HC Deb 06 August 1914 vol 65 cc2101-7
The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George)

I beg to move, "That leave be given to introduce a Bill to authorise the issue of Currency notes, and to make provision in respect of the note issue in Irish and Scottish banks."

This Bill is to give legislative effect to the proposal which I laid before the House yesterday. The only point which I left to some doubt yesterday, a point which has not yet been cleared up, is with reference to the position of Irish banks and Scottish banks. We had the privilege yesterday of meeting a deputation of all the great Irish banks, and we had also the opportunity of meeting Sir George Anderson, and a number of representatives of the Scottish banks. We were able to come to an arrangement with them. This is the arrangement we have entered into with the Irish banks: We propose that any bank note issues by a bank of issue in Scotland and Ireland shall be legal tender in payments of any amount in Scotland or Ireland respectively, and any such bank of issue shall not be under any obligation to pay its notes on demand, except at the head office of the bank, and may pay its notes, if thought fit, in the currency notes issued by the Treasury under the Bill. If gold were desired they would have to be presented at the Bank of England.


May I ask the right hon. Gentleman against what is that issue to be made. Is it to be against capital or reserve fund, or what?


Is the hon. Baronet referring to the general issue of Treasury notes?


I am referring to the new issue of Scottish one pound notes, which must obviously be represented by assets.


This is the proposal that the Bank of England, and the banks of issue in Scotland and Ireland may so far as temporarily authorised by the Treasury, and subject to any conditions attached thereto, issue notes, in excess, of any limit fixed by law, and those persons are hereby indemnified in respect of any issue beyond the amount fixed by law since 1st August, 1911, in pursuance of any authority by the Treasury or by letter from the Chancellor of the Exchequer.


I understand that the banks are perfectly satisfied with the arrangement?


I can assure the hon. Baronet that it is in pursuance and in accordance with the wishes of the Bank of Scotland. The banks of Ireland are also satisfied.


I desire to thank the Chancellor of the Exchequer for the attention which he has paid to the representation of the Irish banks. What he has proposed entirely meets our case, and we are extremely well satisfied. We hope that to-morrow, when the banks open, that business in Ireland will pursue its normal course, both as regards ordinary business and the employment of labour.


I think I rather promised yesterday to say a word to-day about extending the moratorium, and perhaps it would be for the convenience of the House if I made that statement now. We propose to issue a new Proclamation which will extend, and extend very considerably the area of the moratorium. The first Proclamation that was issued dealt with a very special emergency. It was, of course, understood then that the banks were to be opened on Tuesday, and with that view we thought it was incumbent on us to meet the desire of the market and to issue that Proclamation immediately. It was never our intention to confine the moratorium merely to that market. When the Bank Holiday was extended we had time to consult the various interests, and we have come to an understanding with them as to the extent of the general moratorium. We propose, therefore, to issue a new Proclamation, which will extend to all indebtedness, subject to a few exceptions. I will give the House the exceptions to the general moratorium. First of all, it will refer to all contracts made before the date referred to in the Proclamation—before 4th August—and it is proposed that the moratorium should come to an end on the 4th September. That is subject to further consideration whether it would be desirable to extend it. I think it is very likely that it will not be necessary to do so. Arrangements have been entered into with the banks and business interests which will enable business to follow its normal course on Friday next. That is the confident feeling, as the right hon. Gentleman (Mr. Chamberlain) knows perfectly well, of those who were present at the Conference.

The Proclamation will not apply to any payment in respect of wages or salary. It will not apply to matters like the Workmen's Compensation Act or any Act amending the same. It will not apply to any payment in respect of liabilities which, when incurred, did not exceed £5; any payment in respect of rates or taxes; any payment in respect of maritime freight—we were assured that it was quite unnecessary there, and that it would cause great inconvenience if there was a moratorium in that respect, because it would be impossible to pay wages. It will not apply to any payment in respect of any debt from any person resident outside the British Islands or from any firm, company, or institution whose principal place of business is outside the British Islands, not being a debt incurred in the British Islands by a person, firm, company, or institution having a business establishment or branch business establishment in the British Islands; any payment in respect of any dividend or interest payable in respect of stocks, funds, or securities (other than real or heritable securities), in which trustees are, under Section 1 of the Trustee Act, or any other Act for the time being in force, authorised to invest; any liability of a bank of issue in respect of bank notes issued by that bank; any payment to be made by or on behalf of His Majesty or any Government Department, including the payment of old age pensions; any payment to be made by any person or society in pursuance of the National Insurance Act or any Act amending the same, whether in the nature of contributions, benefits, or otherwise; any payment under the Workmen's Compensation Act, 1906, or any Act amending the same; any payment in respect of the withdrawal of a deposit by a depositor in a trustee savings bank. … These are the subjects which are excepted from the general moratorium. If there are any questions that hon. Members wish to put, I shall be glad to answer them.

Nothing in the Proclamation will affect any bills of exchange to which the Proclamation dated the 2nd August, 1914, relating to the postponement of payment of certain bills of exchange applies.


