HL Deb 28 June 1934 vol 93 cc236-55

My Lords, I beg to move the Motion standing on the Paper in the name of my noble friend Lord Hailsham.

Moved, That Standing Order No. XXXIX be considered in order to its being dispensed with in respect of the remaining stages of the Debts Clearing Offices and Import Restrictions Bill.—(The Marquess of Londonderry.)

On Question, Motion agreed to, and ordered accordingly.

Order of the Day for the Second Reading read.


My Lords, this is a short Bill, but a difficult one. Your Lordships have no doubt read the White Paper, Cmd. 4,620, entitled "The German Transfer Moratorium," but perhaps I might refer very briefly to that document to show the reason why the Government are putting forward this Bill. Your Lordships will see that Germany claims that, although her people will continue to pay their debts punctually in marks, the transfer question renders the payment of their foreign debts impossible, and in this default she includes the Dawes and Young loans. Your Lordships will observe that it is not a six months moratorium for, as the White Paper shows, the German Government states that it hopes that "transfer may again be possible in a not too remote future." Again, on page 6 of the White Paper, it is stated: As the representatives of the creditors have now recognised, however"— that is, the creditors who were in consultation in Berlin in regard to the non-Reich debts— Germany needs a breathing space for the transfer in order that her balance of exchange may be at least so far restored that the establishment of a regular service for foreign debts is again rendered possible, in the absence of special united effort this would only be possible in the course of decades and only in so far as Germany obtains a current income from surplus exports. His Majesty's Government, as your Lordships are aware from the White Paper, are unable to accept the statement that the transfer question was inevitable and unavoidable. Our Note points out that the creditors' representatives had ascertained "that the diminution in the reserves of the Reichsbank was due … to the purchase of scrip and bonds and repayments of capital." It is pointed out that the interest on the Dawes and Young loans represents only about 2 per cent. of the gross exchange income of Germany from all sources. The excess of imports from Germany into the United Kingdom has in the past two years exceeded the imports of United Kingdom produce and manufactures into Germany by a sum "sufficient to cover the interest on all the German loans issued in London more than three times, and the interest on the London issues of the Dawes and Young loans more than ten times."

Although there is a large number of other foreign loans in default at the present time, Germany, in the view of the Government, seems to stand apart as a special case. While therefore we prefer that as a whole agreements should normally be reached by direct negotiations between debtors and creditors, as I mentioned the other day when we were discussing a Motion of the noble Earl, Lord Liverpool, when a debtor Government behaves as Germany has done and declines to accept a reasonable compromise with its creditors, and insists upon suspending all payments to them, while using its foreign exchange resources freely for other purposes, it is our duty to ask Parliament to give us powers to protect legitimate British interests. As the Bill has therefore become necessary, we have thought it right to draft it in very wide terms, so that it should not only apply to the case of Germany but could be applied elsewhere if the need arose. I need hardly say that His Majesty's Government hope that such a need will not arise, and they have even, now hopes that it may not be necessary to institute the clearing arrangements in regard to Germany herself, in view of the negotiations which are going on at the present moment.

Clause 1 enables a Clearing Office to be set up. It is a complicated clause, into which I do not think I need go in great detail, but the proposal is in the first instance only to apply a Clearing Office to goods made in Germany, whether consigned from Germany or not. It could also be imposed on goods consigned from Germany though made elsewhere, but anyhow not at the beginning, and we hope that that will never be required. It is proposed merely to have a Clearing House in regard to imported goods made in Germany, from whichever country they come. That will, of course, necessitate importers giving a certificate of origin to show where the goods come from, and of course to that extent it interferes with our trade. How far the clause will require to be put into operation depends upon the course of the present negotiations, and we hope it may not be necessary to put it into operation at all; but, at any rate, it is necessary to take the powers, in order that we may have the weapon in our hands should such a weapon be required.

