HC Deb 01 February 1938 vol 331 cc40-6
49. Mr. Craven-Ellis

asked the Chancellor of the Exchequer whether, in view of the fact that loans to foreign countries which have been issued in London and quoted on the London Stock Exchange are primarily made with the object of encouraging the export of British manufactured goods, he can say whether it is now his intention to relax the restrictions on foreign borrowing of this nature?

The Chancellor of the Exchequer (Sir John Simon)

With Mr. Speaker's permission, I propose to make a more general statement, at the end of questions today, with regard to our policy on foreign lending. Perhaps my hon. Friend will be good enough to await that statement, which will cover this question.

50. Mr. Craven-Ellis

asked the Chancellor of the Exchequer what is the total amount invested in foreign government bonds in London and quoted on the London Stock Exchange; will he give a schedule of the foreign countries in which these investments have been effected, and the amounts; and will he state which of the investments in the schedule have paid their interest up to date and those which are in default, and from what date?

Sir J. Simon

To give a full and authoritative reply to my hon. Friend's question would involve considerable labour, but I think that if my hon. Friend will refer to the Stock Exchange Year Book and similar publications he will find there the informaion which he requires.

At the end of Questions—

Sir J. Simon

In view of the present condition of our exchanges, I have come to certain decisions on the subject of our policy on foreign lending, and I welcome the opportunity of communicating them to the House. As I have already informed the House, I do not consider that the time has come when consents in respect of foreign issues, as defined under the Foreign Transactions Advisory Committee's terms of reference, can be given indiscriminately, and I refer in particular to those on behalf of foreign governments, foreign local or public authorities, or state-controlled organisations. Applications of this kind will continue to be considered on their merits, along the lines laid down in the Committee's terms of reference and with regard to the general policy of His Majesty's Government. Greater latitude will, however, be allowed until further notice in respect of applications which do not fall within the class which I have mentioned. I refer particularly

  1. (a) to the raising of new money in this market on a long term basis on behalf of British borrowers, in which term I include borrowers in any part of the Empire, for the purpose of acquiring assets or developing enterprise in foreign countries; and
  2. (b) to transactions involving large blocks of foreign-owned securities which were the subject of my predecessor's letter of 12th June, 1933, to the Chairman of the Stock Exchange Committee.
Applications should still be made to the Foreign Transactions Advisory Committee in respect of such proposals, not only because the Treasury will continue to avail itself of the advice so tendered, but because it is essential that we should know what is going on. Such applications will, however, in general receive the sympathetic consideration of the Committee, though I do not, of course, say that in particular cases there may not be reasons of public policy which would lead to their rejection.

What I have just said applies, of course, to long-term lending, and illustrates the desire of His Majesty's Government to encourage a suitable expansion of international capital transactions. I should add that foreign short-term lending of a non-commercial character involves other considerations, and raises special difficulties which render it generally undesirable.

I must take this opportunity of expressing the thanks of His Majesty's Government to the Foreign Transactions Advisory Committee for the valuable services which they have rendered and will continue to render. I am glad to be able to state to the House that the modification in our policy on foreign lending which I have just announced has the full approval of the Committee. The work of the Committee could not have been, and could not be, fully effective were it not for the helpful spirit, which I wish to acknowledge, of the financial community in responding to the requests which it is found necessary to make to them from time to time.

Mr. De la Bère

Instead of lending money abroad, why do you not lend it to agriculture at home?

Mr. Pethick-Lawrence

This is a very important announcement, and it is quite impossible for anyone in this House to express an opinion on it on the spur of the moment. As far as I understand, there are two separate changes which are involved. The first is the relaxation on the prohibition of money to be lent for the purpose of encouraging British enterprise abroad, which, of course, would involve our exports from this country. The second applies, under both (a) and (b), to the purchase of foreign assets. It is in regard to the second that I want to ask two questions. In the first place, what assurance can be given that the indirect effect of this purchase of foreign assets will not be to place money in the hands of those Governments which are re-arming to the disadvantage of this country? The second question is this: Does he not consider that this part, at any rate, of his proposal is very closely related to the proposals of M. van Zeeland, and would it not be better to await the decision of the Government on that larger issue before making this very significant change?

