HC Deb 07 March 1935 vol 298 cc2155-264

"That a sum, not exceeding £162,826,000, be granted to His Majesty, on account, for or towards defraying the Charges for the following Civil and Revenue Departments (including Pensions, Education, Insurance, and other Grants, and Exchequer Contributions to Local Revenues) for the year ending on the 31st day of March, 1936, namely:" [For details of Vote on Account, see OFFICIAL REPORT, 4th March, 1935; cols. 1601–1604.]

Resolution read a Second time.

3.50 p.m.


On a point of Order. I understand that it is contemplated, upon the Vote on Account, to discuss speculation in certain commodities, among which pepper has already been mentioned. I wish to know under which Ministry the control of this commodity comes, and to what extent it is in order to discuss speculation in a commodity like pepper, for which no Minister is responsible.


I should like to hear the discussion before I say whether it is in order or not.

3.51 p.m.


I beg to move to leave out "£162,825,000" and to insert "£162,824,900."

I am moving this reduction in order to draw attention to what we regard as a matter of great public importance, and to ask for an undertaking from the Government. We on this side of the House are not certain whether it is the President of the Board of Trade or some other Minister who is directly responsible in this matter, but it is one of sufficient importance to merit the close attention of every Member of the House. I make no apology for bringing it forward, and for laying before this High Court of Parliament the main features of certain disturbing transactions in the City connected with the buying and selling of certain commodities. Speculations in pepper, shellac and tin which have been partly made known to the public have occasioned very great concern indeed in the City and in all quarters of the country. This story in three parts, with particulars of these transactions, must partake of the character of the ingredients themselves. There will be spicy elements, there will be sticky episodes and glittering pages of reckless exploits and ambitious attempts at conquest. These matters first became known in the City itself in the form of rumour and head shakings and whispered communications among people who were on the scene. The complaints grew in volume and became more insistent, and ultimately found echo in this House. Questions to Ministers are not always due to idle curiosity on the part of Members. I do not know this City and its ways. I have great respect for the man who works hard in any useful business, but I have an equal aversion to the person who preys upon legitimate industry by gambling. We heard about this gamble in commodities when we came back after the January Recess, and I, with my sensitiveness to this kind of thing, readily responded to a suggestion made to me that I should put a question seeking information in this House.

A question was put to the Chancellor of the Exchequer on 7th February. Later I received several communications, and came to know the effect of these speculations, from a number of solid, respectable firms in the City. A large number of companies were very heavily involved, and were anxiously waiting to learn whether anything could possibly be done to avoid their liquidation and the general disaster which threatened them in those days. Their worst fears materialised in a day or two. It was on 9th February, I think, when it became known that certain firms had been unable to meet their commitments and other firms involved with them were brought to default and were threatened with liquidation. I think they were actually "posted" on 9th February. There was great public concern, and the Press announcements were highly sensational. The names of important personages were openly connected with the speculation. The sensation was not confined to this country. The foreign Press readily took up the accounts published in the Press of this country, and an impression was created that an English Stavisky affair had been discovered. That was exceedingly bad for the reputation of this country abroad. Hon. Members cannot discharge themselves from some responsibility, owing to the reluctance shown by the Government in meeting the inquiries which were made in the House in an effort to clear the matter up. A large number of questions were directed to Ministers with the object of obtaining a fuller inquiry and a frank statement of the recent history of these transactions, but the Government refused those requests, and we have waited to this day for the reply to the application that was made.

I feel sure there is no one in this country who believes that anything resembling the wretched Stavisky business has taken place in this country, but there is very great apprehension that things are not as they should be, and we know, in fact, that there was an attempt to buy up all available supplies of pepper and shellac and to operate a tin pool for private profit by certain individuals and by companies under their direction. Take the case of pepper. We are the largest consumers of pepper in the world. One-half of the white pepper is consumed in this country. In the last three years we have bought the following quantities: In 1932 we purchased 92,873 cwts. of pepper; in 1933, 140,873 cwts.; and in 1934, 365,922 cwts. The values were: In 1932, £296,427; in 1934, £1,654,190. There was abnormal buying of this commodity in 1934. We bought four times as much as we did two years earlier and paid six times the price. Our stocks had multiplied ten times in 1934 as compared with 1932. We have in this country at the present time enough pepper to supply the world for three years. The corner which it was intended to develop in this commodity failed because those who planned the corner had not realised the enormous yield of the pepper harvest all over the world, and had made a thoroughly inadequate estimate of the stocks of black pepper in the markets. The attempt to form a corner failed, and we are now left with the dèbâcle in Mincing Lane and the pepper market.

This House is concerned with the object of this corner. I have been told in this House that it is not an improper thing to try to obtain a corner in commodities, that it is quite a usual thing in business and that there is nothing improper if you can succeed. Mr. Bishirgian, one of the principal men concerned, said in an inter view in the days of his great popularity, immediately following the crash, which was published, I think, in the "Daily Mail," that it was a proper thing to do, and that there was nothing wrong in the attempt that he and other people had made. He said that the small addition of ½d. per ounce in the price of pepper would not have brought hardship to one housewife in this country. I have made a computation, and find that ½d. an ounce is equal to 8d. per 1b., or £74 13s. 4d. a ton. If Mr. Bishirgian and others had succeeded in buying up 20,000 tons of pepper, as had been intended, the £d. an ounce would have meant an additional profit to Mr. Bishirgian and his followers of no less than £1,500,000. One halfpenny an ounce on the housewife's pepper is not a very exhorbitant charge, but £1,500,000 profit is not to be sneezed at. This abnormal buying and selling, fortunately, was not successful, but we are concerned with the damaging effect upon innocent business people in the City and upon the credit of this country which is very much involved and very much damaged by the reports we have had from time to time as to what has been taking place.

Then take the case of shellac, a relatively unimportant commodity, also an Eastern product grown mainly in India. We take 25 per cent, of the world's supply. We find that in 1932, 107,705 cases were purchased; in 1933, 170,044 cases; and in 1934, 439,517 cases. The value has gone up from £319,178 in 1932 to £2,129,419 in 1934. In both pepper and shellac the value has risen in almost identical proportions. The quantity purchased has been multiplied four times, and the value has gone up by more than six times.

It is very important that the House and the country should know who are the people who have been engaged in buying pepper, and why they were indulging in this stupid—because it must be so described—and senseless speculation at the expense of the fair name of this country. Names have been mentioned, and must be mentioned in this House. They have been mentioned outside, they have appeared in newspapers both in this country and abroad, and there is no reason why we should not mention them here. One of the first results of the failure to obtain a complete monopoly was the failure of a firm called James and Shakespeare. They are the firm responsible for the main transactions to buy. Mr. Bishirgian's firm was one of the firms which became amalgamated with James and Shakespeare. This company was formed in September last year for the one purpose only of entering upon this speculation. I must shorten this because it would take too much time, but there were a number of companies which came together. There was a firm called Williams Henry, Limited. In Williams Henry the Midland Bank figures very largely, holding £49,000 of ordinary shares. The shareholders in James and Shakespeare include a number of companies and banks' nominees with personal holdings by Mr. Reginald McKenna, the Chairman of the Midland Bank, and Sir Hugo Cunliffe Owen, a director. These gentlemen are again joined on the directorate of Tobacco Investments, Limited, which is registered in the Isle of Man for purposes best known to gentlemen familiar with this kind of business; and on the directorate of Tobacco Securities Trust Company. Among the companies holding shares in James and Shakespeare are William Henry and Dean Finance, Limited. These companies are related and interlocked. Mr. Bishirgian, Mr. Howeson, the right hon. Reginald McKenna and Sir Hugo Cunliffe Owen are all in this group of companies.

I am told that the most remarkable position exists in the offices of some of these companies. They all live next door to each other, and shelter under the same roof, but they have different addresses. You can go through the front door in one street and out of the back door in another street. They are closely associated. Their principals are associated in business and associated by relatives in marriage, and by a number of intermediaries who have been engaged in carrying on the operations which we have before us to-day. The shellac and the pepper connection are very definitely established. I am sure the House will be fully satisfied before the Debate is over that there has been something which the House must condemn. Business methods have been devised which cannot—


I want to know what responsibility attaches to the Govern ment. If the hon. Member proposes that anything should be done, which would mean legislation, that would not be in order.


I am not asking for legislation, because I think that it is impossible in this Parliament, but I did hope that we should get an undertaking from the Government. I do ask that there should be an undertaking by the Government that they will grant a request for a public inquiry into all these things.


The hon. Member for Gower (Mr. D. Grenfell) in his interesting remarks has refened to certain companies, and it is well known that those companies are already being publicly investigated—[HON. MEMBERS: "No!"]—by the Official Receiver in one case. That being so, just for information I would like to know whether the hon. Member for Gower is entitled to discuss the affairs of that company at all?


I am not discussing their affairs in detail. I am giving a recital to the House of a chain of circumstances with which the House should be made familiar, and with which we have tried to make the House familiar in a variety of questions put to the Government.


Further to that point of Order. The hon. Member said that he did not discuss the affairs of a particular company which is already being handled by the Official Receiver. It is within the recollection of the House that the hon. Member did refer not only to that company, but to certain other subsidiaries. I would ask whether, in view of that company being in the hands of the Official Receiver, the hon. Member is entitled to discuss the company in this House, where they cannot defend themselves?


I have been listening very carefully to what the hon. Member for Gower (Mr. D. Grenfell) has been saying. With regard to the point of Order raised by the hon. and learned Member for Withington (Mr. Fleming), I have not heard anything he has said in debate contrary to order; but my question to him was with regard to another point altogether, namely, whether the Government had any responsibility in this matter.


I should have said it at the beginning probably, but I do now say we are seeking an undertaking from the Government, and we are pressing a demand or requesting the Government that they should institute a far wider inquiry than is possible under Section 182 of the Act of 1929. We are quite convinced that the inquiry into the affairs of one company which is now being made, and the manner in which the report is made public, does not meet the case, and it is because we desire a public inquiry of the most comprehensive character, which we believe to be necessary in the interests of the City itself and of the country, that I am bringing this matter forward to-day. I shall not refer in more particular to the speculation in pepper and shellac, but it is very well known that the people who have been dealing in pepper and shellac have also been dealing in tin at the same time, that the same group of people who have found it convenient to organise for the purchase of pepper have exchanged services in the manipulation of the tin pool. I know there is no possibility of cornering tin. The cases are not on all four at all. The right hon. Gentleman has been kind enough to give us in the White Paper very full information of the tin restrictions scheme. We also know something about the quantity of tin provided by the various tin-producing countries, and we know something also about prices to-day as compared with prices in the past; but there is a private pool of 8,000 tons of tin, and there is also a tin pool of 20,000 tons under restriction.

The SECRETARY of STATE for the COLONIES (Sir Philip Cunliffe-Lister)

I think the hon. Member is dealing with the pool, which was formed when the Labour Government were in power and in agreement with the Labour Government, which was to be released by various gradations when the price of tin reached £180 gold, because we were then on gold and not sterling. That pool is entirely exhausted, and the only Government pool which exists at the present moment is that of which I have given particulars both in the White Paper and in the House which is put up by four Governments, and I think comes out at 8,200 tons.


There is that pool, and we are not seeking to criticise today the operations of the tin restric tion scheme or any part played by His Majesty's Government directly in that scheme; but we do recognise that there is a danger to the consumers. I represent in this House, probably the largest number of tinplate workers in this country. In my constituency there is a large number of tinplate mills. We are large consumers of tin, and I would urge upon the Government and point out the danger of raising the price of tin too high, because if we do so, customers will resort to substitutes, and there is a great danger that aluminium and other substitutes may take its place. Let me quote the prices before this break in tin took place. The price of tin was then £229 a ton, or nearly twice as high as the price I can remember 25 and 30 years ago. The price just before the War was about £170 per ton. I am not finding fault with the scheme, but, even with the existence of the pool, prices are being maintained too high and at the expense of the industry.

Let me give the House a few figures to show the effect of these transactions. Tin is now nearly 2s. per 1b.; £225 per ton is almost exactly 2s. per lb. In the manufacture of tinplates a box containing one hundredweight of steel plates is coated with 1 1b. 12 ozs. of tin. That box of tinplates, embodying skill, labour and expensive tin is put on the market at 17s. 6d., which is about six times the value of the 1¾ lbs. of tin. The price is maintained above the natural level by the restriction, and the price of the tin represents 20 per cent, of the cost of the manufactured article. That is a very high proportion. It is well known in the trade that the price of tin can be reduced with advantage to the manufacturing industry. Every £5 reduction per ton in the wholesale price of tin means 1d. reduction in the cost of the box, and, if the tin were reduced to its pre-war level of £170 per ton, that would mean a reduction in the cost of producing tinplates of 1s. per box, and would result in a considerable strengthening of the trade in the face of substitutes and in competition with other metals. A good many people in this country believe that £170 is the right and normal level.


I believe the hon. Gentleman is speaking on behalf of his party. I should very much like to ask him a question, the answer to which may elucidate the position a little. He says that tin ought to be stabilised at £170 per ton; why did the Labour Government when they were in power enter into an agreement with a pool to get a price of £180 gold? It is only fair to the right hon. Gentleman to say that both Governments agreed that the scheme was necessary and desirable. The hon. Gentleman has dealt with the question of price, and I suggest we ought to be told why he now says that the price ought to be £170?


The answer to that question is quite simple. The right hon. Gentleman knows that prior to the establishment of the restriction scheme the price of tin had dropped as low as £136, and, because of that low level the late Labour Government were prepared to accept a scheme of quota production and restriction of output. The right hon. Gentleman will not expect me to answer for everything that was done in those days. My point is as to whether the price could be reduced with advantage, and that the operation of the pool has not reduced the price, with resulting disadvantage to the consumers, but has kept the price above the right level.

I shall pass away from the question of tin. The close connection of tin with shellac and pepper is not an accident. There has been a kind of conspiracy against the consumers, not only of tin but of pepper and shellac, for the gaining of abnormally high profit for a few individuals. We believe that the circumstances of that association should be more fully examined. These principals whom I have mentioned, and their agents and underlings, are shining lights of financial probity, joined with obscure and shady associates in a miserable game of speculation, dragging behind them, into the field of gambling and high stakes, people who have always done their business according to the demands of the market from time to time. The consequences have been disastrous to many firms. Their employès have had their livelihood placed in jeopardy and Mincing Lane market is lifeless and deserted. There is a three or four years' stock of pepper and a tenfold increase in the stocks of shellac; the producers of these commodities will seek vainly for a market here for next season's harvest.

These methods are ruinous to the producer and the traders, and even worse to this country as a great centre of finance. We claim credit for honest dealing, and our institutions are based on confidence at home and confidence abroad. The right hon. Gentleman the President of the Board of Trade has said on more than one occasion that if a Labour Government came into office he would not trust our own financial institutions to serve the people of this country. What has he to say in these circumstances? Is he content to allow dubious practices to extend further and further into finance and commerce? Are the Government willing that directors of joint stock banks should be engaged in secret enterprises to comer commodities and to hazard the lives of business firms whom they profess to serve with money and advice? The national credit has suffered from these events.

During the course of the day we shall discuss the names of men prominent in these transactions. Those names are being discussed outside. There is a need for further inquiry into the events of the past six or nine months to which I have called attention. A Board of Trade inquiry can never be fully satisfactory. We have had the limits of the inquiry defined by the right hon. Gentleman the President of the Board of Trade and by his able Parliamentary Secretary in this House, but we are not satisfied and the public outside are not satisfied with the scope of the inquiry and the nature of the publicity to be afforded when the inquiry has been completed. I make this demand on behalf of the party, that the public inquiry should be held as soon as possible and that the report should be made to this House and to the country. We believe that the report will disclose that certain people have been guilty of practices detrimental to the credit and honour of this country and that reassurance can only come from an inquiry of this kind.

4.25 p.m.


It is a very good thing that opportunity has been afforded this afternoon to discuss the matter which has been dealt with by the hon. Member for Gower (Mr. D. Grenfell). There is no doubt that public opinion has been greatly disturbed, and indeed angered, at the disreputable events which have taken place, owing to the incursion of marauders into the organised markets engaged in conducting the movements of products from the producers to the consumers. It is highly desirable that an inquiry should take place and it is probably within the powers of the President of the Board of Trade to obtain such information through the processes which are available to him as will satisfy public opinion, but, if it is not possible, it is desirable that he should take whatever steps may be necessary to allay suspicion and to restore confidence by putting the search light full on to these transactions, however intricate they may be. Confidence has been disturbed not only by the nature of the transactions but owing to the fact that the names of persons occupying positions of authority and trust in this country have been associated with the transaction. I would venture to indicate one direction in which an inquiry should proceed within the powers which are available, one possible remedy which is available and two or three matters in which probably the public conscience will require to be satisfied before it allows these matters to pass from its cognisance.

We are dealing with an extraordinarily difficult matter. This is a form of social disease which has prevailed in all ages. About 200 years ago exactly the same kind of thing was expressing itself in another way. There arose people of predatory disposition and rapacious in character who chartered when they could not steal a ship. They sailed the high seas, and most of us in our younger days were familiar with their names. Paul Jones, Captain Trent, Long John Silver and Billy Bones sailed after spice and pepper, and when they saw the ships and the islands where these things r-ere to be found, they seized the products, and if the transactions did not go through to their satisfaction the people who were in control walked the plank. Public opinion has prevented activities of that kind, but nevertheless there are marauders with the same predatory instincts and the same—


I think the hon. Member referred to Paul Jones. The late Paul Jones should not be included in the category of pirates. He happened to belong to my part of the country and he certainly conducted a raid; but it is most undesirable that an action on his part should be misrepresented, because he was a duly authenticated member of a navy, at the time when he carried out the raid.


I am willing to withdraw the name of Paul Jones from the distinguished list of gentlemen who carried out those anti-social practices in those days and who were the predecessors, in the attitude of mind, of those who are now capable of the activities to which we are directing our attention this afternoon. An inquiry, as indicated by the hon. Member for Gower, is called for in the public interest, and will be welcomed by everybody concerned. If in their operations these people only burned their own fingers it would be a matter of little consequence, but in the course of these transactions they not only inflict injury upon the producer—for I fear they will in the long run have inflicted injury on the producers of shellac by the disturbance of the course of the market and the production of wide and erratic movements—but they interfere with the livelihood of traders and the beneficial processes of organised trade, disturbing the markets and causing injury and suffering, not only to consumers, but to a very wide circle of people. No one would welcome an inquiry more than those who are engaged in making their livelihood in these organised markets.

Therefore, I would suggest to the President of the Board of Trade that, in the course of his consideration of these matters, he should see whether it is not possible to institute, in the particular markets concerned, those processes of sale which have given complete satisfaction and safeguards in the case of the corn exchange, the cotton market, and other well recognised and organised markets in this and other countries. I do not know whether that would be sufficient to keep the marauders at bay, but I think it might be. I am not clear that in this particular set of transactions it would have avoided disaster, because, while these speculators might have been successful in meeting the differences from day to day, clearly they could never have hoped to find the money for the final settlement for the immense amounts of products which they had engaged to take up.

I think that this Committee and the public will require to have their anxiety allayed in one particular respect, and that is that these transactions were not carried on with the cognisance, and still less with the connivance, of any great banking institution. For my own part I am satisfied that that is not the case. An hon. Member asks, "Why?" I can only speak of what comes within the range of my own knowledge, and my experience and knowledge teach me this, that if there had been any bank connected with or conniving at any of these transactions, they would not have gone down in the way that they did, because there would have been ample resources to take up the shellac, pepper, or whatever it might be, when it came in boatload after boat-load into the Port of London. We all know that, when that stuff came forward, the funds to take it up were not available, and those who had been engaged in speculating were separated by the banks from those who had been conducting genuine operations. The banks would not lift a finger to help anyone who had taken part in these devastating speculative transactions. That is one of the points on which public opinion in this country will require to be satisfied.

Also, I think, public opinion in this country will require to be satisfied, not only that the was no official connection, but that the names of those in positions of trust and responsibility were not employed in any way to seek an extension of credit or to encourage investments which otherwise would not have been made but for the use, possibly quite unknown to them, that was made of their names and of the positions that they hold. We always hope, when these transactions come to light, that they will be the last of their kind. Undoubtedly they deal a heavy blow at the commercial credit of this country and at that good will which is such an important element in commercial transactions, not only at home, but also abroad.

The hon. Member for Gower devoted part of his remarks to the question of tin control. I think it is quite clear that there have been connections between the tin control and some of these other unfortunate circumstances. I think it is quite clear that, when the circumstances arose which led to the formation of the tin control, there were only two courses open to those concerned with the tin industry and the Governments who were naturally concerned to do what they could to protect that industry. One was to let the thing go on, on a policy of pure laissez faire—to leave it to the processes of bankruptcy and elimination of those who could not stand the strain, processes which in all probability would have been followed in due course by a rocketing of the prices of tin, to the discomfiture of the consumer—or to adopt some policy of the kind which has been adopted, and which, so far as my information goes, has worked tolerably well, which at all events has not led to discontent or serious complaint on the part of the consumer, and has secured, I am not able to say whether it is a fair price, but a living price to those engaged in different quarters of the Empire in producing this product. But, if controls of this kind are to be tolerated by the public and are to have the public confidence, it is essential that there should be no suspicion at all that anybody connected with the international tin control, or with the buffer pool, or with any part of the organisation, should be associated, or even be said to be associated, with any group operating in tin, or pepper, or shellac, or anything else. It must be an organisation which, having the prestige of Government behind it, must be in every regard above suspicion.

In the course of the unfortunate events which have been disturbing the whole country, it has been alleged that persons associated with James and Shakespeare have had personal connection, and intimate connection, with the management of the tin control. That is a point on which I think the House will require some information, and an assurance that nothing of the kind has been taking place, or, if it should have occurred, that it can be dismissed as a possibility of the future. I shall probably only be repeating what is common, knowledge to everyone in this House who has given his mind to it when I say that the origin of the whole of these unfortunate speculations was profits made out of the manipulation of tin. There may be no truth in the statement, and, if that is the case, it is in the public interest that it should be cleared up and that that particular statement should be nailed to the counter.

