HL Deb 12 December 1922 vol 52 cc358-72

Order of the Day for the Second Reading read.


My Lords, the object of this Bill may be described as fourfold. In the first place, it is desired to extend the time and increase the amount of loans guaranteeable under the Trade Facilities Act, 1921, the object mainly being to relieve the unemployment which is now pressing so severely upon this country. Secondly, with regard to Austria, the desire is to carry out the pledges to which we are already committed, and to rehabilitate, so far as is within our power, that country in Europe. Thirdly, with regard to the Soudan, it is desired to guarantee a loan for the irrigation of the Gezireh Plain—a plain extending 170 miles south of the juncture of the White Nile and Blue Nile, above Khartoum—and other purpose. Fourthly, by Clause 4, it is proposed to meet a difficulty which has arisen in the past with regard to the export credits scheme.

The Bill passed the House of Commons without amendment, and I trust that after such explanation as I may be able to give to-day your Lordships will be able to pass the measure also in the same way. With regard to the extension of the Trade Facilities Act, the principle involved has been fully discussed both here and else-where in the debates upon the original Act. The purpose is that the Treasury should have power to guarantee loans to be raised when satisfied that the proceeds are to be applied towards the carrying out of any capital undertaking, or in the purchase of articles, other than munitions of war, manufactured or produced in the United Kingdom and required for the purpose of the undertaking, and, further, that the application of the loan is calculated to promote employment in the United Kingdom. Guarantees are to be given only after consultation with an Advisory Committee nominated by the Treasury for the purpose, and the Treasury were fortunate in securing for the Committee the services of very able men. As the House is aware, the Treasury have felt themselves bound, by the opinions expressed in the debates on the original Act, to give guarantees under the Act only on the recommendation of the Committee.

The Act was an experiment. Its purpose was to give employment to skilled men in their own factories by stimulating orders. Its design was to encourage the outlay of capital in productive enterprise. The object of the limitation of the Act to capital undertakings was to prevent its operating to keep up prices. The promotion of capital undertakings tended to increase the quantity of goods produced and to decrease the cost of production. The power to give guarantees under the original Act came to an end on November 9 last. Under that Act the amount of the loans in respect of which guarantees could be given was limited to £25,000,000. Guarantees of loans to the amount of £22,243,645 were given. The undertakings which have taken advantage of the Act are of all kinds, and the loans raised are of varying amounts, very large and very small. The spending of this large sum of money in this country must obviously have a substantial effect upon employment, although the precise amount of employment secured cannot be stated. But these figures give a very incomplete picture of the results of the Act for the common form of the contract required in connection with these loans provides that all the plant, machinery and materials needed in connection with the works to be undertaken shall be purchased in Great Britain at the lowest prices on a competitive basis under contracts which require, the contractors to certify on their own behalf, and on behalf of the sub-contractors, that the plant, machinery or material to be supplied will be wholly of British manufacture. Any breach of the undertaking has to be reported to the Treasury.

It might be objected that the Act has no immediate effect on unemployment, and it is, of course, true that some time must elapse before the giving of the guarantee and the employment of men upon the work to be paid for out of the proceeds of the loan to be raised. The number of men who will be employed this winter as a result of the guarantees given under the Act has been estimated at 100,000. The precise number who will get employment by the passing of this Bill can only be a matter of conjecture, but, if the Committee can maintain the speed with which during the past year they have dealt with applications, it should be possible to make considerable additions to the 100,000 whose employment will be strictly due to the Act. But we have also to look ahead to the future not only of employment but of our exports, and to the raising of loans with the condition as to purchase in this country.

The second subject dealt with by the Bill is the Austrian loan. The Bill is framed to carry out pledges given at Geneva in respect of the League of Nations scheme for the rehabilitation of Austria. The Agreement signed at Geneva has been laid before Parliament. The scheme contemplates the issue by the Austrian Government of a loan for 650,000,000 gold crowns. It is to be secured by the Austrian Customs and the Austrian tobacco monopoly, the revenue of which should be sufficient to provide for the charges on the loan. To enable the loan to be issued it was recognised that the guarantees of foreign Governments were required. The total of the loan is made up of two amounts—520,000,000 and 130,000,000 gold crowns.

