- (1) The Treasury may at any time, if they think fit, raise money in the same manner-in which they are authorised to raise money under Sub-section (1) of Section one of the War Loan Act, 1919, for any of the following purposes, that is to say:
- (a) for providing during the financial year ending the thirty-first day of March, nineteen hundred and twenty-three, for the issue out of the Consolidated Fund of the sums to be issued thereout under Section forty-five of the Finance Act, 1921, for the purposes of the sinking fund established under that Section in connection with the three and one-half per cent. Conversion Loan; and
- (b) for providing during the said financial year such sums as are required in connection with four per cent. Victory Bonds, or stock of bonds forming part of the four per cent. Funding Loan, 1960–1990, which are transferred in satisfaction of death duties, or as are required under Section two of the War Loan Act, 1919, to be issued to the National Debt Commissioners for the purposes of the sinking funds established in pursuance of that Section in connection with the four per cent. Victory Bonds and four per cent. Funding Loan, 1960–1990; and
- (c)for providing for the repayment to the Consolidated Fund of all or any part of the sums issued out of that fund for the purposes aforesaid.
- (2) This Section shall be construed as one with Section one of the War Loan Act, 1919, and the provisions of that Section shall have effect accordingly.
§ Mr. N. MACLEANI beg to move, in Sub-section (1), after the word "money," to insert the words
at a rate of interest not exceeding three and one-half per cent, per annum.We all realise that in order to provide the moneys required for certain sinking funds some provision of this kind is necessary. Following the principle which I have laid down in previous Debates, my object is to save to the Government of this country as much money as possibly can he saved by trying to get the Government to put legislation into effect which will enable them to obtain the money required to pay the interest on certain loans at a much cheaper rate. One of the statements made by the Chancellor of the Exchequer and other Members of this House at various times 1420 has been that there is a great burden of debt upon the country, and it has always been pointed out what a huge sum total of interest we have to pay on the loans Which have been issued. My contention has always been that many of those who are dealt with under this Clause are getting an advantage which, judging from the bank rate and the fact that certain things have happened in the money market, makes it unwise for the Government to pay so much in interest as they are doing, and my Amendment is to remedy this.I think I can anticipate what the objection of the Chancellor of the Exchequer will be to my proposal. He will probably say that it is impossible for him to borrow money at the present time at 3½ per cent. If that is going to be his argument, then it is very peculiar, because some of the Conversion Loans already in operation carry that rate of interest. The Conversion Loan that has already been issued, and is supposed to amount to per cent., actually means considerably more when you take into consideration the price at which conversion took place and the yield until the date of redemption. It is considerably more than the 3½ per cent which appears on the paper. I do not wish to have any investor being led to believe that he is going to have a greater yield for the whole period than 3½ per cent. The very first Conversion Loan by this Government means that those who were getting the interest, instead of receiving 4 per cent. it actually worked out calculating the actual yield to be 5½ per cent., or 1½ per cent. more than they had been receiving prior to the conversion. That is not a fair way of dealing with finance. It is unfair to treat the people of this country in this way, because they have to provide by taxation the money which the Government require to pay interest on their loans, and for these reasons I am endeavouring to limit the Chancellor of the Exchequer.
I know from the views which are held by the Chancellor of the Exchequer that but for the fact that he is sitting on the Treasury Bench he would be inclined to support the view I am putting forward. 1421 The position he will take up will no doubt be that he must get the money, and as he has not up to the present said that he is going to accept my Amendment, I expect he is going to oppose it, because he does not desire any limit placed upon him. He wishes to be able to secure money at the rate of interest which he thinks the money market at the time is entitled to receive. I know quite well, and so does the right hon. Gentleman, that Government securities are looked upon as being the safest. As a matter of fact the way in which they are quoted on the Stock Exchange, according to the daily Press, shows that they are regarded as one of the safest investments in which anyone can put money. The rate of interest for a safe investment is always lower than that which is paid on a highly speculative investment. Consequently, there is no necessity for the Government continuing pay a high rate of interest. They are paying, approximately, only 1 per cent, less than what is received on normal industrial shares, most of which return 6 per cent. Without detaining the Committee any longer, because I like other Members want to hear the views of the right hon. Gentleman on this matter, I will simply express the hope that, in the interests of that sound finance which the right hon. Gentleman has proclaimed from that Box on several occasions this year, he will accept the Amendment and make it perfectly clear to monied people outside and to financiers who attempt to rig the market against himself and the Treasury in order to compel the payment of a high rate of interest, that this House does not give its consent to securing any loan on which a higher rate of interest is to be paid than that mentioned in the Amendment, namely 3½ per cent.
