. I believe that it was a magnificent contract, I hope it will be continued and that through its influence we shall be able to extend future Anglo-Canadian trade.
§ 5.16 p.m.
§ Mr. Dodds-Parker (Banbury)
The first point on which I should like to follow the hon. Member for Huddersfield, East 1447 (Mr. J. P. W. Mallalieu) is that of the Canadian wheat agreement. Without going into details, may I say that I think that this agreement will shortly come up for renewal, and I hope that the President of the Board of Trade, when discussing this matter with the Canadians, will put up to them the point which has just been made by the hon. Member opposite. For producers an agreement such as this is acceptable, while we on this side of the Committee feel that these agreements need not be in the form of bulk purchase by the State, because it is possible to achieve our objects by other methods.
I hope the President will ask the Canadian authorities to consider extending a similar assurance to the Empire sugar producers; the Canadians have not so far been willing to give the same assurance of reciprocity to the Empire sugar producers as this country is giving to the Canadian wheat producers. I therefore ask the President most seriously to take up this point when he discusses any new wheat agreement with the Canadians. If they would undertake to give priority to some 300,000 tons of Empire sugar, it would do much to increase the stability of the Empire producers.
I think that all hon. Members on this side of the Committee were amused by one aspect of the President's speech. His usual offensiveness, to which we have become accustomed, was not there, and possibly, with his small majority, he may not feel so safe and if he has not changed his constituency by then, may well find himself in Canada or elsewhere trying to sell some of these goods. I should love to see his offensiveness turned into aggressiveness and the right hon. Gentleman himself go out as an aggressive salesman, when he would find that it is much more difficult to sell £10 worth of these goods than it is to lose £10 million worth of public money or criticise traders on the Floor of the House.
There are two points which I want to raise with the right hon. Gentleman on his speech, and the first is on the subject of steel. He has said, for instance, that by selling steel east of the Iron Curtain we have received far more timber. I think this is a very dangerous principle, for it seems to imply that we are pre- 1448 pared to take these perhaps slave-produced imports from Russia or her satellites rather than from free Empire producers. There is another point concerning steel. The right hon. Gentleman said that in 1947 and 1948 it was not possible to export enough finished steel products to Canada. I think, at that time, it was suggested in certain quarters that we should import from Canada semifinished or raw steel, finish it here and reexport it to Canada, but this project was turned down by the right hon. Gentleman's department.
We on this side of the Committee do not approach these difficulties on the basis of bilateralism. It was agreed by us that this case should be argued today on the bilateral basis because there is no time today to talk about the full implications of the dollar gap and so on. I feel that the width of the dollar gap today is not necessary, but that it has been increased by two major actions of this Government. The first is the releases of sterling balances and other credits to the extent to which it has been done in the last two or three years. The second and most serious point is that this Government have failed to restore world confidence in sterling as the lubricant of world trade which, sooner or later, has to be restored if this country is to survive. We were always told by hon. Members opposite that the only excuse for devaluation was that it would lead to convertibility of current transactions. Yet here we are today, with convertibility as far off as ever. As I have said, it is not appropriate on this occasion to go into detail on that argument.
I wish to put one or two specific points to the President on the export of anthracite from this country to Canada. I have a Question down for next Wednesday on the export of anthracite from this country, and I shall be glad if the right hon. Gentleman can either confirm or deny whether it is true that Canada would take from Britain, if available, one million tons of anthracite this year; that there are only about 450,000 tons available, and, at the moment, shipping space for only 200,000 tons. This is a point which needs to be gone into, and we on this side of the Committee would be glad if the President of the Board of Trade would tell us whether these figures are correct.
1449 The second point I wish to put to the right hon. Gentleman is about compensation trade. Here I speak from commercial experience, for which I make no apology to the Committee, because often it is only by one's own commercial dealings that one finds out what is going on. What is the ratio of dollar earnings to dollar expenditure in so-called " compensation deals "? Incidentally, I am against compensation deals, just as I am against bilateralism, although I realise that we have to accept a certain amount of such deals in the interim period between the war and a return to multilateral trade. Is it true that the ratio today is so fixed that three dollars must be earned to every one offered for sale? In this connection, I support what my hon. Friend the Member for Chislehurst (Miss Hornsby-Smith) said about development in territories such as Labrador. I think that on a basis of compensation trade we might be able to invest capital in the form of capital equipment in the great development areas, not only in ironstone in Labrador, but also in oil production in the West.
There is another point I wish to put to the right hon. Gentleman. As hon. Members on this side have said, I think the greatest sin of this Government has been the encouraging of Canadian producers—despite what an hon. Member said just now—to go ahead and produce, only to find that they cannot sell their products. " Britain will take all you can produce," was the attitude adopted in 1945-46 by Sir Ben Smith and the Lord President of the Council. Take it, yes, but we cannot pay for it.
That is the problem we are up against. I think that the figures of non-wheat imports into this country are in volume fairly significant ones. The non-wheat imports were down to 14,500,000 tons in February, 9.4 million in 1947, 3.6 million in 1948 and two million in 1949. That is in volume; in value, of course, the figures are even more telling. They represent things like bacon, cheese, and so forth of which we are short. Wheat is the one thing which has gone up, to 971 per cent. of our food imports from Canada.
Finally, there is the question of tobacco. In Southern Ontario two years ago I had the privilege of seeing tobacco production in Canada. There they have gone 1450 ahead, again believing that we in this country could absorb all the tobacco they could offer us. They have now many millions of pounds of some of the finest cigarette tobacco in the world which they cannot sell to this country because they are told that there are not the necessary dollars available. Their only alternative is to plough it back into the ground as a fertiliser. Can the right hon. Gentleman say whether it is not possible to give some hope to these people that some of that tobacco will be taken by this country?
I have asked the President to give us some indication of the Government's attitude towards the creation of new blocked credits and their use in payment for such urgent necessities as foodstuffs and timber, whether on private or public account. Is the right hon. Gentleman prepared to allow imports into this country against a time when they can be free and convertible, or must all imports be paid for out of current transactions? I believe there are a number of people in Canada and in this country who could arrange for the time being—always, of course, under the control of the right hon. Gentleman's Department—credits which would be of mutual benefit to both countries for the immediate period ahead.
What I said earlier about sugar is an example of something which could be of very considerable benefit both to this country and to Canada. I hope that in that particular connection, above all, the right hon. Gentleman will do all he can to help. Like my hon. Friends on this side of the Committee, I believe that the solution of the problem of AngloCanadian trade is likely to prove the key to the whole dollar problem.
§ 5.26 p.m.
§ Mr. Edgar Granville (Eye)
I do not think the Government can complain about some of the speeches made in this Debate this afternoon. There has certainly been a desire on both sides of the Committee to make suggestions to the right hon. Gentleman for increasing AngloCanadian trade. Only a few weeks ago, the Chancellor of the Exchequer was telling us that the life of this country depended on an increase in our exports to the dollar countries.
I thought that the President of the Board of Trade sounded a trifle gloomy in his speech this afternoon—certainly 1451 gloomier than on the last occasion when he addressed us on this subject—which I considered rather surprising after his visit to Canada, and certainly surprising on May Day. I found myself wondering what had happened to the spirit of pioneering and adventure which, only a few months ago, he associated with his appeal for the export drive to the United States and Canada. I hope it does not mean that the right hon. Gentleman is disappointed with the result of the increase of exports from this country.
