HC Deb 27 February 1936 vol 309 cc860-96

Motion made, and Question proposed, That a Supplementary sum, not exceeding £88,180, be granted to His Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1936, for certain Miscellaneous Expenses, including certain Grants in Aid, and Supplement to certain Statutory Salaries.

Mr. W. S. MORRISON

This particular Estimate for Miscellaneous Expenses covers slightly complicated matters to which a brief explanation may be appended. I do pot think I would be doing my duty if I did not attempt to explain very briefly the matters involved. The Oceanic Company is the company which, prior to the merger of the Cunard-White Star company, owned and operated the White Star fleet, and to that company under the Trade Facilities Acts of 1921 to 1926 the Treasury of the United Kingdom, and the Ministry of Northern Ireland under their similar Act, called the Loans Guarantee Act—it is the same principle as the Trade Facilities Acts—guaranteed certain large loans to the Oceanic Company for the purpose of enabling that company to construct new tonnage. I want to make it clear to the House that up to 1930 the Company were doing well and made fair profits. After 1930 the depression set in (and in view of the previous scolding I received I will endeavour to use terms which are entirely colourless) with particular severity in the North Atlantic shipping trade. The fact really is that since 1931 this company has been unable to meet interest or redemption of its loans.

I ought to remind the Committee that the North Atlantic Shipping Act of 1934 set up a Cunard-White Star merger. The shares in that company were distributed as to 38 per cent. to the Oceanic Company and as to the remaining 62 per cent. to the Cunard Company. After the merger had taken place the security which the Treasury had for their guarantee in the case of the Oceanic Company was two blocks of White Star-Cunard shares. The first block was of 2,280,000 shares and the second block with which we are really concerned was of 1,520,000 shares. The debenture holders of the company had a prior charge and the only charge which the Treasury had was confined to a -charge for one loan of £245,000.

Sir S. CRIPPS

Were they both shares of a similar type?

Mr. MORRISON

Yes. They were ordinary shares of the Cunard-White Star Company held in the proportions I have mentioned. In December last the trustees for the debenture holders of the Oceanic Company informed the Treasury that they were in a position, by selling assets on which they had charges, to realise enough money to pay the whole of their debts in full, both capital and interest. In the light of that announcement the Treasury reviewed its security position, because it was quite clear that that sort of action by the debenture holders would entail the disappearance of this block of shares, and the consequences of that, if those shares were to disappear, would be serious from the point of view of the Treasuries of this country and Northern Ireland. The first would be that they would lose their charge upon the block of shares upon which the loan of £245,000 was secured, and the second that the removal of this large block of shares might mean that the Treasury would fail to realise the full amount of money.

Consideration was given to the matter by the two Treasuries, and the conclusion was reached that it was in the interest of the taxpayers that steps should be taken to prevent this valuable block of shares disappearing simply in satisfaction of the debenture holders claims. In order to remedy that, the transaction took place which is now before the Committee, in this Supplementary Estimate. To cut it short the Treasuries came to an agreement with the debenture holders that they would give them enough money so that after the debenture holders had released their assets a sum of money would be available to enable their claims to be paid out in full. The sum of money involved was £163,000, and the Northern Ireland Treasury agreed to go halves in this venture, and our share is, therefore, £81,804 13s. 8d., and it forms the major part of the sum now being asked for in this estimate.

The position is this: There is one other sum in this for £6,375. It arises in this way, as part of the arrangement with the trustees for the debenture holders, for, owing to the charge on the Oceanic company the company was not in a position to use its own cash balances, and in order to give some time while the future of the company could be discussed and appropriate steps taken to secure the interests of the taxpayers, it was decided to advance to the company the minimum working money required to carry on. This money is secured as a first charge on the company on this block of shares which the action of the Treasury has rescued from the debenture holders. I am sorry that I have such a story to put before the House on this matter, and I think I have told the House every relevant detail. The sum of money is vast, but it is necessary in order to prevent this security disappearing for the satisfaction of debenture holders and also for the minimum working expenses up to the end of the financial year.

In the agreement the company has agreed to place itself under strict Treasury control. It has agreed to pay out no sums without the consent of the Treasury and the Finance Ministry of Northern Ireland, to furnish estimates and also audited accounts monthly, and it is reserved to the Comptroller and Auditor-General to have access to the books. The transaction has been agreed in order to prevent the sale of a valuable asset, this block of shares. No one knows what the value is for several reasons, one of them being that there is no market in the shares, the whole of them being held by these two companies. We have acquired these shares at an average of about 3s. each.

Mr. SILVERMAN

Can the hon. and learned Gentleman say who the debenture holders were?

Mr. MORRISON

I cannot. The hon. Member can take it from me that the debenture holders had a charge on this block of shares.

Mr. SILVERMAN

What was the amount?

Mr. MORRISON

That was not the only charge. We have preserved this valuable asset. The Treasury took the most competent advice it could find. It was agreed that in the taxpayers' interest it would be a prudent step to prevent the disappearance of this valuable block of shares. The North Atlantic shipping trade has been in the last few years in the worst state it has ever been. The result of last year's trading shows a marked improvement, and given the reasonable swing of the pendulum that can be expected we have not the slightest doubt that in obtaining these shares we have done something which has improved the security of the Treasury and the taxpayer for the enormous loans which the Government has in the past guaranteed, The sums involved are very large, in the neighbourhood of £3,000,000, and it is felt that it is a wise precaution to prevent this valuable block of shares disappearing.

3.55 a.m.

Mr. GREENWOOD

I beg to move, "That the Chairman do report Progress, and ask leave to sit again."

The speech which the hon, and learned Gentleman has just made is important and weighty, and it should receive the careful consideration of the Committee. It is three hours since I asked leave to move to report Progress, and in view of this very late hour, again I beg leave to move to report Progress. Three hours ago the hon. Member for Ebbw Vale (Mr. Bevan) tried to defend my Motion on the ground that we were tired and weary on this side. When I look at the hon. Members opposite in the recumbent positions which some of them have taken, when I think of the state of coma which has come over them, and when I think of the enormous amount of financial knowledge on that side, I feel that we are not going to be enlightened on this matter. For the majority of the House to lie in this semi-comatose state, with two of its Members horizontal—

Mr. GARRO-JONES

On a point of Order, may I draw attention to the fact that some hon. Members on the Conservative Benches are lying prone on their benches, and is that not contrary to Standing Orders?

The TEMPORARY CHAIRMAN (Major Milner)

That is not a point of Order.

Captain STRICKLAND

Does the hon. Member not think it better to lie recumbent than to lie standing?

Mr. GREENWOOD

The hon. Member is in a better position to answer that than I am. It is a matter of order that hon. Members should restrain themselves in seemly fashion. Two hon. Members are in a state of unconsciousness. This is no hour to discuss so important a problem as this. The figures with which the Financial Secretary juggled and the arguments which he used were so complex that hon. Member's should have a full opportunity of reading his speech in the OFFICIAL REPORT before we have a Debate. That seems to me sufficient reason why reason should prevail, why we should say to the Chief Whip "And so to bed," and it is in that spirit of friendliness that I beg to move my Motion.

The CHAIRMAN

proceeded to put the Question, "That the Chairman do report Progress, and ask leave to sit again."

Mr. GARRO-JONES

rose.—

The CHAIRMAN

Does the hon. Member question the discretion of the Chair?

Mr. GREENWOOD

rose—

HON. MEMBERS

Name!

The CHAIRMAN

If the right hon. Gentleman desires to raise a point of Order I will hear him. I must remind him that when the occupant of the Chair is on his feet he must sit down.

Mr. GREENWOOD

It was not a point of Order. It was a question. While admitting your discretion may I ask why the Government has not the decency to reply to the statement that has been made?

The CHAIRMAN

I do not propose to give them the opportunity.

Mr. SHINWELL

On a point of Order. May I ask whether immediately before you came to your seat in the Chair there was any conversation between you and the Patronage Secretary as to the conduct you should employ?

The CHAIRMAN

The hon. Member's statement is very wrong.

Mr. BEVAN

On a point of Order, may I respectfully submit that the speech which was delivered by the Secretary to the Treasury you were unfortunately unaware of, and therefore you were not in possession of the gravity of the issue the Committee will be asked to discuss. The reason why it is asked to move to report Progress is because of the gravity of the problem the Committee is asked to debate. If you had been in possession of that information you would have admitted discussion of the Motion to report Progress so that hon. Members not in the Committee at the time would be put in possession of the information. Perhaps you will reconsider your decision.

