House of Commons
Monday, December 13, 1915
TREATY SERIES (No. 14, 1915)
Copy presented of Declaration between the United Kingdom, France, Italy, Japan, and Russia engaging not to conclude Peace separately during the present War. Signed at London, 30th November, 1915 [by Command]; to lie upon the Table.
Chelsea Hospital (Army Prize Money and Legacy Funds)
Account presented of the Receipts and Expenditure of the Commissioners of Chelsea Hospital (for Services other than those voted by Parliament) in the year ended 31st March, 1915, with the Report of the Comptroller and Auditor-General thereon [by Act]; to lie upon the Table, and to be printed. [No. 399].
Consolidated Fund
Abstract Account presented, showing the Issues made from the Consolidated Fund of the United Kingdom in the financial year ended 31st March, 1915, for the Interest and Management of the Debt, for the Civil List, and for all other Issues in the financial year for services charged directly on the said Fund, together with the Report of the Comptroller and Auditor-General thereon [by Act]; to lie upon the Table, and to be printed. [No. 400].
Destructive Insects and Pests Acts, 1877 and 1907
Copies presented of Orders numbered D.I.P. 322 to 329, inclusive, declaring the respective areas described in the Schedules thereto to be infected with Wart Disease and infected areas for the purposes of the Wart Disease of Potatoes (Infected Areas) Order of 1914 [by Act]; to lie upon the Table.
Shops Act, 1912
Copy presented of Order made by the Council of the borough of Gravesend, and confirmed by the Secretary of State for the Home Department [by Act]; to lie upon the Table.
Army (Supplementary Estimate)
Estimate presented of the additional number of Men required in the year ending 31st March, 1916, in consequence of the War [by Command]; Referred to the Committee of Supply, and to be printed. [No. 401.]
Oral Answers to Questions
War
United States (Safe Conduct for Germans and Austrians)
asked the Secretary of State for Foreign Affairs if he will state the names of the Germans and Austrians who have been given a safe conduct by this country from the United States to Europe; and whether he can state the reasons in each case for the grant of this facility?
The persons to whom safe conducts have been given are Dr. Dernberg, Dr. Dumba, Dr. Oskar Nedbal, and Max Hartenstein. In the case of the first named, it was considered to be in the interests of this country and its Allies not to prevent him from leaving the United States. In the case of Dr. Dumba the United States Government asked for a safe conduct, which His Majesty's Government did not feel able to refuse. Dr. Oskar Nedbal was given a safe conduct from Vienna to the United States and back because it was represented by the United States Ambassador that his presence was desired at the Panama-Pacific Exposition to conduct concerts, and it was considered that there was no harm in making an exception to the rule in his case. Max Hartenstein was given a safe conduct from Germany to the United States and back at the request of the United States Government, in order that he might give evidence in a criminal case.
Is it intended to give a safe conduct to Captain Boy-Ed and Captain Papen?
I must ask my hon. Friend to give me notice.
Greece
asked the Secretary of State for Foreign Affairs whether he is yet in a position to make any statement with regard to the position of Greece and the Entente Powers?
I regret that at the present moment no statement could be usefully made on the subject.
I will repeat the question on Wednesday.
asked the Secretary of State for Foreign Affairs whether his attention has been drawn to an interview between King Constantine and an American correspondent of the Associated Press, and to the King's statement that the landing of Allied troops in Greece was made without his assent; and whether, in view that Lord Lansdowne definitely stated that it was at the instance of the Greek Prime Minister His Majesty's Government sent troops to Serbia viâ Salonika, he can make any statement on the matter?
I do not know that I can usefully say anything on the subject except that Lord Lansdowne's statement was perfectly accurate. It would not be proper for me to discuss the relations between the King of Greece and his Ministers, which is purely a domestic affair.
asked the Secretary of State for Foreign Affairs whether he is aware that statements have appeared in the Press of neutral countries that France and England, by sending troops to Serbia through Greek territory, have violated the neutrality of Greece in the same manner that Germany violated Belgian neutrality on 2nd August, 1914, and that this same charge was made by the Chancellor in the Reichstag on 9th December; and whether, seeing that the Greek Government, through their Prime Minister, requested this country to send troops to Serbia viâ Salonika to enable Greece to fulfil her treaty obligations to Serbia, he will take steps to have this fact made known in neutral countries?
I am aware that such statements have been made in the Press of neutral countries, but they have been contradicted and ridiculed in the Press of neutral countries without any inspiration by His Majesty's Government. If there should appear to be any danger of neutral countries being misled on this point the suggestion of the hon. Member will be borne in mind.
Is the Noble Lord aware that in all the New York papers controlled by Mr. Hearst these statements are made day by day?
Yes; but I am afraid that it is impossible for us to control Mr. Hearst.
Can the Undersecretary for Foreign Affairs explain why M. Venizelos, on 3rd November, in the Greek Chamber, said there was no connection between the landing of the Anglo-French force at Salonika and the question put to the Powers as to their willingness to send a force against Bulgaria?
I do not quite see how that arises; I must ask the hon. Gentleman to give me notice.
Trade With Neutral Countries
Re-Exports to Germany
asked the Secretary of State for Foreign Affairs whether bonâ fide neutral trade which is to be allowed under the Agreement made with Denmark will include goods which may be re-exported to Germany?
I beg to refer the hon. Baronet to the answers given to him on the 6th December.
asked the Secretary of State for Foreign Affairs if the policy of the Foreign Office in concluding trading agreements with neutral Powers is to prevent Germany receiving only such articles as are not contraband?
The answer is in the negative. The policy of the Government in concluding trading agreements which the Foreign Office endeavours to carry out is by inflicting on Germany all the economic pressure possible to bring the War to a speedy and victorious conclusion.
Does that mean the including of the Commercial Treaty with Denmark?
Yes, Sir.
asked the Prime Minister if he is aware that the Foreign Office have entered into agreements with neutral countries under which goods essential to the enemy are allowed to pass through neutral countries into Germany; and whether, having regard to the fact that these agreements contravene the purpose of the Order in Council of 11th March, namely, the prevention of commodities of any kind from reaching or leaving Germany, this change of policy has been approved by the Cabinet?
The object of all the agreements referred to is the reduction, and, as far as possible, the extinction of all German trade, while preserving to neutrals their legitimate rights, and they do not involve any new departure or change in policy.
Have the Law Officers been consulted as to whether the Agreement with the Denmark traders affects the validity of the Order in Council of 11th March?
Has the right hon. Gentleman's attention been called to a statement by an ex-Law Officer to-day that this Agreement is one that would be very dangerous to this country?
I saw that, but I cannot enter into it in answer to a question.
Does not the agreement indicate that in the view of the Government the blockade cannot be effectively carried out?
No, Sir.
Will the right hon. Gentleman kindly answer my question?
I really do not know; but, as far as I do know, the Law Officers of the Crown have been consulted, and the Agreement does not in the least degree affect the validity of the Order in Council.
Is it true that neither the President of the Board of Trade nor the Committee in charge of exports were consulted in this matter?
I cannot say without notice.
Nor the Cabinet?
I will give notice.
asked the Prime Minister whether the Agreement between His Majesty's Government and certain merchants in Denmark was submitted to and approved by the Cabinet; and, if so, was such approval given before or after the Agreement had been settled?
The Agreement referred to was entered into with the concurrence of the Departments concerned, and the Government take full responsibility for it.
That is not the question on the Paper. The question on the Paper is whether the Cabinet was consulted before this highly-important Agreement was entered into?
It is not desirable to state publicly what questions are or are not submitted to the Cabinet. The Government were consulted as to the principle and agreed to the principle; the carrying out of it was left to the Departments concerned.
Questions
Montenegro
asked the Secretary of State for Foreign Affairs whether any application has been made to His Majesty's Government to facilitate the dispatch to Montenegro of food purchased or to be purchased by a syndicate operating in that behalf; if so, what action has been or will be taken in respect of such application; and whether any loan to Montenegro for the purchase of food is contemplated?
Such an application has been made to the Foreign Office privately, but I do not think that at the moment there is any need, or indeed any room, for the formation of such a syndicate, since the purchase of the necessary supplies presents no difficulties, and has already been undertaken. The answer to the last part of the question is in the affirmative.
Moroccan Government (British Prisoners)
asked the Secretary of State for Foreign Affairs if he can give any information as to the treatment of British prisoners interned at Alhucemas by the Moroccan Government; and whether he is aware that they are not receiving parcels sent to them?
I think the hon. Gentleman is under some misapprehension. A party of survivors from the "Wood-field" were captured by Moorish tribesmen, but have now been released. The remainder of the survivors are under the care of the Spanish authorities at Alhucemas, Penon, and Melilla. It goes without saying that they are receiving every consideration from the Spanish authorities. I have received no information as to the miscarriage of parcels, but if the hon. Gentleman will give me particulars I will make inquiries.
Domestic Coal Supply (London)
asked the President of the Board of Trade if he has received a letter from the Tabernacle Coal Society respecting the refusal of Messrs. Charles Franklin to supply coal on the ground of lack of supplies; and whether he will take steps to secure the rights of the poor of London by inducing the firm to fulfil their contracts?
I have received a complaint from this society. Inquiry is being made, and I will inform my hon. Friend of the result.
Mesopotamia
asked the Secretary of State for India whether he has received any report as to the attitude of the Arabs who have hitherto been friendly towards the British troops in Mesopotamia, and if he can state whether adequate reinforcements for all the future operations are now on their way?
I assume that the first part of the question refers to a rumour of German origin that friendly Arabs turned against the British troops in the recent action. I have every reason to believe this statement to be quite untrue. As regards the second part, I have nothing to add to the information contained in my reply of the 8th instant to the hon. Member.
Can the right hon. Gentleman contradict the statement made to the effect that our troops on the way towards Baghdad were stopped for political reasons—our Expeditionary Force from India?
I do not know to what statement the hon. Gentleman refers, but any questions as to the movements of troops must be put on the Paper, and there must be full notice given of them. There are obvious reasons why I should not answer a great many of these questions, and there are stronger reasons why I should answer none of them without notice.
Post Office (Girl Messengers)
asked the Assistant Postmaster-General whether girls are now being employed in the Post Office messenger service, and, if so, how many are so employed; whether their interests as to continued education and future absorption into the service are being safeguarded by the Standing Committee on Boy Labour in the Post Office; if so, will he add one or more women to the Standing Committee, and, if not, will he appoint a similar Committee to deal with girl messengers only?
About 1,000 girls are being employed as temporary messengers in the Post Office. Their employment is purely temporary and will cease after the War. No question of absorption therefore arises; and I fear that it would not be practicable in the present conditions to make special arrangements for their education during the comparatively short time they are in Post Office employment.
Letter Postal Rates
asked the Assistant Postmaster-General if a 1½-oz. letter can be sent by post for 1½d.?
No, Sir! The rate of postage for an inland letter exceeding 1 oz. but not exceeding 2 ozs. in weight is 2d.
Any variation on the 1-oz.?
I am afraid it is quite impossible to make any change at this time, from what I know.
Retired Army Men (Employment as Postmen)
asked the Assistant Postmaster-General whether the rule relating to the appointment of postmen from retired Army men is applicable to retired Territorials; and, if not, will he explain why it does not apply to them?
Under the regulations in force before the War, and still operative, soldiers who have had three years' Colour service and are otherwise eligible may be considered for appointment as postmen. If a Territorial "were to render three years' embodied service, he would be regarded as eligible, by length of Army service, for nomination to a postmanship. Territorials disabled in the War are being offered temporary employment in the Post Office. The whole question of appointments to permanent positions in the Post Office will need careful examination.
British Prisoners of War (Postal Parcels)
asked the Assistant Postmaster-General whether the parcels addressed to British prisoners of war are opened at the Post Office; and, if so, what steps are taken to see that these parcels are carefully repacked and that nothing is abstracted?
I understand that every effort is made to repack such parcels as are opened exactly as they were before, or, indeed, in a more secure condition, because, as my hon. Friend is aware, the packing of these parcels by the senders leaves much to be desired.
Munitions
Munitions Act Amendment Bill
asked the Minister of Munitions whether the Report of Lord Balfour of Burleigh and Mr. Macassey, K.C., on the grievances of munitions workers will be circulated to Members before the Second Reading of the Munitions of War Act Amendment Bill?
My right hon. Friend has received an interim Report from Lord Balfour of Burleigh and Mr. Macassey, but as he understands that the employers' case has not been heard, he does not think it desirable to publish at the present stage any provisional conclusions which may be modified in the light of evidence not yet taken.
Will the hon. Gentleman represent to his chief the importance of supplying the House with information with regard to munition work before the Munitions Bill is discussed?
My right hon. Friend is fully aware of the desirability of doing so, but this is a semi-judicial Inquiry, and it is hardly thought right to publish a portion of the Report until both sides have been heard.
Can the hon. Gentleman say how the Government intend to proceed with the Munitions Bill when they have not yet heard the employers' side of the case?
Parliamentary proceedings do not affect the prosecution of the Inquiry.
Springfield Spinning Company (Belfast), Limited
asked the Minister of Munitions whether the Springfield cotton mill of Belfast is making cotton for munitions; whether he is aware that 100 women after doing the ordinary mill work, 55½ hours per week for 10s. 6d. a week,. return on five nights to work from 6 p.m. to 9 p.m. for special War work, and that for this overtime they are paid less than 3d. an hour; and whether he will take-power to examine the wage-book and to enforce fair rates of pay?
The Springfield Spinning Company (Belfast), Limited, recently held a War Office contract for absorbent cotton wool, which has just been completed. No complaint has been re- ceived as regards the labour conditions of this firm, but I will have inquiry made into the matter. The terms of the contract empower the Department to inspect the firm's wages boot and time sheets.
Optical Instruments Test
asked the Minister of Munitions if he will supply a list of the institutions in London which have been entrusted with the preliminary official test of the optical instruments submitted to the Government by traders for the use of His Majesty's Forces under the Order in Council?
The institutions in question are the following:—Imperial College of Science and Technology, King's College, University College, Birkbeck College, Battersea Polytechnic Institute, Northern Polytechnic Institute, South Western Polytechnic Institute, Northampton Polytechnic Institute.
Royal Alfred Home, Belvedere
asked the Minister of Munitions whether the old people have been removed from the Royal Alfred Home, Belvedere; and, if not, will he consider the advisability of obtaining some other places in which to house munition workers or delay the removal of these old men until after this inclement weather is over?
The removal has not yet taken place, but the arrangements have been completed and it will take place very shortly. Every possible consideration will be shown for the confort and convenience of the inmates of the home.
Can the hon. Gentleman say what provision has been made to secure the comfort of these very old men between sixty and ninety years of age at this time of the year, and cannot some arrangement be made for some other place, and have the local people been consulted?
I do not quite understand my hon. Friend's question. If it is whether some other place can be taken for housing munition workers, I may say that we have taken all the available institutions in the district.
Has the hon. Member been consulted as to whether he could give any advice on the point?
I will inquire.
Questions
Retired Naval Officers
asked the Secretary to the Admiralty whether the time served by a retired naval officer called out during the present hostilities counts towards increase of retired pay and towards qualifying him for a step in rank on the retired list?
The service of a retired officer called out does not count towards increase of retired pay, but a war bonus of 25 per cent. of the full pay he receives is paid in lieu. As regards the second part of the question, the service of retired officers called out counts as service to render them eligible for promotion under the rules applicable to active service officers.
National Insurance Act
National Deposit Society, North Tawton District
asked the Comptroller of the Household, as representing the National Health Insurance Commissioners, if he is aware that the Devon County Insurance Committee has transferred the members of the National Deposit Society (North Tawton district) to the panel of Dr. Langdon without their consent; and whether he proposes to take any action?
The insured persons to whom I assume that the hon. Member refers, who are not members of any one approved society in particular, were accepted as patients by two doctors acting in partnership, one of whom withdrew from the panel in April last, his partner undertaking to attend his insured patients. No complaint as to the notice then given to the patients was made until late in September, and steps were taken to draw the attention of those who complained to their right to apply for transfer to another doctor from the beginning of 1916. As the doctor named in the question is now serving in His Majesty's Forces, any such applications will, in accordance with the Regulations, be specially considered by the Medical Service Sub-Committee.
Questions
Trials in Camera (Home Office Circular)
asked the Secretary of State for the Home Department if he will publish the text of the Home Office circular re in camera trials which he has stated to have been issued?
The text of the circular (which was dated 1st December) has already been published, as other Home Office circulars relating to the administration of justice are published—that is to say, by being sent to newspapers specially concerned in the subject matter. I shall be glad to send my hon. Friend a copy.
May I ask the right hon. Gentleman to arrange to have a copy in the Library, so that it may be accessible generally to Members?
If that is thought convenient, certainly.
Metropolitan Special Constabulary
asked the Home Secretary whether the grant of winter equipment to special constables is conditional on the performance of a certain number of duties; and whether, as a result of the enforcement of this condition, many of the constables will only obtain the winter clothing when winter is over?
I would refer my hon. Friend to my reply on the 8th instant to a question on the same subject from the hon. Member for North Islington.
Does that reply cover the special point in this question whether the equipment will be provided in time for all special constables?
I think if my hon. Friend will refer to the answer he will see that that is exactly what is there asked— whether "they must wait until the cold weather is over before receiving the equipment."
Does that depend on the number of duties performed?
The real question which I wish the right hon. Gentleman to answer is whether special constables will receive the winter clothing while it is still winter?
In regard to that, I think I have given the hon. Member a perfectly fair answer. I do not want him to think it is not fair. The arrangement is that we are going to provide, and we have almost entirely already provided, clothing, boots, and overcoats for special constables which by reason of past services may be said to replace overcoats and boots which they have worn out. There was no proposal that we would give overcoats and boots to men who have just joined the special constabulary, and that is perfectly well understood.
War Loans
asked the Chancellor of the Exchequer whether his attention has been called to the manner in which circulation is being given to the idea that a compulsory Loan in this country may become a necessity; and whether he will take the necessary steps to prevent the financial position of this country being misunderstood and misrepresented by making it clear that such a course if adopted would be chosen as a desirable and acceptable method and not because the Loan might be otherwise impossible?
I do not anticipate any difficulty in raising on voluntary terms such Loans as the financial needs of the State may require. I trust this answer will remove any misunderstanding.
Sailors' and Soldiers' Home, Edinburgh
asked the Chancellor of the Exchequer whether the sailors' and soldiers' home in Edinburgh, equipped by public subscription and not sought to be conducted at a profit but in order to supply sleeping accommodation and meals for sailors and soldiers on reasonable terms, will be exempted from payment of Property Tax?
Institutes of the kind referred to do not fall within any exemption from Income Tax, Schedule A.
Retrenchment Committee (Scottish Members)
asked the Chancellor of the Exchequer whether he has added any Scottish Members to the Retrenchment Committee; and, if not, and he proposes to do so, will he consult the two groups of Scottish Members in the House in order that they may consider whether any Scottish Members should serve on the Committee or not?
No Scottish Members have been added to the Committee. Should such an addition be contemplated, I will bear the hon. Member's suggestion in mind.
Cheque Issue (Scotland)
asked the Chancellor of the Exchequer whether he is aware that in Scotland the Act regarding the issue of cheques under £1 still holds good; and whether, with a view to complying with the request of the Government that debts should be paid by cheque as far as possible, he will consider the advisability of repealing the Statute?
My hon. Friend appears to be under a misapprehension. Under Section 20 of the Act 8 and 9 Vict, cap. 38, cheques are exempt from the restrictions placed by the Act on drawing promissory notes, etc., for sums under 20s.
Finance (No. 3) Bill
Income Tax
asked the Chancellor of the Exchequer whether he can state the total estimated amount that will be received by the Treasury in a full year from Income Tax on the pay of soldiers and sailors in all branches of the Services, including the Royal Army Medical Corps, after allowing for the concession made in the Finance (No. 3) Bill, 1915; and what would be the amount if Income Tax was deducted from all such pay only at the rates provided in Sections 2 and 4 of the Finance Act, 1914?
The estimates asked for may be put at £610,000 and £375,000 respectively.
asked whether the pensions granted to widows of officers who have served in the Army and Navy are subject to deduction for Income Tax; and, if so, whether Income Tax is deducted at the full rates provided for in the Finance Act, 1915, and the Finance (No. 3) Bill, 1915; and what is the estimated amount which would be received by the Treasury in a full year from this source?
Subject to the general provisions of the Income Tax Acts in regard to exemption or abatement, the pensions are chargeable with Income Tax as earned income at the rates provided for in the Finance Act, 1915, as modified by the Finance (No. 3) Bill, 1915. As regards the last part of the question, no data are available for an estimate.
Will the right hon. Gentleman take steps to ascertain what is the amount received by the Treasury from this collection of Income Tax at war rate on widows' pensions?
I will see if it can be done.
Board of Referees
asked the Chancellor of the Exchequer whether Sir W. Peat, who is a member of the Court of Referees on the Excess Profits Tax, is a member of the firm of Messrs. Marwick, Mitchell, Peat and Company, 79, Wall Street, New York; whether this is the same firm which has an office at Unter Den Linden, 56, Berlin; and whether this office has been opened since the commencement of the War?
The answer to the first part of the question is in the affirmative. As regards the second and third parts of the question, I understand that in June. 1914, the firm opened a branch office at 56, Unter den Linden, Berlin, but that immediately on the outbreak of war, the manager was arrested and interned and the office disposed of. No business has been transacted by the firm in Berlin since the beginning of the War.
Irish Volunteers (National School Teacher)
asked the Chief Secretary to the Lord Lieutenant of Ireland if he is now in a position to state the date and nature of the communication from Dublin Castle in pursuance of which the Resident Commissioner of National Education in Ireland, without the authority of the Board, called upon Mr. O'Connell, teacher of Foilemore national school, Cahirciveen, to sever his connection with the Irish Volunteers under pain of dismissal last July, in view of the Resident Commissioner's statement that the Board did not consider this case until the 31st August?
In a communication addressed to the secretaries to the Commissioners of National Education, by the Under-Secretary, on the 15th June, 1915, attention was called to the fact that the teacher referred to had been actively engaged during the previous six months in drilling and organising a branch at Cahirciveen of the body known as the Irish Volunteers. The case was first submitted to the Commissioners at their meeting of the 6th July last, and, as I have already informed the hon. Member, the action taken thereon was ordered by the Board and not by the Resident Commissioner. I know of no such statement as is attributed to the Resident Commissioner in the concluding portion of the question.
Under what authority does the Under-Secretary at Dublin Castle write to the Resident Commissioner on such a subject?
Under his general authority.
Recruiting
Obstruction in Ireland
asked the Chief Secretary what steps he is taking to counteract the endeavours of the organisation which is obstructing recruiting and fomenting disloyalty in Ireland; and if all supporters of this movement who are in Government employment will be dismissed?
It is not in the public interest to set forth all the steps that are being taken to counteract the endeavours of the Irish Volunteers to obstruct recruiting and to foment disloyalty in Ireland; but some indication as to them is given in my answers to the questions of the hon. Member for North Westmeath in this matter. When persons in Government employment are found to be supporters of the movement they are warned to cease all connection with it, and, if they fail to comply with this direction, they are dismissed.
Is the right hon. Gentleman aware that seditious leaflets have been widely circulated in Ireland, and although representations have been made to the authorities, nothing has been done?
We have watched these leaflets, and we do what we can to suppress them.
Prime Minister's General Statement
asked the Prime Minister (1) the number of recruits necessary to keep up the existing establishments and make good the deficit for the campaign of 1916; and whether the War Office, Treasury, and Board of Trade have agreed on the number of recruitable men that can be withdrawn from industry on the basis that this country makes no further advances by way of loans to our Allies, (2) whether, in view of the fact that large numbers of unmarried men have not attested under Lord Derby's scheme, will he now forthwith redeem his pledge to the married men and release them from any obligation they have incurred under Lord Derby's scheme; and whether he intends to at once introduce legislation dealing with this question on the basis of taking unmarried men from non-essential industries; and (3) whether the Government have informed our Allies that the power of this country to give them financial aid and munitions is dependent on our export trade not being further reduced; and whether the Cabinet have obtained any Report from the Departments of State giving the total number of recruitable men who can be withdrawn from non-essential industries, having due regard to these financial considerations; if so, will he give the figures?
asked the Prime Minister (1) whether he is aware of the hindrances to recruiting arising from the unsatisfactory character of the starring of persons under the National Register; and whether he will take steps to see that all starred cards are promptly placed at the disposal of the Advisory Committee of the Parliamentary Recruiting Committee, in order that they may organise the canvass of such starred persons as they decide should be asked whether they will enrol for miltary service, subject to the usual provisions; and (2) whether he is aware that few, if any, armlets are now in public use by persons who have been enrolled for military service in the Army Reserve under Lord Derby's scheme; and whether he will take immediate steps to make the wearing of such armlets by enrolled persons compulsory, in order that it may be known who have volunteered to help the country in this way, and that their example so known may be an incentive to others who at present have failed to follow their example?
In reply to these questions, which deal with various aspects of the question of recruiting, as to some of the points raised the information is not yet complete, while others cannot be adequately dealt with in answer to a question. It will be convenient, therefore, to defer them for the general statement which will be made on the Vote for more men.
When the Prime Minister makes his general statement will he bear in mind that during the time of Lord Derby's campaign thousands of men have left their own work and gone into the munitions work and starred trades?
Can the right hon. Gentleman say whether, with regard to the question of dealing with starred men, that it will be recognised that this is a very urgent question, and one not necessarily independent of the numbers arrived at under Lord Derby's campaign?
I recognise that.
Will the right hon. Gentleman also bear in mind the promise made the other day to consider the desirability of circulating a memorandum giving the figures before the day that Lord Derby's scheme is discussed?
I shall be glad to do so if possible, but I cannot promise.
Lord Derby's Scheme
asked the Undersecretary of State for War whether any statistics are available which will show up to the present time, respectively, what numbers of men in Great Britain have, under Lord Derby's scheme, enlisted for immediate service, been attested under Army Reserve B (group system), and have been rejected?
I cannot, I fear, anticipate any disclosure of the statistics on these heads which my right hon. Friend the Prime Minister may think it in the public interest to make. But the statistics, if not at the moment complete, will be so shortly.
asked the Under-Secretary of State for War whether, in view of the uncertainty of many married men of military age as to their position, he will say whether, as stated on Monday last by Lord Richard Frederick Cavendish, supervisor and organiser of recruiting in Lancashire, married men will not be called up until single men have gone, that if compulsion should not be brought into force for single men married men who have been attested will be relieved from their pledge, and that if compulsion should be brought into force those who have attested will receive preferential treatment in regard to the selection of a regiment and the time of their being called up?
Lord Derby's letter of the 19th November to my right hon. Friend the Prime Minister, and the latter's reply to it, is the official declaration of policy on this subject. The first part of the statement attributed to the Noble Lord is in accordance with that declaration. If, however, he went on to make a statement with regard to what would happen if compulsory methods were adopted, he, no doubt, made it as an expression of his personal opinion.
Will my right hon. Friend report that that expression of personal opinion is one very widely shared in by a number of persons who have been engaged in canvassing and recruiting?
Oh, yes, Sir, I can well believe it.
Is it not the fact that men who have married and have families have fulfilled their principal ambition in life?
asked if all members of recognised Volunteer Training Corps who are of military age and who have signed an undertaking to enlist, if called upon to do so, have been attested under Lord Derby's scheme?
I regret that I have no statistics which would enable me to answer this question. But it was understood before Lord Derby began his campaign that these men would join the Forces of the Crown.
Irish Industries
asked the Undersecretary of State for War whose decision is it in pursuance of which recruiting is allowed among those engaged in essential industries in Ireland while not allowed among those engaged in the same industries in this country; whether any Irish representative body has been consulted and has approved of that discrimination; whether is has been submitted to and approved by the Cabinet; and will he explain how, under these circumstances, uniform administration throughout the United Kingdom has been maintained?
The National Registration Act, as the hon. Member is aware, did not apply to Ireland. The recruiting authorities in Ireland were consequently not so fully provided with information as were recruiting authorities in other parts of the United Kingdom. My statement on the 8th December was that recruiting was conducted on the voluntary principle uniformly throughout the United Kingdom. Uniformity of administration would be obtained through the issue of identical instructions to the various recruiting authorities concerned.
Will the right hon. Gentleman explain why the fishing and agricultural industries are protected in this country and not in Ireland?
I really do not think that that arises out of this question. I do not think the hon. Member is correct in his assumption. Nearly the whole of those who in peace times are engaged in the fishing industry have given their services to the Admiralty.
Have any been recruited from the fishing industry in this country as they have been in Ireland?
Yes, certainly—if there are any men still unemployed by the Government.
Enlistment of Unfit Men
asked the Undersecretary of State for War if his attention has been called to the evidence given at an inquest, held at Shoreditch, on 7th December, on Henry Cotton, who died from a complication of chronic bronchitis, mitral disease, and pleurisy; if he is aware that it was stated that Cotton, although having been previously rejected as unfit and in a dangerous state of health, was pressed to enlist by three soldiers who called at his house at midnight, and that he was passed for service in the 4th City of London Regiment by Surgeon-Major Dutch; and if he will take action with respect to those who forced Cotton to go to the recruiting office, and in the case of the doctor who passed him as being fit for service?
I am obtaining a report on this.
Medical Students
asked whether senior medical students are being employed in military hospitals as surgical dressers and medical clerks; and whether their services in these capacities will be taken into account as hospital attendance for the purpose of their medical qualification?
( was understood to ask ): Before that question is answered, may I inquire if the right hon. Gentleman has received representations from some of the public authorities on the matter?
My hon. Friend asks whether I have received representations from public authorities on this subject. I think we have received one letter, but I do not think there is an absolutely unanimous feeling. As to the question on the Paper, I am informed that medical students are not being employed by the War Office as surgical dressers or medical clerks in military hospitals.
Does my right hon. Friend not think it would be a saving of qualified medical men if senior medical students were so employed?
