§ Order for Second Reading read.
§ Mr. BURMAN
I beg to move "That the Bill be now read a Second time."
This Bill is a revised version of a similar Measure introduced last Session by the hon. and gallant Member for Abingdon (Major Glyn). That Bill, after obtaining a Second Reading, passed through Committee, but got no further. The present Bill is substantially the same Measure, incorporating the Amendments agreed to in Committee, and some further improvements suggested by the Home Office and the Board of Trade. I ought to explain that my own position in connection with this Bill arises from my good fortune in the ballot. I claim no credit for this Measure. It is due largely to Lord Carson, but more especially to my hon. Friend the Member for Bedford (Mr. Wells), whose enthusiasm and persistency are very largely responsible for the fact that the Measure still continues before the House. My own enthusiasm has risen since I became more closely associated with the Bill, and I sincerely trust that on this, the third occasion on which it has come before the House, it may be successful in passing through all its stages.
Moneylenders have been subject to legislation from time immemorial. I might enter into a historical survey of the laws of usury, but I think it will be well if I go no further back than the Act of 1900, which is the main Act under which the moneylenders of to-day conduct their business. The Act of 1900 was slightly amended in 1911. It was passed as the outcome of a very intense agitation which resulted in the setting up of a Select Committee in 1898. That Committee took a great deal of evidence and came to the conclusion that legislation was absolutely necessary, and the result was the Measure of 1900. A quarter of a century has passed since then and undoubtedly the time is ripe for further legislation. Serious defects have developed in connection with the Act of 1900. Three Sessions ago, in 1925, Lord Carson, in another place and the hon. Member for 728 Bedford in this House introduced Moneylenders Bills. The Bill in another place passed all its stages, but in this House the hon. Member for Bedford was less successful. Here the Bill got a Second Reading and then both Bills were referred to a very strong joint Select Committee under the chairmanship of Lord Darling. This Committee sat during 1925, and produced a Bill which was a combination of the two Bills previously introduced. That Bill, last year, was introduced in this House by the hon. and gallant Member for Abingdon,, and in another place by Lord Carson. Once more it was successful in passing through all its stages in another place; but in this House, after a Second Reading, it went to Committee and got no further. A number of very valuable Amendments were suggested. These Amendments have been incorporated in the present Bill, and it has been polished up in a variety of other ways and it is now presented to the Rouse as the finished article and the result of three years' continuous work.
The present Bill has been framed without any spirit of vindictiveness or animosity. For my part I have no feeling of bitterness against moneylenders. It may be that I have led a simple life and have not come into contact with them and therefore have nit had occasion to quarrel with them. Now and then I may have trespassed on the generosity of my bankers, but so far as moneylenders are concerned I have no personal experience one way or the other. I start on the assumption that moneylenders are an honourable body of men. [An HON. MEMBER. "Question."] I look upon every man in business as an honourable man. Moneylenders are in business under statute law and I think, on the whole, they are necessary to the life of the community. If a banker who, after all, is only a superior moneylender is necessary to the life of the community, I do not see why the moneylender, who gets the rags of the business, should not be equally regarded as such; but the nature of his industry is such that it requires very strict supervision, just as publicans, pawnbrokers and others require very special legislation. The Bill is admittedly framed to protect the unfortunate and unskilful against the shrewd experienced and often rapacious moneylender. At the same time I maintain there is nothing in the Bill which should cause the 729 honourable moneylender the slightest uneasiness, although I agree that every attempt has been made to make the way of the transgressors more hard. The Select Committee which was set up in 1925 drew upon the Pawnbrokers Act, 1872, as a model—
§ Notice taken that 40 Members were not present; House counted; and 40 Members being present—
§ Mr. BURMAN
I was explaining that the Select Committee in 1925 took the Pawnbrokers Act, 1872, as a model, and under that model they established the status of the moneylender, which is contained in the first three Clauses of the Bill. Under the Act of 1900 a moneylender is required to register once in three years, and anybody can obtain a registration for the sum of £1. I understand that at the present time there are 8,648 registered moneylenders in the United Kingdom, but under the present Bill an Excise licence will be demanded, and before it can be obtained it will be necessary for those who desire to practice moneylending to obtain a certificate of character from the local magistrates. It must be obtained every year, and that, I think, is no hardship, because a similar regulation prevails with regard to pawnbrokers and innkeepers. Having obtained this certificate of good character, they will proceed to take out their licence. Every moneylender must take out a licence. If there are a number of partners in a firm, each partner in his own name must take out a licence, and he must have a licence for every address. In the Bill last year some objection was raised, reasonably, I think, to the enormous expense involved, because, supposing there were three partners, each partner was required to pay £15 for each address, but an attempt has been made, by the acceptance of certain Amendments moved in Committee last year, to rectify this, and now one licence only is required for each address, but the certificate of character remains. A further Amendment has been accepted by which a moneylender who has traded for a certain number of years under a business name may continue in that name, subject to the Business Names Act, 1916, and subject also to the Companies (Particulars as to Directors) Act, 1917. That is the future status of the moneylender. There are certain regulations as to how he shall 730 indicate himself to the public, how his name and that of his firm must be stated on business letters, and in other ways.
The next most important point in the Bill deals with the relation of the moneylender to the public and to his clients, and in the next four Clauses, Clauses 4, 5, 6, and 7, there are certain very important regulations. The one which concerns the public most is with regard to the prohibition of circulars. This is not so important, to my mind, as some others, but it is one point more than anything else that will interest the public. Everyone, I think, objects to circulars. They are not issued by pawnbrokers, by members of the Stock Exchange, or lay members of other similar professions, and there is no reason why they should be issued by moneylenders. I do not know what is the experience of other Members of the House, but I have found that at election times they are issued in great numbers. It may be that at that time we are supposed to be very short of money and to be engaged in a very sharp contest, and, therefore, are assumed to require their assistance. Happily, again, I have been able to avoid it myself. Although they are to be prohibited from sending circulars, there is no prohibition against advertising, provided the regulations are properly adhered to, and no doubt they will advertise at the usual rates in the newspapers and will be able to introduce their wares to the public in that way.
When we come to the question of a moneylender's contract, I think we have really reached the heart of the Bill. There is a very old proverb, which says that "clear bargains make firm friends." What is needed in connection with moneylenders is a clear bargain between the borrower and the lender, and it is laid down here that all parties shall sign a form of contract, of which a copy shall be given to the borrower. This form of contract shall contain all the details as to the principal and interest and the dates on which the interest is to be paid. In many cases we find that a moneylender does not specifically state the rate of interest. Instead of putting so much per cent. per week or per month, the borrower will borrow perhaps £100, to be repaid at the rate of so much per month, and it is a very old dodge, I am told, to confuse principal and interest, 731 so that it is difficult to know where the one begins and the other ends. This is dealt with by a very ingenious Schedule, which I hope Members will all read and understand. It is a rough and ready method of deciding what is principal and what is interest, and where no rate of interest is expressed in the contract, then it falls under the first Schedule, which states as between borrower and lender what is the principal and what is the interest.
One of the most important points with regard to this contract is this. Much unhappiness has been caused in the past by wives borrowing without the knowledge of their husbands, and without a shadow of doubt they have been blackmailed to a very serious extent. If this Clause passes into law, a wife cannot borrow without letting her husband know, as his name must appear on the contract as one of the parties.
§ Mr. BURMAN
Clause 5, which states that the contract must be signed by all the parties to he charged. Therefore, the wife's fear in the past lest her husband should know of her borrowing will not arise, because he will know at the time she borrows, as his name will appear on the contract.
§ Lieut.-Commander KENWORTHY
What protection is there for the wife whose husband has been foolish, and borrowed without her consent?
§ Mr. BURMAN
I think that is a different point. The wife is not responsible for the husband's debts in the same way as the husband is for the wife's debts, and Clause 5 must be read in conjunction with Clause 7, because there, there is an obligation on the moneylender to supply information at any time as to the state of the loan and give copies of documents relating thereto. So that after the document is signed, and certain payments have been made, if the borrower wishes to know in two or three months how he stands, the moneylender must supply to the borrower a statement showing exactly how much money has been paid both as to principal and interest, and the amount outstanding. There is a further Clause with regard to 732 the prohibition of compound interest. It generally happens now that directly there is a default, the whole amount becomes due with compound interest. This Clause gets rid once and for all of compound interest, and, in case of default, simple interest only is payable on the outstanding amount. There are certain provisions as to bankruptcy proceedings in Clause 8, which is taken from the Bankruptcy Act, 1914. With regard to Clause 9, there is a very controversial point, and it arises for the first time, I think, in any Moneylenders Bill, that is to say, what is and what is not a harsh and an unconscionable rate of interest. Here it is settled for the first time that where the rate of interest exceeds 48 per cent. per annum it will be presumed to be harsh and unconscionable, unless the contrary is proved by the moneylender. A high rate of interest is not always unconscionable. The Select Committee in 1898 reported to the effect that theyconsider that a high rate of interest is not in itself incompatible with fair dealing, and that no limit of interest can be proscribed which would he adapted to the widely different conditions under which these loans are contracted; and, further that if a maximum rate were fixed by Statute, the interest would tend in all cases to rise to that maximum.So that the amount of 48 per cent. is a standard. It is not a maximum and it is not a minimum, but it is a general guide as to what is a far and reasonable charge. Lord Darling, who had very great experience in these matters, declared that it was most difficult to find some kind of standard or basis on which to say what was a harsh and an unconscionable rate of interest, and he is one of those who strongly supports the naming of a, certain sum. This Clause has been a little strengthened, because where a moneylender has been shown to be harsh and unconscionable, his certificate of character may be endorsed. He may not actually have committed an offence, but none the less, the fact that he has been shown to be unconscionable in his dealings can be endorsed on his certificate, so that when it comes up for renewal at the end of the year, note will be taken of that fact.
Clause 11 contains another very valuable provision, namely, the prohibition of charges for preliminary expenses. I 733 do not want to labour this point. It is common knowledge, I think, that there are many men of straw without any money to lend who advertise themselves as moneylenders, and have demanded sums amounting to half a guinea or two guineas, or whatever it may be, for preliminary expenses. The money has been sent and in due course a letter has been received saying that the application is unsuccessful. I believe that is fraud, and, perhaps, might be dealt with under another Measure, but it is just as well to day it down that charges for inquiries and preliminary expenses are illegal, and should not be permitted. We have made in Clause 12 a concession which was suggested last year, that is to say, in the Bill of last year, six months was laid down as the limit if time during which proceedings could be taken for the recovery of money. This has been increased to 12 months, which, I think, is reasonable and fair. Some further slight alteration has been made in Clause 14, where special provisions are made as to pawnbrokers' loans. I believe there can be no reasonable objection in any way, because it would be quite easy otherwise for a moneylender to disguise himself as a pawnbroker. I am very hopeful that when this Bill is passed a moneylender may become as respectable as a pawnbroker, and that there will be no competition between the two. In Clause 15 will be found some very necessary interpretations and definitions, chiefly as to what is principal and what is interest. I think half of the financial troubles in the world is due to the fact that very few people know what is principal and what is interest. Here it is definitely laid down what is principal and what is interest. It is a rough-and-ready definition, but I think, on the whole, it will be very satisfactory.
I have summarised the provisions of the Bill at greater length than I intended to do, because this Bill has been so often before the House, but I am very anxious that we should give it a fair run. I see opposite two very redoubtable opponents of the Bill, and I hope we may succeed in melting their opposition before they unmask their batteries. As far as this Bill is concerned, we have endeavoured to meet as far as possible every reasonable objection, and I commend the Bill 734 to the House for a Second Reading, with every hope and confidence.
§ Mr. WELLS
I beg to second the Motion.
I think we who support this Measure ought to congratulate the hon. Mover on the very careful survey he has made of this Bill. We think this is the most important Private Member's Measure that has come before the present Parliament, and this is the third time. My hon. Friend truly said that moneylending goes back a very long way. There are to-day some 'clay tablets in the British Museum, 4,000 years old, that come from the city of Ur of the Chaldees, showing moneylending transactions in those early days. They show the money lent, the time for repayment and the amount to be repaid. I think we can gather from that, that even in those early days there must have been some legislation to persuade those moneylenders to put their dealings on clay tablets. Later, in the Middle Ages, we come across a very celebrated case known to every Member of this House, in which a woman advocate took a very prominent part. I do not doubt that that case has caused a good deal of trial among younger generations since, and I daresay they have wished that ease had never come into court.
As the hon. Mover has said, I think the time has come when we should really deal with this matter. Last year certain criticisms were advanced. The hon. Member for Grimsby (Mr. Womersley), who moved the rejection of that Bill, made his criticisms very fairly, and most of them have been met in the present Measure. But there is one criticism which we have not at present dealt with, and that was that in no case should the 48 per cent. limit be exceeded. That, of course, would probably meet with a good deal of sympathetic consideration from those who are supporting this Bill. There are other Members who have said that this is class legislation and do not approve of it, but I do not think anyone could say with any truth that this Measure is a Measure of class legislation.
