HL Deb 13 March 1929 vol 73 cc507-18

LORD DANESFORT had given Notice to ask His Majesty's Government whether they will inform the House of the terms of the agreement which has been made between His Majesty's Government and the Irish Free State Government under which His Majesty's Government have agreed to purchase the British coinage now or recently in circulation in the Free State at its face value; what is the total approximate face value and bullion value respectively of such coinage; when did the Free State Government first suggest to His Majesty's Government that they should purchase this coinage at its face value, and did the Free State Government claim such purchase as a right or as an ex gratia concession, and what answer did the British Government make to this suggestion when first made; what were the reasons which induced His Majesty's Government to make this concession to the Free State Government; and to move for Papers.

The noble Lord said: My Lords, I rise to move the Motion which stands in my name and also to ask the Question which is in my name on the Paper. This is a matter which appears to me to be of grave importance. It involves a gift of a sum of £500,000 to the Irish Free State out of the pockets of the British taxpayer. Since I put down this Motion some little time ago some information has been given on this subject in another place by the Chancellor of the Exchequer. The information or explanation which he gave for this act of lavish generosity appeared to me to be extremely meagre and inadequate, and I trust that His Majesty's Government may to-day be able to give some more satisfactory justification for this action.

The story is really a very strange one. Some two years ago the Irish Free State Government determined to substitute their own token silver coinage for the token silver coinage of British origin which was in circulation in the Free State. What were the reasons for that determination have never been explained. What is certain is that the issue of this new coinage will be a great inconvenience, as I think, to Northern Ireland and to all persons who visit the Free State. Having made its decision to issue this new coinage the Free State made a demand which I cannot but characterise as an amazing demand upon the British taxpayer and Treasury. They said, in effect: "There are something like £1,500,000 or £3,000,000 worth of silver coinage, taking its face value, in circulation in Southern Ireland, and we ask the British Government to buy up this £1,500,000 or £3,000,000, not at its bullion value but at its face value." If the British Government complied it would mean a cost to the British tax-payer of between £1,000,000 and £2,000,000 of money. The Chancellor of the Exchequer most properly refused the demand, and it might have been hoped that that would have put an end to the matter. Nothing of the kind. The Free State were not in the least discouraged. They had had experience on former occasions of what persistent importunity would do in the matter of money, and I suppose they had been studying with care and admiration the parable of the importunate widow. They therefore went on with their scheme for the new coinage.

That coinage has recently been issued. I do not know if your Lordships have yourselves seen any of that new coinage. It is of an extremely remarkable character. Impressed on those coins are designs of animals of many varieties supposed in some cases to be indigenous to Ireland, but it is curious to notice that in the copper coins which have been issued simultaneously there are designs of somewhat ignoble animals such as pigs and barn door fowls. On that coinage there is one design which is conspicuously absent from every silver and copper coin issued by the Free State, and that is the design which of all others you would expect to be there—namely, the head of His Majesty the King. That design has been completely eliminated from the new coinage as it had previously been eliminated from the design of the postage stamps already issued by the Free State. Perhaps the Government can inform the House why this course of eliminating the King's head from the new coinage was adopted. Is there any precedent of any of His Majesty's Dominions issuing coinage with the head of the King eliminated from the design?

The next step on the part of the Free State was to renew their demand on the British Government to buy up the British coinage in circulation in the Irish Free State at its face value. This demand was supported by the most flimsy and unsustainable arguments. They suggested in the first place that it was obligatory on the part of the British Government to buy up this coinage at its face value because profits had been made out of the original minting. The British Government shattered that argument by pointing out that this British coinage was issued before the Exchequers were divided and that both the Irish and British taxpayers have therefore participated in the profits of this minting. Therefore, the Irish taxpayer in Southern Ireland had already eaten part of his cake and now wanted to eat some which was not his at all. The next suggestion made by the Free State was that, since the establishment of the Free State, British Treasury notes had been in circulation in Southern Ireland and the British Government had made a profit out of the circulation of those notes. The obvious answer was that these British Treasury notes have been used in Southern Ireland for the advantage and convenience of Southern Ireland and in no way for the advantage and profit of the British Government.

In point of fact, the Free State Government had got great advantage out of this issue because when it was established they were not in a position to issue notes of their own. In the absence of credit, they could not issue notes that would pass as currency. Those two suggestions were, therefore, wholly without foundation.

