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Currency And Bank Loan (Amendment) Bill

Volume 66: debated on Wednesday 26 August 1914

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Order read for Second Reading.

Motion made, and Question proposed, "That the Bill be now read a second time."

There are two points as to which I would like information. The first is: Whether it is proposed to take the Committee stage to-day? A second point is this: Sub-section (6) of Clause 1 of the original Act provides that for the purpose of meeting immediate exigencies all postal orders issued either before or after this Act are legal tender. The result of that has been that the Post Office has forced into currency an immense number of postal orders, the necessity of which I am wholly unable to see. I think that they are a very unpopular and a very inconvenient currency. I would like to know what ground there is for stinting the silver currency of the country. Great inconvenience is caused at present by the scarcity of small silver change. As I understood, when this subject was debated before, the Government intended to coin silver freely. There is no scarcity of silver. I do not see that the price of silver has risen since the war broke out. The Government makes a profit on every pound of silver coined. The public wants silver at the present moment. If you go into a post office and offer a sovereign for five shillings' worth of stamps, the post-office will refuse to give silver change, and insist upon your taking a number of postal orders. Is there any objection to or difficulty in the free coinage of silver, so that the public inconvenience, which is keenly felt in some districts owing to the great want of small silver change, may be removed?

I understand that this small Bill, to which no objection can be taken, is a Bill mainly to assist the bankers. I would like to ask my right hon. Friend if he will see that some of the banks, especially those which give facilities for foreign business—[HON. MEMBERS: "Speak up!"]—and which have received such liberal assistance from the Government, especially from my right hon. Friend and from this House also, will take care that they give the facilities to the trade and to their customers which this House and the Government intend to be secured by their legislation. I cannot make that suggestion without stating that a great many of the banks, especially the largest and best known banks in this country, are behaving exceedingly well, and though they have, as they were entitled to do, taken advantage in a formal way of the moratorium, yet I think that in the matter of facilities to customers, discounting bills, loans, and everything connected with ordinary general trade, the great bankers, so far as my experience goes, and that of many friends whom I have consulted in the country, are behaving in a very liberal and fair way, and are endeavouring to carry the country through a great emergency. But there is another section of bankers. They are the bankers who facilitate foreign trade.

It is exceedingly important that this section of our business should work easily, that bills should regularly be sold and bought in the foreign market from which we get food supplies, and seeing that the Government have not only assisted the bankers, but that we have authorised this system of national insurance, it is very desirable that, if possible, the wheels of commerce should run perfectly smoothly, and, above all, that these supplies of all kinds should come freely in. I am very sorry to say that in some cases these bankers, who are engaged in foreign business, are putting on great restrictions. They will not give the proper facilities; they will not purchase bills. This morning I had a telegram from a foreign market saying that no bills are dealt with, save under unreasonable conditions. I would be glad if my right hon. Friend would say a few words now giving an assurance that the Treasury are willing to hear complaints and to give assistance. It would be a great help to the trade of this country in the present emergency. I am sure that all the House recognises that it is the aim of the Government to give facilities so that our trade, the routes for which are being kept clear by our powerful Fleet, may go on smoothly during the continuance of the War, and also that the price of food may be kept down. This great end will not be secured, notwithstanding the efforts of this House and of the Government, unless the banks, and especially that section of the banks to which I have referred, will recognise their responsibility, and realise that the country and the Government have done something for them and that they ought also to fulfil their part of the bargain and give all possible facilities for trade, especially for the bringing in of foreign supplies.

I do not propose to follow my right hon. Friend, though I think that what he has said with regard to the big banks of the country would require a little modification, as I do not think that they are giving satisfaction quite to the extent he has suggested. I do not propose to proceed to a general discussion now, but should like to ask the Chancellor of the Exchequer whether this House will have an opportunity of hearing from him a somewhat full statement as to what is being done in these financial matters generally. We have heard nothing about the guarantee which is being given or the terms on which it is given. We none of us know much in regard to the conditions under which notes have been issued, and the great assistance given to the banks. I am not one of those who feel that they have responded as they ought to the assistance which has been given. I am afraid they have taken the opportunity to strengthen and protect themselves somewhat at the expense of the community. I think it would be well that we should have an opportunity to express some opinion in this House with regard to any suggestion for the extension of the moratorium. If there is to be an extension of such a moratorium as we have now got it would be extremely inadvisable, and ought not to be thought of. Something may be required to be done, especially in regard to foreign bills and mortgages, and various matters of that kind, in regard to which it is quite possible and proper that there should be an extension of the general moratorium, but I venture to suggest that it would be little less than a disaster, or would be very serious, to a large part of the trade of this country—important as is the position of the City of London, it is not the country at large—and therefore we trust that we may have a full statement from the Chancellor of the Exchequer, who, I must say we all recognise, has done so much, and has done it so promptly. We shall be glad to hear an explanation from him when it is agreeable to him, and hope that we may have an opportunity of briefly saying something on these matters.

