§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
§ 8.15 p.m.
§ Mr. Eccles
There is a small point which I wish to make on this Clause, which deals with payments outside the United Kingdom. Here again, only with the permission of the Chancellor can anyone make a payment to, or place any money to the credit of, anyone outside the United Kingdom. At present, I think that the Bank of England, probably under the orders of the Treasury, takes rather too short a view about the value of lending money outside this country. For instance, suppose a firm in Brazil wants to finance a shipment to New York in dollars. Normally, before the war, it would go to an English bank, and the English bank would finance that shipment. That is going on now. I am glad to say—and the Solicitor-General will know to what extent it is true—that the amount of business which is being brought to London by foreign countries, business which does not touch our shores, is very good. But, of course, the bank must give facilities before financing business outside this country. A commission is earned, but it means that some of our available working capital in dollars is being used outside this country to earn money. That applies also to the entrepôt trade. They, too, need to place money to the credit of people outside this country to buy goods subsequently for resale in another country at a profit to themselves.
At present it is undoubtedly true that severe restrictions are being put on this 432 sort of business. For instance, to go back to the art trade—which I know fairly well because I am a collector—an art dealer in London cannot put any money to the credit of his agent in Milan when there is a book sale in Milan. He is not allowed to do that, yet if he cannot do it he cannot buy anything there which he would afterwards sell, perhaps in New York, at a good profit. Many of the banks find also that they cannot get permission to finance trade between two countries outside the United Kingdom, trade on which they would earn a commission. I suppose that the view of the Treasury is that our working capital in foreign exchange is too small to permit it to be used in these ways. I put it to the Government that the actual operation is based on too short-sighted a view.
The fact of the matter is that the Treasury, by long training, are accustomed to make up their accounts once every 12 months, and they desire that their annual balance sheet should be full of cash. Therefore, they do not like to see British assets engaged for a longer period than 12 months, in trade which probably goes on and on. After a man has finished one transaction, he then wants to use the working capital for another. One of the criticisms of the present exchange control system is that it is being operated by a Department of State which takes too short a view Trade cannot take this annual budget view which the Treasury must take. If the Treasury are to remain the masters of foreign exchange control then they really must learn to take a rather longer view. Were the Chancellor of the Exchequer here, I should have reminded him that he has said that he does not believe in annual balances. He has said that there is nothing sacred in this period of 12 months. I wanted to ask the Chancellor whether he will keep his eye on this and try to get the Treasury to take the same long view in the granting of exchange facilities of this type. In particular, I think it would pay this country to give the entrepôt trade greater facilities for buying abroad for the purpose of re-sale later. As the Chancellor of the Exchequer is not present, perhaps the hon. and learned Solicitor-General could convey this point to him and, perhaps, at some later time, we could have an answer, because it is a matter which affects the business of a great many people.
§ The Solicitor-General
I have listened with great interest to the observations made by the hon. Member for Chippenham (Mr. Eccles). He has dealt with matters concerning which I have to speak rather from a brief, than from any intimate experience, as he and hon. Members opposite will understand. But I will certainly convey what he says to my right hon. Friend. So far as I myself feel able to answer what he says, my answer must be that it is impossible, a priori, to define the circumstances in which currency would be made available for the entrepôt business, or the sort of transaction which the hon. Gentleman has in mind. One can only say that each case would be considered on its merits, and assessed in relation to the national interest and the overriding necessity of conserving our resources of foreign currency to the uttermost extent. Of course, the attitude of the Treasury towards transactions of that type would, naturally, differ as time goes on. Circumstances may become more stringent, or they may become less stringent. Our balance of payment position may become better, or it may become worse. Therefore, it is impossible to lay down any general statement of principle with regard to that type of transaction, beyond what I have already done—that is to say, each case must be considered on its merits.
The hon. Gentleman was speaking on Clause 6 and of the way in which it might be operated But, purely as a Clause —and that is the matter, I submit, with which we are principally concerned at the moment—it is the complement to Clause 5. Clause 5 would be inadequate if it were not supplemented by the further qualifications in Clause 6 which has no other purpose in this Bill, except to make sure that Clause 5 does not leave an easily usable loophole. I submit to the Committee that that really is the scope of this discussion. Clause 6 is inserted in the Bill simply for that purpose. It has, as have all other Clauses, to be used with Treasury permission, subject to such indulgence as the Treasury may grant, and subject to such exemptions as are made under the all important Clause 31 of the Bill. The exemptions necessary to enable transactions such as the hon. Gentleman has in mind to be carried out, in so far as they can be carried out consistently with the national policy in relation to such transactions, must be made under the 434 terms of exemption Orders made under Clause 31. They will, of course, modify the stringent provision of Clause 6. I will not attempt to tell the Committee that the Clause is not stringent. It is stringent, as is Clause 5. It would not be frank to say otherwise. As the House was told on Second reading, the whole framework of this Bill is really hinged on Clause 31. Clause 6 contains a number of very stringent provisions and Clause 31 is introduced to modify the operation of those otherwise stringent provisions, and will be used to make possible transactions of the type which the hon. Gentleman has in mind, so far as they can be undertaken consistently with the national interest.
