Orders of the Day — British Advertisements, Russia

– in the House of Commons at 12:00 am on 1 December 1944.

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Motion made, and Question proposed, "That this House do now adjourn."—[Major Sir James Edmondson.]

5.1 p.m.

Photo of Mr Quintin Hogg Mr Quintin Hogg , Oxford

After the wide Debate to which we have listened, I have to ask this House to come down to a very small piece of detail. I think it would be readily agreed that the question of our export trade after the war is one of the most important that we have to face, and, for some time past, some of us have been patting down a series of Questions to the Secretary to the Department of Overseas Trade—whom I am glad to see in his place—to ascertain what plans the Government have for this purpose. It is not my purpose this evening to say anything on general issues, but one of these Questions elicited a most unsatisfactory answer. On 16th November I asked the Secretary to the Department of Overseas Trade a Question which was answered by the Financial Secretary to the Treasury. The Question was as follows: To ask the Financial Secretary to the Treasury whether he is aware that America has already booked £60,000 worth of advertisements in Russian trade journals; and why of £35,000 worth of applications by British firms, £31,000 has been forbidden by the British Government. Now, the position in regard to that Question was as stated in those facts. The Americans have booked £60,000 worth of advertisements in Russian technical journals. British manufacturers and would-be exporters applied for advertisements to the value of £35,000. Of this, the Treasury permitted only £4,000 worth to be inserted in the Russian Press, and has forbidden the remaining £31,000, with the result that Russian trade journals will carry £60,000 worth of American advertising matter in due course, while British exporters are still only to be allowed £4,000. To that Question, I was given the following reply by the Financial Secretary to the Treasury: I have seen reports which have appeared in the American Press regarding expenditure of $250,000 in this connection. The requests by individual United Kingdom firms in connection with advertising in trade papers in the Soviet Union have been kept under constant review, and, as was stated by my right hon. Friend the Secretary to the Department of Overseas Trade on 26th October, a certain number of applications were in fact allowed while the general position was under examination by the Treasury in connection with that Department. Both Departments are, of course, anxious to take the most effective steps to stimulate United Kingdom trade with the Soviet Union, and have been, and will be, prepared to consider sympathetically any proposals which take into account the special conditions under which such trade is carried on. But, in view of the system under which Soviet orders are placed, it is obvious that appeals to individual consumers by means of advertisement can have but limited, if any, effect on the orders placed, and in the light of this factor, expenditure of foreign currency for this purpose must be restricted."—[OFFICIAL REPORT, 16th November, 1944; Vol. 404, c. 2135–6.] From that reply, I understand that, not merely did my right hon. Friend seek to justify the refusal of £31,000 out of £35,000 worth of applications for advertising by British exporters, but one must assume that of that £4,000, which was granted, the greater part was granted whilst the general position was under examination by the Treasury, and in future we must assume and expect a very much less generous policy towards these applications even than that which was incorporated in my Question. I beg to submit that my right hon. Friend is wrong on a number of counts. In the first place, it is wrong to think that the Treasury ought to be the deciding factor as to whether advertisements ought to appear in Russian trade journals or not. It is true, no doubt, that whether any foreign advertisements can be permitted at all may be a question, like other questions affecting the use of foreign currency, which comes within the purview of the Treasury, but to suggest that the Treasury is in a position to advise exporters whether advertising matter in Russian newspapers is likely to be useful or not is, I should have thought, a very different question.

