HIRE-PURCHASE SYSTEM BILL. (Hansard, 4 May 1928)

HC Deb 04 May 1928 vol 216 cc2065-102 2065

§ Order for Second Reading read.

§ Sir JAMES AGG-GARDNER
I beg to move, "That the Bill be now read a Second time."
The object of this Bill is to relieve the property of a hire trader, held under a bona fide agreement with a hire purchaser, from liability for the debts of the hire purchaser. As everyone is aware, some time ago all goods found on the premises of a debtor were subject to seizure by creditors, to whomsoever they might belong, but in 1908 an Act was passed, known as the Law of Distress (Amendment) Act, which afforded relief to all the owners of such goods, excepting these which were the property of the hire trader. I will not attempt to discuss either the cause of this disparity of treatment or why it should have been reserved for the hire-purchase system beyond suggesting that at that time the system was in its infancy and neither fully understood nor appreciated.
Since that time, however, the system has expanded considerably, both as to its operations and its utility. In the monthly review of the Midland Bank, it is stated that from 50 per cent. to 80 per cent. of the motor cars, 70 per cent, of the sewing machines and 80 per cent, of the pianos and gramophones sold in this country, are disposed of on the hire-purchase system. It may be justly added that the system, since its inception, has stimulated trade, encouraged habits of thrift and distributed among thousands of our population conveniences and comforts of existence which, without its aid, few of those who possess little or no capital would have been able to enjoy. In these circumstances, which show that the hire-purchase system is both popular and beneficial, I submit that the time has come when the relief afforded by the Act of 1908 to tenants in general, should be extended to the hire trader.
I recognise that this Bill has its opponents as well as, I hope, its friends; but, as the Bill asks only for a simple act of justice to an undertaking that has admittedly bestowed many benefits, I am 2066 somewhat surprised that it should have aroused opposition. That such is the case, I gather from the appearance on the Order Paper of an Amendment to reject the Bill, and from letters which I, and other Members, doubtless, have received from certain organisations. As regards these communications, I will only refer to two, one from the Auctioneers, House Agents, etc., Society, and the other from the Liberty and Property Defence League. The first suggests the adoption of some system of registration of hire-purchase agreements, etc.—a suggestion which might be better considered in Committee than on the Second Reading of the Bill. The other communication, which proceeds from that highly-respected and venerable association, the Liberty and Property Defence League, appears to rely rather on the strength of its language than on the strength of its arguments. For instance, it describes our modest single-Clause Bill as a piece of "colossal impudence."
I am, naturally, shocked and grieved that our Bill should have presented such a frivolous appearance to the Council of this staid society. I am, however, quite unable to admit that there is anything impudent in an attempt to incorporate in a Bill the honest, time-honoured principle that "one man's goods must, not be taken to pay another man's debts". This is the cardinal principle on which our Bill is based, and in that respect it can claim, I may recall, the emphatic approval of two distinguished Judges, the late Lord Alverstone and the late Lord Russell, the latter of whom, in trying a hire-purchase case may years ago, said: I have long been of opinion, and shall go to my grave with the conviction, that it is against common justice to take A's goods to satisfy B's debts. Lord Alverstone, in similar circumstances, expressed a similar opinion. The points urged in these communications against the Bill affect matters of detail, such as the delivery of a declaration and a schedule of protected goods, which may well be reserved for Committee. On the other hand, the cardinal principle of the Bill, that "one man's goods must not be taken to pay another man's debts" remains unassailed and unassailable. Recognising the value of the time of the House, I will not trespass further on it than to express my gratitude for the kind 2067 indulgence extended to me, and the hope that the Bill may receive full, fair and favourable consideration.

