EXPORT CREDITS, a post-war scheme adopted by the British Government to assist British export trade. The export credits scheme was initiated by Mr. Lloyd George's coalition government in the autumn of 1919 as a means of facilitating the finance of export business and of promoting the restoration of British trade. Importers in many markets found it difficult at the time to pay cash or do business on short-term bills; and it was felt that trade could be secured if facilities were provided for financing transactions which, owing to the length of credit required, or for other reasons, would not be acceptable to the banks.
Power was also taken to insure goods against risks of an ab normal or exceptional nature, but this part of the scheme has re mained inoperative. At first the application of the scheme was limited to business with certain European States, viz., Finland, the Baltic States, Czechoslovakia, Yugoslavia, Rumania and others. This restriction was due in part to a concomitant policy of assisting in the economic reconstruction of countries which had been specially disorganized by the World War. In 1921 the sphere of operations was enlarged to include the whole world, subject to exceptions adopted in the administration of the scheme.
The legislation governing the scheme is contained in the Over seas Trade (Credit and Insurance) Act 192o; in an amending Act of 1921 ; and in the Trade Facilities Act 1921-26. It is admin istered on behalf of the Board of Trade by the export credits guarantee department of the department of overseas trade, with the assistance of an advisory committee of business men. The aggregate amount outstanding in respect of credits at any given time may not exceed £26,000,000. Credits and guarantee may only be given for British goods. The period within which new credits may be given expires in Sept. 1929.
A floating contract has also been introduced which provides assistance to exporters without each specific transaction having to be submitted to the department. An exporter can now obtain a contract from the department covering each of the countries with which he is doing business on the basis of bills of exchange. Cover to an agreed amount is given for a forward period of six months. Appropriate premia are charged in all cases.
The total business up to Dec. 1927 was about L1,75o,000 under the advances scheme: £6,260,00o under the first guarantee scheme (1921-26), and £834,00o under the new guarantee scheme (1926). Losses were made under the advances scheme but the credit in surance committee found that under the guarantee scheme no material profit or loss had been made up to 1926.
As the limit fixed by the original act was f 26,000,00o it is clear that the scheme has not been taken advantage of to the extent expected. This may be due to various causes. It has taken time for the scheme to become widely known; business men have been perhaps sceptical about the handling of such matters by a gov ernment department; there may have been complications and rigidities of practice such as would discourage applicants. Pub lished figures, however, show that very much larger amounts of credits have been sanctioned than have actually been taken up— presumably because the applicant eventually failed to secure the business for which the credit was required, or perhaps was ultimately able to finance it without assistance from the depart ment. They also show that the scheme in its latest form is mak ing much more rapid progress. On the whole, the figures indicate that the scheme has been helpful to British trade at a difficult juncture.