Lords Sitting of 11 July 1935

Preamble
The House met at a quarter past four of the clock, The LORD CHANCELLOR on the Woolsack.
LONDON COUNTY COUNCIL (MONEY) BILL.
Read 2a.
MAIDSTONE CORPORATION BILL.
Read 3a, with the Amendments, and passed, and returned to the Commons.
READING CORPORATION BILL.
Read 3a, with the Amendments, and passed, and returned to the Commons.
FYLDE WATER BOARD BILL.
Read 3a, with the Amendments, and passed, and returned to the Commons.

BOGNOR GAS AND ELECTRICITY BILL.
Read 3a, and passed.
UNEMPLOYMENT INSURANCE (CREDITING OF CONTRIBUTIONS) BILL.
Brought from the Commons; read 1a; and to be printed.

LONDON PASSENGER TRANSPORT BOARD (FINANCE) BILL.
Brought from the Commons; read 1a; and referred to the Examiners.

HOURS OF EMPLOYMENT (CON VENTIONS) BILL. [H.L.]
THE EARL OF FEVERSHAM: My Lords, I beg leave to introduce a Bill to carry out certain draft International Conventions relating to the employment of women during the night and to hours of work in automatic sheet glass works, to amend the law relating to the hours of employment of women holding responsible

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positions of management who are not ordinarily engaged in manual work; and for purposes connected with the matters aforesaid. I move that it be read a first time.
Moved, That the B ill be now read 1a.—(The Earl of Feversham.)
On Question, Bill read 1a, and to be printed.

BUSINESS OF THE HOUSE.
LORD PONSONBY OF SHULBREDE: My Lords, I think it will be convenient to your Lordships if the noble Marquess the Leader of the House can tell us what the course of business next week will be and whether he expects the House to sit on Tuesday.
EARL PEEL: My Lords, may I just supplement that question and ask the noble Marquess if he will be good enough to make a statement, about the later stages of the Government of India Bill?
THE LORD PRIVY SEAL (THE MARQUESS OF LONDONDERRY): My Lords, I am much obliged to my two noble friends for giving me the opportunity of making a statement on the business which it is proposed to take next week. The Report stage of the Government of India Bill will be commenced on Thursday next, July 18, and should be continued if the coarse of the debate makes this necessary on the following Monday, July 22. It may possibly be necessary to ask your Lordships to sit after dinner on both those days, but I think we can wait until the day when we shall be able to make some arrangements. The date that I have in mind for the Third Reading is Wednesday, July 24.
As the noble Lord has asked for the programme for next week, I think it would be convenient if I gave the course of business which it is proposed to take on each day. It will be necessary for your Lordships to sit on Monday, when it is proposed to take the Report stages of the Housing Bill and the Salmon and Freshwater Fisheries Bill and the Committee stage of the Money Payments (Justices Procedure) Bill. In addition there are Questions down in the names of Lord Lamington and Lord Strickland. I am not proposing that the House should meet on Tuesday, July 16, as I
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know that many of your Lordships will desire to be present at the Naval Review. On Wednesday, July 17, we shall take the Third Readings of the Housing Bill, the Money Payments (Justices Procedure) Bill and the Salmon and Freshwater Fisheries Bill, the Report stage of the 'Weights and Measures Bill and the Committee stage of the Housing (Scotland) Bill. In addition, on that day, there are Questions down in the names of Lord Noel Buxton and Lord Mansfield. On Thursday, July 18, as I have already informed your Lordships, we shall commence the Report stage of the Government of India Bill and the House will meet on that day at three o'clock. It may also, as I have said, be necessary to ask your Lordships to sit after dinner.
THE LORD CHANCELLOR (VISCOUNT HAILSHAM): My Lords, arising out of that statement of my noble friend, I wish to ask your Lordships' permission to be absent on Wednesday next as I hope to have the privilege, with some other members of the Government, of attending the exercises of the Fleet on that afternoon. Therefore, I hope you will forgive me if I find substitute to take my place on the Woolsack that day.
METROPOLITAN COMMON SCHEME (PALEWELL) PROVISIONAL ORDER BILL.
Read 3a (according to Order), and passed.

ASSURANCE COMPANIES (WINDING UP) BILL. [H.L.]
Order of the Day for the Second Reading read.
THE LORD CHANCELLOR: My Lords, the Bill to which I ask your Lordships to give a Second Reading is a Bill which is designed to remedy a deficiency which has made its presence apparent in the Assurance Companies (Winding Up) Act of 1933. As your Lordships know, it is now compulsory for persons using motor cars and mechanical vehicles on the public roads to take out an insurance policy against third-party risks. The object of that, of course, is to ensure that anyone who is unhappily injured by any fault in driving shall be sure to recover

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the damages which he or she may sustain. Unfortunately, it has turned out in experience that it sometimes happens that the company with whom the insurance policy is effected is not in a position to discharge its liability. Parliament recognised in 1933 that it was eminently undesirable that we should enact that these policies should be taken out, in order to make sure that damages should be recovered when they are sustained, and then to leave it possible for a company in an insolvent condition to be carrying on that business, and so to deprive the public of the security which we thought we were giving. In those circumstances the Act of 1933 gave power to the Board of Trade in certain circumstances to inspect the accounts of companies, and to apply for winding up orders.
The Act of 1933 gave power to the Board of Trade to take action when, in the words of the Statute, "it appears to the Board of Trade that there is reasonable ground for believing that an assurance company is insolvent." The Board of Trade has been advised, and I have no reason to doubt the accuracy of the advice, that in order to satisfy that condition they must be able to produce prima facie evidence of the insolvency of the company. Now, the question whether the company is insolvent is the very question which they desire to investigate, and in certain cases to appoint an inspector to investigate, and the position under the present law is that the very fact which the Board of Trade is intended to find out, and in regard to which it is intended it shall have power of inspection, has first to be prima facie proved to the Board of Trade before it can act at all. In those circumstances it has been thought necessary to strengthen the power of the Board, and the proposals which the Government have thought it right to bring forward involve that the Board of Trade shall have the right to require a company to give such information as will enable the Board of Trade to ascertain whether it is insolvent, and if the company either will not give the information or the information discloses a doubtful state of affairs, then for the Board of Trade to appoint an inspector.
Obviously, your Lordships may say that if that were left to the untrammeled
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power of a public Department, it might be that we should have too great a responsibility placed upon a possibly bureaucratic office. Accordingly care is taken in the Bill to provide that if the company objects to give the information or if it objects to the appointment of an inspector, then application has to be made to the Court, and the Court has to determine that the information is necessary in order to ascertain the solvency of the company or that the appointment of the inspector is necessary for that purpose, before the order can be made. I venture to think that that provision is not an unreasonable one in the light of the experiences of the last few years.
I have to add that before introducing this Bill the Board of Trade thought it right to consult the British Insurance Association, which is the association representing the great insurance companies of this country. The association have always taken the view, and still take the view, that these powers ought not to be confined to the case of companies, and would like to see them extended to the case of individuals. That would involve a very much wider extension of the law than it would be possible to get through at this season of the year and would involve very radical changes in our procedure: and the association, recognising that fact, while they still would desire that the law should be extended to individuals, still have recognised the urgency of the present problems and have intimated that they agree with the principle of the Bill.
I would desire also, in order to avoid misconception, to state that, although in the view of the Government these powers are necessary in order to provide complete protection to the public, it is only in the case of an infinitesimal proportion of the insurance companies of this country that any question of this kind can arise. Fortunately we have a system of insurance built up through a long series of commercial enterprises and a long business experience in this country which is probably unrivalled in any country in the world, and there is no question at all that the great insurance companies of this country are as strong and as safe as any institutions could possibly be. It is only to deal with the very small minority of cases which,

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although they are insignificant numerically, yet in the individual case may cause substantial -harm and damage to the individual, that we have thought it right to ask your Lordships to give these additional powers. I beg to move.
Moved, That the Bill be now read 2a.—(The Lord Chancellar.)
VISCOUNT ELIBANK: My Lords, I rise to support this Bill for reasons which I will state. As the noble and learned Viscount has said, insurance companies have taken part in the preliminary discussion of its provisions and, recognising as they do that the amendment proposed is reasonable, they have offered no opposition. Nevertheless, it would be dealing with the subject more adequately and comprehensively if there were passed into law with some amendments the Insurance Undertakings Bill, which has lain dormant for some years. Their attitude—and I am sure your Lordships will agree with this—is a further instance of the strength of the tradition of service by which the insurance companies are moved in all matters affecting the public interests, and I think the noble and learned Viscount acknowledged that in the words that he spoke. But it would be wrong—as the noble and learned Viscount has also acknowledged—to assume from the companies' attitude towards the Bill that there is no feature in this legislation to which they take exception. There is, in fact, one serious evil to which reference has been made, to which I feel it my duty to direct the attention of your Lordships' House, because it would be unfortunate if the support which the companies are prepared to give to this measure should be interpreted at any subsequent time as acquiescence in its shortcomings.
Your Lordships will have observed that the powers conferred upon the Government by the principal measure which this Bill seeks to amend are exercisable only in respect of certain insurance companies, as has been stated. It is a matter of common knowledge, however, that the conduct of insurance operations in this country is not confined only to insurance companies, but is shared in by syndicates of private underwriters and by mutual associations. It is true that the circumstances which prompted this legislation and the present amending Bill arose in connection with certain small insurance
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companies, but, looking at the history of British insurance as a whole, the cases where a British company has defaulted on its obligations are extremely rare; and it is no exaggeration to say that the British insurance companies, many of whose names are household words throughout the world, stand for all that is best in British commercial life.
And yet the Government, while taking, for the protection of the public, powers in respect of the whole body of insurance companies, have not taken any steps to extend those powers to deal with any other classes of insurers, such as those that I have just mentioned. The insurance companies are unable in equity to admit or to acquiesce in the principle of this discrimination, but, as I have already indicated, it is not proposed in any way to hinder the passage of this Bill by seeking its amendment. I am content to-day to bring to the notice of the Government the view that there should be at an early date legislation to bring all insurers, of whatever nature, within its scope, and to make it plain that the acceptance of this Bill as it stands in no way involves acceptance of the principle of discrimination which it contains.
LORD ELTON: My Lords, this Bill comes before us with the special advantage of being presented with all the customary lucidity and impressiveness of the noble and learned Viscount on the Woolsack. It appears to me to be yet one more contribution to that admirably intentioned, but necessarily piecemeal and restricted process of erosion which the Minister of Transport is conducting at the circumference of the road problem—a problem which I myself am convinced will only be eventually solved by much more explosive act-ion at the centre. Unfortunately, it has to be admitted that at the moment that snore drastic and con prehensive action is not entirely within the power of the Minister of Transport The present position seems to me exactly to reverse the circumstances in a familiar fable of Æsop. The British public appears to resemble the lion which has got itself inextricably entangled in the net of road slaughter, and your Lordships will doubtless remember that the powerful and irritable animal was eventually liberated by the inconspicuous activities of a benevolent mouse. The Minister of