Three years ago, when a Bill was introduced it was based on a report from the Social and Industrial Reform Committee working in Liverpool, a report which was of great value. They have been working for years in Liverpool and the neighbour- 735 hood, and they found that in 1924 there were 1,380 registered moneylenders in that area, of whom over 1,100 were women. This morning I have received seine further particulars from Liverpool. They tell me that all the women and a certain number of the men carry on their businesses from their own homes in small streets and cater for the borrowers of small sums, often charging exorbitant rates of interest, and many of them act as terrible bullies to their clients. Some of these bullies carry on subsidiary trades, clothing shops, greengrocer shops, and the like, and insist on their debtors also becoming their customers, thereby causing them, through fear, to buy articles they do not want or cannot afford. They also report that many women borrow without their husband's knowledge, and live in constant terror of exposure by rapacious moneylenders. They say:We have known of cases of suicide, of several cases of nervous breakdown, and of many lives which are full of misery due entirely to the habit of recourse to moneylenders.In their report they recommended, and there was brought into the Bill three years ago, a prohibition of circulars and advertisements altogether. They recommended that the provisions as to contract should give particulars of interest, a limitation of interest, and a tightening-up of registration. These points all form part of the foundation of the present Measure. This Bill and the Bill which Lord Carson introduced into another place were, as the Mover has said, sent to a Joint Committee, and it was inevitable, once the question had been reopened, that it should be dealt with in a comprehensive maner. I know there is a Member of this House who says this present Bill is not the Bill of the Joint Committee. There are points of difference, and some points have been left out, but the main foundation of that Bill is the Bill as we have it to-day.
This question has now been before us for three years, and I do not think any Member who is interested in it has grudged the time given to this Bill, and we think we are now justified in asking the Government not only for their sympathy but for their active help in passing the Measure into law. We feel 736 there ought to be some safeguards for those who in their ignorance do foolish things for which they suffer years of misery. In the last few years I have received hundreds of letters from all parts of the country, from people in desperate straits, and belonging to all classes. Here is one from a country clergyman saying he met at a club a country rector who had borrowed £70 and had repaid £210, and still owed £70. I have another letter from very poor people in Glasgow. I do not propose to read the whole of it, but they say:The months of awful worry we have had and are still Lo have! Our friends are wondering what has gone wrong with us. No one can call us any bigger fools than we call ourselves. Your Bill cannot help us now, but I do hope it will go a long way to helping others.I think that is a very human letter. I have another letter from a man who was for 42 years in the Bank of England, and left with a pension. He started a business, failed, and borrowed £100. He was sued for £320 and made bankrupt, and lost everything he had got, including his pension. We give men terms of imprisonment for doing wrong, but even that is hardly as bad as the misery some of these people have, had to suffer. I think we should try to make the punishment fit the crime as far as we can. There have been other cases where only the grave has hidden the misery and shame that exposure brings. I am sure every Member in this House knows of cases of very great hardship and realises that there is good reason for asking the House to pass this Bill and to bring some justice tempered with mercy to these people.
We may be asked whether we think this Measure will work. I feel we are justified in saying "Yes," in view of the information we have from America, where they have what is known as the Uniform Small Loan Law. That law covers about 20 States in America and over half the population of the United States, and is more stringent than this Bill. They make a moneylender take out a licence at a cost of £20. He has to file with the licensing officials a bond for £200, and may be called upon for another £200 bond at a few days' notice if one is not considered sufficient. If a moneylender is convicted a second time his licence is revoked, and he can no 737 longer carry on business. He can only carry on his business in the name on the licence, and he may not issue any misleading statement as to rates of interest or conditions. His interest is limited to 3½ per cent. per month. This is what is called a scientific interest. It has been worked out; interest was tried over a term of years at lower rates, and they found eventually that 3½ per cent. per month was a reasonable and proper amount to charge. Further he must give full particulars of the loan to the borrower. This provision as to interest does not apply to loans of over £60, because it is thought that in those cases 3i per cent. per month would be too much to charge. Some of these States started this law in 1916, and where it was adopted it has never, I think, been revoked; and where companies have been set up to carry on a moneylender's business they have paid reasonable dividends, averaging something like 10 per cent.
We desire to place transactions with moneylenders on a better footing. We want to check lenders who engage in discreditable practices, and to check unscrupulous borrowers, and we believe the Bill will do it. We have the good will and support of private individuals, trade organisations and various societies in the country, and last, but not least, we have had the support throughout of many moneylenders and many moneylenders' associations up and down the country. I do not want to go into the provisions of the Bill, which have already been fully explained, but I would ask the House, if it be not satisfied with the Bill, to divide against it, because we would like to see the weakness of our opponents in the Division Lobby. This is a well-considered Measure, a most important Measure of social reform long overdue, and it is with the greatest confidence that I support the Second Reading.
§ Lieut.-Commander KENWORTHY
I beg to move to leave out the word "now," and at the end of the Question to add the words, "upon this day six months."
I am glad that this Bill has been brought forward in the calm atmosphere of a wet Friday morning. I congratulate the hon. Mover and the Seconder of this 738 Bill on their comparatively temperate speeches, although they have approached this matter from different standpoints. I am glad that they have avoided the temptation of introducing anti-Semitic prejudices, because the usual argument is that all moneylenders are Jews, that Jews are all wicked, and that the poor unfortunate Christian needs protection against the wicked Judean. I hope that argument will not be used on the Floor of this House; no one has any right to use that argument simply because Shakespeare took a Jew as the villain in one of his plays. I must complain, however, that hon. Members opposite seek to make party capital out of Bills which are really non-party Bills. This Bill has on the back of it only the names of Members of the Conservative party. Why is that? I know that Members of all parties are in favour of this Measure. I believe my hon. and learned Friend the Member for South-East Leeds (Sir H. Slesser) is in favour of it. I also notice that the Leader of the Opposition is not here to listen to my speech, and failing that I think he is in favour of the Bill. When I was sitting on the opposite side of the Gangway I was opposed to this Measure, and I am still opposed to it for the same reason. Why do hon. Members opposite try to make party capital out, of a Measure like this?
§ Lieut.-Commander KENWORTHY
The Conservative party are trying to exploit this question by bringing forward cases representing the black sheep of the moneylenders in order that they may appear as defenders of the poor, but I intend to show the hollowness of that argument. The hon. Member for Bedford (Mr. Wells), with tears in his voice, spoke about suicides and the despair of the victims of moneylenders, but I would like to point out that those are not the only cases of suicide. How about those who commit suicide through drink and gambling and through excessive dancing to jazz music! I believe the Charleston has been known to kill people. Is it proposed to legislate specially against these evils? Not at all, because hon. Members opposite support the drink trade 739 and they have always fought against the Puritan element in this House who wanted to legislate against gambling. We have more suicides to-day through industrial depression, unemployment, misery and bad trade than from any other cause, and because occasionally man who has been very foolish, usually in connection with drink and gambling, has gone to a moneylender and has afterwards committed suicide, it is not fair to arouse sentiment in favour of this Measure in that way. Let us look at these things in the light of the actual facts and circumstances of the case. This Bill will do nothing to remove the admitted abuses of the present day where usury is concerned. It will remove no real evil. I hold in my hand some remarks made by the Lancashire and Cheshire Moneylenders' Association, in which they admit that there are certain abuses. They say:It will be found on inquiry that the malpractices which exist in the business occur mainly through those lenders who lend large minis to the more highly-placed members of the community and not through thin type of lender who lends small sums to the very poor.This is where the abuses come in and they receive a good deal of publicity. You have the impoverished nobleman or brother of a nobleman who borrows very large sums, knowing perfectly well he has no means of repaying them. There are these gilded sharks with long pedigrees and flamboyant armorial bearings, who prey on moneylenders in the West End of London, and then go squealing to the courts when they are brought to book. The atmosphere created is such that very often the man who has lent the money has the greatest reluctance to go into the courts at all. We have to hold the scales of justice level, and it is not right that only the moneylender and the black sheep should be singled out when very often the fact is overlooked that the borrower is just as much to blame as the lender. These people simply exploit their social position in order to borrow money, which they have no business to do, and they deserve no protection because they are fools. No legislation will ever prevent a fool from indulging in his folly.
Then there is a large number of unregistered moneylenders who lend small sums of 2s. or 3s. a week to poor women, 740 and often get one penny interest. We bear a good deal about the limiting of the rate of interest to 48 per cent. where there is good security, but this is nothing compared with the interest charged by these back-street usurers. A woman may find herself short of money at the beginning of the week, and she borrows a shilling and repays it with one penny interest in five days' time. That works out at 8 per cent. per week. If you work that out at the annual rate of interest it comes to about 400 per cent. per annum. Under these conditions, what becomes of the hon. Member's limit of 48 per cent.? Does the hon. Member think this Bill will stop that sort of thing? These people are not registered, yet they make a big business in this way and among them are hard-fisted usurers and persons who prey on poor women and create misery in this way. Does the Mover of this Bill think that his Measure is going to stop one single transaction of that kind? These people are not registered and they will laugh at the hon. Member and his Bill.
The only result of legislation of this kind will be to drive out the decent moneylender. You will make the business so difficult and so unpopular that the decent moneylenders, who have been established for years and fulfil a certain position in the life of the country, and of whom I maintain there are a pod many, will be driven out, and only the people who are clever enough to drive their coaches and fours through this Act will remain. I say that there are certain old-established firms, especially in the North of England, who do a legitimate business. Take the case of a young man without any capital and no security to offer but only his brains and energy, who sees an opening in business. Under our present banking system, with the joint stock banks practically forming a monopoly, it is impossible for him nowadays to go to a bank and get a loan. Of course, if he has useful introductions and business friends and can give guarantees, he can, but I am talking about a young adventurer in the best sense of the word who sees art opening for legitimate business if he can get hold of a little money to enable him to do it.
§ Lieut.-Commander KENWORTHY
It is not ridiculous at all. It may pay a man at that rate of interest in order to get a start. My hon. Friend makes a great cry about 48 per cent., but what sort of profit is made in many branches of the wholesale and retail trades in the country? I have here a letter, dated 2nd March, from a moneylender in the West Country, and I think it is worth reading just a part of it. I do not know this man. He has written to me and asks pardon for the liberty he has taken. First of all, he wishes to know what protection the proposed Bill will afford the honest moneylender from unscrupulous borrowers. I have dealt with that point, and I think it is very important. Then he complains that his business is treated as criminal, and he says that the proposal laid down in the Bill is humiliating and that he and other men who pride themselves on their business integrity will be driven out of the business of moneylending. He compares his rate of interest with what he has to pay to other tradesmen. He says that his wife pays the dairyman weekly 75 per cent. profit for delivering the milk. What happens to my hon. Friend's 48 per cent. per annum? The milkman has no, risk. Then he says that broccoli was bought by the greengrocer in Exeter when it was scarce for 2d. and was sold the same day for 6d. That is 200 per cent. per day.
§ 12 n.
§ Lieut.-Commander KENWORTHY
My hon. Friend does not condone that, but he must admit that 48 per cent. for no security is not an unreasonable rate of interest. Then my correspondent says that on tobacco the retailer makes a profit of 2d. on every ounce. He points out that this works out as follows: In the first ease of the milkman the rate of interest is 3,900 per cent. per annum; in the second case of the greengrocer it is 200 per cent. per diem or 73,000 per cent. per annum, and in the third case of the tobacconist it is 25 per cent. per week or 1.300 per cent. per annum. As a matter of fact, when we go into the question of 742 the loss on perishable goods to the greengrocer and the milkman, they are not really such terrible profiteers as they are sometimes made out to be. But tremendous profits are made unfairly by the people above them higher up in the wholesale line or the manufacturing line who have virtually a monopoly. This is where I complain of the Conservative party. Every Friday almost once Parliament began they have brought forward some Measure for dealing with a small limited class of profit-makers, but they never think of dealing with the exploitation of the mass of the people. That they will not do. They prefer to raise these smoke screens to hide the transactions of the great exploiters in this country, and they hope to tickle the imagination of the voters by bringing forward little petty Measures to deal with limited classes against whom they can raise prejudice, like those connected with mock auctions on the one hand and moneylenders on the other.
I do not understand why pawnbrokers are included in the hostility of the promoters of this Bill. I say hostility, because, otherwise, I do not know why pawnbrokers should be interfered with and brought into this Bill. Why should a pawnbroker have to take out this additional licence as laid down in Clause 2 and referred to again in Clause 14. Perhaps one of the hon. Members who speak later, or, the lion. Member for Duddeston Division of Birmingham (Mr. Burman), himself now, will tell us why a pawnbroker should be proceeded against.
§ Mr. BURMAN
A pawnbroker at present takes out a licence which costs him £7 10s. per annum. We propose, if he comes under this Act, that he should pay an additional licence fee of £7 10s. per annum, so that his licence fee should be exactly the same as that of a moneylender.
§ Lieut.-Commander KENWORTHY
Pawnbrokers are already registered, and are closely regulated by Act of Parliament. Are there any complaints made against pawnbrokers?
§ Lieut.-Commander KENWORTHY
For their protection pawnbrokers have to pay £7 10s. more per annum! If hon. Members do not omit pawnbrokers from their Bill, it will have a rough passage. If they want to have a smooth passage, they had better stick to moneylenders alone. I can promise them strenuous opposition on behalf of pawnbrokers unless they meet us in that objection. Under the Mohammedan religion, usury is forbidden altogether. Under the Christian religion and under the law of this country, it is not forbidden, and, until it is forbidden by law or ethics in this country, if you are going to tackle the vexed question of usury, you must tackle it Lt the root. It is no use picking out one class of usurer for special treatment. That is what I call the throwing out of smoke screens. If hon. Members opposite would look closely into the whole system of banking and credit in this country, of moneylending by the bankers, and the way in which they they do not lend money when they ought to lend it for legitimate enterprise and production, they would be doing something to earn the gratitude of the nation. Why do they not do it?
