HL Deb 26 January 1916 vol 20 cc1078-90

Order of the Day for the Second Reading read.

THE LORD PRIVY SEAL (EARL CURZON OF KEDLESTON)

My Lords, although I am speaking to an almost empty House I must pay to this Bill, which as nobody knows better than the noble and learned Earl opposite (Lord Halsbury) is one of great importance, the compliment of saying a few words in recommending it to your Lordships. The Bill is an attempt to remedy admitted defects and flaws in the existing law with regard to the treatment of enemy interests in this country. From such information as we possess we gather that the Germans are behaving very arbitrarily as regards property owned by British subjects in that country. They seized such properties at the beginning of the war; they interned the owners and put in German supervisors or controllers. They, in fact, converted them into German businesses and ran them in the interests of the State; and at the end of the war there will be either nothing left for the owners or, if we may judge from other expressions of German psychology, the property will probably be confiscated. On the other hand under the existing law we cannot adequately protect the interests of our own traders in this country while we betray a truly excessive tenderness towards the interests of the enemy.

Constant attention has been drawn to this matter in both Houses of Parliament during the progress of the war, and in the past two years no fewer than four Acts have been passed relating to the question of trading with the enemy. I have here a careful analysis of what has been done under those Acts, but I need not in the present condition of affairs repeat it to your Lordships' House. Suffice it to say that under these four Acts powers have been taken to appoint inspectors of firms or companies in which enemy interests were largely represented to see that no trading with the enemy takes place, supervisors to attend at the companies' offices and control the management of the business and see that no money goes to the enemy, and in certain cases where national interests are involved in the prosecution of the business controllers have been appointed by the Government. I may briefly mention that these Acts have been by no means a dead letter, and that the number of firms or companies in which inspectors have been appointed under these Acts has been 705, and out of that total a supervisor has been appointed in 325 cases, and the number of companies or firms in which a controller has been appointed by the Court on the application of the Board of Trade has been 11.

But it is evident that the existing law leaves many loopholes of which profit is taken by the enemy. Thus it is in the power of enemy persons or of firms or companies partly or wholly composed of enemy shareholders to continue to conduct their business in this country unmolested, to employ British labour, to compete with British firms, to undersell British manufacturers, and to keep up, possibly even to extend, the good will of the concern to their own advantage and to our detriment. All that the existing law enables us to do in this respect is to put in one or two of the officials I have been speaking of, to exercise a technical control of the business and to accumulate the profits made by the concern, which under the existing law have to be handed back to the enemy shareholder or shareholders at the end of the war to re-establish the business to our detriment.

Then there is the case, which must also be mentioned in passing, of shipping. Under the law it is possible that any two Germans may constitute themselves a limited company to acquire, to own, and to trade with British ships during the war, and to obtain the full benefit of our laws and the protection they afford.

The matter has been more than once raised in this House. The noble and learned Earl opposite (Lord Halsbury) raised it specifically in the form of a Bill which I remember received a Second Reading here some weeks ago. On that occasion we told him that a Bill was being prepared and would shortly be introduced in another place by the Government. The noble Earl's method of treating the matter was different from that which we have adopted. He proposed to make companies, of which the shares were predominantly held by the enemy, alien companies; but our advisers were unfavourable to dealing with the matter in that way, on the ground that it would be very unfair to the British shareholders in those companies and might spell absolute ruin to them. Accordingly this Bill has been introduced and passed through the other House.

Broadly speaking, this is a Bill to prevent business from being carried on in this country for the benefit of Germans during the war. It proposes to give the Board of Trade full power to close down or wind up such enemy businesses, to prevent time accumulation of profits during the war which will ultimately be handed over to them afterwards, and in this way to prevent the preservation or the increase of the value of the good will of the enemy in his business concern. The question may be asked, How does the Bill do this? I hardly think it necessary to trouble your Lordships with a detailed analysis of the Bill. I will only refer in a few words to two or three of the principal clauses in it.

