Lords Sitting of 16 July 1940

Preamble
The House met at four of the clock, The LORD CHANCELLOR on the Woolsack.
THE LATE EARL OF COVENTRY.
THE SECRETARY OF STATE FOR DOMINION AFFAIRS (VISCOUNT CALDECOTE): My Lords, I very much regret to have to record the death in action of a member of your Lordships' House, the Earl of Coventry. I know your Lordships will desire to express your sympathy with the relatives.

CHARTERED AND OTHER BODIES (TRAFFIC COMMISSIONERS) ORDER, 1940.
Draft Special Order, made by the Minister of Transport under subsection (3) of Section 2 of the Chartered and Other Bodies (Temporary Provisions) Act, 1939:
Laid before the House (pursuant to Act) for affirmative Resolution and referred to the Special Orders Committee.

NEGOTIATIONS WITH JAPAN.
LORD ADDISON: My Lords, may I ask the Leader of the House a question of which I have given private notice—namely, whether the Government are able to make a statement on negotiations with Japan, particularly with regard to the Burma road?
VISCOUNT CALDECOTE: My Lords, my noble friend Lord Halifax hopes to be in a position to make a statement on this matter in the very near future.
LORD ADDISON: Could the noble Viscount say whether that means tomorrow?
VISCOUNT CALDECOTE: I could not bind myself to say it actually means tomorrow. The noble Lord opposite will realise that the fall of the Japanese Government has added another complication to the position.

SOUTH WEST MIDLANDS ELECTRICITY DISTRICT (AMENDMENT) ORDER, 1940.
THE FIRST COMMISSIONER OF WORKS (LORD TRYON): My Lords, I beg to move the Motion that stands in my name.
Moved, That the Special Order, as reported from the Special Orders Committee on Wednesday last, be approved.—(Lord Tryon.)

CARDIFF CORPORATION (TROLLEY VEHICLES) PROVISIONAL ORDER BILL.
Read 3a (according to Order), and passed.
HUDDERSFIELD CORPORATION (TROLLEY VEHICLES) PROVISIONAL ORDER BILL.
Read 3a (according to Order), and passed.
NEWCASTLE-UPON-TYNE CORPORATION (TROLLEY VEHICLES) PROVISIONAL ORDER BILL.
Read 3a (according to Order), and passed.
SOLICITORS BILL. [H.L.]
Amendments reported (according to Order).

MERCHANT SHIPPING (SALVAGE) BILL.
Order of the Day for the Second Reading read.
4.3 p.m.
LORD TEMPLEMORE: My Lords, I beg to move that this Bill be now read a second time. The purpose of the Bill is to place the Crown in the same position as the private salvor—that is, the Crown should be able to claim a salvage reward for services rendered by any of His Majesty's ships or by any ship under the control of the Crown. Until 1916 the Crown was precluded by a Statute enacted in 1853 and now embodied as Section 557 of the Merchant Shipping Act, 1894, from claiming any such reward. That Act, as your Lordships will see, is repealed in the

