HC Deb 09 September 1914 vol 66 cc583-604

I beg to move, "That leave be given to introduce a Bill to make provision with respect to penalties for trading with the enemy, and other purposes connected therewith."

4.0 P.M.

Trading with the enemy is, by the common law of this realm, a crime, but as the House knows, it has been thought convenient to issue a Proclamation stating more in detail what are the transactions which are prohibited and what transactions are permitted. The experience of the last few weeks has shown that it is necessary to revise this Proclamation and issue a new one. This is being done to-day, and it will state more clearly the rules which must be observed. It will prohibit certain transactions which are not prohibited in the earlier Order. For example, it will prohibit the making of any payment to an enemy, even though it arises out of a contract made before the War began. In this connection, I might point out that trading with the enemy means a person, firm, or company resident or carrying on business in hostile territory, and the test in this connection is not the nationality of the person with whom you are dealing. The expression "alien enemy" is used in a different sense when registration is required by the Home Office. The present Bill will make this Proclamation effective by providing penalties for a breach of the rules against trading with the enemy. It is proposed to make the offence a misdemeanour punishable either summarily or on indictment. For a summary conviction the maximum punishment will be imprisonment for twelve months or a fine of £500. For a conviction on indictment, which, as the House knows, is a more lengthy and elaborate process suitable for cases of great gravity, the punishment will be penal servitude for seven years as a maximum penalty. In order to secure that prosecutions shall be undertaken solely in the public interest on adequate grounds and not for any private purpose, it is proposed to obtain the assent of the Attorney-General under the new law. There are two other things which are provided for in this Bill. The first is this: It is proposed to confer upon the Board of Trade, or a Secretary of State, power to apply to a magistrate for what, in effect, is a search warrant for leave to inspect the books and documents of a firm which there is reasonable ground for suspecting is committing the offence of trading with the enemy, and in certain special cases—for example, where the persons interested m a firm or company are substantially subjects of a State now at war with this country, and there is reasonable ground for suspecting that an offence is being committed—this power of inspection is conferred upon the public Department without the necessity of an application to a magistrate. The remaining provision in the Bill is one which the experience of the last few weeks has shown to be needed. It is a provision which empowers the Board of Trade in certain special cases—for example, where a business is one which in the public interest should be continued, but which is in danger of being discontinued owing to difficulties of management connected with the War—to apply to the Court for the appointment of a receiver of the business, so as to enable it to be carried on. If the House will give mc leave to introduce the Bill to-day, then it will be circulated to-night, and we shall propose to take its remaining stages tomorrow.


Will the Bill include some powers in reference to cases where English registered companies are carried on by German directors, or where the bulk or almost the bulk of the shares are held by foreigners? I did not gather from the Attorney-General's clear statement whether or not powers are taken in reference to such companies. He did tell us in cases where there was a company which could not be carried on because of the directors being alien enemies and it being impossible for them to meet that there were certain powers, but I did not understand that the Bill covered the case where you had a genuine English company registered under English company law. Great difficulty must arise in those eases where you have got an English company which is really in truth or in fact a branch of a parent company in Germany or a company which has a number of German directors, or where the whole of the capital is practically held by Germans. I hope the right hon. Gentleman has included in the Bill special powers in reference to those companies, so that if necessary inquiries can be made or returns can be asked for. I merely ask the Attorney-General that, and I hope that he may be able to give some assurance to the House.


I would like to ask whether the powers under this Bill will include powers to prevent the payment of dividends to foreigners arising from holdings in the English companies? I did not gather from the speech of the right hon. Gentleman whether it included such powers or not. It is an important point. The right hon. Gentleman, no doubt, remembers that throughout the whole of the Crimean War the Russian Government fulfilled its obligations to its English creditors with very great advantage to itself afterwards. I think it would be a mistake if any legislation of the kind proposed by the right hon. Gentleman were to prevent foreigners who had invested their money in a genuine English company from receiving their dividends. The War is not going to last for ever, and it is our desire to attract as much money over here as we possibly can, I do not know whether I am speaking unnecessarily or not. but I would like to draw the attention of the right hon. Gentleman to this fact, and to express the hope that he will remember what I say, and, if possible, avoid the prevention of the payment of dividends in an English company, or, I presume, an English municipality, to persons who may happen to be foreigners, but who genuinely invested their money some few years ago in those undertakings.


