HC Deb 08 March 1946 vol 420 cc728-38

Motion made, and Question proposed, "That this House do now adjourn— [Mr. J. Henderson.]

3.58 p.m.

Captain Marples (Wallasey)

The question which I wish to raise on the Adjournment is that of British holders of Japanese bonds. The reason why this matter is being brought up is because of the unsatisfactory reply given by the Chancellor of the Exchequer to my hon. Friend the Member for Twickenham (Mr. Keeling) on 26th February. My hon. Friend asked the Chancellor of the Exchequer: What are the prospects of the resumption of service of the Japanese loans? to which the Chancellor replied: Not very bright, I should imagine." My hon. Friend, with that tenacity of purpose for which he is well known, asked the supplementary question: Will the Government do everything in their power to promote the resumption of payment? The Chancellor of the Exchequer ignored that question, and then proceeded to say: I cannot imagine why any Britisher should own Japanese bonds at all."— [OFFICIAL REPORT, 26th February, 1946; Vol. 419, c. 1749-50.] I have no Japanese bonds, and I have no client who owns Japanese bonds. I propose to deal with two aspects of these loans today. The first is with the history of the Japanese loans, and the second with the results of the answer— the uncivil answer▀×given by the right hon. Gentleman.

It being Four o'clock, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, "That this House do now adjourn."— [Mr. J. Henderson.]

Captain Marples

The history of the Japanese loans can be dealt with in two parts: firstly, the issues for cash, and, secondly, the conversion loans. The issues for cash took place in 1899, 1907, 1908, 1909 and 1910. The House might like to be reminded that the Anglo-Japanese Alliance was signed in the early part of this century and, therefore, these cash issues and loans were to a friendly Power, because at that time we had an alliance with Japan. The Japanese in the first world war helped us considerably, particularly in naval affairs. A friend of mine told me last night that when he was coming through the Mediterranean during the First World War, he was very grateful for the assistance of a Japanese destroyer. I think that establishes that the original sums were advanced to a friendly Power.

The conversion took place in 1924 and 1930, under the auspices of a Labour Government and a Labour Chancellor of the Exchequer. I have not heard of any objection to that by the then Chancellor of the Exchequer, unless the right hon. Gentleman has gone through the Treasury files and can produce an objection this afternoon. The present holders of these Japanese bonds are not only large financial concerns in the City but trust funds which pay annuities to widows and orphans, and assurance companies which also pay money out to annuity and life policy holders. Why the right hon. Gentleman should think fit to insult them, particularly in view of the appeal made by the Prime Minister for unity, passes my comprehension. Japanese bonds have been marked down 20 per cent in the City and foreign bonds have been marked down by millions of pounds in sympathy. That enabled the Brazilian Government to make more advantageously sinking fund purchases of its own bonds here, and may have resulted in this country losing foreign exchange.

On the one hand we have the President of the Board of Trade appealing for more foreign exchange by way of exports and, on the other hand, the Chancellor of the Exchequer, in a very quick and snappy answer, destroying probably hundreds and thousands of pounds' worth of foreign exchange. I thought that his utterance was irresponsible and unpardonable. It gives the maximum encouragement to foreign countries to default. What its effect will be in America, I do not know, but no doubt, Mr. Wheeler will probably get up in the Senate and say, "Why should we loan money to a Socialist Chancellor of the Exchequer when he does not even look after his own bonds?" An imputation has been made on the British holders of these foreign bonds. Why the Chancellor should say that he cannot imagine why any Britisher should hold Japanese bonds at all is something which I do not understand. How could they know that the Japanese Government were going to turn aggressive. At the time they subscribed to the loans the Japanese were our Allies and friends. That is something which the hon. Gentleman who knows all about atom bombs really ought to know.

Captain Blackburn (Birmingham, King's Norton)

Will the hon. and gallant Gentleman allow me.

Captain Marples

No. I cannot give way. I have not sufficient time. I am sorry I cannot give way but I must give time for the right hon. Gentleman to reply. There were one or two books written between the two wars which, to a certain extent, rather encouraged people, especially as some of them were written by eminent people. I will quote a passage from one, which reads: The fevered hunt for remote new ' menaces'; the hysterical summoning of spirits from the vasty deep; the imputation to Japan, in particular, of aggressive policies of which she shows no sign; the building, utterly without necessity, of the British Naval Base at Singapore; all these are aberrations which discredit the judgment of their authors. When British people read statements like that they are entitled, I think hon. Members opposite will agree, to think that Japanese bonds are quite good things in which to invest.

Mr. Walkden (Doncaster)

Would the hon. and gallant Gentleman allow me? Does he realise that the folk in Lancashire do not regard Japanese bonds, Japanese industries which caused unemployment and sadness and robbed us of our livelihood, as being a good investment for Lancashire?

