§ Order for Second Reading read.
§ 3.45 p.m.
§ The Chancellor of the Exchequer (Mr. Dalton)
I beg to move "That the Bill be now read a Second time."
This is a simple Bill, and one which, I hope, is not controversial. Its purposes are obvious, and, as I hope I shall be able to explain, no grave questions of principle are raised by it. The Bill authorises that in place of the present so-called silver coins—and I will explain later why I say "so-called"—we should, in future, mint and issue coins of the same denomination but made of cupronickel, that is to say of 75 per cent. copper and 25 per cent. nickel, in place of the present alloy of which the so-called silver coins consist, of 50 per cent. silver, 40 per cent. copper, 5 per cent. nickel and 5 per cent. zinc.
There are two reasons for making this proposal now. In the first place, silver has become more expensive than it was before the war, and, in the view of the Government, it has now become too expensive to be used any longer as a means of currency. The price of silver in 1939 was something below 2s. an ounce, and the price now is more than 4s. 7d. It is 4/7½d. an ounce at the controlled London price, but the supplies are limited, and it is quite possible that the price may rise further, but I base my argument on the figure of 4/7½d. The rise in price is due partly to an increase in the demand for silver during the war, and partly to the permanent increase in the peace-time use of this metal, particularly in photographic and electrical procedures in industry. That is one reason why the price has risen. Another reason is the increased hoarding of silver which is taking place in many parts of the world. In the second place, we have an obligation to repay to the United States a quantity of silver lent by them to us under Lend-Lease during the war. Some 88 million ounces of silver were thus obtained, and this has to be repaid over the next five years, under an agreement entered into some time ago. The Government of India has a similar obligation to make repayment for an even larger amount to the 803 United States. We and India cannot possibly buy this silver in the market. It is too ruinously expensive. We must, therefore, economise our existing use of silver, where economy will do least harm—where, I believe, it will do no harm—that is to say, in coinage, rather than to economise in its industrial use, which would be unfortunate.
The effect of this Bill would be that we should be able to recover about 20 million ounces of fine silver a year for some years to come, through the gradual withdrawal of coins from circulation. It would be a gradual process, spread over a term of years, and it would be our intention to withdraw at, roughly, the rate of 20 million ounces a year. The total saving which would result by replacing the whole of the existing silver coinage by the cupro-nickel coins which we propose to substitute, when the whole operation has been completed, would be in the order of £50 million sterling, and this would be gradually reflected in the Vote of the Royal Mint during the period. The saving of £50 million would be the gross saving, and from this would have to be deducted the amount due to be repaid to the United States under the Lend-Lease agreement, but even after such deduction, there would still be a saving of some £30 million over the period to the public finances. So much for the general reasons for the Bill.
It may interest the House if I very briefly mention one or two facts of past history. The use of silver as coinage dates back a long way, and the silver coins which we have used in recent times have always been token coins. That is to say, the silver in the coin has always been worth considerably less in terms- of sterling than the nominal value stamped upon the coin, except that in 1920, when Sir Austen Chamberlain was Chancellor of the Exchequer, for a short time the price of silver rose so high that it became profitable to melt down the coins in order to obtain and sell the metal, and Sir Austen Chamberlain introduced a new coin. I quote him because I am sure his name will be respected and his conduct command approval on the benches opposite. He was a most respectable Chancellor of the Exchequer. Therefore, his action is a precedent which I can cite today. He felt it was proper and right to dilute the silver coinage, and it was he 804 who introduced a new coin consisting of 50 per cent. silver and 50 per cent. copper. The proportions were later altered to the alloy I have just mentioned, which constitutes the present silver coinage; but it was Sir Austen Chamberlain who took the first step along this path.
The value of the silver in a shilling at the moment, taking the price of 55½d.— 4s. 7½d.—per oz., is 5.22d. It is effectively a token coin now. There has been token coinage in this country since 1816, except for the short period of 1920 which I have mentioned, when the value temporarily rose to equal the nominal value of the coin. Therefore, I think we can feel that what we are proposing today can in no way be described as a debasement of the currency, or in any respect as an act which we should hesitate to take on grounds of national reputation. It is in line with much that has been done before.
With regard to the new coins, I have arranged for specimens of the new cupro-nickel coins to be placed in the Library, where hon. Members may care to look at them. The cupro-nickel alloy is a bright white metal, looking very much like the present silver coinage at first sight. Indeed, in Eire I am told that a cupro-nickel 6d. is circulating side by side with a silver 6d., and that the inhabitants of Eire, although quickwitted in many matters do not readily distinguish between the two coins as they circulate side by side. They will, of course, circulate side by side in this country, if this Bill is passed, for a number of years to come. The choice of this cupro-nickel alloy is based upon all relevant considerations, as the common phrase goes. The alternatives are all open to certain objections. Tin and zinc and aluminium are all too soft, I am advised, and iron and steel are too hard for use as coinage. The use of pure nickel has been advocated by some people. The Mond Nickel Company, who, of course, will take an entirely detached and scientific view of the matter, have been writing to the newspapers, either on their own account or through subsidiaries and mouthpieces, and they think there is nothing like pure nickel.
§ Mr. Oliver Stanley (Bristol, West)
Is the right hon. Gentleman referring to the letter in "The Times" of today from the Agent-General for Ontario as coming from a mouthpiece?
§ Mr. Dalton
No, I am not referring to him. It is the Mond Nickel Co. who are behind the suggestion that there is nothing like nikel, and why not have 100 per cent. nickel? We have considered whether the coin should be made of pure nickel or of cupro-nickel, and we have formed the view that, without prejudice to further changes in the future, but for the present and as an immediate measure, we should have cupro-nickel rather than pure nickel, because our present machinery at the Mint is adapted to stamp cupro-nickel coins, but would need various modifications and changes to stamp pure nickel, and we are advised that, for all practical purposes, cupro-nickel will do. It is no more easy to counterfeit and forge than the existing silver coins, and we are satisfied that its appearance will be satisfactory. That, however, is without prejudice to further consideration later on, if the powers proposed in the Bill are given, to alternative metal contents for the token coinage.
§ Mr. Keeling (Twickenham)
Can the Chancellor say whether the cupro-nickel coin's appearance continues satisfactory when it grows old?
§ Mr. Dalton
Nobody's appearance continues entirely satisfactory as he grows older, but I think it maintains its appearance as well as most. So much for the general background of the Bill. It is a simple Measure, and I think it would be convenient if I indicated briefly the powers conferred in the various Clauses. Clause I gives the status of legal tender to coins of cupro-nickel on the same basis as the silver coinage has now; that is to say, they are legal tender up to 40s. Clause 2 and the Schedule specify the composition and weight and limits the variation from the standard weight and composition. Clause 3—and I emphasise this point, because it has a bearing upon the argument that pure nickel would be better—gives power to vary in future the composition of nickel coins and to make coins out of metal other than cupro-nickel if the House should hereafter so desire. At the present time, we think cupro-nickel is the best substitute, but if in the future further metallurgical discoveries are made, or it seems on further consideration that some other combination of metals or pure metal would be better, then powers are given to enable that to be done.
806 Clause 4 provides for testing standard trial plates of pure metal against which the composition of the new coins would be tested Clause 5 deals with miscellaneous matters which I do not think I need describe in detail. Clause 6 contains a concession to sentimental and historical associations, because it provides that the Maundy money shall continue to be made of silver—silver pennies, twopenny, threepenny and fourpenny pieces distributed on behalf of His Majesty—and that the silver content of the Maundy money shall indeed be increased from 500 to 925-thousandths of pure silver. This is a relatively unimportant thing, but it has historical associations, and I think the House would wish this to be done. Clause 7 provides that the cost of all metal required should be met from issues out of the Consolidated Fund.
That is the whole of the Bill. I hope the House will look kindly upon it, and that we shall get it with reasonable expedition, because we are anxious not to incur further expense in the purchase of this expensive silver. If we can get the Bill quickly—before the end of this Session—we shall have enough silver in hand and will not need to buy any more. We hope we shall not need to buy any more. If the Bill is delayed, we shall have to make further expensive and unnecessary purchases.
§ 3.59 p.m
§ Mr. Assheton (City of London)
First, may I say how glad we are to see the Chancellor of the Exchequer back again on this side of the Atlantic? We hope that he has benefited greatly from the contacts he has been able to make over on the other side That, however, is the only happy thing I have to say, because we on this side of the House feel that this is rather a melancholy occasion and I think that the whole House will profoundly regret the passing of our silver coinage, if in fact that is to be. As the Chancellor has told us, silver has been the principal coinage of this country for a very long time, in fact for more than 1,200 years—since, I think, the time of King Offa of Mercia. Twelve hundred years is a very long time and such an association is not something to be lightly cast aside. Of course we recognise that silver has not, for some time, been the standard of our coinage, as the Chancellor has said. In 1816, I think it was, we 807 went on to a gold standard, and from that time onwards silver ceased to be the standard, and then the time came when the gold standard went, but the silver standard did not replace it.
