Lords Sitting of 18 February 1947

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers.
The Lord Kensington—Took the Oath.

BUSINESS OF THE HOUSE.
THE SECRETARY OF STATE FOR DOMINION AFFAIRS (VISCOUNT ADDISON): My Lords, I beg to move the Motion which stands in my name.
Moved, That Standing Order No. XXI be considered in order to its being dispensed with for the purpose of giving precedence to the motion for the Third Reading of the Pensions (Increase) Bill and the Road Traffic (Driving Licences) Bill over the other Notices and Orders of the Day.—(Viscount Addison.)
On Question, Motion agreed to and ordered accordingly.

SITUATION IN TRINIDAD.
LORD TWEEDSMUIR: My Lords, I rise to ask the question which stands in my name.
[The question was as follows:
To ask His Majesty's Government whether the account of the situation hi Trinidad given in recent reports in the Daily Mirror is accurate.]
THE FIRST LORD OF THE ADMIRALTY (VISCOUNT HALL): My Lords, my right honourable friend the Secretary of State for the Colonies has already stated in another place that it is not in question that there were acts of violence, mass intimidation and sabotage in the course of the recent disturbances in Trinidad, and that the Governor of the Island has acted throughout the troubles with the unanimous support of the official and non-official members of his Executive Council. The police and other authorities were concerned to take the necessary steps for the protection of the general
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community including the large majority of trades unionists. My right honourable friend has called upon the Acting Governor of Trinidad to furnish him with a full report upon the occurrences on the conclusion of the local proceedings, and the matter will receive his close attention when that report is received.
In the meantime, the information which has reached him is being compared with the reports which have appeared in the Daily Mirror, but my right honourable friend is awaiting fuller information before accepting the newspaper reports and the criticisms which have been made of the actions of the authorities in Trinidad, in what were undoubtedly difficult and anxious circumstances. For the convenience and information of your Lordships, and with the concurrence of the noble Lord who has asked me this question, I am appending to my answer in Hansard a summary of several statements which have been made recently in another place by the Secretary of State for the Colonies on the situation in Trinidad.
LORD TWEEDSMUIR: I am obliged to the noble Lord for his answer.
[The following is the summary referred to:
There have been three strikes recently in Trinidad, the first being declared by the Seamen's and Waterfront Workers' Union on November 8 last, after a claim for 50 per cent. increase in wages and a reduction in hours of work had been rejected by the Shipping Association. This strike was terminated on December 5, when the Shipping Association agreed to apply to their employees the terms of any fresh agreement which might be reached between the Government Wharves Administration and the Union; and discussions with a view to the preparation of a new agreement are proceeding.
On January 8, the Public Works and Public Services Workers' Trade Union called a strike of its members. Discussions had been taking place between the Trinidad Government and the Federated Workers' Trade Union, which claims the largest membership of the workers concerned, but the Public Works and Public Services Workers' Trade Union had declined to associate itself with the Federated Workers' Trade Union in these discussions. A Committee is at work on the revision of current schedules of groups and basic wage salaries for Government employees. The strikers in this case number 1,113 out of 8,900 Government employees.
On November 11, Uriah Butler, as President-General of the British Empire Workers', Peasants' and Ratepayers' Association, submitted certain demands to the employers in the oil industry, which were

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rejected. On December 9, Butler, on behalf of another body called the Mineral Development Union, called a strike. The Oilfield Workers' Trade Union, which is the Union recognized by the Oilfield Employers' Association and has an agreement providing, amongst other things, for the adjustment of wages in accordance with the cost of living index, warned its members against participating in this strike, and only 1,470 out of the 11,340 workers in the industry came out. The strikers began to return to work early in January. At the time when the strikers began to return to work acts of sabotage were reported, including the burning of oil wells and the emptying of water reservoirs. The Legislature of the Colony enacted an Emergency Powers Ordinance, under which proclamations were issued ordering Butler to leave the area and imposing a nine-hours curfew.
On January 19, Butler established headquarters in Port-of-Spain and was joined by a large number of his followers. Meanwhile, acts of sabotage continued and a large number of Butler's followers on January 20 picketed the main traffic routes and the bus termini and railway stations, and seventy-two persons were arrested by the police. Thirty-two persons were later arrested when a crowd of some 3,000 to 4,000 people went in procession to the Government buildings with the apparent intention to occupy the Legislative Council Chamber. On this occasion the Governor reports that the police were attacked with sticks, stones and bottles and suffered a number of casualties, and were obliged to use tear gas and baton charges. Later, a party of police under the Commissioner visited Butler's headquarters. Trouble followed, and stones and missiles were used. On this occasion, a large number of persons were arrested. Of the persons arrested at various times during these disturbances, a considerable number have been acquitted by the courts and in some cases short sentences of imprisonment have been imposed. The latest reports from Trinidad indicate that order is now normal.
My right honourable friend is anxious to do all he can to help in securing improvement of working standards and labour organization generally in Trinidad and the observance of trade union procedure and practice as understood in this country; and has indicated that he hopes to arrange for a visit by some person with wide experience in these matters with a view to discussion with all parties concerned in Trinidad. Meantime the local Government has set up committees on the revision of wages and salaries of its own employees, and on the means whereby the high cost of living can be reduced. The Standing Price Control Committee is also re-examining the percentage mark-up of goods with a view to reducing prices. Recent increases in the cost of imported foodstuffs and other commodities have entailed serious hardship for large numbers of people in Trinidad.]

PENSIONS (INCREASE) BILL.
Read 3a (according to Order), and passed.
ROAD TRAFFIC (DRIVING LICENCES) BILL.
Read 3a (according to Order), and passed.

SUNDAY ENTERTAINMENTS ACT, 1932 (URBAN DISTRICT OF RAYLEIGH 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 of the Act to the Urban District of Rayleigh, and laid before the House on Tuesday last, be approved—(Lord Walkden.)
On Question, Motion agreed to.

SUNDAY ENTERTAINMENTS ACT, 1932 (RURAL DISTRICT OF ELSTREE 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 Rural District of Elstree, and laid before the House on Tuesday last, be approved.—(Lord Walkden.)
On Question, Motion agreed to.

SUNDAY ENTERTAINMENTS ACT, 1932 (CITY OF CARLISLE 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 City of Carlisle, and laid before the House on Friday last, be approved—(Lord Walkden.)
On Question, Motion agreed to.

EXCHANGE CONTROL BILL.
Order of the Day for the House to be put into Committee read.
Moved, That the House do now resolve itself into Committee.—(Lord Pethick-Lawrence).
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL OF DROGHEDA in the Chair.]
Clause 1 agreed to.
Clause 2:
Surrender of gold and foreign currency.
(1) Every person in or resident in the United Kingdom who is entitled to sell, or to procure the sale of, any gold, or any foreign currency to which this section applies, and is not an authorized dealer, shall offer it, or cause it to be offered, for sale to an authorized dealer, unless the Treasury consent to his retention and use thereof or he disposes thereof to any other person with the permission of the Treasury.
VISCOUNT BRIDGEMAN: Before Clause 2 stands part of the Bill, it seems to me that the House ought to look a little more closely into the question of the authorized dealers. Your Lordships may remember that gold and foreign currency may be retained in the United Kingdom only by those people who are authorized dealers. In talking about "authorized dealers" I would like to say at once that I am not suggesting any criticism of the way in which the Bank of England have dealt with foreign exchange in the past. In fact I would like to say exactly the opposite. In this Bill we restrict the power of dealing in foreign exchange to authorized dealers, and they are also authorized by the Treasury to delegate their powers in different directions; but there is nothing in this Bill to show who is to be an authorized dealer and who is not. It makes a good deal of difference to those who are engaged in foreign exchange that it should be absolutely clear what class of persons are going to be authorized dealers. The permission to specify those who are to be authorized dealers should be permission which does not favour one particular set of people, or one particular interest, against another. I suggest that it might be worth while if we heard something more about the way in which the Treasury intend to deal with this matter.
THE SECRETARY OF STATE FOR INDIA AND BURMA (LORD PETHICK-LAWRENCE): I do not think there is anything on the point raised by the noble Lord which really calls for special comment. There have been in the past some eighty dealers authorized. It would not be possible to single them out by name, but they are the dealers who are in agreement with the British Bankers Association, the Association dealing with Acceptance Houses and one or two other organizations. The practice has been to take their opinion as to who should be authorized dealers.
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If any persons are left out for any improper reason, they would no doubt have special review and then could be included. It has worked very well in times gone by, and I do not think there is any reason to suppose that the method used of dealing with what in effect is their recognized trade union is not the best that could be adopted.
VISCOUNT BRIDGEMAN: I am very grateful to the noble Lord for his assurance on that point. If I. understand him rightly, it means that the permission to be an authorized dealer is not confined to the membership of certain associations, but that the advice of certain associations is taken before admitting an individual to membership. I wonder if I could have the noble Lord's assurance that I have understood that correctly?
LORD PETHICK-LAWRENCE: That is how I understand it. I would not like to give an assurance without further confirmation, but I think that is so.
Clause 2 agreed to.
Clauses 3 to 16 agreed to.
Clause 17:
Special provisions as to dealing in certain securities.
(2) Except with the permission of the Treasury, no person shall, in the United Kingdom, and no person resident in the United Kingdom shall, outside the United Kingdom, transfer, or do anything which affects his rights or powers in relation to, any security to which this section applies.
2.40 p.m.
LORD HAWKE: My Lords, I should rather like to hear from the noble Lord opposite the precise interpretation put on subsection (2) of this clause, because, as it stands, it appears that under this clause an American, a temporary visitor to this country, would not be able to conduct any operations in his own country whilst staying here. For instance, it appears that he would not be: able to telegraph his broker in New York to sell securities on Wall Street, and if a document were sent to him to sign in this country it would not be legal for him to do so. That is how I read the clause, and I believe that in another place the Chancellor of the Exchequer admitted that that kind of interpretation was correct. Clearly, some sort of permission will have to be given,

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and I should like to know what form that permission will take, because otherwise the clause would act as a distinct deterrent to foreign visitors of substance coming to these shores.
LORD PETHICK-LAWRENCE: There is no danger of action being taken in the direction to which the noble Lord takes exception. The fact that an American is a visitor to this country will not in the ordinary course prevent his carrying out any transactions on his own stock exchange in his own country, whether he advises his broker by telephone, telegram or letter, nor from doing any business which he has the intention of doing in his own country. The noble Lord need have no fear on that account.
VISCOUNT SIMON: If that is the case, he would not, in the ordinary course, be a person resident in the United Kingdom.
LORD PETHICK-LAWRENCE: It is a general principle, in dealing with persons from a foreign country, that a man may do certain transactions on the stock exchange in his own country, and that does not attract any trouble. What he must not do is to use exchange so as to affect the general position.
VISCOUNT SIMON: I do not think this clause can be interpreted by general principles. Clause 17 says that any person resident in the United Kingdom, but outside the United Kingdom personally, shall do nothing relating to any security to which the clause applies. I appreciate that that can refer only to the securities to which the clause applies, but I must say, in fairness, that it is not clear to me that it is because of some general principle which is involved. It must be because a person is considered not a person resident.
LORD PETHICK-LAWRENCE: The Treasury will give general regulations that all these cases will be covered.
VISCOUNT SIMON: Covered by the phrase "except with the permission of the Treasury." That is right.
LORD HAWKE: I thank the noble Lord for his explanation, and I am happy to accept that the Treasury will make it perfectly clear that it is legal for foreigners to transact business in their own country while staying here.
Clause 17 agreed to.
Clauses 18 to 21 agreed to.
Clause 22:
General restrictions on export.
(1) The exportation from the United Kingdom of—

(a) any notes of a class which are or have at any time been legal tender in the United Kingdom or any part of the United Kingdom or in any other territory; and

(b) any Treasury bills; and

(c) any postal orders; and

is hereby prohibited except with the permission of the Treasury.
LORD MOYNE LORD MOYNE moved, after subsection (1), to insert:
"(2) The prohibition in paragraphs (a) and (c) above shall not apply to the exportation from the United Kingdom to Eire of ten shilling notes, £1 notes, or postal orders."
The noble Lord said: I hope your Lordships will extend your customary tolerance to the shortcomings of a first effort. It is, I believe, usual when one is speaking for the first time, to do so on a non-controversial subject. I feel confident that whether or not my Amendment is acceptable, its aim and object cannot be in dispute. It is designed, perhaps clumsily, to ensure that the normal practice of Irishmen working in this country, or of soldiers, of sending their earnings home to their dependants, shall not be jeopardized by the present Bill. There are, I think, over 100,000 Irishmen and Irish women working in industry in this country, and many thousands serving in the Armed Forces, under obligations which, be it remembered, it is not open to them to break. The great number of these people have dependants at home whom they support. I am told that in 1946 over 4,250,000 postal orders and money orders were sent from the United Kingdom to Eire. I venture to say that in many instances these people would not, and could not, enter into their commitments in this country if they had not been able to count on helping from here those who depend on them at home.
In introducing this Bill in another place, the Chancellor of the Exchequer stated categorically that exchange control would not apply to the sterling area, but Clause 22, by banning the exportation from the United Kingdom of postal orders and bank notes, deprives all those who do not enjoy the benefit of banking accounts of the means of making the payments which

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are allowed. As it stands, the Bill enables the Treasury to grant permission, but when my noble friend Viscount Simon, on the Second Reading in this House, raised the question of postal orders to Eire, the noble and learned Viscount, the Lord Chancellor, who probably meant his words to be more reassuring than they actually were, merely replied: "We intend, if we can, to publish and promulgate some kind of order about it." But, "if we can" is cold comfort for those who have chosen to serve in His Majesty's Forces; "if we can" is not very encouraging to the much-needed help of Irish labour in industry and agriculture; if we can, "sounds rather grim for the people of Achill and other rocky places of the West, from which young men have gone out every year since the days of the famine to lift potatoes in Scotland and England.
If these men could not send or take their earnings home with them it would mean great hardship for themselves and their families. If even any kind of permission had to be sought it would add difficulties to lives already by no means easy. It would no doubt be something gained if the Government were to give at least a positive undertaking that standing permission would be granted. But after all, the Government are not simply seeking power to forbid exportation of these things. They have asked us to do the forbidding, and for all time. How is the unfortunate individual to be sure when and how permission will be forthcoming, when and how it may not be withdrawn? To cover the cases I have mentioned where hardship and injustice might otherwise result, is it not our duty to have a definite exception inserted in the Bill?
No one questions the wisdom of the Treasury in these matters. The firmness and fairness with which they have administered the war-time regulations have drawn praise from every quarter. But, after all, it is a basic principle of our Constitution that we do not give arbitrary power to any branch of the Executive, however wise it may be. Our Executive is subject to rules of law, and the law is controlled by Parliament. The Government recognize this principle by having a Bill and not asking us to vest the Chancellor of the Exchequer with unfettered dictatorial power. As the noble and learned Viscount on the Woolsack very
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frankly conceded on the Second Reading, circumstances have driven the Government some way in this direction; but the Bill at least recognizes that certain matters remain the responsibility of Parliament. Is it too much, then, to ask statutory recognition for this very fundamental right of Irishmen working in the United Kingdom to support their dependants at home? Other departments than the Treasury—the Ministry of Labour, the War Office, the Admiralty, the Air Ministry, the Ministry of Agriculture—are affected. Eire is differentiated from the remainder of the scheduled territories by reason of the land frontier with Northern Ireland and by reason of the number of her citizens working and serving here. A question of principle is involved, especially for those serving with the Armed Forces, and in my humble submission the safeguard should be provided by Parliament. I beg to move.
Amendment moved—
Page 16, line 4, at end insert the said new subsection.—(Lord Moyne.)
THE EARL OF DONOUGHMORE: May I say one word in support of what has been said by my noble friend opposite? First, however, I should like to say how pleased I am that the son of an old friend has made his first speech in your Lordships' House. The matter' with which his Amendment deals is one with which I am in rather close touch myself. I have half a dozen people from my own employment here in this country, and in the cases of four of them their homes are actually outside my own lodge gates in Ireland. I know that they send small but very useful postal orders back to the people at their homes, and the receipt of those postal orders is very much appreciated. If one of your Lordships wishes to remit money to Ireland—I will not say for what purpose, but, possibly, it might be in order to buy a ticket in a sweepstake—he can do so by sending a cheque. These people, of whom my noble friend speaks, have no banking accounts, they cannot have banking accounts, and they do not want them. I do not know if the wording of my noble friend's Amendment is satisfactory in the view of the Government, but I do suggest that this is a point which ought to be dealt with, otherwise great hardship may be caused now and in the future.
LORD PETHICK-LAWRENCE: May I, as a comparative newcomer to your Lordships' House, join with the noble Earl who has just spoken in paying a tribute to the noble Lord whom we are very glad to hear speak in this House for the first time to-day Like the noble Earl, I knew his father and I crossed swords with him in another place. In fact, I think that he succeeded me as Financial Secretary to the Treasury. I hope that this will not be the last time that the noble Lord, Lord Moyne, will take part in a debate in your Lordships' House. With regard to the Amendment which the noble Lord has moved, I am fully in sympathy with its intention, but I do not feel that we can carry out the noble Lord's intention in the way in which he proposes. We are, at present, perfectly happy to allow sterling notes to pass between the United Kingdom and Eire, and we think that it will also be practicable to extend this freedom to postal orders. That is, because of our happy relations with Eire in this field. The exchange control of Eire works harmoniously with our own, and her economy is so closely linked with sterling that this freedom is natural, and shelters no major abuses.
But this Bill is a permanent measure, and it is essential for the Treasury to have power to take action in hypothetical circumstances which might arise, and which could, in an incredibly short time, do incalculable damage, if that power did not exist. This point applies to many clauses of the Bill. The Lord Chancellor dealt with it in the speech which he made on the Second Reading, to which reference has already been made. Therefore, instead of altering the text of the Bill and whittling down the rights of the Treasury, the Government are of the firm opinion—and that opinion is shared by financial authorities—that the right way to proceed is to give the Treasury very wide powers, and the Treasury will, naturally, issue orders to make it clear that so far as ordinary transactions are concerned there is no need to clamp down in any way.
In another place, the Chancellor of the Exchequer made it clear that, simultaneously with the coming into force of the Bill, a whole series of Treasury Orders, mainly under Clause 31, will be promulgated relaxing the severity of the
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measure where practicable, so that the day-to-day effect of exchange control will be far less rigorous than a reading of the Bill might suggest. Points to which this Amendment is directed will be covered under such an Order. The significant fact is that all such Orders can be modified or withdrawn quickly if need arises. In view of that assurance, given by the Chancellor of the Exchequer in another place, I hope that the noble Lord, Lord Moyne will feel able to withdraw his Amendment.
VISCOUNT SIMON: I hope that the noble Lord who moved this Amendment will be glad to accept that assurance. Certainly I would most respectfully advise him to do so. I rise, however, to make two observations. I hope that the noble Lord opposite does realize—I think that anybody who has in his composition any remains of Liberal tradition ought to do so—that the method by which he is proceeding cannot be regarded as a good maxim of legislation in general. He says that the authorities are all of one mind that you should give to a Government Department very wide powers, excessively wide powers, and then, having gone far beyond anything which is really intended or really reasonable, you should whittle them down to what is thought to be tolerable by excessive use of Departmental exceptions. I agree that that is a way of legislating. You could legislate that everybody shall be hanged and then say: "Oh but some Government Department will issue exceptions which will limit the hanging to cases of murder." It is really too ridiculous to suggest that this is a good maxim to follow in the framing of legislation.
It may be an unhappy necessity, but I hope that it is not going to go forth even from one side of the House (and I do not think it is, for I see some noble Lords sitting opposite who, I am sure, do not feel that this is a good maxim) that you ought, as an ideal, to present to Parliament what have been described as very wide powers, leaving it unconditionally to a Department to bring them back to what is reasonable, simply saying that the Department will, in all proper cases, grant an exception or a permission. The second matter to which I wish to refer is this. I was very glad to have my attention called to Clause 31, and I am sure that my noble friend, no less than myself,

