HC Deb 20 February 1933 vol 274 cc1461-523

Order for Third Reading read.

3.38 p.m.


I beg to move, "That the Bill be now read the Third time."

The Government do not infer from the fact that this Bill has passed through its stages without a Division that the apprehensions that have been expressed were unnatural. On the contrary, I think they were perfectly understandable, and my right hon. Friend and I have done our best to remove them. Is the course that we are taking in making this guaranteed loan to Austria a reasonable one? That question can only be answered by reference to the past. Vienna, although on a smaller scale is, like London, a financial metropolis. It polarises much of the business activity and much of the attention of the countries which surround it. The Creditanstalt is its principal bank. Following the practice of continental banks, that institution incurred many industrial commitments and in the economic conditions of the time fears were entertained lest there should be a run on the bank. The Government of Austria, anxious to circumscribe the effect of such a development, undertook to meet the obligations of the Creditanstalt. It did not know what the extent of the commitments that it was assuming would be and it addressed itself to the principal capitals of Europe. It was the intention of the Government in Austria to raise money upon Treasury Bonds in London and Paris. That course, however, proved impossible, and the Bank of England came to the succour of the Austrian Government and thereby of the Austrian National Bank and the Creditanstalt. The Austrian Government, in asking the Bank of England for assistance, promised to repay the 150,000,000 schillings which were in question, out of the proceeds of the first loan which was made. It was assumed that the loan would shortly be made and the Bank of England advance was on a weekly basis. The step taken was not sufficiently prompt to avert the spread of the calamity, for Germany was affected and a moratorium was declared there. England was also touched, and the crisis of the autumn of 1931 ensued. The story should be sufficient to show how difficult it is to isolate the repercussions of financial disaster, and I think it is plain why we are anxious that Austria should not be allowed to fail.

I have told the House that the Bank of England made this advance upon its own responsibility; and by virtue of a contract which they made with the Austrian authorities it was to be repaid out of the first loan which Austria issued. That is a matter entirely between the Bank of England and Austria, although I think it is a fortunate thing for us that that contract exists, for it means that not one single penny of the proceeds of this loan will leave this country. The position arises by virtue of the contract arranged between the Bank of England and Austria, and this country is no party to that contract. The Austrian Government having failed to raise a loan, largely because of the financial developments which I have narrated to the House, therefore addressed itself to the Powers collectively, who undertook to make a guaranteed loan under certain precautions, which are now well known to the House. They imposed on Austria certain conditions, and, looking at these conditions, may I answer the second question which is relevant, and which has loomed large in the criticisms made in this House —is there a reasonable chance that the British taxpayer will avoid any liability under the guaranteed loan?

What are the conditions? Austria undertakes to rehabilitate the credit of the Creditanstalt, to balance her Budget, to meet punctually her foreign obligations and to reorganise her internal economy. Their efforts are proceeding satisfactorily under all these heads. What are the assets out of which the service of this loan is to be met? The answer to this question will be an even more cogent reply to the question as to the liability of the British taxpayer. The loan will be secured on the customs receipts, tobacco monopoly which have an annual yield of 570,000,000 schillings. The service of the loans of 1923 and 1930 required 89,000,000 and 34,000,000 schillings respectively, so that the surplus available for the new loan amounts to approximately 450,000,000 schillings, which should suffice to cover the service of the new loan in Austrian currency at least 20 times. I am entitled to suggest that those hon. Members who fear that Austria is not in a position to meet this loan and who complain that we have guaranteed a loan to Austria rather than to our own people—hon. Members who make that attack on the Bill cannot substantiate it on the figures.


Does not the Financial Secretary realise that Austria, a country which he describes as being so rich, is already in default on some of her loans?


No, neither the 1923 loan nor the 1930 loan is in default. If the hon. Member was making a criticism of some of the Powers which surround Austria his criticism would be justified. Hungary, Greece and Bulgaria have been obliged to suspend the services of their foreign loans in whole or in part, but there has been no default to the bondholders on the Austrian foreign loans of 1923 and 1930.


I am sorry to have to contradict the hon. Member, but I must point out that the right hon. Member for West Birmingham (Sir A. Chamberlain), who was Chairman of the League Loans Committee, stated in a publication this morning that Austria is in default.


Perhaps when the hon. Member makes his speech he will specify what loan and the amount. I am giving the House the information in my possession. If the hon. Member wishes, and he will particularise the loan which is in default and narrate the relevant circumstances proving that I am wrong, I shall be quite prepared to withdraw. I am of the opinion that Austria is not in default, certainly not on the 1923 loan and the 1930 loan, with which we are concerned. Further, as a result of fortifying the financial position of Austria, we shall continue to save£800,000 which might be endangered or rather which we might have to find as guarantors of the 1923 loan. On the whole the British taxpayer has more to gain than lose by this loan. I hope I have not exaggerated the position in any way. I have shown the peculiar position of Austria which justifies this course, and the repercussions which may be expected to ensue if we allow that country to become embarrassed. I have shown that there is a distinct probability that the British taxpayer will not be called upon to meet any obligations, I put the case no higher than that, and I appeal to the House to allow the Third Reading of the Bill to pass.

3.48 p.m.


I have listened to the speeches of the Financial Secretary on this subject and I think he has made the best possible case of an almost impossible subject. He has given us what appears to be satisfactory figures as to how the interest on this loan will be met. He has stated that it is amply covered by the customs revenues of Austria. May I point out that the loan is to be repaid in gold shillings, whereas the Austrian customs are paid in Austrian schillings, and there is a difference of nearly 20 per cent. between the two. This difference may be greater in a very short time and may wipe out the whole of the cover which the Financial Secretary says is there to meet the interest on the loan.


I hope the Financial Secretary will tell us if what the hon. and gallant Member for Chippenham (Captain Cazalet) says is true. If it is then it is a very serious state of affairs.


I cannot reply while the hon. and gallant Member is speaking. I should prefer to hear the speech first and then answer it.


I do not want to make a point so as to score off the Financial Secretary. My hon. Friend said that unless we gave this extra loan, unless the British taxpayers guarantee another£4,000,000, we might lose£800,000. It seems to me that we shall lose£4,800,000. One of the reasons for Austria's present plight is that in the past she has over-borrowed, and so, I presume, it is hoped, by giving her the hypothetical advantage of another loan, to secure what really is impossible to-day. I do not suppose that any loan was discussed or raised with less good will than the present one. I believe that the anxieties and misgivings concerning this loan are shared equally on the Treasury Bench and in other parts of the House. Many of us spoke against the Financial Resolution before Christmas, but as we did not go into the Division Lobby against it any opposition to this Bill is now theoretical rather than practical. I must admit that nothing has happened since December to alter my views or those of my hon. Friends in regard to this Measure. Certainly a short visit to Austria and Vienna has only endorsed and confirmed every doubt and misgiving which I held a few weeks ago.

We have been asked to support this Bill on two grounds; first, because of some commitment or promise between a former Government and the Bank of England; and secondly, on the ground that we must carry out an obligation into which we have entered with foreign nations in order to help Austria. I do not think either of them is a very good reason, nor do I think, although the Financial Secretary has made out the best possible case, that he has substantiated this particular argument. First of all in regard to our commitments with the Bank of England, it seems to me a very good example of the curious and nebulous relationship between the Treasury and the Bank of England. I am not saying that the present Government are the exception, because all Governments are the same. Sometimes we are told that the Bank of England is a completely independent body, maintaining friendly relations with the Treasury. That argument is used when it suits the Government. On other occasions we have the case in which, apparently, the Government feel in duty bound to take over a commitment from the Bank of England. Of course, it simply means in other words that the Treasury, or rather the British taxpayer, is assuming a responsibility which, in the Financial Secretary's own words, the Bank of England took entirely independently on its own account. There is this to be said: Had the Bank of England not made this particular stipulation, that their short-term loan should be repaid out of the first long-term loan raised by Austria, we should have found ourselves to-day voting an extra£4,000,000 to Austria in addition to that which the Bank of England has already lent.

My hon. Friend said that one satisfactory thing about the loan was that no money would leave the country. That is not really helping the argument that this loan is going to be of substantial use to Austria. My hon. Friend cannot have it both ways. I understand that the position of the Government is a very unpleasant one. They have to come to the House and ask for a guarantee of over£4,000,000, while at the same time they are refusing to issue loans for purely domestic matters—loan issues which, I think, are far more likely to prove to the benefit of the taxpayer of this country than this Austrian Loan will ever be. In my view this loan is going to be of very little use to Austria. First of all, it does definitely tie her for a number of years upon a particular point. We have heard various arguments. I think it was my hon. Friend the Member for Torquay (Mr. C. Williams) who suggested that this loan was some secret arrangement. I think he was wrong in saying that it was "secret," but certainly it is not plainly stated in the Bill.

I understand that the facts are these: Austria raised a loan in 1922, subject to certain conditions known as Protocol No. 1. One of the conditions was that she could not form a Customs Union with Germany. That loan extended only from 1922 to 1940. When the loan was repaid that condition would have come to an end. This loan extends that condition for another 10 years, because it includes the particular article in the Protocol which deals with that point. There is something further. I think it was referred to by the hon. Member for East Wolverhampton (Mr. Mander). By a majority decision of one the International Court of Justice at The Hague interpreted the Protocol as forbidding Austria to form a Customs Union with Germany Many of us here, many people on the Continent and a large proportion of the people of Austria believe that Austria's sole economic salvation depends on being able to make an economic Customs Union with Germany. Yet we are definitely preventing Austria from doing the very thing which will put her in a sound financial position.

Secondly, the Financial Secretary said that one of the advantages to Austria is that by this loan she will be able to convert a short-term loan at a high rate of interest into a long-term loan at a lower rate of interest. I do not know what rate of interest the Bank of England is charging Austria for her loan, but as far as that goes that statement is. perfectly true. But this English loan is only part of the total loan. We naturally have no control over the rates that will be charged for the foreign issue in France. We may be certain that it will be at a rate far in excess of the Government rate in this country. The last internal loan in France was issued at 91 at 4½ per cent. A loan was raised in France a few months ago for Rumania, and the rate was certainly nearer 10 than 6 per cent.

I found in Vienna considerable consternation as to what rates of interest Austria would be charged, on certainly the French portion of her loan. There was a discussion in the Austrian Chamber, and the Chamber passed a resolution that they would not accept a loan unless they first knew upon what conditions it was raised, what commission was to be charged, what the underwriting was to be, and so forth. We may very well find that, although we may be able to float a loan in this country at a comparatively low rate of interest, the rate in France will be so high that the Austrian Parliament will be unable to accept it. In that case our loan will fall to the ground, because we are committed only if France raises a loan at the same time and to the same amount.

There is another point. Some hon. Members on the Socialist Benches have suggested that by this loan and the Protocol we are imposing certain social hardships on the Austrian people. Those best fitted to know, the representatives of the League of Nations in Austria, are of the opinion that this loan does not impose any hardships on the Austrian people. And it is true, I think, to say that Austria has made certain efforts in the last few months. You may say that it is to her interest to do so, that if she was going to get a loan of between£10,000,000 and£12,000,000, it was up to her to show that she was going to take certain steps to put her house in order. It is perfectly true what the hon. Member said, that she has balanced her Budget, including the deficit on the railways. It is perfectly true that she has managed her currency with extraordinary skill. It is true that, to a very large extent, she has reorganised her finances. She is every month attracting a greater number of tourists to various cities and various places within her boundaries. Her financial position during the past few months, if that is any criterion, has definitely improved.

In spite of all those facts—and I give them because they are assured me by those in a position to know—I must admit that I came away, and I believe the majority of people in Austria would agree with me, profoundly pessimistic as to the future conditions of Austria. It may well be argued that we are giving Austria this loan in order that worse things may not come upon us. That is, of course, a counsel of despair. Some hon. Members imagine that Austria will have at its disposal for various purposes a large portion of this loan. That is not the case. A very small amount of the loan will be available to Austria; 100,000,000 schillings, or more than one-third of it, goes immediately to the Bank of England. A very large portion of the French loan is already earmarked with the Bank of International Settlement for various payments, and I think it will be found that a very small portion remains by which Austria may stabilise her currency or support her financial position.

In conclusion, I only want to say that I believe a great many hon. Members hold the same view as I do, that nothing except a radical alteration of either the political or economic frontiers of Europe is a solution of the Austrian problem, and it seems to me rather paradoxical that all the great Powers during the past few years have been spending their energies in various Danubian conferences in trying to restore, at any rate, the economic hegemony of the old Austrian Empire which they spent so much blood and money in order to destroy. The right hon. Gentleman the Foreign Secretary said—I suppose it is right that the Foreign Secretary should say on questions dealing with arms traffic in Yugoslavia—" Far be it from me or this Government to interfere in any way with a friendly Power." That may be a perfectly proper statement for a Foreign Secretary to make, but my view is that until we interfere or somebody else interferes very radically with the present map of Europe, we are not going to get any solution of the political, economic or disarmament problems which confront Europe and the world to-day. We know that the economic structure of Europe to-day is a complete anomaly.

