HC Deb 07 March 1933 vol 275 cc1097-109

Motion made, and Question proposed, That a Supplementary sum, not exceeding £166,570, be granted to His Majesty, to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1933, for sundry Dominion Services, including certain Grants in Aid, and for expenditure in connection with Ex-Service Men in the Irish Free State, and for a Grant in Aid to the Irish Free State in respect of Compensation to Transferred Officers.

9.25 p.m.


Happily this is in the same category as the last Order which went through, being non-contentious and non-controversial. This is a Supplementary Estimate which is entirely accounted for by a new subhead for a grant-in-aid for Newfoundland. The House will be well aware that following the economic difficulties of the world, our Dominions were naturally and obviously affected like everyone else, and no Dominion was more affected than the oldest of our Dominions, Newfoundland. For reasons into which I need not go, they found themselves in a very difficult position in 1931, and very wisely they sent to this country and said, "Here is a very serious state of affairs. We want your help and co-operation." We gave them the assistance of a financial adviser, but, in spite of all the recommendations and economies effected in 1931, they found themselves in December, 1932, entirely unable to meet their commitments which were due in January— commitments not only to this country, to themselves and Canada, but commit- ments outside the United Kingdom and the Empire.

The matter received our immediate attention and we took, shortly, this view, that whatever might be the reasons or causes, a default by one of our own Dominions would be a very bad thing, especially when we knew that it was due to circumstances over which they had no control. The Prime Minister of Canada, Mr. Bennett, happened to be in this country at the time. Canada was, and is, vitally interested in the position and the future of Newfoundland. It would naturally be affected by the default of a fellow-Dominion. It would be affected because of the close proximity and connection between Newfoundland and Canada, and also because of the financial interests between the two Dominions. As a result of the discussions that took place, the Prime Minister of Canada agreed with us that it would be a very bad thing at that time and for the reasons I have already given, for a default to take place. I think I am entitled to pay tribute to the Canadian Prime Minister and to the Canadian Government for so readily responding. The result was that we sought to arrive at an agreement whereby, jointly, we were prepared to meet the 'situation at once, and prevent a default that would have occurred in January.

But it would be unfair and unwise for me not to explain to the House that we were not only taking an unprecedented step but a step that naturally might have repercussions. The result was that we decided, not on our own, but after consultation and agreement with the Newfoundland Government, that we could not let the position merely rest there. It was agreed between Canada, Newfoundland and ourselves that we should appoint a Commission at once to proceed to Newfoundland to investigate the whole situation. The reason for that was that the next payment would be due in June, and the object of the Commission would be to review the situation on the spot in consultation with the Newfoundland Government and their representatives, take all the evidence necessary and report to us as to their findings on the whole situation so that the matter could be reviewed before the next payment was due in June. I have already explained to the House the appointment and personnel of that Commission. They are at this moment en route for Newfoundland. They will apply themselves immediately to the situation and their instructions are to report in time for us to consider the situation before June.

Therefore, in presenting this Estimate to the House I make no apology for the action of the Government. Everyone who gives a moment's consideration not only to the situation then but to the situation to-day will come to the conclusion that it would have been a very bad thing, it would have reflected against us and would not have tended either to the unity or strength of the British Commonwealth which we all desire, if in an emergency of this kind we had failed to respond to the appeal which was made. It was because of all those circumstances and for the reasons I have given that the Government arrived at this decision, and we now ask the House, by passing this Estimate, to confirm the action we took.

9.35 p.m.


I rise only for the purpose of asking one or two questions which, no doubt, the Secretary of State for Dominion Affairs, with his usual courtesy, will answer. I should like to ask, for how much is Canada responsible? I notice that the right hon. Gentleman stated that Canada had come into the agreement, but he did not say if Canada was taking any responsibility and if so, what was the sum for which she was responsible.




Thank you, I thought the answer would be in terms like that. The second point which I wish to raise is this. There is no use in trying to skate over the fact that there has been, among a great section of the population in Newfoundland, to put it no higher, grave uneasiness. Everybody knows that that uneasiness has found expression in many ways. There may have been cause for the uneasiness or there may not but we must all agree that in a colony, which is not very large, a thing like this would cause uneasiness. I presume that that is one of the reasons why a commission has been appointed— in order to report on this subject and help to put matters on a proper footing. Has this commission power to investigate what happened in the past and what caused a situation which almost amounts to default, if we along with Canada do not go to the rescue of Newfoundland Has the commission power to examine the past actions and conduct of those in control of Newfoundland affairs?

