§ Mr. SNOWDEN(by Private Notice) asked the Chancellor of the Exchequer whether he can make any statement with regard to the settlement of the French War Debt?
§ Mr. CHURCHILLA complete settlement, covering not only the French War Debt, but virtually all outstanding accounts between Great Britain and France, was signed yesterday afternoon by Monsieur Caillaux and by me. The text of the Agreement and its annexes will be in the Vote Office at six o'clock to-day. But perhaps I may add a few words of comment and explanation.
The Agreement in substance conforms to the partial agreement reached last August with Monsieur Caillaux, i.e., that the War indebtedness of France to Great Britain should be discharged by 62 annuities of £12,500,000 or their equivalent. There remained several points outstanding, some of which were important; and upon a settlement of these the previous partial agreement depended.
Of these points the principal was the so-called "Safeguard" Clause. All the French Governments have sought to insert in the Agreement a Clause which would make the continuance of the annuities to Great Britain dependent upon the Reparations obtained by France from Germany under the Dawes Agreement. His Majesty's Government felt that the annuities should rest upon the sole credit of France. The deadlock on this point has been complete since Mon- 234 sieur Caillaux was last here. We have finally agreed that, while there is no safeguard Clause in the Agreement, letters should be exchanged between the representatives of the two Governments making it clear that, in the event of a complete or very serious failure of German payments—which we see no reason to apprehend—France would be entitled to ask for a reconsideration of the terms in the light of all the circumstances then prevailing. We are, therefore, committed to the principle of reconsideration in such an eventuality. It would, however, of course, be open to us to raise any counter-arguments which may seem to arise, upon, for instance, the simultaneous injury which we ourselves should suffer by the failure of German reparations occurring during the continuance of our obligations to the United States, and also upon what would be fair among nations who have been Allies in war, having regard to the actual financial and economic circumstances in which either of them may find themselves in that period. The point of reconsideration is, therefore, conceded: but it will be open to both sides to argue the case on the merits, and the result of the discussion is not prejudged. The letters should, however, be studied in their actual text.
A transfer clause, providing for delay within certain limits in making payments on account of exchange difficulties, has been agreed to on the lines of that contained in the French debt settlement with the United States. There is a clause providing that, in the event of British receipts from Reparations and war debts exceeding at any time in the future what we shall have paid since the end of the War to the United States, the surplus shall be divided between the various Allied debtors in reduction of their future contributions. This conforms to the Balfour Note and is identical with the provisions in the British-Italian debt settlement.
We have also not asked for the delivery of bonds in a form suitable for sale on the market. It is true that the United States, in all their agreements, have taken power to obtain such bonds. But market operations in such obligations would not, in any case, be easy, and, as we have not at any time contemplated them, I saw no reason to press for a power which we did not intend to use.
235 There remains only the question of the moratorium, or, as it may be more intelligibly called the échelle, or ladder of ascending payments, by which the total of £12,500,000 a year is to be reached. We have agreed upon a scale for the years up to and including 1930 identical with that which I proposed to Monsieur Caillaux in August last. The sums deducted from the earlier years will, of course, be transferred to and repaid (though at a low rate of interest) in the later years of the Agreement. On this basis then, the actual annuities will be for the present year £4,000,000, and thereafter £6,000,000, £8,000,000, £10,000,000 until £12,500,000 has been reached in 1930. The annuities will continue at £12,500,000 from 1930 to 1956, when they will rise for the last 31 years of the period to £14,000,000.
Originally, last August, I proposed that France should make an additional initial payment for the half year 1925 of £2,000,000. That year has now passed, and I have not sought to alter the remaining steps of the ladder as originally conceived. However, as the settlement comprises a complete cleaning of the slate between Great Britain and France of all the outstanding accounts arising out of the war and in the post-war period, a sum of about £2,000,000 of French money already in London can now be transferred to the Exchequer, increasing our receipts this year from £4,000,000 to £6,000,000. The vexed question of the £53,500,000 gold transferred by the French Government to this country during the war has been left in the following situation, i.e., that France will continue to owe us, outside the limits of this debt settlement, the sum of £53,500,000 as a non-interest bearing debt, that we shall continue to credit France with £53,500,000 of gold equally as a non-interest bearing debt, and that the future adjustment of this situation must be left to a future agreement between the two Governments, both of which remain perfectly free.
