§ Considered in Committee.
§ (In the Committee.)
§ Clause 1:—
§ Question proposed, "That Clause 1 stand part of the Bill."736
§ *MR. CALDWELL (Lanark, Mid.)
This clause practically contains the substance of the Bill. I therefore propose to take this opportunity of stating my objections to the measure. The clause confers the right to give loans to the Colonies, and it prescribes the whole regulations. I admit that according to the clause any 737 loan to a colony must first of all receive the sanction and approval of Parliament. There must be a previous voting of the money. The objection which I take is practically to the Bill itself, in so far as it gives any facilities whatever for the Colonies to borrow money on the credit of the Imperial Exchequer. I object altogether to giving these facilities. I fear that if we thus become enormous creditors of the Colonies, we shall find it will not be beneficial to our relations with them, and it may turn out very greatly to our disadvantage. I may point out that this Bill leaves the amount of interest to he fixed by the Treasury, instead of deciding on the minimum, as is done in the case of loans to local authorities.
§ MR. DILLON (Mayo, E.)
The whole Bill is founded on this clause, and for my part I cannot find in any of the speeches which have been made by the Chancellor of the Exchequer any justification whatever for starting this new fund. The Bill proposes to create a new stock on exactly the same lines as the Local Loans Fund, and the stock will be placed on the market as a guaranteed stock bearing interest the amount of which is not fixed in the Bill, but which is to be fixed by the Treasury. When the right hon. Gentleman introduced this measure last year he said it was not only intended to be of assistance to the Colonies, but also to open up a new means of investment for Post Office Savings Banks deposits, and thus while they were helping the Colonies they would be aiding a class which they all desired to assist, viz., the thrifty, industrious people who deposited money in the Savings Banks. Now the real meaning of this is that, in order to keep up an expensive Savings Bank system, and to enable the Government to continue to pay a larger interest than can be earned under the present system of investment, a new stock is to be deliberately started. One of my chief objections to the Bill is based on that ground. Another is that you are starting machinery for lending money to the Colonies, as a result of which there will be a continuous pressure on the Chancellor of the Exchequer to lend improvidently. We all remember how, in the Debate last year, when it was alleged that the real object of this Bill was to 738 help the West Indian Colonies, the Chancellor of the Exchequer denied it. But the pressure of circumstances began to operate almost immediately, and it is already in contemplation to lend money to these Colonies under this Bill. If ever there was a period in the history of this country when the policy of lending money to the Colonies ought to be most jealously watched it is now. The extension of the Colonies has been so enormous, and the demands of the gentlemen popularly called Imperialists, inflationists, or extensionists are so excessive, that I confess I am inclined to look with great jealousy on any proposal for facilitating the lending of money to the Colonies. I asked the Chancellor of the Exchequer, on a former occasion, to what colonies this Bill would apply, and he indicated that it would apply to many African colonies, including Rhodesia, British Central Africa, East Africa—it may be the Soudan, but as to that I am not quite certain. However that may be, the prospect of opening up temptation to the Chancellor of the Exchequer to lend money freely to these African colonies appears to me to involve the adoption of a false policy and of a most vicious financial system. The Chancellor of the Exchequer told us that one good point about the Bill was that it gave Parliament a more efficient control over the finances of the colonies to which these loans were made, and he mentioned that there would be an annual and complete Return to this House on the same lines as that which embodied the loans to local authorities in this country. But I do not see the efficacy of these Returns at all, and therefore I do not look on that as in any way an argument in favour of the Bill. I think it would be far safer to continue the present system of making these loans. At present they are granted under special Acts, and in the long run many of them are wholly or partially remitted. I cannot see what the Chancellor of the Exchequer has to gain by devising machinery which will have the effect of applying 739 pressure to the Treasury to grant loans more freely. If we are going to set up a new system, I would suggest that the money for these Colonial loans should be found, not by starting a new stock, but out of the cash at the disposal of the Commissioners of the National Debt. In any ease the loans made under this Act will have to be a charge on the Consolidated Fund ultimately, and as any loss must eventually be borne by the taxpayers of this country, I think that the money might as well be advanced directly.
§ SIR M. HICKS BEACH (Bristol, W.)
I have explained on several occasions, I am afraid without success in the case of the Member for East Mayo, the effect of this measure. But he certainly does not seem to realise the intent of the Bill. If its effect were to facilitate pressure upon the Chancellor of the Exchequer to make loans to the Colonies, I should never have proposed it. The safeguard of the Chancellor of the Exchequer in these matters is the fact that a loan made to the Colonies must obtain the assent of Parliament, and as under this Bill that provision is carefully inserted I do not think there is any ground for the hon. Member's alarm. What happens now is that if a Crown colony has good credit it goes into the market, through the Crown Agent, and obtains a loan. Anybody who chooses to look down the list of securities in the market can see that many of our Crown colonies have very good credit. The object of this Bill was, not that we may lend to what has been described as insolvent colonies, but that we may secure for the investors in our savings banks the chalice of investment in the loans of the more solvent colonies. We may, of course, also lend to a colony which has not been so prosperous as other colonies. By the machinery proposed under the Bill the Colonies will be assisted by being able to obtain loans at a lower rate of interest, while there will be an advantage to this country in 740 providing for deposits in savings banks a better means of investment than Consols afford. I quite admit that the principle of this Bill is contained in the first clause, and that therefore the hon. Member had a perfect right to raise this Debate.
