HC Deb 23 May 1939 vol 347 cc2078-82
55. Mr. A. Henderson

asked the Chancellor of the Exchequer what information he has received as to the intention of the German Government to repudiate Czechoslovak Government debts?

Sir J. Simon

In the course of the conversations referred to in the reply given yesterday to my hon. Friend the Member for Norwood (Mr. Sandys), it has not appeared that there is any intention of repudiating Czecho-Slovak Government debts.

Mr. Henderson

Is the right hon. Gentleman aware of the statement that was made by the French Finance Minister two or three days ago in the French Chamber, in which he stated that the German Government were contemplating the repudiation of these debts and that the French Government proposed to raise the tax on German imports into France?

Sir J. Simon

I have not had my attention called to that, but I think the hon. and learned Gentleman will regard the information I have given him as being more positive than that.

53. Mr. Pethick-Lawrence (for Mr. Dalton)

asked the Chancellor of the Exchequer the purpose of the conversations now taking place between His Majesty's Treasury and representatives of the German Government regarding the disposal of Czech balances held by the Bank of England and other institutions and persons in this country; and whether he will undertake that no part of such balances shall be paid over to the German Government, or to the Reichsbank, or to any subsidiary or agent thereof without the previous consent of this House?

Sir J. Simon

In reply to the first part of the question I would refer the hon. Member to the reply given by my right hon. Friend the Financial Secretary to the Treasury to the hon. Member for North Lambeth (Mr. G. Strauss) yesterday. In reply to the second part of the question, there will, as stated in that reply, be no general release of assets unless and until a satisfactory arrangement has been made in regard to financial obligations due from Czecho-Slovakia to British holders. If an agreement is reached, it will be laid before Parliament in the usual way.

Mr. Pethick-Lawrence

With regard to the first part of the answer, do I understand from the Chancellor of the Exchequer that when the Governor of the Bank of England, in his position as a director of the Bank for International Settlements has to come to a decision, that he makes no report whatever to the Treasury, and that therefore the Treasury and the Chancellor of the Exchequer are ignorant of most important international events that are happening in the Bank for International Settlements?

Sir J. Simon

I think the right hon. Gentleman is referring to a matter which was mentioned at Question Time yesterday, and I am very glad of the opportunity to deal with it in a short answer. There are two quite distinct things. There are, as the House knows, the assets, which have been blocked in this country, held on behalf of and at the order of Czecho-Slovakian institutions or individuals. Those we hold, and except in the case of helping refugees and the like we do not part with them, and we are engaged in seeing whether we cannot, by means of those assets, repay the debts due from Czecho-Slovakia, to provide a fund that will continue to be available for refugees, and to meet the claims of British holders who had, for example, bank balances in Czecho-Slovakia before the German annexation. That is the object of the discussion I have mentioned.

The other matter is, as I understand, an asset—it was gold, I think—which was held by the Bank of England for the Bank for International Settlements at Basle. I should like to make it plain to the House that the Treasury did hear indirectly that it was believed that the German Reichsbank was seeking to get from the Bank for International Settlements an amount of gold with which it had been entrusted by the Czech National Bank; but the House will appreciate that that was a matter quite outside the blocking of Czech assets. Consideration was given in the Treasury to the question whether His Majesty's Government could in any way intervene. We had no desire to see the transfer made, but the matter was quite outside the Czecho-Slovakia (Restrictions of Banking Accounts) Act and it was clear that no such intervention would be possible in view of the formal and explicit undertakings given in the Protocols of 1930 and 1936 as to the immunity of the assets of the Bank for International Settlements from every form of interference and restriction.

Replying directly to the question put to me, it is certainly not the fact that the Governor of the Bank of England reports to the British Government on a matter of this sort. It is a mistake to suppose that the Governor of the Bank of England serves on the Board of the Bank for International Settlements as a nominee of the British Government. That is not so at all. He is there as governor of one of the central banks, just as other eminent bankers who serve on the Board. I had this information, but not from the Governor of the Bank or the Bank. It came, indirectly, I think from a Continental source. As soon as I heard it I considered with my advisers whether there was any way in which we could put restraint on the matter. It was plain there was not, and it is clear that the London bank has got to obey the mandate given to it by its customer the bank in Basle.