Clause 1 of the Bill is, perhaps, the most important. It imposes upon the Board of Trade the duty of closing any business which is carried on wholly or mainly for the benefit of or under the control of enemy subjects, unless for any special reason it appears to the Board inexpedient to do so. The House may not unreasonably ask what is the character of the special reasons which would justify the Board in not exercising the discretion left to it. They are of a twofold character. On the one hand you may have partially enemy businesses in which some national interest is concerned—for instance, like the works of the Siemens Company—which it may be extremely useful for the Government to continue in operation during the war. The second case in which the Board of Trade would have discretion not to issue an Order would be that of the petty businesses carried on in small shops which, upon the principle of de minimis non curat lex, would hardly be worth while dealing with, and in some cases if you did deal with them it might entail injustice, as for instance in the case of a petty retail shop being carried on by the British-born wife of a German who had been interned. These are the exceptions in which the Board of Trade would not act, but in all other cases the presumption is that the enemy business will be closed.

Subsections (3) and (4) of Clause 1 provide for the distribution of the assets which are realised in winding up a business. Where there are assets in enemy territory the claims in enemy territory are to be deemed to have been satisfied out of such assets, and claims of British creditors are to be satisfied in priority to claims of enemy creditors. Any balance available for shareholders will be applied ratably for the benefit of all shareholders, whether British, neutral, or enemy, with the proviso that any amounts due to enemies are to be paid to the custodian. This brings me to a point which I must not pass by in complete silence, and which constitutes one of the main differences between this Bill and the Acts that have preceded it. The moneys of which I have been speaking, with other moneys under Clause 4 which are to be vested in the hands of an official called the custodian, will not necessarily be paid back to the enemy owner at the end of the war. They will be held in reserve in this country as a weapon to secure fair treatment for owners of British property in enemy countries, in Germany and elsewhere, and as a means of compensating our own people in the event of their property being seized by the enemy. I may mention in passing as showing the scale of the business with which we are dealing, that the value of German and Austrian property held in this country is estimated at no less than £120,000,000 sterling.

Clause 2 of the Bill as it is now printed was introduced only yesterday in the House of Commons. It relates to contracts, and enables the Board of Trade to cancel a contract entered into with an enemy or enemy subject before the war or With a firm or company in respect of which a controller has been appointed under this Bill, when it appears to the Board of Trade that the contract is injurious to the public interest. Clause 4, to which I referred just now, enables the Board of Trade to vest in the custodian any property belonging to an enemy or enemy subject, and to confer upon the custodian powers of selling and managing such property. This is an extension of the existing law, because as it is now you can only make an order vesting the property of an enemy, but not of an enemy subject, in the custodian. It will be possible to use this power for the purpose of ridding British companies of German shareholders, the presence of whom has been very prejudicial to many English companies. It will also enable a business which it is desirable to maintain in this country to be transferred to British subjects. Clause 6 relates to patents, but unless I am challenged for an explanation on the point I do not think I need refer to it.

Clause 7 is of some importance. It relates to the treatment of property after the war. Its object is to enable us to maintain a hold on enemy property which may not have been vested in the custodian after the conclusion of the war, until it has been definitely settled what is to be done with such property; and the clause extends not only to property which has been actually notified to the custodian but also to property which ought to have been so notified but was not. Were it not for a provision of this sort a large amount of enemy property might be taken out of the control of the Government immediately after the war. The other clauses of the Bill relate to machinery, and I do not think I need say anything about them.

This Bill has been the subject of very close examination in the House of Commons for two days. On the Second Reading it was received with a chorus of praise. It was described as a sound and prudent and necessary measure. The only substantial criticism that was passed upon it was that it might have been introduced much earlier; and the only serious fear that was entertained by its critics was that the Board of Trade, the authority who will act under this Bill, may not use the powers committed to them with sufficient vigilance and resolution.

THE EARL OF HALSBURY

Hear, hear.

