HC Deb 27 February 1919 vol 112 cc2066-84

Whereupon MR. SPEAKER, pursuant to the Order of the House of 12th February, proposed the Question, "That this House do now adjourn."


May I ask the Leader of the House if he can make the reply he promised at Question Time on the subject of the new issues?

Mr. BONAR LAW (Leader of the House (imperfectly heard)

As I promised I have gone into this question fully with the Chancellor of the Exchequer, and I am afraid I must occupy a few minutes of the time of the House in explaining the position as well as I can. The Regulation to which so much exception was taken was made on this ground: During the continuance of the War the various Governments under the advice in each case of representatives of financial interests, came to the conclusion that free issues could not be permitted without gravely endangering our chance of getting the money which was necessary to carry on the War, and that system continued until the end of the War. The other day a new Regulation was issued which seemed to be, and judging by some of the questions put at Question Time, is being found in fact to be, more restrictive than the custom which existed during the War. Let me point out to the House that that was not the intention of it. The intention was exactly the reverse. The Government realised that now that actual hostilities had ceased there must be greater freedom in allowing issues than had been permitted while the War was going on, and with that object in view the Government had not only given new terms of reference but terms of reference which are specially directed to facilities being given for finding money for anything which would help to restore trade or industry, or facilitate the public utility works. That is the object, but it so happens that purposes during the War have been served without a definite Defence of the Realm Regulation. That dates from a very early stage in the War. The first of these Regulations was made early in 1915, practically as soon as the Stock Exchange began its functions again, and at that time my predecessor was advised that all that was necessary was not to forbid by Statute or by Regulation these issues, but to make arrangements with the Stock Exchange that they would not deal in anything that had not received Treasury sanction. It was believed that that would serve the purpose, and to a large extent it did. When hostilities came to an end a great many more issues were made without the sanction of the Treasury, and the representatives of the Stock Exchange came to my right hon. Friend the Chancellor of the Exchequer, and pointed out how unfair this was to stock exchanges all over the country, and I think it is only right to say that not only the London Stock Exchange but all the exchanges in the Kingdom did exactly what the Government wanted throughout the whole period of the War. But the net result was that these new issues which were carried out without Treasury sanction were being dealt with by outside sources, and members of the Stock Exchange, who had so loyally supported the Government, were debarred from dealing even in issues which in ordinary course would be dealt with on the Stock Exchange.

It was evident, therefore, and every hon. Member will agree with me, I am sure—as a matter of fact, my right hon. Friend consulted me in the matter, and therefore I share his responsibility—that it was utterly impossible with any fairness to continue an arrangement which allowed issues of this kind to be made without Treasury sanction, and dealing in which was confined to those who were not members of the Stock Exchange. That was the sole reason for issuing a Defence of the Realm Regulation now which had not been issued during the War. On one point the Government are quite decided, and I may add that everyone whom my right hon. Friend has consulted takes the same view, and that is the need of borrowing. The necessity of money coming into the State is just as great now as it was at any time during the War, and I would point out to the House the reasons which make it specially difficult to get money now. Personally, I always thought that the end of the War would find the difficulty in raising the money far greater than during the War, and I am quite sure my successor in that respect will have a harder task than devolved on me when I was Chancellor of the Exchequer. That, I am sure, will be obvious to the House. For one reason the patriotic feeling which had so much to do with the loans and different methods by which we raised loans cannot be relied upon to quite the same extent. People feel that the War is over and therefore they are more inclined to make investments in the ordinary way which seem to be best from the point of view of the ordinary investor. In addition, so long as industry in this country was in full swing and every factory was used and profits were being made, the money which was borrowed came largely back to the Treasury in the form of loans or Treasury Bills. But to whatever extent, the change of industry from a war to a peace footing leaves a smaller sum available for loans. In spite of the cessation of hostilities the amount of our expenditure has not fallen to anything like the extent which we hoped when peace actually came. That is not surprising. The Army is not demobilised yet, and the expense of demobilisation is very great. As a matter of fact the falling off in our daily expenditure is only something like a million less up to the time of the Armistice.

