COMPANIES ACTS.

HC Deb 15 December 1937 vol 330 cc1175-238

3.50 p.m.

Mr. Bellenger

I beg to move, That this House, being of the opinion that further provision should be made to protect the public from widespread evils resulting from fraudulent and unscrupulous business and financial operations, calls for the early introduction of legislation to strengthen the law, to amend the Companies Acts, and to establish a national investments board. The question I am raising in this Motion is one of considerable complexity and a certain amount of intricacy and, therefore, if I deal with it as widely as I can, I hope hon. Members will bear with me if I am somewhat brief in my remarks on certain points. The last Act which dealt with this subject was passed in 1929, and consisted of nearly 400 Clauses and 12 Schedules. Therefore, in order to economise time this afternoon I propose to deal with what I consider to be the more outstanding points of company law which should have the immediate attention of His Majesty's Government. In the first place, I should like to deal with the responsibility and liability of directors of public companies. This is a matter which has been often discussed from different angles, but I want to deal with two specific features of this responsibility, particularly with the feature which concerns company prospectuses which are issued at the time application is made for subscriptions from the general public to the company on whose behalf the prospectus is issued. I think the liability and responsibility of directors for statements made in the prospectus of a public company should be much greater and more extended than at present. Indeed, I think this liability and responsibility, this extended liability, should fall not only on the directors but on the issuing house, who are, to a certain measure, responsible for the issue which they float.

In order to emphasise my point, let me give an illustration. The illustration is public property already, and will be well known to many hon. Members. It concerns oil, which I believe on the Stock Exchange is considered to be a favourite gambling counter. The chequered career of this particular company started in February, 1929. The ball was set rolling—I do not want to mention names unless it is absolutely necessary—to acquire land in a certain part of the country in order to set up its refinery. I have no doubt that the details I am going to give will enable many hon. Members to identify the company to which I am referring. Two and a half years later that company came to grief, and was wound up. In March, 1932, another company was formed to take over the refinery and land of the previous company, and a year and a half after it in turn came to grief. Oil did not seem to be too successful a business in that part of the country. But that does not end the story, because in April, 1934, another company was formed to try its luck and took over the assets of the previous company. The company issued a prospectus and shares of various categories to the public. I would ask hon. Members to pay particular attention to what I have to say now, bceause this is the point on which my criticism mainly falls. In the prospectus issued by this public company, for which the directors presumably were responsible, they said: The net annual profits are estimated conservatively at £120,000. I think the issued capital amounted to £350,000, so a slight calculation will show that if the estimates had been realised a satisfactory profit would have been made for the shareholders. In August, 1935, a year after the public flotation of the company, the first report and accounts were issued and the trading prospects were described as excellent. I presume that someone must have been responsible for that statement to the public, and I assume it must have been the board of directors. In January and February of the following year knowledgeable sources on the Stock Exchange rocketing the ordinary shares of this company, 1s. shares, up to 16 times their par value, and this is where the public come in and where the public lose their money. In March of that year the progress report is issued—and again I presume that the directors were responsible for it—which said: All sections are now in production and trading prospects for finished lubricating oil are now encouraging. It reminds one of the statements issued during the War from General Headquarters. I assume that it was on the strength of that statement that another £50,000 second debentures were issued. Six months later the company had no money to carry on its business or pay its staff. I hope hon. Members will not think I am exaggerating when I say that the statements made in the progress and other reports by the directors of this company were if not misleading certainly over-optimistic. That is the point to which I desire to direct the attention of hon. Members. In this case—I could give numerous others—statements were made on the responsibility of the directors in order to get the public to put their money into the company, and those statements at the time they were issued must have been devoid of a good deal of truth in view of the position of this particular company later.

There is one other matter in connection with directors to which I should like to refer. Hon. Members will know that a good deal of speculation is being carried on by directors of companies under the disguise of nominees. That is a state of affairs which I suggest should cease. Public companies are not allowed under the Companies Acts to engage in operations with their own shares and, therefore, I do not think the directors themselves should be allowed to do so under any disguise. If they want to do so, they should carry out these transactions in their own names, so that the public and the shareholders of the company can see just what they are up to.

Let me deal with the question of holding companies. This is a feature which is being widely practised in modern business. It is a comparatively modern development, and I think I can say without contradiction that it is gradually assuming large proportions. The Greene Committee, which reported in 1926, and on whose report the 1928 Companies Act was based, stated: Shareholders in holding companies were entitled to know whether the dividends proposed to be paid by holding companies were justified by the results of the group as a whole. The Act of 1929 contains no mention of this principle. Section 126 of that Act provides that: The accounts of the holding company shall state how the aggregate profits and losses of the subsidiary companies have been dealt with in the accounts. But there is a proviso which says that the statement need not mention the amount of profits and/or losses with the treatment of which the statement deals. Hon. Members conversant with this kind of business will know that holding companies comprise not only subsidiary companies, but associated companies and sub-subsidiary companies, and I believe I am right in saying that the Act of 1929, which was a Consolidation Act, the main Act being the 1928 Act, while defining a subsidiary company, defines it so that it does not include a sub-subsidiary company. It is well known to hon. Members that under the operations of holding companies to-day a true, accurate, and complete picture of a company's operations through its constituent parts is not disclosed to the shareholders in the holding company or to the general public. I say that whatever the merits or the advantages of limited liability may be, it is not fair to shareholders who are asked to put up their money that they should be denied the information with which they can make up their minds whether their money is safe or whether they are justified in keeping their money in a company or selling out their shares.

Let me mention one illustration in passing which will underline what I have just said. I need only refer to a well known case which occurred a few years ago and which resulted in the chairman of that company, which was a large shipping company, finding himself in the dock at the Old Bailey. Although he was prosecuted, not under the company law, but under the Larceny Acts, nevertheless his conviction was due to the fact that he withheld certain information from those who were asked to subscribe to a debenture issue of the company. In the case of a single company, the Act provides that such a company, within limits, shall give as full a statement of its operations, assets, and various accounts as possible to its shareholders, but while that is definitely stated in the Act for single companies, I think there is no doubt that some further provision should be made by an amendment of the law with regard to the accounts, both balance sheets and profits and loss accounts, of holding companies.

Now I would like to deal with another feature which has been very much in the public eye in the last few months and which, I think—and I am inclined to think that many hon. Members on the Government side of the House will agree with me here—if it is not tackled by the Government at an early date, will result in widespread hardship to numerous small investors in this country. I am referring to property investment societies. Here an anomaly arises, because these societies are not dealt with by the Companies Act of 1929. They are able to carry on their particular kind of business under another Act, but if it is not possible to alter this other Act, the Industrial and Provident Societies Act, I suggest to the hon. and gallant Gentleman that the Government should make provision to include these property societies in the Companies Act. Let it be noted that if these property societies were compelled to register under the Companies Act, 1929, they would be compelled to give much more information than they do at the present time under the Industrial and Provident Societies Act. I think I can state without fear of contradiction that this class of financial activity among a large number of property societies—I admit that there are some whose accounts would bear investigation—is rapidly becoming a public scandal, and it is a swindle and ought to be dealt with by the Government at no distant date, because this is the striking feature of this kind of investment, that it deals not with the money of the rich, wealthy owner, but with the small savings of the man or woman of comparatively moderate means.

The extent to which this particular feature is developing can be seen from this fact: I have two sources of information here, so that hon. Members will see that I am not biased. One is the "Evening Standard "and the other is the" Daily Herald." These papers have made a special investigation of these matters in their City columns, and they state that from £12,000,000 to £16,000,000 of public money are involved. I asked a question yesterday of the Financial Secretary to the Treasury as to how many property societies had been formed in recent years, and these are the figures that were circulated in the OFFICIAL REPORT. In 1934 four were registered; in 1935, 22; in 1936, 36; and in 1937, 31; giving a total of 93, so that hon. Members will see that this class of investment society is developing on a considerable scale. It is interesting to note that the paid-up share capital of 58 of the 62 property societies registered between 1934 and 1936 amounted to £116,728, so that hon. Members can draw their own conclusions from those figures. Many of them will know that a large amount of the capital that has got into these societies is in the form of debentures, or what are alleged to be debentures, so that one can see that under the umbrella of this Act, which was passed to encourage thrift among people of small means, these speculators and gamblers are being allowed to fleece the public.

I will give two outstanding examples which have come to the notice of the public in the last few days. One concerns a property society in regard to which the Official Receiver, in the bankruptcy proceedings, said: He had a pathetic story to unfold. Certain people who had not a lot of money had sunk their whole capital in this unfortunate company. The society's records were in a chaotic condition. It had been impossible to find important documents such as mortgages. The other investment society was one dealt with by the Senior Official Receiver on Thursday last, and he stated that this property society was run by a gentleman of the name of Henry John Greville, a name that might have come out of Burke or Debrett, but it appears that his former name was Goldberg. This gentleman had been enabled to carry on his operations with the assistance of certain other gentlemen, two of whom were peers, with honoured titles, which they have inherited and, as far as I can see, are not entitled to on their own diligence or public service. I suggest to the hon. and gallant Gentleman that these excrescences on the business life of this country should be removed as quickly as possible, and I have reason to believe that at any rate the actions of these two titled gentlemen, who apparently knew very little about property investment, but drew some reward, I presume, from the company, are going to be further investigated.

Mr. Bracken

Is it not a fact that the person named Greville is an undischarged bankrupt

Mr. Bellenger

That may be so, and, if so, it only makes the case worse. It is interesting to note that even the newspapers are coming to the point when they will not accept advertisements from many of these property societies. The Council of Advertisers set up a committee consisting of many well-known gentlemen, one of whom was Sir Josiah Stamp, to investigate the accounts of many of these property societies, and I understand that as a result of the report many newspaper proprietors have refused to accept their advertisements.

I propose now to direct attention to a few more features of the company law. On the question of trusts and share-pushing, I propose to say very little, because so important a matter is this in the eyes of the Government that they have set up two committees to deal with it, and those two committees have reported. The committee that dealt with fixed trusts will, I believe, soon be out of date, because I understand that fixed trusts are only a part of this type of business nowadays. We have now passed a little farther on the stage of progress of these business operations, because we have not only fixed trusts, but flexible trusts, conversion trusts, and reinvestment trusts, so that by the time the Government make up their mind to introduce legislation to deal with these they may find that they will want another committee to investigate the question anew. Suffice it to say in this respect that the Stock Exchange Committee reported as long ago as January, 1936, that a full measure of protection could only be given to the public by legislation. That is why, in my Motion, I am asking the Government to introduce legislation at an early date to implement the report which they now have in their hands. There is one other quotation which I should like to give to the House in this connection, and that is from a speech of the president of the Institute of Chartered Accountants. In October last this gentleman, Mr. Frank Lindsay Fisher, said: The present freedom of unit trusts and their managers from any statutory regulations in the conduct of their affairs left a loophole for fraud of which advantage might be taken sooner or later if there was no proper control. The financial stability of the managers was another matter of vital importance, in view of the continuing responsibilities which managers undertook towards certificate holders. The House will know that these unit trusts, which in many ways have desirable features, deal with a large amount of public money, and, therefore, I do not think I am overstating my case when I ask that the Government should act with all possible expedition in the matter.

Then there is the question of auditors. I will only touch on the matter briefly, because I understand that another of my hon. Friends wishes to say something upon it. I think the duties of auditors should be extended further and that there should be some statutory provision whereby auditors can give a completer and truer picture than they are able to do at present of the affairs of the companies of which they are auditors. Only yesterday I received a letter on this subject from a gentleman in Edinburgh, and he tells me that auditors are fully alive to the fact that it is the directors and not the shareholders who can make or mar them, and they act accordingly. We know that auditors are servants of the company, but any hon. Gentleman who has some acquaintance with the conduct of the affairs of public companies knows that the directors have considerable influence at any rate in the appointment of the auditors. I may mention that the accountants themselves would welcome further powers being given to them, and it is interesting to note that a past President of the Incorporated Society of Accountants stated early last year that: The present Companies Act, in conjunction with the almost general adoption of the subsidiary company principle, has in truth had the effect of reducing the auditors' reports to a farce. I think many hon. Members will be inclined to agree with that statement. I propose now to come to the last sentence of my Motion, which deals with the setting up by the Government of a national investments board. I am not a fatuous optimist in this respect, and even if I were, the Amendment on the Order Paper in the name of the hon. and learned Member for Ashford (Mr. Spens) would soon disillusion me. I know that this is a contentious and controversial subject, but I have included it in my Motion for reasons with which I would now like to acquaint the House. I submit that a national investments board would be a measure by which small investors could invest their money with safety and with the backing of the Government. Hon. Members may think that this is a revolutionary idea, but I assure them that it is not. It is not a new idea, and I would even go as far as to say that the idea of a national investments board is to a certain extent in operation already.

I will give the House some figures. At the present time, the British Government securities quoted on the Stock Exchange, which are called gilt-edged securities—I hope they are—amount to nearly £6,000,000,000 of public money invested. There is then the Post Office Savings Bank, the building societies, which largely take small money, the trustee savings banks and the National Savings Certificates, making a total of almost £8,000,000,000. That money is not in speculative forms of investment, but in gilt-edged investments, a large amount of it dealing with the affairs of the country. In addition, the Government have shareholdings in the Anglo-Iranian Oil Company, amounting to £11,250,000, and an interest in Imperial Airways.