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Schedule of the present Bill. After the 1916 Act they were authorised to claim rewards in respect only of salvage vessels or of tugs. They were still debarred from claiming for the services of warships, miscellaneous craft other than those specified, shore parties, plant, etc. Until a judgment in the House of Lords (Valverda case, 1937) rendered the procedure invalid, the Admiralty were able to modify the statutory disability by entering into voluntary agreements with the representatives of the salved property. In practice the present Bill aims to do little more than return to the position before this decision.
The need for the proposed legislation is especially great in war-time, when the Admiralty have taken up almost the entire salvage organisation of the country, and in addition requisition and purchase salvage equipment and ships to deal with individual cases of vessels in distress. The present practice relieves the under-writers, at the expense of the taxpayer, of a considerable liability. In the last war the Admiralty salvage organisation was only started in 1917 and throughout there was a body of private salvage firms in operation. Although a large number of cases are covered by existing legislation, it is only right that where, with an eye to the urgent need for ships, the Admiralty undertake a salvage job which a private salvor would reject as an unprofitable undertaking, some reasonable reward should be paid out of the benefit received by the owners of the property salved. As an illustration of a case where the Admiralty are debarred from claiming salvage under present law, while the private salvor may do so, the following may be noted. Two Admiralty trawlers—this actually happened—towed a ship damaged by enemy action forty miles to the entrance of a harbour. These two vessels were unable by law to claim salvage, yet the Admiralty controlled tug which came out of harbour, towed the damaged ship a few hundred yards inside without any risk to herself, was able to claim. Since the beginning of the war upwards of 100 vessels with a total tonnage close on half a million tons have been successfully salvaged. This is almost a half of the British tonnage which has been sunk by enemy action since September 3. In a number of these cases the Admiralty have not been able to claim salvage reward. The terms of the
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Bill do not prevent crews in any way from receiving salvage awards. The rule regarding crews in the permanent service of the Admiralty is that they must get Admiralty permission before they claim. I may say this is always given in any case where the Admiralty claim.
Turning to the Bill, the most important clause is Clause 1, subsections (2) and (3) of which are intended to remove doubts whether the crew or the owner of a ship is entitled to claim salvage for services rendered by the ship while she is requisitioned. The effect of decisions by the Courts is that where the terms of the requisition, by placing the possession and control of the vessel in the Crown, are equivalent to a charter by demise, the Crown is entitled to the benefit of any salvage services rendered by the ship. This position gives rise to some difficulty in cases where a ship is requisitioned ad hoc for a particular salvage service, and the salvage services are rendered before any agreement has been made about the terms. These two subsections of the Bill provide that the Crown and not the owner shall be entitled to any salvage reward earned by a requisitioned ship unless an agreement is made to the contrary.
Some difficulty has been experienced in regard to the position of commercial tugs called on to assist the Admiralty in salvage operations. Although Clause 1 (2) of the Bill has a bearing on this matter it is only incidentally since the power to requisition and the control of salvage work are given to the Admiralty by Defence (General) Regulations. It is undesirable that where the Admiralty have accepted a salvage contract the owners of the property salved should also be put to the trouble and expense of dealing with other claims put forward by tug owners employed by the Admiralty in connection with the operations. It should be for the Admiralty alone to settle with the tug owners, and there is no intention of treat-ting them unfairly. Negotiations are at present proceeding with the Institute of Tug Owners, and there is every reason to believe that the exercise of the power of requisition in such cases will not be necessary but that the position between the Admiralty and the tug owners will be fixed by general agreement. The Bill also applies to aircraft, although it is doubtful whether any important aircraft operations of this nature will be carried out. I would draw your Lordships' attention to

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Clause 4 (2), under which the Bill will be construed as one with the Merchant Shipping Acts, and will thus extend to Australia, New Zealand, India, and the Colonial Empire.
Finally, it may be said that the general purpose of the Bill is eminently equitable. The position is summed up in Lord Wright's judgment. Although the present law as interpreted by the noble and learned Lord is against an Admiralty-claim for salvage—and here I should like, if my noble and learned friend has no objection, to quote his actual words—
"it is difficult now to see any decisive reason why the general body of taxpayers should pay the expenses of salvage rather than the particular shipowners or underwriters who have benefited by it. The case is even less obvious when the ships salved are foreign or the underwriters are foreign in whole or in part."
I have now explained as well as I can the objects and scope of this small but rather technical Bill. The Bill comes to us from another place, and it is the intention of His Majesty's Government to put down one or two Amendments on the Committee stage in order, as we think, to improve the Bill and make it clearer. That being the case, I will ask your Lordships, if you will be good enough, to allow me to take the Committee stage on Thursday, so that we could then have Report and Third Reading next week and send the Bill back to another place for the consideration of our Amendments. I hope your Lordships will regard this Bill as a necessary piece of war legislation. I beg to move that it be now read a second time.
Moved, That the Bill be now read 2a.—(Lord Templemore.)
4.12 p.m.
LORD WRIGHT: My Lords, as my noble friend has referred to certain statements and expressions of opinion of mine when sitting as a Law Lord, I may say at once that my opinion has not changed. The Law Lords—and I think my noble and learned friend Lord Maugham was a member of the tribunal—felt bound to hold that the law was as we held it to be, on grounds of history and precedent, but I ventured, extra-judicially, to express a view as to what I thought it ought to be, and the other members of the House who were sitting upon the case were, I am sure, of the same opinion.
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That expressed the view I felt then and the view I still feel.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

