HC Deb 21 July 1933 vol 280 cc2179-97

1.6 p.m.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

I beg to move: That this House approves the proposals of His Majesty's Government as respects the Twenty-year 5½ per cent. Gold Bonds payable on the first day of February, nineteen hundred and thirty-seven, as set out in Command Paper, No. 4388. I rise to move a Resolution of an unusual character designed to deal with altogether exceptional circumstances. In 1917, in the last year but one of the War, the then British Government raised a loan in the United States of 250,000,000 dollars. Part of that loan has since been extinguished, but there still remains about 136,000,000 dollars, of which the principal is repayable in 1937, and meanwhile the interest which it carries is at the rate of 5½ per cent. The Bond which secured this indebtedness contained the clause which is commonly known as the Gold Clause, the terms of which will be found in the White Paper which has been presented to the House. It is or was quite a common clause to be inserted in contracts made in the United States, and it provided that the principal when repaid and the interest as payable, if paid in New York as the holders have a right to demand, should be paid in gold dollars or gold coin of the United States of the standard of weight and fineness which existed on 1st February, 1917. The effect of the contract after the United States had gone off the Gold Standard was that the holders of the Bonds could demand, not the number of dollars which were ex- pressed in the Bond, but that number of dollars increased in the proportion that paper dollars were depreciated in terms of gold. After the United States went off the Gold Standard that was the position under this Clause if there had been no further legislation, but there was further legislation. By a more recent Act the United States Government abrogated the Gold Clause. They provided that any obligation expressed in gold or in coin or currency of the United States shall be discharged upon payment, dollar for dollar, in any coin or currency of the United States which at the time of payment is legal tender for public or private debts. The passage of that legislation created a situation with regard to these bonds to which the Government have given very careful and anxious consideration. The legal position, I think, is perfectly clear. The obligation which the British Government undertook in 1917 had been abrogated by an alteration in the law of the land under whose jurisdiction the Bond was issued. That alteration, it is true, was adopted as part of a general policy directed to meeting the internal needs of the United States. At the same time, I think that everybody will agree that, in view of the passing of that legislation, there is no legal obligation upon us to resume a liability of which we have been lawfully relieved by the Government of the United States, nor is there any reason legally for us to take any action in relation to these Bonds which might be held to be in opposition to the general economic objects of the United States Government. So much for the legal position.

But there are other than legal considerations connected with this debt. The circumstances, as I have already said, are exceptional. I think I might almost go further and say that they are unique. You will not find them applying to any other obligation of this country, nor can they be exactly paralleled in the circumstances of any other country. Just observe what these circumstances are? It is not our practice in this country to use New York as a banking centre. We do not made a practice of borrowing money in the United States of America. This particular loan was a War loan. It was raised in War time and therefore the circumstances which attended its raising were quite exceptional. But there is another point. Although it was raised in America it must not be assumed that the bond holders are all Americans. The bonds are bearer bonds, and therefore we have not precise information as to where they are held, but we have good reason to believe that a very considerable part of these bonds are held outside the United States. Therefore we had to consider this position, that our obligations to these bondholders, whether British or foreign, were until a short time ago that they had the right to demand payment in gold. Until a short time ago they had every reason to suppose that those rights were valid. Thinking it over, and considering the circumstances, we came to the conclusion, and we could not resist the conclusion, that we have some moral obligation, apart from the legal obligation, towards the people who had lent money to the British Government and Who find that some of the considerations on which they had lent that money have been taken from them, not by the British Government, but by action taken in another country.

There is another feature which is peculiar about this loan. As matters stand at present our legal liability is to repay the principal, when it becomes due, in New York in American currency. We are liable to find in 1937 136,000,000 dollars in New York. Hon. Members will appreciate that it is quite possible that it might be inconvenient to us in 1937 to find that large amount of foreign currency in New York, and it would therefore be advantageous to us if we could be rid of that liability by means of some scheme for repatriating the loan, such as a scheme under which the holders of the loan will accept an offer for repayment in sterling instead of in dollars. Combining these two features, the Government came to the conclusion that it would be met by an offer to the bond holders for an exchange on the lines and on the terms set out in the White Paper.

Put briefly, those terms are these. The holders who accept the offer will receive until February, 1937, 2½ per cent. interest instead of 5½ per cent. To that extent it is less advantageous to them than the present rate. On the other hand, in 1937 instead of a bond of 1,000 dollars, which is now worth at par £206 in sterling, they will receive sterling bonds to the face value of £260. It would be impossible to make the arrangement in connection with this offer in time to deal with the coupon which becomes due on the 1st August next. Therefore, that bond will be paid in paper dollars in accordance with our legal liability. Any holders who do not accept the offer made to them by the British Government and who prefer to retain their existing dollar bonds will in future be paid both as to interest and principal in paper dollars, or they have the right if they choose to be paid in sterling at the fixed rate of 4.86½ dollars to the £. I hope and believe that the holders of these bonds will consider that we have given them what we have tried to give them, namely, a square deal. On our side the net effect is that in 1937 the actual net amount of the debt will be increased by about £7,500,000. Against that must be set the fact that the interest payable in the intervening period is reduced by £650,000 a, year, or, say, £2,250,000. At that cost, that is, the difference between those two figures, we shall have discharged our moral obligation and we shall have repatriated our loan to the extent to which the offer is accepted.

