§ Considered in Committee.
§ [Mr. WHITLEY in the Chair.]
I beg to move,That it is expedient to authorise the payment, out of moneys to be provided by Parliament, of the share of the United Kingdom of the compensation payable in pursuance of any Act of the present Session to confirm an agreement made on the 2nd day of July, 1919, between His Majesty's Government in London, His Majesty's Government of the Commonwealth of Australia, and His Majesty's Government of the Dominion of New Zealand, in relation to the Island of Nauru and of other expenses in connection therewith.I do not think it is necessary to add anything to what has been said on the subject of the finances of the Bill, which naturally came into the discussion on the Second Reading. A White Paper has been published dealing with the question of the payment of this money. It simply 1352 carries out Article 14 of the agreement, under which the United Kingdom pays 42 per cent., Australia 42 per cent., and New Zealand the remaining 16 per cent. The amount of compensation payable to the Pacific Phosphate Company has been agreed at £3,500,000, together with a further sum not exceeding £39,000 in respect of compensation to certain officials of the company if their services are not retained by the Commissioners. The share of the United Kingdom in this amount is £1,486,380. The sum to be asked for also includes provision, amounting to £1,620, for legal expenses, making a total of £1,488,000. I have pointed out the urgency of getting the Second Reading and the Financial Resolution as soon as possible in order that the Bill may be sent to a Committee upstairs, and I trust the Committee will now give me the Resolution.
§ Sir D. MACLEAN
All that the hon. and gallant Gentleman has done is simply to read Clauses 7 and 8 of the Paper, but I think I should like to have some more information. This country is going 1353 to be committed to a charge of, in round figures, £1,500,000. I want to know something more about it than Clauses 7 and 8 on the White Paper. Will the hon. and gallant Gentleman tell us something about the position of the company, what its dividends have been, and whether this £1,500,000 that we are going to pay is, on the figures which he can give us, a good and proper investment for the country to make? That is the sort of thing an ordinary business man would like to know. Clauses 7 and 8 are of an indefinite character, giving no information at all, other than that the price is to be £3,500,000, and our share of it is to be £1,500,000. I hope that information will be forthcoming. Then with regard to the £39,000 in respect of compensation to certain officials of the company, what dues that mean? How many of them are there, and what are the conditions under which the sum is to be paid if their services are not retained by the Commissioners? Are they to be pensioned, or is it to be a lump sum, or how is the thing to be done? If my hon. Friend gives us some information on that point that satisfies us that this is on ordinary business lines, we will give him his Resolution.
§ 7.0 P.M.
§ Lieut.-Commander KENWORTHY
I would like to know whether there are any investors other than British subjects who hold shares in this phosphate company. This matter was raised by one hon. Member in the Debate on the Second Reading. Before we compensate the shareholders we want to know whether they are enemy nationals. It is a very important point which ought to be made clear. I take the view that private property even of enemy nationals should be compensated in these colonies abroad. It is a totally new departure in warfare, at any rate for the last five or six centuries, that we should not compensate the private property of enemy nationals. Are we making an exception in the case of this company? This company got a licence from the German Government to work the phosphates there, and I should be very surprised to hear that there were not many German shareholders in the company. I should also be surprised to hear that there were not some conditions laid down that a certain portion of the shares should be held by German subjects, or possibly by the German Government. I would point to the analogous 1354 case of the Persian Oil Company in which our Government controlled a certain number of shares. Had the German Government any such interest in this company? The whole principle of the compensation of foreign shareholders in undertakings that are nationalised is of great importance in regard to several countries at the present time. I will only mention Austria. In Austria the Socialist party happens to have a majority in the Austrian Reichsrath, and they are proposing to nationalise certain undertakings. In those undertakings there are foreign shareholders, and it is laid down that those foreign shareholders can claim the amount of their holdings from the Austrian Government at par, whereas on the market those shares are hardly worth the paper on which they are written. That being the case, we should proceed very warily in this matter. There has been a great deal of investment in public companies, registered and unregistered, by the Government in recent years, and this practice is very much on the increase. I asked for a return some months ago of those investments. I asked for it in March, and judging from the time it has taken the Treasury to produce the Return, it leads me to believe that this sort of investment and the putting up of public money in public companies has been carried on to a much greater extent than hon. Members know. Under the circumstances it is only right that we should have further details.
I thought I had dealt at some length with the position of this company, and with its capital, and that I had justified the amount of money which the Government propose to pay. In answer to my right hon. Friend (Sir D. Maclean), I may say that the original Pacific Phosphate Company was registered on the 18th April, 1902, with a capital of £250,000, of which £200,000 was allotted to the Pacific Islands Company, which was the forerunner of the Pacific Phosphate Company. The capital was increased to £500,000 in 1909, to £875,000 in 1910, to £975,000 in 1912, and in 1914 the authorised capital was increased to £1,200,000. That consisted of ordinary fully paid-up shares, with the exception of £375,000 £1 shares, of which 10s. only had been paid, and 225,000 preference shares which had not been called up. The hon. Gentleman asked whether any 1355 of these shares were held by the enemy. There were some holdings by Germans, but those holdings were sold by the Public Trustee in 1917.
§ Lieut.-Commander KENWORTHY
I quite understand that, but are we paying the company on account of those shares? Is the amount that was realised from the sale by the Public Trustee being taken into consideration before we pay this compensation?
