§ Considered in Committee under Standing Order No. 71A.
§ [Captain BOURNE in the Chair.]
§
Motion made, and Question proposed,
That it is expedient, to amend the Law relating to the National Debt as follows:
and with respect to other matters in connection with any securities so issued;
§ Mr. P. SNOWDENPerhaps I had better just say a few words on this very long Resolution, although I can add little if anything to the observations which I made when referring to this matter in the Budget speech. Its purpose is to empower the Treasury, when they con- 923 sider the circumstances favourable, to make a conversion of the huge block of £2,000,000,000 of 5 per cent. War Loan. It might be asked why it should be necessary to take legislative powers in regard to this possible conversion when other conversion operations have been carried out in the past under the existing legislative powers. The reason for that is that this will be a very exceptional conversion. It would be very simple if it were the conversion of £200,000,000 or £300,000,000, but when you have a block of £2,000,000,000 you have a very different proposition with which to deal. We are asking for certain legislative authority, but it does not mean that all the powers that are asked for in this Resolution, which will later be incorporated in the Finance Bill, will be exercised. It does not mean when we come to consider the terms of conversion and the prospectus that all the powers in possession of the Treasury will be exercised and employed but it is necessary to take powers.
I believe that there is an impression in some quarters that this Loan, being of such huge dimensions, is not likely to be converted or that it is unlikely that an attempt to convert it will be made for a very long time. Those who are familiar with the conditions of this Loan are well aware that the Government have a right to convert it at three months' notice, but it must be paid off, if it is not converted, before 1947. Then the Government must pay it off by whatever means they may find available at that time. If they cannot issue new stock at that time they will have to find cash. The operation of finding £2,000,000,000 of cash would be one which, I think, would exercise not merely the ingenuity but the power of any Government however strong.
The Members of the Committee will notice that nothing is said in this Resolution as to the financial terms of the conversion offer. Obviously, a statement of that kind could not be made at the present time, but I think that I may go to this extent and say that the Government, or the Treasury, which is the Department and authority responsible, will not consider a conversion scheme unless the effect of it would be to bring a very substantial sum of benefit to the Exchequer in the form of reduced interest. I believe that 924 I said in my Budget Statement that I had hoped at the middle of this year to launch such a conversion offer, but financial conditions became such as to make it certain that had such a proposal been made at that time, it would not have been successful. But I can add to that by saying that of course the condition of the markets will be followed with closeness and care, and that at the first favourable prospect of a successful operation advantage will be taken of those conditions.
There are two or three conditions, or powers, shall I say, which are in this Resolution and will be embodied in the Finance Bill to which I will refer. I believe that there is an Amendment upon the Paper and it refers, if I remember rightly, to a power taken in this Resolution to exempt from Income Tax certain foreign holders, who are a very considerable number. The holding of 5 per cent. War Loan by foreigners is very considerable. We are asking for the usual powers, and power will be given to exempt from British taxation the converted stock which may be held by foreigners.
We are also taking the power—and again I say that it will not necessarily be used—to continue the practice which applies to the existing War Loan of not deducting tax at the source, but I believe that there is an impression in the minds of some people that that means that British holders of the War Stock will not pay Income Tax. That is not the case. Although it is not payable at the source, they will pay Income Tax in the ordinary way if liable. There are other powers which we are seeking in regard to the safeguarding of trustees and one or two matters of a minor character. In paragraph (b) we are seeking a power which has become necessary owing to the position of the National Debt charges. We are reducing the statutory or rather the fixed Debt charge of £355,000,000 to £322,000,000. This reduction is mainly accounted for by the Hoover plan, which relieves us this year of £13,500,000 for interest and nearly £6,000,000 which is saved in respect of the Sinking Fund on the American debt. Other reductions bring the figure down to £322,000,000.
I am quite sure that there will be no Member of the Committee who will 925 oppose this Resolution. There is no Member of the Committee who is not anxious that this huge block of war debt should be tackled at the earliest possible moment. It is now carrying a rate of interest higher than the interest on Government stock generally, and it is most important that it should be con- verted. We hear speeches and much talk about the burden of the War debt and attention is always directed to the 5 per cent. War Loan, ignoring the comparatively low rate of interest that is carried by a very large part of our National Debt. I have not had the figures taken out for some months, therefore the figure that I am going to give may not be up to date, but when I did go into the matter I found that the average interest upon the total of our National Debt was only about 3½ per cent.
There is a very considerable block, amounting to £700,000,000 of the old 2½ per cent. Consols, which carries an interest of 2½ per cent. There are other blocks that are not so large, which carry a little more interest to people who bought this stock at a depreciated price. For instance, the 2½ per cent. Consols, now standing at 57, stood at 110 some years ago. I know that there are a great many who bought the stock at that price. Therefore, they have lost about one-half of their capital investment. When people talk about the War Debt, attention is always concentrated upon this large block of £2,000,000,000 5 per cent. War Loan. I am very anxious to grapple with the matter, and I am sure that every Member of the Committee is equally anxious. I do not for a single moment doubt that we should get unanimous support for the Resolution.
§ Mr. WARDLAW-MILNECan the right hon. Gentleman say how much is held abroad?
§ Mr. SNOWDENI cannot say at the moment.
§ Mr. PETHICK-LAWRENCEI am glad that on one subject, following the rather acrimonious discussions that have taken place since the House re-assembled, we are in a considerable measure of agreement with right hon. and hon. Members opposite. It is a personal satisfaction to me that on the first occasion that I have followed the Chancellor of the Exchequer, who for so long was 926 my chief in the late Government, it should be an occasion on which I am able to agree with him in the proposition that he is putting before the Committee. From this side of the House there is complete agreement with the desire to secure the conversion of Debt. Having regard to the sacrifices that have been demanded from every section of the community, some of us take the view that some definite sacrifice should have been demanded from the holders of Debt. The proposal contained in this Resolution is definitely on a voluntary basis in regard to the future. Although the Government are prepared to break contractual liabilities with regard to persons in receipt of salaries and wages, I suppose that, with their outlook, one cannot expect them to take a similar course with regard to the holders of bonds which are a charge upon the State.
There was one point in the speech of the Chancellor of the Exchequer on which I was not clear. He said that, on going through the whole of the Debt, he found that the average rate of interest was about 3½ per cent. I should like to know whether that calculation takes into account that part of the Debt on which I believe no interest is paid, because it is held by the Government. It is part of the Debt which is held against the fiduciary issue. I believe that is reckoned as part of the Debt. I do not know whether it nominally pays interest which is repaid, but I imagine that it pays no interest at all.
§ Mr. SNOWDENIt does not make any difference.
§ Mr. PETHICK-LAWRENCEIf it pays no interest and if it is included in the right hon. Gentleman's calculation, it does tend to bring down the average amount of interest. I do not think that stands alone, I think there are other parts of the debt which pay no interest. Coming to the main teat of the Resolution, we fully approve of the principle of converting the 5 per cent. War Loan at the earliest opportunity to a lower level. In so far as the Resolution is for that purpose, it has our full support. The Chancellor of the Exchequer is right in thinking that we shall not oppose this proposal in the Division Lobby. There are, however, one or two points in this somewhat complicated form about which 927 I am not wholly clear. I thought the Chancellor of the Exchequer would have enlightened us a little more in detail than he did. I notice that in paragraph (a, 1), line 9, it says that provision may be made
for the issue of bonus stock and bonus bonds to form part of the said loan and the payment of cash bonuses.I am not clear as to what that means. I think it means that if the 5 per cent. War Loan cannot be converted pound for pound into 4 per cent. War Loan it may be that some little additional payment will be made. If the 5 per cent. War Loan stands at 99½ and the 4 per cent. War Loan at 98 it may be necessary to give in addition to pound for pound conversion some slight bonus to make up the balance.
§ Mr. SNOWDENThis operation might extend over many months and it may be desirable to offer a bonus to those who convert in the early stages. It might be desirable to give a little bonus for early conversion.
§ Mr. PETHICK - LAWRENCEI am much obliged for the explanation. The Chancellor of the Exchequer has already explained that the sole object of paragraph (b) relates to the amount paid on account of the American Debt—
§ Mr. SNOWDENAnd Victory Bonds.
§ Mr. PETHICK-LAWRENCEI understand this has to do with the Sinking Fund; that the provisions which are referred to are in order to preserve the stability of the Sinking Fund.
§ Mr. SNOWDENThe position is like this. We are not going to provide the full Sinking Fund this year. We are not providing for Victory Bonds tendered for Death Duties which have generally amounted to about £12,500,000, and there is £1,000,000 of the £52,000,000 which is free Sinking Fund and also nearly £6,000,000 of the American Sinking Fund, which will be suspended. Altogether the savings amount to about 220,000,000.
§ Mr. PETHICK-LAWRENCEI am anxious to be a little more certain with regard to paragraph (c). As I anticipated the Chancellor has said that this relates to foreign bond holders, but there is 928 nothing in paragraph (c), as it stands, which limits it to foreign bonds. Paragraph (c) (1) refers to the fact that in regard to the present 5 per cent. War Loan tax is not deducted at the source, and it gives the Treasury power, when substituting the new War Loan for the old—
The DEPUTY-CHAIRMANI think I must point out to the hon. Member that there is an Amendment. on the Order Paper to omit paragraph (c) and it seems to me that the most appropriate place to discuss this matter would be on that Amendment. If the hon. Member for East Leicester (Mr. Wise) proposes to move that Amendment, I cannot admit another discussion on the same topic.
Mr. MACLEANIs it not within the right of any hon. Member who is replying to the Chancellor of the Exchequer, who has moved the full Resolution, to ask questions upon any part of the entire Resolution before any Amendment is moved? It may lead to greater clarity later on if the Chancellor of the Exchequer is asked to make clear now what is in the Resolution.
§ Mr. PETHICK-LAWRENCEThat is the point I want to emphasise. I am seeking to elucidate the precise meaning of the Resolution. I appreciate the point that it would be undesirable to argue the question at the moment, but I think it is desirable at this stage that we should have some understanding as to what the Resolution means so that when the time comes the hon. Member will be able to decide whether he will move his Amendment or not.
The DEPUTY-CHAIRMANIf the hon. Member confines himself to inquiring what the Chancellor of the Exchequer means he will be in order. I do not wish to have a double discussion on the exact meaning of the Resolution. As long as hon. Members confine themselves entirely to asking what the Resolution means they will be in order.
§ Mr. PETHICK-LAWRENCEI will endeavour to keep within your Ruling. As I understand it, paragraph (c) (1) relates to the fact that Income Tax is not at present deducted at the source in the case of the 5 per cent. War Loan, and I understand that this provision is to 929 enable the Treasury to make the same concession in the case of the loan which is to take the place of the 5 per cent. War Loan.
§ Mr. SNOWDENThat is so.
§ Mr. PETHICK-LAWRENCEIn regard to paragraph (c) (2), do I understand that in the Finance Bill it will be confined solely to foreign investors?
§ Mr. SNOWDENindicated assent.
