HC Deb 17 January 1918 vol 101 cc502-4
Sir SAMUEL ROBERTS (by Private Notice)

asked the Chancellor of the Exchequer whether any steps are being taken to safeguard the interests of the holders of the Treasury Bills issued on behalf of the Russian Government by the Bank of England with the approval of His Majesty's Government, which mature for payment on the 28th instant, and those of acceptors of bills drawn under the commercial credit arranged by the Russian Finance Minister through the Bank of England in 1915?

Mr. BONAR LAW

His Majesty's Government has no direct responsibility in regard to any of the bills referred to in the question, the arrangements having been made solely upon the credit of the Russian Government and the various Russian banks concerned. In view, however, of the circumstances in which the issues were made and of the representations which have been made to me that the non-payment of the bills on the due dates (which is apparently inevitable in view of the disturbance of financial transactions between this country and Russia) would have serious consequences to general credit, I have arranged with the acceptors of the commercial bills that the Treasury should take over their rights against the drawers and guarantors, together with the Russian Government Treasury Bills pledged as collateral, in exchange for twelve-year 3 per cent. Exchequer Bonds at par. As the present market value of these Exchequer Bonds is about 82 per cent., the effect of the arrangement is that the Treasury insures the acceptors against loss for a premium of about 18 per cent.

In the event of the Russian Government Treasury Bills issued through the Bank of England not being met upon their maturity, I am prepared to authorise the Bank of England to take them over from holders on the same terms.

Sir J. D. REES

Will similar or any action be taken in respect of municipal loans?

Mr. BONAR LAW

Oh, no! The reason we have taken this action is that although we have no direct liability, I think, in view of the circumstances of the issue, there is a certain amount of moral responsibility.

Mr. MOLTENO

What liability to the Government will be involved in this transaction?

Mr. BONAR LAW

I have not the exact. figure. I think it is £10,000,000 and £7,500,000; in all, £17,000,000.

Mr. MOLTENO

Will any authority from this House be required for the acceptance of this liability by the Government?

Mr. BONAR LAW

I think not.