§ LORD STRABOLGI rose to ask His Majesty's Government whether they have any information about the reports in the British newspapers of a private loan of two and a half billion dollars arranged by a group of American industrialists and financiers to the Government of the U.S.S.R. to facilitate the supply of American machinery, machine-tools and other goods for reconstruction purposes in Russia; whether similar arrangements are being made, or are contemplated, to facilitate British trade in capital goods to the Russian market; and to move for Papers.
§ The noble Lord said: My Lords, in moving the Motion which stands in my name, I need not remind your Lordships that this is a matter of considerable interest upon which I am seeking information, and my noble friends and myself 897 attach a good deal of importance to it. It is not at all an unsuitable subject for Empire Day, because, naturally, I include the members of the British Commonwealth when I ask for information about steps to be taken, in the future, to facilitate trade with the great Russian market. If the statements in the British newspapers, to which I have referred, about a large private loan to Russia for trade purposes by a group of American financiers and industrialists, is true, I want it to be understood that I am making no sort of complaint at all. I only admire the far-sightedness and rapidity of action of these American financial magnates. But it is remarkable that, while there is still not an over-friendliness for Soviet Russia in certain American business, religious and political circles—as anyone who reads American newspapers will appreciate—the American financiers and industrialists are realistic enough to show willingness, not only to trade with Russia, but to take risks. They also showed considerable enterprise in the Russian market before the present war. On the other hand, during the period between the two wars, their British counterparts, the financial and industrial magnates of this country, I am sorry to say, because of their political prejudices, lost business with Russia—which they could have had—despite the high credit standing of the Russian governmental trade agencies. That is only too true, but I presume that His Majesty's Government will give no encouragement to so short-sighted a policy in the future.
§ The position with regard to our trade with Russia is that, apart from the Cooperative Wholesale Society and one or two engineering firms, there were no important groups in this country who seriously tried to develop the Russian market. Those who did had excellent results—the one or two engineering firms to which I have referred and the C.W.S. The information which reaches me, which I dare say the Government will confirm, is that after the war there will be a very great need in Russia for capital goods of all kinds, and also that long-term credits will be needed. I have studied this matter for many years. I represented in another place a port which owed its past prosperity to the Baltic trade, so that it was my business to know about it. I believe that British and Russian trade and manufacturing 898 facturing are really complementary; we are natural customer each other. For example, after this war, we shall have to face great timber shortage, and the timber, oil and other raw materials and the foodstuffs which there Russians can supply are just what we require, while we can make to perfection there the electrical equipment, the machine tools and the heavy capital goods which Russian reconstruction will need. I am very glad to see that at least one leading British firm of electrical engineers has already signed contracts to supply equipment for Stalingrad in Russia. At the present time the united kingdom commercial corporation seems to have quasi- monopoly of all foreign trade, including trade with Russia That is natural, because its work is very largely concerned with Pre-emption, which is not a commercial process. I understand, however, that there will be grave dissatisfaction amongst British merchants and manufacturers, apart from those who may expect to enjoy its favours, if the United Kingdom Commercial Corporation continues its activities after the war.
§ This subject was raised within the narrow compass of a Parliamentary question on May 16 last by an honourable friend of mine, and Dr. Dalton, replying for the Government, gave an unexceptionable answer, which I have here; but from that answer I did not get the impression that anything very big was visualized. It was a typical Departmental answer. Let us compare that with what is happening on the other side of the Atlantic with regard to the Russian market. I have cuttings here from a number of reputable British newspapers, and I should like to refer to one or two of the headlines. The Financial Times says that American firms may acquire orders worth some £375,000,000 from the U.S.S.R. in the next six months. The Financial Times quotes the current issue of the American Business Week as stating that, in the negotiations now under way for huge postwar orders with Russia, more than thirty large private businesses are concerned. One American company, it is stated, is said to have agreed to initial orders up to £60,000,000, while another has set a limit of £205,000,000 on the initial credit. I understand that the American Government have nothing whatever to do with this. It is entirely a private venture by American financial and business men.