I cordially support what the hon. Baronet the Member for the City of London (Sir F. Banbury) has said. It would be most unfortunate if any steps were taken which would in any way penalise or discourage investments in this country by persons abroad. It is a fair case for the appointment of a receiver when a foreigner who has brought property in this country has deserted it and left it at large for his creditors, but to say that you should set about the confiscation of shares or property of an alien enemy, thereby setting a bad example to other countries, is a proposition which, I think, will require a great deal of consideration. I think the House would do well to bear in mind that there are English investments in Germany and in Austria of a very substantial and genuine kind, and we, a rich country like this, should certainly not be the first to say that a shareholder, although he is an alien enemy, should needlessly suffer. If it becomes a matter of warlike necessity, that is all well and good, but I think it would be most unfortunate if, as a mere act of patriotism or as a mere emergency measure, any steps were taken without the fullest consideration.


I should like to ask the right hon. Gentleman two questions. In the first place, is it intended to penalise the payment by an Englishman of his just debt to au English agent of a foreign company who is resident here? In the second place, will this Bill enable a scheme to be started under which English creditors of German and Austrian debtors may have the debts on the other side, as it were, pooled, and the debts due by Englishmen also pooled, for the benefit of English creditors of German and Austrian debtors? The Associated Chambers of Commerce, as the House no doubt knows, have a Bill which they hope may be introduced here, and I should very much like to know whether the Attorney-General can give us any information as to whether it is the intention of the Government to utilise the debts owed to Germans and Austrians by English debtors, in part or in whole, to pay the indebtedness of German and Austrian debtors to creditors in this country.


The Board of Trade are apparently to have certain dispensary powers. I would ask the House to imagine a case in which an English manufacturer is offered and can obtain certain merchandise, raw material, more or less essential to the conduct of business here, shipped from Rotterdam by a German firm on the ordinary terms of credit, in some cases six weeks and in others twelve weeks. Would it be possible for the Board of Trade to give a dispensary power to receive that merchandise on condition that it was not paid for, but that the money was deposited, say, in a bank here or with the Treasury till the end of the War? It is possible to receive certain goods on those conditions, but I cannot tell for certain whether, under the present Proclamation, it would be legal. I do not know whether the right hon. Gentleman intended any dispensary power of that kind. The power would be very advantageous to certain people who want to get mer- chandise, and it would in no way prejudice the position by sending payment to an alien enemy.


Perhaps the right hon. and learned Gentleman would tell the House, with regard to what has been said by the hon. Baronet the Member for the City of London (Sir F. Banbury) and the hon. and learned Member for Cork (Mr. T. M. Healy), whether at present by common law' every payment to an alien enemy is not illegal?


Will it be illegal for any English firm to do business with a foreign firm which is not hostile, but which is recognised as a forwarding agent for a foreign hostile firm?


Is there anything illegal in carrying on business with a German firm in a neutral country—for instance, in America or China? Nobody seems to know, and we should very much like to have a clear exposition of the law on the subject. Is it, or is it not, legal to enter into business with a German firm in a neutral country?


I put a question to the President of the Board of Trade last week with regard to an English company with a capital of £600,000, £550,000 of which is owned in Berlin by Germans, and five-sixths of the entire directorate of which are also Germans. Is it not desirable, in the case of such a company dealing very largely with our own Admiralty and War Office, and having large Government contracts, that a controller should be appointed in order that it may be certain that Government secrets and interests are not, during the time of war, interfered with? I have not the least desire to impede ordinary business relations that are necessarily going on, nor do I differ from the hon. Baronet the Member for the City of London (Sir F. Banbury) in his desire that ordinary dividends on Consols and such-like stock should be paid to German creditors, but I do ask, if this Bill is going to deal with such questions, and, if not. whether some Bill will be brought in? The President of the Board of Trade promised that an announcement would be made very shortly on the subject, and I was in hopes that the Attorney-General would be able to make that statement this afternoon or on the Second Beading of the Bill.

