HC Deb 19 December 1946 vol 431 cc2297-323

Amendment made: In page 34, line 43, leave out the first "section," and insert "paragraph."—[The Solicitor-General."]

10.8 p.m.

The Financial Secretary to the Treasury (Mr. Glenvil Hall)

I beg to move, "That this Bill be now read the Third time."

The House have spent five days on this Measure, and I have not the slightest doubt that all of us are grateful to realise that our labours on it are nearing their end. Exchange control is a complicated and technical subject about which it is difficult to get excited, and quite impossible to become passionate. Its importance, however, cannot be over-estimated. At this juncture in our national life, it is an essential weapon in our struggle for social and economic recover, and in the future, when things become normal, it will still-we on this side of the House believe -be a necessary safeguard in reserve against any eventualities that may arise.

Looking back over the Debates we have had on this Bill, I have been struck by the fact that, however critical the Opposition have been of some of its provisions, they have clearly considered that the present controls must continue for some time ahead. I believe that this fact is beyond dispute, and should assist in securing for this Measure a smooth passage through another place, particularly when it is remembered that my right hon. Friend, as is customary with him, has been eminently reasonable during our discussions on this Bill, and, where possible, has accepted suggestions from the other side of the House, when justified. Some have been incorporated in the Bill.

As I said, this is a complicated and technical subject. That is self-evident on the face of the Bill, but the width of the provisions which we have had to include in it show something more—that merely to safeguard our exchange resources by controlling the use of foreign currencies is not, by itself, enough. We have to go much further. In order to control our exchange position properly we must control payments, and not only payments, but ultimately the goods to which such payments relate. In the present situation no individual citizen or trader could possibly see the canvas as a whole. Only the Government can have access to the necessary information, and be able to decide, on behalf of the community at large, how much the nation can afford at any given time on any particular type of expenditure. This is the avowed reason for this Bill. It gives the Government the full and necessary powers to act on behalf of the community as a whole, and though hon. Members in various parts of the House have, quite rightly, drawn attention to the drastic powers which the Bill contains—and, of course, we do not complain of that—we believe that Parliament would be failing in its duty if it was not, while eternally vigilant on behalf of the ordinary citizens, at the same time strong enough to see that where drastic powers are essential for the life of the community, those powers should be given.

The effect of the operation of exchange control does not, however, primarily depend on the severity or otherwise of the powers taken. I think the House will agree that they really depend on the efficiency and the commonsense of those who administer them, coupled with the support of the citizens of this country, without which no Government could go very far. As to the use of these powers, I give the assurance that the Government will use the powers which the passage of this Bill will give them, as moderately and as sensibly as it is possible so to do, and they will refrain from using any of them as soon as they cease to be necessary for the life of the community. As Members will have noticed, and with this I will close, Part III of the Bill comes into operation at a date yet to be determined, possibly as from 1st May, 1947, or thereabouts. As from the date of operation the Chancellor of the Exchequer hopes to allow United Kingdom residents, who wish to sell their foreign currency securities, to reinvest the proceeds, on application, in other securities expressed in the same currency, provided the transactions take place through a regular security market like the Stock Exchange and are completed within a limited period. He hopes also to be able to allow dealings in London between residents in such securities. We shall accept no responsibility, of course, for any decision to sell or buy, and any proceeds not reinvested under these arrangements must be accounted for in the usual way. At this stage it cannot be guaranteed that this concession will apply to every security not expressed in sterling, though it is hoped that it will.

The change is timed with the coming into force of the Bill, as I have already indicated, so that the necessary administrative arrangements can be made, and, in particular, so that the provisions of Clauses 15 and 16, which hon. and right hon. Members know deal with the deposit of certificates of title, may apply to the new securities. We have spent a good many hours on this Measure. It is complicated. We are now in the last stages of its passage through the House and I cordially recommend that the Third Reading be given

10.17 p.m.

Lieut.-Commander Gurney Braith-waite (Holderness)

As has been observed more than once earlier in our proceedings, the Christmas spirit is steadily penetrating into this Chamber. While I have some critical observations to offer on the occasion of the Third Reading of this Bill, I shall endeavour to do so in a manner which will not even rustle the mistletoe bough which is now suspended from your microphone, Mr. Speaker. It is customary on these occasions to offer felicitations to the Ministers who have been responsible for the conduct of a great Measure, and this I gladly do. The Chancellor of the Exchequer, as has been observed by one of his colleagues, grows in the virtue of conciliation as the months go by. Whether it be that he mellows with time or the gravity of the impending financial situation, who can tell? At least, we welcome that development.

Of the Financial Secretary, Mr. Speaker, I would use the language familiar at this time of the year in so many homes—the language of the school report: Conduct good. Tries hard Might do better in another form. I am indeed glad, and so I think are hon. Members, on whatever Benches they may sit, that the hon. and learned Solicitor-General is here to take a well deserved curtain call. He has laboured long in the Committee and on the Report stage. He has been affable, amiable, humble and explanatory on all these occasions When we have had differences of opinion, as was inevitable throughout these long proceedings, his brow has remained unruffled save, of course, on those occasions when we have had the intermittent and interminable interventions from the hon. and learned Member for Gloucester (Mr. Turner-Samuels), whose ascent, simultaneously, up the legal and social ladders, I follow with the keenest but very speculative interest.

There are one or two matters which are still outstanding in our discussion of this Bill. An Amendment which we put down was not selected this afternoon, and I hope it will be possible for the right hon. Gentleman, when he winds up the Third Reading Debate, to say something to us on the subject. It was raised during the Committee stage, and concerns the possibility of the lengthening, or broadening, as the case may be, of the list of authorised dealers and depositors under the machinery of this Measure. We are now replacing a Defence Regulation by a permanent Act. During the wartime operation of exchange control, the list of those who were entitled to act in this capacity was necessarily a short one, and we are anxious to see that reputable firms, who are at present excluded, may have an opportunity now of going on the lists both of authorised dealers and authorised depositors. The right hon. Gentleman himself said that he would say something on a later stage of the Bill, but the opportunity did not arise this afternoon on the Report stage, so that, perhaps, he could say something to us now.

