Lords Sitting of 3 March 1927

Preamble
The House met at a quarter past four of the clock, The EAUL OF DONOUGHMORE on the Woolsack.
YORKSHIRE ELECTRIC POWER BILL. [H.L.]
Read 2a, and committed: The Committee to be proposed by the Committee of Selection.
YEADON WATERWORKS BILL. [H.L.]
Read 3a, and passed, and sent to the Commons.
NORTH METROPOLITAN ELECTRIC POWER SUPPLY BILL. [H.L.]
Read 3a: Amendments made: Bill passed, and sent to the Commons.

LIVERPOOL CORPORATION BILL. [H.L.]
Order of the Day for the Second Reading read.
THE CHAIRMAN OF COMMITTEES (THE EARL OF DONOUGHMORE): My Lords, in moving the Second Reading of this Bill I think I can save time if I read a letter that has been sent to the Town Clerk of Liverpool by the Assistant-Secretary of the Ministry of Health. Your Lordships will see that three members of your Lordships' House have given notice to move that it should be an instruction to the Committee that Clause 214 [Power to buy, sell, import and deal in coal] should be omitted. The letter is as follows:—
"With reference to the Bill promoted by the Corporation in the present Session of Parliament, the Minister observes that, in Clause 214, the City Council propose to take powers to engage in the sale of coal.
"I am directed to inform you that the Government consider that this is not a matter which is suited for local legislation and that, if and when they are satisfied that action is necessary, they will deal with it as a general question.
"In the circumstances the Minister hopes that the Council will see their way to withdraw the clause."
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That being so, the promoters have communicated with me and, I believe, also with my noble friend, saying that when the Bill reaches the Committee they will ask those of your Lordships who serve on the Committee to omit that clause.
Moved, That the Bill be now read 2a.—(The Earl of Donoughmore.)
LORD FORRES LORD FORRES had given Notice to move, in the event of the Bill being committed, That it be an instruction to the Committee to which the Bill may be referred to strike out Clause 214. The noble Lord said: My Lords, while the action taken by the promoters of this Bill under the inspiration of the Government renders entirely unnecessary the Motion that I had intended to move, I should like on the Second Reading to make some reference to the principles which it is proposed to carry into legislation in this Bill. The larger portion of the Bill is, I think, unobjectionable, and I do not propose to refer to any of the points that will come under review by the Committee and will, no doubt, receive the care and attention that are always given by Committees of this House. Nevertheless, Committees of this House are small in numbers and not all of us sit upon them, and we have not therefore an opportunity of examining in detail many of the interesting points that arise.
This particular clause, Clause 214, though it is proposed to withdraw it in Committee, is still in the Bill, so far as this House is concerned at the moment, and it brings before us a question of very vital importance to the trading community and the consumers of this country. This question of municipal trading is one on which it is difficult to lay down an absolutely hard and fast rule as to how far it can be permitted. It is obvious that such matters as the supply of gas, water, electric light and so forth may be called municipal trading; but they are, after all, public utilities and are concerned with cutting up the public streets which are in the charge of the municipalities concerned. These public utilities occupy, in my judgment, a very different position from a trade in such an article as coal. In matters of trading it appears to me that private enterprise can better supply the needs of the community and at a cheaper cost than municipal trading

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can supply them. Therefore there is no need for municipalities to undertake that branch of activity, although it may be quite reasonable that they should undertake the supply of water, gas and electricity. The two things are on an entirely different footing. And while I believe that municipal trading has already been allowed to go to some extent beyond what are called public utilities—I believe, for example, that the Legislature has sanctioned municipal trading in electric light fittings—still we have to be very jealous and very careful not to allow this policy to be generally adopted.
This power would have given Liverpool the right to deal in coal, not only in the case of a strike but also in the case of an apprehended rise in prices. Well, if Liverpool may speculate in coal because the Town Clerk and the Corporation think that there is to be a rise in the price of coal, why should not Manchester and a great many other towns also do so? We should then have the spectacle of municipalities entering upon speculations which might end disastrously and the cost of which might fall upon the ratepayer. I think the principle is a dangerous one. It was for that reason that I put down the Motion which stands in my name, but I did so on my own initiative and only subsequently did I receive representations from a number of bodies who entirely objected to this clause. I am very glad that the Government have taken my Motion into consideration and recommended the promoters of the Bill to withdraw the clause. I shall be interested to know whether they have done so on principle or because of the details of the clause, but that perhaps is immaterial at the moment. They have taken that step and therefore the object I had in view has been achieved. I wish to say for my part as a trader and merchant, that the principle suggested in this clause is one which I think is a very bad one, and I hope we shall not have it brought again before this House.
VISCOUNT HALDANE: My Lords, it must not be taken that those who sit on this Bench agree with all the principles laid down by the noble Lord who has just spoken. If he wishes to see an example of what is aimed at let him look at the price of coal that is being charged by the coal merchants in London
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to-day and compare it with the price that is being charged in Scotland. There is no doubt that somewhere or other there is a great taking of profit and adding to profits going on at this moment which ought to be checked. I quite appreciate the proposition that legislation ought to be entered into in a general fashion, but pending that it must not be taken that some of us here do not recognise the great grievance from which the public is suffering at the hands of the private vendors of coal in comparison with what might be if the sale of coal were put on a different footing. It is all very well to take this as a proposition which is concerned with Socialism, but your Lordships have already embarked upon Socialism in the case of water, light and gas, and the time will come when you will have to embark upon it in connection with public conveyance.
LORD JOICEY: My Lords, I quite agree with what was said by the noble Lord, Lord Forres, with regard to Clause 214. I confess I am somewhat surprised that a Corporation with such a reputation as Liverpool should put a clause of this kind into their Bill practically containing as it does the principle of bringing Socialism into every question affecting marketing and selling—a clause, indeed, which would enable them to buy and sell coal when they think the price too high. Whether the price is high or not it will always be too high for gentlemen who are anxious to get votes. This principle is one which could be developed to any extent, and I cannot see why coal is specially selected. If you give the power to buy and sell coal, why not give it in the case of flour and meat, in fact everything that a Corporation might think was too dear? I think there is a great deal of ignorance prevalent with regard to these matters, but to give a municipality this power would be a very foolish and unwise policy on the part of your Lordships. The price of coal varies constantly and I have always found that competition is the best means of fixing its value.
I know that people are accustomed to compare the price of coal coming out of the pit with the price of coal supplied to the consumer. They are altogether different things. The price of coal which comes out of the pit is for the whole of the coal produced from the mine, containing stones, which have to be picked

