Lords Sitting of 21 November 1939

Preamble
The House met at half past three of the clock, the LORD CHANCELLOR on the Woolsack.

SPECIAL ORDERS COMMITTEE.
THE CHAIRMAN OF COMMITTEES (THE EARL OF ONSLOW): My Lords, I beg to move that the Lord Denham be added to the Select Committee on Special Orders.
Moved, That the Lord Denham be added to the Select Committee.—(The Earl of Onslow.)
On Question, Motion agreed to, and ordered accordingly.

RESTRICTION OF ADVERTISEMENT (WAR RISKS INSURANCE) BILL.
Order of the Day for the Second Reading read.
LORD TEMPLEMORE: My Lords, this Bill is based on one recommendation, and one only, of the Committee which was set up under Lord Weir three months ago to examine the question of evolving any scheme for mutual protection against war damage to fixed property in private ownership. Your Lordships will remember that His Majesty's Government decided some time ago that, in view of the great changes in modern warfare, including intense bombing and things of that kind, since 1918, it was not practicable to set up any scheme of complete indemnity. This conclusion was announced by the President of the Board of Trade in 1937, and it was repeated by my right honourable friend the Chancellor of the Exchequer early this year. When the War Risks Insurance Bill was before Parliament in July last, a considerable amount of dissatisfaction was expressed by members of all Parties at the absence of any Government scheme of insurance to cover fixed property, plant and machinery. In consequence, a Committee was set up under the Chairmanship of my noble friend Lord Weir to consider this question and subjects connected therewith.
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I do not know whether your Lordships are aware, but it is a fact mat since 1937 various companies have started, on a basis of mutual enterprise, claiming to give subscribers protection against war risks to their property. These companies are not necessarily fraudulent—I do not mean to imply that—nor are they fraudently conducted. The great objection to them is, however, that they give the impression among people who are perhaps not very well versed in the subject of insurance—which, after all, is a complicated matter—that they afford full protection against war risks, whereas in reality the protection in many cases is very thin indeed. There are two main objections to the procedure of these companies. The first is that the rate of premium payable, judged by the standards of the advisers of His Majesty's Government, is really absurdly low; and secondly, that most circulars that come round are so overloaded with a mass of verbiage that many people are led to believe that effective cover is given, whereas the cover provided is conditional and may in the end prove severely limited or perhaps non-existent.
As regards the first objection, your Lordships are aware that when the war risks insurance scheme was drawn up, His Majesty's Government placed the rate of premiums as high as six per cent. They did that on the information provided to them by their advisers—which, after all, was the best information that they could get, and the best information that can be got is naturally at the disposal of the Government. Some of these societies, however, in these schemes which I am describing, charge in peacetime as low a rate as 2s. per cent., which is about the rate of an ordinary fire insurance carried out with one of the well-known companies, which of course has many millions of pounds in reserve at its back. I think the highest was found to be 15s. per cent. Even now, in time of war, rates in the lowest instance have only been raised to an average of between 5s. and 7s. 6d. per cent.
As regards the second objection, His Majesty's Government feel that it is really not understood by many people that there is a limitation of liability. As your Lordships know, in the Government scheme there is limitation, which is the Government's ability to pay; but these companies set out to give something

