Lords Sitting of 28 February 1939

Preamble
The House met at a quarter past four of the clock, The LORD CHANCELLOR on the Woolsack.
The Earl of Oxford and Asquith—Sat first in Parliament after the death of his grandfather.

RICHMOND PARK REGULATIONS: MESSAGE FROM THE KING.
THE EARL OF CLARENDON: My Lords, I have to convey to your Lordships the following Message from the King:
"I have received your Address against the Draft Regulations amending the Richmond Park Regulations, 1932, made under the Parks Regulation Acts, 1872 and 1926."

SPAIN: RECOGNITION OF GENERAL FRANCO'S GOVERNMENT.
LORD STRABOLGI: My Lords, on behalf of my noble friend Lord Snell, who is unavoidably absent, I have a Question by private notice to ask of His Majesty's Government; and I should like to precede it by saying that we have heard with great distress of the illness of the Foreign Secretary, which we hope will not be of long duration. The Question is to ask whether His Majesty's Government have any statement to make on the recognition of the insurgents in Spain as the Government of that country.
THE PARLIAMENTARY UNDER-SECRETARY OF STATE FOR FOREIGN AFFAIRS (THE EARL OF PLYMOUTH): My Lords, on behalf of my noble friend the Secretary of State for Foreign Affairs, I should like to take this opportunity of informing your Lordships that His Majesty's Government took formal action on February 27 to inform General Franco that they had decided to recognise his Government as the Government of Spain, and I understand that the French Government have taken similar action. The reasons for the decision of His Majesty's Government were in the main twofold. First, they could not fail to take into
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account the fact that, after Barcelona and the whole of Catalonia had fallen into General Franco's hands, he was in control of the greater part of Spanish territory, including the most important industrial and productive areas of Spain. Moreover, His Majesty's Government considered that there could now be no doubt of the ultimate issue of the Spanish conflict, and that whatever show of resistance the Republican forces might put up would be unlikely to do more than cause further suffering and loss of life. Secondly, His Majesty's Government reached the conclusion that the Spanish Republican Government, which was scattered in different places and was no longer exercising settled authority, could not now be regarded as the sovereign Government of Spain. I should add that His Majesty's Government have taken note with satisfaction of General Franco's public statements concerning the determination of himself and his Government to secure the traditional independence of Spain and to take proceedings only in the case of those against whom criminal charges are laid.
LORD STRABOLGI: My Lords, my noble friend has requested me to say that, while the answer we have just had is not unexpected, we would seek an opportunity as soon as possible of debating this important matter, and we propose to put a Motion down on the Paper and arrange with the Government through the usual channels a suitable time for this matter to be discussed.

STROUD DISTRICT WATER BOARD &c. BILL. [H.L.]
THE CHAIRMAN OF COMMITTEES (THE EARL OF ONSLOW)had given Notice that he would move, That notwithstanding that the Stroud Urban District Council, joint promoters of the Bill with the Stroud Rural District Council, have withdrawn from the promotion of the Bill, leave be given to the Stroud Rural District Council to proceed with the promotion, and that the Bill be now read 2a; and further, that the time for depositing petitions praying to be heard against the said Bill be extended to Wednesday, the 15th day of March next.
The noble Earl said: My Lords, I beg to move the Motion which stands in my name, and perhaps I ought to say just

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one word in explanation. It is to enable the Stroud Rural District Council to proceed with the Bill without the collaboration of the Urban District Council. The two councils together decided to promote a joint Bill, but the ratepayers of the urban district rejected the proposal on a poll, and the urban district therefore fell out as promoters. There are precedents in analogous circumstances authorising one set of promoters to continue the promotion of a Bill when the others have withdrawn, and these circumstances have usually arisen at a later stage owing to Amendments which have been inserted in Committee. I do not think there is any reason why the same procedure should not be followed on Second Reading, as I venture to ask your Lordships to do in this case. The purpose of extending the petitioning time, which is also in the Motion, until March 15, is to enable the urban district who have withdrawn to petition against the Bill if they desire to do so. I beg to move.
Moved, That notwithstanding that the Stroud Urban District Council, joint promoters of the Bill with the Stroud Rural District Council, have withdrawn from the promotion of the Bill, leave be given to the Stroud Rural District Council to proceed with the promotion, and that the Bill be now read 2a.—(The Earl of Onslow.)
On Question, Motion agreed to: Bill read 2a accordingly.
Moved, That the time for depositing petitions praying to be heard against the Bill be extended to Wednesday, the 15th day of March next.—(The Earl of Onslow.)
On Question, Motion agreed to and ordered accordingly.

NATIONAL TRUST FOR PLACES OF HISTORIC INTEREST OR NATURAL BEAUTY BILL. [H.L.]
Order of the Day for the Second Reading read.
VISCOUNT ESHER: My Lords, this Bill, as the Title states, is promoted
"to make further provision with respect to the transfer of lands to the National Trust for Places of Historic Interest or Natural Beauty and for other purposes."
The general object of the National Trust and the work it is doing for the nation
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are already so well known to your Lordships that I feel it is unnecessary for me to refer to them in more than the broadest outline. The National Trust has already vested in it for the purpose of preservation upwards of 50,000 acres of land, and 300 buildings ranging from castles to cottages. The National Trust was incorporated as a statutory body in 1907, and its exceptional position has been recognised by Parliament in the special Acts which have been passed, conferring powers upon it for the furtherance of its objects. The latest of these Acts was passed in 1937, and by means thereof it has been possible to establish what is known as the Country Houses Scheme, which aims at the preservation of historic houses for the benefit of the nation in the hands of the Trust, while the families of the owners are enabled to remain in occupation.
Your Lordships are well aware of the manner in which estates are settled and entailed, and of the restrictions placed by law on the alienation of such land. I would, however, remind your Lordships that under the existing general law the tenant for life of a settled estate has power to dispose of the principal mansion house and the pleasure grounds and park and lands usually connected therewith. That power is subject to certain restrictions, and any sale of such property must be made for the best consideration in money that can reasonably be obtained. The special Act of 1937 already enables tenants for life to grant or lease settled land to the National Trust, gratuitously or otherwise, but subject to the restriction that the area shall not exceed five acres. Much though the Act has facilitated the Country Houses Scheme, it has been found ineffective to deal with the transfer of the larger houses and estates of national interest, or of architectural, historic or artistic importance, of which there are so many magnificent examples familiar to us all.
If your Lordships will turn to Clause 3 of the Bill it will be seen how the National Trust propose to facilitate such transfers. The clause is necessarily complicated and technical, but its provisions may, I think, be summarised as follows: It is proposed to empower the National Trust to accept, and the tenant for life under any settlement which comprises a principal mansion house to grant, either gratuitously or otherwise to the National Trust, in

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fee simple, firstly, the principal mansion house and the pleasure grounds or park usually connected with it; secondly, what may briefly be described as "amenity lands," that is, any property in the neighbourhood necessary to preserve the amenities of the house; and thirdly, what may be described as "endowment lands," that is, lands to provide an income for the maintenance and preservation of the house, its pleasure grounds and the amenity lands.
Within three months after the transfer of any such estate to the National Trust, the National Trust is obliged to lease the property to the tenant for life or statutory owner for a term not exceeding 150 years, at a nominal or other rent, and such lease is to be made subject to the settlement which affected the land before a transfer to the National Trust. The provisions to be contained in that lease are set out in subsection (3) of Clause 3. It is to be noted that the lease must contain a covenant by the lessee to admit the public to view such part of the property as may be agreed by the National Trust, and also give power to the National Trust to determine the lease whenever the entail comes to an end. Before passing from Clause 3, I would like to draw your Lordships' attention to the two very important restrictions on the exercise of the powers of the clause imposed by subsection (2). In the first place the disposition of the property cannot be made without the consent of the trustees, or an order of the Court, and in the second place the principal mansion house must be one which is certified by His Majesty's Commissioners of Works as being a building which is of national interest, or architectural, historic or artistic importance, and therefore proper to be acquired by the National Trust.
There are minor general matters also included in the Bill. Clause 5 will enable the Trust to grant easements over the property without the consent of the Charity Commissioners, and so save a considerable amount of trouble and expense. The Bill, under Clause 6, also enables the Trust to be trustee of any property which comes within the objects of the Trust. As the Trust finds the imposition of by-laws of very great value in the management of its estates, it asks for power, under Clause 7, for such by-laws to extend to properties which it holds
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on lease. Clause 8 extends the jurisdiction of the National Trust Acts to the Isle of Man. Such, briefly, are the provisions of the Bill, and commending it to the sympathetic approval of your Lordships, I beg to move that the Bill be read a second time.
Moved, That the Bill be now read 2a.—(Viscount Esher.)
THE EARL OF ONSLOW: My Lords, I do not suppose there is any one of your Lordships who has not the heartiest sympathy with the objects of this Bill. Certainly I have. I feel that the National Trust, in its endeavours to secure the preservation of these ancient buildings, is doing work for which everyone of us should be grateful. The ancient houses of England are well worthy of preservation, and I fear that if they do not receive some sort of assistance, such as this Bill affords, they will gradually disappear. Your Lordships perhaps occasionally visit Epsom, and your Lordships may have heard of Nonsuch Palace. That building of Henry VIII was pulled down by a friend of Charles II to build villas at Epsom. We do not want that to happen to-day, and the villas of our suburban resorts to be built of the materials of our ancient houses. But while we wish to do everything we can to preserve the ancient houses of our country, I think we must carefully consider the means whereby we seek to attain that end.
Naturally, as I am bound to do, I have given this Bill very careful scrutiny. It has been very carefully scrutinised in my Department, and in the corresponding Department in another place. At first I had considerable doubt as to whether this Bill could properly be allowed to proceed as a Private Bill—whether it should not really be a Public Bill. The main reason for that is that it alters the general law in regard to the Settled Lands Acts. However, after very careful consideration of similar, though not quite analogous, precedents I came to the conclusion that, so far as I was concerned, it was not necessary to suggest to your Lordships that it should not proceed as a Private Bill, but I felt that, if it did so, every possible step should be taken to secure that the Bill and all its provisions should receive the most careful scrutiny of your Lordships' House. Indeed when it was decided that the Bill should be introduced as a Private Bill I said that I would bring