I agreed with the right hon. Member for Aldershot (Mr. Lyttelton) when he said that he thought the various pessimistic statements which are made do a great deal of harm. An hon. Member opposite spoke on the same point. I have no doubt they do. When the right hon. Gentleman was making his statement, an hon. Member interjected that statements in this House are telegraphed to the United States and Canada. I would say that some of the speeches made by business men or visitors to the United States are telegraphed across the frontier to the " Montreal Star " or to Ottawa and the Western newspapers, and are reproduced there.
I was sorry to hear that the Lord President of the Council made a statement during his trip to Canada—when he was respendent in a fur coat—which could be interpreted as detrimental to British trade. It seems clear that Canada must reduce her imports from the United States and increase her exports from this country, if she is to reduce her own dollar gap with America and our gap with her. The hon. Member for Chislehurst (Miss Hornsby-Smith), who delivered a brilliant maiden speech this afternoon, referred to capital investment in Canada. I hope that somebody in the right hon. Gentleman's Department or in the Treasury is applying himself to the solution of this problem of capital investment and to the matter of the disadvantage from which we suffer at the present time because the United States have virtually taken from us the markets which we held in Canada before the war. I know there are tremendous difficulties, but I hope the Minister will not put it on one side as being impossible of solution, and that the matter will continue to be taken up by our representatives at Ottawa at the 1452 highest level under Mr. St. Laurent or his many capable Ministers.
As the President said, the main emphasis has still to be on our export drive. I should have thought that the right hon. Gentleman knows by now, from the experience of the last three or four years, that it is quite clear that the increase in our drive must come from our main traditional exports from this country. I am not complaining because a very large number of business men, encouraged by the Board of Trade and the various speeches of the right hon. Gentleman, have been to Canada to try to work out some sort of arrangement for the purchase of our consumer goods and so on. But, in the end, as the hon. Member for Chislehurst said, we shall have to depend on exports of woollens and cotton, upon textiles and engineering, which the right hon. Gentleman referred to. and upon motor cars.
I have no interest in this at all, but I notice reports in the newspapers that Canada has turned over to the purchase of United States aircraft. I am sorry to see that. I realise that behind it there must be a tremendous problem with regard to expenditure; but I had hoped that the exporters of British aircraft to Canada were going to find a semipermanent market.
§ Mr. Granville
They do, and we are very glad to know that, but I am afraid there is a decision to buy other aircraft, perhaps fighters and so on, from the United States. I hope the President will have a talk with the Minister of Supply who, I think, is responsible and find out what is happening.
Possibly the President touched upon one of the reasons for these purchases when he referred in his speech to what the right hon. Gentleman the Member for Aldershot said about electrical equipment and standardisation. I believe that in the engineering and electrical engineering industries, this country will have to take radical and bold new steps forward in the matter of co-ordination of American and United Kingdom measures. It involves the whole question of exports and of servicing and spares and the whole question of defence. It is an enormous 1453 problem and I know that the Ministry of Supply has started to tackle it. If we want to maintain our exports of engineering goods and similar material to Canada, we shall have to make a bold move in reaching agreement with the United States on the standardisation of engineering equipment.
Price is still a very important factor in the Canadian market. In many ways, certainly with regard to consumer goods, Canada is not a rich market. The enormous populations of Quebec, Montreal and similar cities are very " pricy buyers " and there is keen business competition from the United States. If one can say, " This is British quality and British workmanship and the price is right," one is on the way to securing something approaching a semi-permanent or even a permanent market for our exports to Canada.
There is, however, the important question of the lag in time of delivery which the President has run up against over and over again. It is a tremendously important question to a buyer in Canada. A traveller goes out, encouraged by the Board of Trade and armed with export credits and currencies and so on, and he says, " I am out to sell poplin." The buyer says, " When can you deliver? " The traveller replies, " In six months—well, I think in six months." The Canadian buyer understands American styles and tastes and, though the quality may not be as good as British, the patterns are good and the style is first-class; he is absolutely certain that he can get delivery in a few weeks and that he may be able to buy at prices even lower than those prevailing when he made the contract.
I have suggested to the Minister in the past that his Department might look into the possibility of exporting to sell from stock in the United States and Canada. I know that many of the powerful manufacturing companies in the textile industry are doing this, but most of our exporters cannot afford to export for stock, either in Toronto, Montreal or New York. As the hon. Member for Chislehurst said, first-class salesmen should be able to go out there and say to buyers, " Here are the actual goods you are going to buy, and you can get them tomorrow—they are in stock." If the right hon. Gentleman could do that, through 1454 the various agencies established by the Board of Trade for group exporting by the smaller firms, it would go further than any other method to deal with this question of delivery, which is perhaps the most difficult problem of all at the present time.
I should also like the President to consider the question of incentives. Appeals are rightly made to exporters to try to get into the Canadian and American markets, but what are the incentives to export? An engineer in capital goods, who has spent 20 or 30 years of his life building up a business in the Middle East where he has customers and goodwill, is asked to pull up his roots and go out and get what, before 1939, was the most difficult and most chancy market in the whole of international trade.
Many of these companies who could export to Canada are saying, " Why should we? What is the incentive? Why should we give up our regular customers and the trade we have built over a number of years? Why should we say goodbye to all that and risk what has always been a semi-permanent market in Canada? " We shall have to address ourselves sooner or later to this problem of incentives, in the form of reduced taxation or of allowing exporters to keep some of the dollars earned abroad or by encouraging workers to work overtime by a reduction in income tax. I should like the right hon. Gentleman to go into this. To give him his due, he has achieved a great deal but if we are to bridge the gap we must tackle this question of incentives.
The target is that if we can take away 15 per cent. of the trade from America that goes to Canada at the present time, we will double our exports to Canada and close the Canadian dollar gap. I hope the right hon. Gentleman will give even greater encouragement to chambers of trade and chambers of commerce in the country to see that no stone is left unturned to try and produce more dollar exports. I should have thought that following the Festival of Britain, we could have had an export exhibition in Sheffield, Manchester and the other larger manufacturing towns.
§ Mr. Granville
But even so, many of the manufacturers are not at all clear on 1455 the point. It is not enough to explain the problem in a speech at a luncheon or something of that sort.
§ Mr. H. Wilson
The British Industries Fair opens next week, and that is the biggest trade fair of its kind in the entire world. I agree that it takes place only in London and Birmingham, but the hon. Gentleman surely knows that as part of the Festival of Britain, there are arrangements for a trading exhibition on the lines he has in mind in parts of the country.
§ Mr. Granville
I know something about the British Industries Fair, but I am taking literally the statement of the Chancellor of the Exchequer that when Marshall Aid ends the life of this country will depend upon our being able to bridge the dollar gap. It is not enough to put all our effort, our advertising, entertainment and publicity into a trading exhibition which is covered by the British Industries Fair. The Government will have to make a more specific approach to management and workers and make known in all the big manufacturing towns the advantage which will accrue from getting our goods into the American market.
§ 5.42 p.m.
§ Mr. Malcolm MacPherson (Stirling and Falkirk Burghs)
The hon. Member for Eye (Mr. Granville) began his speech by suggesting that the President of the Board of Trade was gloomy. I cannot imagine an adjective less suited to my right hon. Friend's speech. I think the hon. Gentleman may have confused the speech of my right hon. Friend with that of the right hon. Member for Aldershot (Mr. Lyttelton).