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much better than what the public get for nothing from His Majesty's Government, and people do not always realise that the companies are subject to the same limitation. In practically every instance it is found in these circulars that there is only a promise to pay at the end of the war, and in every instance the amount to be paid bears no relation to the amount of damage suffered but is limited by the amount in the fund at the end of the war. This means that with the small premiums there is very little cover indeed. In fact, I think it is true to say that the circulars of these companies, in many cases, set out the advantages at the top in very big print, so that people think that everything is lovely, and in much smaller type the limitations, conditions and so forth, which many people, unless they are knowledgable or very industrious, do not take the trouble to read.
The Committee under Lord Weir considered this and cognate matters, and in paragraph 14 they recommended legislation. They recommended it very strongly in language which I should like to quote to your Lordships. After saying that they have considered the problem of the growth in recent months of these schemes, they go on to say:
"While we do not suggest that there is any intention to induce the public by misrepresentation to subscribe to these schemes, we are of the opinion that many of the appeals made to the public on behalf of the promoters are put in such a form as in fact to mislead the public into thinking that a substantial element of cover against the risk of damage is offered to them."
They go on to say that they received very strong representations against these bodies from various quarters, and they recommend that action should be taken to deal with them. And they go on to say this:
"We recommend therefore that the appropriate Government Department should consider the most suitable method of curtailing the public activities of the sponsors of such schemes by prohibiting circularisation of the general public in the form of prospectuses or advertisement."
On that recommendation, which is contained on page 12, in paragraph 14, of Command Paper 6116, this Bill was founded.
To go on to the Bill: Clause 1 accordingly imposes a prohibition on the distribution on and after such day as may be fixed by order of the Board of Trade of
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circulars containing any invitation to persons to insure property in the United Kingdom against war risks, or any information calculated to lead directly or indirectly to the recipient insuring his property against such risks. The clause also prohibits, on and after the same day, the causing or permitting any advertisement to appear containing such an invitation. There is a general exception where the distribution of the circular or the appearance of the advertisement has been permitted by the Board of Trade, subject to such conditions, if any, as the Board of Trade may have imposed in regard thereto. The object of Clause 1 (1) is to secure that the person proposing to subscribe to any of the schemes in question shall have a clear and unequivocal explanation of the scheme and of the manner of its working. Subsection (2) contains certain necessary savings with regard to activities undertaken for the purpose of the War Risks Insurance Act, 1939, and so forth.
Clause 2 enables the Board of Trade, besides imposing conditions with regard to the actual distribution or appearance of a circular or advertisement, to specify by order requirements with which the persons carrying on the business must comply. The requirements must be designed to secure that any representations made in the circulars or advertisements are complied with, including, if the Board of Trade think fit, certain important requirements which are set out on page 3 of the Bill in paragraphs (a) to (d) of subsection (1). These cover such matters as the separation of the fund for claims from the fund for expenses, the proportion of the premiums to be allocated to the payment of claims, the maintenance of the compensation fund, and the keeping, drawing up, auditing and publication of accounts. In the exercise of these important functions, it is laid down in Clause 3 that there shall be set up by the Board of Trade an Advisory Committee. No permission may be given by the Board of Trade except on a recommendation of the Committee, and all conditions laid down by the Committee must be carried out. The clause, however, provides that notwithstanding the recommendation of the Committee, the Board of Trade may refuse permission or may impose additional conditions or requirements. The essential ground on which permission is to be granted must be

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that, having regard to all relevant circumstances, and in particular to the nature and situation of the property, and the classes of persons whom it is proposed to invite to insure, the Committee are satisfied that the granting of permission would not be contrary to the public interest.
I do not think the remaining clauses of the Bill call for any special comment. Clause 4 deals with penalties, Clause 5 is machinery, Clause 6 interpretation and Clause 7 the Short Title. That is the Bill. His Majesty's Government consider that at present there is a distinct danger that insurance schemes such as I have described, without, as I said before, being in any way fraudulent, do convey a wrong impression to many people, which may lead to great loss and disappointment later on, and that some remedy is needed in the interests of the public. They consider that the Bill will provide this protection for those people who need it, and I commend it to your Lordships for Second Reading.
Moved, That the Bill be now read 2a.—(Lord Templemore.)
On Question, Bill read 2a, and committed to a Committee of the Whole House.