§ Sir R. HORNEMy hon. Friend is the most optimistic financier I know. He has been kind enough to attribute to me powers which unfortunately I do not possess. He assumes that whatever the British Government says ought to be the rate of interest, I necessarily can borrow at that rate. But there are very conclusive evidences that that view is not borne out by the facts. The British Government, like every other borrower, can only borrow at the price at which the market will lend. It is perfectly true that the 1422 British Government can borrow money at cheaper rates than most other people, but still, like other borrowers who go into the market, it has to borrow at the price at which the market is willing to lend. During recent years we have been in a particularly favourable position by reason of the very unfortunate fact that industry in this country has been taking less money than usual, and accordingly more money is set free for the use of the Government and for finance generally. The result has been a glut of money in the market, and, under these circumstances, the most favourable rate of interest at which I can borrow on behalf of the British Government is the best test of what is possible. My hon. Friend wishes me to borrow at 3⅜ per cent. There is a British stock on the market to-day which yields a return of 3½, per cent. But what are people in the market willing to pay for that stock? They are only willing to pay £77 for £100 of it, thus showing that the market is prepared to lend money to the British Government at something like from £4 10s. to £4 13s. per cent. That is a complete test of what I am able to do.
9.0 p.m.
It is true that on short-term loans I can borrow money more cheaply, and every week the financial journals report the rates at which Treasury Bills are issued. That indicates what people are willing to lend money to the Government at on short-term loans. The loans I have hitherto been speaking about are perpetual loans redeemable at the option of the Government, but on short-term loans I can borrow much more cheaply and Treasury Bills are issued at the present time at £2 18s. per cent. I have, however, to replace that money as soon as the Bill comes to maturity. It may be a three months bill or a six months' bill. I can borrow more cheaply on the former. The difficulty is that one has a great deal of floating debt which it may be necessary to pay off at a moment when it is very embarrassing to the Government. Great financiers always say that the first duty of the Exchequer is to get rid of the floating debt, and naturally the desire of the Chancellor of the Exchequer is to get money on long terms so as to be free from embarrassment in the immediate future. That is the reason why everyone agrees that the time must come when it will of great advantage to the country to fund the debt. At 1423 present it is coming due at various periods, always compelling the Chancellor of the Exchequer to find money to meet these maturing obligations. After what I have said I hope my hon. Friend, who has been kind enough to use expressions towards myself for which I am grateful, will see
§ that, even with all the powers the Chancellor of the Exchequer possesses, it is quite impossible to raise any money at the rate he desires to have it done.
§ Question put, "That those words be there inserted."
§ The Committee divided; Ayes, 10; Noes, 243.
1425| Division No. 170.] | AYES | [9.4 p.m. |
| Davison, J. E. (Smethwick) | Roberts, Frederick O. (W. Bromwich) | Watts-Morgan, Lieut.-Col. D. |
| Gillis, William | Robertson, John | |
| Graham, D. M. (Lanark, Hamilton) | Swan, J. E. | TELLERS FOR THE AYES.— |
| Jones, J. J. (West Ham, Silvertown) | Thorne, W. (West Ham, Plaistow) | Mr. Neil Maclean and Mr. Mills. |
