HC Deb 04 September 1939 vol 351 cc402-10

Order for Second Reading read.

4.34 p.m.

The President of the Board of Trade (Mr. Oliver Stanley)

I beg to move, "That the Bill be now read a Second time."

I think the House will be so cognisant of the necessity of this Bill that it will be unnecessary for me, in introducing the Second Reading, to make anything but a short speech. The Bill gives rise to a number of questions of legal and financial difficulty, but they are questions of detail which will be more properly discussed upon the Committee stage. Therefore, it will be for the convenience of the House if I describe briefly the purport of the various Clauses. Many hon. Members are no doubt aware that it is an offence under common law to trade with the enemy. Only this morning I published a notice in the Press drawing the attention of traders to that fact and giving them warning of the kind of transaction which might be regarded by the courts as coming within that description. Anyone who had experience in the last War is aware, however, that merely to rely on the powers of the common law in regard to trading with the enemy is not sufficient. It was necessary then and is necessary now to lay down in specific Statutes the offences and the machinery for enforcing the law.

Part 1 of the Bill deals with this question of trading with the enemy and Clause 1 sets out the various transactions which fall within that description. There is nothing in that Clause to which I need call attention. Clause 2 is of some importance because there is found the definition of the enemy. Broadly speaking, it follows the same definition as that in the Bill which I introduced the other day in relation to import and export restrictions. There are one or two points to which I should like to call attention. A person is not to be regarded as an enemy for the purpose of this part of the Bill merely because he is an enemy subject. That is to say, a German or Austrian or Czech refugee does not ipso facto, although he is still an enemy subject, become an enemy for the purpose of Part 1 and it does not become an offence to trade with him; on the other hand hon. Members will realise that I shall have power to proclaim specific individuals who are enemy subjects as coming within the definition of enemy. There is power for me to specify by order any person who does not fall within the categories in Subsection (1) of the Clause and declare that person to be an enemy and to prevent trading with him. This is a recrudescence of what was known in the last war as the statutory list procedure. There may be in neutral countries people of enemy birth, or neutrals, of such close affiliations with the enemy country that trade with them would be almost certain to inure to the benefit of the enemy. In the last war this was the practice and powers were taken to issue statutory lists of people in various countries with whom trade was forbidden.

Clause 3 merely deals with inspection and supervision of businesses where we have reason to suspect that trading with the enemy is going on. Clauses 4, 5 and 6 refer to particular transactions which might be carried out such as the transfer of negotiable instruments, and of securities to enemy countries. That completes the first part of the Bill dealing with trading with the enemy.

Clause 7 raises an entirely different point. It gives power to appoint custodians of enemy property and to vest in them enemy property in this country. Before I go into the details of the Clause, I would make one general observation. I believe it was a fact at the time of the introduction of similar machinery in the last War that there was criticism on the grounds that this was for the first time the confiscation of property of enemies during time of war. That criticism arises from a certain misconception of the primary function of enemy property custodians. Everyone will agree that the property of enemies of this country cannot be allowed to accrue for the benefit of the property-owner during the course of the War. The purpose of the Clause is not to confiscate the property but to take it over and to conserve it with a view to some arrangement being made to dispose of it when hostilities have terminated. At the end of the last War much of such property cancelled out on each side. In order to make that point clear we have introduced, at the beginning of the Clause, words which show clearly the purpose for which this machinery is being elected.

We shall appoint custodians separately for England, Scotland and Northern Ireland, and Clause 7 sets out the powers which will be conferred upon them and the duties they will perform. There is however one important point in Clause 7 to which I think I ought to call attention. Under this Clause the definition of enemy property—property which will vest in these custodians—is that for the time being belonging to or held or managed on behalf of an enemy or an enemy subject, but I would call attention to the fact that I can prescribe by order what steps are to be taken with any class of enemy property and although in terms this would allow me to make an order which vested in the custodians the property of, say, those refugees to whom reference has been made earlier during our proceedings, I think it is only right to tell the House that if I get the power under this Clause my intention is to issue a general order which will not vest the property of such people in the custodians although it will rightly impose upon them the obligation to register with the custodians the extent of their property. That will not prevent me making an individual order where I have reason to believe that someone who is an enemy subject might also rightly be regarded as an enemy in fact.

Clause 8 deals with a different kind of point, largely of machinery. Its purpose is to enable any clearing arrangement which may now be in existence to continue if we find ourselves at war with a country with whom we have a clearing arrangement. It is largely a machinery Clause to enable payment still to be made to the clearing office, The House is aware that we have no clearing arrangement with Germany, and therefore, as far as Germany is concerned, the Clause will have little effect. The other Clauses in the Bill are merely machinery Clauses, to which I do not think it is necessary at this stage to call attention, and I hope that with that explanation the House will be prepared to give me powers which I think are recognised by everyone to be essential in the conduct of a war.

