Lords Sitting of 11 February 1926

Preamble
The House met at a, quarter past four of the clock, The LORD CHANCELLOR on the Woolsack.

WEIGHTS AND MEASURES (AMEND MENT) BILL. [H.L.]
THE LORD PRIVY SEAL (THE MARQUESS OF SALISBURY): My Lords, I beg leave to introduce a Bill entitled the Weights and Measures (Amendment) Bill, and to move that it be read a first time.
Moved, That the Bill be now read 1a. —(The Marquess of Salisbury.)
On Question, Bill read 1a, and to be printed.

EXECUTION OF DILIGENCE (SCOTLAND) BILL. [H.L.]
THE PAYMASTER-GENERAL(THE DUKE OF SUTHERLAND): My Lords, I beg leave to introduce a Bill to amend the law relating to the execution of diligence in Scotland, and to move that it be read a first time.
Moved, That the Bill be now read 1a. (The Duke of Sutherland.)
On Question, Bill read P, and to be printed.

MONEYLENDERS BILL. [H.L.]
Order of the Day for the Second Reading read.
LORD CARSON: My Lords, in moving the Second Reading of this Bill I should like to remind your Lordships very briefly of the history of the Bill which I introduced in the last Session and the different stages through which it, proceeded. Having done that, it seems to me that it will be unnecessary for me to occupy your Lordships' time at any length to-day seeing that the Bill was so very recently before you. The Third Reading of that Bill took place, if I remember aright, some time in December. It went to another place too late to be passed there in any circumstances: indeed, it was apparent when it left here that there was no probability of its becoming law.

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That Bill was accorded a Second Reading in your Lordships' House with considerable unanimity. The noble and learned Viscount opposite gave it his blessing, though he made a prophecy with which I entirely agreed, that it would not stop all the gaps it was necessary to stop. At the same time, he saw a useful provision in the Bill for trying to put an end to some of the great scandals which arise in relation to moneylending transactions in this country. The Bill was welcomed also by the noble Lord, Lord Desborough, who on that occasion represented the Home Office, and the Lord Chancellor said that he desired that the matter should be taken up and dealt with. Therefore, a Second Reading was given with considerable, if not with absolute, unanimity in this House.
Your Lordships may remember that after the Bill had been read a second time it was referred, on the Motion of the Government, to a Joint Select Committee of the House of Lords and the House of Commons. That Committee, a very able Committee presided over by my noble friend Lord Darling, a Judge who for many years had dealt with the law as it stood in relation to moneylenders, sat for a considerable time and heard a great deal of evidence, which has been published. I do not know whether any of your Lordships have read any of that evidence, but it is not at all uninteresting. Having taken the evidence both of those who are engaged in the business of moneylending and those who were affected by the moneylending law as it stands, and also very important evidence by a lady who is connected with social welfare in Liverpool and also from bankruptcy officials in this country—I shall have to say a word about that evidence before I conclude—they made a number of Amendments in the Bill and sent it back to us. Your Lordships adopted the Amendments that were made and in addition to that, the Bill having been examined by the Home Office, certain Amendments were proposed on behalf of the Government and those Amendments were also adopted by this House. Then the Third Reading was passed and the Bill was sent to another place.
Therefore, as your Lordships will see, the Bill has had considerable examination of a, most important character and I think it may now be taken to be the
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maturely considered Bill of all Parties, because all Parties were represented on the Select Committee drawn from this House and the House of Commons. In those circumstances it is not necessary for me to go at any great length into the terms of the Bill, though I must, of course, say a few words in explanation. I ought to state that the Bill as I have now introduced it is in exactly the same form as that in which it left this House in December. It does not altogether represent my own views in certain respects and there are Amendments that I personally would like to see inserted. would not he nearly so generous to the moneylender as the Committee have been, but I am a sufficiently old Parliamentarian to know that one cannot do exactly as one would like and I bow to the superior wisdom and greater knowledge of the Select Committee which heard the evidence. The Committee changed the figure that I would have allowed as the one that throws the onus upon the moneylender of showing that the transaction is fair and not unconscionable from 15 per cent. per year to 4 per cent. per month. That limit in the Bill seems to me to be a very generous one.