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out, and dirt, and it has to be screened to a large extent before you can supply it for domestic use. There are some cases where thirty, forty and I have even known cases where seventy per cent, of the coal is slack and small coal which has to be taken out of house coal intended for domestic use. The price of the latter is therefore altogether altered because screened coal commands a high price and small coal usually a very low price. Then you have to consider the cost of taking it to the consumer. I have had some experience of retailing coal to small people. They do not usually take a very large quantity, and a man who is dealing with 20,000 tons of coal in the year, selling by cart, has very heavy expenses. He has offices to keep up, he has rates and taxes to pay, he has clerks, and he finds that in handling the coal it is often very much broken and he has to take a large quantity of small coal out of it. All that means that there is no comparison whatever between the price paid by the consumer and the price realised at the pit for the whole of the production. It is quite impossible at the moment to give an exact figure because in every town and district the figures vary.
I am bound to say that if the Liverpool Corporation attempts to undertake this trade it will lead to very great difficulties in connection with many other matters. I am not a believer in all this legislation against profits. What is business for but to make profit? Who benefits? Of any profit that I make the Government takes fifty per cent., and I suppose when I die they will take fifty per cent. of my savings. I feel sure of this, that if you allow this clause to pass you will create many very great difficulties in other ways. Municipal authorities cannot compete with private enterprise any more than a Government can compete with private enterprise. In Newcastle we have a very good system of trams, but what has happened? The Corporation will not give a licence for a single omnibus because they know very well that if they allow omnibuses to run they will very soon have to close down the trams altogether. Omnibuses are very much more convenient, they do not stop the traffic and can be run at very much less cost, I am sure, than the ordinary tramway.
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I do not think that on consideration your Lordships will allow this Bill to pass without giving an instruction to the Committee to remove Clause 214. Whatever may be the opinion of the Liverpool Corporation and other municipalities who intend to go into these social questions, I do hope that your Lordships, in the interests of the community at large, will not allow such a clause to pass. The community has a very great interest in this matter. Do you think that the private retailer is going to compete with a municipality which has the rates behind it and which, if it makes a loss, will be able to make it good out of the rates? As a very large ratepayer I know perfectly well that it would be extremely unwise to allow any municipality or any Government to carry on business of this kind. This is the beginning of an attempt to get hold of the general trade of the country and I feel quite sure that if your Lordships do not pass the instruction you will have a great many similar Bills brought forward by those extreme men who, in my judgment, do not quite understand these questions. I hope that your Lordships will prevent municipalities from going in for trading against the regular traders of the country. The regular traders are the people who pay the rates. I feel sure that as time goes on if we do allow such a clause as this to pass, it Will have a very serious and bad influence upon all these matters, which we are so anxious to carry on for the benefit of the community.
VISCOUNT GAGE: My Lords, as various noble Lords were not present when the letter was read by the Lord Chairman I think it would be well if I read it again. It is a letter sent by the Ministry of Health to the Town Clerk of Liverpool and is as follows:—
"With reference to the Bill promoted by the Corporation in the present Session of Parliament the Minister observes that, in Clause 214, the City Council propose to take powers to engage in the sale of coal.
"I am directed to inform you that the Government consider that this is not a matter which is suited for local legislation and that, if and when they are satisfied that action is necessary, they will deal with it as a general question.
"In the circumstances the Minister hopes that the Council will see their way to withdraw, the clause."

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The Government understand that in deference to their wishes an undertaking has been given that this clause will be withdrawn. Therefore the general considerations which have been put forward by various noble Lords do not arise in this particular case.
On Question, Bill read 2a, and committed: The Committee to be proposed by the Committee of Selection.

DISEASES OF ANIMALS BILL [H.L.]
House in Committee (according to Order): Bill reported without amendment.

ANGLO-RUSSIAN RELATIONS.
LORD NEWTON LORD NEWTON rose to call attention to the Note recently addressed by His Majesty's Government to the Soviet Charge d'Affaires in London, dated 23rd February, 1927. The noble Lord said: My Lords, the House will probably remember that in the early part of last summer a discussion took place here upon our relations with the Soviet Government, and that upon that occasion my noble friend the Earl of Balfour, who I regret to see is not in his place this afternoon, made a very exhaustive speech dealing in great detail with the whole question. That speech has always served as a kind of official exposition of our relations with the Soviet Government. In that speech he did not dissociate himself from some severely critical observations which had been made upon the. Soviet Government. He expressed, in fact, general agreement with what had been said; he made it clear that his Majesty's Government were fully aware of, and were under no illusions whatever as to, the real sentiments of the Soviet Government with regard to this country. He also made it clear that they were under no illusions as to the various aliases and subterfuges under which the Soviet Government concealed itself. He expressed the opinion in so many words that the sending of money in aid of the General Strike was an unfriendly act, which no Government could tolerate.
But he wound up by announcing that in spite of the admissions which he had made, His Majesty's Government had no intention of taking any specific action. That statement naturally received a
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somewhat varied reception. Those persons whom it is now convenient to designate as "Die-Hards"—I observe that the term "Die-Hard" is usually applied to anybody who wants to get anything done definitely—naturally disapproved of this statement, but upon the whole it was received with approval and upon the whole the Government, if I may so express it, got a further mandate for patience. Nine months or so have elapsed since this statement was made and we are now back at the original point. We are not only back to the time of the intervention of the Soviet Government on the occasion of the General Strike last year but we are further back still; we are back to 1924 at the period when the Labour Government, through the Prime Minister, Mr. Ramsay MacDonald, were impelled send a strong expostulation to the Soviet Government with regard to their intolerable interference in our affairs.
As we all know, a long protest has recently been addressed to the Soviet Government more or less on the same lines. This Note of protest on oar part is really, so to speak, a long recapitulation of the various kicks which we have received at various times from the Soviet Government. This expostulatory Note on our part has already received a reply from the Soviet Government and I do not think I am using the language of exaggeration when I say that this reply is both evasive and impudent. It denies the charges which have been brought against the Soviet Government, it repudiates with almost incredible effrontery the authorship of and responsibility for the Zinoviev letter. Perhaps I may observe parenthetically that the explanation of the repudiation by M. Zinoviev of that celebrated letter is a perfectly simple one. Obviously what happened was that we had not possession of the original but had possession of a copy. It was therefore open to him to say that he had not signed the copy and that statement has about as much importance to be attached to it as would a statement of a Member of Parliament if he were to repudiate the statements made in his Election Address because he had not actually printed the placard himself.
This Note makes no allusion whatsoever, if I am not mistaken, to the fact that they sent money here in favour of