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Transport, relying on literary precedents, is presumably trying to re-enact the part of that gifted rodent. My own view is that it is only when the lion itself can be persuaded to lash itself into sufficient frenzy to break its own way out of the net that the road problem will be solved. However, it has to be admitted that the temper of the public has not yet risen sufficiently for that to be expected in the near future, and consequently we have to be content with a series of partial erosions of which this is an instalment.
For the present instalment I, for myself, would say what one finds oneself saying about so many Bills, that we are very grateful but that we wish it had gone a good deal further. I do not want to traverse any of the ground which has been covered with such admirable and lucid brevity by the noble and learned Viscount, but I would like to ask him: Is it not true that before commencing motor insurance business it is only necessary to deposit £15,000, and is not that sum entirely independent of the volume of business to be transacted; so that if any of your Lordships were to decide for one reason or another not to insure your car before you took it on the road, you would yourselves be required to make a deposit of £15,000? If that is so it is obvious that there is no guarantee that a business is adequately equipped for motor insurance before it starts business. I would like to make it clear that I am speaking only of the few sinners and not of the many righteous, and I am not in. any sense calling in question the well-deserved tributes paid to the insurance business in general both by the noble and learned Viscount and by the noble Viscount who has just sat down.
I would like to ask the noble and learned Viscount whether it would not be possible at a later stage to consider altering the permissive "may" into the mandatory "shall." Is it not possible that, if we leave the permissive "may" in the Bill, the Board of Trade will almost inevitably wait before acting until there is some suspicion about the stability of the company in question? If that is so, are we not reintroducing ourselves to the old vicious circle? Once it is recognised that the summons to provide evidence implies some stigma, some suspicion of insolvency, then it seems to me the Board of Trade is all the more likely to
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give the company in question the benefit of the doubt, all the more likely to be reluctant to issue that summons. Just as when a private citizen is placed in the dock there is necessarily some stigma on him even if he is triumphantly acquitted of all the charges against him, so is it also likely that there will be some stigma upon a company which is selected out of all the companies as the one of which it is to be required that it shall furnish evidence, even if it should succeed in completely establishing its own solvency. We all know that Government Departments are traditionally soft-hearted. I. can understand the Board of Trade saying: "In the interests of the shareholders of this company we must wait a little longer, we must give it the benefit of the doubt, before we subject it to this inevitable stigma." I may be entirely wrong and the noble Viscount will tell me if I am wrong; but, if that is so, shall we not be back where we were under the Act of 1933? Would it not be better to substitute the mandatory "shall" for the permissive "may" and thereby transform a selective system into an automatic system? That is my first point.
My second point is this, and I hope I am not asking too much. I, personally, should be very glad to see, not only regular automatic provision of proof of stability of insurance companies. I should also like to see regular and automatic provision of statistics on certain other matters which are of great and growing importance to the State and to the general public. I think I am right in saying that when the Road Traffic (Compensation for Accidents) Bill was before a Select Committee of your Lordships' House, that Select Committee found itself considerably hampered in its activities by lack of statistics which in some cases, I believe, the insurance companies were not too ready to provide. I, for one, should like to see a regular return of statistics, for example, as to the number of claims made, the number paid by settlement, the number awarded in Court, the number declined, and the total sums paid.
All these are matters of great and growing importance, not only to the Board of Trade but to the Minister of Transport and to the general public. It

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seems to me that, by making motor insurance compulsory, the State has conferred a very real advantage on the motor insurance companies, and may therefore regard itself as entitled to say to them: "In return for this advantage of being taken in a sense into State partnership to your advantage, you shall regularly and systematically satisfy us not only as to your solvency, but as to the fact that you are faithfully, and on fair terms, discharging your obligations to the public, and further we ask you to provide these statistics which are required to enable us to conduct our general attack upon the much wider road problem."
I feel it in my bones that the noble and learned Viscount will say I am asking in this respect too much. If that is too much, will it also he too much to ask at a later stage for the mandatory "shall" instead of the permissive "may," and thereby transform the selective system with its necessary stigma, and all that springs from that necessary stigma, into the mandatory and automatic system? Only when we get that mandatory and automatic system will the public be in a position to feel that this compulsory legal insurance is, by all the companies and not merely by the great majority, being discharged in an adequate and reliable manner. That I believe is what the public demand and what it seems to me, subject to correction, unless it is strengthened this measure will not provide.
THE EARL OF MAR AND KELLIE: My Lords, surely at the present time every insurance company has to send up to the Board of Trade the most minute accounts? Therefore, if any unsoundness may occur, the Board of Trade is in a position at once to lay its finger on it, for that reason I cannot at first sight see the necessity for the Bill.
THE LORD CHANCELLOR: My Lords, in reply to the questions which have been raised by my noble friend Lord Elibank, I think he will realise that I anticipated most of the points he was going to raise in the speech with which I opened the debate. It is quite true that this Bill deals with companies, and companies only, but I explained before that it is not possible in legislation which it is desired to get on the Statute Book at the earliest possible moment to make
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such very complete changes in our law as would be involved by the suggestion to bring all individuals within the present company provisions.
The two questions which have been addressed to me by the two other noble Lords just a little bit cancel out one another. The noble Lord, Lord Elton, said: "Why do you not make it, mandatory and insist on everybody making full returns?" The next question was: "Why have the Bill at all, because you have already all the returns you want?" In fact, neither statement is quite true it is perfectly true, as I was going to say. in answer to Lord Elton in any case, there is already provision by which at the end of the year for which the accounts are made up, or, at any rate, within six months after they have been made up, figures are furnished to the Board of Trade, and these figures do contain very complete information; but my noble friend will realise that these figures relate to a period which may have begun eighteen months before the figures are actually furnished If the Board of Trade have to wait for eighteen months after they begin to suspect insolvency, and for such further period as is necessary to investigate the affairs of the company when the accounts are submitted, it may be a very long time before they are able to take effective action, and during the whole of that time a company which is not in a position to discharge its liabilities may be going on piling up increased liabilities to the on small detriment of the public.
In answer to my noble friend Lord Elton, who says "Make this mandatory," there is, as has been pointed out already, the mandatory provision that companies shall furnish accounts within six months after each year, and in the great majority of cases that is quite sufficient. This Bill is designed, as the 1933 Act was intended, to meet the case in which the Board of Trade believe that a company is carrying on business after it has got into an insolvent condition, and is not able to cheek that information or take any steps with regard to it because it has got to wait for six months after the end of the company's financial year. It would not be possible, as my noble friend has suggested, to make it mandatory on every company to furnish such accounts as the Board of Trade may

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want because, again, you would be leaving it entirely at the discretion of the Board of Trade to say what they are going to ask for. It is mandatory on every company to furnish such accounts as are commonly required. The need which we have found in practice to have arisen is to take steps when there is a company with regard to which there is general suspicion—and indeed what the man-in-the-street would call general knowledge—that it was in a doubtful state of solvency and with regard to which there is no means of arresting its course until the statutory period has arrived.
Then, it may be said: "Why should you not only have the right to demand such accounts as are involved in the ordinary statutory provision?" The answer is that it is not possible from those accounts always to find out everything that you want to know. In the ordinary case the accounts are ample and full and complete enough, and leave no possible doubt as to the solvency of the company involved, but one great element in a company's solvency is the assessment of the possible claims, because at the end of a year there is always an unexpired risk, and you can make a good deal of difference according to the rate at which you estimate the unexpected risk. I even read the other day an account of a company which was being wound up, and the explanation given by, I think, the managing director was that the Courts were so unreasonable in giving too heavy damages. That was only another way of saying the company had consistently underestimated its liability. Unless you have power to look into the figures and see how the accounts are made up you cannot check them and assure yourself of the solvency of the company. I do not contend that this Bill is complete. It is intended simply to meet the difficulty which has arisen in practice and which we hope will be remedied.
In answer to the other suggestion made by my noble friend, that we are eroding the edge of a great problem, I would point out that this Bill is not designed to affect the safety of the roads at all. It is intended only to deal with the ordinary but still important problem as to what shall happen when, unhappily, an accident has occurred. I venture to think that with these explanations your
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Lordships will realise that, although it is a small measure, it is yet an eminently useful one, and I hope, therefore, that it will receive your Lordships' general assent.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

MONEY PAYMENTS (JUSTICES PROCEDURE) BILL. [H.L.]
Order of the Day for the Second Reading read.
THE EARL OF FEVERSHAM: My Lords, the subject of this Bill was debated in your Lordships' House as recently as last February. On that occasion the noble Lord, Lord Arnold, called your Lordships' attention. to the Report of the Departmental Committee which had investigated the question why so many people are sent to prison every year by courts of summary jurisdiction for failure to pay fines, rates, and sums due under wife maintenance orders and affiliation orders. In a speech for which we are greatly indebted to the noble Lord, he drew, if I may be permitted to say so, in a very clear and concise manner attention to the principal facts and considerations contained in that Report. He then pointed out that the Committee had come to the unanimous conclusion that it would be practicable by certain amendments of the law to reduce substantially the number of imprisonments.
There can be no doubt as to the importance of this subject. In a year about 20,000 people are sent to prison in England and Wales for failing to make the money payments which are dealt with in this Bill. Over 11,000 people are sent 'to prison for failure to pay fines, 3,600 for failure to pay under wife maintenance orders, 2,400 for failure to pay under affiliation orders and 3,000 people for failure to gay rates. As the noble Lord, Lord Arnold, has already told your Lordships, the total number of imprisonments in a year from all causes is 53,000, and therefore your Lordships will appreciate that more than one-third of the total number of imprisonments occur, not because offences have been committed for which imprisonment is the only appropriate penalty, but because there has been failure to comply with the orders

