HL Deb 02 May 1933 vol 87 cc649-76

LORD MOUNT TEMPLErose to ask His Majesty's Government whether they can now state what policy they intend to pursue generally in their relations with the Government of the Soviet Union of Russia, with special reference to diplomatic relations, trade, debts, export credits, the Lena Goldfields arbitral award, and the treatment of British subjects in that country; and to move for Papers.

The noble Lord said: My Lords, last week your Lordships had a very interesting debate upon the fate of the six British engineers who were arrested in Moscow, and the overwhelming majority of your Lordships welcomed the stimulating policy adopted by His Majesty's Government, and set the seal of their approval upon their action. Unfortunately, there are still two British engineers in prison in Moscow, but those best able to judge are convinced that not many weeks will pass before they are released and we shall have the whole six of them safe in this country. If this Government, and any following Government, will pursue a stimulating policy, and not continue, as in the past, to go in for plaintive entreaty, I feel sure that it will be far safer for British subjects to Barry on business in Moscow, to reside there and to work there, than it has been at any time since the Revolution.

And why? Because the Russian Government, and especially the head of it, Stalin, seem entirely to have misunderstood the mentality of the British people. Stalin no doubt thought: "I see great discontent arising in my country at the failure of the five-year plan. I must do something to assuage the unrest in my own country. I must find some scapegoat for the failure of Bolshevism and Socialism. Let me therefore arrest cer- tain engineers connected with the Metropolitan-Vickers Company; let me associate with them a certain number of Russian subjects who are their fellow employees; let me stage a trial; let me shoot the Russians and condemn the Englishmen to long terms of imprisonment. What will happen? My prestige will be re-established in Russia, and the British people—and, above all, the British Government—will pay no attention to these happenings in Russia." I am rather afraid that the past action of successive British Governments may have afforded some ground for the adoption of that view by Stalin. But if he had studied the mentality of the British people he would have realised that, though the British people are long suffering, though the British taxpayer is always supposed, and himself expects, to find all the money necessary to meet troubles, internal and external, the one thing that the British people will not stand is an injustice done to any of their nationals, however humble their station. Therefore he miscalculated when he imagined that because these British engineers of humble origin, of no social rank, were almost banished from their own country when they were arrested, Englishmen would stand for trouble of that sort. And, therefore, whatever else the present Government may do as regards Russia in the future, I do urge them not to abandon their present moderate and patriotic attitude and go back to the policy of the past, the policy of simply writing Despatches and doing nothing else.

There are, I am sorry to say, many outstanding questions between the British Government and the Government of Russia. The one which I think has created most feeling in this country and has given the most trouble to successive Governments is that of Bolshevist propaganda in this country and throughout the British Empire. That question has not, in my humble opinion, been handled well by any Government, except possibly the Conservative Government of 1927, and there were rather regrettable features even then connected with the Arcos raid. But for the last thirteen years we have inserted in successive trade agreements, at the instance of the British Government, a clause which forbids the Bolshevist Government to carry on any propaganda in this country or inside the Empire which would be harmful to the present social system or subversive of the present law and the Monarchy as we know it. This prohibition has never been observed. Successive Foreign Secretaries, from Lord Curzon onwards, have written innumerable Despatches protesting against the state of things. The Soviet Government have paid not the slightest attention to any of those protests, and we have really become the laughing stock of the world, because it is impossible for any self-respecting Foreign Secretary to go on writing Despatches and receiving simply negative answers or no answers at all.

Therefore, may I put forward with great humility as a suggestion to His Majesty's Government that if, and when, they do sign a new trade agreement with Russia, they should eliminate this clause altogether? It is no use putting such a clause into any agreement unless you are able to enforce it, and I submit that we are not able to enforce this clause except at the cost of a serious breach with Russia, which apparently no Government, except the one of 1927, has thought fit to incur. It would not prevent us at all from pursuing with the utmost rigour of the law any Britisher or foreigner engaged in propaganda in this country, and whom we could prove to be engaged in propaganda, but to put it in as an undertaking on the part of a foreign Government seems to me to be useless and unnecessary.

There are many other outstanding problems between Russia and this country besides that of propaganda. There are diplomatic relations, the Lena Goldfields arbitral award, the trade agreement, and export credits and debts. Now, may I suggest, having done everything possible to protect our nationals in Russia—and I gladly bear testimony that I think the present Government have done that, and done it extremely well—that we should approach these subjects as far as possible without prejudice so that a fair settlement may be arrived at; but you must remember that this Metropolitan-Vickers incident has rather altered one's point of view as regards Russia and this country in several respects. I submit that the policy of negotiations, backed only by persuasion, has been entirely ineffective. The line always taken has been that of the Foreign Secretary writing to the Soviet Foreign Minister: "You really must do something to fulfil your promises and legal obligations. If you don't, I shall write a cross Despatch, and publish it too." As your Lordships know, that was the actual policy followed not long ago by a Foreign Minister, and we have therefore become the laughing stock of the world as far as persuasiveness is concerned. On the other hand, reasonable firmness has been most effective in the case of the arrested engineers, for undoubtedly, if the Government had not taken very strong action, practically all those Russians arrested with the engineers would have been condemned to death, and the engineers themselves would have been condemned to long terms of imprisonment. Let us, therefore, adopt this policy of reasonable firmness.

