BANK RATE TRIBUNAL (REPORT)

HC Deb 03 February 1958 vol 581 cc815-948

3.31 p.m.

The Secretary of State for the Home Department and Lord Privy Seal (Mr. R. A. Butler)

I beg to move, That this House welcomes the findings of the Tribunal appointed under the Tribunals of Inquiry (Evidence) Act, 1921, to inquire into Allegations of Improper Disclosure of Information relating to the Raising of the Bank Rate, presented on 21st January, and accepts the Report. The Tribunal whose Report is before the House was set up under the Act of 1921 on a Motion moved by my right hon. Friend the Prime Minister on 14th November—that was last year—to ascertain whether there had been an improper leak of information about the raising of the Bank Rate.

In fact, as I shall shortly show, the Tribunal's findings entirely justify the confidence that was rightly placed in all those who, for one good reason or another, received advance information of the announcement of financial policy last September. They justify the trust which the Government must place in the Press. They justify the integrity of members of Her Majesty's Government and party officials, and the honour of those against whom individual insinuations have been made. They justify my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft). Finally, they completely vindicate the stand against rumour and calumny which was taken by my right hon. Friend the Prime Minister.

In the circumstances, when issues of private honour and public import are involved, we are astonished that the most that the Opposition can do is not to dissent from these findings. This, in itself, is eloquent of the parlous state of the Opposition. It was, in fact, the hon. and learned Member for Northampton (Mr. Paget), in the debate to which I have been referring, who illustrated the gravity of the decision to set up a Tribunal. He expressed anxieties about the procedure under the 1921 Act. He said that it was quite possible to have an inquiry which would result in a Report which might be totally destructive to a number of careers, without any charge ever having been formulated against the people concerned…"—[OFFICIAL REPORT, 14th November, 1957; Vol. 577, c. 1168.] We should have it in mind that it is impossible to tell beforehand how many people will be affected by an inquiry of this sort. Technically, nobody is accused. Many people are generally regarded as being in the dock. Many people will have many details of their private lives laid bare; not only politicians, bankers, brokers or jobbers, but also journalists, Government officials and a variety of individuals are put in this position. Accordingly, a very heavy burden lies on those who pursue, or pursued, a campaign, regardless of the nature of the means employed, as bitterly as did right hon. and hon. Gentlemen opposite in this case.

The Act of 1921 may have its shortcomings, but there can be no doubt about the integrity and reliability of this Tribunal. I am sure that I have the House with me when I pay a tribute to Lord Justice Parker, Mr. Milner Holland, and Mr. Geoffrey Veale, for the devotion and thoroughness which they have given to their task.

The House will recall that in the same debate, on the Motion to set up the Tribunal, we were asked what the scope of this inquiry would be. This issue is now clear, for it is explicitly recorded in paragraph 5 of the Tribunal's Report that the Tribunal did not limit its examination to whether there was any disclosure of increase in the Bank Rate but also examined to what extent there was any prior disclosure of any of the other restrictive financial measures, and whether any information in regard to those measures, as well as any information in regard to the Bank Rate, was used for the purpose of private gain.

The historical facts of this affair are fully, and, I think, carefully, set out in the Report which is before the House. There will be further opportunities in this debate to describe how certain members of the Opposition have gone to almost any length in innuendo and malice. I shall now come straight to the findings of the Report.

It must be recorded that the Tribunal, having defined its terms of reference in the widest sense, has given us findings which, on all points, have been absolutely definite and unanimous. There can be no doubt about this. In the course of this two-day debate we shall no doubt see tremendous diversionary efforts of one sort or another, for the limpid stream of justice must now pass through the turbulent rapids of politics in Parliament. That was what the Tribunal expected, and that will happen.

The issues which the Tribunal was established to examine are set out in paragraph 5 of its Report. They are unanimously reported on, and are clear and, as our discussions broaden out, they will become clearer still. There are verdicts on all the people who were unnecessarily put into the position of having to answer some sort of accusation, expressed or implied.

I will take, first, the journalists whom my right hon. Friend the Member for Monmouth saw before he made his announcement. This is one of the few of the rather long quotations I want to read. I think that we ought to establish these facts. The finding is that the then Chancellor, that is, my right hon. Friend the Member for Monmouth, did not at any time discuss with, disclose to or give them, either directly or indirectly, any information whatsoever about the proposed increase in the Bank Rate. It therefore follows that in respect of these persons there is no justification for any allegation of any disclosure to them or by them of an increase in the Bank Rate. The Tribunal goes on to say: We are also satisfied that no unauthorised disclosure was made by any of these persons of the information as to the restrictive financial measures given to them as representatives of their newspapers, and that no use was made of the information for the purpose of private Cain. So much for those journalists.

There are the other representatives of the Press, such as the Daily Telegraph and the News Chronicle, and this is the finding: …we are satisfied that there is no justification for any allegation of prior knowledge… And again: There is no justification for the allegation to which attention was called in Mr. Harold Wilson's Memorandum. Then there are the officials of the Conservative Central Office. The Tribunal says: We are satisfied that there is no justification for any allegation that Mr. Poole, Mr. Fraser or Mr. Dear received, either directly or indirectly, any information as to the increase in the Bank Rate. Each of them treated the prior information of the restrictive financial measures which they received as confidential and did not use it for the purpose of private gain. There are the representatives of industry—there is the same verdict—and the part-time directors of the Bank of England. Here is the phrase used: There is no justification for any allegations". There is Mr. Poole. This is what the Tribunal says: there is not a shred of evidence that Mr. Poole made any disclosure either in regard to the Bank Rate or the restrictive financial measures to any persons connected with the companies with which he is associated, or that he made use of any such information for the purpose of private gain. That is exactly what those who know him would have expected.

My right hon. Friend the Prime Minister was finally moved to appoint a judicial tribunal in order publicly to clear Mr. Poole, who has been the victim of base insinuation in this House. As for all the other dealings, the Report gives a completely clear bill. There are officials of the Bank of England and it says: no shred of evidence". There are the Treasury officials: no shred of evidence". and there are the Ministers of the Crown—no suggestion and no shred of evidence". Then there is the variety of isolated incidents. There is the curious incident, as Sherlock Holmes might have called it, of the conversation in the railway train. How Miss Chataway's remarks came to be taken seriously, in the words of the Tribunal, "is difficult to understand." What is even more difficult to understand is how the right hon. Member for Huyton (Mr. H. Wilson) came to take them seriously himself. There is the incident of the public relations officers and the finding is: no prior knowledge", There are incidents of other individuals. There is even the strange story of two Japanese bankers, talking excitedly in Japanese. The catalogue is indeed bizarre. "No shred of evidence, no validity for the suggestion, no justification for any allegations"—these repeated pronouncements are a solace to those involved and, therefore, an example of the integrity of our public affairs and a vindication of the judgment on the whole proceedings by the Prime Minister.

So much for the findings of the Tribunal. The House will remember that the Report considered that there were certain questions which it would be right for Parliament to deal with, and I enumerate them now as follows. First, there is the question of advance information of Government announcements. The Report itself says, in paragraph 5: The further question whether, and if so, in what circumstances prior disclosure of intended Government measures to persons outside the Government and Civil Service may properly be made is, of course, a question for Parliament alone. Therefore, we shall discuss it here.

Then there is the question of the working of the Bank of England and the position of part-time directors. Also, the House will want to consider the rôle of certain hon. Members of this House and of the Opposition in particular in this matter, and the comments and statements which led up to the appointment of the Tribunal.

I shall take these matters one by one as succinctly as I can. On the disclosure of information, I shall, first, deal with the question of disclosing measures to the Press and afterwards, the question of disclosing information to outside bodies and party officials. The fact is that it is entirely within the authority of any Chancellor of the Exchequer or, indeed, any other Ministers to disclose information in the interests of his policy to anybody in whom he reposes trust. Of course, this must be done deliberately and with discretion; he must be certain that they will not use their advance information for private ends.

To disclose confidential matters accidentally is another thing; to disclose them negligently without having confidence in the discretion of the recipients would also be quite a different thing, but those questions do not arise in this case, since the finding of the Tribunal has clearly exonerated all those to whom the then Chancellor of the Exchequer gave advance information of the restrictive financial measures other than the Bank Rate. The Report describes the steps which the Government thought it right to take to ensure that the measures which were to be announced on 19th September were seen in their proper context and were given maximum support by the various organs of responsible opinion.

The Chancellor of the Exchequer had talks with seven representatives of the Press, with the Director-General of the F.B.I., the Deputy-Chairman of the Conservative Party and two of his officials. More or less simultaneously, the Minister of Power and the Minister of Labour had similar talks with the chairmen of the main nationalised industries, the representatives of the T.U.C. and the B.E.C.

I will take, first, the Press. I should be surprised if any hon. Member in this debate seriously advanced the view that in no circumstances can it be right to give advance information about Government announcements or actions to members of the Press on a confidential basis. I think that everyone in this House must be well aware that for many years this has been a clearly established practice, which has been followed by Ministers of all political parties. I noticed, for example, that the New Statesman said, on 24th January: The issue is not the Chancellor's right to brief journalists and party machines on impending changes, indeed, this practice is on the whole justified by results and one which in the future the Labour Party will find extremely useful. The writer might have added, "as in the past".

I have quite a considerable selection of examples of this practice from the past and I will give one of them. In February, 1948, Treasury Ministers in the Socialist Government and officials saw newspaper editors and correspondents at various times; on the 2nd, 3rd and 4th February in advance of publication to Parliament of the important White Paper on Personal Incomes, Costs and Prices, which was laid before Parliament on the afternoon of the 4th. Again, before the Economic Survey was published, in March, 1949, individual briefing of selected editors and correspondents took place both on the previous day and on the morning of the day on which the Survey was published at 5 p.m.

The same sort of practice occurred in 1951 and it is important for those who jeer to note that these documents were important and that both of these surveys had a marked effect on Stock Exchange prices. The Financial Times reported, in 1949, that …the Economic Survey…induced bear selling in equities while the publication of the Economic Survey in 1951 had a notably adverse effect on stock markets.

Those are examples of what happened when a Socialist Government were in power. Of course, this practice is not a recent one. On the occasion of passing from the Gold Standard, when Mr. Ramsay MacDonald was Prime Minister, he used the following language to the Press, which I think was very much more dramatic than anything used by my right hon. Friend the Member for Monmouth. The former Socialist Prime Minister said to the journalists, and it was later released: According to how you represent this news to the public tomorrow, so there will be financial panic and food riots and that kind of thing, or else there will be calm, confidence and even a feeling that better times are at hand. Tomorrow, gentlemen, the Government of the country is in your hands. I mention these various examples to show the sort of preparation which previous Prime Ministers and Chancellors of the Exchequer have thought necessary when important financial statements are to be released. It can hardly be said that there was anything unusual or reprehensible in my right hon. Friend's seeing representatives of the Press last September, just before the announcement of Government measures on the 19th. The right hon. Member for Battersea, North (Mr. Jay) is reported to have said recently on television: The blunder the Chancellor made was not in seeing the clearing bankers and the journalists, but in seeing them the day before the announcement and not the day after it. Coming from a right hon. Member of the Front Bench opposite, one who has served as Economic Secretary and Financial Secretary to the Treasury and who, when out of office, has been a writer on the Daily Herald, the first part of his remark, I thought, showed extremely little grasp of how things are done. Does he really think that a Chancellor of the Exchequer, in making a request to the clearing bankers to limit the level of their advances to the level of the previous twelve months, without consultation beforehand, lets them read it in their financial papers and then asks them along to discuss it with him on the following day? Does he really think that this is the way to enlist their co-operation, or, what is more important, to ensure the effective character of his measures?

To revert to the journalists, what was the blunder? The whole weight of evidence of the Tribunal serves to rebut any suggestion that the interviews with the journalists led to rumours of an announcement. It seems clear that they did not. Indeed, there were only two Press rumours of an announcement. It is shown that the story in the Daily Telegraph and the Financial Times had no connection at all with the Chancellor's interview. None of the other daily papers reported any rumours at all.

It may be said—indeed, it has been said—that whatever may be the rights and wrongs of the timings of these interviews, it was wrong to see only selected journalists or representatives of the Press. I wish to make only two points on this. First, it has been perfectly normal practice in the exchanges between Ministers of all parties and the Press for many years. Secondly, it would be absurd to say that all newspapers have an inherent right to exactly equal treatment in all circumstances, that if a Minister was going to talk to one journalist he should open his door to all journalists. That would, of course, rule out any question of individual discussion of the sort which I have just been describing.

Besides, there was no question of giving an unfair advantage to selected journalists. No one got a scoop, or anything like it. Why? Because well before any daily newspapers could go to press about the announcement my right hon. Friend held a conference at which representatives of all the Press were present.

As well as the reference to this subject which I have quoted from paragraph 5 of the Report, the Tribunal said something further: We do, however, understand and appreciate the reasons for the decision of the Chancellor of the Exchequer, with the approval of his Cabinet colleagues… That, I think, is the fairest way to look at the ex-Chancellor's action against the background of his determination to save sterling and to redeem a serious financial situation.

I now come to the interviews with the clearing bankers, the T.U.C. and the B.E.C. I have not heard any complaints that the Minister of Power saw representatives of the nationalised industries and that the Minister of Labour saw representatives of the T.U.C. and the B.E.C. In such a matter as restricting the level of investment, it is of the utmost importance to carry those representatives of our industrial life with us. There are the most respectable precedents for so doing. Indeed, it may be that if such representatives are not seen it is impossible to maintain confidence in a democracy.

Then there is the question of interviews with the party officials. I must refer here to a gratuitous suggestion made by the right hon. Member for Huyton in the course of his evidence before the Tribunal, that Mr. Poole was acting improperly in handing the document which he had been given by the then Chancellor to Mr. Dear on the ground that this was contrary to the Official Secrets Act. Paragraph 34 of the Report is quite authoritative on this point. I am surprised that the right hon. Gentleman felt it right to dredge up every accusation he could think of when his original evidence was proving so feckless. The discretion of a Minister is really exactly the same in respect of and in regard to officials of his party's organisation as it is to other persons whom he may feel it desirable to consult.

The right hon. Member for Lewisham, South (Mr. H. Morrison) did his memory less than justice when he said, on 13th November, that he could never remember representatives of the outside Labour Party organisation being brought in. The fact is that it has been publicly stated that the Labour Government not only informed but consulted their party organisation in advance of announcing economic and financial decisions of the highest importance.

I will take the most reputable and strict of almost all Chancellors of the Exchequer, namely, Lord Snowden. He describes the following events, in his autobiography. He says: On the suggestion of Mr. Henderson, the Cabinet Economy Committee met the General Council of the Trade Union Congress, the Executive of the Labour Party, and the Consultative Committee of the Parliamentary Labour Party on the afternoon of 20th August. That was in 1931. He adds that the meeting was on the subject of the cuts proposed by the Cabinet. He adds—I think that this puts the matter in proper perspective: I went with great reluctance. I had never recognised the right of the Trades Union Congress Committee to be consulted in matters of Cabinet policy. He says: I went to this meeting, however, because, in addition to the Trade Union Congress Committee, there were present representatives of the Labour Party Executive and of the Parliamentary Labour Party. Mrs. Hamilton, in her biography of Arthur Henderson, describes it from his point of view in the following words: Henderson, on the other hand, felt that if a party meeting could not be held these two Executives, that is, the National Executive of the Labour Party and the General Council of the T.U.C., came as near as could be got to the general mind of the Party: the Party ought to be brought into consultation and carried with them in any decisions they had to take. He used these words: After all, they were a democratic movement and here was an issue that affected every member. That view, strongly put and supported, prevailed. So there is precedent for saying that it is democratic and right to see the Trades Union Congress and the party. I would point out that in the case of the right hon. Member for Monmouth there is no question of his having consulted the party or any of its executive. What he did was to hand to Mr. Poole, as is set out in the Report, and to a member of the Conservative Research Department, the documents about the restrictive financial measures other than the Bank Rate. These were to be announced on the next day. This was to enable the party to have a little time to prepare its part in the public presentation of the policy.

Those who have served in any Government, particularly those who have served for a rather long time, will realise that the right relationship between Whitehall and the party organisation is important. The Government in power obviously depend upon a party and its organisation. Indeed, it is and should be strengthened by contacts with its own party whether through the organisation or through any research department that it may have. As the Tribunal said, there is no shred of evidence that Mr. Poole or any of his friends knew about the Bank Rate, or that they improperly disclosed any of the information given to them about the other restrictive measures.

We are in agreement that the utmost care must be exercised in a Government in giving information to party organisations, but, on the closest examination, my colleagues and I have found that this practice has been very carefully watched under our Administration. The frank and open explanations of my right hon. Friend the Member for Monmouth illustrate exactly what information he handed to Mr. Poole. The Tribunal has confirmed, in the second part of the inquiry to which I referred earlier, that there was no prior disclosure of measures designed to meet the financial and economic crisis in the country. So much for the disclosures, and the action of my right hon. Friend the Member for Monmouth.

I now turn to the question of the Bank of England. The effect of this campaign of rumours on the standing of the City of London and of the Bank of England was clearly very much in the minds of Lord Justice Parker and his colleagues. It must be a source of relief to the whole country that the high reputation which the Bank of England, and the City of London as a whole, have enjoyed for so long—[HON. MEMBERS: "Oh."]—has been vindicated.

All responsible people must have a great regard for our financial reputation. London is the centre of the sterling area. We are responsible for an international banking system on which depends the livelihood and the standards of living of millions of people not only in this country, but in many parts of the world. Such a system cannot be run from an ivory tower, or even entirely behind a desk in the atmosphere of Whitehall. The value of our system—and this applies not only to international banking, but also over most fields of our invisible trade, insurance and the like—depends upon our commercial reputation.

Of course, there are plenty of people, here and abroad, who will take up any suggestion that people in our public life, and in the City of London, are dishonourable. The actions of private traders are not, in this case, the concern of either the Government or Parliament, but it is right that we should look at the position of the witnesses before the Tribunal who are part-time directors of the Bank of England.

This is a question that has aroused great interest since the Tribunal's Report has been published. This is what the Tribunal said: This raises a general and very important question of policy with which we are clearly not concerned. Had it been our duty to express an opinion on this matter, we should, before doing so, have required exhaustive evidence as to the advantages and disadvantages of continuing a state of affairs which has so long existed. The Tribunal goes on to say: The criterion, of course, must be the national interest. This is really part of the problem of dual loyalty that exists in the whole of our public life today. The dilemma is not unique to part-time directors of the Bank of England. In a sense, all Members of Parliament have some experience of it, and in many other spheres—such as the Civil Service and many other professions—there are matters in which it is not right to make use for private advantage of information which has been obtained in one's profession.

The problem was very well stated, and with a due sense of proportion, in the Memorandum (in page 208 of the Blue Book of evidence), which was put in evidence before the Tribunal by the Governor of the Bank of England. He said: The position arises almost every day in banking, where a banker is not expected to use, for his bank's profit, secret information about a customer's affairs. A professional accountant is not free to use secret information about the affairs of his clients for the benefit of a company of which he may be a director. I am not familiar with the legal profession, but I imagine that the same position must arise there, too, The Governor went on to say that the problem is not a new one, and that it exists in other countries; and he drew attention to analogous problems and difficulties which arise both in the practice and in the experience of the United States of America. All that can be read in the Blue Book of evidence.

This is a question upon which some Members of this House have, perhaps, been in too much of a hurry to make up their minds. The Leader of the Opposition, on television, said: The essential point is that the part-time Directors of the Bank of England should be advisory in character and should not have access to secrets of this kind which will embarrass them. Other suggestions have been made. As I understand—and it is open to him to correct me—the Leader of the Liberal Party has expressed a view in favour of changing the present practice whereby any alteration in Bank Rate is usually made on a Thursday.

It is fair to point out that the present practice and constitution of the Bank of England derive from the Act of 1946, which was constructed and passed by the party opposite. It is that Act that establishes the constitution of the Bank. It laid it down that, as well as the Governor and Deputy Governor, there should be a Court of 16 directors, of whom only four should give their exclusive services to the Bank.

It is that Act that entrusted the management of the affairs of the Bank to that Court. In the Second Reading debate on the Bank of England Bill, the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) used these words: …we shall seek, in particular, so to compose the Court as adequately to reflect industrial as well as financial experience."—[OFFICIAL REPORT, 29th October, 1945; Vol. 415, c. 51.] The Socialist Government clearly knew, and endorsed by the passing of the 1946 Act, the way in which the Bank operates. From 1946 onwards they did nothing to alter the Bank's practice. They must have found that it worked satisfactorily. The Bank of England must, after all, be a commercial centre in the widest sense, or else it is nothing. That is why we have always attached importance, as the Socialist Government did in the 1946 Act, to the proper mixture of commercial experience in the Court of the Bank of England.

Although some people may have taken sides hastily, the Government, for their part, are not prepared to take snap decisions about whether any change in this practice is or is not desirable. The Government agree with the Tribunal that this is a matter that needs careful thought and examination. The Tribunal itself said that exhaustive evidence should precede any decision to change the present, long-standing system. On thinking over this matter, we have reflected that it is, in fact, a question which is within the terms of reference of the Committee at present sitting under Lord Radcliffe.

I would remind the House that the terms of reference of this Committee are: To inquire into the working of the monetary and credit system and to make recommendations. That is a phrase that clearly covers the constitution as well as the activities of the Bank of England. My right hon. Friend the Chancellor of the Exchequer has requested Lord Radcliffe to confirm that his Committee will include this question in its Report and will make recommendations upon it, together with all other aspects of the monetary and credit system. Lord Radcliffe has confirmed to my right hon. Friend that his Committee will do this.

In this way it will be possible to give this matter the exhaustive study which the Tribunal thinks necessary. This is the way, also, in which this question of the constitution of the Bank can be examined without damage to the international financial interests of this country. The House will have read, Sir, one further observation of the Governor. In paragraph 118 of the Report, he says: …I do earnestly hope that the final result of this Tribunal may be not only to maintain, but actually to enhance the reputation of London for financial integrity. If those conclusions should be reached I trust…that everybody who has it in his power to remedy the damage which has been done by those rumours, will make every effort so to do, not least those persons who may have wittingly, or unwittingly, contributed to the circulation of those rumours. The Tribunal specifically endorsed that hope, and its Report has, indeed, done everything possible to proclaim the financial integrity of the City of London. As a noble Lord, a member of the Socialist Party, Lord Pakenham, has said: Some of the most eminent"— of the leaders of the city— have recently vindicated not only their integrity, never doubted by anyone except a fool or a knave, but also their great ability and knowledge of the world scene. So much for the findings of the Tribunal—

Mr. Harold Davies (Leek)

rose—

Hon. Members

Sit down.

Mr. Davies

Will the right hon. Gentleman give way for one moment, please?

Mr. Butler

So much for the findings of the Tribunal—

Mr. Davies

Will he be so good as to give way—

Mr. Speaker

Order, order. It is disorderly for the hon. Member to remain standing if the Minister does not give way.

Mr. Butler

I have nearly finished my observations, Sir, and the hon. Gentleman might perhaps join in at the end.

So much for the findings of this Tribunal, which Her Majesty's Government accept, and so much for the two main issues, which any reader of the Report of the Tribunal would agree were matters for the consideration of Parliament, with which I have been dealing. I have set them out in this opening speech and I have indicated the views of Her Majesty's Government upon them.

As the Opposition have offered us one of their Supply Days, we still have two days' debate before us. I cannot, Mr. Speaker, either as Leader of the House or as one of Her Majesty's Ministers, end what I have to say without some reference to the part of Parliament in general, and hon. Members in particular, in this affair. We must take care that our attitudes and positions in this House are equally well understood outside. There is no doubt that, had the Opposition agreed with my right hon. Friend the Prime Minister that the preliminary examination by the Lord Chancellor disposed of the flimsy evidence which it had brought forward, there would have been no reason to set up the Tribunal. The House will remember that the Lord Chancellor was asked to see whether, in fact, there was evidence which would justify holding some further inquiry—

Mr. R. T. Paget (Northampton)

Well, was there not?

Mr. Butler

The Lord Chancellor then made a personal report to my right hon. Friend that there was no prima facie evidence, and this view has been clearly upheld by the Tribunal. This action of my right hon. Friend in asking the Lord Chancellor, and his action, closely followed the precedent under the Socialist Government of 1948, but the right hon. Gentleman and his hon. Friends were determined not to be baulked. Up to this point, as The Times said in a leading article last Tuesday, there was perhaps nothing improper in the actions of the Opposition. This is what it said: Though it may be argued that the Labour leaders adopted an inappropriate tone when passing to the Government (quite rightly) the scraps of information passed to them, it cannot be suggested that anything they did before November 12 was improper. What happened from then onwards has, however, caused considerable misgivings. Let us see what happened after that. On 12th November, the hon. Gentleman the Member for Deptford (Sir L. Plummer) asked my right hon. Friend who was then Chancellor of the Exchequer two Questions. In following them up the hon. Gentleman made the first mention of the name of Mr. Oliver Poole. Two days later the hon. Gentleman claimed that he made no imputations against the honour of Mr. Poole, but he himself made a curious remark a little later. He said that Mr. Oliver Poole was not the first man to have his reputation tarnished—or an attempt made to tarnish it—in the House of Commons.

Be that as it may, it was left to the right hon. Gentleman the Member for Huyton to enlarge this imputation. I will repeat the question that he asked the then Chancellor of the Exchequer. Will he not now…state clearly whether he did or did not…see the Vice-Chairman of the Conservative Party, who has vast City interests, the day before Bank Rate went up?"—[OFFICIAL REPORT, 12th November, 1957 Vol. 577, c. 767.] Those insinuations were made under the cover of Privilege. The Prime Minister decided that they could be publicly cleared only through a judicial tribunal, but this has left unsolved one serious problem. When a highly defamatory statement is made in this House about an individual outside it, without any reasonable or probable cause whatever, the machinery of the Tribunal is the only existing path to justice. Surely this realisation imposes on us an infinitely higher standard of responsibility for our privileged utterances than that which guided the right hon. Gentleman opposite. Meanwhile, let us be thankful that, massive as is the machinery of the Tribunal, it has broken the political weapon of the smear. I ask the House to accept the Motion.

4.15 p.m.

Mr. Harold Wilson (Huyton)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: whilst not dissenting from the findings of the Report of the Tribunal appointed to inquire into Allegations of Improper Disclosure of Information relating to the Raising of the Bank Rate, regrets the prior disclosure on 18th September, 1957, by the then Chancellor of the Exchequer of secret information about the Government's financial policies to certain selected journalists and to officials of the Conservative Central Office and also calls upon Her Majesty's Government to take steps to obviate the present conflict between public duties and private responsibilities of part-time directors of the Bank of England". The Lord Privy Seal has made a number of personal references to me and I am greatly tempted to reply in kind, but I think it would be more convenient to the House if I speak directly to the Motion, and perhaps reply to the Lord Privy Seal at the end of my remarks. I will give the House this undertaking, that I will deal with every point that the right hon. Gentleman has raised in the course of my speech. [HON. MEMBERS: "Withdraw."] I am quite prepared to wait all day and tomorrow before proceeding. I intend to make my speech, in any case.

The Lord Privy Seal tried to make the point, first, that the Tribunal was unnecessary, and, secondly, that it was because of us that it was appointed. I will deal with both these points and dispose of them. This Tribunal has been fully justified. The inquiry was necessary and the work has been carried out with thoroughness and expedition. Speaking for my right hon. Friends, we accept unhesitatingly the findings of the Report in relation to the individuals whose names have been principally mentioned. At this point may I say to the Lord Privy Seal that at no time have any of my right hon. or hon. Friends or myself named any of the part-time directors of the Bank of England. We did not know they were even involved until we saw the evidence that was produced at the Tribunal.