This Bill proposes to do away altogether with the silver in our coins except in the case of the Maundy money to which the right hon. Gentleman has referred. It does seem to us that many things in these days are getting nastier and of lower quality, and that nothing seems to get cheaper except money. What is the cause of this rather depressing proposal? The Chancellor has told us, and we are certainly bound to agree, that we have become much poorer, and in the view of His Majesty's Government at least we can no longer indulge in the luxury of a coinage which is at any rate half silver. As the result of the first world war, we lost our gold coinage; as the result of the second world war we are to lose our silver coins too. Someone drew my attention the other day to the fact that the Romans suffered a somewhat similar discomfort; after the first Punic War the value of the as was reduced from 12 ounces of copper to two, and after the second Punic War to one. The Chancellor has told us the main reasons governing his decision. He said that we have borrowed a large quantity of silver from the United States of America and that we have promised to pay that silver back We have undertaken to pay it back within five years, from a date which has not yet, in fact, arrived, but still we have to pay it back and there is no dispute about that. We are not quite sure why the United States wants the silver back; I understand that at the end of last year they had something like 1,720 million ounces of silver tucked away, but that of course is no concern of ours. We have undertaken to give it back and give it back we shall.
The Chancellor has said that the price of silver is now high That is a fact, and the price in the world market is a good bit higher than the price which the Chancellor named, and is certainly well above 6s. an ounce. That is not, however, as high a price as that which obtained after the last war when Sir Austen Chamberlain made the change to which the Chancellor referred, but it is only right to remember that in Sir Austen Chamberlain's day it had become essential to reduce the amount 808 of silver in the coins, because in 1920, when he introduced his Measure, the halt-crown was worth 3s. 4d. No Government could allow that situation to continue, and although the Chancellor bases himself on that precedent, and claims that he is no debaser of the coinage like Henry VIII, I do not think the case he made was quite as cast-iron—or a golden—as he chose to make out.
As a result of the present proposal a considerable amount of silver is to be acquired over the years. The Chancellor has told the House that this is a sensible thing to do, because we are going to be short of dollars and it would be, in his view—and I daresay the House may agree—rather difficult to justify spending many of our hard-earned dollars in the purchase of silver. We on this side of the House are bound to recognise that there is a good deal in that point of view. We are not, however, altogether happy about the powers given in Clause 3 to vary the coinage because we rather feel that that is something which Parliament should reserve to itself. But perhaps I may come to the question of the actual coinage proposed in a moment or two. I should like, in passing, to say that we do very much approve Clause 6 which once again makes Maundy money what it used to be before 1920—that is to say of real silver of a fineness at any rate of .925, and I feel that the hand of some traditionalist, in the Treasury or the Mint, must have been responsible for such a happy Clause in an otherwise unhappy Bill.
I do not doubt for one moment that the people of this country would prefer to use the coins to which they have been accustomed. The chink of silver is I think better than the chink of cupro-nickel, although I have not yet tried the latter. The gambler is more tempted to be reckless when he is playing with chips than when he is playing with real money Nevertheless, however much we on this side of the House may dislike the proposal in this Bill, we are not minded to vote against the Second Reading, for the reasons which the Chancellor has given and which I have endorsed. It is obvious to us, however, that it is desirable that the new coins we are to have should be as worthy as possible, and I know the Chancellor agrees about that.
What are the qualities which are needed in coins? First, I should say they ought 809 to be of good appearance and capable of maintaining that appearance. The point raised in an interjection by my hon. Friend the Member for Twickenham (Mr. Keeling) is a very sound one indeed. After the last war, when the silver in coins was reduced to 50 per cent., we had for a certain time a very inferior kind of half-crown. I have one in my pocket now. It was not creditable either to the Mint or to this country, and in the course of time it was altered. We are very anxious to avoid similar mistakes on this occasion. If we cannot wear real silk stockings, let us have the very best lisle thread; let us have an article which is at least serviceable, and will maintain its appearance over a period.
The things we want in coins then are, first, that they should be of good appearance and that the good appearance should be maintained; secondly, I think they should be difficult to counterfeit, and thirdly, as far as possible, they should be hygienic. There was an interesting letter in "The Times" today to which I thought the Chancellor was about to refer, although evidently he had some other correspondence in mind which I have not seen. The letter in question deals with this very subject of cupro-nickel coins and comes from the Agent General for Ontario. I do not conceal the fact that those in Canada are deeply interested in the future of nickel, but let us look at some of the criticisms which are made and see if they are of importance. The Agent General for Ontario states, for example, that cupro-nickel isdrab, dull, and yellowish in appearance, is not stainless, is a soft metal, loses shape, corrodes and pits easily, thereby attracting dirt.Those are rather serious criticisms of a coinage, and although the new cupro-nickel coins, the patterns of which the Chancellor has placed in the Library for hon. Members to inspect, look very nice at present, we on this side are anxious to know what they will look like when they have been in our pockets for a few years after, perhaps, being left lying about on a publichouse counter with a lot of beer spilt over them, which may well be the fate of our coins now and then. We want to know whether these coins will stand up to hard wear
The Agent General for Ontario raised another point; he said that one of the main arguments against cupro-nickel is that the 810 coinage is so readily counterfeited. The Chancellor has denied that, but I think it is a matter on which we may press him a little further when we come to the Committee stage. We propose to raise these matters again and to go into them in detail because we feel that it is the duty of hon. Members of this House to see that our coinage is of the very best possible standard. This is in no sense a political matter and I hope, therefore, that the whole House will give its mind and attention to the matter and that hon. Members will do all they can to help the Chancellor in this problem.
On the question of counterfeiting, the suggestion of the right hon. Gentleman is that cupro-nickel is softer, which makes it easier to deal with. There is one advantage in it being softer, and that is that a higher relief is obtainable, which certainly gives the coinage an added attraction. That seems almost the only point that can be urged against nickel coinage, which in every other respect seems to be desirable. The Chancellor has told us of the practical difficulties. He has told us that the Mint have not the equipment—I suppose that means furnace and rolling equipment—to deal with the job at the present time. We must ask ourselves whether we are right in that case to go ahead with this matter straight away, or whether it would not be wiser to wait and get the equipment, in order to make the very best coins. The Chancellor's answer is that he does not want to go out and buy any more silver, and that if this change is not made here and now, he will be put in the position of having to do so. That matter we shall go into more carefully in the Committee stage. I warn the Chancellor that on this side of the House we shall probably put down Amendments to raise this matter.
Probably the only way of dealing with the situation immediately would be to buy nickel blanks and use them for the coinage. I think it will be quite possible, although my long-term proposal is that it would be far better if the Mint had the necessary machinery and equipment to make the coins throughout the whole process. The Chancellor may urge that there would still be delays about design and so on, but I do not think they would be very serious. We do not very much like the proposal in Clause 3 that powers to vary our coinage should be exercised by Proclamation. We think that that 811 power should not be in the Bill and that the Chancellor should come to the House again if at any time he thinks it desirable to alter the coinage.
There is one other point I would mention. I appreciate, and I am sure all hon. Members appreciate, that the Bill does not, in itself, involve any alteration in the purchasing value of money. The silver coins we use are already token currency, and not standard currency at all. None the less, these are times in which we must be very careful not to upset confidence. Obviously the Chancellor has that consideration clearly in mind. The confidence of people in the coinage is not so likely to be upset in this country as it would be in an Oriental country, where these problems are regarded perhaps in a rather different light; yet the point about confidence has to be considered. Therefore, it is only right to suggest that, at a time when he is making changes in the coinage, the Chancellor should take very great pains indeed to see that money does not lose its value.
Many hon. Members on this side of the House, and I dare say on the Government side, have been disturbed by the increasing amount of inflation which has been stimulated recently by the present Government's effort to maintain cheap money through extensive purchases that they have been making in the gilt-edged market. Cheap money is all very well, and is very desirable if it comes from natural causes, but when it comes from the Treasury supporting the market, it must be viewed with some suspicion. The Chancellor ought to be very careful to see that the purchasing power of money is maintained. It is very much easier to produce bank credit than to produce coal. I hope that when the Financial Secretary to the Treasury replies, he will give us some reassurance on that point. If the new inflationary tendencies are to be checked, various steps have to be taken, into which I will not go now. All I want to say this afternoon is that my hon. Friends will agree to give the Bill a Second Reading, but I warn the Chancellor that, when the Bill reaches the Committee stage, which I understand is to be taken on Friday, we shall probably put down Amendments. At any rate, we shall want to go very closely into the manner in which the new coins are to be made.
§ 4.16 p.m.
§ Mr. Norman Smith (Nottingham, South)
I do not know whether the right hon. Gentleman the junior Member for the City of London (Mr. Assheton) ever goes into publichouses. I do, and I can assure him that coins of the realm just never lie about on the counter. Indeed, I cannot imagine a more unsafe place for them to lie. I have sometimes admired the ingenuity of publicans in devising apparatus well behind the bar, to accommodate the takings.
The right hon. Gentleman the Member for the City of London has given us a wonderful exposition of his great genius for emphasising the unimportant, as he so often does in this House. Apart from the obvious matter of Maundy money, to which he referred with emphasis, perhaps the best example of it was when he talked about confidence. He insisted that Parliament must control the coinage, but let us look at the matter. With what is the Bill concerned? It is concerned, certainly, with our money, but only about 2 per cent. of our money assumes metallic form. Coinage is only the small change of business, and I cannot feel that it is very important. The right hon. Gentleman did not say a word about the much wider aspects of the question of our money. I do not propose to go into them now, but I would remind the House that about 20 per cent. of our money is circulated in the form of Bank of England notes over which, until last year, the Government had no control. About 80 per cent. of our money exists in even less tangible form. It exists only as rows of figures in bankers' books. It is created out of nothing and takes the form of bank deposits, which circulate from the account of one person to the account of another, in the form of cheques There is no need to raise the question of confidence in this Debate. We are dealing with coinage, that is, with something which is comparatively unimportant.