Let me pause for a moment to consider the question of diplomatic relations, which is very important. In my view, with a country like Russia, there are two possible plans to pursue, and one impossible. The last Government and the present Government up to now have adopted the impossible. What did they do? They treated Russia as if she were a civilised country, and she is not a civilised country—that is the whole trouble. You cannot treat Russia as if she were a country like France. You must realise that underneath the very thin veneer of civilisation there is the Tartar and the savage. I submit that the "all-in" policy of complete recognition and no safeguards has been a complete failure. Our protests have been ignored, we have been robbed right and left, and our prestige has disappeared. May I put forward what in my opinion are the two possible policies to pursue? There is official recognition on terms, and there is no official recognition at all. No official recognition has been the policy of the United States from the time of President Wilson onwards. It certainly appears to have been successful, at any rate as far as the trade of the United States with Russia is concerned, because their trade is infinitely larger, and on an infinitely more favourable basis, than our trade with Soviet Russia. One can understand a great nation like the United States saying: "Our Government will have nothing to do with a, tyrannical oligarchy which bans the Bible, seeks to destroy capitalistic society, has abolished all private trade, has suppressed all individual opportunity, and whose jurisprudence is a travesty of justice." I can understand, though we need not necessarily follow it, a great nation adopting that policy and continuing that policy for a term of years.

Then there is the other alternative which has its attractions—namely, the recognition of the Soviet Government on terms, and I stress "recognition on terms." Now, may I, with the greatest respect and humility, put forward the terms on which I would recognise the Soviet Government? I think the terms should be that no Ambassador should be exchanged or diplomatic relations entered into until a settlement has been reached about the Lena Goldfields arbitral award and the money owing by Russia to this country, both money owing to us as a 'State and money owing to our nationals in this country. Further, a condition precedent to diplomatic relations must be some payment under the settlement. How is it we have got into this very difficult and unsatisfactory state? I submit that the first great error—a blundering mistake—was made by the first Socialist Government. The first Socialist Government started, if I may say so with respect to my friends on the Opposition Front Bench, on right lines. They said: "We will not have any diplomatic recognition, we will not send an Ambassador to Moscow, we will not receive an Ambassador here in London, until some settlement has been arrived at in regard to debts." We were in a very strong position. My noble friend Lord Ponsonby shakes his head—


I do not wish to interrupt the noble Lord, but there was recognition of the Russian Government in the first fortnight after the Socialist Government came in. There was no exchange of Ambassadors, but there was a Chargé d' Affaires.


That was the mistake. It was a mistake to have official recognition of the Russian Government before you had some settlement as to the debts, because directly they got recognition they simply played with us so far as negotiations were concerned. The negotiations went on for two years, and it was not until Sir John Simon and the present Government came in that these lengthy negotiations—the Soviet Government never meaning to pay at all—were brought to an end. If, on the other hand, you had said: "You have got to settle debts and then you can have diplomatic recognition," we should be in a very much stronger position than we are in to-day. The next outstanding difficulty between Russia and this country is the Lena Goldfields arbitral award. I see the noble Lord, Lord Marley, in his place. He spoke last November, if I remember rightly, on this particular case and no doubt we shall hear something from him on this point this afternoon. Here I think we have a case so strong against the Russian Government that I will not apologise for a second in bringing it up again for the attention of your Lordships. All the other cases of debts owing to this country may be got out of by the Soviet Government saying, "These are Czarist debts." Why, because you change your form of Government, a nation should be allowed to repudiate its public debts is something I do not understand. We might just as well get rid of all our public debts here by starting a Republic and saying: "The public debt was incurred under the Monarchy." Obviously it would be absurd.

You can say there are difficulties about private debts because no judicial tribunal, at any rate as yet, has assessed the amount of the private debts, but the Lena Company's award stands on an entirely different footing, because the amount of money which the Soviet Government is held to owe the Lena Goldfields has been settled by an independent tribunal, and by a tribunal agreed to by the Soviet Government. What is the history of the case in three or four sentences? In 1925 the Soviet Government granted a concession to the Lena Goldfields Company, a company registered in this country but which has large foreign holdings. Under the terms of the concession agreement all disputes were to be submitted to an Arbitration Court. This was agreed to by the Soviet Government. All disputes were to be submitted to an Arbitration Court and the Arbitration Court, appointed with the full concurrence of the Soviet Government, consisted of Professor Stutzer, of Freiburg Mining Academy, who was elected by both parties as super-arbitrator, and Mr. Leslie Scott, K.C., who was nominated by the Lena Goldfields Company.

The Court sat for three weeks, so that it did not give small and meagre attention to the case. Having sat for no less than three weeks, the Court found that the company had been prevented by the Soviet Government from carrying out their concession agreement. What did the Court do? The Court directed the Soviet Government to pay the Lena Company £12,965,000 with interest. And what were the reasons they gave for this finding? They found that the Soviets incited trade unions to intimidate the company's workmen, that the Ogpu made raids on the company's offices and carried off books and documents, and finally arrested some of the company's employees, making it impossible for the company to carry on. In fact the Court found, what we all know, that when a foreign concession becomes sufficiently valuable the Soviet Government then proceeds to make it impossible for the company to carry on its business, and seizes the company's goods on the ground that the company have not carried out their concession. To sum up this case. Here you have a country, Russia, which gives a concession to a foreign company. It agrees with that foreign company that any matter of dispute shall not only go to arbitration, but agrees also to the particular composition of the Court and its powers, and when the company goes to that Arbitration Court and gets an award for a large sum of money, then the Soviet refuses to pay a single penny. It seems to me that in this case, whatever else His Majesty's Government may do, they must include the carrying out of this award as one of the first things which they have to insist on with the Soviet Government.