Mr. Pethick-Lawrence

Are we to understand that in a matter of this supreme international importance the Governor of the Bank of England acts entirely in his individual capacity, and that he does not officially inform the Government; and even if the Government only heard of it unofficially, how could that justify the Prime Minister in the very sweeping statement he made last Friday that the whole matter of this payment to Germany through the medium of the Bank for International Settlements was a mare's nest?

Sir J. Simon

There is no difficulty in understanding that. The statement that was made in the newspaper was that the British Treasury had agreed to release this sum. That was not true. The statement made by the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) was that the Treasury had agreed to the transfer. He pointed to me and said that I, as Chancellor of the Exchequer, had sanctioned the transfer. I had done nothing of the kind. Nobody had ever asked me for leave and I had not given leave. If it had been within my power I would not have given leave, but the matter was wholly outside my power, and in the circumstances I thought the right hon. Gentleman's statement was a monstrous suggestion to make.

Mr. Sandys

Are we to understand from my right hon. Friend's reply that no Czech assets under the Act will be released without the prior consent of this House?

Sir J. Simon

Without the prior consent of the Treasury. I stated in my first answer that we certainly shall not release any assets at all except for the purposes which I have mentioned, and about which, I trust, there is no difference of opinion.

Mr. Benn

The Chancellor of the Exchequer said he would lay such an agreement before the House. What did he mean by that? Will he recollect that we had an unfortunate experience of his private arrangements for loans for Czechoslovakia, under which money was lost?

Mr. Stokes

Is it not about time that the Government took over the Bank of England?

Mr. G. Strauss

Do we understand that the Bank for International Settlements are holding this gold in trust for the people of Czecho-Slovakia, and by handing it over to another nation that has annexed Czecho-Slovakia they were, in fact, committing a breach of trust, and that our Government, hearing about it and agreeing to the transfer, are, in fact, conniving at a breach of trust committed by the Bank for International Settlements?

Sir J. Simon

If the hon. Member will excuse me he is getting this matter quite wrong. The question was whether the Bank of England, which held a particular asset, had to obey the mandate of its customer the Basle Bank and hand that asset over. I did not know then, and I do not know now, what is the state of the account between the bank in Basle and Czecho-Slovakia. Why should I know? It has nothing to do with me. I told the House perfectly candidly that indirectly the Treasury had some information that this might be the result, and we did everything we could to find out whether we had a means of stopping it, and I do not think the House of Commons could expect me to do more than that.

Mr. De la Bère

Why should the House of Commons be ignored by the Treasury?

Mr. Pethick-Lawrence

Was it candid of the Treasury to inform the Prime Minister that it was a mare's nest? I can understand it being said that what the right hon. Member for Carnarvon Boroughs had said was terminologically inexact, but to suggest that the whole thing was a mare's nest is surely very far from the facts.

Sir J. Simon

I am afraid that I must ask the right hon. Gentleman to look at what was stated. It was stated in the Press and stated in this House that the Treasury had been facilitating, or authorising, or assisting this transfer. There was not a syllable of truth in that statement, and I think my right hon. Friend the Prime Minister was perfectly justified in saying what he did say.

Mr. De Chair

In view of the fact that Germany repudiated the Treaty, along with other Treaties, how can she have any claim on the Bank for International Settlements at Basle, which was set up in connection with the Reparation Clauses of the Treaty of Versailles?

Sir J. Simon

The only issue I am aware of is that a bank in London was called upon to hand over that which had been deposited with it by a bank in Switzerland, and that is all I am concerned with, and, I should have thought, it is all that anyone who understands banking could only be concerned with. London will not remain the banking centre of the world for long if banks do not obey the cheques and orders of their customers.

Mr. Kirkwood

Are the British Government going to hand to British citizens the money which they invested in Czechoslovakia and have now lost?

Sir J. Simon

The object of blocking this money and of the discussions now going on is to secure that Czecho-Slovakian funds here shall be made available to repay debts owing by Czechoslovakia to citizens in this country.

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