CLAUSE 2.—(Power to Require Information and Inspection of Documents.) (Hansard, 10 January 1918)

§ The CHAIRMAN
With regard to the first two Amendments standing on the Order Paper—to leave out the words 336 "Board of Trade" and to insert instead thereof the words "High Court," and after the word "time" to insert the words "on the application of the Board of Trade upon an originating summons and for a sufficient reason to be specified therein"—standing in the names of the hon. and learned Member for Norfolk (Mr. Hemmerde) and the hon. Member for West Aberdeen (Mr. J. M. Henderson), I think they would conflict with Clause 1 as amended and passed by the Committee yesterday. The hon. Members do not seem to have observed that this Clause simply confers the power referred to in Sub-section (2) of Clause 1, and the proposals which they have put down would conflict with that Sub-section.

§ Mr. JOHN HENDERSON
On a point of Order. I understand that Clause 1 deals with the parties applying for a licence, but Clause 2 gives the Board of Trade power at any time "to require any person who may be able to give information with respect to the constitution," and so forth. It might be a person outside the company, firm, or individual applying for the licence. This gives the Board of Trade power to call upon any outsider who may at any time have been connected with the company and who may have certain information at his command to give evidence.

§ The CHAIRMAN
I see the hon. Member's point, but I observe that the words about which he has some fear are going to be moved out by a subsequent Amendment on the Order Paper standing in the name of the President of the Board of Trade. The Amendment—to leave out the words "any person able to give information with respect to the constitution, control, or management of"—standing in the name of the right hon. Gentleman the Member for the Rushcliffe Division (Mr. Leif Jones), I think is met in better form by an Amendment further on standing in the name of the President of the Board of Trade.

§ Mr. LEIF JONES
I think the substance of it is met by the Amendment of the President of the Board of Trade, though it is not in the same form. My view was that the Clause as drafted was a great deal too wide. It gave power to call upon anybody anywhere to give evidence. I suggested that it should be the company, firm, or individual who should be called upon to give the required information. 337 I think the words of the President of the Board of Trade will meet the case, and I therefore do not move.

§ The CHAIRMAN
The. same remark applies to the Amendment—after the word "person" to insert the words "employed by and"—standing in the name of the hon. Member for the Hexham Division (Mr. Holt).

§ The PRESIDENT of the BOARD of TRADE (Sir A. Stanley)
I beg to move to leave out the words "able to give information with respect to the constitution, control, or management," and to insert instead therof the words "who, being a director, partner, manager, or officer of, or the holder of, or person interested in shares or securities."
I move this Amendment in accordance with a promise which I gave yesterday.

§ Sir C. HOBHOUSE
Could the right hon. Gentleman say what that promise was? I am afraid I was not here when it was made.

§ Sir A. STANLEY
The Clause as originally drafted gave much wider powers of investigation, and the object of the Amendment is to limit it to persons directly interested in the application.

§ Mr. HENDERSON
I have no objection whatever, and I welcome the Amendment, but I fail to see why the Board of Trade should call in a shareholder and examine him. I can quite understand the desire to examine a director, partner, manager, or officer.

§ Sir A. STANLEY
I think it is quite clear. Shares might be held on behalf of an alien enemy.

§ Mr. HENDERSON
You are giving an extremely wide power to hunt registers to find out whom you may think is interested. You must have some evidence before you can ask to examine the register. It seems to me extraordinary to ask us to give the Board of Trade a roaming power to call in Tom, Dick, and Harry, and to ask them for whom they 'hold their shares. You might have shares in the names of nominees or of half a dozen bankers. You might suspect some shareholders of being enemies, and in order to make an exhaustive investigation you might have to call them all in. It is a most extraordinary power to give to any Department.
Question, "That the words proposed to be left out stand part of the Clause," put, and negatived. 338 Question proposed, "That the proposed words be there inserted."

§ Mr. HENDERSON
I beg to move, as an Amendment to the proposed Amendment, to leave out the words "or the holder of, or person interested in, shares or securities."
The Board of Trade must have some sort of ground before they go and examine a man, and such ground as they would have would enable them to get the information they require, if it were possible. I do not think any Department ought to have the power to call in anybody they like and examine them as to what is their holding, and on whose behalf they hold the shares. The shares may be held as security for anything. It is a most extraordinary power to give.

§ The LORD ADVOCATE (Mr. Clyde)
I am afraid it would be necessary for the Board of Trade to have these words in the Bill and this power committed to them. Obviously, as the Committee can see, nothing is more difficult than to detect such a thing as real enemy interest in a concern. If, in particular, we were to be limited to what appears on the share register, I am afraid there would be very many cases in which complete enemy ownership—and, indeed, complete enemy control—would be quite immune from any powers of the Bill to restrict or modify it. As the hon. Member himself has said, it is not infrequently the case the shares are actually held and entered on the register in the name of somebody who is not the true proprietor of them at all. Accordingly you might easily have the great bulk of the capital in a particular concern entirely held by enemy shareholders in fact, although in appearance and form the register was innocent of any taint of the kind. There is no expedient— I do not say it is used for improper purposes—more commonly resorted to, for one reason or another, than to put shares on the register in the name of a bank. If there were no means of ascertaining who was the real owner of those shares the Board of Trade or anybody who wanted to discover whether the company really was in the hands of the enemy would be deprived of an absolutely essential power to ascertain what the real facts were. I think that the hon. Member apprehends abuses. I admit it is true that all powers are capable of abuse, but, on the other hand, I am afraid that this power is not 339 only useful but indispensable if effective knowledge is to be obtained as to who holds the true interest in a particular company. What I have just said holds good a fortiori of some unregistered concerns.