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will accept the assurance exactly as it was given. But I would just point out, in passing, that I have not, as yet, found anything in the Bill which announces or makes any provision for announcing what the Orders in question are to be. I hope that when we are dealing with the Bill in its later stages we shall consider whether if, as may happen, there are going to be a great number of exceptions by Order, there ought not to be in the Bill something which secures that the public shall know what those Orders are.
LORD PETHICK-LAWRENCE: I do not, think your Lordships will expect me to follow the noble and learned Viscount into the picturesque simile that he used regarding methods of legislation. I think it is in Ruddigore that a passage occurs in which a large number of criminals are waiting to be thrown to the crocodiles. One of those so condemned says that he is looking forward to it, because in the long chain of persons who are going to be thrown to the crocodiles are some of his bitterest enemies, and as their turns will come before his they will not have the treat of witnessing his struggle. On the general matter raised by the noble and learned Viscount I agree. I do not think it is an ideal form of legislation. Quite obviously, it is not desirable in most laws to make provisions of this kind and then say that there are large categories of persons who should be exempt. I agree that that is not an ideal method of legislating in general. The trouble with exchange control is that one lapse for a very short time may produce very damaging results before it is possible to make a law. The noble and learned Viscount has been Chancellor of the Exchequer and he knows how in the annual Budget it is very difficult to keep up with the crooked ways by which certain people who should be taxpayers succeed in finding loopholes in existing Statutes, and getting away with unfair advantage as a result.
LORD HAWKE: Would the noble Lord let us know why it is crooked to do something which is allowed by the law?
LORD PETHICK-LAWRENCE: I think I will leave the noble Lord to the noble and learned Viscount over there, because I am quite sure the noble and learned Viscount knows quite well that while it is perfectly legitimate to use the law in the manner that we should not pay more tax
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than the law would oblige, there have been practices adopted which quite clearly do not belong to that category; and Chancellors of the Exchequer have had to recognize it by making retrospective legislation. Retrospective legislation is even less desirable than the provisions in this Bill to which the noble and learned Viscount is taking some exception. But the net result is that it: is absolutely essential that we should stop up possible loopholes by which exchange can be played about with to the detriment of this country. The fact that large masses of exchange could be disposed of before there was time to stop up the leak by legislation makes it essential for the Treasury to have the powers. Therefore, although I agree with the noble and learned Viscount generally, in this particular matter of exchange control I think it is necessary to have these wider powers.
LORD MOYNE: The Government feel the need is for urgency in some hypothetical case if Eire should wish to leave the sterling area. Would it not meet the Government's difficulty if my Amendment were to be framed as it is, but with the words added: "So long as Eire remains within the scheduled territories"? In the case of emergency it could only be if Eire were leaving the scheduled territories. Would such an Amendment be acceptable?
LORD PETHICK-LAWRENCE: I am afraid we cannot meet it in that way.
LORD GIFFORD: Would it not be possible to limit the amount of any particular gift? Would that not meet the case?
LORD PETHICK-LAWRENCE: I do not think you could do that.
LORD MOYNE: I was very unhappy about the Government's doubt on the subject of postal orders, because that is the point that would hit the small man so hard. I can see no reason for not classing postal orders with pound notes or treasury notes. Postal orders are limited in amount—apart from money orders—to one guinea. I think that the Government might be able to give us an assurance on postal orders as on the subject of ten shilling and pound notes.
LORD PETHICK-LAWRENCE: I do not think any hardship is involved because these things will become legal and will be permitted.
LORD MOYNE: On that assurance, I am very happy indeed to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 22 agreed to.
Clause 23:
Payment for exports.
(1) exportation of goods of any class or description from the United Kingdom to a destination in any such territory as may be prescribed is hereby prohibited except with the permission of the Treasury, unless the Commissioners of Customs and Excise are satisfied—
(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:
(3) Any reference in this section to the destination of any goods includes a reference to the ultimate destination thereof.
3.5 p.m.
LORD BALFOUR OF INCHRYE LORD BALFOUR OF INCHRYE moved, after paragraph (b) of subsection (1), to insert:
"In cases where the Commissioners of Customs and Excise consider that the payment is not such as to represent a return for the goods satisfactory to the national interest the Commissioners of Customs and Excise shall declare to the person or persons wishing to export the goods, or to whom payment for the goods would, be made, the reasons for such decision, and shall give such person or persons opportunity of making representations to them concerning the proposed transaction."
The noble Lord said: As the Bill is at present drafted, Clause 23 prohibits 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. The Bill describes two particular conditions on which the Customs and Excise must be satisfied, one being:
"… 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."
Thus it gives to the Governmental authorities enormous powers. It means that unless the Customs and Excise are satisfied that the return is adequate, virtually no export trade can be carried on.
It may well be that under the present circumstances these powers are, in general, necessary. I think they are
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necessary, and one has to admit that fact. But it does seem to me a very wide definition to say that the payment must represent a sum which, in all circumstances, is in the national interest while at the same time you give no opportunity for the trader to make representations as regards the customs of his trade. Indeed, it does not give the trader any opportunity to request—I will not use the word "demand"—the right to receive from the Customs and Excise the reasons why the Customs and Excise would consider the return is not adequate in the national interest in all circumstances. "Satisfactory to the national interest" means, in fact, that the Customs and Excise can question the cost charge for any of our exports. It will make it extraordinarily difficult for traders in the future to be able to fix terms ahead as regards transactions if the transaction is liable to be reopened because the payment to be received is not considered by the authorities to be in the national interest.
I do not think that the Customs and Excise are really the right people to judge what, in all the circumstances, is a return adequate in the national interest. After all, every trader has to what is called "nurse clients" at certain times. In the export trade it is sometimes necessary to sell goods at an uneconomic price in order to create a market. On a short-term basis that might not give a return for these goods satisfactory in the national interest. I am quite sure the Customs and Excise are reasonable men, and that if they had an opportunity of hearing that it is a short-term act in a long-term policy of developing a market, they would probably accede to the opinion of the manufacturer. Therefore I suggest two things: first, that the Customs and Excise should be under an obligation to declare the reasons at any time as to why they consider a return is not in the national interest, and secondly, that having done so, they should allow the trader an opportunity to make his representations as to why he considers the Customs and Excise are in the wrong, and why he is justified in putting forward his proposition for a particular commercial transaction. We on this side of the House are not in any way trying to help someone to do something that is dishonest or near the mark. What we are trying to do is to see that the honest trader of this country is not

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throttled unnecessarily. If the Government must have these powers, and I agree that the Government have to have them now, let them be powers which are not used unilaterally and arbitrarily.
Amendment moved—
Page 16, line 23, at end insert the said words.—(Lord Balfour of Inchrye.)
LORD HAWKE: I would like to support my noble friend. If we have to have this horribly clause I feel that the Govern-merit simply must accept some sort of Amendment of this nature. Imagine the situation of a merchant who has to sell his goods ahead, before shipment, and when he comes to ship the goods the Commissioners of Customs and Excise say: "The invoice price is not in the national interest." What is he to tell his overseas buyer, unless he can go to the Commissioners of Customs and Excise and receive some sort of reason for their action? He could not tell his buyer anything except that the authorities refused to allow him to ship. This might be considered a slur on his own name, or some "pig-headedness" on the part of the authorities. I feel that some provision of the nature suggested is essential.
LORD PETHICK-LAWRENCE: I quite appreciate the point made by the noble Lord opposite and supported by the noble Lord, Lord Hawke. This Amendment states exactly what is the existing practice of the Commissioners of Customs and Excise, which will certainly continue under the new Act. The previous practice has always been to do what is the reasonable thing. It is inconceivable that the Commissioners of Customs and Excise should arbitrarily come down on a trader and say: "You have not to do this"; that they should not have a discussion with him, explain their actions, get his rejoinder, and, if that seems adequate, give way on the point. I do not think that there is any object in putting this proviso into the clause, because there are many other matters which might equally be put into the Bill.
For example, let us suppose that a person has to be searched. A provision might be put in to the effect that the search shall not be carried out in an unreasonable manner, in a cold, draughty place, but shall be conducted properly, in certain circumstances, and so on. One does not put those things into a Bill, because that is part of the reasonable
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action. Here we have something which has not given rise to the kind of arbitrary behaviour to which the noble Lord has called attention. It has not been done in the past. There is no ground for supposing that it will be done in the future. If in every case where a thing had to be done in a reasonable way, a stipulation were put into the Bill that it had to be done in such and such a way, and that it would be most unreasonable if it were not done in that way, we should double the length of the Bill, and not: get any further. For that reason I am afraid that I cannot agree to this being put into the Bill.
LORD BALFOUR OF INCHRYE: Might I ask this question? If this is virtually the practice, is it not a matter of sufficient general importance to be put into the Bill? The noble Lord drew a distinction between a particular case where individuals were searched and something which affects the broad principles of our trade. If this is the practice, I submit that the aim should be to try to put into the context of the Bill as much as possible of the broad principles which animate it. Let me remind the noble Lord that in another Bill, namely, the Coal Industry Nationalization Bill, in this House we had to pass a clause which allowed for certain parties to make representations with regard to particular actions which the Government might take. The noble and learned Viscount, the Lord Chancellor, who was piloting that Bill, was good enough to accept that Amendment and did not use the argument which the noble Lord used just now, which was to the effect that if you put one thing in the Bill you will have to put everything in the Bill. If he will allow me to say so with respect, I do not think it was a very convincing answer. I am not sure that a matter of such general principle should not be inserted in the Bill.
VISCOUNT SIMON: I am very sorry that the answer which has been given by the noble Lord opposite should have been given. His analogy is as far-fetched as he thought mine was on an earlier clause. I quite understand the natural desire of anybody in charge of a Bill to keep it in the shape in which it is. People sometimes wish that because they hope to avoid a discussion in another place. Just consider the clause as a whole. The clause makes some provision as to how the Commissioners of Customs and Excise are to arrange their work. Just see what

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the clause says—what it has been thought worth while to insert in the Bill—and consider whether it is not necessary to have a supplemental clause. Subsection (2) states:
"For the purpose of satisfying themselves in the case of any goods as to the matters specified in subsection (1) of this section"—
one of those things is the question of what is a price satisfactory in the national interest—
"… the Commissioners of Customs and Excise may require the person making entry of the goods for export to deliver to the collector or other proper officer together with the entry such declarations signed by such persons as the Commissioners may require, and where any such declaration has been so required the goods shall not be exported until it has been delivered as aforesaid."
Your Lordships will note that the Government think it worth while to put into the Bill that the Commissioners shall be entitled to administer these interrogatories to the trader. But when it comes to the trader saying, "May I also have it on record that I may know from the Commissioners why they are taking the view which they propose to take, and may I have right of access to the Commissioners in order that I may point out to them that the circumstances of my case are not what they suppose?", there is nothing about that in the Bill.
Every possible facility is given to the Department not only to ask questions but to insist on an answer under pain of certain penalties, but nothing whatever is put into the Bill on a matter which affects a trader and which, as I understood the noble Lord opposite, is in fact what he recognizes as entirely reasonable and fair. I am not for a moment suggesting that the Commissioners of Customs and Excise would not wish to act reasonably and fairly. That is not the point. This is a very good illustration of taking power wider than one really needs, refusing to concede what one ought to concede, and saying: "It will be all right in the end, because look how reasonable Departments are in this free country." I do not think that is good enough. I hope that this Amendment, which admittedly is an Amendment which will not in the least alter the practice, will be added to the Bill.
LORD PETHICK-LAWRENCE: I still do not think that there is any great object in this Amendment. The practice of the
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Treasury will continue to be the practice, and traders, so far as I can see, have no ground for imagining that it will not be. However, if noble Lords opposite take a strong view about this matter and feel keenly about it, I will agree to have it looked into again, to see if we can meet them on the Report stage.
LORD BALFOUR OF INCHRYE: I am very grateful to the noble Lord for his assurance that he will look into this matter between now and the Report stage. I should be very grateful to him if, through the usual channels, he could let us know before the Report stage the result of his deliberations. On that assurance, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
VISCOUNT BRIDGEMAN VISCOUNT BRIDGEMAN moved to leave out subsection (3). The noble Viscount said: Perhaps the noble Lord opposite will not feel that this Amendment is open to the objection which he found to the last one—namely, that it makes the Bill longer. I am well aware—as we all are—that this was a matter which was fairly fully discussed in another place. None the less I think that your Lordships should pay careful attention to this clause, because I, for one, do not see exactly how this can be implemented. I think it is wrong to have a clause like this in the Bill when it is almost impossible to make certain that it is carried out in day-to-day commercial business. I should like to be clear as to how noble Lords opposite think that this subsection is going to be carried out. For instance, let us imagine a cargo of, say, textiles or electric motors, or something of that sort, consigned to Singapore, Rotterdam, or any other port. What is the ultimate destination, and how can the exporter possibly know what the destination of these goods is going to be, beyond the destination expressed in the invoice? That is a matter of pure conjecture.
If your Lordships want a slightly more far-fetched case let us imagine that a cargo of explosives is consigned to a Near Eastern country and a Near Eastern port. What does one suppose will be the ultimate destination of those explosives, and how would it be wise to try and deal with such a case under the Bill I seriously suggest either that my Amendment is accepted, or that the noble Lord opposite should consider some other form of words in reference to the destination, and relate that reference to the person to whom the

