Lords Sitting of 4 February 1947

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

  PALESTINE: EVACUATION OF BRITISH CIVILIANS.
  VISCOUNT SIMON: My Lords, on behalf of my noble friend Lord Altrincham, who has asked me to apologize for not being here as he is laid low with influenza, I beg to ask His Majesty's Government the following question of which he had given them private Notice: To ask His Majesty's Government whether it is true that all British civilians living in Palestine have been informed that they must leave the country at once or accept internment in a concentration area unless their vocations are considered essential by the Palestine Government, and that British and other journalists have been placed in the unessential categories; and further, what steps will in that event be taken to deal with anti-British propaganda and to prevent the dissemination of all hostile rumours regarding the conduct of our Forces and the action of the Palestine Government?
  THE FIRST LORD OF THE ADMIRALTY (VISCOUNT HALL): My Lords, as the High Commissioner for Palestine announced on February 1, British women and children and certain other British civilians are being evacuated from Palestine so that the Government and the Armed Forces may not be hampered in their task of maintaining law and order. No Government officer is being evacuated except some female teachers who will go to Trans-Jordan temporarily; and members of religious orders, missionaries, doctors and nurses are remaining. I understand that those civilians who remain will be assembled during the next few days into cantonment areas to facilitate the task of safeguarding them, since in the special circumstances in which the co-operation of the Jewish community against terrorism cannot be counted upon it is difficult to take
  348
  adequate measures for their protection elsewhere.
  British journalists were informed of these arrangements and the reasons for them, and advised that if they chose to stay in Palestine and continued to move freely, the Government could not accept responsibility for anything that might happen to them at the hands of the terrorists. There is no question of their being compulsorily evacuated as nonessential. As regards the last part of the question, I can assure the noble Viscount that both His Majesty's Government and the Palestine authorities are fully seized of the vital importance of dealing with anti-British propaganda and preventing the dissemination of any hostile rumours that may arise regarding the conduct of our Forces and the action taken by the Palestine Government.
  LORD STRABOLGI: My Lords, arising out of that answer could the noble Lord give us a little more information about the position of British business men in Palestine, a number of whom have been there for many years? Are they to be compulsorily evacuated, or are they being given the option of remaining at their own risk?
  VISCOUNT HALL: I understand that they have been advised to evacuate.
  LORD STRABOLGI: Suppose they desire to remain, are they allowed to stay at their own risk? In other words, are they treated in the same way as journalists?
  VISCOUNT HALL: I would like to have notice of that question.

  MALTA (RECONSTRUCTION) BILL.
  Brought from the Commons; read 1a; and to be printed.

  REMEDY AGAINST THE CROWN AS OCCUPIER BILL. [H.L.]
  VISCOUNT SIMON: My Lords, I beg leave to introduce a Bill to provide a remedy against the Crown as occupier of premises, analogous to that now existing against a private occupier. I beg to move that the Bill be now read a first time.
  Moved, that the Bill be now read 1a.—(Viscount Simon.)
  On Question, Bill read 1a, and to be printed.

  SUNDAY ENTERTAINMENTS ACT, 1932 (URBAN DISTRICT OF ASHFORD ORDER).
  LORD WALKDEN: My Lords, I beg to move that this Order be approved.
  Moved, That the Order made by the Secretary of State for the Home Department under the Act, for extending Section 1 of the Act to the Urban District of Ashford, and laid before the House on Thursday last, be approved.—(Lord Walkden.)
  On Question, Motion agreed to.

  SUNDAY ENTERTAINMENTS ACT, 1932 (URBAN DISTRICT OF HUCKNALL ORDER).
  LORD WALKDEN: My Lords, I beg to move that this Order be approved.
  Moved, That the Order made by the Secretary of State for the Home Department under the Act, for extending Section 1 of the Act to the Urban District of Hucknall, and laid before the House on Thursday last, be approved.—(Lord Walkden.)
  On Question, Motion agreed to.

  SUNDAY ENTERTAINMENTS ACT, 1932 (URBAN DISTRICT OF RUGELEY ORDER).
  LORD WALKDEN: My Lords, I beg to move that this Order be approved.
  Moved, That the Order made by the Secretary of State for the Home Department under the Act, for extending Section 1 of the Act to the Urban District of Rugeley, and laid before the House on Thursday last, be approved.—(Lord Walkden.)
  On Question, Motion agreed to.

  EXCHANGE CONTROL BILL.
  2.38 p.m.
  Order of the Day for the Second Reading read.
  THE SECRETARY OF STATE FOR INDIA AND BURMA (LORD PETRICK-LAWRENCE): My Lords, this is a complicated and highly technical Bill, and I do not think your Lordships would desire from me a long and detailed speech in its defence on its Second Reading.
  350
  What I will try to do is to lay before your Lordships the main objects and purpose of the Bill, and say a few words about the means by which it is sought to obtain those objects. In the spacious days of the second half of the nineteenth century, when Britain owned capital in almost every inhabited country, when the City of London and the Bank of England were the recognized pivot of the financial structure of nations, and the sterling area was almost synonymous with the civilized world, no one thought, or perhaps needed to think, of exchange control. But with the coming of the twentieth century, and more particularly the two world wars, vast changes have taken place. Britain has lost much of her foreign investments which brought her food and raw materials, and much of her merchant marine has been sunk. She has contracted a large amount of foreign debt. She is no longer the only centre of world finance. It is, moreover, recognized to-day that movements of capital, if unregulated and unchecked, are liable to threaten the financial and economic stability of nations; and of no country is this more true than of our own highly industrialized land.
  In these circumstances, we are compelled to husband our foreign resources with the utmost care, and it has become essential for us to watch over them most fully to prevent their being squandered. During the war the legal basis of exchange control was provided by the Emergency Powers (Defence) Acts under which the Treasury had power to make Regulations. These Regulations were set out, added to and modified during the years 1939 to 1942. For reasons that I have already explained, the need for this control did not end with the war. In the difficult period which lies ahead, this control remains urgently necessary. In 1945, accordingly, powers were taken under the Supplies and Services (Transitional Powers) Act temporarily to continue exchange control; and this Bill now rewrites those powers, dropping those no longer required and adding a few new provisions.
  One of the main reasons for exchange control is the need to stop capital transfers unless they are desirable—for example, to develop an existing and profitable British venture or to assist our export trade. The

  351
  crisis of 1931 was brought on and aggravated by wild movements of capital between financial centres. We must not let that happen again. But in any case we have at present no surplus in the balance of payments out of which we can afford to lock up purchasing power in capital investments abroad. We need our purchasing power for current imports. But a capital transfer does not always show itself with a convenient label round its neck. One can identify a purchase of foreign securities easily enough, but a transfer of funds to a foreign account may masquerade as sales expenses, or as capital for local stocks; while without an adequate control, capital could easily go abroad in the form of marketable goods, looking like desirable exports until it became apparent that the sale proceeds were not coming back here. These and many variants have been tried. The Bill provides adequate powers to deal with them, because it applies a legal control, modified administratively, to all transfers and all exports to destinations outside the sterling area.
  Though we speak of exchange control we are at least as much concerned with sterling control. Sterling in the hands of a non-resident is a demand claim on our current production. We can afford to increase the volume of such claims only if we are getting equivalent current value in the form of necessary imports and the like. I should point out, however, that exchange control as such does not determine the volume of imports. This is part of the import licensing technique, and the import programme is under constant oversight and review. Exchange control sees to it that what we buy we pay for. There has been wide acceptance of the need for this Bill in well-informed quarters. The Chancellor of the Exchequer, in his speech in another place, quoted a number of approving expressions of opinion. Only a few days ago Sir Clarence Sadd, Chairman of the Midland Bank, addressing the Institute of Bankers, used these words:
  "There is a Bill to vest in the Government permanent powers to regulate foreign exchange transactions—a necessary Bill conferring wide and strong powers upon it; it is essential not only for our own country but for all other countries interested in the successful working of the International Monetary Fund."
  It was suggested in another place that a limit should be set on the life of the Bill,
  352
  and an Amendment was moved which would have caused the Bill to expire in the year 1950. This was a most unfortunate date to choose, in view of the obligations under the American and Canadian credits which we have to shoulder as from 1951. But in any case the idea of a time limit is misconceived. It may well be that as the years go by we shall be able to modify and relax many of these controls. Even immediately, we intend by Exemptions Orders to allow many relaxations from the strict text of the Bill. But because we succeed in weathering one financial storm, are we to assume absolute immunity from all external pressure on our exchange resources for all time? When the rain stops and the sun comes out it is reasonable to take down the umbrella and to leave it in the hall-stand, but no reasonable man breaks it up for firewood on the ground that if it happens to rain again he can always buy another. These powers are permanently needed, in reserve but immediately at call. It is, of course, for the Government of the day to justify their use.
  With regard to the mechanics of exchange control, it may interest your Lordships to have the following facts. The pre-war German system of exchange control involved a Government Department to which everything was referred, and which carried 30,000 people on its pay-roll. The Exchange Control division of the Treasury consists of eight people. In the Bank of England, where the central executive decisions are given and the statistics are kept, about 1000 people are so engaged. But the great mass of transactions is handled under delegated powers in the banks and in the stock exchanges; and some essential controls are administered at the ports by Customs and Immigration officers alongside their other duties. All this means not only a considerable economy to the Exchequer but much greater speed and general satisfaction in the administration of the control. In particular, the public and the commercial community benefit by the really admirable services given by the banks to their customers. Under our system they have considerable authority to deal with their customers' exchange requirements, and they combine these agency functions most happily with advice and services on behalf of their customers including the presentation of cases to the central Exchange Control.

