HL Deb 06 May 1936 vol 100 cc823-36

LORD NEWTON asked His Majesty's Government whether they can state the amount of financial loss which we have incurred in consequence of compensating Yugoslavia for participation in the policy of sanctions; whether Yugoslavia has quite recently concluded a Commercial Agreement with Germany which is prejudicial to British trade; and whether they can state the approximate loss to British trade which has been incurred since the introduction of sanctions?

The noble Lord said: My Lords, this subject has twice been brought before the House, once by myself and once by Lord Mottistone, and we were replied to by my noble friend Earl Stanhope, who represents the Foreign Office. Upon this occasion I understand that the matter is going to be dealt with by the Board of Trade, but I hope that my noble friend Lord Stanhope will not consider himself to be precluded from speaking, because on a question of this kind it is perfectly clear that you cannot divorce politics from it, and sanctions are closely connected with policy. I do not expect that if he speaks he will be able to throw any light upon the question whether sanctions are going to continue or not, but at all events he may possibly be able to adduce other reasons why sanctions hitherto have been such a conspicuous failure.

On these occasions of which I have spoken my noble friend contended that it was an extremely unimportant question, and I do not deny that it is comparatively unimportant, but he also said that it was a great mistake to attach too much importance to it, because the amount of money was so small as to be almost microscopic and unworthy of attention. He also stated that it was a case in which this particular country, Yugoslavia, was deserving of charity, and he made an ingenious calculation, which I was quite unable to follow, that such loss as there was would be distributed amongst a number of different countries, and would be almost imperceptible so far as we were concerned. When things are looked into, however, they would appear to be rather more serious than we have been given to understand, because I glean from a letter from the well-informed correspondent of The Times at Vienna, dated April 7, that the total estimated loss is 800,000,000 dinars, which represents about £3,500,000 of our money, and we have undertaken to make good 120,000,000 dinars, that is to say, at the present rate of exchange about £550,000, which is not an altogether negligible am in my opinion. If you are going to act in this kind of charitable way towards any country, the least you can expect is a certain amount of gratitude, but we have not received anything of the kind. Yugoslavia, having obtained assistance from this country to the extent of £550,000, promptly made a Commercial Agreement with Germany, under which nearly all Yugoslavian imports will remain in the hands of Germany, and we shall suffer in the same way as everybody else. I would like to ask my noble friend Lord Stanhope whether we have addressed any remonstrance to Yugoslavia with regard to this action, and whether we are going to be, or have been, similarly charitable as regards other countries. I remember that he mentioned three other countries who had applied for assistance on the last occasion, and he did not say positively whether their demands were going to be acceded to or not.

It seems to me that this precedent of financing small countries, and practically bribing them to attack Italy, is a rather dubious kind of proceeding. It is rather as if you hired a small boy to go and throw stones against the window of your neighbour against whom you have ill-feeling. It strengthens the idea that it is perfectly right that Italy is not contending with the League but with this country I have a further objection. I do not see why this country should act both as policeman and as almoner for the League. If we are going to do this sort of thing surely it would be better that we should confine our own action to our own nationals. If anybody deserves to be compensated it is the British traders who have lost a great deal of money in consequence of the Government's action, and I see that one body, a body calling itself the Association of British Importers from Italy, has already applied to the President of the Board of Trade for assistance, and has been told that he will not do anything for them. The President of the Board of Trade is evidently not one of those people who believe that charity begins at home. He apparently thinks that it begins and ends in Yugoslavia.

The second part of my Question relates to the effect of the sanctions upon the trade of this country. I do not think that anybody will deny that prior to the present trouble Italy was a very good customer of this country. The Italian trade represented in exports and imports something over £20,000,000, and the trade between Italy and our Dependencies was £15,000,000 or £16,000,000. It represented a total sum of about £36,000,000. The balance of our trade with Italy had been continually improving until the latter part of last year. The position at the present moment is this. In the first three months of 1935 our trade with Italy amounted approximately to £6,000,000. In the first three months of this year it only amounted to £225,000. Therefore it is quite obvious that our trade with Italy is rapidly diminishing, and will probably disappear altogether.