On the main difference between the two sides of the House, may I say that it was fought out in Committee, and that the main difference between us is one of the duration of this Measure. We, on this side of the House, felt, and I repeat it, that the Government had ample powers under the Supplies and Services (Transitional Powers) Act, which was passed last Session, which would have taken them up to 1950, which would have been ample time to review the whole question of our foreign exchange in the light of events then, and that there was never any case, at this moment, if ever, for enacting permanent restrictions of this kind. But the Government and the Chancellor, and, presumably, their supporters as well, are anxious that this legislation should be passed as being necessary for all time. If hon. Members take that view, so be it, but may I remind them that, if they do take that view—that exchange controls are going to be a permanent feature—they are making nonsense of the Chancellor's boast about British credit being higher than ever before in our history. If that were so, sterling would need no artificial respiration, even of a temporary character.

On the Second Reading, I made reference to a famous speech delivered just before the outbreak of the recent war, a speech by the President of the Board of Trade, in which the right hon. and learned Gentleman predicted that the advent of a Socialist majority Government must result in a first-class financial crisis, and, in making that quotation, I incurred the displeasure of the hon. and learned Member for Crewe (Mr. Scholefield Allen). I gave the hon. and learned Member notice that I intended to make reference to this very agreeable controversy which we had on that occasion. The hon. and learned Member for Crewe objected to the quotation from the speech of the President of the Board of Trade, and said that that speech on British credit was made before the war. He said that times have changed and so on, but, on the following day, fortunately, perhaps, for me, the President of the Board of Trade addressed a gathering of manufacturers and he said —and this was not in 1938, but only a few days ago—that we were in danger of coming a real cropper. Well, we still have the advantage of the distinguished Law Officer—

Mr. Scholefield Allen (Crewe)

If the hon. and gallant Gentleman will allow me. I have the good fortune to be in possession of the speech made by my right hon. and learned Friend on that occasion. It was made to a body of ex- porters, and the whole purpose of the speech was urging the Federation to do their utmost, in the difficulties of the situation, to extend and expand our imports He was not dealing with any financial situation at all. He did not use the words used by the hon. and gallant Gentleman. What he said was, "If you gentlemen do not further our exports, we shall come a real cropper in a year or two" He was pointing out the urgent necessity for the expansion of exports up to 75 per cent. above the prewar level. I do not think—

Hon. Members

Speech.

Mr. Allen

With great respect, Mr. Speaker, my name has been taken in vain. I have been cited as supporting the President of the Board of Trade. I continue to support him, and I say that the hon and gallant Gentleman opposite has misrepresented the words that he used, a copy of which I have in my hand. I shall be delighted to hand the hon. and gallant Gentleman the whole speech and, as a stockbroker, I think that he will profit by reading it.

Lieut.-Commander Braithwaite

I gave way to the hon. and learned Gentleman, but had I realised how lengthy his speech was going to be, I do not think that I should have done so. I have not taken his name in vain. I quoted what he said on the Second Reading. If I take anybody's name in vain it is that of the President of the Board of Trade. I was addressing myself to the Law Officer of the Crown, but, directly anyone addresses a Law Officer, up pop half a dozen would-be law officers. The point which I was putting to the Solicitor-General was, What is the legal distinction between a first-class financial crisis and a real cropper? It seems to me to be a matter of degree, with the real cropper striking the deeper note of the two.

The whole question of the value of our sterling is often related by the right hon. Gentleman to the gilt-edged market. It is his favourite barometer and, since the passing of the Bank of England Act, institutional investment has been directed, as we all know, into that one channel. What could cause the crisis which is envisaged by this Bill which we are now being asked to pass? What could bring it about? The other day, I was reading some observations by a gentleman who is by no means always right, but who quite often is—Mr. S. W. Alexander. [Laughter.] May I remind hon. Members who mock when his name is mentioned that he is considered worthy and good enough to appear on the platform of the National Savings Movement? As I say, Mr. S. W. Alexander is sometimes right and sometimes wrong, but, at any rate, he is worth studying. He is more often right than the Chancellor of the Exchequer, and at least as good a prophet. This gentleman predicts that before this Parliament has run its course, His Majesty's Government will be borrowing at the rate of 5 and 6 per cent.

I wonder if hon. Members opposite realise, or, for that matter, whether the right hon. Gentleman realises, that, if the gilt-edged market were to fall five points, the big five would probably lose one-third of their assets, owing to the manner in which institutional investment has been steadily pumped in this direction during the lifetime of this Government. Therefore, if there is a danger to British credit, it comes from the tampering and tinkering of the Chancellor of the Exchequer during the past 15 months.

We take leave of this Measure, and it goes to another place. At least the Opposition can claim to have improved this Bill. It is certainly a better Bill than when it was read a Second time, but it is still far from a perfect Bill, and, in my view, is doomed to failure. As I see it. hon. Members opposite are on the horns of a particularly embarrassing financial dilemma. If the right hon. Gentleman is right about the future of our credit, this Bill is utterly unnecessary. If, on the other hand, he is wrong and the crash comes, then the apparatus which we are sending forward tonight will be no more effective to stem the oncoming waves than the proverbial and, may I add, seasonable, snowballs to withstand the heat of the infernal regions.

10.30 p.m.

Mr. Boothby (Aberdeen and Kincardine, Eastern)

I want to utter one or two sentences before we part with this Bill, if only to say how sorry I was to hear the hon. and gallant Member for Holder-ness (Lieut.-Commander Braithwaite) quoting Mr. S. W. Alexander. I did not think I would ever live to see the day when I should hear Mr. S. W. Alexander, the greatest advocate of pure unadulterated free trade this country has ever had, being quoted by the hon. and gallant Member. Never did I think the day would come when I would hear that Gentleman quoted by a member of the Tory Party as a financial authority.