  353
  This is a typically British arrangement, of which we can be justly proud.
  Your Lordships will find a summary of the actual provisions of the Bill in the White Paper. To this I need add only a few words to-day. Part I controls gold and foreign exchange, mainly through the banks, and is broadly similar to the present control, though Clause 3, which deals with people who say that gold or foreign currencies in their possession are not held on their own account but for someone else, is new. And so is Clause 4, which is intended to clear up the position about travellers' cheques. Part II is concerned with the control of payments. Clause 5 controls payments in the United Kingdom and operations on bank accounts which are equivalent to payments. Clause 6 controls payments outside the United Kingdom, and Clause 7 controls a class of payments which is really a round-about way of getting value abroad without appearing to remit any money. Part III is concerned with securities and is very much like the existing securities control, except that a number of loopholes have been stopped which the Rouse will not expect to be identified.
  In the main, the Bill retains the provisions of the Treasury Regulations but the important provision giving the Treasury powers compulsorily to buy certain classes of foreign securities at the market price of the day is not retained. This omission does not, however, affect the position of securities already acquired by or placed at the disposal of the Treasury under the Financial Powers (U.S.A. Securities) Act, 1941. The system of control projected by the Bill contains one important new feature, namely, in relation to bearer securities, as usually understood, and all certificates of title to securities for which there is no register, or of which the register is outside the scheduled territories. A large number of such documents were exchanged during the war for registered stock, while others were lodged, to ensure their safety, in an official deposit in Canada. The latter are now available to their owners once again, and it is necessary to institute some form of control over them.
  It is proposed, by the Bill, to introduce in relation to them a safeguard parallel to that which exists in relation to securities on a United Kingdom register, by virtue of the fact that they can usually only be transferred with the co-operation of the
  354
  registrar, who is required to satisfy himself as to the approved nature of the transfer. The form of control devised requires that, after an appointed date, such securities should be lodged with or to the order of an authorized depositary which will, no doubt, generally be a bank. The ownership of such securities will, of course, remain unaffected, and ordinarily income upon them will be collected in the normal way, but the document of title will remain with the approved depositary until it is presented for redemption. It is the intention, by these means, to prevent illicit transfer of such securities, without placing undue restrictions on the owners.
  I think that these are the principal provisions of the Bill to which your Lordships will wish me to call attention at this stage, and I move, therefore, that the Bill be now read a Second time.
  Moved, That the Bill be now read 2a.—(Lord Pethick-Lawrence.)
  2.54 p.m.
  VISCOUNT SIMON: My Lords, we are grateful to the noble Lord, the Secretary of State for India and Burma, for his exposition of the Bill, which, I agree with him, is a most important measure and one which involves a great deal that is exceedingly technical. Like the noble Lord, I will try to avoid dealing with too many details, but I have a challenge to make, for, in the course of his speech, he was pleased to claim that this Bill is a "typically British arrangement." I do not think it will be very difficult to show that, so far from it being typically British, it is an attempt to introduce into the field which it covers arrangements which are very far from being typically British, however much they may be admired by those who have adopted Socialist theories.
  Do not let us have any doubt, at any rate, as to what the main object of the Bill is—and I do not think that we shall have any such doubt. The main object of the Bill is to establish, on a permanent basis, the mechanism of exchange control that functioned—and on the whole, functioned very smoothly—during the war and which at present operates under the Supplies and Services (Transitional Powers) Act, 1945. That is the main object of the Bill, and therefore admittedly what this Bill seeks to do for all time is to transform restrictions devised for the conditions of war, and at present only temporary, into permanent measures

  355
  of official control over a vast field in which, hitherto, there has been room for decisions of individual judgment and enterprise. Nobody will doubt that that makes this a very important measure. How it can be described as "a typically British arrangement," I leave your Lordships to judge.
  The field it covers is so vast that if anybody really attempted in a Second Reading debate to describe it, even in outline, a most lengthy and elaborate explanation would be necessary. It is enough for me to say on the first point that hitherto the Government preference—the pathological preference, I am bound to call it—for Departmental regulation over the exercise of individual rights and judgment, has, for the most part, been expressed in temporary legislation. Take the position as regards food, or petrol, or coupons for clothes and furniture. These powers are now being exercised by the appropriate Government Departments under a temporary Bill, which, as the noble Lord has reminded us, was given at the beginning of this Parliament a life of five years. Nobody, I agree, can say whether at the end of five years we shall want any more regulation of that sort. We are none of us prophets, and it may be that we shall. But common sense dictates that we should not make these provisions permanent measures and then announce to the public, as the noble Lord has done just now: "After all, you will, very likely, find that, certain changes will be made in these permanent arrangements, and we hope that they will be for the better."
  The truth is that the appetite of this Government for government by civil servants, just like the number of civil servants themselves, grows under this Socialist Administration, and on this occasion we are told that nothing but a permanent Bill will do. Not a word of regret is uttered, not a single word to suggest that this is fundamentally and permanently altering the way in which British trade has developed in the past. But this is the Socialist ideal.
  LORD PETHICK-LAWRENCE: Oh, no.—not at all.
  VISCOUNT SIMON: The noble Lord says that it is not the ideal; but, at any rate, the Chancellor of the Exchequer, when he thinks of these things, has "a
  356
  song in his heart." I wish to define exactly the position which we—I think that my noble friends around me are all agreed—take up in regard to this Bill, because I do not wish it to be misunderstood and I am sure that no one would wish to misrepresent it. We do not deny at all the necessity for some time to come, and for an uncertain time to come, of the maintenance of a very considerable measure of exchange control. Nobody who knows anything at all about it will doubt that it is right to keep on (I do not say entirely and I do not criticize details) what may be called a system of exchange control in the present circumstances. The noble Lord, the Secretary of State, gave us some reasons, and they are absolutely convincing reasons: no sensible person would dispute them. How it has come about, whether there may be any blame for it and, if so, where the blame may lie, it is not for the moment material to ask. But the fact is that, eighteen months after the war is over and eighteen months after we have enjoyed the blessings of the present administration, the pound sterling would certainly cut and run if it were not tied by the leg and rigorously confined. I think it is a most lamentable fact.
  "'Tis true 'tis pity;
  And pity 'tis, 'tis true."
  But while the Chancellor of the Exchequer is boasting, as he did the other day, that our credit was never better than now—it is one of his "songs"—our balance of foreign payments is deplorable. I do not dispute that for the time being and for some time to come we must retain a control of which this country in its palmy days never dreamt. No doubt, as the noble Lord opposite states, this is due to the war; but some day we shall recover from some of the effects of the war, so do not let us proceed on the basis that things can never get better. This is a permanent Bill. The noble Lord in the course of his speech spoke of the difficult period which lies ahead. Well, provide for the difficult period. But surely the noble Lord, who knows this side of our national life so well, realizes that it is a very serious and lamentable matter that we should proceed to write into the economic history of this country that, in the view of the Government, there is nothing for it but to have a permanent measure of this sort; that is to say, the clamping on our external trade for all time of the iron hand of the Treasury.

  357
  I do not know how far the noble Lords sitting on the Benches opposite have really studied this Bill. I heard a murmur or two just now. But do they know how many times in this Bill, at the beginning either of a clause or of a subsection, there occur the words: "except with the permission of the Treasury"? They occur twenty-eight times. There are twenty-eight separate provisions in this Bill in which you start with a prohibition which is to last for ever, and you introduce it with the words: "except with the consent of the Treasury". Let me give one or two examples. Take Clause 23, which I especially commend to members of the House who may be interested in the export trade. This is what it provides, and I would ask you to read it:
  "The exportation of goods of any class or description from the United Kingdom to a destination in any such territory as may be prescribed"—
  that means prescribed by the Treasury—
  "is hereby prohibited"—
  it is a prohibition, then, at the will of the Treasury, of the export of goods of any class or description—
  "except with the permission of the Treasury, unless the Commissioners of Customs and Excise are satisfied"—
  I will leave out (1) (a) and take (1) (b)—
  "that the amount of the payment that has been made or is to be made is such as to represent a return for the goods which is in all the circumstances satisfactory in the national interest."
  That is to be a permanent provision of the Bill. We all have the greatest respect for the Commissioners of Customs and Excise. They have plenty to do, but am I to understand that they are to assemble and to ask themselves a question which I should have thought it inconceivable that they were well qualified to answer? This question may be in reference to any class or description of goods, and they are to say to themselves: "Well, now, we cannot allow the export of these goods to the certain territories that may be prescribed without being satisfied that the contract is one which provides for payment which, in all the circumstances, is satisfactory in the national interest." This is indeed national trading. Very respectfully but very firmly, I wish to ask: Does anybody suppose that these gentlemen of the Customs and Excise Department have any qualifications at all to form a judgment on such a matter?
  358
  It is perfectly well known, or it used to be well known in the past, that British subjects sometimes developed trade abroad by selling their products at a very small return, and even at a loss. They did it because they hoped by that means to show the excellence of their goods, to establish a connexion, or to make for custom. I do not know whether the noble Viscount the Leader of the House thinks I am quoting something that does not happen, or that I have not had forty years' commercial experience, but I believe I know something about it. I repeat that it has been a perfectly common thing for exporters in this country to sell their exports abroad at a small return, if they find it necessary, in order to cultivate custom and in order to establish a connexion. I would like to know from those responsible for this Bill whether they really think that Commissioners for Customs and Excise can form a wise judgment as to whether a particular price charged for a product is, in all the circumstances, satisfactory in the national interest.
  I take another example which illustrates that the prohibitions in this Bill are so wide that it is only by the working of a vast amount of Treasury permission that our affairs can be conducted at all. Look at Clause 22. Clause 22 prohibits the exportation from the United Kingdom of any Treasury note or any postal order, except with the permission of the Treasury. I have read the words of the Bill. I take a very simple illustration, and I shall be very grateful if I may know how it is to be dealt with. I gather that my noble friend on the Woolsack may be replying at the end of the debate, and I am sure he would be pleased to tell me how it will be dealt with. There are in this capital, and in many other large towns at the present time, a large number of Irish girls engaged as waitresses or in other similar employment, in receipt of weekly or monthly wages. Like many a good girl in such circumstances—like many Scottish girls certainly—periodically they send a portion of their wages to their mother and father in their own country; in this case, Eire. Eire is not within the United Kingdom, so what does this provision do? By this provision it becomes a criminal offence to export from the United Kingdom any postal order except with the permission of the Treasury.

  359
  Nobody contemplates that the Government will be so foolish as to apply this to the sort of case I have described, but I want to know how the exception is to be made. Is the young woman to go hopefully and call on Mr. Dalton? Is she to ring the front bell of the Treasury? If she knew a little more about it, she would know that as a matter of fact the Treasury do not handle this at all; it is dealt with in the Bank of England. Whether legitimately or illegitimately, the power which is given by the authority of Parliament devolves on other people. There is a clause in this Bill to make that regular. What is this woman, then, to do? It seems to me quite inconceivable that whatever she does should be done by individual application. It may be said that the difficulty will be met by a general and beneficent permission which the Treasury are prepared to grant. How is it going to be done? Is there anything in this Bill about publishing a permission? Under the Food Acts we have had heaps of cases where people have been accused of offences—and I think convicted of offences—although the particular Regulation had never been published. How do you inform the Eire girls in this country that they may send a portion of their wages to their parents in Eire, notwithstanding the terms of this Bill? I only take that instance as one amongst hundreds. What I should like to know from my noble friend, who is always reasonable in these matters—I cannot expect him at the moment to give me detailed answers—is how, under this Bill, are you going to make publicly known the extent of the permission which the Treasury grant?
  There is one other question which I might ask in this connexion. How are you to find out whether the rule is broken? In war-time that was easy enough, and I will tell your Lordships why. During the war period we had a postal censorship. I do not, for one moment accuse the Government of attempting to establish, as part of the permanent rule of the land, the right to open other people's letters. If they tried that I think they would get a pretty quick answer from what remains of the liberty-loving citizenship of this country. Nobody would accept it for a single moment. But how are you going to administer this, in view of the fact—which
  360
  would be admitted at once—that censorship has ceased? I say it is a most serious matter that the Government should seek to fasten upon the country, as part of the permanent economic law of our hitherto free land, the provisions to be found in this Bill. I really cannot accept the explanation which the noble Lord offered, that there is something about this Measure which cannot be made temporary.
  What is there about the Measure which cannot be made temporary? You pass a Measure in the form of a temporary Bill because you are legislating for an emergency. That is not to say you know how long the emergency will last. I do not know and noble Lords on the Government Benches do not know. But the way in which that is overcome—and it is perfectly familiar to every Parliamentarian—is either 'by introducing a new Bill at the end of the temporary period already provided for, or, indeed, if it is thought right, by including it in the Expiring Laws Continuance Bill. There is nothing in the least unusual about that. I do not know whether the noble Lord recalls that the Ballot Act, 1872, was enacted for only six years, and after that it was carried on year after year, for a whole generation, in the Expiring Laws Continuance Act.
  LORD PETHICK-LAWRENCE: It was a misguided way of doing it, too. They would have done much better to put it on the Statute Book.
  VISCOUNT SIMON: The noble Lord's criticism is a very just one, but for the moment his memory has not served him. When we came to have a comprehensive franchise measure, we did put it in the Franchise Act, instead of going on with the old method.
  LORD PETHICK-LAWRENCE: Certainly.
  VISCOUNT SIMON: If, as a result of twenty or thirty years of these conditions, we lived in a country which said: "Well, there is nothing for it; we will have to have this thing for ever," then I agree that we might legislate for it for ever. But why do it now? There is no reason at all except this appetite for securing in every direction Governmental Regulations in preference to free enterprise. A suggestion has been made to explain it—I think that the noble Lord referred to it in a short sentence just now. It is sug-