The effect of the Tribunal is to reassure the public, and it is clear from the evidence and statements made to it that there was every need for such reassurance. The pity is that this reassurance did not come earlier. Once rumours had started to circulate in the City—[HON. MEMBERS: "Oh."] I am obliged to hon. Gentlemen opposite for their help. They do not realise how much they are helping me at this point.

Once rumours had started to circulate in the City, once responsible newspapers had, as early as the day after the Bank Rate went up—we had not said a word; so much for hon. Gentlemen opposite; if any hon. Gentleman will produce evidence that we said anything before 24th September, four or five days after responsible newspapers had printed this, I shall be very glad to have it—once responsible newspapers had, as early as the day after the Bank Rate went up, referred to suspicions of "fore-knowledge", it was the duty of the Government to take action, so that either the public could be fully reassured or, if there were irregularities, so that those responsible could be identified.

The House will be familiar with the statements on 20th September, that is, the day after. Bank Rate was raised, in The Times, in the Financial Times, and in the Manchester Guardian. The Times referred to "inspired selling", the Financial Times referred to "an early whisper", while the Manchester Guardian said that it was— a complete surprise to all but one or two people who seemed to have got wind that something was afoot. The Manchester Guardian went on to say: Unfortunately, the Bank Rate change seemed to have been partly discounted. There were considerable sales before the announcement was made, and there is talk of an inquiry into the matter. That was the Manchester Guardian, and we know that the Daily Telegraph, the same morning, claimed to have exclusively forecast a Bank Rate increase.

I assume that I now carry hon. Members with me when I say that these statements meant, and could only mean, that there had been a leakage of information. [HON. MEMBERS: "No."] I am sorry that I do not carry some hon. Members with me, but what I have just said was certainly the view of the Attorney-General. If we look at the Attorney-General's statement, in page 2 of the Report, in referring to The Times, he said: What exactly is the significance to be attached to the words 'inspired selling' with the word 'inspired' in inverted commas? Surely they meant, and could only be understood to mean, selling with knowledge of what was going to happen. The Times, in my submission, was saying that it was inspired selling, that is to say, selling with knowledge that the Bank rate was going to be raised, which persuaded the dealers that a rise in the Bank rate was possible. That is the Attorney-General on The Times.

Then, the Attorney-General, after quoting the Financial Times and the Manchester Guardian, said: Now it would not, in my submission, be putting it too high to say that these passages that I have quoted from these newspapers which are universally regarded as responsible, could be understood to mean that there had been a leakage of information. I hope that that point, at any rate, is accepted. I think that so far I have proved that, as from 20th September, the day after the Bank Rate was raised, the statements in these responsible newspapers carried the suggestion that there had been a leakage of information and that it was the duty of the Government to make inquiries.

The Opposition had not said a word up to that time. In our view, the Government should have initiated inquiries. In fact, it was not until I wrote to the Financial Secretary to the Treasury, the then Chancellor of the Exchequer being abroad, four days later, that they made even the most perfunctory inquiries into the business. Indeed, we know now how perfunctory they were, though the Prime Minister has made a lot of them since. We now have the Governor of the Bank of England's letter to the Prime Minister, in which he said: The Financial Secretary expressly said that he did not wish me to make any inquiries about detailed transactions, or give him any information about detailed transactions, until he had made up his mind whether there was any prima facie evidence of a leakage about Bank Rate intentions. This is a very strange way of finding out.

Another reason why I say that the Government, and especially the Prime Minister, failed to perform their clear duty is known to us now, though it was not known then. It was given in the Governor's letter of 27th September, eight days after the Bank Rate increase, and this is what the Governor said: In the past two days private information has come to me, as Governor of the Bank of England, about transactions by three corporations in which Directors of the Bank of England, as members of the boards of these corporations, might be, or held to be, concerned. The Governor ended his letter with these words: If you or the Chancellor of the Exchequer on his return, should wish to be supplied personally with details of these transactions, they are available. The Governor offered to give this information to the Prime Minister, and I maintain that it was the duty of the Prime Minister, on receiving that letter, to take the matter further; indeed, to order an inquiry. Certainly, if the Prime Minister had been aware of the figures involved and of the names of the directors, he would, I suggest, have ordered a more extensive inquiry then. I presume that I am still carrying hon. Members opposite with me.

Mr. Denzil Freeth (Basingstoke)

rose—

Mr. Wilson

No; the Lord Privy Seal did not give way. I know that the hon. Member wants to quote this, and I am just going to do it. Perhaps I shall beat him to it.

What I have just said was part of the Attorney-General's submission in winding-up the hearing of the Tribunal, in page 299 of the Report of the evidence. It will be recalled that, in his winding-up speech, he concentrated on only two points: first, the responsibility of the Governor of the Bank of England for the fact that the Prime Minister had not ordered an inquiry, and, secondly, the position of Mr. Keswick. This is what the Attorney-General said: …if the figures, the totals, not the details, involved, the names of the companies, the names of the directors, had been disclosed by the Governor of the Bank of England in a secret letter to the Prime Minister it might be—I do not know—that at that time it would have been considered that some more extensive inquiry was desirable in the interests of all those concerned than that which the Governor of the Bank of England was able to conduct himself. I have just quoted the words of the Attorney-General, and I hope that hon. Gentlemen will take full account of them. Some hon. Members opposite gave me notice that they intend to speak in this debate, if they can catch Mr. Speaker's eye, and I only hope they do.

The Attorney-General, in fact, was highly critical of the Governor's letter, some thought that he was trying to blame the Governor for the failure of the Prime Minister to act. But this will not stand up. I have shown that the Governor had offered to give the details to the Prime Minister or to the Chancellor of the Exchequer. Therefore, if the Prime Minister stands condemned on this, for not following up that offer, what about the Lord Chancellor's inquiry?

Several Hon. Members

rose—

Mr. Wilson

The Lord Privy Seal did not give way. I have a lot to get through.

The Lord Chancellor was purporting, with his great judicial authority—in his capacity as a judicial authority, and not as a political Minister—to bring it to bear on an investigation, which a week later the Prime Minister asked him to undertake. I find it inconceivable, and so, I imagine, does the Attorney-General, that the Lord Chancellor, after the Prime Minister had received the Governor's letter, should not probe the details mentioned in that letter.

What happened in the Lord Chancellor's inquiry? The Lord Privy Seal suggested this afternoon that we should have accepted the Lord Chancellor's report, without even letting us see it. We do not know whom he saw. Did the Prime Minister withhold the letter from the Lord Chancellor, and not show it to him? Did he have the letter and fail to follow it up? Did he, in fact, see the Governor of the Bank of England and be misled? I would not expect that to be the case. Or did he, in fact,—[Interruption.] I have said that I do not accept that.

I am saying that because there are only four possible explanations of the actions of the Lord Chancellor. Either the Prime Minister withheld the letter from him, or the Lord Chancellor had the letter and failed to follow it up, or he was not given information by the Governor, or—and this is what I suspect happened, and I hope that we shall be told—did he get the full facts from the Governor and still decide that there was no case for an inquiry?

The House has a right to know the answer to this. In view of the Attorney-General's attack on the Governor before the Tribunal, it is only fair to the Governor that we should be told. We do not know, because the Government refused to publish the Lord Chancellor's report. There is more at stake here than the good judgment of the Prime Minister. There is the position of the Lord Chancellor.

My right hon. Friend the Leader of the Opposition and I—and this is something which I hope hon. Members will follow rather closely—suggested not only to the Lord Chancellor but to the Prime Minister that the Lord Chancellor was not the man to conduct a preliminary inquiry at all, for reasons which I will later outline. Our suggestion to the Lord Chancellor and to the Prime Minister was that there should be a preliminary inquiry to see whether there was a case for a more formal investigation to be undertaken, not by the Lord Chancellor, but by an independent High Court judge nominated by him. We undertook to accept the recommendations of that High Court judge. That is the answer to everything that the Lord Privy Seal has said this afternoon. Our offer was rejected.

Lieut.-Colonel W. H. Bromley-Davenport (Knutsford)

I should think so.

Mr. Wilson

I will be quite frank with the House. If it had been accepted, it is clear from what the Attorney-General said, and it is clear, even, from repeated statements of the Tribunal, that an independent judge would have decided—we know this now—that there was a case for a formal inquiry. I will go on in a moment to show why. Suppose there had been such an inquiry. What would have been the result? First, the inquiry would have been held several weeks earlier. The Tribunal's task would have been a great deal easier. Witnesses would not have had to be asked about events and conversations three months' old. The public would have had its reassurance much earlier, and much of the subsequent unpleasantness would have been avoided.

We made that offer. If, of course, the High Court judge had said that there was insufficient prima facie evidence to justify further inquiry, we should have accepted his decision and the matter would have been dropped. We gave that assurance. My right hon. Friend the deputy Leader of the Opposition gave the assurance to the Prime Minister and my right hon. Friend the Leader of the Opposition gave that assurance to the Lord Chancellor.

Mr. James Griffiths (Llanelly)

Do they deny it?

Mr. Wilson

They are in a mood to deny anything.

Incidentally, this disposes of the silly argument put forward, I understand, by the Parliamentary Secretary to the Ministry of Works, in a recent speech, that the cost of the Tribunal to the taxpayer is, somehow, the responsibility of the Opposition. If our proposal had been accepted, the High Court judge would have made the decisive recommendation. The responsibility would have been his. For my part, I think that there could be no doubt now about what he would have recommended.

Having made the point that the Government were at fault in not appointing an inquiry earlier, I have a duty, as the first Opposition speaker in this debate, to deal with four subjects, all subjects covered by the Lord Privy Seal. First, there is the record of the Opposition in the matter; I accept that it is my duty to deal with this, and I propose to do so. Secondly, we must deal with the Report itself: what should the House say about the Tribunal's inquiry and its findings? Thirdly and fourthly, the two important matters left to the House by the Tribunal and referred to by the Lord Privy Seal, are the impropriety or otherwise of the then Chancellor seeing certain Press representatives and Conservative Party officials, and the position of part-time directors of the Bank of England.

Many, I think, will consider that this last question and other matters affecting the organisation of the City form the most important issue thrown up by the Tribunal, and I hope that my right hon. and hon. Friends will develop many points I make about it. In view of the special circumstances surrounding the Tribunal, to which the Lord Privy Seal drew attention, I accept a responsibility this afternoon to deal with these matters as well. First, I shall begin with the record of the Opposition.

We have not at any time said that there was a leak; we have said only that there was a case for an inquiry. From the first letter to the Financial Secretary on 24th September, we stressed the importance of reassuring the public. We were not satisfied with the Financial Secretary's reply, which came back in 24 hours. It was clear that his inquiry had been perfunctory, and, moreover, by the time he sent his reply, a firm of dealers in the City had published its démarche. We reserved the right to press the matter when the House resumed.

Meanwhile, there were other developments. There was the information which reached us about the Pumphrey-Chataway conversation. [Laughter.] I am going to deal with that. Hon. Members should not help me too much on this; they have been very helpful so far, and they look like continuing to be so. A great deal has been said and written about this conversation. The House will realise that it was the duty of the Opposition, once a thing of this kind had reached us, to forward it to the Government. [Interruption.] Was it not? It suggested that something was known in the Conservative Central Office, and something was known in the Conservative Central Office.

We were not in a position to check the story at first hand. It was not until the Tribunal began to hear evidence that we even knew the name of the lady employee at the Central Office, so we certainly could not ask her about it. It was our duty to bring it to the Government, and we took it to the Prime Minister and the Lord Chancellor.

Our main difficulty in our discussions with those Ministers was to protect all concerned, and especially the Central Office employee, from possible victimisation.

Mr. Geoffrey Hirst (Shipley)

Apologise and sit down.

Mr. Deputy-Speaker (Sir Charles MacAndrew)

I hope that the House will try to restrain itself.

Mr. Wilson

Possible victimisation had been the main concern expressed to us by Mr. Pumphrey. [Laughter.] Hon. Members would do well just to wait for a minute or two. My right hon. Friend will confirm, in the light of our discussions with those Ministers, that the fear of victimisation was a very real one. We could not get from the Ministers concerned the assurance for which we asked. Therefore, there was nothing to laugh at in that particular point. If there had been, the Lord Chancellor should have offered the reassurance when we asked for it.

The Prime Minister insisted that it should be the Lord Chancellor who should look into the matter. Although the Lord Chancellor must already have had the Governor's letter before him, he reported in about ten days that there was no case for an inquiry. [HON. MEMBERS: "Quite right."] We knew that he was going to report that, because we read it in the Daily Mail two days after he began his inquiry. I am not suggesting that the Lord Chancellor leaked that; he did not. But, as I have already said, had he taken the Governor's letter seriously there would have been no question but that there would have to be an inquiry.

I want to make it clear that the Pumphrey-Chataway case was not one which we pressed on the Tribunal. This is where hon. Members are so wrong. [HON. MEMBERS: "Apologise."] There is nothing to apologise for. It was our duty to give this information to the Lord Chancellor. We suggested a certain way in which it should be investigated, and we accepted the Lord Chancellor's decision in this respect. In my memorandum to the Tribunal I said "As we now know, the Lord Chancellor satisfied himself that there was nothing in it."

I have referred to my memorandum to the Tribunal. Since, in view of the Lord Privy Seal's remarks, I shall need to quote from this memorandum, which contains my two charges, both of which have been substantiated, it is, in my view, unfortunate that this memorandum was not published. No doubt the Tribunal had its reasons, but the only quotations of mine that it has made were from my earlier memorandum to the Lord Chancellor. It did not go into the Lord Chancellor's investigations.

I should have liked hon. Members to see this memorandum, but I know the dislike of the House for hearing quotations from a document not available to them. If the Government want to publish it in the OFFICIAL REPORT, I shall be quite happy. In any case, I shall place it in the Library at the end of my speech, and hon. Members can then form their own opinions about it; and perhaps my own position in the matter will not be so misrepresented as it is at present.

The Lord Chancellor's investigations took ten days. He had no powers to take evidence on oath or to get records of sales. On 22nd October, the Prime Minister wrote to my right hon. Friend turning down the request for an inquiry. We then issued a Press statement—the House was not then sitting, so the matter could not be raised here—saying three things. First, we repeated our view that there should be an independent judge; secondly, that the Lord Chancellor had not the power needed, and, thirdly, Whether there was or was not any direct leak of information about the Bank Rate itself, we know beyond any shadow of doubt that certain circles in the city as well as certain people in the Press were aware on the Wednesday afternoon that the Chancellor of the Exchequer was going to make a very grave statement on the Thursday morning which would 'put the screws on' and intensify the credit squeeze. That was the only charge that we made. It has been fully substantiated by the evidence before the Tribunal.

I made the same point in the House on 29th October. I think that most hon. Members took my statement on that occasion as accepting the fact that there would not be an inquiry and dropping the matter, although I said that there were still many questions unanswered. I will not read the words I used on that occasion, but I did refer to the fact that it was understood in the City that the Chancellor would make a statement on Thursday morning—Bank Rate morning—and I said that to most City men such a statement could mean only one thing. I ended on 29th October with the phrase. I will leave that matter there".—[OFFICIAL REPORT, 29th October, 1957; Vol. 575, c. 71.] If I had, all these items that the Prime Minister was suppressing—from the Governor's letter onwards—would, of course, have remained hidden.

I come now to the question of Mr. Poole. May I again quote from my memorandum: Up to this point, 29th October, I had not heard any suggestion that Mr. Oliver Poole was or could have been implicated in this matter, save in his collective responsibility for the Conservative Central Office. No one had suggested to me that the Chancellor had seen him on the Wednesday. If they had I should not have believed it, but written it off as one of the many fantastic suggestions that were made to me from different sources. Highly circumstantial Press stories began to appear suggesting that the Chancellor had seen Mr. Oliver Poole, and my hon. Friend the Member for Deptford, after consultation with me, tabled two Questions, one asking about the communication of measures to persons outside Government service, and the second asking what M.P.s or ex-Members were seen by the Chancellor before the Bank Rate went up. My hon. Friend did not refer to the Bank Rate itself, but to financial measures. He did not refer in his Question to any brief or document. The Chancellor apparently seemed more anxious to answer the Daily Express than my hon. Friend the Member for Deptford, because he referred both to the brief, to which my hon. Friend had not referred, and to the other question that I have mentioned.

I come to Question Time on 12th November, when the Lord Privy Seal had a lot to say. Before I refer to that occasion, let me say this. I agree with the Prime Minister and the Lord Privy Seal that Parliamentary Privilege should not be used to attack people outside the House. But I would emphasise that there is another Parliamentary convention of equal constitutional importance, and that is the answerability of Ministers to this House. The then Chancellor refused to answer any question whether he had seen Mr. Poole or anyone else. He dodged and ducked the question.

Suppose that on a comparable occasion Sir Stafford Cripps or either of my right hon. Friends had seen Mr. Morgan Phillips, or someone connected with the party who had financial connections. What would they have said? Would they have been satisfied with a reply that utterly evaded the issue?

But that is not all. The then Chancellor gravely misled the House of Commons. He said, …there was no brief about the Bank Rate".—[OFFICIAL REPORT, 12th November. 1957 Vol 577, c. 765.] But the Tribunal evidence and the Report, which reproduces the brief, shows that there was one. [Interruption.] Let hon. Members read the Report. This was the document—marked "Top Secret"—handed to Mr. Poole after all the pantomime about cutting two inches off the foot, then handed to a Tory Party official, taken home to Hampshire, and, after the Lord Chancellor's investigations, subsequently, most surprisingly, destroyed.

Mr. Peter Thorneycroft (Monmouth)

I am sure that the right hon. Gentleman has no wish to mislead the House. Would he refer to any reference to the Bank Rate in the document handed to Mr. Poole?

Mr. Wilson

I will say right away—[HON. MEMBERS: "Answer."] If hon. Members will let me answer, I will; I said that the former Chancellor said that there was no brief on the Bank Rate. But there was a brief, because the brief, including paragraph 9, was a brief on the Bank Rate. The former Chancellor did not say that there was not a brief handed to Mr. Poole about the Bank Rate. He told the House that there was no brief about the Bank Rate, and there was a brief. What is more, I will go on to show in a few minutes that anyone receiving even paragraphs 1 to 8 might well have concluded that the Bank Rate was going up. I will come to that in a moment. If hon. Gentlemen will curb their impatience or follow the argument, they might be a little wiser in a few minutes than they are now.

I have just referred to the brief. The former Chancellor said that there was no brief. The Government had gone to great lengths to hide the fact that the ex-Chancellor had seen Mr. Poole. We know now that the Prime Minister saw Mr. Poole as well and told him, not on the Wednesday but the Tuesday, that the Chancellor was to make a grave statement on the Thursday—so grave that it was necessary for Mr. Poole to hand over the chairmanship of the Conservative Party to the noble Lord, Lord Hailsham, not on the Thursday, as planned, but on the Wednesday afternoon.

This is very serious. I suggest most seriously to the House—I am not being wise after the event; I said this on the same occasion, 12th November—that the ex-Chancellor should have "come clean" with the House. Suppose he had said, "I did see Mr. Poole. I had a discussion with him, and I give the House this assurance, that I said nothing about the Bank Rate and nothing which could have led him to believe that the Bank Rate was going up, and I ask the House to accept that assurance." If he had said that, the House would have accepted that assurance. The Prime Minister might have wanted to set up a Select Committee to confirm the statement, as happened in the case of my right hon. Friend the Member for Bishop Auckland (Mr. Dalton), but I have no doubt that the result would have been a unanimous Report accepting the Chancellor's assurance. But we did not get that assurance from the Chancellor.

Now I come to my supplementary question. We were faced with a flat refusal to give the House information to which it was entitled, with no question of State security involved. The more that the former Chancellor of the Exchequer refused, the worse it looked. After getting no answer to five previous questions, I asked this question, which the Lord Privy Seal has quoted: Will he not now, in order to allay public anxiety on this matter, state clearly whether he did or did not, or any other Treasury representative did or did not, see the Vice-Chairman of the Conservative Party, who has vast City interests, the day before Bank Rate went up?"—[OFFICIAL REPORT, 12th November, 1957; Vol. 577, c. 767.] That is the question—at least, those five words—to which hon. Members and the Lord Privy Seal have objected, but, as my hon. Friend the Member for Deptford pointed out, we were not concerned to cast doubts on Mr. Poole's integrity. We were concerned to cast doubts on the former Chancellor's sense of discretion.

At a time when the Chancellor of the Exchequer should have been in purdah, it was unwise for him to see anyone with any City connections. This involves no reflection on Mr. Poole. Neither, for that matter, should the right hon. Gentleman have seen anyone with Press connections. Why is it that Chancellors go into purdah and keep clear of both the City and the Press immediately before a Budget? It is not because we fear corrupt actions or conspiracies, but because we fear a slip of the tongue or an unintended hint.

My hon. Friend was speaking for both of us when, referring to the former Chancellor, he said: I do not think that he is a dishonourable man. Of course he is not…His behaviour, however, has shown that he is completely unfitted for his post, that he is not a dishonourable gentleman but what the people in my constituency would call a proper Charlie'."—[OFFICIAL REPORT, 14th November, 1957; Vol. 577, c. 1159.] That was the view that I put to the Tribunal in writing and orally, but I recognise that there has been doubt about this, as well as misunderstanding and even misrepresentation. I want, therefore, to repeat to the House this assurance.

When I put that question, I did not intend to reflect in any way on the integrity of Mr. Poole; only on the good sense of the Chancellor. I ask the House to accept that assurance. [HON. MEMBERS: "No."] Hon. Members say that they do not. Very well, let me say this. No hon. Member at the time viewed it in any other way than I have just put it. [An HON. MEMBER: "Nonsense."] If hon. Members thought otherwise, why did they not rise and challenge it?

Sir Henry d'Avigdor-Goldsmid (Walsall, South)

rose—

Mr. Wilson

I recognise the hon. Member as having a close interest in this. He spoke on it on 14th November. If he will allow me to come to the end of this important part of what I am saying, I will gladly give way to him.

During the supplementary questions HANSARD showed nine recorded interruptions. There was no interruption recorded at all when I used the phrase which I have just quoted. [Interruption.] Had hon. Members reacted to it at the time, some interest might have been shown. Why did not the Chancellor, who gave me three more answers after I had used those words, take exception to them? The Lord Privy Seal was concerned and sanctimonious about it this afternoon. Why did he not get up and challenge it? Why did not a single hon. Member among those who are calling out this afternoon get on his feet and take exception or challenge me as to my meaning on that occasion? If I had been challenged on that point that day, or if I had thought then that that interpretation was being put upon it, I would have made my position clear. Not a single hon. Member took that point on that day. It was not until the next day that that very smart politician, the Prime Minister, saw the political opportunity that he thought was presented and it was then, for the first time, that this issue was raised.

As I have said, if any hon. Member had thought that that was what I meant, it was his duty to get up and challenge me on it, but not a single hon. Member did.

Sir H. d'Avigdor-Goldsmid

I have nothing to add to what the right hon. Gentleman has said. I challenged his point as soon as I heard it.

Mr. Wilson

Not in public. If the hon. Gentleman said anything, it must have been done so quietly that HANSARD did not catch it. He challenged it on the Thursday, two days later, by which time the Prime Minister had tabled the Motion, without giving anybody in the House at that time the opportunity to comment on it; and the matter was already before the Tribunal and sub judice. On 12th November, nobody challenged what I said. That disposes of some of the hypocrisy of some of the remarks that we have heard from hon Members opposite.

I will not waste time on the speech of the Prime Minister when he announced the setting up of the Tribunal. My right hon. Friend the Leader of the Opposition dealt with that when he said that it was not in accordance with precedent in such matters.

Now, I should like to come to the Tribunal itself, its work and its Report. As to its method of procedure, the Tribunal begins by drawing attention to its unique difficulties in this kind of inquiry. It says: There is no prosecutor and accused as in a criminal case, and no plaintiff and defendant as in a civil case. It is an Inquiry with no charges and no pleadings. Since the Tribunal states that it decided to follow the procedure adopted by the Lynskey Tribunal, I should like to draw attention to one major difficulty. The Lynskey Tribunal had the services of the police before and throughout its inquiry. Indeed, when that business began—and it began with the most fantastic accusations against Mr. Belcher which were utterly disproved—I myself, as President of the Board of Trade, put the matter in the hands of New Scotland Yard even before informing the then Prime Minister.

Therefore, the Lord Privy Seal's reference to the precedent of the Lord Chancellor looking through the case breaks down, because by the time that the then Lord Chancellor, Lord Jowitt, was asked to look at the matter, he had available to him full police reports and depositions from all the persons involved and possible witnesses. Mr. Belcher's secretary, for example—a Mr. Pearson, I think—was "grilled" for eight hours by the police. That was the sort of information that was available to the then Lord Chancellor. There was nothing like that when the present Lord Chancellor made his inquiry, nor were any police depositions available to the Tribunal. Moreover, in the Lynskey case, when the terms of reference were as wide open as they could possibly be, every accusation against any public servant or Minister was investigated by the police—even anonymous letters.

I have said that we unreservedly accept the findings of the Tribunal on the actions of the persons principally named—Mr. Keswick, Lord Kindersley and Mr. Poole. I repeat that I had never heard any suggestion about either Mr. Keswick or Lord Kindersley before the Tribunal was set up. The conclusions about both of them and Mr. Poole are unanimous and clear. We accept them.

Nobody, however, can go on from there to say that there was no case for an inquiry. There are in this country 11,000 public companies. Only four of them sold in advance on any considerable scale, all four of them being closely associated with one or other of two Bank of England directors. The statistical odds against this happening by chance are very high indeed and, clearly, only a Tribunal able to satisfy itself both as to the motives of each sale and as to the integrity of the individuals concerned could give the reassurance that was called for.

There was, therefore, every case for an inquiry. The Attorney-General thought so, too, as the quotations which I have given show. Indeed, many people assumed from his winding-up speech, which was devoted mostly to Mr. Keswick, that he was going further. In view of the decision given by the Tribunal about Mr. Keswick, I will not quote what the Attorney-General said.

Anybody who thinks that there was no case to answer should read the speech of the Attorney-General. The Tribunal itself had this to say: There can be no doubt that a sinister construction could be put upon Mr. Keswick's actions…In a situation of this nature, where conduct and documents are capable either of an innocent or a sinister explanation, the only course is to reach a conclusion upon a dispassionate appraisal of the character and truthfulness of the person whose conduct is under inquiry. It was on that basis that the Tribunal reached its conclusion, and the House as a whole will have no hesitation in accepting that conclusion. But that is not the same as saying that there was no case into which to inquire.

The same will, and must be, said of Lord Kindersley. Here, again, the long arm of coincidence called for explanation. There were the Lazard sales, where the Tribunal said: Lord Kindersley was a party to, if not the proposer of the policy decisions of 13th September—that is, the sales of gilt-edged; there were the extraordinary after-dealings sales on the Wednesday, when the decision had been taken five days before; there was the coincidence of Royal Exchange Assurance and British Match, as well as Lord Kindersley's activities in connection with the Vicker's issue. But on every case the Tribunal is completely satisfied. And so must the House be.

As for Mr. Poole, as I have said, we made no allegations that he was told about the Bank Rate or, if he had been, that he used the information directly or indirectly for his own or for others' private gain. The Tribunal is quite specific on this point, but I will return later to the wider issue raised by the Chancellor's meetings with Mr. Poole.

Of the minor cases referred to in the Report I will mention only two. First, there was Reuters. We learned that Reuters' Chief Accountant telephoned the General Manager of the Indian National Bank before the Bank Rate went up and referred to the possibility of an increase. In fact, it was a fairly strong hint. Though the Report does not comment on this, the evidence shows that the Chief Accountant had been given a very broad hint—what my hon. Friend the Member for Deptford would call "a long wink"—by Mr. Gampell. Mr. Gampell had seen the Chancellor, and, of course, the Chancellor had told him nothing. I accept that, but it is unfortunate that Mr. Gampell was not recalled so that the Tribunal could examine what it was which made him give this hint to a colleague.