Mr. GARRO-JONES

You have been good enough to state that there was no conversation between the Patronage Secretary and yourself before you came to that Chair. The Patronage Secretary rose from his place and held a long conversation with your predecessor. Is it in order for the Patronage Secretary to seek to influence the Chair in that way?

The CHAIRMAN

Of course a good deal of this is really very much out of order because it is in the nature—whether hon. Members mean it or not—it is undoubtedly in the nature of a reflection on the Chair. For the information of hon. Members I may say 'that I had been for some time keeping myself closely in touch with what had been happening in the Chamber and lately I had been behind the Chair or near by before I came to the Chair. I was fully acquainted with the position of affairs in the House. In these circumstances I came to the conclusion that when the right hon. Gentleman at the end of his remarks moved to report Progress this was a proper occasion in my discretion to put the Question forthwith.

Mr. ALEXANDER

rose—

The CHAIRMAN

If it is the same point of order I will not admit it.

Mr. ALEXANDER

I want to put this point: I have sat in the Committee during the whole period of these discussions, last evening and this morning, for the purpose of addressing what I hoped would be considered severe criticism of this proposal. I cannot imagine that if you had listened to the statement of the Financial Secretary you could possibly have refused a proper discussion.

The CHAIRMAN

The right hon. Gentleman is apparently arguing still further that point of order on which I have given my decision and on which I said I cannot listen to more.

Major MILNER

On a point of explanation, if I may be permitted.

The CHAIRMAN

I think that in the circumstances it would be a proper thing for me to allow the hon. and gallant Member to proceed if he rises on a point of personal explanation.

Major MILNER

I must say that I personally asked the Patronage Secretary the time of the last division on this subject, so that I might form an opinion. He came back and told me that the division was at 1.50 a.m. so that I could form an opinion. That was the only conversation.

Division No. 73.] AYES. [4.7 a.m.
Adams, D. (Consett) Greenwood, Rt. Hon. A. Seely, Sir H. M.
Adamson, W. M. Griffith, F. Kingeley (M'ddl'sbro, W.) Sexton, T. M.
Alexander, Rt. Hon. A. V. (H'lsbr.) Hall, J. H. (Whitechapel) Shinwell, E.
Anderson, F. (Whitehaven) Henderson, A. (Kliigswinford) Silverman, S. S.
Bevan, A. Henderson, T. (Tradeston) Simpson, F. B.
Broad, F. A. Holland, A. Smith, Ben (Rotherhithe)
Brown, C. (Mansfield) Hollins, A. Smith, E. (Stoke)
Compton, J. Jones, A. C. (Shipley) Smith, T. (Normanton)
Cripps, Hon. Sir Stafford Kelly, W. T. Stewart, W J. (H'ght'n-le-Sp'ng)
Daggar, G. Kirby, B. V. Strauss, G. R. (Lambeth, N.)
Dalton, H. Lawson, J. J. Taylor, R. J. (Morpeth)
Davidson, J. J. (Maryhill) Lee, F. Tinker, J. J.
Davies, D. L. (Pontypridd) Logan, D. G. Watkins, F C.
Davies, S. O. (Merthyr) Lunn, W. Westwood, J,
Dunn, E. (Rother Valley) Mainwarlng, W. H. Whiteley, W.
Ede, J. C. Marklew, E. Wilkinson, Ellen
Edwards, Sir C. (Bedwellty) Mliner. Major J. Williams, E. J. (Ogmore)
Fletcher, Lt.-Comdr. R. T. H. Paling, W. Williams, T. (Don Valley)
Foot, D. M. Potts, J. Windsor, W. (Hull, C.)
Frankel, D. Pritt, D. N.
Garro-Jones, G. M. Ritson, J. TELLERS FOR THE AYES.—
Glbbins, J. Robinson, W. A. (St. Helens) Mr. John and Mr. Mathers.
NOES.
Albery, I. J. Grimston, R. V. Rankin, R
Allen, Lt.-Col J. Sandeman (B'kn'hd) Guest, Maj. Hon. O.(C'mb'rw'll, N. W.) Rathbone, J. R. (Bodmin)
Allen, Lt.-Col. Sir W. J. (Armagh) Hannah, I. C. Rayner, Major R. H.
Anderson, Sir A. Garrett (C. of Ldn.) Hannon, Sir P. J. H. Reed, A. C. (Exeter)
Aske, Sir R. W. Heilgers, Captain F. F. A. Rickards, G. W. (Skipton)
Balfour, Capt. H. H. (Isle of Thanet) Hepburn, P. G. T. Buchan- Robinson, J. R. (Blackpool)
Beauchamp, Sir B. C. Holmes, J. S. Ropner, Colonel L.
Bernays, R. H. Horsbrugh, Florence Rowlands, G.
Blindell, Sir J. Hudson, Capt. A. U. M. (Hack., N.) Russell, S. H. M. (Darwen)
Bossom, A. C. Hulbert, N. J. Salt, E. W.
Boulton, W. W. Inskip, Rt. Hon. Sir T. W. H. Samuel, M R. A. (Putney)
Bower, Comdr. R. T. Keeling, E. H. Sandys, E. D.
Bracken, B. Kerr, Colonel C. I. (Montrose) Shaw, Captain W. T. (Forfar)
Briscoe. Capt. R. G. Kerr, J. Graham (Scottish Univs) Smith, L. w. (Hallam)
Bull, B. B. Latham. Sir P. Somerset, T.
Burghley, Lord Law, R. K. (Hull, S.W.) Somervell, Sir D. B. (Crewe)
Burgin, Dr. E. L Leckie, J. A. Southby, Comdr. A. R. J.
Cartland, J. R. H. Loftus, P. C. Spens, W. P.
Channon, H. Mabane, W. (Huddersfield) Stanley, Rt. Hon. Lord (Fylde)
Chapman, A. (Rutherglen) MacAndrew, Lt.-Col. Sir C. G. Storey, S.
Colville, Lt.-Col. D. J. M'Connell, Sir J. Stourion, Hon. J. J.
Courtauld, Major J. S. McKie, J. H. Strauss, H. G. (Norwich)
Courthope, Col. Sir G. L. Macnamara, Capt. J. R. J. Strickland, Captain W. F.
Cranborne, Viscount Magnay, T. Stuart, Hon. J. (Moray and Nairn)
Critchley, A. Margesson, Capt. Rt. Hon. H. D. R. Sutcliffe, H.
Cross, R. H. Maxwell, S. A. Tate, Mavis C.
Crowder, J. F. E, Mayhew, Lt.-Col. J. Taylor, Vice-Adm. E. A. (Padd., S.)
Culverwell, C. T. Mellor, Sir J. S. P. (Tamworth) Thomas, J. P. L. (Hereford)
Davies, Major G. F. (Yeovil) Mills, Major J. D. (New Forest) Titchfield, Marquess of
De Chair, S. S. Mitchell, H. (Brentford and Chitwick) Tree, A. R. L. F.
Donner, P. W. Moore-Brabazon, Lt.-Col. J. T. C. Tryon, Major Rt. Hon. G. C.
Dorman-Smith, Major R. H. Morrison, G. A. (Scottish Univ's.) Turton, R. H.
Duckworth, W. R. (Moss Side) Morrison, W. S. (Cirencester) Wakefield, W. W.
Dugdale, Major T. L. Muirhead, Lt.-Col. A. J. Wallace, Captain Euan
Duggan, H J. Nicolson, Hon. H. G. Ward, Lieut.-Col. Sir A. L. (Hull)
Duncan, J. A. L. Orr-Ewing, I. L. Ward, Irene (Wallsend)
Dunne, P. R. R. Palmer, G. E. H. Waterhouse, Captain C.
Eastwood, J. F. Peake, O. Wickham, Lt.-Col. E. T. R.
Eckersley, P. T. Penny, Sir G. Williams, H. G. (Croydon, S.)
Errington, E. Peters, Dr. S. J. Wilson, Lt.-Col. Sir A. T. (Hitchin)
Erskine Hill, A. G. Petherick, M. Windsor-Clive, Lieut. -Colonel G.
Evans, Capt. A. (Cardiff, S.) Plugge, L. F. Wise, A. R.
Everard, W. L. Ponsonby, Col. C. E. Womersley, Sir W. J.
Fleming, E. L. Porrltt, R. W. Young. A S. L. (Partick)
Fyfe, D. P. M. Raikes, H. V. A. M.
Gluckstein, L. H. Ramsay, Captain A. H. M. TELLERS FOR THE NOES.—
Gridley, Sir A. B. Ramsbotham, H. Captain Hope and Lieut.-Colonel
Llewellin.

