Sitting of 17 December 1945

Preamble
The House met at a Quarter past Two o'Clock
PRAYERS
[Mr. SPEAKER in the Chair]
DEATH OF A MEMBER
Mr. Speaker: I regret to have to inform the House of the death of George Arthur Griffiths, esquire, Member for the County of York, West Riding (Hemsworth Division), and I desire on behalf of the House to express our sense of the loss we have sustained and our sympathy with the relatives of the honourable Member.

PRIVATE BILLS
The CHAIRMAN of WAYS and MEANS reported, That, in accordance with Standing Order 81, he had conferred with, the Chairman of Committees of the House of Lords, for the purpose of determining in which House of Parliament the respective Private Bills should be first considered, and they had determined that the Bills contained in the following List should originate in the House of Lords, namely:
Breconshire County Council.
Bromborough Dock.
City of London (Various Powers).
Clevedon and Yatton Gas.
Leicester Corporation.
London Midland and Scottish Railway.
London Necropolis.
Manchester Corporation.
Mid and South East Cheshire Water Board.
Nottingham Corporation.
Rotherham Corporation.
Rushden District Gas.
Tyne Tunnel.
EAST GRINSTEAD GAS AND WATER BILL
Lords Amendments considered, and agreed to.

ORAL ANSWERS TO QUESTIONS
  TRADE AND COMMERCE

    Towels
    Lieutenant William Shepherdasked the President of the Board of Trade if he has now completed his inquiries into the alleged large stocks of towels held by wholesalers and retailers, in accordance with his letter to the hon. Member for Bucklow; and whether he is now able to announce an increase in the coupon values.
    The President of the Board of Trade (Sir Stafford Cripps): Yes, Sir. The information which I have obtained shows that stocks are not excessive. In the case of certain types of utility towels, however, I am arranging, in consultation with the Hairdressing Standing Committee, a scheme for the release of about 720,000 of these towels in 1946 against certificates issued by my Department and presented by hairdressers. The situation is not such as to warrant an increase in coupon values.
    Lieutenant Shepherd: Is the right hon. and learned Gentleman aware that almost all the members of the trade feel that there are large stocks available, and would he make a further inquiry into this matter?
    Sir S. Cripps: I have made inquiries and I am releasing 720,000 as a result.

    Tullos Factory. Aberdeen
    Mr. Hector Hughesasked the President of the Board of Trade whether he will yet specify in detail the future of Tullos factory, Aberdeen, the complete use of which is necessary to diminish future unemployment in that city.
    Sir S. Cripps: The Board of Trade is at present negotiating with industrialists who have applied for this factory, and it is hoped to make an announcement in the near future.
    Mr. Hughes: Is the Minister in a position to say how many workers continue to be employed in this factory?
    Sir S. Cripps: Not until the negotiations are completed.
    Mr. Hughes: Can the Minister give any assurance that the number of workers who have been employed up to the present will not be decreased?
    Sir S. Cripps: Obviously in view of my answer I cannot say anything further at the moment.

    Industrial Development
    Mr. Hector Hughesasked the President of the Board of Trade what steps he intends to take under his statutory powers to maintain and extend the industrial development of the city of Aberdeen.
    Sir S. Cripps: I have no statutory powers to maintain and extend the industrial development of the City of Aberdeen, but, in pursuance of the Government's general policy, the Board of Trade will endeavour to assist and encourage industry in that district.
    Mr. Williamsonasked the President of the Board of Trade if he has considered the establishment of new industry in Barton-on-Humber; and what steps are being taken, to provide industrial prospects for the juvenile population and to provide against unemployment which was experienced in this area prior to the war.
    Sir S. Cripps: A proposal to this end is at present under consideration. My officers will take advantage of any opportunity offered to encourage the establishment of new industry in this district.

    U.S. Exports (Eire)
    Squadron-Leader Donnerasked the President of the Board of Trade the value of U.S. exports of manufactures to Eire during the past six months, as compared with those from this country.
    Sir S. Cripps: Exports to Eire of United Kingdom goods classified as wholly or mainly manufactured amounted to £6,140,000 in the six months April to September, 1945. The value of similar goods exported from the United States to Eire during this period was roughly £320,000.
    Squadron-Leader Donner: Is the Minister aware that Dublin shops are full of American goods and that this represents a failure to capture a market on our doorstep?
    Sir S. Cripps: I cannot see how that could be, as we exported 20 times more goods to Eire than America.
    Lieut.-Colonel Lindsay: Will the Minister read his replies a little more slowly, so that we can hear them?

    Carpet Factory, Creetown
    Mr. McKieasked the President of the Board of Trade if he is now in a position to make a statement with regard to the granting of a licence for the proposed carpet factory at Creetown, Kirkcud brightshire.
    Sir S. Cripps: My information is that the proposal to which the hon. Member refers has been dropped.
    Mr. McKie: Is the President aware that the dropping is slightly due to the inordinate length of time it takes his Department to answer—over six weeks?
    Sir S Cripps: According to my information the dropping is for another reason.

    Departmental Correspondence (Delays)
    Mr. Sidney Shephardasked the President of the Board of Trade if he is aware that business firms frequently experience a delay of three to four weeks in obtaining a reply to their letters from his Department; and if he will give instructions to his officials to speed up their replies.
    Sir S. Cripps: Owing to the heavy pressure of work in my Department and to the shortage of staff, there is unfortunately some delay in answering letters. I am taking all possible steps to improve matters in this respect.
    Mr. Shephard: Could the right hon. and learned Member consider setting up a working party to investigate his Department?
    Sir S. Cripps: There has, for a long time, been such a party.
    Colonel Erroll: Could the Minister issue a circular indicating which letters should be addressed to his regional offices and which to his head office, as that would save some delay?
    Sir S. Cripps: If the hon. and gallant Gentleman will look at the "Board of Trade Journal" he will see that particulars are given of which matters are dealt with regionally.

    Lace
    Mr. S. Shephardasked the President of the Board of Trade if he will now allow the sale of fancy lace and lace net in the home market.
    Sir S. Cripps: No, Sir. The quantity of yarn that can be provided for the manufacture of fancy laces and lace net is still only small and is all required for export. Production on a limited scale of utility curtain net for the home market is now beginning, but it will be a few months before supplies are available in the shops.
    Mr. Shephard: Is the right hon. and learned Gentleman aware that women are utterly disgusted with this unnecessary austerity regulation and that men like to see women and children wearing a bit of lace?
    Sir S. Cripps: I am quite aware of that, but I am also aware that exports are essential for this country.

    Surplus Government Stores
    Mr. S. Shephardasked the President of the Board of Trade what organisations have been set up by his Department to deal with the disposal of Government surplus stores; and what value of goods have each disposed of, to a recent date.
    Sir S. Cripps: The trading organisations which have been set up, or are used, by the Board of Trade to deal with the disposal of Government surplus stores and the value of goods which each has disposed of to the 30th November, are as follows:

    £

    Surplus Textiles Corporation, Ltd.

    788,481

    Reconditioned and Salvaged Clothing Merchants' Association, Ltd.

    145,862

    British Overseas Cotton, Ltd.

    172,200

    In addition, the Wool Industry Surplus Cloth Corporation, Ltd., has just started operations, and a Surplus Hardware Corporation is about to be registered.
    Mr. Shephard: Is the Minister satisfied with the present progress of the disposal of surplus Government stores?
    Sir S. Cripps:I am never satisfied with anything, but this is going, I think, as well as can be expected.

    Retail Trade Licensing (Discontinuance)
    Colonel Stoddart-Scottasked the President of the Board of Trade if he is yet able to make a statement on the future of the retail shop licensing system.
    Sir S. Cripps: Yes, Sir. With your permission and that of the hon. and gallant Gentleman, I will make a statement on this matter at the end of Questions.
    Later—
    Sir S. Cripps: After careful consideration, I have decided to bring the Location of Retail Businesses Order to an end and to close the Register of Withdrawn Traders on 31st December next.
    The House will remember that my right hon. Friend, the Chancellor of the Exchequer, when he was at the Board of Trade, announced in December, 1943, that this licensing would be continued for a time after the end of the war in Europe and that, so long as it was continued, it would be used to facilitate the re-entry into retail trade of persons on the Register of Withdrawn Traders and the resettlement in civil life of selected disabled persons. It has not, I think, been fully appreciated by hon. Members that this policy was designed to help ex-traders as a class, and the war-disabled, and not ex-Servicemen as such. According to my information a minority only of these ex-traders are in the Forces, many are civilians transferred to other work, while there are a number of branches of large businesses. On the other hand, there are many ex-Servicemen whose interests we all desire to regard, who have been prevented by the policy laid down from setting up in retail trade because they are neither ex-traders nor war-disabled.
    Ex-traders as a class will have had six months in which to come forward in person or by proxy to take up their former businesses, and I consider that it would not be justifiable to hold the field for them any longer to the exclusion of ex-Service-men who desire to enter retail trade. Special steps will, however, be taken during the first three months of next year to continue to help the present priority class—ex-traders- and war-disabled persons. In particular, we shall do what we can to assist them to get building licences where these are necessary for the minimum repairs and alterations to fit their premises for the business proposed.

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    We will also issue coupon floats to the war-disabled, in suitable cases, and to ex-traders who used to sell consumer goods which are now rationed and who desire to re-start their businesses in the sale of rationed goods. For these purposes, I am asking the local licensing committees to consider any such applications for building licences and to make recommendations upon them to the Ministry of Works and also to advise the appropriate Department of the Board of Trade on the issue of coupon floats. I must emphasise, however, that, while everything possible will be done to help the priority classes to get their shops sufficiently repaired to enable them to open their businesses during this period, there can be no absolute guarantee that labour and materials to carry out the actual work will be available in the period in any particular district. The grant of licences must be contingent upon other urgent demands for building labour in the area. During the operation of the Order, my Department have obtained the co-operation of supplies in assisting war-disabled new entrants to get supplies. I take this opportunity to thank those who have thus helped and to express the hope that they will continue to give such assistance as lies in their power to war-disabled persons who set up in the retail trade.
    While after 31st December it will thus be open to anyone to enter retail trade without a licence, it is right that I should warn ex-Servicemen and others to consider, before putting their money into a shop for the first time, that supplies will still be difficult for a considerable time to come, particularly for those with no former trade connections, and that they cannot rely, while labour and material shortages continue, on getting premises repaired, adapted or furnished, or on the grant of coupon floats to establish a trade in rationed goods.
    I wish to take this opportunity to express my thanks on behalf of the Government to the men and women of the local licensing committees who have voluntarily spent so much of their time and energies in the administration of this Order. The burden has been an ever-increasing one and the work, involving, as it has, decisions affecting the livelihood of their fellow men, has been of a particularly arduous character. I am sure that all sides of the House will join me in thanking the committees for their work
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    and in expressing our sense of obligation for the very fair and conscientious way in which they have administered the policy laid down for them. Finally, I desire to make it clear that what I have said refers only to businesses covered by the L.R.B.O. and does not cover either food shops or catering establishments.
    Mr. Gammans: Does the right hon. and learned Gentleman suggest that Service traders who are now out in the Far East have had a fair chance to reopen their businesses, and will he amplify what he means when he suggests that these men should be given some, special facilities within the next three months?
    Sir S. Cripps: I think that, on balance— and, in all these matters, it must be a balance of justice—the balance of justice now falls in the direction of ending the Order. They have had six months, either themselves or by proxy, to make application. So far as the second part of the question is concerned, the facilities which, for the next three months, we are giving to this priority class, arc that we will assist them to get the necessary licences to adapt their premises and we will give them coupon floats, if necessary, to start their businesses.
    Colonel Stoddart-Scott: While thanking the Minister for that reply, which, I am quite sure, will bring great satisfaction to many people in this country—not only those who wish to open shops, but also those who wish to be customers—I would like to ask him whether it means that a man who has been a greengrocer or who had a food shop before the war, or a man who has been wounded in the war, cannot now open a shop?
    Sir S. Cripps: It does not mean that. I do not deal with food shops; the Minister of Food is responsible for them.
    Mr. Leslie: May I ask the President if he is aware of what happened after the last war, when many ex-Servicemen were cajoled into buying businesses of which they had no experience, with the result that they kept open for seven days a week but lost their all, and that we do not want that to happen again?
    Sir S. Cripps: I quite agree with the hon. Member, and I hope all ex-Service-men will inquire very carefully before they embark upon such businesses.
    Lieut.-Colonel Dower: As the grant of a licence by the Ministry of Works unfortunately does not mean that repairs can be done by anybody, will the Minister consult with the Minister of Works to see that these licences will have no time limit so that the men will be sure that, when labour and materials are available, they will be done?
    Mr. Mikardo: Is the Minister aware that this statement will give universal satisfaction throughout the country and throughout this House, except to some hon. Gentlemen opposite—who looked to him with a morbid hope that he would exercise control for the sake of control?
    Mr. Stephen: Can the Minister say whether he has consulted the Minister of Food to see whether similar action will be taken by him?
    Sir S. Cripps: I have consulted with the Minister of Food to see whether he had any objection to the action I was taking, but I have not ventured to suggest to him what he should do about his own responsibility.
    Mr. Reeves: Does the President's reply mean that traders who commenced trading during the period of the war will now have an allocation with respect to goods that are rationed, which they have been denied up to now?
    Sir S. Cripps: No, this is only dealing with the question of opening new shops.
    Major John Whiteasked the President of the Board of Trade if his attention has been called to the case of an ex-Serviceman, Mr. P. E. Jackson, whose application to sell plants and seeds at 14a, Lower Bridge Street, Canterbury, was rejected, without any explanation, by the local Price Control Committee, Tunbridge Wells, on 27th November; if he will state the reason for this rejection, and if he will cause the case to be reconsidered.
    Sir S. Cripps: Under the existing policy, licences under the Location of Retail Businesses Order to open new businesses are granted in the main to two classes of persons, war-disabled and ex-traders who are eligible for inclusion in the Board's Register of Withdrawn Traders. Mr. Jackson did not, I understand, claim to be in either of these classes. The Local Licensing Committee therefore acted rightly in rejecting his application.
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    With regard to the last part of the Question, I would refer the hon. Member to the statement which I am making at the end of Question time today, in reply to Question No. 9.
    Major White: Will the right hon. and learned Gentleman bear in mind that there have been a great number of these cases of ex-Servicemen trying to get back into work and of his Department being rather difficult about it?
    Sir S. Cripps: Perhaps the hon. and gallant Gentleman will await the statement which I shall make after Questions.

    Children's Footwear
    Major Boyd-Carpenter: asked the President of the Board of Trade if he will state the total number of children's boots and shoes made available to retailers during the months of September, October and November, 1945.
    Sir S. Cripps: I am afraid that the only figures available are quarterly and relate to manufacturers' supplies. For July-September quarter, these figures are as follows: boys, 2.28 million, girls, 3 million, and infants, 2.8 million.
    Major Boyd-Carpenter: Can the right hon. and learned Gentleman say whether there has been any recent increase in this urgently needed commodity?
    Sir S. Cripps: Not very marked.
    Mr. Molson: Is the right hon. and learned Gentleman doing anything to improve the quality of the leather used for children's shoes?
    Sir S. Cripps:We are getting the best leather we can import. We cannot improve much beyond that.

    Dutch Commercial Debts
    Mr. McKie: asked the President of the Board of Trade if he is aware that large sums of money, lent to Dutch subjects by British subjects for commercial purposes, have been confiscated by the Germans from the persons concerned; and what steps he will take to recover these debts from the Dutch firms involved.
    Sir S. Cripps:This matter has been the subject of discussion with the Dutch Government, and I am sending the hon. Member a copy of the "Board of Trade Journal" for 24th November, 1945, which contains a full statement of the position.

    Wool
    Sir Waldron Smithersasked the President of the Board of Trade how much wool there is in the country; and if he will do all in his power to secure labour for the worsted and wool factories so that clothing for the home and export market may be manufactured.
    Sir S. Cripps: Stocks in the hands of the Wool Control at 31st October were 600 million lbs. greasy weight. In addition, substantial quantities are in the hands of the trade. My Department and the Ministry of Labour are doing everything possible to assist the Wool textile industry to secure additional labour.
    Sir W. Smithers: Does the right hon. and learned Gentleman know that warehouses in the Bradford district are bulging with wool, and the owners have to pay rental at great expense? He may think it is necessary to control a shortage, but why is it necessary to control an abundance?
    Sir S. Cripps: The necessity arises from the fact that the allocation of the ultimate manufactured material, which is in short supply, has to be dealt with.
    Sir W. Smithers: Does the Minister also realise that there are large orders awaiting export?
    Sir S. Cripps: Certainly, and we have not yet the capacity or labour to cope with them.

    Mistletoe
    Mr. John Fosterasked the President of the Board of Trade for what reason an import licence for mistletoe for sale in this country during the forthcoming Christmas season has been given to one firm and refused to all others; and whether, in view of the fact that the grant of such a monopoly must tend to encourage undesirable practices, he will undertake that henceforward all such applications will be dealt with in consultation with the appropriate trade organisation, thus ensuring a fair deal for all traders involved.
    Lieut.-Commander Gurney Braithwaiteasked the President of the Board of Trade whether he is aware of the dissatisfaction of the fruit and flower trade about the decision of his Department to grant a licence to one firm only and to no others to import mistletoe during the present
    902
    season from France; that this decision is unfair to the pre-war importers of French mistletoe and will result in unsatisfactory and uneven distribution of the small importation permitted; and what steps he proposes to arrange for a more equitable form of importation and distribution in similar cases in future.
    Sir S. Cripps: In order that the mistletoe should arrive in time for our first postwar Christmas, licences were issued to the first two applicants, and these absorbed all the very small amount of foreign exchange available for this purpose.
    Colonel Thornton-Kemsley: Will the Minister make it clear that the words "undesirable practice," refer to the granting of monopoly, and not to the possible use to which mistletoe might be put?
    Sir S. Cripps: Certainly, Sir.

    Army Personnel(Shoes)
    Lieut.-Colonel Hareasked the President of the Board of Trade if he will provide other ranks in the Army with coupons for the purchase of shoes in order that men can take advantage of the present War Office walking-out regulations.
    Sir S. Cripps: No, Sir. While this suggestion has my sympathy, a concession on these lines is not possible so long as supplies of shoes are as short as they are at present.
    Lieut.-Colonel Hare: Would the Minister consider consulting the Secretary of State for War to verify the facts? This refusal of special coupons for the purchase of shoes is very serious in the Forces and they cannot take advantage of these Regulations with regard to walking out.
    Sir S. Cripps: I am well aware of the difficulties in purchasing shoes, but we cannot take them from civilians for that reason.

    Industrial Premises, London (Evictions)
    Mr. Haydn Davies: asked the President of the Board of Trade whether he is aware that Telco, Limited, machine tool makers, of Gordon Square on the Bedford Estate, in spite of repeated protests, have been given notice to quit on 25th March next; and whether, in view

    903
    of the fact that similar evictions of small industrial firms and commercial businesses are taking place all over the London area, he will consider taking the necessary powers to prevent such evictions during the transition period.
    Sir S. Cripps: I would refer my hon. Friend to the reply I gave to him on 12th November.
    Mr. Davies: Could I ask my right hon. and learned Friend how much more evidence he requires of these cases, happening all over London, before he makes any move?
    Sir S. Cripps: There would have to be a very considerable volume of evidence before I could ask Parliament to legislate for this purpose.
    Mrs. Ayrton Gouldasked the President of the Board of Trade whether, in view of the increasing number of firms in the London area who have been, or are being, given notice to quit their existing premises, he will, in the interests of maintaining supplies and services, take powers tinder the Defence (General) Regulations, 1939, to protect these firms against eviction during the difficult period of transition to peacetime operations.
    Sir S. Cripps: No, Sir. I have not sufficient evidence of the necessity.
    Mrs. Gould: May I ask my right hon. and learned Friend how much evidence he requires? A number of firms are suffering seriously from being turned out; how much evidence is necessary to get something done?
    Sir S. Cripps: It would be necessary, I think, to show a widespread occurrence of this difficulty before we should take any action.
    Mr. Gallacher: Is the Minister not aware that the only way to stop this practice of dog eating dog is for the Government to take over all the industries?

    New Companies (Registry of Titles)
    Sir John Mellorasked the President of the Board of Trade what is the average interval of time between application and provisional consent by the Registrar for the use of titles by new companies.
    Sir S. Cripps: I regret to say there has been a delay of up to two months in the work of this office, owing to its location at Llandudno and the acute shortage of staff. Recently, it was arranged to bring the office back to London. Since then some of the work has been brought up to date, but a shortage of staff still persists. Every effort is being made to bring the staff up to full strength, so as to clear off arrears of work.
    Lieut.-Colonel Dower: Could the right hon. and learned Gentleman say when the staff is coming to London?
    Sir S. Cripps:It has come to London.

    British Universities Press, Limited
    Mr. Wilson Harrisasked the President of the Board of Trade whether his attention has been called to advertisements in the Press announcing the flotation of a public limited company under the style of British Universities, Limited; and since this commercial concern has no connection with any British university, what steps he is taking to prevent the assumption by this company of a misleading title for financial gain.
    Sir S. Cripps: Yes, Sir. British Universities Press Limited, registered in 1944, is a reconstruction and amalgamation of a group of companies, one of which, a private company of that name, was registered in 1938. I am advised that the powers conferred by the Companies Act, 1929, would not have enabled the Board of Trade or Registrar to prevent the registration of this company by the name in question. The Cohen Committee on Company Law Amendment have, however, made a recommendation on this subject which, when carried into effect, will enable the Department to refuse a name calculated to mislead the public
    Mr. Harris: Would the right hon. and learned Gentleman be disposed to give a gratuitous opinion as to whether this is a case in which a "passing off" action would lie?
    Sir S. Cripps: No, I would not b prepared to.

    Leather
    Colonel Stoddart-Scottasked the President of the Board of Trade if he is aware that instructions have been issued to chrome leather tanners to withhold 20 percent, of their output of chrome tanned

    905
    upper leather from the shoe manufacturers from 1st December, 1945, to 28th February, 1946, because this quantity is required for U.N.R.R.A.; why this is done when the home market is so short of supplies of leather and shoe manufacturers are unable to supply the people with sufficient, shoes to maintain health; and what steps does he propose to take to enable shoe manufacturers to maintain necessary supplies of shoes for the home market.
    Sir S. Cripps:At the request of U.N.R.R.A., we have taken over certain hides belonging to them for tanning here, and we are consequently providing a corresponding quantity of leather for the liberated territories. This will, in total, be only 6percent, of the full chrome upper leather output of all kinds for civilian use. This arrangement will not diminish the supplies of upper leather available for the home market.

    Bicycle Tyres and Tubes
    Colonel Wheatleyasked the President of the Board of Trade if he will state the present situation regarding inner tubes for bicycles for home use.
    Brigadier Prior-Palmerasked the President of the Board of Trade if he is aware that there is a shortage of tubes and outer-covers of size 26 inch by 1⅜inch for bicycles; that this shortage affects a large number of wage-earners who rely on this means of transport to convey them to their place of employment; and what steps he is taking to relieve this shortage.
    Sir S. Cripps: I would refer the hon. and gallant Members to the statement on the production of bicycle tyres and tubes given to my hon. Friend the Member for Taunton (Mr. Collins) on 11th October. The present position is substantially unchanged. Every endeavour is being made to secure additional labour for the existing tyre industry and increased production facilities are being provided as speedily as possible
    colonel Wheatley: Is the Minister aware that this shortage of tyres is causing great hardship to people who are forced to go to work on their bicycles, and will he do something to speed up the production of tyres?
    Sir S. Cripps: I am quite aware of the inconvenience, which I much regret, and
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    we are doing our best to increase production.
    Mr. Stubbs:Is my right hon. and learned Friend aware that workmen are losing a great deal of time because of the shortage of tubes and tyres for their bicycles which are the only means they have of getting to work? What does he propose to do, because many of their bicycles are laid up for want of new tyres?
    Sir S. Cripps: I am quite aware of the difficulties, and we are doing our utmost to solve them.

    Russia
    Mr. Edelmanasked the President of the Board of Trade what are the impediments to the conclusion of a large- scale trade agreement between Britain and the U.S.S.R.
    Sir S. Cripps: As I have previously stated, we are prepared to enter into such negotiation as soon as the Soviet Government are ready to do so.
    Mr. Edelmanasked the President of the Board of Trade the extent of Britain's exports of machinery and machine tools to the U.S.S.R. during the first nine months of the years 1937, 1938 and 1945, respectively; and what were our imports of timber from the U.S.S.R. for these periods.
    Sir S. Cripps: The value of the exports of machinery, including machine tools, of United Kingdom manufacture exported from this country to the U.S.S.R. in the first nine months of 1937, 1938 and 1945, amounted to £510,000, £1,961,000 and £9,808,000 respectively. The value of the timber imported into the United Kingdom from the U.S.S.R. during these periods was £6,778,000, £3,856,000 and £557,000.

    Suspender Grips
    Mr. Garry Allighanasked the President of the Board of Trade if he will state the amount of rubber saved during an average year by changing the grip on women's suspenders to metal; whether he is satisfied that this saving is essential having regard to the fact that the utility types of suspender now in compulsory use either fail to keep stockings up, or are effective at the expense of laddering the stocking; and if he will give instructions for the use of rubberised grips to be resumed.
    Sir S. Cripps: Separate statistics of the materials used in suspender buttons or collets are not available. The manufacture of suspender collets in synthetic rubber has been allowed again since 23rd November.
    Mr. Allighan: Is the right hon. and learned Gentleman aware that what he is gaining on the—
    Hon. Members: Swings.
    Mr. Allighan: —he is losing on laddered stockings?

    Elastic Braces
    Colonel Stoddart-Scottasked the President of the Board of Trade when elastic braces are likely to be again available in the shops.
    Sir S. Cripps: Production of braces containing elastic will be resumed as soon as elastic webbing can be made available, but this will not be for some time.

    Book cloth
    Major Hugh Fraserasked the President of the Board of Trade in view of his department's exhortations to the book trade to increase production for export and of his restitution of 65 percent. of their paper quota, what steps he is taking to increase their supply of book cloth from 50 percent. of their pre-war requirements.
    Sir S. Cripps: I cannot take any such steps at the present time owing to the continuing shortage of cotton yarn.
    Major Fraser: Is the Minister aware that there is likely to be something in the nature of a book famine in the middle of next year, especially in educational books, owing to the failure to release more cotton yarn for the book trade?
    Sir S. Cripps: The only remedy I can suggest is to use paper covers in the meanwhile.

    Furniture
    Lord John Hopeasked the President of the Board of Trade if he will state the value of the furniture to be imported into this country under arrangements with Canada and Norway; and the value of our total imports of timber suitable for furniture during the past three months.
    Sir S. Cripps: We hope to be able to import from Canada about £250,000
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    worth. I am not at present considering the importation of any furniture from Norway. During the last three months, we imported hardwoods to the value of £1¾ million and plywood to the value of about £2 million. A considerable proportion of both hardwoods and plywood would be suitable for furniture.
    Lord John Hope: Is the right hon. and learned Gentleman satisfied with the policy of importing made-up furniture while furniture manufacturers in this country are being refused permission to make furniture because of the scarcity of materials?
    Sir S. Cripps: Yes Sir. We cannot import the timber, but there are one or two pockets where we can get furniture, and, in order to relieve the needs of the civilian population of this country for furniture, I think we should do all we can to get it in immediate supply.
    Mr. Manningasked the President of the Board of Trade if he will indicate an approximate date when the hon. Member for North Camberwell can expect an answer to his letter of 9th November last in respect of an application for dockets for utility furniture, etc., made by Mrs. Vallis, 16, Barkworth Road, S.E.16, who was allotted a prefabricated bungalow by her local authority last autumn.
    Sir S. Cripps:There have been certain complications about this case, but I will write to my hon. Friend about it this week

    Blankets (Release for Europe)
    Miss Rathboneasked the President of the Board of Trade whether, out of his surplus war store of 2,000,000 blankets, he will now release the 750,000 which he is waiting for the trade to take up, so that they could be used for the needs of those in Germany and other countries, where great numbers of displaced persons and of the native population are actually freezing to death.
    Sir S. Cripps: Of the 2,726,000 blankets which have been made available from surplus stocks, 1,476,000 have been allocated for dispatch to the Continent of Europe for liberated countries and displaced persons. The bulk of these have already been dispatched to the Continent, and shipment is proceeding as fast as the

    909
    blankets can be sorted, packed and dispatched. The remainder of the surpluses are being made available for disposal to the general public in this country.
    Miss Rathbone: In view of the still enormous need on the Continent, could not some of the large quantity of blankets which are being held for future sale to the trade also be released?
    Sir S. Cripps: I do not think it would be fair in the circumstances to take all surplus blankets and give them to people abroad.

    Paper
    Flight-Lieutenant Haireasked the President of the Board of Trade what paper supplies still exist in this country which were reserved for emergency war time purposes.
    Sir S. Cripps: I am not aware of any appreciable supplies of such paper.

    Utility Cloths
    Mr. Boardmanasked the President of the Board of Trade whether he is aware that sub-standard utility cloths are taken out of the utility ranges and sold as general; that these imperfect goods are then sold at prices greatly in excess of the legitimate prices of perfect goods and become subject to purchase tax; and if he will stop this practice.
    Sir S. Cripps: No, Sir, but if my hon. Friend will let me have details of any cases he has in mind, I shall be glad to look into them.

    Motor Tyres (Sugar-Beet Areas)
    Mr. Goochasked the President of the Board of Trade whether he is aware of the shortage of tyres for vehicles used for the haulage of sugar-beet in North Norfolk; and if he will make the supply available in that area and thus prevent a waste of this valuable crop.
    Brigadier Medlicott:asked the Minister of War Transport if he is aware of the shortage of motor-lorry tyres in East Anglia; and if he will arrange for additional supplies of such tyres to be made available in that area.
    Sir S. Cripps:Yes, Sir, and we are doing our best to direct available supplies to the sugar-beet area, but it would be of material assistance if users could give
    910
    as much prior notice as possible of their demands to the Regional Tyre Officer.

    Stationery
    Mr. I. J. Pitmanasked the President of the Board of Trade what quantity of graph paper or other stationery has been imported from the U.S.A. since 30th May, 1945; how much such paper has been supplied for the use of Government departments; to what extent the necessity for this import has been caused by lack of supply of raw material or labour to manufacture in Britain; and whether he is taking action to ensure that the home producer will in future be put in a position to be able to supply all Government requirements
    Sir S. Cripps: Small quantities of such paper, mostly of special types and to the value of about £250, have been so imported. Approximately half of these imports have been for Government use, and of types not produced in this country.
    Mr. Pitman: Is the right hon. and learned Gentleman aware that the paper used at Rothampstead Experimental Station appears to be of recent foreign importation?
    Sir S. Cripps: That may be part of the £125 worth which has been imported on Government account.

    Export Firms (List)
    Mr. Vernon Bartlettasked the President of the Board of Trade whether he will undertake the preparation of a handbook of British firms working specially for export and will arrange for the widest distribution of this handbook through embassies, legations, consulates and tourist offices, in order that foreign firms may have no difficulty in ascertaining what British articles are immediately available and where they may be obtained.
    Sir S. Cripps: No, Sir. The practical value of such a handbook would not be such as to warrant the cost and labour of its original compilation and constant revision.
    Mr. Bartlett:Is the right hon. and learned Gentleman aware that at present any firm which wishes to buy British goods has to get in touch with a very large number of firms before it can find out

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    those which are prepared to export? Is he further aware that before the war the Austrian Government had an extraordinarily useful book of that sort, and would he, perhaps, consult with some Austrians who may be able to assist him in this matter?
    Sir S. Cripps:If persons will use the machinery which is available through the Department of Overseas Trade, they will find there are perfectly adequate methods of getting in touch with the right people.