The right hon. Gentleman referred to what happened in 1920 and he felt impelled, I do not know why, to justify Mr. Austen Chamberlain, as he was then. When Mr. Austen Chamberlain carried through his Coinage Act in 1920 he debased the silver coinage to the tune of 50 per cent. At that time silver was at a very high price, about 82d. an ounce, if I remember rightly. But during that same year, 1920, it fell to 42d.; and 813 within two years it was down to 32d. There is not very much in the right hon. Gentleman's point.
I hope that my right hon. Friend the Chancellor of the Exchequer—whom I also am glad to see safely back from America—has had good technical advice about these cupro-nickel coins. Some of us remember the disastrous results after the Act of 1920, when the coins used to turn brown or green, and some even were known to disintegrate under the impact of everyday use. My right hon. Friend has to face a rather grim possibility. It could happen—I hope it will not—that the circulation of the new cupro-nickel coinage might tarnish not only the linings of our trouser pockets, but also the good name of His Majesty's Government. If that should happen, I have an idea for the Chancellor of the Exchequer which might help him out. Suppose this coinage, which is 2 per cent. of our money, tends to look bad after a few years, and His Majesty's Government begins in consequence to forfeit some of the high esteem in which it is now held, the Chancellor of the Exchequer can quite easily get that esteem back in a very short time. All of us are much more concerned with our bank notes than with small change, and all he has to do is to introduce a nice new design of bank note, restoring the effigy of His Majesty which the Tory Party took off the banknote in 1928. He can also restore to the banknote an engraving of this Palace of Westminster which the Tory Party took off the banknote in 1928. If there is any loss of prestige due to an apparent deterioration of the currency, the Chancellor can get it back in this way.
§ Mr. Assheton
The Tory Party have never changed the banknote, as the hon Gentleman knows quite well. They were Treasury notes at that time and not banknotes.
§ Mr. Smith
The Tory Party passed the Currency and Banknotes Act of 1928, which suppressed Treasury notes and merged their issue with that of the banknotes. I leave the House to judge between us. I do not think this new currency-is going to be second-rate or unworthy of a great nation. Indeed, I rather welcome anything which tends to destroy the prestige of money. Prestige is something very different from the confidence we want 814 people to have in the coinage. Prestige is merely a matter of superstition, unlike confidence which depends on reason. When I first came to work in London before World War I, my weekly wage was five golden sovereigns and a five shilling piece. Money was regarded by most people in those days with something which amounted almost to superstition—[Interruption.] Yes, I was an extremely well paid member of the proletariat. Fleet Street always was comparatively well paid. Money at that epoch was regarded by most people with something like superstition, but we have gone a long way since that time. People are beginning to understand what I want them to understand, that money is not wealth in itself or something which one can hoard in order to keep its value. Money is tickets entitling the holder to consume his share of the goods and services on offer, and I want people to look at it in that way. This Bill helps to remove the illusion that money is something to which we must always bow down.
The right hon. Gentleman the Member for the City of London said that we are living in an age when things are getting nasty. That is only to a limited extent true. People who are accustomed to privilege will have to face up to some reduction of privilege for a few years, but for most people—the people who sent us on this side here—life, so far from getting nastier, is going to get very much nicer. I have one criticism of the Bill. The right hon. Gentleman has apparently forgotten to insert any Clause tightening up the penalties against counterfeiters and coiners. After all, coiners are people who take on themselves, without authority, to expand and therefore dilute the circulating medium. It is possible to argue with some cogency that in a serious depression like that in the years 1932 and 1933 forgers, by making more purchasing power available, are performing a public service notwithstanding their purely individualistic and privately enterprising motives. But we have a Labour Government now. My right hon. Friend is sitting on the Front Bench and he is likely to continue sitting there for many years. I believe there will be no more depression for quite a lot of years, and that being so, the anti-social activities of the coiner stand out for what they are, and it is no longer possible to palliate their activities. There is something to be said for tightening up 815 the penalties, but if my right hon. Friend does that, as I trust he may, I hope he will make the penalties of universal application and extend them not only to those who as coiners dilute the circulating currency medium, but also to the perfectly respectable people with offices in the City of London who, lending ten times what they have in their tills, swell the circulating currency by creating immense bank deposits. I could never understand why bankers should be honoured for perpetrating the very offence for which heavy penalties are visited on coiners. I hope my right hon. Friend will look into that.
§ 4.25 p.m.
§ Mr. Charles Williams (Torquay)
I welcome the opportunity of taking a small part in this Debate. I remember the Coinage Act passed after the first world war and I remember that the then Chancellor of the Exchequer was let in for a certain amount of trouble as a result of it. He produced then, not as bad a coin as will probably be produced today, but a really bad coin, and there was a good deal of trouble. I object to this Bill from two points of view. I was not convinced even before the Chancellor's speech that there was any necessity to depart from the basis of silver and since the right hon. Gentleman's speech I am nearer to complete conviction that there is very little reason for leaving silver as a basis of coinage at the present time. I fully realise the difficulties as far as the repayment of silver to the United States is concerned. The proposal is, I understand, that we shall repay to the United States something like 20,000,000 ounces each year for three years—
§ Mr. Williams
Let us look at it from that point of view. That is a very considerable proportion of the world's production of silver. I am not sure what the world's production of silver is today, but round about 1940 the world production of silver was in the neighbourhood of 210 to 220 million ounces. The main producer is Mexico. Production of silver in the British Empire was something like 37 million ounces. Canada produced 23 million ounces in 1940. The argument for the use of silver is that we are in fact producing a considerable amount of silver within the Empire and that there are 816 probably considerable supplies within the Empire. Silver could be produced in this country, though not to a large extent, but when it is possible to produce it in the Empire, is it right, because we have to make this repayment to the United States at the present time, to take away one of the factors which has helped the production of silver in the past by taking the English silver coinage away, and replacing it by some other metal? From the material point of view of producing silver, that is one of the things we ought to weigh against the fact that we have to make this repayment to the American people. After all, anything we can produce ourselves is something to encourage us.
May I ask the Chancellor of the Exchequer to make the matter a little clearer to me than he has done? As to this 20 million ounces that we have to hand over in the next few years, is there any immediate demand at the present minute from America to have that silver now? What we shall have to pay in the next few months cannot be very big. I should like a further explanation of whether there is any real pressure at the present time from America that this payment should be made immediately. Might not it be possible, by some Lend-Lease system of silver, to get a transfer of, say Canadian silver to the United States to get over the difficulty?
It has been pointed out that there has been a considerable rise in the cost of silver and that that is the real reason why the right hon. Gentleman feels obliged to act in this way. Before we consider the other side of it, surely there is some value in having a silver coinage in this country from a purely sentimental point of view? I do not expect that argument to appeal to a dehydrated professor, for instance, but the ordinary person in the street who has a shilling, even if it be worth only 5d. worth of silver, if he hears silver is going up, feels he has something of his own which is of value. I do not believe, any more than the hon. Member for South Nottingham (Mr. N. Smith), in the worship of money, but the possession of something of real value helps enormously to create a sense of security in the country as a whole. I deprecate that we should choose this particular time to go off silver. I am not in any way depreciating the fact of our debt to America but, from our point of view, I think it 817 unfortunate to do this at present. In Clause 6 the Chancellor has made a concession to sentiment with regard to Maundy money; it is true only a very small concession, and it relates only to a very ancient privilege and affects a small number of people. Surely, however, we have the right to put before the House the privilege of the ordinary Briton to hold in his pocket a silver coin which is of some value?
That is where I stand in the matter of silver. The main object of the Bill—having abolished silver—is to introduce cupro-nickel. I cannot imagine any worse metal of which to make coins, although from the point of view of the good Socialist I cannot imagine any more suitable metal for that purpose. Naturally the Government like it, but let us look at it from some angles, if not all. First, it is very cheap indeed. That, of course, they obviously think an advantage. In other words, the people who hold these coins have something which is only a token, something which is of absolutely no value. That, I can see, would naturally appeal to hon. Gentlemen opposite. It gives nothing in the way of security. Let us look at it from another point of view. By taking away silver and substituting this metal, the Chancellor is really levying a tax which is being borne by every person who holds any silver coin. It is true he is not allowed to do anything with it, but it is something of actual value which he is losing and from that point of view, it is a carefully concealed tax. Then again, I think it is a very great pity, from a purely Imperial point of view, not to use nickel. Nickel has been one of the most valuable exports of Canada for a considerable time. I am not in the least interested in any company, but nickel has been and always will be, of great Imperial value. That is the Canadian point of view.
Now let me take the home point of view. Is there not in South Wales a nickel factory which could be used for refining nickel at the present time? Can anyone tell me whether that factory is working to its full capacity at present? Is it working to more than 5 or 10 per cent. of its capacity? Might we not, by adopting nickel, which is harder and takes longer to work, do something to help that South Wales factory production? Again, if we could increase the production of nickel in 818 this country considerably, it would help to restore what was a valuable trade before the war. I say frankly that a good advertisement in the shape of a first-class nickel coin, is one of the best things to help our export trade, in the manufacture of coins for other countries as we had before the war.
