GOLD AND SILVER (EXPORT, CONTROL, ETC.) BILL. (Hansard, 10 November 1920)

§ The FINANCIAL SECRETARY to the TREASURY (Mr. Baldwin)

I beg to move, "That the Bill be now read a second time."

This is a small Bill of two Clauses, which I can explain in a few words. The first Clause deals with the export of gold and silver bullion. It may not be familiar to the House that the control over the export of gold and silver bullion which 1321 exists to-day is regulated by Orders in Council under a provision of 1914, which expires on the conclusion of the last of the Peace Treaties, and, therefore, if it be a good thing to maintain this control of export, provision must be made in a Statute to give effect to that. I do not think there can be two opinions in this House at the moment that, anxious as we all are to see again in London a free market in gold, both for import and for export, to-day, having regard to the condition of the exchanges throughout the world, and the position of our own currency, there is no expert authority of any kind who will admit that that time is yet come. So we take power in the first Clause to deal with the situation. We propose to deal with it in this way: we make use of Section 8 of the Customs and Inland Revenue Act, 1879, and we add the Subsections that follow. The Government will then have power, at any time when the situation makes it necessary, to regulate by Order-in-Council the export of gold and silver bullion, and to make Regulations for controlling such exports as may be permitted by licence. I would call the attention of the House specifically to this point, that it is not making permanent this control of exports, it is only giving power to the Government to effect such a control, and at such a time as that control may be deemed necessary. I would repeat what I said a few moments ago, that we are as anxious as anyone in this House to see the day come when we may safely revert once more to the open market, which has always been the glory and the strength of finance in this country.

I am very anxious to get the Second Reading of this Bill because, in our opinion, it is essential that the Bill should be obtained before the last Peace Treaties come before this House. I will just mention one or two points which I know may in anticipation be made against this Bill. One or two newspapers in this country which are particularly interested in the settlement of commercial agreement between this country and Russia have expressed some alarm lest it would be more difficult to make this agreement with Russia if these Regulations in regard to the export of gold were made. I would point out to those who fear this that we are proposing nothing new. We are merely proposing, for the time being, the 1322 continuation of what now exists, and what has existed before any question of any commercial agreement with Russia was thought of at all. We are imposing no restriction on Russian gold that is not equally applicable to the gold from every other country, and we are putting no difficulties in the way of this trade than are put in the way of similar trades in all other principal countries of the world, except the United States of America, whose financial position at this moment is very different from our own. Nothing that is proposed in this Bill can prejudice at all any agreement that may be arrived at, if and when such agreement is arrived at, between this country and Russia. We recognise as much as anyone that in individual cases where export under licence has ruled, there may be— possibly there are—individual hardships. At a time like this private interests must give way to the paramount public interest. We have no complaints in the office which I represent, and also, as far as I am aware, there have not been any complaints at the Board of Trade as to the method by which the licences under this Order in Council are given; but I would tell the House here that if any traders feel themselves aggrieved as to the manner in which the granting of licences is administered, any complaint to mo of unfair treatment or anything of that kind will always be examined and considered with care. I am only too grateful for any cases which may be brought to me in which traders feel that any preferential treatment or anything of that kind is alleged in any quarter.

With regard to the second Clause, it may be a surprise to hon. Members, as it was to me when I saw this Bill in draft, to find that there is no statutory power existing at the present time, apart from the Defence of the Realm Regulations, which prevents the melting up of coin. When the, Coinage Acts of 1870 were passed them were all kinds of provisions against defacing coinage and stripping coinage. At that time it would not pay anyone to melt up coins and it was a crime that did not exist, because there was no temptation to indulge in it. But to-day the position is very different, and it may be a very lucrative occupation to melt up the coinage. This is peculiarly dangerous because anything that may tend to lessen the amount of bullion in 1323 the country would act prejudicially against our exchanges and may do damage to the state of our currency. It is of the utmost importance to safeguard our coinage, and with a view to further protecting it I have increased the penalty which, under the Defence of the Realm Act is six months' imprisonment, to a term of imprisonment for two years. I feel that there is no doubt that, in spite of the closest investigation, this is a class of crime which will be practised in certain quarters of the community. It is difficult to detect, but it is one which, when detected, ought to be punished very severely, because not only do these people obtain enormous profits, but they are conducting a business which is wholly deleterious to the interests of the country. With these few words I commend this Bill to the consideration of this House, and I trust it will be given a Second Reading.