SEA WARFARE: BRITISH REPLY TO GERMAN METHODS.
3.45 p.m.
THE LORD PRESIDENT OF THE COUNCIL (EARL STANHOPE): My Lords, I beg to move that the House do now adjourn.
Moved, That the House do now adjourn.—(Earl Stanhope.)
LORD MOYNE: My Lords, I understand that this is a proper opportunity for me to draw attention to a matter which has stood in my name on your Lordships' Order Paper for some weeks past—the question of the freedom of Germany to export in neutral bottoms. When I originally put this question down, it was for a particular day, but I learnt that in the opinion of His Majesty's Government the time was hardly opportune for a discussion and so I postponed it and put it down under the heading of "No day named." As this Session is now drawing to a close, I would like to
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mention this matter briefly, especially as I see the noble Lord, Lord Hankey, the Minister without Portfolio, on the Front Bench, and I am sure we are all very glad to welcome him there, I think for the first time, although we have all had the advantage of his advice on matters of defence before he took his place on that Bench.
The matter to which I wish to draw attention is the breaches of International Law by Germany. This country has throughout strictly observed the principles of the Declaration of Paris under which a neutral flag covers any goods save for contraband of war. Germany has taken advantage of this franchise to expand her trade in many directions. She is sending machinery and electrical appliances to Southern and Central America. They are there transformed into local products, and the proceeds sold in the United States for dollars. In the same way her exports are pouring in neutral bottoms through the Suez Canal, and they are being sold in larger quantities than ever before in the Dutch East Indian markets—such products as dyestuffs and hardware and so forth. Now the guilders and the dollars which are earned by this trade are being used by Germany to finance vital purchases of war materials—iron ore and animal fats from Scandinavia, copper and oils and wheat from the Balkans and from beyond her Eastern frontier. Meanwhile, she has pursued a course of murder and piracy, sinking ships without warning, contrary to the law of nations and contrary to the special provisions on the subject of the Treaty of Washington. In spite of the advantage which her exports enjoy in neutral ships, she has interfered with our exports in exactly parallel circumstances.
It is well known from the Press that about forty neutral ships have been sunk by German submarines and German mines. I have no statistics of how far those ships have included neutrals going from British to neutral ports with British exports—where, therefore, under the Treaty of Paris, no questions of stoppage owing to contraband could arise. But I do know by chance of certain cases where those ships have been sunk without warning, where British exports in neutral bottoms have been destroyed between British and Scandinavian ports, and I would suggest that reprisals are now justified,

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not in the same shape as the German method of savage sinking, but by the impounding of goods of German ownership and origin.
There has been a new factor, which encourages me to raise this matter, in the sinking of the "Simon Bolivar" and the sowing of mines by submarines which appears now to be taking place, contrary to the provisions of a third international agreement, The Hague Convention. Neither the Declaration of Paris, nor the Treaty of Washington, nor The Hague Convention, was framed for one-sided application, and I suggest that the cup of Germany's crimes is overkill. During the last war there was a month's delay between the declaration of submarine blockade by Germany and British reprisals. In contrast, in this case, three months have elapsed during which Germany has pursued methods of mass murder by bombing the civil population of Poland, and piracy on the ocean by sinking the "Athenia" and other ships. I trust that the noble Lord, Lord Hankey, may be able to give us some assurance that these crimes will not pass without retribution and that the Government may soon see their way to take appropriate action.
3.51 p.m.
THE EARL OF CRAWFORD: My Lords, on a point noble Lord replies, this question is on the Notice of Motion Paper, with no day named:
"To call attention to German export trade carried on in ships of neutral Powers; and to move for Papers."
I submit that it is quite irregular, on the Motion for the adjournment of the House, to anticipate a Motion that is already on the Paper and which, technically, may not be brought before your Lordships' House without a day being notified under Standing Order XXI. It is a very important subject upon which, I believe, many noble, Lords would like to address your Lordships. No notice has been given, and we are taken, therefore, at very great disadvantage. I think the rule of the House, which is very clearly stated in Standing Order XXI, has been overstrained.
3.52 p.m.
LORD MOYNE: My Lords, I should be the last to wish to infringe the rules of your Lordships' House. I did take
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any steps which were open to me to ascertain whether it was in accordance with the practice of your Lordships' House to raise a matter on the adjournment, and I was told there was no limitation on the subjects which might be so dealt with. I raised it primarily to get advice as to whether, seeing the Motion would automatically lapse, I had better put it down again, and I can only say that if it is contrary to the rules of order, then I have transgressed them quite inadvertently.
3.53 p.m.
EARL STANHOPE: My Lords, I can only say it is unusual for a question to be raised on the Motion for the adjournment of this House, although I believe it is common in another place. It is open to noble Lords to put a Private Notice question, but then the usual thing is to put it without any speech. In this way the Government are enabled to make statements in this House which may, perhaps, correspond with statements which are being made in another place, and so enable your Lordships to hear simultaneously any statement of Government policy which has been decided upon since the House last met.
3.54 p.m.
THE MARQUESS OF SALISBURY: My Lords, I have no doubt whatever that my noble friend Lord Crawford, on the point of order, is quite correct, but your Lordships are generally very liberal in your interpretation of the rules of order when it is clear that the House wishes an exception to be made. Of course, if His Majesty's Government, represented by the Leader of the House, entered a protest, and said they were not prepared to make any statement at all, that I suppose would be an end of the matter. No one would wish the slightest breach of order in the teeth of the wishes of the Government, but if it be true that the Government are prepared to make a statement, it would be a disappointment to some noble Lords if that statement were not heard. That has to do with the anticipation of a Motion already on the Paper. As regards the actual taking advantage of the Motion for the adjournment, I do not doubt that upon that my noble friend who sits beside me (Lord Moyne) was well within his rights. On the Motion for the adjourn-

