COINAGE BILL.

HL Deb 24 October 1946 vol 143 cc671-93

Order of the Day for the Second Reading read.

THE SECRETARY OF STATE FOR INDIA AND BURMA (LORD PETHICK-LAWRENCE)

My Lords, I rise to move the Second Reading of the Coinage Bill. The purpose of this Bill is to effect the removal from the currency of that element of silver which it now contains. The principal reason for the Bill is the need for repaying the United States of America the loan of 88,000,000 ounces of silver which was made during the war and which we are under contract to repay in silver during the next five years. The Bill provides for a coinage of a cupro-nickel alloy to take the place of the existing currency. I propose to say a few very brief words on each one of these topics.

It is a very long time since the intrinsic value of our silver coinage has corresponded with its face value. At any time during the last 130 years if you were to melt down, say, what was called the silver shilling the value of the silver which you would have got as a result would have been substantially less than one shilling's worth. This means that the silver coinage has been essentially a token coinage; that is to say, it depended for its value not upon its intrinsic material but upon the fact that it was to be accepted in certain circumstances as legal tender. As token coinage it did not differ in essence from the paper currency except that, whereas the paper currency is of course intrinsically worth hardly anything at all, the intrinsic value of the coinage we have had has varied from a few pence up to very nearly its face value, and I think even more than that at one time. Up to 1920, except at a time some centuries ago, the silver coinage consisted of a very large proportion of silver. But in 1920 the value of the silver in the silver coinage, owing to the rise in the price of silver, had become so great that for a brief period the intrinsic value of the silver was actually greater than the face value. That being so, Mr. Austen Chamberlain, as he then was, who was the Chancellor of the Exchequer at the time, decided that it was necessary to reduce the amount of silver in the currency, otherwise there would be a tendency for people to melt down the coinage in order to get the greater value the metal had over the face value imprinted on it. He reduced the amount of silver in currency to fifty per cent., and at that figure it has remained ever since, so that the shillings and half-crowns and sixpences which we have today are not silver coins, they are coins made of an alloy of which silver is exactly half. The purpose of this Bill is to change that alloy from a silver alloy to a cupronickel alloy, as I shall describe more particularly a little later on.

Why is it desired by the Government to make this change? The first reason is that silver is becoming steadily dearer at the present time, and as we have to keep on purchasing metal for our expanding so-called silver currency it is a considerable expense to us at the enhanced price to go on buying silver. Broadly speaking, silver, which was 2s, an ounce in 1939, is now 4s. 7½d. or thereabouts per ounce, which you will see is a very considerable rise, and it may well be that the price of silver will go on still further rising above what it is at the present time.

That in itself would be a considerable reason but, as I stated earlier, a more important reason still is the fact that during the war we borrowed 88,000,000 ounces of silver from the United States of America. We entered into contract to repay them during the next five years, and that repayment has now become due. I may add that the Government of India have a similar liability for an even larger amount. If we were to buy all this silver in the open market in order to repay the American loan, in the first place we should have to pay a very considerable price, and it may be an increasing price, because of our increased demand which might well send up the price far above its present figure. In addition to that we should be taking silver away from use in industry, which I understand is a growing one at the present time. I think in those circumstances your Lordships will agree that there is no object in making use of our very limited foreign exchange in order to buy silver and that, much as we may regret it from a sentimental point of view—and I suppose none of us do not regret it—it is a sound proposition for us to get rid of the silver from our currency and make use of an inferior alloy. So silver will go the way of gold and no longer find itself jingling in our pockets or residing in our purses.

So far, I imagine, I shall have, with perhaps one or two exceptions, the general consent and agreement of your Lordships. I now come to a point which, judging by the debates in another place, may give rise to some difference of opinion. I refer to the question as to with what we shall replace the silver alloy which has hitherto formed the substance of our silver currency. As your Lordships know, the proposition in the Bill is that for the present alloy there shall be substituted an alloy which is called cupro-nickel and which consists of three parts of copper and one part of nickel. I want to say straight away that this alloy is a white metal eminently suited for coinage and that the Mint are in a position to set about producing those coins immediately. They cannot come into direct use by the public quite so soon because a little interval will elapse, but as far as the Mint are concerned the minting of those coins can proceed at once and will in fact proceed directly this Bill has been carried into law.