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the matter before your Lordships' House in this way, so that your Lordships might have every facility and insist upon its careful scrutiny.
Perhaps I may be allowed to explain what is in my mind. The Bill is unopposed, and there are therefore no petitions against it. In the ordinary way it would not go to a Select Committee of your Lordships' House and I should deal with it under the Standing Orders personally in what is known as the Unopposed Bills Committee. I do not think that that would be sufficient scrutiny to meet the purpose, and so I suggest that we should take advantage of Standing Order No. 110. That Standing Order runs as follows:
"The Chairman of Committes may, if he thinks fit, report to the House his opinion that any unopposed Bill on which he shall sit as Chairman should be proceeded with as an opposed Bill."
And that is the report which I propose to make to your Lordships' House. Turning it into an opposed Bill will have the effect of sending it to a Committee upstairs.
This provision is not very often used. I believe I have made more use of the Standing Order than my predecessors, because it has always seemed to me that if an important matter is to be considered on which there may possibly be divided opinions, it is more satisfactory that a thorough examination should take place before a Select Committee, rather than that the examination should take place before the Unopposed Bills Committee. At the same time, I do not think that I have really troubled your Lordships unduly in exercising the powers under this Standing Order. But I think that of all the Bills that I have dealt with in that way, this one is the one which is really most suitable to be turned into an opposed Bill and to be sent to a Select Committee. Of course your Lordships would probably, as you did in the case of the Rooks and Rabbits Bill, refer it to a Committee, and this procedure will have the same effect. When the Bill is turned into an opposed Bill I would propose, as is quite the usual practice in the case of any Bills referred to Committees in your Lordships' House when points occur which are not fully dealt with in the petitions, to write a letter to the Chairman of the Committee, drawing his attention to certain points in the Bill and inviting
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him to ask his Committee to give very careful consideration to them and to report thereon to your Lordships' House. By using this procedure I think the Bill will receive a thorough examination in the Select Committee.
I would now like to draw attention to one or two points which occur to me as being worthy of consideration. In the first instance I would make it clear that transfers such as are contemplated in this Bill can at present be effected without any difficulty under our Estate Bill procedure. Estate Bill procedure is not very often used. I think in the eight or nine years that I have had the honour to occupy this office, I have had only two or three Estate Bills, but they do offer procedure for transfers and alterations in settlements such as are contemplated in this Bill. Under Estate Bill procedure, which has been followed by your Lordships' House for a great many years—I do not quite know how long—the consent of the trustees, of the remainder men, and all other interested parties is required. The procedure is rather formal. They have all to appear in the Moses Room before me, and in the presence of each other they have to give formal consent.
Under the proposal now before your Lordships, it will be possible, as I understand it, for the tenant for life to do something by leave of the Court to which all the interested parties, including remainder men and trustees, may object. Of course I am not saying that this is not desirable. It may be very desirable. Restrictions imposed by the Estate Bill procedure may be very undesirable, and this Bill may remedy the law in that respect, and it might be for the benefit of everybody. I only say this, that when you are going to make so considerable an alteration in the law—the settled lands law—and in the procedure of your Lordships' House, very careful scrutiny is required, and your Lordships should be fully acquainted with exactly what is contemplated and with the opinion of a Committee which has given careful attention to the matter.
I pass to Clause 3 of the Bill. By that clause the tenant for life will have power to transfer his mansion house, park and other properties specified in Clause 3 (1) to the National Trust, subject to the conditions set out in subsection (3) of the same clause. First, he

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would have to get the consent of the trustees. There is an appeal, as I understand it, if the trustees fail to assent, to the High Court, and no consents of remainder men or other persons interested will be necessary. There is one point in the Bill which requires examination by a Committee, and that is that there do not seem to be any principles laid down for the guidance of the Court in the case of there being any opposition by trustees or any other interested parties to the proposed transfer. Also it seems that it is not clear whether the Court could have regard to anything but the pecuniary benefit of the parties interested. I do not know whether that is the case or not, but I think it requires examination, and I believe I am not incorrect in thinking that certain Amendments have been drafted with a view to meeting some of these points. But those, of course, we have not before us at present, and they would be very suitable for examination by the Committee.
Then there is a point in the Bill which I do not think my noble friend mentioned. It is that when the remainder man becomes entitled to possession he can be given six months' notice even if he and the trustees and all the other interested parties have objected to the original transfer to the National Trust. I would suggest that this is a very considerable alteration in the general law of settled estates and also in the Estate Bill procedure of your Lordships' House, and that is a strong reason why I think a Committee should examine it in detail. As your Lordships know, we have always been able to make these transfers by Estate Bill procedure, but have always insisted upon the consent of trustees, remainder men, and other interested parties. There is a still further point. It is a question for consideration perhaps whether it is desirable that all these settlements and trusts should be affected by this particular clause—whether existing ones should be affected or only future ones, and I think that might be a matter which would be usefully examined by a Committee and their opinion reported to your Lordships' House.
I think that probably many of your Lordships are familiar with this procedure as trustees and in other capacities. I have had some experience myself though I am not a remainder man—I rather wish I
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was. Your Lordships will see the difficulties, and the importance of the considerations which this Bill presents and the necessity for their examination. There are one or two other matters which the Committee might examine. For instance, one might perhaps suggest that the class of properties mentioned in Clause 3 (1) might be looked into to see if they are suitable, whether they should be added to or subtracted from, or anything of that kind. Before Parliament decides this issue the list should be scrutinised carefully by a Committee. It might be considered whether it is desirable that the consent of trustees alone without any order of Court should be permitted. Thus you might have two methods—consent of trustees on general lines, or an order of the Court, when the trustees object, on hard and fast lines. That occurs to me as a matter which the Committee might usefully examine.
Then we have the next point—the duration of the lease for 150 years. I am not quite clear why that particular number is taken. It may be quite all right—very likely it is—but it is a matter that might be scrutinised. There are other points in the Bill which seem to me a little obscure and which might be examined and improved by a Committee, such as the incidence of Death Duty. I do not follow from the Bill how that would work out. That is all I have to say. I hope your Lordships will not think that I am in any way opposing the Bill. All I say is that it is a very important measure which will form precedents for other measures, and it is one that Parliament should not pass until it is satisfied it is the best possible measure of the kind which can be laid before it.
THE SECRETARY OF STATE FOR INDIA (THE MARQUESS OF ZETLAND): My Lords, I do not wish to discuss the merits of this Bill. I am, myself, in a somewhat delicate position. I am Chairman of the National Trust and also a member of His Majesty's Government, and I understand that it is contrary to all practice for a member of the Government to express opinions with regard to the provisions of a Private Bill. But I would like to say that, speaking as Chairman of the National Trust, I would not wish in any way to dissent from the suggestion which has been made by the Chairman of Committees. I quite agree that in respect of a certain restricted class

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of property which will be scheduled this Bill would make alterations in the Settled Lands Acts and, that being so, I quite agree it is suitable that the provisions of the Bill should be carefully scrutinised in Committee. Though it is an unopposed Private Bill, I would not myself wish therefore to raise any objection to the suggestion made that it should be treated as an opposed Bill and examined in Committee.
THE LORD CHANCELLOR (LORD MAUGHAM): My Lords, this Bill deals with matters which, both as regards the procedure of the House and the form and substance of the measure, are matters of considerable interest to anybody in the position of the Lord Chancellor. Perhaps your Lordships would desire to know what view the Lord Chancellor takes upon the matter. As regards the procedure of this House I am no authority, but the authorities of this House and of the other place agree that it is not out of order for such a Bill to proceed as a Private Bill. I am bound, however, to point out the very wide scope of this Bill and to remind your Lordships, before you proceed with it as a Private Bill, that it affects potentially every limited owner of property of the kind specified in the Bill and every reversioner and remainder man of such property.
If the Bill had schedules of properties proposed to be included or affected, whether two of such properties or a large number, then notice would have to be served on those who had interests in the estates concerned. If they were infants entitled to remainder, application would have to be made to the Lord Chancellor for the appointment of guardians for such infants, and either the consent of the remainder men or of the guardians of the infants would have to be obtained or, if not, it would rest with the Committee to consider whether such consents could be dispensed with. I do not, myself, know whether under the Bill as it stands every remainder man of property which he considers to be within the scope of the Bill—which of course is very wide—if he considers he has an interest in a house of historic or architectural interest or romantic beauty, would be entitled to appear before the Committee and be heard. But what I do think it is appropriate to point out to your Lordships is this—namely, that there is hardly a property owner of this kind, whether in
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possession or reversion, who knows that his interests are going to be affected, and accordingly it is not worth the while of a person, we will say the tenant for life of a beautiful property in Wales or the North of England, to instruct counsel to appear before the Committee which the Lord Chairman of Committees told us is going to report.
The consequence is that your Lordships are being asked to-day to give a Second Reading to a measure which may affect quite a large number of persons entitled in remainder or in possession, and they really have not had any sufficient opportunity of knowing whether their interests are going to be affected by a Private Bill and have taken no steps in the matter. Your Lordships will bear in mind that a number of the persons to whom properties would descend on the deaths of the tenants for life will be infants, and in a large number of cases they will be persons who are not yet born. Moreover, it is suggested, I understand, though it is not at present in the Bill, that the Bill is going to include in "properties" pictures, furniture, and chattels settled with the principal mansion house. If that were done, it would be a very extraordinary extension of the Bill, and it would require very careful consideration because the legal position as regards chattels is not the same as that which exists with regard to land.
These are considerations which it seems to me might well indicate to your Lordships in your discretion that you do not consider this Bill, which affects the rights of so many people who are not mentioned by name and who do not know their rights have been interfered with, ought to receive a Second Reading in this position—namely, that the Bill is a Private Bill. There is another consideration which I may mention. Most of your Lordships have had no opportunity at all of considering the position. I know certain of your Lordships who have come here without any idea as to the very large interests that are affected by this Bill. There are a large number of noble Lords who are tenants for life or owners in remainder of estates of historic interest or natural beauty and places of that character, and it does seem to me that before this matter is dealt with on Second Reading the people concerned should have an opportunity of considering whether in the true interests of themselves

