HC Deb 14 February 1933 vol 274 cc939-66
Mr. C. WILLIAMS

I beg to move, in page 1, line 22, to leave out the words "one hundred" and to insert instead thereof the word "fifty."

My intention is quite clear. It is to reduce by one-half the amount of the guarantee of the British Government. I do this because I believe it is essential at the present time that some Members of this House should get up and say they think that the time has come when we should absolutely stop—or stop as near as we possibly can—any of these guarantees. I hope no one will get up and make any sort of excuse that it might affect what will be paid by other Powers, because it is laid down in the White Paper, Cmd. 4218, that the guarantees shall be several and not joint. From that point of view, we, as a Parliament, are absolutely independent and can cut down the amount of the guarantee if we wish. I see the Financial Secretary is here, and I presume he will be answering on behalf of the Government. I should like to point out that we have been returned to this House to put the finances of this country in order. That is the primary thing we were sent here for. We were not sent here to deal with Austria or any other nation. On the other hand, the Government say it is essential for the salvation of the world that Austria should be dealt with. Then let them deal with it not in the little, puny way we are doing it here, but with the whole of Central Europe on one occasion.

Secondly, is it really wise or the right time, having regard to our own financial position and the loans which we may have incurred, for Britain to guarantee loans outside our own British Empire? I think that is the essential point which should be made at present. Then I should like to ask the Government why were these guarantees only made by a few selected Governments?

The DEPUTY-CHAIRMAN

Order. The hon. Member is now getting away from the terms of his own Amendment, which is to reduce the amount, and is going on to deal with the whole question whether there should be a loan or not.

Mr. C. WILLIAMS

I am sorry. There will be other opportunities in the course of the Committee stage to deal with that question, and I will deal strictly with the Amendment. Why should we be guaranteeing 100,000,000 schillings when a lot of other countries are guaranteeing nothing? I do not think I am wrong on this occasion, at any rate, in laying it down clearly that in the present financial position of the country we ought to realize how immense are the objects to which capital and credit could be put in our own country—the fishing industry and other industries. Surely the Government might have abstained on this occasion from letting us into this position where we have to guarantee this money? Not only do I think 100,000,000 schillings is too much and that 50,000,000 is quite sufficient, but if other Members wish to reduce the amount in my Amendment I shall not be against it. I have listened to all that has been said on this Bill, but I have never heard any real case made out as to why we should guarantee any part of this loan. For these reasons, I move my Amendment.

Sir ARTHUR MICHAEL SAMUEL

I think my hon. Friend has done a good service in calling attention to this matter, for it is our duty to draw attention to it at every stage of the Bill. There is complete justification for the hon. Member moving that we should reduce the amount if possible, and he has done good service in drawing attention to what will inevitably be a loss. The amount is £4,200,0000. We might as well call it the Austrian Gift Bill as the Austrian Loan Bill. I am not going into the reasons for the loan, because we dealt with them on the Second Reading of the Bill, and I should be out of order in discussing them now. What possibility is there of getting out of the liability which this Bill puts upon us? A large area of territory was torn away from Austria after the War, under the Treaty, and her power to earn money and pay her way has been destroyed. She has tried to maintain her old standard of living for her people since her territory was torn away from her, but it has been impossible. She has raised loan after loan for that purpose, and she cannot pay. Poverty is reigning supreme in Austria, and from the instincts of common humanity we should like to help her, but that is not our function here. We are dealing with the taxpayers' money. No loan will put right the position in Austria. Austria cannot pay, eventually. She may hold out for some little length of time, but she cannot pay the interest on her loans.

I have looked into the figures to see if there is any justification for our thinking that we shall be able to get out of our liability in regard to this loan. I have gone into the figures of the Austrian position and I find that on her merchandise trade she has an adverse balance for the last two years of £ 30,000,000 a year and in the current year it will probably be £ 20,000,000. It may be that the invisible exports will bring Austria £ 10,000,000 and that will go to reduce the adverse balance of £ 20,000,000 this year. But on the top of that, there is another £ 10,000,000 which she has to find for the service of foreign loans. It is impossible for her to find £ 20,000,000 for these over-frontier payments.

I do not understand my right hon. Friend the Foreign Secretary, a man with the keenest intellect in the House, I should say, in the arguments that he put forward in the Debate on the Second Reading on the 7th February. On page 158 of the OFFICIAL REPORT he said: If Austria made default on her 1923 loan, then, straight away, we were in for a loss of £800,000 a year, which is a good, solid, practical factor."—[OFFICIAL REPORT, 7th February, 1933; col. 158, Vol. 274.] The reason we are to find this money is because we run the risk of making a Loss—

The DEPUTY-CHAIRMAN

The hon. Member now appears to be making a general Second Reading speech. I have been waiting for him to come to the Amendment.

Sir A. M. SAMUEL

I say that we have not in the slightest degree any hope of getting from Austria enough to pay the interest on the 100,000,000 schillings that we are guaranteeing. For that reason, the hon. Member opposite is well justified in asking that the guarantee should be reduced to 50,000,000 schillings. We are finding this money in order to prevent default on an earlier loan. Two or three years hence we shall be called upon to find another loan so that there may be no default upon this particular guarantee which is being given in order to prevent default of the loan of 1923. We have one guarantee and loan after another. It reminds me of the story of the man who went into a shop to purchase coal. He was told that if he bought a cone it would halve his consumption of coal, whereupon he said: "I will take two cones, and do away with the consumption of coal altogether." According to the right hon. Gentleman we shall lose £ 800,000 a year if we do not make this guarantee, but the probability is that we shall lose what we are now guaranteeing. In this Clause there is no provision for our collecting the interest.

The DEPUTY-CHAIRMAN

I would remind the hon. Member that we are not discussing the Question, "That the Clause stand part."

