HL Deb 15 November 1944 vol 133 cc1186-219

2.35 p.m.

VISCOUNT SAMUEL rose to call attention to the action of the Government of Palestine, with the approval of the Colonial Office, in issuing Bonds carrying the right to participate in a State lottery, and to move to resolve, That this House trusts that the sale of Premium Bonds now begun in Palestine will not be continued. The noble Viscount said: My Lords, I beg to move the Resolution which stands in my name on the Order Paper. As soon as I became aware of the fact that the Government of Palestine had issued a draft Ordinance permitting the issue of so-called Premium Bonds I wrote to the Colonial Office to ask them if they would be kind enough to give me particulars of this measure. This they, at once, very courteously did. Thereupon. at the end of the Parliamentary Recess, I wrote to the Colonial Secretary expressing the objections to this measure, and asking that the Ordinance should not be definitely brought into force until an opportunity had been given for its discussion in this House. At the same time, I put down a Resolution on your Lordships' Order Paper which was to be debated on the first available day. The Colonial Secretary replied expressing his regret that the measure should receive opposition, and saying that he would cable to Palestine to ask what was the position with regard to its enactment. It was only on November 2 that I heard from the Colonial Office that the Ordinance had, in fact, been enacted on September 13, and that the sales of these Bonds had begun on September 26. Thereupon, it was necessary for me to alter the terms of the Resolution which I had on the Paper, which expressed the hope that this measure would not be brought into operation, and to put it in the terms now before your Lordships; the Resolution being to the effect that "This House trusts that the sale of Premium Bonds now begun in Palestine will not be continued." I have to trouble your Lordships with this short preamble to explain why the terms of the Resolution have been changed.

In the first place, I would invite your Lordships' attention to the character of these Bonds. I hold here in my hand a leaflet which has been sent to me from Palestine and which is being publicly distributed there by the Government. It is headed: "Palestine Bearer Bonds"—I will draw attention in a moment to that wording.—"War Loan (Bearer Bonds) Ordinance, 1944, First Issue." This leaflet has its first paragraph headed: "What They Are." As the matter may appear somewhat complex I will read this paragraph: 100,000 Bonds are being issued by the Government of Palestine and can be bought for ten pounds each at leading Banks, Co-Operative Societies and all Post Offices. There are no forms to be filled or stamp duties to be paid at the time of purchase. The Bonds are current for twenty years from the date of issue, and those which have not been previously redeemed at a premium will be bought back by Government on 20th September, 1964, at the full price of ten pounds for each Bond. Interest at 1 per cent. per annum will be paid on each Bond for the period it remains unredeemed and in addition every three months there will be drawings by lot for one hundred and fifty-nine Bonds which will be redeemed at the following prices:

One Bond at L.P. £1,000
One L.P. £500
Two Bonds at L.P. £250 each
Ten at L.P. £100 each
Twenty at L.P. £50 each
One Hundred and twenty five Bonds at L.P. £20 each."

The paragraph proceeds: There is therefore no risk of losing your money; there is a certain return thereon of one per cent. per annum and there is a chance of very considerable profit.

It at once appears that the term which is currently given to this kind of Bond, Premium Bonds, is quite misleading, and the title which is given to them in Palestine, Bearer Bonds, is meaningless. Investors are quite familiar with the principle of the premium. When an issue of debentures or shares or Government securities is made, and when it is not desired to pay off the whole issue at any one date it is the common practice for drawings to take place annually, and for individuals to have their Bonds repaid, perhaps not at their own desire or at their own convenience, and to receive a premium as compensation. And that may be one, two, three, or even as much as 5 per cent. But to suggest that it is a premium when a Bond for which an investor has paid £10 is repaid at the price of £100 or £1,000 is obviously a misuse of the term.

There was a Royal Commission on Lotteries and Betting in 1932, which reported in 1933. That Royal Commission sat under the chairmanship of a distinguished Judge, Sir Sidney Rowlatt. In their Report the Commission said: The characteristic feature of a lottery is that it is a distribution of prizes by lot or chance. They went on: A raffle or a prize-drawing is a simple form of lottery. A sweepstake is a more complicated form of lottery.…. Premium Bonds are another form of lottery. I submit, therefore, that I am justified in placing a Resolution on the Order Paper saying that this is a State lottery which is set up in connexion with an issue of Government Bonds. The right name for these Bonds, and the only right name, is Lottery Bonds. Why is it that this form of security conceals its real name? Why is it that at one time it is called a Premium Bond, and in this leaflet, most modestly, a Bearer Bond? Why does it take all these different aliases? Obviously for the same reason that malefactors take aliases—in order to conceal their previous convictions.

We have had a long experience of State lotteries. The Royal Commission in their Report gave a history of them in this country. The first English State lottery for the benefit of the Exchequer took place precisely 250 years ago, in 1694, and, strangely enough, the issue was precisely the same as is now being made in Palestine —namely, 100,000 shares of £10 each. The Royal Commission said in their Report that that issue had more in common with Premium Bonds than the ordinary State lotteries. In the latter part of the eighteenth century, when, as we all know, gambling was exceedingly rife among all classes of society in this country, the State pandered to gambling and encouraged it, and held a number of public lotteries which were very profitable. The yield from them reached its peak in the year 1802, when they brought in £520,000 to the Exchequer.

Public opinion, however, soon became aware of the harm that was being done to the nation by this system. The City of London petitioned the House of Commons against the authorization of lotteries as "highly injurious to the commerce of the kingdom and to the welfare and prosperity of the people." That was in 1773. In 1808 the House of Commons appointed a Select Committee which (I quote from the Report of the Royal Commission) "denounced the social evils to which it"—that is, the lottery system— "gave rise," and went on to say that regarded as a method of raising revenue, "no mode of raising money appears to your Committee so burdensome, so pernicious and so unproductive." Finally, in 1823 Parliament passed a Statute which prohibited all lotteries, whether State or other; but, in order not to give too sudden a jolt to the national finances, it allowed one more to be held, in 1826, and that was the last until the system was revived by the present Government in 1943 in Cyprus and in 1944 in Palestine.

I have had to refer to these old statements and to these rather ancient quotations because for about a hundred years nothing was heard of a method of raising money which had been so strongly condemned by experience and which had been rejected by Parliament. At the time of the last war, however, this suggestion of Premium Bonds was revised. At that time the State naturally had difficulty in raising sufficient money to pay for the war, and the Premium Bond method was proposed in various quarters as a device to help the Exchequer in its difficulties. The House of Commons appointed a Select Committee in January, 1918, to consider the proposals which were then being mooted. I would mention to your Lordships that among the witnesses who appeared before that Committee (which was not concerned with lotteries in general, but specifically with Premium Bonds) and who urged that the proposal should not be adopted, were Mr. Reginald McKenna, who had just been Chancellor of the Exchequer and was then, or afterwards soon became, Chairman of the Midland Bank, Sir John Bradbury, the Secretary of the Treasury, and Sir Robert Kindersley, who was then the Chairman, as he is now as Lord Kindersley the President of the National War Savings Committee. Lord Kindersley very much regrets that he is not able to be here to-day, and authorizes me to say that he is still of the opinion that Premium Bonds are objectionable and should not be accepted. Among other witnesses who appeared before that Committee in 1918 as opponents were Lord Cunliffe, Governor of the Bank of England, Sir Edward Holden, Lord Leverhulme, Mr. Lionel Hitchens, and other financial authorities, the Secretary of the Co-operative Union, and various leading trade unionists and labour leaders, such as Mr. Will Thorne, M.P., together with many representatives of the Churches.