Some criticism has been made of this alloy and it is argued that pure nickel should be used instead. I have no inherent objection to a nickel coinage, but I should explain to your Lordships first of all what difference there is between nickel and cupro-nickel coinage for practical purposes and then give the reasons why the Government have come down for the moment on the side of cupronickel. It is argued by people who have not seen these alloys made into coins that the cupro-nickel alloy is unsuitable for coinage for several reasons. In the first place, it is said that it is dirty and possibly a yellow or a drab colour. That is quite a misunderstanding; the appearance of a cupro-nickel coin is in every way as white and as bright as pure nickel, and in fact the two coins are indistinguishable unless they are very carefully examined one against the other. It is perhaps not generally known that on the other side of the Atlantic the so-called nickel in the United States of America is cupro-nickel. The so-called nickel in Canada, on the other hand, is pure nickel. The United States nickel, which is cupro-nickel, has been in currency ever since 1870 and, so far as I am aware at any rate, there has been no criticism of the United States coin or any suggestion that it is in any way inferior to the Canadian pure nickel coin. I think probably the idea that cupronickel is a yellowish substance exists in the public's mind because they imagine that that is the alloy from which our present twelve-sided threepenny bit is made. That, of course, is entirely incorrect; our twelve-sided threepenny bit is not made of cupro-nickel but of nickel-brass, in which nickel, I think, plays a very small part. As I have already said, cupro-nickel is almost indistinguishable from pure nickel.

It is also said that cupro-nickel is soft and can lose its shape. That is quite untrue. It may not be quite as hard as pure nickel but it is very hard indeed and it is quite impossible to bend it out of shape. It is said that it is easily counterfeited because it melts at a low temperature. That also is quite incorrect. It is true that it melts at a lower temperature than pure nickel but it melts at a temperature 200 degrees above the alloy which forms our present silver currency. It is said that it becomes discoloured and pitted after a time, but there is no evidence whatever of that. As a matter of fact in several countries of the world—notably, as I have mentioned, in the United States—it has been in existence for a long time.

That I think disposes of nearly all the objections which have been raised against the use of cupronickel, but, as I have said, I am not out to defend cupronickel as a better substance than pure nickel from which to make coinage. Why is it then, that the Government are asking in this Bill that in the first instance at any rate cupronickel shall be used? The answer is that we want to get this operation proceeding at once and we could not do that if it were decided to change over to pure nickel. Nickel, as I have already said, requires a higher melting point, and I understand that the present furnaces and the present set-up in the Mint would not be able to produce the disc from which the currency would have to be stamped if nickel were used. If nickel coins were to be used, the only alternatives would be that private firms should be asked to produce them or that, with considerable delay, the furnaces and the other apparatus should be got together and installed, if it were possible, in the present premises, and if that were not possible some additional premises would have to be found. Taking one thing and another, it is exceedingly likely that at least a year's delay would take place before a new nickel coinage could be made.

There is another point to bear in mind. Nickel is harder than cupronickel. The designs which enable the present currency to be cast are of a relief which will suffice for the stamping of cupronickel coins but would not be correct for the stamping of pure nickel. Nickel being so much harder, it is not possible to have so deep a relief and therefore it would be necessary to have new designs in order to provide the lower relief which alone could be efficacious in the case of pure nickel. For those reasons there will be considerable delay. Therefore, the Government have decided, as is stated in this Bill, that cupronickel shall be the coinage which shall immediately replace, or begin to replace, the so-called silver coinage. I hope I need not go into the precise significance of the individual clauses. If there is any point on them it can of course be raised in the course of the discussion or in Committee, if it is thought fit to have a Committee stage.

There is just one clause to which I think I should call attention, and that is Clause 3. In that clause it is proposed that by proclamation it will be possible to vary the material from which the coins will be made. It may be that in years to come use may be made of that clause, which will mean that it will not be necessary to come back to Parliament to obtain sanction for a change. On the other hand, I would remind your Lordships tint that proclamation will be open to what I think is known as a negative Resolution. In other words, a Prayer can be put down against it, and if there should be any reason to disapprove of it and in the opinion of the House that is so, the proclamation will not take effect. With those few words I commend this Bill to your Lordships' House.

Moved, That the Bill be now read 2^a.—(Lord Pethick-Lawrence.)

4.23 p.m.

LORD BALFOUR OF INCHRYE

My Lords, I am sure the whole House is grateful to the noble Lord for the way he has explained this Bill. We on this side of the House admit that in the circumstances the measure is necessary, and therefore we do not oppose its introduction. Notwithstanding that, it is worth thinking a moment that this is indeed a melancholy occasion, because the Government have virtually invited us in this House to go, as it were, to an All-Party funeral for silver. I am sure there are mourners on all sides and in all quarters of the House at the disappearance of silver from our coinage. Although in principle we do not oppose this measure, nevertheless whether the Government's proposals are the best, and whether what the Government propose is the only way to do what they wish, are matters of some difference, some comment, and some question, from myself and other noble Lords on this side of the House.

Although, naturally, the noble Lord as a member of the Administration responsible for the change did not say so, we must admit that this is a warning regarding the state of our finances at the present time. The Bill is a measure indicating the straitened circumstances in which this country is carrying on at the present time. The coinage of this country has in the past been a token of its stability and respectability. It was rather like a well-cut, well-preserved suit in which somebody goes out to do business. We are now donning—and there is no question about it—what is really a shoddy garment of, I am afraid, dubious wearing quality, and it seems to me that it marks one more step towards that utility life into which we are all being led at the present time. We have got utility furniture, we have got utility radios, we have got utility this and utility that, and now we are to have rather a drab, dreary, utility coinage. It is, of course, true that in the technical sense our credit is unimpaired by the change in this coinage, but it must have a bad effect on the ordinary citizens in the other countries of the world with which we are doing our trade. There must be a bad psychological effect as the result of this bad substitution for our age-long silver coinage.