  361
  gested that the control of what is sometimes called "hot" money is a control which will be needed indefinitely. Well, we are getting into the recesses, the arcana which not everybody easily follows. I understand that by "hot" money is meant speculative movements of short-term capital entered into in order that a speculator may make a quick profit, as distinct from legitimate and useful current transactions. The argument, as given in another place, is: "Well, surely it is not too bad a thing to try to stop this 'hot' money all the time; therefore this Bill must be permanent."
  I am afraid that I regard the argument as puerile. It is quite true that you cannot always distinguish by looking at transactions what is their nature. But there are plenty of ways of dealing with that. At the very worst you can give to the Bank of England, or to whatever is the appropriate body, the right to determine that such and such transactions, and such and such policies, shall be regarded as prohibited "hot" money transactions, unless the opposite is true; but to say that all the inflictions imposed by this Bill on all and sundry are necessary because of the difficulty of defining "hot" money is more than I am able to swallow. It is quite true that there are occasions when it is difficult to distinguish capital movements from current transactions. Every banker in the House knows it, and every Chancellor of the Exchequer knows it. That is not the question. The question is whether this Bill, by conferring on the Treasury powers which can only delay and frustrate currant transactions, does not involve damage to our external trade which would not be compensated for by stopping, or trying to stop, these speculations.
  The noble Lord said just now that the service which the banks have rendered in this matter must have been very gratifying to their customers. But it was an extra burden on the banks. The banks are accustomed to doing things to help their customers, and we are all very grateful to them. Surely he is not going to say that the banks, on that account, are not being put under an extra burden, and the customer is not put under the necessity of making more applications? It is common knowledge in most of the great branches of commerce in this country that under modern conditions a man who wants to export has to get such a
  362
  lot of permissions, fill up so many forms, satisfy so many people, that his whole opportunity may be prejudiced, and he may return heartbroken by the extent to which we are having our affairs administered, not by the Government—because noble Lords opposite are the political chiefs and do not administer our affairs—but by a committee in the Bank of England.
  Mr. Dalton does not administer these things; and there is nobody of any high standing in the Treasury who administers them. They arc, as I say, administered by a Committee in the Bank of England, and the transactions in respect of which application is made are so numerous that it is literally impossible to give a wide discretion to individuals concerned. The result is, as it is in some other connexions, that those who get exemptions are very often those who are most persistent in demanding them.
  I do not for a moment say that those concerned in administering this business are not doing their best, and doing their honest best, but it arises from the nature of the case. Is anybody going to tell me that at this time people who require an extra allowance of petrol are not more likely to get it if they are people who are persistent and whose names are known? Is anybody going to tell me that if you want a "sleeper" from Edinburgh to King's Cross it is not better to be a civil servant than to be a man with an afflicted wife, or a man pursuing an ordinary business? It is really too much, in a House of Parliament where we are entitled to state the truth as it is, and not to be afraid of anybody, to be told that this sort of administration really secures promptly and accurately the best results for everybody.
  I know the view of Mr. Ernest Bevin, which is in strange contradiction with some of these proposals. His ambition, expressed in a heartfelt outburst at the Bournemouth Conference of the Socialist party, was to go abroad, taking with him what he might require—I will not use his words—without a passport. What a foolish wish, to take abroad, without the consent of the Treasury, whatever he might require. Surely, the Government are not going to tell us that Mr. Ernest Bevin is to have shown to him a little favour which other people would not have shown to them if they were going on a holiday? Surely, no one would suggest that an

  363
  Under-Secretary can get a sleeper, when a person who is not known but who has arthritis cannot get one?
  THE SECRETARY OF STATE FOR DOMINION AFFAIRS (VISCOUNT ADDISON): Are you suggesting that?
  VISCOUNT SIMON: I think the way it works is that people who may have very good claims do in fact find that it is the persistent person, or the person who is known, who ultimately gets the concession.
  VISCOUNT ADDISON: This is really a very serious charge against the Civil Service. Do I understand the noble Viscount to suggest that an Under-Secretary gets favour as against a crippled woman?
  VISCOUNT SIMON: What I suggest is this. In point of fact, when you have so many applications it is quite impossible—
  VISCOUNT ADDISON: That is not what you said.
  VISCOUNT SIMON: You must listen. I do not want to say that there is favour for anyone but, as a matter of fact, when these applications are made for exemption they would in most cases be automatically turned down except where people persist. I think that is true. I make no reflection against anybody, for it may be that the person who applies has a perfectly good case. I am confident, however, that a number of other people who have equally good cases do not stand an equally good chance. That is not because of favouritism, but because the system is one by which the exercise of the power contained in the words "except with the permission of the Treasury "involves handling, after some fashion, tens of thousands of cases, in which really the only thing the authorities can do in any but the cases specially called to their attention is to say: "Application refused." And they do say so.
  I submit that the observations I have made show that this ought to be a temporary measure. It ought to be liable to extension, or amendment, or expiry after a few years. It is said that the financial regulations worked very well in the war. So they did, and if I may say so I take that as a small compliment. They were
  364
  all worked out before the war began. They were the result of earnest consideration by people then at the Treasury, and especially by the permanent officials. Persons who might be interested in different ways were consulted, and the financial regulations were pigeon-holed ready to be produced. They worked well for another reason. Not only was there a postal censorship at that time—and I take it that there is not now—but at that time everybody was quite prepared to put up with the restrictions involved. The whole population were prepared to do so in support of the effort for winning the war. I have no doubt that these regulations for a certain number of years may well receive a similar support, and for an analogous reason. I recognize what a very hard task the Government have, but what I will not accept is the proposition that the case made out for making this law permanent is a "typically British arrangement."
  LORD PETHICK-LAWRENCE: I never said that. You are quite mistaken. You have attributed that to me three times.
  VISCOUNT SIMON: I thought I heard you aright.
  LORD PETHICK-LAWRENCE: I did not apply it in the way in which the noble Viscount has three times charged me with doing. That is all.
  VISCOUNT SIMON: I am glad to be corrected. I thought what I was told was that it was considered that this was a typically British arrangement.
  LORD PETHICK-LAWRENCE: I never said that.
  VISCOUNT SIMON: Then I apologize to the noble Lord and I wish he had explained it to me on the first occasion. I have not the slightest desire to say anything which is not entirely fair. At any rate, we may agree that it is not a typically British arrangement. It is a gross departure from the methods by which British trade has hitherto been worked. I think we ought to deplore the necessity for the Bill. I admit that at present regulations of this sort are absolutely necessary, but to put it upon the Statute Book as a permanent measure is unnecessary and humiliating to the country.
  3.29 p.m.
  LORD RENNELL: My Lords, I wish in advance to say that if I appear to support this Bill, as I propose to do, it is for reasons which I shall adduce in the latter part of what I say, and not because I like the Bill for its own sake, or for its appearance, or for anything to do with it. However, I will come to that in due course. In order to get the right perspective about this Bill, it is perhaps necessary to refer quite briefly to its antecedents. As is well known to your Lordships, it is not the fact that exchange control owes its origin to this war. There may be some delight on one side of the House or the other if I remind your Lordships of the fact that in recent years exchange control was introduced for the first time in the year 1931, when a very rigid Order was made under the Gold Standard (Amendment) Act of 1931. That Order stated:
  "The Lords Commissioners of His Majestys Treasury, pursuant to Section 1 … hereby order that until further notice the purchase of foreign exchange and the transfer of funds with the object of acquiring such foreign exchange directly or indirectly by British subjects resident in the United Kingdom"—
  the same phrase which has been used throughout our war Orders—
  "shall be prohibited except for the purpose of financing normal trade requirements.…"
  That Order, in point of historical fact, was signed by that man of great and good memory, Philip Snowden.
  We find the second main exchange control provision enacted (not in war time, as that Order was not enacted in war time), by this Labour Government. I think it is fair to say that the Exchange Control Regulations which will be superseded by this Bill, if and when it becomes an Act—as I feel sure it will—were the outcome of experience and of growth. As one loophole after another had to be stopped in time of war, a new administrative device was sought to stop it. All those Orders and Regulations (with one exception to which the noble Lord, Lord Pethick-Lawrence, referred, and which has been dropped) find their place in this Bill, together with one or two other provisions—notably the one on securities—designed to stop up certain additional loopholes which have been created by the ingenuity of man. I have no objection to those Regulations at all. I think they are necessary to proper administration, and if they did not find their place in a Bill they
  366
  would no doubt find their place in an Order or some amending Rule.
  What were the reasons for those Orders in time of war? The reasons fall into two categories. In the first place there was the necessity for conserving our foreign exchange resources in order to prosecute the war, and in the second place—and perhaps no less important—there was the necessity to administer the Trading with the Enemy Regulations and contraband control and to further the policy of our Government in time of war in trading with neutral countries under the provisions of the Black, White and Grey Lists. May I add parenthetically that those were the subject of Regulations, as your Lordships know. The Statutory Black List was published and made known to the world, and it made it an offence for persons in this country to trade with firms or persons whose names had been declared in it. We submitted to that in order to conserve our resources to prosecute the war and also to further the policy of His Majesty's Government in dealing with neutral and other countries. With the termination of the war the second of those two groups of motives—the statutory Black List, Grey List and White List—has in fact been swept away, except for certain surviving elements in regard to investigations into the activities of certain neutral firms which may have acted as a cover or a cloak for enemy transactions. At least, we have been told it has been swept away, but I want to revert to that point in a minute.
  When we come to the Bill itself, it behoves us to inquire what are the motives (if we do not question, as I do not, the necessity for it) which underlie the presentation of the Bill in this form at this moment, instead of continuing for several years, as I am advised we could have continued, the existing Rules and Regulations under which we are administered now in these respects. The precise moment is one which I think has a very considerable bearing on the whole issue, and it is the one thing which makes me hesitate to give the Bill the support which I would otherwise give to it. I personally question the opportuneness of presenting at this moment so drastic, so Draconian, a Bill which may have the effect of frightening people about our position in this country. May I observe that exchange control had to be introduced in 1931 precisely on account of the fear which had been engendered abroad and by people here about