My last objection to the Bill is that it is one more attempt to make people wise by Act of Parliament. This Bill will not protect the simple curate, referred to 'in the London club, who was running about complaining of the way he had been treated by the usurer. If a man in the position of A clergyman wants to borrow money, he ought to be able to get it from a bank, without going to moneylenders. This Bill will not stop him from going to unregistered moneylenders, because registered moneylenders, the good ones, will find their business too difficult. It will not prevent people from committing suicide through drink and gambling and borrowing combined; it will not prevent the man about whom we heard the other day who, in order to get married, went to a moneylender and borrowed money for the purpose. You are not going to prevent that kind of unwisdom by Act of Parliament. When hon. Members realise that they cannot alter human nature by laws placed on the Statute Book, and that really to improve the lot of the mass of the people you have to get down to the root causes 744 of poverty and misery in the crowded industrial areas, we shall not have our time wasted over these Bills which will do no good at all, except, perhaps, get a transient amount of approval from the electorate, until the electorate have found out how hollow is the policy, and how mistaken are the efforts of these gentlemen.
§ Colonel WEDGWOOD
I beg to second the Amendment.
I congratulate Lord Carson's Bill on its vitality, and on the hands in which it has been put this year. I have listened to many Movers of Bills on Friday afternoons, and they usually confine themselves to generalities and fail to explain the Bill at all. To-day we have had the thing done very well indeed, and I think the hon. Gentleman deserves the thanks of the House. The Seconder I do not approve of. I am not speaking personally, of course, but there you have what I would call the bad old manner. The bad old manner is this: You take a grievance against which the great heart of the people is stirred, and you paint it in lurid colours; you show how people suffer from the evil, and, having wrought up the House of Commons to a proper feeling of horror against this all-pervading evil of our social system, you then fail to show any sort of connection between the Bill which you have before the House and the cure of the evil.
There is one thing that is certain about this Bill of Lord Carson's—it is popular. I have had more lettters reprobating me for opposing this Bill than for almost anything else that I have done in my political career. Evidently, at the present time, a very widely held feeling of hostility to monylenders pervades the country. I do not wonder at that. I think any person is bound to be oppressed at the evils wrought by indiscriminate borrowing, and by many of the other evils of our present day. I have myself seen families ruined by this insane and easy habit of running into debt. But I have seen families ruined also by gambling, and many more still ruined by drink, either on the part of the husband or, even worse, of the wife. People are ruined by gambling, by drink, by borrowing money which they do not ever intend to repay, by wine and women. In every 745 sort of way families are being ruined today, and you can draw a harrowing picture of the ruin caused by every one of these evils. Because of that, you have a large number of people in this country, as in America who are out for prohibition—for stopping the drink trade. Because of that, you have a large number of people in this country out for suppressing gambling. Because of that, you have a large number of people in this country out for the suppression of prostitution; and, in the same way, you have a large number of people out for suppressing the capacity for borrowing money from moneylenders.
With every one of these movements, every decent man must have a good deal of sympathy. If we could stop any of these evils, we should be benefiting humanity, and, to the unthinking person, that argument is enough; a Bill is brought in to cure the ill, and it is considered almost indecent for any Member of Parliament to oppose it. That, however, is not enough. We here have to think which is the best way of stopping these evils. Ought we to suppress them entirely? Ought we to make the borrowing of money illegal? Ought we to make the getting of alcoholic drink illegal? Ought we to make gambling illegal? That is one way of dealing with the problem—to make them illegal, as they have attempted to do in America. They have been unsuccessful, it is true, but still, that is one way of dealing with the problem. There must, however, be many Members of this House who know that in the long run the best way of dealing with these ills is to rely upon education, upon creating self-control and self-respect. That method of dealing with the evil takes much longer, but in the long run it is much more satisfactory.
Let us look back on this particular evil for the last two generations. Two generations ago, a young man who "went the pace," who borrowed money recklessly without ever intending to repay it, was admired as a gentleman. Now, the same man doing the same thing is no longer admired as a typical gentleman, but is treated as a fool. That change has come about in two generations, and I do submit that, if you look at the drink evil, the gambling evil, or those other social evils to which I have referred, you 746 will find that the best and most permanent cure is the gradual education of people—not only the upper classes, but all society—to more decent, self-respecting ways of living. This Bill does not really touch the spot. The Seconder made the matter clear when he read out to us the arguments used by a certain Liverpool social organisation—I forget its exact title—for demanding a Bill. This Liverpool organisation had seen that form of moneylending which is, I believe, rather peculiar to Liverpool—that street-corner, week-end lending of a shilling for an interest of a penny a week. It was that form of moneylending which caused the agitation; it is the evil of that form of moneylending that is most visible among the working classes. But that form of moneylending is to-day illegal under existing legislation. These people who lend money on these terms are not registered. We have heard how many are registered, and one can see what a small proportion of the people who lend money as moneylenders are registered. To-day, the vast majority of them, particularly those who lend money on the street, are unregistered.
§ Colonel WEDGWOOD
How can you tell? As a matter of fact the hon. Member himself and I are moneylenders from time to time. The particular form of moneylending which inspired this Bill was the form complained of in Liverpool. Those people are unregistered moneylenders. How many thy are no one can pretend to know. They cannot sue for their debts, and yet they refuse to pay £1 a year to become registered in order to acquire the legal capacity of suing. If they are not prepared to pay £15 a year for registration, they are certainly not prepared to pay £15 a year for a licence, and you will not get any more of those people who are at present unregistered, registered and licensed moneylenders. However many there are outside the law lending money to-day, there will be more in future, and the precise evil against which this Bill is directed will be increased rather than decreased.
But I think my most profound reason for disagreeing with the Bill is that I do not believe the real motives behind it, have been sufficiently admitted. We know 747 that the principal argument in favour of Prohibition in America was that it made the working classes so much more efficient, that they turned up on Monday morning so much more regularly if they were not able to get drink. The main argument for it was that the working class were so liable to be seduced from their proper habits of working that it was right that everyone should sacrifice his right to get drink. I am glad to think it has never been argued on that basis in this country. But I feel that behind this Bill is the same sort of spirit, that you do not want the working man to borrow money, that he ought not to borrow money, and therefore, you will make it more difficult for him to borrow money. I do not think it is our business to make it more difficult for a man to take risks. It seems to me that we are overdoing the slogan of "safety first." Safety first never made England. It was taking risks that made this country. We are becoming so old and so careful that we see stuck on the omnibuses now "Safety first." I think it is a bad motto for England. I prefer that people should take risks—both moneylenders and money borrower. I dare say an enormous amount of the money borrowed is wasted and thrown away but we do not want to make it harder for the man who wants to cease to be someone's servant and start a little business on his own, having a chance. It makes it more difficult to rise from the ranks if a man is unable to borrow £50. I dare say in nine cases of our ten the man who borrows this £50 goes bankrupt. Many people have started by borrowing £50. If profits are quick, the man may be saved. The risks he takes are worth taking if it saves one man in ten, and at any rate we do not want by legislation to stop that. Least of all do we want to stop it with that horrible idea of desiring to make the working classes more respectable, more trustworthy and more useful to their employers by Act of Parliament. The idea that we ought to make it difficult for the working class to drink, gamble or borrow, is one on which we should make up our minds right away. Those who want to make it more difficult should vote on one side and those who do not should vote on the other. That is the real test. I do not want, and I do not believe any 748 of my colleagues on these benches want, to make it more difficult for the working class to do foolish things. We want them to have an opportunity of establishing their self confidence and self reliance without being shepherded. The good and wise and brave people who support these Bills pretending to do good to the poor, are the people who are the real danger not only to the poor but to the whole of the country.
We come back to this. Either borrowing is wicked and should be stopped, or it is not wicked, and we should try to make it as decent as possible. The question is, can we by this Bill make it as decent as possible?—and I think when this Bill gets a Second Reading, as I imagine it will, it will be the duty of the Committee that deals with it to try to look at it from that point of view. How can we make this business of poor people borrowing small sums of money as decent as possible? Of course the pawnbroker is the poor man's banker. The man who has no other security can only go and deposit his furniture at the pawnbroker's and get a loan. We have not heard much of the evils of pawnbroking to-day, but everyone knows they are as great as the evils of moneylending. It is easier done and the results are as disastrous in the long run. In every European country, I think, pawnbroking is a State monopoly, because they know that the business of pawnbroking carried on by individuals is likely to be not such a satisfactory trade as it otherwise might be. If the Committee that goes into this question deals with it properly, it will consider whether we could not municipalise the pawnbroking business, as in France and Germany, so that the rate of interest may be limited, so that the direction of the business may he divorced from the profits of the business and so that the poor man anxious to borrow money should be able to borrow on cheaper terms. After all, in the interests of people who must borrow money, it is right chat they should get it on the cheapest possible terms. That is one way of making borrowing more decent, and if you had that form of borrowing on security, you would find that a great many of those people who at present go to moneylenders would go to the State pawnbroker to get their loan. It would reduce the demand upon the moneylender by increasing the clientele of the pawnbroker, and 749 would take from the moneylender a good many of the poor people. It would not touch the man who wanted to borrow £100 or the man who wanted to borrow £20,000, but it would relieve the poor of a great deal of the difficulty and expense in getting money in an emergency which they suffer at the present time. The next way in which we might make moneylending more decent, is to try to get away from the habit of always condemning and despising the moneylenders. We have hardly heard one word to-day but that of contempt for the moneylending business. If you treat people as if they are decent people, they will behave as decent people, but if you goon telling them what a disgusting and loathsome trade theirs is they will carry on in that way. There is an old saying, "Give a dog a bad name and hang him." I do not know whether that is true or not, but certainly if you give a dog a bad name, sooner or later you will have to hang him. Therefore, in going through this Bill in Committee we must seek to remove all those Clauses which are obviously derogatory to the dignity and position of the moneylender.
We have only to go through the Bill to see what an enormous number of respectability tests are put in, just as if it were assumed normally that the people in the business to-day are a disreputable crowd. I think we might, in going through the Bill, remove these semi-demi insults and try to treat this particular trade as if it were composed of people as decent as pawnbrokers, at any rate, as decent possibly as architects, nurses, auctioneers et all those other great professions which are now seeking, like the moneylenders, to acquire incorporation and by paying a considerable sum yearly developing into a big and close profession. Let us see what this Bill actually proposes. In Clause 1, it is proposed to. raise the annual fee paid by moneylenders from £1 to £15. That, of course, will keep out the poor type of moneylenders. It will not keep them out of business, but it will keep them out of legal business. If moneylending were subject to free trade conditions, that increased charge would inevitably be passed on to the consumer. The fee of a year would be added to and multiplied in the demands made upon the person who borrowed the money. In a good many eases that will happen still, 750 and the Bill seeks to prevent that by later on laying down some estimate of what they consider to be a reasonable rate of interest. The immediate effect of the £15 licence will be that a very great, number of the 9,000 moneylenders who are registered to-day will drop out, perhaps half of them, and the remainder will: form into a close corporation, into a perfectly substantial trades union, and wilt prosper as before by squeezing more out of the borrowers or demanding better security before they lend. I do not think there is anything to be hoped for the borrower in Clause 1.
In Clause 1 we have also a curious insistence, repeated over and over again, that the man should register his true name. I think that might be dropped out. I do not care in the least whether the man from whom I borrow calls himself Gordon, Montague or Levy: it does not matter. This Clause is a hint that the moneylender is more likely to trade under a name that is not his own than anybody else; that he is ashamed of his trade. You will never get decent moneylending so long as the man is ashamed of his trade. You will never get proper conditions until he is proud of his trade. In the same Clause, we also get the hint, that the moneylender must not call himself a bank. Apparently, to call yourself a bank is the highest symbol of respectability. If you can once appropriate that glorious name, you might become one of the Big Five. If we go back into history we find that 250 years ago the banker was also a goldsmith and worked in his shop at his job, or a moneylender pure and simple, without security. When we-think of their loans to the British Crown and the little they got back, and that their rates of interest were low rather than high, they, like the moneylender of to-day, took considerable risks with a rascally clientele.
Clause 2 requires a certificate. Listen to this:A certificate shall not be refused except on the ground that satisfactory evidence has not been produced of good character.Apparently, there is to be a sort of smelling-out competition. Inspectors are to go round and say, "Who was your father? Who was your grandfather? What did you do at Sunday school?" Surely, this is the only trade where the 751 Home Office inspects a man's moral character before it allows him to have a licence. We shall have them inspecting the moral character of the taxicab drivers next. What business is it of a Government Department to inquire into a man's moral character: how he spends his Saturday night? That is not enough. Not, only has a man to have a good moral character, but under paragraph (b) he is to be "a fit and proper person." I should have thought that to have a good moral character and to be a fit and proper person was one and the same thing; but we find in Clause after Clause this respectability test repeated: this question of whether a man is fit, say, to occupy the pulpit one day and to lend money the next. To my mind, it is that sort of Clause which deprives the moneylenders of any chance of being proud of their trade and of any chance of respectability. These suggestions do not make them any better, but they do hint that the attitude of the whole universe towards moneylending is one of contempt and hostility.