The hon. Member said that Vienna was a metropolis like London, but he failed to add that it is a metropolis without an Empire, and to-day there are some 180,000 unemployed, out of a population of about 2,000,000 in Vienna, who never can possibly hope, under the existing map of Europe, to find work again. I do not think that it could fall to the lot of any pedestrian to have a more depressing experience than to walk in the streets of Vienna to-day, and I think it is true to say that the condition of a large number of people in Vienna to-day is definitely worse than at any time immediately following the War. However, having expressed my doubts and misgivings in regard to this Measure, I perfectly realise that we are committed to it, and that without any doubt the Government will get the Third Reading of this Bill to-day. Therefore, I suppose that, as we have got to give the money, we may still hope and trust that, although by or through it conditions in Austria will not improve, we may hope that, at any rate, it will coincide with a new era in Austrian affairs, and perhaps that a brighter period may be ensuing for Central Europe, whose financial resources must always be so closely associated with those of Austria and Vienna. Although I do not think that this Measure, in itself, will do much to promote that better era, we can, at any rate, if we are going to pass this Bill, add our hopes that it may be so.

4.7 p.m.

Captain FULLER

I was very interested to hear the remarks of the hon. and gallant Member for Chippenham (Captain Cazalet) in connection with the depreciation of the Austrian schilling. I do not wish to anticipate the reply of the Minister, hut in the Committee stage of this Bill last week, I pointed out that already before the Austrian Government there was a Measure which proposed to raise the Customs Duties of Austria by 22 per cent. to compensate for the depreciation in the Austrian schilling, and if the hon. Member is able to give us a little more information on the matter, it does seem a very relevant point in this discussion. When we were discussing this Bill last week I was surprised to hear the hon. Member for Westhoughton (Mr. Rhys Davies) express his surprise that Tory opposition to this Bill should come at that stage, after the House had passed the Financial Resolution, but before he finished his remarks it transpired that he was really apprehensive that we were using this Bill as a pivot on which to discuss the necessity for the revision of the Austrian Treaty, which has placed Austria in the straight waistcoat in which she finds herself to-day. I was very glad to see a Member of his own party disillusion him on that point, and I can only say, as far as I am concerned at any rate, that it is not my intention to do so, but rather to point out the absolute futility of continuing these loans to Austria at this juncture.

In my opinion, for what it is worth, there are bound to be reactions to the policy we are pursuing. I think it is true to say that in what is happening here, we are conniving at the transfer of a private debt, which was incurred without the consent of this House between the Austrian Government and the Bank of England, and we are conniving at the transfer of this liability to the responsibility of the British taxpayer. I do not think that there can be the slightest doubt about that. If the Austrian Government had floated this loan in the money market in the ordinary way—and I am not suggesting that it is at all a desirable thing to do—the subscribers to it, whether they were the Bank of England or the general public, would have taken upon themselves the whole risk, and, of course, they would have taken that risk with their eyes open, and without placing any responsibility whatever on the British taxpayer. As a result of that, any default which might have occurred in connection with the loan raised would have been borne by them. Of course, there might have been, and I daresay there would have been, a general commiseration with the bondholders, but certainly the matter would have ended there. But when the community as a whole, through its representatives in this House, assumes a financial responsibility, the burden of that whole loan is very widely distributed, and if default occurred, as it may well in this case, then it would mean nothing more and nothing less than increased taxation, either direct or indirect, and a good deal of ill-feeling with, possibly, I think, international repercussions.

I do not wish to discuss the question of the American Debt; that, of course, would be irrelevant to this discussion, but I suggest that the feeling which has been created by it is just the kind of feeling which might be created by any country defaulting in any circumstances, and especially in circumstances referring to a loan which that country may have raised with the Government of another country. I think it cannot be denied that the contracting of a debt in any circumstances does not generate what one might call an all-consuming love as between the two parties to the contract, and in many cases the repercussions are very far-reaching. So that when discussing the question of the debt, I would like to take a look at the plight in which the citizens of the United States find themselves as a result of their own lending abroad. If we take their own testimony —and I think that is good enough for the purpose of this Debate—we shall see that in Europe alone since the post-war period, they have themselves lost the stupendous sum of£3,000,000,000, but nobody has worried, except, of course, the poor unfortunate bondholders, who took the risk, I imagine, with their eyes open, and the Governments of the countries concerned have pursued the even tenour of their way and probably winked at the whole proceeding. If we compare the War Debts with these loans it is obvious that they are comparatively small, I would, therefore, like to protest strongly against the Government's assumption of this liability which has been made possible under the guarantee of this Bill.

The second objection I would like to raise concerns the effect upon our export trade which, in my view, will be greatly accentuated by the grant of this loan. I think at this late stage that most people are agreed that one of the fundamental causes of the world depression to-day is international indebtedness, and I am making no distinction between commercial and War Debts, although, I think, commercial debts are much more important. It has been our policy in the last 150 years or more to strive—quite wrongly as I think—for what has been called and is still called a favourable balance of trade, and, when we have got it, we have indulged in the policy of lending abroad by the colossal export of goods on credit. In this way, I have no doubt, we have conferred untold benefits on the world and have ourselves partaken of them. Incidentally, at the same time, we have managed very effectively to ruin our own agriculture.

I wonder if the boomerang effect which that misguided policy is now having on our trade is sufficiently appreciated. One continually hears, even in this House, the statement that such-and-such a country has a favourable balance of trade with this country, and the request that some steps should be taken in the direction of a levelling-up process as it were. But what can we expect if we make loans abroad either from our own favourable trade balance or by the issue of loans and the export of capital goods? We are, quite naturally entitled to receive, and in fact do receive, imports of goods in payment of interest on those loans. What we have to grasp is that those interest payments can only be accepted in goods which, as an hon. Member has remarked, we do not want, and unless the loans made increase the national income of the borrowing country, it is evident that their standard of living must be depressed to meet the charges.

The debtor countries, if they are to meet their loan charges must obviously have a favourable balance of trade—an excess of exports over imports. As we know, there are only two ways by which that can be done. The country will increase its exports, if it is able to do so, or, if it is not able to do so, as is the case with Austria to-day, it must of necessity reduce its imports. The tragedy of the depression in the world to-day is that no country can expand its exports because nobody wants them, and every country is endeavouring to restrict its imports in order to meet the liabilities which all debtor countries must shoulder or else incur fresh loans.


Three cheers for Tariff Reform.

Captain FULLER

We, as the greatest creditor country in the world still, are feeling the results of all this on our own export trade and I suggest that the question of this Austrian loan is extremely relevant to that trade. In spite of all the loans which we have showered on Austria since the War the financial equilibrium of that country, as far as I understand it, is even now in doubt. Since 1928 Austria's Budget deficit has increased considerably. In that year it stood at 172,000,000 schillings and in 1931 it had risen to 235,000,000 schillings. In 1932 it was hoped that there would be a surplus of 2,000,000 schillings. But it is also true that all these years since the War Austria has been reiterating her intention of balancing her Budget—as she does in one of the conditions attached to this loan—and of putting her house in order, if we will give her more loans, while her debt position, as far as I understand it, goes from bad to worse. Her pre-War debt is placed at 268,000,000 schillings and her War debt at the small figure of 280,000 schillings but the actual debt incurred by the Austrian Republic since the War has already reached the stupendous sum of 2,129,000,000 schillings.

The point I wish to make is that the more we lend her now the more we worsen her position. Paradoxical though it may seem, it is the fact that we have reached a position in the world in which the creditor nations are not in a position to receive and the debtor nations are not in a position to pay. In addition to all this indebtedness and the great increase in her liabilities, Austria's trade position appears to be more hopeless than ever. In the last five years her adverse balance of trade has been increasing and the fact is evident that she can only maintain herself by resort to further borrowing. But the more we lend her to-day the worse we make her position and we ourselves suffer in consequence because there is only one way in which we can receive the interest payments and that is by the importation of more goods from Austria.

When the Bill was in the Committee stage I referred to Austria's action in further restricting imports from this country. I would like to point out that Austria at the moment, apart from the proposal which, is now before her own legislature to increase her customs duties by 22 per cent., is already restricting the importation of goods from this country, particularly Lancashire cotton goods and textiles. If she is doing this before getting this loan, are we not entitled to assume that there will be further restrictions if she gets the loan, because it will be necessary for her either to expand her exports—which she cannot do—or restrict her imports? That is the policy which we are obliging her to follow more and more to the detriment of our own trade.

It has been said that we are not providing Austria with any new money and that, consequently, there will be no further liability as far as we are concerned. That, of course, is technically true but the fact remains that the other countries which are parties to this agreement are providing new money and, as a result, we are increasing the liability of Austria and she will be obliged, more and more, to restrict her importation of goods. What I do not like in connection with this Bill is that Austria is discriminating directly against cotton goods from this country. I object to the Bill because the Government are assuming a liability which, I maintain, they have no right to assume and are putting that liability on to the burden of the taxpayer in the event of default, which seems to me most likely, and, secondly and what is more important to me, because the new liabilities which Austria is shouldering under the terms of this loan are going to handicap our trade increasingly. For those reasons I shall support the rejection of this Bill which I understand is to be moved by the hon. Member for Torquay (Mr. C. Williams).

4.24 p.m.


It is very gratifying to me as one of the two or three Members who opposed this Bill in its earlier stages to find that opposition to its provisions is growing in the House. The Prime Minister said the other day that more than enough had been said, but I think if we could go on discussing this Bill there would develop a very strong opposition to this loan. I say quite candidly that had there been a real Opposition in this House this loan never would and never could have gone through. I am not ashamed of my Liberalism, and as an old Liberal I object to these loans being compulsorily foisted on the taxpayers. If Austria wants to raise money here, voluntarily, in the open market, well and good, but here it is proposed to fasten compulsorily on the taxpayers the responsibility for this loan. That, to my mind, is an entirely objectionable principle. Let the people of this country spend their own money. They understand the spending of it far better than the Government. That is a principle which I want to inculcate as far as I can. It is about 30 years ago since the old Liberal principle of allowing money to fructify in the pockets of the people was discarded. The process began with the Irish Land Bill. We need not discuss that now, but I was one of those who voted against it.

We have had a great number of these loans since the Armistice. I have been referring to the finance accounts of the United Kingdom and I find that since the Armistice we have been ladling out vast sums of money with the greatest profusion. Hon. Members will find it an interesting study to look up those accounts and to see the outstanding loans. There is the 1923 loan to Austria. The amount outstanding is£10,164,000. Then there is the Palestine loan,£4,475,000; the Tanganyika loan,£2,070,000; another Tanganyika loan,£3,000,000 and the Nyasaland loan,£2,000,000. Then we have, in addition to these, what are called relief and reconstruction loans issued since the War. There is Belgium,£9,000,000 and the Belgian Congo,£3,600,000. I cannot understand why we should advance that sum to the Belgian Congo. There appears to be no reason for it whatever. It is beyond me. Then there is Poland£4,000,000 and Rumania£2,000,000. There is a total of nearly£30,000,000 involved in these relief and reconstruction loans. I object to these loans and I hope that this will be the last of them. If it is not, I think the Government will find that, with all their great majority, they will have even more difficulty with any future proposal of the kind than they have had in this matter. I want to warn the Government that in this matter they are offending their own supporters. I happen to have been in my constituency in the early part of January and I met a professional man there, a doctor who was wrestling with his Income Tax return. His remarks about expenditure were not complimentary—




I beg the hon. and learned Member's pardon.


I thought the right hon. Gentleman was going to cite some of the remarks.


No, we in Devon are polite and Parliamentary, but his re- marks were not Parliamentary and if he had had a few Members of the Government under his care—well I do not know what the result might be. There is another objection to the loan at this moment. It is bound to hamper our negotiations with the United States. Do not let any hon. Members sitting on the Government benches imagine that they are going to have an easy task. A friend of mine sent me from the United States only a day or two ago a book that is being circulated freely over that country. It is a story of "The rape of American credit." I have read it, and it is a very powerful presentation of the American debt question, urging that no remission of debt should take place. What answer can our people make? I think this loan has come at a most unfortunate moment. Is it right that the taxpayers of this country should come to the rescue of a private institution like the Bank of England? It was never done in my younger days in this House. Everyone seemed to have had great confidence in the wisdom of the Bank of England, and here we know that they advanced something like£6,000,000 or£7,000,000 on a weekly loan to the Austrians. Why should the taxpayers of this country be responsible for an unwise and injudicious loan made by the Bank of England? What is the reason of it? I object to it. Is it any wonder that the Budget is going to be a difficult one, if we go on in this way?

This loan is very bad also from the point of view that the only way in which you will get a change in the management of the Bank of England is by squeezing the pockets of the stockholders of the Bank of England. Then they will change, but if you go on guaranteeing their losses, they will never change. If we could in any way emancipate the Treasury from this influence of the Bank of England, it would really have a good effect. We know that the Bank of England's policy has been disastrous. I understand that they are rebuilding the Bank of England, and all that I can say is that I hope they will finish it off with a statue in gold to the right hon. Member for Epping (Mr. Churchill), who helped them to restore the Gold Standard in 1925.


it was not his fault.


He was the facile dupe of the Bank of England. In the "Times" this morning there was a communication from that paper's New York correspondent as follows: The assumption that most of the earmarking (of gold) has been for the Bank of England has aroused some comment to the effect that Britain seems to have overstated her case in the War Debts discussion, considering the ability she has shown to accumulate gold since December. That is the Bank of England policy, and I suggest to the Government in all sincerity that it would be wise for them to dissociate themselves from the Bank of England policy, which is really placing obstacles in the way of their own negotiations with the United States. I want to be quite frank and friendly when I warn the Government about these things. This point came out this morning in a newspaper with regard, not to the ultimatum, but to the Note that has been sent to Austria by the British and French Governments. Here is a statement from a correspondent in Vienna, who says: I learn that the Austrian Vice-Chancellor, Dr. Winkler, made to-day, at a meeting of his party. … a very important statement indicating that Austria has decided to reject the demands in the Anglo-French Note. The statement is so clear that it can be accepted as a definite indication that Austria has decided to cut the links with France, Great Britain and the so-called 'League policy' which has dominated Austria since the recnstruction loan of 1923, and to throw in her lot with the Italian Revisionist bloc and Germany. Is there any truth in that statement? What is the demand behind this Bill? Is it going to embroil us with the other Powers? There is certainly something, otherwise this very reputable correspondent—I take this cutting from the "Daily Telegraph"—would not have stated that Austria has definitely decided to cut the links with France, Great Britain, and the League policy. We know that these loans are the League policy. Is that statement true? May we have some information? It is time we did get some information as to what is the policy of the Government and of our country in these Danubian provinces.

