HL Deb 21 December 1965 vol 271 cc968-1003

3.50 p.m.

Debate resumed.

LORD CONESFORD

My Lords, in the debate of November 15, I endeavoured to make clear what my attitude was to sanctions in the case of the illegal Government of Rhodesia. I expressed my fear that Her Majesty's Government were not asking themselves what I believed to be the most important question, which was whether the sanctions that they were considering were in fact calculated to bring about the results they desired. The noble Lord who commended these Orders this afternoon said he hoped the sole question we should raise would be that of effectiveness. I make no complaint of that, but I think there is some danger of the word "effective" being used in two quite different senses. Sometimes these sanctions are recommended as being effective when by "effective" the speaker means "drastic". Provided they are sufficiently drastic it is assumed that they will be effective. What I mean by "effective" is, calculated to bring about the object that the Government have proclaimed.

On November 15 I ventured to quote what the Prime Minister himself had said, and I expressed my doubts whether some of the sanctions were calculated to bring about the desired result. I notice the most recent statement of the aim of the Government appears in the terms of an Amendment to a Motion tabled in another place, and, if I may quote the words describing their sanctions, they are designed to secure the return of Rhodesia to constitutional rule". I think it will be agreed on all sides that this is the proclaimed objective of Her Majesty's Government.

I share with my noble friend whose speech preceded mine an increasing alarm at the series of sanctions which I believe, taken cumulatively, are really approaching a state of war between this country and Rhodesia—and a state of war without even some of the few hopeful things consistent with war. There was a passage in the speech made by the noble Lord who commended these Orders this afternoon in which he made some violent remarks about Mr. Smith. I am not going to say whether or not they were justified. I merely believe that, if negotiations are desirable, for the two sides to call each other names is not going to help. But the noble Lord used language which has been used by the Chancellor of the Exchequer in another place when he was dealing with insurance contracts, which had reference to the parallels of war and even its justifications.

There is one very great difference between war and our position vis-à-vis Rhodesia. It is this: that when you are at war you do at least recognise the Government against which you are fighting. That is extremely important. Naturally, when you are engaged in war and fighting another Government, you seek to deprive it of all means that could strengthen it, and there are the ordinary consequences of war with which we are familiar, such as the frustration of insurance contracts, and so on. But, as between us and Rhodesia, the Prime Minister has said repeatedly that he desires that the effect of our sanctions shall be such that other people in Rhodesia become dissatisfied with Mr. Smith and approach the Governor, proposing a Government that they and we should prefer. If that is the object, to treat Rhodesia to a series of measures which appear to have been designed to inflict the maximum of economic damage may not in the least tend to bring about the result which Her Majesty's Government desire.

I generally credit my political opponents with complete honesty in these matters and I am going to assume that the object of the Government is that which they declare. What I question is whether these cumulative sanctions that they are imposing are in the least likely to bring about the desired result. A more likely probability is that they will increasingly unite even the former opponents of Mr. Smith behind him, and in fact an article in the current issue of the Economist, which has hitherto been taking a strongly pro-Government view on sanctions, expresses the fear that now even some of the trading community and others who were very much opposed to a U.D.I. are lining themselves up behind Mr. Smith because it is felt that any questioning of Mr. Smith and his Government is almost like treason.

Taking the view I do of the dangers of the course on which the Government have embarked, I thought it right to express those doubts and fears to the House because I feel them most strongly, but I come now to the specific point raised by my noble and learned friend Lord Dilhorne and others, though I am going to put it in a slightly different way. It concerns the Southern Rhodesian stocks. I think the noble and learned Viscount, Lord Dilhorne, thought that the power of direction in paragraph 3(e) could be exercised so as to enable payment of interest to be made from these funds. I am not going to argue for one moment whether that is right or wrong, though coming from my noble and learned friend, of course, I treat that view with great respect. But I can understand the other view being taken, that, though there are powers of direction, they should be limited to what would otherwise be proper in dealing with these Bank assets. I can understand either view; but my point on these loans does not depend on that in the least. Nor am I concerned with the hardship caused by not paying interest on these loans. What I am concerned with is the credit of Her Majesty's Government.

I want to put the point absolutely simply. These loans are the debts of the legitimate Government of Rhodesia. I take it that is agreed. I imagine Her Majesty's Government think that the conception of a legitimate Government in Rhodesia is not merely a myth. There is such a thing. In fact, if I might quote one statement by the Prime Minister, which I quoted on November 15, he referred to "the only legal 'Government' there, the Governor". My noble and learned friend Lord Dilhorne has quoted from another constitutional Order that has been made, showing that the Secretary of State has executive power to act as the legitimate "Government" of Rhodesia. If you get these two things in regard to this stock (it is a trustee security of course), that it is a debt of the legitimate Government of Rhodesia and that we have power—in fact we are always asserting we have power—to exercise the powers of the legitimate Government of Rhodesia, why is it that we have not paid the interest? That question is quite independent of the question from what funds that interest should be paid. But if that is an obligation on Her Majesty's Government, it ought to be discharged.

Perhaps I may give quotations to show that it is not merely I who have these doubts. In the debate in another place the other day there was a quotation from the City Editor of The Times, who said this: It is, however, an unhappy precedent, as are so many others, as it looks like being the first time ever that there has been a default on any British or Commonwealth stock. That is not a matter of trivial importance. Nor is it only The Times and I who are saying this. Let me quote what the Economist said, not in the current number but last week. After dealing with other matters with which I will not trouble the House, they say this: Leaving the meaningless technicalities aside, the interest should surely have been paid. Either London is responsible for Rhodesia or it is not. I do not think anything could be clearer. I hope I have made the point that I am asking reasonably clear. It is three propositions: that this is a debt owed by the lawful Government of Rhodesia; the Secretary of State has all powers to act as the lawful "Government" of Rhodesia; why are these debts not being paid? I hope that will be answered.

The other matter I should like to raise is that the noble Lord who introduced these Orders twice observed—and I think I see the force of his remark—that whatever merits there may be in these points I am making, he thinks they do not arise directly out of the Orders before the House.

LORD BESWICK

My Lords, the noble Lord is perfectly entitled to quote me, but I think he is wrong in saying what I think. It is not a question of what I think, but of what I am advised by the legal advisers of Her Majesty's Government.

LORD CONESFORD

I am sorry if I put it wrongly. I entirely agree with the noble Lord that that was the impression made to the House. I did not mean to imply anything to the contrary. The noble Lord was making quite clear in his submission, what was the advice of his Department.

I was now coming to the relevance of these Orders. I can understand the submission that the point I am now raising does not arise directly out of these Orders. But, of course, it is very closely connected because this Order, which, as the Economist last week pointed out, is an extremely effective Order—it is perhaps the most effective Order which has yet been made by Her Majesty's Government in depriving the de facto Government of Rhodesia of its ability to get hold of sterling—provides an excuse for the de facto Government of Rhodesia to do nothing about the loans. It accentuates, if I may say so, our responsibility.

There is also another result. I forget if it was the noble Lord, Lord Byers, or somebody else who hoped that these sanctions would deprive the de facto Government of Rhodesia of its means to carry on, and so forth. But, of course, the trouble about these sanctions is that you not only hit those you wish to hit; you hit some you do not wish to hit at all. What has happened? The de facto Government of Rhodesia, deprived by these sanctions of a great deal of the assets on which it would otherwise rely, takes immediate steps, through raising the price of coal and putting a duty on coal, calculated to cause disaster to Zambia. I beg Her Majesty's Government to consider two things. First of all, is this series of sanctions tending to produce the result they want—that is, to cause the people of Rhodesia to desire, or work for, a different Government? And, secondly, what effect are they having on third parties, and third parties whom we certainly do not wish to injure?