If it is possible, I would like hon. Members to deal with this matter, on which I do not propose to speak at length, as I do not wish to take up too much time in a non-party matter; but the subject is one which ought to be dealt with by my hon. Friends, and I hope it will be. There are many eminent authorities, not necessarily Socialists, who have backed the idea of a national investments board. I hope that the matter will be looked at in a dispassionate manner, free from party politics, if that is possible in these days, with the present constitution of the Government benches. At any rate, hon. Members will be interested to know that I am strengthened in my conviction that the national investments board is inevitable sooner or later by reading a question which was asked by the hon. Member for Southampton (Mr. Craven-Ellis), who has on the Order Paper an Amendment to my Motion. Last week, the hon. Gentleman asked the Chancellor of the Exchequer: Whether His Majesty's Government will give favourable consideration to forming a central bank constituted as a public utility corporation, not trading for profit, which will undertake all Government banking business, including the complete control of foreign exchange? I must confess that that gave me a shock, as no doubt it also gave a shock to the Chancellor of the Exchequer; and it is interesting to note that the Financial Secretary to the Treasury replied in a positive manner to his hon. Friend by saying: No, Sir. Despite the answer that was given to the question, I am encouraged to hope—and I trust that is also the case with the hon. Member for Southampton—that what Labour says to-day the National Government may do to-morrow. Therefore, I am not in the slightest degree disappointed that the hon. and learned Member for Ashford has on the Order Paper an Amendment to the last sentence of my Motion.

Sir John Withers

May I ask the hon. Gentleman a question for purposes of information? What is the machinery which he proposes for the national investments board? Would it invest in Stock Exchange securities?

Mr. Bellenger

I should be only too glad to answer that question now, but I am afraid that if I did so, the House would not be as patient with me as it has been so far. I do not wish to evade giving an answer, but I believe there are certain of my hon. Friends who will speak on this matter and who will elaborate what I am saying. There is an answer to the hon. Gentleman, not only my answer, but one which has been published by the Labour party in one of its pamphlets. I am sure the House will not accuse me of being vague on this point, but I wish to finish my speech as quickly as possible. In regard to the amendment of company law, the Government are committed, and I believe they have considerable sympathy with some of the points I have submitted today. On being questioned on the matter, the predecessor of the right hon. Gentleman the President of the Board of Trade told the House, in October, 1936, that he was considering how to deal with industrial and provident societies, but that he would rather deal with the thing wisely than make a mess of it. In November, 1936, he stated that he deferred inquiry into the revision of the Companies Act, which he admitted required revision from time to time, until fixed trusts and share-pushing had been dealt with. The right hon. Gentleman who is now President of the Board of Trade apologised, in June, 1937, for the delay in preparing a Bill to deal with fixed trusts. I do not think I am asking too much when I ask the Government to deal with this matter more expeditiously than they have done in the past.

To-day we have the spectacle of the President of the Board of Trade standing at that Box and solemnly excommunicating certain types of investments, such as soya beans and mushrooms, by bell, book and candle. Is it not a sufficient commentary on the inadequacy of our company law that it is necessary for the right hon. Gentleman to come to the House and tell British investors not to put their money into soya beans and mushrooms? We even have the heavy artillery in the shape of the Minister for the Co-ordination of Defence being called in to broadcast from the British Broadcasting Corporation a speech warning investors about the dangers of share touts. I suggest to the House that to-day the whole structure of public industry and finance is poised on a very delicate pinnacle, and that it would not take a lot to push it over. I do not suggest for one moment that the majority of business undertakings in this country are not engaged in honourable dealing, but it is not legitimate business that will overthrow that delicately poised structure.

We know what happened in 1931. Hon. Members opposite, when talking about the economic blizzard, may for political purposes put it all down to Labour, but we know that the Hatrys and Staviskys of those days inaugurated the crisis which occurred then. The Hatrys and Staviskys of yesterday are mere prototypes; they can be, and are being, repeated, not only in this country but in other countries. I have watched in Germany the wiping out of the middle class, which is the connecting link between two strata of society. How did that occur? In Germany it occurred by inflation, and the absolute deletion of all the savings of the middle class. I suggest that we should deal with this question while there is time. I am not saying that there will be an immediate slump, but slumps occur for definite reasons, and one of those reasons is lack of public confidence, which can be caused by one large company going bankrupt. That has happened before, and the South Sea Bubbles of days gone by may be repeated.

The Prime Minister used a very significant simile when speaking on the subject of foreign affairs earlier this year, when he likened the situation to the danger of an avalanche which could be caused in the high mountains by an incautious move. How appropriate those words are to-day when applied to modern business. We have now done away with the decentralised small units of last century, and placed in their stead these modern giants of industry. One incautious move in the high mountains can cause an avalanche which will overwhelm all those standing in its way. I understand from the Press, which has an uncanny way of making intelligent anticipations, that the Government are proposing to deal with certain parts of the Motion I have moved. I hope that is so. In conclusion, I invite the co-operation and support of all hon. Members. I have moved the Motion not because I want to deal with one particular class of the community, the investing class, but because I believe that all classes of society are so interlocked as are subsidiary companies in holding companies that what happens in the financial and business world will affect the whole of the community. I ask hon. Members to support the Motion.

4.28 p.m.

Major Milner

I beg to second the Motion.

I am confident that I shall express the view of the House when I say that we consider it a fortunate circumstance that my hon. Friend the Member for Bassetlaw (Mr. Bellenger) was lucky in the Ballot and that he selected this subject. I believe my hon. Friend has done a great public service by stressing the importance and the urgent necessity of early attention being given to this matter. I notice that in some quarters there has been some surprise that a Motion in these terms should have been brought forward by a member of the Labour party. It is often said, and certainly often thought, that members of the Labour party have little concern for any others than those who are weekly wage earners. That is untrue. It is implicit in the future system which we envisage that the best conditions should be created for all classes without distinction, and that even under the present system, subject to the general public good, such conditions should be created, regulated and safeguarded as will obtain the greatest efficiency in the economic system and the most satisfactory results for all concerned.

This Motion is proof, if proof were needed of our concern with those, in every class, who have large or small amounts of surplus money to invest. We recognise that capital is essential under any form of Government. Indeed we believe that, under the form of Government to which we look forward, more wealth will be produced and more capital will be available than ever before, and the wider that capital is spread the better for the stability and well-being of the State. I should like to make it clear, therefore, that the Labour party are, at least, as much concerned with those who have money to invest or who hold investments, as the party opposite, and I believe that were we in power we would bring in legislation for the protection of investors which this Government would not, and, in my view, dare not introduce. We on this side of the House who support the Motion, make no general imputation against those who take advantage of the great privilege of limited liability. We believe, as was said by the Greene Committee, that most limited companies are honestly and conscientiously run. It is only right, however, from every point of view, moral, social and economic, that that privilege should not be abused even by a few, and in order to prevent any such abuse, greater control than that which at present exists is essential.

The chief difficulty in dealing with a Motion of this kind is that of compressing into a convenient form the great mass of material which is available. One might begin the consideration of this subject with the passing of the 1929 Act which was undoubtedly a great improvement on the law as it existed previously. It has been satisfactory up to a point and it put many matters which had been in doubt on a more definite basis. But I think to-day it is generally admitted that there are, literally, scores of amendments which could, with advantage, be made in that Act, either to ensure the greater safety of investors or for the purpose of strengthening and clarifying its provisions. My hon. Friend the Mover hit the nail on the head when he said that the first great necessity is to make company directors bear a real responsibility and ensure that they do the work for which they are paid. At present, the liability of directors is chiefly on an agency and not on a trustee basis, and we all know that it is exceedingly difficult to bring home a charge of misfeasance against a director.

Every day we read in newspapers and in prospectuses high-sounding names in connection with the boards of certain companies. Many of these names belong to what are known as "guinea-pig" directors who for a good consideration, allow their names to be used by companies, usually of a rather doubtful type. They can rest secure as long as they are careful not to find out anything about the affairs of the company, and not to take any active part in its management. Thus the "guinea-pig" director is practically immune from any liability for misfeasance or responsibility for the shady transactions of his fellow-directors. People invest their money on the faith of those names in prospectuses. Yet there is no obligation on a director to take any definite part in the conduct of the business of which he is a director.

Then, under the existing law a person can hold as many directorships as he desires and many people hold far more than they can adequately fulfil. There are what are known as exchange directorships. If there is a vacancy on the board of one of the companies which a particular director and his group control, he invites a friend to take that place and in return the friend invites him to take a directorship in another company of which he has control. Neither of the exchange directors is expected to give any time or attention at all to the affairs of the company to which he has been appointed. That kind of thing occurs more frequently than many people imagine. In my view directors ought to have greater responsibility for the public money which is entrusted to them; the law should be altered so as to limit the number of directorships which a man can hold and there should be some direct personal responsibility for any breach of that rule.

In the event of the liquidation of a company, except in special circumstances, the directors should have some financial responsibility. The suggestion has been made that they should be under an obligation to return to the company the directors' fees received by them during the preceding three years, or some such period. I am referring now to ordinary directors, and not to those who serve under a service agreement or anything of that sort. Such proposals as I have outlined would ensure adequate attention being given to the affairs of the company, would give scope for other men to take up vacant directorships, and would do away with many of these "guinea-pig" directors and, generally, improve the breed.

Another important matter requiring attention is the position of the shareholders. Shareholders should be given greater means of knowledge and greater power than they have to-day. In 99 cases out of 100, shareholders have no real knowledge of the affairs of the company in which their money is invested until a crash comes. They have no means of obtaining such knowledge. In the information which the directors are bound by law to supply, very little light is usually thrown on the conduct of the company by the directors. I think the hon. and learned Member for Ashford (Mr. Spens) will probably confirm my view that directors controlling one-third of the shares in a company can always guarantee to control any situation in that company, in spite of any action taken by the remaining two-thirds of the shareholders. That amounts to dictatorship in the case of many boards of directors and is, to say the least of it, highly undesirable.

One method of providing greater knowledge for the shareholders, and certainly greater confidence, would be to set up by law in the case of every public company a committee of, perhaps, three shareholders retiring by rotation, and ineligible for re-election, to work along with the auditor of the company. The auditor should be under a statutory obligation to bring every questionable matter to the notice of that committee. That committee should have power to call a general meeting of the company, and if the directors objected, then, the power to call a general meeting should only be exercised by leave of a judge in chambers or somebody of that sort. Such a committee would work in much the same way as the Public Accounts Committee in this House, and the affairs of the company would be under continuous review. There would be no harmful publicity except where definite action was necessary, while there would be every protection for directors who were acting in good faith and in the interests of the shareholders.

Then there is the vexed and important question of holding companies. We all know that to-day, in the case of very large and important companies and corporations, the shareholders and the general public do not know, and have no means of finding out, the true state of affairs. I make no suggestion against any particular company, but it must be admitted that the system gives great opportunities for misrepresentation and fraud. The fact that the system has not been more abused can only be attributed to the comparative honesty of the persons concerned or lack of imagination in the higher ranks of the criminal classes. A holding company's assets may consist entirely of shares in operating companies, and no information under the present law need be given, even to the shareholders, with regard to subsidiary companies except to the very limited extent provided for in Section 125 of the Act.

There are no doubt cases in which the use of subsidiary companies is a business convenience, but in the great majority of cases the system is used merely for the purpose of secrecy, so that neither shareholders nor the general public shall know what is really happening. If all the details were known, it would be found that increasingly powerful and disguised monopolies are being formed in this country day by day under the cover of the present law. The hon. and learned Member for Ashford will agree that one excellent principle which has hitherto been laid down in company law is being violated in spirit every day by these large companies. It is the principle that a company cannot hold its own shares. In effect, companies which have subsidiary companies under their control are holding their own shares, contrary to that principle of the law. My hon. Friend referred to the question of accounts. I think the aid of the accountancy profession ought to be obtained by the Government making the alterations in the law which are essential. Legislation ought to be passed to forbid one company having such a shareholding in another company as to give it complete control of that other company. If such alterations are not made, I assure the House that there will be a great shock one of these days for the people of this country.

Then there is a number of points of practice which require attention. The use of the word "bank" ought to be limited to those companies which are entitled to use it. I believe the Greene Committee recommended that step. The use of the word "bank" in the name of a company should be forbidden except in the case of a duly licensed company authorised to carry on and actually carrying on banking business, under whatever safeguards are thought fit. I need not remind hon. Members of cases of companies calling themselves the "Bank of London," the "Bank of the United Kingdom and Ireland," and names of that sort. I am infomed that a Swiss gentleman invested a large sum of money in a company of that kind and when the company failed said that he had invested it on the strength of the use made of the term "bank" in the name of the company. As in the case of the Bank of Montreal and the Bank of Toronto, there are traditions which ought to be brought into use in this country so that that particular word should not be used except in special cases.

Then there is the practice known as stagging. Public issues are often confused and prejudiced by stagging. A form of application for shares is issued, the application goes in, and if the issue does not appear to be going well, the application is withdrawn before the actual issue is made. Such an offer ought to be made irrevocable for a specified period. Another practice point is that the nature and contents of a contract have not to be shown in a prospectus. The gross price of shares to a vendor has not to be shown, and it ought to be calculated and disclosed in a prospectus. One could go through a hundred and one points of that kind. I am assured that in America prospectuses fill from 20 to 30 pages in giving particulars of one sort and another. I do not say that we need go to that extent, but there are a great many particulars which have not yet been set out by law as having to be given in prospectuses that ought to be given. There are many dodges. I have noticed that when a private company is converted into a public company, it does not hold a statutory meeting. It is the growing practice, in order to dodge the holding of such a meeting, to register a private company and immediately afterwards convert it into a public company.

The question of nominee holdings is also of great importance. At the time of the pepper crisis, there was a good deal of feeling about them, and in particular against the practice of bank nominees. The trouble goes a good deal further than that. There are many practical difficulties in the matter, but such a system makes it possible for foreigners, through a nominee, to hold the whole of the shares in a British company. That is an undesirable thing. No doubt some hon. Members may be able to advance a number of reasons against complete disclosure in a company's share register, but unless there is something to hide, why should it be hidden. I believe that eventually a complete disclosure of the true beneficial holders of shares will have to be made on a public register.