  367
  what was happening in this country. I would not like to see a repetition of that and I am therefore inclined to question the wisdom of introducing this Bill at this moment.
  That must lead me to examine briefly what are the reasons which have induced His Majesty's Government, and the Chancellor of the Exchequer in particular, to do this now. It seems to me there may be three reasons, the first of which is a legislative reason near and dear to the heart of every administrator—namely, to have the powers under which he and his officers act tidily and concisely in one instrument instead of having to deal with a problem that arises under one of several Orders, amending Orders, exceptions and so on. It is obviously tempting to have the legislation nice and tidy in one Act. It has been alleged that that was the Chancellor's motive, and indeed something he said in another place lends a certain amount of colour to that allegation: I refer to the occasion when he said the powers granted under this Bill gave him great pleasure because he hoped to be able to have a better hook with which to catch the crook. There is no doubt at all that it will facilitate the catching of crooks, but I wonder whether the consequences of this Bill could be justified solely by being able to catch a few more crooks. In fact it is very often better to let a few crooks go and to let honest people get on with their work rather than take too much trouble in catching the few crooks.
  Moreover, I cannot believe that in the pressure of legislation with which this Parliament is faced any responsible Minister would have sought to introduce a Bill which must have a good deal of repercussion and echo elsewhere, and to take up the time of your Lordships' House and another place solely for the purpose of having a tidy piece of legislation. That cannot be the reason; it would be too paltry. I cannot accept that, and I do not think anyone in your Lordships' House would seriously suggest that that was the reason. The second reason is one which, as your Lordships on the other side of the House will realize, has been made much of in certain quarters—namely, that there is underlying this Bill some hidden motive, some desire to obtain greater powers to do certain things in the way of furthering a policy which it is perhaps not desirable to say too much about: in other words, to
  368
  have hidden powers. I cannot accept that either. It is, quite frankly, obviously nonsense. No responsible person acts in that way, and it is cheap, I think, to accuse the Chancellor, whether you like his policy or whether you do not, of being motivated by a reason of that sort.
  There remains, therefore, the only other reason—the third reason—which may have prompted him to introduce this Bill in another place at this time, and why we are discussing it here to-day. That is, that the situation warrants it. There are a few more powers assumed in this Bill than are contained in the Orders. They are very few, but broadly speaking they are much the same. It appears to be urgent to get this Bill through now, and without the time limit which has been urged by the noble and learned Viscount who has just sat down, and also by others in another place. The Government, in its wisdom, have not seen fit to insert a time limit. I take it that there must be reasons both for the decision to introduce the Bill now and for the decision to refuse to insert a time limit. I am, therefore, driven back to the unfortunate and to me unhappy conclusion that the economic situation of this country is so serious that we cannot afford to delay another year or two years before granting to the Government permanent powers of this sort.
  If that conclusion is right it is a very serious one, and I cannot but feel that that is the real motive. Would it be impertinent to describe as jeremiads the statements which have come from the more senior Ministers in His Majesty's Government in recent weeks? Scarcely a week passes without our being told that the economic situation of this country is really very serious indeed, and the White Paper which was published the week before last did nothing to alleviate that feeling. No doubt we shall have the opportunity of discussing that White Paper in perhaps a month's time, but I am left with the inescapable conclusion that the Government feel that they must have this Bill now because things are serious. If that is what they mean, then I accept it. Those of us who sit on the outside cannot know as much as those who are sitting inside, and if the Government put forward those reasons then they are good enough reasons for me to accept and, in accepting them, to accept also the Bill which is part and parcel of the machinery for dealing with the situation.

  369
  Moreover, if this constitutes an alarm signal, a call of alarm to all concerned, then I say that, whether we like the Bill or not, we must support it. That is why I support it, although I do not like it. I conclude that the situation is bad enough, as expressed by this act of policy and as expressed by His Majesty's Ministers, to make us accept this Bill in its present form, now. If that is so, then I can quite see why there cannot be a time limit of two, three, four or five years, because obviously we shall not get out of a situation like that so quickly as to be able to set a time limit. Such being the case, much as we dislike the Bill, we must accept it, substantially in its present form, subject to a few Amendments and improvements which I hope will be made in the course of its passage through your Lordships' House. The provisions for dealing with escapees, with the ingenuity of people's minds in evading exchange control, I regard, by and large, as necessary. And I do not believe that the powers which have been taken, and the complicated provisions which are contained in the Bill, will in fact create more burden than the exchange Regulations which we have had for the last six years have created and are creating.
  Here, I must express some difference of opinion with the noble and learned Viscount who has just sat down. If I understood rightly the noble Lord who introduced this Bill, what he meant by referring to a "typically British arrangement" was the arrangement by which this body of exchange Regulations has been administered; and there I agree with him entirely. It is a typically British arrangement, because it has been administered by professional people for, and on behalf of, whichever Government has been in power, and not by a body of civil servants. Because it has been so administered I think I am entitled to claim, on behalf of all those of us who know something about it, that it has been well administered from the point of view of the public, and the small person has had the same attention as the large person—the same attention that he would have had as a customer of a bank at any time. I do not believe that the persistent person has had advantage over the widow and the old man, if only because they have gone to the people to whom they have been used to going—the bank officers who have dealt with their private affairs in the
  370
  past and who deal with their exchange troubles to-day.
  That is a typically British arrangement, and we all hope that it will continue indefinitely. If it cannot, I can only say that I do not believe that any other series of complicated Regulations—and they are extremely complicated, and necessarily so—have formed the subject of less complaint on the part of the public affected by them. The credit for that is due to the small body of civil servants and officers of the Bank of England who have built up their experience of regulations over a period of years, and who, in practically every case—and very few complaints have come to my knowledge—have earned nothing but praise from the people with whom they have had contact.
  There are, however, two points in the Bill with which I find myself in profound disagreement, although not because I disagree with the principles or the application of the Bill as a whole. At the beginning of my remarks I referred to one of the reasons for exchange control during the war—namely, to administer the Black List, the White List, and the Contraband Control and Trading with the Enemy Regulations. There is one clause in this Bill to which I take the greatest possible exception because it appears to me to connote a return to the gravest practices which we thought finished with the war and which created so much ill feeling, not only in this country but outside it. I refer in particular to Clause 30, which, briefly, provides that any person in the United Kingdom shall do what the Treasury want in regard to a company or person abroad without, so far as I can see, any reason being given and without a Statutory List to announce who are those people abroad who are so to be treated.
  Anyone in this country may be required so to conform his actions as regards a foreign company as to cause that company to comply with any Treasury requirements, or to remove any obstacle to a foreign company complying with any of the requirements, or to render it in any respect more probable that the foreign company will comply with any of the Treasury's requirements. This is singularly near the Black and Grey List practices of the time of war, and to my mind is intolerable in time of peace. It is calculated to create the maximum amount of difficulty to foreign concerns and

  371
  notably to concerns across the Atlantic. I trust that on the Committee stage your Lordships will think it fit to take that clause into very serious consideration. To my mind it represents the greatest possible danger.
  My second criticism is perhaps of lesser importance but it is one which affects us all personally. I refer to Clause 22, to which reference has already been made and to part of which the noble and learned Viscount in particular referred. The assumption of powers by the Treasury under subsection (1) (f) of Clause 22 is really vital. It affects you and me—all your Lordships—when we go abroad. In fact, it gives the Treasury powers to remove our boots or socks or trousers out of our bags—I particularly do not say shirts, because the Treasury have already removed mine, and perhaps your Lordships' as well! Under this clause the Treasury have power to remove everything else. If there is to be an export prohibition on articles or a single class of goods, for heaven's sake let us have the appropriate prohibition, and do not give the Treasury freedom to say: "You must not take your boots abroad; leave them here," or "You must not take your watch or watch-chain"—that of course, is gold and the matter is much more serious. Powers of this sort are calculated to bring what is otherwise a complicated but extremely competent piece of legislation into disrepute, and I would like to see them dropped.
  In conclusion, I can only repeat what I have already said. I do not like the Bill and I do not like the reason I have given why this Bill has been presented. I think it is a pity that the Bill was presented at this time, because if the situation is as bad as it appears to be the presentation of this measure is not going to improve it. It is going to create a lack of confidence. I cannot help thinking that it is a mistake that it was presented and adopted in another place. However, the mistake has been made, and those who are responsible will no doubt answer for it. Having made those observations on the Bill which is now before you, I trust your Lordships will, as I will, support its Second Reading.
  3.55 p.m.
  VISCOUNT BRIDGEMAN: My Lords, as the noble Lord who introduced this Bill said, it is a very complicated and
  372
  technical document, but I do not think that need really influence us very much on Second Reading, because the fact of the matter is, that for the purposes of Second Reading the whole matter might be summed up, as the 1931 Order was summed up, in a short sentence: No one is to carry out any foreign exchange transaction without the permission of the Treasury. That is really the situation in which we shall find ourselves under this Bill.
  I do not think there is anybody in this House who does not reluctantly agree that the continuance of exchange control is necessary at the present time. I wonder, however, whether I can go so far as the noble Lord, Lord Rennell, who justified it by saying that the economic situation may be grave and therefore we must have the Bill. I should much prefer to go with my noble and learned friend Viscount Simon, who said that there should be a time limit to the Bill or that exchange control should be continued under the Expiring Laws Continuance Act. However, that is as it may be.
  I would question one remark which, if I heard rightly, fell from the lips of the noble Lord who moved the Second Reading. He gave us to suppose that the banks were largely in favour of this Bill. I would not dispute that they are, like us, accepting an unavoidable necessity, but I have here the speech of a prominent banker which I think better represents the feelings of the banking world. It states that while control necessarily must continue for a long time, it is to be hoped that we should retain as an object of policy the establishment of free exchanges. I do not believe that the banks have gone any further in support of His Majesty's Government than is indicated in the words I have just quoted.
  When we come to look at this Bill, I think we should be very brave to give it a Second Reading. We may have to be brave because, judging from the text of the Bill, it is a matter of much conjecture what is really going to happen when we pass it. In one sense, I know it is conjecture, because a number of regulations will be carried on which have been in force under the Defence (Finance) Regulations, and so forth. It is a conjecture especially as to what effect the Bill is going to have on foreign trade. The present Defence (Finance) Regula-