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exporter looks for payment rather than oblige the exporter by law to do something that is likely to be quite impossible. I beg to move.
Amendment moved—
Page 16, line 40, leave out subsection (3).—(Viscount Bridgeman.)
LORD PETHICK-LAWRENCE: I think I can satisfy the noble Viscount on this point. I believe he is under a slight misapprehension. "Ultimate destination" obviously does not mean, and could not mean, the ultimate place to which the goods may go in the course of time. Those words mean the ultimate customer to whom the goods are sent by the exporter. What we are trying to prevent is the case where a man is in fact going to send goods to America although the boat calls at Cherbourg on the way. He should not be able to get away with the idea that the goods are going to Cherbourg, having sent previous instructions to his agent in Cherbourg to send them on to the United States. That must be stopped. If a man sends goods to a New York buyer, his real customer, and after the man has dealt with the matter the New York importer chooses by some other means to send them to Mexico, to the Argentine, or anywhere else, that does not come under the phrase "ultimate destination." I think that the point which the noble Viscount quite rightly made is met, because the words "ultimate destination" fall to be construed, if necessary by a court, as the last point with which the exporter is concerned. I hope that the noble Lord will be satisfied with that explanation.
VISCOUNT SWINTON: Is the word "ultimate" defined in the Bill? I do not dissent from what the noble Lord has said. I have had a good deal of experience the other way round, of goods consigned from a country, and one wants to know what was the country of origin. It was a very common practice in the days of differential duties, when people wished to evade the duty. It seems to me that "ultimate" is not the right word, and what we want is something like "bona fide." I do not know whether the word "ultimate" is defined in the Bill, but in any event I feel that what is wanted is something like "genuine" or "bona fide."
THE LORD CHANCELLOR: The word "ultimate" is not defined in the
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Bill. I feel certain that as a matter of construction you must regard "ultimate" in the context of the particular exporter. You cannot possibly have regard to what the exporter sells, and then say that what he may do with the goods has nothing whatever to do with it. I am sure the word "ultimate" will have to be construed as "ultimate quoad the exporter."
VISCOUNT BRIDGEMAN: I am quite at one with the noble Lord in wishing that the practices which he mentioned should be stopped. I think we all agree about that, but I still do not feel that these words "ultimate destination" are the clearest possible words which we can find for expressing what is wanted. If "ultimate destination" is the expression that is thought to be wanted, I suggest that at any rate there should be a reference to it in the interpretation clause, and actually there is not. I hope, therefore, that we may have an assurance that the matter will be looked into, and that we shall not be left with words which, if I heard aright, may still remain in doubt until they are interpreted in the courts.
LORD PETHICK-LAWRENCE: I do not think there is any real doubt here.
VISCOUNT SIMON: I would just like to point this out. In view of the fact that a price is to be examined to consider whether or not it is in the national interest—and here I agree with the noble and learned Viscount, the Lord Chancellor—it is pretty clear that what is referred to is the transaction between the exporter and his customer. But would it not be well to consider whether the word "ultimate" is not perhaps an ambiguous word? What is the matter with substituting a phrase like "bona fide," or some other word? I do not think it can be doubted that the noble Lords who have raised this question are very familiar with the position, and they are certainly not trying to waste time. I should have thought it might be reasonable to say, in answer to the point, that as a matter of language it would be considered.
LORD PETHICK-LAWRENCE: The matter has already been considered very carefully, and I do not think we shall find a better word.
VISCOUNT BRIDGEMAN: In that case, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 23 agreed to.
Clause 24:
Duty to collect certain debts.
(2) Where a person has contravened the provisions of subsection (1) of this section in relation to any specified currency or payment in sterling, the Treasury may gibe to him or to any other person who appears to the Treasury to be in a position to give effect thereto (being a person in or resident in the United Kingdom) such directions as appear to the Treasury to be expedient for the purposes of obtaining or expediting the receipt of the currency or payment in question, and, without prejudice to the generality of the preceding provisions of this subsection, may direct that there shall be assigned to the Treasury, or to such person as may be specified in the directions, the right to receive the currency or payment or enforce any security for the receipt thereof.
3.25 p.m.
LORD BALFOUR OF INCHRYE LORD BALFOUR OF INCHRYE moved, in subsection (2), to leave out "contravened" and insert "been convicted of contravening." The noble Lord said: The Bill as drafted at present says that where a person has contravened a provision of this particular subsection the Treasury may give to that person orders as to what he is to do with certain funds. The purpose of the Amendment is to make it clear that a contravention can only take place after conviction by a court of law. As I read the Bill at the present time, it seems to me that the Treasury can make a unilateral declaration that contravention has taken place, and therefore the man in question must comply with the Treasury direction. I am conscious that I am swimming in very strange waters—the waters of expert legal knowledge—but it does seem to me that here we are introducing a new principle, that a Government Department can itself declare that a contravention has taken place. That might lead us anywhere.
Supposing that the Chancellor of the Exchequer were temporarily short of funds, could he go round to everyone and say: "You have been contravening, and therefore the Treasury is going to give you certain directions. Please hand us your money"? That seems to me perhaps a rather exaggerated example, but nevertheless a possible example of what might happen if the Treasury were allowed to say on its own order that a contravention
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had taken place. This matter was debated in another place, and there—with respect to the Solicitor-General—it seemed to me that no satisfactory answer was given. I hope, therefore, that the Government may be able to accept this Amendment. At the same time I would very much like to know who is to decide that a contravention has taken place, if the Government maintain that a conviction in a court of law is not a necessity, and what is to happen if the Treasury takes it on itself to say that any contravention has taken place, and the man denies such contravention. Does the matter then go to law, or does the Treasury Order hold sway? I feel that this is a matter that does need some elucidation, and I beg to move the Amendment.
Amendment moved—
Page 7, line 21, leave out ("contravened"), and insert ("been convicted of contravening").—(Lord Balfour of Inchrye.)
THE LORD CHANCELLOR: The noble Lord has swum very gallantly in these strange waters, and if I may I will try to help him to get safely to land. I think the real position under this clause is as follows. The condition of the Treasury making these directions is that a man has contravened. If the man has not contravened, then it follows from the clause that the Treasury have no right to give these directions. Suppose the Treasury think a man has contravened and thereupon give him directions, and suppose the man is quite sure he has not contravened. In those circumstances he is perfectly entitled to go to the court, and if he can establish that he has not contravened, he knocks away the foundation upon which the Treasury direction is issued. The Treasury direction falls to the ground at the same time as the courts say the man has not contravened. I think it is so far quite plain. As a matter of practical politics, it is interesting to note that there never has been such a case.
The practice in these matters is that if the creditor over here has sent goods to America and there seems to be no hurry on the part of the American to pay for them (sometimes one rather suspects that it may be that the creditor over here is telling his friend in America not to hurry unduly), the Treasury come along and say: "Look here, this is not good enough; you must really write to your American friend and wake him up." In practice

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the letter so suggested by the Treasury—or, if you like, drafted by the Treasury—is the direction. That is the way in which the thing works; and it has worked with perfect smoothness, although I suspect there may have been cases in which the creditor over here has said to the debtor in America, "Never mind what letters I write you hereafter—they will be inspired by the Treasury. Do not you pay. "There may have been such cases as that but, broadly speaking, the scheme has worked very well. It would make it quite impossible for the Treasury if, before they issued any direction, somebody had to go to the courts and get a ruling as to whether or not a man had contravened. The right way in which to do it is to keep it as it is, always preserving the individual's right—a right which in seven years has never been exercised—to go to the court and say, "These directions are all invalid; I have not contravened at all."
LORD BALFOUR OF INCHRYE: I thank the noble and learned Viscount for his explanation, which I look forward to reading in Hansard and digesting at my leisure. In view of the explanation I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 24 agreed to.
Clause 25:
Duty not to delay sale or importation of goods.
(1) Where—

(a) any permission or consent has been granted under this Act, or under any corresponding provision of the law in force in any territory comprised in the scheduled territories, subject to a condition providing that, or on the faith of an application stating an intention that, any goods should be sold outside the scheduled territories; or

(b) any statement or declaration has been made under any provision of this Act or any such corresponding provision as aforesaid that any goods are to be sold outside the scheduled territories; or

(c) any currency has been obtained in, or by any person resident in, the scheduled territories on the faith of an application stating an intention that any goods should be sold outside the scheduled territories,

then, except with the permission of the Treasury, no person resident in the United Kingdom who is entitled to sell or procure the sale of the said goods shall do, or refrain from doing, any act with intent to secure—

(i) that the said sale is delayed to an extent which is unreasonable having regard to the ordinary course of trade; or

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(ii) that, on the said sale, any payment made for the goods is not made in the manner indicated by the condition, statement, or declaration, as the case may be.

LORD HAWKE LORD HAWKE moved, in subsection (1) (c) (ii), after the second "made" to insert "materially". The noble Lord said: My object in putting down this Amendment is to try to introduce a little flexibility into what may otherwise prove to be a very wooden form of procedure. I have in mind a case where an exporter has passed his invoices, and so on, through the Customs, where the goods are on their way and where the importer in the other country says that he cannot adhere to the original terms of payment but wishes to make some small change, perhaps to conform with his local Finance Regulations or to conform to a changed state of his pocket. It seems that if an exporter agrees to make some trivial change in the method of payment he may lay himself open to a charge of doing an act to secure that payment was not made, and so on. I should to receive an assurance that any such composition, if I may so call it, which an exporter accepts will not be held against him as an act done with intent to secure. I beg to move.
Amendment moved—
Page 18, line 13, after ("made") insert ("materially").—(Lord Hawke.)
LORD PETHICK-LAWRENCE: The suggestion underlying this Amendment is that modification as to payment ought to be possible without getting Treasury permission, provided that the modification is not material. The point, of course, is who is to judge what is material and what is not material. Let me give an illustration. Suppose a London merchant has been allowed to buy American goods on the condition that they are sold in the Argentine for Argentine sterling, and diverts them to Greece, so that they are sold for Greek sterling. He may think the difference is immaterial because in each case he gets sterling, but the national interest is very much concerned with the source and type of sterling used in payment for our exports because different holders of sterling vary in their claims on us. Only the Government, with its up-to-date knowledge of a complex and changing system, can decide what to allow and what to disallow. As a result, it is proposed in this Bill that the exporter must go to his bank, if for any

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reason he is unable or unwilling to fulfill the terms on which the exchange was made available to him, and get permission accordingly. If we depart from that principle we shall, I am afraid, get into deep waters. We cannot leave it to the man to decide whether the alteration is material. The right way in which to do it is for him to go to the bank and inquire whether the alteration proposed is such as seriously to affect the nature of the transaction.
LORD HAWKE: May I ask the noble Lord a question? Has the bank power to decide trivial matters without reference to the Treasury? The instance the noble Lord gave was a far more serious change in the method of sale than I contemplated. I contemplated something trivial like a demand draft instead of telegraphic transfer. Has the bank power to decide that on the spot If so, that would satisfy me.
LORD PETHICK-LAWRENCE: A bank has power delegated to it by the Bank of England, the Treasury or whoever it may be, and acts reasonably. In the matter of any small modification which quite obviously made no difference the bank could decide for itself.
LORD HAWKE: With that assurance, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 25 agreed to.
Clauses 26 to 29 agreed to.
Clause 30:
Companies.
30.—(1) Where there is served on any person resident in the United Kingdom a notice in writing that the Treasury wish any such requirements as are hereinafter mentioned to be complied with by any such body corporate as is specified in the Second Schedule to this Act (hereafter in this subsection referred to as a "foreign company"), and that person can, by doing or refraining from doing any act,—

(a) cause the foreign company to comply with any of the requirements; or

(b) remove any obstacle to the foreign company complying with any of the requirements; or

(c) render it in any respect more probable that the foreign company will comply with any of the requirements,

then, except so far as permission to the contrary may be given by the Treasury, that person shall do, or, as the case may be, refrain from doing, that act.
LORD RENNELL: Perhaps I may be forgiven if I return to a point I raised on
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the Second Reading concerning Clause 30. It is to ask once more if the Government will, between now and the Report stage, consider seriously whether Clause 30 should remain in the Bill. I do not want to reiterate the arguments I used on the Second Reading. I have well in mind the observations which the noble and learned Viscount made at the conclusion of that debate. I am quite aware of the purposes of this clause and also of the type of company to which it refers. I am also aware that existing Regulations cover that particular point. There is, however, the distinction to be made that those Regulations were made in time of war, when a lot of things could be permitted, or might have been desirable or could be excused, in regard to foreign companies which are much more difficult to excuse in peacetime.
The real point at issue is this. There may be some foreign companies—subsidiaries to companies in this country or controlled by evilly-intentioned persons in this country—which exist for the purpose of evading exchange Regulations or of depriving this country of the benefit of certain foreign exchange. For that purpose it is considered necessary to put pressure on the people controlling those foreign companies in this country. I agree that that may be desirable and I do not doubt that this clause has been inserted in the Bill because those powers have been considered to be necessary and still are considered to be necessary, but they cannot be powers which have been very frequently invoked or which are likely to be frequently invoked in the future. The real point at issue is that here is a Bill which will shortly become an Act of Parliament in this country in which powers are given in black and white to put pressure on a foreign company.
Subsidiary companies in this country, owned by foreign concerns, are subject to the law of this country. Subsidiary companies in other countries—in Ruritania, or whatever other country—are subject to the laws of that country. For the purpose of protecting ourselves against the two or three cases of this sort which may arise, I think it is using an extremely dangerous weapon which other countries may use against us in circumstances that we would not consider justifiable. In other words, it opens the way to another country retaliating—and retaliating in quite

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different circumstances—with only a slight modification of the words used. I ask the noble Lord who is in charge of this Bill to consider between now and the Report stage whether it is not very dangerous to have this clause in an Act on our Statute Book for the sake of stopping two or three crooks in this country who may be apprehended by other methods. In all these matters there are other ways of killing a cat than by drowning it. I wonder whether, for the sake of one or two, this very difficult and serious principle of putting pressure upon a foreign company ought to find its place in an Act.
VISCOUNT BRIDGEMAN: I do not wish to take up the time of the House, and I rise only to say that I am in very full agreement with what the noble Lord has said, as I believe are other noble Lords.
LORD PETHICK-LAWRENCE: There are two kinds of transactions which are dealt with by this clause. There is one where you have a purely bogus company, to which the noble Lord himself referred, and in that case these powers ought to exist. The other case is that of a perfectly genuine company with a subsidiary abroad, and the question is whether that company should be allowed, for perfectly bona fide reasons, to pursue its transactions abroad without regard to the national interest. They may be perfectly legitimate transactions in themselves, and yet it may not be in the interest of this country as a whole that they should be carried out. To give one illustration, a company in this country may wish unduly to stockpile in various other countries. It may be in the interest of that particular company, but: at the same time it may be that we cannot afford a transaction of that kind to be carried out, and we have to prevent it.
I can assure your Lordships that the powers have been, and will continue to be, used sparingly, giving full weight to the considerations mentioned in the suggestion put forward by the noble Lord. It is certainly not the intention or the policy of His Majesty's Government to force the liquidation of successful British subsidiaries abroad; quite the contrary. We desire to assist them, within the severe limits of the means at our disposal, to become even more successful. We have no desire to kill the goose that lays the
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golden egg, but we feel that these powers must be in reserve. I can give the assurance—which I think is really what the noble Lord desires—that they will be sparingly used, and that the interests of the subsidiary will, in the main, be taken fully into account.
VISCOUNT SWINTON: I really think the noble Lord has missed the point Lord Rennell was advancing. I accept entirely that these powers are going to be sparingly used in the way the noble Lord has indicated. Frankly, I did not think that the instance he gave was a very good one, because he said we might want to stop a subsidiary company in a foreign country stock-piling to excess. There is a very simple way in which that can be dealt with, because we row have to have a permit for everything we do—and, indeed, before we do it. It appears to be perfectly simple to control that matter by the system of export permits from this country. If you do not give a company the materials they cannot export in excess. You are taking tremendously wide powers here which, although they are not going to be exercised very often, are creating a precedent. This is very likely to be prayed in aid by foreign countries not nearly so careful, nor nearly so meticulous, in carrying out the powers they take.
You may say that foreign countries will do what they like, but there is great respect for this country abroad. There is a great respect for our legal system, our commercial practice and our commercial court. It is common knowledge, as the noble Viscount, the Lord Chancellor, will know, that wherever a contract is made, arbitration is by an English arbitration and takes place here, governed by our law, and our trade rules. Those things are important and we want to be careful before we put in an Act of Parliament something which might be cited by others as a precedent of the way in which the English legislature works. I think I have understood what is in the mind of the noble Lord, Lord Rennell. If there is some way in which this can be done, then I think it would be wise to reconsider this clause.
LORD RENNELL: The noble Viscount who has just sat down has made my point. I am not questioning that there are cases where this power ought to be used, but I wonder whether it is worth

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while running the risks to which I have referred by getting those powers in an Act and inviting reprisals. I wonder whether it is not better to suffer whatever loss may be suffered—which, on the showing of the noble Lord himself, is likely to be small, because the powers will be very sparingly used. For the sake of those few instances I do ask the noble Lord to consider between now and the Report stage whether it is wise to invite the reprisals which this clause might promote.
VISCOUNT HALL: I apologize for interrupting the business before your Lordships House, but I ask permission to make a statement. I therefore move that the House be now resumed.
Moved, That the House do now resume.—(Viscount Hall.)
On Question, Motion agreed to, and House resumed accordingly.

PALESTINE.
3.50 p.m.
VISCOUNT HALL: My Lords, the following is a statement on Palestine which is being made by the Secretary of State for Foreign Affairs in another place, and according to the usual practice your Lordships would wish it to be made also in your Lordships' House.
The following is the statement:
I am sorry to have to inform the House that the Conferences with the Arabs and the consultations with the Zionist Organization about the future of Palestine, which have been proceeding in London, have come to an end because it has become clear that there is no prospect of reaching, by this means, any settlement which would be even broadly acceptable to the two communities in Palestine. Ever since they have taken Office the Government have laboured incessantly to find a solution to the Palestine problem. Most members on this side of the House believed that no solution could be found along the lines of the White Paper of 1939, and the Government, therefore, addressed themselves at once to the task of devising a different approach on which they could negotiate with the parties concerned.
In view of the keen interest shown by American Jewry in the aspirations
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of Zionism it was thought desirable that the Government of the United States should be associated with this endeavour and as a result an Anglo-American, Committee of Inquiry was appointed in November, 1945. At the same time it was decided that Jewish immigration into Palestine should be temporarily continued at the rate of 1,500 a month notwithstanding the limits set by the White Paper, and an additional 21,000 Jews have already been admitted. When the Report of the Anglo-American Committee was received we agreed with the United States Government that it should be examined by British and American officials. They jointly recommended the plan of provisional autonomy which was described by my right honourable friend the Lord President of the Council on July 31, 1946.
This plan gave us a basis for negotiation with the parties concerned and no time was lost in inviting them to confer with us. Neither of the two communities in Palestine accepted this invitation, but a conference with representatives of the Arab States was opened in London in September of last year. After an adjournment, due to the meeting of the General Assembly of the United Nations, the Conference was resumed in January, the Palestine Arabs then joining in the discussions. The Jewish Agency have throughout refused to participate in the Conference, although informed that all proposals would be open for discussion, but it has been possible in this last phase to have conversations on an informal basis with representatives of the Agency.
From the outset both Arabs and Jews declined to accept as a basis for discussion the provisional autonomy plan put forward by His Majesty's Government. The Arabs put forward an alternative proposal, under which Palestine would achieve early independence as a unitary State with a permanent Arab majority. His Majesty's Government, seeing no prospect of negotiating a settlement on that basis, put forward new proposals of their own. These envisaged the establishment of local areas, Arab and Jewish, with a substantial degree of autonomy within a unitary State