Then, of course, there is Mrs. Campbell. I hope that hon. Members opposite are not accusing me of bringing her before the Tribunal. I think that it was a very eminent Conservative who was responsible. The Tribunal described Mrs. Campbell as "a most unsatisfactory witness." We are asked to believe that she went to a cocktail party and, in the midst of a group of complete strangers, said, in order to draw attention to herself, and to amuse Mr. Bobby Howes, that she had heard that the Bank Rate was going up the next morning by 1½ per cent.

The increase of 2 per cent. in the Bank Rate was the biggest in peace time since 1847. Only twice in peace time has the Bank Rate gone up by more than 1 per cent. at a time in the last century. Mrs. Campbell was very near the mark with her forecast. I do not think that any hon. Member opposite or on this side of the House made such a forecast, even to himself. The interesting thing is that none of the stockbrokers who gave evidence before the Tribunal thought that the Bank Rate was going up. Hardly any of them even gave a thought to the possibility that it might go up. That is all in the evidence. It is on oath. As for the Editor of The Times, he did not even know that Thursday followed Wednesday.

Yet Mrs. Campbell was very near the mark in her forecast. I am bound to say that her clairvoyance was of such a high order as to make one almost believe in witchcraft, particularly as she has since claimed that she often gets these brilliant flashes.

Mr. David Price (Eastleigh)

Is the right hon. Gentleman suggesting that Mrs. Campbell committed perjury in the evidence she gave before the Tribunal?

Mr. Wilson

No, I was just saying that it was a remarkable achievement on her part and a very high degree of clairvoyance. In fact, so brilliant is she in forecasting the future that I am sure she will have a very brilliant future in the astrological columns of one of the Conservative newspapers.

On the other minor cases—and now I refer to some rather more serious matters —reference is made to the case of the Ancient Order of Foresters and the mystery of the late Mr. Osborne and the Japanese banks. I must repeat, as I said in a letter to the Economist last week, that I can take no responsibility for these. It was my duty to pass them on to the Tribunal, without prejudice or comment, and I was not responsible for the names being made public. I received a very large number of letters from various parts of the country naming people whose names I will not give. I said that I would give the messages to the Tribunal, which it could check for itself. I was careful not to mention the names of the people either in my memorandum or before the Tribunal. It was the Attorney-General who accidentally brought out the name of the Ancient Order of Foresters.

The Attorney-General (Sir Reginald Manningham-Buller)

Not accidentally. The Ancient Order of Foresters was one of the bodies, as the right hon. Gentleman admitted, to which he had referred in the memorandum to the Lord Chancellor.

Mr. Wilson

The Attorney-General and the House can judge for themselves from this memorandum which I will place in the Library. They will find it in paragraph 22.

In referring to these, I said that I could take no responsibility for them, but would pass them on to the Tribunal, both being highly circumstantial and easy of checking. If that memorandum had been published, it would have been clear.

It is said that we made charges or allegations and that the Tribunal Report disproves them. I think that there are still one or two hon. Members opposite who think that. In fact, it will not bear examination. I will quote to the House what I said in my submission to the Tribunal. I said: The Motion establishing the Tribunal refers to 'allegations.' If I am asked what allegations I have made, or now make, I repeat that I have insisted throughout that I have no knowledge whether a 'leak,' direct or indirect, took place but that there is a case for an independent inquiry, in order to allay public anxiety as expressed in the Press and in the City. In the light of the Parliamentary exchanges, last week, however, I do not now make the criticism that, (i) the Chancellor of the Exchequer showed lack of discretion in seeing… these people. I also said: (ii) The Chancellor's actions made it possible for the knowledge to get around before after-hours dealings ended in the City, that he was going to make a very grave statement the following morning… Those are the only two charges we made, and I think that both criticisms have been substantiated by the Tribunal.

The question of the Chancellor's meetings with Mr. Poole and others I am just coming to, but on the other allegation, that it was known outside Government circles that he was to make a grave statement on the Thursday, Bank Rate day, our suspicion has been proved 100 per cent. For instance, the Prime Minister himself told Mr. Poole on the Tuesday evening—Question 4987. In Question 4989, Mr. Poole said: He gave me the impression that he considered it a very important statement… Secondly, Sir William Haley's evidence—Question 25. The Times on 25th September said: It was clear on Wednesday that several City institutions were well aware that some Government announcement was imminent. Sir William Haley did not know the authority for that statement, and, although he gave the name of the writer, he was not called.

Thirdly, the letter of the Governor of the Bank of England to the Prime Minister said: The general consensus of opinion in the market is that there was no Bank Rate leak, but that there was some knowledge that a Government announcement was to be made and also that the Chancellor had seen some of the big bankers, and as a result of this becoming known certain holders had decided to dispose of some stock at current market levels. Fourthly, we know from Mr. McIntosh, the rather talkative Ministry of Labour Press Officer, that he was told on the Tuesday—his second day in the Ministry—that the Chancellor was to make a statement on the Thursday—a statement so important that the Minister himself would brief Mr. Mackintosh personally on it. Questions 1130 and 1131 state this.

Fifthly, we have the evidence of Dr. Hock, a merchant banker, in which he said: I knew, of course, that afternoon there were rumours in the City about the coming ceiling on bank advances of the statement of the Chancellor to be made the next day… The Chancellor told journalists on the Wednesday that he would be seeing Lobby correspondents at 12 noon the next day. So there was abundant confirmation that the statement would be made on the Thursday morning. What is more, when we alleged this, and the Prime Minister refused to hold an inquiry, the right hon. Gentleman was in possession of the Governor's letter proving that we were right. All that the right hon. Gentleman could say about this grave business was "tittle-tattle."

I am sorry that I have gone on so long, but I have had quite a lot of interruptions. I now turn to the first of the two points specifically referred by the Tribunal to the judgment of Parliament, namely, the propriety or otherwise of the ex-Chancellor's prior disclosures to outside persons.

I want to say right away—I agree with the Lord Privy Seal here—that no one in any part of the House would wish to fetter the rights of Ministers to consult industrial interests who may be concerned, perhaps vitally concerned, in decisions such as cuts in the investment programmes of public or privately owned industry. In such cases prior consultation with, for example, the T.U.C., the National Coal Board, the British Transport Commission, the F.B.I., or, where collective bargaining is involved, the British Employers' Confederation as well as the T.U.C., is quite appropriate.

Propriety in such matters, as the Lord Privy Seal said, must be a matter of judgment of the circumstances in each case. One would not do it in connection with a Budget, or any major change of economic policy such as devaluation or a Bank Rate change, where money could be made from such foreknowledge. Again, I certainly would not restrict the right of Ministers to seek advice wherever it may be profitably sought.

We can have doubts about the judgment or modernity of one individual economist seen by the former Chancellor, but there is nothing improper in the ex-Chancellor's seeing him, provided secret information is not disclosed to him, as it clearly was not. But the issue raised here is not that of interested industrial bodies or private economists. The question is the former Chancellor's wisdom and sense of the fitness of things in seeing certain selected newspapers and Mr. Poole and other officials of the Conservative Central Office the day before the Bank Rate went up.

Let us admit that there may be times when the Press should be seen and guidance given—there may well be such occasions—but not on the eve of a top secret decision. Sir Stafford Cripps did not see the Press the day before devaluation. My right hon. Friend did not anticipate the announcement of dividend limitation in 1951. The general rule should be wherever possible to see the Lobby correspondents, because I do not believe that there is any recorded case of a Minister who has done so who has been let down. In a special case he could see City editors, but, if there is anything secret involved, not before the event, nor on a selective basis, nor individually.

Why did the right hon. Gentleman not see them on the Thursday morning? That is what we cannot understand. In fact, in this case what is not clear is why the Chancellor wanted to see the City editors, for he could not tell them the main decision, which was about Bank Rate, and he did not do so. That was the main thing the journalists would have to write about when they came to write their piece on the Thursday. Without it, as one journalist said, it was "Hamlet without the Prince." Did he then just see them to mislead them or to gag them?

It was certainly a risky decision to see them. One of them, we understand, Mr. Fry of the Manchester Guardian, went out thinking that Bank Rate was going up, and, no doubt owing to inadvertence, he was the only one the Attorney-General failed to ask the routine question, "Did you gain any impression one way or the other about what was going to happen to Bank Rate?"

I never thought that there was any leak through the journalists. I said so to the Prime Minister, to the Lord Chancellor and to the Tribunal. As for the apparently suspicious case of the Daily Telegraph, I said both to the Lord Chancellor and to the Tribunal: For the sake of completeness and fairness I have since been told that the Chancellor did not see the City Editor of the Telegraph, that the Telegraph representative whom he saw had no contact with the City Editor that evening, that he was shocked when he saw the City Editor's Bank Rate story on the Thursday morning, and that the City Editor had made his forecast either on a tip from the City or by introspection. That is another example of how reading this memorandum will completely answer the story about irresponsible charges.

The whole procedure was most unwise, and one result of the Tribunal may well be that wiser counsels will prevail in future.

But we still do not know why the Chancellor or, for that matter, the Prime Minister saw Mr. Poole and the other officials on the Tuesday and Wednesday respectively. We are told that it was so that the Central Office could answer questions on the Thursday. This is a bit thin. Most questions on this go to Government P.R.O.'s, not to party headquarters. In any case, what is the Chancellor of the Duchy of Lancaster for? Moreover, 99 out of every 100 Questions that would be put on the Thursday would be about Bank Rate. After all, it was the highest Rate for thirty-seven years. It was the highest jump in Bank Rate in peace-time since 1847. That was the subject on which Questions would come on the Thursday and, of course, it was the one subject the Chancellor could not, and did not, disclose.

What did the right hon. Gentleman do? He told them the rest of the story, and we have had this business about the document which had two inches cut off the foot of a page. I am surprised the Government still make light of this business of the document. After all, the classification of "Top Secret" at the top of a document means something. Was there not a great risk? Was there not a danger that Mr. Poole and his officials would be intelligent enough to realise that the items left in the document were hardly enough to justify the "Top Secret" label and that there was something more important cut off or missed off? We understand—and I accept this—that neither Mr. Poole nor any of his officials saw that two inches had been cut off the document.

In any case, if a document is marked "Top Secret" and has nothing in it, would not they think that there was something missed out? Mr. Poole is an intelligent man and he might easily have thought that if paragraph 8 of the document meant anything, the Bank Rate must go up. Hon. Members have read this document. It is in the Report. Do they not agree that anyone reading paragraph 8 might well have thought that that was leading up to an increase in the Bank Rate? Do they not agree that is likely?

Let them study the evidence of Mr. T. H. Brand, one of the acutest men in the City and a colleague of Mr. Poole, in Lazards. When a member of the Tribunal recapitulated a previous question and read an extract from paragraph 8, and asked him, at Question 5515, On that your view is that a rise in Bank rate is inevitable? his answer was: Yes. So Mr. Brand's reading of paragraph 8 was that Bank Rate was going up. Was there not a real danger that anyone else reading that paragraph 8 might form the same view as Mr. Brand?

Although we know beyond doubt that Mr. Poole made no use of any information given to him or any suspicion he may have formed, there is, I think, no doubt that either on leaving the Chancellor, or perhaps on reflecting on these matters afterwards, Mr. Poole did think that the Bank Rate was going up. I notice how silent hon. Members opposite have become in the last few minutes. [An HON. MEMBER: "Boredom."] I repeat that although Mr. Poole, as we know, did not use any information or any guesswork he may have done afterwards, his conclusion was that Bank Rate was going up. This is shown by his conversation on the Thursday morning with a colleague in one of his companies, Pearson's. The Tribunal reports: …When the latter asked Mr. Poole whether there was any likelihood of a rise in the Bank Rate Mr. Poole replied that he had no knowledge. But that was not all. In evidence, beginning at Question 5059, he answered questions as follows: 'I said that some people thought it was likely.' 'Whom had you in mind when you said that some people thought it was likely? Chiefly myself.' So Mr. Poole got that impression.

Now I come, finally, to the other point raised by the Report. If I have taken a long time it is because of the interruptions. I come to the invidious position of the part-time directors whose task in reconciling their public duties with their private responsibilities is, in the words of the Chairman of the Tribunal, "superhuman". We know from the Report that the part-time directors whose names have been mentioned did not use their knowledge for private gain but the problem remains. The evidence suggests that at times when something was afoot at the Bank Lord Kindersley's colleagues would steer clear of him. How could they know when to steer clear of him? What view did they form if they did?

What is the danger, I ask seriously, of a state of affairs when the director's colleagues start muttering. "The old man's in purdah again"? Must that not, subconsciously at least, tend to affect their decisions on other matters? Again, this brusque and even discourteous change of subject when one is asked about gilt-edged prices, and one changes the subject immediately to yacht racing at Burnham: again, there is a risk of one's being misunderstood.

We have heard a great deal from the Lord Privy Seal about the fact that part-time directors were enshrined in the Labour Government's nationalisation Act, eleven years ago. That is true, but they are a relic from the time when the Bank was almost entirely the preserve of the merchant bankers. For over a century the most distinguished in this very close fraternity were elected to the Court and the Governorship rotated amongst them rather like the Lord Mayoralty, only for two years at a time. Montagu Norman, Cunliffe and Catto were all merchant bankers. What my right hon. Friend did was greatly to reduce the power of the merchant banking interest in the Bank.

The position certainly needs reconsideration. We are glad that the Lord Privy Seal says that it will be looked at by the Radcliffe Committee, but we cannot defend a system where, for instance, merchant bankers are treated as the gentlemen and the clearing bankers as the players using the professionals' gate out of the pavilion. Indeed, the joint stock bankers with their greater contact with trade and industry, have more to contribute to the Bank of England than have the merchant bankers, not only at home but also overseas.

The objectives in any reconsideration, therefore, should be two: first, to remove the conflict of duties; and, secondly, to assert the clear primacy of the Treasury and the Chancellor of the Exchequer in all matters affecting the financial and economic well-being of the country. It is an out-dated system that we are working in this day and age.

Take the letter from the Deputy Governor, of very doubtful wisdom, to the part-time director on his grouse moor, accompanied by an injunction to destroy it after reading. This was before the proposal for any increase in Bank Rate, let alone a swingeing increase, was put before the Chancellor of the Exchequer. I agree that the circumstances were somewhat unusual; there was a very long delay before the Bank made recommendations to the Chancellor of the Exchequer. Some of us have a fairly good idea why. Even so, the initiative and control should lie in the Treasury, and any doubt about where the power of decision lies should be removed.

This is supposed to be a nationalised undertaking, we are told, but it behaves like a sovereign State and its relations with the Treasury are still carried on with too much out-dated stiffness and protocol. In our view, contact between the Bank and the Treasury should be more intimate. There should be much greater exchange of staffs. Promising men in the Bank should go into the Treasury and help to provide a group from which future Governors or future top Treasury officials should be drawn. The Bank has unrivalled expertise, but it is remote from policy considerations and the kind of questions which are of interest to Ministers and to the House, whereas the Treasury official has that quality but in most cases lacks the expertise, especially on foreign exchange matters. There should be more exchange of staff. In our view, this is especially necessary at the intelligence and economic advisory level where there are excellent people in both the Treasury and the Bank but people who would gain by a little cross-fertilisation.

The problem of the part-time directors is not a simple problem. We do not want the Bank to become a branch of the Treasury, or even an outpost three miles away. Nor do we wish to see a 100 per cent. professional team running the Bank. Recent experience in the United States shows the danger of a powerful and independent central Bank, almost going as far as to defy the Government.

Possibly the answer may lie in an executive board composed of the Governor, the Deputy Governor and the full-time directors, reinforced by full-time Treasury nominees. As for the part-time directors, we agree with the Governor's view that it is necessary to get advice, but can this be obtained only from part-time directors? Is it suggested that if the Governor asked Sir Oliver Franks, Lord Monckton, Mr. Tuke, or the other clearing bank chairmen, they would sulkily refuse to give advice because they are not members of the Court? Of course not. Perhaps, then, there should be an advisory council—called a Court, if hon. Members like—but more representative of our national life, and the essential factor should be, no secret information.

This Tribunal has quite fortuitously provided the country with a valuable insight into many other questions of national concern. One of the impressions which many people have formed is the essentially amateurish way in which vital decisions affecting our whole economic well-being are taken—the "old boy" network, the grouse moors, Nigel was very depressing". Well, he depresses us sometimes. But contacts between Treasury Ministers and Bank functionaries should not be dependent on social contacts of this kind.

Secondly, I do not know what view the man in the street will take of the stockbrokers and jobbers who gave evidence. One thing he may decide to do is to go elsewhere for advice in future. We had, for instance, the gentleman who reads the City columns to see what the investor is likely to do next, while the City editor whom he reads goes to the jobbers and the brokers to see what he should write. Hardly one of those who gave evidence gave a thought to the possibility of an increase in Bank Rate that week. They were all hedging against devaluation. Yet hardly any of them thought of getting into gold shares. It is very remarkable.

I asked in the recent economic debate: what will the trade union members make of those who go in each day thinking of a nice gamble, like the gentleman who said that he works it out in the train instead of doing his crossword puzzle? When people read about this, will it help wage restraint?

A great deal of this evidence shows how irrelevant to the dominant economic problems of this age is all that goes on. Certainly, there is an important function to be performed in mobilising the nation's private savings and in providing a market for selling and buying investments when people, on investment grounds, want to change their holdings. But how much of the sales are merely and purely speculative, merely to get ahead of the other fellow, knowing that he, too, will be largely conditioned by speculative rather than by real factors?

All this has come out. I sincerely understand and sympathise with the fears of hon. Members opposite. There is danger in all this coming out. People might start to think and might question what they see.

Understandably, apprehensions have been expressed about the effect of this Tribunal on the reputation of London and on the future of sterling. I think that the right judgment on this was that expressed by a Zurich banker, who said: There is no other country in which a searching inquiry of this kind would be held. The Report will put up the credit of London and of sterling. I am sure that we all endorse that view.

But one thing is very clear. Many of those who gave evidence saw the run on sterling not so much as a national danger as a means to make a profit or to hedge against for the purpose of avoiding a loss. The new Chancellor should study what is going on. This volume of evidence will help him. He should realise the danger to sterling of the freedoms in foreign exchange matters which his predecessors, especially the Lord Privy Seal, so rashly introduced.

5.30 p.m.

Mr. Peter Thorneycroft (Monmouth)

I had not intended to intervene in the debate, but I am referred to, and perfectly properly referred to, in the Amendment and, on the whole, it may be convenient if I speak shortly and at this stage. I do not rise in the House of Commons to defend my honour in this matter, because, indeed, I do not think that it is at question. The origins of the Tribunal and of this debate will, no doubt be argued by others. Looking back on it, to me the incident is associated with the three words—"Bank Rate leak."

Those words were blazoned across the Press of this country and across the Press of the world—[HON. MEMBERS: "Not by us."]—rightly or wrongly, but certainly they did not do any of us in this country a very great deal of good. I am not concerned with how they came there. I am not concerned with whether it was because of Questions in the House of Commons or articles in the newspapers, or a clever combination of the two. I am satisfied to know that the Tribunal has utterly refuted that accusation.

There are two subsidiary matters to which the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) referred—the question of whom I saw and the Bank directors. The point I wish to make is simple and short. It is that this was no ordinary Bank Rate operation. This was not the ordinary kind of operation with which we associated earlier Bank Rate changes, and it would be dangerous for the House of Commons to draw conclusions, for example, about the constitution of the Bank, from these arrangements.

May I recall to the House what was happening at that time? The exchange position was that we had lost 225 million dollars in August, and the dollars were running out at the rate of 100 million a week during September. The remedy which was adopted—and I am not here to debate its merits—was new, controversial and very different from any adopted by any party before.

It was decided to limit the supply of money. We said that we would not be prepared to finance inflation. To quote the words I used only a week later: If inflationary pressure grows inside the economy, other things may alter and other aspects of policy may have to be adjusted, but the strain will not be placed upon the value of the £ sterling. What we were saying was that whereas in the past all Governments had said. "We will guarantee to you full employment at all costs and, if everybody shows restraint, we will have stable prices, too", we were saying, and saying for the first time, "We will seek by every means open to us to secure stable prices and a stable £ and, if we all show restraint, then we can have the same level of employment which we now enjoy".

Whatever else may be said about that—and I repeat that I am not debating its merits—it was a novel and controversial policy, and in its implementation we had decided to limit investment in the public sector, to limit public investment in industry, to hold it in the social services, in hospitals and schools, and actually to cut it back in the controversial case of housing. We had also agreed at that time to limit bank advances over the next twelve months to the same level as the previous year's. As part, but only as part, of that operation, it was agreed that we should put up the Bank Rate from 5 per cent. to 7 per cent. That was the background against which we undertook this operation.

It was, of course, with the approval of the Prime Minister and of the Cabinet that I saw the people whom I did see, but they were not seen about the Bank Rate. I saw first of all the clearing bankers. An operation such as that upon which we were engaged would have been impossible without seeing the clearing bankers. We have no power over the clearing bankers. There is no legislation which can order the level of their advances, and we had, therefore, to persuade them—not in one meeting, but in several meetings over the period of a week or so—to agree to hold the level of their bank advances. In the process, quite rightly and properly, we had to tell them the other measures we were adopting—not the Bank Rate, but the public investment and public expenditure measures.

Secondly, we saw the journalists. As my right hon. Friend said, they have been seen before, and I have not the slightest doubt that they will be seen again. There are endless examples of journalists having been seen in advance of policy being announced and of their having been seen selectively. What I had in mind in seeing them on this occasion was not opinion in this country but opinion overseas.

We were faced with a situation in which our reserves were running out at a pace which would have exhausted them in five months. We had this opportunity—and it may have been the last and only opportunity—to present a combination of measures to hold sterling, and in that the Press can be a very powerful ally. We saw them for that reason and on those terms and in conference.

In addition, we saw or arranged to have seen the T.U.C., certain industrial organisations, and Mr. Oliver Poole and his two officials. No objection is taken, as I understand it, to seeing the T.U.C.—I have not heard of any—or to seeing the officials of the industrial organisations. I am bound to say that I cannot see why objection is taken to seeing the others.

I have been in the House of Commons for twenty years, and I have known the Press to be given information in confidence on many occasions. I place it on record that I have never known that confidence abused—never. I find it a strange argument indeed to suggest that one can see representatives of the T.U.C., or representatives of industrial organisations, or industrial managements, but cannot see reputable and highly-placed Press officials who, on occasions such as this, can play a vital rôle in helping us to deal with overseas opinion.

Mr. Paget

Since the right hon. Gentleman has asked that question, may I comment that this was a critical time? An occasion when people call at the Ministry of Labour or the Ministry of Power has a quite different significance from an occasion when people are suddenly called to the Chancellor. That is the difficulty.

Mr. Thorneycroft

The hon. and learned Member says that the fact that people were suddenly called to the Chancellor caused some different effects. I am satisfied that my interviews with the Press and their willingness to present this case in the Press overseas had a crucial and satisfactory effect in winning the confidence of people overseas.

I want to refer to the bankers. [Interruption.] I did not consult on anything like the scale which my right hon. Friend indicated happened in 1931. What I did do was to give information to responsible trade union officials, to responsible leaders of industrial organisations, to Mr. Oliver Poole and his two officials, and I make no apologies for any of it.

Now I want to refer to the bankers.

Mr. Aneurin Bevan (Ebbw Vale)

The right hon. Gentleman has just informed the House that he saw representatives of the Press, not so much because of the domestic consequences, but for external reasons. Was that the reason why he saw Mr. Poole?

Mr. Thorneycroft

I saw him for exactly the same reason as I saw members of the T.U.C. [HON. MEMBERS: "Oh."] I saw them in the expectation that they would have presented to them the following morning this policy—which, as I have said, was a controversial and novel policy—and I thought it right and proper that they should be given advance notice. [HON. MEMBERS: "When did you see the T.U.C.?"]

As regards the Bank of England—[Interruption.]

Mr. Bevan

rose—

Mr. Deputy-Speaker (Sir Charles MacAndrew)

If the right hon. Member for Monmouth (Mr. P. Thorneycroft) does not give way, other hon. Members must remain in their seats.

Mr. Bevan

On a point of explanation.

Mr. Deputy-Speaker

Is this a point of order?

Mr. Bevan

Yes, Sir. I raise a point of order on the ground that the right hon. Gentleman has deliberately misled the House.

Mr. Deputy-Speaker

That is not a point of order. Mr. Thorneycroft.

Mr. Bevan

rose—

Mr. Deputy-Speaker

One should not make an accusation of that kind on a point of order. [Interruption.]

Mr. Bevan

Why not?

Mr. Deputy-Speaker

Because it is not a point of order. Mr. Thorneycroft.

Mr. Bevan

On a point of order. You have just said, Mr. Deputy-Speaker, that I ought not to make a statement of that sort.—[HON. MEMBERS: "On a point of order."]—in raising a point of order with the Chair. The Chair has just said that I ought not to use an expression of that sort.

Hon. Members

On a point of order.

Mr. Deputy-Speaker

I never said that at all.

Mr. Bevan

What did you say?

Mr. Deputy-Speaker

I said that it was not a point of order. Mr. Thorneycroft. [Interruption.]

Mr. Thorneycroft

I want to refer to that part—[Interruption.]

Mr. Deputy-Speaker

Order. I hope the House will restrain itself.

Mr. Thorneycroft

I want to refer to that part of the speech of the right hon. Member for Huyton which dealt with the Bank of England. My point is that the Bank of England is not—

Hon. Members

Who saw the T.U.C.?

Mr. Deputy-Speaker

I am very reluctant to suspend the Sitting, but I must have more peace.

Mr. Charles Pannell (Leeds, West)

On a point of order. I have listened to the debate so far, and if there is any reason for suspending the Sitting now, Mr. Deputy-Speaker, what should the position have been when my right hon. Friend was speaking?

Mr. Deputy-Speaker

In case of grave disorder, it is my duty to suspend the Sitting, and if grave disorder continues, I shall do so.

Mr. H. Wilson

I did not require protection during my speech. I think there is some misunderstanding here, perhaps because of defective acoustics or hearing or a slip which the ex-Chancellor made. Would it not help us to make progress and enable us to hear the right hon. Gentleman if he would make it clear, for those of us who are not clear what he said, when he saw the T.U.C., or if he did not?

Mr. Deputy-Speaker

The right hon. Gentleman knows quite well that that is not a point of order.

Mr. Thorneycroft

What I was trying to do was to make a rather uncontroversal point in regard to the right hon. Gentleman's speech, about the Bank of England. [HON. MEMBERS: "When did you see the T.U.C.?"] The T.U.C. was seen by my right hon. Friend the Minister of Labour. [HON. MEMBERS: "Oh."]

Mr. Bevan

Withdraw.

Mr. Thorneycroft

My point is that the credit system and the constitution of the Bank, so far as it affects the matter, is being considered by the Radcliffe Committee at this moment. The right hon. Gentleman is perfectly right in saying that an important issue is involved. There are those who say that the Bank of England should be closer to the Treasury. The argument which the right hon. Gentleman put forward is a perfectly understandable and intelligible one, namely, that with an economy as delicately balanced as ours, it is reasonable that one man should be able to have quick and immediate control both over the fiscal and the monetary side of policy. Equally, there are powerful arguments the other way. There is the argument that a country as dependent as ours upon international banking should have a Bank of England which is removed from day-to-day control or influence by party political considerations, with independent bank directors, who should be, if anything, further removed.

I am not attempting to judge that matter. I agree with the right hon. Gentleman that it is an important matter and it seems to me to be crucial and central to the kind of problems which the Radcliffe Committee is considering. But, for heaven's sake let us decide what kind of Bank we are going to have before we make final judgments as to what kind of Bank directors we are going to have. Whatever else we do, we should not make a decision at this time, in advance of any report of the Radcliffe Committee, as to whether or not we ought to have independent Bank directors.

