HL Deb 18 July 1916 vol 22 cc753-63

LORD SYDENHAM rose to ask the Under-Secretary of State for India—

  1. 1. Whether the firm of Schroeder Schmidt, of Bombay, which was stated to have been closed, is still dealing in manganese ore under the name of Ettlinger & Company.
  2. 2. Whether the firm of Schroeder Schmidt was not an adjunct of Ettlinger & Company before the war; and
  3. 3. Whether Ettlinger & Company are now supplying the Munitions Department with manganese ore through the Carlton Iron Company.

The noble Lord said: My Lords, since I drew attention to this question in January last it has entered on a new phase which is very difficult to understand. I then pointed out that the firm of Schroeder and Schmidt, of Bombay, was regarded as an enemy concern when war broke out, and was ordered to close. This firm, however, received permission to go on trading pending liquidation, and in that happy position it remained for about fifteen months. Further action at length was taken by the Government of India after some protests had been made, and a Mr. Kann, whose proper home is Frankfort, was allowed to go out and make arrangements for the carrying on of the business and the transfer to somebody else. In the last half of January a Mr. Dadabhoy Ramtek was apparently negotiating the purchase of 20,000 tons of manganese ore as the approved successor of the Schroeder and Schmidt firm. I further stated at the time that Schroeder and Schmidt were really agents of Ettlinger and Company, of London, and that Ettlinger and Company were in close financial relations with Beer Sondheimer and Company, of Frankfort. My noble friend the Under-Secretary of State said, in reply, that enemy firms in India could only trade under licence from the Government of India, and that such licence was not given unless discontinuance of their operations would be disadvantageous to British interests. He also stated that Schroeder and Schmidt had been closed "except that the firm is permitted to dispose of indent goods already obtained, and to sue, if necessary, for recovery of debts subject to the supervision of a controller." And he had been informed also that manganese ore could be "obtained more quickly" from this enemy firm "than in any other way." And finally the noble Lord assured the House that Ettlinger and Company had "really no connection with this particular firm in India," and that Mr. Kann, during his complicated negotiations, was "under the vigilant attention of the authorities."

My Lords, those statements created considerable surprise in India, and it was at once explained that 80,000 tons of manganese ore was available for export in British hands in December, and that Schroeder and Schmidt held at that time only 7,000 tons. I may add to this that the richest manganese ore in India is in British hands, and that Schroeder and Schmidt could obtain it only by acting as middlemen. How any advantage to British interests could possibly accrue from allowing Schroeder and Schmidt to go on trading, it is very difficult to imagine. As regards the pre-war relations between Schroeder Schmidt and Ettlinger, I have a copy of a letter which was written by the former to the latter in November, 1913. From that letter I should certainly say that it was clear that Ettlinger and Company were almost the head office of Schroeder and Schmidt, and that both these firms were in most intimate relation with Frankfort and also with another firm in Bremen of which I do not know the name. Besides that, I have copies of the Bilbao-South Spanish charter parties, which prove that Ettlinger and Company were agents for Beer Sondheimer and Company, and I understand that these connections were known in business circles though apparently not to the India Office.

I now come to the later phase of this question. Mr. Dadabhoy Ramtek seems to have dropped out of the matter, and the firm of Schroeder and Schmidt now trades in the name of Ettlinger and Company; and in April last cargoes of manganese ore were consigned by Ettlinger to Hull and Genoa. The Hull cargo was intended for the Carlton Ironworks Company, of Middles-borough. Since then 2,900 tons of manganese ore have been shipped from Calcutta by Ettlinger, and consigned to Ettlinger and Company in this country. All that mass of ore was intended for the Carlton Ironworks Company. Now manganese ore has been made contraband of war and is controlled by the Munitions Department. But the Munitions Department has permitted this large supply from a firm of very doubtful antecedents to the Carlton Ironworks. More than that, before the war the Carlton Ironworks Company were in close financial relations with Ettlinger and Company, who, I think, still have the monopoly right of selling the ferro-manganese produced by the Carlton Company. Since the war began, Ettlinger and Company have been in the habit of issuing this rather attractive advertisement— Army supplies. City merchants with surplus capital invite proposals connected with War contracts. Are also prepared to entertain any profit-sharing scheme for other bona fide transactions in general merchandise, and request full particulars.—' Anglo-French,' Box M 246, The Times. Whatever may be the status of a firm which is the agent of an enemy firm in Frankfort and almost stands in parental relation to an enemy firm in Bombay, it certainly is not Anglo-French.