The 520,000,000 gold crowns represent the estimated deficit on the Austrian Budget for the next two years, at the end of which period it is anticipated that, under the League of Nations scheme, the Budget will balance. The 130,000,000 gold crowns represent the amount of advances made by certain Governments to Austria on the express condition that they should be repaid out of the proceeds of the first foreign loan raised by Austria. Great Britain, France, Italy and Czecho-Slovakia undertook at Geneva to guarantee each 20 per cent, of the charges in respect of the 520,000,000 gold crowns representing the Budget deficit. Great Britain, France mid Czecho-Slovakia, to whom repayments of advances ware due, agreed to guarantee each 33⅓ per cent. of the 130,000,000 gold crowns representing the amount required for repayment of advances. It may be necessary for the Austrian Government to raise money by short term securities to cover the period before the loan is issued and its proceeds are available; such securities will be redeemed out of the proceeds of the loan.

Turning now to Clause 3, which relates to the Soudan, this authorises the Treasury to guarantee principal and interest of any loan raised by the Soudan for the Gezireh Plain irrigation works, not exceeding the amount required to raise £3,500,000. Conditions are specified which must be satisfied before any guarantee can be given, and the general effect is that the Soudan Government must make proper arrangements for applying the loan, charging it on the general revenue and assets of the Soudan and establishing proper sinking funds.

There is one further subject to which I must refer, and that is contained in Clause 4 of the Bill, wherein provision is made for meeting a difficulty which has arisen in connection with the administration of the export credits scheme. The Department of Overseas Trade undertakes to guarantee bills drawn against genera] credits. Under the provisions of the Overseas Trade Acts no fresh credits can be given after September 8, 1923, and doubt has arisen as to whether the date on which the Department undertakes to give a credit or guarantee, or the date on which the transaction actually crystallises, should be regarded as the date of the giving of a credit for the purposes of the time limit imposed by the Acts. This clause makes it clear that the date of the undertaking shall be regarded as the date on which a guarantee is given.

I have now placed before your Lordships, so far as I could, the general purposes of the Bill and the points which it raises. It is a wide Bill, and covers four very varied matters. I will endeavour to answer any questions which may be raised, but I trust that your Lordships will find that I have given as clear an explanation as was possible of the general purposes of the Bill. I beg to move.

Moved, That the Bill be now read 2a.—(Lord Somerleyton.)


My Lords, I do not suppose that there is any member of your Lordships' House who desires to resist the passage of this Bill, and certainly I do not intend to offer any opposition to it, not because its provisions are such as, in normal circumstances, I should find myself able to approve, but because I recognise that the circumstances to-day are so abnormal that it is useless to try to criticise measures that are intended for their palliation and relief by the ordinary standards of criticism that would be applied in more usual conditions. None the less, it appears to me that there are matters in this Bill that do most earnestly require your Lordships' consideration.

As has been pointed out by the noble Lord who has introduced this measure, and who has given us an extremely full and clear account of its provisions, it is a Bill which embraces many and various objects. The only two upon which I propose to say anything are those Which relate to the extension of the existing trade guarantees, and those that, relate to the guarantee of the loan to Austria. My reason for doing that is that both of these provisions really arise from our trade conditions at home. The noble Lord himself said that the extension of those trade guarantees was designed to secure employment for some of our unemployed people at the present time, and the figures which he gave, though I recognise that he did not mean them to be anything more than a fair estimate, show the full extent to which this measure can be relied upon for the purpose of granting that relief. What a pitiful amount it is! At this moment, as we all know, there are between 1,301000 and 1,500,000 of our workmen out of work. They have been out of work for months, and there is no one who can suggest any spell or any artifice by which that deplorable condition can be effectively relieved.

I think it is plain that, if you examine the question at all seriously, it will be found that nothing that can be done to our domestic industries here can effectively afford that relief. If von want to see what has caused this unemployment I think it is necessary to go back a little in the history of our industries. For reasons that it is now unnecessary to examine, the whole policy of this country during the last fifty years, following, as I think, the natural trend of the genius of the British people, has been to develop all our industrial life at the cost and expense of our agricultural life. Without that it would have been impossible to maintain the enormous population which this country supported before the war.