Far be it from me to claim to be an authority on Colonial matters. I am always content to be a student of those things but there is at least this to go upon—that among certain people there is a feeling that if things had been properly managed this question would not have arisen now and there would be no need to go to the rescue of New-foundland. Are there any limitations placed on the commission? Is it to find out where this default arose and what was the cause, whether any persons were directly responsible or whether it was merely the outcome of economic conditions and world trade conditions over which Newfoundland had no control? It may be that the latter is the case but it would be well for the right hon. Gentleman to tell us exactly what are the powers of the commission.

Naturally we do not object to helping Newfoundland or any other Dominion if such help is required but it is only natural that people at home should point out that they also need loans. I am not in favour of putting any barriers between this country and Newfoundland or indeed any part of the world but naturally people here say "we need help also." Yet people at home see the Government embarking on Austrian loans and Newfoundland loans. They see that the House of Commons passes these loans almost unchallenged while there is great need for assistance at home. I was recently in a mining area which is suffering acute distress, which is, indeed, in a pitiable state because the people there are working and yet have to put up with shocking conditions. People there ask how it is that the Government can find money for Austria and Newfoundland and for various other purposes yet when loans are asked for essential objects they are refused.

Only to-day I heard of a town which was asking for a loan to carry out certain desirable works, works to which no one could take exception, and one of the town councillors, a Conservative, writes to me to this effect: "How is it that this town is refused a loan of £25,000 for the improvement of the town, and yet the Government can make loans to Newfoundland and elsewhere?" I do not say that the Newfoundland loan will not come back. I think that anything which is given to another human being even in a foreign country comes back in some form or another. On the other hand these questions to which I have referred are raised in the people's minds by such proposals as this. The Government take credit for and indeed glory in making a loan of this kind and yet they also glory in refusing loans to towns within our own borders for equally estimable purposes. I hope therefore that the right hon. Gentleman will state what limitations if any have been placed on this Commission; whether they will have power to send for documents and witnesses and find out what has happened in the past and whether they will in due course present their report to this House and to the Canadian Parliament in order that Members may know the exact position.

9.43 p.m.


I do not like to offer opposition to the large-hearted generosity whether of the Secretary of State for Dominion Affairs or the hon. Member for Gorbals (Mr. Buchanan). We are all only too anxious to give money to everybody. At the same time we ought to see where we are going. This is only a matter of £166,000, a mere bagatelle, although, I think, there are not 166,000 people there. But this only represents a half year's interest. How long is it going on? Will the Government not be faced next June with precisely the same difficulty—the difficulty with which America, next door to Newfoundland, is being faced? How long is the generosity which has been lauded here going to continue? Is this to be a permanent additional charge on the British taxpayer of £332,000 a year?

This is a deadly precedent. What you have done for Newfoundland are you also going to do for the other Dominions? Australia is a heavier borrower than even Newfoundland. Then, there is Canada or, to come to a place where we have even greater responsibilities, there is Kenya. There are large loans, rising, I think, to £10,000,000. That is a Crown Colony governed from here. They raised the money on their own security. Are we liable? Are we to take a liability on our shoulders by this precedent which may run into hundreds of millions of pounds The real difficulty is this: Now that you have done this for the Newfoundland loan, everybody who has invested money in that loan immediately says: "Well, now the British Government is behind it, I can afford to stick to my loan." I do not know what the price was down at, but let us say 50, and it bounds up to 75, all on the strength of the Government guarantee. If this is to be a precedent for other Dominions as well, think of the effect, over all the loans of our Dominions, on the price at which those loans will stand. It is more than that. If we are to guarantee all loans raised by British Dominions, every one of them could have raised their money much cheaper than at the present time. The investor in those loans bought without the British guarantee. Are you now going to make him a present, a valuable financial present, which will increase the value of his security in some cases out of all reason?

Really, the right hon. Gentleman must have thought of all these questions before. It must have been present in his mind when this loan to Newfoundland came up, and I cannot help thinking that he and the Treasury have been jumped into this through the co-operation of Canada. Bennett was at it again. I mean to say that Mr. Bennett was naturally a moving spirit in this matter. But let me point out to the right hon. Gentleman that the positions of Canada and ourselves vis-a-vis any loan to Newfoundland are very different indeed. He knows that under a recent arbitration award Newfoundland has added to its territory an infinitely larger territory in Labrador. The arbitration award cut away a large part of what was previously considered to be Canadian territory and transferred it to Newfoundland. The Canadians are naturally anxious to get back that territory, which is always held to be rich in minerals, timber resources, and so on. They make an advance, fifty-fifty, of £333,000 in a year, but they have security.