Original Question again proposed.

Question put, "That the Chairman do report Progress, and ask leave to sit again."

The Committee divided: Ayes, 63; Noes, 138.

4.17 a.m.

Mr. ALEXANDER

I want first of all to say that I consider it nothing short of a disaster that the House should be asked to give consideration at this hour to such a very important Supplementary Estimate as that now before us. There is no question at all that these Supplementary Estimates are such as would, twenty-five years ago, have led to a fearful scene in the House. Here is unravelled, if one likes to look at the details of the Estimate, the story of one of the grave scandals of modern times. Here is another example of the misuse of the public credit. Here is another case where, if I understood aright the implication of the companies who are in relation to this particular transaction, the public is going to be called upon to pay, whilst others who have profited out of the transaction will not be called upon to pay. The Financial Secretary shakes his head. I listened in vain to that long and somewhat vague statement he made just now before the Motion to report Progress was moved, but I did not hear a single thing in that long statement which gave any more light to the Committee than was to be found in the White Paper. If he had other information to give to us then I think he might have given it. I want to draw the attention of the Committee to the fact that the shipping industry as a whole is receiving substantial sums already from public funds, and in so far as the Financial Secretary showed just now that trade was improving he means by that that it is being assisted to some extent by Government subsidy.

In dealing with these two transactions, however, when one looks at the details of this company that he laid before us, I find that not only were they the controllers of the White Star, not only were they the subject of arrangements between the White Star and Oceanic, but they had close association with another shipping line, called Shaw Savill and Co. When I look at the latest report available with regard to Shaw Savill and Co. I cannot see that they are in quite such a bad way in that respect as has been indicated in the report with regard to the other aspects of the operation. I look up the returns in the Stock Exchange Year Book of the Shaw Savill and Albion Co., Ltd. I look up the sec- tion which refers to accounts and dividends and I find this; accounts and dividends are submitted in May. Particulars as to the provision for ordinary dividends are withheld from publication. How much are they? Will not the hon. Member tell us?

Mr. W. S. MORRISON

The hon. Member has asked me about that. I cannot tell him about Shaw Savill and Albion. The prosperity of the Shaw Savill company is beside the point.

Mr. ALEXANDER

Has the lion. Member not made any inquiries at all as to the connection between the Oceanic and Shaw Savill? I think if he will look up the returns with regard to the Oceanic Steam Navigation company it might be helpful to him. The company is interested jointly with Shaw, Savill and Albion Company Ltd., with ships operating between Great Britain, Australia, Canada and New Zealand. That company is undoubtedly profitable. It is operating jointly. Is there any suggestion at all, now the country is being asked to supply this extra money, as to any contribution being made by that profitable company? I think we are entitled to know. I want to look at another aspect. I suppose there is no dubiety in the mind of the hon. Member as to the connection of this company with the Royal Mail? I heard some questions put to my hon. Friend during the course of his explanation to the Committee asking for information as to who were the debenture holders, who in other years had been lending money to these companies. It is true I cannot find in my researches in the Stock Exchange Year Book exactly who were the holders of this particular set of debentures, but when I look up the records of the Royal Mail set out in the same place, I find that some at least of the loan held by the Royal Mail Steam Packet was advanced by an insurance company not unknown in this class of business, the Royal Exchange Insurance Company.

I had occasion yesterday morning in the Standing Committee upstairs, in dealing with another section of default of trades facilities, namely a group of sugar-beet companies, to refer to the fact that it was a loan advanced to these companies by the Royal Exchange Insurance Company. I find over and over again, when we come to this kind of advance made under guarantee of the Treasury, the Royal Exchange Insurance Company. I looked up the record of the Royal Exchange Insurance Company. I found there was never any difficulty about the dividends of the Royal Exchange Insurance Company—25 per cent. two years ago and 27 per cent. last year, and I think it is worth while, in considering this aspect to-night of another stage towards capitalism completely on the dole, to know how closely these finance companies, very often with Members of the House of Lords or the House of Commons on their boards of directors, are in touch with every kind of opportunity there is available for using, for investment purposes, their financial funds, in order to keep this or that other section of capital organisation on the dole. They will be certain always to keep their financial returns quite safe and be able to make the regular high dividends paid to their stock holders and clients.

I think it is apposite at this time to call attention to the way in which finance in this case has been manipulated. I also want to point out something else. It appears from the White Paper and is verified by the repetitions of the Financial Secretary, that so concerned are the Treasury now about the position of the money which was guaranteed, that contrary to all the usual tenets of the hon. Member opposite, the Treasury have gone completely into the business. He told the Committee that one of the great advantages per contra of the first grant of £81,000—the half-share—they are making to the Northern Ireland Treasury, was that there would be strict Treasury control, that they would have complete access to the books, that the company would be required to furnish estimates and monthly accounts. Indeed the more one listened to that side of the Financial Secretary's explanation the more one could see at once that the Treasury was putting itself in practically entirely as liquidator in regard to a going concern, They are running the business.

It would have been very much better in the view of many hon. Members on this side if, instead of losing the money in the way it has been lost since the War, the country had had the sense to take control of these shipping lines themselves years ago.

Mr. MAGNAY

What about America?

Mr. ALEXANDER

The hon. Member forgets I was reproving his political friend there for laughing. Let me point out to the hon. Member who interrupted just now that he would not laugh if he read about some of the conditions of the families who have lost their money because of the rotten type of financial capitalist who has had control of this industrial business and manipulated these very companies to whom the public have advanced their money in such a way as would be a disgrace yr Great Britain.

Mr. MAGNAY

Am I not justified in laughing at the idea that any Socialist could run industry in this country?

Mr. ALEXANDER

I think the hon. Gentleman has got a very special view. If you examine the records of this House you will find that from the moment when this country was faced with a real crisis, and when the nation had to be saved, private enterprise broke down. Ever since the War you have had a whole procession of captains of industry and financiers coming cap in hand to the representatives of the people asking for public money, taking it, squandering it and using it fraudulently in many cases; and finally we have to make good a default such as we are now dealing with in this Committee. We are asked to discuss a matter like this at this late hour. It seems to be nothing short of a scandal and a disgrace that the Parliamentary Secretary to the Treasury should allot to one day such a vast quantity of Parliamentary business, and leave us at this hour of the morning to discuss such questions as this. I imagine it was put down because there was so much on the Order Paper that it was hoped the light of day could be prevented from coming in on a rotten sticky scandal.

The CHAIRMAN

I must ask the right hon. Gentleman to remember that he is parting from the Estimates.

Mr. ALEXANDER

I do not think I have said anything which has been away from the Estimates. The Estimate is for a figure of £88,000, and it is presented with little more than a hope of enabling redemption to be made of grants already made by the Treasury because of the default in redemption of their loan by the people who had the Treasury guarantee. There has been a vast de- terioration in Parliamentary standards since the War. If there had been a transaction such as this twenty years ago it would have led to the resignation of the Government of the day.

4.36 a.m.

Sir S. CRIPPS

I can only imagine that we are forced to discuss this matter as a result of the Financial Secretary having explained it to the Chief Whip in the same way as he did to the Committee, and the Chief Whip thinking it was unintelligible and that we should not waste time over it. We are asked to deal with this matter as simple borrowing; but there are a great many questions which arise upon it and the points to be put are very material.

Mr. MORRISON

I think I can give the relations between the companies in due course. [Interruption.] I was referring to the connection between the Shaw Savill Company and the Oceanic Company. The Oceanic Company possessed certain shares in the Shaw Savill Company, but they were sold.