I object entirely to the principle of these loans because it is an invasion of the liberty of the British taxpayer to spend his money as he likes; it is perpetuating the pernicious policy of endeavouring to solve political difficulties with public money; it is bolstering up a private company that has made a bad investment; it will render more difficult the American Debt revision, and it involves interference in the domestic affairs of another nation. I object to all that. I do not propose to move the rejection of the Bill at this stage, but if any hon. Member does move its rejection, and there is a Division, I shall go into the Lobby against the Bill. [HON. MEMBERS: "Oh! "] I have never been afraid of my convictions yet. I have been here a long time, and I want to educate the younger generation now. I object to this thing, but, of course, it has gone too far now. If it could have been tackled in the early stages by a really efficient and vigorous Opposition, I do not believe that this Bill would ever have passed.

4.37 p.m.


I agree with what the right hon. Member for South Molton (Mr. Lambert) has said, that the whole principle on which this Bill has been brought forward is unsound and objectionable, and that it ought to be protested against. We are still in some doubt—at least I am—as to what is the exact position. Apparently the chief bank in Vienna got into financial difficulties in the early part of the year 1931, and the Bank of England came to the rescue and made a very substantial advance. The question has been asked again and again: Did the Bank of England act as an independent institution on that occasion, dealing only with financial matters, in which it is interested, or did it take that action at the instigation or with the approval, tacit or expressed, of the Government of that day? That is a plain question, and on the answer to it depends whether this House should honour the credit which it is now being asked to give. If it was an act of public policy following the directions, however given, of the Government of the day, then this House is committed to some extent, whoever that Government was or whatever its policy was.

There is another question which is in my mind, and I think also in the minds of other hon. and right hon. Members who have been trying to follow these Debates. Has Austria, the Government, or the bank acting on behalf of the Austrian Government, had the whole of the money which we are now asked to guarantee, or is the loan contemplated to relieve the Bank of England of liability for money already advanced to Austria? In addition to that advance, is there any further sum going to the credit of Austria; that is to say, has the money all gone already, or is there some margin of new money to be guaranteed by this country?

The right hon. Member for South Molton talked of the policy of the League of Nations. We all know that the League of Nations policy may be useful, but as for its financial guarantee, it is worth nothing at all. I seem to remember very clearly, when the first Austrian loan was floated on the British market, that a very great part of the inducement to subscribe was the statement that it was under the auspices of the League of Nations. That was a mere phrase, worthless and valueless as affecting any financial investment.

I think it is very pertinent indeed that this matter should be understood. The Bank of England has, with or without the encouragement and consent of the Government of the day, made this advance, and the Bank of England is liable for the advance of a very considerable sum of money to. Austria. I believe it is contemplated to float a loan and to ask the British public to subscribe to that loan in order to relieve the Bank of England, and I suppose it is considered that the loan would not receive much support from the public unless there was some other guarantee than that of the League of Nations. I feel very strongly that the whole of this thing is wrong in principle. It is a secret monetary transaction that ought not to encumber the policy of this country at the present time, and if any of my hon. Friends will go into the Lobby with me, I shall vote against the Bill.

4.44 p.m.


No one can say that those of us on these benches have been lacking in sympathy with Austria. After the Great War we practically turned Austria into a cul-de-sac, and industrially and politically she became the orphan of the storm. As a result, she was compelled to enter into certain financial arrangements. Nobody in this House really believes that Austria can ever pay back her debts. She has borrowed from various countries, and those countries are holding the baby. Austria is a buffer State and she stands between Germany, Prance and Italy. As a consequence, those Governments which are talking so glibly about their financial responsibilities find themselves having to feed the baby, and they turn round and say that we must find the money necessary to redeem their liabilities which they incurred in days gone by. As a member of the Labour party, I object to the loan. We cannot afford to find money for our own people, and therefore we ought not to be able to find money for anybody else. We have been told by a prominent member of the Government that it will take us 10 years to get back to something like normality in employment. Yet we 'are so generous that we are prepared to lend money to anybody except our own people. I know that we are spending£100,000,000 a year on unemployment benefit, but that is only an insurance against the possibility of revolution. If you cannot find work for the people, naturally you are creating a fund of discontent which will eventually break out.

We on these benches want to understand why loans are being made to other countries. I have heard it stated in this House that£130,000,000 has already been advanced. To whom and what for? This particular case is supposed to be a guarantee to the Bank of England shareholders. Whatever happens, therefore, they will be all right: whatever money the Bank lends to Austria, they will get back. What they lose on the swings they will get back on the roundabouts, whatever happens to Austria. We are now paying for the great mistake—I do not say that it was anything more than that—that was made when we made the Treaty. We have turned Europe into a cockpit worse than ever Belgium was in the War. We have made a corridor, and we have created such international complications that it will take us another 100 years to put them right. I do not pretend to understand all about international complications; all I understand is that if you create barriers between nations and people because of racial, religious, or other antagonisms, you build up greater barriers. This Bill is one of the consequences. Austria is down and out. It is not so much Austria as Vienna, one city which has to carry all the problems of an inter-mixture of races, so that they have had to come to us for money; and because we know that we would be involved with other nations if anything happens to Austria we agree to pay. Other countries will want their money back, but we are not Shylocks; we are skylarks. We do not expect to get our money back. What the Government are doing is to pay an insurance premium for the future of Europe; they are finding the money to remedy the position made by the Treaties after the War. We shall have to go on doing it.

We can afford to pay only a few hundred millions for our own people, but we could afford to spend£8,000,000,000 in the War. That money had to be borrowed and the people who lent the money are getting their money back, but the great mass of the people of the country are not getting their money back; all they are getting is poverty and unemployment. The Labour party are not prepared to recognise a loan of this character. I want to remind the right hon. Member for Epping (Mr. Churchill) that he first started this policy. I am only a common or garden Member of the House; I am only a back bencher— if I were much further back I would be on my back in Palace Yard—but as I see it, while there is no money for anything in this country or the possibility of finding employment for our own people, we are at the same time willing to float loans all over the world for the purpose of guaranteeing the interest of the shareholders of the Bank of England. That game has gone on long enough. In the words of Abraham Lincoln: You can fool some of the people some of the time; you can fool some of the people all the time; but you cannot fool all the people all the time.

4.52 p.m.


My hon. Friend the Member for Silvertown (Mr. J. Jones) is becoming very modest in his old age, but he very often represents the opinion of the man in the street on some of these big matters. I regret that the Third Reading of this Bill has been used for some illegitimate purposes. One hon. Member made a. speech on the financial position not only of Europe, but of the whole world, and I hope that on the Third Reading of a Measure like this we are not going to have much more of that type of speech. I look upon this Bill as a Measure which one might describe as thoroughly tiresome. In the first place, it is one of those financial Bills which has to go through all the procedure of Resolution, Second Reading, and Report stage before we get to the actual Bill. It is also one of those legacies from the past for which one cannot blame the Government very much. It is one of those Measures for which the Minister in charge cannot get much credit. It is a typical Under-Secretary's Bill. I have been an Under-Secretary, and I know the feelings of my hon. Friend. I hope that he will not think that any of the criticisms made on the Bill are levelled at him. I should like to have seen the Chancellor of the Exchequer sitting by him and helping him out of the difficulties which ought to be on his own back.

The point I wish to make is with regard to the relationship of the Treasury and the Bank of England. There is a mystical union. Mystical unions are difficult to understand. Like the Trinity and the quantum theory, they are impossible for the ordinary layman to understand. Mystical unions are all right, but when there are children therefrom, they become tiresome, and in this case we are left with a baby that is going to cost us£5,000,000. There is an old Spanish proverb which says that when it rains we all get wet. That applies very much to banks. All banks hold together; they are a great trade union, and when one bank is about to fail, they instantly run to the assistance of the failing bank, because, if one goes down, they all suffer very much. In this particular case a leading bank of Austria was in trouble, and it was only right and proper that the Bank of England should go to its assistance. But if it had been successful by that assistance, is it not true to say that the Bank of England and all other banks would have benefited there-from? When the thing failed, however, apparently the Treasury had to carry the baby. That is a policy of "heads I win, tails you lose."

I do not expect the Financial Secretary at the present moment to tell us what is the exact relationship between the Treasury and the Bank of England, but I hope that at a later date, when we come to the Budget or some other big Debate on finance, we shall be told a little more about this curious relationship. As I see the right hon. Member For Epping (Mr. Churchill) sitting there, I hope that he will be able to draw the curtain aside a little bit and tell us about this curious relationship, which has upset the House of Commons and from which the Government have derived very little benefit, but a great deal of abuse up and down the country through no fault of their own. I hope that the Financial Secretary will try and help us in this matter.

4.56 p.m.


I beg to move, to leave out the word "now," and, at the end of the Question, to add the words, "upon this day six months."

In moving this Amendment, I can assure the Government that I do it in no state of hostility to them. I would like to join with my hon. and gallant Friend the Member for Wallasey (Lieut.-Colonel Moore-Brabazon) in paying my tribute to the skill with which the Financial Secretary has got this Bill through the proceedings of this House. I do not think that any Member of the House has yet spoken on behalf of this Bill, unless it may be one of the variety of Socialists who sit on the Front Opposition Bench. Might not the Government accept my Amendment? Might they not agree that if the Bill were postponed until August, it would help them out of the difficulty. There is a very difficult financial problem for the Government to meet this year, and might not it be easier if they stuck to their original policy of September, 1931, which was that there should be no outside loan, and that they should do everything possible to discourage loans until the financial position of the country was settled in two or three of its major aspects. These are points which the Government might well consider. How can ordinary Members go to their constituents and explain the position of a Government which, having laid down that foreign loans should not be imposed, go and do it themselves?

It is a curious thing that this guaranteed loan—no money passes at present, and we hope that it never will— was made in rather a hurry last autumn. We were suddenly presented with this in the House of Commons. There is a point which has been emphasised to-day about which we are not quite clear. We are definitely laying down certain terms which, in the opinion of many people, bear hardly on the Austrian people. The last time this question was raised, the Financial Secretary said, with reference to the Protocol: Nothing is added to it either in substance or kind." —[OFFICIAL REPORT, 16th February, 1933; col. 1320, Vol. 274] That may apply to the terms of the treaty, but not to the terms of the loan, and it is only the terms of the loan— that is, the original loan of 1922–42—about which I and others have ever asked. The present loan runs from 1932 to 1952. In other words, a period of 10 years has been added, in which the Austrians will be bound financially under the Bill. I do not say that the terms of the treaty are altered in any way, but Austria is bound financially for a longer term. The second point which I am advancing in support of the rejection of the Bill is based on the statement made the other day by the Financial Secretary to the Treasury: Austria can make commercial treaties about tariffs either to lower them or to tighten them." —[OFFICIAL REPORT, 16th February, 1933; col. 1320, Vol. 274.] That is a very curious point, because it was clearly laid down on the 3rd of January that the loan would be subject to certain stipulations and the Protocol under which the earlier League loan to Austria was issued, which was held by the International Court of Justice at The Hague, in a majority judgment, to be inconsistent with the proposed Customs Union with Germany. It has been clearly laid down that Austria cannot enter into anything in the nature of a Customs Union with Germany. I have no brief for Austria or any other nation. It is not the duty of the House of Commons to work more on behalf of one nation than another, but I say at the present time that we could not get any support in the country—and I think there is very little in the House of Commons for it—for anything which would make it more difficult for the nations in the centre of Europe, of whose difficulties we have heard throughout this Debate, to get out of their difficulties. I hope the Bill will be thrown out. I do not think it would hurt the Government in any way to accept this proposal to put off the Third Beading till the summer. All the terms of the Bill are inconsistent with the dignity of the House and the position which we as Members should take up.

There is another point which has already been mentioned this afternoon. The Executive of this country are getting into the habit of deciding things at Geneva and other places and then presenting those decisions to this House in the form of a Bill, and saying that everything has been fixed and settled and must be carried through. The Attorney-General told us the other night that there was nothing in a certain Bill which could bind the House of Commons in any way, nor is there in this Bill, and I would like the House on this occasion to show that it has independence and to stand up for its own position. This is only a small affair, comparatively, and one which is very difficult to understand, but if the House would only make it plain to-day that it is not going to have this kind of thing shoved on its shoulders that might prove to be a useful example for the next year or two. I watched the Coalition Government fairly carefully, and I know that it was this kind of thing which smashed that Government, and it is creating feeling against the present Government. I am not hostile to the Government, but I am bitterly hostile to the Government doing things which are in direct contradiction to their own policy, which have not, as I believe, the support of the country and which are not in the best interests of the country as a whole.

5.5 p.m.


I beg to second the Amendment.