The next problem is the question of the debts owing by the Soviet Government to the Government of this country—that is to say, the taxpayers of this country—and to private individuals. As far as the money owing to the Government is concerned, that has been officially stated in another place as amounting to a few million pounds over a thousand million pounds. They owe us over £1,000,000,000 and we, the taxpayers of this country, have the privilege of paying every year £45,000,000, the interest on that money, which we should not have to pay if the Soviet Government had carried out its monetary obligations. Then there is the other problem as regards debt—namely, the amount of money which the Soviet Government owes to private individuals in this country. When the Soviets got into power they seized all the factories, all the goods, all the land and all the buildings belonging to Britishers, and others indeed, in that country, and the claims total anything from £250,000,000 to £350,000,000. Many individuals and companies have become bankrupt owing to this unjustifiable act of robbery on the part of the Soviet Government. I hope and trust that when this Metropolitan-Vickers incident is liquidated and closed and new negotiations are entered into, His Majesty's Government will not forget those thousands of wretched individuals, both British and foreigners, who have been ruined by this robbery on the part of the Soviet Government. It may be said: "Well, what is to happen? The Soviet Government have practically no money available to send abroad." That, I think, is true, and I believe it is a fact that they have been obliged this year to cut down their purchases abroad from £90,000,000 to £58,000,000. That no doubt will be taken into account in coming to some arrangement. But I attach more importance to the principle of making some payment as recognition rather than to the actual amount for a year or two, so that we could at any rate feel we had got back some of the money they owe to us.

May I sum up? I will not detain your Lordships more than another five minutes. I urge that the Government should give no diplomatic recognition till some payments are made on account of debt. You have to provide in case payments should cease after the first one or two instalments, and, if payments cease, I urge that diplomatic recognition and any trade agreement in existence should be suspended. We should then, till payment was resumed, bring pressure to bear by treating Russian exports to this country as we are now treating Irish exports to this country. His Majesty's Government cannot say that is an impossible or a wrong suggestion, because they themselves have brought in this method of treating Irish imports. I submit that the Russians could not very long stand up against this total prohibition. During the last two years, that is 1931 and 1932, we bought from Russia £52,000,000 worth of goods, whereas they only bought from us £,16,500,000—that is to say, three to one. We are in a very strong position, therefore, when any trade is interrupted between Russia and this country.

The next problem, the last but one, is a trade agreement. I confess that I have changed my opinion. Perhaps it does not mutter, but I have changed my opinion as regards a trade agreement. Up to now I have been against any trade agreement, and rather favoured the policy of the United States of leaving it to private individuals to trade as best they can, and certainly, in the case of the United States, it has not been unsuccessful. But we are in a rather different position from the United States. If His Majesty's Government think it necessary to have a trade agreement with Russia, as we are now making trade agreements with the Argentine and Denmark, Germany and other countries, I do not think it is for those who are not in a position to have as much information as His Majesty's Government have to oppose them. What I do say is that if you are going to have trading arrangements with Russia and a Russian trade delegation here, do not give that delegation diplomatic immunity. There is no necessity for it. Diplomatic immunity is reserved for Ambassadors. I do not see why the Russian delegation, who I understand have been not inactive in bringing money here for political propaganda, should have that protection extended to them.

The last problem of all, one of very considerable importance, is that of export credits. I put it to His Majesty's Government, is it prudent to give export credits to stimulate trade with Russia? No one was more vehement in denouncing export credits than the leaders of the Conservative Party when the last Socialist Government was in office. My noble and learned friend Viscount Hailsham moved audiences to tears by his denunciation of export credits. Sir Philip Cunliffe-Lister and Mr. Baldwin denounced them up hill and down dale. What was wrong three years ago I should say, as far as principle is concerned, is wrong now. Indeed it is much more wrong now in view of the happenings in the Metropolitan-Vickers case. Mark you, my Lords, we have no inconsiderable sum of money at stake. Up to the end of May, 1932, the Export Credits Department had assumed liabilities for Russian trade up to £10,000,000. Last May the present National Government thought they would like to extend the export credits to Russia, and they granted a further sum of £1,600,000. That was only for short-term credit, I admit, but still they granted that extra credit. At the present moment the total export credits amount to £12,000,000, of which £5,000,000 has run off, leaving £7,000,000 outstanding.

Suppose the breach with Russia becomes a really serious breach, who has to find that £7,000,000? The British taxpayer. Export credits are all right so long as they run on, but directly there is trouble the person who has given the export credit finds himself in the position of having to find the money. At the present moment if we had a real breach with Russia the British taxpayer—he is always the patient ox—would have to find £7,000,000. What is done, is done, and you cannot change it, but I hope and trust that these export credits which are excellent when dealing with a civilised, reliable country, will not be given again by His Majesty's Government as far as Russia is concerned.

I apologise for having detained your Lordships so long on a subject which has been before you on previous occasions, but I consider it a matter of very great moment that the Government should decide as early as possible what is to be their general policy. I do not expect them to give any definite outline of their views to-day. Unhappily these two engineers are still in prison and one must be as careful as possible—I hope I have been—to say nothing to endanger them getting their liberty as soon as possible. But whatever is the policy of His Majesty's Government I do hope that it will be a stimulating policy, a patriotic policy, a definite policy, and that once and for all we shall have done with this crawling to Russia. We must remember that England with all her faults is far superior to Russia with all its vast territory. I beg to move for Papers.


My Lords, a number of points which should be considered by your Lordships' House arise in the other direction from the very moderate remarks which have fallen from the noble Lord. I say "moderate" because usually in your Lordships' House all references to Russia create such excitement that in the present case the noble Lord's remarks really are comparatively moderate. Of course they are, as usual, inaccurate. I do not mean inaccurate as far as the noble Lord is concerned, but inaccurate as references to Russia usually are. The noble Lord asked that the matter might be approached without prejudice and I venture to support his plea and to ask that the House will realise that there is another side to almost every point that he put before your Lordships. The noble Lord laid down certain conditions for diplomatic recognition. I should have thought that in the interest of the prosperity of the world recognition in any case is better than no diplomatic relationship. Surely for British nationals living in Russia it must be more satisfactory to have a British Ambassador and an Embassy than to be without recognition and to be in the position United States citizens are in at the present moment in the Soviet Union of being represented by, I think, Nicaragua or Ecuador or some other nation not usually considered of first-class rank. I cannot help thinking that it is essential for friendship that there should be knowledge and understanding, and if an Embassy carries out its tasks adequately it should prove a means of acquiring knowledge of what is going on in another country.