I do not think that even the most eager optimist as to the agricultural possibilities of this country would suggest that this country can provide itself with the necessary sustenance for the forty-eight millions of people that it has to carry. It was a marvellous achievement of human effort that enabled this tiny speck of land to maintain a population so vast, and I believe that you will be unable to parallel anywhere in the world such a remarkable result. How was it maintained? It was maintained by one means only—by the power that we possessed of selling our goods in every quarter of the world; and as soon as our overseas markets were destroyed difficulty and trouble were bound to come at home. There were several nations in Europe in a similar, though not in any way in the same, position; but the war has shaken the whole edifice of European trade, and it is difficult indeed to know when it will be possible for it to regain its equipoise.

It is for that reason that I want your Lordships, in considering this Bill, to have regard to the wider aspect of the question of which this touches only a part, that aspect which is brought to your notice by the necessity of guaranteeing the loan for Austria. Why? Because the whole industrial system of Austria has also broken down; because the Peace Treaty has so cut up and carved her economic life that Austria is no longer able to operate as an entire unit in providing its own raw substances and exporting its materials as it did before the war. It may be that it will be possible in the future to rebuild an attenuated Austria in the place of the great Empire which she now represents; but it can never have anything more than a shadowy resemblance to the Power that was. If we look nearer we see the same thing happening closer to our own shores, in Germany. The Conference that has just broken down is an illustration of the difficulty that we have experienced in knowing how best to treat that problem. I do not desire to embark upon a discussion of that at the moment, because it is obvious that there may be other and better opportunities afforded for our deliberations upon the point.

It is this that I want your Lordships to realise. If I apprehend aright a letter that was published inThe Times of yesterday, it was pointed out that of our exports before the war only 20 per cent. went to the Central Empires of Europe—only 20 per cent. !—and it was thought that it was impossible to account for our unemployment at home by the fact that 20 per cent. had been practically destroyed. But does it not strike you as remarkable that that 20 per cent. bears the most startling resemblance to the percentage of unemployment within our own shores, and that our 1,300,000 unemployed men do represent very nearly 20 per cent. of our own ordinary industrial population? The market abroad for the goods those people used to make is destroyed, and unless it is possible for that market to be restored it will be perfectly impossible for us to relieve this shadow of unemployment which, instead of lightening, will deepen and deepen into perpetual darkness and night.

It is because I am so anxious that the Government should face that problem fearlessly that I have taken advantage of this opportunity to bring it again to their notice. It may be asked: What is it that we can do? At least there is this. There are debts owing to us from the Allied Powers. There are claims that we hold against Reparations which Germany has been called upon to pay. We can at least make it quite clear that we are prepared to sacrifice every single farthing of those claims against our Allies and against Germany, upon the condition that our Allies will, with the assistance of the Central Empires themselves, attempt to restore a stable basis of economic life in Germany and Austria.

It is, of course, of no use attempting to deal with this matter piecemeal. It is not of the least use having a moratorium for five years and at the end allowing the same claim to be made with crushing weight when we shall have nothing whatever to offer in order to cause its postponement. Whatever is done should now be done once and for all, and upon a basis that will enable the restoration of a normal currency in Austria and in Germany, through the medium of which alone it will be possible for the ordinary channels of trade to be cleared and commercial intercourse resumed. If this is found to be impossible, if the Government find that this cannot be effected, I would then beg your Lordships to remember what was said in the speech made by a member of the late Government in the course of the debate on the most gracious Speech from the Throne.

It was then said that the late Government had been trying for four years to find new markets and had been unable to find them. Is it in the least likely that if yon pursue your inquiries for another four years you will be able to find them? They cannot be found because they do not exist; and they do not exist because you will never be able to fertilise the outstanding commercial areas unless you can once more restore the central market of Europe. It is obvious that the difficulties that we find in trading with Germany are not merely reflected in the condition of trade between ourselves and Europe. The fact that Germany cannot buy, to the full extent to which she could before, the products of our own Colonies—Australia and New Zealand—prevents those Colonies in their turn being able to buy our goods to the fullest possible extent. It is useless to imagine that trade runs through one pipe. It permeates and circulates through the vast vascular system of the whole of the commercial communities, and if once you cut one of the main arteries you starve all the outlying members of the great commercial body.

