HC Deb 09 July 1918 vol 108 cc255-64

Any company, association, or body of persons, notwithstanding anything contained in any Act, Order, or instrument by or under which it is constituted or regulated, shall have power—

  1. (i) during the continuance of the present War, and a period of twelve months thereafter—
    1. (a) To subscribe for, take, purchase, or otherwise acquire, hold, sell, and dispose of shares, stock, or other securities of any limited liability company formed or to be formed, and having for its principal object the cultivation of flax or the provision of supplies thereof, or the promotion of such cultivation or provision:
    2. (b) to lend money to any such company:
    3. (c) to guarantee, or join with others in guaranteeing, any debts, obligations, or liabilities, present or future of any such company:
    4. (d) to give financial assistance in any other form to any such company:
    5. (e) to apply any of their funds or to borrow for the purpose of any such acquisition of shares, stock, or other securities, loan of money, guarantee, or financial assistance as aforesaid; and
  2. (ii) after the expiration of the said period of twelve months to hold, sell, or dispose of any such shares, stock, or other securities, and continue or renew any such loan, guarantee, or other financial assistance, or any such borrowing as aforesaid.

Mr. SHERWELL

I beg to move, after the word "persons" ["Any company, association, or body of persons"], to insert the words "carrying on a bank or other institution which has for its principal object the lending of money."

I move this Amendment on behalf and at the request of my hon. Friend the Member for Hexham (Mr. Holt). It is simply intended to make a little more precise and definite a phrase in the Clause which, at present, is extremely vague. The Clause says or body of persons It is assumed that the intention of the Government is only to sanction the operation in the case of such responsible bodies as I have mentioned, and I move the Amendment in order to make the definition a little more precise.

The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Forster)

I hope that my hon. and learned Friend (Mr. Sherwell) will not press this Amendment. The effect of it will be very narrowly to restrict the area from which we can hope to derive financial assistance. What we are anxious to do is to open as wide as possible the gates of financial assistance. If my hon. and learned Friend has doubts as to the Bill being too wide, or as to the interests of shareholders being placed in jeopardy by any operations under this Bill, I hope that, as a result of Amendments which I am prepared to accept later on, standing in the name of the hon. Member for Hexham (Mr. Holt)—I am prepared to accept them in substance—those doubts may be removed, but I am afraid I cannot see my way to accept the Amendment he has moved.

Mr. CHARLES ROBERTS

Might we not know what particular Amendments the right hon. Gentleman is prepared to accept? As I understand it, the contingent guarantee that we are going to give is to be given through the agency of institutions of some character other than that of a bank or that of an institution which has for its principal object the lending of money. I should have thought that those words were wide enough. I do not know what kind of institutions the Financial Secretary has in his mind. If he can explain to us the kind of Amendments he is going to accept, it will save time.

Mr. WATT

The suggestion made by the hon. Member for Lincoln (Mr. C. Roberts) is a wise one. If it were adopted, we should get some indication at the present stage of what Amendments the right hon. Gentleman proposes to suggest to the Committee. The phrase or body of persons is much too wide. It would enable any association of individuals to act as the measure allows, that is To subscribe for, take, purchase, or otherwise acquire, hold, sell, and dispose of shares, stock, or other securities of any limited liability company formed or to be formed, and having for its principal object the cultivation of flax or the provision of supplies thereof, or the promotion of such cultivation or provision. The limitation proposed by the Amendment is a good one. It is that the advancing of the money and the taking of shares should be limited to some particular institution, such as one carrying on the business of a bank or which has for its principal object the lending of money. This Amendment ought to be accepted by the Government, but if anything is to be proposed by the right hon. Gentleman in substitution for it, he should adumbrate it to the Committee and let us know what the line of the Government will be.