So the matter went on—persistent importunity on the part of the Free State and a gradual weakening, ending in a surrender, on the part of the British Treasury. The last stage of this controversy appears to have been reached in January last, because I find in the Irish newspapers that on the 19th of January, Mr. Blythe, the Finance Minister of the Irish Free State, came over to London accompanied by the Attorney-General and his Treasury officials and had an interview with the British Treasury. What passed at that interview we have not been informed. What pressure was used we do not know. What arguments were employed have not been disclosed. The result was that the British Government capitulated and an arrangement was made, as announced by the Chancellor of the Exchequer on February 27 in another place, by which the British Government have agreed to buy up the British token coins circulating in the Free State to the extent of £750,000 nominal value and to buy them up at their face value. This purchase is to be spread over a number of years and the cost of this transaction to the British Exchequer is to be £500,000. Incidentally, I would like to know whether these new silver coins issued in the Free State will be legal tender in Northern Ireland or anywhere else out of the Free State.

In the course of the discussions on this controversy, I understand it was suggested there was some precedent for this action on the part of His Majesty's Government to be found in the fact that the British Government to some extent assisted the Governments of Australia and South Africa when they established new coinage of their own. There are two comments which answer that suggestion. The first is that the cases of South Africa and Australia are wholly different from the conditions prevailing in the Free State. In Canada, Australia and South Africa, where they have their own coinage, they have local branches of the Royal Mint established under the Coinage Act of 1870, and the coinage of these Dominions is minted there. These local branches are to a very considerable extent under the control of the Deputy Master of the Royal Mint in this country, and they send reports to him annually of the transactions in which they are engaged. Nothing of the sort exists in the Free State. They have no local branch of the Royal Mint. They have no means of minting coins for themselves. In this case, they have had to contract with the Royal Mint to manufacture this new silver coinage. More than that, the Royal Mint have no control whatever over this coinage, and neither the Royal Mint nor this country has any control over the designs, the denominations, or the issue of this coinage—although I may add incidentally that in the British Coinage Act, 1870, there are express provisions by which Proclamations and Orders in Council can be issued by this country controlling the designs and denominations of coinage to be issued in the Dominions.

Nothing of that sort was done in this case. They have selected their own designs, not consulting us about them; and their new coinage—it is a remarkable thing, which is new to me; it only appeared in an answer to a non-oral Question which I got this morning—their new coinage has been issued, not under a British Statute, although one of the Prerogatives of the Crown is the control of the coinage, but under a Free State Act of 1926, and the British Coinage Act, 1870, has nothing whatever to do with it. Whether that Free State Coinage Act of 1926 was in accordance with constitutional usage or not I do not propose to enquire now, but it is rather an interesting question, and I should like to know something about it hereafter. But at any rate conditions in the Free State are wholly different from conditions which exist in Australia and South Africa.

The second comment which I wish to make is that we know very little about the conditions in which the Government assisted either Australia or South Africa when they established their new coinage. As regards Australia, it was done some time ago, and I have been unable to discover any records whatever of the circumstances in which we are said to have helped Australia with her coinage. As for South Africa, the reports of what was done with regard to their coinage are exceedingly meagre, and I have been unable to discover any record of the transactions at all, except in certain annual Reports which are made by the Deputy-Master of the Royal Mint here, and which contain Reports made by the Deputy-Master of the branch of the Royal Mint in South Africa. There is also a short reference, and not a very clear one, in a Report, with which I have been furnished, of the Controller and Auditor-General of South Africa for 1923, but it does not carry the matter any further. I make bold to say that, without a detailed examination of precisely what happened in Australia and South Africa on the establishment of the new coinage, for which no adequate material that I know of exists, it is impossible to establish a precedent to justify the action of the British Government in regard to the issue of this new coinage in the Free State.

So much for the question of the issue of this coinage. But before I conclude I wish to refer to a question of a wider character and of a very serious nature. These financial concessions in regard to this new coinage are not by any means the first that have been made by this country to the Free State. The British Government for a very considerable time since the first establishment of the Free State has been pouring British money into the pockets of the Free State; and the question that arises is how long this process is to go on. Are we for ever going to be making this distribution of the money of British taxpayers for the benefit of the Free State? I do not propose—and it would be unsuitable at the moment—to go into the details of the many financial concessions that have from time to time been made by the British Government to the Free State since its establishment. But may I shortly refer to three notorious cases which have occurred during the last few weeks?

The first of these cases was the very well known Wigg and Cochrane case. May I remind you of what happened in that case? There were certain ex-British civil servants who had been transferred to the Irish Free State, and who had been retired or discharged from that Service, and they claimed certain compensation and pensions under the Treaty. The Free State refused the demand, liti- gation ensued, and finally it went to the Privy Council, and by two decisions the Privy Council decided that these ex-British civil servants were entitled to somewhat more compensation than the Free State were willing to give them. At first the Free State announced that they would pay no attention whatever to the decisions of the Privy Council. Negotiations ensued between this Government and the Free State Government, and the result was that the Free State Government said: "Yes, we will pay this additional compensation, which the Privy Council have said they are entitled to, but on one condition"—a very characteristic condition—"on condition that the British Government supply the money for doing this."