On the whole, I feel certain that if the Bill is passed in its present form, or with such Amendments as may be made, that it will effect a real improvement in the law. I can only hope that public opinion will from time to time enable such gaps as are found in it—and such gaps will undoubtedly be found in it—to be filled by those who come after us and who have to deal with the grievances as they arise. We are now in this position: We have the Report of the Committee of 1898 upon which the Bill of 1900 was framed; that Bill is at present the law of the country which regulates the transactions of moneylenders. The Report of the Committee of 1898 is, I think, one of the most able and informing documents of the kind that I have ever read. As I pointed out before, there is nothing of a serious nature in the Bill which has not already been recommended by the Committee in 1898. That Committee started with one finding to which I shall refer. It is a finding that I think ought never to be let out of sight, because the amount of evidence that the Committee heard and the

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eminence and knowledge of the great Judges and others who were examined before them were really more than are generally met with in inquiries of this kind by Select Committees.
The Committee start with this statement:—
"The system of moneylending by professional moneylenders at high rates of interest is productive of crime, bankruptcy, unfair advantage over other creditors of the borrower, extortion from the borrower's family and friends, and other serious injuries to the community."
That was the conclusion the Committee came to, and the basis that guided them in framing their Bill. The Receiver in Bankruptcy, who was examined before the joint Select Committee of the two Houses last year, said practically the same thing. He said that he had never known of a case (and he had had a very wide experience) in which any trader had ever in the long run been benefited by going to moneylenders and borrowing at high rates. He also stated that in his experience the petitions in bankruptcy that came to his notice were in the bulk petitions by moneylenders, and that they were generally used for the ulterior purpose of trying to bring pressure upon relatives and friends to come to the rescue of those who probably would be ruined if a bankruptcy order were made against them.
How that goes on still from day to day I was reminded the other day when I got a letter from a gentleman who had had an honourable career of some 35 years in a position from which he retired on pension. He had a son who was starting in life, and who had had a distinguished scholastic career, and had just obtained that start in life which it is so difficult to procure when, unfortunately, the son was induced to borrow money from moneylenders. A bankruptcy petition was presented which would have ruined him at the very outset of his career, and his father was obliged to go to moneylenders to borrow money in order to pay off the petition presented against his son, and he himself had to take his son's place and allow the moneylenders to present a bankruptcy petition against him. That kind of case is not at all infrequent, and they lead one to wonder whether, upon the whole, the evils of allowing moneylending at all are not so great that much more drastic steps ought not to be taken,
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though for those steps at the present moment I do not think the public are quite ripe.
I have read a great deal of very intresting literature sent to me from America, where they are presenting what they call a "Sharks Bill." I refer to the Russell Sage organisation. Their reports of the misery, poverty and crime that have arisen from the action of moneylenders are of a most extraordinary character. I am bound to say that they are in favour of it and what they call the "Sharks Bill" has been passed by almost every State in America, which allows something like 30 per cent. as a limit. In America—and this must be said to their credit—they are setting up by degrees various semi-philanthropic institutions throughout the States which are attempting in some way to relieve the extreme distress of people who find themselves involved, through no fault of their own, in a condition in which they are compelled to borrow money and can not get it at reasonable rates. One may hope that the example of Liverpool, which was proved in the evidence I have already referred to, of starting an organisation of that kind, may sooner or later be encouraged and helped by the Government of the country. I am not going to read to your Lordships the number of cases I referred to last time—they are all on record—but it is worth while calling your Lordships' attention to the extent of the evil with which we are dealing and in order to do so I will read one or two passages from the evidence of Miss Keeling, of Liverpool, given before the Joint Select Committee.