One word in conclusion as to why we are asking the House to pass the Resolution. As a matter of fact it is unnecessary to do so, in this sense that the offer could have been made under the existing law, but the Government, upon a review of the circumstances, felt that this was an altogether exceptional and unusual transaction and one on which the House of Commons ought really to have an opportunity of discussing the whole matter and of expressing upon it any opinion which it thought fit. In view of that strongly held opinion on our part, we have thought it right to publish the terms of the offer we are making and the circumstances' in which that offer is made, in the form of a White Paper. We have presented that White Paper to the House, and we ask hon. Members to express their approval of what we propose to do by passing the Resolution. Accordingly, I move the Resolution.

1.23 p.m.


I rise to oppose the Resolution. I am not surprised that the Government have thought it proper to bring this matter before the House. The only unfortunate thing is that it has been brought before the House on a Friday afternoon when many of those whom I hoped would have resisted it are not in their place. This is a matter which we regard as one of immense importance and of vital principle. As the right hon. Gentleman has said, this is the first time that we have sought by ingenious argument to convince ourselves that we ought to pay more than we owe. It seems to us that if we are going to embark upon that principle there are much better recipients than the bondholders of this particular issue. The right hon. Gentleman stated that this money was lent for the purpose of prosecuting the War, but it is perfectly obvious that the vast majority of these bonds by now are in quite different hands from those who originally lent the money in 1917. It is merely now an ordinary stock exchange security in New York.

The effect of the right hon. Gentleman's announcement has been seen by the fact that there has been a 10 point rise, in the middle of a catastrophic fall in prices on the New York market, in this particular security, which means that since this announcement became known last night the right hon. Gentleman has given a bonus which, quite frankly, as he has stated, is a bonus amounting to somewhere about £5,000,000, to the holders of these bonds. The position before the announcement was made yesterday was that these bonds were being paid in paper dollars, that was the only way in which they could be paid under the American law, or in sterling at 4.86½ dollars to the £. On either of these the gift which is being given to these bondholders will amount to something like 14 per cent. per annum extra during the rest of the life of these bonds. It was always possible, and strictly within the terms of the bond it- self, quite apart from American law, to pay these bonds in sterling money at a fixed rate of 4,86½ dollars to the £. Quite apart from any American legislation we should be entitled to pay in sterling calculate at the ordinary dollar exchange rate.


The option is the option of the bondholders, not that of the Government.


I read it as being the option of the Government, but if it is the option of the bondholder he would not accept it if he was going to lose by it. So far as American legislation is concerned, I understand that the legislation was passed for the purpose of relieving the debtor of the burden of the gold dollar; that is to say, in order that the load upon the debtor should be lessened, and, indeed, the special provision which the President of the United States made with regard to the repayment of Government debts to America was specially designed to lighten the burden with regard to dollar debts. Indeed, we ourselves, who are now so generous over this loan, and were too impecunious to pay the American Government loan, now say to them "We take advantage of the special legislation when we are paying the Government debt to the American Government, which we can only pay to the extent of 10 per cent., and we are legally entitled to pay in paper dollars".—as we propose to impose upon ourselves a moral obligation.

The right hon. Gentleman in the White Paper says that there are very special circumstances which surround this particular case. I should like to ask him whether one of the very special circumstances which surround this particular case is the fact that a large quantity of these bonds are held in the City of London? It is generally known that a large quantity of this issue has, in fact, been purchased in the City of London, and it looks as if this has nothing to do with the question of American holders of these bonds, but has something to do with British holders of these bonds; that this is a device by which British holders of these bonds, who have gained enormously during the period we have been off the Gold Standard up to the present time, by reason of our having to pay interest in gold, are now saying, "Things are going against us in the United States, although we have had the benefit of this gold clause for years; we demand that something be done for us to put the position right." And the Chancellor of the Exchequer is saying: "Well, it would only cost us £5,500,000. We will do it for you." It is much the same type of transaction as the Austrian loan, where, in order to reimburse the Bank of England the millions which they have lent to Austria, we guaranteed a fresh Austrian loan which went straight into the coffers of the Bank of England to repay the loan which they had lent.

We strongly resent this special finding of £5,500,000 for the City of London, because that is what it comes to. There are plenty of other good causes. There are public works, which the President of the Board of Trade says cannot be undertaken because of economy. These £5,500,000 would be a useful little contribution towards works in this country. There are the social services, education, which has been cut, the unemployed, the low wages and salary rates in the Government service; there are even the Judges, whom the Lord President of the Council turned down so summarily the other day when they asked for the reinstatement of their salaries. There are hundreds of cases, some better than others, which some of us would support in preference to others, but I cannot believe that hon. Members, at a time when they consider that we have to embark on every kind of economy, will seriously consider going outside our legal obligations to pay £5,500,000 to the City of London.

We have not a soft corner in our hearts for the City of London like the Chancellor of the Exchequer. We have not observed any great reason why they should have this very special treatment; which is absolutely without precedent. For years and years they have had the benefit of getting their money paid in gold dollars, whereas other people in this country had to get it in paper dollars, and now because the ordinary risk of investment in purchasing securities issued in a foreign market turns out, temporarily, to be against them they are to be pampered and paid this money from the taxpayers' pockets. It seems an extraordinary thing on the one hand to apply the means test to the unemployed and, on the other, to come forward with a bonus of £5,500,000 to the City of London.

