HC Deb 30 November 1937 vol 329 cc1881-4
52. Sir Nicholas Grattan-Doyle

asked the Chancellor of the Exchequer whether he is aware that three-fourths of all the foreign Government bonds issued in London and quoted on the London Stock Exchange are in whole, partial, or threatened default; and will he ask the Foreign Loans Advisory Committee to keep this condition of affairs continually in mind so as to prevent more British savings being lost by a relaxation of the embargo on flotation of loans to borrowers outside the British Empire?

Sir J. Simon

I do not accept my hon. Friend's estimate, but I am aware that there is a regrettably large number of such loans in default. In reply to the second part of the question, I would refer to the answer which I gave my hon. Friend on 15th June last.

Mr. Craven-Ellis

Can the right hon. Gentleman say what is the title of these foreign investments which are in question?

Sir J. Simon

Not without notice.

Mr. Loftus

Will the right hon. Gentleman, before considering the relaxing of the embargo on foreign investments, consider appointing a committee to investigate the whole case of capital losses incurred by this country through foreign indebtedness?

Sir J. Simon

I am not convinced at all that that would be a suitable course.

Mr. Lansbury

Has the Treasury considered the suggestion of Sir Josiah Stamp, that the best way of settling these questions would be by the establishment of an international bankruptcy court?

54. Mr. De la Bère

asked the Chancellor of the Exchequer whether, as overseas lending creates export trade, and as there have been continued losses of British savings and tax revenues caused by defaults on foreign loans issued in London, he will, in collaboration with the Foreign Office, organise an inter-departmental committee to watch our foreign investments so as to intervene at an early stage, upon threat of default by a foreign borrower, as the Council of Foreign Bondholders has, as shown in its last 10 annual reports, been unable to protect British investors against loss of capital values and income from foreign loans?

Sir J. Simon

The Treasury and the Foreign Office already keep a careful watch on these questions, and His Majesty's Government are always ready to consider the question of intervention if their assistance is requested. An interdepartmental committee such as my hon. Friend suggests is, therefore, unnecessary. I do not know whether my hon. Friend intends to suggest that negotiations on these matters should be taken out of the hands of the Council of Foreign Bondholders. If he does, I am wholly unable to accept such a suggestion.

Mr. De la Bère

Does the right hon. Gentleman not think that the Council of Foreign Bondholders should be given additional power to enable them to safeguard the British public?

Sir J. Simon

I consider that the Council of Foreign Bondholders perform a very useful purpose, and, as I said in the original answer, they are in close touch with Government Departments, and we give them all the help we can.

Mr. Craven-Ellis

Is it not a fact that these losses on foreign investments are the equivalent to making a free gift of British goods, for which the British taxpayers have to pay?

Sir J. Simon

The economic effects of these things we can work out, but I do not think it is a matter of making a free gift.

Mr. Craven-Ellis

Is it desirable to encourage foreign investments?

55. Dr. Leech

asked the Chancellor of the Exchequer whether he is aware that one of the weaknesses in the defence of, British foreign investments is the lack of power of the Council of Foreign Bondholders to make its protests effective, as shown in most cases in its annual reports; and will the Government, in view of this weakness and in relation to fostering the export industries of the North-East Coast, assume in future the duty of looking after the treatment of our investments by the foreign borrowers?

Sir J. Simon

It is always open to the Council of Foreign Bondholders to re quest the support of His Majesty's Government. Such requests for support are in fact frequently made by the council in cases of default on foreign securities, and always receive sympathetic consideration by His Majesty's Government. The conduct of negotiations on these matters must, however, remain in the hands of the authorised representatives of the bondholders, and the answer to the second part of the question is, accordingly, in the negative.

56. Mr. De la Bère

asked the Chancellor of the Exchequer whether he will, in order to warn British subjects against risk of future losses, make it a condition, before relaxing the embargo on the marketing in London of any foreign loans, that all bond flotation concerns which invite subscriptions to the issue here of the paper of foreign public authorities shall give in prospectuses or offers for sale particulars of the whole or part defaults by the respective foreign borrowers on obligations marketed here during the previous 20 years?

Sir J. Simon

I do not think that such a condition would be necessary. It must be left to the market to assess the credit of foreign borrowers in London, and the past financial records of would-be borrowers are easily obtainable by intending investors.

Mr. De la Bère

Would it not be better to lend money at 2½ per cent. to agriculture in Great Britain?

Mr. T. Johnston

Has the right hon. Gentleman seen the remarkable revelations made by the hon. Member for Oxford University (Sir A. Salter) as to the result of investigations made at Geneva as to the complete waste of most of the money at least invested in South American Republics on armaments since the end of the War?

57. Sir N. Grattan-Doyle

asked the Chancellor of the Exchequer whether he will prepare a scheme for Anglo-Brazilian exchange clearing so that, if the proposals by the Brazilian Government in respect of debt default are not of such a kind that the British negotiators can recommend them for acceptance, an Anglo-Brazilian exchange clearing may be ready for the protection of £262,000,000 of British capital in Brazil listed on the London Stock Exchange?

Sir J. Simon

I do not think I can usefully say anything at the present stage, more than that the whole position is being most carefully considered.