§ Order of the Day for the Third Reading read.
§ LORD CARSON
My Lords, I have to move that this Bill be now read a third time, but I should like to make a few brief observations before the Question is put. When I brought in this measure I was impressed by the great urgency of the matter. I had had to investigate many cases that were brought before me of hardship and indeed of poverty, sometimes of criminality and blackmail, which were caused by the machinations of those moneylenders. Since then I have been much more educated upon the subject by an immense correspondence, giving me innumerable instances of the devious ways in which the organisations of moneylenders and others are knit together in order to get into their nets people whose miseries they afterwards exploit to their detriment and also the detriment of their relations. You can hardly take up a newspaper to-day in which you do not see cases in which moneylenders are concerned which must touch the heart of anybody who has any human concern about his fellow creatures. What is worse is when you read the observations of the Judges, almost from day to day, as to the utter futility of the resent state of the law under the Moneylenders Acts and their utter powerlessness to do anything to help in the matter.
Of course, the present Bill has been open to criticism and I entirely agree with what the noble Viscount opposite said upon the Second Reading, that it is almost impossible to stop a great many of the hardships and of the intrigues which arise in the carrying out of a business of this kind. Assuming, however, for it is the assumption on which one must attempt to legislate, that the business of a moneylender is a necessity in this country—it is not my own view at all, but it is the general view of people at large—a great deal may be done to alleviate these evils by this Bill. Every day one gets more and more evidence of the audacity of these moneylenders. This Bill tries to put an end to a most offensive proceeding, the constant and persistent sending of moneylenders' circulars, almost every one of which is founded upon the suppression of truth or 1009 a false statement as to facts. The growth of this practice is so enormous that evidently it must pay in some way or other.
The Public Prosecutor sent me the other day particulars of a case which came before him, in which one moneylender had within six months issued 190,000 circulars, each one of them done up in an envelope requiring a three-halfpenny stamp, printed on good paper and having all the appearance of a respectable document in order that people might open it. Your Lordships can easily draw your own conclusions, if one moneylender can afford to do that, as to the way in which people are induced by these circulars to go to the offices of these people. If we saw these 190,000 circulars—God forbid that we should have to look through them all—we should find that each one of them was founded on a false suggestion. A common one—and I have had to look through some thousands of circulars—is: "Try our short loan system. We give you pounds and you pay back in guineas." One finds out afterwards that this most attractive system means that you get £100 for a month if you pay £105 at the end of month. There are many other devices of that kind. There has recently been brought to my notice another class of ease. Some moneylenders do not adopt the system of putting their circulars in envelopes requiring a three-halfpenny stamp, but put them into letter boxes all through London. These circulars are plainly intended for servants and offer loans of anything up to £5, generally at a shilling a week per £, or something like that. Could anything be worse than that servants should take up such documents as this and should be led into the hands of these people while they are carrying out the duties which are entrusted to them?
In addition to that, touting is a matter which is going on to an enormous extent. I venture to say that there is not a single port in the Kingdom where young naval officers come in, or a single town where there are barracks, where there are not these moneylenders' touts. I was told the other day by a very high official in the Admiralty that the number of young officers who, coming on shore after long service at sea, unfortunately get into the hands of these moneylenders, is a most disastrous thing for the Service. To show 1010 you the way in which the tout is encouraged may I quote from a circular, which I have here. It was sent by a moneylender in London to a very large number of people. In this he says:We have in our possession a considerable number of silver wrist watches sold throughout the War for £3 10s. These were made dust-proof and water-tight; the fifteen jewel movement is splendid, the whole being a very desirable watch. We have decided to give one of these watches until they are all disposed of to each customer who introduces from this date either personally or by letter a client to us to whom we lend £5 or upwards.Your Lordships can easily calculate, if they give a £3 10s. watch for an introduction to a man who borrows £5, how much profit is made out of the poor borrower.
