Sir H. DALZIEL
Before this Debate closes I desire to address one or two questions to the Government upon another branch associated with the conduct of the War. I refer to the question of the winding-up of enemy firms trading in this country. I want to invite the Government to tell us why—in my opinion, at all events—there has been such great delay, and I want to provide them with the opportunity to put forward any defence which they have to make. Many people have expressed surprise that up to the present not one single German firm in this country has been wound up to completion. I confess that I am not in the least surprised. I remember when the Bill was passed six or eight months ago that gave the Government power to carry out this administrative act, it was only after eighteen months that some of my Friends and myself induced the Government to take power to deal with this matter. They would not take the power themselves, and they were only forced by public opinion to act in this matter. I say, therefore, that I am not surprised that they have shown such little vigour in using those powers. I remember my hon. Friend the Parliamentary Secretary, when we had the last Debate on this subject, saying that he was sure they would all agree that it was a very distasteful thing to have to carry out that policy, and I am sorry that our expectations daily are being fulfilled. But I regard this as a very serious matter indeed. I am referring not to firms which have a small enemy alien interest, but firms which are overwhelmingly German and which were allowed by the graciousness of the Government to continue business as usual for the first eighteen months of the War. According to the latest statement on the subject there were 275 enemy alien businesses under control and 333 cases in which winding-up orders had been issued, and 883 there is not a single case in which the winding-up process has been completed. The vast majority of these firms are continuing to-day. They are doing business. A very considerable portion of them are taking orders for a very long time ahead, and really to some of them the winding-up order or the control of the Board of Trade, as the case may be, is an advantage, because they can now boast, as some of them have done, that they are carrying on business in association with the Board of Trade.
These firms, in the most case are being carried on not in British interest, but in German interest, and on balance it will be the enemy who will gain from the business which is now being carried on in certain cases. My hon. Friend will no doubt tell me that there is a full and satisfactory answer to the criticism which I am making. He will tell us that there is the question of the book debts, that these have got to be collected, and that, therefore, we cannot finish the winding-up process until the last book debt has been collected. I submit with all deference that that is no answer. There is never a company of which you can collect the last debt. That is why the law of the country, in cases in which a winding-up process is carried out, gives great power to the Courts, and authorises action which the liquidator may take in regard to the more expeditious winding-up of a particular company, and if controllers or liquidators at present were anxious to wind-up the business of any particular firm, all they have got to do is to go to the Court and state the circumstances of the case, and no reasonable request would be refused. When there are a few debts on the books it is quite possible and quite customary to sell the debts, to invite outside persons to say how much they will give for them, and in that way close the liquidation. If the Government are going to wait until the very last debt has been collected on behalf of these German firms the War will be over—and I am no optimist with regard to the cessation of the War—before these firms are to any great extent wound-up. I would ask my right hon. Friend whether any communication has been made, direct or indirect, to the controllers and liquidators of these firms to expedite their work as speedily as possible? I venture to say no communication whatever has been made. The result is that the controllers and liquidators are masters of 884 the situation. We want some one above them—a controller of the controllers and liquidators—who will hurry up these matters with the least possible delay. There are great and valuable officers at the Board of Trade, more valuable, perhaps, than there are in any other Department, and it is impossible for them to give the time necessary for matters of this kind day by day and hour by hour with the many other matters to which they have to give their attention. They should be dealt with in a separate and independent Department. Why is it that this long delay has taken place? Up to this moment, after two years and three months I challenge him to deny that not one German firm in this country has been officially wound up in accordance with the wishes of the House. It is quite different in Germany, where there was only one British company not wound up soon after the War. Persons have been nominated in all parts of the country as controllers, and some of them have very little knowledge of liquidation duties. I suggest that is one reason. I suggest another. Will my hon. Friend tell me whether these persons are paid by fee according to the magnitude and character of the firms they are called upon to liquidate? I assert that they are being paid by the hour. These men are working possibly months, possibly years, and they are paid so much an hour at the present time. If that is the case, I do not think that is the sort of thing which will carry on with undue rapidity the work for which they have been appointed. I can quite understand, if men are paid by the hour, that the thing is likely to run a good deal longer than would be the case if they got a bonus or premium, according to the shortness of time in which they are occupied in completing the work thrown upon them. I know that the system of payment by the hour exists in some cases, a system which is calculated to prolong the liquidations, because, human nature being what it is, there is no particular reason why it should be otherwise. You have got to revise the whole arrangement, and offer an inducement to these men to complete their work with the least possible delay. Do the Government realise how seriously people throughout the country regard this matter? We see at the present time the heads of British businesses being forced by the law of this country to join the ranks of the Army, while, on the other hand, 885 Germans, some of them naturalised and some unnaturalised, are allowed to carry on their business and snatch and capture the very business which these Englishmen have had to give up in order to fight for their country. I cannot understand how a Government supposed to represent the country and all parties should approach this matter in the way they have. There is far too much tenderness in almost every Department of the Government for Germans naturalised or unnaturalised. There is evidence of it in the slowness with which they come to a decision or do anything at all. In the winding-up of businesses and the internment of alien enemies it has been difficult to get the Government to move in what we believed vital matters connected with the winning of the War. We fail to understand why this should be so. There is no getting the Government to move in what we believe to be a vital matter in connection with the winning of the War. There has been too much tenderness. There has been no driving power—no proper supervision in regard to this matter. If the Government meant business as they profess to do these firms would all have been wound-up by the present time.
