HL Deb 16 October 1918 vol 31 cc703-8

LORD SYDENHAM rose to ask His Majesty's Government whether the liquidation of Merton and Company was directed or permitted by the Board of Trade; whether, in the case of voluntary liquidation, books and documents dealing with the transactions of a firm may be destroyed; and, if so, whether the Government will give orders to the liquidator that such destruction of the documents of Merton and Company shall not take place.

The noble Lord said: My Lords, when the history of our treatment of German traders in this country comes to be written, there will be no chapter more remarkable than that which deals with the affairs of Merton and Company. Before the war, this firm was one of the most important limbs of the great Frankfort agency for obtaining control over our metal trade; and it also occupied the favoured position of Government brokers, although the facts about its composition and its connections could very easily have been ascertained. Some time ago I quoted in your Lordships' House from an article written by a German before the war, and written with evident pride, in which the methods of Frankfort and the status of Mertons were partly explained. The slightest inquiry would have shown that in August, 1914, 11,875 ordinary shares of the Merton firm were held by the Metall-Gesellschaft, and 18,600 shares by the Metall-Bank and Metallurgische-Gesellschaft, which were other limbs of the Frankfort octopus. It would be interesting to know how, in these circumstances, the Merton firm ever came to be appointed as brokers to the Government, and it would be still more interesting to know how they continued to retain that position for a long period after the outbreak of the war.

When a very natural and widespread agitation against German trading in this country had been raised, it was stated that enemy influence had been eliminated from the Merton firm. Now, so far as I know, all that really happened was that the Schweitzerische-Gesellschaft für Metallwerke, of Basle, which also was a large shareholder in Merton and Company suddenly changed its name to Société Suisse pour Valeur de Métaux, an almost literal translation of its former title. At the same time Herr Langenbach changed his name to Mr. Lang, and Herr Heinrich Schwiertz became Mr. Harry Ferdinand Stanton. I assume, my Lords, that those changes were sanctioned by some one, and sanctioned on the principle that a German rose by any other name would smell as sweet. Whether there were any other steps taken for the elimination of German influence from this firm I do not know, but perhaps the noble Lord who will answer me, speaking for the Government, will be able to throw sonic light on that matter. But certainly no effective steps could have been taken without a full inquiry into the circumstances had been held. No such inquiry was held. But it so happened that the nature of the Merton proceedings was disclosed in our Law Courts in 1916, after fifteen months of war, in the course of a suit for £5,000 to which this firm had the effrontery to institute. As a layman, of course, I do not in the least understand the complications of that suit, but the late Sir Samuel Evans, whose death created a great loss to the Bench and to the country, delivered a most remarkable judgment on the case. In winding up, he said these words— The whole of the £5,000 (claimed by Merton's) was debited by Merton and Company, Limited, in their books of account, to the Metall-Gesellschaft, of Frankfort, which is evidence of their having paid it on behalf of this enemy firm. For whomsoever it was paid, Merton and Company Limited, made the payment in order to try to preserve the goods for the owners, whom they knew to be enemies, and to gain sonic possible advantage to themselves, or their principals or co-adventurers, the Metall-Gesellchaft. And in acting thus they appear not to have hesitated to engage in commercial intercourse with enemies of the country. The claim is one which has no sort of foundation. To launch such a claim much assurance was needed, and to persevere in it showed, further, a reckless want of appreciation of the possible consequences. I think that this claim also shows the sense of security which the firm must have felt.

Now, my Lords, if a Judge had made a judgment of that kind upon any British firm in this country, legal proceedings against that firm would, of course, have been taken at once. But two years more elapsed, and during those years Merton and Company seem to have pursued the even tenour of their ways. Mr. Hughes, however, took up this whole matter, with his usual vigour and fearlessness, and he took it up in the interests of Australia, where German penetration had been sorely felt and was very bitterly resented. On October 7th, 1916, an Australian mining paper significantly stated— Their close association with the enemies of Great Britain should have decided the Government at the outbreak of the war not alone to strike Henry R. Merton and Company off the list, but to intern every member of the firm and impound their books and papers. Well, indeed, may one ask with the clean British Press, What is the special 'influence' this Germanised gang have got in England?

Those words, I know, express the general feeling throughout Australia in this business. And now, after more than four years of war, Merton and Company have been permitted to go into voluntary liquidation. There have certainly been cases in which this process has been entered upon in order that papers showing misconduct might be destroyed, and I therefore earnestly beg of the Government that they will give orders that no books, papers, or documents belonging to this company shall be destroyed on any account. I do not know whether the threatened action against Mr. Hughes will proceed. I think, in the public interest, it would be much better that it should. But in any case it seems essential that no evidence of the transactions of this firm should be destroyed, as it may be needed some day if we are ever to find out the full extent of the injury which German trade has inflicted upon the British Empire. My Lords, while such things as I have attempted to describe, and some others to which I have referred on previous occasions, are permitted, can we wonder that there are people in this country who believe in the existence of the "hidden hand"? It is quite clear from what I have stated that Merton and Company must have had some very influential protectors, and in the interests of our national honour, and of the purity of our public life, I think that we ought to know who those protectors are. I beg to put my Question.


