Lords Sitting of 20 April 1932

Preamble
The House met at a quarter before four of the clock, The LORD CHANCELLOR on the Woolsack.
SOUTH STAFFORDSHIRE WATER BILL.
Read 2a, and committed.
YORK WATERWORKS BILL.
Read 2a, and committed.
MINISTRY OF HEALTH PRO- VISIONAL ORDERS (MARGATE AND YEOVIL) BILL.
Read 2a (according to Order), and committed.
EDINBURGH CORPORATION (SHERIFF COURT HOUSE, &c.) ORDER CONFIRMATION BILL.
Read 3a (according to Order), and passed.
MINISTRY OF HEALTH PROVISIONAL ORDER (NORTHAMPTON) BILL.
To be printed.

TRADE POLICY WITH RUSSIA.
LORD LLOYD LORD LLOYD rose to call attention to the trade policy of His Majesty's Government with Russia; and to move for Papers. The noble Lord said: My Lords, the Motion that stands in my name on the Order Paper to-day, as perhaps your Lordships may have noticed, is in different terms from that which you may have read yesterday. I learned yesterday from my noble and learned friend who leads the House that the Government would regard my Resolution in the terms in which it was framed yesterday as a Motion of Censure. I have no desire whatever to embarrass His Majesty's Government with whose efforts we have sympathy and whom we desire to support in every possible way. Accordingly
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I have tabled my Motion in terms which I hope my noble and learned friend will at all events prefer.
The Motion which I venture to submit for consideration this afternoon raises once more the whole question of trading relations between this country and the Soviet Government. I know that the matter has been debated here on several occasions, although I have not happened to be present, and if, therefore, I seek to raise it once again it is not only because I believe that these relations, at any rate on their present footing, are an actual handicap to our economic recovery but because we have more and more evidence every month that the conditions under which the Russian people are compelled by their Government to produce the goods which they export to us, are barbarous and worse than slavery itself. The fact that we are furthering and assisting this trade with them is, to a large block of public opinion at any rate in England, very disquieting. So long as this is the case I for one hope that there will never lack voices either here or in another place to protest against what we believe to be an evil.
There are other reasons why I think we may properly ask His Majesty's Government to review their policy to-day. We know a great deal more nowadays about the subject, more about the conditions to which I have just referred, more about the intrigues of the Soviet Government against us in different parts of the Empire, than we did in March, 1921, when we first signed a trading agreement with them, though even at that moment we were engaged in protesting against the special intrigues of the Soviet Government against us in the East. We learned more in 1924ߞa good deal moreߞbut it was really not until 1927, when there was a great raid by General Chang-tso-Lin upon the Soviet headquarters in Manchuria and documents of great importance were seized proving irrefutably that Soviet schemes were schemes against this country, that our full information was obtained. One other reason I would adduce for bringing forward this question and that is that I think we have some right to hope for support from prominent members of His Majesty's Government themselves. Unhampered as they now are by old-fashioned doctrines of Cabinet unity,

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they are now permitted not only to air their differences but to do so somewhat combatively sometimes. And we know they do differ. My noble friend who leads this House has expressed his views in very strong termsߞin very similar ones to those which I propose to use to-day. We know that within the ranks of His Majesty's Government, unless they have changed their views in the last few weeks, there must be deep-seated differences of opinion on this matter. It was only a little over a year ago, in February, 1931, that the noble and learned Viscount the Leader of the House denounced lending money to Russia and spoke most damagingly against a policy which encouraged and facilitated the dumping of Russian goods on this market. Mr. Baldwin, Sir Philip Cunliffe-Lister and other members of the present Government have over and over again, and in recent times, publicly expressed similarly hostile sentiments against the very policy which they are now, I presume, supporting. In such circumstances, unless great matters of high policy like this are to be treated with very unbecoming levity, I think this might be an occasion when we should have support from prominent members of the Government who feel with us in regard to a subject which moves the public very strongly, I can assure your Lordships, probably more strongly than everyone in this House quite realises.
I cannot disguise that I feel that, even from an ordinary business point of view, the grant of special trade facilities or credits to a Government which has seized British property without compensation, repudiated War Debts, and repeatedly broken its treaty obligationsߞto give credits to a Government of that kind is in itself impolitic, to use a mild term, and little calculated to encourage those principles of fidelity to contract and the discharge of honourable obligations which, after all, are the essential foundations of all international trade. The facts are too well known to need any long recital of proof, but our memories sometimes get blunted. If I may remind your Lordships of some of the outstanding facts, private claims against the Russian Government—of course one can only speak in round termsߞincluding bonds, properties, claims in foreign currencies and miscellaneous claims, amount to
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something like £360,000,000. Then there are War Debts which have been repudiated, amounting to something between £900,000,000 and £1,000,000,000. An expert calculated the other day that the annual loss of interest every year on debts legally due to us represent a sum of about £63,000,000. That is something very important and serious to us in the present state of our national finances.
It is further important to remember that this confiscation and repudiation was never due to financial misfortune or to any form of national urgency. It has been declared by the Soviet Government to be definitely designed for the destruction of capitalism. There are some people who try to offset our claims against Russia by so-called Soviet counter-claims. In that respect it is important to remember that the decrees confiscating British property were issued while we were Allies at the beginning of 1918, actually two years before the acts of alleged intervention ever took place. The plain fact is that the Soviet Government never had and have not the slightest intention of paying a farthing of debt to us unless compelled, and it is to that Government that we are giving more credits than probably to any other in the world.
I have said a word about the breaking of treaty obligations. No one in this country to-day would, I think, seek to deny the accuracy of that charge, but let us quote the words of a great statesman who was never prone to use exaggerated language, the late Lord Balfour, who in this House in May, 1927, speaking as Lord President of the Council, used words which for him were very strong. He said:
".… the Soviet Government.… have systematically promised not to interfere in the affairs of this country, and have systematically broken that promise on every possible occasion.… Year after year, ever since the Trade Agreement.… the British Government, to whatever Party it belonged, has been constantly offering remonstrances to the Russian Government as to the way in which it was behaving, and.… steadily and throughout every Russian Government, and every Russian statement, has been lavish in promises of amendment, and not a single one of those promises has ever been kept.…"
".… there is a point at which a steady course of deliberate and authorised perfidy

