§ Debate resumed (according to Order) on the Motion moved on Tuesday by Viscount Wimborne—namely, That there be laid before the House Papers relating to the position of British exports as revealed by figures recently issued by the Board of Trade.
§ 12.13 p.m.
My Lords, before I moved the adjournment of this debate on Tuesday, we had all of us listened with, I am sure, the greatest pleasure, on account of the charm of his diction, to a speech by Lord Stanley of Alderley. As he is not in his place to-day I do not feel that I am, perhaps, called upon to follow all his points too closely. Moreover, I think that all your Lordships while enjoying his speech will have remarked that it was, in many respects, 199 rather indirectly relevant to the debate. I would, however, like to recall that the noble Lord started by twitting myself and my friends who sit on these Benches with what he suggested was our addiction to nationalization as a panacea for all ills, and then went on to ask for Government assistance, Government finance, Government backing for loans, Government aid of every sort and description. In fact, he asked for everything from the Government except the amount of Government control which I feel, if he obtained from the Government everything for which he asked, any Government of any colour would be bound to demand.
I do not wish to go over points which have already been made, but I would like to make one reference to the speech of my noble friend Lord Bledisloe, who always pleads so eloquently in your Lordships' House the cause of British agriculture. I am not pessimistic on this subject. I believe that with so many of our invisible export6–if not all of them—gone, it will be essential that British agriculture should be developed and fully employed. On the other hand, I think that Lord Bledisloe would agree with me that it is not desirable that British agriculture should attempt to undertake the production of forms of agricultural produce which can be produced better, more easily, and more cheaply abroad, until, at any rate, it has produced in this island everything that our people require of that kind of produce to which it is most adapted, and which can only be supplied from our own soil. However, as I say, I am not pessimistic, and I do not believe that the noble Viscount is really too pessimistic himself, about the post-war outlook for British agriculture.
§ VISCOUNT BLEDISLOE
May I interrupt my noble friend to say this? As regards primary produce, of course a large amount of it which we cannot so easily grow ourselves has, in the past, been imported into this country. But there has also been a very large amount imported that we can produce and produce at least equally as good as any importing country. That is the sort of competition against which, I hope, we shall be protected in the future.
The noble Viscount has in fact confirmed my own 200 idea of what probably his view would be on that point. But on this subject of exports there are, amongst speakers generally, I think, an excessive number of Jeremiahs. The situation is, I suggest, a difficult one, but is not by any means catastrophic. We are, in many respects, in a much more favourable position than is commonly stated, at any rate in public. But we have heard already in this debate a considerable number of speeches about British exports. It seems to me that we have heard an inadequate amount about British imports, because, after all, imports and exports are two sides of the same coin. There is no point in exporting for export's sake. You export only to import. At least most countries do, though there are certain countries which export in order to maintain home employment, and they demand payment generally in gold. But according to the most modern view such a form of exporting is really self-robbery because, as in the most famous case, that of America, the gold is simply plunged into vaults. Nobody, I may say, appears to know whether there is any truth in the story that all that gold that was put in the vaults in America has fallen through the bottom of those vaults into bottomless caves. And it really does not matter if it has done so, so long as everybody believes it is in the vaults. But in any case nobody is one golden dollar the better off. The gold is there somewhere and I would suggest to America that they should put it over the Statue of Liberty or the dome of the Capitol. It would look much nicer there. Quite clearly it is useless where it is. The workers of America, in being paid in gold, have been robbing themselves. We, in this country, are not in that position. We export to pay for our imports and it is, I think, essential that these two sides of what is clearly the same question should be kept always very much in mind.
International trade is really a labour-saving device. We import things from abroad which can be produced there more easily than at home, or things which cannot be produced here and for which, if we wanted to obtain them within our own borders, we should have to find substitutes, which might be expensive to produce and far less satisfactory in use. It is a labour-saving device; but there is no point in saving labour unless we use 201 it, and we must be sure that if we save our labour by international trade we do not produce unemployment at home. This, I think, was the burden of a great many speeches which we have heard; to some extent it was the burden of the speech of the noble Viscount, Lord Bledisloe. We must have a home policy for full employment, because, if we do not, our export trade will be no use to us.
From what I have said about imports and exports, it follows quite clearly that if we are going to give priorities in labour and material for the p7oduction of exports, we must also control the imports which are being paid for by those exports. It would not be right to grant priorities to the producers of exports and to allow the foreign exchange obtained by the export of the goods so produced to be spent without due regard to what is in fact the national need in the way of raw materials. I suggest, therefore, that an export drive makes sense only when it is combined with the control of imports. We have heard from several noble Lords a good deal about export credits. Since the object of our exports, as I have already said, is to pay, for imports, I do not consider that the extension of long-term credits should be indulged in too freely in order to subsidize our exports, because what we must aim at first and foremost is the payment by exports for current imports. The only credits for exports which seem to me to be justified are those which will lead in the future to cash payment for further exports. For example, it is clearly worth while to develop a market abroad if we can be sure that it is going to remain a market, but it is not worth while giving long-term credits for the export of consumer goods which will give rise to no further demands in the future.