I should like to make one other point about independent advice. It does not matter whether it comes from a director or an advisory board, or whether he or it is technically inside or outside the Bank; if one is going to ask for advice, one has to ask the right question. In this case, there is no doubt what question had to be asked, namely, "In the eyes of the world, will a 7 per cent. Bank Rate—that is, a 2 per cent. increase—be regarded as a sign of strength or of panic?" That question had to be answered, and probably only men who have spent their lives in the international exchanges could give a correct answer to it. I mention that in order to emphasise that, whatever kind of director we have, we have to ask him the right question.

This was a vast, complicated and very difficult operation, undertaken at a moment when this country was under great pressure. Every shred of evidence has been examined, every allegation and every rumour, and there has been not one possible shred of evidence against anybody. I would only say to the right hon. Gentleman in conclusion: remember, all of us are going to have these institutions and to have to use them when in office. To the extent that we besmirch our fellow countrymen, we also besmirch ourselves.

5.50 p.m.

Mr. R. T. Paget (Northampton)

I listened with interest to what was said by the right hon. Member for Monmouth (Mr. P. Thorneycroft) about besmirching public institutions. I hope that hon. Members opposite will bear that in mind when they consider what they have said about nationalised industries. I agree with the right hon. Gentleman. I deplore the campaign of besmirchment of anything just because it is public, just because it belongs to the nation, a campaign from which we have suffered for years. I am glad to follow the right hon. Gentleman, because it provides me with an opportunity to put some of the questions to him which were not put to him at the Tribunal.

My first general question is this: if it was necessary to give in advance information to individuals, the nature of which must affect the markets, why not tell them the Bank Rate? If the Bank Rate was only one of a number of devices which were being used, why not tell them? I do not know the answer. As I understand it, the rule is—this is a vitally important rule, and it is a rule of degree—that great care should be taken that no advance information is given by Government action—whether it be by interview or by what is said, or by the fact of having any interview at all—about matters on which people can make money by speculation.

That puts other Ministries, the Ministry of Fuel and Power or the Ministry of Labour and National Service, for example, in quite a different position. When people visit those Ministries it conveys no hint. When they go to the Chancellor, with rumours running round—as they undoubtedly were—when there is pressure on sterling; when they come on a Wednesday; when a statement is expected; and with the prospect of a visit to the International Monetary Fund—the very fact that these people call on the Chancellor conveys information.

That is the debit side. What is the credit side? What was the advantage to be gained from what the Chancellor did? I find that difficult to see. The Chancellor was faced with two problems. He was a Chancellor in a Government which was not too popular and was getting more unpopular. He had what I may describe without impropriety as the party point of view. He did not want what he was going to do to be too unpopular and make his party too unpopular. Equally, from the point of view of the £, the more unpopular and the more shocking was the thing he did, the better. From that point of view, it was shock treatment that was wanted to frighten off the bears and to save sterling. How did seeing these journalists in advance improve that shock treatment?

What did the right hon. Gentleman tell the journalists that was not in the statement? I refer to page 9 of the Report and the reference to "Top Secret." The right hon. Gentleman tells us that he told them nothing that was not there. Then what on earth was the advantage of telling them in advance? This statement was to be published on the next day. Until the statement was published, neither Mr. Oliver Poole nor the journalists could do anything. What was the point of giving it before they could do anything, unless they were given the lot? The comments they had prepared in advance would probably be explanations about why this would be enough without moving the Bank Rate. So if it was to enable the journalists to do their "homework" and to prepare their reaction for publication, to tell them this without telling them the Bank Rate would make all they did a waste of time. In all those circumstances, I again ask, what was the advantage?

We are not here concerned with consultation, but with advanced information about something which had already been decided. We have seen the result and the danger and all the trouble it caused. What was the compensating advantage? I find it impossible to discover.

Now I wish to turn from that aspect and deal with the wider issue of the Tribunal itself, on which I take quite a different view from my right hon. Friend, as I did when this proposal was put up. I believe that this Tribunal procedure is an infamous procedure. I believe that a departure from the rule of law into an inquisitorial procedure always does harm. Either it victimises or it is laughed off as a bucket of whitewash—as I believe this Tribunal has been. I referred last time to the terrible injury it could do to people who had neither been charged nor had an opportunity to answer.

Sir Lionel Heald (Chertsey)

Is the hon. and learned Gentleman speaking to the Amendment?

Mr. Paget

I am speaking to the Motion.

I wish to say something about Mr. W. J. Keswick. I feel that acquittals by this Tribunal are probably as lethal as convictions. I believe that Mr. Keswick has suffered very great injustice. He will be known from now on, and nothing can take it off him, as the man who was prepared to sell his country—[HON. MEMBERS: "No."]—the man who said. …this is anti-British and derogatory to sterling but, on balance, if one is free to do so, it makes sense to me. That will damn him wherever he goes, and it is utterly unjust. It is, in fact, the opposite to the truth. Mr. Keswick throughout the summer, probably in dereliction of the duty which he owed to his clients, had urged them to stay in sterling. A point had arrived when he could do it no longer. Let us say that if a Government lets German cars into the country they cannot require people to run a private trade embargo upon them. If they allow the purchase of foreign Government securities, Canadian and North American, they cannot expect people to run an embargo on that. It is utterly unjust to do so.

Mr. Keswick was in a position of trust. He had to give advice, but he loathed doing so. He realised the folly of the Government. He realised the idiocy of leaving open the gap at Kuwait and Hong Kong, but finally he reached the point where he had to say, "Since the Government are fool enough to leave this gap, I can no longer tell you not to walk through it." I shall be saying things about Mr. Keswick later on which he will not like, but at this stage the voice of an opponent and critic may be of some value to him when this charge is made. I am convinced that he did his best as a patriotic man to serve the interests of this country and went as far as his duty would enable him to go.

Having said that with regard to the acquittals, which I think are scarcely less injurious than convictions, I come to the next objection to this form of inquiry, and that is the impossible position in which it puts the Attorney-General. Before the inquiry the Attorney-General is in the dilemma that he can behave either as a cad or as a stooge. Both the right hon. and learned Gentlemen the present Attorney-General and my right hon. and learned Friend the Member for St. Helens (Sir H. Shawcross) were faced with this dilemma, and they took opposite choices. I do not disapprove of the choice of the right hon. Gentleman; I believe in being loyal to friends and in not assassinating colleagues. My criticism of the right hon. Gentleman is that he did so clumsily. The contrast between the extent to which he made himself counsel for the Government and against the City was just too much. Let me compare them for a moment.

I will take the cross-examination of Mr. Keswick, which starts on page 110 and goes on for 700 questions. They are not perhaps rapier thrusts, but good hard bludgeoning. There is no question about that. Look, on the other hand, at the cross-examination—it is not cross-examination at all—of the man who was a principal accused, the right hon. Member for Monmouth, the man who, we said, had been a "proper Charlie".

Look at the sort of question which was put to the right hon. Gentleman. I wilt quote from page 278 of the evidence, Question 10699: I want to ask you this: did you consider it to be essential in view of the growing pressure on the £ that you should get as quickly as possible the maximum support for the policy you were putting forward?—Yes, I did.

The Attorney-General

I hope the hon. and learned Gentleman appreciates that one of my functions was to get from the witnesses in full the statements they had supplied so far as they were relevant, I am sure that he does not wish to be more unfair than he feels himself compelled to be, and I would point out that the question he is reading was to elicit something which was contained in the statement supplied by my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft).

Mr. Paget

I, too, have examined people very often on statements. Leading questions are generally disallowed. Leading questions of this sort are only put when counsel for the correspondent is trying to put a few helpful questions to the girl before the husband's counsel gets at her. Unfortunately there was no husband's counsel on this occasion. For a question on something which, I rather gather, was not in the statement, I turn to Question 10713. It is: I want to ask you your views on this. In your judgment was such guidance to the Press and prior notification to the trade unions and to the employers essential to the success of the operation on which you were engaged? It comes as though this is extra to the statement—

The Attorney-General

I would like to help the hon. and learned Gentleman. I appreciate his difficulty in finding adequate ammunition. The question he has quoted was again part of my right hon. Friend's statement.

Mr. Paget

It is oddly phrased, but even if it be so, is it necessary when examining someone from a statement to put leading questions leading to this conclusion and at the end of the statement to have no cross-examination at all? There is no doubt that every one of these questions was intensely controversial.

Having drawn attention to the contrast between the way in which the City witnesses were treated and the way members of the Government were treated, I would again point out the extent to which the right hon. and learned Gentleman shied off any question that might have led towards the Government. There are many examples I could give the right hon. and learned Gentleman. In particular, I would take a sentence in Mr. Keswick's letter on the 10th: I think Nigel was very depressing". We did not even hear that "Nigel" was the right hon. Member for Flint, West (Mr. Birch) until the Tribunal took up the matter on page 98. They were the first to elicit that fact, and not one question was put about it to the right hon. Gentleman himself or to anybody. Mr. Keswick is cross-examined at enormous length as to the basis of his action in advising his Hong Kong clients. In his letter, the matter which he had put almost foremost as the principal reason was that Nigel was so depressing, yet that was totally omitted.

I would be intensely interested to know more about it. What business has a right hon. Gentleman holding office in the Treasury to express depression? [Laughter.] Government supporters need not laugh at this. Let them look at the text of the letter about the difficult, murky economic outlook. It was an economic outlook and depression which resulted from it which was the cause or one of the causes of the advice that went to Hong Kong which involved doing things which could be injurious and dangerous to sterling and were recognised as such yet not one question was asked about whether the depression was in the right hon. Gentleman's appearance, in what he said, or in what he did.

There is another question on page 113. I am just picking these up as I go along. [Laughter.] Oh, I can go on for quite a long way if Government supporters want me to. I believe the trade figures are dreadful. How did the witness know? Where came his advanced information? From the Bank? From a Government Department? Not a question. That sort of lead was avoided. I do not disagree with the choice which the right hon. and learned Gentleman made, which was to stand by his friends, but he might have done it a little more deftly.

The next point concerns the police. Let us look at Mrs. Campbell. The Tribunal has found that she was an unsatisfactory witness. Considering that the Tribunal had the advantage of hearing Sir William Haley and Mr. Cobbold, it was a little ungallant of the Tribunal to pick on poor Mrs. Campbell as an unsatisfactory witness. In spite of finding her to be an unsatisfactory witness, the Tribunal believed her on her main and most incredible point that this statement about the Bank Rate came straight out of the blue. This Tribunal actually found that Mrs. Campbell, who apparently scarcely knew what a Bank Rate was, and certainly did not know its connection with interest rates, made a pronouncement as to an increase in the Bank Rate in order to attract to her beautiful person the attention of Mr. Bobby Howes.

Mr. R. Gresham Cooke (Twickenham)

I think it fair to Mrs. Campbell to say that she had been interested in the Stock Exchange for many years and had made transactions on the Stock Exchange. Therefore, presumably she did know.

Mr. Paget

She said she did not know the connection. When we have a Tribunal saying that they believe that, all I can say is, can three elderly lawyers get more naive than that? As the Duke of Wellington once observed to someone who addressed him as "Mr. Smith", "Sir, if you can believe that you can believe anything." With that kind of finding in it, I do not think it very surprising that this Report has not carried much conviction in the country. But with no police investigation what else was the Tribunal to find?

Unconvincing as may be the findings, the light thrown on the workings of the City is bizarre indeed. "City through the Tribunal" or "City through the Looking Glass", is really worth looking at. Take the great concern of Matheson's, one of the most important financial institutions in the world, and see how it is run. Its director tells us he played hookey. He simply disappears for a couple of days without telling anyone. Look at the circumstances in which he does it. He had received Barton's letter and taken it up to Scotland. On the 10th he had received his brother's letter which referred to meeting him on the following Monday. On the Thursday he has cancelled his sleepers for the Sunday and the Monday before he ever went to Scotland. When he gets to Scotland he sees his brother on the Saturday, but if we are to believe this evidence he has not at that point made up his mind when he is going south and does not tell his brother he will not be back until Wednesday, although he had already cancelled the seats and although he had had a letter from the brother expecting him at the office on the Monday.

On the Monday he arrives. The elder brother writes the letter and telegram which he marks to be shown to his brother, but I cannot see anything in those marks to show that they must be shown before being sent. He then goes to lunch where he is not expected, at the Bank of England. The brother does not turn up. Next day again the brother does not turn up. Nobody thinks of telephoning him in Scotland, although he was on the telephone. I do not know if these people who were dealing in millions could not run to the cost of a telephone call to Scotland to check it.

A letter is written on one day and a telegram is drafted because the letter will not get there soon enough, and then one delays sending the telegraph—why? That is a very curious way to do business. On the Tuesday, when the brother still had not turned up, that is duly sent, and we have this most curious answer on page 117 in the cross-examination of Mr. J. W. Keswick: But why did you not then, before sending the telegram, if you wanted to consult with your brother, try and find out when he was going to come in?—Because I knew his views. Then if you knew his views why defer the despatch of this telegram?—Because our invariable rule is that however well I may know my brother's views or he mine, when you make a draft, just as I consulted those other two and got the details from the third, I would naturally discuss that draft with my brother. Did Mr. Johnston Keswick really know that the whole business of Matheson's had to be held up if he did not come back, and then proceed not to come back, and not to take the trouble of telling anyone in the office? Did his secretary who cancelled the sleepers not know? I do not know how a trade union branch could be run that way; but the Tribunal believes this.

Again we get a most remarkable view of what happens in Lazard's. They have a world-famous chairman and managing director. Periodically, apparently, he goes into purdah. That is to say, at any time of crisis, when one would have thought his leadership was most vital, he cannot do anything, no one can approach him, and with an exquisite tact, without a word said, his partners realise the delicacy necessary in dealing with a noble Lord in an interesting condition. It is a really staggering state of affairs. His visit to the Royal Exchange is even more remarkable. He is going to the Court of the Exchequer of the Royal Exchange, and this is on Wednesday the 18th. He knows all about the Bank Rate going up the next morning by two points. He knows before he goes that there is no financial question—of course the Court of the Exchequer is dealing with financial questions—which can come up on which he can give any advice or take any action. He goes and takes avoiding action. He talks to the manager about yachting. The manager lacks the tact to know when Lord Kindersley is pregnant. He is asked: "Supposing, Lord Kindersley, your views had been asked?" He replied that he would have turned to Lord Weekes and asked his views, and when he expressed his views he would have said: "I entirely agree". It does not seem to matter whether he did or did not. The most curious thing about this is why he did not take the obvious avoiding action of not going. Surely, in all conscience, a gentleman in the condition of a noble Lord could have pleaded morning sickness. All this stuff is accepted.

The money meeting was on Friday the 12th, and Lord Kindersley was present. He takes the main part, he takes the initiative, and at that time, ever since he had been back from Canada, of course he knows that the Bank Rate was very much under discussion. On Friday, what he describes as the vital decision was taken, and from that point onwards there is no need to consult him because it is mere execution, the execution takes place over the next two days and involves a record sale of gilt-edged of £2 million.

On page 189, in Question 7415, we read of the Friday meeting and the decision: As a matter of fact, I would not have given it another moment's consideration, because once the decision in principle is made it is up to the peopie who run those departments at Lazards to do it. He was the person who had taken the decision in principle. If hon. Members look at his letter to Mr. Cobbold, on which, oddly enough, he was not cross-examined, they will find that he wrote, I should have thought as clearly as a letter could, that he was not at the meeting of the 13th. Let us read it: Dear Mr. Governor, As agreed with you this morning, I have asked Mr. Brand to prepare a memorandum on the decisions taken by my colleagues concerning sales of gilt-edged securities which I now enclose. I confirm that I was not present at the meetings when these decisions were taken and that the other Managing Directors who were present at those meetings have added their signatures to the memorandum.… The document reads: He was asked to do this in such a way as not to press the market…No one present at the meetings on Friday or Monday had, or purported to have, any pre-knowledge of what action Her Majesty's Government intended to take. That was signed by Mr. Brand, Mr. Marris, Mr. Macartney-Filgate and Mr. Meinertzhagen. If that letter and enclosures is not intended to convey and does not convey that Lord Kindersley was not at the meeting on the Friday, and had no part in the decision resulting in the sales, I do not know what it does convey. Yet he is entirely believed.

I must cut this short, but quite frankly, there is a point when belief surpasses all reason and becomes a faith, in this case a faith in the establishment. Not being a worshipper of the establishment, I am afraid that I find it difficult to take this Report seriously.

Viscount Hinchingbrooke (Dorset, South)

Is Lord Justice Parker a part of the establishment?

Mr. Paget

Yes, but that is the difficulty of this extra-judicial procedure. We take the judge out of the due processes of law. Judges are judges as part of a due process of law and when they are out of the due process of law they are simple citizens like anybody else.

I do not believe that this simple-looking picture is what really happens in the City of London. I personally believe that members of the Court of the Bank of England are not selected because they are schizophrenics capable of cutting their personalities into as many portions as they enjoy directorships.

Colonel Richard H. Glyn (Dorset, North)

May I put a simple question? Is not the whole difficulty caused by the fact that the Bank of England is nationalised?

Mr. Paget

That is a wonderful question!

The whole point of this Court of the Bank of England is not that people bring there the secrets of other boardrooms. Of course they do not. It is that they bring there a capacity to advise based upon what they know from other boardrooms in the City. That is how it works, and it is a two-way traffic and always has been. I worked on the gilt-edged market thirty years ago. The situation has always worked like this. There has been an inner ring of the great finance and merchant bankers' houses who have had the advantage of directors who could advise them when it was desirable to get liquid. That has certain advantages. But that is the way it always has happened. I am not saying for a moment that there is anything particularly right or wrong about that, but that is the reality of the way it works.

I think perhaps the most significant question of all is that which was answered by Mr. Meinertzhagen, as reported on page 159. This certainly conveys to me exactly the opposite impression to that which is conveyed to the Tribunal. Question No. 6078 reads: Had you given instructions that the sales were to be effected in such a way as not unduly to press the market?—I had. That is to say that the sales would only be made at prices which were considered reasonable?—May I explain that it would normally be understood by our dealers, if I give an instruction of that kind, that they would only deal without reference to me if the price they could obtain was, in fact, closely approximate to the price which they had in mind when I gave the order. There it will be seen that he was not dealing normally; he did something different. He gave specific instructions that the market was not to be pressed. In my submission, that is precisely the morality of the way this works.

Certainly these great concerns do not take action before Bank Rate or anything like that which will panic the market and unduly depress it. Most emphatically, they do not go off and have a personal gamble; of course they do not.

Mr. John Peyton (Yeovil)

rose—

Mr. Paget

I cannot give way.

What they say and do is to take the steps either towards or away from liquidity which will be desirable in the circumstances of which they are forewarned. That is the reality of the situation and in my submission that is the way in which we should look at it.

I hope that this is the last inquiry which is ever held under this Act. I hope that in future we shall stick to due process of law and nothing but due process of law. Let us have an Act which creates an offence for a man in the public service who behaves in a way equivalent to a man charged in the Army for conduct not becoming an officer—conduct not becoming a public servant. Then we can have a trial with the proper criminal procedure and the proper criminal defence. To go in for these random inquiries utterly destructive of reputation and utterly unconvincing in their results, is, I believe, contrary to the whole tradition of our judicial system and is something which should come to an end.

6.29 p.m.

Sir Lionel Heald (Chertsey)

I believe that no one can, or should, speak in this debate without a grave sense of responsibility, and I will certainly try to do so without rancour or personal bitterness. But I want to make it clear at once that I shall have some very hard things to say and I hope that I shall be able to say them with due moderation and in accordance with the traditions of the House. I have given notice to the right hon. Member for Huyton (Mr. H. Wilson) that I shall refer to him, and I hope that he will be in his place before long. At any rate, I will defer any reference to him until he has had an opportunity to return.

In the meantime, I can refer to the hon. and learned Member for Northampton (Mr. Paget). In his case, I do not think that we can accuse him of malice; I think it is sheer irresponsibility. He has, in effect, challenged the finding of this Tribunal—[An HON. MEMBER: "Why not?"] The hon. and learned Gentleman nods and another hon. Member asks, "Why should he not?" I will deal with him as well, if necessary, later.

The hon. and learned Gentleman—of whom I should like to say at once that he is an old friend of mine, and I was very sorry to hear him speak as he did—has, in effect, hurled against honourable men in the City of London, who have been exonerated by the Tribunal—to the great pleasure of all men of good will in the country—these accusations, in a most irresponsible and incoherent manner. I hope that nobody in the country will pay the slightest attention to what he says, and that they will take it from those of us who know him that he sometimes does these things, and that we need only be sorry for him.

Before I deal with the right hon. Gentleman the Member for Huyton, when he returns, perhaps I may attempt to say one or two things that I believe we ought to say in this House; and if I appeared to be agitated just now, I admit quite frankly that I regard this as a most serious matter.

Let us look for a moment at the terms of the Motion. The Motion uses the word "welcomes." Is not the word "welcomes" a word that is appropriately used? According to our own British standards of decency of life, when a neighbour or acquaintance of ours is cleared of an unpleasant imputation, we go to him and congratulate him, and we rejoice with him. Therefore, the word "welcomes" is very appropriate.

But what does the Opposition Amendment say? It asks the House to delete that word "welcomes". I wonder whether the right hon. Gentleman the Leader of the Opposition appreciates what that means. I wonder whether, now that it has been brought to his attention, he would not like, before the Amendment is put to the House tomorrow night for voting upon—if it is—to consider asking, with the permission of the Chair, to restore that word "welcomes"? I believe that that would be in accordance with the public position that the right hon. Gentleman holds as Leader of the Opposition. I am not too hopeful about it, for a reason that I shall give in a few moments, but I certainly ask him to consider it.

We all appreciate, also, that this Report is exceptionally strong, clear and definite in its finding. There have been several inquiries under the 1921 Act, but never—and I have looked at them all—has there been a case where there has been such an absolute and total refutation of every single rumour or accusation put before a Tribunal. Surely we ought, therefore, to accept that Report ourselves, here, thankfully and genuinely, and to do another thing; to set an example from this House to all those people outside who are waiting to hear what we say about it.

In particular, we must do nothing, I suggest, to encourage those people who were described the other day. I think rather well, as the "no-smoke-without-fire-brigade." Such people exist, unfortunately, and they are very mischievous and unattractive people, and what the Opposition are doing today, both by the terms of the Amendment and by their behaviour, is calculated to assist them. I say that without the slightest doubt.

There are people, fortunately, who are not politicians—or at any rate, not Conservative politicians—who appreciate that point, and appreciate what our debate should be about today. Reference has been made by my right hon. Friend to an article by Lord Pakenham. I was rather surprised that his name should have evoked the curious noises that come from the other side of the House. After all, he was a prominent member of the Labour Government from 1945 to 1951. We do not think that that is anything against him, so why should hon. Members opposite?

This is what he says—and let us listen to this, because this is said by a man who has been one of His Majesty's Ministers. Lord Pakenham says: …Meanwhile, Parliament prepares to discuss the affairs of the City…There is no doubt whatever that the leaders on all sides will fully appreciate the responsibilities falling on them…But what is hard to convey, or indeed to apprehend in full, unless one has worked in the City, is the pride that the City—that is to say, the human beings who make it up—feel in their chosen profession, in its standards of professional competence, industry and, above all, honour. They believe, and are surely right to believe, that whatever changes may or may not be desirable in financial organisation, no great country in the world except Britain could have survived a grilling like the Parker inquiry and come out with its head held high. We should be grateful to the noble Lord for that statement. I really do not think that there is a single hon. Member who is not very grateful to him, though the right hon. Member for Huyton is, possibly, an exception.

Another similar statement occurred in an admirable letter in The Times by the Warden of All Souls, Mr. Sparrow, who is most certainly not a politician at all. I think that it is worth while referring to just one passage from that letter—although I commend the whole of it, because it deals with the question of part-time directors with admirable fairness. Mr. Sparrow was less optimistic than Lord Pakenham about the behaviour of the House.

This is what he said: Now the Report has vindicated the honour of those impugned"— it is he, an independent member of the public, who says that, not myself— the politicians who instigated it will no doubt seek to divert attention from the findings of the Inquiry. What a remarkable prophecy of what has happened!

The warning of Mr. Sparrow has been echoed in many quarters, notably in such diverse publications as The Times, the Economist, the Spectator, the Manchester Guardian, the News Chronicle, and the Star. Personally, I should have regarded none of them as a crusted Tory supporter. I was particularly struck by the leading article in the Star, which said: Let none behave like frustrated mudslingers. The Star is a paper that has frequently, and recently, supported the Opposition and attacked the Government, but that is what it says. I am glad to see that the right hon. Gentleman the Member for Huyton has returned. May I tell him that I have just been quoting the reference by the Star to "frustrated mudslingers."

That should be read with paragraph 118 of the Report. It was referred to briefly by my right hon. Friend, the Lord Privy Seal, but there is just one part to which I should like also to refer. The Report sets out the evidence given by the Governor of the Bank of England, and quotes these words: …if you should conclude…that these rumours are baseless, I do earnestly hope that the final result of this Tribunal may be not only to maintain, but actually to enhance, the reputation of London for financial integrity. If those conclusions should be reached I trust…that everybody who has it in his power to remedy the damage which has been done by those rumours, will make every effort so to do, not least those persons who may have, wittingly or unwittingly, contributed to the circulation of those rumours. I feel that the right hon. Member for Huyton will at any rate admit that he may be regarded as one of the addressees of that exhortation. It was a very plain hint, but the right hon. Gentleman has done very little to comply with it so far. I hope, however, that when he has heard, and the House has heard, what I feel it my duty to say, he will reconsider the matter and will consider whether the pressure of opinion, both in this House and outside it—which even he cannot afford to disregard—will show the right hon. Gentleman that it is his duty as a gentleman, indeed as a right hon. Gentleman, to do what the Tribunal plainly hoped he would do, and what this House, I believe, will think he ought to do, and, indeed, might say, if necessary that he must do—[An HON. MEMBER: "Why?"] I will be glad to explain why and how—that is, to make a frank and honest apology for the very serious damage he has done, whether wittingly or unwittingly as the Tribunal says, at least to one man—[HON. MEMBERS: "Rubbish."] I know that some hon. Gentlemen opposite do not like this, but they are going to have it. I hope that the right hon. Gentleman will decide to apologise to one man, at any rate, who has been abominably treated—Mr. Oliver Poole.

I hold no brief for Mr. Oliver Poole. [HON. MEMBERS: "No?"] It is very difficult for some hon. Gentlemen opposite to realise that there are men in this country who put justice and decent behaviour above other things. I hardly even know Mr. Oliver Poole to speak to, and what I am about to say to the House now—

Mr. Bevan

Say it.

Sir L. Heald

The right hon. Gentleman can come into it as well, if he likes, later. What I am going to say I would say even if he were editor of the Tribune, and that is saying a great deal.

Mr. Poole is a member of the general public and he is entitled to fair treatment from this House. He has not yet had it, and the country is waiting to see whether he is to get it. Before I state my opinion, as I am about to do, of the legal effects of what the right hon. Gentleman did in this House on 12th November, because I feel it is my duty to do so, I will tell Ole House that I consulted others before I came finally to this opinion.

I do not regard myself as an expert on the law of libel and slander, so I consulted two of the leading authorities on it now in practice at the Bar. As a result, I am confident that the opinion I am about to give the House now is right, and I do not believe that any lawyer in the House who knows anything about the subject will attempt to controvert it.

Dr. J. Dickson Mahon (Greenock)

Priggish.

Sir L. Heald

The hon. Gentleman talks about being priggish when we are dealing with a man's honour which has been impugned. My ideas on this subject are different from those of the hon. Gentleman, and so, I believe, are those of a vast number of people in this country. In this House on 12th November last—[Interruption.] This will be said, so it may as well be taken calmly, because otherwise it will only take longer—

Mr. John Rankin (Glasgow, Govan)

It is only a two-day debate.