She was asked whether she was speaking for some association and she said:
"I am speaking as Chairman of the Moneylending Committee which was appointed by the Liverpool Women Citizens' Association and also as Secretary of the Liverpool Personal Service Society which supplies the evidence, or most of it, to that Committee to work upon. Speaking as a social worker of long experience, I have never come across such agony of mind as that caused by the habit of borrowing at high rates of interest with no hope of being able to repay. This experience has been very considerably increased by the recent inquiry made in Liverpool by the Women Citizens' Association and the Personal Service Society, and also by means of the recently formed Experimental Loan Fund administered by the Liverpool Personal Service Society. Cases going before this

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Fund are mostly of people who are already entangled in the meshes of unscrupulous moneylenders, and many of them are heartrending in the extreme. One woman we knew borrowed and re-borrowed for five years from moneylender after moneylender, borrowing from one to repay another and, finally, last July, committed suicide, leaving four young children. Her husband came and begged us to make her story public in order to restrain others by her example. In Liverpool and Birkenhead we have 1,380 registered moneylenders, over 1,100, or 80 per cent. of them, being women. …
The usual rate of interest charged by these 1,100 women moneylenders in Liverpool appears to be 1d. in the 1s. per week, or 433⅓ per cent. per annum, although cases of 1½d. 2d, and even 3d. in the is. per week have been known. We feel the great importance of having a fixed maximum interest allowed instead of as at present, leaving the Court to decide in each individual case what is harsh and unconscionable."
Then Miss Keeling goes on to deal with a form of the evil of which very little is heard. She says:—
"Our experience is that the moneylenders who charge the highest rates of interest are bullies of the worst type and that their poor debtors are far too terrified of them to take the cases into Court. Many borrowers have refused even to give us permission to see the moneylenders or in some cases to tell us their names through fear of being bullied afterwards. One woman moneylender who was interviewed and persuaded to halve the amount she claimed to be owed, went straight to her client, who had been confined only two days previously, to tell her what she thought of her."
There is much more evidence of a similar character, but it is not necessary for me to repeat it because your Lordships will, I know, trust the judgment come to by the Joint Select Committee presided over by my noble and learned friend.
Let me now mention shortly how the Bill stands and what it tries to do. Under the Bill passed in 1900 it was left open to the Court to inquire into any moneylending transaction, and if the transaction was unconscionable and the interest deemed to be too high the Court had power to investigate the transaction and fix a lesser rate of interest. At the time everybody foretold that such a provision as that would really not solve the question at all. In the first place, there was no indication in the Act as to what would be held, or could be held, to lie unconscionable. There was no suggestion as to what rate of interest would be fair. It was left to each Court to determine as
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it pleased according to its own view of these transactions and you find the most extraordinary difference amongst various Judges before whom these cases have gone as to the amount of interest that was allowed.
One of the provisions of the present Bill is to fix the standard at 4 per cent. per month. That is the standard fixed by the Joint Select Committee and if the interest is over that it is to be assumed to be unconscionable and too high unless the Court in all the circumstances thinks there is reason for it. In addition to that, if any person wants to borrow and is prepared to pay a higher rate of interest, the borrower and the lender can go before the registrar of a county court who may enquire into the facts and afterwards say whether the limit of the 4 per cent. per month can be exceeded or not. I think that when you read of cases in which 400 per cent., 500 per cent. and even 600 per cent. has been charged—there was a, case only in to-day's newspaper where I think the interest was 400 per cent—it is quite right that you should have a standard setting up the limit of 4 per cent. per month, because it gives some basis to a Judge upon which he can start. That is one of the provisions of this Bill.