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is intolerable in international relations.…
"If they follow these interests, the trade lost will not be of a very serious kind, and in any case it sinks into insignificance by the side of the broader considerations which I have laid before your Lordships."
When you reflect, my Lords, that those words were used by the late Lord Balfour, you realise that he must have felt fairly strongly upon the issue.
Mr. Baldwin, as late as 1927, stated categorically as Prime Minister that "the evidence in the hands of the authorities proved that subversive activities throughout the British Empire and North and South America were directed and carried out from Soviet House, and that both the Trade Delegation and the employees of Arcos had been involved in anti-British espionage and propaganda." Those are two pretty clear statements of proof. The noble Viscount who I believe will do me the honour of replying to me, Lord Snowden, writing in an article in the Daily News in 1927, said:
"The violent anti-British character of the rising in China is largely due to Bolshevist inspiration. The Soviet Press claims the credit for having provoked the trouble there. A resolution, recently passed by the Executive of the Communist Internationale, called upon Communists in all countries to concentrate on the support of the world revolution in Britain and China."
I leave out some paragraphs here and will add one 'which says:
"Wherever there is a prospect of stirring up trouble, they, the Bolsheviks, are there."
This, in spite of the fact that it can be clearly demonstrated that the British people and successive British Governments have shown more friendly dispositions, and done more to help Russia than any other country in the world.
If you look at the period between 1920 and 1922 you will see that the British Government were always prepared to support efforts by British business men to come to terms and that there were some very definite acts of friendship shown by Great Britain to Russia. The raising of the blockade against Russia in 1920, for instance, was done at the instigation of the British Government. The first Soviet trading delegation was received by the British Government, and the British Government was the first of all Western European Governments to negotiate and conclude a trade agreement with the
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Soviet Government. It was the British Government which, in 1922, with great difficulty and actuated solely by friendly sentiments, initiated conferences with Soviet representatives at Genoa and The Hague to try to come to an amicable settlement of difficulties. In spite of all these friendly dispositions your Lordships know perfectly well that before that time, since and even now the Soviets have never ceased to foment disorder and disaffection against us wherever they thought they had any chance of success. In all the dark directory of duplicity and bad faith there is nothing to compare with the behaviour of the Soviet Government of Russia.
So much for the facts in relation to the past. It is in the light of these circumstances, which I think the noble Viscount will not seek to deny, that I would ask your Lordships for a few moments to consider His Majesty's Government's present policy. Those who defend this policy would, I think, never attempt to do so on diplomatic or moral grounds. That would be rather too ambitious a task. It would be defended, I presume, mainly on the grounds of economic necessityߞthat it was valuable to have these trade relations with Russia. It is in regard to that defence that I would like to say a few words. Has it really been of value to our trade, and is de jure recognition of the Soviet Republic necessary for the welfare of our trade and our exports? As I have said, Great Britain was first among the Great Powers to extend de jure recognition to Soviet Russia in February, 1924, though, of course, there had been trading relations established before that date. Between 1920 and 1924, trading operations in Great Britain resulted in a turn-over of about £44,500,000. Of this total nearly £6,000,000 accrued in balance in favour of Great Britain. That was before de jure recognition. Since the official recognition in 1924, Soviet trading relations in this country have produced unfavourable balances for Britain totalling £164,000,000.
On the other hand let us look at the condition of trade in the United States of America, which has always refused de jure recognition of the Soviet Republic. The result of trading relations between the United States of America and the Soviet show an aggregate balance in favour of the United States since 1923 of 424,000,000 dollars. It is quite clear then that neither special recognition nor

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special credit is necessary in order to develop an export trade with Russia. Without credits and without even recognition, still less a treaty, America has done far more trade on more favourable terms to herself than this country, although she is geographically handicapped by being thousands of miles further away from Russia. If Russia wishes to trade with Great Britain or America she will do so, whether recognised or not and therefore it is not upon recognition or even the Trade Treaty that we must rely mainly for the furtherance of ordinary trade relations.
Mr. Baldwin expressed himself very clearly in sympathy with the point of view which I have put before your Lordships when he said, at Newton Abbot on March 6 of last year:
"Russia needs no credits to buy from us. She sells us four or five times as much as she buys. She can afford to buy much more than she does from us without getting a furthering of credits."
I think that was a very accurate statement of the case which was made by the very same members of the present Government who are now obviously the main pillars of support of that policy which they strongly deprecated in the past, I think that is a confusing picture for the British public, who look to our statesmen for a clearer lead in these vital matters than that. During the last twelve months, while our own people in our Dominions have been suffering from world depression, we have purchased over a million tons of wheat, I believe, from Soviet Russia. Just think for a moment. Supposing we had put those orders with, and bought our wheat from, Canada? What a revival of hope it would have given to agriculturists in the West of Canada, and how immediately we should have hoped for an increase in their purchasing power, which we know would in a considerable degree have benefited our manufacturers in this country.
Again we know that while Russia sells us about £32,000,000 worth of goods, she only buys from us about £7,000,000 worth, and even that £7,000,000 worth that we send out is done mostly on our money, because a large proportion is done with British credits afforded to Russia. Again, whilst our own people, whose savings were invested in the Russian oil industry, have had to forego
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their legitimate profits, we have paid the Soviet millions of pounds for our own oil, coining from wells which were opened up and. developed by British money and British skill and energy. During the last twelve months the returns show that we have had to purchase from Russia nearly £3,000,000 worth of oil, stolen from us at the end of the War. The same applies to timber in a lesser degree. Before the War it was largely our money that opened up and developed the Russian timber trade, and this has been confiscated by the Soviet Government, and the timber has now to be bought back by us from them. It must be remembered also that a new agreement has recently been signed for £4,500,000 worth of timber, and yet not one penny has been paid, so far as I know, in compensation to us for our timber rights and properties in Russia. If you were dealing in private trade with anybody who treated you so, would you try to finance him further? Would you not say: "I will not have any further dealings with anybody who behaves so dishonestly and ungratefully to me."? That is a consideration that we should reflect upon, especially in the light of a few other considerations that, if I am not wearying your Lordships, I may put before you.
The policy pursued by His Majesty's Government, in my judgment, encourages the strategical and tactical war which is levied upon our markets, and which is openly confessed to by Soviet leaders. It is often called "dumping," but it is nothing of the kind. It is a tactical and strategical commercial war. One of the attributes of dumping is that the dumped goods should to some degree be surplus to the normal consumption of the exporting markets. It is not dumping to export wheat when the Russian people starve. It is not dumping to export Russian leather when the Russian people have no boots. It is not dumping to export Russian cotton when the Russian people have no clothes. It is a strategical war, openly confessedߞa scientific and calculated attempt to destroy the prices of our prime commodities and so bring devastation, suffering and disorganisation into all the markets of our Empire. We have seen the devastating results in regard to wheat, oil, copper, asbestos, coal and other of our

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important raw materials. In the words of the present Minister for the Colonies ߞI could not put it better—
"the whole object of that plan is to launch an offensive on every market of the world, and to accomplish that which Communism has failed to do in this country by stupid propaganda, but which it can do in depressed times by an attack on our standard of living and employment."
In conclusion, there is one other aspect of this problem to which I would refer. I will say nothing about the political or moral aspects of our relations with the Soviet Government. Some of us feel very strongly on that subject, but it would not be within the scope of my Motion to refer to it. I do desire, however, to stress with all the force at my command how dangerous is the example of giving credits to a country which wantonly repudiates its debts. It amounts to a declaration by the British Government that they are prepared to give not merely commercial credit, but the imprimatur and cachet of Government credit to a country which openly repudiates all its obligation. Surely this is a dangerous policy for the smallest State in Europe, but for us, one of the greatest creditor countries of the world, and one whose export trade must depend on its continuing to lend, as far as it can, all over the world, it is a dangerous and shortsighted policy.
I know that it is hinted that the raising of such a Motion as I have on the Paper is an embarrassment to the Government, and therefore better not done. I confess that I myself do not take that view. Every member of His Majesty's Government knows that I am actuated by no hostility towards the Government, but that on the contrary I am very anxious to support the Government in the stupendous task that they have undertaken. I am firmly persuaded, however, that so long as the present trade policy with Russia is continued it is most damaging to the production of all our prime commodities. It is something more than that. It makes it impossible for us to plead that we are not partly responsible for the hideous evils that are going on in Russia, and for the tyranny there. So long as we facilitate by means of credits the continuance of the Soviet. Government's behaviour we do in some degree share responsibility for events in Russia. It is only with
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our co-operation that the dictators in Russia are able to carry on with the five-year plan, for they can only carry on so long as they are able to finance it, and they can only finance it so long as we make it possible for them to flood our markets with the produce of theirߞto all appearancesߞslave labour. Therefore I am afraid it is true that we do in the eyes of the world make ourselves in some degree responsible, so long as we carry on this unhappy and unfruitful policy with the Soviet Government.
My only plea to the Government would be that they should at least do thisߞreview their policy towards Russia in the light of the newer circumstances of today. If they did do that I believe it would have an immediate and fortunate repercussion upon our trade and would re-establish us in the eyes of the world as a Power, however great in trading, which still has some considerations it can put before money, or even before trade. I beg to move.
LORD PHILLIMORE: My Lords, I think it is important to remember that we are discussing His Majesty's trade policy towards Russia, and that that policy rests primarily on the Trade Agreement of April, 1930, and, secondly, on the extension of the exports credits scheme to Russia, which took place in August, 1929. 1929 is, I submit, a fateful date. If we were back where we were commercially in 1929 things would be very different from what they are to-day. The Budget we heard yesterday would have been not at all on the same plane. It is clear that since 1929 many things have happened which would justify even those who set their hands to this policy in reconsidering the matter from the beginning. In 1929 the Russian five-year plan had only been inaugurated for one year. It had taken on no great momentum. In fact, I submit it would have taken on nothing like the momentum it has taken if it had not been for the Treaty made with this country.
The aspect of This question to which I would like to call your Lordships' attention to-day is the repercussion of our trade policy towards Russia on other friendly nations with whom for centuries we have traded, including amongst those even our brother States of the