I have mentioned this to your Lordships because, although I believe that the Government are very anxious indeed to face this difficulty—and I believe that quite sincerely—I want them to understand that so far as I have any influence or power to speak for anybody except myself, my services would always be at the service of the Government to support and strengthen them to the utmost of my power in carrying out a bold and courageous policy of such a character as that which I have indicated. I know how great and grave are the difficulties by which we are beset; but this country has been beset by difficulties before, and the world has been encompassed by difficulties before through which it has been the privilege of this country to show the way. I venture to hope that we may at this moment he able to exercise that privilege once again.


My Lords, I have no wish to repeat what has been said by the noble and learned Lord, although I entirely agree with the propositions that he has put forward. I want to say, in high commendation of the proposals in this Bill, that I think Clause 2 and the proposed guarantee of the Austrian Loan is a most important first step—and I am thankful it has been largely brought about by the agency of this country—towards the restoration of the industrial markets in Central Europe, and a most important first step towards dealing with the impoverishment which in a very remarkable degree has overtaken the new Austrian Republic.

I will not go into the actual figures of Clause 2, because they have already been stated, nor into any question arising out of them; but I desire to say this. In backing up as far as I can what I call the beneficial and generous provisions of this clause, I would point out that it involves two very important principles—principles which should be operative in the wider field to which the noble and learned Lord who has just spoken referred. The first principle is this I am not aware that it has ever been found in any proposal before—that the conquering countries have come forward of themselves, and in a spirit of generosity, to assist the conquered country. I have tried to find a precedent for that, and I have not been able to find it, but it is a principle which, being applied now in the case of Austria, in its further application would, I think, meet a large number of the difficulties to which the noble and learned Lord has referred. I have visited Austria two or three timers, and observed the conditions in Vienna and other parts of the country, and I rejoice particularly that Austria's neighbour, which at one time was not too friendly, Czecho-Slovakia, has come forward to join in the guarantee.

The second point I want to make is this. I regard the conditions of the guarantee of the loan as found in Clause 2 as affording the most notable illustration we have hitherto had of the success of the principle of the League of Nations. Your Lordships know that I have always strongly advocated the principle of the League, and, as stated in the other House, I think we owe largely to a member of this House, the Earl of Balfour, the arrangement that he carried out as Chairman of the Committee which was appointed by the Assembly at Geneva to deal with this difficult question. It is greatly to the honour of the noble Earl, whom some of us have known for many years in political life, and also to the honour of the principle of file League of Nations, that the League have come forward and performed the feat of carrying through a loan of this character which, in my opinion, could never have been carried through without their aid and support.

I should like to say one or two words also on the Protocols which are referred to in Clause 2. It has been suggested by some critics that the proposals have placed too severe a control upon the financial position of the Austrian Government. I think that that criticism is quite unfounded. The words of the Protocol itself state that it is not intended to control the financial independence of the Austrian Government. I want to refer presently to some message that has come from Austria, and I wish to state that my own view, after most careful consideration, is that no undue measure of control has been imposed which in any way interferes with the legitimate independence and the sovereignty of the Federal Republic of Austria. There is a second provision which I also think of great importance. It is that the guaranteeing Powers are not to get any advantage or industrial preference owing to the fact that they have entered into this guarantee. In this way all question of exploiting Austria under a loan of this kind becomes, I think, impossible.

On this occasion I do not wish to emphasise in any way the conditions from which, I hope, Austria will be relieved under the terms of this loan, but, having had an opportunity of visiting all the relief works in Vienna, perhaps I might be allowed to give one illustration. A Judge in a high position in Austria, to whose Court I was introduced, was receiving, under the conditions which then prevailed in Austria, a salary equivalent to 8s. per week of English money. He was obviously starved. At the same time the professors of the great University of Vienna, of world renown, were really living on one meal a day which cost one penny in English money. I admit that I tried the meal. You had the alternative either of a plate of soup or a plate of pudding, but you could not have both. It is hardly wonderful that, in those circumstances, you saw men of the highest eminence, men of European and world-reputation, gradually starving for want of sufficient resources to preserve life under healthy conditions.