I think it is necessary to say this in order to convince the House that it would not be possible to leave issues perfectly free now and to allow every kind of speculation which would inevitably come if they were. Not only is there difficulty in raising money, but if the issues were perfectly free it is almost certain—everyone who has discussed it with me and is competent to judge tells me it is so—that there would be a great number of issues, not for home investment only, but issues abroad, and in addition to the difficulty of raising money one of the great difficulties of the Exchequer is the question of exchanges, and I am sure the House will agree that it is absolutely impossible at this moment to allow perfect freedom in these issues. But while all that is true, the one greatest preoccupation of the Government at this moment, the greatest of all our anxieties, is connected with employment in this country. We realise as fully as any hon. Member of the House that the only chance of getting back to reasonable conditions is that trade and industry should be revived with the utmost possible speed, and we believe that that cannot be done unless there is much greater freedom in giving money for these purposes than was the case while the War was going on. It is necessary, therefore, to try to hit on an even course between giving complete freedom and, on the other hand, making the issue of new capital for really useful purposes far more easy than it wag before the War. For that reason we have not only altered the terms of reference, as I have said, but we have appointed three Committees and will appoint more, if necessary, so that there shall be no delay, and, in addition, a facility is going to be given now which was not given during the War—that is to say, those who have their case will be permitted and encouraged to state it themselves in person; so that it may be certain that there will be neither delay nor any unreasonable refusal of money required for reconstruction purposes. So much for the general principle. Beyond that, we are quite satisfied that it would be in the highest degree detrimental in the public interest to remove some of the control over these public issues.

Now we come to another aspect of the question which was specially raised at Question Time, and that is the retrospective effect of the Regulation which we have issued. I would like, if I may, to put the point of view which induced the Treasury to issue the Regulations in that form. It is this. An appeal was made to everyone not to make any issue without the sanction of the Treasury. The great majority of people responded to that appeal, but some did not, and it therefore seemed to the Treasury that it would be unfair to those who had loyally helped the country to give them now facilities which they had obtained by acting against the advice of the Treasury when those facilities were not given to those who loyally supported the Treasury.


Why not issue a Regulation to make it impossible?

8.0 p.m.


The weakness of that position has been touched upon by my hon. Friend. His case is, that if we intended at any time to make dealings in these shares illegal we ought to have made the issue of them illegal. That at once puts the Government in a weak position, but I hope the House will not judge us too harshly in that respect. These Regulations to which I have referred were made at the beginning of the War when the Stock Exchange was first open. They seemed to be effective. Nobody knew how long the War would last, and nobody wished to add new restrictions if they could be avoided, and week after week, month after month, the matter was allowed to go on because they thought no great harm was being done. But it does after the position when it can be said that you are in effect taking action which is retrospective, and damaging people for doing that which was not illegal. We feel there is great force in that. I think the House will understand this if I give an illustration. If two people (A and B) applied for the same kind of issues, and A was refused, but B went on with it without sanction; now, if you recognised B's transaction, the result would be that A, who had loyally carried out the wishes of the Government in the interest of the nation, would be penalised, whereas B, who had not responded to the appeal of the Government, would be given an advantage. Naturally a sense of justice made us feel that that was hardly fair. After all, in a case of this kind we have got to consider really, not so much the abstract question, as what is in the national interest at this moment. I have had a long consultation to-day with my right hon. Friend the Chancellor of the Exchequer and his advisers, and we have come to the conclusion that the question of abstract justice is not so important as the general interest of the community, and I have the authority of my right hon. Friend for stating that he intends to issue a new Order removing the retrospective effect of the new Regulation. I am sorry my right hon. Friend who has succeeded me at the Treasury is not here, because he is not a legal Member of the House now. I do ask the House—and I speak here with great knowledge—to realise that in all these questions it is very difficult to come to a right decision, and very often, with the best desire of consulting everybody, it is not possible to find out all the information which would lead us to come to a decision. My right hon. Friend himself has come to the conclusion that it is right to make this concession, but, in making it, I do appeal to my right hon. and hon. Friends in the House to realise that the general restriction on the issue of securities is absolutely essential in the interest of this country, and that, having made this concession, they will accept it, without desiring still further to alter our Regulations, which have been made, I am sure, in the best interests of the trade of this country.