My right hon. Friend has no technical advisers to qualify him to give advice of that kind. The Department of Overseas Trade ought to have taken a very much more prominent part in this matter. It is extremely unlikely that American business firms spend £60,000 on advertising for no purpose at all. They are not pure philanthropists, anxious to support trade journals in the Soviet Union. They know what they are about. They put in their advertisements because they know it will help to sell their goods. It is very unlikely that my right hon. Friend knows their business better than they do themselves, better in fact than not only American business men know it, but than British business men know it, because they have applied for £35,000 worth of advertisements, and it is my right hon. Friend who says "It is not good for you to spend the money; it would not be to your interest and would have little or no effect." My right hon. Friend perhaps does not share the views on some matters which I myself advocate. I should doubt whether he belongs to the same section of Conservative opinion that I do myself, but I should have thought there was one matter upon which we should both be agreed, and that was that it was extremely undesirable for the Government to tell British manufacturers and exporters what was good for them; that it was extremely undesirable in principle that, if British manufacturers and exporters thought they could sell their goods in Russia by advertising in trade papers, the Financial Secretary to the Treasury, of all officials, should say "No, we do not think that it is good for you to do it. We are not going to allow it." I should have thought that both my right hon. Friend and myself and all Members of the Conservative Party would at least have been united in restricting the functions of the Government on an issue like that.

Photo of Mr Quintin Hogg Mr Quintin Hogg , Oxford

I submit that my right hon. Friend is wrong on the merits, and badly wrong. There are two factors to be considered. It is true that, in a country in which trade orders are determined by Government organisations of one sort or another, orders are placed by a different kind of functionary than in a country where free enterprise is the rule. I do not know if it has occurred to my right hon. Friend that the person who places the order in each case has to know about the goods for which he places the order, whether he happens to be a functionary of Government or the servant of a firm, and if he is not told about what goods are available for him he will not place the orders.

It does not matter who it is in Russia that places the orders for British goods, whether a Central Commissar or somebody within the confines of the Crimea or Uzbegistan—he still has to know about the British goods before he can order them, and if, in fact, these trade journals are to carry advertisements of nothing but American wares, we may be absolutely certain that nothing but American wares will be ordered. My right hon. Friend seems to me in this respect to be totally devoid of imagination. If we want the Russian Commissar, or whoever it is who orders the goods from abroad which Russians need, to be British-minded, he has to be approached in exactly the same way as any other customer, whether an official or a representative of private enterprise. To think that just because one is dealing with a vast Socialist organisation one can afford to ignore the medium of the newspapers is to be totally unrealistic.

I only say this by way of conclusion. The Russians do not have their trade journals for purely decorative purposes; they are meant to be read and they are read, and if we can secure, by advertisements of our goods, space in Russian trade journals then we are getting very good value for our money, provided, of course, that the matter is sufficiently attractive to the would-be purchaser. I ask my right hon. Friend to reconsider his decision which, I believe, was not carefully thought out. I see my right hon. Friend the Secretary to the Department of Overseas Trade sitting beside him. I trust that they will confer together and allow a wider and more prudent policy to be adopted.

5.12 p.m.

Photo of Mr Osbert Peake Mr Osbert Peake , Leeds North

This Debate arises out of the Question which my hon. Friend the Member for Oxford (Mr. Quintin Hogg) put on 16th November, and which he was good enough to read to the House. May I say first that the issue raised is whether private individual firms in this country acting through, and no doubt encouraged by, advertising agents here, should be allocated part of our very limited resources in foreign exchange for the purpose of inserting advertisements in Russian trade journals. My hon. Friend's Question asked whether I was aware that America has already booked £60,000 worth of advertisements in Russian trade journals, and my hon. Friend repeated that statement in the course of his speech this afternoon. Now that is based on a fundamental misconception. American business men have not booked £60,000 worth or, indeed, any money's worth at all of advertisements in Russian trade journals. I have here a cutting which has come to hand from the "Wall Street Journal" of 16th October and which gives a full description of what, in fact, is the United States scheme. In the course of this article it is said that: The great bulk of this expenditure"— that is, the quarter of a million dollars to which my hon. Friend refers— will go for display space in a massive buyers' guide now being prepared by Amtorg, Soviet trading monopoly, for use of Russian purchasing agents, engineers and industrial planners. The point of the scheme in America is that Amtorg, which is a company incorporated in the United States, is to produce a catalogue on a big scale. The scheme involves no transfer whatever of any foreign exchange. The catalogue will be sent to the U.S.S.R. by Amtorg and distributed there on behalf of American industrialists. It is worth notice also that the promoters of this scheme in America have, it is stated, discouraged the makers of consumer goods because such advertising, it is explained, would be quite pointless. The scheme is to produce a catalogue of America's heavy industries on lines similar to the previous catalogues which have been produced for this purpose since 1927. I must point out at the outset that the idea that American business men are to advertise in Russian trade journals—which is the facility sought for British business men—is a fundamental misconception: I must, however, provide just a little background to this issue. The general policy of the Treasury is very strongly in favour of all steps, including advertising overseas, which will assist our export trade. In the ordinary way, every encouragement is given to firms seeking to advertise goods overseas, whether within or without the sterling area. Even where we have to part with gold or "hard" currency we are quite prepared to facilitate suitable advertising by British firms——