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with a Central Government in which both Arabs and Jews would share.
These proposals provided that Jewish immigrants would be admitted over the next two years at the rate of 4,000 a month, and that thereafter the continuance and rate of Jewish immigration should be determined, with due regard to economic absorptive capacity, by the High Commissioner in consultation with his Advisory Council, or, in the event of disagreement, by an arbitration tribunal appointed by the United Nations. This plan, while consistent with the principles of the mandate, added an element which has hitherto been lacking in our administration of Palestine—namely, a practical promise of evolution tending towards independence by building up during a five-year period of trusteeship political institutions rooted in the lives of the people. It was offered as a basis of discussion. These three solutions have already been made known in a broad outline, and we intend to lay before the House later in the week a White Paper describing each of them in greater detail.
The latest proposals of His Majesty's Government were rejected outright by both the Arab Delegations and the representatives of the Jewish Agency, even as a basis for discussion. I think it important that the House should understand clearly the reasons which prompted the two sides to reject this solution. For the Arabs the fundamental point is that Palestine should no longer be denied the independence which has now been attained by every other Arab State and that in accordance with the accepted principles of democracy the elected majority should be free to determine the future destiny of the country. They regard the further expansion of the Jewish national home as jeopardizing the attainment of national independence by the Arabs of Palestine, which all Arab States desire, and they are therefore unwilling to contemplate further Jewish immigration into Palestine. They are equally opposed to the creation of a Jewish State in any part of Palestine.
The Jewish Agency, on the other hand, have made it clear that their fundamental aim is the creation of an
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independent Jewish State in Palestine. With this in view they first proposed that His Majesty's Government should continue to administer the Mandate on a basis which would enable them to continue to expand the Jewish National Home until such time as they had attained by immigration a numerical majority in Palestine and could demand the creation of an independent Jewish State over the country as a whole. When it was made clear that His Majesty's Government were unable to maintain in Palestine a mandatory administration under the protection of which such a policy could be carried out, the representatives of the Jewish Agency indicated that, while still main-taming the justice of their full claim, they would be prepared to consider, as a compromise, proposals for the creation of "a viable Jewish State in an adequate area of Palestine." While they were not themselves willing to propose a plan of partition they were prepared to consider such a proposal if advanced by His Majesty's Government.
His Majesty's Government have thus been faced with an irreconcilable conflict of principles. There are in Palestine about 1,200,000 Arabs and 600,000 Jews. For the Jews, the essential point of principle is the creation of a sovereign Jewish state. For the Arabs, the essential point of principle is to resist to the last the establishment of Jewish sovereignty in any part of Palestine. The discussions of the last month have clearly shown that there is no present prospect of resolving this conflict by any settlement negotiated between the parties. But if the conflict has to be resolved by an arbitrary decision, that is not a decision which His Majesty's Government are empowered, as Mandatory, to take. His Majesty's Government have of themselves no power under the terms of the Mandate to award the country either to the Arabs or to the Jews, or even to partition it between them.
It is in these circumstances that we, have decided that we are unable either to accept the scheme put forward by the Arabs or by the Jews or to impose ourselves a solution of our own. We have, therefore, reached the conclusion that the only course now open to us is to sub-

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mit the problem to the judgment of the United Nations. We intend to place before them an historical account of the way in which His Majesty's Government have discharged their trust in Palestine over the last twenty-five years. We shall explain that the Mandate has proved to be unworkable in practice, and that the obligations undertaken to the two communities in Palestine have been shown to be irreconcilable. We shall describe the various proposals which have been put forward for dealing with the situation—namely, the Arab Plan, Zionist aspirations so far as we have been able to ascertain them, the proposals of the Anglo-American Committee and the various proposals which we ourselves have put forward. We shall then ask the United Nations to consider our Report and to recommend a settlement of the problem. We do not intend ourselves to recommend any particular solution.
Though we shall give immediate notice of our intentions, we see great difficulty in having this matter considered by the United Nations before the next regular Session of the General Assembly in September. We regret that the final settlement should be subject to this further delay, particularly in view of the continuing strain on the British Administration and Services during this further period. We trust, however, that, as the question is now to be referred to the United Nations, all concerned will exercise restraint until their judgment is known.
4.3 p.m.
VISCOUNT CRANBORNE: My Lords, I should like, if I may, to thank the First Lord of the Admiralty for the very full statement which he has made with regard to the position in Palestine. Clearly, this statement is historic. It has disclosed the failure of the Government—I use the word "failure" in no offensive sense—to find, despite their utmost efforts, a basis of agreement acceptable to both the Arabs and the Jews, and their decision to submit the whole problem to the United Nations. Whether this step might have been rendered unnecessary by earlier and more resolute action I do not propose to discuss to-day. But we do recognize, of course, in all quarters of the House, the immense difficulties with which the Government have been faced, and we recognize that,
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very likely, they have no other course open to them at the present time than that which they have taken. At any rate, I do not propose to discuss it to-day, but I would like to give notice to the Government that we shall put down a Motion for debate at an early date.
VISCOUNT SAMUEL: My Lords, in all quarters of the House regret will be felt that the discussions which have taken place should have resulted in failure, though such a result was by no means unexpected. In the present situation there is little doubt that the only course open to the Government is to make a reference to the United Nations, though I am sure that in all quarters of the House the regret of the Government will be shared that so long a delay will be involved before consideration of this question by the United Nations can be undertaken. Meanwhile, we would all wish to abstain to-day from engaging in any discussion, especially in view of the notice which has been given by the noble Viscount, the Leader of the Opposition, to ask for a debate at any early date in your Lordships' House.
LORD STRABOLGI: My Lords, I do not wish to enlarge this discussion in any way but I would like to ask my nobly friend, the First Lord of the Admiralty if I may, two questions which I think are important and practical. There is bound to be—as the noble Viscount has reminded your Lordships—considerable delay before this problem is considered by the United Nations, and in the meantime, there are certain problems of administration in Palestine about which I think the House is entitled to some information, particularly in view of what fell from the lips of my noble friend with regard to the White Paper of 1939. In the interim, which may be very long—it may be a year or more before there is some satisfactory settlement—what is going to happen with regard to immigration? I do not gather that any new figure has been announced. Secondly—and this is quite urgent—are the present restrictions on the purchase of land in Palestine to be maintained in force? I would be very grateful if my noble friend, the First Lord of the Admiralty, can give me some information on those two points.
VISCOUNT HALL: The two matters which have been referred to by my noble

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friend, Lord Strabolgi, are two of many which are now being considered by the Government. I desire to express my thanks to the two noble Viscounts who have spoken very briefly upon the statement which has been made, and I can assure them that a day will be set aside at an early date for a debate in your Lordships' House on this matter.

EXCHANGE CONTROL BILL.
4.8 p.m.
House again in Committee.
LORD PETHICK-LAWRENCE: I think that just before we broke off I was asked by noble Lords opposite if I could extend the declaration which I had made. With regard to the remarks of the noble Viscount, Lord Swinton, I do nor think it is correct that we have the powers to which he has referred, and I am afraid that I cannot go further than I have gone.
LORD RENNELL: I thank the noble Lord for his statement. I had thought of moving an Amendment to omit the clause, but I hoped that the Government would be persuaded to do it.
Clause 30 agreed to.
Clauses 31 to 36 agreed to.
Clause 37 [Other powers of Treasury]:
VISCOUNT SIMON VISCOUNT SIMON moved, after subsection (2), to insert the following subsection:
"(3) Any permission, consent, authority or direction granted or given by or under the authority of the Treasury under this Act (except in cases where such permission, consent, authority or direction is granted or given in respect of an individual) shall be published in the prescribed manner for the purpose of ensuring that it shall be adequately known by the persons concerned, and a failure to observe any such direction shall not be made the subject of a prosecution unless such failure arises after such publication as aforesaid."
The noble and learned Viscount said: Consideration of the Bill by the Committee has necessarily been interrupted in order that a very important statement might be made. I hope that I may now be allowed to submit to the House that the question raised in this Amendment put forward by Lord Balfour of Inchyre and myself is really a very important one. The
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question is whether or not we are going to provide in this Statute, in so far as the Treasury make general permissions, or give general authorities or directions, that what the Treasury thus decide is made public. I will not say any more in criticism of the form of the Bill, because it is really common ground between the noble Lord, Lord Pethick-Lawrence, and the rest of us that this Bill does take an exceptional form (which is said to be necessary) in that it lays down enormously wide prohibitions for breaches of which, on the face of it, everybody may 133 prosecuted and, in some cases at any rate, may go to prison.
Those prohibitions, as I say, are enormously wide, but none the less, as the noble Lord rightly points out, it is hoped to make the actual effect of the Bill much less widespread, because it is the firm intention of the Treasury to issue general orders of exemption. That is all very well. Whether the right way is to prohibit all sorts of things and then excuse a large part of them is another matter. Already in the Committee stage to-day my noble friend Lord Moyne has been assured that the appeal which he made about people who come from Eire and who want to send postal orders and pound notes to their relatives in Eire, which under the terms of the Bill is a criminal offence, will be met, and that it will be met by a general Order such as the Treasury may make under the Bill. There are many other cases in the Bill where similar provisions are to be made. Of course, I do not suggest that the permission by way of exception given by the Treasury to an individual, such as a man who wants to travel abroad and asks if he can take with him a limited amount of sterling, should be published. It is a limited thing, and, indeed, I think the paper shortage would make it practically impossible to have it published.
But when you come to decisions by the Treasury—whether permitting things or prohibiting things under the terms of this Bill—which refer to a class, I do submit to the good sense and fair judgment of this House that these kings ought to be published. They ought to be published because, of course, everybody else in like case is entitled to know if the Treasury in their judgment think that a particular class of case should be exempted and the rigour of the Bill should not apply to it. It is no good their deciding or making an

723
Order unless it is published. I speak subject to correction, and I am sure the noble and learned Viscount the Lord Chancellor will correct me with his usual courtesy if I am wrong. But, so far as I have been able to see, there is nothing in this Bill, as it is now before us, which provides for publication. Therefore, it is quite possible, and indeed it will be the case, that permission of a general character will be given in various directions.
All I am saying in this Amendment is that there ought to be publication in some proper form of these general powers. I believe that the proposition is one that can hardly be resisted. I am sure it must receive the sympathy of everyone in this House, quite apart from Party, because obviously, if it can be done, it will be the fair thing to do. With that in mind, may I be allowed just to read the Amendment to the House, because not everyone has the Marshalled List in front of him? I am not saying that this is necessarily the best way to draft it, but I think it does express the idea. This is what I seek to add to Clause 37 in the Bill:
"(3) Any permission, consent, authority or direction granted or given by or under the authority of the Treasury under this Act (except in cases where such permission, consent, authority or direction is granted or given in respect of an individual) shall be published in the prescribed manner for the purpose of ensuring that it shall be adequately known by the persons concerned, and a failure to observe any such direction shall not be made the subject of a prosecution unless such failure arises after such publication as aforesaid."
I hope I shall not be met with either of two possible responses. In the first place, I hope I shall not be asked to consider whether the words are exactly right—I am sure I shall not be, with the Lord Chancellor sitting there. I am most willing to believe that those who are responsible for this Bill, and the noble and learned Viscount in particular, will see that it is put in the best possible words. I have done the best I could, and I hope, at any rate, that it is plain English, which is more than could be said of everything in Acts of Parliament. The second answer which I hope will not be offered is: "Oh, I can assure you that is what we always mean to do." The question is not whether the Treasury are going benevolently beyond what they are obliged to do; the question is whether it ought not to be put in the Bill. All sorts of things are prohibited under penalty in
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this Bill, subject to the class of cases in which the Treasury give permission. It is only common sense and reason that you should publish an explanation of Orders which the Treasury make in mitigation under the Bill.
Publication is necessary, first of all, in order that there may be fair play for everybody. If there is such a general permission given, and some people do not happen to know of it, then they may abstain from taking any action which they would be allowed to take because the Bill makes it a criminal offence to do it. It is also necessary because it is quite wrong to leave people to break the law on the chance that it will be forgiven or forgotten. I will take the case of these Irish employees over here which was mentioned by me on the Second Reading, and mentioned much more fully and persuasively by my noble friend behind me to-day. It is all very well to say: "You may take it the Treasury will not make any bones about these girls in restaurants in London sending money home to Eire by postal order." The fact remains that if I say that to one of these girls and she sends a postal order home she will, as things stand, be breaking the law—the criminal law—unless she gets permission. On the earlier Amendment I noticed my noble friend Lord Pethick-Lawrence met the objection of Lord Moyne by saying: "Oh, the Treasury will make an Order about that." I am very glad to hear it. But are they going to publish the Order? I suggest it is only right that these things should be published, and I am encouraged to think that this will be received with some friendly consideration because, in answer to an earlier Amendment, my noble friend opposite, the Secretary of State, thought the Treasury had already been collecting a whole bundle of drafts which were going to be issued at the same time as the Bill.
Making an Order is one thing, but making it known to the public is another. I want to secure the provision in the Bill which I have here endeavoured to state. It seems to me manifestly wrong that anybody should be punished because he has not obeyed a Treasury direction, which is one of the features of this Bill, though he has had no opportunity of knowing what the direction is. There have been cases under the Food Regulations—and I speak subject to correction—where people have been prosecuted for breaches

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of Regulations although they did not know the Regulations existed. I am not asking for more now than that the noble Lord. Who is good enough to reply will give this House a firm assurance that the Government will put into this Bill the provisions which cover the ground I have indicated. I hope very much that they will do so. I feel sure it is the general feeling of noble Lords here that it ought to be in the Bill, and I hope very much we shall be able to see it put there by general consent.
Amendment moved—
Page 25, line 35, at end insert the said subsection.—(Viscount Simon.)
VISCOUNT MAUGHAM: In the absence of other lawyers to speak to this Amendment I think it is desirable I should say just one word. Clause 37 of the Bill, subsection (3), obviously suggests that by virtue of a direction given by the Treasury under the Act no person may be convicted of an offence against the Act unless the direction was served on him or he knew, or avoided getting to know, of the giving thereof. There is a proviso about reasonable steps being taken for the purpose of bringing the purport of that direction to his notice. If these steps were taken, "it shall be for him to show that he neither knew nor avoided getting to know of the giving thereof"; that is to say, the onus is shifted in that case, and he has to prove that he did not know or (what would be a very funny conception) avoided getting to know. If it were a direction which was published anywhere there would presumably be no difficulty in his knowing without any such clause as this.
It seems to me that under a Bill of this sort relating to exchange control, no person ought to be prosecuted, or be subjected to the stigma of prosecution and possibly disagreeable consequences of a judgment against him, whether rightly or wrongly, unless he is aware, in the ordinary course of his business, that something is prohibited and that he does it at his peril. In such a measure as this, it seems to me that precisely the same principles apply as apply in the case of a taxing Statute—namely, that the offence should be made clear and that the facts upon which a prosecution may be launched should be obvious to any citizens of the realm.
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It is new to me in a Statute of this character that there should be an obligation the breach of which involves a criminal act unless there is a full publication to all the people who might be affected by it and unless the man therefore knows precisely what risks he is running. I would observe for my part, without in any way limiting what other people may think about it, that the strength of the case against this clause as it stands is that it applies to any directions given by the Treasury under the provisions of this Bill, whether the directions are reasonable or unreasonable. In either case it applies.
VISCOUNT SLAION: And to any permission.
VISCOUNT MAUGHAM: And to any permission. Secondly, it applies however general the direction may be. So that anybody who is in any way concerned with any such transaction as is dealt with in the Bill may find himself subject to prosecution under subsection (3) of Clause 37. I cannot help thinking that the matter should be clarified a little more, so that what I would regard as a legal mistake should not be perpetrated and possible injustice done in the future under the provisions of this Bill.
THE LORD CHANCELLOR: I am not quite certain that I understand the real point of this Amendment. I can only judge the Amendment by the words it uses. I quite realize that drafting errors may be put right hereafter. I want to try to follow the substance of the thing. The Amendment, as I follow it, falls into two parts. First, it is saying that any permission, consent, authority or direction (except in cases where such permission, consent, authority or direction is given in respect of an individual) must be published in the prescribed manner. "Prescribed," as the noble Viscount has pointed out, is defined in the Bill as meaning "prescribed, for the purposes of the provision in question, by order of the Treasury." That is all it means.
The Amendment goes on to deal with a criminal offence, and says that no one is to be found guilty of a criminal offence, which arises under a direction rather than under an exemption, unless the particular direction has been brought to his attention. It seems to me that in drafting that, the noble Viscount failed to

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notice subsection (3), because that was designed to deal with that point. We make it quite plain in subsection (3) that, so long as the direction is not published under the Rules Publication Act or the Statutory Instruments Act, when that takes its place—we had a discussion on the Statutory Instruments Act—the public are not presumed to have notice of these matters. If it is there then the man may be convicted, but if it is not there, he cannot be convicted "unless the direction was served on him or he knew, or avoided getting to know, of the giving thereof." That sometimes happens. It has to be proved that the man deliberately avoided getting to know, as, for instance, by deliberately abstaining from opening any letters that he thought might come from the Bank or the Treasury. But that has to be proved.
The subsection goes on to state:
"Provided that where reasonable steps are taken for the purpose of bringing the purport of the direction to his notice it shall be for him to show that he neither knew nor avoided getting to know of the giving thereof."
That is our code and that is what we have set out to do. May I say one further word, so far as exemptions are concerned. I think the noble and learned Viscount had in mind particularly the case of the Irish serving maid over here who wants to remit money.
VISCOUNT SIMON: There are many more.
THE LORD CHANCELLOR: That was the one illustration given, but any other illustration you like to give will do. So far as exemptions are concerned, those have to be published by Order, and those Orders have to be laid, and all the exemptions that will be made will be made by Order laid before Parliament—every one of them. I am dealing, of course, not with a merely specific individual one. Your Lordships will see at the top of page 25 the words:
"Any Order made by the Treasury under this Act … shall be laid before both Houses of Parliament."
All the exemptions come under that. Moreover, the exemption will be not only published but laid. So far as permissions are concerned they are rather different, because in practice permissions are worked through the banks. When you
728
give a permission—which is some concession from a airection—you notify the banks, and the banks, of course, notify their clients. But so far as directions are concerned there is really nothing of importance, as I see it, between the phrase in line 33:
"shall be given to such persons in such manner as the Treasury think appropriate,"
and the phrase:
"shall be given in the prescribed manner"
which means "as the Treasury may order." They both come to precisely the same thing.
VISCOUNT SIMON: Really I have not made myself plain. I know that the noble and learned Viscount, the Lord Chancellor, would not deliberately wish to remain under a misapprehension. I will take an instance, which is a common instance in the Bill. There are many clauses which say that something or other is prohibited except with the permission of the Treasury. I have not yet followed, with great respect to the noble and learned Viscount, what clause in the Bill provides that where that permission is of a general character it must be published. That was the point I was dealing with. I am quite willing to take the case of the Irish girl. Where is there anything in the Bill which says that because the Treasury is minded to excuse a class of people from sending postal orders abroad, and gives permission to that class of people, the permission shall be made known? With great respect I have not seen that. I am sorry if I introduced a complication by referring to directions; that is my fault. I still want to know the really important thing: how are people who ought to benefit by these permissions to know that the permissions are given? That is not laid on the Table of the House, surely.
THE LORD CHANCELLOR: What has been the practice—and what I understand it is intended is to be the practice—is that the permissions are either given through the bank or are given by an Order which has to be laid.
I think—if the noble and learned Viscount will forgive my saying so—he has rather a habit of not listening to the answer, having made, as he always does, a very formidable case. One must not merely make a formidable case; one must be a good listener afterwards. What I was going on to say was this: I am quite ready to consider whether or not I am right on