1.33 p.m.


Having put a question to the Chancellor of the Exchequer a few weeks ago, at what must have been an embarrassing moment to him, I desire to thank him for the statement he has made to the House this afternoon and the explanation he has given of the manner in which this difficult technical problem has now been dealt with. I always listen with the greatest interest to the hon. and learned Member for Bristol East (Sir S. Cripps) on questions of finance. He has accustomed himself to talk in big figures. He is frequently put up by the Opposition to talk on these questions but he suffers at times from lapses of memory; and he is suffering from one to-day. Like myself, the hon. and learned Member was not in the House during the period of the first Labour government in 1924, in fact, I do not recall his name as an active protagonist of Socialism in those days, but if he had been here he might recall, when he accuses my right hon. Friend the Chancellor of the Exchequer of finding ingenious excuses for paying more than we owe, the fact that by the 4½ per cent. conversion loan, issued by the first Socialist government in 1924, holders of the five per cent. War Loan were offered a conversion scheme by Lord Snowden, then Chancellor of the Exchequer, on the basis of 4½ per cent., for which they received £103 for every £100 of war stock.

Also he might have recalled the action of the Government of which he himself was a Member. I know that often hon. Members opposite protest against the iniquity of the State paying five per cent. to any of its stockholders. The Government of which the right hon. Member for Bow and Bromley (Mr. Lansbury) was a Member were kind enough to issue in November, 1929, a conversion loan under which they converted 5 per cent. War Loan into 5 per cent. Conversion. It cannot be dealt with until 1944, and it is one of the chief obstacles to further conversion schemes by the Government. It was on that occasion that the late Labour Government were mindful of the City of London and treated the City very generously. They placed a large amount of that stock at 99½, or Ms. discount, with special financial houses of the City, and it was calculated that they gave a very handsome bonus to the City at that time. So if the hon. and learned Member is anxious to attack this Resolution, as, of course, it is his duty to do, he has chosen a rather unfortunate jumping-off ground when he accuses the Chancellor of the Exchequer of finding ingenious excuses for paying more than we owe.

At least I think the House will agree that the technical position with which the Government were faced was one of very great difficulty. The Government followed what after all is the very sound proverb, that what is sauce for the goose is sauce for the gander. They have dealt with the matter according to the law of the land in the United States, and they have given the bondholders what at the present time is a very real and useful opportunity of converting their holdings into sterling and out of the dollar. That is a very useful contribution and a very sound solution. It is quite true that the hon. and learned Member has suggested other uses which might have been found for the money. I understood him to advocate the restoration of the judges' salary cuts.


What I said was that it might even be used for that. I understood that hon. Members opposite wanted it so used.


The hon. and learned Member gave us a choice of alternatives. He suggested that the money might be used on public works, on the Roosevelt scale, I take it, which has led very largely to the present situation in America. He suggested a restoration of the cuts in civil servants' salaries. He suggested further expenditure on education—financial education, I hope, for the benefit of hon. Members opposite; and he suggested also that the £7,000,000 might be used to restore the whole of the unemployment benefit cut. A little mental arithmetic might cure that suggestion. At the end of the list there was the suggestion that the cuts in the judges' salaries might be restored. I hope that the hon. and learned Member will also bear in mind his colleagues in the House of Commons, and Cabinet Ministers, if we are going into the question of cuts. Judges have been mentioned, but let us remember all of us. Those are the arguments which it is the hon. and learned Member's duty to bring forward whenever these questions are raised. They will, of course, read well in the "Daily Herald" in the morning, but as that paper does not circulate in circles where education has penetrated, no great harm may be done.

So far as the suggestion and policy of my right hon. Friend the Chancellor of the Exchequer are concerned, the proof of the pudding is in the eating. As the hon. and learned Member has pointed out, at a time when prices are crashing in New York owing to the application of a policy which may well be compared to that of his Labour colleagues in 1929—an unbalanced Budget. expenditure on public works and financial recklessness—in. the midst of it all the loan which is linked to Great Britain has risen by eight to ten points, which is a great tribute to the opportunity which people have of exchanging their holdings into sterling. I have no hesitation in saying that I think my right hon. Friend is to be congratulated and I hope the House will pass the Resolution by a large majority.

1.40 p.m.


It is always interesting when one has a concrete example given of an abstract opinion. Last evening I happened to be with a stockbroker and I was talking to him about this. He said: "You must not think that stockbrokers know anything about finance." It is nice to have that confirmed.


Is the hon. Gentleman under the improssion that I am a stockbroker?


I took the information from "Dod." If the statement is wrong, of course I withdraw it.


I am a stockbroker in the same way that the hon. and learned Member for Bristol East (Sir. S. Cripps) is a solicitor.