The hon. Member for Glower stated that the firm of James and Shakespeare had been floated for the purpose of carrying out these transactions, and no other. I have myself looked into the circumstances of the formation of that company and its relations with these transactions, and I have come to precisely the same conclusion as the hon. Member. I do not know whether the President of the Board of Trade has satisfied himself as to the nature and character of that flotation, but it is quite clear, I think, to those who have given their minds to this unfortunate circumstance, that these enormous transactions could not have been carried out by the unaided credit of this firm of James and Shakespeare, and the statement has been made that £2,000,000 was by some means extracted from the tin market and subsequently applied to the purchase of 1,750,000 pounds sterling of pepper and an accumulation, from 1933 onwards, of some 300,000 cases of shellac—some four or five years' supply—on the docksides of London. That could only have been carried out if there had been available, from some source or other, a very large sum of money indeed, possibly reinforced by credit obtained by some other method. Clearly, here is a matter which, as my hon. Friend has suggested, calls for an inquiry and report to this House. I sincerely hope that the Government will satisfy themselves, and will so direct the course of public opinion, reinforced by such action as they may take if necessary, as to make quite sure that, however picturesque these buccaneering excursions of people in this frame of mind in past generations may have been, and however pleasing they may be to read about in books of adventure, the honour of British commercial life shall not in the future be besmirched by trafficking of the kind of which we complain this afternoon.

4.42 p.m.


I think the House is indebted to the hon. Member for Gower (Mr. D. Grenfell) for having drawn attention to the recent sorry sordid squalid story of gambling and ruin. I should like to congratulate him upon the temperate way in which he introduced his subject. I do riot propose to do any muck-raking, but to put some facts before the House as I see them, without any prejudice, following the line taken by the hon. Member for Gower and the hon. Member for East Birkenhead (Mr. White). In my opinion it is necessary to have two inquiries here. I hold that this recent gambling in commodities, of which the pepper failure is a symptom, has been helped by two things. I have nothing whatever to do with the City, but speak as an old manufacturer. I think it has been helped by excessively cheap money—not cheap money, because I differentiate between the terms "excessively cheap" and "cheap." I am all for cheap money, but I wish to draw attention to the dangers of excessively cheap money. The other thing which I think has induced, as it always will induce, speculations in commodities, is that there are defects in our whole system of limited liability; limited liability has become a shield for shady transactions and rogues rather than a protection for honest men.

The inquiry we must have regarding this commercial breakdown concerns two Government Departments. The Treasury should look into their cheap money policy, and see whether it has not gone too far and defeated its own ends; and the Board of Trade should begin a departmental inquiry similar to that which I was allowed to obtain from Lord Passfield when he was President of the Board of Trade some years ago into the operation of the old Companies Act, and that gave birth to the Act of 1929. We need an inquiry to find out how far limited liability under the existing Act is permitting itself to be made a shield for disreputable transactions. The banks are complaining, quite rightly, that they are not getting applications from credit-worthy manufacturers and persons engaged in economic transactions which have a good justification, that is to say, transactions which turn raw material into goods and money and give employment to work-people. They cannot lend enough; there is not an adequate number of good borrowers; and the money accumulated in the banks has become excessively plentiful and is asking to have itself hired at very low rates if only to pay for its keep. Money is not idle. The stock-in-trade of a bank is, I take it, the amount of its deposits, just as the stock-in-trade of a tailor's shop is the value of the materials in the shop. What wholesale business, or manufacturing business, or retail shop, could call its stock-in-trade idle if, as is the case with the banks, the capital is turned over twiee in a month? Roughly this stock-in-trade of the banks amounts to under £2,000,000,000, and the bank clearings are probably £4,000,000,000 a month. That is to say, in a year the stock-in-trade of the banks is turned over between 20 and 25 times.

It cannot, therefore, be said that the stock-in-trade of the banks, that is to say, the money in the banks, is idle. But what is it doing? It is at work. What is its occupation? We know that industrial firms and commercial organisations are not borrowing eagerly. I think we should find that abnormally or excessively cheap money has been used instead for transactions which have no economic justification. It is impossible to discover to what extent. The bankers must know themselves, but we cannot ask them. If it were not confidential there is another place where we could find out what is happening with this excessively cheap money, if we could dissect the messages that go over the cables and wireless, but, of course, we cannot. I should split them up into ordinary family messages, then messages about sport and betting, then messages about crime, then messages about ordinary news for journals, then messages about buying and selling securities and raw material legitimately for factories and buying and selling products here and abroad, but above all it would be found that a large proportion of cabled messages deal with speculations for the rise and fall in paper values, for stock exchange transactions and arbitrage differences and shuntings of quotations and then mere speculations in commodities. If we could only find out without breaking confidence whether there has been an increase in the volume of cables dealing with non-economic transactions in comparison with true economic transactions it would clear our minds very much. To what extent is excessively cheap money increasing transactions for which there is no true economic justification I Let us know what excessively cheap money is doing. You cannot stop gambling anyhow. There is an appropriate line of Persius: Tolle recens primus piper e sitiente camelo. It means, "You be the first to get the pepper off the back of the camel before it has had a drink, and you will make some money out of it." Pepper is historically a very interesting commodity. Gambling in pepper was a usual form of gambling in Rome 2,000 years ago. Columbus discovered the West Indies and Vasco da Gama went round the Cape of Good Hope to the East Indies to find pepper. What the Prime Minister said at Doncaster about this gambling in commodities will have found an echo in the heart of every man engaged in honest business. I do not think we can stop gambling, but, if the Government tries to tighten up matters the Prime Minister will get all the support he needs from those in trade. As the hon. Member pointed out, gambling in raw material goes very much farther than the buying and selling and making or losing by speculators. When manufacturers do not know what prices of their raw materials are from day to day, it throws their business out of gear. There has been a large fall in wool lately, not caused by gambling; it has thrown the finished product balance-sheet of wool manufacturers out of gear. When there is no stability in the price of raw material, whether brought about by gambling or not, our manufacturers dare not extend. They do not know whether they will make or lose by the wide variations in prices and they hold back. The first man to suffer is the working man. If only for that reason I join with the hon. Member for Gower in saying that the causes of these things should be looked into. When money becomes abnormally cheap it no longer produces increased orders; it fails to attract industry to employ it; it is useless if there are no orders for goods. It becomer, excessively cheap and is attractive to gamblers. This is a fact and not a theory—people say, "We will not buy; we cannot sell goods. We will have a flutter in some commodity or make a pool or a corner."

Up to a point I am entirely in accord with the Chancellor of the Exchequer in his policy of cheap money. Debt service charges are less; municipalities and companies are able to borrow or convert their debts to lower rates so as to lower their overhead charges, then we get capital goods produced at a lower cost. But then orders for consumption goods arising from capital goods have to be obtained and increased orders for consumption goods are not being obtained as the result of cheap money. The consequence is that cheap money has become abnormally cheap. Then we have been told we must have cheap money to stimulate trade. It is all very well for Stock Exchange people and Mincing Lane brokers to say they want cheap money for their trades but how far does cheap money at present rates affect us manufacturers? Before the War I always liked to see the Bank Rate at 3½ per cent, to 4 per cent, because then I knew that there was a wholesome demand for money, that it was obtainable at a reasonable price, and that it was abundant. But when people tell us now that we must have very cheap money because it is so good for basic industry, I question it very much. What difference does it make to us if the discount rate is 3 per cent, or 1 per cent.? You may get an order for £1,000 paid by a 90 days bill. What difference does 3 per cent, or 1 per cent, make? At 3 per cent, per annum discount a ninety days £1,000 bill costs £7 10s. At the excessively low rate of 1 per cent, it costs £2 10s. A trivial £5 on a £1,000 order, is the difference in the cost of discounting the payment. It makes absolutely no difference to our getting more orders. We are not asking that this excessively cheap money should be allowed to continue. The Stock Exchange and Mincing Lane, of course, would like to see money very cheap. Commodity speculators do not borrow always by loans or overdrafts. In commodity gambling cases like that which we have before us the money can be raised by acceptance credits. The people who are induced by excessively cheap money to speculate are able to get acceptances through merchant banking houses, they raise the cash by discounting them and thus use them for the purpose of carrying out their rise or fall speculations in raw materials. Thus a small rise or fall in the price of the commodity brings a good profit because they have not to pay very much for the use of money.

You can carry cheap money too far, as has been shown by this pepper speculation. Cheap money was carried too far in Gosehen's time, in 1888, when he converted 3 per cent. Consols to 2¾ per cent, and then 2½ per cent. There is a great deal of virtue in Disraeli's apophthegm, ''the sweet simplicity of the three per cents." If people can get 3 per cent, for their money with a small amount of income tax taken off, tlhey can live upon it, but when, as happened in the time of Gosehen's conversion, the yield of Consols became too little, people did exactly what they are doing now. They were driven to speculation and to unsound investment for long dated income. Small investors left Consols alone. The yield was too low to let people live, so you had the Liberator scandal. To-day if money is too cheap and Consols and first class Government securities are forced up, and men cannot live on the interest on their savings, what do they do? They speculate. They pay no income tax on speculation or capital profits. That is not a very healthy thing, and driving the small investor out of the market for gilt-edged securities is not a good thing either for the saving thrifty worker or for Government credit. A generation ago nothing was so unpopular as Consols and Local Loans; it does not do now to drive them up by a policy of excessively cheap money and in turn drive people into speculation, because the capital price of first-class securities is so high that people cannot live on the interest. Like everything in life moderation is the rule; you can carry even cheapness of money to excess. The public has already realised that, and has refused to lend money to the London County Council at 2¾ per cent. The issue is now at £4 discount. The Treasury will have to reconsider whether it is doing wisely for the country as a whole on balance in allowing cheap money to get to the point of excessive cheapness with its varied reactions.

Lieut.-Colonel C. G. MacANDREW

The hon. Gentleman has referred to the London County Council loan. Were there not at the same time two other loans at the same rate of interest—one was Aberdeen—which went perfectly well?


With all due respect to Aberdeen—and I have great respect for their credit—I do not think the rates of interest for London and Aberdeen were the same. London County Council stock is as good a security as Local Loans stock issued under the authority of Parliament.

There is the other point to which I should like to call attention. The Association of Chambers of Commerce, the Chartered Accountants, the Incorporated Accountants and representatives of the Stock Exchanges in London and the provinces have jointly asked for an inquiry into blemishes in the Limited Liability Act, 1929. One flaw alone became visible and operative in this pepper speculation. Under the Act subsidiary companies have to make certain returns, but it has been overlooked by the framers of the Act that sub-subsidiary companies need not do so. So we have screen in front of screen to enable operations to be hidden. Then there is the screen of Bank Nominees' holdings. I do not for a moment believe that banks have any beneficial interest in the holdings. They are merely acting for their clients.

One of the requirements of the existing Companies Act is that there must be on the share register of a company the name and address of the person who holds the shares. But a person may pay for them and put them into the name of a nominee, and it is the nominee that appears on the share register of a company. No one knows who is behind these nominee transactions. The Act is defied and evaded. If everything is straight and above-board, why do people wish to hide their names behind nominees? Why should not the beneficial owner's name be declared by the nominee holders and appear on the share register for record only? There would be no inconvenience to anyone. Again why should not all subsidiary companies be registered at Somerset House? Why is it necessary to register a company, let us say, in the isle of Tristan da Cunha? Why sub-subsidiary companies? Is there not a maxim that concealment is the shadow of fraud? Sub-subsidiary companies and nominee holders defeat the Act of Parliament. I want, first, to ask the Treasury to review its policy of excessively cheap money—not cheap money—and then I want to ask the President of the Board of Trade to give us a departmental inquiry as to whether the law relating to limited liability is working as it ought as a protection to the public.

5.0 p.m.


I associate myself with everything that has been said by my hon. Friend the Member for Farnham (Sir A. M. Samuel) about the abuse of the Companies Acts, which has been exposed more obviously than on most occa sions during the past few weeks with regard to the speculation in tin, shellac, and pepper. You have only to look at the records of some of the companies involved to find that they are scattered, as with pepper out of a pepper pot, with the names of bank nominees, the names of shadow men and of shadow women too, obvious nominees, holding a large proportion of the capital of these companies. It would not be an exaggeration to say that it would be impossible for anyone, except after the most experienced and acute and prolonged inquiry, to determine, even to his own satisfaction, let alone anyone else's, who precisely are the really important shareholders in a great number of these companies. The machinery of nominee shareholders has been used, not for the purpose of convenience, for which it is legitimate, but for the purpose of obscuring the facts, and I very much hope that when the Government has time and occasion to consider the amendment of the Companies Acts—and I hope that time and occasion will not be too long delayed—this matter among others will have its attention.

The discussion on this request to the Government for an inquiry has taken a very general form, but I deem it necessary, in order to make clear the points which are really at issue, and for matters which among others require investigation, that there should be a little more precision. Hon. Members who are speaking on matters of this kind from the Floor of the House are always in a position of very considerable embarrassment, especially if they think it necessary to refer to men who are not themselves Members of this House and, therefore, are unable to stand up in their place and make such replies as they may deem fit. I think the cover which membership of this House gives an hon. Member puts him under a graver and not a less responsibility in speaking of those who are not here. I am going to state certain facts and to ask the House to draw certain inferences from those facts. I shall produce some facts which are susceptible of proof in a court of law, other facts which have been stated upon the Floor of this House from the Treasury Bench, and there is a third and much more difficult class of facts, which falls within neither of those categories and must, to some extent, necessarily rest upon assumption and on the good faith of whoever may make the statement. I shall make no statement which I have not been scrupulously careful to check and counter-check and of which I may say that I am satisfied that I can prove it in every way, short of formal proof in the witness box. In order that one may visualise with some accuracy the kind of situation with which one is confronted, I would ask the House to consider the position with regard to tin, and I trust I shall satisfy the House that I have related tin to pepper and to shellac. With regard to the scheme set out in the White Paper, which, in answer to a question from me, the Secretary of State was good enough to lay upon the Table, I have nothing to say at all. With regard to the buffer stock scheme contained in that White Paper, I have nothing to say at all. With regard to the report of the World Economic Conference, I have nothing to say either, for the purpose of this discussion, which is a request for an inquiry into certain incidents. For this purpose I accept all that, and, so far as I am concerned, it is entirely unnecessary for the Secretary of State to make any defence or explanation of them at all. But I think I may say this, that I shall be describing with sufficient accuracy for this purpose the broad objects of the scheme if I say that the object is to create a monopoly in tin and at the same time to regulate the prices so that they do not exceed a reasonable figure. That seems to me to emerge from a consideration of this scheme. In order to carry out these objects, there is constituted an International Tin Committee. It has upon it representatives of a number of Governments of producing countries, but we in this House are concerned, or the Colonial Office is concerned, only with the Malay States and Nigeria.

Lieut.-Commander AGNEW

Is not Cornwall now a signatory to the scheme?


Cornwall may very well be.


It is.


And the Government, of course, is responsible for Cornwall.

Lieut.-Commander AGNEW

I think, if the hon. and gallant Member reads the Government's White Paper, he will find it set out there.


I accept the correction, but in any case it is not relevant to my purpose. For my purpose it is the Malay States and Nigeria which are relevant. This international committee consists of certain delegations 'appointed by or on behalf of various Governments. In the case of the Malay States and Nigeria, those representatives are all, with one exception, Government servants, and that one exception is a retired Government servant. Those Government servants are, of course, subject to the direction of the Colonial Office, and the chairman of the committee is a very distinguished officer of the Colonial Office, Sir John Campbell. Finance adviser at the Colonial Office is his correct description, I think. He is at once a representative of the Malay States and Nigeria. That is the International Tin Committee, and it is supported or 'assisted by an advisory committee which consists of a number of representatives of various organisations. There is a representative of consumers, but he is an American representative of American consumers. There is upon this advisory committee, be it noted in passing, not a single representative of British consumers.


When the hon. and gallant Member makes a statement of that kind, will he also state, what I have said in a reply in the House, that the British consumers have been asked on several occasions to nominate their representative and have not done so?


My right hon. Friend does himself and me less than justice in interrupting me. I am putting before the House a case which I desire to put fairly and frankly so far as I can. I gave way, as I always would, to the right hon. Gentleman, but he interrupted me in making the very statement which he himself has now made. As the right hon. Gentleman informed me, British consumers have as long ago as November, and again more recently, been invited to appoint a representative for the consumers, but they have in fact refrained, no doubt for good reasons of their own, from doing so. I point out therefore to the House that in fact, from beginning to end, up to this point of time there has been on the advisory committee not one single representative of consumers in this country. The Nigerian delegation have appointed three advisers, the Malayan delegation have appointed three members of the advisory committee, and the Tin Producers Association have appointed three representatives to attend the advisory committee—Sir Samuel Wilson, Mr. Howeson, and Mr. C. V. Stephens. The House will observe that there are six members on the advisory committee—as I am going to suggest to the House, six fingers of the Howeson hand.

In addition to the International Tin Committee there is a buffer stock scheme. Under that scheme 8,282 tons of tin had to be delivered not later than the 31st December, 1934. I rather gathered from an answer that the right hon. Gentleman gave the other day that they are a little short in their deliveries, but that does not matter for the present purpose. The buffer stock committee has the power to sell tin and it has the power to buy tin. The scheme remains in force until the end of this year, a fixed date, unless by unanimous agreement it is to be prolonged, and each delegation can give three months' notice, to determine at any time beginning from the end of the present month. Be it noted that unless the Government's representatives on the buffer stock committee unanimously agree that the scheme is to be prolonged, by the 31st December at the latest the whole of the buffer stock must be liquidated. There is a buffer stock committee which controls the buffer pool, and it has upon it, representing Malay, Sir John Campbell, who is the chairman of the buffer stock committee, and the Nigerian representative, appointed entirely by a delegation consisting entirely of Government officials, is Mr. Howeson. This buffer stock committee is charged with the control of the buffer pool, and it is differentiated from the advisory committee in this way: The advisory committee merely expresses opinions—or this is the theory, at least—to the International Tin Committee, and, so the right hon. Gentleman told me, in answer to a question the other day, the members of the delegations themselves, and they alone, are responsible for the decisions. That is, at least, the theory. What is the theory with regard to the buffer stock committee. It is not an advisory committee; it is an operating committee which bas the control and the decision as to the buffer pool. There is a very great distinction between the advisory committee and the buffer stock committee which makes it all the more necessary that there should be no one associated—


I am sure that the hon. and gallant Gentleman does not want to mislead the House, and therefore he would wish to inform the House that the Buffer Stock Committee is a purely executive body and that matters of policy are left to the International Tin Committee. That is in the White Paper.


Let us see. If I think that the right hon. Gentleman is correct, I shall be the first to agree. Paragraph 3, on page 12, of the White Paper says: When operating on the buffer stock, and when dealing with the proceeds derived from the sale of tin from the buffer stock, the Buffer Stock Committee shall act in accordance with such general instructions as the International Tin Committee may, from time to time, issue for their guidance. But look at paragraph 11, on page 13: The Buffer Stock Committee is empowered to sell any tin "— No restriction there and no qualification— for the time being in the buffer stock and to employ the proceeds for the purchase of tin.


Of course, as everybody knows—[Interruption.] I am not going to have this sort of thing said. You have to hear what has been the practice. When I give an undertaking to the House, I think I have been long enough in the House to know that I am saying what is the fact. The intention and express purpose of that is that this committee shall be an executive body to carry out the policy laid down in respect of the International Tin Committee. It is plain in the wording, and certainly plain in the White Paper.


A private Member of this House is always at a disadvantage. It is the usual courtesy of the House, which I am always anxious to acknowledge and conform to, to give way when a Member of the Treasury bench rises. I know that it is open to me to refuse to do so, but the last thing that I would wish to do would be to do anything which the right hon. Gentleman might think to be discourteous, but I am putting to the House a case. This White Paper is not my document, but the document of the right hon. Gentleman. It is not a question of what is the intention. Let the right hon. Gentleman go into the law courts and produce an Act of Parliament and say, "That was my intention." My very experienced hon. Friend the Parliamentary Secretary to the Board of Trade, sitting on his right, will tell him that whatever the intention might have been, unless the Government were careful in framing their document and putting it into precise terms to carry out their intention, it would be no answer to what I was saying. I repeat: The Buffer Stock Committee is empowered "— no qualification there— to sell any tin for the time being in the buffer stock and to employ the proceeds for the purchase of tin. It goes on to say how they may use any surplus proceeds, which is not relevant for the purposes of my argument this evening. There were certain private pools before the restriction came in in 1931 when Lord Passfield was Colonial Secretary. It was indeed for the purpose of preventing the private pools from unloading that the restriction was at that time introduced. That was its primary object, but I do not by any means suggest that it was its sole object. It is worth while pointing out that the standard cash price for tin was £118 per long ton. It has risen steeply; it is off gold now, but I think that that is a pretext and a fallacious argument. In January, 1935, the price was £231, and it is now somewhat less. Since the pool came into existence in 1933 two private pools have already been liquidated. It might have been thought if it had been found necessary to meet the emergency, the Government-directed buffer pool would have been enlarged for that purpose.

What is the actual position? There is now a private pool in addition to the buffer pool. The right hon. Gentleman has told us that it discloses its stocks to the buffer stock committee and to the International Tin Committee. We know that one member at least of the advisory committee is interested in the private pool, and we know that one member at least with private interests is the representative of Nigeria on the buffer stock committee. That is the situation which I present to the House; that there is a conflict of interests and indeed a conflict of duty in representatives of the advisory committee and in one at least of those also on the buffer stock committee. This private pool has amassed its stock very quickly, and to-day the House may be surprised to know that the stock of that private pool is about two-thirds of the authorised stock of the buffer pool itself. I should like to know why it would not be more convenient and suitable, if it is deemed necessary to> have a pool of 13,000 or 14,000 tons, that that should not be all under an official control instead of being partly under private control and partly under public control. The private pool is represented on an advisory committee of experts under the scheme, and it is common ground that it is also represented on the buffer stock committee.