I had not intended to intervene in this Debate on the point raised by my hon. Friend the Member for Chippenham (Mr. Eccles) until I heard the reply of the hon. and learned Solicitor-General. If I may say so, I thought that the hon. and learned Gentleman showed great courtesy in his reply on this occasion as, in fact, he always does. But I do not agree with his answer. If each case is to be dealt with on its merits, I cannot see these permits getting through in time. If hon. Members are honest with themselves, and with the Committee, they will admit that when they have to deal with a Government Department and they leave off the letters "M.P." from their correspondence, nothing happens for weeks and weeks. But if they put "M.P." on their letters, as I do, they receive prompt attention. Therefore, when the hon. and learned Solicitor-General says, with all earnestness, that each of such cases will be dealt with on its merits, I am afraid it does not impress me. I can see such a sale as the hon. Member for Chippenham mentioned, which would do no harm to anybody, being over and done with before the permission came through. For that reason, I ask the hon. and learned Solicitor-General to see, when he tells his right hon. Friend about the points which have been raised, whether some means can be found for expediting the process in the cases of the kind put forward by the hon. Member for Chippenham.
§ Mr. J. Foster
I would ask the Solicitor-General to make representations to his right hon. Friend in the case of certain transactions capable of being accomplished by the use of sterling which, in the technical sense, need only be out for 435 a very short time. I have been informed, for instance, of two cases in the chemical trade where certain chemical products, which were available in Italy and urgently needed in the Middle East, were refused the necessary sterling payments between Italy and Palestine—it may have been Persia—on the ground that they were not the kind of payments which should be granted the individual permission of the Treasury. If my information is correct, these were cases in which, by putting out sterling for a short time, we could have financed an operation to the advantage of the world in general and our own country in particular, because we should have received the middleman's profit for having arranged this trade. The products involved could not be produced in this country, in the sense that they were in short supply in this country and were not available for export. I hope that, in making representations to the Chancellor of the Exchequer, the hon. and learned Gentleman will bear in mind that such instances do exist. If he thinks that anything could be done about the matter, I should be pleased to send him the details, but I do not wish to waste his time unnecessarily.
§ Mr. Benson
I think that everybody agrees with what the hon. Member for Chippenham (Mr. Eccles) and other hon. Members have said about its being highly desirable that we should be able to finance third party trade which does not touch this country, and on which we should earn a reasonable profit. But I suggest to hon. Gentlemen opposite that, while we all agree that that is highly desirable, they should consider the risk which they are asking us to run. As I see it, it is that sterling shall be put out all over the world, by a very large number of people, in order that these profits may be earned. It does not take a very large leakage of capital to wipe out all the profits that may be earned in 12 months, because fantastic profits are not made on these deals. As a rule, financial dealings in third party trade bear a very low rate of interest. The suggestion is that very large sums of sterling should be put out all over the world, where banks and our finance machinery could not keep track of them, in order that a certain amount of profit shall be made. Because we could not keep track of such transactions, the possibility of using this form of trade to 436 export sterling is so great that, desirable as the profits might be if we could run the risk, I do not think that we can possibly undertake the risk that any wide extension of this third party trade would involve.
§ 8.30 p.m.
§ Mr. Jennings
I thought the hon. Member for Chesterfield (Mr. Benson) had not quite listened to the learned Solicitor-General. The hon. and learned Gentleman said that all these transactions would be dealt with on their merits.
§ Mr. Jennings
I must say, the learned Solicitor-General gave us a very courteous and sensible reply on his brief. He said he would report to the Chancellor the matter raised by my hon. Friend the Member for Chippenham (Mr. Eccles) and that each case would be considered on its merits. So far as that goes, I am quite satisfied. But I would also like him to impress upon the Chancellor that when the Treasury are making up their minds on these cases they should do so quickly. Very often have we heard it said, "I have lost that business, because the Treasury have not made up their minds." I do believe that when expedition is almost as important as judging on the facts of each particular case, their minds should be made up quickly, so that the opportunity will not be lost and we shall get the transaction completed. In contradistinction to the hon. Gentleman the Member for Chesterfield, I think the learned Solicitor-General has no intention of conveying to the Chancellor the idea that we want a wide extension of these transactions. We want, as the learned Solicitor-General suggested, every transaction dealt with on its own merits, but, in addition to that, we want them dealt with expeditiously.
§ Mr. Birch
We have heard a great deal about the way everything will be put right when we come to Clause 31. I would urge this consideration upon the Solicitor-General and the Financial Secretary. We have here a very complex economy, and if we are to live we must do the things at which we are good. The things we are not good at, are such things as growing wet wheat and feeding it to hens. The things we are good at are, particularly, merchanting and dealing in commodities all over the world. It is very largely 437 by those means that we have earned our foreign exchange. What we should wish for our people, is what every mother wishes for her son, that he should do the best-paid work in the world. This type of thing is the best-paid work, and it cannot be done without a certain amount of working capital. That is what is required. It is all very well to say we will deal with each case on its merits. When it is a question of buying something in one country, and selling it in another, by the time the merits have been looked into those merits no longer exist. It is very important that people who are dealing with these things, and who have a reputation for doing so, should have the chance of exercising their art. If we are to cut out all those things in which we have led the world, and go back to peasant crafts and agriculture, we shall be a very poor country. It is vital for us to realise that it is only by doing the things at which we are good, that we shall pay our way.
§ Question put, and agreed to.
§ Clause ordered to stand part of the Bill.