Captain Marples

I can tell the hon. Gentleman that 1 was born in Lancashire, too. That quotation which I have read was from a book, not by a Tory, not by the hon. Gentleman the Member for Orpington (Sir W. Smithers), but by no less a person than the Chancellor of the Exchequer himself. We have this very devastating quotation. I will lend this book to the hon. Member for Doncaster, who interrupted me. It is called" Towards the Peace of Nations "—[An Hon. Member: "How much? "] I think it was given away. Having said in 1928, "This is a magnificent country," how can the Chancellor of the Exchequer sit, or rather recline, there and say in 1946, "I cannot imagine why any Britisher should own Japanese bonds at all?" I must say it was an irresponsible utterance. In view of the Prime Minister's appeal for unity, I really think that the hurling of cheap, undeserved jibes at those who are my fellow countrymen, as well as fellow countrymen of the Chancellor of the Exchequer, is not necessary. It takes a big man to give way. The right hon. Gentleman is a big man, physically. May we hope. he is a big man mentally too?

4.8 p.m.

Mr. Keeling (Twickenham)

Like my hon. and gallant Friend the Member for Wallasey (Captain Marples) I have not and never have had any Japanese or other ex-enemy bonds. I have no clients. But I have constituents. When the right hon. Gentleman withdrew the word "clients" he said he meant people who prompted us when we asked our questions. I was prompted by a constituent, and I will tell the House what he said. He said: I bought Tokio Sterling Bonds in 1936. I also bought Danish bonds. This country was on friendly terms with both Japan and Denmark at the time. My income is entirely from investments. I have no pension, so I spread my money over a range in small amounts. My chief investment is in Three per cent. Defence Bonds, which I shall be compelled to sell if Mr. Dalton does not do something to enable the payment of foreign bonds. I will ask the House to judge between the Chancellor of the Exchequer and me, whether there is anything improper in my raising this matter. There is a popular belief, which possibly the Chancellor shares, that it is mainly bankers and speculators who hold these bonds. As my hon. and gallant Friend has said, that is an erroneous idea. Bankers do not want these bonds because the security is not good enough. Speculators do not like bonds, because the market in them is very limited. To a surprising and perhaps rather pitiable extent, these bonds are widely distributed among people of very limited means, and often represent their entire savings. Such people were attracted to these bonds, by the high rate of interest on them.

I assert that the protection of these bondholders is not a matter of class or party As my hon. and gallant Friend has said, many of them are held by investment trust companies, the shareholders in which are to a very large extent —indeed probably the majority—small men. I hold in my hand the last published list of investments of an investment trust called the City and Commercial Investment Trust Limited, which had a substantial holding, and so far as 1 know still has, of two kinds of these Japanese bonds. The Chancellor said he could not imagine why any Britisher should hold these bonds. This is a British company, and the House may be interested to know that the chairman of this investment trust company is the treasurer of the Fabian Society, and the Minister of Town and Country Planning, until he took office last August, was a director of this investment trust. Perhaps the right hon. Gentleman the Minister of Town and Country Planning —I am sorry he is not here; I told him that I intended to refer to this matter— will take the Chancellor of the Exchequer aside one day and ask him if he maintains this slur upon him. If he does discuss the matter with the Chancellor, he might remind him that a large part of these Japanese bonds, something like one-third, were issued at a time when a Labour Government were in office and could have stopped them had they wished.

My considerable correspondence on this matter shows that the holders of these bonds strongly resent the imputation on their patriotism or motives. I wish the Chancellor of the Exchequer to give a plain answer to the question of whether he maintains his imputation against the motives or the patriotism of those holders, whether they be holders of Japanese bonds or of the Dawes or Young Bonds, which, of course, were recommended to the British public by the Labour Government of the time. The fact is that these bondholders are every bit as patriotic, and just as much entitled to Government protection, as any other class of the community. It is simply deplorable that the Chancellor of the Exchequer should have said what he did, and that he was so loudly cheered by hon. Members on the other side of the House.

That is by no means all. The Chancellor added injury to insult, for he held out no hope of any payments being made to these holders of Japanese bonds, and said there was a long list of stronger claims to reparations. I challenge that statement. I say there is no reason why these bondholders should suffer more than any other victims of the Japanese war. I say they ought to rank equal with, if not before, those other claimants. If these bondholders are to be at the bottom of the list, as the Chancellor proposes, they will get nothing. As it was they who poured money into Japan when we were in alliance or friendly relationship with Japan, it will mean, in effect, that any reparations will be paid indirectly by themselves. The sum involved in the service of these bonds is not a large one. The total of sterling bonds outstanding is only about £90 million, and the annual interest is not an onerous charge. There is no reason why efforts should not be made to get this interest paid. Apart from doing justice to British subjects, which I suppose even a Labour Government will admit in principle, the enforcement of these claims is a matter of vital national importance. Everybody knows the need for exports and everybody knows that invisible exports are just as important as ordinary exports. As my hon. and gallant Friend said, these foreign investments are a large part of our invisible exports and, unlike ordinary exports, they require no labour and no materials. I say, in view of the parlous state of our exchange, that every effort ought to be made to get payment on these bonds.