There is another point with regard to cupro-nickel. It is of comparatively little use in time of war, and I suggest that a reserve of pure nickel coinage is a very valuable war reserve. I believe it was found that in Germany during the last war there was a reserve of coins of practically 95 per cent. nickel. From that point of view it would be valuable, and would naturally appeal to us but obviously would not appeal to the present Government. There are many other ways in which cupro-nickel coins would appeal to the Government, but I would like the Chancellor to tell us before the Debate ends why cupro-nickel was withdrawn from circulation in India. Was it because it got dirty? I have looked at the lovely shining coins in the Library, but how long will they remain in that condition? Would it not be a shame if, in 12 months' time, these bright new coins became filthy and stained? It is almost certain too that this metal is much more liable to carry disease than pure nickel. It is almost certain that it will get very dirty. It would really wring my heart if, after 12 months, all these lovely new coins became to be known as "dirty Daltons," and if the right hon. Gentleman had to withdraw them from circulation. I say that from a friendly point of view. I warn the right hon. Gentleman against this decision, and, if he takes it, I hope he will not blame me later for the consequences.
There is another angle from which I appeal to the Government. As I understand it, this alloy has been found by experience to be the metal counterfeiters would most wish to have. It is very soft. Is the Chancellor absolutely certain about it? He only said that it was not very good, and I have no doubt he has reams of information on it. Is he certain that a hard nickel coin is easier to counterfeit than a comparatively soft cupro-nickel coin? Those are other reasons why I am against this particular coin. On the other hand, if we have to make a change from silver—which I regard as going backwards almost to prehistoric times—I am in 819 favour of nickel. It is the hardest metal and most useful for this purpose. I have no doubt that harder metal can be obtained, but from the practical point of view, and by reason of the fact that it does not wear the pocket to a great extent, it is probably as good as any metal. From the hygienic point of view I think it is far better than cupro-nickel. It is not so likely to pick up stains, dirt and rust. It is clean, and likely to remain in good condition for a fairly long time. That in itself is a value.
We differ vitally from the Government in another respect. I think that as an Empire product it is far better to encourage the production of nickel than of this alloy. I have no reason to suppose that the Empire production of nickel is not going on fairly well at present. We might do something to help trade and industry and I also think that nickel would be much more satisfactory to prevent forgery.
I am told that nickel has a further advantage over nearly all other metals in that it is magnetic. By an ordinary magnet one can detect whether a nickel coin is good, or not. That is an advantage worth consideration. Under all these circumstances, although I regret that the Bill has been brought in, and although I hope there will be some Amendments of a substantial nature on the Committee stage and, possibly, on the Report stage, I wish to say nothing which will in any way hurt the position in regard to repayment to America. If that position is as the Chancellor suggested, we have to accept it. But I am sorry that at this tag end of a Session we should be bringing in a Bill abolishing the silver coinage, which has stood for much all over the world, especially in India. I rather wonder why this is not happening in conjunction with India. If there is to be a Second Reading for this Bill, under the circumstances it will not be opposed, although it is a dismal thing at the end of a Session, and I suppose there will have to be an amending Bill in a few years.
§ 4.45 p.m.
§ Mr. Richards (Wrexham)
I should like to join in the welcome extended to this Bill by hon. Members on all sides of the House. In doing that, I find myself in the invidious position of agreeing with a 820 great deal that has been said by hon. Members opposite. I have considerable sympathy with the view expressed, that it is a pity we are coming to an end of a very interesting chapter in our history, in that we are dispensing for ever with our silver coinage. Silver coinage in this country has had a very long history. Owing to the particularly important position we have always held in financial and commercial circles, our coinage has had a considerable influence on the coinages of other nations.
I presume this kind of change was bound to come sooner or later. There was a time when we were particularly proud of our gold coinage, and the English gold sovereign was known all over the world. It had a currency which probably no other coin has ever had. But at the beginning of the first world war we found we could not afford to keep our golden coins, and consequently they disappeared altogether. Now has come the turn of silver to disappear also. The explanation, I take it, is twofold, although I did not quite follow the Chancellor in this respect. In the first place, it is too expensive to buy silver and use it as a coin, just as it was in the case of the golden sovereign. The Chancellor said that he does not want to buy any more at the moment, at any rate, and we are very deeply indebted to the United States to whom we have given a definite promise to pay back the silver we borrowed during the dark years of war. The Chancellor thinks, quite rightly, that this is possibly an easy way of recovering a great deal of silver, about £50 million worth, and paying our debt to America by instalments. Silver is expensive to use in coins, and our debt to America is a first concern of the Treasury, and must be. Consequently, we must dispose of our silver coins, and substitute' something else for them.
The Chancellor has decided in favour of an alloy of copper and nickel. I am sorry he has come to this decision because, judging from the speeches we have heard, and from what little I have read, the un-suitability of nickel is undoubtedly very great. In India, some years ago, this alloy was introduced. There it was found to be very easy to counterfeit the coins. Consequently, those coins had to be withdrawn very shortly afterwards. That is a very serious consideration. We do not want a coin, however beautiful it may 821 appear in a glass case in the Library, to be introduced, and then have to withdraw it after a very few years. Another point has been made that it would be a very dirty coin, and in a short time would appear to be quite unworthy of this great country which for centuries has had a first-class silver coinage, and for many years had a first-class gold coinage.
What probably weighed with the Chancellor was the relative cost of the two. I understand that it will cost the Chancellor something like £2,000,000 a year to get the alloy upon which he has set his mind, but if he had pure nickel, it would cost him another £1,250,000 per year. I do not think that that is a great difference, when all is said and done, in view of the considerable profit which the Treasury will make by calling in the silver coins. I understand that the profit will be in the region of £50 million.
§ Mr. Dalton
Thirty million pounds. Might I explain that £50 million is the gross saving due to the withdrawal of the silver coins from circulation? When account is taken of the repayment of silver to the United States that gross saving becomes a net saving of £30 million.
§ Mr. Richards
In view of what the Chancellor has said, I do not think that he ought to begrudge another £1,250,000 a year to get a really satisfactory coin. Nickel has considerable merits. It is easily seen and detected, and, as has been pointed out, has certain magnetic qualities which make it still easier to detect. In addition to that, it is particularly hard, it carries an impress for a long time, and it is quite a clean metal. If we are to substitute a very inferior alloy for our present silver coinage, I rather agree with those who have suggested that that is a backward step.
We may be in serious financial difficulties at the moment. We know our economic position is not what it was 20, 30 or 50 years ago. Yet I think we ought to struggle to produce a coinage—if a change is to be made, and I quite agree with that—of which we can be reasonably proud. Nickel would answer the purpose admirably from that point of view. Stanley Jevons, many years ago, said that possibly the only thing that would survive from our civilisation would be its coins—we have realised, in the course of the last war, that that is quite a possibility—and 822 he asked if there was any reason why these coins should not be as artistic and well produced as possible. The Bill that has been introduced by the Chancellor loses an opportunity in not selecting a material that is only a little more expensive than the one he suggests, and which is, on all other counts, far superior to the alternative he suggests Consequently, as I have already said, although I shall certainly not vote against the Second Reading of the Bill, I have some feeling about the step which the Chancellor is proposing to take and I think it would be much better if he substituted nickel for the alloy which he has proposed.
§ 4.55 p.m.
§ Mr. Hopkin Morris (Carmarthen)
There is unanimity in the House today about the welcome to the Chancellor on his return, and I should like to associate myself with it. There is a great deal of unanimity, too, about the Bill itself. We regret the necessity for it, we regret the passing of silver. I agree with the speeches that have been made on this side of the House, and the speech of the hon. Member for Wrexham (Mr. Richards). It is one of those Bills which is the measure of our poverty. We have to resort to this in order to discharge our obligations under Lend-Lease to the United States. The simple question is: Which is the better way of doing it? I listened to the Chancellor's speech, in which he said it should be done by the use of cupro-nickel, and I think I am doing him justice in saying that the reason why he objected to nickel was not the question of expense. The hon. Member for Wrexham said that the question of expense was only an additional £1,250,000 a year. No point was made by the Chancellor about that
The point he made was that the Mint had the necessary plant to deal with cupro-nickel but not with nickel. Very good That is an admission in itself that cupro-nickel is not being chosen on merit, but because of the position at the Mint. The answer to that is we have the facilities in this country, and in South Wales, to deal with it. The plant is there, the labour can be provided, and it would be a great contribution to the unemployment problem in South Wales. Here is an opportunity for the Government to implement its undertakings to South Wales, and an opportunity for the Chancellor to do something to help his right hon. Friend the Minister of Labour. This is 823 a case in which employment could be provided in South Wales, and an adequate coinage secured, although we should not use the machinery of the Mint, because the necessary machinery is not there. Instead of using an admittedly inferior metal, let us use the superior metal and thereby give employment to South Wales. It is not often that I support the arguments of the hon. Member for Torquay (Mr. C. Williams), but he put forward the best argument that has been put forward for the use of nickel. It will give us a better coinage, and contribute something to the solution of unemployment in South Wales.
§ 4.58 p.m.