I should have liked to say a word about applying the provisions of the Companies Acts to all corporations, and particularly to those societies which my hon. Friend mentioned that were registered under the Industrial and Provident Societies Acts. I refer especially to the type of property and similar companies mentioned by my hon. Friend. It ought to be made clear that no reference to building societies, properly so-called, is intended. In point of fact, I believe that an investment in the best type of building society is, by the very nature of the constitution and practice of these societies, among the safest and best investing media for the ordinary man. The ordinary societies registered under the Industrial and Provident Societies Acts should clearly be brought within the scope of the Companies Acts and should be subject to the same rules as to prospectuses, circulars, and offers of shares. They ought to have registers of their mortgages at Somerset House and should be under the legal obligation to publish accounts. The Commissioner ought to have much greater powers than he has to-day.

I recommend the suggestion of a national investments board. There is some misconception of the precise nature of such a board. I am sorry that the hon. Member for Cambridge University (Sir J. Withers), who asked my hon. Friend a question on this subject, has not remained in the House. As I understand the suggestion, a national investments board would be a body backed by State guarantee and would secure an absolutely safe form of investment for all. It would be, in effect, a national concern willing to receive and to invest money for State, Empire, municipal, or any other purposes which would naturally be of social, economic or public utility value in the widest sense. It would not be, as is so frequently thought, a sort of vetting body which merely puts its imprimatur on certain companies or stocks and shares and refusing it to others. I can conceive that such a body, backed and assisted by the Treasury, might for a time, in a limited sense and subject to certain conditions, be entrusted with the duty of preparing an approved list of securities, as is done to-day by the Treasury in the case of trustee securities. I see no objection to such a procedure, because the Treasury are always years behind the times.

Although the National Government have had it brought to their notice on many occasions, a corporation or an individual who has power only to invest in trustee securities can invest in small pieces of property if they can get it valued at the appropriate value, and yet they cannot put their money in the Central Electricity Board, because it is not a trustee security. There are many other concerns of the same kind. Such a body might serve a useful purpose in preparing in a limited way and subject to conditions, such a list as I have suggested. This board would be a valuable asset to a nation such as ours. It would be at one and the same time a medium for absolutely safe investment and a reservoir of wealth available for the general security, development, and well-being of the nation, with possibilities of eventual expansion, when nationalism has been done away with and the world has become one, to regions beyond the comprehension of any one of us to-day. It would have inimitable possibilities, backed as it would be by the money and savings of our people.

What are the Government going to do in response to this Motion? They have had committees galore on almost all the subject matters contained in it. They had a committee on unit trusts which reported almost a year-and-a-half ago. They have had a committee which reported five months ago on share-pushing. They have had recommendations from the Federation of British Industries and from various accountancy societies. All have been pressing the Government to take action, as have many hon. Members for several years. The Government so far have grossly neglected their responsibilities in this matter, and if we have no response to this Motion, many people will consider, in my view rightly, that the Government are particeps criminis in this matter.

4.55 p.m.

Mr. Dodd

The House is grateful to the hon. Gentleman the Member for Basset-law (Mr. Bellenger) for introducing this subject. While I cannot agree with the Motion in its entirety, I am sure the House in general will sympathise with a great deal of what has been said by the Mover and Seconder. There is not a doubt in the minds of all Members that the time has come for alterations and amendments to the 1929 Act. Since that Act was introduced, there has been a considerable growth of various types of industrial organisations which have not reflected credit on people who have been associated with them. While the Seconder of the Motion started by saying that in general he could commend the honesty of those connected with industry and business, he proceeded to expand his case and rather left us with the impression that those who were in any way associated with trusts or holding companies and various subsidiary companies were not all that they should be.

I think that in general the majority of businesses in this country are run inherently honestly, and it is only the minority which bring discredit upon the whole. In the case of trusts, subsidiary companies, and all classes of new types of businesses which have been introduced in recent years, there have been defaulters, and from the point of view of organised industry employers in general would prefer the strengthening of the present Companies Act. I would like to review a few matters that have taken place since the 1929 Act was passed. Originally, the committee which considered the proposals on which that Act was based, namely, the Greene Committee, commenced its operations in 1925. It completed its deliberations in 1926, and after a period the Companies Act of 1929 was introduced and passed. That means that it is already 12 years since the Greene Committee commenced its deliberations on the revision of the company law. I contend that so much has happened during the past 12 years, and certainly during the past eight years since the introduction of the 1929 Act, that the time has come for a further inquiry into the whole of the company law. It has been said, in reply to questions in the House, that there is no particular hurry in the matter and that nothing can be really done until we have dealt with fixed trusts, share-pushing, and bucket-shops. These are, however, only minor points in the whole fabric of company law.

There is a demand from industry and from those associated with business that further inquiry and investigation should be made. Since so much time has passed since the Greene Committee originally sat, and a period of four years had passed before legislation was on the Statute Book, I contend that the time is fully ripe for beginning a further investigation, because it is likely to take even longer in view of the complications of the different types of companies that have been formed since the Greene Committee's inquiry took place. With the knowledge that already exists on certain fixed trusts, on various forms of share-pushing and on hire-purchase legislation, etc., there is a mass of information available, and the Government should proceed by putting the whole case before a Departmental Committee for full consideration and investigation.

There is a very strong body of opinion behind the request for a revision of the company law, both from one side of the House, apparently, and from the other, and from organised industry and various bodies throughout the country. The Association of Chartered Accountants, through their president, have from time to time expressed very strong views on the matter. The Association of Incorporated Accountants have done similarly, and the Association of British Chambers of Commerce, of which I have the privilege of being an officer, have passed time and time again resolutions strongly emphasising the necessity for a revision of the 1929 Act. In 1932 the Association of British Chambers of Commerce set up a committee, which consisted of leading men in industry and accountants and men connected in every way with modern industry, to review the position, and they drew up a series of proposed Amendments. That report was made in 1933 and was furnished to the President of the Board of Trade. It was not a wide, sweeping report. Some of the Amendments were perhaps not of major importance, but at any rate it had the intention of arousing a wider interest in a revision of the company law.

Then again the Chambers of Commerce in 1933, in conference, passed a very strong resolution in favour of further Amendments of the present Act. They were not content with that, but in 1934 the Chambers of Commerce again pressed for a revision, and again in 1936. Now they have again, this year, in May, confirmed the original findings of their own committee of 1933, and they ask the Government to take action in this particular case. I feel that before any legislation can take place it is absolutely essential that full investigation should be made and evidence taken. The majority of people connected with business and the floating of new businesses are inherently honest. We had recently introduced into this House a Bill which dealt with the affairs of the private individual. The Bill was introduced by the Senior Member for Oxford University (Mr. A. Herbert), and it was essentially on a par with this type of legislation in that it dealt with minority cases rather than the majority. While that Bill touched perhaps almost every home and met with a great deal of thought and discussion throughout the length and breadth of the country, here is an Act which, passed in 1929, affects every man and woman in Great Britain. There is nobody who is not in some way affected or touched by the Companies Act. It has such wide ramifications that it is essential that it should be safe. I am not suggesting that any Act could be framed in such a way that somebody could not get around it. That has been the case with the 1929 Act, and those of us who remember the introduction of it in 1929 know that it met with a good deal of opposition in the country and from organised industry. I am quite satisfied, in my own mind, that the great majority of people who were in opposition to that Bill at the time of its introduction would be the first to support it to-day. In general it is firm and very sound, and a satisfactory background for further legislation.

The hon. Member for Bassetlaw has rendered this House a service in introducing this subject, although I cannot agree with his proposals for the establishment of a national investments board, because the suggestions and the proposals made both by the Mover and the Seconder were in such a nebulous state, if I may make that statement, that they could not expect a measure of support for them without a great deal more knowledge, at least on my part, of what was in their minds, and I think that is the case with many hon. Members of this House. Apart from that, the House, I am quite certain, is sympathetic to the Motion which has been put forward, and I hope the Government will decide to take action upon this and will set in motion some committee or some method of working forward towards a revision at a very early date, and not necessarily reply to the House by saying, "We must first deal with new legislation with regard to fixed trusts and the control of share-pushing and bucket-shops." Rather, I hope they will be in a position to move forward towards a much wider revision of the Companies Act. I hope that we shall have before very long a plan put forward, not by private Members, but by the Government, who should assure their own supporters that they are very much alive to this particular question, and that they will assist those who are willing to help them on the side of industry in amending that Act.

5.7 p.m.

Mr. R. C. Morrison

I find myself in agreement with the last speaker and with the Mover and Seconder. The amount of unanimity which is likely to be shown in the House on the subject of this Motion, with the exception of the last several words, I think augurs well for the attitude which Members of the House are taking in regard to the necessity for an early revision of the Companies Act. The only question, it seems to me, that we shall be looking forward to when the hon. and gallant Gentleman on the Front Bench replies is whether the Government are going to make an adequate response to the request which I am sure will come from all sides of the House. For some considerable time, and during the whole of this Parliament, some of us have been periodically putting questions on this subject, but with very little success up to now. We had a Debate on share-pushing, and we have had questions of all kinds, but the last President of the Board of Trade appeared to take up the attitude, "Oh, don't bother me. I don't want to be bothered with this," and he seemed to think that it was too big a task. The hon. Gentleman who preceded me pointed out that from the time the Greene Committee was set up in 1924, five years elapsed before we were able to get the Companies Act passed. Since 1929 a great deal has happened. It seems to me that the system of limited liability is so important a part of the commercial life of this country that the law should be examined frequently in the light of new methods and practices.

I raised the question in the House not very long ago of another evil arising out of this Act, and that is the case of the establishment and the growing numbers of what I call the "£100 companies." It is a method of evading Section 113 of the Companies Act, under which a public company, when it is established, has to give a mass of information. In the case of a public company arising out of a private company, it is not necessary to give that information, and so what has been happening lately is that small private companies have been formed, and in increasing numbers, and the private companies, after a short time, have become public companies, and thus evade Section 113 of the Act. It is not necessary for them for 15 months to hold statutory public meetings, and thus the people in charge of the companies have nearly 15 months in which to carry out whatever intentions they have, and during that time a good deal of damage has been done to the unfortunate people who have invested their money. The same thing applies, but perhaps not to the same extent, to the practice of old-established companies having a name but very little business. They are purchased because they have a name which is known. It may be that they have almost ceased to do business. They come forward as a public company, and again it is not necessary to supply the public with the information which they would have had to supply if they had originally appeared as a public company.

I and other Members of this House have on occasions during the last few years drawn attention to a most pernicious practice—and in this connection we made an attack on the legal profession—under which solicitors working in association with so-called legal societies used to take up cases of accidents. They had their representatives around hospitals and police stations and indeed in some of the populous districts. I had an instance in my own constituency in the last four months where a youngster coming home from school at about four o'clock was knocked down by a motor car, and before nine o'clock nine different people had called on behalf of different legal aid organisations to take up the case. I understand that as a result of representations that were made, the Law Society took action in this matter, and probably the Law Society is seeing that solicitors are not involved in this disreputable practice. It has now gone out of the hands of lawyers and is coming into the hands of one-man companies, companies run by one individual. I have here particulars of one called "The London Claims Association." The London Claims Association is one person. I think the Companies Act ought to be amended to prevent one person from calling himself an association and running a business as an association and misleading the public. These organisations with grandiose titles like "the London Claims Association" and the National Legal Aid Society" and so on are really run by one man in an office. The Companies Act might be amended in order that some steps could be taken to put an end to the activities of these people who are really carrying on practices that are the cause of great distress to many working people.

The question of the responsibility of directors has already been dealt with, but I should like to quote one example. The board of Wallpapers Consolidated has just issued its first report. The prospectus, which was issued a year ago, estimated that the profits, after depreciation and directors' fees, would amount to not less than £15,000. The first report was issued this week, and the profit is £1,810. Again there seems to have been some information that has not been put in the prospectus. Someone ought to be held responsible for issuing a prospectus forecasting a profit of £15,000 when actually the profit only amounts to £1,800. In the Press to-day we read of a cinema combine which has recently changed hands. The estimate of profits by that combine in a prospectus issued as recently as January of this year was £270,000 for a full year. That would work out at £135,000 for six months. The balance-sheet for the first six months, just issued, shows that in place of a half of £270,000 the net profit is less than £20,000. That is the kind of thing which I feel ought to be dealt with.

My final example is concerned with investment trusts. I have here an advertisement issued by certain of these people. I am not going to advertise them, but there are three points in that advertisement which, in my opinion, are deliberately calculated to mislead the public, and those who are very easily misled are the people who have been thrifty and have saved some money but have very little knowledge of investment. The advertisement says: Invest co-operatively. They use the word "co-operative" because they know that it makes an appeal to a very large number of thrifty people who belong to the vast co-operative societies. Then they say: One of the oldest-established societies for co-operative investment. But the trump card of the advertisement comes at the end: The accounts are audited by public auditors approved by His Majesty's Treasury. They are able to state that because they are registered under the Industrial and Provident Societies Act, and their accounts have to be audited by public auditors approved by the Treasury. Other hon. Members will doubtless give other instances, and I hope that the hon. and gallant Member who will reply on behalf of the Government will give us some encouragement to hope that action will be taken. As far as I understand it, the attitude of the Board of Trade up to this Debate has been this: Let us, first of all, clear up these side issues, bucket-shops, share-pushers, investment trusts, and that sort of thing; let us introduce legislation to clean up those scandals, and then we will see what happens afterwards.