With regard to this Bill, may I say that very few people in this House would deny the necessity for some form of exchange control. What distresses me is to hear people on my own side say they are looking forward to the day when sterling may look the dollar in the face and when all exchange restrictions may be removed. I have put it on record before and I wish to put it on record again, that it was the gold standard that led to our collapse in the interwar years, and I hope I shall never see it again. But the question before us tonight is a very different one. The Government, by the action they are taking, are, instead of using these exchange restrictions for a constructive purpose, to build up the export trade on the basis of mutual, reciprocal trade agreements between ourselves, the Dominions and the Colonies—in which lies our greatest hope—using them in the narrowest and most restrictive sense. I am sure that in the use of these restrictions in the narrowest sense the Government will only succeed in strangling the economic life of this country. I am not arguing that there is no case for exchange control at the present time. But there is the strongest possible reason for extending our trade within the sterling area with the Dominions and Colonies of our own Empire instead of using these controls in the most restrictive way.

10.34 p.m.

Mr. Quintin Hogg (Oxford)

I also resent the restrictive economic policy of the present Government which this Bill represents. This is another example. As time goes on, the effects of this policy will become more and more apparent. I am not so much concerned with that, however, as with the international implications of what is now being done. We are now engaged in putting on the Statute Book, not by way of temporary regulation but as part of our permanent legislative structure, a Measure which, in every respect, contains powers equal to those wielded by Dr. Schacht under the Nazi regime. It is of great fortune to His Majesty's present advisers that that gentleman was acquitted at the Nuremberg trial, so that they will soon be able to appoint him to the Treasury Bench. When they do so that will be another glorious milestone—to quote one of the happy phrases of hon. Members opposite —in the gradual approach to our glorious new National Socialist Britain. What I am concerned with tonight is to point out that National Socialist economics, such as are embodied in this Bill, are inevitably a prelude to economic warfare, and economic warfare is inevitably a prelude to warfare of a more dangerous and fatal nature.

We must assume that the structure created by this Measure will be reproduced in every other country in the world; or at least, we cannot complain it it is. I tried to point out, on an Amendment earlier this evening, the kind of difficulty which will arise. There is no doubt that this Bill will make Great Britain a prison. There is not the slightest doubt about that. What is far far worse is that it is absolutely inevitable that other countries will follow suit, and the various antagonistic restrictionist economies which each country in turn will raise, will create an international situation, similar to that created by Dr. Schacht, whose economic policy the right hon. Gentleman is deliberately pursuing and copying.

10.37 p.m.

Viscount Hinchingbrooke (Dorset, Southern)

I make an apology to the House for not having taken part in the proceedings on the earlier stages of the Bill. The fact is that it was only as the Bill progressed through Committee that it was increasingly borne in upon me how pernicious and tendentious it was. I agree with every word that fell from the lips of the hon. Member for Oxford (Mr. Hogg). It astonishes me that the Government have so far departed from the principles of Bretton Woods. Under that agreement I understood we were to have an international system of freer trade, a removal of restrictions, and opportunities for people to travel and take their goods widely throughout the world. What is there in this Bill consistent with the principles of Bretton Woods? I suggest to the House that there is nothing at all. Has the Foreign Secretary been consulted about this Bill? The right hon. Gentleman made a great speech not long ago which attracted the attention of the whole world. In it he said it was his ambition that anybody should be free to take a ticket at Victoria and go wherever the hell he liked—[HON. MEMBERS: "Order."]—surely it was implicit that a man should be free to travel with his wife and his family, and with his goods all over the world, and that if he wanted to trade in different parts of the world he should be at liberty to trade and bring back to this country the goods that he could obtain.

Hon. Members opposite talk a lot about the 40-hour week. In present circumstances, we on this side think that to be the wrong policy, but that it will come to this country in time, I have not the slightest doubt, and it may come very soon indeed. In fact, hon. Gentlemen are pressing for it. What goes with it? Surely, there goes with it the desire of people to take their paid holidays abroad, to be able to travel freely abroad, and to take part in overseas cruises and the like without restrictions from the Treasury. The Government are binding us to a tiny island economy, such an economy as we in all the history of our country have never faced before. I think the time has come for us to repeat what we did 100 years ago, in 1846, and to abandon protection and abandon restrictions, to cast our bread, upon the waters, and to set forth into the world with our liberal democratic beliefs and faiths.

Mr. Boothby rose—

Viscount Hinchingbrooke

I know that my hon. Friend's views differ fundamentally from my own, and I know that he would never put a question to me that would not tend to separate us, and I want to be friendly with him. The Government are passing a whole series of pernicious Measures, and this is one of the most monstrous. I think that the parties in this country—and I do not except, in certain aspects of policy, my own party—are very largely out of touch with public opinion, which wants freedom for the ordinary man to go about his business without let or hindrance in any part of the world. The party opposite is too wedded to the beliefs and ideas of the bureaucratic planners. I think the time will come and come soon when the people will rise in their wrath and tear down the whole structure of totali- tarian planning and restriction which this Government is forcing upon us.

10.42 p.m.

Colonel Crosthwaite-Eyre (New Forest and Christchurch)

During this Debate, we have had a very varied interest from hon. Members opposite. I would like particularly to say how much I enjoyed the contributions by the hon. Member for Chesterfield (Mr. Benson), and how much he helped me in understanding the contents of this Bill. But what this Bill really comes to, when all is said and done, is how much power are we prepared to grant to the Treasury. We started this Debate, on the Second Reading, by hearing from the Chancellor of the Exchequer, the Financial Secretary and the Solicitor-General, and other hon. Members, that the one thing that was necessary was a safeguard, something to tide us over the immediate emergency. During the Committee stage, which, if I may say so, was rather like the Chancellor's dance of the seven veils, another veil was raised, and it became apparent that this Measure was not to tide over an immediate emergency, but was designed to cover the catching of crooks. By the time it had come, slightly late on Monday night, to the final stage of the Committee, the Chancellor had come clean, and he was prepared to say to hon. Members on this side: I offer them this consolation: if only they could win a General Election, then the prospect would open out that this Measure although permanent in form, might be temporary if they had the power to change it. That is the only consolation which I feel it proper to offer tonight" [OFFICIAL REPORT, 9th Dec, 1946; vol. 431; c. 908.] He went on later, in a more serious mood —and I must say that, unlike the Chancellor, I am careful to get my quotations accurate—to say: that wide powers should be vested in the Treasury, and such powers were theoretically capable of gross abuse; that was the basis on which the whole Bill had been drafted. The position is very simple. The House is faced with a Measure which is capable of intolerable abuse by anyone who may not have the particular philosophy of the present Government. The Solicitor-General told us a couple of hours ago that it was the desire of H.M. Government to enforce upon a company the nomination of a particular director if it will do any thing to help the Government to enforce their policy on a foreign subsidiary. Could anything be more utterly ludicrous than that a directorship should be at the disposal of the Government at any time to help their policy? That surely, at the best, is contrary to the best commercial practice and at the worst is nepotism of the worst order. That is the only possible answer that could be given by anyone who tried to uphold the commercial traditions of this country.