It is no good saying that we do not like the system of government in Russia and therefore we will not recognise it. I do not suppose we like the system of government in the United States, but we do not break off diplomatic relationship with the United States merely because we do not consider that a Republican system under which 125,000 posts change every time there is a change of President is a particularly good system. The noble Lord apparently prefers to consider expressions of hatred and expressions of dislike as a method of dealing with Russia, whom he characterises as a nation of savages. If he had a more adequate knowledge of the Russian nation he would surely realise that that is scarcely a moderate description. I do not remember many protests from him in another place against the recognition of Russia under the Czaristrégime. The Russian people have not changed in fifteen years. They are the same people that he now so cheerfully describes as savages. Yet I do not remember his protesting against recognition in those days. He then goes on to say that he only wants trade with Russia provided they recognise and pay their debts and provided they pay the arbitral award.


I apologise for interrupting the noble Lord, but I did not say that I did not want trade with Russia. I said trade agreements with Russia. Private trade could go on.


I accept naturally what the noble Lord says, but it is quite clear that adequate private trading cannot go on unless there is some form of trade agreement, and in fact the noble Lord recognises that. The noble Lord recognised that point when he said he had changed his opinion and was now in favour of a trade agreement in order that such trade might be carried on. If it makes no difference whether there is a trade agreement or not, why object to a trade agreement? Clearly a trade agreement is of value.

Let us first look for a moment at the Lena Goldfields award. The one-sided account of the Lena Arbitration Court should not be allowed to remain as an accurate description of what took place. Let me remind the noble Lord that the Lena Company got a concession about 1925 to work goldfields in Russia. For about two years they did carry out the terms of that concession, but about 1928 it was clear that they could not get any more money. They tried to raise more money in America and in this country and could not get enough to carry out the terms of the concession. They then had to borrow from the Russian Government something like £1,500,000—money which under the terms of the concession they had agreed to raise in other countries—in order to carry on the concession; and, finally it became clear they could not carry out the concession. Then, naturally, a number of disputes took place and it was agreed by the Russian Government, at the request of the Lena Company, to refer these disputes to the Arbitral Court to which the noble Lord has referred, so that the disputes could be settled and arrangements made to carry on the concession. That agreement was come to about April—


My information is that the Court to which the arbitration should go was agreed on when the concession was given, not in 1928.


That is just where the noble Lord is inaccurate. The Arbitral Court was set up for the specific purpose of deciding these disputes—as a matter of fact on February 12, 1930. That Court was set up, and the members of the Court agreed upon, during the week following the request by the Lena Company that these disputes should be referred to arbitration. I can assure the noble Lord that that is absolutely accurate.


Anyhow it was an agreed Court.


An agreed Court to decide whether the concession could be carried on. As he says Professor Stutzer—I think of the Freiburg Mining Academy—was agreed upon as the Chairman or super-arbitrator and the two other members of the Court were Sir Leslie Scott, representing the Lena Company, and M. Tchlenoff, representing the Soviet Government. About a week before that Court actually sat—and this is an interesting fact which has not been mentioned—the Lena Company decided not to continue to work the concession at all, withdrew their engineers from the ground where the concession was being worked, revoked the power of attorney of their representatives, and notified the Russian Government that in no circumstances would they continue to work the concession. As a consequence the Russian Government decided that a Court which had been set up as anad hocCourt to decide disputes which had arisen in working the concession was not a suitable court to decide the ending of the concession and demanded that another and special Court should be set up for the purpose. Those are the facts of the position.

They notified the Lena Company and the Chairman of their decision a week before the Court sat, and the Lena Company from London wired "Refuse to accept the position taken up by the Russian Government," and said that Sir Leslie Scott would leave for Berlin the day following the receipt of the telegram. The Russian Government refused to send their representative to the Court and notified the super-arbitrator that they did not recognise the Court for this pur- pose of deciding, in accordance with the terms of the concession, the terms under which the concession was to be wound up. The result was that the Court sat with no representative of the Russian Government at all and found, as the noble Lord rightly pointed out, nearly £13,000,000 as the sum due for compensation.

But this matter has been dealt with more recently by the British Government, and it is a great pity that the noble Lord omitted to inform the House that in the House of Commons on March 13 of this year the present Government, speaking through Mr. Baldwin, gave a description of the present position and pointed out that despite the award of the Arbitration Court, to use Mr. Baldwin's own words, the British Ambassador at Moscow was authorised to discuss unofficially with the then President of the Chief Concessions Committee, M. Kamenev, the prospects of a settlement [of the Lena Goldfields Award] at a sum of £3,500,000"— and these words are important— representing approximately the proved capital losses of the company after taking into account all counter-claims put forward on behalf of the committee. In other words, this £13,000,000, as I pointed out last November, is an absurd inflation of all possible losses, and the present Government, through Mr. Baldwin, have admitted that the capital losses are at a maximum no more than £3,500,000.


Was that offered by the Soviet Government?