§ Mr. PETHICK-LAWRENCEThat, I think, covers all the points I wanted to raise in connection with the Resolution.
§ Mr. LOGANI am a little interested in this matter, and I want to compliment the Chancellor of the Exchequer on bringing forward a proposal to convert the 1929–1947 stock, but naturally I am most anxious to know from the point of view of various societies how far the Chancellor of the Exchequer proposes to go and what he intends to do. I do not want to know all the particulars, I am not anxious to know when the flotation is to take place or what rate per cent. will be allowed, but I imagine that the flotation of the loan will mean a reduction of 1 per cent. There are one or two points which are very germane to the question of this conversion and I trust that the Committee will not consider that I am taking up too much of its time in dealing with some contractual obligations which have been entered into and with some of the difficulties which this conversion will create.
I am not concerned about those who have made wealth, I am concerned about those particular societies, mostly affecting the poor, who have entered into arrangements to guarantee certain benefits. There are trustee investments which many approved societies took up in the 1929–1947 stock, and it naturally follows that if there is any reduction in the amount it is going to interfere with the benefits paid by these particular societies. If there is a drop from 5 per cent. to 4 per cent. it will mean roughly 20 per cent. on the valuation of societies. We have just passed through the third quin-quennial valuation and the Treasury have issued orders to various societies that they can give certain benefits on account of the investments and securities which they hold. I trust that this conversion will be beneficial, I hope that the Chan- 930 cellor of the Exchequer will succeed, but I think it is advisable to see what protection can be given before the powers asked for in this Resolution are handed over to the authorities in this matter.
The valuation that has taken place in the Government Department in respect of National Health Insurance has enabled the societies to give certain benefits. If there is a conversion of 5 per cent, loan to 4 per cent. it will certainly mean either the cancellation of extra benefits or that another class of insurance will have to be brought in to make good the loss of 1 per cent. on the investment account. Is it meant that the whole of the National Health Insurance service of the Kingdom is to be dealt with drastically and curtailed simply because the benefit to members will not be allowable? If the calculation of 4 per cent. interest be correct, there must be a corresponding deduction in. the additional benefits given for Health insurance. I do not wish to plead for preferential treatment. When we are dealing with £2,000,000,000 I am convinced that the Chancellor of the Exchequer ought to be given the fullest play and ought to have his conversion as early as possible. But no injustice ought to be done.
Is it to be said that oculist treatment, dental treatment and convalescent treatment are to be curtailed? Thousands that I know, the poorest of the poor, will be affected. Is it possible for some grants from the Treasury to be made, or for an arrangement to be made with the Insurance Commissioners, seeing that the State is about to break a contract affecting a loan which has been taken up as a trustee security by the societies? Has there been any consultation in respect of the administration, to see if some readjustment of administration can be brought about to make good the loss to the approved societies I ask these questions not in any spirit of carping criticism. I have been associated for long with this class of business, in running a society and managing the funds, and I know what I am talking about. I want to see these benefits continued. I hope that the Chancellor will give careful consideration to the point raised and will see that some redress is given to members of approved societies.
Mr. MACLEANIn the event of a conversion loan, does the Chancellor not intend to reduce the amount of interest below the sum mentioned in line 28 of the Resolution?
§ Mr. P. SNOWDENI do not under stand what the hon. Member means.
Mr. MACLEANIn the resolution, the right hon. Gentleman says:
by reducing to three hundred and twenty-two million pounds the permanent annual charge for the National Debt for each of the financial years ending respectively….
§ Mr. SNOWDENThe words "permanent annual charge" are the words that are incorporated in all Finance Acts dealing with the Debt charge, and include interest and Sinking Fund. In regard to the way in which these figures are made up I have already tried to answer a question. I will try to make it a little plainer and this will be an answer to the hon. Member's Amendment if he moves it later. I explained that the £355,000,000 in this year's Finance Bill as the fixed charge is reduced by three items, Victory Bonds, suspension of the Sinking Fund to America and the dropping of £1,000,000 that we had as free Sinking Fund. The Sinking Fund now was £52,000,000, or something like that. By those reductions that I have mentioned it is reduced to £32,500,000. There will be required as interest £289,500,000, and that makes up the £322,000,000.
Mr. MACLEANThe amount of the interest you wish to reduce to is £289,500,000? The other items that you mentioned make up the total of £322,000,000?
§ Mr. SNOWDENOne word more. In this figure of interest, I have taken no account this year of any saving in the reduction of interest. I think I explained that in my Budget Speech.
Mr. MACLEANI beg to move, in line 23, to leave out the words "three hundred and twenty-two" and to insert instead thereof the words "two hundred."
My reason for doing so is that in the language of the Chancellor of the Exchequer and the Prime Minister and the supporters of the Government we are passing through a financial crisis and sacrifices have to be made. Already sacrifices have been imposed by the vote 932 of this House upon certain sections of the community. As the Chancellor is well aware a few of us in this party have, for a number of years, advocated the necessity of examining the War Loans of this country with a view to reducing the interest upon them. We have put forward as our argument for reducing the rate of interest on our War Loans, the very argument which was used by the Prime Minister as a justification for imposing a 10 per cent. cut upon the unemployed, namely, that there has been a fall in the cost of living. We pointed out that, as there had been such a fall, a fixed interest on War Loan meant that the recipients of that interest were now enjoying greater value in the spending power of their money, than they had when the country was in such dire necessity and when they were invited to subscribe to these loans at high rates of interest.
We were constantly met, however, with the argument, "You cannot break a contract." We were told that a contract had been entered into between the lenders of the money and the State to whom the money had been lent; that that contract could not be broken and that the interest must continue to be paid at the same rate. I have been interested to-night to hear part of the Chancellor's explanation. I apologise for not having been here to hear all of it but this matter came up sooner than we anticipated. I was also interested to hear the reply of the hon. Member for West. Leicester (Mr. Pethick-Lawrence) who was Financial Secretary to the Treasury under the late Government. Their speeches were practically admissions that what we had been saying in the past on this matter was justified at that time. The Chancellor opposed our ideas in 1921, 1922 and 1923 at the Labour party conferences when we moved resolutions to reduce the War Loan interest. He and the hon. Member for West Leicester appear now to have come round to the point of view which we then advocated. I notice that the Chancellor smiles, but had they accepted our proposals at that time and had the country accepted our proposals this financial crisis would never have arisen and this Government would never have been necessary.
This Government has introduced a Bill which asks Parliament to give it powers 933 to break the very contractual obligations which the Chancellor of the Exchequer formerly held up to us as sacred contracts which could not be broken. If a breach of contract was involved at that time, then the Economy Bill is a breach of contract. The reduction of teachers' salaries is a breach of contract. The reduction of the wages of Navy men is a breach of contract. The whole of the Government's national economy scheme is built up on breaches of contracts made by the State with most of the population who are going to suffer from the proposals. Why talk of breaches of contract? These are breaches of honour as well. If it is not a breach of contract to pass a Bill of that kind to-day, then it would have been no breach of contract in 1921 to have put a similar measure into operation in this country in regard to War Loan interest. The Chancellor has told us that the average rate of interest over the entire debt of £7,000,000,000 is 3½ per cent. In that figure, I take it, are included certain items upon which no interest is being paid and also Consols upon which 2½ per cent. is being paid. On something like.£2,000,000,000 5 per cent. is at present being paid. The right hon. Gentleman spoke of 3½ per cent. average interest as something which might be considered rather moderate. It is all very nice to discuss these things, according to averages, but averages do not always work out in the proper way.
In order to get away from the contractual obligations and induce people who at present hold bonds to yield up those bonds and accept others at a lower rate of interest, the right hon. Gentleman proposes, according to his explanation to offer a bonus. In his own words, he is willing to give a bonus to the people who agree to yield up their contractual right to receive interest at 5 per cent. or whatever the rate may be on the particular class of loan held by them. That is to say he is going to give them a bonus if they care to yield up their 5 per cent. bonds and take bonds in a lower category, say, 4 per cent. Why is not a bonus being offered to the teachers to give up their rights according to their contractual obligation to the State? Why is not a bonus being offered to any of the other classes who are being compelled—not asked but compelled—to yield up their contractual obligations and rights.
934 I ask hon. Members to read the report of this Debate to-morrow and to contrast the explanation of the Chancellor of the Exchequer and the speech of the hon. Member for West Leicester accepting that explanation with the speeches which they made on former occasions at Labour party conferences on this subject. A committee was set up by the Labour party to examine the proposal—that was a resolution which I put to the Edinburgh Congress in 1922—and I would ask hon. Members to refer to the report of that committee of which the hon. Member for West Leicester was a member. It will be found that in the statements which have been made tonight by the Chancellor of the Exchequer and by the hon. Member for West Leicester, they have now come round to the view which we advocated and have come down on the side which we advocated in 1921 and 1922. I hope that to-night the Labour Members in this House will, if I take this to a Division, follow me into the Lobby, as some of them did upon another occasion, about eight years ago, when on an Amendment that I moved and divided the House upon I tried to get a reduction in the rate of interest.
This is no new idea with me. [Interruption.] I am glad of that interruption by my hon. Friend the Member for the Scotland Division of Liverpool (Mr. Logan). The friendly and the health societies undoubtedly may suffer hardship under my proposal, but the hon. Member has to bear in mind that before the War trustee stock was put out at a lower rate per cent. than is the case at present. The amount was raised because of what was looked upon as the dearer price of money, and want to put it to him that it is much better for the nation as a whole to save a sum of £150,000,000 or even £200,000,000 per year in interest upon War Loan than that £10,000,000 should be spent even in additional benefits to members of health societies. The greater saving is to the greater number, and it would be looked upon as a very selfish method of approaching the question that the interests of a small number of the community who required teeth, or glasses, or other additional benefit given by health societies, should be put upon a higher pinnacle than those of 935 the nation as a whole. I trust that the Financial Secretary to the Treasury, if he replies, will indicate that he intends to accept my Amendment, if not completely, at least to the extent of reducing the amount that stands in the
§ orginal Resolution by a considerable sum.
§ Question put, "That the words proposed to be left out stand part of the Question."
§ The Committee divided: Ayes, 267; Noes, 185.