Under Clause 3, the names are to be stated on the document. That is to say, if a moneylender, for the purpose of his business, issues any circular containing an expression which can be held to imply that he carries on a banking business, he will get into trouble. Does the House remember that, during one period of the War, while Admiral Koltchak was in Siberia, he received an indignant telegram from the present Chancellor of the Exchequer, who was urged thereto by the Prime Minister, the right hon. Member for Carnal-von Boroughs (Mr. Lloyd George), in which Koltchak was urged to make a noise like a democrat? In this Bill, the moneylender is warned in Clause after Clause that he is never to make a noise like a banker. It does not amount to more than that. Clause 4 seems to be directed against touts, but really it is difficult to understand whether it is directed only against touts or against all moneylenders. We are not to have circulars sent to Members of Parliament. I rather look forward to these circulars. Few things are more decorative, and every time I open one and am disappointed in not finding what I expected I always reflect that there is some revenue for the Post Office. I 752 have no objection to receiving letters of that sort. But we must not allow this prohibition of circulars to give the Home Office or Post Office an opportunity to open our letters.
I have not the slightest objection to their reading letters I receive from money-lenders, but I have a great objection to their reading letters I receive from other people, and if this Bill is going to give the Home Office an opportunity of diving into our post bags I feel that the benefit to people who lend or borrow money will be entirely eclipsed by the annoyance it will give to my temper. There is an impertinence about the Government opening one's letters which I, for one, resent, and I am sure that the taxpayer will resent as well. But touts under this Clause are illegal. As far as I can make out, however, there is no definition as to what is a tout. You will never be able to pass an Act of Parliament preventing some person suggesting to an acquaintance, sotto voce, that he will be able to borrow money if he goes to so-and-so. Then this person will be able to say to the moneylender, "I sent Jones along to you the other day, and perhaps you will remember me!" How are you going to make that illegal and prevent a man suggesting that Mr. Tom Smith is an excellent person who will always lend you money without any security whatso-ever? The tout suffers a ferocious penalty. For canvassing he gets three months, or a fine of £100. That is a bit thick, but the penalty is so heavy that the prosecutions under this Clause will be nil. In the same way the ferocious penalties for stealing articles worth a shilling, which obtained in the old days, produced no charges at all, and this ferocious penalty against canvassers for moneylenders will be a dead letter. The canvassers will escape, the Bill will remain on the Statute Book, and things will go on as they are.
Clause 5, I agree, is the backbone of the Bill, and a thoroughly sound and good backbone it is. If the promoters of the Measure would only cut out the rest of the Bill they would meet with no opposition in the Committee stage. It provides that every transaction shall be clearly stated with the rate of interest involved at any moment. If anyone 753 desires to see how he stands with the moneylender, he can pay a shilling and get a document showing exactly how he stands. That is what every sound borrower does in other walks of life. Clause 8 is a most unpleasant Clause. In the case of a bankruptcy, the moneylender is only entitled to claim 5 per cent, interest. Of course, when a man goes bankrupt the landlord gets priority. He always gets his rent, and, after the landlord has had his slice in full, other creditors come in on an equal footing. Now we are making a third class of creditor, and they are all to be on an equal footing except the moneylender, who is only to get 5 per cent. That is a stupid position. It is not only offensive to moneylenders, but what it means is that the man who is insolvent shall never be made bankrupt by a moneylender; the moneylender shall get him made a bankrupt by somebody else. As a matter of fact, the moneylender will seek to keep the man alive at any cost, knowing that, if he goes bankrupt, he will get less than anybody else. That is thoroughly unsound. A man who is insolvent bad better go through the Courts instead of hanging on and doing other people in for more than otherwise would be the case. It is not the business of an Act of Parliament to alter the Bankruptcy Laws in this way by putting one set of creditors in an entirely different position to all the other ones.
Clause 9 determines the rate if interest. Apparently anything above 48 per cent. will be considered excessive if a case is brought into Court. There is no guarantee that something under 48 per cent. shall not be considered excessive. I have nothing much to say about that; probably that stipulation will be fairly harmless. It will mean that moneylenders will not be so free to lend money as they are at the present time. They will be more cautious and will require better security; there will be less money lent, and the rate of interest will go down. It will not affect the unlicensed unregistered moneylenders who are doing business at the street corners. They will charge what rate they like, and will be in the same position as they are today, unable to sue for their debt but at the same time will be able to threaten the woman that they will let the husband know of the debt. Clause 10 is also 754 thoroughly unjust. Under the Clause a case for the recovery of large sums of money may be brought before the County Court. It is undesirable that we should have inferior justice in cases of this sort. I would sooner have the beet sort of justice in cases where prejudice is likely to arise. When a man is being sued for £30,000 or £40,000 borrowed from moneylenders that case should go before the High Court instead of the County Court.
Clause 13 says that a debt may not be assigned. Why not? Why should not a moneylender be able to sell a debt to somebody else? Apparently it is to be stopped. I suppose the idea is that a man may go round and buy up all the debts of his enemy from moneylenders and then proceed to smash him. I do not think there is anything in it. It is too romantic to be true, and there is no reason why a man should not be able to sell a debt from a private individual just as easily as I can sell a bearer bond. The more marketable these debts are the easier will be the terms obtained by borrowers. The Pawnbrokers' Clause has been dealt with, and I do not think it is necessary for me to go through each Clause in this Bill. It is obvious that this Bill can be materially improved in Committee if hon. Members will resolutely set themselves against trying to gain a little flamboyant popularity by backing a Bill which means nothing, but rather try to see how to make pawnbroking and moneylending decent pursuits which can be carried on by decent people in the interests of the whole community; if they will see that evils such as we have heard of to-day cannot he stopped by suppression, but can be stopped only by bringing people lip to a decent level of civilisation, and by stopping the hopeless idea that vice in every walk of life can be destroyed by Act of Parliament.
§ Sir H. SLESSER
I believe there is a philosophy, known to the Stoics, which says that at fixed intervals of time we all repeat the same experiences. When I heard the speech of my right hon. and gallant Friend who has just spoken, when I consider what I am going to say and what others are going to say, I feel that we have got into the grip of that Stoic cycle, and are all compelled, not to say the same thing, but to use the same arguments against one another. Everything that has been said to-day was 755 said last year on the former Bill, and was probably said on other Bills before that time. I pointed out then, as I point out now, that this Measure is not one isolated Measure dealing with moneylending for the first time, but is complementary and supplementary to the Moneylenders Acts which are already on the Statute Book. When the Act of 1900 was passed and an interference was made by the law with the freedom of moneylenders to charge such interest as they willed, I believe there was a great argument whether the whole principle of saying that interest was excessive or hard or unconscionable ought not to be introduced into the law. But the decision of Parliament then was that moneylending was a transaction of so peculiar a kind that the Court should have power to deal with the transactions of the lender. Therefore, if there be any slur on moneylending, which I deny, if there be any necessity for the State to interfere, that decision was taken in the year 1900.
So also with regard to the registration of moneylenders. My right hon. and gallant Friend suggests that some slur is placed upon the moneylender because he is treated in a peculiar and unique way. But that decision also was taken in 1900. In the 1900 Act it was decided that a moneylender, which term included every person whose business was that of moneylending, should be compelled to register under the Act. Therefore, all these arguments about the peculiar treatment of moneylenders, about the suppression of vices in peculiar ways, and the like, have all been decided 27 years ago. To-day all we have to consider is whether an amendment is or is not necessary in the law which was then passed. My right hon. Friend says that this Bill is very popular, and I am sure that he, as a democrat, will agree that Measures are not popular in this country unless they deal with a real mischief. Why is this Bill popular? Because people feel the need of it. My right hon. Friend said that he had suffered more criticism because he opposed this Bill than for opposing any other Bill which had ever passed. That is saying a good deal, because he, and generally rightly, opposes most Bills. If that be the case, there must be a very strong feeling in 756 the country that some alteration of the law is needed. This Bill and the Committees which were set up and all the agitation that has gone on, have shown that the bulk of the people, not only in the House but in the country, feel the necessity for regularising this matter further than it is regularised at present.
I could not understand the argument of my right hon. Friend when at one moment he said the Bill would not touch the unregistered moneylender who dealt with the working classes, and then complained that the Bill would interfere with the liberty of the working classes to borrow money as they will. If this Bill is impotent to deal with working people by reason of the large number of unregistered moneylenders, there will be in fact no interference with their right to borrow money. But, as I read the law, if those persons who carry on the business of moneylending either in whole or in part are not registered they are committing a criminal offence. If there are in fact persons so carrying on the business of moneylending, then the Home Office and the authorities are at fault in not prosecuting those persons under the Act. It is stated in terms that a moneylender is anyone who carries on the business of moneylending in any way, that he must be registered, and that if he fails to register he is liable on conviction to a fine not exceeding £100. If it is a reflection on anyone, it is a reflection on the authorities if there are large numbers of persons unregistered and carrying on the business of moneylending. But that is no argument for not proceeding with this Bill.
We do not want to do away with this Bill altogether because we cannot define the exact limit whether a person becomes a moneylender for business or for amusement or for charity. That being so, I do not propose to follow the right hon. Gentleman by going through the details of the Bill. That can properly be done in Committee. There are, however, certain points which call for attention. The most important Clause is that which deals with the 48 per cent. The right hon. and learned Member for the Exchange Division of Liverpool (Sir L. Scott) and I pointed out last year that if you were to limit rigidly the interest to 48 per cent. and give no elasticity to the Court, 757 it might work serious injustice. Circumstances might arise where the security was so good or the necessity so great that much less than a charge of 48 per cent. could properly be said by the Court to be hard and unconscionable. The present Bill preserves the complete elasticity of the Court. It lays down 48 per cent. as a kind of indication of what is to be deemed to be the extreme limit, but it goes on to say, on the one hand, that the Court may find that the interest is hard and unconscionable when the rate is lower than 48 per cent. It gives power to the Court either way to deal with the matter. It seems to me to he entirely satisfactory and to have men our point completely.
I noticed that my right hon. and gallant Friend agrees with Clause 5, which includes two of the most fundamental provisions of the Bill. I did not understand his argument on those two provisions. It may be that he wished to make a speech explaining certain philosophical and political principles with which I am in entire agreement. I think there is far too great a tendency on the part of—I will not call them the wise or rich, but on the part of prigs, to interfere with the liberty of people to live as they will. But I cannot apply this principle to this Bill. That is where I differ from my right hon. Friend. I have the advantage not only of believing in sane individualistic ideas, but also of harrowing some of my ideas from a far older system, the Canon Law. The Canon Law has always pointed out that moneylending and the obtaining of profit by the lending of money was a peculiarly dangerous transaction, dangerous to the soul of the person who undertook the transaction, and dangerous to the prosperity of the person who accepted the benefit of it. It is not the case, as the hon. and gallant Member for Central Hull (Lieut.-Commander Kenworthy) suggested, that the Canon Law condemned usury simply. There were, in the early days of the Canon Law, rigorists who did so, but by the time we reach St. Thomas we find that he distinctly says that the test of the righteousness of moneylending is whether the transaction is reasonable or not, and he does not condemn out of hand all moneylending, as was done in the earlier and more rigorous canonists' days.
§ Sir H. SLESSER
The Canon Law, the Mohammedan law, and, curiously enough, the Levitical law of the Jews also condemned usury. It is quite wrong to say that the Levitical law allowed usury to, the Jews. There may have been bad Jews, but the Canon Law, the Mohammedan Law and the Levitical Law forbade usury in one form or another. Now we come to this Bill which I welcome, possibly for reasons in which hon. Members opposite will not follow me. It has been said by some hon. Members on this, side, "Why single out moneylending?" I do not; I welcome this Bill as the thin end of the wedge. I want to see all commercial transactions forbidden if they are harsh or unconscionable. I should like to see the merchants' transactions, the bankers' transactions and all commercial transactions dealt with in the way that moneylending transactions are dealt with under Clause 7 of this Bill. I do not want to see the moneylender in an exceptional position, I want to see all trades put into that position. However, we are only dealing today with moneylenders. The Bill seems to me to revert to the old medieval idea of looking into the morality of the transaction, and to reject the Victorian idea of individualism. I welcome in this Bill, as I do in the Adoption Act, and the Legitimacy Act and other Acts, tendencies showing that the party opposite are repudiating commercial individualism and are going back to the laws and principles of the Middle Ages.
§ The UNDER-SECRETARY of STATE for the HOME DEPARTMENT (Captain Hacking)
We have all been delighted with the speech just delivered by the hon. and learned Member opposite. He made some reference—which I could not quite follow—to St. Thomas, and I was not sure in my mind whether he was referring to the Saint of that name who occasionally sits beside him on the front Opposition bench or whether he was going back into ancient history. We were all delighted to hear such a speech. If it were customary to refer to a speech delivered in this House in the previous Session, if it were usual for any Member to desire to save the time of the House, 759 if it were desirable only to use the best arguments in favour of any particular Measure, if it were the practice of this House, as we all know it is not, to avoid repetition, then my speech would consist only of one sentence. I would refer hon. Members of the House to the speech which was delivered by my right hon. Friend the Home Secretary on 23rd April last year, the date on which this Bill or a very similar Bill was introduced upon Second Reading. The traditions of this House, however, must be followed. I congratulate my hon. Friend who was fortunate enough to draw a very good place in the Ballot for Private Members' Bills, and who was fortunate enough to decide to introduce this particular Bill. He may not consider he has been so fortunate when this Bill goes into Committee. It may be my privilege then to sympathise with him, but I hope that he in his turn will give me his sympathy if I have to endeavour, on behalf of the Home Office, to keep the Bill along the right lines.