EARL CURZON OF KEDLESTON

As to that, I can only say that the most emphatic assurances were given on the matter by the Minister speaking for the Department—Mr. Pretyman—and those assurances, so far as I can gather, satisfied his critics. In the passage of the Bill through Committee in another place yesterday the clause to which I referred just now, the new clause about contracts, was introduced; and there is one other change to which I ought to refer in passing, because it is of some importance. It is in subsection (8) of Clause 1, by which the Board of Trade is to publish in the Gazette the orders which it may have issued prohibiting or limiting the carrying on of any enemy business, and to lay before Parliament the lists of persons, firms, or companies who have been dealt with under the powers conferred upon it in Clause 1, Other minor alterations were introduced which I need not, perhaps, explain; and when the Bill goes into Committee I shall, with your Lordships' permission, introduce a few Amendments on behalf of the Government. They are verbal in character with one exception, and that is an Amendment introduced to meet a point that was raised by Mr. Annan Bryce in the other House yesterday evening, and upon which the Solicitor-General undertook to endeavour to satisfy him at a later stage.

I need say no more. This Bill is an attempt to deal with enemy trade in this country I will not say with German weapons, but with adequate weapons. I hope it will be regarded by your Lordships as part of the general effort which is now being made, and which is really the secondary object of this war, to relieve our trade in this country from the incubus of German influence which has too long weighed down upon it; and if we can do so we shall not only divert a good deal of business which has hitherto been taken from us into less suspect and dangerous channels, but we shall also, I think, do something to stimulate and encourage the industry of our own countrymen. I hope, therefore, that your Lordships will, without any more words from me, be kind enough to give a favourable reception to the Bill of which I now move the Second Reading.

Moved, That the Bill be now read 2a.—(Earl Curzon of Kedleston.)

THE EARL OF HALSBURY

My Lords, I heartily support this Bill. I think it will prove most valuable, but in the present condition of the House I certainly do not mean to discuss it at any length. There are, however, two observations that I think I must make. I do not know whether the noble Marquess (Lord Lansdowne) has seen the remarks made by the Solicitor-General in another place describing the way in which British companies were treated in Germany. If he has, I think he will be a little surprised at the information which he had received and which he gave in answer to me during the Committee stage of the Companies of Enemy Character Bill. The description which the noble Earl opposite has just given certainly contrasts very strongly with the information which the noble Marquess then gave us as to the mode in which English companies were treated abroad. I cannot forbear from saying that this Bill, although I think it a most important and valuable measure, is some-what belated. My Notice of a Bill of the sort was to be found on the Paper last June, and when about to move in pursuance of my Notice I was informed from time to time that the Government would deal with the subject. Now when it is dealt with, it is remarkable to see how it is treated. This matter, of undoubtedly great importance, is dealt with literally at the last minute of the session, and the consequence is that interest in the subject does not seem to be very wide. I have no more to say. I should not think of discussing the matter at length, as I think it deserves to be discussed, in the present condition of the House. I will only repeat that I heartily support the Bill.

On Question, Bill read 2a, and (Standing Order No. XXXIX having been suspended) committed to a Committee of the Whole House forthwith.

House in Committee accordingly.

[The EARL OF DONOUGHMORE in the Chair.]

Clause 1:

Power to deal with businesses of persons, &.c., of enemy nationality or associations.

1.—(1) Where it appears to the Board of Trade that the business carried on in the United Kingdom by any person, firm, or company is, by reason of the enemy nationality or enemy association of that person, firm, or company, or of the members of that firm or company or any of them, or otherwise, carried on wholly or mainly for the benefit of or under the control of enemy subjects the Board of Trade, shall, unless for any special reason it appears to them inexpedient to do so, make an order either—

  1. (a) prohibiting the person, firm, or company from carrying on the business except for the purposes, and subject to the conditions, if any, specified in the order; or
  2. (b) requiring the business to be wound up.

The Board of Trade may at any time revoke or vary any such order, and may, in any case where they have made an order prohibiting or limiting the carrying on of the business, at any time, if they think it expedient, substitute for that order an order requiring the business to be wound up.

THE EARL OF HALSBURY moved to amend subsection (1), after the words "the Board of Trade shall unless for any special reason," by inserting "such reason to be stated by an authoritative announcement."