I do not think that this is a good precedent to make in any case, and I hope we shall be told that it is not to be taken as a precedent of any kind, but I think it was unfortunate that we made it in connection with Newfoundland. The Government of Newfoundland has not been above criticism. It is not a very good advertisement of British rule, and I think the Secretary of State for Dominion Affairs ought to contemplate, as no doubt he will when his commission reports, the possibility of putting Newfoundland back in the position of a Crown Colony and administering it by this House.


I am afraid that would involve legislation.


It certainly would involve legislation, but we have to consider what the position of the Government will be when it is asked to find another £166,000 only three months hence. How much longer are we to go on paying? If we have control of the taxation and of the expenditure of a place, we can afford to lend money there, but we cannot afford to lend money to Newfoundland if the administration of that Colony by its politicians is to continue in future as in the past. Canada can. They have security. We cannot. I think the House should consider very carefully the whole principle of this idea of guaranteeing loans that have been raised by our Dominions. It is presenting money to the bondholders in the capital appreciation of the value of their bonds, and it is a liability upon the taxpayers of this country which this country is really unable to meet.

9.50 p.m.


I agree that we must be careful in lending money to anyone, but it is not right to call this a guarantee. It is a Grant-in-aid, and I think it is right and proper. This is a, time when we are suffering in all parts of the world, and if we are able, by nursing certain debtors who are in distress, to save what we have already lent, that is surely the part of wisdom rather than of recklessness. This is a Grant-in-aid to avoid default.


To pay to the moneylenders.


No, but to help Newfoundland to maintain its credit. If other people have already lent considerable sums to Newfoundland and other parts of the British Dominions, is it not wise finance to nurse these people, who in the present depression need to be brought back to solvency? Does not that benefit every class, whether the capitalist or the working class? If we suffer great losses all over the Empire, will not all classes be affected? I think this is a wise measure, and it has been defended in moderate language by the Secretary of State for the Dominions. I see it is stated that the terms of the loan and replacement of the advance will be determined in the light of the report of the commission which is about to visit Newfoundland. Might I suggest to the right hon. Gentleman that it would be very wise—because I agree with my right hon. and gallant Friend opposite that we should not be reckless in making advances to anyone without provision for repayment—that there should be a very stringent sinking fund provided? It would be quite in order for us to instruct the right hon. Gentleman and for him to instruct this commission that there should be a very stringent sinking fund, so that my right hon. Friend would be assured that the money will be repaid.


How about Turkey?


We are discussing Newfoundland at the moment. I hope my right hon. Friend will bear that in mind. I wish him well and hope the money will be well spent.


Is the right hon. Gentleman not going to reply?

9.34 p.m.


I will answer the questions submitted to me by my hon. Friend the Member for Gorbals (Mr. Buchanan) and others. There is no connection whatever between the situation arising out of our action and the dispute which took place 12 months ago in Newfoundland. Last year the Government were asked to intervene, and the dispute to which the hon. Member referred took place nearly 12 months ago. In any case, I assure the hon. Member that the commission are free to investigate the whole circumstances responsible for the present financial position and to make recommendations. The hon. Member then asked what were the real causes that brought about this loan. There is a confusion, for this is not a loan in the sense in which it has been described. It was an action on our part to enable Newfoundland to meet their obligations and interest under a loan. The reason is simple. There are two primary industries in Newfoundland—cod liver oil and iron ore. The depression in the rest of the world found Newfoundland in the position that they were unable to sell the ore which bad found employment for large numbers of their people. That was aggravated by the depression which also hit their other industry. In all fairness to the people of Newfoundland, I am able to say from all the information I have that no body of people has struggled harder than these people under very difficult circumstances. My right hon. and gallant Friend the Member for Newcastle-under-Lyme (Colonel Wedgwood) said that in his view Newfoundland ought to revert to a Crown colony—


I stopped the right hon. and gallant Gentleman discussing that question, because it cannot be discussed in Committee of Supply.