They were sold by the Public Trustee and bought by British people. Those people own the shares now, and they will get compensation when payment is made to the company. In regard to £39,000 payable in respect of compensation to certain officials of the company, that is shown in the agreement between the three Governments and the Pacific Phosphate Company. Copies of this agreement are in the library for hon. Members to see. Clause 11 of the agreement deals with the particular point raised by the right hon. Gentleman. It says:The Governments shall on or before the first day of September, 1920, pay to the company for and on behalf of the senior members of the staff of the company in London, Australia, and New Zealand whose names are specialised in the Third Schedule hereto, such amounts as compensation for their loss of office as shall be determined in each case by the Governments and the company, in the event of no mutual arrangements being made respectively for their employment by the Governments, provided, however, that the total amount payable by the Governments as compensation hereunder shall in no event exceed the sum of £39,000.The present nominal market value of the shares shows that the Government were making by no means a bad bargain in taking over the undertaking at the price of £3,500,000. The right hon. Gentleman asked what dividends the company had paid. Before the War on its nominal capital of £1,200,000 it paid anything between 25 per cent. and 50 per cent. During the War owing to reduced shipments it has not paid as large a dividend, but now that tonnage is becoming available there is no reason why the same dividend should not be paid on the authorised capital.
§ Lord R. CECIL
I suppose the Government have considered the effect of this kind of commitment on our general credit. This may be a good investment or it may 1356 be a bad investment, but the mere fact that we have to raise £3,500,000 more now—
§ Lord R. CECIL
That will, of course, be an additional difficulty on the top of the existing difficulties in the raising of money. As to the financial soundness of the transaction, I do not quite understand what the hon. and gallant Gentleman means. He says there is no reason why we should not make the same dividends on this transaction as before.
The Noble Lord must have misunderstood me. I said there is no reason why the same dividends should not be payable now as before on the authorised capital.
§ Lord R. CECIL
Would the same profits be made? I do not understand that they would. The phosphate has not to be sold in the open market. It is to be sold principally to the British Government, the New Zealand Government, and the Australian Government. The sale will be restricted. Only these people can buy in the first instance, and until they have exercised their right of purchase it cannot be sold to anybody else. They can buy at any price they like. I do not see how under any circumstances you are going to make a large profit. I may be wrong. These Governments will buy the phosphate at their own price, and unless the Government are going to profiteer I do not see how you are to make large profits. Of course, if they are going to buy the phosphate and then resell it to the agricultural community at an immense profit they may make a large sum of money, but I do not think that would be a very desirable course for the Government to pursue. If they are going to resell it to the agricultural community at the price at which they have bought it, with some small addition for expenses, it is quite evident they will not make a very profitable business. I do not see under any circumstances that they are going to make a very profitable business of it. Unless the management is a good deal better than the Government management of these things usually is, the probability is that there will be a very considerable 1357 loss. In these circumstances, at the present time, to ask the House suddenly, in order to carry out a transaction which I forbear at this stage to characterise further, to enter upon considerable obligations is hard to reconcile with the Government's oft repeated love of economy. The Government's love of economy is very much their love of the League of Nations. It consists of making eloquent speeches on the subject. Unless there is a much better explanation of this transaction I shall vote against it.
§ Lieut.-Commander KENWORTHY
I am not satisfied with the explanation about the shares. At what price were these shares sold by the Public Trustee during the War, and at what price are the shareholders to be compensated? I very much object to paying money to people who happen to have made a lucky speculation in a business of this sort. If for no other reason, I should vote against the Resolution. The Lord Privy Seal has told us that this whole business is going to be submitted to the Council of the League of Nations for consideration. He told us that with his hand on his heart. In that case, they may upset the whole arrangement. If they do so, I hope the Government will accept it in good grace. I would like to have the whole thing upset. Without having got any understanding from the League of Nations in full session, or from the Council of the League of Nations, without which I do not think the mandate would be legal, we are asked for a very considerable sum of money, which will have to be borrowed. I do not think it is a businesslike transaction or in any way worthy of our acceptance.
§ Captain W. BENN
Can the hon. and gallant Member tell us on what Vote it is proposed to pay this sum of money? Is there to be a supplementary Vote? It cannot be included in the existing Votes. When will it come up for discussion?
Without further inquiry, I do not think I can answer the hon. and gallant Member with certainty; but as this is a Colonial Office matter, I presume it will come under the Colonial Office Vote.
In regard to the point made by the Noble Lord, I do not know whether he was in the House when I referred to Article 11, which states thatphosphates shall be supplied to the United Kingdom, Australia, and New Zealand at the same f.o.b. price, to be fixed by the Commissioners on a basis which will cover working expenses, cost of management, contribution to administrative expenses, interest on capital, and a sinking fund for the redemption of capital.Under that Article phosphate can only be sold at a price which, after all administration and working expenses and cost of management, etc., are paid, will also pay interest on capital and sinking fund.
That would be arranged between the three Governments concerned. Naturally, it would be a commercial rate of interest. As to the price at which enemy shares were sold, I cannot give the information without further inquiry, but I will endeavour to get it. I must take exception to one thing which my hon. and gallant Friend the Member for Central Hull said about the statement of the Lord Privy Seal. As I understood my right hon. Friend, and I think correctly, the question of this transaction between the three Governments was entirely distinct from any other question which might arise as to the mandate under the League of Nations. This is a purely commercial transaction between the Phosphate Company and the three Governments concerned. Whatever happens, I cannot see that the League of Nations has any right to interfere with this particular transaction, which is purely a domestic question between the company and the Governments concerned.
§ Lieut. - Commander KENWORTHY
The League of Nations may object with the whole of the phosphate of this island being distributed exclusively to three parts of the British Empire.
§ Question put,
§ The Committee divided: Ayes, 206: Noes, 62.1361
§ Resolution to be reported to-morrow.