Photo of Mr Osbert Peake Mr Osbert Peake , Leeds North

For instance, in the United States and in Latin American countries. Owing, however, to the unique economic system of the U.S.S.R., and the fact that all Russian imports are bought through Russian trade delegations abroad, it is extremely doubtful whether advertising in Russian trade journals would have much effect on the placing of orders here. There may be better methods—and I am sure there are—of encouraging British exports than advertising of this character. In the first place, I think everybody will agree that the best form of advertising is the satisfied customer. It may interest the House to know that British capital goods of a civilian character have been going to Russia during the last two or three years on a scale in excess, both as regards value and volume, of the flow of similar goods before the war. Enormous quantities of reconstruction goods such as electrical machinery, machine tools, rolling stock and engineering products of all kinds have gone from this country to Russia during the last two or three years and, therefore, we may be confident that the persons whom my hon. Friend has in mind—the factory managers and technicians in Russia, whom he thinks can influence orders which will ultimately be placed by the Soviet Trade Delegation here—have had a better opportunity of actually using the machines and goods for which there will be such a large postwar demand in Russia than ever before.

Photo of Mr Edgar Granville Mr Edgar Granville , Eye

Is it not the case that when these catalogues or descriptive guides get to Russia, they are circulated among industries, buyers and designers, who are encouraged to send to the central buying authority any new ideas which they would like to adopt for themselves? Does what the right hon. Gentleman is now saying take account of that? I understand that that is what America is aiming at. There are such things as new ideas.

Photo of Mr Osbert Peake Mr Osbert Peake , Leeds North

I am coming to that, but the point I am making is that, if orders can be influenced by Russian technicians and industrial managers, they have certainly had a unique opportunity during the war of seeing the actual implements that they require. [An HON. MEMBER: "They are not post-war goods."] That is exactly what they are. We have exported every sort of machinery to Russia for reconstruction purposes during the last two or three years. I could cite examples, such as complete electrical power stations, which have been exported in recent months. Orders are far more likely to flow through the instrumentality of a man who has actually experienced and derived satisfaction from a British machine, than from a man merely seeing a picture of a machine in a trade journal. There is a much better way of putting pictures and descriptions of what British industry can achieve before the persons who, my hon. Friend says, will influence the ultimate orders than parting with our very meagre resources of foreign exchange in competitive advertising of this character, in which individual firms are asked, through commission agents, to advertise their products in Russian trade journals.

Of course, arrangements already exist for the Soviet Trade Delegation buyers here to have every facility for seeing the achievements of British industry, but we could obviously go beyond that with a scheme on parallel lines to that adopted by the far-seeing and sensible business men of the United States, and my right hon. Friend who represents the Department of Overseas Trade, and the Treasury, will give every encouragement and assistance to schemes put forward by responsible bodies of industry for that purpose.