May I mention, since it has been mentioned in the course of this debate, the insurance question? HerMajesty's Government, I know, are trying to make some of the so-called sanctions sanctions which will be followed by other countries, too. But nobody supposes that any other country is going to prohibit payment under its insurance contracts. I should like to know, should the noble Lord who is going to reply have any information on this subject, whether it is true (I heard it as a rumour during the last two days) that certain foreign countries, in their propaganda in Rhodesia and elsewhere, are claiming that they pay on their own insurance contracts but that Lloyd's do not.

I regard these threats to our interests as very serious. I do not wish to lengthen the debate on this matter, because on the main question of sanctions, perhaps, to-morrow's debate provides an even better opportunity. But I hope that on the one specific question about the interest on these Rhodesian loans, we shall have a perfectly clear reply.

4.10 p.m.

LORD BALFOUR OF INCHRYE

My Lords, I have never spoken in your Lordships' House on Rhodesia. I have known Rhodesia in peace time and I have had much to do with Rhodesia in war time. I have listened with increasing distress over the months which have passed to the sorry tale which your Lordships have heard. There comes a time when, if a man is going to live with himself and he feels deeply upon some subject, he must make those views known. The discussion of these matters to-day gives me a chance for a few moments to express my views. Like most other noble Lords, I should think all noble Lords in this House, I shared the regret at the illegal Declaration of Independence, but with a measure of sympathy for those who truly felt they were the victims of a long period of "double think" and "double talk" by successive British Governments. Even after that illegal declaration, I shared the view which I am sure the majority of your Lordships had, and I believe millions of people felt outside, that the position was not lost. But now, step by step, it seems to me that we are slipping to a state of war, and these Orders are further steps in that direction.

For this Order and for all preceding Orders dealing with sanctions, the Prime Minister's defence has been twofold: quick sanctions which will hurt; an alternative to force. That is the first defence. The second defence has been the prevention of foreign intervention in that territory. We know of the possibility that the Prime Miniter talked of, of red berets and blue United Nations uniforms. What is the position now in relation to that dual defence? There are to-day the veiled threats of a United Nations blockade, if required, upon Portuguese East Africa—a blockade which Britain would be forced to take part in if the United Nations so wish. Secondly, as regards foreign intervention, we ourselves have invited a foreign Power to come in and assist us with the airlift, in the form of American transport aircraft. It is these contradictions which so alarm me when looking at the present situation. I believe that, sooner or later, a Government —this Government or another Government—will have to negotiate, and with Mr. Smith. I believe that the sooner we start, the better it will be.

This Order is not going to have an effect against rebels, against traitors, against men of treason—those stupid words which are bandied about far too lightly and far too easily. This Order is against a body of British citizens, exasperated and determined people, who feel they wish to rebel against the policy of the British Government, at present backed by a majority in Parliament. This talk of rebels—rebels against whom? Not against Her Majesty. But rebels against a policy which they believe would bring disaster to their country. And they see the example of the Belgian Congo next door, which bears so heavily upon their minds.

On the effect of these Orders we, too, like the Government, have our sources of impartial, disinterested information from Rhodesia. I would summarise the information I have tried to gather under four points. The first is that there has been a great change in Rhodesia since the sanctions policy by this Government has been put into effect. Between July and September last many business interests in Rhodesia were antagonistic to Mr. Smith. To-day, Mr. Smith probably carries 95 per cent. of the Europeans behind him. Secondly, the territorial sanctity of Rhodesia is something that every Rhodesian man and woman—and do not forget the women—would definitely fight for. Thirdly, there is no force in the illusion the Prime Minister seems to hold—I can only conclude this from the words I have listened to in his speeches, and from reading them—that suddenly some middle-of-the-road white Liberal is going to arise and gather a measure of strength which will be sufficient to overthrow the Smith regime. That is not so. Rightly or wrongly, the Europeans are behind Mr. Smith to-day.

Finally, let me say that they are never going to surrender. The sanctions may bite. The sanctions will bite. In March next, I think they will bite harshly. But I hope the Government realise that there is still a pioneer spirit in that country. They will pull in their belts and will not surrender. So I come back to the point that, sooner or later, Her Majesty's Government will have to negotiate with Mr. Smith; and for the sake of the whole outside world, the Commonwealth, Rhodesia and ourselves, the sooner the better. It seems to me that a rather dangerous impression is gaining ground that this Order and others are part of a sort of personal conflict between Mr. Wilson and Mr. Smith, and that Mr. Wilson has nailed his colours to the mast and that there is marked on them "Unconditional surrender!". I think that was partly caused by the regrettable language which the Prime Minister used in speaking of Mr. Smith, then the Prime Minister of Rhodesia, and his colleagues as "frightened men". They may be misguided men; they may be obstinate men. But Mr. Smith fought in a Spitfire over Italy and was shot down. Mr. Harper led a Royal Air Force wing. These men are not lacking in courage; they are not frightened men.

No one, except a few here and, I believe, a few in Rhodesia, wishes to perpetuate white supremacy. That is not the issue. The issue is the speed with which the 1961 Constitution provisions shall be implemented. There is a lot of silliness in Rhodesia, their best friends will say, in the way of stupid racial discrimination which must be abandoned. But there is a great deal of good sense, and good men there who are allied to Mr. Smith and who are being more and more alienated. This Order and the oil sanctions Order which your Lordships will be debating soon will, I hope, be the last Orders on the road towards a conflict in which all might be involved. Let this Order be the last, and let it mark the start of talking around a table with the men in power.

I conclude by one prophesy to your Lordships—namely, that any Government in this country, of whatever political complexion, if it once allies itself to a policy which allows white man to shoot at white man, will, by a great upsurge of public opinion, be out within twenty-four hours, and I believe deservedly so.

4.20 p.m.

LORD BARNBY

My Lords, like most of your Lordships, I came into this Chamber this afternoon with a sense of great responsibility and great complexity; and I am compelled to intervene because I feel strongly that the Government are fooling themselves in thinking that these measures are wise. The noble and learned Viscount who spoke for the Opposition put a great number of points, which doubtless will be answered. I say that, because those of us who have assiduously read the report of the debate on these measures in the other Chamber, could not help feeling that there was a great deal of evasion. There were answers of a kind, but the Government certainly did not give direct answers to what was asked.

The original Act establishing the Rhodesian Reserve Bank is quite a complicated one, and doubtless it covers all the things that should be covered. The point I want to make is that I feel that the results of this action by the Government are without doubt going to have a very bad effect throughout the world on confidence in sterling, and in British insurance, and the propriety of actions interfering with that confidence must be considered. The Order is, of course, virtually equivalent to what was introduced when war broke out the last time. Technically, I suppose, we are in a state of war, and this Government are given power to do anything they like.

THE EARL OF LONGFORD

My Lords, I leave it to lawyers present to explain to the noble Lord the technicalities, but we are certainly not technically in a state of war with Rhodesia. They are technically in a state of rebellion.