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of a. court of summary jurisdiction for payment of a sum of money.
I believe that it is unnecessary for me at this stage to enlarge upon the evils attendant on the great number of imprisonments for failure to pay money. The noble Lord's request that early steps should be taken to implement the recommendations of that Departmental Committee was echoed by the noble and learned Lord, Lord Merrivale, the noble Marquess, Lord Reading, and the most reverend Primate the Archbishop of Canterbury. The unanimity of opinion expressed in your Lordships' House on that occasion has greatly facilitated the task of the Government in dealing with this problem, and the noble Lord, Lord Arnold, will be glad that they have decided to introduce without delay a measure to give effect to the views expressed on that occasion in all parts of your Lordships' House. But perhaps it may be well for mc to explain the provisions of the particular clauses contained in the' Bill in more detail than is customary for a non-controversial measure owing to the fact that this Bill has come to your Lordships' House before being introduced in another place, and to the essential importance of having the provisions of the Bill understood by those who adjudicate in petty sessional courts.
The principles upon which the Committee's Report is based are comparatively simple, but in order to give effect to those principles it is necessary to amend the existing law relating to the procedure of courts of summary jurisdiction in a number of details. A great deal of consideration has been given to the question as to how to effect these amendments in as clear and short a way as is practicable, and the Bill before your Lordships embodies. I think, the essential proposals of the Committee so far as they relate to courts of summary jurisdiction. The principles running through all the Committee's recommendations are, first, that persons should not be imprisoned for default in payment of moneys unless and until the minds of the justices have been specifically directed to the question of imprisonment; and secondly, that as regards rates and sums Clue under wife maintenance orders or affiliation orders, it should be made clear that the courts ought not to commit to prison if, after inquiry as to the means
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and circumstances of the defaulter, they come to the opinion that his default is not due to wilful refusal or culpable neglect. To give effect to these general principles it is necessary to deal separately with the law relating to fines, to wife maintenance and affiliation orders, and also to rates.
As regards fines, the Bill proposes in accordance with the recommendations of the Committee to give effect to the principle that imprisonment shall only be ordered after the mind of the court has been specifically directed to this question, by providing in Clause I that when a fine is imposed and time is given for payment there shall at the time of the conviction as a general rule be no term of imprisonment fixed in default, but that if default occurs the defaulter shall be brought before the court again so that the justices may have the opportunity of reviewing his circumstances before deciding whether to send him to prison. It is, of course, necessary, as the noble Lord, Lord Arnold, pointed out in his speech on his Motion, to give some discretion to the courts to make certain exceptions to this general rule and these exceptional cases are covered by the proviso to Clause 1. The noble Lord referred to such specific cases as habitual drunkards and vagrants. As regards the great majority of cases where fines are imposed the court expects the fines to be paid and does not, when imposing a fine, contemplate the possibility of imprisonment. In over 97 per cent., of the cases this expectation is justified. Your Lordships will remember that the total number of persons fined, according to the last available statistics in 1932, was 437,000. In the residue of cases, just below 3 per cent., the defendant is sent to prison as a result of the issue of a commitment warrant signed by a single justice who may know nothing about the case except that the fine has not been paid.
Under the procedure proposed in Clause 1 it would be impossible for a position to arise in which the justices may have to sign commitment warrants without full information about the circumstances of the persons against whom those warrants are directed. The new procedure proposed under the Bill will be when default occurs to bring the defendant before the court so that the court may consider, not, of course, the

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original conviction, but whether the defendant has made reasonable efforts to pay the fine, whether longer time should be allowed to him, and what is the appropriate penalty if he fails to pay. The court will also have an opportunity at this stage, if thought fit, to place the defaulter under supervision in accordance with the provisions of Clause 5, a clause on which with your Lordships' permission I will make some comment later.
One result of the new procedure proposed in Clause 1 is to make it necessary to provide special machinery for dealing with defendants who reside at some long distance from the court at which they have been convicted. Motoring offences, as your Lordships know, are frequently committed in places far removed from the defendant's residence. Under the present law if a man living, say, in York is fined for an offence in London—and if the offence were of a minor character he would probably send a letter to the court asking to be excused attendance—the procedure, if he fails to pay, would be for the London court to issue a warrant of commitment to prison and for the York police to execute that warrant. Under the new procedure proposed in Clause 1 it would obviously be impracticable to bring the defaulter from York to London for this purpose, for he has to appear before the court in order that his means may be ascertained. Clause 2 therefore provides machinery by which in such case the defaulter can, if necessary, be brought for such an examination before the court in the district in which he is residing. Obviously, my Lords, examination as to a defaulter's means can be more effectively conducted in his own district. It is perhaps worth mentioning here that if in such a ease the fine is ultimately paid it will be transmitted to the clerk of the convicting court.
Clause 3, which provides for proper notification being given to persons who are fined, is intended to bring the practice of all courts up to the standard of the best courts. Such notices as are provided for in this clause are specially important in the case of persons who are fined for minor offences in their absence. It is the practice of some clerks to justices to send no notification of a fine to an absent defaulter unless he has forwarded a stamped addressed envelope for this purpose, and needless to say the
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number of defendants who take this precaution is very small. Cases occur sometimes where an offender receives a summons on which there is a note that if he does not attend and wishes to hear the result he must send a stamped addressed envelope to the clerk. The offender does not attend the court and does not send a. stamped envelope. He is fined in his absence and hears no more of the matter until a policeman appears with a warrant of commitment to prison if the money is not then forthcoming he is liable to be lodged in gaol. The noble Lord, Lord Arnold, in the previous debate, quoted a case of a lorry driver who was charged with obstruction. It was a technical obstruction on the highway. He heard nothing of the results of the proceedings taken in his absence and remained in ignorance until a police officer arrived with a commitment warrant and he was taken to gaol. Everyone will agree that the law should be so framed as to prevent cases of this kind occurring, and Clause 3 will have that effect.
Clause 4 provides for detention for one night in a police station of persons who fail to pay small fines. Under the existing law imprisonment cannot be ordered for a shorter period than five days, and courts have power to commit to certified police cells for detention for a period not exceeding four days. Few police authorities, however, have applied for the necessary certificate that their station is suitable for detention for so long a period as four days. Accordingly under the existing law imprisonment has frequently to be ordered although it may be an excessive and inconvenient penalty. For example, men who have been fined, say, 5s., for some minor offence have to be sent up from, say, Brighton to Wormwood Scrubs for a week's imprisonment. Again, young fellows fined for some small offence, such, for example, as damage to a street lamp, have to be sent to prison for a week because the courts have no other method of enforcing the law against those who defy their authority. In many eases where small fines are imposed and are not paid it is essential to do something to show that the law cannot be disregarded with impunity; and Clause 4, authorising detention for a period not exceeding one night in a police cell, will give the courts a useful power of dealing with these minor cases. The

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fact that the power is in existence and can be used as a threat will frequently, no doubt, make it unnecessary to carry out the threat.
Clauses 5 and 6 make valuable extensions to the existing law relating to the powers of the court to place under supervision a person who has been given time to pay a fine. Under the existing law, where a young person under 21 is fined and given time to pay, courts have power to place him under the supervision of a suitable person who shall "advise and befriend him with a view to inducing him to pay and thereby avoid imprisonment and shall if required report to the court as to his conduct and means." Very little use has hitherto been made of this power, partly owing to the fact that supervision orders can under the existing law be made only at the time when the fine is imposed and cannot be made later when a default occurs; and partly owing to the fact that many courts do not think this duty of supervision is suitable for a probation officer and there is no one else available to undertake the work. The Committee expressed the opinion, with which I entirely agree, that the probation officer is clearly a suitable person to undertake this work, not only because of his training and experience but also because of his position of authority under the court which imposes the fine. It is recognised that in many areas the probation officer is already fully occupied and cannot undertake more duties, but that is not a reason for refusing to make use of this valuable method of supervision. It is a reason for strengthening the staff of probation officers and making such arrangements, either by turning a part-time probation officer into a full-time officer, or by appointing additional officers, as will enable the court to have assistance from a trained social worker in all cases where such assistance is desirable.
Clause 5 amends the existing law by enabling the courts to adopt the method of supervision not only at the time when the fine is imposed but also on a later occasion when default occurs, and also by enabling them, if they think fit, to use the method of supervision not only for young offenders but also for older defaulters. Clause 6 imposes an additional check on the imprisonment of young persons under twenty-one. Everyone agrees that imprisonment for young
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persons ought not to be adopted if any other method is practicable. The importance of this principle has recently been emphasised in weighty words by the Lord Chief Justice in a recent lecture of the Clarke Hall Fellowship. The clause will make it impracticable for the justices to send persons under twenty-one to prison for failure to pay fines unless the method of supervision has been tried or there is some special reason for not adopting this course, which reason must be stated by the justices in the warrant.
I now turn to the provisions of the Bill affecting wife maintenance and affiliation orders. Under the existing law, if a man fails to pay the weekly sum which he has been directed to pay under such orders, the justices may, "if they think fit," commit the defaulter to prison. Most justices, in the exercise of this wide discretion, consider how far the defaulter is to blame for his failure, but there is no legal requirement that they shall do so. The Committee regard this as a serious defect in the existing law, and it is desirable to lay down by Statute the policy which justices ought to pursue in such cases. While on the one hand it will be agreed that only those defaulters whose failure is culpable ought to be sent to prison, it is on the other hand essential to avoid placing on the woman the onus of proving that the man has been guilty of wilful refusal or culpable neglect. In framing Clause 8, account has been taken of both these -considerations. Its effect will be to require the justices in every case to consider whether the man's failure to pay is due to wilful refusal or culpable neglect without placing on the woman the onus of proving culpability. If, however, the justices, after reviewing the circumstances, form the opinion that there has been no culpability, the clause makes it clear that in such a ease they must not exercise the power of imprisonment.
Clause 10 of the Bill deals with rate defaulters, of whom about 3,000 are sent to prison every year. Very few of the large numbers of persons summoned for non-payment of rates appear in answer to the summons. The next step is for the justices to issue a distress warrant. In most cases payment is made on the issue of this warrant, if, however, the warrant is returned marked "No effects," or "Insufficient effects," application is then made to tile justices to issue a commitment to prison. Most of those who have