Although that Committee contained members who had previously publicly expressed an opinion in favour of Premium Bonds, the Committee unanimously advised that the method should not be adopted at that time. That advice was acted upon by the Government; but on December 1, 1919, the matter was again brought forward and pressed in the House of Commons on a Motion most fittingly moved by Mr. Horatio Bottomley. He was at all events, in the terms of his Motion, candid enough to say that the Bonds "should be drawn at intervals and paid off with a premium or prize attached." It is the first time that the word "prize" was used, showing definitely that this was regarded as a lottery. In the debate which followed, Mr. Austen Chamberlain, then Chancellor of the Exchequer, announced that the Government would leave the matter to the House and not put on the Government Whips. He said that so far as he himself was concerned he had at first been somewhat favourable to the idea of Premium Bonds, but on consideration he was definitely opposed to it, largely in the interests of the War Savings Movement. Mr. Chamberlain in the course of his speech said this: It is not worth while to confront evils inherent in an issue of this kind with the doubtful advantages which we would derive …. Just in proportion to your success would be the revival of evils which affected the old lotteries. Above all, at a time when the one lesson you have to teach everybody is that there is no salvation except in work, you teach them to expect salvation by luck. Among other opponents of the proposal were Lord Hugh Cecil, now Lord Quickswood, and Mr. Bonar Law. When the Motion was voted upon the Ayes numbered 84 and the Noes 276.

The next event in this history was the Royal Commission of 1932, which in 1933 unanimously and strongly reported against lotteries in general. They reported that all serious writers who had recorded their views upon the subject had condemned large public lotteries. They drew a distinction between such lotteries and small bazaar lotteries and the like, which they said might be condoned, and they recommended that all large State lotteries, whether for the Exchequer or for charities or for other purposes, were socially undesirable and should not be allowed. I asked a question in your Lordships' House recently as to the pronouncements that had been made on behalf of His Majesty's Government in recent years, and the Lord Chancellor kindly gave a very full reply, in which he mentioned that the Government had at the time accepted the recommendation of the Royal Commission in 1933 and that successive Chancellors of the Exchequer had consistently refused to consider the issue of Premium Bonds in this country. He quoted in particular, on December 7, 1939, in answer to a question advocating national Premium Bonds with cash prizes, the reply of Sir Kingsley Wood, Chancellor of the Exchequer: No, Sir. The Government do not propose to make any issue of Premium Bonds. On June i8, 1940, Sir Kingsley Wood again said: No, Sir. It is not proposed to make an issue of the kind referred to which I consider would cause controversy and weaken the force of the National Savings Campaign. And on December 9, 1941, in answer to a question suggesting an issue of bonds numbered for the purposes of a lottery for substantial prizes, Sir Kingsley Wood simply answered: "No, Sir."

There has been within the last few years, as I say, a revival of this suggestion, and the Government of India made an issue of Premium Bonds last year. That of course was done on their own authority. His Majesty's Government at Westminster do not endeavour to exercise any control over the Indian Government in a case such as this, and your Lordships' House probably would not regard the matter as within their purview. But I wish to draw attention to the case of India to show the danger of a spread of this system in various countries. I hold here a copy of a Press message issued in December last by the Information Department, India Office, London, embodying a telegram from New Delhi from Reuter's Agency. This paper, issued to the Press by the India Office in Whitehall, is headed "The Indian Government is starting a State lottery" and begins: As a new move in the anti-inflation drive, the Finance Department has announced that five-year, interest free prize bonds will be on sale from January 15th"— that is, of this year.— They will have a chance of winning a big prize up to 50,000 rupees (about £3,750). The bonds … will not carry interest", and they give particulars of the various prizes for which they were drawn. This paper, issued by the India Office in London, ends: In effect, the Government is securing a short-term loan at 2 per cent. (That is because the value of the prizes amounts to 2 per cent. of the amount raised.) At that figure there would be no rush to invest, but with the prospect of winning the largest sum of money, the new bonds are expected to prove very attractive. There is another sentence here which is worth reading: The latest method will soak up the surplus purchasing power. That was the object in the great Indian Empire, to soak up the surplus purchasing power and so prevent inflation. As a matter of fact, in their population of 400,000,000 the result has been that £2,300,000 only have been subscribed.

The next instance was in Cyprus in June of last year, where, with the approval no doubt of the Colonial Office (because the Colonial Office has to approve of these things), on June 1 an issue of Bonds of this character was made. There, with a mainly Greek population, it proved to be more attractive, and the result was that a sum of about £1,000,000 has already been raised. The third is this present instance in Palestine. Here the Colonial Office is directly responsible. There is no local system of self-government at all in Palestine. I greatly deplore it, but your Lordships are aware that the difficult political situation there has made several attempts to establish self-government abortive. There is no Council in Palestine, either elected or nominated, and the Government is directed entirely by the High Commissioner and by Government officials under him, the whole being controlled by the Colonial Office. This particular Ordinance had the approval of the Colonial Office, and I am sure the noble Duke, when he replies, will not deny the direct responsibility resting upon the Colonial Office and His Majesty's Government. Is there any special reason why an issue of this kind should be made in Palestine? A question on the subject was asked a month ago, on October 11, in the House of Commons, and the Government spokesman there gave the reason for it as: Having regard to the general financial situation and the dangers of inflation, …. the Government are anxious to raise in Palestine as much money as possible by local borrowing and consequently thought that Premium Bonds would be an attractive way of securing this end.

As the noble Duke, when he replies, I have no doubt will give the same answer as was given in the House of Commons and will endeavour to persuade your Lordships that the justification for this is the danger of inflation in Palestine, I must make a few observations on that particular point. In Palestine the cost of living has gone up very greatly and the real value of the currency has in fact declined. That has been due to the expenditure during the war of immense sums in Palestine by the military authorities and by the Government in purchasing supplies for the Army and by the expenditure of the troops who have been there, and, on the other hand, by a lack of shipping that has restricted the supplies available in the country. The consequence has been a rocketing of prices and a very high cost of living, which has necessitated in turn a rise in wages and salaries and the vicious spiral of which we always have to be afraid in times of war. The same conditions prevail to an even greater extent in the neighbouring countries of Syria and Egypt.