I am not going to suggest that the hon. and gallant Gentleman is in a position this afternoon to say, or that it would be wise for him to say, that he can promise that the Government will immediately bring in a Bill to amend the Companies Act in the many directions in which it has been shown to be defective. I do not think that anybody expects the hon. and gallant Member to say that, but what we do expect is that the Government shall not push us off by referring us to the promise made in the King's Speech that a Bill to deal with share-pushing and other abuses will be introduced, and then find that it is a limited Bill confined merely to the points that I have mentioned. What we should like the hon. and gallant Gentleman to say is that the Government are prepared to undertake the legislation for which the country is clamouring to put an end to these flagrant abuses, but that at the same time they appreciate that with the passage of years since 1929 the time has arrived for a complete overhaul of the Companies Act; that that will take time; that following the precedent which was set in the case of the previous Companies Act, it will be necessary to set up a committee to get together the evidence; and that there shall be such a committee set up, so that we may be pushing ahead with the work.

5.20 p.m.

Sir David Reid

I rise for the purpose of supporting the plea made by the hon. Member for Oldham (Mr. Dodd). Like him, I have been for a good many years a member of the Council of the Association of Chambers of Commerce. I have been a member of it during all the time when the inquiries which he told us were made by that association were in progress. I know that when this matter has been brought before the Board of Trade in the past they have taken the view that the Act of 1929 has hardly been in operation for a sufficient period to justify its amendment, but I think the views expressed in different parts of the House must convince the Government that the time has come when another committee of investigation should be appointed. I have no intention of going into details on this subject, but the growth of the system of forming subsidiary and allied companies has really brought the whole of the provisions of the Act of 1929 dealing with the publication of accounts for the information of shareholders to what is little more than nullity. For that reason alone I think farther investigations are required.

A number of points have been raised from the other side of the House, and I know that the Association of Chambers of Commerce have put before the Government a great deal of information on those points and that it is in the possession of the Board of Trade for their consideration. But there is also a number of other matters which demand attention, and I would point out that those who have been pressing this matter on the attention of the Government are not old ladies or innocent people who have speculated and lost their money, but men engaged in the every-day conduct of trade and industry who have seen things passing before their eyes which they feel ought not to be allowed in the interests of honest business. Therefore, this is a demand to which I think the Government might fairly attach considerable weight. In the general public interest, and in view of the developments which have taken place since the Greene Committee sat, I urge the Government to accede to this general request for a new committee to be appointed to go into those matters which it has been shown need amendment since the passing of the 1929 Act. As for the suggested investments board, I only mention it to say that I, at any rate, do not support that part of the Motion, and I think that the account which was given of it was so nebulous that that part of the Motion may safely be left on one side.

5.25 p.m.

Mr. R. Acland

I do not like the emphasis which is being put upon the need for a public inquiry following the speech of the hon. Member for Oldham (Mr. Dodd). I appreciate that there may be many things which cannot be dealt with until there has been a public inquiry, but surely there are one or two reforms which can be taken in hand without the necessity of waiting for a further inquiry. I would put it to hon. Members opposite that the need for an inquiry is often advanced as a method of gaining time and postponing the likelihood of getting anything done, and that this is a matter in which they themselves ought to be pressing for action rather than hon. Members of the Labour party. It is really no part of their function to perfect the Capitalist system. That is the function of hon. Members opposite, but they are not doing their best to shield private enterprise from the attacks which are made upon it by hon. Members of the Labour party by trying to preserve intact all the opportunities which to-day people with money have for making more. It ought to be hon. Members opposite who should be pressing for the closing of any possible loopholes for abuses under the system which they defend.

In certain respects the need for action now has been proved, and no further inquiry is necessary. Among other proofs, I would submit this book, "Britain's Industrial Future," which is the report of the Liberal Industrial Inquiry and was published in 1928. It ought to be a compulsory textbook for all Members of this House, because it contains the whole of the legislation which will be passed by this House in years to come. The ordinary progress of any idea in this country is that it is first taken up by a certain number of active and enlightened individuals, who canvass it in the Press and elsewhere for, perhaps, five or ten years. Then it is tested and, if found sound, is adopted by the Liberal party. Several years later it is approved by the next five-year group. Five years after that it finds its place in the Labour party's short-term programme, and 15 years later than that it is passed into law, in an emasculated form, by the Conservative party. Therefore, it is some guarantee of future performance that these ideas are all contained in this book, from which I will read one or two sentences, for they correspond in a remarkable way with the very able speech which we heard from the hon. Member for Bassetlaw (Mr. Bellenger): In large companies, where shares are mainly held by the general public, abuses are increasingly frequent for which secrecy in the accounts is at least partly responsible. The common practice of publishing balance sheets which convey entirely inadequate information to shareholders is a cause of loss and of disappointment. A further abuse, namely, the growing practice of directors of dealing directly or indirectly in shares in their own companies is closely connected with the problem. It will be part of the duties of auditors to see that the publicity provisions of the revised company law are fully satisfied. If these new and onerous duties are placed on auditors it would be desirable that their tenure of office and their independence should be more fully protected. All these ideas have been described to us in the speech of the Mover of the Motion, and these are, I think, the matters on which action could be taken without need for further inquiry. Many other things will occur to other hon. Members. The market value of the investments which are held by a company should be disclosed. There ought to be a full disclosure of the profit and loss of sub-subsidiary companies, because the law which was recently passed for the disclosure of the profits of subsidiary companies is immediately defeated if you can produce sub-subsidiary companies whose profits are not disclosed. There should be either a consolidated balance sheet of all the companies which are held, or each subsidiary should publish a balance sheet simultaneously with the holding company. There are many other things of the same sort, the case for which is made out now and requires no further investigation.

I would like to say a word or two about the board of national investment, which is mentioned in the Motion and which now forms a prominent part of the Labour short-term programme. It was in this book several years before, and it is attacked by hon. Members opposite. I shall be interested to hear what the objection to it will be. Possibly objection arises very largely from not really understanding it. I hope that hon. Members will not object to it merely because it looks like some Government Department doing something. I know that the idea of a Government Department actually doing anything is really repulsive to hon. Members opposite, but it may be good. Everybody who talks about a board of national investment agrees that the idea is that it should start in a rather small way and should discover in actual experience its sphere of usefulness. As a start, it would be a pooling of all the activities of the Government in capital expenditure. It would be a pooling of the Post Office Savings Bank and of the Local Loans Fund. It would review capital expenditure by the Government as a whole, instead of each Department doing its own capital investment in what type of market suited it. There would be this over-seeing authority which would consider capital repayments to the Government and capital re-investment as a whole, in relation to the state of the capital market in private industry.

It was recognised by the very authoritative group of economists, recently quoted by the junior Member for Oxford University (Sir A. Salter), that there is, and will be in the future, a useful function to be performed by some authority which tries to increase public capital construction at those times in the trade cycle when private capital construction is at a minimum and vice versa. It surely would have been useful in 1929 if there had been some body which had the right and the duty to know and to understand the sum total of foreign loans being made by all the lending authorities in this country. Were not our difficulties at that time in part due to the fact that, unknown to each other, a number of different institutions had made loans to foreign countries, cities and companies, the total of which could not be justified by the state of the finance market at home?

When we hear of the abuses which may be wrought in the private investment market in this country, and when we know how honest little people can be swindled, the functions gradually growing as a result of experience, of the board of national investments will be of growing service. It is wisely said in this book that we can never expect to defend the born gull from the born shark, but there is something to be said for starting in a small way and progressing in order to see how far we can get, along the line of establishing some kind of authority with knowledge and power to make advance investigations into the prospects of companies which ask for public money. It would be a reassurance to the public if they could be defended in that way. All those things appear to be strong recommendations for the establishment of a national investments board, and I shall be interested to know why hon. Members opposite feel that it would be such a danger to the financial community.

5.36 p.m.

Mr. Craven-Ellis

In the few minutes which I have at my disposal I would say, first of all, that the hon. Member for Bassetlaw (Mr. Bellenger) has rendered a service to the House to-day. There are undoubtedly abuses, but they are not entirely with the property societies. There are just as many irregularities under the company law. That is not a justification for letting matters stay where they are; the abuses have to be stopped in some way or other. No doubt many people have been persuaded or induced to take part in societies under the Industrial and Provident Societies Act, and there have been many loopholes for irregularities. I strongly recommend that the House should support some new regulations or legislation which will strengthen the position for the operation of property societies. There seems to be some confusion as to what is a property society and a society which is speculative. There must be a definition. I do not think there is any form of investment for the small investor equal to that of a well-managed property company, but nevertheless, there has to be some method of controlling this form of investment. I suggest that the present regulations should be tightened up considerably in order to put a stop to misleading statements which are made by certain property societies for inducing people to invest their money.

The House has a right to know what is the position of societies, as has been found out by the Association of Property Societies. The information is a sufficient reason for some kind of Government action. The number of applications invited for the Association of Property Societies was 55, and the actual applications received numbered 18. Of those, 12 were elected to membership and 6 were withdrawn or refused by the council.

Mr. Bracken

Who elects them?

Mr. Craven-Ellis

The council is elected by the societies.

Mr. Bracken

They elect themselves.

Mr. Craven-Ellis

The association was formed for the sole purpose of trying to put a stop to these abuses, and to strengthen the position for the security of investors. Since those 12 societies were elected, no fewer than five of them have been removed from membership or have resigned. Those who resigned did so because they were not able to comply with the standards established by the council of the association. I think that that resumé discloses a situation which is not satisfactory and is good ground for the Government to consider either amending the regulations or introducing new regulations.

5.41 p.m.

Mr. T. Johnston

I hope that the hon. Member who has just resumed his seat will be able to give the House on some future occasion when we are discussing the details of Government legislation some further assurance, particularly with regard to the amount of money that these provident societies may borrow upon the strength of their investments in property. I understand that the new association to which the hon. Gentleman refers recommend their component parts to lend up to 90 per cent. of the proved value of the properties. I feel that that is not quite safe; a very much smaller figure would be required to satisfy us on these benches.

There has been general commendation from all parts of the House of the Motion of my hon. Friend and of the speech with which he proposed it. I think it was the great Barnum who said that there was a Sucker born every minute. The Motion is not before its time. The hon. Gentleman who spoke from the Liberal benches a few minutes ago said that nothing could save the born gull from the born crook. [HON. MEMBERS: "Shark."] That is the Liberal point of view. This Motion, if it were carried, would make things more difficult for the sharks to get after the gulls. It is a crying scandal that groups of plausible thieves and rogues should be allowed rob and cheat, and that patent lies should be advertised in the Press and carried by His Majesty's mails. Notwithstanding that the police know that these are lies, thousands of people of small and moderate means are thereby defrauded of their savings to the extent of at least £5,000,000 per annum. During the past 12 months, the Director of Public Prosecutions, the Criminal Investigation Department, the City of London Police, and the President of the Board of Trade have actively run many of these rogues into jail or out of the country. I can trace about 50 of them who are either in jail now or have left these shores.

Some part of the credit for this activity is due to Mr. Speaker, who permitted me to take risks in putting the names of companies on the Order Paper week after week and asking questions about them. The effect of those Parliamentary questions has been tremendous. I should like also, if I may, to congratulate a newspaper which is violently opposed to myself and my hon. Friends on these benches—the "Daily Mail." I am told by friends in Fleet Street that it has cost the "Daily Mail" some £50,000 to stop Jacob Factor and his associates. Those who, like myself, have taken an active part in this campaign for a long time, know what it means to live in this Edgar Wallace atmosphere.

We are asking to-night that there should be registration of every broker, and I hope that the Government will specifically agree to that, and will not merely accept the vague, empty formula of a Resolution. We are asking that every broker, everyone who traffics in shares, stocks, loans, mortgages, unit grants, or whatnot, must be registered. If I go along a street to-day and feel a pain in my epigastrium, and I see someone with a plate "M. D." over his doorway, I feel some kind of assurance that that medical man has a certain standard of qualifictions and a certain code of honour. Why we should allow sharks and rogues to run loose in the City of London among the finances of the nation without registration, either as individuals or associations, passes my understanding.

We want adequate security for the registered dealers. The £500 proposed by the Bodkin Committee is not enough. The central recommendation of the Bodkin Committee is that only persons of good character, with a good past record, who have not been proven guilty of a criminal offence, shall be permitted to register, and that they should have to put up £500. But Jacob Factor never wants to be registered; Maurice Singer never asks to be registered; they put up dummies. They are perfectly ready and willing and able to get dummies with good characters, whom they send before the Board of Trade with a cheque for £500, and behind those dummies the Jacob Factors and Maurice Singers and so on can go on as in the past. Do not let the Government forget, also, that these rogues can operate from outside these shores. They have operated from Guernsey in times past. The National Chemical Holdings Company was operated from Guernsey. They can operate from the Isle of Man; they can operate from the Irish Free State; they can operate from the Continent, and they can operate from Canada. They can run newspapers. They have run the "Financial Recorder," the "Financial Standard," and the "Stock Exchange Times." They stick at no title. And what a rogues' gallery!

I can trace 100 of them who entered this country with Canadian or American passports in two years. They get in for three months, they stay here for 2½ months, they take an aeroplane to Paris for a holiday, come back in another fortnight, and proceed for another three months to operate on British soil. Well, we had Shapiro. [Laughter.] It is no laughing matter. Shapiro, Burkaart, Baum, Primakow, Setzler, Laub, Roth, Jacob Factor—the one-time barber in Chicago, who was alleged to have left these shores with over £1,000,000 in his pocket—and Maurice Singer, said to be a Czechoslovak. Jacob Factor and a man named Tanfield netted nearly £500,000 out of the Cambrian Trust and British Allied Estates. One hon. Member has suggested that we must stop the misleading description of company titles. What is the sense of registering "The Bank of London, Limited"? Maurice Singer ran the Bank of London, Limited, and after three years he had a cash asset in the bank of £33. He finally crashed with a deficiency of £167,000, and, when the bank came up before Mr. Justice Clauson he described the whole affair as a swindling bucket-shop. It had run for years. Then there was the Federated European Bank. It is almost incredible that the man who ran the share dealing department of the Federated European Bank had previously served four terms of imprisonment. I do not know whether that is going to be the kind of good character required. He had no assets at all. How that bank wound up I do not know, but I cannot trace it in the Bankers' Almanac.

