HC Deb 07 December 1937 vol 330 cc200-2
47. Sir Nicholas Grattan-Doyle

asked the Chancellor of the Exchequer whether he is aware that Germany has derived for the current year a net free sterling surplus of not less than £5,000,000 in her commercial and financial relations with the United Kingdom; and will he therefore, out of that surplus, restore the defaulted sinking fund on the British holdings of German International (Young) 5½ per cent. Loan of 1930, which was taken up in the faith of the terms contained in the Treasury White Paper, as the subscribers have now lost half their capital owing to the default on the contractual sinking fund?

Sir J. Simon

I do not know how my hon. Friend arrives at the figure given in the first part of the question, but under the provisions of the Anglo-German Payments Agreement of 1st November, 1934, a balance of free sterling remains at the disposal of the German Government. As regards the second part, full interest is being paid under Article 7 of that Agreement on bonds in British ownership of the German International Loan of 1930; should the question be raised of amending the Agreement so as to provide for capital repayments, there would no doubt be other claimants to a share of the surplus besides the bondholders of the Young Loan. The question is, therefore, a complicated one, but I should, of course, welcome any action which the German Government could take towards restoring the contractual payments to British creditors.

48. Mr. De la Bère

asked the Chancellor of the Exchequer whether he can give the figures, as at the middle of 1937, of the amount of the nominal £39,000,000 of loans offered to British investors on the recommendation of the League of Nations which are in whole or partial default, and the names of the British subjects among the experts who advised the issue of these loans; and whether he will take into consideration the British capital lost in foreign loans floated on the advice of the financial experts of the League before raising the embargo on foreign lending?

Sir J. Simon

Of the League loans issued in London, about £20,500,000 nominal was at the middle of 1937 either in receipt of full service or had been paid off; on about £8,750,000, reduced service payments were being made under agreements reached with representatives of the bondholders; on about £10,250,000 partial payments had been offered by the debtor Government, but the offer had not been accepted by the bondholders' representatives. The responsibility for recommending the issue of these loans rests upon the League Council as a whole. As regards the last paragraph of the question, I would refer my hon. Friend to the reply which I gave on 30th November to my hon. Friend the Member for Newcastle-on-Tyne, North (Sir N. Grattan-Doyle).

Mr. De la Bère

In view of the fact that the League Council advised investors in Great Britain to put their money into these loans, cannot some powers of compulsory exchange clearing be instituted in order to help the investors of this country?

Sir Arthur Salter

As one of those apparently referred to in the question, and as one who certainly has no desire to evade any responsibility, may I ask the Chancellor of the Exchequer whether it is not the case that the average return to investors in League loans up to date and over an average period of about 12 years has exceeded 6 per cent., and whether this return does not compare favourably with the record not only of foreign investments in general, but of many classes of British investments, to say nothing of the 2½ or 3½ per cent. loans which the hon. Member opposite so frequently advocates?