The remedies for this situation are already having effect. The vast expenditures in that part of the world are being reduced; the shipping situation, one may hope, will be remedied before long; and even the prospect of a remedy and more abundant supplies tends to reduce prices. Already the rise in the cost of living has been stopped some months ago and is apparently on the eve of being replaced by a decline. The immense available purchasing power has not been let loose upon the markets. It has found its way into the banks. In the Palestine Monthly Bulletin of Statistics, the latest number of August, 1944, has a table showing the amount of money on deposit held by the banks and credit institutions in Palestine, and the figures are most striking. The first figure in the table is for the month of July, 1941, when the deposits in the banks of Palestine amounted to £17,000,000, already a very large sum for a country like that. But the last figure in the table for June, 1944, amounts, not to £17,000,000, but to £60,000,000. That little country, with a population of one and a half million people, about the size perhaps of an English county, has now got in its banks or co-operative societies, on deposit and available when required for purchases, the sum of £60,000,000. The amount withdrawn from the savings banks through the Premium Bonds is at present £350,000. As a beginning £350,000 have been spent on these Bonds. But even if the whole million is spent, what is that as a means of effecting a cure for inflation, when the banks have £60,000,000 on deposit? It is perfectly futile, and would play only a trivial part. Thus the amount raised by Premium Bonds would be ludicrously out of proportion to the degree of any possible inflation.

Are there any special circumstances in Palestine affecting this matter? Yes there are, but not on the economic side and not in relation to inflation, and not in favour of Lottery Bonds, but against them. There are special circumstances. Palestine, after all, is a country unique in the world, and if there is one country whose traditions and the reverence which it inspires among the adherents of three religions should save it from experiments of this character, it is Palestine, for there at least we should expect to have a Government in office which would have due regard for the dignity of the State and for sound principles in matters of finance and government. Now the Government of Palestine some few years ago, not when I was High Commissioner but subsequently, enacted a new Penal Code, and Section 191 of that Penal Code prohibited private lotteries and made them a criminal offence. Some few issues of Premium Bonds had been made in Palestine before the Penal Code was enacted, by credit co-operative societies, which had to suppress their issues in consequence of the Ordinance issued by the Palestine Government. Why did the Palestine Government make that Ordinance if Premium Bonds are innocuous, and if State lotteries do not matter? Only because, it must be held, they were wrong in principle and against the public interest. Now that the Palestine Government itself is entering upon a career as lottery-monger does it propose to repeal its own Ordinance and to allow other people to pursue the same methods? If not, why not?

What justification can there be for regarding as a criminal offence in other people that which the State itself is practising at the present time? It is much worse for a Government to start a lottery than for some credit co-operative society, or some charitable organization, for, after all, what the Government does is regarded by many people as an authorization, a justification. If individual people wish to gamble with their money that is their own concern, and if they do wish to do so, the law would not necessarily say that they should not do it. But for a State to pass an Ordinance and itself invite or urge its people to take part in a lottery seems to me most reprehensible. I will read the concluding paragraph of this leaflet which I read at the beginning of my observations. These are its words, issued by the Government of Palestine: Why You Should Buy These Bonds: By lending your money to the Government on these attractive terms you are:

  1. (a) assisting the war effort;
  2. (b) helping to make it possible for the Government to grant loans to municipal and local councils;
  3. (c) deferring personal expenditure on consumable goods now while prices are high and thereby increasing your chance of getting better value for your money."
So that the Palestine Government says to the people of Palestine that it is a social duty and a service to the State to purchase these Lottery Bonds.

Any individual responding to that who buys, let us say, £100 worth of Bonds will, it is true, have his capital secure: he will get the whole sum repaid at the end of twenty years if the Bonds have not been redeemed previously. He will have received during those twenty years, at the rate of 1 per cent., £20 in interest. If he had invested in an ordinary Government loan in Palestine, on which he would have received probably 4 per cent., he would have received on his investment of £100 in twenty years £80. What has become of the other £60? He gets, in return for the other £60, lottery tickets which are supposed to be worth that amount, drawing every quarter for a certain number of years. Four times a year in Jerusalem in the office of the Government there will be set up a tombola in the Treasury, and 100,000 numbers will be put in that tombola, and 159 prizes will be drawn. These 159 prizes will be scattered over the towns and villages of Palestine among the Arab and Jewish population. One person will get £1,000, another £500, and similarly for the rest of the 159, demoralizing each family that receives it in whole streets, neighbourhoods, towns or villages. The news goes like wildfire round the whole neighbourhood that So-and-so has got £1,000, another £500. In George Meredith's letters is included one in which he describes how as a young man he went once to a race meeting, with very rueful results. He adds: Wise grows the loser, merely happy the winner. The winner may have temporary happiness, but the history of lotteries shows that the moral results on character and the results on the future fortunes of the winners are very frequently disastrous. And let these people owning the 100,000 Bonds, if so many are issued, remember that while 159 get prizes 99,841 get nothing at each drawing, a fact which is not always sufficiently realized by those participating.

This proposal has met with considerable opposition in Palestine. The general manager of the principal local bank, which has a capital of about £1,000,000 and is connected with the Zionist movement, has written to me to say that he himself strongly opposes this proposal. He writes, so far as inflation is concerned: I answer first of all that in a matter of principle expediency is no argument, secondly, that each population must save in its own way, and that Palestine has been saving enormous amounts which have gone to the British Treasury, and thirdly, that our inflation is under control and is the mildest in the whole of the Middle East. He also writes in his letter: If a Premium Bond issue is a thing repugnant to British tradition why should the Holy Land, the country of regeneration of the Jewish people, be singled out for introduction of such a scheme? Jews do not want their name to be connected with the first official lottery scheme within the British Empire.

I would read here a paragraph that has appeared in art article in an organ of the Jewish community in this country, the Jewish Chronicle. This is a very important aspect of this question in view of the fact that the Jewish community is very closely concerned with Palestine. This is what it says: Similar proposals have been made from time to time in this country but have always been turned down. Why Palestine should be deemed a more suitable ground for them is a puzzle and, we would add, an insult. The Chalutzim"— those are the pioneers trained in modern agriculture who have gone out there to redeem and work the land— have not gone to Palestine to enrich themselves by a gamble. They believe that the Jewish National Home is to be built by hard work and not by pandering greed or to the get-rich-quick mania. The whole proposal is, in fact, quite out of keeping with the spirit and motives behind the Zionist movement, and one which introduces an element of degradation into the Holy Land.

The Anglican Bishop in Jerusalem has also issued a protest as well as the representative of the Scottish Churches. The late Archbishop Temple, whose death we so greatly deplore, wrote to me not very long before his lamentable death, on October 5: I am writing to the Colonial Secretary in support of your letter. If my own state of health, which at present is completely laying me up, and other engagements permit, I should like to support you in the House of Lords; but I am afraid it is very doubtful if I can manage to be there. I am in the most cordial agreement with everything you say in your letter to the Colonial Secretary. I have also had communications embodying resolutions of protest from the Methodist Church and from the Congregational Union. Are we to expect when the people in the churches sing the hymn—. I will not cease from mortal fight, Nor shall my sword sleep in my hand, Till we have built Jerusalem In England's green and pleasant land, that it is to be this new model Jerusalem with. State lotteries and tombolas with money drafts scattered throughout the country for £1000 and similar large sums to people who have lent £10 to the Government?

