TRADING WITH THE ENEMY ACT (1914) AMENDMENT BILL.

HC Deb 30 November 1914 vol 68 cc683-725

Order for Second Reading read.

The ATTORNEY-GENERAL (Sir J. Simon)

I beg to move, "That the Bill be now read a second time."

It will, I think, be for the convenience of the House if I make a short statement explanatory of the provisions contained in the Bill. Trading with the enemy is a criminal offence by common law, and no Act of Parliament, therefore, is needed to create that offence. But, none the less, it was found desirable, at the beginning of the War to pass an emergency Statute—the Trading with the Enemy Act, 1914—in order to strengthen the common law and to improve the machinery available for applying it. The present Bill is a Bill to amend that Act, because, in the interval which has since elapsed, it has been possible, by experience, to find in what direction changes in the original Trading with the Enemy Act would appear to be desirable. May I just remind the House, briefly, of the provisions embodied in the Trading with the Enemy Act passed two months ago. There were three things in that Act which are important. In the first place it authorised and made effective Proclamations against trading with the enemy, one of which had been issued on the very day when war broke out, and additions to and alterations of which have been since made by Proclamation. In the second place, it imposed more severe penalties, and provided more summary machinery, for punishing those who committed the offence of trading with the enemy, whether that offence was an offence at common law or a breach of the Proclamation. In the third place, it contained provisions dealing with films and companies in this country which might need to be specially watched and supervised because of their predominantly German character. Of course, a limited company which is registered in this country, and carries on business here, is not the same thing as a shareholder who holds shares in it, or even as a director who directs it. From some points of view, such a limited company must be treated as being what it really is, namely, an English institution.

But on the other hand, of course, when the object is to prevent trading with the enemy, it is obvious that special care needs, to be taken if you have a company which, from some points of view, is British, but none the less is controlled by interests which are largely held by individuals who are subjects of the State at war with us. Therefore, the original Trading with the Enemy Act provided that where you had any partnership firm, one or more members of which was the subject of or resident in, or carrying on business in, the enemy's state, or a company with enemy control or shareholding to the extent of one-third, the Board of Trade might appoint an inspector who would have a right to examine the books of such firm, and who might go further and, in a proper case, when satisfied that an offence under the Act was likely to be committed, or for some other reason there mentioned, might appoint a controller to exercise powers rather like those of a receiver, the object being, in regard to those enterprises in this country which might need to be specially watched and guarded, to secure by inspection, or, it may be, by actual control, that the directors of such concern and those interested in it should not use the concern to supply the enemy with financial aid. Those were the three provisions of the original Act. Two months have passed since the original Act received Royal Assent on 18th September, because here we are now at 20th November, and as might have been expected in a subject which is at once so novel and complicated, experience has shown that there are certain directions in which the law might be improved.

I should like, quite briefly, to indicate to the House what are the principal changes which we recommend them to make in the existing law. In the first place, and this, perhaps, is the most striking feature of the new Bill, we propose to create an authority which will receive and preserve in safe custody in this country, some portion, at any rate, of that money and those other interests which, if they are not put under such custody, might find their way to the enemy's state. We propose in England and Wales to appoint the Public Trustee as custodian, but inasmuch as the Public Trustee is not an official whose ordinary activities extend to the whole of the United Kingdom we shall make special arrangements for the other parts of the United Kingdom, He will be called in this country "the custodian of enemy property." In the first place we propose that every dividend which, if we were at peace, and would be payable and paid to a shareholder who is an enemy, that is to say, whose address is in Germany or Austria—every share of profits which would go to a similar destination, and in certain cases also any payment of interest—should not be left as it is now in the ordinary custody in which it finds itself with the risk that it might after all be transmitted to the enemy, but that all such dividends, interests, and share of profits, shall be paid to the custodian who will give a receipt for them and who will hold them, responsible, of course, to this House and to the Executive.

I think that will be a provision which will give great satisfaction to some members of the public who, while, I am sure, quite sincerely anxious to pay their debts as time goes on in the ordinary way, none the less have felt a real concern lest in the case of a company, any dividend, or in the case of any other persons any share of profits, in discharging their own obligations, they might not quite unwittingly provide valuable aid to our enemy. So far as those provisions are concerned, they are compulsory provisions. They do not depend upon any application to the Court, or upon the will of the individual. It is an absolute condition so far as dividends and any share of profits are concerned that they are to be paid to the Custodian. It may be said, "Yes, but if you have got a company here which is controlled by directors who are Germans or Austrians, a company in which the predominating interest is not British but is hostile, what is the good of saying that the dividends or any share of profits are to be paid to the Custodian? Will not the flank of your Act of Parliament be turned by those who control such an enterprise deliberately refraining from declaring a dividend or distributing the profits?" In order to meet that which appears to us a criticism of real force and importance, we go on to provide that the Board of Trade official, the inspector or controller, who was appointed under the original Bill, shall have the right in a proper case of directing what is the proper sum so to hand over to the Custodian, and shall even go to the length in a proper case of indicating what is the dividend that ought to be paid. That is the first part of our proposal so far as it relates to the Custodian.

At first sight, it might appear that you could usefully extend this provision to every kind of payment which was going to be made to an enemy. I would point out to the House at once that there is one absolutely fatal objection to such a proposal. The only way in which you can enforce the provision I have just described is by imposing a stiff penalty upon people who fail to comply and treating it as a criminal offence to fail to comply with it. If you attempt to place in the Custodian every right and claim of every sort which a person, say, in Germany at this moment may have against British subjects, these two consequences will follow: First of all, you will be compelling a number of British subjects to find money to pay over to the Custodian, when the person to whom they owe the money could not compel them to pay so long as the War goes on; and, in the second place, you will be making it a criminal offence to fail to pay what might be regarded as a debt. It is not a criminal offence to fail to pay your debts. It may lead you to the Bankruptcy Court, but it will not land you in prison because you are unable to pay your debts. Therefore, it is necessary to limit our provisions so far as their compulsory character is concerned to the dividends, interest, and share of profits which are defined in the Bill.

We propose that the Custodian shall also be at liberty to receive and shall indeed be required to receive other sorts of payment if application is made to the Court for the purpose, and we suggest that application might properly be made by any private person interested. There may be cases, for instance, where the debtor himself would be very glad to get rid of his liability by paying the money into such custody as guarantees absolutely that our enemy cannot be benefited. Again, an application might be made by the Custodian. A Government Department might get information that it was highly desirable to transfer such a sum into his custody. And, thirdly, application might be made on behalf of the Board of Trade or some other body. That is not a compulsory provision such as the Provision I first described, and I think it necessarily involves an application to the Court. I am heartily sorry that it should be necessary to introduce machinery so elaborate, but I trust it will be possible by the rules which will be made to reduce the elaboration to a minimum. It is obviously necessary that you must have an order made vesting such property in the Custodian which defines what the property is, otherwise your Public Trustee will not know what property in this country is vested in him, and what property is not.

I come to a third point. So far I have spoken of property which belongs to an enemy, meaning, of course, as one always does in this connection, those who are residing or carrying on business or who are in an enemy country. It has been pointed out to those who have been considering the drafting of this Bill that you do not necessarily go very far because you only transfer to the Custodian the interests of shareholders who in the books of the company registered here are on the face of it persons residing or carrying on business in the enemy country, because although, of course, there are a great number of Germans and Austrians on the Continent who do hold shares in British companies, it very often happens that they do not themselves appear upon the share register, but for purposes of obvious convenience have somebody in this country who is entered as the owner of the shares, but who, as a matter of fact, is a mere trustee or agent for collecting their dividends. We here are not concerned with the interests of trustees. We are aiming at stopping by every reasonable means the transmission of money, or the creation of credit which can be of advantage to the enemy country, which will catch those dividends which are paid to the mere trustees or agents in this country for those in the enemy country, as well as the dividends which are transmissible across the sea. We propose to do that by providing that everybody in this country who holds property in trust, or manages it, or collects proceeds in respect of it for an enemy—that is to say, for a person in Germany or Austria, and now Turkey—shall be required, under a penalty, to declare that he does so in order that an application may then, in a proper case, be made for transferring his interests, although it stands in the name of a trustee here, to the Custodian, just as that would be done supposing there were no intervening trusts at all. That is the third point.

