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Soviets and Property Clause.

Genoa Conference. – in the House of Commons on 25th May 1922.

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The first challenge of principle came in regard to the claim put forward by the Soviet Government for compensation for ruin wrought in the civil war. They said: "Most of the smashing of property in Russia was done by you." I am putting simply the proposition which they submitted. They said that the damage was done by Denikin, Koltchak and Wrangel's intervention, and they put forward a claim in a certain document. The House will get a copy of it by and by. It is a very interesting document. It is for a trifling £5,000,00,000 sterling, which is said to have been the damage done in these various operations. We had to tell them "We cannot acknowledge that, under any circumstances." Historically, it is an unsound proposition, because in revolutions assistance has been given in the past by other countries to one or other of the parties. Assistance was given by France to the Royalist party in our Civil War, and, undoubtedly, the assistance that was given by France kept them going much longer than would otherwise have been the case. Therefore, there might have been a bill for reparations against France. Instead of that, I think, Cromwell made friends with France as soon as he could get the opportunity. On the other hand, we gave every assistance to the anti-revolutionary party in France, and I have never heard of France putting in a bill for reparations against the British Ministry of that date. The Russian claim in this respect was one that we could not acknowledge.

Photo of Mr David Lloyd George Mr David Lloyd George , Caernarvon District of Boroughs

We were prepared to take into account the fact that Russia was damaged by the civil war, and the effect of the destruction which civil war had wrought in their territory, that that is a question which a creditor is not merely entitled to take into account, but is bound to take into account, when he is considering what payment he can expect from a debtor. No doubt hon. Members have seen the document of the 15th April. It is a very important document, because it represents the first approach between the two parties. First of all, we said that we could not accept any liability, but we were willing, in view of the serious economic condition of Russia, to write down the claims for money advanced by Governments during the War. That was agreed to by France, Belgium, Italy and ourselves. But we could not accept any claim to be put against the money advanced by any nationals, by any individuals, to Russia, or acknowledge any counter claim to be put in its place in regard to damage done to property, or to property which was withdrawn from Russia. That was the proposition we put forward. There was a letter from the Russian Delegation which was not wholly satisfactory, but the powers came to the conclusion that it was good enough for us to go on with the discussion. That was the position at that date.

As I have already stated, when you come to the question of debts there is no insuperable question of loans to Russia in the past, and no insuperable question of principle which divides the parties. But when you came to property, the division was a much more serious one. I hope the Members of the House have got the Cannes Resolutions. The position of the European powers is very clearly stated in those Resolutions, and that statement of the case of Europe against the Soviet Government was never assailed by the Russians during the whole proceedings. They accepted the Cannes Resolutions. The first Resolution acknowledges the sovereign right of a State to do what it likes with property within its own territory. That was done in Czecho-Slovakia and Roumania. Property was transferred there with a minimum of compensation. We have had complaints from our nationals. We have never been able to interfere, because the sovereign rights of these communities were involved. But in Section 3 we say that, although a country has a right to do what it chooses with the property inside its own jurisdiction, still, if it is seeking credits from the rest of the world, it must either restore property or give compensation.

The powers were in complete agreement upon this. I will tell you where there was a slight disagreement, because a great deal has been made out of it. Our claim in respect of property was framed in the first instance by three of the ablest jurists in Europe. One is Mons. Fromgeot, a very able French jurist. Another is Sir Cecil Hurst, one of our most distinguished jurists. The other represents Belgium, and is a most able jurist and, in addition to that, a great banker. Those were the three men who drafted what became known as Clause 7 in respect of property, and the British Empire Delegation accepted their draft. It came before the Political Commission. I want the House of Commons to get these facts. The delegates of France accepted that draft, which was just as much theirs as ours, with the addition of one Amendment, which we thought was an improvement and accepted. There was, therefore, no difference of opinion between France and ourselves upon the Property Clause which is embodied in our Memorandum. Belgium took a different view. The Belgian jurist had helped to draft the Clause. The Belgian representative in the Conference refused to accept it. His view was the view expressed in the Cannes Resolution—restoration or compensation, which is the principle of every civilized Government. If a Government take land or property away it must compensate, but it has the full right to do that. The Belgian position was that the property must be restored if it were materially possible. That is not the Cannes Resolution. That was the only difference. France acted with Belgium afterwards—not in agreement, because they had already accepted the draft—but rather out of general sympathy with Belgium. But the whole of the Conference accepted the draft which was prepared by the British, French and Belgian jurists.

I thought it necessary to explain that to the House. Fortunately nothing arises out of it, because the Russian Delegation did not accept that document. They put forward a document which is known as the document of 11th May. There they went back a little upon their previous decision. In order to realise why they did so, it is necessary to state one or two facts, because the House cannot judge the Russian situation without understanding what that means. Between the date of the Villa d'Albertis conversation and the 11th May, the 1st of May intervened. Hon. Members opposite know what that means. It is not very easy to negotiate immediately after 1st May, and the same thing happened in Russia. There is no doubt that there has been a great struggle there between the practical statesman of the Soviet system and the extreme theorists. For some time the more moderate and practical men were on top. Then came the struggle of the 1st of May. There were great demonstrations in Russia, great demands that there should be no surrender, and that was undoubtedly reflected in the action of the Soviet Delegation.