Meanwhile Ettlinger and Company appear to be accumulating stocks of manganese ore at Calcutta and Bombay with very wise prevision. Before the war Schroeder and Schmidt were almost the sole suppliers of manganese ore to Germany. When peace comes Germany will be in great need of manganese, which only Russia and India can provide. In a letter recently received in London I find the following— It is useless our raising a contention about the firm of Ettlinger, because, although your description of them is quite correct, the business which is being done in their name is not being done by them or for them, but by the Government of India, who have taken over their concern and are using it themselves. I am certain my noble friend will contradict that statement, because it is quite inconceivable that the Government of India can be speculating in manganese ore under a German name. Nothing could be more important than preventing an impression of that kind getting about among Indian merchants.

The importance of this matter seems to me, not so much in the value of the trade permitted, which is not very great, as in the remarkable measures which seem to have been taken, cither by the India Office or by the Government of India, and in the extreme cleverness of the pre-war preparations of the Germans which is revealed. In the background there is Beer Sondheimer and Company, of Frankfort; in London there is Ettlinger and Company, doubtless naturalised, but agents of Beer Sondheimer and standing in very close relations with an enemy firm in Bombay, and perhaps with an Ironworks Company which bears a good English name. When war broke out, the Indian firm was recognised as an enemy concern. It was ordered to close, but then received most-favoured-nation treatment, and the parent firm in London was this year allowed to carry on the business for the firm in India. Considerable injustice has been done to British firms in India; but my point is that this is a typical and most instructive instance of that peaceful penetration which we were told not long before the war by a high authority was for the benefit of mankind.

The moral I draw is this. We talk glibly of removing the tentacles of the German octopus from our trade; but we have not succeeded so far, and when peace comes we may find the task almost impossible, because the number of interests which have their financial home in Germany is greater than we know. Incidentally I think this case does plainly demonstrate the urgent need of the Registration of Firms Bill which is shortly to come before your Lordships' House. I now beg to put the Questions standing in my name.


My Lords, before the noble Lord replies I should like, with your Lordships' permission, to bring before you a case even more serious than the one to which my noble friend has called attention. It is the case of the firm of Müller, and I should like to ask what is the objection to winding up this firm. Müllers were turned out of the Baltic Exchange. But they were reinstated at the instigation of the Government, and there is consequently a great deal of indignation amongst the members of the Baltic Exchange. It has been brought to the notice of this House already that between 1,250,000 and 1,500,000 tons of ore have gone through Rotterdam to Germany since the war began, and a great deal of that ore has been sent by Müllers. In 1914 they chartered a steamer. Its original destination was Antwerp, but when they heard of war being declared they diverted it to Rotterdam. All that cargo was manganese ore, so necessary for making munitions of war, and the whole of that cargo went eventually to Germany. This really means supplying munitions with which to kill our soldiers. It is not only very hard on the soldiers but very hard on the munition workers, because they have to work double time in order to counteract the effect of these German shells on our lines. I submit that the Government should do something to stop Germans in this country trading as English subjects when they are really trading for the benefit of Germany. The company to which I have called attention is not only an enemy company, but it has been proved to have been trading with the enemy. I would also ask whether any of the naval advisers have protested against this firm. I am informed that they have, but I am not sure about it. I should like to know definitely whether they have protested against this large amount of manganese and iron ore going into Germany. My noble friend Lord Devonport showed quite recently, in your Lordships' House, that 557 cargoes have gone to Germany representing over 2,000,000 tons of ore. That is a serious thing for our soldiers, for our expenditure, and for the war altogether. I do not see how we are to end the war if the British Government allow these things to go on.


My Lords, before I reply to the Question placed on the Paper by my noble friend Lord Sydenham, I would refer to the speech which has just been made by the noble and gallant Lord. It is impossible for me, without notice, to answer a question in regard to a firm about which at present I am in possession of none of the facts. These are extremely complicated cases, and it is absolutely necessary to have, due notice in order that inquiry may be made, because it very often means probing into the recesses of more than one Public Department. I did not glean from the remarks of the noble and gallant Lord that this particular firm of Müller is connected with India or the Government of India. From what I gathered, it was a firm trading in the Baltic. Therefore the question which he put to me should more properly be put either to the representative of the Board of Trade or to the representative of the Admiralty.

