There are two questions I would like to put to the President of the Board of Trade. Will a United Kingdom merchant be in order in asking for guarantees in respect of exports of Dutch produce between, say, Surabaya and New York? Secondly, will a United Kingdom merchant be in order for asking for guarantees to export commodities of foreign origin lying in the entrepôt Port of London to, say, Sweden.
I desire to ask a few questions with a view to eliciting information. First, under that provision of Clause 2, by which the Export Guarantees Advisory Council is to be brought into consultation with the Minister, can we have an assurance that in the future their decisions will be carried out with greater speed than in the past? Secondly, are they alive to the seriousness of the question of delivery dates? In some cases, when concerns have been quoting for contracts, there has been so much uncertainty they have not been able to give delivery dates, which in some cases be- tween the two wars made all the difference as regards obtaining or not obtaining large orders. I find that some industrial concerns in this country consider that the premiums charged are too high. I would like some information on that in relation to what is to be the policy in the future. My final point is that between the two wars the facilities contained in this Bill provided for orders to be obtained from Russia to a greater extent than they would otherwise have been, and some of the industrial areas of this country were kept going—
I do not wish to interrupt my hon. Friend, but I am most anxious, as is my right hon. Friend, to give information, and I do not think that the particular point which my hon. Friend is now raising does arise under this Clause. This is a Clause designed to extend these guarantees for such purposes as those indicated by the hon. and gallant Member for Aston (Commander Prior). I submit that my hon. Friend's observations would be in Order at a later stage, but not here.
My hon. and gallant Friend the Member for Aston (Commander Prior) was quite right to ask the questions that he put. Frankly, I had not previously understood completely the full scope of the Clause as it is at present drafted. I had the idea that it was really to facilitate Empire trade in the case, for example, of rubber exports from Malaya to Russia, or some other foreign country—transactions negotiated by United Kingdom firms. With that I would be in complete agreement, so far as I am in agreement at all. It is absolutely right to use these credits, not only for British manufactures made in this country and sent abroad, but also in respect of British raw materials coming from Empire countries to foreign countries. So far so good. But the Clause as at present drafted goes much further, and that is what alarms me. As my hon. and gallant Friend has discovered, it will be possible to guarantee shipments from Surabaya to New York.
Some years ago, before I became a Member of the House, I happened to be one of the managing directors of a firm of British timber agents. We acted as shippers' selling agents. We placed the timber, not only in this country but in various Continental countries as well. In return for that service of selling we received a very small commission, which generally amounted, after deduction of discount, to 3 per cent. net, including delcredere. It might have been the case that we took reasonable risks then, but in the post-war world it is going to be a much more hazardous business than it was in the years from 1918 to 1939. It seems, looking carefully at this Clause, that it would be perfectly possible for export credits to be granted in respect of shipments of timber from Finland to Spain. I think that is wrong. I do not think British credit ought to be spent or pledged for purposes such as that. If we could get some kind of assurance from my right hon. Friend that these credits would not be used for that sort of trade, some of us would feel much more happy about it. If the object is merely to facilitate exports, well and good, but I hope we are not going to pledge our rather exiguous credit in transactions on which we get very small returns, and on which possibly we may lose money.
There seems to be a little ambiguity on this matter. Clause 2 gives power to the Board of Trade to facilitate and to give certain guarantees to exporters:
Any company incorporated under the law of any part of the United Kingdom for any person (including a company) carrying on business in the United Kingdom in connection with the sale or an agreement for sale of any goods for delivery outside the United Kingdom.
Do I interpret that to mean that if a British merchant wishes to export something from India to South Africa, both of which countries are connected with this country, facilities would be given to him on that basis? Would it be necessary for the merchant or exporter to have business associations in this country to have the backing of the Board of Trade? Then there is the question of unmanufactured goods. I do not think that the great proportion of goods exported from this country would be, in the strict sense of the term, "unmanufactured" goods. Certain of them are partly manufactured and partly processed, but there are other goods which we call raw material. I would like it if some kind of description could be given, in connection with these guarantees, of unmanufactured goods and primary products and whether they would constitute a considerable proportion of all
the goods which are exported. I appreciate that it is just a brief outline of what the Bill incorporates and it is not possible to know what lies at the back of the Board of Trade's mind, but I would like if possible such an explanation.
May I ask the right hon. Gentleman to tell us whether the provisions of this Clause cover exports say from Sumatra to America or somewhere else? Would he make it quite clear whether that applies to British firms in the sense of a firm registered in this country, with full operations in this country, or does he mean that for a firm to have a partner or an interest in some agency here, is sufficient?
