HC Deb 17 November 1944 vol 404 cc2319-36

Question again proposed, "That this House do now adjourn."

2.47 p.m.

Mr. Molson

I was just pointing out that, under the present system, there is an elaborate arrangement of exchange discrimination, and I was trying to meet the point put by the hon. Member for Aberavon, who suggested that the depressed state of the Argentine investments was a natural hazard to which all private investment is subject. But, as a matter of fact these railways in the Argentine have been earning quite substantial revenues. I have not the figures completely up-to-date, but quite large profits have been made by the companies, in the Argentine currency. It is the discrimination against the remittance of those profits to this country which is the ground for complaint and it is one in which, I feel, it would be quite proper for the British Government to make representations to the Argentine Government.

Recently, there has been a change, and a change for the better. In the case of purchases of coal, instead of the fixed exchange being 15 pesos to the pound, it has been altered to 14, and, in the case of financial service, it has been altered from 16.15 to 14.15. That is only a temporary adjustment, and it was not intended to give any benefit to the British investor. It was only in order to enable the Argentine railways to bear the burden of an increase in wages which had been, in large measure, brought about by the action of the Argentine Government. I make no complaint; I recognise that, to that extent, the Argentine Government has behaved quite properly. It has recognised that, in imposing an additional burden upon the British-owned railways in the Argentine, it was under an obligation to see that the railways had the resources with which to bear that burden, but that does not indicate that there has been any departure in principle from a system under which the rate of exchange is varied according to the purpose for which the currency is required.

These British-owned railways operating in the Argentine operate under a law passed 37 years ago, which provides that there should not be any taxation levied upon them other than a certain 3 per cent. on the amount of their profits. To introduce a discriminatory exchange is, quite obviously, a breach of that law, under which they have been operating for the last 37 years and which does not expire until 1947. I, therefore, ask that the British Government shall consider whether they could not make representations to the Argentine Government and urge upon them that, as they have so high a reputation for complete fairness and correctness in the service of the debts which they themselves owe, they will treat the debt of the Argentine railways in the same way. We are very large purchasers of the exports of the Argentine, and we are entitled, I think, to expect, in return, that they will be sympathetic to our investments and to our exports.

I have raised this matter for three reasons. First, in order to emphasise that this is not a matter which merely affects a few wealthy men who hold investments in the Argentine railways. It is a matter of having available to the British Exchequer substantial amounts of foreign exchange which will be used for the purchase of overseas foodstuffs. It is also of great importance to our industries, because these British-owned railways were built of British materials and, so long as they are British run there is very little doubt that British engineering products will enjoy a substantial advantage in that market. If it proves to be the desire of the Argentine to acquire these railways, no one will complain, provided that a fair purchase price is paid, but, from the point of view of the maintenance of our exports, which the Government itself recognises to be of the utmost importance, then the sale of these large British overseas investments will, almost certainly, result in a substantial decline in our exports of locomotives, rolling stock and rails to the Argentine.

In the second place, I have raised this in order to obtain, if possible, from the Government, an undertaking that they will use our economic bargaining power to obtain fair treatment for our overseas investors. I have mentioned the case of Costa Rica, and the case of the Argentine. Bath these countries are very largely dependent for their prosperity on the extremely large purchases which we make, and, if we do that, we are entitled to expect some reciprocity. In the third place, I want to urge the setting up of a council for the protection of our overseas investments—something which would not exclude the Council of Foreign Bondholders, but would be wider in its ambit and be of a more official character. I suggest that there should be on it representatives of the banks, the insurance companies, investment trusts and of the Stock Exchange, and also that it should contain representatives of the Treasury, the Board of Trade, the Foreign Office and some hon. Members of this House.