UNEMPLOYMENT INSURANCE BILL.
Order of the Day for the Second Reading read.
4.15 p.m.
LORD TRYON: My Lords, this Unemployment Insurance Bill proposes to make certain changes in the law relating to unemployment insurance and unemployment assistance. The changes fall into two parts. In the first place it is proposed to make certain improvements in the rates of and rules governing unemployment benefit. In the second place it is proposed to bring within the scope of the unemployment insurance and unemployment assistance schemes a class of persons who have hitherto been outside them. The reasons for the changes are as follows. With regard to the improvement in benefits, the cost of living has gone up by 26 points, or about 17 per cent. since the beginning of the war. Now the rates of unemployment assistance have already been raised and, as to unemployment benefit, the rates for dependent children have also been increased since the war started. It is now proposed to raise the basic rates for adults and young persons. The Unemployment insurance Statutory Committee, in their last Report, referred to the possibility that a rise in the cost of living might make it desirable to amend the rates of benefit and contribution, but pointed out at the same time that this could not be done by them on the finance of the schemes but would require legislation. Hence this Bill. They had already recommended, some time ago, that the salary limit for non-manual workers should be raised.
The new class to be brought into the scope of unemployment benefit is the "black coated" (as he is called) worker with a remuneration of £250 up to £420 a year, which is above the limit in the present Acts. Many of these whose position has hitherto been regarded as secure are liable to suffer temporary unemployment from a variety of causes connected with the war. It is true that the scheme known as the Prevention and Relief of Distress Scheme, which was put

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into operation at the outbreak of war, met their needs to some extent, but it is felt that they should be put on the same footing as others who have unemployment insurance, giving them definite benefit rights under a contributory scheme, as their first line of defence. In addition the possibility of post-war unemployment amongst this class is one which ought to be provided for.
So much for the reasons for the changes. The detailed changes which are proposed are as follows: In the first place it is suggested that the weekly rate of benefit under the general scheme should be raised by 3s. for men and women, that is to say, persons aged 21 and over, and 2s. for young men and young women aged 18 to 20. So the present men's rate of 17s. will become £1 and the present women's rate of 15s. will become 18s. Young men will get 16s. instead of 14s. as hitherto and young women 14s. instead of 12s. Similar increases in benefit are proposed for the agricultural scheme. There it is suggested that the rate for men should be raised by 3s. and that for women, young men and young women by 2s. This will give men 18s., women and young men 15s. and young women 12s., and a corollary to this latter change will be the raising of the maximum amount of weekly benefit which could be received. Ever since the inception of the agricultural scheme there has been a limit on the amount of benefit receivable in a week, having regard to the prevailing rates of agricultural wages; that limit was originally 30s. a week. With increases in agricultural wages and in benefit rates the limit has been raised successively to 33s. and 35s. It is now proposed that the limit should be 41s. Finally, so far as benefit is concerned, it is proposed to make a change which has long been sought by insured contributors and for which the special circumstances of to-day afford justification. Unemployment benefit is only payable in respect of continuous periods of unemployment, and at present no continuous period can be less than three days; benefit may be payable only if a man is unemployed at least three days out of any six consecutive days. The change which it is proposed to make is that benefit may be payable if a man is unemployed for at least two days out of any six consecutive clays.
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The changes just referred to will, of course, involve additional expenditure out of the Unemployment Fund. To meet this it is proposed to raise the weekly rates of contribution under the general scheme by a penny, and under the agricultural scheme by a halfpenny, for men, women, young men and young women respectively in respect of each of the three contributing parties—namely, employer, worker, Exchequer. The remaining change proposed by the Bill is to bring into the unemployment insurance and unemployment assistance schemes the new class referred to. This is the class popularly known as the "black-coated" workers. It comprises non-manual workers whose rate of remuneration exceeds £250 a year and does not exceed £420 a year. "Black-coated" workers whose rate of remuneration does not exceed £250 a year are already within the scope of the scheme. Apart from the desirability of including this class on merit there is an incidental advantage. A number of workers will, as a result of war-time wage increases or of overtime, go over the limit; but for the present Bill these persons would in course of time lose all their rights under the unemployment insurance scheme for which they have been paying for years past. This would be a distinct hardship. The Bill obviates it. The accepted principle for dealing with unemployment is to make unemployment benefit the first line of defence and unemployment assistance the second line.
The Bill which has just been introduced provides that after the lapse of one year the new class who are brought into insurance by the Bill will be brought into the assistance scheme also. It is, of course, unnecessary that they should be brought in before that date as they must acquire a contribution qualification of thirty weeks' contributions before being entitled to benefit, and when they have a title to benefit it gives, under present emergency conditions, a maximum of 180 days so that, generally speaking, there is no need for recourse to the unemployment assistance scheme in the first twelve months. In exceptional cases the Prevention and Relief of Distress Scheme will meet all needs. The proposal is that these changes with regard to benefit rates and rules shall come into operation on August 1; the new contributions will be payable as from August 5; and the