§ Mr. HOLT
On the whole the President of the Board of Trade has not unfairly met the Committee. He has removed from this Clause what appeared to us to be the most objectionable feature. I am bound to admit that if you are going to have a Bill of this kind you must put in a large number of objectionable powers, but that is an objection which applies to the Bill as a whole. I would suggest to my hon. Friend the Member for West Aberdeenshire that as the President has met us fairly we might accept his Amendments to this Clause.

§ Mr. HENDERSON
I do not want to press the matter unduly. It is perfectly well known in commerce, and especially in banking, that any number of people put their shares into the names of their bankers, for the very obvious reason that they may want to borrow on the securities from time to time. There is not a large company in Great Britain, or anyhow in England, in which half a dozen bankers are not the holders of shares. If you cannot get from the manager or director or partners, or an officer, some indication of enemy influence being exercised, how can you go to a bank and say, "You must disclose to us who is the real owner of these shares"? You are landing yourselves in hopeless inquiries which will cause friction and trouble. If you cannot ascertain the facts from the director or manager, you cannot get them by a roving commission. However, I do not press the Amendment if the Committee thinks it should not be made.
Amendment to proposed Amendment negatived.
Words proposed there inserted.

§ Sir A. STANLEY
I beg to move, after the word "Act "["a licence has been granted under this Act"], to insert the words "is able to give any information as to the constitution, control, or management thereof or the business carried on thereby or the beneficial interest of any person therein or in any shares or securities thereof."

§ Mr. HENDERSON
I should have thought that this would have been suffi- 340 cient to enable the Government to accept my Amendment. It only reproduces the same thing.
Amendment agreed to.

§ Sir C. HOBHOUSE
I beg to move to leave out the words "such time as the Board may direct," and to insert instead thereof the words "one month."
I move this Amendment merely for the purpose of obtaining some information. The Clause provides that the information is to be furnished within such time as the Board may direct. If the President will look at the Clause he will see that the company, firm, or individual has to apply for a licence before it can trade. Thereupon the books, papers, and so forth of the applicant have to be examined, and somebody has to give information upon them. Unless there is some reasonable period specified within which the information must be sought and the books examined, it is clear that a firm might be held up for some considerable time, not in its general business, but in a particular business in respect of which the licence has to be obtained. The ways and methods of Government Departments are very often protracted. I do not lay any blame on the Board of Trade for that. The proceedings may be protracted. If there is some stimulus which will require the Board of Trade to obtain the information and give a decision within a reasonable time, the interests of traders will be considerably forwarded. It is for the purpose of obtaining information on that point that I move this Amendment.

§ Sir A. STANLEY
I am not at all sure that the Bill does not meet the point. With the consent of the right hon. Gentleman, we will agree to consider it later on.

§ Sir C. HOBHOUSE
It may be met somewhere in the Bill, but I have not been able to trace it. This was a manuscript Amendment, and I would apologise for raising the question unexpectedly. Will the President give us some time as being the period in his mind within which these proceedings must be concluded or the information obtained? There is no specific time mentioned in the Bill, but probably there is some time in the mind of the right hon. Gentleman.

§ Mr. CLYDE
I agree that the point is well worthy of consideration. What was probably in the mind of my right hon. 341 Friend the President when he answered was this: The period of six months which is mentioned in Sub-section (1) of Clause 1 is the period during which these questions about licences are to be settled.

§ Sir C. HOBHOUSE
That is the preliminary.

§ Mr. CLYDE
I follow that that is not quite enough for the right hon. Gentleman. He thinks that during that six months some new person may come forward and there might be some risk of delay.

§ Sir C. HOBHOUSE
Or revocation.

§ Mr. CLYDE
The right hon. Gentleman is quite right. There is a possibility of something of that kind. I think it would be a great pity to say that the period should be one month. I should imagine that for the most part the information required on the matters referred to would be obtained in a very short time. Would the right hon. Gentleman be content with the assurance that this particular point will be considered, and that, if necessary, we would put in something more?

§ Sir C. HOBHOUSE
You mean on Report?

§ Mr. CLYDE
Yes.

§ Mr. L. JONES
This is the period within which information required by the Board of Trade may be obtained. The difficulties must be greater or less, according to the kind of search to be made. Therefore, I do not think that to say within one month or within one week will be good enough.

§ Mr. CLYDE
We will consider that point.