Faced as we are at the present time, with the painful transition from being the greatest creditor nation in the world to being perhaps the greatest debtor nation, it is vitally important that we should take all steps that we properly and reasonably can to ensure fair treatment of our interests overseas. I have tried to show that at the present time the British Government are actually part-owners of these overseas investments, that they are vitally and intimately concerned with their welfare, and I hope, therefore, the Government will be prepared to say that they are willing to take the necessary steps to ensure their defence.

2.56 p.m.

Mr. Shinwell (Seaham)

My hon. Friend the Member for The High Peak (Mr. Molson) usually makes interesting speeches to the House and I frequently find myself in agreement with him, but I must confess that this afternoon I find myself completely bewildered. He has just asked the right hon. Gentleman the Minister of State to agree to the creation of a council to protect the interests of bondholders. I am under the impression that such a council is hardly necessary, in view of the fact that the young Tory group have accepted the responsibility. It is a new role for that young Tory group. I would have thought that my hon. Friend would have come to the House this afternoon and prefaced his observations—some long and, no doubt, necessary observations—by the declaration that the worst thing that ever happened for the people of this country and the interests and trade of this country was the indiscriminate investment of British funds in foreign countries. He did nothing of the sort. He made the position even worse by the somewhat infantile suggestion that, if it had not been for our investments in the Argentine, the steel-workers in the North would have been unemployed. Are we to understand from that observation that, in order to find work for the people of this country, we should send our wealth abroad? Of course not. There was no occasion for that at all.

Mr. Molson

I said that the export of capital to this country has, on almost every occasion, taken the form of the export of capital goods manufactured in this country.

Mr. Shinwell

I accept that, of course. If you are exporting, you are exporting goods, naturally, but is it assumed that you cannot find work for the people in this country without exporting your own wealth? Of course you can, and my hon. Friend knows very well—it is an economic axiom, it is a truism, it is elementary—that the reason we export is because we import, and if we do not secure imports from the Argentine or countries associated in a multi-lateral capacity with the Argentine, obviously, we would not require to export goods to the Argentine. The steel-workers of Middlesbrough and the North-East, the miners in my hon. Friend's constituency of Aberavon and the cotton operatives of this country could find plenty of work to do in our awn land, if, instead of sending our wealth abroad, we had organised our wealth, and, moreover, if we had turned our eyes in the more desirable direction—the direction which I understand is always the happy hunting ground of the Tory Party—

Sir Alfred Beit (St. Pancras, South East)


Mr. Shinwell

May I complete the sentence in case there is any misconception-of the Empire and the Colonies.

Sir A. Beit

My hon. Friend the Member for The High Peak (Mr. Molson) was addressing himself to railways and we have, of course, done most of the work in developing the railways in the Empire, and surely the hon. Member is not objecting to our undertaking capital works in the Argentine as well.

Mr. Shinwell

I could suggest glorious and amazing opportunities for the development of the railway system in our own land. On that subject I have ventured to put my thoughts into writing, and perhaps on some occasion I shall express them in this House. Everybody is familiar with our needs in relation to transport and transport facilities. These are infantile arguments. What is my hon. Friend talking about? It is not a war situation but a post war situation. He is not asking the Minister of State to issue a ukase to the Argentine Government here and now, that existing debts should be paid outright. He is asking for something after the war. Why? Because the only means at the disposal of the Argentine or any other country in the repayment of debt, is to send goods to this country. Therefore, it is a post-war question. Are we prepared to accept goods from the Argentine after the war? That is a matter for future consideration. It depends entirely on the Government's commercial policy. We may require to accept some goods from the Argentine and from some other countries after the war, but I am not at all sure that that squares with the Tory policy on tariffs, on the safeguarding of British industries. We must be mighty careful what we are talking about.

My principal reason for intervening in the Debate—I agree it is a matter which requires very careful consideration and preparation before one does intervene—is to point out that, if we insist upon the repayment of debt, we must be very careful, because it so happens that we in this country owe a lot of money to other countries. I can recall occasions in this House when we had very exciting Debates on the subject of the repayment of the debt to America. I have no doubt that we owe other countries a great deal, and do not let us forget the sterling balances and the issue involved in the holding of sterling credits in this country. All these matters have to be argued out after the war, and they are very serious matters. We might be called upon to embark upon a completely new line of policy after consultation with the various interests.