The Palestine Government is not accountable to any local Assembly but it is accountable to an international assembly, to the League of Nations. The Mandates Commission of the League of Nations is still functioning and it still has supervision over the acts of the Palestine Administration. I do not envy the spokesman of that Government who has to appear before the Mandates Commission and has to answer this question from one of its members: How is it that you have established there a State lottery on a plan which has been condemned by your own statesmen, condemned by a Select Committee of your House of Commons and by a Royal Commission, and by your Chancellor of the Exchequer and your Government, which you hold is not good enough for the British people but which you thrust upon the population entrusted to your rule by international agreement? And let the House realize this, that once this principle is established in Cyprus and in Palestine, then the Government of any Colony which is tempted to find an easy and perhaps attractive source of raising revenue will be entitled to, and cannot be denied, the right to follow the same course. This system may spread to any part or to all parts of our Asiatic or African Empire.

Then what action should be taken now? The whole issue has not been made yet, but only one-third of it has been taken up. It is what is known in the City as being "on tap." I trust that a new Ordinance will be issued by the Palestine Government repealing the old one and providing for the repayment of the sums so far subscribed with, no doubt, a payment of interest at an appropriate rate to cover the short period that has elapsed and that then an ordinary loan should be issued. Or if that is thought quite impossible by the Government, at least they should undertake that no more Bonds shall be issued beyond those that have at present been taken up by the public. I trust the noble Duke who is to reply will agree that that should be done. If not, I earnestly hope this House will exercise its influence and authority as a House of Parliament and require that that shall be done.

In conclusion I may summarize the propositions which I have laid before your Lordships' House and which I trust you will accept. First, that this loan in Premium or Bearer Bonds consists of Lottery Bonds and that what is being done is to set up a State lottery; secondly, that State lotteries are wrong in principle and detrimental to national character; thirdly, that His Majesty's Government are directly responsible for the administration of Palestine and must bear the direct responsibility for this action. I would remind your Lordships that this proposal has been often considered and always rejected—by a Select Committee of the House of Commons in 1918, by the House of Commons itself in 1919, by a Royal Commission in 1933, and by the present Government in repeated statements in Parliament, and that the Colonial Office ought not, without further authorization, to have gone directly counter to these decisions. I maintain that there is no financial reason for asking for any exception in the case of Palestine; that £60,000,000 of deposits in banks make any financial transaction of this kind quite futile for the purpose of meeting inflation; that there are no special circumstances of the character that I have described, but that there are special circumstances which should lead to the conclusion that Palestine should not be the first but the very last country to have a system of this kind introduced; that if once established and approved by His Majesty's Government and by this House any Colony throughout the British Empire may be tempted to indulge in this expedient in derogation of the very high standards of government which have long been the pride of our Commonwealth and Empire. I beg to move.

Moved to resolve, That this House trusts that the sale of Premium Bonds now begun in Palestine will not be continued. —(Viscount Samuel.)

3.19 p.m.


My Lords, the noble Viscount has done a great public service by calling attention to this matter and, if I may say so, I have never heard a good cause so exhaustively, comprehensively, and unanswerably presented. There would indeed be little I should wish to add and I have risen chiefly to say that I support this Motion not merely for myself but on behalf of a great volume of Christian opinion which the noble Viscount has already indicated. I believe that wherever the knowledge of these Premium Bonds has extended amongst Christian people it has caused a great shock and really deep indignation that such a thing should be done in what, to them, must appear a hole-and-corner manner in a distant part of the world.

I am expressly charged by the executive of the British Council of Churches, which represents all the great denominations in this country except the Roman Catholic Church, to express their strongest possible disapprobation of that step. What is felt amongst Christian people here is felt even more acutely by Christian people in Palestine itself. The noble Viscount referred to a letter from the Anglican Bishop in Jerusalem. I have a copy of that letter. He writes with the unanimous support of his advisers and he says that it seems regrettable that the Palestine Government should set the example of raising funds by what is practically an appeal to cupidity. He goes on to say that such a scheme is in fact nothing else but a lottery and would be illegal in this country. I will not read the rest of the letter but there follows a postscript signed by the Special Commissioner of the Church of Scotland in the Middle East and by the Minister of the Church of Scotland in Jerusalem, saying they desire to give their fullest adherence to the letter from the Anglican Bishop, adding that they think this action is deeply to be deplored and contrary to the spirit of the British Mandate.

It is difficult to add anything to the arguments put before your Lordships by the noble Viscount and I do not mean to embark on any discussion of the ethics of lotteries. I will merely say that it is the declared and maintained policy of this country, reaffirmed again and again as history has shown, that State lotteries are socially undesirable and disturbing and disrupting. That being so, this present action would seem to me quite indefensible on two grounds. The first is simply this, that we are the Mandatory Power, holding in trust the interests of Palestine, and it is unthinkable that trustees should allow and encourage in the country for which they are responsible a practice which they regard as socially undesirable and deplorable for themselves. We know there are parents who are in the habit of taking liberties and licence for themselves which they deny to their children, but it is an altogether unnatural parent who, having denied for himself practices which he things morally and otherwise undesirable, will encourage his child in those same practices. If that is true of the parent it is true also of the schoolmaster or of any trustee. I think it directly concerns our repute as a nation that we should in any way encourage among those for whom we are responsible that which for ourselves we regard as socially disturbing and disrupting.

The second simple reason is that this should be done at such a time as this when the whole emphasis of the thought and the social policy of this country is in the direction of saying that men in this nation must work out their salvation by honest work earning their profit legitimately and by no other means, and that that profit itself must be controlled by ultimate social interests. That is the only basis on which we can possibly in the years after the war work out our own national salvation. Dare we at such a moment commit a people for whom we are responsible to the opposite policy of depending upon money for nothing and sheer cupidity, those very things which have worked disaster in our own society and the renewal of which we are determined should be limited in the future? For these two reasons I support most warmly this Motion. I gather from what the noble Viscount said that he expected the Government would attempt to justify this policy. May I earnestly express the hope that the Government will not attempt to justify the policy but will honestly say "A mistake has been made, we regret that mistake and al: the earliest possible moment we will withdraw"?

3.26 p.m.


My Lords, like the right reverend Prelate I desire to associate myself with what has been said by the noble Viscount, Lord Samuel, speaking with the authority of one who has been High Commissioner for Palestine. To put it mildly, the issue of these so-called Premium Bonds by the Palestine Administration under the ægis of His Majesty's Government as the Mandatory Power is a most reprehensible step, and certainly runs counter to Christian and Jewish religious opinion both in Palestine and in this country. The facts are not in dispute. The aim is to raise one million pounds by the issue of 100,000 Bonds of £10 each, the Bonds to carry interest of 1 per cent. only, with the additional attraction of premiums to be paid quarterly. The first Bond drawn each quarter is to be redeemed for £1,000 and 158 others are to be redeemed with smaller substantial money prizes. The actuarial cost to the State of such an issue is approximately 3 per cent., but two-thirds of that, instead of being paid in interest, is to be withheld in order to create a gambling pool to provide prizes for the lottery.