| Lawson, John James | ||
| NOES | ||
| Adkins, Sir William Ryland Dent | Eyres-Monseil, Com. Bolton M. | Larmor, Sir Joseph |
| Agg-Gardner, Sir James Tynte | Falle, Major Sir Bertram Godfray | Law, Alfred J. (Rochdale) |
| Ainsworth, Captain Charles | Farquharson, Major A. C. | Lewis, Rt. Hon. J. H. (Univ., Wales) |
| Amery, Rt. Hon. Leopold C. M. S. | Fildes, Henry | Lewis, T. A. (Glam., Pontypridd) |
| Armstrong, Henry Bruce | Foot, Isaac | Lloyd, George Butler |
| Astbury, Lieut.-Com. Frederick W. | Foreman, Sir Henry | Locker-Lampson, Com. O. (H'tngd'n) |
| Balfour, George (Hampstead) | Forestler-Walker, L. | Lorden, John William |
| Barker, Major Robert H. | Forrest, Walter | Lort-Williams, J. |
| Barker, G. (Monmouth, Abertillery) | Fraser. Major Sir Keith | Lunn, William |
| Barlow, Sir Montague | Fremantle, Lieut.-Colonel Francis E | Lyle, C. E. Leonard |
| Barnett, Major Richard W. | Galbraith, Samuel | McLaren, Robert (Lanark, Northern) |
| Barrand, A. R. | Ganzoni, Sir John | Macnaghten, Sir Malcolm |
| Bartley-Denniss, Sir Edmund Robert | Gilmour, Lieut.-Colonel Sir John | Macpherson, Rt. Hon. James I. |
| Bellairs, Commander Canyon W. | Goff, Sir R. Park | Macquisten, F. A. |
| Betterton, Henry B. | Gould, James C. | Maitland, Sir Arthur D. Steel |
| Bigland, Alfred | Grant, James Augustus | Mallaileu, Frederick William |
| Bird, Sir R. B. (Wolverhampton, W.) | Green, Joseph F. (Leicester, W.) | Malone, Major P. B. (Tottenham, S.) |
| Blair, Sir Reginald | Greenwood, William (Stockport) | Marks, Sir George Croydon |
| Bowles, Colonel H. F. | Greer, Sir Harry | Middlebrook, Sir William |
| Bowyer, Captain G. W. E. | Grundy, T. W. | Mildmay, Colonel Rt. Hon. F. B. |
| Bramsdon, Sir Thomas | Guest, Capt. Rt. Hon. Frederick E. | Mitchell, Sir William Lane |
| Breese, Major Charles E. | Guinness, Lieut.-Col. Hon. W. E. | Mond, Rt. Hon. Sir Alfred Moritz |
| Bridgeman, Rt. Hon. William Clive | Hallwood, Augustine | Moore-Brabazon, Lieut.-Col. J. T. C. |
| Briggs, Harold | Hall, F. (York, W.R., Normanton) | Moreing, Captain Algernon H. |
| Broad, Thomas Tucker | Hall, Rt-Adml Sir W.(Liv'pl,W.D'by) | Mosley, Oswald |
| Brown, Brig.-Gen. Clifton (Newbury) | Hannon, Patrick Joseph Henry | Murchison, C. K |
| Bruton, Sir James | Harmsworth, C. B. (Bedford, Luton) | Murray, Hon. A. C. (Aberdeen) |
| Bull, Rt. Hon. Sir William James | Harmsworth, Hon. E. C. (Kent) | Murray, Rt. H on. C. D. (Edinburgh) |
| Butcher, Sir John George | Harris, Sir Henry Percy | Nall, Major Joseph |
| Carr, W. Theodore | Haslam, Lewis | Neal, Arthur |
| Carter, R. A. D. (Man., Withington) | Hayday, Arthur | Newman, Sit R. H. S. D. L. (Exeter) |
| Casey, T. W. | Hayward, Evan | Newson, Sir Percy Wilson |
| Cautley, Henry Strother | Henderson, Lt.-Col. V. L. (Tradeston) | Nicholson, Reginald (Doncaster) |
| Chamberlain, Rt. Hn. J. A.(Birm.,W.) | Herbert, Col. Hon. A. (Yeovil) | Norris, Colonel Sir Henry G. |
| Chamberlain, N. (Birm., Ladywood) | Herbert, Dennis (Hertford, Watford) | Norton-Griffiths, Lieut.-Col Sir John |
| Churchman, Sir Arthur | Hilder, Lieut.-Colonel Frank | Oman, Sir Charles William C. |
| Clay, Lieut.-Colonel H. H. Spender | Hinds, John | Ormsby-Gore, Hon. William |
| Clough, Sir Robert | Hirst, G. H. | Parker, James |
| Cents, Sir Stuart | Hogge, James Myles | Parry, Lieut.-Colonel Thomas Henry |
| Cobb, Sir Cyril | Holbrook, Sir Arthur Richard | Pearce, Sir William |
| Colfox, Major Wm. Phillips | Holmes, J. Stanley | Pease, Rt. Hon. Herbert Pike |
| Collins, Sir Godfrey (Greenock) | Hood, Sir Joseph | Pennefather, De Fonbianque |
| Colvin, Brig.-General Richard Beale | Hope, Sir H.(Stirling & Cl'ckm'nn,W.) | Perring, William George |