§ Mr. MacPherson
I agree that the right hon. Member for Aldershot was gloomy. But surely the figures relating to the motor trade which my right hon. Friend gave were the very reverse of gloomy. The whole picture which my right hon. Friend painted of Anglo-Canadian trade was one of increasing success, particularly in regard to its development.
There are one or two other points in the hon. Gentleman's speech which call for a certain amount of comment. He 1456 referred to the lag in delivery time which Canadian buyers of our merchandise are experiencing. Surely the most important thing is the success with which our exporters are overcoming that difficulty. The time lag in deliveries is decreasing, which suggests that we have got the problem in mind and that it is well on the way to being solved. The hon. Member also suggested that we should export for stock in Canada. That suggestion sounds sensible enough—in fact, it may well be sensible enough—but those of us who have noted what is being said about the difficulties of our export trade with Canada will realise that this is not a problem to be dealt with casually. A great many warnings have been issued on the subject of trying to sell from stock in Canada, and it is not by any means the kind of problem which can be dealt with casually in the absence of a good deal of expert knowledge.
§ Mr. Granville
I do not suggest that we should try to sell new lines. We should only sell routine lines and approved commodities which have a regular run in the market.
§ Mr. MacPherson
That seems to me to be the policy to adopt after our trade is well established. We are trying to build up our trade in the post-war years. Our trade with Canada is not as widely developed and fully established as most of us hope it will be in the course of a number of years, but it is on the way. It is doing extremely well, and we hope that it will become even more fully established. The hon. Member also expressed misapprehension about the Festival of Britain. He suggested that there should also be an export exhibition. Surely the main idea behind the Festival of Britain is just that, that it should be an export exhibition. I was glad that an hon. Member opposite reminded him that there had been a very successful exhibition of this kind in Scotland.
§ The hon. Member for Banbury (Mr. Dodds-Parker)
was guilty of several statements which seemed to be misleading. His statement that the width of the dollar gap was entirely due to actions of the Government was quite unjustifiable. He would surely not exclude the effect of the so-called American trade recession. When he spoke about devaluation as having for its only excuse—I think that 1457 was the phrase he used—the fact that it would lead to convertibility in dollar-sterling transactions, surely he was putting a completely wrong construction on the matter. I am sorry that he is now absent from the Chamber. One of the main aims of devaluation was to help increase our dollar trade and so help to bridge the dollar gap. Experience since devaluation has proved that the judgment of the Government was wise in that respect.
One or two speakers have already pointed out that so far as our exports are concerned, the Canadian market is a permanent and not a temporary market. I am glad that that has been stressed, because there are a number of things which are of considerable importance in a temporary sense in the Canadian market; but basically the market will last. The agricultural production of Canada is likely to supply us permanently with much that we need, and I suppose that we shall continue for a long time to buy Canadian wheat. Canada realises perfectly well that, however, much she may develop her own economy, one of her problems will be to conduct an external trade. In our trade with Canada, however, there are difficulties on both sides which, fortunately, each of the two nations recognises. It is not just completely free trade; it is not a completely natural trade. It is not the kind of trade which can go ahead to its full fruition if things are left to laissez faire principles.
Canada, for example, finds it necessary to divert a certain number of her purchases from the United States of America, and she is actually doing that by methods which we should call controls. She has set quotas on certain imports, for example. We, on our side, have a parallel difficulty. The markets in Western Europe and in the stering area generally are perhaps more attractive and more easy to satisfy than.the Canadian markets. To develop a large-scale Canadian trade means giving up, to a certain extent, other markets which are considerably easier. Therefore, on each side certain practical difficulties have to be faced. But, as has been stressed more than once, there is a good deal of good will to us on the Canadian side, and vice versa.
I support the suggestion put forward, first by the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) and then by my right hon. Friend, that 1458 we should develop our trade in capital goods with Canada. That should be the centre and basis of our export trade to that Dominion. As the hon. Lady the Member for Chislehurst (Miss Hornsby-Smith) mentioned, there are oil developments in Alberta and Labrador and the posibility of a considerable iron and steel industry in the East. These developments involve the transfer of possibly the greatest part of the oil from Alberta right across to the Eastern industrial zone and, in addition, the Labrador developments will add to the industrialisation of Eastern Canada.
A few days ago hon. Members opposite suggested, at Question time in the House, that Canada was very nearly in a position to supply all her own needs. She may well be in the future, but before she has reached that stage she must carry out a considerable amount of capital equipment of new industries. My right hon. Friend the Minister of Works, when a back bencher in the previous Government, raised the matter on the Adjournment and suggested that during the next few years Canada would be developing a capital equipment programme of £7,600 million—a terrific development.
That temporary situation—in a longterm sense, because it will last over a number of years—is a strong indication to us to enter the capital equipment market in Canada. That line of development has the additional advantage to us that it means strengthening what is, after all, our strongest industrial suit, the capital equipment of heavy engineering and the various things associated with it. Machine tools and agricultural machinery have been mentioned, and I would suggest, also, scientific instruments as well as the range of equipment that goes with the building up of capital installations of one kind and another. Our trading position in the coming generation or two should be one in which we will do our best to equip not merely Canada but a large number of other areas in. the world that will need a considerable amount of capital equipment before they can produce to their full potentiality.
I was interested when the President of the Board of Trade mentioned the question of Canadian engineering students being given some experience in universities in this country. That merits a great deal of fresh attention. Anyone who is 1459 familiar with the workings of the interchange of mature students in the field of pure scholarship through the Rhodes scholarship system, the Commonwealth scholarship system, and others of less importance and not so well known to the public, realises how much it has enriched both this country and other countries inside and outside the Empire which have participated.
I have often wondered how far it would be practicable to extend such a system to the technicians, to the younger executives and even to the salesmen in our bigger and more fundamental industries. It seems to me that while there have been the beginnings of that, it has not had such authoritative backing as the remarks of the President today. I hope it will be put into practice not only for Canadian engineering students but for technicians in other industries, particularly our basic heavy engineering industries.
§ 5.55 p.m.
§ Mr. Beverley Baxter (Southgate)
I understand that the time is short and, therefore, I shall be brief in what I have to say. We should congratulate ourselves on the extraordinary thing that is happening today: we are actually having a Debate upon Commonwealth affairs—upon Anglo-Canadian trade. This is really a remarkable thing and I am glad to see that for the last hour the Minister of Commonwealth Affairs has been in the Committee. I want to congratulate the " usual channels " on finding three and a half hours for this subject. It is almost as important as the reclaiming of marginal land—not quite, but almost—and nearly half as important as the film industry. We are getting on.
I cannot remember when we had our last Debate on Dominion affairs, and I hope that the " usual channels "—and I see one of the " channels " entering now, the Lord President of the Council—will realise how glad we are. Having started so well—if I could have the right hon. Gentleman's ear—may we hope that within a couple of years or so we shall be allowed one and a half hours to debate the Colombo Conference? Are we asking for too much? At any rate we have started well today with this three and a half hours, and now I will get on with what I have to say.
1460 Let me say, while the Lord President is here—I know he has a lot to do, and he will have a lot more to do presently—that in his absence this afternoon it was mentioned that when he encouraged the Canadians to grow apples, it was no laughing matter when the Canadians, who took him seriously, had to pull up thousands of apple trees. Men who had sown the seed and watched the tree grow and watched the fruit come to the branch were told, " There is no place for it, the people will not take it."