§ Sir JOHN POWER
I beg to second the Motion.
One of the most startling developments of our social system is to be found in the hire-purchase system, or payment by instalment. I have no doubt that our forefathers would turn in their graves if they knew exactly what are the ideas of the present generation with regard to enjoying life while they have it. In the old days, it was necessary before a man went in for any extension of his pleasures to save the money by thrift and carefulness, and when he had obtained sufficient capital, he purchased the instrument or article from which he expected to derive considerably more interest in life. All these considerations, which reigned so completely in the days of Samuel Smiles, have gone by the board, and the present generation refuses to accept them. Into the morality or the philosophic results of that change, it is not for us to enter, but there can be no doubt that there is something to be said for having the means of living a fuller life and attaining a higher standard of living while one has life and the blood is hot enough for enjoyment.
The hire-purchase system had a very humble origin. It was, unfortunately, exploited in the early days by firms whose reputations for fair dealing were sometimes not above suspicion. Like many other evolutions that have come from the bottom rungs of society, it has gradually worked its way up into the higher rungs. So, with hire-purchase or payment by instalments, you find that what at one time was almost the sole possession of finns and business concerns of little repute, is now accepted by every responsible business firm, and you can obtain goods on the deferred payments or hire-purchase system from the best and most responsible firms in the country. You can buy anything, no matter how humble, right the way up the scale to articles of great luxury, such as a Rolls Royce motor car. Therefore, I submit that, this evolution having come about, we have to consider the whole question of the hire-purchase system from an entirely new standpoint.
2068 I suppose that the most startling change in this respect has taken place in the United States. I ask for the indulgence of the House if I deal with the situation there, for the simple reason that there is no country in the world where there are so many statistics kept or such accurate information available with regard to trade. Firms of hire-purchase have existed almost for generations for such things as sewing machines, pianos and even houses. Of course it may be said that in buying a house on the hire-purchase system one is saving. We might almost bring in life assurance. That, perhaps, comes under the category of saving. But the extension of this system to every article that is used in our life dates practically from within the last 20 years. We saw a great impetus given to the system in America in 1919, when the General Motors Corporation decided to adopt this as one of their principles in future in the selling of motor cars. They formed a General Motors Acceptance Corporation which deals with the situation and finances the sales.
Some of the results are indeed startling. It is estimated that something like 80 per cent. of the motor cars that are sold in America are sold on this system and that 70 per cent. of the furniture is so sold. An enormous quantity of clothing is sold on what they call the ten instalment plan, by which a customer pays down a quarter of the price and the remainder by 10 equal instalments. So great has this system become in America that it has been said that an American baby when born is put into a hire-purchase cradle, that it is brought up in an atmosphere of deferred payments, receives its college education on the instalment plan, and when it arrives at maturity it purchases the necessities and luxuries of life, such as a motor car, a wife and a home, on the instalment plan. A great deal of the jewellery is also bought on the instalment plan. When the American dies he goes down to the grave leaving behind him a trail of uncompleted instalment payments. That is the popular idea. Needless to say it is no more accurate than generalisations usually are.
As a matter of fact, this enormous expansion of the hire-purchase trade in the United States caused just as much commotion there as it did here, in reference to the financial stability of the scheme. 2069 In 1924 the American Bankers' Association appointed a commission to inquire into the whole financial stability of this system of trading. The Commission reported that if the whole thing came to an end at once, within three months all the debts would be liquidated with the exception of 35 per cent.; at the end of six months they would all be liquidated with the exception of 14 per cent.; and at the end of 12 months they would be liquidated with the exception of 2 per cent. The system has therefore been accepted by the American nation as a part of their commercial life. In 1925 it was estimated that out of a total retail trade of 38,000 million dollars to 40,000 million dollars, no less than 6,000 million dollars of the trading was effected on the hire-purchase system. Banks have been formed to finance these purchases, and meetings have been taking place and an association formed by a thousand firms who buy from the dealers the agreements, sometimes with recourse to the dealers in the event of failure on the part of the purchaser, but more usually buying them outright and collecting the instalments themselves.
I do not think we can ignore the far- reaching influences of this scheme. There- fore, I submit it is necessary that this recent development in the hire-purchase system should receive some consideration in respect of the present state of our laws in this country. In Great Britain it is more difficult to find accurate statistics, but, taking the figures of the Hire-Purchasers' Association, it is estimated that between 60 and 70 per cent. of the motor cars in this country are now purchased on the hire system, and 50 per cent. of the furniture and 10 per cent, of the jewellery are so bought. Of course, it is quite impossible to arrive at accurate estimates as to the proportion that the hire-pur- chase trade forms of the whole retail trade of the country. We are hampered in the development of this form of trading by the present state of the law, which en- ables a landlord to seize the goods on the premises, even though they do not belong to the tenant; and we are hampered also in the question of bankruptcy, where the creditors of a bankrupt can seize the goods of a hire-purchase trader found upon or affixed to his premises, with certain exceptions. That is where the confusion arises in our law. There are 2070 very many exceptions. For instance the motor car used in trade is not exempted from seizure, but a motor car used for pleasure is, even if that pleasure car be used for business. Furniture found in a hotel is exempt from seizure by the creditors of a bankrupt purchaser on the hire-purchase system, but the very same furniture, if it is found in ordinary office premises, is subject to seizure on behalf of the creditors.
I am not a lawyer, and I do not pretend to go into the legal intricacies of the case, but I can state that it is possible for a hire-purchase trader, in any case of bankruptcy, to obtain immunity for his goods if he can prove that it was a trade custom, that the hirer is in possession of goods that are usually let out on such terms. But it is very difficult for the hire-purchase trader always to prove custom. My interests, I might say, are entirely on the other side. I am a landlord, and I derive almost all my income from property. That, however, does not prevent me from recognising the iniquity of the proceeding that has been pointed out by my hon. Friend of seizing one man's goods to pay another man's debts. Therefore, if a trader wishes to prove custom in any particular trade, he has to go to enormous expense, and that is an expense that is practically always outside the possibility of a private trader to bear on his own account. There is no doubt that the state of the law at present is a direct obstacle to the development of this system of trading.
I would like now to take another aspect of the case. I am not concerned with the woes of the hire-purchase trader, and that is not my object in associating myself with this Bill. The hire-purchase trader can take care of himself, no doubt, and for the risk he runs he charges a heavy price. It is the producer and the consumer for whom I am speaking, and particularly the consumer. I do not see why the consumer should be placed in the position of having to pay more heavily than he ought for his goods, because the hire-purchase trader is able to hold in front of him the fear that his goods may be seized by his landlord or his creditor in the event of bankruptcy. It is the consumer of whom I am thinking. Then, again, as I said in my opening remarks, this system of trading had humble 2071 beginnings, but it has gone right away up the scale, and you can now purchase anything on the hire-purchase system.
What I am more concerned with is the industrial side of this matter. In this country we are suffering, it is admitted on all hands, from the fact that we are working with more or less obsolete machinery. In every debate on Safeguarding or on similar questions, this is always brought up, and we are asked, "Why do you nut replace your machinery? Why go on working with obsolete works? Why go on with plant that is out of date? Why do you not replenish your works with fresh machinery, so that you will be able to go ahead and compete with the foreigner "There is one very great objection to doing all these things, which we should all wish to see brought about, and that is the lack of capital. It is not so easy to equip a nation with fresh machinery. It has been done. It was done by France. One of the terrible results of the war to France in the beginning was the fact that the whole of her industrial and factory life was devastated, with the result that when the war was over she had to start anew and rebuild her works, and she naturally did so with the most up-to-date and modern machinery, so that she now stands in many respects far ahead of us.
Take the case of Germany, where, owing to the depreciation of the mark and the financial chaos that resulted in that country, every man who had anything to spend put it, rightly, into new material and plant and machinery. There again you have a country which is practically re-equipped with fresh machinery and able, unfortunately for us, to compete on superior terms with this country. The present state of the law is a direct obstacle to the furnishing of our industries with new and modern machinery, because it has been tried. The commencement of this phase of hire-purchase has already started, with most unfortunate results to those machinery manufacturers who have equipped new works with fresh machinery. There have been bankruptcies and seizures of machinery by the landlord, and in the present state of the law he has been quite within his rights, but in human nature we cannot expect the raachinery manufacturers to 2072 equip new works or old works with new machinery, if they have held over them always the fear that this machinery will be seized to satisfy the bankrupt's debt if he happens to go bankrupt, or the landlord if he puts in a distress for rent, or the local authority if they put in a distress for rates. Great developments have taken place, in this system in the United States of America, France, Germany, and many other countries, and I think that, in maintaining the law in this country in its present unsatisfactory state, we are putting a direct obstacle in the way of re-equipping our industries with modern machinery that would enable us to compete better, not only in the home market, but also in the markets overseas. We are also putting an obstacle in the way of the absorption of that huge mass of unemployment of which we hear so much from all quarters in this House.
I cannot see that the landlord is going to suffer very much. I shall be told by some of my hon. Friends that, in supporting this Bill, I am wrecking the whole leasehold system but I, as a landlord, do not believe it.. It is a matter of fact that the losses that are incurred by the hire-purchase traders are infinitesimal, even in times of depression. In America they are put down by the General Motors Acceptance Corporation at less than 1 per cent., and in this country they are estimated at about 2 per cent., but it is the fear that the hire-purchase trader can hold over his customer that enables him to exact a price that is very unfortunate for the consumer to have to pay. I hold no brief for the hire-purchase trader. What I want to see is some means by which the law can be altered, so as to make it easier for our manufacturers to obtain new machinery. The reason why I am associating myself with this Bill is because of the industrial side of the question. I have very little interest indeed, as I have said, in the woes of the hire-purchase trader in the ordinary necessities of life, but I cannot see how you can expect any machinery manufacturer to supply machinery, costing large sums of money, when there is every probability that it may, in the event of any disaster happening to the purchasing firm, disappear entirely from his possession.
I understand that most of the opposition to this Measure comes from two 2073 classes. It comes from the lawyers, and it comes from the landlords. I do not pretend to understand exactly what their fear is—I have no doubt it will come out during the Debate—but I would say this to the landlords, that if it is part of their case that, if they are not allowed to seize the furniture in the house of a tenant that belongs to a third party, they will lose their rent, I might equally well say to the landlords that, if their tenants were not able to get furniture on the hire-purchase system, which they say is now universal, they, the landlords, would not be able to let their houses. So they want it both ways. They want to let their houses to people who have got another man's goods with which to furnish them, and they want the right to seize those goods, in the event of the tenant getting into arrears with his rent, although they know full well that they do not belong to the tenant. I do not think anyone can defend the morality of such a proceeding, and I think that in the long run the landlords will have very little to fear from such a Measure as this. That is a matter that will no doubt be elucidated during the course of the discussion, but I would reiterate that what I am primarily concerned with in this Bill is the fact that, if it is passed into law, it will give our manufacturers an opportunity of acquiring fresh plant, of re-equipping themselves, and thus being able better to hold their own in the world competition that is so fierce to-day.
I do not see how it can be argued that what is right in one case is wrong in the other, but I, personally, would be quite willing to welcome any Amendment that would make the Bill a better Bill, and make it meet the case. Our manufacturers, I know of my own personal knowledge, are most anxious to have reasonable means devised for protecting the hire-purchase trader from having his goods unjustly seized. I, therefore, hope the House will give this Measure really careful consideration. There is more in it than appears on the surface. I do not think that we can put back the clock. This system of hire-purchase has come to stay. It is growing. Out of a total trade in the United States of between 38,000,000,000 to 40,000,0e0,000 dollars, no less than 15 per cent. is probably carried out on this hire-purchase system. I hope the House, before it decides on 2074 this matter, will examine the many aspects of the case, as all of us must, who have the interest of this country at heart, who wish to see the great masses of the people get more out of life than they do at the present time, and wish to see some means devised for relieving them of the extra cost which they have to pay through no fault of their own.