I have the very greatest pleasure in seconding the Amendment so ably moved by the hon. Member for Torquay (Mr. C. Williams), and I would join with him in congratulating the Financial Secretary to the Treasury on the adroitness and the courtesy with which he has conducted this Debate. I do not think the House has been very well treated this afternoon. I see that the Lord President of the Council is now on the Treasury Bench, but for quite two hours the Financial Secretary has been a Parliamentary Casabianca: The boy stood on the burning deck, Whence all but he had fled. For an hour not a single Minister has been sitting beside him, though on an occasion like this the Financial Secretary does require, I will not say reinforcing, but the moral support of his colleagues when we are passing one of the worst Bills ever presented to the House. This is our last opportunity of criticising this utterly unjustifiable Measure, and in a forlorn hope of being able to secure sufficient opposition to enable us to march into the Lobby against it I would like to recapitulate the arguments which have been marshalled so well against this loan. In the first place, this Bill implements a deal done behind the back of Parliament to liquefy a frozen advance made by an all too powerful English banker to an Austrian finance house which, incidentally, has lent a great deal of money to our own trade competitors. There are many industries in this country encountering the strong competition of industries subsidised by the Credit Anstalt, and they must feel rather alarmed to find that the central banking institution of this country subsidised the Credit Anstalt, which, in turn, subsidised traders who are competing with them in the markets of Central Europe.

This Measure is plainly and simply a Bank of England Relief Bill, to save losses which would otherwise be incurred by the Bank of England. This point has been well put by the hon. and gallant Member for Burton-on-Trent (Colonel Gretton). When this loan was made it may be asked, did the British Government give the Bank of England any assurance that it would, either directly or indirectly, recoup the Bank for any loss sustained? The Financial Secretary says that the Bank of England got no such undertaking, and I feel sure that information is accurate. We have, therefore, no legal or moral responsibility in this matter. There is no more justification for our paying the bad debts of the Bank of England than for paying the bad debts of the Joint Stock Banks, or even of the Birmingham Municipal Bank, whose pious founder is the present Chancellor of the Exchequer. I wonder what the House would think if a Member came along with a proposal to pay the bad debts of the Joint Stock Banks or the Birmingham Municipal Bank?

There is another point I wish to make. We have been rather hostile to the Government all through the proceedings on this Measure. Though that gave us very great pain, we did our duty man- fully. I think there is an opportunity for a compromise. We dislike the Bill, but we are reasonable people, and so we suggest a compromise. I should not like to ask the Financial Secretary, on his own initiative, to accept our proposal, tout as the Lord President of the Council, than whom there is no more powerful figure in the Government, is present, perhaps we can have a word or two from him. The suggestion is quite simple. The loan to the Credit Anstalt was made in July, 1931, at, I believe, a very high rate of interest. I believe the total sum received by way of interest by the Bank of England is£400,000—or between£400,000 and£500,000. Who gets that great sum? The Bank of England. Does it share it with the Treasury? Most certainly not. It only shares its liabilities with the Treasury.

The plain facts are that the bank has received more than£400,000 by way of interest on this advance, and has now devised a scheme whereby the British people must repay the full amount of the advance—while the bank takes the interest. This one-way bargain really outshylocks Shylock. Indeed, it makes his loans appear to be the outpourings of an improvident philanthropist. I therefore, ask the Financial Secretary to put this suggestion before the Chancellor of the Exchequer. If his lord and master, the Chancellor of the Exchequer, insists on paying the bad debts of the Bank of England, cannot he get one concession from the Governor? If the public have to pay the full amount of the loan granted to the Creditanstalt, may they not have the interest which the Bank of England has received on this loan? That is a perfectly fair proposition. I know it is difficult for the Financial Secretary to accept suggestions made on the Floor of the House, but I hope that after he has consulted with the Chancellor of the Exchequer they will be able to announce to the House that although we have risked a lot of money by this Bank of England advance to Austria we can still have the interest. I think this is a grave point and I hope the Members of the House will insist on this modification of the present arrangement. I do not think anyone could object to the argument that as we are taking the responsibility for the whole of the money the Bank of England ought to concede us the interest.

The Bill has been recommended to the House on a very slender basis of justification. No one has really attempted to uphold it. The Financial Secretary has done his duty in a most agreeable way, but he did not approach that Box with the keenness and fervour which he showed in putting the case for Protection or some of the other things in which he really believes. The loan has been commended to the House on the ground that it is a great act of financial statesmanship. I do not know what constitutes a financial statesman. I have been trying very hard to find out.




The hon. Member must not interrupt me. His jokes after closing hours may appeal to some people, but they do not appeal to me. Again I ask "What is a financial statesman?"—because nobody knows. Perhaps a financial statesman is a banker, with an unbounded megalomania, who interferes in political affairs, who must have a finger in every pie and a headline in every newspaper. There is a lot of uneasiness concerning the adventures of central bankers in foreign politics, and the part they are playing in hopelessly speculative industrial ventures in England. If this Bill is the quintessence of financial statesmanship, then God help the poor taxpayer, because it is quite certain that the Treasury will not.

This Bill raises a number of other points which have been dealt with extraordinarily well by hon. Members in all parts of the House. The right hon. Member for South Molton (Mr. Lambert), who sat in this House with Gladstone, and has not changed either his views or his arguments since, and who is one of the finest specimens of Liberals in England, came forward in opposition to this whole proposal, and my hon. Friend the Member for Torquay, an adjacent but less attractive part of Devonshire, has moved the rejection of the Bill.


What did you say?


I cannot enter into a discussion now concerning the geographical features of Devonshire. I am glad to see the Foreign Secretary is now here, because there is a point in this Bill which rather concerns him. Only a few days ago I read in a newspaper that the British and the French Governments had sent a severe reproof to Austria for her breach of the Treaty of St. Germain by assisting the smuggling of arms into Hungary, and I think our Foreign Secretary suggested, or perhaps he required, that those munitions should be destroyed. Further, in his excellent legal way he required an affidavit from the Austrian Government that the munitions would be destroyed. That is the report which I read in the "Times" the other day. I do not know whether it is true or not, but it raises a very interesting point. If we do not trust the word of Austria in that matter, and ask for an affidavit, why do we lend Austria a lot of money? I hope the Financial Secretary will answer that point, because I do not think the Foreign Secretary will intervene. Furthermore, the spectacle of the Foreign Secretary with a big stick in one hand and a cheque-book in the other, as he appears in this Austrian loan affair, is as absurd as it is censurable.

A new point has been raised in this Debate by the right hon. Member for South Molton (Mr. Lambert). He said that the Austrian loan would cause a great deal of comment in the United States. He is perfectly right. It has done so already. I have been reading American newspapers, some of which are asking how European Governments can justify lending a large sum in gold to Austria at a time when they are lecturing America on the impossibility of discharging inter-Governmental Debts in gold. That is a relevant point, and it should be taken into consideration by the Government before they give their final answer to-night.

There is another point that we ought to consider in regard to this loan, and in connection with the shocking prophecy about unemployment made by the Chancellor of the Exchequer a few days ago. He foresaw 10 years of acute unemployment. I ask hon. Members quite seriously: Are you willing to vote large sums to Austria's London banker while you are slashing the standard of livelihood of your own people? I want hon. Members to weigh that consideration very carefully. The slums of Vienna have been rebuilt largely out of the loans advanced by British taxpayers. The sum that we are asked to vote at the present time would very greatly help to recon- dition or rebuild the slums of London, slums that I know very well, suppurating filth; slums which cry out to Heaven for removal, and yet the Government can do nothing. They say that they are too poor, or they say: "We can do nothing." I ask hon. Members, in view of the Government's attitude towards expenditure on slum clearance and other social services, how can they justify this Austrian Loan Bill, or this Bank of England relief Bill, which is before the House?

We are told that the Treasury's poverty prevents the Government spending money on housing. I think that that is a very odd argument. We see that the Treasury is apparently rich enough to thrust gifts upon Austria's London bank, which is now spending millions on erecting an ornate eyesore in the City. What sort of Government is this? Their policy is to use a slang word, to bunch Austria's banker while slashing teachers', soldiers' and sailors' salaries and the salaries of other Civil Service employés. They are quite willing to put a razor through those people's salaries, but when Austria's banker comes along, they must obey and pay him. I think that is very bad policy from a Government that is boasting of its determination to hold the scales evenly between all classes. There is one further point. The victims of some of your ill-contrived economies, of which you were all boasting so strongly a few months ago, but which you are regretful about now—[HON. MEMBERS: "No, we are not! "] The hon. Member for Aylesbury (Mr. M. Beaumont) does not regret anything, but a lot of people regret the hon. Member for Aylesbury. The victims of some of your ill-contrived economies will say, with perfect truth, that this is an international and not a national Government, and that the foreigner's banker comes first and your own people come last.

5.19 p.m.


I am glad to see that the Foreign Secretary is here, because we have had a good many different reasons given for this loan, beginning with humanitarian reasons; it then came down to be some kind of City transaction. It has been a subject of criticism from almost every angle in this House. It has the oldest Liberal and the oldest Conservative against it. We really should have something more authoritative from a member of the Cabinet as to the policy which is behind it.


It was your Government's policy.


The hon. Baronet says that it was our Government's policy. Unfortunately, he has not been present during the Debate all day.


I have taken part in every stage of this Debate, and I have listened to every word to-day. I put a question to the Chancellor of the Exchequer when the Financial Resolution was introduced. I asked him if we had any moral responsibility in the matter and he replied that he was not a member of the last Government, that the proposals came from the Bank of England which were made at the time when Lord Snowden, the colleague of the hon. Member for Limehouse, was in that Government, and that he had no doubt that the Government approved the proposal.


The hon. Baronet undoubtedly heard that, but he must have fallen asleep since then, because it has been stated quite clearly in the House to-day that the proposal for this loan came from the Bank of England. It is not a policy of any Government. That Government acquiesced in it, but took no responsibility as the Government of the day. Even if the hon. Baronet likes to say that Lord Snowden approved of it, my withers are unwrung because the Lord Snowden is a possession of the hon. Baronet. He will not hit me by hitting Lord Snowden, I can assure him.


Not now!


Nor any other time. [Interruption.]


I come into the House sober anyhow. I do not treat it with contempt.


Whether this matter began in the last Government or the present Government is really an aside. I want to ask a question as to the Government's policy in this matter. If the matter began with the policy of the Socialist Government, at any rate that was a Government which, while lending money to Austria, did not refuse advances to people in distress in this country. We have it on record that this Government is refusing every kind of scheme in this country. I have a letter from my own borough council, which is not one with a Labour majority but which has the strongest possible views on this very question of the Government turning down every attempt to develop our own country. If this had occurred in June, 1931, this proposal would have been attacked as part of a profligate policy. Hon. Members would have said that we were ladling out money all round. The present Government, while they are continuing to ladle out money, as we thought to Austria but apparently to the Bank of England, are refusing altogether to help our own people. I want to ask whether conditions are altogether the same as when this loan was brought forward. I do not profess to have a great inside knowledge of foreign politics, but I should not have thought that this was the best time to lend money. I understand that the Bank of England might want to get out of their bargain as soon as possible.

There has been a good deal of inconsistency in the points that have been put forward from the Treasury Bench. Either this loan is well secured, or it is not. We have had a statement that it is well secured, and we have had a statement that Austria had not defaulted on two loans. I noticed that the Financial Secretary based himself only on two loans. It seems to me like suggesting that it was quite all right to lend money to a man because he always paid his tailor's bill, but saying nothing about any other bill. The Financial Secretary did not go into the general matter. I hope he has some better explanation in regard to the customs. Is this or is this not a sound business proposition? If it is, why does not the Bank of England continue it? If it is not a sound business proposition, why are we taking it over from the Bank of England? I do not think that the hon. Member can have it both ways. To be told in one and the same breath that we have somehow to save Austria, as she will go absolutely down if she does not get this loan, and that, on the other hand, the loan is amply secured, seems to us to be inconsistent.

Our point of view on these benches is quite definite on the general question of what the Government's policy is. I do not agree with the very mid-Victorian Liberalism of the right hon. Member for South Molton (Mr. Lambert). He does not believe that we should have anything at all to do with the Continent or with other countries. He is an unrepentant Free Trader and he believes in keeping money at home. We do not believe that you can divest yourself of the affairs of the Continent of Europe. On the other hand, what is the good of saying that you are putting up money to try to keep Austria on her feet in the interests of world stability and world trade, when you carry on a directly opposite policy at home and refuse every kind of assistance to help your own country and keep your people at home on their feet? There seems an absolute inconsistency in that. The whole thing seems to boil down to the fact, as has been stated, that the Treasury is in the hands of the Bank of England. The Bank of England have made a bad bargain and they have managed to persuade the Treasury to take over the bargain. Instead of agreeing to that, we should take over the Bank of England.

5.28 p.m.


I should like to remind the Financial Secretary to the Treasury that the Government have throughout this Bill treated this House, perhaps justifiably, with a certain amount of lofty disdain, as if the House really had no say in the matter, and as if the concurrence of the Treasury and the Bank of England were all that was required to make this guarantee a fait accompli. It is just as if the matter had simply to be ratified by this House with as little discussion as possible. I would remind the Government that the House is still supposed to be the custodian of the national finances and that, whatever commitments and obligations may have been entered into in the past, we ought not lightly and without very full Debate, to give a guarantee of this kind.

It would have been a catastrophe if this Bill had been allowed to go through without considerable discussion, and even protest, and I would not at all mind seeing that protest carried into the Division Lobbies. I was always very full of respect, amounting almost to reverence, for the Bank of England. That respect and reverence have grown year by year since the War, and they have reached their apex at the present time; but I have always thought that there should be limits to the extent and the amount of influence which that remarkable institution should be permitted to exercise upon the general financial and foreign policy of this country.

