HL Deb 18 February 1947 vol 145 cc688-715

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.


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.


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. 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.


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?


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.


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, 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.


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.


If that is the case, he would not, in the ordinary course, be a person resident in the United Kingdom.


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.


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.


The Treasury will give general regulations that all these cases will be covered.


Covered by the phrase "except with the permission of the Treasury." That is right.


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—

  1. (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
  2. (b) any Treasury bills; and
  3. (c) any postal orders; and
is hereby prohibited except with the permission of the Treasury.

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 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 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.)


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.


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 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.


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, 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.


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.


Would the noble Lord let us know why it is crooked to do something which is allowed by the law?


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 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.


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?


I am afraid we cannot meet it in that way.


Would it not be possible to limit the amount of any particular gift? Would that not meet the case?


I do not think you could do that.


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.


I do not think any hardship is involved because these things will become legal and will be permitted.


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 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 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 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.)


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.


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 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.


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.


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 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.


I still do not think that there is any great object in this Amendment. The practice of the 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.


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 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 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.)


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.


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 word "ultimate" is not defined in the 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."


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.


I do not think there is any real doubt here.


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.


The matter has already been considered very carefully, and I do not think we shall find a better word.


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 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 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 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 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."


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—

  1. (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
  2. (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
  3. (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—

  1. (i) that the said sale is delayed to an extent which is unreasonable having regard to the ordinary course of trade; or
  2. 710
  3. (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 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.)


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 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.


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.


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.


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:


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,—

  1. (a) cause the foreign company to comply with any of the requirements; or
  2. (b) remove any obstacle to the foreign company complying with any of the requirements; or
  3. (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.


Perhaps I may be forgiven if I return to a point I raised on 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 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.


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.


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 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.


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.


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 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.


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.

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