§ Sir HARRY FOSTER
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.'
At the outset of the remarks I desire to submit to the House, I cannot refrain from expressing my personal regret that, on one of the very rare occasions on which we have the privilege of hearing my right hon. Friend who moved the Second Reading of this Bill, I should find it my duty to oppose him. We seldom have the privilege of hearing him. It is now 36 years since I first had the pleasure of becoming a colleague of my right. hon. Friend in this House, and I believe this is the first occasion on which he and I have been in public opposition to one another. He is generally so much occupied outside this. Chamber in looking after our personal comfort and convenience, that we all feel close personal relationship with him. My right hon. Friend, with that candour which we would have expected, made no pretence, in moving the Second Reading of this Bill, that it was in the interest of anyone but the hire-trader. He said, quite frankly, what indeed is obvious on a most cursory examination, that whom it is proposed to benefit by this Measure is that trade which my hon. Friend the seconder of the Motion told us was a great, growing trade, namely, the hire trade, and my hon. Friend who seconded told us that this Bill was being opposed in the interest of two classes, the lawyers—I do not know why—and the landlords, of whom he acknowledged himself to be guilty of being one.
I would only tell my hon. Friend that I am not asking for any consideration for that outlawed and wicked class known as landlords. They are, of course, always fair game, particularly in any public debate. I suppose they ought to have some rights even as landlords, though the very term "landlord" in these days is likely to prejudice them. I do not, therefore, say a word on behalf of the landlords, 2075 nor am I, like my hon. Friend who seconded the Motion, in the least concerned for the hire-purchase firms, who are very well able, as he told us, to take care of themselves, and who, he also told us, in taking care of themselves make very heavy charges in respect of the goods lent to the tenants. They must, indeed, make very heavy charges, because they could not afford to expend the very large sums they do in public advertising, and in the very seductive way they have, among other things, of boasting that no references are required, and no questions are asked. They make the thing as simple and easy as possible. They could not afford to do that, and take the risks which an ordinary trader does not take, unless they did make very substantial profits. Amongst other profits are those which we know in another branch of industry, about which hon. Members opposite well know—I mean the enormous profit which has accrued in the past in certain undertakings in connection with life insurance under the form of lapsed policies.
I do not exaggerate when I say that millions of money, under the name of thrift, has been collected from the poor, who, in the end, have lost their policies by being unable, through removal or other causes, to keep up the insurance, and these moneys have gone, not in the cause of thrift in the end, but to enrich other people. That is one of the evils, as I know it, of the system of hire-purchase. That is one of the sources of profit, as I know it, of some of the hire-purchase firms, and I would by no means classify them together, because, as in life insurance, so in connection with this hire-purchase, there are firms, and firms. My concern is like that of the late right hon. Member of this House known to many of us, loved by many of us, Mr. Rawlinson, who, in 1908, when the last Act was passed, said in this House: The person really injured by making the law of distress too easy was not the landlord but the tenant."—[OFFICIAL REPORT, 3rd July, 1908; col. 1102, Vol. 191.] Now this Bill which is before us to-day makes any distress illegal, because the landlord would not know whether the goods were on the hire-purchase system, and it would, therefore, be unsafe for any landlord, if this Bill were passed into law, 2076 to levy any distress. I call the attention of the House to the extraordinary proposal, which is described in rather stronger language in one of the great newspapers in the North. Like my right hon. Friend, I do not believe in using strong language; nor is it necessary when you have got a good case. But this Bill has been described as "a piece of colossal impudence." Whether that is a fair description or not I will not attempt to say. [An HON. MEMBER: "Much too mild! "] Nothing is to be gained for a good cause by using strong language. I call the attention of the House to the fact that, under the existing law, even in those cases that have been quite rightly exempted from distress, the very proper provision is laid down that, if a distress is levied on goods and I claim those goods, either as a lodger who is not the direct tenant of the landlord, or as any other person who has property in that house which is going to be seized by distress, property in which the tenant himself has no interest, the law very properly says that I must do two things. I must give notice in writing to the 'landlord. I must make a declaration, and, if that declaration should turn out to be untrue and to the detriment of the landlord, I am guilty of a, misdemeanour: and I must accompany that declaration by a detailed inventory of those goods. That, surely, is a most elementary principle, and it applies in the cases which I have mentioned. In this Bill, there is not even that; so lacking have the promoters been in sense in drafting the Bill, that they do not even attempt to make any provision for giving notice to the landlord of the position in which he stands.
In 1908, the whole of this question was most carefully gone into, and, may I remark, in a House which was certainly not a landlord's house. [An HON. MEMBER: "A Labour Government? "] No, it was a Liberal Government, and there was an overwhelming Liberal and Labour majority. By that Act, the exemption and the protection given to the lodger was re-enacted, and it was extended to innocent persons having no interest in the tenancy, who had lent goods or deposited goods with the tenant, and could show that the tenant had no interest whatever in those goods. But expressly, by the Act, three classes of goods were not to have that protection, 2077 namely, goods under hire-purchase, goods under a bill of sale, and goods which had been made the subject of a settlement. In all these cases, Parliament deliberately said that, while they extended protection to other classes, these classes, to use again the words of the Seconder of this Motion, could look after themselves.
The device of hire-purchase is, of course, one with which we are familiar, and it is properly described as being, in substance, the buying of goods upon credit; but, as between the creditor and the debtor, the creditor has the right to repossess himself of the goods in the event of default of payment by the debtor. The object of this Bill is to give a statutory extension to the effect of the device. In the case of ordinary trading, the very basis of it Ls that the goods which had belonged to the creditor, when once they are supplied to the debtor and sold to him, either for cash or upon credit, become the property of the person to whom they are delivered. If that man is in a, weak financial position, arid if he afterwards, without having paid for those goods, goes into the Bankruptcy Court, those goods, without any process of distress, by an operation of law pass from the debtor into the hands of his trustees for the benefit of his creditors. Is there any injustice to the creditor who originally supplied these goods? No, because his business is to satisfy himself, before lie delivers the goods, that he is going to be paid for them. To-day, it is the business of the hire-purchase people—and they take care of this—to be satisfied, notwithstanding all their declarations about "no references required or inquiries made," that there is a reasonable prospect of their being paid. If they come to the conclusion that the man proposing business with them is not a straightforward man, not a reliable man, and not likely to preserve his solvency, he would not get the goods on the hire-purchase system, a system which is being carried on to-day with growing volume, and manifestly profitable results to those conducting it.
Why should Parliament be suddenly called upon, not in the interests of the tenant, but in the interests of the trader, to give the trader a special title 2078 to these goods over and above the ordinary basis of credit trading? Why should Parliament be asked to put him in such an extraordinary position? Really, the expression used by the Northern newspaper seems almost to be justified as we examine these proposals. [HON. MEMBERS: "What was it"? It was something colossal! Attention is called to the fact by those competent to express an opinion, that the persons who mostly avail themselves of this hire-purchase system are those who occupy houses of lower rateable value. In the event of non-payment of rent, the landlord has to decide whether he will seek an ejectment order or distrain on the furniture. At the present time, it is a matter of extreme difficulty to obtain an ejectment order, and this Bill proposes to deprive the wicked landlord of his only remaining remedy. The practical effect, therefore, must be that the landlord will be unable to obtain an ejectment order, and will be deprived of his power to distrain upon the furniture. There is an increasing body of landlords in the form of county councils and local bodies, and their tenancies, of course, are nearly all of the class referred to, so that the question does not merely become a landlord's question, but becomes very vitally a ratepayer's question, because the ratepayers' interests are largely concerned in the due collection of the rents which otherwise would have to be provided for by him through the outlay of his local body.
Another point of great unfairness would be the way in which creditors would be treated in the event of failure. At the present moment, if a man's estate goes into bankruptcy, the trustee can, if three-quarters of the payments have been made, pay the balance claimed by the hire-purchase trader, and realise the security, as he ought to be able to do, for the general body of creditors, or, if he considers there is no advantage, he can disclaim responsibility. Under this Bill there is an absolute prohibition upon any interest whatever passing to the trustee for the creditors; on the contrary, there is a direction that the property is vested in the hire-trader and must go back to him—one of the most remarkable provisions I have ever seen in the draft of an Act of Parliament.
From the signs I have seen already, I think that Members in all parts of the 2079 House appreciate the curious and the insidious character of the Bill and the only interest which it can serve. I say nothing of the alteration it will make in the relationship between landlord and tenant. Obviously, if a landlord cannot rely upon the apparent well-being of the tenant, if he does not know whether a single thing belongs to him, obviously the landlord, whether an individual or a local authority will require some kind of security in the place of that which he has at this moment, and that will be to the disadvantage of the tenant. There will be more demands for payment in advance, and the landlord will have no option but to eject the tenants if he can neither get his rent nor have any security for redress in respect of that which is on the premises. Further, this system will encourage thriftlessness and irresponsibility. The hon. Member for Wimbledon (Sir J. Power) has drawn an extraordinary picture of the state of things in America; he was asked whether the instalment system has been extended even to the purchase of the wedding ring. From start to finish, according to him, people are living from hand-to-mouth in America in consequence of the enormous prevalence of this system, and when they die—well, he did not tell us what happens when they die, whether the goods are passed on to someone else or are repossessed. This Bill would allow hire-purchase firms to hire out their goods at high prices, as they do at present, and yet get the extraordinary security which this Bill would give them. I repeat my regret that I should have to urge anything in opposition to what my right hon. Friend the Member for Cheltenham (Sir J. Agg-Gardner) has proposed in this House, but, although we all love him and value his work, our duty will not permit us to go contrary to our convictions of what is in the public interest.