If there is no discrimination against British creditors of non-Reich loans—there is a possibility of course, that there may be such discrimination in view of negotiations which Germany is now undertaking with her Swiss and Dutch creditors—if there is no such discrimination then we may be able to confine ourselves solely to the service of the Dawes and Young loans. The amounts required for these loans are: £175,000 on the 15th October for the Dawes loan and £205,000 due on the 1st December for the Young loan. I may say that Germany has made her payments up to the 15th of this month. After the 1st December £350,000 will be due on the Dawes loan every six months and £246,000 on the Young loan every six months. We believe that if 20 per cent. of clearing is imposed on goods imported from Germany that will be sufficient to cover the service of these loans, and the proposal is that the purchaser here shall pay to the Clearing Office 20 per cent. of the value of goods, valued as for Customs purposes, and 80 per cent. direct to the German trader. The Clearing Office will notify the German authorities that they have received this 20 per cent., and as Germany states that the debtors in that country are still paying their debts in reichsmarks the authorities in Germany will be able to draw on those reichsmarks in order to pay the remaining 20 per cent. which does not go direct to the German exporter.

As regards the manner in which the money from the Clearing Office will be dealt with, it is proposed that full interest shall be paid to all holders of sterling bonds in the Dawes and Young loans who are British subjects wherever they are resident, and also that full interest shall be paid to foreigners holding these sterling bonds in the same loans who are resident in the United Kingdom. All bondholders must have held the bonds by June 15 or earlier: those who have purchased them after that date will not come into the Clearing Office arrangement. As regards other British issues, the proposal is that the creditors of the funding loans which Germany has proposed to institute at 3 per cent. interest will receive that interest or, if better terms are granted to the Swiss and Dutch creditors of Germany, then they will receive the same terms as Dutch and Swiss creditors.


Will these bonds be short-term bonds?


I think they are short-term bonds. Two points were raised in another place with reference to Clause 1. The first was the case where a British importer was also an exporter to Germany. There might be a case where a, man said: "I owe a German £100, but he also owes me £100 or rather less." It seems absurd in that case that the English creditor should have to go through the Clearing Office, and it was suggested that he might cancel the one debt against the other without going into the Clearing Office at all. That would raise a good many difficulties, but we think that in individual cases if an English trader likes to go to the Clearing Office—not the Customs House—and produces sufficient evidence, either by his accounts or in other ways, to show that the amount which he owes is less than the amount which he is due to receive, then he will get a clearing certificate from the Clearing Office and will not have to make any payment. Perhaps I have not made that point clear, but I can amplify it if I have not done so.


May I ask the noble Earl a question? Something was asked by my noble friend Earl Peel which I did not hear, but I heard the words "short-term bonds." Would the noble Earl tell us what the question and answer mean, as I cannot follow the answer, not having heard the question?


I should like to ask my advisers further about it, but the question asked by my noble friend Lord Peel related to the short-term bonds Germany proposes to issue to the creditors of the non-Reich loans. The noble Marquess will remember that negotiations have been going on in Berlin.


Three per cent. bonds?


Three per cent. bonds; and my noble friend asked if they were short-term bonds, and I said I thought they were. Another point was raised in another place, and it was promised that further consideration would be given when the matter came before your Lordships. That was under subsection (2) of Clause 1. At the bottom of page 1 and the beginning of page 2, your Lordships will see that an Order may apply to all debts apart from trade debts. It was pointed out that it might be possible to seize German bank balances in this country and that that would create a great deal of consternation and might entail a great many withdrawals from the banks. On that I may say that a German refugee who is living in this country could not be described as, in the words of the subsection, "ordinarily resident" in a foreign country. He is "ordinarily resident" here, and therefore there can be no question of his coining within the scope of this subsection (2).

But apart from that, even if it was proposed, and it is not proposed, to bring financial debts into the scope of the clearing arrangements, no German bank balances would have to be paid to the Clearing Office unless and until the holder of that balance proposed to remit it either directly or indirectly to Germany. If he withdrew his bank balance in this country in order to send it to Germany, then of course that payment would have to go through the Clearing Office, but as long as he kept his bank balance in this country it would remain entirely outside the clearing arrangement. Therefore, of course, bank balances will not be dealt with at all.