As a matter of fact our main export to Italy, that is to say coal, has disappeared already. There is no coal going from this country to Italy at all, and the position is so bad that in one of the most depressed areas of South Wales the Great Western Railway Company are going to close the port of Penarth at the beginning of July because they have no further use for it. That is the state of things which must make one think very seriously about the effect of sanctions. Of course I shall be told, probably by my noble friend Lord Cecil, that it does not matter, because the Italians could not pay for the coal if we supplied it to them. But that argument does not weigh with me very much, because the Italians must get coal somewhere, and it is perfectly obvious that they are getting their coal from Germany. I am perfectly certain, too, that Germans do not let their coal go for nothing, and if they can make an arrangement with the Italian Government we ought to be able to do the same thing ourselves.

It seems to me that the policy which brings about a state of things in which we are perhaps going to complete the ruin of one of the distressed areas is almost incredibly foolish, and on the whole I really do not see that you can do anything more foolish. I confess that when I consider the whole of our policy with regard to Abyssinia, and more especially with regard to sanctions, I am astounded at what I can only term the levity of our action—not only the action of the Government but the action of the Government supported by the principal Parties and by the principal personages in the political world. It seems to me that they have completely failed to calculate the results of their actions. I can really only think of one small action which does credit to their prevision, and that is the putting of our Legation at Addis Ababa in a state of defence. At all events, they can be given credit for that. But in every other calculation they have made, and every other action they have taken, it seems to me that they have completely misjudged the situation.

In the first place we were apparently convinced that Mussolini was bluffing. When it was plain that he was going to fight we imagined—when I say that, I do not mean only the Government, I mean the Parties opposite—we imagined that at the first bleat from Geneva he would suspend his preparations. Then we fell back on sanctions, and we all know what the result of sanctions is up to now. Then in a lucid interval when there was a prospect of making peace, all negotiations were at once wrecked by the noble Viscount, Lord Cecil, and his friends, and all hopes of making peace were put off indefinitely, with the only result that a much worse peace from the League point of view will be made than would have been made otherwise. But the most serious miscalculation which was made was that they never realised that their League associates would not stand by them when the shock came. That really has been the bottom of all the trouble. The truth is that almost everybody, or at all events all the stupid people, realise what the Government have completely failed to realise all along, and that is that there is not a single nation of any importance besides ourselves which cares two straws for the Covenant or for the League itself.

The results of all that has happened in the last six or seven months is that the League has demonstrated itself to be in its present condition quite unfit either to stop war or to enforce peace, that both collective security and collective action are a pure illusion. And the lesson of the whole thing is that the Government, like private individuals, although they may have the best intentions in the world, ought to refrain from committing them-selves to undertakings that they are incapable of fulfilling.


My Lords, I had not intended saying anything on this subject to-day, but I have noticed that our debates in this House find their way a good deal into the foreign Press, perhaps more than into our own Press, and that particularly the utterances of the noble Lord opposite are made great use of in the Italian newspapers. I do not complain about that but I think it is necessary that the statements that he made in the latter part of his remrks, in default of any other reply, should receive some answer, however inadequate, from myself, because I understand the Board of Trade representative in your Lordships' House will reply, and he may not care to deal with the political matters which, I must say to my surprise, the noble Lord brought into his discussion of his Question on the Paper. But when he says that no nation cares anything about the League of Nations except ourselves that really is a gross mistake, and it is a libel on the other fifty-one Members of the League. I would beg the noble Lord to tell us what evidence he has to show that nobody cares anything about the League except ourselves.


What nations do?


I have visited a great many countries in Europe since the Covenant of the League was agreed to and nearly everywhere there are very active bodies educating public opinion in League principles. Indeed the usual complaint in the past has been that it is the smaller nations, which have nothing to lose and no contribution to make to a system of collective security, which supported the League, and it is the great Powers which hold back. The complaint made in what are called League circles at Geneva in the past—not in the past year but in the old days when I used to go frequently to Geneva on League matters—was the exact opposite of that stated by the noble Lord.