Mr. F. HALL (Dulwich)

I know from my own knowledge of contracts which have been entered into with neutral countries through Berlin, and I should be glad if the Attorney-General could make it perfectly clear whether, under the circumstances, people in the City of London can or should carry out those obligations to neutral countries which have been made through Berlin simply and solely as an agent.


A number of questions, some of them of very great general importance, have been raised, and it will be perhaps convenient if I may, by leave, just shortly give an answer. The Bill is one merely to provide for the trial by appropriate Courts of persons who are accused of breaking the law in this regard, and for their punishment if they are convicted. It does not primarily deal with all the matters which hon. Members have raised in the Debate, but we are pursuing this method. We have already issued a Proclamation against trading with the enemy. It was designed primarily as a warning. We live, as a rule, in times of peace, and the trading community cannot be expected to know, and, as a matter of fact, I very much doubt whether anybody knows, precisely what is the law about it. I certainly do not claim to have any great confidence about it. We issued the Proclamation as a warning. We have now, in the light of the experience of the last few weeks, revised that Proclamation, and we are issuing a new one to-day. We are now, by this Bill, taking powers to make breaches of the rules in that Proclamation offences, so the Proclamation ceases to be a mere warning and becomes a definition of what you may do and what you may not do. At the same time we have reserved power to modify the Proclamation from time to tune, and we have taken power also in the appropriate Department to grant licence or permission in particular cases when good cause is shown and made out. Unless you have some such system you really cannot adjust the rule on these matters to the infinite complexity of British trade, and to lay down a cast-iron rule and to apply it to individuals against the judgment of common sense would, I am sure, be a very fatal policy for the commercial interests of this country. There is a Committee sitting—a Trading with the Enemy Committee—of which I am Chairman, and in the course of two or three hours every day it passes in review hundreds of applications. Many of them can be at once dealt with on the lines which have already been settled. But in cases of difficulty further consultation may be required, and it is by that means we try to do what we can to give practical assistance to traders who feel in any difficulty in regard to these matters. That is the general scheme. I come now to the questions which have been put to me.

The first was raised by the hon. and learned Member for Leamington (Mr. Pollock) and by the hon. Member for Brentford (Mr. Joynson-Hicks). It was as to the position of companies registered under our English law—companies registered as English companies but which are, in substance, enemy's concerns. Of course it is to be observed that, even although the shareholders of a company may be enemies, it you really take proper steps to prevent the profits of such a concern being distributed to the enemy, it may be that such an enterprise is a very useful way of employing labour in this country. There are undoubtedly many very important cases of this sort, and we should be acting very foolishly if we laid down any cast-iron rule such as has been suggested. So far as the Bill is concerned, and so far as the Proclamations under the Bill are concerned, they are rather directed to making sure that there is no transmission of anything in the way of profits, or the equivalent of profits, from this country to hostile territory. That is primarily our object, and the question what is the position of a particular firm or company in this country only arises incident-ally. The hon. Member for Brentford has suggested that the President of the Board of Trade has not dealt fully with a question which he put on this subject. But this matter has been engaging the attention of several of us. We have been looking into it very closely, and I may say it is the intention of my right hon. Friend to produce, before our present sittings terminate—to produce immediately, proposals dealing with this matter. I want to make it quite plain, however, that the Bill which I am asking leave to introduce does not profess to deal with the case of a company registered under our law which is found in substance to be a company with a hostile directorate and shareholders, save to this extent: In this Bill we do confer on the proper Department of State power to investigate the books of any such company in order to ascertain the facts, and, having ascertained the facts, the Board of Trade, in the Bill which it is proposed to introduce, will suggest a proper way of dealing with such a company. I venture to submit to the House, and as far as I may to others outside who are much concerned with this matter, that it is a very foolish and short-sighted thing for us to do, just because we come across an enterprise in this country with a German or Austrian name, or which is suspected to have a German or Austrian connection—it is a very foolish thing for us, and very bad for employment in this country, to lay down a cast-iron rule. What we desire to make certain is that such an enterprise shall not transmit goods or profits to the enemy's country, and that ought to be the general object which we have in view.