§ Sir ROBERT GOWER
I beg to second the Amendment. Like my hon. Friend, I regret having to take up this attitude in the Debate, because my right hon. Friend the Member for Cheltenham (Sir J. Agg-Gardner) is so beloved and esteemed in this House that we should all have liked to see him secure a Second Reading for the Bill which he has presented when, after so many years, he has sucoeeded in securing a place in the 2080 ballot. This Bill is of such a character, however, that if it were passed it would be attended with so many and so great evils to all classes of the community that, in my judgment, the House would be acting wrongly if it gave the principles of the Bill that endorsement which a Second Reading bestows. Before I come to deal with the intelligible parts of the Bill, or with the speeches which have been made, I wish to call attention to a portion of a Clause which I frankly confess I am at a loss to understand. In Clause 1, at line 16, it says: and shall not during the currency of the hire-purchase agreement or simple hiring agreement, or at any time thereafter, he or be deemed to be or to have at any time been impressed with any trust in favour of any person or persons by reason only that such goods and chattels may have been acquired at the request of a hirer by any person or persons with a view to the same being comprised in the hire-purchase agreement of simple hiring agreement. What on earth do those words mean or are they intended to mean? With what case or with what class of case are they intended to deal? My knowledge of the law and of the English language, and particularly of legal phraseology, is insufficient to render these words or this combination of words comprehensible to me.

§ Mr. CRAWFURD
Why blame the English language?

§ 12 n.

§ Sir R. GOWER
I am not blaming the English language, but the language used by the draftsman of this Bill, or, if I am wrong there, I am blaming what I shall suggest in a few minutes is possibly the proposal which these words may mean. I have discussed these words or this combination of words with a number of the most eminent legal authorities in the House, and I am relieved to find that they are in the same difficulty concerning them as I am. Speaking quite frankly, and without wishing to hurt the feelings of the draftsman, it appears to me that this combination of words is a meaningless jargon; as one hon. and learned Member said to me, the words are of such a nature that if they became the subject of judicial proceedings they would be considered as being void for uncertainty. It is quite obvious, however, that the draftsman of this Bill had something in his mind which he wanted to put into 2081 words. Having given them careful consideration, I have come to the conclusion that it is possible—and I lay emphasis upon the word possible—that ^N hat the framer or draftsman intended to provide was that a moneylender or a hire-purchase firm should be enabled to evade the provisions of the Bills of Sale Act so far as those provisions relate to the lending of money on the security of personal chattels. It is quite possible that these words might be construed as meaning that money could be lent on the security of furniture without the document embodying the transaction being in the form or registered as laid down by the Act. I have consulted an hon. and learned Member of the House who is an authority on the law relating to Bills of Sale and hire-purchase agreements, and he agrees that my construction is possible. If my assumption is correct, the proposal is a pernicious one. On considering these particular words, and also the general wording of the Bill, the House will, I am sure, he considerably surprised that the hon. Member who sits behind me sholld have suggested that lawyers objected to the Bill. If this Bill passes in this form, it will supply a most useful source of income for members of the legal profession.
I am sure the House listened with interest and attention to the speeches of the Proposer and Seconder of the Bill. If it is not an impertinence on my part, I would like to congratulate my hon. Friend who sits behind me upon the careful and cautious way in which he gave his reasons for recommending the Bill to the consideration of the House. The case he made out for the Second Reading of this Bill was somewhat in the nature of a panegyric of the hire-purchase system generally and the hire-purchasing trader in particular. I do not propose to deal with the question of the hire-purchase system. All I wish to say in that connection is that I think it is extremely doubtful whether, in the interests of the country, we should give encouragement to what is known as the system of extended credit. Well-known economic authorities in this country tell us that such an extension is likely to be attended with grave dangers to the State. I do not feel that I am competent to deal with that part of the question, and I will leave it to 2082 some other speakers. I was extremely surprised at one of the reasons adduced by the Seconder of the Motion for the Second Reading, which was to the effect that the condition of the law in its present form resulted in hire traders running the risk of suffering unnecessary and unjustifiable losses. It seems to me that the hon. Member contradicted self on that point, because he went on to state that the losses sustained under hiring contracts were roughly only 2 per cent.

§ Sir J. POWER
I said that I considered the losses were very small in view of the high prices which the consumer had to pay for the goods, and which they would not have to pay were it not for the risks involved.

