HL Deb 08 November 1939 vol 114 cc1743-70

3.44 p.m.

VISCOUNT ELIBANK rose to ask His Majesty's Government what steps they are taking to foster the export trade of this country; whether in view of the importance of maintaining so far as possible a proper equilibrium between imports and exports, the Board of Trade and the Central Priority Committee of the Supply Ministry are in full and practical collaboration in this matter and whether there is any expert ad hoc committee in charge of this question which is so vital in the conservation of our financial resources for the prosecution of the war; and to move for Papers.

The noble Viscount said: My Lords, I wish it to be understood that I have brought forward this Motion in no spirit of carping criticism, but rather in the form of an inquiry, and in the hope that the debate that may take place may provide certain useful suggestions to the Government, who no doubt are just as anxious about this country's export trade policy as are some of us in this House and outside it. As a nation which is paying to-day a graduated Income Tax of some 7s. 6d. to 17s. 6d. in the pound, and is also heavily taxed in other directions, which is asked to spend and save at one and the same time, and, further, which realises that the limit of taxation is not by any means reached, whether the war be short or long, I think that many of us are seeking, at any rate in our own minds, to try to find a way of conserving our financial resources, and expanding them where possible, to meet the tremendous financial burdens which we have to face.

That is the reason why I have brought forward this Motion to-day. It is an axiom that the export trade of this country is the main artery of our economic life, and that with a falling export trade we must relatively decline in wealth and strength. Indeed, so far as the prosecution of the war is concerned, with a reduced export trade we shall find it more and more difficult to provide the necessary exchange for the purchase of raw materials required for the prosecution of that war. It is true that we possess gold reserves in large quantities, but we cannot utilise, or we ought not to utilise, those reserves for that purpose, because if we do so we shall deteriorate our currency owing to the fall in our assets, and consequently the cost of those raw materials will become greater to us. Further, our direct export trade is more important to us to-day because of the condition of what are called the invisible exports. As your Lordships are all aware, invisible exports consist of the dividends received on over-sea investments, which to-day in many cases are smaller, and in some cases have disappeared altogether. They also consist of shipping receipts, and insurance and banking receipts, all of which have been affected already by the war, and will be still more affected if our direct export trade falls.

There is another form of invisible exports, and that is a form of international trade done through foreign countries, with goods of foreign origin, but instigated from London. This trade aggregates in the year several hundred million pounds in value. Unfortunately, and possibly through ignorance, the Ministry of Economic Warfare issued an order at the beginning of the war which has had a most deleterious effect upon that trade. All that trade in the past had been transacted through bills of lading, which were made out to order. By that notice the Ministry instructed those concerned that in future they should be made out to consignees, thereby giving away to neutral countries where that trade is conducted, and the whole direction and origin of that trade. I do not propose to detain your Lordships on this point at any length. It is a fact that the Ministry of Economic Warfare have attempted to put this matter right, but they have not put it right. They have issued another order which does not effect what is really wanted, and I suggest to His Majesty's Government that the Ministry of Economic Warfare, with the Board of Trade and all the other Departments, whoever are concerned, should take this matter into very serious account and see whether we cannot save at least some of this trade, of which we have already lost quite a considerable amount.

That, shortly, is the general situation with which we are confronted economically owing to the fall in export trade. What I am asking His Majesty's Government to-day is how they are going to meet that situation and what they are going to do to maintain and, if possible, improve the export trade. I should be the first to admit that there are many difficulties in the way; but we have at least this in our favour. Through our magnificent Navy and through our equally magnificent Air Force—and I say this in the presence of the noble Lord, Lord Chatfield, who so ably commanded that Navy for so long—we have command of the seas such as is possessed by no other nation. Then we have an Empire which stretches from one end of the Seven Seas to the other, and from which we can draw practically every kind of raw material required for the manufacture of armaments as well as for the manufacture of goods for our export trade. These are initial factors of enormous advantage to us and should by themselves give us courage and enterprise to overcome the many difficulties ancillary to the war connected with this question.

Germany, on the other hand, owing to the successful suppression of her mercantile fleet by the means I have described, is gradually being driven off the face of these seas. This is leaving the door open to us in markets which Germany is now on the point of vacating or has already vacated. This applies not only to countries which are contiguous to Germany, but also to other foreign countries like South America and elsewhere, and it applies, too, to our Dominions and Colonies. I cannot urge too strongly upon the Government to take every step they can to provide every facility to maintain and expand export trade wherever possible. I do not think we need be, to-day, too particular as to what form of trade we enter into, whether for cash, or by barter where the country concerned cannot afford to pay cash but is a country of sufficient substance and reliability to carry out its undertakings. We may, through control of exchange in these countries, be able to direct export trade to them.

By the latest published statistics I have observed that, compared with September, 1938, imports in September, 1939, showed a reduction, in round figures, of £25,000,000 or 33 per cent., while exports were down by £17,000,000 or 42 per cent., or at the rate of £200,000,000 for a full year. These figures, I understand, have shown an improvement in October, and for all I know they may show a further improvement in November and onwards, but, nevertheless, they are sufficiently alarming to be a reason for a search for remedial measures. That is what I am asking the Government to do. Last week in your Lordships' House the question was raised and debated of the hindrance to trade and the loss of time in the issue of licences for exports and imports. The Government gave a reassuring statement of what they were doing to speed up these licences. I am in touch with certain parties who are gravely concerned in these matters, and I understand that there has been a definite improvement. Whether that improvement is the result of the Motion of the noble Lord, Lord Strabolgi, or whether it is a natural impetus and urge is immaterial. The fact is that, I am told, there is a definite improvement, although I have no doubt that improvement might be further speeded up.


