§
Motion made, and Question proposed:
That the Treasury may,—
§ The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)The Resolution which you have read from the Chair is intended as the basis for a Bill authorising fresh borrowing operations by the Treasury. In making the Motion, I cause no surprise to the Committee, and, indeed, I think, no surprise was caused in any quarter when my right hon. Friend the Leader of the House gave notice for Ways and Means Committee to-day. Neither have I any revelations to make to the Committee to-day. The Resolution authorises the Treasury in general terms to borrow any 1728 sums required for raising the Supply of the year up to a limit of £250,000,000, any sums required for repayment of any maturing securities issued under the War Loans Acts, 1914 to 1918, or any Treasury Bills or Ways and Means advances. It further authorises a State security to be issued to the holders of any securities issued under those Acts in exchange for such securities, and to charge on the Consolidated Fund the principal and interest of any securities created in pursuance of the Resolution, and any sums required for Sinking Fund for the redemption of securities so issued in pursuance of the Resolution. I do not think I need dwell on the precedents—there are plenty of them—for a Resolution in these general terms, followed, sometimes immediately, by the issue of a prospectus of a new loan, and sometimes only at a considerable interval.
The reasons for contemplating such an issue now are well within the knowledge of the House. I stated, in opening the Budget, that I estimated the deficit of the year at a little over £230,000,000, or £250,000,000, as I took it at a round figure, and to leave a little margin for contingencies. If that were all I had to deal with, I should have no particular occasion for concern. It is true that the bonds which were, being issued up to Saturday last have not yielded the large weekly total to which we were accustomed under the earlier issue, but they would have provided, or very nearly provided, all that would have been required during the year. But that deficit is not the serious feature of the situation. The serious feature is the immense floating, debt, the great quantity of short-dated securities which we have to meet. I have provided myself with figures up to 31st May, and the House may perhaps like to have them as being later, I think, than any that have been published. They include Ways and Means advances £457,892,000, Treasury Bills to the amount of £1,036,131,000, Exchequer Bonds maturing within this financial year to the amount of £245,000,000, if I include in that figure an amount of £66,000,000 of 1922 Bonds, the holders of which have an option of repayment in the course of a year. That is exclusive of Miscellaneous Foreign Debt falling due this year, amounting approximately to £98,000,000. The House will see how large these figures are. If you cast your eyes a little further ahead, you will find 1729 that, in addition to these securities maturing during the current year, there is no less than £1,008,000,000 maturing in the period from 1st April, 1920, to 31st March, 1924, and a further £91,000,000 of Foreign Debt.
Under those circumstances, the Committee will readily understand that I have, from the beginning of my tenure of office, seriously considered the desirability of a funding operation. I do not need hero to dwell upon the importance of funding as much as we can of this large floating debt. I venture just to say a few words about it, because the importance, appreciated here, and appreciated in the City of London and in financial and business circles, where these matters are studied, may be less apparent to the average citizen. Such a vast amount of short-dated securities spread an atmosphere of insecurity over the business world, and is an undoubted obstacle to the revival of trade and industry as we all wish to see it revived. But it is more than that. It prevents our restricting the continued issue of currency notes, or doing anything to reduce the inflation of the currency, and it prevents our taking any steps to stabilise our foreign exchange. Accordingly, it is not merely financial interests, it is not merely the Treasury, that are concerned. It is each and every parson of this realm who has an interest in the prosperity and well-being of the country, and the need for support to this Loan, whenever it is issued, is as great and the claim on the patriotism of the citizen is as strong, as were that need and those claims during the progress of active operations.