I think it is really better for medical students who are not in their last years of study to join the combatant Forces of the Crown. Those who are approaching completion of their medical curriculum should proceed with it and become doctors.
But is not their experience gained in these hospitals equivalent to, or even better than, the experience they would gain in civilian hospitals?
If my hon. Friend means in the capacity of an orderly I should say certainly not.
As dressers?
As dressers they might get some amount of clinical practice which would be of value, but in a subordinate capacity, not being members of the Royal Army Medical Corps, they would not receive it.
Vaccination
asked whether recruiting officers have been instructed to keep a record of the names and addresses of any men whose enlistment is not proceeded with on account of their unwillingness to be vaccinated; and are such men provided with any document to prove that they have offered themselves for enlistment and the ground for their rejection?
The answer to both parts of the question is in the negative.
asked the Under-Secretary of State for War whether he is aware that the attestation of many men who are presenting themselves for enlistment under Lord Derby's group system is not being proceeded with by the recruiting officers because of the unwillingness of conscientious objectors to vaccination to consent to undergo an operation from which they have been legally exempted; and will he say if he is prepared to instruct recruiting officers to refer such men to the Territorial Force, in order that their services may not be entirely lost to the country?
I understand that what is stated in the first part of the question is correct. It is, of course, impossible for recruiting officers to vary the Regulations for the Regular Army. I should say that conscientious objectors, as a body, knew by this time what the position was in regard to vaccination. I have already informed the authorities concerned that men desirous of avoiding vaccination may be enlisted in the Territorial Force.
Will the right hon. Gentleman explain how that could take place where only one form is in use at these offices?
If only one form is in use under Lord Derby's scheme I can understand that, because the men enlisted into the Groups are intended to form a Pool, from which men will be drafted to any unit. Those units in greatest need of reinforcements will obtain them first. For the Territorial Force another form of attestation should be used, and I have given instructions that it shall be provided for all candidates joining that Force.
May I ask whether the danger is to be faced by the Territorial Force by the enlistment in their ranks of men who may be a source of contagion?
Of course there has always been that danger. The Territorial Force has been exempted from compulsory vaccination ever since it was started, and therefore I do not think there is a very great additional danger at the present moment.
Will the right hon. Gentleman instruct the authorities to whom he sent the notice to have it made as public as possible, in order that these people may take service in that part of our Army?
I think that is very desirable, and I will see whether greater publicity cannot be given to it.
Will the right hon. Gentleman answer my question as to whether any Territorials have been recruited under the Derby scheme?
No, Sir; I think not.
Armlets for Medically Unfit
asked the Under-Secretary of State for War (1) if he is aware that men who have volunteered for enlistment and have been rejected for medical reasons are now, in consequence of not being given armlets, faced with the dilemma that they have either to submit to being regarded as shirkers or to explain generally details of their physical condition, which they may not desire to disclose either for private reasons or for fear of injuring their prospects of employment; and if, in view of this, the Government will reconsider the recent decision not to give armlets to men rejected on medical grounds; and (2) if he is aware that the Liverpool recruiting committee unanimously passed a resolution, on Monday last, protesting against the withholding of khaki armlets from men who had volunteered for military service and had been rejected as medically unfit; and if, in view of the feeling in Liverpool and elsewhere on the subject, the Government will take steps to give armlets to these rejected men on the lines indicated by the Director of Recruiting at the beginning of last month?
Armlets will be given to those candidates who have been rejected on medical grounds, subject to certain conditions which are shortly to be published by the War Office.
Will the armlets also be given to men who are discharged on account of ill-health from the Army?
I should like notice of that, but I think the answer is in the affirmative.
Does the right hon. Gentleman not think there is a great deal of waste of material in the armlets?
It depends on the size of the arm.
I mean in width.
Are the armlets to be issued to the rejected men identical with those issued to the men who have been attested and put back to their classes?
I would rather not give an absolute pledge on that subject, but I think again the answer is in the affirmative.
Questions
National Economy (Ministerial and Parliamentary Salaries)
asked the Prime Minister whether the Government will propose an all-round reduction of ministerial and Parliamentary salaries during the War as an example to the nation of retrenchment of public and private expenditure urgently necessary to conserve our financial resources for the prosecution of the War?
The Government do not intend to make such a proposal.
Christmas (National Message of Thanks to the Forces)
asked the Prime Minister whether, before the House adjourns for Christmas, he will arrange for Parliament to send on behalf of the nation a message of thanks and appreciation to all our sailors and soldiers who are away from home serving their country in the different theatres of War?
I doubt whether such a course is necessary, or in accordance with the usual practice, but I will inquire into the matter. Our gallant soldiers and sailors are well aware of the appreciation and gratitude felt by the country for their services.
Is my right hon. Friend aware that the French Chamber of Deputies, on the first anniversary of the outbreak of war, sent a message to the French troops? Will he take that fact into consideration?
Post-War Problems (Inquiries)
asked the Prime Minister whether he will consent to the appointment of two or three Committees of the House to consider and report on the problems which will arise after the War, more especially affecting the reinstatement of the men who have given up their positions and prospects to enlist, trade within the Empire, and trade development generally by this country and our Allies?
asked the Prime Minister whether the investigations with reference to commercial conditions which will require to be dealt with at the conclusion of the War are being carried on by a regularly appointed Committee; if so, will he say when it was appointed and the number of sittings so far held; whether, in the event of a Committee having been formed, it has taken evidence, and if he will communicate the scope of its work; if the instructions of the Government are that those investigating should, in addition to reporting, make recommendations; if he will consider the advisability of giving the names of the officials of the Departments; whether he will give those of the business men who have been asked by the Government to assist in this work; and if he will state, in consideration of the importance and urgency of this matter, why it could not be dealt with by a Select Committee of Parliament?
His Majesty's Government are fully alive to the great importance of the economic, social, commercial and financial problems that will arise after the War, and I am strongly of opinion that not even our preoccupation with the immediate and paramount task of ensuring victory ought to prevent us from taking measures to ensure that these problems shall be carefully explored by skilled experts in advance.
My hon. Friend will be glad to know that a great deal of preparatory investigation is already taking place, but much of it is naturally unsuited for public discussion at present. For this and other reasons, I doubt if the precise machinery suggested in the question is best suited for the purpose.
Is evidence being taken by the body making the investigation?
reply was inaudible in the Reporters' Gallery.
Enemy Companies
asked whether the Government will give facilities to the Bill, introduced by Lord Halsbury in another place, dealing with enemy companies?
No, Sir, I am not prepared to give facilities at present, for the reasons given by the Lord Chancellor in his speech in the House of Lords last Thursday.
War Office Contracts
asked the Prime Minister whether, in view of the fact that clothing contracts and food contracts under the War Office are necessarily determined by officials who are not connected with the different trades, and who therefore cannot have the necessary knowledge to enable them to avoid undesirable contracts and extravagance, the Cabinet will consider the advisability of immediately transferring those matters to the Department of Munitions, or, alternatively, to place them under the complete control of committees drawn from the leading members of the different trades?
The Contracts Department of the War Office has actually in its employment, and consults in an advisory capacity, a large number of business experts. I see no reason for making the change suggested by the hon. Member.
Prisoners of War (Treatment)
asked the Prime Minister whether, in connection with the recent exchange of prisoners of war with Germany, we have returned upwards of 100 well-fed, well-clothed, able-bodied men to Germany and have received in exchange soldiers who are totally disabled by their injuries and in many cases are in a half-starved and ill-clad condition; and what course he proposes to take to secure in future a fair equality of exchange?
One hundred and three men were returned to Germany on the occasion of the recent exchange, and, as stated in the question, they were all wellfed and well-clothed, but they were not all able-bodied, as forty-three were incapacitated for further service. The remaining sixty were members of the German medical services. The disabilities from which the soldiers returned by Germany are suffering are similar to those on account of which the forty-three incapacitated Germans were repatriated. The condition of the clothing of the British subjects repatriated from Germany was, I am informed, bad, but it is also stated that they did not appear, to be half-starved. As regards the last part of the question, it is not considered that there is any inequality in the exchanges which take place, the same standard of incapacity being adopted by both countries.
Will the right hon. Gentleman inquire through the proper channels whether it is not the fact that owing to the scarcity of wool in Germany returning prisoners have had their woollen underclothing taken?
I will make inquiries; but that is not in accordance with the information I have received.
War Committee
asked whether it is to be understood from the fact that Lord Kitchener has joined the War Committee as a member that the War Committee has been increased beyond the number of five, which the Prime Minister stated on 2nd November to be the highest limit?
Lord Kitchener as Secretary of State for War is necessarily a member of the War Committee. I am not aware that I ever bound myself that the Committee should in no circumstances consist of more than five.
Did not the right hon. Gentleman state that according to his idea the Committee ought to consist of some number between three and five?
I did, but five is not a sacred number.
Lord Chief Justice
asked whether it is the intention of the Government to transfer the services of the Lord Chief Justice to the Treasury?
At my request, and that of the Chancellor of the Exchequer, the Lord Chief Justice has been good enough to render temporary assistance at the Treasury.
Will the reserved judgment in the Speyer and Cassel case be delivered before he takes up his new duties?
Does the hon. Gentleman think that I can answer that without notice?
London Government (City Funds)
asked the Prime Minister (1) whether he is aware that, by the unification of municipal government in London, economies to the value of over £1,000,000 a year could easily be effected; whether he will therefore take step? to ascertain whether this result could be attained by extending the jurisdiction of the Lord Mayor and Corporation of the City of London, giving to the boroughs a representation on the Court of Common Council proportionate to their population, and thus not only preserving but enhancing the dignity of the City Corporation and at the same time effecting economies; and (2) whether he is aware that Royal Commissions have reported that the property of the City Livery Companies is national property and should be under national control; whether he is aware of allegations of extravagance in administration; and whether, seeing that the value of the property is variously estimated at from £17,000,000 to £25,000,000, and that there is an annual income of over £500,000, he will take steps to secure it for national purposes in the present emergency?
asked the Prime Minister whether, in view of the revenues of the City Livery companies, and seeing that their funds are not used to their best advantage nor subject to public control, he will promote such legislation as will ensure their resources being utilised for the benefit of the nation?
The proposals, even if they could be recommended, could only be carried into effect by means of legislation which could not fail to be keenly controversial. At the same time, the hon. Gentlemen who ask these questions must not take it that I agree either with their premises or with their conclusions.
Is the right hon. Gentleman aware that the only inaccuracy in my question is that I estimate the savings at over £1,000,000, whereas in point of fact they would be over £4,000,000?
I am afraid I cannot accept that as the only inaccuracy in the question.
Does the right hon. Gentleman deny that there is a difference of over £1 per head in the municipal expenditure in London as compared with provincial cities, and that, taking the population in London into consideration, that proves there is an expenditure of over £4,000,000 that could be saved?
If I were not to deny that, I should be compelled to affirm that there were many reasons to account for the difference.
I will put the question down again.
Ministers' and Members' Salaries
asked the Prime Minister whether the Chief Secretary for Ireland, in making a statement on the question of Ministers' and Members' salaries, spoke on behalf of the Cabinet; and, if not, whether he intends to follow the advice of his colleague?
My impression is that my right hon. Friend must have been speaking for himself.
Will the Prime Minister say how many more negatives are required to make an affirmative?
If the right hon. Gentleman deals in any way with the reduction of Minister's or Members' salaries will he go by way of taxation, and so get a larger share of the plunder of colliery proprietors?
Near East (Superintendent of Camps)
asked the Under-Secretary of State for War whether he will explain the position, duties, and emoluments of the hon. Member for Merthyr Tydvil, who has been appointed superintendent of camps in the Near East?
I do not represent the Young Men's Christian Association in this House, but I have made inquiries, and as a result I learn that the hon. Member for Merthyr Tydvil has gone to the Near East in the capacity of a worker under the auspices of that association.
Is not the hon. Member of military age, and does he not come under Lord Derby's scheme?
The hon. Member is in the Near East.
Is he big enough round the chest?
Defence of London
asked the Under-Secretary of State for War whether any decision has now been reached on the question of transferring the Anti-Aircraft (London) Corps to the control of the War Office?
Although there are certain details in connection with this matter which still require settlement, the defences of London are being transferred to the control of the War Department.
Does that mean that Sir Percy Scott will no longer be in charge of the air defences of London, or will he also be transferred to the War Office?
No, Sir; I think he will be no longer in charge.
Permanently Unfit Soldiers
asked the Undersecretary of State for War whether numbers of the men now stationed at Aldershot have been marked permanently unfit for service without being able to obtain their discharge; whether he is aware that this represents a heavy financial loss to these men; whether these soldiers, suffering severe pain from rheumatism and other complaints, have to be out for breakfast by a quarter to seven and cannot return to the huts until 12.30 p.m.; that they are unable to see a fire until the opening of the recreation room at 11 a.m.; that they sleep on the floor with straw mattresses under them; and whether he will cause investigation to be made with a view to all soldiers permanently unfit for service receiving their discharge, together with the pensions and other payments to which they are entitled?
The intention of the Regulations is exactly that described in the last sentence of the question. If my hon. Friend will communicate to me details of any specific instances of the hardships he relates I shall be happy to have inquiry made.
Officers' Promotion
asked why it is that captains in the Cavalry of fifteen years' service and upwards have not been promoted to the rank of major while captains of Infantry regiments with the same length of service, to the number of some 700, have recently been so promoted?
I stated the reason for this in a written reply I gave to the hon. and gallant Member for the Ecclesall Division on the 8th December.
Public Schools Battalion
asked what procedure is to be adopted to obtain commissions by members of the Public Schools Battalions who are desirous of obtaining commissions?
Members of these battalions who desire to be candidates, should apply to their commanding officers for recommendation.
Does that mean the commanding officer of their battalion? If so, is the right hon. Gentleman aware that great difficulty has been experienced for some months in getting commissions by these persons who joined these battalions in the hope and expectation that it would be the best way of training for commissions?
I am very familiar with the fact that the hon. Gentleman brings once again to my notice. It is undoubtedly a truth, a verity, which he asserts; but there has been an amount of alteration in the history of this case during the last few weeks. It is this: that we have sent out from the War Office a special officer to inquire into these cases where there were deserving candidates for commissions who could be recommended. He has brought the facts back for the consideration of the Field-Marshal Commanding-in-Chief and the officers at headquarters in general.
When will that report be given?
I did not say a report. I said we sent an officer from the War Office.
When?
About ten days ago.
Was it not understood that special facilities would be given to the members of the public schools battalions for obtaining commissions if they were trained?
My hon. Friend asks if special facilities were to be given—
Promised!
No, they were withheld, but I do not think there was any promise.
American Medical Men (Services in General Hospitals)
asked the Under-Secretary of State for War whether American medical men have been recruited for medical service with the British Army; and, if so, what are their conditions of service?
I understand that several of the American universities have combined under the auspices of the Red Cross Society to send medical men and nurses to form the staff of two general hospitals. These men and nurses are engaged in their civilian capacity. Individual American medical men are not being employed in a military capacity.
Are they not being employed by our War Office and placed in uniform?
I do not think that is so.
Would my right hon. Friend inquire?
Certainly.
Transfer of Lieut.-Colonels (Territorial Force)
asked the Under-Secretary of State for War whether a lieutenant-colonel of a Territorial battalion who is transferred to another battalion for special duty can only receive the pay of a major on the grounds of the establishment fixed for such unit; and whether he will take immediate steps to remedy this state of affairs and reimburse any such officers who were deprived of their pay without their consent, and have suffered pecuniarily through such treatment, the amount of pay properly applicable to their rank?
If the hon. Member is aware of any case in which a lieutenant-colonel has been appointed to such a post in ignorance of the conditions attaching to the appointment I will make inquiries on receiving particulars.
Royal Flying Corps (Messing Charges)
asked the Under-Secretary of State for War whether, in the unit of the Royal Flying Corps stationed at Swingate Downs, Dover, the inclusive messing charges amount to about 7s. a day, from which ration allowances are to be deducted; and whether he will have an inquiry into the circumstances under which these charges have been permitted, notwithstanding the searching inquiry made by the War Office in order to prevent unnecessary expenditure?
I have caused inquiry to be made, but I have not yet received the report.
Officers' Horses (Employment of Grooms)
asked the Financial Secretary to the War Office whether he is aware that thousands of horses are being provided and kept for Infantry company commands and higher rank officers at the front for which there is no military necessity in the present conditions of warfare; whether thousands of men are kept out of the firing line to act as grooms; and if he will state what steps he proposes to take to stop this waste of public money and the weakening of our fighting forces involved?
Infantry battalions are regularly drilled, exercised, and manœuvred at frequent intervals, and I am advised that the horses referred to by my hon. Friend must be regarded as a military necessity. I am informed that the establishment of horses and grooms has been fixed at the lowest number compatible with military requirements, and that the grooms are all trained soldiers, who can take their place in the firing line when required.
Volunteer Training Corps
asked whether, in view of the Volunteer Training Corps now giving military training to men of military age employed in munition factories or in other war work, the War Office will reconsider the question of giving a grant of public money towards the cost of uniforms and equipment?
I regret that I cannot fall in with my hon. Friend's suggestion.
Army Shirts (Wages of Cutters)
asked the President of the Board of Trade whether his attention has been called to a strike of cutters engaged on Army shirts at the factory of Messrs Tillie and Henderson, Londonderry, alleged to be caused by a demand for a bonus of 3s. for skilled and experienced cutters who were receiving wages only slightly in excess of £1 per week; whether these rates of wages are being paid; if so, whether they constitute a breach of the Fair-Wages Clause; and whether, in that case, steps will be taken to secure the immediate reinstatement of the cutters in question at fair rates of wages?
My attention had not been previously called to this case. I will make inquiry into it.
Serbian Refugees (Relief Steps)
I beg to ask the Secretary of State for Foreign Affairs a question, of which I have given private notice, namely: Whether he can make any statement as to the steps which are being taken to provide food, shelter and clothing for destitute Serbian refugees?
The whole question of the relief of refugees from Serbia has been closely gone into in co-operation with the Serbian Relief Committee and with the Governments of the Allies. Steps have been taken to collect ample food supplies at points suitable for base depots, and these depots will be stocked with clothing and materials for providing shelter as soon as the need for these can be measured. There are, of course, very great difficulties remaining to be surmounted, and in certain areas it is not easy to ascertain exactly how great the influx of refugees is likely to be, but, on the whole, I believe that the numbers to be supplied will not turn out to be as large as was first supposed.
Is my right hon. Friend able to say whether urgent appeals have come within the last day or two for help for Serbians with regard to the supply of food?
I should like to have notice of that.
Railway Traffic Congestion (Manchester District)
I desire to ask the President of the Board of Trade a question, of which I have given him private notice: Whether he is aware of the serious congestion of traffic on the railways in and around Manchester, which has become a matter of great urgency at the present time; and whether he is taking steps to relieve this pressure by arranging for a considerable increase in railway facilities for traffic?
The general question of railway congestion is receiving the closest daily attention of the Railway Executive Committee, but I am asking them to look into the circumstances of the Manchester district now, with particular reference to the port of Manchester. I am also asking the Port and Transit Executive Committee to consider the complaints which have reached the Board of Trade from merchants and others who use the port. The strain on the labour supply at our ports is the most difficult problem with which we have to deal at the present time.
I beg to give notice that I shall raise the subject at an early date.
Foot-and-Mouth Disease
asked the Parliamentary Secretary to the Board of Agriculture whether he will state what number of animals have been affected in the recent outbreak of foot-and-mouth distemper in Bradford-on-Avon and South Maxhall; whether any further outbreaks have since occurred; and whether stringent precautions are being taken to prevent infection?
The total number of animals found to be affected in the particular outbreak to which the hon. Member refers was four cows and three calves. There has been no extension of disease in connection with this outbreak, although one occurred two days later in the Glastonbury district. The reply to the last part of the question is in the affirmative.
Royal Irish Academy of Music
asked the Secretary to the Treasury whether an intimation has been conveyed to the Royal Irish Academy of Music that the usual small Grant made to that body for the support of musical education in Ireland is to be immediately stopped; whether he is aware that the programme of education for the coming year was settled so far back as last September and that contracts were entered into accordingly on the assumption that the Grant would be paid as usual; and, seeing that the effect of the stoppage of the Grant will be that the contracts in question cannot be carried out or the prizes offered paid, whether under such circumstances the Treasury will persist in refusing the Grant, especially as it will amount altogether to a sum of only £300 at the most for the whole year?
The answer to the first part of the question is in the-affirmative. While I regret the necessity of such economies, I must point out that they are being made equally in England. I should not feel justified, on the information before me, in treating the case of Ireland differently.
New Member Sworn
The right honble. Herbert Louis Samuel, for the County of York, North Riding, (Cleveland Division).
Orders of the Day
Business of the House
I should like to ask the Parliamentary Secretary to the Treasury how far the Government propose to go in the Order Paper to-night with reference to the Motion for the suspension of the Eleven o'clock Rule. Will the hon. Gentleman state, for the convenience of Members, how many Orders it is proposed to take to-night? I should like further to ask whether, in view of the fact that the Eleven o'clock Rule was suspended on Thursday, and is to be again suspended to-day, it is intended that this shall be a daily practice?
In the temporary absence of the Prime Minister, perhaps I may say that he does not intend to move the Motion standing in his name to suspend the Eleven o'clock rule, but, if time permit, we shall hope to get the first five Orders.
Government War Obligations (No. 2) Bill
Order for Second Reading read.
Motion made, and Question proposed, "That the Bill be now read a second time."
I wish to ask you, Mr. Speaker, on a point of Order, whether this Bill does not go beyond the scope of the Money Resolution which has been passed by the House? I wish to ask this question not only generally with regard to this Bill, but specifically with regard to one or two other measures. May I remind you, Mr. Speaker, that the hon. Baronet the Member for the City of London (Sir F. Ban-bury) moved an Amendment to this Money Resolution with a view to limiting it, and on 1st December, 1915, in column 797 of the OFFICIAL REPORT, the Chancellor of the Exchequer stated that it only related to past obligations. Later in the Debate, when I supported the hon. Baronet, the right hon. Gentleman also made the same remark, in column 803 of the same date. In that Debate several hon. Members took part, including the hon. Member for Hereford (Mr. Hewins), the hon. Member for North-West Lanarkshire (Mr. Pringle), and myself, and we warned the Chancellor of the Exchequer that his Money Resolution, in our opinion, was too vague and too wide, but he asked the House to pass it because it related to past obligations. I want to submit to you, Mr. Speaker, that a Bill of this kind, which authorises any agreement in regard to American securities, can be considered as past obligations? I also wish to ask whether the Chancellor of the Exchequer did not give a definite pledge, in answer to the hon. Member for Hereford, that if he has to deal with anything in the future of this kind he would come to the House for a specific Money Resolution? These are the Chancellor of the Exchequer's own words and the question put by the hon. Member for Hereford:—
"Mr. Hewins: Are we to understand that the right hon. Gentleman will not proceed with this Bill unless he has already got the approval of the House to the American securities scheme?"
"Mr. McKenna: I do not say that for a moment, but I do say that if I proceed with this Bill before I have got the scheme approved in respect to American securities, the American securities scheme will not be in the Bill, and I must come to Parliament for another Bill to indemnify me in regard to that."—[OFFICIAL REPORT, 1st December, 1915, col. 803]
The hon. Member thereupon accepted that assurance. I wish to ask whether this Bill conforms to the statement made by the Chancellor of the Exchequer?
I do not think that the last question is quite a proper question to put to me, and the hon. Member must put it to the Chancellor of the Exchequer. I have not got to interpret the observations of the Chancellor of the Exchequer. He is responsible for that, and no doubt will give the proper explanation. The hon. Member, however, is entitled to put to me the question whether the Bill conforms to the Resolution, and that I am quite prepared to answer. My reading of the Resolution is that the words "incurred for the purpose of the present War, or in connection therewith," mean obligations which shall have been incurred at the time that the Act comes into force. Of course the Resolution of itself has no force until it is fortified by the passing of the Act, and the Act has no force until it has passed and receives the Royal Assent. Therefore it seems, to me that the ordinary and necessary interpretation is that the word "incurred" means such as shall have been incurred before the Act became law, and not to be incurred in the future. As to the time which is to be taken, it is the time at which the Act has passed and receives the Royal Assent. It seems to me that the Bill as it stands at present does conform with the Resolution. So far as that is concerned, I think I have answered the hon. Member's question, and the other part I must leave him to put later on.
I think my hon. Friend in the course of this Debate will find in regard to the question he has put to me that I shall be able to give him an answer to his satisfaction. I do not propose to go into minor points in moving the Second Reading, but I wish to explain the general scope of the Bill, and the scheme for dealing with American securities to which my hon. Friend has referred. The general object of the Bill is to continue and extend the Government War Obligations Act of last year. By that Act it was enacted that there should be paid out of the moneys to be provided by Parliament, or out of the Consolidated Funds, sums for certain purposes set aside in the Schedule to the Act. When the Bill of last year was introduced into the House the Government had entered into a certain series of obligations for which at the time no Parliamentary sanction had been obtained. A Bill of Indemnity was, therefore, introduced and passed through Parliament. We propose to renew that Act, and we also ask the House to extend it in respect to certain other obligations which have been entered into since last year. I have no doubt that at a later date the Government will be obliged once again to ask the House to indemnify other obligations which we shall have to enter into in the future. I am sure the House will appreciate that it is absolutely impossible to anticipate all the obligations which it is the duty of the Government to enter into in a state of war, and that it will be quite impossible in a great many cases to get Parliamentary sanction in anticipation of the obligation. In respect of one fact, I am sure the Government can always depend upon receiving the support of the House. I have never known the House of Commons object to initiative, provided the initiative is wise and proper. On the contrary, I have always observed that the criticism of hon. Members has rather been directed to the point that on certain critical occasions there may have been a want of initiative on the part of the Government. There is no phrase more current, both in this House and outside it, than "Give us a lead," and when the Government does give a lead and initiate action, provided the action is proper, I think the House will not hesitate to indemnify the Government for that action. I might rapidly recapitulate the new obligations for which sanction is asked under this Bill: — the obligations which we have undertaken, provided our resources remain liquid, and we are given time. We have got immense resources with which to pay, and which ordinarily are not taken into account. There was in time of peace a very large balance of trade in our favour, not the balance of trade which appears in the Returns of the Board of Trade, which merely give exports and imports, but the whole balance of trade, as measured by the profits which we make upon our shipping, our banking, and our insurance business, as well as the Returns which we receive from foreign countries in the way of interest and dividend upon foreign investment. We had a very large surplus with which to meet any purchases that we might have to make, but that surplus has now been exhausted by the new demands which we have had to make on America. In spite of the large amount which we have earned from shipping, in spite of the great annual interest and dividend paid to us, those amounts taken together are not sufficient to set right the balance of trade which is now against us. Consequently, in order to meet our liabilities in the United States, we are obliged to go outside the ordinary course of trade. We find ourselves compelled to meet our immediate liabilities, either by raising loans or by selling securities. We have in this country at the present time an unknown but certainly a very large amount of American securities. These securities are held partly by the great institutions, bank companies, insurance companies, trust companies, and others, and also very largely by individual members of the public. So long as these securities are sold in the ordinary course of business to the United States, the sale has the effect of restoring the balance of trade, and consequently of maintaining the American Exchange.
4.0 P.M.
But if these institutions and private persons are left to themselves it is not probable that the full advantage will be taken of the securities which are held here, that they would not be, as it were, mobilised or rendered mobile and used for the purpose of maintaining our exchange with the United States. We want, if we can, to get these securities as far as possible into one hand, so that they may be controlled and used for the purpose of paying our debts in the United States. We believe that they will afford us a very great resource which will be fully sufficient to meet our liabilities, and therefore to maintain a good level of exchange with the United States for a period which I trust will be at least as long as the War will last. There are certain elements of doubt. We do not at present really know what is the total amount of these securities held in this country, and there is of course another element of doubt as to the length of time it would take to get these securities which we desire to sell, or on which we desired to borrow, absorbed in the United States. We recognise to the full that it is as much our interest as it is the interest of the United States that we should do nothing which would harass their market or injure their financial business, and, therefore, in any action that we take we shall certainly exercise every care that nothing is done to embarrass the financial interests in the United States. We are satisfied, however, that if full use is to be made of the American securities that the country holds, a great endeavour should be made to bring those securities directly under the control of the Government, so that in skilled and well qualified hands they may be used for the best interests of the State.
A week or two ago I asked representatives of the insurance companies and the trust companies to meet me at the Treasury, in order to discuss the terms upon which the Government might be given control of the American securities. Certain proposals were put before those gentlemen whom I saw at the time. They were not definite proposals then, they were only an outline, a basis for discussion. Those proposals were further considered by the Treasury, and by representatives of the insurance companies and trust companies, and finally, last Saturday, I again had the pleasure of meeting at a joint meeting representatives of both sets of institutions, and I then laid before them a final draft of a scheme which I hoped would meet with their acceptance. The representatives whom I saw had a very full discussion with me, our conference lasted a considerable time, and at its conclusion I think I am justified in saying that there was general, if not complete, if not universal, approval of the scheme, particularly of that part which we put foward first as the most important. The scheme divided itself into two parts. We primarily proposed under the scheme to purchase all the securities held in this country which are suitable for the Govern- ment. I may say at once the kind of securities which we have in view are American and Canadian securities. In our opinion the simplest and best course to pursue is to purchase. Accordingly where the holder of Canadian and American securities is in a position to sell his securities outright, the Treasury desire to purchase such of them as are in their opinion suitable for the purpose in view at the current market price, the purchase money to be paid in five year 5 per cent. Exchequer bonds at par.
Can the right hon. Gentleman say anything about the market price?