  INDIA

    Nursing Units
    Colonel Errollasked the Under secretary of State for India how many members of British nursing units in India and Burma are engaged on nursing sick and wounded Indian soldiers at the present time.
    The Under-Secretary of State for India (Mr. Arthur Henderson):The number of nurses of the Queen Alexandra Imperial Military Nursing Service employed, against Indian Military Nursing Service vacancies, and therefore employed in nursing Indian soldiers in Indian and combined British and Indian hospitals, is 389.
    Colonel Erroll: In view of the urgency created by the serious shortage of nurses in this country, cannot the Minister return these women to the United Kingdom as soon as suitable Indian substitutes have been found?
    Mr. Henderson:I would remind hon. Members that these nurses are being used mostly to nurse men who were wounded in action against our late enemy.

    Elections
    Mr. Mikardoasked the Under secretary of State for India, how many names of persons on the lists submitted By the trades unions in connection with the amendment of electoral rolls in Orissa did not appear on the lists submitted for the same purpose by factory owners.
    Mr. A. HendersonI have no information, but will make inquiries and inform by hon. Friend of the result.

    Rice
    Mr. Bossomasked the Under secretary of State for India whether India
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    produces enough rice to meet the annual need, and, if not, what steps are being taken to put under cultivation the great areas of arable land that could be cultivated.
    Mr. A. Henderson: India is not self-sufficient in foodgrains, and in the years before the war it was necessary to import annually from abroad for the rice-consuming areas an average of over 1½million tons of rice. During the war, the Government of India and the Provincial Governments have taken all practicable steps to increase the production of rice and other foods, mainly by substituting food crops for other crops. The Provinces have plans for irrigation works which are expected to increase considerably the amount of land under cultivation. I would however point out that a high proportion of the uncultivated land in India, is, in fact, unsuitable for cultivation.
    Mr. Bossom: Is it not possible for India to be self-supporting in this respect?
    Mr. Henderson:I should say that depended upon the amount of increase possible as a result of the projected improvements.
    Mr. Bossom: When will those improvements be instituted?
    Mr. Henderson: It is impossible for me to answer that precisely at this stage.
    Major Wyatt: In view of the Minister's reply, can he explain why less land was under cultivation in Bihar in 1941 than was under cultivation there in 1921?
    Mr. Molson: What progress is being made to get the production of rice going in Burma?
    Mr. Henderson:I should like to see that question on the Paper.
    Mr. Cobb: Is the Minister aware that the steps which he has outlined are not those which are really necessary, and that what is wanted is an increase in agricultural efficiency? What steps is he taking in that direction?
    Mr. Henderson:Again I must say that I am not in a position to answer the question without notice.

    Defence Services (Reconstruction)
    Major Wyattasked the Undersecretary of State for India why, in view

    913
    of the Government's intention to Indianise the Indian Army, the recently appointed chairman of the Recontruction Committee of the Defence Services of India is a British service lieutenant-general and not an Indian Army officer.
    Mr. A. Henderson:General Willcox, who has wide experience of Indian conditions, was selected by the Commander-in-Chief as the best available officer for the appointment in question. There are two Indian Army members of the committee, one of whom, a brigadier, is an Indian.
    Major Wyatt: Is my hon. and learned Friend aware that there is considerable resentment in the Indian Army because nearly all the high appointments in India have been given to British Service officers and not to officers in the Indian Army, either British officers in the Indian Army or even Indian officers in the Indian Army; and will he take steps to look into the matter and have this state of affairs altered?
    Mr. Henderson: I will look into what my hon. and gallant Friend represents, but as regards this particular appointment, I am satisfied that the Commander-in-Chief took the view that General Willcox was the best officer for this work.

    Indian Army (Demobilisation)
    Mr. Dribergasked the Under-Secretary for India how soon men in release Group 22, serving in the Indian Army, are to be repatriated.
    Mr. A. Henderson: The Government of India have not yet reported what dates have been fixed for the release of Indian Army officers in Group 22, but inquiries are being made and I will communicate with my hon. Friend on receiving a reply.
    Mr. Driberg:Is my hon. and learned Friend aware that these officers were originally told that they would be sent home in November and were then deferred another three months, and that many of them have now been for five years continuously on overseas service; and will he do something to equalise their treatment with that of officers in the British Army?
    Mr. Henderson: The policy is to seek to equalise the treatment of British officers serving in the Indian Army and officers in the British service; in the case of British Service officers in Group 22,
    914
    the period of release fixed is 10th January to 24th January next year, and I hope the same rule will apply to officers in the Indian Army.

    Famine Prevention (Bengal)
    Mr. Bossomasked the Undersecretary of State for India what special steps are being taken to avoid famines occurring in Bengal at times when monsoons are below the average.
    Mr. A. Henderson: The Government of Bengal are in a far better position to deal with any threat of famine than they were in 1943. In particular rationing of the population of over 4 million in Greater Calcutta has now been running smoothly for the past 18 months, and it is being gradually extended to other urban areas. Also the local government now hold considerable working stocks of rice and they have at their disposal the necessary transport and storage facilities to enable them to distribute these stocks to any area where a threat of shortage may exist.
    Mr. Bossom: If I put down the Question again, will the Minister give a more comprehensive answer, as he has given only a few high spots and has not explained the situation?
    Mr. Henderson: I shall be glad to give a full statement if the hon. Member will put down a Question.

  QUESTIONS TO MINISTERS (ARMED FORCES)
  Mr. Keelingasked the Prime Minister whether he will answer Questions which affect all the Fighting Services equally; or if he will arrange for them to be answered by the Lord President of the Council on his behalf.
  The Prime Minister (Mr. Attlee):No, Sir. There has for some years been a growing practice of putting down to the Prime Minister Questions relating to all three Services. In many cases these Questions are concerned with detailed matters of administration giving rise to supplementaries involving problems on which the Prime Minister is not, and cannot readily be, informed. On such Questions a fuller and more speedy reply can be given by Departmental Ministers who are directly concerned with these matters in

  915
  the normal discharge of their administrative duties.
  As my right hon. Friend the Secretary of State for War has a large interest in the majority of these Questions, I have arranged with the Service Ministers that all such Questions which do not specifically involve the responsibility of the Prime Minister as Minister of Defence should be answered by the Secretary of State for War.
  This will mean that Questions on high Defence policy, strategy and operations involving all three Services will be answered by the Prime Minister. Factual Questions and those involving detailed matters of administration will be answered by the Secretary of State for War. Questions of manpower relating to allocation, call-up and release should be addressed to my right hon. Friend the Minister of Labour.
  Mr. Keeling:Does the Prime Minister appreciate that the present system is unsatisfactory from the Members' point of view, firstly, because the Secretary of State for War really cannot answer on behalf of all three Services, and, secondly, because the War Office Question list is already overloaded?
  The Prime Minister:With regard to the first part of the supplementary question, I would answer that arrangements have been made, where a Question concerns the other Services, for the Secretary of State for War to get full information from those Departments. On the second supplementary, the real purpose of putting these Questions to the Prime Minister is to get an answer by what I would call an unfair advantage over other Members who put Questions down to the Secretary of State for War. It is true there are too many Questions to the Secretary of State for War on the Paper, as Mr. Speaker said the other day, relating to individual cases. The device of combining a Question which relates to one Service with Questions relating to others, in order to get it on by No. 45 or sooner, is to be deprecated.
  Lieut.-Colonel Lindsay: Is the Prime Minister aware that the practice of putting down Questions on individual cases is growing only because there is no other way of getting answers from Ministers in a short space of time?
  The Prime Minister:I am not aware of that, but I am sure that hon. Members realise that there is an immense pressure at the present time on questions of demobilisation and on individual cases, and that it is impossible to return an answer at once.

  GOVERNMENT INFORMATION SERVICES(NEW ORGANISATION)
  Mr. Maurice Webbasked the Prime Minister whether he has any statement to make on the future of the Government Information Service.
  The Prime Minister:Yes, Sir. The Government have had under consideration the information services which should be maintained at home and overseas in peace. They are satisfied that, while these services should be on a substantially reduced scale as compared with wartime, they have an important and permanent part in the machinery of government under modern conditions. It is essential to good administration under a democratic system that the public shall be adequately informed about the many matters in which Government action directly impinges on their daily lives, and it is in particular important that a true and adequate picture of British policy, British institutions and the British way of life should be presented overseas.
  In the view of the Government, the responsibility for the information policy of a Department must rest with its Minister, but there are various technical functions, notably on the production side, which it would be uneconomical to organise departmentally, and which can best be performed centrally as a common service. For this purpose we propose that departmental information services shall be supplemented by a central office performing certain common technical and production functions and making specialist services available to Departments for both, home and overseas purposes. To be effective, this office, like the Government information services generally, will need a highly qualified rather than a large staff.
  There must also be effective machinery for co-ordination, especially as far as overseas publicity is concerned. Neither of these purposes, however, requires a separate Minister exclusively concerned with information matters, and the Government

  917
  have, therefore, decided to bring the Ministry of Information to an end. The Ministry of Information will, however, continue until the new organisation has been set up, and opportunities of transfer to the new services will be offered to members of the Ministry's staff with the requisite qualifications. Detailed arrangements are now being worked out and will be made public in due course.
  In conclusion, I think that, whatever opinions may be held about the future, the House generally would like me to take the present opportunity of placing on record appreciation of the services which the Ministry of Information has rendered since it was formed in 1939, and of the conspicuous success with which, after it emerged from its original teething troubles, it performed its important and difficult task during the war.
  Mr. Webb:Could the Prime Minister now state to which Ministers hon. Members will address their Questions on general matters of information policy, when the new central organisation is established? Could he state also whether he is satisfied that the new central organisation can achieve the purposes which he set out so admirably in the first part of his answer?
  The Prime Minister:In reply to the second part of that question, I am satisfied that the new organisation will operate effectively. As regards Questions, they should be put to the Ministers concerned, rather than to one Minister solely concerned with information.
  Mr. Oliver Stanley:Will the Prime Minister allow my hon. Friends and myself to associate, ourselves with the tribute that he has paid to the Ministry of Information? Could I ask for further information on the matter referred to by the hon. Member? What we want to know is which Minister will be responsible for the new central organisation which is being set up. Surely some Minister will be responsible?
  The Prime Minister: I may be more precise about this matter later on, but the general idea is that there should not be a Ministry of Information but an information unit, which would be drawn upon by various Ministers for the information they want. As to whether there
  918
  would be a Minister precisely in charge of that administration and on what Vote it would come, I would rather make a statement later.
  Mr. Thurtle: Under the new scheme, who will answer for the B.B.C. in the House of Commons?
  The Prime Minister:That point is under consideration. My hon. Friend will remember that in peace time certain technical questions with regard to the B.B.C. were answered by the Postmaster-General. The B.B.C. Charter will come up for review, I think, next year and the question whether there should be any further Ministerial responsibility will be considered. The general rule has been that programmes should not be the subject of Question and answer in this House..
  Mr. W. J. Brown: What is the impact of the Prime Minister's statement on the British Council, if any?
  The Prime Minister: There is no direct impact, but the position of the British Council and generally of that kind of service is under consideration, and a statement will be made later on.
  Viscount Hinchingbrooke: In view of the fact that the new organisation is to be concerned with internal publicity, what exactly will be the relations between it and the B.B.C? Can the right hon. Gentleman give us an assurance that the independence of the B.B.C. will be in no wise altered?.
  The Prime Minister: I can give that assurance.
  Mr. Michael Foot: Can the Prime Minister say whether such information services as those in the United States, which Have done very good work under great difficulties during the war, will in future come under the new organisation or under the Foreign Office?
  The Prime Minister:Broadly speaking, those services will come under the Foreign Office, but the matter is under consideration. The general idea is that overseas information, which I think needs to be correlated not only with regard to foreign countries but also with regard to the Dominions and the Colonies, should be under the general supervision of the Foreign Office.

  OVERSEAS TRADE DEPARTMENT (REORGANISATION)
  Mr. Dryden Brookasked the Prime Minister whether he has any statement to make about the future of the Overseas Trade Department.
  The Prime Minister: I propose, with Mr. Speaker's permission, to make a statement at the end of Questions.
  Later—
  The Prime Minister:In the light of the decision taken by the Coalition Government to create a unified Foreign Service, the Government have reviewed the responsibilities and mutual relations of the Departments principally concerned with the greatly increased effort to develop overseas trade which is now necessary for the country's well-being. Hitherto the Secretary of the Department of Overseas Trade has been responsible jointly to the Secretary of State for Foreign Affairs and the President of the Board of Trade. In future he will be known as the Secretary for Overseas Trade and will be directly responsible to the President of the Board of Trade. The Department of Overseas Trade will be integrated with the Board of Trade and all overseas work will be under the direction of the Secretary for Overseas Trade, but the latter will, of course, be subordinate to the President of the Board of Trade, who remains responsible for trade policy both internal and external.
  Arrangements are being made for close co-ordination of the work for which the Secretary for Overseas Trade will be responsible with the Treasury, Foreign Office, the Dominions Office, and other Departments concerned with external economic policy. In particular, arrangements will be made for the training of members of the Foreign Service within the Board of Trade, for their making frequent visits to manufacturing and commercial centres in this country, and for rapid communication between them and the Board of Trade on commercial matters. The Trade Commissioner Service, operating in the Empire and Commonwealth will be administered directly by the Board of Trade in consultation as necessary with the Departments concerned with Empire matters.
  For the information of the House and the business community, I would like to say that the arrangements now announced
  920
  are intended to improve the service which the Government can render to overseas trade. The Secretary for Overseas Trade will have under his immediate direction an organisation strengthened for this purpose and the area of his responsibility will be extended. Legislation will be necessary to give affect to these changes and will be laid before Parliament shortly.
  Mr. Gallacher: Has any arrangement been made for the President of the Board of Trade to meet his opposite number in Eire to discuss better trade relations?
  The Prime Minister:That does not arise out of this Question.
  Mr. David Eccles: Will the Prime Minister take into consideration the great difficulty of getting good staff for the overseas secretariats? Will he continue the wartime practice of having temporary civil servants in these overseas services and make certain that the divorce between the Foreign Office and the Board of Trade does not result in the commercial secretaries being on a lower level than those of the Diplomatic Service?
  The Prime Minister:While I could not answer immediately with regard to the question of temporary civil servants, I entirely agree with the hon. Member in the importance of this service, and there must not be separate grades and a grade below, because it is of vital importance to the whole country.

  EQUAL PAY (ROYAL COMMISSION)
  Mr. W. J. Brownasked the Prime Minister when it is anticipated that the Report of the Royal Commission on Equal Pay will be forthcoming.
  Flight-Lieutenant Beswickasked the Prime Minister if, as announced, the policy of the Government with regard to pay of women in industry is to be based on the findings of the Royal Commission considering that matter, he will suggest to the Commission that they endeavour to make a Report in the near future.
  The Prime Minister:I am informed that the Royal Commission cannot yet name a date when their Report will be ready. The Government are not, of course, committed in advance to accepting the Commission's findings.
  Mr. Brown:May I ask whether, without establishing any precedent, we might ask this Royal Commission to put a jerk in it?
  The Prime Minister: I hope they will report as soon as they can.

  GERMANY

    Arms and Munitions Industries
    General Sir George Jeffreysasked the Chancellor of the Duchy of Lancaster what steps are being taken, or will be taken, totally to dismantle all German arsenals, aircraft factories and naval dockyards; and whether all German industries capable of being used for the production of armaments and munitions will be controlled and, if necessary, closed down.
    The Chancellor of the Duchy of Lancaster (Mr. John Hynd):It was agreed at the Potsdam Conference that all arms, ammunition and implements of war and all specialised facilities for their production in Germany should be held at the disposal of the Allies, or destroyed. This decision is being implemented in full by H.M. Government in the British Zone of Germany and good progress has been made. The answer to the second part of the Question is "Yes, Sir."
    Sir G. Jeffreys: Is the right hon. Gentleman aware that it was the failure effectually to dismantle and close down these various establishments that was largely responsible for Germany being in a position to make war again in 1939, and will he accelerate the process of dealing with those places and with the German war potential?
    Mr. Hynd: I am afraid I cannot give an affirmative answer to the last part of the question, because the process is being accelerated as much as possible in present conditions.

    Polish Displaced Persons
    Miss Rathboneasked the Chancellor of the Duchy of Lancaster whether the large numbers of Polish displaced persons who have been repatriated or are being assembled for repatriation in Germany are being sent back only with their consent or irrespective of their wishes; do they include men, women and children; and do they include Jewish persons.
    Mr. J. Hynd: Poles, including Jewish persons, in the British Zone in Germany are not repatriated against their wishes. Those who have gone back include men, women and children.
    Miss Rathbone: Is my hon. Friend sure that this is being fairly carried out, because my information is that many persons are being hustled into giving a dubious assent and cannot easily change it?
    Mr. Hynd: Full opportunities were given to all the Poles in the displaced persons camps to indicate whether or not they were prepared to return, and those who gave an affirmative reply are being returned. If there were any cases such as the hon. Lady suggests, they would, if brought to our notice, be inquired into.
    Mr. Hector Hughes: Do those persons include Jewish persons?
    Mr. Hynd: The answer states "Poles, including Jewish persons."

    Victims of Persecution (Rations)
    Miss Rathboneasked the Chancellor of the Duchy of Lancaster whether he is now able to report on any arrangements for enabling German Jews or other German victims of Nazi persecution who have been freed from concentration camps or have emerged from hiding, to obtain rations in excess of those allowed to ordinary Germans; and, if so, will he explain the arrangements for enabling these victims to establish their claim.
    Mr. J. Hynd: Many German victims of Nazi persecution who have been freed from concentration camps, including German Jews, are being housed at displaced persons assembly centres where they receive preferential treatment in the matter of food and clothing. On discharge from assembly centres, survivors of concentration camps receive a ration equivalent to that of a medium heavy worker, but in the case of those who went back to their homes independently, the administrative difficulties of tracing them for the purpose of providing special treatment are formidable. The British authorities in Germany have the matter in hand and, while I am not in a position to give a definite assurance, I hope that it will be possible to overcome the difficulties.

  AGRICULTURE

    Calfhood Vaccination
    Lieut.-Colonel Corbettasked the Minister of Agriculture whether he will extend the calfhood vaccination scheme against contagious abortion to all attested herds.
    The Minister of Agriculture (Mr. Thomas Williams):No, Sir. I am afraid I cannot undertake to do so at present. The limiting factor is the supply of vaccine, and priority must be given to dairy herds in view of the need for more milk. I shall, however, be prepared to reconsider the matter as soon as supplies of vaccine can be increased.

    Advisory Service
    Mr. David Ecclesasked the Minister of Agriculture whether he will allow married women to apply for appointments in the Agricultural Advisory Service.
    Mr. T. Williams: Yes, Sir.
    Mr. Eccles:Is the Minister aware that the form of application which has gone out in relation to these posts states that married women may not apply, and will he therefore change the form of application?
    Mr. Williams:I understand that married women both can make, and have made, applications.
    Mr. Eccles:May I send the Minister a copy of the form, because it states in black and white that married women may not apply?
    Mr. Williams: Yes, I should like to see a copy.

    Training Schemes
    Mr. Bartlettasked the Minister of Agriculture whether the rate of allowances payable to disabled agricultural trainees upon which an announcement was promised in the House of Commons on 14th June last, has yet been decided; and whether he will bear in mind the extra expenses incurred by these disabled men.
    Mr. T. Williams:The maintenance and other allowances payable to disabled persons in receipt of vocational training in agriculture, as in other occupations, under the provisions of the Disabled Persons (Employment) Act, 1944, have now been brought into line, with effect
    924
    from 2nd July, 1945, with those of the Government's Vocational Training Scheme which were announced by the Minister of Labour and National Service in the House on 14th June last.
    Mr. Hurdasked the Minister of Agriculture if the Government's Farm Training Scheme is open to all suitable men in the Services who desire to enter agricultural employment or farm on their own account.
    Mr. T. Williams: Yes, Sir, subject to the satisfaction of the broad conditions of eligibility applicable to all applicants for vocational training under the Government Scheme, as announced in the House by the Parliamentary Secretary to the Ministry of Labour and National Service on 6th April, 1944. I would refer the hon. Member to the reply I gave my hon. Friend the Member for Southall (Mr. Ayles) on this subject on 24th October last.
    Mr. Hurd:Is the Minister satisfied with the working of these arrangements, which have so far allowed only a few-hundred men to be approved?
    Mr. Williams: Yes, sir. I understand the Ministry of Labour interpret the conditions liberally in the case of men who desire to take up agricultural training.
    Major Legge-Bourkeasked the Minister of Agriculture if he will issue a full statement of the Government's intentions with regard to the employment after training of those applicants for the Agricultural and Horticultural Training Scheme who prove satisfactory.
    Mr. T. Williams: As indicated in the detailed announcement of the scheme which my Department issued to the Press on 5th June last, it is anticipated that many training employers will wish to give employment to trainees who have satisfactorily completed training with them, but in any case my Department, through the county agricultural executive committees will take all practicable steps to ensure that satisfactory trainees are found suitable employment on the land.
    Major Legge-Bourke:Does not the right hon. Gentleman realise that when a man intends to take up agriculture for the rest of his life and hopes to make a livelihood from it, he should have some

    925
    more security before he starts than the mere promise that everything possible that can be done will be done?
    Mr. Williams: I can assure the hon. and gallant Gentleman that all the trainees who are proved to be satisfactory should have ample opportunities to engage in the industry for the rest of their lives.
    Mr. Stephen: Is the Minister making arrangements for these people to be granted smallholdings?
    Mr. Williams:I am afraid that the question of smallholdings does not arise out of this Question.
    Major Legge-Bourkeasked the Minister of Agriculture if he is satisfied that the Agricultural and Horticultural Training Scheme in England and Wales, for non-disabled men and women released from war service, is attracting sufficient numbers of men and women; how many have applied; and if he has any such scheme for disabled ex-Servicemen.
    Mr. T. Williams: Eight hundred and twenty-three had applied for agricultural and horticultural training under my Department's scheme up to 30th November. I am hopeful that there will be a substantial increase in the number of applicants for training as younger men and women are released from the Forces. Training under the scheme is available to disabled as well as non-disabled ex-Servicemen.
    Major Legge-Bourke:Has the Minister any target figure for the next six months?
    Mr. Williams:Our target is just as many trainees as we can possibly get.

    Class B Releases
    Squadron-Leader Emrys Robertsasked the Minister of Agriculture how many applications for the release of agricultural workers have been received by the Merioneth W.A.E.C.; how many have been supported and forwarded to his Department by the Committee; how many cases were recommended for release by his Department; and in how many cases release has actually been approved.
    Mr. T. Williams:Nine applications for Class B release of agricultural workers under the individual specialists scheme have been dealt with by the Merioneth-
    926
    shire War Agricultural Executive Committee up to date; four of these have been forwarded to my Department, which recommended two to the appropriate authorities, who have approved release in both cases.
    Squadron-Leader Sir Gifford Foxasked the Minister of Agriculture (1) what particular conditions are to be applied to the Class B block release of agricultural workers from the services; in what way the scheme is expected to work; and if he will state the total number to be released by next harvest;
    (2) what particular conditions are to be applied to Class B block releases of agricultural workers from the Services; whether it is estimated that these arrangements will produce the authorised number of agricultural workers to be released; and that these authorised numbers will be sufficient for next harvest.
    Mr. T. Williams: As the answer is somewhat long, I will circulate it in the OFFICIAL REPORT.
    Following is the answer:
    As announced by my right hon. Friend the Minister of Labour and National Service on 4th December, the Government have agreed to the inclusion under the Class B block release arrangements of up to 10,000 agricultural workers. Under the block release system the Service Departments are informed of the occupational classes in which men are required for release in Class B and also of the numbers authorised. The individual men are identified by the Service Departments by reference to their central records on which the men's pre-enlistment civilian occupations are recorded. The Service Departments select the appropriate number of men in the specified occupations in age and service order (excluding those whose release in Class A is imminent) and offer them release in Class B. Service men are, of course, entitled to refuse Class B release and wait their turn for release under Class A.
    Under the block release system, applications for the release of individual workers cannot be entertained by the Agricultural Departments or Agricultural Executive Committees. The limited scheme for the release under Class B by nomination of individual specialists in agriculture (i.e. men required for posts of

    927
    a managerial or supervising character) will be continued as at present. Class B block, release to produce the numbers authorised will be offered by the Service Departments to men classed as general farm worker, market garden worker, shepherd, cattleman, stockman, yardman, dairyman, carter, horseman, ploughman, tractor driver and farm labourer.
    Save in exceptional circumstances, men who accept Class B release will be placed either with their previous employer or on another farm near their homes by the Local Office of the Ministry of Labour and National Service after consultation with agricultural executive committees. Every effort will be made to place the men on the farms to which they desire to return. Arrangements have also been made for the release in Class B by nomination of a few hundred rural craftsmen, e.g., blacksmiths, wheelwrights, saddlers, estate maintenance workers, etc., who are required for urgent work in connection with food production and whose age and service group is 50or less. Applications for such release should be made to the agricultural executive committee for the county in which the rural craftsman's business is situated. Applications supported by committees will be considered by the Agricultural Department concerned, who will recommend release, up to the authorised number, in cases which comply with the essential conditions, and pass them to the appropriate authorities.
    I expect that the authorised number of agricultural workers to be released under these arrangements will be working on farms long before next harvest. In addition it is contemplated that a substantial number of experienced workers will return to the industry in the next few months on release in Class A. The Government will take all possible steps to ensure that the labour needed for the harvesting of the 1946 crops is available.

    Appeal Tribunals (Minister's Veto)
    Mr. De la Béreasked the Minister of Agriculture whether he will now make a statement to clarify the position in connection with the right of appeal by farmers, who have been dispossessed by the W.A.E.C., to the appeals tribunal, especially as regards this right to veto the recommendations made by the appeals tribunal
    Mr. T. Williams: Whilst the final decision in each case must rest with me as the Minister in whom authority to dispossess has been vested under the Emergency legislation, I should naturally, save in quite exceptional circumstances, be prepared to act in accordance with the recommendations of the tribunal.
    Mr. De la Bére: Does the right hon. Gentleman really mean to tell the House that he exercises the right of veto over the recommendation of the appeals tribunal?
    Mr. T. Williams:Yes, as I happen to be responsible to this House for those decisions.
    Mr. Godfrey NicholsonHow many times has the right been exercised?
    Mr. T. Williams:The tribunals have not yet commenced to operate.
    Mr. Nicholson: Will it be exercised?

    Fertilisers
    Mr. De la Béreasked the Minister of Agriculture whether he will give an assurance to farmers that during the year 1946 there will be available adequate supplies of fertilisers and especially of potash and superphosphate.
    Mr. T. Williams: Supplies of nitrogenous and of phosphatic fertilisers, including superphospate, for use during the first half of 1946 will be adequate to meet farmers' requirements for arable crops, but only a limited quantity of phosphate will be available for use on grassland, and there will continue to be a shortage of potash. As regards the second half of that year, the supply position of nitrogenous and phosphatic fertilisers should be satisfactory but I can give no assurance that the potash supply will by then have materially improved.
    Mr. Turton:Is the Minister doing anything to get more potash from Germany?
    Mr. Williams:As my hon. Friend knows full well, we get our main supplies from Germany and France, and there is little or no possibility of increasing supplies immediately.

    Calves
    Mr. De la Béreasked the Minister of Agriculture what steps the Government are taking for 1946 to encourage and

    929
    ensure the rearing of calves and to prevent the excessive slaughter of calves and young heifers.
    Mr. T. Williams: County war agricultural executive committees are actively impressing on farmers the importance of rearing more calves both in their own and the national interest. By arrangement with the Ministry of Food calves sent for slaughter which are considered suitable for rearing, and store cattle which would repay further feeding, are kept back and sold for those purposes wherever there are buyers. Where practicable, county committees purchase such calves for rearing on farms in their possession or for allocation to farmers.
    Mr. De la Bére: Since there is still a great deal of slaughtering going on, would it be possible to increase that practice?
    Mr. Williams: It is being practised in every county already.

    Farm Occupancy, Cumberland (Consent)
    Mr. Wilfrid Robertsasked the Minister of Agriculture the number of cases in the county of Cumberland in which the purchaser of a farm has been given permission to occupy the farm, and in which permission has been refused, respectively.
    Mr. T. Williams: My consent is required only in cases where a notice to quit has been served on the occupier of an agricultural holding purchased since 3rd September, 1939, or subject to a contract of sale made, since that date. Of the 29 such cases in Cumberland, consent has been given in 21 and refused in eight.

    Prisoner-of-War Labour
    Mr. Goochasked the Minister of Agriculture if he will discourage the use of prisoner-of-war labour by farmers and W.A.E.C.s where other labour is available.
    Mr. T. Williams:I have impressed on county war agricultural executive committees the need, of which they are fully aware, for ensuring that prisoners-of-war are not supplied to farmers or used by committees themselves on work for which civilian labour is available.
    Mr. Gooch:Is my right hon. Friend aware that farm workers are complaining bitterly that they are being dismissed in
    930
    certain cases and that German prisoners are taking their places, and will he circularise the county committees informing them that this must stop?
    Mr. Williams:The county committees have already been circularised. If my hon. Friend will bring any individual cases to my notice, I will look into them.
    Mr. Janner:Is my right hon. Friend aware that there is labour available from some of the prisons of this country and it has proved extremely satisfactory to utilise these men, and will he give attention to the possibility of using more of them?
    Mr. Williams:I believe that the first part of my hon. Friend's question is strictly correct. The men have been proved useful.

    Tillage Acreage
    Mr. Goochasked the Minister of Agriculture if he will use his powers of direction to prevent arable land from tumbling down to grass and thus maintain as large a tillage-acreage as possible.
    Mr. T. Williams:As indicated in my recent statement on agricultural policy, for the time being while the serious world food shortage remains, measures, including the issue of directions, will be taken to control, when necessary, the laying down of grass, in order to meet the need for maintaining a large tillage acreage.
    Mr. McKie: Is the Minister aware that it is more important to ensure that no undue strain is placed upon farmers in the way of putting too large an acreage under the plough?
    Mr. Williams:I think the hon. Member can take it for granted that we shall exercise discretion in this matter.

    Prices and Wages
    Mr. Dyeasked the Minister of Agriculture, in view of the Government's decision to retain the Control of Engagement Order in respect of agricultural employment, while freeing nearly all other industries, whether he will now consider, in his annual review of prices, fixing such a level of prices as will enable agricultural workers to be paid wages at least equal to those paid in other industries.
    Mr. T. Williams:Prices of the principal agricultural products will be fixed by the Government, after the annual Febru-

    931
    ary reviews, at a level appropriate, in the opinion of the Government, to achieve the purposes stated in the policy announcement of 15th November of which an important feature is the provision of adequate remuneration and decent living conditions for agricultural workers. The fixing of minimum rates of wages for agricultural workers in the United Kingdom has been entrusted by Parliament to independent bodies. It would be quite improper for Ministers to indicate to these bodies how they should carry out their statutory functions.
    Mr. Dye: In the case of a substantial increase in wages being arranged by the Wages Board, will the prices already fixed be just from the point of view of meeting that requirement?
    Mr. Williams: I am afraid I cannot add anything to the statement I made on 15th November.

    Technical Staffs
    Mr. Dyeasked the Minister of Agriculture whether there are enough trained personnel available to fill the posts in the new Agricultural Advisory Service, to staff the County Agricultural Committees that will continue the work of the W.A.E.C's and also enable the development of the farm institutes and other educational and training establishments for the future workers and farmers in this country, or what steps he proposes to take to ensure that the farm institutes are adequately staffed.
    Mr. T. Williams: I accept the implication of my hon. Friend's question that there is a shortage of men and women with the technical qualifications required for the Agricultural Education and Advisory Services on the scale ultimately contemplated. It is my intention, as far as possible, to secure a fair distribution of trained staff between the two services, and at the same time to ensure that the county committees can continue to carry out their duties efficiently. The steps necessary to this end will be considered at an early date when we shall have more complete information about the available supply of staff.
    Lieut.-Colonel Dower:Will the right hon. Gentleman not appoint fanners who have failed in their own particular work, and whose appointment would be very
    932
    strongly resented in the agricultural industry?
    Mr. Williams: If the hon. and gallant Member will look at the question again, I think he will find that farmers are not likely to be applicants for the Advisory Service.
    Mr. Dye:Can my right hon. Friend say what number of farm institutes will be established in the country?
    Mr. Williams:That is another question.