I was only going to observe that I could not answer my right hon. and gallant Friend's question, for I did not want him to feel that I was discourteous by not referring to it. In reply to another question of my hon. Friend below the Gangway, the commission are entrusted with the responsibility of investigating not only the whole circumstances, but what in their view ought to be the future position. In answer to my right hon. and gallant Friend the Member for Newcastle-under-Lyme, I assure him straight away that this must not be taken as a precedent. I want to make it clear that if it were assumed for a moment that the action which we took in the circumstances which I have already described implied an obligation to meet similar circumstances in any other Dominion, it would be a position which we could not for a moment undertake. I give that assurance right away. I also assure the House that the position will be considered in the light of the circumstances which arise from the commission's investigations. It is not true to say that the position of Labrador is in any way prejudiced. The commission are not instructed to look at the position of Labrador or of Canada in relation to Labrador. They are instructed to investigate the whole circumstances and report to the Government, and I am sure that the House on reflection will agree that, faced as we were in December with this crisis, and a situation which in the circumstances would have proclaimed to the world that for the first time one of the oldest of our Dominions had defaulted, there would have been many Members in the House who would have asked, "What steps did you take to meet the situation?" We took the only steps open to us to meet the situation. It is not to be taken as a precedent in any way, I hope that it will never be necessary to repeat it, and that as a result of the investigation of the commission we will reach a stage that will be satisfactory to everybody.

10.0 p.m.


The statement of the right hon. Gentleman is a very adequate one. He assures us that this will not be taken as a precedent for other parts of the British- Dominions. I want his definite assurance that, should the result of the investigation about to take place show that the position of Newfoundland in December, 1933, was no better than it was in December, 1932, we shall not be asked to continue this for another year.


I give the hon. Gentleman the assurance right away that when the report of the Commission is received and has been considered by the Government, the House will have an opportunity of seeing the recommendations and will be able to judge then what ought to be done in the circumstances.


That is certainly very satisfactory. The only other thing is that I hope the right hon. Gentleman understood, and meant us to understand, that we have not committed ourselves in the survey of the situation as it will be put to us in the report. I do not follow the markets in the way that the right hon. Gentleman does, but I can see no reason to expect that the cod liver oil market in 1933 will be much better 'than it was in 1932.


If it is castor oil, it will be.


The right hon. Gentleman is thinking of a different part of the Dominions. I do not know anything that is likely to make Newfoundland's iron ore a more marketable commodity in 1933 than it was in 1932. Therefore, I do not want to be called upon next year at this time to repeat the £160,000 grant to Newfoundland. I am told that it is £320,000. I am afraid, therefore, that I shall have to make a speech. I understand that the total payment was £600,000, half to be borne by Canada and a similar amount by this country.


That is not true. It would be true if a similar circumstance arose in June, but I explained clearly to the House that I expected to receive the report before June, and therefore the £160,000 addition need not arise until then. I explained that to the hon. Member for Gorbals, and I thought that his Leader understood it.


I have had the opportunity of consulting with my associates. We work rather as a Soviet than as a Cabinet. I thought I understood fairly well, but the right hon. Gentleman now lets me understand that we must make another decision on this matter before June. Is it his attitude that we as a country are not going to pay any more to keep up Newfoundland's financial reputation in the eyes of the world, that if in June they are unable to meet charges which they have undertaken to meet Newfoundland's external debt will just have to flop? Do I understand that that is the position? It is no good the right hon. Gentleman assuring the right hon. Gentleman above the Gangway that this is not to form a precedent. If Newfoundland is to be allowed to flop financially in June it seems to me that it would have been better to let her go now. I am inclined to think this commitment was entered into in a very lighthearted way. All of us know the generous and sporting nature of the Dominions Secretary. We know that he is always ready to do a kindly act, always ready to take a sporting risk, and I think that in this matter he has committed us very much in that spirit. He has done a generous act which is a very, very sporting risk indeed, and he knows from long experi- ence that the losers crop up more frequently than the winners.

The final point I wish to make is this. It seems to me that his generosity of spirit towards the Dominions increases with the distance that they are away from our own shores. The further away they are and the less valuable properties they are the more he is concerned to maintain their reputation in the eyes of the world. Had he adopted the same spirit of generosity towards our nearest Dominion as he is adopting towards this one I, for one, would have been much more ready to give him ungrudgingly a free hand to help this colony to maintain itself and carry itself through its difficulties.

Resolution to be reported upon Thursday; Committee to sit again Tomorrow.