It is a great mistake to imagine that autocratic Governments are altogether free from the influence of public opinion. There is only one public opinion in Russia, and that is not the public opinion of the vast masses of the people. Ninety-five per cent. of the people are indifferent or hostile to this system. The only opinion there that matters is the opinion of the workmen in the towns, who represent less than 1 per cent. of the whole population. But the Soviet system and its power are based upon them. It is not a democracy. It is an oligarchy, and this talk about nationalisation in Russia is all humbug. When they talk about the great principles of the Revolution 95 per cent. of the property in Russia is land. Nominally they have nationalised it. Let them try to take it back. It is as much a peasant proprietary as if the title had been written out, and they know that. I told them so, and they could not challenge it. And they say, "We cannot give up the great sacred principles of the Revolution. "The fact is that the vast majority of the Russian people are more individualists than the people of this country, and you have that paradox of a Communist Government speaking in the name of an individualist population. And that communism is what is known as "export beer" It was not really in Russia itself. In the towns you have got it, but you get it less and less in the towns than it was before. Therefore the difficulty is not a difficulty in practice. It is a difficulty in principle.

You have got theorists there coming into being. Whenever business is being discussed, they write documents asking for credits, most of which is taken up with a defence of the doctrine of repudiation. You have to realise it. Many among them realise it now, and know what a foolish document that of 11th May was. It was so foolish a document that it could only have been written by a very clever man. If they want credits they must get them where credits are. Suppose they came to float a loan in England, held a meeting in the Cannon Street Hotel, and Mr. Tchitcherin delivered an eloquent exposition of the doctrines of the revolution by way of commending the loan, and said that "the basis of all revolutionary principles is the repudiation of debts, and the confiscation of property. "I have no doubt that he would illustrate it with a wealth of historical allusion which only he himself could command, but the more powerful the argument, the less he would convince: and at the end of it he might have a vote of thanks proposed by my hon. and gallant Friend the Member for Central Hull (Lieut.-Commander Kenworthy—

Photo of Mr David Lloyd George Mr David Lloyd George , Caernarvon District of Boroughs

—seconded by Mr. George Lansbury, and that Resolution of thanks is the only thing that he would take away in his pocket. These theorists cannot realise the difference between a logical proposition and a business one. There is all the difference in the world. Men in business know. Therefore, they have got to realise that they will not get credits for their business until they command the confidence of the only people who are in a position to give them those credits. Until then, they will get nothing from them. I should like to ask how many trade unions would have invested their funds on the strength of that document? Up to the time they wrote that document, the Russians were discussing business. We had a basis for a business discussion as to amount and moratorium, as to bonds and debts. Then came the 1st of May, when they nailed their flag to that barren fig tree of Com- munism under which multitudes are dying of pestilence. But they were themselves anxious to get away as far as possible from that atmosphere, and to come to a discussion of the practical difficulties. This is what I was informed, and we were all informed—that it was easier to settle these matters in practice than in principle. If you say to them, "You must accept this principle," they say, "No, we cannot; that is a sacred doctrine of the Revolution." But if you say to them, "Well, now, what about that property? Will you restore it?" they say, "Well, that is another matter," and the Hague Conference is to proceed from a different angle. The Cannes Resolutions are accepted as a basis.

5.0 p.m.

Then you come to the practical discussion between experts as to what they are really prepared to do. They state that a vast majority of the properties—and most of our difficulties came over property—can be restored. The real reason is, they do not know what to do with them. However, that I did not discover from them. They have not the skill; they have not the knowledge; they have not the workmen; and they are most anxious to hand these over to anyone who knows what to do with them. That is the fact of the matter. Most of the properties, I understand, are in a position to be restored, and are ready to be restored. Then comes the question, what is to be done about the rest? With regard to the rest of the properties, they are prepared to consider compensation in kind of one category or another. I believe they have come nearly to the end of their gold, and what they have is essential to keep the population from starvation. Therefore, payment in gold is something for which we cannot hope. You are dealing with a bankrupt community.

What they are prepared to do is to discuss the giving of concessions. Where there have been amalgamations by the State of concerns like the Donetz coal mines, they are prepared to give compensation, in the form of shares in the larger combines, to the owners of any particular mines; and with regard to the small minority, which I am sure will be left, they are prepared to give bonds, which I do not think anyone will regard with very much joy. It is a country of infinite natural resources. These are matters which the property owners will consider, and they will do it with the full knowledge, because they are practical men, that they are dealing with concerns which may not for a great many years to come pay 20s. in the £.

These are the things to be discussed at the Hague. Meanwhile, there will also be the question of what credits will he available. They need money for railways, for ports, for machinery, for agricultural implements, for the re-equipment of their factories and mines, and for the clothing of their people, who are in rags. Those questions will have to be considered very carefully at the Hague, in conjunction with the other propositions. I am very hopeful that when we come to an examination of the practical details, something may be achieved.