I will not resist the temptation to say a word or two on the present situation, and I am not going to take a Cassandra-like attitude as the noble Lord has done—though I do not complain, because he has been absolutely consistent, and the exposition given this afternoon by the noble Lord is very typical indeed of the arguments that are heard very widely outside. The noble Lord is an excellent spokesman of what I may call Carlton Club opinion. Well, there are many Carlton Clubs and perhaps I am not referring to that noble building next to my own club in Pall Mall—perhaps I should say Constitutional Club opinion—and there are many Constitutional Clubs in the country—and the sort of isolationist and defeatist opinion that one hears to day. I will not join the noble Lord in jeering at the Government at this stage. The time will come to speak of their action and lack of action during the last year or two, but I wish to say this now because the Motion of my noble friend Lord Ponsonby to-morrow deals with future policy. I think this needs saying with regard to the present impasse.

The debate we had recently in your Lordships' House will be in your Lordships' memory, and the statements made by the noble Earl, Lord Stanhope, will be remembered. I think that what he said then is just as true to-day as when he said it—namely, that we are not at the end of this business at all. I ventured to say then that the game was not played out. In spite of the events of the last few days I suggest that the Italian difficulties are only really beginning. The "mafficking" in Rome will last for a certain time, but it will not last for ever, and even that form of sentimental emotionalism will not take the place of work and bread, and that is what the Italians need most at the present time. I do not think they will get work and bread out of Abyssinia for many years to come even if they are allowed to carry out their declared plans. I make so bold as to say that what the noble Earl said on behalf of His Majesty's Government about the effect of sanctions, even the limited and imperfect sanctions that have been imposed, is just as true to-day as it was then. I said on that same occasion that during the next few weeks we shall require strong nerves on the part of the Government if we are to continue to play our part in this affair. I suggest to your Lordships that if we stand firm we will be supported in Europe by the other States Members of the League, and our policy should be this. I am here speaking for myself, because I have not had an opportunity of conferring with my noble friends on this matter, but I do not think I am misrepresenting the point of view of the majority of the Labour Party. At the present time it is more than ever necessary that we should stand by the League.


What does that mean?


That this is not the time to wobble or run away. I never expected that what I had to say would be clear at the first attempt to the noble Viscount. I am glad he interrupted because I want to make my meaning clear. I should hate him to misunderstand anything I say. This is not the time to quit. Is that clear to the noble Viscount? This is not the time to run away or to wobble. This is the time to continue existing sanctions, and, speaking for myself, I should like to see them intensified. That does not mean military sanctions, with great respect to the noble Earl, Lord Stanhope. The last time I said we ought to give direct help to the Abyssinians when we were expecting they would hold out for six or seven months more; I meant financial help to pay for the needs of their armies. The noble Earl then said: "You are advocating war." I am not advocating war or military sanctions in the particular situation in which we find ourselves. What I do advocate—and here I know I am speaking for the majority of my Party because we have recently discussed this—is that we should keep on the present sanctions if we can get support from the other States-Members. I see no reason why we should not get that support. Personally, I should like to see sanctions increased and intensified. Lord Stanhope, who spoke for the Foreign Office, although he always attacks me, sometimes not altogether justly, I plead, did please me and my noble friends when he said that the Government's object now was to prove that aggression does not pay. We have still to do that, otherwise we are encouraging gunmen Governments everywhere.

I must resist the temptation to speak of the future, but in this particular case I venture to repeat that the game is not yet played out. The Italian financial situation especially is bound to become weaker. They will come running to us for a loan presently, I suppose, and the noble Lord who introduced this Question will doubtless be willing to give it to them if the security is all right and the rate of interest is satisfactory. I repeat that I hope we shall continue economic pressure if we can get other nations to support us. I have spoken because I did not want it to go out to the world from your Lordships' House that the moment there is this unexpected setback we should all run away and quit our obligations to the Covenant.