Sir A. M. SAMUEL

There is no reason to believe that there will be any precautions taken by ourselves and our cosignatory to protect the revenue. For these reasons, although we can do nothing here but make our protest, I think that it would be very much more reasonable if we were to fall in with the proposal made by the Mover of the Amendment. If we have to vote this guarantee of 100,000,000 schillings, some of us on this side of the House and other hon. Members sitting opposite, out of respect for our own knowledge of finance, cannot refrain from telling the Committee that we know that this guarantee is a piece of folly, and that the money must be lost.

9.42 p.m.

The FINANCIAL SECRETARY to the TREASURY (Mr. Hore-Belisha)

I listened with great attention and also with sympathy to the speeches made by my two hon. Friends. I realise the difficulties under which they have been placed, for they desire to raise very much broader issues than can be raised and answered on this Amendment. They appreciate that the Financial Resolution was carried in this House without a Division, as indeed was the Second Reading of the Bill. On the occasion of the Second Reading the House was informed that, availing ourselves of the powers conferred on us in Committee of the Whole House, we had ratified the Protocol which was signed at Geneva on the 15th July, 1932. That being so, we are bound by the terms of that Protocol. Under the Protocol we undertook to ask Parliament for authority to guarantee a loan up to 100,000,000 schillings. My hon. Friend seeks by his Amendment, and his Amendment is purely confined to that, to reduce the 100,000,000 to 50,000,000.

Quite apart from the merits of any reduction, the principle of a reduction cannot be acceded to within the term of the Protocol which has already been signed by His Majesty's Government, in pursuance of the authority conferred upon us. We are, therefore, bound to give this guarantee, if we are giving it at all, up to a sum of 100,000,000 schillings. Fifty million schillings would not be sufficient to assist Austria in her difficulties. I would point out to my hon. Friend the Member for Far ham (Sir A. M. Samuel) that this does not mean any additional obligation upon Austria, thereby placing her in a less advantageous position than she was in before. It means actually diminishing the obligation upon Austria, for she will use this long-term money, if and when she receives it, to pay her short-term loans, and the rate of interest will thereby in all probability be reduced. To the amount that we curtail the amount from 100,000,000 schillings she would be in a less satisfactory situation from the point of view of repaying her loans.

I hope that I have satisfied the Committee that, whatever the merits of the actual figure suggested by my hon. Friend in his Amendment, we cannot, in view of the signature which we have put on the Protocol, reduce the sum now.

Mr. C. WILLIAMS

The Financial Secretary says that the Government cannot now reduce the sum of the guarantee, although he has stated that under the Protocol the Government were to ask Parliament for authority to make the guarantee. Surely, Parliament can make a fresh decision if it chooses.

Mr. HORE-BELISHA

My hon. Friend does not appear to appreciate that we acted on a Financial Resolution which was passed in Committee of the Whole House. On the occasion of that Financial Resolution my right hon. Friend the Chancellor of the Exchequer informed the Committee that if the Resolution were carried Great Britain would ratify the Protocol. He informed the full Committee of that but nevertheless the Committee did not divide against the Resolution and, accordingly, my right hon. Friend authorized the ratification. France and Italy have ratified. The instrument is now a perfectly valid instrument. I gave the House an undertaking that this loan would not be made except simultaneously with France. France has ratified the Protocol, and if and when France is ready to make the loan, in accordance with the terms of the Protocol, we shall be ready also.

9.46 p.m.

Sir NAIRNE STEWART SANDE-MAN

I am more interested in the question as it affects the Bank of England than as it affects Austria, and I would suggest that the Financial Secretary should use his persuasive influence with the Bank of England to induce them to go fifty-fifty with the Government. I do not see why the Bank of England should not be brought into this matter. They have a liability, and I am perfectly certain that sweet words from the Financial Secretary would induce the Bank of England to take on the liability on a fifty-fifty basis. It would be a gesture which would make the Bank of England much more popular than it has been lately. The people who will have to foot the bill, if we take on the whole of this liability, are taxpayers of this country. I do not know what has happened in the past. It may be that people have made promises which they would not have made after further reflection, but there is a feeling that there is something behind all this of which we know nothing. I have no doubt that it is something about which we cannot be told; and I am perfectly certain that it is something about which we shall not be told. But that there is something behind it is certain. If the Financial Secretary will accept the Amendment and use his powers with the Bank of England to carry it through he will gain the eternal gratitude of the taxpayers of this country.

Amendment negatived.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

9.49 p.m.

Mr. RHYS DAVIES

When this proposal was before the House on Second Reading some criticisms were made as to this guarantee, but whilst we have been critical we have always borne in mind the disaster which must befall Austria if it is not given. On the last occasion my protest in the main was leveled against this Bill on two grounds; first, that France prevents Austria from having any economic arrangements with Germany, which is one of the strongest protests we can make against the Bill. Balancing the pros and cons as to whether we shall give this guarantee or not, we have to bear in mind that the condition of the people of Austria, and particularly of Vienna, would be appalling if it was not made. The other point I raised on the last occasion was in reference to the 60,000 rifles which were found passing through Austria on their way into Hungary, with a considerable number of machine guns. We have had an assurance from the Foreign Secretary that inquiries were being made into this transaction. The League of Nations has taken the matter up since, probably because of protests in the Parliaments of Europe, and the League Council have now decided to prosecute inquiries into the matter. Having the assurance from the Foreign Secretary, and seeing also that the League of Nations is taking up this question, I should advise my friends to allow the Clause to pass.

9.51 p.m.