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the General Strike; it makes no promise whatever to modify their political action in future with regard to this country; and it concludes with a lurid threat that His Majesty's Government will break off relations with the Soviet Government at its own peril. No doubt there is a good deal of bluff in this, but at all events it shows one thing conclusively and that is that there has been, so to speak, no change of heart on the part of these people. At first sight I think it must strike everybody that on paper and in theory the case for a rupture of diplomatic relations and for the termination of the Trade Agreement is justified over and over again. I would ask the House, more particularly noble Lords opposite, whether they can recall any instance in modern times in which any Government has so persistently and so ostentatiously interfered in the affairs of another Government. I would ask them to reverse the position and to consider what would be the case if we acted in this way ourselves with regard not only to the Soviet Government but to any other Government.
I can remember, and many noble Lords here will remember, that our Ambassador in Washington, the late Lord Sack-ville, was turned out of the United States, if I remember correctly at a very few hours' notice, because he had ventured to answer a question put to him by a person of British extraction in America who wanted his opinion upon the Presidential Election. Our Ambassador was unceremoniously turned out of the country. What do noble Lords opposite think would happen if, for instance, a Labour Government in this country were found to be encouraging some kind of agitation against, let us say, Signor Mussolini in Italy? Or, again, supposing the Conservative Party were in power and a Conservative Government were found to be sympathising with, and providing encouragement and means for the financing of, a Legitimist revival in France? But I prefer to take the case of Russia. What do noble Lords imagine would be the result if they interfered in any way in the internal affairs in Russia?
I can imagine very well what would happen. I can form a better idea perhaps than other people because I can quote an instance which came within my personal knowledge. I have already
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mentioned this case to the House, but it seems to me to be so significant that am not ashamed to repeat it. In the year 1925 some refugee Russians in Paris subscribed a sum of money to assist their former school fellows who were living in great poverty in Leningrad. They collected a certain amount of money which was sent to Leningrad. The facts became known to the Soviet Government and all the persons who received the money, including old men and old women, were instantly arrested, taken off to a political prison and shot without the semblance of a trial. This took place in the early days of July, 1925, and it so happened that I was in Leningrad myself only a few weeks subsequent to that event and when the circumstances had become known. The circumstances attending this particular execution were so horrible that even those persons who had been living in Russia under the new system were not only horrified but amazed, for they had been under the impression that the Soviet had, to some extent, reformed its system and that outrages of this kind had ceased. This episode showed how wrong they were in their judgment and what would be the fate of any person who received money from a foreign source living in Russia. Such persons would be accused of high treason and the probability is they would all be executed without any trial at all.
Apart from the question of reciprocity, it has always seemed to me that when we express indignation at the procedure of the Soviet Government we make a great mistake. We are committing a serious error when we imagine that this hostility is directed solely against a Conservative Government. I do not want unduly to pain noble Lords opposite, but I am quite convinced that the Soviet Government holds noble Lords opposite in equal detestation; indeed, I am not at all sure they do not dislike them even more than they dislike us. It would not surprise me at all to find, for instance, that my noble friend Lord Parmoor was more cordially detested in Russia than, shall I say, Lord Birkenhead or Mr. Winston Churchill. There is no class of person for whom the Soviet Government entertains such detestation as the so-called moderate members of the Labour Party in this country.
I say that not only because of what I read in the Press but because of what I have heard and observed myself. If anybody feels any doubt I would invite them to read the more advanced Opposition Press. There you will find plaintive laments from people like Mr. Snowden and Mr. Bromley, M.P., of the abuse to which they are subjected by the Soviet Government. What pains them more than anything else, what actually cuts them to the heart, is that the Soviet Government by adopting this procedure are playing what they call "the Tory game." In other words, they are blurting out the truth. The moral of all this is that if a moderate Labour Government ever comes into power in this country again it will suffer just as much from attacks from the Soviet Government as the present Government does. In fact, the only Government I can conceive of which would be exempt from attacks of this kind would be a Government formed by Mr. Cook, supposing that unhappy contingency ever occurred.
The reasons for breaking off diplomatic relations and for terminating the Trade Agreements really have been supplied by members of the Cabinet themselves. Distinguished and prominent members of the Cabinet have described members of the Soviet Government as murderers, swindlers, robbers and assassins, amongst other epithets. If this is true, and there is no reason to suppose it is not true, how can you continue to associate on so-called friendly terms with them? How can yon keep up the pretence of being on friendly and amicable terms with people whom you describe in this way? Why do you associate with them at all? Of course, I understand that there are many and weighty arguments which can be used against the rupture of diplomatic relations, although I often wonder whether the disadvantages of breaking off diplomatic relations would not be more than balanced by the advantages which we should derive thereby. We are told, and it may be true—though I have much more confidence in the Foreign Office in these matters than most people have—that if we break off diplomatic relations some vague international calamity may occur, a regrouping of powers or something equally important. I do not pretend to be sufficiently behind the scenes to know whether this is the case or not. On the
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other hand, even supposing it is true, it seems to me that the breaking off of diplomatic relations on our part may have a quite different result.
I do not think it is sufficiently realised that the Bolsheviks are not only the enemies of this country but the enemies of all countries—that is to say, of all countries where there is a civilised and orderly Government. We have had plenty of evidence of that. There are about half a dozen countries in Europe which they have attempted to overthrow by what is called "direct action." They have tried it in Bulgaria, in Hungary, in Poland, in Esthonia, in Latvia, and they will try it in other countries no doubt if they get the opportunity. Here they have not attempted direct action. They have preferred indirect action, with the assistance of Mr. Cook and his friends. But supposing we nerved ourselves, supposing the Government decided to break off diplomatic relations, I often wonder whether it would not have a very encouraging effect upon Europe and whether our action would not be hailed with great satisfaction by other Powers. They might conceivably be induced to follow our example. At the same time I realise the objections perfectly well, and if His Majesty's Government are still satisfied that rupture of diplomatic relations is not a thing which ought to be undertaken, then what I am anxious to submit is that there is another and in my opinion a better alternative, although of a less sensational nature.
The alternative which I suggest and which has been suggested by plenty of people before me is that the Trade Agreement should be terminated. Any suggestion of that kind would be received in certain quarters with horror, but as a matter of fact the importance of our trade with Russia is greatly exaggerated. In the first place, when people talk about the trade we have lost with Russia, they do not seem to realise the fact that our trade with the old Russia was conducted principally with those parts of the Russian Empire which now form separate communities altogether, such as Poland, for instance, Finland and so forth. But, as a matter of fact, the volume of Russian trade is very insignificant. I do not think it amounts to more than 1½ per cent., or something of that kind, of our total trade. But whereas the trade with

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Russia is of no particular importance to us it is of very great importance to the Russians themselves. The position is that we sell very little to them—I forget what the amount is but it is very small. On the other hand, they sell a great deal to us. I think they sell something like £25,000,000 worth a year to us. The greater proportion of what they sell is made up of oil and timber—that is to say, property which has been stolen from other people. Therefore what we are doing is this—and it is not much to our credit commercially—we are buying, or a certain section of merchants are buying, stolen goods. They are paying for those goods with British money, that money goes to Russia and it is used against us, not only in propaganda in this country but in financing war in China and elsewhere.
That is the net result of our Trade Agreement. So far as I know no similar Trade Agreement exists between Soviet Russia and any other Power. Yet, in spite of this fact, American trade with Soviet Russia is in a far more favourable position than ours and the United States sell at least double as much as we do. I was interested in observing that a day or two ago a speech was made by Sir Robert Horne, who negotiated the Anglo-Russian Trade Agreement in 1921. He, therefore, must know what he is talking about. Sir Robert Horne stated that he had the greatest hope when he signed this Agreement that it would not only result in the improvement of our relations but would help considerably towards remedying the present economic condition of Europe. Well, he has had to admit that it has been a complete disappointment, and he goes so far as to say—and I think he would be corroborated by every one who has studied the question—that that Agreement has been a failure in almost every clause. Under the Agreement you can denounce it at any moment if it has been broken. Therefore if you wish to denounce it you can do so to-morrow. If you do not wish to take advantage of flagrant breaches of the Agreement to terminate it suddenly you can give six months' notice. Surely it is not too much to ask the Government that they should seriously consider this proposal and that if they are not prepared to denounce the Agreement at once they should give notice that the Agreement will be terminated six months hence.
What does not seem to be realised is that in this matter we have the whip hand. They are most anxious to trade with us; whether we trade with them is to us a matter of comparative unimportance. They are bound to come to us in order to get the money and it is for that reason that in the Trade Agreement we have a most valuable weapon in our possession. In addition, I might point out that, not only will the denunciation of the Agreement probably bring them to their senses, but it will enable us to effect a much more satisfactory Agreement later on. In any case it seems inconceivable that this policy of inaction should continue. Ministers seem sometimes to have forgotten that it was really Zinoviev who gave them their unprecedented majority. This Government was returned to power more for the purpose of ridding this country of Russian interference than for any other reason and I do not think it is possible for the Government to forget that fact. Not only that, but we are occupying at the present moment a most humiliating position in the eyes of the civilised world because we are tolerating, and we have already for several years tolerated, their behaviour. If no definite action is announced on the part of His Majesty's Government now, I cannot help thinking that the worst possible impression will be produced. It seems almost inconceivable that one of the greatest Powers in the world should be, so to speak, perpetually insulted and held to ransom by these people, who might almost be described as the enemies of civilisation.
The language I have used has, I am afraid, been rather forcible, but, on the whole, I do not think it is more forcible than that employed by persons occupying much more responsible positions than myself and who are actually Cabinet Ministers. I have a slight regret at being obliged to use this language myself. I have no personal grievance against the Soviet Government. In fact—I am almost ashamed to say it—I am under some slight obligation to them. I suppose I am almost the only member of this Assembly who has been to Russia comparatively recently. The Soviet authorities allowed me to go there. I asked no favours of them, but they treated me with civility and courtesy. They did not interfere with my movements and they

