HL Deb 14 June 1928 vol 71 cc463-9

Order of the Day for the House to be put into Committee read.

Moved, That the House do now resolve itself into Committee.—(Viscount Peel.)

On Question, Motion agreed to.

House in Committee accordingly.

[The EARL OF DONOUGHMORE in the Chair.]

Clauses 1 and 2 agreed to.

Clause 3:

Securities for note issue to be held in issue department.

3.—(1) In addition to the gold coin and bullion for the time being in the issue department, the Bank shall from time to time appropriate to and hold in the issue department securities of an amount in value sufficient to cover the fiduciary note issue for the time being.

(2) The securities to be held as aforesaid may include silver coin to an amount not exceeding five and one-half million pounds.

(3) The Bank shall from time to time give to the Treasury such information as the Treasury may require with respect to the securities held in the issue department, but shall not be required to include any of the said securities in the account to be taken pursuant to Section five of the Bank of England Act, 1819.

VISCOUNT BERTIE OF THAME moved, at the end of subsection (2), to insert "and commercial bills not exceeding five and one-half million pounds." The noble Viscount said: I should like to point out that the whole of this clause is a bad innovation. It begins by saying— In addition to the gold coin and bullion for the time being in the issue department,"— the amount of which is not stated— the Bank shall from time to time appropriate to and hold in the issue department securities"— again, it does not say what sort of securities, whether foreign bonds or what not— of an amount in value sufficient to cover the fiduciary note issue for the time being. The old £5, £50 and £100 notes are backed by gold. As I understand it, these fiduciary notes will not be backed entirely by gold.

VISCOUNT PEEL

Not at all.

VISCOUNT BERTIE OF THAME

Not at all! That makes the case even worse. I notice that silver coin is referred to in subsection (2), and I suppose that is the debased coinage which was issued a few years ago. It is bad enough to have even silver. Then there is a very wide subsection regarding securities, and I understand that commercial bills are included under "securities." Surely, they ought to be equally limited in amount. I have placed my Amendment on the Paper in this form—although I know perfectly well that commercial bills are included under "securities"—in order that a limit might be put upon securities as well as upon silver. I beg to move.

Amendment moved— Page 3, line 17, at end insert ("and commercial bills not exceeding five and one-half million pounds").—(Viscount Bertie of Thame.)

VISCOUNT PEEL

I think the Amendment moved by my noble friend is an example of the difficulties one has in dealing with this Bill, when different schools of thought are constantly fighting against each other. I was contending during the Second Reading debate to make it plain to those who press very strongly that "securities" should include commercial bills, that I understood that it did include commercial bills. Now I have the noble Viscount on the other side who apparently dislikes these commercial bills. He wants to limit them to a very small amount. The noble Viscount said he belonged to one party and I wanted to point out that there was a very strong party on the other side. The general commercial opinion is, I understand, that certainly a proportion of the securities held against the fiduciary issue should be in commercial bills. It would be a pity to limit the particular bills to £5,500,000. It might quite well be that in many circumstances of the market it would be very desirable to have a good deal more than that held.

VISCOUNT BERTIE OF THAME

Is the noble Viscount prepared to limit them to some extent?

VISCOUNT PEEL

I will tell the noble Viscount why not. He is so very obliging always with his Amendments. I am not quite sure what limitation he wants. I would ask him not to put any limitation because immediately you classify the different securities to be held against the fiduciary issue you then begin to interfere very greatly with the discretion of the Bank of England as to the class of securities which it should hold against the fiduciary issue. I would, therefore, urge my noble friend not to press his Amendment about limitation to £5,500,000 and indeed not to put in any limitation on the amount of commercial bills, otherwise he is bound to put limitations on the other classes of securities which make up the general securities to be held in support of the fiduciary issue.

VISCOUNT BERTIE OF THAME

If the noble Viscount would put a limit on all these different classes of security I should be more than satisfied.

VISCOUNT PEEL

That would mean we should have to put in a series of limits and I hope the noble Viscount will not press me to do that.

LORD SWAYTHLING

My Lords, I think the noble Viscount who has just sat down mistook something I said on the Second Reading. I rather gathered that he thought I pressed him to include dollar bills. As the law stands, under the Bank Act dollar bills are now included and the Bank of England have power, I understand, at the present moment, to transfer any security held in the Banking Department to the Issue Department. That would include at the present moment commercial bills and also commercial bills in foreign currencies. What I drew the noble Viscount's attention to was this, that these commercial bills should only be held in those currencies which are on a definitely free gold basis. As to the suggestion that there should be a limit to these commercial bills, there is no limit at the present time and I do not see what advantage there would be in fixing a limit for the future. If we look back at the expansion of business since the Bank Act we will realise that if a limit had been put then on the number of commercial bills used it would have been considerably smaller than the limit which might be put now. If we put a limit now we might have to amend that limit very considerably in the future and that, I think, world be a very great mistake.

On Question, Amendment negatived.

VISCOUNT BERTIE OF THAME moved to omit from subsection (3) all words after "department." The noble Viscount said: Under Section 5 of the Bank of England Act, 1819, once a year a return of certain information has to be made to Parliament. The Bank of England is not a Government Department; it is a private concern. I think the public ought to know what sort of securities are being held to back the fiduciary issue. I therefore beg to move the Amendment.

Amendment moved— Page 3, line 21, leave out from ("but") to end of subsection.—(Viscount Bertie of Thame.)