As I have said already, it is inevitable that the clearing arrangement will interfere with trade between the two countries. The Government regret that that should be necessary, and that regret was expressed in all quarters in another place. At the same time the necessity for this Bill was also, I think, accepted from every part of the House. Everybody agreed that in the circumstances the Government were not only fulfilling a right but their duty in producing this Bill. The only criticism was that this clause was drawn on rather wide lines, but, as I have pointed out, a similar situation might arise with another country, although we have no reason to suppose it will, and therefore we thought it right to draw the clause as we have. As regards Clause 1 perhaps I might add that my right honourable friend the Chancellor of the Exchequer proposes to set up a small Advisory Committee with representatives of the Treasury, the Board of Trade, the Bank of England, the joint stock banks, the Federation of British Industries, and the Chambers of Commerce. Therefore he hopes to be kept in very close touch with the whole situation in regard to trade and finance and to do everything that is possible to avoid undue interference.

As regards Clause 2, I have to admit to your Lordships that that is not specifically directed against Germany. In point of fact, it could not be directed against Germany at once because we have a trade agreement with Germany, and that could not be abrogated under a period of less than one year. This is a clause which the Board of Trade has been pressed for some time to produce, and it enables the Board to prohibit or restrict imports from a foreign country which discriminates against our trade. I emphasise the word "a," because it is not proposed under this clause, and in fact it would not be possible, to institute a general system of quotas against other countries. This is purely what I might call a "reprisal clause" to deal with any country which imposes quotas unfairly against this country. It is drafted on similar lines to Section 12 of the Import Duties Act, 1932, which allows us to impose discriminatory import duties, and it is extending the discriminatory policy to quotas as well as import duties. I say quite frankly that His Majesty's Government do not like quotas. They have only imposed them in the case of agricultural products, because there it was necessary to impose quotas in order to keep any kind of market at all, not only for the benefit of the home producer but equally for the benefit of the importer, whether he was a Dominion importer or an importer from a foreign country.

This clause could not be applied against Germany on account of trade agreements, and equally, of course, it could not be applied against any other country with whom we have a trade agreement. Therefore, there are very few that could be dealt with at once. Exceptions would be made where it is necessary to bring a trade agreement to an end. Some can be brought to an end after, I think, six months—the usual time is at the end of a year. Exceptions would be made where obviously a foreign country had broken its treaty arrangements with us in regard to trade and where, therefore, it was necessary to take retaliatory action. I do not think your Lordships need be unduly nervous about the possibility that this clause will be often brought into force. Section 12 of the Import Duties Act, to which I have referred, has only once been brought into force, and that was against France when she imposed discriminatory duties against us. Whether it is due to that or not I cannot say, but it is only a question of days when your Lordships will see the recent agreement that we have been able to arrive at with France, which I hope your Lordships will think as satisfactory as I do.

It was remarked in another place that this Bill has had to be produced to both Houses at very short notice. Your Lordships have had very little opportunity of discussing it. Therefore it would not be fair to keep it as a permanent part of the legislation of this country, particularly in view of the fact that Clause 2 is not really connected with the crisis in which we find ourselves in regard to the German situation. Therefore it was agreed by His Majesty's Government, and now appears in the Bill under Clause 7 (2), that this Act shall continue in force until the 30th day of June, 1936, and no longer; in other words, it is only to last for two years. I do not know if there is any other matter that I can deal with. There is one small Amendment which I will presently ask leave to move. It is in the Schedule on page 7, lines 28 and 29, after "or imprisonment" to insert "for six months." I do not know whether your Lordships would like me to explain that now. I think I had better perhaps do that when we go into Committee. It was suggested in the Committee stage in another place that penalties should be put into the Bill and that was done at short notice. I beg to move.