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not paid on the issue of the distress warrant pay on the issue of a commitment warrant, but in the residue of cases the defaulters are taken to prison. In a proportion of these cases, had the defendant appeared before the justices and represented his circumstances, he would have been given more time and possibly have been excused payment or part payment. This clause will enable and require the justices, in those cases where a distress warrant fails to produce the money, to compel the defaulter's attendance before the court. In many cases the issue of process for this purpose will no doubt result in the payment of the sum due. In the residue of cases the justices will have an opportunity of examining the defaulter as to his circumstances before deciding whether they will commit him to prison.
Under the existing provision of the Rating and Valuation Act the justices must not commit a defaulter to prison if he shows that his default is due to circumstances beyond his own control. The Committee, however, felt that it is undesirable to place on these defaulters, many of whom are ignorant of legal procedure, the onus of proof that default is due to circumstances beyond their own control. At the same time, if the onus of proof is placed on the rating authority, it would often be impossible for the rating authority to prove that default is due to wilful refusal or culpable neglect. Clause 10, accordingly, is based on the same principle as has been adopted with regard to defaulters under affiliation and maintenance orders. It requires the justices to consider in every case whether the failure to pay is clue to wilful refusal or culpable neglect, but does not place on the rating authority the onus of proving culpability. If, however, the justices, after considering the defaulter's circumstances, come to the conclusion that he is not to blame for his failure, then the clause will prevent them issuing a warrant of commitment to prison. Clause 12 enables the justices to investigate the circumstances of the various classes of defaulters to whom the Bill applies, and it will often be an advantage to them to be able to accept as prima facie evidence a written statement from the employer as to wages.
I hope I have made it clear by this review of the provisions of the Bill that
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it gives effect to the two main principles on which the Departmental Committee laid emphasis. First, it provides that before a defaulter is sent to prison for failing to make any of the money payments dealt with in the Bill, the justices shall review his circumstances, and if they decide to commit him to prison they shall only do so after their attention has been specifically directed to the question of imprisonment. Secondly, the Bill provides that in wife maintenance and affiliation cases, and in rate cases, imprisonment shall not be ordered if the court, after reviewing the defaulter's circumstances, form the opinion that his failure is not due to wilful refusal or culpable neglect.
The question may be asked whether the Bill will not impose additional and unnecessary work on the courts, and perhaps some additional expense. The answer is that it may impose additional work on some courts, but that such additional work is by no means unnecessary. As the findings of the Committee show, evils are liable to occur because the existing system does not allow sufficient opportunity to the courts to deal with the issue of commitment warrants in a judicial manner. The issue of a warrant ordering a man's committal to prison is a very serious step, and no one ought to begrudge time spent by the courts in preliminary consideration before taking this step. If it be true that some courts are so busy that the adoption of the additional procedure provided for in the Bill will cause serious inconvenience to the arrangement of their work, the answer is that the sittings of a court of justice ought to be arranged so as to enable all the steps to be taken which are necessary for the proper administration of justice.
A procedure which is desirable in the interests of justice must not be shortened in order to suit the convenience of the court; on the contrary, the time of the court must be arranged so as to suit the requirements of justice. Reasonable despatch in the conduct of business is no doubt a virtue; but it is possible that in some of the busy courts of summary jurisdiction there is a danger of over haste, with the result that it may be difficult in all cases to be certain that justice is done, and still more difficult to convey to defendants the impression that justice is done. Even if a man has

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a poor case it is desirable that he should be given time and opportunity to state it fully. To make certain that justices shall fully consider all cases where a question of imprisonment for non-payment of money arises is the main object and effort of this Bill. I am afraid that I have taken up much of your Lordships' time in explaining in some detail the provisions of this Bill, hit as it is hoped to complete the Bill in all stages, both in this House and another place, before we rise, I think that my doing so will facilitate that end.
Moved, That the Bill be now read 2a.—(The Earl of Feversham.)
LORD ARNOLD: My Lords, I should like on behalf of myself, and of those with whom I am associated on these Benches, to express our deep gratitude to the Government for bringing in this Bill. It is a measure which, I am sure, will be warmly welcomed by men of all Parties and by the whole country. The noble Earl has moved the Second Reading in what we shall all agree was a most comprehensive speech of great lucidity. He had a large amount of ground to cover, and he has done so most exhaustively. His full exposition will be of great value to your Lordships' House and to the country.
The noble Earl referred to the debate which took place here on February 27 last, when I had put down a Motion dealing with the whole problem, and on that occasion complete unanimity was achieved in this House. The noble Earl was good enough to say kind words about my speech and my Motion, and I greatly appreciate what he has said, but I do riot take credit to myself for the unanimity achieved on that occasion. It. was achieved by the compelling human appeal of this problem. I found, myself, that any language which I had used was surpassed in strength by great legal authorities like the noble and learned Lord, Lord Merrivale, and the noble Marquess, Lord Reading. They emphasised in the strongest possible terms the need for reform, and the urgent need for reform, in order that the present system, which has continued far too long, should be brought to an end. Also, as the noble Earl has said, the most reverend Primate on that occasion spoke forcefully in the same sense, and following that debate the Press of the country was absolutely
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unanimous in saying that something ought to be done. In particular there was a powerful article in The Times not very long after the debate in this House.
The Government on that occasion, through the noble Earl who had the debate in charge, promised to take the matter into favourable consideration. They have done so, and as a result they have now brought forward this Bill. It is the urgent need for reform which has caused the Government to do this, and I wish to say that as far as we on these Benches in this House are concerned, we will do all that we can to facilitate the smooth and swift passage of this Bill through your Lordships' House. The noble and learned Marquess, Lord Reading, spoke in a similar sense for the Liberal Peers, 'and noble Lords on the other side spoke also in a similar sense. Therefore I think we may take it that the quick passage of this Bill through your Lordships' House is assured, and speaking with some confidence—and I have grounds for what I say—I believe that the same thing will happen in another place and that the Bill will also pass through there rapidly.
It is, as the noble Earl pointed out, amazing and Appalling to think that altogether, if we add to the 20,000 or so persons imprisoned under the three heads which he named to your Lordships those who are imprisoned through failure to pay County Court debts, who usually seem to number between 3.000 and 4,000 persons a year—and this Bill does not deal with them because the Committee's Report did not deal with them—we arrive at the result that pretty nearly one half of the people in the prisons in the course of a year are there because they are unable to find a sum of money which for the most part is a very trifling amount. That is what The Times in its article referred to as a "blot on our civilisation." Those are strong words. The Times said that it is an abuse of punishment that, because these persons are unable to find sum of money which for the most part is quite trifling, they should have inflicted upon them the terrible penalty of imprisonment.
As the Committee said in their Report this Bill should reduce by many thousands a year the numbers of those going to prison for failure to find money under the three or four heads with which the

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Bill deals. I will venture to suggest that when the Bill is fully in operation it may well be that this measure will keep out of gaol perhaps somewhere about 10,000 persons a year who would otherwise be put in gaol for these quite minor offences, the actual offence being the inability to find a trifling sum of money. When we think of the incalculable saving in human suffering, not only for the people involved but for their relatives and friends, it becomes perfectly clear that there is an overwhelming case for Parliament to do something.
In particular I rejoice that this Bill deals with the question of imprisonment for rates. I may be too optimistic, but I think that the clause which is in this Bill should to a very large extent bring to an end imprisonment for rates. Every year somewhere about 3,000 people—which means on the average about ten persons a day leaving out Sundays—are taken to prison because they are unable to pay their rates and in the vast majority of cases, practically all cases, not through any fault of their own but through sheer poverty. I believe it is the case that when the Departmental Committee investigated these matters there was not one single Prison Governor who gave evidence who thought that imprisonment for non-payment of rates was justified. Cases have been known of rate collectors actually paying the rates out of their own pockets so as to prevent some poor person being haled off to gaol. That may be very creditable to the rate collectors, but it is descreditable to the system which brings about such an extraordinary state of things.
There has been a book published in the past month by Dr. Unwin, who is the head of Cambridge University Settlement in South London. He has been investigating some of these cases. There was one particularly poignant case of an old age pensioner, a poor man nearly blind, trying to find things and unable to do so. It was proved, according to this book that after he had paid his rent, he and his wife had 14s. a week to pay for food, coal, light, heating and rates. He could not do it, and he was taken off to gaol. It is time that that kind of thing was stopped, and this Bill will stop it. Other cases which I might bring before your
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Lordships, but I do not think it necessary, will be stopped by this Bill. Suffering of this kind, the result only of the crime of poverty, ought to be brought to an end.
Let me in conclusion quote from The Times article:
"In and out of prison goes constantly throughout the whole year a steady stream of men and women who have not been guilty of any crime, as that term is ordinarily understood."
Then, referring to the debate in your Lordships' House in February, and urging legislation, they say:
"Meanwhile the imprisonments go on as before and will continue until those steps are taken which humanity demands."
Well, thanks to the Government for bringing in this Bill, those steps are being taken now, and there is every hope that before we adjourn for the Autumn Recess this Bill will be on the Statute Book. It is very difficult to see on what grounds the Bill can be opposed or criticised. If it is said by some that the Bill might go further, that applies to every Bill I have ever heard of. It goes a long way. It does a great deal, and incorporates a very great percentage of the recommendations of the Departmental Committee. If it went further—and I can quite see the Government's point—there would be some risk perhaps of its becoming controversial, and, if it were controversial, at this stage of the Session it could not pass.
I do not think, either, that the Bill can be criticised on purely legal grounds. I say that for two reasons, and in the first place because the Departmental Committee, on whose findings the Bill is based, contained gentlemen of eminent legal qualifications and gentlemen who have had profound experience of these various problems. Then again, this Bill has been prepared in the Home Office, and the Home Secretary, Sir John Simon, is one of the greatest lawyers of our time. I think we may take it that it is scarcely possible to cavil from the legal point of view at a Bill for which he has in a sense that special responsibility. I cannot think that any noble Lords in your Lordships' House, or any honourable members in another place, would take upon themselves the responsibility of killing what I will call this merciful measure, which will do so much