Sir L. Heald

In this House on 12th November, the right hon. Gentleman the Member for Huyton made certain statements, in the form of Questions, relating to Mr. Oliver Poole. They appear in HANSARD in cols. 766 to 767. In my opinion, but for his absolute legal immunity from any process from anything said in the House, those statements could and would have rendered the right hon. Gentleman liable to an action for slander based upon defamatory insinuations against Mr. Poole in respect of his office as Vice-Chairman of the Conservative Party and in respect of his business in the City. Those insinuations were certainly calculated to cause Mr. Poole serious damage.

Mr. H. Wilson

No, they were not.

Sir L. Heald

They have been found by the Tribunal to be utterly false and unfounded, and the right hon. Gentleman admitted in his evidence before the Tribunal that he made them without the slightest justification—

Mr. Wilson

No.

Sir L. Heald

—without even making any attempt to verify them, or even the grounds on which they were based. It is, therefore, also firmly my opinion, having regard to the findings of the Tribunal—and this again I have confirmed independently from the best advice I could get—that but for his ability to shelter behind his Parliamentary Privilege—no, not his privilege, our Privilege; and I stress that—the right hon. Gentleman would today inevitably be facing the prospect of a very heavy award of damages which might well be nearer £10,000 than £5,000.

Mr. William Wells (Walsall, North)

rose—

Sir L. Heald

I cannot give way. I am in the middle of a statement.

That opinion is confirmed by the best opinion available today. Let the House realise, therefore, what this right hon. Gentleman has done. He has escaped from an award of damages of possibly £10,000 or more because of Parliamentary Privilege.

Several Hon. Members

rose—

Hon. Members

Give way.

Mr. Roy Mason (Barnsley)

On a point of order, Mr. Speaker. Is not the right hon. and learned Gentleman doing exactly the same as what he is charging my right hon. Friend with doing?

Mr. Speaker

I do not think so. I did not hear any ground for a point of order in that. Does the hon. Member for Newcastle-upon-Tyne, Central (Mr. Short) wish to rise to a point of order?

Mr. Edward Short (Newcastle-upon-Tyne, Central)

Is not the right hon. and learned Gentleman accusing my right hon. Friend of certain offences in which there is an element of malice? Is he not, therefore, imputing motives of malice to my right hon. Friend?

Mr. Speaker

Order. Earlier in his speech I heard the right hon. and learned Member for Chertsey (Sir L. Heald) say, when he started his criticism of the right hon. Member for Huyton (Mr. H. Wilson), "wittingly or unwittingly". I did not gather that he was imputing malice to the right hon. Member. May I say a word of caution to the House on this matter? It is a difficult one. The rule of the House is that no hon. Member is entitled to impute a motive of a discreditable character to another hon. Member which he has not disclosed.

I must ask both sides of the House to keep to that rule. We are not entitled to do that to each other, and it is proper that it should be so. As far as I could hear the speech of the right hon. and learned Member, I thought he was merely saying that the words of the right hon. Member might have landed him in these consequences. [HON. MEMBERS: "No."] Order. That at least was my understanding of what he said.

Mr. Wilson

Further to that point of order, Sir. Although the right hon. and learned Gentleman used the words "wittingly or unwittingly", did he not go on to say that my words were calculated to give an impression, and does not the word "calculated" mean deliberate intent, and, therefore, impute motive?

Mr. Speaker

No, I think not. I think that the right hon. Member will realise that the word "calculated" does not necessarily imply intent. Calculated can mean intended, but it can also mean likely to produce an effect without any intention being implied.

Mr. Hugh Fraser (Stafford and Stone)

Further to that point of order, Sir. We are in some difficulty in that, if there be malice, and we cannot impute it, how are we to deal with that situation?

Mr. Speaker

Will the hon. Member repeat his question? I did not hear it.

Mr. Fraser

If there be malice and it is impossible to impute malice to those who clearly have it, how do we stand?

Mr. Speaker

Hon. Members' beliefs are one thing, and that is a matter for them; but what they say in this House is another matter and that is a matter for me.

Mr. Wilson

Since I gave the House an assurance this afternoon of what I did mean by that statement, is it in order for the right hon. and learned Gentleman and hon. Members opposite to go on imputing motives as to what I did or did not mean? Secondly, could not this have been avoided if the right hon. and learned Gentleman, who has had so much to say tonight, had risen on 12th November and challenged it then?

Sir L. Heald

Unfortunately, I could not he in the House on that day.

Hon. Members

Oh.

Mr. W. Wells

rose—

Mr. Speaker

Does the hon. and learned Member rise to a point of order?

Mr. Wells

Yes, Mr. Speaker. You yourself, when you were dealing with this question of improper motives and the circumstances in which an hon. Member could attribute improper motives to another hon. Member, surely raised the question, on the right hon. and learned Gentleman's speech in relation to my right hon. Friend the Member for Huyton (Mr. H. Wilson), that, quite necessarily, he had been guilty of an improper motive, because it necessarily follows—[Interruption.] Unlike the right hon. and learned Gentleman, I was brought up on the law of libel. If the right hon. and learned Gentleman says, as I understood him to say, that my right hon. Friend the Member for Huyton is liable for from £5,000 to £10,000 damages for slander, it necessarily implies that the defence of qualified privilege is not available to my right hon. Friend, and that necessarily means that my right hon. Friend is guilty of an improper motive.

Mr. Speaker

I do not take that view of it at all. People frequently use words which are the grounds for actions for defamation, and have the verdict given against them. It does not mean that they use them with an improper motive.

Sir L. Heald

I am very much obliged to you, Mr. Speaker, for what you have just said enables me to go on with my speech at the exact point in my notes where I finished a quarter of an hour ago.

What I have just said may surprise a number of hon. Members, but, to be slanderous, there are a number of matters that one should consider in relation to the statements made, and the first and most relevant of all in this connection is this: it is quite immaterial what was intended to be said. It is even more immaterial what the maker of the statement said he intended to mean. Both these are quite irrelevant. Nor is it necessary that there should be any positive and direct allegation. No doubt, "the law is a ass" in many respects, but not such an ass as all that. The most insidious form of slander, as, indeed, many hon. Members will know, is the pointing of a finger or thumb, or the gesture that is made. Even the tone of voice may be relied upon; indeed, all of these things. The mere words, the particular words, are not what matters.

The material question is not what was actually said, still less what the speaker says he thought he said, had meant to say or wanted to say. The question is: what is the effect of the words in their context and in the circumstances on an audience which knows the facts? This House did, in fact, know quite a lot on that occasion, and so did the general public. Let me first remind the House of the exact language used. I do not think that the House needs reminding of it, but I think that on both sides we must he careful about these things.

It was not only one sentence which the right hon. Gentleman uttered, as he seems to think. He started by joining in the hunt with the hon. Member for Deptford (Sir L. Plummer). He himself suddenly came in from the Front Bench, saying: Does not the Chancellor's refusal to answer this Question in the way it is put"— having just referred to Mr. Poole having been named by the hon. Member for Deptford— throw the most surprising light…the strangest light on the Prime Minister's refusal? That is the beginning of it.

Then, there is an answer by my right hon. Friend and another Question: Will the Chancellor now answer the question?…Will the right hon. Gentleman inform the House of the inquiries he has made about the sales of gilt-edged, and whether any of them were undertaken by companies connected with any of the people whom he saw, or any other representative of the Treasury saw on Wednesday afternoon? My right hon. Friend replied that this was fully dealt with in the letter which the Prime Minister sent to the Leader of the Opposition. Then the right hon. Member for Huyton put this question: But, Mr. Speaker, since the right hon. Gentleman said it was fully dealt with, is he aware that that letter dealt with only one or two specific and very minor pieces of evidence which we put before the Prime Minister…We had no idea at that time that there was any suggestion that the right hon. Gentleman had seen the Vice-Chairman of the Conservative Party. Will he not now, in order to allay public anxiety on this matter, state clearly whether he did or did not, or any other Treasury representative did or did not, see the Vice-Chairman of the Conservative Party, who has vast City interests, the day before Bank Rate went up? A little later, the right hon. Gentleman put another question: …is he aware that this question about Mr. Oliver Poole was not submitted to the Lord Chancellor? Will he now recommend to his right hon. Friend the Prime Minister—because it"— and I stress "it"— has only come up now and because we gave all the evidence we had to the Lord Chancellor—the need for a full inquiry, on oath, on all the circumstances arising out of this unfortunate matter?"—[OFFICIAL REPORT, 12th November, 1957; Vol. 577, c. 766–8.]

Mr. Harold Lever (Manchester, Cheetham)

rose—

Sir L. Heald

No, I cannot give way now.

Hon. Members

Give way.

Sir L. Heald

May I ask the hon. Gentleman, please, not to interrupt me in the middle of this most difficult matter? I will give way in a few minutes, but I must finish this part of my argument.

As for that statement about "vast City interests," these actual words are not in themselves defamatory, whatever some hon. Members opposite may think, but that is not the point. It was not a casual or isolated remark. Nor was it sown in virgin soil; and perhaps I should say planted rather than sown. Everyone in the House knew certain things, and the general public, who read HANSARD and the newspapers next day, knew these facts. What anybody did or did not do about it at that time is absolutely irrelevant to what I am saying now.

The first thing they knew of was that there were rumours about a Bank Rate leak through improper means and that a person or some persons were benefiting because they knew of that. Secondly, a day or two before, the Daily Express had an article by Mr. Derek Marks saying that a brief had been given to two senior officials in the Conservative Central Office, and adding: And I do not mean typists. The article went on to ask, among other things, the question whether the recipients included any persons connected with concerns in a position to benefit.

Then, thirdly, there followed an article in the Sunday Express, not mentioning the Bank Rate, but referring to Mr. Poole under the headline "Shrewd". I need not mention it, because the Tribunal, in page 29 of its Report, quotes the opinion of an expert on the subject, the expert being the hon. Member for Deptford, and I should also like to rely on his evidence. I am not going to deal in my speech with his questions, since he has turned "Queen's Evidence" since then.

In page 29 of the Report, under the heading "Mr. Oliver Poole", the article is set out, under the name Ephraim Hardcastle, and what the Tribunal says is this: Both Sir Leslie Plummer and Mr. Poole considered this paragraph to be 'loaded' Sir Leslie Plummer regarded it as a purposeful and carefully designed attempt on the part of the editor to publish, without too much risk of libel, as much as he could of the information he had about Mr. Poole's visit to the Chancellor and of the current speculations as to some of the results of that visit. That is what is said by a real expert on the subject, and I think that we can accept it. That was the situation when we came to the House.

So far, be it noted, from what I have read from those two articles, there has been no linkage between Mr. Poole and the "recipients" of information. That, of course, may have given them a let-out on libel; we do not know. I do not know what the future will hold, and that is no business of ours. They were people outside the House. So far as we are concerned here, what the right hon. Member for Huyton did was to provide the direct linkage between those two articles, and put the cap on Mr. Poole's head. That is what he did, and that is slander.

Mr. Niall MacDermot (Lewisham, North)

Will not the right hon. and learned Gentleman give way?

Sir L. Heald

No, I cannot give way.

Mr. H. Lever

rose—

Sir L. Heald

It is the hon. Member's turn now.

Mr. Lever

I am greatly obliged to the right hon. and learned Gentleman. He must have heard my right hon. Friend say that he did not intend to cast any aspersion whatsoever on Mr. Poole and that, had anybody suggested the contrary, he would have made it abundantly clear that he made no aspersion upon Mr. Poole. Will the right hon. and learned Gentleman assist me by stating how he thinks he is assisting Mr. Poole by being the only one now to say that an aspersion was made upon Mr. Poole?

Sir L. Heald

I am certainly not the only person to suggest it. I can read the statements in the newspapers, which have said exactly what I have been saying this afternoon.

I was glad to give way to the hon. Member, because he and I worked together on the Defamation Bill, and I shall always remember that with great pleasure; it was, I think, a good achievement. The importance of it is that one of the things the Bill did was to provide that, in a case of this type of slander, it is unnecessary to prove special damage—which I think, might have been a great advantage to Mr. Poole.

There is, of course, no doubt at all about what the result would have been. Now that we have gone through this rather rough water, I hope that the House will appreciate the very serious importance of the matter. I have no doubt whatever that the legal answer is what I have given. At any rate, let us assume that I am right. [HON. MEMBERS: "Why?"] Because a very large number of people in the House agree with me.

Mr. MacDermot

rose—

Sir L. Heald

No, I cannot give way.

Mr. Eric Fletcher (Islington, East)

rose—

Sir L. Heald

No; I am sorry.

That being the position, what is the result of it? There is no doubt at all that the right hon. Gentleman has abused his Privilege. My right hon. Friend the Prime Minister was quite right in saying that we cannot allow Privilege to be used as a protection for defamation. That is what has been done here, without any question at all.

Hon. Members

Nonsense.

Mr. Speaker

If I may say so, I think that the right hon. and learned Gentleman is getting very near to imputing an improper motive. Members are not immune from criticism in this House, and it might be quite innocuous to say that the effect of the words, had they been said outside and put before a jury with all proper legal forms, might have resulted in an action for damages. That is, I should think, innocuous, but the right hon. and learned Gentleman's last words rather suggested—at least, they did to my mind—that the right hon. Member for Huyton was sheltering behind Parliamentary Privilege and using language which otherwise he would not have used.

Sir L. Heald

I apologise for using the word—

Hon. Members

Withdraw.

Mr. Speaker

Order. Let the right hon. and earned Gentleman take his own course. He does not need instruction from the House.

Sir L. Heald

I apologise for using the word "sheltering", and I withdraw it. It was a very wrong word to use. Parliamentary Privilege is something much too big to be sheltered behind.

Mr. MacDermot

On a point of order, Mr. Speaker.

Sir L. Heald

What I did say—

Mr. Speaker

There is another point of order.

Mr. MacDermot

I submit to you, Mr. Speaker, that implicit in the argument which the right hon. and learned Gentleman is putting there is undoubtedly an allegation of malice against my right hon. Friend the Member for Huyton (Mr. H. Wilson). The reason is this. Supposing that my right hon. Friend was not protected by the doctrine of absolute Privilege, it would still be necessary, in order to establish liability for defamation against him in the courts, to show that he was not protected by the ordinary law of qualified privilege. The ordinary law of qualified privilege—[HON. MEMBERS: Speech."] With respect, Mr. Speaker, it is a point of order.

The ordinary law of qualified privilege states that, where a person is speaking on an occasion when he has a duty to ask a question, if, in so doing, he makes a defamatory imputation, that is not actionable unless he is actuated by malice. I do not know whether this point was brought to the attention of the right hon. and learned Gentleman when he consulted the experts on the law of defamation but, in my submission, the matter is too plain for words. The whole of his argument implies an allegation of malice against my right hon. Friend.

Mr. Speaker

We are getting into waters too deep for me on the law of slander. The commonsense way I look at it is this. I have known cases of slander in my time when all that the jury looked at were the words spoken and the jury deduced malice if they saw fit so to do; but it was not necessary to prove malice except by inference from the language actually used. I do not think that to say that it might have led to an action for slander is necessarily to impute the motive of malice to the right hon. Member for Huyton (Mr. H. Wilson). That is my view of the law. I am, perhaps, more accustomed nowadays to giving my views on points of order rather than on points of law concerning defamation, but that is my view.

I think that the right hon. and learned Gentleman may have strayed a little in using the word "sheltered", because that seemed to imply an attempt to do something and take advantage of Privilege. The right hon. and learned Gentleman has withdrawn that. In these stormy waters, the House should, I think, follow his example. Hon. Members should try to put their points forcibly, by all means, but without transgressing the rules of order and imputing motives to each other.

Mr. E. Fletcher

Further to that point of order.

Mr. Speaker

On that point of order, I have made my Ruling. I do not wish to hear any more about it. I am not to be changed on the matter. I think that we should proceed with the debate.

If hon. Members had the burden I have, of a great number of Members wanting to speak, they would share some of my impatience at the protraction of our proceedings by these points of order.

Mr. Fletcher

Further to that point of order, with great respect, Mr. Speaker. Would it not simplify the matter once and for all if the right hon. and learned Member for Chertsey (Sir L. Heald) would say whether or not he is accusing my right hon. Friend of malice?

Mr. Speaker

There is no point of order there.

Sir L. Heald

I proceed from the point I was at just now and return to the point made by my hon. Friend—I call him that although he sits opposite; it makes no difference—the hon. Member for Cheetham (Mr. H. Lever). He and I were associated on the Defamation Bill, and he will remember one thing which he and I did. We covered the case where someone makes a slanderous statement and says, with good reason—at any rate, people are prepared to accept it—that he did so unintentionally.

The hon. Gentleman made a very amusing speech about one or two of the famous cases, mentioning one where an action arose because somebody was described as the wrong person's wife. We put in a provision which allowed people to escape from heavy damages where there was a genuine mistake; in such cases they could apologise. The hon. Gentleman was quite strong about it.

Perhaps we might apply that by analogy to this case. I could say that, adopting your very wise words, Mr. Speaker, supposing the matter were put before a jury in the proper way and they were properly directed, they might come to the conclusion that heavy damages should be paid. It might be possible also to deal with it in advance by making a sincere and frank apology if that were acceptable. The hon. Member for Cheetham was always very strong about this point. It must be a genuine apology, not a halfway withdrawal. It has to be a genuine, sincere apology, honestly meant and genuinely given. If that were done, that might obviate the necessity for damages.

The matter is put as well as it can be put in one or two sentences which I will read from the Daily Telegraph, and then I have finished on this point. I have very little more to say. This is what the Daily Telegraph says: Members must remain free to raise such issues as seem to them right and proper, even if, in raising them, they impugn the honour and conduct of men who cannot make them justify their statements in a court of law. But if such statements are later proved to be without foundation, then those who made them are bound by every canon of decency—however they may be protected by Parliamentary procedure—to make an amende honorable. It might well be out of order, and would certainly prolong the proceedings and exacerbate matters, if I went into the question of what the House could do if it thought that an apology that was not made should be made. I will not do that. I will only remind the House of the Bill of Rights. The Bill of Rights, when it gives immunity, only gives it outside Parliament. It is expressly worded so as to preserve the right of Parliament itself to punish its Members for contempt.

That is all I have to say, except one thing. I have a personal interest to declare in relation to this matter. I ought to do it in accordance with the proper proceedings of the House. I have discovered that Mr. Pumphrey is one of my constituents.

7.13 p.m.

Mr. Niall MacDermot (Lewisham, North)

I do not intend to follow the arguments of the right hon. and learned Gentleman the Member for Chertsey (Sir L. Heald) other than to repeat again, not as a point of order, Mr. Speaker, the points of law that I attempted to put to him. If he has a reply to make, I will be only too glad to give way to him even though he would not give way to me.

The whole tenor of his speech was that my right hon. Friend the Member for Huyton (Mr. H. Wilson) had made a defamatory statement about Mr. Oliver Poole which would be actionable in the courts of law if it were not for the fact that he was protected by absolute Privilege. I understand that he expressed his opinion with confidence not on the basis of his own knowledge of the law of defamation, but on the opinion that he received from two other experts in this branch of law.

As I understand the law of defamation, quite apart from the law of absolute privilege, there is a perfectly normal law of qualified privilege which every citizen is entitled to raise as a defence to an action for libel. That is to say, if the occasion of the libel is one in which a man has an interest in common with the person concerned, then he is entitled to be protected from any action for defamation if he is not activated by motives of malice. In this context the word "malice" means the ordinary sense in which the public understand it—of spite or ill will. I utterly fail to see how any action could be brought against my right hon. Friend in respect of the words he used and how that action could be successful unless it were proved that he were activated by motives of spite or ill will. If the right hon. and learned Gentleman wishes me to give way, I will do so.

Sir L. Heald

indicated dissent.

Mr. Short

My hon. Friend is by way of an expert in this matter. Would he say what, in his opinion, would be the position of the right hon. and learned Gentleman the Member for Chertsey (Sir L. Heald) with regard to his speech if he, too, claimed the absolute Privilege of the House?

Major W. Hicks Beach (Cheltenham)

rose—

Mr. Charles A. Howell (Birmingham, Perry Barr)

On a point of order. My hon. Friend has been accused of not giving a truthful answer. Is that in order in this House?

Mr. Speaker

It depends how it is meant. There are frequent debates in this House as to what is the truth—debates on matters of fact—and there is nothing wrong in that.

Mr. Howell

You misunderstood me, Mr. Speaker. Is it in order for an hon. Member to impute that my hon. Friend is not speaking truthfully?

Mr. Speaker

I did not hear such an imputation.

Mr. MacDermot

I do not know whether the hon. and gallant Member for Cheltenham (Major Hicks Beach) wishes me to give way.

Major Hicks Beach

All I want the hon. Member to do is to give a true interpretation of the law of defamation.

Mr. Speaker

May I ask the House not to go into these legal subtleties about the law of defamation? We are not in a court of law now. We have our own rules which are founded on decent conduct between one hon. Member and another and the avoidance of wounding phrases that we would not use to each other as friends. If the House sticks to that, there is no need to bother about the subtleties of the law of defamation.

Mr. MacDermot

I am only too happy to accept your invitation to leave the subject, Mr. Speaker. I referred to it only because it comprised almost the whole of the speech of the right hon. and learned Member for Chertsey.

I wish to comment on what seem to me to be some of the more important public consequences which flow from the evidence which was laid before the Tribunal. Before doing so, it is only right that I should say, for my part, that I welcome most sincerely the finding that there was no improper use made of any confidential information disclosed to anyone in connection with the raising of the Bank Rate.

I do so for a number of reasons, but more particularly for two. First, having read, I think, almost all the evidence laid before the Tribunal, it is only right for me to say that I do not see how any other conclusion could have been arrived at on that evidence. It is also right to say that my impression from reading the evidence was that perhaps the two principal characters who were the subject of inquiry, namely, Mr. William Keswick and Lord Kindersley, both appeared to make what in the law we call first-class witnesses. It is quite obvious that they were endeavouring to answer the questions frankly and fearlessly and to assist the Tribunal to get a true picture of what their state of mind was at the relative periods. It is only to be wished, perhaps, that some of the other witnesses, from the Governor of the Bank of England downwards, had given the same assistance to the Tribunal.

The second reason I welcome it is that it is the very fact that the people who were led to act in the way in which they did were honourable men—which makes what I may call "the case against the City" which arises out of this evidence so very much stronger.

I am not referring to the actions of the speculators. To my mind, anyone who at a time of crisis in sterling attempts to speculate in dealings in "gilts" is guilty of conduct which is beneath contempt. I was glad to see the view expressed in a leading article in The Times last Friday that such action undoubtedly would be anti-British. Certainly, judging by some of the evidence that was laid before the Tribunal, that view is not universally held in the City. Among all responsible bodies in the City, however, I think it undoubtedly is held.

Nor am I referring to the letter which I might characterise as Mr. Keswick's agonising reappraisal when he found it necessary to yield to the pressure, to which he had been subjected from Mr. Barton, in Hong Kong, for a long period, to get out of "gilts". I agree by and large with the comments on this aspect that were made by my hon. and learned Friend the Member for Northampton (Mr. Paget).

After all, the much criticised phrase of Mr. Keswick about its being anti-British and derogatory to sterling but that "as long as we are allowed to do it, it makes sense to me"—the fact that he should come to write in those terms at all—shows to my mind that he is a man of exceptional honesty of thought and was stating his predicament—and a very real personal predicament—which he felt as a patriot in having to give that advice. It appears to me, however, to raise the question very acutely whether or not there is something seriously at fault in a system which should put such a man in such a predicament.

What I regard as the most serious aspect of this part of the matter which is raised by the evidence is what I may term the phenomenon of the rush for liquidity which takes place, and has to take place, whenever a serious financial crisis threatens the country. The evidence which was laid before the Tribunal, particularly by the representatives of various merchant banks, has confirmed me in the view, which I have held for many years, that the method of operation of our financial system is one of the major contributory causes to its instability. It has been described by some people as a fraudulent system, and there is something in that charge in that no private individual would be allowed to conduct his operations in the way in which our whole banking system does.

The fact is that our banking system—and in this it does not differ from any other banking system in the capitalist world—is at any moment incapable of meeting its liabilities. I know that all banks can, and do, produce impressive balance sheets to show that their assets exceed in value their liabilities, but the point is that if ever there is a crisis—which in this context means a loss of confidence, in any form, in the banks—they are unable by the nature of the system to realise those assets. There simply is not enough money about to enable the banks to realise their assets so as to meet their obligations if they were ever really pushed to do so.

When the pressure is from outside the country, it is the merchant banks which first feel it. When they feel the pressure against sterling, their whole instinct is to make the dash for liquidity. That operation, if carried to any serious degree, will in itself very seriously contribute to the crisis. Indeed, if it is not stopped, it will bring the whole pack of cards tumbling down to the ground. That is why, when there is pressure of this kind, to save our whole financial structure it is essential for drastic measures to be taken, such as either devaluation or a swingeing increase in the Bank Rate, in order to attempt to restore confidence in those quarters where confidence is being undermined and is, consequently, threatening our financial system.

As we see from the evidence, the pressure for such action comes most strongly from the banks themselves. It is that which accounts for the fact that in this case Lord Kindersley came dashing back from Canada, terminating his holiday there earlier than he had intended, to press for a strong increase in the Bank Rate. My fears in this respect are in no way alleviated by the statement from the former Chancellor of the Exchequer, the right hon. Member for Monmouth (Mr. P. Thorneycroft), which he gave us this afternoon, that there is no legal power whatever in the Government to control the level of bank advances. It is for that reason that it is necessary for a Chancellor of the Exchequer to invite the co-operation of the banks to restrict the level of bank advances.

That means that there is no power in the Government to restrict the level of bank deposits. That means that there is no legal power in the Government to restrict the extent to which the banking system superimposes bank money—bank credit—on top of the ordinary lawful currency of the land. It is a very serious disclosure indeed if the fact is that the Government of the country do not have the legal power to control the quantity of money.

We know that the whole purpose of the conglomeration of financial measures that the former Chancellor of the Exchequer adopted was to control the supply of money, and yet we hear him confess today that the Government legally do not have the power to do that. For my part, I welcome the news that the whole question of the relationship of the central bank to the Government will be submitted for the consideration of the Radcliffe Commission.

Turning specifically to the matters relating to Lord Kindersley, I should like to comment very briefly upon them to this effect. Reference was made this afternoon by my right hon. Friend the Member for Huyton to the surprising coincidence of the heavy sales of "gilts" by the three concerns with which Lord Kindersley was connected. Of course, the Tribunal's inquiry was directed to finding out whether that coincidence was due to any improper disclosure by Lord Kindersley of the Government's decision to raise the Bank Rate. It seems to me on the evidence that clearly it was not. Equally clearly, however, it seems to me that the reason for that coincidence is that long before the Government had decided to raise the Bank Rate, Lord Kindersley was a firm and fervent advocate of its being raised. That becomes clear from Lord Kindersley's own evidence in dealing with the matter of the Royal Exchange Assurance.

Lord Kindersley returned to this country on 24th August. He spent the first weekend in reading papers. The first meeting he attended was that of the Court of Treasury of the Royal Exchange on 28th August. With great frankness, he tells us that he gave a lecture on what he considered to be the seriousness of the situation and the fact that the Royal Exchange Assurance would be well advised, as a matter of investment policy, to "get liquid" as quickly as possible. That advice was heard by Mr. Cooper, who had interrupted his holiday especially to attend the meeting.

The next thing to happen was that on 2nd September Lord Kindersley saw the Deputy-Governor of the Bank of England, the Governor being away on holiday, and conveyed to the Deputy-Governor the serious views which he had brought back with him from Canada and said that he considered that the Bank Rate had got to be raised and raised properly. If those were his views when speaking to Mr. Mynors, it is to be assumed that he represented them to his fellow directors in Lazards and no doubt to some, if not to all, on the Board of the British Match Corporation and others of his business associates. This was drastic action which he considered necessary and no doubt he was bringing all proper pressure on the Government to see that that action was taken. It is in those circumstances that there appears to me to be a complete air of unreality about the discussions which took place in the few days before the Bank Rate was raised and when the actual decisions were made as to what to sell and how much to sell.