I desire to join in the compliment paid by the hon. Member for the Spen Valley on the work done by the Chancellor of the Exchequer. So far as the Scottish banks are concerned—I know there have been certain difficulties at first in regard to joint stock banks!—their action—from inquiries I have made of the managers of important Scottish banks—with regard to their customers has been marked by generosity. Facilities are given and have been given, where required, as the Chancellor of the Exchequer knows, and there has been no difficulty on the part of the Scottish banks at all. There is one point on which I wish to ask the right hon. Gentleman a question. As I understand, the Treasury notes are issued on the payment of a certain percentage, 5 per cent., or whatever it may be. I believe a demand has been made by the Treasury to the bankers for payment of some percentage. I know that has been done in certain cases, although it was not persisted in. I only mention the matter now in order to make it certain that it shall be stopped where the bank is prepared to pay. Certificates, of course, are necessary in the case of deposit of bills or notes against the issue.

May I ask the Chancellor of the Exchequer if he will inform the House as to the amount of these notes that have been issued?

May I ask the right hon. Gentleman what is the certificates referred to in Clause 2? Is it merely a note of a larger denomination which is issued by the Treasury for convenience, instead of, as the words limit it, in Clause 2, with a view to the issue of a number of notes for a smaller amount? If that be not the case, perhaps the right hon. Gentleman will explain what is meant.

I should like to ask the Chancellor of the Exchequer whether the interpretation the Treasury put on the moratorium, where it is applied to contracts entered into before the 5th August, is correct? If so, the effect will be enormous. There are many contracts under which there are weekly and monthly deliveries of goods. If the moratorium is extended, and it applies to contracts before the 5th August, under which the contractors have to make one delivery of goods after another, there will be found an accumulation of credits, which must have most serious consequences.

I wish to ask the Chancellor of the Exchequer what steps will be taken to relieve the importers of foreign and Colonial raw produce, such as cotton, jute, seeds, and hides, who have at the expiry of the moratorium paid a draft to the Commissioners drawn against the produce for which they have received no payment; so that if the moratorium is suddenly dealt with before normal conditions are re-established, these firms, and many firms dependent upon them, would be practically confronted with ruin?

The Chancellor of the Exchequer could not be expected to foresee that a question of that kind would be raised on this Bill, and the hon. Member should give notice of it.

Shall I be allowed, under the circumstances, to put it down to-morrow, for, if the House rises suddenly, no opportunity would offer?

If the hon. Member puts a question down to-day, the Chancellor of the Exchequer will be in a position to deal with it.

May I ask the Chancellor of the Exchequer whether there will be any opportunity of seeing the actual one pound note to be issued in the Tea Room before it is issued? There are so many one pound notes, especially in connection with the Scottish banks, that it is material that this one pound note should differ in design from other one pound notes. I do not know how soon it is going to be issued, but is there any hope of putting one in the Tea Room, where it could be seen by Members of the House?

Before the Chancellor of the Exchequer replies, I should like to ask whether the favour shown to bankers in the issue of certificates is to be extended to fire insurance companies and like companies, who, particularly in time of war, have a great many sudden payments to make, and therefore require favours of the same sort as those which are given to bankers?

I desire to support the appeal to the Chancellor of the Exchequer to give us an opportunity for the full discussion of the question of the moratorium, which may be an excellent thing, but which may be carried too far. After all, it affects very much what is the principal part of commerce, namely, bill discounting, and the effect of the moratorium upon it was to stop bill discounting altogether, and until the moratorium is restricted, and we get back more or less to the general flow, you will not have bill discounting, for you cannot get bills discounted, and you cannot carry on business. What happens is this: The bill brokers owe the banks a large sum of money, and the bill books are full of bills which come under the moratorium. Therefore the banks would not discount any more or lend any more to the broker. Thus the matter went through a rather unfortunate phase, and certainly for three weeks since the declaration of the moratorium there has been no bill discounting throughout the whole country. No doubt the Chancellor of the Exchequer has relieved that position by what I am afraid will be a very costly operation. I hope when we come to discuss the moratorium it may be discussed carefully as to the resulting effects on the commerce of the country if it is not carefully restricted.