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and their successors it is right to assent to the measure going through in its present form. It is quite true that the matter might be rediscussed on Third Reading, but according to my understanding of the practice of the House if the Committee decided that the Preamble of the Bill has been approved, there is a very strong feeling that the matter ought not to be reopened on Third Reading in the case of a Private Bill.
In these circumstances, after discussing the matter with the Leader of the House, who is unable to be present owing to duties elsewhere, I am unable at present to accept the Bill in its present form, and I think the wiser course, subject to your Lordships' approval, would be to adjourn this debate in order to allow the matter to be further considered. If your Lordships should see fit to allow the Bill to proceed as a Private Bill, I feel I should not be justified in resisting that course, because the general objects of the Bill are, I think, admirable, and I would not endeavour to oppose them. If, on the other hand, some of your Lordships should consider that this measure should only be allowed to proceed as a Public Bill, then perhaps one of your Lordships would put down a Motion to reject the Second Reading. If that is not done, and your Lordships approve of the Bill going on as a Private Bill after that further consideration which a short adjournment would allow, I should have nothing to say, but, having discussed the matter with the Leader of the House, I suggest that the interests affected are so large that they ought not to be interfered with in a matter of this kind except after very full consideration. Accordingly, in order to bring the matter to a head, I propose to move the adjournment of this debate.
Moved, That the debate be adjourned.—(The Lord Chancellor.)
THE EARL OF CRAWFORD: My Lords, I am sure your Lordships are greatly obliged to the noble Lord on the Woolsack, and equally to the Chairman of Committees, for the careful analysis they have given of this Bill. In the first place I should like to say that this Bill has been in possession of the House since last November. There is no novelty in the Bill. It has been in possession of your Lordships, as I say, for several
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months, longer in fact than any Bill which is on your Lordships' Order Paper to-day. Secondly, I must point out to the noble and learned Lord on the Woolsack that nobody's property is taken away from him under this Bill, as was the case a few months ago under the Coal Bill. The initiative lies with the owner, and, if the owner is an infant, with a duly appointed guardian of that infant—
THE LORD CHANCELLOR: There is the tenant for life.
THE EARL OF CRAWFORD: The initiative lies with him. The initiative lies with him now in dealing with property of this kind, and I really cannot see why in those circumstances this is quite so predatory a measure as the Lord Chancellor indicated. I should deprecate substituting for this Bill what is called the Estate Bill procedure. That might involve a dozen Bills in a single Session of Parliament, which would be very unfortunate, and very costly, and would bore your Lordships and the House of Commons still more. I think that, in view of the fact that a Bill promoted by the National Trust may reasonably be considered to be a Public Utilities Bill, there is really no need for putting the name of every property and the names of the owners of every property into a Schedule of an Estate Bill, year by year. In other words, the National Trust is entitled to have a continuation of several other Acts under which it acts already with statutory powers.
Between the proposals advanced from the Woolsack and by the Lord Chairman of Committees I myself would prefer the latter, but I have not had an opportunity of talking to my noble friend opposite who has already addressed your Lordships. I should hope really that we might conciliate the differences between the Lord Chairman and the Lord Chancellor by agreeing to an adjournment for a few days, or a week or two, and that then the Lord Chancellor at any rate should agree that he would approve of the proposal made by the Lord Chairman, whose speech, as he indicated, will be referred to the Chairman of the Committee upstairs and that will of course ensure that more than ample opportunity will be presented to have the matter fully considered.
THE EARL OF ONSLOW: May I intervene for one moment? There is a great

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difference between your Lordships' Estate Bill procedure and this Bill. Under the Estate Bill procedure transfers such as are contemplated in this Bill can only be effected with the consent of all those interested. Under this Bill the consent of the trustees, remainder men and so forth may be dispensed with. That, I think, is the difference in procedure which will be the most important matter for a Committee to take into consideration.
THE EARL OF MANSFIELD: My Lords, the noble Earl, Lord Crawford, has stated that the Bill has been in possession of the House for a considerable period. That may be the case technically, but I wonder how many noble Lords who are here this afternoon had ever seen the Bill before they entered the House to-day. It is not a Bill such as one of those normally circulated when pink notices come round inviting your Lordships to put a cross against those Bills you wish to consider. Normally, in the case of a Private Bill, the cross is not put, because it is assumed that the Bill is of a non-controversial character. In the circumstances, I do not think that your Lordships' House has had any ample opportunity for discussing and considering this Bill, and, therefore, I shall respectfully suggest that we should accept the advice of the noble and learned Lord on the Woolsack and adjourn the debate.
On Question, Motion agreed to, and debate adjourned accordingly.

BACON INDUSTRY (AMENDMENT) BILL.
Brought from the Commons; read 1a; and to be printed.
MINISTRY OF HEALTH PROVISIONAL ORDER (BLACKBURN) BILL.
Brought from the Commons; read 1a; to be printed, and referred to the Examiners.
MINISTRY OF HEALTH PROVISIONAL ORDER (HASTINGS) BILL.
Brought from the Commons; read 1a; to be printed, and referred to the Examiners.
MINISTRY OF HEALTH PROVISIONAL ORDER (LEYTON) BILL.
Brought from the Commons; read 1a; to be printed, and referred to the Examiners.
MINISTRY OF HEALTH PROVISIONAL ORDER (LUTON EXTENSION) BILL.
Brought from the Commons; read 1a; to be printed, and referred to the Examiners.
CARDIFF GAS ORDER, 1939.
  CHELMSFORD GAS ORDER, 1939.

    ROSS GAS ORDER, 1939.
    LORD TEMPLEMORE: My Lords, I beg to move the Motion standing in my name.
    Moved, That the Special Orders, as reported from the Special Orders Committee on Thursday last, be approved.—(Lord Templemore.)
    On Question, Motion agreed to.

PREVENTION OF FRAUD (INVESTMENTS) BILL.
Order of the Day for the Second Reading read.
LORD TEMPLEMORE: My Lords, the necessity for a Bill to curb the activities of people known as share-pushers and others, is I think, generally admitted and cannot be denied. It would be inconceivable, if it were not known to be true, how successful the frauds of these share-pushers have been and still are. Your Lordships must have read many times in the Press of these frauds and must have been surprised not only at the unscrupulous cleverness of these individuals but also at the ease with which, in nearly every case, their victims are taken in. In spite of advice given publicly by notices in the Press, through the Post Office and through the British Broadcasting Corporation, and by questions and answers in another place, people are continually parting with their money in circumstances which one would have thought would have aroused the youngest child's suspicions.
If these frauds were practised only at the expense of the well-to-do—that is to say, of the foolish young man who has

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come into a large sum of money or the wealthy man who wishes to make a little more—your Lordships and people generally might say that with their education, their bringing-up and their knowledge of the world and so on they should know better and would have to stand the racket. But, as a rule, the victims of these frauds are people of a very different class—widows, spinsters, pensioners, retired professional men living on their savings, clergymen with perhaps poor livings and large families—all these form so to speak the happy hunting-ground of the fraudulent share-pusher, whose one idea from the very start is to transfer the money of his victims from their pockets to his own. Your Lordships will remember certain notorious frauds which have taken place within recent years. The worst case was that of Jacob Factor, a gentleman of American origin, who through the agency of Broad Street Press, Limited, relieved the public here of some £1,200,000 before he escaped to America, from which, I regret to say, all efforts to obtain his extradition have been in vain. Then there was the case of MacLean and Henderson, an old established firm of dealers in stocks and shares which was acquired by one Spiro. He and his confederates induced the public to buy many thousands of worthless shares. Spiro was sentenced last year to eight years' penal servitude. There were also the cases of Murdoch and Barr, and of Ward, Daw and Company, and in the last few months the case of Tanfield.
In most of these cases, I am glad to say, convictions have been obtained and the guilty parties have been sentenced to long terms of imprisonment. That is all very well, but it does not, of course, return one penny piece to the pockets of the victims. The first attempt to deal with the matter was in the Companies Act, 1929, which contained a section—Section 356—prohibiting persons from going from house to house offering shares for subscription or purchase. Unfortunately, this section has been rendered largely inoperative by the ingenious way in which persons have gone from a house in one street to a house in another street, or sometimes from a house in one town to a house in another town, thereby making it very difficult to prove that there was actual canvassing from house to house. In 1936 my noble friend
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Viscount Runciman, whose absence to-day we regret, who was then President of the Board of Trade, appointed a Committee under the chairmanship of Sir Archibald Bodkin to investigate this whole problem. That Committee reported in the summer of 1937, and it is on that Report—Command Paper 5539—that the main provisions of this Bill are based.
The Bodkin Committee came to the conclusion that no one should be allowed to deal in stocks and shares unless he was a member of some recognised stock exchange or other association or was registered. The Bill follows this principle, but for registration it has been found better to substitute licensing with all that licensing implies. If your Lordships turn to the Bill you will see that Clause 1 provides that on and after the appointed day, no one shall carry on the business of dealing in securities unless he is the holder of a principal's licence and that no one shall in the capacity of a servant of any such person deal in securities unless he is the holder of a representative's licence. This will bring under review every director of a company carrying on such business and every manager of a company or partnership. Clause 2, subsection (1), excludes from the licensing provisions of the Bill members of recognised stock exchanges or recognised associations of dealers in securities. With regard to outside dealers, the Bodkin Committee envisaged the formation of a strong association which would have a code of conduct sufficiently stringent to enable the Board of Trade to give it recognition. An Association of Dealers in Stocks and Shares has been formed by some of the leading outside dealers and it is hoped that it may form the nucleus of a representative body.
Next there are exemptions from the Bill for the Bank of England, any statutory corporation or municipal corporation, any exempted dealer and any industrial and provident society and building society. The exemption of the Bank of England needs no explanation. The power to exempt banks and finance houses is contained in Clause 15 of the Bill. It is wide and will enable the Board of Trade to exempt the leading banks, accepting and finance houses whose business, though entailing dealings

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in securities, does not lend itself to share-pushing. Industrial and provident societies and building societies are excluded because they are otherwise regulated in the Bill—namely, in Clause 10. Persons acting in the capacity of approved trustees of unit trusts or in the capacity of the managers of an authorised unit trust scheme are likewise excluded, for the reason that a trustee to be approved and a unit trust scheme to be authorised have to comply with the exacting standards provided for in Clause 16.
Some apprehension was felt as to the position of insurance companies, investment trusts, solicitors and others, and subsection (2) of Clause 2 was inserted for the purpose of clarifying the position. It provides that, for the purpose of determining whether or not a person has contravened any of the restrictions imposed by Clause 1, no account is to be taken of his having done certain things. These things are: (1) effecting transactions with or through the agency of a stockbroker or some other person under discipline; (2) issuing documents which, by virtue of the Companies Act, must conform to the prospectus requirements of that Act or which do in fact so conform; (3) as a principal, acquiring, subscribing for or underwriting securities or effecting transactions with a person whose business involves the acquisition and disposal or the holding of securities, whether as a principal or as an agent, in other words with a professional dealer.
Clause 3 of the Bill deals with the question of applications for and grant of licences and gives the Board of Trade power to prescribe fees for licences. A licence, unless revoked, is to be valid for a period of one year only, the intention being that all licences should come up for review once a year. Clause 4 stipulates that the applicant for a principal's licence must deposit £500 with the Accountant-General of the Supreme Court. The Board of Trade are empowered to accept a security in lieu of a deposit or, in the case of persons who have carried on in Great Britain the business of dealing in securities since the beginning of 1939, to waive the requirement altogether if they are satisfied that insistence upon it would cause hardship.
Clause 5 deals with the power of the Board of Trade to refuse or revoke licences. They may refuse or revoke, first, if the applicant or the holder has not
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furnished such information relating to him and to any circumstances likely to affect his method of conducting business as the Board may require. The Board may also refuse or revoke a licence if the applicant has been convicted within His Majesty's Dominions of an offence which necessarily involved fraud or dishonesty, or if he has been convicted of an offence under the present Bill, or has broken a rule of conduct made by the Board of Trade under Clause 7. Lastly, the Board are given a wide discretionary power of refusing or revoking a licence if it appears to them that the applicant or holder is no longer a fit and proper person to hold a licence
"by reason of any other circumstances whatsoever which either are likely to lead to the improper conduct of business by, or reflect discredit upon the method of conducting business of, the applicant or holder …"
Clause 6 sets up a special tribunal of inquiry. This is to consist of a chairman and one other person appointed by the Lord Chancellor being members of the legal profession, and one other person appointed by the Treasury who must have financial or accountancy experience and must not be a person in His Majesty's Service. The tribunal is thus to be an impartial and quasi-judicial body which will deal with all cases in which an applicant for a licence who is refused a licence, or a licence-holder who is threatened with the revocation of a licence, desires to submit his case to the tribunal, and the Board of Trade are debarred from refusing to grant an application or from revoking a licence if the tribunal recommend that the licence should be granted or remain in force, as the case may be.
Clause 7 gives the Board of Trade power to make rules for regulating the conduct of business by holders of licences, and enables them, in particular, to determine the class of persons in relation to whom, and the manner and circumstances in which, any holder of a licence may deal in securities. Subsection (3) requires the Board of Trade to publish the rules in draft before they are actually made, so that those interested may make objections and representations, which have to be considered by the Board. Clause 8 provides that the holder of a principal's licence must notify in writing to the Board of Trade any change in his business address and, in the case of a corporation, any change in its directorate. Clause 9 empowers the Board of Trade to publish the