4.0 P.M
Indeed, if I am to be criticised at all, I think it would be for not having undertaken this operation at an earlier stage. Many people have expected it earlier. Some have expressed surprise that I have not undertaken it earlier. I say frankly that I hoped that the progress of affairs in Paris would be Such that the preliminaries of peace would have been signed before now, and that I might make my issue after the signature of the preliminaries of peace. But we are close upon the Whitsuntide holidays. There is a, very limited time between the resumption of business after the Whitsuntide holiday and the general summer holidays of the community, and I think it will be clear to everyone that the choice before us 1730 is either to make this issue at a very early date or to postpone it altogether till the autumn. It is under these circumstances that I ask the Committee to pass this Resolution before the House adjourns for its own Whitsuntide Recess, and I say at once that, as has been indicated by my action in ceasing the issue of Treasury Bills and stopping the issue of the Bonds, it is my intention to make the issue almost immediately after the House rises for the Whitsuntide Recess. I do not bind myself; I must reserve my liberty till the last moment; but that is my intention. The terms of the Loan will, of course, be set forth in the Prospectus, whenever it is issued. This Resolution embodies no terms. In that it is in accordance with precedent. The terms themselves will need much closer definition in the Bill which it will be my duty later to present to the House. I have come to the conclusion that in the choice, as I have said, between making a very early issue and postponing it till the autumn, unless wholly unforeseen circumstances arise, I ought to choose the earlier date. I think it is bad for everyone that the uncertainty should continue longer than is necessary, and, if the issue is made, at least one element of uncertainty is removed. If the preliminaries of peace be already signed by that time, or if they be signed during the time when the lists are open, so much the better. It would go forward with assured confidence. If they are not signed, there will be so much the more reason why we should do everything that we can to strengthen our financial position and be prepared for all emergencies. If the prospects which I held out in the Budget statement are realised, then, of the Loan which will be issued in pursuance of this Resolution, only some £250,000,000 will be required to meet new expenditure, and the whole of the rest of the proceeds will be available for the funding of floating debt. That is an operation which everyone conversant with the facts must desire to see succeed, and I hope that investors will make ready for the opportunity which will be afforded to them, and that those who have received their due dividends will keep them for reinvestment in Government securities. I take the opportunity of saying that, thanks to the sacrifices which my predecessors have asked the country to make, and which it has made, during the War, thanks to the ready response with which previous Loans have met, we stand to-day in a position unrivalled among the belligerents who entered 1731 the War at the commencement. As we reap, in our situation to-day, the reward of past sacrifices and past efforts, so I hope the country will be encouraged to make another great effort, not this time to put us in funds for the waging of long campaigns, but to lead us forward along the paths of reconstruction and peace and along the path of financial stability and security.
§ Sir DONALD MACLEANWith regard to the statement of the Chancellor of the Exchequer, of course, it is perfectly obvious that he cannot give us the terms now. The terms can only be disclosed when the Prospectus is issued. As to the difficulties which he has met with in regard to the choice of the time of issue, I think the Committee will syspathise with him, and will approve of the action which he has taken in seeking the necessary powers now. So far as any Member of this House or any citizen is concerned, criticisms at the present stage should only be directed to the curing of faults and to assisting the Treasury to get the nation on to a sound financial basis. There are just three points which I should like briefly to make. I suppose that no one would really wish to attempt to fund a debt when you have to go on borrowing. That is, of course, rather a counsel of perfection, because, so far as one can see, that has been partly done in what has happened in previous Loans.
§ Mr. CHAMBERLAINYou mean a Sinking Fund?
§ Sir D. MACLEANNo, seeking to fund the Debt. If you want to borrow at the same time beyond what you have to deal with, you really come into the open market rather in competition with others who are trying to get money to carry on their own businesses. But let that pass. Another point on which I think we are all substantially agreed is the danger of stereotyping the interest at too high a rate. High prices and high wages, of course, necessitate a high rate of interest, but I hope that my right hon. Friend will not make his Loan too long a loan. Let us hope, for the sake of the financial future of the country, that prices will go down. If prices fall, wages will no doubt correspond. After all, what the workers want is real wages and not paper wages. The position then will be that if you are left with a lower wage and lower prices, and, 1732 for a Government security, a very high rate of interest—I do not know what it is going to be——
§ Mr. CHAMBERLAINWe had better not say.
