I beg to move,
That the Clearing Office (Italy) Amendment Order, 1938, dated the twenty-eighth day of March, nineteen hundred and thirty-eight, made by the Treasury under the Debts Clearing Offices and Import Restrictions Act, 1934, a copy of which was presented to this House on the thirtieth day of March, nineteen hundred and thirty-eight, be approved.
The House will appreciate that this is an Amendment Order made under Sections 1 and 3 of the Debts Clearing Offices and Import Restrictions Act, 1934, and that, in accordance with that Act, this Order, which came into force a few days ago has to be approved by a Resolution of the House within 28 days. I do not imagine that the House will wish me to go back very far into the history of our financial arrangements with Italy, and it may meet the point if I say that in July, 1936, when the sanctions policy was terminated, there were considerable arrears of trade debts owing to United Kingdom creditors in respect of goods imported into Italy before sanctions were imposed. An Anglo-Italian Clearing Office was set up, and in November, 1936, an agreement was signed with the Italian Government which provided for the distribution of the sterling received by the clearing. That arrangement was that 70 per cent. should be devoted to current trade debts, 3 per cent. to the transfer of financial remittances, and the remaining 27 per cent. to the transfer of commercial arrears. This agreement has worked well, and the allocation of sterling to commercial arrears has been sufficient to clear off practically all the trade debts which were outstanding when the agreement was signed. Would that all clearings were as successful!
It is the original agreement to which this is an amendment. Nearly all of these debts have been cleared off, and it became necessary, therefore, a few weeks ago, to reallocate the 27 per cent. of sterling received from the clearing which was devoted to commercial arrears. We opened negotiations for the revision of the agreement in February of this year, and those negotiations came to fruition in an agreement signed on 18th March, which appears in the Schedule to this Order. Under the new agreement the allocation of payments in respect of current trade is increased from 70 per cent. to 87 per cent., and this will be divided between two separate sub-accounts; 46 per cent. will go in payment for the f.o.b. price of United Kingdom coal sent to Italy, and the other 41 per cent. for other United Kingdom goods, and freights other than coal freights.
It is a satisfactory result of the agreement that it gives scope for an increase of our export trade with Italy, and particularly of our export of coal. If the sterling receipts of the clearing office for this year, 1938, amount to £7,000,000—and last year approximately £6,500,000 was collected—it will enable coal to be exported to Italy to a total f.o.b. value of nearly £3,250,000. If these expectations are fulfilled—and there is no reason to think that a clearing of £6,500,000 last year will not produce £7,000,000 this year—the value of our coal export to Italy in 1938 will exceed the value of our coal export in 1937 by nearly £1,000,000, and will amount to about 80 per cent. of the value of our coal export to Italy in 1934. Moreover, payments for other exports and freights will be able to be made to an amount of over £2,800,000.
In addition to this, the agreement provides for an increase of the allocation for financial transfers from 3 per cent. to 6½ per cent., and the remaining 6½ per cent. is allocated in the first place to the transfer of any old trade debts which remain, any balance not required for that purpose being placed at the free disposal of the Italian Foreign Exchange Institute. The Italian Government have undertaken to transfer payments for freight and insurance on United Kingdom coal exports to Italy partly out of this free allocation and partly by providing sterling from; sources other than the clearing. The requirements for this freight and insurance on United Kingdom coal exported to Italy will, of course, depend on the amount of coal exported and on the fluctuations of the freight market, but we calculate that these requirements can hardly be less in the current year than £900,000, or, in other words, some 13 per cent. of the figure of £7,000,000 which was given as a measure of the probable sterling receipts from the clearing for 1938. The House will observe, therefore, that in actual practice these two amounts of 6½ per cent. which I have mentioned will in any case be devoted to financial transfers and to providing sterling for the transport and insurance of coal exported to Italy. Provision is also made in the notes annexed to the agreement for the settlement within six months of the old trade debts due from Italy to Burma, Newfoundland and the Colonial Empire.