Last week we heard about the Federal Industrial Development Bank, Limited. At one time this precious bank had 11s. 7d. to its credit, and the Lord Mayor expressed the utmost amazement that this bucket-shop bank should be allowed to go on for years under the noses of the police and under the cognisance of the Board of Trade. It was run as a share-pushing bank, and one transaction alone in its books represented £150,000. I should like to know who lost that. Fortunately, on 29th November this year, its managing director got six months, but after that six months will he be able to get on the register? We want to get on this register everyone who deals in shares, loans, mortgages, and so on. But when you have small individual transactions carried on by passing share scrip from one hand to another, are you prepared to agree that such proceedings shall not be valid unless they are witnessed by a bank agent or a solicitor? We must make everything as tight as we possibly can, on the lines of the Security Frauds Prevention Act of British Columbia. Are you going to stop individual touting by telephone? You have stopped by law touting from door to door, but the man who goes to one door in a town, or one door in a street, and then moves off to another town or another street, is allowed to escape. Then I think the police would welcome some redefinition of what is meant by "venue of offence." If a man who commits an offence in Manchester is grabbed in Edinburgh or London, why should he not be tried in Edinburgh or London?

We have heard so much about property investment societies this afternoon that I hesitate to take up the time of the House with any further observations upon them, but I know three such societies with titled people in the forefront. I know it is really impossible to get an inquiry on the requisition of 100 shareholders, because there is no provision whereby one shareholder can get the addresses of his fellow shareholders. You can get the names, but not the addresses; they are forbidden. I believe that one of these societies has as a leading operator a gentleman who has some considerable knowledge of share pushing, and I believe, further, that there is some practice of changing names, whereby share-pushing individuals may give themselves titles. Like Lord George Sanger with his circus, they can call themselves Lord Somebody Else. I believe, also, that there is a considerable rake-off in commission from the buying and selling of property. The more an agent has to pay for a property, the bigger commission he gets, and I trust that the Government, when considering changes in the law, will see to it that there is adequate control of valuations of property. If you do not have safe valuations, the registrar will be helpless; the returns he will get will be valueless. Surely the very least that the Government can do is to prevent the traffic in shares, stocks, loans and mortgages by these property societies unless they are forthwith brought under the provisions of the Companies Acts.

I hesitate in the public interest to say now what I should like to say at some time in this House about share-pushing. I have here a share-pusher's dossier, with all the apparatus complete—photographs, transfers, and all the rest of it; but, as I know that the police are actively taking steps to examine the position in that regard, it might defeat the ends of justice were I to say from this Box what I think ought to be said about some of these mushrooms, soya bean and similar unit grant contraptions. But I ought to say this, that, as the result of questions which I put in this House to the right hon. and gallant Gentleman and the President of the Board of Trade, specific warning was given in this House from the Front Government Bench that no more money could be safely risked in these companies. For example, on 29th November the hon. and gallant Gentleman himself repeated and emphasised the statement made by the President of the Board of Trade on the previous Tuesday that anyone investing money in soya beans or mushrooms on the unit grant basis was taking a very great risk. Probably that is as far as a Minister answering questions from the Treasury Bench could go.

What happened? In the same week in which those questions were answered, some of the most responsible journals, against which I say not a word as to their honesty and integrity, come out with flaunting advertisements on their financial pages of the Soya Bean Unit concern. I do not deny for a moment that these things slipped inadvertently into the "Daily Telegraph," the "Evening Standard" and so on; but what happens? The operators in soya beans, mushrooms, and the rest immediately reprint these advertisements and send them broadcast, hundreds of thousands of them, perhaps through the land, telling people, "See what the reputable Daily This or the Evening Something Else prints," especially when these papers are known to be wholly against those corporations whose advertisements they have inadvertently carried. Yet, inadvertently, everything the Government have striven to do has been undone. I think the B.B.C. ought to have been compelled by the Government to take a very much more active part in warning small investors up and down the land of the iniquities which were being perpetrated on them, and which are known to the police. I know of concerns that have already raked in £600,000, others that have raked in £200,000; some of them run by undischarged bankrupts, some alleged to be run by men who have been interested in the system of marriage by convenience in the City of London, men that nobody would trust, but who, with high sounding titles and beautifully got- up literature, have been allowed to rob unsuspecting people with impunity.

I should like to say a word or two about the national investments board. We want the small man to have safety and to have assurance that his money is not being used in an anti-national enterprise, or an enterprise which is directly contrary to his own economic interests. If I am a jute worker in Dundee and put my money in an ordinary bank, I may have that money, after it has gone through various tortuous evolutions, invested in, say, the Bengal jute industry, competing with myself, cutting down my own rates of wages. If I am a collier, and put my investments, if any, into an ordinary bank, I may find it used to help the Polish coalmines. If I am a farmer, I may find my money, against my wishes, used to help some enterprise against my own economic interest. All we ask for in connection with this board is that a man should know where his savings are placed, and to what use they are put. The board will be empowered to place the money only in State enterprises, municipal loans, or public utility corporations controlled and directed by this House. If we are assured that our money is invested only in these organisations we know that we are not assisting, directly or indirectly, the enemies of our class, the enemies of our persons, or our families, or our State. To-day, we have municipal borrowings through financial houses in London on commission, with no concern whatever for municipal interests or national interests in the distribution of the available money. It was in this field that Hatry operated, and one would have expected that the Conservative party would have been the first to rush to this House for a demand that, at least, municipal loans should be allocated the cheapest possible rate by a national investments board, and not left a prey to the public money market.

Let me refer to the case of the Central Electricity Board. Anyone who wants details about this can look at the most remarkable series of articles which Mr. Francis Williams, who was then financial editor of the "Daily Herald," wrote in October, 1934. So far as I know, his figures have never been disputed. He proves that the Central Electricity Board has had to pay £8,500,000 more for its money than it would have required to pay had it been a medium-sized municipality. That is an amazing statement, that £8,500,000 could have been saved. It is essential that we should have cheap electricity. We are all agreed that if you are going to permit the hampering and crabbing of the Central Electricity Board and similar organisations, the whole community will suffer.

Sir Arthur Salter

Is it not a fact that the Central Electricity Board has power to utilise, and, in fact, could have utilised, the Treasury guarantee, and that the extra expenditure could have been to some extent averted if they had used that power?

Mr. Johnston

On the advice of the Bank of England, I think two or three weeks before the Conversion Loan was announced, the board were induced, egged on, advised, to borrow a large sum at about 5 per cent., which they could have got at 3¾ per cent. if they had been allowed to wait another few weeks.

Sir A. Salter

I was not in any way defending, or attacking, the Central Electricity Board, but pointing out that the law does permit of the exercise of discretion.

Mr. Johnston

But they have to go for the money where the money is. If the Bank of England say, "We shall not get you the money except on X.Y. conditions," the board has to take those conditions. We are suggesting that everything in the nature of a public utility corporation should receive its money from the national investments board. All the Post Office savings and the investments of private investors and surpluses in Government hands should be pooled under the board, and allocated as far as possible to State enterprises, public utility loans and municipal corporation loans, with the object not only of safeguarding the small investor, but of strengthening the State. I hope that on some occasion we shall have an opportunity of going in more detail into this question of a national investments board. It is one of the things that ought to be discussed in this House. The hon. Member who spoke from the Liberal Benches said that it was a Liberal idea. One does not know where these ideas originate. Some of them may be 100 years old. It is true that Mr. J. M. Keynes deserves a special vote of thanks for the work he did on this matter. He is a strong protagonist of the national investments board. The Labour party have not accepted the Liberal party's idea of a national investments board; we have amended it and extended it and the idea of control in the public interest has received support from many quarters; for example, Mr. W. W. Paine, a director of Lloyd's Bank, writing in the "Banker" for November, 1928, denounced The waste of our national resources by the many wild-cat schemes with which we are now familiar. He felt, he said, "some sympathy" with the Labour party demand. It was "a laudable object" and something must be done to remove some of the attractions by which unscrupulous promoters inveigle the more ignorant sections of the community. He did not agree to a State board, but he wanted an outside Committee control.

Then there is Hartley Withers, one of the other side's supporters, I believe. He writes in a similar strain. There is a growing feeling among men of all classes that there should be a reservoir for savings, which would be a purely national one and would guarantee the small investor against the fluctuations of War Loan up and down in the money market, which would give security and an absolute guarantee that money is not being used to provide useless aircraft concerns for taking the idle rich from London to Brighton at the week-end, or anything of that sort, when shipbuilding and agriculture are being starved.

I want to end, as I begun, by saying that the Government will not find us niggling or captious in our criticism if they are bold enough to deal with the manifold abuses which everybody in this House agrees are now obvious in the City. I do not believe that any legislation which can be introduced under the existing system will plug up all the holes. You will plug up many of them, but the Jacob Factors and the Maurice Singers and the rest will find new methods of obtaining money from the unwary. Yet it is the duty of the House to do the best it can to stop the holes and to stop the inflow of these share-pushers; to make life difficult for them, to ease the way of the police when getting after them, and to encourage the Press to take no money from them. And one thing more we can do is to set up a national investments board, which will give us the security and safety we want and lessen the opportunities for the Maurice Singers and Jacob Factors, the rogues and cheats who have attracted so much attention this afternoon.

6.14 p.m.

The Parliamentary Secretary to the Board of Trade (Captain Euan Wallace)

The right hon. Gentleman who has just addressed the House paid tribute to various persons and organisations, including one to yourself, Mr. Speaker, for the work done in recent months in bringing some of these share-pushing rogues to book; but he omitted, as a man of his modesty would be bound to omit, to pay a tribute to himself; and I am glad to take the opportunity of saying from this Box how much anyone who has had to study this question appreciates the amount of work that the right hon. Gentleman the Member for West Stirling and Clackmannan (Mr. Johnston) has done, and continues to do, in this matter. The hon. Gentleman the Member for Bassetlaw (Mr. Bellenger) who took advantage of his luck in the Ballot to raise this question, has had a tribute paid to him by speakers from every side. I will add mine by saying that I am very glad that he has given me the opportunity to make, on behalf of the Government, a brief statement this afternoon upon matters which have been exercising public attention for some time and have provoked a large number of questions in this House by the Mover and other hon. Members. The questions raised this afternoon fall into three distinct categories. First of all, fraud open and unashamed, such as share-pushing and cognate activities; secondly, the very large question of the amendment of the Companies Act, 1929; and, thirdly, the proposal so lightly and delicately sketched by various hon. Members opposite that we should set up in this country a national investments board. In the view of the Government, the first, that is, the prevention of fraud as far as possible, is by far the most urgent and pressing; and the Government are determined to deal with those abuses which have been so very graphically described this afternoon drastically and as soon as they possibly can.

I am glad that the hon. Gentleman the Member for North Tottenham (Mr. R. C. Morrison) has said in advance that he, for one, would not expect anybody speaking at this Box to reveal in advance full details of the legislation which is promised in the King's Speech. The House will realise that the Bodkin Committee, a very strong committee which reported this August, deals with most of the malpractices which have been discussed this afternoon, and it not only deals with them, but suggests remedies. Legislation on the lines of the Bodkin report is at this moment under active consideration, and I think that the right hon. Gentleman who has just spoken will not, on reflection, expect me in these circumstances to answer the detailed, and I admit extremely pertinent, questions which he asked. It is not at the moment possible for me to disclose the exact proposals of our proposed share-pushing legislation, but I can indicate to the House very briefly the matters which we intend to cover.

First of all, there will be share-pushing and share-hawking as generally understood. Secondly, we intend to deal with what we may call cognate activities, such as invitations to the public to participate in share, commodity, or metal pools. Thirdly, we hope to deal in this legislation with the offers of participation in mushroom and soya bean farms which I hope and believe that the exchanges of question and answer between the right hon. Gentleman and myself over the Table of this House and their reproduction by the B.B.C. may perhaps have done something to stop. Fourthly, we hope to deal in this legislation with the abuses described by several hon. Members which have arisen under the Industrial and Provident Societies Acts. It is very well known that certain property and investment societies registered under these Acts and enjoying the special privileges thus accorded to them have recently offered to the public shares or debentures without having to disclose the full particulars which they would have been required to disclose had they been registered under the Companies Act, 1929. We hope to deal with that in the forthcoming legislation.

The commodity and metal pools and what perhaps we would call "agricultural undertakings," can certainly be covered by the measures which we are going to take against share-pushers, but the case of the property and investment societies is, I must admit, somewhat more difficult. We must remember that the particular societies to which criticism has been directed this afternoon represent only a small fraction of the societies registered under the Industrial and Provident Societies Acts. The societies registered under these Acts comprise the co-operative movement, housing societies, working-men's clubs, and a large number of bona fide and beneficent activities, which it would not be either fair or desirable to restrict; I can imagine the trouble that we would get into here if we attempted to interfere with what may fairly be described as "the Co-operative charter." But we are considering what provisions can be included in the share-pushing legislation to deal with an evil which we admit exists and which we admit there is a strong case for remedying.

Mr. R. C. Morrison

Will it include the case of the £100 companies to which I referred?

