§ LORD TEMPLEMOREMy Lords, this Order is really a purely machinery Order, but your Lordships may like a few words of explanation. Between 1934 and 1936 the restrictions imposed by the Rumanian Government on the transfer of funds from Rumania resulted in the accumulation of a large volume of unpaid trade and financial debts owing to creditors in the United Kingdom, while the service of Rumanian loans in the United Kingdom, already substantially reduced under an Agreement of 1934, was completely suspended. On May 2, 1936, an Anglo-Rumanian Payments Agreement was concluded, which provided for the establishment of a clearing arrangement between the United Kingdom and Rumania. That Agreement was given effect by the Clearing Office (Rumania) Order, 1936, made by the Treasury on May 28, 1936. I think it fell to my lot to pilot that Agreement through this House nearly two years ago. The Order 657 established an Anglo-Rumanian Clearing Office and made it compulsory for United Kingdom debtors in respect of Rumanian goods to pay their debts to that Office. After making deductions for compensation trade and providing for sterling to be available for payments in the United Kingdom by oil companies, the sterling so received was to be paid in agreed proportions into various sub-accounts; the sums standing in those sub-accounts were then to be applied respectively to the service of Rumanian loans in the United Kingdom, to payments in respect of short-term credits granted to Rumania by British banks, to outstanding and current trade debts due from Rumania to the United Kingdom and to miscellaneous Rumanian debts payable in the United Kingdom. A small percentage of the sterling was left at the free disposal of the Rumanian authorities.
By subsequent Agreements concluded on December 5, 1936, and May 27, 1937, certain modifications were made in the clearing arrangements. These Agreements were put into force by the Clearing Office (Rumania) Amendment Orders, 1936 and 1937, made by the Treasury on December 17, 1936, and June 1, 1937, respectively. Until towards the end of last year the clearing arrangement worked very satisfactorily. The greater part of the outstanding trade debts has been liquidated, the arrears of payments due on Rumanian loans (at the reduced level provided for under agreements between the Rumanian Government and the bondholders) have been overtaken, while progress has been made with the transfer of payments in respect of the remaining financial debts due to creditors in the United Kingdom. In the last few months, however, there has been a considerable decline in the amount of Rumanian exports to this country. This development has been reflected in a lower level of receipts of sterling into the clearing, with the result that there has been some danger of an accumulation of fresh arrears of payment.
In these circumstances the Rumanian National Bank offered to make certain transfers of sterling from its free exchange resources to the sub-accounts which, under the existing arrangements, were receiving insufficient sterling to meet the payments clue to be made from them, on the understanding that the transfers would be repaid from the sub-accounts 658 concerned, when and to the extent that the Clearing Office and the National Bank of Rumania agree that an available surplus exists on those sub-accounts. This offer was accepted and was embodied in the fresh supplementary Agreement between the two Governments on February 25 last. The net effect of the new arrangement in practice is that the Rumanian National Bank returns to the Clearing Office sterling which has been placed at its free disposal until such time as the Clearing Office is in a position to make a refund. The Agreement is a little complicated, but it is really only a machinery Agreement. I have explained it to your Lordships to the best of my ability, and I hope you will approve of it. I beg to move.
§ Moved, That the Special Order, as reported from the Special Orders Committee on Thursday last, be approved.—(Lord Templemore.)
§ On Question, Motion agreed to.