Will not the House agree that it is essential that there should be complete identity of interest between the official buffer committee and the private pool? Otherwise, it is obvious that the international tin scheme will suffer a severe blow through the sharp fall in the prices when the private pool has to be liquidated, not to suit the convenience of the international pool or the industry, but to suit the convenience of those who are participlants in the private pool. The Committee say that their object is to keep a steady price, and it certainly remains fairly steady for the time being but at a price which our own Malayan producers have recently characterised as commercial robbery. Then the private pool gets going and thus helps to maintain the price. When the state of affairs exists which we find to-day, of which the tin committee is completely aware, are not the tin committee really in the position of being ambushed by the highwaymen of the private pool?

What is their position? The tin committee cannot confess failure. If they did, the price would fall by as much as 10 or 20 per cent, if the private pool were forced to liquidate. And who knows at what point of time the banks may withdraw their support, if indeed, as rumour goes, support has not been in some part withdrawn already. Suppose the banks press one of the leaders of the private pool in view of unsuccessful operations in other commodity markets, what is the position of the private pool spokesmen then? What is he to say to the official buffer committee, of which, perchance, he is a member or an adviser of the committee upon this matter? He will have placed himself in a position in which there is not only a conflict of interest but of duty. It may be a conflict between his own interests and the interests of the committee or his duty to his shareholders and his duty to the committee. Is it right that a Government-sponsored scheme of this kind should be allowed to operate privately with an advance knowledge of the tin committee's decisions, because they themselves are the men who give to the tin committee the information upon which the committee, not being expert, are asked to act?


Is it not true that the Dutch Government are also in the private pool and that they are directly or indirectly represented on all federated bodies, and in exactly the same position as the gentlemen to whom the hon. and gallant Gentleman is referring?


For the purpose of my argument it is entirely irrelevant. [HON. MEMBEKS: "Oh!"] Oh, yes. The Colonial Secretary would be the first to say, as he has said before in answers to questions in this House, that he could not even tell me if a foreign Government were represented upon the buffer stock committee, because he could not give information about the actions of a foreign Government.


I am going to do so to-night.


I am glad that the right hon. Gentleman is going to do what he has refused or failed to do in response to repeated questions and supplementary questions put by myself and hon. Friends over a period of two or three weeks. The point with regard to the tin position which I place before the House is that it is vital that there should be an identity of interests between members of the committee and those responsible for operating the buffer pool, on the one hand, and those who are in the private pool on the other. But as long as Mr. Howeson is a member of the buffer stock committee—and I know that the right hon. Gentleman has told us that he has indicated his possible intention of resigning, owing to conflict of interests—there really can be no satisfaction or confidence. The position that emerges is this, that someone of push and go has only to form a private pool, then, unless the official authorities of the scheme are prepared to pay him his price or else risk their own necks and break his by lowering their own price, he can run the official pool. That is the position to-day. On the official pool the Committee is dominated by the pretty firm personality of a single man. It seems to me that the position is much the same as if in connection with the Exchange Equalisation Account it were suddenly to be rumoured or it were suddenly to be supported by evidence that those whom the Chancellor of the Exchequer were consulting in connection with the Equalisation Account and those who had been instructed to carry out his instructions were collecting pounds and francs of their own, and making a little corner against sterling. There would be horror at such a situation in regard to the Exchange Equalisation Account and the position is not very different, if it is different at all, in the present instance.

There is a certain newspaper with a world-wide reputation which has made some remarks on this matter, and I will quote from it. It is the only quotation with which I shall trouble the House, but it is relevant because it puts by under-statement rather than over-statement, and puts moderately and with restraint, the position as I think it might be put to the Committee. It says: The International Committee must take account of supplies coming from a private speculative pool which is eventually forced to sell. The Committee has known for a long time of the existence of a private pool and it should have made it its task to determine the extent of the speculation. On the contrary, however, the Committee took no steps to oppose the pool and even regarded it as an ally. In this connection the International Tin Committee failed to act correctly. That is a very authoritative opinion, coming from such a source. [HON. MEMBERS: "What is the source?"] The "Manchester Guardian" Commercial, which has a reputation not less than that of the "Times" in every part of the world. I accept those words as my own. "The Committee has failed to act correctly." Here we have this genius of tin, altogether the presiding spirit of the restriction scheme and of previous tin pools. He has not done very well for the British-Malayan low cost producers. He is an adviser to the Tin, Committee and he is the representative of Nigeria on the Buffer Stock Committee. That is Mr. Howeson.

He is greatly interested in tin, but tin is not his only interest. There is the Anglo-Oriental Company, of which he is chairman. The Anglo-Oriental group has issued to the public an intimation that through a subsidiary it has dealt with 355 tons of pepper and that it has 55 tons still left. But that is not the only connection of Mr. Howeson with pepper. I was surprised to see some 10 days ago in the public Press a report that a company known as Jayandee has been interested in pepper, and during those 10 days no denial has been issued by Mr. Howeson. Who are Jayandee? They are not a subsidiary of the Anglo-Oriental Company. I do not think there are any nominees in that company. It is very remarkable that, so far as my researches go, that company had its registered office originally at 55–61, Moor' gate. That is the address of the Anglo-Oriental Company. That is the address where cluster all these companies round Mr. Howeson. Its registered office has, however, been changed to 75–79, Coleman, Street, which is the office of Williams, Henry and Company. No one hearing of a change from one office to another would believe it to be possible that 75–79, Coleman Street is the back entrance to 55–61, Moorgate. I wonder why the address was changed.

Why trouble to change an address when the physical habitat remains the same? Was it not perhaps to make it a little less obvious that Jayandee was a Howeson company. Although Mr. Howeson and his family own upwards of 90 per cent, of the capital of Jayandee, Mr. Howeson is not a director of that company, It would be interesting to know which are the companies with regard to which Mr. Howeson, though not formally a director, does in fact exercise the functions of a director. I would suggest to my right hon. Friend the President of the Board of Trade that it is a fruitful line of enquiry for the Official Receiver to investigate in regard to James and Shakespeare whether or not Mr. Howeson, though not a director on the Register, was acting in such a way as to make himself a director for the purpose of the Companies Acts. Here we get this com pany, with its curious experience, which has not only the same address as Williams, Henry and Company, but the same secretary. Who are the directors of it? One of the directors is—not Mr. Howeson, although he has £183,800 in it for himself and his family—Mr. Andrew Barry. Who is Mr. Andrew Barry? Mr. Barry is also a director of James and Shakespeare and Williams, Henry and Company.

Another director is Mr. Cleaver. Mr. Cleaver is a brother-in-law of Mr. Howeson and a brother of a shareholder named William Swanzy Cleaver. Mr. Cleaver of Jayandee is also a director, or he was until January, of James and Shakespeare. The remaining director is Mr. Louis Hardy, who seems to have followed Mr. Howeson around from the Anglo-Oriental Company, and he is now a director of Mr. Howeson's private family investment company. Mr. Louis Hardy is also or has been managing director of Williams Henry and Company. I suggest that this constant concentration upon Moorgate Street is no coincidence and that this concentration in regard to directors is no coincidence, and I suggest to the right hon. Gentleman that the activities of Mr. Howeson in regard to tin, pepper, and shellac, in combination with his friends, justifies the investigation for which my hon. Friend asks.

5.36 p.m.


As one who every morning, like the hon. and gallant Member for Bethnal Green, North-East (Major Nathan) concentrates upon Moorgate, I have listened with great interest to his speech. After listening to him, hon. Members will feel that the sooner he transfers his address to Baker Street the sooner will he be in his appropriate place. I would point out, however, that the famous detective whom my hon. and gallant Friend has emulated this afternoon proceeded rather by direct proof than by insinuation. I rise to speak very briefly upon the general issue upon which the House appears to be unanimous. From all benches there has been an expression of opinion that nothing has been more reprehensible than that speculation should take place in commodities or in connection with schemes which are primarily intended for the employment of our people and those within our Em pire. I am one of those who has an inherent objection to restriction schemes as such. I became a convert to them rather by force of circumstance, but I feel that in the world in which we live restriction schemes are very often the only alternative to the complete collapse of essential industries. I have in mind particularly, because I think it is a fair analogy, the industry of which we properly hear a great deal from hon. Members opposite, the coal industry. No one would deny that the underlying intention of the Coal Mines Act, which they placed upon the Statute Book when they were in office, was to raise the price of coal, to maintain as far as they were able the standard of remuneration for those in the industry by a system of quota, and by so doing they were largely if not entirely actuated with a desire to prevent an essential industry from collapse.

I would pass from that analogy to tin. Whatever else the Debate has done it has given us an authoritative statement from the Front Bench opposite, and one which alarms me. I am sorry that the hon. Member for Gower (Mr. D. Grenfell) is not in his place, but whoever replies from that bench will perhaps clear up a point which I regard with the greatest anxiety. Instancing the situation within his own constituency, where there are many tinplate workers, the hon. Member, with his usual forcefulness and eloquence, said that the price of tin was too high and that a figure of £170 was the figure at which tin should stand. When the party opposite were responsible for the initiation of the tin restriction scheme and the formation of a pool the price to which they assented was a gold price of £185, which translated into terms of sterling means £300. Along comes the hon. Member for Gower and tells us that the prevailing market price, which is in the vicinity of £215, is too high, and that it should be £170. When challenged on the point he said that when the Socialist party were in office tin had fallen to £136 in terms of gold.

I would point out that the price of £170 in sterling is £130 in terms of gold. When hon. Members opposite lose no opportunity of telling us how they are going to take over the dreadful situation which capitalism has created, how they are going to control the various industries, and how much better it will be for all people when they gain control, what can we make of a statement like that? Are we to understand that the hon. Member for Gower is advocating the old price of £185 gold or £300 sterling; and, if so, why is he declaiming against the present price of tin? If he means that the price should be in terms of gold and should be £130, then why did the party opposite seek to raise the price from £136 to £185? It is just like the arithmetic which we sometimes get from them; the sort of thing we hear from the Leader of the Opposition when he talks about the collapse of the banks in the course of one of his week-end speeches, and the chaos which may come. The chaos is not going to be confined to the banks; the party opposite are going to get busy with the tin industry, and, therefore, I think that we should have an authoritative statement from them; otherwise, we can well understand that the advent of a Socialist Government will result, not only in more nervousness as to the future, but in still more nervousness as to Socialist arithmetic. We may find a first-class tin crisis running hand-in-hand with the activities of the hon. and learned Member for East Bristol (Sir S. Cripps). Let me pass to what is the essential condition lying behind this scheme. Surely it is that these restriction schemes are able, through their operation, to enable industry to survive and to lift the wage level from the starvation level in tin and rubber. We were told by the hon. Member for Gower that the price of tin ought to be £170.


He said that it would be much better if it was at £170.


I think hon. Members who heard the speech will agree that when challenged he said that £170 was the price which in his view would be most suitable. Does he know that the minimum price at which Cornish miners can carry on is £190? Are we going to have posters in the Camborne division saying "Vote for Socialism and your wages will be reduced?" That is the effect of the hon. Member's proposal. Unless these restriction schemes succeed in raising the price of the products in which the workers are engaged to such a level as to give them a wage which is above the starvation level, they will have failed. If this Debate does nothing else I hope it will restore confidence in the integrity of these schemes, and make clear how much we all deplore any idea of their being used for speculative purposes. If the Debate does no more than that the House of Commons will have done a useful afternoon's work.

But let us be quite sure what we mean by speculation. The purchase of shares or commodities for the purpose of selling them a little higher is what is generally described as speculation. There is always a very interesting page in the "Daily Herald," which I read with avidity, telling you exactly how to do that. There is a very talented gentleman whose address is not Moorgate but who doubtless emerges every evening from some back door, but who on the financial page gives most useful information on this subject. Speculators can be divided into two, those who speculate on a bull tack by buying things which they think will go higher and those who speculate on a bear tack who sell things because they think the price will go down. Between these two there is no distinction. Both of them are speculating, and both of them must incur the censure and disapproval of this House.

Not even the "Daily Herald" ever recommends that you should buy something to sell lower down, nor have I seen it suggested that it would be proper even for a Socialist to sell tin at £170 with a view to closing his commitments at £225. That valuable newspaper indeed is very clear as to the lines upon which one should go. Nor does it go into distinctions. It does not suggest that what is proper for a large firm is improper for an individual. It does not suggest that it is proper to attack a company or a group of companies for speculating, and suggest that it is proper for a co-operative society to do exactly the same thing. Yet that is the lamentable fact. It will be fresh within the recollection of hon. Members that it was not the thousands of rich men or of millionaires from overseas that were gambled away in Mincing Lane but the millions of pennies of working class people through the activities of the co-operative societies. I hope that our condemnation is going to be whole-hearted and universal. Let us send forth a magnificent slogan from an all-Party platform at the House of Commons that there shall be no further nefarious operations of this sort.

Let us remember also that there is something else which is not in my view worthy. Suppose you know that someone or some group of persons has become heavily involved in pepper, that they are also bulls, or holders of large quantities of tin, and that in order to meet their pepper commitments they will have to realise upon that tin. Knowing these facts you promptly sell short on tin, and having sold short you flood the market with propaganda, pointing out the likelihood of a fall in the price of tin; a propaganda upon which the House may have the guidance and assistance of the hon. Member for North Lambeth (Mr. G. R. Strauss).


I have been following the hon. Member during the last minute or two and I gather that he is making certain suggestions as regards my business of selling short on tin, and so on. I have not interrupted him because I did not know whether he was referring to me or not. May I assure him that the facts which he has put before the House are utterly untrue. They have no foundation whatever. If he desires to go on—I know that he does not wish to mislead the House—let me tell him that his facts have absolutely no foundation whatever.


The hon. Member is entitled to make that intervention. All I have said is that this process of selling short on tin will be one upon which the hon. Member can assist the House, it is a matter with which he is extremely familiar in his ordinary business. I have in my hand certain documents issued by the firm with which he is connected, and I desire to do no more than point out that if we are engaged in getting rid of abuses to which the country objects then there is nothing to choose between gambling on a bull tack and gambling on a bear tack. The hon. Member with his knowledge of this matter, and in view of the kind of document which has been given out—there is one in the name of his own firm—will be able to supply us with some information about that particular propaganda.


I cannot allow that to go. There is a definite innuendo which the hon. Member has not with drawn, that owing to certain knowledge which I or my firm had that we sold short on tin and put out a propaganda to support our action. I repeat that these facts have no foundation whatever, and I think it is an abuse of the privileges of this House for the hon. Member to make statements of that sort.


The statement I made which brought the hon. Member to his feet for the first time was with regard to operations of a bear nature in tin within the last few weeks. He knows that that is the case. He also knows that there has been within the last few days a large bear position in tin, and that there has been propaganda in the City of London and also in the newspapers. I am not the only Member in the House who is in possession of this information. Those who listened to the speech of the hon. and gallant Member for North-East Bethnal Green (Major Nathan) will agree that so far I have said nothing in the nature of an insinuating kind any more than did the hon. and gallant Gentleman. I am anxious to establish the point that if the House is condemning speculation it must condemn propaganda for the purpose of depressing the price of a metal or any other commodity in order to assist those who are endeavouring to make money in this way. Propaganda of that sort and in the Press is to my mind entirely improper.

Let me conclude by referring to a matter in connection with the main theme of this Debate, I want to refer to the international aspect of this matter. The tin scheme and the rubber scheme are being operated not only with the agreement of our own Government but with the assistance and co-operation of the Government of the Netherlands. The international aspect is one which the House should bear in mind. In this matter we have had the good will, the active support and co-operation of one of the greatest democratic statesmen of our times, Dr. Colijn, the Prime Minister of the Netherlands. That gentleman is already in a position of some embarrassment, owing to the depreciation of sterling while he remains on gold, in co-operating in a restriction scheme of this sort. A restriction scheme operating between one country on gold and another country off gold is a kind of machinery which requires the greatest possible good will if it is to succeed, and I hope that this Debate will make it clear not only to this country but to Holland, and other countries who are interested in this matter, that whatever we may have said in our domestic differences to-day the integrity of the tin scheme and any other scheme in which the Government are engaged has been completely maintained. I feel that if an inquiry takes place—I see no reason why it should not, and I think it would be a good thing—it will settle any insinuations which have been objected to in the House to-day. A full inquiry is something to which none of us objects. I hope the Debate will result in the complete restoration of confidence in this important matter, which affects the livelihood and the standard of living of thousands of people within our Empire.

6.2 p.m.


I had not intended to take part in this Debate, because I desired to follow the long-established and wise custom of this House, that a Member who has interests in the subject under discussion should not join in a Debate. It is only because of the remarkable charge or insinuation made by the hon. Member for Hillsborough (Mr. G. Braithwaite) against myself that I feel compelled to detain the House for two or three minutes in order to repudiate that allegation, of which incidentally I have had no notice whatever.


I have in no sense made a personal allegation. I made a general statement.


An offensive insinuation.


When I made that general statement the hon. Member for North Lambeth (Mr. G. R. Strauss) leapt to his feet, and the House can draw its own conclusion.


The hon. Gentleman made certain suggestions before I had risen to my feet. He mentioned my constituency and definitely indicated myself, and those allegations, as I say, were made without giving me the slightest warning that the hon. Member was going to make them. In view of the allegation which has been made it is necessary that I should explain to the House, not how the hon. Gentleman came to make that allegation, because that I do not know, but what the position is. The firm of which I am a director has been established for 60 years. During that period it has been one of the leading non-ferrous metal merchants in this country. From the day of its inception up to now its statistical data, which it publishes periodically, have been looked upon as authoritative by the tin industry throughout the world, and the reviews and comments which it publishes weekly are looked upon as being the most responsible and independent commentary on the tin situation which appears in any paper. Those comments which my firm makes are the honest opinion of the firm when they make those statements. They have appeared for a period of many months in the paper under the management of the hon. Member for North Paddington (Mr. Bracken).

The suggestion is, I gather, quite definitely, that owing to certain bear operations which my firm have undertaken recently we have suddenly put up some propaganda against the International Tin Committee and the present price of tin. There is no foundation whatever for that statement. I do not want to enter into the controversy but wish to confine myself to a personal explanation. Ever since the International Tin Committee began to operate it was the opinion of my firm that it was very unsatisfactory and that its management was injurious to the tin industry; and for the last four years therefore we have put forward that view, and also the view that the price has been too high. That is not just the view of myself or my firm; it is the view that has been supported, I think I can say, by every independent and important British producer in Malaya. I could name one company after another, very important producing companies, who have said, as I am saying and my firm has said for four years, that the management of the tin restrictions scheme was highly injurious and that the price was too high. Those views have been supported by the major portion of the financial Press. They have been expressed constantly in papers like the "Economist," the "Financial News," in Malayan papers like the "Malay Mail" and the "Straits Times," and by a large section of the ordinary public Press in this country. They are not isolated views, but views constantly expressed, and the views which my firm have expressed recently are exactly the same views as they have been expressing during the last few years.

So much for that part of the allegation. Then it is suggested that my firm has been engaging successfully in bear operations and putting out this propaganda in order to help the position of the firm. I can only give the House a categorical denial. That statement is absolutely untrue. I cannot go any further than that. It is absolutely untrue. I am amazed at an hon. Gentleman making a statement of that sort in this House and refusing to withdraw it when I got up straight away and denied the allegation which he made. I do not know whether the hon. Gentleman has been genuinely misled by people outside. I hope that that is the case. I do not know whether this subject has been dragged into the Debate in order to detract from the major controversy which is being discussed, but I suggest that to make a statement of that sort without consultation with the Member who is about to be charged with something, and without any attempt apparently to confirm the facts, and when the facts are absolutely against the charge—to make a charge against the personal reputation of a Member of this House is a gross abuse of the privileges of this House.

If the hon. Member had come to me and asked me if it was true, or what the facts were, I would have given them to him with pleasure. He did no such thing, but in an open House made an absolutely untrue allegation without any foundation for it whatever. That is a very reprehensible thing to do indeed. In the hope that the hon. Member has merely been misled by outside advisers, and that he is not putting his statement forward on his own account, I suggest that, in view of my absolute denial of the statement that any firm have been engaged in bear operations recently or have been recently short on tin—after my explanation of the situation I suggest that the only reasonable and decent thing that the hon. Member can do is to withdraw entirely the insinuations which he has so unjustifiably made.

6.10 p.m.

The PRESIDENT of the BOARD of TRADE (Mr. Runciman)

I do not propose to intervene in the controversy of the last few minutes. There will no doubt be a verbatim report in the OFFICIAL RH-PQBT of what has been said by both sides, and the House can decide what it thinks of the episode. But I would point out that this episode is the inevitable result of our attempting to deal with matters of market prices on the Floor of this House. The danger that we run, with some of the more modern development of Government organisation, is that these discussions may arise over and over again. I have sympathy with a good many Members of the House who have either directly or indirectly some personal interest in these various markets. For instance, my hon. Friend the Member for Gower (Mr. D. Grenfell) put in a plea for a very much lower price of tin for the sake of the tin plate manufacturers of his constituency. My hon. and gallant Friend the Member for Camborne (Lieut. -Commander Agnew), I am very glad to see, did not agree with that view. It is a satisfaction to my constituents to know that their mines are being opened again. I do not know that there is anything reprehensible in my saying anything in this House which will tend to improve their interests. There is nothing reprehensible in my hon. Friend the Member for Gower having made a statement as to the price to which he would like to see tin drop. But let it be understood that if we are to discuss such matters as the prices of commodities here, it means that sooner or later every Member of the House will be directly or indirectly concerned. If we are to go into that sort of thing in the future let us do so with our eyes open.

I confess that I am less interested in the personal aspects of some of this investigation than the hon. and gallant Gentleman the Member for North-East Bethnal Green (Major Nathan). He spoke of the curious by-ways of the City and the operations of some gentlemen of whom I know nothing. He made a considerable number of charges against the operators of the tin scheme and he was not very ready to accept the disclaimers of my right hon. Friend the Secretary of State for the Colonies.