§ Sir D. MACLEANAt any rate we are quite safe in saying somewhere about 5 per cent., because that is what has happened in the past, and there is not much likelihood of doing very much better in the immediate future. If that is so, with a very long Loan, you will be left with the charge that the Loan must go to the large property-owning classes—I mean those who have the money—and we shall be face to face with this great Government security carrying a high rate of interest, and at the same time with a dropping of wages and a lowering of prices. That is a state of things to which we shall be inevitably bound up if we have too long a Loan. I would respectfully urge upon the right hon. Gentleman that in the Loan which he is about to issue he should keep it as short as he reasonably can, in view of the arguments which I have just addressed to him. Of course he is face to face with very considerable difficulties as to getting his money. Some of the very best securities, in order to get money for their preference stock, have to offer to-day something like 6½or 7 per cent. He is faced with difficulties in which he has our very great sympathy, and it is our duty to do what we can individually, and at the same time everybody ought to urge the whole nation to back this Loan to the full extent of its capacity. After all, the British Government is still the finest security in the world. In no carping spirit I would say that I am quite certain that the right hon. Gentleman would get a much better response to his applications if he could only face the country backed by the fact that the Government itself was run on business lines, that Government extravagances were cut down, that no unnecessary payments were being made. Government Departments should be cut down to all possible limits of reasonable expenditure, and if that were the case—unfortunately it is not the case yet—how much more willingly should we find the public backing him and putting their money into a concern which is certainly their own, but which at the same time is at present overloaded by unnecessary extravagance, and by uncontrolled expenditure. As far as this Committee and the country as a whole is concerned, I believe that, in spite of all difficulties, there will 1733 be a generous and patriotic response to the appeal which the Chancellor of the Exchequer has made to-day.
§ Sir F. BANBURYThe right hon. Gentleman who has just sat down was quite correct when he said that the response to the Loan will probably be greater if the people who can subscribe are certain that economy is going to be practised by the Government. There would be the greater reason to subscribe, because if economy were practised there would probably be no more Loans in future. Having had some experience in the issuing of loans in my younger days, I am quite aware that if potential subscribers think the Loan in hand is to be the last one they will subscribe to it with more eagerness than they would subscribe if they thought that there were to be other Loans. The remarks of the right hon. Gentleman, too, portrayed the situation that I think is probably very present to the mind of the Chancellor of the Exchequer. I am not quite so certain that it is present to the minds of the other members of the Government, who, I see, with one exception, have deserted the Front Bench. I do not venture to offer any criticism upon the Resolution put forward by the Chancellor of the Exchequer. I am glad that my right hon. Friend has brought it in. It is absolutely necessary that the Debt should be funded as soon as possible. If, however, I might venture to criticise the remarks of the right hon. Gentleman opposite, I would point out to him that there is a difference between funding a debt and paying it off by means of a sinking fund. What was in the right hon. Gentleman's mind was what took place in the days of Pitt, when Pitt objected to borrow with the one hand and pay off debts with the other—not the funding of the debt, which is a totally different thing.
The enormous amount of floating debt—I think I am right in saying over £1,000,000,000—is, I must say, really a danger to the business of the country. Large sums of money which have to be renewed from month to month prevent the floating balances being employed in trade. The right hon. Gentleman opposite said he hoped the interest would not be too high or the date of issue too long. He thought that matters were probably undergoing, or would undergo, a change, and that money was going to be easier. That is a matter for speculation. I really do not know whether it would be so or not. I am, however, quite certain of one thing—so 1734 long as Income Tax and Super-tax amount to 10s. in the £ you are not going to get money at very low rates. As to the rate of interest I am not going to say a word, but take a loan which normally returns 5 per cent. and consider the people who are likely to make a success of the Loan. What may happen in the future nobody can say, but no one is more desirous than I am that subscribers should be plentiful and that many small amounts should be subscribed. Small subscribers really make the backing of any loan. They do not come in it at the first, or did not in the days when I was in the City. To begin with, a loan was always taken up by large, holders. If Super-tax and Income Tax amount to 10s. in the £ large investors get 2½ per cent. Therefore, if you are going to be able in future to borrow at the lower rate, you have to do two things: First, curtail expenditure; and, next, reduce the Income Tax and Super-tax.