The defenders of this unorthodox method of raising funds for the State claim that this does not involve gambling because all the principal, as the noble Viscount said in his opening remarks, and part of the interest are secure. But surely that part of the interest which is applied to prizes—namely two-thirds—is unqualified lottery. To contend that a man is gambling if he stakes the whole or part of his capital and not gambling if he stakes only a portion of his income is sheer sophistry. Nay more, it is unadulterated non-sense. That is a difference of degree, not of principle. The appeal of the Premium Bond with large money prizes is quite frankly to cupidity, to the craze to get rich quickly without effort. The very fact of their being issued by the Government and in the form of a lottery means that the gambling bait is presented in its most insidious and attractive guise. I do not suggest that this is bringing a new evil for the first time into an otherwise guileless world, but I do submit that this is a concerted attempt to exploit an existing evil by appealing to some of man's worst instincts. Surely instead of deliberately playing upon and cultivating this weakness of human nature the Government should seek to build character, not debase it.

The noble Viscount has referred to some of the findings of the Royal Commission on Lotteries and Betting which reported in 1933 and which rejected the proposal to legalize lotteries. I should like to refer to two other paragraphs of that Report. In the course of their Report the Commission stated: Lotteries depend for their success upon the blatant advertisement of large money prizes. They tend to exalt the results of chances and to encourage a belief in luck, while the draw and the announcement of the result give rise to an unwholesome excitement…In the history of public finance, lotteries take their place among the expedients which are resorted to when other and more reputable methods of finance have failed. I invite your Lordships' special attention to those latter words from the Report of the Royal Commission, because, judging by the answer given by the Colonial Secretary in another place—to which the noble Viscount, Lord Samuel, has already referred—that is the raison d'être in this case, for we are told that owing to the danger of inflation, through war conditions, and the more reputable methods of ordinary family savings having failed in Palestine, His Majesty's Government have approved of this, a priori, less reputable method of raising funds.

The Royal Commission found that it was "much easier to authorize large public lotteries in this country than to put a stop to such lotteries once they are started." If that is true in this country, how much more true is it likely to be in a country like Palestine. And if the State does it, what is to prevent the gambling mania running like a prairie fire through dried and tractless grassland, and becoming a menace in every walk of Palestinian life? This rejection by the Government of a sound economic basis for their financial transactions, in thus raising funds, may well have a debilitating, and possibly destructive, effect in Palestine upon finance generally and the whole attitude of the community to financial responsibility.

Then I want to raise another point, a point arising out of the speech made by the noble Viscount, Lord Samuel. I wish to ask the noble Duke who is going to reply for the Government why such a serious step as this was taken without Parliament being given an opportunity of discussing the matter, more especially —the noble Viscount has told us this—as the Government were specifically asked to hold their hands until an opportunity had been afforded for such discussions to take place. Yet a further point arises this afternoon, and it is, I suggest, a rather serious one. I think that we ought to have some light thrown upon it. If I understood the noble Viscount aright he told us that the issue of these Bonds actually started on September 13.


They were authorized on September 13 and issued on September 26.


Authorized on September 13 and actually issued on September 26. Now I am sure that the noble Duke will exonerate me from imputing motives, but I want to ask the very categorical question why, in view of the fact that these Bonds were actually issued on September 26, the Colonial Secretary said in another place on October 11—and I have Hansard with me—"It is proposed to issue these Bonds." I suggest that your Lordships' House is entitled to some explanation of that discrepancy. What has happened is that the Government, as trustees in a mandated country, have given way on a fundamental and vastly important question of principle, and by so doing have weakened, if not surrendered, their power to control or suppress other nefarious prize schemes and lotteries, which their own example will have encouraged. Ignorant of the laws of probability, subscribers to these Premium Bonds will confidently expect to win, without realizing how infinitesimal is their chance of doing so. And there is the added danger—to which reference has been made—that they will relax effort and concentration, always thinking of, and hoping for, a prize which seldom, if ever, comes their way. State lotteries, widely advertised, involve an absorbing excitement and capture thought and interest to the detriment of the real and important concerns of life, and the excitement spreads through the community.

Admittedly a lottery is entirely devoid of skill; the whole determination rests upon chance, and this indubitably encourages and develops a false value of life. What is the Government's excuse for this departure from the canons of sound finance? Well, the Colonial Secretary has told us, in that answer to which reference has been made, that "whereas this country is well accustomed to ordinary family savings, so far that has been a failure in Palestine." So it was in this country, until an appeal was made to the highest, instead of pandering to the basest, in human nature. Put on the lowest level, it pays to go straight. And here we come on the border line, where business and morals touch, which Parliament is bound to consider. The appeal of Premium Bonds is to the small investor; that is why they are only £10 each. It is not suggested that large investors and big business concerns, or industrial undertakings, will be appealed to by the element of chance. To them Premium Bonds would be anathema, and to a business man, to say the least, they would be less attractive than Bonds with a fixed yield at current rates of interest. Unfortunately, lotteries appeal with special force to those in straitened circumstances, and to those in economic insecurity. Is it such as these the Government seek to beguile?

The people of this country were at one time, no more "accustomed to ordinary family savings" than the people of Palestine are said to be now. But the War Savings Campaign of the last war altered all that, with the result that vast numbers of people were educated as to the whole meaning of investment. With what result? Before the last war started, only about 345,000 persons held Government securities in the United Kingdom, and after the war, in 1919, the corresponding figure was well over 17,000,000. In this war that experience has been repeated, and on an infinitely larger scale. If a similar great organization of thrift were built up in Palestine, in order powerfully to influence the habits of the people, similar beneficial results could be looked for. The essential wrong of lotteries is the wrong of gambling of all kinds. Financial advantage is sought, not as a result of work or skill, but by chance. To seek either pleasure or gain at another's expense is immoral. Gambling is a cancer in the body politic and, quite as surely, rots the moral foundations of society.

Just at a time when the Football Association of this country is asking for new legislation to prohibit football pools of all kinds as contrary to public interest, His Majesty's Government are a party to the promotion of this State Lottery in Palestine. Could anything be more cynical? In my submission, this is an offence against the moral and financial rectitude of the country. We do well to remember that Jesus Christ said: "It must needs be that offences come; but woe to that man by whom the offence cometh!" I desire to associate myself whole-heartedly with what the noble Viscount, Lord Samuel, has said, in which he was so ably supported by the right reverend Prelate.

3.40 p.m.


My Lords, perhaps I shall be forgiven if I approach this subject from a different point of view from that expressed by the last speaker. I can claim lo speak as representing the National War Savings Movement, to which reference has been made, because for the last eighteen years I have been closely connected with it, most of the time as Chairman and now as Vice-President. I have consulted Lord Kindersley, to whom reference has been made by my noble friend Lord Samuel, and the Chairman who succeeded me, Sir Harold Mackintosh, and a great many other persons, and I think that I can express their views. They are vitally concerned in this matter, if one hypothesis be true. That hypothesis, which I hope that the Government spokesman will demolish—but there is at any rate a prima facie case for it, and therefore we thank the noble Viscount for bringing this matter forward —is that the Government are weakening on this matter of Premium Bonds, and that as they have sanctioned them in Palestine they are not sure that in the near future they may not adopt that method here.