I wish to support the hon. Member for Penryn and Falmouth (Mr. Petherick). I hope that the right hon. Gentleman will give due consideration to what he said and also to what was said by my hon. Friend opposite, with whom I do not always agree. In this country in the past we have done a quite large re-export trade on which our commissions and profits have been very small, and I would agree that it is not fair that the national credit should be pledged to ensure a business which is very often done on a commission of a half per cent. or even less. I do think that that is an important point. As a matter of fact this Bill is largely a Bill, I take it, to support weak traders. The hon. Member has told us about the risk which is taken, and I hope we shall continue to take those risks. But I should be glad if he would deal with the point of the exports.
The question asked by the hon. Member for Penryn and Falmouth (Mr. Petherick) and by the hon. Member opposite, can really be answered in the affirmative. The object of this Bill is to make easier, and to retain for this country the very large business in international merchanting, which has been and we hope will continue to be a very great asset to this country, particularly from the point of view of earning foreign exchange. The kind of transaction that we have in mind is exactly that described by the hon. and gallant Member. A merchant firm in this country dealing in some commodity, and earning a proper commission, is faced by times of difficulty, that are covered by the Export Credit Guarantees Department, such, for example, as transfer risks. It is an unfortunate and unavoidable fact that during the war there has been a tendency for the United Kingdom to lose much of this business. A particularly important example is the dealing in Australian wool. Australian wool for the United States was financed almost entirely by merchants in this country and there has been a tendency during the war to lose that business.
It is, I think, wrong to under-estimate the importance of what is called these trifling commissions. They amount in the aggregate to many millions, and we wish to be able to earn those millions which in effect are earned wholly in foreign exchange of one kind or another, which is still extremely important to us. It is for that reason that this Clause has been inserted. It applies only to firms in this country. It would not apply to a firm of merchants the members of which were British and United Kingdom citizens by birth, who happen to be established, say, in Calcutta. It applies solely to firms which are carrying on their business in this country, and it applies equally of course to Dominion, Colonial and to foreign commodities. It is strictly limited, and the wording of the Bill has to make allowance for this. A question has been asked in regard to unmanufactured goods. There are of course some raw materials which are partly processed. Most wool is shipped is scoured form, and it might be reasonable to argue that that was in fact in process of manufacture. One has to allow for that, otherwise raw materials of that kind could not be included.
I am still not sure whether this explains what is meant by "unmanufactured goods and other primary products." I am not aware that there are exports in any considerable quantity of primary products, in that sense of the term. Also, if a firm which is registered in this country has the vast preponderating bulk of its trade in some other country, would that fact entitle that firm to have the benefits of this Bill?
If a firm has a London office and is, by origin, a United Kingdom firm, the fact that it has branches elsewhere would not debar it from being able to take advantage of these facilities. You could not bar a firm because it happened to have a branch in Calcutta, or if it had 20 branches in 20 other countries.
I am not at all happy after the reply which has been made by my right hon. Friend. Of course, we should wish to maintain this trade between foreign countries and ourselves, or between the Empire and foreign countries after the war. Trade has been encouraged in London, on which London got commission, and we all know that it the risk is a reasonable one, that trade will go on and may increase after the war. That is a very different thing from using part of the export credit of the country to facilitate that kind of trade. Surely that trade could stand on its own. The individual merchants or financial houses will assess the relative risks of the market, and they will go on taking them, if it is good business. An hon. Member has mentioned the case of a half per cent. commission being taken in certain cases. In such a case, how on earth is the trader concerned or the negotiator concerned to be able to pay the premium in respect of the export credits? There will be nothing left.
A great deal of this trade is done on a very small commission, profit or turn-over basis. That is for the individual trader to assess and I do not think it is right that the export guarantees scheme should facilitate that sort of trade. I should be alarmed if, in the future, the export guarantees scheme were used for purposes other than that of facilitating export from this country or from the countries of the Empire. It is perfectly fair and right if we view the scheme as a whole but we must not use this country's credit facilities for transactions on which the return to this country is very small in individual instances. Those risks should be taken by the manufacturers or the negotiators concerned.
I think I must differ from my hon. Friend. I do not think he has approached this matter from quite the right angle. The fact is that in this trade which it is proposed to finance the returns are not all limited to the half per cent. or to the small commission. It is bound up with the whole question of this country's markets and the insurance. The fact is that transactions of this kind are done in the same market in London, and I do not see any reason why we should not maintain the shipping, merchanting and insurance position of this country which has been an extremely profitable trade in more senses than one to this country in the past and we should do our utmost to build up here.