That being so, we have to consider the position of those firms—and there are many of them at present—in this country which have built up during the war period very considerable reserves. It will undoubtedly be possible for a considerable number of firms to grant themselves credits towards exports. If this is done it may not be done in the national interest; it may not be done according to a national plan of development for bota import and export trade. It is therefore necessary that there should be a firm Government policy on this matter, and that there should be a control of the resources of 202 private firms in order that they may not finance exports, even from their own resources, which are not in the national interest and which in fact the nation as a whole will not be able to afford.
I come now to the organization of our export trade. It has happened in the past, and it will, unless the Government take steps to prevent it, inevitably happen in the future, that one British firm spoils the market for all other British firms in a certain trade. Such behaviour is natural and inevitable in conditions of free competition, but it is clearly contrary to the national interest. I suggest, therefore, that exporters should be encouraged, and if necessary coerced, to form among themselves export groups which will fix minimum prices for British exports in their own sphere. Clearly it will not be expected that I, speaking from these Benches, will make a proposal of that kind without proposing at the same time that the Government should take strong measures to control such export groups. They should, I maintain, encourage their formation for mutual benefit, but they must necessarily take a degree of control over their future activities.
Foreigners who may be desirous of buying our produce may have some difficulty in seeing in advance and choosing between those articles which they may wish to buy. I suggest that the export groups to which I have referred should be encouraged by the Government to set up showrooms in which their goods should be displayed for foreigners to see. If this is not possible—and I can see that it may be a difficult thing for a group of individual traders to do—I believe that it is a responsibility which would fall upon the Department of Overseas Trade, the Board of Trade or the Consular Service. I do not mind which Department takes over the responsibility, but I consider that the responsibility is one which the Government should undertake—to open permanent showrooms in which British goods can be displayed for the edification and information of foreign buyers. The State is already responsible for the provision of commercial intelligence, and I suggest that one of the Departments—the Board of Trade, the Department of Overseas Trade or the Consular Service—should make itself responsible for a far wider sphere of services to the commercial community than it at present provides.
203 I come now to the question of commercial policy. It seems to me inevitable—I think that there will be fairly general agreement that it is inevitable— that after this war there will be a good deal of Government control of imports in foreign countries. Imports, if they consist of raw materials and foodstuff, are a bottleneck which it is fairly easy to control, and one which Governments which desire to control their trade policy will inevitably seize upon. The result of this will be that our traders will find that in very many cases in the future they have to deal not with a private buyer in a foreign country but with a Government Department. It is clear, I think, that in those circumstances the private trader will be at a considerable disadvantage; and I believe that whether they wish to do so or not the British Government will have to go into business on behalf of the British exporters when dealing with foreign import boards. As I have said, in my view imports and exports are only opposite sides of the same coin. I have already said that the control of imports is a bottleneck which any Government can fairly easily control. Also in a country like ours, since our major imports are foodstuffs and raw materials, which can be bought, and have during the war been bought, in hulk, they lend themselves particularly to long-term agreements.
I am so anxious lest we may find that we have signed up long-term agreements for our imports whilst leaving the whole of our problems of export to chance. Our exports consist of a vast variety of different kinds of articles, of all shapes, sizes and values. When dealing with such articles it is excessively difficult to control them by any other method than through that of money. I believe it will be found necessary, in the post-war period at any rate, to control imports by controlling money, by introducing clearing and blocked currency arrangements. I know that this is a sin against the spirit of the Old Lady of Threadneedle Street. I have no doubt that I shall be attacked; I can see several of my neighbours on the Benches above the gangway bubbling with the gospel of conventional finance. But I am not proposing clearing and blocked currency agreements as a desirable method of dealing with this business. I do not regard such arrangements as in 204 themselves a desirable end, but I do regard them as an inevitable method of dealing with immediate post-war problems.
I would point out that no such arrangement would necessarily entail, for example, two rates of exchange. I would suggest that the single official rate of exchange should apply to all currencies, whether it is blocked or whether it is convertible. Nor need it lead to the excessive complications of the German system, of which we had experience before the war. But I believe that a blocked currency system, in which the blocked currency should be exchangeable for other soft currencies or for the goods or services of other soft currency countries, and only unconvertible into dollars or hard currencies or gold, would in fact lead to an expansionist policy. Because the alternative is not as between, for example, paying for Australian wool with blocked or convertible currency, the alternative is between buying Australian wool with blocked currency or buying no Australian wool and producing some sort of substitute fibre in this country. The alternative—and let us put it quite clearly—is between a series of blocked currencies and free international trade, and between a highly convertible currency and national autarchy. Between those two choices I think that most of us would not hesitate.