We come now to the great Clause about which the Chancellor of the Exchequer said so much, namely, Clause 31— the Clause that is to make everything smooth and pleasant, the Clause which is going to make this Bill work. The first thing about it is that the right hon. Gentleman refused to accept an Amendment, whereby he would undertake, not only on the part of the present Government but on the part of any future Government, that there should not be any distinctions made between classes of people, or between any two subjects of this country. He refuses to allow this elementary safeguard to be given as to distinctions between classes. In other words, he leaves it open to himself or his successor at any time, to make a distinction between those people whom he may generally favour and those whom he may not. What he is inclined to do is the fulfilling of that which we on this side of the House have said so often would be done—providing jobs for the boys.

At the moment the Government have taken the power to prevent anything going out of the country. Equally they have taken power to decide who lives where, and although I have heard glowing tributes from this side of the House to the Meteorological Office, I have never heard the Chancellor of the Exchequer described as a pathfinder. No doubt he will qualify for that later. The only reasons given by the Government for the powers they are now taking are, first, that these powers were used during the war; secondly, that they will be used with discretion; and, thirdly, that they do not mean to use them at all. These are the three bells which have been rung; these are the changes which have been pealed. As to the question of these powers being used during the war, I should like to say a word or two and I am glad to see the Leader of the House present. During the war we had Regulation 18b, and no one suggests that we should start it again now. The Chancellor of the Exchequer, the Solicitor-General and the Financial Secretary to the Treasury got up, time and again during the proceedings on this Bill, and said no one objected to these powers being used during the war. No one objected to the use of Regulation 18b during the war. [HON. MEMBERS: "Yes they did."] I apologise; certain Members did, but the country generally did not make any objection. The country never objected to. these powers during the war either, but if the Chancellor comes down to this House and says, that because no one during the war objected to the use of these powers, we ought therefore to use them now, I say it is perfectly ludicrous.

The next argument is that the Chancellor is going to use discretion in the application of these powers. We all know the moods of the right hon. Gentleman. He moves from sun to temper, and back again to sun. Now he is conciliatory, now he is turning and rending his supporters behind him. Now he is smiling his approval on this side of the House. Yes, we all know his moods. The other day he said that this was the 22nd year that he had sat in the House of Commons. May I say to him, ''Time marches on"?

Let us not assume that he will be here for ever. Is he really prepared in honesty and justice to leave these powers to someone less capable than himself? We admire him; we may not necessarily admire his successor. If he wishes to have these powers, why could not he have left them under the Defence Regulations, instead of making them a permanent statutory measure? The Solicitor-General has said that he will not necessarily use these powers. If he does not need them, why put them into a permanent Statute? It seems to me that the result of this Bill is that in addition to the Strachey Snoopers we are now going to have the Dalton Detectives and the Hall Harriers. That will be only an addition to the Civil Service, and will do little to help the future of this country.

On the Second Reading, I said that this Bill was negative. It is a negative measure which will help nobody, and will destroy the confidence of the world in the future of this country, and prevent ex- porters and importers in future from doing their immediate job, which is to help to solve the crisis with which this country is faced. Therefore, I hope the measure will be rejected, to show that we have confidence in ourselves and determination to face the future without the obstructions which the Chancellor wishes to put in our way.

10.52 p.m.

Mr. Drayson (Skipton)

I disliked this Bill when it was first introduced, and I dislike it still more tonight, and I am going to vote against its Third Reading. Our discussions this afternoon started, I am told, in the Christmas spirit. I believe that, since then, we have advanced into Boxing Day. This Bill, Mr. Speaker, was foreshadowed in the Debate we had a year ago on the American Loan. It was on that subject that I made my maiden speech. But now, after a year of disillusionment and the failure of the Labour Party to keep its promises, I feel more like a G.I. bride. On the occasion of the discussion on the American Loan a great deal was said about the possibility of starting multilateral trading at the earliest possible moment. In fact, the Chancellor of the Exchequer told us that although he did not foreshadow this Bill, it was his intention to make sterling convertible for current transactions at the earliest possible moment. We understood that under the Anglo-American Loan Agreement sterling for current transactions would be made convertible within a year of the date on which the Agreement had been signed. The Chancellor of the Exchequer informed us at the time that, as a result of the war, our national economy had been distorted and violently twisted out of shape. I do not know what the hon. Gentlemen opposite, and the Chancellor of the Exchequer in particular, think they have been doing with our economy since they took office. It may be that they consider a series of streamlined Bills will streamline our economy. I think that they are, in fact, streamlining our economy almost out of existence.

The two chief criticisms I have of this Bill are these. Many speakers have said that we on this side have recognised that restrictions were necessary until we had got back to peacetime conditions. The Financial Secretary, in his speech a few moments ago, said that he hoped we would soon return to normal conditions, but, nevertheless, it would be comforting to have this Bill on the Statute Book. I suggest that his remarks there were a contradiction. The other aspect, of course, is my profound disbelief that it will be in the immediate future that sterling will in fact be convertible for current transactions. I do not really think there is any need for this Bill whatsoever. Why, if, as the Chancellor contends, our credit is standing higher to-day than it has ever stood before, is it necessary to bring this Bill before the House? I suggest that it is time that the Chancellor realised that there is something better than cheap money, and that is money which is convertible—which all other countries are desirous of obtaining. Perhaps his officials have told him that block sterling is changing hands at the moment in New York at 25 per cent. discount. When we discussed the American Loan, when this Bill was envisaged, we were told that the major part of that Loan was to free our trade and to help re-equip British industry so that we could take our place in the world of commerce and make this measure unnecessary. But, we hear that only 9 per cent. of those dollars have been spent on re-equipping British industry, while the bulk, as we know, has been spent either on food or other American luxuries which we have not in this country.

