SECOND READING. (Hansard, 19 March 1891)

§ LORD HERSCHELL
My Lords, in moving the Second Reading of this Bill I need not trouble your Lordships with any observations upon its general object, or about the provisions contained in the first clause of it, because those are matters which were considered when I moved some days ago the Second Reading of the Bill relating to the sending of circulars to persons under age inciting to betting. The first clause of this Bill is framed on the same lines as the Bill to which your Lordships have already given a Second Reading, and I apprehend I need say nothing further upon it. But, my Lords, the Bill contains two clauses to which I ought to call your attention. Experience has shown that one of the means which those who encourage and induce borrowing by those under age have adopted in order to get their victims as completely as possible within their power is this, that they suggest to the youth that he should make a statutory declaration, or make an 1350 affidavit stating that he is of age. The object of getting this done is not really to afford any assurance to the lender; he of course has ample means by which he could satisfy himself if he so desired whether the youth was of age or not before he entered upon the transaction; the purpose for which he obtains the statutory declaration or affidavit is quite different; he represents it commonly as a mere form. It is not regarded by the infant who makes the declaration as in the slightest degree deceiving the person to whom he gives it, for he is told it is a mere matter of form, and for no object. But when it is obtained it is used by the lender in this way—that if he cannot obtain payment of the money which he has lent from the borrowing infant himself, or from his relations, he at once indulges in threats; points out that a statutory declaration has been made which is false, and that unless some settlement is come to, the youth will find himself in the Police Court charged with a criminal offence. Now, I am not speaking of an imaginary case, I am merely referring to cases of which many have come before the Courts, and I have every reason to believe that the cases are very numerous in which this device has been resorted to. I have, therefore, thought it expedient to meet this device in some way or other, which will prevent its being resorted to in future; to prevent its being taken advantage of in the way it has been in the past as a most tremendous engine for extorting money from the relatives of the person to whom the loans have been made. It was a matter of considerable difficulty, because as your Lordships will see, there is no doubt in such cases as those that an offence has been committed against the law; but a suggestion has been made, which I think will meet the case. As I have said, the application for a statutory declaration is not made for any legitimate purpose, and I think, having regard to one's experience as to the mode in. which this engine has been used, that it is perfectly legitimate to make it an offence in a person to induce the giving of a statutory declaration or the making of an affidavit in connection with or for the purpose of a loan by an infant. If this clause should pass into law it will operate in this way, that if the money lender is in the position to say to his 1351 victim, "You will find yourself in the Criminal Court unless the money is paid to me," if such a provision as this passes into law there will be a most effective answer to such a statement or threat as that, namely, that the money lender may find himself in the very difficulty in which he wishes to place his victim. And I cannot but think that a provision of this sort, whilst it is a perfectly legitimate one, will afford infants protection against statutory declaration and affidavits being obtained under such circumstances as I have stated to your Lordships. It seems to me it would prevent their being obtained and used as a means of extortion by money lenders. The other provision is one in which I have endeavoured to carry out a suggestion which was made by the noble Marquess opposite. It deals with a matter of great difficulty. There is, of course, no difficulty in declaring that a loan which, when contracted by the infant, is void, shall not be made valid merely by an acknowledgment or promise to pay after the infant becomes of age; but the difficulty arises from this, that the transaction would not under ordinary circumstances be carried out in that way at all, even if you were to prohibit and render ineffective such an acknowledgment or promise, because it would always be connected with some new transaction. We will suppose that a debt had been contracted by an infant which had run up to a large sum and which was void and could not be validated really by any subsequent acknowledgment or promise; there would be a new transaction of this description—the money lender would advance another sum, smaller or greater (a small sum would be quite sufficient), and then he would obtain from the person who had been an infant, when he came of age, a promissory note or negotiable instrument, including both the former debt and the new advance; and, of course, as there would have been a consideration for that new agreement, that consideration would make the whole thing valid, even though the consideration for the new agreement was extremely small. If, for example, there had been a debt of, say £900, contracted by the infant, and there were a new advance of £10 only, that would be a perfectly valid and binding agreement to pay; or if a promissory 1352 note were given for £910 that promissory note would be valid, even although the new consideration given after the infant obtained majority only amounted to that small sum. This difficulty can only be met by making any negotiable instrument, after the infant comes of age, void to any extent in respect to which it is given for an old loan, and valid only to the extent to which it is given for the new advance. I do not think there is anything which would run counter to principle in making that provision; so that although the agreement on the face of it is a single one, and for a single sum, you would be allowed to inquire into the consideration given for it, and so get rid of the promissory note or agreement, in so far as the sum covered by it represented merely a loan made during the time of infancy, which was void in point of law. So far I do not suppose there could be much question or controversy. But then this difficulty arises. Supposing a promissory note to be given which you make void to the extent to which it represents what I will call the infant loan, but not for the new advance, against whom are you to make it so void? Of course there is no difficulty in making it void as against the person who has lent the money, but if you were to leave it valid if in the hands of what is called "a bonâ fide holder for value" it is obvious that the effect of this provision could be easily and would be evaded because you would find these notes or negotiable instruments in the hands of a so-called "bonâ fide holder for value" who would be the person appearing to sue upon them, and to enforce payment of them. I say "so-called" for this reason: that it is so very easy on the one hand for a person to be put forward as a bonâ fide holder for value, and on the other so difficult to prove that it is not so; and if you were to allow these transactions to be valid, if an instrument is in the hands of a so-called bonâ fide holder for value, I think the effect of the clause would be likely to be very small indeed. Now, the question is, can those transactions be made legitimately and properly void, even when the notes are in the hands of third persons? As far as I can learn, there would be no danger in such an enactment. These Bills do not pass current; they do not get into 1353 the hands of persons who ordinarily take commercial negotiable instruments at all; and I do not believe there is any case in which a person would take a note of this description, really relying upon the name which he finds attached to the promissory note, which is that of an impecunious person who has recently been an infant; and, besides, he can always, of course, look to the person from whom he takes it—he has that security. No one need take it unless he pleases. If payment is not made, he has his remedy against the person from whom he took it, and the only effect, I believe, against a person of that description, if such a measure as this were to be passed, would be that he would be more likely to be careful in the credit he gives. The circumstances are peculiar, and the course to be taken is an exceptional one; but I believe, in a matter of this description, that steps might be taken, and that no harm would be done, while a great deal of good would be likely to be done if, in these transactions, securities of that kind, so far as they represented loans made during infancy, were made void. There is one point in connection with this clause to which I should advert. Some have thought that instead of making a note or agreement void altogether to the extent of the debt which has been contracted during infancy, it would be better to allow the person holding the security to claim the amount of any actual advance and 5 per cent. interest. I think, probably, the result of suchan enactment would be much the same thing, because I think that if lenders could not in any case recover more than the amount of the actual advance and 5 per cent interest, these transactions would cease to become profitable; while, on the other hand, it is necessary to prevent them because if these amounts could be recovered—if the money lenders could get them in only one or two out of a number of cases—that would make it worth their while to make advances in future; but, of course, if they cannot get more than the amount advanced and 5 per cent. interest, such transactions would cease to be profitable and would not be so likely to be entered into. Of course these are more matters for Committee than for discussion on Second Reading; but I have made this explanation because I have thought it the 1354 wisest and best course in the first instance, whatever may be done afterwards, to make the clause extensive and absolute, as I have made it in the Bill which I put before your Lordships. I do not think there is any other observation I need make, but I think if this measure, or any such measure as this, be passed into law it will go a long way in checking practices that have been most mischievous and most disastrous. I should like to add this, to remove a misconception which has been found to exist. From various letters which I have received from correspondents, it has been thought that these Bills refer only to youths who are at the public schools or universities, and I have been reproached rather with taking under my care what are called "swells," and with leaving out of sight infants who are not, being in different circumstances, in that happy position. That is an entire misapprehension. The Bill I have introduced to your Lordships applies to persons under age, whatever their position or rank in life may be; there is no distinction made, and it will equally apply to all persons under age, whether at public schools or at institutions of a more humble description. I beg to move that the Bill be read a second time.