There is an associated question—that of the continuance in our midst of German banks. This is, I understand, a matter not directly under the Board of Trade but more one for the Treasury. We have three German banks allowed to do business to this day in our midst after two years and three months of war. I think it is a disgrace. The banks are run by a German who is day after day in the manager's office doing business, surrounded, in one case to my knowledge, by German clerks. It was only as a result of frequent protests in this House that we forced the Government to intern the Germans employed in two banks—or rather some of the number so employed. The excuse of the Government was that these men are necessary, after two years of war, to carry on German business in a German bank, under a German manager, in the City of London ! In my opinion, that was a very weak excuse. It is said that these men have a knowledge of the business of the bank and its various ramifications which make it necessary to retain them. But the same applies to hundreds of thousands of businesses in this country the principals of which are interned at the present moment. We are a lenient people. I do not know if the House is aware there are many men interned at Islington who 886 are allowed once a week to see the principals of the firm with which they are associated, and the clerks who used to serve them, and to discuss with them matters of vital importance to the business. Why was that not possible with regard to the German banks. Why could not the clerks who have knowledge of the business in the City of London have been interned and, if necessary, consulted on matters of vital importance? No, it is a case of tenderness again—tenderness with regard to banks. I do not know whether the Chancellor of the Duchy of Lancaster is going to say anything on this to-night. I hope he is not going to say that they have appointed Sir William Plender—a man of very high standing—and that he is responsible for the carrying on of the banks, and that therefore the Government have no responsibility. But the question of the clerks employed in the carrying on of these banks by Germans is really not a matter for Sir William Plender. It is the responsibility of the manager of the bank. He is a German, and he is allowed to continue in that position by the gracious permission of the Government. The right hon. Gentleman must not seek to ride away on the popularity and ability of Sir William Plender. It is the Government who are responsible. It is the German manager of the bank who is responsible for the German clerks employed, and Sir William Plender has no direct responsibility in the matter.
I should like to ask a fourth question. Is it true the German clerks who have been interned are allowed full salary while British clerks fighting at the front have had their allowance reduced by 50 per cent.? I hope I shall get an answer to that question. Then, again, German banks are employing German brokers. If they have shares to sell they go to alien firms—one member of which changed his name a short time ago to an English name. The banks, in fact, are still allowed to go to the friends of German firms and carry through transactions on the Stock Exchange. We had a precedent in Germany in regard to this matter, and I say the whole story with regard to German firms and German banks has never been properly explained to this House. I say to the Government, "Get a move on at last in regard to this matter. Let the British public believe that you are sincere, because unless some action is taken, unless public opinion is 887 satisfied, all these things will drag on until the War is practically over, we shall have all the German clerks and managers coming back, and the business they had before will again be centred in their hands."