§ MR. SYDNEY BUXTON (Tower Hamlets, Poplar)
As the Chancellor of the Exchequer says, we have already discussed the principle of this Bill, and if the remarks of my hon. friend had been directed against the measure introduced last year I should have entirely agreed with all he said. But this Bill is totally different; the objectionable features found in the last measure have now been removed, and there can be no practical objection to the present Bill. I do not see how this Bill would in any way either prevent or encourage loans to colonies. It is purely a machinery Bill. Any loan to a colony must first come in the form of a Bill before this House, where it will be discussed on its merits. Should this House agree to lend money to any particular colony, it surely would be an advantage to this country, as well as to the colony, that the loan should be made under a properly regulated system. I therefore feel bound to support this Bill.
§ MR. DILLON
I thoroughly understand that in each individual case of loans under this Bill the loan will have to be sanctioned by a separate Bill. But is the Chancellor of the Exchequer in earnest in saying it is seriously intended that these separate Bills shall be freely discussed? Do not we all know perfectly well that, 99 cases out of 100, when the Chancellor of the Exchequer of the day, with a great majority behind him, decides that such a Bill shall be brought in, the thing is practically done. My objection to this Bill is that it is no part of the business of the Government to bolster up an unsound banking system by making it a means of investment for funds that are accumulating beyond our present means 741 of investment. That I may point out is the view of the Economist newspaper, which is one of the highest authorities on these questions. If the right hon. Gentleman desires to obtain good security outside the United Kingdom for the investment of Savings Bank money, why exclude India? I understand that it is excluded under this Bill, yet we know that India has a larger stock, and could therefore give greater relief than all the Crown colonies combined four or five times over. It seems to me absolutely logical and irresistible that if you are going to set up this new fund and look upon it as a desirable investment for your Savings Bank deposits, you must go on mid consolidate the debt of all the Crown colonies, so as to reduce their interest. It is clear that to be of any effect this system must have large operation. The Bill contains within itself the germs of a great financial policy, and no one can see the extent to which it may be carried. It will, no doubt, enable the burdens of the Crown colonies to be enormously reduced, and I do not see why India should be debarred from sharing the benefits.
§ MR. DALZIEL (Kirkcaldy Burghs)
I suppose that if this Bill is carried we shall have still another claim from the Government that they have done a great deal to knit more closely together the mother country and the Colonies. While I sympathise to a large extent with that desire on the part of the Government, I must say I do not think that this particular plan is calculated to have that effect. The policy of the Bill in the first place is to hold out a bait to our Colonies to the effect that they can obtain money from the mother country with less difficulty than in the past, and when I see the two front benches so unanimous upon the Bill I am inclined to look a little more closely into its merits. One point, I think, has not received sufficient attention. 742 The Chancellor of the Exchequer, in the course of the past year, has refused many applications for public funds; but his difficulties will be increased in the future if this Bill is passed, for under it you are practically setting yourselves up as a great money-lending institution. The result to the Colonies will be disappointing, for the poorer ones, which most require the loans, will find the greatest difficulty in providing the necessary guarantees. You will also run the risk of raising a rivalry among the Colonies as to the amount of credit to he guaranteed, and the inevitable result will be to interfere with the friendly relations which now exist. I am afraid that if you now pass this Bill you will on some future occasion be told that the passing of it was intended to sanction the principle of granting loans to colonies; and thus, therefore, we are now being asked to anticipate sonic decision which may have to be taken after 12 o'clock at night some years later, and we shall then be unable to discuss the question on its merits.
§ MR. DAVITT (Mayo, S.)
I would support the Bill if I were satisfied that it would confer any real benefit on the Colonies. But from my own knowledge of the Colonies, and especially of Australia, I know they are already labouring under the disadvantage of having borrowed too much money. What they want in Australia and New Zealand is more population, and not more indebtedness.
§ MR. DAVITT
Well, I say it is a bad policy to put temptation in the way of these colonies to borrow money. I think the better plan would be to lend this 743 money to county councils in England and Ireland, and to give those bodies compulsory powers to buy agricultural land and place labourers upon it. That would, I believe, prove a very good investment.
§ MR. BARTLEY (Islington, N.)
It seems strange that there should be any debate on a proposal of this kind, seeing that the object is to relieve the Chancellor of the Exchequer of his great difficulty in investing satisfactorily the Savings Bank deposits. This is a very small matter, and it would surely be as well to try the experiment.