I want to ask the noble Lord if the Government would consider taking particular care to brief our commercial secretaries and our trade representatives in foreign countries as to the true need of this measure, what it is and why we have to introduce it, in order that any bad psychological effect upon the credit of this country may be offset. No one disputes the need to save, nor indeed do we dispute the merit of saving. The Chancellor of the Exchequer said in another place, and the noble Lord has repeated to-day to your Lordships, that the main reason why the Government have introduced this measure is that we have an obligation to repay 88,000,000 ounces of silver to the United States over the next five years; and there is also our reluctance to buy silver at the present enhanced price in order to continue silver in our coinage. We have been compelled, therefore, to take the step with which noble Lords on this side of the House do not disagree.

But I want to question whether we are really doing the best for this country by the substitution of cupro-nickel. The noble Lord said that we are doing this for the present time and that the Government have come down for the moment on the side of cupro-nickel. He also said that he was not out to defend cupronickel, but nevertheless he put up a very good defence for that particular alloy. The noble Lord put up a certain line of defence but, if you will allow me to say so, I think it is arguable whether that defence was either sufficient or really correct in certain respects. It has been generally argued that nickel would, if it could be used, be a more satisfactory material for our coinage than cupro-nickel. Indeed, in another place the Financial Secretary of the Treasury said he very much regretted that the Mint could not cope with the work at the present time, if in fact nickel is the better material. I hope that what I will call the "escape clause"—the noble Lord referred to it twice in his speech, saying "for the present cupro-nickel," and that he had come down on the side of cupro-nickel "for the moment"—means that the Government have not closed their minds to the possibilities of abandoning cupro-nickel as soon as circumstances allow, for a coinage of nickel, which has generally been admitted—and no Government spokesman has tried to deny this—is a more desirable metal.

There are three reasons given for what I will call this second-class decision to which the Government have had to come. The chief reason is the difficulty of minting. Many of us have read the debates in another place, and I would summarize the reason for the difficulties of minting under three headings. Firstly, they have not got adequate building space to put in new machinery; secondly, they have not got the new machinery; and thirdly, if they had the new machinery I understand that the foundations of the building would need modification. The noble Lord said that the Government have to take this step of introducing oupro-nickel at once, and therefore they could not wait for those remedies required for the Mint to be brought into operation. I put it to your Lordships that that explanation is not really enough. The Government have now been in office some eighteen months. As soon as Lease-Lend ended they must have known of the call which was likely to be made on us to repay the 88,000,000 ounces of silver, and surely in a year to a year and a half the Mint, with Government support, might have got the machinery required, and the buildings might have been enlarged or the Mint removed to a more suitable place. Also the foundations might have been put right to such an extent as to allow of putting in such machinery as it might have been possible to install.

It does seem to me that it is a peculiar position with respect to a nationally operated industry that, after eighteen months, when a Government pledged to the maximum degree of nationalization are asked to cope with a particular situation, they declare themselves unable to do so because the industry has not got the fittings, the plant or the necessary foundations. Of course, the Mint has been operated—with great credit, I am sure, to those who have been conducting the operations—under State ownership for a large number of years under various Administrations, some of those being Administrations not so fond of State ownership and nationalization as the present Government are. But it does seem to me to be poor testimony to the policy of industrial nationalization if the present Socialist Government after eighteen months have to admit that their own plant is inadequate to meet a position which they should have foreseen a year ago.

It is due to this delay that there is only one step open to the Government as an alternative to the step which is now to be carried out, and that would be to seek the aid of private enterprise. It is understandable that there would be a certain amount of reluctance on the part of the Government to go to private enterprise, when nationalization appears to have failed, to make arrangements for the production of a nickel coinage, instead of one of cupro-nickel. But the introduction of nickel coinage, instead of cupro-nickel, could be brought about now and the technical difficulties with which the nationalized industry cannot cope could be overcome by going to private enterprise. I cannot help feeling that the circumstances of the present time fit in somewhat conveniently with the Socialist theories of Government ownership and their feeling that in no circumstances would they go to private enterprise. Lord Pethick-Lawrence said that this alloy, cupro-nickel, is just as attractive to look at as nickel, and he made out a case regarding its wearing qualities which I think was rather overdone. I have here two coins which I shall be glad to pass to the noble Lord provided he returns them to me. One of them is of cupro-nickel and was made in 1946. The other is of nickel and was made in 1928. I am quite sure that Lord Pethick-Lawrence or any other noble Lord who looks at these coins will find no difficulty in deciding which of the two is much the better, cleaner, brighter and nicer-looking. It is the coin made in 1928.