§ The FINANCIAL SECRETARY to the TREASURY (Mr. McKinnon Wood)
The only subject which affects the Department that I represent is the winding up of the German banks, and in regard to that the statement is a very plain and simple one. In the early days after the outbreak of War—in August and September, 1914—the Home Office issued orders dealing with the winding up of the German banks. The broad principle upon which those orders proceeded was that no new business at all was to be undertaken by those banks. The sole business was to be the winding up of transactions that were proceeding when the War broke out. With regard to one of these banks, one of the most important, the Deutsche Bank, that process, I am told, is practically completed. With the others great progress has been made. I want to make it perfectly plain to my right hon. Friend that the licence of these banks extended only to transactions that were proceeding at the time, and the business of the Receiver who was appointed, Sir William Plender, was to collect the assets and deal with the liabilities. In the cases where payments were due from the banks to British subjects or Allies or neutrals, it was the duty of the Receiver to pay the sums over. Where the liabilities were due to enemy subjects, when they were known persons, the money went to the Public Trustee, and the surplus assets of the banks were paid over on account of the Treasury to the Bank of England. That is the whole process that is going on. Just before the outbreak of War there were 363 enemy alien subjects in these banks. That number has been reduced to nine, and it is about to be reduced to seven.
§ Mr. McKINNON WOOD
A certain number of persons who had special knowledge of the business, on the advice of those responsible for the winding-up of the banks—I am sure my right hon. Friend will see nothing remarkable about that fact—had to be retained, because banking business is not a thing that can be carried on without a certain amount of knowledge. As to the amount of time 888 occupied, I do not suppose that that will surprise anybody who is accustomed to banking business. These banks were doing business all over the world. Naturally, the collection of debts due to the banks and the winding-up of business with persons in all parts of the world takes a certain amount of time. Under circumstances like these commercial people are not in a hurry to deal with the business. I confess I do not see anything remarkable in the fact that the winding-up of these banks, with their large, extended, and complicated transactions, should have taken a couple of years. That winding-up was necessary to the interests of the British, Allies, and neutral creditors. It is not quite fair to represent it as a case of carrying on German businesses. To express it accurately it should be described as a case of winding up German business. Under that heading I hope my right hon. Friend is satisfied, for I submit to the House that he really has no very substantial ground of complaint. The only other point is that of the salaries. I cannot at present give my right hon. Friend that information, as I did not know the question was going to be raised.
Sir H. DALZIEL
I mean the salaries of the men employed by the bank and interned as against the Britishers who have been forced to go to the front. In the one case they are paid in full, whilst the British only receive a portion of their wages.
§ The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Mr. Pretyman)
In answering the rather strongly-worded accusation that the right hon. Gentleman has made against the Board of Trade for not having done the duty laid upon it by Parliament under the Trading With the Enemy Act passed at the beginning of the year, I should like, before I deal with it, to note what clearly it was that we had to do. This was perfectly clear. It was to get rid of enemy control and of the enemy element in our trade, in the trade interests of this country. We have not wasted time in doing that. It is a different matter altogether when the suggestion is made that the duty laid by Parliament upon the Board of Trade was confiscation of enemy 889 property. That is a policy which has not been approved by Parliament, either in this War or in any other war in which we have been engaged. Parliament, of course, may adopt that policy if it thinks fit. It has not thought fit so far, and it has not laid that duty upon the Board of Trade.
There is another point which perhaps I also should make clear: That when the vesting of this enemy property, which has to be vested either in the controller for winding-up or in the custodian for the purpose of sale, comes to be dealt with at the end of the War, it will be dealt with as an asset belonging to this country, and as an asset which will be of value in bargaining whatever terms of peace may be decided upon. It must be subdivided into two parts. First of all, there is the actual capital belonging to the enemy subject or enemy which has been vested as such; and, secondly, any profits that have accrued whilst it has been in the hands of either the controller or the custodian. These two are kept separate. I understand that the legal position is that the question of these two assets is quite different. It will be quite open to Parliament or the Government after the War to treat these two assets on a different basis—the asset which was the actual value of the enemy's property at the time it was vested, and the asset which arises out of profits earned during the time when the property was vested. And it does not necessarily follow at all if it should be decided that the capital sum should be returned or exchanged against British property which has been in the enemy's hands, that the profits which have been earned on that capital would similarly be returned. I cannot say, nor can anybody say, what exactly would be done with them; but I want to make clear that one does not necessarily follow the other, and it would be perfectly open to this House or the Government to decide what should be done either in the one or the other case.