Lord Kindersley, again with his great frankness, described what took place on 18th September at the Court of the Royal Exchange. Mr. Cooper, having got back from his holiday, at once gave effect to the injunction he had received on the 28th from Lord Kindersley to see how they could get liquid. Until Lord Kindersley gave his evidence, the whole tenor of the evidence up to that point had been that careful calculations had been made as to exactly how much cash was likely to be required by the Royal Exchange in the near future and that it had been agreed to raise only such money as was necessary for that purpose.

When we come to Lord Kindersley's evidence, again we have a very much franker picture about how that discussion began with Mr. Cooper giving a description of the general situation—Lord Kindersley thought that he said that it was "lousy" and that he did not see how it could get any better and that they had better raise enough cash to meet all their liabilities, "plus". That is brought out in reply to Question 7482. Lord Kindersley explained that when that discussion took place, his colleagues looked to him to initiate an open discussion and he explained that at that moment his lips were sealed, because he then knew the definite date on which the Bank Rate was to be raised and by how much. He said that he had to keep "mum" or, to use another colloquialism used by Lord Weekes, "po-faced" that day.

In a situation with Lord Kindersley urging them to get liquid and then sitting, "po-faced," it needs no great intuition or intelligence on the part of his colleagues on Lazards or on the Court of the Royal Exchange to size up the situation and what they ought to do. I dwell on this matter only because it appears to me to bring out fairly vividly the artificiality of considering whether there was any direct leak by Lord Kindersley that the decision had been taken to raise the Bank Rate by 2 per cent. and, secondly, the undesirability of this dual position of bank directors with the Court of the Bank of England holding active directorships in public companies in the City at the same time.

Although I will not attempt to give all the relevant citations, there is abundant evidence from many witnesses that this dual position leads to situations of embarrassment. Lord Kindersley has what he considers to be a simple solution. In reply to Question 7518 he said: …I have been in a very awkward situation many a time. What he says he does is to …avoid discussion like the plague. Then, if he finds that he cannot avoid discussion, he says that it is "very simple" to say to himself, "If you had not been given this information by the Governor of the Bank of England, what would you say to these chaps?" He says that he finds that a simple test to apply, but it appears to me that that under-rates the capacity of all of us, more particularly the more extrovert, for self-deception. One would like to know the number of occasions on which Lord Kindersley, applying that test, has found it necessary to give advice different from that which he would have given had he been free to use the information he had received from the Governor.

Mr. Keswick faces this problem much more squarely and much more intellectually honestly. His dilemma was that he had to give some advice to his colleagues in Hong Kong. He was under an obligation to do so. He also had information which he had received confidentially and which was bound to influence his judgment. To go back to the beginning of the matter, Mr. Barton of Jardine Matheson had been pressing from Hong Kong for some time for the firm to get out of "gilts". He made it clear in his letter written on his way to or from a holiday in Tokyo that he was afraid of devaluation and because of that he wanted to get out of "gilts".

He asked for advice and comments from Mr. William Keswick. Having received the Deputy-Governor's letter on 2nd September, whatever he may have heard from the depressing Nigel, from that letter alone Mr. Keswick had confidential information which showed him quite clearly that for the time being at least there was to be no devaluation, but that there were to be stringent measures, the exact nature of which he did not yet know, which were obviously to be taken to prevent devaluation taking place.

He could not give a dishonest answer to Hong Kong. Had he been dishonest, he might have suggested to Hong Kong that there would be devaluation and that they would have to sell "gilts". That would have achieved the same results, but he was not that kind of man and he had to give an answer which he thought honest, which was that there would be no devaluation, for the time being at least.

However, he could not leave the matter there, because he would have been deceiving and giving a false picture to Mr. Barton in Hong Kong. He had to go on and advise him that in spite of the fact that there was to be no devaluation, he must sell "gilts." He had to give reasons, and this is where his predicament began to be embarrassing, because he could not state the specific measures which he thought might be taken and which would lead to the conclusion that one should sell.

Far from any intention to disclose the likelihood of a Bank Rate increase in that letter, Mr. Keswick in his own mind was doing everything he possibly could to avoid disclosing that. It so happens that he failed and that Mr. Barton read the letter in the sense that the Bank Rate was to be increased. I accept the Tribunal's view that that result was not what Mr. Keswick was trying to achieve and that in fact he was trying to achieve the contrary. The position for him was difficult, because if he was to give advice to sell, it followed in those circumstances that he must use the knowledge which he had had, in a sense, from confidential sources.

I cannot do better than use his own words, because he sets the dilemma with immense clarity. During his thorough cross-examination by the Attorney-General, the following was said: And of course you had taken your decision with knowledge of what he had written to you on the 3rd September?—Yes. That made it more difficult still, did it not?—I do not think so. Can I tell you my attitude to that? Certainly.—When I wrote that letter"— this is dealing with the letter from the Deputy-Governor— I had to ask myself two questions; one, what was the objective of the Deputy-Governor writing to me a manuscript letter which you know about. It certainly was not to ask advice or consultation, because he said: 'Destroy it. I do not want an answer.' It is inconceivable to me that he was giving me a tip, because he wrote the same letter, I believe, or similar letters to other directors, and a copy was kept in spite of being asked to destroy it I do not think he was asked to what that had reference. I cannot believe that he wished—and I can only put it in this way—to put me in baulk, so that I could have no freedom of action whatsoever, so I took it at its face value in the simplest way that it was a courtesy letter to a fellow-director, telling me about the situation, that remedies were being considered, that the Governor was away, and there was no need for me to return. That is what I thought the objective of that letter to me was That is the first consideration I had to make, and that is what I did. The second is: Should I, or should I not be influenced by that letter? My decision, right or wrong was this that he wrote to me on the 3rd and I went to London on the 16th—badgered by requests and talks with my brother about whether we should sell, or whether we should not sell—and at that time I decided, rightly or wrong, that I had not had any more communications from the Deputy-Governor that the news was stale, written on the 3rd (I took my decision on the 16th) it was unconfirmed and tentative. I also could not at that time, go to the Deputy-Governor and say: 'What is the position, because I want to advise my colleague whether to sell or not to sell?' It would have put him, I believe, in a most impossible situation. Nor could I, at that time, have written to Barton and said: 'I cannot advise you.' So I took the action that you all know about, and those are the reasons for my taking them. If I had to do it again, I would not act differently in any way. He had explained a little earlier that he had taken great pains to complete his letter and draft a telegram before lunch on the Monday, because he was going to the Bank to see the Deputy-Governor at lunch-time and he obviously suspected that he would know something not merely unconfirmed and tentative but confirmed and definite, and from that time on he would consider himself silenced.

Mr. Keswick's solution is to say, "If the information which I receive is tentative, I consider that I am not in baulk and that I am free to discharge my duty to my company and give advice." He does not pretend that he can exclude from his mind the tentative information that he may receive, albeit confidentially. On the other hand, he says that if the information is specific he declares his interest, which means that he tells his predicament to the Governor. The Governor, in his evidence, told us that in those circumstances his advice would be to forget the letter or the telegram. But if Mr. Keswick is to act upon that advice it means that he must fail in his duty to his company, because it is precisely in this situation that he is required to give the advice which, as he says elsewhere, he is paid to give. It is precisely in such a crisis of sterling that the directors in Hong Kong want to know what Mr. Keswick—who has the feel of the London market—thinks is the right action to take, and in that situation he is compelled to resolve the conflict in such a way that he is unable to give advice.

Quite apart from the risks as to the inferences which might be drawn from such a silence, this goes to the root of the difficulty of this dual position. It is not, as the Lord Privy Seal suggested, the common and familiar situation which applies throughout the public service—the conflict between private advantage and public duty. That problem is as old as the hills, and easy of solution. The person involved says, "If I find that I have some information which I have received in the course of my public duty and a situation arises when I have to take a decision where my personal interest is involved, I subordinate it and, if need be, suffer a loss which I should not otherwise have suffered, because I am prevented from acting in my private sphere by my public knowledge."

But this is not that situation. In this case, the man concerned has two public duties—one to the Government and the State, and the other to a public company. He may have no financial interest in the question of what advice he should give to Hong Kong; that would depend upon his shareholding. He would have a duty to give the information and if he failed to do it he would not be giving that which he contracted to give when he assumed his directorship and took up that position. That appears to be the crux of the problem, and the reason why it is not fair to any of the institutions concerned, let alone the persons, to continue it any longer.

I want to raise two other matters. First, there is the decision of the Chancellor to see the representatives of the Press, of the Conservative Central Office and of industry in advance—and here I make no distinction between trade unions, employers' federations and the rest. I cannot for the life of me see what the necessity was, on this occasion, to see these people in order to give them this information. I know that it helps to promote good relations and that one can help people to feel that one is being courteous by taking them into one's confidence. That is the only possible justification that I can see for this procedure.

There was no specific action that any of these people could take in the twenty-four hours before the public announcement, and if they had attempted to take it they would have been misled, because they were given only partial information. This was an attempt to build up a general atmosphere of good will and confidence. But if that is all that was to be gained, and one puts into the balance against it the great risk involved in seeing these people, and the possibility—to put it no higher—of an accidental or negligent leakage by one of them, it surely cannot be the right thing to do.

The Lord Privy Seal said that this kind of deliberate and confidential communication was on quite a different level from an accidental or negligent communication, but if 15 or 20 people are to be given confidential information the risk of precisely that sort of accidental communication by one of them is enormously increased. The Chancellor was misrepresenting the position, because, although he was purporting to take these people into his confidence he was not doing so; he was not telling them the most vital measure of the lot.

Let us consider the evidence, and see what might have happened—the possibility that some of these people might have come away concluding that this obviously meant that the Chancellor would raise the Bank Rate and they would not be under any oath of silence to keep quiet about that conclusion. I confess that I find it exceedingly difficult to understand the working of Sir William Haley's mind—no doubt due to the mediocrity of my own—when he heard the measures which the Chancellor was proposing to take.

Apparently he was compelled to ask the Chancellor about interest rates. What the purpose of that question was, other than in relation to the Bank Rate, I do not understand, but Sir William says that he was not thinking of the Bank Rate but of something more long-term. The answer he got was, "I cannot discuss that now." Quite clearly the Chancellor thought that he could not discuss the matter then because he thought that the question was directed to the Bank Rate. Surely that is a perilous situation straight away.

Once he is asked that question—especially a Chancellor who had so notoriously been publicly opposing any rise in the Bank Rate; there was evidence that he had addressed a luncheon of bankers only a few weeks before, in which he spent the whole of his speech explaining why the Bank Rate should not be raised—if he turns round and says, "I cannot discuss that now," it can only mean, "Because it is precisely that type of secret information which I am not in a position to discuss."

Sir William Haley says that he went back to his office and discussed the matter with his assistant editor and said, …if that was all he is going to do, God help us. I do not know what else, other than raising the Bank Rate, Sir William could have had in mind; but, as I say, I do not understand his evidence.

Mr. Bareau, of the News Chronicle, said that he walked out of the Chancellor's room and immediately asked Mr. Leslie a question about the Bank Rate. I do not know what answer he expected to get or what weight he thought he could attach to the answer. He says that he was very cleverly led off the scent. If he had been on the right scent, would not he have expected attempts to lead him off it? Was he to judge whether he was on the right scent by judging how clever was the attempt to lead him off? I confess that I find Mr. Bareau's reaction over this exceedingly naive. Perhaps that is not surprising, considering that he was on his way to a Liberal Party conference, but I think this shows the dangers involved in this kind of procedure.

The position of Mr. Gampell of Reuters has been dealt with. The next morning he was asked by Mr. Turner to express his view on the likelihood of devaluation, and he said that there would not be any devaluation. Then he said, rather curiously: Why don't you read the morning papers? Mr. Turner apparently took this to be a reference to the prediction in the Daily Telegraph that morning that there was to be a rise in the Bank Rate and so he hurriedly rang up his friend in the Bank of India to say that there was a strong rumour in the City that the Bank Rate was to be raised. That shows the danger involved in the Chancellor having these sort of conversations with representatives of the Press.

Mr. Pollock's reaction when he saw the Minister of Labour and National Service was that when he got back to his office and his assistant asked, "What about the Bank Rate?" he said, "Nothing was said about that because obviously there is going to be a rise in the Bank Rate". He had formed that opinion, he says, independently. There again is an instance of the fact that what precisely was supposed not to be disclosed could be referred to in such a way as to lead people who were listening to think that it was a pointer from what had been said by the Chancellor.

We come now to the Tory Central Office, and I have not heard in this debate any kind of explanation which appears to me to make sense of why it was necessary to see representatives of the Tory Central Office, still less why it was necessary to give them any document—still less what on earth they wanted the document for, or what they did with the document when they got it. Apparently Mr. Dear went home and slept on it. He folded it up and put it in his wallet. He read it so carefully that he did not notice that two inches were cut off the bottom. The only person who saw it outside the Tory Central Office, Sir George Coldstream, did notice it. But is it safe to rely on the stupidity of members of the Tory Central Office and assume that there are no risks involved in that kind of action, when clearly, some people reading that document might conclude from the way it was cast that it was leading up to a "bull point" at the end and that the "bull point" had been cut off which must mean, and could only mean, a rise in the Bank Rate?

I fear that I have detained the House for too long, but I wish to close with a few comments—I will make them as brief as I can—on the procedure of these tribunals, which has been referred to by my hon. and learned Friend the Member for Northampton. I entirely agree with the comment of my hon. and learned Friend that the procedure before these tribunals puts the Attorney-General in a hopelessly embarrassing position. The right hon. and learned Gentleman has to decide whom to cross-examine and how strongly to press his cross-examination. It is a very difficult and embarrassing position, particularly when political personalities are involved, as they nearly always are at these inquiries. If he presses his cross-examination too far, he will create animosity among his friends. If he does not press it far enough, he will create animosity among his opponents. No doubt the Attorney-General may draw some comfort from the fact that he has been criticised on both scores; though perhaps the criticism that he went too far would come more from financial circles and the criticisms that he did not go far enough from political circles.

The fact that such criticisms are made shows what an intolerably difficult position the right hon. and learned Gentleman is in. After all, one of the main objects of these inquiries, apart from attempting to get at the truth, is to convince the public that the truth is being successfully arrived at. Where the person who has the main conduct of the evidence is put in this embarrassing situation, it is difficult to convey that impression to the public.

Secondly, there is the point that it is something quite foreign to our whole judicial system. We do not like and are not used to this inquisitorial system, and that again was pointed out by my hon. and learned Friend. We prefer the system of examination and cross-examination. To attempt satisfactorily to combine both in one person seems to me to be impossible.

The essence of examination-in-chief is that the advocate must not lead the witness. There are very good reasons for this. Very frequently a witness does not come up to proof; in other words, he does not give his evidence in accordance with the statement obtained from him by the solicitor. Then, the Tribunal is able to form an impression of the witness by the fact that he is giving the answers, and that the words are not being put into his mouth; and the witness feels that he is being allowed to tell his own story.

As the Attorney-General made clear in an intervention earlier this afternoon, he was bound to take all this evidence-in-chief in the form of leading questions. He was bound to take all the witnesses through their statements because later he was to cross-examine on those statements and he would have been put in a very difficult and almost impossible situation in attempting later to cross-examine unless he did it in that form.

The result was that the whole essence and value of the examination-in-chief went, and we see in the case of Mr. Ellis the difficulties into which counsel got when he sought to depart from that practice. Mr. Rodger Winn was not examining Mr. Ellis in that form and the result was that he found himself, at a very early stage, involved in cross-examining the witness. Having read the evidence, I must say that Mr. Winn has my complete sympathy, but I am sure that Mr. Ellis came out of the box quite convinced that he had not been given any sort of chance at all to tell his own story, and that again is unsatisfactory.

The most difficult part of it is the dilemma of the Attorney-General to know who to cross-examine. No doubt he felt he ought not to cross-examine anybody against whom, as it were, he had not opened a case before the Tribunal. Unless, as it were, metaphorically he has put the person in the dock at the outset, he ought not to turn round and cross-examine him. One can see again in the case of Mr. Ellis what happened when that was done. Mr. Ellis wanted to be represented and felt that he had been treated unjustly. It seems to me, therefore, that further consideration ought to be given to the question of the proper procedure before these tribunals.

I put forward, very tentatively, a suggestion that the procedure might be improved by, in effect, having two Crown Counsel employed. One—let it be the Attorney-General—should act as Sir Donald Somerville, as he then was, acted in the 1936 Tribunal merely laying the evidence before the Court and taking in chief those witnesses who are not represented by counsel. Those witnesses who are so represented, that is to say, interested parties, could be taken in chief in the ordinary way by their own counsel. Then let the witnesses be cross-examined by a quite separate, independent, non-political silk of distinction and ability. Let him have a roving commission to do impartially all the cross-examination. In that way it will not be left, as it was at many times in the course of this inquiry, to the Tribunal itself to do the cross-examining, which is unsatisfactory from every point of view and is liable to give witnesses the impression that the Tribunal is hostile towards them. I apologise for having occupied the House for so long.

8.1 p.m.

Mr. I. J. Pitman (Bath)

It is twelve years since I resigned from the honourable position of a Director of the Bank of England to enter this very honourable House. It was from the corresponding seat on the opposite side of the Chamber that I made my maiden speech on the nationalisation of the Bank of England. Perhaps I might, therefore, be allowed to contribute something this evening by way, as it were, of the personal experience of someone who has been in the position that has been so much discussed and who, throughout, has taken the very greatest interest in the Bank of England and in the new machinery and Constitution which were set up in the Bank of England Act, 1946.

I would start with one extract from my maiden speech, which is as true today as it was when I made it. It is: …the Bank of England is a very precious institution, not only in this country but in the world…I think the Chancellor will agree that we ought to bring a spirit of moderation and a true spirit of objectivity to our deliberations this afternoon. Credit is popularly supposed to be wholly monetary. Believe me it is at least as much, in fact probably more, emotional. I hope, therefore, that we shall be at great pains to keep emotion down and bring objectivity and sincerity to bear.—[OFFICIAL REPORT, 29th October, 1945; Vol. 415, c. 64.] I hope that my present remarks will equally have the moderation of a maiden speech. I hope, also, that the hon. Member for Lewisham, North (Mr. MacDermot) will not mind if I confine myself to the narrow limits of two of the points he mentioned, both connected with the second point of the analysis of the speech of my right hon. Friend the Home Secretary, and if I do not follow him in all the points he raised. I should like to follow him on these two points, because in one of them he really put his finger on the root of the trouble.

The hon. Member did that when he explained the dilemma in which Mr. Keswick found himself in relation to Mr. Barton. That arises, however, out of the dilemma with which we all are faced. Are we to regard the Bank of England and our monetary system as the Russians regard theirs, as a fully controlled State capitalism? Or are we the financial centre serving the free world? If we are a completely controlled State capitalism, we can stop the sort of thing happening and the dilemma occurring that the hon. Member for Lewisham, North mentioned. If we are the centre of the free world as a financial institution, these dilemmas are bound to occur.

I put down a Question to the late Sir Stafford Cripps at the time of the last devaluation of the currency and when there had been much comment on the tremendous loss of many millions of pounds to this country. Speculation against the £ had caused really vast losses to the country. I asked whether the loss was due to the Treasury's having failed to give a direction to the foreign exchange control, or whether it was due to any failure of the foreign exchange control machinery in not carrying out such direction. The right hon. and learned Gentleman came out with an admission which we must know to be true; that no control, unless it were the full State capitalism of Russia, over a financial institution which is a free world institution could stop people using their freedom to buy or sell on this market and other markets according to their judgment.

The dilemma which faced Mr. Keswick, and why the hon. Member for Lewisham, North has such sympathy with him, is that the foreigner knows quite well that if the people of this country do not take a realistic view about gilt-edged or about sterling there are also other financial centres who can deal in lieu of the London market, and will do so. The problem, therefore, is not how to stop such losses, but rather how much of the loss goes outside and overseas and how much is preserved within this nation.

The other point I wish to take up is the dilemma in which he stated Lord Kindersley and directors of the Bank of England find themselves in relation to information which they have gathered. Everything that the hon. Member for Lewisham, North said is, however, just as capable of being true about the adviser as about the director. If I were to become adviser to the Bank of England under some new constitution, I would presumably have information or the Governor would not wish to consult me. Similarly, I would by such consultation receive information. If we were to carry the objection against information into the field of advising as much as into the field of directing, the poor Governor would have nothing but "proper Charlies" to advise him: only those who would have no information and would contribute nothing.

Let us not make the mistake of thinking that this is anything but a fundamental problem. The directors are valuable to the Governor precisely for the information they have. The problem is one not of absence of information but of the use of information: one of resistance to temptation and not of abuse of information which they have got. The problem cannot be solved by denying information to people or by seeing that they do not pass information on. Each individual, however, must be the keeper of his own conscience and must see that there is no improper use of information given to him.

May I now deal with the organisation and constitution of the Bank of England and with the great change which took place when the Bank was nationalised? I have always been interested in organisation and in the recognition that responsibility can be on only one shoulder and must be matched by power. Before nationalisation, responsibility, in the final crunch, lay with the Court of the Bank of England. It and it alone was finally responsible for Bank Rate. There was, however, effective representation on the part of the Treasury, which made for that proper interplay of forces. The result of it was a complex between the Bank of England Court, on the one hand, as the responsible power and the Treasury and the political decision of the Chancellor, on the other hand, as the effective representation of the political view.

At the time of nationalisation, I made the point in my maiden speech that this complex balance had been eminently satisfactory and that there had not been, historically, any clash between the Bank acting as a Court and the Treasury acting as a political factor. Even the return to gold was done as the result of a committee appointed by Mr. Snowden, who was Chancellor of the Exchequer of the Labour Government. On that committee there was not one representative of the Bank of England. The decision was thus wholly political. There had been no clash.

Secondly, representation by the Treasury was effective because, in practice, any conflict between the two was unthinkable. For technical reasons connected with the fiduciary issue it was constitutionally impracticable, but, speaking in ordinary parlance, any head-on clash then, as now, would be quite unthinkable. Of course, arising from the possibility of nationalisation, there never was any doubt of the potential clear primacy on the part of the political Government. There was no doubt even before nationalisation that the Treasury and the Chancellor and this House and the democratic principle controlled the Bank if it should ever come to a real conflict.

By nationalisation, the situation was reversed. In the final crunch, responsibility alone lay in a "direction" from the Chancellor of the Exchequer. If he does not give that direction, he is failing in his duty and is at fault. The clear primacy of responsibility, to use the words of the right hon. Member for Huyton (Mr. H. Wilson) lies with the Chancellor of the Exchequer now. The right hon. Member for Huyton said, too, that there should not be any doubt where the decision lies. I think the House must know there can be no doubt where the decision lies. Those powers of direction are there in the Chancellor's hands and were put there to be used so that the responsibility should lie clearly, as well as firmly, with the political Chancellor of the Exchequer.

Just as I have said responsibility in its final crunch must be matched by some effective representation, the right hon. Member for Bishop Auckland (Mr. Dalton)—who, I suppose, was the architect of the constitution of the Bank—introduced the Court, under a Royal Charter, consisting of appointments of the Crown. That, I submit, was to give a balancing factor of an effective representation, so that if at any time the Chancellor was taking too political a decision there was a technical and financial body which could make effective representations to the contrary as a potential correction—but not to override the Chancellor. It did not alter the responsibility any more than it did before. Responsibility can lie only in one place, but whereas before the Chancellor was in a position to make effective representations and the Bank was responsible, now the Chancellor became responsible and the Court was the mechanism by which effective representations could be brought forward.

Obviously there are varying needs in national undertakings for such a balance between power and representation Clearly, in Departments which are wholly political—such as the Foreign Office, the Post Office, and the Ministry of Health—it is absolutely right that the whole balance of emphasis should be on the political side. The permanent secretary has very little by which he can make effective representations against policies—for, after all, they are political and only political. On the other hand, we should not forget that the Bank of England is not a wholly political organisation. The Bank of England is the centre of sterling over the whole world, and it is not only sterling countries which enter into sterling transactions.

The technical function of the Bank of England is thus at least as important as its political function. The business community here and the business community in the sterling area and throughout the world have a real right to insist that in the constitutional mechanism of the Bank of England there is some safeguard that the decisions shall be not merely and only political ones: that the financial technician should have some consideration and some weight attached to those considerations. Let us not forget the value of the £ at home is not only a political question. I know it is fashionable to think that the Bank of England determines economic activity and that money does that, but money very often is the symptom of a disease and not that which causes the disease.

There is an intention to review this whole question of the Constitution of the Bank, and I am very glad that that has been referred to Lord Radcliffe and his Committee, but I make a plea that we in this House should not in any way prejudge the answer. Above all, let us not take political sides on what the decisions of the Radcliffe Committee ought to be on this particular case.

Long-term lending is a matter in which by inflation this country loses as vast sums as it lost over devaluation. Every business community must have its arrangements for long-term lending, and we in Britain, as a big exporting country are selling our goods to be paid for in sterling in the long run. The measure has to be in the £ and, after a period of time, when inflation has taken place to the degree of recent extents, inflation chisels away the standard of living of the people in this country by reason of the fact that the monetary return we get when the debts are paid after twenty or thirty years is so much less than the value of the goods we supplied when we made our original exports.

The point which arises out of all this is that the people who are part-time directors of the Bank of England are the people who are so often lending long and who, all things being equal, are most interested in keeping the value of the £ stable over the years and most interested in seeing that the British community gets value for money by being repaid for what It has supplied in a value of money which is comparable to the value of money when it supplied those goods. There is thus an identity of interest between such directors and the national interest.

Here there is one point I do not understand—how it comes that in terms of what is referred to in the Tribunal report as the "difficult and embarrassing position", of directors has now been turned in the terms of the Amendment into an alleged "conflict between public duties and private responsibilities". I understand it when the findings of the Tribunal speak of a difficult and embarrassing position, but I do not see that there is any conflict between public duties and private responsibilities. Consider the position of Lord Kindersley. In advocating a high Bank Rate to preserve the long-term value of the £, there is no conflict. Moreover, there is no individual gain in an increase of Bank Rate. Such directors presumably, had very considerable monetary savings as capital from which they lend, but a Bank Rate increase of 2 per cent. always means vast capital losses, at any rate on paper, to those who have considerable savings. It is just not true, as is sometimes supposed, that the City of London does very well by raising the Bank Rate. Per contra, it is exactly the opposite. There can be embarrassment over information and how properly to use it, but there is no conflict between private and public duties.

If then there is this identity of interests, I think that the independent directors are ideally suited to help the Bank; and to help the Bank means also to help the Chancellor, the House and the Electorate. First, I think they are ideally suited to present the technical as distinct from the political point of view. I think it always ought to be a marriage of those two points of view. We in the House have our place to reflect the view of the electorate, but there is also the technical point of world trading and of sterling trading which ought effectively to be put. Let us face it, too—there is no reason why we should riot have on the Court to take their share of responsibility people from the joint stock banks as much as from the banking houses. The present restriction is a relic of the past, arising from actions with the Bill Department, and discounting, the Bank of England being the central banker.

These specially selected people are ideally suited to be an effective balancing force to an otherwise over-strong political unit. I think that is very important. I believe it was a considered design by the right hon. Member for Bishop Auckland. Why should it be overthrown? I hope that there will be no political agitation, no prejudice, on this matter, adopted in the belief that it is right to substitute an advisory committee, because the advisory committee will not solve any of the problems of what is to be done with information and it will not give the balance which an effective representation of the technical point of view could give.