Captain Wallace

I do not think that I will go into any more detail at the moment. I should like to say something here—I think it is the most suitable point—about unit trusts. We have already had reference made to the report of the Departmental Committee on Fixed Trusts. It has received very careful consideration from the Government, and for the benefit of those hon. Members who do not happen to have read it, its main recommendations can be summarised under two heads. First of all, it is proposed that all unit trusts should have trustees of recognised status, and, secondly, that particulars as to their constitution and accounts should be available to unit holders. It is only fair to say that all reputable unit trusts have trustees of recognised status, and it is fair also to say that the great majority of these trusts have already carried out of their own volition many of the Anderson Committee's recommendations. Organisations of the type which go in for mushroom farms and soya bean farms we hope to get into the share-pushing legislation; and, therefore, I do not wish at the moment to suggest that we have in immediate contemplation legislation dealing with unit trusts as such.

I pass to the second main question with which the Motion deals, and that is the very large question of amending the Companies Act, 1929, the number of whose Sections and Schedules has already been mentioned to the House. I can give without any qualification the assurance that the Government recognise that this Act, like other codes of law—and that is what it really is—requires periodical revision in the light of practical experience and changing conditions. The only question which the Government have to decide is whether this particular moment is appropriate, not so much for the actual revision of the Act, but for the setting up of what will have to be a wide and comprehensive inquiry which the hon. Member for Oldham (Mr. Dodd) and one or two other hon. Members said must inevitably precede it. The questions which have been raised with regard to company law during this very short Debate show clearly enough that if we are going to amend it at all, we shall have to start by setting up an inquiry which will cover the whole field. All the suggestions which have been made to-day and during the past few years the Board of Trade have noted, and the companies department of the Board of Trade have during their eight years' practical experience of the working of the Act accumulated a fair number of suggestions of their own.

Generally speaking, I think that it must be admitted—and the hon. Gentleman the Member for Oldham did admit—that the Act of 1929, which resulted from an extensive inquiry by a thoroughly competent committee, is on the whole working satisfactorily. We believe that by dealing with the specific abuses to which I have already referred by special legislation we shall reduce to a certain extent the immediate urgency for this comprehensive inquiry and possibly far-reaching revision. As this afternoon we have been discussing nothing but the shady side—indeed the very shady side—of the City, it is perhaps wise to remember when we consider further proposals for putting restrictions upon the trading community, that cases of fraud and dishonesty are comparatively few. The business methods in this country are in general honest and straightforward, and there certainly is a point, of which this House should take note, at which it becomes contrary to the public interest to hamper the legitimate activities of the vast majority in order to repress the comparatively few wrongdoers.

Moreover, despite what the hon. Gentleman the Member for Oldham has said, I am advised that the people most competent to deal with this extraordinarily technical subject—and I hope that the House will have some sympathy for me in having to address them upon it—are not at the present moment all agreed either as to the urgency of the amendment of the Act, or of the form that amendment should take. Therefore, if the Government accept the Motion, with the Amendment which it is proposed to move if Mr. Speaker allows it, to cut out the national investments board, I must say quite categorically that such acceptance must not be taken as meaning that "early legislation" in so far as the amendment of the Companies Act is concerned means "in the spring."

Mr. R. C. Morrison

Does that mean that the hon. and gallant Gentleman is now definitely saying that the Government do not intend to set up a committee which he says must be set up?

Captain Wallace

No, I am not saying that at all. I am saying that I am not in a position to give any assurance as to exactly when it will be set up.

Mr. Lees-Smith

The Government are going to introduce legislation in regard to share-pushing. Does the hon. and gallant Member mean that they will introduce legislation to deal with certain defects in the Companies Acts fairly early, and then await the result of the inquiry for more comprehensive legislation?

Captain Wallace

I hoped that I had made myself clear. What it is intended to do is to introduce a Bill in the near future dealing with share-pushing and with the various cognate activities which I classified under four heads. What I have tried to convey to the House is that in so far as a general comprehensive reform of the Companies Acts is concerned I cannot do more than say that the Government recognise the need for setting up an inquiry, which must precede such reform. I can give no definite assurance that it will be set up in the Spring or that legislation will follow immediately. Anyone who looks at the legislative programme of the Government will realise that it would not be very easy to find time for such legislation for some time.

Mr. Bellenger

Does the hon. and gallant Member recollect that the Greene Committee, which reported in 1926, took a very long time on its deliberations? As the suggested committee will probably need at least two or three years to complete its investigations, may I ask whether it is proposed to set up the committee at a very early date, apart from the Government's immediate legislation?

Captain Wallace

I am quite prepared to take the hon. Gentleman into my confidence. Hon. Members will realise that if that committee of inquiry is to be effective, it must have extremely strong Departmental representation from the Board of Trade. It will mean a great deal of extra work in a Department which at the moment is very hard worked. One of the reasons which I think would induce my right hon. Friend not to give a guarantee to set up the committee immediately, is that it would be advisable, for obvious administrative reasons, and would probably expedite the deliberations of the committee, if we could, so to speak, clear the decks by getting the share-pushing legislation out of the way first.

Let me now deal with the question of a national investments board. I am not very much wiser as to what that board is going to do than I was when the Debate started, because while the right hon. Gentleman opposite suggests, if I understood him aright, that it would be a kind of reservoir for accumulating the savings of the people and allocating them to various beneficial public works, the hon. Member for Barnstaple (Mr. Acland), who represents the Opposition Liberal party, gave me the impression that the national investments board was going to be a sort of organisation for "vetting" securities. The full case will be dealt with later by my hon. Friends, but it seems to me that the need for a national investments board must rest on one of two grounds. Is it of any value to the small investor or is it of any value to the State? Its value to the small investor must depend upon the answer to the question whether there is at present insufficient opportunity for the investment of small savings. I believe the answer to that question is in the negative.

There is in fact no lack of opportunity for the investment of small savings at a reasonable rate of interest in sound and unimpeachable securities. Some £1,200,000,000 is invested in the Post Office Savings Bank, the Trustee Savings Banks, and in National Savings Certificates. I will not weary the House with the precise terms that one can get by investing in those securities, but simply add that if people wish to get a little more interest and are willing, as one has to be in this world if one wants a little more interest, to risk some capital fluctuation, the small investor can invest through the Post Office Savings Bank in denominations as low as £5, in Government securities, and get 3¼ per cent. For those people who are willing to take a little bit more chance, there is the building societies field, in which £600,000,000 is already invested.

The right hon. Member who has just spoken was concerned as to where the money went. National Savings Certificates go to the reduction of Government debt, and the deposits in the Post Office Savings Bank and the Trustee Savings Banks are invested in Government securities and in advances guaranteed by the Government. A considerable amount is invested in local loans, which finance the smaller authorities; and no less than £100,000,000 has been advanced for telephone and other Post Office capital expenditure. The right hon. Member quoted the case of a man in Dundee who lends money to a bank and the bank proceeds to finance his competitors in Bengal. It would have been much more sensible for that man to have put his money into a trustee savings bank; he would have got as good interest and would know that it was a local concern, and the money would probably be invested locally.

There is then the other aspect, the question whether it would be to the advantage of the State to establish a national investments board. It has been suggested that better facilities might be provided for financing sound concerns. Anyone who considers the amount of the National Debt to-day may well wonder whether it would be wise for the Government to contemplate any addition to their national indebtedness by borrowing a further unlimited amount to be used for an unspecified purpose. The Government have been willing to use Government credit for specific purposes. There is the purchase of coal royalties, and there are the loans for railway extensions around London and in other places. Therefore, I say that neither upon the ground that the small investor is unduly handicapped by lack of opportunities for investing nor that the proposal would be of benefit to the central Government, has any case been made out for a national investments board.

We have been for three hours discussing fraud, trickery and chicanery. I only hope that people will not think that while I have been sitting almost alone on this bench I am the representative of the crooks, and that I am here to defend them. I have already said that the Government intend to deal drastically and immediately with those abuses which can be checked by legislation. I would ask the House not to let us lose our sense of proportion during this extremely important and interesting Debate. The consequences for the poor people who are robbed of their savings by these sharks are, of course, terribly serious; but there is a certain amount of truth in what the right hon. Gentleman said from the Front Bench opposite, that "nothing can save the born gull from the born shark." The point that I want to emphasise is that the sum of the loss inflicted upon these people, enormous as it sounds this afternoon, is insignificant compared with the aggregate volume of transactions carried out in the City of London alone every day in perfect good faith, both on the Stock Exchange and off it.

Mr. E. J. Williams

Not insignificant for the poor people.

Captain Wallace

I said that they were certainly not insignificant to the poor people, but I am asking that the House should not lose its sense of proportion. We have in this country a reputation for scrupulous integrity which, in spite of anything that has been said this afternoon, has made this country, and London in particular, the financial centre of the world. The Government are perfectly ready to accept the hon. Member's Motion provided he is willing to delete from it the only part to which we cannot agree. I hope, therefore, the House will see its way to pass the Amendment, and thereby allow the Government an opportunity of recording their concurrence with the rest of the Motion which the hon. Member for Bassetlaw so very ably moved.

6.41 p.m.

Mr. Spens

I beg to move, in line 4, after "law," to insert "and."

The main effect of this and the following Amendment is to leave out the national investments board. Before I deal with that part of my subject which directly relates to the investments board, I should like to express my thanks to the Mover of the Motion for the opportunity, which is the first there has been during the five years I have been a Member of this House, of having even as much as four and a-half hours for the discussion of company law. It is highly desirable that this House should at intervals discuss that part of our commercial activities. I also want to associate myself with the closing words of my hon. and gallant Friend. We have to realise that far the greatest proportion of the business transactions in this country are done in the most perfect good faith and mutual trust, and that applies to those persons who are handling the moneys of poor people. The great mass of that business is done very often by a nod or a note on the back of an envelope, without any sort of legal formalities, and it goes straight through without the least bad faith. The ordinary man does not go to the city and to his business every day with the intention of defrauding anybody or the expectation of being defrauded by anybody. He goes in the belief that in good faith business will go through on the basis of mutual credit.

The moment the system of limited liability was introduced into this country, instead of the old system of business being done by an individual in his own name or by partnership, we got rid at once of the greatest of the sanctions against dishonesty, namely, the liability of the private individual or the partnership to the last penny of their private fortunes if anything went wrong. The moment the system of limited liability was introduced we got a much more speculative element coming into the business of the country, because there are many men, not only dishonest men, but perfectly honest men, who are prepared to go into a venture where they know that if anything goes wrong their losses are limited by the amount of capital they put in. That fact undoubtedly opened up the opportunity for the dishonest. The dishonest man is always trying to get the money of other people. As the company laws have grown we have hedged round more and more by regulations and rules the methods by which money can be obtained from members of the public. In 1929 we thought that we had got a really tight system of rules under the Companies Acts with regard to invitations to the public, either by prospectus for direct application or by offers to sell shares which had been allocated to some one else. We thought that we had hedged round the practice of house-to-house hawking. But the more this House attempts to prevent the dishonest man getting the money of other people dishonestly so surely he finds a new loophole in a few months. Hence during the last eight years new methods of obtaining money from the public have arisen which are not subject to the conditions of the Companies Acts.

We have had what I consider in many cases—I do not think it is too strong to call it—a prostitution of the Industrial and Provident Societies Act machinery. The reason why it has been used is because you can approach the public without any of the obligations which obtain under the Companies Acts. I do not want to say a word more than is necessary about unit trusts, in respect of which we are going to have legislation. Once they are established, they depend on a strong system of equitable jurisdiction over trusts which if ever it is called in aid in respect of frauds will be amply sufficient to deal with them, but there is no question that in the original invitation to the public to subscribe to them the provisions of the Companies Acts do not apply, and they make invitations which they could not possibly make under the Companies Acts. These are the pressing wrongs which have to be dealt with, and I was delighted to hear that in the legislation which is under preparation it will deal with these methods, under which it is possible at the present time to obtain money from the public by unfair statements of what is proposed, which are not covered by the Companies Acts.

We have heard this afternoon instances given as to the way in which the Companies Acts want amendment in other respects. I could add to those instances for half an hour. It is terribly easy to point them out and to pick holes in the Companies Act, 1929, which was one of the most carefully prepared Bills that ever passed this House, but it is very difficult to find, whether you are among lawyers or accountants or business men, what is the right method of remedying these abuses. Even on the purest accountancy matter, what ought to be the form of the balance sheet of a trading company with subsidiaries, if you got six accountants round a table and they sat all night, you would not get any agreement. On any other matter which we know is not just right, it is very often difficult to get any measure of agreement as to how it should be put right. Therefore, I support strongly the attitude of my right hon. and gallant Friend that before we attempt to amend the Companies Acts we should have a full inquiry and consider what are the proper amendments to make, otherwise we shall be simply wasting our time. [HON. MEMBERS: "Four years."] That would not be a bit too long, because although these points are important, they are not anything like so important as the legislation which is going to prevent the public having their money taken from them improperly.

I could speak for hours on the general subject, but I must come to the point, the only point on which we find ourselves compelled to disagree with the Motion. What in the world is the good of a national investments board? The hon. Member the Mover of the Motion wisely left it to his junior who spoke after him, but his junior was very nebulous, and he left it to other people. It was not until the hon. Member on the Liberal benches below the Gangway spoke that anyone attempted to go into detail. If the hon. Member below the Gangway put it forward as a Liberal idea then I cannot congratulate him upon it. In the first place, I cannot see what is the difference between the function of a national investments board and that which the Treasury at present play in regard to every single sum of money that is raised and spent by the Government. The only idea seems to be to substitute a new board called the "national investments board" for the Treasury. I do not know whether they are to be national servants or not. That is perfectly worthless, and I much prefer the tried Treasury officials and system which we have in this country. The hon. Member below the Gangway also envisaged that it might grow into some sort of a bottle-neck, through which money would pass from poor people into investments. I do not think the hon. Member mentioned a Government guarantee, but if he did not the board would be nothing more than the most gross misrepresentation of a national board for poor people who are to invest through it.