The hon. and learned Member for Cork (Mr. T. M. Healy) and the hon. Baronet the Member for the City of London (Sir F. Banbury) raised a question about the payment of dividends to shareholders who "re foreigners. Let me point out again that, though there is in our Proclamation a prohibition against making payments to the enemy, payment to the enemy in this connection it is quite clear in the Proclamation, does not mean payment to a man in this country who has got a name which does not seem to be an English name. It means transmission of money or the equivalent of money to a hostile country. Therefore, the case which the hon. Baronet has in mind is not a case of paying dividends to Germans or Austrians who have duly registered themselves and have satisfied the authorities that they are perfectly reasonable persons to be here in our midst, but it is a case of paying dividends to persons resident in Germany or Austria-Hungary. There, again, I take leave to say our policy ought to be to make it quite plain that we are not engaged in any process of confiscation. It is a matter of commercial good faith, and it is obviously good business that we should make it entirely plain that a private citizen, although the subject of States now at war with us, so far as he has commercial interests in this country, or vested rights in private commercial dealings, is safe and his interests are going to be guarded rather than confiscated. It is at present under consideration whether we might not make some special provision for these interests to be collected and gathered in the hands of some authority which would be able to keep an account and record of this kind of property, which may in some cases be derelict or very nearly so. That is a point I will not now go into, because it has not been fully considered. But while we lay down the principle you must not make payments or transmit goods out of this country to hostile territory, there again in proper cases it is quite possible to grant licences where the argument is strongly in favour of exceptions being allowed. I think it is better to lay down the rule that dividends are not to be transmitted to the enemy's country. They should be duly secured and paid into a bank here, where they can be safely earmarked for their true owners. That is obviously a proper thing to do, but we thought it best to lay down the rule that payments are not to be made involving transmission to the enemy's country, because, if once we began to allow that, I do not know where we should stop.

My hon. Friend behind me (Mr. Theodore Taylor) asked whether any objection was going to be taken to payments which English merchants or others wished to make in discharge of their just debts to agents in this country of firms established in the enemy's country. I am very averse to starting legal doubts, but I think myself there is very grave doubt whether a man who acts in this country as the agent of a German or Austrian firm can really and truly be said to have any agency once the War has broken out. I should very much doubt whether any contract of agency was not automatically suspended by the outbreak of war. I hope, however, it may be possible to make arrangements in these cases. The Trading with the Enemy Committee has done everything it can to suggest arrangements which will enable those who want to rid themselves of liabilities which they are prepared to discharge to do so, in order that they may feel that they are paying their debts and carrying on their business as commercial men desire to do, while taking proper security that money or goods shall not be transmitted to a hostile country. There, again, some plan by which we might be able to collect such money and hold it on account of those to whom it would belong if the War were not proceeding may be found to be the best and most practicable method. In that connection my hon. Friend asked whether it was not possible to set off debts which Englishmen owe to Germans against debts which Germans owe to Englishmen. Any suggestion that proceeds on the proposition that trade is exchange would be heartily welcomed by myself. But there is this little inconvenience, that, if you begin paying the debts which Germans owe to Englishmen in this way, it remains to be seen whether a sufficient number of Englishmen will come forward to announce that they owe money to Germans. That obviously is a difficulty, and it is one of which I have not yet seen a solution suggested. The proposal to which my hon. Friend referred was, I think, made by the Associated Chambers of Commerce. It is one which has been a good deal considered in the Treasury and elsewhere, and my hon. Friend may rest quite content that it has not been overlooked.

In answer to the hon. Baronet the Member for Ayr Burghs (Sir George Younger), who asked whether or not it is possible to grant some dispensing power enabling people to receive goods, shipped through Rotterdam to this country, provided they are sent on the understanding that they are not to be paid for until the War is over, I think I may take it upon myself to answer that off-hand. If the hon. Gentleman or any of his compatriots can persuade those with whom they trade to supply them with valuable commodities on the terms that nothing is to be paid for until the War is over, I am quite sure that the Committee which deals with Trade with the Enemy would offer no sort of opposition.