Another provision is that there shall not be compound interest. One of the most ordinary methods of the moneylender is the use he makes of compound interest. He has generally in his agreement a stipulation that if an instalment is not paid the whole sum becomes due. Then the unfortunate man has to give him another note, the moneylender adds on to the note the whole of the interest due, gets an additional sum for giving him the note and then charges his 100 per cent., or 150 per cent., or whatever it may be, upon the whole sum; and so it rolls up like a snowball from week to week until it becomes an utter impossibility for any person in such conditions as surround these borrowers to deal with the matter. Further, as I am reminded by a noble Lord beside me, if one instalment is not paid the same thing happens all over again, and so it goes on. I have come across cases in my own family. I had to pay a sum where the borrower had paid the whole of the advance at 50 per cent. with compound interest, and still owed, on a borrowing of £500 or

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£600, nearly £600 still, which was all rolled up in that kind of way in two or three years until the debtor was wise enough to come to consult me and I was either foolish or generous enough to pay. That is the sort of case that we have tried to meet, and I think that your Lordships will agree that this is a most valuable provision.
Another provision that I look upon as of the greatest importance is that which has been inserted to give the Legislature power by Order in Council, which has to be laid on the Table of both Houses of Parliament, to direct the Courts in which moneylenders can sue. At the present moment there is an absolute denial of justice to the borrower. What happens is this. When the money becomes due the moneylender takes out a writ in the High Court. He is taking out a writ against a man who could not get a shilling in the world except by paying 200 per cent., or whatever the amount may be. He takes out a writ and then, under the summary procedure of the Courts, he moves for judgment. In nine eases out of ten, whatever may be the rights of the borrower to raise the question of the loan being unconscionable and at too high a rate of interest, he cannot contest it. He would have to employ a solicitor and counsel and would have the have the whole thing fought out on this summary motion. If he then gets leave to defend he would have to go on with litigation in the High Court, which in any case would cost him £200 or £300, no matte' how cheaply he tried to do it. I say that this is an absolute denial of justice which leaves the law nugatory even under the Act of 1900.
I had a letter the other day from a man in Paris of whom I knew something and who told me that he had been served with one of these summary notices. He was in a state of absolute poverty and asked what he could do. He could not, of course, afford to employ counsel and fight the case in the High Court, although he had paid off an amount which he believed to be far more than that to which the lender was entitled if a, proper account were taken on a fair basis. I regard this provision that the moneylender should be compelled to take his ease into the county courts or even, where such small amounts are concerned
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as could be limited by the Order in Council, before the magistrates, as of the greatest importance, and I believe that by treating the matter in the county courts you will arrive at a far steadier and better way of dealing with cases than you can possibly reach through this summary procedure in the High Courts, where people cannot afford to be present and where there is really no argument heard on the one side, so that the Judge is bound to give judgment for the applicant. I think that the sooner this provision becomes law the better, as otherwise nothing that has been enacted is of the least use to the man who has got into the toils of the moneylenders, no matter how good his case may be.
Another provision in the Bill, perhaps the most important of its provisions, is designed to limit proceedings to be taken in the Court of Bankruptcy. As I have told your Lordships, the service of a bankruptcy summons is the most terrible weapon that the moneylender has. If a man becomes bankrupt, no matter how honourable he may have been, be may be absolutely ruined. Even at the start of his life, if he has got into the hands of a moneylender, he may find the stigma of bankruptcy upon him. The evidence on this point was of the greatest possible importance. Let me refer to the evidence of Mr. Williams, who is an Official Receiver in Bankruptcy. He said this:—
"In my opinion, the moneylender does not present his petition with a view to bringing about a rateable distribution of the assets amongst all the 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. It is only an opinion, but that is the opinion I have formed."
Then he was asked about a provision in the Bill concerning this point that I introduced before your Lordships, and he expressed the opinion that it was a fair provision and would not be unduly harsh to the moneylender.
He added:
"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 a 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 conies in with, in my view, increased liabilities, and his

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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. … I think it follows that a debtor makes great efforts at the expense of his trade creditor, whose goods he very often uses, or goods supplied by them he often uses, that is, the proceeds, to pay off the moneylenders. We have a large number of cases where the debtor gives, as one of the causes of his insolvency, that he has been borrowing money at rates which he could not afford to pay."
At a later stage, as I have told your Lordships before, he used these words:
"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 served to postpone the actual date of the failure. I cannot recollect a single case where it could have served any useful purpose."