Sir A. M. SAMUEL

I want to ask the Financial Secretary one or two questions. The service of this loan must depend on Excise and Customs receipts. I am alive to the fact that we cannot interfere with the sovereign rights of Austria or break pledges which have been given to her, but I want to ask the Financial Secretary whether in collaboration with other Powers who are guaranteeing this loan any steps have been taken, without infringing the sovereign rights of Austria, to get some control over customs and excise to ensure that the money raised may not be deflected and diverted into other channels. We can ask Austria to take such a suggestion from us made in good faith. This is a loan backed up by the recommendation of the League of Nations. There is no reason why we should not take the precaution of asking Austria to see that the control, collection and distribution of the monies received from excise and customs should be held in hands where they cannot be diverted to other purposes. We should then get what is due for the service of this loan, and the balance could go to the general purposes of Austria. That is a proposal which I think the Financial Secretary will do well to take into consideration.

9.53 p.m.

Mr. BOOTHBY

This Bill will obviously go through, but the Financial Secretary will make a great mistake if he assumes that the Committee is altogether happy about it or is ready to let other Bills of a similar character go through for an indefinite period. I was interested in the speech of the Financial Secretary on the Second Beading. He informed the House that the Bank of England had advanced this money out of humanitarian motives, and he went on to say that if no national loan was raised by Austria the Bank of England could not be repaid; that is, the humanitarian money it had advanced to Austria. This Bill enables Austria to raise a national loan, which is essential if the Bank of England is to be repaid the money it has lent. Some of us think that this Bill is merely a further stage in the long and disastrous policy, pursued for many years by the Bank of England in conjunction with, the Treasury, that is, a policy of endeavoring to bolster up by means of successive loans European countries which in the nature of things can never recover; they are not in themselves economic entities.

I agree entirely with the observations of the hon. Member for Ebbw Vale (Mr. A. Bevan) on the Second Reading Debate. The condition of Austria as it was established under the terms of the St. German Treaty, for which we have a responsibility, is such that until it is altered it is perfectly useless to expect the economic recovery of Austria. It is equally useless to expect that any loans that we make to Austria under existing conditions will ever be repaid, and I believe the Financial Secretary knows that perfectly well. My hon. Friend in his speech tonight pointed out with pride that we would not guarantee this loan to Austria unless and until, pari passu, it was guaranteed by France. But surely, as my hon. Friend knows, France has a very good reason for guaranteeing this loan. France is determined to keep Austria in a condition of bankruptcy as long as possible, and she will do it by guaranteeing loans of this character indefinitely for as many years as we are prepared to back her. France refuses absolutely to permit Austria to go into a customs union with Germany, which is the one economic move calculated to revive the dying fortunes of a top-heavy state. France, in fact, is guaranteeing this money in order to prevent Austria from entering such a union. Unless some economic measures of this kind are taken by Austria I do not believe anyone in this Committee can truthfully say that he thinks Austria will revive sufficiently from an economic point of view to repay any of the loans we are guaranteeing.

It has been pointed out over and over again by the Government of which the Financial Secretary is so distinguished an ornament, that international government indebtedness is one of the curses of the world at the present time. That is true, and yet we go on aggravating the already difficult economic situation by making a still further loan of £ 4,500,000, and my hon. Friend comes down to the Committee and tells us that if we only make this loan— it is not as if it was the first loan—to Austria, not only will it improve the situation, but it will save Austria from an economic point of view, and put her on her feet again. I do not believe that in the long run this sort of loan helps anyone, either helps us or helps Austria; but I would say to my hon. Friend as representing the Treasury that if he really can maintain that a loan of this kind is going to pull Austria round and put her on her feet, that drives a cart and horse through the arguments addressed to the House by the Treasury during the last seven or eight months upon the subject of development loans inside this country. We are informed that a development loan in this country, if we were to undertake it for housing construction or other practical productive work, would be valueless, and would not only do no good from the point of view of curing unemployment, but would actually jeopardize gravely the economic position of the country. If an internal development loan for practical constructive work inside this country, which would at least create a tangible asset for the people of this country, is of no value, why does my hon. Friend suppose that a loan of £4,500,000 to Austria at this juncture is going to save Austria? I shall be very interested to hear how the Treasury can reconcile those two completely divergent points of view.

If we have many more of this sort of Bill I shall have to go to my constituents, to the fishermen, to the farmers who are rapidly in succession becoming bankrupt, and tell them that the Government are refusing to spend any money internally for economic reasons, that we cannot raise a loan inside this country for housing construction or development of any sort or kind, that we have gone so far as to give instructions to local authorities throughout Britain to hold up every scheme of national development and productive work of every kind, but that when it comes to Austria there is a very different story, although Austria is in fact in an economic position which makes it extremely improbable that she will ever be able to repay any loan. From humanitarian motives the Bank of England, backed by the Government of this country, has been prepared to make an additional grant of £4,500,000 in order to put Austria on her feet again, yet we cannot put our own fishermen or farmers on their feet or help unemployment.

I ask the Financial Secretary to answer two questions: First, was this loan granted in the first place by the Bank of England with the cognizance or approval of the Government? That is a very important question. In other words, did the Government at the time give an undertaking, tacit or implied, to the Bank of England, that at some time they would come to the House and ask for the means of repaying to the Bank of England this humanitarian loan to Austria. Secondly, can the Financial Secretary say that this at any rate marks the end of a policy of granting loans to European countries which from their intrinsic position are unlikely ever to be able to repay them, and at the same time refusing loans of any sort or kind to our own people to develop our own country?

10.2 p.m.

Mr. ATTLEE

I would like to add to the questions that have just been put, and to ask whether, as a matter of fact, the Austrian people have been the subjects of this humanitarian effort by the Bank of England, and whether the loan by the Bank of England was not made in order to save certain financial houses in the City of London? As a matter of fact has anything in this loan been particularly humanitarian? This loan is not to set Austria on her feet, but to take away the obligation which she has formed to the Bank of England. The Bank of England has lent money to Austria and it looks like losing it. We are told that this is a short-term loan and is to be turned into a long-term loan, but there are plenty of short-term loans which have been broken. As far as I can make out we are to take over the liability resting on the Bank of England, to unfreeze the money so far as the Bank of England is concerned and to freeze it so far as we are concerned.