If all that the hon. Member envisages is a bottle-neck through which the investments of poor people are going to pass into a number of different investments, then of course there must be a guarantee against capital fluctuations, and, of course, after the money has passed through this bottle-neck there is no body of men who can control what happens to it afterwards. That depends on the particular venture and the particular men who manage it. That surely can be done just as easily through ordinary private resources, through the banks who can give them good advice as to what they think is a good investment. But the right hon. Member for Stirling and Clackmannan (Mr. Johnston) made it clear that in his view a national investments board was going to carry with it a guarantee of principal and interest to the poor people who invested through it. The basis of the idea is that the poor person's investment shall be handed to some central body which is to carry a Government guarantee. I am not in the least surprised that that suggestion should come from the Socialist benches. It is entirely in accordance with their principles, but it is entirely adverse to everything for which we stand. There is a whole mass of Government securities in which poor persons can invest at the present moment. This would simply be a body of some kind to which they would send their money, a body carrying a Government guarantee of capital and interest, and that body would distribute the money among certain types of investments.

Mr. Bellenger

They can do it through the Post Office.

Mr. Spens

You can do it through the Post Office now. The poor person can put his money in high class investments, and the speech of the right hon. Member opposite indicated that in his view this body would confine the investment of this money solely to high class investments. The moment you go beyond that you will have a body controlling every sort and kind of activity, from public utility companies down to privately run companies. The hon. Member who moved the Motion never explained it, but the right hon. Member opposite did, and what he is asking the House to vote for is one huge Government holding company, with a Government guarantee. Thus if anything went wrong it would form a charge on the taxpayers. That is the idea. [Interruption.] If I am wrong, I am not going to apologise, because the hon. Member never explained it, and the hon. and gallant Member who seconded it never explained it. We had some idea from the hon. Member on the Liberal benches and a short speech from the right hon. Member opposite. I am not going to apologise if I am wrong after such an explanation as that, and we may have a much longer time to go into this matter on a later occasion. With the vague views which I have been able to gather from what hon Members have said I hope the House will vote for the Amendment.

6.58 p.m.

Sir Irving Albery

I beg to second the Amendment.

I had intended to deal with one or two amendments of the Company Law which I think are necessary, but as the hour is getting late I will just deal with two matters I want to bring before the House. The hon. and learned Member for Ash-ford (Mr. Spens) has referred to the uses and changes which have been brought about by limited liability. Undoubtedly when limited liability was originally introduced it was mainly, almost certainly, for the purpose of enabling a body of people collectively to get together money to undertake an enterprise which would probably have been too large for them otherwise. Since then custom in this matter has changed considerably. I have never been able to understand why a private limited company is permitted to be used for the many different purposes for which it is used. Limited liability has been referred to as a privilege. It enables those who employ it to evade certain heavy responsibilities. There is no doubt there are many uses for private limited liability, and most of the abuses we have been discussing this afternoon arise from private limited liability. It seems to me that we need to amend the law in that respect. It ought not to be possible for anybody to make a private limited company for any improper purpose.

It seems to me that when you want to register a private limited liability company there should be some kind of standard and some kind of test to show that the company has a good and proper purpose in view, and the register should probably be periodically revised to discover whether this private limited company is still being conducted on proper and suitable lines. The hon. and learned Gentleman who moved this Amendment referred to the status which used to be enjoyed in this country, and still is to a more limited extent, by those who do business on their own full personal responsibility. It has always seemed to me to be a matter of great regret that no encouragement is ever given to people to trade privately on their own individual responsibility. All the encouragement is the other way. Almost every enterprise you might undertake is handicapped unless you register it as a private limited company; and I think that is a matter which needs very serious consideration. If some legislation could be framed to deal with that, almost at one stroke you would do away with a great many of the undesirable things which we have been discussing to-day.

Another thing to which I wish to draw attention is the constant and frequently improper use of the title of "bank" or "banking corporation." It has already been mentioned in the Debate that many bucket-shops in the City call themselves banks. There was the Bank of London—a high sounding title. The bank had a good address in the City of London, it advertised all over Europe, where the banking institutions of this country have a high reputation, and a great many people abroad were misled. Other fraudulent bucket-shops have used titles in which they employed the word "bank" or "banking corporation," and they have advertised widely and sent circulars all over the country and defrauded a great number of people. I have made some inquiries abroad and I find that in many countries there are limitations on the use of the word "bank." They are not always strictly legal limitations. In some countries you have to be a member of a chamber of commerce and your title has to conform to the kind of business that you are doing. That already is a considerable safeguard. In Germany I believe they have actually got definite legislation. There you cannot use the word "bank" unless you have satisfied the authorities that you are the proper kind of person to use it. They have restrictions also in Sweden and Belgium.

I believe in the 1929 Act there are restrictions to prevent certain companies using the names "chamber of commerce" or "building society," and there are restrictions also on the use of the words "royal," "imperial," "municipal" and "chartered." In each case the use of those titles is subject to Board of Trade approval, and it is about time we had some legislation in this country which would make it necessary that some sanction should be obtained before firms or businesses can describe themselves as "banks" or "banking corporations." I do not think it would be at all difficult to do. I imagine that if every bank were registered the Board of Trade could delegate powers to different banking associations. I do not know that there are many such associations at present. I know there is one which includes the big five banks; another one includes the overseas banks, and I believe there is another which includes currency and money houses. Every firm which conducted a legitimate banking business could be an associate, and then such banking associations would be responsible for seeing that people who were not conducting the kind of business for which the associations were instituted were not admitted to their ranks.

I want to say a word or two about this suggested national investments board. I rather gather from the right hon. Gentleman the Member for Stirling (Mr. Johnston) that his idea is that the money collected by the national investments board would be for municipal loans, public utility services, and possibly one or two other forms of investment.

Mr. Johnston

State enterprises.

Sir I Albery

I can understand this suggestion being put forward as a means of bringing about a greater degree of State control, but I cannot understand how you can make that scheme work with reference to investments. The right hon. Gentleman particularly stipulated that the investor should not lose his capital, and that it should not depreciate; he should get the same amount of money out as he put in. The money would be that kind of deposit which he could get out at three months' notice. If that board confines its investments to what one might call gilt-edged securities I do not see how it could give the private investor any better terms than he can get at present—

Mr. Johnston

I never suggested that he would get better terms. The small man plays for safety and security.

Sir I. Albery

That has already been fully given. If the investor is not to get better terms there are plenty of facilities for him already. The Post Office Savings Bank and National Savings Certificates have been mentioned, and there are several short-dated Government loans which you can still buy. I can understand the right hon. Gentleman putting this suggestion forward as a Socialist measure to collect capital and then use it for a public enterprise, but I cannot see how he is going to protect the private investor. Therefore, I can see no reason for supporting the Motion. There has been very general agreement in the Debate and would it not be possible to terminate it by accepting the Amendment and so strengthen the main portion of the Motion by avoiding a Division; otherwise the only course I can take is to support the Amendment moved by my hon. and learned Friend.

7.11 p.m.

Mr. Silverman

In view of the general unanimity on the main part of the Motion moved by my hon. Friend, I do not propose to say anything about that, except to express my agreement with what has been the general sense of the House, and I should like to devote my remarks to the Amendment. I find myself in considerable difficulty at the outset, because I cannot decide which of two mutually conflicting ideas the hon. and learned Member wishes to rely on. I found two currents running through his speech. One was the very definite assertion that this proposal for a national investments board was one to which he and his friends could never agree—that it divided fundamentally hon. Members on the benches opposite from hon. Members on this side of the House. But in the very next breath he said that, after all, there were the Post Office Savings Bank, the Treasury, and a variety of other institutions already doing the same thing. In advancing those mutually destructive arguments, he is not doing justice to his usual lucid and brilliant advocacy of the causes that he supports. A national investments board is a very necessary part of the kind of safeguards which are envisaged by the Motion, with which nearly the whole House, including the Government, agree.

An hon. Member who spoke from the Liberal benches said it was not quite the province of Members on these benches to make proposals to perfect the capitalist system. This proposal is not designed to perfect the capitalist system. There is no such thing as a perfect capitalist system. A system that was perfect would not be capitalist; no capitalist system can be perfect; and the Motion was not designed to reconcile the irreconcilable. What the Motion is intended to do is to protect some of the victims of the capitalist system from some of its defects, and the whole point about the Motion is that small people—those for whom the company laws and the whole principle of limited liability were invented—can be swindled out of the whole of their savings without any breach of the law. The House is agreed that the law must be strengthened in order to make those things which are morally inadmissible legally inadmissible as well. It has been said with some force that whatever legal safeguard the Legislature may invent, the born shark will always get the born gull; and I suppose that a National Government is the very best instance of the eternal veracity of that statement. If that be so, is it not worth while to add to our safeguards and precautions something that is extra-legal, something that is beyond the criminal code or the commercial code?

Hon. Members opposite agree with us in part when we say that there ought to be, apart from chaotic, unrestricted, and uncontrolled speculative investment, another form of investment which is suitable for people who do not desire to take risks, who do not desire to get money for nothing, who do not desire large and unexpected profits from gambles at somebody else's expense, but who desire their savings to be at the disposal of the community for sound communal purposes and to show some modest but certain return to them. Despite the contention of the hon. and learned. Member for Ashford (Mr. Spens) that there is a fundamental division of opinion on this matter, hon. Members opposite have agreed that in the Post Office Savings Bank and in other functions of the Treasury some sort of provision of this kind already exists.

But we say that it is not enough. We say that there will never be any safety or any health in the speculative side of the financial world until, side by side with uncontrolled and unrestricted speculative investment for private purposes, there exists some central pool in which the small man can safely put his savings and in which the unspent portion of the earned income of the community can be utilised by the State, for the State's own purposes. In the few minutes that remain, I do not intend to go into the details of this matter, but when hon. Members opposite say that they do not understand the proposal, surely they fail to understand it only because so far they have not provided themselves with the opportunity of sufficiently investigating it. In large parts of the world some principle of this sort applies.

The statement of the hon. Member who spoke from the Liberal benches that this proposal is Liberal in its origin is not true. I thought the hon. Member was a little pessimistic from the point of view of his own party when he apparently reconciled himself and his party to the unfortunate fate of Moses, who was permitted to see the promised land but not to enter it. The hon. Member's idea was that the Liberal party invented the proposal, that over seven years later it was taken over by another party, and that 15 years after that, it would be embodied, in an emasculated form, in some legislation passed by the National Government. If that be so, it would seem that hon. Members of the Liberal party will have no lot or share in the passage of that legislation, and that the triumph of Liberal ideas will be in inverse proportion to their representation in the House. The truth is that this idea arises inevitably out of the obvious failings and difficulties in which uncontrolled finance lands a capitalist community. Until the House and the community reconcile themselves to the duty and necessity of controlling the unspent portion of the community's earnings in the interest of the future activities of the community, as well as of the owners of those earnings, we shall have periodic Debates of this kind and periodic re-enactments or reforms of the criminal law in order to capture sharks.

7.20 p.m.

Mr. A. V. Alexander

It is unfortunate that there cannot be a longer Debate in reply to the Mover and Seconder of the Amendment, which seeks to omit from the Motion of my hon. Friend the Member for Bassetlaw (Mr. Bellenger) the provision concerning the national investments board. I was very interested by the quiet and well-reasoned argument of the hon. Member for Gravesend (Sir I. Albery). In the Standing Committee which considered the Companies Bill in 1929, I always found the hon. Member a sure and firm supporter of good reform of company law; but with great respect to him, I maintain that some of the alternatives which he suggested for the small investor are not good enough, since they are subject to all sorts of special restrictions, such as days of notice and special limitations upon the amount to be put in, which need not operate if there were a centrally controlled national investments board which, under a competent Government Department, would direct investments to those fields most necessary in the national interest. The hon. Member did not quite understand another function which we have in mind with regard to the national investments board. I do not want again to go over the ground concerning investments in Government and publicly-owned securities, but to deal with the general question of safeguarding the investing public in regard to industrial investments.

Members of the Labour party, in taking up this matter, have never hidden the fact that there are those in the small investors' class who do not always want to rest solely upon the very low fixed rate of interest on Government securities; but surely that is no reason why they should always be open to very gross exploitation and fraud by those who hide behind the Companies Act. One of the functions which we want to have attached to the national investments board is an advisory function, and the power to license, if necessary, the time of issue. It would have the function of deciding whether there should be an issue of the kind contemplated. As was said by my right hon. Friend, who has made a study of this matter and who published a book upon it in 1934, there are heaps of cases where the small investor is defrauded on account of the fact that immediately a particular class of operations or production begins to show a profit, it is flooded with new issues and attempts to exploit it unduly. It would be one of the functions of the national investments board, by the licensing of issues, to prevent overcapitalisation by new issues in that particular group, and that would represent a very great safeguard for the investor. I talked this matter over with a very prominent leader of the Stock Exchange in 1929, when I was leading the Opposition on the 1929 Bill. I have not the slightest hesitation in saying that many of those who have a very onerous task at present in connection with Stock Exchange transactions, and who have tried to put some check upon the shady practices that go on, would welcome some aspects of the national investments board, in order to prevent frauds.