Mr. Molson

I hope that the hon. Member does not mean to confuse a commercial debt owing by a railway, which is a revenue producing concern, and which is developing the country, with a political debt arising out of the conduct of the war?

Mr. Shinwell

I am going to make a gift to my hon. Friend. I should imagine that a private debt is of as much concern to the State as a national debt. Does not he agree? I observe, to my surprise, that he does not accept that which I should have thought was the traditional Tory view. In any event, as my hon. Friend the Member for West Islington (Mr. Montague) has pointed out to me, it all means exports or imports in the long run. It means bi-lateral and multi-lateral trade. It cannot mean anything else. Therefore, we have to be extremely careful if there is to be any question of repayment of debt. On dealing with defaulters, we might find ourselves in rather an awkward position. I am very much concerned, as I hope hon. Members opposite are, that we should not make the same mistakes in the future. There has to be direction of investments. It must not be left to the individual to decide where he is going to invest. It is a matter for State policy. It has nothing to do with State ownership or nationalisation. It is not ideological or doctrinaire. It is practical common sense that, before people in this country with surpluses at their disposal are permitted to invest abroad, a sense of responsibility must be considered because any action taken must conform to national policy. That is the essential prerequisite of any kind of trade organisation of a satisfactory character in the post-war years.

That is the first step. The second is this: If we are going to invest—and again I agree it must be under State supervision—consider the possibilities in our Colonial possessions and in the Dominion countries. My hon. Friend has been talking about railways in the Argentine. Recently I have been studying the lack of adequate transport facilities in the African Colonies, and the question of how better transport facilities would assist agricultural expansion and, possibly, industrial expansion, and help to eradicate disease and improve social conditions. I have no doubt my hon. Friends opposite will agree with all I have said under that head. Then, let us see to it in the future that hard-earned money raised in this country, is not exported in the wrong direction. I hope that my hon. Friends will consider it from that angle. Finally, let me put this to my hon. Friend. He said that after all it was not only wealthy investors who sought protection. I wonder what he meant by that. Was he bringing in the widows and orphans?

Mr. Molson


Mr. Shinwell

I am glad of that because we are familiar with the argument that the widows and orphans have to be protected. I suggest to him that, on the whole, it is only a very small section of the community who are affected —the investors in the Argentine. All right, it is our duty to protect everybody, high or low, wealthy or poor. That is the responsibility of the State, and I do not take exception to that. But let us not embark upon a policy vis-à-vis the Argentine which means that after the war, in order to protect wealthy bondholders in this country, we have to accept goods from the Argentine which compete with our own industry. I am putting the Tory policy to my hon. Friends opposite—because that is what it is—but it may be in line with the kind of policy we may have to accept after the war, in order to foster our trade. That is the only reason why I have intervened. I beg my right hon. Friend the Minister of State not to pander too much to these wealthy bondholders and to these foolish investors, who, in my judgment, have wasted the substance of this country, instead of using it in the country for the country's good. Instead of using it for the Empire's good, they have sent it to other lands and, in consequence, have found in due course default happening and now they are complaining. I beg him to be extremely careful before he embarks on a policy which is calculated to do more harm to this country than has ever been done by the investors themselves.

3.8 p.m.