10.3 p.m.

Captain FULLER

I do not propose to follow the last speaker. I find myself rather more in agreement with what the hon. Member for Eastern Aberdeen (Mr. Booth by) has said. Of course, the Financial Secretary is quite entitled to get the Second Reading of the Bill, because the House has passed the Financial Resolution, but since the Financial Resolution there have happened one or two things which may have escaped the attention of some hon. Members. This is not an occasion that I should have chosen to make a speech on my view of the Bill. In these days of uncertainty, when one day one walks blithely down the road and on the next day is in bed with influenza, one has to seize opportunities, and I am seizing this opportunity to say one or two things that have occurred to me in the course of last week. First of all, I would like to draw attention to two dispatches in the "Times" of 10th and 11th February. The first is as follows: The Austrian Government has passed a measure prohibiting the importation till further orders, except under special permits, of cotton yarns up to Number 60 (English), listed under numbers 133 to 136 of the present Customs Tariff; yarns, bleached, mercerized, etc., up to Number 60 (English) listed under Tariff Number 137; and yarns packed for retail sale, listed under Tariff Number 139. That is the first dispatch. The second reads as follows: The Government has introduced a Bill to empower it to increase Customs duties all round by 22 per cent.—the amount by which the Austrian schilling has depreciated since September, 1931. The increase is expected to yield £ 1,400,000 (at par) annually, It is, however, feared in many quarters that the measure, if passed, would increase the cost of living and end in increasing the number of assisted unemployed which has reached a record figure. For this reason the measure will be opposed by the Socialists. I hope the hon. Gentlemen in front of me will cogitate upon that dispatch. It is, of course, perfectly true that we are affording advantage to Austria because of the low interest rates which she is to pay on this loan as compared with the other loan. That is all to her advantage. It has been made possible through the sacrifice of the people of this country. At the same time other Powers, as I understand it, are giving new money in capital, goods or gold to Austria, and as a result of that Austria has to pay additional interest charges on these new loans. The only possible way in which she can do that is by restricting her imports or increasing her exports. She cannot do the latter, so she naturally does the former, and makes a direct discrimination against the cotton goods of this country.

As a Member who represents, perhaps Very imperfectly, one of the Lancashire constituencies, I, for one, cannot sit down and swallow this. The advantages which Austria receives come entirely from this country. The disadvantages which she ladles out come entirely on this country. It is going to create further unemployment in Lancashire, where, God knows, there is enough already. I, for one, will be no party to voting for any Measure in this House which will put one man out of employment if I know it. I am taking this opportunity of expressing my regret at this loan, and would like to ask the Financial Secretary if some representations cannot be made or some terms come to with Austria whereby she takes off this discrimination against us. France, in my view, has imposed a most iniquitous political condition with her loan, and we are only asking for fair play for our people. I hope the Financial Secretary will be able to give an answer which will not only satisfy me, but the people I represent.

10.11 p.m.

Mr. BRACKEN

This is the third Debate we have had on this question, and yet we have not received any adequate answer to the points of substance which have been raised. We have had a series of contradictory explanations from the Financial Secretary, and from his chief, the Chancellor of the Exchequer. I have carefully studied the reports of what both have said, and I am in a complete fog as to what is the Government's policy with regard to this loan. Take the Chancellor of the Exchequer's apologia. He says he was not a member of the Government which was in office when the loan was made, and be does not know whether the Government guaranteed the Bank against loss. It is waste of time to consider things of that sort from the Chancellor. The plain fact is that the right hon. Gentleman cannot justify his Department's policy with regard to this loan, so he puts forward the absurd defense that he cannot say what happened because he was not in the Government at the time. He cannot even have read the records of the Treasury. So far as this Bill is concerned, the right hon. Gentleman might as well be bird watching in the Park as presiding over His Majesty's Treasury. Therefore, we must content ourselves with the exceedingly obscure, involved and contradictory explanations that have been given by the Secretary to the Treasury. He said that when the advance was made to Austria the Treasury was not committed repaying it, but added that they accepted liability at a later date. I hope I am not misinterpreting the hon. Gentleman, who has made so many explanations of explanations that it is very difficult to follow what he means.

Mr. HORE-BELISHA

I would like to have the hon. Member's indictment against me made absolutely plain. He has already quoted what the Chancellor of the Exchequer said, stopping at the important point incidentally, but he has not quoted what I have said. He is giving his own version.

Mr. BRACKEN

I will quote what the hon. Member said if the House wishes, but he made speeches extending to seven or eight columns of the OFFICIAL REPORT in the course of the Debate. I asked him if I did him an injustice in saying he had said the Treasury did not concur in the original loan, but on a subsequent occasion had accepted liability. Am I to understand that that is a misinterpretation of the speech?

Mr. HORE-BELISHA

My hon. Friend knows we are in Committee. I only want to make quite sure what he has in mind. I want to be absolutely plain as to what he is charging me with, and I will answer him.

Mr. BRACKEN

I am not charging the hon. Gentleman with anything. [Interruption.] The Socialists who are so eager to rush to the defense of the Government must remember that although the hon. Member for Caerphilly (Mr. Morgan Jones) is very clever, the Financial Secretary to the Treasury is quite capable of looking after himself.

Mr. MORGAN JONES

Go for him, then.

Mr. BRACKEN

Before we got involved in this rather squalid argument I was trying to point out that we were not indicting him. The Financial Secretary made a number of observations which it would require a very facile brain to piece together logically. No doubt he has that great gift. The person we are most anxious to make a case against is not the Financial Secretary but Lord Snowden. The real villain of this piece is Lord Snowden. He is entirely responsible for the policy which the Government adopted with regard to this Austrian loan. I am bound to say that we are much too fond of paying tributes to reputations which have passed beyond the censure of this House. I think Lord Snowden was the worst Chancellor of the Exchequer since Charles Townshend. And I think it is relevant for a moment to consider the record of Lord Snowden's general financial policy. We all know that when he was Chancellor of the Exchequer he harried every industry and worried every trade. He boasted of that achievement on the Treasury Bench. Having disordered the whole finances of the country he spends his time, in well-merited retirement, pouring vitriol on all the people who have to clear up the mess he left at the Treasury.