Moved, That the Bill be now read 2a.—(Earl Stanhope.)


My Lords, this Bill is a piece of emergency legislation, and the Party for which I speak have no objection to the rapidity with which it has been passed through the other place and comes before your Lordships. It is a Money Bill, I understand, which your Lordships cannot amend or deal with in any way.


No, it is not certified.


My noble friends and I should not like the Bill to go through without a few comments from the Party to which we belong and I should like to say at once that we deeply regret, as I am sure all your Lordships regret, the necessity for this Bill. I also wish to state that I intend to be most careful not to say anything which may endanger or embarrass in any way the negotiations that are now going on. With regard to Clause 1, I think it has been drawn unnecessarily wide. It seems to me it would have sufficed if it had been confined to the immediate matter in hand—namely, the question of the German debts. I do not think it need have been made to apply to any other countries. It does place in the hands of the Government a considerable weapon which, I understand, they can use with very little Parliamentary control. If I am wrong about that no doubt the noble Earl will correct me. When the Bill was first introduced there was no time limit imposed as to the setting up of the Clearing Office. I am glad to say that has been amended in another place, and the Bill now extends for only two years. I wish myself it could have been even a shorter time. I think one year would have been ample.

Then Clause 2 of the Bill was, I think, quite unnecessary. I do not think that the Government should use this emergency in order to put into an emergency measure a matter not really connected with the emergency, as the noble Earl has himself told us is the case. Further, the Bill is used to give power to the Government which can be exercised with very little Parliamentary control. I think that is undesirable. The only consolation I have with regard to that clause is derived from hearing the noble Earl say that His Majesty's Government did not like quotas. I am very glad indeed to hear that, but I am not so certain that the Government may not grow to like quotas rather more than they do now. I am not at all convinced that quotas and these discriminatory duties may not be used later on in an undesirable way. We, of course, have quotas in agriculture at present, and quotas have a tendency to spread. There is a real danger that they may spread to other industries. Our experience of quotas in agriculture has not, in my opinion, been very inspiring, and I am not anxious to see that sort of ex- periment tried in other industries where it might lead to more impediments and interference with, trade, more international complications and, possibly, international conflict. I hope, therefore, that His Majesty's Government will use these powers as sparingly as possible.

I do not wish to express any very definite opinion on the question as to whether the Germans can, or cannot, pay these debts. I do not feel that I have the requisite knowledge. But I have read the White Paper carefully, and I think the Foreign Secretary, Sir John Simon, has made out a very strong case for the British point of view. I may say the same with regard to the statement that the noble Earl has made in that respect. I entirely share the hope of the noble Earl that it may not be necessary to put this Bill into force because I think that the setting up of the Clearing Office may have serious effects on our foreign trade—not only on the trade between England and Germany, but on trade with other countries. As your Lordships know, a great deal of international trade is triangular in character and interference with trade between two countries is very apt to have extensive repercussions on the trade of many other countries besides those actually involved. It is not absolutely certain, of course, that the setting up of the Clearing Office will solve the question. It may lead to counter measures on the part of the Germans which may be very disastrous to trade and to good feeling generally. I feel that there is a possibility at any rate that if this measure is put into force it may injure trade considerably, it may injure many classes of producers all over the world, it may retard economic recovery and it may increase unemployment. So, while I admit the necessity of the Bill, for the reasons I have given I very much hope that it will not be necessary to put it into force.