Mr. FORSTER

I am very anxious to meet the convenience of the Committee in any way I can, and if you, Sir Donald Maclean, will allow a more or less general discussion on this Amendment, it would clear the air for subsequent Amendments. One reason why I cannot accept the Amendment of the hon. and learned Member for Huddersfield (Mr. Sherwell) is that, as I explained on the Second Reading, part of the guarantee is to be undertaken by the linen industry, which desires to come to the assistance of the country and of the Government in the matter that I then described. If the Amendment were to be accepted in the terms in which it is moved, it would prevent the linen industry from taking part in this operation in which they are anxious to engage. The anxiety of the linen industry to assist in the production of flax is very readily intelligible to anyone who thinks for a moment of the situation with which it is faced. Owing to the threatened shortage of the supply of raw material, they have to look forward to a prospect in the coming twelve months of standing machinery, and to a period of severe unemployment. That is a situation which, naturally, in the interests of their own workpeople, of their own shareholders, and of the country, they are very anxious to avoid as far as they can. If we are to produce the amount of flax that we require, if we are to produce the amount of flax that the linen industry requires to keep its machinery running, we shall have to treble the production in the United Kingdom. That cannot be done in a few minutes. It is a thing which, undoubtedly, will take a considerable time to accomplish. But there is absolutely no time to lose in setting about the business. I think I have said enough to show why I cannot accept the Amendment. As I indicated on the Second Reading, I am anxious to meet the views of those who consider that this Bill is drawn too widely—my hon. Friend the Member for Lincoln (Mr. C. Roberts) was one of them—but it would be better to make it read Any company, association or body of persons. I am really anxious to give the freest opportunity to anyone who will come to help, but I am very anxious that there shall be some kind of guarantee of bona fides and of standing. Therefore I should be prepared to move an Amendment to Clause 1 making the consent of the Board of Trade necessary for any association or body of persons or limited company to exercise the powers which are given by this Bill. That was an Amendment which was suggested by the hon. Member for Pontefract (Mr. Booth) on the Second Reading. I have considered it, and that I am prepared to move later on. Then we come to the question whether or not the shareholders in limited companies and persons who form an association or a body of persons should be committed, without their knowledge, by those who are in charge of the direction of their undertakings. There is a great force in the contention of those—I have discussed this with the hon. Member for Hexham—who think that shareholders should retain their right to govern the fortunes of the undertakings to which they have subscribed, so far as that can be secured. It may be necessary, in times of emergency, to clothe the directors of public companies with powers without consulting their shareholders. It was done, for instance, in the case of munitions. Companies that were empowered to undertake munition work did so without consulting their shareholders. Again, it was done, I think, in the case of companies who had no power to subscribe to national loans. In this case I do not think the pressure of time is so great as to prevent shareholders from being consulted. I therefore propose to accept the substance, although not the words, of the second Amendment standing in the name of the hon. Member for Hexham.

There is another Amendment I propose to move myself in order to remove any doubt or misunderstanding as to what the position will be after this Bill becomes law. Some people seem to think that, when this Bill becomes law, it will no longer be necessary for those who wish to lend or borrow to consult the Treasury. That is not so. After the Bill has become law, it will still be necessary to consult the Treasury and to obtain their sanction for the raising of new money and so forth. I propose to make that clear by putting an Amendment in the later part of the Clause so as to make it plain that where people borrow money they can only do with the consent of the Treasury. I come to the last Amendment, standing in the name of the hon. Member for Hexham, which, I agree, is desirable, and that again I am prepared to accept. There remains the new Clause [Limited Liability Companies' New Shares], standing in the name of the right hon. Baronet opposite (Sir C. Hobhouse). That I am afraid I cannot accept. Ever since 1915 it has been found necessary, in the public interest, to require that all fresh issues of capital or shares shall be approved by the Treasury before they are made. In pursuance of this policy it has been the regular practice to insert in Bills or Acts which confer fresh borrowing powers, whether on local authorities, companies, or others, words to the effect that the exercise of such powers during the continuance of the War and twelve months thereafter shall be subject to the consent of the Treasury. My right hon. Friend by his Clause would seek to give a special power to companies coming under the provisions of this Bill which would be subversive to the whole policy applied to other companies throughout the country. He will see that that is going further than we could go, but I am quite sure—at any rate, I greatly hope—that flax-producing companies will take the opportunity to exercise such powers as they have to enlarge their undertakings and increase the rate of production, and I am quite confident that the Treasury would look with a very favourable eye upon any application for an increase of capital for that purpose. I hope that what I have said shows that I am willing to meet criticism in a reasonable spirit, and I hope it will obviate the necessity of prolonging the Debate.