There is, as my hon. Friend the Financial Secretary knows, or ought to know, and there has been for some time past, a great uneasiness, not only in this House but in the country, that the influence of the Bank of England, not only upon financial policy but upon foreign policy in this country, has become so great during the past few years as to be now a decisive factor in bringing, not only this Government, but Labour Governments, and, in fact, every Government that we have had since the War, to decisions and conclusions upon the most vital aspects of political as well as economic policy. There is also a feeling, which has increased of late, that, while the Bank of England has served this country very well, and is, as I have said, unique of its kind as an institution in the world, it has not in the past always proved to be right upon these major issues of policy, and I see no reason why the Bank of England, at least on these questions of policy, should be right as against the Government of the day. At any rate, whether that be the case or not, we cannot pass this Bill without a protest, and we ought not to pass it at all until we get a little more information than we have yet had from the Financial Secretary as to exactly how this loan came to be made.

My hon. Friend has not been quite frank with the House about that. He has not told us whether the Bank of England made this loan to the Creditan-stalt with the concurrence or approval of the Chancellor of the Exchequer of the day, and that is a vital point so far as this House is concerned. If it were a mere commercial loan made in the ordinary course of day-to-day business by the Bank of England, I do not think that this House has any right to implement this guarantee this afternoon; it is a matter solely for the responsibility of the Bank of England, which we are always being told is a purely private and independent institution. If, on the other hand, the loan was made with the approval, tacit or expressed, of the then Chancellor of the Exchequer, or at any rate after the terms had been communicated to him, then the responsibility falls in a great measure, whatever my hon. Friend the acting Leader of the Opposition may say, upon the Government of which he was then so distinguished an ornament, and particularly upon Lord Snowden, who at that time was Chancellor of the Exchequer. If that be so, I think a strong case could be made out that this House is virtually under an obligation to implement the guarantee, and I hope that the Financial Secretary, when he comes to reply, will be quite explicit on this point, because it is a point of vital importance.

There is another question, which was raised by my hon. Friend the Member for North Paddington (Mr. Bracken), upon which I think we might have some reply from the Financial Secretary, and that is the question of interest. If this House, the Government and the British taxpayer are going to accept responsibility for the principal of this loan, are we to have no share at all in the interest, or is it to be paid entirely to the Bank of England? I think my hon. Friend said that, if that were the policy of the Government, the Bank of England would receive something in the neighbourhood of£400,000 by way of interest on this loan—


For how long?


In all. Does my hon. Friend suggest that this House and the Government should guarantee the principal and receive none of the interest at all, but that all the interest should be paid to the Bank of England? I suggest that there is a strong case for the taxpayer sharing with the Bank of England in the profit on this transaction. However, I would ask the Financial Secretary to deal with that point also when he comes to reply. Another point that I wish to make is this—and here again it is really a matter for the Secretary of State for Foreign Affairs rather than for the Financial Secretary. What is Austria actually going to get out of this loan? How much of it is going into repayment of existing debts, and, therefore, is not actually going to Austria at all? Is it a fact that the Austrian Chamber was only persuaded to accept this loan with the greatest difficulty—that it was only passed by a margin of a single vote, or of two votes? Does Austria herself want this loan, or is it really, as some of us are beginning to think, a loan for the primary purpose of repaying existing creditors of Austria, of whom the Bank of England is one, and not directly for the benefit of Austria at all?

In the second place, how does my hon. Friend think that in the long run Austria is going to repay the whole of the principal of this loan? Does he really maintain that, because the loans of 1923 and 1930 were repaid by Austria, that is any genuine argument that she is going to be able to pay successive loans during the next decade, in her present financial and economic situation and condition? I do not believe for a moment that it is possible. The French Government have agreed to implement this guarantee, to come in with us in the granting of this loan, simply in order to prevent Austria from doing the one thing which might enable her to repay, namely, to form an economic union with some larger entity, probably Germany. It is a condition of this loan that the Anschluss shall not take place; but I do not believe that, without the Anschluss, Austria can ever revive from an economic point of view, or become a healthy or satisfactory economic entity. It is not possible.

The trouble dates right back to the Treaty of St. Germain. The present situation in Central Europe is impossible, both from the political and from the economic aspect. My hon. Friend knows that perfectly well. He can go on making loans; the Bank of England can go on making loans—as, indeed, it has done for the last 10 years—to Central Europe year by year; but you will never get a revival of prosperity in Europe so long as the present economic conditions and conditions as to frontiers and boundaries prevail. Where has all the money gone that has been sent to Central Europe during the last 10 years? Most of it has gone down the sink; we shall never see it again, nor can we while these conditions prevail. On the top of all this we find ourselves confronted—and I would ask my hon. Friend to reassure the House on this question—with a new cause of difficulty between His Majesty's Government and the Austrian Government, and a considerable deviation of opinion, on the question of the export of arms. Is my hon. Friend quite satisfied with re- gard to the intentions of the Austrian Government in this matter? I am inclined to think that the wiser policy, not only for this country but for Europe as a whole, would be for us to keep out of Europe altogether from an economic point of view during the immediate future.

Lastly, I would like my hon. Friend to turn his eyes for a moment to the home problem, to the situation at home, where, according to the Chancellor of the Exchequer, we are to expect to see unprecedented unemployment for a period of 10 years to come. My hon. Friend said that there was a distinct probability of our not having to implement the guarantee that we are making in regard to Austria, but I would put this question to my hon. Friend. Does he really think that, if a great scheme for the construction of houses and for slum clearance were brought forward in this country today—such a scheme as has been carried out in Austria with our money during the last few years—the British municipalities would be more likely to default than the Austrian Government? Would the taxpayers of this country, in the opinion of my hon. Friend, be more likely to implement the guarantee of a loan for slum clearance and housing construction in this country than to guarantee this loan to Austria? I can only say that, if I were making a loan in a private capacity, I would very much rather float an internal loan for the purpose of developing housing construction in this country than I would an external loan to Austria.

I agree with the opinion, which has been expressed from all quarters of the House, that, at a moment when wages are being cut down, when the work of municipalities is being slowed up, when construction and development are being slowed up all over this country, it is really a wicked thing that the Government should come forward and ask the House to guarantee a loan of£4,500,000 to Austria. I would say to the Financial Secretary that he will have very much greater difficulty in getting through another Bill of this kind than he has had in the case of this one, although we all admit that his adroitness has been remarkable during the last few days. This foreign loan policy, at any rate for the time being, has got to stop so far as the Government are concerned.

We are assured by economists of every shade of opinion all over America and Europe, and by the Government themselves, that inter-governmental indebtedness is one of the most potent causes of the present world depression, and we all know that debts generally—Government debts, private debts and municipal debts —are the curse of the world at the present time. What is needed is to cut down indebtedness, not to create fresh debt obligations, but that is what the Government are doing at the present time.

5.40 p.m.


I would like from this side of the House to express, as has been done from other quarters, admiration for the way in which the Financial Secretary has handled a very difficult position. I sympathise with him very much in the fact that, after all the intellectual sacrifices that he must have made in order to take office, he should still find himself in opposition to every speech that has been made here this afternoon. I want to say a word following on the speech of the hon. Member for East Aberdeen (Mr. Boothby). I am opposed to this Bill because of its effects upon Austria. We all sympathise with Austria and with Vienna. It has been said that one of the most tragic cities in Europe is Vienna, which was once the head of a mighty Empire, and inhabited by artistic and charming people. All its provinces have been torn from it, and its people have been left in a state of misery and bankruptcy. I am convinced, as I think the whole House is, that the only way in which Austria can attain economic stability is by entering into a customs union with some of her neighbours. For certain reasons it is impossible for her, at any rate at the present time, to enter into a customs union with what are called the Danubian States, and that is why her people have looked northwards to Germany, and have cherished an ambition to enter into a customs union with a country to which, after all, they are allied by many ties, both of race and of history. Under this Measure she will be prevented from doing this.

It has been stated that France would not have agreed to this loan unless a Clause had been embodied in the Agreement to the effect that Austria would abandon for a period of 20 years any idea of entering a customs union with Germany. The Financial Secretary has said that this statement in the Bill makes no difference whatsoever—that it simply reiterates the governing Treaty of St. Germain. I do not entirely agree with that; it is rather a doubtful point. The Financial Secretary said that nothing is being added in substance or in time to the Treaty of St. Germain. That, however, is a rather dubious point, because, when the idea of a customs union between Germany and Austria was mooted a year or so ago, it came before the court of The Hague, and the court at The Hague certainly decided that that was inconsistent with the Treaty of St. Germain, but it only came to that decision by eight votes to seven; and among the seven judges on that tribunal who held the opposite view, that it would be quite consistent with the Treaty for Austria to enter into a customs union with Germany, were the representative of the British Government and the representative of the American Government. It is quite possible that, if another and slightly different scheme were drawn up on some future occasion, it might be admitted by the Court of The Hague as being consistent with the Treaty of St. Germain. If that be not so, what is the necessity for insisting upon this Clause in the Bill? If the Treaty of St. Germain is perfectly clear on this point, why should any Power insist upon reiterating it, in this Bill, for another 20 years? Moreover, the Clause which the Financial Secretary himself read out seems to involve some little addition of substance to the Treaty, because it runs like this: The undertaking of Austria not to alienate her independence shall not prevent Austria from maintaining, subject to the treaty of St. Germain, her freedom in the matter of customs tariffs provided always that she shall not violate her economic independence by granting to any State a special régime or exclusive advantages calculated to threaten this independence. It will be noted that in the first part of the Clause it had already been stated that Austria must not do anything against the Treaty of St. Germain. But it goes on to say she can have economic independence provided she does not enter into a special regime with another State. That seems to me an addition of substance to the original guarantee under the Treaty of St. Germain. But, even if that were not so, I still say that, by putting in this limitation of 20 years, you have added in fact to the Treaty. The Financial Secretary to the Treasury said the Treaty of St. Germain lays down the position for all time. This Bill only lays it down for the next 20 years. This is one of the few cases where time is longer than eternity because it is absurd, when you are dealing with States and nations, to say they must not do something for all time. If you say they must, not do something for 20 years, there is a definite period which will have some validity but, if you lay it down that they shall never join another State or enter into a customs' union with another State, you are saying something that is meaningless, especially when one sees what the history of Europe has been in the past, or foresees the history of Europe in the future. The only Power that can say "never-more" to a State is the Deity, and certainly that Power was not behind the Treaty of St. Germain or any of the Treaties that concluded the War. Therefore, by putting this Clause into the Bill you are adding a new sanction to a series of treaties which are rapidly becoming obsolescent. You are saying that for 20 years Austria must keep strictly to one of those Treaties which we all know certain nations are even now preparing to abrogate, if necessary, by force.

I should like to echo what others have said against lending this money to the Bank of England. The hon. and gallant Gentleman behind me asked what was the position between the Bank of England and the Treasury. I think I can answer that on very high authority, perhaps the highest. The relation between the Bank of England and the Treasury is the relation between Tweedledum and Tweedledee. There seems to be no reason why we should give this present to Mr. Montagu Norman, who by his deflationary policy has added so much to our present distresses. Something has been said to-day about interest, and it has been asked who is going to get the interest. I do not think "interest" is quite the word that the hon. Member for North Paddington (Mr. Bracken) and the hon. Member for East Aberdeen have actually in mind. I understand that by being repaid in this way the Bank of England is going to make a very large profit owing to the different values of gold. Both debts are gold debts. The Bank of England advanced the money, I understand, at a time when gold was at parity with the Austrian schilling and, owing to the fact that we are now off gold, on being repaid it will make a clear profit of perhaps£600,000. If that is the case, I think that the proposition of the hon. Members for North Paddington and East Aberdeen that the profit should go to the Treasury and not to the Bank is a very sound one. It is not the interest that is in question but a capital profit made by being repaid when we are off the gold standard a loan that was made when we were on it.

We were told last week by the Chancellor of the Exchequer that there is no money for loans at all, and that it is not the policy of the Government to splash money about. Why should we splash it about Vienna if we are not allowed to splash it about London, Birmingham, Newcastle or places where work ought to be provided? If we are not allowed to raise a loan of£l,750,000 for the Humber Bridge, why should we raise this loan of£4,500,000 for the Bank of England under the pretence that it is for the use of Austria? I agree with the statements made outside the House that in such a crisis as the present the House of Commons should concentrate upon unemployment. It is the one thing that we are not allowed to discuss or, if we ask for a day, it is rather resented by the Government. For the Government to ask for this loan in present circumstances is an insult to the electorate and a flouting of the wishes of the people.

5.51 p.m.


In a fairly long membership of the House I do not recollect under any Government a Measure which has been so pulverised by all parties and which has no friend in any quarter of the House, at any rate any quarter that is vocal. There has not been a single word said either on the Socialist, the Liberal or the Conservative benches in favour of the Measure at this or any stage. It only goes to show, as I said when the Bill was first introduced, that, if we pass it, we are throwing good money after bad. I think this view is shared by the Government. Not a Cabinet Minister has been present all the afternoon. They put up one of their most dextrous Under-Secretaries to carry this very troublesome baby. In their heart of hearts they know that it is a most improper Bill from every point of view to bring before the House. I do not think I have ever been so cordially in agreement with the views expressed by Liberals and Socialists that the Bill should be refused a hearing unless the Government can give as an assurance that the Bank of England had some undertaking from the Government that, if they lent this money to the Austrian Bank, the Government would see them through or, at any rate, that the Bank of England were given to understand that it would be helpful to this country if they advanced this loan, as they did, at very high interest to Austria. Incidentally, I entirely agree with my hon. Friend the Member for North Paddington (Mr. Bracken) that, if we are to carry this baby for the Bank of England, we ought to have any profits or endowments which came with it in its early years. The State certainly ought to have any interest that has been paid to date.