This emergency, or crisis, or difficulty, or whatever we like to call it, is a very striking and very melancholy commentary on our international relations, and especially on international financial relations since the War. Immediately after the War we imposed an enormous and impossible burden on the Germans in the form of Reparations which were so enormous that they had to be gradually whittled down. We had first the Dawes plan and then the Young plan, and for all I know we may have to have somebody else's plan before we have done. Then the Germans began to borrow in order to pay the Reparations. Large numbers of people all over the world, including people in this country, lent money to Germany in the hope of a good rate of interest, in order to enable Germany to pay Reparations. Germany's creditors have really to a large extent paid their own Reparations to themselves. All the time all over the world most countries were making it more difficult to carry on trade. Tariffs were set up, and higher tariffs, and then a few years ago we in this country took the same course of introducing obstacles to foreign trade by tariffs, thus making it more and more difficult for people to settle debts which could only be settled in the form of goods or services except in countries which happened to be gold-producing countries. Then we get to a point where the Germans say they can pay no longer.

I say that is rather a melancholy commentary on the history of events from the time of the War and on the present situation. There are many lessons we could learn from the history of those events which I have briefly, tried to state. I will only refer to two of the lessons which I think we should learn. It ought to be perfectly clear that to impose Reparations on a defeated enemy is quite futile and is likely to injure the countries that receive as well as the country that pays. In fact, these Reparations have injured the whole world. I do not think that is too much to say. Another lesson we might perhaps learn is the need for some sort of control over the investment of capital. We did control and regulate the investment of capital—very successfully, I think—during part of the War, and there is no reason whatever why we should not control and regulate the investment of capital in time of peace. If we had had a National Investment Board through which capital could have been controlled and sent to places where it was most needed, a lot of this trouble would have been avoided. Capital badly needed at home for housing purposes or for other social purposes would have been kept at home and not sent abroad to support objects which might be harmful and possibly dangerous to the world, objects over which we have no control whatever. It would be far better to place some limit on the amount of capital invested in Germany and abroad. I will not pursue that subject further now, because it may be thought a little irrelevant to the Bill, but I do not think it is entirely irrelevant. I certainly think it is a point worth consideration. I will conclude by saying once more on behalf of my noble friends that we very much regret the necessity for this Bill and we hope very much that it may not be necessary for it to be put into force. It is a great encouragement to us to have heard the noble Earl express the same view and say that he thinks there is still a chance that the Bill may not have to be put into force. I hope very much that all those engaged in the negotiations that are going on will act in a conciliatory manner and that it may be possible to find a better and more satisfactory solution of the difficulty.


My Lords, if the purpose of this Bill were to put into execution the plan indicated to us by the noble Earl who moved the Second Reading certainly there could be no criticism, at least not in my opinion. There would be general approval of the course taken in order that effect might be given to the views of the Government, who naturally are in possession of greater information than most of us, and in order that some means might be taken with the object of collecting the debt due at this moment. I do not propose to travel into the reasons given by the noble Earl in explaining why it has been thought necessary to take this step in regard to Germany. They have been stated by the Government both here and in another place and set out in the White Paper. Speaking for myself and for those associated with me we do not quarrel at all with what has been said or with the course proposed. But having said that, I am bound to say also that I am rather troubled by the course which the Government are taking.

The procedure seems to me remarkable. If all that is desired is to carry out what is said to be intended, that is to say, to arm the Government with powers which it can use in the event of default taking place on July 1, then I follow the necessity of having this Bill introduced as an emergency measure, carrying it through another place in two days, as has been done, and having it brought to this House, presented to us and carried through all its stages to-day, with the Royal Assent to be given this evening, so that it is in truth dealt with just as we dealt with a War measure, as an emergency measure. I understand the emergency as affecting what is going to happen on July 1, that is, the payment of the interest due on the Dawes and Young loans; but where is the emergency otherwise? What is it? I utterly fail to discover it in the Bill or in anything that has been said by the noble Earl in introducing the Bill. We would certainly pass a Bill of this character, and I would not complain at all of the procedure of the Government, if all that was desired was to carry into effect the plan of the Clearing Office for the purpose of meeting this default, and even carrying it on for a few years. But this Bill goes very much further, and we are asked to give much further powers without, so far as I have been able to understand, any explanation being given why the Government are seeking them at this moment.

