HC Deb 14 June 1933 vol 279 cc283-93

Motion made, and Question proposed, "That this House do now adjourn."—[Captain Margesson.]

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

I feel that the House will almost expect me to say that I am not in a position to make any statement, but I am very happy to inform the House that there need be no repetition to-night of the incidents of yesterday. I am now able to give them all the information in my possession. I should like to take this opportunity of thanking the House, all sections of it, for the patience and forbearance which they showed yesterday in circumstances which I must admit were extremely trying.

I have repeatedly been asked in the course of the last few weeks what were the intentions of His Majesty's Government with regard to the instalment of the American War Debt falling due tomorrow. It was not possible for me to answer those questions before the Recess, for the simple reason that conversations upon the subject were in progress in Washington but had not yet reached a conclusion. His Majesty's Government, however, have been anxious that the House should have the earliest information possible on the subject, and it was accordingly arranged that I should make a statement yesterday, when it was expected that a definite decision could be announced. It was, however, as the House will realise, essential that the announcements in London and Washington should be synchronised, and it was not found possible to provide for this until the present moment. I hope that with this explanation hon. Members will forgive me for the inconvenience which has been caused to them.

The House will remember that the last instalment of the debt due on the 15th December was the subject of an exchange of Notes between ourselves and the American Government. In our Note of 11th December last we set out at some length our conviction that the continued payment of these inter-Governmental obligations was a fatal barrier to the recovery of the world. Our standpoint on this matter was reinforced by the Preparatory Committee for the World Conference, which, at the outset of their report, pointed out that the problem of inter-Governmental indebtedness had not been included because it lay outside their terms of reference. The committee went on to say: In our opinion, however, it is essential that this question shall be settled and that the settlement shall relieve the world of further anxiety concerning the disturbing effects of such payments upon the financial, economic and currency stability. Until there is such a settlement, or the definite prospect of such a settlement, these debts will remain an insuperable barrier to economic and financial reconstruction. We therefore attach the greatest importance to the early resumption and successful conclusion of negotiations upon this problem. We had hoped that the discussions with America last year might have led to some arrangement which would have avoided the necessity for the payment of 15th December. We had, however, to take account of the political situation in the United States. The Administration had been defeated at the elections and was carrying on without being able to exercise effective authority until the new President took office. We were, however, informed that the United States Government would be prepared to review the whole situation with us without loss of time, and we were assured that the prospects of a satisfactory approach to the whole question would be greatly increased by payment on the 15th December. In these circumstances, we felt that the right course was to allow time for negotiations by making payment on that date. But we explained in our Note of the 11th December that this payment was not to be regarded as a resumption of the annual payments contemplated by the existing Agreement, and we announced our intention of treating it as a capital payment of which account should be taken in any final settlement. We added that the procedure adopted must obviously be exceptional and abnormal and we urged upon the United States Government the importance of an early exchange of views with the object of concluding the proposed discussion before the 15th June next in order to obviate the risk of a general breakdown of existing inter-Governmental agreements. Negotiations were accordingly started, even before the new Administration was inaugurated, and have been pursued ever since. On the occasion of the Prime Minister's visit to Washington, he and the President made preliminary explorations of the situation. As stated in the communique issued at the time: with the most friendly spirit progress is being made. After the Prime Minister's departure these conversations can well continue in London and Washington. The visit of the Prime Minister to Washington established an atmosphere of understanding and good will on both sides which has been of the utmost value throughout all our subsequent conversations. But, as was made clear at the time, the Prime Minister's journey was undertaken only for the purpose of elucidating the position, and indeed it was not possible in the time at his disposal to arrive at a final conclusion even if he had desired to do so. In these circumstances His Majesty's Government hoped that it would have been possible for the Government of the United States to accede to their request that the payment of the June instalment should be postponed pending the discussion of War Debts as a whole. They maintained this hope up to a very recent date, but in the end it became clear that it would not be realised and they had, therefore, to decide upon their course of action in the circumstances as they found them.

In considering their decision, the Government felt that they must have regard to its effects not only upon this country but upon the whole world. The Conference which is now sitting in South Kensington is recognised by all as of the most momentous character, and delegate after delegate has already urged the disastrous consequences which would ensue if it failed and the necessity for a sense of confidence if it is to succeed. We had already made a payment in December in the hope that it would pave the way to a settlement before another payment became due. If we paid again there would appear to be no reason why we should not continue to be called upon to make payments of a similar kind indefinitely. But it seemed to us impossible to contemplate that this country should continue to make payments of this magnitude while under the Lausanne provisional agreements we had suspended the corresponding claims upon our own debtors. Further payment would, therefore, have necessitated putting an end to the Lausanne agreements, reopening all the vexed questions of Reparations and War Debts which were there provisionally settled and plunging the world once more into the condition of uncertainty and despair from which it was rescued last year. These considerations appeared to the Government to be of such fundamental importance as to outweigh all others.