The Minister of State (Mr. Richard Law)

I regret it extremely if, by getting up now, I am in any way curtailing this Debate, but I feel that the subject which has been raised by my hon. Friend the Member for The High Peak (Mr. Molson) is of such great importance that the House is entitled to a fairly full reply from the Government. Indeed, I am glad of the opportunity of making a reasonably full reply on these topics and, in spite of the objurgations of my hon. Friend the Member for Seaham (Mr. Shinwell), I still think that this problem, which has been touched upon so ably by the hon. Member for The High Peak, is of supreme importance to this country at the start. My hon. Friend, who introduced the Debate in that extremely able speech, explained why this problem of indebtedness was no longer—whatever it may have been in the past—a problem which affected just a section of the community but was now a problem which affected the community as a whole. I think the whole House is familiar with the problem of the balance of payments which will face us after the war. My hon. Friend touched upon that and gave some figures. I would not commit myself as to their accuracy, because I do not believe they were entirely accurate. However, the fact remains that the broad picture he presented is true, that we have this balance of payments to solve, and upon its solution depends a great many other things. Its solution will be materially helped if we are able, in the future, to collect those foreign obligations which are our just due.

I must say that I am always very much interested by the economics of my hon. Friend the Member for Seaham. I do not know where he gets this crude, Continental mercantilism that he is always expounding with great vigour in this House, but I must say, speaking for my own part, that I do not agree with it and I do not hold with his theories.

Mr. Shinwell

Will my right hon. Friend state specifically what it is with which he does not agree?

Mr. Law

Certainly. As I was saying, I do not hold with my hon. Friend's theories. I believe, like any sensible man, that most economists are wrong, but whoever the economists may be from whom my hon. Friend gets his extraordinary theories, I can only say that they are more wrong than most. Let me say a word to my hon. Friend about his theories. He says it is wrong to export wealth. Well, that may be so—

Mr. Shinwell

No, my right hon. Friend has not listened at all. I did not say it was wrong to export wealth. I said the reason why we exported wealth, was because we imported wealth.

Mr. Law

My hon. Friend did say that it was a foolish thing to export wealth, and that we would have done much better not to have exported it but to have used the wealth in this country and in the Empire. That is as may be. That is arguable but, having exported it, surely there is obvious advantage in getting value for what you have already spent?

Mr. Shinwell

What is wrong with my theory?

Mr. Law

The hon. Member said that because in his view it was unwise to export wealth, therefore it was unwise to bother about these foreign investments.

Mr. Shinwell

My right hon. Friend cannot get away with that. If he wants an argument, he will have to stand up to me. He starts off with the wrong premise. He assumes that I said it was wrong to export wealth. I will make it as clear as I can. What I say is that the reason we export wealth is because we require to import wealth, and we return the value of imports by exporting the wealth of this country. If we did not import, we would not require to export. Is that plain enough for my right hon. Friend?

Mr. Law

I should be only too glad to stand up to my hon. Friend if he will give me any opportunity to stand up at all. Having complained, as I am afraid he did—I think he will find it in HANSARD if he reads it to-morrow morning—that we should not worry about this question of foreign indebtedness, because it was something that concerned only a few people and not the community as a whole, and that exported wealth was, on the whole, wasted wealth, he then developed his argument and stated that if you exported wealth—which on the whole it is unwise to do—instead of using the wealth in your own country, you are now proposing to do a still more unwise thing because you are importing wealth which can only be paid for by exports. Whatever his economics are, he cannot have it both ways—he cannot say that the export of wealth is foolish and the import of wealth is foolish because, if the export of wealth is foolish, the import of wealth must be a wise thing.

Mr. Shinwell

May I put a further point?

Hon. Members


Mr. Speaker

The hon. Member has spoken already at some length.

Mr. Shinwell

I want to make one point perfectly clear. What I said was that if you import wealth in this fashion, it will conflict with the kind of commercial policy you may be required to adopt after the war, and I reminded my hon. Friends opposite of the Tory fiscal policy. What has my right hon. Friend to say about that?

