CLAUSE 1.—(Extension of the Government War Obligations Act, 1914.) (Hansard, 18 December 1916)

The DEPUTY-CHAIRMAN
The first Amendment on the Paper in the name of the hon. Baronet, which proposes to leave out from the beginning of the Clause in Sub-section (1) to the word "by"["extended by"], does not seem to me to read.

§ Sir C. HENRY
My object is that the Clause should begin, "section one of the Government War Obligations Act, 1915,"and to leave out the reference to the War Obligations Act of 1914.

The DEPUTY-CHAIRMAN
That is not the Amendment of which the hon. Member has given notice, and I must point out that it would alter the whole of the Bill right through.

§ Sir C. HENRY
The object of my Amendment was to protest against legislation by reference. My view is that the Schedule should contain the obligations which were put forward under the Act of 1914, so that the House might have had the opportunity of discussing those obligations, and of hearing explanations as to them given by the Minister in charge.

The DEPUTY-CHAIRMAN
Would it not be better for the hon. Baronet to read out the Amendment he wishes to move?

§ Sir C. HENRY
The Amendment I wish to move is on the Paper.

The DEPUTY - CHAIRMAN
That Amendment is not in order.

§ Mr. WATT
Would not the Amendment, if carried, make the Clause read quite satisfactorily? It would then begin on line six, Section one, of the Government War Obligations Act, 1916.

The DEPUTY-CHAIRMAN
That is not the Amendment. If the Amendment were carried, the Clause would read "By Section one of the Government War Obligations Act, 1915," etc.

§ Sir C. HENRY
May I modify the Amendment by proposing to leave out from the beginning of Sub-section (1) to the word "Section"["by Section one"]?

The DEPUTY-CHAIRMAN
That would not read unless there were consequential Amendments.

§ Sir C. HENRY
I shall not press the point.

§ Mr. WATT
I beg to move, in Sub-section (1), to leave out the words "in the like matter of money, "and to insert instead thereof the words "out of moneys provided by Parliament."
1194 This Bill, I think, has been drafted in a very careless way. There appears, to have been a scheme in drafting it to perplex Members. I think very few who listened to the Debate on the Second Beading, and on the Money Resolution, were quite aware of the purport of this Bill. One of the reasons for that is that there is a good deal of this legislation by reference. The words which I desire to omit constitute an attempt to legislate by reference. If we ask what in the like manner of money means we find, on referring to the previous Acts of 1914, that this is what is meant by the phrase "There shall be paid out of moneys provided by Parliament, or, if those moneys, are insufficient, there shall be charged and paid out of the Consolidated Fund, or the growing produce thereof, such sums," etc So that in like manner means that if the moneys are not sufficient, the Government shall have the power to debit the Consolidated Fund with the balance required. It is to avoid that I propose my Amendment, which would have the effect of making the Government on every occasion when the funds granted came to an end, instead of going to the Consolidated Fund balance, come to Parliament for sanction. I venture to think that that is the right principle to adopt, and that we should not allow the Government whenever they are short of cash to go to the Consolidated Fund.

§ Sir G. CAVE
This Bill follows exactly the form of the Act passed last year, and brings into this Act the provisions of the Act of 1914. The hon. Gentleman was quite right as to the meaning of these words. They make these contracts binding upon the Government, and that is the intention of the Clause. Some of those obligations will run not only during this year, but during some years to follow the War, and it is well that persons entering into contracts should know that they have the sanction of Parliament behind them. That is what the House wishes and that is what the Government wishes. Money to discharge these liabilities must be voted by Parliament from year to year.

§ Mr. D. MASON
I do not think the arguments of my hon. Friend who moved this Amendment is at all inconsistent with the explanation given by the Home Secretary. If I understand the hon. and learned Gentleman, his argument is that 1195 these contracts were entered into. The matter was argued at some considerable length when the Bill was read a second time. As I understand my hon. Friend, he desires to have some cheek of this House over these contracts by knowing the extent of our money liabilities; therefore he suggests that it is desirable, when carrying out these contracts, that the Government should come before Parliament so that the House may know the extent of the money obligations. The Home Secretary has not at all met that argument. He simply says that this is similar to what was formerly done. I deny that. I think the Amendment is one that really requires further consideration from this House because of the check it gives to the House over our money liabilities by compelling the Government to come before Parliament for the money necessary to carry out these contracts.

§ Mr. HOBHOUSE
It may perhaps be very hard for the Home Secretary to have at hand the details of the expenditure which come under this Clause. It is a thing with which his Department does not deal. It is finance. The Chancellor of the Exchequer has only assumed office and cannot be supposed to know the details of everything; but I should like to remind the Chancellor of the Exchequer that when this Bill was last under reivew we had a very considerable discussion here as to whether or not we were to hear the details of the expenditure it was proposed to meet under the provisions of this Bill. The then Financial Secretary to the Treasury (Mr. MacKinnon Wood) gave us to understand that it was only proposed to provide in this Bill for the payment of such sums of money as could not be met out of the Consolidated Fund Bill. I think that was his explanation. I then gathered from him—though I think the matter remained exceedingly abscure at the end of the Debate—that practically the whole requirements of the Government which were mentioned as having been incurred previous to the date on which this Bill was expected to pass would be met with out of the ordinary Votes of the House of Commons, and would not be met with any money specially provided out of this Bill. It would be very hard, and, I think, unjust to ask the Home Secretary for details of that expenditure, and still less the Chancellor of the Exchequer. But I would suggest to the right hon. Gentle- 1196 man opposite that when we get to the Report stage of the Bill—I do not know that he proposes to take it this evening— that he should see if he cannot give us some indication of the amount of money which it is proposed to cover by this Bill, and give us, too, some indication of the object upon which the money is to be expended. We were promised on the original discussion various details, and I expected, when this Bill was presented, a Schedule showing the expenditure. We have not got it, and cannot now get it, but I hope before we come to the Report stage that we shall have that information.