If the noble Viscount will allow me, I understand the improvement is largely due to the energy of Viscount Cobham, who has taken the matter up.


I am very glad to hear that my noble friend Lord Cobham is at the back of it, and I heartily congratulate him on the result which, I understand, he has been able to obtain. I should like to read an extract from a letter to show that, from the shipping point of view, things are not yet altogether right. This is a letter from a friend of mine who wrote after seeing my Motion on the Order Paper, and who is very interested in shipping matters. He wrote to me as follows: I have to keep in touch with the liner shipping situation to India and the Dominions, and it is deplorable to see ships sometimes a third or more empty and having to shut out cargo solely on account of the delay of the authorities in releasing cargo for shipping. Week after week this has been happening. I understand this has improved—the letter is dated November 3. The effect in making the voyage of the ship a serious loss is exasperating to ship-owners; but far more serious is the effect on the economic position of the country. All these commodities of which I speak, which have been held up at the docks, are in the cases I have mentioned goods for India, Australia, or other British Dominions. It is hard, indeed, to remain patient when one sees such examples of departmental delays doing active injury to this country. Only eight days ago a certain vessel, which will be nameless, left this country 2,000 tons short of cargo which it had to leave on the wharf because it did not get Customs release. These conditions may have been improved, but I state them again to the House because they have not entirely improved and require further investigation.

I understand that there is a certain system called the pre-entry system, and that under that pre-entry system an exporter can either take a licence for goods which he knows are all right or else he has to take a licence for goods which may be all right or not. This has caused considerable delay because exporters, naturally, were in the difficult position of not knowing which goods were exportable and which were not. I am going to suggest that the Board of Trade should have prepared a list of reputable exporters who can be relied upon to export goods which are not of contraband nature. I understand that in the last war that was done. There will be no difficulty in preparing such a list in consultation with certain commercial bodies in this country who would give all the information that is necessary for that purpose. In addition, it may be necessary to prepare a list of those exporters who are not so reliable, and possibly the Government have already started to prepare such a list.

I am quite ready to admit that the manufacture of war requirements must come first, but after that I consider that the manufacture of articles for export should come second in importance, and that this should be made a definite policy of the Government. I have examined the departmental machinery which controls the priority of the arrangements for the different manufactures and different raw materials in this country. In answer to a question in the House of Commons on the October 18 last, Mr. Burgin, the Minister of Supply, made a statement giving us information regarding this which is summarised shortly as follows: Firstly, there is a Ministerial Priority Committee under the Chairmanship of the Minister for the Co-ordination of Defence. (I am sorry that he has now left the House, because I am going to criticise to some extent the composition of this Committee.) Secondly, subject to this Central Committee, there are five Priority Sub-Committees dealing with (a) labour, (b) materials, (c) production capacity, (d) transport and (e) building labour. These five Sub-Committees are under the Chairmanship of the Parliamentary Under-Secretaries of the Departments to which their special subjects refer, and all these Sub-Committees have a central secretariat and register in the Department of the Central Priority Committee. Lastly, on all these Sub-Committees there are representatives of various civil Departments holding watching briefs, and, presumably, there is among these a representative of the Board of Trade watching exports.

I understand that on the Ministerial Central Priority Committee the President of the Board of Trade has a seat, and we shall be no doubt told that he pays in this capacity special attention to exports. That may sound all right, but actually it is not so good as it sounds, because on looking at the reply to this question, I find that the Sub-Committees of the Central Committee are expected to be the main machinery for reaching decisions in regard to all matters of priority. Those matters probably never reach the Central Committee, because these Sub-Committees have full power to come to decisions and make orders quite irrespective of the Central Committee. Supposing one of the Sub-Committees had at the head of it the Parliamentary Secretary of the Board of Trade, and that Sub-Committee were devoted specially to looking after export matters in regard to priority and other questions ancillary to it, then one might have greater confidence that the export trade was being attended to; but what chance has the export trade in these Committees to-day?

The Ministry of Overseas Trade, it is perfectly true, may have representatives on these Sub-Committees looking after the Ministry's particular interests, but there are members representing other interests, civilian interests, looking after those interests, and all of us who have had any experience of administration in this House know how difficult it is for any one individual, however able and however determined, to carry a policy through against a body of men who have other interests and who are just as able and ready and determined to represent those interests. I wish to recommend to the Government that they appoint a Sub-Committee of practical men to look after this question of exports in connection with the Ministerial Priority Central Committee. Unless they do this I cannot see, with such knowledge as I have of Governmental machinery, how exports are really going to be properly looked after in this country. I wish to conclude by saying this. I stated earlier in my remarks that our export trade is the most vital link in our economic existence and it is essential that it be so recognised by the Government. It is certain that unless it is so recognised, and supported and encouraged, our financial strength will falter and weaken, and with this will become increasingly difficult the prosecution of a war which is bound up with the preservation of those ideals of human liberty that have helped this country so much in the past and have given so much happiness to this country and to our Empire. I beg to move.

4.8 p.m.


My Lords, I apologise for addressing your Lordships again after having spoken at some length last week. I can only offer the excuse, if your Lordships will allow me, that I was connected officially with the Department of Export Trade and also with that trade in a personal capacity. Therefore I deem it almost a duty to speak on behalf of those associated with me, particularly the Association of British Chambers of Commerce with whom I work from day to day. More especially I feel that I ought to speak because members of the Government have in the other House asked manufacturers to try to do their best to expand our exports. I agree that we should do so as a matter of duty, quite apart from any question of profit. We need the exchange, which exports will create, to pay for our war materials. We also want to keep the export trade going so that when our men come back from the war we shall have trade waiting for them in which they can obtain employment.