§ Mr. Scollan (Renfrew, Western)
I wish to support the Chancellor in bringing forward this Bill. I had intended to deal with the point which was dealt with just now about the machinery in the Mint not being able to mint coins of a different tension. Obviously, unless we can get other machinery for the Mint we require to mint coins of a metal of the same tension as those we are using at present. High tension metal cannot be minted in a machine which is built for the purpose of dealing with medium or low-tension metal. Apart from that, I feel privileged to be here on an occasion which, many years hence, will be regarded as historic—the passing of the silver coinage The first recognised coinage of this country was a silver coinage. Even today, in our most modern coinage, if one looks at a pound note one seesWe, the Directors of the Bank of Scotland"—or some other bank—promise to pay the Bearer on Demand the sum of One Pound sterling.That means one pound avoirdupois weight of silver. It is rather amusing sometimes when one reads in the Press, especially in the contributions of the geniuses who write the City notes, about "sterling," when what is obviously meant is the receipts for sterling.
We now have a coinage which originates from the date when the first receipt was issued. Incidentally, it may interest the Chancellor, though he may know already, to hear that a Scotsman named William Paterson was responsible. It was he, a goldsmith of the City of London, who founded the Bank of England. When the 824 traders of the Continent came to this country to buy wool, which is symbolised in the Woolsack, they brought gold and silver with them. In those days a lot of people—inspired by private enterprise—used to waylay them and relieve them of their responsibility. As a result, they went to a Scot named William Paterson and laid their responsibilities with him. He gave them a receipt which they carried. To this day, we carry receipts in the same way, the only difference being that if we present our receipts, unlike William Paterson who would give us a pound sterling, those responsible could not give us a pound sterling today. From then on, it was discovered by some very astute Englishmen—if the Chancellor will pardon me for this aspersion on the past of his predecessors—that they could issue the receipts without the necessary metal. Then we had inflation—the first inflation.
I have no doubt but that the cheap type of Tory during the Committee stage will try to get in some kind of skit on the debasement of the currency. I forestall that by reminding them, if they do not know already, that this is only a matter of taking the silver reserve of the country to pay back a debt to the Americans who have not yet learned that real wealth does not lie in useless metal. That great reserve will be sent back, and in the course of time the Americans will learn that they have a great reserve of silver as they had of gold. Then they will have to call the nations together, as they did in the case of gold, to see whether they can find some means of realising the real value of what they buried in the vaults. The Chancellor is not the first who has debased the coinage in our time. [Laughter.] My hon. Friends opposite are laughing. The "caretaker" Government debased the paper coinage. Our paper coinage was issued on the understanding that it would buy gold at 168s. per fine ounce. The "caretaker" Government debased it by raising the figure to 172s. 3d., an increase of 4s. 3d. per fine ounce, to the tune of the 12,000,000 ounces which come out of Africa every year, thus getting 4s. 3d. extra. That is something new to hon. Members. They never thought of that. Their education goes on apace.
I am concerned at the kind of coinage which we shall have in the future. I think everybody is concerned, including the Chancellor. I wonder whether he 825 would be well advised to have another look at this matter and consider again whether we should have a real nickel coin or this cupro-nickel coin. I do not know, but I make bold to say that the finest coining machinery which the world has ever known was made and is worked in this country. I know that specially artistic and very highly skilled people are required to make the necessary dies and machinery. I do not know whether there is a shortage of that kind of labour but, while I am shedding no tears for the passing of the silver which is to be sent to our American friends—who are still in about the same stage of development with regard to knowledge of currency and international trade and commerce as we were about 50 years ago—I am still of the opinion that while the passage of the Bill would not be retarded, the Chancellor might delay putting this into operation until we have the necessary machinery to guarantee to his satisfaction a coinage of a standard that befits a great nation.
§ 5.6 p.m.
§ Mr. Drayson (Skipton)
I do not consider that the Chancellor has by any means made his case clear. While he has had many welcomes on his return from America, I think the country and the House have got used to Ministers who return from that country usually having given something away while they have been there. On this occasion it would appear that the Chancellor has parted with £20 million worth of silver. At least, we might have expected that he could have made some other arrangement. Recently we had a large dollar loan. Perhaps a little of that could have been given to the Americans in satisfaction of their demands for this metal and we could have retained our present coinage.
§ The Financial Secretary to the Treasury (Mr. Glenvil Hall)
I am sorry to interrupt the hon. Gentleman, but it should be made quite clear that this silver amounting to 88,000,000 ounces, to which he has referred, was a loan. We have had the silver and it is now a question of repaying it
§ Mr. Drayson
Yes. My suggestion was that we should repay the loan in dollars instead of silver. I regard this clearly as a panic measure. Other hon. Members have described how silver rose to some phenomenal price in the early twenties and how after a year or two it returned 826 to normal. Those countries which before the war produced large quantities of silver have been occupied in other pursuits during the last six years and per-haps the silver mining industry has been disrupted. However, it cannot be very long before those concerned who have left their wartime pursuits will return once more to the task of winning silver from the earth.
Therefore, the high price which exists today will be reduced again to a price which will allow us to retain silver in our coinage. This is one more example of the determination of hon. Gentlemen opposite—and they have expressed this in words and writing before now—to ensure that our currency is nothing but a series of meaningless symbols. There has been no attempt so far on the part of the public to hoard the silver coinage which is now in circulation. When they learn, as a result of this Debate, that the shilling contains only five pennyworth of silver, they will be still less inclined to keep any of this money out of circulation. We have heard that the amount involved in the whole of our silver coinage is £50 million, that only £20 million is required to satisfy the Americans, and that £30 million will be available as profit to the Treasury.
I would like to put forward a suggestion to the Chancellor for his consideration. Will he consider issuing a five-shilling note? That would account for half the silver in circulation, and, at his will, he can withdraw the other half and from it pay back the silver which he owes to the United States. After all, the great American nation, with more than 100 million population and its vast commerce, conducts this daily with the dollar bill, which is worth, in terms of sterling at the present time, five shillings. If we move to another country which has one of the soundest currencies in the world at the present time, Switzerland, we find there that the lowest paper denomination is that of five francs, worth about six shillings at the official rate of exchange. I do not want a whole mass of paper currency, such as we have found in other European countries, but we have these two precedents worth five and six shillings respectively which we might consider. I feel that there are possiblities there, and that many of us who find our pockets, after many years, getting rather threadbare.
827 would be glad to reduce the amount of metal in them while keeping our paper money elsewhere.
I consider that the public should be able to feel that the coins which they have in their pockets have some value, and we shall regret very much the passing of our silver. The Chancellor is not here, but I would say to him that, rather than go down to history as the man who produced the "dirty Daltons," which we fear these new cupro-nickel coins will ultimately be called, he might produce a "Dalton" five shilling note which could look the dollar squarely in the face. I hope that, after further thought, either my suggestion will be adopted or that that other metal, nickel, whose virtues have been extolled from both sides of the House, will be given full consideration.
§ 5.13 p.m.
§ Major Vernon (Dulwich)
There is only one plea which I wish to make and it arises from a remark made by the hon. and learned Member for Carmarthen (Mr. Hopkin Morris). He said that silver, which had such a history in our coinage, was to be abandoned for ever, and those words "for ever" depressed me very much indeed. I can understand the needs of the Chancellor and the importance of getting out of debt to America. Much as I deplore the disappearance of silver from our money, I cannot but say that, for this purpose of partly restoring the balance between ourselves and the United States, it is something which has to be done. But I hope the Financial Secretary to the Treasury will hold out some hope that, when this period is over, silver may be restored to the coinage.
We have had so many objections from various parts of the House to the proposals that have been made that I think there is a general feeling that the proposals themselves are open to a good many objections. Why is it that I am so attracted to silver? It is that it holds for us historical and traditional links, and it reflects in a way the English character. When I say the English character, I do not mean good character only, because good and bad character, especially in our kings, have been reflected in our currency. In fact, I might say that the kings who were called "good" were those who maintained the value of the currency, and that those, who were called bad kings were the kings 828 who let it down. This debasement of the currency, or inflation, as, in our more mealy-mouthed times, it is termed, is a practice which is very old indeed. The right hon. Gentleman the Member for the City of London (Mr. Assheton) said that in Roman times coins were debased by being decreased in size. We in Britain have decreased the quantity of metal in our coins, and also the quality, and it is not only the coin itself to which this traditional interest attaches. It is also the words that are associated with it. The penny was one-pennyweight of silver, or 24 grains, and it was laid down on the subject of the standard of the grain, that it was to be taken from the middle of the ear. The pound was a pound weight of silver, and so, in very many other ways, there are traditional links with English history and the ideas which have been associated with it all the way through.
There are numerous links with the silver currency which add to the interest, and, I think, to the affection, with which some of us regard this device which we have used in this country. Concerning the decrease in quantity of metal in the money, it is interesting to remember that, in Saxon times, the penny was really a pennyweight of silver and of 24 grains. That quantity of metal in the coin was maintained for about 500 years, when it dropped to 22½ grains. The reason for this decrease in the weight of metal, I believe, came from the fact that the king felt it was his responsibility to his subjects to maintain the coinage at this standard weight or size, and, of course, they had to have his portrait on one side. Whether this portrait was put there as a guarantee of quantity or quality, or as Royalist publicity, I am not quite sure, but in course of time the portrait began to wear off and there was the necessity for calling in those coins and sending out fresh ones. Then the king began to discover that he did not get so many coins to send out again from the silver which he got back, because the silver had disappeared in wear. For a while, the king made up this loss out of his own resources. But there came a day when he said he could stand it no longer, and, instead of 24 grains, they would only put in 22½ grains. Further reductions followed. In 1400, it went down to 18; in 1500 to 12; in 1600 to nine; in 1900 to seven, where it remained until 1920, when, as we have been reminded, Sir Austen Chamberlain reduced 829 it to 3½ and now we come to the sad point where it disappears altogether.