Really, in these days the House of Commons and the country ought to be taken rather more into the confidence of the Government as to the exact position of the Bank of England in the national hierarchy. We were all brought up, in all classes of the community, to look upon the Bank of England as a wonderful institution rather beyond the ken of man, but I think it is about time there was some change, not in the Bank of England but in the government of the bank. They have certainly been guilty of great blunders in the advice they have given to succeeding Governments. We were pushed back on to the Gold Standard far too soon after the War and at present we are again buying millions of gold. The ordinary man-in-the-street does not quite understand where we are. As the right hon. Gentleman the Member for South Molton (Mr. Lambert) said, if the Government are going to carry the baby of the Bank of England whenever they make a bad deal, we shall never get that change in the government of the Bank of England which I consider highly desirable in the interests of the country. [Interruption.] I hear Socialist cheers. I do not at all mean what they mean, that we should have the Bank of England governed by a Socialist Government of the day who shall be able to put their fingers in the cake and pull out the plums for some of their Socialist nostrums. We want certain reforms within the Bank of England and we want a change in some of the governors of the Bank. It is high time the Bank of England stopped putting up its hands to shield itself from the camera of criticism, saying, "We are sacrosanct—you must not ask us any questions." This is a good opportunity for the Government to take the House of Commons and the country generally into their confidence as to their relations with the Bank on this matter and, unless the Bank had had some definite request from the Government when they advanced this money, I certainly think we should not agree to guarantee this loan. The National Government were returned, among other things, to rectify the adverse trade balance and, if we are going to give more loans of this kind to Continental countries, they can only pay the interest by sending us goods, which will have exactly the opposite effect to rectifying the adverse trade balance.

There is a further point raised by an earlier speaker about which I do not think the Government have been nearly frank enough. We are told this is a gold loan guaranteed by the Austrian Customs. The Austrian Customs are not on a gold basis, and we ought certainly to have information on that point. Whether we carry the Amendment or not, I hope the Government have had a lesson to stop tinkering with European finance. There has been quite enough of this. It is not even pretended that the Bill will do good to Austria. It certainly will not. I very much doubt if Austria will get any money at all. The sooner the Government stop attempting to bolster up European finance with these loans, the better it will be for this country and everyone concerned.

6.0 p.m.


It has been said that no speech has been made in support of the Bill, and I am certainly not going to make any exception to the general rule, but I suggest, in spite of the badness of the Bill, that the House will be ill-advised to reject it at this stage. I am in entire agreement with almost all the criticisms which have been levelled against it, including even the fantastical hyperbole of the hon. Member for North Paddington (Mr. Bracken). I would ask the House to remember two things, first of all, that this sum is only a guarantee and that there is a hope—not possibly a very big hope—that the money will not, in fact, have to be found from the Treasury of this country, and, secondly, to consider what the effect upon international feeling would be if the House of Commons, having passed the Second Reading of the Bill without a Division and accepted the principle of the Bill, and having failed to divide against any of the Amendments on the Committee stage, were, on the Third Reading, suddenly to turn it down. My hon. and gallant Friend the Member for Wallasey (Lieut.-Colonel Moore Brabazon) chid one of our hon. Friends for referring to the state of world finance in connection with the Third Reading of the Bill. With the greatest respect, although his Parliamentary experience is much longer than mine, I suggest that that reference was not so irrelevant as he seemed to think. At the present time anything which was likely to shake international confidence would be extremely dangerous.


The criticism was that it should have been made on the Second Reading, and not on the Third Reading.


To throw out the Bill on the Third Reading would be a blow at international confidence which would be extremely dangerous. I hope that the Government will listen to the protests. I agree with the speech of my hon. Friend the Member for East Aberdeen (Mr. Boothby), who said that the Bill should not be passed without a very strong protest. A very strong protest has been delivered. I hope that the Financial Secretary to the Treasury will answer the questions which have been put to him and will give us some insight into the mystical union indicated by my hon. and gallant Friend the Member for Wallasey. I hope, if the facing of the House of Commons with a loan of money to foreign Powers is a fait accompli as a result of that mystical union, that the Government will do something to alter the terms of that mystical union. The House does not like this kind of thing and will not stand it in the future. The time to have rejected the Bill was on Second Reading, and to do so now would really, in the long run, do more harm than good.

6.4 p.m.


I am rather glad to see the interest which has been taken in the Bill on the Third Reading, and I am rather sceptical at the moment as to the carrying of votes into the Division Lobby against the Bill. On the Motion for the Second Reading of the Bill my hon. Friend the Member for Bridgeton (Mr. Maxton) and I called out very loudly against the passage of the Second Reading, but there was no response from any other hon. Member of the House. I am not anxious to criticise the Chair because Mr. Speaker felt justified in refusing to take a Division in the House as there was no body of opinion against the Bill.


The hon. Member must have been intoxicated by the exuberance of his utterance if he did not notice that we took very strong exception to the Bill.


No. It is all very well to suggest at this stage that hon. Members were against the Bill, because Lord Beaverbrook has given his orders since then and told the House of Commons that the Members ought to have challenged a Division in the Lobby. They are now being praised in the "Sunday Express" for their attitude last week and are attempting to justify their action now.


The hon. Member suggested that I am one of what he calls Lord Beaverbrook's subsidised gentlemen. I am content to say that I have no financial connection with Lord Beaverbrook, and I hope he also has no connection with any foreign influence. I do not use the word "foreign" in an offensive sense, but only in regard to the independence of this House. There is no influence in this country which affects my vote, and the hon. Member ought to withdraw that statement.


I understand that others besides the hon. Gentleman have spoken to-day. If he thinks that he is the only voice in this House he has become more intoxicated than I was when he suggested that I did not hear him on the last occasion. There are a number of Members of the National Government who have stated in this House that they are going to challenge the right of the Government to grant this loan to indemnify the Bank of England. Why should they be against indemnifying the Bank of England? Are they so simple that at this stage they are trying to make us believe that the men who sit on the Front Bench are the people who decide the policy of the country? Has it not always been the Governors of the Bank of England, since it became a great financial house granting loans, national and international, who have dictated the policy of every successive Government in this House? If the Members of the House are trying to make the country believe that this is a departure of policy on the present occasion, they are attempting to make the public believe something which is not true. We have been told repeatedly—even by Members of the late Labour Government since they went out of office—that the Bank of England, at every turn, were dictating the policy, and were preventing them from carrying out their programme and the policy as endorsed by the electorate.

There is a growing volume of opinion in this House on the matter. As the oldest Liberal, the oldest Tory and the oldest Labour supporter are united against the loan, I have difficulty in deciding what to do to-night. I do not like the coalition of opinion of the three orthodox parties of the House. It seems to me that there is something seriously wrong when these people get together and. decide upon a common policy, because from what I have seen during the short time I have been in the House, when the oldest Liberal, the oldest Tory and the oldest Labour men agree, it means that they are all agreed upon a complete Tory policy, and are Tory in outlook in every shape and form. I do not profess to being an ardent constitutionalist. When hon. Members come to the House and say that the Bank of England want the country to carry the burden because there is a danger of a loss on the transaction, is not that exactly what is being done in commercial life right throughout—the ringing of the changes, the sleight-of-hand trick? Every person wants to evade anything which he thinks is to become a total loss to himself and wishes to pass it on to the nation. If the Governors of the Bank of England are anxious to pass on the burden to the British taxpayers, it seems to me that they are becoming more and more convinced that the transaction is going to be a loss. It reminds me of the street bookmaker who came to a simple friend of mine and said that he had more money to pay out than he had drawn in. He lived on his winnings, and he said, "If you give me£25 I shall manage to carry on." The man to whom he appealed for the£25 had£5 3s. to come back, and therefore he thought that it was in his own interests to lend the£25 in order to get his£5 3s. All the other people who had money to come were all encouraging him to pay over the£25 in order that they could get their share. Naturally, if the Governors of the Bank of England see the danger of a loss they will be encouraging the taxpayers to step in and take on the obligation.

I would rather see this money spent by the British working class. If the money is to be given as a loan, I would rather see it given to the local authorities in order to put idle British workers into employment in the construction of houses, the laying-out of allotments or in other things which would be of permanent use and value to the working class of the country. When the Government can give£4,500,000 to Austria we may take it that the financial crisis in this country is not so acute as it was made out to be to the working classes. They have robbed, pillaged and practically murdered a large section of the working class by reductions in transitional benefit, in doles and in wages, and they have the effrontery to come to the House and say to the people, "We have stolen£7,000,000 or£8,000,000 from the unemployed, and we are proposing to give£4,500,000 to Austria in order to enable Austria to pay back interest and some other commitments on loans previously obtained Here is the difficulty in which I am placed in connection with this Bill. I and my hon. Friends cannot actually know what is going to happen in the future. This is the basis of my decision as to my opposition or support to-night. If I could be convinced that the withholding of the loan of£4,500,000 would help to precipitate crisis and re- volution in Austria, I should be in favour of withholding the money in order to precipitate revolution and to ensure world revolt against the capitalist system and the banks of the various countries.


Why do you not risk your own skin in Glasgow?


I have always been prepared to risk my skin, and I have never asked other persons to risk their skin at my expense. Take that from me. You will not even risk a vote. You have left the House yourself after you have said that you were not going to support it. I like these courageous men. They are only courageous when they want to make a speech and get something off their chest, but when it comes to carrying out their intentions in the Lobby they are afraid to carry them to a conclusion. Of whatever else we can be accused, we cannot be accused of that sort of thing. Honestly, we in this House are always prepared to come down on the side which will bring about a further stage in the liberation of the common people from tyranny, autocracy, and the financial jugglers who are holding the country and the world in subjection at the present moment. We measure the amount of freedom gained by the working class in the completion of that cycle of revolt which is taking place throughout the world. Therefore, this is all that we have to decide. If there is a vote given in this House to-night against the granting of the money, I shall go into the Lobby with no other aim or Object in view but to encourage crises in the financial houses of the world, and to bring about a further stage in the liberation of the working class through world revolution.

6.15 p.m.


Many Conservative Members who have opposed the Bill have done so for reasons precisely the opposite of those advanced by the hon. Member for Shettleston (Mr. McGovern). Their case has been that if you go on lending money in this way the difficulties of the world will be increased, but that if you allow inter-Governmental debts to be cut out of the financial system capitalism will become more buoyant and will be restored. The hon. Member for Shettleston is in greater difficulty than the hon. Member for North Paddington (Mr. Bracken). The hon. Member for Shettleston wants to be sure whether or not his vote will help to bring about a revolution in Austria, before he gives it. I would suggest to him with every respect and courtesy, that he should be a little more courteous in his references to hon. Members of this House. Many of us have taken part in these Debates, on the Second Reading and in Committee, and also this evening, because we are genuinely convinced that this is a very bad bit of business. I can understand the hon. Member's difficulty when he sees Liberals, Conservatives and Labour Members coming together and opposing a Measure. He suspects that there must be something wrong. For his own part he is unable to decide the matter upon the merits of the case, and he begins to cast aspersions. I do not think the hon. Member and his colleagues below the Gangway are fair to their colleagues in this House, or that they do their own case justice by the way in which they present it.


Are we to take lessons from you how to do it?


We have had lessons more than once from hon. Members below the Gangway. I can promise them that if they proceed in the way in which they have been going—


Get on with it. We are not depending upon instructions from you.


We shall never be able to adopt the smug, self-righteous attitude of the hon. Member.


If we had miners' money it would be another matter.


Will the hon. Member tell me what I said that has aroused his indignation so much? He has done a little bit in lecturing hon. Members himself. He should be the last to talk.


I do not take the slightest exception to the hon. Member attacking other hon. Members on the merits of the case under discussion, but it really is becoming tiresome when we hear aspersions against the morality of hon. and right hon. Members. May I remind the hon. Member that he said that where Conservatives, Liberals and Socialists combined in this House, it is because they are combining on a Tory Measure.


Am I not entitled to say that?


The hon. Member is not entitled to cast unjust aspersions at the same time. I should like to answer the hon. Member for Aylesbury (Mr. M. Beaumont), who has ventured some small defence of the Government. He suggested that we ought not to vote against this Measure this evening because we did not vote against it on Second Reading or in the Committee stage.


I did not suggest that it would be improper to do so, but that it would be unwise, because it would create a very bad impression outside.


The bad impression would have been created if we had voted against it on Second Reading or in Committee. The bad impression would not be an attribute of the Third Reading stage, but an attribute as a vote against the Bill.


That is not quite so. When you pass the Second Reading of a Bill the assumption is that you accept the principle underlying it. When you get to the Third Reading you are dealing with the Bill as it has arrived at that stage. Since we did not object to the principle on Second Reading, it would be an ill-judged procedure to object to the principle now.