I beg your Lordships not to think that I am cavilling at all at the Government taking rather wider powers than may be thought to be necessary at this exact moment. I do not at all. Indeed, having regard to the somewhat cumbrous machinery of Parliament, certainly in another place, I can quite understand that the Government wish to arm themselves with all the weapons which they may think fit to use at a later stage, and that it is necessary that it should do so at once, and not have to come back to Parliament. But that does not explain why we should have this Bill in its very extended form brought before us as an emergency measure. The speech of the noble Earl confirmed what I am saying; and that is true not only of what has been said in this House, because I think I am right in saying that it applies also to the observations which fell from the Chancellor of the Exchequer in another place. What is said in definite terms—so that we need not argue about it—is that the second part of the Bill, that is to say, Clause 2, dealing with quotas and restrictions which may be imposed, is utterly unconnected with the question of Germany's default on July 1.

It has not the remotest connection with it, and I defy the Government to say that it has. On the contrary, as I understand it the Government admit that it has not. I am glad to see that the noble Earl agrees that I have correctly followed his observations. If I may say so, he was very frank about it. If that is the case, then may I ask why it is that we in this House are asked to pass in this extraordinary way as an emergency measure something which is not extraordinary legislation, which is not an emergency measure, which may possibly require to be dealt with—I do not know as to that—but which cannot by any possibility be brought within the category of emergency measures? I utterly fail to understand why we are asked to do it. I am taking this point only for the purpose, of protecting ourselves against having Bills of this character brought before us in this way. We are not opposing this Bill, and I am not going to oppose it to-day, simply because the Government require to be armed with power to deal with the German situation in case the negotiations should prove abortive by July 1. We are now at June 28, the last day we meet before July 1, and I understand the need for the Bill. But the point which I make and which I desire to press upon the Government is that they ought to explain to us why it is that they have included something in the second part of the Bill which they admit is not an emergency measure. That I have really not been able to understand.

In the first part of the Bill, which is dealing with the Clearing Office system, the powers sought under this Bill as it now stands are extremely wide. They are far wider than was indicated by the noble Earl in his speech to your Lordships; they go much beyond that. I can quite understand that the Government intend at the moment to exercise the powers only to the extent explained, that is, with regard to the German situation, but the Bill gives powers not only as regards Germany but as regards any other country which may be in default. It may be quite a good thing and quite necessary to take those powers, but I want to point out that the powers given under the terms of this Bill are a wide extension of the Clearing House system which is proposed at this moment, and would, if carried out with a number of countries, have a most devastating effect upon international trade. I would ask any member of your Lordships' House familiar with international trade whether he would dispute that proposition. I am sure that he could not dispute it, and I do not think that the noble Earl himself would question it.

Therefore, what we shall be doing is arming the Government with these powers which, if used—and of course they are taken for the purpose of use if necessary—may have a most serious effect. I quite realise that the Government do not want to use them, and that it will use them only if it becomes absolutely necessary to do so; and here again I think we must rely upon the Government, as we have done and as we necessarily must do. As I follow the Bill the only check which there is upon the Government's exercise of these powers—the noble Earl will correct me if he thinks that I am stating it wrongly—is that an Order will have effect for a period of twenty-eight days only unless there is an affirmative Resolution by each House of Parliament that it shall continue, that is to say, ratifying it. Then it continues beyond the twenty-eight days. That no doubt is quite a useful check; nevertheless for a period effect would have been given to the Order without Parliamentary sanction. All that I desire to say upon it now is that I hope the Government will bear in mind what has been said both here and in another place, and that the greatest care will be taken in the exercise of these powers, because otherwise they certainly would affect us very seriously.

I was glad to hear the noble Earl tell us that there will be an Advisory Committee composed as he has indicated, which will no doubt be of the greatest value to the Chancellor of the Exchequer in applying this Bill when it becomes an Act, and that gives me more confidence in the working out of it. All that we can hope is that the negotiations now proceeding may make it unnecessary to use these powers, and that the mere fact that the Government are in possession of them may have some value. Whether it will or not we do not stop to argue, because we think that in a matter of this character we should give the Government the powers which they wish to have in order that they may be made quite effectual if the negotiations prove abortive.