LORD BARNBY

My Lords, I understood the noble Lord the Government Chief Whip to say that the exercise was to bring Rhodesia back into the Commonwealth. One wonders which other States intend leaving the Commonwealth. But the noble Earl the Leader of the House has raised a technical point. I repeat that there will be widespread repercussions in all circles which have regard for the historical responsibility of sterling, and, of course, in circles concerned with insurances and premiums and matters of that kind.

I say that because through a long life I have been in touch with considerable financial and banking operations, and I am satisfied that Governments cannot pass Orders like this without introducing a great deal of confusion. The financial Press this morning emphasises what confusion is being caused. It must break out everywhere, and the Order is therefore dangerous. The effect on insurances with regard to the delays in payment of premiums is equally dangerous.

Of course, this situation is unique. There has never before been a suspension of a Reserve Bank. After all, the Reserve Bank is of relatively recent introduction. There was no Reserve Bank in the United States until 1932, and until then banks did not even guarantee deposits. New Zealand, for instance, had no Reserve Bank until quite recently, so the Government are now seeking to upset a new mechanism. That causes great surprise. Incidentally, we have all these difficulties about who is what, who is the Government and so on; but I cannot help reflecting that, although United States policy has been progressively to encourage de-colonialisation, we now have the humorous situation that the United States Government is reported to be strongly in support of a policy which apparently is going to restore to London the administration of a certain part of what, in spite of what has been said, is still the Commonwealth.

I hope that, in replying, the noble Lord, Lord Shepherd, will deal with a question which was put to the Chief Secre- tary in another place, but which was not answered—namely: who is the customer of the Reserve Bank of Rhodesia? Is that customer the Governor of Rhodesia? Are we the Government of Rhodesia?"—[OFFICIAL REPORT, Commons, Vol. 722 (No. 26), col. 1208, 14/12/65.] The point I want to emphasise is that the Government should remember, as my noble friend Lord Coleraine has said, that they have got a tiger by the tail, and this is not a very good way of dealing with it. I should like to associate myself with the remarks of my noble friend Lord Colyton, and of my noble friend Lord Balfour of Inchrye. I have read very carefully the Report of the debate in another place, and many points were put there which do not appear to have been answered.

The noble and learned Viscount has put a great number of points here. I should like to conclude by confirming what I believe is the situation to-day. Whatever intensification there is in the actions announced against Rhodesia, it will only strengthen the resolution of the Afrikaner population of Rhodesia to resist. The Government are only fooling themselves if they do not recognise what is human nature, and what we should want to be the case if it were Britain and they were Britons, rebellion or no rebellion. They believe that Rhodesia is their country, and they see nearby what has happened in the Congo with the withdrawal of normal government. So in that tone I appeal to the Government to realise that negotiation is now the best policy. Coercion will not achieve the desired result.

4.28 p.m.

LORD REAY

My Lords, the single logic of the successive measures introduced by Her Majesty's Government in respect of Rhodesia, subsequent to Smith's declaration of independence, has been to bring the Rhodesian Front, or some plausible political alternative, to sue for terms by temporarily destroying that country's capacity to continue as a trading nation. From the initial sanction of the withdrawal of Commonwealth Preference, to the sanction on tobacco, to the initial discretionary control of Rhodesia's reserves held in London, to the almost complete freezing of all those reserves—these have had the single objective of denying that country foreign exchange with which to enable it to finance its imports. What we now need is more information on which to judge how fully these sanctions, designed to reduce the availability of foreign exchange to the Rhodesian Front, are operating, and a scrutiny of where further pressure might be applied.

In the first place, I should like to ask Her Majesty's Government whether they will reveal the extent to which the board of the Reserve Bank of Rhodesia have succeeded in locating the Rhodesian reserves held overseas, and whether the board would publish a statement of the Rhodesian reserves—their total and their distribution. It was the policy of the Reserve Bank of Rhodesia, under the old board, to publish a statement of the reserves each week. Could we also have an assurance that these reserves are nowhere available for use by the Rhodesian Front, and that, if foreign commercial banks are found to be making funds available for such use, the Government will consider taking action in the courts of the appropriate country to claim those funds?

Secondly, would Her Majesty's Government consider the possibility of instructing the subsidiaries of British companies in Rhodesia to see that their foreign exchange earnings are not used for the purchase of imports into Rhodesia, but are turned over to the English parent company or to the Bank of England? Thirdly, would Her Majesty's Government look into the possibility of restricting the extension of internal credit in Rhodesia by the issue of instructions from the Reserve Bank (if this should be possible) to the commercial banks of Rhodesia to call in, for example, overdrafts? Fourthly, would Her Majesty's Government be prepared to direct the Board to devalue the Rhodesian pound? I should like to know if they would in any circumstances be prepared to do this; and, if so, in what circumstances. Finally, in view of the situation that has arisen on the board of the Central African Power Corporation, would the Government, in order that this board should continue to discharge its functions and responsibilities for the generation of electricity at Kariba, appoint three members to replace those three Rhodesian members whose resignations fall due today?

It has been argued here, and has been very widely argued in another place, that Her Majesty's Government have already, by these Orders, destroyed that confidence in the integrity of this country to meet its obligations without which this country can no longer hope to continue its role as a hanker in the world. But whether this is so is not to be tested by describing the unprecedented character of the present situation: it is tested by watching the banking reactions of other countries to these events. If other countries were to cease to bank with us, were to cease to insure with us, if they became nervous at the mere hint of political trouble, then clearly there might be some cause for alarm. But there are reasons for not expecting this. First, this is, on any viewing, an exceptional occasion, of which other countries can hardly need persuading; but, if they did need persuasion, it should be the quite manageable duty of Her Majesty's Government to provide it. Secondly, there was very explicit warning. It was not by the unannounced severity of our retaliatory measures that other countries have been surprised. It was a unique event preceded by every warning of the most unambiguous nature.

We are at war with a country which we wish to defeat without resort to the use of military force. It is a situation which offers a horrifying potential of escalating responsibilities and costs. The cost of rescuing Zambia from destruction for each week that this lasts: of air-lifting oil, of organising coal, of restoring her economy ultimately; the risk of incapacity to the Copper Belt by sabotage, direct or indirect; the costs of imposing an oil blockade, which of course may be necessary; the outbreak of disorder in Zambia or in Rhodesia itself, which would equally certainly require military intervention, perhaps even the ultimate re-occupation of Rhodesia with our own police and troops, and their maintenance there for years—these dangers increase with the passage of each month, each week, each day.

There seems no comparison between these risks and the disputed fractions of notional integrity we allegedly put at hazard by any additional element of stringency in our financial measures. And certainly any element of confusion or timidity or carelessness in the consideration of the slightest detail of possible extra effective power derivable from or associated with these Orders would be as grave and regrettable an offence as if the issue were one of committing soldiers of this country to risk their lives—for that, of course, if we were to fail, is what it might always come to.

4.35 p.m.

LORD SALTER

My Lords, I do not intend to inflict a speech upon your Lordships now: I want only to express in a sentence or two the deep anxiety which I believe is now felt by many in this House and outside that the Government are taking one step after the other (of which the latest, but not perhaps the last, is now under discussion here) which will soon result in the Prime Minister finding himself in a position in which he cannot escape forcible aggression, against which practically all those on whom the present measure of government, stability and direction of the economy in Rhodesia depend will feel that they must unite to defend all that is dearest to them. I never questioned the sincerity of the Prime Minister when he stated, time after time, that he did not wish to use force, but I do gravely doubt, as I think many others do, whether he is not finding himself going along a course which will have that consequence, with further consequences on which I will not now dilate but which will be in all your Lordships' minds.