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Dominions. I think it is seldom realised what a pivotal position this country holds with regard to world trade, or rather I should say it was less realised even as little as a year ago. Now we see that when we go off sterling half the world has to follow. When we put on Import Duties the flow of imports still has to proceed to this country. We occupy the position which the compensation in a watch holds to the rest of the movement. We are bound, commercially bound, almost morally bound, to take up the play of the rest of the movement. We have constituted ourselves the balancing factor in the trade of the world, and we cannot afford, and we do not intend, to drop that position. Now, possibly unconsciously, in 1929 the greatest importing country of the world, entering into trade relations with potentially possibly the greatest exporting country in the world, at any rate in primary produce, threw into the works an unknown and unbalancing factor.
I venture to say that the calamitous fall in prices which has taken place since 1929 is not wholly unrelated to that action of the late Government. It surely is not completely fortuitous that yesterday we restored the price of wheat to the British farmer to the price at which it stood in 1929. Some of your Lordships may not think that was a good thing to do, but most of your Lordships found that it was necessary to restore the price to 10 s. per cwt., where it was approximately in 1929. In 1929 wheat in Canada was selling at 10 s. odd per cwt.; it is now selling at 5s. Since that time Russia has become our principal supplier of wheat. The same, mutatis mutandis, holds good of barley. Very nearly the same holds good of oats. Think what that has meant to Canada and the Argentine. Whether or not we intended it, we have thrown the whole exporting business of Canada and the Argentine out of gear by entering into these relations with Russia. The same holds good of butter, and to a lesser extent of such things as maize and so on.
It cannot be entirely fortuitous either that since we entered into this Agreement the price of the load of Finnish timber has dropped from 83 s. to 65 s. Consequent on this and many other price changes, not entirely, I must admit, brought about by the action of His Majesty's 'Government in opening our
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trade relations with Russia, but I submit in very large part by that, a whole series of calamities has fallen upon nations which are necessary to us as fellow traders. We have strikes in the timber industry in Sweden, and great financial distress, quite apart from the late collapse which we all know of; we have difficulties in Finland; we have Argentina unable to pay the interests on her debt, very largely because of the fall of price which, as I say, coincides almost exactly in time with the period during which this Treaty policy has been running.
I submit that the effect of this Treaty policy would not have been so great had it not been that within the lines of the most-favoured-nation clause included in that Treaty at least six special concessions have been made. In the first place we have abandoned the whole of our trade union standards, we have abandoned our obligations under the Covenant of the League of Nations, and we are dealing gratuitously and willingly with a people who boasted as recently as this March that they have made a revenue of £30,000,000 in one year on the proceeds of their convict labour, and who say that they are going to treble that revenue this year. We are dealing with a country where admittedly forced labour is universally legal and carried into effect. There is concession number one.
Concession No. 2: we are extending credit to this country on a scale to which we extend it to no other country, and for lengths of term up to 21 months, I believe, from the date of the order; and that in spite of the fact that the head of the Department of Overseas Trade admitted so recently as March 3 that practically all our purchases from Russia were paid with cash, whilst all our exports to Russia were based on long credit. Thirdly, we are trading with a Government, not with individuals, and we are trading with a Government which does not trade, as my noble friend Lord Lloyd pointed out, entirely on a commercial basis, but also on a political basis, and uses its trade for political ends. Fourthly, disregarding all our fears as to the adverse effect on our own financial stability of an adverse balance of trade, we are trading on a basis with Russia which involved an adverse balance of £24,000,000 last year.

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In this connection I would like to make a small digression, because I know that to some of your Lordships the fishing industry is of great importance, and a red herring has often been drawn across the scentߞor rather, I should say in this country a genuine blue herring. It has been said that the reason for our extending these credits to Russia is that our hard-pressed fishermen could not do without that outlet for the herrings which they catch. What are the facts? They are that we are very pleased to have sold 37,000 barrels of herrings to Russia the other day, whilst during the same week Norway entered into a deal with Russia by means of which she will sell 300,000 barrels during the year. In 1931 we did £22,000 worth of trade in herrings with Soviet Russia. We did £500,000 worth with Poland and £1,000,000 worth with Germany. So much for the red herring, It is not my purpose to detain your Lordships longer but it is my purpose to point out that it is impossible for this country to act alone, to drop collaborating with other friendly nations, to carve out for herself the position of the other friendly nations with whom she has traded for centuries and to enter into a policy governed by hand-to-mouth considerations as to whether or not we can find a temporary market for some of our surplus manufactured articles. I am sure I shall carry the whole of your Lordships with me when I say that I look to the Ottawa Conference to find at any rate a basis of a policy under which we shall trade with our friends first and our foes afterwards.
LORD LOVAT: My Lords, in asking your Lordships to consider a single facet of this very great question I do not propose to make more than a reference to the fact that we are more interested in the welfare of the primary producer than any other nation or group of nations in the world. I would suggest that Russia is one of the greatest difficulties existing in connection with putting the primary producer in six or eight of the greatest lines of production in a position to earn a reasonable living. We are specially interested in the welfare of the primary producer because, in the first place, we have advanced more money to those nations which have been and are being developed than any other country in Europe. If you travel over the world
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you will find that a very large proportion of the railways, almost the whole of them, and a great many of the institutions that go towards developing a country, are founded on British capital and very often actually run by British people. Again, as traders we have to remember the advances we have made to countries entirely occupied in the production of primary products and that we have a greater trade with them than any other nation. Finally, we have in our own group of nations the Crown Colonies, which depend wholly on primary products, and the Dominions, which depend to a very great extent upon them.
What have we in Russia? We have in Russia a nation which declared in the recent report of the Commercial Exhibition in Paris:
"We cannot play a decisive roôle on the world market, for our means of exportation are relatively feeble. But we can, at least, bungle the prices of world commerce. It is this that we have done up to the present, selling at random at dirt-cheap prices, not drawing any profit, and causing losses not merely to ourselves but also to the large traders of the entire world."
Other speakers have pointed out that whether you deal with the question of wheat, of barley, of linseed, of copper or of timber there is the potentiality that Russia at any moment, with her great natural resources, can produce a position in any particular line of industry which is impossible for outside nations. They are an army not a nation. The terms they use in speaking of themselves are those of an army. They talk of the war on a particular front. They talk of mobilising their forces to fight on the wheat front. They talk about their storm battalions and their shock troops that are sent from wheat to timber, moved about as a battalion, a regiment or a division would be moved. I have heard it stated on authority which I believe to be as good as anything which exists, by Germans who are working in the mechanisation of some of the Russian wheat lands, that if their plans go as they expect, they will very shortly be able to set free some 4,000,000 to 5,000,000 people to be used in other industries to trouble the industries of the world.
I do not wish to deal with these general subjects, but I should like to say a word about the timber trade and to ask the Government a single question. We in