The CHAIRMAN (Sir Dennis Herbert)

The hon. Member is going a little too far.

Mr. BRACKEN

I think, Sir Dennis, if you were to perceive the sequence of my arguments, you would not take that uncharitable view of my remarks. I was merely pointing out that the Financial Secretary has, in this matter, to a very large extent to assume liability for Lord Snowden's policy which I believe he very much dislikes. I think it is relevant on this occasion to point out that Lord Snowden is responsible for the policy which lies behind this Bill. Let us consider Lord Snowden's policy. He took the view that the Treasury were not committed to guarantee the Bank of England against loss in respect of this loan but subsequently he accepted full liability on behalf of the Government. That seems to be one of the most illogical episodes in an extremely illogical career. It is also relevant to recall for a moment Lord Snowden's progress as the hero of The Hague. We all remember the time when he insulted foreign Governments and put our diplomatic interests in jeopardy by his extremely ill natured outburst at The Hague. That was for a matter of about £ l,600,000, and he became the hero of England when he appeared to collect that sum from the French Government—though in fact he never succeeded.

Lieut.-Colonel ACLAND-TROYTE

On a point of Order. Shall I be allowed to discuss Lord Snowden and land taxes presently?

Mr. BRACKEN

I did not follow the interruption. It appeared to have reference to land taxes which are the bane of all agricultural Members, but I thought its introduction into this Debate showed a certain vacuity which requires censure. The real origin of this loan was when Lord Snowden returned to London as a sort of Cromwell of finance and was received in the bosom of the City of London and went to the Mansion House where turtle-fed aldermen entertained him to lunch—

The CHAIRMAN

The hon. Member may have been in order in recalling an incident of Lord Snowden's career, but he is not in order in following the complete progress of Lord Snowden.

Mr. BRACKEN

I bow to your Ruling, Sir Dennis, and I would not inflict on the House the whole of Lord Snowden's curious political career. What I was pointing out was that it was just after the episode of The Hague that he committed us to this loan. He then discarded the trappings of the Iron Chancellor in order to appear as the fairy godmother of the Bank of England. That is why we wish to enter a reasonably emphatic protest against his whole policy. We recall that the man who slashed every social service, and who cut down unemployment benefit, was willing to subsidies bankers. We mere Tories strongly object to that attitude. In order to keep within the bounds of order, I shall say nothing more about Lord Snowden's conduct in regard to this loan beyond applying to it his own favorite word, "grotesque." We have another and I think an important duty to discharge tonight, namely, to consider the part of the Bank of England in connection with this loan.

When the Bank made this loan to Austria, mug ump newspapers came out with leading articles calling it a noble and generous gesture and preachers pointed out in the pulpit that the Bank had done what no State would do, that is, to save Austria from bankruptcy and general ruin. I was willing to accept the view that it was a noble and generous act on the part of the Bank. I personally, and I suppose every other Member, greatly regretted that the Bank sustained a heavy loss through this generous advance to Austria, but there is a very important difference between regretting a loss and paying for it, and what we are being asked to do tonight is to pay for the loss.

I think we ought to ask ourselves—and I hope the Financial Secretary will answer this question very carefully—why the Government have thrust the liability for the Bank's advance on the taxpayer, because that is the basis of this Debate. It may be said that the amount of the advance was so great that it would strain the Bank of England's resources, but we all know that that is an utterly futile argument. Every day in the City of London the joint stock banks have to make advances to British industries, which in the course of a year, if they were all added together, would show losses of a great deal more than £4,000,000 in those banks' endeavors to encourage British trade. In view of that, it is singularly unconvincing to say that the advance to the Creditanstalt will so strain the Bank of England's resources that we ought to step in now and assist them. I must say that the joint stock banks do not whine-about their losses. They do not come down to Whitehall and ask that the Government should discharge the liabilities which they have incurred when they have made advances to industries in Lancashire, Yorkshire, or elsewhere in this country. They know very well that they would be chased out of Whitehall if they were to dare to ask for a Treasury assistance to justify the advances, prudent or otherwise, made by them to industry in this country.

We must ask ourselves this question: What is the all-pervading power which has turned the Treasury into the West End branch of the Bank of England? I hope the Financial Secretary will explain that development. I have the greatest admiration for the Governor of the Bank of England and for the Bank of England itself. I think the Governor has qualities of enterprise and determination which we fail to discern in the occupants of the Treasury Bench, but, much as I admire him, we are here to protect public money, and so if the Bank of England cares to make a loan to Austria, and loses its money, I think the Bank ought to stand the racket. I do not think the House of Commons, as representing the taxpayers, should be called in to bear burdens of that sort.

Another point of importance arises, and that is that the financial commitments of this country ought not to be determined by the Governor of the Bank of England. If the Governor is so well fitted to determine our financial commitments, then for goodness' sake make him Chancellor of the Exchequer, so that we may have an opportunity of exercising some control over him. If that were done, we should have an opportunity of inquiring into the policy which led to this advance to Austria. The Government's attitude to this Bill is really an affront to the whole House. We have had three long Debates on this subject, in which the Financial Secretary to the Treasury has attempted to answer some of the points we made, but, owing to the fact that his chief laid down the line that Ministers did not know what happened before they went to the Treasury, we have not been able to get information which has been of the least assistance to us.