My Lords, there is a matter which is more or less germane to the subject before your Lordships, and which somewhat affects the position of the noble Lord w ho has put the Question, that I think this is a fitting moment to draw the attention of the House to it. The House may remember that in March last, to every noble Lord I think, there was addressed a communication from some people called Ettlinger and Company, enclosing a letter which they had written to the noble Lord, and in which they complained, very properly, of some statement that he had made in a somewhat similar case in regard to German influence and German trading. I am not going to quote their violent language, because it may perfectly well be that the language was not justified, and it may be that the statements made by the noble Lord were perfectly correct; but what they asked was that the noble Lord should not shelter himself under his Parliamentary privilege in making statements about private persons or private firms in regard to which they were unable to take action.

This is not a matter, I admit at once, which it is at all fitting that I should raise. It is a matter which is much more properly raised by the Leader of the House. But I have waited for six months to see whether the noble Lord himself, who was so bitterly attacked in this public manner, or the Leader of the House would take any steps. No one seems disposed to take any steps in the matter, though it does seem to me to be one which affects the honour of your Lordships' House and the ordinary Parliamentary practice. If a noble Lord, or a member of the other House, taking advantage of his Parliamentary immunity, makes statements which reflect upon somebody else, that very immunity imposes upon him a corresponding obligation to be sure of the statements of fact which he makes, and if he makes incorrect statements of fact, as he very well may do inadvertently, I am far from suggesting that it is his duty to expose himself to legal action because he has made a mistake, but it becomes his duty to withdraw any statements as publicly as they were made. He can either withdraw the statements or repeat them outside where they can form the subject of legal proceedings. That, I submit, would be the usual practice.

I can give your Lordships two instances in which the course that I have indicated has been followed. Your Lordships may remember that sometime ago Mr. Markham, a member of the other House, made libellous statements about Mr. Beit, I think it was, and he was challenged to repeat them in public. He at once recognised the necessity of accepting that challenge, and he repeated them and they formed the subject of an action. More recently the same thing happened in the ease of Mr. Hobhouse, who made statements of a personal character in the House of Commons which he was challenged to repeat outside, and which also formed the subject of an action in the only place where the truth or falsity of such statements can be properly decided—namely, in the Law Courts. The statements that have been made with great violence the noble Lord has not thought fit to withdraw or modify, nor has he given the people affected any opportunity of defending themselves in the only effective way in which they can defend themselves in a matter of this kind. This is not a matter which I ought to have to bring to the notice of the House, but it is one which does affect the honour of your Lordships, and it is one which ought not any longer to be passed sub silentio.


My Lords, the noble Lord who raised this subject travelled a very great deal further than this Question upon the Paper in his search for the truth, and I will not attempt to follow him in everything that he has said. I have a great deal of sympathy with much of what he said. With regard to the matter which the noble Earl (Earl Russell) has just raised, I think that it is hardly in my province to place my views before your Lordships. I will therefore confine myself to the Question of Lord Sydenham.

The liquidation of Henry R. Merton and Company, Ltd., was not directed by the Board of Trade, but an application by the company under the Non-ferrous Metal Industry Act, 1918, for a licence to trade in non-ferrous metals was refused, and the company thereupon became unable to carry on business in the non-ferrous metals to which the Act applied. The company was given until October 5 within which to get rid of existing commitments, and was informed that in the event of its going into liquidation this period would be extended until December 5 next. The company has passed a special resolution for voluntary winding-up which was Confirmed on October 2, and has appointed Sir Woodburn Kirby to be the liquidator. In pursuance of Section 2 of the Company's (Foreign Interests) Act, 1917, the resolution for the voluntary winding-up of the company has been ratified by the Board of Trade.

In the case of a voluntary liquidation, when the affairs of the company are fully wound up and it is about to be dissolved, the books and documents of the company can be destroyed if the shareholders pass an extraordinary resolution directing that they should be so dealt with. The books of the company have been open to the inspection of the supervisor appointed by the Board of Trade, since an early stage in the war, and Sir Woodburn Kirby has given the Board of Trade his assurance that the books of the company ill not be destroyed. I trust that this reply is satisfactory to most of my noble friend's questions. It is in my view very important that these papers should be retained. I trust, therefore, that my answer will satisfy my noble friend in that respect.


My Lords, with regard to what the noble Earl said, there was one case in which I made a statement that was not fully correct, and which I took an early opportunity of correcting in your Lordships' House. As regards what I said of the firm in question, there is nothing I wish to withdraw. I was very careful in ascertaining the facts, and most of those facts were actually admitted, as your Lordship will see on reference to the papers published by the Government. Action in regard to certain trade with India was actually taken by the Government. I was very careful in collecting my facts. On the other hand, at my time of life, I do not feel inclined to let myself in for a complicated legal action in a case in which it might be exceedingly difficult to get the exact evidence which would be regarded as legal proof.