729
this matter. I realize that one should consider carefully whether exemptions should be given so that all the world should know about it.
VISCOUNT SIMON: Permissions.
THE LORD CHANCELLOR: Yes, permissions. The words are "permissions, consent or authority", if we are to be quite accurate, but I do not want to recite those words each time. I am quite willing to look into it between now and the Report stage, if Report stage there be, or Third Reading if there is no Report stage. When my noble friend said that he would look into the matter before the Report stage, that means, of course, before Third Reading, if there is no Report stage. I am willing to consider that. However, the broad general principle which we desire to maintain here is that which we have laid down in subsection (3), which makes at any rate the last part of this Amendment completely otiose; that is to say, we make it quite plain that there can be no prosecution here unless' you bring home to the man against whom you are making a charge that he knew, or in substance deliberately abstained from knowing, what the direction was in respect of which he is being prosecuted. That we must adhere to, and I cannot get away from it. But for the rest, on the question as to the way in which the notice should be given, that I am quite willing to look at with my advisers, to see that, so far as possible, we make known to the world the various provisions which in this connexion are material.
LORD BALFOUR OF INCHRYE: I do not wish to detain your Lordships for more than a few moments. I am grateful to the noble and learned Viscount, the Lord Chancellor, for saying that he will look into the matter. May I remind the noble and learned Viscount, that on December 5—column 545 of Hansard—the Financial Secretary, who dealt with the question of permissions granted under Clause 22, subsection (1), of this Bill, said:
"I was asked whether a list of the prohibited articles would be published. Of course, it will be."
But then if you search Hansard afterwards there has been no explanation as to how that publication would take place.
THE LORD CHANCELLOR: If I may interrupt the noble Lord, that will
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take place by an Order laid before Parliament.
LORD BALFOUR OF INCHRYE: Yes. Now we come to permissions. One thing I am puzzled about is this: when does an exemption become a permission? Suppose the Treasury wish to give permission for postal orders for 7s. 6d. instead of 5s. to be sent to the Irish Free State, that would be a permission amending an exemption already made. It is that particular point we want clarified.
THE LORD CHANCELLOR: General or specific?
LORD BALFOUR OF INCHRYE: general permissions. If we are satisfied that general permissions will be know a to all people, as well as the exemptions which are covered by the Treasury Order, then, either by some Amendment which the Lord Chancellor may consider necessary, or by his reassurance, I think the point will be met.
VISCOUNT SIMON: I would like to thank the noble and learned Viscount for all his observations, and I would say that I am very willing to await the result of his further examination. I merely submit to him, with great respect, that when that examination takes place it may turn out that in many places where the treasury may give permission there is no provision in the Bill for the fact that they have given that permission, and for the extent, though it is general, to which it shall be published. After looking at it maturely, if the noble and learned Viscount finds that I am wrong, I shall be willing to accept his correction. But at present, with all possible courtesy, I am afraid that I am quite right.
Amendment, by leave, withdrawn.
Clause 37 agreed to.
Clauses 38 to 40 agreed to.
Clause 41:
Determination of residence.
(2) The Treasury may give directions declaring that for all or any of the purposes of this Act a person is to be treated as resident or not resident in such territories as may be specified in the directions.
4.35 p.m.
VISCOUNT SIMONhad the following Amendment on the Paper: To insert, after subsection (2), the following subsections:

731
"(3) If any person is dissatisfied with the directions given by the Treasury in regard to him under the last foregoing subsection, he may appeal to a Judge of the High Court nominated by the Lord Chancellor for the purpose, in order to obtain as rapidly as possible a decision on the issues raised in accordance with Rules of Court, and the decision of the Judge shall be final. Provided that in any case where it is necessary for directions to be given the decisions of the Judge can be obtained, such directions shall be operative until the decision of the Judge is obtained.
(4) The jurisdiction conferred by the last foregoing subsection upon a Judge of the High Court shall extend to the giving of a decision on the question whether a person is to be treated as resident or not resident in any territory upon an application made for the purpose at any time before a direction is given, and such application may be made either by the Treasury or by the person in respect of whom the direction is proposed to be given."
The noble and learned Viscount said: This is the only other Amendment which I wish to ask the House to consider, but I do think the matter is an important one. I am not without hope that the object which I have in view is one that the noble and learned Viscount, the Lord Chancellor, may feel to be deserving of a certain measure of sympathy. As things stand, the decision as to whether or not a person is or is not a resident rests finally and altogether with the Treasury. There are some purposes in this Bill for which it is important for a man to be held to be a resident. There are other purposes in the Bill for which I think it would suit him better not to be held a resident. At any rate, as things stand and as this clause says quite plainly, it is the decision of the Treasury which is to determine whether a person is resident or not, and whether a company is resident or not.
I hope the noble and learned Viscount will agree with me that it is' not a good thing that we should leave the decision on a question which is not a simple question to be determined by the Treasury. The only objection which could reasonably be taken to my Amendment would be that, however desirable it is in principle, it cannot be done. I am sure that nobody desires that the question should be carried from court to court or that it should be dealt with in the House of Lords. But there have been instances before in which difficult questions like this have arisen, in which the Act of Parliament has not said that it is to be finally decided by the Department concerned. On the contrary,
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the Act of Parliament has provided that on such a question the matter should be finally decided by a Judge of the High Court under the Rules of Court. That is what I desire to suggest here. It is not right, I venture to think, that the Treasury, which in one sense is one of the two parties—though no doubt they are acting in the public interest to the best of their ability—should be the final authority to decide who is a resident and who is not.
The main objection which I anticipate might be raised is that in some cases this matter has to be decided so speedily that it is difficult to see that there is room for any form of appeal. I have tried to deal with it in my suggested Amendment. It would perhaps make it plainer to my noble friends opposite if I explained it, as it is not correctly printed. What I want to insert is this:
"If any person is dissatisfied with the directions given by the Treasury in regard to him under the last foregoing subsection"—
that is to say, the directions declaring that he is a resident or he is not—
"he may appeal to a Judge of the High Court nominated by the Lord Chancellor for the purpose, in order to obtain as rapidly as possible a decision on the issues raised in accordance with Rules of Court,"—
No doubt Rules of Court would have to be made as to whether the application should be in Chambers or in open court—
"and the decision of the Judge shall be final."
There shall be no question of going to the Court of Appeal—
"Provided that in any case where it is necessary for directions to be given"—
by the Treasury—
"before the decisions of the Judge can be obtained, such directions shall be operative until the decision of the Judge is obtained."
The words as printed are a pure slip. My Amendment should read as I have just given it to your Lordships. A man may say: "I want, as speedily as possible, to get you to declare that I am a resident, although I have not been here long, so that I may be entitled to do those things which only residents may do under this Bill." The Treasury may say, "We do not agree that you are a resident." As the matter stands, the Treasury, and nobody else, have to decide that. I recognize that there may be cases where the applicant comes too late, and where the matter is so urgent that the question has really to be decided there and then. Be

733
that so. But I suggest that provision should be made for the Judge to decide the matter as soon as possible, and if he comes to a different conclusion, the man may, in many cases, receive better treatment.
There is the further point that he may raise the question with the Treasury months before. He may say: "I am hoping to go on a business trip to South America in the autumn. I am making my provisional arrangements now, and I wish to take a certain amount of money with me. I want to know whether or not I am a resident." It is possible that there might be considerable correspondence before the matter is finally determined, and in the meantime he will be waiting for a decision, as he hopes, in his favour. Therefore I want to put in:
"The jurisdiction conferred by the last foregoing subsection upon a Judge of the High Court shall extend to the giving of a decision on the question whether a person is to be treated a resident or not resident in any territory upon an application made for the purpose at any time before a direction is given, and such application may be made either by the Treasury or by the person in respect of whom the direction is proposed to be given."
Your Lordships see, as I am sure my noble friend opposite sees at once, what I have in mind. What I have in mind is that it is really not right, if it can be avoided, that a decision of this sort, on which much may turn so far as the individual is concerned, should be finally decided by a Government Department. I hope there is no one who thinks that that is the proper way in which to do it. The question is whether we can make arrangements which will mitigate that, and I think that we can if we adopt the procedure which was, I think, adopted under the Unemployment Insurance Act, where I recollect that Mr. Justice Roche used to sit especially to decide who came within the Act and who did not. If we can devise a machinery like that without destroying the machinery for reaching speedy decisions, we shall be doing a useful thing. I venture to put that suggestion before the noble and learned Viscount, the Lord Chancellor. I hope very much he may, in the first place, feel that it is put forward with the intention of achieving an object with which he sympathizes, and that in the second place, he and those who advise him, may be able to see that it can be done. I beg to move.
Amendment moved—
Page 27, line 21, at end insert:
("(3) If any person is dissatisfied with the directions given by the Treasury in regard to him under the last foregoing subsection, he may appeal to a Judge of the High Court nominated by the Lord Chancellor for the purpose, in order to obtain as rapidly as possible a decision on the issues raised in accordance with Rules of Court, and the decision of the Judge shall be final. Provided that in any case where it is necessary for directions to be given before the decisions of the Judge can be obtained, such directions shall be operative until the decision of the Judge is obtained.
(4) The jurisdiction conferred by the last foregoing subsection upon a Judge of the High Court shall extend to the giving of a decision on the question whether a person is to be treated as resident or not resident in any territory upon an application made for the purpose at any time before a direction is given, and such application may be made either by the Treasury or by the person in respect of whom the direction is proposed to be given.")—(Viscount Simon.)
THE LORD CHANCELLOR: I fully appreciate the reasons which the noble and learned Viscount has in mind in moving this Amendment and I quite see the point of it. I am sorry, however, to tell him that it is one which we cannot possibly accept. We regard this as going to the root of exchange control. As he rightly says, rapidity of decision is necessary. That is true; and he tries to provide for it by his Amendment. But there is another quality which is wanted almost as much, and that is flexibility. One of the great features of our law is that it is a system whereby the law is declared, and the law so declared applies to all similar cases. If it is declared in the highest court which can speak on the matter, then only an Act of Parliament can alter it. I think it is right that that should be so, and I, for one, rejoice in the fact that it is so.
Here we are in, as I have said before, a line of country which I very much regret, as I regret this Bill. Here we are dealing with something in the nature of siege economics. I believe it would be absolutely disastrous for us if we followed the precedent of the ordinary Income Tax Acts, where there is a decision as to the law from a Judge and where, if the Judge by his judgment shows there is some loophole in an Act, evasions take place until the matter is put right in the next Finance Act. As I see it, it is idle to think that the circumstances in which we find ourselves to-day are such that we can contemplate any such procedure at all.

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leak may start by being a small leak, but a leak which starts by being small has a habit of becoming larger and developing into a rush. We really cannot face that element of rigidity (for which, in normal circumstances, there is so much to be said) which comes from having a Judge's decision, following precedent and all that sort of thing. That is not possible to-day.
Let me show your Lordships how flexible this system is to-day, and how this procedure has worked for seven years now with, I believe, almost universal consent. This applies not only to individuals but to companies and so on. We sometimes have a person who is at one and the same time treated as a resident and as a non-resident. Take, for instance, one of the Dominions with an insurance company over here. They carry on a business over here of collecting premiums in respect of risks which they write here, and of paying out sums in respect of the losses which they incur here. That is a resident business. Then they make a profit, and that profit they transfer to another account, which is a non-resident account. That is quite common.
The whole of the smooth working of this scheme is entirely due to the way in which the banks work it and in which the Bank of England supervise the work. An account is established with a bank, and if the banker is in any doubt at all as to that account he asks whether it is to be treated as a resident account or a non-resident account, and he gets his instructions. If it is an obvious case he decides for himself, but if he is in doubt about it he asks the Bank of England and they say: "Treat it as a resident account" or "Treat it as a non-resident account," as the case may be. Thereafter the account remains what it has been so designated, save with the consent of the Bank of England. Really we deal with these matters by—the word perhaps is hardly appropriate—looking at the account itself, rather than at the individual and by having in some cases a resident account and in other cases a non-resident account—two of them available for the same person.
In the seven years during which this thing has worked, so far as I know there has been only one case in which there has been any sort of complaint. There was one case where somebody treated as
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a non-resident said he ought to be treated as French, and that therefore the account should be in francs, rather than as an American, in which case it would be dollars. That is the only case in seven years in which there has been any trouble. Here we are following our experience, the experience of our friends in the sterling area and the experience in Canada. All of them have a provision similar to that which we have in this Bill. I am firmly convinced that if we are really going to get working with the necessary flexibility a system of exchange control which unhappily we certainly need, having regard to the strains and stresses to which sterling is going to be put, we can only get it if we accept this system here, which has worked so well, and eschew—though I dislike eschewing—the appeal to the courts, which, inevitably, is less flexible and more rigid, and which would expose us to all the troubles we had in the past.
Therefore, I must tell the noble and learned Viscount that although I fully appreciate his motive in bringing this Amendment forward, and though I sincerely wish that the times were sufficiently spacious and not sufficiently critical to enable us to accept an Amendment which, in normal circumstances, I should most certainly welcome, yet, having regard to our experience, the experience of our neighbours in the sterling area, and the experience of Canada, we cannot possibly accept this system which will destroy our flexibility and give us great rigidity. It is no good my saying I will consider this any more, because I have considered it and discussed it with the Treasury experts, and on this matter the Treasury say they must stand perfectly firm.
VISCOUNT MAUGHAM: Before the matter closes, may I ask the noble and learned Viscount whether it would not be possible to add only two words to show what is meant by "residence" in this connexion? I daresay it is not easy, of course, because "residence" does not merely mean, I suppose, residence at a hotel for a week. Something other than that is designated, and it is a matter of very great importance. I am acquainted with people who come here from time to time and who are not residents in this country. Unless words are added to make that clear I am afraid there will be great uncertainty, and even some uncer-

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tainty in the minds of the Treasury in deciding whether a man is or is not resident in this country.
THE LORD CHANCELLOR: I am afraid that that difficulty is inherent. These things turn on such fine points, and depend from the Treasury point of view very much upon whether there is any "monkey business"—as they call it—going on. I am afraid I could not possibly devise words which would make that which is very difficult appear any clearer.
VISCOUNT SIMON: I am obliged to the noble and learned Viscount for dealing so courteously with what I said. I confess to sharing the distress which he has expressed that this should be thought to be necessary. Time was when it used to be said that equity was the length of the Lord Chancellor's foot. I think that probably none of us would wish to assert that now, but I can assert what residence is: residence is the length of the Treasury's foot. It just depends as to weather, in a particular instance, they think the case is one which they can deal with benevolently, or whether they should take the stricter view. I am sorry to think that it had not occurred to me that it was going to be decided on the lines of the Income Tax cases as to residence. If that is so, I am heartily sorry for the clerk in the Treasury or in the Bank of England who is to issue decisions on these matters. I thought it was simpler than that. Not only the basis on which we decide residence, but the tribunal which deals with the matter, will be left entirely to a Government Department. I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 41 agreed to.
Remaining Clauses and Schedules agreed to.
House adjourned during pleasure.
House resumed.

ROYAL COMMISSION.
The following Bills, and Measure passed in accordance with the provisions of Section 4 of the Church of England Assembly (Powers) Act, 1919, received the Royal Assent—
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Greenwich Hospital

Trustee Savings Banks.

Pensions (Increase).

Road Traffic (Driving Licensces).

Malta (Reconstruction).

House of commons (Redistribution of Seats).

Incumbents (Discipline) Measure.

House adjourned during pleasure.