My Lords, I only wish to add a few words to those which have fallen from the noble Lord who has just sat down. Perhaps he knows more about the feeling of the Carlton Club than I do, but I think he takes an unduly unfavourable view of the opinion of that very distinguished body of individuals. I believe he would find that, whatever might be said about the wisdom or unwisdom of the original stages of this controversy, there would be a very strong feeling among the members of the Carlton Club that at this moment, when the Ruler of Abyssinia has had to fly and his country has been desolated by every kind of horror which accompanies modern war, some of which we had hoped had been eliminated from modern war, the great majority of decent people in this country would not think it a particularly favourable moment to raise questions of pounds, shillings, and pence about what we did, or did not do, with regard to Yugoslavia.

The noble Lord who asked this Question made a reference to me, and I have ventured to intervene because of his reference to me and my friends. The noble Lord is entirely mistaken if he thinks that the outcry against the Hoare Laval Agreement was the work of any particular organisation. It was general and quite spontaneous all over the country. I remember that the first letter written to The Times on the subject was written by a very distinguished gentleman who certainly was not prompted by any organisation at all, but merely by his own feelings that in the circumstances it was a very improper Agreement. My noble friends are labouring under a profound illusion if they think that the passionate sentiment that at present exists all over the country on this subject is the work of any particular organisation. It is the natural consequence of the events that have taken place, and I should have thought it might have been foreseen with absolute certainty by anyone who has any knowledge or appreciation of the kind of way in which British opinion moves.

One word more. The noble Lord said that there was not a country in Europe that cared about the League of Nations except this country. I cannot imagine on what he based such a fantastic perversion of the facts. It is perfectly well known that the great mass of the smaller countries regard the League of Nations, imperfect as we all admit it to be, as their one security for their independence and their freedom from oppression by their larger neighbours. As for France, which is supposed by some people to be indifferent, the recent Elections that have taken place no doubt proceeded on a great number of issues, as elections always do, but it is true to say that those who were the keenest supporters of the League of Nations have gained by far the greatest electoral victory, overwhelmingly the greatest. I have one particular case in mind of gentlemen who took a strong anti-League line, whose local position was very strong, and whose support up to now had been overwhelming, but who, at this Election, have been defeated. I have not the slightest doubt that the overwhelming majority of the French people desire to support the League, though they may not always take the same view as myself or others as to the best way of doing so. As to the present Government of France, even, which is not supposed to be particularly keen on the League, when it suggested its terms of peace with Germany it emphasised the fact that it desired that the League should be supported and should be the basis of future international action. I thought it right just to make that protest against some of the observations that have fallen from the noble Lord who introduced this Question, because I think they must have been made by inadvertence, for they appear to be, as far as I know anything of the subject, quite out of accordance with the facts of the case.


My Lords, my noble friend Lord Newton at the outset of his remarks seemed to be a little dissatisfied because his Question was going to be answered by myself on behalf of the Board of Trade instead of by my noble friend the Under-Secretary of State for Foreign Affairs. I can only say that the Question as it is down on the Paper is a Question which His Majesty's Government considered could best be dealt with by the Department which I represent, and that is how I come to be standing here this afternoon. Although the noble Lord will not, I am sure, expect me to go into the question of the rights and wrongs of sanctions and the various other matters he dealt with in his able and interesting way, I can assure him that I have an answer, and a very full answer, to the specific Question that he has put on the Paper. I personally and the Department I represent, and I am sure also His Majesty's Government, although the figures that I am going to mention may not be very large, do not in any way consider them trivial or unimportant.