With reference to what the last speaker has said, I cannot share his views. I think it is absolutely essential that the moratorium in some form or other should be extended, perhaps with modifications, and I think it is perfectly impossible for the moratorium to cease. I should like to join in what the hon. Member for East Mayo (Mr. Dillon) said about the coinage of silver. There has been a difficulty in getting silver for wages since the outbreak of the War, and I cannot see why there should be any difficulty in turning out silver. The banks have great difficulty in getting silver, and surely it ought not to be impossible to get it. I wish, also, my right hon. Friend to consider a suggestion which has been made to me. Very large sums of money are owing by this country to Germany, and people in Germany are largely indebted to people in this country. I, at the present time, owe money to Germany, and, of course, I am not going to pay it. I would suggest to the Chancellor of the Exchequer, at all events, to consider the question whether it would not be possible to have some ratification between the sums owed by German people and those owed by people in this country. I put the suggestion to the Chancellor of the Exchequer, who in the way he has handled all these difficulties, novel in many of their aspects, has dealt with them to the entire satisfaction of the whole of the trading community, and most certainly to the satisfaction of the bankers. So far as the large joint stock banks are concerned, I entirely differ from those of my hon. Friend who say that those banks have not given facilities. I believe the northern banks, or some of them, have not given facilities, but I believe the large London joint stock banks have. One of the directors of the London City and Midland Bank told me that they had not refused a single facility to a single customer, and that they had in fact increased facilities. The same applies to Lloyds Bank. [An HON. MEMBER: "No."] The same applies to Williams, Deacon Bank. Therefore it is not quite fair to attack the banks, and say that they are not giving facilities. On the whole I think that the large London joint stock banks have behaved throughout this crisis exceedingly well. I would ask the Chancellor to consider the other question I have raised, and I hope that he will be able to find some solution of the difficulty. My right hon. Friend may also be interested to know that while some time ago he was the most hated man in the City to-day he is the most popular there.

Before I come to the very important questions which have been raised by my right hon. Friend the Member for Spen Valley (Sir T. Whittaker), and afterwards by other hon. Gentlemen on both sides, I would like to deal with two or three of the subsidiary questions which have been raised. One of them was the question raised by my hon. Friend the Member for East Mayo (Mr. Dillon), and afterwards by one or two other hon. Members, namely, with regard to the scarcity of silver. I do not know why there should be any scarcity of silver. The temporary scarcity of silver has not been because there has been any shortage in the issue of silver from the Mint, and I am afraid there must have been some hoarding of silver, a very stupid thing to have done.

Yes, a slight increase. We rather hesitated to deluge, as it were, the public with silver, as it is not desirable from many points of view unless you are forced to do it. The reason why there was a shortage of silver two or three weeks ago was the scarcity of gold when silver was used to a point to which it is not generally used by the public you had people carrying about, say, forty shillings worth of silver for the simple reason that they could not get gold to pay either railway fares or for their dinners, and what not. As my right hon. Friend (Sir J. Simon) reminds me, very often the banks gave you £5 in silver in return for a £5 note. I hope that will be corrected without being forced to coin an excessive amount of silver. However, we have done our best to meet the difficulty within the last week or fortnight, but we cannot do it all at once. I hope that when the public get better accustomed to the 10s. and £1 notes that there will be less difficulty in that respect than is experienced at the present moment. I come to the question of the design on the note. My hon. Friend (Mr. J. Hogge) is very anxious to have a look at it. He suggests it would be sufficiently guarded. I think he also wanted specimens of other notes for the purpose of comparison.

There is one thing he said with which I agree, and that is that we ought to have a note different in design from that of the Scottish notes, and very beautiful notes those are. I have been examining them repeatedly during the last fortnight, and I am afraid that the new design will not compare in artistic merit with those of the Scottish banks. I cannot hope for that. We have to consider a good many things, and the first is, in connection with a note, whether it is easily forgable or not. Then you have got to consider the watermarks. You have not merely to have the watermark there, but it must be easily seen and detected. Therefore we have decided to discard those very artistic designs for the very reason that if you have got a good mass of colour on your note it is not so easy to detect the forgery.

4.0 P.M.

I have been told by those who are experts in this matter—I am sorry to see the hon. Baronet set himself up as one of them—that the simpler the design is the more difficult it is to forge, and the simpler the signature is the more difficult it is to forge. Signatures with great flourishes are more easily forged. If you have a really simple signature, like that on a Bank of England note, it is the most difficult thing in the world to forge it. It is much more difficult to imitate simplicity than to imitate flourishes and special adornments. That is the principle on which we have proceeded in the preparation of these notes. We have a simple note, but it takes a very long time to prepare them. Therefore, I cannot hope to have them ready for some time.

It has taken us a long time to come to a decision, but at last we have decided in favour of a simple note, which will not be readily forgable. I think that, once adopted, they may become very popular, and form an integral part of our monetary system. With regard to the certificate, the object is really to create credit without issuing the actual notes. We want the banks to feel that they are enabled to finance trade, and that when they want actual currency they can draw on the certificate. Supposing a bank has a certificate for £1,000,000: if it is short of currency, it may like to have £100,000 in notes. But it might not want to pay the interest on the whole £1,000,000. It would pay the interest on the £100,000 actually issued. The banks have the knowledge that they have that credit in the bank, without having to ask for the actual currency and pay interest on it. That facilitates trade. It is purely a certificate that they are entitled to so much credit. They need not draw upon it, but they can do so; and as long as they have so much credit in the Treasury, it enables them to make arrangements for financing the trade of the country. That is the real reason why we have inserted this for the first time. At present they have actually to draw their notes before they get any credit. I think it is very important to have the credit without having actually to draw the notes.