There is only one other question on this part of the Bill which I want to raise with the noble Earl, because I did not quite follow his observations upon it. Without referring to the words of the Bill (which I can do if necessary) it is clear that the debts affected by the Bill—that is debts due to Germany or any other foreign country which may be in default—are not confined to debts for goods, and that when we are talking of this present proposition, which is very limited and as to which we trust it will not be necessary to put the provisions of the Bill into force, it really means that a person who has imported goods and has to pay for them will have to pay 20 per cent. of the Customs value of the goods to the Clearing Office. That would operate for the purpose of the Government making use of it in order to pay either interest which has not been paid or any sum which is in default within the meaning of the Bill. That applies to the goods. There is no limit of that kind in the Bill. That is only what the Government intend to do. Under the Bill the Government would have power to say that the whole 100 per cent. must be paid. All I will say with regard to that is that I rely much upon the Government's discretion in this matter. As I have indicated, I am made much more confident in this by reason of the fact that they are going to have this Advisory Committee, which will be in the best position to tell them how matters will stand in international trade.

Now I want to raise a question with regard to such things as bank balances. They are affected by the Bill. I do not think the noble Earl will dispute that. Equally—I think it was raised in another place—insurances with British insurance companies, payments which become due, it may be on fire or marine insurances, are affected, and it must be obvious that if the Government were seeking to put into operation all those powers they would have a serious effect upon those businesses. I have not understood whether they go as far as to say that they have no intention of using the Bill for this purpose, but the powers are sufficiently wide. I did understand that it was not to apply to bank balances within limits. Would it apply to insurances? For example, to marine insurances, which are so much effected by British companies, Lloyds and others, in Germany. If it does apply it would affect those businesses, and it would be a great help if the Government would tell us that they have no intention of using these powers for that purpose. It may be that the Government will say that they have no such intention at the moment, and so far as they can see it may not become necessary, but that, nevertheless, they have the power and want to take that power so that they can use it in case of having to proceed to extremes. I ask them to say that they do not intend to use these powers unless they are forced to extremes. I have the impression, although I am not sure, that the Goverment in another place were prepared to make this statement to the extent that I would wish, that it would not apply to insurances, but I must repeat the question to the noble Earl, and ask him to tell us what they are prepared to do.

On the other part of the Bill I feel very great difficulty in discussing it at all, because that part of the Bill, everybody agrees, is entirely unconnected with the subject which has led to this emergency measure being introduced, and I have not heard one word which has indicated even that there is urgency. Your Lordships will appreciate that there is a very great difference between urgency and emergency. You may have an emergency when something happens which you do not expect to happen, and the matter being a critical one you must introduce some measure to meet it. An urgency matter is merely a matter of time. Many matters come before us which are urgent. But what is the urgency of this? I have not heard one word to explain it. I understand what the Government desire—namely, to be armed with powers for the purpose of reprisals—and I am very glad to hear the Government say that they do not like quotas and have no intention of using it for the purpose of quotas. I do not want to discuss that part of the Bill, but so far as I am concerned I wish to say that, although I am not going to oppose it in this House and at this stage, because the Bill must be passed and receive the Royal Assent, yet when an affirmative Resolution is required for the purpose of making an Order effective we shall have arguments to put forward as to why an Order should not be passed.

I am, however, puzzled to understand the reason for this part of the Bill, and I hope that the Government will give us some explanation of why it is they have thought it necessary to attach this second part of the Bill to what is so appropriately called an emergency measure. I have read everything, so far as I have been able, said in the other House and in the Bill and in the White Paper, and I have found nothing to explain it. All I can say is that the Government seem to have taken this view, that as they were introducing a measure which was an emergency measure, which they had to ask Parliament to pass at once, they would like to have this power respecting quotas, although they were bound to admit that it had nothing to do with the emergency Bill. I cannot but think that it is a regrettable procedure and one which ought not to be adopted in this House. If it were, it would place us in a most difficult position, and would render it impossible for us to pass emergency measures at any time, because we should have no confidence in any Government at any time.