Mr. Law

I might remind my hon. Friend of the fiscal policy of the Labour Party, but that would not get us very far. The fact remains that this question, raised by my hon. Friend the Member for The High Peak, is of great import- ance, not only to a small class of people, the investors themselves, but to the community as a whole, because to the extent to which we are able to get payment of our debts, we are relieved of our balance of payments problem. This is one of the most important problems that faces us. My hon. Friend asked me a number of questions, and asked me to give a number of undertakings. He suggested that it would be a good idea to set up a wide committee, modelled on the Council of Foreign Bondholders, to cover the whole field, and not the narrow field of Government obligations which the Council of Foreign Bondholders covers. My hon. Friend was good enough to make that suggestion to me some days ago, and it has been most carefully and most sympathetically considered, because the Government are quite as anxious as he is, to do everything in their power to collect any obligations that are due. We have examined it, but we have reached the conclusion that the suggestion, attractive as it is at first sight, would not help us particularly to solve the problem.

May I explain why that is? As my hon. Friend pointed out, foreign investment falls, broadly, into two classifications. It comes, broadly speaking, under two headings. In the first place, there are foreign, Governmental and municipal obligations, and, in the second place, there is ordinary commercial investment in a variety of commercial undertakings overseas. That method of classification is not merely a matter of convenience. It is a classification that goes to the root of the problem, and I would like to examine for a moment or two these two classes and show why it would be impossible to apply the same method to both. Let me take, first, the Governmental and municipal obligations. That, as my hon. Friend pointed out, is looked after by the Council of Foreign Bondholders. What does that Council do? I think I could define their activities most briefly and conveniently by reading to the House something which was said by the then Prime Minister on 14th February, 1938, in reply to a Question: 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 a body entrusted by Parliament with the duty of re- presenting 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. … The Council has always maintained the closest contact with the Treasury and Foreign Office, and in the last few years this contact has been continuous. …"—[OFFICIAL REPORT, 14th February, 1938; Vol. 331, c. 1517.] That was the position in 1938, and that is still the position to-day. The Foreign Office and the Treasury maintain the closest interest in the work of the Council of Foreign Bondholders and do, in fact, have the very closest relations with them and regard the Council as being the mouthpiece of the bondholders. I would like to make it clear, because I do not think it was clear to my hon. Friend the Member for The High Peak, that there is no case that I know of, in which political pressure has been put upon the Council of Foreign Bondholders by any Government Department not to take a course of action which the Council wanted to take, or a course of action which they did not want to take. I would like to make that absolutely clear. This should be borne in mind with reference to certain allegations—I think my hon. Friend himself rather implied them, if he did not actually make them—which have been made about the negotiations between the Council and the Brazilian Government.

I recognise that there has been criticism in this country against the relative position allotted in that settlement to certain sterling issues which enjoy specific security. Every assistance was given to the Council to effect a redistribution more in accordance with their views. Unfortunately, neither we nor the Council had a great deal of success, and the terms finally agreed upon were recommended by the Council to the bondholders as the best obtainable, and in the circumstances His Majesty's Government saw no reason to dissent. But the House can rest assured that His Majesty's Government continue to believe in the retention of, and in the recognition of, specific security because although, obviously, it is impossible for bondholders to obtain physical possession of hypothecated revenue, specific security is the only yardstick with which to measure the relative value of external bond issues in a particular country at the time of the debt settlement.

Sir A. Beit

Will there be an opportunity of bringing the matter up again after the war, when we come to effect a final settlement with Brazil?

Mr. Law

I can assure my hon. Friend that we shall do everything we can to get this principle established. We believe in the principle, and His Majesty's Government will do their utmost to convince other creditor countries of the necessity of its retention. I described the mechanism of the Council of Foreign Bondholders which was set up by Parliament. It works in the closest consultation with the Foreign Office and the Treasury which are the Departments mainly concerned, and those Departments give it all the help they possibly can.