For those reasons I venture to address your Lordships, to deal with certain undesirable details of control and, if I can, to suggest remedies for them, and so, where it is possible, to sweep away current hindrances to the export trade. But before coming to my general argument I would like to mention two things. In one matter I support my noble friend who has just spoken. He referred to the bills of lading alterations as recently laid down by the Government. I think it is a childish and wasteful thing that they should order shippers to omit the words "to order" from bills of lading. It is a technical matter; I shall not weary your Lordships by explaining all that it means. But on balance I cannot see that it would do us much harm if we reverted to our former practice. The enemy might perhaps reap a trivial benefit. On the whole I think the game is not worth the candle, to hurt our export merchanting trade by leaving out the words "to order," and thus disclose to our competitors what we are doing and who our customers are. Our competitors will take advantage of that disclosure, not only now but later on, and the extensive and lucrative London merchanting business, and all its ramifications, will suffer.

One other thing I had hoped my noble friend (Viscount Elibank) would mention, for I see that he has been in correspondence with the London Chamber of Commerce who know much about the subject of this Motion. I was hoping he would refer to the difficulties of cargo owners as distinguished from those of shipowners, bankers and underwriters. I think that there has been a forgetfulness on the part of the Government when organising the Ministry of Shipping in not putting on the Advisory Committee a representative of the cargo owners, of those who ship the goods for export, and other relative services. The Advisory Committee is composed, for the most part, of ship-owners. I would like to take this opportunity of suggesting to the Government that Sir John Gilmour should be asked to invite one or two representatives of those who ship cargoes and of those who finance and insure the exports—drawn perhaps from the London Chamber of Commerce—to tell him what they think ought to be done. Here is one instance of detail which shows that unnecessary obstruction takes place. One cannot now export without a censorship permit. I have received, since I came to my seat just now, from the London Chamber of Commerce this letter: On October 12, the Censorship authorities told us that it was hoped to issue permits within, at latest, two or three days of completed declarations.… Four instances reported in the last few days are of applications made 14, 12, 11 and 11 days ago and still the permits have not been received. You cannot carry on export business or any other business under those conditions. The censorship permit method must be overhauled. It must be re-examined and improved.

This is my general argument. The Government rightly say we must expand exports. Very good. Yet they forget two platitudes: One is that if you want to sell goods to overseas buyers you must be allowed to have raw materials to work up into the goods. After all, one cannot make bricks without straw to-day, any more than one could 3,000 years ago. Secondly, you must be allowed to ship goods to your customers when they are made. Yet the Government seem to put clogs in the way of allowing manufacturers to buy or import, or to use, raw material. Manufacturers cannot get raw material except after much delay and discouragement. More than that, they cannot get permission to export the manufactured goods except after further delay. The position is that manufacturers can neither get nor use raw materials nor can they get, in a businesslike manner, permission to export goods when they have made them. Still we are begged to maintain our export trade and to expand exports. What a farce. How can we?

The Glasgow Chamber of Commerce report that it is difficult to get licences to import goods even although the particular goods were ordered long before the war and were goods needed for Government work. Why should these goods be held up? If they are for Government work, it means that Government work is being held up. Why? A letter in my pocket from a Northampton firm, dated November 4, reports that the firm cannot get replies to earlier letters about import licences. There is nothing more silly, more stupid, more incompetent, than to leave business letters unanswered. It ought not to be tolerated for a moment that business letters should not be answered within a reasonable time. Then a Newcastle firm reports the receipt of an inquiry from my old Department, the Department of Overseas Trade, for a quotation for ten tons of lampblack wanted for Calcutta. The Department of Overseas Trade quite properly told the manufacturer "We can probably sell for you ten tons of lampblack in Calcutta." Yet the manufacturer was recently refused a permit to export lampblack to Brisbane. It is not likely that lampblack going to Brisbane or Calcutta will get to Germany; and yet a permit was refused. Evidently the Department of Overseas Trade was unaware of the Brisbane permit being refused. At the same time, the firm is waiting for permission to export to Rotterdam.

Why do not the various Government Departments concerned work together and keep one another informed? There are a large number of Departments concerned, directly and indirectly, in the export and import trade. They should have a permanent committee, composed of representatives of each Department, in continuous informative contact with each other, so that each Department should know what all other Departments want and are doing, and at the same time avoid having to send round papers from one Department to another. The Liverpool Chamber of Commerce reports that irritating and incompetent handling of business, the failure to get replies from the Export Licensing Department. I hope the Government will come down severely on any Department that does not answer letters promptly. Nothing creates more friction for a Government Department than failure to answer business letters punctually.

We need raw material from overseas to convert into manufactured exports. But foreign sellers of raw materials will not wait for us to take delivery because we cannot get official permits to import from them, and within a reasonable time, materials ordered a long time ago. The foreigners will now ship elsewhere at better prices, and will leave us to buy at higher prices the similar materials later on. I worked with the noble Lord opposite, Lord Addison, at the Ministry of Munitions, twenty-five years ago. Manufacturers then who wanted supplies were quickly told how much they could have and where they could get the permitted amount. I think the system under the noble Lord, twenty-five years ago, worked better than the system which we are working now. If the noble Lord, Lord Addison, will be so good as to speak afterwards, I think he will be able to tell us of the advantage of having one central body to deal with permits and supplies. To-day controls, which I admit are inevitable, have been scattered all over the country, just as one peppers Greek accents on a page of school prose. The cities of controls are widely apart. They are at Reading, or at Bristol, or at Dundee, or at a dozen other places. But the documents all have to come back from the provincial cities of control to the Strand before a licence can be obtained.