Accordingly, the Committee inserted Clause 10 of this Bill, concerning bankruptcy proceedings. One of the provisions is that no moneylender can bring an action until he has got an order from the county court for payment by instalments, so as to give the man a chance. of paying off the debt. The other proceeding is that when the moneylender does make the man bankrupt he can only get 5 per cent. upon the loan in bankruptcy, until the other creditors have been satisfied up to the same extent, and if there is anything over after that it can be distributed by the court in accordance with the contracts entered into. That is looked upon by those who have to administer the bankruptcy laws in the interests of the general trading community of the country as an immense improvement.
The next matter to which I would call attention—I am not going through the whole Bill—is this. Nothing, I think, is so lamentable as the way in which young officers, either of the Civil Service or of the Army or Navy, get into the hands of moneylenders. There is hardly a port in the kingdom in which there are not to be found touts and agents of these moneylenders. There is hardly a case in which a ship comes into port with young officers, who have been abroad, in which they are not approached by these people with a view to their wanting money for the purpose of having a good time. Indeed, in many cases it is mixed up, I regret to say, with the business of betting. What happens is that a bookmaker gets a young officer into his hands and gets him to bet large sums, and when the young officer
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says he has not the money the bookmaker replies: "I know a good fellow to whom I could introduce you; he will let you have the money, and it will be quite secret and private." There are two observations to be made with regard to that kind of case. The first is that in reality the moneylender knows perfectly well that where a man is in Government employment, with an assured salary of some kind, there will be extraordinary efforts made by all those with whom he is connected to try to keep him from the loss of his post. Therefore he is not really dealing, as no doubt in many cases he is dealing, with a person of no prospects at all.
The second point, and this is really a point of great importance, which I ventured to urge upon the House last year, is that the pay of the Civil Service and the pay of these officers is given with a view of enabling them to discharge efficiently their public duties, and can you imagine, my Lords, a young man entangled as these young officers so often are, worried to death and not knowing what is going to happen owing to these entanglements in which they find themselves, trying to perform efficiently for the public service the duties which are cast upon them? It is because of that, and because of the necessity of their being left these moneys which they are paid for public services, that so many Acts have provided that the pay of such people cannot be taken in execution under any judgment, whether by a trader or anybody else. They are supposed to have this money for the purpose of supporting them and keeping them in a proper position while they are discharging their duties to the State. But the moneylender at once has resort to bankruptcy proceedings. We have therefore proposed in the Bill, and the Committee have proposed in the Bill, that in no case where the law is that the salary of a public official, whether in the Civil Service or in the Army or the Navy, cannot be attached for a debt, can there be a bankruptcy proceeding to attach that salary for that debt. I think that is a protection which is worth giving, as well in the interests of the individual as in those of the public service.
I spoke of the touts of the moneylenders. The touting of moneylenders is really one of the most extraordinary organisations which it is possible to conceive,

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and we have tried in the Bill to stop the enormous number of circulars which are from day to day delivered to almost everybody, with a view of inducing people to come into the parlour of the spider. I gave particulars to the House on the Third Reading last year of a case which was sent by the Public Prosecutor, where a man in a very short time was shown to have sent round 160,000 of these circulars, all with full postage, for the benefit of the Post Office, and all on very enticing paper, so that the recipient would be likely to open them. I have examined hundreds of these circulars, all artistically got up and printed on beautiful paper, looking extremely interesting, and I venture to say I have scarcely ever examined one of these circulars in which there was not falsehood throughout the whole of it—I do not say absolute statements that were false, but a suppression of the truth, and indications of rates of interest which were not the true rates of interest at all.
Then there are the names which are used. I have here a letter from the Albemarle Trust Co., Ltd. This is a letter which was sent to a lady who was ill in a home. Sonic relative of this lady had died and left her some money. To show your Lordships the activity of these people, they must have gone searching through the wills at Somerset House, because here is the letter:
"Under the will of the above, you are entitled to a very large sum. We wonder if you would care to let us make you an advance … which we can do quite easily at a fraction above hank rate."