    Animal Feedingstuffs
    Mr. Dyeasked the Minister of Agriculture whether he proposes, in 1946, to import a greater quantity of animal feedingstuffs into this country in the event of the Anglo-U.S.A. Loan Agreement being ratified.
    The Parliamentary Secretary to the Ministry of Food (Dr. Edith Summerskill):I have been asked to reply. A larger quantity of rationed animal feedingstuffs will be distributed in the next rationing year 1st May, 1946, to 30th April, 1947, than was issued in the same period 1945–46. This will necessitate a greater import, provided supplies can be secured. I am not aware that U.S.A. will be an exporter of animal feedingstuffs and it would be premature to anticipate supplies from that source.

    Opencast Working (Restoration)
    Colonel Clarkeasked the Minister of Agriculture whether he is satisfied that the top-soil removed through opencast working is being properly replaced and spread.
    Mr. T. Williams: Yes, Sir.
    Colonel Clarke:What steps does the Minister take to see that contractors do this work all over the country?
    Mr. Williams: Each war agricultural executive committee appoints one person to make contact with the officer of the Ministry of Fuel and Power and between them they ascertain what the farmer desires as far as restoration is concerned, and they do their best between them to see that that desire is met.
    Colonel Clarke:Does the Minister get reports at the Ministry from this subcommittee and is he in direct touch him-

    933
    self, or is the matter left entirely to the local war agricultural committee and the local fuel and power committee?
    Mr. Williams:The hon. and gallant Gentleman will appreciate that the county committees are the Minister's agents and he must accept their guidance on these questions.
    Viscount Hinchingbrooke:Is the Minister aware that although the arrangements may be satisfactory in regard to coal workings, they are far less satisfactory in the case of gravel and clay? Will he look into that matter?
    Mr. Williams:If the Noble Lord will bring to my notice any case he has in mind, I will gladly look into it.
    Mr. Baldwin:What steps does the Minister propose to take with regard to sites where no attempt has been made to get the top soil ready to put back on the site?
    Mr. Williams:If the hon. Gentleman will bring to my notice any case of which he knows, I will have it looked into.

    Potato Order
    Colonel Errollasked the Minister of Agriculture what is the object of the levies imposed under the new Potato Order.
    Dr. Summerskill:I have been asked to reply. As this Order is due for discussion later today, I would ask the hon. Member to await the statement I hope to make then.

  FISHING INDUSTRY (SURPLUS GOVERNMENT PROPERTIES)
  Commander Marshallasked the Minister of Agriculture whether he has a list of piers, ships, boat-repairing sheds, ice plants and other structures which have been erected by the Service Departments in England and which might be of use to the fishing community; and whether he will see that these are not dismantled without consultation with the local authorities.
  Mr. T. Williams: I have some information on the subject of the hon. and gallant Member's Question but I have no comprehensive lists. I am, however, in communication with the Service
  934
  Departments with a view to ensuring that the various local fishing communities are given an opportunity to acquire any surplus properties that would be useful to them.

  DOMINIONS (RADIO ADVERTISING)
  Sir G. Foxasked the Under-Secretary of State for Dominion Affairs in which of the Dominions arrangements exist, or are being made, at the present time to enable a limited amount of advertising on the radio; and under what conditions in each case.
  The Under-Secretary of State for Dominion Affairs (Mr. Parker):I understand that advertising on the radio is now permitted in all the Dominions subject to various conditions. These conditions are somewhat lengthy and complicated and with the hon. Member's permission I will communicate them to him in writing.
  Mr. Bossom:Will they be published in the Official Report?
  Mr. Parker:They are very long indeed and I am afraid that it will not be possible.
  Mr. Bossom:Will the right hon. Gentleman please do that?
  Mr. Parker: I am afraid it is impossible.

  BURMA (FAR-EASTERN RELIEF FUND)
  Mr. Keelingasked the Under-Secretary of State for Burma whether the Far-Eastern Relief Fund will be renamed the Far-Eastern and Burma Relief Fund.
  The Under-Secretary of State for Burma (Mr. A. Henderson):The Far-Eastern Relief Fund is an unofficial fund registered under the War Charities Act, and it is, therefore, not within the province of my Noble Friend to alter the title by which it has been known since its inception in 1942.
  Mr. Keeling:As the Minister has already answered b number of questions about the Fund, and as Burma is not in the Far East—it is nowhere near the Far East— will he say how people from Burma are to know that they are eligible to draw relief from this Fund?
  Mr. Henderson: The difficulty is that people in the Netherlands East Indies are receiving assistance from this Fund and, therefore, it does not solve the problem by merely extending it to cover Burma.

MESSAGE FROM THE LORDS
That they agreed to:
Workmen's Compensation (Pneumoconiosis) Bill, without Amendment,
Building Materials and Housing Bill,
Elections and Jurors Bill, with Amendments,
Wallasey Corporation Bill, without Amendment.

BUILDING MATERIALS AND HOUSING BILL
Lords Amendments to be considered Tomorrow, and to be printed. [Bill 56.]
ELECTIONS AND JURORS BILL
Lords Amendments to be considered Tomorrow, and to be printed. [Bill 57.]
NEW MEMBER SWORN
William John Irving, esquire, for the Borough of Tottenham (North Division).
BUSINESS OF THE HOUSE
Proceedings on Government Business exempted, at this day's Sitting, from the provisions of the Standing Order (Sittings of the House).—[The Prime Minister.]
ORDERS OF THE DAY

  BANK OF ENGLAND (re-committed) BILL
  Considered in Committee.
  [MAJOR MILNER IN THE CHAIR]
  CLAUSE 1.—(Transfer of Bank stock to Treasury.)
  3.30 p.m.
  Sir John Mellor: I beg to move, in page 2, line 1, leave out Subsection (3), and insert:
  " (3) The Government stock shall be redeemed at par by the Treasury on the 5th day of April, 1966."
  Subsection (3) provides that the Government stock which is to be given by way of compensation to the stockholders of the Bank of England shall be redeemed on 5th April, 1966, or at any time thereafter, at the Government's option, subject to three months' notice. My Amendment proposes that this stock should be redeemed on 5th April, 1966, without any option whatever.
  I think this is a desirable Amendment. There seems to me to be no reason why the Government should reserve a unilateral option which, of course, would only be exercised at a time when the current rate of interest on Government borrowing fell to something below 3 percent., and therefore a time which would obviously be unfavourable for the reinvestment of the proceeds of redemption. If the Chancellor had proposed a perpetual irredeemable stock, I should not have quarrelled with his proposal, but I appreciate that there is no precedent for the issue of such a stock, so far as I am aware, by the British Government and I certainly do not want to encourage the Chancellor to wander too far from precedent in these matters. Moreover, I think that a stock with a fixed date for redemption would be more popular in the open market, because a date for redemption tends to anchor the market price more or less within sight of par value, whatever may be the ebb and flow of interest rates for the

  937
  time being. I hope the Chancellor, in replying to this Amendment, will not take the line that, as no petitions were made on behalf of the stockholders to the Select Committee, this Committee of the Whole House need no longer trouble about the matter of compensation. I feel that we have a special duty in respect of this stock, because the Bank of England stock was a trustee stock; it was authorised for the investment by trustees of trust funds under the Trustee Act. Counsel for the Government, before the Select Committee, sought to make a point upon that. He said:
  " The stock is a well-known one—a trustee stock which is therefore, held to some considerable extent by persons who are not only entitled, but are bound by their duties under their trust to do all that they properly can to maintain their property interest. There is not one person present today to raise any point before you."
  I think it was rather unreasonable to expect trustees holding Bank of England stock to decide at one week's notice— because that was all that was allowed for the presentation of petitions after the Second Reading of the Bill—to embark upon the very considerable expenditure of presenting a petition through learned counsel to the Select Committee. Therefore I do not think that point, that none of the stockholders presented a petition, is really one of great substance. Indeed, I think they were entitled to expect that the Governor of the Bank of England —who was the only witness to give evidence before the Select Committee—would perhaps have presented aspects of their case rather more prominently than he did the case for the Government.
  The Chancellor of the Exchequer (Mr.Dalton):Is it suggested that the Governor of the Bank of England presented the case for the Government? Are the words carefully chosen by the hon. Gentleman?
  Sir J. Mellor:Yes, certainly. He was the only witness called by the Government; he was the Government's witness. Therefore I think my comment was a fair one. There is one further point why I say that this Committee of the Whole House should look carefully at this transaction. This was not a negotiated arrangement. The terms proposed in the Bill are imposed The Financial Secretary made it perfectly clear on the Second Reading of the Bill, and on the Debate on the Money Resolution, that these terms are not based upon negotiation. That
  938
  being so, I feel that this Committee has a duty to scrutinise the precise terms of the compensation.
  Sir Frank Sanderson:I support this Amendment from a rather different point of view. I think it is generally accepted that the Bank of England stock is, so far as I am aware, the only ordinary stock or share which has the status of a trustee stock. It is on this account that many investors have invested in this stock, because they felt by so doing they were purchasing a security which had the status of a trustee stock whilst owning the equity of the Bank of England. They felt, and they had cause to feel, that in the holding of this security they had a hedge against any possible inflation, since the dividend could at any future time be increased as an off set against the reduction in the purchasing power of the£.This sense of security is now lost to them. What does this Clause imply? Surely it implies that an amount of £400 in 3 percent. stock, is to be exchanged for £100 of Bank of England stock upon which holders are to receive 3 percent. until the year 1966. When that date arrives, it will be for the Chancellor of the Exchequer or his successor—probably it will be his successor as it is 20 years hence —
  Mr. Evelyn Walkden: It will be the same Government.
  Sir F. Sanderson:In any event it will be for the Chancellor of the Exchequer to decide whether the Government shall pay off this loan, or whether they will permit it to continue. The right hon. Gentleman has said that, if it suits the Government at that time, clearly they will—and it will be expedient so to do—repay the loan, but how unfair to the owners of that loan who may or may not at the time fixed, namely 21 years hence, be paid off at a time when the money market may possibly be on a 2 percent., or 2½ percent. basis. What, in effect, the right hon. Gentleman says is, "We will pay you 12 percent. per annum on every £100 of Bank of England stock for 21 years and, after the termination of that period, it will remain to be seen what we propose to do with you." This is a one-sided contract.
  Let me put the other side of this picture. Assuming that the Government did not nationalise the Bank of England, it is, I think, reasonable to say that never

  939
  would the stockholders have received less than 12 per cent. upon their money invested, and it would have been open to the Governors of the Bank of England to increase the dividend from time to time, and, if they were to distribute a larger proportion of their profits—they have been in a position, during the last 20 years, so to do—it is reasonable to assume that they will equally be in a position during the next 20 years to pay an increased dividend, if the Court of Directors desired. I base my argument in favour of this Amendment on the ground that it would, at least, give the holder of the stock a minimum of 3 percent. in perpetuity. I agree with my hon. Friend who moved this Amendment that had this Clause not provided for a definite date for redemption, had it been an irredeemable stock in the same way as 2½ percent. Consols, then I should have had nothing to say and would have supported the Clause as it stood, but for the reasons I have given, I support the Amendment.
  Mr. Dalton:This Amendment proposes to improve the terms of compensation from the point of view of the stockholder. In that respect those who have advocated it are "more royalist than the king." I can quite understand the hon. Gentleman not wishing me to rely upon this argument, but I am going to rely upon the argument that of the 17,000 and more stockholders of the Bank of England none-availed themselves of the opportunity furnished to them of petitioning against these terms. I would like to correct what the hon. Gentleman said about only a short time being available. They had 25 days in which to take any action they desired before the Select Committee. The Bill was presented on 11th October; it was not read a Second time until 29th October, therefore 18 days elapsed. Of course, they may have been banking on the Second Reading being defeated in this House, but, if so, they were political innocents—and innocence is no defence in law.
  Mr. Oliver Stanley: Innocence is no defence in law?
  3.45 p.m.
  Lieut.-Colonel Dower: The Chancellor of the Exchequer has made the amazing statement that innocence is no defence in law.
  940
  Am I in Order in asking whether he meant "ignorance? "
  Mr. Dalton: Yes, Sir, I must be excused for a lapsus linguae. I should, of course, have said "ignorance," which we do sometimes associate with innocence, but not always. But, seriously, they had 25 days in which to take whatever measures seemed to them to be necessary.
  Sir J. Mellor: I was referring to the Order of this House that all objections against the Bill should be presented within seven clear days after the Second Reading of the Bill. I think I was, therefore, quite entitled not to count the period until after the Second Reading.
  Sir F. Sanderson:I should like to point out that a large number of the shareholders are small shareholders and that if any small shareholder had desired to lodge a petition, he could not have done so without incurring considerable expense, expense which might have been equal to the amount of his investment in the Bank.
  Mr. Dalton:Let us take one point at a time. The point I was on was not the length or otherwise of the purse of the stockholder, but the length of time which he had, in order to initiate a petition if he had so desired. The prudent stockholder who felt outraged by the injustice of these terms would have done well to taken the first steps as soon as the Bill, which I am defending here, was presented on 11th October. I will indicate in a moment what actually happened after the Bill was presented on 11th October, which has a bearing on this Amendment; but for the moment I do not think it can be reasonably argued that too short a time was allowed for the presentation of a petition, and least of all that there was a great mass of seething indignation and a sense of injustice among the stockholders. At any rate, if there had been, they had other though less strictly legal opportunities of making known their views. They could have written letters either to their Members of Parliament, or to myself, or to the Governor of the Bank of England, or to any other person who they thought might help them in their dire need, but this has not happened on any appreciable scale. Speaking from memory, I received one letter—and one only. The Governor of the Bank of England, in evidence before the Select Com-

  941
  mittee, said he had received only ten letters protesting against the terms and he went on to say that of those ten letters two were received from persons who had bought Bank stock after the Government bad announced that it was going to rationlise the Bank, and he went on to say that those two gentlemen, therefore, were evidently speculators and their letters were not to be taken too seriously. The Governor also indicated that several of the other persons who wrote were abusive. They charged the Government with confiscating their property and used other unmeasured language, but the Governor thought the reasonable replies which he had sent to all of them had satisfied most of them.
  However that may be, ten, of whom two were speculators, is not a considerable volume of protest from among 17,000 stockholders. Members of Parliament are not slow to approach me or other Ministers when grievances, real or supposed, bear upon their constituents, and I do not recall one case in which a Member approached me on this subject or wrote to me passing on complaints from any of his constituents who might be shareholders. Therefore, I say there is really no evidence at all that the stockholders as a class were dissatisfied with these arrangements.
  I must make a comment, in passing, on the phrase used by the hon. Member who moved the Amendment in which he stated that the Governor of the Bank of England presented the case for the Government. He did not. The person who presented the case for the Government was Sir Cyril Radcliffe, and indeed, the Governor of the Bank, in order to remove any misapprehension that might have been felt on this point, used these words before the Select Committee:
  " Before I finish, Mr. Chairman, may I say this, that I am here as Governor of the Bank to give you all the information that I can. I am not a witness on behalf of the Treasury or on behalf of anybody else. I am here to give you all the information I can, and to help you in your consideration of this matter."
  It is perfectly true that he was called by Sir Cyril Radcliffe, but all that that shows is that Sir Cyril Radcliffe took the view that his evidence would be of interest and value, and he was so right in that view that the Committee, having heard the Governor, did call no further witness. They said "What need have we of further
  942
  witness? "I was afraid—well, I was not afraid, but I was apprehensive, in view of the pressure on my time—that the Committee would call me, but having heard the Governor of the Bank they decided that no other evidence should be called. The status of the Governor in this matter is clearly stated in his own words which I have read.
  Sir J. Mellor: I think my comment was quite fair. When I said the Governor presented the case, of course I appreciated that he was a witness, and the only witness, but I think that anybody who has read through every word of his evidence, as I have twice, will feel that he showed a painful anxiety to assure the Select Committee that the terms were completely satisfactory from the point of view of the stockholders rather than to present certain aspects of the case such as, for instance, those I have been endeavouring to present this afternoon.
  Mr. Dalton:I do not know why the epithet "painful" is used in this connection. I do not know to whom it was painful, except to people who felt pain at having certain truths clearly and intelligently exposed. Apart from that I do not know who suffered pain. Certainly the stockholders suffered no pain through any stage of these proceedings, and Sir Cyril Radcliffe said he thought it might well be that the terms were somewhat benevolent towards the stockholders. And so the market thought, if I may use language which personifies the market as being possessed of a brain.
  What happened on nth October when the Bill was introduced? Bank stock rose sharply. The hon. Member for Sutton Coldfield (Sir J. Mellor) says he has read this evidence from end to end. He has, therefore, seen among other things, the chart showing the relative movements of Bank stock and Local Loans. For some time they moved practically together, but when the electors gave their verdict, so great was the confidence in His Majesty's new Government that Local Loans, being a Government stock, rose relative to Bank stock. Thereafter the difference slightly increased, due to very natural doubts in the minds of the stockholders and others as to the terms on which the Government would carry out its expressed intention to nationalise the Bank. But as soon as the Bill was published all those apprehensions disappeared. The market felt very happy and satisfied and Bank stock rose and

  943
  passed above Local Loans stock and so remained, as is shown on this chart, up to the time the chart terminated.
  In these circumstances, if we had any second thoughts about these terms of compensation they would be that perhaps they are rather a shade too generous. But we left all this to be determined by the Select Committee appointed by this House, and the Select Committee have reported that they recommend no change in these terms, and I am prepared to stand by their recommendation. It is true that if 21 years hence the rate of interest should have fallen below 3 percent. it would be a very natural thing for any Chancellor of the Exchequer to convert this stock down—certainly it would—but meanwhile the stockholders will have their 3 percent. Stock, and if the rate of interest has fallen in the meantime that stock will have appreciated, and the stockholders will be able to sell it at a good price and reinvest somewhere else. I do not think it can be contended that they have been other than generously treated, and the proposal in the Amendment to give them a great further advantage is one which cannot be sustained on the evidence, and I therefore ask the Committee to reject the Amendment
  Captain Crookshank: I think the right hon. Gentleman was unwittingly putting a little too high the opportunities for the stockholders to protest when he prayed in aid the 18 days between the printing of the Bill and the Second Reading, because it was not until after the Second Reading that anybody knew what the subsequent procedure on this Bill would be, knew that it was going to be treated as a hybrid Bill, a very rare proceeding. I very much doubt— though I do not want to make this more than a point for the purpose of accuracy —whether any stockholders would naturally have assumed that that would be the procedure and would have set about drawing up petitions. In point of fact no one did, and so I do not think it matters very much one way or the other; but I would not like it to go forth that on future occasions the time must be counted to run from the actual printing of the Bill in the case of Bills which are not subject to the ordinary procedure of this House.
  Mr. Dalton: I do not want to press the point unduly, but I think all Parliamen-
  944
  tarians knew that this was a hybrid Bill. A number of people outside who study our procedure knew, and I should have thought there was plenty of legal advice available. If any stockholder had felt terribly aggrieved and had spoken to his solicitors or to his stockbrokers, they would probably have been able to advise him. But I do not want to make too much of the point.
  Captain Crookshank: It was exactly because I did not want the Chancellor to make too much of the point that I put in that caveat. I hope he will remember not to talk too much about 20 years hence, because, in the words of a song on which he and I were brought up, twenty years hence we will all ' 'seem to the boys to be old fools."
  Amendment negatived.
  The Chairman:As a matter of courtesy to the hon. Member for Sutton Coldfield (Sir J. Mellor) I should like to inform him that on further consideration of his next Amendment—in page 2, line 9, leave out "or greater "—Ihave decided not to select it.
  Motion made, and Question proposed, "That the Clause stand part of the Bill."
  Lieut.-Colonel Dower:At this point I think it will be in Order for me to say how much I regret that this Clause omits any reference to the reserves of the Bank of England which are to be taken over. I do not want to take up much time, because this point was very adequately discussed on the Second Reading of the Bill, but I should have thought, in view of the opinions then expressed from more than one side of the House, that between Second Reading and now the Chancellor of the Exchequer would have thought fit to give some indication of what those reserves actually are. I do not intend to develop this, but only to make two points. One is that when the Bank of England is nationalised, it is not against the national interest to disclose what the reserves are.
  The Chairman: I do not think any question of the reserves can arise on this Clause.
  Lieut.-Colonel Dower:The Clause has this very great omission. There are rumours that the reserves amount to £100 million.
  4.0 p.m.
  Mr. Stanley: Is one not entitled to argue that the question of compensation is a most relevant factor in this matter?
  The Chairman:I do not think it is relevant on this occasion.
  Lieut.-Colonel Dower: I do not intend to be more than a couple of minutes—
  Captain Crookshank: On a point of Order. It should be relevant, because this question arose on the Second Reading on 29th October when the Financial Secretary to the Treasury stated specifically, in answer to my inquiry about the reserves, that we would be able to ask this question as and when we dealt with this matter in Committee. Therefore the Government certainly envisaged the position of being asked to deal with it on the Committee stage.
  The Chairman:It might have been in Order in the Select Committee, but the hon. and gallant Gentleman cannot discuss it now.
  Captain Crookshank: The hon. Gentleman was quite definitely referring to the Committee here.
  The Chairman:The hon. Gentleman, if he will forgive my saying so, was probably wrong and fortunately or unfortunately I am the authority on the matter.
  Lieut.-Colonel Dower:There are rumours all over the country that the reserves are actually £100,000,000, and I think that it would be in the interests of the country that the actual amount should be published.
  Mr. Dalton:Why?
  Lieut.-Colonel Dower:The facts may not be so bad as the rumour.
  Mr. Dalton: What is bad about it?
  Lieut.-Colonel Dower:If the reserve is £100,000,000, the compensation is inadequate.
  The Chairman: It is definitely not in Order now to go into these details.
  Lieut.-Colonel Dower: Should I be in Order, if I asked this very simple question? Is it not the duty of hon. Members of this Committee to know whether His Majesty's Government are paying too much or too little? We do not know. However, I bow to your Ruling, Major Milner, and I will not develop this point, but I must protest,
  946
  with all respect, at the inadequacy of the opportunity given to. us to raise this very important matter.
  Mr. Sydney Silverman:As I understand the argument of the hon. Member who has just sat down, it is this: Not only is there some figure which we do not know, but it may turn out that the compensation which is being paid is too little.
  Lieut.-Colonel Dower: Or too much.
  Mr. Silverman:I doubt very much whether the hon. and gallant Member and his friends would be interested to raise much Debate in Committee on this point if they thought the Government were committed to paying too much. When we find that there are 17,000 stockholders, of whom only 11 all told have any complaint to make, and two of those are people who came into the field only in order to make a profit out of this transaction if they could—I should have thought that there was overwhelming evidence that, at any rate, the compensation was not too little. If one looks at the graph to which the right hon. Gentleman has referred one is tempted to regret very much that we did not have an Amendment down on this side of the Committee to reduce the amount of compensation which it is proposed to Pay.
  Sir J. Mellor: I wish to raise one specific point on this Clause. Subsection (4) provides that after the appointed day, no dividends on Bank Stock shall be declared but, in lieu, the fixed half-yearly payment shall be made to the Treasury. That half-yearly payment is calculated to be exactly the equivalent of what the half-yearly dividend used to be. It is further provided that the fixed sum may be increased or diminished by agreement between the Bank of England and the Treasury. I am rather surprised that provision has been included to increase that sum for this reason: The whole basis of the Government's argument for keeping down the compensation to the level of the dividend, which used to be received by the Bank of England stockholders, was based on the conception that in no circumstances, if the Bank had continued under private ownership, would stockholders ever have received more than the dividend that they customarily received during the past 20 years. Whatever might be accumulated by way of

  947
  assets, the stockholder would not enjoy participation in these assets by way of an increased dividend.
  The case for the Government—if I may use this term without offence to the Chancellor of the Exchequer or Lord Catto—was clearly illustrated in Lord Catto's evidence. He said that any surplus which might be earned beyond what was sufficient to pay the customary dividend to the stockholders of the Bank of England would have been used, and always would have been used, first of all, to strengthen the reserves and, secondly, to provide an improved service for those who used the services of the Bank of England. I will give two examples. Counsel for the Government before the Select Committee repeated words which the Chancellor of the Exchequer had himself used on the Second Reading of the Bill in making this point. He referred to the words used by the Governor of the Bank in a broadcast in 1939 when he said:
  " In theory, the dividend paid on Bank stock can vary, just like that paid by any other company; who are proprietors when they come to realise that services, and not a larger dividend, is the first consideration. In fact, the dividend has been unchanged for many years."
  Previously Lord Cato said this:
  "I do not think that the increase in the reserves would have affected the dividend in the future. Our object would have been service, as I have indicated a few minutes ago, and we would have reduced our charges for any service or we might have done a great many other things so as not to increase our earnings in any unreasonable manner."
  I think that it is clear that the whole case of the Government for keeping down compensation to the level of the dividend customarily paid is based on that idea that there would have been no distribution by the Bank out of any accumulated surplus, but it would have been retained for strengthening the reserves and for improving the public services which it rendered. That being so, I think that it is quite unjustifiable that the Treasury should desire now in the terms of this Bill to have a right to extract more from the Bank than the Bank would have paid to the stockholders if it had continued under private enterprise.
  Lieut.-Colonel Nigel Birch (Flint):I would like to refer shortly to the question of non-disclosure. I am not criticizing
  948
  the terms of compensation. I am convinced by the graph which we had on the report of the Select Committee, and I am glad to see that the Chancellor of the Exchequer has learnt from the hon. Member for Bath (Mr. Pitman) the value of graphs. The real point is that we ought to know what we are buying. I do not belong to Lord Rothschild's party, and so I think it is permissible to say a word of implied criticism of a noble banker. In his evidence, Lord Catto defended the non-disclosure for two reasons. The first was that it was customary to tell white lies when you were having amalgamation between banks—and, no doubt, black lies when having amalgamations between bucket shops. The second point was that it would not be in the national interest, because some people might think the reserves too high, and some might think them too low. Presumably the security of the Bank is the same as the Consolidated Fund, because, if not, there is no point in this Measure at all. That being so, the argument falls to the ground as another £50,000,000 or £100,000,000 of reserves really does not make any difference at all. I think that we ought to have some answer to this, and that the principle should be laid down that the State does not acquire anything without giving some idea of what it is acquiring.
  Sir F. Sanderson:There is one point which I should like to raise. Clause 1 (4) provides for £873,000 being paid by the Bank of England to the Treasury half yearly in lieu of dividends. Can the Chancellor of the Exchequer inform me how this sum will be disposed of? Do I take it that the amount will be deducted from the profits earned by the Bank during that particular half year and the balance carried forward, as customary: and can he inform the House whether the profit and loss account of the Bank of England will in future be laid before Parliament?
  Mr. Howard:I would like to say one word about this question of the half annual or annual payment by the Bank to the Treasury under Clause 4. I would ask whether it should be a fixed sum or whether there should be a rise or fall. My own suspicion, and I am sure that of other hon. Members on this matter, is that the reason for these words put in the Clause is just the usual Treasury

  949
  caution, when entering into a bargain either to pay or receive anything. They usually like to have it both ways. I mention this because counsel for the promoters in the Select Committee used words which made it very clear—I will not read them to the Chancellor of the Exchequer because he must be well aware of them—that it was in fact the intention of the Government to arrange a fixed payment which would not vary from year to year. It seems to me that is very desirable. The point has already been made that one of the objects of the Bill is to remove any idea of profit and to give the idea of service. Therefore, if there is any greater profit available for distribution, it clearly should go to reducing the charge of services or improving the conditions of the people who provide those services.
  Logically it would be quite reasonable for the Chancellor to remove all the last words of the Clause. In practice, I do not think there is any danger of the right hon. Gentleman being advised by the Treasury to accept less than the amount stated in the Bill. There is, on the other hand, a very real danger of the Chancellor in his other capacity, as the Minister responsible for safeguarding the national revenue, finding it a very convenient means of getting a considerable sum, because nobody knows what the profits of the Bank are, and we all hope that as a result of this Measure they will be enormously increased. But we want them to be used for improving the services supplied by the Bank to the whole of the community, not for the benefit of the Treasury.
  4.15 p.m.
  May I, as an illustration, quote what happened in the case of another service, the Post Office telephones? The telephone service provided by the Post Office is a public service. The hon. Member for Chesterfield (Mr. Benson) will remember that in evidence given before the Committee on Public Accounts earlier this year, it was disclosed that the surplus amounted to £37 million, of which £32 million was the direct result of what was admitted to be, in fact, taxation, so that the users of the telephones are paying over £30 million in taxation. The idea clearly was that that should be a service. There are reasons, perhaps, why the actual service that we have been receiv-
  950
  ing is not as good as it was. I doubt whether the Postmaster-General would contend that those who pay rents for telephones, have been receiving the same service as that to which they were accustomed previously. It is wrong that public Departments which exist to give public services, should be regarded by the Chancellor as a source of revenue. There may be exceptions. The Post Office is a less unfortunate exception than the case we are discussing would be, because the only people who suffer in the case of the telephone service, are the actual users or renters of telephones. In the case of this Bill, if the costs of services rendered by the Bank through the financial community to the whole population are greater than they need be the whole population will suffer. That is the fair argument. I will not stress it any more. I have no doubt that the Chancellor will be able to explain or will agree to amend the Clause on the Report stage.
  Captain Crookshank: This is a vital Clause in the Bill. It deals with compensation. [Laughter.] It is vital both to the existing holders and to the State, in which we are all taxpayers, and we all speak for our share of the representation of the country in this Committee. I cannot imagine that anyone can take exception to that statement. In the discussion on the last Amendment the right hon. Gentleman said this was generous compensation. I do not know why he should have taken that view today, because that is not the view he took on the Second Reading. What he said then was that the terms of the transfer of the Bank's stock or what were commonly called "the terms of compensation" were, in his view, on the one hand, fair to the shareholders, and, on the other hand, undoubtedly, a good bargain for the State. To speak of generous compensation is putting rather a gloss on that statement. As a matter of fact, there are some very interesting observations in the evidence of Lord Catto to the Select Committee on this very point. He referred to this particular statement of the Chancellor—he was good enough to say he did not remember now who made it. He said that there was some confusion, by reason of an expression used in the House of Commons that this was a good bargain for the Government, and he pointed out that in his view a good bargain did not mean

  951
  a bad bargain for the other side and said —that in his opinion the price stated in the Bill was a fair and reasonable price for both sides. I hope that the word "generous" will now fade out of the picture.
  My hon. Friends have reason to be slightly disappointed at the fact that nothing has been said about the reserves. Hon. Members who are interested in this matter will have read and I, as a Member of the Select Committee heard, the evidence given on the general problem of disclosing reserves in cases such as this. My hon. and gallant Friend who spoke earlier expressed the view that we ought to know what we are buying. The State should know what it is acquiring. The difficulty here is probably rather that the State, as personified by the Chancellor, knows perfectly well and that the rest of us do not know. If the right hon. Gentleman will not disclose it, as indeed the Governor was not prepared to disclose it to the Select Committee, I am not clear that we can do anything about it. There is no other means of finding out. If the Bank will not tell us, and the Chancellor will not tell us, we can merely register such disapproval as we feel in the matter, and realise that figures are available to the Chancellor and his advisers upon which they have been able to form a judgment and which cause him to consider that this is fair to the shareholders and a good bargain for the State. We are not in a position to judge that point. Therefore, I suppose, as in many matters of this kind, we have to accept the word of the Government that they think it right.
  I am in agreement with my hon. Friend the Member for Sutton Coldfield (Sir J. Mellor) and my hon. Friend the Member for St. George's (Mr. Howard) on the words which we had hoped to delete if the Amendment had been called, as to why in certain circumstances there should be, in lieu of any dividend payments to the Treasury by the Bank, such sums "less or greater" than the 873,180 referred to in Clause 1 (4). If my hon. Friend is right in thinking that the words ".… or such less or greater sum …" is just a reference to a balancing figure, there may be no great harm in it. If it means that there is to be an attempt to secure agreement to the payment of greater sums than that specified from the Bank to the Treasury, there is some risk
  952
  that the very services to the public rendered by the Bank—and it is claimed that this is one of the objects of the Bill— should be reduced for the benefit of the Treasury, that is, the taxpayers. My hon. Friend pointed out that there had been other examples of that sort of thing in the past.
  In our view, it would have been much better if the words "or greater" did not figure in this Clause. This possibility of varying sums being paid, might lead to a conflict of opinion and disputes between the Bank and the Treasury on what should be paid to the Treasury. I can imagine circumstances in which the Bank thought they should be able to hold more out of their annual profits than the Treasury thought fit, either to extend their services, or for some other purpose—it might even be to add to their reserves. It would be undesirable on the face of it that there should be disputes and trouble between these two great authorities on such a subject as that. It looks to us as though it would have been wiser to have fixed a sum neither greater nor less than that prescribed in Clause 1 (4). I hope, therefore, that the right hon. Gentleman will tell us quite frankly what he has in mind by putting these words into the Clause.
  For the rest, my hon. Friends, as they have already pointed out, are disappointed and aggrieved that the right hon. Gentleman so far—unless, of course, he is going to make some disclosure now—has not felt himself in a position to explain exactly what it is the State is taking over from the Bank through this Bill. So far as the whole compensation Clause is concerned, I hope that the right hon. Gentleman will realise that he has, up to now, defended the Bill on the basis of its being fair to the shareholders and good for the State and that he will not try to state that it is generous compensation in either direction.
  Lieut.-Colonel Dower: If the Chancellor is not going to inform us what are the reserves, will he say why he will not tell us, because after nationalisation the whole of the credit of the country will be behind a nationalised Bank of England and I cannot see that such information could possibly do any harm?
  Mr. Dalton:That is the hon. and gallant Member's opinion. It is not the