Sir J. Simon

With regard to the last part of the right hon. Gentleman's question, I do agree that the announcement I have made is along the lines of one of the suggestions made by M. van Zeeland, and as such I hope it may be largely welcomed. As regards the earlier part of the right hon. Gentleman's question about this very technical matter of buying blocks of foreign securities, I shall, of course, carefully study the point that he makes, but at the same time I think he will observe that the whole matter is safeguarded by the necessity of an application to the Kennet Committee. Apart from that, I agree with the right hon. Gentleman that it is very difficult to make useful comments on a mere announcement.

Mr. Attlee

Is it quite clear that it is not the intention of the Government to encourage lending to the Powers that are engaged in active aggression?

Sir J. Simon

Clearly not. I took the precaution of providing the right hon. Gentleman with a copy of my statement before questions began, and if he has time to study it he will see quite plainly that the exact opposite is the intention.

Mr. Attlee

I am obliged to the right hon. Gentleman for his courtesy in supplying me with a copy of his statement, and it is just because that point is not quite clear that I ask the supplementary question.

Mr. Petherick

Is it not usually possible to sell any amount of goods abroad if the British investor is prepared to pay for it in the shape of long-term loans? In the last few years has not the restriction on foreign lending been one of the great causes of our recovery, and will the right hon. Gentleman insist on a very rigid application of the new rules, so that as much as possible of the amount of money available is spent in this country and in the Empire?

Mr. A. Bevan

Is it not a fact that the committee referred to would very largely take into consideration economic matters, but are there not involved in this question political considerations on which the House ought to have safeguards?

Sir J. Simon

There are certainly both economic and political issues involved in considering this very difficult and complicated question. On the technical and financial side we have been very greatly served by the work done by the Kennet Committee. That does not in the least discharge the Government from its own responsibility, and, as I have indicated, the Government continues to keep control over every one of these questions.

Colonel Wedgwood

Would the right hon. Gentleman say whether under this scheme he is now allowing British capitalists to invest their money in adventure in Abyssinia on long-term loans, and whether that will not be assisting the dictatorship countries?

Sir J. Simon

No, Sir. I am surprised that my right hon. and gallant Friend should be so suspicious of the whole idea. The general proposal is to enlarge foreign trade, but the circumstances of individual cases to be dealt with are entirely reserved.

Mr. Boothby

Arising out of the various replies, will my right hon. Friend give the House an assurance that his statement does not mean that the Government will not exercise some discrimination as between one country and another in respect of both parts of the proposal?

Sir J. Simon

If my hon. Friend will look at what I have read he will find that that is covered. The Government remain responsible for deciding whether in individual cases the transaction is one which on general grounds can be approved. No one is trying to get away from that. It is an attempt—a useful attempt I hope—to enlarge the possibilities of foreign trade.

Mr. Shinwell

When the right hon. Gentleman says that this is along the lines of the van Zeeland Report, how does he reconcile that statement with the statement made by the Prime Minister that before the van Zeeland Report can be put into operation other governments must be consulted?

Sir J. Simon

I will explain it to the hon. Gentleman. It is certainly the case that there must be mature consideration of the report. But the circumstance that the report makes a particular suggestion which has commended itself for some little time to His Majesty's Government is not any reason why we should not carry it out now.

Mr. Speaker

rose—

Mr. Maclean

I wish to put a supplementary question.

Mr. Speaker

The hon. Member must not speak while I am standing.

Mr. Maclean

I wish to put a further supplementary question.

Mr. Speaker

We cannot turn all these questions into debates. It is quite out of order for the House to carry on in this way. This is not the time for a debate on the subject.

Mr. Maclean

Is it not the case that the statement made by the Chancellor of the Exchequer in reply to a question is of a much more important character, in showing the policy of the Government, than many of the other questions, and since he has delayed his reply to the question on the Order Paper until the finish of Question Time, does it not devolve upon the House to consider his statement as a much more important matter than that raised by any other question on the Paper? Because of that should not additional time be given to put questions to the Government about their change of policy? I now want to ask my question. If the Chancellor of the Exchequer—[Interruption.]

Mr. Speaker

The order of the questions does not arise. The fact that this question was answered at the end of Question

Time does not add to the importance of the question. We cannot have debates at Question Time.

Mr. Maclean

This is a declaration of policy on the part of the Government.