Do not let us hear anything more about a levy on capital. You also want economy. I am glad my right hon. Friend has brought in this Resolution, which I have no desire to criticise, but I would like to ask one question. It is a little difficult to follow any Resolution read over from the Chair, or as my right hon. Friend read it, but there were words in it which I could not quite understand. The first part authorises, the issue of a Loan of £ 250,000,000, required to meet the current expenditure of the year. The second part authorises the issue of an unknown sum of money to be given in exchange for debt now payable. That does not, I presume, mean that the public cannot subscribe?
§ Mr. CHAMBERLAINThe object, first of all, is to raise the sum of £ 250,000,000 for the Supply services for the year; then any sums required for the repayment of any maturing securities; and, thirdly, to create securities to be issued to holders of any securities issued under these Acts in exchange for their securities—that is the right of conversion.
§ Sir F. BANBURYI was a little bit afraid of how the matter stood. We will say, for the sake of argument, that the right hon. Gentleman issued a Loan for £ 250,000,000 for the service of the year. There are £1,000,000,000 of Treasury Bills. Does that mean that the thousand millions are to be offered—the whole of the Treasury Bills—or will the public be able to come in and subscribe at the same time?
§ Mr. CHAMBERLAINI cannot imagine that the right hon. Baronet could ever have any doubt about the matter——
§ Sir F. BANBURYIt is not clear!
§ Mr. CHAMBERLAIN——any doubt whatever about it! The public not only can come in, but it is urgently necessary that they should come in.
§ Sir F. BANBURYI quite agree it is absolutely necessary.
§ Mr. CHAMBERLAINThe object is to get the floating debt into the hands of real investors.
§ Sir F. BANBURYI can quite understand that.
§ Mr. CHAMBERLAINThe people who hold cither Treasury Bills or any existing Government securities will be welcome.
§ Sir C. HENRYWill any portion of this Loan be earmarked for any special purpose?
§ Sir F. BANBURYThat is the whole point I quite understand the position, but I was afraid, while hearing the Resolution read, that part of it might be earmarked for a particular purpose.
§ Mr. CHAMBERLAINNo.
§ Sir F. BANBURYIf that were so in the Resolution I think it would be a mistake, and in order to avoid any misunderstanding I asked the question. So long as that is not so, I have nothing further to say, except to congratulate my right hon. Friend and to wish him every success.
§ Mr. CLYNESI cannot allow this Resolution to pass without expressing upon it in a sentence or two the feeling of hon. Members with whom I act. The right hon. Baronet opposite (Sir F. Banbury) has expressed the hope that we shall hear no more about Loans. I am quite certain the look forward to some immediate future when we could be confident of hearing no more about loans. I am quite certain the right hon. Baronet will hear a great deal more, and so will the Government before very long, on the question of a capital levy. I can agree with the closing observations of my right hon. Friend beside me (Sir D. Maclean) and I hope that as evidently this Loan is to be issued there will be a national and whole-hearted response. I trust that as this step is a step which the Government is bent upon taking, it will, for its purpose, be a com- 1736 plete success. I agree also with what my right hon. Friend said on the point of interest. Having so agreed I cannot let the occasion pass without expressing the view of the members of the Labour party that this policy of borrowing is a ruinous policy, distinctly harmful to the nation's interest, and mistaken; and in despite of the fact that there has been an enormous-addition to the total sum of private wealth during the period of the War. That addition is the justification of the Government in calling upon the people of this generation who have such means to enable them to make even greater sacrifice— without seriously feeling the burden of any financial sacrifice which the Government could justly call upon them to make. So far we have no great monument to the memory of those who have fallen. We are piling up debt which will be for, at any rate, a very long time a reminder to those who are having their burdens increased of the policy being pursued.