§ Mr. PRINGLE
It is not my intention to deal with the point which has been raised by the right hon. Gentleman opposite. I have put down an Amendment later which deals with the paragraph of the Schedule to the original Act upon which it seems to me it would be convenient to obtain details. As to the Amendment before us, it is to the effect that all money to meet these obligations shall in future be directly voted by the House of Commons, so that in future the House may know that in a matter of these obligations exactly what the liabilities come to. It is not an attempt to get out of the obligations. It is simply that all pecuniary obligations incurred in future years shall be met out of the Votes proposed in Parliament so that Parliament may know the extent to which it has been committed. The right hon. and learned Gentleman pointed out that we were merely adopting the style which occurred in the original Act. But when the original Act was proposed we were all assured then that the Government were merely dealing with emergency legislation, and the Bill went through with very little discussion because it was regarded as emergency legislation. This is the third measure of the kind. We can hardly describe this Bill as of an emergency character. In the circumstances I think that a sound case has been made out for the form of words proposed in the Amendment.

§ Sir G. CAVE
The object of the Bill is to get a security behind these various transactions. As regards the point raised by the hon. Gentleman opposite, I do not think my hon. Friend the then Secretary to the Treasury said that he was going to give figures in Committee. I read his speech carefully before this discussion, and I think he said, what I am bound to 1197 say, that there are some figures which could not be given—even on Report. There are a good many categories under which one could not give details—for instance, in regard to the Insurance Committee. It may be that there is no expenditure at all. If a general list were made out, I should have to put a note against many items saying that I could not give them. I shall be very glad, however, to show my right hon. Friend any figures that it may be possible to show him.

§ Mr. WATT
I beg to move, in Subsection (1), to leave out the words "the passing of this Act," and to insert instead thereof the words "the twenty-third day of November, nineteen hundred and sixteen."
This is a measure of indemnity. The Government have many contracts into which they have entered, and this is a Bill by which the House of Commons gives its approval to these contracts. I have just inquired as to what contracts are included in this Bill of Indemnity and no satisfactory answer has been given. The effect of my Amendment would be that the end of the time with which this measure will deal will be altered from the passing of the Act—probably at the end of this week —to 23rd November, when the measure was first brought in. The Financial Resolution was introduced into this House on 23rd November. The idea of this Amendment is that it is only the contracts which have been entered into before 23rd November for which this Bill will be the indemnity. There is, perhaps, not much on the face of it in altering the date, but there is this principle: that a measure such as this of indemnity might at any future time be brought into the House of Commons and contracts rushed in between the entrance of the Bill and the exit of the Act. It is the effect of this principle being legalised that made me move this Amendment. If there are any contracts entered into between 23rd November and the passing into law of this measure they can be dealt with in the future by another measure. In the meantime I think it right that this particular measure should be limited as to that which it sanctions and that to which it gives an indemnity to the moment when the Bill was introduced into the House of Commons.

§ Sir G. CAVE
There is not very much in this Amendment, though my hon. Friend 1198 stated precisely how the matter stood, so far as this Bill is concerned. There are only two new items in it, as he will see. The one is the loansor the guarantee of loans made for the benefit of places damaged or affected by any hostile action, and the other is the guarantee in connection with the British Italian Corporation in Sub-section (3). These obligations were incurred before the date mentioned, 23rd November. It may be that some small contracts of the kind have been entered into between 23rd November and now. I do not know. I hope, after what I have said, my hon. Friend will not press his Amendment. I have given him all the facts I know.

§ Mr. PRINGLE
I beg to move, at the end of Sub-section (1), to add the words, "Provided that the Schedule to the Government War Obligations Act, 1914, shall be limited so as to exclude the obligations set out in paragraphs (2), (3), (4), and (5) of that Schedule."
In the previous Debates on this Bill we received information from the late Financial Secretary to the Treasury regarding the obligations incurred under the Schedule of the original Act, but all the information given related to obligations incurred under paragraph (1) of that Schedule, which is to this effect: "Guarantees given to the Bank of England in connection with

(a) The discount of bills of exchange;

(b) Advances to acceptors of bills of exchange;