There is one point to which perhaps I should draw attention, in order, I hope, to forestall criticism. That is the point which may be made that this clearing agreement to which I hope the House is going to give its approval means in some way the granting of credits to Italy. In fact, as my right hon. Friend the Secretary to the Department of Overseas Trade said in answer to a Question in the House the other day, it does not mean anything of the kind. It is purely a machinery arrangement to the advantage of both countries for transferring payments between them. Payments for exports to Italy, in common with most other countries, are eligible for the guarantee of the Exports Credits Guarantee Department, but that is not affected in any way by the Order which we are discussing, and there is no question of granting to Italy special credit facilities through the Export Credits Guarantee Department. These exports credits, as the House knows, are guaranteed for the benefit of United Kingdom exporters, and the decision whether a credit should be guaranteed is made on each individual application by a body of experts, solely on commercial and financial grounds.
The agreement is certainly somewhat complicated, but I hope I have said enough to assure the House of its general purport. I may sum it up by saying that its conclusion has been made possible by the fact that the commercial arrears have been successfully transferred under the old agreement, and the 27 per cent. of sterling hitherto allocated to them is now liberated and can be turned to the needs of current trade. The net result, as I trust I have succeeded in making clear to the House, is that it will be possible to finance very substantially increased exports of coal and establish increased quotas for other goods. I hope, in those circumstances, that the House will approve the Motion.
I need hardly say that my right hon. and hon. Friends and myself examine any proposal to this House arising from negotiations between His Majesty's Government and the Italian Government, with a good deal of suspicion. I do not think that that anxiety is confined to Members on these Benches. I believe that in all parts of the House any step which worked out, directly or indirectly, at providing financial credit from this country to help Signor Mussolini in subduing the Abyssinians or in assisting General Franco in overturning the Government in Spain or in building, or continuing the fortification of, points in Spain or elsewhere, which are likely to be inimical to this country, would receive very grave scrutiny and, I think, in general, disapprobation. However, the right hon. Gentleman will perhaps not be surprised when I say that, having looked yen, carefully at the proposals which we are now discussing, I do not find that they come under the category which I have already said would give us grave grounds for anxiety. It seems to me to be more or less an incidental rearrangement, required for the normal process of trade, and, therefore, I do not think that those who are sitting with me on these Benches have any ground for taking exception to them.
I would only say that I should be glad if the right hon. Gentleman would indicate to us what, in his opinion, is likely to be the future course of this clearing agreement, assuming normal conditions, because the object of clearing agreements is to clear, and therefore, presumably all these clearing arrangements are expected to come to an end at the earliest possible opportunity. I should be glad if the right hon. Gentleman the Financial Secretary would tell us before the Debate ends whether, if things proceed normally along the lines that the right hon. Gentleman has suggested, it is expected that the necessity for a clearing arrangement will come to an end, not of course in a few weeks, but a few months; or whether he anticipates the prolongation of it for a year or several years, before it is finally closed down.
It is very satisfactory that the old debts, as I understand, are either entirely or nearly wiped out, but I am not sure whether, in the course of these proceedings, new debts get into arrears, or the working of the arrangement is that all the new, I will not say debts, but arrangements, are met, and the old debts steadily cleared off. If that is the case, I imagine the right hon. Gentleman will be able to tell us, more or less explicitly, how long this is likely to go on. If it is what I might call a revolving credit, paying off old debts by creating new ones, I can understand that he will not be able to give us a specific forecast. In any case, whatever the position may be, I hope that before the amending Order is finally disposed of, it will be possible to have some indication as to how long it will be necessary to have a clearing arrangement—either this or another one.
I need not say that I do not rise to oppose this Order. In the event of those latent political considerations referred to by the right hon. Gentleman above the Gangway, one might have to take a very different attitude towards an arrangement of this kind; but it is certainly satisfactory to know that the need for this amending Order arises from the satisfactory developments of the original arrangements. I gather that if the previous arrangement had not been working well, we should not have been called upon to consider this Amendment. One hopes that, in the normal world, these arrangements will disappear; but I must confess that I think schemes of this kind are likely to be necessary for some time to come. The right hon. Gentleman asked for information as to how long these clearing arrangements will continue, and whether the process of clearing is likely to go on for ever. After a slight examination of Italian economy, I am afraid they are likely to continue for some considerable time, because a country which is devoting so much of its economy, not merely its surplus resources, to the purposes for which Italy is devoting it, is hardly likely to be able to enter freely into transactions with the rest of the world, and, under present conditions, its urgent necessity is to curtail imports and try to stimulate its exports of finished material, which is where its economy is failing to operate. As long as that tendency continues, Italy will need to seek protection of this kind, so that its citizens may continue their trade. I am afraid it will be some time before these agreements cease to be necessary.