| Conway, Sir W. Martin | Hope, Lt.-Col. Sir J. A. (Midlothian) | Pickering, Colonel Emil W. |
| Cope, Major William | Hope, J. D. (Berwick & Haddington) | Pollock, Rt. Hon. Sir Ernest Murray |
| Cory, Sir J. H. (Cardiff, South) | Hopkins, John W. W. | Pownall, Lieut.-Colonel Assheton |
| Dalziel, Sir D. (Lambeth, Brixton) | Hopkinson, A. (Lancaster, Mossley) | Pratt, John William |
| Davidson, Major-General Sir J. H. | Horne, Edgar (Surrey. Guildford) | Prescott, Major Sir W. H. |
| Davies, David (Montgomery) | Horne, Sir R. S. (Glasgow, Hillhead) | Purchase, H. G. |
| Davies, Thomas (Cirencester) | Hotchkin, Captain Stafford Vera | Rae, Sir Henry N. |
| Davies, Sir William H. (Bristol, S.) | Hurd, Percy A. | Rattan, Peter Wilson |
| Dawson, Sir Philip | Hurst, Lieut.-Colonel Gerald B | Handles, Sir John Scurrah |
| Dewhurst, Lieut.-Commander Harry | James, Lieut.-Colonel Hon. Cuthbert | Rankin, Captain James Stuart |
| Doyle, N. Grattan | Jodrell, Neville Paul | Ratcliffe, Henry Butler |
| Du Pre, Colonel William Baring | John, William (Rhondda, West) | Rawlinson, John Frederick Peel |
| Edgar, Clifford B. | Johnson, Sir Stanley | Remer, J. R. |
| Edge, Captain Sir William | Johnstone, Joseph | Richardson, Sir Alex. (Gravesend) |
| Edwards, C. (Monmouth, Bedwelity) | Jones, Henry Haydn (Merioneth) | Roberts, Rt. Hon. G. H. (Norwich) |
| Edwards, G. (Norfolk, South) | Kellaway, Rt. Hon. Fredk. George | Roberts, Samuel (Hereford. Hereford) |
| Edwards, Hugh (Glam., Neath) | Kidd, James | Roberts, Sir S. (Sheffield, Ecclesall) |
| Evans, Ernest | King, Captain Henry Douglas | Robinson, S. (Brecon and Radnor) |
| Robinson, Sir T. (Lancs., Stretford) | Stephenson, Lieut.-colonel H. K. | White, Charles F. (Derby, Western) |
| Rodger, A. K. | Strauss, Edward Anthony | White, Col. G. D. (Southport) |
| Rose, Frank H. | Sturrock, J. Leng | Wignall, James |
| Roundell, Colonel R. F. | Sugden, W. H. | Williams, C. (Tavistock) |
| Royce, William Stapleton | Surtees, Brigadier-General H. C. | Wilson, Lt.-Col. Sir M. (Bethnal Gn.) |
| Royds, Lieut.-Colonel Edmund | Sykes, Sir Charles (Huddersfield) | Winterton, Earl |
| Rutherford, Sir W. W. (Edge Hill) | Taylor, J. | Wintringham, Margaret |
| Samuel, A. M. (Surrey, Farnham) | Thomson, F. C. (Aberdeen, South) | Wise, Frederick |
| Samuel, Samuel (W'dsworth, Putney) | Thomson, Sir W. Mitchell- (Maryhill) | Wood, Hon. Edward F L. (Ripon) |
| Sanders, Colonel Sir Robert Arthur | Thorne, G. R. (Wolverhampton, E.) | Wood, Major M. M. (Aberdeen, C.) |
| Sassoon, Sir Philip Albert Gustave D | Tryon, Major George Clement | Wood, Major Sir S. Hill- (High Peak) |
| Scott, A. M. (Glasgow, Bridgeton) | Turton, Edmund Russborough | Woolcock, William James U. |
| Scott, Sir Leslie (Liverp'l, Exchange) | Waddington, R. | Worthington-Evans, Rt. Hon. Sir L. |
| Seddon, J. A. | Wallace, J. | Yeo, Sir Alfred William |
| Shaw, Hon. Alex. (Kilmarnock) | Walters, Rt. Hon. Sir John Tudor | Young, Sir Frederick W. (Swindon) |
| Shortt, Rt. Hon. E. (N'castls-on-T.) | Walton, J. (York, W. R., Don Valley) | Young, Robert (Lancaster, Newton) |
| Smith, Sir Allan M. (Croydon, South) | Ward, Col. J. (Stoke-upon-Trent) | |
| Smith, Sir Harold (Warrington) | Ward, Col. L. (Kingston-upon-Hull) | TELLERS FOR THE NOES.— |
| Spencer, George A. | Warner, Sir T. Courtenay T. | Colonel Leslie Wilson and Mr. |
| Stanley, Major Hon. G. (Preston) | Warren, Sir Alfred H. | McCurdy. |
| Stanton, Charles Butt | Watson, Captain John Bertrand |
Question put, and agreed to.
§ Clause ordered to stand part of the Bill.
§ Clause 31 (Charge on Consolidated Fund under Section 24 (1) of 10 & 11 Geo. 5, c. 67, to extend to the growing produce of Fund) ordered to stand part of the Bill.