4.36 p.m.

LORD FRASER OF NORTH CAPE

My Lords, I intervene only because I have at times had under my command many Rhodesian people, and my admiration for them has been beyond measure. I believe most of us will think that Mr. Smith is much the same—a likeable, courageous, determined man. The fact remains that the law of England is that, whatever the provocation—and there may have been provocation from Her Majesty's Government—you are not allowed to take the law into your own hands; and that is what Mr. Smith has done. In consequence, every sort of sanction is entirely his responsibility.

Now a great deal has been said about the united support of the Rhodesians for Mr. Smith's Government. Unfortunately, if you have a likeable, courageous and determined leader people will blindly follow him. We have experienced that, of course, with our own Commanders-in-Chief. Armies and Navies will follow them blindly. If the Commander-in-Chief leads them to disaster, it is entirely his responsibility, in his own heart, soul and conscience. If we go back to the past, Napoleon, I suppose, had the support of the whole French people: he led them to disaster. Hitler, I suppose, had 95 per cent. German support: he led them to disaster. Mussolini had 95 per cent. Italian support: he led them to disaster. It is not the peoples: it is the leaders who are to blame.

In the case of Rhodesia, Mr. Smith is, as I have said, a likeable, courageous and determined man. I suppose no greater courage is required of a man than for him to retrace his steps. If Mr. Smith were to bring his country back to the legal position he would certainly, I think, by the suffering which he would thereby save, be worthy of the George Cross; and if he did that I think he would get the admiration and the sympathy of the whole world.

4.39 p.m.

THE EARL OF DUNDEE

My Lords, in the interests of Party unity on this question (which has been a little shaken, perhaps unintentionally, by some recent statements of Her Majesty's Government), and also in the interests of that objective on which I think we are all agreed—the early return of Rhodesia to constitutional government—I hope that the noble Lord, Lord Shepherd, who is going to reply for the Government, will answer clearly and unequivocally the questions which were put to him at the beginning of the debate by my noble and learned friend Lord Dilhorne.

I am going to refer very briefly to only one of those questions—the last one, concerning the payment of interest on the Rhodesian Government loan stock. I feel bound to say that I do not think it would have been necessary even to ask this question in your Lordships' House if it had been answered in another place. And the reason why it has been pressed strongly—and, in my view, rightly so—by nearly every noble Lord who has spoken this afternoon is that it was asked in another place repeatedly, clearly and politely, but the reply of the official Government spokesman was one which I can only describe as an impenetrable smokescreen of verbosity. I am sure that the noble Lord, Lord Shepherd, is altogether incapable of employing a defensive weapon of this kind.

It really is not good enough to tell us that it is outside the scope of this Order; because paragraph 3(e) of the second Order (No. 2049), which I look upon as the most important paragraph, states that: the Secretary of State may from time to time give to the Governor or to the Deputy Governor or to any other director or (through the Governor or Deputy Governor) to the Board such general or special directions relating to the policy of the Bank or the conduct of its business as he may think fit and it shall be the duty of every person to whom any such directions are given to comply with them. Nor, my Lords, do I think it is good enough to tell us simply that we are not the Government of Rhodesia. That may be technically true; but, surely, we hold the view that the present de facto Government of Rhodesia is an illegal Government; and, surely, it was because we regarded it as an illegal Government that the Southern Rhodesia Constitution Order of November 16 was issued. This Order, in paragraph 4, provides that: the executive authority of Southern Rhodesia may be exercised on Her Majesty's behalf by a Secretary of State". Then, in sub-paragraph (d) it says: a Secretary of State may exercise any function that is vested by the Constitution or any other law in force in Southern Rhodesia in a Minister or a Deputy Minister or a Parliamentary Secretary". What has happened is that the illegal Government of Rhodesia paid the interest due upon the Government loan stock on November 21. On December 6, when another instalment fell due, the interest was not paid because we had made it impossible for the illegal Rhodesian Government to obtain the necessary currency to pay it to persons resident outside Rhodesia. Therefore, for the first time, there was a default upon a Commonwealth Trustee stock; and I understand that this default again took place on December 15 on the instalment which then fell due.

I really do not think it will redound to our credit or advantage if we plead that the de facto Government of Rhodesia is illegal in so far as it is competent for us to take away its assets, and that it is still a legal Government in so far as it still has the liability to pay the interest which we have made it impossible for it to do. I really do not see how we can argue that if we have the power—as I think we have—to deprive this illegal Government of the financial assets of the people of Rhodesia, we can go on to argue that we have the power to take away its assets but no power to take over its liabilities. Surely, if we pursue this line we shall be regarded, to say the least of it, as equivocating and disingenuous; and I think this is of fundamental importance. So far from being irrelevant to the Order, it is the most important thing about it.

In normal circumstances it would have been a sufficient reason for a vote against the Order, but as my noble friend Lord Dilhorne has said, we do not intend to divide against the Order because we feel that to follow such a course would not help our agreed common objective of bringing back Rhodesia at the earliest possible moment to constitutional Government. But surely that makes it all the more important that we should act in a manner which is clearly above reproach in the eyes of the world. As the noble Lord, Lord Byers—rightly, I think—said, our refusal to pay the interest due upon these bonds after we had deprived the illegal Government of the funds necessary to pay it and of having the constitutional power to pay, may, in itself, indirectly delay our objective of bringing back Rhodesia to constitutional Government—because the more honourable and more straightforward we are seen to be, the sooner that result is likely to be brought about.

I would ask the Government, indeed I beg the Government, to be consistent and to be straightforward in order to achieve our common objective and in order to retain our unity on this question, which is of such importance to the Commonwealth and to the world. I am sure the Government wish to be both; but there have been statements lately which have appeared to be ambiguous in some respects. The Prime Minister began by saying—and he said it very well—that the use of force was absolutely out. I do hope that that is still so, because more lately there have been statements made by the Prime Minister land by others which might perhaps be interpreted to mean that this may not be so. I think we all agree with and admire the Prime Minister's statement on November 23 about conciliation, in which he said that as soon as the people of Rhodesia are prepared to return to constitutional paths, and as soon as the Governor feels there is an opportunity of people there forming a Government which will act in a constitutional manner, we would want to deal with those people without any recrimination or rancour about the past. I think that was a very fine conclusion to the sentence: without any recrimination or rancour about the past. But we are not altogether certain, in view of recent statements, whether the Government still feel that recrimination and rancour are to be avoided.

I am not going to say anything about the recent ambiguities concerning those with whom we should negotiate, but the impression has been created that the Government may not perhaps wish to negotiate in any circumstances with people who have deceived them and who have acted illegally. I hope that this is not the true mind of the Government; because, if you are going to have constitutional rule in Rhodesia, clearly you must have constitutional elections; and you cannot have constitutional, free elections if the only people who are allowed to stand for election are those people whose honesty and good character have the approval of the British Government. Therefore, I hope that the Government will bear in mind that if we are to achieve our common objective, we must not rule out negotiations with any Rhodesian, however illegally he may have acted and however exasperating his behaviour may have been to all of us.

4.50 p.m.