I come now to the fourth point about the Custodian. I may be asked what is the effect of paying a sum of money, which would otherwise be due to an enemy, to the Custodian. Nobody wants to pay twice over, and before you can reasonably ask a man to pay something which belongs to the enemy to the Custodian he wants to be quite clear what his own position would be in view of the fact that he has paid it to some third person, and not the person to whom it was originally due. It is no part of our intention at all in this Bill to go in for indiscriminate confiscation. It is a matter of the greatest possible importance, both for our credit as a commercial nation and also in order that we may comply with the obvious rules of good faith and fairness which we set up for ourselves, that there should be nothing which in the least resembles indiscriminate confiscation involved in this Bill. What we are doing is this: we are preserving this property. We are not confiscating and, of course, we are not destroying it. We are preserving it to the end of the War, and what is going to happen to the property at the end of the War is a matter to be very properly decided at the end of the War. Consequently we have provided as regards the receipt this: The Custodian, when he receives property under the terms of our Bill, whether it be dividends, interest or share of profits, or any other kind of property to which I have referred, by giving his receipt will discharge the man who owed the money as between that man and his original creditor. Of course that will only operate in the Courts of this country—we can only legislate here for what is to happen here—and when the happy day comes when terms of peace can be discussed it will be for those who conduct those negotiations to secure that as we have preserved enemy property by this process we shall then get a proper arrangement by which it may be handed over to those to whom it belongs, on being satisfied that our interests in the enemy country had been similarly dealt with, or deal with it otherwise, as the case may be.

There is one further use to which we think it right to put the money which is thus collected by the Custodian. A great and practical difficulty has arisen in many cases since the War broke out, because there are many persons in this country—merchants, traders, shopkeepers and others—who have supplied goods on credit to those who at this time are enemies fighting against us. Probably all of us have had such cases brought to our notice. There is a very great practical difficulty in dealing with those cases. You obviously cannot allow people to go and help themselves to such property as seems to be lying about in the country belonging to the enemy whom they describe as their debtor. Obviously the creditor has to prove his debt in some way. There is at this moment a case before the Court of Appeal as to how far it is possible in the time of war to prove your claim against an enemy. In this Bill we have provided that when the Custodian has got in his own hands property which is paid to him as representing some given enemy creditor, that property shall, under the direction of the Court, be available, so far as it will go, to pay this debt or that debt which is owed by that enemy creditor. I think it will be possible by that means to work out in many cases what is undoubted justice, and to use the property which is now in this country, or dividends which are now in this country belonging to a particular German, for example, even though war is going on, in order to discharge that German's just debts to other persons in this country who are pressing for their money. So far, I have been describing as best I may our provisions with regard to the Custodian. That, the House will find, is the subject dealt with in Clauses 1, 2, 3, 4, and 5.

I pass to the other principal provisions of the Bill, but before I do so perhaps the House will allow me to refer them to two of those provisions in the Clauses I have been trying to summarise. May I just read the Clause which deals with the receipt of the Custodian? We propose to provide in Clause 5, Sub-section (3), that the receipt of the Custodian … for any sum paid to him under this Act shall be a good discharge to the person paying the same as against the person, or body of persons, in respect of whom the sum was paid to the Custodian. The House will see that that effects a perfectly good discharge as regards the person in this country owing the debt. The other part of the Bill which I will read—I read this part with some trepidation—is the part which precedes the first Clause, that is the Preamble. This is a Bill of which the Preamble is a decidedly important part. We have so drawn the Preamble as to make it plain, I hope, not only to our own people, but also to neutrals who are watching to see how we are dealing with enemy rights, and to the enemy himself, what is the spirit in which we desire to deal with this matter. The Preamble which we suggest to the Bill is this: Whereas it is expedient to make further provision for preventing the payment of money to … enemies, in contravention of the law relating to trading with the enemy, and for preserving, with a view to arrangements to be made at the conclusion of peace, such money and certain other property belonging to enemies. I hope that by putting that upon the face of the Bill as the introductory matter inspiring the Clauses which follow, it will be made entirely plain that we are not here engaged in any spirit of confiscation. On the contrary, our object is to preserve this property and to preserve it till the end of the War, in order that it may then be dealt with as is fair and just. So much for the Custodian.

I must mention some other provisions of the Bill of a very far-reaching effect which will undoubtedly make the law against trading with the enemy more stringent than it is to-day. The first of these other provisions is contained in Clause 6, and that Clause is designed to deal with this situation. It has become quite clear in the course of these three months of war that though transactions between Germany—I will use Germany as an illustration—and this country are of course prohibited and are impossible so long as those transactions take place directly, none the less there is a very considerable transference of claims which Germans have against this country taking place from Germany to neutral countries. To give a simple illustration, a German merchant in Hamburg may have a claim against a merchant in London. He cannot, of course, enforce his claim while the War is going on. Our Law Courts would not, I imagine, be open for any such purpose. Any attempt by the London merchant to pay would be an obvious breach of the law, and I am sure it is a thing which, speaking broadly, we may be confident our commercial community may be trusted not to do. But what happens is that there is some transfer or assignment of the claim which the German has got to a neutral country, it may be to a Dutchman, or an Italian, or a Swiss, and once the claim is assigned there is, in very many cases actually occurring, a claim put forward by a neutral against the London merchant for the payment of the debt. I think it is quite clear that we ought to do what we can to stop that, because if it is a proper policy to prevent it if it is done directly, it cannot possibly be a proper thing to allow if it is done indirectly. I do not represent that we shall succeed in stopping this altogether, but the Clause which we have inserted in the Bill will, I hope, go a very long way towards it. The same thing is true about bills of exchange. I hope the hon. Baronet (Sir F. Banbury) and others interested in the matter from the point of view of the City of London will examine closely our provision in that regard. Of course, it would be a most foolish policy for us to go and destroy the great reputation which Bills drawn upon London at this day possess. It would be a most idiotic proceeding to imagine that you were going to do some temporary good at the expense of the reputation of London as a place where, if a Bill is drawn upon it, it is as good as the Bank of England, and indistinguishable from the Bank of England. But at the same time if you find that a neutral bank is endeavouring to collect on a London acceptance which has been transferred for collection to a neutral bank since the War began by a holder who was an enemy, I cannot but think that that is a case which might very properly be dealt with as far as we can, and consequently we have a provision in the Clause to deal with that case too. That is the next considerable provision which I think the House will find is certainly likely to have a large and important effect.

I come to another thing. Here is another way in which experience has shown that the enemy is able, in spite of our law, to finance itself while the War is going on. There are a great many Germans and Austrians in Germany and Austria who hold shares in English companies. The same is true the other way, of course. There are a great number of English shareholders in certain German concerns. Gas companies, and other municipal companies in some of the big German towns are companies in which English shareholders have very large interests. But I am speaking of the reverse way. Of course, the enemy shareholder in an English company cannot sell his share to an Englishman. That would obviously be trading with the enemy, and it would be immediately found out and punished. But what he can do is to sell his share to a neutral. That is merely done by executing a transfer from the German as transferor to the neutral as transferee. That, of course, is not trading with the enemy, because it its trading between the enemy on the one hand and a neutral on the other, and the neutral having acquired that share—which may be for valuable consideration for ought I know, but it may be really as part of an underhand bargain—can present that share transfer to the secretary of the English company and, as the law now stands, I do not see how the secretary of the English company can refuse to alter the share register, and to enter as a shareholder the neutral name instead of the enemy name. It is a common provision certainly in the articles of English companies that upon the presentment of a properly executed transfer of shares the company undertakes and promises that it will transfer the share to the new name without asking questions. That is obviously a way in which German shareholders in English companies may be able to finance themselves in a time when we hope and believe there is a certain amount of financial stringency being felt across the water. Therefore we propose to provide in Clause 8 that no transfer made after the day this Bill is introduced by or on behalf of an enemy of any securities shall confer on the transferee any rights or remedies in respect thereof, and that no entry shall be made during the continuance of the War in the books of any company in the United Kingdom of a transfer of the share which at the date named stood in the name of the enemy. By that means we believe we shall succeed in stopping what experience has shown during the last few months to be a very serious source of leakage at present quite unprovided for by the law.

Mr. STEEL-MAITLAND

May I ask a question which has been put to me by some people in relation to English companies. Up to this date is there any question as to the validity of the transference of a share held by an enemy, either to a British subject or to a neutral?

Sir J. SIMON

I will take first the case of a transfer since the War began, but before this date, from an enemy shareholder to a neutral in an English company. That transfer is quite unchallengeable. Of course, the neutral is entited to acquire it. It would be doing a very wrong thing, I think, regarding our duty towards neutrals, if we threw any question at all upon his title. Moreover, in the meantime he may have resold, and resold it to an Engishman. The other case put by the hon. Gentleman is the case of a transfer from an enemy shareholder, not to a neutral but to a British subject. If he will give me any such case since the War began I will undertake to prosecute the British subject.