  953
  opinion of one whose opinion on this point I value a good deal more highly—the Governor of the Bank who said in the clearest terms:
  " I would consider that any disclosure of those inner reserves would be greatly against the national interest.. …
  Lieut.-Colonel Dower: Why?
  Mr. Dalton:The place to ask "Why?" was in the Select Committee, when that witness was in the witness chair. I say, quite frankly, that had I been called, as it seemed I might have been called, before the Select Committee, I should have rested my refusal to disclose the reserves simply on the judgment of the Governor of the Bank of England, who, in my opinion, is in a better position to judge than anybody else, since he has had control of these matters, and is in a position to assess the effect which would be produced at home and abroad by any unwise disclosure. That seems good enough to me. I am not going to disclose them now for that simple and sufficient reason. I will repeat what I said before: I do not say that I know nothing whatever about this subject myself, but I will say that, in the light of what I know, though I am not prepared to disclose it publicly, this is a good bargain for the State. I said that before; I say it again. That should assure every patriotic person who would attach any credence to my word.
  On the other matter which arises on this Clause, the question of the amount paid from the Bank to the Treasury under the new conditions, the position is very simple. It was the hon. Member for Ealing (Sir F. Sanderson) who asked how these sums would be disposed of. The Bank has hitherto paid the same amount regularly for the past 23 years, every half-year, as dividend on the stock. This same sum will continue to be paid, subject to the greater or less provision, with which I will deal in a moment, every half year, no longer to the shareholders but to His Majesty's Treasury. It will go into the general revenues of the country —it will not be ear-marked in any way—just like any other receipt from taxation, or any other source of public income. It will go into the general revenues and will be liable to be used for any purpose of public expenditure.
  But, of course, it does happen to be equal to the additional annual charge on the national debt that will be created
  954
  through the creation of this new stock and, therefore, if one likes to make a notional equation, or a notional balance, between the two, that is quite legitimate so long as one does not imagine that this sum is followed through the Treasury and out to the payment of the holders of stock. The interest charged on that increment in the national debt is equal to the amount paid by the Bank to the Treasury in lieu of the dividend.
  4.30 p.m.
  Coming to the question of "greater or less," it is to some extent the case, as the hon. Member for St. George's (Mr. Howard) suggested, that this is a flexibility provision. We want to have the possibility of variations. We are legislating for the long future. I do not know when it will again be necessary to pass a Bill relating to the Bank of England; it may be a very long time. We think this will operate very well and beneficially to the national interest and it will be just as well to be able to vary it one way or another so that if it seems in the national interest, both to the Treasury and, to the Bank of England either to raise or lower the amount, it can be done. I think it is a wise precaution to put in this degree of flexibility, but I hasten to add that I have no present intention of suggesting a variation. I have no reason to think that the Bank of England has any reason to suggest a variation but if it seemed to both the parties reasonable to alter it, it would be a pity if they were prevented from doing so by rigidity in the Statute.
  It is also perhaps just worth mentioning, since the hon. Member asked the question, that paragraph 14 of the First Schedule to the Bill makes it clear that the Bank will be entitled to deduct this payment from their profits. In regard to the question of a profit and loss account, it would be premature to consider this before the Bill has gone through. But when it has I will discuss with the Governor of the Bank of England what would be the most useful form for the laying of an annual Report which could, of course, be discussed in the House, on the operations of the Bank, and what would be the most convenient form that that should take. My approach to that would be that we desire to give the maximum of information about the operation of the Bank under the new conditions which will be consistent with the public interest and

  955
  the reasonable requirement of discretion, and even of secrecy, on which point I would be disposed to be guided very much on what the Governor himself and the Bank thought. Subject to that, we would be prepared to lay a Report in Parliament, but its exact form I would not like to indicate at this stage.
  Sir F. Sanderson:I am very gratified with the latter part of the reply.
  Mr. Marlowe:The latter part of the reply may have been gratifying, but I want to register my protest against the continued refusal to disclose what the Government are acquiring. We are told by the Chancellor that he is not giving the information for two reasons, and the first is that Lord Catto would not give it. Of course, that is not a reason at all; it does not give any rational grounds on which we can act, and, in any event, Lord Catto is being made into the Chancellor's alter ego and he is to become a State servant. I do not think that be cause Lord Catto said that it was not a good thing, we should be bound by that. The Chancellor has told us we are getting a good bargain and that we ought to be satisfied with that. What is, and what is not, a good bargain, is always a matter of opinion, and our opinion might be different from that of the Chancellor. It is generally assumed that the public are acquiring some reserves of a considerable value, but I do not know. For all I know, we might be taking considerable liabilities—
  The Chairman:We have gone into that matter very fully, and it was before the Select Committee.
  Mr. Marlowe: I was not on the Select Committee and if you, Major Milner, would allow me to continue my observations, this seems to be a matter of very considerable importance, because here there is a question of precedent. How do we know what is going to happen in the future, when the Government buy the railways, coal mines, or gas works? Are we to be told what we are getting or not? Is the Chancellor going to adopt this line and the Executive to set themselves above Parliament? The Executive are retaining for themselves some knowledge they are not prepared to disclose to Parliament. That does not surprise me; it is true National Socialism. For all
  956
  we know this may be "The People's Car" all over again. How do we know? I do ask the Chancellor of the Exchequer to think this over and realise that the public are being asked to pay for this. They will bear the cost, and are entitled to know what they are going to get for it.
  Captain Blackburn: I desire to say only a few words on this subject. It seems to me that the amount of the reserves is largely irrelevant, because the dividend will be fixed and unalterable—[Hon. Members: "No."]—it has, in effect, been fixed in practice for many years. It is a rather remarkable thing that hon. Members opposite should ask the Chancellor of the Exchequer to disclose reserves, which big business men are never themselves prepared to disclose to their own shareholders, and which the governors of the Bank of England have never been prepared to disclose to their own stockholders.
  Lieut.-Colonel Dower:The hon. and gallant Member is missing a relevant point. The Bank of England is to be nationalised, and the whole of the finances of Britain will be behind the Bank of England, and it will be.a question of national policy. Disclosure could be made easily, whereas in the case of a private firm, there would be competitors and they would be giving secrets away in competition.
  The Chairman:The hon. and gallant Gentleman cannot make his speech again.
  Captain Blackburn:I will bring my remarks to an end as quickly as possible. I seems to me that there is a perfect analogy here. In the past there have been directors from the party opposite—
  Mr. Marlowe Mr. Marlowe rose —
  Captain Blackburn: I understand that the Chairman is anxious that I should bring my remarks to an end.
  Mr. Marlowe:The only point I want to put is that, hitherto, I have not been a stockholder in the Bank of England and have not been entitled to demand it, but now I understand I am to become one, and I want the information.
  Captain Blackburn:It happens that my father was a stockholder, and on one

  957
  occasion I said I would like to find out about this because I was interested in the Royal Mail Steam Packet Company and other companies, but, in fact, the reserves were not disclosed. Some of us are a little worried that there is a sort of hangover from wartime secrecy, which is perfectly understandable. I hope that, generally, the Chancellor will accept it as a principle, that if the Government decide to withhold information they should give the reason why they desire to withhold it.
  Lieut.-Commander Gurney Braithwaite:Before we part with this Clause I would like to put to the Chancellor a question suggested to me by the hon. and gallant Member for King's Norton (Captain Blackburn)—whom I would like to congratulate on a commendable attempt to get his stripes back, after his conduct on Thursday. The Chancellor quoted the evidence given by Lord Catto, before the Select Committee—a Governor who appears to enjoy the confidence of the Socialist Party to a considerably greater extent than did his predecessor, presumably because he is engaged in making the necessary transfer, and who declared himself against disclosing the reserves. What I want to put before the Chancellor of the Exchequer is whether that objection is based on the fact that, until the Bank of England becomes the property of the State, it is still a private firm. Once the transfer has been made and the Bank of England becomes the property of the nation will the right hon. Gentleman be able to disclose the figures?
  Sir J. MellorI must say I think the Chancellor of the Exchequer is being very inconsistent. On the one hand he is refusing to disclose the extent of assets, and on the other he is wishing to reserve the right of the Treasury to take something greater by way of income from the Bank than is required to pay the interest on the stock. If on the one hand we look upon the Bank as a State institution I think we consider that the credit of the Bank can be neither higher nor lower than that of the State itself; and if that is the case what possible objection can there be to disclosing the extent of the assets?
  The Chairman: I cannot allow the hon. Member to go into that again. Repetition is not admissible.
  Sir J. Mellor: I am not pursuing that point.
  The Chairman: It has already been covered by the hon. Member himself.
  Sir J. Mellor: I am only drawing attention to the inconsistency of the stand the Chancellor has taken and the other aspect, of his desiring to be able to take more out of the Bank than has been customarily taken out of the Bank by the Bank of England stockholders in the past. If he looks upon the Bank as part of the State, that is one thing, but, if it is to be preserved as a separate entity, then, surely, the Chancellor ought not to demand the right to take out more from the Bank than the stockholders have done in the past.
  Mr. I. J. Pitman,: May I take the opportunity of asking the Chancellor to give us two assurances, one of which he might wish to give us, and about the other I am less sanguine. The first is that in this matter of "greater or less," he will make a disclosure of what the distribution by the Bank is to the Treasury? It seems to me that just as the ordinary company discloses what its distribution is, so the Bank of England, with its one sole proprietor, should disclose to the world, for the benefit of depositors and others, what it is, and it seems to me that in the Charter of the Bank, the right hon. Gentleman should undertake that the information will be given.
  Mr. Dalton: I do not know whether 1 have correctly understood the question. The distribution to the shareholder is, of course, known now, and has been, invariable for a generation. The distribution, if that term is still used, which will be made to the Government as. the sole stockholder, will be the same except that it may be varied under the "greater or less" provision. If it is varied under the "greater or less" provision, that, of course, will be made public. It will appear in the Public Accounts as an item of revenue.
  4.45 P.m.
  Mr. Pitman:The other point about which I am not quite certain is this. Would the right hon. Gentleman give to the Committee an undertaking that the Bank will not be used as a means of indirect taxation, as the hon. Member for the St. George's Division of Westminster (Mr. Howard) has said, like the Post Office and the B.B.C.? The Chancellor indicated dissent. I was rather afraid that he might give no assurance.
  Mr. Howard:May I press the Chancellor on this question of the flexibility of the "greater or less" Clause, for two reasons? One is that in presenting his case, the counsel for the Government did state in specific terms before the Select Committee that the annual amount paid would be the same. There was no suggestion in his statement to the Select Committee of any rise or fall. The other point is this. I did not know it was in Order to refer to the First Schedule, but as the Chancellor did refer to it, I take it that it is in Order for a humble back bench Member to do the same. As I read paragraph 13 of the First Schedule, it is a direction that these sums are to be applied by the Treasury for the purpose of paying interest on the loan, which they are creating for the purchase of the stock. Therefore, there is a definite indication that this money is to be applied for a specific purpose, which would seem to suggest that it is illogical to have in another part of the Bill a rise and fall Clause.
  Question put, and agreed to.
  Clause ordered to stand part of the Bill.
  Clause 2.—(Court of directors of the Bank.)
  Motion made, and Question proposed, "That the Clause stand part of the Bill."
  Captain Crookshank: Perhaps the Chancellor would be good enough to say something about the directorate of the Bank as it will be after the Bill becomes law. The Clause reduces the existing number of directors from 24 to 16, and it was understood from the evidence given that it had been the intention to make some reduction—whether or not exactly as great as this I do not know—on an appropriate occasion. Owing to the fact that the Bank works under a Charter, and charters are not very often amendable, this was left to an appropriate occasion. There seems to be no reason to take exception to that, if it was the view of the Bank, running its own business as a private institution, that the directorate was too large. We would be interested to know whether, in fact, the existing Court of Directors will be re-appointed when the change takes place, whether there are to be any changes, if the Chancellor is in a position to tell us anything about the kind of principles which would
  960
  actuate him in the submissions which he will make to His Majesty with regard to the new Court, and whether the House of Commons at any stage will have any opportunity of expressing a view, or whether the right hon. Gentleman will undertake specifically to inform us of what is about to happen or what has just happened.
  At present, of course, the existing proprietors have some say in the appointments in the Court of Directors. The present proprietors pass out of the picture, and the nation as represented in this House, takes their place. Will the House have any say or inherit any of the privileges in that direction which the existing proprietors have? I imagine that, at some stage, this will be—it must be—open to question in this House, and perhaps the Chancellor will be good enough to let us know what the Government have in mind in this respect. There are, of course, opportunities for discussing and debating these matters, but it may not always be a particularly suitable way of dealing with this problem any more than it is in respect of the many other appointments which are made by various Government Departments. Those are the questions which I want to put to the Chancellor if he feels able to reply; first what he is going to do about the existing Court of Directors; and secondly, what sort of appointments does he think, while he is in his present office, are likely to be made? Will they be representative appointments, will they be entirely on his own advice, or will he consult others, and so forth? Finally, I would like to know whether the House will have any opportunity of expressing any opinion and of asking questions, or, if necessary, having a discussion on the subject.
  Sir F. Sanderson: There is one point I would like to raise with regard to the Court of Directors. Is any provision being made for the retirement of any members of the Court of Directors? Will a number automatically retire each year, or is it entirely in the hands of the Treasury to determine how long each member of the Court of Directors should continue to function?
  Mr. Dalton:I am very glad to make a reply to these very reasonable questions. I did deal briefly with the point when I moved the Second Reading of the Bill,

  961
  and I will refer in a moment to what I said then. With regard to the size of the Court, it is the case, as was said by Lord Catto in his evidence before the Select Committee, that it had been the view of the Bank itself for some time that 24 was rather a large number in addition to the Governor and the Deputy—26 in all. As Lord Catto informed the Select Committee, and as he informed me later, the Bank welcomed an opportunity of a reduction being made in the number of members. I do not sec any reason why this should not be said frankly to the Committee. When I began to study this matter, I thought that possibly 12 would be sufficient—12 plus the Governor and the Deputy—but, having discussed the matter with Lord Catto and others, it seemed that on the whole 16 would be about the right number; it would be less than exists now, but rather more than I, myself, originally had in mind. With a view to keeping the various Committees properly manned, it appeared that 16, together with the Governor and the Deputy Governor, was about right.
  With regard to retirements, it is clearly laid down in the Second Schedule—and I think I indicated in my Second Reading Speech—that the retirements will be, to use a common expression, staggered. That is to say each year a certain number will fall due for retirement and when the scheme gets into working order there will be a regular four-yearly rotation; that is to say each of the 16 individual members of the Court other than the Governor and Deputy of whom I will speak in a moment, will be appointed for four years, and they will be in four groups of four, so that, each year, four will retire, and will be eligible for re-appointment. I do not want to make the thing too rigid, but I indicated that, generally speaking, it would not be the intention of the Government to appoint for the first time or to re-appoint any person who had passed the age of 66; that is to say, 70 would, in fact, be the retiring age. That will not be too rigid—there may be exceptional cases —but, broadly speaking, we would not make the appointments so that members of the Court would be over 70 years of age at any time.
  With regard to the initial stage, 16 directors will have to be appointed initially by His Majesty when the Bill passes into law; and those 16, as is shown in the
  962
  Second Schedule to the Bill, will be appointed by His Majesty, in the first instance, in such a way that four of them will be appointed for one year only, four for two years, four for three years and four for four years. At the end of the first year, four will be eligible to retire and for re-appointment. They will be eligible, but not necessarily entitled to re-appointment. The Governor and the Deputy Governor will each be appointed for a term of five years, although the present Governor has indicated that he would not wish to continue for a longer period than would be required to get the new arrangement working smoothly, for the reason that he has expressed—and it is a pity that more old men do not express it more often—that it is time younger men were brought in.
  Captain Crookshank: He is not an old man.
  Mr. Dalton: "Older" and "younger" are relative terms. I welcome that as a general approach to these matters, and 1 hope that as we all grow older, we shall remember this good example in business as well as in politics. The Cohen Committee drew attention to the deplorable longevity of directors in private enterprise, and urged that they should retire earlier. The Governor and Deputy-Governor are appointed for five years and are again eligible for re-appointment. As to the mode of appointment, and the extent of public information and discussion, here we shall follow the practice adopted in other cases of public boards of various kinds, for the appointment to be made by His Majesty. We were anxious, as I explained to the House, to give a rather better status to these appointments than they now have. We thought it might be a more dignified position if they were appointed by the Crown, rather than selected by the somewhat curious system which now prevails, and His Majesty will be consulted regarding these appointments. It is not intended that the House shall have an opportunity of discussing them before they are made. That would be a very unwelcome innovation. On the other hand, of course, the House can discuss them after they are made. Questions can be raised about them, but what will happen will be—and, of course, there will be no secret about who is appointed—that an announcement will be made that "His Majesty has been pleased to appoint "—

  963
  and then will follow the names of 16 persons. It will then be open for the matter to be raised in Parliament.
  It may be suggested that this or that is not right. I hope it will not be; I hope the appointments will command general approval. Before I myself reached a final view on the question of personnel, I should think it my duty, as Ministers commonly do in these matters, to consult with people who would have valuable opinions to offer, and I would be guided by such opinions. What I did say in the House during the Second Reading Debate was that we hoped to be able constantly to reinforce old experience with new blood, and that I do hope we shall be able to do. I hope that, with the gradual rotation of retirements, we shall aim at bringing in new people, often younger people, who will have a useful contribution to make. At the same time, it would be a very great mistake if I made—and it is not within my contemplation to make —anything approaching a clean sweep of existing people. A certain number should, obviously, continue because of their valuable experience, although, equally, there should be some new faces from the outside. As to who they should be, I went on to say in the Second Reading Debate:
  " I wish to make it clear that it is not intended that there should be representation of any sectional interest whatever on the Court. No one will be entitled to say, ' I speak on behalf of this, that or the other section" of the community.' We shall advise His Majesty to place upon the Court persons of suitable and varied "—
  and I emphasised "varied "—
  " ability and knowledge, and we shall seek in particular so to compose the Court as adequately to reflect industrial as well as financial experience."—[Official Report, 29th October, 1945; Vol. 415, c. 51.]
  5.0 p.m.
  I do not think at this stage I can usefully go further, but I attach importance to the last phrase of what I then said. This tendency has shown itself for a number of years in a gradual change in the composition of the Court. At one time it was almost a monopoly of the merchant bankers, and that was obviously a great mistake. Hardly anybody got a place on the Court unless he was in an inner ring of merchant bankers in the City. I will not go into the mistakes of the past, because some of them, no doubt, were due to the fact that this Court was
  964
  composed in that much too narrow fashion. More recently the tendency has been to bring on to the Court people representing a variety of industrial knowledge. That has been wholly to the good, and it is that which we shall seek to continue. It would not be reasonable that I should go into further detail. I can only hope that when the names are announced they will command fairly general approval.
  Captain Crookshank: Can the Chancellor say anything about the salaries? Will they be left entirely to the Bank or will the Treasury come into the matter?
  Mr. Dalton: We shall leave that matter to the Bank, but no doubt the Bank will consult us. It will not be subject to Treasury rule in the sense that Civil Service salaries are.
  Mr. Howard: Is the Chancellor of the Exchequer prepared to say anything about full-time directors? I understand that it is intended to continue that practice. There is a good deal to be said, in view of the key position such directors will hold, for their being appointed by the Government or the Chancellor of the Exchequer, but on the other hand, having regard to the function they will have to carry out, there is a good deal to be said for their appointment being left to the Court after appointment. Can we have some information on the matter?
  Mr. Dalton: Yes, Sir. The matter is mentioned in the Second Schedule. The intention is that, of the 16 members of the Court, in addition to the Governor and the Deputy Governor, not more than four directors should be full-time directors. That, in fact, continues the present arrangement. At present, the Governor and his Deputy are full-time, and so are four out of the 24 directors. The intention is that this number, out of the smaller Court, shall be continued under the new regime. As to who they shall be, I would prefer not; to make that point too precise and exact. I should like to leave all these arrangements to a co-operative working between the directorate and the Treasury by way of interchange of views. It is not envisaged that His Majesty will be advised to put as it were an asterisk against four names and say, "These are the full-time directors." We shall advise His Majesty to appoint 16 persons to be directors. No doubt we shall have a

  965
  pretty shrewd idea, after consultation with the Bank, which of those persons will be continued in their functions as executive directors or, if they are not at present executive directors, should become so.
  Captain Crookshank: Does the Chancellor of the Exchequer mean that the Treasury will specify the full-time directors, or does he mean that the matter will be left to the Court when it is constituted? Is that it?
  Mr. Dalton: The right hon. and gallant Gentleman is asking questions to which it is just as well that I should not give too pedantic, precise and binding an answer. I have said that when His Majesty is asked to appoint 16 persons as directors it will not be indicated by any asterisk or mark in the announcement or appointment that any one lather than any other of those gentlemen will be full-time, executive directors; but it is laid down in the Schedule that not more than four shall be so appointed. I expect there will be friendly discussion between myself and the Governor, and that the matter will be decided in the light of that discussion. It will be a mistake to press this thing to too precise and sharp a point.
  Captain Crookshank: The right hon. Gentleman will find that we shall think this matter over. The point has not been raised before. We are moving into an entirely new field, and it might be that some of my hon. Friends would like to put down Amendments at a later stage. The Chancellor would not take exception to that?
  Mr. Dalton: No.
  Question put, and agreed to.
  Clause ordered to stand part of the Bill.
  CLAUSE 3.—(Consequential provisions as to constitution and powers of the Bank.)
  The Financial Secretary to the Treasury (Mr. Glenvil Hall):I beg to move, in page 2, line 34, after "revoke," insert:
  " all or any of the provisions of."
  The original Charter, dated 1694, laid down certain Regulations and provisions. The supplementary Charter of 1892 followed, and there have been other changes dealing with the Constitution of the Bank of England. It was thought when this Clause was drafted, that it would be a cleaner and better job to revoke the whole of those Charters, but in going through
  966
  them, and in the elaboration of the new Charter, it has been found that certain of the provisions are of such a character that it would be well to retain them. Because of that desire we now seek the approval of the Committee to this drafting Amendment.
  Captain Crookshank:I do not quite understand this proposal. We were told quite definitely by the Chancellor's Counsel in the Select Committee that the Government's intention was that a new Charter should be granted. He stated:
  "It is intended that as soon as this Act becomes effective, a new Charter with more up-to-date provisions should be granted by the Crown to the Bank."
  The Chancellor then went on to say various things about that new Charter. I now understand from the Amendment which the hon. Gentleman has just moved, that that is not the intention. There are to be bits and pieces of the existing Charter revoked, and the Bank will be acting under an incomplete document. Instead of having one brand-new Charter, the existing Charter will be modified and altered. Some parts will be revoked and some parts will be unrevoked. Is that the intention? If so, it seems a most peculiar way of doing things. Surely it would be simpler to have a new Charter —or is the explanation that it takes so long to make a new Charter that these are temporary provisions with a view to having a proper Charter later?
  Mr. Hall:The short answer is that we must keep so much of the original Charter going in order to keep the Bank incorporated. That was the intention of the Bill as drafted. Now it has been found that it may well be that other parts of the original Charter and subsequent enactments ought to be kept, such as provisions relating to the common seal, the holding of land, the constitution of the capital stock, and matters of that kind. In order, therefore, to give the Treasury sufficient elbow room, it is felt that this Amendment should be made, to allow, if necessary, further provisions relative to these matters to be kept going, as well as the original provision dealing with the incorporation of the Bank. That is all that these Amendments mean, no more and no less.
  Captain Crookshank: I quite understand that, but I cannot see why they should not be collected together and put

  967
  into a new Charter. There need be no gap, because there has to be an appointed day'. Therefore, there is plenty of time. Contrary to the Government's previous intention, the Bill is not to become an Act until next year. The Government have all January in which to spend their time drawing up a new Charter so as to be ready for the appointed day. It is extremely slovenly to have bits and pieces of various Charters governing various functions of the Bank. Surely the proper thing to do is to have a new Charter, and to have it signed and sealed, and ready to come into effect on the appointed day. Up to the appointed day, the existing Charter would carry on the validity for all that was done.
  Mr. Hall:I appreciate what the right hon. and gallant Gentleman has said, but our advisers are of the opinion that in order to get continuity it will be as well to put these provisions into the new Charter. If they cover some of the same matters, all well and good. It is essential, in order to keep the peculiar and particular Constitution of the Bank going, that we should word the Clause in this way. We hope, therefore, that the Committee will accept the Amendment. There is no sinister design behind it at all.
  Mr. Stanley: There is still going to be a new Charter?
  Mr. Hall: Yes, indeed. It is now being drafted, and it will come into operation on the appointed day.
  Mr. Stanley:If it comes into operation on the appointed day, what possible reason can there be for the Amendment? It is not till the appointed day that any change is made at all and if there is to be a new Charter on the appointed day what is the reason for putting forward the Amendment?
  Mr. Hall: It might be that the Charter will not come into operation on the appointed day. When the appointed day comes, although it appears to be the operative day for the Charter to be brought into operation, we have to keep continuity in this matter. There are certain provisions in the original Charter which we wish to perpetuate and carry
  Mr. Howard:Will the Financial Secretary explain the position under the new Charter which is to come into operation? If it comes into operation, will all the existing old Charters be wholly revoked? I am a very simple soul and find it very difficult that from time to time in this financial legislation one has to refer back. It appears that here is another case where we might clean up and have a fairly clear situation, but the proposal of the Financial Secretary would merely make it more complicated. Frankly, it suggests to my mind that the Treasury, for some reason, definitely attempt to make these things complicated. Can the Minister say whether, if and when the new Charter comes into being, all the existing Charters will be wholly revoked?
  Mr. Hall:here is a list of enactments to be repealed. The hon. Member will notice that in some instances the whole of the enactment is being repealed and in others only parts. Therefore, to that extent the provisions of previous enactments will be kept in being.
  Mr. Ralph Assheton: Is not the only possible explanation that the Charter will not be ready for the appointed day? On the other hand, the Financial Secretary said that it would be ready on the appointed day. Perhaps he was in error on that point.
  Mr. Hall: No. The expectation is that it will be ready, but perhaps it will not, and in order to provide for every contingency this Amendment is put forward. I assure the Committee that we have nothing to hide in this matter and that although the explanation appears simple, it is the explanation.
  Mr. Howard: Will the Government not make an effort to consolidate?
  Amendment agreed to.
  Further Amendment made: In page 2, line 37, leave out "such," and insert:
  "so much of the said Charters as remains unrevoked and such other."—[Mr. Glenvil Hall.]
  The following Amendment stood on the Order Paper, in the name of Lieut.-Commander Braithwaite: In page 2, line 38, leave out "charters," and insert "statutory instruments."
  Lieut.-Commander Braithwaite:May I suggest that it would be for the con-

  969
  venience of the Committee if this Amendment and the two following Amendments were discussed together?
  The Deputy-Chairman (Mr. Hubert Beaumont): I should have informed the Committee that the first Amendment has not been selected, but the other two can be taken together.
  Lieut.-Commander Braithwaite: They really hang together.
  The Deputy-Chairman:A Charter is not a statutory instrument, and, therefore, the Amendment does not make sense.
  Mr. Stanley: The Amendment is to leave out "charters" and insert "statutory instruments." It is just because they are not the same that we have put down the Amendment. To say that you, Mr. Deputy-Chairman, are not selecting it, but that we may discuss the next two consequential Amendments, does not seem to me to put the discussion in Order.
  The Deputy-Chairman:The Chairman has decided not to select the first, but the other two have been selected.
  Mr. Stanley: Of course, I cannot argue against the Chairman's Ruling, but I would ask most respectfully whether you do not realise, Mr. Beaumont, that the effect of the decision is that the executive Amendment has not been selected while the two consequential Amendments which, without the first one, make nonsense, have been selected.
  The Deputy-Chairman:It has already been decided that the first one cannot be selected. The hon. and gallant Gentleman need not proceed with the other two, unless he wishes to.
  Lieutenant-Commander Braithwaite: I beg to move, in page 2, line 38, leave out "His Majesty," and insert "Order in Council."
  The second Amendment which has been selected is in page 2, line 39, at the end, to insert the words on the Order Paper. I will do my best to convince the Government that it might be more workable and wise if on Report we could include something in the nature of the words of the first Amendment. Very briefly, my point is this. The present text of the Bill provides that the Bank shall be constituted
  970
  and regulated by Royal Charter. Such procedure would do much to detract from the power of this House of Commons under the Constitution of the Bank, and it is, to put it mildly, a little unusual to constitute by Royal Charter what will, in fact, be a branch of the Executive Government. The Amendment I have moved, and the following one, which are consequential to the first, are very difficult to argue since the first has not been selected. The whole objective was to provide that the constitution and regulation of the Bank would be effected by Order in Council, subject to an affirmative Resolution of this House. It is an endeavour, as far as we can, to retain power in the House of Commons over this newly-constituted and nationalised Bank of England, to ensure that it should not be lifted entirely out of our purview, and that hon. Members should have opportunities of discussion, question and so on at the most frequent intervals. We submit that it is, in fact, a better machinery that we suggest in these Amendments, in substitution for the Royal Charter proposals.
  Mr. Mikardo: On a point of Order. Can you, Mr. Deputy-Chairman, kindly give a Ruling to the Committee as to whether it is, in fact, possible for charters to be given by Orders in Council, because, if not, the fact that the first of the three Amendments has not been selected makes it, if I may say so with respect, nonsense to discuss the second and third.
  Mr. Assheton:Possibly the Committee is in a little difficulty, and I wonder whether my hon. Friend the Financial Secretary would consider looking at this Amendment before we come to the Report stage. As put down by the Opposition, these three Amendments all run together, and the two which have been called do not really make sense without the first, to which they are consequential. In those circumstances the only way of getting out of our present difficulty is to ask the Government if they would be so good as to give us an opportunity of considering it again on the Report stage.
  Mr. Glenvil Hall: I could not, of course, give that assurance, because we should have to resist this Amendment, however it was phrased. I do not know why the original Amendment has been ruled out of Order—
  The Deputy-Chairman: Not ruled out of Order—just not selected.
  Mr. Hall: As I understand it, the words "statutory instruments" do not yet actually appear in an Act of Parliament as part of the law of the land. We are, therefore, somewhat in the dark as to what can be in the minds of the movers of these three Amendments which, quite frankly, do hang together, unless it is that they want the customary procedure to apply— that the Order or statutory instrument should be laid before the House and subjected to an affirmative or negative Resolution after 40 days. If that is what they have in mind, and if we are asked to consider that between now and Report Stage, I have to say that we cannot possibly give any promise of that kind, for the simple reason that this is a matter for the Bank to deal with. They will deal with these things in a sort of day-to-day procedure, and, therefore—
  Mr. Stanley:Is not the hon. Gentleman answering the wrong Amendment? We are talking about the Charter, a term which we want to change into statutory instrument. [Hon. Members: "No.] It is the consequential Amendments in which the Order in Council appears. Surely the hon. Gentleman is not asking that the Order in Council or Charter will be dealt with by the Bank as a day to day affair. Will it not be dealt with by the Government?
  Mr. BensonWhy is the right hon. Gentleman pressing his Amend-
  ment when we have already, in the earlier part of the Clause, accepted the word "charter"? If we change from "charter" in line 35 to "statutory instrument "in line 38, we shall make nonsense of the Clause. We should, in any case, have resisted the earlier Amendment.
  Mr. Stanley: May I point out to the hon. Gentleman that the part of the Clause which is already passed, where the word "charter" occurs, refers to revoking the Charter? We are supporting the revoking of the Charter and suggesting putting in its place a different kind of statutory instrument.
  Mr. Benson: The right hon. Gentleman is wrong. We have already agreed to revoke only such parts of the Charter as necessary—the Charter remains. Therefore, we cannot have a Charter and a statutory instrument in this Clause, we must have one or the other as the basis of the Bank. Hon. Gentlemen opposite can only withdraw the Amendment.
  The Deputy-Chairman: Does the hon. and gallant Gentleman withdraw the Amendment?
  Question put, "That the words ' His Majesty,' stand part of the Clause."
  The Committee divided: Ayes, 231; Noes, 89.