I do not make complaint without suggesting remedies. The first remedy I would suggest is that there should be a single co-ordinating permanent committee of information composed of representatives from every Department concerned. It would be able to decide, without passing papers round several Departments, what controlled goods or materials and how much of the controlled goods or materials can be released per week to export manufacturers. The committee would be able then to grant quick permission to export to those countries through which goods cannot possibly reach Germany. I should think export could be permitted without question to Empire countries, to North and South America, to France and to Belgium. Further, some decision should be reached now at once as to which are the neutral countries to which manufacturers may export. At the same time the committee should come to a decision as to what are the goods which do not contain materials needed for carrying on the war. Those materials could be easily defined. There would be no need then to decide in a hurry or at the last moment, for fear of delay holding up an export order. The materials could be defined so that permits could be granted without a day's delay. The delays are the trouble.

I come now to the timber control. The import of timber is a vital matter for Britain. The timber trade has a competent organisation, with plenty of money behind it, and with able men in control. Yet the Government have set up a separate control over timber instead of using the existing organisation but guided by Government control. It that had been done the expense of a separate Government control would have been saved. The long established organisation needed to tackle the problem was there, and the capital of the trade could have been used instead of the Treasury being called upon to find the money to finance the timber control. I think the timber position should be overhauled and reconsidered as to method of control.

Now I will pass to another aspect of our export problem; although I shall not be able to explain it fully within the time available and besides I do not wish to trouble your Lordships with the details of it. I shall not show your Lordships the minute hand, but I shall perhaps be able to strike the hour on the clock of what I mean. We need to export to pay for Government imports; so we need exchange. It may come to this: it may be necessary to order all our exporters to sell in terms of United States currency or some in Argentine pesos or some in Brazilian milreis for exported goods going to that side of the world. In addition I make this point: the goods should be sold by means of bills of exchange, written documents under the bills of exchange law. The bills received for exports by us should be sold to the agent of the Government—I suppose the Bank of England, but certainly for the Treasury's use—and the sterling value given to the exporter by the Treasury. The Treasury will give the proper exchange value for them, and if necessary and through the Bank of England, discount the bills if they have days to run. But a proportion of the foreign currency which is due to the exporter for his sold goods should be handed to the exporter to enable him to pay for imported raw materials which he requires for his trade. That is a rough outline of something that I think will lubricate the friction now in the export licensing machinery.

Of course it implies a snub to the pound sterling by ourselves. But the pound sterling can stand a good deal of snubbing without much damage. We are at war; there is no reason why we should not, for our own benefit, have our exported goods sold by bills of exchange and invoiced in various foreign currencies, by order of the Government. I know that in some cases exporters are already selling and invoicing some of their goods in foreign currencies. In any case, the injury to our export trade by awkward handling of control or by petty obstruction or by delay in administration cannot be tolerated any longer. I beg your Lordships to tell the controlling Departments what the country will not stand. I hope your Lordships therefore will ask for remedies, such as those set forth by my noble friend Lord Elibank and myself, methods by which the defects of control I have outlined in this discussion can be abolished.

4.23 p.m.


My Lords, I hope the reply to my noble friend's Motion will not show too complacent a spirit, for I think there is little doubt that the present condition of our trade and its corollary, employment, is not wholly satisfactory. There are certain general considerations which at once leap to the eye and which bear, to my mind, on the root of this trouble. The first is that this Government took not only general but also particular powers to deal with almost every branch of life in this country to a degree to which we are certainly not accustomed, which was not used at the beginning of the last war and to which we only gradually, as we found our way, got used at the end of the last war. I cannot say that I think the result at the present time is happy, and I do not think the employment figures are going to do anything but bear me out in that respect. Your Lordships will remember that, when we were at our busiest in the last war, an enormous number of women were being employed in munition factories. Is there anything comparable to that to-day? Is the labour force that is working amplified and increased, or is it on the whole, looking over the whole country, diminished? I venture to say it is the latter, and that bears pretty closely and very importantly on the subject raised by my noble friend.

Lest we should be too complacent about this, it may interest the House to hear two sentences from a very recent report from a very trustworthy source as to German trade with Belgium as it is being conducted now. To give a short instance: In Brussels a firm of opticians ran short of lenses for eyeglasses, which it had been buying in France. The French company did not appear to be likely to fulfil the order. The optician reluctantly telephoned to a German firm and placed a small rush order. In four days the lenses arrived by parcel post from Germany. Another paragraph says: The Germans have been accepting and fulfilling contracts to Belgium for general machinery and machinery for munition plants, machine tools, precision instruments like sights for guns, all kinds of chemical products and fertilisers, finished leather, coal, barley and other foodstuffs. That report is only a few days old. It shows how keenly the Germans are making use of their possibilities of export. At the same time it illustrates very clearly the markets that we might be gaining or we might be losing.

There are some most important markets available to us to-day with which one would have thought we could have dealt with perfect security. I may mention amongst European markets, Spain, which, after all, is, as far as land communications are concerned, cut off from our enemies and which has an immense potential market if the necessary finance for it can be found. I pass to the other end of the world, to Australia, our own Dominion, where the expansion of her forces is, I am told, involving them in the expenditure of £40,000,000 of fresh money. I am sorry to say I am told that a large part of that money will have to be spent in the United States because it is considered that this country is incapable of fulfilling their orders. With such opportunities as that, some much greater effort should be made to make use of them, to expand our markets, and to get our people to work producing wealth and, as my noble friend Lord Mancroft points out, exchange for this country.

