§ 51 Mr. CAUTLEY
asked the Chancellor of the Exchequer (1) the reasons why he has approved of the Government taking 1,450,000 of the British Cellulose Company's preference shares rather than insist upon the company's property being sold and the Government's investment therein, made during the War, repaid; what justification the Government has for taking part in the industry of film producing; (2) 248 under what circumstances the Government became financially interested in the British Cellulose Company, Limited, and to what extent and upon what terms?
Under agreements made during the War with the British Cellulose Company for the production of acetate of cellulose the Ministry of Munitions contracted to advance to the company a proportion of its expenditure on plant and buildings for the purpose. Towards the end of 1918 arrangements were made to secure these advances, amounting to £1,250,000 in addition to a loan of £200,000, on the security of the company's power plant, by debentures on the understanding that the company would make an issue of preference shares in order to provide itself with the necessary working capital for the development of its peace business.
Experience has shown, however, that in these circumstances it would not be possible for the company to raise the necessary funds to continue its undertaking, and accordingly, after very careful consideration and as part of a scheme for the reconstruction of the company, I approved the proposal of the Minister of Munitions to take 1,450,0007½ per cent. accumulative participating preference shares in place of the existing mortgage and debentures. It is a condition of this arrangement that in case of war the Government shall have the right to take control of the management of the factory for the purpose of producing munitions, and that the company unreservedly abandons certain large claims put forward by them in connection with their transactions with the Government during the War. The alternative suggested by the hon. Member, namely, the liquidation of a new industry, which is essential in war and which under peace conditions may, I hope, prove to be of great benefit to this country, would not, in my opinion, have been in the best interests of the nation.
§ Mr. CAUTLEY
Is the right hon. Gentleman aware that the fact that two Government directors applied for 1,450,000 shares is being used by the company as a means of inducing other people to take shares?
We took the shares in view of our prior lien charge. We believe that will be in the interests of the country both as a creditor of the 249 Company and because it will facilitate the establishment of this industry here. We put two directors on the company to watch over the public money which has been invested.
§ Mr. G. LAMBERT
Has not this company made large profits during the War, and could the right hon. Gentleman not consider the possibility of the company paying off its liabilities to the Government?
Yes, certainly. There are other cases during the War where similar action has been taken.
I should be much obliged if the hon. Member would address a question of that kind to the Minister of Munitions, who is primarily responsible, although he could not act without the Treasury consent. I have acted on the advice of the Minister of Munitions, and I have satisfied myself that this advice was well founded.
I inquired as to the profits of the company, and satisfied myself, in conversations I had with the Minister of Munitions and others, that it was not possible for the company to pay off our debentures or to raise capital with our debentures as a prior charge.
If it is put down to the Minister of Munitions, I see no reason why it should not be answered.