Now I come to another provision in the Bill which has been pressed upon us and which I think the House will see is reasonable in itself. A number of enterprises which are German in character—I only use the word German for convenience as meaning an enemy—have endeavoured to transform themselves in a very strange way since the War began, and they have done it by registering themselves at Somerset House in the form of a limited company.

In some cases a new company has been formed with the express object of taking over a German enterprise which was not prepared to continue on its old footing. In other cases a company has been formed and nothing has been said as to the reason, but it has subsequently acquired such an interest. We propose to provide in Clause 9 that during the continuance of the present War, when application is made to register a new company, the Registrar of Joint Stock Companies shall have filed with him a Statutory declaration made by a solicitor that the company is not formed for the purpose or with the intention of acquiring the whole or any part of the undertaking of an enemy. Or, of course, it may be, instead of that, that a licence has been given by the Board of Trade because in some special cases it is right that such a company should be formed. I think that will relieve the public mind from some very natural anxiety, because, certainly, my own correspondence, and I have had something to do with it, shows that a good many people are much exercised in their minds at what they believe to be the rapid creation of new legal entities—incorporated companies—which really represent in disguise enemy interests.

I have only one other thing to mention, and it comes towards the end of the Bill. We propose, further, to extend the definition of trading with the enemy to cover cases which it does not now cover. I will mention two instances: It is an offence to trade with the enemy, and by principles which are familiar to the English law, if it is an offence to do a thing it is also an offence to attempt to do a thing. But such is the curious refinement of those who have developed our criminal law that it does not always follow that it is an offence to offer to do it. It all depends on whether your offer gets so near to the doing it that it may fairly be regarded as an offence. It is an offence to murder a man, it is an offence to attempt to murder a man, but I think it would be a strong proposition to say that always, in all circumstances, it is an offence in a lighthearted way to offer to murder a man. In dealing with trading with the enemy we are dealing with an emergency which makes it necessary that an offer to trade should be made into a crime. It happens sometimes that correspondence is available which shows that some discreditable individual or other, though not indeed trading or attempting to trade with an enemy, has been writing letters in which he angles a little for possibly illegal business. We should like to make it quite plain and beyond all doubt that anybody who attempts or offers to trade, or invites a tender, with an enemy comes within the purview of our law, and shall be no less guilty than a person who succeeds in committing this most discreditable and most unpatriotic offence.

There is another thing which has been found. This device has been hit upon by certain persons. It is an offence for a man in London to trade with a man in Hamburg, but cases have arisen in which we have, at any rate, had reason to suspect that a man in London has not been above acting as an intermediary in order to find some neutral to carry on trade with a man in Hamburg which was previously carried on by himself. If he does that, he is not trading with the enemy. He is acting as a sort of register office for the business, but in substance he is just inflicting the same wound on his country's interests as he would be inflicting if he traded with the enemy himself. We propose to proceed further and make that an offence, so that the person shall be held to be acting as an intermediary in such a case as that. These are the provisions of the Bill. I am afraid it has rather a formidable aspect for an emergency measure, consisting, as it does, of twelve Clauses, but it is the result of a great deal of consideration and conference, in which I would like to say I have been very much assisted, confidentially, by some hon. Members in all quarters of the House. It is a sincere attempt to strengthen the law relating to trading with the enemy, and to make it more effective than that which exists to-day, without, at the same time, either confiscating enemy property, on the one hand, or doing a great injury to British trade on the other.

It is very easy for the public, and, I say with all respect, it is very easy for the newspapers, to insist that more stringent regulations should be made, and to suggest very stringent regulations; but, after all, we have to think about more things than one, and it is possible to make regulations so stringent and severe that in the end, when applied all the way round, you would do as much damage to this country as to the enemy. We have endeavoured to carry our law up to the extreme limit of what can be done without damaging our own interests and industries. I have only to say, in conclusion, that I believe most of the provisions of this Bill—not all of them—could have been effected by Proclamation without coming to the House of Commons for express permission, because the powers under the previous Trading with the Enemy Bill are very wide. I did not think it right to amend the law by Proclamation further than was necessary since Parliament was sitting, because I fully realise that the public interest in this subject is very great, and that it is inspired by sincere patriotic feeling. For my part, I think our object should be not indeed to harry and worry every innocent German or Austrian who happens to be living in our country, but to make it our business by every means in our power that the trade they and we carry on shall not, by any possibility, result in adding to the financial strength of the enemy with which we are at war. That result will be made more perfectly clear by this Bill than by the Bill we have already passed.

2.0 P.M.

Mr. MORTON

Will the right hon. and learned Gentleman tell the House the effect of Sub-section (3) of Clause 12 as to Proclamation?

Sir J. SIMON

It means that, in view of the facts and the experience we have had, we needed to modify the regulations several times; and that, in view of the fact that Parliament might not be continuously sitting, it is necessary to make it quite clear that in legislating here that does not limit the right to deal by Proclamation, which was given in the earlier Bill, to make more offences criminal. It does not, on the other hand, limit the right of the Executive in a given case to licence a particular transaction which would otherwise be criminal. It is in order to preserve the necessary elasticity which might be thought to be jeopardised by the fact of our introducing this Bill.

Mr. STEEL-MAITLAND

I wish, in the first place, to express to my hon. Friends that they need not be deterred from supporting this Bill on account of its formidable aspect. The only commentary that could be made on the subject is that it might have been better if this Bill could have been introduced a little earlier, if possible. But we know and recognise the difficulties there may have been in the way. I am sure everyone will realise the great difficulty of dealing with this subject. In the first place, there are delicate matters involved in connection with the industrial and financial interests of the community; and, secondly, the principle which the Attorney-General has laid down is one in which everyone will concur, namely, that there is no wish to deal any blow at any individual trader, but rather the one main object throughout is to safeguard the full interests of this country and to protect the resources of the country in this emergency. There are some points in the Bill which I am quite certain many of the trading community will welcome with the greatest thankfulness. It has no doubt been the experience of many. It was been my own experience. One or two firms which have been speaking to me on the subject have themselves expressed a wish from time to time that they should pay the debts which are due to enemy firms trading in this country, and at the same time they could not do so with safety not knowing where the money so paid will go. In one given instance, which I merely give as an instance, a blank refusal was given to pay the debt, but at the same time a special account was opened with the bank in a special name and the money representing the debt was paid into it.

The firm that did that took the risk of what I think was then an illegal refusal to pay a debt, and I think that their action was probably justified in the light of the Bill which has just been brought in. In the second place, I am quite sure that it is an absolutely necessary provision to put the onus on the individual to disclose whether he is acting as a trustee for an enemy holder or not, and there has been a great deal of anxiety on that score. I have been through the list of shareholders of a number of companies the trading of which has been in question, and that was a point of very great difficulty to all of us, and we were exceedingly anxious that the onus should be put upon them, because it seemed quite impossible to attain the object of the Bill otherwise. I would now put, quite briefly, one or two points, for the consideration of the Attorney-General, and not wishing in any way to be antagonistic. The first is whether it would not be worth the consideration of the Attorney-General to make the Bill retrospective in one or two ways. To make measures retrospective more than is possible generally is an enterprise which creates greater disadvantage than advantage, so that caution should be used from the outset. But I think that it is worth consideration in regard to one or two points. I am not sure whether it would not be advisable to have placed under the charge of the Custodian all moneys already paid into the account of an enemy company from the date of the declaration of War up to the date that the Bill is brought in. If I am in error, perhaps the Attorney-General will correct me, because I only got the Bill late last night and I had very little time to consider it. I have consulted beforehand with some friends of mine, who, I know, were in consultation with him on this side of the House, but owing to the lateness of the Bill I have not been able to consider it as fully as I could wish.

Sir J. SIMON

I do not want to interrupt the hon. Member, but I really do not quite follow, and I must follow if I am to take advantage of his suggestion. Of course, "enemy" in this connection means throughout, as the hon. Gentleman knows quite well, persons or bodies of persons resident or carrying on business in a country with which His Majesty is for the time being at war, and necessarily so, because it is transmitting to that country, or creating credits for that country, which assist that enemy. When the hon. Member says "enemy company," does he mean a company registered in this country which has got, let us say, a number of directors who are German subjects?

Mr. STEEL-MAITLAND

Yes, I mean a company it may be registered in this country and where—let us put the strongest case—the bulk of the control of the company is quite without question in the hands of individuals who are enemies though the "persona" of the company is English.

Sir J. SIMON

Then what is the suggestion?

Mr. STEEL-MAITLAND

That power might be taken in those cases for moneys standing to the credit or paid to the credit to be under the control of the Custodian. There are two other points as to which I want to ask. The first is this: Suppose that a company is wound up, would there be any power for the Custodian or any other person to insist on its being carried on? There are certain products made in this country which are of rather vital importance. Suppose it were wished to continue carrying on a company which may be English but which is under German control, would it be possible to arrange for that company to be carried on?