It is always "a little over," or "a fraction above," the bank rate.
"You can rely on all dealings with us; strict secrecy is observed. We shall be glad to hear from you at your earliest. We might mention you can have an advance within 24 hours."
The solicitor for this lady sent on this letter. She was not in want of any money and had never known anything about moneylenders. She was being sick-nursed in a home and she got from a thing calling itself a "trust" this letter to try to get her into the hands of these men.
I have another letter here of a different character, showing the way in which they try to get touts. It is dated July last year, and runs:
"We have in our possession a considerable number of silver wrist watches, sold
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during the war for £3 10 s. These were made dust-proof and water-tight. The 15-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 lye lend £5 or upwards."
This letter was sent on to me with this note:
"Cannot anything be done to stop this iniquitous procedure?"
We have put drastic provisions into the Bill, with penal consequences, to try to put a stop to this touting and this great abuse of advertisement, which in every case is really an attempt, on the face of it, to perpetrate a fraud.
I do not think it is necessary to go further into this. Bill. I hope your Lordships will receive it as you received the Bill last year.. At all events, recollect that it has been thoroughly sifted by the Joint Select Committee. As we are now at an early stage of the Session I would make an appeal to His Majesty's Government to try to help us to get this Bill turned into an Act of Parliament. I notice that in the ballot in the other House an hon. Member who was also a member of the Joint Select Committee which heard the evidence, has got an early clay on which he will bring in a Bill —I imagine it will be the same Bill as this. In the circumstances, therefore, would press upon His Majesty's Government to give us any possible facilities to get this Bill passed. I believe it will be some improvement. I am not too optimistic about it but it will be, at all events, some improvement, and should do something, at any rate, to relieve those who are in distress, and whose distress is taken advantage of to get them entangled with moneylenders by the methods that I have ventured to describe. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Carson.)
LORD DESBOROUGH: My Lords, as concerns the Government, to appeal has been made by my learned friend, all that I have behalf of the Home Office is the main provisions of the Bill, substantially the same as re Bill of last year, they are in agreement, but there may be a

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few Amendments which I shall feel it my duty on their behalf to move at a later stage.
VISCOUNT HALDANE: My Lords, on the previous occasion when this Bill came before the House I expressed my sympathy and that of those with whom I am associated with the purposes of this Bill. I think it is fortunate that the measure should have been in the hands of the noble and learned Lord, who is not a person carried away by sentimental notions, and who has a great experience of this class of transactions. He has been fortunate in having associated with him in the revision of the Bill the noble and learned Lord who sits by him (Lord Darling), who also has had great experience of these cases in the Courts. The Bill is probably as good a Bill as any Bill of its kind could be made. I only wish to utter a word of warning to your Lordships about one thing. This is a measure of social reform—a very important measure of social reform, if it fully attains its purpose—and the House is indebted to the noble and learned Lord for having entered upon a new step towards redressing a great evil. But I am afraid that this Bill will not cover the whole of the field that it is necessary to cover if the evil is to be redressed.
With moneylenders you have two things to remember. You are dealing with an extremely astute class, and you are dealing with a sort of business in which large fortunes are to be made by people of sufficient individual ability. It is all a question of the individual ability of the moneylender and his judgment. A business of that kind is not easily put down by Act of Parliament, and the difficulty is increased by the fact that the desire to borrow money is sometimes a very powerful desire which will lead people to take almost any sort of risk. It is like the taste for drink—difficult to repress and impossible to extirpate when circumstances cause it to arise. These very experienced people—experienced in moneylending, experienced in providing for a. human passion—will find, if it be possible, a way round this Bill, should it become an Act.