My noble friend Lord Sydenham has raised three specific points in the Question that he has placed upon the Paper. First, as regards Schroeder and Schmidt, a firm in Bombay, I repeat what I said on a former occasion when this question was raised, that this firm was licensed to liquidate shortly after the outbreak of war; it had its licence revoked, and was closed down in June of last year. Since that time it has only been authorised to sue for the recovery of debts, and to dispose of the balance of indent goods which had been imported to the firm in pursuance of contracts that had been entered into prior to the commencement of the war. The House will understand that, in closing down these firms, especially if they are large firms, it is only fair to the firm and to all concerned that due time should be given for this process of liquidation to be carried out, and of course in the case of a large firm in ordinary circumstances the process must be one of considerable duration. Throughout the process of liquidation all moneys that are accumulated in regard to transactions are deposited with the Treasury of the Government of India, and therefore in no way come into competition with other or British firms in the country. As I explained in the debate last January, this firm of Schroeder and Schmidt not only dealt in manganese ore but with many other commodities, such as piece goods and hides. Therefore it will be seen that the process alluded to is one that must take time before it is brought to a final conclusion. But that, I understand, has now definitely come to pass. I would also point out that during the period of liquidation the whole of the manganese ore exported by this firm has come to this country, and has been under the very close supervision of the authorities both in India and here.

Now I will say a word as regards the other firm alluded to by the noble Lord—Messrs. Ettlinger and Company. The noble Lord asks me whether Schroeder and Schmidt was not an adjunct of Ettlinger and Company before the war. I must admit that I find myself obliged to-day to modify what I said last January in the course of the debate then. What I said then in regard to the connection between Ettlinger and Company and Schroeder and Schmidt was said with imperfect information. I have found out since that there was a connection between these two firms before the war, and so far as I have been able to ascertain the manganese business of Schroeder and Schmidt had been largely financed by Ettlinger and Company. When I last spoke on this question, from the information then in my possession there seemed to be no objection, under the supervision that was being carried out, to Ettlinger continuing to supply ore to this country. At the time manganese ore was greatly needed by the Munitions Department, and, as I then said, it was found by the Munitions Department that they could obtain ore through this source more readily and of a higher quality than would have been the case had they left this particular firm out. Ettlinger were therefore allowed to export ore from India for the use of this country, and for the purposes which I have described. Every precaution was taken to ensure that the delivery was to this country, and that it was in bond; and in addition to the convenience to the Department in time of emergency, it was also done with a view to considering the small mineowners who were purchasing through this company, and it was therefore on that account to a large extent that the transfer was allowed.

Recent investigation by the Board of Trade regarding the character of Ettlinger and Company has brought out the fact that before the war close relations existed between this firm and the firm alluded to by the noble Lord—Messrs. Beer Sondheimer and Company, of Frankfort. The Secretary of State for India, on becoming informed of these facts, considered it inadvisable that facilities should be maintained which would assist in the resumption of German influence in the manganese ore trade after the war. Accordingly, after consultation with the Government of India, it was decided to issue orders with a view to terminating their business in India, and the firm in question is now being informed accordingly.


That is Ettlinger and Company?


Yes. Now one word as regards the other firm alluded to by the noble Lord—the Carlton Ironworks Company. I have made inquiries of the Ministry of Munitions and am informed that the Ministry do not purchase either manganese ore or ferro-manganese from this company. I have no doubt that manganese is supplied by the Carlton Iron Company to manufacturers of munitions, though this has not been obtained through the Ministry. As regards this firm I may say that the Office for which I answer—the India Office—has no direct concern, and I would suggest that if the noble Lord desires further information he should consult either the Admiralty or the Board of Trade. I may say this in addition. The Carlton Iron Company had business relations with Ettlinger and Company before the war. It seems that they were under German influence, but I am given to understand that since July of 1914 the company has been reconstructed, and at least five-sixths of the shares are now said to be in British hands. Beyond this I have no further information regarding this firm.