If I may for a moment turn to the question of timber control, the noble Lord, Lord Mancroft, spoke of it from the importer's point of view. From the home-grown timber point of view it is remarkable that almost the first circular sent out by the Control was to forbid anybody who owned growing trees to fell more than a minute quantity per month. That is how Government Departments work. It is no reflection on the Civil Service, or on those who have been recently imported into it, to say that the first thing a Government official must do is to hold everything up until he has got that grasp of the situation which the trader has had for many years. The next thing he does is to "pat the ball," as it is called, all round the other Government Departments concerned, with the inevitable result that delay ensues. At the beginning of the war there was a question in my county of how the necessary supplies for the farmers could be obtained, and we found that to get one lorry from the county town to the farms involved no less than four Departments, all of whom had to issue a licence for the purpose.

That sort of thing is absolutely killing trade, and the real cure for this state of affairs is to release a great deal of Government control and to put the control back, as my noble friend Lord Mancroft suggested, in the hands of the trade associations. It must be remembered that since the last war there has been an enormous development of trade associations, coupled on the whole with a parallel development of employers' federations and at the same time of the workers' organisations. All these things are now fitted together with things like the Whitley Councils, and especially the Consultative Council which has been set up since the war. The real cure, I reiterate, is to do away with as much control as you possibly can, let business go back as far as possible into its normal channels, and work the trade associations and workers' organisations for all they are worth for the good of the country.

4.31 p.m.


My Lords, perhaps I might be allowed to intervene for a few minutes in response to what was said by the noble Lord opposite. It has been my business lately to make some inquiries into the machinery and the operation of this control and of the Ministry of Supply. I must say that I think the criticisms of the noble Lord opposite are more than justified. So far as I understand the position at present, if a manufacturer wishes to obtain material for manufacture he must apply to different Controllers in various parts of the country who are supposedly in control of the supply in sight of the different materials. But of course, as we all know, there is practically no complex manufactured article which fails to make a demand upon a considerable number of materials. That means that at present applications have to be sent for different materials to different parts of the country. Therefore the man who deals, let us say, with tungsten does not have any cognisance of the man dealing, say, with aluminium; nor has he any notion whatever of what sort of reply to make. That in the first place necessarily involves delay.

As I understand, too, so far as the requirements of Government Departments are concerned, they have, so to say, if it is for war services, priority. That is what we would expect; and we must have some practical means of securing that that priority is obtained and exercised, with regard at the same time to the vital needs of industry. As far as I can see at present, there is no machinery at all for associating the one with the other. What actually seems to happen is this. If the demands of manufacturers for particular materials amount in the aggregate to more than the Controller has in sight at the present time, the case will ultimately be brought up by the Board of Trade at the Priority Committee. It means, therefore, that the manufacturer, when he has to apply for his licences, has to go through the whole gamut of these applications, and it is only afterwards, when the aggregate demand, so to say, exceeds the available supply, that the Board of Trade, on behalf, we will say, of the Manufacturers' Association or of an individual firm, may bring it up at the Priority Committee. That process necessarily involves prolonged delay. It must involve all sorts of references and interchange of references—letters and all the rest of it—between the different Controllers before ever it gets focused in a priority question at all.

Then, finally, the Board of Trade will bring it up at the Priority Committee, on which these Service Departments are represented. It may be that the priority can be granted in half a dozen materials but not in one, and it is only after the whole of this elaborate and complex process has been gone through that the unfortunate manufacturer will be able to know whether or not he will get the licences. It is impossible to imagine a more complex system or one more calculated to be beset with annoyances all along the line. I suggest that the fault of the system—and it is an obvious fault—is that there is no centralisation of this matter at all, no central statistical knowledge available to any body of persons upon which decisions can be made. As the noble Lord has reminded us, in the course of time, it is true, and with many tribulations, a system was developed in the last war which got to work, I think I can say, fairly expeditiously and reasonably. But it could only work fairly and expeditiously in the interests of manufacturers for two reasons. First, the manufacturers' associations were used to the utmost, so that they could focus and express the needs of their members in different collective fashions; and, secondly, there was a central department which had knowledge of the demands of the Service Departments and of the demands of different branches of private industry, some more vital than others, upon which priority decisions could rapidly be obtained. There is, so far as I understand, now a complete scattering of all these controls, with no central cognisance of the position of affairs until after all the difficulties have been threaded through by applicants. It is an entirely unworkable system, and I believe from all the evidence that it has greatly prejudiced the supply.

But there is this to say: that in addition it does not appear at present that there is any efficient body, apart from the individual "control agencies"—whatever that may mean, and I do not know what it does mean—for promoting increased supply. That is to say, we know well enough that there are some materials of which home production could be increased and in which shortages are in prospect, additional supplies of which might be produced by efforts at home. But there does not appear to be, so far as I understand the working of the machine at present, any collective arrangement for securing an increased supply where it will be called for owing to the demands of civil or military industries. If noble Lords will refer back to the speech of the Minister of Supply in another place made about a month ago, they will see that he said that where there is likely to be a shortage of supply he considers the necessity of importation—that is to say, with all the difficulties of exchange and foreign purchase—but that is only after difficulties have arisen. We could have a central body, with central statistical knowledge derived from the demands of trade associations, under the War Department, which itself should take the necessary steps through the industries in various ways to increase home supplies where there is a prospective shortage. At the present time trade in almost every direction is a victim of overgrown control—shall I say, run to seed?—scattered all over the country, and I think that it is an entirely unworkable system. We are indebted to the noble Lord for drawing attention to the difficulties which beset manufacturers and traders of all kinds, both in the home market and for purposes of export.

4.40 p.m.