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names and addresses of all holders of principals' licences for the time being in force, this information to be published not less often than once a year.
Clauses 10 and 11 are very important clauses, and are intended to prevent abuses in connection with societies registered under the Industrial and Provident Societies Acts and the Building Societies Acts. The Industrial and Provident Societies Acts have in recent years come to be used by the company promoter as a convenient channel for registering profit-making concerns of an undesirable type for which the Acts are not intended. The object of Clause 10 is to confine the machinery of the Acts in future to genuine co-operative societies and so forth. The clause provides that a society shall not be registered under the Acts unless it is shown to the satisfaction of the registrar (a) that the society is a bona-fide co-operative society, or (b) that the society should be registered under the Industrial Provident Societies Act rather than under the Companies Act because its business is being, or is intended to be, conducted mainly for the purpose of improving the conditions of living or otherwise promoting the social well-being of members of the working classes, or otherwise for the benefit of the community, and that on these grounds there are special reasons why the society should be registered under the Industrial and Provident Societies Act rather than the Companies Act. Existing societies which do not fulfil these conditions will not be interfered with unless, since the date of the original introduction of the Bill, they have issued invitations to subscribe for capital or to lend money to the society. In cases where the Registrar decides to cancel, the society is allowed to convert into a company under the Companies Act or to amalgamate with such a company without having to pay capital duties and fees on its existing paid-up capital. This facility will continue only for a period of one year from the passing of the Bill. Clause 11 contains provisions with regard to building societies in order to guard against the possibility of the Building Societies Acts being abused in the same way as the Industrial and Provident Societies Acts.
Clause 12 contains some rather technical provisions for the prevention of fraud which are of general application. The clause is based on a recommendation
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of the Bodkin Committee that the definition of false pretences under the Larceny Act should be extended so as to render easier the conviction of offenders in connection with share-pushing. Clause 13 is intended primarily to deal with activities which are analogous to share-pushing but are not directly connected with shares, such as fraudulent commodity and finance pools and undesirable enterprises of the unit trust type, of which certain mushroom farms afford an example. The clause prohibits the distribution or having in possession of circulars containing invitations to do any of the acts specified in Clause 12, or information calculated to lead directly or indirectly to the doing of any of those acts by the recipient of the information. This prohibition does not apply to invitations or information made or given with respect to securities by members of recognised stock exchanges, etc., exempted dealers, or managers of authorised unit trust schemes. It would apply, however, to circulars inviting the purchase of units of unauthorised unit trust schemes, whether sent out by managers of such schemes or by any other person.
Clause 14 empowers the Board of Trade by order to declare any body of persons carrying on in Great Britain the business of dealing in securities to be a recognised stock exchange or recognised association of dealers in securities for the purposes of the Bill. An order can be varied or revoked by a subsequent order and, in the case of revocation, an order is not to take effect until three months after the date on which the order is made. This provision is intended to give the members of an exchange or association which ceases to be a recognised stock exchange or association, time to obtain licences. Clause 15 deals with banks: it empowers the Board of Trade to declare banks and finance houses to be exempted dealers. Clause 16 lays down the conditions under which the Board of Trade are empowered to declare corporations to be approved trustees of unit trusts. They are that the corporation must be incorporated under the law of the United Kingdom, that it must be empowered to act as a trustee, and that it must have a capital for the time being issued of not less than £500,000, of which an amount of not less than £250,000 must have been paid up, and that the assets must be sufficient to meet its liabilities. The standard laid down for the approved

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trustee is that recommended by the Departmental Committee on Fixed Trusts.
The remaining clauses of the Bill deal with the penal and other necessary provisions. I would point out to your Lordships that under Clause 21 any rules or regulations made under the Bill by the Board of Trade must be laid before Parliament, and that by Clause 25, Section 356 of the Companies Act is repealed for the reason, as I said before, that this section, owing to the ingenious ways of share-pushers, has long been ineffective. Clause 26 includes the definitions, Clause 27 deals with the application of the Bill to Scotland, and Clause 28 is merely the short title and extent. The Bill is to come into force on the appointed day, which is defined in Clause 26 as meaning "such day as the Board of Trade may by order appoint." His Majesty's Government intend to bring the Bill into operation as soon as possible after its enactment, but some time will, I am afraid, have to elapse in order to enable the rules and regulations to be made, and for applications for licences to be made by individual dealers and to be considered and, where necessary, referred to the tribunal. It will also be necessary before the appointed day to deal with the question of exemptions under Clause 15 and the approval of trustees of unit trusts under Clause 16.
These are the main features of the Bill, which I have endeavoured at some length, I am afraid, to explain to your Lordships. My noble and learned friend on the Woolsack, who will be speaking later in the debate, will endeavour to make clear, and I am sure will make clear, any question that your Lordships may ask on the Bill. I should like to say to your Lordships that the Bill in its main principle had the support of all Parties in the House of Commons, and that its Second and Third Readings were carried there without a Division. I hope that it may have as favourable a passage in your Lordships' House. For your Lordships' information I would propose, with your consent, to put the Committee stage down for Tuesday, March 14, which should give sufficient time to any of your Lordships who wish to put down Amendments. In conclusion, I would say that the Bill has been framed with the sole idea of curbing and, if possible, stopping altogether the activities of a particularly cruel and objectionable section of the
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community, without interfering with the business of the genuine professional dealer. His Majesty's Government hope and believe that when the Bill is law and in full force it will go a very long way in doing two most desirable things—namely, preserving the fool from his folly, and guarding the helpless and ignorant from the wiles of the swindler and the shark.
Moved, That the Bill be now read 2a.—(Lord Templemore.)
LORD STRABOLGI: My Lords, on behalf of my noble friends on this side of the House I would like to thank the noble Lord, Lord Templemore, for his very condensed but nevertheless complete analysis of this complicated measure, and also personally to offer him my congratulations upon the wealth of invective which fell from him, which I envy and wish I could imitate when dealing with the Government's policy. I understand that the noble and learned Lord on the Woolsack will deal with any matters which may be raised in the debate. I have very few matters to refer to on behalf of my noble friends, although there is one which I must mention. In another place this Bill was subjected to a great deal of deserved attention and alteration. It was treated as a non-Party measure, and I think my right honourable and honourable friends improved the Bill very much. The President of the Board of Trade will, I am sure, be the first to admit the assistance which he had from them. In that connection I would particularly like to mention my right honourable friend Mr. Johnston, who has taken a great deal of interest in the matter, and who was partly responsible for the introduction of the Bill and for forcing the Whips to give the necessary time for its passage.
We would like to have seen the Bill rather more widely drawn, to deal with certain abuses that have arisen from the evasion of the intention of the Companies Acts by a matter which is known as the use of bank nominees. Your Lordships will be aware that the use of the loophole in the original Acts, to cover up the actual holders of the control of companies under the blanket of bank nominees, is open to serious objection. The matter was fully ventilated in another place, and I understand that as a result the banks themselves are taking steps to remove some of the possible evils which in certain cases might arise. We regard the Bill as a

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good measure, and hope it will be successful. The only point upon which there are still criticisms is that it does not at present apply in Northern Ireland or indeed in Eire, or in the Channel Islands, but I presume that the Board of Trade will be on the lookout for those gentry who may change the scene of their operations, and possibly the Government of Northern Ireland may take steps to follow suit with similar legislation. With these remarks I wish to extend a welcome to the Bill.
LORD WARDINGTON: My Lords, in rising to support this Bill, and at the same time to make one or two points of criticism, I ask for the indulgence of your Lordships' House. I do so firstly relying on the traditional kindly consideration which your Lordships are accustomed to give to anyone who ventures to address this House for the first time. I also ask your sympathy because this Bill which we are discussing is of a rather complicated and technical character, and does not lend itself easily to any comments which can be made of any general interest. With the objects of the Bill, I think there will be very general sympathy in all quarters of the House. Everyone is anxious to curtail the activities of the gentleman who is commonly known as a share-pusher, and to deprive him of the opportunities of getting away with his ill-gotten gains. There is a similiar anxiety to protect the innocent and unwary who may get into his clutches; and there is, in a lesser degree, anxiety to protect even the gentlemen of the get-rich-quick variety who may be seduced by the specious arguments of the persuasive share-pusher.
If it is not out of place for me to do so I should like to congratulate the Government on the production of this Bill, and further to thank my right honourable friend the President of the Board of Trade for the sweet reasonableness with which he has met the criticisms against some of the undesirable features in the first draft of the Bill, and for the way in which he has moved or accepted Amendments in Committee in another place. The present Bill has been improved out of all recognition, in comparison with its original form. The original Bill was in some places incomprehensible, at least
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to my limited intelligence, and was calculated to do almost as much harm in hampering perfectly legitimate finance as it was designed to control the operations of the share-pusher. So much was that the case that I was inclined to believe a cynical friend of mine who told me that a Bill of this type is purposely drawn in such a way that it is hard to understand on the principle that if its provisions are made too clear a rogue can easily invent methods of circumventing those provisions, whereas, on the other hand, if the exact meaning is sufficiently obscure he thinks twice before becoming involved in their penalties.
With the general provisions of the Bill I am in complete accord, but there are one or two points which appear to be of some importance to which I should like to draw your Lordships' attention. The first is one of principle which I feel will commend itself to your Lordships. Clause 16 (3) reads as follows:
"Subject to any exceptions which may be prescribed, every deed or other instrument (executed whether before or after the commencement of this Act) under which property is, in pursuance of any unit trust scheme, vested in an approved trustee of unit trusts, shall be deemed to contain such provisions as may be prescribed, and any provision contained in any such deed or other instrument shall, if and so far as it is inconsistent with any of the provisions so prescribed, be of no effect."
I am advised that in exercising the powers conferred on the Board of Trade by this provision it will be possible for responsibilities to be imposed upon the trustees of unit trusts far in excess of those which they accepted at the time when the deeds constituting such trusts were executed. Indeed the powers conferred by this clause on the Board of Trade are so wide that any addition can be made to the trust deeds of existing trusts, notwithstanding that such additions may conflict with the existing clauses of the deeds, and in fact alter the whole basis of contracts.
It would appear from the proceedings in Committee in another place that it was the intention that the clause should be inserted to impose additional responsibilities upon the trustees of unit trusts. I respectfully draw your Lordships' attention to the fact that the question of the modification of the constitution of unit trusts was referred by the President of the Board of Trade to a Committee,