937| Division No. 474.] | AYES. | [8.59 p.m. |
| Acland-Troyte, Lieut.-Colonel | Davies, Maj. Geo. F.(Somerset, Yeovil) | Jones, Rt. Hon. Leif (Camborne) |
| Aitchison, Rt. Hon. Craigle M. | Davison, Sir W. H. (Kensington, S.) | Jowitt, Rt. Hon. Sir W. A. (Preston) |
| Albery, Irving James | Dawson, Sir Philip | Kedward, R. M. (Kent, Ashford) |
| Alexander, Sir Wm. (Glasgow, Cent'l) | Denman, Hon. R. D. | Kindersley, Major G. M. |
| Allen, Lt.-Col. Sir William (Armagh) | Despencer-Robertson, Major J. A. F. | Lamb, Sir J. Q. |
| Amery, Rt. Hon. Leopold C. M. S. | Dixey, A. C. | Lane Fox, Col. Rt. Hon. George R |
| Ashley, Lt.-Col. Rt. Hon. Wilfrid W. | Dixon, Captain Rt. Hon. Herbert | Latham, H. P. (Scarboro' & Whitby) |
| Aske, Sir Robert | Duckworth, G. A. V. | Law, Sir Alfred (Derby, High Peak) |
| Astor, Maj. Hon. John J. (Kent, Dover) | Dudgeon, Major C. R. | Leighton, Major B. E. P. |
| Atkinson, C. | Dugdale, Capt. T. L. | Lewis, Oswald (Colchester) |
| Baldwin, Rt. Hon. Stanley (Bewdley) | Eden, Captain Anthony | Little, Graham-, Sir Ernest |
| Balfour, George (Hampstead) | Edmondson, Major A. J. | Llewellin, Major J. J. |
| Balfour, Captain H. H. (I. of Thanet) | Elliot, Major Walter E. | Locker-Lampson, Rt. Hon. Godfrey |
| Balniel, Lord | England, Colonel A. | Lockwood, Captain J. H. |
| Beamish, Rear-Admiral T. P. H. | Erskine, Lord (Somerset, Weston-s.-M.) | Long, Major Hon. Eric |
| Beaumont, M. W. | Evans, Capt. Ernest (Welsh Univer.) | Lovat-Fraser, J. A. |
| Bellairs, Commander Carlyon | Everard, W. Lindsay | Lymington, Viscount |
| Bennett, Sir E. N. (Cardiff, Central) | Falle, Sir Bertram G. | McConnell, Sir Joseph |
| Betterton, Sir Henry B. | Ferguson, Sir John | MacDonald, Rt. Hon. J. R. (Seaham) |
| Bevan, S. J. (Holborn) | Fielden, E. B. | MacDonald, Malcolm (Bassetlaw) |
| Birkett, W. Norman | Fison, F. G. Clavering | Macdonald, Capt. P. D. (I. of W.) |
| Blindell, James | Foot, Isaac | Maclean, Sir Donald (Cornwall, N.) |
| Boothby, R. J. G. | Ford, Sir P. J. | Macpherson, Rt. Hon. James I. |
| Bowater, Col. Sir T. Vansittart | Forestier-Walker, Sir L. | Macquisten, F. A. |
| Bowyer, Captain Sir George E. W. | Fremantle, Lieut.-Colonel Francis E. | Maitland, A. (Kent, Faversham) |
| Boyce, Leslie | Ganzoni, Sir John | Makins, Brigadier-General E. |
| Bracken, B. | Gault, Lieut.-Col. A. Hamilton | Mander, Geoffrey le M. |
| Braithwaite, Major A. N. | George, Major G. Lloyd (Pembroke) | Margesson, Captain H. D. |
| Briscoe, Richard George | George, Megan Lloyd (Anglesea) | Marjoribanks, Edward |
| Broadbent, Colonel J. | Gillett, George M. | Markham, S. F. |
| Brown, Ernest (Leith) | Gilmour, Lt.-Col. Rt. Hon. Sir John | Mason, Colonel Glyn K. |
| Brown, Brig.-Gen. H.C. (Berks, Newb'y) | Glassey, A. E. | Meller, R. J. |
| Buchan, John | Glyn, Major R. G. C. | Merriman, Sir F. Boyd |
| Buchan-Hepburn, P. G. T. | Gower, Sir Robert | Millar, J. D. |
| Bullock, Captain Malcolm | Graham, Fergus (Cumberland, N.) | Milne, Wardlaw-, J. S. |
| Burgin, Dr. E. L. | Grattan-Doyle, Sir N. | Mitchell, Sir W. Lane (Streatham) |
| Butler, R. A. | Gray, Milner | Monsell, Eyres, Com. Rt. Hon. Sir S. |
| Cadogan, Major Hon. Edward | Greaves-Lord, Sir Walter | Moore, Lieut.-Colonel T. C. R. (Ayr) |
| Campbell, E. T. | Greene, W. P. Crawford | Morris, Rhys Hopkins |
| Carver, Major W. H. | Grenfell, Edward C. (City of London) | Morrison, W. S. (Glos., Cirencester) |
| Castle Stewart, Earl of | Gretton, Colonel Rt. Hon. John | Muirhead, A. J. |
| Cayzer, Sir C. (Chester, City) | Griffith, F. Kingsley (Middlesbro' W.) | Nail-Cain, A. R. N. |
| Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.) | Gritten, W. G. Howard | Newman, Sir R. H. S. D. L. (Exeter) |
| Chadwick, Capt. Sir Robert Burton | Hacking, Rt. Hon. Douglas H. | Newton, Sir D. G. C. (Cambridge) |
| Chamberlain, Rt. Hn. Sir J.A.(Blrm., W.) | Hall, Lieut.-Col. Sir F. (Dulwich) | Nicholson, O. (Westminster) |
| Chamberlain, Rt. Hon. N. (Edgbaston) | Hamilton, Sir George (Ilford) | O'Connor, T. J. |
| Chapman, Sir S. | Hamilton, Sir R. (Orkney & Zetland) | Oliver, P. M. (Man., Blackley) |
| Christie, J. A. | Hammersley, S. S. | Oman, Sir Charles William C. |
| Church, Major A. G. | Hanbury, C, | Ormsby-Gore, Rt. Hon. William |
| Clydesdale, Marquess of | Hannon, Patrick Joseph Henry | Owen, Major G. (Carnarvon) |
| Cobb, Sir Cyril | Harbord, A. | Peake, Capt. Osbert |
| Cockerill, Brig.-General Sir George | Harris, Percy A. | Penny, Sir George |
| Cohen, Major J. Brunel | Hartington, Marquess of | Percy, Lord Eustace (Hastings) |
| Colfox, Major William Philip | Harvey, Major S. E. (Devon, Totnes) | Perkins, W. R. D. |
| Collins, Sir Godfrey (Greenock) | Haslam, Henry C. | Peters, Dr. Sidney John |
| Colman, N. C. D. | Henderson, Capt. R. R. (Oxf'd, Henley) | Peto, Sir Basil E. (Devon, Barnstaple) |
| Colville, Major D. J. | Hennessy, Major Sir G. R. J. | Pownall, Sir Assheton |
| Conway, Sir W. Martin | Hills, Major Rt. Hon. John Waller | Pybus, Percy John |
| Cooper, A. Duff | Hope, Sir Harry (Forfar) | Ramsay, T. B. Wilson |
| Courthope, Colonel Sir G. L | Hore-Belisha, Leslie | Ramsbotham, H. |
| Cowan, D. M. | Horne, Rt. Hon. Sir Robert S. | Rawson, Sir Cooper |
| Cranborne, Viscount | Howard-Bury, Colonel C. K. | Reid, David D. (County Down) |
| Crichton-Stuart, Lord C. | Hudson, Capt. A. U. M. (Hackney, N.) | Remer, John R. |
| Crookshank, Capt. H. C. | Hunter Weston, Lt.-Gen. Sir Aylmer | Rentoul, Sir Gervais S. |
| Culverwell, C. T. (Bristol, West) | Hurd, Percy A. | Rhys, Hon. C. A. U. |
| Cunliffe-Lister, Rt. Hon. Sir Philip | Hurst, Sir Gerald B. | Richardson, Sir P. W. (Sur'y, Ch'ts'y) |
| Dalkeith, Earl of | Hutchison, Maj.-Gen. Sir R. | Roberts, Sir Samuel (Ecclesall) |
| Dairymple-White, Lt.-Col. Sir Godfrey | Inskip, Sir Thomas | Robinson, Sir T. (Lanes, Stretford) |
| Davidson, Rt. Hon. J. (Hertford) | Jones, Llewellyn-, F. | Rodd, Rt. Hon. Sir James Rennell |
| Davies, Dr. Vernon | Jones, Sir G. W. H. (Stoke New'gton) | Rosbotham, D. S. T. |
| Davies, E. C. (Montgomery) | Jones, Henry Haydn (Merioneth) | Ross, Ronald D. |
| Ruggles-Brise, Colonel E. | Somerville, D. G. (Willesden, East) | Walters, Rt. Hon. Sir J. Tudor |
| Russell, Alexander West (Tynemouth) | Southby, Commander A. R.J. | Ward, Lieut.-Col. Sir A. Lambert |
| Russell, Richard John (Eddlsbury) | Spender-Clay, Colonel H. | Warrender, Sir Victor |
| Salmon, Major I. | Stanley, Lord (Fylde) | Waterhouse, Captain Charles |
| Samuel, A. M. (Surrey, Farnham) | Stanley, Hon. O. (Westmorland) | Wayland, Sir William A. |
| Samuel, Rt. Hon. Sir H. (Darwen) | Steel-Maitland, Rt. Hon. Sir Arthur | Wells, Sydney R. |
| Samuel, Samuel (W'dsworth, Putney) | Stewart, W. J. (Belfast, South) | White, H. G. |
| Sandeman, Sir N. Stewart | Stuart, Hon. J. (Moray and Nairn) | Williams, Charles (Devon, Torquay) |
| Sassoon, Rt. Hon. Sir Philip A. G. D. | Sueter, Rear-Admiral M. F. | Wilson, G. H. A. (Cambridge U.) |
| Savery, S. S. | Taylor, Vice-Admiral E. A. | Windsor-Clive, Lieut.-Colonel George |
| Scott, James | Thomas, Rt. Hon. J. H. (Derby) | Winterton, Rt. Hon. Earl |
| Shakespeare, Geoffrey H. | Thomas, Major L. B. (King's Norton) | Wolmer, Rt. Hon. Viscount |
| Shepperson, Sir Ernest Whittome | Titchfield, Major the Marquess of | Womersley, W. J. |
| Sinclair, Col. T. (Queen's U., Belfst) | Todd, Capt. A. J. | Wood, Rt. Hon. Sir Kingsley |
| Smith, Louis W. (Sheffield, Hallam) | Train, J. | Wood, Major McKenzle (Banff) |
| Smith, R.W.(Aberd'n & Kinc'dlne, C.) | Tryon, Rt. Hon. George Clement | Young, Rt. Hon. Sir Hilton |
| Smith-Carington, Neville W. | Turton, Robert Hugh | |
| Smithers, Waldron | Vaughan-Morgan, Sir Kenyon | TELLERS FOR THE AYES.— |
| Snowden, Rt. Hon. Philip | Wallace, Capt. D. E. (Hornsey) | Sir Frederick Thomson and Viscount Elmley. |
| NOES. | ||
| Ammon, Charles George | Henderson, Thomas (Glasgow) | Phillips, Dr. Marion |
| Arnott, John | Henderson, W. W. (Middx., Enfield) | Pole, Major 0. G. |
| Attlee, Clement Richard | Hicks, Ernest George | Potts, John S. |
| Ayles, Walter | Hirst, G. H. (York, W. R., Wentworth) | Price, M. P. |
| Baker, John (Wolverhampton, Bliston) | Hirst, W. (Bradford, South) | Raynes, W. R. |
| Barnes, Alfred John | Hoffman, P. C. | Richards, R. |
| Barr, James | Hopkin, Daniel | Richardson, R. (Houghton-le-Spring) |
| Batey, Joseph | Horrabin, J. F. | Riley, F. F. (Stockton-on-Tees) |
| Bennett, William (Battersea, South) | Hudson, James H. (Huddersfleld) | Romerll, H. G. |
| Bevan, Aneurin (Ebbw Vale) | Isaacs, George | Rowson, Guy |
| Bowen, J. W. | Jenkins, Sir William | Sandham, E. |
| Bowerman, Rt. Hon. Charles W. | John, William (Rhondda, West) | Scrymgeour, E. |
| Broad, Francis Alfred | Johnston, Rt. Hon. Thomas | Scurr, John |
| Brockway, A. Fenner | Jones, Morgan (Caerphilly) | Sherwood, G. H. |
| Brooke, W. | Kelly, W. T. | Shield, George William |
| Brothers, M, | Kennedy, Rt. Hon. Thomas | Shillaker, J. F. |
| Brown, Rt. Hon. J. (South Ayrshire) | Kenworthy, Lt.-Com. Hon. Joseph M | Short, Alfred (Wednesbury) |
| Brown, W. J. (Wolverhampton, West) | Kinley, J. | Simmons. C. J. |
| Buchanan, G. | Lansbury, Rt. Hon. George | Sinkinson, George |
| Burgess, F. G. | Lathan, G. (Sheffield, Park) | Sitch, Charles H. |
| Buxton, C. R. (Yorks, W. R. Elland) | Law, A. (Rossendale) | Smith, Ben (Bermondsey Rotherhlthe) |
