CONVERSION LOAN. (Hansard, 7 November 1929)

§ Sir A. POWNALL
I desire to raise a point of Order. There are several questions on the Order Paper to-day with regard to the forthcoming Conversion Loan. Those questions were put down at the earliest possible moment after the issue was first announced, but, owing to the congestion of the Order Paper, they have not been reached to-day. The lists open to-morrow morning, and, therefore, I maintain that it is of urgent public importance that these questions should be answered by the Chancellor of the Exchequer this afternoon, because obviously the result of the loan may depend to some extent on the reply that he gives to them.

§ Mr. D. G. SOMERVILLE
May I say that I gave notice to the Chancellor of the Exchequer asking for information on this matter, and I was told that several questions were on the Order Paper, and, therefore, my request could not be 1248 acceded to? I desire to support my hon. and gallant Friend in asking for a statement.

§ Mr. SPEAKER
This question has not been submitted to me as a Private Notice question, but I think it of sufficient importance to allow a Private Notice question to be asked.

§ 108. Sir A. POWNALL
asked the Chancellor of the Exchequer what were the reasons which cause the issue of the new Conversion Loan bearing interest at 5 per cent. for at least the next 15 years?

§ 112. Captain EDEN
asked the Chancellor of the Exchequer his reasons for the issue of a new Five per cent. Con version Loan at this present time?

§ 115. Mr. H. F. OWEN
asked the Chancellor of the Exchequer whether the terms of issue of the Five per cent. Con version Loan, which have resulted in a fall in State securities, are designed to attract cash capital for debt conversion or whether they relate to fresh development schemes of the Lord Privy Seal's Department?

§ The CHANCELLOR of the EXCHEQUER (Mr. Philip Snowden)
This issue is not designed to raise cash for schemes of general development. The immediate occasion of the operation is to provide for maturities of Exchequer and Treasury Bonds falling due to a total of £30,000,000 in January and February next, but I have also to strengthen my position in advance against the large maturity of over £130,000,000 5½ per cent Treasury Bonds next May. Beyond this I feel it very desirable to curtail the volume of Treasury Bills, the amount of which in the hands of the market has increased substantially in recent times. The terms of the loan are attractive, but, while I both hope and expect that future operations as they become necessary will be able to be conducted on terms more advantageous to the Exchequer, it would, in my judgment, in view of what I have stated, have been most impolitic to post pone any action till a later date. I may add that, in order to provide against any unforeseen contingencies, I have considered it prudent to ensure the subscription of a sum sufficient to meet the earlier maturities of £30,000,000 and with this 1249 object have obtained guaranteed subscriptions for the required amount at a cost of ½ per cent.

§ Sir A. POWNALL
May I ask whether there is any precedent for giving a com mission of ½ per cent., at a cost of £150,000, in the case of a Government loan of this nature, and why this was not mentioned on the prospectus, as has to be done in the case of any commercial issue?

§ Mr. SNOWDEN
The course of underwriting a Government loan is exceptional, but it has been done on previous occasions. I understand that there is some feeling in certain quarters as to the announcement not having been made earlier with regard to the underwriting of a portion of the loan. With regard to the fact of its not having been stated in the prospectus, it was not considered necessary to do so.

§ Captain EDEN
In view of the fact that the Chancellor of the Exchequer's statement to-day was necessarily brief and cannot now be debated, and of the admittedly great importance of this matter, I beg to ask leave to move the Adjournment of the House for the purpose of discussing a definite matter of urgent public importance, namely, "the action of the Chancellor of the Exchequer in regard to the terms of issue of the new Conversion Loan, and more especially with reference to the grant of preferential terms to certain persons which was not disclosed in the original prospectus."

§ Mr. SPEAKER
The hon. and gallant Member asks leave to move the Adjournment of the House on a definite matter of urgent public importance. There is a Standing Order on this question, and I cannot see that the reasons given for moving the Adjournment comply with that Standing Order. Therefore, I am afraid that I must disallow the Motion.

§ Sir LAMING WORTHINGTON-EVANS
On the question of urgency: This loan is to be issued to-morrow. The terms, until the actual issue has been made, are, of course, subject to the approval of this House. I submit to you, Sir, that surely now is the only opportunity on which those terms can be usefully discussed. If a day be allowed to elapse, the terms when accepted become a contract and the matter is 1250 finished. At this moment there is a locus penitentiae, and there is a time when the House can pronounce a judgment upon it. I submit that never was a matter of more urgent importance. I am not arguing the merits of the Loan for a moment; all that I am submitting to you, Sir, is that the question is urgent and is well within the Standing Order.

§ Mr. SNOWDEN
On the question of urgency: The prospectus appeared on Sunday, and under the Standing Order a Motion for the Adjournment of the House is not admissible unless the earliest possible opportunity is taken of calling attention to the matter. I submit to you, Sir, that, seeing that this matter was not raised on Monday, when this impending issue was well known, the question of urgency cannot be maintained.

§ Sir L. WORTHINGTON-EVANS
May I submit to you that the question of urgency really arises, not on the first day on which the prospectus was issued, but on the first day on which it was known that preferential terms had been given to certain subscribers? It is true that it was rumoured in the Press yesterday, but the first official confirmation of the fact has been given within the last 10 minutes by the Chancellor of the Exchequer.

§ Lieut.-Commander KENWORTHY
Are you aware, Sir, that, in the City columns of the "Times" yesterday, all this was set out chapter and verse, and, therefore, must have been known the day before yesterday?

§ Mr. D. G. SOMERVILLE
May I say that I gave notice to the Chancellor of the Exchequer raising this very point, so that a day's notice was given?

Mr. MACLEAN
Arising out of the points that have been raised, may I draw your attention, Sir, to the terms of the question which you permitted the hon. and gallant Member for East Lewisham (Sir A. Pownall) to ask, and may I submit to you that, that question having been handed in at the Table two days before, the matter arising from it is not definite and urgent?

§ Sir A. POWNALL
May I say that, when I handed in my question, I had no knowledge whatever with regard to the ½ per cent., so that the question is now urgent, although it was not then?

§ Captain EDEN
May I submit one further matter for your consideration? I think I am right in saying that the amended prospectus with reference to this loan only appeared in the Press this morning. Therefore, I cannot see how any more immediate steps could have been taken than we have taken by raising the matter now.

Sir F. HALL
The Chancellor of the Exchequer stated that there was no necessity for stating in the prospectus that there was to be a payment of ½ per cent., which was tantamount to an underwriting commission. Does the right hon. Gentleman recognise that the reply he has given is likely to make matters very difficult in regard to prosecutions that may eventually be necessary where all information is not forthcoming in the prospectus?

§ Mr. JAMES STUART
May I point out that there is a further point which was not mentioned in the prospectus, namely, the question of the rights of holders of the Treasury Five Per Cent. Loan?

§ Mr. SNOWDEN
With regard to the point which has been urged from the other side of the House, that the information with regard to the under writing has only just been disclosed, there is on the Order Paper this morning a question dealing with this matter, and, therefore, it must have been public property already.

§ Mr. SPEAKER
In the various points of Order that have been raised nothing has been said to change my mind. However desirable it may be that this matter should be raised as a matter of definite public importance, it does not comply with Standing Order No. 10. That is the only thing that I have to consider, and, therefore, I cannot allow the Motion to be moved.