I have no doubt that the Government will succeed in carrying the Bill through tonight. I do not read many politicians' speeches in the newspapers, but I have heard that from time to time highly respected Members of this House go to their constituents and explain that the poverty of the country is the sole reason why the Government have not done something for slum clearance or for the dire poverty in our midst. That has been the argument with which they have justified the policy of intense restriction which the Government have followed. But are hon. Members quite happy in voting £ 4,500,000 as a Bank of England Relief Bill? This money is not going to Austria but to the vaults of the Bank of England, which it ought never to have left if we have to repay it. Are hon. Members entirely happy about this policy of cutting down every social service, restricting every form of development, affording no relief sums or for advancing other justifiable State policies, and at the same time saying that Parliament can approve a Bill to confirm a loan of £4,500,000 to the Austrian Government, which incidentally will be passed on to the Bank of England, which is not the poorest corporation in this country? If hon. Members are happy in voting tonight for this loan, I believe they will be less happy when the next General Election comes along.

10.26 p.m.

Mr. MAXTON

I have been interested in the Debate this evening and somewhat amazed at the strong views expressed by the hon. Member for East Aberdeen (Mr. Booth by) and other hon. Members on the Government Benches, because on the last occasion when this question was before the House and the matter came to be decided on by voting in the Division Lobby, my hon. Friends and I called "No," and were ready to go into the Lobby if there had been any evidence of support for our point of view.

Mr. BRACKEN

The hon. Member must have called so loudly that he did not observe the "Noes" that came from us.

Mr. MAXTON

The hon. Member may have said "No," but he must have taken care that it was inaudible not only to me, but to the Government Whips. My hon. Friends and I do not want to be perpetually going into the Lobby in groups of three, two or nothing, but if tonight there is a possibility of gallant hordes of Government supporters joining us, we shall be only too glad to act as their humble servants at the Table. It seems to me very peculiar that on an important matter of this description—because it is important—the most responsible Cabinet Ministers have, perhaps accidentally, but nevertheless noticeably, refrained from being present during the various discussions. It may be that an expenditure of £4,500,000 is now a very trivial matter to the Government, and that the national finances have been put into such very fine order that we can throw £4,500,000 about quite freely. If that be the case, let the House know it, and those of us who have other ways in which we think £4,500,000 might be spent could begin to put forward our claims, about which we have been silent knowing the national difficulties.

I assume that the absence of the responsible Ministers of the Crown is not due to the fact that they deliberately want to put an affront on the House, but that they are busily engaged in some room behind the Speaker's Chair considering the last minute instructions that they are to give to the people who are going over to explain to America why we should not pay the debt that we have honorably undertaken over there, while they send the Financial Secretary to the House to persuade us to pay a debt that we never undertook at all. I want the Financial Secretary to explain to me, as a plain and simple man, just exactly what is the guiding principle that governs the Government's policy on these foreign debt questions. Here we are applying all our brains to get out of the American debt and explaining to America how harmful it will be to America if we pay that debt, while we are insisting that Ireland should pay us her debt, and now the Government are insisting that we shall develop an entirely new debt with Austria. The Financial Secretary knows how very difficult all this must be for people like ourselves. Those who have to handle large sums of money in their personal affairs grip these things just at once, but those of us who have been brought up to incur debts as small as possible, and to pay them as speedily as we can, get all mixed up when we are confronted with what seems to us a complete contradiction in the various ways of dealing with the various foreign commitments.

I am quite sure that there is some general principle running through them all, in spite of the superficial difficulties. I cannot believe that the National Government, when they get into the Cabinet room, work on the principle of saying, "Well, there are a certain number of Liberals here, a certain number of Conservatives and a certain number of Labor people, and on this issue we will go the Liberal way, on this other one go the Conservative way, and on this third one go the Labor way"—a scrap to each. That would not be a National Government, and I cannot believe that is how the Cabinet come to their decisions, but I am perfectly certain that many people in the country are inclined to believe that that is the case. I hope the hon. Gentleman in his reply will clear away the fogs that hang over the minds of myself and my hon. Friends who sit on this bench, and, if he fails to clear away those mists, I hope those supporters of the Government who have spoken out so courageously tonight will carry their point of view into the Division Lobby, when what little support we are able to present to them will be freely and generously given.

10.33 p.m.

Mr. HARCOURT JOHNSTONE

In intervening for a few moments, first of all, I think, to assist the Financial Secretary in his duel with my hon. Friend, the Member for North Padding ton (Mr. Bracken), I would like to quote a passage which I am sure my hon. Friend would have been glad to use if he had had it handy. The Financial Secretary, speaking on the last occasion when this subject was debated said: The Bank of England made the loan to Austria in June, 1931, on its own initiative, but His Majesty's Government at that date, though not the present Government, was informed of and expressed its concurrence in what the Bank of England was doing. The Bank of England made it a term of this advance that it should be repaid in full out of the proceeds of the first national loan that was floated by Austria, which was then considered a proximate possibility."—[OFFICIAL REPORT, 7th February, 1933; col. 133, Vol. 274.] I think that to any unprejudiced listener the course of events must be reasonably clear, but I. am sure the Committee would be grateful to the hon. Gentleman if he would set their minds at rest. My own reading of the event is this, that, although the House was sitting, the Government were not willing or able to come down to the House to ask for the money to be voted, and said to the Bank of England: "If you will advance the money and give us time to negotiate with other countries for a joint loan, you may rely upon it that our share of the loan will be repaid to you." As a matter of fact, I am certain that that is what occurred. I see no reason why the Financial Secretary should not say so quite plainly. There is nothing disgraceful about it. If the loan to Austria was an immediate necessity in order to prevent a collapse which would carry in its train losses far greater than the £4,300,000 that is proposed, the Government would be justified in making it. The method which they adopted, because they could not get co-guarantors for the loan in a great hurry, has nothing disgraceful about it. The only thing which makes one uneasy is that the method should not be avowed, but that this air of mystery should have been created by the Financial Secretary around what, on the face of it, must have been a perfectly simple transaction.