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did not attempt to convert me or to infect me with their propaganda. Whether it was because they considered that it was no use or that I was not worth the trouble, I do not know. At any rate they treated me well and left me alone. Anybody, however, must admit that personal courtesy and personal civility cannot blind one to actual facts. Even the shortest visit to Russia, whatever one's treatment may be, cannot fail to make one realise the condition to which that country has been brought by its present leaders. Least of all can it remove the impression of persistent and unrelenting hostility which that Government has always manifested and continues to manifest towards us and our institutions.
THE MARQUESS OF READING: I presume that few, if any, of your Lordships will doubt the justification of the noble Lord, who has just spoken, for many of his observations and- especially those founded upon the propaganda which has been carried on by the Soviet Government and directed against this country. Nevertheless, I find myself unable to arrive at the same conclusion as the noble Lord. I gather that the real question before us now is not the Note, although that is the foundation of the debate, but what action should be taken in consequence of the despatch of the Note and the reply transmitted by the Russian Government. After all, the Note has been sent. It may be doubted, and I would myself rather doubt, whether in truth any useful purpose has been served by sending it. The Russian Government, by means of those various organisations the names of which are familiar to some of your Lordships and certainly are known to all those who have had to deal with Russian propaganda, especially in the East, has carried on this system now for a considerable time. At the very moment when the Anglo-Russian Trade Agreement of 1921 was concluded, or very soon after, some representations were made by His Majesty's Government directed against this propaganda.
The truth of the matter is, as the noble Lord said, that the propaganda is not directed against a particular Party. I doubt whether any one has ever imagined that the Russian Soviet Government was concerned with dealing only with the Conservative Party. The action of that
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Government is directed against the system of government which is carried on, not only in this country, but throughout the civilised world. It happens, unfortunately in some respects, that this Government has been made the chief target, probably for reasons not very difficult to conjecture. Perhaps it is because of the might and the influence of the Empire, perhaps also because it is thought that this Empire, by reason of its vast territories throughout the world, might be more easily attacked than, let us say, the United States of America, which has not the same interest as we have in the East or in the rest of the world. It may be also that, inasmuch as democratic government, really saw its origin in this country and has made persistent progress and the system of government is more stable in this country than in many others and as stable as in any, therefore the Russian Government directed its attacks against us because its object is to spread the notions upon which its own government has been built, up and to introduce the same system of government throughout the world instead of its being confined, as it is now, to Russia and the territories over which it has influence and power.
But, when all this is said, one gets to the question of the value of the Note and of the action to be taken. That there was ample justification for indignation on the part of His Majesty's Government is beyond dispute. I do not suppose that any of your Lordships who are present would hesitate to make the same observation. I do not suppose that any member of the Opposition would take a different view. Indeed, it would ill befit him if he did, for the late Prime Minister, Mr. Ramsay MacDonald, who was then also Secretary of State for Foreign Affairs, himself in 1924 addressed a very strong remonstrance to the Russian Government on this campaign of propaganda which was being carried on against our own Government. Accordingly, I think one is justified in saying that all of your Lordships must be of the same opinion in this respect.
As to the action taken by His Majesty's Government, I am not disposed to indulge in much criticism of it, because I can see that the temptation was very great to take some action, to make some representation to the Russian Government

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which might have some effect, might produce some explanation or might possibly lead to better conditions in the future. The Note has been answered. I pass over the reply, which, in my judgment, has received quite sufficient notice in the observations made by the noble Lord who initiated this debate. Certainly he was fully justified in saying that it was evasive. It answers every point except the one upon which the Government's Note was really based, and therefore it may be said not to have met the case that was put.
Then I ask myself, in common with those who are associated with me and with the Party to which I belong, what we should gain either by abrogating or denouncing the Trade Agreement, as is suggested, or by severing diplomatic relations. It is quite true, as the noble Lord suggested—and indeed one does not wonder at it—that there is some indication of a possibility of action of this character—I do not think that it goes further than that—in the Note that His Majesty's Government has recently addressed to Russia. But to sever diplomatic relations is a very serious step to take. I do not wish to enter into any long discussion upon it, inasmuch as the noble Earl, the Lord President of the Council, spoke upon this subject not very long ago—I think some eight or nine months—in your Lordships' House. He dealt with this question and showed quite clearly the vast difference that there is between entering into diplomatic relations and breaking off diplomatic relations, and he illustrated the conditions that must be considered in relation to both. When you are once in diplomatic relations, to break them off is indeed a serious rupture, and I do not think that any one could easily foretell the consequences of that action.
Perhaps your Lordships will remember that such action was the precursor of the advent of the United States into the War. In February, 1917, diplomatic relations between Germany and the United States of America were broken off, and in April America entered into the War. I am not suggesting that any such consequences must ensue in this case. What I mean is that every country must realise the importance of not breaking off diplomatic relations
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unless the conditions actually compel such action. It may be said or thought by some that the present conditions demand it. But I would ask: What is the advantage? That there is some danger no one can dispute, and not the least of the difficulties is that no one can exactly foretell what the consequences would be. That there would be no diplomatic agent to whom to make any representation of any character obviously follows, and such means as you have, poor, indeed, as I admit that they may be, of exerting anything in the nature of peaceful pressure would disappear immediately. Another consequence that would follow is that we should be acting in isolation from other Powers. We should be the only country that had broken off diplomatic relations with Russia after having entered into them, and I very much doubt whether any country would follow the example that we set. It is not desirable that we should be placed in this isolated position. I admit that circumstances might occur in which His Majesty's Government would be compelled to take this step. What I am now considering is whether this is the moment at which the Government ought to take it.
I turn to the other remedy suggested and, as I gathered, advocated by the noble Lord in his speech to-day—namely, that we should put an end to the Trade Agreement. I would ask again: What is it supposed that we shall have done when we have done that? What do we gain? What pressure shall we have brought to bear on Russia? It is true that our trade with Russia is not very large. In 1924, to go no further back, it was about £31,000,000, taking imports, exports and re-exports together. In 1925 it was £44,000,000 and in 1926 it was £38,000,000. That is not a very important amount and, as the noble Lord quite correctly said, the greater part of it represents imports. That, course, is an important factor in the argument that he was adducing. Nevertheless, it represents trade that we are carrying on.
A great deal of this trade—I am not sure that I should be wrong if I said nearly all of it—would be, or certainly might be, carried on without a Trading Agreement. America has no Trading Agreement, and yet America is carrying on trade with Russia. I do not like to