What does all this amount to? That so far as tin is concerned the hon. and gallant Gentleman thinks he sees some connection between operations in tin, of which he disapproves, and the pepper operations which brought about a collapse in the City a few weeks ago. I must confess that I am not so: much interested in the action of these various individuals whom he has been tracking down. I am more interested in maintaining the fair name of the City of London. That is the aspect of this problem I wish to raise. Of course people have been disturbed over recent events and with very good reason. Great and prominent names have been dragged into the Press; comments have been made on those who have taken part in these affairs; and in the House here there has certainly been full opportunity taken of dealing with them and asking again and again either directly or indirectly whether or not they were concerned in these affairs, and to what extent. Even if there were nothing more than an atmosphere of suspicion which has surrounded a good many of these transactions, I hold the view, and I hope it is shared all over the House, that an investigation can do good and cannot do harm. The only question that is open, therefore, is what form the investigation should take.

I hope there is going to be no attempt to lay down what are the ethical rights of bears and bulls. I do not think it is a very easy matter to define what is legitimate speculation and what is illegitimate, but I would point out that there are some people who think apparently that if you are either bear or bull there is something reprehensible about your commercial conduct. They do not seem to realise that nearly all the big staple industries of the country must have within their organisation some means by which they can get their supplies of raw material at a fair and even price, and that the only means of doing that is by working to a system of bears and bulls. If you put it bluntly, it is speculating in futures.

My hon. Friend the Member for East Birkenhead (Mr. G. White), who has a very intimate knowledge of the working of modern exchanges, delivered a calm and lucid speech. I do not need to refer to the Stock Exchange, because that is a thing all to itself. These exchanges are conducted under very strict discipline.

The point which I want to make at this stage is this. I have said that the big industries are dependent to a large extent for their supplies of raw material at a fairly flat price on the operations of the futures market. A Lancashire mill manager who has to get a supply of raw material for his spinning does not want to get all the supply in at one time. He wants to get it throughout the year. He likes to take delivery of a twelfth of the year's supply every month. If he is going to do that, he does not want, himself, to enter into the speculative market. Possibly he may not be a very good hand at it; he may not be in that day-to-day touch with the market, which becomes in a short time a second instinct to those who are regularly engaged in these operations. Accordingly, he buys from a broker; the broker has dealings with the members of the Liverpool Cotton Exchange; the members of the Liverpool Cotton Exchange are all the time speculating in futures. Is that reprehensible? I do not think that anyone with a knowledge of the facts would say that it was, or indeed that you could get on in Lancashire without the futures market. It is an essential part of the machinery.

See what happens in the Baltic Exchange in London with regard to grain. Again there is gambling in futures, but all this speculation or gambling, as some might call it, tends to flatten out the price. The result of it all is that Lancashire gets its raw cotton cheaper than any other county or country in the world throughout the year, and gets it on a fairly non-fluctuating level of price, while in London we get our grain on a basis which enables us to feed our people on the cheapest food in the world. That is all because of this carefully elaborated system which has been growing up over a long period of time. That is speculation, and I do not think that that ought to be condemned. Yet there are some people who say that speculation in cotton or in grain, or in all that long list of commodities dealt with in the London market is reprehensible. Is the inquiry, then, to define what is or what is not gambling? I think it would find itself in very great difficulties if it attempted anything of the kind and they would not be personal difficulties, such as those of which the hon. Member opposite has been complaining. They would be actual difficulties in defining what should and what should not be prohibited by law.

I gather that there is no suggestion that we should so amend our Companies Act as to make speculation impossible. I do not think that even the Leader of the Opposition desires that, although no one would accuse him of having gambling instincts. But what is desired is that these various processes should be investigated to see whether transactions have been put through which may be open to criticism, by means of combinations. Of course there may be a great many people working in one direction as well as others who are working in an opposite direction. The strength of the bulls must always bear some relation to the strength and the number of the bears. That is bound to be the case, or otherwise there would not be a market price. Nobody would say that we ought to amend the Companies Act so as to remove that altogether. Of course not. What is desired in the first instance, as far as I can understand from the discussions that we have had, is a full inquiry into what has happened in these recent transactions in the City; that everybody connected with them should be placed under examination and that there should be an expression of opinion from some judicial body or some committee on these various transactions.

Do not let the House imagine that we are quite powerless in these matters. The Official Receiver is an Officer of the Court as well as an official of the Board of Trade, and has the widest possible powers. He has far wider powers than some hon. Members opposite seem to think. They have gone on the assumption that if the Official Receiver makes an investigation, he does so purely on behalf of the shareholders and creditors; that when he has finished, he hands over his report to the shareholders and to the creditors, and that those outside, who have been taking an interest in the matter, are not to have either part or lot in this investigation and are not to have handed to them the information elicited by the Official Receiver in his inquiries. It is just as well, if we are going to examine the nature of this tribunal and to see whether or not it is likely to be efficient, that we should know where we stand is regards the Official Receiver.

In this Case, in the case of the particular company concerned in this matter and the group associated with it, we have been provided with an opening for an examination of the closest possible character. The failure of James and Shakespeare Ltd., and the compulsory liquidation of that company, gives the Official Receiver the chance of stepping in and making the fullest possible inquiries into everything that is going on and has gone on there since the formation of the company. Inquiries into the circumstances attending the failure of the company and into the affairs both of that company and of the associated companies will be undertaken, not by a subordinate official in the department, but by the Senior Official Receiver himself, than whom, I venture to say, there is no more fearless official to be found in London. He will make his investigation with the assistance of his officials who are accustomed to investigations of the kind. The normal procedure of compulsory winding-up makes full provision for complete investigation and for the consideration of any matter in connection with the affairs of a company in compulsory liquidation and for such action as is deemed warrantable.

The House will observe that this phraseology is of the widest description and the interpretation of it, I can assure the House, will not be a narrow one. In so far as I have power, and I know this to be the view of the Official Receiver as well, his powers will be interpreted in the widest sense and will cover the widest possible area. As far as the tribunal and the method are concerned no one need have any misgivings. The powers conferred on the Official Receiver enable him to pursue his inquiries by examining any director or officer of the company. The examinations are conducted in private and are not on oath but a false statement may be made the subject of proceedings under the Perjury Act. I observed the other day when a question was put in the House on this subject, that there seemed to be some doubt as to whether the evidence would be taken on oath. In the first place, it is taken with the fear of the penalties of the Perjury Act over the witness. A false statement which is made the subject of proceedings under the Perjury Act entails consequences which every lawyer knows leads almost inevitably—such has been the experience—to the evidence given before the Official Receiver being as full as the evidence which would be given in open court.

The Official Receiver has still further powers. He may also apply for an order for the private examination on oath of any person known or suspected to be able to give information concerning the promotion, trade, dealings or affairs of the company. Nothing could be more complete. In fact, that procedure is rarely required because the persons concerned usually attend when summoned. As soon as his inquiries enable him to do so, the Official Receiver summons meetings of the creditors and shareholders to which the Press are usually admitted and to which he gives an account of the firm's history, its financial position and as far as can then be ascertained the causes of his failure. The House may want to know when that is done. Usually it is done within six weeks of the winding-up order. In this case I think two weeks have already passed and so that we may hope that this stage of the inquiry will be completed before another four weeks have expired. Following those meetings, the Official Receiver circulates to the creditors and the shareholders a summary of the statement of affairs submitted by the directors together—and this is important—with his own observations thereon. It is common knowledge that these observations in many cases find their way into the public Press. Publicity therefore, is bound to be, and will be, secured.

That is not all that the Official Receiver has to do. He is a very formidable individual. He has a statutory duty under Section 182 (1) of the Companies Act to submit to the court as soon as practicable after receiving the Statement of Affairs, a preliminary report as to the amount of capital issued, subscribed and paid up, the estimated amount of the assets and liabilities, and an account as to the causes of the failure, so that we can delve right down to the bottom of the proceedings. He has also to state whether in his opinion further inquiry is desirable as to any matter relating to the promotion or formation or, again, the failure of the company. He may make if he thinks fit under Section 182 (2) of the; Companies Act a further report. He can say whether in his opinion any fraud has been committed by any persons in the promotion of the company or by any director, or other officer of the company in relation to its business or any other matters which in his opinion it is desirable to bring to the notice of the Court.


May I ask the right hon. Gentleman a question?


I would rather go through with this. I shall be glad to accept the assistance of the hon. and gallant Gentleman at the proper moment as he has had a lot of experience in these matters, but I wish to go through the whole of this analysis in order to show that we are giving under this system a full examination of the affairs not only of the two companies concerned, but of everything which appertains to their business. Under Section 182 (2) the Official Receiver can state whether in his opinion any fraud has been committed; if any fraud has been committed, if there is a prima facie case, the case is sent to the Director of Public Prosecutions. Let us see therefore, what happens? The Official Receiver makes a full examination. He makes a preliminary report and that report is available to the shareholders and the creditors. There is a communication then made of a documentary kind to the shareholders and the creditors. The Press may be present at the meetings and they usually take advantage of that privilege. If the Official Receiver detects anything in the nature of fraud he can set in motion the very formidable machinery of the Director of Public Prosecutions. I would suggest therefore to the House that until the whole of these processes have been exhausted, we can well say that nothing further need be done of an entirely new character.

Now I want to deal with this, not in its narrowest, but in its broadest aspects. What really has given rise to the trouble in this case? I believe the whole trouble in this case centres round one fact which seems immaterial but which always has been a potent factor in these great marketing operations and organisations. There was no settling day for pepper. If there had been a settling day, say once a week or once a fortnight this speculative position could never have been built up. You can only build up a position of this kind in an atmosphere of secrecy. If there is a settling day once a week or once a fortnight that secrecy cannot be maintained. But in looking at the organisation in London I have seen—I have no doubt it was visible to a great many people long before I came into contact with it—a gap in the marketing organisation. The absence of a settling day undoubtedly leaves a loophole through which much harm may be done. Let us see what has been the experience of some other organisations not dealing in these commodities but in others of a similar class. They have found it necessary to work through an exchange on which a market is made. Of course markets are bound to show for the time being all sorts of fluctuations and there may be a great deal of speculation—and legitimate speculation—or in some instances illegitimate speculation. But an exchange is no good unless there is discipline. There must be discipline exercised over the members of that exchange. There must in every case be a settling day.

Let us take the example of what, I think, is one of the best exchanges in the world, the Baltic Exchange, which is practically the centre of the corn markets of the world. What have they found by experience? They have found, first of all, that they must be under the management of a democratic committee. It is one of the most democratic committees in any great business organisation. The directors of the management committee and the disciplinary committee are elected in proportion to their holdings of shares, and they get one vote for one share, two votes for 10 shares, three votes for 20 shares, and so on. Added to the board is a very formidable minority representing the actual clerks employed on the floor, who are in daily touch with this business and are actively concerned with keeping the atmosphere pure and seeing that no one gets an unfair advantage. That is not only necessary, but essential. By experience the Baltic has learned for wheat and, I think, for other grain, that a settling shall take place once every 24 hours at 11 o'clock every morning. It is a matter of very great concern to the Baltic that that system should be maintained. Had there been anything like this—I do not say once a day, but once a week or once a fortnight—in pepper I doubt very much if we should have heard anything of the recent operations. What is done in the Baltic and the Liverpool cotton exchange is done informally in one or two important commodities in the City of London now. I have ventured to suggest that it would be as well if some of those connected with these trades should consider taking fuller powers to organise themselves on a wider basis and to profit by the example of what has been learned elsewhere.

When these troubles broke out there appeared to me to be an undue tendency in some quarters to magnify them. I do not belittle them in the least, and, so far as I am concerned, as long as I remain head of the Board of Trade, I shall see to it that the investigations go right down to the uttermost limit. We are going to have the whole truth out about this matter. I cannot do it without the assistance of the Official Receiver, but I have shown how ample are his powers. Not only was there a good deal of anxiety and disquiet here, but there were those who are not friends of this country on the Continent of Europe who took the opportunity of writing in their newspapers of this dreadful scandal. They used the dreadful word "Stavisky," as the hon. Member for Gower did. "Stavisky" means to them something definite; it means the corruption of our public life, and will anyone dare say that anyone connected with the Government or any hon. Member of the House of Commons is mixed up in this affair or is guilty of corruption? I venture to say that it is necessary that it should be known, not only on the Floor of the House, but elsewhere and abroad, that, so far as the Government are concerned, there has never been a whisper of suspicion that any Member of it, high or low, and not one individual in the House of Commons who can be fairly accused of having been mixed up in these affairs. It is as well that the world should know that and should know that our public life has been maintained pure. A secondary consideration built upon that fact is that we should do everything we can, inside and outside the House, to maintain the highest standard of British commercial life.


Will the right hon. Gentleman allow me to put the question which I tried to put while he was speaking? In reference to the last words he has spoken may I first, in view of the fact that I made a speech to which he has in some part replied, associate myself with what he has said as to any suggestion being made in regard to any one associated with the Government. The question I wish to ask is whether the right hon. Gentleman is clear that the inquiry to which he has referred can extend as far as he anticipates? I know that he has referred to the provisions of the Companies Act, and his statement was necessarily qualified, because the Statute qualifies it by the words "of the company." Is the right hon. Gentleman satisfied that an inquiry into the affairs of the company, in the liquidation of the company, by or on behalf of the liquidator of the company, by the Official Receiver in the winding-up of the company, will be sufficient to give him that wide scope for the inquiry which I understand, from what he has said, he wishes to have?


I can answer that very briefly. Of course it will, and I would not have said so unless I had satisfied myself on the point.


On a point of Order. A little time ago an hon. Member of this House made a certain allegation against me which I immediately and promptly denied. I invited the hon. Gentleman to withdraw the allegation. He has not done so, and I do not know whether he is prepared to do so now, but, in case he is not, I should like to ask what protection I have against an allegation of that sort which is utterly untrue.


I am the Member referred to by the hon. Member and I intended to rise when the President of the Board of Trade rose. The hon. Gentleman has made a categorical statement, and of course in this House we always accept personal statements of that character. If, after reading the OFFICIAL REPORT, the hon. Member considers that I have said anything to his personal detriment or against his interest, or which accuses his firm of any improper conduct, I will take the first opportunity of publicly withdrawing it. I think, however, he will find, on reading my speech, that I have not done so.

6.37 p.m.


The House has listened with great interest to the statement of the right hon. Gentleman the President of the Board of Trade and to the statements of other Members with regard to the somewhat extraordinary train of events which we are discussing. I understand the President of the Board of Trade to say that he was satisfied that the investigation which is being set on foot by reason of the compulsory liquidation of James and Shakespeare will be adequate for all the purposes which he can foresee. I wish to put to the right hon. Gentleman that there are certain matters connected with this business which it is essential in the public interests should be investigated. I want to indicate what these matters are for they have hardly been mentioned this afternoon. They go to the very heart of this business, and it is necessary that we shall be certain that the form of inquiry proposed will be adequate and wide enough to deal with these particular matters. I was interested to hear the President give his lucid and terse explanation of speculation, and I thought he dismissed it rather airily. My own view is that speculation in the commodity markets has many attendant evils, whatever form it takes, and were this the occasion we might debate that matter. I am not asking for consideration of this evil upon the lines that speculation in the sense that the right hon. Gentleman mentioned it should be abolished. This is no mere ordinary incident in the ordinary operations of the market. If it were an ordinary unfortunate example of normal private enterprise, I should certainly have no right to ask the House or the Government to institute a special inquiry for that reason, but I suggest that, judged by the ordinary standards of ordinary commercial probity, this matter constitutes a special public scandal. I believe it has opened our eyes to a menace which, as the days go by, widens and deepens because the clouds of suspicion grow blacker and the feelings of uneasiness spread.

Statements appear almost daily in the Press which reveal these astonishing and far reaching affiliations, and yet they leave the public to suspect and to conjecture as to who are the real culprits responsible for the present state of affairs. We know that great losses have been made. As the right hon. Gentleman inferred in his description of the commodity market, just as la bull is accompanied by a bear, so is a loss accompanied by a profit, and the losses which have involved this bankruptcy and ruin to innocent people are offset in some place or other by profit for some people who have engineered this business for their own pecuniary gain. I would not venture to detain the House any longer were it not for the fact that I think the House should be satisfied that the inquiry which is now on foot shall be competent to investigate not alone the affairs of the company. In every statement which the right hon. Gentleman made he said "of the company"—that is to say, the affairs of James and Shakespeare, Limited. The examination which the Official Receiver is competent to conduct, as I understand it, is an examination of the directors, the officers, the creditors and the shareholders and any other person concerned with the operations of the company.

The real gravamen of this business, the thing that causes Continental and American people to use the word "Stavisky"—an unjustifiable expression because there is no suggestion of public corruption or of any Government or public official being involved—is the deep suspicion resting upon a mass of highly suspicious circumstances, a suspicion, not that members of the Government are involved, but that persons occuping very high places of trust, almost of trusteeship, in commercial life are involved in a manner which renders them oustide the scope of the inquiry into the affairs of the company. I think the right hon. Gentleman will agree that if it were true that persons responsible for the upshot of this affair, who have reaped a profit from this business, will escape from this inquiry "because they are antecedent to its flotation or outside the actual operations of the company, he will probably agree that the terms or the form of the inquiry should be altered, and that it might very well be one of those grave public matters for which the proper tribunal is a select committee.

May I briefly examine the facts upon which these somewhat grave statements are made? This is not a pleasant task. It is a task of which any Member would be glad to be relieved. I do hope there will be no reptition of the unfounded and, in my view, dishonourable suggestions that Members who conceive it to be their duty to raise these things in the British House of Commons do so because they have some pecuniary interest. I will not go over all the details, but this company of James and Shakespeare, which we know so well, is an old-established highly respectable firm of metal and produce brokers. It has been in existence ever since 1844, but, as we all know, in September of last year this small, highly respectable old-established private company was converted into a public company and its capital was increased from £17,000 to £500,000. An issue was made of ordinary and preference shares to the public.


That is a question which is being inquired into by the Official Receiver, and that may be, after all, only a preliminary inquiry. It might lead to other inquiries, indeed to prosecution, and if that be so we do not want to prejudice the case while the inquiry is going on.


I desire, of course, to obey your Ruling Mr. Speaker, but I find myself in a little difficulty. I seek to submit to the Government certain facts concerning a course of events which, in my view, is supported by the facts which led up to a series of events which finally terminated in the flotation of this company. I am endeavouring to show that it is necessary to investigate the circumstances and the conduct of persons a long way anterior to this flotation, and if I cannot describe those operations it is extremely difficult for me to make a case for the purpose which I seek.


I am sure the hon. Member will agree with me that while the Official Receiver is making his inquiry we cannot have an inquiry going on in this House which might in any way prejudice the affair being inquired into. It is just the same as dealing with a person who is before the courts.


The point where disagreement arises is, I think, that a certain company's business is going to be investigated, is in process of being investigated, by the Official Receiver. Our point is that that investigation and the powers of the Official Receiver will not go into the questions which led up to that company being placed in the position it is now, that is to say, they will not be able to inquire into the operations of persons and companies outside that particular company. If the right hon. Gentleman can clear that point up we shall feel more satisfied than we are able to feel at this minute.


I can give that assurance at once. I thought I had made it clear in my speech that the inquiry would not, and could not, be restricted merely to the affairs of James and Shakespeare, and must go outside them


I do not wish to be obstinate in this matter, but I do desire to lay before the House a certain course of events, and I will ask you, Mr. Speaker, whether you will allow me to communicate to the House what is the form of the course of events I have in mind. If I am not able to do this within the rules, it seems to me, with all respect, that the whole of this Debate must have been out of order, because it has all of it been a description of events which will ultimately be the subject of inquiry by whatever is the appropriate court. I want to direct attention to this point, that when this old company was floated with this enlarged capital there was a great deal of criticism about its flotation. Its prospectus was called in order.


I felt some difficulty at the beginning of this Debate, but since the President of the Board of Trade has made his speech as to the powers which the Official Receiver has to make his inquiry, it seems to me that the question which the hon. Member is now raising is just one of those enumerated as one of the subjects into which the Official Receiver will inquire—the prospectus of the company and all its antecedents.


I will try to keep within the rules. The point is this—and it is a very important point—that I believe it to be true to say that there was in operation six months before this took place a pool, a gambling transaction, among private persons, private persons very highly placed, and this company was floated as a coffin ship designed and floated to go on the rocks carrying the burden, under limited liability, of private persons' personal liability. It seems to me that if there is any evidence of that fact, then I ought to be able to ask the President—


Surely the circumstances of the flotation and the company's prospectus are matters which will he inquired into?


I am afraid that I cannot get much further, but these facts were never mentioned in the prospectus, neither were they required by law to be mentioned in the prospectus. There was no obligation under any Act or Statute that any of these facts should come into the prospectus. The prospectus, while perhaps undesirable, was certainly not illegal, and it is a set of circumstances into which, in my contention, the Official Receiver would have no power to inquire which are the real gravamen and menace in this business. I ask whether that is not possible, believing this as I do. I may say that this belief is not founded on mere suspicion. It is not capable, I will say so right away, of absolute proof, but the gravamen of the business is that everybody in Mincing Lane believes it to be true, every broker who is struggling now to carry on his business in the hands of his creditors, in the hands of the banks, if he has not already gone down, believes it to be true; and one may well ask why it was that this business was ever under written at all by underwriters of great experience and repute, and why it was that responsible brokers of many years' and very high standing in their business should have granted credit to this new company, of somewhat doubtful origin, a credit running into millions. Why was it? I beg to submit that the answer to those two questions goes right down into the heart of what I believe to be one of the gravest public scandals we have seen in this country since Clarence Hatry was committed to gaol. It is difficult within the Rules of the House and your Ruling, which I am only too eager to obey, to explain exactly how these transactions took place, but I do beg to suggest, in the broadest outline, that those brokers who acted—and there are few people in this business who were not given orders by this company—acted first of all, and the underwriters underwrote this issue, because they were given the most absolute water-tight assurances, not in contracts, not on paper, not in any thing that can be produced in a court, but by the ordinary negotiable instrument of respectable business, a verbal promise. They were given a verbal undertaking by people whose repute, standing and con nections were above question and above dispute—


I am sorry to interrupt the hon. Gentleman, but he is now giving circulation to a rumour against very highly-placed people. It is a most malignant rumour, and if he is so certain of his facts will he state these names to the House?