I was sorry to witness the breach between the conservative Members who sit among the Opposition, as represented on the one hand by the hon. and learned Member for South-East Leeds (Sir H. Slesser), and the still more conservative Members of the Opposition as typified by the right hon. Member for Newcastle-under-Lyme (Colonel Wedgwood). I am only surprised that they are not conservative on many other matters, in which case we could hope to give them more of a welcome on this side of the House. The right hon. Member for Newcastle-under-Lyme made a great appeal for freedom. With that we on this side of the House all agree, but where we differ is that, whereas we wish to give freedom to honest people, the right hon. Gentleman makes no differentiation between honest and dishonest persons. One point that the right hon. Gentleman mentioned was in connection with his correspondence, which he feared was going to be opened on every conceivable occasion. I sympathise with him. It is not desirable that one's private correspondence should be tampered with unduly. I sympathise with him for a different reason; I do not inquire what his reason is, but I do 760 sympathise with him. I would point out that this Bill does not give the power to open his letters. He need not be at all nervous that, if this Bill is placed upon the Statute Book, the powers given to the Home Office or any Department will be increased in that respect.
The history of the existing law has been explained by my hon. Friend who moved the Second Reading of this Bill. The existing law with regard to moneylenders as was also mentioned by the hon. and learned Member for South-East Leeds, is contained in the Moneylenders Acts of 1900 and 1911. The main provision of those two Acts are, first, that a moneylender shall register himself in accordance with the regulations of the Commissioners of Inland Revenue, and shall do business only under his registered name; secondly, that the Court may reopen any moneylending transaction, brought before it either by the lender or the borrower, which it finds to be harsh, and according to the word of that is used, unconscionable. I always think that is an unfortunate word which is perhaps easier to pronounce in the earlier part of the day than in the evening. These provisions arise from the recommendations of the Select Committee of the House of Commons that reported in 1898. In recent years, many deceptive circulars have been sent out broadcast by certain moneylenders, very frequently under assumed names. These circulars have aroused considerable annoyance. Cases in Court have illustrated quite clearly and beyond all doubt that the extortionate habits of some moneylenders have given rise to the belief—one might say to the certainty—that exactions and grave intimidation are being employed in many cases in which the victim is either too ignorant or, perhaps, more frequently too frightened to go to the Court at all. This Bill would go a long way to remedy an evil which we all admit exists. There is nothing new in principle in this Bill. It does not differ from the previous Bill in any general principle and in fact there is very little fresh in it as regards detail.
There are two Sub-sections which have not been mentioned and in which there is a change from previous Bills and I think the House should have its attention called to these two new points. I 761 refer to Sub-sections (2) and (3) of Clause 1. These appear for the first time and they provide that moneylenders' licences may contain, in addition to the true name of the moneylender, another name in which he is authorised to carry on business, but only if that other name consists of either the true names of the partners in the firm in which he himself is a partner or a business name, properly used for a, period of three years. The introduction of these two Sub-sections is a concession which was made, I think to the hon. and gallant Member for East Rhondda (Lieut.-Colonel Watts-Morgan) when he pressed this matter upon the Committee last year. The. Promoters of the Bill have taken advantage of the suggestions which were made in Committee and most of these have been incorporated in the present Measure. I wish to express my gratitude to the hon. Member for Duddeston (Mr. Burman) the hon. Member for Bedford (Mr. Wells) and the lion and gallant Member for Abingdon (Major Glyn) for frequently collaborating with the Home Office and allowing us the opportunity of giving them any advice which we were able to give from the experience we have had in connection with the other Bills and of the way in which the present Acts have been working in the country.
What are the views of the Government on this particular Measure? When my hon. and gallant Friend the Member for Abingdon introduced his Bill last year, my right hon. Friend the Secretary of State for the Home Department blessed the Measure. In fact, Government time was given to the Ways and Means Resolution, which, as the House knows, must be passed before the provisions as to licensing can even be considered in Committee upstairs. As to the reason why the Bill did not make further progress, I was going to say that it was only on account of the obstruction, but the word "obstruction" does not occur in the Parliamentary vocabulary, and so I will say that it was owing to the enthusiasm of the right hon. and gallant Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood) for a very full and complete discussion, that the Bill did not make much headway last year. The right hon. Gentleman was most enthusiastic to see that the Bill was materially improved. He discussed every 762 Clause and every line of every Clause and every word of every line and almost every comma. In fact, on more than one occasion I think he complained because there were certain spaces in the Bill which he thought he could fill in to advantage. That great enthusiasm has had its reward. The right hon. Gentleman must realise that the Bill now before us is much better than the Bill then under consideration as the result of his enthusiasm. If it was only enthusiasm and nothing more, he must have the satisfaction of feeling that, as far as this Bill is concerned, it will not be necessary for him on this occasion when the Bill goes to Committee to say much on the first two Clauses, because most of the advice which he gave last year has been accepted and the advice which has not been accepted has, at any rate, been thrashed out in arguments which I am sure he will not wish to repeat.
The Secretary of State had already promised the promoters that he would give the Bill every assistance if it was introduced this year, and it is my duty to repeat that promise to the House. This Bill will be treated in every way as a Private Member's Bill, at any rate so far as we can say at present, but time, I hope, will be found, as was done last year, for the Ways and Means Resolution. In fact, I may say that the Government hope that a Bill containing the principles which are contained in this particular Bill will be placed upon the Statute Book at an early date. I, personally, believe that the Bill, even as it stands without further amendment, is welcomed by the genuine moneylender himself, and I am sure it will be welcomed by the public at large as a great measure of protection against certain dishonest and discreditable members of what should be and could be an honest and honourable profession.
§ Mr. DENNISON
Last year when the hon. and gallant Member for Abingdon (Major Glyn) introduced a similar Bill, I had the pleasure of supporting it with certain reservations. I assumed that those reservations, having been discussed on the Floor of the House, would have had the careful consideration of the promoters of the present Bill, but I find that in few respects indeed have either the criticisms then made or the promises 763 of the Home Secretary been given effect to in the Bill now before us. When we were upstairs in Committee, what were regarded as reasonable Amendments were premed on the promoters of the Bill, but with the exception perhaps of Clause 1, little or no change has been made from the Bill of last year in the present Measure. The Under-Secretary says there is no difference in principle between this Bill and the other Bills which have been before the House. It is for that reason that we desire an opportunity of criticising it. While I am personally in favour of legislation, and I believe the profession itself is also in favour of legislation, it must be legislation of an equitable character. It was from that point of view that I ventured to make certain criticisms and suggestions last year, and I hope the House will be patient with me if I submit similar arguments to-day.
The Select Committee of which I had the honour of being a member, heard a considerable amount of very useful evidence. I did not find that any member of the moneylending profession who came before the Committee, opposed legislation. They were concerned, however, as Parliament ought to be concerned, to see that whatever legislation was passed should be fair and equitable both to the borrower and the lender. It has been said that this Bill, like the Bill of last year, is practically an agreed Bill among the members of the Select Committee who are in this House, but, as a member of that Committee, I must say that I never had an opportunity of looking at this Bill as now presented. When the hon. Member for Duddeston (Mr. Burman) was fortunate in the Ballot, I was asked if I would support his Bill, but I declined to do so until I saw what it contained.
The main points that I want to put are these: First of all, Clause 1 makes provision for the supply of certificates and licences to moneylenders. Before a certificate is given, a petty sessional court inquires into the character and respectability of the applicant, and when that is done it is, I assume, merely a matter of form for the licence to be granted on the payment of a £15 fee. I think that that licence ought to stand until it is 764 either cancelled or renewed in a year's time, but Sub-section (4) of Clause 1 states thatany moneylender's excise licence which does not comply with the foregoing requirements of this section shall be void,That is to say, that the moneylender who, during the period when he has been holding the licence, has not been complying with certain regulations laid down in the Bill, is illegally conducting his business, and that leaves him open, I would suggest—and I think I am not stretching the point too much—to the unscrupulous borrower denying his liability to the moneylender on the ground that the latter has been acting illegally because his licence has not been in accordance with the regulations. It would be all very well if that could be shown to be the fault of the moneylender, but I can conceive of a licence being issued, say, by a magistrate's clerk and containing some irregularity, and yet the moneylender would undoubtedly be held to be responsible and would probably be in danger of losing the money he had lent. I suggest that the licence should remain in force until such time as it is either cancelled or renewed.
Clause 3, Sub-section (3), which has been touched upon to-day, deals with the name of the business under which the people who are licensed moneylenders are allowed to trade, and I notice that it says that no name "which might reasonably be held to imply" the carrying on of a banking business shall be permitted as the name of any moneylending concern. I can conceive, with such a wide phrase as that, that the lawyers will have a fine harvest out of both borrower and lender, for what is a banking business?
§ Mr. DENNISON
That is no reason why it should not be changed. Surely the 1911 Act is not the law of the Medes and Persians. I should assume that when the promoters were bringing in a Bill to deal equitably with this matter, they would equally deal with the law as it now stands and make any reasonable Amendment, and the mere fact that a phrase is in the 1911 Act does not make it equitable. All that I am concerned about is that we should not pass legislation knowingly which leaves the people in- 765 volved in it open to all kinds of litigation as to the meaning of particular terms. Will the promoters of this Bill, who are responsible for what is in the Bill, tell the House what they mean by a banking business? Will they also tell us when a banking business is not a moneylending business, and when a moneylending business is not a banking business? I can see endless difficulties under that particular Clause, which I trust will have very careful consideration if the Bill goes to Committee. Would they describe a "Timbuctoo Investment Corporation" as a moneylending concern or a banking concern, or would a "Scottish Money Trust," if such a thing be possible to conceive, be regarded as something coming under the ban of this Clause?
I want also to draw attention to Clause 8, Sub-section (1), dealing with bankruptcy proceedings, and here again I suppose I shall be told that this is already part of some other Act. I know as a fact that it is so, but I want this thing dealt with on something like up-to-date lines, having regard to all the difficulties of the case. That Sub-section (1) of Clause 8. dealing with the position which may arise in the event of a debtor owing money to a moneylender, is, to my mind, something that should receive some reasonable explanation before we agree to the Second Reading of the Bill. If hon. Members will look at the Clause, they will find that in effect the moneylender to whom is owing a sum of money by a bankrupt is only entitled to rank for a rate of interest on his loan or debt not exceeding 5 per cent., and it is only after all the other creditors have been met that the moneylender will rank for anything in excess of that which has been allocated in respect of what is the rate of interest he is going to get, not exceeding 5 per cent. I said last year, as I say to-day, that if it be the intention of the promoters, as I presume it is, to clean the moneylending business from all its worst features—and I trust the Bill will be able to do that—as a matter of equity the moneylender who is carrying on an honest profession should not be placed at a disadvantage alongside of other trades-people who are ranking with him in respect of dividends and of other factors in regard to bankruptcy proceedings.
766 Hon. Members will know that the law as it now stands is that a moneylender cannot get sanction from the Registrar to take bankruptcy proceedings against a debtor unless the moneylender can prove that he has loaned £50 at least of his own actual cash to the individual. In this Bill it will not be the rate of interest plus the £50 which will be the full debt, because the Bill—and I hope it will be carried in that shape—will always make the position of the principal quite clear, and the debt in this case under this Bill will be the principal and not the principal plus the interest. I can, therefore, conceive of a number of tradespeople and a moneylender all being involved in endeavouring to get a dividend from the bankruptcy proceedings, where the moneylender will only rank for a sum not exceeding 5 per cent. of his actual cash loaned to the debtor, whereas, on the other hand, you might find a grocer who has purchased in the wholesale market, say, £50 worth of goods and sold them to the debtor for, say, £75, standing in the bankruptcy proceedings under this Bill to rank for dividend to the extent of £75. I trust when this matter comes before the Committee, it also will receive very careful consideration.
Clause 9 lays it down that the rate of interest shall be one which can be regarded as not being "harsh and unconscionable." If hon. Members will look at Sub-section (1) of Clause 9, they will find that it not only does that, which I think is fair, but it lays it down not only in respect of loans that may be contracted for after the passing of the Act, but in respect of loans which have been entered into prior to the passing of the Act. Surely it cannot be intended that we should give a retrospective character to this Bill. If we are going to have a lot of old transactions between a borrower and a lender brought into account, no one in connection with the business will know where he stands. Last year, when the Bill was before the House, consideration was given to Clause 11 in that Bill. It is Clause 10 in this Bill. There was a suggestion, which will continue, that the High Courts should try all the cases. Criticism was levelled against that suggestion both here, and also, I believe, in another place. It is extremely important that we should have some confidence in the 767 promoters of the Bill giving effect to a promise that was made last year by the Home Secretary. I would like to remind the House what was said on that occasion:Hon. Members are aware that the County Court has jurisdiction up to £100, and above that sum the cases come before the High Court. In the Debate in another place it was suggested that we should give a higher limit to the County Court, but that suggestion was not agreed to. Then proposals were made to give the County Court jurisdiction to an unlimited amount, but think that would hardly be possible or in accordance with the position which the County Court holds. What is more, if we did that we should be doing something entirely unprecedented, and it would be very inconvenient as affecting the jurisdiction of the High Court. I am, however, authorised by the Lord Chancellor to say that he has been considering these points, and will he prepared to accept an Amendment to the Bill fixing the increased jurisdiction of the County Courts."—[OFFICIAL REPORT, 23rd April, 1926; cols, 1565–6, Vol. 194.]I would have expected after that lead given by the Home Secretary in face of the criticism levelled against the Bill last year, the promoters, to avoid discussion as far as possible, and to give evidence of good faith towards those who supported the Bill on the last occasion, would have put a Clause in the Bill implementing the promise made by the Home Secretary. Before I can go into the Lobby in favour of the Bill to-day, I would like to know from those who are backing the Bill how far they are going to give effect to the promise made by the Home Secretary.