Sir J. SIMON

The hon. Member will forgive me interrupting him again. The point which he raises is an important point. It is not only provided for, but the provision is already being taken advantage of in one case. It is in the original Bill which has been law for the last two months. It provides that where it appears to the Board of Trade, in reference to any company, that the control or management of that company has been or is likely to be so affected by the state of war as to prejudice the effective continuance of its trade, and that it is in the public interest that the trade should be carried on, the Board of Trade have power to take control of it. That has actually been done in the case of the manufacture, in the North of England, of an extremely important material, in a case in which it would be most prejudicial to one of our great industries should that manufacture cease.

Mr. STEEL-MAITLAND

I apologise to the right hon. Gentleman. I was talking the matter over with some of my business friends and they omitted to call my attention to that. There is only one other point, and that is with regard to continuous contracts. It is not absolutely material to this Bill, but is connected with it. I will put a case, not from the legal point of view, but from the point of view of the actual business men concerned in matters of the kind Say that an English firm has a contract with a railway company or other industrial entity in this country. That contract is to be carried out by instalments. One part is to be done this year, another next year, and another in the third year, and it may run on for a number of years. They sub-contract with a German firm—shall we say a company actually in Germany, not merely a British company with German shareholders—for portion of the work. Obviously while we are at war that German firm cannot carry out work in this country. What happens? The English firm which has undertaken this contract at the start is placed in a position of great difficulty. If it goes ahead and wishes to make fresh arrangements, and then peace is declared, it is afraid that the original contract might then be operative, as it is made for periods which may be subsequent to peace bring declared. I have been asked to put that point, and if the Attorney-General can reassure me upon it, it will save anxiety on the part of some people who are at this moment wondering what is their position with regard to contracts of the kind.

Sir CLIFFORD CORY

I should like to say a few words on this Bill, in no hostile spirit, but rather by way of criticism and suggestion. There is much anxiety amongst traders in this country in regard to this question, which has been dealt with in a way rather disturbing to their interests. If this Bill were amended in certain directions it might have the effect of preventing certain disadvantageous results in the future. In regard to the provision which was made in September, and which gave control and power to realise assets in German and Austrian banks in this-country, it is known in the City that declarations were made by neutral subjects stating that certain assets had been transferred to them before the War broke out, and those securities have been in some cases given to those transferees; otherwise, they would have been available for the payment of debts due to British creditors if they had not been parted with in that way. I have no doubt-that the learned Attorney-General is aware that they found their way back through neutral subjects into Germany. A great deal of difficulty has arisen with regard to the traders in this country getting their debts paid out of assets belonging to German subjects in this country. The Registrar of joint-stock companies does not seem to have done his duty. In Section 274 of the Companies Consolidation Act (1908) it is laid down that any foreign company doing business in this country shall register itself, and the penalty for not doing that is £50, and £5 a day so long as the offence continues.

The Registrar does not seem to think that it was his duty to insist on that being carried out. A letter was addressed to him by a firm of solicitors on the subject, and the Registrar replied that it did not fall within his province to do other, under the Section, than to register such papers as might be presented for that purpose; but if his attention were directed to any company who failed to comply with this Section, he would endeavour to secure compliance with it. It is a curious thing that a private individual or company was under the necessity of bringing before the Registrar such a question in regard to his duty. The traders of England are very much prejudiced by these companies not being registered here, and they are in the position that, in order to get debts paid, they have to issue a writ and get judgment. The consequence is that the companies which have not been registered in this country cannot have a writ issued against them, and can only be reached through diplomatic channels. In as much as the War has broken out, the ordinary diplomatic channels are no longer available, and there is no way of getting a writ served and of obtaining ultimate judgment. In Scotland, I understand that the law is very much more favourable to the trader than it is to the trader in this country. In Scotland, the assets can be arrested and judgment obtained afterwards. In this country it seems to be impossible to obtain payment of debts of this description. Clause 5 of the Bill provides that The property held by the Custodian under this Act shall not be liable to be attached or otherwise taken in execution, but the Custodian may, if so authorised by an order of the High Court, or a judge by whose order any property belonging to an enemy was vested in the Custodian under this Act, or of any Court in which judgment has been recovered against an enemy, pay out of the property paid to him in respect of that enemy any debts due by that enemy and specified in the order. But the difficulty of the English trader is that he cannot get judgment; there is no process by which he can obtain judgment. My suggestion to the Attorney-General is that some Clause should be inserted in the Bill under which the English trader would be in a position to serve a writ and get judgment. Otherwise, it is not a bit of good, so far as he is concerned, that the Custodian should be collecting all these moneys due to enemy firms if he has no means of getting his debts paid out of them.

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Mr. J. M. Robertson)

Will the hon. Member look at the end of Clause 4?

Sir C. CORY

Clause 4, giving power to vest enemy property in the Custodian, says:— The High Court, or a judge thereof, may, on the application in accordance with the rules of Court of any person who appears to the Court to be interested … vest in the Custodian any property real or personal"—

Mr. ROBERTSON

The words to which I refer to are and may by the order confer on the Custodian such powers of selling, managing and otherwise dealing with the property as to the Court or judge may seem proper.

Sir C. CORY

But the question I should like to put to my hon. Friend is, whether the Custodian, without a judgment, would part with assets in this country belonging to alien enemies?

Mr. ROBERTSON

You must get judgment.

Sir C. CORY

Yes; that is what I said. A writ would have to be served, and there are no means, so far as I am advised, by which one can serve a writ in order to-get judgment. That is why I want a special Clause inserted in the Bill to obviate that difficulty. In Scotland they have powers which I submit ought to be obtained in England. Also in America there are powers and there was a case the other day against the Hamburg-American Steamship Company, in which judgment was obtained in New York. Ours seems to be the only country in which one is not able to do that. The suggestion is made that the difficulty might be overcome by the trader availing himself of the scheme which the Government brought forward to lend money to traders who have large sums owing to them by enemy traders; but the English trader in this country does not want a loan, with the expenses of interest and commission, bill stamps, and things of that sort. He proposes to get these debts paid in the ordinary way. I do not know whether it would be possible for the Government to put a Clause in the Bill which would put the Custodian or Controller in much the same position as a receiver in bankruptcy, and in which he could collect the assets belonging to the alien enemy—and with the proceeds liquidate debts due to English traders. In the cases of acceptances there would be no difficulty of proof, because the acceptance itself is proof of debt. I know this would be a great relief to traders throughout the country, and I hope some Clause will be put in the Bill by which creditors will be able to serve writs and get judgment and payment of the debts due to them.

Mr. CAVE

I want to add a few words which will be mainly in the direction of recommending the extension of the Bill, which I entirely welcome. In regard to the branches of foreign firms, the House knows that where a foreign firm has a branch in this country, that branch stands upon a better footing than the principal firm abroad, and great difficulties arise, and have arisen, in dealing with cases of that kind. I should like it made clear in the Bill that the branches of foreign firms stand on exactly the same footing as the principal firms; otherwise a great deal of money might find its way to a hostile country. Clause 2 of the Bill vests in the Custodian dividends and interests only, but I am one of those who think that the Clause might go further and vest in the Custodian the debts owing to an enemy trader. The effect of that would be that the money would be available for the payment of enemies' debts in this country. It is very-desirable to obtain that, and the effect might be to wind up a good many outstanding liabilities which at present cannot be satisfied in any way. There is nothing in the Bill which has that effect.

Mr. WATT

Did not the Attorney-General say there was?

Mr. CAVE

On the contrary, I think the Attorney-General said that could not be done. The right hon. Gentleman said that if you provided for the vesting of debts in the Custodian, the effect might be that it would be a criminal act not to pay the debts. I do not think that need be so. The only effect of the change I suggest would be to make the Custodian the creditor instead of the foreign enemy, and therefore the Custodian would only have the civil remedies for the recovery of debt, and no question of the criminal law would arise. I think that meets the objection of the Government to the proposal which I am supporting. I hope the matter will be reconsidered, because it really is much more important to deal with these capital debts, such as an account in a bank, or a business liability which may be of a large amount, than to deal with only small sums, which may come in by way of dividend.