Hon. Members have been attempting in the course of discussion to find out the facts behind the policy of the Government. We have attempted during the Second Reading and the Committee stages to learn from the Foreign Secretary and from the Financial Secretary to the Treasury what actually led up to the present proposal. We have given the Government ample time, and we are voting against them on the Third Reading because we are satisfied that the case has not been made out in the House. It is true that the Financial Secretary has made several adroit speeches and has scored many debating points, but there are a number of questions which he has not answered, and I am sure that at this belated hour we are not going to have the answers for which we asked. He cannot give the answers, because by giving them he would disclose many unpleasant things behind this transaction. The second reason advanced by the hon. Member for Aylesbury was very remarkable. It was that, perhaps, the money would not be required, that we might not lose the money. That is a suggestion that we should be enticed to go on to the ice. We say that the ice is thin and may let us down. The answer is that perhaps it will keep up. We suggest that we should not go on the ice, that we should not run the risk. There is no reason why we should run the risk of losing£4,500,000 for the purpose of backing up the Bank of England.

The hon. Member for South Kensington (Sir W. Davison) made an attack, which I deeply deplore, upon the Governor of the Bank of England. I do not see why the poor Governor should have to put up with all these attacks.


I carefully avoided making an attack by name on any individual. I criticized the governors of the Bank of England.


It is extremely unfair that the Governor should be attacked. He is a perfectly good Governor. He is doing the job that any Governor would do if he were in a similar position. What is the position? The Foreign Secretary let the cat out of the bag. A large amount of money had been lent to Austria. Austria was in danger of defaulting. The Bank of England, closely associated with the City of London, closely associated with the people who had lent money to Austria, saw the difficulty, and they did what they have always done—they rushed to their friends in the city and said: "We cannot allow Austria to default, otherwise all the people who have been lending money to Austria will lose their money." Therefore, the Bank of England stepped in to support the credit of Austria for the purpose of supporting their friends in London. That is perfectly proper for the government of the Bank of England to do. They have always done it. They have only been international buccaneers. It is an indictment of the whole history of British international policy.

If Conservative Members want to indict anything they should indict the system which permits the Chancellor of the Exchequer or the Foreign Secretary to commit this House to any international obligation before the House has had an opportunity of discussing it. What has happened in this case? The Bank of England made this loan. We were informed by the Foreign Secretary, in Debate, that the Bank did it with the cognisance of the Chancellor of the Exchequer. Consequently, although the Bank was not acting as the instrument of the Chancellor of the Exchequer, there was a gentlemen's understanding between the Chancellor of the Exchequer and the Bank of England that this money should be lent to Austria. Accompanying the lending of the money there were certain terms. Those terms, put euphemistically, were that Austria should not alienate her economic independence. In other words, she should not enjoy the same liberty that we ourselves exercise. We exercise the liberty of putting a tariff against some goods and not against others, but in the case of Austria this Bill prevents her from doing that. We say to Austria: "If you give a privilege to anybody you must give it to everybody. You must keep yourself in a position of financial and economic subserviance to your neighbours."

The alarming feature is that it is the Bank of England that attached that political condition to the loan, and now we are asked, at this hour of the day, to ratify an agreement entered into not on behalf of the Chancellor of the Exchequer hut with his cognisance. I suggest that if the House is going to allow this sort of thing, there will be a repetition of it in the near future. Are we going to allow the Prime Minister or any Executive to enter into an international obligation which we must ratify, because we have been committed to it beforehand? We have reached this stage in the British House of Commons that a great deal of business which involves the economic life of the country, and which involves international negotiations and agreements, is taken out of the hands of the House of Commons. Are we to assume that we cannot have a Debate beforehand and give instructions to the Government? If we do so, it would tie their hands in bargaining. They say that we cannot discuss matters beforehand because the rest of the world would then know our intentions. Therefore, the Government must be free to make arrangements behind our backs, which involve this House in financial commitments, in important agreements, and months afterwards the Government come to us and say that they have done this tiling, and that we must ratify it. It means that the House of Commons have no control over the Government's international negotiations.

I seriously suggest that as this Bill is not a fundamentally important Measure, and as the effects of rejecting it will not be catastrophic, the House should turn it down in order to restore its control over finance, and to make it clear to the Government that the House of Commons is going to be the master of the Government's foreign policy as well as its domestic policy. Unless the House takes that line, the Prime Minister will take it for granted that no matter what may be the course of discussion in the House, as long as he commits us beforehand, he can always depend upon the House of Commons, in the most docile manner, ratifying the signature on any agreements at which he may have arrived. I would ask the Financial Secretary one question. If this money has already been loaned by the Bank of England to Austria, are there any economic merits in the loan, and in what way will Austria be disadvantaged if we refuse to ratify?

The Financial Secretary made the case that the money is necessary in order to restore the credit of Austria and put her financial life on a sound basis. I understand that this has already been accomplished. Therefore, will he say in what way any of these objects will be endangered if we refuse to ratify the Bill? I submit that the case that has to be met is not the need for a loan to Austria but the need for the Government of Great Britain finding the money for the Bank of England. That case has not yet been made out. It is the narrow issue which is now before the House. We cannot decide as to whether we are going to lend money to Austria—the money has been lent. We cannot decide whether the money has been properly used—it has been used. What the House is now asked to decide is not the merits of a loan to Austria but a Bill to indemnify the Bank of England against any losses which may be involved. That is the narrow issue to which I ask the Financial Secretary to address himself, and I hope that in the course of his reply he will face up to the question frankly.

6.31 p.m.


I doubt whether the House will be content if I confine myself to answering the question put to me by the hon. Member for Ebbw Vale (Mr. A. Bevan), upon the answer to which he said everything depended. But let me answer him at once. He asked in what way will Austria's position be disadvantaged if we refuse to ratify the Bill, because, he says, Austria has already received the money and out of the proceeds of the loan she will repay it; and, therefore, she will be in the same position as she was before. The question is susceptible of answer; and this is the answer. Austria borrowed money from the Bank of England on short term. She contracted to pay the Bank rate of interest, which has varied between 6 per cent, and 10 per cent. That short term obligation under this Bill will be converted into a long term obligation, at perhaps half the average rate of interest. To that extent Austria will appreciably benefit. I have answered that question first because many of the other questions which have been put during the Debate depend upon the answer to it.

I have been asked what is to become of the proceeds of the loan. We know that the Bank of England is to be repaid some of the money it has lent. Let me pause here to answer the hon. Member for North Paddington (Mr. Bracken) and the hon. Member for Aberdeen, East (Mr. Boothby), who evidently think that out of the proceeds of this loan interest is to be paid to the Bank of England. The Member for East Aberdeen made that point and put in a plea to persuade the Bank of England to forego the interest. It is not a question of interest at all. The Bank of England will be repaid a capital sum. If the hon. Member will look at the Protocol he will see that the advance of 100,000,000 schillings made by the Bank of England to the Austrian Government must be repaid out of the proceeds of the loan; that is a capital sum. The Bank of England lent 150,000,000 schillings to Austria; Austria has paid off 50,000,000 and there remains 100,000,000 schillings which will be repaid out of the proceeds of the loan.


I am sorry to interrupt—


The hon. Member interrupts me all the time. May I complete this part of my statement? Annexe 1 of the Protocol also discloses the fact that the rest of the proceeds of the loan is to remain free, consequently, Austria will derive considerable advantage by acquiring a sum of money in exchange which represents the total sum to be guaranteed. Only the Bank of England is to be repaid under the Protocol, and it is to be repaid in consequence of an agreement made between the Bank of England and the Austrian Government without any intervention by His Majesty's Government. I wish to make that point perfectly plain. There was no Bill before the House of Commons, no proposal for a Bill, when the Bank of England lent the money. It was lent at a time when the Creditanstalt was in difficulties. His Majesty's Government were, of course, aware of that decision and were sympathetic towards Austria being lent money. Austria wished to borrow money on Treasury bonds in Paris and London, but was not successful. The Bank of England made the advance of its own motion, acquainting His Majesty's Government with their action, and their action received the full approval of His Majesty's Government.

The wisdom of His Majesty's Government in so approving is disclosed by the consequent history of events, for from the collapse of the Creditanstalt in Austria can be traced step by step the calamity which subsequently overcame this country in the autumn of 1931. That is a historical narrative which has never been disputed. You cannot isolate or insulate one nation from its neighbours and say that it is a matter of complete indifference what happens in an important metropolitan centre. I have answered the series of questions as to what is to happen to the proceeds of the loan and also the series of questions as to the independence of the Bank of England in this matter. I gather from the discussions that the Bank of England is not as popular as His Majesty's Government, but the Bank of England took a course of action which was in the best interests of the world, and a course which met with the approval of His Majesty's Government. What guarantee is there that the taxpayer of this country will be spared the necessity of having to meet any call? That is an important matter. Many speeches have been based on the supposition that we are depriving the British worker of the wherewithal to undertake propositions like slum clearance in order to give it to Austria. The British taxpayer has not been called upon to meet any obligation yet in respect of the 1923 loan or the 1930 loan. Bondholders have received their interest up to date.


Why should they not be called upon to implement a matter like the Humber Bridge scheme any more than this one?


I do not quite follow the logic of the hon. Member. I say that, up to the present moment, the taxpayer has not been called upon to implement any past loan, either the loan made in 1923 or the loan made in 1930. What chance have we of escaping any liability under this loan? I gave certain figures showing that the loan was covered by customs and the tobacco monopoly at least 20 times. The hon. and gallant Member for Chippingham (Captain Cazalet), in what was one of the best informed speeches it is possible to make on this subject, suggested that there was perhaps some difference between taking a gold figure and an artificial parity figure. That is true, and if Austria were allowed to collapse and the Austrian schilling became worth less than it is to-day my figures would be entirely changed, but if the Austrian exchange is preserved, as we wish it to be, then my figures are absolutely true. I have taken a gold parity, and on a gold parity Austria is in a position to meet the interest 20 times over.

I have said that Austria's finances are to be put in order. I have been asked about the customs policy of the country. The hon. and gallant Member for Ardwick (Captain Fuller) was naturally interested in an increase in the tariff on certain cotton goods. He raised the matter on a previous occasion and I told him that His Majesty's Government would make representations to the Austrian Government if the facts were found to be correct. The Government have made representations to the Austrian Government and we have received their reply; to the effect that they desire to secure the fair treatment of British trade and they express the view that the new duties will not affect British imports specially because they are on a type of yarn which Lancashire does not export as much as other countries. The reply is now being examined and I can assure the House that every step will be taken to secure fair treatment for British interests.

I have endeavoured to answer the questions that have been put to me. I can understand the deep feelings which have been expressed, but the type of criticism which suggest that we are giving certain advantages to Austria and withholding them from our own people is specious; and I can understand the effect it will have, particularly on untutored minds. We are not depriving the British people of anything. We have to have regard to our position internally and externally, for a great deal of the welfare and employment of this country depends on the continuance of our commerce. If Austria be allowed to default, and if other countries follow suit, it will have a grave effect on employment in this country. The argument also seems to suggest what is wholly without foundation, that we have not been generous to our own people. They have been guaranteed loans of many hundreds of thousands of pounds more than we are now guaranteeing to Austria. We wish Austria to be put on her legs, but that does not imply that we have no desire, in a manner with which no other country can compare, to fulfil our obligations to our own people.

6.45 p.m.


I regret having to intervene at this hour in the Debate on a Bill which has been discussed by many hon. Members, several of them extremely well-informed on financial and City affairs. I do not propose to go into the question of the policy of the Bank of England. I only regret that a financial authority like the hon. Member for North Paddington (Mr. Bracken) finds himself at variance with the Bank of England. I regret, too, that much of the criticism of this Bill had been directed against the policy of the Bank of England as distinct from the policy of the Government. The policy of the Government is still obscure. I have listened to the Debates on this Bill on many days, three if not four, and I have still no real knowledge, nor has anyone in the House, of what actually occurred at the Treasury between the Chancellor of the Exchequer and the Governor or representatives of the Bank of England, when the loan was originally made by the Bank of England. The Financial Secretary to the Treasury has just said that at the time the loan was made no Bill was in contemplation— it "had not been thought of" were his exact words. I find it difficult to reconcile the policy of this country, the statement that the lending of fresh money to Austria had not been thought of, with the statement made by the Financial Secretary on 7th February, when he said: 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. So proximate was it considered that the Bank of England only advanced the money on weekly terms."—[OFFICIAL REPORT, 7th February, 1933; col. 133, Vol. 274.]


I said the same to-day.


Precisely. Then why say that at the time the Bank of England made the loan no Bill had been thought of or was contemplated?


I said in my opening speech and said again just now that the Austrian Government tried to raise this money on the market, in Paris and London. They were not successful. You do not have a Bill for that, but you do happen to have a Bill for a guaranteed loan. At first there was no question of a guaranteed loan, because it was thought that Austria would be able to raise the money otherwise.


What was the "proximate possibility"?


That Austria would be able to raise the money on the market.


Without any guarantee?




Considering the state of Austrian finances, it is a curious thing that the Government should now say that at the time it was considered a "proximate possibility," in fact almost a certainty, that the Government of Austria would be able to raise the money in the market, seeing that months and months of negotiations with a series of Governments have since been necessary to obtain the money. I really cannot help drawing the conclusion, which I think other Members have drawn, that fundamentally there was a connection between this loan made by the Bank of England and the policy of the Government at that time. It was very much the intention of the Treasury, should Austria find itself unable to repay the capital of this loan advanced on short term, to come to this House for permission to advance the money to Austria, which in turn would repay it to the Bank of England. If that was the case I see no reason why the Government should be ashamed of it. It is true that it would be an infringement to a large extent of the power of this House over finance, but there are occasions of great crisis when it is necessary, perhaps, to go behind the back of the House and to act quickly. But it creates no good impression in the mind of the House of Commons if the Government commit the crime and then are not frank about it.