899§ The brilliant [...]correspondent of the Daily[...]Iddon, whom I am sure your[...] proceeding between the Soviet and[...] that is actually I do not know what[...] that as a result of case. He says Russia will buy of these negotiations of capital goods £2,500,000,000 worth is over a ten-year from the United State News says that period. The Financial [...] dollars are orders for 1,500,000 [...] six months. The same paper under speaks of a "Lombard Street" [...] post-war loan to 2,500,000,000 dollars [...] Russia, and then goes on to describe the capital goods which [...] be supplied and the excellent arrangements which will be made for long-term [...] and so on, and says that the authorities in Moscow are very pleased. I need not quote the whole of it to your Lordships, but correspondents of reputable British newspapers. Again I say I do not make any complaint; I can only congratulate our American friends on they [...] foresight, courage and acumen.
§
But compare that with [...] answer given by my right honourable friend Dr. Dalton in another place, when asked about this. If I may, I will ask [...] Lordships kindly to mark these wor[...]
The question of export credit[...]war trade, both with Russia [...] countries, is now being studied an[...] touch with my right honourable [...] Chancellor of the Exchequer on the [...]
§ Compare that with the statements about what is going on amongst the [...] men in New York and other American cities. "I am in touch with my right honourable friend the Chancellor [...] Exchequer on the subject"£ Tho[...] departmental, quite correct and [...] tionable, but not to be compared range or scope with what the Americans have in mind. I repeat that we can only congratulate the Americans on what they are doing and admire it; we have no right to make any sort of complaint at all.
§ I do not agree with those who, [...] noble Lord, Lord Rennell, whose [...] speech we all so much enjoyed, say that after the war we shall have to fight for our economic life. I am all for co-operation among our Allies in the trade of the 900 world. There is plenty for everybody, and the need for goods of all kinds, and capital goods particularly, in the post-war world will be immense, and we shall all be stretched to provide them. Certainly there is room in the future Russian market for both Britain and the United States of America, and in fact for the whole British Commonwealth and the United States of America. Russia's needs are immense and its future development will be very great indeed. Remember there will be a great vacuum left in Russia' by German industry. The idea of the Allgemeine Elektrika Gesellschaft, for example, providing dynamos for the city of Stalingrad is absurd. I do not think that any German business man or merchant will dare to show his face in Russia for very many years after this war, whereas the Germans before this war had a very large and flourishing business with Russia.
§ I agree, of course, that in looking ahead the Government have to take into account a number of what I may call imponderables, a number of factors which it is difficult at present to gauge. For instance, we do not know whether Lend-Lease will be continued after the war to Russia, and whether it will continue in peace-time goods. The Government may have information on that score, but I certainly have not. That will obviously affect the whole situation. The future operations of U.N.R.R.A. will presumably extend to Russia, and that may make a great difference. Then there is the question referred to by my noble friend Lord Bennett in the recent debate on currency plans—the question of whether the present bulk purchases and pooling of supplies between the Allies will continue. I rather gathered that my noble friend believes that they will continue for some time, and I venture to share the same opinion. That, of course, will affect the whole trade position. Another important matter is what reparation goods Germany and her satellites will be required to provide for Russia. I imagine that a very considerable volume of reparation goods will go from Germany and German satellites to Russia as part of the peace settlement. Incidentally, your Lordships will not have allowed it to escape your notice that at present Russia is about the only country which can take large quantities of reparation goods without injury to her economy.
901§ Nevertheless, in spite of these imponderables, as I have ventured to call them, I see no reason, and I hope that my noble friend Lord Templemore, who is replying, will see no reason, why there should not be announced a broad Governmental policy for helping and guiding British industry and commerce in the Russian market. If credit assistance is required, as seems to be the case, it should be on a worth-while scale. We shall have to look to something far more ambitious than the operations of the Department of Overseas Trade in the past, if we are to take advantage of the immense Opportunities of this great market. At the same time, I repeat, I am sure we all hope there will be co-operation between all the Allies in this war in developing trade between them, and this particularly applies to Great Britain and the United States of America. If there is to be a wild scramble for markets as the noble Lord, Lord Rennell, suggested in the interesting maiden speech which he made the other day, I think that would be unfortunate. At the same time, if our timidity, or prejudice, or lack of enterprise results in our not getting our natural share in the Russian market in the future—and the word "natural" is the operative word there—there will be, I believe, great blame attachable to His Majesty's Government and to the leaders of British finance and industry.
§ I believe I am right in saying that there has been a great reversal of opinion among the British public generally, including the men in the Forces, in favour of the Russian nation during the last three years. That was natural; they are comrades in arms, and there has been much admiration for the great military feats of the Russian forces; and I believe our people are determined that everything possible should be done to make a firm and lasting friendship and alliance between he British Commonwealth and the U.S.S R. I believe the great mass of the people are determined on that and the exchange of goods by trade is one of the ways in which this can be accomplished. I am sure the Government realize all this, and I look forward to a sympathetic and helpful reply from my noble friend. I beg to move for Papers.