At the same time that we have settled these various matters, a separate arrangement has been made with the French Government on behalf of the so-called "Sinistrés." The Sinistrés are British subjects, and businesses in France whose property sustained military damage in the War at the hands of the enemy, or of 236 the contending armies. We have always maintained that these British subjects and businesses, paying taxes as they do, to France, and forming to all intents and purposes part of French economy should be entitled to the same compensation as is provided by French law for French nationals. The French Government have now undertaken to treat these claimants in approximately the same way as they treat their own nationals or Belgians similarly circumstanced, we extending reciprocal treatment to French nationals who have suffered war damage in this country.
I hope that, after the documents in the Vote Office have been studied, a measure of general approval will not be withheld from this settlement of the difficult and embarrassing question of War debts. His Majesty's Government believe that it embodies the best practical arrangement likely to be achieved, and is also in harmony with the traditional policy of this country in respect of indebtedness incurred by the Allies of Britain in a common cause.
§ Mr. SNOWDENWill that Agreement be submitted to the House of Commons for ratification?
§ Mr. CHURCHILLNo, Sir, that is not required at the hands of the House of Commons. Of course, if there is a demand or the desire to discuss the matter, I have no doubt that an effort will be made through the usual channels to meet the wishes of the Opposition. It might be that there are some remaining opportunities of the Session possibly—though I am here speaking without having consulted Mr. Speaker—the Third Reading of the Finance Bill might afford the opportunity.
§ Mr. SNOWDENWe must seek an early opportunity to have a Debate on the arrangement.
§ Mr. CHURCHILLI am informed by my right hon. Friend the Parliamentary Secretary to the Treasury that there are plenty of Supply days available—quite sufficient—and one of these might be assigned for discussion.
Captain BENNCan the right. hon. Gentleman say how far the safeguarding Clause will involve a possible ultimate substitution of Germany for France as our debtor?
§ Mr. CHURCHILLIt does not do that at all, but in the event of a total or serious failure of German payments, it would be open to the French Government to ask for a reconsideration of the arrangements. That is, of course, a serious step—a real step—I do not wish to minimise it in any way, but it in no way invalidates the responsibility of France; it only gives France the right, in certain circumstances, which we think will not occur, to ask that the matter should be reviewed. Our right to argue the case remains open.
Captain BENNHave we given a promise that should such circumstances arise we will consider their claim more favourably than at the present time?
§ Mr. CHURCHILLNo, Sir. We have stated quite clearly that we recognise their right to ask for reconsideration, but we have in no way prejudged what our attitude would be. Of course the fact that they have a claim to ask for reconsideration may be held to imply that the existing settlement figures would be reviewed, and they would scarcely be reviewed in a direction more adverse ro France than at the present time; but beyond that we are quite prepared to argue our final case.
§ Colonel WEDGWOODAs this Agreement does not require ratification by the House of Commons, could the right hon. Gentleman say whether it requires ratification by the Chamber of Deputies and the Senate?
§ Mr. CHURCHILLYes, Sir.
§ Captain GARRO-JONESWould the right hon. Gentleman say what will be the net result of that remarkable double entry in respect of the £53,000,000 in gold? Does that mean that it is going to be paid gradually to France?
§ Mr. CHURCHILLI think the net result will be to leave matters very much where they are.
§ Colonel WEDGWOODIs not this a case of "Heads I win and tails you lose?" We make the Agreement, but it is left to the French Chamber of Deputies to decide whether the Agreement is ratified or not. Supposing it is not ratified, we are bound and the French Government are not.
§ Mr. CHURCHILLOh, no, Sir. The Agreement is signed by me on behalf of the British Government with full power, and it is signed by M. Caillaux, on behalf of the French Government, subject to the constitution of that country, and in the event of it not being ratified His Majesty's Government would be absolutely free.
§ Mr. RUNCIMANAlthough it is not necessary to secure ratification by the House of Commons, would not the Chancellor of the Exchequer and the Government consider it desirable to have the registered approval of the House of Commons?
§ Mr. CHURCHILLThe Government, of course, are in the hands of the House of Commons in the matter. There is the Appropriation Bill, for instance, on which this subject could be dissussed, but at this late period of the Session I should imagine that the Leader of the House would be very chary of parting with any further time.