Before sitting down I will state broadly what the Government of India are doing to deal with cases such as those which have formed the subject of the noble Lord's questions. The Government of India, in order to secure complete power over these firms, are issuing two Ordinances. One of these will empower them to impose prohibition and restriction both on imports and on exports in any way they see fit. This will give them complete power to deal with any suspected firms or undesirable individuals. Then there is a second Ordinance, which follows closely the British Act dealing with trading with the enemy, but has the necessary adaptations to meet the varying conditions in India. The Government of India, have long prevented hostile firms carrying on business in India for the benefit of enemy interests; but for the purpose of determining what is a hostile firm—a very difficult matter to determine—they are taking as a criterion whether a firm's, business was being carried on before the war for the benefit of enemy interests and is likely to be resumed on similar lines after the war. This action, your Lordships will see, will give the Government of India power to close down firms who, in order to continue their business during the war, have temporarily severed their enemy connections, but have done so in such a way as to make it possible or likely that they will resume them on the termination of the war. It will also enable the Government of India at the same time to transfer the stocks and the contracts to British firms, so that the supply of manganese ore to ourselves and to our Allies will in no way be interrupted. When these Ordinances are in force—which will be very soon—I think it may be said that the control of enemy trading by the Government of India will be complete; and it will therefore then rest with them to decide the extent to which it is desirable to exercise these powers with regard to the elimination of enemy trade in India and its connection with this country. I hope that I have answered all the points raised by the noble Lord, and that he is satisfied with the information I have been able to give.


I thank my noble friend for his very full answer. As regards the past, I do not think he has quite satisfied me; but with regard to the future, he holds out hopes of great improvement. I understand that in future Ettlinger and Company will not be able to move manganese across the seas. And I am sure the House will welcome the two Ordinances of the Government of India. But the war has been in existence nearly two years.


My Lords, I think a word ought to be said on that last point. The noble Lord who represents the Government of India spoke with a general air of satisfaction at the action which his Department has taken with respect to this enemy firm, but it seems that the Government of India have wakened up two years after the war began. What have the Government of India been doing all this time? My noble friend on the Cross Benches brought this subject prominently before the Government at the beginning of this year. Then, not because the Government of India had found anything out but because my noble friend presses them and persists, they ultimately take action.

I do not know, but I think it is extremely doubtful whether they would have done anything at all except for Lord Sydenham's Questions. I put it to the noble Lord as representing the Department that it would have been only right if he had said that the Department were extremely sorry that nothing had been done before. These things have been going on all these months. Yet he says, "We have just found out that Schroeder and Schmidt, or Ettlinger and Company, had connection with some Germans in Frankfort before the war." Why did they not find that out before? Why did they not apply to the Board of Trade and ascertain? Indeed, I do not quite know even now what the position of Ettlinger and Company is. I understand that, under the action of the Government of India now, the Indian branch of Ettlinger and Company is not allowed to operate. But are we to understand that the branch of Ettlinger and Company established in this country is still operating? Are they still a firm protected by British laws and helped by the good order and government, of this country? Are the really Germans, and are they in connection with Germans still? What is their position?

Then there is—it certainly has a good English name—the Carlton Iron Company. I am left in some doubt as to the position of this firm. They appear to have dealt with Ettlinger, who dealt with Schroeder and Schmidt, who dealt with a German firm in Frankfort. Whether the Carlton Iron Company are a true British concern or not does not appear. I hope we shall not be given the answer that we must inquire of another Department. If we can be quite sure that the Government will take this matter in hand and finally fathom the intricacies of the German connections of these various gentlemen and firms, we shall be satisfied. But I must say that my noble friend has been abundantly justified in calling attention to the matter; and I hope that the next time my noble and gallant friend Lord Beresford asks about another German gentleman called Müller, he will receive a full explanation of why the Government have not acted in that case.


My Lords, I think I must say a word in reply to the noble Marquess, because I think he is under a misapprehension. He seemed to conceive with regard to these firms that they had been allowed to proceed as they liked during the whole of the war, and that no security or control had been placed over them by the Government of India. That is not so. In the case of one firm, they were placed in liquidation and told to close with the exception of open contracts which still existed, and all the moneys that were collected from those sources were placed in the Government Treasury and were not at the disposal of the firm. So that I do not think it is quite fair to say that the Government of India have been callous and indifferent to British interests in regard to that firm. As regards Ettlinger and Company, I can only speak, of course, in regard to that firm in its connection with Indian business. The noble Marquess expressed the hope that I should not give him the reply that he must ask another Department. But I am very much afraid I must give him that answer, because it is impossible for my Department to reply in respect of all the different firms dealing in other parts of the world. These, of course, properly come under the supervision and the control of an entirely different Department from the Government of India or the India Office. The firm of Ettlinger may, for aught I know, have large interests with other parts of the world, but it is not in my power to obtain the information for which the noble Marquess asked in regard to anything outside India. I rose merely to submit these points, because it struck me that the noble Marquess, in making his comments, considered that the Government of India had been indifferent to their duties, which is really not the case.