A further point I would like to get cleared up finally is the question of the Government's policy with regard to Austrian trade agreements. We had a long statement from the Financial Secretary on the last occasion on which this Bill was debated, and he then affirmed, and in answer to repeated questions reaffirmed several times, that the Protocol connected with this Bill only in fact repeats the actual terms of the Treaty of St. Germain. I am not convinced that that is the case. The Treaty of St. Germain forbids Austria to alienate her independence. The Protocol for the first loan not only reaffirms that, but prevents Austria from raising the question before the League of Nations until a term of years have passed. The Protocol of this Bill appears to me to extend that prohibition for a further 10 years. It is not the continuance of the affirmation of the terms of the Treaty of St. Germain to which one can object. The Treaty exists, and it is, of course, of its own nature perpetual, but when you introduce into a Protocol new matter which is designed to prevent Austria from raising the question before a certain term of years has passed, you are going beyond the Treaty and making this country a party to a policy which we know is held by the French and Italian Governments, but which I most sincerely hope is not held by the British Government.

I am sure that the Financial Secretary is entirely sincere when he makes, as he has made, numerous statements as to the importance of Austria in the economic structure of Europe, when he says that it is vitally important that Austria should not be allowed to collapse, as we are all members of one another, and so forth. But it is even more important that the Government should take a long view of this question. A loan such as this has a certain importance. It may help Austria temporarily, but the only thing that can help Austria permanently is a reorientation of her political position. That is infinitely mixed up with her financial and economic position—more intimately than that of any other country. Limitations based upon Austrian sovereignty by the Treaty of St. Germain affect her economic life more vitally than the conditions of any of the post-War Treaties affect the economic life of any of the countries.

I hope to hear, not on this occasion but on some future occasion, that it is not the policy of His Majesty's Government to stabilise permanently or for an increasing term of years, whichever it may be, a political condition which is having the most disastrous economic effect upon Central Europe, and will only force this country, this Government perhaps, to come again to this House for further money to get Austria out of the economic morass in which she is confined by the terms of that Treaty. The explanation which the House would like to hear is one for the Secretary of State for Foreign Affairs to make. I regret very much that he has not been here to make it. I am certain that the whole House, irrespective of party, would have welcomed from him a general indication of the policy of the Government with regard to Austria. I hope there will be an occasion given in the near future when this question may be debated in the House. I very deeply regret that this Bill does seem, apart from all the defects attributed to it by the hon. Member for North Paddington and the hon. Member for Eastern Aberdeen (Mr. Boothby), to show that the Government are content with the political situation of Austria, and are content, with France and Italy, to force that position upon her for ever. If that is not the case I hope we may have some contrary indication from the Government in the near future.

Question put, "That the word 'now' stand part of the Question."

The House divided: Ayes, 227; Noes, 51.

Division No. 48.] AYES. [6.56 p.m.
Acland, Rt. Hon. Sir Francis Dyke Greaves-Lord, Sir Walter O'Connor, Terence James
Adams, Samuel Vyvyan T. (Leeds, W.) Grimston, R. V. O'Donovan, Dr. William James
Albery, Irving James Guinness. Thomas L. E. B. Ormsby-Gore, Rt. Hon. William G. A.
Amery, Rt. Hon. Leopold C. I M. S. Gunston, Captain D. W. Patrick, Colin M.
Anstruther-Gray, W. J. Hales, Harold K. Percy, Lord Eustace
Applin, Lieut.-Col. Reginald V. K. Hamilton, Sir R. W. (Orkney & Zetl'nd) Petherick, M.
Aske, Sir Robert William Hanbury, Cecil Peto, Geoffrey K. (W'verh'pt'n, Bilst'n)
Atholl, Duchess of Hanley, Dennis A. Powell, Lieut.-Col. Evelyn G. H.
Atkinson, Cyril Hannon, Patrick Joseph Henry Power, Sir John Cecil
Baldwin, Rt. Hon. Stanley Harvey, Major S. E. (Devon, Totnes) Pybus, Percy John
Balfour, George (Hempstead) Haslam, Sir John (Bolton) Ramsay, Alexander (W. Bromwich)
Balniel, Lord Headlam, Lieut.-Col. Cuthbert M. Ramsay, T. B. W. (Western Isles)
Banks, Sir Reginald Mitchell Heilgers, Captain F. F. A. Ramsbotham, Herwald
Barrie, Sir Charles Coupar Henderson, sir Vivian L. (Chelmsford! Rea, Walter Russell
Beauchamp, Sir Brograve Campbell Heneage, Lieut.-Colonel Arthur P. Reed, Arthur C. (Exeter)
Beaumont, M. W. (Bucks., Aylesbury) Hills, Major Rt. Hon. John Waller Reid, William Allan (Derby)
Beaumont, Hon. R.E.B. (Portsm'th.C.) Hoare, Lt.-Col. Rt. Hon. Sir S. J. G. Rentoul, Sir Gervals S.
Benn, Sir Arthur Shirley Hopkinson, Austin Rhys, Hon. Charles Arthur U.
Bernays, Robert Hore-Belisha, Leslie Ropner, Colonel L.
Betterton, Rt. Hon. Sir Henry B. Hornby, Frank Rosbotham, Sir Samuel
Bird, Ernest Roy (Yorks., Skipton) Horsbrugh, Florence Rothschild, James A. de
Blindell, James Howitt, Dr. Alfred B. Runge, Norah Cecil
Borodale, Viscount. Hudson, Capt. A. U. M. (Hackney, N.) Russell, Richard John (Eddisbury)
Boulton, W. W. Hudson, Robert Spear (Southport) Rutherford, John (Edmonton)
Bower, Lieut.-Com. Robert Tatton Hume, Sir George Hopwood Rutherford, Sir John Hugo (Liverp'l)
Bowyer, Capt. Sir George E. W. Hunter, Dr. Joseph (Dumfries) Salmon, Sir Isidore
Boyce, H. Leslie Brass, Captain Sir William Hunter, Capt. M. J. (Brigg) Sandeman, Sir A. N. Stewart
Brass, Captain Sir William Hurst, Sir Gerald B. Sanderson, Sir Frank Barnard
Broadbent, Colonel John Inskip, Rt. Hon. sir Thomas W. H. Savery, Samuel Servington
Brocklebank, C. E. R. James, Wing-Com. A. W. H. Selley, Harry R.
Buchan, John Joel, Dudley J. Barnato Shakespeare, Geoffrey H.
Buchan-Hepburn, P. G. T. Ker, J. Campbell Shaw, Captain William T. (Forfar)
Burghley, Lord Kerr, Lieut.-Col. Charles (Montrose) Simmonds, Oliver Edwin
Burnett, John George Kerr, Hamilton W. Simon, Rt. Hon. Sir John
Cadogan, Hon. Edward Kirkpatrick, William M. Sinclair, Maj. Rt. Hn. Sir A. (C'thness)
Campbell, Edward Taswell (Bromley) Knight, Holford Sinclair, Col. T.(Queen's Unv., Belfast)
Campbell, Vice-Admiral G. (Burnley) Law, Richard K. (Hull, S.W.) Skelton, Archibald Noel
Caporn, Arthur Cecil Leighton, Major B. E. P. Slater, John
Carver, Major William H. Levy, Thomas Smith, R. W. (Ab'rd'n & Kinc'dine, C.)
Castle Stewart, Earl Lindsay, Noel Ker Smith-Carington, Neville W.
Cayzer, Sir Charles (Chester, City) Lister, Rt. Hon. Sir Philip Cunliffe- Smithers, Waldron
Chamberlain, Rt. Hon. N. (Edgbaston) Locker-Lampion, Rt. Hn. G. (Wd. Gr'n) Somervell, Donald Bradley
Chorlton, Alan Ernest Leofric Locker-Lampson, Com. O. (H'ndsw'th) Somerville, Annesley A. (Windsor)
Clarke, Frank Lockwood, John C. (Hackney, C.) Soper, Richard
Cochrane, Commander Hon. A. D. Lumley, Captain Lawrence R. Sotheron-Estcourt, Captain T. E.
Cook, Thomas A. MacAndrew, Lieut.-Col. C. G. (Partick) Southby, Commander Archibald R. J.
Cooke, Douglas MacAndrew, Capt. J. O. (Ayr) Spencer, Captain Richard A.
Cooper, A. Duff McCorquodale, M. S. Stanley, Lord (Lancaster, Fylde)
Courthope, Colonel Sir George L MacDonald, Rt. Hon. J. R. (Seaham) Stanley, Hon. O. F. C. (Westmorland)
Craddock, Sir Reginald Henry McKie, John Hamilton Stourton, Hon. John J.
Crookshank, Capt. H. C. (Gainsb'ro) McLean, Major Sir Alan Stuart, Lord C. Crichton-
Croom-Johnson, R. P. Macmillan, Maurice Harold Sueter, Rear-Admiral Murray F.
Cruddas, Lieut.-Colonel Bernard Maitland, Adam Sutcliffe, Harold
Denman, Hon. R. D. Makins, Brigadier-General Ernest Thomas, Rt. Hon. J. H. (Derby)
Dormer, P. W. Mallalieu, Edward Lancelot Thomson, Sir Frederick Charles
Duggan, Hubert John Margesson, Capt. Rt. Hon. H. D. R. Thorp, Linton Theodore
Duncan, James A. L. (Kensington, N.) Marsden, Commander Arthur Titchfield, Major the Marquess of
Eastwood, John Francis Martin, Thomas B. Todd, Capt. A. J. K. (B'wick-on-T.)
Elliot, Major Rt. Hon. Walter E. Mason, Col. Glyn K. (Croydon, N.) Touche, Gordon Cosmo
Elliston, Captain George Sampson Mayhew, Lieut.-Colonel John Turton, Robert Hugh
Elmley, Viscount Mills, Major J. D. (New Forest) Vaughan-Morgan, Sir Kenyon
Emrys-Evans, P. V. Mitchell, Harold P.(Br'tf'd & Chisw'k) Wallace, John (Dunfermline)
Erskine, Lord (Weston-super-Mare) Mitcheson, G. G. Ward, Lt.-Col. Sir A. L. (Hull)
Fielden, Edward Brocklehurst Monsell, Rt. Hon. Sir B. Eyres Ward, Irene Mary Bewick (Wallsend)
Ford, Sir Patrick J. Moore-Brabazon, Lieut.-Col. J. T. C. Ward, Sarah Adelaide (Cannock)
Fox, Sir Gifford Moreing, Adrian C. Warrender, Sir Victor A. G.
Fremantle, Sir Francis Morris-Jones, Dr. J. H. (Denbigh) Watt, Captain George Steven H.
Ganzoni, Sir John Morrison, William Shepherd Wedderburn, Henry James Scrymgeour-
Gillett, Sir George Masterman Muirhead, Major A. J. Wells, Sydney Richard
Glossop, C. W. H. Munro, Patrick Wills, Wilfrid D.
Gluckstein, Louis Halle Nation, Brigadier-General J. J. H. Wilson, Clyde T. (West Toxteth)
Glyn, Major Ralph G. C. Nicholson, Godfrey (Morpeth) Windsor-Clive, Lieut.-Colonel George
Graham, Sir F. Fergus (C'mb'rl'd, N.) Normand, Wilfrid Guild Winterton, Rt. Hon. Earl
Grattan-Doyle, Sir Nicholas Nunn, William Wolmer, Rt. Hon. Viscount
Womersley, Walter James Worthington, Dr. John V. TELLERS FOR THE AYES—
Wood, Rt. Hon. Sir H. Kingsley Young, Rt. Hon. Sir Hilton (S'v'oaks) Sir George Penny and Major George Davies.
Wood, Sir Murdoch McKenzie (Banff)
Ainsworth, Lieut-Colonel Charles Fuller, Captain A. G. McGovern, John
Attlee, Clement Richard George, Rt. Hon. D. Lloyd (Carn'v'n) Maclean, Nell (Glasgow, Govan)
Banfield, John William George, Major G. Lloyd (Pembroke) Maxton, James
Batey, Joseph Greenwood, Rt. Hon. Arthur Milner, Major James
Belt, Sir Alfred L. Grenfell, David Rees (Glamorgan) Molson, A. Hugh Elsdale
Bevan, Aneurin (Ebbw Vale) Gretton, Colonel Rt. Hon. John Parkinson, John Alien
Bracken, Brendan Groves, Thomas E. Price, Gabriel
Brown, C. W. E. (Notts., Mansfield) Hall, F. (York, W.R., Normanton) Remer, John R.
Buchanan, George Hicks, Ernest George Robinson, John Roland
Clarry, Reginald George Jones, Henry Haydn (Merioneth) Sugden, Sir Wilfrid Hart
Cocks, Frederick Seymour Jones, J. J. (West Ham, Silvertown) Thorne, William James
Courtauld, Major John Sewell Jones, Morgan (Caerphilly) Tinker, John Joseph
Cripps, Sir Stafford Lansbury, Rt. Hon. George Wedgwood, Rt. Hon. Josiah
Daggar, George Logan, David Gilbert Williams, Thomas (York, Don Valley)
Davies, David L. (Pontypridd) Lunn, William Withers, Sir John James
Davison, Sir William Henry Macdonald, Gordon (Ince)
Edwards, Charles Macdonald, Capt. P. D. (I. of W.) TELLERS FOR THE NOES.—
Foot, Dingle (Dundee) McEntee, Valentine L. Mr. Boothby and Mr. Charles Williams.

Question put, and agreed to.

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