I put that as an alternative.


I thought that probably the hon. Baronet did not want to carry his proposal quite to that extent. I would ask him to remember that it is possible to assist an enemy just as much by giving him good credit in this country as by paying him money. If the hon. Baronet puts into the bank at the disposal of an enemy a sum of £10,000, that enemy becomes £10,000 richer for the purpose of making purchases. But this, again, is one of those cases where, if we can devise a satisfactory scheme for holding the interest of the alien enemy until the War is over, we may thereby do something to assist our own trade while making certain there is no improper help offered to those with whom we are at war. The hon. and learned Member for Exeter (Mr. Duke) said, quite truly, that, according to our common law, every payment to an enemy is illegal. But it is not convenient to make that cast-iron rule fit in with the complexity of modern commerce, and we have thought it well, therefore, to proceed by way of Proclamation, which not only says you are warned against doing certain things, but which also says in certain cases you may do certain things under proper conditions.

That brings me to the only remaining question—the question about branches, and I am much obliged to the hon. Members who raised it. In the proclamation which we are issuing today we are slightly varying the terms previously laid down for dealing with branches, and perhaps the House will allow me to state, in a couple of sentences, what our proposal is. If a branch is, say, in China or South America, the advantage which accrues to our home trade and commerce by allowing ordinary dealings to be continued is infinitely greater than any advantage which would accrue to us from stopping such trade. Take, for instance, the enormous export trade of Lancashire to some of those great neutral markets on the other side of the world. It is, as many hon. Members know quite well, a common thing for an importer in a neutral market—say China or Argentina—to be a German house—a branch of a house established in the Empire of Germany. The usual course of business is for the order to be given by the head office for the goods to be delivered to the branch house on the other side of the world. Of course, we cannot have any new transactions entered into with the head office in the enemy's country, as that would obviously be trading with the enemy in a most direct way. We have provided that there is no objection to entering into transactions with a, branch in neutral territory of a house established in Germany, so long as the contract is made with and the goods are delivered to the branch, and, secondly, that there is no direct contract made with the head office in Germany or Austria


Does that apply to the branches in the Colonies as well?


It applies to branches of houses established in Austria or Germany, whether those branches are in neutral or British territory or Allied territory, that is French or Russian, but we have found ourselves obliged to make this limitation, and this is the new matter we have dealt with in the Proclamation—we find it necessary to say that it cannot be permitted if the branch is in neutral territory on the Continent of Europe. We find by experience that to allow trading with a branch in some neutral country, which borders closely upon the areas with which we are at war, really is offering so considerable a loophole for trading with the enemy that it is necessary that we should make that restriction. In a given case, where it is suitable so to do, it will still be possible to grant a licence and to permit it where we can get proper security. The effect will be that no offence will be committed under the Proclamation if the trading is with a branch of a German or Austrian house, so long as that branch is outside Europe or the United Kingdom where it can be controlled, but we make the exception that the branch is if, on neutral territory not on the Continent of Europe. By that means we think we have taken the security for which we must ask in order to protect national interests with calmness and good judgment without making unnecessarily severe rules against businesses necessary for continuing the trade and commerce of this country, and which provide employment for our own people. I think I have dealt with all matters raised by hon. Members.


What kind of offence is this to be? Under the present common law is it not treason felony?


Under the common law it is at any rate a possible view that it really amounts to treason, because it is in the nature of comforting or assisting the enemy. One of the reasons why we are anxious to have this Bill put on the Statute Book is to enable this offence to be dealt with summarily and conveniently, instead of having to run the risk of the whole paraphernalia of a trial for treason. Under the common law you cannot punish offences such as this before a magistrate. We propose to take power to punish before a magistrate. Since the punishment under the Bill may exceed three months' imprisonment, everybody who is tried under this Bill will have the right to be tried by jury if he wishes.


The common law is not ousted?


We expressly provide against that.