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to help those who cannot help themselves. This is pre-eminently a Bill to help the helpless. The noble Earl who introduced it has in the course of his life shown practical sympathy with those unfortunate human beings who have come within the measures of the law. He has devoted his time and abilities from time to time to helping them, and I think it will afford him peculiar satisfaction that he is in charge of this Bill which will do not a little but a great deal to lessen human suffering.
LORD SNELL: My Lords, it must be a source of some satisfaction to your Lordships that this much needed and unduly delayed reform had its origin in your Lordships' House. I had the privilege in December, 1932, of introducing this matter to your Lordships' attention, and I have to admit at once that the Gov-eminent, as soon as the facts were put before them, responded immediately to my request that a Committee of Investigation should be established. That Committee was set up in due course. We have watched the progress of this inquiry with a good deal of anxiety, and waited impatiently for the Bill that is now presented to your Lordships' House.
I do not need to recite any of the details or to say any further word about it except just this, that especially to those of us who sit on these Benches it is a source of anxiety, tragedy almost, that the peak of unemployment in the nation always corresponds with the peak of those who go to prison for nonpayment of debt in various forms. There is something peculiarly odious in the fact that the torture of prison is added to the agony of unavoidable unemployment. Because we think this measure will help to remedy that, we promise to give the Government every possible support we can to get it passed into law this Session. This year is one when we ought to rejoice to remove from the Statute Book some of these limitations which mean suffering to our fellow human beings. If this Bill is passed, as I pray it will be passed—and I appeal to your Lordships to give it all the assistance you can—the result will be that thousands of decent people will be saved from suffering in the future.
THE MARQUESS OF LONDONDERRY: My Lords, I am sure it must be very gratifying that this measure has met with so much approval on all sides of the
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House. Your Lordships will remember that this subject has been brought up on more than one occasion, and it was brought up on the initiative of the noble Lord who sits opposite. While I cannot give him the full credit for the legislation which has been brought into being, still I should like to pay tribute to the manner in which he introduced the subject, and I feel that he, as much as anybody else, has the right to feel that he has had a hand in the enactment, as will shortly be the fact, of this legislation.
The noble Lord who has just sat down has spoken on this matter in terms which we should expect of him. This will be a measure which will, I think, be a benefit in all parts of the country. I should like also to endorse what the noble Lord opposite said, that he was gratified to see my noble friend Lord Feversham in charge of this Bill. My noble friend has occupied himself for many years in these matters, and I know he is feeling great satisfaction in that he has the opportunity of piloting this measure through your Lordships' House. I sincerely hope it will rapidly pass through all its further stages in this House, and that it will have an equally smooth passage in another place.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

CURRENCIES AND EXCHANGE.
THE EARL OF LIVERPOOL THE EARL OF LIVERPOOL had given Notice that he would ask His Majesty's Government whether they will consider the desirability of taking steps to deal with currencies relative to the exchange problem, more especially in view of the fact that owing to the amount of frozen money the assets of the Treasury are considerably affected; and move for Papers. The noble Earl said: My Lords, I have been asked by certain people to put down the Question that stands in my name. Before going into detail, I ought to say they are very much alarmed at the condition of affairs which prevails in many parts, in fact in all parts, of the world, as a. result of frozen credits due to the unsatisfactory condition of the exchanges. At the same time, undoubtedly there has been some improvement in that condition of affairs since last the matter was raised in your Lordships' House, and I think it would

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be unfair if great credit for that improvement were not given both to His Majesty's Ambassadors and to the Government officials in the three large Departments concerned—namely, the Foreign Office, the Treasury, and the Board of Trade.
I felt, before saying anything in your Lordships' House this afternoon, that I ought to give the noble Earl who is going to reply some idea of the examples which I was going to quote of cases where a large amount of British capital was involved, because I did not want to act the part of a leather-jacket and traverse the whole pitch of the world. For that reason I felt I should only quote three instances. The first one is the place where there is probably most frozen British capital, and that is the Argentine. We are fully aware, of course, that the Committee appointed by the President is entirely favourable to us in many respects, but it now depends on how these conditions are going to be carried out. The Argentine itself must have learned a certain amount from the fact of the failure of their loan over here, because, so far as their railways are concerned, which are practically run entirely by British capital, if their credit is not to be permanently affected they will have to do something to release some of their money over here.
This Question of mine has been framed for a dual purpose. First I want to show the large amount of capital which is lost to the Treasury. Secondly, it is framed to safeguard and protect, so far as possible, the large amount of British capital invested all over the world and at present locked up owing to the unsatisfactory condition of the exchanges. This capital should not be considered, I think, as the property of certain investors. It originated from the earnings and savings of our country. It is truly national property, and deserves every possible protection from every Government in this country, for the country cannot afford to lose its savings. It may be said that we in this country are unwise to invest any capital in any foreign country, but I do not think that would be the view of many in your Lordships' House. Indeed it has been the practice in the last few years for the Governments of this country to assist foreign countries by means of loans owing to the depression which has ensued since the War.
I leave the Argentine for a moment, and pass on to another country which, until the last few years, has always upheld its obligations. I want to ask the noble Earl, especially, what is the position as regards Chile. There a large amount of British capital is involved, and by the loss of the interest on that capital the Treasury also loses a large amount of money. I understand that the Chileans sent over a delegation to this country to talk with our Foreign Bondholders' Association. They suggested that on their Government obligations they should pay 50 per cent of their debt and that the other 50 per cent should go to liquidate the bonds themselves. T understand—the noble Earl will probably tell me—that our people over here in the Foreign Bondholders' Association strongly objected to that arrangement. I should be glad to hear whether a solution has been reached on the question or not.
There is, lastly, on the American Continent another case which has to deal with the question of exchanges. As we all know, Australia and New Zealand, both in their public and private undertakings, have never failed to act up to their obligations. Unhappily, Canada has not been quite so fortunate, because, so far as their private undertakings are concerned, they are to a certain degree mixed up with a foreign country—namely, the United States of America. There is one undertaking in Canada which you can hardly call a private undertaking, because it is involved very largely as a Government concern; I refer to the Canadian Pacific Railway. A large part of its primary stock—I understand it is 97 per cent.—is held in this country and that company is involved in payments to other railway lines in the United States of America. I understand that our officials here are, at the present moment, somewhat concerned as to how far they are involved in the United States. I would ask the noble Earl who is to reply whether he can tell us whether or not we have been approached to deal with this whole question so far as the American continent—I include South America as well as North America—is concerned, and to see if we cannot devise some scheme to make more satisfactory the condition of exchanges in that part of the world. Those who asked me to put this Question down realise the fact that our payments next year are going to be very much

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greater than at the present time, and it would be pleasant, at all events, to know, both for the private individual and for those grasping people the Treasury, that they are going to get more money without putting a bigger burden on this country. I beg to move.
LORD STRABOLGI: My Louis, I think it will be agreed by your Lordships that the noble Earl who has just resumed his seat has introduced a good hot weather subject, also that it is, despite the weather, a subject of very great importance. The noble Earl, in what perhaps he will allow me to describe as his most interesting speech, dealt with three particular cases. I propose in my few remarks to deal with no actual cases, but only with one or two general principles. The noble Earl has performed the great service of loosening the single stone which brings down the avalanche, and I shall attempt to supply the avalanche by dealing with this question from the point of view of broad principles. I gave the noble Earl, Lord Stanhope, some very brief preliminary notice of what I was going to say, and I am sure, with his great knowledge of these matters and his great experience, he will be able to answer to the satisfaction of your Lordships.
The subject which the noble Earl, Lord Liverpool, has introduced deals with the questions of currency and exchange. I believe that the question of the stabilisation of the world's currencies is of tremendous importance to this country as a great trading nation, and that the greatest service the Government can do is to press forward with a sound system for the stabilisation of international exchanges; but if that stabilisation means that we are going, once more, to be cooped up in the strait-jacket of the gold standard, I submit to your Lordships that will be disastrous. I believe the majority of business men, trade anion leaders, and others in this country, and especially the younger generation of business men, and the younger generation of bankers, would agree that it would be an unmitigated disaster to go back to the old gold standard. That standard was bad enough when the rules were observed, before the days of huge international indebtedness, of gold hoarding, and of restrictions on foreign exchange and
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foreign trade. I submit it is quite impossible to go back to it now.
I will trouble your Lordships with a very few of the more recent statistics to show how the countries which remained on gold have fared, compared with those who have gone off gold and are now within the sterling bloc, including the countries to which the noble Earl referred. The trouble is that certain of the bank presidents and Central Bank governors who attend the meetings of the Bank of International Settlement at Basle, and who come from the countries on the sterling basis, will insist on flirting with the idea of going back to gold. They have encouraged the old orthodox economists in the gold standard countries to cling to that out-of-date standard, with results that you see in Belgium, where the country was nearly ruined by remaining on gold far too long.
I believe we need an authoritative declaration now from the Government. Let them speak as a Government intending to govern, and say that they have no intention of going back to the gold standard at all under the conditions now ruling. We now know that the modern need for a currency, national or international, is not only that it should keep the price level reasonably stable, but that is shall be capable of expansion to keep pace with the steady increase in production, national and international. Otherwise we get that modern evil, deflation, which brings with it cuts and economies and reduction of purchasing power, and that modern anachronism, hunger and poverty in the midst of plenty. The present Government, or its immediate predecessor, the present Coalition Government was formed for the purpose of keeping Britain on the gold standard, and I cannot refrain from reminding your Lordships of the terrible prophecies that were made of what would happen if we abandoned the gold standard. Everything, we were told, would be ruined; the English pound would be worth nothing; all prices would rise. We were told this not only in this country, but by the orthodox economists in other countries. Well, since we have abandoned gold, the Chancellor of the Exchequer and the Leader of the House and other Ministers have been very fond of telling us that the position of this country has steadily improved, and