| Cameron, A. G. | Lawrence, Susan | Smith, Frank (Nuneaton) |
| Cape, Thomas | Lawrie, Hugh Hartley (Stalybridge) | Smith, W. R. (Norwich) |
| Carter, W. (St. Pancras, S.W.) | Lawson, John James | Snowden, Thomas (Accrington) |
| Charleton, H. C. | Lawther, W. (Barnard Castle) | Sorensen, R. |
| Chater, Daniel | Leach, W. | Stamford, Thomas W. |
| Clynes, Rt. Hon. John R. | Lee, Frank (Derby, N. E.) | Stephen, Campbell |
| Cocks, Frederick Seymour | Lee, Jennie (Lanark, Northern) | Strauss, G. R. |
| Compton, Joseph | Leonard, W. | Sullivan, J. |
| Cove, William G. | Logan, David Gilbert | Sutton, J. E. |
| Cripps, Sir Stafford | Longbottom, A. W. | Thorne, W. (West Ham, Plaistow) |
| Daggar, George | Longden, F. | Toole, Joseph |
| Davies, D. L. (Pontypridd) | Lunn, William | Tout, W, J. |
| Davies, Rhys John (Westhoughton) | McElwee, A. | Townend, A. E. |
| Devlin, Joseph | McEntee, V. L. | Vaughan, David |
| Dukes, C. | McKinlay, A. | Viant, S. P. |
| Duncan, Charles | MacNeill-Weir, L. | Walkden, A. G. |
| Dunnico, H. | McShane, John James | Walker, J. |
| Ede, James Chuter | Malone, C. L'Estrange (N'thampton) | Wallace, H. W. |
| Edmunds, J. E. | Manning, E. L. | Watkins, F. C. |
| Edwards, C. (Monmouth, Bedwellty) | Mansfield, W. | Watson, W. M. (Dunfermline) |
| Edwards, E. (Morpeth) | Marcus, M, | Watts-Morgan, Lt.-Col. D. (Rhondda) |
| Egan, W. H. | Marley, J. | Wellock, Wilfred |
| Gibbins, Joseph | Marshall, Fred | Welsh, James Paisley) |
| Gill, T. H. | Mathers, George | West, F. R. |
| Graham, D. M. (Lanark, Hamilton) | Maxton, James | Westwood, Joseph |
| Greenwood, Rt. Hon. A. (Coins) | Messer, Fred | Whiteley, Wilfrid (Blrm., Ladywood) |
| Grenfell, D. R. (Glamorgan) | Middleton, G. | Whiteley, William (Blaydon) |
| Griffiths, T. (Monmouth, Pontypool) | Montague, Frederick | Wilkinson, Ellen C. |
| Groves, Thomas E. | Morgan, Dr. H. B. | Williams, David (Swansea, East) |
| Grundy, Thomas w. | Morley, Ralph | Williams, E. J. (Ogmore) |
| Hall, F. (York, W.R., Normanton) | Morrison, Rt. Hon. H. (Hackney, S.) | Williams, Or. J. H. (Llanelly) |
| Hall, G. H. (Merthyr Tydvil) | Mort, D. L. | Wilson, C. H. (Sheffield, Attercliffe) |
| Hall, J. H. (Whitechapel) | Muggeridge, H. T. | Wilson, J. (Oldham) |
| Hall, Capt. W. G. (Portsmouth, C.) | Murnin, Hugh | Wilson, R. J. (Jarrow) |
| Hamilton, Mary Agnes (Blackburn) | Naylor, T. E. | Winterton, G. E.(Leicester, Loughb'gh) |
| Hardle, David (Rutherglen) | Noel-Buxton, Baroness (Norfolk, N.) | Wise, E. F. |
| Hardle, G. D. (Springburn) | Oldfield, J. R. | Young, R. S. (Islington. North) |
| Hastings, Dr. Somerville | Oliver, George Harold (Ilkeston) | Young, Sir R. (Lancaster, Newton) |
| Haycock, A. W. | Pal[...]n, John Henry | |
| Hayday, Arthur | Paling, Wilfrid | TELLERS FOR THE NOES.— |
| Hayes, John Henry | Parkinson, John Alien (Wigan) | Mr. Nell Maclean and Mr. Mills. |
| Henderson, Joseph (Ardwick) | Perry, S. F. |
§ Mr. WISEI beg to move, in line 33, to leave out paragraph (c).
The object of this paragraph is to permit the Chancellor of the Exchequer, in dealing with the question of conversion, to issue stock which bears the condition either that Income Tax is not deducted at the source, or that it is in some cases entirely free from taxation. Before dealing with the particular point covered by that paragraph, it will be relevant to explain its relation to my attitude to the whole question of conversion. The Chancellor, we know, has been for years obsessed by the hope and desire of carrying out a great conversion operation. The fame of Mr. Goschen seems to have exercised a deplorable fascination for him. As far as one can tell, a great deal of the inexplicable financial policy of the last two years, and of the Treasury before that time, has been due to this obsession of the vital importance of carrying through a conversion operation. We on these benches, of course, have no objection to any process by which the burden of National Debt is reduced, but the effect of that desire over a period of years to secure favourable conditions for a conversion operation has undoubtedly been expressed to a very large measure in the policy of deflation which has ruined the industries of this country and added hundreds of thousands to our unemployed; it has largely brought this country and the world—because the world to a lerge extent has been guided in its financial policy by the policy of London—to their present pass.
It is fair, then, to examine what real advantage has been purchased if a conversion operation is possible at so heavy a price. It is plain that the financial advantages to the Budget which might come from a successful conversion operation are grossly exaggerated and have been grossly exaggerated. They could have been won in a much more direct and effective manner. The actual amount of 5 per cent. stock which falls due for repayment in the period between 1931 and 1940 is about £2,000,000,000 at 5 per cent., and no one supposes that in the most favourable conditions in the last three years, or in any possible conditions in the next year, or still less in the short period of office which we understand this Government expects for itself—or at 940 any rate, some section of the party opposite—no one supposes that the rate of interest at which a voluntary conversion scheme would be possible would be lower than 4 per cent. The probability is that the Government would be very fortunate if it dropped as low as 4¼ or even 4 ½ per cent.
Take 4 per cent.; the maximum saving, if the whole of this issue is converted, would be about £20,000,000. It is quite certain, since the Government proposed to do it on a voluntary basis and to give the option to those who hold the stock to decide whether or not they will come into the conversion operation, that not more than three-quarters of that stock would be converted, but if the whole were converted the maximum saving would be only £20,000,000. From that you have to deduct the loss in Income Tax and Super-tax, so probably the maximum saving would be somewhere in the nature of £15,000,000 or £16,000,000. That is the only gain to the Treasury by which the Chancellor has apparently sought to justify his policy in regard to the money market for these two or three years which has landed us to a very large extent into the present trouble in which we find ourselves.
§ Mr. WISEI have never been able to understand the difference which the City seems to feel exists, and which apparently hon. Members opposite seem to feel exists between the manipulation of the market which has been attempted during these years for the purpose of securing a voluntary conversion operation, and a direct conversion which would do the thing cleanly and properly and with great advantage to the Treasury. Moreover, if we have this conversion operation it is to apply only to about a quarter of the existing National Debt. The rest of the war debt does not fall due for possible repayment, and, therefore, conversion, in the next year or two.
I remember that a year or two ago, when the party which now sits on the benches opposite below the Gangway produced a report—I forget whether it was a pink or a yellow book—on the industrial recovery of this country, one of the items to which they attached the greatest importance was strong measures 941 for reducing the burden on the country on account of the undeserved and unearned increment which came to the holders of War debt owing to the drop in prices. That was two years ago, and prices have dropped a great deal since then. They said then that the holders of the War debt were getting the equivalent of at least £90,000,000 a year more than they were entitled to on a reasonable arid equitable interpretation of the terms of the contract, and the amount which comes to them now in purchasing power must be very much greater on account of the further drop in price. Compared with the amount that they ought to disgorge—£150,000,000 or so—to bring them into parity with the prices at which the loan was made, this saving of £15,000,000 or so on this conversion operation is niggardly, and certainly not worth the trouble that has been taken and will have to be taken if conditions are to be produced in which a voluntary conversion is possible.
Let me pass to the special point raised in paragraph (c). In order to carry through the, process, the Chancellor proposes to give exemption of a perfectly general kind, so far as the Resolution goes, both to British and foreign holders of these particular securities—exemptions from the burden of having the Income Tax deducted at the source, and in sonic cases, also, exemption from Income Tax altogether. Two commissions or committees have, in the last 10 years, examined the wisdom, from the national point of view, of granting such exemption. The Royal Commission on the Income Tax in 1919, after going most carefully into the problem, decided that to give exemption from Income Tax as part of the inducement to persuade one to buy a particular sort of Government stock was an extremely bad bargain for the State. It was a gamble on the part of the individual taxpayer as to what the rate of Income Tax might be in a few years' time, as to what his own income might be and the rate of tax leviable upon him; and they decided unanimously that in that gambling transaction the State always got the worst of the bargain.