I desire to know what provision is, or is going to be, made for companies governed entirely by Germans? There is one company governed entirely by Germans which has a contract with the Government for the supply of articles worth £20,000. This particular article is going to be used in the War in connection with field telegraphy. The manager, the works manager, and others connected with it, are Germans. What is to hinder them putting in bad stuff? There is another company consisting of Germans who have a contract with the Admiralty—


That is going rather wide of the Bill. I have allowed the greatest possible latitude in the Debate, but that question does not arise on this Bill, which provides for penalties under the Proclamation. The first point referred to by the hon. Member has already been dealt with and answered before he came into the House.


The answer given by the Attorney-General to the question raised by the hon. Baronet (Sir F. Banbury) was highly satisfactory, but there is another important point in connection with the same subject to which he did not allude, namely, the question whether transfers of shares at present held by alien enemies in British companies are to be allowed. It is understood that under the existing Proclamation such transfers are not permissible. It may be a matter of very great importance to that alien enemy, whom the Attorney-General says he does not wish injuriously to affect so tar as any confiscation of his interests is concerned, if he were not able daring the continuance of war to sell those shares, so long as the money which resulted from the sale was not transmitted. It might amount to confiscation, supposing his shares during the War fell to a price very much lower than at present exists, or may exist for some time. He would be able to define his risk by selling his shares and effecting a transfer during the course of the War. It is a question which is creating considerable feeling in the City at the present time. If it is desired not to affect injuriously the interests of foreign shareholders the Government ought to consider that question, either in this Bill or in a Proclamation. There is another point of very great importance with regard to insurance companies. A great many—in fact, all great insurance companies—have contracts running with German and Austrian companies for sharing risks of fire all taken out in this country. Are those agreements cancelled or not by the War, or is the existence of those contracts and the payment of money under them really suspended? That is a matter which has excited a great deal of anxiety among insurance companies, and I wish the Attorney-General would say something upon it.


There is one point arising out of the Attorney-General's speech upon which I would ask either him or the Solicitor-General to give some explanation. I gather that one object of the Bill is to prevent the transmission of goods or money to hostile territory. The point I desire to raise is what is to happen in the case of the transmission of money or goods to an alien enenmy resident in a neutral country? It is quite obvious that such a transmission would be, or might be, just as dangerous in its results as transmission direct to the alien enemy in his own country, because he might find means of getting the goods or money handed on from the neutral country. Would it be possible to forbid such a transmission in the Proclamation? If it were so for bidden, I presume it would be dealt with in the Bill. If it is not already dealt with, will the Government say that at least that point will not be lost sight of?


The question I desire to raise is one on which I have had very much correspondence. At present, broadly speaking, the distinction between enemy and friend is the line of war—that is to say, that a person permanently resident or domiciled, as the lawyers would say, or carrying on commercial business permanently in a hostile country is regarded as an enemy, whatever his nationality may be—in fact, even if he be British—but that if he is domiciled or carrying on business permanently in a neutral country, even though he is a German, he is regarded by us as a neutral. Similary, if a German is carrying on business permanently here, he gets the advantage of the cloak of nationality.


That is the principle upon which the whole Proclamation proceeds.


So I understood. But there is a question upon which it is very difficult to judge, and which is of some practical importance, because I have already had since the outbreak of war a number of inquiries upon it, particularly in relation to life insurance—that is, What is the character, enemy or friendly, of a German or Austrian who is in British territory, not domiciled here in the sense of his having made this country his permanent domicile or having a commercial domicile here in the sense of permanently carrying on business here, but is in this country more or less permanently? In my view, which I put forward with considerable hesitation, at common law the position of that Geman is still that of an enemy, and transactions with him are forbidden by the rules regarding trading with the enemy. I can see many grounds of policy why that man should not be treated as an enemy, and I would like the consideration of the Government to that particular point in regard to this Bill.


It seems to me that that will be dealt with in the new Proclamation. The old Proclamation spoke of enemies as if they were persons resident or carrying on business or being—we had the three expressions—in the enemy country. We now propose to say those persons who are resident or carrying on business.