Let it not be supposed for one moment that I suggest that it was wrong for the British Government to supply this money; I think it was absolutely right for them to supply this money to pay their ex-servants the money which the Privy Council said they ought to get. But what I ask your Lordships to consider is this. Here was money which the Free State, by all the rules of the Constitution, ought to have paid. They ought to have paid in accordance with the Treaty and in accordance with their own legislation, and yet, in violation of the Treaty and of their own Constitution, they refused to pay this money, and compelled the British taxpayer to pay. I think that was a very unfortunate situation, by which the British Government were compelled, in order to do justice, to meet a liability which properly fell upon the Free State.

The next case was one which is also familiar to your Lordships—namely, the case of the Irish loyalists who had been injured since the Treaty of July, 1921. I think it is sometimes forgotten that the Free State in 1922 solemnly undertook to pay the compensation properly due to those Irish loyalists for those injuries; but unfortunately the Free State entirely failed to carry out this undertaking. What did they do? They passed an Act in 1923, by which they totally altered the basis on which the compensation was estimated, and made the compensation which was payable to these injured loyalists almost illusory. Thereupon the British Government, having guaranteed the payment of fair compensation for these Irish loyalists, very properly took up the obligation which the Free State refused to honour, and paid the compensation which was fairly and justly due to these men. That action of the Free State cost the British taxpayer something considerably over £1,000,000. Again, I say, I do not for one moment complain of the action of the British Government in paying this compensation, on the contrary, I think they did the right and fair thing; but I think it is rather unfortunate that owing to this default of the Free State to fulfil their obligations, the British taxpayer was compelled to pay considerably over £1,000,000.

The third case in which we have paid money, or are about to pay money which I think ought not to be paid at all to the Free State, is the present case of paying £500,000 in order to withdraw this coinage at its face value. I have already said what I propose to say about that. I venture to ask your Lordships to say that the payment of this £500,000 was unnecessary and cannot be justified on any ground. I ask my Question and I move for Papers, and the Papers which I should like to have, if possible, from the Government are the correspondence which passed between the British Government on the one hand and the Free State Government on the other as to the withdrawal of silver coinage of British origin from the Free State and the British Government paying for it at its face value instead of at its true value. I beg to move.

LORD OLIVIER had given Notice to ask His Majesty's Government whether the British coinage now or recently in circulation in the Irish Free State was issued (whether through the banks or through other channels) in exchange for cash or credit in sterling at its face value or at its bullion value, and if at the former value, whether the difference between the two values has, between the date of its issue and the present time, been appropriated as revenue in aid of the services of His Majety's Government, or otherwise enjoyed for the use and purposes of the British Exchequer. The noble Lord said: My Lords, my Question is only designed to elucidate the situation. Is there anything in it really except that the Exchequer, having issued a certain amount of base currency at the rate of 4d. for 9d. is now reversing the process and retracting it by paying 9d. for 4d.?


My Lords, the agreement which has been reached between His Majesty's Government here and the Irish Free State for the return of British token silver coins to this country provides for their acceptance in this country at their face value up to a total of £750,000. The return is to be spread over a period of rather more than ten years as follows:—£50,000 by the 31st March, 1929; £100,000 in April, 1929; £600,000 in April, 1930; and £60,000 in the April of each succeeding year up till 1939. The total amount of British silver coin circulating in the Irish Free State has been variously estimated at from £1,500,000 to £3,000,000, but it will be seen that the agreement is limited to the withdrawal of an amount of £750,000. The total cost to the Exchequer in respect of the withdrawal of this amount on the basis of the present value of silver is estimated at not exceeding £500,000.

I think I had better very shortly give your Lordships an account of the history of the facts which have led up to this situation, and thereby I hope to be able to answer the numerous questions the noble Lord, Lord Danesfort, has asked me with regard to this transaction. Before I do so I think I might refer to the Question asked by the noble Lord, Lord Olivier. He is quite right that when any silver coinage is issued there is a profit on issue representing the difference between the bullion value of the silver and the face value. The coins are issued through the banks to the public in the ordinary way for payment in sterling at face value, and the proceeds, after paying for the bullion used and the cost of minting, accrue to the Exchequer as miscellaneous revenue.

I think the noble Lord, Lord Danesfort, has given a pretty accurate account of the various stages which led up to the present agreement. As he said some two years ago the Irish Free State authorities, wishing to introduce a token coinage of their own, made' representations to the Government here that they should take back the silver circulating in the Free State at its face value. The Government demurred to this proposal on the ground of the expense that it would cause to the United Kingdom taxpayer. The Free State authorities suggested that an obligation rested on the United Kingdom to redeem the coinage at face value since the profits from its minting had accrued to the United Kingdom. In reply, as the noble Lord said, we put forward the argument that these profits had accrued before the severance of the Irish Free State from the United Kingdom, and that therefore the taxpayers in the Irish Free State had benefited to a certain extent and had received some share of those profits.