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was investigated by them, that the Report of such Committee was made some two years ago, and that it did not contain any recommendations to this effect. I would further point out that to confer upon a Government Department such power in relation to existing contracts between private individuals is, as far as I know, without precedent and must be viewed with the greatest concern. No provision is made by the Bill enabling a trustee who is unwilling to continue under the changed conditions that may be imposed upon him by the Board of Trade to retire from the trust. It may be—I do not say that it is—that the documents constituting some existing unit trusts are unsatisfactory, and that they should be amended, but for Parliament to place in the hands of a Government Department an unlimited right, without consulting with those parties who are interested, and without indeed any obligation to consider any representations that such parties may want to make to amend existing contracts on which large sums of money have changed hands, is, I submit, an unusual and unfortunate way of providing a remedy.
There would be grave objection to the insertion by Statute of specified alterations into existing contracts, but there would be precedents for legislation of that kind, and it may be that legislation of that character would be justified. In that event those concerned would know beforehand the nature of the alterations which it was proposed to make, and they would have an opportunity, through their representatives in Parliament, of seeing that their views were represented, and were to be considered. If the Bill passes in its present form those interested will have no statutory right to know beforehand what alterations are proposed and will have no assurance that their views will be heard. That special Committee appointed by the President of the Board of Trade two years ago heard a number of witnesses and gave a great amount of time and trouble in preparing a Report to the President of the Board of Trade, making a number of recommendations, but those recommendations certainly do not include a recommendation that the Board of Trade should be given a free hand to make any alteration they think fit in existing deeds. But in any case am I not justified in pointing out that the
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Bill before the House is a share-pushing Bill and has nothing whatever to do with unit trusts as such? If legislation is required in connection with unit trusts, ought not this to be dealt with quite separately, or at any rate if anything is embodied in the present Bill, ought not the specific steps contemplated to be clearly set out and scheduled to the Bill, so that an opportunity might be given for debating this? And, further, should not provision be made enabling trustees of unit trusts to retire from the trust if they are not prepared to accept the additional responsibility which may be imposed upon them?
The second point which I wish to make is in regard to Clause 13, originally Clause 11. This is still not quite satisfactory. It deals with the distribution of circulars and other literature relating to investments, property and so on. It is drafted upon the basis that it is a criminal offence to distribute, or to have in one's possession for purposes of distribution, any circulars relating to investments other than those accepted by subsections (2) and (3) of the clause. I feel sure that the list of exceptions will not, in practice, prove to be sufficiently comprehensive and that certain types of literature which might be circulated perfectly legitimately and without objection have been lost sight of. I suggest that the Board of Trade should take power to add to the list of exceptions from time to time, otherwise it will only be possible to add to the list by Act of Parliament.
The only other clause to which I need draw your Lordships' attention is Clause 18. This provides that where any offence under the Act has been committed by a corporation, if it is proved that the commission of the offence is attributable to any negligence on the part of a director or officer of that corporation, that individual as well as the corporation shall be guilty of a criminal offence and be liable to be proceeded against accordingly. It seems to me that it is entirely too drastic that mere negligence, due perhaps to great pressure of time or want of meticulous care on the part of an official—a mere slip—should be made a criminal offence. It may be that the Home Secretary had some pre-vision of this clause when he undertook to provide some amelioration of the conditions of prison life, but this will give an unfortunate and

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entirely unintentional criminal little consolation. I apologise to your Lordships for taking up so much time, but I hope that the points which I have raised will be considered not unimportant. Just before I entered your Lordships' House a communication was sent to me from the Board of Trade in which, I understand, it was stated that these points will receive the attention of the Government. I hope that the noble Lord who is in charge of the Bill will be able to confirm that, and that these matters will be considered when the Bill comes to the Committee stage.
VISCOUNT BUCKMASTER: My Lords, I am sure it is your Lordships' wish that I should congratulate the noble Lord who has just spoken on his important and interesting speech. I feel sure that I am further expressing your Lordships' sentiments when I say I hope that he may again give us the benefit of his wide knowledge of banking and may take an active part in our debates. There is much to be said about this Bill, and I have no desire to detain your Lordships unduly. I propose therefore addressing myself to those aspects of it which are not primarily concerned with the matters to which the noble Lord who introduced the Bill referred. That this Bill is necessary cannot be disputed. The victims of the share-pusher are so numerous, their descriptions so various—they extend, so we are told, from maiden ladies to members of the Church and even of the legal profession—that sometimes one is inclined to believe that members of your Lordships' House are the only section of the community which has been able to escape.
It is the essential feature of this Bill that dealing in stocks and shares, with the exception of members of recognised exchanges, should be limited to those to whom a licence has been granted. There are certain other exceptions, but they call for no comment. This principle of licensing is one to which no exception can be taken, but it does confer a very real status on the licensee. One can only hope that it will not be possible for licensed dealers to use the description, "Licensed by the Board of Trade," to extend further their activities. They will not be bound by the rules which members of recognised exchanges impose upon themselves. They will be free to buy addresses, to extract names from transfers, and by devices of
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a like nature to solicit whom they please. Any approach of this kind must obviously be more effective if it is purported to be made under the auspices of the Board of Trade. The President of the Board of Trade stated that he had this point in mind, but he gave no definite undertaking, and I would welcome an assurance that it will not be possible for licensed dealers to advertise the fact that they are licensed.
Turning to the conditions on which licences are granted, one can only welcome the Amendment to Clause 4 which provides that a deposit of £500 must be found. One cannot help wondering whether, even so, this clause is stringent enough. Licensed dealers would be free to deal in securities, not as brokers, but as principals, and a business of this kind must be difficult, may indeed be dangerous, and, if successfully conducted, it must involve the handling of large sums of other people's money. Yet not only do we not ask for any sureties, but we are satisfied with a deposit of so small a sum as £500. To my mind a larger deposit should be asked for and satisfactory sureties should be insisted on. This principle is indeed accepted by the London Stock Exchange, which insists in the case of members without any previous experience that there should be three sureties of £500 each. That is in addition to various payments which cost at the present time approximately £2,000. The Bodkin Committee recommended that the provision of satisfactory sureties should be an essential condition of granting licences. They suggested, moreover, that the sureties should testify to the candidate's business and personal repute. I can see little objection to a proposal of this kind, which not only affords the public added security, but cannot surely embarrass anyone who has any serious pretension to be qualified as a dealer in stocks and shares.
This Bill, in order to achieve its purpose, had to enlarge its scope beyond that which most of us anticipated. In particular, it has dealt with building and allied societies, and one naturally welcomes the fact that in the case of companies registered under the Industrial and Provident Societies Act, the Registrar is given additional powers to cancel registration. As your Lordships are aware, companies registered under this Act escape many of the restrictions imposed by the Companies

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Act, and there is no doubt that a large number of so-called Co-operative Property and Investment Companies appealing particularly to the smaller investor are, if registered, better able to push and advertise their shares. Many of these companies promise high rates of interest together with security and safety. I have here some letters from a company of this nature, signed by a name not unfamiliar to your Lordships, inviting the purchase of shares in which interest of £6 4s. 2d. per cent is offered together with safety of capital and no risk of depreciation. Moreover, it states that property worth a very large amount was recently acquired. But the applicant is left in ignorance of the fact that the property is very heavily mortgaged. So little in fact of what is material is mentioned and to such an extent is the applicant left in ignorance that one may say in regard to it:
"Must helpless man, in ignorance sedate,
Roll darkling down the torrent of his fate?"
I now turn to the question of unit trusts of which the noble Lord has spoken. I regret that I cannot share his view. The noble and learned Lord on the Woolsack will correct me if I am wrong, but I understood that we were to be given an opportunity of studying the rules which the Board of Trade will propose. If those rules are to be the subject of a debate both in another place and in your Lordships' House, that does meet the objection that they are not specifically incorporated in the present Bill. I must confess that I would have welcomed the embodiment in the Bill of the recommendations of the Anderson Committee. I do not think that there is abuse in the management of the trusts, but I do say there is opportunity for fraud. While it may be true that many of these trusts have voluntarily adopted the suggestions of the Anderson Committee, it does seem desirable that the more important recommendations should be included in the conditions which the Board of Trade will prescribe. I for one would like to feel that the rules to be framed by the Board of Trade will in fact embody the more important recommendations of the Committee. In particular would I like to see it established that the trustees are made responsible for any advertisements issued, for a statement which might be permissible when made by an ordinary individual assumes another complexion
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when it purports to be issued with the approval of one of our leading banks.
I have here an advertisement issued last year stating that South African gold mining shares are the best investment obtainable at the present time. The advertisement goes on to say that a selected investment in these shares produces a gross yield averaging over 8 per cent. No reference is made to the fact that the life of any mine is limited, and that mining shares are wasting assets. I have here another more recent advertisement urging investors to purchase at the present time when markets are on the upward trend. Underneath both these advertisements appears the name of the Midland Bank as trustee. No doubt your Lordships would like to know whether it is the considered opinion of the Midland Bank that we are on the eve of rising markets. One can only say that such a statement, unsupported by reasoning, bears little relation to the precise and carefully worded reports which the same bank is in the habit of sending out each month. Whatever the true facts may be, there is no doubt that statements of this kind have every appearance to the uninitiated of having been made with the full authority and approval of the Bank.
Another point in this connection to which I wish to refer is the question of management. I would like to see the trustees given power to remove the management where it is in the best interests of the unit holders that this should be done. As your Lordships are aware the management company acquire the securities which are subsequently transferred to the trustees. Now, although it does not happen in every case, there are cases in which very substantial profits can be made without the knowledge of the unit holders. It is not unusual to provide that irrespective of the purchase price securities are valued at the higher or buying price of the two prices quoted in the Stock Exchange Official List. This quotation is prepared some time before the close of Stock Exchange business, and is a wide quotation covering a considerable range of fluctuations. The actual price at which securities can be purchased would in nearly every case be very substantially below the higher price of the official quotation. For this reason the management companies start with an almost assured profit on any purchase. It is true that this may be lost by sub-