  373
  tions, although they have been modified, nearly all date from war-time. As my noble friend Lord Rennell said just now, they were then operated for two purposes. We were not concerned then, as His Majesty's Government are rightly concerned now, to stimulate the export trade; we were more concerned to restrict the import of anything that was not absolutely necessary. But now the case is entirely altered.
  In White Papers and in many speeches His Majesty's Government have made it clear that the promotion of foreign trade is vital to recovery. We all agree with that. But the promotion of foreign trade will be very largely affected in a thousand small ways by the manner in which the powers given to the Treasury in this Bill are implemented. It is not as if foreign trade were entirely a matter of exports; we must have a certain amount of raw and partly-finished materials from other countries. We may have to stimulate these essential imports by foreign investment, and so on, and we may have to give admission to foreign experts and others so that we may get the value of their services in stimulating the production of goods for export in this country. I do not know whether your Lordships all realize—many of you do—the enormous extent to which we benefited in the ten years before the war by the arrival of foreign experts, with their skill and even with their money, and how much business and profit they brought to the United Kingdom from Central Europe and from elsewhere. All I can say is that it is ten times less likely that these foreign experts will come into this country in such numbers now, because once they come in here they stand no chance of being able to get their money out again, even if they get themselves out. So we are running a very great risk, in this Bill, of freezing up the pipes of foreign trade. The seizing up, or freezing up, of pipes is, no doubt, a matter of which many of the domestically-minded among your Lordships will be thinking just now.
  Those who were acquainted with the German financial machine before the last war know how much that machine was slowed down by controls, very much of this kind, that were applied in Germany under the Nazi régime. It was not quite the same thing, of course, and I do not want to press the analogy too far. Not only did the Nazis impose controls but
  374
  they also removed all Jews and all anti-Nazis from their particular world of finance and commerce. Their loss was largely our gain. But in adopting these provisions in this Bill as a permanent addition to the Statute Book, we must face the fact that we are not stimulating initiative and enterprise but are reducing the likelihood that enterprise and initiative will restore and reconquer the ground which has been lost, perforce, during the war. That makes me ask once again, as so many noble Lords have asked in this debate, is it really the considered policy of His Majesty's Government that we must go on with controls for ever, or do they, like some noble Lords on these Benches, look forward to a time when we can have a free exchange? If not, why do they not?
  I am now going to turn for one moment to some of the clauses of the Bill. I would like your Lordships to look, for a moment, at Clause 42, by which it is proposed to give the Treasury the power permanently to decide who is to be allowed to come into the foreign exchange business and which defines the meaning of "authorised dealer" and "authorised depositary." Is it not reasonable to ask what is going to be the size of that closed shop, and how difficult is it going to be for any new entrant to get into the foreign exchange market? Then again, look at Clause 36 (5). It gives power for the revocation of any Order made under this Act by a subsequent Order, apparently without any notice being given and subject only to a negative resolution by Parliament.
  Clause 37 (4) gives the power to delegate. How is the power to delegate going to be used? It seems that, under this Bill, it can be used—I do not know whether it will be so used—to delegate powers to certain financial firms, to the exclusion of their rivals. That, I think, is a point which we shall have to watch very carefully. Then Clause 41 (2) gives power to decide as to the residence of individuals, and, as usual, there is no appeal. Finally, I could not associate myself more strongly than I do with what the noble Lord, Lord Rennell, said about foreign companies. It is quite inconceivable, to my mind, that companies or individuals here should be put under the necessity of having to obey Treasury orders in this way. The order might perhaps be a general one, absolutely inappropriate or, what is still more likely,

  375
  absolutely impossible to carry out in the circumstances prevailing in a foreign country. What relations will be like between British parent companies and foreign subsidiaries once it is known that we are no longer free agents but liable at any time to accept orders from the Treasury, I tremble to think. So, how far do we know what we are really committing ourselves to when passing this Bill?
  Of course we shall be told, as we have already been told, that the Treasury have been very reasonable and that they have operated the controls, so far, in a typically British manner. No one, I think, has accused anybody—any paid official, that is—who has had the duty of operating the regulations up to now, of any unfairness. What one does doubt is whether, by their mere conscientiousness, the result will not be to slow up or forestall transactions which have been undertaken as a private risk by private persons in the interests of their country. Everybody knows, as Lord Rennell has said, how important it is, once you have official control, to stop up all loopholes and to try to prevent evasion. You will always get a certain number of evasions. But, far more important, to my mind, is the point that you cannot chase the crooks without chasing everybody else; and the result will be that the whole of the City of London, and everywhere else, instead of getting on with the job of creating wealth and stimulating foreign trade, will be running round to the Treasury to know whether or not, in certain conditions, they will be allowed to do this or that which is what is happening every day of the week.
  One other word of regret which I do not think ought to go unspoken in this House, relates to the fact that the publication of the First Schedule puts off still further the day when there can be freedom of trade between this country and the Dominion of Canada. I know that that is part of a much wider subject, but, none the less, I think we should be wrong if we did not record the point in this debate. To sum up, we on these Benches agree, I am sure, that a Bill is regrettably necessary in the situation. But I myself have heard nothing which leads me to think that the situation could not have been dealt with by a temporary measure. I admit that I am a bad judge because, amongst other things, I have been quite incapable,
  376
  merely by reading this Bill, of discovering what is going to happen and what is not. Therefore, I hope that if this Bill passes His Majesty's Government will take the earliest opportunity of explaining as clearly as possible what orders the Treasury are going to make, and that we, in your Lordships' House, will not be placed in the position of having this afternoon, and in the following debates, handed out a blank cheque. Lastly, I hope the Government will—as I know they will—relate this matter to the promotion of foreign trade, a matter which is equally near their hearts, because one cannot have a situation like that of a jockey whipping his horse with one hand and pulling it in with the other.
  4.8 p.m.
  LORD HAWKE: My Lords, the final words of the noble Viscount who has just sat down give me an opening to remind your Lordships of some words which were spoken by the noble Lord, Lord Pethick-Lawrence, in moving the Second Reading of this Bill. He said that the Bill is going to help us to be able to pay for what we buy. I do not think it would be quite accurate to describe it in those words. There is nothing in this Bill to help us to pay for anything. Paying is a positive action; this Bill is entirely negative. If the noble Lord had used the word "borrow" instead of "pay," it would have been, I think, more accurate. I do not see how we are going to pay for many of the transactions in which we are indulging in these days. It seems to me quite extraordinary that this Bill should ever have come before Parliament. These powers for exchange control exist, and I should have thought that a wise Government would have used them as long as necessary and said as little about it as possible. I think that there has been a serious lack of co-ordination between the planners and the publicity department. I cannot imagine a worse advertisement for Socialism than this Bill.
  It can, of course, be argued: "We are doing all this now; why should we not tidy it up and put it into a permanent form?" But that is an attitude which, I think, betrays a great lack of knowledge of human nature. Confidence is everything in this world, and this Bill breathes lack of confidence. Never was it so important that people abroad should have confidence in Britain and in sterling as

  377
  to-day. In July of this year we are committed to exchange on demand for other currencies the balances of sterling resulting from current transactions. It would be really inconvenient if everybody who had such a balance took advantage of it, and I can see nothing in this Bill to encourage them to refrain from so doing, but rather the reverse. This is true not only of people outside the scheduled territories or, as I prefer to call it, the sterling area; it applies also to people within it. When they see that their countries can be expelled from the sterling area by a Treasury order which does not require the prior approval of Parliament they may well say: "Let us not run too big a balance in London, just in case of accidents."
  So much for people abroad; what about our own people? They may well say: "The Government have treated our savings with savagery; surely this permanent legislation means that savagery is in store for ever, and if that is the case ought we not to try and remove some money into a place where it will be safe from depredations, if we can?" If they come to that frame of mind they will be tempted to break the law. There are also (as the noble Viscount, Lord Bridge-man, said) many people in this country who fled from persecution abroad—persecution which was always coincident with exchange regulations. The more nervous of them may take fright at the coincidence, and may think that it is time to get out and take their money with them. If they do so, we shall lose their skill and the number of our traducers abroad will be increased. If they decide to take their money away, and they cannot do it by fair means, they will certainly be tempted to break the law. The Government may say: "All these transactions will be illegal, and we shall catch these people," but exchange regulations have been in force for many years all over the world, and people who wanted to get their money out of a country at some sacrifice generally seem to have been able to do it. That is the effect on individuals, as I see it.
  The noble Viscount, Lord Simon, brought to your Lordships' attention the case of exports, with which he has had a long connexion in his career at the Bar. I would dike to bring it again to your notice from the point of view of a mer-
  378
  chant, because I have been a merchant. I can assure your Lordships that his statement—which I believe met with some doubt—that goods were frequently sold at a loss in order to establish a brand, and so on, was absolutely and perfectly true. I defy any Customs officer in the world to be able to judge, except on a very few commodities indeed, within a few per cent. whether the goods are being invoiced at the right price or not. It is quite impossible. Further, I am not at all sure that in Clause 23 (1) (b) the unfortunate Customs officer does not get involved in deciding whether the currency in which the goods are invoiced is the one most suitable in the national interest. If this is so, we are in very deep waters. How difficult is it for His Majesty's Government to agree what is the national interest; and how seldom do we agree with them! To expect a poor Customs officer (and he will be a junior) to make this decision is, as the noble Viscount, Lord Simon, pointed out, quite ludicrous.
  Under Clause 24 of the Bill it will become an offence, without seeking Treasury approval, to do anything towards letting off a debtor. That means that if any of your Lordships happens to win £5 from a Frenchman at bridge, he must seek Treasury 'permission to refrain from reminding the Frenchman of this debt at suitable intervals. I know that that is an absurd instance, but the doctrine of de minimus seems to be a very dangerous one. If you creat offences right and left who is to say when the border is crossed? In certain less happy countries than ours these trifling types of offences often contribute very considerably to the emoluments of minor officials.
  Clause 30 has met with considerable obloquy from all speakers, and I can only join in condemning it. The position of British capital abroad is already sufficiently delicate, and to publish to the world that the Treasury can require a company to influence its wholly-owned subsidiary abroad would be sufficiently tactless; but when one considers the qualifications in the Second Schedule which render a foreign company susceptible to this attention of the British Treasury one wonders where sovereignty begins and ends. One fears, in fact, that Governments, whether Dominion, Colonial or foreign, may think twice in future about allowing British companies to form sub-