§ The Lord President of the Council (Mr. Herbert Morrison)
Can the hon. Gentleman tell me when these negotiations about apples took place between myself and the Canadian Government? I do not remember them.
§ Mr. Baxter
Yes, it has already been stated this afternoon that the right hon. Gentleman encouraged the Canadians to grow everything they could—Britain would take everything they could give us in the way of fruit or foodstuffs.
§ Mr. Baxter
But the Canadians were led to understand that.
Another thing about which we should be glad today is that the speeches of my right hon. Friend the Member for Aldershot (Mr. Lyttelton) and the President of the Board of Trade both reveal that we have in the two of them complete Empire Ambassadors. I do not think it does any harm if we have a coalition on the subject of Empire—I wish the Lord President would give me his ear because I am talking about a coalition, and that is his business. I am giving him a lot of good advice if he would only listen. We all have to listen to him a lot. If we are to have a coalition, let us begin with a coalition on the Empire. That is one thing we can afford to do.
Now I want to say something about the visit of the President of the Board of Trade to Canada. I am sure that the right hon. Gentleman will not mind if I say something which begins more harshly than it will end. I went across Canada, just after he had been there. In Montreal the right hon. Gentleman made a bad impression.I do not know why it was, but I found the people there very hostile to him. In fact, 1461 if he goes back there, I would advise him to wear a beard. However, I give him credit for the fact that while Toronto was critical, the further west I went I found that he had improved, or else they liked him better. The British Trade Commissioners told me—they were talking quite bluntly—that they found him friendly and accessible and that the ideas they put forward to him he took up swiftly; and they paid their tribute to him as a Minister. I am merely putting on record that this is a fact. I appreciate what the right hon. Gentleman said today.
In Vancouver I met a young Trade Commissioner, a civil servant. So often civil sercants are described, foolishly, as men who are clock-watchers and tea-drinkers, but I found there that this young man, who handled the British trade with British Columbia and Alberta, could not have worked more skilfully or with more enterprise or more spirit if he had been getting 25 per cent. profit on everything he did. I am sure the President of the Board of Trade will bear out what I say. I was immensely struck by that. In Winnipeg there was the same thing. I pay that young man and others like him, engaged in that work, full tribute for what they are doing.
I turn for a second to attack and criticise some of the things I saw—not the Government, but British industry. Travelling right across the 3,000 miles of Canada last September I did not meet one British industrialist. Yet Canada is so constituted as to be at once so narrow and wide—[HON. MEMBERS: " Narrow and wide? "1 Yes, it is. It is wide from east to west and narrow the other way. In travelling across the country, had there been any considerable number of British visiting industrialists, I should surely have come across some of them. However, I did not find one. Another thing I saw was the advertising literature. It was deplorable, though not so far as textiles and the motor industry were concerned. I could have given examples to the Committee, but I promised not to be long.
As has been said already today, the whole tempo of Canadian life is in tune with the American. There are the American radios, American magazines, and 1462 American tourists all the time, and British industrialists are too slow in realising that showmanship and packaging have an immense amount to do with sales in Canada. I was told, for instance, that a Canadian lumberman will come into town to buy an axe. There is a British axe with a plain handle. It is the best axe that can be bought. Beside it is an American axe with a painted handle. The lumberman, coming in from his hard work out in the woods, likes the look of the painted handle, and so he buys the American axe rather than the British.
I have a cousin who is the head of the Macassar Mines, and who wanted to place an order for £10,000 worth of machinery. On some of this machinery a man has to sit at a certain height, and he has to have a seat. The buyer required the seat on the equipment to be a foot higher. The British said that they had always had it that way and would not change it. My cousin told me that himself. An Englishman said to me when I was over there, " The trouble is that in Canada they are not satisfied with a gold watch. They want hot chocolate sauce on it." I think the answer to that is that if we want to sell goods to the Canadians and the Canadians want gold watches with hot chocolate sauce on, we must give them gold watches with hot chocolate sauce on them. There is no doubt that some of our advertising literature and our packaging is very bad, and does not conduce to the sale of our goods in the Canadian market.
It is very unfortunate, but I must leave out a lot of what I wanted to say if I am to keep my promise not to speak much longer. I should like to know, however, what the President has to say about some revelations which appeared in the " Financial Post " in Canada about woollen and worsted goods which were rejected by the Canadians. The " Financial Post " is a journal of the very highest integrity, and I should like to know whether it is true that there has been such a falling off in the quality of some of our textiles that they are being returned by the Canadians, sometimes at the rate of as many as from 30 to 40 articles in a package of 100. The " Financial Post " lays the blame on the British Government. It says that this falling off was because of encouragement to make cheaper goods to earn more dollars. I shall be very pleased if the President can say that that story is not 1463 true, or if he can give any explanation of the facts, because it is a very serious thing.
To me, as one who was born in Canada, it has been an encouraging and thrilling thing to hear the tributes to Canadian generosity and Canadian loyalty. The things said in those tributes are true. We must not forget though, and the Canadians must not forget—and perhaps I can say this more easily than anyone else in the Committee—that the Canadians need the sterling area, too. Canada could not keep her identity as a nation in relation to the United States but for what we can give to Canada. This is not a one-way proposition. When I went across Canada I pointed out to the audiences I spoke to that Canada should try even more and more to find some way of trading within the sterling bloc. It may mean dual currency, but if she wants to keep her independence as a nation, she must turn to us, just as we, if we want to keep the Empire going, must turn to her.
Canada is a growing country. It is a young country in many surprising ways. At present there are two births in Canada to one death They are about to bring the St. Lawrence waterways plan into commission, and soon ocean-borne traffic will go up the Great Lakes even to Chicago. I have seen the oilfields which they have brought into action. In Labrador there is a great new mass of minerals. As one sails across the ocean and draws near to Canada one can see, as it were, a pencilled shadow against the horizon. That is Newfoundland, and that is Canada, too. Let us on both sides of the Committee, regardless of what our politics are regardless of the differences in our approach and methods, realise that there is an enormous brotherhood in Canada, that our eldest son is growing up, and let us act wisely and enthusiastically. I am glad indeed that we have had a chance today to discuss Canada in this Committee.
§ 6.7 p.m.
§ Mr. Michael Foot (Plymouth, Devonport)
The hon. Member for Southgate (Mr. Baxter) who has just addressed the Committee obviously has very special qualifications for speaking in this Committee on Anglo-Canadian trade, even though perhaps that was not fully evident 1464 from his speech, because he is himself by way of being a kind of frustrated import. However, in the last part of his speech he did touch on one aspect of the subject which has not been fully discussed in this Debate, and that is a matter to which I wish to refer as briefly as I can. I quite agreed with the hon. Gentleman when he stressed the fact that Canada needs the sterling area just as we need Canadian trade, and I believe it is that major aspect of the matter which has not, perhaps, been fully discussed in this Debate.
I must confess that from some of the speeches that have been made one would suppose that the difficulties that arise between this country and Canada in our trading relations are due to the way in which Ministers frame their speeches, or to some odd remarks they may have made at some dinner in Montreal or Winnipeg, or that they arise from some particular contract that happens to have been broken; and these things have been put up and presented to the Committee as the reasons for the difficulties which have existed in expanding Anglo-Canadian trade as we wish to see it expanded.