What are and were the functions of the ordinary directors? First, there was the weekly court. Incidentally, the fact that the court meets regularly at the same hour and day each week and that all arrangements are laid on every such meeting for announcing either a change of Bank Rate or the maintenance of Bank Rate is probably the greatest provision to secrecy which could possibly be achieved. Secondly, there are a large number of sub-committees and meetings on other days. From my own experience I might say that no board of directors has ever worked as hard and that no £500 is more economically spent in getting first-class people and a first-class continuing interest and attention. I will not say that the work is whole time but I would claim that the attention is continuing. The point is most important that though the work is not full-time, yet the interest and attention is as ever present as the sense of responsibility.

I should like hon. Members to compare that with the Post Office Advisory Committee. There are fundamental differences. If we elect a director of the Bank of England, which is about the most honourable position which anybody in business could achieve, he develops a corporate sense and feeling with other members of the Court. There is a very real feeling of individual and collective responsibility. I have never served on the Post Office Advisory Committee and I may be wrong in what I say, but I cannot imagine members of that Committee having the same continuing pride and interest in everything which might affect the Post Office and I cannot imagine them attending if need be to fight because of their responsibility and their sense of duty.

I think that the very dignity of the position in the Court of the Bank of England develops a pride in and devotion to the work which would not be achieved if we were to have a purely advisory committee. How many hon. Members have had the experience of being just an adviser, only an adviser? The feeling is, "It is not worth taking trouble; I am only an adviser, they will pay no attention to my advice." If one is a responsible member of a Court, on the other hand, one's attitude and the attitude in which one's work is conceived is quite different.

What about the question of temptation and the embarrassment of information? It is a difficult and embarrassing position every now and then but it is only temporary and it would arise in any case if the Government are to take advice from anyone. One must have information and one must use one's discretion in passing it on. After all, we in the House meet exactly the same situation of embarrassment and of resistance to temptation. It is an issue of temptation and the right and proper use of information, nothing else.

As the Home Secretary said, the banking community lives in an atmosphere of receiving information and treating it with integrity and rectitude. It does not abuse it. It gets information about certain customers which other customers would find extremely valuable or which would make the shares of one company rise and the shares of another company fall. It is to them an every-day issue of such temptation. But this is what people are educated and paid to resist. Above all, their whole careers are blighted if they fail to resist it. Election to the Court of the Bank of England is, moreover, a natural selection from people of such integrity. We may confidently expect such rectitude.

The Report of the Tribunal is what we had hoped for, and I think we should welcome it. I think we should leave to the Radcliffe Committee the question of examining the constitution of the Court and of the Bank, and everything else referred to it, in an atmosphere in which we all reserve our final views and adopt no attitude of prejudice. By all means let us discuss the question in a manner fitting for such discussions, but above all do not let us make a political issue of this relatively minor point in the Tribunal's Report.

8.28 p.m.

Mr. J. Grimond (Orkney and Shetland)

I spent some time this morning in reading the speech that the hon. Member for Bath (Mr. Pitman) delivered twelve years ago, to which he has just referred. It was a very good speech, if I may say so, and he has now made another obviously extremely well-informed speech about the Bank of England, of which I think that he is probably the only ex-director of pre-nationalisation days now sitting in this House. I have no doubt that his advice will be welcomed. It is welcomed by me, because I want to refer to at least two points on which he has spoken.

I am very glad indeed that the Tribunal has reported that no impropriety took place, and has given everybody a clean bill of health. I am glad of that for obvious reasons, but also because I do not believe that we, in this House, or, indeed, in the City, stand so high in public opinion just now that we can afford any suspicion that there has been any impropriety, either intentional or unintentional. When we calm down and look at this in perspective, it may be as well to review the whole circumstances out of which the inquiry arose, and to see whether the conduct of this House and its relations to such Tribunals and, indeed, the mechanism of the City do not all need some reform.

I have a great deal of sympathy with what has been said by various hon. Members, and, in particular, the hon. and learned Member for Northampton (Mr. Paget), to the effect that there is a danger in these fishing inquiries, which dredge up all sorts of things about individuals to which they have, at best, a very limited opportunity to reply, and which, with the best will in the world, are very often misunderstood when reported in the newspapers. I find that, even now, this process is not at an end.

I was much interested in the new information that we gleaned from the speech of the right hon. Gentleman the Member for Monmouth (Mr. P. Thorneycroft). He told us this afternoon that he regarded the action that he took last September as a drastic departure from anything that had been done before. He told us that he was really determined to save the £, although, in saying that, he implied that none of his colleagues had before been really so determined.

The implication of the right hon. Gentleman's speech was that, up to then, the Government had been willing to sacrifice the £, certainly in the interests of full employment, and, perhaps, for other interests as well. That surprised me, because I would have thought that in so far as he spoke of restrictions on capital investment there was nothing new in that. We have heard that once every year—sometimes it has been every two years—off and on since the war. We have heard also of the need to hold back expenditure, to limit bank advances, and so on—

Mr. Kenneth Pickthorn (Carlton)

Like the Liberal revival.

Mr. Grimond

What was new was the decision to put up the Bank Rate from 5 per cent. to 7 per cent. It was, as has been said, a drastic and, indeed, a new departure, but this, of course, was the one step that the right hon. Gentleman could not and did not mention at the conference he held on Wednesday, 18th September.

I must say that the more I hear of the reasons why it was necessary to give advance information, the more doubtful I am whether it was necessary to give information to the Press at that time at all. After all, they could not write their leading articles for the next morning, and the one important fact that was to colour their whole attitude was, of necessity, omitted. If it is said that it might have been necessary to give some background to the Press, then, like several other hon. Members, I cannot understand why the Lobby could not have been used.

Nor can I see why it was necessary to summon a motley collection of people—the Tory Central Office, the Employers' Confederation, the T.U.C., and so forth. I can well imagine that there are occasions when it may be desirable to give background information—it has been done before—but I cannot think of a Chancellor who would have exposed himself to such very great danger by doing it 24 hours before, by leaving out the main item of information, and by inviting certain newspapers and omitting others. We know that the result was that the newspapers that had been omitted did not take it at all kindly, and, although I can well understand that on a financial matter the Chancellor of the Exchequer might wish to make some discrimination in such a matter, he cannot complain if those whom he has left out take advantage of any difficulty that they can create.

Nor can I be expected, I think, to be much moved by the usual Conservative argument that this was, after all, always done by the Labour Party. I know that it was done in 1931, but I believe that, then, all editors were summoned and it was done in a purely formal way. It was not as if people were called in for consultation or, to my mind, as if they could not have been told the next day.

Further, I find myself puzzled by the etiquette. It is not right, and it is repudiated by everybody, that a change in the Bank Rate should be mentioned, the reason being that someone might gain some advantage and speculate on the Stock Exchange. But, surely, if a Chancellor tells people that there are to be cuts in capital expenditure, that information also is valuable to anybody who is, in fact, inclined to speculate on the Stock Exchange. It would be very useful to anybody inclined to speculate in equities, and the change did, in fact, have important effects on the equity market. But no inquiry has been made into that.

The only thing looked at has been the effect on the gilt-edged market, and I am not at all clear why, if it is so wrong to give prior information about a rise or fall in the Bank Rate, it is quite all right to give information about cuts in the capital programme of, say, the nationalised industries, which can affect the stocks of railway equipment makers and makers of atomic power stations, etc.

I want now to say a word or two about the question of the conflict of interests. If I may say so, I think that the hon. Member for Bath said some very wise things about this. He said that we have to face the fact that there may be a risk of some conflict between different interests if we want advice from people who are in touch with the world situation, and can give us general advice about financial matters. There is one form which this conflict took that has not yet, I think, been mentioned, and that is the apparent conflict over the Vickers issue.

In page 186, it appears that Lord Kindersley was seriously concerned, because if the Bank Rate was put up in that particular week it would mean that underwriters would be left with a large proportion of the Vickers issue. Therefore, at Question 7279 he said that he discussed with the Governor of the Bank the possibility of postponing the Bank Rate decision. At Question 7280 he was asked: Did the Governor convince you that such a course was not feasible? Lord Kindersley replied: He did". Then he obtained the Governor's permission to talk to Lord Bicester, who was also a director of the Bank and who was a member of the firm chiefly concerned in underwriting. It appears, that the final reason why it was decided that they must go forward with the Vickers issue was that it had gone too far to be stopped at that point. Apparently, it was suggested that either the raising of the Bank Rate should be postponed or the issue should be postponed.

I would have thought that if the first suggestion had been taken it would have meant that many people who might have subscribed to the issue would have got landed with a very heavy loss, whereas, if the second course had been taken, it might equally have meant that Vickers would have had to pay a great deal more for their money. This seems to me to be a real conflict of interest which actually arose, and it is at least as awkward as some of those other ones that have been mentioned.

Again, I make no personal imputation, but here was a dilemma, in a way a more difficult dilemma than the one into which Mr. Keswick got over the selling of gilt-edged. This is a point which has great bearing on the general questions of the lessons to be drawn about the directorate of the Bank and the organisation of the City from this inquiry.

Mr. Pitman

If the hon. Member will allow me to interrupt, may I say that I do not know whether the word "feasible" carried with it also the moral issue, which is how I read the paragraph. Lord Kindersley went to discuss this because it was a relevant problem to be discussed. It was quite right to go to the Governor to discuss it and to say that the general decision was that it was not feasible. They use that word, but I would say that the decision was that it was not right to depart from what had been arranged.

Mr. Grimond

I accept that interpretation, but I think that it was because the underwriting was completed. Later on, in the evidence, when this is dealt with in more detail, I think it will be shown that this was the reason. However, I think the hon. Gentleman will agree that there was some real conflict there.

How do we get over this? I am certain that it must arise in a number of other institutions, as has been suggested, and one place where it could arise in its most acute form is the Capital Issues Committee. This is also directed, and very ably, by people who are engaged in other forms of industry. I do not know, but I can imagine that the Committee might have before it a proposal for an issue from a concern which is a competitor of some firms of which its members are directors. I can also imagine that among those who are directors of ordinary joint stock banks, there may be many who hold other directorships, and there may be occasions upon which there is a prima facie conflict of interest.

Therefore, we have to make up our minds quite clearly about the real ground of our complaint about directors of the Bank of England holding other directorships. If it is that there is a conflict of interest, it seems to me clear that it must exist and that it does exist in a great range of business and finance. We know from this inquiry that, as far as this case is concerned, it was solved to everyone's credit, but we can imagine cases—and, indeed, cases were mentioned in this inquiry—in which it would involve a very awkward decision.

There is the other ground that, in point of fact, the Bank would be better served by whole-time directors than it is under the present system. This is the ground of competence, and presumably, will be inquired into by the Radcliffe Committee. It is noticeable that, in the debate on the Second Reading of the Bill to nationalise the Bank of England, there was very little between the two sides of the House. At least, that was my impression and I think that the nationalisation Act was expected to make little difference to the functioning of the Bank. It was assumed at that time that it was best to have some outside directors, and that was assumed just as much by the Labour Party, which was bringing in the Bill, as by the Opposition, who, with one or two exceptions, were opposing it.

Furthermore, we know that, in the system of the Federal Reserve Bank of America, in some of the subordinate banks there are a great many part-time directors. Therefore, I do not think that it is at all clear yet that we should gain very greatly in efficiency, though we might put some people out of their agony of dual loyalty, by appointing entirely whole-time directors.

Equally, I do not myself feel that by making the directors entirely whole-time directors we should make the Bank a branch of the Civil Service. This seems to be carrying the argument too far. There is no reason why whole-time directors of the Bank of England should not come from the Bank itself or the banking system generally, but if we are to do that we must pay them well. We ought to have sufficiently high salaries to attract the very best people in the banking world. It is no good pretending that Civil Service rates will do this.

I see no reason why the appointment of full-time directors should necessarily make them into civil servants, but I do think that we should be careful that we are not, so to speak, cutting off our nose to spite our face. We have heard that, on the whole, it is fairly well agreed that we have an efficient banking system. We have a tremendous reputation for the City of London. We are the centre of a world-wide system of credit, and so forth, and we should be careful about jeopardising that because of some rather specialised cases of conflicting interests, which, in fact, so far as the evidence before us goes, have not led to anything either disreputable or inefficient.

I want also just to mention these conversations on the grouse moors, and these "chatty" letters. I do not see that it is any more wicked to talk on a grouse moor than in the Tea Room here or in a coffee house. Banks may be inefficient, but this does not prove it. I suspect that if we looked at the correspondence of hon. Members here, if we called them to appear before such an inquiry and produce their letters, they might seem funny if we produced them in cold blood before a tribunal. Some would either appear shady or rather ridiculous. It is putting a rather severe strain on people to ask them to bring out their correspondence before a tribunal, and expect it to look as though it was written for publication by a high-grade girls' school.

I end by saying that, whatever we do, do not let us impose too rigid a form on the City of London. Although I know very little about it, I believe that it works through personal contact, personal prestige and with very little trouble compared with most things in the world. A great deal of business is done on the nod without all the paraphernalia of memoranda, conferences, contracts, and so forth. That is wholly to our advantage. We have here an institution that works on trust. If you spread the idea that it is not to be trusted you will encourage ill-disposed people to live up to your suspicions. We shall lose our international goodwill. Let us not be too rigid in our ideas about it. As is suggested in the Manchester Guardian, I should like to see this matter of the future of the Bank considered by the Bank itself and by the City. Certainly, the Radcliffe Committee should consider it, but it is a matter of expertise requiring a careful balancing of interests which, perhaps, cannot be wholly adequately decided by evidence before a Committee.

8.45 p.m.

Mr. Hugh Fraser (Stafford and Stone)

I shall speak for only ten minutes, and I hope, therefore, that I shall not be interrupted either by my hon. Friends or by hon. Gentlemen opposite.

The point must be made, so that it may go out from the House, that this House, having inflicted the process of the Tribunal, rightly or wrongly, on a large number of people, and having visited the penalties of this type of proceedings on many persons, including my right hon. and learned Friend who was put in the embarrassing position of having to lead and cross-examine, has found them all to be vindicated. There is no doubt that the procedure of inquiry by this type of tribunal does strain the elements of decency and mercy in the outside world, and there is no question but that the people who have been subjected to it, after having been misrepresented by the Press and suffering in their reputation, have, in the final result, been vindicated.

It is the principal duty of the House to welcome the Report of the Tribunal, as it has been welcomed by financial centres throughout the world. It would be great folly if the House, or any part of it, were to give the impression that it is prepared to use the slur and smear technique against individuals. Any such wish has been denied by the right hon. Member for Huyton (Mr. H. Wilson), and one must accept his denial at the Box; but this House of Commons is in grave danger if, through its special privileges, people use this sacred and sacrosanct Chamber for abusing and attacking people outside.

There have, this afternoon, been two tendencies which I deprecate. The first is the tendency of the right hon. Member for Huyton to use the well known old technique of praising Caesar's enemies—the constant repetition of "These are honourable men"—the oldest, most childish, most "spoofing" technique ever used. We heard it used about Keswick and about Kindersley this afternoon. It is entirely wrong that this type of imputation should still be put about, not by a direct statement or attack, but by imputation that these men were dishonest. They have been proved, in one of the most rending experiences for a man, to be innocent.

The hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas) will agree, I think, that the cross-examination by my right hon. and learned Friend the Attorney-General was, quite properly, as brutal as any of Vyshinsky's. [HON. MEMBERS: "Order."] That is bound to be so in this kind of tribunal. We saw precisely the same thing when Sir Hartley Shawcross had to—

Hon. Members

Order.

Lieut.-Colonel Bromley-Davenport

He is never here; it does not matter.

Mr. Fraser

Therefore, on the general issue, it is vital that the House makes clear its acceptance of the general findings of the Tribunal and welcomes those findings. That is beyond dispute.

Other matters have been raised. There have been imputations against Mr. Keswick and Lord Kindersley in the House, quite apart from what may be suggested by a misreading of, or a selection from, individual sentences in what was said by different people. I think that the activities of both of these gentlemen have proved their extreme ability and desirability as directors of the Bank of England.

Regarding the question of the part-time directors of the Bank of England, I believe that our thoughts could well be conditioned by the thought of two great men, Mr. Bagehot, who in 1870 wrote "Lombard Street, etc.", and the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton), who accepted almost precisely the same interpretation of what the functions of these directors should be. It is as well that the whole matter, as my hon. Friend the Member for Bath (Mr. Pitman), who was a director of the Bank of England a few years back, has said, should be referred to the Radcliffe Committee. I am certain that the main object and the main purpose of these directors is, as Bagehot said nearly 80 years ago, that they should be a living contact rather than the dead hand of bureaucracy of those trained up through the banks.

As the ex-Chancellor pointed out this afternoon, the question which these people from outside the Bank have to decide is what the effect of the 7 per cent. Bank Rate would be abroad—whether it would be regarded by people abroad as a gesture of panic or a gesture of strength. The importance of these outside directors is. I believe, very great, and I think it can be shown conclusively by the reports and findings of the Radcliffe Committee, which will go deeply into this matter rather than merely take the points which have emerged on a specialist investigation into the two questions whether there has been a loss of information, a leakage, and whether it was wrongly used. It should be a far deeper investigation rather than just the facts that have emerged from this limited inquiry.

There is one final thing I should like to say and that concerns the attitude of the Opposition. I believe that the main thing I must impugn them for this afternoon is not lack of honesty but lack of judgment, first of all, in the way the right hon. Member for Huyton (Mr. H. Wilson) provided or prepared his brief to show that there had been a leak; his failure and the failure of the Leader of the Opposition to see that there was a proper investigation before putting forward the witness Mr. Pumphrey; failure to investigate whether the simplest checks had been made; and failure on the other point of the brief put forward. I believe that there was a supreme lack of judgment by the right hon. Gentleman opposite.

Secondly, I will say this about the most grave lack of judgment of hon. Gentlemen opposite today. It is the attitude that certain hon. Members opposite have tried to make use of—the old attitude which is entirely dead—the conflict between the people of this country and the money power. Hon. Gentlemen opposite one day may be in office. What a disastrous thing that the message should go out from this House that right hon. and hon. Gentlemen opposite are using every possible method to denigrate the City of London in every possible way. This is, I believe, a supreme absence of judgment on the part of hon. Gentlemen opposite. We live in a plural society where all these institutions are of importance. We should rejoice when one of these institutions is vindicated, whether it be the Trades Union Congress, the Bank of England, or a member of a political party, from the defamation of its opponents. But hon Gentlemen tonight, by their conduct, stand condemned, not so much as knaves but as fools.

8.55 p.m.

Sir Lynn Ungoed-Thomas (Leicester, North-East)

We have been considering today what is, to my mind, one of the most unfortunate occurrences in our political and judicial life: namely, a judicial proceeding becoming involved in party politics, as it has done on this occasion. I think that all of us, on all sides of the House, whatever our views, cannot but regret that that should have happened.

We have had a judicial decision which, of course, must be unhesitatingly accepted. The Chairman of the Tribunal, Lord Justice Parker, is one of our most distinguished judges. Every lawyer on both sides of the House knows perfectly well that he upholds the very highest traditions of the English Bench. There can be no greater occasion for confidence than that.

Of course, there may be differences of view about the decisions of the Tribunal, especially when the essential decision is based upon the impression which the Tribunal itself formed of witnesses in the witness box. In a case of that kind, it is inevitable that different views should be formed when people are reading the Report and have not had the advantage of seeing the witnesses concerned.

Feeling has run extremely high. It has run very high here this afternoon and reached its climax—since then, I am glad to say, there has been a drop—in the speech of the right hon. Member for Chertsey (Sir L. Heald). My right hon. Friend the Member for Huyton (Mr. H. Wilson), who has been the subject of considerable attack, has given his explanation. I was glad to hear the hon. Member for Stafford and Stone (Mr. H. Fraser) say that, of course, an explanation given from the Box is to be accepted. It would be reducing this House to a shambles if any other practice than what is traditional were accepted.

That, however, was what the right hon. and learned Member for Chertsey attempted to do this afternoon. He gave his opinion and quoted the opinion of some unknown but very distinguished people in the Temple on the law of defamation. Every solicitor and barrister knows perfectly well that no opinion is of any value whatever unless one knows the instructions on which it is based. To have that long tirade from the right hon. and learned Member was regrettable.

In the course of the Tribunal's findings, individuals have been exculpated. I am glad that they have been. In this House, we have on occasion seen individuals ruined not by criminal proceedings, but by inquiries and by decisions resulting from inquiries. Nobody with any compassion at all can do anything but be glad that the individuals here concerned were exculpated.

That does not mean that the exculpation goes beyond the decisions of the Tribunal itself and—let us be quite clear about this—it does not mean that there is an exculpation or approval of the system of recruiting directors of the Bank of England. It does not mean an approval of the Stock Exchange system as a system. It does not mean the approval of the selective interviews of the Chancellor of the Exchequer. It does not mean approval of the Prime Minister's refusal to have an inquiry. None of those matters was a matter for the decision of the Tribunal, yet all kinds of inferences have been sought to be drawn from the Tribunal's decision. The Tribunal has exculpated individuals and let us all be unitedly glad that it has done that.

Mr. Grant-Ferris (Nantwich)

Why did the Opposition not cheer?

Sir L. Ungoed-Thomas

I am well acquainted with the stunt of getting things like that on record in the Press and in HANSARD. Nor were there any cheers from the hon. Member's side of the House.

Before coming to this particular Tribunal. I want to deal for a moment, in a rarefied and, I hope, uncontroversial atmosphere, with the general procedure of this inquiry. Some remarks ought to be made about that aspect of it, because it leads to difficulties and particularly involves the Attorney-General in difficulties.

There are misgivings about this inquiry procedure. The problem is to deal with a case where there is concern about some matter of public importance about which something must obviously be done. It is essential not only to keep public life pure, but to make it manifestly clear to everybody that there is complete probity in our public life. If any question about it arises, that must be dealt with, and it can be dealt with only by some form of independent inquiry.

If there were a case for criminal proceedings, criminal proceedings could be taken, but these are cases not amounting to cases for criminal proceedings and yet requiring investigation, so that the solution cannot be a criminal prosecution. It is suggested that the solution might be a Select Committee. I know that some of my hon. Friends share the view that a Select Committee would be a better procedure that an inquiry of the kind we have had. I do not take that view.

The present procedure was established because Parliamentary procedure failed. There was an investigation into the Marconi affair and the division was strictly along party lines. With all humility and respect, it is my view that the House of Commons is not suitable, either by means of its Select Committees or otherwise, to act as a judicial body.

We here are conditioned politically. We are politically sensitive, and if we were not we would not be doing the job we are here to do. Election petitions were at one time tried by the House of Commons, but, again because the House of Commons was so politically sensitive, election petitions had to be referred to the courts and we no longer deal with them here.

I have heard speeches in the House about the Committee of Privileges. I have had very little experience of the Committee of Privileges, but I am not persuaded that that Committee establishes the case that the House of Commons is an appropriate body to act judicially. There must be an independent tribunal outside the House and independent of it and with High Court powers.

There are difficulties which we have to face if we are to have a tribunal of this kind. The fundamental one, which was mentioned by my hon. Friend the Member for Lewisham, North (Mr. Mac-Dermot) is that it is an inquiry and not a trial procedure. We are not accustomed to procedure by inquiry. The whole of our tradition is a two-party procedure, one on one side and one on the other, with a judge to decide between them. We have it in games, in law, and in politics. We are a two-party nation and the difficulty with the tribunal procedure is that is does not conform to that kind of system.

In the early proceedings under this Act the judges themselves put the questions. This was found to be embarrassing, because it produced a bad impression and was alien to our system and methods of thought. This question of being alien to our procedure is not a merely legal consideration; people all over the country think in the same way. Our whole political and legal system is conducted in the same way, and we are used to it. When, as in the Budget leak inquiry, the judges themselves ask the questions, it is utterly repugnant to us. In the Lynskey Tribunal the method was adopted of the Attorney-General cross-examining.

There are other difficulties resulting from the inquiry system. There is no charge; there is nothing beyond the terms of reference of the Tribunal. That is inevitable. There is a difficulty about representation by counsel to which, again, my hon. and learned Friend the Member for Lewisham, North referred. There was the case of the Daily Express City Editor, Mr. Ellis, when the Tribunal had no power to enable him to be represented because he was not an interested party within the provisions of the Statute.

There is a difficulty about cross-examination. One newspaper has complained about men of high standing being treated like prisoners in the dock. That is a very unfortunate statement, because prisoners in the dock should have consideration in their treatment above everybody. Surely nobody will suggest that because a person is of high standing he should have more consideration than a lowly person who comes before a Tribunal. I hope that that sentence is utterly repugnant to our whole approach to the question.

I have no cause for complaint about the severity of the Attorney-General's cross-examination. I believe profoundly in the cross-examination system. I should like to quote the words which the Attorney-General himself used at the end of his speech before the Tribunal—but instead I will quote Mr. Belcher's observations, made through his counsel, before the Lynskey Tribunal. He said: …in this particular matter Mr. Belcher feels that the Attorney-General has been placed in a very difficult personal position, and Mr. Belcher would like it to be known that, notwithstanding the severe, and I say rigorous, cross-examination of Mr. Belcher at the hands of the Attorney-General…Mr. Belcher appreciates that without that rigorous cross-examination this Inquiry might well have been a farce so far as he was concerned. That also goes for those who were cross-examined before this Tribunal. What would their position have been if they had not been as rigorously cross-examined as they were by the Attorney-General?

The Attorney-General is in a difficult position, again, because he does the examination-in-chief and the cross-examination, and I hope that some consideration will be given to that procedure. He is the Government's legal adviser and holds a political as well as a quasi-judicial office. I believe that when Sir Gordon Hewart—as he then was—was Attorney-General, he looked after the Government's interests in such an inquiry as this. It may well be that in a case of this kind a Government might be involved, and it would be right that that Government should be represented before a tribunal. When a Government are involved there is certainly a strong case for saying—as my hon. and learned Friend the Member for Lewisham, North said—that the cross-examination should be conducted by counsel other than the Attorney-General. I have not the time to go into all the pros and cons, but there was a good and well-balanced article dealing with that suggestion in The Times some time ago.

Anyone who comes to the inquiry, as I did, by reading the Report of the proceedings, and not having been involved at all before, will realise that the core of these proceedings lies in the evidence of Mr. Keswick and Lord Kindersley. That is the source of the whole concern. That was obviously the root of the trouble. They were exculpated, but, of course, the fact that they were exculpated does not mean that there was no case for an inquiry. No one could suggest that.

No one would suggest that because there is a prosecution, and the person accused gets off, therefore the police were not justified in bringing a prosecution. That is an absurdity. But these people "got off" if I may use that term. They were exculpated. We may use any term we choose to express the meaning. If hon. Members opposite can suggest some other term, I will use it.

My right hon. Friend quoted a passage from the Report and I am sure that it is familiar to everyone: There can be no doubt that a sinister construction could be put upon Mr. Keswick's actions. The Report goes on: In a situation of this nature, where conduct and documents are capable either of an innocent or a sinister explanation, the only course is to reach a conclusion upon a dispassionate appraisal of the character and truthfulness of the person whose conduct is under inquiry. We had the advantage of observing Mr. W. J. Keswick under searching cross-examination covering every point in his conduct. Having done so, the Tribunal came to a conclusion in his favour, and gave him a completely clean bill.

I could quote from paragraphs 51 and 56 of the Report to indicate exactly the same conclusion in the case of Lord Kindersley. He had a completely clean bill, and I am glad that it is so. But that conclusion was based upon the impression given in the witness box and, therefore, there was a very clear case for an inquiry. There could never have been an impression given in the witness box unless the person got into the witness box to create that impression. To quote the words of the Attorney-General in opening the case—

Mr. Alan Green (Preston, South)

rose—

Sir L. Ungoed-Thomas

I am sorry, I cannot give way. I promised to sit down at a certain time and I have a lot to say.