(c) Advances in connection with loans made to members of the Stock Exchange."
On the Second Reading of the Bill my recollection is that the late Financial Secretary to the Treasury gave us an account of exactly how the position stood regarding each of these things. But, as regards the other paragraphs of the Schedule, and what obligations had been incurred in respect of them, he maintained discreet silence. The second paragraph deals with
"Guarantees given in connection with bills of exchange drawn by traders having debts due from abroad which are not immediately recoverable, and in connection with advances to traders to enable them to meet liabilities under contracts entered into before the outbreak of war."
1199 It seems to me that all the obligations arising under that paragraph might well be disclosed to the Committee at this stage. Surely it is possible for the Government to indicate the extent of these guarantees, and to give us an estimate of the liability arising from them. Then under paragraph (3) we have:
"Payments on contracts of insurance, or reinsurance against war risks of ships or cargo or for the relief of dependants of persons on insured ships, so far as provision is not made for those payments by the application of premiums or otherwise."
Some information has been given to this House by the late President of the Board of Trade regarding the position of the insurance fund, and as such information has been given consistently with the public interest, I would not greatly press for any statement at the present time with regard to them. The fourth paragraph deals with:
"Any loan raised by any of the Powers allied in the present War or by the Government of Egypt or by the Government of any of His Majesty's Dominions or any British Possession or Protectorate."
I think particulars might be given up to the passing of the Act in relation to that. But the most important provision of the original Act is contained in paragraph 5:
"The maintenance or assistance, in connection with the present War, of food supply, trade, industry, business, or communications in the United Kingdom or in any other country, or the relief of distress in the United Kingdom or in any other country."
Now up to the present time we have received no information whatever under any of these heads. I think it is extremely important that some information should be given to the House before we sanction the re-enactment by reference of those paragraphs in the original Act.
I think, for example, that some information might at this stage be given both as to the obligations and as to the results of the Government's dealing with such an article as sugar. We have now had over two years in which sugar has been a Government monopoly, and, although it might not be possible for the Government to give us information up to date, they might surely give us information for the 1200 first two years of the War. Then we know that for over a year now the Government have entered upon extremely extensive dealings in wheat. I think up to a certain period it should be possible for the Government to tell us what exactly has been the result of the obligations incurred in respect of that important article. But, in addition to these things, there have been obligations incurred in regard to trade, industry, and business. Those are the most interesting of all. The Government themselves have never said anything about them, but there have appeared unofficial statements in a number of periodicals suggesting that very heavy liabilities have been incurred by the Government.
One of the things which brought this question to my notice were the dealings with Colonial Governments. While we see nothing about this matter in the Press of this country, there have been statements in Canadian newspapers regarding the Government dealings with a company called the British American Nickel Corporation. I do not know anything about this company, except that it is a company incorporated in the Dominion of Canada with a capital of 10,000,000 dollars in Six per Cent. Bonds, equivalent to £2,000,000, and with 20,000,000 dollars in shares equal to £4,000,000. References have appeared in Canadian papers, as well as in the "Engineering and Mining Journal" of New York, from September to November of this year, in which the statement has been made that this company has received the support of the British Government. Of course, if it has received the support of the British Government, it would be in virtue of this paragraph in the Schedule of the original War Obligations Act. But the statement in these papers is that the British Government has guaranteed to them interest for the next ten years amounting to a bounty of £120,000 per annum. Then we are also told the Government has given an undertaking to that company to take over part of the output. I do not know whether that is the case or not, but it is obvious that, under this paragraph of the Schedule, it would be possible for the Government to enter into such an obligation without coming to Parliament at all. Naturally, therefore, we desire to know whether such obligations have in fact been incurred—whether, in fact, in the first place, obligations have been incurred to the British American Nickel Corporation; secondly, if such obligations 1201 have been incurred, what is the extent of those obligations, are they confined to the present year, or do they extend over a period; and if they extend over a period of years, what is the annual liability? I think, in view of the fact that these statements have been publicly made, it is the duty of the Government to inform the House whether, under the paragraphs which I have read to the House, these liabilities have actually been incurred.
That is only an example. It is obvious that a great many other obligations of a similar kind may have been made. According to the terms of paragraph 5, almost any kind of obligation whatever might be covered, and we are, in fact, by this Bill giving the Government a complete indemnity for its action in the past, and we are also shouldering for the future the obligations which might be involved in these contracts. Then there is the other matter involved in the words "communications in the United Kingdom." That involves, of course, the whole of the bargain in relation to the railways, as I understand, because it can only be in terms of this paragraph that the contract—for it was undoubtedly a contract—with the railway companies can be carried out. The Government took over the railways, but they were taken over on terms, and an obligation has been entered into with the different railway companies, which, I assume, is covered by this particular paragraph, and we know from the statement just made that the Government have agreed also to take over the Irish railways.

§ Mr. THOMAS
They ought to have done it long ago.

§ Mr. PRINGLE
I am not dealing with that question. The whole question I desire to put is, on what terms is it to be done? The House of Commons should be told what are the terms. We know that as the result of taking over the British railways the Government has relieved the shareholders of these railways of the obligation—

The DEPUTY-CHAIRMAN
I am not sure myself as to the actual powers under which the railways were taken over. I think it was under an old Act. I do not think they come under this Act at all, or under any of the other War Obligation Acts. The hon. Member must show they would, or I am afraid I cannot allow him to continue on that line.

§ Mr. PRINGLE
I was making the point that I believed the Government had power to take over the railways. But in so far as they entered into obligations, apart from the powers, it was my view that these obligations could only be covered by such a paragraph as this. Of course, if it is not so, and if the Government state that this paragraph was not required to cover the obligation, then my point goes by the board, and I shall not deal with it further. If, however, it turns out otherwise, I hope the Home Secretary will give me an answer on these questions. That, however, exhausts practically all the points on which I wished to speak on this Amendment, and I hope in moving it I have given the Home Secretary an opportunity of giving us further information or at least some information, because we have never had any information at all regarding this paragraph.

§ Sir G. CAVE
I do not think my hon. Friend really desires to exclude these paragraphs from the operation of the Bill. If he did so he would wreck the Bill entirely, because he would destroy by his Amendment, among other things, the whole of the Government insurance scheme, and other very important schemes. I understand that what my hon Friend wants is information with regard to the points he has put. He throws rather a heavy burden upon my shoulders. I will give him such information as I have. With regard to paragraph 2, the question of trade debts, I am told that at the very worst, the liability is not likely to exceed £200,000.

§ Mr. HOBHOUSE
Would the right hon Gentleman, in giving the information to the House, please tell us how much has been incurred in debt and how much is, still to be met?