Moreover, just at this moment, when it is perfectly plain that, whichever Government is in power further taxation of high Income Tax payers is inevitable, an offer 942 to persons to put themselves in a, position in which they can ride out of their proper responsibilities and their proper duties to the State is thoroughly undesirable and contrary to the public interest. The temptation to those persons of whom we heard at Question Time who are busily occupied in making the position of the Exchequer more difficult by putting their money abroad would probably be irresistible. The Committee on the National Debt in 1927 came to exactly the same conclusion. They examined the question again, and they entirely endorsed that conclusion. They endorsed it not only as regards exemption from liability to deduction of tax at the source but also in regard to exemption from liability to pay Income Tax. The only case which might offer some conceivable justification is that of a foreign holder, and, as we understand from what the Chancellor of the Exchequer says, it is the foreign holder primarily that he has in his mind.
In that case, I would like to ask whoever is to reply why that point has been left out of the Resolution. We are to vote on the Resolution as it stands, and as it stands it will give the Treasury power to grant exemption from Income Tax not only to the foreign holder but to the British holder too. The best that the Committee on the National Debt could say about granting exemption for the benefit of the foreign owner was that it facilitated investment in safe English securities by those British subjects who, in order to avoid taxation, take themselves and their capital abroad. Surely that is not a desirable object, even in these days. We do not want to facilitate in any way the removal of capital from this country. This paragraph of the Resolution, with the alleviations and conditions which the Treasury would be able to give, would facilitate an operation which would be thoroughly undesirable from every point of view.
There is the case, admittedly, of the foreigner who invests money in the security of this country and finds it difficult to recover taxation which has been deducted at the source. The only circumstance in which that has any economic value at all is when he invests money in Government securities instead of industrial securities, but at this moment I do not know that the foreigner 943 wishes to invest in this country, and I am not sure that in present circumstances it is very desirable for him to do so. We have learned a great deal in the last few weeks about the inconveniences and the dangers attending that position. Things would be easier for us now if he had not had an inducement to keep his money in Government stock but to put it instead into industrial securities.
In any case I do not see that there is any reason to give special exemption to foreigners, and no reason at all to give them to our own nationals. They are exemptions which have been condemned by the Inland Revenue, by the two commissions or committees which have examined elaborately the Income Tax arrangements of this country in the last 10 years, and further, it is contrary to public policy to give the Treasury power to make these conditions in this conversion operation, whenever it is carried through. If I am told that in that case we cannot persuade the foreigner to convert on easy terms, at any rate there is no reason to pay more for several years. In the form in which it appears on the Paper, and with all the general disadvantages which are behind this proposal—unless the explanations from the Treasury Bench are very much more satisfactory than have been accorded us up to the present—we shall certainly vote against the paragraph.
§ Major ELLIOTNo one who heard the hon. Member explaining his position on this Amendment could deny (a) that he had been a civil servant, and (b) that he had been an extremely able civil servant. He put the view of the bureaucracy with almost perfect lucidity. It was a shame that people should be able to get their money away from the Treasury, much more convenient if the Treasury could get at everybody's money first. How awkward it was that foreigners—these nasty people—should be able to get their money paid over to them without the Treasury having the full power of taking the money first. How much more convenient if the Treasury could impound the money and the foreigner have to show reason why he should get it back! These are all immensely powerful reasons, but from whose point of view? From the point 944 of view of the Treasury. My only defence and argument against the hon. Member is that he is not trying to raise a Conversion Loan. The people who are trying to carry through a Conversion Loan must not look only to all the advantages that it gives to themselves. They have got to look at the points that attract people to convert. It is for that reason that we desire to consider the conditions which will make the loan attractive. I would ask the hon. Member to consider it from that point of view as well as from the point of view of that idealistic age which he desires when we shall all live in that Treasury heaven where no one will draw dividends for anything anywhere except with the written consent of the Treasury and on the understanding that they should not be spent, but should at once be reinvested.
The ordinary man, when asked to invest, looks at the conditions on which he is asked to entrust his money by the persons who ask that they should have this money lent to them. The privilege—for it is a privilege—of allowing the issue of securities, which are not subject to deduction at the source, is a privilege which has been already extended to the holders of these securities, and it well may be that it may not be possible to get them to exchange except into securities which offer them similar privileges. The hon. Member said that this was a very vague proposal, that these were general conditions—too general conditions—giving power to the Chancellor of the Exchequer and to the Treasury to allow Income Tax not to be deducted in certain cases, and to allow people outside the country to have certain other privileges. The specific proposals will appear in the Finance Bill. All we are asked to pass now is a Resolution giving authority for the drafting and introduction into this House of the Bill. What the proposals are that we shall have to consider will be enshrined in the terms of the Bill, and I suggest to the hon. Member for East Leicester (Mr. Wise) that he should await the detailed proposals which will be set forth in the Clauses of the Bill when it is introduced.
I can give him roughly now the purpose of the proposals. Securities will he exempt from tax only as long as the securities are in the beneficial ownership 945 of persons not ordinarily resident in the United Kingdom, and capital will be exempt only as long as the securities are in the beneficial ownership of persons not domiciled or ordinarily resident in the United Kingdom. These are the customary provisions, and the 5 per cent. War Loan and the 4 per cent. Loan were issued on these, terms. The hon. Member says that this is a very bad proposal and that he is opposed to the principle underlying it, because, says he, we have seen in recent days what a great inconvenience it is to have foreigners investing their money in this country. Is it from the foreigner who has money thus invested in this country that we are suffering inconvenience? I thought that we were suffering from the short-term money. The idea that we suffer similar inconvenience from long-term money in this country has certainly not been put forward with anything like the same vehemence. The hon. Member for East Leicester, however, says to the foreigner, "You thug, you brute, you criminal, to come and invest your money here."
§ Mr. WISEThe hon. and gallant Member must not exercise a very active and lurid imagination on the lines of Edgar Wallace.
§ Major ELLIOTI am anxious to understand the hon. Member's point. The hon. Member was arguing that the foreigner who had invested money here was the man who had aided to produce the financial disturbance and crisis from which we have suffered in the last few weeks—
§ Mr. WISEI was referring to foreign money here. As a matter of fact, in the last few weeks it has been short-term money, but the hon. Member is aware that the real apprehension of the next few weeks may be long-term money.
§ Major ELLIOTAll I can say is that I hope that the hon. Member will not make too many speeches of the kind to which we have just listened, or he will reinforce that apprehension to a certain extent. We all agree that this money has not so far proved a menace to us. It is the short-term loans. So far, we have had no quarrel with the long-term loans.
§ Mr. SANDHAMYou are feeling the draught.
§ Major ELLIOTI cannot enter into controversy, especially on a subject like this, with the hon. Member, who has proved his redoubtable qualities on every opportunity. No one who desires to get his proposals through the House will wantonly trail his coat before the sonorous and floriferous hon. Member. This is a Resolution on which the Bill is to be drafted, and on the details of that Bill detailed criticism can justly be offered. What we are discussing here is the general principle from which the details will proceed. The general principle is that a power, which has existed in the past, shall continue in the future. We are all agreed that the utilisation of this power has in the past been of greater advantage to the holders of the loan than to the Treasury that issues the loan. We are also agreed that the person who is issuing the loan has got to take account of the opinions of the investors.
§ Mr. McSHANEThe foreigner.
§ Major ELLIOTThe foreigner and the home investor and—
§ Mr. WISEYes, but the hon. and gallant Member says that this is to apply to persons not ordinarily resident in this country. I am saying that the Government are adopting their usual practice in those loans of consulting the views of the foreigner.
§ Major ELLIOTAs the foreigner holds a, good deal of this loan already, the last thing the Treasury wishes is that the foreigner should come rushing to the Treasury to demand the whole of his money back. We have got to take into account the foreign investor and all investors. The hon. Member for the Scotland Division of Liverpool (Mr. Logan) made a powerful speech a few minutes ago—
§ Major ELLIOTHe is an example of the persons whose opinions we need take into account. My objection to the hon. Member's speech as a whole was that it was delivered in vacuo. It did not refer to the question immediately under discussion of how the Conversion Loan should be carried through. Of course, he dealt with the wider question whether it would not be much better not to have a Conversion Loan, but to repudiate a 947 greater or lesser part of the interest on the loan. That is a subject which it would not be in order to discuss at this moment and into which certainly I am not to be drawn. I hope that the hon. Member is content with these explanations though, if there are further explanations he desires me to give, I shall be glad to do so. On the question of principle, I am afraid that it would be useless for us to try to convert each other across the Floor of the House. I ask that, on this question of a Resolution authorising the Chancellor to introduce a Bill, he should allow it to pass and allow us to bring in the Bill and then launch his criticism against it.
§ Mr. WISESurely the hon. and gallant Gentleman does not propose to give these special facilities and conditions to persons, as he put it, not ordinarily resident in the United Kingdom, but to British subjects who have gone abroad.
§ Major ELLIOTI think that question shows that the hon. Member requires to work it out more in detail. Surely he does not suggest that these persons have gone abroad for the purpose of escaping taxation. The hon. Member for Smethwick (Sir O. Mosley) goes abroad, and we all go abroad.
§ Lieut.-Commander KENWORTHYI agreed with one part of the Financial Secretary's speech when he warned hon. Members about tile effect of their speeches on credit. He referred to what had been said by the hon. Member for East Leicester (Mr. Wise) as to possible pressure in regard to long term loans. I wish he would address that warning to those who sit on the Treasury Bench. What has been the principal feature of these Debates during the last fortnight? It is that the stout patriots, in matters of this kind, are on this side of the House, and that the pessimists, who seem to be seeing good in every other country but their own, are sitting behind the Financial Secretary to the Treasury. I wish on matters of this kind hon. Members opposite would take a leaf out of the book of the Labour party and put their country first. The proposals which are now before us will only continue the trouble with which we are faced; in fact they will bring about more trouble.
The Financial Secretary to the Treasury has told us that it is necessary 948 to persuade people to convert, and he offers them certain inducements to do so. May I respectfully suggest to the hon. and gallant Gentleman that that cannot be done by offering exemptions from taxation or little advantages in the terms of issue. You will not succeed in carrying conversion through by appealing merely to cupidity. I remember what happened in the case of the Victory Loan. At that time, in a year of peace, we were faced with a deficit of some £360,000,000, and not a mere £120,000,000, or £170,000,000, as is the case at the present time. The sum of about £360,000,000 was the amount of the Budget deficit when the present First Lord was Chancellor of the Exchequer in a year of peace. At that time people were nervous, and did hot know what was going to happen. They had lent tremendously during the War and were war weary. Many thought a new domestic loan could not be raised. At that time the Victory Loan was got through, by an appeal to patriotism, made with great success. To-day the circumstances are not dissimilar.
The hon. Member for Stirling and Clackmannan (Mr. Johnston) has more than once, during the last fortnight, appealed to the Government to do that sort of thing now instead of suggesting exemptions from taxation and other inducements for conversion. [Interruption.] You should appeal to our own people now on grounds of high patriotism, and on the ground that you have to loosen this country from the thrall of the foreign usurer. This Government has been showing weakness and timidity and adopting an attitude of defeatism. We should not allow usurers and speculators in New York and Paris to dictate to us how our Parliament should levy taxation on the people. Why should they dictate to us in that way? That is the appeal that will open the purse of the public. The Secretary for Mines will see what. I mean before we are through with this business. If you appeal to the people of this country to get the old country out of this mess, so that it may no longer have to bow down and take orders from usurers in Paris and New York, you will get your conversion loan. I fear that the present Government will not have the courage, the imagination, the "guts" to do that. The real patriots in this matter are on 949 this side of the House. In a few weeks' time we shall be the Government, and we will do it.