  379
  sidiaries on their soil when the British Treasury have powers of this nature in the background. Would it not have been much better to leave these things in some Order where, no doubt, they quietly lurk, and say nothing about them? Clause 29 seems to provide an anomaly which, as a non-lawyer, I put forward with some diffidence in the hope that I shall be told I am raising an unnecessary hare. Under that clause, as I see it, if any one makes a settlement in this country, other than by Will, then no one can ever benefit from it if he happened to reside outside the sterling area at the time of the settlement.
  VISCOUNT SIMON: Except with the permission of the Treasury.
  LORD HAWKE: And unless his name was brought to the notice of the Treasury at that time, and the Treasury gave permission. If that is so, this is an instance that might arise. One of your Lordships might settle £1,000 on an unmarried daughter, half to go to her husband on marriage. If she had the fortune to win a Canadian as a husband, so far as I can see that Canadian would never be likely to benefit. To return from the particular to the general, I am perfectly certain that the fact of this being permanent legislation will increase the number of people wishing to break the law. They will have a bigger stake to play for, and will be proportionately the more desperate. They will be escaping not from a short term but from life imprisonment; thus the volume of work thrown on an already overburdened Civil Service will increase.
  I do not believe that this Bill can be enforced without a postal censorship, and I am sure that the Treasury, or some agency of theirs, will before long require a permanent pensionable staff of "narks" and "stool pigeons," and we shall probably have the usual wrangle between rival trade unions for their allegiance. Even the efforts of this army will, I think, be in vain. In the Daily Telegraph some months ago it was alleged that Scotland Yard believed that the proceeds of most of the recent jewel robberies had left this country and only a negligible amount had been traced. If this is true, and it sounds credible, how on earth is it possible to prevent widespread evasion of the provisions of this Bill? I do not pretend to know the legal
  380
  loopholes, but I am perfectly certain there will be some. We shall find that currency brokers who specialize in evasion will set up and probably operate from countries in the sterling area, where Governments will probably not be quite so zealous in "crook" hunting as we are in this country; and that, of course, will make for bad blood between the different Governments in the sterling areas.
  I hope that the Government will make the best of a bad job and allow individuals to take away their money as freely as possible, because, by so doing, they will encourage it to stay. Perhaps it is ton much to ask them to follow a policy which will attract capital to this country, but, until they do so, sterling will remain sick. There are not many currencies to-day which are devoid of some risk or another, and it would not take much to make sterling able to look them all in the face again. A bit more coal and a little less dogma would probably do the trick. I do not know whether the Government really want London to be again a great financial centre. The precedents are mixed. Where we had the finest market in the world, the Liverpool Cotton Market, we are throwing it away; where, on the other hand, the Germans had the fur market of the world at Leipzig, we seem to be trying to bring it to London. There is no consistency about these things.
  I cannot close without some mention of the Memorandum which accompanied this Bill. When I read in this Memorandum that under Bretton Woods we were bound to produce this Bill, I was so dumbfounded that I hastened to turn up the papers to see if my understanding of the Bretton Woods Agreement was so utterly false. I do not think it was. I understood, and I understand, that the Articles of Association of the International Monetary Fund provide measures for members to be able to make their currencies freer, but that the Fund may ask a member to take steps to stop a large and sustained drain of capital. I can only conclude that the Government are anticipating a large and sustained drain of capital, and have brought out this Bill with the explanatory Memorandum. If so, they clearly have a guilty conscience, because capital does not leave a sound currency. Under Article VIII, Section 2, of the Fund, we are not at liberty to impose restrictions on payments for current trans-

  381
  actions. I cannot reconcile this with the limited amount of exchange allowed to travellers. Surely, if people choose to draw from their income and maintain themselves abroad, that is a current transaction or a series of current transactions. I am quite certain that the signatories to the Fund never thought that they were limiting foreign travel, or even limiting the importation of books and so on.
  I had hoped that during the debate the Government might give some news of what is happening with regard to the International Monetary Fund and Bank. It is most disquietening that so little is being heard about them. If the world is to obtain dollars in 1950, surely the Bank ought to be sponsoring loans in American markets to-day, because until the borrowers can get their money they cannot place their orders. And there is a two-year queue for most of the goods they require. So if we ourselves want orders to be placed in this country for delivery in 1950, to provide us with dollars in these years it is to our interest to see that the Bank staff are functioning as quickly as possible. I hope that by this Bill the Government are not writing off in their minds both the Bank and the Fund, though the Bill is not very reassuring in this respect.
  4.29 p.m.
  THE LORD CHANCELLOR (VISCOUNT JOWITT): My Lords, I will do my best to reply briefly to some of the questions that have been raised in this interesting discussion. I am bound to say, however, that the questions seem to me to have travelled rather far afield. Some noble Lords, like the Walrus, seem to have thought that the time has come to talk of many things. In the last speech we heard about the Liverpool Cotton Exchange, the fur market, the international Monetary Fund and so on. With great respect to the noble Lord, I do not intend to refer to any of those matters, because I have not the necessary material and information.
  May I, at the very outset of my remarks, say that sterling is, in my firm belief, still a first-rate currency, far more stable than many other currencies, and we all hope that it will remain stable. But it is quite idle for anybody to pretend that in the immediate future sterling may not be exposed to very great strains and stresses. I do not say that it will
  382
  be. I do not say that it is to-day. Of course, as the noble Lord who spoke last said, it is largely a matter of confidence. I regretted very much to hear the noble Viscount, Lord Simon—who, after all, speaks with the great authority of an ex-Chancellor of the Exchequer—give it forth to the world in our debate to-day that, if it were not for the powers in this Bill, sterling would cut and run. I ask myself if, as the noble Lord who spoke last said, it is largely a matter of confidence, does such a statement as that, coming from such a quarter, increase that confidence? Let us face the facts, not in an alarmist spirit, but do let us get away from the man who preaches smooth things because he thinks they will give pleasure.
  On the one hand, we are accused of uttering jeremiads; on the other hand, of preaching smooth doctrines. Let us look at the facts for ourselves. What are the facts? Although we waged the recent war mainly on our own behalf, yet equally surely it was that the civilization of the whole world might live. We saved India, we saved Egypt, and we saved many other countries, from the horrors of invasion and conquest. The saving of other countries from these horrors seems to me to have been most expensive. We had to incur vast sums of money, largely in order to bring about those very ends in their interest. What is the result? To-day to our friends abroad we owe a sum, expressed in sterling, of somewhere between £3,000,000,000 and £4,000,000,000, and it is much nearer the latter figure than the former.
  VISCOUNT SIMON: I wonder if I may interrupt the noble and learned Viscount. I paid very great attention to his comment. I thought, but I may be wrong, that I was only repeating in my own words what was said by the Chancellor of the Exchequer on the Second Reading of this Bill. May I be permitted to remind the noble and learned Viscount of what he said? He said:
  "This is one reason why I do not think any rational person who studies the subject could argue that we could decontrol capital exports until we can see our way more clearly than we do now. Indeed, if we were to decontrol external capital movements, the result would be that the consequent uncontrolled movements of capital would very soon make complete hay of our balance of payments. I say that quite, deliberately."

  383
  I agree that it is a serious statement, but I am not the first one to make it.
  THE LORD CHANCELLOR: The noble Viscount in his statement said that sterling would "cut and run." That is the phrase to which I objected, and that is very different from the phrase used by the Chancellor of the Exchequer. I was dealing, when I was interrupted, with the figures. I was saying that we now owe to those friends whom we helped and whom we saved something between £3,000,000,000 and £4,000,000,000 expressed in sterling; and in or about June or July of this year sterling is to be made convertible. What is the rest of the economic situation? Your Lordships know it quite well. In the year 1946 our imports, cut down grievously though they were, exceeded our exports by £330,000,000. What is the solution? It is obvious that unless we can very substantially increase our productivity we must face up to a very substantial cut in our imports. This, to my mind, is not a situation which lends itself to Party capital or Party repartee. We are all in this together, and all sections of the community have got to pull their weight and more than their weight.
  If we are going to get through this trouble it is going to be a test of the virility, the strength and the courage of our people. I say quite definitely that had the Tory Party been in power now they would have had to introduce this Bill just as we have had to introduce it, and for this reason. There are always some people who in a time of grave national difficulty would far rather safeguard their own interests than the national interests; people who would see that their nest is feathered and not mind how bad the national nest might be. There are some people who, by devious methods and by devious ways, by contracting a debt abroad and then by remitting the debt, or in a hundred and one ways, would endeavour to store up for themselves, if they thought a crisis was coming, a nice little nest egg in some other country. Faced as we are with the obvious possibility of serious strains and stresses, which no reasonable man can deny on the figures which I have given, we should be mad if at the present time we did not have a measure of exchange control. I do not think anybody denies
  384
  that, although, as I shall point out presently, the noble Viscount did raise some points which seemed to indicate his doubt.
  I do not like this Bill; I hate it. Quite frankly, I hate the Treasury having to take vast powers and then having a right in certain cases not to exercise them. I hate the twenty-eight clauses the noble Lord mentioned with the qualification: "save with the permission of the Treasury." It would have made Mr. Gladstone turn in his grave; but if Mr. Gladstone had seen the present financial situation he would have been going round in his grave like a turbine. You cannot possibly pretend that measures or decisions which would apply to what the noble Lord, Lord Pethick-Lawrence, called the spacious days have any applicability at all to the time through which we are passing today.
  Should the Bill be temporary, or should it be permanent? By this Bill we have enormous powers in reserve. Why do you have a temporary Bill? You have a temporary Bill for two reasons, as I follow it: first of all, you have it because you are doing something experimental. The Ballot Act of 1872 is a good illustration. In those days it was experimental, and they wanted to see how it would work. Secondly, you have a temporary Bill if you can be reasonably satisfied that at the end of the specified period the need for the Bill will go. There can be nobody who studies these facts who can doubt that the need to have these powers in reserve—perhaps not to exercise them—must last more than a period of five years. The disturbed conditions which followed the war which ended in 1918 reached their climax in 1931, twelve or thirteen years afterwards. Is there any man with any financial knowledge at all who could lay his hand on his heart and say that he thinks there is a chance of these powers, albeit in reserve, not being needed in five years time? I should be playing with your Lordships if I pretended that this or any other Government would contemplate such a possibility.
  On the other hand, I sincerely hope that these powers will not have to be used to anything like their full extent, that we shall be able to mitigate the rigour and control, and that from time to time we shall be able to allow all sorts of things to be done. These powers, however, must be in reserve, for once a leak starts in a time of