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Great Britain take practically 50 per cent. or, if you include Memel and Riga, rather over 50 per cent. of the timber which Russia sends to Europe. How is it that as the biggest customer of Russia we do not exact special terms from Russia, though we give them the unexampled terms mentioned by noble Lords this afternoon? This year we are buying 450,000 standards from Russia. That does not include, as has so often appeared in the Press, hard wood. It does not include doors, of which Russia sends us 600,000, no doubt to the very great advantage of the commerce of this country. It does not include timber in the round of any sort and it does not include pulp. This amount is sent over here and is paid for invariably in cash or bills at three months. In certain cases it is actually paid for before the timber is delivered.
What do we get in return? We not only have to deal on a two years' system with them, but our Government comes forward, as the noble Lord, Lord Lloyd has pointed out, and actually gives protection and assistance. Supposing for a moment the Front Bench were a business concernߞno doubt that can be imagined ߞis there any other trading body in the world which, being the largest customer or a particular firm, does not expect to get rather better terms than the others? Yet we are getting the worst in Europe. If you were selling 500,000 tons of potatoes to a firm in London and another individual was buying one pound weight from you, which of them would get the potatoes to better advantage? If you were sending a large amount of goods over a railway you would expect special freights. Yet this country, buying, as I say, as much timber as the whole of Europe put together, is getting far worse terms than anybody. Look at France. France buys a small portion of Russian timber, but if in doing this France thinks her industries are being threatened she at once says: "We will finish with Russia." Other nations say: "You shall only sell its as much timber as you will buy of our goods," and there is no two years' credit system allowed in their case. Why should not we, I should like to ask His Majesty's Government, trade with Russia on similar terms to those which have been adopted, by other nations.? Other nations are able to extract these terms from Russia. Why
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should not we, the biggest purchasers of all, exact the same terms, or even better ones?
I have given the Leader of the House notice of the question which I am now about to deal with briefly. The second question I would like to raise is this: What is going to happen at Ottawa? I do not know if your Lordships share the views that one sees in the Press and hears spoken of in ordinary conversation. The average man in the street seems to imagine that this organisation of the timber trade of the Empire is a thing that is going to be settled at once quite easily. Let me assure your Lordships that nothing will be more difficult. I do not pretend to speak with any particular knowledge, but I do happen to have been Chairman of two Empire Forestry Conferences, and I have had a lot of correspondence with the producers in the Empire and have heard what their views are. Their views are simply and candidly these: "We are not going to take the risk as long as the Russian position exists as it is to-day." That is perfectly right.
What have they got up against them? At the present moment, as your Lordships will know, there is a £450,000 contractߞapart from other contracts to which I have referredߞin which there is what is called in America an easy "rake off" of at least £250,000 for the distributors of timber in this country. The importer is like any other man, and if he sees an easy opportunity of making money he will do so. As long as you have the present position, and as long as you trade on an unlimited scale with a nation to whom the question of prices means nothing, you will always have them ready to do what is necessary in the way of grease or oil in order to get their goods sold, and you cannot save the importers from the fact that by buying cheaply they are getting a big remuneration. They are selling the timber to which the whole of Great Britain is accustomed. The timber is cut to the required dimensions and is excellent. You cannot expect to see the timber trade in this country in these circumstances try to encourage timber markets for the producers in our Empire. Empire producers know that as well as we know it here. As long as you have this encouragement you can call it nothing else but most-favoured-

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nation treatment. You cannot, if the same advantages in the way of loans are not to be made to our own Empire, expect the Empire timber producers to come in and hope to compete with prices such as at present obtain for timber that is sent over here from Russia.
I do not know if your Lordships are aware what is the price of some of this timber which is put on the market here. Take, for instance, doors. Six hundred thousand doors were sold here at the price of 4s. 6d. per doorߞthat is 4s. 6d. c.i.f. in this country. Think what the price was to the producer in Russia when you have taken from that price of 4s. 6d. the cost of commission, insurance and freight, and of delivery, sawing, etc. Sleepers have been sold in large numbers at 3s. 3d. a block. The freight rate from Archangel is 55 s. and fifty-five sleepers approximately go to the standardߞthat is to say, that 1s. is to be deducted from the price of each sleeper. Sleeper blocks with a 6-inch face containing two sleepers were sold as low as 3s. 3d. a block. You can easily see what the price of each sleeper was free on board. Who can compete with that? Is it possible that anything but the most outrageous form of dumping can have been the cause of such prices? How can we hope, when our leaders go to Ottawa, to discuss the matter as to whether there is going to be any possibility of a development of trade in the Empire for timber, to have any result?
We have in the Empire the possibilities of producing 10 per cent., possibly 15 per cent., and some people say 20 per cent., of our soft wood timber, and practically the whole of the hard wood. What chance have we to come to any arrangement when they see the natural hostility that there will be on the part of the traders here and the prices at which the Russian trader will sell. What chance have we of seeing any Empire arrangement? I would say that I think it is possible to do something. If I did not think it was possible to do something I would not have raised this question at the present time. I think it possible to take a note out of the book of France and Holland and say to Russia: "We shall decide on a definite limit to the amount of Russian timber that shall be sent here." Let us accept so many hundred thousand standards and then make
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up our mind that no more standards shall come in. We should insist upon something of that sort if we are to allow this trading in Russian timber to continue. If we do allow any trading with Russia we must insist that a proportionߞI would suggest a very large proportionߞof the money which is paid to them in cash shall be re-invested here in our own products. We should treat the group of Russian merchants as if we were trading with one individual. Until we thoroughly grasp that, it is impossible for us to talk of a policy which can lead to the development of production in the Empire which, we hope, will be one of the results gained from the Conference in July.
LORD NEWTON: My Lords, I have listened to a great many debates on this subject, and have taken part in a considerable number of them myself. They all appear to me to have a very strong resemblance. Debates are started by somebody who makes out an unanswerable case against the Soviet Government. He is followed by his friends, and the Motion, or whatever it may be, is opposed by the friends and sympathisers of the Soviet Government. Occasionally the debate is varied by the experiences of gentlemen who have paid visits to Soviet Russia, and who have been favourably impressed by what they have seen. That certainly was not the case in my own experience. I have been one of those tourists, and I have seen nothing whatever to admire, but a great deal to object to. I can honestly say I never felt a greater feeling of relief than when I emerged from the proletarian Paradise into a free country.
I was about to say that these debates invariably conclude with a speech from the Minister, either Coalition, Conservative or Labour, in which he invariably says that the case against the Soviet is not so strong as is commonly supposed, that they are in reality much better people than we give them credit for being, and that on the whole it is better to leave things alone and not interfere with the existing arrangement. I understand that the noble Viscount, Lord Snowden, is going to reply for the Government on this occasion. I hope that he will acquit me of any want of courtesy if I express the hope that we may also be favoured with the views of my noble and learned friend the Leader