The next point to which I wish to refer is in reference to Clause 6, which avoids transfers or shares and securities and liabilities, but only from to-day or yesterday. I do think that to some extent that provision might without injustice be made retrospective, because we all know that transfers have been made during the last three months by alien enemies of shares and property in this country. I do not in the least want to shake the title of persons who have taken transfers in good faith and for value. I think, whatever the motive of the enemy may have been, those transfers ought to stand, even although the proceeds and consideration sometimes may have gone abroad. While we cannot shake the title of persons who gave value, I think it would not be unfair to put upon those who have taken transfers and shares and securities from alien enemies the burden of proving that they have acted in good faith and have given value. If you did that the person who purchased those shares in good faith would not have the least difficulty in showing that that was so, and his title would stand. You would be able, however, to look into the matter, and find out whether there are not such cases, and I believe there are many cases of transfers which have been made by the enemy, not for value, although value may appear on the document, but did not really pass, and those transfers, it seems to me, ought to be voided. There is a precedent for what I am suggesting. Under the Bankruptcy Acts settlements made within a certain time before bankruptcy are void unless it is shown that they are made in good faith, and for value. You may apply the analogy of that case to this measure, and make the same provision with regard to transfers since the War broke out.

The only other point I desire to make is this. The Bill does not deal with contracts. There are, of course, many continuing contracts with enemy firms abroad. The Bill does not begin to deal with matters of that kind, and I know it is very difficult indeed to deal with them. Still it is true that contracts are running that cannot be performed and that breaches are committed, of necessity, by one of the contracting parties—the one in this country. Damages may be running on, and interest may be running on, but the contracting party has no remedy. He cannot perform his contract, because it is contrary to law to do so. I think some provision might be made for dealing with that particular case, although I know it is very hard to do so. Many proposals have been made, and I have no doubt the hon. Gentleman has heard of many. I hope before the Bill comes on in Committee that the Government will reconsider that point, and endeavour to make provision, either by suspending such liabilities, or by transferring them to custodians or to some controller or in some other way, so that no penalty may fall upon Englishmen for failing to perform a contract. Those are the points I ask the Government to consider.

Mr. MORTON

I do not rise for the purpose of opposing the Second Reading of this Bill in any shape or form whatever. On the contrary, I am glad to know that in London and throughout the country we have the Government to carry on the business of the country. I am glad to know also that in the City of London, which may be said to be a Tory place, entire satisfaction is expressed in favour of the way in which the present Government is carrying out the business of the country. I mention that because I want to ask the Government to do something for the City of London. I propose to mention two cases which, if I get the opportunity, I hope to bring before the Committee in the shape of Amendments. One is with regard to insurance companies, and that applies not only to the City of London but to the whole of the country, because there are insurance offices in other places besides the City, which have treaties or contracts in regard to reinsurance and with Germany principally. They are in this difficulty at the present moment, and this is where they want help, that they do not know what they have to do under those contracts, and whether they are alive or not, and they want to have it made certain what their position really is. We know that the Trading with the Enemy Act and the Proclamations have put us all under the most severe provisions as to penalties in case we trade with or assist the enemy in any way whatever. I quite agree with that, but the question is, where a difficulty arises, whether Parliament ought to give us the necessary relief so that we cannot be punished for obeying the law of the land as we might be in cases which I could mention, and which I hope to bring before the Committee. With regard to the insurance companies, I need not dwell on the point as I hope to have the opportunity of going into it in Committee. I did take the opportunity of consulting the Attorney-General, and I have consulted those whom he advised me to consult. I hope, therefore, that the matter will meet with his attention on that ground if on no other.

The other case which I wish to mention is with regard to paving contracts in the City of London. The customary procedure in the City with regard to asphalt paving has been to make contracts, not only for laying the paving, but also for keeping it in repair, and sometimes for as long as fourteen years. The corporation pays so much per square yard per annum. We have a case at present, and that is why our attention has been drawn to the matter, where we owe about six or seven hundred pounds to a company which we now know is practically German. Besides that we have a contract which will run for seven years amounting to £1,400 per year, and the question is, what are we to do? We write to the Government, and they do not give us any assistance. We do not know whether we ought to pay the money, or whether we ought to allow the work mentioned in the contract to be carried on. I was glad that the Government decided to bring in this Bill, and I hope that Amendments will be inserted in Committee which will make quite clear the position of the contractor in the cases I have mentioned.

This is what the corporation desires—that the definition of "enemy character" should be extended so as to include companies and firms, the directors and shareholders of which are predominantly German, or resident or carrying on business or trading in any country with which His Majesty is for the time being at war, notwithstanding that such companies are registered in this country. This registration of companies in this country is one of the difficulties with which we have to deal. It is practically a sham. They are no more British companies than anything else outside Britain that you might mention. The corporation also desires His Majesty's Government to obtain power for the determination of contracts with companies for the supply of goods imported from any country with which this country is at war, or manufactured, or partly manufactured, in any such hostile country, and for the determination of contracts with companies which are, or were, on and subsequently to the 1st January, 1914, under the management of, or a majority of, whose directors or shareholders are, or were, during the said period, born subjects of any such hostile countries. If that were done, a committee of the corporation think that it would give some relief without inflicting any injustice upon anybody.

We have no sort of ill-feeling against the company to which I have referred. If it were not for the War, we should only be too pleased to continue the contract, and to pay them as speedily as possible, as we have always done. But we say that we ought, in the first place, to know exactly what the law is, and that, as the Trading with the Enemy Act is to be strengthened, we ought to be shown definitely what we are to do to relieve ourselves of any claim for damages or compensation that might be brought against us after the War. I mention these matters because I intend to put down Amendments dealing with them in Committee. As we are most anxious to be loyal, not only to the King, but to the Government, and to do all we can to assist them in carrying out the duties they have to perform, I hope the Government will give us their assistance in putting these matters right, bearing in mind that no party is opposing them, but that we are all endeavouring to work together to carry on the business of the country in the best possible way.

Mr. WATSON RUTHERFORD

Our only object is to make this Bill as good a Bill as possible, and I hope the Government will believe that, in any remarks I may make, that is the object I have at heart. My objection to this Bill is that it is not severe enough, that it is not strong enough, and that it does not go far enough. I notice in the Press this morning that the Attorney-General has been having a serious struggle in the Court of Appeal as to the meaning of the words "alien enemy." I certainly think that if, instead of the words that are in the recital of the Bill, there was some proper definition as to what is an "alien enemy" it would prevent any difficulty of that description. If we are obliged to take "alien enemy," as defined here, as a person resident or carrying on business in a country which is at war with us, I can see perfectly clearly that a considerable number of English firms and persons would come within the definition. We have a number of companies in England consisting of English shareholders and whose money is English which are operating to-day in Germany and Austria-Hungary. I myself know of two or three of these companies. It would be absurd immediately to put these companies into the category of enemies of this country. It is a ridiculous position in which they should find their contracts and their money. Yesterday the Attorney-General was endeavouring to argue that the Act of which this Bill is an Amendment would apply, and that these companies would be alien enemies provided they had any residence or any business in a country which was at war with us. I trust that the Government, especially now that they have already got into serious difficulty in the Law Courts in regard to the definition of "alien enemy," will carefully consider this point. I think we ought to have in Committee a Clause inserted defining the term in such a manner that there can be no possible mistake. The object of this Bill ought to be to protect British subjects, British capital, and British money, and at the same time to prevent, during the War, pecuniary and other advantages getting into the hands of hostile countries. If that is properly done, there is no reason at all why British firms or British companies should be embarrassed or placed in a wrong position with regard to their business.

I also take up the same point as my hon. Friend the Member for Kingston (Mr. Cave). Clause 2, which is really the principal operative part of the Bill, provides that any sum of money which is owing for dividends, interests, or share of profits by an alien enemy, shall be paid over to and shall at once vest in this new official. Why should not any sum of money due from an alien enemy be vested in the Custodian? Why should it be limited merely to dividends, interest, or share of profits? Why should not the proceeds of goods of an alien enemy be paid over to the Custodian? Why should not the shares of an alien enemy in any company or concern in England at once vest in the Custodian? Why should not securities or any of these things, if they are sold or consigned for sale? There are quantities of goods consigned for sale from enemy countries. In a large number of cases they were consigned before the War, and have arrived since the War, and are to-day in a position of considerable difficulty. I ventured last night to refer to a concrete case of the kind. It may illustrate the matter just in a moment or two to put it before the House. There were £200,000 worth of sultana raisins sent from Smyrna before the War. That cargo arrived at Liverpool, and has been seized at Liverpool by the Customs, who will not allow the brokers to realise the cargo. The brokers have advanced money upon these sultanas, and there is nobody to take charge of the sultanas or to realise them There is nobody to pay the freight and charges, or to repay the advances and interest that have been made. I suggest that this Custodian whom it is proposed to appoint should be given charge of these matters. He is the right person to take possession of the whole of that cargo, to pay whatever is required to be paid to British subjects out of it, and to keep the balance of the money, under the terms of this Act, until the War is over, in order that it then may be properly ascertained what should be done.