On the other hand, we felt the strongest objection to any course which would have placed us in the position of having repudiated our obligations. In our view, the proper way to treat the June instalment was to consider it as merged in the body of the debt which we (had already discussed informally and as to which we were prepared to enter upon formal negotiations as soon as they could be arranged. We therefore decided that in order to make perfectly clear our view that the suspension of the June payment did not and was not intended to prejudice the ultimate settlement, we would propose to make a payment of 10 million dollars as an acknowledgement of the debt, pending a final settlement. I am happy to say that the President, while formally taking note of our communication, has issued a statement which shows that he has appreciated the spirit in which our proposal was made, and he has expressed himself in terms which I propose to read to the House and which will I am sure give as much satisfaction to the House as they have to His Majesty's Government. After remarking that: Such payment does not of course in any sense prejudice the freedom of either Government in any subsequent discussion of the entire debt question which will take account of this and other debt payments, he adds in a later passage: It seems the part of fairness and wisdom to postpone formal representations on the debt subject until later. Meanwhile the World Economic Conference is beginning under most favourable auspices, and it is vitally necessary that during the opening days of the Conference difficult and possibly protracted discussion of the debt be avoided. In a spirit of co-operation I have as executive noted the representations of the British Government with respect to the payment of the June 15th instalment inasmuch as the payment made is accompanied by a clear acknowledgement of the debt itself. In view of those representations, and of the payment, I have no personal hesitation in saying that I do not characterise the resultant situation as a default. I need only add that we propose to make this payment in silver, which we have been informed by the United States Government will be accepted at 50 cents a fine ounce. The Government have acquired this silver from the Government of India.

The various documents exchanged between the two Governments have been printed and will be available in the Vote Office this evening. From them it will be seen that the Government have asked when and where the formal negotiations about the whole debt question can be begun and that the President has suggested that they should be taken up in Washington as soon as convenient. I trust the House will feel satisfied, as we on this bench feel satisfied, that this very difficult and delicate problem has been adjusted in a manner which is of good augury for the success of the World Conference, and which may prove to be the first step towards the complete and final settlement of the whole question of War debts.

10.13 p.m.


I am sure that the whole House will be glad that the right hon. Gentleman has at last been able to relieve our curiosity, and will sympathise with him in his embarrassment of yesterday. I am sure the House will also desire to congratulate President Roosevelt upon the realism with which he has faced this situation, whilst we on these benches can adopt the somewhat unaccustomed role of congratulating His Majesty's Government on having arrived at a solution of this immediate payment which is satisfactory to this country and to President Roosevelt, and particularly to the right hon. Member for Hillhead (Sir R. Home). We hope that the negotiations will be entered upon with as little delay as possible and that, in view of the urgent necessity for the settlement, not only of this debt question, but of all international indebtedness, the World Economic Conference will be able to set up some means by which this matter of default by other States can be dealt with. If we are to have recurring crises in all debtor countries such as the crisis through which we have been passing during the last 48 hours, they will only make the economic recovery of the world even more impossible than it is to-day. In view of the settlement which has been announced, I do not think it would be profitable to attempt to review in any way the debt situation with America, and I will content myself with saying that we hope the right hon. Gentleman and the President of the United States will be able to arrive at a speedy and equitable solution of this problem.

10.15 p.m.


We on these benches desire to associate ourselves with what has already been said in congratulation to the right hon. Gentleman the Chancellor of the Exchequer on the settlement which has been reached, and also in expressing our deep appreciation of the action of the President of the United States in acceding to an arrangement which is a profound relief to all of us. There were in this matter three factors which have been almost equally predominant from the beginning the first a sense, deeply felt in this House and throughout the country, of the extreme unfairness of the financial situation in which this country was left at the failure of all our debtors to pay their debts and the requirement from our creditors that the whole of our debts should be paid in full. If the House has said little on this matter hitherto it was not because feeling was not deep, but because we felt that Debate would not be helpful and that representations would not assist the ultimate settlement of these delicate negotiations. Equally, at the same time, all of us felt that if it could by any possibility be avoided there ought to be no interference with the full friendliness and cordiality of Anglo-American relations—cordiality and friendliness which must always be the very foundation stone of our policy. Particularly is that cordiality and friendship essential in these days, when both the Disarmament Conference and the World Economic Conference are in session.

Thirdly, I think there is among the Members of this House a feeling that it would have been a most lamentable thing if we had been forced into a position of repudiation. We have a very strong feeling of the obligation that rests upon this country to fulfil its bond. That an Englishman's word is his bond has always been a most proud maxim in this country, and definitely to have repudiated a financial obligation at a moment when we told other countries of the importance of maintaining the sacredness of their undertakings, would have been a course which would have been a matter of profound regret. It is, therefore, an extreme relief to all of us that these various factors have been reconciled, that there is no repudiation, that Anglo-American friendship is fully maintained, and that at the same time the onerous financial burden upon us is to be relieved. If at one and the same time we can congratulate those to whom speech in this House is always silvern and can relieve the Indian Government of the accumulations of silver which clog their Treasury, and pay our debt to America in a coinage which is welcomed there by the advocates of the remonetisation of silver, then indeed the climax is put on the satisfactory end of those arrangements. The whole House would wish to join in congratulating the Government, and particularly the Chancellor of the Exchequer, on the successful outcome of a most difficult negotiation.