§ Mr. SAMUEL SAMUEL

I wish to complain of the very short notice given in regard to the introduction of a Bill of this enormous importance. This measure was circulated only yesterday morning, and I was surprised to find it down for Second Reading to-day. Only recently a manager of one of the Eastern Banks sent for me and asked me if I could give him a copy of this Bill. I told him that I did not know of any such Bill. The reply I got was that the bank had received yesterday morning a telegram from Calcutta to say that there were rumours in the market in Calcutta that the Government were introducing a Bill to regulate the export of gold and silver and bullion. In consequence of those rumours the exchange had gone up 2d. in the rupee against this country, which means an increase in the cost of many of the essential raw materials which we require to import from India. Perhaps the Secretary to the Treasury may be able to inform the House how it was that this news reached Calcutta before we had a copy of the Bill in the House of Commons.

It is very extraordinary that the effect of the Government control is in this, as in many other things, very prejudicial. We know that at the outset of the War, when the Government took on the control of many things, and when they went into commerce and in doing so tried to 1324 regulate the Indian exchange by prohibiting the import of silver into India, we saw the rupee go from Is. 4d. to 2s. 7d., and we saw at the same time the rupee disappear from the markets of India and Ceylon, and business brought almost to a standstill. The first effect of the reports regarding this Bill has been that in India, where the rupee was steadily declining and business was becoming a little easier, there has been an immediate reaction and the rupee has started to rise again. The Secretary to the Treasury says he has received no protests or representations in regard to this Bill from the commercial community. I would ask how was it possible for the commercial community to make a protest against a Bill smuggled through the House of Commons 24 hours after it was printed. It was absolutely impossible, and I would ask the Secretary to the Treasury to postpone this Bill until he has heard from the commercial community as to what they consider that the effect of this legislation may be, not only on the credit but on the commerce and industries of this country. We are all agreed that at the present time it would be disastrous to attempt to export bullion or gold or silver coinage from this country. But the Government themselves are a great deal responsible for the shortage of currency from which we are suffering, as they denuded the banks and financial houses of the coin they held— I will not say against the advice of experts —no doubt they did take the advice of some experts—but in spite of the fact that there were many people who held strong views as to what the result would be of denuding this country of specie, which they were shipping away by the ton load.

The Secretary of the Treasury says that this is a temporary measure. But the Bill does not convey that impression to any business man. We know perfectly well that there is a desire on the part of some people to have a monopoly created for them for the handling of bullion in this country. I see in the papers that the House of Commons has been calling out a great deal about monopolies of different kinds. Here the House of Commons is asked to create by Act of Parliament a monopoly in favour of a small group of bullion dealers. I do not wish to say that that is the intention of the Government; but we have had experience 1325 now for six years of the licensing of all sorts of commodities. We know the system that is adopted, and there is no security in this Bill against the system, once introduced, not being continued for an indefinite period. We know that some of these dealers have the ear of the Treasury, and they are in a position to bring their influence to bear, for an indefinite period perhaps, on the side of having this Regulation, by Order in Council, becoming almost permanent. I do not know the procedure at all— whether it is necessary to have one Order in Council, or whether it is necessary continually to have Orders in Council, but we realise that this is a very grave danger in the hands of any Government or any Government Department.

The very least the Treasury can do is to give the financial and commercial communities, and those who are most interested in the welfare of the. commerce and the industry of this country, and whose opinions can be relied upon, an opportunity of expressing their views, before the Government runs into hasty legislation to carry out a system which they themselves say they do not wish to perpetuate longer than they can possibly help. We know, if these Regulations come into force so far as this country is concerned, what will happen. Take Australia, where at the present time you have an example of Government control in the export of bullion. Perhaps it will surprise this House to know that to-day the export of manufactured goods, and all classes of goods, from this country to Australia is at a standstill, because the Australian Government has prohibited the export of gold except by licence. The result is that all the private banks of Australia have an accumulation of bullion in their coffers which the Government will not allow them to export; but the Commonwealth Government do from time to time give a licence to the National Commonwealth Bank, which is their own institution, so that they are able to export a small amount of bullion for the benefit of their customers. There are a large number of responsible and wealthy firms in this country who have obligations to meet and who have the gold lying in Australia now, but they are unable to remit a single penny to this country. The Australian banks who have branches in London—and there are many of them—are most anxious 1326 to help the continuation of the export trade from this country to Australia, and they are being constantly asked to finance shipments of goods from this country.