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of the House. I express that hope because I have heard the noble and learned Viscount make speeches in this place which bore a very striking resemblance to the speech made by my noble friend Lord Lloyd from the Cross Benches. As for the noble Viscount, I think am not mistaken in saying that he has been from time to time a somewhat strong critic of the Soviet system, but that upon the whole he may be considered as being favourable in principle to the practice of assisting trade with the Soviet. It will be very interesting to compare the views of the two noble Viscounts if we have the opportunity. I suppose we may take it for granted that this is one of the occasions upon which various members of the Cabinet may agree to differ.
There is one thing which I should like to put to the noble Viscount, although I am afraid he will not answer it because it is of a somewhat hypothetical nature. I think it will be admitted by everyone who has studied this question in an unprejudiced frame of mind that really the whole demand for trade with Russia and for Government assistance for trade with Russia is political. It is a demand which has emanated from the Party represented by noble Lords opposite and they have succeeded in getting their way with all Governments during recent years. I maintain that politics are at the bottom of, and are the original cause of this Trading Agreement. What I would like to ask the noble Viscount is, supposing a Tsarist Government were still in power and supposing labour conditions in Russia were as they are now, does he honestly think there would have been any demand on the part of his Party for trade with Russia at all? My firm belief is, that so far from there being any demand for anything of the kind there would have been violent protests against our having any connection whatever with that country. Not only would there have been no demand for trade but there would have been denunciations of any such idea and a clamour to break off relations altogether with that country; In fact, I expect there would have been breaking of windows at the Russian Embassy until their demands were more or less satisfied.
I cannot help thinking, although it may sound an unkind thing to say, that the
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British Socialist Party often attaches more importance to the constitution of a Government than it does to the acts committed by that Government. I remember years ago, as many of your Lordships must also remember, the intense indignation caused in this country at the news of the Armenian massacres attributed to the blood-stained despot Abdul Hamid. After he had been got rid of the Young Turks came into existence and created a sham Parliament. The massacres still went on, only in a more scientific and thorough manner, but no protest of any sort or kind was made by the Socialists in this country. It only shows what you can do if you set about the thing in the right way. The bugbear of the British Socialists at this moment is Signor Mussolini. Why? Because he has done away with Parliament. There is a much greater despot reigning in another country at the present moment, and that is Mustapha Kemal, but Mustapha Kemal had the sense not only to start a sham Parliament but to start an Opposition. It almost seems as if he did it for the purpose of placating the Socialists in this country. We never hear anything against Mustapha Kemal because he has started sham parliamentary institutions. There are other cases which I could quote if necessary. I am sure, for instance, that the Socialist Government which now governs in Spain could repeat all the arbitrary acts of the former King without any protest being made here; and there is another potentate, the Emperor of Abyssinia, who, if he had sufficient ingenuity to create a Parliament, would be able to carry on the time-honoured institution of slavery for an indefinite period without any interference from people in this country.
I have said that the origin of this business is entirely political, and I do not want to waste time in going over the arguments brought forward with much force by noble Lords who have already spoken this afternoon. I will merely say that there is very little that can be said in favour of the existing Agreement. It has been shown this afternoon that scarcely any change has occurred in the volume of trade. It has, if I am not mistaken, not yet reached the level at which it stood before the Soviet Government came into existence. Nobody disputes the fact that they are the people

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who benefit and that we are the losers. If they spend any money it is by way of anti-British propaganda. All that they get from us is spent in working against us. Nor do I want to waste time over the moral objections, although it does seem to me a most extraordinary thing, in view of the fact that Russia is practically a slave State, that there has been no protest as far as I know on the part of the Socialist Party against the conditions that exist.
I might also say that it is a strange thing that people here, especially the Socialist Party, advocate trading with people who have shown themselves to be flagrantly and impudently dishonest over and over again. In private life you do not do business with frauds and cheats. You leave them alone. Neither do you do business, if you can help it, with people who have repeatedly broken solemn engagements, which has been the case with these particular people. On the whole I prefer to leave moral objections to the Episcopal Bench. Unfortunately I do not observe any members of it present to-day, but I have heard the case from the moral point of view put remarkably well from those Benches before now.
Now I have a word to say about what I may term material objections to trade with Russia. Soviet Russia is not, as some innocent people may suppose, a friendly State. Soviet Russia is a hostile State, and if there is one country which the Soviet Government dislikes more than another it is this country. The question which we have to consider is not really a question of whether so-and-so shall be given assistance to sell his herrings to Russia, or whether assistance shall be given for purchases of timber from Russia to be dumped in this country. It is really a far greater question than that. Russia, as I have said, is a predominantly hostile State and at this moment the Soviet Government are engaged in a gigantic effort to industrialise the whole countryߞfor what purpose? Not for the purpose of benefiting Russia, but for the purpose of ruining the rest of the world and ourselves in particular.
The object of the so-called five-year plan is to disorganise and ruin industries in all other countries in order that the Socialist revolution may come more quickly into being. Every pound we spend
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in buying Russian goods goes to help towards the fruition of this particular plan. I do not want to say too much about this plan, but everybody must see perfectly well what it means, and I am not using exaggerated language when I say that it is a deliberate act of aggression against the whole of the civilised world. It is, in fact, a clear case of Communism versus Commercialism and we seem to take a long time to realise it. If the Governments of Europe had possessed rather more vision they would have realised it before now and would have endeavoured to form some kind of front against the danger or, if unable to do it themselves, they might perhapsߞI throw out this suggestion to my noble friend Viscount Cecilߞhave pursuaded the League of Nations to take up the question, and the League would have done a much more useful service to civilisation than it has been able to render latterly.
Unfortunately, instead of endeavouring to make any sort of stand against this danger, Governments and banks and associations of traders and so forth have tumbled over each other in order to try to do business with the Soviet Government and allowed themselves to be exploited for the benefit of the Soviet Government. We, I regret to say, have played a prominent part in this campaign and all I can say is that we are exactly in the position of a man who knows perfectly well that his enemy is preparing to burgle his house and yet continually advances him money for the purpose of finding materials to effect his object. That is what we are doing when we assist the five-year plan. It is time that this sorry farce should come to an end and I hope, although I do not expect it, that some announcement to that effect will be made in your Lordships' House this afternoon.
LORD BANBURY OF SOUTHAM: My Lords, I think the House is greatly indebted to Lord Lloyd for bringing forward this question, which seems to me to resolve itself into two parts. First, is it wise for this countryߞthat is to say the taxpayerߞto guarantee credit to Russia? I do not know the exact amount which the Government have advanced to Russia in guaranteeing credits, but I believe it is a considerable sum. Now we are advancing this money to people who

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owe us money already, who not only owe private individuals in this country money, and who not only have taken and confiscated their property, but actually awe money to the Government. I think I am right in saying that during the War this country advanced something like £800,000,000 to the Soviet Government. We have had no interest on it and not a single farthing of the principal has been repaid. Therefore it seems to me, having some small experience of business, that it is utterly futile and foolish to advance more money, especially the taxpayers' money, to people who have behaved in this manner.
Secondly, is it advisable that we should allow Russia to send large quantities of wheat, timber and other goads over here in view of the fact that the majority of those goods have been made either by slave or forced labour Of course, that is a different and really more or less a moral question. It seems to me that it is extraordinary that the Socialist Party, and to a certain extent the Liberal Party, who have always been in favour of high wages, short hours and protection to workmen here, should encourage a Government who not only disregard all the principles of trade unionism, but use, as my noble friend Lord Lovat says, as an army the unfortunate people who dwell in their country. I think there can be no question, on the first part of the subject, that it is utterly foolish to advance the taxpayers' money to this sort of people. With regard to the second part there may be differences of opinion. The noble Lord, Lord Newton, suggested that the League of Nations might do something. I have not much faith in the League of Nations and I do not think they have any power to do anything even if they wanted to. But I hope now that we have a new Government pledged to carry on the business of the country with economy, though I have not seen very much of it lately, we shall do something to avoid lending the taxpayers' money to people who probably will not, repay us.
LORD MOUNT TEMPLE: My Lords, I apprehend that the real gist of the Motion moved by Lord Lloyd is not so much as to the ordinary trade relations between this country and Russia as to what has happened in consequence of the diplomatic relations which have been resumed between the two countries and the
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consequent giving of large export credits to stimulate trade between this country and Russia. That aspect of the case seems to be one well within our province and well within the terms of the Motion. The ordinary ebb and flow of trade between the two countries seem to be more appropriate to a fiscal debate than to the Motion of my noble friend.
I may be alone in this, but I feel an inexpressible degradation in the fact that His Majesty's late Government and the present Government thought fit to send an Ambassador to Moscow and to receive a Soviet Ambassador in this country. Surely it is beneath the dignity of this country to put Russia on the same footing as we should put France, Germany, Denmark or any other civilised country. It is degradation that we should receive this Ambassador, and in consequence give export credits, that we should receive this Ambassador from a nation which has suppressed all individual liberty, has suppressed all private trading, has banned the Christian religion, has refused to pay its debts and, what is snore, has stolen the money of the Government and of our nationals.
I have never read any adequate, sound, sensible explanation of why the late Government did recognise the Union of the Soviet Republics. It is not on the ground that any increase of trade has followed because the increase of trade in the three years since recognition has only amounted in the case of exports from this country to Soviet Russia to half a million and that entirely through export credits. There has been an increase of imports of £5,500,000, but that cannot be welcomed by anyone in this country because the National Government is doing all it can to prevent that sort of thing.
You cannot ascribe to the resumption of diplomatic relations any financial gains to this country whatsoever. Therefore I await with great interest the reply of the noble Viscount, Lord Snowden, as to why originally in 1929 recognition was given to the Soviet Republic, and I await with still greater interest information as to why the present Government have continued that recognition. I can only put it down to the fact that certain members of the late Government are now incorporated in the present Government, and that no one wants to be hard on them

