NATIONAL LOANS BILL. (Hansard, 15 November 1939)

§ Mr. Woodburn
There is no reason at all why the machinery of this Bill should be opposed, provided that the purpose of the machinery is made clear. At earlier stages of the Bill my hon. Friends addressed to the Hosue certain remarks which, as far as I can gather from the replies of the Chancellor of the Exchequer and the Financial Secretary, have received practically no consideration whatsoever. Those points related roughly to the question of interest. We appreciate the Chancellor's statement that it is impossible to state in public his intentions regarding interest and other things, but we do think it desirable that some statement of the willingness of the Government to consider the objections raised from these benches should be made to the House.

§ Mr. Deputy-Speaker (Sir Dennis Herbert)
I must remind the hon. Member that on the Third Reading of the Bill he cannot talk about what is not in the Bill. His observations must be confined to what is in the Bill.

§ Mr. Woodburn
Then I shall refer to Clause 1, which provides that the Treasury may raise the money in such manner as it thinks fit. The objection made to that was that it might include the raising of money by a public loan, to which the public will subscribe, not by money of their own but by borrowing from the joint stock banks. My right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence) made this very clear in his speech, and as far as I can gather neither the Chancellor of the Exchequer nor the Financial Secretary made the slightest reference to that point. There is the tremendous danger of such a huge inflation as took place during the last war, unless the Treasury are quite clear in their minds that they are going to put some restriction on the borrowing of credit from the joint stock banks in order that money might be re-lent to the 740 Government. That brings in the second point, that if there is to be any borrowing from the banks it should be done by the Government direct in such a manner that the Treasury will know exactly what is coming from the banks. In Clause 3 of the Bill it is provided that: The security shall bear such rate of interest as the Treasury may determine. The Government have not yet indicated that they have taken into favourable consideration the suggestions made from this side of the House, that the rate of interest should be such as not to burden the country with a debt which will swamp the whole financial structure of the nation. It may be that those who after the war want some upheaval, some disturbance, some collapse of our civilisation in this country, would welcome such an inflation of the currency as would render monetary values of no account. I hope that that is not the view of the Government: in fact I am sure it is not; but from this side of the House we would like some assurance that the Chancellor of the Exchequer and the Government are prepared to give consideration to these points, and that they will take such steps as are necessary to prevent an overwhelming inflation and prevent the expenditure of the country's resources by payment of unnecessary interest on manufactured credit by the joint stock banks.

Mr. Graham White
It is, perhaps, rather tantalising that the Chancellor of the Exchequer and the Financial Secretary should still leave something to our imagination as to the future course of our finances, but if there has been anything on which opinions expressed in the House have been unanimous, it has been the view that it is essential that the rates of interest should be at a low level. That is indeed a self-evident proposition, because otherwise the Government would be faced after the war with a very heavy burden which would have a retarding effect on the economic recovery of the country. The Government have not contradicted that view or advanced any contrary theory to the low interest rates. Therefore it would be a moderately safe assumption that when the Chancellor opens his box and releases the secrets we shall find that his policy is in accord with the unanimous expression of opinion by 741 the House. On the other subject of inflation, it is indeed the expressed policy of the Government to avoid inflation, if they can. That policy can be carried out only by restriction or rationing or withdrawing from private consumption money as released in the form of genuine savings which may be applied to the loans. I am sufficiently optimistic to believe that when the secrets are released the policy of the Treasury and the Government will be in accordance with the wishes of the House.
This Bill does not set the stage for the issuing of loans, but it does clear the way for them in a thorough and complete manner. Disabilities are removed from the path of those who might find themselves in difficulty about lending money. Clause 3, which makes an arrangement for the exchange of securities, enables the Government, if so minded, to effect a rearrangement of our National Debt. No doubt they can, if they wish. approach the holders of some of the form-of loan which are still carrying heavier rates of interest, and so be enabled to reduce the burdens of the country.

§ Mr. Pethick-Lawrence
When I speak at party meetings in the country and a vote of thanks is moved to me at the end, in returning thanks for that vote of thanks I usually make the very sapient remark that the best vote of thanks they can give to me is to join the party and assist in propagating the good cause. I just pass that suggestion to the Chancellor of the Exchequer at the moment. In the earlier stages on this Bill we have made various suggestions to the Chancellor. I appreciate the difficulties that he has in telling the House and the country exactly what he going to do about the loan when it comes. I can only say that he will be doing what I would like him to do most if he will take to heart the lessons that we have been trying to inculcate in his mind, and carry them into effect when the loan is brought out. If he fails to take those lessons to heart and floats the loans in a way different from that which has been suggested, I can assure him that he will come in for a good deal of criticism hereafter.

§ The Chancellor of the Exchequer (Sir John Simon)
The House has recognised the inhibitions under which I labour, but 742 I wish to do what I can to remove anxiety and to show my appreciation of the suggestions which have been made as to the way in which these powers should be exercised. I shall not attempt to make any new statement. I would rather refer to the speech which I made on the war Budget, which will go to show that some at least of these propositions are not the exclusive proprietary right of hon. Members opposite. I therefore remind the House that on the war Budget I said: While I cannot anticipate the proposals we shall make, I can say that our policy is to borrow from the genuine savings of the people—that is very important—at the lowest rate that we can. That is an essential part of the elaborate plan which is one of the most important parts of our arrangements in connection with winning the war."—[OFFICIAL REPORT, 28th September, 1939; col. 1607. Vol. 351.] The right hon. Member for East Edinburgh (Mr. Pethick-Lawrence) has told us how he replies to votes of thanks at his meetings. In my case I shall conclude by saying,"Now let us thank the gentleman in the Chair for the able way in which he has presided over our proceedings."

§ Mr. Tinker
I do not want the Chancellor of the Exchequer to go away thinking that we are satisfied with what has been said. We still press him to see that he does not yield on the particular point of the rate of interest. This Bill is in the hands of the Treasury. Many on these benches are not completely trustful of the Treasury when it comes to borrowing money. To put it plainly, we think that the Treasury at times adopts a much too benevolent attitude towards financial interests. At a time like this the rate of interest ought to be as low as possible. People must lend at the lowest rate of interest. But the Chancellor of the Exchequer must state what the rate of interest is to be. It is not for him to ask "Will you lend us the money at 3 per cent., 3½ per cent. or 4 per cent.?" He must lay down, quite definitely, that he cannot go above 2½ per cent. If he can fix the limit even lower than that, good luck to him. We are making our protest against any higher limit, before it becomes too late. We have found so often that the Government commit themselves, and then say to their supporters, "We have pledged ourselves now, and if you vote against 743 us it means the resignation of the Government." We want the lowest possible rate of interest consistent with the proper carrying on of the war; and, I repeat, the rate must not be higher than 2½ per cent.