Can they draw against that credit from time to time? In other words, they need not draw out the whole credit at once?

Certainly not. They can present their notes from time to time. They can increase or diminish the amount of their notes from time to time. But if they want an increased credit they must make new arrangements with the bank. Then there is the important question raised by my hon. Friend the Member for the Mansfield Division (Sir A. Markham) with regard to the clearing of German bills. That is a very difficult, delicate, and dangerous operation. I need hardly tell my hon. Friend that I have been looking into it for some time. The real danger is that somehow or other bills due from this country to Germany might be honoured, but that we might not get much out of bills due from Germany to us. We have to take great care that the transaction is not a one-sided one. For that reason we have to proceed very carefully. I am discussing the matter with a great many gentlemen who have been engaged in this trade, and I find it is a very difficult thing to do. I hope to be able, in the course of the next few days, to set up some sort of machinery that will attempt the operation; but we must take good care that in doing so we are not financing the enemy. We have had it in our minds for the last fortnight, but up to the present we have not found any scheme which satisfies us that we will be able to set these two transactions against each other without any money, somehow or other, percolating through to the enemies of our country. With regard to the certificate of insurance companies, insurance companies cannot get notes, and therefore the certificate will not apply to them. The certificate applies simply to the issue of notes by banks; therefore it would not cover the case of insurance companies.

Will the right hon. Gentleman refer to contracts for goods where there are periodical deliveries?

May I ask in regard to the issue of credit notes: I understand that interest is charged on notes so issued, but if you give a cheque for £100,000 to the Bank of England, you will of course be entitled to £100,000 of notes without any charge?

Those are notes of the Bank of England. Those are notes given against credit.

No; Treasury notes retained against the issue of notes of any bank of issue.

I should like to know exactly what the point of the hon. Baronet is. Perhaps he will tell me later on. I am not sure that I know what the difficulty is.

Can the right hon. Gentleman tell us what are the objections to increasing the amount of coinage?

The general objection is that you do not want too much silver issued from the Mint. It might be found in a short time that there was more silver than was actually needed. There must be a limit to the amount issued.

The old age pensioner much prefers two half-crowns to a postal order.

As long as he gets the credit, that is all he requires. My right hon. Friend (Sir T. Whittaker) suggested that it was desirable that a statement should be made of the arrangements entered into by the Government with regard to the finance of the country. I agree. I hope it will be possible, perhaps on the Motion for the Adjournment of the House in the course of a couple of days, to do so. I shall be glad to have an opportunity, not only to make the statement, but also to hear what Members in all parts of the House have to say on the subject in the way of suggestions as to the course we ought to pursue. There are two or three very special difficulties on which personally I have not yet been able to make up my mind as to the best course to be adopted. The first is with regard to the moratorium. A number of hon. Gentlemen have expressed themselves very strongly on that question. They think the moratorium ought to be brought to a speedy termination. [HON. MEMBERS: "Hear, hear!" and "No!"] That is an indication of the divided state of opinion on the subject.

I will tell the House what has been done in the matter. I have issued a questionnaire to some of the leading traders in the country. I can assure the House that I have not consulted merely bankers in the City of London. I agree with my right hon. Friend that the interests of the City of London are not necessarily identical with those of the trading community throughout the country. It is a totally different business. It is a very important and very essential part, but only a part. There was a real danger no doubt that if you consulted financiers too exclusively you might not obtain the views of the trading community. I have been in conference with leading traders, and afterwards, by means of direct communication with some of the leading manufacturers and retail traders in the kingdom, to ascertain their views with regard to the moratorium and banking facilities. I will deal with the moratorium first. Up to three o'clock to-day we have received something like 8,000 replies to the questions which I put. They were in the proportion of something like 4,500 in favour of bringing the moratorium to an end on the 4th September, to 3,500 in favour of extending it. That shows how very divided the trading community are on the subject. The banks are almost unanimously in favour of extending it. The financial houses are in favour of extending it. Taking the retail traders, I certainly thought that they would have been overwhelming in favour of putting an end to it. But they were not. There was a majority, a substantial majority, in favour of bringing it to an end, but only a majority. The manufacturers, I should say, were two to one in favour of bringing the moratorium to an end. But still the remaining one-third represented very important interests in the manufacturing world, who were very much afraid that if we brought the moratorium precipitately to an end, we might have a crash in the manufacturing world.