The Free State Government then replied that a substantial profit had accrued to the United Kingdom through the circulation of British Treasury notes in the Irish Free State since the establishment of the Irish Free State, and also they drew our attention to the fact that special arrangements for the withdrawal of British silver coin were made in both Australia and South Africa when the decision was reached to establish local token currencies in those two Dominions, and that a refusal to make a similar arrangement with the Irish Free State would be discriminating against them and be very exceptional treatment. In view of these arguments the Government felt that an effort ought to be made to come to some friendly compromise with the Free State Government. The matter was discussed between the Chancellor of the Exchequer and the Minister of Finance of the Irish Free State, with the result that the agreement was reached which I have already indicated to your Lordships. I would like to point out to the noble Lord, Lord Danesfort, that there is no question of a surrender or capitulation. This was an agreement which was considered fair by both sides. It is worth while drawing your Lordships' attention to the fact that in the Irish Free State this agreement has been criticised on the ground that the Free State have made a bad bargain, whereas on this side it is being criticised because the United Kingdom Government have made a bad bargain. I think that goes to show that on the whole the agreement was a fair compromise and just to all concerned.

The noble Lord, Lord Danesfort, has referred to the analogies of Australia and South Africa. He maintained that they were not fair analogies. I do not agree with him at all. I think on the whole they were quite fair analogies to bring to bear on this situation. The noble Lord referred to the fact that there were branches of the Royal Mint in Australia and South Africa. I do not think that really in any way affects the right of the Irish Free State to issue their own coinage. In fact I feel confident it does not. As far as I am able to inform your Lordships, the arrangement made with Australia was for the withdrawal of the total amount of British silver coin circulating there at the rate of £100,000 a year, and the arrangement with South Africa, which was made in 1922, was substantially on the same lines. In view of that I think it would have been extraordinarily difficult to differentiate between the cases of Australia and South Africa on the one hand and the Irish Free State on the other hand.

The noble Lord asked me whether the Irish Free State coinage will be legal tender only in the Irish Free State, or whether it will be legal tender in Northern Ireland and here in Great Britain. It will only be legal tender in the Irish Free State. It will not be legal tender either here in Great Britain or in Northern Ireland. So far as our coinage is concerned, that will remain legal tender in the Irish Free State unless and until the Irish Free State Government, by Order under their Coinage Act, demonetise it. The noble Lord then went on to refer to such matters as the Wigg and Cochrane case and the grant to Irish loyalists. I think it would not be proper for me to follow him in those matters because they are not really germane to the subject which we are discussing now. He ended his speech by moving for Papers, and explained the Papers he would like to have laid upon the Table. As a matter of fact, the agreement was the result of direct personal negotiations. Therefore there is practically nothing to lay upon the Table. Such correspondence as has taken place between the two Governments could not be published, naturally, without first obtaining the consent of the Irish Free State. As the facts really have been set out quite fully and quite correctly, I do not think there is any need for laying Papers on the Table.


My Lords, I thank the noble Earl for the statement he has made, but with regard to Papers, I really feel some difficulty. When an arrangement is made between this country and a Dominion or between this country and a foreign State, which certainly has some points seriously open to objection and discussion, and when there has been, as the noble Earl has told us, a considerable difference of opinion as to the rights of the case between the two countries, I should have thought Parliament was entitled to see how it came about that this agreement was made. I really would press my noble friend to publish such of the Papers as it is possible to publish and, if necessary, to get the permission of the Irish Free State. If there is nothing discreditable in this correspondence, why should it not be published? It will at any rate open our eyes and our understandings as to how this arrangement was brought about. I really would ask my noble friend to reconsider that and to give us more light upon it.

As to the analogies of Australia and South Africa, my noble friend gave us no information at all, and I am sorry to say he did not tell us where we could find it. Therefore I think the analogies or the suggested analogies will not carry much weight with your Lordships. There is only one other point I would like to refer to and that is a statement of my noble friend which I must say caused me considerable amusement. He told your Lordships that there were people in the Irish Free State who thought they had not got enough. Is there any one in the Irish Free State who ever thinks he has got enough out of the British Government? I have never met any one among the present governors or sympathisers of the Free State. What do they think? Do they think they should have another million or another two millions? If that is their view, I am extremely glad at any rate that it was not the view of His Majesty's present advisers over here. I hope my noble friend will reconsider the question of Papers, because I think it is important that we should know what views were put forward on one side or the other.

On Question, Motion negatived.

House adjourned at a quarter past seven o'clock.