4.43 p.m.

Mr. Pethick-Lawrence

I have listened to the right hon. Gentleman's speech with careful attention, and in general with complete approval; but I should like to put before the House one or two points with regard to the Bill. I do not think there will be any difference of opinion in any part of the House as to the need for some Measure of this kind. The experience of the last War showed that the Common Law alone was not sufficient to prevent such trading with the enemy as would be deleterious to the interests of the country; therefore, subject to the proviso in Clause 2, which is very careful to make it clear that the mere fact of a person being an enemy subject does not make him an enemy, I do not think any exception whatever will be taken to this part of the Bill. But when we come to what the right hon. Gentleman called the second part of the Bill, dealing with the property of enemies in enemy countries, he rightly points out two facts. In the first place, in the Bill as drafted, enemy subjects are included where they were excluded from the first part of the Bill and, in the second place, there is the empowering provision which enables the President to make Orders. I was not quite clear, when I first read the Bill, what that involved. The right hon. Gentleman has now explained that it does not mean that he may or may not make an Order which covers all these people. The Order will be of a rather vague character with regard to persons who are enemy subjects, but in the case of any person who is in the first instance to be regarded as an enemy subject a good deal of discretion is left in the power of the President, and it is to that point that I want more particularly to address my remarks.

This present emergency differs from the Great War of 1914–18 in two particulars. In the first place, broadly speaking, during the previous War all the subjects of Germany and Austria, and the other Powers allied against us, were potential enemies, whereas of course, as we have heard from the reply of the Home Secretary earlier on, it is evident that there are resident in this country many persons who are technically enemy subjects and are more enthusiastically with us in the prosecution of the war than any-one else. We have to take that entirely new fact into consideration. The other new fact is that we are not carrying out legislation of this kind for the first time, because we have the experience of the late War present in our minds. As far as I can see, the proposals that the right hon. Gentleman makes with regard to those who are enemy subjects in our midst who are not in any sense our enemies seem to me adequate. The only point is that, of course, we shall have to watch how he carries out his undertaking, because it is naturally of a vague character, and we can only hope that our confident expectation that he will carry it out in the spirit of a reasonable attitude towards these people will be justified. I have no reason to think and I am not suggesting that it will not be justified, but it is the business of the House to exercise a very considerable watching brief to see that all these people, of whom we are all thinking deeply and anxiously, will be properly safeguarded, while we have not the smallest wish, in consequence of that, to allow any improper persons to slip through the fingers of the President of the Board of Trade. I confess that he has a difficult task in the matter.

In regard to the other more general point, I am glad the right hon. Gentleman made the statement that he did at the beginning, pointing out that we are not confiscating enemy property. The provision made in the last War was this: Although nominally we were doing what the President proposes to do in this Bill, to a very large extent the good intentions in that matter did not work out in practice, for two reasons, first of all because the people who took charge of enemy businesses did not always carry through their trusteeship with any great discretion, and a great many bona fide businesses belonging to enemy subjects long established in this country were ruined by the treatment that they received under the management and control of the persons in charge of them. I hope very much that great care will be taken in the present instance to see that nothing of that sort happens again. In the second place, enemy subjects in this country, many of whom may have been very friendly, did lose a great deal of their property owing to the currency exchange after the War. I happened to be Financial Secretary at a time when the matter became very prominent, and I am bound to say that I came to the conclusion that the main fault in that matter—at any rate, directly —was not ours, but was the fault of the German Government—though the hands of the German Government were largely forced by the currency depreciation which took place in Germany, and for which the German Government had only a partial responsibility.

I hope, therefore, that the spirit of the right hon. Gentleman's remarks to-day will be loyally observed. We are not dealing, in all cases at any rate, with the kind of people with whom this country has any quarrel. We are dealing, in some of these cases, with people who are quite good friends of this country, who have been in the past, and will be in the future, quite prepared to deal honestly with us. As has been said several times in this House, we are not really at war with the German people, except in so far as we are forced to be by those who are ruling Germany at present. Therefore, I put in a plea that the right hon. Gentleman shall do all he can to see that the expressions he used with regard to the non-confiscation of this property and with regard to the fair treatment that will be given, both during and after the war, shall be most carefully observed, and shall be carried through in the spirit which, I am quite sure, he intends, at the present time, that it shall.