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or to make them feel uncomfortable in any way.
What has been gained by this recognition? Not one single penny, I think Lord Banbury will support me in saying, has been gained in consequence of the recognition, and not one single penny has been repaid to the private creditors of Russia, or to the Government of this country. Not one serious consideration has been given to any of the numerous protests made by Lord Curzon and his successors against the insidious and wicked propaganda to incite sedition in this country. I have here an extractߞI will not burden the House with itߞfrom an article written by the noble Viscount, Lord Snowden, in Reynolds' Illustrated, in 1927, in which he shatters the contention that the Soviet Government were not responsible for the propaganda. He says, with truth, that there is a trinity thereߞone in three and three in oneߞand the excuse made by the Government of Russia that they were not able to control certain organisations is, in the words of the noble Viscount, "a palpable falsehood, and cannot be supported by facts." While we are subsidising trade with Russia we are not even enjoying internal peace, owing to their action. The General Strike of 1926 was largely engineered by the Soviet Government, in South Wales, in London, and in the Daily Worker, subsidised from Russia, and not only the late Government but even the present Government sit down under scornful rebuffs to our representations.
I do not want to trespass any longer upon your Lordships' patience, except to say this, that unfortunately there is a trade balance against this country, over a period of five years, of 5½ to one. For every £1 of goods that we send to Soviet Russia they send back in return £5 10 s. Where do they use that balance of trade? Not with us, who crawl to them, but in the United States of America, although the United States have never made a trade agreement with them, or recognised them, and so they respect and are afraid of her. We, who have done everything to ingratiate ourselves with them, they treat in this way. Surely His Majesty's Government ought to do something to recover this money for the nation and the individual. We leave this enormous balance of trade against us and in favour of Russia, and
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I can see no difficulty in recovering it. There is never any difficulty if we make up our minds to do a thing. It can be done by imposing a tax upon these goods coming from Russia to this country, and devoting the money so raised to the repayment of money stolen from the taxpayers of this country, and to reimbursing private owners who have had their property so shamefully taken away from them. I understand that that proposal has been made to the Foreign Office, and that they say it is impracticable, but I venture to prophesy that if this House and another place decided that it was practicable it could soon be done. May I have some reply on that point from the noble Viscount?
THE LORD PRIVY SEAL (VISCOUNT SNOWDEN): My Lords, I am afraid that I rise in an atmosphere which is not very suitable for the calm and dispassionate consideration of this question. A great deal of indignation, arising I am quite sure from what those who have expressed it regard as moral and justifiable reasons, has been expressed in the course of this debate. The debate has travelled far beyond the terms of the Motion upon the Paper. That Motion is confined to asking for a statement of the Government's policy in regard to trade with Russia. The greater part of the speech of the noble Lord who submitted this Motion was not concerned with the trade aspects of this question. He dealt with the labour conditions in Russia, which he described as conditions of slavery. He said a great deal about Communist and Bolshevist propaganda in different parts of the world, and their intrigues against this country in particular, but I would like to call your Lordships' attention to the fact that the information given by the noble Lord on these matters was at the latest five years old. Five years ago I should have been without hesitation prepared to agree to every word that the noble Lord said this afternoon in regard to world Communist propaganda, but I think that during the last few years there has been, so far as we can ascertain, I will not say a complete cessation of this Communist propaganda, but at any rate it has been much less violent and widespread than was the case a few years ago.
I do not rise, my Lords, for the purpose of defending either Bolshevism

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or Communism, or the principles and the practice of the Soviet Government. I have in years gone by expressed my opposition to those tenets and those principles, and that propaganda, as vigorously, perhaps, as even the Leader of the House has done, and I withdraw no word of what I have said on those matters. But this afternoon we are dealing, if we confine ourselves to the terms of the Motion, with the question of the Government's attitude to trade with Russia, and I hope your Lordships will forgive me if I say that all the speeches which have been made, from the speech of Lord Lloyd, who raised the Question, to the speech of The noble Lord who has just sat down, and every intervening speech, has shown a most extraordinary ignorance of the actual conditions of the Government's relations to trade with Russia. The noble Lord, Lord Banbury, perhaps put it as shortly and as emphatically as any other speaker who has taken part in this debate. He said that there were two questions arising out of the debate this afternoon, and the first was this: Is the British Government justified in spending the taxpayers' money and giving it to Russia for the encouragement of Russian trade? I hope I have accurately represented what the noble Lord said.
LORD BANBURY OF SOUTHAM: Yes, that is right.
VISCOUNT SNOWDEN: Well, that has been stated in other words and in other forms by every speaker who has taken part in this debate. May I assure the noble Lord, Lord Banbury, in particular that the, British Government has never given one penny of the taxpayers' money to Russia? There is no guarantee to the Government of Russia in regard to any trade transaction. On that point the whole of the debate this afternoon has been carried on under a, complete misapprehension. The credits are not given to Russia: the credits are given to British traders in order to finance their transactions with Russia.
LORD BANBURY OF SOUTHAM: Is not that exactly the same thing? Is not the result that if the Russian Government does not pay we have to pay?
VISCOUNT SNOWDEN: Of course, it means that, but we shall pay, not to the Russian Government but to the traders
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of this country. And I may at this point make a statement which I should have made laterߞnamely, that so far there has not been a penny of loss incurred upon any of the credits which have been given for transactions in Russian trade. It is not intended, I say, to assist Russia; it is intended to assist trades in this country. May I give you one particular illustration, the machine-tool trade? The machine-tool trade to-day in this country is employed to the extent of 80 per cent. on executing orders with Russia, and that has only been made possible by the granting of export credits to those firms. Now, do noble Lords ask that assistance of that sort should be suddenly stopped, that no further credits should be given, and that 80 per cent. of the important machine-tool making industry in this country should have to close their works?
LORD BANBURY OF SOUTHAM: Yes.
VISCOUNT SNOWDEN: Well, the noble Lord is perfectly frank; he says he would like to see those people thrown out of work.
LORD BANBURY OF SOUTHAM: No, I say I should stop their credits.
LORD LOVAT: Why should the credits be given in the case of Russia, and not in the case of other nations?
VISCOUNT SNOWDEN: There is another misunderstanding of the nature of the exports credits scheme. They are open to every country in the world. I mean, British traders doing trade with those countries are open to use those-credits in their trade relations with those nations, and if they can establish a case that credits are necessary in order that orders may be carried out then the Advisory Committee which deals with these matters will give the same consideration to such an application as they would in the case of Russia.
LORD PHILLIMORE: And the same length of term?
VISCOUNT SNOWDEN: That, of course, would entirely depend on the circumstances. The Advisory Committee, as the noble Lord knows quite well, is a non-political body. It is a body of financial and commercial experts, men of the highest probity and of the widest