§ Captain HAROLD BALFOURI only want to take up one statement of the hon. and gallant Member for Central Hull (Lieut.-Commander Kenworthy), and that is as to there being an attitude of defeatism on this side of the House, while all the patriots are sitting on that side. The hon. and gallant Member's brain works slowly; he is about two or three months behind. Then the patriots were on that side of the House, and the defeatists on this side. He said that the party on this side were responsible for the crisis—that they had brought it about—
The DEPUTY-CHAIRMANThe question of who is responsible for the crisis cannot possibly arise on this Amendment.
§ Captain BALFOURI have no wish to get out of order, and I will abide by your Ruling and will not pursue that line, but will simply say that the remarks of the hon. and gallant Member ill become the row of scarlet runners whom we see on the other side.
§ Mr. BROCKWAYI do not suppose that the Financial Secretary to the Treasury imagined that the reply he made to this Amendment would convince us; but even his caricature of the speech of the hon. Member for East Leicester (Mr. Wise) was more convincing than the case which he stated against the hon. Member. I want to put the issue in very simple and clear terms. The Government have set out to balance the Budget. In our national expenditure there are two items. One is £300,000,000 which is paid in interest to those who hold War Loan, and the other is £100,000,000 which is a State contribution towards the cost of the maintenance of those who are unemployed.
The DEPUTY-CHAIRMANThe hon. Member cannot raise the whole question on this Amendment. The sole question that is before the Committee is whether the Treasury should or should not have power to make an issue, (a) not deducting Income Tax at the source, (b) in certain cases free of Income Tax. The general question of conversion does not now arise.
§ Mr. BROCKWAYI am sorry; I was trying to follow the arguments previously used in this discussion, but I will apply myself absolutely to the terms of the Amendment. The proposal in this Resolution is a bribe to those who now hold War Loan, with a view to their accepting the proposals for conversion. I want to oppose this proposal of a bribe, on the ground that, when the Government was faced with a deficit, it ought to have treated those who hold War Loan with the same ruthlessness as it treated others at whose expense it was economising. If it can break a contract in the case of teachers, police, or sailors of the armed forces, there was no earthly reason why it should not break a contract in the case of those who hold War Loan.
The DEPUTY-CHAIRMANI must again point out to the hon. Member that no question of contract arises on the Amendment before the Committee. The sole question is whether the Treasury should or should not have power to issue fresh securities either subject or not subject to Income Tax. The rest of the hon. Member's argument does not arise.
§ Mr. BROCKWAYWhat I want to suggest is that this proposal is a bribe in order to get those who hold War Loan to agree to conversion proposals, and surely I am entitled to argue that, instead of offering a bribe far that purpose, the Government ought to have taken its courage into its hands and used the same pressure upon the bondholders as it has used in the case of the teachers, the police and the armed forces. That is the case that I want to put very strongly. As I understand it, the fear of the Minister is that unless this bribe is offered he will not be successful in getting his Conversion Loan—that there must be some monetary prize as a reward for responding to the needs of the nation at this time, because otherwise the bondholders will go on strike and refuse to assist the nation. The bondholders are to be permitted to do that, but the sailors are put under arrest when they venture to do a similar thing. If that kind of pressure is to be exerted in the case of one class of persons, we ask that that kind of pressure should be applied in the case of the financial classes as well. That is the simple principle behind this Amendment, and the Government will have to defend 951 this Clause much more effectively if they are to convince us that the Amendment ought to be withdrawn.
§ Lieut.-Colonal Sir A. LAMBERT WARDI will do my best to confine myself strictly to the terms of the Amendment. I look upon this conversion loan as a matter of expediency. We have this gigantic sum of £2,000,000,000, which we wish to convert into a loan bearing a lower rate of interest, so as to relieve the finances of this country. Of course it is perfectly possible to default on this loan—to refuse to pay any interest at all; but that is not the way in which this country has handled its finances, and I am not at all sure whether it would be to the advantage of this country to conduct its financial business on those lines in the future. [Interruption.] It is, of course, a matter of opinion. If hon. Gentlemen opposite think it would be in this country's interest to default on that loan, all I can say is that I most cordially and sincerely disagree with them; hut, as regards re-funding this loan at a lower rate of interest, I agree that it would be an ideal thing to do.
With regard to the question whether we should or should not pay the interest on that loan free of Income Tax, that again is a matter of opinion. One of the difficulties which have stood in the way of converting this loan hitherto has been the uncertainty of the amount of the loan that is held abroad in the hands, if you like, of the usurers in Paris and New York. It is perfectly true, as I have said, that we could refuse to pay those usurers anything at all, but I do not think it would be to our advantage to do so. Furthermore, if we wished to convert this loan, it seems to me that it would be in our interest to get these usurers, if you like, to accept a lower rate of interest rather than demand repayment—that is, if hon. Members opposite think it is better to repay them than to default. I happen to know that it would only be with very great difficulty that you could get these usurers, if you like, to subscribe to a loan, or accept in exchange for the existing loan securities the interest on which is not paid free of Income Tax, principally because they have not the least idea to what fancy heights Income Tax may be raised in this country. Therefore, if we wish to per- 952 suade these foreign holders to convert into a security bearing a lower rate of interest, it is in our interest to offer them that percentage of interest, whatever it is, free of Income Tax. If we do not do so, I think we shall be faced with a demand almost universally from foreign holders of War Loan that they will nut accept I he conversion that is offered them and will demand repayment.
§ Mr. PRICEI do not think the hon. and gallant Gentleman understands our position on these benches. There is no question whatever of our advocating default of any portion of the National Debt. What we say is that contracts should be treated alike. We have engaged in certain social contracts with pensioners, the unemployed and others. We have also contracts with bondholders. In the case of the unemployed, we cut the contracts about and alter them without any compunction. The other contracts we regard as sacred. I have here a copy of the National Economy Bill.
The DEPUTY-CHAIRMANAs I have pointed out before, the only question that arises on this Amendment is whether or not the Treasury have power to issue securities from which either Income Tax is not deducted at the source or which are free of Income Tax. The question of other economies, or the general question of conversion, does not arise.
§ 10.0 p.m.
§ Mr. PRICEI quite understand, Sir, but I was not going to raise that question at all. My point is that there is in the Economy Bill a provision for the modification and termination of statutory or contractual rights, obligations and restrictions subsisting at the date when the order takes effect. If a provision can be put in for dealing with contracts for unemployment and social services, similar measures can be taken for dealing with contracts of bondholders. We say contracts should be treated alike, whether with the poorest of the poor or with bondholders. The point we are discussing is whether this bribe to the bondholders is the correct way in which we should bring about conversion. I wish the Government had considered what one of our Dominions in a similar position is doing. The Labour Government of Mr. Scullin in Australia has had the courage 953 to stand up to the bondholders and has adopted very much more stringent measures than this Government has attempted to do. They have instituted a measure of compulsion in their conversion. They have not offered bribes like this. They have offered to the holders of £500,000,000 of the internal debt of Australia certain conditions involving a reduction of interest. They have appealed to their patriotism, and that appeal has met with a remarkable response. But at the back of it there has been a threat of compulsion and, if it does not go through voluntarily, compulsion will be used. That is the spirit that we should have liked to see the Government adopt if they are going to take steps to lower the burden of the National Debt. There is another way. That is to impose a special tax upon gilt edged—
The DEPUTY-CHAIRMANThat cannot possibly arise on this Amendment. If I have to call the hon. Member to order again, I must ask him to resume his seat.
§ Mr. PRICEI was not going to develop that argument. All I wished to do was to point out the various methods of conversion and to maintain that there are other methods than those which the Government have undertaken. I had no intention of disobeying your Ruling, Sir. But we are not going to sit by and see contracts with the unemployed dealt with in this manner. I am informed that a portion of the money that is now being lent to this country by France is English money which has gone over there and is being re-lent at a higher rate. That is why we are not going to sit idly by and see this sort of thing.
§ Mr. HOFFMANThe hon. and gallant Gentleman the Member for North-West Hull (Sir A. Lambert Ward) said the whole reason why this conversion is proposed to be done in this way is a matter of expediency. I have noticed that, whenever financial interests are dealt with at all, they are dealt with very mildly, very nicely and very kindly on grounds of expediency. When the nation was troubled in the early days of the War and the country had to come to the rescue of the moneyed powers of the country by creating its own currency in paper and 954 the nation had to go and ask in addition to that for War Loan, they said, "Yes, at the usual rate of interest." Human life was conscripted, but money was not. We are now in a similar difficulty. We have been told repeatedly, almost hysterically, that the nation's difficulties are equal to those that we had to face in the early days of 1914.
A part of the proposal is that a little later on there shall be a conversion, and, when that conversion takes place, some velvet-gloved hand is going to be used in the interest of the bondholders. I am going to make my own personal protest. In my opinion, we shall be able to make this conversion without giving any of these facilities to the bondholder. The bondholder has already done exceedingly well within the last few years. The cost of living and the price of commodities have fallen tremendously. We have been informed that the 1925 conversion to gold parity has added over £1,000,000,000 to the bondholders alone, and, since then, the fall in the cost of living has tremendously improved these holdings. In those circumstances it is a painful thing that the bondholders should be enticed to come into a new conversion scheme.
I do not want to be unduly pessimistic. If you, Sir, have been privileged to be upstairs to-day, you have heard a very well-known economist, Mr. John Maynard Keynes, giving rather a painful view as to what is likely to happen. Indeed, it is freely being stated that even yet we may have to go off gold entirely, and, if we do, I cannot imagine this country standing idly by and allowing the bondholders to get away as easily as they have done in the past. In my humble opinion, they will be called upon to make very much greater sacrifices than any conversion scheme can possibly cause them to do. I, therefore, utter my protest against this method of dealing with the bondholders.
§ Mr. ARTHUR MICHAEL SAMUELI have never listened to a greater fallacy, repeated time after time, about the value of the pound in regard to the question of the National Debt. I will give my view in this way. The National Debt is now £7,500,000,000, of which £1,000,000,000 is due to the United 955 States. If the hon. Gentleman tells us that the average bondholder to-day—and that is the basis of his argument—is receiving in interest or repayment something of much greater value than he put into the National Debt, he is under a misapprehension.
The DEPUTY-CHAIRMANThe Resolution only deals with the issue of bonds either free of Income Tax or with the tax deducted at the source. If we start upon a discussion of the position of bondholders we shall never finish this Debate.
§ Mr. SAMUELI wish to obey your Riding. All I will say is that I shall support the Motion which is before the House, and that I totally disagree with the hon. Gentleman opposite, who said he should oppose it, with regard to the value of the pound, because it is not an honest argument and not based upon fact.