COMPANIES BILL. [H.L.]
5.17 p.m.
House again in Committee (according to Order).
Clause 14:
Signature and copies of accounts.
(2) If—

(a) any copy of a profit and loss account or consolidated accounts not signed as required by this section is issued, circulated or published: or

(b) if any copy of a balance sheet is issued, circulated, or published without having a copy annexed thereto of the profit and loss account or any consolidated accounts required by this section to be so attached;

the company, and every officer of the company who is in default shall be liable to a fine not exceeding fifty pounds.
(3) Any member of a company, whether he is or is not entitled to receive notices of general meetings of the company, shall be entitled under paragraph (a) of subsection (1) of section one hundred and thirty of the principal Act to have sent to him a copy of every balance sheet and of the other documents mentioned in that paragraph, and any holder of debentures of a company shall have the same right under that paragraph as a member of the company:
Provided that this subsection shall not require a copy of those documents to be sent to any person of whose address the company is not aware.
(5) Subsection (1), and not subsection (2) of the said section one hundred and thirty shall apply in the case of a private company, as of any other company, except in relation to balance sheets laid before the company before the coming into force of this section.
LORD COZENS-HARDY LORD COZENS-HARDY moved, at the end of the clause, to add:
"Provided that the provisions of paragraph (b) of subsection (2) and of subsections (3) and (5) of this section shall not during the year in question apply to a private company if the following conditions have been complied with:—

(a) the company has not less than two months prior to its annual general meeting passed a special resolution desiring such exemption and has sect to the Board of Trade a copy of such resolution;

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(b) that a certificate of exemption in accordance with the provisions of the next following paragraph of this subsection has been given to the company by the Board of Trade and that a copy thereof has been sent by the company to the Registrar of Companies;

(c) that, in the notice calling the meeting to consider such special resolution there has appeared with reasonable prominence a statement that any member objecting thereto may notify the Board of Trade of his objection.

In considering such applications for exemption the Board of Trade having made such inquiries as it deems necessary shall within 28 days of the notification of such special resolution inform the company of its grant or refusal of such exemption for the year in question. In making its decision the Board of Trade shall have regard to the circumstances of the case and to the public interest."
The noble Lord said: I would remark, in passing, that though the Amendment relates to subsection (5) there is no subsection (4). I sincerely hope that the noble and learned Viscount, the Lord Chancellor, will not be so hardheaded with regard to this Amendment.
SEVERAL NOBLE LORDS: Hardhearted you mean!
LORD COZENS-HARDY: I hope that the noble and learned Viscount the Lord Chancellor will recognize that this Amendment is drawn to safeguard minority interests, and I trust that he will not feel compelled to refuse it as he has refused earlier Amendments of mine. My aim is simply to preserve a degree of privacy which is allowed to a private company which complies with the stringent conditions of Clause 43. Even in a company limited to fifty shareholders, there are sure to be some members who, by nature, are careless, and who may unintentionally leave copies of the companies' accounts lying about, and so destroy the privacy of the company's affairs. To guard against accidental discovery, the members may prefer not to have private accounts floating about in their hands for twenty-one days before the annual general meeting. My Amendment simply makes provision for putting this relief into effect if, and only if, the Board of Trade certifies that such a waiver is reasonable in the circumstances and not against public interests. I beg to move.
Amendment moved—
Page 14, line 36, at end insert the said new words—(Lord Cozens-Hardy.)
LORD CHORLEY: I am sorry to have to inform the noble Lord, on behalf of my noble and learned friend, that I propose to be hard-headed and hard-hearted about this Amendment. The noble Lord's Amendment would, as he has indicated, relieve a private company from the requirement of attaching a profit and loss account to its balance sheet, and of circulating to its members copies of the balance sheet, profit and loss account and consolidated accounts, and the other obligations which are imposed upon companies under the clause as it now stands. Under the existing law, the situation is very unsatisfactory. No member of a private company is entitled as a right to have the balance sheet circulated to him; he has to pay for it, and he has no right to the profit and loss account at all.
The Cohen Committee considered this matter very carefully, and they recommended that shareholders in private companies should be entitled to these documents in the same way as they are in public companies. No doubt there is something to be said for the noble Lord's argument of the unfortunate private company having the state of its accounts made known to some of its competitors, but a competitor who is really determined and unscrupulous is prepared to use any means to get these accounts. We know that he does, in fact, get them and we do not think that that argument can stand up to the importance of members having the accounts. We are therefore unable to accept this Amendment.
LORD COZENS-HARDY: The Amendment does not keep away from the shareholders of an exempt private company the information which is required. That is to say, they will have before them at the general meeting the balance sheet and the profit and loss account. The only object of the Amendment is to provide that a company which does not wish to have these things delivered twenty-one days before need not have them.
LORD CHORLEY: The position is really similar to the one we discussed last week. It would enable the majority which controls a private company to do this by means of a special resolution.
LORD COZENS-HARDY: Only subject to the consent of the Board of Trade.
LORD CHORLEY: Subject to the consent of the Board of Trade, which is a

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very cumbersome and elaborate piece of machinery. I am afraid that in the circumstances we are unable to accept this Amendment.
LORD COZENS-HARDY: I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 14 agreed to.
Clause 15 agreed to.
Clause 16:
Extension of disqualifications for appointment as auditor.
16.—(1) A person shall not be qualified for appointment as auditor of a company unless either—

(a) he is a member of a body of accountants established in Great Britain and for the time being recognized for the purposes of this provision by the Board of Trade; or

(b) he is for the time being authorized by the Board of Trade to be so appointed either as having similar qualifications obtained outside Great Britain or as having before the eighteenth day of July, nineteen hundred and forty-five, practised in Great Britain as an accountant.

(2) In subsection (1) of section one hundred and thirty-three of the principal Act (which disqualifies, among others, directors and officers of a company and partners and employees of officers of a company from appointment as auditors of the company)—

(a) references to an officer of the company shall include any servant of the company, but not an auditor; and

(b) paragraph (b) (which relates to partners and employees of officers of the company) shall apply in like manner to partners and employees of directors of the company; and

(c) the exception in the said paragraph (b) for private companies shall cease to have effect.

5.25 p.m.
LORD DE L'ISLE AND DUDLEY LORD DE L'ISLE AND DUDLEY moved, in subsection (1) (b), to leave out "before the eighteenth day of July, nineteen hundred and forty-five." The noble Lord said: I rise to move the Amendment that stands in my name. The object of the Amendment is to delete the words "before the 18th July, 1945." It seems to me that this is an arbitrary date to fix for disqualifying accountants who are not members of the learned bodies. If a man had been serving in the Forces or in affairs of State during the war, he might, on return, find that his livelihood and his profession had departed from him. In order to do justice to such people
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I think it right that this arbitrary date should be taken from the Bill.
Amendment moved—
Page 15, line 40, leave out from "having" to "practised" in line 42.—(Lord De L'Isle and Dudley.)
LORD SALTOUN: I would like to support my noble friend's Amendment. The accountants' societies of Scotland would like to insert here "for a period of five years." In view of the very varied qualifications of a large number of people who practise as accountants, and in view of the very privileged position occupied by auditors under the existing law which is going to be very much increased under this law, I cannot but think that that would be a reasonable stipulation to make, especially when one considers the condition of affairs in small country towns. I take the opportunity at this point, in supporting my noble friend's Amendment, to ask the Government if they will consider this matter at a later stage. It is a point to which my attention was drawn only yesterday, so I could not give proper notice.
LORD LATHAM: I wish to invite your Lordships to reject this Amendment. I speak as a member of one of the recognized associations of accountants, and I have practised as a professional accountant for some thirty years. I wish to submit to your Lordships that, whilst it is eminently desirable and will be accepted by every member of your Lordships' House that special provision should be made so that no substantial injustice is done to ex-Service persons, this is not the way to do it. The Amendment is against the whole weight of evidence submitted to the Cohen Committee, and is in conflict with the recommendations of that Committee. The Amendment, if accepted, would mean that any person at any time could say that, because he had done the audit of a greengrocer at the end of the road, he had a claim to be considered by the Board of Trade as to whether he was not, in fact, in practice as an accountant. I do submit that that very largely vitiates the quite proper provision contained in this Bill, following the recommendations of the Cohen Committee, to tighten up the law both as regards accounts and as regards the qualifications of those who purport to audit accounts, and also to tighten up the requirements of the existing law both as

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regards public companies and as regards private companies.
Therefore, I invite your Lordships not to accept this Amendment, and I would, with respect, ask the noble and learned Viscount, the Lord Chancellor, to consider whether the clause as it now stands should not be looked at between now and Report stage or the Third Reading, with a view to seeing whether some proper provision could not be made in order not to inflict injustice upon ex-Service people. That is the view of the established and recognized bodies of practising accountants who have, for some time, been associated together in joint consultation as a joint committee with a view to securing the regularization by registration of the accountancy profession, which I think all business people will admit is overdue and is eminently desirable. The proposals which will be ultimately submitted, with, it is to be hoped, the sympathy and support of the present Government, will provide for the registration of qualified and recognized accountants and will provide, as I think reasonably, for the admission to practice of such accountants who may not be members of the recognized bodies but who can show that they have been in practice for a specified time before a specified date.
The effect of the Amendment before your Lordships' House would be to take out the specified date. It is not an arbitrary date in the generally accepted sense: it is related to something. It is related to the date of the publication of the Cohen Report, when it was assumed that the public could be regarded as having been put on notice as to what were the recommendations of that Committee which were to be followed by legislation. Therefore I hope that this Amendment will not be accepted, but that the noble and learned Viscount the Lord Chancellor will see his way clear to consider some protective words to safeguard the position of ex-Service men.
LORD RENNELL: I am inclined to support the Amendment. While not disagreeing with what was said by the noble Lord who has just sat down, I should like to draw your Lordships' attention to the practical rather than the theoretical issue on this point. As a matter of fact, there are two points involved in the Amend-
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ment of the noble Lord, Lord De L'Isle and Dudley. One is that which relates to the exclusion, or the hardship which may be caused by the exclusion, of persons who had been practising as accountants, though not belonging to any of the recognized associations, and who have been demobilized from the Forces. They would be precluded by the operation of this date from resuming or accepting work of this nature. But the Amendment really has a much wider implication, and it is on the purely practical issue that I should like to support it.
The practical issue, as it seems to me, is this. There are in England and Scotland something of the order of 162,000 private companies. A great many of them are very small corporations. They will be familiar to many of your Lordships in any town or maybe village in England. In many cases in practice these small companies have had their accounts audited by persons who are not qualified and who do not belong to any recognized association of auditors or chartered accountants. There is not to-day in this country a sufficient supply of qualified auditors belonging to the associations to undertake the work of auditing the accounts of the 162,000 companies which at present need auditors. From the purely practical aspect, I ask your Lordships to support the Amendment, and I beg the noble and learned Viscount the Lord Chancellor to take it into serious account. Otherwise not only will very grievous hardships be caused to the people who have been practising as auditors (and quite adequately) in auditing the accounts of these small companies to which I have referred, but it will be made practically impossible for many companies to get their accounts audited, because there are not enough auditors to do the work. Your Lordships know as well as I do the delays which are inevitable at the present moment (I refer of course to those of us who may use auditors for the purpose) in getting income tax returns and accounts made up. Very often two of three years' arrears of work have to be done. A situation which would make it impossible for those people who have adequately performed these services in the past to continue to do so in future would be not only an injustice to the persons concerned but a grave hardship to the companies for which they have been working.
VISCOUNT ELIBANK: The noble Lord who has just sat down has made out a very strong case in favour of the Amendment, and I agree with all he has said. Nevertheless, the noble Lord opposite also made a strong case from the point of view of the protection of the public. I think that this clause with the words moved to be omitted by my noble friend, Lord De L'Isle and Dudley, certainly does not protect the public in the way that it should. I believe that if the noble and learned Viscount, the Lord Chancellor, in dealing with this matter, would consider omitting those words and at the same time adding at the end the words, "for a period of not less than five years"—that is to say, having practised in Great Britain as an accountant for a period of not less than five years—that, at least, would be in the direction desired by the chartered accountants. I have in my hand a letter from a chartered accountant who has asked for this consideration. At the same time, I cannot believe that there are many of the companies referred to by my noble friend Lord Rennell whose accounts are audited by individuals who have not practised as auditors for the last five, six or eight years. I think if my suggestion were adopted it might be a way out.
THE LORD CHANCELLOR: I have a past in this matter, and I had better reveal it. For a good many years now I have been instrumental in trying to get a Bill brought in to put the accountants' profession (when I say "accountants" I am talking of the various bodies which constitute accountants) on a more satisfactory basis. I think it is thoroughly undesirable that wholly unqualified people should act as accountants. It is wrong not merely in the interests and protection of the public, but also I think in the interests of businesses themselves. Just as, if you are wise, you take a child to the doctor for an overhaul and to see that everything is all right, so I think businesses ought periodically to go to their doctor for an overhaul, to see that everything is all right. After all, the doctor of business is the accountant, and I certainly look forward to a time when we have a proper Bill dealing with this question, and depart from what I think is the wrong practice of to-day, when anybody who sets up a plate and calls himself an accountant—whether a turf accountant or anything else—can carry
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on. I am sure that noble Lords in all quarters of the House would probably agree with that point of view.
On the other hand, I think we all recognize that there is some difficulty to-day in view of the fact that there are not enough accountants, and therefore trouble arises. When Sir Alfred Mond was Minister of Health and had to bring in his Bill dealing with dentists, he found that there were a large number of unqualified practitioners at that time, and he was very anxious to raise the whole status of the profession. He did it in this way. He said: "Very well, I will allow those people who are practising at the date of the passing of this Bill to carry on, but in future I will have only qualified people. In that way, when unqualified people pass out, you will gradually have a higher standard of skill and competence." I think we might do something on those lines.
I have a very open mind on this question and I would like the noble Lord to withdraw his Amendment. I am not making a promise, but I will gladly consider this whole matter between now and the Report stage and discuss it with him to see what we can do about it. At the present time I am disposed to keep these words here, but I am not at all wedded to the date. If we have a wrong date, in order to avoid hardship by all means let us have another date. There is no substance in that at all. I am disposed to keep the words with a date, but as your Lordships will see from my Amendment to page 15, line 42, I am disposed to say that this subsection shall not apply to exempt companies. We might allow the type of company which owns the little butcher's shop or greengrocer's shop (which very often is owned by a private company) and which will be exempt under the meaning of this Act, for the time being to carry on as it does to-day, at any rate until we get our consolidation Act. I think that might be a solution. I would ask the noble Lord to be good enough-to withdraw his Amendment now, on the understanding that I will consider this matter between now and the Report stage, and on the understanding that I am going to move my Amendment, though that also will be subject to discussion and consideration between now and the Report stage.
LORD LATHAM: The Amendment of the noble and learned Viscount, the Lord

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Chancellor, does not refer to this point, if I may say so with respect. It refers to the question whether a partner of a director shall be competent to be an auditor of the company of which his partner is a director.
THE LORD CHANCELLOR: It is rather wider than that. It is to insert at the end of page 15, line 42, "Provided) this subsection shall not apply …"
LORD LATHAM: I beg the noble and learned Viscount's pardon. I have not got that one.
LORD DE L'ISLE AND DUDLEY: I thank the noble and learned Viscount, the Lord Chancellor, for his comments on this matter, and I certainly am not going to be arbitrary about it. It has, I think, provoked a useful discussion, and particularly useful was the contribution of the noble Lord, Lord Rennell. It may well be that the Amendment put down by the noble and learned Viscount, Lord Chancellor, may meet the point, because in the case of small private companies in provincial towns the unqualified accountant—it may be the articled clerk aspiring to be an accountant—will probably operate. I am a member of the accountancy profession, but I am not sure that they would call themselves the healers of business. I think very often they would more aptly be described as the analyst at the coroner's court. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved, at the end of paragraph (b) of subsection (1), to insert:
"Provided that this subsection shall not apply in the case of a private company which at the time of the auditor's appointment is an exempt company as defined in the section of this Act relating to the inclusion of a private company's accounts in its annual return."
The noble and learned Viscount said: This is the Amendment I have put down, and which I beg to move. We discussed this, broadly speaking, on the last Amendment. I am saying here that subsection (1) is not to apply in the case of an exempt company. I believe that is a fair way out of the difficulty. I may say that I have some misgivings about it, as I expect have all your Lordships, but on the whole I think it is a fair compromise. I beg to move.
Amendment moved—
Page 15, line 42, at end, insert the said proviso.—(The Lord Chancellor.)
LORD RENNELL: May I express my gratification for the Amendment, which I think goes a long way toward meeting the difficulty.
LORD LATHAM: I would not in any way wish to be ungrateful to the noble and learned Viscount, the Lord Chancellor, for this Amendment, but I think your Lordships should appreciate that in substance it will mean that the bulk of private companies will be exempt from the obligation to have a qualified auditor. If that be the case, it may happen—indeed it will happen—hat among the companies thus exempt from having a qualified auditor there will be thousands of companies carrying on quite substantial businesses. They will not be limited to the grocer, the candlestick maker, and the small trader whose accounts can be done on Saturday evening by the bank clerk or the bank clerk's junior. There will be very important private companies having obligations to the public, to debenture holders, to creditors, and also to their shareholders, whose accounts will be prepared—and they will be entitled to have them prepared—by unqualified persons. I submit to your Lordships that that is not a desirable state of affairs and that it is against the whole purpose of this Bill.
After all, as I see it, the whole basis of limited liability is in the nature of a bargain made between those who wish to trade under the reliefs and escapes of a limited company, and the community; a kind of social contract by which the persons trading escape personal liability, which they would suffer but for the protection of a limited liability company, in return for which they are asked to comply with certain requirements—to comply, in fact, with requirements as between themselves as shareholders and as between the company and the public. For instance, private companies henceforth are to be required to furnish to their shareholders copies of audited accounts; private companies are to be restricted in their powers to appoint and dismiss auditors; private companies are to be required, save they be exempt, to file the balance sheet and the documents annexed thereto with the annual return. All those steps are, I submit, proper steps for the protection of the