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commit myself to the figures that the noble Lord mentioned, but I think he suggested that it was about double the amount of trade that we are doing. America carries on her trade with Russia without a Trading Agreement and, indeed, without diplomatic relations, because the Government of the United States has been consistent in refusing to enter into diplomatic relations with Russia from the time when the Soviet Government came into existence. This at least establishes that the mere fact of the existence of the Trading Agreement is not necessary for trade, but I would suggest, nevertheless, that it does help, and that it is easier for those in this country who wish to carry on trade to have some recognised authority to whom they can address themselves.
I am not for one moment suggesting that trade is the only consideration; far from it. It is one consideration, and the importance of it should not be lost sight of; but there are others. The political considerations seem to me far to outweigh all the arguments that can be brought forward in regard to abrogating the Trade Agreement. But there is perhaps an even stronger reason. I have no immediate knowledge, and I do not know what the Government intend to say or what action they propose to take, but I cannot but think that after the Note that they have sent it really is not open to them at once either to abrogate the Trading Agreement or to sever diplomatic relations. The true effect of the Note as I read it—I do not happen to have it before me, but I think I remember very well the effect of it—was to give a warning somewhat in the words that I will now use (I do not say the exact language): that public opinion would not long tolerate the continuance of the propaganda now carried on by Russia, and sooner or later would, if it continued, demand that there should be an abrogation of the Trade Agreement, and even a severance of diplomatic relations. That Note, as I should interpret it—and as I should think any one who is in the habit of dealing with documents of this character, and especially with solemn remonstrances forwarded by one Government to another would interpret it—seems to me to negative the breaking off of either the Trading Agreement or diplomatic relations immediately I do not for a moment suggest that
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the Government may not in future take that action, indeed it is indicated that they may take it; but what is said is that if these acts continue then they will take this course.
It may well be said, and I am sure it is thought by many of your Lordships, that we have addressed remonstrances of this kind before. That is perfectly true. In 1923 the noble Marquess who was then Secretary of State for Foreign Affairs, the late Lord Curzon of Kedleston, addressed a Note in strong terms protesting against the propaganda. I am myself, of course, very conscious of it, inasmuch as I was then in office in India, and naturally I had to keep a close and vigilant eye upon the propaganda that was carried on there. Then there was an answer made, and there was a Conference, or a proposed Conference, and in the end a document was drawn up which, if it had been carried out, would have put an end to the propaganda then carried on. But it really seems to have had no effect, or, if it had, only for a short time, because it was in 1924, when Mr. Ramsay MacDonald was Prime Minister and Foreign Secretary, that he had to address to the Soviet Government the Note to which I have already adverted, and which was as strong a remonstrance as could be put forward But nothing has happened. We discussed the subject, and then eventually, a few days ago, the last Note was sent.
Well, again I would ask your Lordships to consider what advantage could be obtained either by taking the one action or the other. I do not wish to repeat anything I have said in reference to diplomatic relations, but I do hope that His Majesty's Government have no intention at this moment of taking any such step, or of putting an end to the Trade Agreement. It is better, in conditions of this character and dealing with a foreign nation, and especially with the Government with which we have to contend in Russia, that we should leave our hands open, having carefully laid the ground, in case further action made it necessary to take a strong step. The Government have done all that can be asked of them. They have given the solemn warning, and, as it seems to me, they are bound now to wait and see whether effect is to be given to the warning which they have addressed to the Russian Government.
THE LORD PRIVY SEAL (THE MARQUESS OF SALISBURY): My Lords, it has almost become a habit, I am afraid, with me to have to apologise for the absence of my distinguished colleagues on account of illness, but I am compelled, to my own regret, and I am sure to the great regret of your Lordships, to say that my noble friend the Lord President of the Council found himself to-day quite unable to make a speech, and therefore he has, I am sorry to say, delegated that duty to myself. I do not regret this debate, because I think it will have the effect of bringing home to the public, especially the Russian public, the unanimity at any rate of English opinion as regards their judgment of the conduct of the Russian Government. We have heard two most interesting and important speeches this evening. The opinions of my noble friend Lord Newton on this subject are very well known, and he has repeated what he has already said several times in your Lordships' House, how bitterly he resents the conduct of the Russian Government. But really, although it was conveyed in rather more judicial language, I do not think that the observations on that head of the noble and learned Marquess who has just sat down fall short in indignation at the attitude of the Russian Government.
And I have very little doubt that when the spokesman of the Front Bench opposite rises to speak he will use similar language. I say that with confidence because many of his political friends have used language of that description, and notably Mr. Snowden, whose attitude on this subject is well known. He said only this year:—
"Wherever there is a prospect of stirring up trouble they—"
the Russian Communists—
"are there."
He went on to say:—
"They have no right to interfere in the political and economic conditions in other countries, and to try and impose their ideas and their systems on others."
And finally he said, in very striking words:—
"But neither British Labour nor any British Government ought to, or will, tolerate interference with their internal affairs by an outside body."
That is to say, amongst all men except a few negligible extremists, amongst all men of good will in this country there is
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but one opinion in reference to the attitude of the Russian authorities. And this debate will help to bring that home to them. When they read the speech of the noble and learned Marquess and the speeches, I have no doubt of a similar kind, which will be delivered in another place this afternoon, it will, I hope, be brought home to them finally.
My noble friend behind me says we are entitled to take strong action. I think the noble Marquess said so, too. Undoubtedly we are so entitled. The case is proved up to the hilt. There is no question that we are entitled to do that. My noble friend gave a number of illustrations in his own picturesque manner of how such an attitude as that which the Russian Government and those who act for them have adopted, would be viewed if repeated by other countries, and he showed, I thought quite convincingly, that the resentment would be rapid and immediate. There is no question of what we are entitled to do. The question is not what we are entitled to do, but what in the interests of our own country and of the world we ought to do. There is no other question. My noble friend spoke, I thought, rather slightingly of patience. There is no statesmanship without patience. It is the most essential of all qualities, and more especially is it necessary in dealing with foreign affairs; but that patience cannot and must not be unlimited. There is a point beyond which it cannot be carried.
Let me say one word about our interests. Like the noble Marquess I do not put the trade question very high. The trade is not a very large one, but even if it were a large one it is not the most important consideration. Still it weighs, it counts, so far as it goes. There is no doubt that in these days we do not want to chill the revival of trade wherever it may be. Still I do not put that too high. The question is not so much what our trade interests require as what our responsibilities demand. I sometimes think, as I listen to debates in this House or read speeches made outside, that some of my countrymen do not realise how great is the position of this country since the War; how overwhelmingly important its action really is. I do not think it is an exaggeration to say that the peace and prosperity of the world depend upon the proper conduct of the foreign policy

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of this country. I believe it all turns upon it. Every country looks to us. Every country relies upon us not to act in haste, but with a due sense of responsibility, and upon the stability and steadiness of British policy really the prosperity of Europe and of the world largely turns.
When my-noble friend and others speak of breaking off diplomatic relations with Russia, with the sequel to which that might necessarily lead, I am not quite sure that they realise what effect that would have in Europe. This is not a subject with which one can deal at length, or very freely. I am not speaking merely of the intrigues which would at once be let loose in Europe. Those are important because they might lead to very serious consequences; but the truth is that the position which has been left by the Great War, and the Treaties which followed it, in Central Europe, is of the most delicate character. Very little would put it out of balance, and no Government, least of all the present Government, are going to take, out of pique or a sense of injured dignity, or some such triviality as that, action which might have very grave consequences. Those things we must bear in mind.
Yet, as I listened to the noble Marquess, I am not quite sure that he did not press those considerations, which were no doubt in his mind, beyond the point to which the Government would be prepared to go. It is quite clear that, although all I have said I believe to be profoundly true, yet there is a point beyond which we cannot go, and there is no use in concealing that. I am sure that it is not in the interests of the prosperity of the world, or of Europe, that we should pretend that we will put up with everything. That is not the case. It is not a trivial matter. It is a substantial matter. It is a question of whether we shall not, if we go too far, destroy the authority of this country or injure it, and there is a question whether there will not be direct damage to our interests—I do not mean merely our trade interests, but our interests as a great Asiatic Power, for instance—if we allow things to go beyond a certain point. It is necessary to show that, although we are deeply conscious of cur responsibilities, yet there is a point beyond which it is impossible we should go.
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My noble friend says that we have reached that point. That was a matter for very grave consideration by the Government, and we have come to the conclusion that we have not reached that point. We have reached a point when it is necessary to say in very plain terms to the Russian Government: "You must not go any further." That we have said. That is the Note which has been the subject matter of the debate this evening. That we have sent. That is the warning which the British Government have given, and I think it is true, as the noble Marquess said, that having uttered that warning we are debarred for the moment from taking any further action, unless, of course, facts should come to our knowledge of which we are not yet aware. That might make a great deal of difference, but in the present state of things we are debarred from going any further, having uttered that warning. I quite agree with my noble friend that it would be an impossible policy to say: "Oh, no, we have gone far enough and cannot put up with any more," but if upon our responsibility, with all the facts before us, we have come to the conclusion that there is more risk to the prosperity and security of Europe in taking a more drastic step, than in putting up with the present condition of things yet a little longer, then I think we are right in issuing the solemn warning which your Lordships have all read.
If it should be that the Russian Government will not be guided, as we earnestly hope they may be, then of course it will be necessary to consider what further steps are to be taken. I do not attribute any importance to their reply Let them talk all the nonsense they please. That does not matter to us. It is a question of deeds, not of words, so far as we are concerned. They can curse the British Government and hold up to ridicule British public men. What does that matter? What does matter is that they should not damage our interests and authority in all parts of the world. That is what is vital, and I attribute no importance to the rubbish in their Note. If they are not guided by our solemn warning, then undoubtedly further steps must be considered. As to whether they shall take the form which my noble friend suggests, of breaking off the Trade