The Bill, of which I am now moving the Third Reading, has very drastic provisions as regards both circulars and touts. Probably the most valuable provisions, however, are those which regulate the rate of interest. That is where the existing legislation has broken down. The existing legislation allows a Judge to interfere if the transaction is unconscionable, without giving any indication whatever as to what is "unconscionable" in the case of a man who has no security coming to ask for a loan from a moneylender. The Bill makes a provision that anything over four per cent. per month—that is forty-eight per cent. per annum—is to be held to be unconscionable, and therefore the Judges will have something to go upon to show how far they ought or ought not to interfere in administering the Act which is at present in force and which, of course, is not interfered with by this Bill. That, of course, is a very valuable provision.
There is also a provision as regards poor persons. That is, that in the case of a loan of £3 or under no principal or interest can be recovered at law. I have had hundreds of letters from the very poorest classes in this country, and the-way they are treated by moneylenders is a great scandal. Probably you do not know that the interest they are charged comes very often to 3s. 8d. for £1 for, say, ten days. That is not an unusual thing. These people have written to me from places throughout England saying that the moment they get into debt with any of these people, the law is not put into force against them but the money- 1011 lenders employ regular bullies who go and terrorise the debtors when they are at work and are likely to be exposed to their foreman or employer. The object is to frighten them into procuring somebody to find the money for them. I have a letter from a school teacher, or from somebody on her behalf, in which it is stated that the moneylender used to go up to the school in which she was teaching and, in the presence of the pupils, demand the money and use abusive language towards her because the poor girl was unable to pay. That is not a matter which you can cure by a Moneylending Bill, and I only refer to it because it is well that the poor should know that there is a provision in the Bill with regard to loans of not more than £3 and the interest thereon not being recoverable. I would certainly advise these people whom attempts are made to terrorise not to be frightened, but to go straight to the police and tell the police of the action of these moneylenders and the methods by which they are trying to recover their money.
Another class of matters mentioned in the Bill, and to which I attach great value, is that comprising the limitations which the Bill provides for allowing bankruptcy summonses to be served. There is most valuable evidence taken by the Committee—evidence given by Mr. Williams, one of the Official Receivers—which goes to show the length to which a class of professional moneylenders goes with a view to what almost amounts to levying blackmail. I am only going to read one or two answers of his which will show your Lordships how this matter is carried on. This gentleman was asked with reference to proceedings in bankruptcy:Do you think it is used by the moneylenders illegitimately in the way of bringing pressure to bear such as other people do not bring to bear upon debtors?
The answer was:That is the conclusion I have come to; that is my own view. In my opinion, the moneylender does not present his petition with a view of bringing about a rateable distribution of the assets amongst all his creditors, which really should be the object of a petitioner, but rather with a view of exerting pressure which will bring the money from somewhere.
He then goes into detail as to the number of petitions which are presented, 1012 and he says that, roughly speaking, from thirty to thirty-five per cent. of the receiving orders are made on the petition of registered moneylenders.
He continues:—Of course, one sees constantly cases coming in on a receiving order, where perhaps there are a dozen petitions filed against the same debtor, most of those petitions being petitions by other moneylenders. I had a case only the other day where there were fourteen petitions against the debtor, and twelve of them were petitions by moneylenders. Of course, many of them had been paid off, but ultimately what does happen is that the debtor comes in with, in my view, increased liabilities, and his assets have been very considerably diminished in trying to pay off the instalments to the moneylenders. In that way I believe that the ordinary creditor suffers.There is one other answer of this gentleman's which I should like to read to the House, and it is this—I think I ought to say that in my experience I cannot recall a single case where the borrowing of money by a trader from a moneylender was likely to result in any useful purpose at all. It only serves to postpone the actual date of the failure. I cannot recollect a single case where it could have served any useful purpose.The provisions in this Bill are particularly valuable as regards naval and military officers, and other persons in the employment of the Crown. A number of Acts have been passed from time to time by the Legislature, for the purpose of preventing the pay or pension of these people from being interfered with or taken in execution on judgment. The reason, of course, is that the pay and right to pension are given to them with a view to their carrying out the services of the Crown; but these people are not protected from bankruptcy, and the evils which would have resulted from a policy of leaving them subject to execution for debt of course follow if, the moment they get into the clutches of moneylenders, they can be served with bankruptcy notices, and in that way, of course, probably lose their employment. Just imagine the case of a young officer—I know of one—who, for three years, was going about from one moneylender to another, attempting to pay off one through another, paying interest at enormous rates, and all that time trying honestly to carry out his work as, say, the commander of a submarine. Such a man does not know at what moment he 1013 may be served with a bankruptcy notice, and in that way driven out of the career to which he has devoted his life. It is impossible for him or for a civil servant, or anybody else, if he has such a matter hanging over him, efficiently to discharge his duties towards the country, which is in that case his employer.