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new class will be brought in as from September 2. The chief features of this Bill are the increase of benefit, the increase of contributions, and the inclusion of a new and very deserving class in insurance. I move that this Bill be read a second time.
Moved, That the Bill be now read 2a.—(Lord Tryon.)
4.21 p.m.
LORD ADDISON: My Lords, I should like to congratulate the noble Lord upon the clarity of his explanation of the Bill and to express on behalf of my noble friends our pleasure at its introduction. I think it reflects considerable credit upon our new Minister of Labour that he has been able so rapidly to solve so many problems, because for years past many of us have considered that those commonly called "black-coated" workers ought, somehow or other, to shed that element of—shall we say snobbery? which has prevented some of them from coming into a scheme of this kind. By this Bill they secure rights which they pay for in a self-respecting way, and which I am sure, in the difficult times which may be ahead, will be of great assistance to many of them. We are glad to welcome the Bill and we hope it will pass without difficulty.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

BRITISH BANKS IN FRANCE.
4.22 p.m.
LORD STRABOLGI LORD STRABOLGI rose to call attention to the position of British subjects with accounts in branches of British banks in France; and to move for Papers. The noble Lord said: My Lords, I have put this Motion on the Order Paper because it affects a great many deserving people who, through no fault of their own, are suffering inconvenience and indeed distress. I am glad to say that I am not affected myself, nor are any of my relations, by the failure of the branches of British banks in France to pay money. I have no personal interest in the matter whatsoever. But this is a matter of public interest. The position shortly is this. A great many British people had money in the French branches of the five big British banks, especially in Paris, but
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also in one or two other French cities. They left France in a hurry and have been unable to draw any of that money in England. In one case which was brought to my notice, a man had £200 in francs at the Paris branch of Lloyds Bank. The English manager of that branch is back in England. The money was first paid into the Fleet Street branch of Lloyds Bank and was transferred by that branch to Paris for the convenience of their customer. Therefore it was only a book-keeping transaction. Nevertheless that man cannot get any of that money either in francs or in sterling. Lloyds Bank say they cannot do anything until the whole position has been cleared up and that the question whether France is to be regarded now as an enemy country is involved. In another case a much bigger sum was held by a lady at Barclays Bank. They say they are unable to do anything and advise waiting until the position is clarified.
Your Lordships will realise that this money was put into the French branches of British banks under the impression that they were reputable and stable branches of the great British banks in this country, and that there could be no question of payment being refused on demand on satisfactory proof of identity either in Britain or in France. That was obviously the impression of thousands of British depositors living in France. In some cases people had lived in France and banked there with British banks domiciled in France for a considerable time and all their savings are involved. In other cases people have securities lodged with these branches of British banks in France. There are also the cases of retired people—civil servants and others—who lived in France but drew pensions from this country through those French branches of British banks. They are also in difficulties. I am quite aware of the difficulties of the banks and I am not making any attack on them, but I think the Treasury—and here I address myself particularly to my noble and learned friend the Lord Chancellor—have a responsibility in this matter and ought to bring their machinery into action to see whether something cannot be done to help some of these deserving people.
I am well aware also that certain of the banks in France bearing the names of the five big banks in this country have been made into separate companies, and it may

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be claimed that they are separate French companies and there is no responsibility or jurisdiction. I hope that will not be advanced as an excuse for keeping back this money. It really would be, if I may use such an expression in your Lordships' House, in the nature of a legal quibble. These British people put their money into these banks in France because of the names they bore, and because of their reputation in England. Where accounts like the one I quoted of the journalist are simply transferred from an English branch to a French branch that is only a book-keeping transaction, as your Lordships will know. Surely in that case the position in France will not be put forward as an excuse for not giving that man his money in this country. I addressed myself just now to my noble and learned friend on the Woolsack because under the Defence Regulations the Government now control all the banks. I do not know how visible that control has been, and I do not know whether it is only in theory or whether it is control in practice, but obviously the Government have the power to say that these poor people are not to be suffered to continue in poverty when they have money which really should be available.
I would also like to ask my noble and learned friend if he can answer this question. I gave him notice of the points I was going to raise, but I did not give him notice of this particular point. I presume that English banks or branches of English banks in France kept their securities and valuables in this country. If they did not I ask this question. In the three weeks which elapsed after the initial defeat which led to the final capitulation of the French Government, when it must have been known to His Majesty's Government that the situation in France was becoming increasingly difficult, were the British banks in France warned to transfer their valuables to this country? I hope that was done and that it was not overlooked in the general confusion. I should have thought that an elementary precaution which the banks would take.
There is the question of identification to be considered. A signature is not always enough. The person has to be identified in some way and I dare say the banks have to be careful. As I said at the beginning, I appreciate the difficulties
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of the banks and I make no attack on them. It is, however, very unfortunate that these people should be in this very difficult situation through no fault of their own, and I do not think His Majesty's Government can escape all responsibility. I beg to move.
4.30 p.m.
LORD WARDINGTON: My Lords, I am very glad that this question has been raised. It is one which has naturally caused the banks great concern, and they sympathise with their clients. I am myself interested both personally and professionally; and if the noble and learned Viscount on the Woolsack can give us any help, and point out any solution to the very obvious difficulties which confront both the banks and their clients, so far as these matters to which the noble Lord, Lord Strabolgi, has drawn attention are concerned, the banks will be only too pleased. I am doubtful whether my contribution to the discussion can really be helpful in that matter, but I hope that it may be considered to be helpful in so far as I can put before your Lordships some of the actual facts.
The English banks operating in France and in this country too are, of course, amenable to the laws of both countries, and the matter is not quite as simple as might appear to be the case from the way in which the noble Lord who moved this Motion has put it; there are very considerable difficulties both of a legal and of a practical nature. I will take the case which he mentioned, and of which I know something personally. Incidentally I may say that although he is obviously aware of the existence of subsidiary companies, and that the "Big Five," as they are called here, do not have branches of their own in France, the original mention of the matter rather suggested that the £200 to which reference was made was deposited in a branch of Lloyds Bank here and was transferred to a branch of Lloyds Bank in France merely by a book entry. That, of course, is not the case. What happened, I take it, was that the customer of Lloyds Bank (the parent company) asked that £200 should be spent in buying francs, and those francs were placed to the credit of this customer in the French bank of another company, a subsidiary company of Lloyds Bank here at home.