This state of affairs which has arisen is, I would point out, a very serious one in another respect, because some considerable quantity of these sultanas had been sold before arrival, and various firms up and down the country want them for the purpose of the Christmas puddings and the season's festivities. A ship like that which leaves the country of an alien enemy before the War is perfectly bonâ fide. It happens to arrive here after the War, and has got itself into this remarkable state of difficulty. Surely it should suggest itself, when we are passing an Act relating to these matters—to have the custody of property and other things coming from alien enemies—that a Bill like this would have been drafted so as to enable it to deal with the case. What I ask, therefore, is: Why should the words "by way of dividends, interest or share of profits" be inserted? Why should the words not be, "any sum of money that becomes payable to an alien enemy"? Why should not these be taken possession of by the Custodian? There may be capital moneys, there may be debts, there may be money to the extent of hundreds of thousands, there may be commissions or fees, there may, and there are to my own knowledge, large sums of money as royalties on patents due to-day to alien enemies, every penny of which, I suggest, ought to be taken possession of by this Custodian under the terms of this Bill. Again I ask: Why should the Custodian take possession of the dividends and leave out the shares? Some shares are more important than the dividends which are declared upon them. Why should not all shares which belong to alien enemies vest automatically in this Custodian? Why include interest and not the loans? According to Sub-section (4) it has to include interest on the loans. Why not the loan itself? Why leave out the principal, or instalments of principal, while taking great pains to collect the interest? I see that the profits of any business are to be included. Why include the profits and leave out the business and the capital that is in the business?

I respectfully suggest to the Law Officers of the Crown and to His Majesty's Government that they ought to make a clean sweep in this matter. The mere fact that we are here to-day to consider a Bill of twelve Clauses, which is an Amending Bill itself to an Act which we only passed two or three weeks ago, suggests that the original Act was very defective, and I think that as soon as the eyes of the Law Officers of the Crown are open to the real facts, and that they find that there are hundreds of thousands, if not millions, of securities and other things of the sort which somebody ought to take care of, they will have to come here again for further Amendments if they do not alter this Bill now and make it wide enough. They will require a further Amending Bill to do what even Turkey—as well as Germany and Austria-Hungary have done long since—take possession of all the property they can lay their hands upon, real and personal, belonging to alien enemies. I look at Clause 5. I find that it contains no power to the Custodian to settle accounts with a British subject, or to pay over to such British subject any amount due to him. That is a very serious matter. There are all kinds of sums of money which the Custodian ought to take possession of, and there will be perfectly legitimate claims on the part of certain British people against those moneys; if the Custodian is to take possession of the whole of the capital and it is to be kept until the end of the War, and there is to be no settlement with British subjects, the Bill is thus far defective. It ought to contain power for the Custodian to ascertain what amounts are properly due to any British subject who do not happen to be alien enemies because, according to the Attorney-General British subjects can be alien enemies if they like—those, I say, who are not alien enemies ought to have their due. I pass to Clause 6—

Sir J. SIMON

If the hon. Gentleman will look at Sub-section (2) of Clause 5 he will see that we have defined it, so far as we could, to do what he has just asked to be done. The Clause provides that money in the hands of the Custodian may, under certain circumstances, be available to pay a debt due.

Mr. RUTHERFORD

I am obliged to the right hon. Gentleman for pointing out the extent to which that might be done. But I suggest that the Custodian should have ampler powers, the same as an official receiver, to discharge the dues, whatever they may be, and see to the rights of any British subject, without any order of the Court whatever.. The Clause which the right hon. Gentleman has pointed out does in one way enable some of these things to be done, but the words are: "if so authorised by an order of the High Court or a judge." Surely there ought to be no occasion for that in a case like that to which I have referred. Advances were made in respect to that cargo of sultanas long before the War to the owners of those sultanas. The Custodian ought to be able to receive the sultanas, realise them, pay the freight and the various charges, and the advances and interest, and simply keep the balance. No one should have to go to the High Court or any other Court in order to carry out a simple commercial transaction which is done in business every day. I will refer to Clause 6. I find there that No person shall by virtue of any transfer or assignment of any negotiable instrument, debt … or delivery of any coupon or other security transferable by delivery, or transfer of any other obligation … have any rights or remedies …. I looked at that very carefully to see whether it applied to the transfer of shares and to the transfer of stock, and I find it does not. It simply applies to the transfer of a negotiable instrument. It says, "or other chose in action or delivery of any coupon or other security transferable by delivery, or transfer of any other obligation." Now what has happened? There are thousands of cases in the City of London where alien enemies since the outbreak of War have transferred shares in public companies into the names of neutral banks. There are a number of neutral banks with branches in London. It would not do in a Debate of this kind to give the names, because we do not want to hold up any bank to public criticism. These transfers may have been perfectly bonâ fide, but it is a very remarkable thing that they have been made to the extent of hundreds of thousands of pounds within the last few weeks, and before this Bill was brought forward. The hon. and learned Member for Kingston pointed out that in his judgment the onus ought to be thrown upon all those people to show that the transfer was done for valuable considerations and was bonâ fide. I would emphasise the argument of my hon. and learned Friend. I fail to see any reply to it. I think, in Clause 6, stocks and shares and debentures should be put in as well as mere securities transferable by delivery, I think in the latter part of that Clause where the 19th of November is conditioned as the date where such assignment should be made, that in any assignment or transfer so transferred, made or registered from the 3rd August down to the 19th November the onus of the proof should be put upon the transferee and assignee to show it is bonâ fide.

3.0 P.M

It is common knowledge that alien enemies have been protecting themselves to the best of their ability; and you cannot blame them; they are business men, and when they are afraid that somehow or other our Government will try and get hold of their shares and their interest in these companies we can hardly blame them for trying to preserve their own property, by causing these transfers to be registered. All we ask is that some effort should be made to stop all transfers, including shares, to the 19th of November, and, at the same time, to put upon the transferee proof of the bona fides of transfers made after the declaration of War. I am sorry to see that some other Clauses of the Bill seem to me to be similarly very inefficient. When I look at Clause 7 I find that where any coupon or other securities are presented for payment to any company, and the company believe it is presented on behalf of an enemy since the 18th of November, they can pay the money into Court, and I ask myself why should not the Custodian have the money. What is the use of our passing an Act like this appointing an official to take charge of this alien money if we give the right under Clause 7 to have it paid into Court? I should have thought a simple plan would be to say, "We appoint a Custodian and we give him ample powers, and the same sort of powers that the Public Trustee has got." We allow him to settle accounts for everybody interested in any of those matters, and we are now passing an Act of Parliament that every particle of real and personal property of every kind and description in the country, including shares or everything else from and after this date is to be vested in that Custodian, and that as regards transfers made since the beginning of war, the onus of proof is to be thrown upon the persons claiming them to show the transaction is bonâ fide. That is the way, I think, this Bill ought to have been prepared. I look at the Definition Clause at the end of Clause 8 and I find this:— For the purposes of this Section the expression 'securities' includes any annuities, stock, shares and debentures or debenture stock issued by or on behalf of the Government. I ask myself why does it not include mortgages or shares. Why should not the word "securities," in fact, include all kinds of security? Why this definition at the end of Clause 8, cutting down the kind of securities to one or two definite things, instead of leaving it open so as to include every kind of security? I ventured to intervene in the discussion on the Courts Emergency (Powers) Bill. That Bill was about being passed sub silentio, and I took a great deal of trouble in connection with it, and felt it my duty to criticise it on account of the injustice which was going to be set up, and it was very considerably modified. We make these criticisms of this Bill this afternoon in no carping spirit. Our idea is to assist the Government to get the very best and clearest Bill they possibly can, and ought to get. Germany has seized, and goodness only knows what she is going to do with them, some millions of securities, shares, stocks, property, concessions, business interests of all kinds and descriptions belonging to British people. She seized them immediately the War broke out. She did not wait for three months or for amending Acts. Austria has done the same, and Turkey, twenty-four hours after the War, seized every mortal thing belonging to Englishmen, Scotsmen, and Irishmen, in the whole of her dominions in which such people had any interest. And here we have stood by and allowed these alien enemies to make all sorts of transfers and register them, and make it complicated and difficult to get at their shares and securities.