The right hon. Gentleman in introducing this Order said it was fairly complicated. It certainly is. If I ask one or two questions it is because I have failed to steer my way through the various sub-heads, and I am not clear about some of the details in the arrangements. The working of an agreement of this kind depends for its success, to some extent, upon the spirit in which sections of it are carried out. There have been difficulties in working the old agreement with regard to the allocation of freight and insurance charges. I do not know whether that has been so in regard to coal, but I notice that, in Article 2, paragraph (a), it is specifically mentioned that it is the f.o.b. price of United Kingdom coal imported into Italy which will be dealt with by the deposit of Italy into the clearing account. On the other hand, it is not specified in paragraphs (b) and (c). It is in regard to general goods that there has been some uncertainty arising in this way. It has not been the f.o.b. costs which have affected the credit, but the costs at the port, freights, freight insurance and many other charges, which have tended to upset or disturb the quota of the particular kind of goods that it is sought to export to Italy.
Difficulties have arisen of that kind, and I should be glad to know whether the difficulty, or what appears to be the differentiation, in the matter of coal and other commodities will arise in future? I have heard of complaints, even under the agreement, of undue delay in the remittance arising between the time of the arrangement made with the Bank or Italy and the time it is received in this country. There have been some complaints, too, of the rate of exchange. I was utterly unable to understand whether there is any fixed rate of exchange at which these transactions are to be made. Is it the rate of exchange of the day, or is it that different transactions, even on the same day, may be carried out at different rates of exchange? Is there some method of differentiation between the different classes of credit? These are points upon which I should be glad to have some further information.
I can quite understand that the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence), who spoke from the Labour front bench, and the hon. Member for East Birkenhead (Mr. White), who spoke from the Liberal bench, have anxiously searched through this amended agreement looking for bogeys, but they have recognised its transparent innocence. I am not quite as confident of its innocence as hon. Members opposite. I have a suspicion that sometimes these agreements are made peculiarly complicated in order that nobody in the House of Commons shall understand them and consequently that they shall go through with very little opposition, if any. This agreement, as leas been said, is very complicated, but I believe that that is because the agreement which the present agreement amends is as complicated, and even more so. My right hon. and gallant Friend, in moving that approval be given to the Motion, made a rather encouraging statement of the course of Italian trade, and the general operation of the immediately preceding agreement which this one purports to amend. I should like to ask him one or two questions.
Hon. Members may recollect that the agreement which this one amends was not the first agreement. There was one made in 1935. At that time the arbitrary date of 19th March was fixed, and all debts due to British subjects at that date came into the agreement, and, in due course, were paid, or should have been paid. But for some obscure reason which I have not been able to understand debts due to British subjects before that date did not come into the agreement at all. That was, obviously, unfair and some of us protested in this House, and in the subsequent agreement the matter was put right. Some of those old debts prior to the date I have mentioned which were subsequently taken over in the second agreement, are still outstanding. I have kept in rather close touch with some of my constituents and others who were suffering and had money locked up in Italy in Italian lire for some years. They had the mortification of seeing creditors of Italy, who ranked chronologically some time after they did, paid in full, whereas they were still waiting for their cash. Can my right hon. and gallant Friend tell me the oldest debt still outstanding which is due to British creditors covered by these agreements? Can he give an indication of the amount still outstanding of debts due prior to, 19th March, 1935, to British creditors? Can he also give any indication of the amounts clue to British creditors still outstanding for any years he cares to choose between 1933 and 1937? I should be very grateful if we could have the information, as it would give some indication of the success or otherwise of these agreements in enabling old debts of Italy to be paid off.