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knowledge of these questions, and it is left entirely to their judgment to decide in each particular case what the length of time should be that is given for the continuance of the credit. There are, I repeat, no political considerations at all in these questions.
Reference has been made this afternoon to what is called the adverse balance of trade with Russia. Now, it is perfectly true that we have been importing for many years now from Russia a very much larger volume of trade than our exports to Russia. Our imports from Russia amounted during the last two years to about £30,000,000 a year, and that is about one-third of the total export trade of Russia. Our exports to Russia on the other hand, have averaged, right up to the last few months at any rate, about £7,000,000 a year. Now, in 1931, the Soviet Government claimed that they had placed orders to the value of £15,000,000 in this country, and that they had also spent on freight and what we know as invisible exports a sum amounting to probably another £7,000,000. But I may say, reverting to a point I made a moment or two ago, that these credits have been given mainly for the export of machinery.
The noble Lord, Lord Lovat, who dealt almost wholly with the question of timber, seemed to assume that the export credits scheme applied to the timber trade. That, of course, is an import and not an export, and the question of trade between this country and Russia in timber is one in which the Government have really no concern at all, unless, of course, your Lordships argue that there are moral issues involved in the question which call for Government interference. But, from the business point of view, it is a matter entirely between the British importers of timber and the Russian Government, which is the sole trading organisation in that country.
I referred to what has been called the adverse balance of trade on the Russian account, but I would just like to give your Lordships figures which I think are rather startling; at any rate they startled me when I saw them for the first time to-day. In January of this year the imports from Russia were just under £1,500,000 and the exports to Russia were £750,000. In February things were better
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still, considerably better from our point of view. The imports from Russia amounted only to £1,000,000 and the exports to Russia amounted to £900,000. So I think, if you take what we call invisible exports and the like into consideration, during the first two months of this year there has been probably no adverse balance in trade at all.
LORD LOVAT: How many Russian ports were frozen at that time?
VISCOUNT SNOWDEN: Well, I have a very good answer indeed to that. I suppose that if the ports were frozen in January of this year they would be frozen in January of last year. May I assume that? The noble Lord raises the objection that this difference in trade as compared with the last few years is due to the fact that the ports were closed in January and February. Take January and February of last year. In January of this year the imports from Russia were under £1,500,000 in January of last year they were £2,250,000, and the exports last year to Russia in January were £579,000. So I am afraid the noble Lord who made the interruption will get very little support for his frozen port theory out of those facts.
The noble Lord, Lord Phillimore, assigned a very large measure of the world trade depression to the Trade Agreement which was concluded in 1930. If I may be permitted to say so I think that some of his assumptions were rather far fetched and are certainly not supported by an examination of the figures of Russian trade for the last ten years. Taking 1925, as that will give me about two equal periods of years, from that year to 1928 the imports from Russia averaged about £23,000,000. They rose from what they were in 1922ߞI will not take 1921 as that would hardly be fair because the imports were only £2,500,000 ߞwhen we first, I suppose, began to feel the effect of the first Trade Agreement and the imports were £8,000,000, to £9,000,000, £20,000,000 and £25,000,000 and then they dropped in 1926 and 1927. In 1929 they were £26,000,000 and in the last two years they have not risen at a greater rate than in the four or five years before the Trade Agreement was formed. So I do not think that gives very much support to the noble Lord's assumption that the dumping of Russian wheat and

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other imports is due in large measure to the great fall in world prices that has taken place.
LORD PHILLIMORE: Is the noble Viscount referring to quantities or prices?
VISCOUNT SNOWDEN: I am referring to prices.
LORD PHILLIMORE: And to quantities?
VISCOUNT SNOWDEN: I have not got the quantities. To return to the question of credits, the Government, of course, were not at all satisfied with the disparity between the imports from Russia and the exports. We have made strong representations to the Soviet Government upon that matter, and I might say that we have insisted, so far as the Government could insist in a matter of this sort, that practical steps should be taken in order to lessen the disparity between the imports and exports. But precipitate action in any form on the part of His Majesty's Government might have the result of increasing our difficulties.
To come more to details in the operation of the export credits plan, it is true that a considerable proportion of the outstanding guaranteed bills is for Russiaߞa very large proportion of them. The reason for that is the one I gave just now, not that other countries have not the opportunity if they can establish a case to the satisfaction of the Advisory Committee, but that our traders have evidently not felt the need for taking advantage of it in regard to their trade with other countries. I will refer in a moment to the question of the alleged slavery in Russia, but I turn now to the Agreement of 1930 referred to by the noble Lord, Lord Phillimore. I might explain that it is not the Government who initiate these exports credits. They can only do it on the advice of, or after consultation with, the Advisory Committee. In 1929 the Government decided that the Advisory Committee should consider applications from British manufacturers in connection with transactions with Russia in the same way as they had dealt with applications in connection with exports to other countries, but it was left, in August, 1929, at the discretion of the Advisory Committee to determine the conditions upon which the guarantees
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should be given. During the next two years the credits on Russian orders were gradually extended until at one time for very heavy engineering works the credit extended for as long as 30 months from the date on which the order was placed.
On this occasion the Soviet Government gave a very definite undertaking, but may I say that the Soviet Government are past masters in the art of propaganda and plausibility, and all that they say in regard to the possibility of placing orders in this country must not be taken without a strong grain of salt. They gave a definite pledge that they would place orders in this country for £6,000,000 worth of heavy engineering work. That £6,000,000 programme was in course of execution at the time of the financial crisis last August. Then the Government decided to restrict these exports credits not only for Russia but for all other countries to twelve months, and while they were under no legal obligation to complete the £6,000,000 programme they were anxious that there should be no question of a breach of faith and so they allowed it to run out. When that happened the present Government decided, in the interests of trade and industry, that the Advisory Committee should again be free, as in the past, to consider proposals involving credits for more than twelve months.
In the case of Russia the Advisory Committee decided, on commercial and financial groundsߞand this is rather importantߞnot to give guarantees for further credits to Russia for more than twelve months without extracting the most stringent conditions, or more stringent conditions than in the past; that is, to impose conditions which would lessen the risk, because nobody denies (and His Majesty's Government is quite alive to it) that there is a certain amount of risk in being involved in very heavy credits arising out of transactions with a Government of the nature of the Soviet Government. I might say in passing that there is a premium charge for these guarantees and in so far as it is not required for meeting losses (and there have been no losses on the Russian trade up to the present, as I have said) it is a reserve against possible future losses. But the Government, as I have said, are well aware of the risks involved. They are watching them very closely and I

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think I am justified in going so far as to say that they will take very great care not to involve themselves in any liabilities unless they are reasonably assured that there will be no loss.
I had better say that at the present time this question of the conditions of credits on Russian orders is under the consideration of the Government. I see that the President of the Board of Trade yesterday gave a reply to a question in the House of Commons to that effect, and said he was not yet in a 'position to announce the result, but I think I can tell your Lordships that the Government are likely to come to a decision upon this matter very shortly indeed, and it will be on the condition that I have already mentioned, that any credits of a long character, or any credits exceeding twelve months, will certainly not be given unless there is what the Government regard as adequate security. This policy is adopted not out of regard for Russia, but simply out of 'consideration for the trade of this country and for the sake of employment in this country. I think the Government would be incurring a very great responsibility if they were suddenly to stop means which undoubtedly have been helpful in the engineering trades in particular, and which have given rise to a good deal of employment. Of this I am quite sure, that if these exports were suddenly brought to a stop it would be regarded with dismay by the engineering trades in the country. I want to assure your Lordships that the Government are not foolish in this matter. They are looking at this question from a practical point of view. They are perfectly alive to any risks that there may be, and they will not take risks unnecessarily or recklessly.
I do not think I need spend much time in dealing with the matters which have been raised in the course of the debate, and which, I think, are rather extraneous to the terms of the Motion now before the House. The noble Lord, Lord Newton, put a question to me. He devoted practically the whole of his speech to the Socialist policy in regard to Russia. That is just about as much out of date now as the evidence that has been produced in regard to Bolshevist propaganda. The noble Lord, Lord Newton, said that this is a political question, and asked me to answer the hypothetical question of
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what the Socialist Government would have done if, under a Tsarist Government, there had been allegations of labour slavery such as are alleged against the present Government of Russia. I think I shall have to ask the noble Lord to be satisfied with his own answer to that question, but I do demur from his statement that the trade aspect of this matter is purely a political question. It is not that at all. It is a business question, it is an industrial question, it is a trade question; and it is regarded by the Governmentߞnot merely by this Government but by preceding Governmentsߞas being simply a question of that character.
The noble Lord, Lord Mount Temple, asked me to give him an answer to the suggestion that has been put forward that there should be an Import Duty upon goods coming into this country from Russia, and that the proceeds of that tax should be used to pay off to some extent the debts that are owed by the Russians to people in this country. It is quite true, as the noble Lord said, that this matter has been raised before, and it has been considered. I agree with the view that he said the Foreign Office had expressed, that it is an impracticable proposition. What would happen? Who would pay? The Chancellor of the Exchequer in his Budget statement yesterday estimated a revenue from Import Duties of, I believe, something like £30,000,000. He was not getting that £30,000,000 from the foreigner, and if we were to put an Import Duty upon Russian goods it would be the people in this country who would pay.
LORD MOUNT TEMPLE: I cannot agree with that.
VISCOUNT SNOWDEN: I know that in the fiscal controversies of former years the question of whether the foreigner paid or not was a matter of very vigorous contest, but I thought that during the last few weeks that had been settled by the general assumption that the foreigner did not pay.
SEVERAL NOBLE LORDS: Oh, no.
VISCOUNT SNOWDEN: I do not want to enter into that question. I could say a good deal about it if we were discussing that particular question, but at any rate the Conservative members in the House of Commons who wanted to add