I was at great pains to explain that this was not capable of proof, and I ask the House to attend to this matter, that this is one of the purposes for which this House exists. [HON. MEMBERS: "Oh!"] Yes. Here is a situation which is undermining the public confidence. Are we to await some fresh collapse, some big scandal, before we ask that these things be investigated? The real evil is not so much whether they are true or false. The real evil, the immediate evil, is that men of standing and business capacity and experience over a wide field believe them to be true, and it is that belief that undermines public confidence. I am asking for this investigation not because I believe them to be true, necessarily, but because I believe it is only fair and decent to the persons whose names are on everybody's tongue that this investigation should include the events to which I refer. It should also find out why these old firms of brokers trusted this mushroom company with these enormous commitments. If you ask them they will tell you that they got their orders from people from whom they were used to getting their orders. They will tell you that persons associated with Mr. Howeson, for instance, gave orders for pepper and shellac, and that the con tracts were delivered to James and Shakespeare, and those contracts were—


We cannot have an inquiry by the Official Receiver and an inquiry by this House going on at the same time.


If this Debate goes on much longer, this same difficulty will keep on recurring. Might I suggest to the Government that they have not yet made sufficiently clear—at least to me and to hon. Members above the Gangway on this side—exactly what the powers of the Official Receiver will be, and whether he will be able to inquire into all the antecedent circumstances, however far back. It would simplify matters if the Attorney-General who, I noticed, was here with the Solicitor-General when the right hon. Gentleman was speaking, was able to say, in answer to the specific inquiries from above the Gangway, whether the Official Receiver will be able to inquire into A, B, C, D, E And specific instances of the kind of thing about which the hon. Gentleman wants to know.


On a point of Order. I find myself in a great difficulty, because the Government have offered an inquiry into this matter which we on these benches do not regard as adequate for the purpose- I seek to show that such an inquiry will not be adequate for the purpose, and I wish to show the reasons why I believe that. I should be very glad of your guidance as to what method I should adopt in order to achieve that object.


I have already pointed out once or twice what is the position. I am not disputing the hon. Member's right to inquire from the Government as to the nature of the public inquiry, but what I am concerned about is that the actual questions which the Official Receiver will have to inquire into may be prejudiced by discussion in this House.


I think I see the way out. May I, then, continue to ask the President of the Board of Trade these one or two simple questions designed to find out whether or not this procedure before the Official Receiver will really get down to these difficulties. Will the Official Receiver be able to investigate a sequence of events which I will brieby describe as follows: Three or four people set out on a private corner in commodities. The corner miscarries because they are misinformed as to the capacity of the market. They have bought to their utmost limits and still they have no control of the markets. What are they to do? The only thing that can save them from personal ruin—because these are not limited liabilities—is the operation of a big and strong buyer. No big and strong buyer is available, and it therefore becomes necessary to create one. For that purpose, and for no other if this theory be correct, this unfortunate public flotation is made, and these personal commitments are unloaded on to a limited company, and thus on to the shareholders and creditors of James and Shakespeare. If that were done—and it is believed by every person in Mincing Lane to be a correct description of what has happened—


The hon. Member is doing now exactly what I said he was not to do. He is referring to the affairs of a company which are being investigated by the Official Receiver.


Then I will merely close by saying that I think I have indicated to the right hon. Gentleman the points that are worrying the public about this—what is disturbing the merchants in the market, and what is casting suspicion upon a great many innocent people, and causing people to make dangerous and, in my view, incorrect remarks to the effect that the banks are behind all this. I ask the right hon. Gentleman whether the Official Receiver will be able and competent, in the inquiry which is now proposed, to investigate these grave charges with regard to the antecedent phases of this company?

7.3 p.m.


With the permission of the House I will repeat the statement I have already made. I pointed out that the Official Receiver can obtain his information in conducting his preliminary inquiries with the fear of the Perjury Act behind him. I added to that this fact, that the Official Receiver may also apply to the court for an order for the private examination on oath of any person—any person, as I understand it, would include a banker—known or suspected to be able to give information concerning the promotion, the trade, the dealings or the affairs of the company. It would be very difficult to make it go wider than that. Might I point out to the House the difficulty we are in? This investigation by the Official Receiver is now proceeding. It is quite obvious that we cannot have discussions and examinations and a riddling out of facts as though we were the Official Receivers court. The President of the Board of Trade would occupy his post, and that cannot be done. If right hon. and hon. Gentlemen opposite want to raise this question again at a later date, the proper time to do it is when the Official Receiver's report is made out. That is the moment and then, of course, the whole case would be in an entirely different position.


May I ask the right hon. Gentleman whether he will bear in mind the extreme urgency of this matter, and will do everything in his power to expedite that report? I should also like to know whether, when he explained again what he had already explained so lucidly, he did not regard the addition of the words "of the company" as limiting the inquiry by excluding the events I have mentioned?


I have no doubt as to the possibility of the inquiry covering the ground. If it does not, the Official Receiver can himself ask for a further inquiry. That stage has also to be reached, and that is a further safeguard. With regard to the question of time, I do not know when the report will be ready, but it usually takes something under six weeks for the first report from the time of the winding-up order. I presume that will mean that we are likely to get his first report about four weeks from now.


Do I understand that the right hon. Gentleman's interpretation of these powers will extend to the Official Receiver being able to investigate the affairs of these other companies we have been told about—companies which were registered in the Isle of Man and elsewhere, and which appear to have been mixed up with this one? Would it cover that?


In so far as they bear on this company and on the dealings of this company, certainly.

7.6 p.m.

Lieut.-Commander AGNEW

After the statement of the President of the Board of Trade I would not, even if I could, attempt to throw any more light on the unfortunate affairs which have taken place in the City. I am perfectly convinced that the machinery which the President of the Board of Trade has at his disposal will be used most effectively and piercingly so as to get to the bottom of everything that has taken place. Not only the whole House but the whole country will be relieved when the matter has been thoroughly investigated. There, I think, the first part of our Debate can rest. But the hon. Member for Gower (Mr. D. Grenfell) supported by the hon. and gallant Member for North-East Bethnal Green (Major Nathan) referred to a very different commodity—tin—and seemed to wish to couple it with shellac and pepper. Here you have an entirely different set of circumstances. There has been no great failure in the City or anywhere else in the case of tin. There is no public scandal for the investigation of which the country is alleged to be crying out. On the other hand there has been in operation—for some years now—a tin control scheme, a scheme which at its inception was rightly regarded as being an uncontroversial one, certainly so far as the parties in this House are concerned. Both of these hon. Members have insinuated that there has been speculation, and by speculation I must presume that in this case they meant improper speculation, in tin. I have not the least hesitation in saying that as regards any facts or evidence which the hon. and gallant Member for North-East Bethnal Green produced I do not think any one of them would stand for one moment in any court or public inquiry as evidence of any improper action taken by any person in regard to tin.


I am sure that the hon. and gallant Member would not wish to misrepresent me. I did not, throughout the whole of my remarks, suggest that there had been any improper speculation. In fact, I did not refer to speculation at all with regard to tin. The burden of my remarks was that there was a conflict of interests and of duty, and that was the subject of complaint. I did not mention speculation in tin at all.

Lieut.-Commander AGNEW

I gladly accept the denial made by the hon. and gallant Member that he has not sought to show that there has been any speculation in tin. Indeed, if he had tried to-do that the House would consider that he had failed. But it was, I think, perhaps a little unfortunate that he chose this occasion, on which the House is properly discussing some very unfortunate speculative affairs in the City, to couple with that the remarks he had to make on this commodity of tin. I rather gather from his remarks that he is not in favour of the buffer stock pool operation of the tin restriction scheme, even if he is not actively opposed to the tin restriction scheme itself.


I said nothing of the kind. I said I accepted the scheme of the buffer pool. My complaint with regard to the tin scheme was that there were certain matters of criticism with regard to its operation, with special reference to the private pool and the interests of the private pool as represented on the buffer stock pool, therefore resulting in a conflict of interests and duties.

Lieut.-Commander AGNEW

In that case it is not speculation that is the trouble, and it is not the effect of the tin restriction scheme or the buffer stock pool. But there is some suggestion that some persons, due to the fact that they may have dual functions, may not be properly able to carry out their duties regarding one or some of the commodities on the control of which they are represented. I would say on that point that I do not think the hon. Member has produced any evidence to the House in substantiation of that charge. I think it is unfortunate that he should have chosen to-day of all days, when we are discussing shellac and pepper in the first place, to have brought this very different kind of charge in relation to a different kind of commodity.


They are the same people.

Lieut.-Commander AGNEW

I have no information as to the persons who are concerned in any of these commodities, and I do not think that is relevant to the subject of this Debate. I was interested in one remark which the hon. Member for Gower made with regard to the price of tin to the consumer at present under the tin restriction scheme. I notice that he rather seemed to skate over the fact that the consumers of tin—the tinplate makers primarily—had not taken advantage of the invitation they have had, repeated more than once, to be represented on the advisory committee of the International Tin Committee. If there is any real complaint about the price to the consumer, surely the proper method of dealing with that complaint is in frank and open discussion round the committee table of the International Committee. I do not think that any complaint alleged to be coming from South Wales or anywhere else would hold water for a moment until the trade concerned has taken the proper steps which it can take to be repre sented on the committee. The hon. Member went rather further than that and suggested that the price of tin was too high at present at £215 and that he thought £175 a ton was the proper price. I think he called that the pre-War price. After he had finished his speech I looked up the pre-War prices of tin in the Library and I find that for the years immediately preceding the War, 1911, 1912 and 1913 the prices of tin were £191. £212, and £204 per ton, which is very substantially above the price desired by the hon. Member for Gower when he speaks, as he said, as a representative of the interest of the consumers. I can well understand that the consumers of tin, which is only one of the commodities which they desire for the manufacture of their product, would be very glad if they could get the metal at a much lower price or, better still, they would like it for nothing. They can, however, have no real grievance if they do not seek to represent their grievance to the committee, which, more than any other body, controls the price of the mineral; that must be the acid test.

Before the hon. Member for Gower comes down to the House of Commons again and begins talking about what price he would like to see in relation to a commodity, he ought to consult some of his friends who represent constituencies where the main industry is another branch of the mining industry, namely, coal. I wonder whether he would come down to my constituency and say that he would like the price of coal cheapened to the consumer. In my constituency are poor miners who find it difficult to pay the price of their own coal. Would he advocate to the 800,000 miners who are having to work coal that the price of coal to the public should be so greatly reduced that the payment of wages would no longer be possible, and a good many coal mines might be thrown out of working? In a case like that, hon. Members on the Opposition benches should say whether they take up the attitude of advocating what they believe to be the consumer's interests or the interests of industry as a whole, as I am sure it would be their wish to do.

I cannot pass from this subject without saying something about the effects on my constituency of the tin restriction schema, which has had some if not direct hits, certainly underhand hits and hits below the belt, this afternoon. The main interest and concern of the workers in my constituency is tin mining, and formerly copper mining. In 1931, when the tin restriction scheme was started, the average price of tin was £118 per ton. In that year only 425 men were employed in the Cornish mining industry. In 1932, when the scheme began to take effect, the price went up to £150 a ton and the average employment rose to 737 men. In 1933 the price became £228, and the employment was 963 men, and for the first nine months of last year the average price was £231, which enabled employment to be given to 1,630 miners. The last figures which I have in my possession relate to September last year, and show that employment has risen to 1,825 men. Stated in. a simpler way, the position is that whereas in 1931 there were only two large mines and one small mine working, there are now five large and four small mines working.

Before this House could pass judgment on the tin restriction scheme it would have to take very seriously into consideration what would be the effect of the abrogation of the scheme upon the tin mining industry. It is not a large industry and it never could be one of the great industries of the country in point of numbers, which are not in any way comparable to those employed in coal mining. It is nevertheless true that in times of national emergency and in war, the tin that we take out of our mines is a vital necessity to the continuance of any resistance that this country might make. In the last War the tin which came out of the Cornish mines was invaluable for the production of essential munitions. In these times of peace, the Cornish tin mining industry is not only employing men who would otherwise have no industry in which to get employment, but it serves, and has served for many years, as a kind of world training ground for miners and mining people, and miners go from Cornwall to all parts of the world to take up positions of trust and responsibility in running mines in the Empire and in foreign countries.

There is no doubt that, but for the tin restriction scheme, Cornish mining would have to go out. If I could use more potent words to the hon. Member for Gower I would use them. Here is a report in a Cornish newspaper of what a very prominent Camborne Socialist said with regard to the tin restriction scheme. He said that Cornish Members of Parliament should be asked to watch very carefully the question of tin restriction and to urge the Government to remain in the scheme because if restriction were abandoned, they could say goodbye to Cornish tin mining.

7.22 p.m.


I wish to make a few brief references to the tin restriction scheme, to which the hon. and gallant Member for Camborne (Lieut.-Commander Agnew) devoted his speech. Earlier in the afternoon, the hon. Member for Gower (Mr. D. Grenfell) made references to the tinplate position in South Wales. He told the House that the tin-plate industry was probably one of the largest customers of tin in the country. I think that is true, and he told the House that 20 per cent, of the selling price of tinplate is represented by the cost of tin in a box of tinplate. As a matter of fact, every £5 per ton rise or fall in the price of tin affects the price of tinplate to the extent of about 1d. per box. With the price in the neighbourhood of £220 a ton, the cost of tin, in a box of tinplate selling at 17s. 6d. or 18s. 6d., is about 3s. 6d. It must be obvious that the price of tin and the operation of the tin restriction scheme are of considerable importance to the tinplate industry of South Wales.

To-day and yesterday I discussed the operation of this scheme and its effect with leading industrialists in the iron and steel industry of South Wales. Sir William Firth, besides being chairman of the Tinplate Association, is the largest individual purchaser of tin in South Wales, purchasing what I regard as a record tonnage of 4,500 per annum. The views he expressed on the tin restriction scheme and the price of tin generally are representative of those held by tinplate manufacturers in South Wales. The tin-plate industry of South Wales believes in the efficacy of the international tin control scheme and believes that it is essential to stability of price levels. The tin-plate industry also holds the view that tin producers are entitled to a fair profit on their commodity for average mines that are running efficiently, but they are rather concerned as to the present position and the present level of tin prices.

Most of the time the tinplate manufacturer can pass on to his customer any increase in the price of tin, but there is a limit beyond which that is not possible, and that limit is reached when the purchaser of tinplate decides that he, must adopt a substitute rather than use tin-plate. The industry is rather concerned even with the present price of tinplate because there seems to be a tendency in various parts of the world, as in this country, for the tinplate consumer to look for substitutes. The question of substitutes is a matter of direct interest and of some concern not only to the tin-plate manufacturer but it should be a concern also of the tin producer, because the tinplate manufacturer can get over his difficulty by adopting a substitute as a coating for his steel sheets. Various experiments and researches are taking place at the present time in America. Aluminium has been adopted, and improvements are taking place in methods of coating with cheaper kinds of coat such as a mixture of tin and lead. We have sent technical experts off to study what is being done in America at the present time.

When the price of tin so affects the price of tinplate as to take tinplate out side the reach of the ordinary purchaser, of the manufactured commodity, we are concerned, in the tinplate industry, about other substitutes that are being used. It is quite common in this country at the present time to find substitutes displacing tinplate, because tinplate prices have gone too high. I can safely say, without fear of contradiction or of making mistakes, that every increase in the price of tinplate during the last few months has been due entirely to the increase in the price of tin. We urge upon the Colonial Secretary that, while the tin-plate industry believes in international control and is quite prepared to say that the tin producer should have a fair and reasonable return on the capital invested in tin mines, which means average mines efficiently run, we feel that the price of tin seems to be on the high side at the present time, and we appeal to the right hon. Gentleman to make what use he can of his buffer pool with a view to bringing the price down. We are concerned lest the broker should once again come back and gamble with tin. It is the general belief of tinplate manufacturers in South Wales that there is less danger in a comparatively high price of tin than there would be if the speculator or the broker once came back to the tinplate market and caused violent fluctuations of price. The tinplate industry, while desiring a gradual reduction, pound by pound, in the price of tin, would deplore the return of violent fluctuations; and, so far as it is possible for the right hon. Gentleman to use his influence with the Tin Committee gradually to increase the supply of tin on the market, with a view to reducing the price, I would make an appeal to him to do so.

7.30 p.m.


We have just listened to a case put very moderately and clearly. Naturally the tinplate producer, like everyone else, would like to get his raw material as cheaply as he can. My hon. Friend established, in the course of a speech based on his own experience in that industry, the two factors which have always weighed with me in regard to the consumer, and which have been emphasised to me by consumers in other countries as well as this. The vital thing to the manufacturer is that he should have a stable price, and nothing is more disturbing than a market entirely in the hands and at the mercy of speculators. My hon. Friend said that the increase in the cost of tinplate in recent months was due to an increase in the price of tin. I must join issue with him on that point, for the price of tin has been stable for the last nine months. I think he will also agree, as I should agree, that, if there were evidence that the price of tin was at a level which caused the consumption of tin to be reduced, it would certainly be in the interest of the producer as much as of the consumer that that price should be lower. I have not been able to find any evidence up to the present that the price has in any way prejudiced the tinplate industry, though I have heard it said that it has. There are cases in which some other alternative has been adopted, but that is not as a substitute for tin; it is an entirely new process, and something with which I do not believe tinplate could compete.


May I make one correction? In what I said about the price of tin I did not mean to limit myself to a few months' prices; I was speaking of the prices over a number of years.


This is not a forum in which one can discuss these matters with the greatest advantage. Only those most closely acquainted with them can really discuss them. I think that much the best way in which the tin user in this country can bring his influence to bear in the councils of the international scheme, which runs for its full period of three years, is by doing what the American consumer has done, that is to say, appointing a representative of the consuming industries of this country to be present at the meetings.

Turning to the broader issue, I came here to-day expecting to have to defend the tin scheme, but only two people have attacked it. Both from the Labour Opposition and from the Liberal Opposition have come tributes to it, as, indeed, might be expected, for it is about the only piece of policy on which we have been able to agree and to have continuity. The scheme has been welcomed and supported. Only the hon. and gallant Member for North East Bethnal Green (Major Nathan), who, perhaps, has not yet become quite acclimatised to his new environment since he crossed the Floor of the House, appears to rank as an opponent of the tin scheme—


I stated that for the purposes of this Debate I took no exception to the scheme—that for the purposes of this Debate I accepted it in its entirety, and would relieve the right hon. Gentleman of all 'necessity for referring to the matter at all


I do not quite know what the hon. and gallant Member means. I suppose he means that he adopts a position of neutrality. He appears to be sitting on the fence, watching which way to jump. I am glad to have the opportunity of saying a few words to-night about the scheme, for, whatever else the hon. and gallant Gentleman did, and whatever his attitude may be, he certainly tried to prejudice the scheme by a number of insinuations. I want to say quite categorically that the scheme as it is carried on to-day, with two exceptions to which I will refer in a moment, is exactly the same as the scheme which the Labour Government initiated. The system of advisers is the same; the gentleman to whom he made particular reference was appointed by the Labour Government as an adviser on the scheme, and has been so ever since. There are two differences in the scheme as it exists to-day from the scheme which I inherited and helped the Labour Government to create at their request. Before I took any hand in this matter as an unofficial member, I said I would not co-operate unless I was satisfied that the Government of the day wanted it. I was told by the Colonial Office and by the Board of Trade that they did want it, and would be very glad, therefore, if I would co-operate.

There are only two differences. One is that the consumer is now represented on the advisory panel. That was introduced following a proposal of my own in my rubber negotiations, that the consumer should be represented on the advisory panel in regard to rubber. That is now extended to tin. The other difference is the creation of the official buffer stock, for which I take my fair share of responsibility. A number of questions have been put to me about it. It is true that certain interests in Malaya were opposed to it. The mining opinion in Malaya was by no means unanimous, though mining opinion in the rest of the countries was, I think, unanimous. But what weighed with me was that, unless you have what I may call the balancing tank of this reserve, you cannot give any guarantee to the consumer that there will not be a sudden and unexpected rise in price. Two things may happen. There may be speculation, though the result of the tin control has been greatly to reduce speculation in the tin market, as my hon. Friend has just said. The price has remained steady for a period of 10 months, and more which I should think is unique in metal market experience. You may, however, get speculation which you cannot control. You may get a bear raid followed by a bull attack—I am not sure whether those are the correct terms; I am not very well acquainted with bear operations. You may get a rise in price which you could not expect. You may also get some sudden development of manufacturing capacity in the world—possibly some great new deal undertaken here or there, or some new development resulting in an increase in manufacturing demand which you cannot meet at once by lifting the quota, because the tin has to be mined. It was suggested in some resolutions to which the hon. Member for East Fulham (Mr. Wilmot) referred that it would be a good thing to allow the mines to carry two months' instead of one month's stock. That has been done, but I do not think it is enough.

It is essential, in the interests of the consumer, to have what my right hon. Friend the Member for Epping (Mr. Churchill) would probably call a mass of manoeuvre, so that you may be able to come in if there is an improper rise in prices or a sudden unexpected demand, and take it up on this cushion. I take my full share in the responsibility for instituting that provision. In other respects the scheme is exactly as it was when the Labour party introduced it. It is a scheme on which both parties, when they have been responsible, were agreed. An inquiry has been suggested. What better inquiry could you have into this scheme than the World Economic Conference which met in 1933? It investigated the scheme exhaustively, and not only did the scheme leave the court without a stain on its character, but this is the finding of the World Economic Conference which consisted of representatives of 66 countries: Discussion did not elicit any substantive criticism of the scheme. No suggestions were made for its amendment; no alternative methods for control were proposed. The sub-committee considered that the existing scheme of control is framed upon sound lines, that it is in accordance with the principles accepted by this conference as those which should govern the framing of plans for the co-ordination of production and consumption, that it had worked smoothly in actual practice for a period of over two years, and that it has been largely successful in achieving its main objective. They go on to say that it would be a grave disaster if the scheme were to break down and were not to be continued, and they recommend other countries to come in. Four other countries have come in since.