§ Sir R. GOWER
I think it is obvious that my hon. Friend has not kept in touch with what is happening so far as the hire-purchase system is concerned, and, if he will read the advertisements in the daily papers, he will find that the most prominent firms in the hire-purchase trade are offering to supply goods on hire at the same prices which they would charge in respect of ready-money transactions. I think that knocks on the head the argument which my hon. Friend the Member for Wimbledon (Sir J. Power) brought forward. One knows that to-day it is possible to obtain goods on the hire-purchase system on the same terms as if cash was paid. [An HON MEMBER: "Do you believe that?"] At any rate, I think, as prominent furnishing firms put in their advertisements statements to that effect, that. we are entitled to assume that if those particular firms are honourable, they would not make such statements if they were not true. But, whether those statements are correct or not, there is no doubt that this Bill has been brought forward simply in the interests of the hire-purchase firms, and, that being so, I am entitled to assume that some reliance can be placed on the statements which they make. My hon. Friend who seconded the Motion for the Second Reading of this Bill referred to the conditions existing in America. We are not anxious that the. American standard of commercialism should be introduced into this country. This Bill is called a Hire-Purchase System Bill. In my opinion it should he called a Hire Traders' Protec- 2083 tion Bill, because the only people who can benefit by a system of that kind are the hiring traders. One part of this one-Clause Bill provides: That goods and chattels—personal comprised in a hire-purchase agreement or simple hiring agreement and not in the possession of the true owner thereof, shall be exempt from distress for rent, rates, water rents, gas and electrical charges. I wish to state that I hold no brief for landlords. There are good as well as had landlords just as there are good and bad tenants. It seems to me that the position of a landlord whether he be a wealthy man, a municipality or county council, or a working man who has saved a little money which he has invested in bricks and mortar is entirely different from the ordinary trader. The ordinary trader can immediately cut supplies when his customer fails to pay for his goods, but the landlord is unable, if his rent is not paid, to follow the same course. It would be necessary for the landlord, if he were unable to levy a distress for the rent due, to go through a process which takes a considerable amount of time before he could obtain protection. I have no doubt at all that, if this Bill is placed on the Statute Book, it will adversely affect the position of the tenant. Probably landlords would require their rent to be paid in advance. It is also quite possible that the landlords would insert in the lease or agreement a clause that no goods held on the hire-purchase system should he introduced on the premises. I think it is admitted that the relationship between landlord and tenant in this country as a general rule is of an amicable nature. Only a few days ago I was talking to one of the principal bailiffs in the City of London, and he informed me that it is a very rare thing for a landlord to distrain on a tenant if he is in distress owing to circumstances beyond his control. If, however, this Bill be passed the landlord, knowing that he has lost the security, which in the past the right to levy a distress on these goods has given him, he will be compelled to take other precautions. My hon. Friend has already pointed out that a large number of the houses in this country, especially the smaller houses, belong to municipalities and county councils. On this point, I would like to read a letter from the 2084 town clerk of one of the principal Metropolitan boroughs. It is as follows: Hire Purchase System. Dear Sir, In reply to your letter of the 17th inst., it appears to me that if this Bill should become law in its present form, local authorities would be seriously prejudiced in enforcing the payment of the amounts due to them, and for the recovery of which they may be entitled to levy a distress. In an industrial area like this a very considerable number of homes are furnished on the hire-purchase system and the exemption of goods hired would be seriously prejudicial to the councils' rights and duties. I think therefore that every step that can be taken should be taken to oppose the further progress of the Bill which appears to me to have been introduced in the interest of a certain class of traders. I think that this letter sums up in words much better than I could choose how local authorities will be affected so far as that part of the Bill is concerned. Another point connected with this part of the Bill, referred to briefly by my hon. Friend who moved the rejection, is that, while landlords have the right of distress at the present time, if this Bill passes, not only the landlord who exercises that right, but also the bailiff and the auctioneer who may be instructed to sell the goods so seized, will be placed in an impossible position. The Auctioneers' Institute has very carefully considered this matter, and has taken legal advice concerning it. Under this Bill, no obligation is thrown upon tin tenant, in case of distress, to notify the bailiff or anyone else that goods are held under a hire-purchase agreement. The landlord, without knowledge that they are held under a hire-purchase agreement. may levy distress on such goods, he may sell such goods, and the auctioneer, the bailiff and the landlord may subsequently find themselves involved in an action, brought at the suit of what is known as the real owner, that is to say, the hire-purchase trader, for damages for conversion and illegal distress. I think the House will agree that circumstances like that would be grossly unjust and unfair to persons who are properly carrying on their business in the ordinary way.
The second point in connection with this Bill is in regard to the provision that goods held under a hire-purchase agreement shall not become divisible among the creditors of a bankrupt hirer. 2085 Surely, the House will not contemplate for one moment giving sanction to such a proposal as that. If that part of the Bill were to become part of the law of the land, it would pave the way to an enormous amount of fraud upon the trading community in general. The law at the present time is such that, where the trader is, with the consent of the true owner of the goods and chattels, in possession of them under such circumstances that he is the reputed owner thereof, they pass to his trustee in bankruptcy or the Official Receiver in the event of the holder becoming bankrupt. Unfortunately, particularly in London and in some of our large commercial towns, there have been of recent years a large number of cases in which fraudulent individuals have commenced business, and, on the strength of having elaborately furnished premises and extensive stock have obtained credit, and subsequently have filed their petitions in bankruptcy. What would be the position if this particular provision of the Bill were put on to the Statute Book1 It would mean that hire-purchase traders would be enabled, without any risk to themselves, to aid and abet, innocently, no doubt. such fraudulent persons in creating such an establishment as would inspire respect and confidence with the ordinary trader.
To-day a hire-purchase trader, before he delivers goods under a hire-purchase agreement to a trader or anyone else, makes inquiries as to the financial stability of the person with whom he is dealing; but, if this provision were to become law, it would mean that the hire-purchase trader would be running no risk at all in dealing with a person of no substance, and the result would be that such an individual, having been able to inspire confidence through the action of the hire-purchase trader, could incur large liabilities, and, on his being made bankrupt, none of the goods or chattels on the premises, in consequence of his holding of which such confidence had been inspired, would be available for his creditors generally it has always been the policy of the law that, where an individual is allowed to hold goods and chattels in such circumstances that people were reasonably entitled to believe that he was the true owner, such goods and chattels should be included as part of his assets in the event of his beeoming bankrupt. The old maxim of law 2086 holds good to-day as much as when it was formulated, that, if one of two innocent persons has to suffer, the one who has by his conduct contributed to the injury should be the sufferer, to the exclusion of the other.
Turning to another part of the Bill, it is provided that any chattel held under a hire-purchase agreement shall not become a fixture. What does that mean? It means that, if any chattels are supplied to a tenant under a hire-purchase agreement, and those chattels are affixed to the freehold, they do not become in the legal sense fixtures, but remain the property of the hire-purchase trader. Let me give to the House an instance which recently came under my own observation., An individual became the tenant of a house. He was a man with some pretensions, and he did not like the doors of the house, he did not like the fireplaces, he did not like the baths, he did not like the chimney-pieces. What did he do? He scrapped the doors of the house, he scrapped the existing fireplaces, he scrapped the chimney-pieces, and he scrapped the baths and replaced them with others. The landlord, of course, had no cause of complaint, because, by the action of the tenant, the property was undoubtedly improved; but if the tenant, after scrapping the fixtures which were originally in the house, had replaced them with others from a hire-purchase firm, and if this part of the Bill were in operation, the result would he that, in the event of the tenant not keeping up his payments, or in the event of his becoming bankrupt, the hire-purchase firm would be entitled to enter the house and take away those doors, fireplaces and so on. [Interruption.] What I am saying is quite correct, and T am quite sure that my hon. Friends will see that that part of the Bill would create a ridiculous and impossible situation.

§ Mr. JAMES HUDSON
Would the landlord, in a case of this sort, or did he in the actual case which the hon. Member is quoting, agree to the original fixtures being replaced by others on the hire-purchase system?

§ Sir R. GOWER
No: there was no question of hire-purchase, but I am asking the House to assume a similar ease where the tenant, instead of buying these fixtures—

2087

§ Mr. CHARLETON
Is it not the law that fixtures which are attached to a landlord's property in such a way that they cannot be removed without damaging the property cannot be touched?

§ Sir R. GOWER
Yes, that is the law to-day, but this particular provision seeks to alter the law, and I was endeavouring to explain that if the provisions of this Bill had been the law then in the case which I have quoted, if the tenant had obtained the goods from a hire-purchase firm, the true owner, that is to say, the hire-purchase firm, would be entitled to enter the premises and take down the doors, fireplaces, baths, chimney-pieces and so on which he had supplied, and, in fact, leave the house a skeleton so far as fixtures are concerned.

§ Mr. CHARLETON
Axe you sure that is so?