Like many of my colleagues, I view anything arising in the nature of finance for Italy with grave suspicion. It is particularly so regarded by the working classes in Britain at the moment. We are at present negotiating with the Government with regard to the engineering question, and this question is one in which we are very much interested. Is there anything in connection with this agreement which presents even the shadow of a case that Britain is going to give any financial aid at the moment to Italy? If there is to be anything on that line, the Government are looking for very serious trouble. It appears to me that they are out to destroy themselves. If the gods wish to destroy, they first make mad. It is evident to me that they are playing absolutely into the hands of the Opposition. Not only the average member of the working class but the whole of the people of Britain are up against the idea at the moment of giving Italy any financial aid. I hope that this is not some subtle scientific method to try to confuse the House in order that the Government may be able to give Mussolini financial assistance.
I was rather amused to hear the speech of the Parliamentary Secretary to the Board of Trade in that he seemed to take credit to himself for the working of this scheme during the past 12 months. It certainly has worked more satisfactorily than I thought it would, but I cannot give any credit to the Government for that. Their economic policy has been diametrically opposed to the policy of making this clearing agreement work. The clearing agreement only works if Italian exports come into this country in sufficient quantities. The ink on the agreement had scarcely dried before they introduced another Order to put tariffs on Italian tombstones to keep that trade out.
The hon. Member says, "Hear, hear." He may agree with that policy, but it is no use agreeing with that policy, and then congratulating yourself that the clearing agreement has worked, because the agreement can only work by the admission of Italian imports. If you keep Italian imports out, your clearing arrangement is completely ruined.
Why has the Agreement worked? It has worked in spite of the muddled policy of the Government. I do not think that the cause of its working is anything on which we can congratulate ourselves. It has worked because there has been a terrific drop in British exports, and for no other reason. Prior to sanctions, we had a favourable balance of trade with Italy, even excluding invisible imports. During the last 12 months we have had an adverse balance of trade with Italy. Italy has sent us £1,000,000 worth of goods more than we have sent to Italy, and the result has been a surplus of sterling balances in the sterling accounts to meet arrears. I am not grumbling about that, for I am not hypnotised by the balance of trade argument. Hon. Members opposite, who construct the whole of their tariff policy in order to get a favourable balance with various countries should be the last people in the world to congratulate themselves when there is an adverse balance of trade.
The arrears in the various accounts under the Agreement of 6th November have been reduced for two reasons. First, there has been £1,000,000 of favourable balance to Italy and, secondly, they have taken another £1, 000,000 out of current trade and put that to the repayment of arrears. Under the 6th November Agreement 30 per cent. of the sterling balances were to be applied to arrears. That is approximately about £2,000,000. It is for that reason, partly the adverse balance of trade and partly the fact that they have been robbing Peter to pay Paul, that they have succeeded in reducing the arrears that existed when the 6th November Agreement was entered into.
I have completely failed to understand the explanation of the right hon. and gallant Gentleman with regard to the 46 per cent. coal allocation. He seemed to suggest that that was a method by which to expand our coal exports. It is nothing of the kind. If we analyse that allocation carefully we find that if there is no proportionate increase in coal exports, if trade figures are stabilised on the basis of 1937, it will undoubtedly put the coal exporters in a favourable position. During the 12 months they get payment for their exports amounting to l00 per cent. They contribute nothing to the repayment of arrears, even coal arrears. The burden of paying off arrears is thrown entirely on the non-coal exporters. Whether that is equitable or not it is not for me to say, but that is the effect of the arrangement. But that only applies if there is a stabilisation of exports at their present level.
If there is an increase in the amount of coal exported or, conversely, if there is a decrease in the amount of other articles exported, then the coal exporters will be in a worse position, because their amount is limited to 46 per cent. The fixing of these trade quotas for the coal exporters is a gamble. It may help them and may put them in an undoubtedly favourable position, or it may put them in an unfavourable position. It entirely depends upon the course of trade during the coming year and upon the proportions of that trade, whether it is coal or non-coal. I do not see any advantage whatever in the allocation of current debts into two parts. Pooling is a much more flexible arrangement. I see no reason why the non-coal exporters should be asked to bear the whole of the burden of the repayment of arrears.