Sir S. CRIPPS

They were part of the value of the assets which were sold for the benefit of the debentures. I would like to put one or two questions in regard to this matter. Would the hon. Gentleman tell us how much money has been paid under the guarantee? That is a vital factor when one is considering whether or not this is a wise expenditure in order to save what has already been put in. Are sums still being paid under these guarantees? Is there still an accruing liability from year to year for the interest? Is there still the full liability, so far as this country is concerned, for the £1,540,000? It proceeds: because the company has not been in a position to fulfil its obligations on these loans or on the first mortgage debentures of the company. Does that mean that sums have to be paid because the company cannot pay the interest on its first mortgage debentures? Was there any guarantee by the Treasury of the interest on those debentures, or was that paid apart from any guarantee to salve the company, in order that the debenture holders should not enter in and take possession thereby of the value of such assets as the Treasury had against this guarantee'? These matters are of vital importance if one is to judge this extraordinarily complex financial transaction.

It proceeds further: The trustees of the debenture holders recently decided to realise the security. Who were the trustees, and why did they so decide? Why did they decide to realise the debentures in this company, with its admirable prospects and with business better? I assume they were carrying a fairly high interest, and that unless the trustees thought it was a risky investment they would have been glad to continue it. It then proceeds to say that the debenture charge covered certain assets, which I understand refers to one block of 1,120,000 shares.

Mr. MORRISON

The block of shares on which the debenture holders had the first charge and the Treasury the second charge was the block of 1,520,000.

Sir S. CRIPPS

I am obliged. Would the hon. Gentleman now tell us what a partial interest is? Was it what it is set out to be, a share of the holding of the shares themselves? Were they co-owners in this block of shares? When this deal was put through how came it that the debenture holders got a first charge and all the Treasury got was a partial interest? Why did the Treasury not then get as good a charge as anyone upon these shares which were transferred? It appears from what follows in this document that, having discovered this state of affairs, trustees were about to realise assets in which they had a partial interest, and that the Treasury advanced money to the trustees. We have not heard a word about that, and I should like to ask the hon. Gentleman on what authority the Treasury advanced the money, and how much money was advanced. As far as I can see there has been no Parliamentary authority for the advance. It has probably been repaid since, but it is a serious matter if the Treasury is to take power, without coming to Parliament, to advance money to trustees of debenture holders in some private company, and the transaction is never to come to Parliament unless it turns out to be a total loss, when, no doubt, Parliament would be asked to Vote the authority for the advance of the money. After having advanced the money the Treasury found that £81,804 of it was irrecoverable. I understand that every- thing except the shares on which there was a charge for the debentures was sold or realised, including shares in the Shaw Savill Line, the money in the till and the balance at the bank, and that still there was £81,000 short. I understand that for that sum there is still a charge on these shares. Have they been purchased for that sum?

Mr. MORRISON

The charge is for all sums that have been advanced.

Sir S. CRIPPS

So that now the security of the Treasury is reduced to a charge on 1,520,000 ordinary shares in the Cunard - White Star Line which are held by the Ocean Steam Navigation Company, the holding company. In order to make that charge effective it has been necessary to advance, without authority from Parliament—£5,000—presumably to the Ocean Steam Navigation Company. That is a company which has no assets except a block of shares. It cannot want any money to carry on with. Why does it want £5,000 to carry on its sole business of holding one block of shares? Is it to pay the directors? This means that the Committee are asked to consent to the advance of this sum to a company whose sole business is to hold one block of shares, in order that they may carry on the business of holding that block of shares until 31st March. I suggest that the hon. Gentleman should have told them to put it in the Chancery Lane Safe Deposit. I cannot understand a figure of that sort being put before the Committee seriously. Then there arises another line of criticism on the whole of this transaction, perhaps more important for the consideration of the Committee than the particular deal we have been concerned with at present. The hon. Gentleman said with great pride that the Committee would observe that he was preserving control in the hands of the Treasury. Does he think it a good thing for the Treasury to have the control of private companies? He does. Then he had better come over to this side.

Mr. W. S. MORRISON

The hon. Gentleman should not misinterpret. I meant that I had noted his point for reply.

Sir S. CRIPPS

If he does not think it a good thing, he will find, when he looks at the OFFICIAL REPORT tomorrow morning, that in his speech there is one point of recommendation he put forward, and that was that the Treasury was preserving control of this business. Are they going to run this business of controlling a block of shares? I am sure he has realised that whether it he a business, a finance corporation or a big shipping company in the North Atlantic, there could be no better control than by the Government. Instead of opposing what we art trying to do he should expand this control until it covers the whole body of the industries of this country. He will then be able to say that the little police he started by getting control of one company had expanded to cover the whole country.

But this method of obtaining control is very expensive, because you obtain control on the theory that you always carry the loss and the other man gets the profit. You do not go in unless the concern is in such a state, and unless the risks are such, that no ordinary prudent investor can carry them. When business in the North Atlantic is improving the Government does not get the profit on the shares. It only gets a fixed rate of interest. There is the Queen Mary. If the shares do well then it is not the Government which gets the benefit. The Government only gets a fixed percentage. When the danger is great the Government takes the risk; where the chances of making profits are concerned the Government gets no advantage at all.

Why did not the Government purchase the shares from the debenture holders? It would have been just, as effective as a charge and if there were a profitable future for the shares they would get the whole benefit and would not have had to advance this £5,000 or £6,000. They would have got the security and the prospects of profits, and would not have had to finance the company which holds this block of shares. This is almost Gilbertian as a method of finance, and could only be adopted by a party which thinks its function is to try to preserve the interests of the capitalist class of this country. The Government could not have had true regard for the interests of the Government itself. It is always the same story. The Government goes in as a hospital nurse to try to keep this terribly anaemic patient alive. Soon it will find the patient will be dead in its arms.

4.57 a.m.

Sir ALAN ANDERSON

Before I went to sleep last night it appeared to me that this problem was the voting of £80,000. Now, in the cold grey light of the morning, it appears to be a much wider question. We have heard about trade facility loans, the shares of Shaw Savill and a large number of surrounding problems. The question we were discussing was whether it was right and proper for the Government to spend £80,000. They had to step into the position of holders of a first security—they had guaranteed a loan for trade facilities. In order to get first securities and therefore power to deal with the property, they bought up the first debentures, and I presume they ran no risk in that. As I see it that is the whole question on this Estimate. Regarding the trade facilities loans, I have heard one or two speeches which imply that they are a bonus to, and are intended to help, the shipowners. You will be interested to hear that the shipowners went more than once to the Government asking them not to grant these trade facilities loans to shipbuilders. The loans were granted to encourage ship-building. It is quite true that some shipowners took advantage of them, but the whole body of shipowners protested against the practice of granting them. So do not imagine that this is something the shipowners asked for or by which they profited. These loans were agreed about ten years ago, and are not in question in the Estimates at all. What is in question is whether it was wise of the Government, that company having got into a very bad position, to step into the position of being holders of first securities by buying these debentures and paying £88,000 for them.

5.2 a.m.

Mr. SILVERMAN

If I had any real hopes that the searching analysis of this transaction which we have heard would meet with any satisfactory response, I might be content to leave it there, but because I have no hope that any such enlightenment will be given to us I continue this discussion. I acquit hon. Gentlemen who have spoken of any desire not to enlighten us, but the really shocking thing about this transaction, as it has been presented to us, is the lack of information which the Financial Secre- tary confesses to. There are two questions which should be very simple to answer and to which it is very necessary to have the answers. We want to know, first, who were the debenture holders, or, if there are too many of them, who were the trustees for the debenture holders?

Mr. W. S. MORRISON

I have said that I could not say actually who were the debenture holders.

Mr. SILVERMAN

I gather that the hon. Gentleman can now tell us who were the trustees, but when the question was referred back he was unable to supply this information. Another question is, What was the amount of the debenture holders' claim? These particulars do not tell us. They tell us that the trustees for the debenture holders decided to realise the securities for the debentures, which included 'certain assets in which the Treasury and the Ministry of Finance of Northern Ireland had a partial interest, subject to the prior claims of the debenture holders. In order to safeguard the recovery of the debt due and to become due to them, it was necessary for the Treasury and the Ministry of Finance to take steps whereby the sale of those assets would be avoided, and accordingly they arranged with the trustees to find, in equal proportions, the sum required to pay off the debentures without the realisation of all the other assets charged as security for the debentures.

It is quite clear what has taken place. What was determined upon was that these other assets charged as security, in which we had no interest, should be sold in order to satisfy the claims of the debenture holders, that when they had been sold something was still due to the debenture holders, that that balance was found jointly with the Minister of Finance of Northern Ireland, and that this Estimate represents our share of that deficit.