I have not finished my proposal yet. Will the hon. Baronet allow me to go on. In the case of securities reported on the New York Stock Exchange, the middle price of the closing New York Stock Exchange quotation of the day on which the securities are purchased will normally be taken as the current market price for the purpose. In the case of unquoted securities or in the case of quoted securities in respect of which the current quotation may not be regarded as representing the true market value, the price will be fixed by agreement with the person tendering the securities. The Exchequer Bonds will carry interest from the day following that on which the purchase is made. Where a quotation does not include accrued interest or dividend to date, such accrued interest or dividend will be added to the price. The price being payable in sterling the New York dollar price will be reckoned in sterling at the exchange of to-day. That is the purchase scheme.
We offer to any holder to buy such American and Canadian dollar securities as are suitable for our purpose at the market price of the day, without commission, without brokerage, for middle market price of the day, and to pay in 5 per cent. five year Exchequer Bonds. Hon. Members will realise what that means, when I say we are giving British credit—the market price of the day of American securities—we are giving British credit of 5 per cent. Any one will appreciate at the present moment American securities are at a good price. British securities, on the other hand, owng to the War, not owing to any failure of credit, but owing to our having to make such large payments—British securities are comparatively very low, consequently when we offer 5 per cent. Exchequer Bonds in exchange for American and Canadian dollar securities at the prices of the day, we are making an offer which would only be justified by the absolute necessity for us to mobilise our American securities and to make them of the utmost value to the nation as a whole.
We recognise that there are some holders of the securities I have named who, however anxious they might be to assist the Government by selling are not in a position to sell their securities outright. In order to meet their position an alternative scheme is suggested. Where a person is unable or unwilling to sell the Treasury are willing to accept securities on deposit, subject to the right of purchase by the Treasury in certain contingencies on the following terms:—
Indefensible?
It is indispensable. Unless a condition of the kind exists, the British Government might find itself very awkwardly placed. These securities will, or may be used, if not by the Government itself—it may not be the Government at all—by institutions over here as collateral security in borrowing money in the United States. If the lender knew that the borrower in no circumstances would consent to the realisation of the security, the borrower might find himself in great difficulties in dealing with the lender; at any rate, the borrower could not deal with the lender upon a footing of equality. It is really essential to put the two parties to the bargain on the same footing, so that the borrower should be in the position, if needs must, to sell the securities. I do not think the borrower will ever want to sell, and he would not be authorised under this condition to sell merely because he desired to sell. He could only sell if necessity arose. I do not think either that the lender ever would really want the borrower to sell. On the contrary, it would be most undesirable in many respects to put upon the American market a very large number of these securities in too short a time. Therefore, both parties, in the last resort, are of the same mind that they do not want the sale to take place. Nevertheless, it is necessary for the borrower to be in a position to defend himself, and he can only defend himself if he is in a position to sell. Consequently, we have to have a condition of this kind. Then it is argued that if you have a condition of this kind you ought to have the condition upon terms more favourable to the British holder of the security. But if the terms are more favourable to the British holder of the security, the borrower in the United States is not really independent. These terms bind him, and the lender in the United States knows that the borrower is bound by these terms. The borrower in the United States must have freedom. That is in the public interest.
I now come to the last point, namely, how far is the lender in this country injured? If we notify the lender of the security that we are going to sell, the lender can himself buy the security back. If the British Government—I will not say the British Government, but the borrower over here is going to sell this security in. New York, or wherever it may be, nothing stands in the way of the original owner of the security himself buying it back, and if it is at a depreciated price he buys it back very much cheaper. We allow 2½ per cent. margin, and we think that that margin would be more than sufficient to cover any difficulties which might arise with regard to the exchange. If there be critics of the scheme, if there be those who do not think the second part of the scheme good for themselves—personally, I do not agree with them—I should unhesitatingly work under that second part of the scheme myself; but if there be those who feel that, I would remind them that primarily we put forward purchase as our main object, and the whole is voluntary. Therefore, I would have the critics remember that whatever their own views may be, they serve no good public purpose by turning all their critical faculties on to a proposal which has commended itself to a very large gathering of the leading institutions directly concerned in this business.
Not wholly.
It commended itself to the meeting as a whole. From some of them I have since heard that they will unhesitatingly themselves adopt the proposal. That is the scheme as a whole. I am unable—I am sure the House would wish me and I should be very glad if I could to do so—to give any estimate as to the amount of the securities involved. Figures have been given by really first-class authorities, which have varied as much as from a total in one case of between £700,000,000 and £800,000,000, and in another case down to as low as from £300,000,000 to £400,000,000. The actual amount of American and Canadian securities held in this country is really unknown. I think that probably in the course of some few weeks I shall know a great deal more about it than I do now, but I have no doubt at all that there is a sufficient amount in sight and available to meet our requirements for a considerable length of time, if the scheme which has been proposed is accepted by Parliament. I look upon the acceptance of the proposal as urgent. The House may say, "If it is urgent now, why was not the Bill introduced earlier?" The answer is that we can only take each measure step by step as the emergency comes. I know that some hon. Gentlemen in this House have put forward for a considerable time proposals of a very much more drastic kind for dealing with American securities. I hope to get their support in the more modest proposal which I have made. We wish to retain, and I think we can retain the complete goodwill and cooperation of all the great business institutions of this country which we received on Saturday. Although I readily admit that some of the proposals did not commend themselves to the meeting at first, before the meeting concluded we received the most hearty promises of assistance and goodwill. I am sure, if the House will give us the sanction for which we ask, that we shall be able to finance ourselves for a very considerable time to come. The Bill includes—
Is it quite clear that the holder has the option of either depositing his securities or of having them purchased? Does the option lie with the holder?
The holder may either sell his securities or deposit his securities. If he deposits them, he may at any time sell them. He retains his right to sell at any time. The option is the option of the present holder of the securities. We have inserted in the Bill a power for companies and trustees to deal with the securities, so that there will be complete liberty of action. Those are the main provisions of the Bill.
What is the definition of "securities"?
All that we say is that they are securities of which the Treasury approve. In practice, the kind of security will be the American or Canadian dollar security, which can either be readily sold in the United States, or upon which money can be borrowed. There are, of course, a good many securities held over here which would not be useful for either of these purposes, but generally American bonds and American stock would be available. I think I have given a sufficient explanation of the terms of the Bill.
I am really in some little difficulty. I do not know whether to congratulate the right hon. Gentleman for having gone as far as he has gone, or blame him for not taking a shorter and much simpler cut to arrive at more or less the same position which I have had the honour of putting before the House upon another occasion. One thing is quite clear: the Government have not intended that either this House or the public should form any opinion of this scheme until to-day. We are now reading for the second time a Bill which purports to grant money to sanction any scheme. There is no detail whatever of the scheme in the Bill. The Chancellor of the Exchequer has stated what his scheme is, and has stated it so amply, so well, and so clearly, that I am quite sure the whole House realises exactly what the proposal of the Government is, but the form in which it is introduced has had the effect of withdrawing the details of the scheme from the control of the House. It will presently be put to us whether we grant a Second Reading to the Bill or not. I, for one, shall of course vote for the Second Beading, but we are powerless to affect the scheme itself. We cannot, when the Bill comes into Committee, move an Amendment to any portion of the scheme. That has not been done by accident. That has obviously been done deliberately by the Government so that the control of the scheme is entirely taken out of the hands of the House. It is equally taken out of the hands of the public, because we are asked to discuss a scheme which has never been put on paper, and which we have had to follow as best we could on the right hon. Gentleman's explanation. Had it been before the public we should have got a lot of informed criticism by the commercial and financial public of this country which would have been a guide and a help, not only to Members of the House, but also to the Government, I have not the least doubt that the Chancellor of the Exchequer has had good advice with regard to this scheme. He told us that Lord Reading has been assisting at the Treasury, and he has had in addition the advice and assistance, of course, of the Treasury officials, and the benefit of conferences with a large number of those who hold these securities; but with all that, the sole repository of financial wisdom is not to be found on the Treasury Bench. There are Members of this House who have also got opinions which are entitled to be considered. I see hon. Gentlemen opposite who have made their living by their knowledge of practical finance, and there are some no doubt on this side of the House, and they ought to be allowed not only to give their opinions after the event, but to shape the form of a scheme which is of such great importance.
I want to criticise the actual scheme that is put before us. First, I ask is the scheme an adequate one? What do we know about it? The right hon. Gentleman told us that the balance of trade with America was, unfortunately, against us at present. I suppose there was no one in the House who did not know that. I was in hopes that he was going a little further and was going to give us some real information on the subject. He gave us absolutely none. He did not tell us what the problem was that we were up against. He did not give us any sort of indication of what the amount was that we had got to provide; and when he came to discuss the scheme, he gave it in two alternatives— the one the power to purchase, and the other the power to receive deposits which the Treasury is going to ask us to give them. He made no estimate whatever of the amount of the bonds and securities which he would get under either one of the headings. So he is asking us to decide upon a scheme which we have heard for the first time a quarter of an hour ago, without giving us either the amount that he desires to raise in this matter or any estimate of what he expects to receive. I want to go into the first principles of this. Why is this scheme put forward at all? It is because there is an excess of imports coming into this country, and in order to pay for them we have got to create a corresponding export. If we hold fast to the absolute elements of the situation I think we can reasonably consider this scheme. Sales of securities form a corresponding export and enable us to pay for that import, and the first part of his scheme, therefore, of offering to purchase securities in 5 per cent. bonds running for five years, I heartily commend. I hope it will be extremely successful, and if that were the only part of the scheme I should have nothing more to say if it was made compulsory, because then, I believe, we should undoubtedly so mobilise our financial resources that we could meet any possible amount of imports that we have to-day.
But that is not the only part. The other part of the scheme is that the Treasury shall go to the holder of the securities and say to him, "If you do not want to sell, come and deposit your securities with me, the Treasury, and I will let you retain all the interest which you get on that security, and in addition I will give you ½ per cent." There are some conditions about that, but that is the broad outline of the proposal that the Treasury is going to make. To the extent that that succeeds we shall not be paying for imports—indeed, we shall be hindering the sale of securities which we require for the payment of imports. If it were to succeed entirely, so that there were no sales of securities at all, this scheme would be worse than useless; it would be an actual detriment as a means for the payment of our imports—that is, if we are to take the Chancellor of the Exchequer quite seriously, because he has got, under the second power, a power to sell those securities at the price of the day plus 2½ per cent., but he warned us that he did not intend to exercise that power, except in case of great necessity, and I gather that he had some difficulty at his meeting on Saturday on that point, because he must have reassured those who were present at that meeting by saying that the power was taken, of course not with the object of using it, but rather as a mere precaution that he hoped never to have to use. If the second scheme of deposit was successful and that power was not used, it would nullify all the good that could be gained by the first scheme, and, indeed, would make our position worse, because it would not create an export in order to pay for the import. It would enable the Government to borrow from bankers and others a certain amount of money, which would be the equivalent of postponing the date for the payment of that import, but it would not in fact satisfy that import. It would postpone the payment for just as long as the Government were able to borrow upon these securities and no longer. If, for example, they borrowed on ninety-day bills, which they discounted, using that security as collateral, they would have postponed the payment for that import for ninety days. If they succeed in renewing those bills for another ninety days, they would then have postponed the payment of that import for altogether 180 days; but that is a totally different thing from selling securities, the price of which would go in firm and final payment for the import. It is therefore, in my judgment, important to recognise the difference between the two propositions and for every Member of the House to use all the influence he has got to see that his trustees, and, if he is the director of a company, his company, accepts the first proposition of the Chancellor of the Exchequer rather than the second. Every obstacle that can be put in the way of selling securities should be removed with all the vigour that Members of this House can bring to bear upon it.
There is another part of the right hon. Gentleman's statement that I want to comment on. He said he had no idea how much of these securities there were in this country. He said there had been wildly varying estimates, and what he stated was perfectly true—there is no one, I believe, who knows within several hundred millions what foreign securities there are in this country and what are likely to be available for such purposes as the Government require this for. But, as the proposition is urgent, you would have thought the Government, instead of telling us they knew nothing about it, would have taken the preliminary step of getting knowledge upon that subject. The preliminary steps I suggested two months ago were that there should be a national register, and that the owners of this class of security should be called upon to register their securities. What we want is a financial Lord Derby. We want those securities registered, and we want them grouped, just as the men are registered and grouped, and just for exactly the same purpose. First of all, we want to know how much there are of these securities. Secondly, we want to know what classes or what groups of securities there are, and which of them are available to be immediately called up for the urgent purposes that the right hon. Gentleman was explaining.
How could that be when there is no definition of security?
The hon. and learned Gentleman will not hold me responsible for the absence of definition. I have not the least difficulty in defining exactly the securities I am referring to. They are securities in the dollar denomination—the right hon. Gentleman said that—and I should go on to add "of any foreign Government, city, corporation, or of any railway, or other utility corporation registered and carrying on its business abroad, that has the dollar denomination of stock." I do not pretend, on the spur of the moment, to give a legal definition, but that is the class of security which is useful for the purpose of paying for imports which arise in a dollar currency country. It is for that purpose that these securities are required. There would be no difficulty in calling for such a register, and there would be no difficulty in insisting upon it being observed. I do not intend to go into detail, but the Government can make this class of security bad delivery. They can prevent them being sold or used until they are stamped as registered, and if such a stamp as that were put on the security there would be not the slightest difficulty in insisting upon the registration. I have heard it said that some men are such bad patriots that they would hide their securities. I do not know whether hon. Members think that, but that is the sort of charge you would bring against a man who would desert in the face of the enemy. I am not prepared to bring that charge against any of my fellow-countrymen, but if that were thought to be the case there are many ways in which his negligence and wrong doing could be punished. These securities could be forfeited even. Under the Customs Act I fancy there is forfeiture for false declaration and treble penalty. There will be no difficulty in finding sufficient penalties to frighten the wrong-doer and prevent him from hiding his securities.
I suggest there should be this register, and that then the Government, instead of taking a complicated scheme of this sort, which may or may not operate, and which may operate partially, but which may not be sufficient to carry us through, to find means of payment of unstated and unknown liabilities, should take power to call up so many of these securities on the register as they require from time to time. If they did that they would know in advance where they were. They would then be able to make their preparations in advance. Under this present scheme the Government cannot make its preparations in advance. It does not know what is coming in from day to day, and it will be impossible to make any broad financial policy which will stretch itself out in preparation for the future. I do not suggest that you should take by compulsion, nor do I necessarily mean that you should pay in stock. That, of course, is the equivalent of a forced loan upon the holders of certain securities, and might be objectionable, but if you are going to pay in 5 per cent. bonds, of a five-year currency, you are paying in so good a medium that no one ought to consider it a hardship to be compelled to part with his securities for so good a return as that. These securities are undoubtedly wanted. The Chancellor of the Exchequer has told us that the matter is urgent, and, indeed, he would not have brought forward this scheme if they were not wanted. He has not told us the total amount of the indebtedness, and he cannot guarantee that the half-measure which he is now proposing will in fact suffice. The scheme is not, of course, unalterable. While the House of Commons is unable to alter it; they have to accept it or refuse it, it is in the power of the Government before the Third Reading to alter it if they choose. I suggest that the Government should reconsider the matter and see whether the proposal to have a register and a compulsory acquisition of those securities when required—not all at once, but calling them up group by group, as you propose to call the men up—is not much simpler and on the whole fairer, both to the nation and to those who hold these securities.
I will not devote much time to the speech of my hon. Friend (Mr. Worthington Evans), except to say that I think it is a mistake that he should have made certain parts of that speech at the present time. His talk about foreign securities and other things may frighten people out of their lives and probably induce some of them, who do not quite understand the proceedings of Parliament, to sell their securities and flood the market, and do no good at all. It is one of the most foolish speeches I have ever listened to. Of course, my hon. Friend understands that I do not intend to be discourteous. With respect to the scheme put forward by the right hon. Gentleman I presume that this is the scheme which the right hon. Gentleman has made up his mind on, and though we cannot alter it here in the House of Commons that there will not be any departure from the scheme without informing the House before the Third Reading takes place. I think there is a great deal to be said for the second part of the scheme, where the right hon. Gentleman takes power to borrow securities, but very little to be said for the first part where he takes power to purchase them. The power to borrow securities is, I think, good, because it does not commit the State to liabilities. The State takes the securities and holds them for two years and borrows money against them in New York. It is quite true that at the end of the two years American exchange may be the same as it is now, but that is very unlikely, because we all hope that some time before two years are over the War will have finished and the American exchange will have righted itself. We cannot hope to regulate the American exchange for all time. We can only hope to do something while the War is lasting. Therefore, I think that the fear of my hon. Friend (Mr. Worthington Evans) as to what may happen at the end of two years is not a fear which we need to consider at the present time.
The advantage to the State under the borrowing part of this scheme is that the Government merely take these securities, they borrow money on them in New York, instead of having to remit money from here, and there is no loss and no profit. At the end of the time they return the securities, and in the meantime money can be borrowed on them in New York, instead of obtaining it here and sending it out. The only possible question of loss would be the ½ per cent. premium per annum which is to be paid. That is not a very large sum, and I think the holders are entitled to something for the use of their securities. With respect to the first part of the scheme, namely, the purchase part, I am not quite sure that I thoroughly understand what the right hon. Gentleman proposes to do. Does he propose to purchase a large amount of these securities at once? Assuming, for the sake of argument, if £100,000,000 of securities are offered, does he intend to purchase them at once?
I should have to consider the question of £100,000,000. That is such a large figure as to be almost extravagant. I do not anticipate anything of the sort. We might be prepared to purchase £100,000,000, but I do not anticipate anything of the sort.
That seems to me to be a very dangerous thing. The right hon. Gentleman in his speech said that American securities were at the present time very high, and that English securities were at the present time comparatively low. My business experience has taught me that the wrong time to buy is when a thing is very high, and the wrong time to sell is when a thing is very low. The right hon. Gentleman is going to commit both those errors. He is going to buy a very large number of American securities when they are very high and pay for them with English securities when the English securities are, in his own words, comparatively low. I think those are two very great mistakes. Of course, I used the figure £100,000,000 figuratively, but I am not at all sure that if it was known in the United States that the right hon. Gentleman was to buy £100,000,000 of American securities at a given price, and that he was to buy them at the price in New York, should not we see a very large drop in New York? Would not our Government be in this position: That in order to save what is not a very large loss on the exchange—I think it is under 6 per cent. for every £100 sent out—
Three per cent.
That strengthens my argument. In order to save 3 per cent. it may be that there may be 5, 6, or 7 per cent. fall in American securities. Ameri- can securities are funny things: they move about rather quickly. The Americans are very clever, and if they know that £100,000,000 worth of securities are to be realised I am not sure that they would not make a market for them.
We do not for a moment intend to throw vast quantities of stocks upon the American Stock Exchange. To do so would be almost an unfriendly act. We intend to borrow on the securities.
But I am talking about what may happen if the right hon. Gentleman has to buy securities. My point is this, that at the present time American securities are very high, partly owing to the exchange. If the exchange rights itself there will be a fall in American securities over here in London prices. The right hon. Gentleman says he is going to buy these securities, but not at high prices, and that he does not propose to sell them all at once in New York. He could not if he wanted to. He proposes to keep them and use them in order to borrow money on them. What is he going to do with these securities after he has finished borrowing money on them? He has to sell them at some time. That is why I think the borrowing part of this scheme is so much the better. If he buys them he has to sell them at some time. He has to buy them when the price is very high. Suppose the War is over in six months' time, and the exchange rights itself and American prices of securities falls, the right hon. Gentleman is the bull of these securities at a very high price. That is what is going to happen, or at any rate, that is what may happen. That is one reason why I urge that though there is a certain risk at the end of two years that the American exchange may not have righted itself, the best thing to do in a sound financial scheme is to borrow securities and not to purchase them. I have endeavoured to put what is a very technical point as clearly as I could. These are, in my opinion, very serious questions which the right hon. Gentleman ought to consider, and I hope he will consider them between now and the Third Reading, so that, if necessary, there may be some alteration.
( indistinctly heard ): It is quite evident that if the Chancellor of the Exchequer buys stock and borrows upon them at a high price that must be a speculation. It is a question whether the Government are prepared to speculate its stocks in American securities or not. If they are willing to speculate, I presume they think the price is going higher, or, at any rate, that it will maintain its present figure. Nevertheless, the Government consider that they are offering holders an adequate compensation when they give them 2½ per cent. of the call on their bonds for two years. The hon. Baronet's (Sir. F. Banbury) knowledge of the Stock Exchange, I think, would lead him to believe, and I should imagine the advisers of the Chancellor of the Exchequer would also think, that to give 2½ per cent. for the power to take over securities for two years does not adequately represent the value, and that so far as private trustees and investors are concerned they would not lend their stocks to the Chancellor of the Exchequer. I can quite see that the Government cannot borrow in America upon bonds unless they are able to give the lender the power to sell in case the money is not repaid. They consider that they should have some power to divest themselves of the security, although the Government state that they have no intention of putting this into execution. It is merely to give them the power of doing this in cases of necessity. Therefore, there can be no objection to offering a higher rate to investors for the call on their stock for two years. It is merely academical, just as I presume it would be in the case of the British Government or their representatives borrowing in the United States. The Government risks nothing by offering as a greater advantage to those who deposit their stocks 5 per cent., which would more adequately represent the value of the option which they are desirous of acquiring.
It is a matter of common knowledge that the Government have already purchased large amounts of securities in this market, and, therefore, the question arises, What is the Government going to do with all these large amounts of American securities they have acquired? I do not suppose that the Chancellor of the Exchequer, with his knowledge of finance, proposes to speculate in American bonds to the extent of hundreds of millions without selling any of them. It seems to me that his advisers would not be likely to adopt such a course. Therefore, I agree with the hon. Baronet (Sir F. Banbury) when he says that so long as the Government borrows upon the stocks and is able to get the money in New York, and adjourn it from time to time when it becomes due, that is a legititmate transaction which is well known in the financial world and frequently resorted to. Would any banker or financial man of any experience go and buy stocks to a large amount, borrow on them, and stand speculation as to what the ultimate result would be? I feel certain that Lord Reading has not advised the Government that such a thing would be a wise thing to do. If the Government is of opinion that the stocks are realisable at the present high rate of interest, they are not justified in asking the holders to give them the option of calling their property for two years at 2½ per cent.
5.0 P.M.
There is another aspect of the question which calls for consideration. Up to the present the import trade of this country and the exports of America, outside those for the Government, have been largely paid for by exports supplemented by sales of bonds. The Government now propose to take these bonds to pay for what I may call the private imports of the country. The Government should certainly make arrangements to make some of this exchange available for the ordinary trade of the country, or they will find the scheme toppling down through the competition of the private traders of the country who are desirous of having dollars to pay for the imports that come into this country. The Chancellor of the Exchequer has not shadowed forth any scheme by which he is going to enable the non-Government importers of the country to pay their debts. They will not allow gold to go forth from the country. Therefore the exchange must deteriorate and go in the direction opposite that which the Government desire unless they give them some apportionment of the result of this borrowing and leave it available for the general trade of the country. I commend this aspect of the question which has been referred to by a previous speaker, but I think that the Government should know that it is highly important that the general trade of the country should not be crippled by not having money available to pay for imports that come from the United States and Canada in large quantities at the present time. It is quite impossible to say how far our exports will pay for the private imports into this country, because the Government have given us no figures upon which we can form an opinion. It is quite competent for the Government to have at their command, owing to the Income Tax payable upon American securities in this country, figures at which they could arrive within an appreciable distance of the total amount of American securities held in this country. I think that, before a definite conclusion can be arrived at, the Government should let the House know the amount of American securities held in this country, and that they should also tell us how far private exporters in this country are able to pay for the general imports from America.
I do not wish to indulge in any criticism of this Bill save from the purely drafting point of view. The Chancellor of the Exchequer was quite well advised in not giving the details, the absence of which was complained about afterwards. I think that he would have made a great mistake if he had gone one inch further than he did. But with regard to the Clause itself there is a vagueness which I think is hardly justifiable. This Clause is really only a blank sheet of paper, and I think that we are entitled to ask what is going to be the "securities deposit scheme." We have never before, as far as my recollection of the Statutes goes, used the word "scheme" and allowed the scheme to have statutory effect. We have given to rule-making powers the right to revise and amend rules, and so forth. I asked the right hon. Gentleman what is the definition of the word "securities." He said very fairly that there was no definition; but when you come to draw a scheme you must define "security" in some way, because, in this Bill powers are taken to discharge a security of all trusts. How can you discharge a security of trusts unless you define in some way what the security is? And remember that in this business you are dealing with hundreds and millions of money, and that some of these securities, so-called, will only become securities when the Treasury approves of them. That would be a most extraordinary state of things. A man may have in his trust scheme half a dozen things which he calls securities. He may have borrowed on any block of them. Suddenly he finds probably that the pillar of the estate of which he is trustee is pulled out, and that he is left as a trustee subject to the trust, while the main portion is taken by the Treasury.
It is not in any spirit of criticism that I offer these observations, because I think the Government are doing what is absolutely essential and necessary, but I do protest that this phrase "securities deposit scheme" is the most wild-cat phrase that I have ever heard of. There is some little suspicion in my mind that you may intend compulsion. If you intend compulsion, say so, and the House will give it to you. But you cannot have compulsion without definition, and if you say you will not have definition then you cannot ask me to present securities to the Treasury until I am told what a security is. From the legal point of view the Clause is the most repugnant Clause that I have ever read. I do not say that with any desire whatever to block the Government Bill. Suppose they draw a scheme and that the scheme does not attract that measure of response which they expect, are they to have the right to issue a scheme without coming to Parliament? I think that it would be a monstrous power, and we ought not to do it; because undoubtedly there is at all events the evidence of what you call patriotic compulsion. I am not blaming the draftsman for this; I am sure that he spotted it. I can assure the Government that it would be well to provide something like this: Let there be power for amended rules to be laid before Parliament. I would also suggest for the protection of trustees that schemes should be published in the "Gazettes" of three Kingdoms. Then, at all events, if a trustee has brought forward a security and thereby liberated his trust, he will be able to say to the Court, "I did that in accordance with the scheme as laid down in the 'Gazette.'" What has he at present? It is not provided that the scheme should be published anywhere. I am only speaking with a desire to assist the Government, but from the lawyer's point of view—and I am not pretending to be much of a lawyer—I think that this is a most extraordinary provision.
I think the discussion which has taken place thus far will have indicated to the House that the question with which the Government are attempting to deal in this Bill and in their scheme is by no means a simple-one. It is surrounded with difficulties. The hon. Member for Colchester (Major Worthington Evans) complained that we had no statement of the liabilities and no estimate of the amount of securities expected to be obtained. I think that it would not be wise to give estimates and statements of that kind. It might damage our position in America very much. Then we had a curious indication. The hon. Member for Colchester thinks that purchase is right, while the hon. Member for the City (Sir F. Banbury) and the hon. Member for Whitechapel (Sir Stuart Samuel), both of them very considerable authorities on finance, think that purchase is bad and that borrowing is very much better. When authorities differ it is clear that there is considerable difficulty. In favour of the borrowing scheme there is undoubtedly this to be said, that if you can borrow and return the security that you borrow then you avoid all loss in the value of the security. That is a very important point indeed. But if you have to sell, then your position is very different indeed, and if you are going to sell the security of a man from whom you borrow and you are to sell it whenever you like, whatever the state of the market, you are going to put him in a very difficult and, I think, very unfair position, unless you give him some alternative. If you go to him and say, "I want your security, but I am not prepared to buy it; you must lend it to me and I may sell it in the market whatever the price may be at a time of slump," I do not think that that is fair. Therefore, I think, that you are bound to give the person from whom you want the securities the opportunity of selling them to you at the market price of the day. If he does not care to sell them to you at the market price of the day, but prefers to lend them and to risk the sale, then that arrangement is perfectly fair, and that is the arrangement which is in the Government scheme.
The hon. Baronet opposite asked if the Government are going to purchase £100,000,000 of securities and sell them in a fortnight. The Government are not obliged to sell. They can exercise their own judgment. If they find that they can sell those securities in a week or fortnight on the New York Stock Exchange at a reasonable price, they can do so. It is extraordinary what the Americans have absorbed of their own securities lately, and the Government can sell gradually unless they are forced. The hon. Member for Whitechapel suggested that if you borrow and then sell at your own convenience it would be equitable to pay rather more than 2½ per cent., and that the lender should have a bonus of 5 per cent. Prom one point of view there is a great deal to be said for that. On the other side we have got to remember this. This power of sale by the Government will only be used when they are in a difficulty. It will only be used to give them the power of equal bargaining. Assume this might be possible. The Government might have borrowed on these securities for six months. At the end of six months the financial gentlemen in America might wish to have a considerable increase in the rate of interest. The only way which the Government could meet a demand like that successfully would be to say, "No, we will sell the security and pay you off." A great deal has been said about a slump in America. The one thing that the financial houses in America will not desire will be a slump in their securities. That is what the Chancellor of the Exchequer wants to avoid. They desire to avoid it over yonder.
There are very great financial transactions built up upon the value of these securities. If a big sale took place and there was a big slump there would be a financial disaster in America, and the financial houses yonder wish to avoid that, and that will be one of the conditions which will place the Chancellor of the Exchequer in a position to bargain more freely. But if he has to give 5 per cent. beyond the price at which he sells then you are hampering him in his bargaining power to that extent. If he sells in order to increase his bargaining power he has to pay a penalty of 5 per cent. Therefore he is less likely to sell because of that loss of 5 per cent. To that extent you are impairing his power, and therefore I think that it is not desirable. Now the broad question of the desirability of improving the exchange between America and this country—and undoubtedly it will be enormously improved if this scheme is carried through—is not merely one of enabling the Government to pay for purchases in America, important as that is. It is important to the whole community. All of us are paying more for food and for goods which we purchase, because raw food and raw materials are costing more in this country, because the exchange is against us. Therefore the whole community, the richest and poorest, are deeply interested in getting the exchange of this country set right.