The hon. Member may be a jobber or a broker, but it makes no difference, as my friend's statement applied to all members of the Stock Exchange. When I saw the hon. Member rise I thought we were going to get some explanation of this Resolution, but the weakness of the case has been quite extraordinary, for all that the hon. Member can rake up is number of instances of conversion loans in which, by a reduction of interest, the indebtedness of this country has been increased. But he did not give us any explanation of this extraordinary conversion loan, for which the interest payment is to be reduced from £1,540,000 odd to £886,000 odd, a magnificent saving of less than £700,000 in four years, while we are going to have an increase in our capital indebtedness of nearly £7,500,000. I never had the pleasure of doing business with the hon. Member, but if he thinks that that is good business, I am prepared to deal with him. I should be quite content with those terms. It seems to me extraordinarily good business to be able, merely for a temporary cut in interest, to make more than twice as much at the end of four years. I do not know whether that is the practice of persons of great experience and authority who lecture to us on finance, and who operate in some way or other on the Stock Exchange.

I was certainly surprised at the speech of the Chancellor of the Exchequer. He said that this is done on account of very special circumstances. But he gave us no very special circumstances. The most he gave us in the way of very special circumstances was that these bonds were now held outside the United States. He was rather reticent and did not go further. He obviously had some information; he knew they were held outside the United States. Perhaps the Financial Secretary will go a little further and tell us where he believes they are held. This proposal is equivalent to the House voting a large sum of money from the taxpayers. Who are the beneficiaries of the Chancellor? I cannot believe in this extraordinarily sudden access of philanthropy on the part of the National Government. I have never noticed any tendency to philanthropy on the part of the Chancellor of the Exchequer. This is a very different cry from that which the right hon. Gentleman has put up during the past two years. Every time he has stood at that Box to talk finance he has been as poor as a church mouse, but he is now prepared in this case to scatter largesse on the just and the unjust alike, without inquiry as to means or anything of that sort.

I do not know whether the people who are to receive this largesse are people who ought to receive it. This House is not here for the purpose of considering the interests of bondholders. The Chancellor of the Exchequer is slot here, or at least he ought not to be here, in the interest of bondholders. He is here to protect the interests of the taxpayers and of this country. I am bound to say that this is only another example of the wonderful way in which the Members of the National Government cling together. The President of the Board of Trade takes exactly the same line. He is going to enormous pains to ensure that the workers of this country shall make a handsome donation to the people who grow our food in the Argentine, and, probably, also a good deal to the people concerned in the transport of the food as well as the dealers in it. This bondholder philanthropy has now spread to the Chancellor of the Exchequer.

What is the tangible advantage that this House as representing this country is going to get out of these proposals. On what possible financial principle does the Chancellor of the Exchequer justify this proposal? If a body of clerks or other employés in a Government Department find that by some means or other they are going to get less than they expected to get, we do not find the Chancellor of the Exchequer coming forward voluntarily and offering to make them a donation. It generally requires a tremendous agitation in the country to get anything of that kind. Here we are told that there is a moral obligation. I did not understand that there was any consideration of "moral obligation" in business circles in the City, and I certainly never observed it in. Treasury deals. Quite apart from the personalities of those who compose the Treasury or the personality of the Chancellor of the Exchequer, the Treasury has a tradition of being extremely hard in these matters and of sticking very strictly to the letter of the bond in every case. Exceptional circumstances are, therefore, required to justify the proposal, and we should like to know what is expected to be the result when we have to pay off these bonds in 1937. Is this really the explanation that cannot be put forward directly—that this is going to be some wonderful gamble, or something based on that gambling with the currencies which now takes up so much of the time of the Chancellor of the Exchequer?

The right hon. Gentleman said that it might be very inconvenient to pay this in American paper dollars. But it might be equally inconvenient at that time to pay it in sterling. I understood that the House had given the right hon. Gentleman about £500,000,000 to play with in foreign currency. Its use is kept secret. Nobody, except the hon. Member for Putney (Mr. S. Samuel) knows what is being done. But we understand that the right hon. Gentleman is in a position to put his hand on the currencies at this time or at that time and to engage in equalisation operations. Yet he says that he would be or might be seriously embarrassed if he had to pay these people according to the letter of the bond. He does not say whether or not he is going to be seriously embarrassed in paying them off in 1937.

In view of the present state of the world, in view of the extremely contradictory statements made by all the high financial pundits whether in the City or abroad and in view of what the course of financial affairs is likely to be, this at best is a gamble and at worst a ramp. It looks as if it was a ramp in the interest of some private persons or private firms of which this House knows nothing, and I think that the House certainly ought to refuse to accept a proposal like this, brought forward all in a hurry and without warning, on a Friday afternoon and in a House where except for the hon. Member for Hillsborough (Mr. Gurney Braithwaite) most of our great financial authorities are conspicuous by their absence. While it may be creditable to the right hon. Gentleman that he has brought this matter to light to some extent, and has at least sought to give it the colour of having been put through publicly, we object to the proposal and to the manner in which it has been presented.

1.50 p.m.


It is with considerable diffidence that I intervene because this conversion offer has only been in our hands a very short time. There are, however, certain points with which I hope the right hon. Gentleman or the Financial Secretary will deal in replying on this debate. First I would join issue with the hon. Gentleman the Member for Limehouse (Mr. Attlee) on two main points. He suggested that it was a ramp on the part of the Chancellor of the Exchequer to make such a favourable offer. I think everyone on this side has followed the right hon. Gentleman's dealings with the national finances with the utmost admiration, and although some of us may feel that this offer is unduly generous, we are convinced that the right hon. Gentleman, in making it, is acting in good faith and in the interests of the nation and of nobody else. I also wish to contradict the hon. Gentleman's suggestion with regard to the increased capital which has to be paid off as a result of this offer. He seemed to think that it was practically without precedent to increase the capital amount of a loan when making an offer of conversion, but it is very often advisable, in return for a very low rate of interest, to increase the capital amount to be repaid. That is an ordinary practice which has been followed in innumerable previous cases.