They began by an offer of £800,000 subsequently raised to £1,000,000; but the actual money raised on behalf of the company did not approach the £3,500,000. As a matter of fact they raised £750,000 on the 8 per cent. original issue; £646,000 owing to German creditors for machinery supplied and not paid for; and £270,000 owing to British companies for machinery supplied and not paid for, making a total of £1,660,000. The balance was supplied by the Soviet Government in the form of some 30,000,000 roubles to help the company to carry out the terms of its concession. The fact of the matter is that the whole of this is hopelessly exaggerated. An award was come to by a Court deliberately not recognised by one side the week before it sat, and constituted for one purpose and then used for a new and entirely different purpose. Naturally the super-arbitrator of that Court, a mining engineer, is not a man suitable to deal with an immense financial problem such as is involved in winding up a concession. This Arbitral Court reported with no representatives on one side giving evidence, and in consequence, I maintain, and I am supported by Mr. Baldwin and the present Government in this matter, that the award was hopelessly inflated and ought not to stand in the way of further trade between this country and Russia.


I hope the noble Lord will forgive me for one moment, but he must not misrepresent the Government by suggesting that they take the view that this is a hopelessly inflated award. What Mr. Baldwin said was that the proved capital loss was £3,500,000, but that is not the measure of damage for repudiation of the contract at all. The Government have never said that the award arrived at by an independent tribunal was one which ought to be challenged by the Government or brought into doubt by them. The proved capital loss is a totally different matter.


Of course, the noble Viscount represents perfectly accurately the position taken up by the Government. What I was pointing out is that the Government have offered to accept £3,500,000 as a basis for settling the claim, which I suggest is equivalent to saying that the other amount is inflated. I may be wrong, and the noble Viscount does not agree with me, but I am merely stating what would appear to the ordinary observer—and I am only putting myself forward as an ordinary observer—with regard to this settlement.

The next point which the noble Lord raised is the question of debts. I am not going to say more than this about debts, that while it is true that the debts to this country may amount to over £1,000,000,000, the Russian Government at the Geneva Conference put forward a counter-claim on account of damages inflicted by this country and others during the intervention period. Some £200,000,000 of this country's money was spent on entirely unjustifiable attacks upon the Soviet Union during that period, and upon that money the taxpayers are now paying about £10,000,000 a year in taxes, which would not have to be paid if the Government of the day had had the sense to see that it was entirely unjustifiable to interfere by force with the government of another country. That £10,000,000 a year represents sixpence, and possibly more, on the Income Tax, and while it was paid with enjoyment possibly by those who approved of the intervention, their sons possibly do not enjoy it so much.

I am, however, not concerned about that. What I am concerned about is what is the matter to-day. To-day we have got in Russia one of the few expanding markets in the world. We have got a Government spending immense sums of money in building large factories and workshops, developing agriculture and raising the standard of living of its people. There are immense opportunities for trade, and yet the noble Lord appears not to want this trade unless certain fantastic demands which he makes are agreed upon between the two Governments. I say that it is entirely wrong to cut ourselves off from this expanding market and to hand over the benefits of that trade to other countries. At the present moment the action of this Government has resulted in trade which was coming to this country being transferred to other countries. France has benefited enormously. I am very glad that she should benefit, but I do not see why she should benefit at our expense, as the noble Lord appears to desire. Italy, by her remarkable credit proposals, has benefited at our expense. Japan is getting goods from Russia which she needs and which she is getting extremely cheaply, and is giving in exchange her produce. As to the United States, I say at once that the noble Lord is entirely inaccurate when he says that Russia's trade with the United States is infinitely greater than with the United Kingdom. On the contrary, the Soviet purchases of goods are much higher in this country than in the United States.


I said the United States sold to Soviet Russia more goods than we did.


I venture to say that the words which the noble Lord used were that the trade with the United States exceeded greatly that with the United Kingdom, and I am showing that this country sells more goods to Russia than does the United States. Let us look at the latest figures. In 1932 Great Britain sold 46,800,000 dollars worth of goods to the Soviet Union. In the same year the United States sold only 16,000,000 dollars worth. Therefore in 1932 our sales were three times as large. It is perfectly true that three years ago—and the noble Lord's figures are based upon out-of-date facts—the United States were selling far more than we were, but the mere fact that that is so proves the madness of the attitude of the Government taken up in this connection in the present position. Let me remind the House what is the present position. British exports to Russia, which were £11,000,000 in 1927 and of course went right down when we had the Arcos raid in 1923, have been gradually rising, year by year, until 1932, when we sold £10,500,000 worth of goods. The noble Lord said the balance of trade is against us. That is true but this adverse balance of trade has been getting less every year. It was as much as £20,000,000 in 1929, and £25,000,000 in 1930, but ever since then it has been getting less, and in 1932 it was only £9,000,000. The noble Lord omitted to say that we were selling year by year more goods to Russia and having an improving balance of trade each year since 1929 and 1930. We did not stop trade with the United States because we had an adverse balance of hundreds of millions of pounds. We have an adverse balance with many countries. Are we to stop trading with them because of that? This argument about the adverse balance of trade is just sheer rot and nonsense, and the sooner it is realised that you can never have a balance of trade with every country the better. You yen only have it when all the nations of the world lie on their backs, do no work and have no trade with anybody.

The position is really absurd that we should cut ourselves off from this expanding market, and that the noble Lord should be objecting to export credits which have brought a profit to the taxpayers of this country of more than a million pounds in the last few years. It is absurd that we should cut ourselves off from all means of participating in this trade. As Russia expands more and more her tools and machinery will come from the United States, Germany and elsewhere, and we shall be the one country which is left out. The Government and the noble Lord may not care about the result of this embargo, but the result of this embargo which the noble Lord wants to see continued until every one of his fantastic conditions is accepted, is to increase the unemployment of this country. It may not be important to him or the present Government, but their action causes extra unemployment to sixty thousand British workers at the very least. With their families that means something like 200,000 British men, women and children who are suffering by this action of the Government. In addition to that there is a rise in the cost of living. It is estimated that the extra cost of timber alone used in the houses that the Government are supposed to be building to deal with the slums will be £15 per house at a very moderate estimate.