§ Sir R. GOWER
If my hon. Friend will read the Clause, he will see it provides that any goods or chattels that are the subject of a hire-purchase agreement shall not become fixtures, and shall be removable by the true owner at any time. It seems to me I was not exaggerating when I made my assertion. I hope hon. Members will not confuse what is the existing law with what it is sought to make the law under this Bill.
There are other matters in the Bill with which I should like to deal. The suggestion has been made—in fact, I made it myself at the commencement of my remarks—that this Bill is one for the protection of the hire trader and not for any other class of the community. It has been suggested that the hire trader runs abnormal risks to-day. All the merits are not on the side of the hire trader. Unfortunately, we know of cases where the hire trader has not only received payment of the rent which it was agreed he should receive under the hire-purchase agreement, but there are many cases where the unfortunate tenant, when he has paid a considerable amount, has been unable to keep up his instalments, and the hire trader has taken possession of the furniture, and no allowance has been made to the tenant in respect of the amount he has paid. That principle is emphasised in this Bill, because in effect it is provided that in the event of a hire trader entering into possession of the 2088 goods and chattels, though there may only be a small sum owing, the landlord, or it is possible the trustee in bankruptcy, is not entitled under the hire-purchase agreement to pay the hire trader the amount due on the chattels and make them available for the creditors.
Let me quote a case. Assume a person obtains goods from a hire trader. The agreed purchase money £100, that is to say, when the sum of £100 is paid by way of rent the goods will become the property of the purchaser. The individual has paid £80, the landlord levies distress, the hire-purchase firm is entitled to take back the whole of the goods and make no allowance at all in respect of the £80 the tenant has paid. It is possible, under this Bill, if the individual has paid, we will say, £90 in respect of the furniture and goes bankrupt, that under the hire-purchase agreement, although only the sum of £10 is owing on the security of the furniture, the firm takes back the furniture and the Official Receiver is not entitled to pay the firm £10 and distribute the proceeds of the sale of the furniture among the creditors. The hire-purchase firm receives the benefit of the whole of the payments that have been made by the hirer. When one becomes bankrupt, the wages of persons in his employment are among the preferential payments to be made, and it might happen, owing to the operation of this Bill, that the whole of the debtor's assets would be taken by the hire-purchase firm and there would be nothing left even for the preferential creditors. I have no doubt at all that the House, when it appreciates everything that this Bill involves, will decline to give it a Second Reading.

§ Mr. MORRIS
It is very interesting to pursue the question of the enormities of the landlord on one side and of the hire trader upon the other. Perhaps it is only human nature for us to be interested in one another's enormities. But that is hardly the subject of this Bill. The one question the Bill is concerned with is what would happen to the goods of the third party in the event of a distress if that third party happens to be a hire trader. It would be easy to multiply instances on one side or the other of injustice under the existing law or under the law if it were amended as it is sought to be amended by this Bill. I might give 2089 one instance on one side and one on the other. The hon. Member who has just sat down referred to a case where a man holding goods under a hire-purchase agreement might have paid a substantial portion of the amount due. He might have paid 11 instalments out of 12. The landlord could not, if the Bill become law, levy distress upon those goods, although the greater part of them had became the property of the tenant. It would be a hard case if the agreement were so drawn that the goods did not become the property of the tenant till he had completed the 12 payments.
One has to view, the case not from the point of view merely of the household tenant but from a larger issue, owing to the change of circumstances and the change in the method and mode of life. Take a case where the tenant was the owner of substantial and valuable machinery—a trader. He owes rent. He owes instalments. He must pay the instalments to the hire trader on the one side and rent to the landlord on the other. If he and the landlord are fraudulent, they enter into an agreement to sell the goods, under the existing law, and the hire trader, even though no instalment has been paid, may be deprived of most valuable machinery. Why should the landlord be deprived of his rent, in the case of a fraudulent, tenant and hire trader, and why on the other hand should the hire trader be defrauded of very valuable machinery in the case of fraud by the landlord and tenant? If you attempt on that basis to decide what the law should be, you only find yourself going from one difficulty to another. One has to decide it upon some other basis, and I think the basis upon which it should be decided is the ordinary development and progress of the law.
Prior to 1908, the landlord could levy distress upon goods found upon the premises, irrespective of whose property they were. That was found to be a gross injustice, and the Law of Distress (Amendment) Act, 1908, remedied, to a certain extent, that position. It remedied the position as the right hon. Gentleman pointed out, with three exceptions. Why were the three exceptions made? The hill-of-sale exception, of course, is clear. The hire-purchase trader was exempt, because in 1908, as the hon. Member pointed out, the hire-purchase mode of 2090 carrying on business had not become as universal and general as it is to-day. There has been a great change since then. The hire-purchase agreement, and goods held under hire-purchase agreement, were looked upon with very great suspicion in 1908.

§ Sir PHILIP PILDITCH
The hon. Gentleman waves aside the case of the bill-of-sale and says that that is all right. Will he tell the House what is the difference between a hire-purchase agreement and a bill-of-sale in regard to the position of the landlord and tenant?

§ Mr. MORRIS
The bill-of-sale, of course, must be registered. I agree, but it might not be expected that the landlord would have to make an inquiry to find oat. The position with regard to the hire-purchase agreement is more or less universally known at the present time. The position in 1908 with reference to hire-purchase agreements was totally different. Very rarely anybody bought household furniture, and machinery even, upon the hire-purchase system prior to 1908, but to-day the position is an entirely different one.

§ Mr. RYE
What about the piano trade? Is it suggested that pianos were not extensively sold on this plan in 1908?

§ Mr. MORRIS
I wonder how many pianos were sold upon the hire-purchase system in 1908?

§ Mr. WOMERSLEY
Ninety per cent.

§ Mr. MORRIS
Even assuming that hire-purchase was extensively observed in the piano trade in 1908, it does not apply only to the piano trade to-day. It applies to luxury trades and to motor cars more universally in 1928 than it did to pianos in 1908, but it is not merely to these luxury trades to which it applies to-day, for hire-purchase has practically become universal. One has only to look at the newspaper advertisements to see how universal this custom has become. By what right can it be said that the landlord has a right to levy distress upon the goods of a hire-purchase trader found on premises rather than upon the goods of a private person found on the premises? [An HON. MEMBER: "Because the hire-purchase trader has security for the goods."] It is not a security to the landlord. It may be a security to the hire trader. They are his goods. Why 2091 should not the hire trader be secured, if he has an agreement? Why should he not have the same right to make an agreement to secure himself as the landlord? If he has made an agreement and protected himself, why should he be excluded from obtaining his goods if, in fact, the goods belong to him?? I am not holding that this Bill should be passed as it stands to-day. All I ask is that this Bill should be given a Second Reading and then modified so as to protect the interests of all concerned. Why the hire trader, merely because he is a hire trader, should be protected I do not know.
The reputed ownership Section of the Bankruptcy Act creates an anomalous position. If the hire trader is a firm or a private individual, the hire trade loses. The hon. Gentleman who seconded this Bill pointed out some of the anomalous situations which arise to-day with regard to the operation of the law. If the hire trader has let out certain things, he can always recover. If he has let out other things, he is bound to lose. It depends upon the category to which the hired goods belong. A good deal has been said about the wedding ring by one speaker after another, but if a hirer hires a hearse at the other end of the scale, the landlord, if he attempts to levy distress upon it, will find that he is unable to do so. On the other hand, if it is a grocer's van that has been hired, the hire trader loses. Upon what principle does the law make the distinction? Take some of the other distinctions that are made. Take the question of woodworking machinery which has been let out on hire. Here the hire-trader loses. If it is printing machinery that has been let out on hire, the hire trader wins. Upon what principle is that distinction made? Is it because one man is a printer and the other man a woodworker? Take the two cases that were stated by the hon. Gentleman opposite—furniture in an hotel and furniture in a business office. In regard to furniture in an hotel, the hire trader wins, but with regard to furniture on business premises the hire trader loses.

§ Sir R. GOWER
Does the hon. Gentleman suggest that the hire trader wins as against the landlord?

2092

§ Mr. MORRIS
Yes, he wins as against the landlord. The goods are exempt from distress in one case and subject to distress in the other.

§ Sir R. GOWER
Under what Statute is that?