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It is not merely a question of a book entry. It is quite true that the modern machinery of banking has enabled the transfer of money from one country to another to be conducted with the greatest facility and with the least amount of expense; but the transaction in question does in effect mean that £200 was paid in England, that it was sent over to France and turned into francs, and that the francs were paid into the account of the customer in France. It is one of the attributes of our excellent banking machinery that that rather complicated and expensive procedure can be done by correspondence and by the method of drawing on the account of the London office by the French office, without any expense, or with very little expense compared with that involved by the actual removal of the cash; but it must not deceive your Lordships into thinking that there is no movement. There is a very definite movement and transfer of funds from one country to another.
In this case, the customer obtained his francs in France in exchange for the £200 which he gave to the London branch. He wanted them, no doubt, for his own purposes, to pay debts in France. He may have been making a visit to France; he may have had some business operations or obligations of some kind for which he required the francs. Now, after the débâcle, and after the overrunning of France by Germany, he would be very glad if instead of having francs he had pounds. That is very natural. The same argument applies, of course, to a man who bought a house in France, or who had any other property in France; he would be very glad under present conditions to see it transferred to this country, but that, of course, is obviously impossible. With regard to the difficulties in this connection, under French law balances in France cannot be moved to this country. It may be said that in present conditions we should disregard French law. I do not know with what impunity that can be done. The main fact is, however, that the debt is due in Paris, not in London, and from a purely legal point of view the answer to a bank customer demanding money in London for the return of his deposit would be to say: "You must go to France, to Paris, and demand the francs there, and good
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luck to you!" That would obviously be a heartless rejoinder, because we know, and he knows, that he cannot go to France, that if he did go to France he would be interned, and that if he did apply for the francs he would not be able to get them.
Another difficulty which the banks have in this matter is that they have no records over here of the accounts in France. So far as this is concerned, the position is a little different from that which obtains in the case of the Channel Islands, which we were discussing last week. In the case of the Channel Islands, the banks who had branches there took the precaution of having records of their accounts in the Channel Islands sent daily to the mainland, so that with a little trouble the accounts can be reconstituted, although obviously they cannot be absolutely up to date. In the case of France, however, the banks operating in France did take the precaution of having duplicate records as between branch and branch, but no-one ever supposed for a moment that the whole of France was going to be overrun, and that any town in France would be just as dangerous from this point of view as any other, so that records were never sent to England. The time taken in sending them to England, of course, would have been much greater, even if one had foreseen the total overrunning of the whole of France; and they would consequently not be nearly so up to date as it was possible to keep them in the case of the Channel Islands.
We have, therefore, no knowledge here in London that the amount which was standing to the credit of one of our customers at a given date is still there. There are, of course, questions of identity and so on, and they have all been gone into, but they are minor details. But in regard to the account itself, we have no knowledge, even though it may have been present in the bank three weeks ago, that it is there still. We have no possibility of communicating with France, and many things may have happened. If this were a business account, he may have had an agent who was entitled to draw on it and the account may have been very depleted in consequence, or entirely withdrawn. On the other hand, again, a garnishee order may have been imposed upon the balance for the payment of some