LORD SHEPHERD

My Lords, to me this has been a strange debate, and I think I might ask for the sympathy of the House when attempting to wind it up and to deal with the various points which have been raised. We had the sad and sobering speech of the noble Lord, Lord Balfour of Inchrye. I would not agree with all he said, but I certainly share the sense of his speech, that what we are now being called on to do is as utterly repugnant to the members of my Party, my Government and their supporters, as it is to any noble Lord opposite. There was the speech of the noble and gallant Lord, Lord Fraser of North Cape, with all its simplicity, which struck at the very heart of the subject; that we are not, in fact, considering the evils of a people but the, perhaps, misguided actions of their leaders.

Then there was the deep and penetrating speech that we should expect to hear from the noble and learned Viscount, Lord Dilhorne—and here I may say that some of my difficulty is due to the fact that the noble and learned Viscount fired his questions so fast that, not being a shorthand writer, I am not sure that I got down all the questions, or even the right sense of them. If I do not answer all his points, it will not be because I am being evasive. If I miss any point put by the noble and learned Viscount, or by any other noble Lord, which he feels is important, perhaps he will remind me. Because I sense the concern of the House that these matters should be dealt with, I will undertake that, if I cannot deal with them adequately this evening, I will, between now and Christmas, read Hansard carefully, and if necessary I will communicate with the noble Lords concerned.

When listening to the noble Lord, Lord Colyton (who seeks the forgiveness of the House because he has had to leave early owing to the illness of his wife), I had the feeling that we were dealing with a domestic matter. But most of us, I think, are conscious that this is not a domestic matter between Mr. Wilson, as was suggested, and Mr. Smith. This is an issue between the Government of Rhodesia and the British Parliament—because the British Parliament is the only organisation which, in the end, can grant independence to the Colony of Southern Rhodesia. The action of Mr. Smith was not against the Labour Government; it was an action against the sovereign Parliament of Great Britain.

My Lords, we should never forget that in the end it will be for Parliament to decide what further steps should be taken and what conclusions should be arrived at. I think it was the noble Lord, Lord Salter, who suggested that we should move from one step to another and that finally we should be confronted with the need for military action. On November 11, 1965, we had the choice between military action or taking economic sanctions. The Government, I believe wisely and rightly, and with the unanimity of the whole House, decided to reject military action and take economic sanctions.

We know why we had to take economic sanctions. It was not only to bring Southern Rhodesia back into the Commonwealth and under Constitutional rule: it was, in fact, to safeguard the interests of the people of Southern Rhodesia, because unless we had retained responsibility for Southern Rhodesia in the face of world opinion, the actions and conflicts in Africa would have beggared description. My Lords, we had no alternative but to take action, and we chose economic sanctions. The noble and learned Viscount, Lord Dilhorne, said during his speech on the enabling Bill that our concern must always be about the effect of economic sanctions. They have been applied on a number of occasions, and they have failed because the nations were not prepared to implement them to the full. By itself no sanction, and particularly the Orders which we are considering this afternoon, would have the desired effect. It may be that some of the measures taken have loopholes in them, but we must consider the aggregate effort of all the sanctions which we have applied to Southern Rhodesia.

I think it was the noble Lord, Lord Colyton, who said that sanctions will bear harder on some individuals than on others. When you use economic sanctions, you are using a blunt instrument; but that is infinitely superior to using the sharp weapon of the sword. We have taken account of the views of your Lordships' House with regard to pensions. We are very sensitive about the application of these sanctions, but we feel that we must use them to achieve the desired end. As we have said on many occasions—but it is well worth repeating—the need is that Southern Rhodesia should have a constitutional Government and return to the Commonwealth.

When we are talking of purpose, I think it necessary that we should think in terms of the spirit which prevails at the end of the day. I would use the words of my right honourable friend the Prime Minister, when he was interviewed by the Daily Mirror, which were quoted. I believe, by the noble Lord, Lord Molson. The Prime Minister said: Given a return to constitutional rule, I am sure that everyone in Britain will want to see a rapid and constructive solution to the problem without recrimination. It was Abraham Lincoln, at the end of the American Civil War. who spoke of 'malice towards none' and 'binding up the nation's wounds'. My right honourable friend concluded, That will be our attitude. So, if there are noble Lords who have closer contacts with Southern Rhodesia than I, or others, have, perhaps they can communicate the message that we are not enemies of the people of Rhodesia; that if the Rhodesians will return, not by unconditional surrender, but if they will return to what they were, a country with a constitutional Government within the Commonwealth, their interests will at all times be safeguarded by Parliament, because in the end it is Parliament which decides what shall be the final solution for Rhodesia.

LORD BARNBY

My Lords, can it be understood that Rhodesia is not now in the Commonwealth, and that Tanzania is in the Commonwealth?

LORD SHEPHERD

My Lords, the noble Lord, Lord Barnby, knows as well as I do that when the Government of Southern Rhodesia became an illegal régime it automatically left the Commonwealth. Tanzania—and here I express the greatest regret—decided to break with us in Britain, and I can understand their feelings. They broke with us, but they did not break with the Commonwealth, because we are not the Commonwealth. The Commonwealth is all the countries who decide to remain in the Commonwealth. My Lords, may I express the hope that we shall see Tanzania hack, because we believe that the Commonwealth still has a great part to play in the pacification and the growth of Africa and the world.

May I turn now to more detailed points which have been raised in this debate? The question has been asked, whether the Government or the Secretary of State is the Government of Southern Rhodesia. Reference has been made to the Southern Rhodesia Constitution Order 1965, Section 4(a), of which reads: The executive authority of Southern Rhodesia may be exercised— I stress the words, "may be"— on Her Majesty's behalf by a Secretary of State". That does not make Her Majesty's Government the Government of Southern Rhodesia. It merely empowers the Secretary of State to take such action as may be necessary. It does not place upon Her Majesty's Government the authority of what was the Government of Southern Rhodesia.

VISCOUNT DILHORNE

My Lords, I feel that the noble Lord should also look at Section 42, which says that The executive authority of Southern Rhodesia is vested in Her Majesty and in the Governor. This provision deals with the United Kingdom's exercise of the powers of government. It makes plain that the executive authority in Southern Rhodesia may be exercised on Her Majesty's behalf by a Secretary of State. The question is not to whom do we attach the label of Governor, but who has the authority to tell the Reserve Bank whether or not to pay interest. The point I was putting to the noble Lord, if I may make it clear, is that beyond any shadow of doubt the Secretary of State has power to order the Bank to pay the interest. That, I think, is confirmed by Section 4(1)(d), to which the noble Lord referred.

LORD SHEPHERD

My Lords, I think that the noble and learned Viscount is going a little further than I have reached in this matter. I was trying to deal with the claim that Her Majesty's Government are the Government of Rhodesia.

THE EARL OF DUNDEE

We did not say that.

LORD SHEPHERD

I understood that some noble Lords had. The noble and learned Viscount asked what was the justification for the Government suspending the old board and appointing a new one. It was clear to the Government that the old board were obeying the orders of Mr. Smith between November 11 and December 3, 1965, and up to this day, even though Mr. Smith has been suspended, the old board have continued to work with him. This was one of the reasons why the Government decided to suspend the old board.

The noble and learned Viscount also asked about the powers of the Secretary of State, which he described as "unfettered". In relation to the 1964 Act, which set up the Reserve Bank of Rhodesia—

VISCOUNT DILHORNE

My Lords, with great respect, we were talking about the paragraph in the Order which gave the Secretary of State unfettered and unlimited powers.