Now let me turn for a few moments to the other type of foreign investment—direct investment in commercial undertakings in foreign countries, in railways and other public utilities, oil refineries, oil-fields, general commercial undertakings, and so forth. Why should not we have the same kind of Council or Committee to deal with this problem, just as the Council of Foreign Bondholders deals with Governmental obligations? There are several reasons—I think quite valid reasons—why such machinery is neither desirable, nor even necessary. First, there is a distinction between bondholders and shareholders. In the main bondholders are individuals who are scattered all over the country and who have no kind of organisation behind them. It is very appropriate that they should have some body like the Council of Foreign Bondholders to represent their interests, but shareholders in ordinary commercial undertakings are not in that position at all. They maintain boards of directors, they are organised, their point of view can be put forward and the boards of directors maintain close relations with the Government Departments concerned, if the necessity arises, and with foreign Governments. There is some organised body to put the case of the shareholders.

Secondly, any committee which had to deal with the enormous variety of problems raised by the many commercial undertakings overseas—gas companies, traction companies, telephone companies, and the like—would be, in effect, no committee but a mass meeting. It would be much too cumbrous. Thirdly—I think it is a conclusive argument—local management of industrial undertakings abroad operates under local laws and is in daily contact with competent authorities of the countries concerned. When difficulties arise, as they constantly do, they have to be overcome in the first instance by negotiation between the companies themselves and the foreign Government concerned. Upon this principle—that it should be left to the company and the foreign Government—all Governments, including our own, are very rightly insistent. Certainly, I do not think we should like it if, in the case of some foreign commercial undertaking operating in this country, the weight and authority of the foreign Government were invoked perpetually on all kinds of matters which could be settled more properly by direct contact between the company itself and the local authorities here. It is only when you can prove conclusively that British investment has been discriminated against, and really harshly and unjustifiably treated, that you can bring the Government in, otherwise it is much wiser to deal with the matter locally by the company with the local Government authority on the spot.

I should not like it to be thought from what I have said that there is not a very great deal of consultation all the time between industry and Government Departments. There is almost continuous consultation with one industry or another on these matters and there is scarcely a Government Department which is not involved at some time or other—sometimes the Treasury or the Foreign Office, sometimes the Board of Trade or it may be the Ministry of Fuel and Power or War Transport. If I have, on reflection, to reject my hon. Friend's proposal it is not because the Government is disinterested in the problem that he has raised. On the contrary, the Government are extremely interested in it and fully recognises its importance. If I reject his particular solution it is simply because I do not think, for the reasons I have given, that it would work very satisfactorily.

May I revert to the position of foreign bondholders? My hon. Friend spoke of economic pressure upon recalcitrant defaulters and asked for an undertaking that we would exercise such pressure. I think it is dear what he means by economic pressure. He means that we should deprive the offender of the advantages of the United Kingdom market. In principle that may or may not be desirable—it is open to argument—but in fact we are not always at any given moment, for obvious reasons, in a position to make use of that particular weapon. Indeed, if we did make use of it, the offender would probably find other markets and we should be no better off in the long run. But, if you are going to take action of that kind, you have to get your timing absolutely right and action may have to be delayed in any particular case. I think the House might remember, and people outside the House might remember, an aphorism of Rudyard Kipling, who said once that, if the patience of His Majesty's Government is as long as a summer's day, its arm may be as long as a winter's night, and the fact that we may lie down under treatment that we consider unfair, does not mean that when the appropriate time comes we may not take such action as is open to us to put the situation right.

I would ask the House not to make the mistake of regarding all our debtors as defaulters, even when the letter of the contract that has been entered into is not fulfilled. There are, inevitably, cases where investment has turned out badly or circumstances have gone against the debtor. It is our tradition—I think it is a right and proper tradition—in such cases to talk matters over with the debtor and come to the best arrangement possible. Unilateral action is one thing but where, after discussion, the representatives of the creditors are satisfied that the terms offered are the best available it is not for the Government to prevent a settlement on those terms or to insist on payment in full, still less would it be wise or prudent for the Government to attempt to reopen the whole question after the creditors themselves have settled it and try to extract better terms than they have been able to do. In such cases, where you get a settlement—not a full settlement—by agreement between creditor and debtor, it is wholly inappropriate to speak of default and I think the House ought to recognise that and give full credit to an honest debtor when he has made a real effort to meet his obligations even if he has not met the whole of them. I should like to add how happy I am to have the opportunity of expressing the gratification that has been caused to the Government by the recent offer of the Republic of Guatemala to redeem its external debt at par. I can only hope that debtor Governments in partial or total default will be stimulated by this excellent example.