Debt is not a monument in which any Government should take pride. I suggest to the right hon. Gentleman that the policy at this moment is doubly unwise by reason of its effect upon the minds of a very large number of people who have no means to lend anything, and who are now compelled to borrow, and, indeed, compelled almost to beg the Government to give them something each week to keep them alive. This is a large population in a state of impoverishment. As is known they are manifesting their unrest in the forms in which they have done. I do not quite share those forms, but I really think we are entitled to warn the Government upon making an appeal to a considerable-number of well-to-do people again to lend largely and generously on terms that will be very remunerative to them, and which will bring substantial profit in the way of interest, at the time when there are such a large number of people who are very seriously discontented at the position in which they find themselves and the prospect before them. Without pursuing this point—I regard this as not the occasion for a general debate—I could not allow the occasion to pass or the Resolution to be adopted without entering a protest on behalf of the Labour party against the policy which the Government is not entitled to continue in view of the ever-increasing wealth of certain sections of the community. These can justly be called upon in this their generation to 1737 make financial sacrifices to extricate the Government from the difficulties of the debt in which the country is involved.
§ Sir FORTESCUE FLANNERYIn a very few sentences my right hon. Friend who has just sat down has succeeded in raising one of the largest, broadest, and deepest questions which can be raised in connection with finance. The right hon. Gentleman said that the House and the country will hear a great deal more about the question of a levy on capital. He supported his argument in favour of that levy on capital, as compared with borrowing, by suggesting that there was one class of persons who would lend and another class of poor persons who could not lend, and that these latter were borrowing weekly to sustain their lives. I cannot help thinking— and my right hon. Friend will forgive me for saying so, as I do not wish to be offensive—that he has not very seriously or profoundly studied the question of finance. How could the borrowing of these persons who are unemployed be met if it were not that the Government, with the credit of the whole country, obtain the money from those who have it, in order, amongst other duties, to furnish the means of subsistence to those who have not at this moment got them? There is a profound misunderstanding of this suggestion of a levy on capital. What does it mean? I can understand my right hon. Friend going to a meeting of the Labour party and from the platform denouncing the capitalist and saying that some of his capital should be taken away from him. I imagine I can hear the echo of the cheers that would respond to such a declaration; but capital is only in existence if it produces revenue. An empty house is no longer anything more than bricks and mortar if it is not tenanted and does not produce rent. Therefore, when you make a levy by Income Tax and Super-tax upon income, you are doing the very equivalent to making a levy upon capital, except that you do not destroy it. You do not pull down the empty house, but let it stand, in the hope that some day it may be again productive.
My right hon. Friend stated that those who responded to this appeal would have a high and remunerative rate of interest, but what does that amount to? Any man who has a large income coming from investments has to pay 6s. in the £ Income Tax, and occasionally there are other circumstances which quite make up a 10s. In- 1738 come Tax altogether. Is that not a levy on capital? Does it not mean for the lifetime, probably, of the present generation that the capital which men have saved and obtained by enterprise, manufacturing skill or ability, as well as that which they have inherited, is to be reduced by one-half, because one-half goes to the State? I have gone away a little from the Resolution, because I felt my right hon. Friend would not be angry for putting in plain language the views that one holds who has closely studied this question. I want to say how thoroughly I support the policy and how thoroughly I believe in the policy of funding the floating debt. I believe we have something like £1,700,000,000 altogether more or less floating, including Treasury Bills and the other items which have been referred to, and they are more or less in a state of flux and hanging, like the sword of Damocles, over the heads of the persons who desire to show enterprise in new investments. The larger portion of that sum which is funded and removed from the immediate necessity of payment by the State the better for the stability of the Money Market, for enterprise, and the better for restoring our trade, which has been so interrupted by the War. I feel certain that the patriotic person who realises the necessity for assisting the best investment the world has produced will believe also that they are acting patriotically us well as in their own interest.