The noble Lord has laid down suggestions: I do not know what the Government are going to say. So far the Government's dealing with this matter has been, in my opinion, hopeless. It has done an immense amount of harm, and I am very glad that it should be quite clear that I personally am not in agreement with the activities of the Government in this matter. I personally am divided entirely from them on the line they have taken: I remember reading once a description of a government which compared them to a row of extinct volcanoes. The present Government are not a row of extinct volcanoes. They are a row of erupting volcanoes, but they are erupting always at the wrong end.


My Lords, the noble Lord who has just sat down criticised my noble friend Lord Mount Temple for speaking in an unfriendly manner of the Russian nation. I do not believe for a moment that Lord Mount Temple intended to do so, but may I explain beforehand that the strictures which I am going to pass are not strictures upon the Russian nation, mainly composed of vast dumb, suffering, masses, whose real wishes we cannot know, but on that very different and distinct entity the Russian Soviet Government. I happen lately to have been thrown into a position which associates me closely with exiled communities of Russian Christians. I am going to call your Lordships' atten- tion to the grinding system of repression which operates in Russia against every kind of religion and against all freedom of thought. I do so because in this debate on our general relations with Russia it would be unseemly that there should be no mention of such a subject, which goes really to the root of the relations between our people and the Russian Government. It would be not merely unseemly, it would be misleading. Sooner or later English people always revolt against any undue complacency towards a Government which stands for oppression. Quite lately certain revolting news, disgusting news, which came to us from Germany created at once feelings throughout this country to which in another place Mr. Attlee and Sir Austen Chamberlain both gave strong and by no means exaggerated expression. I refer to that merely for the sake of remarking that in the presence of great public wrong and oppression English feeling is perfectly impartial as between different nations, different classes, and different creeds.

I need not take up your Lordships' attention with much detail of the system in Russia to which I have referred. A year or two ago it was dealt with fully by the most rev. Primate the Archbishop of Canterbury in a statement of very great moderation and very great power. Just shortly, the position then described to us was this: For avowed motives of prudence a much diminished, but very considerable, number of churches were open and are open, and in those churches a prescribed ritual may be performed. Every other activity naturally associated with churches, save that prescribed ritual, is strictly forbidden by a vigorously enforced law. For example, and above all, while a singularly intolerant atheism is being inculcated by the schools and by every other influence which Government can bring to bear, the teaching of any religion to a group of children exceeding—I forget whether it is four or six—is a criminal offence. That is one example. Meanwhile the life of every minister of any religion is by an extraordinarily mean and petty civil disability made as poor and miserable as may be, and those ministers and any prominent persons among their followers live continuously exposed to those periodic outbreaks of ferocity which visit impartially professors of religion, farmers who happen to prosper, engineers in the employ of Government, and apparently harmless men of science and of learning.

There has been no change, certainly no material change, since the most rev. Primate laid these matters before us, since other leaders of other churches in this country did the same outside these walls, and since His Holiness the Pope, speaking with special and peculiar information on this subject which he personally as well as officially possesses, put substantially the same facts before the whole world. There has been no great change, nor can there be any intelligent doubt of the truth of the case that has been made, because it rests upon the published laws, upon the official utterances and speeches of leaders of the Russian Government, and upon constant and exultant confession of what happens under those laws, which may be read in their own authorised newspapers. Here we have these things sometimes ignorantly or fatuously questioned: there in Russia remember that they are avowed exultantly and triumphantly.

Not to labour that further, I wish as briefly as I can to ask how this bears upon the general question before us. What I have been speaking of is not some temporary abuse or aberration of power: it is something which belongs to the fundamental principle of the Soviet State. The economic principle upon which, as we all know, they stand, and as to which we English people are very little concerned, is by some peculiar process of thought inextricably tied up with a dogmatic atheism, held with quite extraordinary fanaticism. That is not all. In our attitude towards most countries in the world we are apt to assume certain principles as common ground between us. We are apt to look for, in other people, the operation of some sentiment at least of human compassion, of some sense of justice due to man as man. We are also accustomed to look in this modern world for some sense of freedom of the mind, the freedom with which human thought ought to be exercised. My Lords, each and all of those principles are in Russia not merely transgressed in the practice of government—they are expressly, and with perfect frankness, denied in the official utterances of the highest authorities in the State.

It really comes to this, that we never can, in our dealings with Russia, lose sight of the fact that what we call the Russian Government is not are organ more or less adequately representing the public life of the nation. It is the organ of a creed and of a cause. That creed it is engaged in enforcing with patiently-exercised, systematic cruelty upon the population subject to it; and that cause, wherever occasion offers and by every means available, it is engaged in propagating in the other countries of the world. That last consideration is one of menace which probably worries us in this country very little indeed so far as we are concerned. It is a very different matter to smaller countries, closer neighbours of Russia, which are fellow-members with us in the League of Nations. Whatever relations in this or in any other respect our Government may find it well to have with the Government of Russia, do not let us ever assume that the Russian Government is anything else than what it proclaims itself to be. You may be sure that not one of the things that I have said by way of what must sound a grievous accusation against the Russian Government this afternoon will ever be denied in any utterance of any person in authority in Russia which is intended for the consumption of his own supporters there.