Last week's "Economist," which is not generally considered a Tory organ, differed flatly and even violently from the Chancellor of the Exchequer. It said that the interest of British bondholders must be pressed to the limit of what is feasible. I might remark, in parenthesis, that, if it is dollars we want, the 1930 Japanese Loan provides, at the option of the holders, that the payment, both of interest and of principal, may be paid in dollars. The interest on that loan alone amounts to something like 2,500,000 dollars a year which, I suggest, is well worth having. There was a time —a much more recent time than that when the Chancellor of the Exchequer wrote the book from which my hon. and gallant Friend quoted—when the Chancellor of the Exchequer appreciated all this, because, in reply to a Question on 1st November by the hon. Baronet the Member for East Ealing (Sir F. Sanderson) who asked: Whether, in view of the disposal of so many of our overseas investments … he will see that every remaining investment is conserved so far as practicable to increase the yield of income in sterling to swell our invisible exports. the Chancellor replied: Yes,Sir"—[OFFICIAL REPORT, 1st Nov., 1945; Vol. 415, cc. 748, 749.] I hope he will regain the sanity which he then showed. Perhaps the "Economist" was right last week when it said that the Chancellor had been jesting, though it added that he had made a very bad joke and one which was very expensive for British interests. In conclusion, I welcome the statement of the Chancellor that he is going to see—I believe very soon—the representatives of these interests. I hope he will keep an open mind, and will discard the prejudice, the complexes and the dangerous frivolity which he showed last Tuesday, and last Tuesday week.

4.18 p.m.

The Chancellor of the Exchequer (Mr. Dalton)

Two quite separate points arise in this connection. First, there is the general question of British bonds and other investments overseas and, secondly, there is the particular question of the Japanese bonds. Dealing first and most briefly, as I think I can, with the former, the hon. Gentleman the Member for Twickenham (Mr. Keeling) has just quoted to the House a statement I made some months ago in answer to a Question on general overseas investments. I stand by what I said then, and, indeed, I said it again as recently as Tuesday, 5th March, when, in reply to the same hon. Gentleman who asked me the Question before, I said: All steps, which are appropriate to each particular case, will be taken to protect our overseas investments."—[OFFICIAL REPORT, 5th March, 1946; Vol. 420, c. 178.] I do not know that it is necessary for me to say more on the general question. I take the view, and have constantly stated it, that it is in our interest that what remains—much has gone for one reason or another—of our sources of income from overseas should be nourished and encouraged to the utmost extent possible in each particular case. The cases, of course, vary for a great number of reasons. There has never been any variation in my view on that, nor any variation in my public statement on the subject. I hope that this will be regarded as sufficiently answering the general question. If not, I am willing to add to it, although I do not think there is much more I can say. I have made clear, succinct and unambiguous statements in answer to Parliamentary Questions on that subject.

Let us then turn to the particular case of Japan. I do not know how this persistent pressing of this particular case will seem to, shall we say, an Australian. I do not know how it will sound in Canberra when the hon. Member for Twickenham said—I took his words down with great care—that he disagreed with my views that Japanese bonds should rank behind payments due to other victims of Japanese aggression and brutality.

Mr. Keeling

Reparation claims.

Mr. Dalton

Very well, reparation claims. He said they should rank equally, if not before, the claims of other victims. He nods his head. Does he know what happened to Australians in the Far Eastern war? Is the memory of these hideous massacres of brave men in captivity is prisoners of war, so far away? Does the hon. Gentleman forget that they were tortured, bayoneted and worse? Does he forget what they went through in the jungles of New Guinea, and what the Australian prisoners of war suffered building the Burma Road? Are these things not known on the Conservative Benches? Is there no pride of Empire left?

Mr. Keeling

Surely the Chancellor is not going to leave those people to await compensation from the Japanese Government?

Mr. Dalton

I say the physical victims of Japanese aggression certainly have a moral claim to rank before the financial victims, if that is the proper way to describe the holders of these bonds. It shocks me very much—and I speak as one who has many friends in Australia —to hear this statement made. Nor do I stop here in recalling to hon. Gentlemen opposite what the Australians have gone through. What about Malaya and Burma? What about the property interests there? What about the planters and those whose estates have been devastated by the Jap barbarians? What about all these, our fellow citizens of the British Empire? Are they all to be on the same level, if not behind, the prewar Japa- nese bondholders? It is an astonishing doctrine.