There is another phase of this matter: This is really equivalent to the issue of a very considerable loan; it is really equivalent to the Government getting a very substantial amount of money without the ordinary new issue. At 5 per cent. it is getting this loan, very easily, from sources where it could not otherwise obtain it. It is getting this very considerable sum of money additional to any loan that it might otherwise effect. They are really inducing, if they be successful, a large number of people to take for five years 5 per cent. Exchequer Bonds. It is highly essential that the Government should have full control of the securities. There might be a desire to raise the interest, and all sorts of difficulties are conceivable. There will be a Presidential election in the United States, and how can we know what sort of difficulties may arise out of this War. It is conceivable that difficulties may arise between the United States and Germany, and it is possible that the financial houses of America might be compelled to say to the Government, "We do not feel, under these conditions, and at this juncture, in a position to continue this loan, and we must ask you to pay it off." The Government could only pay it off by selling, and they must have the power to sell. No doubt if the Government buys it runs a very substantial risk; and it runs the risk of a fall when it sells; that is inevitable and unavoidable. Of course, if it borrows and sells and there is a fall, there is the 2½ per cent. in addition secured to those who lend, and that being the position you may take it as practically certain that the Government will not sell unless they are obliged to do so. It is the penalty of selling, and therefore the Government will not sell borrowed stock unless they are obliged to do so.
So far as the lender is concerned I think he has nothing to complain of. The Government want his securities and they pay for them at the market price of the day, the middle price, which is rather more than the ordinary selling price. They pay the middle price, and they pay it free of the cost of commission, brokerage, and the rest of it, and therefore it is quite a clean sale. They give for it five years 5 per cent. Exchequer Bonds, a security which, two or three years ago, many men would have jumped at; and although it is a short bond, I should not be surprised to see it at a premium during the five years. If his securities are sold the lender gets 2½ per cent. extra upon the price; but until and unless his securities are sold, he will be able to sell them himself, if he thinks it to his advantage to do so—if he thinks the price a good one and he would like to realise. If he thinks the price is likely to fall because the Government may sell he can protect himself by selling. It has been said elsewhere, I am not sure whether it has been suggested here, that the lender of the security will find himself in a difficulty if his security is sold against him at a very much lower price than the price at which it stands now. We say, "Yes, but he will get 2½ per cent." He might say, "But the fall may be more than 2½ per cent., and I would be placed in a difficulty." But it was pointed out by the Chancellor of the Exchequer that he will have the power to repurchase if the price is low. If the sale is at a low price he will have the power to repurchase, and would have the 2½ per cent. margin to play upon; he would get 2½ per cent. more than the Government had sold at, and that would give him a margin ore which to turn round and buy.
If the holder is wise he will wait till the Government have sold, because that would put down the price; at any rate it will not put up the price, and he had better wait till the Government has sold, and the probability is that he will replace his security better after the Government has sold. My hon. Friend near me, who is an authority on these matters, says that if the Government were to sell it might make the price higher. I should be surprised if the Government were compelled to sell that the price immediately after they sold would be higher than before. I think it must be lower, and I would suggest to one who has lent the security which has been sold that he would do well not to buy until after the Government have sold. My own impression is that he will do fairly well, and I am disposed to think, on the whole, that the tendency of prices in America—if you take the run of the five years' Exchequer Bonds—will tend downwards rather than upwards; but it is very unwise for anybody to attempt to prophesy what is likely to take place, especially in American shares and bonds. Reference has been made by the hon. Member for Colchester to the question of compulsion. My own feeling is that compulsion is undesirable if it can be avoided. It is a very undesirable thing, in matters of this kind, to begin with compulsion if you can manage to get what you want without it. Further, there are some securities which it would be difficult for some people and some companies to deposit, and they may not be deposited under a voluntary scheme, but unless a sufficient amount of securities do come forward voluntarily under this scheme the Government might be driven to resort to compulsion. I hope, however, that they will not do so until they have tried the voluntary scheme.
After all, this is an appeal to the patriotism of the country, and the success of this scheme depends very much indeed upon the lead which is given in the City of London and in the City of Edinburgh. Those two places are centres where there are a large number of trust companies and a considerable number of insurance companies; besides, they are the headquarters of almost all the principal banks of the country. Both those cities are widely known for their patriotism. The banks in the past have done extremely well for the country in this War. They are the advisers of their customers, and they would advise the holders of these securities. Their advice and the advice of the stockbrokers in the great cities of the country will be most important and most helpful in inducing private holders to send in their securities to the Government. Such advice would be invaluable, and I think it will be found to be forthcoming. The trust companies and the insurance companies are large holders. They have difficulties of their own in connection with these matters, and some of those difficulties are by no means slight; but I think they are not insuperable, and I do hope that the response to the appeal of the Chancellor to what I may call the capital of the country will be as satisfactory as the response recently made to the appeal to the men of the country.
When the masses of the people are making a supreme effort and risking and giving their lives for the sake of their country, I think the least that the holders of securities, which the nation wants, can do is to come forward and place them at the service of the Empire just as the men have placed their lives at its service; and, when they are asked to do so on terms which it seems to me are generous and fair, I think they ought to readily respond to the appeal which has been made to them. What is the main issue? It is that you are asked to put these securities in the hands of the Government at the market price of the day. Surely you can have nothing fairer than that. You are to be given five years' 5 per cent. Exchequer Bonds, the best security the world can produce, and I hope there will be a response from the country to this appeal that will show, as everything thus far has shown, that all classes of this country are determined to do anything and everything they can to bring this War to a successful conclusion.
I shall certainly support the Bill brought in by the Chancellor of the Exchequer, whom I venture to congratulate upon dealing with this matter. I had hoped that the Chancellor of the Exchequer would have provided in the Bill for the registration of all foreign stocks in this country, and that those stocks would have carried on them a war stamp, I care not of how small value, which would show that they were registered, and the Chancellor of the Exchequer would then know exactly what amount of these stocks we had here in England. There is another suggestion I should like to make to the Chancellor of the Exchequer for dealing with exchange. There will be, as we all know, vast sums of money for investment. Neutral countries which are not engaged in this War are making huge sums of money which they will want to invest. In America, during the past year, they have exported over one thousand million dollars' worth more goods than they have imported. This must mean that a great many of the merchants have made large sums of money. Some will use it for increasing their business, while others will want to invest it, and Americans generally want good security and fair interest. A great multi-millionaire, who has made all his money in America, told me that Americans who made money are very careful as to how they invest it. He stated that in the past men who had made money in their own business had often put it into new businesses over which they had no control, and they nearly always lost it. Therefore they want a good security. Some people may say, "Why have they not taken up more of this last loan?" The last loan, in my humble opinion, was not a popular loan. It was raised under an arrangement made by our Government with great financial houses in America, of great strength and great respectability, but some of them very unpopular with a great many people in America. Some were unpopular because they had been mixed up with the trusts, and others because they helped to reorganise railways, frequently cutting out ordinary stockholders, and leaving a very bad feeling towards them in the minds of the stockholders. If our Government, instead of issuing more loans like that, bring out ten-year Treasury Bonds carrying 5 per cent., and issue them over the counter, with the condition that if they are purchased by people living in neutral countries that they can be registered for payment on maturity in that particular country at the rate of exchange current on the day they were bought, and that where they are registered payable on maturity in a foreign country that the coupons will be made payable in the foreign country free of all British taxation at the same rate of exchange, and if instead of paying 2 per cent. underwriting commission, that one-half of that is used for paying bankers and brokers who deal in those bonds, and the other half used for properly advertising the advantages of the bond, I believe if such Treasury Bonds were to be obtained you would find a large number of people applying for them. Someone may say, "Why should they apply for them in America?" There are several reasons. America has in the past been a debtor nation. She has now become, through her growth in population and in money, a creditor nation. Just as her securities were leading features in European exchanges in the olden days, so America now can deal in European securities on her exchanges. I am confident if America was satisfied that the security was good, and the interest fair, they would apply for large quantities of our bonds.
In the second place, sentiment goes a long way in America. As we all know, there are a large number of people, I believe the great majority of Americans, who are in favour of the Allies, and some are very anxious to help. I believe if they thought that by taking up these bonds they would be helping in the fight of democracy against military autocracy, they would subscribe very freely. The third reason I should like to give is a business reason. We are the very best customers of America, and one of the maxims in America amongst business men is this: If you have a customer, and he wants assistance, never hesitate to give it if you believe that you can do it without undue risk and for fair remuneration. I think the Americans recognise that they would have in our case very good security and fair remuneration. Another reason is this. The Americans who deal with us to-day have to draw upon the English buyers or bankers for the proceeds of their goods. They object more strongly than we do to the low rate of exchange existing. If they knew that by instructing their bankers or brokers to buy these Treasury Bonds they could quickly regulate the rate of exchange, I feel confident that they would do so. We all know that the money has got to be found in order to pay for those goods that we are buying from America. We know that it will be found, because every sensible man realises that this War can never come to a conclusion until the German military machine is broken and her power of restoring it absolutely destroyed. The men will be forthcoming, because patriotism is not dead. The guns and munitions will be forthcoming, for our workmen have not lost either their skill or their energy. The money will be forthcoming to pay for the goods and to regulate the exchange, if the Chancellor of the Exchequer will continue taking the bull by the horns and going ahead.
I have no doubt that the House will readily accord to the Chancellor the power he is seeking by this Bill, but I am not sure in my own mind whether the points of view, and the criticisms that have so far been advanced in this Debate really represent the actual views and criticisms which may be directed against this proposal in very large circles outside. The right hon. Gentleman the Member for Spen Valley (Sir T. Whittaker), like other speakers, sought to assure the holders of these American securities that the bargain proposed is a good financial and remunerative bargain, and he reinforced that argument, as others have done, with the suggestion that the tender or loan of those securities will be in itself a highly patriotic act. I confess that to me there is no great exhibition of patriotism in the loan of sound securities to the Government temporarily under adequate financial guarantees that not merely shall you have the proper interest accruing, but something over and above that in the shape of a ½ or 1 per cent. added to the ordinary rate of interest. There is no patriotism or the suggestion of patriotism in a bargain of that kind. As I listened to the right hon. Gentleman and to this discussion I instinctively contrasted the offer which the Chancellor is making to the holders of these securities, who are wealthy corporations for the most part, with the terms he proposed to the workers of this country for the loan of their savings for Government purposes at the present time. He made a suggestion the other day to the workers that they should place their savings at the disposal of the Government on the terms of interest accruing from six months after the date of the deposit, but for the first six months there was to be no interest on the savings thus entrusted to the care of the Government. I am not at all sure that this will not be a further suggestion to a large class of the population that the same spirit of consideration which is shown by the Government towards wealthy and powerful corporations is not always present in the mind of the Government when they are concerning themselves with the affairs of the less wealthy members of the community. I suggest to the right hon. Gentleman that if he is going to persevere with these indefinite powers for the advantage of wealthy corporations holding these valuable securities, that he should consider the desirability of amending the offer by which he wishes to attract the savings of the workers of this country.
There is the question of the definition of securities. I think most people will be satisfied to leave that to the Government rules. If those securities are confined to what are roughly known as trustee securities, in that way you would have a useful definition. If the Chancellor, however, begins to buy ordinary stocks and shares, and to take some and no others, I think he will make for himself a sea of trouble. Take the big Canadian railways—the Canadian Pacific, the Grand Trunk, and the Canadian Northern—if he finds the ordinary shares, say, of the Canadian Pacific are suitable, and the shares of other big corporations and the shares of other big railway corporations in Canada unsuitable, that immediately will give rise to discussion. He will not be able to keep the matter secret, and I do not envy him having to reply to the question as to why one is taken and the other left. Another point is that, if he buys securities outright, they should not be retained for any long period, because that would be speculation. I think if he will give an undertaking to the House that he would only retain in his hands, of the first class that he buys outright, a certain amount unsold, that would give a good deal of satisfaction to many Members of the House. He could use the second class for maintaining credit. Those that he gets on two years' loan can be used for the purpose of temporary credit in New York. There is undoubtedly a good deal of feeling that if he holds a large amount of the purchased securities he is thereby indulging in a dangerous speculation, and he may have to face very serious loss.
There are two or three points in this Debate to which I should like to direct attention, and which do not affect the Bill fundamentally. There was a tendency amongst a certain number of speakers in the Debate, or at any rate in the earlier portion of the Debate, to place one or other of the alternatives before the consideration of the Chancellor. It seems to me that one of the most important points about the right hon. Gentleman's proposal is that he has both a proposal to buy and a proposal to loan, because in that way he is averaging his risks. If we assume the case of the American price of British credit falling, then surely the Chancellor will have got his advantage in one way! On the other hand, if British credit rises at the end of the War, then the right hon. Gentleman will be in the position that he will be able to borrow in order to pay off the loan which he has obtained in New York with these stocks and shares as collateral under advantageous conditions. If he has bought at the present time he probably has been able to buy outright under more favourable conditions than he would be able to buy if subsequently our credit fell. I hope this point will be noticed. It seems to me, therefore, that he should not only have the two alternatives, but that he should exercise them, because he is then covering the two risks. He is averaging his risks. If British credit falls, then he will have to pay more for those things if he attemps to buy them in the future, and if British credit rises, when he goes to borrow, in order to be able to return to lenders these securities, he will have borrowed under easier conditions, and the permanent charge on British credit will be less. Therefore it seems to me that the scheme of the right hon. Gentleman, if both heads are put in force, does mean that we average risks, and that we are not speculating to the extent we should otherwise be. May I reinforce the plea put forward by the hon. Member for Whitechapel (Sir S. Samuel)? It seems to me that if the Government are to succeed with this scheme it will be necessary for the Treasury to have its eye all the time on the trade relations of this country with the North American Continent as a whole. The position will be somewhat similar to that which holds between India and this country. The India Council notoriously has to adjust its operations in this respect, having its eye all the time on the trade relations between this country and India. It has to consider the convenience of exporters from India and of importers from India in the matter of making payments for its imports.
It seems to me that under this Bill we shall have a similar position as between Canada and the United States on the one hand, and this country on the other. A very large quantity of these securities have been sold during past months. Presumably a portion of the proceeds was used in order to pay for the ordinary trade imports, not Government imports, into this country. The Government, therefore, must not simply consider the problem of obtaining dollars in New York for the purpose of paying for the munitions which it is buying there. It will be necessary to consider the facilities of the ordinary trade importers into this country, and, if necessary, to help them in their position. It is quite true that the tendency of this legislation should be to drive up the exchange, and so far benefit the ordinary importer. But that will be a merely nominal benefit, if he cannot buy bills wherewith to pay for his imports. If he is not in a position to obtain the credit in New York, the nominal rate of exchange, however good, is practically of small value to him. Therefore, if the Government are entering this great market, and if they are to succeed, as we hope they will, on a great scale, it will be absolutely necessary for the Treasury from day to day to be in close communication with those who conduct the ordinary trade relations between this country and the North American Continent, if you are not to cause great inconvenience to the importing traders of the country. The only other point is one which no doubt the Chancellor of the Exchequer has considered, although he did not mention it in his speech. It will be necessary, I imagine, for him to take additional precautions to ensure that we do not get an import of securities into this country, for the purpose of obtaining the extra percentage. It is obvious that a certain kind of bearer securities might be brought into this country, and unless he enforces very stringently the rule as to final possession of the documents in this country, he will find that we are making a present of this percentage under certain conditions to people who are doing us no earthly good in the matter, who are on the other side of the water, and whose securities we do not wish to have imported.
Perhaps I may be allowed to reply at this point, as unfortunately I have to keep, later in the evening, an engagement which absolutely precludes the possibility of my staying during the whole of the Debate.
When I raised an important point of Order some time ago, I understood you, Sir, to say that I should put it to the Chancellor of the Exchequer. The right hon. Gentleman said that he would answer it, but he did not in his speech, and if he escapes me now—
I will not escape my hon. Friend. Let me acknowledge at once how valuable in many respects the Debate has been. Several suggestions have been made, of which I shall certainly take advantage. The hon. Member for White-chapel (Sir S. Samuel) made two observations which I think ought not to go out to the world. He said that the export of gold was prohibited. He is entirely mistaken.
I ought to have said undesirable. I know it is not prohibited.
Of course it is undesirable. Naturally we do not desire to see gold leaving the country. But the freedom of our gold market is absolute, and it would certainly be most undesirable that it should go out, on the authority of one who speaks with so much authority as my hon. Friend, that the export of gold is prohibited. If my hon. Friend follows the returns week by week, he will see that a large quantity of gold has been exported. Certainly no restriction is placed upon it. Then he said that the commercial community were hampered in obtaining exchange.
Would be.
I think that if my hon. friend follows the foreign exchange market he will see that for some weeks it has been steadily rising, a condition which does not admit of the commercial community being hampered in obtaining exchange. The hon. Member for Colchester (Major Worthington Evans) made a speech which, if it stood by itself, would, I think, be really alarming. The hon. Gentleman recommended that we should commandeer American securities, tabulate them, and call them up group by group for sale on the American Stock Exchange, or for sale in America.
I did not say for sale; I said as the Government required, either for sale or for borrowing.
The hon. Gentleman explained that sale was the only useful purpose. If anything could be destructive to the American market, it would be the notion that a known group of securities was to be called up and to hang over the American market awaiting sale.
It would not be known. The grouping would be done by the Government. There would be absolutely no necessity whatever for anyone to know what the groups were.
I am afraid the American Stock Exchange would be quick enough to appreciate when the agents of the American Government were selling. They would know that a group was being sold, and they would know precisely how much of that group was held in this country. It is absolutely clear, in spite of anything that may have been said by critics of our proposal in this House, that, so far as the Government are concerned, there is no intention of swamping the American market with a vast mass of American securities. We should regard it as a most undesirable thing to do. Naturally, it would be most alarming to the American market, and it would be unfair to the holders of American securities here, if it were to go out from this House that we intended to overwhelm their market with the sale of securities. All British holders would immediately find that they had lost two, three, five, or ten points in the price of their stock. We intend nothing of the sort. We shall hold these securities in order that we may deal with them. Primarily they will be used as collateral security in obtaining loans. The hon. Member for Colchester holds that loans are of no use to us. I think he is mistaken. I think he said that if we borrowed on stocks we should be able to get a loan for ninety days on them; that we might renew for another ninety days; that would be 180 days, but that at the end we should be no better off and have to pay in gold. All that we require is time. We have the means and the ability to pay. It is the machinery that is defective. We require time. This War is not going on for ever. Ninety days, followed by another ninety days, and perhaps the bills renewed again—by that time we may be back in peace conditions, under which we have an enormous balance of trade in our favour, and that balance of trade will automatically clear up our foreign debts. What we have to do is to finance our purchases now at this moment, when the balance of trade is against us, and to achieve that object we have to get into our possession American securities, so that we have unfettered power of dealing with them in America, either by sale or for using as collateral security. In either case we shall take very good care that we do not so use the securities as to cause unnecessary loss. on the American Stock Exchange.
The hon. Member for Cork (Mr. T. Healy) suggested that the scheme should be published in the "London Gazette." I think that is an excellent idea. Before the Third Reading of the Bill, but after its consideration in the House, I think it would be the best course to put the scheme in a published form, not merely before this House, but before the whole public, and probably the "London Gazette" will be the best medium to use. My hon. Friend the Member for Huddersfield (Mr. Sherwell) I think misunderstood the proposal made on another occasion with regard to small investors. He contrasted the terms which we are offering to the wealthy holder of American securities with the terms which we proposed for small investors. He said that in one case we are willing to give 5 per cent. Exchequer Bonds, while in the other case we propose to withhold interest for six months and then give 5 per cent. That is not quite a true statement of the case. We are to-day perfectly willing to give the small investor precisely the same terms that we are giving the rich hold of securities—5 per cent. from the start. What we offered in the case of the small investor from whom we withhold interest for six months was that he should be able to get cash at any moment, if he would lend the money at call. Of course, when money is lent at call, as in the case of the Post Office now, it is impossible to afford the same rate of interest that we can give when money is lent for a definite period.
Will my right hon. Friend see if he cannot, within the margin of that condition, increase the rate of interest in the Post Office Savings Bank and so attract the capital of the working classes?
6.0 P.M.
That is one of the questions which is being considered by a Committee of which several Members of this House are members, and no doubt they will give every consideration to that point. My hon. Friend the Member for Pontefract (Mr. Booth) put a point of Order, which I think is really a question of the legal construction of this Bill. I believe that without a Bill I have authority to buy American securities out of the Vote of (Credit; therefore I do not need any indemnity for any purchases of the kind that I may make. I am not sure that I should require a Bill even for the Loan part of the scheme, but I might. I might require a Bill—though again I am not sure—for an indemnity for the payment of 2½ per cent. in excess of the market price. But whether this Bill in itself constitutes an act of indemnity is a question of the legal construction of it. What I said to the hon. Member the other day, and what I repeat now, is that if after this Bill becomes law, and a transaction does in fact take place, and there is a purchase of American securities under the terms of this Bill which is not authorised by the Bill, then I must come to the House and get a new Act of Indemnity, and I shall be glad and willing to do so. What I have sought to do in introducing this Bill is to lay before the House the full intentions of the Government. Whether those intentions are all actually carried out before the date of the passing of the Bill or not is really, I think, in substance immaterial. I want to get an expression of confidence or approval from the House for the proposal in general. I am quite willing to leave the question of construction till afterwards, and as to whether I shall or shall not be bound to bring in at a later stage a still further Bill to give me an Act of Indemnity. The Bill itself—I think this is where my hon. Friend fell into error— includes terms which do not require an authorising Resolution at all. For instance, it does not require a Resolution to authorise or empower trustees to deal with their securities. Authorisation under the Resolution was necessary for other parts of the Bill. But it is proper, and quite in accordance with the practice of this House, to introduce into a Bill which is founded upon a Resolution Clauses which are not founded upon the Resolution. That is an ordinary feature of the Finance Bill. All those characteristics of the second Clause, which my hon. Friend said were not covered by the Resolution, are characteristics which do not require a Resolution. He was perfectly right when he said that the Clause of the Bill was not covered. It is not. It does not need it. I think that is sufficient answer to the points raised by my hon. Friend. I am certainly not able to say at the present stage whether the whole of the obligations contemplated by this Bill, which we have been discussing, will have been completed or will have been fully entered into before this Bill passes its Third Reading or becomes law. It might not be the case. If it is not the case, I shall come later for a second Bill, and I hope that will be sufficient answer to my hon. Friend.
I am afraid the Chancellor of the Exchequer takes too rosy a view of the course of the American exchange. Even if the War, as he hopes, and we all hope, comes to an end within a limited number of months, it will be, I consider, a great many months after that before there is any likelihood of a return to the old level of the American exchange in favour of this country. After a great dislocation it always requires a long time before things readjust themselves. It is difficult in connection with this Bill to criticise properly without having the text of the scheme before one. I am very glad to hear that the Chancellor of the Exchequer is going to publish it, although it will be actually too late for criticism. Not only is it necessary for a definition of securities, but it is very necessary in order to be able to criticise the Bill to know the exact terms of the proposals of the Bill, or the scheme to repurchase the securities of those who are going to deposit. The right hon. Gentleman the Member for the Spen Valley (Sir T. Whittaker) seemed to think it would be perfectly simple for the depositor to buy them back once the Government sold them. But we do not know exactly what the scheme provides for them. I myself do not very well see how, if the Government has sold depositors' securities in the United States, it can also sell them back to him. It would not be the securities he has deposited that he buys back, but fresh securities which he buys in the market, or the Government buys for him. That appears to me to be a point that requires definition. I can very well see that there might be a loss sometimes when the variation in the prices are sudden. I myself believe that the Government might have made very much better terms with the holders of those securities whom it invites to deposit them than it actually offers. I believe that a great body of banks and the insurance companies would have been quite willing to have lent the Government their holdings at a lower rate of extra interest, if, indeed, any extra rate of interest at all were required. I think the ½ per cent. which the Government offers is unnecessarily generous. I, myself, am the director of a large insurance company, and I feel quite convinced—although that point was not discussed—that all the great insurance companies of this country, and the bulk of the holders of such securities as the Government wishes to obtain control of, would have been very willing to have lent them to the Government on lower terms.
I cannot help thinking, in regard to the sales of the securities to the Government, that there is a very considerable danger to the taxpayer in the proposal. Who can tell what kind of price these securities are going to be sold at? The Chancellor of the Exchequer has said they will not be thrown upon the market. Of course, one can understand that no man in his senses would throw blocks of securities on the market if he has to dispose of them. But until we know—which we do not—by what method the Government proposes to deal with this question generally it is quite impossible to estimate the risk which the country is running by sanctioning this transaction. The Government has not told us how it proposes at the end of the two years to reimburse the parties who have lent money upon these securities and so enable it to return the securities to the depositors. That may come at a time when it is very difficult to sell securities, and however well the transaction may be managed I really cannot see how it is going to be carried through without risk, and very great loss. I regard the whole of this transaction as a thing to be very much deprecated. At the same time I do not see any other way of avoiding the danger of a considerable fall in the exchange. I entirely demur to what the Chancellor of the Exchequer said that the best way of handling these things was to wait until an emergency arose and then to deal with the subject. It seems to me that this matter ought to have been taken in hand at a very early stage of the War. It was pointed out to the Government by many people; by financial authorities in the City, and by the great economic journals, that the question was certain to become an urgent one. They pressed the Government very early in the year to deal with it. The Government did not do so. If they had dealt with it in February they could perfectly well have raised a very large loan, probably double the amount which they did succeed in raising, in the United States, and probably would have paid one and three-quarter millions per cent. less than they actually paid. The 6 per per cent. might possibly run at more than that. They certainly could have borrowed at that time from 4¼ to 4½ per cent. from America. That is going to make a difference to the country of 1¾ millions per year. I have asked any number of authorities, and everybody tells me that it would not have been difficult to have done this. If the Government had handled the whole question then they would not have found it necessary to bring up this exceedingly dangerous measure now.
I would suggest one way of relief to the Government, and that is that they should ask our Allies to do something. It was understood at the beginning of the War that there was to be a pooling of resources. As far as I can see we are the only people who are pooling any resources at all. The Allies do nothing. Neither France, nor Russia, nor Italy are doing anything at all to help our finances. The whole burden of these American exchanges is borne by us. We have to maintain the exchange. Russia and France have got enormous quantities of gold of which they are making no use whatever. France has got 200,000,000 in gold. Russia has over 200,000,000 in gold. In regard to both countries, France and Russia, their gold is absolutely no use to them. Surely they might let us have some of it? If we had some of their gold we could keep the exchanges right. Not only so, but it would help the exchanges between them and us. At the present time the exchange between France and England is very much against France. The exchange between Italy and England is very much against Italy. The exchange between Russia and England is enormously against Russia. If these countries would part with some of their superfluous stock of gold, it would not only help us very much, but it would help themselves. The reserves of the banks, or any other reserves, are of use only when you are in a hole. If you are not in a hole, you do not want your reserves. The time that gold is of value is when it is scarce. Is it impossible for the Chancellor of the Exchequer to impress upon France and Russia this question of the exchanges, and so get their assistance in the way I have suggested, in the general interest, by letting us have some of their large stocks of gold?
The Debate commenced by two speeches, one from the hon. Member for Colchester and the other from the hon. Baronet the Member for the City of London. One of them frankly opposed one-half of the scheme and the other frankly opposed the other half. What in my view is advantageous in the proposal of the right hon. Gentleman is that there is a choice, and that these two schemes run side by side, so that the owners of the securities have the power, so far as I understand it, entirely in his own hands either to sell or to lend as he chooses. But the hon. Member for Colchester, although he advocated an amount of compulsion which, although probably necessary later, is possibly not necessary at the present time, did advocate that a knowledge as to the quantity and position of these securities ought to be acquired. I do think that it would be most advantageous to the Government to get some idea, which apparently at present they have not got, as to the quantity of these securities and their nature; and it seems to me they ought to be able to get a very approximate estimate from the return of Income Tax from these foreign securities. I should have thought that in the Inland Revenue Department there was material from which they could get a very approximate estimate, at any rate of the amount held in this country, or at the last date on which the Income Tax returns were made.
I have not much to say about the purchase part of the scheme, because, of course, that is merely a question of whether the offer to the holder of securities to sell is sufficiently good. But as regards the loan part, I think we ought to get a little more detail as to the exact proposal. I understand, to begin with, that this scheme is to apply to practically any dollar security—that is, any share or bond in railways or industrial companies, and so forth, in America and Canada; and I understand that if these securities are borrowed by the Government there will be a deposit certificate or its equivalent given for it, which will be saleable, of course, only on the English market. But the right hon. Gentleman explained that if a depositor wanted, during the period of the loan, to dispose finally of his hold- ing, the Government would sell for him without charging him the expense of the sale. The degree of success which may attend that offer depends on how long it will be before the time a depositor makes up his mind to sell and the time the Government effects a sale for him, because it is perfectly obvious that if, owing to the state of the market, the holder thinks he has got a good opportunity for selling, and then the formalities take a week or two, his chance of selling might be lost. Therefore, I should very much like to know by what machinery he can effect his sale quickly on any particular day he may want to effect it.
I understood the scheme was to include Canadian as well as United States securities. I do not know whether the Government are wise to include Canadian securities at all, because I am a little afraid that our fellow-subjects in Canada might have a feeling that if Canadian securities were bought up in large quantities for the purpose of rectifying the exchange of the United States, a preponderating proportion of those securities might fall into American hands, and, although the objection may be more or less a sentimental one, I am not at all sure whether the Government would not be wise, at any rate at the beginning, to leave Canadian securities out of their calculation.
There is only one other point which I should like to raise. The right hon. Gentleman said that in due course the scheme would be published. I do not think he told us at all in what way he proposed to get the offer of these securities. Does he propose to make a public appeal that the holders of securities should offer them to the Government, or in what way is it suggested that the present holders should bring their holdings and their offers before the Government? I have not the slightest doubt there are a good many people who would be perfectly willing to come into the scheme very readily and very quickly, and it would be desirable in some way that the notice of these people should be called with very little delay to the proposal and the means by which they can give effect to their offer.