As to the quality, it was maintained steadily at 92 per cent. pure silver, and that standard quality of purity of the British coin gave us some prestige all over Europe for a long period. It was one of our bad kings, financially, who upset the business again, and he was Henry VIII, who was rather an extravagant King and who found it difficult to make both ends meet. He was also an ingenious person and he reduced the percentage of silver in the coins from 92 to 75, and, at the same time, made them smaller. He tried it first on the Irish, and they never seemed to notice any difference and, having found he could do it with the Irish, he tried it on the British. It went down moderately well, because, in those days, if one took it badly, the king took it badly too, and the same thing happened to all those who objected too strongly to the actions of that particular monarch. It was not only by reducing the size and quantity of the coinage that Henry VIII did well for himself. His father made only £100 a year out of turning people's raw metal into coins, but Henry put up the charge by stages from 8d. in the £ until it became 8s. in the £. He also kept people waiting for their money. They brought their gold and silver to the Mint, but, when they came a few weeks later and asked for their coins, it was like getting clothes back from the laundry today. They came again and again, and he kept them waiting for months, using the money in the meantime.
I am sorry to put all these ideas into hon. Members' heads and hope that too much notice will not be taken of them. But they are really part of the historical story and part of my appeal to the Chancellor of the Exchequer to put the silver back into the coins when he gets the chance. It was not only Sir Austen Chamberlain who made a profit out of this proceeding. I have the record of how much Henry VIII gained by handling the currency. From gold he made £40,600 3s., and from silver £186,778 8s. 9¼d. I think I have said enough to explain my attachment to this particular metal in relation to our currency, and I hope that the Financial Secretary will be able to give us some word of hope that, in due course, the silver will be restored.
§ 5.22 p.m.
§ Mr. David Eccles (Chippenham)
I am sure the House will join with me in congratulating the hon. and gallant Member for Dulwich (Major Vernon) on his most agreeable and traditional speech. The noble Lord the Member for Horsham (Earl Winterton) tells me that the ghost of Sir Charles Oman walks again. I agree with him that cupro-nickel is a bad alloy, and I also agree that we have to repay the silver. The only point I wish to make is that I was surprised at the levity with which the Chancellor of the Exchequer moved the Second Reading of this Bill. One would have thought that the right hon. Gentleman would have regarded the introduction of cupro-nickel into our coinage, very much as the Foreign Secretary regards the introduction of crypto-Communism into the Labour movement. Both are shocking concessions to the poverty of the nation.
If we were still a wealthy country, and if we still had large export surpluses such as we formerly enjoyed, then I do not doubt that we should still have a gold coinage like the United States of America. It is a stroke of good business for a rich country to have an intrinsic value to its coinage, because all the other countries of the world are more willing to write their contracts in a currency which has an intrinsic value and, therefore, the nation that is already rich, gets richer still. But what we are doing this afternoon is parting with one of the outward and visible signs of British wealth. We have to take this step, but are we wise to pretend—and this is my charge against the right hon. Gentleman—that it does not really matter how cheap and nasty is our coinage? It seems to me that the Chancellor was saying to the British public something like this: "You are in debt and you have very little money. Therefore, you must pawn your silver watch and chain at my Government shop. You really do not need a watch at all. There are plenty of clocks in public places and you can dial 'TIM' on somebody else's telephone, if you want to know the time. As a matter of fact you have been wasting your money ever to have a watch at all. "That is the language of the "Rake's Progress" and the language of the tempter who suggests to his victim that virtue is so far impaired that there is no innocence left worth preserving.
831 I am very sorry to see the Government take that line. Surely, the proper course would be to tell the people the truth and to say, "We are desperately hard up—very nearly bankrupt"—and to have explained that, in those circumstances, we had to part with silver, but at the same time making it clear that we were all determined to work unceasingly until we regained the substance and the ornament of respectability and a high standard of life. Getting rid of silver from our coinage is another stage in the deterioration of our standard of life. I do not like the soft way in which the Government speak to the people about the real nature of our difficulties. The House knows that I am a believer in precisely the opposite method. If I were His Majesty's Government, I would tell the people the hard truth and make an appeal to all British men and women for the time being to pocket their fads and fancies, and to work together in order that the country might be put on its feet again. If that were done, I believe that a tremendous response would come from the people. But that is not what the Government do; they ask us almost to welcome this step towards poverty.
The new coinage, if the Lord Privy Seal will allow me to say so, is going to have a still further drawback. It will be symbolic with a new meaning. The Mint is going to issue bright and attractive coins—attractive to children and magpies. But we know that within a short time such coins will tarnish and that dirt will cloud their shine, and then children will have to be smacked for playing with them, and magpies will refuse to collect them. What a perfect symbol of the career of this Government. Here is a Government which came into power in July, 1945, bright and shiny with promises. Now, only 15 months afterwards, we find them grubby in their performance. In the pocket and purse of every British subject there will, from now onwards, be a symbol of this Government.
§ 5.28 p.m.
§ Sir John Barlow (Eddisbury)
It seemed to me that when the Chancellor of the Exchequer introduced this Bill he was almost enthusiastic about debasing the silver coinage still further into the new alloy coinage. To me it is rather a sad 832 moment, having seen the passing of the gold coinage. Then we saw reduction in the value of the silver coinage; now we see it passing altogether and the substitution of a cheap alloy coinage. In these days, we must approach the matter from a practical point of view, and we should all recognise that this silver coinage, so called, has been merely a token coinage for very many years. Some years ago, the British Government borrowed a certain amount of silver from America and, at a given time—we have not been told exactly when—that silver must be repaid in kind. I imagine that the Government have the opportunity either of paying back that silver out of our coinage, or by buying in the open market and repaying it in that way.
As we have been told, the price of silver has increased very substantially. I can imagine the holders of silver in America and other parts of the world carefully watching our position and anxiously looking to see whether we propose to purchase £20 million of silver with which to repay the debt, meanwhile stepping up the purchase price as time goes on. I think we should congratulate the Government on taking this step of removing the silver from our coinage and repaying it in kind. It is undoubtedly one very good thing which they have decided to do. I do not often agree with the Chancellor of the Exchequer, but I congratulate him upon taking this step. In conclusion, therefore, although in principle, I dislike the proposed change in the content of our coinage, I think that from a practical and commonsense point of view it is undoubtedly the right action at the present time.
§ 5.31 p.m.
§ Mr. Godfrey Nicholson (Farnham)
I think most of the points which should be covered in an important Debate like this have already been covered, and I do not propose to detain the House for long. It seems to me that the case for this great and deplorable change has been made out, and we should concentrate our endeavours upon trying to persuade the Government to, make a new coinage which will take the place of our ancient and honourable coinage as something that is worthy of this country. I believe coinage has a most profound symbolic value and a psychological effect. I believe a great deal of extravagance, waste and a sub- 833 conscious tendency towards inflation can be traced to the sad days over 30 years ago, when the golden sovereign and half sovereign disappeared, and I believe that if we are now to fall into the same trap into which most Continental countries have fallen, of having a shoddy sort of coinage, it will debase the economic morality of each one of us.
I am sure the Chancellor will pay full attention to the weighty arguments that have been brought to bear in favour of a nickel coinage, and I only wish to underline those arguments. There are one or two particular points that I wish to make. From the Schedule to the Bill I see that we have finally said "goodbye" to the crown piece. I hope that decision will be reconsidered It has always struck me that the crown is a handsome piece of money. It gives great delight to children, and I do not see why we should not give delight to children, it is a dignified coin and it can be a most magnificent coin. Crown pieces have been the finest objects in anybody's collection. One thinks particularly of one produced under the Commonwealth, and some of the 18th century coins. In the Committee stage I shall try to press for the retention of the crown piece.
Then there is the question of design. I do not know whether it is the Chancellor's intention to make this an occasion for redesigning the British coinage. I hope it is. It is my conviction that this century has seen a sad decline in the standard of British coin design. One occasionally finds in one's pocket Victorian coins. Contrast with the later designs the style of designing of the sovereign's head in the 'seventies; consider the florin or even the pennies or halfpennies of the 'seventies. Take the obverse side of the coins. What miserable designs these half-crowns today are, compared with the finest specimens of the Victorian era or preceding reigns. This is a great opportunity for restoring the artistic dignity and the psychological and symbolical value of our coinage, and I hope that opportunity will be taken. In a way, this is a humiliating moment, when we sink to the level of so many bankrupt foreign nations, and have to abandon any pretence that our coinage is not debased. However, I think it is a sign of honest poverty, of money spent in a great cause. We may have to live at a cheaper rate 834 and wear cheaper and more homespun clothes, but let us wear them with dignity and let us see that they are well cut, and we shall not disgrace ourselves or our forebears.
§ 5.35 p.m.
§ Mr. Oliver Stanley (Bristol West)
I hope I will be excused if I do not follow what appears now to be the established precedent of welcoming the Chancellor back from America. So far as I know, he has already started to go back there, and, in any case, I see no reason for treating him as a sort of Columbus in reverse. His journey cannot have been very dangerous and probably the only risk he ran was that of overstraining his digestion.