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so has the position improved in certain other countries also on sterling and off gold. Of course, that is the British Government's fault we will be told. Some other countries have done better than we have. They have benefited from the presence of the present Government in Britain, I suppose! Sweden, which, I am sorry to have to remind your Lordships, has a Labour Government, has done even better than we have. The unemployment figure in Sweden now is better than the pre-War figure. It represents three quarters of one per cent. of the population.
Now, compare that with the position in other countries still on gold. I will trouble your Lordships with a few figures which have just been produced and which, I think, are of sufficient interest to quote. Before we consider the case, however, of the sterling countries, let us consider the case of Belgium, a country in many ways on all-fours with ours, with a Colonial Empire, and with a closely-settled population, dependent on her industries and very largely on her overseas trade. Belgium was nearly ruined by clinging to the gold standard. The wholesale price index rose in Belgium—here is something for those advocates of the gold standard who talk about stability and sound currency to answer—from a basic figure of 100 in 1914 to 744 in 1926, then to a peak of 851 in 1929, falling back to 470. In the boom year of 1929 it went up to 850 and during the years of deflation it fell to 470. The retail price index rose to 618 in 1926 as compared with 119 in 1914. It then rose to 875 in 1929, but in the slump fell to only 660, with the result that anyone could prophesy.
The cost of living in Belgium before they went off gold was 15 points higher than in 1926, and unemployment—these figures, I submit, are very striking indeed—during this terrible period rose from 28,000 in 1926 to the fantastic figure of 392,000 in the spring of this year just before Belgium went off gold. That would have happened to us if we had remained on gold. If Mr. Ramsay MacDonald and the present Viscount Snowden and others had had their way we should have remained on gold and we should have gone through this terrible experience that the industrious, hardworking and very businesslike Belgians have passed through. Bankruptcies
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trebled in Belgium, and their so-called sound money finally brought a collapse and the country went off gold. Now they are beginning to look up again. The position in France, Germany and Italy with their so-called gold currencies—I say "so-called" because in Germany and Italy they are only nominal—is notorious.
I am now going to trouble your Lordships with some figures, because one must get down to facts. There has just been published the Statistical Year Book of the League of Nations which gives a mass of most valuable and official figures relating to the cost of living, employment, the index of production and so on. They are a little difficult to follow, but they have been co-ordinated and correlated and reduced to a common denominator by a very able young writer, Francis Williams, of the Daily Herald, with whose writings I have no doubt the noble Earl is familiar. He has a great reputation as an economist though not perhaps as a politician on the other side of your Lordships' House. He has analysed these figures, and they are most remarkable.
In all cases the 1929 figures when the post-War boom was at its height have been taken as 100. There are seven countries which show a distinct recovery from the slump period of 1931–2. Taking the figure of 100 in 1929, Japanese industrial production went down to 91, but has now risen to 136. With the exception of Russia, Japan shows the greatest improvement of all. I do not want to enter into reasons here. I dare say one reason which will be given is that of the present Government at Westminster. In the case of Russia the figure of industrial production in 1934 is 296, nearly three times as much as in 1929. Now I come to Sweden. In Sweden in the slump years 1931–2 the figure went down to 84.5. It is now back to 100. Now we come to our own country. Our lowest point of depression was reached in 1932 with a comparative figure of 83. It is now up to 99.1. It is nearly back to the 1929 figure. I admit that that is very satisfactory as far as it goes. The Danes are level with us, practically back to the 1929 figure. Norway, having slumped down to 78, is now up to 94.3, and Hungary, having slumped to 73.5, is now up to 94.1. So much for the countries who are off gold.
Now we come to countries with Fascist Governments on a nominal gold standard.

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It is necessary to mention Fascist countries separately because it is obvious that the attempts to make a Corporate State and the various restrictions introduced have affected production, and politics of course come into the question here. Germany, with 100 in 1929, had reached a productive output at the end of 1934 of 87, Italy 80.9 and Austria 72.1. Those are the Fascist countries. Now let us turn to the gold bloc countries. France slumped down to 68.6 in 1931, and has now recovered to 70.7. Holland at the end of last year, as compared with the index figure of 100 in 1929, was up to 69.8 compared with our 99.1; Poland, 63; the United States of America (not on gold now), 66.4—there were special factors there because the slump went much lower—and Canada, from a figure of 100 in 1929, went down to 48 in 1933 (a terrible thing for an agricultural and raw material producing country) and is now only up to 74. I submit that those figures are very striking. They show throughout that countries on gold have suffered much more severely than countries that went off gold, and that we have now recovered to a greater extent.
I must now trouble your Lordships with a few figures about employment. I will not deal with the terrible figures of the slump years, I will only take the year 1929, the index year, and the 1934 figures. Again the index figure is 100. In the case of Japan the figure in 1934 was 105.9. Actually there were more people employed than in 1929. The figure for Denmark was 111.5, and for the United Kingdom, 99.9. The figure for this country is slightly up now; this figure is only to the end of 1934 when the Statistical Department of the League of Nations closed their books. The figure for Sweden, 96.2, is also slightly up now. We find therefore that the volume of employment in countries off gold has gone up to nearly the pre-slump figures. Now take the corresponding figures in the Fascist countries. They are: Italy, 69.6; Germany, 86.8, in spite of the tremendous programme of public works and great orders for munitions and armaments; and Austria, 67.1. Now we turn to the gold bloc countries. We are told what a wonderful thing it would be for us to go back to gold. This is what has actually happened. The figures in the gold bloc countries are: France, 72.1 (a new record for all time in France);
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Holland, 69.1; Switzerland, 70.8; Poland, 57.8; Belgium, 74.3; all compared to an index figure of 100 in 1929. As a matter of interest only I may quote the case of the United States of America, which of course is not on gold, where the figure is 78.6.
Those figures, I submit, are conclusive, and the same lesson can be learned from the comparative figures of cost of living and other statistics in regard to all these nations. Countries that have remained on gold have suffered much more severely than those that went off gold. What saved us was that the Government were driven willy nilly off the gold standard. I hope they have learned their lesson. The International Chamber of Commerce has recently met in Paris, and a well-known economist, Professor T. E. Gregory, who may be supposed to speak with authority, fried to stampede the International Chamber of Commerce by declaring:
"Universal stabilisation can only be attained upon the basis of gold. Although fixity of exchange would be obtained if every country did link up with sterling, it is politically impossible to think of France or the United States of America ever agreeing to such proposals."
That is not true, or rather it is one of those dangerous half-truths which do infinitely more harm than downright misstatements.
It is true that neither France nor Holland nor Switzerland nor the United States would be willing to link their currency to sterling so long as the principles according to which the currencies of the British Empire are and will be managed, are not clearly and openly defined. I am not here to criticise His Majesty's Government on this occasion, but I think our position should be defined more clearly than in the past. It is probably true that British public opinion will not allow the Government to return to gold before the gold bloc countries declare their readiness to manage their currencies according to the principles laid down by the Brussels Monetary Conference of 1922; that is to say, in such a way as to "avoid undue fluctuations in the purchasing power of gold." As I have tried to show, especially in the case of Belgium, gold, far from being a rigidly fixed standard, is as elastic as gutta percha where the prices of goods are concerned.

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Those recommendations in 1922 were counsels of perfection, but since then there has been great progress in monetary science. I must remind your Lordships of the work of such economists and students as my friend Dr. Carl Snyder, of the Federal Reserve Bank of New York, whose name is well known to the Treasury and to the noble Earl, and the two famous French economists, Dr. Georges and Dr. Edouard Guillaume, of Paris and Neuchâtel. They have shown us precisely how to define the particular method of credit control, national and international, which will keep the price level approximately stable and allow trade and industry to expand at their natural rate of increase. It has been demonstrated by these gentlemen, by my friend Dr. Eisler in Vienna, Dr. H. Bolza and others, that the price level will not remain stable and economic activity will not be able to expand at the normal rate unless the volume of credit—that is, fiduciary circulation of all kinds—is expanded year after year at exactly the same percentage rate at which interest falls due on the existing indebtedness of the country or countries in question. Any expansion of credit beyond the proper percentage rate, such as we are likely to be forced into by the new armaments race, spells inflation, with all the concomitant evils of the inevitably-following period of credit contraction. Any expansion falling below the percentage rate at Which interest is falling due in the respective period means deflation, increased unemployment, a wave of bankruptcies and a catastrophic fall in prices. That is, of course, exactly what has happened now in France, Holland and the other gold countries.
I suggest to the noble Earl that the Government should tell the world quite frankly that we are not going to submit to the proper expansion of sterling credit which we are enjoying now being fatally cramped in order to prevent an outflow of gold caused by the failure of the gold bloc countries to expand their fiduciary currency in the proper proportion. Why should we sacrifice our proper expansion of credit to preserve the gold standard currencies in Holland or France? If they want England to link the pound to gold again, they must put themselves into the position of being able to expand their national credit-volume to the extent
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which is necessary to prevent a further fall of gold prices, and they must undertake to start, by open-market policy operations, the credit expansion necessary to this effect at once. In other words, they have to follow us in an expansion of currency and credit, and not in further deflation. In itself, devaluation of the French and the Swiss franc and the Dutch guilder is not necessary. All these gold bloc countries could start on an expansionist policy to-morrow without devaluation if they were prepared to lose part of their gold reserves.
There is no reason why they should not. Apparently, however, these modern worshippers of the Calf of Gold want us to abandon our managed currency, to abandon our cheap money policy—which the Chancellor of the Exchequer says has helped our trade, and which I admit—and close our doors to the much-needed expansionist policy. Why? In order to preserve the fetish of gold. Above all, they want us to mortgage our Exchange Stabilisation Fund for the purpose of underpinning an out-of-date gold standard system. I understand that the United States have made various proposals recently for conversations or negotiations with us for the purpose of stabilisation, and that they have been refused. I do not know whether this is true or not; perhaps the noble Earl will inform us. I am also informed that the French authorities have made a similar invitation to us, but they, of course, want us to put up with the same or a similar strait waistcoat to that which they are now wearing, and I hope that we shall declare what our policy is.
After all, the international gold standard only operated for forty years before the War. It is quite a modern thing. Then it was operated from London, under a free trade system, with free lending of our surplus capital for developing overseas markets. May I say to the noble Earl, Lord Liverpool, that I entirely agree with what he said about foreign lending? It was the only way to proceed in the old days; we had to lend our surplus capital abroad to undeveloped territories, for exporting machinery, and so forth. During the last twenty-five years we have only been on gold for ten years, and then it has worked very badly and inefficiently.
Then the Chancellor of the Exchequer declares that we are not ready to con