There is one other matter to which I might refer, although I do not want to weary the House by going into details. Hitherto, in the vast majority of cases, it was utterly impossible for a man who had dealt with moneylenders to defend himself. Proceedings were taken in the High Court. First, a Writ was issued, and then a summary motion. To defend himself in those proceedings the man, who had not got a shilling and who had been borrowing money at enormous rates of interest, was invited to come in, employ solicitor and counsel, and expend a considerable sum of money, even before he got leave to appeal at all—what we call a summary motion. That, to my mind, was a denial of justice, and I put into the original Bill that I introduced in your Lordships' House a provision that all proceedings should be taken in the County Courts. I notice that the Select Committee of the two Houses to which the Bill was referred have altered that, and have left it to a Secretary of State to provide as to the particular Court in which the proceedings shall be taken. I do not take that as being hostile to my provision at all. In certain cases, if you wish to give an opportunity of defence at all, it may be proper to have the matter decided before a summary tribunal like the petty sessions in very small cases. That may be necessary if you are to give an opportunity to very poor people, to have their case heard at all. But I do hope that, if the Bill becomes law, there will be no hesitation whatever on the part of the Government in making such arrangements as will in the best possible way delimit the powers of the Courts as regards these particular cases, and not allow such a denial of justice as certainly has resulted, and must result, when people in such a predicament as are these borrowers are driven into the High Court of Justice to defend themselves at enormous expense.
I believe the Bill to be an honest effort to do something to mitigate what is a great public scandal. Whether it will 1014 become law or not I do not know, but I make a most sincere appeal to the Government, who, I know, are occupied with great and important matters which primarily call for their attention, to give some consideration to a question of this kind, for they will find the more they sift the matter the more they will be convinced of the great amount of poverty created among the poor by this traffic in money. I read the other day a report of an independent inquiry made in America, and I was astounded to find how much of the poverty in America was attributed by that Committee to people being led into improper and extravagant habits, which they could not possibly afford, by the advance of money to them, with the ensuing utter misery which must result in such circumstance. I commend this Bill to your Lordships' attention, and I hope that, if it does pass your Lordships' House, His Majesty's Government may afterwards give it fall consideration with a view to its being passed in another place, and to its becoming the law of the land.
§ Moved, That the Bill be now read 3a.—(Lord Carson.)
§ VISCOUNT HALDANE
My Lords, I, too, hope that this Bill will receive favourable consideration. As the noble and learned Lord has remarked, I pointed out on the Second Reading certain inadequacies in the scope of the measure. I had in mind the old usury laws which were on our Statute Book for a long time, and which prohibited loans at a high rate of interest. Those Acts proved to be a dead letter, because the moneylender, when approached, said: "No, I cannot lend money, because I cannot get any interest, but I will do this. I will purchase from you an annuity. I will pay you a sum down, and you will pay me an annuity"—which was, of course, a very large amount proportionate to the advance—"and that will not be a loan transaction at all, but the creation of an annuity." So far as I can see, this Bill leaves that kind of transaction where it was, and I have no doubt that the noble and learned Lord thought it very difficult to strike at a thing of that kind. I do not like to prophesy, but I think it likely that the moneylenders will not go under, but will proceed to buy annuities wholesale, and that in some shape or form they will get what they 1015 want. They may be able to send out circulars saying, "We will buy annuities; who will come into our market?"
Therefore, while I am not satisfied that this Bill will create a complete revolution in the system which now obtains, I think the Bill is a very valuable one. It puts an end to the system of circulars, at any rate, as regards loans; it severely restricts the rate of interest on loans, and it prevents a number of things being done, which are done at the present time, in the way of touting and canvassing for loans. On the whole, I think the Bill is a valuable gesture against what is a very bad system, and therefore I hope that the Government, even though they may think that it does not go the whole way, will consider that it goes far enough to be a valuable alleviation of a most monstrous system which flourishes to-day.