It is a thing you cannot decide altogether by a majority. You may have two-thirds of a particular interest whom it suits to bring the moratorium to an end, and one-third to whom the matter would be so serious that you might destroy the whole trade of a particular community by so doing. We have to take that into account. Merchants are in favour of an extension of the moratorium—both foreign merchants and, I think, those engaged in home trade as well. I think that represents the views of different sections of the community.

Could my right hon. Friend, in looking through these replies, in any way separate the firms who are doing or are interested in foreign trade? They will be in favour of an extension, and if there could be a limited extension applying to those bills, it would very likely entirely alter the replies.

You cannot really divide the manufacturers of this country into those who are doing foreign trade and those who are doing home trade. There are a great many manufacturers doing both home and foreign trade. But, after all, the foreign trade of this country represents a larger proportion of our general trade than that of any other country. That is why it is so important to us. I have tried to go through these very carefully. I have tried to consider whether it is possible to get the moratorium—a limited moratorium—which would protect these particular interests without interfering with those who would rather have no moratorium at all. It is a very difficult thing. With a limited moratorium we found ourselves in this position: You were protecting A against his debts; you were not protecting B, although B was dependent upon A to carry on business. That is the real difficulty. The difficulty is that if you protect a section of the community and leave others unprotected, you will find that these latter will be unable to finance themselves because the protected people are not paying them. That is one of the difficulties which we have to consider very carefully. The debates in the House during the next couple of days, if it can be arranged, would be exceedingly useful to the Government in coming to a definite decision upon the subject.

About 10,000; but that does not really represent what has been done. For instance, take the drapers, the grocers, the butchers, and the great retail trades. Their own societies issued circulars, or took other steps, in order to find out what the opinion of their particular friends were. So I obtained the opinion of the retail traders very largely, not by direct questionnaires, but through their own associations. The result has been that we have really elicited the opinion of a very considerable number of traders in every branch of industry and commerce in this country, and the result I have indicated; that they are hopelessly divided upon the subject. If hon. and right hon. Gentlemen have taken the trouble to read the discussions which have taken place in some of the commercial papers they will find that same division of opinion there. It is a very difficult thing to decide. We shall have to come to a decision within the next few days, and I should like to hear from hon. and right hon. Gentlemen what their views are. I had a very good illustration of the matter at a meeting of traders held last week. I asked the leading trader there what was his opinion of the moratorium. That gentleman replied: "I am a colliery proprietor and a merchant: as a colliery proprietor, I should like to bring it to an end; as a merchant, I should like it to continue." That is really the position in which the community finds itself in regard to the moratorium. We have been told that the steps we have taken in regard to the discounting of bills involves risk. This is a time when we must take risks. We must keep up the credit of this country; for, after all, it is upon the strength of the credit of this country that the whole of the trade has been won.

We have got to keep the machinery of trade, commerce, and industry going, so that we shall not find ourselves at the end of the War without the important business that we have been transacting for the whole of the civilised world, it having passed away to some other country. That is really what we have got to see to. It may be necessary to take stronger action. A good deal depends upon the banks. I think we have done for the banks as much as ever they could have expected of us. We did not do it in order to strengthen their position or to increase their dividends. We did it in order to enable them to finance the trade of the country during a difficult period. If the Government and the country are prepared to take risks, they must take risks as well. I agree with what has been said by some of my hon. Friends that a very considerable number of banks have behaved admirably. It may be necessary to name the banks which have not behaved admirably. I do not think it would be desirable to do it now.

I have no right on behalf of the House of Commons and the Government to pledge the credit of the country to support the banks without seeing how they use that credit placed at their disposal. Some banks have not behaved well, and I think that it is better that that should be said. I think we must take it that this has been due to timidity, and a good deal to over-caution. They have had to think about their own depositors. I do not think they were considering their own shareholders. I do not believe that they were considering the price of their shares. They were considering their depositors. They considered themselves to be trustees of their depositors, and that they were not entitled to take very great risks. I think the time has come that they really ought to do so, with the credit of the State behind them. I called their attention last week to complaints which have come to me. I said that it would be my duty to report to the House of Commons that unless the trade of the country received the usual facilities for its performance, and even greater facilities in the special emergencies, then I had no doubt at all that the House of Commons would take some action which would place behind the trade of the country the necessary credit in order to enable it to carry on.

I am very glad to be able to say that the banks, after careful consideration, have come to the conclusion that they can finance business much more liberally than they were in a position to do during the first fortnight. I hope that in the course of the next few days we shall receive reports showing that this more liberal policy is having an effect in certain areas and in certain trades where the restrictive action of the banks has acted undoubtedly very prejudicially to business. I do not think it would be desirable for me at the present time to say anything further. One hon. Gentleman on this side of the House called attention to the fact that the foreign exchanges had broken down, and that the bridge had not yet been quite repaired. That is quite true. It has been a very sudden breakdown, a snapping of the communications. The cords have been repaired, and I hope that every day will show an improvement. But if it be necessary to take any further action in order to expedite matters then I may have to come to the House of Commons. I do not think it is. I think that the discounting of bills has had this effect: that the banks will find it to their own interest to use the liberated cash for the purpose of financing trade. There is no other way to use the cash to their own advantage. I hope in the course of a couple of days to be able to make a full statement showing what has been done. I shall be very glad if hon. and right hon. Gentlemen will, by means of discussion in this House, offer such suggestions to the Government as their experience shows will be helpful.