§ Mr. HENDERSON
There is something in the point raised by the right hon. Member for Rushcliffe. It is quite possible that it might require more than a month to acquire the information. You might require to go to the Continent to obtain it. The right hon. Gentleman who moved the Amendment did not quite gather that the people who made the examination were to produce the information within a month. That might be very difficult. If there is a delay in furnishing the evidence it cannot be laid to the Board of Trade. I want the Board of Trade to fix their time, and not the man who furnishes the evidence to fix his time.

§ Mr. JONES
A shareholder in one of these companies might be in America, and might be holding in the name of somebody in China. It would take some considerable period to ascertain all the information the Board of Trade require. You must, therefore, have some freedom for the Board of Trade in this matter.

§ Mr. HOLT
May I make the suggestion that the Board should take power to issue provisional licences during the investigations? It is quite possible that it might be undesirable to issue a licence to a person and then have to revoke it. The provisional licence might be issued for a fortnight or a month while the inquiry is being made.

§ Mr. CLYDE
We will consider that Amendment negatived.

§ Mr. BRUNNER
I beg to move, at the end of the Clause, to add the words, "relating to the business of winning, extracting, smelting, dressing, refining or dealing by way of wholesale trade in metal or metallic ore to which this Act applies."
The Clause as drawn gives the Board of Trade the right to inspect any books and documents belonging to the firm. These worth; would limit that right to that part of the business relating to non-ferrous metals.

§ Mr. CLYDE
I am not quite sure that there is any great difference between us though I may not have quite apprehended the purpose of the words. The words at the top of page 3, "to inspect any books and documents belonging to or under the central of such company," and so on, are governed wholly by the preceding words, namely, that this is only for the purpose of obtaining or verifying such information, and the word "such" carries us back again to the words "with respect to the constitution, control or management of the company," and of course no company is in question except a company of the description that he proposes to put into the Amendment. Does not that mean that these words are not necessary? The only purpose for which the Board of Trade could ask to see books and documents is to get information with respect to the constitution, control or management. I think that really renders these words unnecessary as far as I understand the point for which they were suggested. If I am wrong the hon. Member will put me right.

§ Mr. BRUNNER
I do not see that it would do any harm if we restricted the right of the Board of Trade to apply their inquiries only to such books and documents as relate to the non-ferrous portion of the company's business.

§ Mr. JONES
I think the words are wider than the Lord Advocate has perceived. We made out yesterday, for instance, that ship owning and shipbuilding companies might have to take out licences under this Bill because incidentally they have transactions in these metals. If the Board of Trade is going to inquire into the business of these companies I think they will only wish to do so in so far as they deal in metals and there is no need to give them a roving commission to examine into the books and affairs of the company which are not concerned with non-ferrous metals. If that is covered by the Clause it is all right, but I am not at all sure that some such Amendment limiting the powers of inquiry to non-ferrous metals alone is not necessary. I think we ought to be quite clear on that point before we allow the Clause to pass.

§ Mr. SHERWELL
The importance of the point is really accentuated by the use of the word "management" in the powers concerning information. Information is to be obtained not merely relating to control and constitution but to management. That, in the case of the company to which my right hen. Friend (Mr. Leif Jones) has referred, could cover an investigation of the whole of the affairs of a concern which was only, partly interested in non-ferrous metals, and, in consideration of the fact that a firm which has a very wide form of management is included in the powers for which information is required, the Government would be well advised to accept the Amendment.

Mr. RUNCIMAN
I should like to ask a specific question to bring this to the point. If the firm of Rothschilds has to be licensed, is it to be considered as the intention of the Board of Trade to investigate the whole of the affairs of the firm of Rothschild? I am sure they do not want to undertake anything of the kind. It is totally unnecessary. It would not only be resented by the firm itself, but still more by its customers. Take the case of any of our joint stock companies. It cannot be the intention of the Board of Trade to investigate all their affairs. The Board of Trade would no doubt say it is riot their intention. Then why cannot 344 they make it clear in the Bill? To have this roving power of such an extensive character might be most obnoxious, I will not say only under the present regime but still more under another regime. I hope the Board of Trade will make it perfectly clear in the Bill that it has no intention of getting a roving commission to look into affairs with which the Bill is in no way connected. It cannot be the object and they might as well make it clear.

§ Mr. CLYDE
It would not do to limit the right of inspection as defined by the words of the Amendment, which would give an advantage to the astute defender of a bad case. Moreover, there are such things as directors' minutes, which you cannot split between the metal business and the rest of the business. The right hon. Gentleman's point, however, is good for all that, though it is truly one of drafting. I have been trying to find words which will meet his point, but I am not able to do it at the moment. I will undertake that words shall be put in which will make it clear that there will be no roving commission into the whole of a man's business.

§ Mr. HENDERSON
I should like to add a word to what my right bon. Friend (Mr. Runciman) has said about the very big firm. If they are still in the position they were in, they will have to get a licence, because they have a large measure of control of nickel in America. That shows what you are coming up against. They are not a limited company, but a private firm, and I suppose you cannot see their share register, and that is one of the cases in which there will be a very great deal of difficulty in finding whether there is enemy interest or not.
Amendment, by leave, withdrawn.
Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."

Mr. STRAUSS
The Government has eliminated the most objectionable part of the Clause, and I do not move its rejection.
Question put, and agreed to.