THE EARL OF CRAWFORD
My Lords, the noble and learned Viscount does not appear to think that this Bill is going to achieve quite as much as its promoters expect and hope, and, if he has nothing better to say for it than that it is a valuable gesture in the first place, and, in the second, that it will stop the tiresome nuisance of circulars, it will do what other Bills passed during the last 3,000 years have done—they have been gestures, they have proved ineffective and the evils and scandals of moneylending have continued. Because moneylending meets a demand—right or wrong, a demand. We have had some experience in this country, not indeed such a long experience as other countries, but we have had 600 years' experience in this country of anti-moneylending agitation and edict. These agitations recur at fairly regular intervals. The last campaign in which I was concerned was in the House of Commons 20 or 25 years ago. It was a really first-class stunt. I remember it well, and Lord Carson does, too. I well remember a wretched moneylender being dragged to the bar, and being rebuked by Mr. Speaker Gully because he had failed to answer some question upstairs about his method of book-keeping.
Well, the time comes round when laws passed by Parliament prove quite ineffective to prevent the abuse of a public demand. The noble and learned Viscount. Lord Haldane, has already referred to one out of the very many methods by 1016 which this demand will be met in spite of this Bill. Lord Carson says that this moneylending is not a necessity. Why should it go on if it is not a necessity Moneylenders do not send out 190,000 advertisements, printed on fine paper, stamped at the cost of a closed envelope, just for fun, just to let one know that someone called Hector McTavish lends money. No, they do it because they know there is a public demand for these circulars. They know very well that they are going to charge high rates of interest because in many cases they are lending money to people who have no security. If I wish to borrow money and I go to Drummond's Bank, they know precisely what security I can offer and they charge me a reasonable interest accordingly. On the other hand, if I want to borrow £2, £3 or £5 and I go to Mr. Drummond and ask him to lend me £3 or £5 he will say: "What is your security? Who are you? I have never seen you before. I do not know you. What guarantee have I that you will repay the money?" and I say: "You do not know me and I cannot give you any guarantee that I will pay." Then Mr. Drummond will say to me: "Very well, I am afraid I cannot deal with you. You must go to somebody who deals with persons who can offer no security and you will have to pay accordingly."
Do not let us be over-worried by the nuisance of the circulars. I get them and I have no doubt that every other member of this House and every official of this House is in the same boat. But I would, at least, say this for the moneylenders' circulars, that they are not couched in such familiar or friendly terms as those of others who frequently implore me to buy their cigars or wines, and if my noble friend is out to stop this nuisance I wish he would stop one which, to myself at any rate, is much the greater of the two. But these circulars meet a demand. The demand may be foolish. The way the demand is fulfilled may be irregular and often is fraudulent. But if the moneylender is fraudulent to his client, make no mistake, the client as often as not, and often deliberately, is fraudulent towards the moneylender, and rates go up accordingly. Rates must go up when you are dealing with customers of this kind, and although the rates of interest are what 1017 we call exorbitant and, of course, in some cases are positively tyrannous, there are tens of thousands of cases where a legitimate need is met by this fraternity, and where a reasonable rate of interest is charged.
It is no good opposing this Bill. The country demands something of this kind. Every generation, or every second generation, this demand becomes insistent and anti-usury laws have to be passed. For a time there is quietude, and then, of course, the trouble begins again in some other form and fresh repressive legislation is necessary. I would, however, make one suggestion. Instead of solely making it illegal as far as Parliament dare, and can to lend money, why not try to make it illegal to borrow money? In that case you would have two criminals to attack instead of one, and to that extent you could hope that you might be able to halve the crime.