I am sorry that the hon. Member who moved the Amendment disturbed the general harmony of the House concerning the main object. I listened with very great interest to the reply of the Parliamentary Secretary to the Board of Trade. While welcoming the announcement that there is to be introduced legislation of an important character to deal with the prevention of share-pushing and one or two of the ancillary matters concerning that group of operations under the Companies Act, may I say that I am exceedingly disappointed, as I am sure my hon. Friend the Member for Bassetlaw is, by the Parliamentary Secretary's general announcement with regard to company law? The suggestion that we cannot proceed to amend the company law without another prolonged inquiry seems to me to be ridiculous. We spent four months in the Standing Committee on the 1929 Bill, which contained 400 Clauses designed to implement the recommendations of the Greene Committee of 1926. It is because the President of the Board of Trade and the Government of that time would not implement all the recommendations of the Greene Committee and rejected many elementary safeguards which were obviously required, that so many subsequent difficulties have arisen. I maintain that with the experience of the companies department of the Board of Trade since 1929, with the report of the Greene Committee, and with the cases since 1929, the Government have all that is needed at the present time to proceed with the drafting of a new Companies Bill to amend the Companies Act. If the Parliamentary Secretary thinks that we shall be satisfied with the promise that we shall get a Bill in four, five, or six years' time, he is mistaken. I believe that that is a fundamentally wrong view of the situation. Nor is it enough to say that the most urgent question is share-pushing. What about all the other frauds that take place under the Companies Acts? What about the Royal Mail Steamship business?

Mr. Speaker

I must remind the right hon. Gentleman of the necessity of keeping to the subject matter of the Amendment, which is that of a national investments board.

Mr. Alexander

It is not easy to keep within the Rules of the House in dealing with an Amendmenet of this sort, and I am obliged to you. Sir, for reminding me that I must do so. My hon. Friends cannot be wholly satisfied with the reply of the Government. With regard to the Amendment on the Paper concerning in-

dustrial and provident societies, which has not been moved, I would point out to the hon. Member for Southampton (Mr. Craven-Ellis) that, although he was not in the House at the time, if Members of his party had been willing to support the Bill introduced in 1929 by my hon. Friend the Member for East Ham, South (Mr. Barnes), we should not have had nearly as many of the frauds and sharp practices under the Industrial and Provident Societies Acts that we are having to-day. In spite of his speech, I hope that the hon. and learned Member for Ashford (Mr. Spens), having listened to what our real views are concerning the national investments board, will withdraw his Amendment, and enable the House to be unanimous on this subject.

Amendment agreed to.

7.28 p.m.

Mr. Assheton

I beg formally to move, in line 4, to leave out from "Acts," to the end of the Question, and to add instead thereof "for this purpose."

Question put, "That the words proposed to be left out stand part of the Question, as amended."

The House divided: Ayes, 125; Noes, 186.

Division No. 62.]	AYES.	[7.30 p.m.
Acland, R. T. D. (Barnstaple)	Griffith, F. Kingsley (M'ddl'sbro, W.)	Maxton, J.
Adams, D. M. (Poplar, S.)	Griffiths, J. (Llanelly)	Messer, F.
Adamson, W. M.	Groves, T. E.	Montague, F.
Alexander, Rt. Hon. A. V. (H'lsbr.)	Hall, G. H. (Aberdare)	Morrison, Rt. Hon. H. (Hackney, S.)
Ammon, C. G.	Hall, J. H. (Whitechapel)	Morrison, R. C. (Tottenham, N.)
Anderson, F. (Whitehaven)	Hardie, Agnes	Muff, G.
Attlee, Rt. Hon. C. R.	Harris, Sir P. A.	Naylor, T. E.
Banfield, J. W.	Harvey, T. E. (Eng. Univ's.)	Noel-Baker, P. J.
Barnes, A. J.	Hayday, A.	Oliver, G. H.
Barr, J.	Henderson, A. (Kingswinford)	Paling, W.
Benson, G.	Henderson, J. (Ardwick)	Parker, J.
Bevan, A.	Henderson, T. (Tradeston)	Pethick-Lawrence, Rt. Hon. F. W.
Bromfield, W.	Hills, A. (Pontefract)	Price, M. P.
Brown, C. (Mansfield)	Holdsworth, H.	Quibell, D. J. K.
Brown, Rt. Hon. J. (S. Ayrshire)	Hollins, A.	Richards, R. (Wrexham)
Buchanan, G.	Jagger, J.	Ridley, G.
Burke, W. A.	Jenkins, A. (Pontypool)	Riley, B.
Cape, T.	Johnston, Rt. Hon. T.	Ritson, J.
Charleton, H. C.	Jones, A. C. (Shipley)	Roberts, Rt. Hon. F. O. (W. Brom.)
Cluse, W. S.	Kennedy, Rt. Hon. T.	Robinson, W. A. (St. Helens)
Clynes, Rt. Hon. J. R.	Kirkwood, D.	Sanders, W. S.
Cocks, F. S.	Lathan, G.	Sexton, T. M.
Cove, W. G.	Lawson, J. J.	Short, A.
Cripps, Hon. Sir Stafford	Leach, W.	Silverman, S. S.
Davies, R. J. (Westhoughton)	Lee, F.	Simpson, F. B.
Davies, S. O. (Merthyr)	Leslie, J. R.	Smith, Ben (Rotherhithe)
Dunn, E. (Rother Valley)	Logan, D. G.	Smith, E. (Stoke)
Ede, J. C.	Lunn, W.	Smith, Rt. Hon. H. B. Lees- (K'ly)
Edwards, A. (Middlesbrough E.)	Macdonald, G. (Ince)	Sorensen, R. W.
Edwards, Sir C. (Bedwellty)	McEntee, V. La T.	Stephen, C.
Evans, D. O. (Cardigan)	McGhee, H. G.	Stewart, W. J. (H'ght'n-le-Sp'ng)
Fletcher, Lt.-Comdr. R. T. H.	McGovern, J.	Strauss, G. R. (Lambeth, N.)
Frankel, D.	MacLaren, A.	Taylor, R. J. (Morpeth)
Gardner, B. W.	Maclean, N.	Thorne, W.
Garro Jones, G. M.	MacNeill Weir, L.	Thurtle, E.
George, Major G. Lloyd (Pembroke)	Mainwaring, W. H.	Tinker, J. J.
Grenfell, D. R.	Mathers, G.	Walkden, A. G.
Walker, J.	Whiteley, W. (Blaydon)	Woods, G. S. (Finsbury)
Watkins, F. C.	Wilkinson, Ellen	Young, Sir R. (Newton)
Watson, W. McL.	Williams, E. J. (Ogmore)
Wedgwood, Rt. Hon. J. C.	Williams, T. (Don Valley)	TELLERS FOR THE AYES.—
Welsh, J. C.	Wilson, C. H. (Attercliffe)	Mr. Bellender and Major Milner.
Westwood, J.	Windsor, W. (Hull, C.)
NOES.
Acland-Troyte, Lt.-Col. G. J.	Grant-Ferris, R.	Pilkington, R.
Allen, Lt.-Col. Sir W. J. (Armagh)	Greene, W. P. C. (Worcester)	Porritt, R. W.
Aske, Sir R. W.	Gridley, Sir A. B.	Procter, Major H. A.
Assheton, R.	Grimston, R. V.	Radford, E. A.
Atholl, Duchess of	Guest, Lieut.-Colonel H. (Drake)	Rankin, Sir R.
Balfour, G. (Hampstead)	Guest, Maj. Hon. O. (C'mb'rw'll, N. W.)	Rathbone, J. R. (Bodmin)
Balfour, Capt. H. H. (Isle of Thanot)	Guinness, T. L. E. B	Rawson, Sir Cooper
Balniel, Lord	Hannon. Sir P. J. H.	Rayner, Major R. H.
Birchall, Sir J. D.	Harbord, A.	Reid, Sir D. D. (Down)
Blair, Sir R.	Haslam, Sir J. (Bolton)	Reid, W. Allan (Derby)
Bossom, A. C.	Heilgers, Captain F. F. A.	Robinson, J R. (Blackpool)
Briscoe, Capt. R. G.	Hely-Hutchinson, M. R.	Ropner, Colonel L.
Brocklebank, Sir Edmund	Heneage, Lieut.-Colonel A. P.	Ross, Major Sir R. D. (Londonderry)
Brown, Col. D. C. (Hexham)	Hepworth, J.	Ross Taylor, W. (Woodbridge)
Brown, Brig.-Gen. H. C. (Newbury)	Herbert, Major J. A. (Monmouth)	Rowlands, G.
Bull, B. B.	Higgs, W. F.	Royds, Admiral P. M. R.
Butcher, H. W.	Hills, Major Rt. Hon. J. W. (Ripon)	Ruggles-Brise, Colonel Sir E. A.
Carver, Major W. H.	Hoare, Rt. Hon. Sir S.	Russell, Sir Alexander
Cazalet, Capt. V. A. (Chippenham)	Holmes, J. S.	Russell, R. J. (Eddisbury)
Channon, H.	Hope, Captain Hon. A. O. J.	Salt, E. W.
Christie, J. A.	Horsbrugh, Florence	Samuel, M. R. A.
Clarke, Lt.-Col. R. S. (E. Grinstead)	Hudson, Capt. A. U. M. (Hack., N.)	Sanderson, Sir F. B.
Clarry, Sir Reginald	Hudson, R. S. (Southport)	Savery, Sir Servington
Cobb, Captain E. C. (Preston)	Hume, Sir G. H.	Selley, H. R.
Colville, Lt.-Col. Rt. Hon. D. J.	Hunter, T.	Smiles, Lieut.-Colonel Sir W. D.
Conant, Captain R. J. E.	Hutchinson, G. C.	Smith, L. W. (Hallam)
Cook, Sir T. R. A. M. (Norfolk N.)	James, Wing-Commander A. W. H.	Smith, Sir R. W. (Aberdeen)
Cooke, J. D. (Hammersmith, S.)	Jones, L. (Swansea W.)	Somervell, Sir D. B. (Crewe)
Cooper, Rt. Hn. T. M. (E'nburgh, W.)	Keyes, Admiral of the Fleet Sir R.	Somerville, A. A. (Windsor)
Craven-Ellis, W.	Lamb, Sir J. Q.	Spears, Brigadier-General E L.
Croft, Brig.-Gen. Sir H. Page	Law, Sir A. J. (High Peak)	Stewart, J. Henderson (Fife, E.)
Crookshank, Capt. H. F. C.	Lees-Jones, J.	Strauss, H. G. (Norwich)
Cross, R. H.	Levy, T.	Strickland, Captain W. F.
Crossley, A. C.	Lindsay, K. M.	Stuart, Lord C. Crichton- (N'thw'h)
Culverwell, C. T.	Lloyd, G. W.	Stuart, Hon. J. (Moray and Nairn)
Davies, Major Sir G. F. (Yeovil)	Locker-Lampson, Comdr. O. S.	Sueter, Rear-Admiral Sir M. F.
De Chair, S. S.	Loftus, P. C.	Tasker, Sir R. I.
De la Bère, R.	MacAndrew, Colonel Sir C. G.	Taylor, Vice-Adm. E. A. (Padd., S.)
Denville, Alfred	MacDonald, Sir Murdoch (Inverness)	Thomas, J. P. L.
Dodd, J. S.	Macdonald, Capt. P. (Isle of Wight)	Touche, G. C.
Doland, G. F.	McEwen, Capt. J. H. F.	Train, Sir J.
Donner, P. W.	McKie, J. H.	Tree, A. R. L. F.
Drewe, C.	Macquisten, F. A.	Tufnell, Lieut.-Commander R. L.
Duckworth, Arthur (Shrewsbury)	Magnay, T.	Wallace, Capt. Rt. Hon. Evan
Dugdale, Captain T. L.	Makins, Brig.-Gen. E.	Ward, Lieut.-Col. Sir A. L. (Hull)
Duncan, J. A. L.	Manningham-Buller, Sir M.	Ward, Irene M. B. (Wallsend)
Dunglass, Lord	Margesson, Capt. Rt. Hon. H. D. R.	Wardlaw-Milne, Sir J. S.
Eastwood, J. F.	Markham, S. F.	Waterhouse, Captain C.
Eckersley, P. T.	Mayhew, Lt.-Col, J.	Watt, Major G. S. Harvie
Edmondson, Major Sir J.	Mellor, Sir J. S. P. (Tamworth)	Wayland, Sir W. A
Elliot, Rt. Hon. W. E.	Mills, Major J. D. (New Forest)	Wedderburn, H. J. S.
Ellis, Sir G.	Moore, Lieut.-Col. Sir T. C. R.	Whiteley, Major J. P. (Buckingham)
Elliston, Capt. G. S.	Moreing, A. C.	Williams, H. G. (Croydon, S.)
Elmley, Viscount	Morrison, G. A. (Scottish Univ's.)	Willoughby de Eresby, Lord
Emery. J. F.	Munro, P.	Windsor-Clive, Lieut.-Colonel G.
Emmott, C. E. G. C.	Nall, Sir J.	Winterton, Rt. Hon. Earl
Emrys-Evans, P. V.	Nicolson, Hon. H. G.	Withers, Sir J. J.
Fildes, Sir H.	O'Connor, Sir Terence J.	Womersley, Sir W. J.
Fleming, E. L.	O'Neill, Rt. Hon. Sir Hugh	Wright, Wing-Commander J. A. C.
Furness, S. N.	Orr-Ewing, I. L.	Young, A. S. L. (Partick)
Gibson, Sir C. G. (Pudsey and Otley)	Peake, O.
Gluckstein, L. H.	Petherick, M.	TELLERS FOR THE NOES.—
Gower, Sir R. V	Pickthorn, K. W. M.	Mr. Spens and Sir Irving
		Albery.

Main Question, as amended, put, and agreed to.

Proposed words there added.

Resolved, That this House, being of the opinion that further provision should be made to protect the public from widespread evils resulting from fraudulent and unscrupulous business and financial operations, calls for the early introduction of legislation to strengthen the law and to amend the Companies Acts for this purpose."—