LORD SHEPHERD

My Lords, that is what I am dealing with. We have to consider the Act of 1964. As I understand it—and I have sought very close advice upon this—the Secretary of State has no special powers, other than those which are in the Order, to amend the constitution of the Bank laid down in the 1964 Act, and if he were to make an instruction which departed in any way from the provisions of the 1964 Act, a further Order in Council would have to be made. The Secretary of State has not unfettered power.

The noble and learned Viscount asked what sort of directions the Secretary of State is likely to make. At this stage, most of these would be confidential, but one of them might well be for the transfer of the assets of the Bank from one centre to another in the interests of the shareholders and customers of the Bank. As I understand it, he would not have power to prevent cheques being paid. The board, like that of any commercial organisation, is responsible for the proper conduct of business activities between one customer and other.

LORD BARNBY

My Lords, dealing with the powers of the board, Section 6 of the Bank constitution says: No person shall be appointed as a director if he is a director or shareholder of any bank or accepting or discount house". Is it to be understood that the old board are suspended, and not dismissed, and that the new members appointed can be appointed only under these same personal considerations as the original directors?

LORD SHEPHERD

My Lords, the noble Lord is right in saying that the old board have been suspended and not dismissed. In regard to their qualifications, the noble Lord will see that these have been waived in making the appointment of the present board.

The noble and learned Viscount, Lord Dilhorne, asked why, in the Assets Order, we ask for information regarding net balances. It is true that under present Orders we should know about transfers from one account to another, but in order that we should understand the significance of these movements, we now need to know the balances. As my noble friend Lord Beswick said, in introducing these Orders, all information in regard to the accounts of private individuals would be treated as secret matter.

May I now turn to a matter which has given concern to most noble Lords who have spoken—that is, the position in regard to payments on bonds. There has been a considerable misunderstanding in the minds of many noble Lords. In regard to general loans raised by Southern Rhodesia (I am not talking about loans raised for the Kariba Dam and for special purposes), all these have been raised by the Colony of Rhodesia under a lawful Constitution consisting of a Government and Parliament. The liability for the repayment and the servicing of these loans remains with Southern Rhodesia.

All these loans were credited to the Consolidated Revenue Fund. Section 113(1) of the Constitution clearly lays down that all sums that are raised by the Colony of Rhodesia shall be paid into the Consolidated Revenue Fund and not into the Reserve Bank of Rhodesia. It is clear that interest payments and repayments are made from the annual Rhodesian Estimates, which have to be approved by Parliament and by a warrant of the Governor. The authority for paying any interest on loans raised by Southern Rhodesia rests with the Southern Rhodesian Parliament and the executive of the Colony—namely, the Governor. The revenue for the payment of interest arises from the taxes raised by the Southern Rhodesian Government, and all these sums for the present year are now available in the Rhodesian Treasury.

I believe there have been some suggestions that the reason for the latest default in payment on the Rhodesian stock was the measures taken in regard to the Bank. I think your Lordships should know of the sequence of events. On December 1 we announced further economic and financial measures. These undoubtedly began to bite. December 6 was the day on which the warrants should have been issued and paid. As I understand it, the Bank of England were expecting to receive instructions from Southern Rhodesia between December 1 and December 3. I think this should be borne in mind, in view of the fact that the particular Bank Order was not published until the evening of the 3rd. As I understand it, the payments that were due had been collected and provided for by the Rhodesian Estimates in the earlier part of the year, and there would have been an automatic instruction to the Bank to pay to the Bank of England. But, as I understand it, on a certain date between the 1st and 3rd the usual mechanism of the payment of interest was interrupted. Who it was, and for what purpose, I do not know. I think it should be clear that it was Mr. Smith or one of his colleagues who interfered with the general mechanism of the payment of interest on these stocks.

LORD COLERAINE

My Lords, I wonder whether the noble Lord would answer a question that rather puzzles me. I see the general validity of the argument he has just put forward, but I cannot see its validity in these particular circumstances. I would ask him this hypothetical question. Suppose Mr. Smith's Government had met these obligations and had paid this interest, and suppose Her Majesty's Government had been asked for their attitude towards this transaction, would not Her Majesty's Government have been obliged to say that it was an illegal action on the part of Mr. Smith's Government, because nothing that Mr. Smith's Government does has any legal validity? If that is so—and I do not see how you can avoid it—where does the legal obligation rest now? It cannot be with Mr. Smith.

LORD SHEPHERD

The noble Lord has raised an interesting point. The fact is that the Rhodesian Estimates had been passed by the Parliament of Southern Rhodesia prior to U.D.I.

LORD COLERAINE

The debts were in December.

LORD SHEPHERD

Let me finish. The provisions had been made, and therefore that would have been a lawful payment.

LORD COLERAINE

Before U.D.I.

LORD SHEPHERD

No. The monies authorised had been authorised by the Parliament of Southern Rhodesia prior to U.D.I., and in that sense it would be lawful. Therefore, if the payment had been made by the Reserve Bank of Rhodesia, acting as agents for the Rhodesian Government, to the Bank of England, there would have been no difficulty in meeting the interest that had arisen on the bonds.

LORD COLERAINE

In the view of the British Government they could not have acted as agents for the Rhodesian Government, because by December 6 Mr. Smith's Government had ceased to exist and, therefore, could have no legal obligation by December 6. Where did that obligation lay?

LORD SHEPHERD

I do not appear to have made myself clear to the noble Lord. What, I said was that the collection of taxes to meet the interest due on the stocks was authorised by the Parliament that was then sitting, prior to U.D.I., and, therefore, the sum that could have been made available would have arisen from a lawful act of the Rhodesian Parliament and there would be no question of any illegality in the transfer of that sum to London. It may well be that Mr. Smith's Government is an illegal Government, but, as I understand it—and it is a strange thing—if an instruction was given within the 1964 Constitution and it was lawful then it could be transacted. I want to make it clear that the halt in the payment of the interest on the shares of Southern Rhodesia was no part of, and did not stem from, the decision of the Government to take control of the Reserve Banc of Southern Rhodesia.

THE EARL OF DUNDEE

My Lords, there is one point I should like to raise, quite apart from the question of illegality. I know that the Rhodesian Parliament can collect enough revenue to pay interest to its residents in Rhodesia. But can the noble Lord confirm what I take him to mean, that the illegal Government of Rhodesia possesses enough British currency in the Bank of England which it could have used to make these interest payments on December 6 and 15, and could it have done that, in spite of the fact that we had impounded their reserves in the Reserve Bank? Had they enough in the Bank of England to do that?

LORD SHEPHERD

I think I should need notice of that particular technical point

THE EARL. OF DUNDEE

It is not a technical point. Surely it is fundamental.

LORD SHEPHERD

It is a technical point (if the noble Earl will only allow me to finish) as to whether the sums were available in London. But this I can say to the noble Earl: that if instructions had been given by the agent of Southern Rhodesia—namely, the Reserve Bank—to the Bank of England, there was no reason at all why the sums should not have been paid to the holders of the stocks in question.

VISCOUNT DILHORNE

My Lords, I understand that, but it really comes back to the question I put to the noble Lord, and which I do not think has been clearly answered yet. Who was the person who at that time could have given instructions to the Reserve Bank, as agent, to pass on to the Bank of England? The answer surely is the Secretary of State.