I do not desire to add much by way of comment to what the Chancellor of the Exchequer has said. He has done me the honour of, from time to time, calling me into consultation with him. It must not be supposed by anyone inside or outside the House that I can, or do, in any way share the responsibility which falls upon the right hon. Gentleman, or that I can relieve him of his burden, but it does make my position a little difficult—I will not say that—but a little acute, for there are things which I might desire to say in the House if I had not free access outside to the Chancellor of the Exchequer. At the same time if I urge reticence on my hon. Friends behind me they may naturally reply: "That is all very well for you who have access to the Chancellor of the Exchequer elsewhere, but it does not suit us who perhaps cannot meet the Chancellor on such familiar grounds." My hon. Friends may be inclined to discuss anything that I say in praise of what the Chancellor of the Exchequer has done because they may think I am somewhat responsible for it, being more in consultation with the right hon. Gentleman than they; but at least they will know that it has not been my habit to lavish unmixed praise upon the Chancellor of the Exchequer, and I hope they will give me credit for sincerity when I say that I think the Chancellor of the Exchequer has handled a very difficult question with great tact, great skill, and great judgment. I have, for instance, had the opportunity, through the Chancellor's kindness, to examine the rather full summary of returns of those 10,000 inquiries to which he referred.

I can absolutely confirm what the right hon. Gentleman has said as to the conflict of evidence as to what is best to be done amongst those who have replied, either in London or in the provinces, or in almost any trade or industry. Each man can give an answer to his particular case if it is a simple one. There are only a comparatively small number of people who, like the gentleman quoted by the Chancellor, replied for themselves in two capacities. "Aye," as a colliery proprietor, and "No" as a merchant. Amongst traders in some classes there is an extraordinary diversity of opinion which, no doubt, the special circumstances justify, but which makes it very difficult to draw conclusions from as to what is best for the interests of the country as a whole. I would like to say this—and I say it not merely because it is due to the Chancellor of the Exchequer, but because I think it is in the interest of the country that it should be said—I have had a good deal of correspondence from gentlemen who think they have complaints which they wish me to bring before the Chancellor of the Exchequer. The most familiar form of complaint is for the writer to say, "That the Chancellor of the Exchequer forgets us small men whilst ho is thinking altogether of the great banks or the great financial houses, or the great credit institutions." That is very shortsighted on the part of the small men. I can say, from my personal knowledge, that the Chancellor of the Exchequer and his advisers have been thinking of the little men just as much as they have been thinking of the big men or the big institutions. The little men are not so independent of the great credit institutions as they sometimes fancy themselves to be, and it is in the interests of the public as a whole, of small men just as much as big men, that the Chancellor of the Exchequer has taken the steps he has taken to relieve the situation of the discounting houses, of the banks, and of great institutions of that kind.

I do not, under the present circumstances, want to add anything to what the Chancellor of the Exchequer has said about the banks. I think the evidence goes to show, as you might expect, that some institutions have been more generous than others, that some institutions have done all they could be expected, and that some have not done all that could be expected, in view of the assistance which has been given to them. I think I can say that whilst all of us who have any real knowledge of the problem as a whole will make allowances for the difficulties that undoubtedly exist, all of us also will desire to strengthen the hands of the Chancellor of the Exchequer in re-establishing the machinery of commerce and of trade, and we shall not feel great sympathy with any institution which, without justification, withholds facilities that it is in its power to give. I do not think it is desirable to say more than that. I would not even say that without saying that many of these institutions have done their very best—perhaps people little realise how much it was safe for them to do—to meet the emergency with which we are all concerned. But I am quite certain that the Chancellor of the Exchequer is wise in proceeding gently, and I am sure that the House would not be wise to attempt to hurry. I am equally sure that if, after full inquiry, the Chancellor of the Exchequer feels it necessary to propose further steps, either to stimulate or to assist these institutions to carry on trade or to provide means for trade to be carried on which they are unable to provide, he will have the sympathy of all parties in the House in the efforts he may make.