10.19 p.m.


Although my right hon. Friend has gently insinuated that on this occasion my silence might be golden, I venture for a moment to ask the indulgence of the House for one or two reflections upon the settlement which the Chancellor of the Exchequer has just announced. I am sure we are all much gratified by the result which has been achieved, and I for one congratulate the Government upon the patience and ingenuity through which they have arrived at a settlement so satisfactory to all of us, and I hope also to those on the other side of the Atlantic. There are many of us who I am sure are very greatly relieved that we have evaded the embarrassment of default. I say that not merely on the high moral ground to which my right hon. Friend the Member for Darwen (Sir H. Samuel) has referred, or on account of the traditions of this country in the past, but also upon a more sordid consideration. We cannot refuse to recognise that default is apt to be contagious. We are after all the greatest creditor nation in the world with a great number of debtors who would be delighted to take advantage of our example to fail in their obligations to us. Accordingly, from a point of view which is purely selfish, I am sure it is a good thing that we have been enabled to evade that trouble.

I am glad, of course, that the settlement has taken the shape which the Chancellor of the Exchequer has described, not merely because it represents a view which I have ventured to put before the House from time to time, and as recently as a month ago, but also because it represents a considerable alleviation in the burden of our obligations at the present time. One has to recollect that America is prepared to take the silver which we propose to transfer to them at 50 cents to the ounce, and I am perfectly certain that the Chancellor of the Exchequer has been able to acquire the silver with which he proposes to pay our debt at a much less price than that—that is if those who have been acting for him have been at all ingenious in their purchases. Accordingly, the amount which we are about to pay has been genuinely mitigated. By the generosity of the American President the amount has been mitigated to some extent and that is a consideration which is perhaps worth reference. May I add one other reflection? We have been too apt to forget in this House the conditions in which the American public have been for some time conducting their consideration of our debt question. We have not, I am sure, always remembered the difficulties of their position and the trouble which their statesmen had in recommending any cancellation of debt to their people. I do not propose to dwell upon that subject any further except to say that in looking to the future the greatest help we can give towards a solution of this great problem is co-operation with the United States in that policy by which the welfare of their country may be retrieved and their sense of wellbeing may be restored.

10.24 p.m.


I would like to express my sincere congratulations to my right hon. Friend the Chancellor of the Exchequer and to His Majesty's Government as one who has laboured at intervals over many years in this very difficult controversial field on the splendid, albeit not final solution which they have found themselves in a position to announce this evening. I would add and it is the only other sentence I intend to utter, that I wish also to express my admiration for the great, wise, generous, comprehending, far-seeing words in which the President of the United States has given a message of peace and hope to all the nations.

10.25 p.m.


In circumstances of such complete harmony as exists in this House to-night it would become me ill to say any word of discord, although my experience in this House has always taught me that the occasions when this House is most unanimous are the occasions when one should be examining the proposals most closely. I do not propose to enter into that examination now. I assume that opportunity will be provided at some subsequent stage, when the documents are in front of us and we have had time to read them in cold print, for the House, if it so desires, going into the whole matter, but I think it is only right and proper that I should try to get for my own benefit, if not for the benefit of the House, the announcement that has been made to-night just precisely in its proper perspective.

If I am to understand the speeches of congratulation that have been made to the Chancellor of the Exchequer, an assumption is being made that the American Debt problem has now been settled for ever. [HON. MEMBERS: "No."] I am glad that that is appreciated, at least. Then am I wrong also in assuming that the House is congratulating the American President and the Chancellor of Britain on having discovered some new device for meeting this situation? If I understand the device correctly, it is the ordinary device by which the debtor who cannot pay goes to his creditor and says, "I am unable to pay my debt, but I am giving you something on account." [HON. MEMBERS: "No."] I find now that while I do not get more assent for that, the dissent is not quite so strong over that point as over the original proposition. What, I take it from the Chancellor's statement, Great Britain has obtained by these conversations is six months' time during which the question of this debt can be more fully discussed. While I do not know whether these six months are going to produce circumstances and opportunities which the last 15 or 16 years have not produced, I hope and trust that a settlement will be found in that period, but let me say this one last word.

It is my humble opinion, and I give it with all deliberation, that this whole question has been put in its wrong position in relation to world unemployment and world trade depression. The War Debt has only assumed the proportions that it has assumed to the problem because the world is depressed, because the trade of the world is depressed. The War Debt problem is not the cause of trade depression. If the nations of the world were prosperous, if the industries of the world were active, the debts that were incurred during the War would be insignificant, and the nations that owe the money today would either pay and think nothing of it or the nations that are owed the money could wipe out the debt and think nothing of it. I do not want to do less than to say that the Chancellor has gained for the nation six months more time to deal with this question, but I do not want to admit for one moment, or to make myself believe for one moment, that he has done more than gain those six more months.

Motion, by leave, withdrawn.