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debt, rent or taxes. We have no knowledge that it is free, and it would obviously be very rash and unfair to expect the banks to make a payment in London when the money had possibly already been drawn in Paris.
But one always gets back to the fundamental point that this account, this debt, was due in France. It was a French debt, and it is impossible at the present time to pay a French debt unless you happen to have a certain sum in French franc notes in the till of the London branch. You might offer that sum in liquidation of the debt to your customer, but he would say: "Thank you for nothing; I don't want francs, they are no use to me; I cannot buy in England with francs; I want sterling." That is, of course, outside his legal right, and even if one did not want to insist on legal points, what value can be attached to so many francs at the present time? I had a letter from a friend the other day, a refugee from France, who got home after a lot of difficulties and trouble by Portugal; and he tells me that he had to give a thousand francs for a pound in order to change his money to get some sterling when he got into Portugal. That is an entirely artificial figure. I believe the Germans are trying to attach the franc to the mark, also at an artificial figure; and what value one can say attaches to a given number of francs at the present moment is quite beyond me.
I will refer to what on the face of it is rather a simple question: that is, the position if the deposit had been in sterling. A few customers have deposit accounts in sterling in French books. On the face of it that looks rather more easy to deal with, because it is the same currency as on this side; but there are various legal difficulties. Foreign currency in France is requisitioned by the French Government, as foreign currencies in this country are requisitioned here. Anybody who has dollars, or pesos, or anything else, has to declare them to the Government here and they may be called for at any time. If one regards this question from the angle of general principles, then if it is contended that debts due in France should be paid in London, the principle must be applied all round, not merely to banks but also to commercial concerns, not merely to customers of banks but also
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to banks themselves. Banks would be entitled to say to their customer to whom they had given a loan in France: "You must pay in francs"; and he would reply with the answer that I have already given, that he cannot deliver francs in repayment of his loan, that he does not know the value of those francs in sterling; and he would consider it very hard if we were to try to force him to repay his loans under present conditions. This argument must apply both ways; it cannot be made to run in a one-way street only. Obviously, if a bank is not able to call in its assets, it cannot very well be called upon to pay its liabilities in the same currency.
With the best will in the world to find a way out of the present difficulties—and I do recognise the hardships of those people who have left property of any kind behind in France—I confess I do not see a solution. I only wish the Government could find one and could give us and our customers some help in this matter. We should be the first to welcome anything of the kind. Of course there is no question whatever of the reputation or stability of the banks concerned. The money is there in France waiting to be claimed, but it is in France and not here. That is the whole point of the difficulty.
We have now been discussing the question of cash balances, but the noble Lord, Lord Strabolgi, also referred to securities and asked what is the position in regard to them. Frankly we do not know, we can only guess. I saw a statement in the papers recently that Germany had commandeered all the securities and had placed a seal on all the private coffres forts of clients in banks. What they have done with them, whether they are merely trying to keep them under their control, I do not know. We in France took all the steps that we could to look after these securities and to treat them with as much care as if they were our own. They were moved about from place to place as the German advance proceeded, and where they are at the present moment I cannot tell, I do not know. Neither do I know what action the German controllers over France generally, both in the occupied and in the unoccupied territory, are taking. If they followed precedent I presume they would put a liquidator into what are from

