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National Loans (No 2) Bill

Volume 116: debated on Thursday 30 May 1940

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4.3 p.m.

Brought from the Commons, endorsed with the Certificate from the Speaker that the Bill is a Money Bill within the meaning of the Parliament Act, 1911, and read 1a .

Then, Standing Order No. XXXIX having been suspended:

My Lords, I move that this Bill be now read a second time. The Bill contains, as your Lordships will see, two operative clauses, the first of which provides in respect of the present financial year what has been enacted for the previous financial year by the National Loans Act passed in November last. The provision is to this effect. It is a provision to confer power on the Treasury to raise money by borrowing in any manner that the Treasury think fit, and it therefore dispenses with any need for separate Parliamentary authority for a loan on each occasion that a loan has to be raised. Such a provision is manifestly necessary in time of war; indeed there are precedents for it not only in every year of the last war but going back to the Boer War. This clause of the Bill is I think universally admitted to be required, and I need say no more about it except perhaps this. I should point out, as your Lordships will see if you examine the terms of Clause 1, that since the power which the Bill confers on the Treasury expires at the end of the financial year it is necessary to add authority for an additional amount not exceeding £250,000,000 in case fresh borrowing by means of a market loan has to be effected immediately after the end of the present financial year and before further statutory powers have been obtained. Such, my Lords, is the provision of the first clause of the Bill.

The second clause deals with a separate matter, and, as it is a new provision so far as the Statute Book is concerned, your Lordships may wish me briefly to explain its purport. When the Government issue a market loan—such as the £300,000,000 of 3 per cent. War Loan which was successfully issued last March or the 2 per cent. Conversion Loan 1943–45 which was offered last January in connection with the repayment of the 4½ per cent. Conversion Loan—it is usual, as your Lordships know, for the prospectus to contain alternative offers as to the form which the Government security may take. The subscriber may choose which offer he will take. One of those forms is that of bonds to bearer which, therefore, of course, pass from hand to hand without any means of checking changes of ownership. My Lords, when Germany invades a neighbouring country, say Holland or Belgium by way of example, that is accompanied, we may be sure, by the seizure forthwith of anything which the invader can lay hands on which might add to his resources, and bearer bonds issued by the British Government would be valuable booty and might be disposed of through neutral buyers. This is a hole, therefore, which, as far as possible, must be stopped.

I am glad to say that the Treasury have not as yet issued any bonds to bearer under either of the loans to which I have referred, though certificates entitling owners to such bonds have been issued where the subscriber has so requested. We therefore propose in this second clause of the Bill to enact that:
"Notwithstanding anything in any contract made by or on behalf of the Treasury before the commencement of this Act in relation to the issue of securities under the National Loans Act, 1939, the Treasury shall not be required to issue any such securities in the form of bonds to bearer or bond certificates to bearer."
The result, as your Lordships will see, will be that these loans will in future only be held in a form requiring registration of the holder, which will provide a check against their getting into improper and enemy hands.

Moved, That the Bill be now read 2a ;—( The Lord Chancellor.)

4.10 p.m.

My Lords, my noble friends and myself do not propose to offer any formal opposition to this measure. It is short but of great importance, and is designed to satisfy urgent and imperative needs. We think that Clause 2 is justified by the circumstances of our time, and that the precaution against stocks falling into the hands of people not entitled to them is entirely wise. We have pleasure in supporting the measure.

On Question, Bill read 2a ; Committee negatived.

Bill read 3a , and passed.