Then there is the question of counterfeiting on which the noble Lord touched very lightly. He said that cupro-nickel was really no more likely to be made the subject of counterfeiting than nickel. My information is somewhat to the contrary. I am not a great expert—I do not suppose any of your Lordships are—in this technical business of counterfeiting. But I have taken some trouble to look up the subject—it is always good to be prepared for future possibilities in the years to come when perhaps our currency has been so reduced that it is virtually useless. In the case of coinage made from silver alloys, counterfeits are made in zinc or lead, and they are easily detected. Therefore, the traffic in them is restricted as they can be passed only in limited quantities. Now cupro-scrap, I understand, is fairly easy to obtain and fairly cheap, therefore we can look forward to the possibility of something happening here such as now happens in India.

In India, I am informed, counterfeiting is regarded as a comparatively popular profession into which to put a young man. There is, I am told, a regular black market in counterfeit coinage, the average price being somewhere around 40 per cent, of the value of genuine coinage. Counterfeit cupro-nickel coins are difficult to detect, whereas counterfeits of nickel coinage can be easily detected by the aid of a magnet. I am not suggesting that every citizen should carry a magnet around with him in order to decide what coins that pass through his hands are counterfeit. But it would be quite easy by means of this test for any one in business to find out the genuineness or otherwise of coins if we used nickel coinage. That is a safeguard which we shall not have when we use cupro-nickel coins.

There is another aspect of this upon which the noble Lord did not touch, and that is the aspect relating to Imperial trade. Nickel is an Empire product, and I am informed that approximately a further 12,000 tons of Empire-produced nickel would be absorbed if we had a pure nickel coinage instead of one of cupro-nickel. But I believe that more important than this actual absorption of 12,000 tons of nickel is the possible effect of the Government decision in influencing other countries that are at present on nickel to go on to cupro-nickel, with a consequent bad effect upon an Empire primary product. Another point upon which the noble Lord did not touch was this. There is, I understand, only one refinery for nickel in this country. That refinery is located in South Wales and is at present working to only 50 per cent, of its capacity. Could not the Government have weighed the possibility of giving further employment to this refinery, before coming to their present decision, and so assisting South Wales where the spectre of unemployment is already beginning to show itself? If they had decided in favour of nickel it would have given a substantial measure of assistance to that particular area.

I repeat that we regret this measure but we do not oppose it. Nevertheless we do offer some criticism and before we give this Bill a Second Reading it is of interest to think for a moment just how far along the road we have travelled to a make-believe world or, to use what I believe is now considered the more correct technical term, "a phoney world." This is where we have arrived. If any of your Lordships go to a racecourse—as perhaps some of you sometimes do—you will read on your race programme, possibly, that a race is being run for 2,000 sovereigns—that is to say horses are supposed to be racing for a prize of 2,000 sovereigns. Those sovereigns do not exist. If you search your pockets you may perhaps find a £1 note which bears inscribed upon it a promise that upon presentation £1 will be paid for it. But it is worth only a fraction of £1 to-day. Now we are having a coinage in which shillings and half-crowns will have no silver in them. It is not unnatural that we on the Opposition Benches here should sometimes think of things from the political angle. My only crumb of political comfort in view of the misgivings which we feel lies in the thought that we critics may well be shown to be correct in the years to come and that the repellent aspect of old "cupro" will be a constant reminder to succeeding generations of the Administration that introduced this measure.

4.38 p.m.

LORD RENNELL

My Lords, may I add my lamentations to those of Lord Bantu of Inchrye for I think that this marks a very serious and sad moment in the history of our currency. It is one that we all regret, but in one way, I suppose we must all realize that the step is inevitable in the circumstances to which Lord Pethick-Lawrence has referred. But let us pause for a moment to think at the same time what this means, not only to our people but to other peoples who have regarded our currency as they should, that is as one of the oldest sound currencies in the world. Credit may remain but the currency is gone. That is not a thing which can be without its significance, either here or elsewhere. I hope it does not mean that that sequence of events to which the preacher referred in the book, with which you are probably familiar, must continue. You will remember that about fifteen years ago in this country the golden bowl was broken, when we went off the gold standard; rightly or wrongly—I do not know, and it is irrelevant here. Now, the silver cord is loosed, too. We hope that the sound of the mills will not diminish unduly, or that singing will cease to be heard in the land. But whatever sentimental regrets we may have, we also feel that a decision of this sort has to be taken, together with many others which arise from the position in which we find ourselves as a result of the war.

It is particularly sad to me, having for many years past—and notably during the war years—had a very great deal to do with currencies of all sorts, good, bad and indifferent, and including—among many varieties which were created—currencies referred to by the British Army as "funny money." I also had to deal with one currency which will always be a very happy recollection to me; and this is relevant in this context. I had through my hands what I believe was at the time virtually the only silver reserve possessed by His Majesty's Government, in the form of Maria Thérésa dollars which were held in a currency reserve of which I had charge. It was the last intrinsically valuable silver coin in the world—certainly one of the most beautiful—and one which was minted, shipped and created for war purposes without debasement and without any alteration in value or silver content as compared with what it was when the Maria Thérésa dollar was first made. We felt that in view of the purposes for which we were going to use that coin we were not entitled to cheat anybody of the value which they thought they were receiving. Accordingly, we gave them the full value to which they had been always accustomed.