Mr. Keeling

No, they should be compensated by the British Government.

Mr. Dalton

I am astonished. Quoting my own phrase of a day or two ago, I am for screwing all I can out of Japan and for making it available. Why have the Tory Party gone so soft on reparations from Japan? I would take all I could get.

Captain Marples

I do not think the Chancellor of the Exchequer should say that the Tory Party is going soft. I myself, who have served six years in this war, do not think that remark of the Chancellor, or his previous remark, has any bearing on what he said in answer to the Question. Everything the Chancellor said may or may not be true, but it still has no bearing on the fact that he gratuitously insulted his fellow countrymen—

Mr. Deputy-Speaker (Mr. Hubert Beaumont)

The hon and gallant Gentleman is taking advantage of the fact that the right hon. Gentleman has given way, to make a second speech. He is not entitled to do this

Mr. Dalton

1 would like the hon. and gallant Gentleman who asked me the question to listen to the answer. In view of the atrocious crimes committed by our Japanese enemies in the war against fellow citizens of ours in the British Empire— against white men and coloured men, against our Allies the Chinese, the Dutch in the Netherlands East Indies, and our American Allies in the Philippines—I say there is altogether too long a list of victims and of strong claimants for whatever can be screwed out of the Japanese, for the prospects of the prewar Japanese bondholders to be other than I described in the first answer which I gave to the first Question which was put to me, when I was asked what are the prospects of these bondholders getting anything, to which I replied, in words which 1 repeat today, that they are not very bright.

I would not be a party, nor would His Majesty's Government be a party—and that is an objective statement of fact— to the policy advocated by the hon. Member for Twickenham, of pressing the claims of this particular group of bondholders, in front of the claims of those I have been enumerating. This surely is an observation almost of the obvious. What good does it do to deceive? I take as an example the hon. Gentleman's constituent who bought these bonds in 1936. What good does it do to conceal from such poor persons the fact that they made an investment which has turned out very ill? Why should we humbug people? Obviously the facts are such that the Japanese will not be able to meet more than a tiny fraction of the cost of their crimes against humanity. Why should we do other than say that this particular group of bondholders have made a very unfortunate investment as things are?

What I have said is, in no way, in conflict with my statement that for British bondholders in general, I will certainly do my utmost to see they get fair play. There is nothing new in that; I have repeated that several times and my previous statement was quoted to me by the hon. Member for Twickenham. Why humbug the holders of Japanese bonds into believing that they have anything more than the dimmest and remotest chance of recovering anything on their investments? The figures have been given by the hon. Gentleman. In fact the total outstanding of these bonds, of which a number were bought back by the Japanese in the interval between the raising of the loan and the present time, is £132 million, of which, incidentally, one-third was put up while we were still in alliance with Japan before 1921. Two-thirds were put up after we had ceased to be in alliance with Japan. It is perfectly true that one-third of these bonds were put up some considerable time before 1921, but a great deal of them were repatriated to Japan in the ordinary process. In the light of what has happened, it has been an unfortunate investment. It has been unfortunate for the holders and also unfortunate for this country in so far as the putting up of this money has, in any respect strengthened Japan either militarily or industrially.

It has turned out ill for the national interest, in so far as that has happened, but it is given to none of us to foresee exactly the effects of our investments. I am sorry I cannot tell the hon. Gentleman to advise his constituents that I can in any way modify the estimate I gave first, that the prospects for these bondholders are in no way very bright.

Mr. Oliver Stanley (Bristol, West)

When the right hon. Gentleman says he is surprised at British people holding these bonds, does he intend to impugn at all the patriotism of these people who may, in the past, have made a mistaken investment, but are going to lose thereby?

Mr. Dalton

Let me say it in my own way. Do not let us engender unnecessary heat about any of these matters. I have already said that a great number of these issues were made a long time ago, and have since changed hands on a great many occasions. I said I could not imagine why people should own these bonds. I would never have thought of owning them myself, but too much must not be read into the statement. It is absurd, to use a colloquialism, to get "hot under the collar" about a passing statement of this kind. I have done my best.

Mr. Stanley

Will the right hon. Gentleman answer the question in the negative?

Mr. Dalton

I think there was very great lack of foresight in some cases.

Captain Marples


Mr. Dalton

I have read the book which the hon. and gallant Member holds up. There was lack of foresight in some cases and lack of apprehension of the consequences of their action in others, as, for example, that these funds might have helped to nourish the Japanese industrial system, and helped to ruin Lancashire.

It being Half-past Four o'Clock, Mr. DEPUTY-SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.