LORD RENNELLMy Lords, the noble Lord has been good enough to refer to one point I made about competition in the export markets. In spite 902 of his rather optimistic view, I feel that there will be considerable competition between America and ourselves and other producing countries in the export markets generally and in the Russian market in particular. That is the particular point in the noble Lord's Motion on which I for my own part would like to have a little explanation from His Majesty's Government in regard to what has happened in the past to credits that were made available for trade with Russia.
LORD RENNELLPre-war, but post-revolutionary Russia. It will be within your Lordships' recollection that in 1936 an agreement was come to with the Soviet trade representative relating to guarantees in connexion with the export to the Soviet Union of goods manufactured in the United Kingdom. That was Command Paper 5253. That agreement provided for guarantees to be extended by the Export Credit Department up to a total amount of £10,000,000 in respect of orders placed by the Soviet import organization with manufacturers in the United Kingdom during the period 1936 to 1937—the 30th September, 1937. The terms of that arrangement were that five-year credits would be extended under the guarantee of the Export Credit Department in respect of orders placed in this country. The Soviet Trade Commission were, very properly, to be entirely free in placing these contracts and in regard to the terms and prices of these contracts. The credit arrangements were perhaps not wholly satisfactory in certain respects, but what I should very much like to know is to what extent they were utilized, and whether in point of fact the whole of the £10,000,000 guaranteed was utilized.
May I remind your Lordships that the terms of that agreement were that the Soviet Trade Delegation were to issue promissory notes with a five-year maturity, which would carry interest at the rate of 5½ per cent. per annum? Under the guarantee of the Export Credit Department those notes were financed in London at a very much lower rate, and that paper was in fact issued in London for the purposes intended. Was the whole of that credit drawn, and if not, what was the reason? I do not know whether 903 the whole credit was drawn or not, but it appears to me that at the time when the Soviet Government were entirely free to choose their market for their purchases, and did in fact order goods not only in the United Kingdom under that credit and by other arrangements of which your Lordships will be aware, the Soviet authorities also ordered large quantities of machinery in the United States, in Germany of course, in Sweden, Italy and other countries. During those years, when many Governments and many countries (but whether this country was one of them or not is a matter on which I forbear to comment) were unfriendly to the Soviet Government, the Soviet authorities nevertheless placed their orders there. I refer in particular to the orders placed in Germany under a Nazi Government, and placed also in Italy. I think it is a legitimate conclusion that the Soviet authorities bought where it suited them, bought in fact the goods that they wanted and of the sort they wanted, irrespective of where they came from and what Governments were in office in the countries where they bought. They did as a matter of fact also buy substantial quantities of goods in this country; it was for that purpose that the credit was granted.
These facts have this bearing on the noble Lord's Motion, that in the postwar period, during which Russia will have to re-equip herself and possibly extend her material equipment in machinery and machine tools, the Soviet authorities naturally will buy precisely where it suits them; and if this country is in a position to produce the goods which the Soviet Government wish to have, I have no doubt that those goods will be ordered here. If goods are ordered here, it is quite inconceivable that credit facilities cannot always be found. The circumstances have changed a great deal since those years when there was an actual difference as between the 5½ per cent. paid for these credits and the 2½ per cent., at which those bills were sold in the London market. It will surely be possible for existing institutions, in co-operation, if necessary, with semi-Government institutions like the U.K.C.C., to provide for all the credit machinery necessary to finance trade. Surely the governing issue here is not the capacity, or indeed the willingness, of His Majesty's Government now or in 904 future years to assist this trade, but whether manufacturers in this country can produce the goods that the Russians want.
The circumstances in which we are situated make it clear that, with our industrial production at the present moment concentrated entirely on war production, it may not be easy to provide the machinery, the equipment, and the goods which Russia needs. It may be that the United States are very much better situated than we are. That is precisely what I mean when I refer to the competition, the fight, in export trade which this country will have to face after the war. Therefore the emphasis which I should like to place in speaking to the noble Lord's Motion is not upon whether credit facilities are necessary or will be provided, but on whether industry in this country will be placed in a position to supply the goods which the Russians need. Without that, it is idle to discuss what credit facilities are required. The latter will always follow the demand, but no amount of provision of credit facilities will supply the goods if the goods manufactured here are not precisely those which the Russians need. That is the main point on which I should like information—notably whether, with the credit facilities which had been provided before the war, there were sufficient goods of the right sort here in this country for the Russians to draw on that credit to the full extent which was provided.