  Division No. 53.]

  AYES.

  [5.24 p.m

  Adams, Capt. Richard (Balham)

  Bowden, Flg.-Offr. H. W.

  Dalton, Rt. Hon. H.

  Adams, W. T. (Hammersmith, South)

  Bowles, F. G. (Nuneaton)

  Davies, Edward (Burslem)

  Adamson, Mrs. J. L.

  Braddock, Mrs. E. M. (L'p'l, Exch'ge)

  Davies, Ernest (Enfield)

  Allen, Scholefield (Crewe)

  Braddock, T. (Mitcham)

  Davies, R. J. (Westhoughton)

  Alpass, J. H.

  Brook, D. (Halifax)

  de Freitas, Geoffrey

  Anderson, F. (Whitehaven)

  Brooks, T. J. (Rothwell)

  Diamond, J.

  Attewell, H. C.

  Brown, George (Belper)

  Dobbie, W.

  Austin, H. L.

  Brown, T. J. (Ince)

  Dodds, N. N.

  Ayles, W. H.

  Buchanan, G.

  Douglas, F. C. R.

  Ayrton Gould, Mrs. B.

  Burden, T. W.

  Dumpleton, C. W.

  Bacon, Miss A.

  Burke, W. A.

  Dye, S.

  Baird, Capt. J.

  Byers, Lt.-Col. F.

  Edelman, M.

  Barnes, Rt. Hon. A. J,

  Callaghan, James

  Edwards, John (Blackburn)

  Barstow, P. G.

  Castle, Mrs. B. A.

  Evans, E. (Lowestoft)

  Barton, C.

  Chamberlain, R. A.

  Follick, M.

  Battley, J. R.

  Champion, A. J.

  Freeman, Maj. J. (Watford)

  Bechervaise, A. E.

  Cluse, W. S.

  Gaitskell, H. T. N.

  Belcher, J. W.

  Cocks, F. S

  George, Lady M. Lloyd (Anglesey)

  Benson, G.

  Collick, P.

  Gibbins, J.

  Berry, H.

  Collindridge, F.

  Glanville, J. E. (Consett)

  Beswick, Flt.-Lieut. F.

  Colman, Miss G. M.

  Goodrich, H. E.

  Binns, J.

  Cooper, Wing-Comdr. G.

  Gordon-Walker, P. C.

  Blackburn, Capt. A. R.

  Corlett, Dr. J.

  Grenfell, D. R

  Blenkinsop, Capt. A.

  Cove, W. G.

  Grey, C. F.

  Blyton, W. R.

  Crossman, R. H. S.

  Grierson, E.

  Boardman, H.

  Daggar, G.

  Guest, Dr. L. Haden

  Bottomley, A. G.

  Daines, P.

  Gunter, Capt. R. J.

  Guy, W. H

  Mathers, G.

  Smith, T. (Normanton)

  Haire, Flt.-Lieut. J. (Wycombe)

  Mayhew, C. P.

  Snow, Capt. J. W.

  Hall, W. G. (Colne Valley)

  Middleton, Mrs. L.

  Sorensen, R. W.

  Hamilton, Lieut.-Col. R.

  Mikardo, Ian

  Soskice, Maj. Sir F.

  Hannan, W. (Maryhill)

  Mitchison, Maj. G. R.

  Sparks, J. A.

  Hastings, Dr. Somerville

  Montague, F.

  Stamford, W.

  Haworth, J.

  Morgan, Dr. H. B.

  Steele, T.

  Henderson, J. (Ardwick)

  Morris, P. (Swansea, W.)

  Stephen, C.

  Herbison, Miss M.

  Morris, Hopkin (Carmarthen)

  Stewart, Capt. Michael (Fulham, E.)

  Hicks, G.

  Morrison, Rt. Hon. H. (Lewisham, E.)

  Stubbs, A. E.

  Hobson, C. R

  Mort, D. L.

  Summerskill, Dr. Edith

  Holman, P.

  Moyle, A.

  Swingler, Capt. S.

  Horabin, T. L.

  Murray, J. D.

  Symonds, Maj. A. L.

  House, G.

  Nayler, T. E.

  Taylor, H. B. (Mansfield)

  Hudson, J. H. (Ealing, W.)

  Neal, H. (Claycross)

  Taylor, R. J. (Morpeth)

  Hughes, Hector (Aberdeen, N.)

  Noel-Baker, Capt. F. E. (Brentford)

  Taylor, Dr. S. (Barnet)

  Hughes, Lt. H. D. (W'lverh'pton, W.)

  Noel-Buxton, Lady

  Thomas, Ivor (Keighley)

  Hynd, H. (Hackney, C.)

  O'Brien, T.

  Thomas, John R. (Dover)

  Hynd, J. B. (Attercliffe)

  Oldfield, W. H.

  Thorneycroft, H. (Manchester, C.)

  Irving, W. J.

  Paget, R. T.

  Tiffany, S.

  Jeger, Capt. G. (Winchester)

  Paling, Will T. (Dewsbury)

  Tolley, L.

  Jeger, Dr. S. W. (St. Pancras, S.E.)

  Pargiter, G. A.

  Vcrnon, Maj. W. F.

  Jones, D. T. (Hartlepools)

  Parkin, Fit.-Lieut. B. T.

  Viant, S. P.

  Jones, P. Asterley

  Paton, Mrs. F. (Rushcliffe)

  Walkden, E.

  Keenan, W.

  Peart, Capt. T. F.

  Wallace, G. D. (Chislehurst)

  Kenyon, C.

  Perrins, W.

  Warbey, W. N.

  Kinghorn, Sqn.-Ldr. E.

  Popplewell, E.

  Watkins, T. E.

  Kinley, J.

  Pritt, D. N.

  Webb, M. (Bradford, C.)

  Kirkwood, D.

  Proctor, W. T.

  Weitzman, D.

  Lang, G.

  Pryde, D. J.

  Wells, P. L. (Faversham)

  Lavers, S.

  Pursey, Cmdr. H.

  Wells, Maj. W. T. (Walsall)

  Lee, F. (Hulme)

  Randall, H. E.

  White, H. (Derbyshire, N.E.)

  Leonard, W.

  Ranger, J.

  Whiteley, Rt. Hon. W.

  Leslie, J. R.

  Rees-Williams, Lt.-Col. D. R.

  Wigs, Col. G. E. C.

  Levy, B, W.

  Reeves, J.

  Wilkes, Maj. L.

  Lipson, D. L.

  Reid, T. (Swindon)

  Wilkins, W. A.

  Lipton, Lt.-Col. M.

  Rhodes, H.

  Willey, F. T. (Sunderland)

  Longden, F.

  Robens, A.

  Willey, O. G. (Cleveland)

  McAdam, W.

  Roberts, Goronwy (Caernarvonshire)

  Williams, Rt. Hon. E. J. (Ogmore)

  McAllister, G.

  Rogers, G. H. R.

  Williams, Rt. Hon. T. (Don Valley)

  McEntee, V. La T.

  Royle, C.

  Williams, W. R. (Heston)

  Mack, J. D.

  Scott-Elliot, W.

  Williamson, T.

  Mackay, R. W. G. (Hull, N.W.)

  Segal Sq.-Ldr. S.

  Willis, E.

  Maclean, N. (Govan)

  Sharp, Lt.-Col. G. M.

  Wilmot, Rt. Hon. J.

  McLeavy, F.

  Shawcross, Sir H. (St. Helens)

  Woods, G. S.

  Mainwaring. W. H.

  Shurmer, P.

  Yates, V. F.

  Mallalieu, J. P. W.

  Silverman, S. S. (Nelson)

  Young, Sir R. (Newton)

  Mann, Mrs. J.

  Simmons, C. J.

  Zilliacus, K.

  Manning, C. (Camberwell, N.).

  Skeffington-Lodge, Lt. T. C.

  Manning, Mrs. L. (Epping).

  Skinnard, F. W.

  TELLERS FOR THE AYES:

  Marshall, F. (Brightside).

  Smith, S. H. (Hull, S.W.)

  Mr. Pearson and Captain Bing.

  NOES

  Agnew, Cmdr. P. G.

  Galbraith, Cmdr. T. D.

  Nutting, Anthony

  Amory, D. Heathcoat

  Gammans, L. D.

  Orr-Ewing, I. L.

  Anderson, Rt. Hn. Sir J. (Scot. Univ.)

  George, Maj. Rt. Hn. G. Lloyd (P'ke)

  Peake, Rt. Hon. O.

  Assheton, Rt. Hon. R.

  Grimston, R. V.

  Peto, Brig. C. H. M.

  Baldwin, A. E.

  Hinchingbrooke, Viscount

  Pitman, I. J.

  Barlow, Sir J.

  Hollis, Sqn.-Ldr. M. C.

  Ponsonby, Col. C. E.

  Baxter, A. B.

  Hope, Lord J.

  Poole, O. B. S. (Oswestry).

  Beattie, F. (Cathcart)

  Howard, Hon. A.

  Raikes, H. V.

  Birch, Lt.-Col. Nigel

  Hurd, A.

  Robinson, Wing-Cmdr. Roland

  Bower, N.

  Jeffreys, General Sir G.

  Ropner, Col. L.

  Boyd-Carpenter, Maj. J. A.

  Kingsmill, Lt.-Col. W. H.

  Sanderson, Sir F.

  Bracken, Rt. Hon. Brendan

  Legge-Bourke, Maj. E. A. H.

  Savory, Prof. D. L.

  Braithwaite, Lt.-Comdr. J. G.

  Lindsay, Lt.-Col. M. (Solihull)

  Shephard, S. (Newark)

  Buchan-Hepburn, P. G. T.

  Lloyd, Maj. Guy (Renfrew, E.)

  Stanley, Rt. Hon. O.

  Bullock, Capt. M.

  Low, Brig. A. R. W.

  Stoddart-Scott, Col. M.

  Carson, E.

  Lucas-Tooth, Sir H.

  Stuart, Rt. Hon. J.

  Clifton Brown, Lt.-Col. G.

  MacAndrew, Col. Sir C.

  Studholme, H. G.

  Corbett, Lt.-Col. U. (Ludlow)

  McKie, J. H. (Galloway)

  Sutcliffe, H.

  Crookshank, Capt. Rt. Hon. H. F. C.

  Macmillan, Rt. Hon. Harold

  Taylor, C. S. (Eastbourne)

  Cuthbert, W. N.

  Marples, Capt. A. E.

  Taylor, Vice-Adm. E. A. (P'dd't'n, S.)

  De la Bére, R.

  Marsden, Capt. A.

  Thornton-Kemsley, Col. C. N.

  Dower, Lt.-Col. A. V. G. (Penrith)

  Marshall, Comdr. D. (Bodmin).

  Touche, G. C.

  Dower, E. L. G. (Caithness)

  Marshall, S. H. (Sutton).

  Turton, R. H.

  Drayson, Capt. G. B.

  Mellor, Sir J.

  Wakefield, Sir W. W.

  Drewe, C.

  Molson, A. H. E.

  Walker-Smith, Lt.-Col. D.

  Duthie, W. S.

  Morrison, Maj. J. G. (Salisbury)

  Wheatley, Col. M. J.

  Eccles, D. M.

  Morrison, Rt. Hn. W. S. (Cirencester)

  White, Maj. J. B. (Canterbury)

  Erroll, Col. F. J.

  Neven-Spence, Major Sir B.

  Fletcher, W. (Bury)

  Nicholson, G.

  TELLERS FOR THE NOES:

  Foster, J. G. (Northwich)

  Nield, B. (Chester)

  Sir Arthur Young and

  Fox, Sqn.-Ldr. Sir G.

  Noble, Comdr. A. H. P.

  Major Mott-Radclyffe.

  Clause, as amended, ordered to stand part of the Bill.

  Clause 4.—( Treasury directions to the Bank and relations of the Bank with other banks.)
  5.33 P.m.
  Mr. Stanley: I beg to move, in page 3, line 3, at the end, insert:
  " Provided that every such direction shall be laid before Parliament within seven days after it has been made, and if not so laid, shall be void; and if the Commons House of Parliament within a period of 40 days thereafter resolves that the direction be annulled, it shall cease to have effect, but without prejudice to anything previously done there under. In reckoning any period for the purpose of this Subsection, no account shall be taken of any time during which Parliament is dissolved or prorogued, or during which the Commons House of Parliament is adjourned for more than four days."
  The purpose of this Amendment is plain. It is an Amendment to which we attach considerable importance and with which, I think, there will be considerable sympathy in all parts of the Committee. I realise that, in view of the acquisition by the Government of the assets and business of the Bank of England, the business of the Bank must in future be run, as indeed it has been for the past 20 years, in consonance with the financial policy and economic views of the Government. I agree that in order to make certain of that, if you are going to legislate, there must be included some such provision as is included in Subsection (1) of this Clause, which enables the Treasury to give directions to the Bank of England and imposes upon the Bank the obligation to carry out those directions. I take it that the directions to which this Clause refers are, in the view of the Chancellor, designed to meet special cases, and do not refer to the day-to-day business which goes on between the Bank of England and the Treasury and where the Treasury may well express views with which the Bank agrees. This provision is inserted to deal with cases where there is a difference of opinion, where the ordinary negotiations have resulted in a failure to get the Bank of England to agree with the Treasury, and where, therefore, it is necessary to have some more formal step and some more formal power to be taken by the Treasury.
  I hope and believe that such occasions will be rare,.but I think it is right that if such occasions do occur, if there is a difference between the Treasury and the
  976
  Bank, and if as a consequence the Chancellor of the Exchequer of the day has to issue a formal direction directing the Court of the Bank of England to do something which in fact it does not want to do and which it considers wrong, that direction should be laid before the House in order that the House may know that the difference has occurred and may judge whether the action of the Chancellor in the matter is one of which it can approve. I think that is fair to the House of Commons. If the Bank is to be a branch of the executive machine, as it is to be in future, the House is entitled to know if any major crisis of this kind threatens. Above all, I think it is fair to the Governor and the Court of Directors, because if they have to acquiesce in a course which is not the course they think right, but one that is dictated to them by the Government, it is only fair that the House and the country should know that that is the case, and that the Governor and the Court of Directors should not have to accept sub silentio responsibility for a course of action with which they are in complete disagreement. I cannot see any objection to this Amendment from the point of view of the Government. It does not ask that before the direction becomes effective, the House of Commons shall have to pass judgment upon it. Even if this Amendment is accepted, the direction will become effective at once, and it will cease to have effect only if, subsequently, the House of Commons, by a Prayer, annuls it. I feel that hon. Members on all sides of the Committee will be in favour of as much publicity as possible being given if any situation of the kind to which I have referred should arise, and for that reason I very much hope the Chancellor will find it possible to accept the Amendment.
  Lieut.-Colonel Nigel Birch:After reading carefully the Report of the Select Committee, it seems to me there are three stages contemplated in the relations of the Bank with the rest of the community. First, there is the request for information, and then, slightly more severe, the recommendation, and lastly, the direction. I take it that what is meant is that no direction would be given unless there was a very serious cause of conflict. I believe that during the next few years the Government's arrangements with regard to the

  977
  Bank of England will work very adequately, and I think it will be extremely surprising if, under the direction of the right hon. Gentleman the Chancellor of the Exchequer, any direction is necessary to any financial institution. But, of course, the march of progress does not stop although hon. Members opposite sometimes talk as if it does. Very much legislation is recommended to us on the ground that the Minister recommending it has never hurt a fly and would be incapable of doing so. In many cases that may be true, but the way one his to look at the matter is to assume that the Prime Minister is the hon. Member for West Fife (Mr. Gallacher) and that he has a very shaky majority. If he had a real majority, it would be no good. If one studies the hon. Member's party in the House, I think one is forced to the conclusion that the Chancellor in the hon. Member's Government would be the hon. Member for Mile End (Mr. Piratin). It is sometimes said that the square mile is over represented in the direction of the Bank of England, but I think it undesirable that other parts of the East End should be over-represented. One might get a situation in which the Bank of England was given a direction that was unsuitable and the only chance of stopping such a direction being enforced would be that it should be dragged into the light of day. In legislating we should look well ahead, and not only at the eminent respectability which we are told we shall see for five years.
  Mr. Dalton: I can see the case for this Amendment, but I can also see more clearly the case against it. The right hon. Member for West Bristol (Mr. Stanley) said that the Bank would in future be a branch of the executive machine. That is the right hon. Gentleman's phrase and not mine, but I do not seriously quarrel with it. The Bank will not be a branch of the Civil Service, or be assimilated to Civil Service conditions of pay, and so forth, in any strict sense, but it will nevertheless, become part of the public services, using that term rather broadly to include the various public boards, many of which already exist, and others of which we are proposing to set up. I hope, frankly and sincerely, that as these new arrangements work themselves out in practice there will be understanding, co-operation and good relationships prevailing between those who from time to time hold high positions in the Treasury and those who hold respon
  978
  sible positions in the Bank. It would be a pity to write into this Statute a suggestion that far from that being so, it might be the desire of those at the Bank to bring forth into the light of day and as it were themselves to require the discussion in the House of some matter which in fact had been the subject not perhaps of complete agreement in the discussions that had taken place within the executive machine and the governmental machine, resulting in the need to issue a direction.
  I agree with the hon. and gallant Member for Flint (Lieut.-Colonel Birch) in that I do not contemplate that it will be necessary in practice for the Treasury to issue directions to the Bank in the forseeable future. Nevertheless, to make completely sure we have inserted this logical provision in the Bill, and the Opposition do not deny it is logical and desirable to have it. I can well imagine—I can go thus far in meeting the right hon. Gentleman, not in by accepting the Amendment, but by indicating to him how publicity might very well arise and the House might be able to discuss the matter of any direction and the reasons behind it—there may be occasions when there will be no objection to the Treasury's directions being made public and the Treasury may wish to ensure publicity. That could be arranged by question and answer on the subject involved. I do not take the view that if directions should have to be issued by the Treasury to the Bank, they should as a matter of principle be withheld from Parliamentary discussion, and indeed, very often Parliamentary discussion might be desired by the Government; but I can imagine that there might be occasions when—this is a case against there being any rigid provision as in the Amendment —it would be definitely against the public interest to have such discussion. The subject matter of the direction might be such that the public interest would be injuriously affected if it were debated in the House.
  Therefore, it would be the best course— I am anxious not to seem to rebuff the Amendment roughly, but to offer reasoned grounds against accepting it—to leave this matter to be determined, at any rate in the first stage of this new regime. Experience perhaps on this subject will accumulate and will tend in one direction or another. But I think it would be better not to enforce a rigid rule such as the

  979
  right hon. Gentleman suggests, but to trust to the discrimination of Ministers and the good will of all those concerned, with, as I have said, the exception, that in certain cases, if directions were issued, it would be desirable that they should be known to the House and the public. But to lay down a rule that in all cases they should be laid on the Table of this House in this way would be a mistake.
  5.45 P.m.
  Lieut.-Colonel Dower: For once I do not find myself entirely opposed to the Chancellor of the Exchequer, but I would like it to be clearly understood what appeared to be the object behind my right hon. and hon. Friends here. I humbly suggest that the Amendment is to meet the more serious cases of instructions of bankers to banks rather than instructions by the Treasury. The Chancellor has said once more, "Trust me," and I am the first person to say, "Of course, I do." No words are to be inserted in the Bill; he wants to see how this is going to work out. I think that that is reasonable and on this occasion I shall not go into the Lobby against him.
  Mr. Stanley: I agree with my hon. and gallant Friend that, although there is a case for publicity on this Amendment, it is not nearly so strong as the case when it is a direction given by the bank with the approval of the Treasury from outside. Therefore, I would not wish to press the Amendment and certainly the right hon. Gentleman, as far as he can speak for himself, has shown every sympathy. The trouble is that we on this side are getting a sort of vested interest in the right hon. Gentleman. He is giving so many personal pledges on what he will do while he is there, that the time will come when we shall have to stand by his side and resist any attempt of his hon. Friends to substitute someone else for him. Is it understood that, in fact, the question directed to the Chancellor as to whether a direction had been issued by the Treasury would be one the Chancellor would have to answer subject to the discretion a Minister of the Crown has always got of saying that it is not in the public interest to do so. Although I am ready, as everybody must be, to accede to the argument on matters which are not in the public interest to discuss, I cannot myself think of any such thing in
  980
  connection with the Amendment. I would be very much obliged if the right hon. Gentleman would tell us that he had not meant the sort of action in which he might have to issue directions.
  Mr. Dalton: In reply to the first question, subject to the ruling of the Chair, as to what questions are proper to place on the Order Paper, I would be inclined to suggest, as far as my judgment goes, that the answer would be "Yes." It would be permissible to place questions on the Order Paper and thereafter to discuss questions of direction. I cannot give a considered answer on what is to some degree a legal matter, but, generally speaking, the answer would be "Yes." With regard to the second question, I can imagine there might be certain matters, if we were living in a period of international tension and difficulties either with regard to the peace of the world or to our own financial stability due to causes possibly outside our control, something going wrong in some other country with which we had close relationships—although we might have differences of view as to action to be taken in a critical situation, it might be the view of the Treasury and the Bank, that although they differed strongly in such a circumstance, it would be undesirable to draw public attention to the matter. I hope that that position will never arise, but it would not be difficult to name such circumstances.
  Amendment negatived.
  Mr. Glenvil Hall: I beg to move, in page 3, line 13, at the end, insert:
  " Provided that no such request or recommendations shall be made with respect to the affairs of any particular customer of a banker.''
  This Amendment has been put down by my right hon. Friend the Chancellor of the Exchequer to implement a promise he gave during the course of his speech on Second Reading, when he said:
  " I understand that there is some apprehension in some quarters lest the provisions of Clause 4, Subsection (3), should be used in order to compel the clearing banks to reveal through the Bank of England to the Treasury the private affairs of their clients or depositors. I do not know whether any hon. Member feels apprehension about that —apparently not—but it has been hinted outside, and I am anxious to deal with it. I can say at once that this apprehension is completely unfounded. It need rob no one of his sleep."—[OFFICIAL REPORT, 29th October; Vol. 415, c. 53.]

  981
  This Amendment has been put down in furtherance of that promise and I hope that it will commend itself to the Committee. The right hon. Gentleman who sits for the Scottish Universities (Sir J. Anderson), in the course of his observations during the same Debate, said, that he thought it would be very difficult to find a form of words which would be suitable. I am glad to say that we think we have found a form of words and I hope that we have made them wide enough to do what we intend them to do. It will be noted that the operative words are:
  " the affairs of any particular customer of a banker."
  We thought that "affairs" was a better word than "transactions," being wider and capable of covering various kinds of work undertaken by a bank on behalf of a client, and we also thought that the word "particular" before the word "customer" was better than "individual," in that a particular customer, so we are advised, might mean not only an individual, but also a company or a corporation. Therefore, I hope the Committee will accept these words as fulfilling the pledge given by my right hon. Friend and will agree to the Amendment.
  Lieut.-Colonel Dower: I would like to say how much I appreciate the honouring of the pledge given by the right hon. Gentleman during the Second Reading Debate. I have no doubt that the Amendment meets all the points, but I would like an assurance from the Financial Secretary that it meets not only a request for private information, but also directions that might be given by a bank to a banker. We feel that the banker is the best judge of the individual, of his credit, whether he is an honest reputable man. He is far better able to judge than a high up State authority on questions of either granting a loan or withdrawing credit facilities.
  Captain Crookshank: We are very much obliged to the Chancellor of the Exchequer for having put down the Amendment. It certainly meets what we think was a difficulty in the Bill and I am glad that he has seen it in the same way as we did.
  Mr. Austin: I am afraid that the Amendment troubles me to a degree and I would like the Financial
  982
  Secretary to elucidate a point. The Chancellor of the Exchequer is invalidating any right he has to investigate undertakings or affairs of a particular customer. Therefore, I would ask how we can investigate the affairs of an arms manufacturer or of a monopolist, or of Mr. Rank in the films industry, or of an unscrupulous scoundrel, a black-marketeer who is amassing money and whose banking account does not disclose his activities. I wonder whether the Chancellor is not divesting himself of the power to examine with scrupulous care the activities of such cases as I have mentioned.
  Amendment agreed to.
  Captain Crookshank: I beg to move, in page 3, line 13, at the end, insert:
  " Provided that the Bank shall not issue any direction which limits the freedom of any banker to give or withhold credit to or from any class of customer."
  This Amendment deals with the question whether there should be any directions for any class of customers. We have inserted that there should not be any request or recommendations made with regard to the affairs of a particular customer of the bank, but this is rather a larger issue. The Amendment is to prevent the issue of any directions limiting the freedom of any banker to give or withhold credit to or from any class of customer. During the Second Reading Debate my hon. and gallant Friend the Member for Glasgow, Central (Lieut.-Colonel Hutchison) pointed out—and I will quote his words—that:
  " Under the New Zealand Banking Act, and further, under the Commonwealth Bank Act of Australia, 1945, it is precluded that power should be given to the central bank to direct the joint stock banks or subsidiary banks to make advances or to refuse advances to any particular set of customers."— [Official Report, 29th October, 1945; Vol. 415, c. 128.]
  One could imagine circumstances in which the Chancellor of the day might wish to attack, for one reason or another, a class of customers and he could use this method of direction to the bank, authorising the Bank to issue directions to any bankers to that effect. It seems to me that that would be a very undesirable thing to do. as it would undermine a good deal of the confidence-which must exist between the ordinary banker and his customers, and I hope that, on consideration, the Treasury will say that this is a suitable Amendment to be inserted.
  6.0 p.m.
  Mr. Glenvil Hall: I am sorry, but we cannot accept this Amendment, for the reason that it would limit both the Treasury and the Bank far too much. What the right hon. and gallant Gentleman desires to do, of course, is to prevent any limitation being put on bankers' freedom to give or withhold credit to or from any class of customer—not any individual customer, but any particular class—and, if that had been in force during the war, it would have been a very great limitation on the Chancellor of the Exchequer. At the beginning of the war, Lord Simon wrote to the Governor of the Bank asking that the Bank should restrict its advances other than those connected with the direct needs of armaments production —and this included the winning of additional coal—and agriculture. Later on, during the war, the right hon. Gentleman the Member for Scottish Universities (Sir J. Anderson) also had occasion to writs to the Governor, and, I think, very properly, asking for the continued co-operation of the Bank, and also asking that unduly large advances should not be made for personal needs and that no facilities should be given for speculative buying or holding either of securities or stocks of commodities.
  Lieut.-Commander Braithwaite: During the war?
  Mr. Hall: During the war. It may well be that this happened during the war, but, knowing the Governor of the Bank as we do, and knowing that the Treasury would not use these powers unless it was absolutely necessary to do so it is true to say that what has happened in the past will continue in the future.. Therefore, to accept this Amendment would unduly limit and hamper the Governor and Court of the Bank, as well as the Treasury, and it is our view that this Amendment should, and must, be resisted.
  Lieut.-Commander Braithwaite: I am bound to say that that reply of the Financial Secretary is entirely unsatisfactory from the point of view of anyone who wishes to see this scheme working smoothly, and, if I may say so with great respect, I thought his analogy particularly unfortunate when he had to run to wartime Chancellors for a precedent for what it is proposed to do in time of peace. One might almost read into his argument that this elaborate machinery had to be re-
  984
  tained for fear of a future war, though I imagine that was not in his mind. Here is a point of real principle. What, after all, are the factors which govern bank loans? I do not know whether it is going to be altered under the new dispensation, but, hitherto, the granting of a loan is dependent on the credit-worthiness of the prospective borrower.
  My object in rising is to put to the Financial Secretary one or two cases which I have very much in mind as the representative of an agricultural constituency. For years past, farmers have been able to get accommodation in the Spring time, in April and May, based upon the productivity of their land and the harvest prospects, and, for many years, farmers have gone to the local bank manager and got an advance, because the manager knew the land and knew what it was likely to produce, and was, therefore, able to give credit upon the harvest prospects. I admit that, to a certain extent, that system has been rather confined since the Big Five came into being and there came along the possibility of an inspector coming down from London and wanting to see what security was lodged, but, after all, the Big Five are only a form of monopoly, which we propose to make even worse under this Bill. One can envisage—I hope it will not happen—a certain tyranny on the part of the war agricultural executive committees, and, if there was some clash, the Treasury would be left with the power of this tremendous sanction of giving no credit.
  It may well be that the wording of this Amendment is capable of improvement, but I do want to suggest to the Chancellor and the Government, that, on a matter of principle, here is something which they would be very well advised to look at again. Between now and the Report stage, we might get a better form of words than that suggested here, but I hope we are going to have something more than that extremely adamant attitude by the Financial Secretary, who justifies his case on a wartime basis. All the evidence he could produce in resisting the Amendment was what Lord Simon had done and what the right hon. Gentleman the present Member for the City of London (Mr. Assheton) had done when he was Financial Secretary to the Treasury. Of course, in time of war, one has to divert credit into certain channels for