I hope I may be permitted to say one or two words upon this subject. In my own personal experience I have come across cases of persons who, as far as I can judge, are perfectly solvent people and people of the highest reputation, but who are taking advantage of the moratorium, and I cannot help thinking that that is done because of the very low rate of interest at which they can renew their bills. Under the moratorium they can renew their bills at ½ or 1 per cent. So that taking advantage of the moratorium in the existing circumstances becomes the cheapest way of borrowing money. I do not think anybody ever intended that. I do not think that people should take advantage of the moratorium, not because they cannot pay, but because it is the cheapest way of borrowing money to carry on ordinary trade operations. I hope, if the moratorium is extended—and personally I am not one of those who are against that extension, because I am ready to believe there is a good deal to be said on the other side—but I hope, if it is extended, the terms of interest will be of such a character that people will not avail themselves of it if they can afford it. If you want to put pressure upon people not to avail of the moratorium, I suggest it should be made plain that under any extension of the moratorium the terms of interest should be less favourable than they are at present, so that people able to meet their obligations shall not be allowed to levy compulsory loans upon somebody else. The moratorium, if one is able to pay, is nothing more or less than a compulsory loan upon another person. If you levy a compulsory loan upon another person you ought to pay a handsome rate of interest, and you ought not to be placed in the position that your own money can be borrowed against your will through the moratorium, while you have to go to the bank and repay that money upon higher terms. I suggest to the right hon. Gentleman that if he wants to get over the difficulty about the moratorium, one of the best means of getting over it would be to see that the rate of interest is of such a character that no person can take advantage of the moratorium who can afford to meet his obligation.

I am full of admiration for what the Chancellor of the Exchequer has done, and I, for one, would support him in any measure he brought forward to clear the air. I think he rather misunderstood the feeling upon this side of the House when he thought many of us were asking to bring to an abrupt conclusion the moratorium. I think what my right hon. Friend the Member for the Spen Valley (Sir Thomas Whittaker) wanted was some modification of it. That is the feeling that prevails all through the country. We know perfectly well and can realise that if the moratorium was brought to an abrupt conclusion, I do not say now or in a month or six months' time, it would disorganise business. We want it gradually removed, not only by such suggestions as were made by the last speaker as that of increasing the interest so as to make it very expensive for people to avail of it, but that there should be some condition that capital debt should be paid off, say, at 5 or 10 per cent. at the end of each month, so that it should not be an absolute moratorium but should gradually die out and leave us free from the debt hanging round the trade of the country, which is stopping so much the growing of trade which would take place if the moratorium was cleared out of the way.

I want to ask one or two questions of the Chancellor of the Exchequer. First, whether he could publish something in the nature of a White Paper, giving the exact nature of the guarantee he has given to the Bank of England in regard to pre-moratorium bills. If the House is going to be asked by the Chancellor of the Exchequer to take some share of the responsibility taken by the Chancellor alone at the present moment, we should have some more information. I gather from his speech that he is going to ask the House to advise with him, and to take upon ourselves the burden not alone of following his guidance, but of sharing responsibility with him, and I think before we can do that we must have a few more facts. We must know the exact nature of the guarantee he has given to the Bank of England regarding pre-moratorium bills. We should also have an estimate of the extent of the liability the State has incurred in regard to those bills. Then with regard to the moratorium and the statement he has made in reference to the replies by ten thousand people, I think we should get a copy of the exact question he submitted to those people, and we should know how they were selected out of the hundred of thousands of people concerned, and from what list they were taken. I want to ask this further question: Whether he has considered at all the question of raising the amount of the small debts in the further moratorium indicated? The present moratorium provides that it shall not extend to debts under £5. I think the way to relieve the pressure would be gradually, from month to month, to raise that limit to £10, £20, or £30. I think that would be a convenient way of getting out of the difficulty the moratorium inflicts upon the small traders. I am not making any attack of any kind upon the Chancellor of the Exchequer: I am merely asking whether he would consider that that also might not be taken into account.

I should like to support the observations of my hon. Friend the Member for Hexham. I know that there is an objection to raising the rate of interest under the moratorium, namely, that it might bear with undue hardship upon debtors. What I would like to point out in regard to the proposals that the rate of interest should be considerably raised is this. If you raised the rate on the one hand you have the disadvantage of the debtor paying a rather higher rate of interest than otherwise he would have to pay, but that is a very small matter compared with the other item which the Chancellor of the Exchequer has proposed, namely, keeping the business of the country going. It is much more important to the traders—and I am speaking as a manufacturer and a large employer of labour—to be able to meet the difficulty of providing wages while there are large sums of money we cannot get in. We have to rely upon the help of the banks. I am speaking as a practical man, and I say it is very much more important to the country to keep our industries going and to be able to pay our people their wages every week than it is for a debtor, however hard pressed, to pay a somewhat higher rate of interest.