LORD SHEPHERD

The noble and learned Viscount is rather naughty. He puts a question and then gives me the answer, and it is the wrong answer.

VISCOUNT DILHORNE

Then let us have the right one.

LORD SHEPHERD

This is one of the most difficult debates in which to answer. I do not mind taking questions, but I strongly object to having a question put and an answer given. We will not get angry at this season of good cheer.

VISCOUNT DILHORNE

What is the answer?

LORD SHEPHERD

Let me come to it. This is a serious matter. We are not in a sort of teach-in. Having made that clear, I think I ought to come back to the relationship of Her Maesty's Government with Southern Rhodesia. It is not my usual practice, but I should like to read this to your Lordships. The Government of Southern Rhodesia continues to exist as a separate entity, despite the rebellion that has taken place there. It remains governed by its own Constitution, and it continues to operate (so far as the physical circumstances of the rebellion permit) through its own institutions and offices, headed by the Governor. It is still regulated by, and it is still its duty to administer, its own laws (which are interpreted and enforced by its own courts), and it is still entitled and subject to the legal rights and liabilities which it has previously acquired or accepted in its own right or which it may in the future so acquire or accept. It has not in any sense been merged into the Government of the United Kingdom. Though the Government of the United Kingdom have been given certain powers to enable them to ensure the lawful government of Southern Rhodesia, including the power to make laws and, in certain cases, to exercise or control the exercise of executive powers in Southern Rhodesia, they have not assumed the government of that country, and have not in any way succeeded to either the assets or the liabilities of the Government of Southern Rhodesia. I hope I have dealt—I have done so to the best of my ability—with the question of bonds and loans.

LORD BYERS

My Lords, before the noble Lord leaves that point, may I ask him one question? From what he states, it sounds very much as though the Government could have given instructions to the Reserve Bank to pay the interest. Should we be right in assuming that?

THE EARL. OF DUNDEE

The noble Lord said that the Bank of England was expecting to be told between December 1 and December 3 to make this interest payment. What the noble Lord has not told us is how the Bank of England obtained the necessary currency to do that.

LORD SHEPHERD

To deal with the point made by the noble Lord, Lord Byers, may I say this to him? The Governor is the executive power within the Constitution. My noble and learned friend on the Woolsack will correct me if I am wrong. The Constitution of Southern Rhodesia consists of the executive authority and the Rhodesian Parliament—and the Rhodesian Parliament is still in being; it has not been suspended. It is only the Ministers, Mr. Smith and his colleagues, who have been suspended. On the question as to whether the Rhodesian Bank should have paid, I tried to say earlier on that the Government are not the Government of Southern Rhodesia and, therefore, could not have given an instruction to the Reserve Bank of Rhodesia to make these payments.

VISCOUNT DILHORNE

My Lords, would the noble Lord be good enough to give way once more? I know it is very difficult for him. I listened with the greatest interest to the passage he read—and he was reading very carefully—when he said in terms that it is quite right that the Secretary of State can discharge the executive functions of a Minister of the Southern Rhodesian Government. I heard him say that distinctly. It is not a question of who succeeded to the assets or the liabilities. I have not suggested for one moment that the British Government succeeded to the assets or the liabilities. I put the question, which the noble Lord has not yet answered, though I suggest it is the vital question: who, after the making of the Southern Rhodesian Constitution Order, had authority, on behalf of the Government of Southern Rhodesia, to tell the Reserve Bank to tell the Bank of England to pay the interest?

LORD SHEPHERD

I will try to deal with this point. The Reserve Bank of Rhodesia is like any other bank it takes instructions from its customers. One of the customers of the Reserve Bank is the Government of Rhodesia. The fact that Her Majesty's Government have taken certain powers does not make it the Government of Rhodesia; it does not make it a customer of the Reserve Bank. The noble Viscount shakes his head, but I have taken the best advice that I can, and if my noble and learned friend on the Woolsack disagrees with what I have said, I will seek his assistance. But that is the advice I have received.

VISCOUNT DILHORNE

I was not challenging the advice in that respect. But when the Government of Rhodesia is the customer of the Reserve Bank, some member of that Government, from time to time, would give instructions, on behalf of that Government, to the bank. Now that power has been taken for the Secretary of State to discharge any functions of any Minister, including the Parlimentary Secretary, the question is: Has the Secretary of State power to give instructions on behalf of the Government of Southern Rhodesia which a Minister of that Government would have?

LORD SHEPHERD

I think I said earlier—and if I did not. I am sorry—that Her Majesty's Government do not have the power to instruct the Reserve Bank of Rhodesia to make these payments, for the very reason that I have given. Noble Lords may shake their heads, but I have taken the best advice available, and I am giving it.

LORD DERWENT

My Lords, may I interrupt the noble Lord, as I have not done so before? I have tried to understand this. Could the noble Lord say what individual, Secretary of State or Minister had the power to authorise payment to the Bank of England by the Reserve Bank? That question has not yet been answered.

LORD SHEPHERD

If the noble Lord will read what I said earlier, he will see that I have already explained that situation—that is, if he was referring to the past interest and dividends that were made prior to, or shortly after, U.D.I. Have I the attention of the noble Lord? Is that the point he is after?

LORD DERWENT

I understood the noble Lord to say that the collection of the money had been authorised perfectly legally. He has not said that at a particular date it had been authorised to be paid to the Bank of England. There is a period of several months between the two.

LORD BARNBY

Before the noble Lord replies, may I read from column 1207 of Hansard, when the Chief Secretary of the Treasury replied: … we, the British Government, own the assets or funds of the Reserve Bank of Rhodesia."—[OFFICIAL REPORT (Commons) Vol. 722, No. 26, col. 1207; 14/12/65.] If they have the power, as the noble Lord explained, of direction, and they own the funds, could he confirm that those funds are owned by the British Government? What about the liabilities? Do the Bank own the liabilities, too?

THE EARL OF LONGFORD

My Lords, I would venture to appeal to the House to let the noble Lord continue with his speech. I do not think the oldest Member will recall a speech which was interrupted quite so often.

LORD SHEPHERD

In view of the help that I have had from the Leader of the House, I cannot very well "knock" the noble Lord, Lord Derwent. But I would ask that he should read my speech, because I think there was some misunderstanding. I was referring to the interest paid on the loans shortly after U.D.I. We are now talking about the default of some later stuff, which raises quite a different matter. If the noble Lord, Lord Derwent, reads what I have said, I think he will see that I have dealt with this matter satisfactorily.

May I now move on? The noble Lord, Lord Byers, asked how the board was operating. The board is operating like any board but, of course, under considerable difficulties. Technically, it has control of all the assets of the Bank. We are sending messages to the chief cashier and the senior officers of the Rhodesian Bank in Salisbury, and we have no reason to believe that the officers of the Bank have acted in any way beyond the constitution of the Bank. Naturally, we are watching with considerable interest.

In regard to how effective the measures are, as I said earlier, you cannot judge one measure by itself; you need to take them all. Certainly the noble Lord will appreciate that Mr. Smith has become a good deal more angry than he was in the past, and I have no doubt that these matters are biting. The officials in Salisbury carry out the normal banking operations of the Bank as they did in the past. I think there was also a question from the noble Lord, Lord Byers, as to whether Sir Sydney Caine's board is locating the assets. This takes some time, and considerable strides have been taken; but it is one of those operations you will never know all about until you can open the full books. But the board is very active indeed. In view of what the noble Lord, Lord Colyton, said, I think I should make it clear (because I think he more or less referred to the assets of Southern Rhodesia as those of the white Rhodesians) that the assets are of the people of Rhodesia as a whole. They are contributed in various ways. Certainly the natives of the country have contributed by their labour, and they have a share in those assets.