§ Mr. MUGGERIDGEI do not share the rather optimistic view of my hon. and gallant Friend the Member for Central Hull (Lieut.-Commander Kenworthy) upon the subject of the moneylender or investor. I do not think that any appeal to his patriotism is going to result in very much. In the Motion as put down enabling the Treasury to issue Conversion bonds, the Government have not taken my view that the investor is not to he trusted. They would like, if they could, to have left out the particular provision that the Income Tax should not be deducted at the source. Everybody who has had anything to do with Government loans knows that every official, from the Income Tax gatherer down to the banks concerned, would almost go on his hands and knees and ask that in future the Government should make no issue from which the tax was not deducted at the source, the reason being that the door is open wide for the investor to escape his share of contributions to the national expenditure. I should have thought it more important to have kept that particular feature of War Loan warrants out than to seize a chance of reducing the interest upon the War Loan by 1 per cent.
The truth is that everyone knows that there are a large number of holders of War bonds, the tax upon which is not 956 deducted at the source. Every tax gatherer knows it. Some of the bondholders go abroad to avoid it. Some of them manage to keep themselves well out of sight when the Income Tax returns are being scattered about, and they escape. A large number of people, to my certain knowledge, escape their share of paying the tax due upon those bonds. I consider that this is an opportunity lost. It is suggested that the Treasury may be able to issue, when a favourable moment arrives, a new Conversion Loan, and it would be an excellent opportunity to get rid of the objectionable feature of that large number of warrants which up to the present have created so much trouble among the tax-gatherers and other officials. Most of it relates to the issue of the 5 per cent. War Loan which is repayable in 1947. I should like to know how much of the interest upon that loan really comes back to the Treasury. In my opinion a large amount escapes, and here is an opportunity to make the position much more watertight. Now comes the difficulty. My hon. and gallant Friend the Member for Central Hull appears to think that you could appeal to the patriotism of the people who are showing their patriotism to-day by cutting other people's salaries, honestly to pay their Income Tax on their warrants in respect of War Loans. I am afraid that the result would be very small.
§ Lieut.-Commander KENWORTHYrose—
§ Mr. MUGGERIDGEI do not want to be interrupted. The hon. and gallant Member for Central Hull is in the picture often enough, and he might allow me to make my point without these continual disturbances. I wish to point out that if the patriotism of these people, which has been so loudly proclaimed, was available on this occasion, I am sure the Treasury would not hesitate for a moment to see that the new issue should contain the proviso that the tax should be collected at the source. It is precisely because they know that that feature, more than the reduction of the yield on the bonds, is the feature that will prevent them from taking up their new Conversion Loan that that has been left out. They want it to be a success, and in order that it may be a success, they allow this practice to continue. 957 They allow the defrauding of the Revenue in order that they may get greater contributions to the Conversion Loan when it is established.
Personally, I am inclined to vote against it. If these people will not respond to a conversion involving one point less in their interest, we shall be entitled to take further steps against them later on. I am inclined to go into the Lobby with my hon. Friend who has moved the Amendment. We ought to oppose the issue of these warrants for debt on the ground that we cannot trust the people who loan this country money. We cannot trust them. I believe that the representatives of the Treasury would like to follow me into the Lobby, but they dare not do so. If you did get a foreigner who, in spite of the fact that our adherence to the gold standard appears to be in doubt throughout the world, does show some desire to come and take up this new
§ Conversion Loan, and he proved that he was a foreigner, truly and honestly, resident abroad in another country and not merely a man who goes abroad to avoid domicile in this country, the Government could say: "You are a foreigner, and our laws do not apply to you in our country. Therefore, there will he repayment to you of the tax that has been deducted." Do not assume, in order to let the foreigner off, that the English investor is an honest person, who will pay his Income Tax. Let us put it the other way round, and assume that nobody is honest and prepared to pay his Income Tax. Let us deduct the tax at the source and, where necessary, give the foreigner a rebate.
§ Question put, "That the words proposed to be left out stand part of the Question."
§ The Committee divided: Ayes, 274; Noes, 187.
961| Division No. 475.] | AYES. | 10.17 p.m. |
| Acland-Troyte, Lieut.-Colonel | Chapman, Sir S. | Flson, F. G. Clavering |
| Altchison, Rt. Hon. Craigle M. | Christie, J. A. | Foot, Isaac |
| Albery, Irving James | Church, Major A. G. | Ford, Sir P. J. |
| Alexander, sir Win. (Glasgow, Cent'l) | Clydesdale, Marquess of | Forestler-Walker, Sir L. |
| Amery, Rt. Hon. Leopold C. M. S. | Cobb, Sir Cyril | Fremantle, Lieut.-Colonel Francis E. |
| Ashley, Lt.-Col. Rt. Hon. Wilfrid W. | Cockerill, Brig.-General Sir George | Ganzonl, Sir John |
| Aske, Sir Robert | Cohen, Major J. Brunel | Gault, Lieut.-Col. A. Hamilton |
| Astor, Ma], Hn. John J. (Kent. Dover) | Col[...]ox, Major William Philip | George, Major G. Lloyd (Pembroke) |
| Atkinson, C. | Collins. Sir Godfrey (Greenock) | George, Megan Lloyd (Anglesea) |
| Baldwin, Rt. Hon. Stanley (Bewdley) | Colman, N. C. D. | Gillett, George M. |
| Balfour, George (Hampstead) | Colville, Major D. J. | Gilmour, Lt.-Col. Rt. Hon. Sir John |
| Balfour, Captain H. H. (I. ot Thanet) | Conway, Sir W. Martin | Glassey, A. E. |
| Balniel, Lord | Cooper, A. Duff | Glyn, Major R. G. C. |
| Beamish. Rear-Admiral T. P. H. | Courtauld, Major J. S. | Gower, Sir Robert |
| Beaumont. M. W. | Courthope, Colonel Sir G. L. | Graham, Fergus (Cumberland, N.) |
| Bellairs, Commander Carlyon | Cowan, D. M. | Grattan-Doyle, Sir N. |
| Bennett, Sir E. N. (Cardiff, Central) | Cranborne, Viscount | Gray, Milner |
| Betterton, sir Henry B. | Crichton-Stuart, Lord C. | Greaves-Lord, Sir Walter |
| Bevan, S. J. (Holborn) | Crookshank, Capt. H. C. | Greene, W. P. Crawford |
| Birchall, Major Sir John Dearman | Culverwell, C. T. (Bristol, West) | Grenfell, Edward C. (City of London) |
| Birkett, W. Norman | Cunilffe-Lister, Rt. Hon. Sir Philip | Gretton, Colonel Rt. Hon. John |
| Blinded, James | Dalkeith, Earl of | Griffith, F. Kingsley (Middlesbro' W.) |
| Boothby, R. J. G. | Dairymple-White, Lt.-Col. Sir Godfrey | Gritten, W. G. Howard |
| Bowater, Col. Sir T. Vansittart | Davidson, Rt. Hon. J. (Hertford) | Gunston, Captain D. W. |
| Boyce, Leslie | Davies, Dr. Vernon | Hacking, Rt. Hon. Douglas H. |
| Bracken, B. | Davies, E- C. (Montgomery) | Hall, Lieut.-Col. Sir F. (Du[...]wich) |
| BraithWa[...]te, Major A. N. | Davies, Maj. Geo. F.(Somerset, Yeovil) | Hamilton, Sir George (Ilford) |
| Briscoe, Richard George | Davison, Sir W. H. (Kensington, S.) | Hamilton, Sir R. (Orkney & Zetland) |
| Broadbent, Colonel J. | Dawson, Sir Philip | Hammersley, S. S. |
| Brown, Ernest (Leith) | Denman, Hon. R. D. | Hanbury, C. |
| Brown, Brig-.Gen.H.C.(Berks, Newb'y) | Despencer-Robertson, Major J. A. F. | Hannon, Patrick Joseph Henry |
| Buchan, John | Dixon, Captain Rt. Hon. Herbert | Harbord, A. |
| Buchan-Hepburn, P. G. T. | Duckworth, G. A. V. | Harris, Percy A. |
| Bullock, Captain Malcolm | Dudgeon, Major C. R. | Hartington, Marquess of |
| Burgin, Dr. E. L. | Dugdale, Capt. T. L. | Harvey, Major S. E. (Devon, Totnes) |
| Butler, R. A. | Eden, Captain Anthony | Haslam, Henry C. |
| Cadogan, Major Hon. Edward | Edmondson, Major A. J. | Henderson, Capt. R. R.(Oxt'd, Henley) |
| Campbell, E. T. | Elliot, Major Walter E. | Hennessy, Major Sir G. R. J. |
| Carver, Major W. H. | Elm[...]ey, Viscount | Hills, Major Rt. Hon. John Waller |
| Castle Stewart, Earl of | England, Colonel A. | Hope, Sir Harry (Fortar) |
| Cautley, Sir Henry s. | Erskine, Lord (Somerset, Weston-s.M.) | Hore-Bellsha, Leslie |
| Cayzer, Sir c. (Chester, City) | Evans, Capt. Ernest (Welsh Univer.) | Home, Rt. Hon. Sir Robert S. |
| Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.) | Everard, W. Lindsay | Howard-Bury, Colonel C. K. |