§ Sir G. CAVE
I do not think I can do that. These are guarantees of debts, and they take some time to ascertain. It is not only not possible to say they are bad debts, but it is not desirable to say they are bad debts until we are certain. With regard to paragraph 3, that covers the Government scheme of insurance or reinsurance against war risks. It is really not possible, I am afraid, to give any figure at all. Of course, the result: of that scheme depends upon events —upon what our enemies are able to do, and what damage they inflict on property. There might be a balance on the right side. It is impossible, at all 1203 events, to say what. It is an enormous scheme, and it is impossible to give any reliable figures at all. The only other paragraph commented on—and the hon. Gentleman commented on it with some force—is paragraph 5, which relates to the maintenance or assistance, in connection with the present War, of food supply, trade, industry and so on. As to the last paragraph, that includes a very large number of items. Take the items of meat and sugar. They alone run into millions of pounds. Where these goods are sold to purchasers it is hoped that the proceeds will cover the cost, and I cannot say that there is any particular figure which will fall upon the public funds in that category. With regard to the British-American Nickel Company I am afraid that I cannot give the facts to-day. As the hon. Member knows, nickel is an article which it is very desirable to keep out of the hands of our enemies, because there has been a lack of that particular thing in enemy countries, and it is an article of vital importance to them. I really hope my right hon. Friend will not press me on that point. With regard to the railways, the action we have taken is under the Railways Regulation Act of 1871. When you take them over you are at liberty to arrange the terms.

§ Mr. THOMAS
The best bargain the Government ever made.

§ Sir G. CAVE
I do not think the action was taken under the first Act.

§ Mr. PRINGLE
What is the meaning of the words "or communications in the United Kingdom"?

§ Sir G. CAVE
I am afraid I cannot answer that point without notice, but I will endeavour to ascertain. I hope what I have said will be considered satisfactory.

§ Mr. PRINGLE
I ask leave to withdraw my Amendment.

§ Mr. PRINGLE
I beg to move, at the end of Sub-section (1), to insert the following words:
"Provided that the obligations set out in Section one, Sub-section (3), of the Government War Obligations Act, 1915, are hereby excluded."
I understand the difficulties under which the right hon. Gentleman labours in dealing with this Act, as he is quite 1204 fresh to it, but the Sub-section to which I refer relates to the Schedule of the original Act which introduces a number of new items. Sub-section (3) of Section 1 of the Act of 1915 provides as follows:
"(3) The Schedule to the principal Act, which sets out the Government War obligations, shall be extended so as to include obligations incurred in connection with the present War in respect of payments—

(a) for the relief of the dependants of persons on any merchant ship or fishing vessel;

(b) for compensation in respect of persons killed or injured on any merchant ship or fishing vessel;

(c)on contracts of insurance against war risks of the personal effects of masters, officers, seamen, and fishermen; and

(d) in respect of aircraft and bombardment insurance contracts;

(e) any arrangements for restricting the supply of any commodities to the enemy;

(f) any arrangements for the regulation of the foreign exchanges;

(g) Any scheme in connection with any such last-mentioned arrangements for enabling securities to be placed at the disposal of the Treasury;

(h) any exchange of obligations with any powers allied with His Majesty in the present War."
My object in moving this Amendment is to obtain information, and therefore I need not repeat the arguments which I used on my last Amendment. I only desire that the right hon. Gentleman should give the Committee such information as he has so that we may know what liability has been actually incurred in the terms of the Sub-section which I have read.

§ Sir G. CAVE
I am afraid I have less information in regard to this point than I had with reference to the last one, but this Amendment would be absolutely fatal to the Bill. I am sorry I cannot accept this proposal, and I hope it will not be pressed.

§ Mr. PRINGLE
It was not our intention to press this Amendment to a Division, but when the Debate upon the Second Reading took place under the late Government these Amendments were drafted immediately after the Second Reading with the view of pressing upon 1205 the Secretary to the Treasury certain points upon which he had promised us information. The only way I could raise this matter was by an Amendment leaving out this paragraph in the original Act. I know that there has been a revolution in this House and we have now to deal with the right hon. Gentleman, who knows nothing about the subject, and consequently I must be content with the meagre information which I have received. If in twelve months' time the right hon. Gentleman is still responsible for a measure of this kind, we shall then take the opportunity of pressing these points upon him, and we shall not be satisfied with the answers now given.

§ Mr. WATT
I beg to move, in Sub-section (2), to leave out the words "compensation for damage to property resulting from any hostile action against His Majesty or action taken for repelling such action, and."
We are not making much headway in our attempts to improve this Bill. When we put down these Amendments we expected to have the assistance of the right hon. Baronet the Member for the City of London (Sir F. Banbury), but unfortunately he is not with us to-night, and for that reason we are not making such a good show. We are in hopes that the Home Secretary will see his way to accept at least one of our Amendments. These words were put in to give compensation for damage done in Scarborough, which town seems to have been picked out for better treatment than any other of our East Coast towns. When this matter was before the Committee the Irishmen demanded that Dublin should be considered. There was no reason why Scarborough should be treated better than other East Coast towns, and perhaps this can only be accounted for by the fact that the hon. Member for Scarborough (Mr. Rea) was a Member of the late Government That fact, however, no longer holds good, and we hope that the Amendment I am proposing will leave out Scarborough and thus put all the East Coast towns on the same basis, not making a pet of one and an enemy of another, but placing them all upon an equal footing.

§ Sir G. CAVE
I am not very well acquainted with the circumstances under 1206 which these obligations were incurred, but I know that an agreement was made for entering into a Loan with Scarborough on account of the bombardment. A Loan has been guaranteed, and I could not entertain for a moment the suggestion that a change of Government should make any alteration in that obligation because we desire to honour the obligations of our predecessors. Therefore, I hope the Amendment will not be pressed.