But we all know that these are not the real reasons. We all know that this matter we are discussing today is the most serious aspect of our dollar problem. Indeed, so great has been the progress which has been made in the past few months in dealing with the dollar problem that it may almost be said that if we were to overcome this aspect of the dollar problem we should hardly be faced with an immediate dollar problem at all. Therefore, I believe that this subject we have been debating here today will be discussed with greater frequency in this Committee, and I think that the hon. Member for Southgate will have his wish fulfilled, and that we shall discuss this matter again very soon, because I believe that the nearer we come to the end of Marshall Aid the more glaringly will be illumined the facts about Anglo-Canadian trade, and the more there will be the desire for a new approach to this problem.
This can also be illustrated from another aspect. All of us agree with the general sentiments the hon. Member for Southgate expressed about our association with Canada. Nobody in any party in this Committee wishes to see any strain 1465 imposed upon the good relations between this country and Canada, especially in view of the services they have rendered to this country during and since the war. But it still is an unalterable fact that our policy in relation to the rest of the Commonwealth is bound to be different from our policy in relation to Canada. Whereas in the case of all the other Commonwealth countries our economic and sentimental interests go in the same direction, in the case of Canada that is not so, and we have to recognise this simple point.
One of the main ways in which we have sought to overcome the dollar problem during the past few years, and one of the ways in which we have been strikingly successful, is by diverting our source of supply away from the dollar area to, in particular, the Commonwealth countries. In the Debate a few days ago, the President of the Board of Trade gave again the remarkable figures showing the way in which during the past four years there has been the biggest expansion of Commonwealth trade that has ever taken place in this century. That is what the facts show, and that is the way in which we have been successful in reducing our dollar difficulties during the past four years. But the more we are successful in reducing our dollar difficulties by that means the greater are the economic conflicts which we are bound to be engaged in to some extent with Canada. These are the awkward facts of the situation, and I believe it is good for the health of our two countries that we should face those facts as squarely as possible
At the last Commonwealth Economic Conference, which took place last year, there was such a successful agreement between all the other Commonwealth countries in reducing their dollar imports that they made a 25 per cent. cut, which contributed so largely to the figures which the Chancellor of the Exchequer was able to read out about our balance of payments situation a week or two ago. It might be said that what happened at that Conference was that all the other Commonwealth countries gathered together and agreed to impose upon themselves cuts in dollar imports, with the consequences that would mean to their livelihood, in order that we should be able to go on meeting the Canadian dollar deficit. It could be put that way.
1466 Of course, it would be harsh on the Canadians to put it bluntly that way without adding certain other facts to the situation, but that is the fact. All these other Commonwealth countries met together and cut down their dollar imports, and at the same time Canada is maintaining a far bigger dollar deficit than she had before the war. Now that is nobody's fault. It arises because of the war, and because of the whole transformation in the relationship between this country and Canada and the dollar area as a whole.
It is nobody's fault, but I believe that a very considerable amount of complacency has been shown in this Debate about the means by which we shall overcome this difficulty. The hon. Member for Banbury (Mr. Dodds-Parker) seemed to suggest that it could be done if only we returned to convertible currencies; that it was all the fault of the British Government that we had not had this return to convertible currencies. Everybody knows that is nonsense, including I imagine the hon. Gentleman who said it. We shall not have a quick return to convertible currencies, and I should have thought anyone who imagines that we can escape from our difficulties by that means would have learned better from our experience during the first two years after the war. That is not a solution.
Everybody agrees that we must step up our exports to Canada as swiftly as possible. Certainly the President of the Board of Trade was able to give good evidence that that is starting, but I do not believe that we can ever increase our exports to Canada sufficiently to be able to buy all the expanding amount of materials we want to get from Canada. We may be able to do it partly by increasing exports from the rest of the sterling area, but I do not believe that those amounts together will enable us to meet this difficulty, or to do what I am sure the Canadian farmers and farming community want us to do, and that is in future to expand our imports of many of their agricultural products.
There are people in Canada who have approached this problem very much more seriously and proposed solutions to the problem which are much more dramatic than any put forward in this Debate today. These are matters with which we shall be increasingly concerned as Marshall Aid comes to an end and as we 1467 have to think of other arrangements. A policy has been advocated in Canada by the political party which corresponds most closely to the Labour Party in this country—the Co-operative Commonwealth Federation. For four years they have been advocating in Canada a policy which would have gone very much further to solving our dollar difficulties here in Britain than anything the present Canadian Government has yet found itself able to do.
There are three main points which the Co-operative Commonwealth Federation, which might be called the Labour Party of Canada, has advanced over the past four years, and which they adumbrated again several weeks ago as measures which they believe should be taken to try to assist in solving the common dollar problem which faces us here in this country and which faces the Canadians as well. These are the three points they make. First, they suggest that Canada should accept payment in sterling for a substantial and reasonable part of Canadian exports to the sterling area, and that this money could be left in Britain to be used for investment in under-developed areas or to purchase goods as and when they became available. Secondly, they suggest and urge on the Canadian Government that increased British imports to Canada should be made possible by further tariff reductions and by cutting Canadian purchases from the dollar area. Thirdly, they suggest they should help to meet the Canadian dollar deficit by cutting out a certain amount of luxury travel in the United States and by cutting down other inessential imports from the United States. I believe that some of those kinds of steps will have to be followed if we are really to overcome this problem.
I want to conclude generally by referring to a point made by the hon. Member for Banbury when he referred to the possibility of the Canadian Government playing a further part with us in building up certain of our arrangements with the British Commonwealth. He referred to the sugar agreement with the West Indies, a subject to which I have referred before in this House. One of the difficulties that has given rise to the failure to reach agreement between ourselves and the West Indians on the question of sugar is that 1468 the Canadians are not prepared to come in on the kind of agreement which we have made to guarantee greater and expanding production within the West Indies.
I believe that the Canadians ought to be more willing to come in on that kind of agreement. If we are to have a real Commonwealth policy in future we must devise some method by which investment in the British Colonies comes not only from this country but from the great Dominions as well. It would certainly be a great advantage if Canadian investment in the West Indies could be greatly increased; if they could perhaps use part of the sterling which they would pile up in payment for their sales here by investment in areas such as the West Indies, and in developing various industries. which we wish to see developed there.
I think that those proposals of the Co-operative Commonwealth Federation of Canada could go a long way in solving the difficulties, which are bound to get increasingly glaring as we come to the end of Marshall Aid and to the period when we shall no longer have any American dollars we can use to help in paying for the products we want to get from Canada.
§ Mr. Henderson Stewart
I would point out that there is no originality in any of these proposals. The first, for example, has been advocated by Mr. Amery and many others. The second has been advocated by industrialists for many years. None of these proposals is new.
§ Mr. Foot
I am not claiming any originality for these proposals The proposals may not be original, but they are not in practice, they are not in operation. I quite agree that Mr. Amery did propose this in an article dealing with AngloCanadian trade, with which I almost entirely agree. All I am saying is that there is a political party in Canada appealing for the votes of the people of Canada which has advocated this for four years, and I should have thought that was a matter of some interest to this House.