My Lords, I am sure the House is indebted to my noble friend for raising this question, and from the succeeding speeches, including that of no less eminent an authority than the noble Lord, Lord Addison, who was so active in directing the Ministry of Munitions in the last war, there seems reason to believe that this is the sort of subject which should be ventilated in your Lordships' House. It is with some feeling of diffidence—almost of indelicacy—that I presume to address your Lordships, because to one who returned only this week to this country, after an absence in distant parts since the period before the war started, it is almost uncomfortable to be in England when one is not in uniform. But when I saw here the noble and gallant Lord, Lord Mottistone, of whose distinguished military career your Lordships are aware, and many other of your Lordships who are no longer in uniform, it will be understood that we have to admit that age brings these things about. As one who spent a good deal of time recently in listening to debates in the Upper House in the United States of America, dealing with legislation which was of particular interest to this country, it is some consolation to return to the dignity and composure of this Chamber, which show that the difficult conditions of administration in present circumstances do not move this House from its traditional calm.

With regard to the question under discussion, one cannot but be impressed with criticism coming from one so familiar with overseas trade as Lord Mancroft, and those instances that he gave were certainly striking. He was supported by the noble Lord, Lord Phillimore, and now we have had the noble Lord, Lord Addison, adding to the criticisms that have been made. I repeat, it seems indelicate to say anything when one has so recently returned and is completely out of touch with conditions in this country; and I suspect that while criticism is loud where some grounds for dissatisfaction exist, there is silence on the many aspects where the greatest achievements of the Government have been made and the highest commendation of the Government is merited. So it is that one would wish to dissociate oneself from any specific criticism, but it seems to me on returning from abroad that under these conditions if one has time to attend your Lordships' House it is the duty of those members of this House who can contribute from their past experience of any of the major controls in the last war, to make any practical suggestions that they can as part of the obligations of being a member of your Lordships' House.

It is in those circumstances that I venture to add just this two-fold comment on the position. Whilst I was in the United States and Canada, where I travelled many thousands of miles and had contacts with a great number of commercial communities, besides being in touch with our own authorities in Washington, Ottawa and elsewhere, I have observed as far as one could whilst abroad, marked and increasing criticism during the last few weeks of the apparent mechanism which controls trade in this country and in those countries. I feel it is right to say that, allowing for all the difficulties of current conditions, more rapidly working administrative machinery should have been possible. It is dangerous for the impression to get abroad, in the United States in particular, as it has, that this country is not going to be in a position to supply exports, and therefore that people in the United States can, if they wish, turn to other sources of supply if they are available. Encouragement is thus given to those multitudinous inquiries which, I have been informed, are pouring into the United States from distant parts of the world for a vast number of supplies which hitherto have been furnished by this country, but which it is now currently believed it will not be possible for this country to supply in the near future, and to the feeling that therefore those users of our goods in distant parts of the world had better hook themselves with the United States. That is dangerous, if it is not essential.

If it is our aim to assist our exports to the greatest degree possible, surely the first thing is to try to build up dollars in the United States. I am encouraged to intervene because in this House there have been many debates of this kind and many of us have been disquieted at the reluctance of the Government to intervene long ago in the direction of giving greater encouragement to the production of goods for export. But it is now necessary to concentrate attention on loosening the machinery so as to make a greater volume of these overseas sales possible. I have spoken to a good many of our consular officers abroad, and can give individual instances where one knows that greater expedition could have been shown and that danger exists of losing our trade. I hope that the noble Lord who is, I understand, to reply for the Government will be able to deal with that particular point.

The other point I wish to make relates to the uneasy feeling that one obtains from such despatches as one could see while abroad, reinforced in many cases, to my surprise, by several telephone conversations with those with whom I was in touch, as being connected with one of the controls in the last war—an uneasy feeling of anxiety, almost of dismay, as to what the position at the moment is. That has caused me to raise this point and to hope that it will be dealt with by the noble Lord. There is a suspicion that in those controls and for those trades where the Government have already found it necessary to interpose material controls involving the commitment of public funds, there is a failure to understand the importance of the mechanism of the merchant and the intermediary, in so far as that has been in the past an essential part of our commercial and industrial organisation. I am in ignorance of what may be the intention of the Government, but it is well to raise that point now because there is, I know, in Canada, extreme disquiet lest the policy followed by His Majesty's Government in the controls which have been injected during this war may disregard the maintenance of that delicate, highly technical organisation for collection and distribution, involving essential intermediary trades in the belief that all this can be substituted by Government machinery.

I am fully conscious that that is a subject which was discussed in the last war, and my noble friend Lord Addison must have spent a good deal of time listening to it. With some experience and a full sense of the difficulty of dealing effectively with conflicting risks, I feel justified in intervening in this debate in order to express the hope that the noble Lord will, in his reply, be able to give the House an assurance that the utmost regard possible is going to be had to the maintenance in this country of the long established machinery, in all its forms, which carries on our trade in peace time, because this is going to cause a reflex action in Canada, where it is already being watched with anxiety, and it might well be that there would be an unwelcome impetus to a similar tendency in the United States. It is on these grounds that I interpose, with some diffidence, for I am in ignorance of the policies which have been followed up to now.

4.53 p.m.


My Lords, my noble friend has raised a question of very great importance, and I can assure him at the outset that I am not in the least complacent. My noble friend Lord Phillimore was afraid I was going to be complacent, but I assure him that His Majesty's Government are fully alive to the very important question of keeping up our export trade to which he referred and on which he is such a great authority. We have here two distinct points of view. There is the point of view so ably expressed by Lord Mancroft, who is also a great authority on these matters, and by Lord Phillimore. They want really practically all Government control taken off.


Obstructive control.