I want to re-echo the suggestion made by my hon. Friend that the Government surely ought to have attended to this matter long since. It is no use saying that when an emergency arises then the cure will follow. If we do not anticipate difficulties we cannot find the remedy at the right time. I know the Government was offered months ago the loan of American stock for the very purposes of this Bill, and if private people did that, surely the Government must have been well aware of the urgency of the exchange question between America and this country. But that has gone, and we have to face the situation as it is to-day. For my own part, I very cordially agree with what the Government propose in the measure which is before us, and in the outlined scheme given by the Chancellor of the Exchequer I think it would be fatal mistake to do anything on a compulsory basis until we have exhausted the voluntary basis. If that operation is not successful, or if the securities do not come in fast enough for the purposes of the Government in order to rectify the exchange, then it is quite well within the powers of the Government to take an inventory of all the securities which are in the country and deal with them on a compulsory basis. The suggestion has been made that we can ascertain the amount of American and Canadian stock in existence in this country on the basis of the Income Tax returns. I think that would be an extremely fallacious way of going about it. It was only last year that the returns were compulsory from income that was collected in America, but not sent over to this side, and I doubt if the Inland Revenue have anything like the detailed information by which it could estimate at all correctly the amount of stock held in this country. Then we do not know how much has been actually sold. At any rate, the proposal is one which is going to benefit the exchange between this country and America, and that is of vital importance to the whole of the community here. The fall in the exchange adds to the cost. Everybody bears the increased cost of food-stuffs and other purchases, and that applies equally to the Government as to private consumers.
There is one point I should like to ask. As I understood it, vendors under the scheme for borrowing, or those who loan the stocks under the scheme for borrowing, were to receive a ½ per cent. extra interest calculated on the face value of the securities. If I understand it, that means that if the Government take securities which are worth 50 they will pay three times as much as compared with securities worth 150, or four times as much if they take securities worth 200. I would like very much to know whether that is quite correct. Might I make my point a little clearer? If the security in the market is worth only 50, although its face value is 100, it means a return of 1 per cent. to the holder of a security selling at 50. If, on the other hand, you give a ½ per cent. to the holder of a security worth 200, although its face value is only 100, you are giving him a ¼ per cent. There is a very great discrepancy here, and I should have thought it would have been far better to have given a ½ per cent. on the actual interest earned by the security rather than have it complicated by the question of face value. That may be only a Committee point, but it does seem to me of some substance, and I should like to have a real explanation. I have heard two explanations in the past—one that it is on the face value, and the other that it is in respect of the interest. The result of this Bill, as I understand it, will be for the benefit of the country, and from that point of view I wish to offer my support to the Government in their efforts to rectify the exchange, and to stabilise it as between this country and the United States.
The colossal piling up of liabilities that we have to face day by day as this terrible War goes on makes it absolutely necessary that the Government should endeavour to raise the necessary financial means by varied methods. I welcome the Government proposal, late in the day though it comes, because, if successful, it will postpone the date at which it will be necessary for them to issue one of these gigantic Loans with which we are now becoming familiar. A great deal has been said about the high value of American securities in the market to-day, but I venture to say that American securities of the best class do not stand at excessively high prices to-day, and when one has regard to the fact that, in all human probability, the United States of America have got the biggest commercial boom in front of them that ever that great country has known, I think it is not at all beyond the bounds of possibility that any securities the Government might buy outright within the next month or two might in a year or two years be worth substantially more than they stand at to-day.
In any case, I welcome the absence of compulsion in this proposal. I think that it would be unfair to apply compulsion to the section of the community who are holders of American and Canadian securities, because, after all, they are comparatively few in number, and if compulsion of this sort were applied to the limited number of holders of these securities the whole of the rest of the community would not be subjected possibly to an equal burden or an equal disadvantage. If it were compulsory that we had to part with these securities at the price of to-day, and prices go much higher as regards American securities in the next twelve months or two years, that would, indeed, inflict a very great loss upon the present holders of those securities. The Government give the alternative of either selling outright at the price of the day or borrowing the securities, giving in return an extra ½ per cent., not, as my hon. Friend who spoke last said, on the face value of the security, but, I understand, an extra ½ per cent. added to the interest derivable from that particular investment. Perhaps the Financial Secretary to the Treasury will clear up that point when he replies. Personally, I should expect to see a very large response made to the Government's two proposals. Some, no doubt, will prefer to sell outright; others will prefer to deposit their securities.
The question of having the power of sale and deposit of securities is, perhaps, the most difficult point in the whole scheme. We are told that if the Government are driven to realise the securities which are lent to them they will give the owner 2½ per cent. on the market value of the day on which they are sold. Well, we know that American securities have violent fluctuations. Sometimes they soar enormously high and at other times are extremely depressed, and, therefore, it is difficult to say whether the 2½ per cent. suggested is a fair and reasonable compensation. In some cases it would undoubtedly bring financial gain to the holder, but in other cases it might involve a very substantial loss indeed. But the question is we must have, with our gigantic expenditure that is going on, all the financial resources of the country mobilised and brought to the assistance of the Government in relieving the financial strain. As a proposal apart from loans, I think that the Government proposal is, on the whole, extremely fair. I anticipate a large response to it, and I believe it will be helpful in reducing the American exchange to a more favourable position. If, as is anticipated, the proceeds that are raised, whether by the purchase or the loan of these securities, are to be applied to paying in America, and Canada for the munitions of war and other Government purchases, that must inevitably react upon the exchange favourable to this country, and if that is so, it will be in a sense favourable to the general trade and commerce of the country, altogether apart from Government securities. I have no hesitation in supporting in the main the Government's proposal. We have the terms of the proposed scheme before us for maturer consideration, and though we cannot pledge ourselves to every detail of the measure, on broad general lines it seems fair and equitable, and I wish it a real success in the direction the Government desire.
I find myself unable to welcome the scheme proposed by the Government for the simple reason that I do not believe it will attain the object which it sets out to achieve, namely, the correcting of the American exchange. The Government have already proposed three remedies for correcting the exchange. The first was the imposition of new Import Duties. Then we had the Anglo-French Loan which cost the country something like 6 per cent. interest. On that occasion I noted that the exchange was 4.72 when the loan syndicate was closed, and it afterwards fell, and is now round about 4.70 at the present moment. There we had a very extravagant form of correcting the American exchange which failed signally in achieving that object, although it was undertaken at very considerable expense to the British taxpayer. No we have this extraordinary, fantastic scheme of mobilising American securities which I do not propose to go into at length, but I will concentrate my efforts to show that it will also fail in achieving its main object, which is to get all the American securities into one hand with the object of correcting the American exchange. I admit that the sale of American securities for the time being does tend to prevent the exchange going lower, and whether it is done by private investors, finance houses or the Government, it will to that extent affect the exchange; but to suggest that we should sanction such extreme powers and such added liabilities to the taxpayer when the Government has made out no case to show the method by which the correction is to be brought about, is asking for far too great powers. The Chancellor of the Exchequer in reply to a question of mine furnished the House with some very interesting figures which touch upon this question of exchange and gold coinage. I asked the right hon. Gentleman on that occasion if he would state what the circulation of gold was in this country prior to the outbreak of war, and what it was at the present time? And he gave in reply some figures which were very interesting, and which showed that the gold in the hands of the bankers on the 30th June, 1914, was £82,800,000, and on the 30th June, 1915, was £110,200,000. He said:— the aggregate trade movement of exports and imports together on the 30th June, 1914, and 1915, were approximately very nearly the same.
I will now give the circulation to the House. If we take gold coin on the 30th June, 1915, it amounted to £75,000,000; Bank of England notes increased by £5,000,000, so that the total on the 30th June was approximately £35,000,000, and to that you have to add £70,000,000 of Treasury notes, making a total currency for 1915 of £180,000,000 for the trade movement, whereas on the 30th June, 1914, the circulation of gold coin was £78,000,000, and Bank of England notes £30,000,000, or a total of £108,000,000. So that we find with very nearly the same aggregate trade an increase from £108,000,000 to £180,000,000, or an increase of £72,000,000 sterling in the currency. There is the real root and main contributing cause of this adverse effect on the exchange for which we are asked to place an additional charge on the taxpayer. The chaos of our finance caused by schemes of this sort makes one despair that sanity will ever return to the British Treasury. These figures show an inflation of £72,000,000, and surely that fact ought to carry weight even with the Chancellor of the Exchequer. When I advanced this argument on a former occasion the Secretary to the Treasury, in his reply, only made an elephantine joke about coming under the Defence of the Realm Act, and further informed me that we were at war. On another occasion the Member for Hex-ham (Mr. Holt) replied to this statement that war had not altered the multiplication table, and, I would add, nor has it altered economic law. Economic law still prevails, and it is because of that fact that the Government are now asking us to consider this scheme for correcting the American exchange. I would just like to say in addition that when a scheme of this sort is about to be submitted it surely ought to be submitted first to this House. We have been told that there have been various consultations and conferences and that the Chancellor of the Exchequer has explained this measure at length to-various insurance companies and trust companies. I think, when the right hon. Gentleman has a scheme of this character, he might at least submit it first to the House and get the opinion of many hon. Members who are capable of giving-some sound opinion and criticism upon it before it goes to the outside world. We are only asked to come in at the eleventh hour, and we are practically told that it does not matter whether we approve of it or not, because it is a fait accompli.
In the second Clause there is reference made to a securities' deposit scheme. We shall not be able to amend that scheme, and we are supposed to swallow it wholesale simply because the Chancellor of the Exchequer and the Financial Secretary think they have fully considered it, and that it is a sufficient and absolute remedy for the falling exchange. Because of the vagueness of these words they will probably later in be able to bring in a fourth plan, and saddle us with a further debt. I protest against us being treated in this way, and against the House of Commons being treated in this way, without any arguments being given to show how this scheme is going to correct the exchange. First we are to give the Government power to get the American securities, and to pay ½ per cent. beyond the yield of these securities. If they borrow them for two years and do not intend to sell, it practically means that the British Government are going to invest millions in American securities. Are they going to guarantee the taxpayer against any loss? Have hon. Members considered what are we doing in this matter? Here we are giving power to the Government to purchase without disturbing the market, and practically creating a false market, and making the market for these sellers to unload, and the British taxpayer will be left after this precious Government has disappeared with a load of some £500,000,000 which they will not be able to sell. It is a monstrous scheme that no sane man who has had experience in finance should be asked to tolerate and support, because it is unworkable and unsound in principle.
There is a little in the criticism of my hon. Friend, and, though I do not want to press it too far, I am afraid that the fashion set in the Insurance Bill is being followed a little too much by the successors of the then Chancellor of the Exchequer. We found then that the great bulk of the scheme was manufactured outside, and that the House was asked to agree. It succeeded so well on that occasion that I am afraid there has been a strong temptation ever since for subsequent Chancellors of the Exchequer to follow that precedent. I am uncertain whether in this case it was necessary. I do not offer any opinion. The Treasury, I dare say, thought it was necessary. I am not quite sure that it would not have been better to have met the financial interests outside—say, between the First and Second Reading or between the Second Reading and the Committee stage. There is something in my hon. Friend's point that the Chancellor of the Exchequer would have been better equipped to face some of the difficulties which he has gone through, and gone through very success-fully, if he had been fortified by the expression of opinion from the various parts of this House. It would probably have been an efficient weapon in his hands if he had been able to quote a speech like that of my hon. Friend the Member for Huddersfield (Mr. Sherwell) and one or two others.
I think we ought to realise that this is perhaps a public acknowledgment of the passing of a body of investments from this country to America. I hope that one of the effects of the War will not be that the United States of America will replace Great Britain as the financial centre of the world; but I think that a public warning should be given that if transactions of this kind are multiplied as the War goes on, the effect will undoubtedly be that a large body of securities which have hitherto been held in this country, and which regularly receive remuneration by way of dividend and interest, will be exchanged for American shot and shell which will be dissipated on the Continent. I am not here to oppose it, and of course the Chancellor of the Exchequer is not responsible for the policy. I am not mentioning it with the view of calling into question the task on which we are engaged. I would press it rather more vigorously. I would certainly spend more energy, whether I spent more money or not, in the prosecution of the national conflict. At the same time, we ought to realise to the full what this means. We are told to prepare ourselves more vigorously for the commercial tasks which we shall have to undertake when the War is over. There were one or two questions on the Paper, but I understood the Prime Minister, in answer, to say that he was not prepared now to ask anyone to consider the difficulty we should be in as a commercial nation at the conclusion of the War, or to develop any policy; but I feel bound to say that transactions of this kind will place us in the position of having to work very hard indeed, and having to stint ourselves a great deal when peace comes, if we are to get back these American securities which we are now asked to pawn.
I know some take the view that this is the passing of British credit, or, rather, of international credit, from one side of the Atlantic to the other, and they represent the Chancellor of the Exchequer as a kind of sexton tolling the passing-bell. I am not sure whether history will adopt that portrait of the right hon. Gentleman, but I do not see any good in withdrawing from the knowledge of even the humblest in the country as well as the financial interests in London that we are now parting with a very large portion of the national capital and savings, and we are sending them over in exchange for munitions, which, of course, will rapidly go in smoke. Another point, I think, should be made. If the Chancellor of the Exchequer is enabled to carry out this scheme of accepting these securities on loan, it will really mean that he has it in his power to conduct one of the greatest stock-jobbing operations which the world has ever known. This will not be merely imagination; it will be a reality. I understand that it was not stated from the Treasury Bench, and if I am saying something that should not be known I regret it; I am only stating it because I think it necessary for a full consideration of this Bill: I suppose it is known that the Government already have been buying American securities, and are now in possession of a considerable quantity. One can understand the mixed feelings with which on a knows that sees an operation of this kind whereby the Government are going to get in addition, with an option to sell, all the American securities now owned in this country, if they can. In addition to all they are buying, and in addition to all the Allied Powers are buying, we are to have the whole operation of this Bill, accumulating a vast number of securities which we ourselves and our Allies can use on the Wall Street Exchange at any time. I feel perfectly certain the last idea in the mind of the Treasury is to get this enormous power for any other purpose than the public good. I say that at once; but still it is an enormous power given for the first time to the Treasury of this country. I am very glad that now there will be no risk of the exchange being put worse than it is by Government action. The competition which went on for a while with regard to some of these transactions between ourselves and our Allies was most distressing, but I understand now—I have heard it from several quarters, and I have heard it since I came into the House today—that there is complete harmony between the various Powers with regard to these transactions on the Stock Exchange of the world.
We have really no explanation as to what the Government will do when they control the whole of these negotiable securities—dollar securities negotiable in New York. I want to point out to the House, and if necessary to warn the House, of some of the dangers. It is quite true that the Government ask that the securities shall be sold to them in the first instance, and I regard that as the cleanest transaction possible, provided that the Government do not intend to keep them in their possession for an undue length of time. If the Government are sincere in saying that they want to buy munitions and munition machinery in America, and to preserve the exchange, or to make it more favourable, then that is bound to be listened to as a very powerful argument; but I have yet to learn that the buying of American securities with English money will improve the exchange. I think, therefore, that there is something more in the mind of the Government than they have yet expressed. When they talk about the price of the day they are not talking of any fixed quantity. They say, for instance, that all these holders of American securities should sell them if they reasonably can at the New York price of the day. What day? The day after this Bill passes? What day is going to be fixed? The only day of which I have heard at present is the day upon which they are handed over. If the Government fix one certain day upon which all these securities are to be priced, surely the very large holders can be operating in New York against that day, and see that prices rule rather high. In that case the Government would get the worst of it. The securities would be taken over at a sort of semi-boom price, and would then be converted by the holders here into 5 per cent. Government Bonds. Therefore, I cannot feel that the Government will fix one particular day for them to be handed over. If they are to be handed over upon the day that the private possessor wishes, well, of course, he will suit his own convenience, and if he has any friends in America he will do his very best to get, not merely the advise of those friends, but to get their moral support—I mean moral support in the sense of Wall Street when it is speculating. He will try to get, not moral advice, but moral support on the Wall Street Exchange on the day his securities are going to be passed. I had hoped that we should have had some indication whether there would be one fixed day, or whether it would be left to a series of days for these securities to be handed to the Government.
7.0 P.M.
I wish to emphasise and to support a point made by the hon. Baronet the Member for Whitechapel (Sir S. Samuel), and by the hon. Member for South-West Manchester (Mr. Needham). The Government should not consider that matter solely from the point of view of paying for munitions and for Government contracts. The huge cotton crop which comes to Lancashire must be financed, and no mention of this was made by the Chancellor of the Exchequer. If you exhaust the exchange and all the powers of the Government in utilising American securities to pay for munitions, how are the traders of Lancashire to pay for their cotton? It is very important that a great trade like that should be fully employed. I understand that no answer has yet been given to the Hon. Member for South-West Lancashire, but unless some explanation is given as to whether the Government, when it is in possession of this enormous amount of securities, will come to the help of the private trader, I feel sure there will be considerable holding back, at any rate in the county of Lancashire, because I do not see how you can expect any cotton people who happen to have American securities to part with them entirely for Government operations unless they know how their own imports of cotton are to be financed. There is another question which I want to put to my right hon. Friend. How are these matters to be entered in the balance sheets of the companies in this country? I see sitting opposite to me one of the best-known accountants in England. The Government, we understand, are prepared to give us certificates for the amount of securities lodged. These securities are to be transferable on a Government register, and I suppose to a certain extent they may be used as loans, or at any rate as collateral securities. How is it to be entered in the balance sheet at the end of the year if a limited company does that? Will the auditors compel us to enter—I am now speaking from the standpoint of the insurance company—"Government receipts, so much, under the security scheme," or will they allow us to put in our balance sheet, as heretofore, a list of those securities? The point is important. Insurance companies who do business with America do two things. They must make large deposits with American States; the deposit in New-York, I believe, is $100,000, and then they make deposits in State after State in order to transact their business. There are other conditions I need not name to the House. The insurance company that has made those deposits cannot give them to the Government, and they must still record them in their balance sheet. Then, in addition to that, the larger companies, in order to get American business, voluntarily make investments, sometimes in town bonds and railway bonds as well as in State bonds, and their local agent, in canvassing for business, very properly points to the British company's balance sheet and says, "They have invested a great deal of money over here; they are financing our industries, and therefore we should insure with them." I think that is a perfectly clear argument. It shows the local people that you are not tied up with your money in England, but are free to make substantial investments in their securities. Consequently it inspires confidence, and appeals to their sense of local patriotism. They say, "If this country is helping us to develop our own lands, then we will insure with them," and one cannot blame them. How will that case be met under this scheme? It is of vital importance, and particularly so in the reinsurance market. I know that the suggestion has already been made to the Treasury, and I will not therefore press the main point, as to its effect upon business, because I have no doubt the Treasury will give the utmost consideration to any insurance company in that position of having a large United States business, but I am asking for a specific answer as to how the English companies are to put these matters in their balance sheets, because unless they can be shown in those balance sheets their canvassing document is weakened. An insurance company uses its balance sheet as a canvassing document to show what it has to offer to insuring persons, particularly abroad, and if you take out the American securities and give them a Government receipt, will the auditors be allowed to recite the list of American securities lent or will they have to lump it "Government securities under Deposit Scheme"? I mention that because I think the Secretary to the Treasury will see the importance of it.
With regard to Clause 2, I am bound to say that the explanation that the Chancellor gave did not satisfy me. The hon. Member for Cork (Mr. T. Healy) blamed the Government for having in this important Clause, Clause 2, so vague a phrase as "securities deposit scheme." He wanted a definition of "security," and a definition of "scheme," but I will put the words before that; it is called "any Treasury securities deposit scheme." We have had one scheme outlined to-day, but the Bill, in my opinion, goes much further than the Chancellor of the Exchequer said. I think the Money Resolution went further. I pointed it out at the time, but the Chancellor of the Exchequer said "No," and that it only meant past obligations, which he repeated three times. Can any prospective deposit scheme be considered a past obligation? Clearly not. The Chancellor of the Exchequer is, therefore, driven to say this, what he considers an answer to my point that I raised soon after Question. His answer is, "If I do anything in incurring obligations I shall come again and get the House then to give me an indemnity." I venture to say that should be done when it is absolutely necessary, and not done when you cannot say frankly to the House what you mean, and get power for it. This House, of course, has been only too glad up to the present to give to any Minister who has shown any enterprise in taking measures for the welfare of the country indemnity and support, and, as the right hon. Gentleman said quite correctly, the blame in the past has been that they have not shown enough enterprise or initiative. That, however, is a right which should be preserved, and which should be cherished and valued. Here it is announced beforehand, "No, I am not taking the trouble to put the scheme in the Bill, and I am not making a Schedule of it"—as I think, Mr. Speaker, with respect, should have been done— "I am doing it without." At the same time he claims that it only refers to past obligations. He says, "I need not now indicate to the House, or put down in black and white, my plans, because I will come among affectionate friends who will immediately give me an indemnity and be glad of the opportunity to do it." Of course, we shall be glad of an opportunity to do it, but I am not so sure that we welcome the announcement beforehand that difficulties that are raised with regard to Money Resolutions for a Bill are going in the future to be dealt with in that manner.
I shall, of course, take my opportunity in the Committee stage of pressing my point with regard to Clause 2, and seeing whether it can then be decided if that Clause in particular, or some measure of it, is not outside the scope of the Financial Resolution of the House. I think, Mr. Speaker, you were quite right in saying to me that, on the technical words of the Resolution, the Bill is inside it, as legally or properly interpreted—not from a legal, but from a House of Commons standpoint. I agree with that, and it was because I saw the words were so wide and vague that I supported the hon. Baronet the Member for the City of London (Sir F. Banbury) in an attempt to get it narrowed. When I press it further, I am told one does not need this Money Resolution at all. Several points have been made, and, from the Chancellor of the Exchequer's second speech, each is outside the Money Resolution and does not need it. What part does need a Money Resolution? We have had no information on that point, and I think we ought to know that. The House passes a Money Resolution to enable a Bill to be brought in, and we raise important point after point, and ask whether it is within the scope of the Resolution. The answer we get is, "We do not need a Resolution or a Bill; we can do that outside." What does need a Bill? We are told it does not need a Bill for the ½ per cent. for the loan, or for the 2½ per cent. as an inducement or compensation when the securities are forcibly realised. The trustees, in order to invest in it, do not need a Bill. We have not information on these important matters or on what caused the Bill to be brought in. The Chancellor of the Exchequer said before that it was necessary to bring it in because the Vote of Credit did not cover aircraft insurance, but insurance is especially mentioned in the Vote of Credit, and so it cannot be that. It cannot be Clause 3. It cannot be paragraph (c) and (d) of Clause 1, and, therefore, I am utterly at a loss to know why there has to be money voted, and why the Bill is in this particular form.
Then when we go to Clause 3, which affects the National Insurance Act—the health portion—I think we are entitled to some explanation of this Clause. I am driven to think that this Bill is required for that Clause The other parts do not seem to require legislation. Surely the intention of Clause 3 cannot be carried into operative effect without legislation, and that is why it is here. I think we ought to have had some explanation of that. I do not want to put down a Motion in Committee to delete the Clause, because, so far as I can see—I have not taken expert advice—it seems to be a good object; but the only way of getting an explanation of this Clause in Committee, apart from Amendments, would be to put a Motion down to delete the Clause. Then it comes after the Committee discussion, and I think we should avoid perhaps unnecessary Amendments if the Government would give some brief indication of the intention of Clause 3. I do not want the Treasury to think that I just got up to find fault. I think the terms in some respects are too good. In this policy of the Government I want to help them all I can, and I hope in some little way I have tried already to help them, even over this matter. The points I have raised are rather points to make the scheme workable than to reject it, because I must say that I cannot vote in opposition to this Bill. I have put points which I believe will lead to its smooth working. When it comes to terms, I am confident pressure will be put on the Government by financial interests to increase the burden on the State. That can only be done, of course, by the Government themselves. I venture to say that while the ½ per cent. may be demanded by the large institutions, I do not believe it will be asked for by the private person. I have discussed it with a number of private people who have American securities, and they have one and all said that they would be prepared to give the Government the full use of them, or to sell them at market price, whichever the Government likes— if the Government pressed them they would not sell, because they took them as investments—without any consideration whatever, except that the Government should hand them back at the close of the War. I trust, therefore, that if pressure is brought to bear even from insurance or trust companies to get a better advantage, the Treasury will remember that they are the people who probably have more securities than anyone else, and that these people are patriotic enough to come to the help of the Government without any reward what- ever, and that is true I believe of all the great financial institutions.
With regard to the 2½ per cent., I am not at all convinced in my own mind that that is necessary. I think if you are going to meet the case by it, it should either be more or nothing. If there is a case for a margin, I am rather with the hon. Member for Whitechapel (Sir S. Samuel). I do not think 2½ per cent. meets it, if you decide to meet it. If I am able to strengthen the Government in a slight way against pressure, which I know will be brought to increase that item, my speech will have been of good account. The present possessor of an American security will always have the right to sell on one day's notice. He can post it one night and, if the Treasury get it the next morning, it is a transaction with the Government at the price of that day in New York. That has been very largely overlooked in the discussion. The depositor of these securities can have the market price of the present day and the Government give him 5 per cent. He can sell his security at any time it suits him, and the price will be paid in sterling in this country. What more does he want to protect him'? If he does not sell outright to the Government when this Bill is passed it is because he is holding for a rise. Of course, he is entitled to do that. The Government allow him to do it. But that can be the only reason why he does not sell outright at the price of the day. If he goes for something better than the Government offer, that is, something better than the market price, he thinks the security will rise in value because America is very busy. Probably they will be busy. What he wants is the right to sell at his own point whenever the rise takes place. The Government give that. If he wants to forestall the Government, and if he is afraid that they are going to sell his securities and give him 2½ per cent., he can always settle the question for himself by selling.
I submit that we should look at this matter apart from our interests. I am speaking against the immediate selfish or personal interests of the insurance companies. I know quite well that if I were speaking to a meeting of insurance men only I might not get very far in these remarks, that is, if they looked at the matter from a purely selfish point of view. But even the insurance companies of this country will, on reflection, see that it is an immense protection to them that they can get the market price now. As the right hon. Gentleman the Member for Spen Valley (Sir T. Whittaker) said, they get something more important than that. They can sell at any date, whenever it suits them. If they do not sell they keep on speculating. They are speculators upon two occasions. They decide when the Bill is passed not to sell, but only if there is an appeal to their patriotism and it would suit the Government to do so. They decide to hold. They hold for some time and decide again and again to maintain that risk rather than sell at the price of the day. People who do that and think they are giving to the country for patriotic reasons are fairly well protected. If the margin of 2½ per cent. is given, not for the trouble or for any advantage to the Government, but so that they may not suffer loss, it is not enough. The Government have no need to guarantee that.
A large number of these companies exist by favour of the public. If a company does not get public favour it cannot do business. I am certain that the large companies which live by the favour of the public will never put themselves against their country or against the needs of the State. That being so, I feel quite sure that the Government need not give way on that point. The main difficulty is to justify the 2½ per cent. You are going to indemnify them against loss; you are going to allow them to take a profit if there is a rise. I do not think anybody ought to ask for more. I dare say some would like it if the Treasury are weak enough to give it. I know the Treasury are not weak enough to give it, but pressure will be brought upon them to give the depositors, not only all the advantages if the stocks go up, but they want the Government to guarantee them against any loss if they go down. The suggestion has already been made today by one or two Members, and it may be made again in this House. I am sure the country would not take that view, neither do I think that the institutions which depend upon public favour will press it so far. I hope the Government will give every consideration in Committee if the points turn up. So far as I am concerned, I have no wish at present to put down any Amendments. I may be able, and I hope I shall, to give a fairly consistent vote for the Government while the Bill goes through Committee.
While I have no doubt that the insurance companies, investing companies, and financial companies generally will fall in very cordially with this proposal, I think the investment companies in particular will be liable to criticise the conditions under which the power of sale is to be left with the Government with respect to the securities which those companies lend to them. For the most part, investment companies have built up their business after many years of labour. They have gathered together a vast amount of information. They certainly desire to retain—I speak generally—the securities they now hold, and speaking with some little knowledge of the business of these investment companies, I feel very certain that they would much prefer to be let alone. My hon. Friend the Member for Huddersfield (Mr. Sherwell) referred to their position as not being patriotic in their requiring to be paid, so to speak, for their lending these securities. I merely mention the fact, as I believe it to be, that they would prefer not to be called upon to lend their securities, merely for the reason that they do not wish to change their securities as a rule. They may change some from time to time, but as a rule they prefer to hold what they have. That applies very strongly to the case of trustees. It is almost notorious that trustees will not change their securities if they can avoid doing so. I believe the Government will have to reconsider that particular part of their scheme, namely, the taking of power to sell as regards securities lent to them. No doubt some means of compromise between the differences of opinion on that point may be reached. I have heard various parties interested say already that they regard with great apprehension and dislike giving that full power of sale unless they are safeguarded in some satisfactory manner.
The hon. Member for Coventry (Mr. D. Mason), in criticising this proposal, said he did not think it would accomplish the object in view. To accomplish the object in view is a very large order. We all know that the question of the American exchange is one of our greatest possible difficulties, but the steps so far taken have accomplished a great deal. I am not quite sure whether my hon. Friend is correct in saying, but assuming that he is correct in saying that the exchange fell materially after the Anglo-French Loan was arranged, it is necessary to bear in mind that the proceeds of that Lean were not immediately available. I dare say to some extent the position is explained by the fact that the public did not buy the bonds as freely as was anticipated. At one time the cable transfer rate fell to 4.48. I think the rate to-day is about 4.72. I do not understand that it is seriously expected that it will be possible under present conditions to improve the rate to what is regarded as the normal figure, 4.86, but a great deal would be accomplished if the rate could be maintained at about its present figure. What is most desired is to have stability of exchange. While it is very undesirable that the rate should be unduly low, it is sufficient for our commercial purposes that it should be maintained at a fair figure. From a financial point of view it is of the utmost importance that that figure should be at such a point as to discourage the export of gold. We all know that gold has been going very freely from this country. Many people have exported it very profitably. Many merchants have refrained from doing so from patriotic reasons. It would have been quite possible for merchants engaged in the American trade during the last few months to have exported gold at a profit of 2 or 3 per cent. To my knowledge it has been done. On the other hand, naturally, it has been discouraged, I believe, by the Bank of England and by the bankers of London, for very good and sufficient reasons. If I may say so, I think the merchants of London and of this country generally engaged in American trade have not taken advantage of the opportunity of shipping gold, which they could have done profitably at 2 or 3 per cent. They have served their country in that manner, I believe to the country's advantage.