  985
  the manufacture of armaments and so forth, but, surely, we are looking forward to entering an era when these things are not necessary and in which there will be the ordinary peaceful flow of commerce, and the restrictions placed under this Clause are odious to me and to many other hon. Members as well.
  Mr. McKie: I very much regret that the Financial Secretary so curtly turned down this Amendment. I should have thought that this was an Amendment couched in very mild language which the Financial Secretary might well have accepted. At any rate, he might have indicated that he was prepared to look at it again between now and the Report stage. We have not yet heard the hon. Gentleman's further reply to the hon. and gallant Member for Holderness (Lieut.-Commander Gurney Braithwaite), but the Financial Secretary, for precedent, had to resort to what the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson), when Chancellor of the Exchequer, did in the National Government during the war. Surely a purely wartime necessity is not to be urged in this Committee by any Financial Secretary as being necessary in the new era of expansion to which we are all looking forward.
  The Financial Secretary said that it would not work. Hon. Members on this side well know that it will not work in the planned economy to which the Socialist Government are pledged, and I see the Chancellor is nodding his head to that. I want to emphasise what the hon. and gallant Member for Holderness said about the harm that will, almost certainly, be done to the agricultural community, if the Amendment is not accepted. The mover of this Amendment has drawn it in wide terms to see that no classes of the community shall be prejudiced in future in regard to perfectly legitimate loans being made to them from the banks. I am speaking of the agricultural community in Scotland, where, in the past, the banks have been very willing to lend, not merely to agriculturists, but to any individual or class of individuals without demanding the same security which has been demanded South of the Border. I agree with the hon. and gallant Member for Holderness that, if this Amendment is not accepted, and this very mild safeguard not put into the Bill, the
  986
  interests of the agricultural community, Scottish as well as English, are likely to be seriously jeopardised, because they may not have the same ready facilities which have been forthcoming in the past.
  I know very well that, owing to the present state of affairs in agriculture, not many agriculturists are seeking overdrafts, but we can never be sure that, when the planned economy comes along, overdrafts or credits may not have to be sought by agriculturists. The Chancellor of the Exchequer seems to be quite comfortable. Perhaps he does not mind very much whether our agriculture languishes in future or not, but I very much hope that the Financial Secretary will have a little more to say than he had in his first reply to the right hon. and gallant Member for Gainsborough (Captain Crookshank) and will indicate that he will, at any rate, look into the matter again between now and the Report stage.
  Sir J. Mellor: I very much hope that the Financial Secretary will, upon consideration, give us a further and better answer. I confess that, when I heard him give the illustrations of wartime expedients, I felt that this Amendment was more important than I had at first thought it to be. Surely, if the circumstances are sufficiently grave to justify directions to bankers to discriminate in favour of or against particular classes of customer, there must be serious reasons in this case. Especially in view of the Measures presented by the Government for carrying into the transitional period certain emergency Measures required during the war, I do not think they ought to go further, and, in a permanent Act, introduce elements of this sort, which presuppose an emergency, and I hope that the Financial Secretary will, on consideration, accept the Amendment or give us a different answer.
  Mr. Dalton: This Amendment cannot be accepted because, in terms of principle—and the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) mentioned a principle—it is wrong. It is true that we do believe—the hon. Member for Galloway (Mr. McKie) has got it right this time—in a planned economy. This is one of the Measures to facilitate it.
  Mr. McKie: That is why we are so worried on this side.
  Mr. Dalton: The hon. Member need not be. In principle, it is necessary that we should have the power, and these are only powers of last resort, because we do not normally anticipate that directions will arise in this context. We anticipate that, normally, there will be an exchange of views between the Treasury, the Bank of England, the joint stock banks and the clearing banks as to what is desirable in the national interest, and we anticipate that, generally speaking, agreement will easily be reached. Nevertheless, we must have these powers because it is essential that we should be able, in the last resort, to establish priorities in the disposal of short-term funds in the same manner as we shall, in a later Measure—which it would be out of order for me to discuss now, but which I hope to introduce when the House resumes—assure priorities of national interest in regard to long-term credit. We must have complementary powers in regard to short-term credit; and we must have power in the last resort to say, "This stands in front of that, in the national interest, therefore we desire that short-term credit should not be extended to this type but rather to that type of economic activity."
  6.15 p.m.
  Far from desiring to see agriculture relapse into the terrible condition into which the hon. Gentleman said it was allowed to fall, when a Labour Administration was not in power, we desire to lift agriculture up, and give it a much better showing in the future than it has had in the past. It has been, of course, common ground for complaint among farmers that they did not always get reasonable credit facilities from the existing banking arrangements, and I would most certainly say that I cannot imagine in the operation of this Measure that we would ever issue a direction to the clearing banks requiring them to discriminate against agriculture and withhold credit from agriculturists. I cannot imagine that that would ever happen. Rather, I should think, the pressure would be the other way: but if directions were ever issued to the banks they would be issued for the purpose of withholding short term credit from lines of economic activity other than agriculture. Certainly I would never think that agriculture would fail under this heading to be other than a
  988
  priority interest and a favoured claimant for short term advances.
  Similarly with the export trade. In my predecessor's communication he particularly requested the banks to give special consideration to advances connected with the export trade, and to that we shall most certainly adhere in these next years. This matter has been debated in various connections and, quite certainly, we must press forward with the export trade. It may well be necessary to ask that credit shall be directed towards the export business and towards agriculture, both on their own merits and in order to give us a substitute for needless imports in these days. So the export trade and agriculture would almost certainly be two of the favoured groups in any operation taking place under this Clause. On the other hand, are we to be denied the power, in the last resort, of advising the banks not to lend money for trashy, luxury trades with no export interest? Is that to be denied? Or to advance money for mere empty and useless speculation? Surely these are cases where it might be necessary, in the last resort, to enforce this procedure—in the last resort—and I repeat that my own anticipation is that a friendly exchange of view between all those concerned will make directions unnecessary.
  Reverting to the point made by the hon. and gallant Gentleman the Member for Holderness about principle, I say that upon principle we must have this Clause, and we cannot accept this Amendment, which would undermine the possibility of rational development in the public interest of the distribution of our available short term funds between various claimants. Therefore, I cannot give any undertaking at all to look at this again between now and the Report stage.
  Mr. J. S. C. Reid: The statement made by the right hon. Gentleman of his position seems to fall very short of covering all the ground which this Amendment covers. Let me put one or two possibilities which we are seeking to exclude, which I think even the right hon. Gentleman can hardly desire- to have power to do. The first thing we desire to exclude is that directions should be issued requiring bankers to give credit to a particular class of customers.
  Mr. Dalton: Farmers?
  Mr. Reid: Let me put it this way. If that class of customer is creditworthy, I have never heard of a bank which was not willing to lend to him if the Bank of England will put that bank in funds to do so. It is in the control, I have always understood, of the Bank of England to increase the volume of credit in the country so that all creditworthy people can get credit, but what we want to prevent is a direction to a bank to lend money to somebody whom the bank thinks is not creditworthy and who is not able to repay. That is what I have in mind. Does the Chancellor really want to retain power to direct a particular bank to lend money to a class of customer whom that bank thinks will never be able to repay it? And suppose the bank turns out to be right at the end of the day. They are directed to lend their shareholders' money to a particular kind of customer against their will, knowing that it is a bad risk, and it turns out to be so. Then they go along to the Bank of England and the Treasury and say, "You have landed us in this loss, what will you do about it?" The Treasury and the Bank of England wash their hands of the whole thing, and say, "We are very sorry, you have just got to stand the loss which we have imposed upon you." That is perfectly possible under the Bill. If the right hon. Gentleman wishes to keep some method of allocating priorities —though I cannot see why it should be necessary—all he has to do is to increase the volume of credit, and anybody who deserves it will get it.
  Mr. Dalton: Many people who do not deserve it might get it.
  Mr. Reid: I am coming to that, but the first thing I want to prevent is that the Treasury and the Bank of England should compel one of the banks to give credit to someone who is not worthy of it and will never be able to repay it. I hope the Chancellor will say something to indicate that in no circumstances will a direction of that kind be issued. That is the first point, that the credit-worthiness of the borrower must be left to the discretion of the bank, and no direction can ever be issued to overrule the bank in that respect.
  Now I come to the other point which the right hon. Gentleman mentioned,
  990
  withholding credit. Why should credit be withheld from any person who can convince the bank that he can repay and who is willing to enter into such an obligation? We all know that in a period of scarcity you withhold material and labour until there is plenty to go round, but credit will surely not be a scarce commodity which will need allocation in this country? Why should you withhold credit from people when you can stop undesirable activities by not giving them permits for material and the like? This will lead to the most disastrous consequences if you use this for economic reasons, which will very soon become political reasons. Is the Chancellor going to retain power to say, "A particular class of trader in a certain sphere is not a class of trader that a Socialist Government likes, another class of trader is the class of trader that a Socialist Government likes; therefore class A will be frozen to death because we shall direct the banks, in the interest of politics, that they are not to give any more credit to class A traders because they are not the kind of people we like in a Socialist State."
  Is that the proposal? That is what the Bill allows the Chancellor to do at the moment; that is what our Amendment would prevent him from doing. Let us be quite clear. Does the Government want to retain power to do that or not? If they want to retain some lesser power than that, surely the Chancellor will look at this matter before the Report Stage in order to obtain some method of limitation which will leave out the political use of the financial power and retain reasonable economic use? If, however, he tells us that in his ideology politics and finance are so closely intertwined that they cannot be separated, then I am bound to say that we must fight this to the death
  Mr. Mikardo: "Death" is right.
  Mr. Reid: This is serious because it means that the Government will use their financial power purely for political ends, in order to destroy their political opponents. That is what they have power to do as the Bill stands, and I hope that the Chancellor does not really want that. I hope, therefore, that he will make it clear, in one form or another, that he does not want that power and, if possible, exclude it by words but, if he is not able to do that, at least exclude it by a perfectly clear undertaking at that Box on which

  991
  we can rely for the future. If the Chancellor, speaking for his party, gives some clear definition of the kind of thing he wants, then I think we can rely on him, and I hope he will give us some definition of that kind in order that we may know exactly what we have to face.
  Mr. Dalton: I did not introduce political considerations; that was left to the right hon. and learned Gentleman. I did not say anything about excluding people on political grounds; I spoke of groups of people distinguished, not by whether they voted for or against His Majesty's Government or His Majesty's Caretaker Government at the Election, but by whether or not they stood in a high priority in the national interest. I gave one or two illustrations. I said that exports and agriculture stood high. Is that denied? Is that a political proposition? Only in a broad, non-Party sense. Exports and agriculture are both very important; they stand very high. I said that speculation stood very low. Is that denied? Perhaps all speculators voted for the Conservative Party.
  Mr. Assheton Mr. Assheton rose—
  Mr. Dalton: I am not giving way at the moment. I am responding in the tone introduced for the first time by the right hon. and learned Gentleman. Until now we have held it on a high level of public interest. If however, he brings it down to a political level, we can beat him on that level as well. I say that speculators should stand at the end of the queue even if they belong to the Carlton Club. We are not provoked; I am replying in the same tone. On the other hand, those concerned with the export trade and with agriculture are entitled to stand well in front of the queue however they voted in the Election. Of course I can easily give an undertaking, readily and easily, that there is no intention to use this provision for the purpose of penalising people for their political opinions. What is contemplated in the last resort—and I repeat only in the last resort—is that we should be entitled to line up people according to the importance of the contribution which their economic activity will make to the national interest in the critical years that lie ahead of us.
  Finally I make the point that these directions to the clearing banks are only
  992
  made by the Bank of England as an initiating agent, and with the approval of the Treasury, and I cannot believe that the Bank of England would desire to penalise any group of persons for their political opinion or for the votes they cast. Therefore, I repeat that I am not prepared to look at it again in any sense of being prepared to consider any Amendment similar to this, and I shall ask the Committee, when the time comes, to resist the Amendment.
  Lieut. -Colonel Dower: The Chancellor of the Exchequer cannot mention one case where recommendations to the clearing banks have not been carried out. Perhaps he will cast back his mind to the period after the appalling mess which took place in this country when the Socialist Government were in power between 1929–1931—
  Mr. Mikardo: In office, not in power.
  6.30 p.m.
  Lieut.-Colonel Dower: In power, in more senses than one, and mess in more senses than one—when a request was made to the clearing banks and to other bankers not to grant any facilities for new issues. On the information which I have received, and which, as far as I know, the right hon. Gentleman is not denying, they carried that out in the letter and in the spirit, and on every other occasion when recommendations have been made to the clearing banks they have co-operated in every way with the policy of the day; but there is one occasion when they would not co-operate, and that would be if the Government of the day should act in the way in which the Chancellor of the Exchequer said that he had not in mind, that is, If they acted from a political point of view and ordered the clearing banks either to grant loans or withhold loans for political doctrines or even for political and party views In the light of the past and of the reasonable and co-operative spirit always shown by the clearing banks, I cannot see that there is any necessity for this power whatsoever, and I am convinced that if the Chancellor ever found there was need for it he could very easily come here and get the requisite authority by explaining the necessity for it. For that reason, however much we may be pressed to get this Bill through quickly, I hope we shall take this Amendment to a Division.
  Mr. Mikardo: The hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) was clearly not altogether satisfied about the wording of the Amendment and his view was to some extent echoed by the hon. Member for Galloway (Mr. McKie), because they thought, I feel, that the wording was so wide and in some respects so vague that it might in fact invalidate the whole of the powers of the Bank under the Clause. One right hon. Gentleman who spoke in this Debate thought of "class of customer" as being a political class. Other hon. Members have thought of class as defined by industry. "Class" is an extremely wide word; it may mean almost anything. One might interpret "class of customer" to cover all customers who have current accounts, which would be a greater part of the customers. Another person might interpret "class of customer" as customers who have overdrafts, who would be all the customers, or very nearly all, affected by this Clause. Or one might even interpret "class of customer" to mean those customers who want credit anyway, who are the customers covered by the Clause. The hon. and gallant Member for Holderness may suggest that we should try to produce a better form of words, but I think it would be extremely difficult to find any other phrase which could not be criticised on precisely these grounds. For example, the right hon. and gallant Member for Gainsborough (Captain Crookshank) quoted statutes of the State Banks in other countries and found there the expression "sets of customers." I suggest that that is just as wide and vague as "class of customer." It therefore seems to me that any Clause worded along the lines proposed might completely inhibit the power of the Bank to issue recommendations and requests to the joint stock banks.
  Mr. Assheton: I am bound to say that we on this side regard this as a very serious matter indeed. The Chancellor's observations have revealed the underlying purposes of the Government in this Clause. The right hon. Gentleman made
  t clear that he intends to take power through the Government to deal with the distribution of credit. When it came to answering the points made by my right hon. and learned Friend the Member for the Hillhead Division (Mr. J. S. C. Reid) he said that there was no intention on the part of the Government to use this in a political way. He illustrated it by saying he was going to make credit available for those in agriculture or the export trades irrespective of whether they had voted Socialist or Conservative. But that is not the point of my right hon. Friend's argument at all. Suppose that the Chancellor took the view, as he very well might as a Socialist, that small shopkeepers ought not to be encouraged but other competing forms of trading encouraged instead. He could easily give a direction to the bankers not to extend credits to small shopkeepers. Let me give another illustration: the State has invested a certain amount of money in British Restaurants. It might well suit the Government to suppress facilities for granting credits to other restaurants in order to let the British Restaurants do better business. That would be within the powers which the Chancellor is taking to-day, and we ought not to let such a Clause go through un-amended. The Amendment is a simple one, merely providing that the Bank
  " shall not issue any direction which limits the freedom of any banker to give or withhold credit to or from any class of customer."
  I suggest that that is an Amendment which the Committee ought to accept. If the Government wish to interfere with any legitimate form of trade let them come to the House, introduce legislation and say so..If they think it is in the interests of the nation that small shopkeepers shall be suppressed let them come down to the House and say so, but not take powers, by the indirect means of withholding credit, to do something which they are afraid to do by direct legislation. We must divide the Committee on this Amendment.
  Question put, "That those words be there inserted."
  The Committee divided: Ayes, 92; Noes, 254

  Division No. 54.]

  AYES.

  [6.40 p.m.

  Amory, D. Heathcoat

  Bower, N.

  Bullock, Capt. M.

  Assheton, Rt. Hon. R.

  Boyd-Carpenter, Maj. J. A.

  Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n)

  Baldwin, A. E.

  Bracken, Rt. Hon. Brendan

  Carson, E.

  Barlow, Sir J.

  Braithwaite, Lt-Comdr. J. G.

  Clarke, Col. R. S.

  Birch, Lt.-Col. Nigel

  Buchan-Hapburn, P. G. T.

  Clifton-Brown, Lt.-Col. G.

  Corbett, Lt.-Col. U. (Ludlow)

  Linstead, H. N.

  Raikes, H. V.

  Crookshank, Capt. Rt. Hon. H. F. C.

  Lloyd, Maj. Guy (Renfrew, E.)

  Reed, Sir S. (Aylesbury)

  Cuthbert, W. N.

  Low, Brig. A. R. W.

  Reid, Rt. Hon. J. S. C. (Hillhead)

  De la Bére, R.

  Lucas-Tooth, Sir H.

  Robinson, Wing-Cmdr. Roland

  Dodds-Parker, Col. A. D.

  MacAndrew, Col. Sir C.

  Savory, Prof. D. L.

  Dower, Lt.-Col. A. V. G. (Penrith)

  McKie, J. H. (Galloway)

  Shephard, S. (Newark)

  Dower, E. L. G. (Caithness)

  Macmillan, Rt. Hon. Harold

  Smith, E. P. (Ashford)

  Drayson, Capt. G. B.

  Maitland, Comdr. J. W.

  Stanley, Rt. Hon. O.

  Duthie, W. S.

  Manningham-Buller, R. E.

  Stoddart-Scott, Col. M.

  Eccles, D. M.

  Marples, Capt. A. E.

  Stuart, Rt. Hon. J.

  Erroll, Col. F. J.

  Marshall, Comdr. D. (Bodmin).

  Studholme, H. G.

  Fletcher, W. (Bury)

  Marshall, S. H. (Sutton).

  Sutcliffe, H.

  Foster, J. G. (Northwich)

  Maude, J. C.

  Taylor, C. S. (Eastbourne)

  Gammans, L. D.

  Mellor, Sir J.

  Taylor, Vice-Adm. E. A. (P'dd't'n, S.)

  George, Maj. Rt. Hn. G. Lloyd (P'ke)

  Molson, A. H. E.

  Thornton-Kemsley, Col. C. N.

  Grimston, R. V.

  Morrison, Maj J. G. (Salisbury)

  Touche, G. C.

  Hare, Lt.-Col. Hon. J. H. (W'dbridge)

  Morrison. Rt. Hn. W. S. (Cirencester)

  Turton, R. H.

  Hollis, Sqn.-Ldr. M. C.

  Mott-Radclyffe, Maj. C. E.

  Vane, W. M. T.

  Hope, Lord J.

  Neven-Spence, Major Sir B.

  Wakefield, Sir W. W

  Howard, Hon. A.

  Nicholson, G.

  Walker-Smith, Lf.-Col D.

  Hudson, Rt. Hon. R. S. (Southport)

  Nield, B. (Chester)

  Wheatley, Col. M. J.

  Hurd, A.

  Noble, Comdr. A. H. P.

  White, Maj. J. B. (Canterbury)

  Jeffreys, General Sir G.

  Nutting, Anthony

  Young, Sir A. S. L. (Partick)

  Kingsmill, Lt.-Col. W. H.

  Peake, Rt. Hon. O.

  Lancaster, Col. C. G.

  Peto, Brig. C. H. M.

  TELLERS FOR THE AYES:

  Legge-Bourke, Maj. E. A. H.

  Pitman, I. J.

  Mr. Drewe and

  Lindsay, Lt.-Col. M. (Solihull)

  Poole, O. B. S. (Oswestry)

  Commander Agnew.

  NOES

  Adams, Capt. Richard (Balham)

  Crawley, Flt.-Lieut. A.

  Jeger, Capt. G. (Winchester)

  Adams, W. T. (Hammersmith, South)

  Crossman, R. H. S.

  Jeger, Dr. S. W. (St. Pancras, S.E.)

  Adamson, Mrs. J. L

  Daggar, G.

  Jones, D. T. (Hartlepools)

  Allen, Scholefield (Crewe)

  Daines, P.

  Jones, P. Asterley

  Alpass, J. H.

  Dalton, Rt. Hon. H.

  Keenan, W.

  Anderson, F. (Whitehaven)

  Davies, Edward (Burslem)

  Kenyon, C.

  Attewell, H. C.

  Davies, Ernest (Enfield)

  Key, C. W.

  Austin, H. L.

  Davies, Haydn (St. Pancras, S.W.)

  Kinghorn, Sqn.-Ldr. E.

  Ayles, W. H.

  Davies, R. J. (Westhoughton)

  Kinley, J.

  Aytton Gould, Mrs. B.

  Deer, G.

  Kirkwood, D.

  Bacon, Miss A.

  de Freitas, Geoffrey

  Lang, G.

  Baird, Capt. J.

  Diamond, J.

  Lavers, S.

  Balfour, A.

  Dobbie, W.

  Lee, F. (Hulme)

  Barnes, Rt. Hon. A. J.

  Dodds, N. N.

  Leslie, J. R.

  Barstow, P. G.

  Douglas, F. C. R.

  Levy, B. W.

  Barton, C.

  Driberg, T. E. N.

  Lindgren, G. S.

  Battley, J. R.

  Dumpleton, C. W.

  Lipson, D. L.

  Bechervaise, A. E.

  Dye, S.

  Lipton, Lt.-Col. M.

  Belcher, J. W.

  Edelman, M.

  Longden, F.

  Bellenger, F. J.

  Edwards, John (Blackburn)

  McAdam, W.

  Berry, H.

  Evans, E. (Lowestoft)

  McAllister, G.

  Beswick, Flt.-Lieut. F.

  Fletcher, E. G. M. (Islington, E.)

  McEntee, V. La T.

  Bing, Capt. G. H. C.

  Follick, M.

  Mack, J. D.

  Binns, J.

  Freeman, Maj. J. (Watford)

  McKay, J. (Wallsend)

  Blackburn, Capt. A. R.

  Gaitskell, H. T. N.

  Maclean, N. (Govan)

  Blenkinsop, Capt. A.

  Gallacher, W.

  McLeavy, F.

  Blyton, W. R.

  George, Lady M. Lloyd (Anglesey)

  Mainwaring. W. H.

  Boardman, H.

  Gibbins, J.

  Mallalieu, J. P. W.

  Bottomley, A. G.

  Gibson, C. W.

  Mann, Mrs. J.

  Bowden, Flg.-Offr. H. W.

  Glanville, J. E. (Consett)

  Manning, Mrs. L. (Epping).

  Bowles, F. G. (Nuneaton)

  Gooch, E. G.

  Marshall, F. (Brightside).

  Braddock, Mrs. E. M. (L'p'l, Exch'ge)

  Goodrich, H. E.

  Mathers, G.

  Braddock, T. (Mitcham)

  Gordon-Walker, P. C.

  Mayhew, C. P.

  Brook, D. (Halifax)

  Grenfell, D. R.

  Middleton, Mrs. L.

  Brooks, T. J. (Rothwell)

  Grey, C. F.

  Mikardo, Ian

  Brown, George (Belper)

  Grierson, E.

  Mitchison, Maj. G. R.

  Brown, T. J. (Ince)

  Guest, Dr. L. Haden

  Montague, F.

  Bruce, Maj. D. W. T.

  Gunter, Capt. R. J.

  Morgan, Dr. H. B.

  Burden, T. W.

  Haire, Flt.-Lieut. J. (Wycombe)

  Morris, P. (Swansea, W.)

  Burke, W. A.

  Hall, W. G. (Colne Valley)

  Morris, Hopkin (Carmarthen)

  Byers, Lt.-Col. F.

  Hamilton, Lieut.-Col. R.

  Morrison, Rt. Hon. H. (Lewisham, E.)

  Callaghan, James

  Hannan, W. (Maryhill)

  Mort, D. L.

  Chamberlain, R. A.

  Hastings, Dr. Somerville

  Moyle, A.

  Champion, A. J.

  Haworth, J.

  Murray, J. D.

  Clitherow, R.

  Herbison, Miss M.

  Naylor, T. E.

  Cluse, W. S

  Hicks, G.

  Neal, H (Claycross)

  Cobb, F. A.

  Hobson, C. R.

  Nichol, Mrs. M. E. (Bradford, N.)

  Cocks, F. S

  Holman, P.

  Noel-Baker, Capt. F. E. (Brentford)

  Collick, P.

  Horabin, T. L.

  Noel-Buxton, Lady

  Collindridge, F.

  House, G.

  O'Brien, T.

  Colman, Miss G. M.

  Hudson, J. H. (Ealing, W.)

  Oldfield, W. H.

  Cooper, Wing-Comdr. G.

  Hughes, Hector (Aberdeen, N.)

  Paget, R. T.

  Corlett, Dr. J.

  Hughes, Lt. H. D. (W'lverh'pton, W.)

  Paling, Will T. (Dewsbury)

  Corvedale, Viscount

  Hynd, H. (Hackney, C.)

  Palmer, A. M. F.

  Cove, W. G.

  Irving, W. J.

  Pargiter, G. A.

  996

  997

  Parkin, Fit.-Lieut. B. T.

  Simmons, C. J.

  Wadsworth, G.

  Paton, Mrs. F. (Rushcliffe)

  Skeffington, A. M.

  Walkden, E.

  Pearson, A.

  Skeffington-Lodge, Lt. T. C.

  Walker, G. H.

  Peart, Capt. T. F.

  Smith, Ellis (Stoke)

  Warbey, W. N.

  Perrins, W.

  Smith, S. H. (Hull, S.W.)

  Watkins, T. E.

  Piratin, P.

  Smith, T. (Normanton)

  Webb, M. (Bradford, C.)

  Popplewell, E.

  Snow, Capt. J. W

  Weitzman, D.

  Pritt, D. N.

  Solley, L. J.

  Wells, P. L. (Faversham)

  Proctor, W. T.

  Sorensen, R. W.

  Wells, Maj. W. T. (Walsall)

  Pryde, D. J.

  Soskice, Maj. Sir F.

  White, C. F. (Derbyshire, W.)

  Pursey, Cmdr. H.

  Sparks, J. A

  Whiteley, Rt. Hon. W.

  Randall, H. E.

  Stamford, W.

  Wigg, Col. G. E. C.

  Ranger, J.

  Steele, T.

  Wilkes, Maj. L.

  Rees-Williams, Lt.-Col. D. R.

  Stephen, C.

  Wilkins, W. A.

  Reeves, J.

  Stubbs, A. E.

  Willey, F. T. (Sunderland)

  Reid, T. (Swindon)

  Summerskill, Dr. Edith

  Willey, O. G. (Cleveland)

  Rhodes, H.

  Swingler, Capt. S.

  Williams, Rt. Hon. E. J. (Ogmore)

  Robens, A.

  Symonds, Maj. A. L.

  Williams, W. R. (Heston)

  Roberts, Sq.-Ldr. Emrys O. (M'rion'th)

  Taylor, H. B. (Mansfield)

  Williamson, T.

  Roberts, Goronwy (Caernarvonshire)

  Taylor, R. J. (Morpeth)

  Willis, E.

  Rogers, G. H. R.

  Taylor, Dr. S. (Barnet)

  Wills, Mrs. E. A.

  Royle, C.

  Thomas, I. O. (Wrekin)

  Wilson, J. H.

  Sargood, R.

  Thomas, John R. (Dover)

  Woods, G. S.

  Scott-Elliot, W.

  Thomas, George (Cardiff)

  Wyatt, Maj. W.

  Sharp, Lt.-Col. G. M.

  Thomson, Rt. Hn. G. R. (Ed'b'gh, E.)

  Yates, V. F.

  Shawcross, C. N. (Widnes)

  Thorneycroft, H. (Manchester, C.)

  Young, Sir R. (Newton)

  Shinwell, Rt. Hon. E.

  Tiffany, S.

  Zilliacus, K.

  Shurmer, P.

  Tolley, L.

  Silkin, Rt. Hon. L.

  Ungoed-Thomas, L.

  TELLERS FOR THE NOES:

  Silverman, J. (Erdington)

  Vernon, Maj. W. F.

  Mr. J. Henderson and

  Silverman, S. S. (Nelson)

  Viant, S. P.

  Captain Michael Stewart.

  6.45 p.m.
  Mr. Assheton: I beg to move, in page 3, line 13, at end, insert:
  " Provided that the Bank shall not issue any direction which would require a banker to issue or to subscribe for share or purchase any asset or to sell any assets."
  This is the other side of the same picture. We were discussing on the last Amendment the principle of the limitation by the Treasury, through its powers of direction, of the issue of credit. Here we are discussing the case where the Bank may issue a direction requiring a banker to subscribe for stock or shares in some undertaking. I think that the Chancellor of the Exchequer should have very little difficulty in accepting this Amendment because it merely protects the commercial banks from interference in the day-to-day conduct of their ordinary business. I do not imagine that even the Chancellor would suggest that it is desirable to compel the banks to take up loans or shares in companies which they think commercially undesirable or at prices they cannot justify. If the Chancellor were to tell us that he does intend to give directions to commercial banks to take up loans, or shares in commercial undertakings, whether they want to or not, then I think he must tell us who is to bear the loss if in fact there are losses resulting from the directions. I can well imagine that if some such proviso as this is not put into the Bill we may very easily find a situation in the City where there is a great deal of pressure being exerted on
  998
  banks to take up certain investments to suit the Government. I will not say more at this stage, because I feel certain that the Chancellor of the Exchequer will accept the Amendment. It is clearly a reasonable one, and one which we on this side of the House feel justified in pressing.
  Mr. Dalton: The right hon. Gentleman rightly stated that this Amendment is only the other side of the same picture. That being so, the same broad considerations apply. I must apologise to the Committee if I repeat arguments which I have used in relation to previous Amendments, but to a considerable extent the reasoning on both sides of the Committee tends to be much the same on a number of these broad matters. We cannot foresee all the circumstances of the future. I would emphatically repeat that there is no intention in the mind of the Government, nor, I am sure, would there be any intention in the minds of those responsible for the Bank of England, to ride rough shod over the views, or, in some cases, the apprehensions or doubts of the clearing banks with regard to the disposal of their resources generally, whether it be in short term credits, which we were discussing on the last Amendment, or whether in more long term investments or the lockup of their funds. Just as I did not feel able to accept the last Amendment, so I do not feel able to accept this one.
  This Clause is deliberately drawn in very wide terms. We feel that what we

  999
  require in order to ensure the smooth and effective working of the relationship between the Treasury, the Bank of England and the clearing banks in the future is that there should be a wide comprehensive general power, to be exercised only in the last resort. Once we begin to seek to narrow these powers down, to chip a little piece off here and a little piece off there, we get, instead of a wide approach to this matter, a rather arbitrary delimiting approach which is not going to make for the effective working of the scheme. I have made one very important exception in the terms of the Amendment which I put down, following the pledge which I gave earlier, which does, I hope, relieve the clearing banks, and the public generally who follow these matters, from what might have been a serious apprehension. Having made that one exception in the Amendment, which has been accepted by the Committee, I do not think that it is wise to make any further broad exceptions from the width of this general power. I would repeat that there is no intention in my mind—nor, I am sure, would such intention enter into the mind of any reasonable person in the future—that we should force the banks to invest their money in directions which appear to them to be seriously likely to involve them in grave losses, such as were contemplated in the speech of the right hon. Gentleman.
  We cannot well exclude the possibility that it may be desirable, in certain circumstances, to urge the banks to devote their resources to one or other form of investment, which it was felt by the Government and the Bank of England was necessary in the interests of a planned priority, with a view to securing full employment in the country and building up our export trade and other necessary elements in our economy. Therefore, I am sure that it will not be misunderstood in any serious circles where these matters are considered, if I ask the Committee to reject this Amendment on the ground that further delimitation of what is deliberately put here as a wide power, would be disadvantageous, rather than advantageous, to the pursuit of a policy which will command general assent in the years to come. There will be the fullest consideration of all these matters, and I will deal with this more definitely on the next Amendment.
  1000
  I am proposing to make a fuller statement on that Amendment following consultations which I have had with the Governor of the Bank of England and certain representatives of the clearing banks as to how Clause 4 (3) is to operate in the future. Therefore, I ask the Committee to allow me to postpone my general statement until then, and not to accept this Amendment.
  Lieut.-Commander Braithwaite: While awaiting the Chancellor's fuller statement, I think there is one point on this Amendment which arises now. It is quite true that this is the other side of the picture in relation to the last Amendment, but the arguments are not quite parallel. The last Amendment dealt with the control of money available to the Banks for loan purposes. The right hon. Gentleman assured us that his intention was to draw up a list of priorities under which money available for loans should be released. This Amendment deals with the Bank funds available for the purposes of shares or stocks. I am quite satisfied with regard to the Chancellor's intentions in this matter, but, as so often pointed out in this House, these matters are not settled by Chancellors or other Ministers coming to the House and making agreeable, soothing speeches on the subject of the Carlton Club or anything else. They are decided by what is in the Act, when the time comes for administration, and however benevolent and politically moral may be the intentions of the right hon. Gentleman, which I do not question for a moment, other Chancellors will follow him, and I doubt if they will read with care what he has said on this occasion. They will decide on the wording of the Act, and it is with a view to improving that wording that this Amendment has been put down. What I fear may be one of the consequences, if we allow the Clause to stand as it is, is that—now we are embarking upon a new economy, and many industries are going to be nationalised, and nationalisation will necessitate the raising of a considerable number of Government loans—the time may come when, owing to industrial austerity, there may be a certain drying up of normal profit investments. Thus loans may be offered and it may be difficult to get them over.
  7.0 p.m.
  There may be a shortage of public subscription and in order to carry out their proposals the Government may direct the bankers to invest a larger proportion of their surplus funds in this or that Government loan. The first duty of any bank—and I put this forward as a first principle to which no hon. Member could take exception—is to look after its customers' money. A person puts his money in the bank for safe custody, and the customer is entitled to know that his money will be there when he wants to draw it. That is perhaps painting a rather extreme picture, but I want to suggest that powers to compel banks to invest in this, that or the other security is entirely different from having a priority in relation to the money available for loan purposes. If only for that reason I hope that the Government will look at this again.
  On the previous Amendment the hon. Member for Reading (Mr. Mikardo) commented upon something I had said about the wording of a previous Amendment. I was anxious to make the normal House of Commons point that when the Opposition puts down an Amendment we are not wedded to any particular form of words, if we can get the Government to agree to meet us on the Report stage with a form of words agreeable to them. They have the services of skilled draftsmen and learned law officers who can put the matter in a convenient form. This is a very different matter from that contained in the previous Amendment. The Chancellor is to speak to us later on on broader lines, but I trust he will reconsider his attitude towards this particular narrow point.
  Sir J. Mellor: The Chancellor has emphasised the width of these powers. It is their very width and the fact that they are to be permanent in this Bill that causes us considerable anxiety. I do not propose to repeat on this Amendment the argument I put forward upon the last one, namely, that when powers are sought for emergency purposes we ought to have special legislation, not permanent legislation. That argument is equally applicable to this Amendment. If the Chancellor insists on importing into this Bill these powers of such a far reaching character, which I feel could only justly be intended to deal with an
  1002
  emergency situation, there ought to be some time limit placed upon their application. If a time limit were introduced, I think the Committee will be much more ready to accept the terms of the Bill as they now stand.
  Lieut.-Colonel Dower: Before we take a Division on this Amendment, as I expect we shall because there seems to be a fundamental principle involved, there is a point which I hope the right hon. Gentleman will bear in mind, following on the argument. When clients of banks know that their funds can be ordered by the Bank, which is really the Government of the day, to be invested in certain securities, as is so clearly stated here, clients are bound to lose a considerable amount of confidence about where they are to put their savings. That is really a point which the Chancellor cannot avoid. Everyone of us wants our savings to be safe. If this Amendment is refused or defeated it will mean that the Government can utilise those savings in taking up or subscribing to shares, or for the purpose of buying an asset which they happen to wish to be bought. The other point, which is important—and this is an important Bill—is that this will infringe very largely the basis of company law. The directors of the bank are elected and are responsible to their shareholders. It seems to me that they will have two masters. Not only will they come under company law but also under the law as laid down in this Bill, and the other master will be the Government of the day. For those reasons I propose to support this particular Amendment in the Division lobby.
  Captain Crookshank: I shall certainly ask my hon. Friends to support this Amendment in the Lobby. It is one of great importance. The Chancellor has told us that he will make some sort of general statement about the relationship between the Bank and other banks, but that will not get away from the proposition which is in this new proviso. The proposition shortly is that it will be possible, unless words of this kind are inserted—my hon. and gallant Friend has said not necessarily these exact words, as we are not perfect draftsmen; we on this side cannot be—for the banks to be forced to subscribe to shares to which they do not wish to subscribe, or which they do not think suitable for their own business,

  1003
  or to purchase assets they do not want to have or which they think are unsuitable for them to hold. It would be possible for them to be forced to do that, which is a great infringement of the liberty of action of a bank in a business sense.
  Mr. Gallacher: Every Member of this Committee will agree that if there are good, sensible, intelligent Labour men in charge of the business of the banks, there will be no investment for which the Chancellor asks that they will not be happy to agree to. If they are not happy
  to do so the Chancellor will be able to see that they are a bunch of stick-in-the-mud Tories, and that the sooner we get rid of them the better.
  Mr. Stanley: As the hon. Member has made that point, will he promise that he and his party will do nothing to turn out these sensible, level-headed Socialist leaders, whom he is asking us to trust?
  Question put, "That those words be there inserted."
  The Committee divided: Ayes, 96; Noes, 249.