I am not going to ask, nor should I expect from the Government, any precise definition of their policy and of the steps they are likely or may feel called upon to take in the very difficult situation which exists between any British Government and the Government of Russia. The relation between the two Governments is, in itself, something quite anomalous, far removed from the, possibility of war on the one hand, equally far removed from any possibility of a stable and cordial friendship the other hand. But there is this to be said, I think, if your Lordships will pardon the expression of a very general principle, that the policy which every British Government ever since the War has avowedly and sincerely pursued has been that of binding together some sort of family of nations in which not merely formal but real friendship may prevail, and in which the interests and the welfare of mankind at large will count for something. We cannot think, we must not think, that by any possibility the Russian Government as at present constituted, resting on its present principles, can ever enter into that family circle.

I have very little more to add. It is very little that we can possibly do to lighten the burden of oppression which rests upon countless numbers of people in Russia, but let that little which from time to time is possible be done. There is, first, the question of slave labour, or, rather, of something worse than slave labour, of labour vindictively and cruelly enforced for the purpose of persecution, whether against religious persons or against independent farmers or against anyone else. Whatever our trade relations may be, nothing can possibly justify us as a people in continuing to buy any class of goods which we are reasonably sure is the product of that sort of labour. Secondly I used to think that no protest which could be made here by public demonstrations or by the Government would have any effect on this oppression in Russia; but I have to say that this is not the opinion held by such Russians in this country or in France as I have been able to talk to about it. They definitely believe that manifestations of public opinion here have led at any rate to some slight temporary mitigation of some of the odious incidents of this tyranny, and they still more strongly believe that representations which they think our Government, has on one or more occasions made to the Russian Government have had a very real effect in individual cases in lightening the hardships of which I have spoken.

Meanwhile, whatever can actually be done to help the oppressed, I think those who have played the part of the advocates and patrons of the Soviet Government in this country must be beginning to be aware that they render themselves accomplices not merely in many crimes but in systematic and continued oppression. It goes without saying, I think, that on the part of our Government special concessions and favours granted to the Government whose principles and whose actions are such as I have indicated do very great wrong, and that every mark of favour that they receive from us, whether from the Government or from masses of the public, does help to strengthen the hands of the rulers of Russia, does encourage them, and does strengthen their hold upon their immediate following and thereby tightens their grip upon the whole of the people. Just lately it has been very much the fashion, I should suppose chiefly among that class of persons who think that a hard heart is some compensation for a soft head, to talk much about the promotion of cultural relations between this country and Soviet Russia. There have been many manifestations in this or that section of the public, or on the part of this or that more or less well-known man, of great friendly and encouraging interest in the Soviet Government and its wonderful works and ways. All that, probably more than those responsible for it imagine, is helping in a considerable degree to fasten firmly the yoke of tyranny upon a most unhappy nation.


My Lords, my noble friend who has just sat down was, I am glad to say, clear that he did not expect the Government to be in a position at this moment to be able to give a very definite expression of its views, and my noble friend who moved the Motion also realised that this was not a time when we could lay clown the future policy of this country in regard to the Union of Soviet Socialist Republics. My noble friend Lord Charnwood said that the Government in Russia was one that was entirely different from that in any other country, and that they differ also in regard to their trade relationships. That is a statement which I think even the noble Lord, Lord Marley, would not dare to dispute, because it is a claim which Russia herself boasts of frequently. As regards the remainder of the noble Lord, Lord Marley's remarks, I can only imagine that he is looked upon in Russia as one of the best advocates that that country has ever had. At any rate we know where his spiritual home now is.

Your Lordships are all aware that relations between His Majesty's Government and the Soviet Union have recently entered a phase of some difficulty as the result of the arrest and prosecution of six employees of the firm of Metropolitan-Vickers, two of whom are still in prison in Moscow. The action taken by His Majesty's Government in regard to this case has already been fully explained by the Secretary of State for Foreign Affairs in another place and to your Lordships by the Leader of this House. Your Lordships will, of course, agree that I ought to be particularly careful in anything I say to your Lordships this afternoon because every one of us desires to see those last two British engineers brought back in safety to this country. I agree with the noble Lord, Lord Marley, in one remark he made, and I think in one only, and that is in regard to the preservation, at any rate for the time being, of diplomatic relations. I think your Lord ships will all agree that to the British subjects imprisoned in Russia it is of great advantage that there should be a Chargé d' Affaires present there to see that they are still being properly treated, and to endeavour, so far as possible, to influence the Soviet authorities to grant their early release. In regard to other British subjects in Russia, too, I think they would agree with the noble Lord, Lord Marley, that there are advantages in maintaining diplomatic relationships because, at any rate, they have some one they can go to if they happen to get into difficulties such as those that have occurred in the case of the six British engineers.

It is obviously unnecessary for me to do more than observe, with reference to trade relationships between His Majesty's Government and the Soviet Government, that the policy of His Majesty's Government in regard to the case of the six engineers involved among other things the suspension of negotiations with Soviet representatives for the conclusion of a fresh Anglo-Soviet trade agreement to replace the instrument which expired on the 17th of last month. I think the noble Lord, Lord Marley, said that if we had no trade agreement we should, of course, have no private trade.


I did not say no private trade.


I understood the noble Lord to say, at any rate, very little private trade. He then went on to claim that foreign countries have got a very large trade and a largely increasing trade with the Soviet Union. But at least one of those countries which the noble Lord quoted—namely, the United States—never has had a trade agreement, and the noble Lord claims that their trade is increasing very largely. I think his own statement proves that no trading agreement is necessary in order to do private trade.


Perhaps the noble Earl will permit me to say that what I said was that trade was decreasing, and that the only reason the United States had a large trade with Russia was that, because of the immense wealth of such organisations as the General Electric Company, they were able to give credits for four or five years. But since the depression in the United States those credits have ceased, and actually the Soviet purchases from the United States have fallen from something like 46,000,000 dollars in 1930 to only 16,718,000 dollars in 1932.