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considerably to the Free List in the Imports Bill did not believe that the foreigner paid.
I think I have answered most of the specific questions that were put to me. I may add this. Of course the only assumption that could be made on the speech of the noble Lord, Lord Lloyd, was that we oughtߞand this indeed was stated more strongly by the noble Lord who preceded meߞto renounce the recognition of Russia. I can tell your Lordships one thing that would certainly happen if we did that. There would be a recrudescence in a more violent form than ever of Communist propaganda against this country. That, I think, most certainly would happen. I do not think there is in this country any very widespread desire for a denunciation of the recognition of Russia. The Russians are very difficult people to get on withߞextremely difficult people to get on with in regard to debts. I do not in the least dissent from, indeed I wholly agree with, what has been said this afternoon in regard to the repudiation of governmental and of private debts in Russia. I have done what one individual as a member of the Government could do to try to get a settlement of that question. It is very difficult to do so. The noble Lord, Lord Mount Temple, said that where there is a will there is a way, and that the House of Commons and this House have only to pass a Resolution that a certain thing must be done and then it will be done. I am afraid it is not so easy as that. If a debtor in this country will not pay his debts you can put in a bailiff, but it would be very difficult to send a number of bailiffs to Russia.
LORD MOUNT TEMPLE: If the noble Viscount will allow me to interrupt him, may I say that I was not referring to the debts but to diplomatic recognition? I said that if the two Houses decided that they wished the Ambassadors withdrawn that could be done.
VISCOUNT SNOWDEN: I am sorry if I associated that observation of the noble Lord with his remarks about debts. I thought he had made it in relation to debts. The Government, as your Lordships know, have for the time being stopped conversations with the Russians in regard to those debts because we found it quite impossible to get on. I frankly
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confess to your Lordships that at the moment I do not see what we could do, but nobody would be more grateful than I should be if some practical suggestion could be made for ensuring that the Russians would honour at least a considerable part of their obligations in this matter.
I have done my best, my Lords, to deal with all the points raised in the course of the discussion, and in conclusion I just want to repeat what I have already said, that the policy of the Government in regard to trade relations is that we are not going to commit ourselves to any reckless policy. If by a safe policy we can ensure an advantage to the trade of this country then we will continue that policy. Negotiations in regard to the extent of the credits are being conducted, as I said, at the present time. I hope that this explanation will be satisfactory to your Lordships and that you will trust the Government to do the right thing and the safe thing and the thing which will be of advantage to this country, and that therefore the noble Lord will not press his Motion to a Division.
LORD LLOYD: My Lords, I must first of all thank the noble Viscount who has just sat down for giving us so ample and so interesting a reply to the questions which noble Lords have put to him. Glad as I was to hear his reply, I still have a lingering regret that the noble and learned Viscount the Leader of the House was not able to give us the benefit of his views on this matter. It showed a diffidence and a modesty which I hope he will overcome when we advance other Motions on other occasions. I do not wish to follow the noble Viscount in his rather delicate distinction between money lent to Russia and money lent to people who trade with Russia. It rather leads me to take the view that the noble Lord, Lord Lovat's supposition about the Front Bench being occupied by business men was a little more fanciful than I thought at the time.
I should like, if I may, to take the opportunity of referring very briefly to two replies made by the noble Viscount. He sounded rather hopeful about the lack of world activity on the part of the Bolsheviks against us. I think he was right in saying that it is less than it was at one period, but if he thinks it in any

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way insignificant or that it has shrunken to any great degree I can assure him that he is very much mistaken. He said that I did not give him any recent instances of that activity. There are good reasons why I did not do so, but if he wants them I can give him one or two and I can direct him where to get others. May I remind him of the General Strike of 1926? That, of course, is an old one. That strike was largely due to Communist inspiration and I have a quotation from the late Lord Balfour, which I did not use, pointing out that that was the case. I might remind him also that quite recently, within the last two or three months, the publisher of the Bolshevist daily newspaper in London, which preaches sedition and wages propaganda against us, was sentenced to three years imprisonment. That happened only about January. I do not know whether the noble Viscount would like me to give him other instances.
VISCOUNT SNOWMEN: I would like better ones than that.
LORD LLOYD: I will gladly supply the noble Viscount with any quantity of very important ones and direct him where to look for others if he will do me the honour of speaking to me afterwards. I will only say now that when I left the Middle East there were ample evidences of the preaching of sedition and disaffection up and down the country by Bolsheviks.
VISCOUNT SNOWDEN: That was several years ago.
LORD LLOYD: Oh, no. I only left in 1929. I should have thought the noble Viscount might have remembered when I left Egypt. But let that pass. I do not want to show a captious spirit. There is one point on which I entirely agree with the noble Viscount. I agree with what he said as regards frozen ports rather than with what was said by the noble Lord, Lord Lovat. If he thinks the matter over, however, he might remember that one explanation of the lower imports in January was the failure of the wheat crop and consequently of exports of wheat about that time. Therefore I do not think he can attach too much hope of improvement in the balance of trade for that reason, though I very much hope
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it will come. If he asks me definitely, as he did ask, whether I want to see credits stopped and men thrown out of work in consequence, my answer is that he must not assume that if credits are stopped there will be a single man thrown out of work. I tried to show from my American illustration, which he did not attempt to challenge, that with the definite stopping of credits trade will be balanced.
I do not want to detain your Lordships longer. I can only say that I am very grateful to the noble Viscount for making two very important statements. I venture to think that this debate was worth while to elicit those statements. We have heard that strong representations are being made to the Soviet about the balance of trade. We are grateful to the Government for that. It is the best piece of news we have heard for a long time in regard to Russia. We have also heard the very important statement that he is looking into the question of credits from the purely business point of view, and not, I am glad to say, from the political point of view. I think those are two very satisfactory statements. May I venture to express the hope that the noble Viscount will not weary in well doing, because there is a great deal more to do in reference to the Russian question before we have finished with it? In view of the reply which has been made I shall ask permission to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

WELWYN GARDEN CITY URBAN DISTRICT COUNCIL BILL. [H.L.]
Report from the Select Committee, That the Committee had not proceeded with the consideration of the Bill, the opposition thereto having been withdrawn: Read, and ordered to lie on the Table: The Orders made on the 3rd and the 16th of March last discharged, and Bill committed.

LAW OF PROPERTY (ENTAILED INTERESTS) BILL. [H.L.]
Order for the Second Reading discharged.
House adjourned at eight minutes past six o'clock.