There are certain points however on which I must confess I have grave doubts. It seems to me that the difference between the existing interest and the new interest results in a saving of £654,000 a year. I give these figures with all reserve because I have had to work them out in a hurry. But the capital sum is increased by £7,500,000 and consequently the saving in interest is reduced to £468,000 a year. Against this, we have to amortise in a period of about 3½ years, the increased capital resulting from this conversion of £7,500,000. That costs something like £2,000,000 a year to write off—the increased capital amount. Thus, if you compare that amount of £2,000,000 with the saving of something under £500,000, it would appear that the country is by about £1,500,000 a year worse off on balance. There may be great compensating advantages. The hon. Member for Limehouse referred to one which is very important. It may be extremely inconvenient in a few years time to be obliged to find a large amount in dollars in New York. The hon. Member for Limehouse said it might equally be difficult to find sterling in London, but I do not agree with him there. If your currency is sterling it is always easier to find sterling than some foreign currency.

There is one other point on which I should like the view of a representative of the Government. It appears to me that we are assuming that dollars will rise over the period of the next few years. I think that is an extremely doubtful assumption. It is at least possible that dollars may fall and in that case we might be able to obtain the dollars required for paying off the capital sum considerably cheaper than we consider possible at the moment. That is merely a question of view. Nobody but a fool or a prophet would venture to prophesy the future course of exchanges over a period of years, and therefore I think it is rather dangerous to take that particular view, that by converting this loan into sterling we shall be better off. I should be most grateful, before coming to a decision as to what to do if there is a division on this very important point, to have the views of a member of the Government on the points which I have raised.

1.56 p.m.


We have had a statement put before us this morning which it is very difficult to follow. During the course of this Debate it has been inferred from this side that a number of these bondholders are in London, and it is apprehended that the Chancellor of the Exchequer is doing something for people in the City of London. Can the Financial Secretary to the Treasury tell us how many of these bondholders actually live in London? If there is a doubt on this side that we in the House of Commons are doing something for certain people in this country, we have a right to know the facts, and if the charge is unfounded and these bondholders are all in America, there will be some understanding why the Chancellor should put the point of view that, on moral grounds, he wants to do something for those people. It will leave a great doubt in our minds, however, if we find that a large majority of these bonds are held in the City of London. If any money is being given away in this country on moral grounds, the unemployed are entitled to some of it. Owing to financial stress, the unemployed have had to suffer a cut. They are people in this country, and, as I say, if any money is to be given away on moral grounds, the unemployed ought to have it. There must be some knowledge at the Treasury as to those who hold these bonds, and I shall be glad to know what the Financial Secretary can tell us on that matter.


Perhaps I may say one or two words in reply to some of the observations that have been made. In reply to the hon. Member for Leigh (Mr. Tinker), I say frankly that I do not know in the least where the holders of these bonds at present live, because if the bonds are bearer bonds, they can pass from hand to hand without any registration taking place of the name or address of the various holders from time to time. Therefore, the hon. Member will see that it is quite impossible to have specific and precise information as to where the bondholders reside. At the same time, as I said before, I have some reason to suppose—I have been informed, at any rate—that a very considerable number of the bonds are held outside the United States of America, which means, no doubt, that some of them are held in London and that others again are held in various places on the Continent.

But we are not addressing ourselves to that particular point as to where the bondholders live, except in this respect, that if we were quite certain that all the bondholders were Americans, I should not feel the same moral obligation on behalf of people who are affected to some extent by reason of the action of their own Government, but the circumstances are different in the case of a bondholder who is not an American, who bought these bonds in good faith of the Gold Clause, and having not the slightest idea that the Gold Clause was likely to be abrogated. That is the reason why I particularly mentioned, as one of the exceptional circumstances, that to a very great extent the bondholders were not Americans, but, so far as I knew, the bonds were largely held elsewhere.

With regard to the rather cheap point, if I may say so, that if there is money to give away, it ought to be used for some other purpose, I think it is sufficient to say that as a matter of fact there will be more money available in the course of the next few years in the Budget by reason of this proposal than there would have been otherwise.

Sir S. CRIPPS indicated dissent.


The hon. and learned Member shakes his head, hut everybody admits that there is a reduce- tion of interest payable, amounting to £650,000 a year, for the next four years.


Is the right hon. Gentleman making no provision at all for repayment? If not, anyway a greater loan will have to be raised at the end of four years.


Quite. That is the point that I was coming to. It has been raised by my hon. Friend the Member for Penrhyn and Falmouth (Mr. Petherick), for whose general approval I am grateful, as well as for that of my hon. Friend the Member for the Hillsborough Division (Mr. G. Braithwaite). I do not propose to provide for the amortisation of the extra amount of principle which will be involved in this offer, and, of course, hon. Members will see that if the repayment had still to be made in gold, as it originally was when we undertook these obligations, there would have been a very much larger amount to pay in 1937 than there would be even under the arrangement that is now in front of us. What we do under this proposal is to make some sort of compensation to the bondholders for loss of rights, and it is not the slightest use for the hon. Member for Limehouse (Mr. Attlee) to leave out of account altogether those circumstances when he is dealing with the case, and to speak of it as though it was a bonus given, quite gratuitously, to people who have no claim, either legal or moral, upon us.