We have all seen before the war most admirable trade and engineering supplements published by our great newspapers—very often annual supplements. There might be something on those lines, prepared with the advice and assistance of my right hon. Friend beside me, but not put forward on behalf of individual manufacturers trying to sell their goods in competition. After all, if you put a picture of four or five different coal-cutting machines, or similar machines, into a Russian trade journal, most of that expenditure on advertising is wasted. What you want to do is to bring the organisations together, and let them build up not merely a catalogue but something more, with descriptive matter of what the British engineer can achieve and has achieved, prepared with Government assistance as regards paper and so forth—a descriptive book, or catalogue, covering the various fields of capital goods in which the Russians will be so much interested. To schemes of that character we would give every assistance and encouragement in our power. What we are not prepared to do is to see a wasteful and competitive use by British manufacturers, some no doubt paying Excess Profit Tax and therefore able to pass 80 per cent. of the cost of advertising on to the back of the taxpayer; we are not prepared to see our meagre resources in gold and foreign exchange frittered away in expenditure of a character which we believe would be very largely useless.

I think I have met my hon. Friend's point. I am grateful to my hon. Friend for raising the matter, since I think my statement will enable British industry to understand the true position. We do not want to see British industrialists wasting their money, and in some cases the taxpayers' money, and making a wasteful call upon what are national resources, namely, our limited supplies of foreign exchange. As regards other countries than Russia, we shall do everything we can to encourage the advertising of British goods. [An HON. MEMBER: "Competitive advertising?"] Certainly, because in a capitalist country people can effectively buy as the result of seeing an advertisement. Conditions in Russia are wholly special and we must, therefore, adopt special methods in order to do trade there. I hope that business men and hon. Members will not be led into thinking that, because an individual manufacturer is refused exchange for inserting an advertisement of this character in a trade journal, we are not therefore anxious to do everything we can to promote trade with Russia. No doubt there will be a vast market there after the war for just the sort of goods which this country is most eminently fitted to produce. Therefore, I say, and I hope the House will believe that I am quite sincere, that we shall do everything in our power to see that British goods are made widely known in the Russian market. They are already better known there than they have ever been before, and no steps will be left untaken to follow up what has been achieved during the war years.

5.27 p.m.

Photo of Mr Edgar Granville Mr Edgar Granville , Eye

I do not know whether the answer suits the hon. Member for Oxford (Mr. Hogg), but there is a great deal of feeling on the question outside the House.

Photo of Mr Osbert Peake Mr Osbert Peake , Leeds North

It has been stimulated by the advertising agencies.

Photo of Mr Edgar Granville Mr Edgar Granville , Eye

Be that as it may, I have been told by business men that there is a strong feeling about the question, and I do not think the right hon. Gentleman's reply will satisfy or encourage them. What he says is that at present we are exporting to Russia certain consumption and capital goods and so on, and that most of those engaged in exporting goods to Russia have the opportunity of putting before the people who will use these goods ideas with regard to British production in the post-war world. If that is the case, how can the right hon. Gentleman explain Lord Woolton's call for merchant adventurers? What are you doing for the small business man who may be engaged on war work and who hopes to respond to the appeals of Lord Woolton and the Government to do some- thing in the export market after the war? How are the producers with new ideas to get their ideas to the knowledge of the large number of individuals in the U.S.S.R. who have the opportunity of buying through the central buying organisation, and who may say "We have seen in a catalogue an idea with regard to textiles or machinery that we would like to adopt, and we would like to obtain it"? I am told that that is what is happening at the present time and that American industrialists have it in mind.

There is a Russian delegation going round this country. Will all the industrialists and manufacturers have the same opportunity of placing their ideas and designs before them? The right hon. Gentleman, in view of the principles in which he believes, should back up what Lord Woolton says about these being the days of merchant adventurers and private enterprise. He is saying, in effect, however, that there must be no competitive advertising in Russia, and that whatever we do, we must not let Russia see that the policy of industry in this country is one of private enterprise and competition. I would appeal to the right hon. Gentleman to ask the Government to reconsider this matter so that British industry shall be given equal opportunities to supply the Russian markets after the war.

Question put, and agreed to.

Adjourned accordingly at Twenty-nine Minutes after Five o'Clock, till Tuesday next, pursuant to the Resolution of the House this day.