The question of price has been raised. It is extraordinarily difficult to say what the price ought to be, nor do I believe that a restriction scheme can be run on a price basis. Experience of all control schemes has shown that the primary rule as to whether supply should be increased or decreased is not price, but demand. The price is a factor, but the primary rule must be supply and demand. It is extremely difficult to say what is a fair price. A price which would damage the consuming industries would be a bad one. One thing is very important, and that is that the consuming industries in every country should get their material at the same price. I have known cartels in the old days. At one time there was, I think, a copper cartel operated in the United States, where the material was available at one price to United States manufacturers but at a different price to outside manufacturers. There is no question of that here. Where you are to consider a reasonable price, one consideration would naturally be that of the prices of the commodity as compared with others. I have looked at the figures, and—taking the year 1913 as 100—I find that the official figures for a number of commodities give the following prices for 1934:—Tin, 114.2; Nickel, 125.2; Aluminium, 125.0; Coal, 126.0; Pig-iron, 115.0, and Tin-plate, about 150. As regards the last of these commodities, tin-plate, I think it only fair to say that I regard the price before the War as deplorably low; but it is clear that, compared with the other prices quoted, that of tin is not unreasonably high.

What attitude did hon. Members opposite take up in this matter, because that is rather relevant if I am to be criticised about prices? The Leader of the Opposition was a Member of the Government that gave very careful consideration to this matter. They found that there were great stocks overhanging the market. They arranged with the pool. [An HON, MEMBER: "They were frightened by the pool!"] On the contrary, they courted them. They arranged with the pool to take over these stocks. It was a very good investment. They not only arranged for the stocks to be taken over, but they agreed what was to be the price at which releases should take place, and they further agreed that Malaya and Nigeria should go on in the scheme, even if it would otherwise come to an end, unless the pool was liquidated. The object of the pool was to raise the price. What were the prices which they considered reasonable at which the pool was to release? At that time we were on gold. That is not just a debating point, because many of the consumers and producers are still on gold. This was an international agreement. The pool tin was to be released at prices between £150 and £180, and the biggest releases did not take place until it got to £180. The sterling price to-day is about £215, and that is equivalent to a gold price, I think, of about £135. People who entered into an agreement for a price of £180 gold cannot criticise us to-day with regard to a price of £135 gold.

I only wish to add a word on the subject of the private tin pool. I have told the House in answer to questions that I did not propose to give information disclosed in confidence, and properly given as fully as possible, to the chairman of the committee. I think that is a principle which the whole House accepted. Indeed, it would be impossible to obtain any information otherwise. The hon. Member has made a number of allegations and insinuations about that pool and I am, therefore, compelled to say something about it, not because of individuals but in justice to the Government of a very friendly State which is a partner with us in this scheme. When I say that, I think it really shows that people ought to be a little careful in allegations that they make in this House. It is well known that the Dutch Government are themselves the major proprietors of the mines of the Netherlands East Indies. They own a preponderating share in those mines, I believe something like four-fifths.


Is the right hon. Gentleman suggesting that the Dutch Government as such is a member of the pool, because my information is a contradiction of that.


I have to say this. I have been in consultation with the Dutch Government. I think it shows the great importance of being rather careful before making allegations in this House. I am put in a very difficult position in answering, as I must answer now in fairness to a Government which is a partner with the British Government and always has been in this and other schemes, and because the Dutch are interested in this I have to say what I am going to say now. I have told the House that the Colonial Office and the Malayan and Nigerian Governments were not consulted as to the formation of this particular pool. The chairman was informed very shortly after the pool was formed that the sole object of forming it was not to speculate or to raise the price but to keep the price steady. He was also told, be tells me, that they did not expect to make money out of it. They thought perhaps they might lose money but they thought it was in their interest as producers that the pool should be formed to hold the price steady. No attempt was made to raise the price. It was kept steady for, I think, a period of eight months. They disclosed every single one of their operations to the chairman of the International Tin Committee. I would quote to the House, not any criticism of my own but a circular that was given me the other day from the firm of C. Trench & Company one of the great metal brokers in New York. This is their appreciation of the scheme: It is not known exactly who has been behind this movement but it bears the earmarks of having the endorsement and backing of tin producers who, contrary to their procedures in former years, are now perhaps doing something to establish an orderly market for their product. That it has been unpopular to some of the London operators is quite natural because it has prevented those wide swings in values that were engineered and encouraged when producers left it entirely to the operators to make the market. That it has been aimed at a species of market control goes without saying, but the charge that it looked towards cornering the market is refuted by the very actions of the market itself. Those who sold London Standards as hedges against Straits tin have had no difficulty in effecting exchanges and it was only those who sold short or who had nothing to exchange that have been penalised. [Interruption.] I have not the hon. Member's knowledge of the market. I am told it is a very large firm of brokers in New York, and that this was an ordinary circular that they sent out. They act as brokers—


For the pool?


Do you know that?


I ask you that.


I have not the least idea. If the hon. Member says it is a prejudiced opinion, I would not dream of saying it against the very unprejudiced views which he has communicated. In my innocence, I quoted it as an American opinion, but I am not particularly concerned with that opinion. What I am concerned with saying is that I make that statement as regards the operations of this pool in which neither His Majesty's Government nor Malaya nor Nigeria have any interest, which has given the fullest information to the chair man of the International Tin Committee throughout and which, on the facts which are patent to the whole world in regard to the stability of the market, has obviously carried out the intention which it stated at the outset that it was not there to speculate but to hold the price steady. I felt that it was my duty to say that, in view of what has been said, in fairness to the Dutch Government, who have been in this tin scheme, as in rubber, in tea and in other negotiations, our most loyal partners.

I am sure that without this kind of regulation, conducted reasonably and fairly, you will never get world trade going because it is the primary producer who affords the purchasing power to the exporter. I suggest to the House that, being agreed, as I believe we are, that this is a sound policy and that it is being soundly conducted, it would be a terrible disadvantage if it were to be prejudiced by attempting to associate it with any speculation which may or may not have gone on elsewhere in some other commodity.

8.1 p.m.


It is my experience generally of cartels and monopolies that they are as a rule devised for the benefit of producers and that they penalise the consumers. I rose to introduce a somewhat different subject, though one connected with the earlier part of the Debate, namely, the scandals which have been unearthed in the City of London. There is one thing that we find, those of us who have studied this question, and that is that where you have a very cheap money market, as you have to-day, you generally have those scandals. We find that at a previous period in our history, such as after the Napoleonic Wars, we had a great number of big scandals. In other words, when you have, as you have to-day, an accentuated cheap money market, you play into the hands of every variety of unscrupulous person, in the City of London or anywhere else, and make things easier for them, with the result that you have an increased number of those scandals. I will read an extract from "History of American Currency," by Sumner: Mr. Baring, in his evidence before the Bullion Committee, and Mr. Huskisson … bore ample testimony to the repeti tion of the old phenomenon of speculation under inflated paper issues. The enterprises undertaken were indeed of the most extravagant kind. For instance, speculations in South America took ludicrous shapes, being in no way adapted to the circumstances of that country. A company was formed to send out Scotch milkmaids to make butter in Buenos Ayres. But when the milkmaids saw the beasts they had to deal with, they shrank from the encounter. A corps of labourers was required to secure the animals at milking time, and when the butter was made it was found that the people preferred oil. That will give the House some idea of what our forefathers went through. There are ample powers for the Official Receiver, but you cannot by Act of Parliament prevent fraud, or deceit, or deception, or thieves, or marauders of various sorts. All that you can do is to have some system of finance which may limit to a certain extent the opportunities for such frauds and such sorry finance. I appreciate very much the courtesy of the right hon. Gentleman the Chancellor of the Exchequer in attending this Debate. We know that he has suffered some illness in his family, and I should like to take this opportunity of offering him my best wishes and the hope that his boy may recover from the operation which I understand he has recently undergone.

The question that has been before the House and the country very much in the last few days has been, Why is the pound falling? We have had many explanations offered in the newspapers and elsewhere, and many of them have been rather curious, but it is a very interesting problem. Why does the pound continue to fall? If I may say so, the paper pound continues to fall because there are too many paper pounds outstanding. That is the question in a nutshell, and in proof of that I would point out that when we went off the Gold Standard in 1931, the Bank of England note issue amounted to £364,000,000, whereas in 1934, last year, it amounted to £405,000,000, an increase of £41,000,000. The right hon. Gentleman, I think, pointed to this as a theme for rejoicing, and he and other Members of the Government said, "What a wonderful thing this is, because it shows our increased purchasing power." Obviously, if you are inflating—and by your notes being off convertibility you are offering every opportunity to inflate and increase your issues—you are, by your public expenditure in every direction, because there is no economy nowadays, increasing the purchasing power of the people, and that is reflected in this high issue of notes. That is the reason why the pound has fallen and will continue to fall, if this policy, this most fatuous and insane policy, is continued.

If the right hon. Gentleman will devote a little time to the history of this country and what took place after the Napoleonic Wars, when we went through a very similar experience, he will find that the same arguments were advanced and the same inflation existed as we have to-day. It will well repay any Member of this House, if he has any leisure, to look through those old Debates, and he will find almost the Debates of yesterday or the day before reflected in the Debates of over 100 years ago. The proof that this inflation exists can be ascertained by anyone. It need not necessarily be a financial expert or a financier of standing. Anyone can test it by comparing the market price for fine gold which to-day is about 147s. per fine ounce, with the old Mint price of gold bullion, which was 85s. per fine ounce, and the difference between that old Mint price and 147s. is the measure of the amount of inflation and depreciation which exists and which is brought about by continually increasing the issue of notes.

Notes are like everything else, like wheat and iron. When there is a plethora of wheat, the price of wheat falls, and in the same way, when there is an excess of notes—and there is no check to-day; there is no convertibility necessitating their being in any sense controlled—the result is that the price of the paper pound falls. It is, as I say, proved by comparing the old Mint price of 85s. with the present market price of 147s., which means that it requires in our currency to-day 147s. to purchase what we formerly purchased for 85s. If your notes have depreciated, you require more notes to purchase the same tiling that you purchased formerly for 85s. It is only right and proper perhaps that one should inflict a speech of this character on the House in the dinner hour, because it is a very technical matter, which would probably be very dry for many Members, but I am grateful to those hon. Members who have done me the courtesy of remaining in the House to hear my few remarks.

There is one other test, which is called the quantitative theory of money, and it is the test, as it were, between the amount of commerce and trade which we are carrying on and the amount of currency that is in existence at the time. When you have convertibility and your trade governs your currency—in other words, the quantitative theory—if you had a cotton crop of, say, 17,000,000 bales, it would obviously require more currency to move the 17,000,000 bales, all things being equal, than to move a crop of, say, 12,000,000 bales. Therefore, if we test again the amount of our currency to-day with the aggregate trade which we carried on in 1931, when we went off the Gold Standard, we shall be able to see whether there has been an increase of currency compared with the trade which we then carried on.

I have taken out the figures from the "Economist" newspaper, which is admittedly a reliable authority, and I find that in 1931 the average trade per month was £66,512,000 imports and £32,430,000 exports, or a total aggregate monthly average of foreign trade in 1931 of £98,942,000. In 1934 our imports, monthly average, amounted to £59,660,000, and our exports to £34,300,000. That is the difference between an aggregate last year of £93,960,000, and one of £98,942,000 in 1931. We had an increase in our Colonial trade, our trade with the Dominions, we know, but I am taking our foreign trade, and it is, of course, our foreign trade to which we look in the main to get rid of the 2,400,000 unemployed, because we live by our foreign trade. My point is that if we take these facts, they show that our average trade has hardly moved at all, and in the figures of the large expansion in the note issue of 1934 compared with 1931 you have the secret of the fall in the pound. I hope I have made that clear. The pound will continue to fall until you reverse your policy and gradually contract your note issue so that the notes will again be equal to the value of the gold which they represent.

At one time, three or four years ago, when I returned to this House, in the last Parliament, from 1931 onwards, I looked forward to the possibility of getting back to the old parity, but I realise, of course, that that is now impossible, and my only anxiety now is to stop the rot, as it were, and to try to impress, if I can, in my humble way, on the right hon. Gentleman the Chancellor of the Exchequer and the other Members of the Treasury the necessity for cutting our loss and stabilising now at or about the existing rate. I get very little encouragement from the right hon. Gentleman, who told me the other day he could offer me no hope. What was the effect of that statement? I should say that that answer of his must have cost this country and the world at large some millions. Of course, I do not suggest that any answer of his, whichever way, will affect in the main the trend. People talk of speculating. Speculators take advantage of conditions, but they do not create those conditions. The fact that a responsible Chancellor of the Exchequer said an emphatic "No" was a signal to the world in general and to speculators in particular that they should either sell bears or should sell short, and that actually accentuated the fall of the pound. It is a gradual descent: "Facilis descensus Averni"—easy is the descent to hell.

What is the remedy of the right hon. Gentleman for this descent? When, not very long ago, I asked him whether the Exchange Equalisation Account of £350,000,000 was used to maintain the pound, he said, "Oh, no." Was it used to depreciate the pound? "Oh, no," said the right hon. Gentleman. I understand that this fund is for the purpose, as the right hon. Gentleman has said, of ironing out the fluctuations without interfering with general trend. In other words, it is the pledging of the nation's credit to the tune of £350,000,000 for the purpose of facilitating the descent into hell. It is to ease the situation, so that it should not be too swift, and he has brought into being apparently all this machinery for that purpose. I was glad that the right hon. Gentleman, who on many occasions leads His Majesty's official Opposition with such skill, drew attention to the fact that the Prime Minister and the party which he leads were returned to power for the very purpose of restoring and maintaining the pound, but to-day we have the pound at a discount of from 40 to 45 per cent., and the general trend is downwards with no possibility, apparently, of any cessation of the trend.

The Chancellor of the Exchequer is not able to offer us any hope. Apparently, he thinks it is all due either to these wicked foreigners or to the disequilibrium between the dollar and the franc, and that it is an advantage for the British Government to have freedom to move the pound up and down. What an absurdity. Does the right hon. Gentleman think that a miserable £350,000,000 will correct the exchanges of the world. The pound will go down and continue to go down in spite of the equalisation fund here or in America with regard to the dollar because of the general trend of economic forces. The wheels of God grind exceedingly small, and so do the economic forces grind exceedingly small, and they will bring down the pound and the dollar until the Government get back to common sense and sound finance. The right hon. Gentleman can offer us no hope; it is always the speculator or this disequilibrium between the franc and the dollar: The fault, dear Brutus, is not in our stars, But in ourselves, that we are underlings. I and many other hon. Members refuse to accept a policy of despair. We believe that there are remedies, and that it is possible for this country to recover its former position, as it was in the past, by the action of a few individuals, who in a humble way, as I am endeavouring to do, put their arguments before the House of Commons and were able eventually to convert Sir Robert Peel to a belief in sound principles of finance. I ask who is to be the Sir Robert Peel. Will it be the Lord President of the Council who was formerly junior Lord at the Treasury and must know something about finance? It may be perhaps even the Chancellor of the Exchequer who sometimes has expressed himself as being in favour of sound finance and has a desire to return to specie payments. The right hon. Gentleman the other day, in answering me, said that the internal value of the purchasing power of the pound, of which I am aware, had not been altered, though the external value had been altered. Are we not affected by the external value of the pound? We have received a document from the Prime Minister with regard to defence. It is an argument in favour of increased armaments. I fail to see that he makes out any case, but the point to which I wish to draw attention is that in that document there is not a single word about finance and financial reserves. Mr. Disraeli, the great leader of the party to which the Chancellor of the Exchequer belongs, and Mr. Gladstone, the great leader of the party of which I am a humble follower, believed that when there was war or prospects of war, or when in difficulties, it was essential to have financial reserves' as well as to provide an army and a navy. The "J.R.M.," who initials this document, says: The National Government … can no longer close its eyes to the fact that adequate defences are still required for security and to enable the British Empire to play its full part in maintaining the peace of the world. There is not a word as to the initiation of steps to put our finances on a sound footing to safeguard us against financial dangers. Finally, he comes near to it, but he does not touch it in any sense whatever. He says: Peace is the principal aim of British foreign policy. The National Government intend to forward this object not only by methods adopted in past years—support to the League of Nations, security agreements, international understanding and international regulation of armaments—but by any other means that may be available. This is the means which is available, and it is entirely neglected. Some time ago a £5 Bank of England note on the Continent of Europe commanded a premium, but to-day a £1 note can be bought or sold for the equivalent of 11s. 4d. in Paris. What would be the position of this Government were they thrown into hostilities in Europe? How should we be able to finance and pay for the Army and other forces which it might be necessary to send there having regard to the fact that the pound is worth only 11s. 4d. to-day in Paris. Does not that strike hon. Members as a factor to be taken into consideration? Are our defences wholly to consist of aeroplanes, naval ships of war, and the Army? If our financial defences are weak and rotten, then we are going down into the abyss, and we do not understand what constitutes real strength. If I cannot make any impression upon the Treasury, I would ask the House and all who are concerned in the great departments of life, whether I am not putting forward arguments which appeal to their impartiality, their intelligence and common sense. If we are to be asked to support an increase in military armaments, are we not equally entitled to press upon the Government that instead of creating mere engines of war we should provide the sinews of war. Which was the Power that was able to finance the other Powers of Europe in the Great War? It was Great Britain. It was the financial resources of this country. I do not wish to decry the bravery, the prowess and the skill of our soldiers, but any responsible person will agree with me that it is essential, that if you have any reason to fear war—I do not suggest that there is any imminence of war—then in times of peace you must prepare for war, and the best method is to economise and husband your resources, your financial resources, so that if you should be faced with the calamity of war you will have the resources upon which you draw.

What resources have we to-day? We have a falling pound. What a position we present. The people of France are amazed. Hon. Members in this House laugh when one raises the question of the falling paper £. They think it is a joke. They do not seem to have any elementary knowledge of what it means. They think that if the £ can be changed here for 20s., things are all right because prices have not risen to any very large extent. What has happened is that there has not been any large increase in prices, but if we were on gold and if we had a convertibility we should I believe have much lower prices. While I desire that the captains of industry should get a fair and legitimate profit I believe that the great mass of the community, the poor, those who have to struggle and to account for every shilling they spend, are the people who are most interested in low prices rather than high prices. If we could arrange our financial system so that it would enable us to get low prices and reconcile that with a fair profit, we should then be doing something not only to benefit the rentier, those who are dependent upon dividends, but something particularly to benefit the wage earners.

Therefore I would make an appeal to the Chancellor of the Exchequer, in the hope that he will, even now, if I have been able to make any impression on him by the arguments that I have submitted to him in all sincerity, consider the ad visability of doing what was done 100 years ago, namely, to appoint a Committee to go into all the reasons that bring about this fall in the paper £ and a rise in the value of gold bullion. The Government could reject or accept the report of such a body. At any rate the right hon. Gentleman would be able to give us some idea of some policy and not always be putting us off with a policy of despair.

8.30 p.m.


I have listened with some surprise to the arguments used by the hon. Member opposite. He has based his reasons for the falling £ on the increase in note circulation. I have not the figures by me, but if the hon. Member had given us the rise in the note circulation we should have seen that there has not been a very considerable rise in the last year or two.


I tried to be perfectly fair, I gave the actual figures. I gave the figures when we went off the gold standard in 1931 and the figures for last year. The increase amounts to £41,000,000.


The hon. Member only gave us figures for two points, three years apart. I believe that if he could have seen when the rise was taking place he would have found that there had been no considerable rise in the note circulation for the past year or two, and that any rise that there has been was in the amount of gold in the Bank of England, and the note circulation was expanded to a certain extent against gold. My reason for pointing this out is that I. think that the causes of the fall in sterling at the present time are to be seen easily elsewhere, and they can be explained in ways other than those suggested by the hon. Member. Until recently the sterling rate had remained fairly level, but recently certain circumstances, one of which has been very freely discussed here to-day, began to unsettle people's minds about the strength of sterling, especially on the Continent. The pepper revelations, as they were called, created a certain amount of uneasiness. Moreover, some time ago, the "Daily Mail" newspaper carried on on the Continent a campaign in regard to the stability of the present Government, which undoubtedly very much alarmed the people in France. They thought that there was a General Election coming very shortly and that there might be changes in the Government of this country. Therefore when the ground had been prepared to that extent on the Continent we found the Continent nervous about the position of affairs over here, and a great mass of speculators in money came in and began to see whether they could not get benefit out of the state of affairs.

I wonder whether hon. Members realise the enormous change that there has been in the money market compared with pre-war days. At the end of the War it was stated that there was something like £2,000,000,000 of money that floats about among the markets of the world, according to the fears of the owners. These monies are moved from one centre to another. Fears began to be aroused recently about this country. Up to that time there were no nervous fears about France or America and accordingly for the time being we have suffered as a result of those fears. With regard to the hon. Members arguments, although there may be some truth in the statement that if there has been an expansion in notes that probably would have some effect on the fall in the pound, it seems to me that the present fall has nothing to do with note circulation, but is explained by the other circumstances to which I have referred. I disagree with the hon. Member in what he said about the Exchange Fund. At one time he said one thing and later he contradicted himself. The Chancellor of the Exchequer made it clear that the Exchange Equalisation Fund was never intended to hold up the price of sterling in the case of a distinct and continuous fall, but that it was intended to smooth out the ups and downs in the market.


I said that.


At one moment the hon. Member accused the Chancellor of the Exchequer of having brought into existence the Exchange Equalisation Fund in order to hold up the price of sterling. I may have misunderstood the hon. Member, but he went on to say that it was quite worthless because it could not hold up the price of sterling. The Chancellor of the Exchequer never said that it could do so against a permanent fall in the price of sterling, that it could only smooth out irregularities, and I cannot understand why the hon. Member should accuse the Chancellor of the Exchequer of bringing into existence a fund to do what he never intended the fund to- do. The first thing is to ask ourselves, what is the home position as a result of the fall in sterling? As a matter of fact, the position is rather unique. The hon. Member for East Edinburgh said that Paris was laughing at an 11s. 4d. pound. The hon. Member is entirely mistaken. It is the one place where they are not doing that.