§ Mr. PRINGLE
I think the right hon. Gentleman has misconceived the object of this Amendment. Up to the present all we have been told in regard to Scarborough is that the Government have guaranteed a Loan for the benefit of Scarborough. If the Amendment of my hon. Friend were adopted the Government would be still able to carry out the whole of their obligations in regard to Scarborough. The Sub-section speaks of
"obligations incurred in connection with the present War in respect of compensation for damage to property resulting from any hostile action against His Majesty or action taken for repelling such action."
What are these obligations? We have been told about the guaranteeing of a Loan to Scarborough, but that is not the only thing, and this Section covers a great deal more. It deals with obligations resulting from any hostile action. What, then, is the obligation entered into?

§ Sir G. CAVE
made an observation which was inaudible in the Reporters' Gallery.

§ Mr. PRINGLE
Why do you want the words if there is no obligation? The Subsection, as amended, would cover the case and all the obligation incurred in regard to Scarborough. Consequently, these further words simply tempt the Government to do something more. It is a temptation to them to hold out inducements to other people in the future. There might be some member of the new Government who might have a constituency—

The DEPUTY-CHAIRMAN
I have looked into this Amendment—I must apologise to the Committee, but I have only taken the Chair quite recently—and I do not think it can possibly be in order. 1207 If the Amendment were carried, the Clause would read:
"The Schedule to the Government War Obligations Act, 1914 (which as extended by the Government War Obligations Act, 1915, sets out the Government War Obligations), shall be further extended so as to include obligations incurred in connection with the present War in respect of loans or guarantees of loans made for the benefit of places damaged or affected by any such action, either actual or apprehended."
What "such action"? We have left out the words which express the limiting action or the enacting action. I am therefore much obliged to the hon. Gentleman for his speech. He has called my attention to that which I had not seen for the moment, and I am afraid that I must rule the Amendment out of order.

§ Mr. PRINGLE
Is it not possible for me to hand in a manuscript Amendment to leave out the words "such action" and to insert the words "hostile action"?

The DEPUTY-CHAIRMAN
I do not think the hon. Member could do that, because the Committee would have determined to leave out the words "hostile action," and, having left them out, the Committee could not in the next breath put them in again.

§ Mr. PRINGLE
We are only leaving them out in one definite connection, namely, "in respect of compensation for damage to property resulting from any hostile action," and I submit that I could reinsert them in another connection.

The DEPUTY-CHAIRMAN
It is very ingenious, but I am afraid it will not do. The Clause says, "damage to property," and the Amendment proposes to leave that out. Then it says, "loans made for the benefit of places damaged." There are no other places that could be dam-aged. I am afraid that I must rule the Amendment out of order.

§ Mr. WATT
I beg to move, in Sub-section (2), to leave out the words "either actual or apprehended."
I admit that this Amendment is not of much importance, but, inasmuch as the Financial Secretary to the Treasury on the former occasion said that he did not see any sense in these words and did not know why they had been inserted, I think probably the Home Secretary will accept it.

§ Sir C. HENRY
I have an Amendment to leave out the words "or apprehended." I wanted to draw attention to the fact that this Bill deals with obligations incurred, and I do not see how any obligation which is apprehended can come under the title "obligations incurred." I do not think we ought to give the Government a blank cheque to enter into any obligation which has not already been incurred.

§ Sir G. CAVE
Scarborough was unfortunately attacked. Thereupon actual damage ensued. Besides that, Scarborough, not unnaturally, apprehended other damage. The result of the damage apprehended was that people left the town and that householders had difficulty in paying their rates. The whole town suffered because of the damage apprehended quite as much and, indeed, considerably more than because of the damage actually incurred. Thereupon the Government entered into an obligation and gave a certain guarantee in respect of the damage suffered by reason of the actual injury done and by reason of the damage apprehended. That was the reason of the Bill. It would be wrong to leave out these words. Otherwise, you would have to inquire whether the guarantee was necessitated by the actual damage done. The words to my mind are quite right and ought to be allowed to remain in the Bill.

§ Mr. D. MASON
I think it is quite clear that it only refers to the damage done to Scarborough and not, as the Mover of the Amendment thought, to future action; but, in view of the fact that it is not desired to give the Government a blank cheque, will the Home Secretary put in words so as to limit it to the action to which he has just referred?

§ Sir G. CAVE
It qualifies the word "action."

§ Mr. MASON
It is rather vague.

§ Mr. PRINGLE
There is some importance in this Amendment, because, after all, the form of this Clause will apply to similar obligations incurred in the future before another Bill is passed. We might have a case of some community which had never been bombarded at all but which was living in fear of bombardment coming to the Government and saying, "We have suffered great loss owing to the apprehension of hostile action." A great many places have suffered from the apprehension of hostile action, but, whilst the exodus 1209 from these places may not have been as great as from others, it has in fact involved a considerable loss. It is an open secret that some watering-places, both on the East Coast of Scotland and of England, during the summer, have suffered loss because of this apprehension, and I look upon the word "apprehended" as an indication to places which have suffered loss merely through the apprehension of hostile action to come to the Government and say, "You have given a Loan and a guarantee to Scarborough because people have run away for fear the Germans will come back again. Why will you not give us a Loan or a guarantee against the loss which we have incurred by reason of the fact that people have not come to us because they fear the Germans will come?" There is on that ground a good deal of substance in the Amendment.

§ Sir G. CAVE
In view of what my hon. Friend has said, I will consider these words before the Report stage.