There is no question here of cheating anybody of value, except that little value which our silver coinage may be said to possess. There are, however, certain areas, and one in particular, where the question of intrinsic value still has a bearing. Some of your Lordships may be aware that the English shilling and two-shilling piece are in current use, and are legal tender, in the Sudan. Moreover, substantial quantities of this coinage were shipped to the Sudan to increase circulation there, which was then very short, owing to our troops and their activity in that part of the world. Is that currency to remain, or are the population of the Sudan also to receive, in place of their shillings and two-shilling pieces, cupronickel or some other alloy? If they are, have steps been taken to prepare them for this change? If not, it will come as a shock, and in any event I fear that it cannot be well received.

I will not enter into the relative merits of cupro-nickel and nickel—a subject with which I am not at all familiar—nor possibly would it be entirely desirable for me to do so, owing to certain business connexions which I have with nickel producers. But I would put in a plea, not so much for nickel, as against cupronickel or experimenting in alloys. Certain institutions in this country have acquired a public reverence which makes it, if not blasphemy then almost blasphemy, to refer to them in disrespectful terms. These institutions are well known to your Lordships—the Royal Mint, the Astronomer Royal, the Brethren of Trinity House. With their long tradition, and past history, they stand for certain standards of production and everything else to which we are accustomed in this country. Can we continue to have the confidence that we should have in the Mint, and its experimentations in alloys for coinage, when some of us have had experience of where those experiments have led?

The use of alloys, other than silver, for coins of a shilling and over, is not new in the British Empire. It will probably be within your Lordships' recollection that after the first Great War it was decided to withdraw the silver shilling from circulation in British West Africa, and to replace it with an alloy coin of about the same size. This was to be a great new coin, cheap to produce and suitable for West African circulation. It was alleged, when it came out, that it would keep its colour and its attractive appearance—an appearance so attractive that some cynics suggested that its shiny brass colour was intended to deceive the West African population into thinking that it was made of gold. That coin might have had that effect, if the alloy had lived up to expectations. But those of your Lordships who have been in West Africa will know how within a very short space of time that coin, even in its improved alloy, loses its colour in the West African climate within—I was going to say a few weeks, but I think a few days would be more correct. No one will know that better than two recent Ministers of State in West Africa.

Apart from this, those of your Lordships who have circulated perhaps a little nearer to the ground than might become your Lordships' dignified positions may also have noticed that that particular alloy discolours in a variety of shades and hues which can only be attributed to the diet of the wearer. Are we certain, my Lords, that this alloy which is to take the place of our silver coinage is guaranteed proof against discoloration from the diet to which we are subject in this country? Do we know that a coin which has been worn in Scotland will have the same colour after a year as a coin worn in Wales? We have the unfortunate experience of having little confidence in these experiments in alloys perpetrated by the finance authorities in this country.

If the example which I have quoted is not sufficient, may I invite your Lordships' attention to the alloy used for making the East African shilling—a very remarkable alloy? I am no metallurgist, and I do not know what the coin is made of, but having dealt with many tons of the currency I know that it has one very peculiar property, apart from discolouration—also, I think, according to the diet of the wearer. That is, that a coin which has been passed as sound and shipped—"having the proper ring" is the technical term, I think—loses that ring by a process which I believe has mystified a number of people. Therefore a coin which has been in circulation for a certain time, although perfectly genuine and perfectly all right in every other way, acquires a dumb sound which makes it, in many respects, indistinguishable from a counterfeit. I had a good deal of trouble with that coin myself in some of my currency transactions for His Majesty's Government. I was told on inquiry that the coins which I had received, which had this property and which had been shipped to me, were no less authentic and no less carefully made than those which preserved their note, and it was not possible to find a reason for the change.

I have given you those two examples. May I give you a third? I think I am right in saving that when shortly after the last war the change in the silver content of our coinage in this country was made, to which the noble Lords, Lord Balfour of Inchrye and Lord Pethick-Lawrence, have referred, an alloy was used which produced a coin looking very like silver when new or in mint condition, but which acquired a yellowish tinge on account of the alloy or the base metal content. I think I am also right in saying that that alloy was subsequently changed for another, which is the one in current use today, and which does preserve a more or less silver colour without getting yellow. Here we have three examples of the use of alloys in British coinage, all of which can only be qualified as wholly unsatisfactory and not creditable to the authorities in this country responsible for their introduction.