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public. Yet the accounts which are required to be circulated need not be accounts prepared and audited by a qualified person. Those accounts can be accounts which are of no value at all; they can be accounts which, in fact, are dangerous, in that they mislead as a result of their inaccuracy, and shareholders will probably suffer more from having the opportunity of perusing Inaccurate accounts than from not having day accounts to peruse at all.
Therefore, whilst I appreciate fully the gesture which the noble and learned Viscount, the Lord Chancellor, has made, I more than share his misgivings as to whether the proposed Amendment is wholly satisfactory. It will leave shareholders and others open to the risks—and they are substantial—of not having accounts properly audited by properly qualified persons. I can speak from experience of this. I have had submitted to me, usually when the company was the subject of analysis in the "coroner's court," accounts which had been audited by unqualified persons which have been simply fantastic and which have been largely contributory to the failure of the company, in that those accounts had misled the directors. The average director of a private company is not in less need, but in more need, of qualified advisers in the field of accountancy than directors of public companies, because he himself is often so uninstructed in matters of this kind.
The answer one almost invariably gets from the director is: "I do not know anything about figures; I left it to the auditor." There is no doubt he did leave to the auditor, and the auditor left it to providence, and the company went into liquidation. That may be regarded as the proper concatenation of circumstances. I therefore hope that the acceptance of this way out—and it is no more than a way out—at this stage will not be prayed in aid against the proposals for registration of accountants on a proper basis which may later come before your Lordships' House.
VISCOUNT SWINTON: I regret that I was not here, and could not be here, to hear the whole of this debate. I do not think this is an easy point. I have considered it a great deal and I should just like to add a word. I think that on the whole the noble and learned Viscount the Lord Chancellor (who has, I know,
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given a tremendous amount of personal attention to this, for which we are all grateful to him) has really reached the best conclusion that can be reached in this matter. I am not sure that the noble Lord, Lord Latham (who speaks, of course, with a great knowledge of accountancy, because, if I remember rightly, he himself is a member of that greatest of trade unions—or the next greatest to the Bar, perhaps I should say) really was not patting his case a little too high. He talked about the protection of the creditors.
Here we are dealing with the exempt private company, and only with the exempted private company. Of course, the exempted private company does not have to publish its accounts, so that the creditor does not have a chance of seeing them. As for the shareholders, the appointment of the auditor is a matter for them and, I think I am right in saying—the noble and learned Viscount wilt correct me if I am wrong—there is no difference in the rules about the appointment of an auditor as between a public company, a private company, and an exempt private company. The auditor has to be appointed by the shareholders, and each individual shareholder receives a copy of the accounts. Therefore, it is within the right of the shareholders to appoint either an unqualified auditor, if I may so describe him, or a member of one of the recognized trade unions. As we are dealing only with the exempt private company here, as otherwise it would create hardship in the case of a number of small companies, and also, as has been said, because there are really not enough people to do the job, I venture to think that the compromise which the noble and learned Viscount has devised and which he advises us to accept is really the wisest step which, at the present time and having regard to all the circumstances, we can take.
LORD SALTOUN: Like the noble Lord, Lord Latham, I am also a member of this great trade union. I would like to say that I think the compromise suggested is, speaking from my knowledge of conditions in Scotland, about the best that could be arrived at. It will affect a great reform quite gently and without doing any harm. I think the corollary of what the noble Lord, Lord Latham, said, would be to force everybody—every private individual—to have his

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accounts audited by a chartered accountant. That, although it would be a very profitable thing for us all, would be going rather too far, because most of these private companies are quite small affairs.
LORD DE L'ISLE AND DUDLEY: I do not wish to prolong the debate on this point. In view of what the noble and learned Viscount the Lord Chancellor has said, I do not intend to move the next Amendment which stands in my name. Being a member of this trade union, I naturally do not wish to appear to be saying anything derogatory to my own profession. I think it gained its status in this country by its own worth and reputation. The case of the exempt company is much more close to that of a partnership, because the balance sheet is not available for publication. I think it would meet the practical needs of the situation if unqualified persons were still permitted to carry out the audit, although if the balance sheet is filed, and the creditors and debenture holders place reliance upon it, I think it is right that qualification should be insisted upon.
On Question, Amendment agreed to.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved, in subsection (2), to leave out "cease to have effect" and insert "apply only in the case of a private company which at the time of the auditor's appointment is an exempt company as defined in the section of this Act relating to the inclusion of a private company's accounts in its annual return." The noble and learned Viscount said: The existing law is this. Under Section 133 of the Act of 1929 it is provided that:
"None of the following persons shall be qualified for appointment as auditor of a company … (b) except where the company is a private company, a person who is a partner of or in the employment of an officer of the company."
So in the case of a private company one may appoint a person who is a partner, or one who is in the employment of an officer of the company. Paragraph (c) of this clause says:
"The exception in the said paragraph (b) for private companies shall cease to have effect."
I am proposing to leave out the words "cease to have effect" and to insert the words "shall apply only in the case of"—I am not reading it all—"the exempted
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private company." This is intended to deal with the Amendment which is down in the name of the noble Lord, Lord Hawke. I think the substance of the two Amendments is the same, but I got the draftsman to put it into language which he thought was entirely appropriate. I beg to move.
Amendment moved—
Page 16, line o, leave out ("cease to have effect") and insert the said new words.—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 16, as amended, agreed to.
Clause 17:
Appointment and remuneration of auditors.
17.—(1) The auditors of a company, appointed at any annual general meeting shall be appointed to hold office from the conclusion of that, until the conclusion of the next, annual general meeting; and at any annual general meeting a retiring auditor, however appointed, shall be reappointed without any resolution being passed, unless—

(a) he is not qualified for reappointment; or

(b) a resolution has been passed at that meeting that he shall not be reappointed (whether or not the resolution appoints some other person instead of him); or

(c) he has given the company notice in writing of his unwillingness to be reappointed;

and, where at an annual general meeting no auditors are appointed or reappointed, the Board of Trade shall appoint a person to fill the vacancy.
The Lord Chancellor moved, in subsection (1), to leave out "shall", where that word last occurs, and insert "may". The noble and learned Viscount said: This is a small Amendment. There may be cases in which it is not desirable that the Board of Trade should appoint an auditor. For instance, supposing that just before an annual general meeting the auditor who was the designated auditor dies, and that the annual general meeting takes place the next day, when the members have not got anybody in mind at the moment—the man they were going to have is dead. In such circumstances as that it is obvious that the Board of Trade should hold its hand in order that the shareholders may have an opportunity of dealing with the matter in the way they desire. It allows us greater latitude not to have the word "shall" but to have the word "may" in order to deal with that class of case. I beg to move.
Amendment moved—
Page 16, Line 30, leave out ("shall") and insert ("may".)—(The Lord Chancellor.)
On Question. Amendment agreed to.
THE MARQUESS OF READING THE MARQUESS OF READING moved to leave out Clause 17. The noble Marquess said: I have put down this somewhat drastic Amendment in regard to Clause 17 because of the difficulty of seeing what is the precise point of altering the existing state of affairs in regard to the appointment of auditors at an annual general meeting. Under the Act of 1929, as I understand it, the position is that every company at each annual general meeting has to appoint an auditor, who Shall hold office until the next annual general meeting. If the company does not appoint, then the Board of Trade may appoint on the application of a member of the company. That involves a positive process at the annual general meeting of the company. The company has to do something—it has to appoint an auditor at that meeting.
The Act of 1929, I think it is fair to say, had in mind a situation which may, to some extent, be behind the clause we are at present discussing. The 1929 Act took over a section from an earlier Act—I think the Act of 1908. Before this particular procedure came into being, there was a time when some anxiety was caused by the fear that if some auditors were, in a phrase which I found in one of the books, "inconveniently faithful in the discharge of their duties", they might be got rid of by the directors. There was a need to guard against that kind of situation. But I suggest that, with the existing law as it stands under the 1929 Act, the possibility of that situation occurring is really guarded against adequately. What is now suggested is that instead of the active process of auditors being elected at the annual general meeting of a company, there shall be a negative process whereby, unless certain action is taken, these auditors are, so to speak, automatically re-elected from year to year. That seems to me open to very considerable criticism, and unless some really substantial case can be made for varying the existing procedure—which so far as I know has worked with sufficient smoothness—I suggest there is no reason for this clause to remain in the Bill, and that it should be deleted. It is on that ground that we have moved for the deletion. I beg to move.
Amendment moved—
Leave out Clause 17.—(The Marquess of Reading.)
LORD DE L'ISLE AND DUDLEY: I beg to support the Amendment moved by the noble Marquess. It seems to me that unless very good cause is shown for altering the existing Act, an auditor's appointment should be made subject to a positive process. He is not a member of the company but he is for some purposes an officer, and I think that his appointment should be subject to active resolution.
LORD SALTOUN: I would like to support this Amendment very strongly. This clause makes it extremely difficult for the directors of a company to remove an auditor, especially an auditor who does not want to be removed. It forces them to pass a resolution, it gives the auditor the right to circularize the company, and it gives him a very powerful position. He is a man who may not have a single share in the company and has no responsibility for the result of his actions. It seems to me that this clause proceeds upon the idea that all directors are bad and that all auditors are good. I submit, very humbly, to the noble Lords opposite, that Parliament has no right to take up that position. I hope that there are very very few black sheep in the flock to which I belong, but I also think that directors, who are after all responsible to the members of the company, are as a rule doing a very good job in this country.
I want to put a possible case, and I am going to assume a very black sheep as an auditor. Let us suppose there is a small company carrying on a business which is also carried on by many other small companies and some very big companies. Let us suppose there is a company which, like Aaron's rod, is eating up all the small companies. Such cases are not unknown to your Lordships, and I think some companies have a director whose special business it is to look out for small companies that can be absorbed.
Let us suppose there is an auditor of a small company who has some affiliation or some friendly relations with a big company. The directors may suspect it—they cannot know—but they dare not put into resolution and circularize suspicions among the company. The directors, after all, are responsible to the shareholders for the business, and the auditor is not. It appears to me that an auditor could misuse his position to the detriment of the

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company, entirely under cover of this clause and without anybody being able to say anything to him. That is a possibility which I hope is very remote from the high character of my profession, but the clause does proceed upon the basis that it is impossible for an auditor, and that it is quite impossible for a director to want to remove an auditor on really good grounds. I therefore earnestly hope that His Majesty's Government will consider this matter, because I should be very sorry to see this clause incorporated in the Bill as it at present stands.
LORD RENNELL: I do not go quite so far as my noble friend who moved this Amendment, because there are certain parts of the clause which I think we should all like to see remain. Where an auditor is removed, if he thinks he has been treated unjustly he should have an opportunity of explaining to the shareholders why he should not be removed. I would like to move for a compromise on the practical issue rather than the shady side of life to which the noble Lord referred. I would like to take the case of a company which started in a small way and employed a very adequate firm of local auditors to do the work. They grow to a size which has gone beyond the capacity of the local firm to carry out the audit, or their business has grown in directions with which the auditors are not familiar—because auditors have specialities like other professional people. This clause makes it invidious to change the auditor when the company has outgrown his or their work without practically doing so in writing and really damaging the reputation of the firm of auditors in question. That is not fair on anybody concerned. I would personally like to see a compromise between the better parts of this clause with the positive resolution to which the noble Marquess and others have referred.
VISCOUNT ELIBANK: I wish to intervene only for a few minutes. I wish to support the noble Marquess who moved the deletion of this clause from the same point of view as he did himself. I want to put the other side of the case, which has not been put this afternoon, and that is the point of view of the shareholder. I am talking of public companies and not private companies. The shareholders of public companies regard their rights to the appointment of the auditor with very,
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very great respect, so much so that at annual general meetings it is not a director who moves the appointment of the auditors but a shareholder, and the motion is seconded by a shareholder. The actual motion is put to the annual general meeting by the shareholders. As often as not, and in fact generally, they fix the fee of the auditors at the same time. My noble friend Lord Reading suggested in his speech that the present practice was an admirable one, and I feel that if it is departed from, whilst there may be some greater protection against the directors (if that be necessary) the shareholders will feel very aggrieved indeed if that right is taken away from them. Therefore generally I support the noble Marquess, Lord Reading, in his motion.
THE LORD CHANCELLOR: Whilst I am very anxious to meet your Lordships' wishes, I confess that I regard this matter from a somewhat different angle. My experience, which is experience in the courts and, to a certain extent, of the rather more seamy side of companies, leads me to say this. Auditors are sometimes placed in a very unfair position, and pressure is not infrequently put on auditors—quite unsuccessfully, of course, on auditors of the highest repute—to agree to practices with which they ought not to agree.
Therefore I think it is of the highest importance that the auditor should be completely independent to do what he thinks is right. If I am told that this clause has the effect of making it difficult for a bad company to change its auditor, I say it is for that reason I strongly support it. On the other hand, I do say this: I am fully conscious of the fact that the largest oak comes from a small acorn, and some companies start in a small way, with a little man quite capable of dealing with them in their infancy. But when they grow too big for him you have to go to bigger people to take over. When that happens, I am anxious to make the change so as to inflict the least amount of hardship or discredit on the little man.
My view of the clause is this. Under subsection (1) (b) you say that:
"a resolution has been passed at that meeting that he"—
as an old auditor—
"shall not be reappointed (whether or not the resolution appoints another person instead of him)."

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I should think you are doing enough if you appoint some other person, without asserting that the old auditor be not reappointed. I should think that if you appoint someone else it follows that he is the person appointed. But I will look at it again from the other point of view, in so far as that may meet your Lordships. I want to do this thing gently in the sort of case I see. I am sure from my experience that it is right and sound to make it rather difficult for a company to change its auditors without adequate reason. After all, I can rely upon the Cohen Committee, for they are people who speak with experience, and that is plainly the view they take. It is for this reason that I am prepared to consider amendment on the lines suggested.
VISCOUNT SWINTON: I really think that that is the judgment of Solomon, if I may say so. I am quite sure we have to meet the case which the Lord Chancellor has put, where a bad man wants to get rid of a good auditor. But you have also to meet the case of the good company which wants to get rid of, not a bad auditor, but an inadequate auditor. If such is the case you will have to proceed by appointing Mr. A. with Mr. B, and that is not sensible. On the other hand, you certainly do not want to make any difficulty for Mr. B, and in fact in 99 cases out of a zoo it would be a friendly arrangement, and it would be said: "We will find work for Mr. A in a subsidiary or make it up to him in another way." So long as the noble and learned Viscount will put down his own Amendment on the Report stage I believe it will be exactly what we all want to do.
THE LORD CHANCELLOR: I will not pledge myself definitely, but that is the present trend of my mind. I shall try and get the authority.
VISCOUNT SWINTON: It will rest with you then? We do not need to conjure our imaginations.
LORD SALTOUN: I entirely agree with the suggestion of the noble and learned Viscount, the Lord Chancellor.
VISCOUNT MAUGHAM: I am grateful to the noble and learned Viscount, the Lord Chancellor, for his suggestion. It is not easy for a company to get rid of its auditor at the present time, even if it wants to. It is not such an easy thing, and I rather stress what I have said because it
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is quite clear to me that: both my noble friend Viscount Swinton, and the noble and learned Viscount opposite, are quite prepared to believe that directors are bad, but reluctant to believe that an auditor can be bad or unreasonable. Directors are responsible for the business of the company, and if they fail it is not only to the disadvantage of themselves but to the disadvantage of the company; but the auditor is not responsible for more than his duties under the Act, and I submit very respectfully to the noble and learned Viscount opposite that the Act actually lays on the auditor very much heavier duties and very mach greater powers in the latter part. I do hope that the noble and learned Viscount will consider this before the next stage and go as far as he can to meet us.
THE MARQUESS OF READING: In putting down the original Amendment I had neither the hope nor the desire that the whole clause would disappear. I thought it was important that a general discussion should be raised on this important matter. So far as I am concerned, I am perfectly prepared to accept the suggestion that the noble and learned Viscount has made but there may be one or two things which might be discussed before his actual Amendment is put down, if he will give us the opportunity. In these circumstances I propose to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 17, as amended, agreed to.
LORD CHORLEY LORD CHORLEY moved, after Clause 17, to insert the following new clause:
Construction of references to documents annexed to accounts.
" . References in the principal Act and this Act to a document annexed or required to be annexed to a company's accounts or any of them shall not include the directors' report or the auditors' report (which are by the principal Act required to be attached to the balance sheet)."
The noble Lord said: The object of the proposed new clause is to make it unnecessary for the auditors to comment on the directors' report. Clause 12 (7) (a) provides that for the purpose of the Bill, except where the context shows to the contrary, any reference to a balance sheet, or profit and loss account, or consolidated account, shall include any notes thereon, such as the report of the directors. It is obviously undesirable as it stands. As it stands, it would be arguable that it places on auditors the Obligation to com-