I want to say that we who are concerned with the War Savings Movement, including the 600,00o voluntary workers engaged in it, are unanimous in saying that we think that that would be inadvisable. We do not say as a body that it is morally wrong. If we thought that it was morally wrong, we would not go into any arguments about whether it was expedient or not. I cannot understand the attitude of people who say that it is morally wrong and who then go on to say that it is really not necessary. Either it is right or it is wrong. A great many of those for whom I speak do think that it is morally wrong, but a very great number of others, of course, do not. The spectacular success of the so-called "Irish Sweep" and of the football pools shows conclusively that the view that gambling is not in itself inherently vicious and contrary to Christian law is so widespread in this country that one could not claim to speak for millions of people and say that they are all of opinion that it is wrong. We do not take that view, and I wish publicly to dissociate ourselves from it; because if we did the argument the other way would be rather dangerous to us.

Nor do we take the view that it is our business to tell the Government what they ought to do in Palestine, and for the same reason. The Government may be able to say that there is some peculiar reason why the High Commissioner thought that it was a good thing to do there. I cannot think what that reason would be, and we are curious to know; but that is not our point. Our real point is this: Will the Government say here and now, in response to the appeal made to them by my noble friend, that they have no intention of going back on the decision so clearly expounded only the other day by the noble and learned Lord Chancellor on the Woolsack? Are they as determined as ever to see that this way of raising money shall not be attempted here? The speeches so far would seem to show that everybody is of one mind, but I know that that is not the case. In the course of my inquiries for the purpose of what I am saying to-day, I have found that there are large numbers of people who for the reason I have mentioned—the spectacular success of the "Irish Sweep" and the football pools—are beginning to think that there is something to be said for adopting the Premium Bond plan. I would pray all those who think in that way to realize that even if the arguments adduced, which were referred to by the Lord Chancellor, were true, it would be disastrous to adopt such a policy now, at this crisis in our financial history. We have been told by the Chancellor of the Exchequer, and we know it to be true, that our War Savings Movement is a vital element which we cannot possibly do without. If it stopped, the embarrassment to the Treasury would be extreme. That must not happen. We have been told again and again by the Chancellor of the Exchequer—he repeated it only the other day—that this movement must go on.

Any attempt to adopt this plan would be disastrous—I use the word advisedly—quite apart from the moral issue. I will tell your Lordships why we all think that that would be so. We have this great body of 600,000 voluntary workers. To take the case only of what are called the street groups, there are 122,000 of them, with 122,000 secretaries, devoted people who in all weathers go round appealing to their neighbours to lend their money to the Government. Under those 122,000 there are an indeterminate number of people, four or five in some districts, who help in the same work and who go to great pains and really to great sacrifices in order to persuade people to lend their money to the Government. They do not say to them, "Do this because it will pay you." We know that to a greater and greater extent the appeal to selfishness is losing its force and that appeals to patriotism—"Help the Government to win the war; Help our fighting men to have the best chance"—are having more and more force.

We know what the feeling is. We spend a considerable sum on advertising, and we know the effect; we can try it and see for ourselves. I have some remarkable figures here with which I shall not weary the House in any detail, but which show the results which have accrued in quite recent times, and also the cost of collection. This latter point is interesting, because, if you spoil our movement, what could you put in its place? Such a spectacle of voluntary effort producing so great a result is, I am sure, unique in the world's history. To give the most recent figures, the total savings for last year were £1,565,000,000 of which "small savings" accounted for £614,000,000. On the figures which I have, the expenditure under the National Committee, taking the whole total, shows that the cost of administration works out at 0.085 per cent. of the total—a tiny fraction, about one-twelfth of one per cent. That is the extraordinary result of almost the whole of the work being voluntary. In the case of what are called "small savings"—the savings obtained by the people I have been describing—the cost is necessarily slightly more, because the expenditure has to be greater, but it works out at 0.21 per cent., or just over one-fifth of one per cent., to raise this gigantic sum.

Most of your Lordships have been of immense help to our National Savings Movement in recent years. I am here to say on behalf of all of those who work at it that we are indeed grateful, and to beg of you not to relax your efforts in the weeks, and indeed a few years, to come, because we do know how vital it is to keep it going. I think I have proved to your Lordships that to adopt the Premium Bond plan would shatter the Savings Movement, and it is just because we want any suspicion of the kind dispelled that, quite apart from the moral arguments so eloquently put forward by the Lord Bishop and by Lord Rochester, I beg of the Government to repudiate emphatically any such intention on their part.

3.51 p.m.


My Lords, I do not claim to be speaking for my noble friends of the Opposition, but every one of them I have spoken to on the subject supports the plea to the Government to stop this whole business once for all: in other words, we support the Motion of the noble Viscount in the terms on the Paper. I cannot refrain, however, from expressing some sympathy, if he will allow me to do so (I hope I do not embarrass him) with the noble Duke. I cannot remember a case, in recent years anyhow, where there has been such an overwhelming attack by Peers on all sides of the House on a Minister who, I suppose, did not know anything about it until a few weeks ago. He has my complete sympathy. He sat with me in another place for a great many years and I know quite well what his feelings must be at having to defend (if he is going to defend) the issue of Premium Bonds in Palestine.

Nor can I refrain, if he will allow me to do so, from congratulating the noble Viscount, Lord Samuel, on his wonderful detachment. I suppose a debate such as we have heard this afternoon could not have taken place in any other assembly in the world at such a time on such a subject. Here we have the whole future of Palestine in the melting-pot; all your Lordships know that. There has been a virtual ban on discussions on Palestine in this House for some years now. A great drama is being enacted. Scores of thousands of miserable fugitives from Nazi cruelty and tyranny are knocking at the doors of Palestine, and a thin stream is being admitted. The terrible outbreak of violence which we all condemn, the brutal murders and assassinations, are the symptoms of some deep, underlying trouble. Yet the noble Viscount could make the speech he did this afternoon, obviously with tremendous preparation, with much documentary support—on what? On the issue of Premium Bonds by the Government of Palestine. I cannot conceal my admiration for the noble Viscount's detachment in such a matter. A modern Joshua comes here with this message from Palestine at this time: "Cease issuing Premium Bonds." I stand up here with no such claim to speak for the great causes for which he speaks, but I wish to support him.

3.54 p.m.


My Lords, before the noble Duke replies, might I mention one fact which has not been stressed in the debate? It is the opinion of practically all social workers that, in the poverty-stricken quarters of our great cities, the two chief evils are intemperance and gambling. Social workers belonging to all the Churches spend the greater part of their efforts in trying to eliminate these evils from our midst. Their task is immensely difficult, but it has been possible in the past to say as against gambling that the State has set itself steadily against gambling Bonds, in spite of the profit from them which it would derive. In future that argument will be gone if the Government refuse the appeal so splendidly made by the noble Viscount. Social workers will in future have to admit that the Government see no harm in obtaining revenue from gambling methods and the volte face will be associated with the place in the whole world regarded as most sacred by Christian people.

3.55 p.m.