As regards the first part of the noble Lord's Question, which really is divided into four parts, the compensation which was granted to Yugoslavia was in respect of four main items. They were eggs, turkeys, chickens and bacon. The precise amount of the loss which has fallen on the Exchequer on account of the admission of these Yugoslavian products cannot be exactly stated, but on the assumption that the whole of the imports from Yugoslavia of these; commodities for the period January to March, 1936, qualify for admission at the reduced rate, the loss of Customs revenue to this country will total in respect of turkeys and chickens for this period the sum of £9,300, of which turkeys account for roughly £4,600 and chickens for roughly £4,700. Certificates in respect of practically the whole of these imports have already been produced. Adding another £1,000 for imports in December, the total loss for turkeys and chickens to the 31st March would have been roughly £10,000. The loss in respect of eggs can be estimated roughly on the same basis for the period January to March, 1936, at £4,000. The maximum loss which could fall on the Exchequer under the Order if the quotas were fully utilised would be roughly as I shall now state. I am sorry to have to bother your Lordships with a certain number of figures, but I am bound to do so. The item for eggs in a full year is £10,000, in any one month £1,400. The item for chickens in a full year is £18,700 and in one month £2,800. The item for turkeys, in a full year is £56,000. All these estimates, of course, are based on the assumption that the imports at the reduced rates displace equal amounts of other foreign supplies. Whether displacement in fact occurs it is impossible to say.

Now I turn to the second part of the noble Lord's Question in which he asks whether Yugoslavia has quite recently concluded an Agreement with Germany which is prejudicial to British trade. The facts of the matter are as follows. The accumulated trade debt due to Yugoslavia in the clearing account with Germany amounts to the equivalent of over £2,000,000. During recent months Yugoslavia has been taking all possible steps to reduce this balance, and negotiations on the subject took place between representatives of the two Governments in March last. Though the detailed result of these negotiations has not been made public, it is understood that in return for certain facilities granted to Yugoslavia by Germany, Yugoslavia has introduced a form of import control designed to render possible the unfreezing of their balance in the clearing account. This control will be operated through a system of foreign exchange permits. A list of goods is being prepared which may only be imported under foreign exchange permits. Until the list in question has been published and until it is known if the control will be really restrictive, it is not possible to say to what extent the United Kingdom trade will be affected. The matter, however, is being carefully watched and has already been the subject of discussions between His Majesty's Minister at Belgrade and officials of the Yugoslav Ministry of Commerce and Ministry of Foreign Affairs. It is hoped and believed that while Yugoslavia is receiving from the United Kingdom assistance to compensate her for losses incurred through the application of sanctions, she will proceed as carefully as possible in regard to trade with this country.

I pass now to the third part of the noble Lord's Question in which he asks whether we have compensated any other countries besides Yugoslavia. The answer to that question is, No. Altogether six countries have made application for compensation. Of those six, three have been refused and three are still under consideration. None of the countries in question, however, is dependent on the Italian market as an outlet for its exports to anything like the same extent as Yugoslavia.

Then I come to the last part of the noble Lord's Question in which he asks whether the Government can state the approximate loss to British trade which has been incurred since the introduction of sanctions. It is not possible to give any reliable estimate of the cost of sanctions to the United Kingdom since our export trade to Italy had greatly declined before the application of sanctions, and would undoubtedly have gone on to decline owing to the progressively increasing difficulty of getting payment for our exports through exchange restrictions and financial stringency in Italy. I am quite aware that the noble Lord in his speech anticipated what I was going to say and made rather light of this financial stringency. I can only say that I am informed that it is perfectly true that it was becoming increasingly difficult to get paid by Italy, for what reason I do not know, but that is the fact. Moreover, it has to be remembered that the prohibition of imports from Italy into other countries will to some extent have stimulated a demand for competing United Kingdom products.

The noble Lord gave me a few figures regarding exports to Italy during the time that sanctions have been on. In concluding my speech I will give the noble Lord a few figures which are arranged in a rather different way from those which he gave. The following figures show the total value of our exports and re-exports to Italy during January, October and December, 1935, and January, February and March, 1936. Exports of United Kingdom goods in January, 1935, amounted to £825,000; the monthly average for the first nine months of 1935 was £678,000. The figures for October, 1935—that is the last pre-sanctions month—were £404,000; for December, 1935, £80,000; for January, 1936, £43,000; for February, 1936, £49,000; and for March, 1936, the last month for which I have figures, £16,000. I have answered the noble Lord's Question on the Paper very fully, as I hope he will agree, and if I have not gone into the question of policy as regards sanctions or the foreign policy of the Government, he must excuse me because I am not authorised to do so.

House adjourned at half-past six o'clock.