VISCOUNT PEEL

My noble friend, in order to support his view that a return should be made once a year as to what securities are in the Issue Department, has to make reference to a very ancient Act of 1819. I would suggest that the Act of 1819 is to some extent obsolete. The intention of that Act was, I understand, to limit the borrowing powers of the Government and the Bank of England. We have departed far from the year 1819. One can think of a great number of cases where it would not be wise to make public these securities that are held in the Issue Department to cover the fiduciary note issue, but I think I will content myself with one observation, which will perhaps appeal to my noble friend, and that is that none of the Central Banks in any country, I believe, do publish separately the number,, nature and description of the securities which are held against fiduciary issues. I think it would be wise to allow the information to go to the Treasury and no further.

VISCOUNT BERTIE OF THAME

The noble Viscount says that the Central Banks abroad do not do this, but I ask him to compare their credit with ours. Ours is always much better than theirs because we are open in what we do.

VISCOUNT PEEL

But that particular kind of openness we do not practise.

On Question, Amendment negatived.

Clause 3 agreed to.

Clauses 4 to 10 agreed to.

Clause 11 [Power of Bank of England to require persons to make returns of and to sell gold]:

VISCOUNT PEEL

There is a point I want to mention here which was raised by my noble friend Lord Balfour of Burleigh on the Second Reading. Unfortunately he is not able to be here to-day. His point was whether a penalty was necessary in case some of these bullion dealers would not sell to the Bank of England? He suggested that a penalty clause was required. I am advised it is not necessary because, first of all, these are very substantial people not likely to resist any request of this kind, and if any very extreme case arose in which it was resisted such refusal would be a misdemeanour under the Common Law.

Clause 11 agreed to.

Clause 12:

Penalty for defacing bank notes.

12. If any person prints, or stamps, or by any like means impresses, on any bank note any words, letters or figures, he shall, in respect of each offence, be liable on summary conviction to a penalty not exceeding one pound.

VISCOUNT BERTIE OF THAME moved, after "person," to insert "writes." The noble Viscount said: The clause reads: If any person prints, or stamps, or by any like means impresses, on any bank note …. It may be much more untidy and dirty to write in ink than to have a banker's stamp on it. I want to make the clause a little more watertight than the present words do. That is why I propose that the word "writes" should be inserted.

Amendment moved— Page 6, line 32, after ("person") insert ("writes").—(Viscount Bertie of Thame.)

VISCOUNT PEEL

I would suggest to my noble friend that he makes it a little too watertight by the Amendment. This clause is intended to prevent stamping or printing or otherwise impressing anything upon these notes. As the noble Lord knows, it is sometimes the practice to require a person to write his name on the back of a note, and I do not think the banks would welcome a prohibition of this kind.

VISCOUNT BERTIE OF THAME

That being the case, then if he prints his name instead of writing it he incurs a £1 penalty and if he writes it he does not.

VISCOUNT PEEL

I do not think he does print it, he writes it.

On Question, Amendment negatived.

Clause 12 agreed to.

Clause 13:

Short title, interpretation and repeal.

(3) In this Act, unless the context otherwise requires,—

The expression "bullion" includes any coin which is not current and legal tender in the United Kingdom.

VISCOUNT BERTIE OF THAME moved, in the definition of bullion in subsection (3), after "any," to insert "gold." The noble Viscount said: The expression "bullion" includes any coin which is not current and legal tender in the United Kingdom. Under this clause we should have silver, nickel or even copper coin which is not legal tender. Therefore I think the word "gold" should be inserted before "coin." I beg to move.

Amendment moved— Page 7, line 13, after ("any") insert ("gold").—(Viscount Bertie of Thame.)

VISCOUNT PEEL

My noble friend in moving this Amendment did so, I thought, with a certain note of indignation in his voice. I am bound to say I have some sympathy with him because the same point occurred to me when I looked at the clause, but I consulted the legal advisers and they quite persuaded me that the insertion of the word "gold" is unnecessary. If my noble friend looks at it I think he will see that "the expression 'bullion' includes any gold coin" would seem to suggest that the word "bullion" can mean more than gold coin. If it includes gold obviously there is something else in it besides gold coin. That may tend to throw doubt on the user of the word "bullion" in other parts of the Bill.

VISCOUNT BERTIE OF THAME

If between now and the Report stage my noble friend will consider some Amendment to prevent silver coin and copper coin and nickel coin, which are not legal tender, being included, I should be very much obliged to him.

VISCOUNT PEEL

I am always ready to consider any suggestions of the noble Viscount, but I rather thought that the point I put to him was conclusive, that to insert the word "gold" would throw doubt on the meaning of the word "bullion." However, I will certainly think over what he says.

LORD BANBURY OF SOUTHAM

I think there is something in this Amendment. I do not ever feel satisfied when I am told that an Amendment is right but that it is not necessary. If it is right put it in, if it is wrong do not put it in, but do not say that in the opinion of legal advisers it is not necessary. That is generally a way of keeping out something which eventually turns out to be necessary.

VISCOUNT PEEL

I am always glad to hear any intervention of my noble friend, especially when, as in this case, he is a supporter of the Bill, but I think he has misunderstood me. I did not say the Amendment was not necessary. I said the Amendment, in fact, had an element of wrong in it because it might result in doubt about the meaning of the word "bullion" in another part of the Bill.

Amendment, by leave, withdrawn.

Clause 13 agreed to.

Schedule agreed to.

Bill reported without amendment.