  Division No. 55.]

  AYES.

  [7.10 p.m.

  Agnew, Cmdr. P. G.

  Hope, Lord J.

  Pitman, I. J.

  Amory, D. Heathcoat

  Howard, Hon. A.

  Poole, O. B. S. (Oswestry).

  Assheton, Rt. Hon. R.

  Hudson, Rt. Hon. R. S. (Southport)

  Raikes, H. V.

  Baldwin, A. E.

  Hulbert, N. J.

  Reed, Sir S. (Aylesbury)

  Barlow, Sir J.

  Hurd, A.

  Reid, Rt. Hon. J. S. C. (Hillhead)

  Birch, Lt.-Col. Nigel

  Jeffreys, General Sir G.

  Roberts, Sq.-Ldr. Emrys O. (M'rion'th)

  Bower, N.

  Kingsmill, Lt.-Col. W. H.

  Robinson, Wing-Cmdr. Roland

  Boyd-Carpenter, Maj. J. A.

  Lancaster, Col. C. G.

  Ropner, Col. L.

  Bracken, Rt. Hon. Brendan

  Lindsay, Lt.-Col. M. (Solihull)

  Savory, Prof. D. L.

  Braithwaite, Lt.-Comdr. J. G.

  Linstead, H. N.

  Shephard, S. (Newark)

  Buchan-Hepburn, P. G. T.

  Lloyd, Maj. Guy (Renfrew, E.)

  Shepherd, Lieut. W. S. (Bucklow)

  Bullock, Capt. M.

  Low, Brig. A. R. W.

  Smith, E. P. (Ashford)

  Carson, E.

  Lucas-Tooth, Sir H.

  Stanley, Rt. Hon. O.

  Clarke, Col. R. S.

  MacAndrew, Col. Sir C.

  Stoddart-Scott, Col. M.

  Clifton-Brown, Lt.-Col. G.

  McKie, J. H. (Galloway)

  Stuart, Rt. Hon. J.

  Corbett, Lt.-Col. U. (Ludlow)

  Macmillan, Rt. Hon. Harold

  Suteliffe, H.

  Crookshank, Capt. Rt. Hon. H. F. C.

  Maitland, Comdr. J. W.

  Taylor, C. S. (Eastbourne)

  Cuthbert, W. N.

  Manningham-Buller, R. E.

  Taylor, Vice-Adm. E. A. (P'dd't'n, S.)

  De la Bére, R.

  Marshall, Comdr. D. (Bodmin).

  Thornton-Kemsley, Col. C. N.

  Dodds-Parker, Col. A. D.

  Marshall, S. H. (Sutton).

  Touche, G. C.

  Dower, Lt.-Col. A. V. G. (Penrith)

  Maude, J. C.

  Turton, R. H.

  Dower, E. L. G. (Caithness)

  Mellor, Sir J.

  Vane, W. M. T.

  Drayson. Capt. G. B.

  Molson, A. H. E.

  Wadsworth, G.

  Duthie, W. S.

  Morris, Hopkin (Carmarthen)

  Wakefield, Sir W. W.

  Eccles, D. M.

  Morrison, Rt. Hn. W. S. (Cirencester)

  Walker-Smith, Lt.-Col. D.

  Erroll, Col. F. J.

  Mott-Radclyffe, Maj. C. E.

  Wheatley, Col. M. J.

  Fletcher, W. (Bury)

  Neven-Spence, Major Sir B.

  White, Maj. J. B. (Canterbury)

  Foster, J. G. (Northwich)

  Nicholson, G.

  Willink, Rt. Hon. H. U.

  Gammans, L. D.

  Nield, B. (Chester)

  York, C.

  Glyn, Sir R.

  Noble, Comdr. A. H. P.

  Young, Sir A. S. L. (Partick)

  Grimston, R. V.

  Nutting, Anthony

  Hare, Lt.-Col. Hon. J. H. (W'dbridge)

  Peake, Rt. Hon. O.

  TELLERS FOR THE AYES:

  Hollis, Sqn.-Ldr. M. C.

  Peto, Brig. C. H. M.

  Mr. Drewe and Mr. Studholme.

  NOES.

  Adams, Capt. Richard (Balham)

  Boardman, H.

  Corvedale, Viscount

  Adams, W. T. (Hammersmith, South)

  Bottomley, A. G.

  Cove, W. G.

  Adamson, Mrs. J. L.

  Bowden, Flg.-Offr. H. W.

  Crawley, Fit.-Lieut. A.

  Allen, Scholefield (Crewe)

  Bowles, F. G. (Nuneaton)

  Crossman, R. H. S.

  Alpass, J. H.

  Braddock, Mrs. E. M. (L'p'l, Exch'ge)

  Dagga, G.

  Anderson, F. (Whitehaven)

  Braddock, T. (Mitcham)

  Daines, P.

  Attewell, H. C.

  Brook, D. (Halifax)

  Dalton, Rt. Hon. H.

  Austin, H. L.

  Brooks, T. J. (Rothwell)

  Davies, Edward (Burslem)

  Ayles, W. H.

  Brown, George (Belper)

  Davies, Ernest (Enfield)

  Ayrton Gould, Mrs. B.

  Brown, T. J. (Ince)

  Davies, Haydn (St. Pancras, S.W.)

  Bacon, Miss A.

  Bruce, Maj. D. W. T.

  Davies, R. J. (Westhoughton)

  Baird, Capt. J.

  Burden, T. W.

  Deer, G.

  Balfour, A.

  Burke, W. A.

  de Freitas, Geoffrey

  Barstow, P. G.

  Callaghan, James

  Diamond, J.

  Barton, C.

  Chamberlain, R. A.

  Dobbie, W.

  Battley, J. R.

  Champion, A. J.

  Dodds, N. N.

  Bechervaise, A. E.

  Clitherow, R.

  Douglas, F. C. R.

  Bellenger, F. J.

  Cluse, W. S.

  Driberg, T. E. N.

  Berry. H.

  Cobb, F. A.

  Dumpleton, C. W.

  Beswick, Flt.-Lieut. F.

  Cocks, F. S.

  Dye, S.

  Bing, Capt. G. H. C.

  Collick, P.

  Edelman, M.

  Binns, J.

  Collindridge, F.

  Edwards, John (Blackburn)

  Blackburn, Capt. A. R.

  Colman, Miss G. M.

  Evans, E. (Lowestoft)

  Blenkinsop, Capt. A.

  Cooper, Wing-Comdr. G.

  Evans, S. N. (Wednesbury)

  Blyton, W. R.

  Corlett, Dr. J.

  Fletcher, E. G. M. (Islington, E.)

  Follick, M.

  Mallalieu, J. P. W.

  Skinnard, F. W.

  Freeman, Maj. J. (Watford)

  Mann, Mrs. J.

  Smith, Ellis (Stoke)

  Gaitskell, H. T. N.

  Manning, Mrs. L. (Epping).

  Smith, S. H. (Hull, S.W.)

  Gallacher, W.

  Marshall, F. (Brightside).

  Smith, T. (Normanton)

  Gibbins, J.

  Mathers, G.

  Snow, Capt. J. W.

  Gibson, C. W.

  Mayhew, C. P.

  Solley, L. J.

  Glanville, J. E. (Consett)

  Messer, F.

  Sorensen, R. W.

  Gooch, E. G.

  Middleton, Mrs. L.

  Soskice, Maj. Sir F.

  Goodrich, H. E.

  Mitchison, Maj. G. R.

  Sparks, J. A.

  Gordon-Walker, P. C.

  Morgan, Dr. H. B.

  Stamford, W.

  Grenfell, D. H

  Morris, P. (Swansea, W.)

  Steele, T.

  Grey, C. F.

  Mort, D. L.

  Stephen, C.

  Grierson, E.

  Moyle, A

  Stewart, Capt. Michael (Fulham, E.)

  Guest, Dr. L. Haden

  Murray, J. D.

  Strachey, J.

  Gunter, Capt. R. J.

  Nally, W.

  Stubbs, A. E.

  Haire, Flt.-Lieut. J. (Wycombe)

  Naylor, T. E.

  Summerskill, Dr. Edith

  Hall, W. G. (Colne Valley)

  Neal, H. (Claycross)

  Swingler, Capt. S.

  Hamilton, Lieut.-Col. R.

  Nichol, Mrs. M. E. (Bradford, N.)

  Symonds, Maj. A. L.

  Hannan, W. (Maryhill)

  Noel-Baker, Capt. F. E. (Brentford)

  Taylor, H. B. (Mansfield)

  Hastings, Dr. Somerville

  Noel-Buxton, Lady

  Taylor, R. J. (Morpeth)

  Haworth, J.

  O'Brien, T.

  Taylor, Dr. S. (Barnet)

  Herbison, Miss M.

  Oldfield, W. H.

  Thomas, I. O. (Wrekin)

  Hicks, G.

  Oliver, G. H.

  Thomas, John R. (Dover)

  Hobson, C. R.

  Paget, R. T.

  Thomas, George (Cardiff)

  Holman, P.

  Paling, Will T. (Dewsbury)

  Thomson, Rt. Hn. G. R. (Ed'b'gh, E )

  House, G.

  Palmer, A. M. F.

  Tiffany, S.

  Hudson, J. H. (Ealing, W.)

  Pargiter, G. A.

  Tolley, L.

  Hughes, Hector (Aberdeen, N.)

  Parkin, Fit.-Lieut. B. T.

  Ungoed-Thomas, L.

  Hughes, Lt. H. D. (W'lverh'pton, W

  Paton, Mrs. F. (Rushcliffe)

  Vernon, Maj. W. F.

  Irving, W. J.

  Pearson, A.

  Viant, S. P.

  Janner, B.

  Peart, Capt. T. F.

  Walkden, E.

  Jeger, Capt. G. (Winchester)

  Perrins, W.

  Walker, G. H.

  Jeger, Dr. S. W. (St. Pancras, S.E.)

  Piratin, P.

  Warbey, W. N.

  Jones, A. C. (Shipley)

  Popplewell, E.

  Watkins, T. E.

  Jones, D. T. (Hartlepools)

  Pritt, D. N.

  Webb, M. (Bradford, C.)

  Jones, P. Asterley

  Proctor, W. T.

  Weitzman, D.

  Keenan, W.

  Pryde, D. J.

  Wells, P. L. (Faversham)

  Kenyon, C.

  Pursey, Cmdr. H.

  Wells, Maj. W. T. (Walsall)

  Key, C. W.

  Randall, H. E.

  White, H. (Derbyshire, N.E.)

  Kinghorn, Sqn.-Ldr. E.

  Ranger, J.

  Whitley, Rt. Hon. W.

  Kinley, J.

  Rees-William, Lt.-Col. D. R.

  Wigg, Col. G. E. C.

  Lang, G.

  Reeves, J.

  Wilkes, Maj. L.

  Lavers, S.

  Reid, T. (Swindon)

  Wilkins, W. A.

  Lawson, Rt. Hon. J. J.

  Rhodes, H.

  Willey, F. T. (Sunderland)

  Lee, F. (Hulme)

  Robens, A.

  Willey, O G. (Cleveland)

  Leonard, W.

  Roberts, Goronwy (Caernarvonshire)

  Williams, Rt. Hon. E. J. (Ogmore)

  Leslie, J. R.

  Rogers, G. H. R.

  Williams, W. R. (Heston)

  Levy, B. W.

  Royle, C.

  Williamson, T.

  Lindgren, G. S.

  Sargood, R.

  Willis, E.

  Lipson, D. L.

  Scott-Elliott, W.

  Wills, Mrs. E. A.

  Longden, F.

  Sharp, Lt.-Cot. G. M.

  Wilson, J. H.

  McAdam, W.

  Shawcross, C. N. (Widnes)

  Woods, G. S.

  McAllister, G.

  Shawcross, Sir H. (St. Helens)

  Wyatt, Maj. W.

  McEntee, V. La T.

  Shinwell, Rt. Hon. E.

  Yates, V. F.

  Mack, J. D.

  Shurmer, P.

  Young, Sir R. (Newton)

  McKay, J. (Wallsend)

  Silverman, J. (Erdington)

  Zilliacus, K.

  Maclean, N. (Govan)

  Silverman, S. S. (Nelson)

  McLeavy, F.

  Skeffington, A. M.

  TELLERS FOR THE NOES:

  Mainwaring. W. H.

  Skeffington-Lodge, Lt. T. C.

  Mr. J. Henderson and Mr. Simmons.

  7.18 p.m.
  Captain Crookshank: I beg to.move, in page 3, line 13, at end, insert:
  "Provided that every direction hereunder by the Bank to any banker together with the relative Treasury authority shall be laid before the Commons House of Parliament within seven days after it has been made and if not so laid shall be void and if the Commons House of Parliament within a period of forty days thereafter resolves that it be annulled its hall cease to have effect but without prejudice to anything previously done thereunder. In reckoning any period for the purpose of this Subsection no account shall be taken of any time during which Parliament is dissolved or prorogued or daring which the Commons House of Parliament is adjourned for more than four days."
  This Amendment is one of considerable importance. The Chancellor has said,
  1006
  speaking to the last Amendment, that he could not foresee all the circumstances in the future, nor, of course, can anybody else, and it is for that reason that it seems to us to be of real importance that the House should have, in due course, information about what is done. The Bill, in Clause 4, Section 3, lays dawn that if the Treasury so authorises them, the Bank may
  " issue directions to any banker for the purpose of securing that effect is given to any such request or recommendation."
  And we have learned, from the discussion which has arisen on the previous Amendments, the sort of things which might happen, because the Committee has rejected the provisos we hoped to insert

  1007
  to prevent their happening. For example, it will be possible—whether it is done or not is another matter—for directions to be given to banks to give credit to any classes of customers to whom otherwise they might not possibly wish to give credit. It would be possible for the banks to be directed to subscribe for shares for which they do not want to subscribe because they do not think they are suitable holdings. It would be possible for banks to be directed to purchase assets which they do not want to purchase.
  In other words, under the Bill as it now stands, they may be directed to do a heap of things which in their own judgment they think undesirable. Banks are, of course, in a trustee position, with regard to both their shareholders and their customers, and they feel that their trustee capacity is being gravely impaired by directions which they may receive. Therefore, in order to clear the banks themselves and to enable them to show both to their shareholders and their customers that they are being overridden and that it is a question of force majeure should these contingencies arise, we propose in this Amendment that any such directions by the Bank to any banker, together with the Treasury authority to do so, should be brought before this House. The Amendment is in quite a reasonably common form, namely, that if these directions are not made within seven days they should be void and that there should be a period during which this House should resolve that they should be annulled. It seems to us that some sort of safeguard of that kind is necessary from the point of view of the banks themselves, because in the circumstances I have indicated they are both innocent and possibly injured parties and, from the very special relationship which they inevitably have with both their share-holders and their depositors, it seems only reasonable that these people should know how it is that these, from their point of view, undesirable activities have arisen.
  It is all very well if, by the authorisation of the Treasury, the Bank of England tells them to do things that they do not want to do and which they think are wrong, to give credit where they do not want to give credit, to buy things they do not want to buy, and to subscribe for shares for which they do not want to subscribe, but it seems to us only
  1008
  reasonable that publicity should be given to that, and this House should have an opportunity of expressing its views as to whether or not the Treasury is authorising a bank to do something which is not desirable in the particular case. The Chancellor, as I say, made it clear that we cannot foresee the future, and it is because we cannot see into the future that it seems only right to us that some sort of safeguard of this kind should be inserted. I would be very interested to hear from the Chancellor any reasons which he might give to the contrary. As he knows better than anyone else, we are entering into an entirely new field of relationship between the Bank of England and the Treasury, and for that reason we think the time has come to make it clear in this Bill that this House should have an opportunity of having a look at these various proposals as they come along, more particularly as this House will be in a new relationship to the whole problem by reason of the very fact that the Bank has been taken over by the State.
  Mr. Dalton: I am anxious to deal in a little more detail with this Amendment, because I think it is a convenient peg on which to hang certain observations with regard to the view of the Government as to how this new regime will work. I will, if I may, begin by dealing with the Amendment narrowly and then pass to rather broader considerations. The case against this Amendment as it is set down upon the Paper is substantially the same as the case I have endeavoured to state to the Committee against previous Amendments, namely that it introduces a certain element of restriction upon the wide powers deliberately sought by the Government under this Clause. But I desire to repeat what I said on an earlier Amendment. In many cases such directions would very properly be made public and would be the subject of debate in the House under one procedure or another. The question might be asked of me or of my successors whether or not such and such a direction had been issued; in such a case it would be the duty of myself or my successor to make reply, and if the reply were thought by the Opposition of the day or by any section of the House to be unsatisfactory it would be possible for the matter to be further pursued, in the extreme case with a Vote of Censure and in other cases on an Adjournment or on a Supply Day.

  1009
  Let me make the point in passing that on a Supply Day in future when this Bill has become law it will be possible to raise matters relating to the operation of the provisions of this Bill which, as the right hon. and gallant Gentleman has rightly said, is a new departure in the relationship between the Treasury, the Bank of England and the Joint Stock Banks. Such matters will be properly debatable, as I understand, on a Treasury Supply Day in the future. That will be one of a number of Parliamentary opportunities which will arise. I think that is so. I do not think the right hon. and gallant Gentleman is disagreeing with that view. I want to get it quite clear, and I will be quite frank about it. There will be in addition an occasion for discussion of these matters— intermediate between a Vote of Censure, which is a very heavy weapon of Debate, and raising the matter on an Adjournment for half an hour or so—and it will also be possible to raise it on a Supply Day if a Treasury Vote is called for. I think— I will not say "very often" because I do not think such directions will be issued very often in the future, but in a high proportion of the small number of cases in which such directions may be issued it will be desired by all, including the Government of the day and the Chancellor of the day, that they shall be examined. On the other hand, there may be cases, as I ventured to suggest to the Committee on an earlier Amendment, in which it will be definitely against the public interest that such a matter should be ventilated at all. I refer to cases in which, owing to situations of tension threatening the peace of the world and this country's national security, or, short of that, situations in which difficult problems arise owing to the pursuit by other countries of economic or financial policies thought by us to be seriously threatening to our own arrangements, it is better that directions should be issued and we should keep rather quiet about them, at any rate for a period of time.
  So much by way of general recapitulation of the argument as to why I cannot advise the Committee to accept this Amendment. I now desire to state certain further observations as to how I think this will and should work. I hope that what I am about to say will be of some reassurance to any hon. Members who may be apprehensive as to the modus operandi of this Clause. Since I
  1010
  have held my present office I have been most anxious to introduce confident and co-operative relationships not only with those In charge of the Bank of England but with those in charge of the Joint Stock Banks. I have had a number of consultations with all the bank chairmen together. On other occasions the bank chairmen have sent, on their behalf, to see me one or two of their number. I would like to say that I have been very much impressed by their willingness to co-operate with the Government, and by the absence of party political ideas from their minds. Our conversations so far, although we may not have agreed 100 percent. on everything, have been to me most encouraging, and I have no doubt at all that with the chairmen of the joint stock banks co-operation is possible and very much desired by all concerned. It is desired by the Treasury, naturally, and by the Governor of the Bank of England and by the chairmen themselves.
  7.30 p.m.
  A little while ago I had a conversation with the Governor of the Bank of England and with two representatives of the Clearing Bank, Mr. Colin Campbell, the Chairman of the National Provincial Bank, and Mr. Edwin Fisher, Chairman of Barclays, who have kept my overdraft for a great many years, and to whom therefore I feel a particular sense of recognition. Those two gentlemen had a conversation with me, together with the Governor, and we discussed the proceedings on the Bill. They asked me what view I took of various Amendments that had been put down, and I told them. I am not saying that at the end of the meeting there was a note of complete agreement on everything. That would be absurd. That is not how we discuss these things; but we exchanged ideas. I would like to tell the Committee what I told the two bank chairmen who represent the general body of clearing banks, in the presence of the Governor, as to how I intended to operate this Clause of the Bill, if the Bill passes into law. I told them how I thought any reasonable successor of mine would also desires to operate it.
  I first of all emphasised to them that I had put down the Amendments which the Committee have already accepted, with regard to the disclosure of the affairs of individuals, particular customers or clients; and that I think they welcomed. That, I hope, has removed a large part

  1011
  of the fear which in some quarters was entertained as to how the Bill might operate. I told them that I would tell the Committee—and I am now telling the Committee what I told them I would state in the House this week—that no direction would be issued by the Bank of England under this Subsection, with the approval of the Treasury, without the views of the representatives of the clearing banks being first ascertained. There should be no question of the clearing banks suddenly waking up to find that the Bank of England has put down some direction, with the approval of the Treasury, without the representatives of the clearing banks having been fully consulted.
  I assured them that if any such case ever arose—I repeat that this is a power of last resort, but if we reached the last resort and if we could not clear things by discussion among the various parties concerned—I undertook that the Treasury would not approve—because the Treasury has to approve, under the Clause—the issue of any direction to the clearing banks without the clearing banks having been consulted fully beforehand, and having had an opportunity not only to express their views to the Bank of England but to have a right of direct access to the Treasury and to the Chancellor of the Exchequer. The Bank of England is, and should be, the normal channel of communications between the Government and the clearing banks. It is administratively clumsy, inconvenient and time-wasting for the clearing banks always to come to the Chancellor of the Exchequer about their affairs. Normally they should proceed through the channel of the Bank of England. But in an abnormal situation such as we had under consideration—the issue of a direction by the Bank of England to the clearing banks—not only should the clearing banks in the first place be fully consulted, but they should have the right of direct access to the Treasury and to myself beforehand. I have pledged myself, so far as my term of office is concerned, that I shall always be glad to see representatives of the clearing banks, the Governor of the Bank of England also being present —that is proper and reasonable—if there should be any such issue, on which difference of opinion is likely to result on the need for a direction's being issued. I think that is not without importance.
  1012
  In the second place, with regard to publicity. Directions such as we are here contemplating would not normally, of themselves, and by their essential nature, fall within the scope of the Official Secrets Acts. I ask hon. Gentlemen opposite to note this point. I say "normally" because we must also consider an abnormal situation such as I have already described, where the safety of the country might be at stake; but normally, they would not fall within the Official Secrets Acts. Therefore it would not be wrong for a representative of the clearing banks who felt that he was liable to be served with a direction which he felt was most damaging to the interests of his bank—we hope this is purely theoretical and that the situation will not arise, but if it should arise—for him to express his views. He would not be bound to complete secrecy. He could express his views to those with whom he was in touch. That means that it would, normally, be possible for such a direction to be the subject of a Parliamentary Question in this House, either before or after the issue of the direction.
  To that extent, publicity is assured and the possibility of Debate is safeguarded to the same degree as I have already mentioned. A Parliamentary question might be asked about the direction intended to be issued. Following that direction, it would be possible for the various forms of Parliamentary Debate to be initiated, extending from the Vote of Censure to the Adjournment half hour. This. I hope, will be, in terms of constitutional theory, a not at all inadequate provision for due publicity. Moreover, I indicated to the representatives of the clearing banks that, of course, I could not bind my successors any more than they could bind their successors. I may perhaps be allowed to recall what I said during the Second Reading Debate to the hon. Member for Mile End (Mr. Piratin).
  Some people say, "What would happen if we had a Communist Chancellor of the Exchequer? "I would ask in reply," What would happen if we had a lot of Fascist or Mosleyite bank chairmen? "In that event it might be thought disadvantageous to have publicity. But we cannot foresee the future. I hope we may rule out certainly the latter and almost certainly the former. That being so, we can look at the thing in terms of practical prospect. I hope

  1013
  and believe that no successor of mine, even though at some distant date he might be drawn from the party opposite, would repudiate these undertakings which I have given, so far as my term of office is concerned, to the bank chairmen. 1 added that so far as I was concerned, I had no intention of using any direction under this Subsection in order to interfere with the daily work and routine of the banks. I have no desire to interfere with the daily work and routine either of the Bank of England or of the joint stock banks. After all, the powers we are taking in the Bill are general, and are designed to relate primarily to large issues of public policy and, I frankly state, to economic planning and the allocation of priorities in regard to the usage of long-term and short-term credit, and to various matters arising therefrom.
  I have related the discussions which I had, and the assurance which I gave to the representatives of the joint-stock banks that I would make this statement in the House. The right hon. Gentleman is quite right—we are entering into quite a new period in regard to many aspects of our national life. This Bill is designed to give the Government broad general powers to guide our craft, through perhaps stormy waters, to a goal which I am sure there would be general desire that we should reach, to a harbour into which every hon. Member would desire that we should enter, the harbour of full employment and widespread prosperity. There is no doubt that we should all desire that; the only dispute is as to whether we should have guidance or whether we should let the whole thing drift. We have had experience of drifting, and we think that now is the time when there should be a firm hand upon the tiller—a firm, but let us hope sympathetic, tolerant, intelligently guided hand.
  So long as I hold this office, I shall always wish to be fully informed of the views entertained in banking circles, particularly by persons who have had long experience in the conduct of banking business such as the two gentlemen I have already referred to, Mr. Colin Campbell and Mr. Edwin Fisher, who have been a long time at the job and who have an accumulated knowledge of economic and financial questions. I shall always wish to keep in touch with such men while I hold this office, and I am sure they
  1014
  approach the matter without any political bias or prejudice at all. I have no right to commit them; I have merely related what I said in my conversations with them. I do not seek to commit them, or to say that they entirely agreed with everything I said; but I hope that I was able to convince them that I want to play the game with them so long as they play the game with me, as I believe they will. This being so, I think it would be disadvantageous to insert this Amendment in the Bill.
  If I may revert for one moment to what I said earlier, there will be circumstances when the Treasury itself will desire that publicity should be given to directions under this subsection, and when it will take special steps to give publicity. There will be other cases where the Treasury will not wish to initiate publicity, but will have no objection to publicity being initiated by other means. I do not think the procedure proposed in this Amendment is convenient for the purpose. I noted with some interest that it is only the "Commons House of Parliament" before which these directions are to be laid and which is to have the power of rejection within 40 days. I do not know why the Conservative Party have put the House of Lords in Coventry. I thought that in these cases the Conservative Party always contended that if they lost the battle in the House of Commons they hoped to win it in the House of Lords, and I am surprised—
  Captain Crookshank: It was assumed, possibly wrongly, that this would be certified as a Money Bill, therefore the other place would have no interest.
  Mr. Dalton: I think it was rather unkind to the Lords, who have been so kind to the Conservative Party; but I understand now. It will be for Mr. Speaker to express the view whether it is a Money Bill or not, but I understand now why the Lords were left out in the cold. But even on that view, I do not think it would be a convenient procedure. I would again ask the Committee to let this thing start under fair auspices, and I hope that, whatever may be said about the difficulty of binding the future, the Committee will agree that it is likely to start under fair auspices, in view of what I have said about the very friendly relations which now exist between those responsible for the conduct and policy of

  1015
  the clearing banks, the Bank of England and the Treasury. Let us start with good hope of co-operative effort directed to the public benefit, and if, later on, it should be found—contrary to all expectations— that these things go wrong, then let the Conservative Opposition of that time—far off in the future—raise the matter and see whether we can improve upon it then. Meanwhile, let it start, and do not let us diminish the generality of the powers contained in this Clause, or seek to introduce notes of potential dispute and disagreement which I seriously hope will never arise in practice.
  7.45 P.m.
  Mr. Stanley: The right hon. Gentleman tells us that as a result of this Bill he hopes in future to have a firm hand on the tiller. What we are frightened of is that at the same time he will have a greedy hand in the till, and we want, as far as possible, to remove that temptation, if not from him at least from his successors. Certainly all of us on this side of the House have been extremely gratified by the glowing tribute the right hon. Gentleman has paid to those responsible for the clearing banks. He has described them as public-spirited men with whom he talked, if not with complete agreement, yet obviously with a considerable amount of mutual respect. He paid tribute to their complete lack of any feelings of party politics. What a difference between the description given of these same gentlemen by the right hon. Gentleman and his supporters when they talk outside this House!
  The right hon. Gentleman has told us that in the course of his conversations he attempted to give the bankers two reassurances on the way in which the extremely wide—in fact unlimited—powers under this Clause are to be used. The first—and with this we would all agree—was that the powers of the Bank of England, after approval by the Treasury, should not be exercised except first of all after consultation between the Bank of England and the clearing banks, and then after consultation between the clearing banks and the Treasury—indeed, as he said, with the right of direct access to the Chancellor. That is a safeguard of considerable extent with which we all agree. I can, however, see no possible reason why that safeguard cannot be inserted in the Bill. We have now been
  1016
  told, a very great number of times, that of course these powers are very wide, that the Government never intend to use them, but still they must have them. Here is a case where there does not seem to me any difficulty at all to prevent the right hon. Gentleman putting down an Amendment on the next stage expressing this necessity for consultation. He does already provide—
  Mr. Dalton: Is the right hon. Gentleman proposing an Amendment providing that it shall not be done without consultation with the joint stock banks?
  Mr. Stanley: I am suggesting that the right hon. Gentleman should put into legislative form the pledge he has given. He said that he could not bind his successors, and of course he could not, by a pledge given to the House as he gives it this evening; but by inserting it in the Bill he could at least give it statutory force, whoever his successor is, until the House of Commons is prepared to change it. I hope he will give us an assurance that on the next stage he will put down the necessary Amendment. The second assurance which the Chancellor gave filled me with a certain amount of anxiety, because he said it would not be in all cases that the Official Secrets Act would apply to a direction given by the Bank of England to, say, the Midland Bank. I cannot see how the Official Secrets Act could apply in any sense. Although I think the way provided in the Amendment is neater and tidier, because it gives the information immediately to the House instead of waiting for the private banker to approach a Member of Parliament and ask him to put a question, I had always counted on the fact that none of these directions to the banks could be secret, and that every recipient would be entitled to appeal to his Member of Parliament and get his Member of Parliament to raise the matter in the same way as any other matter can be raised. I was amazed to hear the right hon. Gentleman suggest that, even in a proportion of cases, the Official Secrets Act could apply to directions of this sort.
  If it is the intention that the direction itself may contain, as one of its terms, a provision that it shall be kept secret, I should say that that would be quite outside the scope and purpose of the Clause, and I hope that as such it would be held to be ultra vires by any court.