The Committee are now asked to say that that was a wise thing, that it was, in the words of the hon. Gentleman who presented the Estimate, a businesslike proceeding. I say the information he has given is insufficient to enable us to decide whether it was or was not a sound business transaction. In order to know whether it was worth our while to step in in that way, after assets in which we were not interested had been sold in order to preserve the other assets in which we were interested, we must know two or three things which have not been told us. One is, What was the value of the assets? Another is, What was the value of the assets in which we had no interest? Thirdly, what was the claim of the debenture holders, and the difference between the sum realised by the sale of the assets in which we had no interest and the amount we had to make up? It is all very well to say what was the final deficit which we had to share with the Ministry of Finance, for we know now how the figure was reached, but we are not given the calculation. We have nothing to enable us to decide whether it was better business to do what was done or whether it would have been better to let the whole thing go.

If it be true that the Financial Secretary has not got this information, then for him to ask the Committee in such circumstances to approve of the expenditure of public money is a misuse of the procedure of this House. It goes a long way to explain why we are being asked to discuss it between 4 and 5 o'clock, because those are the hours of darkness, and it may well be that this is a transaction which is better discussed in the hours of darkness than dragged out in the light of day. We on these benches will insist on continuing the discussion because, if we discuss it long enough, the light of day will be brought into it, physically and literally. The Financial Secretary is asking us to sanction this expenditure on information which is insufficient. If it had been an instruction given to him by a firm of solicitors who wanted counsel's opinion, he would have sent back and have said "I am insufficiently instructed and I cannot give you an opinion because the information which you have sent me is insufficient." If in his own professional capacity he would have refused to advise a client because- the information was vague and incomplete, then for him to come here at ten minutes past five and ask us, on like information, to deal with monies of which we are in the strictest sense the public trustees, is an abuse of the procedure of this House.

If the hon. Gentleman were considering this matter at an ordinary time and, may I say with all respect, with all his faculties fully awake, he would not be doing what he is doing now. I suggest to him that it would be a wise thing to ask leave to withdraw the Estimate, and to come back to us at some other time, with full and detailed information, showing exactly how and why and when the expenditure was incurred, and why we should regard this as a good business proposition. Let him tell us why it is better to be content with a charge in this way rather than to purchase. Why be content with the less if we could have the more? We are not unreasonable, we shall not persist in our criticism if there is some explanation. But the explanation is not given, and even if it were given at this stage in the Debate the criticism would still remain that the Financial Secretary ought not to invite us to consent to a payment of this nature without volunteering the information which, at the end of a two hours' Debate in the early morning, we may extract from him piece-meal and spasmodically. Let him take it all back and when he can supply us with the knowledge of which he has confessed his ignorance in this Debate then the Committee can exercise its functions with all the care which trustees have to exercise in dealing with public funds.

5.14 a.m.

Mr. PRITT

I respectfully agree with my hon. Friend the Member for Nelson and Colne (Mr. Silverman) about the necessity of being extremely careful when it is a question of whether you should throw good money after bad or cut your losses. I want to ask tie hon. Member who is dealing with this matter for the Government to enlighten the Committee as best he car: on one very important item. We have to consider among other problems the value of what we are likely to be left with at the end. We know that we are left with about one and a half million shares—with a charge on the shares, but not the shares. We are not told their nominal value, although I believe it to be a pound. The hon. Gentleman said very frankly earlier that he did not know. I do not know whether the eminent business expert who was advising the Government knew or not. Among a certain number of indignant shareholders in these associated concerns—who selected, of all the funny people on earth to whom to take their grievances a Member of Parliament who sits in the Socialist interest for North Hammersmith—is one gentleman who holds the view that they are worth threepence, which would make the Government security worth £20,000.

Mr. W. S. MORRISON

I do not like to interrupt the hon. and learned Member, but when he is talking about these shares he is not referring to the shares in question here, the Cunard-White Star shares?

Mr. PRITT

Yes, the one and a half million Canard-White Star shares. We are now getting a little more information about their value. The first information was that the hon. Member did not know. The second bit of information was that he had heard something about 3s. The third bit of information is that the hon. Gentleman is obviously dismayed at the possibility of there being any truth in what somebody has told me about their being worth three pence. Of course, if he cannot tell us the value of the shares in pounds, shillings, pence and farthings, perhaps he can tell us what assets stand behind the shares? I suspect from what I have been told by people who have written letters to me that they consist of ships, which are, of course, tangible assets, or as is the more normal case in modern shipping conditions, tangible liabilities. I speak of what I know. The ships of this country have caused me to be enriched in winding-up courts, in civil courts and in criminal courts. Will the Financial Secretary tell me whether the assets are ships, how many there are, how decrepit they are, are they sailing the seas, what is the average loss per voyage account and how many people they are already mortgaged to? This Committee has got to sanction, or not to sanction, the pouring away of what nowadays is a very small sum of public money, but a principle is involved. We know that the hon. and learned Member would tell us if be knew. I want him to know, so that he may tell us and we may know before we make up our minds. These are my normal working hours and I don't mind waiting while he sends for information, but I do want to know. I have confidence that the hon. and learned Member will tell us everything he knows before this one more regretful incident of dying capitalism being financed out of the public pocket when the pessimistic capitalist will not finance it out of his own pocket.

5.20 a.m.

Lieut.-Colonel Sir CHARLES MacANDREW

I have sat through the Debate on this Supplementary Estimate, and I can see the difficulty in which the Financial Secretary must have been in his anxiety whether the money should be washed out as a bad debt or whether something should be done to try and save something from the wreckage. I know that if I come to the cost of this Supplementary Estimate I shall be out of Order. There are a lot of things we would be interested to know. Although this is a great deal of money, nevertheless, from the point of view of the country as a whole, it is not a very large percentage. I will tell the Committee how this matter strikes me. I am worried about this particular item; but I gather that the policy of some hon. Members is that ultimately all the businesses of this country should be run by the Government. I cannot imagine that it would be possible to find a more competent person than the Financial Secretary to the Treasury. Here we are in an all night sitting spending nearly three hours on £81,000. Can you imagine what will happen to the industries of this country if they are to be run by Parliament? [Interruption]If hon. Gentlemen opposite seriously think that businesses can be run—

The DEPUTY-CHAIRMAN

I do not think that question arises.

Mr. DAVID ADAMS

We have had a most entertaining discussion, but in all the speeches there appears to be omitted what appears to me to be fundamental information, to which the House is entitled. I had something to do with trade facilities at one time—[Interruption.]—

The DEPUTY-CHAIRMAN

I think we shall get on better if hon. Members will allow the hon. Member to make his speech. I, for one, would like to hear it.

Mr. ADAMS

I do not intend to occupy much time. I am interested in trying to get an answer which I think the House ought to have. I had some association with shipping concerns in connection with the Trade Facilities Acts, and at that time, so far as the lesser shipping companies which received guarantees were required to give cover for the amount of money which was guaranteed to them. If that had been done in the case of this concern, there could not have been debenture holders with any prior claims over the Treasury claims. I should like to know whether the customary transaction at that time by the Trade Facilities department was departed from and, if so, why that was done.

Mr. E. SMITH

Am I correct in understanding that the Cunard White Star line is connected with those that we are now discussing? If that be so, it raises a serious point for some of us who have been concerned in the matter since the General Election. Within two weeks of the last General Election it was stated in the "News Chronicle", the "Manchester Guardian" and one or two other reliable papers that the Colonial and Dominion Line had stated that if a National Government were not returned they would give no order to a shipbuilding company. Now we are beginning to see who is responsible for these statements, because the Colonial and Dominion Line is a subsidiary of the Cunard Line, and the directors of the Dominion Line are practically the same as the Cunard Line. Now we are beginning to see the influence that returned the National Government.

5.30 a.m.

Mr. W. S. MORRISON

It is obvious that if you are conducting State guaranteed loans you do not attract the best class, because the best class is that which has the highest credit, and it can generally get the credit it wants without such a guarantee. But if you are prepared to operate Trade Facilities Acts you must be prepared to take some risks that are not as good as others. These loans were in operation from 1921–1927. Looking over the whole story it is surprising to see—such has been the care with which the applications have been graded—how little money has been lost. Out of the total of nearly £60,000,000 involved, the amount of losses known to be irrecoverable —

Sir S. CRIPPS

Is it in order, to discuss the whole policy of the Trades Facilities Acts?