I said that Paris is amazed that we in this country do not seem to appreciate the gravity of the situation.


The impression the hon. Member made on my mind was that Paris was laughing at the fall in the £, and I thought that it was about the last thing the people in Paris would do. The one concern of countries who are still on gold is the position in which they are being placed as a result of the fall in sterling. From our own point of view we may feel, unless there is a rise in prices, that this fall, as far as it has any effect upon us, is beneficial to our export trade, although it is the reverse in regard to our import trade. But we, I think, get more benefit on our export trade. On the other hand, we have to consider what is going to be the effect on countries like France, Italy, Belgium and Holland, of this fall in sterling and the effect it is having on their prices and the condition of trade in those countries. We often hear arguments used in regard to tariffs and quotas and restrictions and the handicaps they are to trade.

My feeling at the present time is that the greatest handicap to the export trade of this country is the instability of the exchange. When the hon. Member suggests that the Chancellor of the Exchequer ought to give him an answer holding out hopes of some change in the policy of this country, I think that the Chancellor is exceedingly wise in the answers he gives. If the hon. Member has any doubts about this he has only to read the papers and see the effect of the answers which President Roosevelt began to make to some questions in regard to financial matters. The money market in New York was so profoundly affected that the President had to issue another statement denying what be is supposed to have said. That shows the wisdom of the Chancellor of the Exchequer in say ing "No" very firmly to the hon. Member, until he has arrived at a point where he can say something definite. My chief conclusions on this matter is that it is quite impossible for this country to move in the matter of exchange settlement until the President of the United States is in a position to move. It is no use blaming any Government of this country because we are more or less helpless until America has made up her mind as to what she is going to do with the dollar. Until President Roosevelt can fix a price for the dollar we can do nothing except wait on events.


We did not wait 100 years ago.


The hon. Member lives in the past. One of the chief enjoyments of his speeches is that he draws his lessons from the past. I feel that the great thing which England needs today is a settlement of the exchange question, and we have to wait the decision of President Roosevelt. Until he is able to come to his conclusions I do not see that anything can be done. The Chancellor of the Exchequer will know far better than any of us what are the possibilities in that direction, but if anything can be done in that direction it will be of the greatest service to our export and international trade. The greatest contribution which can be made to a solution of the problem of unemployment to-day is to be found in the exchange question. Therefore I am glad that the hon. Member has raised this matter. Although I disagree with many of his arguments I agree in thinking that we are now discussing the greatest solution that can be found to our industrial and social problems.

8.42 p.m.


I think that the House, small as it is, must have been shocked and amazed by one passage in the speech of the hon. Member for East Edinburgh (Mr. D. Mason). He revealed to us that he has changed his mind. He declared that three years ago he came to the House believing that we ought to reestablish the £ on gold at its old parity, but he has now confessed that he no longer holds that view. He has joined the ranks of the infidels and agrees to a policy which would establish the £ on gold at a lower basis than that made sacred by the provisions of the Bank Act. That is a remarkable advance. Earlier in his speech he said that this Debate was exactly paralleled by a Debate of 100 years ago. The hon. Member, I think, is right. He could have gone further. The other day I was looking up old volumes of the OFFICIAL REPORT and I chanced upon a speech made by the hon. Member before' the War. It was the same speech. He is entirely right in saying that the views he holds are a reflection of the past, but we are now in the present, and must act accordingly.

My desire to take part in the Debate was prompted by the intervention of the hon. Member for East Edinburgh at Question Time last week. I think it would be rather unfortunate if the impression should go out that the House in general was dissatisfied with the financial policy pursued by the Chancellor of the Exchequer, and that the House was disturbed by the movements on the foreign exchange. The hon. Member for East Edinburgh always speaks of the pound falling in relation to these movements on the foreign exchange. I think he is wrong. Surely it is more proper to talk of the price of gold rising. I am sure the hon. Member will agree that since the movement on the exchanges began there has been no change in internal prices in this country, and the vital matter to people in this land is that there should be no sudden change in the internal value of the pound sterling. It is far truer to say that we have nothing to be disturbed about, but that countries based on gold have a great deal to be disturbed about.

The hon. Member for Finsbury (Sir G. Gillett) has given many excellent reasons for the recent movement on the exchanges. There is another reason that I am satisfied is important. That is the decision given by the Supreme Court in America on the Gold Clause. Undoubtedly the effect of that decision on the minds of those people who are concerned with financial operations throughout the world was to make them convinced that at last at any rate the gold content of the dollar was settled. Gold, therefore, secured rather a better value. The hon. Member for Finsbury referred to happenings in the United States yesterday, when the President made his statement. What happened? On the exchanges here the value of the dollar at once went up from 4.71½ to 4.78½. The reporters returned to ask the President whether he had meant what they had interpreted him as meaning. With a shrug of his shoulders the President said "No," and the value of the dollar in London came back within a minute or two to 4.74½. It is a very unfortunate thing that one man by a shrug of his shoulders can alter the relation of currencies on the exchanges. But there we are.

I was moved to intervene in this Debate by the hon. Member for East Edinburgh and also by certain evidence that people have begun to think it proper to chivvy the Chancellor of the Exchequer on his financial policy. Reference has been made to what people call the excessive cheapness of money. I will not say that I agree with the Chancellor of the Exchequer in all his views, but the financial policy of my right hon. Friend since he took office has been such as no business man, no sound patriot, can seriously object to, and has resulted in this country recovering a great deal of the position which it lost in 1931.

I will adduce certain considerations to the House in support of my belief that the policy of the Chancellor of the Exchequer has been not merely good but excellent and extremely wise. I think we would all agree that stabilised exchanges are good. What happened when the Economic Conference assembled? The speech made by the Chancellor of the Exchequer indicated quite clearly that he was prepared to discuss stabilisation if the other countries, and principally the United States, would discuss it on reasonable terms. He received no ecouragement. I am eternally thankful that he did not endeavour to do something on his own account, not knowing what the other countries were going to do.

Moreover, the Chancellor of the Exchequer had about the same time endeavoured to make a change in the international financial relationships, that would have made stabilisation more possible, and would, even without stabilisation, of itself have made the international financial situation better. My right hon. Friend did his best to secure a settlement of war debt and reparation payments. It is my belief that if he had been successful in securing a satisfactory settlement of war debt and reparation paymets, if, further, he had been encouraged by other countries to engage in an attempt at stabilisation, then most of the financial troubles of the world would now be settled.

It is unfair now to accuse the Chancellor of the Exchequer of being responsible for these movements on the exchanges when he had received no sort of encouragement from the other countries which could have made possible such action as he desired. Until he receives that encouragement I hope he will not on any account undertake such operations as the hon. Member for East Edinburgh would desire.

When this House assembled in 1931 the hon. Member for East Edinburgh desired as soon as possible a return to the Gold Standard on the old parity. I desired, in a quite opposite sense, a managed currency. I am delighted to think, when I survey the events of the past three years, that what I wanted has come to pass, and that what the hon. Member for East Edinburgh wanted has not come to pass. Whether a managed currency without any reference to gold will be the currency of the world in the future I cannot say. I am not very particular. I am quite satisfied to contemplate a currency managed in a sense and tied to gold in a sense. If the policy advocated by the hon. Member for East Edinburgh were adopted it would mean industrial catastrophe and would not in any sense reestablish the financial position of this country. Instead it would make our position worse. The policy pursued by the Chancellor of the Exchequer in the past, and to be pursued, I hope, in the future, is most likely to preserve to this country the position that it has always held in this financial opinion of the world.

8.52 p.m.


In the first place I would like to associate myself with the hon. Member for East Edinburgh (Mr. D. Mason) in his personal references to the Chancellor of the Exchequer. With regard to the Motion before the House, on behalf of my friends, in view of the generous character of the undertaking given by the President of the Board of Trade on the issue raised in the earlier part of the Debate, we do not propose to carry the Motion to a division. We understand the undertaking of the President of the Board of Trade to be that the inquiry to be conducted, or being conducted, by the Official Receiver into the affairs of the firm in question, will be made as wide as possible, and that if the President of the Board of Trade does not think that it has covered sufficient matters that are properly concerned and which are of great public importance, he will extend the scope of the inquiry. I think that that is a fair interpretation, of what he said. But for all that, whilst we welcome the statement of the President of the Board of Trade we do not by any means thereby agree that an inquiry of this kind, however wide it may be, will be sufficient to cover the uncertainties and troubles which lately have overtaken some parts of the markets in the City of London.

Suppose that the inquiry into this firm's misfortunes is as searching as may be, after all it is this group of people and no more. What the community should be safeguarded against is a repetition of this kind of thing. We are entitled to ask that the community should be safeguarded as far as possible against this gambling in commodities, which discredits our country and spreads ruin and difficulty and trouble among thousands of entirely innocent people. I am glad to find that no one in this Debate has put down the troubles to the wicked Socialists. In some newspapers it was suggested that the slump in the City of London was due to the performances of some of my friends on political platforms. I am glad to say that we have not had that repeated to-night. I see from an extract I have here from the front page of the "New York Times" that that journal rightly attributes the uncertainty and depreciation that are going on to these gamblings in commodities. But I do not accept and this party does not accept the description given by the President of the Board of Trade of what is necessary in these market operations. This is not the appropriate time to discuss that matter, and I do not propose to embark on it further than to say that the right hon. Gentleman seems to regard it as an essential part of the ordinary purchase of commodities which the people require for their lives, that we should be able to buy and sell futures and have bears and bulls. That is not a theory which we can accept for a moment, and I notice that the lesson which the "Economist" drew from these events the other day was thus expressed If the responsible leaders of the City cannot find ways and means of preventing their markets being abused, the State will inevitably be called upon to ensure that the supply of commodities, which should be organised in the public interest, will be organised in as orderly a manner as possible, and not made a field for speculative gambling.

The DEPUTY-SPEAKER (Captain Bourne)

Would not that require legislation?


I am only saying that these are matters into which we shall want inquiry to be made some time. We believe that these are the issues really raised by the catastrophes which have recently occurred, and while we shall accept, with such fortitude as we can, the results of the inquiry now to be made, we want to see an inquiry into how this kind of thing can be stopped, and what system should be adopted in the City to prevent the recurrence of such events. Losses of this kind occur quite often. We should also be glad of an inquiry which would cover losses of a kindred type. There is one mentioned in this evening's paper which might well be made the subject of an extended inquiry. We learn that at a meeting of the shareholders of the White Star Line Mr. Watts said that there was nothing to show for a sum of £6,000,000 except further liabilities to the tune of £3,000,000. In other words, the shareholders of this concern—whether it is to be attributed to gambling or mismanagement I do not know—are informed that £9,000,000 has disappeared, according to the statement in the evening paper. I take it that all this represents one of the inevitable concomitants of the holy system of private enterprise. I am sure that a wasteful Socialistic institution like the Post Office would not be guilty of such mistakes.

I want to come now to the matter which was raised by the hon. Member for East Edinburgh and I take this opportunity of thanking the Chancellor of Exchequer for being in his place for this discussion. I notice that the hon. Member for Huddersfield (Mr. Mabane) defended the Chancellor very gallantly in advance. I think this matter is of even greater importance than the question of the pepper gambles, but before dealing with the question of the fall in the value of the pound, I think we ought to try to separate it from what may be called adventitious or accidental causes. The first cause to which it has been attributed is a speech of the hon. and learned Member for East Bristol (Sir S. Cripps). I think we can wipe that out as not having been likely to cause the pound to go down to 11s. 4½d.

Then there was the threat of the President of the Board of Trade that he was going to take his securities out of the bank or something of that kind, if there were any prospect of the Socialists coming into power. I do not think that that has been responsible. It was an empty threat. I think the history of the last 15 years which has shown the futility of trying to extract thousands of millions from Germany should have been sufficient to prevent the right hon. Gentleman from indulging in a foolish threat to transfer his capital from this country to some other happy country. There is another suggested cause which must be interesting to the right hon. Gentleman the Lord President of the Council. It is to be noticed that the fall in the pound has been more rapid since the right hon. Gentleman told us that there was not going to be an Election. Since the Dominions Secretary told us, in that postprandial oration of his, that there was not to 'be an election for three years, the fall has been still more rapid. I think however we can write off that suggested cause also, and assume that it has not contributed to the fall in the pound.

There is another possible cause which however only cropped up since this Motion was placed on the Paper and to which I shall only refer briefly. That is the White Paper circulated the other day which I fear has produced a far-reaching effect. The only comment one can make upon it now is that when you are sending your Foreign Secretary on a mission of appeasement it is surely an act of folly to tell the Power to which he is being sent in so many words that it is regarded as a disturber of or a threat to the world's peace. That is an act which, could only have been done by the Government which was responsible for the Unemployment Insurance Act, and the Regulations under that Act, I could only describe as a piece of monumental idiocy for which I know no parallel. I believe that even now it may have disastrous effects on sterling. However that matter had not arisen when this Motion was put on the Paper and so on this occasion we may disregard it.

The Chanellor of the Exchequer is equipped with a very exceptional instrument about which I wish to ask some questions. The Exchange Equalisation Account was established in 1932, and its purposes were defined as being to strengthen currency and check undue fluctuations in the exchange value of sterling. A sum of £150,000,000, and later a Sum of £200,000,000, were placed at the disposal of the Chancellor of the Exchequer by a trusting Parliament for that Fund. The right hon. Gentleman is not required to give any account of those sums at all. In defending the policy of secrecy in regard to this Fund, the right hon. Gentleman, on 4th May, 1933, said that the principal object of the Fund was to counteract the operations of speculators, and that that was the chief reason for saying that there should be no publication of the accounts of this prodigious Fund of £350,000,000. He knows as well as I do that there are other ways in which you can curb the operation of speculators than this, and, if he will cast his mind back over the last 15 years, he will recall some of them being used. Nobody wants to help these people, of course, but I think the time has arrived when, without in any way playing into their hands, the House of Commons should be furnished in some appropriate way with some account of the right hon. Gentleman's stewardship of this great Fund. I do not think from what has happened since it was created that we have quite so much about which to congratulate ourselves as one hon. Member seemed to think. With regard to the recent fall, has the Chancellor allowed it to occur deliberately? In other words, is he engaged in the attractive policy of depreciating his own currency, or has the Fund not been able to prevent it? If the latter event, which I do not expect is really the case altogether, then, of course, it raises very grave questions of what is the state of the Fund. I will assume, however, that the Chancellor, for reasons of his own, has looked on while this fall took place and has not affected to arrest it.


Hear, hear.


I notice that an hon. Member seems to think that that is what he has done. I have no special knowledge myself. I assume it for the moment, because the other alternative is much more dangerous. It is something from which the handful of Members with whom I am associated on this side may derive some comfort, because I was among those who stood here and was assailed by the Prime Minister in his first National Government before the Election, when he told us of all the lurid things which would happen if we went off the Gold Standard. I have been one of those who were rash enough to tell him more than once that we ought to have gone off it years ago and that we should never have gone on it. He told the House to the effect that, if we were to go off the Gold Standard the price of an old age pension warrant would not be worth more than the price of a newspaper. That was the lurid and terrifying illustration he used. The point to which I am coming is that the management of this Fund is largely in the hands of the people who gave the Prime Minister that advice, and the tragic part of the whole thing was that he did not know any better. The tragic part of it also was not so much that it was unmitigated nonsense, but the fact that he thought it was all right, and he was Prime Minister. He was primed to say that sort of thing by the people who are in charge and have since been in charge—except for the right hon. Gentleman who is immediately responsible—of the detailed management of the Fund.

I want to recall to the House that the previous history of the Bank of England organisation, so far as it is associated with this Fund, does not inspire confidence, any more than the association of the important banks with the pepper ring inspires confidence. I can see very well that soon there will be a movement in the City to look to the Socialist party to safeguard their institutions. The House will remember—and it is material to recall it—that those who are in charge of this Fund came here—at least Viscount Snowden came—in regard to a loan of large numbers of millions of francs and dollars. That was on the advice of the same people who are responsible for the management of this Fund. They advised the Government that if only they got this loan we should keep on the Gold Standard and escape all the disasters about which the Prime Minister had been telling us. We got the loan, and in six weeks we lost £30,000,000 and the Gold Standard had gone. I have not any particular confidence in the farsightedness of these people who must of necessity be very largely the Chancellor's assistants in this matter.

Seeing what has happened since the fund was established, I am anxious to know a little more about it. The Chancellor the other day derived satisfaction—and he was entitled to do so—from the interesting fact that while the pound has fallen as an instrument of exchange, as sterling, the purchasing power in our home market so far as commodities are concerned has remained remarkably stable. I think that I am not misrepresenting the right hon. Gentleman when I say that that was the point he made a short time ago. I draw from it quite a different inference from that which he drew. It is poles asunder from the view of my hon. Friend the Member for East Edinburgh because, if he can so manage his money power that, notwithstanding a fall in the exchange value of sterling, he can still make it purchase as many commodities at home as it did before, why cannot he use his money power to increase purchasing power, because it is part of the same logic?


The point I made was that sterling prices, as a result of inflation, have not fallen to the same extent as gold prices.


I want to increase the purchasing power of the pound to buy goods, which is a different thing. I take it that what it comes to is that the Chancellor of the Exchequer derives satisfaction from the fact that this business has been so managed that, notwithstanding a fall in the value of the pound, it will still purchase as many bread loaves, or whatever 'it may be, as it would before, and that it is on that nice balance that we have got the people as near the bone as possible, and he does not want them to get any further from it. I have a lively recollection of the policy that was pressed on us by the gentlemen who are necessarily the right hon. Gentleman's instruments in managing this fund. They told us over and over again that what was necessary was to get down costs, and to get a lower standard of life so that we could compete in the world markets; in other words, that the people were to have less money to spend. The present business looks suspiciously like the maintenance of the same policy. The Chancellor himself the other day presented to us another of the contradictions which this strange Government is continually obtruding before our notice. The last contradiction was sending the Foreign Secretary on a mission of appeasement and issuing a provocative paper to speed him on his way.

There are two remarkable contradictions of policy in what the Government are doing in this matter which affect the purchasing power of the people, and I want to draw attention to them. First, the Chancellor of the Exchequer takes credit for managing this fund so that the level of purchasing power in terms of commodities remains roughly the same, and I think he is entitled to do so; but what does he do on the other hand? He tells us that he is very glad that there has been a great heaping up of money, which of course becomes cheap, and has the great advantage that he has a plentiful supply of cheap money. That would be all right provided he allowed it to be used, but the challenge we are making to the Chancellor is that while he has the immense advantage of these enormous supplies of cheap money he is not allowing them to be used, holding them back from use by various devices. Here is a trifling instance. He knows very well that a number of local authorities have not been able to get their loans at as low rates as many of them have wanted, except with a good deal of difficulty. There was for some time a good deal of pressure to make them borrow at higher rates from building societies. Then, the other day, he placed some difficulties—I do not know whether there were sound reasons for it or not, I am not expressing any opinion—in the way of the establishment of a line of ships.

Then, all along, he refuses to allow money to be spent on internal development. For instance, everybody knows that the only sensible way of dealing with the national water supply question is to do the thing properly by getting pipe supplies for our country districts. The same observation applies to drainage. Putting aside what one might call frills, there are half a dozen big matters of national enterprise and development which are standing still because the Chancellor will not provide money. There are drainage schemes worked out by competent engineers, many of them in great detail, which would employ many thousands of men, but except here and there, where bits of grants are thrown to them if the Chairman of a catchment area board makes himself rather too much of a nuisance, none of the money so urgently required for these schemes is really let out. The Chancellor takes credit for having this mass of cheap money, and at the same time is restricting its full use. The only result of that is to keep down wages, to depress purchasing power. It is the same old policy which some of us fought so bitterly in 1931 when missionaries used to come to us from the City to lecture us in a committee room upstairs in this House or in the corridors of No. 10, Downing Street. It is the same policy—"You have got to keep things tight so that the purchasing power of the people is not increased." That is that.

We have another extraordinary feature of the policy of the Government, in the contrast between the President of the Board of Trade and the Minister of Agriculture. The President of the Board of Trade is busy going up and down the world making all kinds of trade agreements, which terminate at all sorts of different dates, and relate to different quotas and different allowances for different countries. I do not envy anybody who, in time to come, has to clear up that mess. There is a variety of agreements with a variety of conditions and with all sorts of countries—with Ottawa in the background—crippling and hindering exchange all over the world, and certainly preventing the expansion of our trade and thereby once more depressing purchasing power and wages. What do we see on the side of the Ministry of Agriculture? We see something which is exactly the opposite. Whilst the President of the Board of Trade has been busily engaged crippling trade so as to keep down prices, and the Chancellor of the Exchequer has a tight hand on his heaps of money, the Ministry of Agriculture is struggling, by all sorts of expedients, to keep up prices. He has to come to this House for large bounties because he cannot get for the producer the prices which he has been struggling to obtain for two years. Of course he cannot obtain them. The President of the Board of Trade has got a lot of webs all round the poor man's legs, and he will never be able to walk until he can emancipate himself from these entanglements. All this criticism may be suspected as being the partisan emotion of an ex-Minister, but, fortunately, there is proof to the contrary to be found in a paper, Cmd. 4828, issued only the night before last. In one respect it is nearly as frank as the Prime Minister's famous message to Germany on the eve of the departure of the Foreign Secretary. In paragraph 11 it describes—of course it does not put it in this gross language, it is very politely phrased, in the best Civil Service language—how after the Ottawa restrictions had been brought into force there had been various differences in the exports of the Argentine and so on, and then goes on to say: In the case of beef it now appears that these various measures were merely palliatives. These various measures which the Government have been adopting during the past two years: The forces depressing prices"— all he has to do is to look to the Treasury Bench, there they are— are again in the ascendant. They are indeed. This is the Minister of Agriculture, in a paper issued only the night before last: Demand shows no definite signs of increasing and the weight of supplies on the market remains excessive. Of course it does. It is bound to remain excessive until we use our money power to enable the people to buy more goods. We have to do one other thing, to control the prices on distribution. There is in this document a sort of swan song of the policy of quantitative regulation. That was another expedient to maintain prices, to put up prices. As I am trying to point out, the Chancellor of the Exchequer and the President of the Board of Trade have been too many for the Minister of Agriculture. They have managed to keep prices down. This paper goes on to say: Failing agreement on the payment of a levy on meat imports, His Majesty's Govern ment in the United Kingdom will have no alternative but to take steps to regulate during the currency of existing agreements the quantity of imports to whatever extent is necessary to restore livestock prices to a remunerative level. All I have to say to the right hon. Gentleman, who has my heartfelt sympathy, is that if he thinks he is going to get producers' prices raised to a remunerative level by a restriction of supplies he is turning a deaf ear to all that the last two years has been telling him, turning a deaf ear to what even his own White Paper tells him. Anyhow, while one Minister is complaining that prices do not rise, here is this alarming fall in sterling, alarming at all events to those who want to keep it up; and so far as it could help our export trade any assistance that it might give is being undone in our home market by the contradictory policy of the Chancellor himself in his tight hold on money and the policy of the President of the Board of Trade in the paralysing hand he is laying on international trade.

