DISTRIBUTION OF GERMAN ENEMY PROPERTY BILL [H.L.] (Hansard, 6 March 1952)

§ VISCOUNT SWINTON
My Lord, here again I am afraid I shall be guilty of keeping rather closely to my brief, because this Bill, though equally short, to the uninitiated is hardly less complicated. Its sole object is to make one small amendment to the Distribution of German Enemy Property Act, 1949, for which, at any rate, the noble and learned Earl 560 opposite was responsible. The purpose of that Act was to provide for the distribution of the proceeds of German enemy property in this country, which had been allotted to us as reparation by international agreement, to British persons who could establish claims in respect of German enemy debts. The expression "German enemy debt" was closely defined in Section 8 (1) of the Act of 1949. As I understand it, the principle behind this definition was that a German enemy debt, in respect of which a claim to share in the distribution under the Act could be entertained, had to arise out of an obligation by a German person to a British person incurred before the outbreak of war. However, in the case of bearer bonds which are dealt in on United Kingdom stock exchanges, and which, of course, frequently change hands, it is often quite impossible to prove after this lapse of time that any particular bond was owned by a British person on September 3, 1939, the date of the outbreak of war.
The issue and the placing of some of these loans by the German and Austrian Governments was actually done with the commendation of the British Government of the day. When transfer difficulties had arisen, the German Government had undertaken to find sterling. Certain of these bonds had been "enfaced" with a certificate to show that, at a pre-war date, they were of British ownership. Sums due in respect of these bonds—which were known on the Stock Exchange as "Reich" Bonds—were therefore specifically relieved by the Act of 1949 from the necessity of proving that, on September 3, 1939 they were in British ownership, and they were specifically included in paragraph (b) of the definition of "German enemy debt" in the Act of 1949. This was a small departure from the main principle of the definition, which was considered to be justified by the special position of these bonds.
The non-Reich sterling bonds of German States, municipalities and corporations which are now listed in the Bill (your Lordships will see that there is a Schedule) were not given similar special treatment under the Act of 1949. At that time it was feared that this treatment would open the door too wide to foreign holders of these bonds to come in and participate in the distribution, and that thereby we should unduly deplete the 561 fund which was intended to be available for British creditors. Also it was hoped that the difficulties of establishing ownership as at the outbreak of war could be overcome administratively.
Your Lordships may remember that we had some discussion about this matter when the earlier Act was before this House in December, 1949. During the Committee stage the noble Lord, Lord Lucas of Chilworth, who was in charge of the Bill, admitted that the question presented some difficulty, but he said that the Government hoped to get the advice of the Advisory Committee which it was proposed to set up when the Bill became law, and he thought there might be some means of securing adequate evidence of ownership. That was followed up, and the position of these bonds was in fact considered by the Advisory Committee on the Distribution of German Enemy Property, on which the British creditor interests were fully represented. In their Report, the Committee drew attention to the inequalities and, therefore, the inequity of the treatment which was meted out as between Reich and other German bonds which arose from the wording of the definition in the Act of 1949, and also to the insuperable difficulties which would confront the holder of non-Reich sterling bonds in trying to prove British ownership of his bonds at September 3, 1939.
The purpose of the present Bill is to remove these inequalities and these difficulties, and is consequently in accordance with the recommendations of the Committee. Its effect is to render it unnecessary for holders of non-Reich sterling bonds which are dealt with on the Stock Exchange to prove, as a condition of establishing claims to share in the distribution of German enemy property, that on the outbreak of war the bonds themselves were owned by a British subject. In this respect, therefore, the Bill assimilates the position of the holders of these non-Reich bonds, which are set out in the Bill, with that of the holders of Reich bonds, who were entitled to come in under the Act of 1949.
The risk that there might arise a large number of claims by foreigners who were not intended to come in and share in these assets is met in rather an ingenious way in the recommendation of the Committee. They recommended that, in 562 addition to the conditions prescribed in the Act, a claimant should be required to show that a debt was due to a British person at a current date. That recommendation was accepted, and an Order in Council was made under the Act laying down that claimants must show that any bonds they hold were owned by a British person on November 7, 1951. It is thus impossible for someone suddenly to appear with a bearer bond not so owned and put it into the hands of a British holder and collect what was intended for British subjects. I draw your Lordships' attention to this point, because it follows that, although the Bill does represent a departure, however slight, from the principle that the German enemy debts must be in respect of an obligation due to a British person in 1939, it does not open the door, as it was feared it might, to a large distribution to foreign holders of these bonds think the Committee have found a very ingenious and, I am sure, a very effective way of doing justice to British holders, while at the same time not conferring an undeserved—and, to us, undesired—bonus upon foreign holders.
This Bill, with which I understand the interests mainly concerned are quite content, will put all the German Reich and non-Reich sterling bonds which are dealt in on our Stock Exchange on the same basis as regards the conditions under which they are entitled to share in the distribution under the Act of 1949. Frankly, I found this Bill easier to understand than the first one, and therefore I have explained it mire intelligently. I beg to move that the Bill be now read a second time.

§ VISCOUNT STANSGATE
My Lords, I was going to ask the noble Viscount how much money was involved. I am very doubtful whether the question I am going to put is in order, but if I am told that it is not, I shall certainly cease speaking. This question of German debts allows me, at any rate, to ask the noble Viscount this question: What is being done about the enormous debt which, morally, the Germans owe for the genocide of the Jews in their country? Israel is at the moment struggling with enormous economic difficulties. We 563 remember that at a time when a poor distraught lad killed some diplomat because his parents had been murdered in a concentration camp, Hitler imposed a penalty of £85,000,000 on the Jewish community in Germany. We now see the Jewish State in tremendous difficulties because they are trying to admit everyone to their State in case that Hitler type of cruelty should come into existence again. One might say that their economic difficulties are directly due to the actions of the Germans. If the noble Viscount is able to answer (and I appreciate that this is rather a wide question) I should like to know, and I am sure the public would like to know, what is being done to exact from the Germans the money reparations—they could never make moral reparation—which they owe in respect of these actions.

§ VISCOUNT SWINTON
My Lords, I do not know whether it is in order for the noble Viscount to ask a question of that kind on a Bill the sole content of which is to say that a very limited number of German corporation stocks which happen to have been held by a British subject at a particular date shall rank for a claim against a specified and limited sum of money which has been received and is deposited in this country. It would certainly be quite out of order for me to engage in a discussion which raised the whole wide issue of German reparations and to observe, not merely whether there should have been German reparations for this country, but whether we should, then or now, have put into an agreement an obligation by which the Germans were to pay reparation to the State of Israel—which I gather is what would be involved. It would not only be entirely out of order for me to engage in any such discussion, it would also be abstract in the extreme and perfectly useless. There are no means by which we can alter an agreement entered into a long time ago.
The noble Viscount did ask one question which was in order, and that was: how much money is involved in this? The answer is that we do not know; and, indeed, we cannot know until the bearer bonds are produced with a certificate on the face of them that they were in the possession of a British holder on the date 564 laid down by the Order in Council. I do not think I can give any further information, because we can know only when the holders of bonds present them.

§ LORD SHEPHERD
My Lords, I rise only to apologise on behalf of my noble Leader, who has been called away. He had intended to say a few words on the Bill. We offer no objection to the Second Reading of this measure, which seems to be in order and desirable, but we may have to look at one or two points before Committee stage.

§ VISCOUNT STANSGATE
I am grateful to the noble Viscount for his remarks I had not the least intention of asking anything that was not proper, but I thought he might possibly be able to tell us something of the negotiations which are, in fact, in progress for the settlement of this matter.