Amendment moved— Page 1, line 12, after ("reason"), insert ("such reason to be stated by an authoritative announcement").—(The Earl of Halsbury.)

EARL CURZON OF KEDLESTON

I understand quite clearly the object which the noble Earl has in view. The provision to which he is referring is the one which lays upon the Board of Trade the prima facie duty of taking certain steps to interfere with enemy businesses, but which at the same time leaves them a discretion in certain cases the character of which I endeavoured to explain just now.

THE EARL OF HALSBURY

For special reasons.

EARL CURZON OF KEDLESTON

Yes, for special reasons; and I endeavoured to indicate just now what the special reasons should be. The noble Earl in effect says, If you have a special reason why should you not state it? Might I submit to him one or two considerations which tell in the opposite direction. In the first place it is very easy to state a reason for taking a definite action, but it is a very different, and I submit an entirely unusual, thing to ask a Government Department to state a reason for not acting—to state a reason for using the discretion which is left to them in a negative way. Secondly, I am very doubtful as to how it could possibly be done. The noble Earl in his Amendment uses the word "announcement," but what form that announcement would take and where it would be made he does not explain. I think I can give the noble Earl two other reasons, to which he will attach greater importance, for not proceeding with the suggestion he has submitted. The first is that by acting in this way you might do harm rather than good in particular cases. Take the case of a business which belongs at the present moment partly to Germans. Under the powers conferred by this Bill you may desire, having got rid of the German shareholders, to convert it into a British concern. The Bill gives power to get rid of the German interests and to transfer them to British subjects. It would be very undesirable indeed to prejudice that business when this operation was being carried out by publishing to the world that it had a German taint about it. My second contention is that if the noble Earl is suspicious and wants in the last resort to be certain of obtaining the Board of Trade's reason for not acting, the machinery for obtaining it exists in Parliament. If he will refer to the provision which I mentioned just now as having been inserted yesterday in another place—namely, subsection (8) of Clause I—he will see that it provides that the Board of Trade shall prepare and lay before Parliament lists of the persons, firms, and companies as to whom Orders have been made. When that list is made it will be perfectly easy for anybody in the House of Commons to get up and say "Why is not such-and-such a firm included in the list?" and then the Minister responsible for the Board of Trade will give a reply. It seems to me that that is a much more proper and regular method of obtaining the information which the noble Earl may desire in particular cases than the suggestion he has submitted to your Lordships. I hope that in those circumstances he will not think it necessary to press his Amendment.

THE EARL OF HALSBURY

I cannot concur. I think much more harm will be done if it is suggested, as it will undoubtedly be suggested if the regular course is not pursued, that there is some influence behind. One has heard this again and again. It would be much better, in my opinion, that the matter should be made public. I should like to explain that I am no party to, nor have I the smallest belief in, the sort of rumour that exists about German influence having been used; but it is much easier to get rid of a suggestion of that sort by openly stating the facts than allowing it to be said that there is some secret influence at work in the Board of Trade or any part of the Government. I think it is very important for the sake of the Board of Trade itself that this should be done. At the same time if the noble Earl refuses to accept the Amendment I shall not risk this very important Bill passing by insisting upon taking a Division.

Amendment, by leave, withdrawn.

EARL CURZON OF KEDLESTON

My Amendments are verbal.

Amendments moved— Page 2, line 22, after ("prohibiting") insert ("or limiting") Page 2, line 34, after ("payable") insert ("or transferable") Page 2, line 35, after ("paid") insert ("or transferred").—(Earl Curzon of Kedleston.)

On Question, Amendments agreed to.

Clause 1, as amended, agreed to.

Clauses 2 to 4 agreed to.

Clause 5:

Duty of enemy subjects to make returns as to property.