Clearly such an arrangement is foreseen in the Final Act of the Bretton Woods Conference. There it is suggested that there should be a transitional period. My anxiety in connexion with the Bretton Woods Conference is that it has set too definite a period. It has been suggested that the transitional period should be from three to five years. I am extremely doubtful whether even the longer of those two periods will be sufficient. I think it would be unwise to tie ourselves to a limited transitional period, or indeed to tie ourselves now, before we can see the shape of things to come, to any such agreement as the Bretton Woods Agreement. I would suggest that such an arrangement—and I am not saying that it is not desirable; it is if it will work—should be drawn up; the framework should be there, but no one should be committed to it until such time as he finds that conditions permit him, and then he should say to the contracting Powers, "Now we would like to come 205 into this agreement and work it, because we think it will make for a freer international trade and not for national autarchy."
I have said that I am not a pessimist about exports, I am not a pessimist even when I consider that we have to pay with exports for our imports, because in looking at the recently published statistics of our war effort some rather remarkable figures emerge. Other members of your Lordships' House have no doubt remarked them and, I expect, drawn from them the same comfort as I have myself. It would appear, for example, that the total production of this country rose by 40 per cent., although at the same time the volume of imports of raw materials into this country actually decreased by about 5o per cent. The value of retained imports in 1935 prices fell by 40 per cent. But I am reliably informed that it is likely that had the shipping position been freer the drop in value would have been more nearly commensurate with the drop in volume. These figures demonstrate, I think, conclusively that, urgent though our need of imports is, if tied clown, if driven into a corner, we should be able by selective control of imports, by the full utilization of cur home resources, by the full use cif scrap and waste products, enormously to increase our production, and it is upon our home production of course that a full employment policy, and consequently the social security measures which we have been talking about recently depend; we should be able to increase our production without increasing our imports, and even while very considerably decreasing them.
I am not suggesting that such measures are desirable; I am only suggesting that they are possible, and therefore we should not be too pessimistic. If a choice is between imports and unemployment here and the production even of synthetic goods here and the cutting down of imports, I believe that any wise Government would choose rather to have full employment here than the- alternative of unemployment. Nothing is so extravagant as unemployment. Apart from its human effects, it is a thoroughly unhealthy atmosphere for all progress, for the hope of the introduction of labour-saving devices, in a country which is suffering from it in a high degree. Our position is difficult, but it is not, I believe, hopeless, far from 206 it. I believe that we should make our customers abroad understand that exports are not merely a way of benefiting us personally, but that if they do not take our exports the result will be that their sterling credits will become permanently frozen and their export market to Britain—and Britain, let us not forget, is probably the largest single market for foreign exporters in the world—will disappear. I believe that if we can make our case to our customers we shall find that they are only too eager to buy from us.
I have said that I am not pessimistic about our export position, but I cannot resist to-day saying one word about the psychological position. Exports must depend upon our relations with those foreign countries; upon friendly relations with our customers in international trade, as in the smallest trade transaction within our own country, depends, to an immense amount, whether an order will be given to us or not. Our Spitfires, which are perhaps at this very moment flying over Athens, may be demonstrating most effectively the skill of our aeronautical engineers, but I doubt very much whether the machine-gun bullets which are coming from them and are killing Greeks will be recommending our products to their bereaved relations. I believe that the maintenance of friendly relations is essential to our exports, and, though I am not pessimistic about our export position, I am to-day very heavy-hearted and pessimistic about the political side.
§ 12.43 p.m.
§ LORD LUKE
My Lords, the noble Lord, Lord Faringdon, who has spoken, seems to be rather inviting with great pleasure any attacks on certain things he has just said, but I notice he expected the attack to come from his right wing (the Liberal Benches), and therefore I dare say he would not be expecting any sniping from this direction. I would rather read in the Official Report what he has actually said about conventional finance and export groups. No doubt I shall be able to study it rather better there, so I will leave it, except to say this: if I understood the noble Lord correctly, what he said was rather in the direction of further controls, just at a time when we were rather hoping we were going to have a little freedom from controls. I am very glad that this debate has been given a second day, because it is a most important 207 subject and it has given a chance to some of us who do not often speak in your Lordships' House.
