I want to raise the question of the way in which our loan from the United States is being spent, particularly in relation to expenditure on tobacco in dollar countries. On 28th January, in reply to a Question from me and two hon. Members opposite, the Chancellor gave certain figures, and he told us that between July and December, 1946, £39 million had been spent on tobacco in the United States, which figure amounted to just over 32 per cent. of the total amount in that period expended from the loan. A note was given, however, that, of course, the purchase of tobacco from America is seasonal and that this rate of expenditure might not be the same throughout the whole year. Nevertheless, I suggest that the figures as my right hon. Friend gave them are distinctly alarming. At a time when we ought to be spending—indeed, I thought this was the only reason the loan was taken—dollars for the purchase of goods to create more goods, in other words, machinery, we are spending that amount, and incurring a debt to that extent, in order to purchase a commodity which only goes up in smoke.

A few days later, I put a Question to the President of the Board of Trade in regard to one particular aspect of the same question, our purchases of tobacco from Turkey, and he told me that we were already buying as much as the market could absorb from that country. I suggest that in these days when the questions of our dollar resources, balance of pay- ments and general currency difficulties are of the nature which they are, to give a reply of that sort is not satisfactory, because it seems to savour too much of the Manchester school of free trade, that supply and demand are the sole factors which govern the markets and the purchases of the country. I think that in this respect public opinion is possibly in advance of the Government. I saw reported in the "News Chronicle" a day or two ago the figures which have been taken out by the Institute of Public Opinion. A sort of Gallup Poll was taken. In that poll 70 per cent. of the people who were asked considered that the American loan should be expended primarily upon machinery, certainly in preference to expenditure on tobacco or films. Moreover, that percentage of 70 per cent. declared themselves ready to consume less tobacco, if it was a question of that or machinery. Possibly, however, the Board of Trade is more concerned about this matter than the answer to the Question which I put seemed to indicate. I hope that that is so. My object tonight is to ask for information on this matter.

What are the alternative sources? Can we supply our people with tobacco without putting too great a strain upon our dollar resources, or prejudice the purchase of machinery from across the Atlantic? First, to take the Empire, what are the resources upon which we can draw? Can we expand our purchases from that quarter? The Colonial Empire in Africa is now producing a certain amount, particularly Rhodesia. I know there is difficulty in rapid expansion there, because of the labour resources, which are not unlimited. But I understand that it is possible to grow, in Rhodesia, the very same kind of tobacco which is grown in Virginia and the Southern States of the United States, in other words the so-called Orinoco white-stemmed tobacco which makes the famous brands which we get from the United States. They grow in Rhodesia. Possibly, the climate may somewhat affect them and make them not quite so palatable, but there is not a great deal of difference. It is extremely important that we should, as quickly as we can, do all we can to develop this Empire-grown tobacco. If Rhodesia is limited, can my hon. Friend the Secretary for Overseas Trade give us any indication of any alternative sources within the Colonial Empire?

I pass from that to the countries outside the Empire, but which are nondollar countries and which produce tobacco. The greatest sources of tobacco from countries in that category are, of course, those round the sea-board of the Eastern Mediterranean—Greece, Macedonia, Bulgaria, Turkey and Egypt. These are countries of no inconsiderable importance to us, and the possibility of doing trade with any of these countries is one which we ought to explore to the full. I know the difficulties so far as tobacco is concerned. Tobacco from those countries does have a certain taste or aroma which our people do not now like. That is only a recent development. I can remember the time when no one smoked anything else but Turkish and Egyptian cigarettes and tobacco. I know that we have acquired, since the first world war, when Turkey was in the war against us, a taste for American tobacco. I know also that tobacco from many of these countries in the Eastern Mediterranean is difficult to collect. It has a small leaf, it is not so easily handled, and it is grown on small farms and smallholdings, not planted out in large plantations. Yet it was from there we used to draw our main reserves.

The other difficulty is that the price is higher. I suggest that at a time like this that should not play a very important role. In order to save dollars, it may be necessary that this higher price, this extra tax, should be paid because our national income, on paper at least, is £1,000 million a year greater than the actual material wealth which we are producing. That might be one of the means by which we deal with inflation. In any case, I do not think that the Chancellor would be much concerned by a small loss through the higher price, if, on the other side, he was able to say that he was spending less of the dollar loan, which to him is a most important consideration.

I suggest that it is better to take action now than to wait until a dollar crisis is upon us. I am certain that we are not in a position to go on spending at the rate of £39 million every six months from this source. I see that in the Economic Survey for 1947 a sum of £50 million is foreshadowed as expenditure on imported tobacco from all countries. I do not know what percentage of that will come from the dollar or non-dollar countries. It does not appear that there will be much change in that respect for 1947. I admit, of course, that this difficulty in regard to taste and aroma of tobacco from the Eastern Mediterranean does exist, but I know that there are people who are still able to smoke tobacco from this region. If it is put to them that it is a patriotic duty to do so, and that they are saving dollars in the process, I am sure that such a request would meet with a good response.

There are many people who literally cannot smoke this tobacco because it would cause discomfort owing to the fact that they are so used to smoking American tobacco. For them, I suggest that blending would meet the case. Experiments have shown that if 5 per cent. of Turkish or Egyptian tobacco is mixed, it is very difficult to detect the presence of it except in the case of those people who have a very sensitive taste. If a higher percentage is used, there is a slight aroma, but it is a fact that in the United States there are brands of tobacco and cigarettes, such as "Chesterfields" and "Lucky Strikes" which contain up to 15 per cent. of tobacco from other countries and they are very widely smoked.

What is the position in regard to the country where possibly we would do the most business, namely, Turkey? During the war we had a sort of gentleman's agreement that we should mix up to two per cent. of Turkish tobacco in our blends. This was done throughout the war. Also, we have another arrangement with Turkey based on a loan which we gave to that country in 1937. The arrangement is that that loan is being repaid to us gradually—the interest and sinking fund—by our taking so much every year of Turkish tobacco. The gentleman's agreement lapsed at the end of the war, but the credit arrangement with Turkey continues. I understand that there is in bonded store in this country a very large quantity of Turkish tobacco which is not blended. It appears that with the lapsing of this gentleman's agreement the two per cent. blending which went on during the war has stopped. We could very easily go up to five per cent. and still not make any real difference to the effect on the palate of the smoker. I have heard reported in the Turkish Press recently that 12 million cigarettes from that country have been ordered to go to the West. I hope that that is the beginning of a change in policy which will enable us to do something to meet the demand which, I think, is imperative. I realise, of course, the public taste being what it is, that we cannot take an unlimited amount from this area, but I ask that what we can take we should take to the full. I am not satisfied that that amount is really being taken. After all, we have also to consider our export trade. At the moment there is no great necessity to expand our export trade to the soft currency countries and we ought to try to sell everything we can to the hard currency countries, so the export trade with Turkey is of less consequence perhaps than that with the dollar countries. Nevertheless we ought now to be thinking of building up good will in those countries with a view to export trade with them as soon as we possibly can. It therefore boils down to this. An important contribution can be made to our balance of payments and our dollar resources by adopting the slogan, "Buy Empire tobacco and take as big a percentage of Turkish and Eastern Mediterranean tobacco as is possible in our blends." The public has a right to know what the Government are thinking and prepared to do in this matter.