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their point of view enemy banks and collect the assets and pay off the liabilities, except to enemy debtors.
That is, I believe, the procedure we adopted in regard to German banks in 1914. We put a liquidator into the German banks here, we sold premises, we collected the purchase price, we collected the cash and other assets, and we paid off the creditors of those banks, with the exception of the German creditors, and they had to wait until the end of the war and the general settlement before they got their money back again. The customer of a German bank which was in England was in exactly the same position as an Italian customer of an Italian bank is at the present time. There again we have, I understand, put in liquidators, and we are going through exactly the same process as we adopted in 1914 with the German banks. Well, the case is very hard to the enemy creditor—in this particular case the Englishman, who is an enemy from the point of the Germans. We are seeking legal advice and counsel's opinion on many of these difficult points, but really it does seem to me that the conclusion of the whole matter is that the first thing we have to do is to win the war and then make the Germans disgorge many of their ill-gotten gains.
4.51 p.m.
LORD JESSEL: My Lords, before the noble and learned Viscount on the Woolsack replies I should like to ask him a question. The Notice given by the noble Lord, Lord Strabolgi, was to call attention to the position of British subjects with accounts in branches of British banks in France. My concern is in regard to people who are left in France, who have got accounts there. How can they get any money to live? I am referring to people who have been obliged to stay in France, who cannot get away. Is it possible for them to get any money at any time, or will they have to starve? There must be hundreds of British people who have got accounts in France. I think the question of the noble Lord covers my question as well.
4.52 p.m.
THE LORD CHANCELLOR (VISCOUNT SIMON): My Lords, the noble Lord, Lord Wardington, began by saying he was glad this question had been raised
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in your Lordships' House, and I think we are all grateful to Lord Wardington for the detailed information which he has been able to put before us. It is evident that this is a very hard case, and a very difficult case to handle. Lord Wardington has made it plain that it is not the big banks, those which are sometimes called the "Big Five," who are faced with this problem. We are considering the case of branches in France of separate companies which have been formed for carrying on a banking business abroad, but the head offices of those companies are themselves in this country. The question therefore at once arises whether the central bank here in London—the head office of the bank whose branches are in France—should be held responsible for the credit balances abroad, which are believed to exist—credit balances belonging to customers who have now come to England. That is the case put.
I am myself acutely conscious both of the hardship which such customers may be suffering and of the difficulty of answering the question. I do not think I should be justified at all in offering a view of my own, even if I had a clear and decided view. It is plainly a very difficult question between the customer and the bank, and I ought not to say anything—it is the last thing I would wish to do—which would prejudice the position of such a customer, if indeed anything said in your Lordships' House could do so. Nor, on the other hand, do I wish in any degree to make the position of the banks more difficult than it undoubtedly is. But, as the noble Lord, Lord Wardington, has pointed out, there are two or three plain considerations which it is well to develop, and even though we do not get a solution of the trouble, we shall probably consider it more intelligently and to better effect if we have these considerations in mind.
I cannot help feeling, and I think your Lordships generally will feel, that the hard situation we are considering of those customers of banks in France is really an illustration, but only an illustration, of the fearful hardship inflicted upon perfectly innocent people, such as English people who have been living in France, when a country like France is overrun by the enemy. It does not only apply to balances in banks. It applies to furniture, it applies to movable property, it applies to houses, it applies to all sorts

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of things. The moment one has to contemplate the fearful consequences of a retreat from a great area of country by those who have been living peaceably within it, and the advance of a powerful enemy which puts no restraint upon its action, it is obvious at once that all sorts of private rights are put in jeopardy, of which no doubt these bank balances may be one. Then I think, too, it is extremely important to bear in mind that we are here dealing with accounts which are in France. Some of them are not necessarily credit balances in favour of the customer, for a bank's business does not consist merely in taking in the deposits of its customers. An equally important part of the bank's business is the advancing of money to those who are borrowing from it, and these banks, I imagine, have in their books both credit balances which stand in favour of the customer and the record of loans which have been advanced in France to their customers, many of them English people, which are just as much in jeopardy.
I find a very great difficulty also in knowing how any liability at the present time, if there be such a liability, could be measured. What is the relation at the present moment of francs to sterling? You may search the money columns of the newspapers in vain to find any quotation of what francs are worth in sterling, and it is quite certain, of course, that the debts which are causing so much anxiety to these unfortunate people are debts in francs, deposits made in francs, and if they ought to be paid they ought to be paid in francs. Those are very serious difficulties, and I do not myself think it would be possible to solve them unless it had been decided to take some appropriate legal action for the purpose of testing how the matter stands. My noble friend who initiated this discussion was good enough to give me some information on the points he was going to raise, and I think he informed me in that communication that there was a body of those who were affected who were consulting together with a view to seeing how they could best protect themselves. I must not for a moment be understood to be offering any advice on the subject, but it is quite plain that this is one of those very difficult questions—the question between those who are suffering and the foreign branches of these banks—which cannot be solved by any
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other process except by a claim being made and the matter being decided.
I could not accept the view—I must with great respect on behalf of His Majesty's Government entirely refuse to accept the view—that this is a responsibility of His Majesty's Government. It is quite impossible to suppose that His Majesty's Government—that is to say, the British taxpayer—ought to be responsible for results, most unhappy results indeed, but results which are due to the onrush and invasion by Germany over the Continent of Europe. At this moment we are bound to treat, for the purposes of trading with the enemy, these areas thus occupied as enemy territory. Anybody who attempted to carry on business transactions with them would manifestly be taking steps which might assist the enemy, and it is therefore prohibited. That is the sense in which, as the noble Lord said, there was considerable control of the banks. That does not mean that His Majesty's Government are undertaking all the banking business of the country, but it does mean that there are regulations imposing considerable restrictions on operations which might assist the enemy.
I am afraid I am disposed to end with the conclusion which the noble Lord reached—that is to say, that the effectual remedy here is the remedy of defeating the Germans and securing the fruits of victory. I greatly fear there is no ingenious financial process by which we can save people, innocent as they are, who are the victims of invasion until that is achieved. My noble friend Lord Jessel put a parallel question about British people who have not left France or, at any rate, who have not come to this country and who, too, have been no doubt relying on getting themselves financed through financial institutions within the boundaries of France. The plain truth is that when the German invades a country one of the first things he does is to lay hold on the financial resources and mechanisms of that country. I hold in my hand—and I dare say my noble friend saw it in The Times two or three days ago—an account of the order which has been made under which the German Commissar entered into various French banking institutions and was apparently insisting on account being made to him of any valuables contained