§ Mr. PRINGLE
There may be no Report stage.

§ Sir C. HENRY
I beg to move to leave out Sub-section (3).
I venture the opinion that this Amendment is perhaps the most important one in connection with this Bill. First of all, I am inclined to take the view that it is outside the scope of the Bill, because special words have had to be put into the Sub-section that this "obligation incurred in respect of the British Italian Banking Corporation is hereby declared to be an obligation undertaken in connection with the present War." The framer of the Bill therefore must have realised that this was not really a war obligation. It is specifically declared in the Bill that for this purpose it comes under the category of a war obligation. Although I am going to press the Amendment to leave out this Sub-section, I want it to be fully understood that I am in full sympathy with the action of the Government as to the co-operation they are willing to give to this newly-formed British Italian Banking Corporation. I believe that to foster that class of business would be to the advantage of the State, and would in some measure come under the Paris Resolutions. As I understand it, this British Italian Banking Corporation was founded by the Credito Italiano, which is recog- 1210 nised as one of the first and leading financial institutions in Italy, and I believe the scheme was fostered here by the managing director of the London branch, Mr. Manzi Fé, of whom there is no more able and capable man in the City of London. That, however, does not dc away with the fact that the entering into this obligation by the medium of this Bill should be strongly protested against.
8.0 p.m.
I am very certain of my ground in this respect, because on the Second Reading of the Bill the present First Lord of the Admiralty (Sir E. Carson) opposed the Clause very vehemently. He said this proposal should be embodied in a measure, and should not be smuggled through in a War Obligations Bill. I am not using his exact words, but that was the sense of his remarks on that occasion. Why was not this the subject of a special Bill? It is a special obligation, not undertaken, I maintain, for war purposes, but for trade purposes which practically will come into operation after the War. When the Government helped the British Dyes, Limited, they came to this House and gave a full explanation of their object, and it was debated. I admit the present Government is not responsible, but one of its leading members was very much opposed to this Sub-section. The late Government evidently did not want this operation to be fully discussed, and therefore did not bring it forward in the usual Parliamentary way. I am inclined to think that they are not very proud of the operation. The British-Italian Banking Corporation has a British capital of £1,000,000 sterling, and the Government has guaranteed the interest for ten years at 5 per cent. on that capital. They have undertaken an obligation of £50,000. The then Secretary to the Board of Trade, on the Second Reading, stated that although they had undertaken this obligation of £50,000—that is, to pay 5 per cent. on this capital of £1,000,000 for ten years —they might not be called upon to do so. Well, I am inclined to the opinion that for the first two or three years they will be called upon to pay it, until this institution is fairly on its legs. Then, supposing that the corporation afterwards made a profit, by which they were able to pay a dividend of 10 per cent. in the fourth year—on three previous years they had made no profit, and the Government would have had to pay £50,000 a year—the Government would then receive nothing in refund from the 1211 corporation at all, but they would be exonerated for that year from paying anything towards the guarantee of 5 per cent. I consider that extraordinarily bad finance. With the British dye companies, I believe I am right in saying, the Government were responsible for, I believe, £500,000 of debentures, and they had a first charge on the concern, on which I think they were receiving 4 per cent. That is a sound business proposition. Previous to the War, they took a participation in the Anglo-Persian Oil Company, of which they took capital stock, and of which they shared the profits. Now, if the Government had said to the British-Italian Banking Corporation, "We will advance you £500,000, and will have a first charge on your security, and be satisfied with 4 per cent. or 5 per cent." that would be another proposition; or, if they had advanced £400,000, and said, "We will participate in the profits," that would be another proposition; but why they should undertake to be responsible to pay 5 per cent. interest for ten years, thereby undertaking a liability of over £500,000, I am at a loss to understand.
It is interesting to know to whom they are guaranteeing this interest. I have here a list of the shareholders to whom they are guaranteeing this interest of this British-Italian Banking Corporation. I find that Sir Ernest Cassel has been allotted 3,750 shares, which is practically nearly £80,000. I do not see any reason why Sir Ernest Cassel should have his interest guaranteed for him. Then I find that the Prudential Insurance Company has been allotted 4,950 shares. Well, the Prudential Insurance Company is a very rich corporation, as my hon. Friend is well aware. Why should they have 4,950 shares, coming, roughly speaking, to £100,000, and why should they have their interest guaranteed? Then there is Lloyds Bank, who were also allotted 5,000 shares. Another very powerful and rich banking corporation—the London and Westminster Bank—have also had 5,000. Other banks have shares, and the Bank of Liverpool has 1,250 shares. If anyone examines this list I think he will find that it contains the names of the wealthiest men and the richest corporations that are in existence in this country, and why they should have been guaranteed by this Government 5 per cent. for ten years, to my mind requires a good deal of explanation. I know that the present Govern- 1212 ment is not responsible for it. I know it was a legacy left them by the previous Government, but the late Chancellor of the Exchequer is here, and I find his name on the back of this Bill. Perhaps he might be inclined to take part in this Debate, and to tell us some of the reasons-which prompted the late Government to guarantee to these gentlemen, and these corporations, this 5 per cent. Although I am in full agreement with the object of the Bill, which is to develop our trade with Italy, yet with the manner in which that object is carried out I heartily disagree. I have never come across anything more illogical than this proposal, and I do not wonder that the late Government endeavoured to smuggle it through in the War Obligations Bill when it was really practically no war obligation at all. I think it would have been much fairer and more straightforward if it had been brought in as a separate Bill. Therefore, I move the Amendment to omit this Sub-section.