On the face of those examples, and with the criticism which has been made in another place, in the Press and in your Lordships' House this afternoon, is it right, so quickly and so definitely, to decide on the use of a cupro-nickel coinage, when the vast majority of other countries which have adopted metal other than silver for their coins have used nickel rather than cupro-nickel, and those who have used cupro-nickel have in certain well-known instances turned to nickel? I know it is no use appealing on sentimental grounds to the flint-hearted, armour plated officials in the Treasury, who feel they have to raise silver to repay this loan. Any appeal on those grounds would obviously be a waste of time and breath. But I appeal for further consideration, even if only for a few weeks or months, before deciding on a step which may be as unsatisfactory as those to which I have referred, and which may have far more unsatisfactory consequences in that the experiment will be made in this country with our silver coinage, and not in the rather more remote parts of the British Colonial Empire.

I cannot help feeling that this decision, brought to your Lordships' House, as it has been, at the end of a Session of Parliament, with only a few days to go, savours a little of some indecent hurry to get a Bill passed before people have had time to organize their opposition to this particular alloy, or have had time to think about better alternatives. My friends—and I know I am speaking for them—would not and could not oppose the grounds on which this Bill has been presented, but, on my own behalf and on behalf of those of your Lordships who feel as I do on this rather important issue, I trust that the Government will give further consideration to the alloy out of which our coinage is to be made, and not now decide on cupro-nickel.

4.55 p.m.

LORD TWEEDSMUIR

My Lords, I shall be extremely brief. In putting the case for pure nickel as against cupronickel, I suppose I must make the usual disclaimer that I have no financial interest in any nickel concern, nor am I ever likely to possess an abundant supply of any coins whatever their content. Noble Lords on the other side of the House have too much good sense, I know, to believe that those who disagree with them must automatically be led to their beliefs by vested interests or by moral corruption or by mere inaccessibility to reason, although I think that some of their sympathizers outside the House incline to that view.

This whole issue has been launched on the country as if there were a sudden emergency. In actual fact, as the noble Lord, Lord Balfour of Inchrye, has pointed out, the Government have had well over one year to consider it. The noble Lord, Lord Pethick-Lawrence, went in great detail into the difficulties of the Royal Mint in making a pure nickel coinage. If he really considers those obstacles so insuperable, is he giving a very good testimonial to the initiative and flexibility of a State-run enterprise? The noble Lord, Lord Pethick-Lawrence, has made his case for the Bill and it was slightly different from that of his colleagues in another place, who did not hesitate to say that pure nickel was essentially a better material for coinage than cupro-nickel.

There is, however, a wider aspect of this matter. As your Lordships are well aware, some ninety per cent, of the world's nickel supplies, by special dispensation of fortune, is to be found in the Dominion of Canada. In peace-time the nickel industry forms a vital part of the whole of Canadian industry. In war, its use to the Empire as a whole is beyond all compare and beyond all price. Therefore anything that benefits the nickel industry benefits Canada, and if nickel in war-time is a vital Imperial interest, surely the maintenance of that industry in peace-time is equally vital? This country had good reason in the war years to be thankful for Canadian nickel, and none of your Lordships in this House today will deny the indebtedness of Britain, and indeed of the Empire as a whole, to the Dominion of Canada: not only to the prowess of her Armed Forces in the common cause, but also to her boundless generosity which continues to this day. Would it not then have been a very practical and appropriate gesture of gratitude to select a nickel coinage, whose superiority over the present cupro-nickel no one seriously disputes?

It has been argued that, if this were done, the amount of nickel that would be used would not materially affect this Canadian industry. I would remind your Lordships that Britain still sets an example in this world in many fields of human activity. Many other countries may be changing their coinage in the near future, and Britain's example would materially affect their choice. The cumulative result of that would confer a very substantial benefit on Canadian industry. It has also been argued that, because the Canadian Government have made no official representation to His Majesty's Government on this matter, Canada is indifferent to this issue. The Canadian Government have a right to believe that Britain will regard her interests without Governmental representation or any official prompting.

This country is famous for quality; our genius is for quality and not quantity. We are famous for the quality of our men, our institutions, and our merchandise. If we embark upon anything that is second-rate, as this cupro-nickel coinage will be second-rate, we appreciably diminish that prestige. Before I sit down I would like most cordially to support the noble Lord, Lord Rennell, that this measure should receive further consideration, and that before we take this step we should review the possibility of using a pure nickel coinage which will give us a coinage of which we can be proud and which will be undimmed not only by the discolouration of a base metal but by any possible implication of ingratitude.

5.01 p.m.

LORD HAWKE

My Lords, may I add to the tale of lamentation we have heard to-night from all quarters? I approach this Bill with very great regret. I deplore this further breach with our tradition, which seems to me just another step from the position we once held as the financial centre of the world. A first-class people should have a first-class coinage. We were once a first-class people, a people of substance, and we had a coinage of substance, a first-class coinage. Now, though we are still a first-class people, a second-class coinage is being imposed upon us by a Government that some think has a second-class record.