| Cazalet, Captain Victor A. | Falle, Sir Bertram G. | Hudson, Capt. A. U. M. (Hackney, N.) |
| Chamberlain, Rt. Hn.sir J. A. (Birm., W.) | Ferguson, Sir John | Hurd, Percy A. |
| Chamberlain, Rt. Hon. N. (Edgbaston) | Fielden, E. B. | Hurst, Sir Gerald B. |
| Hutchison, Maj.-Gen. Sir R. | Muirhead, A. J. | Simon, Rt. Hon. Sir John |
| Inskip, Sir Thomas | Nail-Cain, A. R. N. | Sinclair, Rt. Hon. Sir A. (Caithness) |
| Jones, Lleweliyn-, F. | Newman, Sir R. H. S. D. L. (Exeter) | Sinclair, Col. T. (Queen's U., Belfst) |
| Jones, Sir G. W. H. (Stoke New'gton) | Newton, Sir D. G. C. (Cambridge) | Smith, Louis W. (Sheffield, Hallam) |
| Jones, Henry Haydn (Merioneth) | Nicholson, O. (Westminster) | Smith, R. W.(Aberd'n & Kinc'dine, C.) |
| Jones, Rt. Hon. Leif (Camborne) | O'Connor, T. J. | Smith-Carington, Neville W. |
| Jowitt, Rt. Hon. Sir W. A. (Preston) | Oliver, P. M. (Man., Blackley) | Smithers, Waldron |
| Kedward, R. M. (Kent, Ashford) | Oman, Sir Charles William C. | Snowden, Rt. Hon. Philip |
| Kindersley, Major G. M. | Ormsby-Gore, Rt. Hon. William | Somerville, D. G. (Willesden, East) |
| Knight, Holford | Owen, Major G. (Carnarvon) | Southby, Commander A. R. J. |
| Lamb, Sir J. Q. | Peake, Capt. Osbert | Spender-Clay, Colonel H. |
| Lane Fox, Col. Rt. Hon. George R. | Penny, Sir George | Stanley, Lord (Fyl[...]e) |
| Latham, H. P. (Scarboro' & Whitby) | Percy, Lord Eustace (Hastings) | Stanley, Hon. O. (Westmorland) |
| Law, Sir Alfred (Derby, High Peak) | Perkins, W. R. D. | Steel-Maltland, Rt. Hon. Sir Arthur |
| Leigh, Sir John (Clapham) | Peters, Or. Sidney John | Stuart, Hon. J. (Moray and Nairn) |
| Leighton, Major B. E. P. | Peto, Sir Basil E. (Devon, Barnstaple) | Sueter, Rear-Admiral M. F. |
| Lewis, Oswald (Colchester) | Power, Sir John Cecil | Taylor, Vice-Admiral E. A. |
| Little, Graham-, Sir Ernest | Pownall, Sir Assheton | Thomas, Rt. Hon. J. H. (Derby) |
| Liewellin, Major J. J. | Purbrick, R. | Thomas, Major L. B. (King's Norton) |
| Locker-Lampson, Rt. Hon. Godfrey | Pybus, Percy John | Thomson, Sir F. |
| Locker-Lampson, Com. O.(Handsw'th) | Ramsay, T. B. Wilson | Titchfield, Major the Marquess of |
| Lockwood, Captain J. H. | Ramsbotham, H. | Todd, Capt. A. J. |
| Long, Major Hon. Erie | Rawson, Sir Cooper | Train, J. |
| Lovat-Fraser, J. A. | Reid, David D. (County Down) | Tryon, Rt. Hon. George Clement |
| Lymington, Viscount | Remer, John R. | Turton, Robert Hugh |
| McConnell, Sir Joseph | Rentoul, Sir Gervals S, | Vaughan-Morgan, Sir Kenyon |
| Mac Donald, Rt. Hon. J. R. (Seaham) | Rhys, Hon. C. A. U. | Wallace, Capt. D. E. (Hornsey) |
| MacDonald, Malcolm (Bassetlaw) | Richardson, Sir P. W. (Sur'y, Ch'ts'y) | Walters, Rt. Hon. Sir J. Tudor |
| Macdonald, Sir M. (Inverness) | Roberts, Sir Samuel (Ecclesall) | Ward, Lieut.-Col. Sir A. Lambert |
| Macdonald, Capt. P. D. (I. of W.) | Robinson, sir T. (Lanes, Stretford) | Waterhouse, Captain Charles |
| Maclean, sir Donald (Cornwall, N.) | Rodd, Rt. Hon. Sir James Rennell | Wayland, Sir William A. |
| Macquisten, F. A. | Rosbotham, D. S. T. | Wells, Sydney R. |
| Maltland, A. (Kent, Faversham) | Ross, Ronald D. | White, H. G. |
| Makins, Brigadier-General E. | Rothschild, J. de | Williams, Charles (Devon, Torquay) |
| Mander, Geoffrey le M. | Ruggles-Brise, Colonel E. | Wilson, G. H. A. (Cambridge U.) |
| Margesson, Captain H. D. | Russell, Alexander West (Tynemouth) | Windsor-Clive, Lieut.-Colonel George |
| Marjorlbanks, Edward | Russell, Richard John (Eddlsbury) | Winterton, Rt. Hon. Earl |
| Markham, S. F. | Salmon, Major I. | Wolmer, Rt. Hon. Viscount |
| Mason, Colonel Glyn K. | Samuel, A. M. (Surrey, Farnham) | Womersley, W. J. |
| Meller, R. J. | Samuel Rt. Hon. Sir H. (Darwen) | Wood, Rt. Hon. Sir Kingsley |
| Merriman, Sir F. Boyd | Samuel, Samuel (W'dsworth, Putney) | Wood, Major McKenzle (Banff) |
| Millar, J. O. | Sandeman, Sir N. Stewart | Young, Rt. Hon. Sir Hilton |
| Milne, Wardlaw-, J. S. | Sassoon, Rt. Hon. Sir Philip A. G. D. | |
| Monsell, Eyres, Com. Rt. Hon. Sir B. | Savery, S S. | TELLERS FOR THE AYES.— |
| Moore, Lieut.-Colonel T. C. R. (Ayr) | Scott, James | Captain Sir Ctorge Bowyer and Sir |
| Morris, Rhys Hopkins | Shakespeare, Geoffrey H. | Victor Warrender. |
| Morrison, W. S. (Glos., Cirencester) | Shepperson, Sir Ernest Whittome | |
| NOES. | ||
| Adamson, W. M. (Stall., Cannock) | Dukes, C. | Hirst, G. H. (York W. R. Wentworth) |
| Alpass, S. H. | Duncan, Charles | Hirst, W. (Bradford, South) |
| Ammon, Charles George | Dunnico, H. | Hoffman, P. C. |
| Arnott, John | Ede, James Chuter | Horrabin, J. F. |
| Attlee, Clement Richard | Edmunds, J. E. | Hudson, James H. (Huddersfield) |
| Ayles, Walter | Edwards, C. (Monmouth, Bedwellty) | Isaacs, George |
| Baker, John (Wolverhampton, Bilston) | Edwards, E. (Morpeth) | Jenkins, Sir William |
| Barnes, Alfred John | Egan. W. H. | John, William (Rhondda, West) |
| Barr, James | Gardner, B. W. (West Ham, Upton) | Jones, Morgan (Caerphilly) |
| Batey, Joseph | Gibbins, Joseph | Kelly, W. T. |
| Bennett, William (Battersea, South) | Gill, T. H. | Kennedy, Rt. Hon. Thomas |
| Bevan, Aneurin (Ebbw Vale) | Gossling, A. G. | Kenworthy, Lt.-Com. Hon. Joseph M. |
| Bowen, J. W. | Gould, F. | Lansbury, Rt. Hon. George |
| Bowerman, Rt. Hon. Charles W. | Graham, D. M. (Lanark, Hamilton) | Lathan, G. (Sheffield, Park) |
| Brockway, A. Fenner | Greenwood, Rt. Hon. A. (Colne) | Law, A. (Rossendale) |
| Bromley, J. | Grenfell, D. R. (Glamorgan) | Lawrle, Hugh Hartley (Stalybridge) |
| Brooke, W. | Griffiths, T. (Monmouth, Pontypool) | Lawson, John James |
| Brothers, M. | Groves, Thomas E. | Lawther, W. (Barnard Castle) |
| Brown, Rt. Hon. J. (South Ayrshire) | Grundy, Thomas W. | Leach, W. |
| Buchanan. G. | Hall, F. (York, W. R., Normanton) | Lee, Frank (Derby, N. E.) |
| Burgess, F. G. | Hall, G. H. (Merthyr Tydvil) | Lee, Jennie (Lanark, Northern) |
| Buxton, C. R. (Yorks. W. R. Elland) | Hall, J. H. (Whitechapel) | Leonard, W. |
| Cameron, A. G | Hamilton, Mary Agnes (Blackburn) | Lewis, T. (Southampton) |
| Cape, Thomas | Hardle, David (Rutherglen) | Logan, David Gilbert |
| Carter, W. (St. Pancras, S. W.) | Hardle, G. D. (Springburn) | Longbottom, A. W. |
| Charleton, H. C. | Hastings, Dr. Somerville | Longden, F. |
| Cluse, W. S. | Haycock, A. W. | Lunn, William |
| Cocks, Frederick Seymour | Hayday, Arthur | McElwee, A. |
| Compton, Joseph | Hayes, John Henry | McEntee, V. L. |
| Cove, William G. | Henderson, Joseph (Ardwick) | McKinlay, A. |
| Cripps, Sir Stafford | Henderson, Thomas (Glasgow) | MacLaren, Andrew |
| Daggar, George | Henderson, W. W. (Middx., Enfield) | Maclean, Nell (Glasgow, Govan) |
| Davies, D. L. (Pontypridd) | Herr[...]otts, J. | McShane, John James |
| Devlin, Joseph | Hicks, Ernest George | Malone, C. L'Estrange (N'thampton) |
| Manning, E. L. | Raynes, W. R. | Sullivan, J. |
| Mansfield, W. | Richards, R. | Sutton, J. E. |
| Marshall, Fred | Richardson, R. (Houghton-le-Spring) | Taylor, R. A. (Lincoln) |
| Mathers, George | Riley, Ben (Dewebury) | Thorne. W. (West Ham. Plaistow) |
| Maxton, James | Riley, F. F. (Stockton-on-Tees) | Thurtle, Ernest |
| Messer, Fred | Ritson, J. | Tillett, Ben |
| Middleton, G. | Romeril, H. G. | Tout, W. J. |
| Mills, J. E. | Rowson, Guy | Townend, A. E. |
| Montague, Frederick | Samuel, H. Walter (Swansea, West) | Vaughan, David |
| Morgan, Dr. H. B. | Sandham, E. | Walkden, A. G. |
| Morley, Ralph | Sawyer, G. F. | Walker, J. |
| Morrison, Robert C. (Tottenham, N.) | Scrymgeour, E. | Wallace, H. W. |
| Mort, D. L. | Scurr, John | Watkins, F. C. |
| Muggerldge, H. T. | Sexton, Sir James | Watson, W. M. (Dunfermline) |
| Murnin, Hugh | Shepherd, Arthur Lewis | Watts-Morgan, Lt.-Col. D. (Rhondda) |
| Naylor, T. E. | Shield, George William | Wellock, Wilfred |
| Noel Baker, P. J. | Shillaker, J. F. | Welsh, James (Pals[...]) |
| Noel-Buxton, Baroness (Norfolk, N.) | Shinwell, E. | Westwood, Joseph |
| Oldfield, J. R. | Short, Alfred (Wednesbury) | Whiteley, Wilfrid (Birm., Ladywood) |
| Oliver, George Harold (Ilkeston) | Simmons, C. J. | Whiteley, William (Blaydon) |
| Palln, John Henry | Sitch, Charles H. | Williams, David (Swansea, East) |
| Paling, Wilfrid | Smith, Ben (Bermondsey, Rotherhithe) | Williams, E. J. (Ogmore) |
| Parkinson, John Allen (Wigan) | Smith, Frank (Nuneaton) | Williams, Dr. J. H. (Llanelly) |
| Perry, S. F. | Smith, Tom (Pontefract) | Wilson, R. J. (Jarrow) |
| Phillips, Dr. Marlon | Smith, W. R. (Norwich) | Winterton, G. E.(Leicester, Loughb'gh) |
| Pole, Major D. G. | Snowden, Thomas (Accrington) | Wise E. F. |
| Potts, John S. | Sorensen, R. | Young, R. S. (Islington, North) |
| Price, M. P. | Stamford, Thomas W. | |
| Quibell, D. J. K. | Stephen, Campbell | TELLERS FOR THE NOES.— |
| Mr. Kinley and Mr. Marley. |
Main Question put, and agreed to.
§ Resolution to be reported to-morrow.