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ment it would be quite possible to raise any question. Of course, if my noble friend Lord Crawford insists on his point of order, there is nothing more to be done. The anticipation is out of order, and it can only be done by leave of the House. In this case, if the Government do not object, I trust your Lordships would like to hear what they have to say.
3.56 p.m.
THE MINISTER WITHOUT PORTFOLIO (LORD HANKEY): My Lords, before I come to the substance of the issue that has been raised, I must thank my noble friend for the kindly and over-flattering words in which he referred to my first appearance to speak from this Bench. I shall not endeavour to follow the noble Lord in all the issues which he raised in asking this question, particularly in view of what has been said on the point of order. The best way in which I can supply an answer to the noble Lord's question is to read to the House a copy of the reply which the Prime Minister has just made to a question in another place. The Prime Minister was asked, in view of the fact that the laying of mines, such as that which sank the "Simon Bolivar" during the last week-end, in trade routes, and without warning, is contrary to International Law, whether His Majesty's Government propose to take any action thereupon.
The Prime Minister's answer is as follows:
"The House will be aware that during the last three days upwards of ten ships, six of which were neutrals, were sunk, with very serious loss of life, by German mines. The Hague Convention to which Germany is a party, and which she announced her intention of observing as recently as 17th September last, provides that when anchored mines are used every possible precaution must be taken for the security of peaceful navigation. This is the very essence of the Convention,
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as the mine cannot discriminate between warship and merchant ship, or between belligerent and neutral. The Convention particularly requires that the danger zone must be notified as soon as military exigencies permit, once the mines cease to be under observation by those who laid them. If unanchored mines are used, they must become harmless one hour at most after those who laid them have lost control over them.
"None of these provisions has been observed by the German Government in laying the mines which occasioned the losses I have mentioned, and this fresh outrage is only the culmination of a series of violations of agreements to which Germany had set her hand. I need only recall the sinking of the 'Athenia' with the loss of 112 lives and the subsequent destruction of British, Allied, and neutral vessels by mine, torpedo, or gunfire. These attacks have been made, often without warning and, to an increasing extent, with a complete disregard of the rules laid down in the Submarine Protocol to which Germany subscribed or of the most elementary dictates of humanity.
"His Majesty's Government are not prepared to allow these methods of conducting warfare to continue without retaliation. I may remind the House that in the last war, as a measure of justified reprisal for submarine attacks on merchant ships, exports of German origin or ownership were made subject to seizure on the high seas. The many violations of International Law and the ruthless brutality of German methods have decided us to follow a similar course now, and an Order in Council will shortly be issued giving effect to this decision."
On Question, Motion for the adjournment agreed to.
House adjourned at four o'clock.