That really enters into another part of the argument. I was merely at the moment dealing with the contention that if you had no trading agreement you could have no private trade or very little. As regards increases or decreases of the trade of all other countries with the Union of Soviet Socialist Republics, I should like to point out, when the noble Lord says this is a largely increasing market, that our recent information is that it is exactly the opposite. It is a decreasing market for the reason that the Soviet Government feel that it is necessary to reduce to the smallest possible amount the trade that is coming into their country, and, there-lore, if the noble Lord will examine the figures, I think he will find that the import trade into Russia in recent months has fallen very materially indeed, and that it is not an increasing market but a decreasing market. As regards the three countries he quoted—France, Italy and Japan—the amount that they actually import into Russia is such a very small amount compared with the total imports that it is worth very little consideration indeed.

As regards the other important questions mentioned by my noble friend Lord Mount Temple, those of debts and the Lena Goldfields arbitral award, I need hardly say that these matters continue to engage the attention of the competent departments of his Majesty's Government and that the endeavours which have previously been made to arrive at a satisfactory settlement will be renewed when circumstances enable such action to be taken with some prospects of success. I should like to add in regard to the Lena Goldfields arbitral award that the noble Lord, Lord Marley, only told part of the story. Under the concession I understand that the Union of Soviet Socialist Republics agreed with the company that in the event of any disagreement a Court should be set up and that it should consist of one individual nominated by the U.S.S.R., one nominated by the company and one nominated jointly. When difficulty arose the nominations of these three individuals were made and the Court was about to sit. At that moment the Union of Soviet Socialist Republics withdrew its member from the Court and the Court had no alternative but to proceed in the way courts have to proceed when one side makes no appearance—that is, to take the case by default. It was considered by the independent Chairman appointed by both sides and by the representative of the company, and it was they who came to the decision that £13,000,000 was the proper sum to award. It had, of course, nothing to do with the company itself. When the noble Lord opposite said that the amount of capital lost was—I think he said, £3,000,000—


Three and a half million pounds.


That, of course, as the noble and learned Viscount the Leader of the House pointed out, is an entirely different question to the question of damages incurred and the amount the Court may award for the breaking of a contract. The noble Lord has given a description of this case which His Majesty's Government cannot, for one moment accept. The description I have now given is fuller and I understand more accurate than the one the noble Lord has given to the House. As regards, debts, that is a very large question which, as my noble friend Lord Mount Temple knows, has been under discussion between the two countries for a very long time indeed.

I now come to the question of export credits. There, I think, the House has more than once been given a. good idea of what are export credits. I think my noble friend Lord Templemore, on the last occasion when the matter was discussed, explained to the House that the Board which decides whether export credits should be given or not is a. statutory body composed of bankers and business men, and they give the credit to any firm which can satisfy them that the business is worthy of such credit and where they consider the security is adequate. When the noble Lord, Lord Marley, said a profit is being made on these transactions he was hardly accurate. A premium is charged on these credits, and until every transaction has been wound up and the whole of the credits repaid we are not in a position to know whether we shall have any profit or whether these premiums will be adequate to meet any amount the country has to pay on these export contracts. I am glad to say the situation is a little better than my noble friend Lord Mount Temple thought, because I believe that nearly half the amount originally guaranteed has already been repaid and therefore the sum outstanding is not as high as he thought.


May I interrupt my noble friend to say that I took my figures from an answer given in another place, I think not more than a month ago? The figures given were £12,000,000 credit and £5,000,000 paid off, leaving £7,000,000 outstanding. However, if something has been done in the meantime that may have altered the position.


It is rather better than my noble friend thought. Of course the question of further export credits does not arise at this moment. As your Lordships are aware, the Soviet Government are placing no further orders in this country, and until such further orders are placed the question of the resumption of export credit facilities does not arise. If, and when, it does arise it will be considered in the light of the circumstances prevailing at the time.

As regards the question of the treatment of British subjects in the Soviet Union, His Majesty's Government anticipate that as a result of the attitude which they have adopted in the Metropolitan-Vickers case British subjects now resident in Russia are not likely to suffer any further molestation at the hands of the Soviet authorities, although, of course, no guarantee of immunity can be given to British subjects desiring to proceed to the Soviet Union and such persons would do well to defer their visit if possible. I need hardly add that further interference with British subjects will create an even more serious situation for Anglo-Soviet relations than that already created by the recent trial. In the meantime I can assure the noble Lord that all British subjects resident in the Soviet Union or who may proceed there either on business or on pleasure will continue as heretofore to receive the advice and assistance of His Majesty's Embassy and of British consular officers. I think I have dealt with a good many of the points which have arisen in a debate, which has spread very wide over a very large subject, and as far as it is advisable perhaps to do in the situation existing at this moment. We are all agreed that the first thing that we require is that these two British subjects should be released and should return in safety to this country. Once that has happened and the embargo has been removed we shall be in a position to consider further what course we should take.


My Lords, I only rise because I feel that some apology is due to your Lordships for my having had on the Paper so long a Motion relating to the proposed new trade agreement with the Soviet Union. In the circumstances which now exist—which I may remind your Lordships have been defined by my noble and learned friend the Leader of the House as follows—namely, that there can be no resumption of commercial relations beyond those now permitted in Russia until the release of the two engineers and that as soon as those two engineers are released negotiations can at once be resumed—this does not seem the time to discuss in detail all the considerations which apply to any proposed new trade agreement with Russia. When, however, as we all hope, the two engineers have been released and it is possible to reconsider this matter, I shall hope to be given an opportunity of addressing your Lordships and of bringing forward in some detail a great many considerations which have not yet been touched upon in your Lordships' House.


My Lords, in view of the sympathetic answer given on behalf of His Majesty's Government, I beg leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.