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ment on the directors' report. It would obviously be undesirable to have obligations of that sort. The object of the new clause is to make that quite clear.
Amendment moved—
Page 17, line 45, after Clause 17 insert the said new clause.—(Lord Chorley.)
On Question, Amendment agreed to.
Clause 18:
Director and Secretary.
18.—(1) Every company shall have a director and a secretary, and a sole director shall not also be secretary.
(2) For any reference in the principal Act to a company's secretary or other chief officer there shall accordingly be substituted a reference to the company's secretary.
LORD BALFOUR OF INCHRYEhad given notice to move, at the end of subsection (2), to insert, "or to such person as may for the time being by the direction of the directors be acting as or in place of the company's secretary." The noble Lord said: In the various sections the secretary is required to do things or to sign documents. The secretary may fall ill, or be absent abroad, or be in other ways incapacitated. As the Bill stands, there is no provision to allow an assistant or deputy secretary to work. The noble and learned Viscount, the Lord Chancellor, however, has put down an Amendment which substantially covers the same point as mine and I am willing to withdraw my Amendment if he will say why it needs a much longer amount of print to say what I have said in two lines. We are really saying the same thing.
Amendment moved—
Page 18, line 6, at end insert the said words.—(Lord Balfour of Inchrye.)
THE LORD CHANCELLOR: I can only reply that I gave this Amendment to the Parliamentary draftsman and he put it into the proper legal language. However, if the noble Lord wishes to move it in the form in which he put it down he may do so, but I can assure him that I derive my Amendment from his ingenuity.
LORD BALFOUR OF INCHRYE: I am very grateful to the noble and learned Viscount, and I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved, after subsection (2), to insert the following subsection:
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"(3) Anything required or authorised to be done by or to the secretary may, if the office is vacant or there is for any other reason no secretary capable of acting, be done by or to any assistant or deputy secretary or, if there is no assistant or deputy secretary capable of acting, by or to any officer of the company authorised generally or specially in that behalf by the directors."
The noble and learned Viscount said: This is the matter which we have just been discussing. The effect of this Amendment is the same as that of the Amendment which my noble friend Lord Balfour of Inchrye has withdrawn. I beg to move.
Amendment moved—
Page 18, line 6, at end insert the said new subsection.—(The Lord Chancellor.)
On Question, Amendment agreed to.
LORD BALFOUR OF INCHRYE LORD BALFOUR OF INCHRYE moved, after subsection (2), to insert the following subsection:
"(3) Nothing in this Act or the principal Act shall be deemed to prevent the appointment as secretary of a company of a partnership firm."
The noble Lord said: In many cases, at present, firms or companies act as secretaries for a company or a group of companies. I know that this is especially so in the case of Scottish investment trust companies, and, to a lesser extent, with English investment trust companies. The practice also prevails in both countries with companies other than investment trusts, such as tea, rubber and mining companies. I think that your Lordships will agree that the practice is not a bad one, and that it has not meant any hardship or produced undesirable results. I think, too, that it will be agreed that it does lead to economy and efficiency in administration. I am informed that under Scottish law a firm is a legal entity, and therefore, would presumably come within the provisions of Clause 18. In England, a firm is not recognized as a legal entity, but, on the other hand, there are many cases where firms act as secretaries of companies. I therefore suggest that the clause should make it clear that a firm can act as a secretary. That is the purpose of the Amendment. I beg to move.
Amendment moved—
Page 18, line 6, at end insert the said new subsection.—(Lord Balfour of Inchrye.)
THE LORD CHANCELLOR: We cannot accept the Amendment in this form, and for this very good reason. If you say "Nothing in this Act or the principal Act

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shall be deemed to prevent the appointment as secretary of a company of a partnership firm", it might at once be claimed that you are saying in express words that you are allowing firms to act as secretaries and so they cannot act as auditors or in some other capacity. In England, a firm cannot act for the very best of reasons; that is, that a firm does not exist at all. It is simply a sort of shorthand phrase for expressing the individuals who compose the firm. In Scotland the matter is different. There a firm is a legal entity.
I think that I can deal with the point which the noble Lord has in mind. I am quite anxious that in Scotland a firm should be able to act. I think that what we really need is a slight amendment to the next clause. It is there that the requirement with reference to the register of directors makes the only difficulty—if difficulty there be—about a firm acting. As paragraph (a) deals with an individual and paragraph (b) deals with a corporation, probably we ought to deal with a firm at that point. If the noble Lord will withdraw this Amendment, I will look into this and see that the position of a firm in Scotland is safeguarded, and that a firm in Scotland can act as auditor or secretary, or as any other officer of a company. I believe that the right way of doing it is by having some little provision in Clause 19 which is the only clause, at the present time, which could—if indeed it can—prevent a firm acting as secretary.
VISCOUNT SWINTON: May I ask a question upon this? As the wording in the Bill stands, a rather tiresome and stupid difficulty arises. You cannot do better than appoint as secretary of a company a well-known firm of accountants. That is a very common practice. Actually, as this stands, if you appoint an eminent firm of accountants who, it may be, have as many as twenty partners, you have got to set out the names of all of them on the notepaper and other documents of your concern. If one partner in the firm of accountants dies, or another is added, you have to amend the rigmarole on your note-paper, and so forth, accordingly. Obviously, that is nonsense, and I take it that that is a matter which will be looked into.
THE LORD CHANCELLOR: You might of course, get difficult questions as
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to who were the members of a firm at a particular time. However, as I have said, I will look into this, with a view to meeting the noble Lord's point.
LORD BALFOUR OF INCHRYE: I thank the noble and learned Viscount and beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 18, as amended, agreed to.
Clause 19 [Register of directors]:
THE LORD CHANCELLOR: This is a mere drafting Amendment to correct a wrong reference. I beg to move.
Amendment moved—
Page 18, line 23, leave out ("subsection (3)") and insert ("subsection (4)").—(The Lord Chancellor.)
On Question, Amendment agreed to.
VISCOUNT BRIDGEMAN VISCOUNT BRIDGEMAN moved, after subsection (3), to insert the following subsection:
"(4) Paragraph (d) of subsection (1) of section one hundred and forty-five of the principal Act (by which every company to which that section applies is required in all trade catalogues, trade circulars, show cards and business letters to state with respect to every director his nationality of origin, if his nationality is not the nationality of origin) shall cease to have effect."
The noble Viscount said: Your Lordships will remember that, under Section 145 of the principal Act, foreign nationals are obliged to show their nationality on the letter headings, business correspondence and so forth of limited companies. Those who have a nationality which is not the nationality of origin must show their nationality of origin, unless they are specially exempted in special circumstances by the Board of Trade. The Amendment does not seek to make any alteration in regard to the law as to directors who are of foreign nationality. I am not suggesting that we should alter the present arrangements, by which they have to show their nationality. But it does seek to provide that those who have acquired British nationality should no longer be obliged to show their nationality of origin.
I think that it is worth while to look back to the origin of the present arrangement. This was in an Act called the Companies (Particulars as to Directors) Act, 1917. It was tied up, I think, with the Registration of Business Names Act in the middle of the last war. It is

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possible to imagine that this Act was really intended as a security measure in time of war. Between 1917 and 1929 not much notice seems to have been taken of this matter, probably because the movement of foreigners into this country was not very large. Therefore, when the present principal Act passed in 1929, these provisions which came from the Companies (Particulars as to Directors) Act, 1917, were incorporated, as I understand it, in the present Act.
Between 1929 and the present time, however, several things have happened. A very large number of persons have emigrated to this country from Central Europe since 1929. They represent, your Lordships may think, the same movement as that of the Huguenots. They are the Huguenots of modern times. They came here, bringing their skill and their wealth, and also their families. In many cases they brought with them young children, babies in arms even, and to this day those children have no knowledge of their country of origin and speak no language but English. These foreigners to whom I refer have prospered here, and in due time they have acquired naturalization, after most searching inquiries by the Board of Trade and after a period, I think, of five years, during which they have had to live here and be of good behaviour. During the late war, I believe, that period was extended to something like ten years. In view of these considerations, I think there can be no doubt of the bona fides or of the fitness to do business of these people who have already acquired a certificate of naturalization.
I put it to your Lordships that if it is decided, in this country, to grant British nationality to any foreigner, we should grant that nationality without any reservation at all. This section of the principal Act which I am seeking to amend does imply reservation. It implies that a man is not really British, and that you have to parade his foreign nationality, even though the Home Office have agreed that he shall acquire British nationality. It is not really fair, I think, to do that. It holds back something from the completely British nationality which we have promised to give, and it invites everybody who reads a letter heading to take note that the British citizenship of a man
764
or woman is qualified to some degree. I know that mistakes have been made and that the public have to be protected if the wrong man is naturalized and does business in this country. But may I put it that this is not a matter for the Board of Trade, it is a matter for the Home Office; and it will complicate legislation far too much if we try, in an Act of Parliament which belongs to one Department, to protect the public from the shortcomings of another? I do not think we should do that, therefore I move this Amendment.
I have put it in no Party spirit whatsoever, but merely on the grounds of sound administration and of equity and fair dealing with this class of person. I think we should give British citizenship, when we give it, with both hands, and leave security questions to be dealt with in the proper way. I hope this Amendment may find favour in this or some other form on the Benches opposite, and I beg to move.
Amendment moved—
Page 18, line 25, at end insert the said new subsection.—(Viscount Bridgeman.)
LORD CHORLEY: I am very glad to be able to say we accept this Amendment. We are very much obliged to the noble Viscount for having brought up the matter, because the spirit in which he has moved the Amendment is entirely the spirit in which the Government look at this matter. He very properly pointed out that when the great benefit and privilege of British nationality is conferred upon an alien it should be given in no spirit of meanness, an argument with which we entirely agree. Many of these aliens, particularly the Germans and, among these, the German Jews, have very strong feelings about being associated with the country from which they were expelled in such a ruthless manner. That is a feeling with which one can entirely sympathize, so we are much obliged to the noble Lord for moving this Amendment, which we accept with great pleasure. It will involve one or two consequential Amendments to the Bill, and also to the Registration of Business Names Act, but that can be provided for at a later stage.
VISCOUNT SWINTON: I am entirely for this Amendment—there is no possible argument against it—but can we clear the whole business up and deal with the Registration of Business Names Act under this Bill?
LORD CHORLEY: We hope to be able to do so, and I am informed that this is possible. If it is we shall certainly take the opportunity of doing so.
VISCOUNT BRIDGEMAN: I am extremely obliged to the noble Lord for the way in which he has accepted this Amendment, and I thank him very much.
On Question, Amendment agreed to.
Clause 19, as amended, agreed to.
Clause 20:
Appointment of directors to be voted on individually.
20.—(1) At a general meeting of a company a motion for the appointment of two or more persons as directors of the company by a single resolution shall not be made, unless a resolution that it shall be so made has first been agreed to by the meeting without any vote being given against it.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved, in subsection (1), after the first "company" to insert "other than a private company." The noble and learned Viscount said: Clause 20 requires the appointment of directors to be voted on individually, and I have had representations made to me that whilst that provision was proper for public companies it is likely to cause considerable confusion at meetings of private companies, and is likely to be more honoured in the breach than in the observance. That being so, I think we should make it applicable only to public companies, and not to private companies. I beg to move.
Amendment moved—
Page 19, line a, after "company" insert "other than a private company."—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 20, as amended, agreed to.
THE LORD CHANCELLOR: We have finished Clause 20 and we now start a rather substantial Amendment which needs a good deal of consideration and with which the noble Viscount, Lord Maugham is concerned. I do not know whether it would be convenient to your Lordships, but I think it would not be desirable to embark on that discussion, which must take some time, at this hour. If your Lordships are agreeable I propose to move that the House do now resume.
Moved, that the House do now resume.—(The Lord Chancellor.)
VISCOUNT SWINTON: Could the noble and learned Viscount say when we shall be taking this again? I think it would be to the convenience of the House to know.
THE LORD CHANCELLOR: I hope that it will be on Monday and Tuesday of next week.
VISCOUNT MAUGHAM: I should be very grateful if the House could adjourn at the present moment. I have a great deal to say on this, and I have been urged to move it by very important bodies.
On Question, Motion agreed to and House resumed accordingly.

CHURCH COMMISSIONERS MEASURE 1947.
6.35 p.m.
THE LORD BISHOP OF LONDON THE LORD BISHOP OF LONDON rose to move to resolve, That in accordance with the Church of England Assembly (Powers) Act, 1919, this House do direct that the Church Commissioners Measure, 1946, be presented to His Majesty for the Royal Assent. The right reverend Prelate said: I am sure that I shall have the sympathy of the noble Lords in the fact that on the first occasion that I have the privilege of addressing your Lordships I have to do so at the end of so exhaustive—4 will not say exhausting—a debate. However I am comforted by the reflection that the Measure I have to bring forward has so far been found entirely without controversy. At any rate, the Ecclesiastical Committee of both Houses have examined it with their usual care, and they have found no cause for controversy in it whatsoever. Therefore I will deal with the matter as briefly as I can, consonant with the courtesy due to the House.
The object of the Measure is to amalgamate the two great financial organizations of the Church of England the Ecclesiastical Commissioners and Queen Anne's Bounty. I believe noble Lords are sufficiently well aware of the history and of the purpose of these two organizations, though they vary to some extent. The Ecclesiastical Commissioners were first appointed in 1836, whereas Queen

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Anne's Bounty goes back to 1704. The Ecclesiastical Commission handle the great common fund which was derived for the most part from the proceeds of some of the greater ecclesiastical properties, and Queen Anne's Bounty handles the fund which Her Gracious Majesty handed back to the Church, consisting of the first fruits and tenths that had been taken by the Crown in the reign of Henry VIII. Queen Anne handed them back to the Church in order that they might form a fund from which the poor clergy could be helped. Since those days the Bounty has had the duty of handling tithe and the tithe rent charge.
It is now proposed to amalgamate these two bodies, and it seems to me there are at least three good and obvious reasons why that amalgamation should take place. In the first instance, I think that the present organization is out of date. It does not represent anything like that democratic principle which is so dear to our hearts at the present time. It deals, of course, with business concerning the rank and file of the clergy, yet the rank and file of the clergy have not been represented on these bodies since they were instituted. The great new organization of the National Assembly of the Church of England has grown up, yet that Assembly has no power of sending representatives to these bodies. In short, the present organization is out of date. It is also clumsy and unwieldy. The Ecclesiastical Commissioners constitute a body which is not very great in size, but when you come to Queen Anne's Bounty there are as many as 700 Governors. I think that most of the 700 are not aware of the honour that has been done to them.
VISCOUNT SWINTON: No emoluments?
THE LORD BISHOP OF LONDON: No emoluments. But it does seem that the time has come when a less unwieldy instrument for arranging the finances of the Church should be found. I think, also, that we ought to recognize that at the present time there is a certain amount of overlapping. Out of 12,000 incumbents in the country, 11,000 are helped by one or other of these two bodies, and a great number of them by both. It is extremely difficult for the incumbent to know to which body he should apply for certain purposes. If he wants to get his house
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repaired, he applies to Queen Anne's Bounty; if he wants to get it improved, he applies to the Ecclesiastical Commissioners; if he wants to sell his house, he applies to Queen Anne's Bounty; if he wants to sell any of his glebe he goes to the Ecclesiastical Commissioners. There are many occasions when the poor man does not know to which body he should apply, and very often he ought to apply to both.
I think it is clear that there is a good case for the amalgamation. What is it that it is proposed to do? It is proposed to make a new organization which shall be less unwieldy, but it is expected, if the arrangements are carried out as suggested, that the new organization will embody the old principle of incorporating into the Governors a number of high officers of State. We should be very sorry indeed to lose the old historical connexions with the high officers of State. There is no necessity for those officers to be members of the Church of England. In the past they have been very ready to accept the honour, and often have performed very great services to the Church. I understand that in this case they have already been approached, and have signified their readiness to serve. The new organization will also embody a democratic principle because the Church Assembly will have an opportunity of sending its representatives direct to it.
The organization will consist of about 100 Commissioners who will meet once a year, or more often if it is found necessary. The monthly business will be done by a Board of Governors, consisting of twenty-seven—quite an ample number for that type of work—but the day-to-day work will be done by an Estates and Finance Committee, consisting of seven members. I think the organization promises to be business-like and there is good reason to believe that it will meet the needs of the Church far better than the two organizations which are functioning at present can do so long as they remain separate. I think that is all I need say at the present moment, but if your Lordships would like to put any questions I can only say that I will endeavour to answer those questions to the very best of my ability. But if your Lordships receive this Measure with the same unanimity with which it has so far been received I shall indeed be a happy man.
Moved to resolve, That in accordance with the Church of England Assembly (Powers) Act, 1919, this House do direct that the Church Commissioners Measure, 1947, be presented to His Majesty for the Royal Assent.—(The Lord Bishop of London.)
VISCOUNT SWINTON: My Lords, I think it is singularly appropriate that this proposal to amalgamate these two great corporations should come before us when we have just concluded our discussion of a Companies Bill dealing with amalgamation and consolidation. I am sure that this Measure will commend itself to your Lordships. I hope that this consolidation will be a great success. It will certainly be a comfort in one department of life, at any rate. In these days the incumbent will know to which Department of State he has to apply—a thing he seldom knows at the present time. I trust that its consolidated accounts will show a most admirable result.
LORD RENNELL: My Lords, may I associate myself with what has been said by the noble Viscount who has just sat down. After a long and somewhat laborious session, this is a Measure which should not pass unnoticed, because here there is something of great historical significance. Some may regret the passing of old institutions. To those of us who have followed this Measure at all, it has been overdue for many years, so that in the regret that we may have at seeing a piece of our antiquity pass into history we can congratulate those who have succeeded in getting unanimity for this Measure.
LORD WALKDEN: My Lords, on behalf of those associated with me on these Benches, I should like to say that we very heartily welcome this Measure. I do so personally as a Churchman. I am most anxious to see the position of the Church enhanced in the eyes of the public. This very business-like arrangement will certainly help in that direction. I trust that great blessings may come from the new arrangement, and that incumbents will be happier and less worried. I hope that the new arrangement will be able to put them in a more comfortable position in life. Many of them are living under considerable hardship, and I am sure that the public would wish to see them in a happier position than that in which they
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are at the present time. I have great pleasure in supporting this Motion.
On Question, Motion agreed to and ordered accordingly.

TENDRING HUNDRED WATER AND GAS BILL. [H.L.]
The Lord Chancellor acquainted the House, That the Clerk of the Parliaments had laid upon the Table the Certificate from the Examiners that the further Standing Orders applicable to the Bill have been complied with.
The same was ordered to lie on the Table.

HAVANT AND WATERLOO URBAN DISTRICT COUNCIL BILL. [H.L.] DUDLEY CORPORATION BILL. [H.L.]
Report from the Committee of Selection, That the following Lords be proposed to the House to form the Select Committee for the Consideration of the said Bills, namely:

L. Carrington.

L. Hindlip.

L. Holden.

L. Craigmyle.

L. Belstead (Chairman).

Agreed to; and the said Lords appointed accordingly.

TENDRING HUNDRED WATER AND GAS BILL. [H.L.]
Committed: the Committee to be proposed by the Committee of Selection.

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

Urban District of Barnard Castle;

Urban District of Felling;

Urban District of Ripley (Derbyshire);

Urban District of Sleaford:

Laid before the House (pursuant to Act) for affirmative Resolution, and ordered to lie on the Table.
House adjourned at a quarter before seven o'clock.