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sider stabilisation, which I understand was his last declaration. What are the bankers doing? The members of the Bank of International Settlement are apparently working independently, seeking to stabilise round about the present exchange values, but without the dollar; that is, to stabilise our currency with the Dutch, the Swiss and the French currencies and others, using our Stabilisation Fund and abandoning the present advantages, but leaving the dollar free. I suggest that that would be a most dangerous course to take. But the interesting thing is that there seem to be two policies pursued. I say "seem to be," because there may be an explanation, and no doubt the noble Earl has one. At the same time there is one policy that is adumbrated and followed by the Chancellor of the Exchequer as head of the Treasury, he says that we are not ready for stabilisation yet. I dare say that he is right, but we ought to work for stabilisation, and on something like the present sterling basis. Then there is the other policy pursued by the central bankers, including our own eminent Governor of the Bank of England, and they appear to be working for stabilisation in order to be able presently all to go back to the gold standard. Which is the national policy, and which one is going to be followed, and who is the master in this matter?
The Labour Party policy is perfectly clear. It was laid down as long ago as 1931 at the Scarborough Conference, our annual conference. If I have your Lordships' permission, I will read it to your Lordships; it is quite brief. In 1931 this policy was laid down by the Labour Party, and I submit that it is the only sound policy for this country to pursue:
"This Conference expresses the conviction that the aim of monetary policy should be to stabilise wholesale prices at a reasonable level."
There are some words that follow which I leave out because they are not relevant to this discussion. It goes on:
"It would, therefore, condemn either currency inflation or any fresh attempt at deflation in order to force sterling back to the old gold parity. It recommends that this country should take the initiative in causing an International Conference to be called with the object of arriving at a concerted monetary policy which will enable the world's resources to be made available for the peoples who to-day are starving in the midst of plenty."
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That is the official policy of the Labour Party, which has not been departed from and which I submit is a perfectly sound policy for this country to pursue. But we must state what our present Government's policy is and make it plain to the whole world. I believe that if we do that there will be an opportunity of having a more reasonable currency system at work internationally in a few years.
There are very powerful influences working in France, Holland, Czechoslovakia and the other gold bloc countries to come off the gold standard. When I was in New York in 1932 I ventured to suggest that America might find it expedient to come off the gold standard. There was a tremendous uproar. I made the remark at a public function; it was reported in all the newspapers and was made headline news. Then I received great praise from the people who depended on overseas trade, and great abuse from those representing the bond-holding interests generally. But America came off gold, as I believe was inevitable. France will eventually come off gold, and then Holland, Switzerland and other countries will do the same, and will benefit enormously when they do. But why not do it in an orderly way? Why should they invite a catastrophe by delay, as in the case of Belgium?
We have the oldest tradition of foreign lending and banking, as the noble Earl reminded your Lordships, of all the countries in the world. Speaking, I hope without undue pride, as an Englishman, I say that our bankers are the most honest in the world. Fewer bankers go to gaol in this country in a century than in any other country, and not only because they are not found out. By our very high tradition in the past we led the way in international lending and foreign monetary operations, and our prestige is enormously high. If we could only get away from this fetish of gold and learn from our recent comparatively happy experience of sterling, then I believe that we could give a lead to the whole world which would do more than anything else to help the restoration of international trade and commerce.
If this Government, with its financial prestige—I am not going to talk about its prestige in other directions—would take a line and stick to it, and give a lead, I believe that the policy which I have quoted could be carried out. Since

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that Labour Conference at Scarborough, the World Economic Conference has met. It was not properly prepared for. It met in a jazz atmosphere, with cinematographs and limelights, and with the Prime Minister posturing and all that sort of business, but if another and more business-like Conference, such as the Brussels Conference of 1922, could be called, and we could give a lead, I think good results would follow. I have not followed very closely the line of argument of the noble Earl, Lord Liverpool, but I think my remarks have been relevant to his Motion. He has told us some of the evil results of the present state of affairs, and I have ventured to suggest a remedy.
EARL PEEL: My Lords, I have listened with great interest to the speech of the noble Lord. It illustrated many things, and among others the fine liberty which we enjoy and the way in which we hate confining ourselves too closely to the questions put down for us. Nevertheless, I listened with great interest to the statistics which were so liberally given to us by the noble Lord in his comparison between countries on the gold standard and those which were not on the gold standard. I do not wish to delay your Lordships on that subject at this moment, except that perhaps I might refer to the Macmillan Report, which dealt very fully with this subject. I do not think we ought to lay all the stresses of the world upon, and draw all the inferences as to the condition of those countries from, the purely monetary question. There are so many other questions which come in. I entirely agree with the noble Lord on one point, in that I hope we are not going to have a. great International Conference again. I believe that nothing whatever did come out of that Conference, and that nothing can come out of a Conference of that kind. The only thing which does emerge is that it has shown how utterly impossible it is for anything to come out of a Conference of that kind. We have gained that valuable experience.
The noble Earl who started the debate did not, I think, give the Government much guidance as to the way in which they should act. His was a rather general invitation to them to deal with this extraordinarily complicated question of the exchanges. I was going, if I might, in only a few words, to say one or two things on that point, because the Chancellor of the Exchequer and other Government
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authorities have indicated that, although the way was hard and difficult, and although a return to the gold standard was at the present moment impossible, yet they looked forward, or rather suggested, that in time we might see a return to the gold standard. I am not talking for a moment of whether a return to the gold standard is a desirable thing. I quite agree with the observation of the noble Lord that in this new world, in this difficult and changing world, it is almost impossible, anyhow, to recreate the conditions on which a gold standard has worked in the past. What has been called "playing the game" of the gold standard was a very difficult thing, and depended upon certain conditions. It depended upon the control which this country exercised of the money market and of finance, and also upon the very remarkable habit which we have acquired, whether by instinct or experience, of reinvesting in those markets where we made our money.
It does seem to me, however, and again I agree with the noble Lord, that it is perfectly hopeless to talk about any return to the gold standard, and that whatever that return may be, it must be an entirely different form of gold standard from that which existed in the past, so long as you have the United States of America in the condition they are. I know nothing about any conversations that have taken place. I can only judge from my own experience in dealing with them, and I understand that there is not the slightest intention, as yet, of the American Government making a more fixed relation between gold and the dollar, or, at all events, that they are going to reserve to themselves power to alter that relation when they like in relation to trade levels in their own country. If you have that condition of mind in the United States, it is hopeless to suppose that you are going to make any stabilisation system with the United States on the basis of gold. One has read the statement made by the President recently. He talks, not so much of a dollar which has particular relation to gold, but of the commodity dollar, of the dollar based on the values of certain leading commodities at the time.
If that is the case, surely we are further away from the gold standard than ever, and it becomes, I would suggest, almost a waste of time to be

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discussing these matters. I think I differ to some extent about what the noble Lord said about young economists, because I notice that one distinguished, and I might say almost venerable economist, Professor Cassel, takes the view that the gold standard is worn out, and he is one of the most distinguished of the older economists. If that is not a practical policy, what are we thrown back upon? I think we have perhaps to learn a great deal as to the exchanges between those countries which have adjusted their currencies to sterling. It bas been very remarkable to those who have followed the stability of the exchanges, that Norway and Sweden, and so on, are practically on a sterling basis, and the only thing one can suggest—I dare say one ought not to suggest anything, because the whole subject is so difficult—is that every attempt should be made by this country to extend that sterling basis to other countries; because, if you compare our course of trade and exchanges with the countries which are wholly, or partially, or are pretending to be, on the gold standard, the extent to which our trade has improved with those countries which are practically on a. sterling basis is very remarkable.
I therefore urge the Government—I do not think they want urging as a matter of fact—to be extremely careful on this question of the return to the gold standard. If they really feel that the conditions which have been laid down more than once by the Chancellor of the Exchequer of returning to the gold standard are not likely to occur, they had better state quite frankly that they do not think that for many years at any rate there is much chance of returning even to a modified gold standard. I think if they said something of that kind it would have a great effect in clearing the air, and indeed indicating to other countries what was the line of policy in monetary matters to be followed by this country.
THE UNDER-SECRETARY OF STATE FOR FOREIGN AFFAIRS (EARL STANHOPE): My Lords, I am very grateful to the noble Earl who moved this Motion for his kindness in telling me something of what he was going to say and so enabling me to prepare to answer it. Whether my replies will be satisfactory to him I am not quite sure, but at any
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rate they will be much more to the point than they would have been without his consideration. The Question on the Order Paper deals with currencies and with the exchange problem, and those are not quite t he same thing. For instance, in two cases to which my noble friend referred the currency of the Argentine is already definitely linked to sterling, and that of Chile to a large extent is for practical purposes also linked with our currency. As regards stabilisation, I really do not think that I can say very much more than was stated by the Chancellor al the Exchequer some two months ago when he stated that:
"Stabilisation of the currency is one of our ultimate objectives. We are watching, and shall continue to watch, the situation with a view to taking action at any time that it seems likely to bring about useful results."
I think your Lordships will agree that many conditions would have to be fulfilled before we could go much further in the direction stated. The noble Earl, Lord Peel, suggested that we should make a statement that we should never return to stabilisation. That, too, I should be unwilling to do—of course I am not authorised to do so—because conditions in the world are changing so rapidly that it would be quite impossible to forecast what would happen some years hence.
EARL PEEL: I did not put it quite so sharply as that. I said the conditions laid down by the Chancellor of the Exchequer were such that I did not think it was possible at any rate within any reasonable time for those conditions to be fulfilled.
EARL STANHOPE: I am sorry I misunderstood my noble friend, but I think we are more or less in agreement on the matter. As regards the exchange our difficulties here, as I pointed out last year when the noble Earl, Lord Liverpool, raised the question, do not really arise in either the Argentine or Chile owing to the instability of their currency in relation to sterling, but to the heavy fall in the value of the products which they export. Argentine exports principally meat, maize and wheat. Chile exports principally nitrates and copper. The prices of those products are now very much lower than they were when British capital was invested in those countries, and unless and until prices return to a better level, the return on