§ Mr. Stanley
I have been for a holiday, too, but nobody welcomed me. Nobody said, "I am glad to see you back from Blackpool." It is just as dangerous to go to Blackpool as to America. I agree entirely with my hon. Friend the Member for Chippenham (Mr. Eccles) that it is a pity that this Measure should be introduced in a spirit of levity, as if it did not matter at all. I do not believe that to be the case. I believe it is a matter of some concern that we should have had to take this step, although I also agree that the circumstances have justified the step being taken. If this easy way of "collaring" £50 million does not matter to anybody in this country, it is difficult to understand why no Chancellor of the Exchequer in recent times before the present one has thought of doing it. Sir Austen Chamberlain, of course, had to meet a different situation where the metal content was about the nominal value.
In the course of my time in Parliament a number of Chancellors of the Exchequer have been anxious to pick up an honest penny to help their Budgets whenever they could find one. I remember one described by the present Chancellor of the Exchequer as "a robber of hen roosts." If this method did not matter, I cannot imagine that any one of them would have passed over the opportunity. It does matter. It reduces very considerably our financial prestige. It is a token of our lowered standard of life, and, to some degree, it is also true that the more one's currency becomes a token currency the less people are concerned about econo- 835 mising it. I agree that this has got to be done. We are faced with this contract to repay this large sum in silver, and, of course, it would be the worst economy to go out in the markets of the world at a time when silver is in keen demand, and buy up silver in order to repay America. Therefore, we on this side of the House do not challenge the Second Reading of this Bill.
I am afraid that I cannot share the optimistic feelings of the hon. and gallant Member for Dulwich (Major Vernon) who hopes that he will get a reassurance from the Financial Secretary that this abandonment of silver will be temporary. I cannot see any Chancellor of the Exchequer coming down to this House in the future and saying, "I have got a surplus for this year of £50 million. I shall not spend it in reducing Income Tax; I am going to spend it all in restoring the silver currency." I am afraid that when we say "Goodbye" to silver with this Bill, we are probably saying "Goodbye" to it so far as the lives of any of us here are concerned. The hon. and gallant Member for Dulwich made a most interesting and amusing speech, but beneath his historical tales and his amusing quips there lay a very deep lesson for the present Chancellor of the Exchequer. The hon. and gallant Gentleman said that in the old days the goodness or badness of kings was largely determined by whether or not they debased the currency.
The same effect as bad kings of old produced upon the people of this country by debasing the currency can still be produced today by bad Chancellors of the Exchequer who reduce the value of our money. It may not matter so much today, merely to put more nickel into a shilling, as it did in the times to which the hon. and gallant Gentleman referred, but exactly the same poverty and distress is caused today when the shilling is reduced in value. If we are to judge Chancellors of the Exchequer by that same test which the hon. and gallant Gentleman applied to kings in the past, I shall put the present Chancellor of the Exchequer definitely among those who in "1066 and all that" would be classed as "bad" kings. I think he is just about on a parallel with King John; not yet perhaps quite in the class of Henry VIII, but working that way.
§ Mr. Stanley
The hon. Gentleman must read English history and he will see. The main difference between the two was that King John had too many lampreys and King Henry VIII too many wives.
§ Mr. Kirkwood
I only wanted to give the right hon. Gentleman an opportunity of telling the House all about it.
§ Mr. Stanley
I would certainly advise the right hon. Gentleman when next he goes out to dinner to be very careful of lampreys: oysters, yes certainly; winkles, possibly, but lampreys, no.
The main point on this Bill is not the fact, which we all admit with whatever degree of regretfulness, that the coinage has got to be changed, but what coin is to be substituted for it. I do not propose to discuss that today, because it is obviously a matter which should be raised, and which we shall raise, in Committee. I make only this one appeal. I do hope the Chancellor of the Exchequer and the Financial Secretary will not meet us when we discuss this in Committee in the sort of spirit that one phrase in the Chancellor's speech today led me to fear; that is, when he described the talk about 100 per cent. nickel currency as coming entirely from the Mond Nickel Company or their mouthpieces. I thought it a little ungenerous, in view of the fact that the principal letter written in the whole of that correspondence has in fact come from the Agent General for the Province of Ontario. I hope the right hon. Gentleman will not try to make prejudices of that kind. There is no party question in this at all. We are all anxious, if possible, to get the best possible currency.
§ Mr. Kirkwood
My right hon. Friend never intended to put it in the way the right hon. Gentleman is suggesting.
§ Mr. Stanley
Then why did he have to say it? If he did not mean it, why was it necessary to bring in the Mond Nickel Company at all? Cannot we discuss, without that kind of prejudice, the simple fact of whether a currency which is likely to be with us all our lives is better made of 100 per cent. nickel or of this particular alloy which is now suggested? I hope that on Friday we shall be able to discuss this not unimportant question in that spirit, and that the Government will keep their minds open to the appeals which have come from all sides of the House.
§ 5.45 p.m.
§ The Financial Secretary to the Treasury (Mr. Glenvil Hall)
I think all of us will agree with the right hon. Gentleman the Member for West Bristol (Mr. Stanley) that the Bill which we are discussing is not really a party issue at all. I think I can go farther, and say that all hon. Members in every quarter of the House—and I am positive the same goes for the general public outside—regret the proposal that from now on our coinage should cease to have any silver content. We are all proud of our coinage; I think we have every right to be proud of it, and of the craftsmen who make such splendid coins—token coins as they are. They are, I am positive, the envy of many people in other parts of the world. Underlying many of the speeches that have been made this afternoon is the assumption that the new coinage will be something worse than the silver coins to which we have been accustomed. Of course, one enters the realms of prophecy here, but I can assure the right hon. Gentleman and his hon. Friends opposite, as well as my hon. Friends on this side of the House, that, regrettable though this change is, it will be the endeavour of the Royal Mint to see that the new coins which are issued will be such that we can continue to be proud of them.
I have been asked if the Government will keep an open mind as to the metal to be used. I readily give this assurance on behalf of my right hon. Friend. I think by general consent we have narrowed the material down to either cupro-nickel, an alloy of 75 per cent. copper and 25 per cent. nickel, or pure nickel. As the House will have noticed, in the Bill we have kept that quite open; although it is the present intention—for reasons which I will give in a moment—to make the new coinage of cupro-nickel, it will still be possible at some future date for the coinage, if the House so desires, to be made entirely of nickel. My right hon. Friend and the Government do not close their minds to the suggestion that we should go over to nickel entirely, should that be desirable. The reason why we cannot do it immediately—and we very much regret it, if nickel is the better material—is that the Royal Mint cannot cope with the work of making coins entirely of nickel at the present time. It would need very special 838 machinery. Although it is true that we could get the nickel manufactured and the discs cut outside, it is felt that this work should, if possible, be done inside the Mint. In addition, apart from the fact that we have not the necessary cutting machinery, new dies would need to be cut. I am not a technician, but I am told new dies would be necessary because the image would have to be cut lower than with the material we are going to use.
I agree with the right hon. Gentleman the Member for the City of London (Mr. Assheton); there is no analogy between what the late Sir Austen Chamberlain did in 1920 and what we propose to do now. Times were different then, and the main factor guiding him was that the intrinsic value was greater than the face value of the coin, and with a token coin that always must be very undesirable. Nevertheless, there are factors today which make this change essential. It is worth while remembering the late Sir Austen Chamberlain's action because, during the time that has elapsed since then, it is clear very little harm has been done. In passing perhaps I might answer the question why we were going back so far as the Maundy money is concerned to the old 925 ounces of fineness. The change made by the late Sir Austen Chamberlain was to give the Maundy money the same content as the new silver coins, as the easiest thing to do. Now that silver is to disappear from the coins altogether, we propose for sentimental reason—to which, I think, none of us object—to continue the manufacture of Maundy money, but of its original fineness. We on this side of the House are great believers in tradition and the keeping of old customs. It is just as well that we should go back to the original arrangement. It will not cost the nation very much. I am told the annual cost is something like £46 5s.
He also said that the coinage should have a good appearance, be difficult to counterfeit, and be hygienic. That, I think, answers the hon. Gentleman who spoke later from one of the Back Benches opposite, who seemed to suggest we ought to have paper money. One of the objections to paper money, one of the alternatives that was thought of, is that, generally, paper money for small denominations is a nuisance, unhygienic and undesirable. I may add, it is generally expensive. It costs little 839 to print the notes, but they constantly have to be changed, so that they do become expensive. In addition, they mean a great deal more work—for people who pay wages; also cashiers in banks can weigh money more easily than count notes. So, considered from every point of view, we rejected the proposition that we should make notes of small denominations, and that, I think, meets with the general approval of the House.
Something has been said by more than one speaker to the effect that cupro-nickel coins will be easy to counterfeit. Again—I speak, of course, not as one who knows, but as one who has gathered his knowledge from the experts—I understand that the new cupro-nickel will be more difficult to counterfeit than the present silver coinage. A good deal has been said about the ease with which the material can be melted down, but, as a matter of fact, I gather that the melting point of the new material is something like 1,350 degrees centigrade, whereas the melting point of the silver used in our silver coins is 200 degrees less. So that, if that is a valid point, cupro-nickel is going to be more safe from the counterfeiter than our present silver token coinage.