I am grateful for the interruption of the right hon. and learned Gentleman. That meets the particular point, which I regard as being of practical importance to the business community at large. Another point which is of very great practical importance to the business community is this: Contracts made before the War are not, primâ facie, dissolved by the War, but are suspended during the War. That is the ordinary rule of Common Law. As a matter of fact, practically all commercial contracts, I believe, are dissolved by the War, because the carrying out of the contract would involve dealing with the enemy, which is forbidden. I do not know whether the Government have been able to do anything towards the solution of the difficulty of deciding whether any given contract in existence at the outbreak of the War is to be treated as dissolved or suspended. It is an extraordinarily difficult question, and one with which the business community of this country has been faced very much, upon which all of us lawyers have already been asking innumerable questions. The Attorney-General smiles. I should think he has been asked them all day long. If the Government can see their way to any solution of that question, and can give an indication as to what characteristics of a contract will enable it to be merely suspended, and what characteristics will cause it to be treated as one that ought to be dissolved, they will do a great service to the business community of the country, who would be very grateful.


I desire to ask the Attorney-General questions on two points as to which my doubts, I am quite certain, are due to my ignorance. In the case of firms or companies belonging to alien enemies which have branches in neutral countries, does the agent become the principal in carrying out the contracts with those houses? The second question is, whether, in the case of contracts made for the periodic delivery of goods extending over a long time at so much a month or a quarter, is there no limit at all to the currency of that contract, or does it go on, or is it renewable by the agents of the alien enemies in neutral countries from time to time? I only ask these questions because I know they have occurred to business people, and it is as well to get them cleared up by experts.


May I ask a question first with regard to the further stages of the Bill being taken to-morrow. For convenience, may we have a copy of the Proclamation to-day, so that we may know exactly what its terms are? Secondly, for the information of the trading community, will the right hon. Gentleman state exactly to whom, and to what address, applications are to be made so as to get the earliest possible attention for exceptional cases where ft is desirable that some trade should be carried on with an alien enemy?

Sir J. D. REES

Will this new Bill cover the position of an alien enemy who acts in such a manner that he would be liable to the penal clauses of the contract but for the War? For instance, suppose an employer has an alien enemy in his employment under circumstances in which he would be entitled to a year or six months' notice, but gives him a month's notice, as undoubtedly he could do at present, would he at the expiry of the War be liable to be sued under the penal clauses of the contract? I know that cases of this sort have happened, and if the Attorney-General would answer, I should be grateful. I would also add my plea to that of the hon. Member (Mr. Peto), that copies of this Proclamation should be circulated with the Votes. It was not done in the case of the moratorium, and some people, of whom I was one, suffered some inconvenience in consequence.


I should be glad if the right hon. Gentleman could throw some light upon the position of contracts of the kind to which my hon. Friend (Mr. Leslie Scott) referred—contracts which were made, let us say, between Germans and people in this country before the War. I have in my mind broadly the case of transactions, of which I know there were a very great many on the Exchange—contracts which were made by Germans before war was declared and transactions which were actually carried out, so far as the relationship between the brokers was concerned, before War was declared, but which have not been completed. That is to say the settlement day arrived—Stock Exchange transactions are one of the class of transactions I am thinking of—only after war was declared. Will either the Proclamation or the Bill affect contracts in that position, or is that to be left to whatever may be the solution which the ordinary principles of law would give? I enforce the point with this in my mind—which, of course, will be obvious to the right hon. Gentleman—that in the case of transactions which are carried out, as so many of these are, between brokers, the brokers are usually bound individually to each other. That stage has been reached in the case of the transactions which are in my mind. Of course, unless some relief were to be accorded in some direction or other, there might arise no end of difficult legal complications. I ask the right hon. Gentleman, if he can, to throw some light upon the position in which contracts in the completed stage in one sense, but in the unexecuted stage in another, will stand.

Sir d. SIMON

When the Bill is circulated it will be plain to the House that some of those matters which are being raised do not arise upon it. Take the matter which was last referred to by the hon. Member (Mr. Leslie Scott). What we are dealing with is the offence of trading with the enemy. That is quite a different thing from asking what is the effect of the outbreak of war upon contracts entered into before the War began.