We need a great deal more data—more facts and figures than have been supplied. All that we have had is a cursory explanation of the agreement. We have the agreement before us and can read it, but we have not the facts and figures behind it. We have not the facts and figures behind the 6th Novem- ber Agreement. The Government have been extremely chary of figures. The Financial Secretary introduced the 6th November Agreement, and gave us two figures only. We were told that in June, 1936, there were debts of £1,750,000 owing by Italy and that during the sanctions period the Government by its Clearing Office had collected £600,000, leaving approximately £1,150,000 owing. Had the Order not been introduced at midnight we should have pressed him a great deal more for adequate figures.
Now that we have a whole day in front of us, I hope the Parliamentary Secretary to the Board of Trade will give us not a mere verbal explanation of the agreement but some data as to how the 1936 agreement has worked, the amount in the various arrears accounts, how much has been paid off, what is the present position in regard to current trade, how many arrears have accumulated during the past 12 months on current trade, and data of that kind. I see that the Lira Sterling Arrears Account, "C" has had increased allocations from 3 per cent. to 6½ per cent. That suggests that the arrears have been accumulating in that account. Therefore, we ought to have more information, dealing with invisible imports, with non-trade debts, rents, interests, insurances and matters of that kind. Those are things that we cannot get from the ordinary tables of trade. We are entitled to know the amount that is owing by Italy, the amount of arrears, and how much has been paid off during the past 12 months. The allocations of three per cent. on the trade figures of 1937 amounted to £200,000 or £300,000. It is now proposed to allocate something like £400,000 for the present year. That is for arrears, not for current trade. The 6½ per cent. goes to the Sterling Arrears Account, "C".
I should like to know what arrangements are being made for the payment of current invisible imports. What financial arrangements are being made in respect of interests, rents, insurance—I do not mean trade insurance, but life and fire insurance? Not a word has been said except that the Italian Government are proposing to put an unspecified amount of sterling at the disposal of the Clearing House for that purpose. We are entitled to know what the invisible imports of this type are, and what is the unspecified amount of sterling which the Italian Government proposes to place at the disposal of the Clearing House. Unless we get facts of this kind we cannot possibly judge the effect of the last agreement or for that matter the effect of the present amendment to it. The Government have been very chary of giving facts and figures, and we are entitled to have the fullest information about this arrangement.
Mr. David Adams:
The Parliamentary Secretary to the Board of Trade in his explanatory statement almost led the House to believe that this was some new method of curtailing or restricting in some way our trade with Italy. An arrangement for a renewal of the agreement with Italy means a continuance of the previous arrangements under which we trade with Italy, as with Germany and Japan, on precisely the same terms as we did before hostilities broke out, and to give the appearance that we are not aiding in the re-armament of Italy by this arrangement is sheer deception. The continuance of the use of export credits guarantee is the most favourable device that could be invented for the benefit of the country to which our exports go, and we are using the credit of the British Government, not as has been suggested by the Parliamentary Secretary to the Board of Trade for the benefit of our exporters, but really and in effect for the benefit of the country to which our exports go. We are under this agreement conferring an unlimited right upon Italy to buy our coal and any other goods, and Italy may use this for the manufacture of munitions or for any other purpose she may please. If there are losses to be borne, these are borne by the British Treasury, as I understand the agreement, and by no other party. I am anxious to know the period for which these guarantees are granted.
If it has nothing to do with this Order I have completely misread it. It is, in fact, a guarantee of British credit to British traders for the purpose of exporting British coal and other goods to Italy, and, that being the case, this system has been devised in order that there should be a continuity of our trade to a country to whose credit bankers in London would not look apart from the guarantees which are given by the British Government. That is the position, and we must not deceive ourselves into thinking that we are taking some step to impair the competence of the Italian Government to produce munitions to be used against any part of the world she may think fit.
I will try to reply to the various points which have been raised in the Debate, and in the first place I should like to re-iterate what has been said by the Parliamentary Secretary in case there is still any misapprehension in the minds of hon. Members as to this Order. There does appear to be some misapprehension from the speech of the hon. Member for Consett (Mr. David Adams). This Order has nothing to do with the Export Credits Guarantee Department, which functions quite separately, and there is no suggestion of any kind of guarantee under the operations of that department in this Order.