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therein. That creates a situation most distressing and deplorable, but I can see no hope, apart from banking altogether, in the interests of these poor people and of every other interest, than that, come what may, we will redress that situation by victory in the field. I wish very much it was possible to find an easier or more soothing solution, but I am convinced that these difficulties are really inherent in these terrific events that have happened. While we deeply sympathise with these people, and hope very much that the banks will find some method which they may think proper of helping, I do not think the Government themselves can be asked to undertake a burden of this sort when we in this country have to carry the whole burden of the war.
5.5 p.m.
LORD STRABOLGI: My Lords, I am very much tempted to press my demand for Papers and test your Lordships' feelings after the speeches of my noble friend Lord Wardington and my noble and learned friend on the Woolsack. I do not know which of them was the harder—the banker or the lawyer. I am quite sure that my noble friend Lord Wardington would have adorned the legal profession if he had chosen to enter it, and I am quite sure my noble and learned friend on the Woolsack would have made an excellent banker, especially after the speech we have just heard, with the exception of the closing sentence, which I, at any rate, take as advice to the bankers to find a way of relieving the serious cases. The people marooned in France are better off than those who have come here. They have the protection of the United States Consuls. They can have money sent to them, with the permission of the authorities here, in hard cases, which can be paid to them through the American Consuls; but British people who escaped and came over here have no redress, according to my noble friend Lord Wardington and the noble and learned Lord Chancellor—none whatever. These two distinguished members of their respective professions quite overlook the fact that an Englishman—say, a retired officer living in Paris, who had got a little business there—banked with Barclays or Lloyds in Paris instead of
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going to the Banque de France or one of the other great French banks because of the name of Barclays or Lloyds. He thought his money would be absolutely safe, in the case of a catastrophe of this sort, that his funds would be all right because the funds of these banks are held in London, as of course they are. The credit of these great institutions is in Lombard Street.
LORD WARDINGTON: The franc assets are not in London. It is franc liability we are talking about.
LORD STRABOLGI: The stability of Lloyds in Paris is nothing whatever except that it bears the name of Lloyds of Lombard Street. That is why such a retired officer banked with Lloyds in Paris.
LORD WARDINGTON: A retired officer can get his francs in Paris if he goes there and asks for them, as far as I know.
LORD STRABOLGI: I must say that Lord Wardington has missed his vocation in life. He ought to have been a lawyer not a banker. This is really a serious matter. I should have asked the Lord Chancellor this question: Have we not frozen French credits in London? I understood that we had done so, as they have done in the United States. There will be funds, therefore, to assist the British people we have been discussing. I thank the Lord Chancellor for his sympathy with them, which we all feel, but surely they will not be placed in a worse position than the claimants on the Czecho-Slovakian banks? We froze Czecho-Slovakian credits, and in due course people with legitimate claims which they made good got compensation. Are these British subjects to be placed in a worse position? I wish to make this appeal to my noble friend Lord Wardington—surely the heads of the great banks must do something for these people where they can prove real title? It is all right to say, "You will get your money after we have won the war." They have to live in the meantime. Surely some ex gratia payment could be made in this case. I ask my noble friend to use his great influence in the City with the heads of these great English banks, and see that the people who trusted in them, as we all do, are treated with generosity and without any prejudice to the ultimate legal position. I do not propose to press my Motion.
LORD WARDINGTON: It will be understood that franc assets are held against franc liabilities. Equally, sterling assets are held against sterling liabilities. A great unfairness might conceivably be done if sterling assets held against sterling liabilities are applied to the payment of franc liabilities.
LORD STRABOLGI: If I may make this rejoinder, I understand that the franc
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is now sought to be pegged to the dollar. There must be some basis of calculation, and I only ask that something should be done for these people who are suffering great distress.
Motion for Papers, by leave, withdrawn.
House adjourned at ten minutes past five o'clock.