A matter not previously mentioned by any speaker in the Debate is that a suggestion has been made that a considerable part of the payment should be made in sterling. As no one has mentioned it before in the Debate, I should have thought it was perfectly proper for us to raise it and 1469 try to urge upon the House of Commons what many people are urging on the other side of the Atlantic. Moreover, as we come to the end of the period of Marshall Aid and as we try to work out what is going to be the relationship between the dollar world and the rest of the world after that period, I think that we have more and more today to discover methods by which the dollar area, including Canada, shall invest in the underdeveloped parts of the world. That is the other part of the programme advocated by the Co-operative Commonwealth Federation in the Dominion of Canada. These are some of the means by which, I believe, we can approach what is bound to be, and will continue to be, a most serious aspect of the whole dollar problem which we have to face here in Britain: and, indeed, which the world has to face.
§ 6.21 p.m.
§ Mr. Lennox-Boyd (Mid-Bedfordshire)
I am sorry to get up now and to deprive one at least of my hon. Friends of a chance of taking part in this Debate. I believe that there are at least eight hon. Members behind me who would be glad to take part in the Debate, and no doubt one or two on the other side of the Committee. I hope that all of them will have a chance at an early date to take part in another discussion on this all-important topic of inter-Imperial trade.
I should like to begin by congratulating my hon. Friend the Member for Chislehurst (Miss Hornsby-Smith) on her admirable maiden speech. She has shown that she can make an excellent speech from the Floor of the House of Commons and a magnificent speech on a platform in the country, a very rare combination. I am sure that everyone who heard her today will hope to hear her on many future occasions.
We have had also one or two most entertaining comments on this subject of Anglo-Canadian trade. The hon. Member for Southgate (Mr. Baxter) quite rightly pointed out that this is a two-way problem in which both Canada and the United Kingdom are equally interested. We have just had a speech in an unaccustomed vein of moderation from the hon. Member for Devonport (Mr. Foot). I wondered at first why it was that he did not try to conjure up the inter-war years before he dealt with the present problems of Anglo-Canadian trade. Then 1470 I remembered that there has lately been in a newspaper with which he is associated comments from a certain political party in Canada which, no doubt, gave him sufficient factual information to deprive him of his normal form of Parliamentary fireworks.
In regard to what he said, I have some comments to make, and I will come to them a little later on. I agree with him that in this very difficult problem no solution ought to be ruled out because it appears to be a novel one, although I know that he also recognises that not his exact solution but a form of it has been advocated in other quarters in previous years.
May I make one brief reference to the right hon. Gentleman who used to sit for Sparkbrook in this House, and whose son, I hoped, would be one of the speakers had this been a longer Debate. No one has done more in this country than he has, and now his son, to advocate ways of getting out of the terrible difficulties that confront Anglo-Canadian trade. I hope that in the years that lie ahead some solution will be found to a problem which will tax Imperial ingenuity very considerably.
I do not think that we need have any apology for this Debate, because it deals with our relations with a great country and a most valued nation in the Commonwealth—a nation that is now the third largest trading nation in the world. If its population is only one-half of 1 per cent. of the population of the world, that at once makes this vast trade all the more remarkable, and it is a challenge to us and to all the British race throughout the world to see that her population expands, realising always that in any problem of this kind it is for the Canadian Government naturally to make the decision.
If I may be allowed to do so, I want to make one comment on this subject in relation to emigration to Canada. As the right hon. Gentleman knows, there has been a recent fall in the emigration figures, and I believe they show the effect of the reduction to £1,000 in 1948, spread over four years, of the amount of capital that even married people with young children are allowed to take to Canada. I would not suggest that we should not be careful about conserving our resources, but I hope that this limitation 1471 will be reconsidered, because it works very unfairly between different parts of Canada. In the middle of Canada and in the far west, it is manifestly absurd to expect people of the type they need to start a new life in Canada with such a limitation.
Nor, I think, will any hon. Member on either side of the Committee suggest that there has not been enough cause for anxiety and alarm in the last year to justify a calm Parliamentary discussion on Anglo-Canadian trade in the confident knowledge that it will not be followed by a vote in the House of Commons. We have had a number of very significant speeches made both by Ministers here, British Ministers in Canada and Canadian Ministers in their own country. Only a few months ago—last December—we had the statement from the Canadian Minister of Agriculture that a very decided official effort—and mark the word " official "—is being made in the United Kingdom to drive every one of these products—and he was talking of apples, eggs and bacon—except wheat, off the British market, and he added,Now that the four-year wheat contract is drawing to a close, an effort is being made to drive off a considerable part of our wheat as well.We know that is not in fact the case, but these remarks should not pass unnoticed, and it is a good thing that they should be discussed in the House of Commons and more than ever important that they should be discussed on the eve of the reconsideration of the Canadian wheat agreement.
We have also had speeches like those made by the late Minister of Food, the present Secretary of State for War, who, as one observer on his return from Canada said lately:treated the Canadians in a manner as cold as a prairie winter.Only three months ago he spoke of our being able only to earn enough dollars for " some Canadian wheat " and nothing else if Canada did not buy enough from the United Kingdom. The Canadians, on the other hand, see the British Government claiming that the standard of living in this country is improving and rations are improving, and they are bound to notice in particular two chief commodities. They realise that whereas two years 1472 ago 48 of our 52 weeks' ration of butter came from the Empire, last year it had dropped to 42, but, more significant still, whereas two years ago 36 weeks of our ration of bacon in the year came from the Empire, last year only eight weeks of our bacon ration came from the Empire. They are bound to ponder among themselves whether it is altogether desirable for them to gear their economy to meet the British need.
As many people realise, this is all the more maddening because they thought that what they were doing had the direct support of the British Government. The hon. Member for Huddersfield, East (Mr. J. P. W. Mallalieu), may claim that many warnings were given to the Canadians that we could not possibly sustain after the war the same high level of purchases of foodstuffs as we did during the war; but all these statements—and they are not very many and not made by Ministers—are neutralised by what has been said since.
In 1945 it is true there was no dollar shortage we knew of because we were still living under Lend-Lease. Yet in 1946, when the Lord President of the Council was in Canada and urged the Canadians to help us to raise our bacon ration from three ounces to four ounces and to tackle the problem of feeding Britain in the spirit of a battle against famine, we had a dollar deficit of £315 million. They argued not unjustly that, knowing the dollar deficit at that time, the British Ministers should not have given these new assurances to Canada on which they have once more geared their national economy.
Again, many Canadians argue that because we had an overall deficit and believed that dollars were the problem we switched our purchases to soft currency countries, paying more for our products than if we had bought from dollar sources. They say that then we asked higher prices for our goods, which the foreign countries were ready to pay because they had the available sterling, with the result that our costs went up and our goods became too expensive for the dollar countries to buy. This is what they argue, and this is why it is a good thing to discuss these matters.
Nor are they very much impressed by some of the arguments used by Government spokesmen in the House. We 1473 have heard a good deal about exporting to Canada, and we all hope that this country will be able to fulfil all that Canada may need, but it is only a few weeks ago that the Prime Minister of British Colombia flew some 6,000 miles for a function over here and used these words. Many of us know him and have been accustomed to trust and have confidence in him. He said:I find it difficult to understand why Canada, with an annual importation of iron and steel to the value of 782 million dollars, should obtain from the United Kingdom less than 7½ per cent. of it. The market is there, the goodwill is there, and the stuff is here. You want our timber. We want your steel. What is it that keeps these two things apart?Nor is there anything that is more satisfactory in the field of newsprint. My right hon. Friend the Member for Aldershot (Mr. Lyttelton) has already referred to this. We must note that this sudden termination of all newsprint purchases for the first six months of this year does not even allow for a carry-over, as in agriculture, for the next year, or even for a token purchase this year which would have kept alive the principle and our obligations.