5. It shall be the duty of every subject of any State at war with His Majesty who is within the United Kingdom, if so required by the custodian, within one month after being so required, to furnish the custodian with such particulars as to—

  1. (a) any stocks, shares, debentures, or other securities issued by any company, government, municipal or other authority held by him or in which he is interested; and
  2. (b) any other property of the value of fifty pounds or upwards belonging to him or in which he is interested 1088 and the custodian may require, and if he fails to do so he shall, on conviction under the Summary Jurisdiction Acts, be liable to a fine not exceeding one hundred pounds, or to imprisonment with or without hard labour for a term not exceeding six months, or to both such a fine and imprisonment, and in addition to a further fine not exceeding fifty pounds for every day during Which the default continues.

Amendments moved— Page 5, lines 38 and 39, leave out ("subject of any State at war with His Majesty") and insert ("enemy subject") Page 6, line 9, leave out the first ("and") ["and the custodian may require"] and insert ("as").—(Earl Curzon of Kedleston.)

On Question, Amendments agreed to.

Clause 5, as amended, agreed to.

Clauses 6 to 9 agreed to.

Clause 10:

Power to refuse registration of companies in certain cases, &c.

10.—(1) Where on an application for the registration of a company it appears to the Registrar of Joint Stock Companies that any subscriber of the memorandum of association or any proposed director of the company is an enemy subject he may refuse to register the company.

(2) Any allotment or transfer of any share, stock, debenture, or other security issued by a company made after the passing of this Act to or for the benefit of an enemy subject, shall, unless made with the consent of the Board of Trade, be void:

Provided that nothing in this provision shall affect the title of any person other than an enemy subject who purchases in good faith for valuable consideration and without notice any such share, stock, debenture, or other security, or of any person other than an enemy subject deriving title under him.

EARL CURZON OF KEDLESTON

I now come to the Amendment which I said we proposed to ask the House to introduce into the Bill to meet the point raised by Mr. Annan Bryce in the other House of Parliament. I could give an explanation of it, but perhaps in the present condition of the House you will not think it necessary that I should do so.

—

Page 7, line 34 [subsection (2)], leave out the first word ("Any,") and insert ("No")

Page 7, line 37, leave out from ("Board of Trade") in subsection (2) to the end of the clause, and insert ("confer on the allottee or transferee any rights or remedies in respect thereof, and the company by whom the security was issued shall not take any cognisance of or otherwise act upon any notice of any such transfer except by leave of a Court of competent jurisdiction or of the Board of Trade. If any company contravenes the provisions of this section the company shall be liable on conviction under the Summary Jurisdiction Acts to a fine not exceeding one hundred pounds, and every director, manager, secretary or other officer of the company who is knowingly a party to the default shall be liable on conviction to a line for a like amount or to imprisonment with or without hard labour for a term not exceeding six months.")—(Earl Curzon of Kedleston.)

On Question, Amendments agreed to.

VISCOUNT MIDLETON

I have an Amendment to Clause 10. The clause already provides that the Registrar of Joint Stock Companies may refuse to register a company with a proposed director who is an enemy subject, but there are cases in which companies have directors appointed who have a right to nominate other directors actually residing in enemy lands, and it is possible for them to be nominated directors of British companies for the purpose of preserving enemy interests. Therefore I move a new subsection to deal with that point, and I understand the Government will accept it.

Amendment moved— Insert as a new subsection: (3) Where the right of nominating or appointing a director of a company is vested in any enemy or enemy subject the right shall not be exercisable except by leave of the Board of Trade, and any director nominated or appointed in exercise of such right shall, except as aforesaid, cease to hold office as director."— (Viscount Midieton.)

LORD READING

I understand from the observations made by the noble Viscount that this is intended only to apply to the right of nominating or appointing which is vested in an enemy subject; that it is not in any way intended to limit or curtail the ordinary power of voting which a shareholder would have for the appointment of a director. If that is what is meant by the words used by the noble Viscount, the Government would accept the Amendment.

On Question, Amendment agreed to

Clause 10, as amended, agreed to.

Remaining clauses agreed to.

Amendments reported; Bill read 3a, with the Amendments, and passed, and returned to the Commons, and to be printed as amended. (No. 205.)

House adjourned at twenty-five minutes past Eight o'clock, till To-morrow, half-past Ten o'clock.