There is no question of guaranteeing credits. It will be necessary, I think, to go over past history in order to clear up the point, since I do not want there to be any misunderstanding about it at all. Between April and November, 1935, a payments agreement was in force with Italy which provided that sterling, paid in settlement of trade debts due from the United Kingdom to Italy, should be used to meet the trade debts due from Italy to this country in respect of current United Kingdom exports and re-exports. There was no compulsion on debtors in the United Kingdom to make their payments into the sterling account opened in the Bank of England for the purposes of the agreement, and, therefore, it did not work satisfactorily. Considerable arrears accumulated in Italy, including very substantial sums in respect of debts which were not transferable through the accounts opened under the agreement.
There was in existence an Act of Parliament which enabled the Government of this country to put on compulsory clearings if they thought it necessary, but in answer to the question raised in the Debate let me say that it is not the policy of His Majesty's Government to apply clearings except where they are forced to do so in order to get satisfaction for United Kingdom creditors. We do not apply clearance for the purpose of forcing and encouraging trade. Some countries believe that they can develop their export trade by putting on clearings, but we do not believe that, and I say clearly that the policy of His Majesty's Government is to come out of these clearing agreements as soon as they can. They put them on only when it is necessary to safeguard their trade and financial interests. Although there was in existence an Act of Parliament which enabled us to apply compulsory clearings we did not in the first instance apply it in the case of Italy, where we tried to work first by voluntary arrangements. In November, 1935, on the imposition of sanctions, a controller of Anglo-Italian debts was appointed to whom debts due for Italian goods were made payable compulsorily. By July, 1936, some £600,000—I will give as many figures as I can—had been collected in this way, and that was applied to reduce the arrears of payments due to the United Kingdom.
In July, 1936, on the abolition of sanctions against Italy, it was decided to set up an Anglo-Italian Clearing Office, payment to which would be compulsory. We have tried the voluntary method because we did not like compulsory clearings, but it did not work satisfactorily and we were inundated with complaints about the operation of the Anglo-Italian Trade Agreement. We were compelled to apply compulsory measures, and this was effected by the Clearing Office (Italy) Order of 1936. Meanwhile sterling received by the newly established clearing office was placed to a reserve fund pending the outcome of negotiations which were set on foot at that time. Some negotiations did take place with the Italian Government before it came into operation, but it was put into effect by the Clearing Office (Italy) Amendment Order of 1936. That agreement provided for the payment to the Clearing Office in sterling of debts from persons in the United Kingdom to persons ordinarily resident outside the United Kingdom in respect of Italian imports into the United Kingdom, and for the distribution of the sterling thus received by the Clearing Office in the following proportions: 70 per cent. for current trade debts, 27 per cent. for commercial arrears, and 3 per cent. for financial debts and remittances, the recurrent items such as rents and interest to be transferred in priority to capital items. Provision was made for the distribution of sterling in the reserve fund in the proportion of 50 per cent. for arrears and 50 per cent. for current trade. Any balance not required for current trade was to be applied periodically to the reduction of commercial arrears. I will now answer some of the questions of the hon. Member for Chesterfield (Mr. Benson) by giving the figures as to the results of that agreement. Under the agreement of 1936, the following amounts were distributed: for current trade, £5,304,000; for commercial arrears, £2,672,000—
Down to the time when the new clearing agreement was made. For financial debts, an amount of £415,000 was distributed. With regard to arrears on trade debts, it would be too sweeping a statement to say that they have been cleared off altogether, but to all intents and purposes they have been settled.