Sir C. HOBHOUSE

We who have listened to the speech of the right hon. Gentleman opposite will acknowledge most freely the spirit with which he has met us. We do not want either to prolong this Debate unnecessarily or to contest the spirit of the Bill. But, as I have pointed out to him outside the doors of this House, there is one little difficulty which has been raised by something which was said both on the Second Reading of the Bill and in a reference he made a moment or two ago. He spoke of being very desirous of drawing into the increased production of flax all possible agencies for that end, and then he went on to say that the particular persons who are most interested in the extension of the growth of flax are the linen companies. The linen industry is centred practically in one place in the United Kingdom, and that is in Belfast. There is, of course, a Scottish industry as well in Dundee, but practically the great linen industry is centred in Belfast, and it consists of three classes of persons—the flax grower, the flax spinner, and the flax weaver—and the person whom I understand my right hon. Friend and the War Office think ought to be more particularly helped and utilised in this connection as an agency for increasing the production of flax is the spinning company.

Mr. FORSTER

I am sure the right hon. Gentleman will forgive me. They are not more deserving than anybody else. I am only most anxious to help a great many other people.

Sir C. HOBHOUSE

I am sure that the right hon. Gentleman will use every agency, but I think his speech—he will correct me if I am wrong—had reference to the great spinning companies. Let me say frankly to the House that what I am afraid of is that these spinning companies will utilise the powers which are going to be put at their disposal by the War Office in this way: they will be able to go to the grower of flax and say, "We can find you money to finance your growth of flax, but we will only do it on terms, and those terms are that you should bring your flax to us after it has been treated, and that you shall give it to us at such-and-such a price." That is the danger I see and that is the reason which made me put down the Clause which I have on the Paper. My right hon. Friend desires that such a position should not arise, that such advantage should not be taken of the grower, and that he will give his good word and that of the Treasury to any person who will show their ability to produce flax whether a private grower or a limited company.

I confess that statement satisfies me to a very great extent, but I do not see in this Bill as it is presented now—we have not got the Amendments, which are only promised for a later stage—how the power which will be exercised by these great spinning companies in Belfast is to be prevented unless you throw open on a wider scale and in an easier manner than my right hon. Friend has adumbrated the powers which he proposes to give to the spinning industry. I recognise the great difficulty of putting it into legislative words, but I do see this great danger which hangs round the tying of the grower of flax to the person who makes use of this produce, because the spinning company will be able to say to the grower, "You must give me your flax," and to the weaver, on the other hand, "I will only give you my product on such-and-such terms." Therefore, I want to see this power which is going to be put in practice, and which is not mentioned specifically in the Bill, extended in the way my right hon. Friend has said, and an open door provided for every person, large or small, company or individual, to obtain the assistance which he orginally proposed to give only to the linen companies.

Mr. FORSTER

I hope my right hon. Friend will not fasten that statement upon me.

Sir C. HOBHOUSE

Very well; I withdraw it, and say which I thought he was going to do. There is only one practical suggestion I would like to make to my right hon. Friend. He is going to accept these Amendments of my hon. Friend the Member for Hexham, and he is going to put down, I think, some Amendments of his own or some words of his own. Would it not save everybody's time and trouble if he took the Committee stage of the Bill to-morrow, put down his Amendments, and then there would be no discussion on Report stage at all? It would go through just as quickly. The difficulty is we have not got the words on the Paper, and you will have to have a Report stage if you accepted any of our Amendments or put down your own. If we postpone this stage and the Amendments were put upon the Paper we could then pass the Committee stage and the Report stage in one sitting, and no time would be lost. I do not suggest this as a dilatory measure, but only as a way of letting us see what the right hon. Gentleman is going to propose and what we are going to accept.