The right hon. Gentleman the Member for the City of London (Sir F. Banbury) spoke about the high rate of interest. If the Chancellor of the Exchequer looks up the history of this question he will find that there was a controversy as to the necessary rate of interest before the issue of the main War Loan, and he will remember that there was a very definite opinion expressed by certain high authorities in the City in favour of a comparatively high rate of interest, but there was also another opinion in the City against the making of a high rate of interest, and that prevailed, with the result that the public came in not only from patriotic grounds, but because the great object of wise investors is security rather than a high rate of interest. I think the security of the British Government and the British nation is still so well established that no high rate of interest is necessary or will be necessary. I have purposely avoided going into the figures, but I urge upon my right hon. Friend that if he has any doubt in the balance of his mind as to a high rate of 1739 interest on the one hand and an attractive security on the other hand, let the right hon. Gentleman take his courage in both hands and decide that the high rate of interest will be less attractive to the bulk of investors than the consideration that they are lending money pariotically with the best State security they can obtain in the world. I congratulate my right hon. Friend on the lucid speech which he made in moving this Resolution, which I hope may be made as widely public as possible, because if that is done I believe it will have the effect which he desires, and which is so necessary for the future of the country.
§ Mr. ACLANDI take exception to the point recently made by the right hon. Gentleman that the position of the country was too serious or a suggestion that the Loan contemplated. will be an. opportunity for the very rich men to make a high rate of interest. I think the figures given by the Chancellor of the Exchequer as to the large amount of our unfunded debt are so serious that it would be better we should all realise that to provide adequately for the Loan he will issue will require the savings, maybe the sacrifices, and certainly the subscriptions of all classes in as large and abundant a manner as they can possibly give him. I am sure the Chancellor of the Exchequer realises that the more persons with limited means can subscribe the better. The right hon. Gentleman regards this as a patriotic duty as much as any of the efforts which preceded it during the War, and it is regarded, not as the rich man's chance, but as the duty of everybody who has an interest in the country. I am not going to be tempted into reopening the question of the capital levy. I would. suggest to the hon. Baronet the Member for the City of London that he might offer a reward, say, of about £5, for a policy which at the same time would avoid anything in the nature of a capital levy, and also do what he and all of us I would so much like to be done, namely, to secure a very large reduction of the Income Tax and the Super-tax at the same time. It is no use believing that there is any real short cut to some policy of providing the large extra amounts which will have to be found, because there is a practical certainty of the continuance of the Income Tax and Super-tax for a great many years at a very high rate.
1740 I want to end with one simple question. The Chancellor of the Exchequer asks for new money, in addition to the money he wants from the permanent investor,. to replace the unfunded debt of £250,000,000. Does that mean that the right hon. Gentleman has not seen any cause for increasing his Estimate of £250,000,000, which, he said, allowed a certain latitude and margin? We cannot avoid the necessity of this £250,000,000 this year, but I think it would be a reassurance to the country if the Chancellor of the Exchequer would confirm that figure after having gone through another month or two. I would like him now to say if he still anticipates that that will be the limit of the total new money he thinks it will be necessary to raise in the year?
§ Mr. CHAMBERLAINThat is certainly my hope, and I see no reason at present to alter the Estimate I have made.
§ Mr. ACLANDThat is reassuring. I had in mind what was stated in the Budget statement when the right hon. Gentleman said certain Estimates had increased since his Estimates were framed, and therefore I am pleased to hear that he has now no cause to think that there will be any alteration in his Estimate.
§ Sir P. PILDITCHThe right hon. Baronet the Member for the City of London said that there would be no earmarking of any part of tins Loan for any specific purpose. I suppose that does not preclude the arrangement that all forms of Government Loans shall have a right to conversion if they wish it. I do not gather from the Chancellor of the Exchequer's statement whether the actual right of conversion would be conceded to all the holders of Government Loans created during the War?