The object of my remarks is not to oppose this Bill, because I know that, public opinion is infected by these indignations and enthusiasms every twenty, thirty, or fifty years, and we are now in the midst of one of them. What I want to say, however, is that in my opinion the scandal of moneylending is very largely caused by trouble into which people get by betting, chiefly on horse-races. I should think that sixty per cent., possibly seventy per cent., of the people who have to suffer from unconscionable rates of interest get into trouble by betting upon races in places they have never visited and upon horses they have never seen. Why is no effort made to remove what is one of the fundamental causes of this great moneylending scandal? We have not the courage to do so. It has been reduced to a fine art by the betting Press. They come down my street every morning. They begin between 9.30 and 9.40 regularly and they go on until late at night. The earlier part of the day is devoted to assisting people to understand what is going to occur during the latter part of the day, and the latter part of the day is devoted to telling you whether you have won or lost your bets in the afternoon and how you had better bet tomorrow. The organisation is one of the most perfect things in the world, and there is not a little street or slum in London where anybody who wants to bet 1018 under the stimulus of the betting Press, cannot do so with the greatest case. I once saw what I think was a perfect triumph of scientific organisation. Somebody came shouting the betting news down my own street about ten o'clock in the morning. A man came down a ladder front the roof where he was working; a girl came up from the basement to the street and met a gentleman in a frock coat who came from the front door, and three halfpenny papers—betting papers and nothing else—were bought for one house. Until Parliament has the courage to check the betting scandal, it is idle for Parliament to say that it can expect to stop the money lending scandal.
§ LORD PHILLIMORE
My Lords, everybody must sympathise with the objects of this Bill, and everybody must be conscious, as well as the noble and learned Lord who is promoting it, that there are very hard cases. But the question is whether this Bill will not make the hard cases harder and more numerous. I cannot help asking your Lordships to consider whether that will not be the case. There are useful provisions in this Bill; but there are provisions in it which, in my humble opinion, will make things worse for the honest man who has no security except his industry, his occupation and his honesty. It will make it harder for him to borrow and more likely that he will be dragged down by his borrowing.
Money borrowing—do not let us speak of money-lending—is a necessity as the world is constituted. It has been a necessity ever since there has been any form of civilisation. There are times when people who have no capital, or no handy capital, but who have brains and courage and industry require a lump sum of money in advance. If they have no security to offer but their industry and their honesty, the question will arise as to what terms the moneylender will ask, and the moneylender will have to say substantially to the borrower: "If I knew that you were an honest man, a hard-working man and a frugal man, I should be able to lend you this money at a very little higher rate than I should lend it to somebody who could offer me ample security; but because there are numbers of people who are not honest and will go to every shift they can to avoid paying me, and 1019 because there are a still greater number of people who are shiftless and will be idle and will not work, and will be extravagant and will not be able to pay me, therefore I must charge you a rate which will enable me to meet the losses which I have upon other people."
After all, the interest charged by a moneylender is made up of two factors. It is partly the rate for the accommodation, but it is much more the insurance. An analogy will make this very clear to your Lordships' House. In shipping matters there is what is called the borrowing of money on "bottomry." The electric telegraph and submarine cables have almost abolished it, but in olden times it was one of the most common forms of borrowing. A shipmaster, driven by contrary winds or accidents into a port where he had no connections, having to raise money for repairs of the ship and other expenses, found himself without anybody to whom he could appeal. He had no connections. His owner was not known, and it would be impossible to refer to his owner in time. What did he do? He gave as security the ship. The law said he could pledge his owner's ship. But the ship might sink before it got home, the ship might get into collision and have a charge made upon it for that collision, and the maritime lien might take precedence of the bottomry. The ship might be the subject of salvage. The risk, therefore, was very great that the lender would not be repaid. The consequence was that the rate of interest on loans on bottomry was quite different from the rate of interest on ordinary loans. Thirty or 40 per cent. was, for them, not at all uncommon. Just in the same way the moneylender requires to insure his loan, and the worse you make it for the moneylender, the more you treat him as an enemy of the human race, the more you treat him as an outcast and pariah, the more he will be driven to charge everybody a high rate of interest, and the more the honest, frugal man will have to pay for the extravagance of the shiftless and dishonest borrower.