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sequent market fluctuations in the price of the securities, but even this can sometimes be guarded against by intelligently anticipating the public demand.
The last point, a brief one, with which I will trouble your Lordships, is the question of taxation. I would like to see the rules so framed that unit trusts no longer enjoy the very real advantage in taxation which they secure over the accepted type of investment trust company. I am advised that whereas an investment trust company registered under the Companies Act would pay stamp duty of £5,000 on an issue of one million £1 shares, a unit trust could, by transferring securities to the value of, say, £10,000 and reserving the right to transfer further securities, escape with a settlement duty of only £25. I have nothing more to add in connection with this Bill except to say that, wide as it is in its scope, effective as we hope it will be in its purpose, it cannot be said that the task of preventing fraud in connection with share dealings is finished until the Companies Act has been thoroughly and effectively revised. I hope that the Government will address themselves to this task as speedily as they can.
THE EARL OF IDDESLEIGH: My Lords, I feel it a privilege to be able to join with the noble Viscount in offering congratulations to the noble Lord, Lord Wardington, on a maiden speech of singular clarity and to express the hope that his very important duties in the City will not prevent him from being present in this House on other occasions. I had intended offering a few remarks on Clause 16, subsection (3), but my noble friend has already dealt with the point in so clear and adequate a manner that there is little I need say. The great corporations engaged in business as corporate trustees are all seriously apprehensive as to the possible effect of this subsection, the nature of which is certainly very surprising. It is intended to give power to a Government Department to alter by regulation the contractual status between the management and the trustee and the public. That status is decided at present by the trust deed, a document drawn up with the utmost care, by which the trustee accepts certain defined responsibilities to the public in return for a stipulated fee. We
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are now asked to give a Government Department the power to add to or alter those responsibilities.
As I read this clause, it gives unlimited powers to add anything that the Department consider desirable to the trust deed. There is no provision enabling the trustee to lay down his trust, or to raise his remuneration in accordance with the new duties which are to be laid upon him. The noble Viscount, Lord Buckmaster, has assured us that we need not be apprehensive on this score, because, he informs us, the regulations would have to be debated in this House, or would at least come before the House and could be debated here. That is perfectly correct, but I would call your Lordships' attention to the actual wording of Clause 21. That clause reads:
"Any rules or regulations made under this Act by the Board of Trade shall be laid before Parliament as soon as may be after they are made."
It is quite clear that they can be debated, but there is no provision for their being negatived. Your Lordships are very well aware—
THE LORD CHANCELLOR: May I be allowed to interrupt the noble Earl? This point has been very carefully considered by the President of the Board of Trade. I think I may say that the objections to the clause will prevail, and that the whole clause will have to be redrafted.
THE EARL OF IDDESLEIGH: I am much obliged to the noble and learned Lord, and in view of what he has said I will not take up more of your Lordships' time.
THE EARL OF MANSFIELD: My Lords, I do not intend to deal with the contents of this badly-needed Bill, but I should like to draw attention to Clause 27, which deals with the application of the Bill to Scotland. That clause seems to have been the victim of very careless work in another place, inasmuch as paragraphs (1) and (2) do not refer in any way to the clause to which they purport to refer. Paragraph (2) says that:
"Subsection (6) of Section eleven shall have effect as if for any reference to a justice of the peace there were substituted a reference to the sheriff, and subsection (9) of the said section shall not apply."
In Clause 11 there are only five subsections. I would suggest that possibly what is meant is subsection (8) of Clause 13.

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I would ask the noble Lord in charge of the Bill to draw the attention of the draftsman to the matter before the Committee stage.
LORD RANKEILLOUR: My Lords, may I be allowed to put one point to the noble and learned Lord on the Woolsack? I should like to ask why the appeal that is allowed in the case of refusal or revocation of licence is not allowed in the case of refusal or revocation of exemptions. Apparently, under Clause 6, the tribunal can deal with the former, and I suggest that attention should be given to the matter to see whether the tribunal could deal also with the latter, because the effect on the body or persons concerned might be equally grave in the latter case as in the former.
THE LORD CHANCELLOR: My Lords, I think there is general agreement on one thing, and that is that this Bill is of the most useful kind, but it must be admitted that it is an exceedingly difficult Bill to draft because nothing is harder in cases of this kind than to catch all ruffians and to let through honest men. I have myself thought that there are provisions in this Bill which might have to be improved in the direction of catching more of the wrongdoers and making it safe for honest men. Your Lordships have suggested a number of matters which ought to receive the attention of the Government before the next stage of the Bill. I can assure your Lordships that everything that has been suggested will be very carefully considered, and on the Committee stage I have no doubt a considerable number of Amendments will have to be put down with the hope of making the Bill approximate a little bit nearer to perfection.
Now I will deal very shortly with some of the points which your Lordships have mentioned. In the first place the noble Lord, Lord Strabolgi, referred to bank nominees, and I agree that that device is one which is sometimes used improperly. The difficulty is to differentiate those cases from the cases where it is quite a natural and useful thing to do. I shall be glad if something can be suggested that will prevent abuse of the process of holding shares in the names of bank nominees. With regard to Northern Ireland, I think we must leave Northern Ireland to legislate for itself in a matter of this kind, because there is always a risk that in legislating for a country where
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somewhat different practises may obtain one may do something which really is not intended. While I am on the question of countries other than England, may I deal at once with the remarks of the noble Earl, Lord Mansfield, about Clause 27 in this Bill, which applies it to Scotland. By a slip, the clause does not properly deal with the matter and the Government are aware that that will have to be put right on the Committee stage.
The noble Lord, Lord Wardington, in his most useful speech attacked Clause 16 (3). The point had already been brought to the attention of the President of the Board of Trade and he had determined that the matter should be considered on behalf of the Government. Perhaps I may say that I think the clause, for the reason the noble Lord himself pointed out, is a clause which must give pain to any good lawyer. It really is extraordinary to provide that an existing deed, such as a deed under which a unit trust exists, is to be deemed to contain all sorts of provisions which it does not contain and that the provisions which it does contain are to be of no effect in so far as they are inconsistent with the imaginary provisions which it does not contain. I admit that the matter really must be dealt with, and an Amendment must be put down to prevent that clause coming on the Statute Book. That brings me to the analogous point which the noble Viscount, Lord Buckmaster, made. He suggested that, after all, it was not so bad as it looked, because the regulations or provisions which were going to be inserted in the Bill would be laid before Parliament under Clause 21. I do not think that answer would be a sufficient answer to the objections to Clause 16 (3) as it stands, but I may say that the reference to that clause will probably have to be somewhat enlarged so that the clause will beyond all doubt refer, not only to rules or regulations, but also to any other provisions of that character which are made by the Board of Trade.
Then I come to the question of taxation, which was raised by my noble friend Lord Buckmaster. I doubt whether that question will be within the scope of this Bill. After all, the Bill does not purport to deal from the ground floor, so to speak, with unit trusts. It is a Prevention of Fraud (Investments) Bill, and I think it would be beyond its scope altogether to

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legislate on taxation—though I am sure that the suggestion of the noble Viscount will be received with pleasure by one of the Departments of State, and perhaps before very long some useful result will be founded upon his reminder! Another matter with which I intended to deal is that of the deposit: whether it should be larger than £500, or whether there should be securities. That matter was considerably discussed in another place, and it might be wiser not to introduce an Amendment there which might delay the passing of this measure into law.
My noble friend Lord Rankeillour pointed out that there was an appeal if a licence was refused, but no appeal if a licence was revoked.
LORD RANKEILLOUR: May I explain? When an order of exemption was revoked.
THE LORD CHANCELLOR: I beg the noble Lord's pardon. This is an omission in the drafting of the Bill, and this also shall be put right on the Committee stage. In the net result, nearly every one of the matters to which your Lordships have referred has either already been considered by the Government or will, I can state at once, be carefully considered on the Committee stage, and nearly all the objections will, I think, be removed. I would add that if any other noble Lord has any matters to bring to the attention of the Government, nobody will be better pleased than I. I have been concerned practically all my life with matters of this sort—company matters and improper methods of extracting money from the public—and I should be only too glad if the net provided by this Bill were thrown widely and so constructed that hardly any of the rogues would be able to get through.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

LONDON GOVERNMENT BILL. [H.L.]
Order of the Day for the Second Reading read.
THE EARL OF LISTOWEL: My Lords, I am glad, in the first place, to be able to relieve your Lordships of any anxiety that you may experience at the moment
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lest I should make a very long speech and there should be a further discussion that might last as long as the very interesting discussion on the last Bill. The measure which I have the honour to present to your Lordships for consideration has been prepared by the London County Council in constant consultation with the Standing Joint Committee of the Metropolitan Boroughs. This means that it is essentially a Bill which has behind it the full authority of all the local authorities in the Administrative County of London and which embodies what they hope the national Legislature will do for them.
This Bill, with its very resounding title, is mainly a Consolidation Bill. It aims at gathering together into one Statute the various enactments affecting the Administrative County of London and in this way tidying up the law as it affects the Metropolis. It also proposes a number of minor amendments to the existing law in order to bring London government into line with local government outside London. In both these respects London at the moment lags far behind the rest of the country. If it would not weary your Lordships to hear a little about the historical background of the Bill, I should like to summarise the situation as follows. In 1930 a Committee was appointed by the then Minister of Health, Mr. Arthur Greenwood, to consider the consolidation of the laws relating to local government and public health in the country as a whole, but London was expressly and, I believe, on very reasonable grounds excluded from the Committee's terms of reference. As a result of the labours of this Committee, three Bills were introduced into Parliament and passed into law. They reached the Statute Book as the Local Government Act, 1933, the Public Health Act, 1936, and the Food and Drugs Act, 1938. When the 1933 Act was before members of another place, the Minister of Health, who is now the noble Lord, Lord Kennet, said that the London County Council was considering a similar measure to cover the London area. In 1934 the noble Earl, the Chairman of Committees in your Lordships' House, pointed out that local government law for London should be brought up to date, and an undertaking was given at that time. It is the object of this Bill to fulfil that undertaking.