I do not desire to follow the hon. Member for Coventry into the rather wide field of the inflation of the currency. It is arguable that some course of this kind is the only method by which we can maintain our gold standard. As we all know, our imports are very much in excess of exports, making all due allowance for freights, services, income upon investments and such things, because we are rather apt to forget that, although the figures are not published, there are large importations on Government account which do not appear in the Board of Trade Returns. We can only remedy that situation by three courses: first, by increasing our exports, which we are unable to do for the reason that our people are so largely engaged in other ways; secondly, we might reduce our imports, which I hope we may gradually accomplish, although we are not making much progress in that direction; and thirdly, we can sell securities, which is being done to some extent. We can hand over to the Government securities and leave them to deal with the matter. In my view, the Government are much more likely to deal with those securities successfully for the purposes in view than the public generally. With the information at their disposal the Government can determine more accurately than anyone else what measures are necessary to accomplish that object. I have no doubt the Government will take every possible step to secure the success of the measure. It may, after all, not be successful. In my belief it will be successful, but the Government are in the best position to judge what measures should be taken, and I thoroughly support the proposal which they have introduced. There are certain movements of a remedial kind which are going on in a perfectly natural way, arising from the fact that money in London is worth more than it is in the United States. I received a letter from New York to-day which states that bills are being discounted there at 2½ per cent. —three months bills—and the rate for practically the same class of bills here would be 5¼ per cent., or possibly 5⅛ per cent—certainly that would be a very fine rate. I am told there are certain indications of a disposition on the part of American financial interests to lend money in London in order to secure the good rates which are now ruling here. My hope—I cannot say I feel so strongly as to express a belief on the subject—is that the remedy of the situation may be assisted by such natural means as that, and with this natural movement for conditions such as we are now dealing with to remedy themselves. I think there is a very good prospect that the steps which the Government is now taking may accomplish all that we hope for and may be able at all events to maintain the rate of exchange at or about the present figure, which is very little under the rate at which gold would be likely to be exported from this country.
I should like to ask the Financial Secretary to the Treasury to elucidate a point which occurred to me at the time the right hon. Gentleman was speaking, which is of considerable importance. I mean the question as to the purchase against 5 per cent. Exchequer Bonds of these American or Canadian dollar bonds. I assume that the purchase will naturally be taken advantage of by a great many people. I believe the terms are very good, and, for example, insurance companies are perfectly certain to take advantage of them largely and do what would be a patriotic action in helping the Government in the matter. What struck me was this: The right hon. Gentleman, in answer to an interruption, said he proposed only to borrow against these bonds, I presume in America, to pay his debts. Does he intend to confine himself to borrowing on these bonds that he buys? Surely he also proposes to sell them when he can do so, as he buys them, as far as possible, because it would be an appalling transaction if he were to roll up hundreds of millions of bonds in the possession of the Government and at the end, when he came to pay his debts, not realise those bonds for a period of years. I cannot think he can possibly have meant it, but in answer to the interruption he said he proposed only to borrow against those bonds. I therefore put the question so that the Financial Secretary may clear up the point.
I rise to say a few words in answer to what has been said by hon. Members, particularly to the interesting and searching speech of my hon. Friend (Mr. Booth). With regard to what the hon. Baronet has just asked, we certainly do not propose to confine ourselves either to borrowing or selling. It must be obvious that in transactions of this kind regard must be had to the condition of affairs in America, and we propose to do in every case what seems to us most advantageous for the purpose we have in mind. But I would observe as a warning, that pretty nearly the whole House, perhaps because of the great liabilities we have incurred and the great sums in which we have been in the habit of thinking, have used hundreds of millions where I should have used tens of millions, and therefore drawn a picture on a very much larger scale. With regard to what my hon. Friend (Mr. Booth) said, really I think his point as to the scope of the Bill and the fear which he still expressed even after what my right hon. Friend had said, is not well founded. He is not as a rule a nervous man, and I should have hoped the assurance given him from this bench would have satisfied him. The first Sub-section of this Bill extends the Government War Obligations Act of 1914 in so far as it applies to obligations which have been incurred before the passing of this Act. Sub-section (3) adds to the Schedule of the Act of 1914 certain items, and among those items are "any scheme in connection with any such last-mentioned arrangements, etc." Therefore it is quite clear that the securities claim is added to the Schedule of the Act of last year, and that the only things which can be added to the Schedule of last year are, under Sub-section (1), liabilities and obligations which have been incurred before the passing of this Act. Therefore it follows that no other scheme, except this securities scheme which my right hon. Friend has outlined, and which I can assure him is the only one in existence—we have not got another big scheme which we are keeping back deliberately—is the only scheme to which Sub-section (3) can apply. Clause 2 deals with securities which are deposited with the Treasury under this Act of Parliament. The securities cannot be deposited with the Treasury except in pursuance of the Treasury Securities Scheme, and therefore the securities will not be deposited with regard to any future scheme which we may make without the sanction of Parliament after the passage of this Act. I think that really is quite conclusive. If my hon. Friend asks me to give an undertaking— which my hon. Friend (Mr. D. Mason) came pretty near doing—that no scheme of this kind should be negotiated by the Government without the previous sanction of Parliament after Debate in Committee, I tell him most respectfully that I must decline to give any such undertaking. These things, to be acceptable, must be negotiated with the people whom they concern, and to ask the House to consider in Committee and on Report Amendments to that scheme which cannot be accepted by the Government without breaking undertakings given to other people would be a waste of the time of the House; and the most respectful way to treat the House is to give them knowledge of what we have done by these War Obligations Acts, of which this is the second, and come to them for the ratification of what we have done at intervals, rather than waste their time by asking them to consider in Committee schemes that they cannot amend. With regard to another matter which my hon. Friend (Mr. Booth) mentioned. When we passed the Injuries in War (Compensation) Act it was ordained by the House that anyone getting compensation under that Act should not be also entitled to benefits under the National Insurance Act, and that we should not charge public funds with a double obligation. In this Bill we are taking power to compensate merchant seamen. What applied to soldiers and sailors under the Injuries Compensation Act and War Obligations Act we think ought also to apply to merchant seamen, who are to get compensation under the provisions of the scheme which we are asked to ratify under this Bill. In reply to my hon. Friend's last point, he will be entitled to put in the balance sheet that he holds "certificates which cover the following shares"—and he can give a list of them— "deposited with His Majesty's Government."
In this case, I take it, the suggestion is that they should be deposited with the Government under certificate?
I think that would be quite satisfactory.
Question put, and agreed to.
Bill read a second time and committed to a Committee of the Whole House for To-morrow (Tuesday).
War Loan (Supplemental Provisions) Bill
Order for Second Reading read.
Motion made, and Question proposed, "That the Bill be now read a second time."
This differs from the last Bill, which raised so many questions of principle, in being a very commonplace and extremely uninteresting machinery Bill. There is nothing in it except the machinery for carrying out the proper conduct of the investments made by small investors in the last War Loan. Under the last War Loan investments were received in the Post Office and through the Post Office. The object of this Bill is primarily to make the necessary statutory provisions for the establishment in the Post Office of a register of the stock held by those who have invested through the Post Office. Under the Savings Bank Act of 1880 facilities were given to those who invested in the Savings Bank to invest in Government Stock through what was known as the Savings Bank Investment Account. Therefore people who had deposits in the Post Office Savings Bank are all right, but a number of the investors in the 4½ per cent. Loan, who invested through the Post Office, had not Post Office Savings Bank deposits, and for the holding of their stock it is proposed, independently of the existing machinery of the Savings Bank Investment Account altogether, to establish a Post Office register and to facilitate the transfer of the stock from the register in the Post Office to the register of the Bank of England and the Bank of Ireland and vice versâ; so that if a man has stock in two places he need not keep it in two places but may register it altogether, either in the Post Office or the Bank of England. The register which will be instituted under this Act will, simply for the convenience of Departmental administration, be kept at the headquarters of the Post Office Savings Bank, West Kensington, but it would be absolutely independent of the ordinary Savings Bank machinery. It will give facilities to those who hold stock in the Savings Bank or who receive dividends by post, and so forth.
The only other thing I need say is that the whole of this Bill deals with the machinery dependent upon that register with the exception of Clauses 5 and 7. My right hon. Friend told the House a week ago that he was devising a scheme to attract small investors, and that he proposed to set up a Committee, which meet for the first time this morning, in order to consider the details of that scheme. It may well be that when that scheme is applied it will be necessary to use the Savings Bank machinery for it. We have any number of applications now coining in, particularly from small investors who have been making large earnings, for permission to exceed the present limit of deposits in the Savings Bank. We want power to modify, for the War only, the Post Office Savings Bank deposit limits. We propose, at the same time, to remove the limit of holding of Government Stock in the Post Office, and this will enable trade unions and friendly societies, so far as they can satisfy us that their funds are provident funds, to register their stock in the new Post Office register. We also take power to enable a friendly society or trade union to invest in the name of the Public Trustee, if it appoints him as its representative, except in so far as Scotland is concerned, because after negotiations with people conversant with these matters in Scotland we have found that they do not like the Public Trustee for this purpose, but prefer a gentleman who is known well to them but of whom I regret to say I am quite ignorant, namely, the Accountant of Court. If there are any regulations made they will be placed before Parliament. We propose to make regulations for the issue of bearer bonds through the Post Office. The Chancellor of the Exchequer has already announced, in answer to a question in the House, that we propose to issue £5 and £25 bonds. These bonds have been issued in a very few cases to people who have applied for them. This is simply to give the necessary legislative sanction. I do not think the Bill is of very great interest to the House, but it is of great importance in so far as it gives facilities for investing small sums, and I trust the Bill will pass without any opposition after a very little discussion.
Can the right hon. Gentleman say, in regard to Clause 7, where it is proposed to increase for the time being the limit of money which may be deposited in the Post Office, what that limit is going to be? The Clause leaves it very vague, and I think we ought to know definitely. I think the limit now is £200.
In regard to the amount of investment that is to be allowed to be held on the Post Office register, it is proposed to be £1,000. In regard to the limit of deposit in the Post Office Savings. Bank we are awaiting the finding of the Committee before deciding that.
With reference to the Committee mentioned, I take it that that is the Committee the formation of which was announced in the House a day or two ago, which included the hon. Member for Sunderland (Mr. Goldstone), the hon. Member for South-West Manchester (Mr. Needham), and the actuary of the Prudential?
Yes.
If that is so, I am quite content to leave the matter with them, because I have confidence in that Committee. I want to know why there is no phrase about the duration of the War in this Bill. It is quite true that it speaks of loans raised for the purpose of the present War, but I should think that in order to complete the description which the right hon. Gentleman has just given that the words "for the duration of the War" should be used.
I only described the alteration of the limit of Post Office de- posits as for the War only. If the hon. Member will consult Clause? he will see in brackets the words "not being longer than the duration of the present War and a period of six months thereafter."
I do not know whether brackets are taken notice of in the Law Courts. I understand that they totally ignore punctuation with the same ease and freedom with which they ignore Parliamentary debates. They take no notice of any comments made by Ministers, and they take no notice of punctuation. My point evidently holds good, that there is no general mention in the leading Clauses, of the Bill as to the duration of the War, and that that term only applies to Clause 7. I do not see any mention of West Kensington in the Bill, and we have had no reason given why the office should be at West Kensington. For my part I would have preferred a more central situation, and I would remind the Government that when people come up from the provinces to do Government business they generally make for a central position, either Whitehall or Somerset House. When they come up under this scheme I am sure that they will not go to West Kensington. What there is attractive about West Kensington I do not know. I should think the hon. Member for West Kensington must have a very persuasive tongue if he is responsible for this, because it will bring a considerable amount of business into his district. An hon. Member suggests that when a man comes up to visit the Olympia they will go to this office and deposit their savings and not get to Olympia at all. I think the right hon. Gentleman might explain why West Kensington has been chosen. It may be that the premises are more suitable, but I think it is a mistake, if it can be avoided, to go into the suburbs.
Clause 2 provides that
"Regulations made under this Act may provide, in connection with any stock inscribed in the register, for the issue through the Post Office of bearer bonds for such amounts as may be provided by the regulations," etc.
I want to remind the Government that it is very dangerous to issue bonds to a class of people who have not been accustomed to place much store on pieces of paper. These people do not have safes, and very often there are no rooms in their houses which are private apart from the children and visitors. We have had experience under the Insurance Act in connection with this problem. Although men and women know that there is value attaching to the stamps they place on their cards, they lose their cards in a wholesale fashion. It is one of the greatest difficulties under the Insurance Act to get the people who are concerned to really prize the document as it ought to be prized. At the present time it is admitted that there are between 300,000 and 400,000 lost cards at Wellington House, Buckingham Gate, stored, I suppose, in the cellars, and all these hundreds and thousands of cards bear stamps. Therefore, while I do not object to the issue of bearer bonds, there must be some check of some kind, otherwise people will part with them a little too freely, or will not take sufficient care of them. Under the Insurance Act, the people know that they can get a substituted card. With regard to these bags full of cards at Wellington Gate, the authorities seem totally incompetent to solve the problem.
I am not quite sure that these people when they get bearer bonds will understand that if they lose a bearer bond it is a loss just as if they lost a five-pound note. It would be a great misfortune of people buy these bonds and are under the impression that if they lose them they can get a substitute, and then find out that they cannot. It will not be sufficient even to put directions on the bonds. Directions are not always understood. There was a sailor on whose insurance card there was a direction to the finder, in case the card was lost, to bring it to the nearest post office. This man happened to be with his ship in Valparaiso, Chile, and he put his insurance card into the post office there. When questioned about it he said, "It says on the card take it to the nearest post office." It was explained to him that that direction was meant for the finder of the card, and he replied, "If I dropped it in Chile and a man found it he would take it to the nearest post office, so I took it there." If some precautions could be taken with a view to safeguarding people from the loss of these bearer bonds, it would save a great deal of heart-burning and it would save Members of Parliament from being troubled, because we shall certainly get pestered if people lose their bonds, and we shall certainly have sympathy with the loser. Therefore, I suggest that when you are instituting a new system of giving bearer bonds into the hands of very poor people some safeguard should be taken against their reckless use.
8.0 P.M.
I notice that Clause 4 stipulates that the Chief Registrar of Friendly Societies is to come in when there is any dispute between the Postmaster-General and the holder of any stock inscribed in the register. I congratulate the Government upon making a wise use of this official. When the Insurance Act was passed there seemed to be a conspiracy against him, and I am pleased to find that this official has been chosen for the purpose of arbitration under this Bill. Approved societies and friendly societies who are accustomed to deal with that office all bear unanimous testimony to the civility and courtesy which they receive there. It would have been a good thing if in the framing of the Insurance Act this official might have been used instead of all the unnecessary intruders whom we find planting themselves upon the Consolidated Fund at Buckingham Gate. I would like to know why the Act is retrospective. It is provided in Sub-Section (3) of Clause 8 that the Section shall be deemed to have had effect as from the 2nd July, 1915. This is the Section which enables the Public Trustee to act. I do not see why, in empowering the Public Trustee to act that the Section is dated back to July. There may be some technical reason for it. If an explanation is given now, it may save my putting down a notice in regard to it, with a view to getting an explanation. Generally speaking, I am sure the House will welcome this Bill. I am glad that they recognise the approved societies under the Insurance Act for this purpose. In reference to Clause 9, which concerns Scotland, mention is made of the "Accountant of Court," and I should be glad to know whether there is more than one "Accountant of Court" in Scotland, or whether there is only one individual occupying that position. If there were more than one it would seem to me that that would lead to confusion. Generally speaking I wish the scheme success. I feel quite sure that the friendly societies as recognised, when appealed to by the Treasury, will give a good response. I thank the right hon. Gentleman, who already has been made aware that he will have the fullest co-operation of all the approved societies under the Insurance Act in placing some of these bonds among insured persons.
I have no desire to delay the progress of this Bill. The right hon. Gentleman the Chancellor of the Exchequer seems destined to establish a reputation for producing a Bill almost every day, just like a daily newspaper. If he goes on to the end of the Session, it will have to be considerably prolonged. I have no reason to make any violent objection to this Bill, but I think that the reason for bringing in the Accountant of Court in Scotland is largely due to the fact that the Government have not seen their way up to the present to give us a Public Trustee in Scotland. The proposal has been pressed upon them time after time, but I suppose there is very little prospect of it being adopted at present. I would like to know whether the friendly societies of Scotland or their representatives have been in any way consulted with regard to Clause 9. If so, I should be very glad to hear it, and perhaps we might also be told who were the people consulted. The Bill has not been long printed, and there has not been opportunity to consult some of the leaders of friendly societies in our own constituencies. Very often we find, after Bills are through, that we get a great deal of important matter which should have been brought up. I would like the right hon. Gentleman to state whether he will give us time to consult our local leaders on that point, but at the same time I do not wish to delay the progress of the Bill.
Yes, I can give an assurance to that effect.
There is one point in regard to the transfers of Government Stock which is a matter that has aroused a considerable amount of interest in Scotland. It was only this morning that I received from an important association in Scotland a communication complaining of the difficulties of the present method of transfer. I notice that this Bill provides for a system of register through the Post Office. I think that many people in Scotland would also like the system of transfer by deed to be applied to other transfers in addition to those which are under the Post Office register. I shall be glad to put into the hands of my right hon. Friend a statement which I have now received, and I hope that he will give it his careful consideration.
By leave of the House I say a few words. I shall be very glad to receive the representations which my hon. Friend has promised me. Certainly we have received none so far. I think that the Accountant of Court is a single personage, but I will take care in the Committee stage of the Bill, or before it, to arm myself with the weighty opinion of the Lord Advocate on the subject, so that I shall be able to give to the House an answer fully in accordance with Scottish law. The hon. Member for Pontefract asked "why one Clause was made retrospective. I must plead guilty to having acted in anticipation of the enactment of Parliament in that regard. It happened in this way: Owing to the difficulty of registering stock in the names of friendly societies, the friendly societies in the past have not been able to invest in Government securities to the extent to which they would like. Therefore, in order to facilitate loans, it was necessary to anticipate Parliament by providing that the Public Trustee should be empowered by trade unions or friendly societies to act for them. Some friendly societies have taken advantage of that, and therefore it is necessary to make this retrospective.
Question put, and agreed to.
Bill read a second time, and committed to a Committee of the Whole House for To-morrow.
Indictments Bill.—[Lords.]
Order read for resuming adjourned Debate on Question [9th December], "That the Bill be now read the third time."
Question again proposed. Debate resumed.
I remember that on Report stage this Bill was taken practically in dumb show. About thirty Amendments were put through without any discussion. They were just put on the Paper that morning. I do not say whether they were important or not, but I would like an assurance, if the Solicitor-General could give it, that those Amendments which were accepted from hon. Members did not make any vital difference in the Bill. I am only a layman, but it seems to me that some of these Amendments are very different from drafting Amendments. I protested at the time, and I moved the adjournment of the Debate. I thank the right hon. Gentleman for his courtesy in postponing the Third Reading stage when he saw that there was some misunderstanding, and for allowing me an opportunity to refer to the matter on Third Reading. The point that has been troubling me is Sub-section (2) of Clause 2 with regard to the Rule Committee. It seems to me that if you appoint a Rule Committee to frame rules under the Bill, and then say that a certain Bill is not to come into operation until that Rule Committee has met, we may be in a difficulty with regard to machinery. I went away from the House quite puzzled. It seemed to me that the provision was something in the nature of the warning that you must not go into the water until you have learned to swim. I dare say that the right hon. Gentleman can clear that up.
The second question refers to a matter on which an answer was given, but when I thought over it I found that it was not satisfactory. Sub-section (3) of Clause 4 of the first Schedule says that the statement of offence shall describe the offence shortly in "ordinary language, avoiding as far as possible the use of technical terms." I can quite see that, with the punctuation as here, it would be read in that way, but, speaking as a layman, I would ask the Solicitor-General if he is also clear that when the punctuation is taken out of that those words would still hold? If that be so, I shall have nothing more to press upon that point. If those words had preceded "ordinary language," I think that my point would have been completely met.
My final question is with the Act not applying to Ireland. I understood that that was to be dealt with by the Irish Office. I would like to know whether the Irish Office have considered the point and come to a decision, or whether I should put down a question on the Notice Paper in order to draw from them what their point of view is. I did not gather whether the Irish Office was considering the matter to have it dealt with in the Bill before the Bill left the House or whether the matter was to be taken up later on. I should be glad if the Solicitor-General could answer that now, but if not I will put down a question for the Irish Office, some time early perhaps in the next Session of Parliament. On the whole the discussion in Committee and Report stages convinces me that this is a genuine attempt to make things easier and smoother for the accused person. I hope that it will have the effect which the Solicitor-General anticipates, and that it will go a long way to remove certain causes of complaint.
I thank the hon. Gentleman for his reference to the treatment which he has received, and I am glad that he makes no complaints on that score. The Amendments which were adopted on the Report stage, I agree with some rapidity, all fell within two categories. They were either mere drafting Amendments, or they were Amendments to give effect to proposals which it had been decided to embody in the Bill. Several of these Amendments had been discussed very usefully in the Committee stage, and we endeavoured on the Report stage to give effect to the point of view which was then adopted. I think that my hon. Friends who took an active part in the Committee stage were satisfied that the objects aimed at were achieved. In reference to the Rule Committee, this is merely a question of giving power to a Committee to alter from time to time the Rules in the original Schedule to the Bill. When changes are made in these Rules they have the same effect as if they were inserted in the Bill. What we propose is, that when the Rule Committee is formed, as it will be immediately the Bill is passed, they shall take into their consideration the Schedule of Rules, and if the Committee see anything which requires alteration, they can deal with that before the Rules actually come into effect. That is the whole meaning of the conversation that took place. There is one other point raised by the hon. Member, who is doubtful about the effect of a certain passage in the Rules, owing to the punctuation. I agree that not much attention is paid to punctuation in the Courts, but, after giving the best reading I can to the passage, I think that with or without the commas it has the same meaning. His last question was with regard to the Irish Office. That Department, in consultation with its Law Officers, very carefully considered whether it should ask the House to extend the present Bill to Ireland, and they came to the conclusion in the negative, mainly, I think, because they had not had a full opportunity to get the Bill considered by experts in Ireland; therefore, they have asked that Ireland be left out of this Bill. I have no doubt the matter will be considered, not before Christmas, but early next year, and if my hon. Friend puts a question on the subject to the Chief Secretary for Ireland, doubtless he will receive a reply to it. I will only conclude by expressing the wish that the Bill may have the effect desired: that is, that every accused person may be fully informed of the offence with which he is charged, and that certain expenses, now thrown away, may be saved, and the cost of criminal cases lessened.
I heartily join in the wish of the right hon. Gentleman, though it would be perfectly idle for me to attempt to dissemble my dislike for the introduction of this Bill at the present time. I mainly rise to call the attention of the right hon. Gentleman to his promise that the Rule Committee shall meet before the Bill becomes operative, and I do hope they will very carefully consider the forms of indictment in the Schedule. I have looked through them, and some of them appear to me to contradict both the original Rules and the Rules as amended. I must say that in getting this Bill into working order, the forms of indictment will cause a considerable amount of extra work and expense at first, and I hope that expense will be minimised very largely if the Rule Committee really give those forms of indictments careful attention, and see that they can be used by practitioners without involving trouble or alteration. I trust that everything will be done to minimise the extra work which will be put upon the officials at first. There must be expenditure incurred for determining points of law which will certainly arise if the forms to which I refer are left as they are at the present moment. I hope that the Bill will be productive of the good results which the Solicitor-General has foreshadowed, and that, sooner or later, the accused person may be able to learn more easily than at present the charge made against him under those forms of indictment in the Bill, and possibly under indictments at the present time. I hope every effort will be made to make the indictment rules clearer than they are now.
Question put, and agreed to.
Bill read the third time, and passed.
Education (Small Population Grants) Bill
Considered in Committee.
[Mr. WHITLEY in the Chair.]
CLAUSE 1.—(Provisions as to Small Population Grants.)
(1) The Parliamentary Grants (hereinafter referred to as small population Grants) payable under paragraph (2) of Section nineteen of the Elementary Education Act, 1876, and the Education Code (1890) Act, 1890, as amended by any subsequent enactments, shall be suspended in respect of the period hereinafter mentioned, and in lieu thereof there shall be paid out of moneys provided by Parliament to the several local education authorities in respect of each year ending the thirtieth day of September during the period hereinafter mentioned, a Grant equal to the aggregate amount (if any) of the sums received by the authority by way of small population Grants in respect of schools in its area for the school years of those schools which ended after the thirtieth day of September, nineteen hundred and fourteen, and before the first day of October, nineteen hundred and fifteen.
Such Grant as aforesaid shall be paid in such instalments and at such times as will secure that a local education authority shall receive sums on account of the Grant corresponding as nearly as may be to those received by the authority in respect to the last small population Grants.
(2) The period hereinbefore referred to shall—
( a ) as respects the Grant payable to local education authorities under this Section, be the period commencing on the first day of October, nineteen hundred and fifteen, and ending on the thirtieth day of September next after the termination of the present War, or on any subsequent thirtieth day of September (not being more than three years later), as the Board of Education may by minute to be laid before Parliament determine; and
( b ) as respects the suspension of the small population Grant, be, in relation to each school, the period commencing at the date when the school year current on the said first day of October commenced, and continuing for the same number of years as are comprised within the period mentioned in paragraph ( a ).
Motion made, and Question proposed, "That the Clause stand part of the Bill."
I have been asked to bring forward a point raised by persons interested in education. I do not oppose the Bill, so far as it avoids making these Grants, which have been a matter of controversy for a fairly long time, most educational reformers, I believe, maintaining that they are now out of date. Where I differ from the Education Office is as to the latter part of Sub-section (1) which deals with the money being spent in some other way. I should have thought that this was a time to make small economies. There is a great deal of pressure with regard to education, and there are suggestions coming from all over the country for economies which would really more particularly affect education at its two ends—to cut off the children under five in order to save money, and, at the other end, to cut off something with regard to scholarships. I think these modest economies in the Bill might be made and they would enable us afterwards to offer educational facilities. I think some small economies made now would make the Department stronger in resisting pressure which will come upon them as the War lasts in regard to economies of a very different character.
These small population Grants were made in the earlier stages in order to help local authorities to come to the relief of small schools which were particularly difficult and expensive to staff. This Bill is really an attempt to encourage the local authorities to give an opportunity to the rural schools, whereby the children in such rural schools will not be placed at a disadvantage as compared with children in the urban schools. It seems to me that the hon. Member for Pontefract is acting on wrong lines. Let him once begin to suggest economies in education, and he will find it difficult to prevent economies in the realm of scholarships being effected by reactionists, now posing as patriots, and in the direction of excluding children under five. I hope the hon. Gentleman in charge of the Bill will not alter its main object—the retention of Grants and their temporary stereotyping, so to speak. I realise it is difficult to carry it out, but this seems to me a very useful little measure, and I heartily support it.
My hon. Friend the Member for Pontefract (Mr. Booth) described the Grants to which this Bill applies as being out of date. He might very well have described the system upon which the Grants themselves are made as being out of date. Our object is to stereotype these Grants during, and for a period following, the War, and thereby to enable the legislature, if it so thinks fit, some time after the War, to introduce a better system. It is impossible for me to accept the hon. Gentleman's suggestion that these Grants should be cut off. If any suggestion of that kind had been made in the Bill, this House, which is not largely attended now, would be full of representatives of the local education authorities, all quivering with alarm and indignation at such a proposal. We are bound to keep faith in this matter with the local education authorities. This Bill, I think, involves a minimum of disturbance and a maximum of useful results.
I suggest to the hon. Member for Sunderland (Mr. Goldstone) that he need not think, he is out of the wood in this matter. I think the best way to protect yourself against demands for economy in vital matters is to be as favourable as you can on a point that does not harm the child. You cannot say that the Amendment I suggest would harm the child. It is a small economy which you could make. Time will show which of us is right in this matter. For instance, in regard to the Insurance Act, I do not want the State to give less to the insured person, but I want the administrators to make economies where they can. It is the same here. If you make economies in these small matters where you can, then I think your defence against the criticism which must come will be all the stronger. I brought this suggestion forward at the request of people who are spending their lives in connection with the education of the young and who wished that point to be made.
Question put, and agreed to.
Clause 2 ordered to stand part of the Bill.
Bill reported, without Amendment; to be read the third time To-morrow.
Trading With the Enemy (Extension) Bill
Order for Second Reading read.
I beg to move, "That the Bill be now read a second time."
This is a Bill which I hope will not excite, at any rate, any great controversy. The object of the Bill is, if not to stop, at any rate to impede enemy trading in neutral countries. I think I may put the case for the Second Reading of the Bill in very short compass. At present the state of affairs is this, that by the English law for belligerent purposes the nationality of anybody depends on his domicile. Thus a German domiciled in a neutral country is for belligerent purposes treated as a neutral. The result is that it is no offence for a British subject to trade with a German firm in neutral countries, and it is no offence for the ships to carry their goods or to bank or finance the business. Under these circumstances we find in a number of neutral countries, of which the strongest case is South America, a number of German firms now who are carrying on business, and are doing a very good trade, and which have, at any rate in times past, been of direct assistance to enemy cruisers, which when they were in existence, were assisted by such firms. Even now, when they have been swept off the seas, the money which Germans have amassed by this trade—I refer to Germans as they are the largest—is used for the assistance of the belligerent purposes of the enemy. I think, therefore, the House will agree that that is not a satisfactory state of things, and that we ought to try and devise a remedy for it. I quite admit that very great difficulties present themselves. Whenever you attempt to deal with trade in a very old mercantile country like this you come across a number of very great and unexpected difficulties. I do not propose to describe all the difficulties we have found. It is enough to say that you must be extremely careful lest your blow aimed at German trade will in fact react upon British trade.
