*THE LORD PRIVY SEAL AND SECRETARY OF STATE FOR INDIA (THE MARQUESS OF CREWE)My Lords, I understand that we have to continue the sitting of the House in respect of certain Bills which are due to come up from another place, and during the interval I may, perhaps, call attention to a subject which is being dealt with by a debate in another place this afternoon—namely, the financial position. I understand that the Chancellor of the Exchequer is about to make a statement, so far as he is able to make one at this moment, on that subject, and in particular on the subject of the Moratorium as it is called, which, as the House is aware, would in due course expire in a comparatively few days from now. We have formed the conclusion that it is altogether impossible that that Moratorium should forthwith cease altogether. The confusion which would result in the City of London and also in all commercial circles might be so serious that we could not take the responsibility of doing away with that suspension of liabilities which, as your Lordships will remember, dates from the beginning of the war for a month in respect of all previous liabilities.
There have been various questions asked and suggestions made as to how far it is possible to limit the system of suspension, whether it is possible to apply it only to certain subjects, certain classes of debts, or whether it is necessary to maintain it in its entirety. There are a great number of different issues involved. The issue of finance, strictly so called, has more than one aspect of its own. The aspect concerned with international finance is not in all respects the same as that with which finance and banking at home are concerned. Then there is the entirely separate question of commercial and trading credits and business. Those are on a somewhat different footing, and they, again, are greatly complicated by the existence of liabilities in other parts of the world, or payments due from other parts of the world, as compared with the strictly domestic aspect of trading. I think it is clear that we shall have to proceed to some general continuance of this suspension of payments within limits; the limit, as the House knows, is now a low one. What we have to consider, constituting the great anxiety of those who are responsible, is what steps we can continue to take to start once more the great 564 and intensely complicated machine of credit in this country.
One observes that different people looking at these matters from different points of view assume that the matter is in itself tolerably simple, and that if one set of parties engaged in these transactions could be satisfied, the whole machine would then at once begin to work again. For instance, there are some who assert that if only free play could be given to the discounting of bills trade would immediately recuperate, and that all the countless transactions, commercial as well as financial, which are concerned with bills of exchange would recommence in their full activity. We have done a great deal to assist the discounting of bills. The Bank of England has undertaken a great liability, supported, of course, by the Government, in that respect. But although a great deal has been done, at the same time the discount market is not active and the flow of bills of exchange has not proceeded with anything like the necessary rapidity demanded for a recuperation of trade. Then on the other hand there are persons, looking at the matter from a quite different point of view, who say that if only rates of insurance for freights were made easier and simpler and all war risks were taken over by the Government, then foreign trade would at once begin to flow backwards and forwards as before. There, again, we have done a great deal; and what I think is perhaps not entirely realised by the public is that the ordinary processes of marine insurance at Lloyds are going on for a great number of risks on a large scale, and there are risks of a different kind which are met on a certain payment by His Majesty's Government. But although that has been done it has not brought about the complete ebb and flow of trade backwards and forwards which might have been expected, although war risks at sea, except in a very few places and on an exceedingly small number of routes., cannot be described as in any way serious, thanks to the precautions which the Admiralty have been able to take in safeguarding a vast number of the main arteries of trade.
Then, again, others assert that so long as you go on protecting banks, and in particular joint stock banks, from a run by their customers or their depositors caused by panic, all banking operations will 565 proceed in their ordinary course. Well, banks are so protected. No run on any bank is possible; and it is quite evident that that particular kind of suspension must continue, at any rate for some time to come. But in spite of that fact, and although I think in the main—I carefully limit the statement—the banks have done what they can to assist the trading community, the machine does not yet work with its proper regularity and with absence of friction. We therefore have to consider very carefully what further steps may be necessary in the riot distant future for the lubrication and the restarting of this intensely complicated machine.
The problem that confronts us here in England is quite a different one from that which any other country has to encounter. The City of London, as we all know, is the great centre of credit of the world, and a great many of those operations requiring credit are conducted under limitations of actual capital which in ordinary times would be sufficient, because it is not possible in the average conditions of commercial life that heavy immediate demands can be made upon an individual or a firm, and that fact, of course, adds vastly to the delicacy and difficulty of our present position. The whole conduct of financial business, for instance in Paris or in Berlin, is of an entirely different kind and on a totally different scale from that which obtains in the City of London. There is no precedent in the world's history for the present position, and there is no very useful example to be obtained from other countries. Therefore we have to consider with the utmost care, and with the recognition of the necessity sometimes of being exceedingly bold as well as exceedingly cautious, that steps may have to be taken in the future of a much more far-reaching kind for sustaining, as we believe in reality it is quite safe to do, this vast fabric of international credit of which the City of London is the centre.