The hon. Member for Torquay (Mr. C. Williams) suggested, as also does a letter which has been referred to, and which appeared today in "The Times," that one advantage about nickel is that a magnet can attract it. I believe this is perfectly true, and if we do come to nickel I imagine that all of us will carry magnets about with us on our watch chains to be quite sure that we are being given no counterfeit coins. But, to be quite serious, it is obvious that the risk of having counterfeit coins in wide circulation is very remote, and if it is the fact that a magnet will attract nickel, that, in itself, as I say, is no sufficient reason why we should adopt nickel.
One of my predecessors in my present office, who sits for the City of London, said that when we came to the Committee stage his party would have objections to offer to the proposal in Clause 3, to change the composition of the coin without reference to Parliament. Quite frankly, the House cannot have it both ways. The suggestion now is that we should not bind ourselves to cupro-nickel, but that, at 840 some time to come, we should go over to pure nickel. Therefore, we must take powers in the Bill, so that, if some other metal is discovered—or nickel is found to be the best way—we may have powers to change over. After all, these are purely technical changes. It is only a question of changing one base metal for another; and, providing that the base metal chosen is better than the old, and that Parliament is informed, surely nothing else matters. Even under the existing law it is permissible to vary the composition of metal coins other than silver, and, of course, now that we are getting rid of silver altogether, it is only right and proper that the variation, which is allowed under the existing law with base metals, should be continued.
We had a very humorous speech, as always, from my hon. Friend the Member for South Nottingham (Mr. N. Smith). He made a point—I think he did it with his tongue in his cheek—that this Bill should include increased penalties against counterfeiters and forgers. It does not need me, perhaps, to tell him that this is not the place to tighten up the criminal law, and I say that all the more certainly and easily because I am sure that he knows it as well as I do, and that he only brought the point into his speech in order to hang a homily to the other side upon it. But, certainly, this is not the Bill to do a thing of that kind. Its object is a very simple one, as my right hon. Friend explained, and that is, to change over our token coinage from silver to an alloy of nickel and copper.
The hon. Member for Torquay was labouring under a misapprehension so far as the United States of America are concerned. It is true, as my right hon. Friend said, that we have to repay 88 million ounces of silver to the United States within the next five years or so. But the hon. Member for Skipton (Mr. Drayson), I think it was, suggested that we should pay in dollars rather than in silver, and that that was one way of obviating the change now suggested. But he and the hon. Member for Torquay must have forgotten that we have undertaken to repay this bar for bar in silver. It is one of our obligations under the Lend-Lease arrangements. As we have at some time to start to repay, there is no reason why we should not begin to make arrangements now, particularly as it will 841 take some little time for the coinage to be made and put into circulation, and for us to get a steady stream of the old coinage coming in, which can be melted down and used. We could, it we would, leave the repayment of the whole 88 million ounces to the end of the five years, but now is an excellent time for making the change. We have this money to repay in silver, and it is our view—and I hope it is shared by the House—that the sooner we make arrangements for repaying it the better.
§ Mr. C. Williams
I thank the hon. Gentleman for giving way to me. I was under no misapprehension at all of any sort or kind. I am grateful also for his explaining part of what I wanted to know. He has told us there is no need to repay this until the end of five years. I am not in the least against him for beginning now, but what I want to know is whether America is asking for present repayment, and if that is the reason for preparing to pay now. As to the fact that we have to pay in silver, is there any pressure from America? Do they want payment now, or could we leave it for two or three years?
§ Mr. Glenvil Hall
I am very glad to be able to put the hon. Gentleman right on that matter. The United States are not pressing us in any way. We do know that this obligation exists. There was an understanding that it should be repaid in the course of the next five years or thereabouts, and this was one of the arguments put forward by my right hon. Friend as a reason for making an early start. Obviously the alternative is to go into the market and buy silver. That would mean that its present high price, might go even higher. In addition we should be competing with industries which now, more than ever, are using silver in processes which are useful and necessary to the national life, and that we do not wish to do. Therefore, for these reasons, which I think are commonsense, this should be done now, though there is, I should like to repeat, no pressure whatever on the part of the United States for this money to be repaid straight away. The hon. Member for Torquay ventured to think that, with the new token coinage, he and others like him would be robbed of a sense of security when they had money in their pockets. I will not follow 842 up that argument, which does not hold water for a moment. I think the right hon. Gentleman who ended the Debate for the other side made much the same point when he indicated, perhaps half by implication, that my right hon. Friend the Chancellor, like a king who debased the coinage, was a bad Chancellor.
§ Mr. Stanley
I said he was a bad Chancellor of the Exchequer because he is lowering the whole value of money, which is the modern form of debasing the currency, which bad kings of old used to do.
§ Mr. Glenvil Hall
If I may quite briefly answer those two points together—the point was made in other words by the hon. Member for Torquay—it crossed my mind, and it must have crossed the minds of other hon. Members on this side, to wonder whether he feels the same when he has a £5 note in his pocket, because the £5 note is intrinsically even more worthless than the token coins which he has in his pocket; furthermore the latter are only legal tender up to 40s. and no more. Therefore, so far as the question of value and the security of individuals is concerned, the situation will be just the same when we get the new token coinage as it is now. That, I think, answers the right hon. Gentleman who wound up the Debate. It is unfair, and in my view it is certainly untrue, to suggest that this change in the token coinage of this country in some way—quite how was not explained—lowers the value of our money. That is quite untrue. The value of money lies in what it will buy—
§ Mr. Glenvil Hall
I took the right hon. Gentleman's words down: he said that a bad Chancellor, like a bad king, was one who would reduce the value of our money, and when I interrupted—
§ Mr. Stanley
I do not want the hon. Gentleman to get me wrong. I am not talking about what the Chancellor is doing today, but about what he has been doing for the last year. That is what has been reducing the value of money.
§ Mr. Glenvil Hall
My hon. and gallant Friend the Member for Dulwich (Major Vernon) suggested that the Chancellor 843 may some day have it in his heart to restore silver coinage, purely on sentimental grounds, and I think that what he said finds an echo in the hearts of most of us. We rather like silver. The word itself is a lovely word, and we like to think that our token coinage does contain silver. What will happen in the future, of course, is not for me to forecast, but again I think the right hon. Gentleman who concluded the Debate was a little wrong when he suggested that its reintroduction would cost any Chancellor £50,000,000. Of course, it would not cost the Chancellor £50,000,000 all at once. It might in the long run, but the operation would take place gradually and the alteration would come into force over some long period of time. What is quite clear is that the new coinage, whatever it is made of, will have the same weight, and much the same appearance as the coins we now use, and we hope that, as in Ireland, the new coinage will run smoothly side by side with the old for some years, until the present silver coinage is withdrawn.
That answers another hon. Gentleman who thought that the time was opportune for changing the designs on the coins—I think it was the hon. Member for Farnham (Mr. Nicholson). Of course, it is possible to improve the designs on our coins, but it was felt that this was neither the time nor the place to do it. For one thing, it would mean that people who are on other work would have to be taken off to elaborate the designs, also, if we are to change the metal used in our coinage, it is perhaps as well to keep the apperance of the coin as it is now, and then the change over does not appear so drastic to the individual. People will not become frightened, as they might—quite wrongly—be frightened by some of the speeches made on the other side.
§ Mr. Nicholson
Does the hon. Gentleman seriously think that a competition for new designs of coins would really affect the labour market? I would point out that the coins cannot be quite the same size; they will be slightly different if they are the same weight, because the specific gravity of the metal will be slightly different. It is a golden opportunity to have a really beautiful coinage. [HON. MEMBERS: "Golden?"] Well, a cupro-nickel opportunity, and the Chancellor would go down in history as a sort of Pericles.
§ Mr. Glenvil Hall
I do not want to labour that point; we have other business tonight, and I do not desire to keep the House any longer on this matter. It is the desire of my right hon. Friend that this change over should be made smoothly, and that the new coinage which takes the place of the present silver token coinage should be worthy of this country in every respect. He desires that the change should be made with the least possible upset, and for that reason perhaps now is not the time to embark upon either new denominations or new designs. We hope that the new coinage will wear well, and I can give the House my right hon. Friend's assurance that, if we find that some of the worst fears of hon. and right hon. Gentlemen opposite are realised, and the coinage begins to look dirty and frayed and unworthy of a great nation, he will be the first to see what changes can be made to improve it—he is taking powers in the Bill so to do—so that the coinage shall continue to be, as it has been in the past, one of the glories of this nation.
§ Colonel Gomme-Duncan (Perth and Kinross, Perth)
Before the hon. Gentleman sits down, may I ask one question? As the silver is to be reduced very considerably, can we be assured that the silver threepenny piece will be restored in the usual numbers, instead of the hideous copper coin which took its place?
§ Mr. Glenvil Hall
The general feeling is that the twelve-sided threepenny piece is a boon and a blessing to men. [HON. MEMBERS: "NO."] That is a matter which could perhaps be raised, if hon. Members desired to raise it, in Committee. I can assure the hon. and gallant Gentleman that we have no intention of manufacturing threepenny bits in silver, as he suggests, and it may be a long time before cupro-nickel threepenny pieces are made, because of certain difficulties owing to the size of the coin. That, however, as I say, is a matter which we might perhaps leave until the Committee stage, when it might be argued at greater length.
§ Question put, and agreed to.
§ Bill accordingly read a Second time.845
§ Bill committed to a Committee of the Whole House, for Friday.—[Mr. Joseph Henderson.]