§ Sir GODFREY COLLINSI wish to urge the right hon. Gentleman to avoid a long-dated Loan. By that means he will attain security and avoid the Government coming on to the Money Market year by year in the future. If the Chancellor of the Exchequer borrows money for a long period of time, it will tend to standardise the present high rate of interest and the high prices prevalent throughout the country to-day. The Chancellor of the Exchequer in this matter has one of the gravest decisions to take. If he fixes a short-dated Loan, or a Loan at a low rate 1741 of interest, he may not secure the money he requires, but if he maintains the rate at a high level he will standardise the present high rate for many years. The result in all former wars has been that after a period of time the rate of interest has fallen, and the Government have been able to borrow money five years afterwards at a much lower rate of interest. Therefore, I appeal to the right hon. Gentleman to avoid long-dated Loans, because money to-day is in great demand, and he will have to pay a high rate of interest, and that will tend to check the upward rise in prices. The rise in prices is dependent upon the rate of interest and the Government security being the best in the world. Other countries will require to pay 1 per cent. or 2 per cent. higher than the British Government. I ask the right hon. Gentleman to take some risks in this matter. Let him fix the rate of interest as low as possible, and by that means endeavour to serve the interests of the industrial position of this country, and at the same time lower the level of prices which press severely upon the working classes to-day.
§ Mr. CHAMBERLAINI do not propose to sketch the prospectus to the House now; I rise only to answer the question put to me by the hon. Member for Spelthorne (Sir P. Pilditch). In endeavouring to assure him that I was not going in any Loan that I might issue to. exclude new subscribers, I appear to have conveyed to him the idea that I am not going to honour the obligation to allow conversions in respect of certain previous Loans raised for certain war purposes. The hon. Gentleman put his question in a form which covered Loans more than those that have that right of conversion. My answer would be that all promises will be fulfilled in the spirit in which they were made, but I am not bound to offer rights of conversion to anybody else.
§ Question put, and agreed to.
§ Mr. CHAMBERLAINI beg to move,
That the Treasury may arrange for giving an option to the holders of any War Saving Certificates to extend the currency of those Securities.As I shall, at a later stage, have to bring in a Bill for the purpose of the Loan, I think it would be an advantage to take Parliamentary authority in that Bill for a 1742 concession to the holders of War Saving Certificates. The Committee is aware that the maximum duration of a War Saving Certificate is now five years, subject to this one extension, that if anybody holds more than one certificate he may continue to hold the earlier certificates till the date on which the last one expires. A Committee was appointed in June, 1917, to consider the facilities for small investors after the War. They recommended that the existing holders of certificates, while retaining, of course, their option of cashing such certificates at 20s. on maturity at the end of their five years, might leave the certificate with the State for a further period of five years, if they so desired. During those five years the certificate would increase in value at the rate of 1d. per month until the end of the period, when a bonus of Is. would be added. Thus the value of the certificate purchased at 15s. 6d. would be 20s. at the end of the first five years, and, if the holder of it then liked to keep it for another five years, it would be 26s. at the end of the ten years. During the whole of the period it would, of course, be cashed at any time, as the certificates can now be cashed. The additional accumulated interest bringing the total value up to 26s. would remain exempt from Income Tax. The intention to do this was publicly announced on the authority of the Treasury, with the statement that arrangements would be made to give effect to it at an early opportunity. I am informed that those who hold these certificates, or at least many of them, would like to have the earliest Parliamentary sanction to the promise which the Treasury then made. I am certain that the Committee will approve the purpose of the Resolution, and I anticipate that it will pass it without any hesitation.
§ The CHAIRMANI have had some little doubt whether this is really a matter for the Loan Bill or for the Finance Bill, but I do" not think that there is very much in the point as it does to some extent deal with funding, and, therefore, it might as well go into the Loan Bill rather than into the Finance Bill.
§ Question put, and agreed to.
§ Resolutions to be reported To-morrow; Committee to sit again To-morrow.