The matter has been considered by the Government for some weeks now, or indeed longer than that, and various plans have been open to them for dealing with this trade. One plan would simply be to change the definition of "enemy" for British purposes. That could not be done for the purposes of international law. You might change simply the definition of nationality for this purpose, and say that birth, nationality in that sense, shall be the only guide to the character of any person or firm in a neutral country. That is, roughly speaking, the French law, but I doubt whether it would be effective in the present case, and for two reasons. In the first place, it would be quite open to the German firm to employ a neutral firm or person in the neutral country and thus evade the consequences of being, as far as trade was concerned, of enemy nationality. I have no doubt that would be done in these matters extensively if such legislation were imposed. It is, therefore, quite clear that you will have to go further. On the other hand, there are districts—I hope they are not very numerous—where trade is so entirely in the hands of the Germans that to cut off that trade would mean to cripple British trade in that district, or indeed all other trade, and that would not be a desirable course. Therefore the Government, have come to the conclusion that the best results would be achieved by forming a. black list of those traders in neutral countries who, we think, are of enemy nationality or are substantially enemy firms who can be safely cut off from British intercourse without doing serious injury to British trade. The House will recognise that any interference with our exports would be a serious blow to us from a military point of view. We are very anxious indeed that no legislation and no act of the Government should interfere with that trade unless it is absolutely necessary in order to secure the success of our military operations. We think that by adopting this plan we can move with caution. The Bill provides: that in the first instance a Proclamation shall be issued containing the names of those firms which are indubitably and clearly such as British subjects ought not to deal with, and after taking full advice not only of people in the district, but of those who understand the trade of this country, and having regard to all the interests concerned, we shall proceed to add to the list from time to time by an Order made by the Lords of the Council on the recommendation of a Secretary of State. That is really the whole Bill.
Will the right hon. Gentleman explain the effect of Sub-section (3)?
That merely applies the Trading with the Enemy Acts, 1914 and 1915, and the Customs (War Powers) (No. 2) Act, 1915, and other enactments, relating to trading with the enemy to the persons who are put upon this list. I could not, without wearying the House, state all the provisions of those Acts; it will be enough for present purposes to say that substantially they make it an offence for persons to deal with those who are enemies of this country. I do not put this Bill forward as a far-reaching or epoch-making measure. I put it forward as a Bill which is likely to be of advantage to our cause in the War by diminishing the resources of the enemy, and as a measure which is urgently required in view of the use the Germans have made of their trading connections in neutral countries, not confined by any means to commercial purposes. Lastly, I recommend it to the House because it will do something to put upon equal terms the British law and the French law on this subject.
My words will be few, and they will be in commendation of the Bill. The Noble Lord used one phrase which caused a little uncertainty in my mind. He proceeded to explain it, but as it stood it was a little ambiguous. He said that nationality for the purposes of belligerency depends on domicile. We have before us on the question of enemy character two entirely different principles: the Continental principle of nationality, and the Anglo-American principle of domicile—the place where you are residing at the moment. Domicile is not to be confined to permanent domicile, but extends to what was called, in Lord Stowell's time, trade domicile. A great deal of the difficulty in which lawyers have plunged us in this War has been due to our unnecessarily clinging to the Anglo-American system of domicile and not modifying it enough in view of modern conditions by the Continental principle of nationality. I welcome this Bill whole-heartedly, because for the first time it makes an inroad on the old British theory of domicile as the test of enemy character. It is because we have remained so unalterably wedded to the doctrine of domicile as deciding enemy character that, unfortunately, enemies resident in this country are allowed to do many things that I should like to see them prevented from doing, and which, if we adopted the Continental principle of nationality, they would never be allowed to do.
The principle of domicile as a test of enemy character lands you in all kinds of absurdities. It lands you in the absurdity that a German resident in this country for trading purposes is not an enemy. It lands you in the absurdity that a German resident in a neutral country is not an enemy. The principle of domicile was a reasonable principle in the times of Lord Stowell and the Napoleonic wars, for various reasons. Intercourse was much more difficult; it took much longer; there were not the facilities for changing residence nor for carrying on trade. When you had, say, a Frenchman residing in India, when it took six months to get there and there was no telegraph, it was not an unreasonable principle to treat that Frenchman as having a British domicile, and therefore as not being an enemy subject. But that principle, in its unadulterated form, is really not a sound principle. Therefore, I am glad that while adhering to the old principle, as we English always do, we are beginning to modify it by recognising that nationality as well as residence must be treated as one of the tests of enemy character. It is not only enemy nationality, but also enemy association. I like that phrase "enemy association" enormously. It shows that mere birth is not to be the test of enemy character any more than mere residence; it is to be trading domicile always, birth possibly, and also possibly connection or association with the enemy for any purpose. I think that is spreading the net pretty widely. I welcome this innovation in? the law; I hope it will be carried through, and I only hope the Foreign Office will introduce further legislation making more inroads on the old English principle of trade domicile as the sole test of enemy character.
So far as this Bill is going to restrict trading with the enemy, I am sure it will receive a warm welcome from all parts of the House. I think, however, that it is a reflection that after sixteen months of war the Noble Lord comes to the House, says this is a very urgent matter, and presses it upon the attention of the House without delay. It justifies to a large extent what some of us have been saying for the last six weeks—that trading was openly going on with our enemies in so many quarters. The Noble Lord referred to South America. I know places in South America where for some months after the War broke out our Consul was a German and was acting for Germany at the same time. That is the sort of way in which we have been trying to meet the enemy in South America and elsewhere. I am glad when any sort of effort is being made even in a moderate degree with regard to this vital matter. I understand that in neutral countries we are to have a black list, which is to be published, and traders here and elsewhere will be warned not to deal with the firms whose names appear on that list. I confess that, as a rule, I am not very much enamoured with the publication of black lists with regard to trade or anything else. We had one in regard to a temperance measure many years ago in this House, and I think it was a complete dead letter. According to the law it is still in force, but nobody takes any notice of it at all. For my part, I should liked to have seen a comprehensive measure dealing with this whole question of trading with the enemy, both at home and abroad. Owing to the extraordinarily ridiculous position in which the law now stands the Germans can come here, carry on their business, are protected, can keep their connection, and then after the War they may be as strong as before. That is something which I think is absolutely humiliating to this country, and absolutely opposed to its best interests. Although this Bill, to some extent, is nibbling at a question which is a very small part of a great and urgent question, I shall not oppose even the slightest effort to do something, though I have grave doubts whether it will achieve the purpose which the Noble Lord has in view.
Take the position as it will be in some neutral countries. We have the arrangement in the Netherlands, and now also in Denmark. There will be constant incitement of most of the members who are members of these organisations to send information in regard to any opponents who may be here in order to get them put on the black list, so that although the Noble Lord has not said so, I should imagine there is a very close connection between the arrangement which has been made in the neutral countries and the bringing forward of this Bill. It will practically mean, as I understand it, that in future traders will be compelled to deal with the Netherlands Overseas Trust and with the Merchants' Guild of Copenhagen. Thus these two great organisations will gain great benefit from the passing of this Bill. The Netherlands Overseas Trust, in my opinion, is a most unsatisfactory organisation. It is not doing its work at all satisfactorily, or at any rate completely. I have grave doubts whether we should increase the power of this organisation at the present time. Probably that is a matter more for Committee than for Second Reading. I can only express my satisfaction that even a small effort is being made to deal with this matter. I trust it will have the result hoped for by the Government. It is my extreme regret that the matter was not brought forward to be dealt with at least sixteen months ago.
I think it was the Chancellor of the Exchequer at the beginning of the evening who said that the House welcomed the initiation of anything which would help to strengthen our position during this time of war. I congratulate the right hon. Gentleman on the fact that he has initiated a new method with regard to trading with the enemy. I think the right hon. Gentleman the Member for Kirkcaldy (Sir H. Dalziel) was not right in his idea as to the birth of this Bill. If my information be correct it arose from a position in regard to the Pacific Steam Navigation Company, South America. That information is this: that the British Consul-General issued certain suggestions or recommendations in South America in regard to the loading of British vessels by German lighters and German firms. These recommendations at a later date were found to be not strictly legal, and—if I may again suggest—in order to make these suggestions of our own Consul legal this Bill has been introduced. I have no private knowledge in that matter, but I suggest that what I have said is the case. I am glad the Bill has been introduced. I think it will be a help to us in many parts of the world in the way of consolidating British trade. At the same time I recognise what the Under Foreign Secretary has said. I know certain parts of South America where, my friends in Liverpool who trade with these parts tell me, there is practically no one to trade with but Germans. Manchester houses who manufacture calico and other goods of that nature and ship them out to these countries would find it very difficult indeed to continue the export of Lancashire production of many articles if they were absolutely debarred from trading with the firms out there, whose members, though of German birth, have been domiciled for many years in South America. While I have not studied the Bill carefully, from what has been said I think the Government has to the best of their ability met this difficulty. After the Bill has been working for a while we shall find out whether or not it will require amendment; and I only rise to say that I am exceedingly pleased that we have initiated one step more to make it difficult for the Germans to hold in different parts of the world the trade that they now hold.
I welcome this Bill, because it makes it clear with whom we can trade overseas. One of the great difficulties of the, situation has been that merchant shipping firms and others in different parts of the country have taken two views. Some of them have thought it right and proper to trade with overseas firms; others of them have thought it right and proper that they should not so trade without first making inquiries. It has been an extreme difficulty to these various firms to know with whom they might trade. They all desire to acknowledge the courtesy of the Parliamentary Counsel of the Treasury in giving advice and any information very freely and readily in response to their inquiries. But firms will be very glad indeed to have all these questions of doubt cleared away. In so far as this Bill does clear away their doubts, I am quite certain that the mercantile community will welcome the Bill. The question of domicile and of branches with partners in Germany has been a great difficulty from the beginning of the War right up to the present. Also questions of difficulty have arisen as to whether we ought to trade with South American firms whose profits might ultimately go to partners resident in Germany. There is one point about which I want to ask the Noble Lord. Supposing firms have contracts already on their books with houses abroad? Suppose they have entered into those contracts in a perfectly bonâ fide and open manner? Supposing their customers, for good cause, should be put upon the Black List contemplated by this Bill? What is to be done with those contracts? Suppose the contracts are broken by the terms of the Bill and the people on this side have shipped their goods. They may be seasonal goods, or goods suitable for a special market, and the firm may thereby make a substantial loss. Is a point of that kind to be met by the Bill? I understand the Noble Lord to acquiesce affirmatively. I do not see where it is going to be met. At any rate, if the point is one—and I believe it is one—of considerable substance, until the machinery of the Bill gets into perfect working order some care ought to be taken so that orders which have been booked in a perfectly legal manner may be dealt with in a perfectly fair manner to the people on this side. One of the gravest difficulties has been that merchants have not known where they might or might not trade, and thereby a good deal of business, to my knowledge, has been refused definitely, because of the uncertainty of this point—uncertainty, perhaps, as to whether licences would be issued by the War Trade Department or whether the firm on the other side might be a proper firm to trade with. If the Bill does clear up doubts in regard to all those questions, and many others, which, I think, can be put forward at a later date, I am quite certain the mercantile shipping community will cordially welcome the Bill.
Like other hon. Members who have spoken, I, too, welcome this Bill as putting some limitation, at any rate, upon the too extensive privileges we grant in this country to German trading, both here and in neutral countries. I wish it had gone much further. I wish it had gone much further in the direction indicated by my hon. Friend, and that we could have defined enemy aliens in some way more consonant with common sense. At the present moment an Englishman living in Germany is an alien enemy for the purpose of trading with the enemy, whereas a German alien enemy living in this country and trading here is a friend and not an alien enemy for the purpose of trading with the enemy. If anything could have been devised more repulsive to common sense, I should like to know where it can be found. But, as I say, I hope my Noble Friend, when we come to consider this Bill in Committee, will see his way to extend it, and we shall be very grateful; if he cannot extend it by this Bill, I hope we shall induce him to bring in another Bill.
I confess when I heard the speech of my Noble Friend I thought he hardly did justice to his own Bill. His description of it seemed to me to limit its operation more than the words of the Bill itself, because he said that the main object of this Bill is to impede an enemy who is carrying on business in a neutral country. As I read the Bill, it is perfectly possible also to impede an enemy who is trading, or carrying on business, in this country, and I trust the Bill will be used for that purpose. I think I shall have my Noble Friend's assurance that I am right in thinking that the Bill will enable us to prevent persons living in this country from trading with enemies who are also living in this country—in other words, that it will not be confined to preventing trading with enemies in neutral countries.
This Bill is introduced by me as representing the Foreign Office. I am sure we all agree as to the effect it will have on foreign trade, but I would like to consider very carefully before I answer as to the effect it would have on trade in this country. We should have to consider it in connection with the other Trading with the Enemy Act.
9.0 P.M.
I did not expect my Noble Friend to give an answer at once, but I see the learned Solicitor-General's name on this Bill, and I thought that was an indication, at any rate, that we were going a step in the right direction, and preventing our subjects from trading with enemies carrying on business in this country. I agree that that is more the business of the Solicitor-General, but, as I read the Bill, there is given a power by Proclamation to prohibit all persons carrying on business in the United Kingdom from trading with any persons, either in neutral countries or in this country, wherever by reason of their enemy nationality, or enemy association, it appears expedient to do so. As I read this Bill, there is this power to prevent persons in this country from trading with enemies in our own country. I should like to ask him this further question: Will that power be used? Because I think it is most desirable it should be used. I think it would be most desirable to use the powers in this Bill in order to prevent persons in this country from trading with a branch in this country of, let us say, a German firm carrying on business in Germany. Let me give an illustration to show what I mean. There is at the present moment in this country a company called the Sanatogen Company. That business belongs entirely to a German alien enemy, living in Germany, called A. von Wulfing. It seems strange to those unfamiliar with those doctrines of law governing trading with the enemy, that this German von Wulfing should be allowed to own this business in England, and to trade in England under the name of A. Wulfing and Company, or the Sanatogen Company, as the case may be, and to have all the rights of an English company trading in England itself. I put a question the other day to the Home Secretary, as to how it was possible for persons in this country to trade with Wulfing and buy his Sanatogen without coming under the prohibition of the Trading with the Enemy Act? The answer I got was very extraordinary. The right hon. Gentleman said it was because of the Proclamation of 9th September, 1914, which says that where an enemy has a branch locally situated in British, Allied or neutral territory, not being neutral territory in Europe, transactions by or with such branch shall not be treated as. transactions by or with an enemy. Perhaps my right hon. Friend will communicate with the Solicitor-General and ask him whether there is any reason of law, policy, or anything else, why that extraordinary provision should have been issued in September, 1914. It comes to this. You have a German trading in Germany. He sets up a branch business, of his own in London, the whole of which, business belongs to him, and no one else has any interest in it whatsoever. Yet, because of this extraordinary Clause which got slipped into a Proclamation, and slipped through in the early part of the War without being noticed, this German gentleman is allowed to trade in England under the name of a branch of his German business. I would like to ask whether, under this Bill, it would be possible to prevent any further repetition of that absurdity—in other words, whether it would be possible under Clause 1 of this Bill to issue a prohibition to British subjects resident in the United Kingdom against trading through A. Wulfing and Company, this German alien carrying on business in London? I hope the answer to that will be in the affirmative.
There is another question I should like to put. I might just say we are all familiar with the curious position of the law created by the case of the Continental Tyre Company, as to which we have a Bill in another place, but whether it will ever reach here I do not know. The question I ask is, Would it be possible under this Bill to prevent a British, or other subject, trading in England from trading with such, a firm as the Continental Tyre Company, which is carrying on business in the United Kingdom? In other words, would it be possible to declare that this Continental Tyre Company is such an enemy association that trading with it under this Bill might be impeded? I think it eminently desirable that this Bill should apply to such a company, because it is a company consisting of a parcel of Germans masquerading under an English address, and yet, by the decision of the Law Courts, these masqueraders are allowed to trade exactly as if they were an English company, and they are being allowed to pile up profits for the benefit of German subjects to be distributed to them possibly at the end of the War. We are all agreed that it is most desirable to stop that sort of thing, and I hope it will be possible under the words of this Bill to prohibit persons in this country from trading with such companies as the Continental Tyre Company, on the ground that they are a firm of enemy associations.
I should like, when we come to the Committee stage, to propose that trading enemy associations shall be so defined as to include such a company as a Continental Tyre Company in which all the shareholders are Germans. I think many people in this House, and outside, have come to the conclusion that it is time we did something to destroy this network of German influence founded upon finance, bolstered up by German companies and German firms, trading here and elsewhere, which has gone so far to destroy British influence and finance here and all over the world. I do not think this Bill will go far enough. We know what this enormous octopus of German trade and finance has done by spreading its tentacles all over the world, and endangering our position, not only as regards finance, but as regards our own safety, by the German system, of espionage throughout this and other countries. I hope that this Bill as it stands, and as it may emerge from Committee, will do something to destroy that sinster influence. While the Noble Lord has confined his speech to persons trading with these enemies in neutral countries, I hope he will not forget that there is another most important branch of the subject which would prohibit, if the Bill is properly carried out, persons living in this country from trading with these alien enemies in our own midst.
This Bill is undoubtedly a step in the right direction, although a step much too long delayed. Many of us know the ramifications of German influence amongst firms of German organisation and their immense industry, and we also know their effect upon British trade in various parts of the world. Take the case of China. Some time after the outbreak of war it did not appear that British traders trading with German firms in China were regarded as trading with the enemy. Subsequently this was made clearer to a certain extent, but until this Bill was proposed it was not made nearly clear enough. Let us take the case of Hong Kong with a powerful German colony exercising a remarkable influence in that small Colony, which forms part of the British Empire. What has happened? Three hundred of them have been interned in Hong Kong instead of being deported. The result is that they are there in internment, having their businesses carried on by Chinese and other friends, and they are able on the spot to exercise their influence in Hong Kong in a way that is advantageous to our enemies and detrimental to the trade interests of this country. I know Hong Kong. I know how the English Colony kow-tow to the German colony there, and how great is the influence of the Germans. I say that to leave the question of the deportation or internment of the German colony in Hong Kong to be determined by the local authorities there is absolutely a mistake.
This matter ought to be dealt with Imperially, and it ought not to be left in the hands of the local authorities. We have got other Concessions and Colonies in China. We have got Tien-Tsin, Neuchwang, and Hankow, where the German flag flies over an area policed by German policemen. All those are virtually German colonies, and if it was right in conjunction with the Japanese to deal with Kiao Chau, why should these other places not be dealt with in the same way, because they are of a similar character? The fact is that we leave the Germans there to conspire against our interests and in the interests of our enemies. Our British traders ought to be independent of those German distributors in China. Why should German firms distribute what we export to China? Why should we leave this matter in the hands of our German enemies? I hope trade with German enemies in China by this Bill will receive such a check that after the War is over they will not be allowed to build up the trade of Germany in those places, whereas if we leave them undisturbed in their businesses they would resume their trade immediately after the War is over. This country allows Germans to be naturalised, and I presume they have the right to trade here, but I believe if this Bill is interpreted literally and as it appears in print, the German associations will be prevented from continuing their trade with us, and this ought to be regarded as trading with the enemy.
One thing I am convinced of, and it is that after all the serious economic losses, and the still more serious loss of human life we have sustained at the hands of the Germans, that the trading people of this country will not be prepared, after the War, to resume trading relations with the Germans on the same terms and conditions that existed before the War. Personally, I hold the strongest view in that direction, and it will be one of the good results of the War if it causes British traders to wake up and to do their own business, not only in the manufacturing and producing of the goods and in the exporting of them, but also in the distributing of them in every country to which they are sent. I hope that the Government will adopt a much stronger policy in dealing with alien enemies. We know how wicked our enemies have been, and we should welcome any sign that the Government are going to adopt a saner view of our duty as a British nation in lessening the danger. See what they have done in Persia by the plottings of German Consuls and traders! Wherever you get a German Consul or trader, not only is he there for commercial purposes, but he is there also for political purposes. They are a menace always to British trade, and they are a still greater menace in the time of war. I support this Bill because it is a step in the right direction, and I hope that it may be used to the fullest extent possible in the interests of this country and to the detriment and economic loss of our enemies.
I re-echo the sentiments of the rejuvenated spokesman who has just sat down, and I envy him his vigour and his youth. I am not surprised that a question like this calls from him all the energy of which he is capable. I only wish that the Bill was half as energetic as the case is strong. I wish to ask why the Bill is put rear-end in front. I cannot understand why you need to set up a blacklist of Germans with whom you must not trade. I should have thought that a very small white list of Germans abroad with whom you might trade would have met the case. Why is the Bill framed on that line? I suppose that it was felt too dangerous for a trader who might make a mistake unwittingly to frame it on other lines. That is the only solution that occurs to my mind. I have no more sympathy with black-lists than my right hon. friend the Member for Kirkcaldy Burghs (Sir Henry Dalziel). It was an abject failure in the case of our own public-houses, though I should have thought it was much easier to enforce it in that case, seeing that every house has to come up once a year for its licence and that they are all daily under the supervision of the police. Yet the thing was a hopeless fiasco, like so many other things decided in this House. We are entitled to ask, that being the only precedent, is this going to be a similar fiasco? I am not sure that it is not. Where is the machinery for carrying it out? I look through the Bill, and I do not find any motive power in it at all.
We are told by the Noble Lord that he is only looking at it from a Foreign Office point of view. That is an amazing statement. The Bill clearly does not apply to this country. If not, it would be a terrible injustice to the community, because then they would be in the position that, whereas they might not trade with a German in Spain on the black list, immediately he opened an office in London they could trade with him with impunity. Surely the Government do not intend that. Surely they do not intend to compel Germans to come to this country in order to get what they want. You cannot forbid the traders of this country dealing with German traders or firms abroad without at the same time making it an offence to deal with the same traders or the same firms if they come here. That would be absurd. It cannot, therefore, be merely an accident that the Bill is drafted in this way. It must have been drafted deliberately to cover this country. But while the Noble Lord cannot answer for this country, I take it that the Solicitor-General can, and we are entitled to ask him what are the views of the Government on the question of putting this Bill into effect in the United Kingdom. Is it to be put in force through the Home Office? Are the Home Office in sympathy with the Bill? I ask that not as an idle question. We know, those of us who take an active part in the proceedings of this House, that every day we find one Government Department doing something that encroaches upon another Department without consulting that other Department at all. That was made plain at Question Time today. We want to know whether the Government mean business in this matter, because to simply drive Germans abroad to seek domicile in this country would provoke the people of this country to straining point. They were provoked once before. The Government were lackadaisical with regard to the question of dealing; with alien enemies until the people rose in revolt. They were warned again and again, but the Government treated the matter with contempt. Of course, they had to hurry up when the riots came. If the Home country is not included we shall have a repetition of those scenes. Germans abroad put on the black list will come to this country to evade our Statute Book. They will use some firm or some agency or some representative to trade here on their behalf. If that ever becomes possible you cannot expect those traders and those workpeople who are debarred from doing business with them abroad tolerating them in any shape or form on any business premises in this country. I do not think it wise. The answer of the Noble Lord was exceedingly unsatisfactory when he said that he only answered for this Bill for the Foreign Office.
The whole thing is really more important, and I venture to urge that the Bill should be stronger. Information reaches me with regard to the fruit trade from Spain. There has been some correspondence in the "Daily Telegraph" on different days on this point. I put a question down some months ago at the request of a number of traders in London. I put the question down after satisfying myself that these traders had no business motive behind it. They had simply acquired the information while conducting their own business. What is taking place now? Germans in Spanish ports are sending cargoes of fruit to be sold in London. They are sending them in English ships, guarded by the British Fleet, insured in London, and the cargoes are being sold. The same cargoes—an increasing number of them—are sent to Holland, whose trade in these things has multiplied ten, twenty, and even thirty times as compared with the pre-war period. Surely the Government could find out whether or not the fruit is really consumed in Holland. Surely they know that some of these German traders, against whom I presume this Bill is aimed, have made enormous profits. They are sending enormous cargoes not only of fruit, but also of vegetables. The trade has reached gigantic proportions.
What also do we find? We find that some very curious proceedings are taking place off the Spanish coast—proceedings into which I need not enter at this moment, although I have no doubt the Government know to what I am referring. I would ask the Solicitor-General whether he can have an easy mind when there is a boatload from a Spanish port, owned by German traders, sent through the Straits of Gibraltar to this country? Does he not know what that ship is likely to do in case it meets a German submarine or other German war vessel which is hanging about in order to destroy innocent lives? Can the right hon. and learned Gentleman not realise what goes on in such a case? These are days of wireless telegraphy and quick movement, and I venture to say that a great deal of the trouble and many of the losses we have incurred in the Mediterranean have arisen from the action of the British Navy in protecting these German cargoes. I want to know if the Bill will interfere with that trade. Why should not a black list be issued against every German abroad? It would be a serious thing to pass this Bill unless it is intended to deal with this evil. The natural inference will be that any firm here can go on with this trade, and you will actually have an increase of trading with the enemy under the Bill if it is not put in force against some of these Germans, who are very easily known.
What are these firms famous for? They are famous for giving dinner parties and fêtes in Spanish towns. On the occasion when the "Lusitania" was sunk, and on occasions when Zeppelins have visited London, these German traders, whose cargoes have been protected by the British Fleet, whose boats possibly at that very moment, after a safe passage owing to our Fleet, are going up the River Thames, have been inviting all the Germans in the towns in which they live for purposes of jollification. There could be nothing more calculated to weaken the prestige of this country than action of this sort. Some of these men are continually entertaining German visitors. If a German ship calls at the port, or if a German statesman passes through the town, these men promptly offer hospitality. They have been proud to be seen with them and to associate with them. I do not blame them, for that is the natural conduct of patriots. I only thank God I was not born a German. But these men are naturally sincere patriots, and they consider that they are doing good service for the Kaiser by taking advantage of this sleepy-headed Government.
They cannot understand why we are so supine. They say to other neutrals, "Look at what is going on; look at the profits we are making out of London; look at the British Navy escorting our cargoes—how delightful it all is!" And then they add invariably, "Do you think these people are going to win?" Therein you find the reason why some of the neutrals are turning against us. They are losing confidence. It is not altogether the fault of the military or the lack of military success. A great deal of that loss of confidence is due to the incompetence displayed by our Government in these matters We cannot shut our eyes to this fact. We are losing the confidence of one neutral nation after another, and I am perfectly certain of this, that we have lost it largely because of this policy. We have been allowing the Germans in Greece to trade with this country unmolested. Yet these German firms in Greece have shown themselves only too anxious to assist German submarines and supply them with oil or anything else in order that they may go on trying to murder our poor fellows who are being transported across the sea. This really is a very serious question.
I am not at all convinced that the Government really mean business by this Bill. The very halting and half-apologetic tone which characterised the speech of the Under-Secretary for Foreign Affairs when introducing the measure distressed me exceedingly. There was very little display of that energy or vivacity which one would expect from a man who had forged a new weapon wherewith to smite the enemy. I hope there will be more strength and vigour in the speech of the Solicitor-General. If he does not indulge in extravagance of demeanour, at any rate, his words mean a great deal, and I hope he will be able to give the House some very necessary assurances in regard to this Bill. I do not know whether he will be prepared to answer further questions with regard to the operation of this Bill. Will it extend to Denmark? How is it going to be applied to Denmark? Are we going to continue to deal with these German associations of which they will not give the names, although they are well known, under this separate treaty and then black list the outside trader? If they do that, I think they will have committed an offence of an unpardonable character. The information that reaches me is that the traders in Denmark who are most favourable to this country are against this secret Agreement—secret that is to England, but public in all other parts of the world. It is to be assumed that this Bill is aimed at Germans in Denmark, but I am told that German firms in Denmark are included in the associations in whose favour this secret treaty has been made, and that they are rejoicing in great measure at fortunes which they are going to make. I am informed that a number of pro-German firms in Denmark are grouped in these associations which will benefit by this treaty, the terms of which cannot be revealed to us, although they are well known, and if other traders who really are our friends are black-listed, then this Bill will have a very lamentable result.
I dare say many Members of the House have been approached by Danish people and have been in receipt of a good deal of information on this question. Two Danish merchants living in this country—naturalised Danes—who are very friendly to this country, came to me from the provinces last week, after the discussion in this House, and I was informed by them that some of the leading pro-German firms in Denmark—such firms as I should have thought this Bill was aimed at—are in this combination in the interests of whom this secret Agreement has teen come to. If that be so, I can only say it is a matter of very serious concern indeed. We have suffered very much in the South of Europe from neutrals disappointing us, and I think it would almost break our hearts if, through negligence, we met with similar disasters in the North. I mention this in order that the impression I entertain, if it be a wrong one, may be removed, and I hope an answer will be given that will clear away all doubt in the matter. I should believe more in this Bill if it went twice as far as it does, and if the Government were to give an undertaking that, if it succeeds, they will willingly carry it a step further. We cannot regard this piece of legislation as a finality. If it succeeds it should convince the Government that they can safely take further steps without hitting innocent people and I hope the Government will have the courage to take such steps.