We want a big fund here and to lay our hands upon everything we can. We do not want to confiscate this property as a matter of right, but I take the position to be this: We want to say to Germany, "You have confiscated millions of pounds worth of property of every kind and description belonging to British people. What are you going to do with it? Are you going to restore these people their money? If not, we have got hold of hundreds of thousands of pounds of German money, and we are going to compensate our own people with it as far as it goes." That is the kind of position we should have. We ought to have ample powers in the clearest possible way in this document, and not to have to apply to the Courts for this, that, or the other, but to take possession, by a properly constituted official, of anything, real or personal, that there is in the United Kingdom, so that we can lay our hands upon the belongings of alien enemies in order to place ourselves in the best position to deal with the whole subject. It is in that spirit I venture to make these suggestions. Of course, if it were more convenient, I could put them down as Amendments to the Bill in Committee, but that may not be desirable, and it would probably occupy a very long time and would be, to some extent, a waste of time. I suggest to the representative of the Board of Trade that if they could deal in a practical shape with these points, and satisfy some of us that they were going to be dealt with in the Bill, we do not want to come here and make long speeches on Amendments. All we want to do is to try and make the Bill as strong and wide as possible, and see that it does not do any injustice to any British subject.

Mr. ROBERTSON

I would like at this point to reply to the criticisms which have been put forward by various speakers. Most of the criticisms which have been made are practically Committee points. Even the hon. Member for the West Derby Division of Liverpool (Mr. Rutherford) admits that he could put all his objections to the Bill in the form of Amendments during the Committee stage. Nevertheless, I will reply to a few points, and this may save further discussion. The hon. Baronet the Member for St. Ives (Sir C. Cory) raised a point of practical importance when he argued that persons under this Bill would find it difficult to get judgment in the way we want to provide. That very difficulty of getting judgment against an alien enemy is now under the express consideration of the Attorney-General, who is drafting a new rule of Court to facilitate the machinery dealing with that question. I trust that that change will meet with the hon. Baronet's difficulty.

Mr. WATT

Will it make it cheaper?

Mr. ROBERTSON

It will make it as cheap as possible. It has been said that the registrar of companies only takes action on receiving a complaint, and it is suggested that he is not doing his duty. May I point out that it is only upon representations made to him that he can take any action, and it is only on information given that he can act, and he does act.

Sir C. CORY

I gave as instances large companies whose names were in the London directory, and I thought the registrar might know that those companies were in existence here. When they are brought to his notice I think he should get them to comply with the Act.

Mr. ROBERTSON

I think that is a Committee point. The hon. Baronet agreed with the hon. Member for West Derby who suggested that this Bill should go very much further and empower the Custodian to get hold of all forms of property. In this respect I only need to repeat what was said by my right hon. Friend in introducing this Bill. The Preamble explains clearly the object of the Bill, and there is no desire to harass or to ruin traders. The words of the Preamble are:— For preserving, with a view to arrangements to be made at the conclusion of peace, such money and certain other property belonging to enemies. I think that clearly expresses the object of our proposals. Certainly the object is not to injure and ruin a number of traders belonging to the enemy, and this Bill is more of a preserving description. The statement made by the hon. Member for the West Derby Division as to what has been done in Germany goes far beyond the information that has reached the Government. I am not saying if such acts as he described have really taken place in the enemy's State, that in that case further action may not be necessary on our part. That, however, would be a Bill different in scope and object to the present measure, and all the hon. Member's Amendments would be carefully considered. At present it seems undesirable that any such legislation should be even contemplated until we have clearer evidence in regard to what the hon. Member has stated. The hon. Member for Sutherlandshire raised the question of contracts.

Mr. MORTON

Running contracts.

Mr. ROBERTSON

Yes, running contracts, and he desires that the state of the law should be cleared up on this point. I am sure that if my right hon. and learned Friend was replying he would simply advise the hon. Member to consult his legal advisers, and if the higher legal authorities here are likely to make such a reply the hon. Member will scarcely expect that I should attempt to indicate what is the state of the law in regard to contracts with the enemy during the contingency of war.

Mr. MORTON

My argument was that having done that which we are quite willing to obey, it is now sought to get out of the penalties in another way.

Mr. ROBERTSON

Those who are put under heavy penalties for bidding them to trade with the enemy can plead that law. In this matter, however, I am afraid I may be trenching on the ground of the lawyers, and I prefer to leave the matter as I have already stated. With regard to the suggestion that this Bill should deal with contracts, it seems to me that any measure that is intended to clear up or to define the state of the law of contract with regard to such cases as have been put by hon. Members to-day would be better dealt with in another measure. From a legal point of view, I think a second measure would be more preferable than attempting to amend the present Bill. These answers seem all that it is necessary for me to give, and as they are only Committee points which have been raised I hope the House, will now agree to allow the Bill to be read a second time.

Mr. HENRY TERRELL (indistinctly heard)

I would like to know what is meant by Clause 4 where it says:— (1)The High Court or a judge thereof may, on the application in accordance with rules of Court of any person who appears to the Court to be interested. Interested in what? Does it mean interested in the real or personal property?

Mr. ROBERTSON

In the property dealt with in that particular case.

Mr. TERRELL

That is what I thought. One of the objects of this Bill is to deal with the case of debtors who have left the country, leaving property in this country and leaving nobody responsible for that property. There have been several cases in the Courts where applications have been made to appoint a Receiver, and the Courts have always said, "We cannot appoint a Receiver. You allege yourself to be a creditor. You must bring the debtor here. Then we will deal with the question. In the meantime, we cannot touch his property." It is intended by this Section, I take it, to deal with a case of that kind, but the Section does not deal with it, because it is perfectly clear that a creditor, or a person alleging himself to be a creditor, is not a person interested in the real or personal property of his debtor. He has no interest in his real or personal property until he gets a judgment against him. Therefore, under this Section, no creditor or person alleging himself to be a creditor of an alien enemy who has left property in this country and gone to Germany or Austria could apply to the Court, nor would the Court on any such application have power to act. That being the real object of the Section, I venture to suggest to the Government that it should be very carefully considered so as to enable a creditor to take action in a case of that kind.

A great deal of misapprehension, and I think confusion, has arisen by the user of the expression "alien enemy." The Bill does not use the expression "alien enemy" at all, and naturally, because the Bill does not deal with "alien enemies." The Bill really deals with that class of person which is known to jurists as "a person possessing trade domicile in war"—that is to say, a person who carries on business in an enemy country. Supposing an Englishman is to-day carrying on under a licence of the German Government business in Berlin, he is not an alien enemy, but he is a person who has a German trade domicile in war, and he is a person whose profits in business are intended to be affected by this Bill. The object of this Bill is to prevent profits of a business going from this country so as to become taxable in an enemy country by an enemy Government. If you have an Englishman carrying on business in Germany his profits are taxable by the German Government. They may take by way of taxation 20s. in the £, that is, take the whole of his profits. We want to prevent any of those profits, or any of the money which makes up those profits, being taken from this country to Germany, where they may be taxed. That is why the Bill does not speak of "alien enemies." It speaks of "persons resident or carrying on business in any country with which His Majesty is for the time being at war." It is the profits of those persons taken over to Germany which we want to attach here.

When it is suggested that you should give power here to the Custodian to take possession of the property of Germans who are resident in this country, a very much more serious question arises. It cannot surely be suggested that we should here do what I think has never been done in any war before, that we should take possession, by an officer appointed by this House or by the Courts, of every bit of property in this country possessed by Germans. There are thousands of Germans and Austrians living in this country. Are we going to appoint a Custodian to go into every one of their houses and take possession of their furniture, and, if not, where do you draw the line? Those persons are alien enemies, but so long as we permit them to reside here they are entitled to enjoy the property which they possess in this country. It would be wrong from an international point of view, and certainly from our own point of view, to say that we are going to appoint a person who can take possession of every bit of property possessed by the enemy. It is said that has been done by Turkey. It may or may not have been done by Turkey, I do not know, but that is no reason why we should follow such a bad example. It seems to me that this Bill does require in Committee very material criticism, and possibly very many alterations. The Bill was prepared in a great hurry, dealing with a very complex and complicated question, but if it is right to distinguish in this Bill the profits which are to be transferred to a person in Germany from the property held by alien enemies in this country, I do think that in Committee the Bill will require the serious attention of the Government.

Sir J. WALTON

I welcome the introduction of this amending Bill because the previous Bill has certainly proved in many respects to be most defective. I should have thought that the object of the Government Bill would have been to conserve and protect the interests of British creditors as against German debtors, and I cannot understand the Under-Secretary's reference to the object of the Bill being rather in the direction of some protection even to German debtors. I believe, if it were clearly ascertained, there is no question that for months prior to the outbreak of War the Germans pressed for the payment of all debts due to them from this country. On the other hand, British creditors of German debtors have not been as wide awake, and the balance at the outbreak of War was decidedly in favour of our German enemy as against this country. I should have thought the one object the Government ought to have in this legislation was to promote the obtaining by British creditors of prompt and full settlement of their claims against German debtors. In order to do this, it is not, as the last speaker has stated, that we desire to take possession of the whole of the property of Germans and Austrians resident in this country. All we desire to do is to take possession, not only of dividends, but also of the shares and of all the property belonging to German debtors who are not settling the just claims of British creditors in this country.