§ LORD TEMPLEMOREMy Lords, my noble friend Lord Strabolgi has raised a very interesting question with regard to trade with Russia after the war and one which is, as he indicated, no doubt very suitable for Empire Day. He went into some detail regarding the political prejudices, as he called them, which prevented our business men from entering into commitments with Russia before the war. I do not intend to follow him in that because his question really refers to what we are going to do after the war. I propose to confine my remarks to that. The noble Lord's question is really in two parts. With his permission, I propose to deal with the second part first and to answer the first part at the end of my speech.
I am authorized to say that after hostilities cease with Germany, His Majesty's Government look forward to a very great 905 increase in trade indeed between Great Britain and Russia. They know that the Government of the Soviet Union share this hope to the full. His Majesty's Government consider that such an increase will not only be of economic benefit to both our countries, but it will also help to clear away any political prejudices that may still exist as between the two countries. As my noble friend said, a good many of these prejudices have already gone. We are all lost in admiration of the part Russia has played in the war, and on the Russian side they are doubtless not unmindful of the part we have played in helping her to do it. This hoped-for increase in trade, if it comes about, will do a great deal to cement the friendship between the two co entries which we all trust will come to pass. It may well be that Russia will, with the passage of time, make an increasing amount of her own requirements, but history has shown that this will be no disadvantage to us. International trade flourishes as the countries of the world become more prosperous, and the Government think that the skill and energy Which British manufacturers have shown in the past will enable them to take advantage of this increased prosperity in Russia to promote increasing exchanges of goods and services between our two nations.
The noble Lord in his speech was rather afraid that His Majesty's Government had done nothing. As a first step the Government have, as was announced in another place, already approached the Soviet authorities to ascertain what goods they are likely to want to buy in this country after the war. The Government of the Soviet Union have welcomed this approach, and experts of the two countries are even now engaged on working out lists of the goods which, so far as they can foresee, each country will want from the other. Before the final goal can be reached there is, of course, a good deal to be done In the fist place, it must not be assumed that each country will be able to meet readily or in full the needs of the other, at all events during the period immediately following the collapse of Germany. For instance, Russia will need many of her own native products—I would mention timber as one of the main ones—to repair the ravages of war in her own territory; and we for our part will have many essential calls on our industrial capacity both from home and overseas 906 markets which, for four years, have steadily run down their stocks of capital goods and consumer goods in subordination to war needs. Another point to which I should like to draw your Lordships' attention is that we must realize that, besides Russia, there are other friendly countries in Europe which have been overrun, whose plant has been either removed or destroyed, and whose resources have been squandered. They also will want our help.
A very important matter for discussion must be that of loans and credits, but it would be premature to say very much about that until such discussions have taken place. There are, however, certain considerations which should be present in the minds of anybody who thinks about this matter. The first is that during the nineteenth century this country was a creditor country on a great scale, and we hope to be so again, but, in tae opinion of most people who know, that may take a good many years. As your Lordships probably know, in order to carry on the war, we have parted with foreign assets to the value of £1,000,000,000, and we have incurred foreign liabilities to the amount of some £2,000,000,000 more. In order that we may be able to have a satisfactory standard of life in this country after the war, which our people demand and to which they are certainly entitled, we shall have to export very much more than we did before the war, and we shall have to do it on terms that will enable us to pay for our imports, including the imports of food and raw materials required to feed our people and to maintain full employment. We shall have to sell in order to buy, and the position will be very different from what it was at a time when we were a creditor country on a great scale. Nor can we afford to devote an undue share to any short-term objective, no matter how attractive it may appear at first sight. Right from the start our eyes must be firmly fixed on the long-term prospects. It is with this in view that His Majesty's Government attach such importance to laying now the firm foundations of a steadily growing trade with Russia, which we can be sure will remain when the immediate post-war demand has conic to an end.