4.52. p.m.

Mr. Foot

The right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) has said everything that needs to be said about the general principles of this Bill. I rise only to ask one or two questions on matters of interpretation. The President of the Board of Trade referred to Clause 2. Subsection (2) of that Clause says: The Board of Trade may by order direct that any person specified in the order shall, for the purposes of this Act, be deemed to be, while so specified, an enemy. I take it that "any person" is intended really to mean any enemy subject, and that it is not intended to take any general power to declare any person whatever to be an enemy. Secondly, I want to ask, what is the definition of "enemy subject"? The phrase is used in this Clause and in Clause 15—the definition Clause—where it is said 'enemy subject' means—

  1. (a)an individual who, not being either a British subject or a British protected person, possesses the nationality of a State at war with His Majesty, or
  2. (b) a body of persons constituted or incorporated in, or under the laws of, any such State."
What view does the Board of Trade take with regard to natives of Bohemia and Slovakia? I think I am right in saying that we have never recognised the German overlordship of those territories. It would be of interest to know what exactly is the view of the Government. Are natives of those territories regarded as being enemy subjects within the meaning of Clause 2 and Clause 15? It is important to know whether the powers which the President of the Board of Trade is taking to proscribe anyone are going to apply automatically to people from those territories. I do not think the Minister referred to Clause 4, which deals with the "transfer of negotiable instruments and choses in action by enemies." The thing is not entirely clear. Would it not be an advantage if an Amendment were made, providing that this should apply only to the assignment of choses made by or on behalf of an enemy before the outbreak of hostilities? It seems to me that we might have some confusion as the Clause stands, and if the assignment had in fact taken place before the outbreak of hostilities it is difficult to see why we should have to have the sanction of the Treasury before the rightful payment is enforced.

4.56 p.m.

Mr. Stanley

The right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) raised a point of very considerable importance when he said, from his great experience, that he knew of cases in the last War when the good intention that this should not amount to confiscation had been, in practice, spoilt by the way in which enemy property was administered. I agree that we shall not be acting in consonance with the declaration of principle that this is not confiscation unless the properties are managed or disposed of in the spirit of trusteeship. I have no doubt that the trustees to be appointed, who will be responsible people, will have that in mind in all their dealings with this property.

The hon. Member for Dundee (Mr. Foot) inquired about the phrase "any person" "Any person" means what it says—any person, not necessarily an enemy subject. The whole point is that this statutory list should cover persons who are neutrals but whose contacts with the enemy we know are so close that to allow them to trade would be in fact to allow trading with the enemy. The Czechs are regarded as enemies, because they live in a territory which is under the control of an enemy country. With regard to the point the hon. Member raised on Clause 4, I will certainly look into it before the Committee stage, but he will see that this is not a prohibition. It appears to me that, even if you put in something about the beginning of the war, somebody would still have to look into every transaction which took place before the beginning of the war, in order to make certain that it was not undertaken in anticipation of the war, in order to avoid legislation of this kind. I think that in practice we should come back to the position which exists under the Bill, but I will look into the matter.

4.58 p.m.

Mr. Pethick-Lawrence

With regard to the position of Czechs, I would point out that those who have come over to this country since the occupation of Czechoslovakia by Germany have German passports, but that there are people who were here before the German occupation, who have Czech passports. What is the position of those?

Mr. Stanley

While they would not necessarily be treated as enemies, I understand that, technically, they would be regarded as enemy subjects. But I will look into this matter, and see that I am in a position to give a definite answer at a later stage.

4.59 p.m.

Mr. David Adams

Regarding Clause 6, is there not just a possibility of a loophole being given to persons trading with neutrals who may desire to purchase enemy currency or securities in one form or another? Sub-section (2) states: ''the expression 'enemy currency' means any such notes or coins as circulate as cur- rency in any area under the sovereignty of a Power with whom His Majesty is at war, not being an area in the occupation of His Majesty or of a Power allied with His Majesty Is there any chance of a loophole being given for trading indirectly with the enemy in an area occupied by a Power allied with His Majesty?

5.1 p.m.

Mr. Stanley

I can reply only by leave of the House. I will look into the matter, but I should have thought that the object of this is to say to an ally, who might occupy a part of Germany, that francs could circulate in that particular part of Germany which had been occupied, and it is therefore to prevent francs being circulated in an enemy country. I do not believe that such a difficulty would arise.

Question, "That the Bill be now read a Second time," put, and agreed to.

Bill read a Second time.

Bill committed to a Committee of the whole House for To-morrow.—[Captain Dugdale.]