The point on which I will conclude is as to the position of the tout and the agent. We need to be very careful what we are doing there. We are all agreed, and I believe the decent moneylender himself would welcome anything that would shut the tout and agent out of the business, because he is undoubtedly one of the greatest evils in the whole trade. I know at the present time the aim of the Bill is to cut the tout and agent out, but if we are not careful, we shall drive touts and agents into establishing companies of their own. Many are established even to-day, with little or no subscribed capital, merely by agents for another moneylending concern. I would like the Committee before whom this Bill goes to have regard to the practicability of inserting a Clause to 768 the effect that no body corporate shall carry on, moneylending business unless they have a subscribed capital of, say, £5,000. To-day, there are numerous concerns whose records can be found at Somerset House, limited companies with a subscribed capita], in some cases, of no more than 2s., offering to lend sums of money from £50 to £50,000. They are merely agents or touts for some other concern, getting a heavy commission both from the original moneylender and the borrower.
These observations, I trust, may be helpful. I make them in no carping spirit, but I would suggest quite seriously to the promoters of the Bill that they are not the only people who are concerned in this matter. Those whose names, appear on the back of this Bill seem to say, "Well, it does not matter about others who spent a good deal of time on the Select Committee, and have taken at least as much interest in this Bill m they have and therefore not to have an opportunity of consultation before it is printed." That was wrong. I shall vote against the Second Reading of this Bill, not because I am opposed to legislation on this subject, but because I am against the manner in which this has been proposed.
§ Major MacANDREW
I would like to make one or two observations in favour of this Bill. The Causes with which I want to deal specially are 4, 5 and 9. Clause 4 relates to the sending of circulars by moneylenders. My own experience of receiving such circulars is that the great majority come to me re-directed from the headquarters of a Territorial unit to which I belong. I think that goes to show that lists, such as the Army List, are used by these moneylenders, the idea probably being that fellows in the Army, not being men of business, are attracted by the advertisement, and very likely misled. On the same lines my hon. Friend the Member for Bedford (Mr. Wells) in his speech read a letter from a clergyman. No doubt the Clergy Lists are taken for the same reason, and with the same view. Therefore, I think that to prevent the circularising of people through the post is a very great point in favour of the Bill.
With regard to Clause 5, I quite agree with the promoter that this is the heart of the Bill. It is the Clause which makes it absolutely essential for the money- 769 lender to give the borrower a contract note showing, amongst other things, the rate per cent. per annum which the borrower is paying. Not very long ago, I had occasion to go to a moneylender to square up for a friend of mine who had got into his clutches. My friend came to me, and asked if I would undertake to do this for him. I said to him, "How much have you had from the moneylender?" and he replied, "I do not know; all I know is how much I owe him." He told me what that sum was. I said, "Have you no idea how much you had?" The thing had been going on for some time, and each time he had been given a new bill which embodied the previous loan. He said that the last time he went he was given and was to pay back £32 10s. in one month. That comes to a rate of 360 per cent. per annum. Armed with that, which really comprised, ail I knew, of what interest had been charged, I went to the moneylender, and as I was paying him a considerable time before the bill fell due, I said, "I presume you will give me a rebate at approximately that rate of interest, because I am paying you before the date of payment." His reply was "No, I never quote a rate of interest. That is very deceptive and misguiding. In simple language, what I do is that I say I will give you £25 and you give me back £32 10s. in a month.'" It seems to me the whole idea of that practice is to mislead the borrower.
If people realised that they were to pay 360 per cent. per annum, I cannot imagine that anyone would be inclined to borrow money. What makes me feel more certain than ever that it is done with the intention of deceiving is this. I have in my hand the bill which I got back when I had made the settlement, and I would draw the attention of the House to the later part of it. The first part deals with the promise to pay; and then it goes on:Should default he made in any one payment or part payment, then the whole amount or as much as shall remain unpaid becomes due and payable together with interest thereon at the rate of 5 per cent. per month.A rate of 5 per cent. per month is 60 per cent. per annum. A rate of interest had to be quoted because it was uncertain how much defalcation there might be; but I would point out that before the 770 man had made any default at all lie was to pay 360 per cent. per annum, whereas after he had made default the rate dropped to 60 per cent. To my mind that proves conclusively that, had the borrower realised in the first instance the colossal rate of interest he was paying, he would never have entered into the contract. One would have imagined that the rate after defalcation would have been greater than the rate in the first case. Therefore I think Clause 5, which makes it essential to state the rate of interest, will be a great safeguard to a lot of fellows who are not in the habit of working out the interest and who do not realise what their position is.
When last year's Bill was before the House, Clause 9, relating to the rate of interest, was criticised rather adversely. That Clause has now been remodelled, and although a rate of 48 per cent. is quoted that is only a rough basis and does not bind either in one direction or the other. It is perfectly obvious that to lay down a maximum rate of interest would tend to prevent people with very bad security to offer from being able to borrow any money at all, and that is not necessarily a desirable thing to do, because one must have freedom, but it is essential through knowledge, to give people protection. I think the opposition to the Bill to-day has been very slight—the two hon. anti gallant Gentlemen who opposed it seemed to be against it because it did not include gambling—and I think we can ask the House to give a Second Reading to the Measure on the ground that it will safeguard those who are not competent to look after themselves.
§ Mr. WOMERSLEY
When a similar Bill to this was before the House for Second Reading last year I opposed it, because I was of the opinion that many of the Clauses were not fair to the honest moneylender or to the licensed pawnbroker, but I must congratulate the promoters of this Bill on having done away with many objectionable features of the old Bill, and I am prepared this afternoon to vote in favour of the Second Reading. I am glad we have not heard so much talk to-day about dishonest moneylenders. Although I admit there are dishonest and dishonourable moneylenders, there is a vast body of moneylenders who are perfectly honourable 771 men, carrying on business in an honourable way. On the other hand, there are many dishonourable borrowers. It is a business in which one takes great risk, therefore it calls for a higher rate of interest than businesses where there is no such risk. One Clause in the Bill of which I heartily approve is Clause 11, which prohibits the charging of inquiry fees. One of the great evils connected with moneylending has been the charging of inquiry fees. I myself know of cases where people have started a moneylender's business without any capital whatever other than sufficient money to pay for a few advertisements in the newspapers announcing they were prepared to lend money. When applications came to them they wrote back to say they could not lend money without making inquiries, and that a fee of 5s. or 10s. was charged for the inquiry. The fee was sent but no inquiry was made; a letter was sent to the applicant saying they were very sorry, but that on making inquiries they found it was not a suitable transaction for them and they could not lend the money. I could tell the House of cases where men have gathered enough money together from inquiry fees to start business eventually as real moneylenders. I am very glad to see Clause 11 in the Bill, because it deals with a practice which ought to be wiped out.
Last year I opposed the Second Reading on behalf of the pawnbrokers of the country, because, as I said then, pawnbrokers carry on a legitimate business, duly licensed under Acts of Parliament, and it appeared they were going to, be severely penalised. Clauses have been included in this Bill which will, indeed, be helpful to the pawnbroker's business, and I do not think pawnbrokers will object to it if one or two minor Amendments be inserted. There are one or two more matters on which I shall propose to put down Amendments in Committee if I have the opportunity of doing so, and I hope the promoters will look into them and try to meet the pawnbrokers on them. The speech of the hon. and gallant Member for Central Hull (Lieut.-Commander Kenworthy) raises the question of why pawnbrokers are included in the Bill at all. There is a reason for it. Under the Pawnbrokers Act, 1872, pawnbrokers are required to take out a licence 772 and to conform to certain rules and regulations as to charges, and there are restrictions as to the rate of interest. That Act only applied, however, to sums under £10. In respect of sums above that amount, pawnbrokers were just the same as any other traders, subject only to the common law of the land; and as there was no Moneylenders Act in those days there was no restriction.
When the Moneylenders' Act, 1911, was passed, that little matter was overlooked, but it was decided in a Court of Law that even a pawnbroker had to register himself as a moneylender if he lent sums of over £10. It is necessary, therefore, that pawnbrokers should be included in this Bill for the purpose of putting them right with the law, and the promoters have inserted Clauses which will meet the case of the pawnbrokers. The pawnbrokers, however, rather resent the fact they will have to pay an extra £7 10s. for a licence. A pawnbroker's licence costs £7 10s. a year, and if he takes jewellery in pledge he has to pay an additional £7 10s.; so at the moment the majority of pawnbrokers are paying £15 a year in licence fees. If this Bill becomes an Act, they 'sill have to pay an additional £7 10s., making a total of £22 les. per annum. They are of the opinion that they ought to be exempt from this extra licence duty. I hope to discuss that matter with the promoters of the Bill, and I will put down an Amendment in that direction which I hope will receive favourable consideration.
The right hon. Cent leman the Member for Newcastle-under-Lyme (Colonel Wedgwood) advocated that we should establish State paw, shops, but I think it would be hard lines if you have to come to State pawnshops which I am sure will not be found to be anything like so useful as the present system. There is a reason for that, because under the Pawnbrokers Act a man has to prove that he possesses a good character, that he has not been convicted for having received stolen property, and he must be a man who can be relied upon before he is granted a licence at all. One hon. Member opposite asked why you should inquire into the character of a man before granting him a certificate as a moneylender. The same reason applies 773 when you give a licence to a pawnbroker, and if you have not got this safeguard you would not get the right people in the business. The honourable moneylenders are not averse to this kind of thing. When the Pawnbrokers Act, 1872, was passed many evils had grown up in the system, but the fact that the pawnbroker had to prove that he possessed a good character weeded out undesirable people, and it is to-day a profession of which no one need be ashamed. These people carry on their business in a fair and honest way and according to the law of the land. For these reasons I support this Bill, and I also support the Clause which states that a man should have a good character before a licence is granted to him.
Another question to which I wish to refer is the one raised in Clause 12 relating to proceedings commenced before the expiration of 12 months from the date on which the cause of action accrued. I think that provision is very unfair and ought to be amended in the interests of the men who are carrying on this business in an honest way. According to the present law, under the Statute of Limitations, if you lose trace of a man for six years all but a day you can recover your debt. Where a dishonest borrower borrows money and then disappears, of course the moneylender cannot serve upon that man any summons and according to my reading of this Clause, unless proceedings are commenced before the expiration of 12 months, the moneylender cannot recover. I think there ought to be an alteration in that respect, because it is going to give the dishonest borrower a real good chance of swindling the moneylender.
In Clause 15 of the Bill we find a reference to the question of the rate of interest, and the contract for a loan by a moneylender, but the interest charged on loan is not expressed in terms of a rate. Very often you have to deal with small borrowers who contract to repay the money, borrowed by weekly instalments. This Bill is all right for the larger amounts where the money will be repaid in a lump sum, but in the case of small weekly instalments this Clause is not going to act quite fairly all round, and I shall have some Amendment to suggest during the Committee stage on this point. 774 On the whole I am in favour of the Second Reading, and I hope the Bill will pass without any Division, because it is an attempt to deal with an admitted evil. As long as we, deal with this question in a fair and just manner it will be for the good of the country. There are certain matters which ought to be amended, and no doubt the promoters will be willing to hear reasonable arguments during the Committee stage. For these reasons I wish the Bill the best of good luck during the Committee stage.
§ Major GLYN
I wish to say how grateful I am to the framers of this Bill for having adopted most of the Clauses which I had the honour of introducing last year. I am sorry that the right hon. Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood) is not in his place, because I believe he said that legislation of this character could not be improved in Committee. I remember last year there was very great difficulty in getting a quorum on the Committee, and the result was that the Bill introduced last year failed to reach the Statute Book. There is one point I wish to raise in regard to moneylending. It is one of considerable importance and I do not think it has been mentioned up to the present in the Debate.
I think we might look upon loans as certain kinds of drugs are looked upon, that is, they can be used for a very good purpose or they can be used for a very bad purpose. As Parliament legislates in regard to the use of drugs which, when used to excess, are poisonous, so I think Parliament ought to introduce legislation for the control of moneylending. There is a very great need in some of the poorer parts of the country for easy access to honourable men to enable money to be lent for trade purposes. Take certain trade unions and members of trade unions, who possess their own tools. They have a sort of pawnbroking business under which they can raise money on the value of their tools. There are many people who wish to obtain money to purchase extra tools in order to be able to carry on their craft at a higher rate of wages. The last thing anybody concerned with this Bill would like to do is to make it difficult for working men to raise money under those conditions. I know there are hon. Gentle- 775 men opposite who do not like the ordinary system of banking because they think people with a certain amount of money—
§ Notice taken that 40 Members were not present; House counted; and 40 Members being present—
§ Major GLYN
I was saying that I hope the Members of the Opposition will recognise that the promoters of this Bill wish to do nothing to prevent people from raising money for the purposes of their trade if they require to do so. The whole intention is to try to elevate the business of moneylending and not to reduce it to those admitted levels of persons who practice more or less in the West End of London and carry on a sharking trade against young and foolish persons who are taken in by the circulars which are issued. There is one other point which I think makes it increasingly important that legislation of this sort should be introduced, and it is the growing habit of advertising the sale of goods on the hire-purchase system. You will see in these advertisements such tempting offers as,You pay £10 down and drive away your own motor car.I saw one the other day which said,Why envy your neighbour his piano, when you may have one if you put £1 down and so many instalments of 10s.—or whatever it may be a week.In the United States a very serious financial position has arisen owing to the universal habit of selling articles on the instalment system. I am aware of instances where people have got into the hands of moneylenders by attempting to purchase things which they cannot afford through this hire-purchase system.