My Lords, in a political acquaintanceship extending now for over twenty years with the noble Viscount who raised this Motion, an acquaintanceship which I think I can truthfully say has ripened into a warm personal friendship, I have become increasingly reluctant to find myself taking a view different from his. During those years one has become ever increasingly conscious of the admirably poised balance of his judgment and of the complete and utter integrity of his political faith. I am therefore extremely reluctant to find myself in disagreement with the noble Viscount, but I am bound to say that, if I am reluctant on any normal occasion, I am still more reluctant to find myself in disagreement with him on the subject of Palestine, a country where he rendered such exceptionally distinguished and devoted service and which means so much to him. Nevertheless, I am sorry to say that I cannot agree with him on this issue or with the noble Lords who have supported him on this issue this afternoon. I appreciate to the full the strength of their convictions, and I know that they have been moved only by sincere desire and sincere concern for the public interest. But there are factors in Palestine, and in some other countries, which do not apply in this country, which have not, I think, been fully brought out in the debate and which it is my submission fully justify this method of raising a loan in the particular case of Palestine.

I have been a little surprised at the fervour with which the noble Lords have spoken on this issue of Palestine, as if it were an entirely new thing. Haying regard to the fact that Cyprus has been employing this method of raising money for some considerable time and has already raised a very substantial sum, having regard to the size and wealth of the island, (over £1,000,000 has been raised without, so far as I am aware, one word of protest from any quarter whatever or any dissentient voice being raised)—


No one knew anything about it.


But I do want to stress that, became the noble Lord referred to the fact, or it has been repeatedly said, that this is a new thing. Of course it is not a new thing.


Last year.


India has had Premium Bonds; Cyprus has had Premium Bonds; and, although it is not strictly relevant to this debate, I shall try to show that in these Premium or Prize Bonds—it is a matter of indifference to me which they are called, because, after all, "premium" is merely the Latin for prize, and that seems to be a point of no very great importance—we are not concerned this afternoon strictly with State lotteries. Not that I attempt to defend them; they are no concern of ours; but in most of the States of Australia State lotteries have gone on for many years, so this is nothing absolutely new.

But I want to make it quite clear what exactly these Premium Bonds are. They have been spoken of by certain noble Lords this afternoon as if they were something strictly comparable with a lottery, with the "Irish Sweep," for instance, in which thousands of people bought tickets and a few lucky individuals got large prizes, while the vast majority, the rest, got nothing at all. That is clearly sheer gambling. But the position of holders of these Premium Bonds is really entirely different. They all receive a regular, if modest, rate of interest on their investment, a rate only three quarters of 1 per cent. less than that which the Government of this country hope will prove attractive to investors here. They are all assured of their capital intact, if their Bonds are not drawn before, on September 15, 1964. So that the main element of saving, the preservation of the investor's capital intact, is preserved. If however, a limited number of these bondholders are lucky their bonds may be drawn for redemption before 1964, in which case they will receive as well as their bond interest a cash premium calculated to compensate for the lower rate of interest. The cost to the Government of Palestine of interest plus premium on the whole issue will be roughly the same as if there had been an ordinary straightforward loan at 3 per cent.

The scheme is different from a lottery, not only as regards its effect on the investor but also as regards its advantages to the promoters. In a normal lottery the promoters reserve a very considerable proportion of the funds subscribed either for their own personal benefit or for the objects in aid of which the lottery is promoted. The noble Viscount who as Home Secretary presented the Report of the Royal Commission on Lotteries and Bettings it 1933, will be aware of the fact, though many of your Lordships may not, that the building of a former Westminster Bridge was financed by means of a lottery authorized by Parliament, and that the British Museum rests on a similar foundation.


What date was that?


I cannot remember the exact date. But my point was not to defend or condone it, but to shows that by what is strictly speaking a lottery a large profit is made, whereas the Government of Palestine is making no profit at all. I have tried to explain the nature of these Premium Bonds, and I now pass to what seems to me their complete justification. It is that Palestine, in common with all other Middle Eastern countries, has suffered from severe inflation of prices. Thanks to the energetic measures of control that have been taken by the Government, this inflation has not reached the very high level which it has in some other Middle Eastern countries, but it has been quite serious enough. The cost-of-living index figure is now only a little under 150 per cent. above pre-war level. The two most important causes of this inflation of prices have been the immense military expenditure in the area, which, taking the Middle East as a whole, has to be reckoned in hundreds of millions, and the restriction of supplies from outside the area. Owing to the military expenditure, there is vastly more cash in the area than there has ever been, and owing to the shortage, both in the countries of supply and of shipping, there are fewer goods available than there have been for many years past.

I scarcely think I need elaborate the reasons which have led to the acute scarcity of supplies in Palestine. Most of your Lardships will be aware that that country is suffering severely from a scarcity of consumption goods, and that shortage is coupled with an abundance of cash such as has never been seen before. Serious inflation must bring very many evils in its train; it hits very hard those with fixed incomes, it gives a temporary and unwholesome stimulation to internal production at very high cost—an internal production which has little hope of survival when free competition returns; while the rise in the cost of production endan- gers the prospect of future export industries. I could not entirely agree with the noble Viscount opposite, who seemed to contradict himself at one point, when he urged that the bank balances were so great and that this trumpery measure—with only £350,000 so far subscribed—could have no effect on the problem of inflation; while almost in the same breath he spoke of the widespread nature of this evil which would spread throughout the land. He cannot have it both ways.

In Palestine the position of recipients of fixed incomes, Government servants included, has been one of real difficulty and indeed hardship, and considerable apprehensions are felt about the post-war export prospects, not only for the wartime industries which have sprung up but for the country's economic mainstay—the citrus industry. Prices would have risen much higher than they have, and Palestine would have been faced with a really damaging inflation if it had not been for the co-ordinated system of anti-inflation measures taken by the Palestine Government. They have held down the price of necessities and prevented the growth of an uncontrollable black market. I do not deny that there is a black market, but they have prevented the growth of it by rationing supplies wherever possible on the one hand, and on the other by subsidizing at very considerable expense the price of essential foodstuffs. They have at the same time taken all the measures possible to remove the excess purchasing power from the pockets of the public. New taxation imposed, both with that object and for the purpose of meeting the cost of the subsidies and other additional war-time charges, has been heavy, and after a very searching review my right honourable friend is satisfied that the level of taxation at present cannot be increased.

Nevertheless there remain very many individual residents of Palestine who have money available for investment. Much of this is held on deposit and, either directly or indirectly, goes to swell the balance in London on Palestine account. There has thus arisen the somewhat anomalous position that while the sterling balances on Palestine accounts in London are swelling, His Majesty's Treasury has had to make additional sterling available to the Palestine Government to enable it to balance its expenditure on food sub- sidies. It will be obvious to your Lordships, and not least to the noble Lord, Lord Mottistone, who has done such tremendously valuable work in connexion with the Savings Movement here, that in a situation of this kind it is most desirable that everything possible should be done to attract the money available for investment in Palestine to Government loans issued in that country, and that has throughout been an object of policy of the Palestine Government. Raising local loans serves more than one purpose. It helps to reduce the surplus purchasing power immedately available, and therefore tends to check inflation, and it reduces the tendency of prices to rise. It also helps to reduce the accumulation of sterling balances in this country. In fact, it helps the country concerned to solve its problems without calling on outside assistance. But, unhappily, it has not proved so easy to accomplish this obviously desirable object of raising loans. United Kingdom Bonds and Savings Certificates have been on sale for some time but they have not met with that wide response which could have been wished. The practice of investing in Government securities is new in Palestine, and indeed in many other countries also.