This Bill has been described as the third weapon in the Chancellor's armoury. One was the Borrowing (Control of Investments) Bill, and now we have this exchange control measure. I would suggest that it is not a weapon, but that it is more like a new instrument in the Chancellor's torture chamber with which he can harass the exporter and the business man who are trying very hard to build up British exports and help Britain to regain its position in the world of commerce. This measure, as other hon. Members have said this evening, carries the full hall-mark of totalitarian economy—[Interruption.] How proud Dr. Schacht would be about this measure to-night if he could see the pleasure with which the Chancellor is contemplating the support of the cohorts behind him to give a Third Reading to this Bill. We are told that Dr. Schacht may finish up in the Argentine, where his services are required by the Government of that country. It might be that his services were required in this country but, with the Chancellor at the helm, there is no need for that. The Chancellor ought to realise that there is something worse than "hot" money, which this Bill seeks to control, and that is "frozen" money, but with Socialism that goes from one extreme to the other, and cannot ever contemplate a middle course, nothing is done. This Bill is nothing more than Fascist finance to bolster up Socialist insolvency.

11.0 p.m.

Mr. Oliver Stanley (Bristol, West)

We are now getting to the final stage—perhaps I should say the penultimate stage—of this Bill, which has followed the usual course of all those Measures introduced by the Chancellor of the Exhequer. "Legislate the Dalton Way" has become a slogan. We had it in the Bank of England Bill, in the borrowing Bill, and now we have it in exchange control. You first have a Bill—which the right hon. Gentleman calls "streamlined" but which everybody else calls "indefinite"—which takes in all powers and leaves all decisions to thousands of boys in hundreds of back rooms. This Bill follows the normal course, although on this occasion I must accuse the Chancellor of the Exchequer of being unduly prolix. He has taken 44 Clauses and six Schedules to do what he could have done just as well, and with as much safeguard to the individual, in three Clauses—one to say that for the purpose of exchange control the Treasury may make any Order they like; the second to say that there will be certain penalties for anyone who breaks it; and a third to say that it will be no defence for anyone charged with breaking an Order to complain that the act in question was committed before the Order had been made.

Just as the form of the Bill has been the same, so has the method of procedure. The Chancellor of the Exchequer, with his two trusty assistants, always reminds me of Horatius holding the bridge, and calling stout Herminius to sit on his right hand and Spurius Lartius on his left. Exactly the same procedure has been followed. When we come to a Clause on which there is to be no concession, then one of the trusty assistants is put up to hold the bridge. Their's not to reason why; their's merely to read out the Treasury brief. And meanwhile Horatius retires to the guard room. On the other Clauses, when there is to be some softening, then Horatius returns, waves a friendly sword, and assures the enemy that whatever the rules, so long as he is on the bridge they will be allowed through safely.

We object to this dichotomy. We object to a situation in which all the powers and all the penalties are in Acts of Parliament which remain permanently on the Statute Book, and all the concessions and exemptions are merely enshrined in HANSARD accounts of Ministers' speeches or, at the best, in Orders which are made by the Treasury. We all agree that under present conditions there must be some measure of exchange control; it is agreed not only by members of all parties but by the whole country—except perhaps for some poor mutt who has read the Chancellor's speeches and taken them at their face value. When the Chancellor says, as he often does, that he fosters the confidence of the moneyed classes more than any Chancellor since Gladstone, the listener may wonder why if Gladstone did not need exchange control the present Chancellor of the Exchequer does.

We all agree that a measure of control must continue for some time. It would seem that in those circumstances there were two alternatives. It was possible to say, "The situation is still so fluid, it is so difficult to know what the immediate future is going to be, so difficult to decide upon the powers we shall want for a longer period, and so impossible to codify at the present moment the regulations under which we have been working for the last few years, that we will postpone the attempt and will continue under the present regulations until conditions are more settled and it is possible to arrive at a more precise estimate." That is one alternative. The other alternative would have been to bring forward now a Bill which gave clear, defined, necessary powers to the Government, drawn on lines that we recognise from the legislation of the past, so that on reading the Bill, the ordinary citizen would know whether he had committed an offence, and under exactly what obligation he was. Neither of these alternatives has been taken by the Chancellor of the Exchequer. He has preferred to bring forward a permanent Bill, which enshrines all the worst features of the transient regulations.

The House has listened to discussions in Committee and on Report upon the various absurdities and anomalies which arise under the Clauses of the Bill as now drafted. Hon. Members must have made their own choice as to which of these Clauses they award the prize. I have hesitated about it a very considerable time. There is Clause 1, which enables the Chancellor of the Exchequer to throw one of our Dominions out of the sterling area, and gives Parliament less opportunity to discuss it. That tremendous economic fact was given last night. There is also Clause 22, under which the Financial Secretary to the Treasury—a man I had always regarded hitherto as being of blameless character—had to admit that he had committed a crime. He had broken the law and laid himself open to prosecution, and it was only thanks to a junior clerk in the Treasury that he was still able to take his place on the Treasury Bench. However, I decided to give the prize to Clause 41. Clause 41, as hon. Members will recollect, is the one which gives the Treasury power to declare that somebody is or is not resident in this country, apparently with no regard whatever to the actual facts of the case. Under this Clause, it is possible for the innocent Eskimo, feeling himself secure in his igloo, which hitherto had been regarded as the Eskimo's castle, to find that the Treasury or the Bank of England has suddenly declared that he is resident in this country, and that unless he hastens to deposit his exiguous stock of blubber and fish-hooks—with, of course, a recognised depositary—he will be guilty of an offence.