I wonder whether this step would really be necessary if the Government were to approach the United States of America for a postponement of this repayment of silver. Surely it cannot be to the interests of the silver bloc in the United States that Britain should demonetize silver in this way. Surely if they knew this step was inevitable if there were no postponement, they would press the Administration to allow a postponement until the price of silver was on a more reasonable basis, as it certainly will be one day. There is another point. We are still a great Oriental power, and it is both our interest and our duty to protect in every way the interests of the teeming millions of the Orient. As your Lordships are aware, the traditional savings of the Orient are in precious metals—gold and silver ornaments: gold for those who can afford it and silver for the rest. Surely nobody can deny that by divorcing ourselves from the silver market for our monetary purposes we are withdrawing a support from that market and thus our support for the value of their savings.

I know the pundits disapprove of investment in precious metals. They call it hoarding—an opprobrious term wonder whether over the last forty years they could have shown these teeming millions a practical investment which would have turned out so well as these hoards of gold and silver have turned out to-day. I do not think so.

Another point we must remember is that it was the sale of hundreds of millions of pounds worth of bullion by the peasants of India which enabled us to maintain the value of the pound in the early 1930's. Members of the Socialist Party on public platforms are particularly prone to perpetrate platitudes on the subject of the raising of the standard of living of the Oriental masses. It is left to a Socialist Chancellor to be the first to pull one prop from under the value of the savings of those same people.

5.6 p.m.

VISCOUNT SWINTON

My Lords, before the noble Lord replies I would like to make an appeal to him and to reinforce what was said by the noble Lord, Lord Rennell, in his extraordinarily interesting speech. I have recently had some responsibility in West Africa and I can assure Lord Pethick-Lawrence that, from the point of view of counterfeiting, he is completely misinformed, at least unless the intelligence of the people of this country is far below the intelligence of the people of West Africa, because counterfeiting in West Africa is one of the staple industries, and it is practised with the most incredible success—in the counterfeiting of these alloys to which my noble friend Lord Rennell has referred. As to the disgusting character of the coin, anybody who has seen it can bear complete witness.

I am not going to reinforce or to repeat all the arguments which have been used—practical, æsthetic, and Imperial. I do not think that the noble Lord himself would wish to deny the force of any one of them. I am sure he is as disgusted at having to introduce this Bill as we are at having to pass it. Now assume that something has to be done here and now, and assume that we have got to avoid the expenditure of buying whatever is the amount of silver that would be required month by month. I understand we are to do this by the process of issuing the new coinage, or replacing the silver coinage by the alloy, by a gradual process. We shall save whatever it is—a million or two dollars—if we make a start on this as soon as possible. But I believe that everybody wishes, if it could be done, that we could have a nickel coinage. I do not want to keep to a silver coinage myself. I have not got that sentiment which I think I should have if I had such a distinguished city connexion as Lord Rennell, and such a rewarding one. I am not going to say keep silver, but I do want to reinforce the plea for nickel on every possible ground.

Why should not we do that? I know the Government really would like to do this just as much as we should. No defence has really been put forward for cupro-nickel as against nickel. If the Mint could do the nickel to-morrow, the Bill would be a Bill to introduce a nickel coinage. Why should the Government not reconsider it, and use private enterprise? I understand that you can get the nickel coinage made by private industry in this country to-morrow. The plant is there; certainly the nickel is there. If that be so, have not the nickel refineries, to which my noble friend refers, in South Wales ample capacity? At any rate, let us be definitely informed whether this is not a possibility. What would it cost us in dollars if we postponed the conversion until such time as either in a private factory or in the Mint nickel coinage could be introduced? We really cannot have the great national industry of the Mint going on as an incompetent institution indefinitely. It ought to be able to do this. Let it be put in a position to do it as soon as may be. In the meantime, let private enterprise make the coinage which is necessary until the Royal Mint can undertake it. Then we should have a coinage which would still be worthy of this country and would fulfil all the desires which everybody in every quarter of the House has expressed.

I would add just this. Having had some experience, if not so wide an experience as the noble Lord, Lord Rennet, I am sure that not only are we going to be disgusted with this thing as the years go on, but that on both practical and aesthetic grounds we shall change and come—and come too late—to a nickel coinage. Then we shall be spending twice over, and spending in the long run a great deal more public money than we should if we now postponed the transaction for a while. I do ask the noble Lord, who I know does not like this any more than we do, whether he cannot give further consideration to the suggestions which have been made from all parts of the House.

5.11 p.m.

LORD PETHICK-LAWRENCE

My Lords, I speak again with the consent of the House, as an answer has been asked for. If facilities for producing nickel coins were identical at the present time with those for producing cupro-nickel I think there is every reason to suppose that it would have been contained in this Bill. We are not taking some terrible step in the dark by proposing to make the coinage of cupro-nickel, and I really do not find any justification for the pessimistic suggestions that have been put forward by the noble Lords who have addressed the House on this Bill.