You cannot get away from it that in the actual circumstances of the case those circumstances must include consideration of the rights which bondholders had before the abrogation of the Gold Clause in America, and while we have not attempted, and do not profess to have attempted, to put the bondholders back in the same position as they were in before the abrogation of the Gold Clause, we have attempted to recognise what we believe to be a moral obligation, and we believe that it will redound to the credit of the British Government and nation, and that we have provided a fair compensation to the bondholders.

2.3 p.m.


The right hon. Gentleman the Chancellor of the Exchequer has not been able to make out a case as clearly as we should have liked. My hon. and learned Friend the Member for East Bristol (Sir S. Cripps) and my hon. Friend the Member for Limehouse (Mr. Attlee) both tried to make the House understand that this was an entirely new departure, for which, so far as we know, there is no precedent, and one which the Chancellor of the Exchequer will be called upon to follow in other cases. Already the hon. Member for Farnham (Sir A. M. Samuel) is continually asking about the German loan of £90,000,000 and asking the right hon. Gentleman to face up to his moral obligations in regard to it. When I was in the Government with Mr. Snowden, vigorous appeals were made on behalf of people in this country who held stock in France for £50,000,000 worth of which they only received £10,000,000. I hope the right hon. Gentleman will believe me when. I say that I have not questioned his sincerity about this matter at all, but I do question his judgment. Every word that he said to-day was said again and again to Mr. Snowden—and it was done from the right hon. Gentleman's own Benches—that we ought in honour, and from the point of view of morals, to come to the aid of those bondholders, who received a pittance for their holdings.

The right hon. Gentleman is on the slippery slope in this matter. He has taken a line of action the end of which no one can see. We very much resent this care for the bondholders by the right hon. Gentleman. My hon. Friend who spoke just now, together with other lion. Members, speak for people who are robbed of their compensation. This House has passed a law that workmen should have compensation. Over and over again they are robbed of it owing to certain conditions, and we come to the House and ask that the House should implement what it has said regarding the rights of these people. I contend that this is a much more justifiable appeal than the one which the right hon. Gentleman made to-day. We shall register our vote against this Resolution because we are certain that the right hon. Gentleman and his advisers have not realised the extent to which they will be called upon to follow the principles that he has laid down this afternoon.

Question put.

The House divided: Ayes, 131; Noes, 22.