The right hon. and learned Gentleman realised that this was a proper matter for a full investigation. Again, with regard to Mr. Keswick, he said that it was necessary to submit the transaction to a close examination. Of course it was. There was a clear case for an inquiry on the opening of the Attorney-General, and it was only as a result of the cross-examination, and the impression which the witnesses made on the Tribunal, that the Tribunal was able to come to the conclusion, of course rightly, that there was no case against them.

Mr. Green

The hon. and learned Gentleman welcomes that?

Sir L. Ungoed-Thomas

Certainly I do. I have said so. If the hon. Gentleman had been here earlier, and followed the debate, he would not waste time now with that kind of observation. I have already explained that, before the hon. Gentleman came into the House, and it is no use the hon. Gentleman and the right hon. and learned Member for Chertsey coming in late and trying to deal with questions which have already been dealt with before they arrived.

These facts should have been made available before the Prime Minister refused an inquiry. The Attorney-General opened on facts on which there was a prima facie case to answer, a case on which they should come into the box. Those facts should have been made available before the Prime Minister refused an inquiry.

Consider the information that was available. Paragraph 39 of the Report gives it. It says: Moreover, at an early stage, when jobbers learnt the names of the clients, specific rumours"— not general rumours— started concerning substantial sales by Lazard Bros. & Co. Ltd., and the Royal Exchange Assurance, with both of whom was coupled the name of Lord Kindersley, a Director of the Bank of England. Later, as a result of a letter dated the 24th September published by a firm of jobbers, Messrs. Wedd & Owen, and views expressed by another firm, Messrs. Francis & Praed, it was being said that facilities for dealing after hours had been abused on the 18th. These dealings after hours were, in the main, sales by Matheson & Co. Ltd., one of whose directors is Mr. W. J. Keswick, a Director of the Bank of England. What was meant by "abused" was simply that the clients were "in the know" whereas the jobbers were not "in the know".

There were the Press reports to which my right hon. Friend the Member for Huyton referred. Evidence was given about them. The Chairman of the Tribunal said: Witnesses so far, from the Press, have led to the City and the jobbers and the brokers. It was quite clear then, absolutely clear, on the evidence of the Press, from the passage which I have read from paragraph 39 of the Report, and the evidence of the brokers who are referred to in this paragraph, that the inquiries led straight to the City. What we wanted to know, what was essential to know, was what sales had been effected and who the sellers were. The City held the key to the whole of this business.

The method of dealing with all this followed a most extraordinary course. Just consider: the Stock Exchange did not have power to make inquiries about clients. The Governor of the Bank of England, when asked, in Question 8097, by the Chairman of the Tribunal: But you had no means of testing what was being said? answered: No. The Lord Chancellor, to whom reference was made, had no judicial power to test what was said. That is why my right hon. Friend the Member for Huyton asked for an independent inquiry by an independent judge, because then it could be done under the powers of the Tribunals Act.

I have read very carefully the Parliamentary proceedings and the extraordinary answers of the Prime Minister. As far as I can judge, my conclusion is that the vital matters concerning Mr. Keswick and Lord Kindersley were not referred to the Lord Chancellor at all. We should like to know: was this matter of the Royal Exchange, Lazards, and Matheson and Co. referred by the Prime Minister to the Lord Chancellor? If not, when the Prime Minister came here and waved the Lord Chancellor before us and said, "Oh, yes, the Lord Chancellor has said that there is no case for inquiry," why did he not bring out clearly at the same time that he did not have before him the whole kernel of this matter, namely, the position of Lord Kindersley and Mr. Keswick? We do not know what happened before the Lord Chancellor, the terms of reference to the Lord Chancellor, what the proceedings before him were and what report he made.

These were the methods of inquiry, but none of them—Bank of England, Stock Exchange, Lord Chancellor—was capable of testing the witnesses. See what happened on 25th September; this most extraordinary thing, of which, fortunately, the Governor of the Bank of England made a memorandum. On 25th September, he had an interview with the Financial Secretary to the Treasury. The Chancellor of the Exchequer was out of all this, because he was in America. The Financial Secretary was dealing with the Prime Minister direct.

This is what the Governor, in the memorandum of the interview of 25th September with the Financial Secretary, said: As I understood this morning was your wish, I have not attempted to find out any details about particular dealings. So the Financial Secretary, acting under the Prime Minister, had told the Governor of the Bank England on 25th September, "We do not want details." Why? There was no information that mattered unless they had details. What was wanted to be known was, first, who sold; secondly, with what knowledge; thirdly, how much; and, fourthly, why? Not a single one of those questions was asked of the Governor of the Bank of England. Instead of that, he was told. "We do not want details.'

Then the Governor of the Bank of England, in the same letter, goes on to give non-detailed information, I suppose the kind of non-detailed information which the Financial Secretary, on behalf of the Prime Minister, wanted. He said: The volume of business (about £4,000,000) quoted by the Government broker, is by no means exceptional. That is valueless information for the purpose of finding out who has sold, what the sales were, with what knowledge and why. Those are the questions which mattered.

On 27th September, the Governor wrote direct to the Prime Minister. He referred to the Financial Secretary having expressly said he did not want detailed inquiries or information and referred to transactions by three corporations in which directors of the Bank of England might be concerned. He said that he was confident there was no irregularity, although he had no means of testing it. He said that details were available for the Prime Minister or the Chancellor of the Exchequer.

When the Prime Minister is told, "The Financial Secretary told me that he did not want details" and that details were available and there were transactions by three corporations in which directors of the Bank of England were concerned, one would normally expect that the Prime Minister would ask for the details—who are the directors, what are the amounts, why did they do it? There is no indication at all that the Prime Minister took any such course. In fact, in an extremely interesting passage in cross-examination by the Attorney-General the very opposite was indicated.

From page 285 in the Report of the proceedings I read excerpts, I trust absolutely fairly. I have cut it down because of the time, but if anyone wants any particular passage read I will gladly read it. The Attorney-General asked: Question 7978. "Was the omission to mention the nominal value and the amounts involved deliberate?—Certainly not. I offered him details of the transaction. 7981. In fact, the nominal value of the total transactions is just about £4¼ million is it not?—I must take that figure from you. 7982. If my mathematics are right, it amounts to that. Do you think it might have affected the Prime Minister's mind as to whether or not a further inquiry should be held if you had told him that transactions of that amount, just under £4¼ million, had been carried out by companies closely associated with two Directors of the Bank, one of whom had been told before the transactions were carried out of the proposal to increase the Bank rate, and the other of whom had been told that discussions were going on and that there was a possibility of a swingeing rise in interest rates?—I would not have thought so… 7984. Did you think it might have affected his mind, or did you not think about it at all?—What I was concerned to do was to make quite clear to the Prime Minister that these cases existed and that he was very welcome to details. 7986. I will again ask you, was it accidental or deliberate that you gave the Prime Minister no indication of the magnitude of those transactions?—I again repeat: I thought that what was relevant to the Prime Minister was the fact of these transactions and not the details of these transactions. That answer is not surprising in view of the fact that the Governor of the Bank of England had himself said that he was prepared to give the details and the fact that the Financial Secretary to the Treasury had told him that he did not want any details at all. On reading this, one is driven to the conclusion that the Prime Minister closed his eyes quite deliberately to what was staring him in the face.

I ask three questions. First, did the Lord Chancellor have for consideration before him the Lazards, Royal Exchange and Mathesons cases? Secondly, why did not the Prime Minister ask for details when he received this letter on 27th September? Thirdly, I do not believe that the Attorney-General put those questions to the Governor of the Bank of England without knowing that there was substance in the suggestion which he was putting, and I should like to know on what background information those questions were based. Without explanation, all this is sordid and squalid stuff, and the person responsible for it is the Prime Minister.

9.26 p.m.

The Attorney-General (Sir Reginald Manningham-Buller)

The hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas) has made a number of observations upon the way in which the Tribunal functioned and upon the rôle of an Attorney-General before the Tribunal, as have some other hon. Members in the course of debate. He has not sought to attack me personally, unlike the hon. and learned Member for Northampton (Mr. Paget), whose remarks I cannot but regard as highly offensive and about which I shall have something to say later.

Until the hon. and learned Member gave me notice that he proposed to attack me—and I thank him for his courtesy in doing so—I did not propose to seek to take part in the debate at all, and I do so now not in order to express any opinion on or to advance any argument with regard to many of the matters which have been debated today, but primarily in order to reply to the hon. and learned Member for Leicester, North-East and to deal with the observations which the hon. and learned Member for Northampton has thought fit to make about my conduct—observations which I shall seek to show are wholly without foundation or justification.

First, may I reply to the hon. and learned Member for Leicester, North-East? It is quite true—I agree with him—that the inquisitorial nature of the proceedings before these tribunals is somewhat foreign to us in the administration of the law. Proceedings before a Select Committee are often inquisitorial. As the hon. and learned Member said, and as the Manchester Guardian said, it was because a Select Committee had proved itself an unsatisfactory instrument for an inquiry of this kind that the Tribunals of Inquiry (Evidence) Act was passed in 1921.

I entirely agree with the hon. and learned Member in the view that he expressed that a Select Committee is inappropriate for investigation of matters of this kind. The last investigation of a leak about the Budget was undertaken by a Select Committee, and I hope that what I say about that will not be taken as casting any doubt whatever on the correctness of the conclusion of that Select Committee but, having sat on it, and having seen this Tribunal function, whatever may be the defects of the Tribunal, I have no doubt whatever that it is a far more satisfactory instrument.

I think everyone would agree that if a Select Committee had been appointed in this case instead of a tribunal, its findings, with a majority of Government supporters on the Committee—as there would have been—would not have been so generally accepted either by this House or by the public as the unanimous findings of the Tribunal, from which the Opposition do not dissent. Really, that is the alternative to the appointment of such a tribunal.

It really is nonsense for the hon. and learned Member for Northampton to say that the functioning of the Tribunal is not under the due process of law. Of course it is. The Tribunal is set up, under Statute, with the powers of the High Court. It is a powerful instrument. It is ruthless in its operations. It has to be. Once it is charged by this House with a duty to find out something, there is no knowing where the investigations that it is required to make will lead. Not even the right hon. Gentleman the Member for Huyton (Mr. H. Wilson), in his most optimistic moments as to what might be the result of those investigations, could have dreamt that it would have led to Mrs. Campbell and to her undergoing an ordeal which, I fear, she must have found most unpleasant.

It may be possible to improve the procedure. It has been gradually improved over the years. Until the Lynskey Tribunal was appointed, the practice was for the Attorney-General of the day just to call the witnesses and then to leave it to the Tribunal to cross-examine them. That must have been much easier for the Attorney-General. That was the practice followed at the Budget "leak" inquiry of 1936, and that Tribunal, in its Report, made these observations: …the testing of the witnesses' stories by way of cross-examination or otherwise has necessarily been undertaken by the members of the Tribunal themselves, with the resultant possibility of creating the impression that they were from the start hostile to some of the witnesses who appeared before them. Of course, Mr. Speaker, it is the case that cross-examination, if it has to be a probing, a severe cross-examination pursued with vigour, must, I think, inevitably create that impression of hostility.

When the Resolution for the appointment of the Lynskey Tribunal came before the House of Lords, one of their Lordships expressed the view that the Law Officers of the day should not be left with the conduct of the proceedings. He said that it should be left to counsel— …who will, with the vigour and relentlessness that such a situation may demand, pursue the truth and ascertain the facts…"—[OFFICIAL REPORT, House of Lords, 28th October, 1948; Vol. 159, c. 91.] I have no doubt at all that his observations were most carefully considered by the right hon. and learned Gentleman the Member for St. Helens (Sir H. Shawcross). They carried particular weight, as they were made by a member of the Porter Tribunal. Nevertheless, the right hon. and learned Gentleman conducted the case before the Lynskey Tribunal, and, if I may say so, I think that he was right to do so. On the opening day, he made the following statement about his position, and I should just like to remind the House of it. He said: In accordance with precedent I appear here now with my learned friends Mr. Gilbert Paull and Mr. Parker. As the Tribunal, of course, knows very well, but as perhaps is not always understood elsewhere, although the Attorney-General is a member of the Government he has certain duties which he cannot abdicate in connection with the administration of the law, especially of the Criminal Law and more particularly, that branch of it which is concerned with the prevention of corruption. These duties are sometimes said to be of a quasi-judicial nature. The Attorney-General has to discharge them with complete independence of the Government, and I must add with complete indifference as to their political or personal results. He went on to say that it was his duty to concern himself, and concern himself only, with the representation and protection of the public interest.

Now, when this Tribunal came to be set up, I, too, carefully considered whether I should appear at this inquiry. I came to the same conclusion, like the right hon. and learned Gentleman, that it was my inescapable duty to do so. If the House will permit me, I will quote the words that I said when the Tribunal first met: At the outset of what is generally referred to as the Lynskey Inquiry or Tribunal, Sir Hartley Shawcross pointed out that there were certain duties of the office of Attorney-General which could not be abdicated. This is one of them, and I regard it as my clear duty to do all that lies in my power to assist you in your task and in the eliciting of the facts. It is my duty to act here, as it is in some other fields, without any regard to political considerations of any kind. In discharging this duty I am not in the least concerned with, indeed, I am completely indifferent to, political or personal results. That is how I regarded my duty, and I did my best to discharge it. It is not the case, as was suggested in an article in the Manchester Guardian, that the Government, as such, or any members of it, had anything to do with my coming to that conclusion. It is quite wrong to suggest that my appearance before the Tribunal was an indication of some Government participation in the inquiry. The Government had nothing to do with it. It might just as well be suggested that the appearance of the Attorney-General or Solicitor-General to prosecute in a case was evidence of Government participation in that case.

None the less, the hon. and learned Gentleman the Member for Northampton has alleged that the choice before an Attorney-General appearing before such a tribunal is either to behave like a cad or a stooge. He cast me for the rôle of a stooge. He cast the right hon. and learned Gentleman the Member for St. Helens for the rôle of a cad. He said I had been loyal to my friends. I hope that absence of loyalty is not one of my failings, but I will seek to show how unfounded was his observation. As I say, the hon. and learned Gentleman clearly implied that the right hon. and learned Member for St. Helens behaved like a cad at the Lynskey Tribunal. In my belief, that observation is equally unfounded. The truth, which the hon. and learned Gentleman will not recognise, is that there are occasions, and this was one of them, where it is the proud tradition of my office that the Attorney of the day should act both fearlessly and independently without any regard to the fact that he is a member of the Government, a Member of this House and a member of a political party. That is the tradition to which I sought to adhere.

As my right hon. Friend the Lord Privy Seal said in opening this debate, there must be many of us in this House, who, on occasions, have to resolve conflicts of interest, but if that occasion arises for an Attorney his duty is absolutely clear. He must wholly ignore his personal interests and seek to serve to the best of his ability the public interest and that alone.

Having made those preliminary observations, I now come to the setting up of the Tribunal. Here I will go back a little into the history. The first demand for an inquiry was, as the right hon. Gentleman the Member for Huyton said, based on the Press reports. I will not enter into any discussion as to whether or not an inquiry should have been arranged then, because I do not think that is a matter upon which I should embark, except, perhaps, to make this comment. In the light of what we know now as to the information on which these Press reports were based, it might be that the case based solely on these reports is not as strong as it would otherwise seem. That was the first chapter.

Then, as the right hon. Gentleman said, there came the second chapter—the evidence about the railway station incidents—and it was then that the right hon. Gentleman wrote a letter of 4th October, basing it upon the incidents at Watford and Woking, in which he said that prima facie evidence had been brought to his attention suggesting that the leak emanated from a political source. That was what I might call the Chattaway-Pumphrey incident and the Watford Station incident. As I understand it, and I am dealing with it historically, it was upon that statement made by the right hon. Gentleman that the matter was referred to the Lord Chancellor. There was at that time no suggestion made by the right hon. Gentleman of any transactions by any directors of the Bank of England.

Sir L. Ungoed-Thomas

But he knew—

The Attorney-General

Perhaps the hon. and learned Gentleman will allow me to follow on. There has been no such suggestion by the right hon. Gentleman, and my right hon. Friend the Prime Minister, in dealing with this matter—and I will come back to the letters later—on 14th November, having referred to the letter of 4th October and this prima facie evidence which, it was said, had been brought to the right hon. Gentleman's attention, said he had referred the matter to the Lord Chancellor and later said: He reported to me that there was nothing in it. This was after a most careful and searching inquiry into every aspect of the evidence produced and down every path to which that evidence might lead."—[OFFICIAL REPORT, 14th November, 1957; Vol. 577, c. 1153.]

Mr. H. Wilson

Will the right hon. and learned Gentleman allow me? He is quite right in saying, as I said this afternoon, that I had no idea about Lord Kindersley and Mr. Keswick, but in my letter to the Lord Chancellor I said that no inquiry would be of any use until he inquired into the sales, of which there was some evidence. Therefore, it is not true that he inquired into every path down which that evidence might lead.

The Attorney-General

I am not going to argue the logic or chop words with the right hon. Gentleman on that, because I thought that he agreed in his evidence that the second chapter was based upon the Watford and Woking Station incidents. I have the letter here. That was the statement which my right hon. Friend the Prime Minister made then, and I suggest that it was clear in its context that it referred to the evidence to which the right hon. Gentleman referred as prima facie evidence.

Then my right hon. Friend the Prime Minister went on to say this: …once an accusation is made which touches the honour of a member of the Government or of an individual outside a different situation arises. Parliamentary privilege is a treasured right of the House of Commons. But we should not forget that it stems from the days of relationships between the Executive and Parliament very different from those which now exist. Privilege was intended to be a buttress of liberty. It should not be used as a protection for defamation."—[OFFICIAL REPORT, 14th November, 1957; Vol. 577, c. 1153–4.] The right hon. Member for Huyton made a great point—or sought to make a great point—of the fact that, when he referred to Mr. Poole the day before, no one got up and commented that it was a breach of privilege or an abuse of privilege. I would just point out that the same observation might be applied to his failure to intervene on the 14th November to deny that he had then any intention of attacking Mr. Poole when the charge was made, and he did not do so.

The first meeting of the Tribunal was on 21st November, and its first session on 2nd December. A very great deal of work had to be done in the interval, and I should like to say a word or two about that. In addition to obtaining statements from all the people likely to be able to give relevant information, a record of all Stock Exchange transactions in gilt-edged on the Wednesday and Thursday had to be compiled. It took some time to get that, and when it was obtained a great deal of work had to be done upon it. The Treasury Solicitor and his assistants were engaged on it, and did magnificent work.

I have seen it suggested that the fact that the Treasury Solicitor was engaged on it was another indication of some Government participation in the inquiry. The only Government participation was to place the services of the Treasury Solicitor at the disposal of the Tribunal. The Treasury Solicitor acted, as the Report makes clear, under the directions of the Tribunal, and I want to emphasise this point, because I think that it escaped the attention of many who spoke in this debate. Indeed, they may not have known of it. Copies of all the statements and documents obtained by the Treasury Solicitor were supplied not only to me, but also to the Tribunal.

The hon. and learned Member for Northampton commented on the fact that, in taking persons through their statements, I had asked leading questions. Of course, that results in a great saving of time, and the Tribunal had the statements in front of them, including the complete statement of the right hon. Member for Huyton. As the right hon. Gentleman knows, I took him through all the parts of his statement which were relevant to the inquiry, so far as they went; and the same happened with every single witness. That part of the hon. and learned Gentleman's attack is, therefore, destroyed.

Mr. Paget

rose—

The Attorney-General

I am not going to give way; I have not time.

Mr. Paget

Really, the right hon. and learned Gentleman is not going to give way when he says that?

Mr. Speaker

Order.

The Attorney-General

I have a great deal to deal with, and I merely corrected the hon. and learned Gentleman on one point.

Mr. Paget

I am pointing out—

Hon. Members

Order.

Mr. Paget

What about me?

Hon. Members

Order.

Mr. Paget

Does a judge have those documents?

The Attorney-General

The judge may have depositions in a criminal case; he will not have proofs of witnesses in civil cases.

Mr. Paget

The right hon. and learned Gentleman is talking nonsense.

The Attorney-General

No, I am not imitating the hon. and learned Member for Northampton.

Mr. Paget

That sort of "tu quoque" gets the right hon. and learned Gentleman nowhere.

The Attorney-General

I have heard it suggested that the Fraud Squad was employed and that the statements it obtained were suppressed. That shows how wild rumour can be. The Fraud Squad was never employed. As I say, the Tribunal saw all statements taken. There is this great difference between the Lynskey inquiry and this inquiry. In the Lynskey case there was the possibility of criminal charges. In this case, so far as I can see, there was no such possibility. At any rate, the matter was fully inquired into and considered. If the assistance of the police had been required, no doubt it would have been obtained.

The right hon. Gentleman made one point about the conduct of the Tribunal which I should like to pick up. He said that it was unfortunate that Mr. Gampell of Reuters was not recalled. The short answer is that the Tribunal had Mr. Gampell's statement and his statement showed that he could give no relevant evidence on the matter.

The right hon. Gentleman sought to place upon me—I do not think wait any malicious intent—responsibility for introducing the Ancient Order of Foresters into the proceedings. As he has admitted, that was one of the two matters which he brought to the attention of the Tribunal. As the Tribunal thought it worthy of investigation, it was rightly brought out into the open in consequence. Frankly, having regard to the right hon. Gentleman's comments, I can well imagine that, if that matter which he had brought to the notice of the Tribunal had not been investigated, he would again have said, "How very unfortunate".

The shortness of the time between the appointment of the Tribunal and its first session made it impossible to complete the preliminary investigation before the sessions commenced. Consequently, it was not possible for me to open all the evidence which would be called before the Tribunal. I fully realised that any observations of mine of a critical character might prove most damaging, and the last thing I wanted to do was to make any critical remark which was not fairly warranted by the information obtained from those concerned in the transactions. I am grateful for the remarks of the hon. and learned Member for Leicester, North-East about that. Partly because work on the Stock Exchange transactions was not complete and partly because what I may call the Keswick and Kindersley matters were not complete, the Press evidence was called first.

Some criticism has been made of the fact that the Press evidence was called first. It has even been suggested that that was done on Government direction. That is again complete nonsense. Obviously, the Press witnesses had to be called. Inquiry had to be made of them at some time to find out on what the Press statements were based. If they were based on anything but rumour, they might lead to the discovery of very relevant facts. I ask the House to consider the kind of comment that would have been made if the inquiry had closed without the witnesses from the Press, who gave publicity to these matters, being called.

Even if the whole of the investigation had been completed by 2nd December, it may well be that they would still have been called first. It would indeed have been very inconvenient if examination of them at a later stage had brought to light a new fact which would have involved the inquiry retracing its steps. The plain fact is that, apart from moving for the appointment of the Tribunal and putting the Treasury Solicitor at its disposal, the Government had nothing to do with the conduct of the inquiry. Neither the Government nor any of their Members either influenced me or sought to influence me as to my conduct. If my conduct is open to criticism, the responsibility is mine and mine alone.

There are two criticisms with which I should particularly like to deal which have appeared in a leader of The Times and which have been touched on today. It was suggested that men of high standing were treated like criminals in the dock; and long statements putting the worst construction on their simplest actions were allowed to stand unanswered, some times for an appreciable interval. I will deal with the latter criticism first. It is the practice for an opening statement to be made. What I said in my opening speech was entirely based on the statements made and documents produced by the witnesses. I outlined the events that had taken place. I indicated that certain questions appeared to me to arise for consideration, but I certainly did not express any opinion or hint at any opinion as to the view that the Tribunal should form—it would have been quite wrong for me to do so—nor did I do so in my final speech.

Two of my learned Friends in their final speeches referred to the case that they thought they had to meet. I thought that the case to be considered by the Tribunal was somewhat more serious and somewhat different from the case that they outlined. That is why I sought again to make clear what those cases appeared to me to be, but without expressing any opinion of any kind as to whether those cases were established or not. The Times words are: …long statements putting the worst construction on their simplest actions. The House can see from the record what I said. I dealt with these matters in my openings factually and chronologically, and, as I said, my opening speeches were supported by the evidence.

It has often been pointed out in this debate that the conduct of the Keswick transaction was capable of an innocent or a sinister explanation. I do not suppose that anyone will dispute that the Keswick and Kindersley transaction required close examination. I think that that transaction came to light only after the Tribunal had been set up.

At this point I ought to refer to the letter written by the Governor of the Bank of England to the Prime Minister on the 27th September. Part of that letter was read by the right hon. Member for Huyton, but he left out this part, and so did the hon. Gentleman the Member for Leicester, North-East: As Governor of the Bank of England, I have thought it my duty to investigate these transactions personally to assure myself that there was no irregularity or improper use of advance information. This I have done and I am absolutely confident that in the three instances which have come to my ears, everything is entirely proper and there is no question of any irregularity whatever. The right hon. Gentleman the Member for Huyton did not read that passage. That was the conclusion reached by the Governor of the Bank of England and that is the conclusion to which the Tribunal came. When the full details of the Keswick matter came before the Tribunal. I would be the last person to say that it was not right for me to open those facts very fully and put them before the Tribunal; but that is another question.

One criticism I have heard of the conduct of proceedings before the Porter Tribunal is that witnesses who were severely criticised in the Report did not, when they gave their evidence, appreciate that they were in jeopardy. It is a serious matter for those in that position. I agree with the hon. and learned Member for Northampton. They may be condemned although not guilty of any criminal act. Their reputation may be wholly destroyed and there is no machinery for any appeal from the Tribunal's conclusions.

I would not, however, agree with the hon. and learned Member that acquittal by such a tribunal is as lethal as conviction. I think that acquittal after a complete investigation is just as satisfactory as an acquittal before any other court in the land. The view expressed by the hon. and learned Member that acquittal is as lethal as conviction may excuse, but will not justify, his irresponsible speech about the Keswicks and about Lord Kindersley.

I thought it my clear duty to indicate as clearly as I could the matters with which I would have to deal. It seemed to me fairer to do that than to take the witnesses by surprise. As I have said, there were no charges and no pleadings in these inquiries. Even a man tried for murder knows the case he has to meet.

There is just one other point which the hon. and learned Member dealt with, about treating men of high standing like prisoners in the dock. It is certainly a novel idea to me that it is permissible to apply a different standard to the cross-examination of an accused person—who is, of course, innocent until found guilty—than to that of anyone else. It is also somewhat astonishing that it should be suggested that even when the facts warrant it, men of high standing should not be subjected to a severe cross-examination. I make no apology for having subjected some of the witnesses to such a cross-examination. It was, in my view, necessary to examine them vigorously and relentlessly.

Mr. Paget

What about the others?

The Attorney-General

I am coming to that. The hon. and learned Member has thought fit to accuse me of partiality, of protecting my friends. The only ground that he put forward for doing so was to compare the length of the cross-examination of the Keswicks with the omission to cross-examine my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft). That is no test, as the hon. and learned Member should know. The case in relation to the Keswicks required the strongest cross-examination. My right hon. Friend, however, frankly and clearly stated all the part that he played. I had no materials on which to cross-examine him. I had no grounds for suggesting that there was any dishonesty or inaccuracy on his part. Unless there are grounds for cross-examining, I do not cross-examine. The hon. and learned Member said that my right hon. Friend was the principal accused. That may have been the chief object of the activities of the party opposite—I do not know—but certainly before the Tribunal my right hon. Friend could not have come within that category. He was not the principal accused. What we were concerned with was to find out whether there was any leak about the Bank Rate.

The only other ground put forward by the hon. and learned Member was that there was no cross-examination on the subject that "Nigel was very depressing". I dare say I have often called the hon. and learned Member rather boring. I would not cross-examine about that either.

The conduct of proceedings before a tribunal is not something that anyone would be anxious to undertake. I did my best, and I hope I have satisfied the House that the inquiry was complete, that there is no ground for impugning the conclusions of the Tribunal and that its conclusions should be accepted.

Debate adjourned.—[Colonel J. H. Harrison.]

Debate to be resumed Tomorrow.

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1. ADJOURNMENT 15 words