To take up the point which was made by the noble Viscount who has just sat down, as to whether we could not get a private firm to produce nickel coins, and whether we could not put our pride in our pocket for a little while, the answer is that we could not get a private firm to produce coins that were equally accurate in weight and every particular. They have not got the machinery for doing it with the same accuracy that the Mint can do it, and it would not be a reliable way of going to work. The noble Viscount spoke of the incompetency of the Mint. I do not think that he could have meant that. What I think he was really pursuing was a point made by the noble Lord, Lord Balfour of Inchrye, that the Mint was unable to produce these particular coins at this particular moment. That can hardly be regarded as incompetency. It has been highly competent in the job it has had to undertake up to now. It is just not in a position to do something now which it did not expect to be called upon to do.

VISCOUNT SWINTON

I do not desire at all to cast reflection on the people who run the Mint. Perhaps I should have spoken of the incompetence of the Government. Quite frankly, I do not think it is competence in business if you are not in a position to do the thing which you might be required to do. Whoever is responsible, I do not think they have acted competently. It has been known for a long time, ever since the agreement was made about repaying this silver, that we should have to come on to an alternative currency. Then whoever was responsible should have seen that the Mint had the machinery to give us the coinage which we all want to have. If the noble Lord prefers it, I will say there was incompetence and lack of foresight on the part of the people who should have given those directions to the Mint.

LORD PETHICK-LAWRENCE

I gave way again to the noble Viscount, but I think he will appreciate that he has now come round to the case put by the noble Lord, Lord Balfour of Inchrye. With regard to that I do not agree at all. To begin to produce nickel coins now we would have had to get the apparatus and would have had to deal with all these things. It is not at all correct to say that had this Government, when formed, regarded as a matter of prime importance the production of these nickel coins, we would have got them successfully delivered at the present time. I cannot accept the accusation levelled against us.

With regard to what was said by the noble Lord, Lord Rennell, who quoted a large number of instances where he said coins had gone wrong and were not satisfactory, I cannot, of course, follow all the cases, but with regard to two that have been put forward, the question of Africa—I am not quite sure whether the noble Lord quoted East Africa—

LORD RENNELL

I did, both.

LORD PETHICK-LAWRENCE

Well, East Africa has not got cupro-nickel coinage. I understand that in East Africa there is a retentional quota of silver.

LORD RENNELL

I did not say it was cupro-nickel. I was quoting the cases of three alloys that as alloys for coinage were unsuccessful.

LORD PETHICK-LAWRENCE

That may be true, but I think the impression produced on the House was that the attack of the noble Lord was against cupro-nickel. I am pointing out that a great many of the cases to which he referred are not cupro-nickel at all. When you come to West Africa, which I think was also quoted by one noble Lord, that is not cupro-nickel but nickel-brass. The Government have gone into this matter and have satisfied themselves that cupro-nickel is much more successful than has been suggested. I gave the illustration of what is called the "nickel" in the United States of America, where ever since the year 1870, that is seventy-six years ago, they have continued to make their coins of cupro-nickel. I should have thought that seventy-six years was a pretty good period for experiment. While I retain the position with which I started, that it is quite open to us if in time to come we find it would be better to change over to nickel to take that course, and the Mint can if it is thought desirable at the appropriate time proceed to make this machinery capable of producing nickel coins, for the practical purposes of this Bill, which is getting the silver out of the currency in order to pay back the silver to America, that does not really meet the case at all. I am afraid I cannot agree to hold up the Bill and change over to the production of nickel, which noble Lords seem to think is a practical proposition.

I would only add this one thing in regard to the question of the noble Lord, Lord Balfour of Inchrye, as to whether it is possible to brief representatives abroad, as it were. The first point is that they are in regular receipt of our Hansard, The Times newspaper and various documents which cover the case, and no doubt on a matter of this importance they will acquaint themselves with the position. However, the Foreign Office will consider whether anything special should be done in addition to that so that there shall be no question of the position not being understood.

Lastly, I would make this point. I hope that nothing the noble Lord said will produce in the minds of the outside world the impression that the value of the currency is being depreciated in any way. Whether the pound sterling is able to buy as much as it could buy, or in what proportion its buying value has fallen, has nothing whatever to do with the character of the currency as such. In the step that was taken in going off gold and on to paper, the change was not due to the fact that it was paper instead of gold; it was due to the fact that the paper had not got a gold basis as it had in the days gone by. Precisely the same is true here. No alteration of the metal alloy of which the silver coinage is made has any effect whatever in depreciating or lowering the purchasing power of what is called the silver subsidiary coinage that we have. I think it is important that nothing shall go out from this House that will convey any different impression.

THE MARQUESS OF ABERDEEN AND TEMAIR

Will not the noble Lord say something about the appeals to Canada?

LORD PETHICK-LAWRENCE

We have not been approached by the Canadian Government on this point. After all, what we are doing in this Bill is to increase the use of nickel and what the noble Lords opposite want is for that process to continue on a still greater scale. I do not see that we are doing anything which is offensive in that respect.

On Question, Bill read 2^a, and committed to a Committee of the Whole House.