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Agreement, or some other form, is a matter to be considered when the time arrives. For the moment I have tried, I am afraid very imperfectly, to place before your Lordships, in as careful language as I can command, the exact position occupied by His Majesty's Government, and I confidently leave that statement to the judgment and, I hope, the approval of your Lordships' House.
LORD PARMOOR: My Lords, I rejoice, and I think we should all rejoice, to hear the conclusion at which His Majesty's Government have arrived and which has been explained by the noble Marquess opposite. I think he is quite right in the statement which he made and I entirely agree with him that this country at the present time holds an overwhelming position on matters of foreign policy. The result of that, as everyone must admit, is that a great responsibility of a very special kind is thrown upon the Government of this country to do nothing which is likely to interfere with the progress of European peace and conciliation. Probably no one knows more fully than the noble Marquess the extremely difficult position at Geneva which has been created even under present conditions by the Russian Government. When we talk about general peace, disarmament and matters of that kind, everyone who has been to Geneva has in his mind the difficulties which arise from the isolated position of Russia, outside, as it is, either the control or influence of the League of Nations.
But what comes to my mind is this. That being our position and our responsibility, it is a matter of great gratification that the noble Marquess, speaking on behalf of His Majesty's Government, should state in this House that nothing has yet occurred which, in his opinion, would justify interference either with the Trade Agreement or diplomatic relations. I very sincerely regret that the noble Earl, the Lord President of the Council [The Earl of Balfour], is not present to-day. He made a speech of far-reaching importance in your Lordships' House in June of last year. There is just one extract from that speech that I should like to give, because I thoroughly concur with it. The noble Lord, Lord Newton, on that occasion, as also I think on subsequent days, spoke of conciliation between this country and Russia as hope
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less. I am using his own phrase and I am sure he knows that he used that phrase on that occasion. I am sorry that he is a pessimist upon this point. The noble Earl, Lord Balfour, who replied for the Government on that occasion, took exactly the opposite view, not badly expressed by what the noble Lord said to-day, "the mandate for patience," and in every direction urged the argument not only that there was no ground, at that date at any rate, for a breach with, Russia but that he thought, for every reason and from a variety of causes to which he referred, that it would be a great misfortune if any such breach were allowed to occur.
Perhaps I may quote the passage before I come particularly to the position that the Party which I represent occupies. The Earl of Balfour on that occasion said:—
"… we have nothing to fear from the contrivances and intrigues of any nation under Heaven."
I entirely agree with that. One of the reasons why I think he made that statement is the attitude throughout, although it has been, misrepresented, of the Labour Party on matters of foreign policy, and especially as regards our relationship towards Russia. What is the view of the Russian Government itself upon this point? I should like to quote it to prevent, once for all, the misrepresentations,—most unfortunate misrepresentations, I think—that are sometimes made against the foreign policy of the Labour Government. The passage which I am going to quote was disclosed in the other House from documents produced by the Home Secretary: "We must adopt," say the Soviet Government, "merciless measures to fight the Labour Party."
It is perfectly true that the Labour Party stands as an obstructive obstacle against any possibility of such action as might be either thought or taken by the Soviet Government against this country, but I regard that not as a matter of reproach against the Labour Party. I say it is all to their honour that they have stood firm, and are standing firm, against what may be called the Communist and Bolshevist spirit, and it is for that reason that the noble Earl, Lord Balfour, was thoroughly justified in making the statement that I have quoted that "we have nothing to fear from the

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contrivances and intrigues of any nation under Heaven." On those points we are all at one. On the question of policy I shall have a word or two to say later.
I should like to call attention now to the statement made by Mr. Ramsay MacDonald when he was Prime Minister and Foreign Minister in the year 1924. Perhaps your Lordships will allow me to read a word or two from it because it is of such importance. It was referred to by the noble Marquess and also by the noble Lord opposite. To my mind it summarises the attitude of the Labour Party towards this question. Mr. Ramsay MacDonald said:—
"No Government will ever tolerate an arrangement with a foreign Government by which the latter is in formal diplomatic relations of a correct kind with it, whilst at the same time a propagandist body organically connected with that foreign Government encourages and even orders subjects of the former to plot and plan revolutions for its overthrow. Such conduct is not only a grave departure from the rules of international comity, but a violation of specific and solemn undertakings repeatedly given to His Majesty's Government."
That passage was quoted, and I think very properly quoted, in the Despatch sent from His Majesty's Government to the Soviet Government in Russia. By that statement of the policy of the Labour Government we all stand—that is to say, all members of the Labour Party stand—fully and entirely and without any qualification.
Of course, a, difference arises at a later stage. I should myself deny, and do deny from the evidence that I have heard adduced and that which has come before me, that there has so far been any infringement by the Soviet Government of the principles of international comity which were there laid down as binding principles by the late Foreign Minister and Prime Minister of this country, Mr. Ramsay MacDonald. So far as I can ascertain the noble Marquess opposite, in substance of course and with certain reservations, has come to the same conclusion. He has come to the conclusion that there is no case, as yet, made either for breaking the Trade Agreement or breaking off diplomatic relations with Russia.
THE MARQUESS OF SALISBURY: I am afraid the noble and learned Lord must
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not read into my words, which I tried to be careful about, any gloss of the kind which he makes. There is no doubt we are entitled to do a great deal. I tried to impress upon your Lordships that it was not for the interest of the world or of this country to break off diplomatic relations, but as to our right to resent what has taken place I entertain no doubt whatsoever.
LORD PARMOOR: I should regret to put any gloss whatever on the words of the noble Marquess. Let me take the way he puts it himself, which is quite sufficient for my argument and carries my argument the whole way. He says that at the present time at any rate, whatever may be the question of right or title, in his view it is not in the interests of this country to take further steps either as regards breaking off the Trade Agreement or diplomatic relations between Russia and ourselves. I think I am perfectly accurate in what I am stating. But that carries the argument which I am adducing against the views of the noble Lord, Lord Newton, that the Government are entitled to break off relations. My answer to that—and it is the same as that of the noble Marquess—is that, quite apart from questions of title or right, which after all are of secondary importance in this matter, nothing has yet occurred which in the opinion of the Government makes it expedient to put in force the views and opinions expressed by the late Prime Minister and Foreign Minister, Mr. Ramsay MacDonald, as regards the relationship between Russia and this country. That, of course, carries the argument which I have addressed to your Lordships a very long way indeed.
Now let me come to specific matters—first of all to the Trade Agreement, and then to the question of diplomatic relations. I regret very much in speaking of the Trade Agreement that we cannot have the assistance, which we had formerly, of Lord Emmott, with all his experience in these matters and his knowledge of trade questions in this country. Your Lordships will recollect that Lord Emmott spoke with all his authority against any breach of the Trade Agreement between this country and Russia. He said it might have been a different thing if there had never been a Trade Agreement, but that to break