I am speaking with considerable knowledge, because I have had conversations with my own bank, which is one of the largest in the country, and they have behaved very liberally. But more or less selfish traders—men in a large way of business—in order to save ½ or 1 per cent. for a few months, are keeping people who, perhaps as manufacturers, have to distribute large amounts of money every week in wages but of their money. I have had this brought to my knowledge: I have been told by bankers, who know what their own clients are doing and see it from their own books, that many of these people are keeping back money that they could well afford to pay. I put it very strongly to the Chancellor of the Exchequer that, although I agree that the moratorium should not be entirely suspended, it wants to be modified very considerably if it is to go on. May I put this also to the House? A great deal of mischief is done in this world by panic as in matters of food and currency. The public at large take an exaggerated view of matters when they do not know the details, and a great deal of panic and mischief is created by people in authority not taking the public into their confidence. The conclusion the public always arrives at is that things are worse than they are, and that is why I should like to see the present moratorium considerably modified. The more it is modified and the sooner we can put an end to it the better. The rate of discount on bills now is dropping almost every day. That is a good sign. If we could modify the moratorium so that it should merely apply to those who need it, I am sure we should do a good thing for the trade of the country, and we should make our policy aim at that end as soon as possible.

I am asked to inquire from the Chancellor of the Exchequer whether something could not be done to prevent unscrupulous lessees making use of the moratorium in withholding rents from lessors while insisting upon the payment of rents from their own tenants. The result is, in some cases brought to my notice, that certain poor people for whom trustees are acting and who ought to receive those rents are deprived of the whole of their means of subsistence owing to their inability to obtain rents from quite well-to-do persons while these lessees are demanding the whole of the payment of rents from their own tenants. It seems a most unfair use to make of the moratorium, and I venture to hope the Government may take some steps to prevent injustice in this matter.

There is one point which I should like to put to the Chancellor of the Exchequer, and I should like to hear from him what it is possible to do in the matter. I dare say the right hon. Gentleman has heard of the case of a certain penny bank. I am not going to suggest that the Government can do anything in this matter, but I wish to mention the sort of criticism which is taking place. People say that it looks as though the Government have rendered assistance to the ordinary capitalist to carry on his business, and have rendered him every assistance to get over his serious financial difficulties, whereas in the case of such institutions as the penny banks, which are devoted especially and almost exclusively to the thrift of the poor, no assistance whatever is being rendered to them. There are one or two institutions in a rather peculiar position, and the criticisms made upon this subject outside has been very severe. I dare say the Chancellor of the Exchequer can justify his action, and if he does then everybody will understand the situation. But unless some statement is made on the subject an entirely false impression may prevail. The attitude taken up by the Chancellor of the Exchequer may be everything that is desired, but I have frequently heard these criticisms calling attention to a difference in the treatment meted out to large banking institutions, and to those institutions in which the working classes are particularly interested. We do not want our people to be under the false impression that institutions connected with the wealthy are protected and are prevented from becoming insolvent, whilst those concerned with the savings of the poor have no attention paid to them.

While the Chancellor of Exchequer is dealing with the question of moratorium relating to persons who belong to the commercial classes, will he consider and come to a definite conclusion as to what he considers the duty of the Government and the State with regard to those suffering through distraint for rent at this quite exceptional time?

Is the right hon. Gentleman going to deal with hire and purchase agreements?

Yes. I can assure the hon. Member for Stoke (Mr. John Ward) that there has been no discrimination in this matter of the moratorium. I would rather not go into the case of the particular institution which the hon. Member mentioned, because I do not think it would help that institution. May I point out, however, that it suspended payment before the war, and for reasons which have nothing whatever to do with the War. The hon. Member for Wilton (Mr. C. Bathurst) put to me a question which illustrates the difficulty of a partial moratorium, and my hon. Friend behind has already pointed out one of the dangers. This is one of the things that makes it exceedingly difficult to give any moratorium at all unless it is a general one. That is the best I can give to the hon. Member. We had a limited moratorium, and the result is that one person takes advantage of it for his own protection, and then presses those who are not protected by it for debts due to him. That is what I am afraid would happen. The hon. Member for Brentford (Mr. Joynson-Hicks) has asked that hon. Members should be supplied with the questionnaire. I think it is very desirable that hon. Members should have that information not only in regard to the questions, but also with the figures showing how the voting has gone, and also the character of the assistance and the conditions under which assistance has been given to discounting houses and banks. I think that is perfectly reasonable, and I hope I shall be able to do that to-morrow. Another hon. Member suggested that the amount of the debt protected should be increased, and that is one of the suggestions we have had under consideration. I think there is also a good deal to be said for the suggestion made by the hon. Member for Hexham (Mr. Holt), and we are also considering that point. I am not so sure that it would be quite effective, but at any rate it might be one of the forms that a limited moratorium would assume if we come to the conclusion that a limited moratorium is the best in the interests of the public.

Under an unlimited moratorium it could be done with a higher rate of interest.

Question put, and agreed to.

Bill read a second time, and committed to a Committee of the Whole House for to-morrow.—[ Mr. Gulland.]