I want, if I can in a few moments, to strike a balance sheet between the adverse factors affecting our exports at the moment and the factors that are advantageous. We have had a good deal of enumeration, both in this House and in another place, of our liabilities, and I do not minimize those liabilities at all. It is perfectly true that our old trade has gone, but I would remind your Lordships that Mr. Oliver Lyttelton, in another place, emphasized only yesterday that our old trade has not withered but it has gone of set purpose as the result of Government policy. It is perfectly true that our old markets are looking elsewhere or are producing goods for themselves, in so far as they can. We have lost our old contacts, and it is not easy, in fact it is almost impossible, to renew those contacts at the present time. Our invisible exports—well, they have probably become even more invisible. These are what I might call the external liabilities, the adverse factors in the international sphere over which we have no control. The adverse factors at home are, to my mind, in the first place the controls which so many of us deplore but which others do not actually deplore but probably rather favour. That reminds me of what the noble Lord, Lord Faring-don, said in reference to Lord Stanley of Alderley's speech. But surely, where there are controls and where the controls are exercised by the Government, that is a reason for industrialists to come to the Government; it is the only place to which they can come when controls are effected.
I am not minimizing the seriousness of those adverse factors, but I would invite your Lordships to look at the other side of the balance sheet. Now we have in this country a capacity to produce which has proved itself during this war to be of immense value; we have the ingenuity and the work of our people, and we have something that is rather indefinable in our goodwill. I know that many people are rather apt to look at the goodwill item in balance sheets, see it down at a certain figure and think "Well, that ought to be written off." I do not agree with such people, and I do not agree here that we should write off, as of no value, the goodwill that we 208 have throughout the world. This goodwill is surely going to stand us in very good stead when we come to try and remake our old contacts. Surely it is going to stand us in very good stead when we are able to enter our old markets, and I believe there are many of our old markets which are still ready and willing to see us. One very potent exponent of our goodwill is the recent White Paper on the War Effort of the United Kingdom, which has had an extraordinarily good Press all over the world. I would suggest to exporters that that White Paper should be sent out to as many people as possible to enhance our goodwill in our old markets—that is to say, if His Majesty's Stationery Office can stand it. The noble Earl, Lord Glasgow, suggested that we should have display houses in foreign countries. I consider that a very good idea, and my noble friend Lord Faringdon also spoke of the same thing, though he used a different term.
We have other things in the international sphere that are on the asset side of the balance sheet. There have been some most important talks going on in the United States of America and I am very glad that we have Lord Keynes there. No one could be better than he to plead our cause. It is most important, as many people have emphasized, that we should avoid a scramble for markets after the war. Anything that can be done in the, international sphere for co-operation cannot fail to be helpful to this country. We must of course ensure a place for ourselves after the war but we are not asking for a gift of exports. There should be, and will be, room to compete within the proper framework. We have good news of the rearrangement of the Lend-Lease Act; and last, but by no means least, we have the Prime Minister's attention. I think that in itself is of great intrinsic value and at the same time is an indication, when he can give his attention to this matter, of the good progress of the war.
I have tried to make some sort of a balance. It is difficult to do it. There are obviously at the moment rather more adverse factors than good ones, but I would suggest to your Lordships that there is by no means a minus account. I think there are one or two things that 209 can be done to improve our internal assets. In the first place I would ask that there may be more practical and sympathetic help from Government Departments. We have got Government control at every turn and, as a noble Lord said the other day, it has led to, frustration. I am well aware of the impatience of industrialists. We are impatient, but may I suggest to your Lordships that our impatience should not be so much with the Government as with the stubbornness of Germany? I would ask the Government to listen very closely to those who do know the export trade. I was very struck with something the noble Lord, Lord Winster, said the other day. He suggested that there should be a co-ordinating body between the Government and trade associations. I should like to support that idea. I think nothing but good could come from it, and at the same time it might lead to the Government paving more attention to the advice of chambers of commerce who, after all, do give a very close study to these matters and are in very close contact with trade.
Government spokesmen have emphasized the need for exports and this is an appeal to exporters to do their best. I suggest that exporters are rallying to that call, but they appeal to the Government in their turn not to hold back anything which can assist them and they ask for a rather more generous attitude. There are signs of a very great effort on the part of the Government in the highest sphere, the international sphere, but I am going to suggest that this assistance and sympathetic consideration has yet to percolate rather further down the scale in the Government Departments. We have heard a good deal lately about private enterprise being on test. Yes, private enterprise is on test; but I would suggest that it has probably been on test during the war and has not been found wanting. Any such test now should not be a test of private enterprise with its hands tied behind its back. I am well aware that there is plenty of criticism, probably perfectly justified criticism, of our old methods of marketing in the export sphere, but we have yet to see what we can do after the war when we shall have new and young blood, which is not available at the moment, to try what it can do in industry and exports. I was very tempted to add a few words to this Motion but I have no doubt that would 210 be out of order. I would have said that this House welcomes the efforts already being made by the Government and looks forward to a very close and sympathetic co-operation of the Government with industry.
§ THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR INDIA AND BURMA (THE EARL OF LISTOWEL)
My Lords, I think it probably would be convenient for your Lordships to adjourn now.
§ House adjourned at five minutes before one o'clock and resumed at two o'clock.