Mr. BRACKEN

I am sorry to interrupt the hon. Member, but I know that he is a very eminent Liberal and that he is very keen on carrying on the Glad stonian principle of the control of finance by the House of Commons. Does he say that there is nothing wrong in the Government making an advance to a foreign country which they dare not bring before Parliament, but which they ask their bankers to make when the House of Commons is not in Session?

Mr. JOHNSTONE

I will make the hon. Gentleman a present of that argument. The Government have a responsibility, but, if the thing is so urgent that it must be done at once and the Government cannot get the Members of the House of Commons together or secure the co-guarantors for a loan of an international character in a short enough space of time, it may adopt the same method as was adopted by the hon. Gentleman's Leader, and it may go out and borrow the money. I do not commend the method as a general principle, but I cannot see why the Government, if that was the method they did adopt, should not say so quite straightforwardly.

The point which I think is of even greater importance is as to the policy of the Government in regard to the situation of Austria in Europe. My hon. Friend the Member for East Wolverhampton (Mr. Mander) raised the question in a speech on the last occasion, and the Foreign Secretary was present in the House and answered on the Debate. The Foreign Secretary avoided making any reference to the point which my hon. Friend then raised, which was this: Is it the policy, the deliberate and thought out policy, of the Government to stabilize for 20 years—

Mr. C. WILLIAMS

On a point of Order. I raise in my Amendment on the Schedule this point as to the position of Austria in Europe. The Foreign Secretary quoted the point in the speech to which the hon. Gentleman is referring. I wish to safeguard my Amendment.

The CHAIRMAN

The hon. Member need not trouble about safeguarding his Amendment. It has gone already.

Mr. WILLIAMS

I am not referring to my first Amendment, but the second Amendment to the Schedule, on page 3, to leave out lines 16 to 20.

The CHAIRMAN

I am referring to the hon. Gentleman's second Amendment.

Mr. JOHNSTONE

The point is quite clear. The Foreign Secretary did not meet the point. It is this: Does the policy of the Government deliberately involve the stabilization of the conditions of the Protocol and of the Treaty of St. Germain? If it is the deliberate policy of the Government to stabilize the present condition of Austria, and to concur with the French in preventing to the best of their ability any Auschluss or trade agreement by Austria, then I think that a Committee of the House is entitled to know it. The hon. Gentleman who just interrupted me gave the Foreign Secretary, most unfortunately, a very good excuse for not answering the question of my hon. Friend the Member for East Wolver Hampton. He raised the point as to some sinister secret agreement. Of course, there is no necessity for any secret agreement, and the Foreign Secretary was able to deny that with force and vigor, without making any answer to the perfectly straight question as to what the Government's policy really is. I think it would be very greatly to the advantage of the Committee if we could have now an answer from the Financial Secretary to the Treasury as to whether it is, and will continue to be in any future financial negotiations with Austria, the policy of the Government to force upon Austria for perhaps the next 20 or 25 years an economic condition which can only destroy Austria itself, and act as a running sore in the very middle of Europe, which, according to the Financial Secretary, he is busily engaged in saving by the promotion of this loan.

Mr. C. WILLIAMS

I should not have risen again on Clause 1 but for the fact that a point has been raised which I and others raised on the last occasion. Many of us feel very bitterly with regard to certain words which are included in the Schedule, though it is a little difficult to know how to discuss, on Clause 1, those words which are in the Schedule. As, however, we are guaranteeing the money in Clause 1, I think it is a reason for not guaranteeing the money that it is laid down very clearly and definitely in another part of the Bill, Amendments to which, apparently, are not going to be called, that Austria is not to be allowed to make any sort or kind of trade agreement with her neighbors in the center of Europe. The hon. Member for South Shields (Mr. H. John stone) has said that I did not put the question very clearly. I admit that in the middle of my question I said something about secret agreements, but I thought I was dealing with someone who was going to give a direct answer to the question which I put in my last words: I think the House is entitled to know perfectly clearly and once for all whether there has been any sort or kind of foreign agreement."—[OFFICIAL REPORT, 7th February, 1933; col. 168, Vol. 274.] I forgot that not so long ago the Foreign Secretary had some associations with the hon. Gentleman who has just been speaking, and, apparently, has not quite forgotten all the tricks that sometimes happen, but most Foreign Ministers would have immediately replied to that question as my main question. The right hon. Gentleman, however, sailed away on the question of secret agreements, and we got no further. Where the hon. Member for East Wolver Hampton (Mr. Mander) got I do not know, but I pressed my question again—which the hon. Mem- ber did not—and we then had a further reference by the Foreign Secretary to the words which I desire to leave out of the Schedule, and which I cannot now discuss. At any rate, the whole position is laid down in those words, and I think that before the House passes Clause 1, which guarantees the money, some reason might be given as to why the British Government and the British Foreign Secretary allow our country to be driven into a treaty of this kind simply because the French and Italian Governments have said that they would not find the money unless, as I understand it, the number of years for which this treaty runs were further extended.

I should like to have an answer to the question which I made quite clear the other day, before we allow this Clause to pass— though I should be averse from dividing against the Clause— namely, for how much longer a period Austria is not to be allowed to make some commercial treaty which will enable her to get out of the position in which she is at the present time. It is a very important point and one upon which many of us feel deeply. I know that the Socialist party will not fight on this or any other question if they can help it. It is utterly wrong that the force of our Government should be used to enforce conditions upon Central Europe by means of a loan of this kind while we are not going to do anything, apparently, for something like 20 years to get rid of what is one of the greatest troubles of civilisation, namely, the hopeless boundaries which exist in Central Europe at the present time.

10.46 p.m.