§ THE PRIME MINISTER AND SECRETARY OF STATE FOR FOREIGN AFFAIRS (The Marquess of SALISBURY)
My Lords, I have only to make my acknowledgments to the noble and learned Lord for his adoption of the suggestion which I made at an early period of this discussion. I have no doubt that the experiment he has made will be of a valuable character, and that some advantage will result from its adoption. I wish, however, to ask him whether the 2nd clause is really any very large advance on the existing law. Would not complicity in obtaining a false affidavit be punishable now? I believe the making of a false affidavit is only a misdemeanour, but still complicity on the part of the man who solicits the infant to make it, would be complicity with perjury, and, I presume, would be punishable as such. It may not be so severely punishable as under the clause 1355 in this Bill which is now introduced by the noble and learned Lord, but I should have thought that it would, at all events, be punishable under the existing law.

§ LORD HERSCHELL
The object of inserting it is this. Of course, if you could prove that the person had been a party to making a false affidavit or statutory declaration he would be liable, but you have affirmatively to prove that he knew it was false, and that he knew the infant was of age. That is not always so easy a thing to prove. It would be open to the person to show that the infant told him he was of age, that he did really believe that to be the fact, and that he had no reason to know that the declaration or affidavit was false; and though you might have a very strong suspicion that he was not deceived at all in the matter it is not necessarily certain that that would be provable. Under this Bill, whether he knows it or does not know it, the inciting of infant persons under age to make these affidavits or declarations is made a criminal offence. With regard to the noble Marquess's suggestion, I am not sure whether one ought not to provide that there should be reasonable grounds in the person obtaining the document for his belief, and I should propose to alter it in Committee by inserting words to provide that there must be reasonable grounds for believing that the person was of age. I quite think that the criticism of the noble Marquess is justified, and that it suggests the expediency of making an alteration in the wording of the section.

§ *LORD NORTON
I merely wish to express the thanks which I, and I am sure all your Lordships will feel are due to the noble and learned Lord for introducing this important Bill. Its first part was received, when introduced, with perfect unanimity, making penal inciting to betting transactions by agents with lads under age. It is one of the most dangerous practices in this country at the present moment, demoralising young men and sowing a future misery among families. The addition of this second Bill, which of course will be consolidated with the other in Committee, and the two dealt with as one Bill in this House, is received with equal applause, making penal lending money to lads under age. I am very glad, as the noble and learned 1356 Lord pointed out just now, this Bill will apply not only to those in our great public schools and universities, but throughout the kingdom. By examination in one of the great prisons in this country it was found that a large proportion of men imprisoned for thefts had begun their vicious course of life by gambling on a small scale when they were young. It is exactly that danger of the taste for gambling being sown among young men of all classes in this country that we ought to provide against. I would only add, with regard to the idea prevalent in the minds of some people that gambling is not so extensive as it was formerly, there is not the slightest doubt that at the present moment the vice of gambling is pervading all classes in this country from the lowest to the highest, and I trust that the Bill of the noble and learned Lord may have the good effect intended.

§ LORD HERSCHELL
I beg to give notice that on going into Committee I shall move that this and the other Bill be consolidated.
Bill committed to a Committee of the Whole House.