§ *MR.HEDDERWICK (Wick Burghs)
We are told we ought to support this Bill simply because it is a mere machinery Bill; and the Chancellor of the Exchequer has endeavoured to disarm opposition by informing us that even if be passed there will be a perfect check against possible abuse, inasmuch as before any loan could be granted under it a special Bill will have to he submitted to Parliament. Then what is the use of passing this Bill? Clearly the object of the Chancellor of the Exchequer is to facilitate the granting of loans. The Bill obviously holds out an inducement to any colony that wants a loan to apply for it. If we provide the Chancellor of the Exchequer with the machinery he desires, it will be much easier for him to grant a loan to any colony that may require one. I do not suppose the right hon. Gentleman would not insist on having substantial securities; but we must remember that securities have a marvellous way of ceasing to be substantial, and therefore I think it would be better to withhold from him the dangerous power for which he asks.
§ MR. CALDWELL
It may be true that before any loan is granted under this Bill another Bill will have to be passed; but my point is that the object of this Bill is to sanction the principle that the State is to provide loans out of Imperial funds in the manner prescribed by the Act. Once this Bill has been passed, when a Bill is brought in to sanction a particular loan it will be said that Parliament has already approved the principle, and we shall have hardly any chance of going into the merits of individual proposals, and I venture to assert that these Bills will be rushed through the House after midnight without practically any discussion. I should also like to point out that the Bill affords an opportunity of discriminating between one colony and another; and I venture to assert that when once you begin lending money to the Colonies you will open the door to all kinds of disputes, especially in regard to the amount of interest you charge. We know that in regard to local loans a large sum of money has to be written off yearly, because the authorities are unable to repay the amounts due to the Public Works Loan Commissioners. If they were not able to repay us, they would wish to be relieved. do not know anything which would more readily bring the Colonies and the mother country into collision than by giving these financial preferences. It would breed dissatisfaction amongst every other colony which was asked to pay more interest than the favoured one.
§ SIR JOHN LENG (Dundee)
It might be inferred from what has been said that our experience as Members of Parliament is that the Treasury of this country is always ready to throw away its money without careful examination. The arguments which have been adduced show, first, distrust of those who have the control of the finances of the Colonies; second, distrust of the Treasury, represented by the Chancellor of the Exchequer; and third, distrust of our- 745 selves as Members of this House. I do not share the feeling of distrust in regard to any of these parties. Anyone who has paid attention to the present state of our finances, especially to the large sums of money accumulating in the savings banks, and to the increasing difficulty of handling that money and finding a safe and reasonable outlet for it, must see that the time has arrived when it is desirable that the Government should find new channels for investment. My only regret is that the Bill does not include India in its survey. If the experiment with the Crown colonies is tried and proves successful, it will encourage the Government to go further.
§ SIR M. HICKS BEACH
I appeal to the Committee to allow a division to be taken. We have already discussed the principle of the Bill when I moved the Resolution, and during the debate on the Second Reading. I do not complain that the Bill has been discussed to-night, but I hope we shall now come to a division.
§ MR. WEIR (Ross and Cromarty)
I am not prepared to give a silent vote on this matter. I opposed a grant of £15,000 to Central Africa for making roads for men who are too indolent to make roads for themselves. I do not like the two front benches agreeing on this question. I have always found that something serious happens when this is the case. These loans, I fear, will be very much like the grants given away to the Northern Territories in Africa. It is said that each loan will be brought before Parliament; but what chance will we have of discussing them properly, if the front benches makes up their mind to back up any rotten colony? I admit that many of the colonies, like Canada and Australia, can borrow money at 3 per cent, and that their stock stands at over par; but are we, the British taxpayers, to provide money for these miserable bankrupt Crown colonies? I have too much regard for the poor people in the North and the starving crofters to agree to that, and I feel it my duty not to allow this Bill to pass in this House if I can help it. There has been a fall in Consols of 2 per 746 cent. within the last few days. Is that in consequence of the Government scheme to furnish money to these bankrupt colonies? It is not so long since Consols stood at 113½ and 114. Now I find to-day that they are down to 108¼. I cannot help thinking that that is in consequence of this Bill.
§ MR. WEIR
I do not think the Transvaal question has affected Consols at all. It is that investors are afraid that this country is going to guarantee these bankrupt colonies. I have no doubt that the bank deposits have gone up considerably, because people prefer to hold their money in hand rather than seek investments until they see what is going to happen. In regard to providing an outlet for the Savings Bank funds, if the Chancellor of the Exchequer is anxious there are many admirable facilities for their investment in our own country. Let the hon. Gentle man arrange a scheme to lend money to county councils. I know in the constituency I represent there are tens of thousands of acres of land which might be used by the people of the Highlands if the County Council had the chance of lending money to the people for developing the land. There would be a splendid security and Consols would again bound up to 114. Here are seas teeming with fish, not small fish, but large fish—
§ MR. WEIR
Well, I will confine myself to the Colonial Loans Fund. The Secretary for the Colonies said this was simply a machinery Bill. We do not want a machinery Bill, and I, for one, object most strongly to money being expended for the purpose of enabling these colonies providing roads—
It being midnight, the Chairman left the Chair to make his Report to the House.
Committee report progress; to sit again upon Monday next.