I know a case in point, in which a German firm is constructing important works in this country, coal distillation works, upon the due completion of which the interests of a large manufacturing concern in this country very vitally depends. At the present moment progress of those works has been arrested. They are not being proceeded with, they will not be completed according to the time stated in the contract, and the British works, therefore, will not get the benefit of that completion. I say, unhesitatingly, that the receiver, or whoever is appointed, the trustee in which the dividends due to Germans ought to be vested, ought also to have vested in him that property to which I have referred, and which should be liable not only for any ordinary debts due from that German company, but also for any loss entailed upon the British company by the non-fulfilment of their contract. I have had the feeling that alien enemies resident in this country have been much too leniently dealt with. I do hope that, in this commercial matter, all the interests of British creditors will be emphatically protected. I hope, too, that the Government will give due consideration between now and the Committee stage of this Bill to the various points which have been raised. I also hope that this Bill will not be rushed through Committee. We have not a great many legislative matters to consider at the present time, and there is no necessity whatsoever that these important measures should be rushed through as rapidly as they have been in the recent past. It will be the best economy of time, and in the best interests of this nation, that we should give ample time in Committee for the consideration of every Clause of this Bill. Do not let us have to find that another amending Bill is necessary within two or three months of this Bill being passed. I believe the Secretary for the Board of Trade is prepared to consider these points and to see that they are considered by the Government. I want this matter dealt with in a broad and comprehensive way. It is absurd to find that we cannot get judgment against a German debtor who has large assets and properties in this country, and the Government is bound, in the interests of British trade, to promote our being able to obtain such judgment at a very cheap cost. Indeed, I think that the official appointed by the Government, in whom is vested the property of an alien enemy, should also be empowered to discharge debts of British creditors on due proof being established, apart from any judgment of the High Courts of Justice or otherwise. I trust that this view of the matter will be taken into consideration by the Government. While I wish to do no injustice to any alien enemy, I think the first consideration of the Government should be, in the provisions of a measure like this, to protect the interests of the British trader, and not to show too much leniency towards an alien enemy.

Mr. RAWLINSON

I think we ought to be very much obliged to the Government for introducing a Bill of this kind on so very important a matter. They might have done much of this by Proclamation, and it is largely to their credit that they have brought forward a Bill in the open House and given us an opportunity of discussing the matter here, instead of doing it merely by Proclamation. This is an extraordinarily complicated and very difficult question. It deals with a very difficult Act of Parliament, and it is a very difficult Bill to follow. I suggest that not only Members, but people outside the House, should read very carefully, if possible, the extraordinarily clear speech of the Attorney-General on the Bill to-day. I think when they have read that, and when they have examined the Bill, we shall get a good many suggestions from outside which will probably be of great assistance to us in dealing with the question. I have gone carefully through the Bill, having, by the courtesy of the Government, seen a copy in advance, and, taking the lines on which the Bill is drafted, I do not see so many Committee points are likely to arise as some of my hon. Friends seem to suggest. This is not a Bill primarily to deal with contracts, running or not running. The object of the Bill is to prevent money going into Germany or Austria at the present time—to prevent money going there which will be of use to the enemy during the War. That is a very difficult object indeed to secure.

As my hon. and learned Friend said just now, it must be borne in mind that "enemy" has nothing whatsoever to do with nationality. It is simply and solely a question whether the person whom we wish to prevent getting the money is trading with Germany or Austria. He may be an Englishman trading in Germany, or equally he may be a German trading in England, but these are not affected by this Bill at all. A man is not an enemy within the meaning of this Bill simply because he is trading in Germany or carrying on business in Germany. That is a distinction which must be borne in mind, and which apparently one or two hon. Members who have spoken have not quite grasped. I am not going into what I may call Committee points, but there was one raised by the hon. and learned Member for Kingston (Mr. Cave) as to whether or not a transfer of shares in an English company since the War commenced should be invalidated. I think that would be an extremely dangerous thing to do. This Act makes any transfer of shares in an English company—say, the London and North-western, for instance—from an alien enemy to anybody else invalid as from the date of the printing of this Bill, and my hon. and learned Friend suggests that the invalidity should apply to any transfer made since the beginning of the War.

Sir A. MARKHAM

Unless valuable consideration is proved.

Mr. RAWLINSON

Yes, unless the person proves that valuable consideration has been paid. But just look at the meaning of that from a commercial point of view. Suppose there was a transfer of London and North-Western stock on the 14th September from an alien enemy to a neutral. The stock may have been sold again on the 28th September to an English buyer. Is his title to turn on the question of the transfer on the 14th September? Are we to have that reopened directly this Bill passes? Are we to call for proof that the transfer on the 14th September was made for due consideration? If that is the intention it will lead to a very difficult position, and it will mean upsetting the title of intermediate holders at any particular time. What good can be done by invalidating such a transfer, seeing that the stock may subsequently have been passed on to other people?

Sir A. MARKHAM

The hon. and learned Member for Kingston made it perfectly clear that he only wanted this to apply to bogus transactions.

Mr. RAWLINSON

Suppose it is a bogus transaction? What I am trying to explain is that it is a very difficult thing to reopen a transaction which took place as long ago as the 14th September, when there may have been many intermediate transactions, perfectly honest, since. If a man bought the shares honestly and paid for them, is he to lose the shares because the transfer in September was a bogus one? I certainly shall oppose any Amendment having that for its object.

Sir C. CORY

If a man buys stolen goods, does he not have to stand the racket?

Mr. RAWLINSON

There are a great many exceptions, even in that case. For instance, in the case of goods sold in market overt, there is a perfectly good title, and there are many other cases in which a perfectly good title can be obtained. For instance, in the case of stolen shares, if they come into the hands of a bonâ fide holder for value received, he is entitled to the security. [An HON. MEMBER: "What about pawnbrokers?"] When there is a transfer in market overt it is perfectly good, and it should be the same when dealing with shares. It would be a serious matter to invalidate the title in such a case. I shall also oppose the suggested Amendment of my hon. Friend the Member for Liverpool (Mr. Watson Rutherford). He has been dealing with the question of Christmas delicacies—a more flagrant case of trading with the enemy I can hardly imagine. It is a transaction in currants or oranges; it is not complete at the present time, but, as I understand it, he seeks to invalidate it. As far as I can gather he has been guilty of flagrant trading with the enemy, and is now trying to defeat some contract.

Mr. RUTHERFORD

Nothing of the sort.

Mr. RAWLINSON

I leave that Committee point to be dealt with at the proper time. Seriously, I would draw attention once more to a relevant point of this Bill contained in a Clause which has not been mentioned. I refer to Clause 10, Sub-section (3). If that Clause is enforced a great amount of good will be done. We are trying to prevent the successful financing of Germany or Austria during the War. It is perfectly simple for people in England who have German sympathies or people who might be anxious to get money into Germany to obtain a credit in New York, and New York being in a neutral State it is possible to transfer the credit from New York to Frankfort, and so the financing goes round. We are dealing here with big matters, not with a cargo of raisins or anything of that sort. If somebody in London is anxious to assist the Germans at the present time he might possibly do it by transmitting money to New York, getting the necessary credit in New York and then getting a person in New York to transmit it to a German. It is upon this Clause that I should like the assistance of the House. Clause 10, Sub-section (3) says, If any person without lawful authority deals, or attempts, or directly or indirectly offers proposes or agrees, to deal with any money or security for money or other property which is in his hands or over which he has any claim or control for the purpose of enabling an enemy to obtain money or credit thereon or thereby he shall be deemed to be guilty of the offence of trading with the enemy within the meaning of the principal Act. That is a very wide provision and I should like to invite the consideration of hon. Members between now and Monday as to whether that may not possibly go too far, or, on the other hand, whether it really goes far enough to prevent things of this kind. I understand the object of it is to prevent anybody over here sending money to New York which would give a credit in some form or other to any enemy in Germany, Austria, or Turkey. If that object is effected no doubt it will carry out a very large proportion of the matters within the Bill. The Bill is one to which I think the whole House desires to give a Second Reading now. I believe they are anxious to assist the Government in dealing with this matter. I hope that between now and Monday the speech of the Attorney-General will be carefully read, so that suggestions may be made to him, and I am quite sure that none will be more glad than he to give attention to the suggestions made.

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

Bill read a second time, and committed to a Committee of the Whole House for Monday next.—[Mr. William Jones.]