The DEPUTY-CHAIRMAN

I do not think we ought to go into the whole policy. I think the Minister is entitled to give an explanation of what happened in the original case as this is a new service.

Mr. GARRO-JONES

Does the Financial Secretary include any loss on this transaction in his figure, or does he regard this as still good?

Mr. MORRISON

The present case I think, thanks to this operation, I would not be justified in holding out as an irrecoverable loss. The prospects of recouping the Treasury are now excellent. The right hon. Member for Hillsborough (Mr. Alexander) scaled us for the whole policy of the Trade Facilities Acts and said that industrialists came cap in hand to Parliament. That is not the problem with which the Committee is now dealing. Here is a loan that was guaranteed 10 years ago. Last Dsecember something happened with which we had to deal. The debenture holders were in a position to destroy a large block of the security.

Mr. SILVERMAN

Why should the trustees for the debenture holders choose just that moment to step in, when on the right hon. Gentleman's own showing trade was recovering so rapidly as to render the loan a good one, and the security valuable?

Mr. MORRISON

I have a note on that point. The debenture holders were anxious to get out with their money and accrued interest. The right hon. Gentleman asks me who were the debenture holders. I do not know. I never did know. The persons who approached the Treasury were the trustees for the debenture holders. The two gentlemen chiefly concerned were Sir Herbert Lawrence and Mr. V. H. Smith.

Mr. SILVERMAN

Does that mean that the trustees for the debenture holders began to be interested in realising this security at the moment the armaments boom started?

Mr. MORRISON

How can I know that; I would like the Committee to say what they would have done in the position we were in. It is no good the right hon. Gentleman making wild charges. Would he have done different from what we did? Our principal security was this big block of 2,280,000 shares, on which we had a first charge. There was also the second block of 1,520,000 shares in respect of which we had a second charge. The threatened destruction of the shares meant that not only should be lose our charge in respect of this debt of £245,000; it meant that if there was a deficiency in our common security there was nothing for us as unsecured creditors to prove against. What has happened is that by paying what I will call this insurance premium we have advanced our security from the second to the first place for this great block of shares, and we have prevented the disappearance of the shares. The result is that the ultimate security of the Treasury and the Northern Ireland Ministry of Finance has been immeasurably benefited. That is the main point. Here was a sum of £81,000. When we could have preserved this security, ought we to have been content to allow the whole thing to go down to the debenture holders? The only alternative policy was that of letting the estate completely disappear. I ask hon. Members before they blame the Treasury too much to ask themselves what a reckoning they would have, had from the House of Commons if they had suffered a block of shares of this magnitude to disappear entirely. I put this forward as a business case.

I have been asked to describe what is a partial interest. We had, in fact, a second charge, not over the whole block, but over a certain number of shares, and that charge was in respect only of this particular loan of £245,000. I am often very perplexed why hon. Members find some points so difficult when they are very clever at understanding matters which are irrelevant but more difficult. We have in this case separate loans made from time to time. It is in respect of one such of these that partial interest arises. I have been asked by what authority this money was issued. That is a point of view with which I have the greatest sympathy. We should do our best to secure Parliamentary control over these issues, but we must not be prepared to be more strict than our forefathers who established the Civil Contingencies Fund out of which it is allowable to make advances when it is necessary to expend a certain sum, of money for certain purposes. The money had to be expended at once or the debenture holders would have foreclosed upon the shares.

Sir S. CRIPPS

What I asked about was the advance to the trustees of, apparently, the total sum of the debentures.

Mr. MORRISON

That is not what was done. What was advanced to the trustees from the Treasuries of this country and Northern Ireland was not the total value of the debentures, but that margin which was necessary after the debenture holders had realised their other assets. That was not the total value of the debentures, but a very much smaller sum.

The sum we advanced was in the neighbourhood of £81,000 from the Civil Contingencies Fund. The Civil Contingencies Fund exists for such a sudden emergency when it is impossible to get Parliamentary authority to prevent some damage, accruing to the State. It is equally important, if that is done, that the Government should come at the earliest possible opportunity to Parliament with a Supplementary Estimate. That is what we have done here. The money was expended on 14th January and this is the first opportunity we have had of coming before the House and laying details of this transaction before it. We hope that the Committee will think we did our best for our people and the taxpayers. The hon. and learned Member accuses me of a good deal of ignorance. That is a crime to which I am always ready to plead guilty. I was asked about shares of the White Star Cunard Company being in private hands.

Mr. PRITT

I said people were complaining to me about the value of these shares because there are other shares of a similar type held by companies in which they are interested.

Mr. MORRISON

There is no doubt there exists a connection between steamship companies. None of those shares are involved in this transaction. The only shares involved are the' new shares of the Cunard White Star Company which was formed by the authority of this House. These shares are held in the following way—62 per cent. of them are held by the Cunard Company and 38 per cent. by the Oceanic Company. That 38 per cent. is divided up into two blocks of shares which I have mentioned—2,280,000 and 1,520,000. There are no shares outside at all, and when hon. Members speak of people complaining of these shares, I know they are not complaining of these shares but of the shares of associated companies. I know they are not complaining of these shares because there are none of them in any hands but those of the two companies concerned. That is an important thing because, looking to the end of this transaction, one has to assess what is the value of this block of shares. We do not know, and one hon. Member was a little unjust when he said I did not know the nominal value. I know that, but who knows what the value will be? If hon. Members opposite base their actions on such a certainty of the future of such a remarkable character, I wonder that they have not had better political weather in the past. Although we do not know exactly the value, we can have what may be called a pretty shrewd idea. If you believe they will be worth more than the amount for which we got control of them, we have solid reasons behind us. I was asked what was the amount of debentures outstanding. It was £1,198,000. It is a fallacy to think that that figure is very important now. What mattered to us was this. There were sufficient debentures out to swallow up these shares.

Mr. SILVERMAN

If the shares which we now hold are so very valuable and such absolute security for our money, why did they fear that the sale of the same assets by the debenture holders would have resulted in total loss to us?

Mr. MORRISON

I have tried to explain that. If they had sold the shares in order to recoup themselves, the debenture holders would have to be paid and that block of shares was our security on a second charge.

Mr. DAVID EVANS

The hon. Gentleman refers to a second charge. My question, which has not been answered, was this. Under the Trade Facilities Act it was the duty of the Treasury to obtain a first charge on the assets of any concern to whom they guaranteed money. Did the Treasury do that in this case? If so, there should be no question of a second charge in the hands of the Treasury, but a first charge.

Mr. MORRISON

I cannot with certainty speak of the details of a transaction which took place ten years ago when this guarantee was originally issued. It is not a transaction of ten years ago which is important to the decision of this Committee, but the transaction as it existed after the merger, whatever was the security accepted by the Treasury 10 years ago. We were confronted with the necessity of making a decision. We are not concerned with any assets issued ten years ago, but with the shares of the Cunard-White Star merger, which was created by statute in 1934.

Mr. DAVID EVANS

In short, the Treasury took a second debenture charge instead of a first charge on the assets of the concern?

Mr. MORRISON

The hon. Member must fight that out with the Treasury of that day, but, the probable explanation is that there were no doubt certain other existing charges over which they could not get priority, and it may have been that the only charge that could be imposed at that time for this particular security was a second charge. I am asked by the hon. and learned Member for East Bristol (Sir S. Cripps), why we did not, instead of taking this particular procedure, buy the shares outright I There were two reasons. It would have cost a great deal more money and it would have been more of a gamble, because, by the process we have adopted, which is that of paying a sum of money for the sake of freeing from debentures this block of shares, we have paid a great deal less than if we had bought the, shares outright. Moreover, we have limited our losses very much more because, though we have paid this money, the shares will be worth more than we have paid. We cannot shut our eye:; the possibility that it might have gone the other way. The problem was, what was the best thing we could do to secure the Treasury? If we had bought the shares and sunk the taxpayers' money in a large purchase and anything went wrong with the shares, the whole of the money would have been lost. As it is, what do we stand to lose if the shares do go down? We stand to lose only the money that we secured on them. By this means we have adopted a much cheaper procedure than by buying the shares outright and one that limits the possibility of losses to a much lower figure. This may be an insufficient explanation, but it is the best that can be given.

Sir S. CRIPPS

Will the hon. and learned Gentleman tell us why it is necessary to keep in existence this holding company and spend £6,375 to do so for three months?