We could multiply cases of that kind a hundredfold; in fact it has been done during the Debate. I shall press the point no further. I only say to the Chancellor that we hear a great deal from time to time of these cardiac murmurs which he dignifies in public by the name of a song. Many no doubt have speculated as to the actual tune which is played on that organ. I have heard several speculations, but I incline to the theory that it is the "Eton Boating Song." It is not only, of course, that that song endears itself to the Chancellor of the Exchequer as to many of his colleagues behind him by its association, but he will remember that pregnant refrain: Nothing on earth shall sever The chains that are round us now. What a theme for the Chancellor and for this Bill. But we are really interested in only one song that the Chancellor might sing, and that is his swan song. I mean it in no personal way—we do not want him to go unaccompanied. Like any African chief, we think it would be undignified if he were to go to the shades without the rest of those who now sit with him upon that Bench. Then, and then only, shall we get to a position where we can hope to maintain the stability of the exchange of this country on a sound economic basis, and not really by police control.

We are going to vote against this Bill. The right hon. Gentleman will not be able to tell the House—although I know he would like to—that if this Bill were defeated, he would be left without any powers of exchange control. That is not true. He knows quite well that he has powers of exchange control now, before the Bill is passed, and if this Bill were defeated, he would still have them. Therefore, do not let him attempt to tell the House or the country that by voting against this Bill, we are voting to deprive him of powers that he must have. He knows that would be inaccurate. But those powers come under regulations. Normally, we oppose the continuance of regulations, we prefer powers to be translated into permanent Acts of Parliament, but then we anticipate that they will be put into Bills which are easily comprehensible, which are definite in their effect, and where the offences for which penalties follow are strictly defined. This is not such a Bill, and rather than have permanently on the Statute Book a Bill of this kind, we would prefer to continue, until another Government or other people can put a sane, sensible Bill upon the Statute Book, under the regulations which now exist.

11.13 p.m.

The Chancellor of the Exchequer (Mr. Dalton)

It is difficult at this late stage of this Debate, and at this relatively late hour, to say much that is new about this excellent Measure which I commend on its Third Reading to the House. The right hon. Gentleman the Member for West Bristol (Mr. Stanley) has made, as is usual, a speech full of charm and wit and intellectural penetration—up to a point—and, indeed, I wept with him thinking of the dangers which overhang the igloo of the Eskimo. He moved me very deeply on that matter, and he can be certain that in any regulations issued under this Bill, we shall take particular care that these infant races, in their gradual march forward to the higher levels, are not unduly handicapped by anything that this Measure might authorise or contain. That undertaking, on behalf of the Eskimo, I give in all sincerity. But what about the British people? They need defences, they need something better than igloos. And I am terrified to think what would have happened, whether to igloos or to other defences had this Government not been returned to power at the last Election. Indeed, with such progress as we have made, it would be out of Order to pursue the theme of the igloo too far, Mr. Speaker, but I am quite certain that already the people of this country would be regretting it had they failed to return this Government to power.

I must pass now from this problem of the igloo, to that of the black market in the sterling area of which we have heard so much. I have no first-hand knowledge of the black market in the sterling area, nor, I am sure, have hon. Members opposite. That is all rumour and surmise and second hand. I am quite confident that this Bill is an essential defence against the black market. Perhaps hon. Members opposite have more specialised knowledge of these subjects, but I only know the part the noble Lord the Member for Southern Dorset (Viscount Hinchingbrooke) has played in the National Savings Movement, and it might be said that he would be entitled to a white mark for his activities there, to be set against any black mark he might have earned for any other activities But I would say that I shall be grateful to the noble Lord for any information which he may be able to give me—entirely in confidence—as to what he knows about this. At present I know nothing at all about it.

I can only say that this Bill is intended to prevent a black market in exchange assuming any serious practical importance. It is, as I have said before, a Measure of national financial defence. It is designed primarily to protect our foreign exchange reserves, and indirectly, the value of the currency which we use. It is a very British Bill. It is based upon common sense, upon the trust which one Englishman reposes in another, the confidence which we all have in the probity and the integrity of the Bank of England and the other banks, in the Treasury, and in all persons engaged in lawful and proper business of all kinds. The Bill has powers which must necessarily be very wide, to enable us to catch the miscreant. At the same time it is a Bill which ensures that these very wide powers will be sensibly and practically used by those to whom they will be given. Therefore, I make no apology whatever for the fact that these powers are very wide and very strong, and that the Bill is drawn in such general terms. With conditions as they exist, in this post-war world, it does not matter what Government, what party, is in power—I am making a quite general proposition—it would find it necessary to have a Measure if not precisely like this, very like it as to powers and intent. The right hon. Gentleman had said—although I am not at all sure that those who sit behind him agree with him—that some measure of exchange control is now necessary, and it would be necessary to continue it for some time. In that I agree with him. But as I say, I do not think there is any unanimity of opinion on the benches behind the right hon. Gentleman about it. If there had been a Conservative Government in power at this time, and looking beyond the rather temporary period covered by the Supplies and Services (Transitional Powers) Bill, I am certain a Government of that nature would have needed a Measure not very dissimilar from the one on which we are going to vote tonight.

As to the question of the length of time and the duration of the Statute which has been raised more than once, I have challenged the Opposition to name a period. I have already stated, and I repeat—for it seems to me to be the whole of the controversy—that the party opposite need only win an Election and they can repeal the Measure, and then it will not be permanent. It is our view that so long as this party controls the destinies and the policy of the country, it is not possible to name and date—and again we challenge the Opposition to name one—at which we could be sure that it would be safe then to bring this Measure to an end. That is the point, and when the Opposition was challenged to name a date they finally came down upon the year 1950. That was the best date they could name, and that is immediately before we are due to begin to repay the large interest liabilities in respect of the Canadian and American credits. That, as we have previously said, would be the most undesirable date to select for this purpose. Therefore, I ask the House to give a Third Reading now to a Measure which, so far as we can foresee, will be necessary for an indefinite time, a Measure that can be administered in relation to the ever-changing situation which will develop. We hope there will gradually come an easement of the pressure upon sterling and upon our foreign exchange reserve, and if that comes, then this Bill is perfectly adapted to the lesser pressure, and as an instrument can be handled and used in an increasingly elastic and tolerant fashion, towards transactions, of which, so long as pressure is as extreme as it is now, we cannot afford to be tolerant.