That does not affect my argument. They want most Government control taken off and the matter handed back to private hands. I am afraid that is not possible, as I shall try to show later on. I can assure your Lordships that the Government, in imposing this control are doing their best to interfere as little as possible with the import and export trade on which our country depends. It is a well known saying that this country must export or perish. If that is true in time of peace, it is still more true in time of war. The question may be viewed from two angles. My noble friend who brought forward this Motion did not dwell very much on this aspect in his speech, but it is in the Motion where he asks the Government what steps they are taking to foster export trade in view of the importance of retaining, so far as possible, a proper equilibrium between imports and exports. The problem assumes concrete form in connection with the provision of foreign exchange to pay for essential imports. In other words we want to export as much as possible in order to earn sufficient to pay for essential imports. For exchange reasons, the countries to which we chiefly want to export are the United States, Canada, Argentina, Scandinavia, Holland and Belgium. But my noble friend made the point that we ought not to exclude exporting, if we can, to other countries, especially the sterling countries of the British Empire.

The achievement of a sound trade balance is assisted by regulating the inward flow of goods as well as the outward flow. In normal times, as far as possible, the channels of trade are kept clear, but in war certain restrictions have to be imposed, and they are being imposed by the Government on two classes of goods—firstly, luxuries which can be dispensed with, and, secondly, goods which can be supplied from home sources. This control is helping to solve this part of the problem—namely, the equilibrium to which my noble friend has called attention. As regards exports, we cannot export at all costs. The question of cost is very important, and by cost is meant cost by way of expenditure in exchange, and particularly difficult foreign exchange. Under present conditions, it is exports of the more highly finished goods which contain the largest servicing content in proportion to the raw materials involved which are most desirable. Quite apart from the question of paying our way now, there is the long-term aspect to be considered, to which my noble friend referred. The last war, as we know, left a serious gap in the way of lost foreign markets. The fight to get back our markets, and keep them, during the last twenty-one years since the Armistice has been a very severe one. The Government do not want to lose them again, and will make every effort not to lose them, so as not to make our task of reconstruction after the war more difficult than it is going to be already.

My noble friend, and indeed all the speakers, referred to the fact that exporters have had a very difficult time during the last few months. I fully recognise that. I have to say that His Majesty's Government are trying to reduce the restrictions which they have had to place on the export trade. We had a debate on this matter only a week ago when a question was raised by the noble Lord, Lord Strabolgi, to which my noble friend the Under-Secretary of State for War replied. We were discussing, then, restrictions in connection with the export licensing system. This has only been imposed in order, first of all, to keep supplies of essential goods in the United Kingdom; and, secondly, to prevent exports from us reaching the enemy, either directly or indirectly. His Majesty's Government are trying to administer this as quickly and with as little hampering of the normal export trade as possible. As regards active steps to deal with this problem, my right honourable friend and the Board of Trade are in close co-operation with commercial and industrial associations, and I think the problem in this connection may be divided into two parts: first of all, the removal of immediate difficulties, and, secondly, plans for the future.


May I ask my noble friend whether, when he speaks of his "right honourable friend" he is referring to the President of the Board of Trade, or to whom?


The President of the Board of Trade. As regards the removal of immediate difficulties, the President of the Board of Trade sent a memorandum on October 17 to the Federation of British Industries, the Association of British Chambers of Commerce and the National Union of Manufacturers. I do not know whether my noble friend has seen this memorandum, but if he has not I shall be very glad to show it to him. My noble friend has pointed out the great importance of the maintenance of our export trade and the necessity for some kind of war-time control. May I point out to him that the one object of sending this memorandum was to remove the psychological difficulty that at the beginning of the war there was a feeling of great uncertainty among traders as to whether they could safely quote for export orders and the same feeling on the part of overseas customers? I am told that this memorandum has gone a great way towards removing any discouragement that may have been felt about the prospects of maintaining export connections.

As regards the second part of the problem, plans for the future, the Board of Trade are now in consultation with the major exporting industries. Discussions have already been held under the Chairmanship of my right honourable friend the Secretary of the Department of Overseas Trade with representatives of the woollen textile trade, the Irish linen trade, and the motor car industry. On the 30th of last month the President of the Board of Trade sent another letter, which I will show my noble friend if he cares to see it, to about thirty important associations, inviting them to frame plans for their particular industries and asking them to send information to enable His Majesty's Government to see what those plans involve by way of materials. It is hoped that the result of those inquiries will enable His Majesty's Government to allocate to exporting industries all supplies of raw material which will put them in a position to conduct their business with confidence.

My noble friend found fault with the system of pre-entry requirements. I am informed that a certain number of complaints have been received as to the pre-entry requirements but I am told they are not at all numerous. They appear largely to arise from a misconception of the object of the requirements, and such difficulties as have been experienced seem mainly to be due to the failure of exporters in some cases to furnish their entries promptly and in time. As exporters become familiar with the requirements such difficulties should tend to disappear. There have also been complaints, mainly from overseas, arising out of the declaration of ultimate destination. Most of these complaints appear to have been based on a misconception of what is required, and steps have been taken to ease difficulties. Both these matters are under constant review with a view to granting any further relaxation which will help traders without prejudicing the general object of these measures. In the second part of his Motion the noble Viscount, who dwelt upon this with some force, asked me whether the Board of Trade and the Central Priority Organisation of the Ministry of Supply are in full and close collaboration. The answer is, yes they are. I was going to give your Lordships an account of the composition of the Ministerial Priority Committee and the various Sub-Committes, but my noble friend did that for me, so I need not trouble your Lordships with it.