Mr. HORE-BELISHA

Nothing stimulates indignation so much as the feeling that there is somewhere a hidden hand. For my part, I will do my best to remove any idea that a hidden hand exists in this business. I will tell the Committee frankly everything that I know, and I do not think that there is anything to conceal. The Credit Anstalt failed in 1931. The Bank of England came to the assistance of Austria. The Government of the day was, of course, made aware of the situation. It was sympathetic towards assistance being given to Austria, but the loan was made entirely upon the initiative of the Bank of England. The Bank of England received no undertaking from the Government that the Government would make a guaranteed loan. The Bank of England, however, advanced the money to Austria, a sum of 150,000,000 schillings, which has since been reduced, by repayment, to 100,000,000 schillings. It was so sure that it would be repaid that it lent the money upon weekly terms, Austria promising to repay the Bank out of the first loan that was made. Austria was not, however, able, owing to the financial condition of the markets, to make a loan, and certain of the Powers who had guaranteed the 1923 loan undertook to guarantee a further loan subject to certain conditions and certain safeguards. Austria was to put her finances completely in order and to regulate her commerce. That is the position, in very brief language, today. The Protocol summarizing the arrangement which I have mentioned has been ratified at Geneva in pursuance of the authority given by this House. It has also been ratified by France and by Italy: Let me at once remove certain misapprehensions. No money has yet been guaranteed. My hon. Friend the Member for Ardwick (Captain Fuller) had some complaint to make about the treatment to which our cotton goods were subjected in Austria. Let me tell him at once, that what he has said is at this moment the subject of consideration, and, if necessary, if the grievance be justified, representation will immediately be made to Austria. No loan has yet been made, nor does it follow, if a loan be made, that any taxpayer in this country will be dignified. There is no Austrian loan which is in default. The 1923 loan has been met, and I trust will continue to be met. We are not entitled to take away from Austria her just reputation. It must be admitted that she has hitherto paid her debts.

Mr. BRACKEN

That suggestion was made by the hon. Member himself, because he told the House the other night that unless we made this loan to Austria she would be unable to meet the loan we made in 1922.

Mr. HORE-BELISHA

I am trying to give a consecutive narrative to the Committee, and I am trying to render justice where justice is due. Austria has not defaulted upon any loan. It is quite true that Austria might default in the future, and we are naturally anxious, in view of the international repercussion, to prevent that country from defaulting, but there has been no actual default, and the result of our guaranteed loan will be that Austria's financial position will be improved. That goes without saying. Her liabilities will be contracted because, as I have already informed the Committee, a short-term loan at higher rates of interest will be converted into a long term loan at lower rates of interest. We and the committee of experts who have examined this question are perfectly satisfied that Austria is making progress in putting her finances in order and will be in a position to meet her liabilities. Therefore there is no ground to fear that the British taxpayer will be called upon to meet any obligation. We must remember any loan that has yet been made has been met.

Mr. BOOTHBY

When there is default, will we make another loan?

Mr. HORE-BELISHA

It is impossible to satisfy my hon. Friend. He dislikes this loan and I appreciate his dislike. I have told, however, the circumstances in which the loan was made and its history. No man as well traveled as he is ignorant of the reactions of a failure in one country on its neighbors. I have not tried to make any sanguine prophecies about this loan or to pass any encomiums upon it. I have told the House the plain blunt story of how we have made the loan. Another point made was that it was all very well to make a loan but why was a political condition imposed. No new political condition is imposed upon Austria. The facts are that, by the Treaty of St. Germany, the independence of Austria is inalienable otherwise than with the consent of the Council of the League of Nations. The Protocol accompanying the loan that was made to Austria in 1923 reiterated the statement I have just made to the House and Austria undertook in return for that loan not to alienate the independence which she had promised in the Treaty of St. Germany not to yield. That Protocol is repeated in the present Bill. France would not have advanced the money nor would Italy if it had not been repeated in the present Bill. If Austria wanted the money she had to reiterate the Protocol which simply reaffirms the condi- tion and is simply recited in the preamble to the Protocol. It is not put there by our instructions but by the desire of France and Italy to have the status quo reaffirmed, which is in fact the Treaty position. I do not think it can be said that we are imposing any unfair condition upon Austria.

Captain CAZALET

Has there not been an interpretation by the International Court of Justice at the Hague which makes it far more difficult for Austria to make a commercial agreement with Germany than under the Treaty of St. Germany?

Mr. HORE-BELISHA

There is nothing in this Protocol which prevents Austria from making any trade or commercial agreement.

Captain CAZALET

rose—

Mr. HORE-BELISHA

I am sorry. If my hon. and gallant Friend does not follow me, I will willingly give way again, but there is nothing in the Protocol which prevents Austria from making any commercial agreement. My hon. Friend the Member for the Bridgeton Division (Mr. Maxton) in a very provocatively-phrased speech—I do not mean provocative in an offensive sense, but provocative of thought—tried to involve me in a theoretical argument. I am not very much attached to theories—attachment to theories has been the downfall of more than one political party—I am concerned with a purely practical issue. I, nevertheless, will try to draw, in one sentence, the distinction which the hon. Member for Bridgeton invited me to draw. He asked me to state what makes the difference between a loan made by us to Austria and a loan made by the United States to us. The loan that we are guaranteeing, or that we are taking power to guarantee, to Austria, is a loan for constructive purposes, to enable a distressed country to rehabilitate itself. The loan which the United States made to us has been blown to pieces in a world war, and was not made for productive purposes. I do not think that I need draw the distinction more finely than that. I will say that it is not the general policy of His Majesty's Government to make loans to foreign countries, but there is an exception to be made in the case of Austria.

Mr. BRACKEN

Why?

Mr. HORE-BELISHA

My hon. Friend has been present throughout the Debates on this subject and he has heard a full explanation of the peculiar situation of Austria. There is an exception to be made in this case. In any event, no money will pass out of this country; it will remain here.

Clause 2 (Short Title) ordered to stand part of the Bill.