It is, as I say, an essentially British measure. This Government are gradually writing into the Statute Book a number of Statutes which are, admittedly, of a somewhat new type in terms of drafting. We are trusting a great deal to common sense and reason in the administration of wide and strong powers, but it is always in the power of the House of Commons to challenge any misuse of these powers, not merely by such means as prayers or affirmative Resolutions, but by votes of lack of confidence in the Government or by Motions to reduce the salary of the Chancellor of the Exchequer or any other responsible Minister. That is a sufficient safeguard against any misuse of these powers.

In conclusion, I say that this is not a time for unilateral disarmament—I hope the Conservatives will agree with that—in regard to the finances of this country. We cannot go forward into the years that lie ahead, unless we have strong powers to shield and safeguard our dollars, our gold and our hard currencies of every kind which it is essential to handle with the same economy and the same circumspection as a reserve of armed men and of munitions of war. These are now the munitions of peace which we must cherish, and which we must marshal with the very greatest care. Again I say it is our duty to our country, it is our duty to the years that lie ahead of us, and the situations we shall find there, to give the Government these powers. None of us can look into the future but, so far I am concerned, if the House gives me the continuance of these powers, I will seek to use these powers in the national interest, as they were used in the last seven years during the conditions of war. Although we have have passed out of the conditions of war conditions are still serious, and in the critical days that lie ahead His Majesty's Government, and I personally, will do all we can to see that these powers, great and strong as they are, are used with reasonableness and commonsense. I ask the House, therefore, to assent to the Third Reading after this long Debate.

Lieut.-Commander Braithwaite

I am sorry to crash in on the right hon. Gentleman's peroration, but could the right hon. Gentleman say a word upon the matter of authorised dealers?

Mr. Dalton

I was going to refer to it, but the hon. and gallant Member was not at that time in the House. I have a note here, a note especially procured in order to enable me to reply to that question. We have considered the question of the authorised dealers and their definition, and we think that it is much the best—I think the hon. and gallant Gentleman will not disagree with this—that the authorised dealers should be defined primarily by categories and groups, and not by lists of personal names, which might become invidious. The authorised dealers whom we think should be given the authority to deal under the Bill include, first of all, all those who are full members of the British Bankers' Association; secondly, the leading acceptance houses; thirdly, the United Kingdom offices of the banks of issue and the central banks of the scheduled territories—any of the Dominions within the scheduled territories—and finally, so far as foreign currencies are concerned, the British branches of recognised foreign banks. My submission is that it is best to leave the administration in that form of specification by category rather than by a list of names. We have no wish to exclude any reputable and proper person from being authorised to be a dealer, but we suggest that the proper course for him to follow in order to become an authorised dealer is to make himself a member of whichever of these categories and associations it is most suitable for him to belong to. I have no reason to suppose any reputable person would have difficulty in fitting himself into whichever of these categories most suited his line of business. I hope that may be an assurance to the hon. and gallant Gentleman that there is no desire to draw this narrowly, but that we do desire to draw it in an impersonal rather than in a personal fashion.

Lieut.-Commander Braithwaite

It is not a closed shop?

Mr. Dalton

It is not a closed shop, in the sense that no one of repute will be excluded, I think I am entitled to say, from joining whichever is the appropriate

body for him to belong to. After that explanation, I hope the hon. and gallant Gentleman will vote with the Government in favour of the Bill.

Question put, "That the Bill be now read the Third time."

The House divided: Ayes 203, Noes, 79.