In regard to the various food contracts that have been mercilessly slashed, I am very glad it has been possible to manipulate the dollars allocated, so that a number of Canadian interests in many districts will receive some share of the British market. But the net effect on Canada's agriculture is very serious indeed. It has had one consequence, which I do not suppose the Government are very pleased about, and that is that it has disillusioned the Canadian people about the merits of bulk purchasing by Governments. The Anglo-Canadian Trade Committee, which reported only a few weeks ago, have asked their respective Governments to restore private trading and to end Government bulk buying. The Canadian farmers also can see no security in Government long-term arrangements which leave them at the mercy of overnight shifts in the purchasing decisions of the British Government.
I am very glad that in this discussion tonight a number of Members have referred to the very great contribution Canada has made by loans and gifts to help to tide us over these difficulties. Their loans and gifts, during the war and since, total some 6,000 million dollars.
1474 Their loan alone is some one-third of the American loan, whereas their national income, as compared with that of the United States, is only one-twentieth and their population 12 million compared with 134 million.
All this should make us desperately anxious to play our part. We have a number of Canadian and British agencies, the United Kingdom Dollar Export Board, the Dollar-Sterling Trade Board, the F.B.I. special office in Toronto and the Trade Commissioners, all doing splendid work, and we wish them success. I would refer particularly to the work of Mr. Duncan, Chairman of the Dollar-Sterling Trade Board, who has repeated and proved over and over again to Canadian retailers and constructional engineers the need to buy British products. Not least would I refer to his remarks, made a few weeks ago, that a 15 per cent. switch from United States markets to the United Kingdom markets would increase British exports by no less than 90 per cent. All these have done considerable work, and the dollar deficit is now reduced to what appears at first sight to be manageable proportions.
I join issue with the hon. Member for Devonport, who suggested, in a sense, that if this particular limited difficulty could be overcome we should have no dollar problem again. The problem will still remain. The immediate difficulties have been overcome in a number of unusual ways. We have cut our Canadian imports by some 100 million dollars. We have monthly aid from the Canadian loan of 10 million dollars, and we have an advance from E.C.A. for purchases from Canada. The first ends in 1950, the second comes to an end in two years' time. The problem will remain, and the British people and the Canadian people cannot be asked permanently to face up to this problem knowing that there is no solution to it however desperately they try to close the dollar gap, and that if it is closed it will be equally hard to keep it closed.
Already most dangerous signs are apparent in Canada. In the first two months of this year Canadian domestic exports fell by 20 million dollars, which is about equivalent to their losses in the British market last year. Their aggregate farm income also fell by some 125 million dollars, and there are all the signs that 1475 without the British market, which is the most valuable market in the world to the Canadian farmer, the whole economy of Canada will be dislocated and the immense industrial and mineral development by which she can solve her problems will be heavily handicapped. The Governor of the Bank of Canada, when asked about the feasibility of trading with Britain against blocked sterling, indicated that this policy was in reality, only another form of credit and would depend on Britain's willingness to accept more credit and Canada's willingness to extend it. When somewhat similar ideas were raised at Washington, they were scoffed at. The British Government, not unnaturally, were unwilling to endanger the future of their currency by accumulating sterling debts in Canada which one day would have to be repaid in dollars.
There must be some half-way house to this problem, and it is imperative that we should apply our minds to what the solution should be. I am a convinced believer in the system of Imperial Preference and in nations whose interests are complementary to each other making their own trade agreements. I know that one in three of all the gainfully employed people in Canada works for the export trade. I know that those who are working in the export trade to the sterling area are working on the goods that have the highest labour content of the goods produced in Canada. Any attempt now, while America, not unnaturally perhaps, bases her economy on a surplus of exports over imports, to fasten discriminatory multilateral trade on the world, with the chief nation of the world in its present frame of mind, would restrict world trade and lead to further nationalist trade policies, as well as being terribly harmful to the future of the British Empire. Therefore, the nations whose interests are complementary must get together.
While in the last few weeks there has been a significant jump in Canadian exports to the United States—actually last month they were 20 per cent. above what they were two years ago—Canada cannot possibly expect America to absorb her huge farming surplus. Canada cannot expect America to take from her those goods which the sterling area used to buy, unless her own surplus of these goods can be sold by the United States herself in the 1476 world markets. American productive capacity has gone up in the last 10 years by 60 per cent., but her population has gone up by only 12 per cent.
It is quite impossible to expect Canada, during this interim period, to find an adequate answer in this way to her problems. Canada herself, we were told last week, has a carry-over of 198 million bushels of wheat and the United States expects to have in the next three years nearly 300 million bushels annually. All who follow closely Canadian and American farming see every sign of what they call the " old corn hog cycle " coming back again. Already the farmers of the United States, far from allowing their Government to import Canadian food, are trying to sell it in Canada.
It is essential that we should realise these difficulties from the Canadian point of view. This time last year when Mr. Howe, the Minister of Commerce in Canada, was over here for the British Industries Fair, he declared that Canadian and British trade had never been in balance, but what it was necessary to do was to balance Canadian trade with the United Kingdom, the rest of the sterling area and the Empire as a whole. In the last few weeks very significant signs have emerged of the drop in Canadian trade with the Colonial Empire. Last year exports to Malaya alone fell by four million dollars and imports fell by five million dollars.
Today we are told it is not possible, for example, for Jamaica to buy her malt in Canada because of dollars. She has to get it in Denmark. Trinidad cannot get her meat products from Canada but has to get them from Australia with a larger haulage. In Bermuda hams are not allowed to come from Canada but have to be got from Australia. Canada, with an import trade of four times what it was before the war, has now, in effect, a standstill in trade with many Colonies and a decline in trade with some others.
Meanwhile, the immense resources of Canada are steadily coming to light, even when we are engaged in trying to solve these difficulties, which are largely the product of the war but not alone due to that source, for they are magnified by agencies that should be our servants rather than our masters. In the development of these resources we can play such 1477 a pitifully small part unless we are prepared to tackle these problems in a new way. There are the oil deposits in Alberta, in the development of which our restrictions on capital are heavily handicapping us; the iron ore deposits in Labrador and north of Lake Superior; the expected fields of uranium and radium in the North West; and, above all, the immensely fertile farming life of Canada as a whole. These are all fields with which we could identify ourselves. It is in order further to impress on our friends and kinsmen in Canada that we believe in their destiny and that we feel we can help them to fulfil it, that the Opposition asked for this Debate tonight.
§ 6.48 p.m.
§ Mr. H. Wilson
This has been a very interesting Debate, and the only regret which hon. Gentlemen and I have is that so many hon. Members were prevented by the shortage of time from joining in it. My right hon. Friend the Minister of Food was sitting with me on the Government Front Bench with the idea that if the Debate concentrated on food he would intervene at the end, but, as hon. Members would agree, most of the discussion has been on the export and import trade, and it would be for the convenience of the Committee if I were to speak again and follow hon. Members in what they said'.
