HC Deb 14 February 1938 vol 331 cc1516-8
32. Sir John Mellor

asked the Secretary of State for Foreign Affairs whether he will make a statement specifying the foreign Governments which are in default upon the service of bonds issued in the United Kingdom; whether he can give an estimate of the loss during the year 1937 to British bondholders consequent upon such defaults; and whether he is satisfied that British interests are being adequately represented with a view to obtaining redress?

The Financial Secretary to the Treasury (Lieut.-Colonel Colville)

I have been asked to reply. In answer to the first two parts of the question, I would refer my hon. Friend to the reply given by my right hon. Friend the Chancellor of the Exchequer to my hon. Friend the Member for Southampton (Mr. Craven-Ellis) on 1st February; the answer to the third part of the question is in the affirmative.

Sir J. Mellor

Does the right hon. and gallant Gentleman consider it desirable that the bondholders concerned should have no say in the selection of the members of the Council of Foreign Bondholders, and no control whatever over their activities?

45. Major Hills

asked the Prime Minister whether the attention of His Majesty's Government has been called to the heavy losses to investors, to the revenue, and to this country as a whole which are involved by defaults on foreign loans owned by bondholders in this country; and what action His Majesty's Government have taken or propose to take to protect the interests of bondholders in such cases?

The Prime Minister (Mr. Chamberlain)

His Majesty's Government view with the gravest concern the loss inflicted, both on individuals and on the country, as the result of defaults on foreign loans. They regard the whole subject as one of very great importance, and I am glad to have this opportunity of making a statement upon the matter.

The Corporation of Foreign Bondholders is an independent statutory body, which was incorporated in 1873 and reconstituted by Special Act of Parliament in 1898. The Government recognise the Council of the Corporation of Foreign Bondholders as the body entrusted by Parliament with the duty of representing the interests of the bondholders in all matters arising out of defaults or threatened defaults by foreign Governments, States or municipalities. The corporation has throughout its life rendered the most valuable services, and in recent years its activities have been steadily increasing. I was, therefore, very glad to learn that, upon the conclusion of his term of office as Governor-General of Canada, Lord Bessborough had consented to accept the position of President of the council. Since then the council have been greatly strengthened by the inclusion of the representatives of the Association of Investment Trusts and the British Insurance Association. The council have always maintained the closest contact with the Treasury and the Foreign Office and in the last few years this contact has been continuous.

In the case of a default, or threatened default, His Majesty's Government expect the foreign Government or authority concerned to enter into negotiations with the council. His Majesty's Government always follow such negotiations very closely and give to the council their fullest support. Where no acceptable agreement is reached they are always prepared to consider what further steps can usefully be taken. I consider that the arrangements which I have described afford the best and most practical means of safeguarding the interests of this country in this matter.

Colonel Nathan

Is it not a fact that one of the very practical difficulties that have shown themselves has been that foreign Governments find that the Council of Foreign Bondholders can bind nobody—not even a single bondholder?

Mr. Craven-Ellis

Is it not a fact that British investors in foreign securities have over the last 70 or 80 years lost over £2,000,000,000?

Colonel Wedgwood

In view of the fact that one-quarter of all the losses by British bondholders fall on the Treasury of this country, will the right hon. Gentleman prevent any further losses of this description being made?

Mr. H. G. Williams

Are the Council permitted by their constitution to deal with defaults such as that of the Government of Alberta?

The Prime Minister

Perhaps my hon. Friend will put that question down.

Sir J. Mellor

Might I put to the right hon. Gentleman the question which I put to the Financial Secretary to the Treasury, to which he did not reply?