§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
§ Mr. SMITHERS
I wish to offer some remarks on this Clause in order to make quite sure that the Committee realise all that it implies. The Clause means that certain stocks shall come under the Trustee Act, so that trustees who wish to do so will be able to invest trust money 772 in those stocks. The Clause refers to the Colonial Stock Acts, 1877 to 1900. I have been at some trouble to look up those Acts and I wish to quote the opening sentence of Clause 2 of the Colonial Stock Act of 1900.Securities in which a trustee may invest under the powers of the Trustee Act shall include" etc.I hope the hon. Baronet will believe that I am trying to contribute a substantial point to this discussion. This country, by allowing its credit to be used for the development of the Empire, has contributed greatly to the development of a great part of the world. Our Dominions and Colonies have been developed roughly on a 4 per cent. or 4½ per cent. basis up to the War. Speaking in a strictly economic sense and putting aside all questions of sentiment it is also true to say that countries like the Argentine, Chile and others have paid us 1 per cent. to 1½ per cent. more for the development of their countries on the credit which we advanced to them, because their stocks did not come under the Trustee Act while those of our Dominions did. I speak here as a member of the Stock Exchange and I wish quite frankly to say in passing that there is no standard of honour higher anywhere in the world than that of the Stock Exchange.
If we admit stocks to the Trustee List, thus placing them in the category of stocks in which a trustee may recommend investment, there may come along some old lady or some dependants who have a little money and who wish to put it into a trustee investment. They will find these stocks in the list of those in which trustees may invest. It will give those stocks a kind of glamour to have the status of British credit behind them and I would point out to the Government that there is a great responsibility in putting any stock upon this list. It is now proposed to include in this list the stocks of mandated territories or territories over which His Majesty's Government exercise a mandate under an order of the League of Nations. May I put this question to the Government? Supposing a small investor invests his or her all in a stock which comes under the Trustee Act, believing the credit of the British Government to be behind that stock, and supposing that for some reason or other, the mandate of the British Government 773 ends or the British Government ceases to have control over the territory, will any loan issued under the Clause we are discussing have the guarantee of the British Government after the mandate or responsibility of the British Government comes to an end and will that stock still be a trustee security? The point is that if a mandate comes to an end or the British Government's responsibility ceases and the credit of that particular stock goes down because the British Government have no more to do with it, what will happen to those people who have already invested money in that particular stock? We have in the Stock Exchange a very long official list of trustee securities, and it is a very great privilege to get on that list, because it enables borrowers to borrow at a much lower rate. I do not press for an answer now, but I would like to have an assurance between now and the Report stage that the hon. Baronet will consider the inner workings of the list and will see that, in justice to those people who invest in these stocks, they cannot be in any way misled because the British Government have given a guarantee which, after the mandate or control of any particular mandated territory comes to an end, may cease. It is to avoid this possibility that I am bringing the matter to the notice of the Government.
§ Sir O. MOSLEY
The hon. Member has raised a very interesting and important point. Of course, the granting of this great privilege of becoming a trustee security does carry with it great obligations on the Government to see that the privilege that is accorded can never become the subject of abuse. To that end the most careful machinery is devised. It is not by any means an automatic procedure that, directly this Bill is passed into law, every Mandated Territory or Protectorate is susceptible to the provisions of the Bill and made a trustee security. If the hon. Member carefully reads the wording of the Clause—
§ Mr. SMITHERS
I have read it very carefully. I do not want to press for a reply now, but it is so important to small investors that I ask the Government to bear it in mind and to make quite sure that the machinery is water-tight.
§ Sir O. MOSLEY
There is the most careful machinery and Treasury scrutiny before any recommendation is made for 774 an order to be exercised. There is also a provision for allowing an order to lie on the table of the House for 20 days, and it is subject to debate after the Treasury scrutiny has been made. In exercising these powers and in making these recommendations, the Treasury would, of course, have in view the posibility of any Mandated Territory ceasing to be a mandate of this country, and they would, in making any recommendations, exercise the very greatest caution in that respect. For those reasons, it may well be that certain territories which would normally enjoy this privilege will not be recommended as trustee securities, but, even if we set aside the Mandated Territories where that situation may arise, and recommendations will not be made, then there is a tremendous scope under the Clause for the inclusion of perfectly good securities as trustee securities. For instance, there is the Federated Malay States—a very good and admirable subject for a trustee security, and in some ways rather a better security than many other trustee securities—and it will be open to them to enjoy the advantage of these amenities, when the Treasury recommendation is made, and after all the machinery has been set in working. The point the hon. Member has raised is very present to the mind of the Government, and will certainly be present to the minds of those who make the recommendations to set the machinery in motion.
§ Question, "That the Clause stand part of the Bill," put, and agreed to.