There is a normal lag in payments which one may put at from six to eight weeks. I am speaking subject to correction, but I think I am right in saying that except for this lag of from six to eight weeks there are now no arrears in our trade debts. The new clearing Agreement which has been explained by my right hon. and gallant Friend the Parliamentary Secretary to the Board of Trade is a readjustment, as the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) correctly said, in view of the fact that the old situation. in which there was a big accumulation of arrears, has been dealt with. It is a readjustment to provide a larger share for current trade. The hon. Member for Chesterfield said that he had doubts as to the wisdom of earmarking a proportion for coal and for non-coal exports. I do not think the hon. Member's gloomy prophecies will be fulfilled. I believe it will be a satisfactory agreement from the point of view of coal; and the non-coal exports, which in several instances have received increased quotas, are articles in which this country is very much interested. Of course, the proof of the pudding is in the eating, but as coal is a very large and important interest between this country and Italy, it was thought wise to divide the allocation in this way. The hon. Member said the agreement was a gamble, but I do not think so. I believe that it will work for the benefit of our coal industry in South Wales. The hon. Member for East Birkenhead (Mr. White) asked why it was provided in the agreement that coal should be f.o.b., whereas non-coal exports are c.i.f. The reason is that in the case of coal, the Italian Government agreed to pay freight and insurance from the free exchange available to them, and thus it is that the term f.o.b. is used in respect of coal, but not in respect of other commodities.
I think allowance has been made for that. One important point which has arisen in the discussion has been the view which has been expressed by some hon. Members that these clearing agreements should have a date of termination in sight. Obviously, we cannot say when such an agreement will terminate because it takes two to make an agreement, but His Majesty's Government wish to see these operations terminated as soon as possible, and will not employ them for a moment longer than is necessary. We feel, however, that the modifications which are proposed in the present agreement which result from the wiping off substantially of an accumulation of debts, and provide for the allocation of a larger proportion to our current trade, will be helpful to our trade within the operations of the clearing machinery.
I wish to put to the right hon. and gallant Gentleman a point which is of importance to me at the present time. I wish to be clear that there is no reason for supposing that by this agreement Britain is in any way going to finance Mussolini. The reason I am so anxious about that is that at the moment my Union is meeting in York concerning the very important question of the dilution of labour. The Government are asking the Union to let go trade rights which we ought not to let go, but to defend. They are asking us to let them go because of Mussolini. Does the right hon. and gallant Gentleman think that if I tell the Union that the Government are busy at the moment in making arrangements to finance Italy, our fellows will let go of any of their trade rights? Certainly they will not. I must have that guarantee now, either one way or the other.
I will answer the hon. Member categorically. There is no suggestion of any loan or credit or financial assistance in this Order. It is a clearing Order under the existing Clearings Act, which means that the money realised from Italian goods sold in this country will substantially be used for the purpose of British goods going into Italy. That, roughly, is what is involved. The hon. Member may be quite clear that there is no question of any credit or financial assistance.
I appreciate that my right hon. and gallant Friend has not all the figures for which I asked, but will he give me this assurance? If I understood him correctly, he said that the arrears of trade debts were only about six weeks.
On these points of detail, I speak subject to correction, and if I find it necessary to do so, I will send a correction to my hon. Friend in writing. I was speaking of the whole range of debts.
The right hon. and gallant Gentleman referred to the elimination of trade debts, but he did not mention the question which I asked about non-trade debts. There has been an increased allocation from 3 to 6½ per cent. to sterling arrears account "C." I assume that that is due to the fact that we have larger balances. Or is it due to the fact that there has been very little reduction of the non-trade debts? I should like, further, to know whether the non-trade debts are current non-trade debts dealt with outside the scope of these agreements, and if so, how?
There is a slightly larger amount available and that has been allocated in the way the hon. Member has indicated. Perhaps I ought to dispel one impression which the House may have gathered from my remarks. I am speaking of arrears in payment of current trade when I say six or eight weeks. That is the normal lag which takes place in payment. In our trade with Italy we had got far beyond the normal period of lag, and the payments were very greatly overdue. Beyond what may be called the normal lag in certain trades, that is not now taking place, arrears have been substantially cleared off. I am not saying that there are not some individual cases in which debts have not been met, but if they are brought to my notice, I shall be glad to look into them. In fact I am told that the payments made by Italian debtors to the Italian Institute and awaiting transfer through the Trade Arrears Accounts amount to rather less than the equivalent of £10,000, which is not an enormous sum.
That the Clearing Office (Italy) Amendment Order, 1938, dated the twenty-eighth day of March, nineteen hundred and thirty-eight, made by the Treasury under the Debts Clearing Offices and Import Restrictions Act, 1934, a copy of which was presented to this House on the thirtieth day of March, nineteen hundred and thirty-eight, be approved.