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To give your Lordships an example of the mess we are in at the moment I would like to mention two points. I would like in the first place to remind your Lordships that the various qualifications for election to local authorities in the Administrative County of London are contained in six different Acts of Parliament, and that the grounds for disqualification are scattered over nineteen different Statutes. This Bill, if it wins the approval of the House and succeeds in passing into law, would repeal fifteen Acts of Parliament completely, and ninety-three others in part. I very much hope that it will commend itself to your Lordships as being a useful measure for tidying up the existing law, and as a method of introducing some minor amendments which would put London government on the same footing as local government outside London. I have summarised as briefly as possible the objects of this Bill in the hope of sparing your Lordships a certain amount of tedium, but I hope I have covered the ground sufficiently to enable your Lordships to judge whether it is a measure which merits your approval.
Moved, That the Bill be now read 2a.—(The Earl of Listowel.)
LORD JESSEL: My Lords, the noble Earl in charge of this Bill has quite accurately described the situation. This Bill is more or less an agreed Bill. It has been considered by the local authorities in London, and they have all agreed with certain reservations that it would be a good thing for the Administrative County of London to follow in the footsteps of previous Bills having consolidation in view. There are, however, one or two small points to which I would now like to call attention. The first is this. The noble Earl referred to the matter of qualification and disqualification. In London, to be qualified for election to the local authority you have either to reside in a borough for twelve months or you have to be an owner of land or else to be a local government elector for the area of the authority. One thing is certain, and that is that under previous Acts a man who resides in the borough for a year, and then ceases to reside, if he is elected to a council does not lose his qualification, but it is not certain at all that a local government elector who pays rates for the whole of his property and then ceases to hold that property, or is
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removed from the roll of local government electors, can still be qualified. That is a matter which has been the subject of controversy for some time, and I hope that the Joint Committee, when it considers this Bill, will clarify the situation.
There is one other point, a domestic point which affects the City of Westminster, and, as my noble friend Lord Balfour of Burleigh will point out, the Royal Borough of Kensington. If your Lordships turn to Clause 17 you will see that it provides that
"A Borough Council shall be a body corporate by the name:
(a) in the case of the City of Westminster, of the mayor, aldermen and councillors of the City of Westminster."
Then, later, it goes on:
"(c) in the case of any other borough, of the mayor, aldermen and councillors, with the addition of the name of the borough."
If your Lordships will take the trouble to turn to the First Schedule, referred to in Clause 1, the names are all set out, but it merely gives the names of "Westminster" and "Kensington" in their order, and there is no mention of the words "City of" before Westminster and "Royal Borough of" before Kensington.
The City of Westminster is extremely proud of being a City, and there is a good deal more behind this matter than is apparent. The title of "City" attaches to towns of several classes. In the first place to certain towns, such as Exeter, which were described as civitates in Doomsday Book and have ever since retained the description. Secondly, to the seats of bishoprics, including such towns as Coventry and Westminster, which formerly contained bishoprics, and such towns as Gloucester, which were raised to the rank of cities when new bishoprics were founded. Then, thirdly, there is another description of large towns, such as Birmingham, which were granted by Royal Charter in modern times "all such ranks, liberties, privileges and immunities as are incident to a city." Westminster was constituted a bishropic in 1540, but unfortunately, owing to the energies of the then Bishop of London, who did not like a rival potentate in the district, it was abolished ten years afterwards, but, on the analogy of Coventry, Westminster continued to be known as a City.
In the Court of Burgesses of the City and Liberty of Westminster it possessed a continuous civic organisation from 1585

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to 1900. I might say in parenthesis that the Court of Burgesses was founded by Cecil, that great Minister of Queen Elizabeth, and Lord Salisbury is still High Steward of Westminster. In all the public documents, popular speech and writings, Westminster is described as a City. Our further claim is this, that the title "City" in relation to the area comprising Westminster was granted in the London Government Bill of 1899 and by Royal Charter of Queen Victoria in 1900. The question of title, therefore, is a matter of Royal Prerogative, for which in both the Municipal Corporations Act, 1882, and the Local Government Act, 1933, there is a specific reservation. Why we are anxious about this is that there is a possibility that in future it may be alleged that the titles of the City and of the Royal Borough depend upon Clause 17 of the London Government Bill, and not upon the Royal Charter and Letters Patent.
I might mention in this connection a curious incident that arose owing to the ecclesiastical authority in Westminster having ceased to be a bishop. It is a story of robbing Peter to pay Paul. The then Bishop of Westminster was very anxious to placate the Bishop of London of those days and he surrendered to him a good many of the lands that belonged to the collegiate church of St. Peter, and that land was sold and used to erect the Cathedral of St. Paul. For these reasons I hope that the Joint Select Committee which is going to deal with this matter will carefully consider these points. In conclusion, I think we must all be very grateful for the work that the London County Council has done in bringing forward this Bill. It will be a great advantage to London to have a definite code now instead of having to look up numerous Acts of Parliament. Therefore I hope that your Lordships will give the Bill a Second Reading and allow it to go to a Joint Select Committee.
LORD BALFOUR OF BURLEIGH: My Lords, I desire to add only a few words to what the noble Lord, Lord Jessel, has said. I admit that the point which I am bringing forward is one more of constitutional interest than of practical importance, but nevertheless it is one to which we in Kensington attach a considerable degree of importance. The position is that the Borough of Kensington holds its title of Royal Borough by virtue
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of Letters Patent. We are advised that after the passing of this Bill, if it passes in the form in which it now is, we shall hold that title by virtue of this Act of Parliament. I hope it is not improper to put it in that way, but we would sooner hold by Letters Patent than by Act of Parliament. An Act of Parliament of course overrides the Royal Prerogative, and what we desire to see is a saving in this Bill for the Royal Prerogative in exactly the same way as has been done in other cases. The noble Earl who introduced the Bill said it was a Consolidation Bill, and I think he said that it was complementary to the Local Government Act, 1933, and of course so it is. But in the Local Government Act, 1933, Section 155, there appears this provision:
"The enabling provisions of this Part of this Act shall be deemed to be in addition to, and not in derogation of, the powers exercisable by His Majesty by virtue of his Royal Prerogative."
That derives in turn from the Municipal Corporations Act, 1882, and it is not clear at first sight why that provision should be omitted from this Bill. It seems to me that it is a departure from precedent, and I am very glad that the Bill is going to a joint Select Committee, where I have no doubt this matter will receive the attention which I think it deserves.
THE PARLIAMENTARY UNDER-SECRETARY OF STATE FOR DOMINION AFFAIRS (THE DUKE OF DEVONSHIRE): My Lords, I need detain your Lordships for only one moment to say that my right honourable friend the Minister of Health welcomes this Bill and that he hopes it will receive a Second Reading. It is, as the noble Earl opposite explained, largely the product of the London County Council, which has been working with the other London authorities and has also been working in close collaboration with the Minister of Health and the Home Secretary. There are one or two matters of detail which will require careful scrutiny in the Committee stage, but broadly speaking the Government welcome this Bill, and hope that your Lordships will see fit to give it a Second Reading.
THE EARL OF LISTOWEL: My Lords, I am much obliged in the first place to the two noble Lords who raised two points of some importance in the course of their remarks. The first of these is

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one that will obviously be dealt with, if your Lordships see fit to give the Bill a Second Reading, when it comes before the Joint Select Committee of the two Houses of Parliament. The second, relating I think to the status of the City of Westminster and the Royal Borough of Kensington, is one of considerable importance and one that may perhaps have been met already. I am perfectly certain that it is not the intention of the sponsors of this Bill to deprive either Westminster or Kensington of their present status and of their interesting historical background, and if unintentionally the Bill is so drafted as to affect in that way the status of those two Boroughs, I am sure that the sponsors will be ready to agree to any alterations that may be necessary in order to restore the Bill to the form which it would have had if it had carried out their intentions.
I am also exceedingly grateful to the noble Duke who spoke for the Government for the assurance he gave. It is very gratifying to know that the Bill will have the facilities that the Government are prepared to give, without which it would certainly fail to pass into law, and we are most grateful for the help that we shall look forward to both in this House and in another place when it reaches there. I am much indebted to the noble Lords who have spoken for their criticism, and if your Lordships agree to give the Bill a Second Reading I shall ask the House to send it to a Joint Select Committee of the two Houses of Parliament. That is the customary procedure in the case of Bills of this kind in order that all interests affected, such as those mentioned by the two noble Lords, may be adequately represented.
On Question, Bill read 2a.
THE EARL OF LISTOWEL: My Lords, I beg to move, That it is desirable that the said Bill be referred to a joint Committee of both Houses of Parliament.
Moved accordingly and, on Question, Motion agreed to.
Ordered, That a Message be sent to the Commons to communicate this Resolution, and to desire their concurrence.

EXPORT GUARANTEES BILL.
Read 3a (according to Order), and passed.

CZECHO-SLOVAKIA (FINANCIAL ASSISTANCE) BILL.
Order of the Day for the Third Reading read.
THE EARL OF PLYMOUTH: My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a.—(The Earl of Plymouth.)
LORD STRABOLGI: My Lords, I understood from the Order Paper that it was hoped to have a Royal Commission round about half-past six, but as your Lordships know, that is always a pious hope, and obviously whoever put the time down was optimistic about the interest your Lordships took in the measures on the Order Paper. This Bill, which we now have a last opportunity of examining, raises matters of the very greatest importance, and I make no apology whatsoever for asking your Lordships' attention to two aspects of it for a brief period. On the Second Reading my noble friend Lord Snell and other noble Lords referred to the broad aspects of the Bill, and I propose now to deal with two matters which perhaps might be called detail, but which, as I say, raise matters of great importance.
First of all may I ask the noble Earl, Lord Plymouth, if he can inform us what is the position with regard to the guarantee of the frontiers of Czecho-Slovakia? If in this Bill we are invited to vote this immense sum of money—it is a very large sum of money, especially in these times—we are entitled to know what has happened to that pledge, given at the time of the Munich Conference and the other meetings that preceded the Munich Agreement, to guarantee the frontiers of Czecho-Slovakia. I have raised this matter on other occasions in your Lordships' House. I have always been referred to a pledge given by the then Minister for the Co-ordination of Defence, Sir Thomas Inskip, now Secretary of State for the Dominions, about our moral responsibility, but that is as far as it seems to have gone. It is important that we should know exactly what the position there is, if the noble Earl is in a position to inform your Lordships.
The second observation I would make is the following. I am speaking, I know,

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for the whole of my Party and for my noble friends in saying we are torn between two considerations. There is, firstly, the desire to help the unfortunate refugees from Czecho-Slovakia, for whom we cannot escape responsibility—indeed their miseries are largely attributable to the actions of His Majesty's present advisers. On the other hand, while we are filled with that feeling of compassion and desire to help, we realise only too clearly that there is a danger that this money—the money of the lieges of this country—will be of indirect assistance to German aggression. I will specify what I mean by referring to a statement made by the noble Earl on the Second Reading. If I may quote from the OFFICIAL REPORT, the noble Earl dealt with the £8,000,000 for the internal reconstruction of Czecho-Slovakia, and he went on to say:
"and, on the other hand, the provision of £4,000,000 plus the approximate equivalent in French francs of another £4,000,000, for the emigration of refugees."
A little later on in his speech the noble Earl said:
"Since expenditure on maintenance alone could not hope to solve the problem, we have agreed that one of the primary methods of relief should be the provision of productive employment through public works—primarily the construction of essential new communications. I should add that the Czecho-Slovak Government have given us an assurance that no part of these funds will be used in building roads with a military object."
The information which reaches me is quite different. I have reason to believe that the Czecho-Slovak Government are being compelled by pressure from Germany to spend a sum of about £210,000 from their own funds on the military motor road which is being constructed between Breslau and Vienna across Czecho-Slovak territory. Your Lordships are aware that that road will have extraterritorial immunity. It will be German property, in other words, and I understand that Czech workmen employed on it will be under the military discipline of Germany while on the road and in its neighbourhood. Two hundred and ten thousand pounds is to be contributed by Czecho-Slovakia to this road of primarily military importance. More than that, I understand it is now intended to build a road from east to west. At the time this great project of a road through Czecho-Slovakia was first mentioned, the object
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of which is clear to all your Lordships—it is simply to allow of German aggression against Rumania through Ruthenia—it was announced that the German Government would bear the whole cost. I understand now that the Czecho-Slovak Government are being coerced or have been coerced into spending £3,200,000 as a contribution to this east-to-west road. If that is the case, it means that the money we are sending to Czecho-Slovakia is being used to build a strategic road for Germany. I cannot allow this Bill to pass without giving the noble Earl an opportunity of commenting on these allegations, either denying them or, if he cannot deny them, giving your Lordships some comfort in the matter and assuring us that the British Government are taking steps to prevent any such pressure being forced on the Czecho-Slovak State.
I would also like to ask the noble Earl if it is not a fact that there is still an agitation being worked up amongst German-speaking Czechs inside the territories remaining to the Czecho-Slovak State—the truncated State you have left to the Government of Prague. I wish to ask whether German-speaking Czechs there are being stirred up to further agitation and unrest and, if so, whether we are taking any steps, diplomatic or other, to protest. Our complaint is that after Munich—we have dealt with the Munich question, your Lordships have voted on that, and I do not wish to reopen it—the Czecho-Slovak State, as far as this country is concerned, was left entirely to its own devices. It was left to make what arrangements it could with its rapacious neighbours. It has since been entirely at the mercy of Germany, and any attempt to ease its lot or support it morally or materially has not been feasible on the part of His Majesty's Government. We are asked to implement this promise to make this very heavy loan to Czecho-Slovakia. Sorry as we are for the Czechs, and exercised as we are about the fate of the unfortunate refugees, I think these questions require some attention. I therefore invite the noble Earl, if he can, to give us some comfort with regard to these matters.
The other matter is a very terrible business indeed. If my information is correct—and it appears to have been admitted by the Government spokesman in another