We are very much obliged to my right hon. Friend for acceding to the generally expressed wishes this afternoon that he should give an opportunity for the discussion of this matter to-night. I am grateful to him for the opportunity he has given us. Let me say at once, I think he has done the right thing in meeting the criticism with regard to the retrospective part of the new Regulation to which he has just referred. I think on consideration he will see that it would have been absolutely impossible to defend it, and the mere fact that it has been issued shows to me that not sufficient consideration was given to this whole matter. I do not want to give away any secrets, but I should be surprised to hear the principal officials of the Treasury knew anything about the Order before it was issued.


Yes, they did.


Not all of them. What I desire to point out to the House is this, that since the very beginning of the War commerce has been severely handicapped so far as its financing is concerned. The business community accepted it in the spirit of patriotism, but at a cost of which the country has no conception. Take a case I knew myself at the beginning of the War. A friend of mine had a document sealed and signed before war broke out to find £1,000,000, I think it was, in connection with the financing of a great concern within a mile of this very building. He had got all his money but £200,000. He was under contract to find the whole amount. He had the money, and was prepared to provide it within two months' time. He lived at the Treasury, because it meant his financial ruin if he were not allowed the liberty simply to carry out his contract. They refused it. What was the result? He lost 200,000 sovereigns in hard cash because of the Treasury Minute. I am prepared to give names and particulars to everyone concerned. I say that was a very hard and cruel case, and it is a case in which toleration ought to have been shown. I am only alluding to it as an instance of some of the injustices that have been committed under the Treasury Regulations. Another injustice has happened. It happened not very long ago in a concern in which I myself am interested. We knew that the War would not last for ever. Every part of our undertaking was employed in war work. We desired to devote £500,000 of our own money—we did not ask the public to subscribe, but subscribed amongst ourselves—in order to prepare for the transformation of the works when peace would ultimately come. We were denied the opportunity of using our own capital for that purpose, and what is the result to-day? That applies not to one firm, but to scores and hundreds of firms throughout the country, and to-day important hotels here are full of trade missions from all parts of the world who are prepared to deliver the very goods which the British manufacturer was prepared to deliver had he been allowed to do so. Today, in the papers, Japan is advertising cotton for sale in Manchester. In all parts of the world they are prepared to deliver goods which British industry would have provided had it been allowed to use its own capital.

There have been grave injustices with regard to the Regulations which have prevailed up to the present time. One injustice was that no explanation was ever given, and the trade was never allowed to see the Committee. You handed in your application, and the Treasury asked all sorts of questions by correspondence. You were never allowed to have an interview with any member of that Committee. Hundreds of thousands of pounds we returned down, and had to be obtained privately in order to keep businesses going. That is unjust and unfair, and I am glad that is recognised by the permission now to be given for oral evidence to be taken. But there is another injustice. From what I hear, there are certain men put on this Committee who are identified with great and important commercial undertakings. I say, is it fair that representatives of a particular company should have to go before the head of a competing company and explain all the reasons and all the ramifications which induce them to desire to introduce fresh capital? It is unjust and unfair, and it is creating great alarmand concern in the commercial community. I want to ask my right hon. Friend whether he realises exactly how the Regulation will work, even with the retrospective Clauses taken out of it? Loans are not to be renewed. If I have £100,000 to-day from the bank, and I want to have it renewed to-morrow, I cannot have it renewed. That is a very serious state of things. Not only that, but if I have deposited securities which were issued with the full permission of the Government, and have obtained advances upon them, all that is cancelled. No bank is to be allowed to lend money on any of these shares. No bank is to be allowed to lend money on any of these shares that are retrospective and have been dealt in during these four years. I do beg my right hon. Friend to pay attention to that particular point, because, as I indicated at Question Time, the cotton people in Lancashire live on loans, and, if not allowed to renew, there is nothing to prevent the Receiver coming in, and taking over the business. That is why this thing is so urgent. If a loan is coming to an end to-day and it is desired to get it renewed, no bank under this Regulation will renew it, and I venture to say that some businesses will go crash in the present week as the result of the disturbance taking place.