Mr. FORSTER

The Amendments I propose are so exceedingly simple and the substance has been upon the Paper and is supported by the hon. Member for Hexham, that I do not see there is any real case for postponing this stage, as my right hon. Friend suggested. If it would save time, I will read the Amendments. I think they are so simple that I could read them seriatim. In Clause 1, I propose that, after the word "shall" ["shall have power"], to insert the words "subject to the consent of the Board of Trade." That is to say, the consent of the Board of Trade will be necessary before any company or others can exercise powers under the Bill. Then I propose, after the word "power," in the same Clause—and this is the substance of the Amendment of my hon. Friend the Member for Hexham—to insert the words "if so determined by a resolution passed at a general meeting of the company, association, or body of persons." That gives the shareholders a right of settling for themselves. Then on page 2, line 3, after "or," insert "with the consent of the Treasury"—"to apply any of their funds with the consent of the Treasury or to borrow for the purpose of any such acquisition of shares." That is merely to make plain that the Treasury sanction has to be obtained. The effect is the same whether the words are there or not. Then I take the last Amendment of the hon. Member (Mr. Holt), and it is the form of words which he has on the Paper. These are really, I think, plain, intelligible Amendments, and I hope my right hon. Friend will let us have them now.

Sir C. HOBHOUSE

That does not meet my point. It says they may borrow with the consent of the Treasury. What it does not say is that they may issue their shares to the public with the consent of the Treasury.

Mr. FORSTER

No one may issue shares to the public without the consent of the Treasury.

Mr. BOOTH

Yes, they can.

Sir C. HOBHOUSE

That is not the position. You cannot, in practice, deal in such shares on the Stock Exchange, but there is nothing in the present regulations to prevent you issuing the shares. That is really so. The right hon. Gentleman must accept that from me. It is a matter not of law, but of practice.

Mr. SHERWELL

I am very much obliged to the right hon. Gentleman for the exceedingly broad way in which he has met the Amendments in the name of my hon. Friend, and, in order to simplify procedure, I am so satisfied with the security he has given in connection with them that I ask leave to withdraw my Amendment.

Mr. WATT

May I also associate myself with the last two speakers in appreciating the courtesy of the right hon. Gentleman and the way he has met us, which I think has hastened the passage of his Bill. I think he indicated that he would introduce the words "or limited company" after "body of persons," but if that is put in there still remains this expression to which I take exception, "body of persons" who are to do the various things enacted in the measure. He indicated that by "body of persons" he meant the various branches of the linen trade. I should have thought the various branches of the linen trade would have been brought in under the expression "company" or, if not company, "association," and that there was no need for this wide expression "body of persons." Again, he indicated that he intended to accept one of the Amendments of my hon. Friend (Mr. Holt), and, as far as I gathered, it was the second, but he indicated that he would reject the first.

Mr. FORSTER

The hon. Member is wrong. I said I accepted it in substance, and that, I think, satisfies the right hon. Gentleman (Sir C. Hobhouse). Instead of the words of the hon. Member (Mr. Holt), I propose to insert "if so determined by a resolution passed at a general meeting of the company, association, or body of persons."

Mr. WATT

That meets my point in that direction entirely, and the only objection I have to this part of the Bill is the expression "body of persons."

Mr. BOOTH

On the Second Beading I suggested that a further direction should be given in this matter, and I understood the Minister in charge to say he would consider my words in Committee. I do not gather from what has been read out that he has met my point. We suggested some Government Department, such as the Board of Trade. Do I understand the right hon. Gentleman thinks that is sufficiently met by the point of Treasury sanction?

Mr. FORSTER

I said I was going to put in words which made the consent of the Board of Trade necessary before anyone could exercise any of the powers given in this Bill.

Amendment, by leave, withdrawn.

Amendments made:

After the word "shall" ["shall have power"] insert the words "subject to the consent of the Board of Trade."

After the word "power," insert the words "if so determined by a resolution passed at a general meeting of the company, association, or body of persons."—[Mr. Forster.]

In paragraph (e), after the word "or" ["to apply any of their funds or"], insert the words "with the consent of the Treasury."

After the word "aforesaid" ["or financial assistance as aforesaid"], insert the words, "Provided always that the power to borrow money conferred by this Act shall not operate so as to increase the total amount of money which such company, association, or body of persons is authorised to borrow.—[Mr. Sherwell.]

Clause, as amended, ordered to stand part of the Bill.

Clause 2 (Short Title) ordered to stand part of the Bill.