Mr. MORRISON

That is a pertinent question and it is one which the hon. and learned Member is not the first to ask. It is a matter which has been under consideration by the Treasury, and it was for the purpose of getting time to review the situation that this advance secured upon the share block was made. The future of this company and its particular functions is the subject of deliberations at the moment. I am unable to say more, hut the reason we made that advance was to get time to decide what was the most profitable thing to do.

Mr. SHINWELL

Is not the £6,375 described as running expenses, of which £5.000 is to be advanced on the account of the Civil Contingencies Fund, and is there any possibility of its recoupment?

Mr. GARRO-JONES

On the same point, what proportion of that is to be paid direct to directors as fees?

Mr. MORRISON

I cannot answer what the proportion of directors' fees is, but what happened was that this company had a floating charge upon it for the debenture holders. The situation was that while the charge was a floating one upon all their assets, they were able to deal with their assets as they pleased, but when it became specific every asset became locked and frozen up.

6.4 a.m.

Mr. H. G. WILLIAMS

We are discussing the case of a guarantee which has not been entirely fortunate, and hon. Members !opposite are enjoying themselves immensely because they are endeavouring to rag my hon. Friend who is dealing with a transaction which took place ten years ago or more.

Mr. PRITT

On a point of Order, I think either you, Captain Bourne, or Sir Dennis, have already ruled out discussions of policy on things that happened ten years ago.

The DEPUTY-CHAIRMAN

I ruled that there could not be a general discussion on the policy of the Trades Facilities Acts, but it is obvious that, this being a new service, some reference may be made to what happened in this particular transaction.

Mr. H. G. WILLIAMS

I was not discussing the general policy at that time. The Debate took place on the 2nd March, 1926, and I was one of those who criticised the legislation on principle. If the hon. Member wants my reasons, he will find them—they are very interesting —in the OFFICIAL REPORT for that date. But that is not the point to which I wished to draw the attention of the Committee. On that occasion there was a most interesting speech made by one whom we all respected very much, the late Rt. Hon. William Graham, who was leading for the party opposite, He made, as he always did, a well-balanced speech, the bulk of which I cannot quote because it raises a principle.

Sir S. CRIPPS

On a point of Order. I only want to know for the guidance of the Committee after the hon. Member has spoken whether we are to be at liberty to discuss the principle of the Act to which the hon. Gentleman is referring, and not the specific matter which is dealt with in the White Paper.

Mr. WILLIAMS

I have no intention of discussing the principle of the Act. I am only going to discuss certain points as to the way the Act had to be administered according to this speech.

The DEPUTY-CHAIRMAN

I think I had better wait to hear what the hon. Gentleman has to say.

Mr. WILLIAMS

Mr. Graham said: The whole of the time we were in office there was very strong criticism of the guarantees which were given to large shipbuilding and other undertakings in this country. In other words, the Labour party were being criticised for giving guarantees; that is the interesting thing. At the time his speech was made, part of this trans- action had been entered into. Mr. Graham referred to the list which was furnished to the Committee at that time, so he was aware of this transaction. What is his comment by implication on that transaction? I offer the suggestion to the House this afternoon that we should best discharge our duty in the matter of providing employment or maximum employment, if we try to give the benefit of this legislation to those undertakings which are perfectly sound, but are not of the gilt-edged or perfectly secure class of great combined or other undertakings such as have been largely guaranteed so far."—[0FFICIAL REPORT, 2nd March, 1926; cols. 1278, 1280, Vol. 192.] In other words, Mr. William Graham at that moment, like all the rest of us, regarded the matter as falling into the category of the gilt-edged or perfectly secure class of great combines, and he took the view that a greater degree of risk ought to be taken because he wanted the guarantees given to undertakings less secure than the gilt-edged undertakings.

Mr. ALEXANDER

On a point of Order I take it that, in view of this discussion, we shall be free to have a discussion on the whole principle of trades facilities and to what classes of corporation these facilities should be made available.

The DEPUTY-CHAIRMAN

I understood that the hon. Member was quoting this particular transaction.

Mr. ALEXANDER

Not at all. If he is to be allowed to continue and to remain in Order, surely we must claim the same right.

The DEPUTY-CHAIRMAN

If the hon. Member is not referring to this transaction, he is not in Order.

Mr. BEVAN

He said himself that by implication this was involved, and his quotation I submit had no direct bearing upon the transaction or the company we are now discussing.

Mr. WILLIAMS

The White Paper available to members of Parliament on that occasion contained particulars of the transaction we are discussing tonight. It is pot customary to print White Papers in the OFFICIAL REPORT. They are a separate Parliamentary Paper.

Mr. SILVERMAN

Surely the time has come when the hon. Gentleman should be asked to say to what he is referring.

Mr. WILLIAMS

I was just about to say that a White Paper to which Mr. William Graham was referring contained particulars of the transactions we are now discussing.

Mr. SILVERMAN

If the hon. Member is referring to a White Paper, surely we are entitled to know hat it is and where it is.

Mr. WILLIAMS

It is a White Paper presented to this House and is available to Members in the Library.

Mr. MAINWARING

Since the hon. Member has offered to supply information, when will he supply it?

The CHAIRMAN

The hon. Gentleman will allow me to conduct the proceedings.

Mr. WILLIAMS

The agreement expresses the view that guarantees given after March, 1926, should be in favour of firms not so sound as those to which guarantees had already been given.

Mr. SILVERMAN

Are we to understand the hon. Gentleman to be saying that he recommended lending money on second preferences?

Mr. WILLIAMS

The loans were not those which had already been made.

6.13 a.m.

Mr. A. HENDERSON

The hon Gentleman has taken trouble and research looking into back records with a view to proving that the late Mr. William Graham had expressed views in support of the policy of the present Government with regard to this matter. I think it would have been preferable from the point of view of the Committee if the hon. Gentleman had read a little more from the speech which he quoted. As he has not done that I propose to do it. May I just read a little further down in the speech: Our case is that the time has come when we must ask the country, and endeavour to get a decision from this House, as to whether we can go on giving guarantees or subsidies to privately-run industries without claiming for the public a right in the ownership of the assets they have helped to create. That quotation puts just a slightly different aspect on to the speech of the hon. Gentleman, and if I desired to take up the time I could read more. [HON. MEMBERS: "Go on."] That is the principle we venture to lay down this afternoon. Hon. Members opposite may say that this legislation was designed to provide employment, and that the State gets the benefit of such employment as it encouraged; but that is not a complete reply to the suggestion I have made. Other industries are carrying on without a guarantee, very often in more difficult circumstances, and they are not getting the benefit of this legislation. Moreover, if it is the case that many of these undertakings can raise money on the open market on rather easier terms with this guarantee than they could without it, then clearly the difference is the measure of the subsidy we give to these firms. I agree that they do not get a subsidy in actual cash; but they get the benefit of the cheaper or easier capital accommodation, and there are other advantages attached. This House is the trustee, theoretically, of all the resources of the British people, and I invite hon. Members to put themselves in the position of a trustee for a privately-owned concern, or, indeed any other property, and ask themselves whether they would be entitled to pledge the credit of the people for whom they were acting unless they had been able to secure some service or right in respect of the risk they undertook."—[OFFICIAL REPORT, 2nd March, 1926; cols. 1282–3, Vol. 192.] I really rose to complete a story that was told to the House by the hon. Member for South Croydon (Mr. H. G. Williams). Perhaps I should add "half a story." I hope what I have been able to quote from the speech of Mr. Graham will not leave a wrong impression on the minds of Members.

6.18 a.m.

Sir S. CRIPPS

I am much obliged to the Financial Secretary for the answers he has given me; but let us see if he will make the matter easier to understand. He has told us that the interest was a second charge on 250,000 shares. I do not understand how a second charge came to be created on only a small proportion of the second block of shares. There was a second block of 1,520,000 shares; why was the second charge on only 250,000 of them?

Mr. W. S. MORRISON

I desire to give the Committee all the information I have. This loan arises in connection with a particular vessel which it was desired to construct—the "Laurentic"—and in order to finance the construction of the "Laurentic" the Government of the day guaranteed a loan of £245,000, getting as security a second charge on 245,784 shares out of the block of 1,520,000 shares. It was a substantial loan made in June, 1927, for the purpose of constructing the "Laurentic." That number of shares is now comprised in the block which we have rescued from the debentures.