Take another case. Some people were able to get permission—I do not want to go further into details; I have no doubt the Committee acted according to their wisdom and in every way correctly—but with regard to some of these companies, in order to keep their businesses going, without asking the assistance of the general shareholders at all—because the Government denied that—certain men took financial responsibility and advanced money themselves under a certain consideration. They found, say, half a million of capital on condition that they got, say, 50,000 shares. What is the case under this Regulation? The person forfeits the consideration, because the Minute distinctly states that no shares shall be issued of any sort or kind. These were floated with the full approval of the Government, and the Government have been taking thousands of pounds every day in the week, and it is not for them, after taking the money and providing the opportunity, now to go back and say, this thing ought never to have been done. The real truth of this matter is—and I say it with regret—that in my opinion I think the Government are going to the wrong quarter for advice. The right hon. Gentleman tells us the Stock Exchange has supported him. I wonder who on the Stock Exchange has supported him. The old-fashioned stockbroker, who goes to his office at eleven o'clock and leaves at three, and only carries out orders sent, may object to more enterprising competitors. The business of the stockbroker, however, is not only to buy and sell shares, but to finance and assist business throughout the country by his enterprise. This is a triumph for the lazy stockbroker, and against the interests of every enterprising stockbroker in the country. It is a triumph also for the banks. I think that Lord Cunliffe has far too much influence over the Government in regard to these matters. He has occupied a great position throughout this War, but Lord Cunliffe, let us be frank and say, does not possess the confidence of the business community in the City of London or this country.

By some means or other he seems to have mesmerised the Government. It is the duty of Lord Cunliffe to protect the interests which he himself represents. Lord Cunliffe is a banker. He has been doing his duty, I have no doubt, as he sees it, according to the highest patriotism and the best of his ability. Yet it must not be forgotten that the bankers have been very favourably treated by the Government throughout this War. What is the position at the present time? If you want to deposit money with a bank you get 3 per cent. If, on the other hand, you want to borrow—it may be the same money—you have to pay 5 or 6 per cent., so that the banks are protected to that extent, while all the time they may be using to the full the deposit to make money. They do not desire too many attractions for the investor, though such may be for the urgent advantage of the country itself. I say that in my opinion—and I desire to speak quite frankly about it because I have had opportunities for discussing the matter with those who know—this new Regulation, put out, as practically admitted, without due consideration, because the vital factor in it has already been withdrawn—I say it is going to do more injury to the trade of this country than I believe my right hon. Friend has any conception of.

Talk about unemployment! What business man is going to risk his money at the present time in the unsettled condition of affairs? He does not know what his excess profits are going to be. He knows if he does make excess profits it is taken from him at both ends, and he says to himself: "Have I got to take the risk? What inducement is offered to me for investing my capital in new enterprises?" I say to the Government that unless they do something more to encourage the development of industry in this country we are going to have a financial position of which at present one has absolutely no conception of. At the present time a business man does not know whether or not he is justified in asking for capital. Under this Regulation if I want half a million of money to-morrow, I have first of all, I suppose, to give something like five or six thousand pounds in order to register before I am permitted to ask for my licence. I have to pay all the legal fees, and everything of that kind, and then I have to stand in a queue outside the Treasury to know whether I am going to get a licence to employ my own capital in my own business! That is a very serious state of affairs. You may have two competing industries in a town which desire capital to extend their operations. They go before the Committee. One of them gets a licence; the other does not. That sort of thing causes very great alarm and very great disquiet.

I am not one of those who say for a moment that you can at the present time give up all control of issues. I do not think you can. But I say that the greater freedom you can give the better it will be for the country and the better it will be for the National Exchequer. No real explanation is given as to why a permit has been refused. I would very humbly represent to my right hon. Friend that he should carry out the spirit of what was understood to be this new Regulation—that money should not be allowed to go abroad at the present time, but that every facility should be given for home industries to get capital to provide employment. If my right hon. Friend can tell us that that is going to be the governing spirit of the policy of the Committee, then, I think, he will go a long way to allay the alarm that has been created. But we are up against this proposition, and I repeat it: unless you afford facilities for commercial concerns to utilise their own capital and the capital of their funds in developing all our industries your markets one after another are bound to go. They are going to-day. They are going to be secured by countries who were never competitors before. It is of vital interest to the State that as few Regulations as possible should be put upon the free flow of capital. I hope, therefore, before the Debate closes, or to-morrow, that my right hon. Friend will tell us what is going to be done in regard to loans, contracts which are not completed, and the other matters to which I have alluded.