I have, however, sufficient confidence in the Government to support this measure, although it goes so much further than I should wish and I fail to understand why they have thought fit to introduce this second part. I repeat that I hope the noble Earl will give us reasons, and that the Government will tell us why it is they have taken this step, which is quite contrary to all Parliamentary procedure and everything hitherto done in this House. I have never known a proposal introduced, set up, and passed in this hurried way, without an opportunity being afforded of considering it and drafting Amendments, or even looking at authorities—a proposal for a purpose which, as we know from the Government, is not an urgent purpose and certainly is not for an emergency. I think we are entitled to ask that the Government will explain why it is that they want to have the second part of the Bill.


My Lords, perhaps I may briefly reply to the points which have been made. I am afraid I was incorrect in replying to Lord Peel. The 3 per cent. funding bonds are repayable on the 1st of January, 1945, so that they are not quite the short-term bonds which I suggested.


They are better than I expected, at any rate.


With regard to the points made by Lord Sanderson, as he will have realised from the speech of the noble Marquess who has just sat down, Parliament does retain some control in regard to these matters, by its being necessary for both Houses to pass affirmative Resolutions in connection with Orders which make the Bill effective and bring it into operation.

The noble Marquess asked me why Clause 2 has been put into the Bill, and why it is treated as an emergency measure. I must frankly admit that it cannot really be described as an emergency measure, but my honourable friend the Parliamentary Secretary of the Overseas Trade Department, in referring to this in another place, pointed out that he was in negotiation with various countries at the present time in order to make trade agreements, and in at any rate one case—she did not like to give the name of the country concerned—he was threatened with quota arrangements, and it was only with great difficulty that he managed to stave them off. We felt that with Parliament about to adjourn, and with several of these treaty arrangements under negotiation, it was really necessary for this country to arm itself with these powers to apply quantitative restrictions, so that if it became necessary we could impose them against any country which proceeded to impose them unfairly against us. Although, as I say, it was not a question of applying these restrictions to Germany, it has been felt, both by the trade interests and by the Board of Trade, that it was necessary for this country to have these powers, and in particular in view of the negotiations which are in progress.

As regards the bank balances and insurances, my right honourable friend the Chancellor of the Exchequer in another place said that he hoped that no diminution of the powers of the Bill would be made, but there was no intention whatever at the present time of putting the Clearing Office arrangement into effect in regard to the financial side, as apart from the trade side. The noble Marquess, I know, realises full well that Germany might take retaliatory measures in regard to this Bill, and therefore it is essential that we should have powers in order to deal still further with German trade than is proposed at this moment. As regards the insurances, the Chancellor of the Exchequer said: There is no present intention to apply the clearing to anything except a portion of the value of German goods imported into this country. I think the noble Marquess would agree that the very last thing that the Government would desire to do would be to diminish our invisible credit by reducing the insurances that we get in Germany and elsewhere, and, as he clearly pointed out, anything in the shape of a clearing house arrangement would materially affect that business. Therefore it would only be in the case of a last resort that anything of the kind would be applied, and I think he can rest fully assured that the Government have no intention whatever of doing that until actually forced to do it. I hope I may have reassured him on these points, and I ask your Lordships now to give this Bill a Second Reading.

On Question, Bill 2a, and, Standing Order No. XXXIX having been suspended, committed to a Committee of the Whole House forthwith.


My Lords, I beg to move that this House do now resolve itself into Committee.

Moved, That the House do now resolve itself into Committee.—(Earl Stanhope.)

On Question, Motion agreed to.

House in Committee accordingly:

[The EARL OF ONSLOW in the Chair.]

Clauses agreed to.


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