§ The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Mr. G. Roberts)
I think the hon. Baronet has lodged his objection to this Sub-section under two heads. First of all, he says that it is entirely outside the scope of the Bill, and, if my memory is correct, he stated on the Second Reading that it ought to have been brought in as a distinct Bill. Well, that may have been so, and probably it would have been a preferable measure; but here it is, and we have to deal with it as part of this Bill. As the hon. Baronet has recognised, this is a legacy handed down from the late Government and we have to treat it accordingly. Certainly, if there was any disposition to try to rush it through without discussion, the parties failed to secure their aim, as the matter was very soon brought to the attention of this House, and it certainly has secured a good deal of consideration outside. I understand that the hon. Baronet does not object to the purpose of this Sub-section. He thinks it is a very good thing that we should endeavour to counteract German influence in Italy and to encourage trade between this country and our Allies, but that he mainly objects to the terms under which it had been arranged. Well, of course, he will exonerate me from any responsibility, or even any credit, for the terms that have been arranged. I do know this, that the matter was the subject of a good deal of consideration by the Department which I represent in this 1213 House and by the Treasury, and that these terms were such as were agreed upon by those Departments. I think the hon. Baronet is aware—it was stated in the discussion on the Second Reading—that two banks of very strong standing in in this country had undertaken the responsibility of raising the capital, and I apprehend that it is through the medium of these two banks that the other shareholders to whom he has referred to-day have been interested in the project. I can only say that this is an arrangement which has been fixed and approved by the two parties in question, and certainly I do not think that there is any disposition to reject the whole agreement.

§ Mr. WATT
I am glad that the hon. Baronet proposed this Amendment. I think it a most important Amendment, and one which, if accepted, would improve this measure. There can be no doubt whatever that a special Bill should have been brought in for the purpose of this Sub-section, namely, the financing of this Italian bank. Like the hon. Baronet who proposed the Amendment, I think the scheme of financing the Italian bank is quite a good one, and quite one which this House should take up. But a separate measure should have been brought in to deal with that transaction. It is a very unwise thing to state, as it is said in this Sub-section, "It is hereby declared that any obligation undertaken in connection with this British Italian bank is in connection with the present War." This is made a war measure by the simple ipse dixit of the Government. This Amendment was supported in Committee on the Resolution by yourself, Sir Frederick, -and I dare say you still think we are in the right, and that this measure should be treated otherwise than in a Sub-section of a Section. I am sorry that the Parliamentary Secretary to the Board of Trade, who replied to the hon. Baronet, did not promise that on the Report stage he would give this matter his serious consideration, for it is certainly one of the most important Amendments which has been proposed.

§ Sir C. HENRY
I fully recognise the position of the Parliamentary Secretary to the Board of Trade, and I may mention that if the late Government had been responsible for the Committee stage of this measure I would have pressed this Amendment to a Division, as I feel very strongly on the point. I do urge on the new Government not to resort to these methods while they are in office. They will 1214 be fortified, I am certain, by some of their present leaders in the Government, and it. is much fairer and more honest, even in time of war, when they have proposals to make which are practically a new departure, that they should bring them forward! in a separate Bill and submit them to the House of Commons. I beg leave to withdraw the Amendment.

§ Mr. McKENNA
rose—

The DEPUTY-CHAIRMAN
I would point out to the right hon. Gentleman that if he refuses to allow the Amendment to-be withdrawn, it will have to be put to the Committee.

§ Mr. McKENNA
Then it can be negatived. I should not have risen but for the last observations of my hon. Friend. He seems to think that this proposal has been smuggled into a War Obligations Bill; that it has nothing to do with the War; and that it stands on a different footing from the other obligations contained in this measure.

§ Sir C. HENRY
Will the right hon. Gentleman read the Sub-section—the enabling; words?

§ Mr. McKENNA
I will do so if he, wishes; if I have it here.

§ Sir C. HENRY
The last line—"It is hereby declared to be an obligation in connection with the present War."

§ Mr. McKENNA
Yes, that is the Clause which declares it; it is the declaratory Clause. The reason for that is very simple. In the first place, this is an obligation which would never have been entered into in peace. It is only entered into, and it was only entered into, because of the War, and it is in the very truest sense of the term, consequently a war obligation. These words were put in as the declaratory words in order, by anticipation, to meet the misconceptions of my hon. Friend. Secondly, as regards the question of its being smuggled into the Bill, this proposal and the terms of this proposal were announced by my right hon. Friend the late President of the Board of Trade or by myself, I forget which, in this House at the time when the undertaking was made, and it was received in this House with universal approval. There has been no smuggling, and nothing hidden.

§ Sir C. HENRY
The right hon. Gentleman did not Bay it was in the War Obligations Bill; we expected a separate Bill.

§ Mr. McKENNA
I have dealt with that point, and I am now dealing with the word "smuggling." My hon. Friend said it was a secret matter. Thirdly, my hon. Friend dealt with the terms of the proposal as being unreasonable. I regret to say that he endeavoured to raise a great deal of prejudice by reciting the names of the persons concerned, and suggesting that, as they were very rich persons, they did not need a guarantee from this country. I am sure even the hon Baronet, who is always willing to assist the State to the extent of the whole of his fortune, will recognise it is not unreasonable, when persons embark their capital in a venture which they do not regard as in itself likely to be profitable but do so in the interests of the State, that they should be guaranteed a reasonable return for a short period of years. A return of 5 per cent., having regard to the rate of interest which can be obtained for money at the present time, is not a very big return. I deprecate the fact that my hon. Friend should have thought it necessary to import prejudice into the discussion of this Bill by impugning to the gentleman and banks who have assisted in this matter that they have been getting an unfair advantage for their own benefit. The late Government—and I believe the bulk of its members are in the Government of to-day—at the time believed, as I believe still, that this measure was of great value in the War, for cementing trade relations now and hereafter between this country and one of her most important Allies. It is a policy which was fully declared at the time, and it met with the full approval of this House.