I desire to add a very few words to what have already fallen from my right hon. Friend. I do not think the Government, in making their old Regulations, which have been superseded, or in making the present Regulations, have realised what they were doing. I am quite sure they do not realise the terrible effects of the new Regulation with which we are now threatened, and which is practically to-day in force. It is the fact even that a private firm in the City of London to-day can go to its bank and give a security for money in half an hour, if it has any securities to give, whereas this Regulation, as imposed, makes it impossible for a limited company to do anything of the sort. A large number of the principal activities in England, both in the City of London and elsewhere, are to-day, for convenience sake, embodied in limited companies. Why they should suddenly be handicapped, not only in their finance, but in all their internal arrangements, it passes the wit of man to discover. The facilities for doing a variety of things which every limited company has always had in this country has suddenly been cut off. If such a company desired a few thousand pounds for the purpose of some transaction, in order to give security for that money it must give debentures, or issue some of the further debentures it is already authorised to issue. It cannot now do that. It must, forsooth, make a written application, and fill up a schedule giving about ten different explanations. It then launches that schedule at the Government Department, and waits for the decision of the Department. During the past two years these restrictions have only applied in the cases where shares or debentures were sought to be authorised, and where these were going to be sold or quoted on the Stock Exchange.

The new Regulations make these issues absolutely illegal without the consent of this new tribunal. The other tribunal was one of the most astounding arrangements that the mind of man could imagine. It sat in the darkness. It refused to listen to anyone who wanted to say anything, or to put his case. Nobody knew who it was. Decisions were given without reasons. One company got its permission, and another company, in exactly the same position, was refused. Weeks, in some cases months, elapsed before the decision could be received at all, and then you probably were turned down altogether.

I confess that I am one of the last men in this House to embarrass the present Government, or the late Government, while the War was on, or to stand here and say anything that I ought not to say. But I do say that in my experience in the city, which has extended over the whole of the War period, and a good many years before that, I have never known anything like this before. If anybody had told me such a thing could exist I would not have believed them. If the Government could tell us of it to-day, and if they could next week make a whole lot of simple operations outside the Regulations, so that they may be freely done without having to go and get these consents, it would be well. Why, for instance, should not a company, if it desires to do so, split its own shares? Companies have been refused permission to split their £10 shares into ten shares of £1 each. They have not been told why. My right hon. Friend the Leader of the House told us just now that the whole object of these arrangements was to enable the State to borrow money, and to prevent the whole lot of loose money being used up by speculative operations which might prevent the free flow of money into the Treasury. We understood that was the object, but why has this Committee turned down simple amalgamation. Two companies are competing with one another, and they want to amalgamate in order to make one concern stronger and go on with their manufacture. They have applied to the Committee for permission to amalgamate. They do not want a single sixpence from the public, but they simply want to amalgamate. They have to go through six months of constant filling up forms, answering all sorts of stupid questions, and then there is a refusal without any reason given and no appeal. The Star Chamber we read of in history is nothing to this burden, which is certainly most incomprehensible, which is being thrown upon the business community of the Kingdom.

There is another aspect of the question. The Leader of the House has not been fair to those concerns who have issued their shares in spite of the late Treasury Minute. They were frankly told that unless their shares and debentures were intended to be dealt with on the Stock Exchange there were no restrictions, and that they could have commissions. They went to Somerset House and paid the money and got permission. Why should they now be penalised. It is ridiculous and outrageous, and I was very glad to hear the observations we have had from the Leader of the House that at all events in the schemes up to the present he is pledged that that shall be modified in that respect. I would like to know what is going to be done in regard to all sorts of current business. Money has been paid and contracts entered into under which debentures have to be issued. These people have their options, and thousands of people hold debentures which they have a right to convert into shares. They have been in some cases to this very Committee and asked to be allowed to exercise their option, and it has been refused. What difference does it make to the finances of the country or to the War whether Mr. A, who owns 100 debentures, should go and say, "I exercise my right to have my shares"? And why should the company have to say, "We have applied to the Treasury Committee, and they will not let us issue those shares"? It seems to me to be so preposterous that you have only really to put the proposition to show how unreasonable and outrageous the behaviour of this Committee has been, and is going to be.