  385
  crisis—like the parable of the Dutch child who put his thumb in the wall of the dyke—the leak is apt to get out of control very quickly—much more quickly than the time in which you can pass an Act of Parliament. We have seen it for many years in Income Tax legislation. We have seen how some clever person gets hold of a way of evading the tax, and then long clauses to meet the situation are included in the next Finance Bill. But there is much time between one Finance Bill and another, and much harm might be done. We are not prepared to adopt any such scheme as that.
  The noble Lord, Lord Rennell—with the greater part of whose speech I found myself in entire agreement, because he and I both dislike this Bill, but we both dislike more the necessity for the Bill—said: "Why introduce the Bill now?" It is not merely a tidying up. I agree that if tidying up had been all that was necessary it would not have been wise. It is that the existing measures, in some respects which I decline to specify at present, are inadequate. When this Bill receives the Royal Assent, if it does, I shall be delighted to tell your Lordships the respects in which the present machinery is defective, but, if you will forgive my saying so, wild horses would not drag it from me now. To put this matter right, we must have legislation, and legislation now. That being so, it is obviously wise to take this opportunity in some respects to enlarge and in some respects to relax the existing requirements, and to bring them up to date and to make them tidy at the same time. Why we do not put this in the form of a temporary measure is not because this sort of legislation causes a song in our hearts, as your Lordships know perfectly well; it is because we must construct, as any Government would have to construct, a complete defence against dangers which may come upon us, not only in the near future, but in the years to come. That is our case for introducing the Bill, and for introducing it in this form.
  The noble and learned Viscount, Lord Simon, does not, if I follow him aright, object to the Bill coming in now, so long as it is a temporary measure. If that is so, what was the point of the observation he made about Clause 23? Clause 23 is the clause containing the phrase "satisfactory in the national interest." The noble and learned Viscount asked: "How on earth can these people, the Customs
  386
  and Excise authorities, say whether the payment is in the national interest?" But he would not mind that for five years.
  VISCOUNT SWINTON: I mind it for any length of time.
  THE LORD CHANCELLOR: I am not speaking of the noble Viscount, Lord Swinton, for the moment. I am thinking of him, of course, as I always do, but I am speaking of the noble Viscount, Lord Simon.
  VISCOUNT SIMON: I am afraid I must interrupt. I was using an argument, which I thought had force, to show that exchange control should not in the present circumstances be made the permanent law of the land. That has nothing to do with references to particular clauses which seem to be in themselves quite extravagant. I certainly should have thought that the Customs and Excise authorities were hardly the people to deal with Clause 23, even for the next five years.
  THE LORD CHANCELLOR: I still do not see the point. This power is not a new power. It is a power which the noble Viscount, as he so proudly told us, introduced before the war. I will not say it was the only one, but it was one respect in which they got ready for the war. The Customs and Excise authorities were put in then. They worked it all through the war. I do not think he minds very much if they work it for five years; it is the permanency he objects to. I make the point (which I think is a legitimate one) that if they worked it well in the past and if they are working it well at the present, why should they not work it equally well in the future?
  The long and short of the matter is that this clause is not intended to deal with a case where the two parties, the exporter and the person to whom the goods are sent, are at arms length. In such a case as that, we are perfectly prepared to trust very largely to the exporter's own judgment. We quite realize, even though we have not been for forty years at the Bar, that a man may need to export goods to build up some connexion, even if he gets practically nothing for them. What we also realize is that the exporter and the man to whom the goods are sent may not be at arms length, but that one may be merely the nominee of the other. Therefore there may be a price fixed which is quite obviously a wholly inadequate and

  387
  improper price, and we should in that way be allowing the export of capital. This scheme has worked without any difficulty in the past, so far as I know, and it will undoubtedly work well in the future, thanks, let me say at once, to the way in which the Bank of England and the banks generally have co-operated with us, which is typically British, as the noble Lord, Lord Pethick-Lawrence said. Thanks to them it has worked well in the past and will continue to work well.
  Then the noble and learned Viscount referred, in regard to Clause 22, to the postal order to Eire. He asked, "How is it to be publicly known?" We intend, if we can, to publish and promulgate some order about it. Then the noble Viscount went on to ask, "You are not going to have a postal censorship, are you?" That is true.
  VISCOUNT SIMON: Is that agreed?
  THE LORD CHANCELLOR: Certainly. Therefore, he said, the Order is ineffective, the whole scheme is ineffective, and the Bill is ineffective. Then why have it for five years? That is what I could not understand, and that was what makes me think the noble Viscount did not really want this Bill at all; but then, at a later stage, he seemed to say, "The vice of the whole thing is that it is not merely for five years." Then there came, at the end of his speech, a passage which I frankly say I very much regret. If a charge is to be made, let it be made openly. I do not like insinuations. I confess I do not understand the relevance of this business about being able to get a first-class sleeper from Edinburgh to London and the relevance of Mr. Bevin going abroad and whether some special concession was made. I suppose behind all this there is the suggestion that somebody 0: other has been granting favours, or doing some other dishonest business.
  VISCOUNT SIMON: The noble Viscount says he does not understand, and I hope therefore he will forgive me if I explain quite briefly the point I was trying to make. If I caused any misunderstanding in any quarter I am glad to take this opportunity of correcting it. I was not making any reflection on anybody. All I was saying was this, and I am sure the noble and learned Viscount the Lord Chancellor will appreciate that it is a
  388
  legitimate argument. It seems to me that in these cases the number of applications for exemption, for permission, is so great, that it is quite impossible that each application should be examined separately and judged by comparing one case with another. That is quite impossible. I am quite confident that that is not the way in which it is done. It is inevitable that unless there be something which, in the view of the authorities, justifies the making of an exception, the ordinary answer must be, "No"—and it is. What I was pointing out was that when that is the situation it is inevitable that those who, for one reason or another, are able to press their claims, are more likely to have them granted than the ordinary man in the street, who has just got to apply and take the best chance he can as to the result. That is a perfectly legitimate argument and one which makes no reflection on anybody. It is, I think, the result of having legislation which involves such a multitude of applications, only a very small section of which can possibly be dealt with.
  THE LORD CHANCELLOR: I am grateful to the noble Viscount for explaining what I failed to understand. I confess I thought that he intended to convey that, as kissing goes by favour, so do sleepers from Edinburgh. That is what I thought he was saying, and if he was not, I am glad to hear it. No one can understand better than he does (because he was the author of these things, as he is proud to boast) how this thing works. The Treasury gives broad instructions, which are public property, and then the administration of the details is left to the banks and not, broadly speaking, to the civil servants at all. If the noble Viscount has any case in mind when he makes this rather minor form of accusation, in which a man has been granted some privilege which has been refused to his less favoured brother, then I should like to hear it, because I believe that although these controls are drastic their administration has given universal satisfaction. If this kind of suggestion is to be made, I think there should be some sort of case to back up the statement which, at any rate as I first understood it, seemed to me to be very derogatory to the Civil Service. It appears to me to be rather questioning the efficiency with which the banks have done their work.

  389
  I pass from that and come now to the speech of the noble Lord, Lord Rennell, whose main theme I have tried to deal with in pointing out the reason why we believe that it is necessary to have this Bill at the present time. It is not exactly an alarm signal, but we want everybody to realize that we are coming into a very difficult time. It is to my mind a foolish argument to say that people stood this thing during the war and they will not stand for it now, after we have had eighteen months of peace, eighteen months of a Socialist Government. The noble Lord knows perfectly well that a Socialist Government have nothing whatever to do with this point.
  LORD RENNELL: That was not my suggestion.
  THE LORD CHANCELLOR: I beg the noble Lord's pardon; I meant the noble Viscount, Lord Simon. But I do say this; in some ways our economic situation to-day is a more difficult situation than it was during the war. During the war we had the great benefit of Lease-Lend, and we have not that benefit to-day. The economic and financial situation is, therefore, more difficult now than it was during the time when we had Lease-Lend. I cannot see how it can be said that it is reasonable to have these powers during the war, but unreasonable to have them when the war is over. Now is the testing time for sterling.
  The noble Lord then raised the question of Clause 30. I suppose he realizes that Clause 30—he obviously knows his subject very well—is merely Regulation V (c) enlarged. I do not believe that on this point there is any difference, and I think it has worked fairly well. The reason for Clause 30 is this. It deals, for instance, with a man who is, broadly speaking, in control of a foreign company, who can be ordered by the Treasury to do certain things, always assuming that he has the power to do them. The reason is that an individual who has a store of dollars abroad can be made to bring his dollars back here, and I think that is reasonable and fair. For instance, there is an island called the Prince Edward Island—I am not sure where it is—
  VISCOUNT SIMON: I thought it was one of the nine Provinces of Canada.
  THE LORD CHANCELLOR: Very well. It is one of the Islands beloved by
  390
  tax dodgers. What would be easier than for a person to get somebody to form in Prince Edward Island a company of which he owns every single share? He then, instead of building up his own pile of dollars, builds it up in the name of that company. If you are going to take from the man who owns his dollars, why should you not equally take from the man who has interposed this mere figment of the imagination between himself and the Treasury? Therefore, the effect of Clause 30 is that in such cases as that we have the right to demand that the owner of those shares should act just as he would have to act if he were the direct owner.
  The noble Lord also raised the question of Clause 22 (1) (f). It is, of course, true that under that clause it is possible that the Treasury might specify anything. It might, as he said, specify his trousers or, as was said in another place, the Scotsman's kilt. The list of articles which they have in fact is such articles as diamonds, jewellery, rare postage stamps and various articles of that sort, and I hope that the Treasury will continue to use their powers with discretion.
  The noble Viscount, Lord Bridgman, referred to many detailed clauses. I hope the noble Viscount will forgive me if I do not go through them all now, because I think he will agree they are more appropriate for discussion in Committee, and on the Committee stage of this Bill—assuming that your Lordships give it a Second Reading—the noble Lord, Lord Pethick-Lawrence, and I will be pleased to deal with these various clauses. It is not really the fact, as he said, that to-day people have to go running round to the Treasury. It is the fact that they go to their bank. There are only eight people in the Treasury dealing with this, and the way the Treasury deal with it is that they give broad general regulations, and the bank, in case of difficulty, would refer to the Bank of England; further, of course, the Bank of England would refer to the Treasury.
  VISCOUNT BRIDGEMAN: If I might interrupt the noble and learned Viscount, in a great many cases the people would not go to the Treasury, but would go to someone to whom the Treasury have delegated the responsibility. But that, I submit, does not for a moment alter my point that you cannot in the City of

  391
  London do more than the simplest routine transactions without going to the Treasury, or the person to whom the Treasury have delegated the responsibility. That is the point I wish to make.
  THE LORD CHANCELLOR: That is true, but there is all the difference in the world in the way this thing has been administered. You have not to go to the Treasury, but to the banks; and the banks have administered this with almost universal satisfaction. I do not think, therefore, that the difficulty is as great as is suggested. The noble Lord, Lord Hawke, referred in particular to the question of letting off a debtor, and also, I think, to settlements abroad. Assuming always that the Treasury are going to use their powers sensibly, of course they would not deal with the sort of cases he had in mind, but I am sure he will realize that in order to stop up all the holes and prevent people who want to evade the provisions of this Bill—notwithstanding what the national need may be—and want to put themselves as individuals in a strong position, we must have this power. I think I can assure the noble Lord that in the sort of cases he has in mind, the commission would be ready to assist.
  That is the position. I have tried not to create any alarm or despondency. I have tried to state the facts because I believe our people are always at their best when the facts are stated. I think the facts cannot be too widely known, or too often stated. We are up against a testing time, but that we shall get through I do not doubt. We shall get through all these matters by all of us pulling together. I am not trying to make Party capital out of what is a great national problem which our people will surely solve.
  On Question, Bill read 2a, and committed to a Committee of the Whole House.