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place—there has been a breach of the undertaking with regard to the refugees themselves. We were told at the time of the Munich Agreement that those persons who were living in the territories ceded to Germany who wished to leave them had the right of option to do so. That is what your Lordships were led to understand, and it was one of the matters we were told about as offering some small comfort. Anyway, these unfortunate people were to be allowed to leave if they wished and to go to the new Czech State. I understand—and I believe the Government admit this is the case—that that undertaking given to the British Prime Minister has been broken and that only citizens of Jewish, Czech or Slovak race have been allowed this option. Citizens of Czecho-Slovakia of Germanic race, so called, have not been allowed this right. They have been retained in the ceded territories and not allowed to go to the other part remaining under the Prague Government.
In many cases they have, I understand, suffered cruel persecution for their political opinions. That is contrary to the undertakings given and the promises made, and before we part with this Bill, voting this large sum of money for the relief of these unfortunate victims of Anglo-French policy at that time, we should be allowed to make some protest. Particularly I would ask the noble Earl—he is aware I am going to raise this point—whether His Majesty's Government are quite helpless in this matter of the so-called Germanic Czechs, and whether we cannot do something to allow these unfortunate people to build up a new life for themselves elsewhere. Earlier we apparently were unable to give diplomatic support to Czecho-Slovakia where only our honour was involved. Well, when this Bill passes our money will be involved. Will that make a better appeal to His Majesty's Government? Are we prepared to give support to this unfortunate nation and to preserve them from further pressure and injustices?
THE EARL OF PLYMOUTH: My Lords, I am grateful to the noble Lord for having given me notice of some of the questions he raised during the course of his speech. He said that, having dealt with matters of broad policy on the Second Reading discussion, he would now deal with details. I confess he seems to me to have ranged over a very wide field
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in regard to Czecho-Slovak matters and he has done so with his usual vehemence. Let me apply myself to the actual points he raised. He first of all raised the question of the guarantee for the frontiers of Czecho-Slovakia. I am afraid I am not able to give him any new information on that matter. The question is still under discussion with the Governments of those countries who are concerned but no definite arrangement or decision has yet been reached.
The next point he raised was in connection with the use that is going to be made of the £8,000,000 loan, and he expressed fears and suspicions that that money might be used for purposes which were of no real advantage to the Czecho-Slovak nation itself but would rather be to the advantage of Germany. I do not really know what sources of information the noble Lord has in regard to these matters, and I can tell him that I know nothing whatsoever of the so-called coercion which he says is being employed by Germany in regard to these matters. I can only state the actual facts as I am aware of them, and that I will now proceed to do. The position in regard to this matter I explained fully during the Second Reading debate and I am afraid I have not very much to add to what I said then, but perhaps I can make our position in regard to the matter somewhat clearer. The situation is that, although the whole of the £8,000,000 guaranteed loan is to be spent ultimately for the benefit of refugees, we have agreed that these funds may be applied temporarily for any urgent requirements of national reconstruction, provided that the whole of the amounts so applied for purposes other than the requirements of refugees shall be replaced by the Czecho-Slovak Treasury as and when required for expenditure in connection with the relief and settlement of refugees in Czecho-Slovakia as at present constituted. That is fundamental.
It has also been agreed that one of the primary methods of relief of refugees will be the provision of productive employment through public works, and the Czecho-Slovak Government have informed us that, in speaking of public works, they have primarily in mind the construction of certain roads which are of vital importance to them in the new economic development of their country. At the same time they have given a

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definite assurance that no part of these funds will be spent on constructing roads with a military object. I should like to add that we have no information as to precisely what roads it is intended to construct with the aid of the money supplied by the guaranteed loan, but we have no reason whatsoever to suppose that the Czecho-Slovak Government wish to evade their undertaking about military roads. The point I wish to bring to the attention of your Lordships is that the allocation of the funds is one of the many points to be settled later by the Czecho-Slovak authorities in consultation with the British liaison officer in Prague who is in close and constant touch with those responsible for spending the money on the Czech side. Moreover, the provision in Annex II of the Exchange of Letters (to which I have referred already) that the Czecho-Slovak Government are to submit a detailed statement of the expenditure actually incurred out of the loan at the end of each quarter, I think quite obviously provides an adequate safeguard, if any is needed, that the money is being properly spent.
LORD STRABOLGI: Before the noble Earl proceeds to the next point might I justify my own question? I understand these figures of road expenditure are in the recently published Czech Budget issued since the Second Reading of the Bill.
THE EARL OF PLYMOUTH: That may be so, but I do not think it affects my argument.
LORD STRABOLGI: There is some basis for it at any rate.
THE EARL OF PLYMOUTH: I do not doubt that. The third point which the noble Lord raised is the question of option, and he suggested that the withholding from persons of German race resident in the Sudeten territories of the right to opt for Czech nationality is inconsistent with the provisions of Article 7 of the Munich Agreement which the noble Lord maintained was intended to confer the right to option on all inhabitants of those territories irrespective of their race. I feel that this point does require some further explanation. Article 7 of the Munich Agreement reads as follows:
"There will be a right of option into and out of the transferred territories the option
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to be exercised within six months from the date of this Agreement. A German-Czcho-Slovak Commission shall determine the details of the option, consider ways of facilitating the transfer of population and settle questions of principle arising out of the said transfer."
It does not contain any definition of the persons who were to enjoy the right of option, and the elaboration of the general principle laid down at Munich was left to the two countries directly concerned—Germany and Czecho-Slovakia.
This is not to say that once the Munich Agreement had been signed, His Majesty's Government entirely disinterested themselves from the execution of the provisions concerning optants. On the contrary, they were anxious to see the right of option granted without discrimination and on as wide a basis as possible; and before the conclusion of the Optants' Agreement they took care to indicate both in Berlin and Prague the importance which they attached to this point. The German and Czecho-Slovak Governments were, however, under no obligation to accept the views of His Majesty's Government; and although regret may be felt at the restrictions which were placed upon the right of option, His Majesty's Government consider that the two Governments concerned were fully entitled to determine the details of the Agreement in whatever manner seemed to them most suitable. In addition to that I can assure the House that there is no justification for the belief that the Czecho-Slovak Government were obliged to accept these restrictions. On the contrary, I understand that they were never anxious to see the right of option extended to persons of German race in the ceded territories. If only for economic reasons, they have all along wished to keep the number of optants as low as possible, since they realised the difficulty of establishing any further considerable volume of persons within their frontiers; and it is understandable that they should consider first the claims of persons of their own race. With this explanation I hope your Lordships will now be prepared to give a Third Reading to the Bill.
On Question, Bill read 3a, and passed.

CURRENCY AND BANK NOTES BILL.
Read 3a (according to Order), and passed.
SHEEP, MUTTON AND LAMB (IMPORT REGULATION) ORDER, 1939.

  OTTAWA AGREEMENTS (IMPORTATION OF MEAT) AMENDMENT ORDER, 1939.
  LORD TEMPLEMORE: My Lords, I beg to move that these Orders, as reported from the Special Orders Committee, be approved.
  Moved, That the Orders, as reported from the Special Orders Committee on Thursday last, be approved.—(Lord Templemore.)
  On Question, Motion agreed to.

BREAKING UP OF STREETS BY STATUTORY UNDERTAKERS.
Order of the Day for taking into consideration the Commons Message of December 22 last read.
The Message acquainted the House that the Commons had appointed a Select Committee of seven members to join with a Committee to be appointed by the Lords to consider those sections of the Gasworks Clauses Act, 1847, the Waterworks Clauses Act, 1847, the Electricity (Supply) Acts, 1882 to 1936, and the Schedule to the Electric Lighting (Clauses) Act, 1899, which relate to the breaking up of streets for the purpose of laying pipes and other works, and to report what, if any, modifications of those provisions should be made to meet modern conditions with a view to their incorporation in future Bills and Orders promoted by statutory Undertakers; and that they had made the following orders: that leave be given to the Committee to hear parties interested by themselves, their counsel, or agents, so far as the Committee think fit; that the Committee have power to send for persons, papers, and records; that three be the quorum. The Commons requested their Lordships to appoint an equal number of Lords to be joined with the said Committee.
THE EARL OF ONSLOW: My Lords, I beg to move the Motion standing in my name.
Moved, That a Committee of seven Lords be appointed to join with a Committee of the House of Commons as mentioned in the said Message, and that the Lords following be named of the Committee:

M. Townshend,

M. Aberdeen and Temair,

E. Cawdor,

L. Abinger,

L. Carnock,

L. Ruthven of Gowrie,

L. Swinfen.

—(The Earl of Onslow.)
On Question, Motion agreed to.
Ordered, That such Committee have power to agree with the Committee of the House of Commons in the appointment of a Chairman.
Leave given to the Committee to hear parties interested, by themselves, their counsel, agents and witnesses, so far as the Committee think fit.
Then a Message was ordered to be sent to the House of Commons to inform them of the appointment of the said Committee by this House and to propose that the Joint Committee do meet in Committee Room No. 4 on Tuesday, the 7th of March next, at eleven o'clock.
House adjourned during pleasure.
House resumed.

ROYAL COMMISSION.
The Royal Assent was given to the following Bills:

Custody of Children (Scotland),

Export Guarantees,

Czecho-Slovakia (Financial Assistance),

Currency and Bank Notes.

House adjourned at a quarter past seven o'clock.