What I meant was this: Is the execution of a contract which has been made before the War going to be made plainly illegal, and will the Bill, or will it not, leave the question on one side as to whether, not only is execution of the contract illegal, but whether the contract is in addition to be dissolved and not suspended?


I agree that there is in that sense a connection. I only wanted to make clear that the question is as to the proper punishment to impose upon a man who commits the criminal offence of trading with an enemy. The other question is only incidentally involved. I shudder at the prospect of any Government or Law Officer making itself, or himself, responsible for an immediate and precise and detailed solution of every legal conundrum in commercial law which arises in consequence of the War. Not only am I, of course, wholly incompetent to deal with so varied a mass of matters, but I shall be committing the grossest offence in the view of every barrister, because obviously it is the duty of private persons to consult private advisers. The Proclamation will, I hope, make it quite clear what is permitted and what is prohibited. If a man has entered into a contract before the War, and has not delivered the goods at the time War breaks out, he will none the less be not only excused from delivering them, but prevented from delivering them if it is clear that he will commit a criminal offence by doing it. I hope it will be found that we have made it quite plain that where the delivery of goods is a delivery which arises before the War, still delivery during the War is prohibited. I will not say more about it than that at the moment.


Will contracts be suspended, or will they be entirely cancelled by the act of war?


I strongly advise the hon. Member to consult the numerous very competent authorities who hold themselves out to offer advice at very reasonable remuneration to those commercial persons who think a lawyer's advice is worth having. I will not nominate a counsel. There are plenty of them. The suggestion made by the hon. Member below the Gangway, that it would be convenient to see the Proclamation and have it circulated, is very reasonable. I cannot have it circulated to-night, because the Council at which it was passed was only held this afternoon. I will make inquiries to see whether it is possible to circulate it to-morrow, and, if it is not, I will see whether it is not possible to have copies available early in the Vote Office, so that the Debate may be conducted with a Proclamation before us. I do not for a moment flatter myself that the Proclamation or the Bill will solve all these questions, but it is an effort made, as the result of a great deal of hard work, to improve the situation, and I hope the Committee which has been dealing with the matter has really produced a much better set of rules than any which exist at present. The person to whom to address any such inquiry as the hon. Member (Mr. Peto) referred to—not that I would encourage their multiplication—would be the Secretary of the Trading with the Enemy Committee at the Treasury. With regard to a question asked me by another hon. Gentleman, I do not know whether he would forgive me if I asked whether I might just see in the OFFICIAL REPORT what it is he put to me and deal with it to-morrow. I would ask the same of my hon. Friend, because the subject of insurance and reinsurance is a difficult one. As regards the transfer of shares, the position is plain. We certainly cannot allow any new sales or purchases of shares as between an alien enemy, say a person in Germany or Austria and ourselves. As regards contracts already made, where all that remains to be done is for the companies to write a new name in a book, there would not be any objection to that being done so long as it is quite clear that it arises under a contract which was made before the War began. The hon. Gentleman (Sir J. D. Rees) asked me whether or not this Proclamation or Bill would affect the position of an employer who had in his service an alien enemy and has cancelled his contract of engagement. I have pointed out that "alien enemy" for this purpose does not mean anyone who is in this country at all, therefore I do not really think the question arises. The hon, and learned Gentleman (Mr. Butcher) asked me if similar inconvenience and damaging results might not follow from transmission, say, to some person in a neutral country.


An alien enemy.


No, for the purpose of any rules about trading with an enemy, by enemy you mean someone in a hostile country. It may or may not be wise to prohibit people sending money to persons living normally with a foreign enemy. I think it most inexpedient. I am sure the best thing we can do is to trade as far and as freely as we may with neutrals. I do not know how you could find out whether a person you are trading with is or is not a subject of a State at war. The principle is that you are not to trade with people who are resident or carrying on business inside the enemy country, whatever their nationality may be.


I understand that my point is outside the scope of the Bill?


I think so, yes.

Question put, and agreed to.

Bill ordered to be brought in by the Attorney-General, Mr. McKenna and Mr. Runciman. Presented accordingly; read the first time; to be read a second time To-morrow, and to be printed. [Bill 395.]