I desire to add only two or three sentences to what has been said by the Chancellor of the Exchequer. I believe that, after the deliberations and conferences held by the Chancellor of the Exchequer, the situation is well in hand. The object of all the steps which are being taken is to restrict the disturbance of trade and industry to the smallest proportions, and to enable trade to be carried on, as far as may be, in the normal way. No doubt there are different interests in particular matters, but it cannot be too strongly said that at this time the common interests of all classes is much greater to everyone than the separate individual interests of any one class. We all stand or fall together, to whatever class we belong. While it is necessary, in order that industry may continue and the ordinary industrial life of the country may be carried on, that general credit should be maintained and that the great banking institutions and others should be able to fulfil their tasks, the steps which are being taken are at least as important to the little men dependent on their daily work and their daily wages and to the small trader in his shop, as they are to the biggest financial interests affected by them.

I want to add one other word. The small man can get the help just as much as the large man. The smooth working of these arrangements will very much depend upon the extent to which every citizen in his own capacity contributes to the help of his fellows and to the help of the State. It cannot be too strongly said, as the opinion, not merely of the Chancellor of the Exchequer, as he expressed it yesterday, but of everyone whom he called into consultation, that any man who attempts now to hoard money or food is an enemy to himself and an enemy to his fellows. No doubt the very extension of the Bank Holiday, which was absolutely necessary to give time, has incidentally helped to restrict the supply of small cash at the moment. Small traders in all parts of the country got their ordinary Bank Holiday takings; then they received their takings on the other Bank Holidays, and the banks have not been able to receive the cash. I hope the Press will bring home to the traders of the country that if they lodge their spare cash with the banks in the ordinary way as soon as those banks are open, they will largely contribute to the smooth working of their own business and facilitate all the little transactions on which the convenience of the community depends. Again I say, and I say it with the authority, not merely of the Chancellor of the Exchequer and myself, but of all those whom he called into conference, that we cannot too strongly place on record our opinion that any man who attempts to hoard up cash or food is injuring the country, injuring his fellows, and injuring himself.


I quite agree with the well-chosen words of the right hon. Gentleman who has just sat down; but I should like to ask the Chancellor of the Exchequer whether there is any provision for the eventual retirement of the notes?

Mr. LLOYD GEORGE (indistinctly heard)

There is a provision for the retirement of the notes, but it depends far more on the arrangements made with the banks. It must be to the interest of the banks to retire when the occasion has passed.


The Chancellor of the Exchequer will understand my point. If there is an unlimited issue of these currency notes and no provision for their retirement, the effect will be to accentuate the hoarding of gold and the export of gold.


Inasmuch as the Bill has not been printed, perhaps I may be allowed to read the particular provision. [The right hon. Gentleman read the provision.]


May I ask whether the right hon. Gentleman and his advisers have considered the question of including rents—at any rate to a modified figure—in the moratorium?


The question of rents, of course, does not arise except in certain cases. There will not be any cases of the kind. But the idea with regard to the industrial classes was that you should exclude them from the moratorium both ways. Their wages are not included in the moratorium; compensation will not be included; national insurance will not be included. We try to keep the industrial classes outside the moratorium altogether. The same thing applies to their arrangements, both with their traders and with their landlord. I think it would be very undesirable that you should have an accumulated debt for rent at the close. That would really not be in the interests of the working classes themselves. We came to the conclusion, after considering the matter, that it would be desirable to keep the industrial classes outside the moratorium in respect of debts owing to them for wages, and in respect of debts owing from them.


With regard to the Bill which the right hon. Gentleman is about to introduce, I understood that it referred to Scottish notes and Irish notes.


Not merely.


Does it contain provisions with respect to the issue of £1 notes in this country?


Certainly. I thought I said that it was to carry out the proposal which I detailed to the House yesterday.

Mr. PRICE (indistinctly heard)

I wish to make quite sure that it will be known that no man can refuse the notes. In some cases I am sorry to say people have been demanding actual cash. Do I understand that the quantity of the additional notes issued by the Scottish banks will depend upon the reserve of the banks, or will it be up to the amount at call?


I desire to bring under the notice of the Chancellor of the Exchequer a matter which has just been brought to my attention. It arises from difficulties which have occurred in the case of large ironmasters in Scotland owning mines in Spain, whose London bills, owing, they say, to the moratorium, cannot be cashed at the Bank of Spain. They ask that some diplomatic intervention may be used to arrange that money deposited in the Bank of Spain here may be released by telegram at the office in Spain. It is most necessary to keep our public works going, and this is a case of great importance, especially to the West of Scotland, and should be dealt with at once.


The reason for the moratorium being declared is due to conditions over which we have no control. The moratorium has been declared in order to give those who had accepted the Bills referred to time, at any rate, to get over the various difficulties and to make the necessary arrangements. I think the hon. Baronet will find that as a result of the arrangements made by the bankers themselves that cases of this kind will now go through in the ordinary course.

Question put, and agreed to.

Bill ordered to be brought in by the Prime Minister, the Chancellor of the Exchequer, and Mr. Montagu. Presented accordingly; read the first time, and ordered to be printed. [Bill 361.]

Question, "That the Bill be now read a second time," put, and agreed to.

Resolved, "That this House will immediately resolve itself into the Committee on the Bill."—[Mr. Lloyd George.]

Bill accordingly considered in Committee, and reported, without Amendment; read the third time, and passed.