§ Sir C. HENRY
Perhaps I may be allowed to say a few words in reply to the right hon. Gentleman. He has not quite seized my point. I am well aware that the firms and individuals who subscribed at the request of the Banking Corporation cannot be accused of lack of patriotism, and the right hon. Gentleman, if he intended to convey that as my meaning, has certainly misrepresented what I said. What I did say was that this was not a sound commercial transaction. Why did they not adopt the same course with regard to British dyes? Here is an ordinary financial enterprise in which a number of men have put their money. I believe it will eventually prove a great success. But for the first few years it may not return sufficient to pay a dividend. Why should these gentlemen be guaran- 1216 teed a dividend simply in order to carry them over the initial stages until they get their business in full running, seeing that afterwards they may make from 10 per cent. to 15 per cent. interest or dividend? Why should they be guaranteed that by the State? In spite of what the hon. Gentleman said, it is not a sound proposition to which the Government should have consented. Instead of guaranteeing the dividend or making themselves responsible for £500,000, it would have been better for the Government to have drawn a cheque for £500,000 and participated in the debentures. They did so in the case of the Anglo-Persian Oil Company, and, therefore, it would not have been a new departure. I do hope that the present Government will not continue these methods of finance.

§ Mr. WATT
I beg to move, at the end of Sub-section (3), to add the words, "Provided that such advance or guarantee does not exceed £50,000 per annum or does not extend beyond the period of ten years."
Neither the hon. Gentleman on the Treasury Bench nor the right hon. Gentleman opposite will argue, surely, against the wisdom of inserting this limitation on the amount to be advanced to this Italian bank. At present we are told it is to be £50,000 per annum for ten years, and what we want to do by this Amendment is to simply limit the figures to those stated. The right hon. Baronet the Member for the City of London (Sir F. Banbury) again and again moved an Amendment to this effect in the House. I hope the Secretary to the Board of Trade will favourably consider this proposal. It limits the amount to be advanced precisely to the sum promised by the late Government.

§ Mr. ROBERTS
The agreement under consideration is to confine the annual payment to £50,000, or £500,000 for the ten years, and I think the hon. Gentleman can accept it that that agreement will not be departed from. But there is some difficulty about accepting the Amendment in reference to the period of ten years. The hon. Gentleman is aware—none better —that this sum of £50,000 per year is to be made free of income, which means that 1217 even although under Treasury Regulations both the Income Tax and the Excess Profits Tax will have to be paid to the Treasury, the Treasury will reimburse the amount each year. The tax paid in the first year will be reimbursed at the end of the second year, and it necessarily follows that the tax paid in the tenth year will probably be reimbursed at the end of the eleventh year. It is, therefore, impossible to limit the operation of the agreement to the ten years, but I hope the hon Member will accept the assurance that the agreement is binding in regard to the £50,000 per year. It is possible, however, that the business may hang on for over the ten years, and that is the reason why we cannot accept the Amendment.

§ Mr. PRINGLE
This discussion has developed new terms of contract. Apparently now the interest to be guaranteed to these various people who have invested their money is to be free of Income Tax and Excess Profits Duty. That is quite a new term in the contract. Of course, if it is a part of the contract, the House must accept it. But at least my hon. Friend has this consolation in having moved this Amendment, that he has succeeded for the first time in obtaining information hitherto denied to us, namely, that the interest is not subject to ordinary taxation, but is absolutely free both from Income Tax and Excess Profits Duty.

§ Mr. D. MASON
The Home Secretary, in reply to an Amendment moved by my hon. Friend (Mr. Pringle) with reference to the Treasury deposit scheme which is known as the mobilisation of securities scheme, said that it was of great benefit to the country. I do not propose to argue that point again. It is quite possible that the late Chancellor of the Exchequer, who was responsible for the scheme, may not always necessarily support it, because he may change his views owing to changes in the money market and the exigencies of national finance later on. I do not suppose that the Home Secretary is prepared to argue such a technical question as this. We are entitled, at this early stage of the new Government, to have some representative of the Treasury here. The Chancellor of the Exchequer is not here to argue the matter, which involves an enormous liability on the people of this 1218 country. No one can expect the new Government to alter their policy at the beginning of their lease of office, yet one would have liked to have heard from the Treasury some exposition of their policy with regard to the continuance of this method. I have pointed out time after time the stimulus given to our imports. The Board of Trade returns bear that out. Up to date they show an excess of £500,000,000 and, as I pointed out on the Vote of Credit, possibly with the excess of munitions it may amount to £700,000,000 at the end of the year. We are entitled to have some exposition of policy from the present Ministry.

§ The CHAIRMAN
Not in Committee.

§ Mr. MASON
I quite agree. I do not expect any exposition of policy with regard to trade, but I thought the Government would have been able to defend their mobilisation scheme which is involved in this Bill, that it would let us know whether they propose to continue it, and why, as the Home Secretary said a few minutes ago, it is such a benefit to the country. Of course, one cannot expect that a policy which involves such an enormous undertaking as this deposit scheme involves can be rescinded suddenly. I know that it involves the artificial support of the exchange. On this occasion I wish to put on record a protest and to ask that at some early date either the Chancellor of the Exchequer or someone representing the Treasury will tell us whether the Government support the continuance of what I believe to be a scheme which, instead of being beneficial to the country, is doing it great injury.