Division No. 51.] AYES [11.27 p.m.
Adams, Richard (Balham) Gilzean, A. Proctor, W. T.
Adams, W. T. (Hammersmith, South) Gooch, E. G. Pursey, Cmdr. H
Allen, A. C. (Bosworth) Gordon-Walker, P. C Randall, H. E.
Allen, Scholefield (Crawe) Granville, E. (Eye) Ranger, J.
Alpass, J. H. Greenwood, A. W. J. (Heywood) Reid, T. (Swindon)
Anderson, F. (Whitehaven) Grierson, E. Rhodes, H
Attewell, H. C. Griffiths, W. D. (Moss Side) Ridealgh, Mrs. M.
Awbery, S. S. Gunter, R. J. Roberts, Emrys (Merioneth)
Ayrton Gould, Mrs. B Haire, John E. (Wycombe) Robertson, J. J. (Berwick)
Bacon, Miss A. Hale, Leslie Royle, C.
Baird, J. Hall, W. G. Segal, Dr. S.
Balfour, A. Hamilton, Lieut.-Col. R Shackleton, Wing-Com. E. A. A
Barton, C. Hardy, E. A. Sharp, Granville
Battley, J. R. Hastings, Dr. Somerville Shawcross, C. N. (Widnes)
Bechervaise, A. E. Henderson, Joseph (Ardwick) Silverman, J. (Erdington)
Bellenger, Rt. Hon. F.J. Hobson, C. R. Silverman, S. S. (Nelson)
Benson, G Holman, P. Simmons, C. J
Bing, G. H. C. Holmes, H. E. (Hemsworth) Skeffington, A. M
Blackburn, A. R Hubbard, T. Skinnard, F. W.
Boardman, H. Hudson, J. H. (Ealing, W.) Smith, C. (Colchester)
Bottomley, A. G. Hughes, Hector (Aberdeen, N.) Smith, Ellis (Stoke)
Bowden, Flg.-Offr. H. W Hynd, H. (Hackney, C.) Smith, S. H. (Hull, S.W.)
Bowles. F. G. (Nuneaton) Irving, W. J. Snow, Capt. J. W
Braddock, Mrs. E. M. (L'pl, Exch'ge) Isaacs, Rt. Hon. G. A Solley, L. J.
Braddock, T. (Mitcham) Jay, D. P. T. Soskice, Maj. Sir F
Brooks, T. J. (Rothwell) Jeger, G. (Winchester) Sparks, J. A
Brown, George (Belper) Jeger, Dr. S. W. (St. Pancras, S.E.) Stamford. W
Brown, T. J. (Ince) Jones, D. T. (Hartlepools) Steele, T
Bruce, Major D. W. T Jones, Elwyn (Plaistow) Stewart, Capt. Michael (Fulham, E.)
Buchanan, G. Keenan, W. Stubbs, A. E
Burke, W. A. Kenyon, C. Symonds, A. L.
Callaghan, Jamas Lee, F. (Hulme) Taylor, H. B. (Mansfield)
Chamberlain, R. A Lewis, A. W J. (Upton) Taylor, R. J. (Morpeth)
Champion, A. J. Lindgren, G. S. Taylor, Dr. S. (Barnet)
Cobb, F. A. Lipton, Lt.-Col. M. Thomas, D. E. (Aberdare)
Cocks, F. S. Longden, F. Thomas, I. O (Wrekin)
Collick, P. McEntee, V. L. T. Thomas, John R. (Dover)
Collins, V. J. McGovern, J. Thomas, George (Cardiff)
Colman, Miss G. M. Mackay, R. W. G. (Hull, N.W.) Thurtle, E
Comyns, Dr. L. McLeavy, P. Tiffany, S.
Cooper, Wing-Comdr G Manning, Mrs. L. (Epping) Titterington, M. F
Corbet, Mrs. F. K. (Camb'well, N W) Mathers, G. Tolley, L
Corlett, Dr. J. Middleton, Mrs. L Turner-Samuels, M
Corvedale, Viscount Moody, A. S. Ungoed-Thomas, L.
Crawley, A. Morgan, Dr. H. B Vernon, Maj. W F
Crossman, R. H. S. Morley, R. Viant, S. P
Daines, P. Morris, P. (Swansea, W.) Wadsworth, G.
Dalton, Rt. Hon. H. Morrison, Rt. Hon. H (Lewisham, E.) Wallace, H. W (Walthamstow, E.)
Davies, Edward (Burslem) Murray, J. D Warbey W N
Davies, Harold (Leek) Nally, W. Weitzman, D.
Davies, Haydn (St. Pancras, S.W.) Nichol, Mrs. M. E. (Bradford, N.) Wells, W. T. (Walsall)
Davies, S. O. (Merthyr) Nicholls, H. R. (Stratford) Whiteley, Rt. Hon. W.
Deer, G. Noel-Baker, Capt. F. E (Brentford) Wigg, Col. G E.
Delargy, Captain H. J Noel-Buxton, Lady Wilcock, Group Capt CAB
Diamond, j Oliver, G. H Wilkins W A
Dodds, N. N. Orbach, M. Willey, F. T. (Sunderland)
Driberg, T. E.N. Palmer, A. M. F Willey, O. G. (Cleveland)
Dugdale, J. (W. Bromwich) Parkin, B. T. Williams, D. J. (Neath)
Durbin, E. F M. Paton, Mrs. F. (Rushcliffe) Williams W. R (Heston)
Edwards, John (Blackburn) Paton, J. (Norwich) Willis E
Evans, E. (Lowestoft) Pearson, A. Wilson J. H.
Evans, S. N. (Wednesbury) Peart, Capt T F Wise, Major F. J.
Farthing, W. J. Perrins, W Woodburn A
Field, Captain W. J. Piratin, P Yates V F
Follick, M. Platts-Mills, J. F. F Zilliacus, K.
Fraser, T. (Hamilton) Popplewell, E.
Ganley, Mrs. C. S. Porter, G. (Leeds) TELLERS FOR THE AYES
George, Lady M. Lloyd (Anglesey) Price, M. Philips Mr. Collingdridge and
Gibson, C. W. Pritt, D. N. Mr. Coldrick.
Beamish, Maj T. V. H Grimston, R. V. Prior-Palmer, Brig O
Boles, Lt.-Col. D. C (Wells) Hare, Hon. J. H. (Woodbridge) Ramsay, Maj. S
Boothby, R. Herbert, Sir A. P. Renton, D.
Bossom, A. G Hinchingbrooke, Viscount Ropner, Col. L.
Bower, N. Hogg, Hon. Q. Sanderson, Sir F.
Boyd-Carpenter, J. A. Holmes, Sir J. Stanley (Harwich) Smith, E. P. (Ashford)
Braithwaite, Lt.-Comdr. J. G. Howard, Hon. A. Spence, H. R.
Buchan-Hepburn, P G. T. Hutchison, Lt.-Cm Clark (E'b'rgh, W) Stanley, Rt. Hon. O.
Butcher, H. W. Kingsmill, Ll.-Col W. H. Strauss, H. G (English Universities)
Churchill, Rt. Hon. W. S Lambert Hon. G. Stuart, Rt. Hon J. (Moray)
Clarke, Col. R. S. Legge-Bourke, Maj. E. A. H Taylor, C. S. (Eastbourne)
Clifton-Brown, Lt.-Col. G. Lindsay, M. (Solihull) Teeling, William
Conant, Maj. R. J. E. Lloyd, Selwyn (Wirral) Thomas, J. P. L. (Hereford)
Crookshank, Capt. Rt. Hon. H. F. C. Lucas, Major Sir J. Thornton-Kemsley, C. N.
Crosthwaite-Eyre, Col. O.E. Lucas-Tooth, Sir H. Thorp, Lt.-Col. R. A. F
Cuthbert, W. N. Macdonald, Sir P (Isle or Wight) Wakefield, Sir W W
Darling, Sir W. Y. McKie, J. H. (Galloway) Walker-Smith, D.
Digby, Maj. S. W. Maclay, Hon J S. Wheatley, Colonel M. j
Dodds-Parker, A D Macpherson, Maj. N. (Dumfries) White, J B (Canterbury)
Dower, Lt.-Col. A. V G (Penrith) Manningham-Buller, R. E Williams, C. (Torquay)
Drayson, G. B. Marlowe, A. A. H Willoughby de Eresby, L
Drewe, C. Maude, J C. Winterton, Rt. Hon. Earl
Elliot, Rt. Hon W E. Morrison, Rt. Hon. W. S. (Cirencester) York, C.
Foster, J. G. (Northwich) Nicholson, G.
Fraser, Sir I. (Lonsdale) Noble, Comdr A. H. P TELLERS FOR THE NOES
Gage, C. Peto, Brig, C. H. M. Sir Arthur Young and
Galbraith, Cmdr. T. O. Pickthorn, K. Commander Agnew
Gridley, Sir A. Pitman, I. J

Question put, and agreed to.

Bill accordingly read the Third time, and passed.