Division No. 279.] AYES. [12.59 p.m.
Adams. Samuel Vyvyan T. (Leeds, W.) Griffith, F. Kingsley (Middlesbro', W). Ormsby-Gore, Rt. Hon. William G. A
Agnew, Lieut.-Com. P. G. Grimston. R. V. Pearson, William G.
Allen, Sir J. Sandeman (Liverp'l, W.) Guest, Capt. Rt. Hon. F. E. Penny, Sir George
Allen, Lt.-Col. Sir William (Armagh) Guinness, Thomas L. E. B. Petherick, M.
Baldwin, Rt. Hon. Stanley Gunston, Captain D. W. Pato, Geoffrey K. (W'verh'pt'n, Bliston)
Beauchamp, Sir Brograve Campbell Hamilton, Sir R. W.(Orkney & Zetl'nd) Pickford, Hon. Mary Ada
Beaumont, Hon. R.E.B. (Portsm'th, C.) Hammersley, Samuel S. Powell, Lieut.-Col. Evelyn G. H.
Benn, Sir Arthur Shirley Hannon, Patrick Joseph Henry Ramsbotham, Herwald
Boulton, W. W. Headlam, Lieut.-Col. Cuthbert M. Ray, Sir William
Bowyer, Capt. Sir George E. W. Hills, Major Rt. Hon. John Waller Rea, Walter Russell
Boyce, H. Leslie Hope, Capt. Hon. A. O. J. (Aston) Reid, William Allan (Derby)
Braithwaite, J. G. (Hillsborough) Hore-Bellsha, Leslie Rentoul, Sir Gervais S.
Broadbent, Colonel John Hornby, Frank Renwick, Major Gustav A.
Brocklebank, C. E. R. Howitt, Dr. Alfred B. Rhys, Hon. Charles Arthur U
Buchan-Hepburn, P. G. T. Hudson, Capt. A. U. M. (Hackney, N.) Ross, Ronald D.
Burnett, John George Hume, Sir George Rothschild, James A. de
Butler, Richard Austen Hopwood Jackson, Sir Henry (Wandsworth, C.) Runge, Norah Cecil
Cadogan, Hon. Edward James, Wing-Com. A. W. H. Russell, Alexander West (Tynemouth)
Campbell, Sir Edward Taswell (Brmly) Jerson, Major Thomas E. Savery, Samuel Servington
Campbell, Vice-Admiral G. (Burnley) Joel, Dudley J. Sarnato Scone, Lord
Caporn, Arthur Cecil Johnstone, Harcourt (S. Shields) Shaw, Captain William T. (Forfar)
Carver, Major William H. K err, Lieut.-Col. Charles (Montrose) Simmonds, Oliver Edwin
Cazalet, Thelma (Islington, E.) Kimball, Lawrence Smith, Bracewell (Dulwich)
Chamberlain, Rt. Hon. N. (Edgbaston) Law, Sir Alfred Smith, Sir J. Walker- (Barrow-in-F.)
Chapman, Col. R. (Houghton le-Spring) Law, Richard K. (Hull, S.W.) Smith-Carington, Neville W.
Clarry, Reginald George Leckie, J. A. Smithere, Waldron
Clayton, Sir Christopher Leech, Dr. J. W. Somervell, Donald Bradley
Colman, N. C. D. Levy, Thomas Somerville, Annesley A. (Windsor)
Conant, R. J. E. Lewis, Oswald Spencer, Captain Richard A.
Cooke, Douglas Lindsay, Noel Ker Spans, William Patrick
Courthope, Colonel Sir George L. Llewellin, Major John J. Stanley, Lord (Lancaster, Fylde)
Craddock, Sir Reginald Henry Loder, Captain J. de Vero Stanley, Hon. O. F. G. (Westmorland)
Crooke, J. Smedley Mabane, William Stones, James
Cruddas, Lieut.-Colonel Bernard MacAndrew, Lieut.-Col. C. G.(Partick) Sugden, Sir Wilfrid Hart
Despencer-Robertson, Major J. A. F. McConnell, Sir Joseph Summersby, Charles H.
Dickie, John P. Macmillan, Maurice Harold Sutcliffe, Harold
Doran, Edward Magnay, Thomas Tate, Mavis Constance
Duggan, Hubert John Makins, Brigadier-General Ernest Thomas, James P. L. (Hereford)
Duncan, James A. L. (Kensington, N.) Margesson, Capt. Rt. Hon. H. D. R. Thompson, Luke
Edge, Sir William Marsden, Commander Arthur Thomson, Sir Frederick Charles
Emmett, Charles E. G. C. Mayhew, Lieut.-Colonel John Touche, Gordon Cosmo
Entwistle, Cyril Fullard Mills, Sir Frederick (Leyton, E.) Tryon, Rt. Hon. George Clement
Evans. David Owen (Cardigan) Mills, Major J. D. (New Forest) Turton, Robert Hugh
Fielden, Edward Brocklehurst Moore, Lt.-Col. Thomas C. R. (Ayr) Vaughan-Morgan, Sir Kenyon
Fox, Sir Gifford Morgan, Robert H. Wallace, Captain D. E. (Hornsey)
Fremantle, Sir Francis Morris, John Patrick (Salford, N.) Wallace, John (Dunfermline)
Fuller, Captain A. G. Morris-Jones, Dr. J. H. (Denbigh) Ward, Lt.-Col. Sir A. L. (Hull)
George, Megan A. Lloyd (Anglesea) Moss, Captain H. J. Ward, Irene Mary Bewick (Wallsend)
Gilmour, Lt.-Col. Rt. Hon. Sir John Nation, Brigadier-General J. J. H. Ward, Sarah Adelaide (Cannock)
Gluckstein, Louis Halle Newton, Sir Douglas George C. Wardlaw-Milne, Sir John S.
Goodman, Colonel Albert W. North, Edward T. Warrender, Sir Victor A. G.
Grattan-Doyle, Sir Nicholas Nunn, William Waterhouse, Captain Charles
Weymouth, Viscount Withers, Sir John James TELLERS FOR THE AYES.
Whiteside, Borras Noel H. Womersley, Walter James Mr. Blindell and Commander
Williams, Charles (Devon, Torquay) Wood, Rt. Hon. Sir H. Kingsley Southby.
Wills, Wilfrid D.
Attlee, Clement Richard Hall, George H. (Merthyr Tydvil) McEntee, Valentine L.
Brown, C. W. E. (Notts., Mansfield) Healy, Cahir Parkinson, John Allen
Cape, Thomas Hirst, George Henry Price, Gabriel
Cove, William G. Jenkins, Sir William Smith, Tom (Normanton)
Cripps, Sir Stafford Jones, Morgan (Caerphilly) Thorne, William James
Daggar, George Kirkwood, David Tinker, John Joseph
Davies, Rhys John (Westhoughton) Lansbury, Rt. Hon. George Wedgwood, Rt. Hon. Josiah
Edwards, Charles Lawson, John James
Grundy, Thomas W. Macdonald, Gordon (Ince) TELLERS FOR THE NOES.
Mr. John and Mr. Groves.

Bill read the Third time, and passed.