So the Government of Palestine is confronted with the problem of finding a new form of loan which would appeal to the local communities, and I must remind your Lordships that the outlook of the local community in Palestine is very different from that in England. To a considerable section of the Moslem world, to the very strictly orthodox Moslem, the receipt of a steady 3 per cent. or 3½ per cent. on a Government loan which would seem entirely respectable to the Quaker community in this country, or indeed to those sections of the community whose opinion was voiced by the noble Lord, Lord Rochester, this afternoon, is utterly abhorrent, because to them it is the sin of usury. On the other hand, the receipt of large casual or adventitious gains which might well seem objectionable to those respectable sections of our own native community here will not cause the slightest twinge of conscience to the most orthodox Moslems. I would also remind your Lordships that we are dealing with an Arab Moslem country, and the Government have to consider very carefully the views of this Arab Moslem community.

The Government there have been faced with the fact that previous efforts to induce the public of Palestine—a public which the noble Viscount himself has said have large resources in cash—to invest in Government loans, have met with only a very moderate measure of success. Other Governments have found themselves in the same difficulty and have had recourse to the same solution. The Government of India have made somewhat similar arrangements to those we have been discussing this afternoon. They are not on exactly the same lines as in Palestine, but the essential features are common to both loans—namely, that the Government repay to the investor the full capital value of his investment when the term of the loan expires. In Cyprus, too, Premium Bonds have also been raised with encouraging results as regards inflation which was threatening the stability of the Budget. My right honourable friend the Secretary of State has been advised that in Palestine also the best, indeed the only means of achieving the very necessary object of a successful loan, is by the issue of Premium Bonds on the same lines.

My noble friend Lord Rochester asked why the Minister did himself state in Parliament that this was proposed when in fact it had already been started. My right honourable friend said on October 11, that it was proposed to issue 100,000 Bonds and he could equally accurately make that statement to-day. Some 35,000 have now been issued and that number had not been issued then. The statement at the time was quite accurate when he said it was proposed to issue 100,000 Bonds and it is still proposed to do so. There is no question of his going behind the back of Parliament, which was fully entitled to discuss this matter.


If that be so, why was Parliament not given an opportunity of discussing this when the request was made in writing and the reply was made that information was being sought from Palestine?


The issue had already started when this question was raised and my right honourable friend, not unnaturally, wanted information as to how the loan was going. As to the question why Parliament was not consulted at every single moment, my right honourable friend would not shirk or deny his full responsibility. It is his responsibility. He has full powers to disallow this Ordinance in Palestine and it is his responsibility entirely. On the other hand, this is a very definite recommendation—it is not our plan—from the Government of Palestine. Finding itself confronted with the various problems that I have been detailing to your Lordships, it made this very definite recommendation to my right honourable friend and I think it would have been a very strong order on his part if he had refused the representations of the Government of Palestine and had abolished the Ordinance. It is his definite opinion that this method will achieve the object of a successful loan and I think that will be another justification for this measure.

Just as it was found not only desirable but also possible to do without Premium Bonds in this country, we hope that through the inducement of these Premium Bonds the public of Palestine, which is wholly unaccustomed to the idea of Government loans, will gradually see its way to lend its money to the Government in this part of the world, and that we shall find that a moderate rate of interest will be as satisfactory there as we have found it to be in this country. We hope the time will come when no premium will be necessary to attract the investor. I do not for one moment pretend that Premium Bonds or Prize Bonds are the ideal way for any Government, in any part of the world, to raise money, but I do say, and I say it with great conviction, that in the special circumstances with which we are confronted in Palestine, it is very much better to raise money by these means than not to raise it at all.

I am glad to be able to give my noble friend Lord Mottistone an absolute assurance on the point on which he sought reassurance. I have been speaking almost entirely this afternoon on the special question of this Premium Bond issue in Palestine and not of the general merits of Premium Bonds or State lotteries or gambling in general. Some noble Lords who spoke this afternoon seem to apprehend that this was, as it were, the thin end of the wedge and that this might be the first step towards the introduction of Premium Bonds. Thanks very largely to the unceasing efforts of members of your Lordships' House, Lord Kindersley, Lord Alness and the noble Lord, Lord Mottistone, who have done so very much, and of their lieutenants, the habit of saving and lending to the Government is now deeply ingrained in this country. The campaign which these noble Lords and their innumerable assistants have waged has resulted in a continuous flow of investments into Government loans both large and small, and this has been a vital factor in the sound financing of the war. I quite endorse every word the noble Lord said when he stated that any suggestion for the issue of Premium Bonds here would have an adverse effect on the voluntary war workers of this country and the public, and that it would be most damaging to the Government. I can give the noble Lord a definite assurance that no such issue is contemplated for one moment by the Government of this country.

Little remains to be said. The noble Viscount, Lord Samuel, concluded by saying he thought I should find difficulty at Geneva. I can only say that I have only once been at Geneva and I hope I shall never go there again. It is full of foreigners and has a most horrible climate. But if ever I do go again I shall wish for no better wicket to bat on than this particular one.


My Lords, may I ask the noble Duke a question arising out of what he has just said? He observed that Moslems have a conscientious scruple against usury. If so, how is the Government's scheme going to attract them? This scheme surely gives them usury? How is it going to overcome their conscientious scruples?


The same question occurred to me. Those who know more than I do assure me that the conscience of some Moslems, like the conscience of some Christians, is somewhat elastic.

4.20 p.m.


My Lords, let me, in the first place, thank the noble Duke very sincerely for his personal references to myself which moved me deeply. I do not propose to add to the lengthy speech with which I detained your Lordships at the beginning of this debate by even two minutes. I would only answer one specific point in the speech of the noble Duke in which he said I had been guilty of a contradiction in saying that after all there were £60,000,000 of deposits and the money to be raised by this loan would be small in comparison, and yet I declared that possibly it might spread like wildfire and attract great numbers of subscribers. I think there is no contradiction at all. The people of Palestine, instead of spending their money and thereby increasing business, put £60,000,000 into the banks, £43,000,000 of that in the last three years. My point was that if this scheme does raise £1,000,000, that would not destroy all the danger of inflation if the people of Palestine choose to spend all the money they had available. It might have some small effect, but if there were no Premium Bonds they would probably be willing to take up at a proper rate of interest the required amount of money, as many of them have subscribed to previous loans. As Sir Austen Chamberlain said in the House of Commons in the speech to which I referred, the more success you have in one direction the more evil you have in another. If this scheme is bad in itself we ought to wish for its failure. I think

Resolved in the negative, and Resolution disagreed to accordingly.

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