Perhaps it would not be out of place if I read a very short extract from one letter which I have received from a great authority in Austria. It is only typical of others, and is as follows:— In consequence of the League of Nations plan— this was before it was actually carried, but when it was anticipated— —our present circumstances are stabilised, and we may hope that this state of things may last. In other words, conditions have been brought about which really date back to August of this year. The condition that has been brought about is one of stability of the rate of exchange, which is recognised on every hand as one of the essential conditions in all cases of financial and industrial restoration.

I dare say your Lordships may not have seen the figures that have been supplied to me. If you take the first nine months of the year 1922 and compare them with the conditions in 1921 and 1920, you find that there has been considerable progress in the trade prosperity of Vienna and Austria. The trade figures show that the proportion of exports to imports has increased, and to that extent Austria has improved its financial position, though I will not say it has become more or less of a self-supporting financial unit, because it has not. I am thankful that, in addition to the permanent assistance which has been given, Austria has received a number of doles from different countries merely to prevent starvation. This country has provided no less than £12,200,000. I have not all the figures before me, but considerable sums have also been provided by both France and Italy.

There is one caution to which I should like to give expression, and that is that relief must continue for Austria—I mean philanthropic relief—until the new conditions come into real operation. When I was in Vienna, Captain Richardson was working for Mr. Hoover's Relief Commission. Their work was most admirably done in every way. It was proposed that those relief works should come to an end last September, but Captain Richardson, who knew the conditions of poverty in Austria, went back to America and got new funds, with the result that these relief works are to be carried on until May or June next year, I think, when it is expected that the necessity for relief of this character will have come to an end. In the same way, other relief works, particularly those of the Society of Friends, with which I happen to be specially conversant, will have to be carried on until the early summer of next year because, naturally enough, while the issue of paper money has been forbidden except on a gold basis by a bank, there will be a period of some exceptional trouble, and also, I am afraid, of exceptional unemployment.

I only wish to add that I believe everyone in the Federal Republic of Austria will be most thankful, and will feel the greatest possible gratitude, for the proposals contained in this Act. They are really the first ray of light on the horizon since the terrible period of the war, and if, in due course of time, the friendly feeling that you are now showing towards Austria could be extended to the other countries who have suffered from the war, it would provide the real solution of the sorrows of the world and the difficulties of unemployment which now exist in this country.


My Lords, I want to ask the noble Marquess opposite a question. My noble and learned friend Lord Buckmaster, in his speech brought in, not without relevance, the question of inter-Allied debts. It is, of course, more relevant to the Conference of Prime Ministers which has now adjourned. I had desired to say something on the subject of inter-Allied debts, on perhaps broader grounds than would be relevant to this particular Bill but starting from the same point of view as that of my noble and learned friend. The noble Marquess has intimated that he will make a statement about the Conference on Thursday, and that he will be able to say, to-morrow, whether the Government would, or would not, deprecate any debate or comment on his statement,. Most unfortunately, I shall be unable to be here next Thursday as I have an important engagement, not a political one, in the North of England at which I absolutely must be present.

What I was going to ask the noble Marquess is whether, if I wish to make a contribution on the question of inter-Allied debts, not for the purpose of getting a statement from the Government but because I may be able to submit certain considerations to them, it would be possible for me to make it to-morrow on the statement of the noble Marquess as to under what limits the Government are prepared to accept discussion on the Conference.


My Lords, I am quite certain your Lordships would all feel that it would be a great loss to the House and to the country if the noble Viscount did not have an opportunity of saving what, he has to say. I hesitate a little in answering his question because of the arrangement of business in your Lordships' House. The statement which I am going to make to-morrow as to the propriety or not of a discussion upon this very delicate matter will be at the beginning of business, and I am not quite sure whether it would be in order for the noble Viscount to make a considerable speech upon another subject before the Orders of the Day. However, I am sure we shall be able to get over that difficulty if he will allow me to confer with him as to the question of business.

