§ (1) Any money required for the raising of any supply granted to His Majesty for the service of the year ending the thirty-first day of March 990 nineteen hundred and nineteen, and, in audition, of a sum not exceeding two hundred and fifty million pounds, or for the raising of any sum required for cancelling securities or Treasury bills under the powers of this Act, may be raised in such manner as the Treasury think fit, and for that purpose they may create and issue any securities by means of which any public loan has been raised or may be raised, or such other securities bearing such rate of interest and subject to such conditions as to repayment, redemption, or otherwise, as they think fit.
§ (2) For the purpose of making the statutory provisions applicable to former War Loans applicable to the War Loan under this Act, Sub-sections (2) and (3) of Section one of the War Loan Act, 1914, and Sub-sections (2) and (3) of Section fourteen of the Finance Act, 1914 (Session 2), shall apply to any sums or loan raised or any securities issued under this Act as they apply to sums or loans raised or stock issued under the War Loan Act, 1914; and Subsections (3), (4), and (5) of Section one of the War Loan Act, 1915, shall apply with respect to the issue of securities under this Act and to securities issued under this Act as they apply with respect to the issue of securities under that Act and to securities issued under that Act, and in those Sub-sections as so applied any reference to War Stock, War Bonus, or Securities issued under the War Loan Act, 1914, shall be deemed to include a reference to securities issued under the War Loan Act, 1915, Section fifty-eight of the Finance Act, 1916, the War Loan Act, 1916, and the War Loan Act, 1917.
§ (3) There shall be paid to the Banks of England and Ireland respectively out of the Consolidated Fund or the growing produce thereof, for the management in every financial year of any securities issued under this Act, such sums as may be agreed upon between the Treasury and those banks respectively.
§ (4) Any expenses incurred in connection with the redemption of any securities issued under this Act shall be charged on and paid out of the Consolidated Fund or the growing produce thereof.
§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
§ Mr. KINGI think we ought to have some explanation as to what is the purpose of this Clause. It is headed at the side, "Issue of New War Loan." I thought the Government were going on with the War Bonds, which seemed to have taken the place of the old War Loan in public popularity. Is there now to be a new type of War Loan? Perhaps the Chancellor of the Exchequer will explain.
§ The CHANCELLOR of the EXCHEQUER (Mr. Bonar Law)I am glad to give that explanation. The side title is copied from previous Bills of the same kind. This is a duplicate of the Bills we have had, and a Bill of this kind is necessary for the present system of borrowing just as much as if you were issuing a loan 991 such as was issued last year. We have no power to raise money for a longer period than five years, except when it is given by a special Act of Parliament. I am glad to say that I see no reason to anticipate that there will be any necessity to depart from the system of raising money which has been so sucessful for the last nine months. Since this subject has been raised, I would like to say that its success has not been achieved without a good deal of work, a great deal of which the House is not aware. A great deal of good work has been done by the war savings associations all over the country.
During the last three months meetings have been held all over the country for the express purpose of pushing these bonds in all the big centres of population throughout the Kingdom, and they have been attended in almost every case by the mayors of the towns in question, and the result we have seen in the amounts which have come in. I think it only right to say that the gentleman who has assisted us at the Treasury in the campaign has rendered really invaluable service by advertising and by the resourcefulness which he has shown, all of which has had great effect in securing the result which the Government has achieved.
§ 9.0 P.M.
§ Mr. D. MASONI also should like to congratulate the right hon. Gentleman on the success recently of his War Loan savings campaign. I understand that this measure asks for powers to facilitate the issue of more Treasury Bills, and I wish to make a few observations upon this particular Clause which gives that authority. It is very difficult to offer any remarks as to what is or what is not the best method of borrowing. The right hon. Gentleman has said that he believes in this continuous system of War Bonds. Until the last week there was undoubtedly a falling off, and there might come a time when we shall have to issue a long-term loan as against a comparatively short-term loan. I would like to emphasise that desirability. Of course, one cannot tell what the duration of the War will be, but if it should come to an end in the autumn, what would be the position of this country and the other belligerents? We know that even to-day we are faced in this country—most of the other belligerents must be in the same position—with a mass 992 of short-term obligations. The amount of Treasury Bills outstanding to-day is something like £1,300,000,000. There are, of course, other obligations, such as the War Savings Certificates and these War Bonds, which the right hon. Gentleman will agree are not by any means long-term engagements. They mature within three, five, and seven years, and must therefore be met either by another loan or some refunding when they fall due. I respectfully suggest to the right hon. Gentleman that he should turn a deaf ear to any pressure by bankers or others for increasing these short term obligations. Of course, from the banker's point of view they are a very desirable form of investment, because they are certain to get their capital back intact, and they pay a fairly good rate of interest. We are not here, however, to represent bankers or any other individual interests, but to do the best in the interests of the State; and it must surely be in the interests of the State to reduce as much as possible these short term obligations. We may reasonable conclude that at the end of the War there will be a considerable demand for capital, and if these short term engagements are suddenly presented to the Treasury for repayment a position of embarrassment may possibly arise. I wish, therefore, to draw the attention of the Chancellor of the Exchequer to the very important necessity of considering the desirability, should we be approaching peace, of issuing a long term loan. Possibly a great many of the holders of these short-dated Treasury Bills and other bonds might be induced to convert into such a long term security, either Consols or some other security, thus lessening the strain on the Treasury, and putting off to a more distant date the necessity for repayment. I would ask the right hon. Gentleman to turn a deaf ear to any pressure for increasing these short term obligations, in spite of all that he has said as to the advantages of the War Bonds, which he will admit are not very long in their duration, and to consider the advisability, should the military situation assume a more favourable aspect, and should we be brought within a reasonable period of the end of the War, of issuing a long term loan and the supreme advantage of funding a great mass of these short term obligations.