The idea of legislation of this character is that we should recognise that moneylending is a profession and a business which must be carried on to meet the needs of the people. When we were in the Select Committee hearing evidence, we had many witnesses who proved to us conclusively that they had conducted their business for many years in the most honourable manner possible, and they said that they would welcome anything which would tend to remove from the profession those members of it who did not carry on the business in an honour- 776 able way. We have tried to remember that it is wrong for any person to utilise the existing law for the benefit of themselves, either through threats of publicity or through the pressure of taking people into the Bankruptcy Court, or matters of that kind, and every Clause in this Bill has been most carefully thought It has been thrashed out over a period of many years, and I am sure that the promoters this year, as I tried to do last year, will be ready to meet all legitimate objections of people who are inclined to be opponents, except those like my right hon. and gallant Friend the Member for Newcastle-under-Lyme.
There is no doubt at all that, if I were in a scrap or trouble, I should be one of the first to go to him for support. He is one of those people who seem to me always to stand up for any section or class or creed or individual who is being attacked, and I think we all recognise his sterling qualities in that direction and realise the breadth of view which he displays, except in this, that he told me once that he strongly disapproved of all legislation, no matter what it was, which was introduced on a Friday. That was one of the reasons why last year he used the whole of his powerful influence to prevent our Bill getting through the Committee stage. I have no doubt that what he means is that Bills of real importance should not be private Members' Bills but should be introduced by the Government. If the Government have not introduced this Bill, they at any rate give it their blessing and support, and I hope that there will be no Division—there was lone last year, and I see no reason why there should be one this—but that the Fill will be given a Second Reading, because those who wish to see it improved in certain directions may have the assurance of those concerned in its promotion that they will be only too glad to give careful consideration to whatever points may be raised in the Committee stage.
Sir MALCOLM MAGNAGHTEN
In spite of the warning, which I had certainly taken to heart, that the Under-Secretary of State for the Home Department delivered against the repetition of arguments in this House, I should like to join my voice with the voices of those 777 who have preceded me in support of this Bill. I am sure that everybody who had the advantage of hearing the hon. and gallant Members who moved and seconded the rejection of the Bill must have admired their gallantry and their sincerity. Conscious as they are and as they admitted themselves to be that the Bill is one for which there is a widespread demand, and realising that it cannot do very much harm, nevertheless, for the sake of principle, as we should expect from them, they set themselves up gallantly in opposition to the current of opinion. There occurred to me as I listened to them a thought which comes from time to time as one listens to speeches from those benches, that hon. and right hon. Gentlemen who sit there are, if I may say so with respect, very often behind the times. They are the young apostles of exploded creeds; and in this case it occurred to me that the speeches to which we have listened might possibly have been delivered with more effect a quarter of a century or more ago. When the Act of 1900 was before the House as a Bill, the observations which they have made might possibly have carried considerable weight and conviction, because that Act did introduce an entirely new principle into our law and did for the first time enable the Courts to re-open moneylending transactions, to revise contracts which had been made between persons of full age and apparently of competent understanding, and to enable the Court to say what it thought ought to be fairly done in the circumstances. That was a very great change.
It is quite true that you could find some parallels for it. For instance, the Court did not allow contracts made with infants. It said that infants were unfit to make contracts, and, until you had passed the age of 21, you could safely bind yourself by a contract with a moneylender, because he had no means of enforcing it against you. Similarly with contracts entered into by persons suffering from mental deficiency, or even temporary insobriety. But, as between persons who were adult and of competent understanding, there was no power to revise or alter the contract or re-open the transaction. The Act of 1900, therefore, introduced a new principle, and that principle has now been at work for 27 years. No one proposes, not even the hon. and 778 gallant Members who have moved the rejection of this Bill, that the Act of 1900 should be repealed; and the reason why no one proposes that it should be repealed is that everyone knows that the Act of 1900 has, on the whole, been a great success. It has in many cases relieved great injustices. But the experience of the last 27 years has shown that, like most things in this world, the Act of 1900 is not perfect. Few things are perfect, and certainly the Act of 1900 is not one of them; and this Bill is simply a Bill to remedy the deficiencies in the Act of 1900.
Really, on most of the points, all who have had experience of the working of the Moneylenders Act, 1900, are agreed. No one now suggests that moneylenders—and by that one means, not hon. and gallant Gentlemen who, in the cause of charity, lend money to their friends, but those who carry on the business of moneylending, and who gain, I hope, a satisfactory livelihood by so doing—no one suggests that moneylenders should not be registered. Under the Act as it is at present, however, anybody, no matter what his character may be, can go and get registered and pay his £1. Persons whose character is such that they really ought not to be allowed to carry on the business of moneylending can go and get themselves registered. All that this Bill proposes is to do that which is done with regard to innkeepers, with regard to people who want to carry on nursing homes, and a number of other things, namely, that they should go before some tribunal—in this case it is the magistrates who have been selected as the tribunal—and give reasonable evidence that they are fit and proper persons to be on the register of moneylenders. Surely, that is not an unreasonable proposal to make. After all, the experience of the world is that the business of moneylending 'may be carried on by unsatisfactory people; no one, surely, can deny that. The odium in which moneylending is held very widely is no doubt due to the fact that persons have engaged in the occupation of moneylending who really, by their character, are not fit and proper persons to do so.
§ Colonel WEDGWOOD
Surely, the same applies to solicitors? No inquiry is made as to their moral character?
§ Sir M. MACNAGHTEN
I am glad that my right hon. Friend has mentioned the case of a solicitor. No person can be even admitted as a student of the Law Society unless he produces satisfactory evidence of his good character; and not only that, but, so far as solicitors are concerned, they not only have to have a good character when they start being solicitors, but they have to keep that character so long as they are solicitors, and, if they fail to maintain that high standard of rectitude which the law requires of all solicitors, there is a tribunal sitting in Bell Yard to which anybody who has any complaint to make against them can go. That tribunal hears the complaint, and, if it is satisfied that the complaint is well-founded, that the solicitor, though he may have committed no offence against the law, though he may have done nothing for which he can be brought to book in a Criminal Court, or even in a Civil Court, has, nevertheless, acted in a way that is unbecoming to the high character which every solicitor ought to possess, they can inflict a penalty upon him, either suspending him or, subject to appeal to the Master of the Rolls, striking him off the roll of solicitors altogether.
§ Colonel WEDGWOOD
As that has had such admittedly excellent results as far as solicitors are concerned, would it not be possible to apply the same principle of extra-legal coercion to moneylenders?
§ Sir M. MACNAGHTEN
If the right hon. Gentleman can suggest some more suitable tribunal than the Justices in Petty Sessions, it will, no doubt, be open to him to do so when the Bill gets to the Committee stage. It may be so. So far as the solicitor is concerned, the tribunal which has been appointed by law is a tribunal of solicitors themselves. Originally the tribunal was the Court, but in comparatively recent years Parliament, satisfied that the Law Society itself was fully competent to exercise disciplinary jurisdiction over its own members, entrusted that jurisdiction to them. I can conceive, when the profession of moneylenders has been entirely purified, so that none but men of the highest class engage in that occupation—I can conceive of a situation in which you would have a 780 Society of Moneylenders, just as you have a Law Society, and I can conceive of a situation arising when Parliament might be prepared to entrust to the Council of the Society of Moneylenders the duty of saying whether or no any member of the society had so failed in his duty, had so lost touch with the high standards of honour and honesty which every moneylender ought to possess, that he should not be allowed to be on the register of moneylenders. For the present, however, I confess I am content with the proposal made by the promoters of this Bill, that the magistrates in Petty Sessions—whether they be paid or stipendiary magistrates, or whether they be the "great unpaid"—will be fully competent, on the evidence brought before them, to say whether a man is or is not duly qualified and a fit and proper person to be registered as a moneylender and permitted to engage in the occupation of moneylending. I hope that, if I have done nothing else, I may have satisfied my right hon. Friend that there really is good ground for constituting some tribunal which should give a certificate authorising a person to apply for registration as a moneylender. That, to my mind, is a very important proposal in the Bill, and one to which I do not think any reasonable objection can really be taken.
I can understand the person who says, "Let us have free trade altogether; let us sweep away registration; let anyone lend money." That is an arguable case. But, when once you concede that it is right and proper to have a register of moneylenders, I do not understand how it can be argued that it is improper to have some system whereby steps can be taken to secure, so far as is possible, that only persons who are fit and proper persons to pursue the vocation of moneylending shall get upon the register. That seems to me, subject to any Amendment that may be proposed with regard to the tribunal, to be a proposal which ought to commend itself to everyone. Whether £15 is the right sum to pay, is again a question that is open to argument. The class of moneylender the hon. and gallant Gentleman described as titled sharks—a description which presents some difficulty to my mind in realising what a titled shark really is—might properly be required to pay as much as 781 £15, but I should have thought that the man who lent small sums to the working classes, £15 was rather a heavy sum to pay, because undoubtedly it is the borrowers who will have to provide the money and no doubt the fact that there is this considerable charge upon them will be made use of as justifying the charges they make to their clients. That there ought to be some charge, no one disputes. Just as no one proposes that registration should be abolished, no one proposes that the existing £1 should be removed, so it is only a question of amount, a question which obviously it would not he proper to discuss on the Second Beading. With regard to circulars I thought everyone now agreed that no advantage is derived by permitting moneylenders to send circulars. If I thought for a moment it would have the result expected by the Under-Secretary, I should be opposed to it, but I do not think there is the smallest danger.
A point in the Bill that I desire to call attention to is Clause 10, which enables His Majesty by Order in Council to direct that proceedings by moneylenders may be taken in any Court specified in the Order. If that really means what it says it seems to me to be a most alarming provision. It is true the Order has to be laid before Parliament, but very often in the press of business these Orders get lost sight of and I do not think the fact of their lying on the Table is such a protection against an unsuitable Order as it appears on the face of it to be. If it really means what it save, it means that by Order in Council you can direct that proceedings by a moneylender can be taken in a Court of Petty Sessional jurisdiction. I do not think the framers of the Bill really intended anything of the sort or could have realised how wide are the powers conferred upon the Court by the Act of 1900. That Act not only gave power to the Court to revise and re-open the transaction but to set aside the security and put other security in its place and entirely reconstitute the bargain between the moneylender and the client. A jurisdiction of that sort ought only to be exercised by a very highly qualified Court and I really do not understand why in the matter of moneylending transactions we cannot be content with the ordinary Courts of the land, the 782 county court, which deals with claims up to £100, and the High Court, which has jurisdiction in claims to any amount. If the ordinary tribunals are not suited to dealing with moneylending cases let them be made so. My observations have been directed to the arguments raised by the Seconder of the rejection and I think on one point I have almost, if not entirely, convinced him that the views I have put forward are right.
Another point which has not been mentioned is that, whereas under the Act of 1000 transactions between a moneylender and his client can be re-opened and the Court may impose a bargain which it thinks reasonable and fair, it has, according to my experience, always been the tendency of the Court to refrain from allowing these cases to go before what, after all, is the constitutional tribunal of this laud, namely a jury of 12 men. I am a great admirer of trial by jury. A jury may not be skilled in the law, but they are ordinary people, taken from their ordinary avocations, called upon to decide fairly according to the best of their ability between the parties who are litigating in the Court. On the question of whether a bargain made between a moneylender and his client is a fair bargain, I cannot conceive or any tribunal more satisfactory than the 12 men who have the facts placed before them by the witnesses, and the law expounded to them by the Judge. It seems to me that they are in a better position than any Judge could be to say what is fair and right to be done. I see the late Solicitor-General present. Perhaps he will bear me out when I say that not only have the Judges rather tended to keep this jurisdiction in their own hands and have declined to let it go to juries, but even with Judges of the High Court there is a marked difference between the view of Judges in one Division of the High Court and the view which the Judges of another Division take. I think I am right in saying that the Judges of the Chancery Division are disposed to allow a, much lower rate of interest than the Judges of the King's Bench Division. Therefore, even, if we leave it to the Judges, we do not get that equality of treatment which really is the foundation of equity.
783 I would suggest to the promoters of the Bill that they should favourably consider in Committee an Amendment which I should desire to make, giving to every person who has borrowed money from a moneylender and whose case comes into Court, the absolute right to demand trial by jury, if he desires it. I believe that that would be a great advantage to the client, and I think it would be a great improvement to this Bill. Every moneylender lending money would then know that the time might come when he would have to justify before a jury of 12 what he had done, and therefore it seems to me he would the more disposed, assuming that he was a person who might desire to take an unfair advantage of his client, and knowing that he might have to justify his conduct before a jury, to walk the upright and honest path, and only to make such terms as, if and when litigation arises, he could justify before a jury of his fellowmen. That is the first proposal which I make.
There is one other proposal, and I address it particularly to the Under-Secretary for the Home Department. I hope that I have escaped the censure directed against those guilty of repetition. I have been present at almost every moment of this Debate, and I do not think that I have heard any of the previous speakers addressing themselves to the points which I am raising. My last point is this: Assuming that this Bill gets a Second Reading and goes to a Committee and proceeds to the Royal Assent, we shall then have on the Statute Book the Act of 1900, the Act of 1911 and the Act of 1927.