There remains the other question. It would be far more convenient if we could take whatever is to be said on Reparations all on one day and not spread it over tomorrow and the following day. The noble Viscount will realise that I cannot answer that point without reference to my colleagues in another place. I must not interfere with their arrangements. I will make the best arrangement I can so far as business is concerned, and will try to arrange so that the noble Viscount will be able to make what observations he has to make to the House.


I am much obliged to the noble Marquess. As far as to-morrow is concerned I am ready to do whatever is most convenient to the House.


I have only one or two words to say with regard to the observations that have been made in the debate. I am sure the Government have no reason to complain of the reception this omnibus Bill has received in your Lordships' House. No hostility has been shown, and the Bill has drawn two speeches of importance to which the Government will give careful attention. The noble and learned Lord will realise that we feel as strongly as he does the great, importance of some recovery of the financial and commercial condition of Central Europe; and we agree that this country cannot look to anything like a complete restoration to normal conditions until that has been achieved.

At the same time, it is not right to forget that there are other directions in which markets will be found. The noble and learned Lord seemed confident that there was no other direction in which new markets could be found, but I do not think that His Majesty's Government quite take that view. We hope that we may be able to find markets within the confines of the Empire itself, and it is with that hope that the Prime Minister has invited the Dominions to an Imperial Conference in order to consider how far it may be possible to extend the opportunities of commercial intercourse within the Empire.

With regard to the rehabilitation of Central Europe, the noble and learned Lord, Lord Parmoor, is quite right in saying that the clause dealing with the Austrian loan is, and is intended to be, a direct contribution to that object. We are much encouraged by the success of the League of Nations in carrying that through and the effect it has already had. My information confirms what the noble and learned Lord has said, that the mere establishment of this new system has had a steadying effect already in Austria. There has been a slight restoration of confidence, and, therefore, of credit, and it has had a very good effect. We are hopeful that this plan may succeed. I should not like to sit down without saying how deeply we feel the tragedy to which Lord parmoor called attention. It is difficult in England to realise how deep is that tragedy. Quite apart from all these dry subjects of financial and commercial reform, the human tragedy which underlies should be present to the minds of all your Lordships, and we should try, both as individuals and nations, to bring such a state of things to an end.


My Lords, I desire to say a few words in amplification of what the noble Marquess has said in regard to the attitude of the Government in reference to the restoration of trade and the improvement of the appalling conditions which affect our own country and the whole world. I heard with gratification the reference of the noble Marquess to the rather curtailed statement of Lord Buckmaster. I believe that in the development of Imperial trade and the resources within the Empire you have a very large, and a different, field for improvement in the existing conditions—indeed, it is the largest and the best field.

Wink I hail with unqualified satisfaction the announcement that we are to have an Economic Conference early in the New Year—a suggestion which I myself made at the beginning of this yeas—I hope that if it is found impossible for the Prime Ministers of the Dominions to attend that Conference and also to attend a regular Imperial Conference, if such is to be held later on, the Government will delay holding the Economic Conference rather than hurry it on without the presence of the Prime Ministers of the Dominions. I have been called upon to preside over two Imperial Conferences, and I am quite confident that the attendance of the Prime Ministers of the Dominions is almost vital to the success of any Conference of this kind.

We sat in an Imperial Committee upon which were representatives of the Dominions as well as of the Home Government, and there is available to-day in the Colonial Office an abundant supply of information as to the directions in which the trade of the Empire can be developed and extended. I hope that at this Economic Conference advantage will be taken of all the work that was done then and all the information which, as I have said, is available. I rose only in order to say that I am very hopeful not only that out of this Economic Conference there will come a real and substantial development of trade here, a development which will help us and the world, but that it will tend to make the bonds which bind the Empire together even stronger than they are, and to make a reality of what is perhaps not quite so real as it might be—namely, the power of the Empire to help itself and to provide trade opportunities which will be sufficient in themselves to help us out of what is undoubtedly a very difficult situation.

On Question, Bill read 2a, and committed to a Committee of the Whole House.