Division No. 280.] AYES. [2.7 p.m.
Baldwin, Rt. Hon, Stanley Hornby, Frank Rea, Walter Russell
Baldwin-Webb, Colonel J. Horsbrugh, Florence Reld, William Allan (Derby)
Beaumont, Hn. R. E. B. (Portsm'th, C.) Howitt, Dr. Allred B. Rentoul, Sir Gervals S.
Bernays, Robert Hudson, Robert Spear (Southport) Renwick, Major Gustav A.
Blindell, James Hume, Sir George Hopwood Rhys, Hon. Charles Arthur U.
Boyce, H. Leslie Hurst, Sir Gerald B. Ross, Ronald D.
Braithwaite, J. G. (Hillsborough) James, Wing-Corn. A. W. H. Runge, Norah Cecil
Brocklebank, C. E. R. Joel, Dudley J. Barnato Russell, Alexander West (Tynemouth)
Burgin, Dr. Edward Leslie Ker, J. Campbell Russell, Hamer Field (Shef'ld, B'tside)
Campbell, Sir Edward Tasweil (Brmly) Kerr, Lieut.-Col. Charles (Montrose) Rutherford, Sir John Hugo (Liverp'l)
Campbell, Vice-Admiral G. (Burnley) Law, Richard K. (Hull, S.W.) Salmon, Sir Isidore
Caporn, Arthur Cecil Leckie, J. A. Sanderson, Sir Frank Barnard
Carver, Major William H. Leech, Dr. J. W. Savery, Samuel Servington
Chamberlain, Rt. Hon. N. (Edgbaston) Lewis, Oswald Simmonds, Oliver Edwin
Chapman, Col. R. (Houghton-le-Spring) Lindsay, Noel Ker Slater, John
Clarry, Reginald George Lockwood, John C. (Hackney, C.) Smith-Carington, Neville W.
Clayton, Sir Christopher Loder, Captain J. de Vere Somerville, Annesley A. (Windsor)
Conant, R. J. E. Mabane, William Southby, Commander Archibald R. J.
Cooke, Douglas MacAndrew, Lieut.-Col. C. G. (Partick) Spens, William Patrick
Craddock, Sir Reginald Henry MacAndrew, Capt. J. O. (Ayr) Sugden, Sir Wilfrid Hart
Cross, R. H. McConnell, Sir Joseph Summersby, Charles H.
Cruddas, Lieut.-Colonel Bernard McCorquodale, M. S. Sutcliffe, Harold
Dickie, John P. Magnay, Thomas Tate, Mavis Constance
Doran, Edward Makins, Brigadier-General Ernest Thompson, Luke
Duggan, Hubert John Margesson, Capt. Rt. Hon. H. D. R. Thomson, Sir Frederick Charles
Duncan, James A. L. (Kensington, N.) Mayhew, Lieut.-Colonel John Touche, Gorden Como
Emmott, Charles E. G. C. Mills, Sir Frederick (Leyton, E.) Turton, Robert Hugh
Entwistle, Cyril Fullard Mitchell, Harold P.(Betf'd & Chisw'k) Vaughan-Morgan, Sir Kenyon
Everard, W. Lindsay Monsell, Rt. Hon. Sir B. Eyres Wallace, John (Dunfermline)
Foot, Dingle (Dundee) Moore, Lt.-Col. Thomas C. R. (Ayr) Ward, Lt.-Col. Sir A. L. (Hull)
Foot, Isaac (Cornwall, Bodmin) Morris, John Patrick (Salford, N.) Ward, Irene Mary Bewick (Wallsend)
Fox, Sir Gifford Morrison, William Shepherd Ward, Sarah Adelaide (Cannock)
Fuller, Captain A. G. Moss, Captain H. J. Wardlaw-Mline, Sir John S.
Gilmour, Lt.-Col. Rt. Hon. Sir John Mulrhead, Major A. J. Warrender, Sir Victor A. G.
Gluckstein, Louis Halle Nation, Brigadier-General J. J. H. Watt, Captain George Steven H.
Goldie, Noel B. Newton, Sir Douglas George C. Weymouth, Viscount
Grattan-Doyle, Sir Nicholas North, Edward T. Whiteside, Borras Noel H.
Grimston, R. V. Nunn, William Williams, Herbert G. (Croydon, S.)
Guest, Capt. Rt. Hon. F. E. Ormsby-Gore, Rt. Hon. William G. A. Wills, Wilfrid D.
Guinness, Thomas L. E. B. Pearson, William G. Withers, Sir John James
Gunston, Captain D. W. Penny, Sir George Womersley, Walter James
Hacking, Rt. Hon. Douglas H. Percy, Lord Eustace
Hannon, Patrick Joseph Henry Pickford, Hon. Mary Ada TELLERS FOR THE AYES.
Hills, Major Rt. Hon. John Waller Powell, Lieut.-Col. Evelyn G. H. Captain Austin Hudson and Dr. Morris-Jones.
Hore-Belisha, Leslie Ramsay, T. B. W. (Western Isles)
Adams, D. M. (Poplar, South) Greenwood, Rt. Hon. Arthur Parkinson, John Allen
Attlee, Clement Richard Griffith, F. Kingsley (Middlesbro', W). Thorne, William James
Bevan, Aneurin (Ebbw Vale) Hall, George H. (Merthyr Tydvit) Tinker, John Joseph
Brown, C. W. E. (Notts., Mansfield) Healy, Cahir Wedgwood, Rt. Hon. Josiah
Cape, Thomas Jenkins, Sir William
Cocks, Frederick Seymour Jones, Morgan (Caerphilly) TELLERS FOR THE NOES.
Cove, William G. Lansbury, Rt. Hon. George Mr. Charles Edwards and Mr. John.
Cripps, Sir Stafford Lawson, John James
Dagger, George McEntee, Valentine L.

Resolved, That this House approves the proposals of His Majesty's Government as respects the Twenty-year 5½ per cent. Gold Bonds payable on the first day of February, nineteen hundred and thirty-seven, as set out in Command Paper, No. 4388.

The remaining Orders were read, and postponed.