Before the Solicitor-General replies, I should like to ask him whether the Bill applies to firms in this country who are of enemy association? At the present time certain firms in this country are under Government supervision, and have supervisors in their offices. I want to know whether power is given to the Board of Trade to stop people trading with these firms when the firms are practically associated with our enemies? It is a well-known fact, which cannot be disputed, that the Government at different times, in negotiations with regard to certain materials, have given the preference to firms in which the German element has been the predominating feature. Unless this Bill gives the power to prevent trading with firms that are essentially German, one useful purpose which is absolutely necessary is not fulfilled. The Government have been made aware in this House of the objections taken to the methods they have adopted in giving practically a preference to German firms. There are German firms in the City of London to-day who openly boast that as soon as the War is over, with their superior brain intelligence to that of the Britisher and the money they can command, they will be able to assert themselves after the War is over in obtaining a large portion of trade. The time has arrived when energetic steps should be taken to see that those firms which are largely German in character should be suppressed during the War as far as possible. I hope I shall get an answer from the Solicitor-General as to whether this Bill empowers the Government to stop the trading with firms which are essentially German and of enemy association.
I gather that the Government do not attach very great importance to this measure, otherwise we should have had a Cabinet Minister here this evening, in view of the Prime Minister's undertaking to the House that we should be allowed to have the benefit of a Cabinet Minister's advice if any important business was going on in the House. However, we have got the Solicitor-General here, so I suppose we have to be satisfied. He, with the Under-Secretary of State for Foreign Affairs, forms a larger proportion of members of the Government than the Government generally vouchsafe to give to the House. One point which hon. Members have overlooked in this discussion is that this Bill does not appear to have been drawn in consultation with the Board of Trade at all. It seems to be a Foreign Office measure.
indicated dissent.
The Under-secretary of State shakes his head. I am very glad to be assured that the Board of Trade have been consulted in this matter. If they have consulted with the Foreign Office, the Bill appears to be very strangely drawn.
I want to welcome the speech of the hon. Member for Barnsley (Sir J. Walton), in which he stated that although he had been a Free Trader all his life, yet he did not intend during his lifetime to trade again with a German. I am sure that is the view of many Members of this House, and certainly the view of a great many of the people.
I said on pre-war terms and conditions.
If this question is approached from that standpoint the Bill does not go far enough. The hon. and learned Member for York ('Mr. Butcher) referred at some length to the case of the Continental Tyre Company. We all know that that company is a purely German company, trading in this country, buying its tyres in America—tyres made in foreign countries—and selling them in this country. We on these benches below the Gangway have protested since the early days of the War against Germans being allowed to carry on business at all in this country. We have allowed Germans to take the bread out of the mouths of the firms whose partners have gone to the War to fight for this country, while the German firms having agents in this country have been allowed to carry on their business and keep together their goodwill. The question of the profits they make is a matter which will be settled after the War. That position is an absurd one, yet the Government under this Bill, so far as I am able to follow it, still allow, and will allow, these alien firms established in this country to continue trading. I am sure that is not the wish of the House of Commons, although it may be the intention of the Government. I believe it is their intention to allow enemies to continue trading. There is only one way of dealing with this question. As the House knows, there is a number of firms in this country the capital in which is entirely or nearly all German. Take the case of the Sanatogen Company, mentioned by the hon. and learned Member for York. That is a company which makes its profits simply on a trade name. The same thing applies to phenacetin, aspirin, and various other things besides sanatogen. They can be made, and are made, exactly of the same constituent parts, but British firms are unable to sell them because of the protection given by the Government to the German firms by allowing them to continue to carry on their business during the period of the War.
The Government have brought in this Bill because they have not enforced their own Order in Council of 11th March. I have not the Order with me at the present moment, but so far as I understand it, the Order not only prevents, under Articles 1 and 2, goods going to and from Germany, but it also prevents a merchant ship carrying from a neutral port to a neutral port goods of German destination or of German origin. I do not think the word "origin" is in the Order, but under the Order no goods of any kind are allowed to be exported from neutral countries to Germany or to any ports from whence goods might eventually be destined for Germany. What are the Government doing with the Netherlands Oversea Trust? In connection with that Trust Clause 1 of the Bill prohibits all business trading with any persons or bodies of persons not resident or carrying on business in enemy territory. What has happened with the Netherlands Oversea Trust in respect of coal? The Netherlands Oversea Trust, in conjunction with the Foreign Office, established an agency for the sale of coal in Holland. That combination in Holland consists, in the main, of the managers of the Westphalian Syndicate. They are German managers, and the managers, in the main, are those who have been carrying on trade with Germany in coal for many years past. All the leading members are, in fact, German managers of the Westphalian Syndicate, and this is the syndicate which His Majesty's Government approves as a proper body to carry on the trade between this country and Holland. After the words in the first line, "His Majesty's Government may by Proclamation prohibit," the Foreign Office, I think, wants to insert, "persons carrying on business in this country," because the Foreign Office appears to have given these facilities to this combination of German gentlemen who, situated in Holland, are keeping together their connection in British coal, and so soon as the War is over the German managers in question will transfer the trade in British coal to German coal as they did before the War. This is a very complex question of the Oversea Trust and the way it is managed. I was hoping at an early date to bring before the attention of the House the whole ramifications of the coal trade, showing how Germany was to-day exploiting the Foreign Office, because the Foreign Office has not taken anything like a sufficiently strong attitude on the subject.
I do not think it is asking too much on the part of the Government that we should say to them on this occasion, "Are you going to prevent Germans resident in this country buying goods in foreign countries and selling them in this country to keep their connection together?" That is what I have protested against for months past without any measure of success. It seems to me iniquitous that we should allow these German firms to continue trading in this country, not manufacturing in many cases, but buying their goods in foreign countries, selling them here, and thereby keeping their goodwill together. The General Electric Company is a case in point. It is a firm in which the capital is wholly German, and yet it is enabled by means. of purchasing goods from America from their American-German friends to keep their connection together in this country, while British firms, owing to being engaged on war work, are losing their connection, and these German firms are gaining and will gain after the War by establishing a connection. It is very difficult when a connection has once been built up to break it, and in ninety-nine cases out of a hundred the purchaser of these German or foreign goods does not know that he is dealing with Germans. Of course, the ramifications are so very great that before an article passes into the hands of the consumer the German gentleman has so manipulated the ways in which the goods travel that it is extremely difficult to bring home to the mind of the buyer that he is not actually buying English goods. This Bill is a small measure introduced sixteen months too late. We have been asking for it for many months and though it does not go far enough the scope of the Bill as drawn is sufficient to enable us in Committee to extend its provisions, and I herewith give notice that I shall on the Committee stage put down Amendments to endeavour to extend the scope of the Bill as far as possible consistent with the provisions of Clause 1. It is quite clear by Clause 1 that the Bill refers to Germans resident in this country—in fact, the Noble Lord himself intimated that it did. It is not confined to Germans abroad, but includes Germans in this country as well. However, we have to be thankful for small mercies. It is a somewhat curious proceeding to have to mention these matters, because we are told by the Noble Lord that we are insolent, that we are blustering, and like phrases of Treasury politeness when we mention these things in the interests of our country. The Noble Lord seems to think, as he did a few days ago when a Privy Councillor raised this question in another form, it is his duty to use language which is wholly inconsistent with his position as Under-Secretary of State for Foreign Affairs, and I give you notice that if he intends to proceed in that manner when he is dealing with perfectly legitimate and honest criticism which has only been advanced in the interests of the country, he will find it very difficult, when he has been a little longer in the House, to get his Bills through.
Probably the House is anxious that the Government should have the very far-reaching powers conferred by this Bill, because differ from my Noble Friend who said, when he introduced the Bill, he did not claim for it any far-reaching effects. I am not quite sure that he knew really how far reaching it is. Instead of wishing to restrict the powers which the Bill gives to the Government, we have this paradoxical position, that Member after Member says, "We are giving you these very wide powers, but we are not satisfied that you are going to use them." I do not think the Government have treated the House quite fairly. They should take us a little more into their confidence than they have done. What use do they mean to make of the Bill? If the right hon. Gentleman only means to use it in Holland and Denmark, it is worse than waste paper. Is it intended to make it a rule to put upon the black list German firms carrying on business with America and China, and various parts of the world, and to make exceptions of those with whom people may trade; or is it, on the other hand, to be an exceptional use, the black list only to be used in exceptional circumstances, and, if so, what are the exceptional circumstances which are to direct and control the Government in their judgment in putting people upon the black list?
It came as a surprise to my Noble Friend that the Bill applies not only to neutral countries but to England, and we have a most extraordinary position. This is a Board of Trade Bill presumably. The name of the Parliamentary Secretary to the Board of Trade is upon it, but there is no one here from the Board of Trade to tell us anything about it, and the Noble Lord, quite naively for him, said he knew nothing about its application to England. I should like to know how far it is in- tended to apply this Bill to England. The House seems to be unanimous in its desire that it should apply to England. There is a Bill, which we cannot help knowing about, introduced by Lord Haldane in another place. As I understand it, if the powers given to the Government under this Bill are put into force in this country and any German company carrying on business in England is black listed, of course that legislation would be unnecessary, and the extensive powers given to the Government would put an end entirely to trading of that description. I think there is not the slightest doubt that there is full power under the Bill if it is to be exercised. I press the Government to tell us in what way they intend to use this Bill. The House has treated it in a most friendly way, and is anxious that the Government should go as far as they intend to, but we ought to know, before we give these very wide powers to any Government, within certain reasonable limits, what use they mean to make of them when we have given them.
I have not had the advantage of hearing the whole of this Debate, but I have heard the speeches since my Noble Friend (Lord Robert Cecil) spoke, and I may be allowed to answer now, so that we can come to a decision on the Second Reading of the Bill. It is a matter of gratification to me that this Bill is brought in and that it not only receives a friendly welcome, but is met with a desire to make it even stronger than it is. During the last nine months I have spent a great part of my time in dealing with the subject of trading with the enemy and with attempts to introduce contraband and other things into enemy countries, and I think the House will believe that no one can have given his time and attention to this subject, as it has been my duty to do, without feeling the keenest interest in making as effective as possible cur blockade of enemy countries and every weapon that we have for crippling our enemy and helping ourselves in this War. I think it may be assumed that everyone responsible for this Bill looks upon it merely as another weapon for the War which we are waging against our enemies, and that my Noble Friend and everybody concerned will do his utmost to make this an effective weapon when it comes into operation.
10.0 P.M.
The hon. Member for Pontefract (Mr. Booth) asked why we have a black list in this Bill. I think the reason is pretty clear. This Bill is intended to make it possible to prevent traders subject to our jurisdiction from trading with firms in other countries principally neutral countries—I will deal with this country later on—which are either of enemy nationality or of enemy association. The House knows quite well that such a measure is necessary. Nobody here can trade with the enemy, but the nationality of firms in neutral countries often depends upon their business domicile, upon the place where they are for the time being settled or registered. A firm may be of enemy nationality in fact, and yet in law a neutral firm, having its home in a neutral country. In order to prevent dealings with a firm of that kind, which we know to be in fact an enemy firm, though nominally a neutral one, we want the power given by this Bill, which will give us jurisdiction over British traders, and others who trade here. For that purpose it is impossible, I think, to proceed by general legislation. You cannot, of course, say in a general law that no British firm shall trade with any firm of a certain nationality, or with any firm in a certain neutral country if any one of its members is of enemy origin or of enemy sympathies. A general law of that kind would be quite impossible to enforce. The most effective and the most practical way of doing it is to authorise the British Government to make what is called a black list, so that when we know that a firm is in fact an enemy firm, whatever its name or domicile may be, we may give to our traders full and fair notice that if they trade with that firm they are really trading with the enemy and doing the enemy good. For that reason the black list is an effective and useful weapon. I think, on reflection, my hon. Friend will find that the system of listing these firms is, at all events, a practical one, and will enable us to deal very frankly with those who attempt to infringe an ordinance of this country. The hon. Member said that the enemy firm could leave the neutral country and come to this country, and then it would be able to trade. I think he is wrong there. I have not the least doubt that an ordinance of this kind would follow any such firm to this country if it chose to move here, and would not be less capable of being enforced if the firm was here. I do not follow my hon. Friend in what he said about Denmark. He seems to have some idea in his mind that it may be the desire of the British Government to encourage trade with pro-enemy firms in Denmark and to suppress trade with friendly firms. No Government would pursue such a course, and I cannot see upon what assumption my hon. Friend's fear is founded.
The hon. Member for the Wellington Division (Sir C. Henry) asked whether the measure will apply to firms in this country. I have the very strongest sympathy with the views he expressed on that matter. I think that in terms the Bill does apply to those firms. It is so widely framed that it might be used for that purpose. At the same time I am not sure that this would be the best means of dealing with that very important subject. I do not say that we shall not have this weapon, but my view is that this may not be the best means to be found for dealing with a matter which has been discussed so much here, and in another place, and throughout the country. My own hope is that we shall find something better. At all events, so far as it goes, I think the hon. Gentleman is quite right that in terms it does apply, and would enable us to prevent trading with a firm of enemy associations in this country.
What would be the position of merchants having contracts with enemies in this country and elsewhere, if the contracts are interfered with by the black list? Who will bear the loss of the cancelling of those contracts if they are cancelled, and will those contracts hang over the merchants in this country until peace comes, and then be exigible?
I have no doubt that when the time comes for making an Order under this Act the Order will be so framed as to deal with matters of that kind. It is obviously impossible to put all these details in the Bill. When the Order is made each matter must be considered and dealt with, and we must make up our minds as to action affecting existing contracts, and who shall bear the consequences.
It is most important.
It is most important. It has not been our practice to hesitate to interfere with contracts with the enemy only because somebody will suffer. I think we are quite willing that the jurisdiction shall be exercised fully, and that anybody who deals with the enemy must expect that he will suffer in some way.
The hon. Member for Mansfield (Sir A. Markham) seemed doubtful whether the Board of Trade was consulted about the Bill, but when he sees upon it the name of the Parliamentry Secretary to the Board of Trade he will infer from that that the Bill has received the consideration of that Department.
The question is what their intentions were.
The remarks of the hon. Member with regard to the Coal Bureau in Holland were to me, who have dealt with the matter for a great many months, rather fantastic. I do not say that the arrangements made with the traders in Holland are perfect, but I have seen a great deal of the Netherlands Oversea Trust and those who manage it, and I think that we may rely upon the directors of that body dealing loyally and fairly with this country and that those who are trying to spread contrary impressions may do harm, which of course they do not intend, but which will be real harm. I believe that the agreement has been of great value to Holland, but it has also been of value to us—at all events, I cannot accept for a moment the observations of my hon. Friend.
In reference to the word "fantastic," does the right hon. Gentleman deny the fact that the Coal Trust worked by the Netherlands Oversea Trust is managed by the former managers of the German Westphalian Syndicate? I will send him to-morrow the names of all these gentlemen who were in the employment of the Westphalian Syndicate before the commencement of the War.
I shall be very glad to have any information from the hon. Gentleman, but I understand that the Coal Bureau, or whatever its proper name is, consists of the chief coal traders in Holland; whether upon it there are some who were formerly concerned in some German coal mines the hon. Gentleman will say. I am not prepared off-hand to deny that that may be so. I know that, although there may be some such names, it includes the names of many of the prin- cipal traders in coal in Holland. I cannot at a moment's notice deal with the very important, and I agree somewhat thorny, subject of the export of coal to Holland. Yet I can assure my hon. Friend that the Government will be glad to receive whatever information he can bring to its notice, and that it will receive every consideration.
I will raise the matter on the Adjournment to-morrow.
My hon. Friend also raised the question, which is a somewhat serious one, of foreign companies in this country. That is not a new subject. It is at present the subject of litigation in the Courts. A most important decision was given, to which reference has been made, and which, I understand is under appeal. I understand the view is taken that you should first have the present law ascertained and decided as early as possible, and then the question of legislation will arise and must be dealt with. I do not think that I can go farther than that to-night except to say that I agree that it is a question of very real importance which requires to be dealt with as early as possible, and to the best of my belief will be dealt with as soon as the Government is in a position to do so. I need hardly add, though my hon. Friend may doubt it, that there is no one on this bench, and I believe no one in this House, who is not anxious by every means in his power to carry on the War not only by military means, but by such trade means as are at our disposal. It is because we believe that that this Bill is brought in and will be used to attain that object.
I am sorry that I was not here to hear the speech of the Noble Lord who introduced the Second Reading of this Bill. I am in a little doubt as to whether this Bill is being introduced from the point of view of preparation to capture German trade or in order to win the War by starving Germany. If it is in order to capture German trade, which I rather gather was in the minds of those who made inquiries among business people before this Bill was drafted, then I am afraid that I cannot agree that the Bill will really help us very much in that direction. If it is in order to win the War, then I have to approach the subject from another point of view, and I suggest to the Noble Lord that he will have a more ready means to hand if he would arrange, by negotiation or otherwise, that no country under the British flag in any part of the world shall be allowed to supply any animal or vegetable fat to any country except to Great Britain. If he would do that, there would be no lard over in America for Germany, and consequently it would bring the War to an end very much sooner than anything in this Bill will do. As regards the Bill itself, I am a little apprehensive from this point of view. Most large British mercantile firms have offices in this country and branches in other countries. These branches in neutral countries are, from the point of view of the Government, as interpreted by the Somerset House revenue officials, carrying on business in this country. And the House will notice in paragraph 1 of this Bill that the people who are subject to pains and penalties are not only persons resident in this country, but persons carrying in business in this country; and if these branches of British firms having trade in neutral countries are regarded as carrying on business in this country for the purposes of this Bill, then they are subject as regards their dealings in neutral countries by their branches to the pains and penalties of this Bill. That appears to me to be a pretty dangerous position. This is a matter that can be dealt with by Proclamation. Possibly licences may be granted, but failing that, and looking at this Bill itself and what it implies, consider the position of a branch house of a British firm situated in a country in South America.
British houses in those countries have almost universally, as far as possible, abstained from trading with Germans. They have naturally wished, being patriotic, to prevent Germans being enriched by their trade. But look how difficult it is in certain cases to avoid trading with Germans. I know of one district where there is an English flour mill. They have to buy their wheat from the farmers living in the district. It so happens that nine-tenths of the farmers living in that district are Germans. If the mill cannot buy wheat from anyone with a German name the mill will have to close. What good would that do towards winning the War? Absolutely none. It will only impoverish British owners of the mill without helping to win the War at all. Consider the difficulties of those people. They have no means of knowing whether people with German names are Germans at all. Some of these families have been sixty years in the country, and when there is a German name it does not at all follow as a fact that the person is a German subject. Years ago in South America British firms had almost a monopoly of foreign trade, but to-day the Germans are probably a third or half as numerous again as the British. It is very difficult for a British firm trading there to know whether they are trading with a man who is really a German—that is to say, subject to Germany and belonging to that country, or whether, say, he is a Chilian trading under a German name.
There are many other difficulties which I could mention. I know a Spanish firm trading under a Spanish name. The greatest interest in the firm was in the hands of two Germans, though the name of the firm was Spanish. How can any British firm trading in that country possibly know every name of every man in every firm, or know who is really German or Spanish? For example, the other day the Government passed rules and regulations for Calcutta that no bags were to be sold to Germans. That was carried out. A British firm had a cargo of bags going to South America. They received an inquiry from a broker for 500 bales of bags for a native bank. The bank paid for the bags, and when the ship arrived it ordered delivery to a German firm. It is impossible to know in cases like that. If you prevent British merchants from dealing with Germans in neutral countries you only hurt the British merchants; you do not hurt the Germans; nor are you helping this country to win the War. This Bill will have to be worked with very great care.
It is quite clear, I think, that the branches of British firms in foreign lands like the Argentina, Chili, Peru, or even California or New York, are subject to this Bill, because owing to their being connected with houses in London or in England, they are technically carrying on business in Great Britain, and consequently are subject to its provisions. Another point is, Do the Government intend to apply this measure equally in all countries or only to pick out places like Ecuador, Peru, Paraguay, or some other country of that kind, but when you come to the United States are you going to be frightened and not touch it? A great deal of trade is carried on with Germans in the United States. Those of us who have houses in the United States have to deal with Germans; otherwise, you would not get a great many of the commodities which you require. If you are going to hurt people in certain small countries who cannot make their voices heard, are you going to do anything in those countries where ten times the trade is done with Germans? If you are simply going to cripple British merchants in some countries, that is no good for winning the War. If you wish to win it, why do you neglect the means of stopping Germany from getting animal or vegetable fat, as you could, by getting your Colonies and Dependencies to send it to this country alone, so that it might not get to foreign countries, and indirectly to Germany?
Question put, and agreed to.
Bill read a second time, and committed to a Committee of the Whole House for To-morrow.
The remaining Orders were read, and postponed.
Censorship (Foreign News)
Whereupon Mr. SPEAKER, pursuant to the Order of the House of the 3rd February, proposed the Question, "That this House do now adjourn."
I desire to put a question to the Under-Secretary for Foreign Affairs with reference to an announcement which appeared in the Press, I think yesterday, as to the censorship with regard to foreign affairs. That, of course, is a very unfortunate announcement, not only to the Press but to the public, and I think it would probably be welcome in many quarters if the Noble Lord could see his way to give us a little fuller information than is contained in the official announcement as to what the policy of the Foreign Office really is on the point. In the first place, I would wish, if he could tell us, and as I only gave him short notice I will raise it again if he cannot, if his new policy is due to any request that has been made by the Press, or is it a policy initiated by the Foreign Office itself. Is its object to give the public fuller information in regard to foreign affairs, with regard to the situation of the countries where military operations may be in progress, because if that is the purpose of the Foreign Office in its new policy it will be very welcome, as far as I know, outside the House. As the House knows, in France and other countries there has been a complete change in the method of censorship. The Paris papers now are practically able to discuss on their own responsibility almost every phase of the War. Take, for example, the position of Serbia and in Greece. At present the Paris papers are practically able to say anything they like on their own responsibility. The result is that the French people are fully aware of the whole situation there and elsewhere, while the British people know practically nothing. Therefore I hope we may understand that this new policy will result in the real facts of the situation in different countries being allowed to be published without the objection of the Foreign Office. I hope this policy of the Department does not mean that there is going to be more severe action with regard to the Press. They have a very difficult duty to perform as it is even with the censorship, and as long as honesty of intention is taken into consideration in regard to publication I do not think anyone would raise the slightest objection whatever. The main point I would like to bring to his attention is this: Is this the beginning of the total abolition of the censorship with regard to the Press generally? I presume that is really a little outside his Department, but at the same time, no doubt it has been considered before this small, although very important, departure was taken. There is then this point. What is military and what is foreign news? That is a point which, I think, is almost certain to give rise to difficulties. Does the position of the British Army in Greece at the present time come under foreign intelligence? The Noble Lord is aware that there is a great deal of news from that part of the world which has not been allowed to be published. Would information regarding the military position in Greece come under what the Noble Lord would describe as his Department? Would it come under the class of news the Government say has not to be censored in future? I think there will be some difficulty in giving a proper definition to that point. Probably he may not be able to give an official answer on the subject at the present moment. One other point. Is it intended to issue any rules of guidance when the censorship is entirely brought to an end? I think that, although the censorship is to be brought to an end, some assistance might be given by the Foreign Office to the Press as to the manner in which they should conduct their foreign news after the abolition of the censorship.
I wish to ask whether newspapers will be free to report political news from abroad. The Noble Lord will, I think, remember a little controversy that arose with regard to a "Times" telegram about the resignation of the Greek Prime Minister. There is now a movement on foot for intercourse between this House and the French Chamber, and one of the earliest results is that we are made acquainted with transactions in the French Chamber which we understand have been suppressed from publication here. I was approached by those who were trying to bring this meeting about—I passed them on to the hon. Member for Bethnal Green—and in the conversation that arose they spoke of certain incidents of the greatest importance, well-known in France, which have occurred in the French Chamber of Deputies, but which have never been allowed to be published here. I was wondering whether the newspapers will be able to act on a matter like that on their own responsibility.
The statement published in the Press, I think, accurately defines what the Government intend. It speaks of the censorship being suspended as from Monday next as far as foreign affairs are concerned. My right hon. Friend asks whether that notice was due to the initiative of the Press or to that of the Foreign Office. I am afraid I must say that it was due to the initiative of the Foreign Office. I do not mean to say that we have any reason to suppose that the Press dislike it. As far as my inquiries have gone, I should say the contrary is the ease. My right hon. Friend asked whether it would mean that there would be fuller information given. I should think it very likely may mean that in some cases. The whole idea is this. Of course I speak only for foreign affairs. I do not pretend to have any knowledge about any other Department. As far as foreign affairs are concerned, what we have felt is that once you have laid down your broad rules as to what ought or ought not in the public interest to be done, it is really better that those who are skilled and who have been all their lives engaged in the presentation of news to the public should be left to carry out those rules for themselves. It is perfectly true that it may happen sometimes that something will be published which is not, from our point of view, desirable. But that happens under the present system. As the House knows, there is no complete censorship at the present time. A good deal that is published under the present system is not submitted to the censorship. In foreign affairs the things that do harm are the comments and criticisms which are passed upon events occurring in foreign countries, and sometimes upon events occurring in this country. At least, that is my view. These comments and criticisms are very often not submitted to the censorship, and therefore, as far as I can see, there is no advantage even from the point of view of control—if it is an advantage— in the present system.
I want very carefully to explain that this proceeding has nothing whatever to do with anything the naval or military authorities may think. There is this broad distinction between naval and military matters and foreign affairs—in military and naval matters there are very often actual facts which the enemy might not know, that it might be very dangerous if he did know, and that it is very important that he should not know. I am not sure whether the right hon. Gentleman will agree with me as to its importance, but I will give as an illustration the actual positions where injury has been done by bombs from Zeppelins. The military and naval authorities thought it very important to keep that from the knowledge of our enemies. It is a fact. But that kind of thing does not arise in foreign affairs. The secrets of the Foreign Office, such as they are—and they are generally not so extensive as many people imagine—are secrets which the Foreign Office ought to keep for itself. They ought not to be at the mercy of casual people who may come upon naval or military secrets. In foreign affairs it is a matter not altogether of comment or criticism, and not a question of fact; therefore they stand in an entirely different position from naval and military matters. Any change which it might be desirable to make in the censor- ship of foreign affairs does not necessarily apply to naval and military matters at all. Therefore I say to my right hon. Friend, when he asks whether this is the beginning, that it may be so or not. There is nothing whatever, of necessary or logical result, which might make the concession capable of being used as an argument for further changes in other Departments of the Government.
I was asked by my right hon. Friend whether it was the intention of the Government to utilise the powers under the Defence of the Realm Act more severely than heretofore. I know of no such intention. I think that any powers of that kind are to be used, as they have been used, very sparingly. If there is any idea that the Government have any intention of trying to trip or trap the Press, or "to run some paper in," as the phrase goes, and so vent their indignation on some particular paper by criminal proceedings, all such ideas are absolutely ruled off the map.
This change was entirely the idea of the Foreign Office. It had nothing to do with any special call of the Press at all. It was designed merely to improve, as we think, the presentation of discussion of foreign affairs by leaving the control of those discussions more particularly to those who are skilled in their presentation to the public. I was also asked if there was going to be any rules in this respect. I have not seen the necessity for any such rules, but if my right hon. Friend has any suggestions to make—I know his knowledge of this subject is very great—I shall be glad to receive suggestions.
It had occurred to me that it would be an advantage to make, as it were, desirable communications to the Press if there was any particular point which might not occur to them as a danger to be guarded against. That would be done in no offensive or patronising way, but if we can be of assistance in that kind of way we shall be very glad to be of assistance. The only other question was put by the hon. Member for Pontefract (Mr. Booth), who asked whether this would apply to political news such as the resignation of M. Venezelos. I think it would apply. We would leave it to the Press. If they were satisfied that news of that kind was true, a matter of public importance, and that it should be published, they would publish it. If they had some doubts as to whether it was true, knowing the sensation it would make, then no doubt as patriotic men they would withhold it until they were quite sure the thing was true.
As to the debates in the French Chamber, I am sorry to say I was not aware of the points the hon. Member raised unless they had some bearing on the military situation, and I will not judge without knowing the facts to which they referred, but I imagine they would come under this new change.
I understood there was a scene in the French Chamber, and a speech by M. Viviani not reported here.
I am not aware of that. There is one other point, and that is the difficulty of distinguishing between military matters and foreign affairs. I quite agree that in war time it is extremely difficult and extremely doubtful as to where foreign affairs end and military matters begin. I do not think that enters into the practical aspects of this case. Wherever the matter is doubtful, and the newspaper desires to have the protection and assistance of the censorship, or thinks it its duty to do so on other grounds, there is nothing to prevent its submission to the Censor. If the Censor thinks it trenches on military lines it will be treated as a military matter. If he thinks it does not he will leave it undealt wth. If it has a bearing on foreign affairs I do not think he will interfere. That has been brought before us very forcibly, and our conclusion is that, on the whole, there will not be any practical difficulty occasioned by this matter. But, of course, in a sense this is an experiment—a new departure. We can only succeed if we have, as we have on the whole had hitherto, the loyal and patriotic co-operation of the Press. With that loyal and patriotic co-operation I believe this experiment may be made a success, and I am sure if it is made a success it will be to the advantage of the public.
I do not rise to offer any criticism, but merely to say that I rejoice at this step towards the liberation of the Press. I was sorry that my right hon. Friend threw out a suggestion that it was not easy to extend it to other Departments. I should like to see the censorship very much relaxed, if not entirely abolished. But, at any rate, in regard to foreign affairs I am very glad we are rid of it, because I think it is desirable that the House and the country should know as much about foreign affairs as is possible, and should not be restrained by the censorship. I have the greatest faith, moreover, in the discretion of the Press. It is expressed, I think, in the speech to which we have just listened from the right hon. Gentleman. He thought it might be left to expert men who knew best what was fit for the public to be told. I am a great believer in daylight, and I think the more we know of what is going on in the War the better for us and for the country. And surely the Defence of the Realm Acts are strict enough and rigid enough to catch any offender who is not wise or who is mischievous in intention? For these reasons I express my great gratification that this relaxation has been made.
Question put, and agreed to
Adjourned accordingly at Twenty minutes before Eleven o'clock.