When the Act of 1900, which I think was promoted by Lord James of Hereford, came before this House, very much the same sort of thing was said as has been said by the noble and learned Lord, Lord Carson. When that Act was passed I was a Judge of the King's Bench Division, and we had to consider 1020 what would be harsh and unconscionable discussed the matter with some of the wisest of my wise brethren, and we all felt the necessity of so conducting ourselves as not to put up the price against the honest man. I endeavoured myself, whenever I had to deal with these cases, to look at the matter from that point of view. We must give the moneylender reasonable security, a reasonable rate of insurance, as well as a reasonable reward. There are clauses in this measure which as I have said, are useful. The idea of restricting the rate of interest, the idea of restricting advertisements seems to me, with all respect to the noble and learned Lord, quite futile and dangerous Touting is such a nuisance, and touting also is such a temptation that I feel anxious to abolish it, but how a man is to start a business as a moneylender—and, after all, it is a useful and legitimate business—if he is not to make known that he is a moneylender, and not to make known on what terms he lends money (which I suppose is what advertisement means) I do not know.
The noble and learned Lord has been eloquent upon the poor person. I remember a very interesting account, in one of those hooks relating to the East End of London, of the "square dolly woman," a woman pawnbroker, who dealt in such small sums of money that no laws could possibly apply to her. She was known as a "square dolly woman" because she always treated her borrowers honestly. Under this Bill there is no room for the "square dolly woman." Nobody is to recover a debt of £3, and therefore nobody will lend £3. The poor man who wants £2 or £3 will be told: "Oh, Lord Carson has prevented that; I cannot lend it to you because I shall not have barely my principal." When this measure was in my mind, during the stages through which it has passed, I took to reading Bentham on Usury, and I find this passage which, with your Lordships' permission, I will quote—The proposition I have been accustomed to lay down to myself on this subject is the following one—namely, that no man of ripe years and of sound mind, acting freely, and with his eyes open, ought to be hindered, with a view to his advantage, from making such bargain, in the way of obtaining money, as he thinks fit.
Your Lordships will see how he goes on. I venture to say that he puts the horse 1021 before the cart, and not the cart before the horse. How is a man to get the money? Bentham says—nor (what is a necessary consequence), anybody hindered from supplying him, upon any terms he thinks proper to accede to.
§ LORD DARLING
My Lords, I cannot take quite the same view of this Bill as the noble and learned Lord who has just sat down, for I listened day after day to evidence as to the amount of harm done by pestering people, not people who really needed money at the time, but pestering people to borrow money which they could have done without, and particularly requesting people to borrow very small sums, and then being very hard upon the people who had borrowed. I could not help somewhat regretting, as I listened to my noble and learned friend opposite, that he did not appear for Shylock in the well known case. I feel certain that Portia would have had a much more difficult task in persuading the Doge of Venice if my noble and learned friend had been able to speak with that enthusiasm in Shylock's behalf with which he spoke for all the poor oppressed persons who will be prevented from getting a living if they are not allowed to worry everybody day after day with circulars. Of course, it would have spoilt the best play in the world, but what would such a price as that have mattered if justice had been done?
Before I leave that part of the subject, I should like to say that I was surprised to hear Bentham quoted, and to find that the ideal is to leave the freeborn, grown-up Englishman alone to make any contract that he pleases. How many years have gone by since that principle was abandoned? I have not the knowledge of the Statute or ally other law which my noble and learned friend possesses. He could tell us in a sentence or two of any number of Statutes which interfere with a man making a contract that he wishes to make. There are hundreds of them. They have been passed for the benefit of the working man, and of all sorts of people, grown-up people, thoroughly able to take care of themselves in many ways. Parliaments have determined that these people are not fit to make those contracts—daily contracts—which they would wish to make, Parliaments have protected them, and if they masts such contracts they are set aside.