§ Mr. MORRIS
I beg the hon. Gentleman's pardon. I am talking of the reputed ownership Section of the Bankruptcy Act. In the case of a motor car hired for pleasure, the hire trader wins, whereas in the case of a motor car hired for business he loses. There can he no argument for the differentiation made in one ease as against the other. I agree with a great deal of the criticisms against the details of this Bill, and, whatever may be the merits of this Bill, it must be clear that the law stands in need of amendment in regard to the hire-purchase agreement. The customs of the time have changed and the anomalous position of the hire trader should be modified in some form, and it is because I believe in some modification that I hope the House will give this Bill a Second Reading.

§ The SOLICITOR-GENERAL (Sir Boyd Merriman)
It must be admitted that it is rather an invidious task for the latest recruit to the Treasury Bench to oppose a Bill introduced by my right hon. Friend the Member for Cheltenham (Sir Agg-Gardner), but he would be the first to admit that this subject must be dealt with on its merits and not on his, and I am bound to say that the merits of the Bill seem to vary in inverse ratio to the merits of the Mover. I want to make it clear at once that I have no attack at all to make upon the hire-purchase system as such. The legitimate, genuine hire-purchase system has unquestionably come to stay, and it serves an extremely useful purpose in the life of the community, but, as my hon. Friend the Member for Central Portsmouth (Sir H. Foster) pointed out, the risks attend-ding the hire-purchase system are known. They are allowed for, perhaps amply allowed for, in the rates of hire, and the hire-purchase trade system is not usually regarded as one of the depressed industries of the country. In spite of the undoubted risk of goods under the hire-purchase system being taken by distress, there still seems to be some small margin available for the purposes of informing 2093 every man, through the usual channels of information, as to the merits and activities of the hire-purchase system.
I agree with the hon. Member for Cardigan (Mr. Morris) that there is no useful purpose to be served, in discussing this matter, by multiplying instances of hardship on the one side or the other. For every instance in which a landlord is hardly treated you can produce a corresponding instance where the owner of the goods is hardly treated. I want to put this broad point. My fear with regard to this Bill is that the result of this exemption of hire-purchase goods will be to paralyse the law of distress, not only with regard to rent but with regard to rates and taxes. It may be a good thing to abolish the law of distress altogether. I do not say it is, but even assuming that it is, let us do so honestly and directly, after a proper inquiry as to all its implications, and not in a backhanded way such as would result from this Bill. It is not fair, I agree, to make a sweeping statement like that without giving some reasons for it and the reason which seems to me to be overwhelming is this—that it is notorious that the ostensible hire-purchase agreement, as distinct from the genuine hire-purchase agreement, is the instrument which is most readily available to the fraudulent trader or the fraudulent tenant to put his goods out of the reach of his creditors.
The hire-purchase agreement is the recognised disguise for the mregistered bill-of-sale. The form which it takes is the form of the hiring of goods from another person, ostensibly the owner. The reality is the mortgage of the so-called hirer's own goods as security for a loan. If I may be permitted to make my point clear by developing it, the usual instances are where the so-called hirer has gone through the form of selling his own goods to the so-called owner, and has then hired them back; or where the so-called hirer has got the so-called owner to purchase the goods for him, with money which is really lent by the so-called owner and the goods are then ostensibly hired to the so-called hirer. Both these transactions may be perfectly genuine but the Court, when it is asked to find whether the transaction is genuine or merely ostensble, usually looks, as it is entitled to look, through the form of the documents in order to 2094 get at the reality of the matter. The Court usually looks to see whether the so-called hirer in the one instance really remains the true owner all the time, or, in the other instance, whether the so-called hirer has actually become the beneficial owner by means of a trust in his favour which is to be implied in the circumstances in which the goods were obtained for him.
The hon. Member for Central Hackney (Sir R. Gower) in this connection said he was not able to understand the words at the end of Clause 1 relating to a trust. I must admit that I myself am unable to understand their full implication, but I can see perfectly well that the words there relating to a trust might compel a Court to shut its eyes to a trust of that sort in favour of the so-called hirer, which would otherwise induce the Court to get at the reality of the matter and hold him to be the beneficial owner. There is no rule in law relating to this matter except that it is the duty of the Court, in each case, to get at the real substance of the transaction on all the facts and in spite of the form which the documents take. The effect of this Bill, if it passed into law, presumably would be to induce the hire-purchase trade to proclaim even more loudly than it does at present, the advantages of the hire-purchase system which would be advertised as including exemption from any form of distress for rates or taxes. It seems to me that it would necessarily, at the same time, induce the fraudulent trader or the fraudulent tenant, to have even more frequent recourse than hitherto to the camouflage of the ostensible hire-purchase agreement or the unregistered bill-of-sale. I assume that the Bill is only intended to deal with the genuine hire-purchase agreement but I must remind hon. Members that the law is, that if goods which are privileged by law from distress, are distrained whether for rent or rates or taxes, not only the bailiff but the landlord is liable to an action for illegal distress and to such damages as the jury may think or the Court may think are warranted in the circumstances.
May I ask hon. Members for the moment to imagine themselves to be in the role of that necessary but unpopular person, the certificated bailiff, who is sent to levy a distress for rent. On entry to the premises he is confronted with a 2095 document which purports to be a hire-purchase agreement. He cannot possibly know whether it is a genuine hire-purchase agreement or not. He cannot possibly guess whether, at the end of the story, the Court, on all the facts laid before it, will hold that it is a genuine hire-purchase agreement, or that it is merely a colourable hire-purchase agreement to avoid registration as a bill of sale. He cannot possibly know that, but he does know that the only way in which that point can be settled is by litigation, at the end of which he, himself, may be held to be personally defenceless to a claim for damages. How can it be expected, in these circumstances, that either the bailiff or the landlord will take the risk I am told that probably the largest landlord in London, the London County Council, who have 35,000 houses or flats of which they are the landlords—although at the present time their instructions to the bailiffs are never to levy if they are assured that goods are the subject of a hire-purchase agreement and are not completely paid off—fear, and I think rightly fear, that, if this Bill were passed, there would be no possible means of enforcing their security for rent. Therefore, hon. Members will see what I meant by saying that the real effect of this Bill, while purporting only to make an amendment in favour of limited classes of transactions, will really be to annul and paralyse the whole system of distress.
Speaking as a Law Officer of the Crown, I am bound to point out that the Crown is directly interested in the matter of levying distress for taxes and excise duties. The collector of taxes and Excise duties would be in precisely the same difficulty as would he the certificated bailiff levying on behalf of the ordinary landlord. This privilege which is sought to be given would be an absolute privilege. There is not even a qualifying condition such as applies to a sub-tenant or lodger under the Act of 1908, who is obliged to give notice or make a declaration of the nature of his goods to the landlord, and, what is more important, who is obliged to pay any outstanding balance existing, or which may accrue in future, to the distraining landlord until the amount of the distress is satisfied. There is no such provision in this Bill at all. It is an absolute 2096 privilege which would make anybody distraining upon these goods defenceless to an action for illegal distress. So much for that part of the Bill.
May I say one or two words about the other parts. The hon. Member for Cardigan referred to that part of the Clause which says that. the goods shall not be divisible among the creditors in bankruptcy. He asked on what particular principle the present law justifies division, and he went so far as to say that there could he no argument in support of it. I would point out that there is a principle in support of the present state of the law, and the key to it is contained in Section 38 of the Bankruptcy Act. The key is that it must be goods which are in the possession of the bankrupt by the consent and disposition of the true owner in such circumstances that he is the reputed owner thereof. The key is that the circumstances are such that he is the reputed owner therof.
1.0 p.m.
It is a question really of the custom of the trade, and the custom will fluctuate as the customs and manners of the people change. It is a question whether it is or is not the custom of the trade that the possession of hire-purchase goods is, or is not, likely to be the badge of ownership. If it is a badge of ownership then the goods do pass to the trustees in bankruptcy. If it is not, then the goods do not pass. It is a question of establishing the custom of the trade. For that, this Bill proposes to substitute the hard and fast rule that, if goods are the subject of hire-purchase agreement. they cannot be distrained. The result. will be in bankruptcy proceedings to substitute for some measure of certainty the uncertainty which will result from having to litigate on every doubtful point on the question, "Is this a genuine hire-purchase agreement or one which is in the nature of a bill-of-sale? "It is said that the advantage to trade will be great. This is not a legal question, but I do think it is a matter for the consideration of the House whether it is desirable that an artificial stimulus should be given to hire-purchase trading at the expense of those traders who have built up their business on the basis of selling goods for cash. By all means let the two things exist side by side; but is it, as a matter 2097 of policy, desirable to give an artificial stimulus to one rather than to the other?
The only other matter is the question of fixtures. It seems to me that this provision with regard to fixtures is a little bit greedy. If goods are really fixtures, it is not necessary to put anything with regard to fixtures in a Bill which is designed to relieve goods from distress, because the mere statement of the fact that they are fixtures automatically makes them exempt from distress. Fixtures are not distrainable by law. Therefore, if you are dealing with things like fireplaces and doors which really are fixtures but by this Bill are not to be regarded as fixtures, you are quite clearly not dealing with the law of distress but with something else, and I suspect that you are trying to make them exempt from the mortgagee. It seems to me that the promoters of this Bill for the hire-purchase trade are trying to get it on the swings and also on the roundabouts. The hire-purchase agreement was deliberately excluded from the purview of the Act of 1908. Anybody who reads the debate of that time will see that it was deliberately excluded; but, during the intervening 20 years, the hire-purchase system has increased and its increase shows no signs of diminution. I invite the House to say that, while the disadvantages of the present system may be apparent, the dangers of the proposed change are great, and to reject this Bill.