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off the Agreement would create more loss in this country in the matter of breach of contract and all that kind of thing than anyone who had not a thorough knowledge, as he had, of Lancashire trade conditions, could possibly appreciate.
I am afraid I must join issue on the question of figures with what has already been said as regards trade between this country and Russia under the terms of that Agreement. I have had the figures given me for 1924–1925 (which I may call the peak year) of the amount of trade under the Agreement between this country and Russia. I find that the aggregate trade on both sides in that one year was £58,079,000. When I dissect that I find that £31,171,000 are in respect of imports from Russia and £26,908,000 ate in respect of sales to Russia. That is a very large trade. The figures which I have of the aggregate trade since the Trade Agreement came into operation show that the total purchases by Russia have amounted to £82,000,000—that is, purchases from us—and the aggregate to no less than £168,936,000. That is a very large trade. Most of the Russian purchases consist of manufactured machinery and manufactured agricultural equipment and implements. The other day I saw in a Manchester newspaper—I think it was in the Manchester Guardian, but at any rate in one of the Manchester newspapers—that 15,000 tons of factory machinery had lately been shipped by way of the Ship Canal from Manchester to Russia and there was a picture of the shipment going on at the Manchester Docks. Surely that is a very large trade interest and one which is very important at this time when the evil of unemployment cannot be remedied unless you maintain and increase our foreign markets. I do not think anybody will dispute that proposition. Where there is a large and increasing trade is it to be said—unless, of course, there is absolute necessity—that it would be a wise action to put an end to that trade and at the same time to bring about enormous difficulties, as Lord Emmott said, in the way of settling up existing contracts and arrangements?
There is one further matter which I think the noble Lord mentioned. It is true that trade is carried on between America and Russia without a Trade
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Agreement, but as regards this country there never was one pound's worth of trade before the Trade Agreement. It is since the Trade Agreement that the whole traffic has grown up. The Trade Agreement, as has been stated, was, brought about when the Coalition Government was in power—and I think it is one of the most admirable pieces of work on their part—in order to bring back as far as possible the advantages to this country of a foreign market which in a special manner wanted manufactured machinery and manufactured equipment. The difficulty at the present time is that the Government do not allow Russia to be amongst the countries—I think it is the only one excluded—to which the Government credit system applies. Everybody knows that credit is of enormous importance at the present moment if you are to encourage Russian trade, and I would say that the more we can encourage it the greater will be the advantage to this country and the greater will be the chances that the number of unemployed will be permanently reduced.
On the other point, I do not think any one really suggests that there should be a diplomatic break. Surely at the present time nothing could be more unfortunate than that all communication, all diplomatic communication, should be brought to an end between this country and Russia. I do not think it is worth while—at any rate I do not intend to attempt it—to analyse either the Despatch from this country or the Despatch sent in answer to it by the Soviet Government. I say that because I think if you analyse either the one document or the other it will be far more likely to lead to further controversy than to real conciliation. The mandate—as expressed by the Lord President, the Earl of Balfour, on the last occasion—of patient conciliation is the right line of conduct for this country to pursue. It is in our interests to do it we want trade and we want peace, and I must say that it is with the greatest satisfaction that I have heard that there is no present thought, as I understand it, on the part of the Government of breaking either the Trade Agreement or the diplomatic relationship.
There is one other point in reference to which I want to say a few words.

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The noble Lord went back to the many questions which have been brought to the front by the communications between Russia—I will not say the Soviet Government—and this country in connection with the subscriptions sent during the period of the mining lock-out. That matter was discussed in the House of Commons and a Motion was brought forward that action of that kind should be rendered impossible. The Home Secretary, in a very able speech, gave reasons why an attitude of that kind would neither be in accordance with international policy nor one to which the Government could give any countenance whatever, with the result that, by a large majority, the Motion was rightly rejected.
Of course, if you want to keep stirring up suspicion, if it is a question of breaking off diplomatic relations, if you rely not on facts which are relevant but on irrelevant outside considerations, then I should think with the noble Lord that conciliation with the Russian Government might be regarded as hopeless. If, on the other hand, you realise that they have as much right to their internal independence as we have, that they have as much right to decide their methods of government as we have, and that discussion and difference between them and us ought not to arise on their form of government or on what they are doing at home, but only in so far as they seek to interfere in our interests and in our country, then I believe there is ample room for conciliation in the future. I believe, too, that the mandate of patience should not be departed from and that, as the noble Marquess has said, we should give our influence on the side of reconciliation on this most important point, particularly having regard to the overwhelming position which we now hold in the foreign policy of Europe.
LORD DANESFORT: My Lords, I do not rise for the purpose of commenting at any length on the remarkable speech to which we have just listened, closing as it did with such words of apparent sympathy with the Soviet Government. I think the noble Lord will agree he took that point of view. What I did rise to comment upon was the very grave misrepresentation in which he indulged as to the policy of His Majesty's Government. He began his speech by saying—I took down his words—that, in the view
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of His Majesty's Government, nothing has yet occurred which could justify the interference of the Government with the Trade Agreement or with our diplomatic relations. He went on to say a little later that it is the view of the Government that no case has yet arisen for breaking off diplomatic relations or interfering with the Trade Agreement. I venture to think that the intervention just now of the noble Marquess, while Lord Parmoor was speaking, ought to be enough to satisfy any one that in making those statements the noble Lord was making the gravest misrepresentation of the Government's policy which it was possible for a man to commit. I hope he will express his regrets for having made this misrepresentation in as public a manner as he made the misrepresentation.
LORD PARMOOR: I am sorry to intervene, but I shall do no such thing. I explained the matter at the time to Lord Salisbury, and there it ended.
LORD DANESFORT: I am really astonished at the action of so experienced and eminent a gentleman, who has been assured by the representative of the Government in this House, the Leader of the House, Lord Salisbury, that, when he said that the view of the Government was that no case had arisen for interfering with the Trade Agreement or diplomatic relations, that was not true and that the statement he had made—I thought inadvertently—was not correct. I should have thought he would have withdrawn it, as is the usual custom both in this House and in the other place. However, as he does not choose to withdraw it, I am glad to have the opportunity of saying that it is most regrettable, first, that the misstatement was made and, secondly, that it was persisted in.
As I understand it, the view of His Majesty's Government to-day is a very simple one. In the first place, in their view they are fully entitled by what has already occurred, if they choose to do so, to break off diplomatic relations or, if they choose to do it, to put an end to the Trade Agreement, but they say, for reasons which have been given to-day, that the present moment is not an appropriate time for taking that step. They say that the time may come and probably will come, unless the Soviet Government

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alter their actions very materially, when those steps, or one of them, will have to be taken. In that view of His Majesty's Government, I understand, the noble Marquess who spoke from those Benches just now is in entire agreement because the noble and learned Marquess, Lord Reading, said that he had no doubt whatever that the Government were entitled at the present moment either to break off the Trade Agreement or to put an end to diplomatic relations or both, and he went on to argue, with some force, that the present moment was not an appropriate moment for taking that step.
Having corrected, as I hope definitely, what fell from the lips of the noble Lord, Lord Parmoor, may I express on my own behalf a hope as to the future policy of His Majesty's Government? If I understand it aright, the policy expressed in the Note and in the speeches of members of the Government comes to this: "You have violated the Trade Agreement in every possible way that you could. You have done unfriendly acts by intriguing against us all over the world, acts which would fully justify breaking off diplomatic relations with you. We give you another chance. We hereby openly proclaim to yon that, unless you mend your ways, observe the Trade Agreement, and behave in a mariner which is usual with a Power which is in diplomatic relations with us, the matter will come up for reconsideration" Although it is not said in so many terms, the inference I draw is that the action which would then be taken by His Majesty's Government is the action which we are entitled to take at this moment if we so think fit.
VISCOUNT GREY OF FALLODON: My Lords, I find myself in almost complete agreement with what has been said by my noble friend Lord Reading and by the noble Marquess opposite as to the course which should be, taken, but I think we ought to be quite clear as to the facts of the situation. I think that the noble Lord, Lord Parmoor, a little confused those facts—I do not mean intentionally—and glossed over what the, real nature of the Soviet Government is. He began by stating that the Soviet Government looked upon the Party to which he belongs, the Labour Party, as the great obstacle in their way. That, I think, is perfectly true, and indeed it is obvious
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from the utterances in Moscow that this is so. But he concluded his speech by saying that, by a policy of conciliation, good relations might gradually be established with the Soviet Government Those are two incompatible statements. If he and his Party are regarded by the Soviet Government as the great obstacle to their aims, they will never have good relations with the Soviet Government unless they fall in with the aims of that Government.
Let us consider what the aims of the Soviet Government are. It is not, in the ordinary sense of the word, a national Government at all. It is not a Russian Government in the sense in which the French Government is French and the German Government is German. The French and German Governments, like our own, exist to promote the interests of their own countries and they do not care about the interests of other countries except in so far as those interests may affect their own. But the Soviet Government in Moscow avowedly exists for an ulterior purpose that goes far beyond Russian national aims. It exists to promote world-revolution, and the question of whether its relations with us are good or bad will depend entirely upon whether they consider those good or bad relations with us further the object of world-revolution. That will be the only test for them, and therefore, in this respect, we must regard them as Fanatics. They believe in world-revolution of their own particular kind as people have believed in religions, they exist to promote it and they will not give up that object. It follows that they are different, from any other Government with which we have to deal.
Nothing that may affect our relations with other Governments is a precedent for what our relations may be with the Soviet Government. They are a thing apart, existing to promote world-revolution, and the question with them is not one of precedent, not what we are justified in doing, but entirely what it is expedient that we should do. Expediency is the only consideration: we cannot appeal to precedent, to what would be the practice with other Governments, but only to what is expedient in this very peculiar ease. I think that the Note that the Government sent to the Soviet Government is in every way justified, but I