  HOUSE OF COMMONS (REDISTRIBUTION OF SEATS) BILL.
  Read 3a, with the Amendment (according to Order), and passed, and returned to the Commons.

  REMEDIES AGAINST THE CROWN.
  5.0 p.m.
  VISCOUNT SIMON VISCOUNT SIMON asked the Lord Chancellor what progress is being made in the preparation of the Bill which it is understood that he intends to introduce dealing with remedies against the Crown, and what are the prospects of such a Bill reaching the Statute Book in the course of the present Session? The noble and learned Viscount said: My Lords, I wish to put to my noble friend on the Woolsack the question which is on the Paper. Very briefly, I would remind the House of the recent history of the matter. It has long been realized that the immunity of the Crown from proceedings directly taken against it for damages and the like, though historically explicable, has somtimes created difficulty. In the ordinary case where a claim is for compensation—that is to say, for an accident in the street, a case where an Army vehicle has been driven too fast and dangerously—the method which has been followed, and followed for many years, has been, since the Crown could not be sued, to find the name of the driver (which the War Office would give) and to sue him. On proof that he had been negligent, judgment was given against him and the amount of the damages was paid by the Crown. Indeed, the case was usually defended by the Crown. That is a very cumbrous method, but it provides a remedy. Recently, however, another class of case has been given publicity in which not only is it unfortunate that we should continue the present arrangement but, if present arrangements are not altered, there will be an absolute denial of the possibility of justice in the courts. It is the case where the Crown is the occupier of premises, and of course the Crown is becoming more and more the occupier of a great many premises.
  If a private person was the occupier, and if a person who went there was a person with a licence to go there, and he was injured owing to the defective condition of the premises, to an unlighted, dangerous staircase, to a hole in the floor, to something falling out of the window and hitting the individual on the head as he walked by, then as against the private occupier there would be a remedy; it would be a breach of duty of the occupier. But as against the Crown there is no remedy at all. That was called attention

  393
  to prominently when the House of Lords was sitting in a judicial capacity as long ago as last September, or early October. It led to a great deal of correspondence in The Times in which the difficulties were pointed out and a claim for remedy was very urgently made.
  It is right to add that under a Commission appointed some time ago, there has already been an elaborate investigation of this whole subject, including the case of the occupier. Although that Commission made no recommendation, it did produce a draft Bill which the Lord Chancellor and his advisers did not think was in the proper shape. The matter was continued at the time of the gracious Speech last November, when a number of members of the House pressed the Government on this subject. They pointed out that the King's Speech contained no undertaking or promise or reference to the introducing of any legislation of the kind, although it was obviously very urgent that the matter should be put on the proper footing. I do not blame my noble friend for saying what he had to say at the time, in view of the Government's programme. He said that unfortunately it was not possible to put it in the King's Speech.
  It was pointed out that, at least in the case where the Crown is the occupier, the private citizen has no remedy at all, and I noticed that The Times on October 12 said that in the interests of justice the present position was untenable. Later, when the matter was raised again in the House, the Lord Chancellor showed real interest in the subject. On November 13 he said he might be able to introduce a Bill on the subject and he hoped to find a loophole to get it in. I have reason to believe he has pressed his colleagues on the matter to the very best of his ability and his authority.
  This afternoon, I have taken a course which I do not think has been taken for many years, but which is still permitted to members of this House: that of introducing a Bill of my own, dealing only with the single point about the occupier. That is an extremely urgent matter, because people are being denied their rights and no one wishes that to continue any longer. I have not done that with the idea of endeavouring to interfere with the Lord Chancellor's project. What I Viscount is: what are the prospects of a want to know from the noble and learned
  394
  Bill covering the whole subject, as no doubt his Bill will do? Is it really being introduced and, what is more important, what are the prospects of the Bill reaching the Statute Book? Because introducing a Bill in itself gives no one any remedy; it has to get on the Statute Book. I need hardly say that nothing would please me better than to see the Lord Chancellor's Bill reaching the Statute Book and containing the clause which I indicated; then my little Bill could be thrown in the waste paper basket.
  I will again say that the real question is not whether he is willing to introduce the Bill, because I know he is. I know his heart is in it. It is not a question whether he and his advisers have been working at it, because I know they have. What I desire to know, and what I think in the public interest ought to be asked, is: what can he tell the House now about the extent to which the Bill is prepared, and have all difficulties been overcome? Departments raise difficulties and they may have to be overcome. What can he tell us of the prospects of its being passed into law this Session? Of course it does not depend on this House; it depends on both Houses and the time available in another place. In the meantime, I very much hope he will be able to give us an assurance that the Bill which he has at heart will be introduced and carried through this House in good time, so that there is every reasonable chance that it goes on the Statute Book.
  5.10 p.m.
  VISCOUNT CECIL OF CHELWOOD: My Lords, I will not detain the Lord Chancellor more than a moment, but I should like to take the opportunity of expressing my very warm support for what has fallen from my noble friend, Viscount Simon. He has touched on an actual case and I do not propose to repeat what he has said. Everything he has said is absolutely right and true. In my own personal capacity I have come across very serious inconvenience, and in some cases even injustice, from the present state of affairs. It is really a pure survival; there is nothing to be said in its favour except that it exists. That is an argument which I do not think will appeal to the Lord Chancellor; it certainly does not appeal to me. I venture to think that the supremacy of the law is the principle on which we all rely for progress and free-

  395
  dom. This solitary exception to that great principle ought to be swept away.
  THE LORD CHANCELLOR: I concur with my noble friends in what they have said. The principle we ought to adopt is this: we should treat the Crown just as we do any ordinary employer, either in contract or in tort. I should like to see exactly the same procedure available against the Crown as against any individual. There are, of course, certain exceptions; the analogy does not quite hold because, of course, no private individual has to run a Post Office, to maintain an Army or a Navy, or fire guns or anything of that sort. Therefore it is quit obvious that there must be same exceptions. But the broad, general principle which I would like to introduce is that in all matters the courts shall be open to anybody who has a claim against the Crown in the same way as they are open to anybody who has a claim against an individual.
  What I am going to say now as to my progress is subject to the difficulty which has arisen over the introduction of the noble and learned Viscount's Bill to-day. He, of course, knows the rule about two Bills dealing with the same subject matter not being able to proceed at the same time. I have not had time to look it up, but he will find the material passages, I think, on page 491 of the 14th Edition of Erskine May.
  VISCOUNT SIMON: I consulted the Authorities at the Table.
  THE LORD CHANCELLOR: What I am saying is that I confess I very much wish the noble Lord had delayed introducing his Bill until after he had heard my answer at a quarter past five, because I think that he might then have not wished to introduce his Bill. As the noble Lord knows, and as he was good enough to say, I have been working on this matter for a long time. I do not propose to make a promise, to which I can be held if anything unforeseen happens, but the ship, after a stormy passage, is so near port that it is there but for tying up at the quay. I very much hope—and I firmly believe that I shall be able to do so—to introduce a Bill on the lines I have indicated, certainly in the course of this month. Indeed, if this question had been asked in a week's time I might have been able to give your Lordships something
  396
  more specific than that. But I must not treat as a mere formality some consents which I still have to get. So far as I know, all Departmental objections have gone. For a very long time I have been anxious to get the Bill drafted, and I have used all my ingenuity to get it drafted. I think that I may now say that all is well.
  VISCOUNT SIMON: I would like to say at once—indeed I think it goes almost without saying—that if indeed it should be the case that my Bill sets up the smallest obstruction to that which the Lord Chancellor is ready to introduce, I should never allow it to continue as a Bill before the House at all. But this is an entirely new point to me, and at present I am not at all sure—nor do I think the Lord Chancellor is—that that is so.
  THE LORD CHANCELLOR: I am not absolutely sure myself, for I have had no advice on this, but I looked up Erskine May. As I have said, it is a pity that the noble and learned Viscount's Bill could not have been introduced say tomorrow, after the noble and learned Viscount had given me a chance of answering his question on the Order Paper. I cannot quite understand why he did not do so. I am now asked, as a further question, what are the prospects of this Bill. Well, I hope to be able to introduce this Bill, and I think I have good grounds for trusting that it will prove to be non-controversial. I had intended to send the Bill round to some noble Lords who have particular knowledge of this matter before I introduced it, but in view of the present situation I think it will perhaps be better to introduce it and, if necessary, to incorporate their suggestions by means of Amendments. I hope that the Bill will prove non-controversial, and that it will be possible to get it through your Lordships' House in a very short time. When that has been done, it will, of course, go to another place. There, I think, it depends entirely on the Opposition whether it is to be non-controversial. Personally, I see no reason why it should not have an easy passage. But if the Bill is going to be controversial in this, that or the other respects, of course it might not get through.
  There are in the Bill, as I have indicated, certain safeguards. I mentioned the Post Office. That is one illustration. Unless we had some safeguard in that

  397
  respect we could not go on with the Bill. It must obviously be made impossible for anyone to say: "I posted a letter containing a lot of money and it has not arrived at its destination," and to proceed to make a claim against the Post Office. The case of a registered letter, of course, is different. We must also have some protection for the Armed Forces, and a few other points which are fundamental to the Bill. I believe that those matters will be clearly set out. They certainly were in the draft Bill of 1927. As I have said, I have no reason to think that it will prove controversial, and I very much hope that the Bill will be passed. I anticipate that it will, though I am not going to be held liable for breach of contract if it is not. But I anticipate being able, in a very short time, to introduce my complete Bill dealing both with contract and with tort, on the lines which I have indicated, into your Lordships' House.
  VISCOUNT SIMON: Does it not deal with occupation?
  THE LORD CHANCELLOR: Yes, it deals with the whole subject matter. A great difficulty that arises to-day not only in the case of occupation—that is a very common illustration—is exemplified where you cannot designate the particu-
  398
  lar servant of the Crown that you say is a wrong-doer. If, for instance, some one while walking along a country road is run down by a lorry which all the witnesses say is an Army lorry, and then the fullest inquiries fail to show which lorry it was, or who was the driver, the injured man is in the position of not having a remedy. I shall, in due course, rely on the assistance of the two noble Lords who have spoken to help me to get the Bill through, and to mould it so that we can get a really satisfactory instrument for doing justice as between the Crown and the subject.

  SUNDAY ENTERTAINMENTS ACT, 1932.
  Orders made by the Secretary of State for the Home Department extending Section 1 of the Act to the

  Urban District of Bridgend;

  Urban District of Oakham;

  Urban District of Whitby;

  Rural District of Eton:

  Laid before the House (pursuant to Act) for affirmative Resolution, and ordered to lie on the Table.
  House adjourned at twenty minutes past five o'clock.