1022 My noble and learned friend said that in dealing with the existing Act it was difficult to say what is harsh and unconscionable, and that when he first had to deal with it he called together a few of the more intelligent of His Majesty's Judges to see if they could arrive at some sort of agreement upon the matter, I am sorry to say that I was not of the assembly. But for all that I had to try some of the cases. They are in the law books, and anybody can read them. We all recognised that you could not lay down any hard and fast rule, and if these cases are looked up it will be found that we were by no means illiberal to moneylenders. No one says that in no circumstances shall interest be above such and such per cent. You cannot. You must take into consideration the circumstances of the borrower and what security he can offer. There was a Judge who used very picturesque language in this respect—Baron Bramwell. A case is recorded in which he asked this question of counsel: "On what terms would you lend a mutton chop to a starving dog? "You cannot lay down any hard mid fast rule. We have tried to remove what we all believe to be a very great grievance and to remedy the very great wrongs which are being done to people in necessitous circumstances. People who go to borrow money are not free agents. They are not all in a position to go to Mr. Drummond, as in the hypothetical case put before your Lordships by the noble Earl. It never occurs to them to go to Mr. Drummond. They are people who would not borrow at all if they were not pestered into borrowing.
The noble Earl said that a greet deal of the borrowing is in order to pay bets. That is perfectly true, but if it were more difficult to borrow money it would, therefore, be much more difficult to bet, and in this way this Bill does strike at the great evil of betting, particularly at the evil of street betting, which appears to flourish in Mayfair. I was surprised to hear the noble Earl say that there is demand for this money; why should we interfere with the demand? Again, it is exactly similar to the case already cited—liberty of contract. We have interfered with that. There is a demand for drink. Do you not interfere with that? Did the noble Earl when he was in the House of Com- 1023 mons and the licensing question was being discussed, get up and say, "There is a demand for drink"?
THE EARL OF CRAWFORD
What happened was this. The noble and learned Lord, Lord Carson, denied that there was a necessity for this, and I said that there was a demand which seemed to connote a necessity. And I say the same about drink.
§ LORD DARLING
It comes to this: You may drink up to a certain point, but beyond that you may not drink. The law says you may not drink more than is good for you. And that is what this Bill says: You shall not enter into contracts which are manifestly bad for you, whether they are contracts to buy drink or to borrow money. We have had a great deal of evidence to show that in the workshops there are many people, some of them foremen, who are licensed moneylenders, and, being licensed moneylenders, they plague the people in the shops to borrow money and in that way get them into their hands. They are most cruel and most oppressive, and it is for that reason that we provide—and I say this boldly—one of the best things in the Bill, that where the sum of money is very small there should be no recourse to the Courts at all in order to get it back. There was probably no real necessity to borrow it. It was borrowed probably for purposes of betting or of drinking. Therefore, if the people like to pay it back well and good, but leave it as a debt of honour and do not trouble the Courts with it. I think the question of the circulars has been a little misunderstood. The noble and learned Lord, Lord Phillimore, asks: How is a moneylender to begin to conduct his business if he cannot send out circulars?
§ LORD PHILLIMORE
I did not say that. On the contrary, I said that repression of touting by circulars was quite legitimate. I was speaking of advertisements which are separately dealt with in the Bill.
§ LORD DARLING
I think the noble and learned Lord will find that there is no difficulty for a moneylender to start his business. He may send out business cards. There is a provision as to that, and as to putting advertisements in the 1024 newspaper. He can send out his cards; but we desire to limit his expenses and prevent him throwing away money, as he often does. For my part, and I think I can speak for my friends, what actuated as was not a feeling that these circulars were a nuisance. It is not because we have to open a dozen or more of these circulars and then throw them into the wastepaper basket. It is not that. It is because people who would not borrow money and get into difficulties, but would set to work and make money in other ways, have this temptation put in their way and get into the hands of moneylenders. That is the real reason why circulars were prohibited. It is only extending a little further the excellent doctrine that if you can avoid it you should not put temptation in the way of people. It has been argued, and quite properly, that you should not, in low class neighbourhoods, where people are poor, hang up clothes at the door with no one to look after them; or put up open stalls at which people might go and pick up goods. If there are temptations which many people cannot resist, I see no infringement of the liberty of the subject in saying that you shall not put these temptations in their way.
The noble Earl asked: Why not prohibit borrowing? I suppose that was a reductio ad absurdum. It would be useless to attempt to prohibit borrowing. You cannot prohibit a man who is poor from asking for a loan. What could you do to him if he is an absolute pauper and asks for a loan, and takes no notice of your law? Nothing. If a man is carrying on a business in a way which has received the condemnation of centuries I hold that we are justified, however hopeless our efforts may be, in making one more effort to control what those on the Committee believed, with the noble Lord, Lord Carson, to be a grave evil inflicted upon people who deserve that the State should try to secure them better treatment.