6.20 a.m.

Sir S. CRIPPS

In 1927 the shares of which the block consists did not exist at all. But at the time of the conversion why was not the charge expanded over the whole block? This was a conversion that was agreed to by the Government in 1934. It was put through the House with an inhibition against any alteration, and the Government must accept responsibility for it. The Financial Secretary gives us a price of 3s. a share. We think that grossly inflated, but, if we take it for the moment, the value of these shares is roughly £40,000. We had a second charge only on shares of that value. In order to save that we paid £88,000. That sounds a very funny deal. The Financial Secretary says you must also regard the fact that there were certain shares that were only charged with the mortgage. By getting the release of these shares from the mortgage we get as subject to a first charge the remaining block of shares. We have substituted, so he tells us, all these fresh shares for the £88,000 that we have paid. As regards the rest, we are substantially in the same position as before. He says it would be far too speculative to buy the shares; they are not worth the money. Yet they are valuable security on which to get a charge. He told us that if we had not paid up, the £88,000 would have disappeared. He knows much better than I do how a share can disappear other than in liquidation. A share is there until liquidation is completed and the company becomes nonexistent. Therefore he must mean that if we had not paid up the £88,000 to the debenture holders this company would have gone into liquidation. Yet the shares of this company, which were worth nothing in December, have suddenly, by virtue of our getting a charge on them, increased to 3s. in value. It is a most miraculous type of dealing in shares. The truth is that the Financial Secretary has not the vaguest idea of the value of the shares to-day. His only justification for the Bill is because the shares are valueless. The hon. and learned Gentle-

Division No. 74.] AYES. [6.27 a.m.
Albery, I. J. Gridley, Sir A. B. Ramsay, Captain A. H. M.
Allen, Lt.-Col. J. Sandeman (B'kn'hd) Grimston, R. V. Ramsbotham, H.
Allen, Lt.-Col. Sir W. J. (Armagh) Guest, Maj. Hon. O.(C'mb'rw'll, N. W.) Rankin, R.
Anderson, Sir A. Garrett (C. of Ldn.) Hannah, I. C. Rathbone, J. R. (Bodmin)
Aske, Sir R. W. Hannon, Sir P. J. H. Rayner, Major R. H.
Balfour, Capt. H. H. (Isle of Thanet) Hellgers, Captain F. F. A, Reed, A. c. (Exeter)
Beauchamp, Sir B. C. Hepburn, P. G. T. Buchan Rickards, G. W. (Skipton)
Bernays, R. H. Holmes, J. S. Robinson, J. R. (Blackpool)
Bllndell. Sir J. Hope, Captain Hon. A. O. J. Ropner, Colonel L.
Bossom, A. C. Horsbrugh, Florence Rowlands, G,
Bculton, W. W. Hudson, Capt. A. u. M. (Hack., N.) Salt, E. D.
Bower, Comdr. R. T. Hulbert, N.J. Samuel, M. R. A. (Putney)
Briscoe, Capt. R G. Inskip, Rt. Hon. Sir T. W. H. Sandys, E D.
Bull, B. B. Kerr, Colonel C. I. (Montrose) Shaw, Captain W. T. (Fortar)
Burghley, Lord Kerr, J. Graham (Scottish Univs.) Smith, L. W. (Hallam)
Burgin, Dr. E. L. Latham, Sir P. Somervell. Sir D. B. (Crewe)
Cartland, J. R. H. Law, R. K. (Hull, S.W.) Southby, Comdr. A. R. J.
Channon, H. Leckie, J. A. Spens, W. P.
Chapman, A. (Rutherglen) Llewellin, Lieut. -Col. J. J. Stanley, Rt. Hon. Lord (Fylde)
Colville, Lt.-Col. D. J. Loftus, P. C. Storey, S.
Courtauld, Major J. S. Mabane, W. (Huddersfield) Stourton, Hon. J. J.
Courthope, Col. Sir G. L. MacAndrew, Lt.-Col. Sir C. G. Strauss, H. G. (Norwich)
Cranborne, Viscount M'Connell, Sir.J. Strickland, Captain W. F.
Critchicy, A. McKie, J. H. Stuart, Hon. J. (Moray and Naim)
Cross, R. H. Macnamara, Capt. J. R. J. Sutclifte, H.
Crowder, J. F. E. Magnay, T. Tate, Mavis C.
Culverwell, C. T. Margesson, Capt. Rt. Hon. H. D. R. Taylor, Vice-Adm. E. A. (Padd., S.)
Davies, Major G. F. (Yeovll) Maxwell, S. A. Thomas, J. P. L. (Hereford)
De Chair, S. S. Mayhew, Lt.-Col. J. Titchfield, Marquess of
Dormer, P. W. Mellor, Sir J. S. P. (Tamworth) Tree, A. R. L. F.
Dorman-Smith, Major R, H. Mills, Major J. D. (New Forest) Turton, R. H.
Duckworth, W. R. (Moss Side) Mitchell, H. (Brentford and Chiswick) Wakefield, W. W.
Dugdale, Major T. L. Moore-Brabazon, Lt.-Col. J. T. C. Wallace, Captain Euan
Duggan, H. J. Morrison, W. S. (Cirencester) Ward, Lieut. -Col. Sir A. L. (Hull)
Duncan, J. A. L. Muirhead, Lt.-Col. A. J. Ward, Irene (Wallsend)
Dunne, P. R. R. Nicolson, Hon. H. G. Wickham, Lt.-Col. E. T. R.
Eastwood, J. F. Orr-Ewing, I. L. Williams, H. G. (Croydon, S.)
Eckersley, P. T. Palmer, G. E. H. Wilson, Lt.-Col. Sir A. T. (Hitchin)
Errington, E. Peake, O Windsor-Cilve, Lieut. -Colonel G.
Erskine Hill, A. G. Peters, Dr. S. J. Wise, A. R.
Evans, Capt. A. (Cardiff, S.) Petherick, M. Womersley, Sir W. J.
Everard, W. L. Plugge, L. F. Young, A. S. L. (Partlck)
Fleming, E. L. Ponsonby, Col. C. E.
Fyfe, D. P. M. Porritt, R. W. TELLERS FOR THE AYES —
Gluckstein, L. H. Raikes, H. V. A. M. Sir George Penny and Captain
Waterhouse.
NOES.
Adams, D. (Consett) Greenwood, Rt. Hon. A. Robinson, W. A. (St. Helens)
Adamson, W. M. Griffith, F. Kingsley (M'ddl'sbro, W.) Seely, Sir H. M.
Alexander, Rt. Hon. A. V. (H'lsbr.) Hall, J. H. (Whitechapel) Sexton, T. M.
Anderson, F. (Whitehaven) Henderson, A. (Kingswinford) Shinwell, E.
Bevan, A. Henderson, T. (Tradeston) Silverman S. S.
Broad, F. A. Holland, A. Simpson, F. B.
Brown, C. (Mansfield) Hollins. A. Smith, Bin (Rotherhithe)
Compton, J. John, W. Smith, E. (Stoke)
Cripps, Hon. Sir Stafford Jones, A. C. (Shipley) Smith, T. (Normanton)
Daggar, G. Kelly, W. T. Stewart, W. J. (H'ght'n-le-Sp'ng)
Dalton, H. Kirby, B. V. Strauss, G. R. (Lambeth, N.)
Davidson, J. J. (MaryhiII) Lawson, J. J. Taylor, R. J. (Morpeth)
Davics, D. L. (Pontypridd) Lee, F. Tinker, J J.
Davies, S. O. (Merthyr). Logan, D. G. Watkins, F. C.
Dunn, E. (Rother Valley) Lunn, W. Westwood, J.
Ede, J. C. Mainwaring, W. H. Wilkinson, Ellen
Edwards, Sin C. (Bedwellty) Marklew, E. Williams. E. J. (Ogmore)
Fletcher, Lt.-Comdr. R. T. H. Milner, Major J. Williams. T. (Don Valley)
Foot, D. M. Paling, W. Windsor, W. (Hull, C.)
Frankel, D. Potts, J.
Garro-Jones, G. M. Pritt, D. N. TELLERS FOR THE NOES.—
Gibbins, J. Ritson, J. Mr. Whiteley and Mr. Mathers.

man should not deal with these problems at 6.30 in the morning.

Original Question put.

The Committee divided: Ayes, 132;. Noes, 63.