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British capital is bound also to be at a low rate of interest. We do not believe that prices will remain indefinitely at their present low figure, and that is one of the reasons why we think it would be unwise at this moment to return to the gold standard. My noble friend Lord Liverpool is quite right in saying that it is, of course, to the interests of the Chancellor of the Exchequer that the biggest possible return should be received from British capital invested abroad, and that is not only the view of the Chancellor of the Exchequer, as it is of every member of the Government, but it is also the view of every taxpayer. It is quite obvious that the more dividends we receive in this country the lower the rate of tax per pound would be; therefore it is to all our interests that we should receive the greatest possible amount of interest in this country.
I referred last year to the work which is being done by the Council of Foreign Bondholders and by the League Loans Committee. Those two bodies during the past twelve months have been perhaps more active than they have ever been before, and have done most valuable work on behalf of those whose money is invested abroad. Wherever they can reach an agreement with a foreign country without the intervention of the Government, that, I think your Lordships will agree, is the best method of all; but where it is found that they cannot make progress, or that there is some special reason, such as an attempt to discriminate against the British investor, or where the foreign debtor takes unilateral action in defiance of the reasonable expectations of the creditor, then the Government are not slow to intervene. There was a case only a few weeks ago when His Majesty's Government, in concert with the French Government, made strong representations to the Government of Greece, owing to the unilateral default of the Greek Government on the service of its loans since April 1 last.
As regards the Argentine railways, to which my noble friend referred, railways in these new countries are in particular affected by the economic activity of the countries in question. That was proved last week by what happened in regard to wheat. As soon as wheat prices broke, the price of Argentine railways on the Stock Exchange here also became unstable, showing how wheat prices affect
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the value of our investments in Argentine railways, owing to the inter-relation of traffics between them. Now under the agreement between this country and the Argentine of May, 1933, the Argentine Government agreed to accord benevolent treatment to public utility undertakings and other companies in which British capital has been invested. As regards railways, a local committee was set up, and has recommended various ways in which the railways required help. So far, I understand that the President of the Argentine Republic has not given a. decision about the matter, and we do not yet know what effective action will be taken in the Argentine to give effect to the recommendations of that Committee. But I can assure my noble friend that we shall lose no opportunity to press the claims of British investors and the outlook and future of British railways in the Argentine upon the Government of that country in order to see that they receive fair, anti indeed generous, treatment.
As regards Chile, the improvement to which I referred last year has been maintained. In January the Chilean Government felt able to provide that the service of external debt should be partially resumed. The scheme which they proposed was not quite that which my noble friend suggested. What they proposed was that they should set aside all revenue which they received from the copper and nitrate industries, for the purpose of their foreign loans, and that 50 per cent. of that revenue should be devoted to the payment of interest, and 50 per cent. to amortisation. It is not for the payment of 50 per cent. of the interest, but 50 per cent. of the revenue raised is to be devoted to the payment of interest, which of course may be more or less, and I am afraid it is likely to be a good deal less than 50 per cent. of the amount due. That scheme was very strongly objected to by the Council of Foreign Bondholders, and for obvious reasons. If you do not pay interest on your debt, and thereby depreciate its value, of course you can buy it back at a very low price. That was obviously unfair. When the Council of Foreign Bondholders went into the matter more thoroughly, and had discussions with the Chilean representatives who came over to this country, they came to the conclusion that, in the very unusual circumstances which

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prevailed in Chile, the Chilean Government were justified in saying that they could not put forward a more favourable scheme than that contained in the proposals of January last. I gather that the Council of Foreign Bondholders, therefore, agreed that the scheme should be accepted.
As regards the Canadian Pacific Railway, that, I think, is an entirely different matter. As I understand it, the directors of the Canadian Pacific Railway have decided not to pay any dividend or, the preference stock. As I understand it, that, of course, would be solely a matter between the directors and the shareholders of the company, in which neither the Canadian Government, still less this Government, would have anything to say. If it is wrong, it is a matter for the shareholders to set right by calling a special meeting and by dealing with their directors as they see fit. It is not a matter in which the Treasury or the Foreign Office or the Board of Trade could take any part at all.
The feeling of the Government is that au International Committee on the whole question of currency and exchange would suffer the same fate now as that of the. Economic Conference called in 1933. Believing, as we do, that the first essential is to raise the prices of primary products on the market, so that there should be a better return for the producers in countries such as the Argentine and our Dominions, we are attacking the problem in detail. The question of maintaining and increasing the price of wheat, which so materially affects the Argentine, and the price of copper, which affects Chile, are being discussed internationally at this moment, and we hope that some scheme may be arrived at by these, producers which will raise prices in the markets generally to the benefit of those countries and of ourselves. As in other matters, for instance in the question of armaments, and in many matters also of trade, we have found that better progress is made if individual topics are dealt with rather than if a too ambitious programme is attempted.
That is the case, not only from the financial aspect, but also as regards trade. There, of course, we have been able to make bilateral agreements with a whole number of countries. We have materially
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improved the trade of our own country in consequence, and also we have succeeded in getting much better treatment for the redemption of debts due to those who have sold our goods overseas. In a good many cases, some of which I could give to your Lordships if you so desired, we have got foreign countries to set aside sums of money to unfreeze old trade debts standing there, and once again to get the wheels of trade moving. Also we have been following the line that discussions by those who are individually concerned in business usually have far more fruitful results than international committees set up to consider the whole question of the economic position. I do not see in his place either the noble Lord the Leader of the Opposition or the noble Viscount, Lord Cecil, both of whom always object to the experts. In regard to finance and trade, however, I think there will be very little doubt among other members of your Lordships' House that it is riot unwise to trust the expert where his business interests are concerned, and get him to discuss the matter with those in the same line as himself and come to an agreement if he can. Probably it tends to be a sound agreement, and, if it is overlooked by the Government, as of course it is, probably it not only benefits the trade in question, but also the consumer as well.
I need not deal with trade restrictions, because that is not a matter which any of your Lordships raised. The noble Lord opposite talked about the Labour Party policy of 1931, but I am afraid he is entirely out of date. The Labour policy now is, I understand, that put forward by Sir Stafford Cripps, to promote a great financial crisis in which I suppose everybody will have to be quick-fingered to pick up anything he can—
LORD STRABOLGI: May I venture to correct the noble Earl? I know be is very interested in these matters. When I speak of the Labour Party policy I mean the policy that is laid down and voted upon at our great annual gathering called our annual conference. Sir Stafford Cripps's 'speeches, frequently, I am afraid, misquoted as in this case, only become the policy when they are approved and debated and voted upon at this great gathering.
EARL STANHOPE: I fully understand that, and I understand that the difficulty

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last year was that they could not come to any agreement as to what their policy was. After all, 1931 is four years ago.
LORD STRABOLGI: We have not altered our policy on this point.
EARL STANHOPE: The Labour Party did not come to any agreement last year.
LORD STRABOLGI: It did not need to.
EARL STANHOPE: They will have to do it before they go to the country at the next Election, and I wish them luck. The noble Lord opposite apparently is not going to agree with one of his leaders.
LORD STRABOLGI: The noble Earl is very good-natured. I quoted the policy of the Labour Party with regard to currency and exchange and the gold standard. That has not been altered. It has not been debated. It stands.
EARL STANHOPE: It undoubtedly will have to be debated, and very promptly, because if the plan for a financial crisis takes effect there will be no stabilisation and no equalisation of currencies, because the first thing that will happen will be that our own currency will crash.
LORD SANDERSON: My noble friend is quite correct in calling it the Labour Party policy. The Labour Party policy has not been to advocate a crisis. No one has ever suggested such a thing. Our policy on this question of stabilisation is as laid down in the Party Conference at Scarborough in 1931, as my noble friend has claimed.
EARL STANHOPE: I am quite content to leave noble Lords opposite to settle what their policy is to be. I hope they will make it clear to the country what it is to be because, at any rate, it is not clear to me. The noble Lord, apparently, gave advice to the United States that they should come off the gold standard. Whether he was suggesting that the Foreign Office should send him off as yet another Ambassador to the gold countries to give the same advice, I was not clear, but we do not feel it is our business to interfere in the matter. I am afraid, therefore, we cannot employ the noble Lord in that particular direction. He talked about the Government's financial prestige, and he is quite right. It was not the result of coming off the gold
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standard. It was the result, first of all, of balancing our Budget and paying our way as we went along. That is the difference that exists between us and the Government from which we took over. That is one of the reasons which are making those extraordinary differences between the nations of the world.
It does not depend on whether a country is on or off the gold standard. It depends on a whole variety of circumstances, which I could not go into now even if I had the knowledge. The first one is that countries should pay their way, and until you get a balanced Budget it is impossible for a country to know whether it is going to keep its currency up to a particular figure or not. That is one of the first things which must be settled before you get any real feeling of security in the world, and that feeling of security is necessary before you take any further steps. I agree entirely with all my noble friend Lord Peel said on that matter, and also with what he said in regard to the stabilisation of currencies on sterling. It is quite true that those who have linked their currencies with sterling seem to have been able, as we have, to keep their currencies on a general level in regard to prices, and to have had comparatively few difficulties in regard to exchange from the variations of the currency problem.
But our difficulties in regard to exchange, I should like again to repeat, are very largely due to the fact of this extraordinary fall in the prices of primary products. That is a matter which is really vital before we can get the trade of this country fully going again, and before the Dominions can feel themselves really happy, in view of the vast amount of primary products which they send to this country, often at a price which is entirely unproductive to the producer. I am afraid I cannot lay any Papers about this question, and I am not sure that I have answered as fully as my noble friend would like, but it is an extraordinary difficult question. I hope I have not upset the agreement which has been prevailing throughout the whole of the sitting of this House to-day in contrast with what has been the case during the past few days, but I think, as a whole, we are in general agreement on this question, and I hope I have not said

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anything with which the noble Earl is likely to disagree.
THE EARL OF LIVERPOOL: My Lords, I would like to thank the noble Earl for his reply. There is just one point on which I would like to have more information. He made a reference to the position in Chile and to an agreement which had been arrived at with the Foreign Bondholders' Association. I should be glad if the noble Earl could give me more information on that point.
EARL STANHOPE: My Lords, I can give the noble Earl the actual proposals of the Chilean Government in detail, as contained in a summary of Law No. 5580 of 31st January, 1935. They are: (1), All revenues accruing to the Government from copper and nitrate industries to be delivered to the Public Debt Amortisation Bank as from January, 1, 1935, for External Debt service. (2), No other source of revenue to be dedicated to this object by the Bank. (3), Fifty
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per cent. of such revenue to be applied to pay interest, and in no case shall the payment exceed the rate of interest corresponding to each loan, and remainder to expenses and amortisation of bonds either by purchase in the open market, or by drawings at par. (4), Coupons to be surrendered in exchange for such payments of interest as may be made from time to time on their account. The encashment of one coupon to bring the bond to which it belongs within the future operation of the Law, the terms of which supersede those of the original contract. (5), If any bondholders do not take interest placed at their disposal, these sums may also be allocated by Presidental Decree to amortisation.
THE EARL OF LIVERPOOL: I beg to withdraw the Motion.
Motion for Papers, by leave, withdrawn.
House adjourned at five minutes before seven o'clock.