I did of the Sub-Committees but I did not of the Ministerial Committee. I understood the President of the Board of Trade was on the Ministerial Central Committee, but I am afraid there is nothing to show us who the other Ministers are on that Committee. If the noble Lord was going to give us that information I hope he will continue and do so.


All I can say about it is that the Ministerial Priority Committee was envisaged by my right honourable friend the Prime Minister in the House of Commons in a statement on April 20 last. It was set up on August 3 last, and it is a Committee of Ministers under the Chairmanship of my noble friend Lord Chatfield, the Minister for the Co-ordination of Defence. As my noble friend has said for me, and I say now, my right honourable friend the President of the Board of Trade is a member of that Committee. But I am coming to my noble friend's objections. He found fault because of the fact that the Parliamentary Secretary to the Board of Trade was not a member of any of the Sub-Committees.


Not Chairman.


He is not Chairman, I know. It was thought that the Chairmen of the various Sub-Committees—the present holders of those offices—would be most suitable for the position of Chairman. I do not mean personally but because of the offices they hold. I should like to say in answer to my noble friend that there is always a right of appeal from any of the Sub-Committees to the Ministerial Committee. If the Board of Trade were aggrieved by a decision of one of the Sub-Committees they could refer the matter to the Ministerial Committee. In fact, no such appeal on behalf of the export trade has so far been necessary, since the Priority Sub-Committees have shown themselves fully alive to the importance of export trade.


Before the noble Lord leaves that point, what I said was that, having regard to the fact that a representative of the Board of Trade sat on a Committee with many other representatives, the special question with which it has to deal—exports—was probably likely to be smothered, and that if it were not smothered—I did not use the word "smothered" at the time—in any case there are other representatives dealing with their own special matters, and it is not possible for one individual or two individuals to press their own policy through a committee, a policy which, after all, is second in importance to armaments, so that there is not sufficient representation to be able to make that policy felt.


I quite see the noble Viscount's point, and I would like to set his mind at rest, if I can. Although the Parliamentary Secretary to the Board of Trade is not a member of any of the Sub-Committees, there is a very high official of the Board of Trade on each of those Sub-Committees. I am perfectly certain that if he were aggrieved he would have sufficient desire and sufficient weight to make his views known pretty forcibly, and he could appeal in the way I have just stated. But I will, of course, bring what my noble friend says to the notice of the Department, and it will appear in the OFFICIAL REPORT to-morrow. I am afraid that is all I can say about that.


And what my noble friend Lord Mancroft said on the same subject?


Yes. The noble Lord opposite, Lord Addison, in a most interesting speech, brought forward what were to me some exceedingly technical matters about these priority committees, and raised the whole subject. He will forgive me, I think, if I do not answer him now. Such a contribution as that of the noble Lord to this debate is bound to be taken notice of by the Department, and I am afraid that that is all I can say about it at the moment. I have dealt with most of the points raised to the best of my ability.


May I ask the noble Lord whether he can say what is the aim of the Government in present circumstances? Is it to maintain as far as practicable the maximum of export trade and to deal with distribution in those industries to which the Government have had to pay particular attention so far as it involves the employment of public funds? May I also ask whether he can make any statement about the use of the telephone to the United States of America? It is a great disadvantage that, while business men in the United States can telephone to Germany, they cannot telephone to the United Kingdom. It makes a great difference to the trade between the two countries.


I am afraid I must ask the noble Lord to excuse me from answering those questions at the moment. The first question is rather technical, but as regards the use of the telephone I can probably ascertain the position, and if he will allow me I will speak to him afterwards. We have had a very interesting discussion. I think it is very useful that this question should be discussed in a helpful and friendly manner, as discussions always are in your Lordships' House. I am sure we are all exceedingly obliged to my noble friend for bringing the matter before the House, because the debate will not only help His Majesty's Government and therefore help the country, but it provides another proof of the value of our Parliamentary institutions, a value which is just as great in time of war as it is at any other time.

5.13 p.m.


My Lords, I should first like to thank the noble Lord for his courteous reply. I was very glad to hear from him that the Government do not view this question complacently, but that they really realise the extreme importance of it in the economic interests of the nation. I must confess, however, that after listening to the criticisms and suggestions that have fallen from noble Lords who have taken part in the debate, I am disappointed with the reply given by my noble friend. He referred to certain memoranda which had been issued to certain commercial bodies in this country. I know that in at least one case a reply was sent acknowledging what was contained in the memorandum of October 31, but pointing out that many points which were not dealt with in the memorandum required attention. It must be obvious from what we have heard this afternoon that there are many points to be cleared up in the control which now exists of the delicate machinery of commerce.

I am particularly disappointed with the reply to the suggestion of the appointment of an expert committee to assist in the special question of exports. In that matter I was very strongly supported by my noble friend Lord Mancroft, who has great experience in these matters. Others to whom I have spoken on the subject believe that it will not be possible to deal properly with the question of exports until there is a committee set up to deal specifically with it. I wish to urge the Government not to leave this question merely to the President of the Board of Trade or his officials. It is not enough to say that the debate will be read in the OFFICIAL REPORT, or to say that note will be taken of it. I would ask my noble friend to urge upon the Government that there is a strong body of opinion in favour of setting up an expert committee, consisting of people who understand the question thoroughly and who will be able to advise the President of the Board of Trade and the Central Priority Committee immediately, so that it will not be necessary when criticisms are received to go out amongst commercial people in order to get suggestions which will ultimately result in these mistakes being rectified. I am glad that I raised this matter this afternoon, because I feel that it has been shown that it was necessary that the subject should be aired on the floor of your Lordships' House. I hope and believe that the noble Lord will take steps to see that proper note is taken of what has been said. I beg leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.