All these things affect sterling, affect the value of money, affect wages and affect prices, and the conclusion to my mind is this, that if there is this disorder in the things that we can see what a vista of confusion may there not be in the things which are concealed from us? The Exchange Equalisation Account is concealed from us. I cannot ask the Chancellor of the Exchequer to publish it to the wide world. I know he could not do that. But in view of the disconcerting circumstances of the times, and seeing that it is two years ago since this money was entrusted to him for the purpose of stabilising sterling—so far as it was intended to stabilise it—and as it clearly is not being successfully used for this purpose, I do think that Parliament is entitled to be given an account in some appropriate way of how this great fund is being used. I am not so sure that if Parliament to-day were asked what it was asked to do in 1932 it would be quite so obliging. Even in the right hon. Gentleman's own party, I suspect, there is rather more of the spirit of revolt than there was in 1932. At all events, what I am asking him to do is that either through the Public Accounts Committee or otherwise—and not simply by the perfunctory three lines of the Comptroller and Auditor-General—this House is en titled to be satisfied about this £350,000,000 which was placed at the disposal of the Chancellor. Manifestly it is not being successfully used for the purpose for which it was voted and it should be accounted for in some appropriate way in the House of Commons.


Did the House hear the right hon. Gentleman aright when earlier in his speech he said that in 1931 the Prime Minister at that Box had said that if we went off the Gold Standard an old age pension warrant would only purchase a newspaper?


Something like that.


Well it is not true, because I have the quotation here, and lest the right hon. Gentleman's quotation should go on record, it is just as well that the correct quotation should be given. The Prime Minister said: Those who disregard the immediate situation and refuse definite and tolerable cuts, throw over employed and unemployed, wage-earners and rentiers alike, to the wreckage of complete collapse. … I emphasise the point. If there is a real panic, the value of money may not sink slowly and by small percentages but may wither to nothing. War pensions, old age pensions, health and insurance benefits become worth, as they became in Germany, only the price of a newspaper."—[OFFICIAL, REPORT. 8th September, 1931; col. 22, Vol. 256.]


The only correction which the hon. Member has made is to make the Prime Minister's statement appear more deplorable than I had thought it to be.

9.28 p.m.


The right hon. Gentleman has travelled over a wide field, and has been so discursive in his direction and the questions he has touched upon, that I think he will not expect me to follow the whole of his speech. And it does not fall to me to deal with the first part of his speech, which was directed to the Debate that took place earlier in the afternoon. I will, however, say one thing, because it is within my own knowledge. I know from my own experience of practising for many years in London that no inquiry could be more drastic and more far-reaching than the inquiries that are conducted by the Official Receiver. I listened to the speech of the hon. Member for East Eulham (Mr. Wilmot). I can assure the House that all the matters which he mentioned concerning the firm of James and Shakespeare come within the purview of the Official Receiver, if his account was accurate.

I will now come to the subject with which I want to deal. The right hon. Gentleman gave several reasons for what he called the fall in the value of the pound. There has not been a fall in the value of the pound. This idea is entirely wrong. My hon. Friend the Member for Huddersfield (Mr. Mabane) explained that point. I will deal with the reasons that the right hon. Gentleman gave us. He said that his hon. and learned Friend the Member for East Bristol (Sir S. Cripps) was not guilty. Then he said that the Dominions Secretary was guilty because he said the election was put off for two years, and therefore the chance of a Socialist party being returned was deferred. Now all the reasons he gave were political reasons. I think politicians sometimes think themselves more important than they are. I do assure the right hon. Gentleman that in this movement we are now seeing there are deep forces and great influences at work that far transcend anything of the froth and drift of politics. What is really happening is an attack on the Gold Standard in the nations that are still on gold. The actual starting cause may have been a smaller event. It may have been the withdrawals of foreign balances from London. It may have been the distrust occasioned by the speculation of which we have heard so much this afternoon. I do not think it had anything to do with the White Paper on defence policy; it happened long before that. But the effect of it is far more serious, because it shows the weakness of those currencies which are linked to gold, and has a very profound effect on the policy that this country ought to follow in regard to stabilising the exchanges. I will come back to that later. I want to say, if the right hon. Gentleman will forgive me, that though I followed his speech with the greatest attention, I have not the remotest idea what his own financial policy would be. At one moment he said he wanted cheapness and abused the Minister of Agriculture for wanting to raise prices—


No, I did not.


With all respect, the right hon. Gentleman did. I listened carefully to his speech, and he poured all the vials of his wrath on the Minister of Agriculture because he was trying to raise prices by quotas or restrictions. Then he turned on the Chancellor of the Exchequer and said that he was all out for low prices and poverty, and a generally depressed world. What the right hon. Gentleman would do if he had the difficult task of managing the finances or the agriculture of this country I have not the remotest idea. I was delighted to hear the speech of my hon. Friend the Member for East Edinburgh (Mr. D. Mason). He is a most stalwart character. Ever since I have known him—and our friendship goes back many years—he has not, in the main, changed his policy. His speeches always have a beneficial effect upon me. He said he wanted to check the fall in sterling. As the hon. Member for Huddersfield said, the fall in exchange value has not affected the internal purchasing power of the pound. The real value of the pound was just as steady when the franc was 76 to the pound as now, when you can get only 71 to the pound.


The fall in exchange value has not affected to any great extent the internal value of the pound, but it has had an effect upon its external purchasing power.


I think my hon. Friend will agree that there has been no fall in value compared with the recent fall in the exchange value. If he looks round the sterling countries he will see what the effect has been. Some of the countries which are on the Gold Standard will soon be driven off. How does this affect us? I agree with the right hon. Gentleman that stabilised exchanges are an advantage. Before the merchant can sell his goods and the buyer can buy raw material, they want to know that the exchange value will not fluctuate very widely. Before you can be sure of that, you must be sure that the' parity value of the different currencies is not likely to vary, and secondly whether you stabilise on the Gold Standard or not on the Gold Standard. The hon. Member for East Edinburgh is a strong gold advocate. He said that Paris laughs at the small value of our pound. I think Paris is laughing at the fall in gold prices, but laughing on the wrong side of the mouth at what, is happening in the gold countries.


I said that this House laughs and that Paris was amazed that we did not appreciate the situation.


There are two things that we can do. First of all we can use the Exchange Equalisation Account to a greater extent than we have done. I wonder if I may ask the Chancellor to give the He-use an account of the use that has been made of the control. Its operations are secret and no accounts are published, but I assure him that the work of the control is perfectly well known in the city. The city knows at what hour the control goes into the market and at what hour it comes out. It knows whether it sells French or Swiss francs, or Dutch currency, because its operations have to be conducted through ordinary exchange channels, and are soon public property. If the control had wished to keep up the value of sterling as compared with the value of gold currencies, no doubt it would have done so. I do not in the least agree that there has been any intentional depreciation of our currency, which might have had a beneficial effect for the time being but the effect of which would soon have been exhausted; if we depreciated our currency in that way by the operation of the Exchange Equalisation Account, that would soon be reflected in increased prices here. I am pretty certain that there has been no intentional depreciation. I should like to know what the Chancellor can tell us as to the policy of the control.

May I say what I think our policy ought to be? I should like to see stabilised exchanges, but if the franc is going off gold, as is possible, and if in a week or a fortnight, or three months, the pound is worth 100 francs, the franc cannot possibly be stabilised at 71. I do not see how it can be stabilised at all. The hon. Member for Huddersfield gave a very clear and interesting account of what happened in Washington the other day and as to the impossibility of knowing the President's intentions. I think we have to wait. I think the House will agree that continuity of value is more important than exchange stability. The remedy for the situation is not to go back to an unregulated Gold Standard, but a managed currency. When I say "a managed currency," I am quite aware that gold has great attractions both in this country and abroad, and that there is an affection for stabilisation on gold. All the affection for gold is, I think, misplaced. But it is a very creditable affection, but one that is very hard to displace because it is very old and sincere. We should probably find it much easier to get international stabilisation if the stabilisation were on gold. The International Gold Standard before the War was our standard. We settled the money policy of the world, and we so managed the Gold Standard that all the world accepted it. We made money out of it, though not an undue amount; we kept prices and values comparatively steady, and we supplied the world with a vast amount of loans. The conditions now are very different. It cannot be said now that the Gold Standard could be managed from London, as was the case before 1914, and, therefore, if we go back to gold, I think the better opinion—economists, of course, never agree—is that it ought to be, and must be, on a managed currency. That, I think, will come, and I should like it to come, but the time is not yet, and any step now would be so dangerous as to be, in my opinion, quite impossible.

9.47 p.m.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

I should like first of all to express my indebtedness to the hon. Member for East Edinburgh (Mr. D. Mason) and to the right hon. Gentleman opposite for their very gracious personal references to myself—references which I am able to accept with the greater pleasure because, fortunately, any anxiety to which I was subjected was of very short duration.

The discussion to which we have listened has, I think, centred on three points. The hon. Member for East Edinburgh raised first of all the question, why has the pound fallen?. He went on to suggest what in his view would be the best course for the Government to take in view of the fall in the pound; and finally we had that somewhat discursive oration from the right hon. Gentleman opposite, from which I extracted only three assertions which concerned my own Department. One of those assertions was that I was holding up money. That assertion was backed by very little evidence, but it was supported by two further assertions, both of which were incorrect. The first was that local autho rities were being prevented from raising money because of the policy of the Treasury. That is not so at all. The larger local authorities are able to go into the market and can borrow at a rate which is very little different from that which the Government itself can command; while, as for the smaller authorities, they too can borrow, not from the open market, but from the Public Works Loans Commissioners, and they too are able to borrow at a rate very little different from that at which the larger local authorities can raise loans.


Only in limited amounts.


Of course, the amount they could borrow must depend upon their resources. If the hon. Member is one of those who would like any small authority to borrow on the same scale as the great local authorities, I do not think he would have much support outside those benches. The other statement of the right hon. Gentleman referred to drainage schemes. He said that schemes were being held up because the Chancellor of the Exchequer refused to reduce the money. What are the facts? The right hon. Gentleman's observations about this matter were as confused as most of the rest of his speech. What is the way in which these drainage schemes are financed? They are financed by the drainage boards. It is true that they come to the Government and ask for a subvention. The only difference in the scheme which I expect the right hon. Gentleman has in his mind is the amount of the subvention. But surely he is not going to say that, because we differ from a particular board as to the percentage of the cost of a particular scheme which should be found by the Treasury, that can be described as refusing to make use of cheap money.


Is it not the fact that the amount which the Treasury is proposing to contribute has been so limited that it has restricted the great majority of these schemes from being undertaken at all?


Of course it is true that, if the Treasury were ready to contribute 100 per cent, of the cost, it is very likely that boards would have no hesitation in proceeding with schemes. But it is a fact that, if the right hon. Gentleman is referring to the Great Ouse scheme, it is only a question of the percentage contribution which the Treasury should make, and the matter is still under discussion. Certainly we are not going to allow that to be described as a deliberate policy on the part of the Treasury of refusing to let cheap money be made use of. What is the second point that the right hon. Gentleman made? It was that the House ought to distrust the position of the Exchange Equalisation Account because the same people must be advising the Treasury about the operation of that Account who gave bad advice to the Prime Minister in 1931. What is the nature of the bad advice which the right hon. Gentleman asserts was given to the Prime Minister in 1931? His assertion was founded, apparently, upon the statement which he quoted, but did not quote correctly, and which my hon. Friend, fortunately, had beside him and was able to give to the House.


That made it worse.


The real difference was in the words which the right hon. Gentleman left out—"if a panic occurred." That is precisely the point. The opinion which the Prime Minister expressed at that time was perfectly right, and the comparison, which hon. Members opposite seem never to be able to appreciate, between the position of that time and the position to-day is exactly what makes the difference. While we were extremely anxious at that time as to what might be the result of a fall in the pound, to-day, as we have been told already in the Debate, foreigners are astonished at the equanimity with which we look upon its low value elsewhere.


I am sorry to interrupt the right hon. Gentleman again, but may I ask him a further question on this very important point? Is it not a fact that these self-same people whom I have arraigned advised the Government of which he was a member that, if he obtained loans from France and America up to a certain amount, it would save the Gold Standard, but that it did not, and the failure to do so cost us £30,000,000?


The right hon. Gentleman is quite wrong. The position at the time to which the right hon. Gen tleman refers was not that I was a member of the Government; it was when the right hon. Gentleman's own party was in office. [Interruption.] Really, the right hon. Gentleman cannot talk to me like that. I sat opposite the present Prime Minister in Downing Street at that time, when I was asked by members of that party to consult with him as to what measures were necessary to save the Gold Standard. Does not the right hon. Gentleman realise that, when you have an unbalanced Budget, when you are borrowing at the rate of £1,000,000 a week to meet a deficit on the Unemployment Fund, and when you have completely destroyed all confidence that you have either the will or the power to balance your Budget and bring the finances of the country into order, it is then that you have every reason to be afraid of results which would destroy the very wages of the people themselves?

The third point is a much smaller one. The right hon. Gentleman said he wanted to know whether the fund had been used for the purpose of depreciating our own currency. I think he only put that point as a sort of rhetorical question, because he himself knows very well what the answer is. I have stated over and over again in the House, and I repeat it once more, that the Exchange Equalisation Account is not used, never has been and never was intended to be used for the purpose of deliberately forcing sterling up or forcing sterling down. It is used simply for the purpose of smoothing out minor irregularities in the value of the currency. In reply to my right hon. Friend behind me who asked me to state how the Equalisation Exchange Account had been used, I wonder what he wants the information for. He cannot want it for himself, for he told us that it is well known in the City. For whose benefit then is it that he wants me to say in the House and to spread about the whole world exactly the way in which the Exchange Equalisation Account functions? If I were to do that, it would be going some way to defeat the very object with which it was established by giving at least an indication to speculators of what we have done on one occasion and therefore what we might be very likely to do again in similar circumstances.

The hon. Member for East Edinburgh asked first of all what had caused the pound to fall, and he proceeded to answer his own question by saying it was due to inflation and to the fact that we had very considerably increased the notes in circulation. Surely the Chairman of the Sound Currency Association cannot fail to believe the statistics which are published monthly by the Bank of England and from which I draw the following figures. I take 1931 and 1934, and I compare the average of the Wednesday figures, and I find that the notes in circulation increased from £354,800,000 to £378,700,000—that is a difference of £24,000,000. At the same time gold coin and bullion increased from £139,700,000 to £191,500,000—so it actually went up by over £50,000,000.


The right hon. Gentleman does not seem to appreciate what inflation is. He assumes that if the Bank of England increases its gold, therefore it may increase its notes. The test of inflation is the proportion which the notes bear to the trade that we are doing. The test of inflation is, as I have said over and over again, and it is acknowledged by all, to compare your Mint price with your market price. On the Chancellor's own figures notes have increased by £20,000,000 odd but trade has kept more or less about the same.


I am astonished and rather shocked at the chairman of the Sound Currency Association thinking that the relation between notes in circulation and gold and bullion in the issue department of the Bank of England has no bearing whatever on the question. The fact is that the change in the external value of the pound has really no relation to anything that has taken place in this country and that there is no change in the economic situation here which in any way justifies that change. If we look for the first cause of the fall that took place in the external value of the pound, I think we must find it in a combination of coincidences coupled with rumours in certain Sunday papers, the foundation for which was a series of suggestions that there might possibly be some change in the continuity of the financial policy of this country owing either to dissentience in the Cabinet or to the substitution of a fresh Cabinet for the one that has existed since the National Government came into being. The hon. Member endeavoured to move the Adjournment of the House and the Leader of the Opposition backed him up and said that this was a very important affair. Of course, in this House we regard the hon. Member as a mistaken, well-meaning, harmless enthusiast, and we knew very well when the right hon. Gentleman intervened that he was not professing to express any serious fears as to the future financial position of the country, but was merely trying to get in a little party score by suggesting that there was inconsistency between the attitude of the Government to-day and the attitude of the Government at election time. Of course, in other capitals these things are looked upon rather differently. They get a little out of proportion. More importance is attached to them than we should think of doing in this country. So they reinforce and exaggerate the fears that exist at a time of speculation and once again increase the departure from the normal.


Does the right hon. Gentleman attribute the fact of the fall to speculators?


I did not say so. There is absolutely nothing in the position, as far as we 'are concerned in this country, which need 'give us a moment's uneasiness. The internal value of the pound is unshaken. It is very different in that respect from the value of gold, which has fluctuated to a very considerable extent. As for attempting in such circumstances as these to try to stabilise our currency on gold, that has aheady been dealt with by two hon. Members below the Gangway and by my right hon. Friend. It is clearly impossible. There is nothing whatever to alter in what I said a little while ago, that we have on either side of us a currency anchored to gold, on one side the franc and on the other side the dollar. But they are out of economic relation to one another. We are in between the two, and now the hon. Member wants us to anchor ourselves likewise. But he forgets the enormous resources of those two countries. France and the United States have enormous hoards of gold in their possession, which gives them a dominating position in working to a Gold Standard. If we were anchored to gold and in consequence of the policy of one of those two countries we were forced either to rid ourselves of such gold as we had or to put up the bank rate and begin to deflate, we should be bringing about a serious state of affairs, at once restricting enterprise and increasing unemployment, and that is not a state of affairs which I am prepared to consider. I do not believe that we are in a position at present to take these risks or to put the pound at the mercy either of the franc on the one side or of the dollar on the other. While I have not changed my view that ultimately I see no better international standard than gold and that some day or another I think in all probability we and other countries may go back to that international standard, I am bound to say that I am not prepared to take any steps to put this country back until I can see conditions so favourable that, having once gone back on to the Gold Standard, it would be pietty certain that we could remain there.

10.6 p.m.


I will not attempt to follow the right hon. Gentleman, but on the question of the Exchange Equalisation Fund I would like to ask him this question. The late hon. Member for Putney (Mr. Samuel Samuel) stood behind the Treasury Bench one day and made exactly the same statement as the right hon. Member for Ripon (Major Hills), and he told the right hon. Gentleman the Chancellor of the Exchequer in terms the operations that had taken place during the day on which he was speaking. The right hon. Gentleman said it is well known in the City what the Chancellor is doing. If that be true, I hold, and we hold, very strongly that the House of Commons ought to know too. I know the Chancellor of the Exchequer has been given power not to tell us about it, but I think that at the end of a couple or three years we ought to know something about it, and I think we would get over a great deal of the suspicion and what the right hon. Gentleman considers the untrue and rather stupid statements about currency if the House and the country, the ordinary people, were now to know something about how these things work. What we do know is that many people make considerable fortunes in this way, and we think that is quite an improper thing to be happening with the currency of a country. That is the only question that I want to ask, whether it is a fact that people in the City do know how this Fund is operating, and, if so, why should they know and not the House of Commons?

The second thing that I want to say—I do not ask for an answer on this—is that I have never believed, although I think I am almost alone in this, that the British nation was ever in any danger, either when the Labour Government was in office or since this Government has been in office, of any financial collapse, and I want to tell the House why. So far as I know, this country—I mean as a nation; I am not talking about the City of London—was not a debtor to any other nation in the world. We were, on the contrary, as a nation, a great creditor nation. There was hardly a nation that took part with us in the great war except America which did not owe us considerable sums of money, and we had let them off considerable sums of money. Therefore, when I was told that our nation was in danger of a financial crash, I never believed it, and I do not believe it now, even though the pound note is at the value that it is on the Continent. The further fact is—and perhaps the right hon. Gentleman will answer me on this—that I believe that £80,000,000 of the £130,000,000 that was in discussion—£50,000,000 of it, I believe, was borrowed by the banks themselves in June—was the sum that was under discussion when we went out, and I think that £80,000,000 came to the new Government. The point that I want to make is that the money that we had to spend to keep the unemployed during our term of office was not borrowed from abroad but was borrowed internally, and, therefore, our credit—the credit of the nation, not the financial credit of the City of London—could not be said to have been jeopardised by anything that the Labour Government did.

10.11 p.m.


With regard to the question as to why the House of Commons should not know as much about the operations of the Exchange Equalisation Account as people in the City, I do not know whether the right hon. Gentleman has ever attended a conjuring entertainment, but, if so, he has probably heard a good many of the audience say they know how he did it. It is like that in the City though I did not want to say this. They think they know, but they do not really.


That might be said about me, but not of the right hon. Member who has been Financial Secretary to the Treasury nor of the late hon. Member for Putney, who was one of them, one of the conjurers.

Question, "That '£162,825,000,' stand part of the Resolution," put, and agreed to.

Motion made, and Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

The remaining Orders were read, and postponed.

  1. ADJOURNMENT. 16 words
Back to
Forward to