I will state exactly what we have done. The right hon. Gentleman said perfectly correctly that I stated, in answer to a question yesterday, that 330 orders have been made for winding-up. Then the right hon. Gentleman waxed very eloquent on the fact that, as he stated, in no case had the winding-up been actually completed. That sounds a very serious indictment. May I suggest to him it does not really matter whether the winding-up 890 is actually completed, so long as we have the assets sold and wound up in that sense? Let us take the case of a company which has been dealt with under a winding-up order. The assets consist, say, of a factory and stock-in-trade, and certain other substantial assets have been disposed of and bought by British producers, but the actual final order of release, the settlement of the winding-up, is not completed because there are certain debts which have not been collected, there are certain creditors who have not been able to give satisfactory proof of what their claims are, and in some cases there are even actions pending which may have to be settled. Therefore the actual completion of the winding-up has not been decided. What happens? Suppose the War comes to an end, what is there left?' A few book debts. Is that a very important matter?
§ Mr. PRETYMAN
No; we are not paying by time, in that it will cost more because it takes six months to clear up instead of three. We are paying on the amount of work done, which is calculated on the amount of time it actually ought to take to do the work, and I do not think that is a very bad system. It is a system which is adopted by the Courts. We pay for actual work done, and it is quite obvious that if you have a percentage scale these cases vary very much. In some cases the difficulties are extremely great and involve a great deal of work, while in others it may be comparatively simple, and to pay on a percentage scale, regardless of the amount of labour entailed on the controller or the Public Trustee, would obviously be unfair. Therefore we pay for actual work done. There is no advantage in spreading the work over.
In answer to the question put to me, I said that in a considerable number of cases the assets had already been sold, and the hon. Member for Brentford asked me if I would get the number. I can now give the number. In 165 cases out of 330 the assets have already been sold and disposed of, and therefore all that is left is a certain number of small items which may take some time to complete, but which is quite immaterial. Therefore practical results have been obtained, assets disposed of, and to all intents and purposes the winding-up is completed. My hon. Friend asks: Why cannot we take 891 some drastic process and get an order of the Court to deal with these cases on a different basis to that of ordinary winding-up cases? If we did that we should come directly up against the other principle that we may run the risk of confiscating private property without any good national reason. The line I suggest is, when we have vested the property in a controller for winding-up and disposed of all the material assets, we have got rid of the enemy interest in our trade and control, and nothing can restore it. The only thing that could restore enemy control over our business would be this: If when the end of the War came a large proportion of these businesses were not woundup to the point at which the assets have been disposed of, and if it were decided that all assets in the hands of the controllers should be restored to their original owners, then enemy control would be resumed over those businesses where the assets had not been realised. For that reason we have done all we can to accelerate this, and my right hon. Friend is perfectly wrong in saying that nothing has been done to accelerate this process. A few weeks ago an urgent Circular was sent to all the controllers, asking them to accelerate the winding-up of these businesses. We are in constant communication with the controllers, and every exertion is made to complete this process as quickly as possible.
I submit that it is much less important to get a number of actual clearing orders than to maintain the principle that we are not to confiscate private property. The Board of Trade are anxious to leave no stone unturned in order to get rid of enemy control of our trade. I repudiate any suggestion that we have been lax or slack in carrying out that principle. May I express the debt of gratitude we are under and the House is under to the Committee who have spent endless hours for which they have not been paid in investigating these innumerable cases, and who have given invaluable advice to the Board of Trade. In every case we have been guided by their advice. The suggestion of my right hon. Friend is that we have taken longer than is necessary in winding up these businesses. In this connection it may be interesting to notice these figures. The number of ordinary winding-up orders of British businesses made in the year 1912 was 151.
§ Mr. PRETYMAN
That is exactly my point. My right hon. Friend does not seem to appreciate my points. There is a War now and that necessitates our getting rid of the enemy control. We are doing this as rapidly as we can, and we have got rid of it absolutely in 165 cases already. But we do not want to deal on a War basis at all with the other part of the problem. I hope that we shall not take as long, but it is only fair to point out what a long process winding-up is in the normal course. Five out of the 151 cases were completed in six months, thirty-three were completed after another six months, twenty-six after eighteen months, twenty-three after two years, thirteen after two and a-half years, eleven after three years, and forty are still outstanding.