I should like to begin by expressing agreement with the opening remarks of the hon. Member for Mid-Bedfordshire (Mr. Lennox-Boyd) about the maiden speech to which we have had the privilege of listening this afternoon, and I would join with him and with my hon. Friend the Member for Huddersfield, East (Mr. J. P. W. Mallalieu) in commenting on the speech of the hon. Lady the Member for Chislehurst (Miss Hornsby-Smith), and in congratulating her on the striking contribution which she made to our Debate as well as on the very clear and sincere way in which she expressed the point she had to put.
The hon. Member for Mid-Bedfordshire, referred to a number of points. He quoted the speech of Mr. Gardiner, the Canadian Minister of Agriculture. I think perhaps it would be better if I did not go into that, more so as the issues have been put in their proper perspective in previous statements made both in this House and in the Canadian Parlia- 1478 ment. I have made it clear this afternoon already in the Committee, that we are buying and shall buy everything from Canada for which we can provide dollars.
The hon. Gentleman went on to say that he thought that the Canadian producer had lost confidence in Government bulk buying, and he quoted the findings of a committee in favour of that, but as far as the wheat agreement is concerned, as my hon. Friend the Member for Huddersfield, East, said, if the hon. Gentleman argued about it on the prairies he would find himself lonely indeed. As the hon. Member for Fife, East (Mr. Henderson Stewart) can testify, the farmers felt that the wheat agreement had been of an estimable value both to this country and to the primary producers of Canada. The hon. Member for Banbury (Mr. Dodds-Parker) began his speech by acquitting me of offensiveness —it seemed from his next few remarks that he wanted all the offensiveness for himself. He seemed to want Canada herself to go in for a policy of bulk buying to aid in insuring a market for sugar producers within the Commonwealth.
§ Mr. Henderson Stewart
It should be said that when the President of the Board of Trade and I were in Canada, we found the wheat farmers in the prairies by no means satisfied with the prospects of our continuing to buy their wheat. Whether that was the fault of the right hon. Gentleman or not I do not know.
§ Mr. Wilson
I found that there were some apprehensions as to whether bulk buying was going to continue and thus guarantee a market for some time. The hon. Member for Mid-Bedfordshire, referred to the question of Imperial Preference in connection with our trade relations, and this was mentioned by a number of other speakers, particularly by the hon. Member for Chislehurst. I have no doubt from all the hon. Gentleman said that there may be an opportunity before long of discussing this question.
Since it has been mentioned, I should like to remind hon. Members that Canada has herself played a leading part in the negotiations for the general agreement on Tariffs and Trade, to which she is one of the contracting parties, and also in the negotiations leading to the Havana Charter. Of course, it is Canada who provides the distinguished public servant 1479 who is presiding over a great part of the discussions with the contracting parties, both in relation to Havana and in regard to the Geneva agreement. We have been left in no doubt at all that Canada attaches the greatest importance to the development of multilateral trade. As we are debating Anglo-Canadian trade and Imperial Preference, it is only right that I should suggest that hon. Gentlemen and hon. Ladies should take some account of what the Canadians themselves want, and not only of what they think the Canadians ought to want. There may be an opportunity for discussing them against a rather broader background, but since it was mentioned I thought it was only right that I should say so.
Throughout the Debate there has been a considerable volume of agreement about the objectives at which we are all aiming. Most of the criticism has been of our inability in this country to buy more of those Canadian products which Canada would like to send us and which we would most certainly like to have. The real question is the amount of dollars available for expending on those things, combined with the fact that a number of the things we are buying from Canada we are taking in increased volume compared with before the war. That leaves fewer dollars over for the buying of other things. There has not been a sufficient realisation that what we would like to do in respect of Canadian imports is dictated by the amount of dollars we can get.
A number of hon. Gentlemen and some of my hon. Friends have stressed the importance of the export drive. The right hon. Member for Aldershot (Mr. Lyttelton) began it. The hon. Member for Eye (Mr. Granville) referred to capital investment. As he knows, we have no surplus available for investing in Canada, but I agree that in individual cases where we can encourage the establishment of branch factories in Canada and where we cannot sell the goods direct, a valuable contribution can be made to the development of our export of components, machine tools, semifinished manufactures, and so on. I agree with a lot of what he said about the styling and packaging of goods that we send to Canada. When I was out there I was told several times that whereas the Canadian buyer used to 1480 think exclusively in terms of price and quality, he is now thinking much more in terms of price and eye-appeal—that is a Canadian phrase. I think it was eye-appeal that the hon. Member for Eye was describing.
The hon. Member mentioned also the importance of exporting for stocking and selling from stock in Canada. I agree with him about the importance of that and I have on other occasions brought to the attention of British exporters by speeches, direct contact with them and articles in the " Board of Trade Journal," the facilities that exist for stocking goods. As the hon. Member knows, the Export Credits Guarantee Department provides facilities for insuring against the risk and for covering the capital involved in holding stocks before they are actually sold. He made the point that many exporters are operating on too small a scale to be able to finance this operation themselves. I have often mentioned, in this connection, the need for private enterprise to develop collective selling arrangements on the lines of the Hambro organisation.
He was followed by the hon. Member for Southgate (Mr. Baxter), who outlined the kind of things that our exporters ought to do if they wanted to sell more goods. His judgment about what ought to be done is very much the sort of thing that was said to me when I was in Canada last year, but if I had said to the Committee what the hon. Gentleman had said this evening I should have been attacked from the Opposition side for criticising British exporters and for attempting to teach them their job, which is the last thing I would want to do. Certainly, it is right that these things should be said. The right hon. Member for Aldershot was dealing with the weakening of our sellers' position by the statements which, he said, had been made by Ministers here at home—I think he meant here at home rather than abroad, with the exception of the quotation which he made from my right hon. Friend the Lord President of the Council.
I am bound to say that when I was in Canada, so far as the position of this country being weakened by criticism is concerned, I found that it was far more a question of criticism which had been taken abroad by some of our exporters who, I suggest, ought to have had quite 1481 enough to do in selling goods without exporting our politics abroad. I heard far more about the welfare State and about production costs arising from all those things with which the Opposition agree—or with which I understood them to agree—far more about wigs and false teeth, than I heard about other aspects of our industrial costs.
§ Mr. Baxter
Will the right hon. Gentleman be able to make a statement upon what I quoted from the " Financial Post."
§ Mr. Wilson
Yes, Sir, I am just coming on to that point. I have been very concerned about the statement in the " Financial Post." I agree with the hon. Gentleman that statements in that quarter have to be taken very seriously indeed. I should not like to say anything which would countenance the suggestion that the statements about the falling off in the quality of our goods, or that our exporters are losing interest in the Canadian market, contain any great amount of truth. I have seen no evidence to suggest that there has been a falling off in quality. Individual cases there may be, but very often those cases are generalised out of all relation to their importance.
The market is becoming more competitive, and it may be that when the home producers are able to supply it more successfully there is a growing volume of complaint about the quality of our goods. One difficulty is that there are different methods of examining wool cloth in the two countries. Until our exporters and their importers understand one another on that side it may be that those complaints will go on. I would agree with what hon. Gentlemen have said in stressing the importance of maintaining our quality. It is on our quality that we shall sell our goods, but unless we combine with that quality satisfactory prices—which we can do and are doing —and also satisfactory assurances about the time of delivery and the appropriate approach to problems of styling, packaging, and all the rest of it, we shall not succeed in getting that increase in exports which we are discussing this afternoon.
§ I beg to ask leave to withdraw the Motion.
§ Motion, by leave, withdrawn