§ Sir M. MACNAGHTEN
Not repealed altogether, but only bits of them. That makes it worse. If they were going to be repealed, I would not mind. Bits of them are going to be repealed, but fragments, large fragments of them will remain. Whether you be a moneylender, or the client of a moneylender, or the solicitor, or the unfortunate barrister, you have to find your law by looking at the Act of 1900 and seeing how much of that has been cut out, and how much remains. Then you have to go to the Act of 1911, and then to the Act of 1927. 784 I humbly beg that my hon. and gallant Friend the Under-Secretary, will favourably consider the suggestion which I make that, if and when this Bill is passed into law, he will consider bringing before the next Session of Parliament a Consolidating Bill, so that all the provisions relating to moneylenders may be found in one Act, and in one Act which will be intelligible alike to the moneylender, the client and the Court.
Mr. HUGH EDWARDS
I rise to support the Second Reading of the Bill. We have had a very suggestive and illuminating speech from the hon. and learned Member who Las just sat down, but I do think that on an occasion of this kind we should confine ourselves more especially to the fundamental principle of the Bill. No one can have read the speech made by Lord Carson in the other House when he first introduced this subject without recognising the tremendous importance and the urgent need of a Measure of this kind. Let us not forget that Lord Carson has rendered a great public service to the community by bringing it forward. This Bill has been begotten of the misery of a very large section of the community. I was very much interested in listening to the speech of my hon. and gallant Friend who moved the rejection of the Bill. He made one statement with which, corning from the benches above the Gangway. I was rather struck. He said: "You cannot change human nature by any legislative enactment." I wonder whether he and his associates recognise the application of that principle all round, and whether they are prepared to realise that you cannot change human nature in its ingrained desire for personal possession, by legislative enactment.
I am glad my right hon. and gallant Friend agrees to that. Why do not the Socialist party act upon it all round?
I am glad that I have not got over the fringe. I was applying the principle laid down by them and saying that they ought to apply it all round. If that principle applies to 785 this Bill, it applies to all their Measures. I hope my right hon. and gallant Friend will bring to this Bill the same judicial quality which he brings to the consideration of the question of site values. If he brings to this Bill the same judicial qualities which he brings to the question of site values, he will be prepared to support this Measure. If and when this Bill is carried into law, as I hope it will be, Lord Carson's great purpose in securing relief for a section of the community will be realised. We must remember that there are large sections in this country who require to be saved from the temptations that are put in their way. I appeal to the House. I appeal to the hon. Members on the Opposition Benches, not to press the Amendment to a Division. Let us have a unanimous vote on the Second Reading. We are simply concerned to-day with the fundamental principle, and as the hon. and learned Member opposite has said, any Amendment that is required can be pressed forward during the Committee stage of the Bill. I hope the House will give the Bill a Second Reading, and Lord Carson, who has rendered the whole nation very conspicuous service in this matter, will have the satisfaction of knowing that his efforts have not been in vain.
§ Mr. MARDY JONES
I do not propose to go into the details of the, Bill, but to confine my remarks to the general scope and object of the Measure. May I, first of all, draw the attention of the House to the fact that the Mover and Seconder of the Bill to-day, like the Mover and Seconder of a similar Bill last year, appealed for the general support of the House on the ground that it is a nonparty Bill and of great national importance. If you look at the names of those who are backing the Bill to-day, and the names of those who backed the Bill last Session, you will find that every one is a Tory Member of Parliament.
§ Major GLYN
May I say that so far as the Bill I introduced last year is concerned, that was not the case.
§ Mr. J0NES
I accept that correction; I was looking more at the names of those who were backing the present Bill. That fact robs it of the claim to be a non- 786 party Measure, but it does net remove from each Member of Parliament the obligation, irrespective of party motives, of treating any Bill on its merits, and on its merits I shall certainly support the Second Reading. We have been told to-day that more than a quarter of a century has passed since legislation was last enacted on this matter—the Act of 1900. The justification of the present Measure is that the Act of 1900 is largely a dead letter. We have also been told that the evils of moneylending in this country are so rampant that they are sapping the moral fibre of rich and poor alike, and that, therefore, new legislation is long overdue to keep these Shy-locks within control. If the devastation caused by moneylending is half as great as is claimed, then my objection to the Bill is that it trifles with the problem and does not go to the root of the evil. If the Government have the courage of their convictions, they will bring in a much better and a much more comprehensive Bill; that is, if they are really anxious to curb and control the evils of moneylending in all its aspects.
I submit that this Bill is a purely Tory Bill which has secured the blessing of the Government. Yet the Government are sitting on the fence, because they are not quite sure, even the experts of the Home Department, that this legislation will be any real remedy for this evil. For instance the Government are arguing behind the scenes that if this Bill becomes law and proves a success then the Government will come forward and claim the credit for it. If, on the other hand, the legislation proves to be a failure then they will calmly turn round and say, "Oh, the Government were not responsible for the Measure. It was the work of a few inexperienced back-benchers, supported by others who were animated by spite and spleen against the moneylenders." The last speaker referred to Lord Carson. It is a well-known fact that this Bill has arisen out of the original action of Lord Carson, who has vowed to vengeance for years past against moneylenders, for reasons best known to himself. The promoters of this Bill realised that Lord Carson's Bill gave the game away, because it is frankly admitted to be very vindictive in its character. The present Bill can be looked upon as a compromise, and it is brought 787 forward in the hope that it will produce some good results.
So far as the Bill is framed—I do not pretend to know anything about moneylending as it is at a minimum in my Division — it is, I think, on the right lines, subject to certain Amendments which should be made in the Committee stage. I regret that the Government have not had the courage to bring in a much better and more comprehensive Measure to curb and control, not some aspects but all aspects of moneylending in this country. I hold the view that we shall never abolish the worst abuses of moneylending until we nationalise our banking system, or at least unify our banks—
§ Mr. JONES
I think I am entitled to use this as an illustration, because our banking system is only another form of moneylending; our bankers are moneylenders in the guise of respectability. Most of us who have experience of them will be able to say that they are pretty hard at times. The entire nation is in the grip of the banks, and it is a serious menace to the future welfare of the country. Let me take, as an illustration, the remarks of a banker who had a great reputation for many years in this House, and who was one of the greatest Chancellors of the Exchequer we have had—Mr. Reginald McKenna, the Chairman of the Midland Bank. At the annual meeting of that Bank on the 28th January this year he made some very frank admissions as to the defects in our banking and monetary system—
I must point out to the hon. Member that a bank is not a moneylender within the meaning of the Act of 1900.
§ Mr. JONES
If I had the time, and the House had the patience, to read the whole of Mr. McKenna's speech, I am sure hon. Members would find out that he treats moneylending as part of the banking system. He pointed out that in our system of banking and moneylending there is a need for a radical revision, and every customer will agree I am sure—
The hon. Member cannot pursue this. It is entirely outside the scope of the Bill.
§ Sir R. THOMAS
I had the privilege, Mr. Deputy-Speaker, of listening to the hon. and gallant Member for Hull (Commander Kenworthy) earlier in the afternoon, and he dealt very largely in the presence of Mr. Speaker on the connection between legitimate banking in this country and usury banking, and Mr. Speaker did not pull up the hon and gallant Member.
I was not present, so I do not know about that. An hon. Member speaking on the Moneylenders Bill cannot discuss banking systems.
§ Sir H. SLESSER
On a point of Order. This Bill says in terms that a money-lending business shall not be called a bank, and therefore distinguishes in terms between banking on the one band and moneylending on the other. May I ask whether the distinction which is drawn in the Bill is not a fit matter for discussion in this House?
The arguments put to me make it quite evident that my original interpretation of the scope of the Bill was a correct interpretation.
§ Mr. MARDY JONES
I regret your ruling, because I have here a very striking argument on this point. If we are to control moneylending and to remove most of its worst abuses, I submit that we are going about it in the wrong way in this Bill. I believe that if the pawnbroking business, which is referred to in the Bill, were made a State concern, as it is in many countries on the Continent, the pawnbroker would become the poor man's banker in a more real sense and with fewer evils that at present. In municipal banking also there is great scope for improvement with regard to moneylending. It is true that whether—e live in prosperous times or in times 789 of depression we always have an improvident class in our midst, drawn from rich and poor alike. There ought to be provision in the Bill for public or semipublic associations for lending money, to be set up in our great industrial centres, so as to replace the moneylending class, particularly the dishonest type of moneylender of whom we have heard so much to-day. There are plenty of men of all parties, men of standing, of business experience and of public spirit, who would be prepared to play their part in such semi-public associations.
We ought to recognise that those of the honest class of lenders and borrowers are the victims of the dishonest class of lenders and borrowers, and the law ought to be made equally available for both. I say, frankly, that, while I shall support the Second Beading of the Bill, I have very little confidence that the Bill will do much good to protect the people who need protection. So far as it does so I am prepared to give it a fair trial. My view is that the evils of moneylending are inherent in our social system, and that as long as we have extremes of riches and poverty in our midst, we shall always have the two types of lenders and borrowers, the honest and the dishonest. I hope that when the Bill reaches the Committee stage, whatever defect we may discover in it, will be considered and rectified by the promoters of the Bill.
§ Sir R. THOMAS
I would congratulate the Mover and Seconder of the Second Reading on a real effort to cope with this evil in our midst. But for the fact that my hon. Friend the Member for Accrington (Mr. J. H. Edwards) has already spoken, I should not have risen, had it not been that I had the privilege of listening to the speech of the hon. and gallant Member for Central Hull (Lieut.-Commander Kenworthy), and the hon. Member for Accrington had not.
§ Sir R. THOMAS
My hon. Friend at any rate did not refer to the points which were raised by the hon. and gallant Member for Central Hull, who took a line which I do not think any business man in this country would accept for one moment. He encouraged young men who were starting in business to take ad- 790 vantage of moneylenders for capital. I interjected the question, did he really mean at 48 per cent? "Certainly," he said. Really I think that my hon. and gallant Friend knows more about the sea than he knows about business. I sometimes think that he is at sea when he talks about politics. To encourage the south of this country to embark upon business as we know it to-day, with the handicap of interest at 48 per cent., is something too appalling to contemplate. It simply means that if the poor young man happens to have anything in the world at all, it is sold up within the first 12 months, and he is ruined. I think that that has been the experience of every young man who has tried it. I hope that, notwithstanding the great influence which my hon. and gallant Friend has in the country, having deserted a little party and gained some notoriety in doing so—I hope that the country will not take too much notice of this extraordinary statement made by him to-day. Notwithstanding the fact that we as a party support the Second Reading of a Bill which is designed to mitigate a terrible evil, I fear that the Bill does not go far enough. I think no one ought to be allowed to borrow money at a higher rate of interest than 10 per cent.
My hon. and gallant Friend has placed the wonderful banking institutions of this country on the same level as usury concerns. He must know perfectly well that there is sufficient competition between the banks of the country to lend money to any respectable man, any man of character. I know men who have had the loan of money on character. But it must be character; it must he well-known character; they must be men of established reputation. The men who cannot get money on favourable terms from our great banking institutions are those who turn to these usury associations for loans on terms which it is impossible for them to make good on. It it impossible for any man to make good in business on the terms which are imposed—not negotiated—by these usury concerns. The Mover of the Second Reading dealt with these usury associations in very moderate terms. He said that he had never had a loan of money from a moneylender. I can claim the same distinction. But I cannot speak of these men, having regard to my intimate 791 Connection for a quarter of a century with a little social reform in the slums of Liverpool, in the judicial manner of my hon. Friend. It has been deprecated on these benches that we should speak of them in a disrespectful manner. I say in this House that the great majority of the 8,000 registered moneylenders in this country are the scum of the earth. I have no particular regard for the gilded youth with a long pedigree who trades upon the social position of his relatives spoken of by my hon. and gallant Friend the Member for Hull. I am not here to advocate his cause, but I am here to advocate the cause of the down-trodden, wretched, miserable people in the slums of our towns who are still further trodden under foot by these people, who are so ashamed of their trade that they will not trade under their own names. Most of them are foreigners to this country. I am not going to stigmatise any particular race, as there are respectable members of every race. These men adopt terrible measures of tyranny and ruin families.
The right hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood) said, "People do not commit suicide simply because they borrow money. It is because of drink and of gambling." I would remind the House that excessive drinking, especially among women, is brought about mainly by the worries caused to them by the terrible injustices imposed upon them by these usury associations. Many of the 1,400 registered moneylenders in Liverpool are known to me. [HON. MEMBERS: "HOW?"] I have already said I have never had occasion to go to them, but I have worked among the slum districts and among the people who have taken advantage, or rather disadvantage, of their services. I have met some of these people who have been imposing their iniquitous system upon the downtrodden of the slums. I do not know if any hon. Member has ever looked into the face of one of these moneylenders. If anyone has, they will see the picture of the devil incarnate. Their trade is stamped upon their countenance. If you meet a moneylender in the street, you know he is a moneylender and there is no mistake about it. I am afraid that my experiences rather carry me away and stir up in me feelings 792 of extreme animosity. My only regret about this Bill is that it does not go far enough. I hope my hon. Friend will get his Second Reading to-day and that the Bill will be made more stringent in Committee. If it is not, I hope that another Bill will be introduced to make this iniquitious system, this iniquitous traffic —for it is not an industry—even more difficult for the future.
§ Question, "That the word 'now' stand part of the Question," put, and agreed to.
§ Bill read a Second time, and committed to a Standing Committee.