§ On Question, Bill read 3a.
§ Clause 1 [Licences to be taken out by moneylenders] and Clause 2 [Certificate required for moneylender's excise licence]:
§ LORD DESBOROUGH
I beg to move pro forma, in accordance with the rules 1025 of the House, that Causes 1 and 2, which are financial clauses, be omitted from the Bill.
Leave out Clauses 1 and 2.—(Lord Desborough.)
§ On Question, Amendment agreed to.
§ Clause 7 [Form of loan document]:
§ Amendment, moved—
§ Page 7, line 7, leave out ("passing") and insert ("commencement").—(Lord Desborough.)
§ On Question, Amendment agreed to.
§ Clause 8 [Obligation of moneylender to supply information as to state of loan]:
Page 7, line 15, leave out ("passing") and insert ("commencement").—(Lord Desborough.)
§ On Question, Amendment agreed to.
§ Clause 10:
§ Proceedings in bankruptcy for moneylenders' loan not to be taken except after application to court having jurisdiction.
§ 10.—(1) No proceedings in bankruptcy shall be commenced by a moneylender in respect of money lent by him after the passing of this Act unless the said moneylender has first applied to the court having jurisdiction for an order for payment of the debt due by such instalments as the court shall think fit, and default has been made by the person against whom such order has been made in the payment of any instalment fixed by the order of the court.
§ (2) Where a debt due to a moneylender in respect of a loan made by him after the passing of this Act includes interest or any pecuniary consideration in lieu of interest, that interest or consideration shall, for the purposes of the provisions of the Bankruptcy Act, 1914, relating to the presentation of a bankruptcy petition, voting at meetings, compositions and schemes of arrangement and dividend, be calculated at a rate not exceeding fire per cent. per annum, but nothing in the foregoing provision shall prejudice the right of the creditor to receive out of the estate, after all the debts proved in the estate have been paid in full, any higher rate of interest to which he may be entitled.
§ (3) No proof of a debt due to a moneylender in respect of a loan made by him shall be admitted for any of the purposes of the Bankruptcy Act, 1914, unless the affidavit verifying the debt is accompanied by a statement showing in detail—
§ (b) the amount of the principal remaining due to the moneylender together with the interest thereon calculated in accordance with the 1026 provisions of the last preceding subsection of this section.
§ Amendments moved—
§ Page 8, line 8, leave out ("passing") and insert ("commencement")
§ Page 8, line 16, leave out ("passing") and insert ("commencement").—(Lord Desborough.)
§ On Question, Amendments agreed to.
§ LORD DESBOROUGH moved to omit from paragraph (b) of subsection (3) the words "principal remaining due to the moneylender together with the interest thereon," and insert "balance remaining unpaid all interest in respect of the loan being." The noble, Lord said: The object of the Amendment is that the interest on the sum lent should be brought into consideration and not only the interest on the capital.
Page 9, line 1, leave out from the second ("the") to ("calculated") in line 3 and insert ("balance remaining unpaid, all interest in respect of the loan being").—(Lord Desborough.)
§ On Question, Amendment agreed to.
§ Clause 11:
§ Restriction on loans to public officers.
§ 11. No proceedings in bankruptcy or under the Debtors Act, 1869, shall be commenced or prosecuted in respect of money lent by a moneylender against any public officer holding a public office or employment, if the pay, salary or emolument of such person is forbidden by law to be assigned or to be taken in execution of any debt due by such person.
§ LORD DESBOROUGH moved to add to the clause: "For the purposes of this section any person in his Majesty's naval, military or air forces shall, whether on full pay or half pay, be deemed to be a public officer holding a public office or employment." The noble Lord said: In pursuance of an undertaking which I gave to my noble friend, I beg to move this Amendment.
Page 9, line 16, at end insert the said words.—(Lord Desborough.)
§ On Question, Amendment agreed to.
§ Moved, That the Bill do now pass.—(Lord Carson.)
§ On Question, Bill passed, and sent to the Commons.