My Lords, I think it was the noble Lord, Lord Colyton, who asked who is the owner of the Reserve Bank. If any noble Lord will look up the constitution of the Bank of 1964 he will see that the share capital of £1 million arrived out of the funds which became available with the dissolution of the Central African Federation. In other words, it was the contribution made by the old Colony of Rhodesia into the Central African Federation, and when it was dissolved it came back and became the funds of the Central Bank.

I should like to answer one question put by the noble Lord, Lord Barnby. He asked whether this action would have bad effects on sterling and confidence in British banking and insurance. This is very far from the truth. We have taken an action which is repugnant to all of us, to meet the desires and, I believe, the demand of the world, and I do not believe any action we have taken will in any way influence confidence in the British banking system, because, as my noble friend Lord Beswick said in regard to the Bank of England, they were acting within the law of the land.

The noble Lord, Lord Reay, asked, has the Reserve Bank located reserves, and can they deny these reserves to any particular individual or group of individuals. This, of course, arises from the Assets Order, but, as my noble friend Lord Beswick said, and as I reiterate, in regard to the Assets Order the inquiry is not in any way to affect the rights of private individuals, whether they are in Rhodesia or in this country. I think that would be an infringement of banking knowledge and banking secrecies. The noble Lord also asked a number of other questions, as did many other noble Lords. I will reply, if I may, by letter.

I would say one last word in regard to the speech of the noble Earl, Lord Dundee. He repeated a number of the questions which had been raised by his noble and learned friend Lord Dilhorne and he then referred to Party unity being shaky. My Lords, I do not believe that in regard to Party unity in the long-term aim of bringing Southern Rhodesia back to constitutional rule within the Commonwealth there is any dispute between us. One well remembers the days during the war when naturally the Opposition or members of the Government Party would question the Government as to the wisdom of one particular action or another. That is the duty of the Opposition and indeed of every Member of the House, but I would say this to the noble Lord, and I will say it to the House again, because I am sure most of us are conscious of the great passions that are now aroused in Africa and what I believe is the desire of the whole House that this matter should be dealt with without fighting in Africa: that one should make sure, when one is making speeches and questioning the decisions of the Government, that such speeches should not be couched (unless they are deliberately couched) to give comfort to Mr. Smith.

I said earlier that sanctions are longterm weapons—they take weeks, and even months—but once you let the other side know that you are in any way lacking in determination to see the end, all that you have done and all that they have suffered is at naught. I do suggest, particularly in view of the Order which will be presented to-morrow, that we keep our unity. We still reserve our rights to criticise and question, but we should never let Mr. Smith and his colleagues believe that there is any lack of determination in this House or in the British Parliament to see the return of Southern Rhodesia, with honour, to constitutional government within the Commonwealth.

VISCOUNT DILHORNE

My Lords, despite the appeal by the noble Earl the Leader of the House, I should like to ask the noble Lord what I believe is the most important question on these Orders. Although he may feel he has given a satisfactory answer I think I can say that he has not really satisfied at all those on this side of the House. I am sorry to annoy him by suggesting the answer, but I want to put the question as clearly as I can. It really divides itself into two parts. I start with the assumption that someone in authority before U.D.I.—some authority in Southern Rhodesia or some member of the Government—had to authorise the Reserve Bank to pay money to the Bank of England in order to pay the interest. Am I correct in that?

LORD SHEPHERD

Yes, the noble Viscount is correct.

VISCOUNT DILHORNE

If that is so, I should be grateful if the noble Lord could point out why it is that under the Constitution Order in Council, paragraph 4, the Secretary of State has not now power to give similar instructions to the Reserve Bank, because under paragraph 4 he has not only got power to exercise any functions vested in a Minister or Parliamentary Secretary but he also has power to exercise any function that is vested by the Constitution or any other law in force in Southern Rhodesia in any officer or authority of the Government.

What I am seeking to find out is who does the noble Lord now say, at the present time, would have the legal authority to say to the Reserve Bank, "Hand over the money to the Bank of England to pay that interest"? And why did he say that it is not the Secretary of State? I put these questions originally, and I think that they still require to be answered.

LORD SHEPHERD

My Lords, I have done my best, in a very long speech, and I will try to summarise it in a few words. The original payment was authorised by an act of the Southern Rhodesian Parliament following provision in the Estimates; and there is an automatic provision, as I understand it, that, having authorised the general payment, the Rhodesian Bank will then automatically remit to the Bank of England the sums due; but somewhere or another between the 1st and the 3rd, countermanding instructions were given.

As to the payments of the recent shares, these have been authorised by Parliament, and I believe, subject to correction, that they have been authorised by the Governor. The noble Lord is asking why Her Majesty's Government cannot instruct the Bank to make the payment. I tried to say earlier that the Bank can only take instructions from a customer. Her Majesty's Government are not the Government of Southern Rhodesia, and are not a customer of the Rhodesian Bank. I know it may sound strange, but it is for that reason that Her Majesty's Government at present have no power to make payment of the interest due. The noble Viscount may shake his head, and I will certainly seek to amplify this advice by letter; but this is the advice I have received and I cannot depart from it.

THE EARL OF LONGFORD

I see a noble Lord rising, but may I say this. At the end of a speech of this kind by a Minister somebody occasionally rises to mention one question, but I should have thought it was quite out of order to continue cross-examining, whether it is done by those who have taken part in the debate or not.

LORD GRIMSTON OF WESTBURY

My Lords, I am, of course, in the hands of your Lordships' House as to whether it is moved that I be no longer heard.

THE EARL OF LONGFORD

I am certainly not going to say anything remotely offensive to the noble Lord, but I think that it would be extremely unusual if a noble Lord made a speech at the end of the proceedings.

LORD GRIMSTON OF WESTBURY

This is a very unusual debate and an unusual occasion.

VISCOUNT DILHORNE

My Lords, I should like to support the noble Earl the Leader of the House. My noble friend the Leader of the Opposition is not here at the moment. I think it has not been the custom while I have been in the House for a noble Lord to speak following the winding-up speech by a Minister speaking for the Government. I know it is done sometimes in the Commons if time permits, but I have never seen it done here, and I would have thought that, on reflection, my noble friend would think it would be better, as we shall be debating Rhodesia to-morrow, to wait. I think it would be somewhat of an innovation if my noble friend now sought to follow the noble Lord, Lord Shepherd.

LORD GRIMSTON OF WESTBURY

My Lords, I should like to respond to my noble friend's appeal and I will do so, but I must first say this. Her Majesty's Government have produced a situation in which there has been a default on a colonial loan for the first time. We have asked how it can be put right and who is now responsible for the interest, but they do not answer us. I think it is a sufficiently serious question for us to continue the debate to get an answer, but if the noble and learned Viscount the Deputy Leader of my Party puts pressure upon me to say we should not continue the debate, I must accept it. But I must say, and I leave it to your Lordships, that this is a completely unprecedented occasion: there has been a default on a British Trustee stock owing to action by the British Government, and your Lordships cannot get the answer as to how that is to be put right.

On Question, Motion agreed to.