Another point that I think we must remember is that the defeat of Germany will not mean an immediate relaxation of Government control over exports or any 907 thing else. For some time a certain amount of Government control will have to remain. I have no doubt that the noble Lord is a good Socialist and that he and those who sit beside him hope that it will remain for a long time. Personally I hope it will remain for only a short time, but that is a small matter of political opinion and circumstances will have to decide the matter. Subject to what I have said, His Majesty's Government would welcome any extension by manufacturers of their present contacts with the Soviet buying authorities. It would not be possible yet, I think, to enter into any commitments as regards fixed dates of delivery nor, probably, to enter into any firm arrangements about payments, but there is much to be done in the discussion of technical questions so that no time need be lost when firm commitments can be accepted.
I turn for a moment to the interesting speech of my noble friend Lord Rennell. I am very sorry, but I am afraid I cannot answer the points he raised. I know that the rules of your Lordships' House are wide, but I came down to the House to answer the question on the Paper and the noble Lord, Lord Rennell, raised some matters of which I had not been apprised, and I have not had time to get information upon them from the Department. I would therefore ask him to excuse me if I do not answer the points he put forward.
As regards the first question of the noble Lord, Lord Strabolgi, asking whether there is any information about the reports in the British newspapers of a private loan of two and a half billion dollars arranged by a group of American industrialists, I would recall to the noble Lord the answer—the substance of which I think he knows—made by my right honourable friend Mr. Dalton in the House of Commons on the 16th of this month. He then said he had seen in the Press reports of discussions between Soviet representatives and United States manufacturers regarding post-war trade, but that he understood the United States Government had taken no part in them. He went on to say that a number of manufacturers in this country had also been in touch with Soviet representatives, as I have already informed your Lordships. I think throughout the speech of the noble Lord there ran an undercurrent of suspicion 908 of His Majesty's Government and also of the manufacturers, an insinuation that we are being outwitted by the United States and are not fully alive to the importance of this trade with the Soviet Republic in the present and future. I can assure your Lordships that that is not so. The Government are fully alive to the importance of this trade. They know that some manufacturers are getting in touch with their opposite numbers in Russia and they hope that others will follow that example as soon as possible. I hope I have answered to his satisfaction all the points raised by the noble Lord.
LORD STRABOLGIMy Lords, I am very much obliged to my noble friend for his reply, the greater part of which dealt with the second part of my question as to the Government plans for future trade with Russia. If I may say so, that was satisfactory. With regard to the part of his reply which dealt with the first question, I think I have a grievance and I think your Lordships have a grievance. These reports of American trade credits have been very widely made in the newspapers and there has been much printed about this enormous credit of two and a half billion dollars for American trade with Russia. Apparently a great deal of the goods to be sold are for immediate delivery. That is a very large sum indeed. I quoted to your Lordships a figure showing that about £65,000,000 worth of American goods would be supplied in the next six months. That has nothing to do with Lend-Lease but was apparently in the way of legitimate and ordinary trade. The only answer I get is to refer me to what Mr. Dalton said in another place. What he said was this:
I have seen references in the Press to discussions between Soviet representatives and United States manufacturers, but I understand the United States Government have taken no part in them.So apparently all the information the noble Lord can give me here is that he, too, has seen references in the Press.Is that all he can tell us about it? Either the Government are withholding information, which I can scarcely believe, from your Lordships' House, or else their intelligence service is adrift in some way. I did expect more information about this matter. It is of the greatest importance to our future trade and employment and I think 909 we ought to have had more information. If the Government have not got it, well there it is. Perhaps my noble friend will give me an opportunity at a future date of asking him for further information. May I make one passing reference to what fell from the noble Lord, Lord Rennell. He reminded your Lordships of the roaring trade done in the City of London between the two wars by people who had sense enough to know that Russian credit was good, and who made money by discounting Russian trade bills.
LORD STRABOLGII am also referring to other Russian trading operations on credit. There were other discount transactions over oil and money bills for shipments. This, I was glad to hear the noble Lord say, is not going to happen again. It was a disgraceful ramp. May I also say this? Lord Rennell spoke of the Russian Governmental agents buying machinery in Italy and Germany or wherever they wanted to get it. Surely a good deal depends on what we buy from Russia in our turn. I have always been brought up to believe that in the long run trade is exchange and that if we buy the Russian products, such as they can let us have in the future, I imagine it will be easier for us to sell our goods to them. Despite the unsatisfactory nature of a part of the reply, I am grateful to my noble friend for the rest of his statement and beg leave to withdraw the Motion.
§ Motion for Papers, by leave, withdrawn.