§ Mr. R. MORRISON
Whatever may be the opinions of hon. Members for or against this Bill, I do not think there will be any two opinions that the House is indebted very much to the Solicitor-General for the clear way in which he has explained the Bill. I think also hon. Members will agree that the hon. and learned Member has added very considerably to the debating strength of the Government Front Bench—an acquisition which was much needed, as the events of the last few days have shown. It will be generally recognised that the speech of the Solicitor-General has sealed the fate of this Bill. Nevertheless, I wish to bring to the notice of the House one or two reasons why I am supporting the Bill, not from any personal or business interest but because I consider—and in 2098 this I agree with the speech of the hon. Member for Cardigan (Mr. Morris)—that it is desirable the Bill should have a Second Reading.
The Solicitor-General has given a scathing analysis of the Bill. He pointed out the tremendous effects which it would have if it were carried into law. I would remind him that this is not the first time that this Bill has been introduced. It was introduced as a Private Member's Bill last Session by the hon. Member for Reading (Mr. H. Williams), who is now Parliamentary Secretary to the Board of Trade. Where is the hon. Member for Reading to-day? It would have been interesting had the house been able to see the hon. Member for Reading in his place, because he so enthusiastically introduced this Bill last year. We might have heard what he has to say at the present time, and whether he agrees with the attitude of the Government, which the Solicitor-General has so clearly and specifically laid down. That is one of the mysteries that are never understood by the ordinary private Member.
The Solicitor-General pointed out that hire-purchase trading could not be regarded as one of the depressed industries. I entirely agree. Neither can the profession of landlordism be regarded as a depressed industry. The hon. and learned Member used one phrase twice to-day, and he strengthened it the second time. He said that the effect of this Bill would be to "annihilate and paralyse the law of distress." That is one of the reasons why I am inclined to support the Bill. The hon. and learned Member went on to admit that that might be a good thing.

§ The SOLICITOR-GENERAL
I said that it might be argued that that was a good thing, although I did not agree with it, but that if you are going to do it you should do it honestly and not in a back-handed way.

§ Mr. MORRISON
I accept that correction. I do not wish to misinterpret the hon. and learned Member. He said that that might be a good thing and that if it were a good thing we should do it openly and not in this roundabout, backhanded way. Unfortunately, that is the 2099 policy adopted by the Government. When they are opposing anything, they say: "There may be a grievance, but this is not the way to rectify it. It must be rectified in some other way at some other time by someone else." They are always putting off things. "Never put off until to-morrow what you can put off until the day after "seems to be the policy of the Government in many things. The Solicitor-General said that this Bill would give an artificial stimulus to the hire trader. Is it not the whole policy of the Government to give an artificial stimulus to trade? Has it not been shown in this Parliament in connection with the coal subsidy, and is it not going to be shown in the agricultural credits, where it is proposed to give an artificial stimulus to agriculture and try to bring about prosperity where there is none.

§ Mr. CRAWFURD
Mechanical lighters.

§ Mr. MORRISON
This is a typical Friday Debate, and probably speeches entirely opposed to mine will be delivered from these benches before the Debate is over. This Bill, which is admittedly highly contentious, was moved and seconded by two Members of the Conservative party and its rejection was moved and seconded by two Members of the Conservative party. There is a tendency now for the discussion to veer round to the question of the morality of hire-purchase. Statements have been made as to the harsh methods of the hire-purchase firms, in waiting until people have nearly made all their payments and then coming down upon them suddenly. That is not the question which we are here to discuss. That is not the question embodied in the Bill, nor is the question of the excessive profits of these companies involved in the Bill. I am not going to defend the hire traders. I have had case after case brought to my notice of the harsh methods of many of these companies, but I would like to point out that as time goes on the business of hire purchase on a large scale has more and more come within the purview of the best firms in the country. The system began with a considerable number of disreputable firms, firms with shady reputations, but to-day some of the best and most reputable firms are embarking upon 2100 it and carrying on a very considerable part of their business by hire-purchase methods, and there is no question of any sharp practice in regard to them.
With regard to the excessive profits, my point is that the way to reduce the charges is to increase the security of the hire-purchase firms and decrease the speculative risk of losses. If the speculative risks that these firms take in handing out furniture, pianos and gramophones under the hire-purchase system were decreased and they knew that landlords and other people were not likely to seize their goods for the debts of other people, they would be able to lower their charges, because the speculative risks would be less. The hon. Member for Portsmouth, Central (Sir H. Foster), made a statement which is becoming a common type of statement in this House on Fridays, namely, that there are good landlords and bad landlords. I would add to that statement that there are good hire-purchase traders and bad hire-purchase traders. What I object to in most of these Friday Debates is that there seems to be a tendency to lump a whole class of neonle together and say, "These are bad" or "These are good." "All landlords are bad." "All hire traders are had," or rice versa.

§ Sir H. FOSTER
I expressly said that there are firms and firms. I made exactly the point that the hon. Member is making. I made a distinction.

§ Mr. MORRISON
I am very glad that the hon. Member has added to the usual Friday statement that there are good landlords and bad landlords by saying that there are also firms and firms. That will be recorded to his credit. Running through the speeches there is a failure to recognise the innate honesty of the overwhelming mass of the people of this country. There seems to be a tendency, particularly on the part of the legal Gentlemen, to assume as did Mr. Bumble, that "the poor in the lump is bad." It is an amazing thing. Anyone who understands the hire-purchase business—the hire traders will certainly admit the truth of this statement—knows that the overwhelming mass of working people who engage in this trading do so honestly and without any desire to defraud landlords, traders or anybody else.
2101 The object of the Bill is to clarify the legal position. I have figures given by the Hire Traders' Association which show that, so far as they can find oat, 50 per cent. of the furniture in this country is sold on the hire-purchase system, 80 per cent. of pianos and gramophones, 70 per cent. of sewing machines and from 50 to 80 per cent. of motor cars. Moreover, there are 16,000,000 hire claims in 2102 force. One hon. Member made a reference to co-operative societies having engaged in this hire-purchase business.

§ Notice taken that 40 Members were not present; House counted, and 40 Members not being present—

§ The House was adjourned at Seventeen Minutes after One of the Clock until Monday next.