With regard to amalgamation, if two concerns want to amalgamate and issue paper between one another in order to make a stronger concern to enable them to pay all the taxes which are being thrust upon them, why should they not be at liberty to do that? I had a case two months ago where two concerns desired to amalgamate and to drop two large flotations of shares on the Stock Exchange, and this was refused. Now shall we be allowed to go again to this tribunal to meet those gentleman? I do not know their business capacity, but I should like to ask what are their grounds for refusal. Why should you stop our business? The patience of business men on this subject is exhausted. They have seen with dismay this new impediment put in the way of their business, and it has been exceedingly difficult for many of us to carry on our businesses, and if we are not to be allowed to use some lubrication, and if we are to have a piece of iron put into the cogs, what is to become of the country?

The difficulties of arranging business are to-day very grave and very serious. I have a case in my own mind which illustrates this point, and I will put it very shortly to the House. Four British companies are carrying on business abroad. They have done so under very great difficulties, and have made great losses during the War, and they desire to amalgamate. The terms have to be discussed with the boards and after- wards go to meetings of the shareholders and debenture holders of those four concerns. That means no less than twelve meetings of debenture holders and shareholders to carry out those arrangements. Are we to apply for permission first, or are we to bring thousands of shareholders from all over the Kingdom to meetings in London to carry out these arrangements, and then come to the Treasury and find they cannot give permission? Therefore, I suggest to the Leader of the House that the position in regard to this matter is intolerable.

The Treasury Committee and those responsible for its Regulations are not people in active business who understand the difficulties of dealing with such matters. They meet in private and secrecy for days and weeks in order to decide whether a few shares or debentures are to be issued or not. Why should these people have to wait at all, if they do not want money subscribed? We ought to have an assurance to-night from the Leader of the House that these Regulations will be immediately altered so as to allow all kinds of transactions to be carried out which do not demand the public subscription of money. If it is to protect the Treasury and secure money to pay our debts, that is one thing; but if it is to interfere with all the internal arrangements of industrial concerns all over the country to stop them splitting their shares, and to prevent them amalgamating and giving their shareholders the shares and debentures they had contracted to give them years ago, I protest against it. I consider the matter so important that it transcends the question of party loyalty, and if there is an opportunity of expressing my disapprobation of the course pursued, which I am afraid is still going to be pursued, unless we have some assurance to the contrary, I shall feel myself bound to go into the Lobby in support of the views I have expressed.


In the first place, this Clause was supposed to be a relaxation of the old practice, which was only a recommendation, and everybody understood it applied to public issues, and that the newspapers were not to be filled with such advertisements in the future. Nobody ever dreamt that it applied to small business concerns. Four-fifths of the business of the country is carried on by private persons who do not care a button for the Stock Exchange. Who are not in the least concerned with the Stock Exchange, do not believe in Stock Exchange matters, and who pass on their shares through the secretary of the company. Of course, these people are enormously annoyed that the Stock Exchange should interfere with their activities at all. If the Government intended to stop these issues it was not their business to give good advice, but to enact a law. If showed that B was a man of much stronger character and preferred his own opinion to that of Treasury officials and probably that he could conduct a more successful company. What I dread about these Regulations is that they will stifle capital altogether. How are we going to develop our country and our Empire if we do not have capital? This cribbing and confining of enterprise is not British finance at all, and it is bound to injure our activities. After all, capital is simply credit, and if enterprise is to be kept down and new industries are not to be developed, where are you going to get that opportunity for employing that mass of workmen now coming back? If this were restricted to foreign or even Colonial enterprise, there might be something to be said about it, but what about starting works of our own in this country? There must be any amount of new genius ready to undertake new developments of all kinds, men who are not going cap in hand to Treasury officials, who, as the hon. Gentleman who has just sat down (Sir W. Rutherford) has said, probably do not know anything about business or have forgotten all that they ever did know.