§ Mr. PRETYMAN
They are liquidations which began in 1912. I merely give them to illustrate the time it takes normally to complete the winding-up, We have succeeded already in the few months that we have dealt with them in winding up practically half of the 330, and, in addition, orders have been made in 70 cases vesting the enemy interest in the Public Trustee for the purpose of selling it to a British purchaser. That is under Section 4 of the Act. There, when you have once sold the property, you have got rid of the enemy interest altogether. You cannot, however, sell the property until you find a purchaser, and we had this difficulty. It is not always easy to find a purchaser at a satisfactory price, and we do not feel justified in selling at a knock-out price, nor do we feel justified in selling at a very low price to a British subject merely because before the War he was a partner with a German. We take the view—and I believe it will be accepted by the House—that these assets are not being vested for the benefit of any particular individual, but are a national asset. It frequently happens that you have a firm, three parts of the interest in which at the time the War broke out belonged to an enemy subject, and the remaining fourth part to a British subject. We vest the enemy share, 75 per cent. in the Public Trustee for the purposes of sale. We are perfectly prepared to allow the British partner, if he can afford to do so and is willing to pay the full value, to purchase, but it 893 would not be fair to allow him, simply because he had been in partnership with a German before the. War, to have the property at a knock-out price, and therefore get an advantage over his trade competitors. Where he cannot pay the full value of the property vested in the custodian, and where no other British purchaser can be found to give fair value for it, he is allowed to pay back to the Public Trustee the share of the profits which would accrue to the enemy subject's capital, and to enter into an arrangement of a permanent character by which he can repay the whole of the capital by instalments over a period of years. So that at the end of the War, if it was decided that the interest should revert to the enemy subject he would not be a creditor who could come down on the old British partner and break him by demanding the whole of the money, but he would come under the permanent arrangement made by the Public Trustee and would only be entitled to receive payment under the arrangement made with the British subject which the British subject would be able to carry out without his business being ruined. The object of that arrangement is that we should not give that particular Englishman an advantage because he was in partnership with a German, and on the other hand that he should not be at a disadvantage and should be treated on fair lines. Those are the principles on which we act, and I do not think my right hon. Friend will object to them. I should like to challenge the statement that he made that German interests of firms go on making profits. They do nothing of the kind.
§ Mr. PRETYMAN
My right hon. Friend was not referring to the banks. From the moment these properties are vested for winding-up or for sale the assets of enemy subjects or enemies, those who have previously controlled those businesses have no say in the matter of any sort, description, or kind. The only people who then have any say are the custodians or controllers, and any British subject who had previously been associated with the business. I will not admit there has been any delay of any description that could be avoided in carrying out orders unless we had been willing to sell properties at knock-out prices and to encourage the somewhat dangerous principle of confiscating private 894 property in war time. If I may venture to say so, I do not think we are a country which ought to encourage that policy.
Sir H. DALZIEL
You have to go to the Courts, and the Courts have to act in accordance with the law, and therefore compensation does not arise. It is the law of the land.
§ Mr. PRETYMAN
I do not quite agree in that. We should not have to go to the Court. If we place the property under a controller, that controller does not have to go to the Court in order to sell that property at a knock-out price. They are not wound up under the orders of the Court, but under the Act. Some are under the order of the Court, and there you have to get permission of the Court. Under this Act no permission is necessary; it is sold under the Act. Under the authority of the Board of Trade, the controller could exercise his power and sell the property merely to get rid of it. In order to fulfil the right hon. Gentleman's desire for inordinate speed in completion, we could sell those properties for a great deal less than they are worth. In doing that, we should not only be getting rid of the element of enemy control, but should be actually confiscating and disbursing the private property of enemies or enemy subjects not for the benefit of the State. I am sure it is a very important matter that we should, at the end of the War, have as large assets as possible in the hands of this country to bargain with. If we disposed of property for half what it was worth instead of the full value, it means we should make a present of half the value to some individual in this country, and the assets we should hold at the end of the War would be by so much reduced.
§ Mr. PRETYMAN
The right hon. Gentleman may desire to give it to them, but I have not said so. It is not German money; it is money which is held by the Government and an asset to this country, and at the end of the War to do what it likes with. We are the last country for whom it would be wise to inaugurate a policy of mere confiscation of private property in war time, for the sole reason that we are the country who probably own a larger proportion of property in foreign lands than any other nation in the world. I do not think it would be a wise policy in our own interests. It is a totally different 895 matter from carrying out the policy laid down by this House of getting rid of the element of peaceful penetration which we very rightly resent and of which the House is determined to get rid. The figures I have given show that in carrying out that policy, the Board of Trade are not lax and are not tardy but are carrying out the policy to the best of their ability. I do not think that even if the right hon. Gentleman did the work himself he could have done it any more expeditiously or effectively than it is being done by those in whose hands it has been placed.