My hon. Friend made a specific reference to our investments in Argentina, and there are one or two things that I should like to have an opportunity of saying. The decreasing volume of remittances on these investments in recent years—and that from a country which is at present one of the most prosperous in the world—has caused us no little anxiety, for there really seems to be so little excuse for such a state of affairs. I do not propose to dwell on the dilemma created to the British-owned Argentine railways by the decree of 3rd June, which has been replaced by the new arrangement, but even that settlement is limited in extent and in duration and practically does nothing at all to improve the railways' earnings and to meet their fixed charges. The difficulties of the railways date from long before the war and have resulted in recent years in virtually no dividends, and in a progressive deterioration. Some of the difficulties were, of course, common to other railways, indeed to most railways. Others are due to war scarcities. The fact, however, remains that for years the Argentine authorities have contributed nothing whatever in constructive thought to this problem and have shown no disposition to assist the reforms that were as necessary for the convenience of the users of the railways as they were to the restoration of the earning capacity of the lines.

Last year the companies were anxious to explore means of improving the organisation and administration of their properties and to examine the reported Grievances of the travelling public, and they accordingly commissioned three of their directors to examine the position on the spot. They saw me before they left and reported to my hon. Friend the Parliamentary Secretary on their return. They were unable to report that the disposition which they had manifested had been matched by any similar disposition on the part of the Argentine authorities. On the contrary, their request to be allowed to discuss administrative reform has been met by the reply that such questions are reserved for use as a bargaining counter at some later stage and for another purpose. What the railways require is, first, goodwill and support in their endeavour to give an up-to-date service. They want a larger and assured peso income, not only as a reward for their long suffering shareholders—and they have suffered very long—but for the maintenance and rehabilitation of their capital assets. My hon. Friend spoke of the exchange question in the Argentine, and it is an important point, but I think he made perhaps a little too much of it. I would not like the House to think that I have any fair words to say about the Argentine exchange control, which practises a system of variable rates arbitrarily imposed for a number of different reasons, most of which appear to be concerned with domestic production and sale of produce overseas and which undoubtedly hits these railways very hard. But I would like to say that no amount of concession as to exchange rates will compensate for an inadequate peso income.

I ought not to leave this subject without making reference to the plight of the Anglo-Argentine Tramways Company, whose assets consist almost entirely of shares in the Buenos Aires Tramways Transport Corporation. The shares in that Corporation were distributed to the constituent companies, of which this British company is by far the largest, in amounts established by law and in full accord with State and Municipality. That shareholding has already been reduced once by mutual consent, and it is now threatened with a further and serious reduction arbitrarily imposed. Meanwhile, the authorities continue to withhold their authorisation to an increase in fares. The present fares were fixed some 40 years ago. The result is that, in the sixth year of the operation of the Corporation, the constituent companies are still deprived of the statutory interest on their shares and no provision is being made for the conservation or rehabilitation of capital assets. Meanwhile, the public of Buenos Aires continue to travel, somewhat uncomfortably it is true, at a good deal less than cost. These are big issues which must await the intervention of His Majesty's Government until the time when normal diplomatic relations are resumed.

I hope that I have been able to assure my hon. Friend that this problem is one which does really engage our serious attention. We do realise that it is an important problem. We realise its importance not only to the shareholders themselves—and as my hon. Friend the Member for the Seaham Division pointed out, any British subject is entitled to justice if he can get it—but its importance to the community as a whole. I can assure the House that the Government are constantly, by every means in their power, seeking ways of solving, as they arise, these problems which are, by their nature, recurrent.