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am not at all sure that it was expedient to send that Note. The Note is not going to be followed up by any action—and think rightly—but, since it was not to be followed up by action, was it altogether expedient to send the Note? What was to be gained by it? If the Note was likely to have any effect on the policy of the Soviet Government, then, of course, there would have been something to be said for it, but it is quite clear that it has no such effect.
Those of us who have followed the utterances from Moscow and the policy that has been pursued there for some years could almost, when we had read the British Note, have written, without having seen it, the reply that was sent from Moscow. It sets up the same fiction that the Soviet Government are not responsible for various things that happened, and so forth. They will always set up those fictions. They are fictions because, from all the information that we can get, the Government of Moscow is autocratic and all-powerful and things do not happen, policies are not carried out by any organisation in Russia, without the consent of the Soviet Government at Moscow. Therefore the reply of the Soviet Government consists of fictions.
But, if we do not get any advantage in the way of influencing the Soviet Government's policy by having sent the Note, that Government gains some advantage from having received it. They have been making use of the Note in Russia for a purpose that interests themselves. It has been noticeable from the references that we have seen in the Press for some time that they have been anxious to stir up the ardour of the Red Army in Russia by circulating reports that Russia was in danger of being attacked from outside, and particularly from this country. They knew, of course, that there was no truth whatever in those reports and that nobody thinks of interfering with them from outside, nor, indeed, could we interfere with their internal affairs from outside if we wished. They know that nobody was thinking of doing so, but it looked as if these attempts to raise the ardour of the Red Army by circulating reports that Russia was going to be attacked had not only failed but had had a somewhat depressing effect upon the Red Army. The Red
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Army would, no doubt, fight if Russia were attacked, but I believe that it would be absolutely impossible even for the autocratic Soviet Government to get it to go outside Russian frontiers or to fight unless it were attacked. I am afraid that the Note has been used in Russia to strengthen this purpose of the Soviet Government by making out that there are hostile designs against Russia which are going to be applied by force. I think that the Note has played into their hands and that they have used it a little for their own purposes in that respect.
I am sure that the Government are quite right not to follow it up, at this moment at any rate, though, of course, I entirely agree that there are limits beyond which a Government cannot with self-respect remain patient. But, so far as this episode is concerned, I am on the whole disposed to think that our prestige and our reputation would have been better served, since we were not prepared to do anything, by saying nothing than by sending a Note and not following it up. I am sure that the Government is right in not following it up, and for this reason amongst other things. There has lately, I think, been a considerable increase in the stability of Central and Western Europe as the result of the Locarno Treaties. If we were at this time to sever diplomatic relations with Russia, or to take any overt step to make those relations worse, I believe that it would have an unsettling effect, particularly in Central Europe.
I do not mean that Germany or any of the Parties who signed the Locarno Treaties would be out of sympathy with us. They would probably think that we were entirely justified in breaking off diplomatic relations with Moscow. Their sympathies might be with us, but it would make their own position more difficult, and I think it quite consistent with the prestige and statesmanship of His Majesty's Government that they should recognise that our first consideration is the stability of Europe, which has been greatly improved by the Locarno Treaties, and that, even if we have just cause of complaint and technical and, indeed, substantial justification for taking diplomatic steps at Moscow, we should put as a higher consideration the interests of the other countries which were parties with us to the Locarno and other Treaties and

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the general stability of Europe, and that we should think it not inconsistent with our dignity to put that general consideration above particular British interest of a narrower kind. That, I understand, is the view that the noble Marquess took, and I think that it is a complete justification against those critics who suggest that we should have taken further steps.
May I say one word more on the question of how we can deal with the attacks—because they are attacks—which the Soviet Government makes upon British interests? Those attacks are not made by force; they are attacks made by insidious propaganda. They are none the less attacks because they are indirect and insidious, but they are very persistent, and it is propaganda with which we have to deal. That is the real action from Moscow which affects us, and with which we have to deal. I think the real truth of the matter is that we should consider what is the best way of dealing with propaganda. In the first place, propaganda can never be dealt with effectually by force. I do not think it can be dealt with by Diplomatic Notes. If it was propaganda in this country by foreign agents working here, of course you could send them out of the country, but that is not the way it is done. The people who are carrying on propaganda in this country are British subjects, members of the Communist Party.
One way of dealing with propaganda is, no doubt, counter-propaganda. I do not suggest that the Government should engage in counter-propaganda. I think those who are most interested in creating counter-propaganda to the Russian propaganda are the constitutionally minded members of the Labour Party and the trade unions. They are the people who are being immediately attacked by the Soviet Government. The immediate object, it seems to me, of the Soviet propaganda in this country at the moment is to undermine trade unionism by Communism. I notice in the utterances in the Press and so forth in Moscow that the people in this country who are attacked by name are not so much the Prime Minister or the Secretary of State for Foreign Affairs, they are Mr. Ramsay MacDonald, Mr. Arthur Henderson, Mr. J. H. Thomas, and members of the trade unions in this country who are adherents of constitutional methods. That is the
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real struggle that is going on, and, if counter-propaganda is to be engaged in, that counter-propaganda would be most effective if it were organised by those who are being more immediately attacked by the Soviet Government, and whose position is the first which the Soviet Government desires to take.
I think we ought to be quite clear, and the country ought to be quite clear, as to what is going on. Do not let us imagine that the Soviet Government is like another Government which can be easily reconciled by fair words, or that you can make terms with it. I would go on. I would not denounce the Trade Agreement. I do not think anything would be gained by denouncing it. If the Soviet Government wishes to trade with British traders it will find means of doing so without a Trade Agreement. I do not see the object of having made a Trade Agreement at all, but, as it has been made, I do not see the object of denouncing it. But let us be quite clear that as long as the Soviet Government remains as it is at present its object will be world-revolution, and we shall have no satisfactory relations with it on which we can rely, however fair the words may be, until they have ceased to pursue that object of world-revolution. I do not believe that for very long a Government in Moscow can continue to spend Vast sums of money, not only in this country but in other parts of the world, in pursuing an object which is not really a Russian object; and the more we can make it plain in this country that we interfere not at all with the internal affairs of Russia, that we spend no money in propaganda, but leave them alone as far as their internal affairs are concerned and pay no attention to them, the more chance there is that after all there will be some Russian feeling arising, and that that feeling in Russia will begin to influence the Soviet Government's policy of spending money all over the world for an object which is not a particular Russian object, when Russia is being left alone by other countries.
LORD NEWTON: My Lords, perhaps I may be allowed, although I have no right of reply, to say that the result of this debate leaves me in a state of deep depression. Everything that I have said has been agreed to, not only by the

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Government but by noble Lords opposite There seems to be a common determination on both sides to do nothing, and to continue to suffer in patience. The only tangible suggestion that I have heard towards terminating this difficulty emanates from the noble Viscount who has just sat down. His remedy for what appears to me a hopeless position is that Mr. Henderson and Mr. Thomas and a few other so-called moderate Labour people, should be turned on to organise propaganda against the Soviet Government. Of all the inefficacious methods ever suggested to combat a real evil I
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think that is one of the worst. I can only hope that next time this subject is discussed—and it is bound to be discussed before very long—some more practical suggestions will be made, and some more definite action taken.
VISCOUNT GREY OF FALLODOR: I did not suggest that the Labour leaders should be turned on; my point was that, as far as counter-propaganda was concerned, it seemed to me more their affair than anybody else's.
House adjourned at twenty-five minutes past six o'clock.