These are not the methods that have made this a great commercial country. The transfer of shares from A to B is nothing. It does not take any capital out of the country. It makes no difference to the country. There has been a great deal of money borrowed on debentures from time to time. Can they be renewed? Can you go to your bankers and borrow money on securities and pay the money off as you wish? I do not think you can under the Regulations. Nobody wants to go to anybody to ask permission to carry on his legitimate business. These Regulations instead of having the effect of making this country more wealthy and better able to bear the enormous burdens of the War, instead of improving the credit of the country, will reduce our finances to such figures that there will be nothing left to tax at all. The Treasury should have confined itself entirely to keeping money from going out of the country and preventing it getting into other hands where it cannot benefit this country. If you want to benefit this country, there must be freedom to develop our own industries and to employ our own workmen. Does the Leader of the House know the dissatisfaction caused in the commercial world, and especially in the city of Glasgow, by those Regulations? Men have sold things which they cannot deliver, and they themselves are under obligations which they cannot fulfil. That is the position in which many men have been placed. Others want to take up commercial operations with other men. None of these things can be done without paying a visit to London to see a Treasury official. These Regulations will put an end for a considerable period to development and enterprise in this country, and where, then, will be the tax-paying capacity which is to get us out of our difficulties. I am all in favour of giving entire freedom.

Mr. BONAR LAW (imperfectly heard)

With the leave of the House, I would like to say a word or two more on this subject. I and the Government are in entire agreement with the object in view as described by my right hon. Friend (Sir H. Dalziel). The whole object of these Regulations is to prevent money being used in a way which is not in the public interest. My hon. Friend who has just sat down (Mr. Macquisten) talked as if this were a new restriction. That really will not be found to be so. Our whole object is the reverse. It is, while keeping some control, to give facilities which will enable everyone to get his business done quickly, to state his ease if there is any doubt about it, and to ensure that no undue impediment is put in his way. That is our object. There will be no stoppage; that has been made plain. The whole object is to prevent speculation in securities which will not go to develop the country at this time and may go abroad. That is our object. I do think that the change we have made is going to get rid of a great deal of the trouble of which my right hon. and hon. Friends have spoken. As I have said, we have three Committees already arranged for. As for the personnel, I know that the aim of the Chancellor of the Exchequer has been to get people who really understand the business side of it and not merely the financial side.


Will my right hon. Friend give an assurance that no member of that Committee will be allowed to sit on any competing application from another firm in the industry in which he is interested, so that he may not get the secrets of his rivals?


I really think that there is no difficulty in giving that assurance, because nobody would do it; but if it is any satisfaction to my right hon. Friend, I will undertake that the Chancellor of the Exchequer shall make it plain that that is his intention in this matter. The real difficulty is that we have got to consider two competing needs of the country. I would like to see every one of these restrictions removed to-morrow, but I am afraid, if we removed them at once, we should run considerable risk of not getting money so freely as we need it. I hope that hon. Members will give the new proposals a chance to see whether the difficulties really do arise. I am assured that they will not. I think it is common custom in most countries that companies have to go through some form before they are allowed to register. Personally, I am inclined to think that we ought not to allow money to go abroad without having some regard to whether it is going to be for the benefit of this country. I think something of the kind is necessary. The community has a right to ask that there shall be no delay. But I do really suggest that the system which has prevailed during the War has had good effect. I can give my right hon. Friend this assurance, that the object of the new Regulation is not to restrict but to increase the issue of capital for industry, and instructions to that effect will be given. As regards the particular points raised respecting loans, I really think it is a question of the actual legal meaning.


But the banks have intimated to-day that they cannot renew the loans.


No; that has all gone, I think.


Will shares issued by private concerns be in practically the same category as shares which were publicly advertised during the last four years? Will it still be permissible for money to be borrowed upon them, and will the loans that are issued on them be able to be renewed?


I believe so; but I am sure my right hon. Friend will understand that I do not like to answer off-hand and without examination questions which are largely matters of interpretation.


But the banks will not lend on shares unless they know that if the loan is not paid they can sell the shares. This Regulation prevents them selling.


I do not think so. The retrospective effect will be taken away, and these issues will for all these purposes be treated just exactly as if they had Treasury sanction. We are in fact putting the whitewash brush over all that has happened in that respect, and putting them all in the same category.


And contracts for delivery will carry on?


I believe that is so. That was the intention of the concession. As regards that, the new Order will be carefully considered in the light of the criticisms we have had to-day; but I do ask this House to realise that we do need some control and to make that control as little hurtful as possible. We are as anxious to get business for the country as we are to get money.

It being one hour after the conclusion of Government Business, Mr. Deputy-Speaker adjourned the House, without Question put, pursuant to the Order of the House of the 12th February, till Monday next, pursuant to the Resolution of the House this day.

Adjourned at Twelve Minutes before Nine o'clock.