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When the Usury Acts N\ ere in force the rate of interest was very definitely restricted, and the moneylender could not recover on his loans above a certain rate of interest. What was the result If you look into the law books and the law reports and the history of the times you will find that there was an enormous business in purchasing annuities. Instead of sending round moneylending circulars it was intimated that if you wanted a sum of ready money you could have it, provided that you would sell au annuity, provided you would undertake to pay—not interest, not anything in re-payment of borrowed capital, but an annuity pure and simple. It might be a. terminable annuity, or it might be a perpetual annuity. The point was that it was not a loan, and so did not come within the Usury Acts. An enormous amount of business was done on that footing, and the Courts could not get at it, because the law did not reach it: it was not a transaction of lending. No more will such transactions be transactions of lending within this Bill as I read it. The noble and learned Lord has done his best to cover the ground, but I suppose it was not possible to bring Within the scope of this Bill the sales of annuities. They are very awkward things to deal with. People do sell annuities. They sell them as part of family settlements sometimes, and it would not be at all convenient to pass legislation which would interfere with the very legitimate transactions of that kind.
What I have risen to say is, that the House must be prepared, if this Bill becomes law, for at least the possibility of being a good deal disappointed. These astute people will put their transactions into a new and novel form, and they have the means of making themselves known to those who require their services. Where the Bill, if it becomes law, will do real good is in dealing with that class of moneylender who lends to the poor. The poor will not sell annuities, at any rate in ordinary cases, and transactions of loan will be within the strict purview of the Bill. There we may hope for something better, particularly as the provisions of the criminal law can be put into force against those who lead people into misery in this fashion.

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There is only one other thing I wish to say. There is, I believe, a small fraction of the moneylending community which consists of fairly decent persons who do not try to ruin people or to extort more than the high rate of interest which is necessary to make their business a lucrative one. They are all lumped together with the had class, and I am afraid that on the whole the Bill will be more successful in extinguishing the good moneylenders—the term is relative and it is only as a relative term that I use it—than in extinguishing the bad ones who will get round the corner by such means as I have suggested. That cannot be helped. You cannot make omelettes without breaking eggs, even when you are dealing with the money lending business. Consequently, on the balance of considerations, I find myself decidedly a supporter of the noble and learned Lord.
LORD HUNSDON OF HUNSDON: My Lords, as the noble and learned Lord claims that one of the great advantages of this Bill is that in no case shall compound interest be charged or allowed and as I think that is the only defect in the Bill, perhaps I might be allowed to say a word about it, although it may be more a question for the Committee stage. I do so in the hope that the noble and learned Lord will consider whether some amendment of the Bill might not be possible. The noble and learned Lord told us in regard to compound interest that one of the great evils of the arrangements which moneylenders make was that if the interest was overdue the whole of the principal also became due. That certainly should be prohibited. But that has nothing whatever to do with compound interest, which merely means that interest should be paid on a debt which is overdue.
When a man owes another man money, whether for interest or for
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any other purpose, he does pay, and ought to pay, interest upon it. Therefore I hope that the clause in question will be amended. Let a low rate of interest be paid, if you please, but some rate of interest ought certainly to be paid. On the hypothesis that the interest is overdue, the security for the payment of that interest is worse in all probability than the security for the original loan. Therefore, to my mind, it would be perfectly just that whatever the interest was on the original loan it should be paid on that overdue interest: but certainly some interest should be paid.
The clause as it stands, will have two effects. The first is that even if the borrower has the money with which to pay he will not nay on the due date because he will be earning interest instead of the lender. The second effect will be that in making a loan the moneylender will take into account the disadvantages he will I suffer as a result of this clause and will raise the rate of interest on the original loan. I am not raising these objections in the least degree for the sake of the borrower or the lender, in neither of whom am I particularly interested; but I hope your Lordships will not agree to a clause which seems to me, at all events, to be contrary to commercial practice and to reason.
LORD BANBURY OF SOUTHAM: My Lords, if I understand the noble and learned Viscount opposite, he is of opinion that Bills dealing with social reform are not of touch value. With that I agree, and if his Party ever come into power again I hope they will remember that saying of the noble Viscount.
On Question, Bill read 2a, and committed to a Committee of the Whole House.
House adjourned at a quarter-past five o'clock.