  1017
  Unless the right hon. Gentleman the Chancellor can assure us, first, that he will at a later stage include some Amendment to carry out the right of consultation which he has promised, and secondly, that the Official Secrets Act does not apply in any case and that the recipients of these directions will always have the right of access to Members of Parliament for the purpose of raising the matter, we shall certainly have to divide the Committee.
  Mr. Gallacher: I want to give a warning about this Amendment. I am not against consultation on the question of these directions, but I can conceive that it might be necessary to give a direction before it was possible to have consultation and that the consultation would take place after the direction had been given. If there is inserted in the Bill a provision that no direction shall be given before there is consultation, that will bring about a very difficult situation and destroy the effect of much of the Measure. For instance, a clearing bank might be about to make an investment that would go right against the national interest, and it might be necessary for a direction to be given to that clearing bank straight away and for consultation to take place afterwards. To insert a provision that there must be consultation before there can be a direction would have a crippling effect on the Bill.
  Lieut.-Colonel Dower: I think the Chancellor of the Exchequer is trying to meet some of the serious worries which hon. Members on this side have on this matter, but I am inclined to agree with my right hon. Friend the Member for West Bristol (Mr. Stanley) that the Chancellor's assurance will not be really effective unless a provision to that effect is inserted in the Bill. For that reason I support the Amendment. I suggest that the right hon. Gentleman is not being absolutely fair to the Committee. He said that, in addition to consultation with the clearing banks, the chairmen of those banks would be free to publish and make known the directions, and that hon. and right hon. Members would be able to raise those matters in the House. I would like to examine that question a bit further. The method of raising a matter in the House by question and answer is very limited. The method of raising matters in the old half an hour on the Adjournment is also extremely limited, and a vast number of hon. Members are constantly trying to
  1018
  obtain the Adjournment. The right hon. Gentleman said that it would always be possible to put down a Motion of Censure, but is it seriously suggested that we should put down a Motion of Censure simply because of one direction which we do not happen particularly to like? All the Motions of Censure that I have known in the House have been on very grave issues. [An Hon. Member: "What about the last one? "] The last Motion of Censure was an outstanding one, and it was one of the gravest Motions of Censure I have known, as I think time will show.
  The Chancellor said that he had met two very charming bank chairmen, one of whom keeps his overdraft. I hope the right hon. Gentleman will be permitted to continue his overdraft, and perhaps even get further credit facilities as a result of his friendly conversations. The right hon. Gentleman said, "These two bankers came to see me and we all got on very nicely indeed." I cannot feel that the Chancellor is such a humble individual that he does not realise that if a lion lies down with a lamb, the lamb has got to get on with the lion or something will happen. The two points which the Chancellor has made have very genuinely met a great deal of doubt which existed in our minds, but I cannot help feeling that this last resort, the direction that may be given by the Treasury and the Bank of England to the clearing banks and which may be resisted by them, is bound to be on a major issue, because in all other cases they will obviously try to co-operate. There is bound to be cooperation, because otherwise the system will not work and the situation will become intolerable. For that reason, I maintain that the Amendment is a reasonable one, and I feel that on the very few occasions when the Bank of England will find it necessary to give directions to the clearing banks, the House should still keep its finger on the pulse of vital issues. If the Amendment is not adopted, I think we shall be giving away another link in the chain of democracy.
  Sir J. Mellor: The Chancellor has resisted this Amendment on the ground that it is a restriction upon the wide and general powers which he feels the Treasury and the Bank of England should have, but as far as I understand him, he objects only because he believes that it may involve the disclosure of some direction

  1019
  which it would be contrary to the public interest to disclose. That is only likely to happen very rarely indeed.
  Mr. Dalton: Very rarely.
  8.0 p.m.
  Sir J. Mellor: Therefore, I would make the suggestion that he might perhaps see his way to accept the Amendment, subject to the proviso that there should be an Amendment to the Amendment, providing that, if the Treasury certified, with regard to a particular direction, that it would be contrary to the public interest to disclose it, there should be no obligation to lay that direction before Parliament. In the ordinary course of events, the obligation to lay before Parliament should be there. I think that that would meet the objection which the Chancellor himself made to the Amendment and I hope very much that we may have his observations upon it.
  Mr. Sydney Silverman: I was glad to hear my right hon. Friend say that he did not propose to accept the Amendment and I hope that he is still of that opinion. I hope also that he will resist the blandishments of the right hon. Gentleman and not accept an Amendment along the lines suggested by him; not to make it a statutory obligation upon him or upon the Bank of England to have consultations prior to any direction coming into force. That would be a very wrong thing to do and would be a wholly ineffective point of view with regard to the objections of hon. and right hon. Gentlemen opposite. What they wish to see inserted in the Bill so as to have statutory obligations, is merely consultation. It is not agreement; it is not even suggested from that side that agreement should be necessary. If they were saying that such direction should not be operative or initiated without the agreement of the chairman of the joint stock banks, I could see some point in the further argument that that should be part of the Bill, but they are not saying that at all. It seems hopeless and derogatory to make that a statutory obligation which could not influence the course of events at all. If there were a difference of opinion between the joint stock banks and the Treasury, then the Treasury view would prevail, and that is the important thing. If that is so, there can be no point at all in making prior consultations a statutory
  1020
  obligation. The essential thing is that this is a fundamental chance in the economy of this country. The question is, Who is going to control large-scale credit in the future? Is it to be the financial institutions or the Treasury, responsible to this House, and, through this House, to the country? Are we to have a planned, purposeful economy or a haphazard economy in the country?
  Lieut.-Colonel Dower: That is what the hon. Member calls it.
  Mr. Silverman: Certainly, that is precisely what we set out to do, and I am surprised that anyone should question it. I can understand that they may not approve of our purpose or of the idea that these things are controlled with a communal purpose at all. They do not agree with it, but I can understand it. I do not see why anyone should challenge that the Government have a purposeful economy and this purpose should be the purpose of the representatives of the people and not, as in the past, of uncontrolled, unrestricted private financial capitalists. If we are to have that—and we are—obviously, the ultimate control must be from the Treasury, and I understand that nobody challenges that. The only other point I wish to make is, that obviously in those circumstances the occasion of these directions will have considerable public importance and this House will ultimately be responsible for them. I take it, therefore, that in the vast majority of cases no question of financial concern should arise.
  I would like my right hon. Friend, if he thinks it necessary, to dilate a little further on the point. I understood him to say, or to indicate, that it would only be on the rarest possible occasions that any question of any financial secrecy could arise. I apprehend that those circumstances might be circumstances of war or of a very high degree of international tension, which might, unfortunately, result in war. I take it, also, to mean that in circumstances that do not come within either of those categories, the Government would have no intention whatever of withholding sufficient from the House of Commons to enable hon. Members on either side to form their own view and exercise their own responsibility whether the directions were rightly made or not.
  Mr. Dalton: I intervene again only to reply to the two suggestions that were made from the Front Opposition bench. May I take them in reverse order for convenience—first, the question of publicity, by one means or another, and, possibly, on a Parliamentary. Debate on one of those directions? I entirely agree with what has been said on both sides of the Committee, last by my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) and before that by the right hon. Member for West Bristol (Mr. Stanley), that very rarely indeed would there be any ground of public interest which should prevent discussion in the House of Commons under one or other of the forms that we have been discussing— a Vote of Censure at one end and the half an hour Adjournment at the other extreme, and conveniently, on some Resolution or on a Supply Day. Rarely indeed would there be any ground of public interest obstructing such discussions.
  I am very anxious—and I was when I was talking to Mr. Colin Campbell and Mr. Edwin Fisher—that there should be no misunderstanding about it, and I indicated to them, and I think they accepted the position, and I think I said it to the Committee, that only in very rare circumstances which, perhaps, might not arise if we enter a period of profound peace and of international co-operation would directions under this Clause not be properly and usefully debated in the House. But if we are to be frank with ourselves and face all the dangers of the future with open eyes, it may be that yet again this country will be either at war or so near to war that the very greatest precautions will need to be taken, so that public interest shall not be jeopardised by improper publicity. It was that which I had in mind in making the qualifications I made both in my discussion with representatives of the joint stock banks and in my statement on the matter to the Committee.
  Very rarely would it be the case, but, occasionally, unhappily, it might be the case that the public interest might properly be held to preclude such discussion, if, for example, the Official Secrets Act were relevant, but only in such case of war, the possibility of war or severely strained international situation. With exclusion made for such an extreme situation, there would not be any reason why these directions should not be discussed in the House.
  1022
  I hope I have satisfactorily dealt with that question.
  The other matter was whether we should insert in the Bill explicit provision for consultation with the joint stock banks before the issue of such directions. Under Clause 4(1), where there is provision as regard to the Bank of England, the Subsection states:
  " (1) The Treasury may from time to time give such directions to the Bank as, after consultation with the Governor of the Bank, they think necessary in the public interest."
  As my hon. Friend pointed out, this refers to consultation and not necessarily agreement. If there was agreement, there would be no need for direction, and the cases of disagreement, I hope, will be very exceptional indeed. It is specifically laid down that there shall be such consultations. As I understand the right hon. Gentleman's proposal, it is that, in Subsection (3) of Clause 4, there should be inserted similar words regarding consultation with the Joint Stock Banks, or the spokesmen of the Joint Stock Banks, or some such words. I will certainly consider that, but I do not want to give a snap answer now. The only thought that occurs to me is that the wording of Clause 4, (1) covers the Governor of the Bank of England, who is a clearly definable person. In the case of the clearing banks, the position would be different, it is quite true, and two gentlemen came to see me the other day—two much respected gentlemen of long experience—and we shall have to be very careful in framing an Amendment to the Bill so as to make quite sure who was entitled to be consulted on behalf of the clearing banks. I should have to have a look at that. [An Hon. Member: "The chairman."] Well, it is a question who would have to be included. There is one chairman, I think, Mr. Colin Campbell, but, anyhow, I will look at it again. All I want to point out to the Committee now is that we must have a greater degree of precision in this case than in the case of the Bank of England, where there is only the one Governor. Here, there are a number of other banks involved, outside the Big Five, but I will look at it again in an attempt to get a form of words exactly parallel, so far as drafting is concerned, to the provision in Clause 4 (1) relating to the Bank of England regarding consultation, but not necessarily agreement. In spite of the cautionary words

  1023
  spoken by the hon. Member for Nelson and Colne, I think it might help to allay needless alarm—[Hon. Members: "It would."]—very well, it would.
  8.15 p.m.
  Mr. Stanley: Not needless?
  Mr. Dalton: Anyhow, I will look at it, but I make no promise, and I will see if it is possible and wise to do that. Having done so, I am assuming that the Opposition will now let us have the Amendment.
  Sir J. Mellor: I think my point was designed to meet the Chancellor's objection. It was simply this—the right hon. Gentleman could accept the Amendment, subject to the Treasury having the right to certify that the disclosure of a particular direction would be contrary to the public interest. The obligation to lay it before Parliament would then no longer arise. Otherwise, there would be the necessity to lay the direction before Parliament. I submit that that would be the ordinary course, and that the necessity for certification would only be very rare. In the ordinary course, laying the directions before Parliament involves no restriction of the Chancellor's powers whatever, except such as this House might think fit to impose by a majority. If the right hon. Gentleman accepted my proposal, there would be no restriction whatever, because, in the event of that exceptional and rare case arising, where there was a real reason to feel that the publication of the direction would be contrary to the public interest, certification could exclude it from the operations of the proviso.
  Mr. Dalton: I am anxious that the hon. Member should not think that I have not given thought to this matter, but this whole procedure, as indicated in this Amendment, is, I think, essentially undesirable. It creates an appearance of conflict in the suggestion made by the hon. Gentleman that the Treasury shall certify and that that certificate might then be called in question and an acrimonious discussion arise in regard to the joint stock banks, with whose interests this discussion is concerned. Although they might have objection in the first instance to the proposals made to them by the Bank of England, none the less the joint stock banks might well prefer that, the direction having been issued, the matter should not further be ventilated in the House. In other words, the proposal which the hon. Gentlemen have suggested might really stir up Debate and discussion where this was, broadly, not advisable, and I repeat that there will be plenty of scope, except in the very rare cases which I have mentioned, such as being in a war zone or near to the war zone, for the matter to be raised and debated, if it is seen to be desirable. If the people connected with the joint stock banks feel that it is really useful, there are many ways in which it can be ventilated in the House. In spite of the suggestion, I must resist the Amendment and ask the Committee to pass this Clause in its pristine form.
  Question put, "That those words be there inserted."
  The Committee divided: Ayes, 91; Noes, 266.

  Division No. 56.]

  AYES.

  [8.20 p.m.

  Agnew, Cmdr. P. G.

  Eccles, D. M.

  Maitland, Comdr. J. W.

  Amory, D. Heathcoat

  Erroll, Col. F. J.

  Manningham-Buller, R. E.

  Assheton, Rt. Hon. R.

  Fletcher, W. (Bury)

  Marshall, Comdr. D. (Bodmin).

  Ba dwin, A. E.

  Foster, J. G. (Northwich)

  Marshall, S. H. (Sutton).

  Barlow, Sir J.

  Gammans, L. D.

  Maude, J. C.

  Birch, Lt.-Col. Nigel

  Glyn, Sir R.

  Mellor, Sir J.

  Bower, N.

  Grimston, R. V.

  Molson, A. H. E.

  Boyd-Carpenter, Maj. J. A.

  Hare, Lt.-Col. Hon. J. H. (W'dbridge)

  Morrison, Rt. Hn. W. S. (Cirencester)

  Bracken, Rt. Hon. Brendan

  Hollis, Sqn.-Ldr. M. C.

  Mott-Radclyffe, Maj. C. E.

  Braithwaite, Lt.-Comdr. J. G.

  Hope, Lord J.

  Neven Spence, Major Sir B.

  Buchan-Hepburn, P, G. T.

  Howard, Hon. A.

  Nicholson, G.

  Bullock, Capt. M.

  Hudson, Rt. Hon. R. S. (Southport)

  Nield, B. (Chester)

  Carson, E.

  Hulbert, N. J.

  Noble, Comdr. A. H. P.

  Clarke, Col. R. S.

  Hurd, A.

  Nutting, Anthony

  Clifton-Brown, Lt-Col. G.

  Jeffreys, General Sir G.

  Peake, Rt. Hon. O.

  Corbett, Lt.-Col. U. (Ludlow)

  Kingsmill, Lt.-Col. W. H.

  Peto, Brig. C. H. M.

  Crookshank, Capt. Rt. Hon. H. F. C.

  Lancaster, Col. C. G.

  Pitman, I. J.

  Cuthbert, W. N,

  Legge-Bourke, Maj. E. A. H.

  Ponsonby, Col. C. E.

  Dodds-Parker, Col. A. D.

  Lindsay, Lt.-Col. M. (Solihull)

  Poole, O. B. S. (Oswestry).

  Dower, Lt.-Col. A. V. G. (Penrith)

  Linstead, H. N.

  Raikes, H. V.

  Dower, E. L. G. (Caithness)

  Low, Brig. A. R. W.

  Reed, Sir S. (Aylesbury)

  Drayson, Capt. G. B.

  Lucas-Tooth, Sir H.

  Reid, Rt. Hon. J. S. C. (Hillhead)

  Drewe, C.

  MacAndrew, Col. Sir C.

  Ropner, Col. L.

  Duthie, W. s.

  Macmillan, Rt. Hon. Harold

  Savory, Prof. D. L.

  Shepherd, S. (Newark)

  Taylor, Vice-Adm. E. A. (P'dd't'n, S.)

  White, Maj. J. B. (Canterbury)

  Shepherd, Lieut. W. S. (Bucklow)

  Thornton-Kemsley, Col. C. N.

  Willink, Rt. Hon. H. U..

  Smith, E. P. (Ashtord)

  Touche, G. C.

  York, C

  Stanley, Rt. Hon. O.

  Turton, R. H.

  Stoddart- Scott, Col. M.

  Vane, W. M. T.

  TELLERS FOR THE AYES:

  Stuart, Rt. Hon. J.

  Wakefield, Sir W. W.

  Sir Arthur Young and

  Sutcliffe, H.

  Walker-Smith, Lt.-Col. D.

  Mr. Studholme.

  Taylor, C. S. (Eastbourne)

  Wheatley, Col. M.J.

  NOES

  Adams, Capt. Richard (Balham)

  Edelman, M.

  Marquand, H. A.

  Adams, W. T. (Hammersmith, South)

  Edwards, (Caerphilly)

  Marshall, F. (Brightside).

  Adamson, Mrs. J. L.

  Edwards, W. J. (Whitechapel)

  Mathers, G.

  Allen, Scholefield (Crewe)

  Evans, E. (Lowestoft)

  Mayhew, C. P.

  Alpass, J. H.

  Evans, S. N. (Wednesbury)

  Messer, F.

  Anderson, F. (Whitehaven)

  Farthing, W. J.

  Middleton, Mrs. L

  Attewell, H. C.

  Fletcher, E. G. M. (Islington, E.)

  Mitchison, Maj. G. R.

  Austin, H. L.

  Follick, M.

  Morgan, Dr. H. B.

  Ayles, W. H.

  Freeman, Maj. J. (Watford)

  Morris, P. (Swansea, W.)

  Ayrton Gould, Mrs. B.

  Gaitskell, H. T. N.

  Morris, Hopkin (Carmarthen)

  Bacon, Miss A.

  Gallacher, W.

  Mort, D. L.

  Baird, Capt. J.

  Gibbins, J.

  Moyle, A.

  Balfour, A.

  Gibson, C. W.

  Murray, J. D.

  Barstow, P. G.

  Glanville, J. E. (Consett)

  Nally, W.

  Barton, C.

  Gooch, E. G.

  Naylor, T. E.

  Battley, J. R.

  Goodrich, H. E.

  Neal, H. (Claycross)

  Bechervaise, A. E.

  Gordon-Walker, P. C.

  Nichol, Mrs. M. E. (Bradford, N.)

  Belcher, J. W.

  Greenwood, Rt. Hon. A.

  Nicholls, H. R. (Stratford)

  Bellenger, F. J.

  Grenfell, D. R.

  Noel-Buxton, Lady

  Berry, H.

  Grey, C. F.

  O'Brien, T.

  Beswick, Flt.-Lieut. F.

  Grierson, E.

  Oldfield, W. H.

  Bevan, Rt. Hon. A. (Ebbw Vale)

  Griffiths, Rt. Hon. J. (Llanelly)

  Oliver, G. H.

  Bing, Capt. G. H. C.

  Guest, Dr. L. Haden

  Paget, R. T.

  Binns, J.

  Gunter, Capt. R. J.

  Paling, Rt. Hon. Wilfred (Wentworth)

  Blackburn, Capt. A. R.

  Hall, W.G. (Colne Valley)

  Paling, Will T. (Dewsbury)

  Blyton, W. R.

  Hamilton, Lieut.-Col. R.

  Palmer, A. M. F.

  Boardman, H.

  Hannan, W. (Maryhill)

  Pargiter, G. A.

  Bottomley, A. G.

  Hastings, Dr. Somerville

  Parkin, Fit.-Lieut. B. T.

  Bowden, Fig.-Offr. H. W.

  Haworth, J.

  Pearson, A.

  Bowles, F. G. (Nunealon)

  Henderson, J. (Ardwick)

  Peart, Capt. T. F.

  Braddock, Mrs. E. M. (L'p'l, Exchge)

  Herbison, Miss M.

  Perrins, W.

  Braddock, T. (Mitcham)

  Hewitson, Capt. M.

  Piratin, P.

  Brook, D. (Halifax)

  Holman, P.

  Platts-Mills, J. F. F.

  Brooks, T. J. (Rothwell)

  Horabin, T. L.

  Poole, Major Cecil (Lichfield).

  Brown, George (Belper)

  House. G.

  Popplewell, E.

  Brown, T. J. (Ince)

  Hudson, J. H. (Ealing, W.)

  Pritt, D. N.

  Bruce, Maj. D. W. T.

  Hughes, Hector (Aberdeen, N.)

  Proctor, W. T.

  Buchanan, G.

  Hughes, Lt. H. D. (W'lverh'pton, W.)

  Pryde, D. J.

  Burke, W. A.

  Isaacs, Rt. Hon. G. A.

  Pursey, Cmdr. H.

  Butler, H. W. (Hackney, S.)

  Irving, W. J.

  Ranger, J.

  Byers, Lt.-Col. F.

  Janner, B.

  Rees-Williams, Lt.-Col. D. R.

  Callaghan, James

  Jeger, Capt. G. (Winchester)

  Reeves, J.

  Chamberlain, R. A.

  Jeger, Dr. S. W. (St. Pancras, S.E.)

  Reid, T. (Swindon)

  Champion, A. J.

  Jones, A. C. (Shipley)

  Rhodes, H.

  Clitherew, R.

  Jones, D. T. (Hartlepools)

  Robens, A.

  Cluse, W. S

  Jones, P. Asterley

  Roberts, Sq.-Ldr. Emrys O. (M'rion'th)

  Cocks, F. S

  Keenan, W.

  Roberts, Goronwy (Caernarvonshire)

  Collick, P.

  Kenyon, C.

  Rogers, G. H. R.

  Collins, V. J.

  Key, C. W.

  Royle, C.

  Colman, Miss G. M.

  Kinghorn, Sqn.-Ldr. E.

  Sargood, R.

  Comyns, Dr. L.

  Kinley, J.

  Scott-Elliot, W.

  Cooper, Wing-Comdr. G.

  Lang, G.

  Sharp, Lt.-Col. G. M.

  Corlett, Dr. J.

  Lavers, S.

  Shawcross, C. N. (Widnes)

  Corvedale, Viscount

  Lawson, Rt. Hon. J. J.

  Shawcross, Sir H. (St. Helens)

  Cove, W. G.

  Lee, F. (Hulme)

  Shinwell, Rt. Hon. E.

  Crossman, R. H. S.

  Leslie, J. R.

  Shurmer, P.

  Daines, P.

  Levy, B. W.

  Silverman, J. (Erdington)

  Dalton, Rt. Hon. H.

  Lewis, A. W. J. (Upton)

  Silverman, S. S. (Nelson)

  Davies, Edward (Burslem)

  Lindgren, G. S.

  Simmons, C. J.

  Davies, Clement (Montgomery)

  Lipson, D. L.

  Skeffington-Lodge, Lt. T. C.

  Davies, Ernest (Enfield)

  Lipton, Lt..-Col. M.

  Skinnard, F. W.

  Davies, Haydn (St. Pancras, S.W.)

  Longden, F.

  Smith, Ellis (Stoke)

  Davies, R. J. (Westhoughton)

  McAdam, W.

  Smith, S. H. (Hull, S.W.)

  Deer, G.

  McAllister, G.

  Smith, T. (Normanton)

  de Freitas, Geoffrey

  McEntee, V. La T.

  Snow, Capt. J. W.

  Delargy, Captain H. J.

  McGhee, H. G.

  Solley, L. J.

  Diamond, J.

  Mack, J. D.

  Sorensen, R. W.

  Dobbie, W.

  McKay, J. (Wallsend)

  Soskice, Maj. Sir F.

  Dodds, N. N.

  Maclean, N. (Govan)

  Sparks, J. A.

  Douglas, F. C. R.

  McLeavy, F.

  Stamford, W.

  Driberg, T. E. N.

  Mainwaring. W. H.

  Steele, T.

  Dugdale, J. (W- Bromwich)

  Mallalieu, J. P. W.

  Stephen, C.

  Dumpleton, C. W.

  Mann, Mrs. J.

  Stewart, Capt. Michael (Fulham, E.)

  Dye, S.

  Manning, Mrs. L. (Epping).

  Stubbs, A. E.

  1026

  1027

  Summerskill, Dr. Edith

  Walkden, E.

  Williams, Rt. Hon. T. (Don Valley)

  Symonds, Maj. A. L.

  Walker, G. H.

  Williams, W. R. (Heston)

  Taylor, H. B. (Mansfield)

  Watkins, T. E.

  Williamson, T.

  Taylor, R. J. (Morpeth)

  Webb, M. (Bradford, C.)

  Willis, E.

  Taylor, Dr. S. (Barnet)

  Weitzman, D.

  Wills, Mrs. E. A.

  Thomas, I. O. (Wrekin).

  Wells, P. L. (Faversham)

  Wilson, J. H.

  Thomas, John R. (Dover)

  Wells, Maj. W. T. (Walsall)

  Woods, G. S.

  Thomas, George (Cardiff)

  White, H. (Derbyshire, N.E.)

  Wyatt, Maj. W.

  Thomson, Rt. Hn. G. R. (Ed'b'gh, E.)

  Whiteley, Rt. Hon. W.

  Yates, V. F.

  Tiffany, S.

  Wigg, Col. G. E. C.

  Young, Sir R. (Newton)

  Tolley, L.

  Wilcock, Group-Capt. C. A. B.

  Younger, Maj. Hon. K. G.

  Tomlinson, Rt. Hon. G.

  Wilkes, Maj. L.

  Zilliacus, K.

  Ungoed-Thomas, L.

  Wilkins, W. A.

  Vernon, Maj. W. F.

  Wilkinson, Rt. Hon. Ellen

  TELLERS FOR THE NOES:

  Viant, S. P.

  Willey, F. T. (Sunderland)

  Mr. Collindridge and

  Wadsworth, G.

  Willey, O. G. (Cleveland)

  and Captain Blenkinsop.

  Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."
  8.30 p.m.
  Captain Blackburn: I was a little embarrassed at one stage by the friendship which seemed to be engendered between the two Front Benches, but I was glad to see the other side, in spite of the extremely generous offer made by my right hon. Friend, insisting on taking this matter to a Division. I would like to remind my right hon. Friend the Chancellor of the Exchequer that the right hon. Gentleman the Member for West Bristol (Mr. O. Stanley) spoke about this Clause as being extremely wide and, indeed, unlimited. My right hon. Friend has been willing to grant a certain concession and it seems to me that it has been granted in too wide a fashion. He has limited this Clause by the words:
  " Provided that no such request or recommendations shall be made with respect to the affairs of any particular customer of a banker."
  The words "particular customer" would not merely cover an individual person like myself or other hon. Members; they most certainly ought to be directed against groups of persons, but they would, unfortunately, also cover big business corporations of all kinds, such as Imperial Chemical Industries or Lever Brothers. I would remind my right hon. Friend of the exact words, which he himself quoted, in the speech which he made on Second Reading, when he said that the object of this Clause was
  " to ensure that the operations of the other banks are harmonised with industrial needs." —[Official Report, 29th October, 1945; Vol. 415, c. 52.]
  If the operations of commercial banks are to be harmonised with industrial needs it is necessary that the Government should be able, by means of this Clause, to restrict the financial operations of mono-
  1028
  polies and cartels and other interests when those financial operations are clearly seen to be against the interest of the public as a whole, and in particular that the Government should have power to restrict the granting of credits to big business.
  The Deputy-Chairman (Mr. Hubert Beaumont): The hon. and gallant Member is getting out of Order. He is now discussing on the Clause what should have been discussed on the Amendment.
  Captain Blackburn: With respect, I am trying to make a submission as to this Clause as it now stands in the hope that between now and Report stage my right hon. Friend might be prepared to introduce an Amendment. I am not discussing that particular Amendment; I am merely trying to state what is the effect of this Clause as amended and relate it to the speech that my right hon. Friend made when he dealt with this Clause on Second Reading. As I understand it, that is in Order, and my right hon. Friend appreciates the point. The exact words that he himself used on Second Reading for the purpose of acceding to the points made by hon. Gentlemen opposite were these:
  " This Bill is not aimed at forcing disclosure of any confidential or private information in order to deal with those …who may be trying to ' dodge the column ' of honest citizens. If we want more powers to deal with that sort of person we shall take them under other Statutes. To make this plain I should be prepared … to propose an Amendment covering this particular point." —[Official Report, 29th October, 1945; Vol. 415, c. 53.]
  That is, the desire to make it plain that this Clause is not intended in any way to catch private persons or individuals who may be trying to "dodge the column," to use the right hon. Gentleman's phrase, either for evasions under the Income Tax Acts or in other respects. What I am asking my right hon. Friend

  1029
  to do, and it is, if I may say so, in line with what I think he once described as an "exhilarating experience" at Blackpool, is to consider between now and the Report stage whether he cannot so limit this Clause that it would still entitle the banks to issue directions in respect of monopolies, cartels or other big business or trade corporations with a capital say, exceeding £100,000. I feel sure my right hon. Friend knows perfectly well that the synthetic fury engendered from the benches opposite would be as nothing compared with the real fury that would be engendered among those who are his supporters if at any stage they thought that as a result of pressure opposite these monopolies, or cartels, or big business interests were allowed to slip through the mesh which my right hon. Friend has so carefully prepared. I would ask him to consider these suggestions between now and Report stage, and I feel sure that if he can give effect to them it will have a most heartening effect on the movement to which he and I are proud to belong.
  Captain Crookshank: May I say before the discussion of this Clause closes that we have no alternative but to vote against it because of its extreme width and unlimited nature? It is true that the right hon. Gentleman has been good enough to make the concession which he outlined earlier, but it is true also that he has not accepted any of our Amendments, provisos, which we put down and to which we attach great importance. Indeed, the Clause in our view is not really necessary. It is not necessary or essential for bringing the capital stock of the Bank into public ownership and for bringing the Bank under public control, which are the first two and the main objectives of this Bill. We had interesting evidence on the Select Committee from the Governor of the Bank indicating that up till now, at any rate, there has been no difficulty on his part in securing the assent of the joint stock banks to the policy which he and the Treasury and the Chancellor of the Exchequer of the day had thought necessary. Powers of persuasion had always in the past been effective, and there is no reason to suppose that those powers would not be equally effective in future. It is because of the extremely wide and unlimited nature of this Clause that we propose to divide the Committee against it.
  Mr. Dalton: My hon. and gallant Friend the Member for King's Norton
  1030
  (Captain Blackburn) has raised a very interesting point regarding the control of cartels and monopolies. In my view that is an important matter, and in the view of the Government it is an important matter, and before this Parliament has run its length we hope to introduce a Measure to deal with it. But not this Measure. I gave an undertaking that I would put in a provision in such terms as I have put down in the Amendment accepted by the Committee excluding from the scope of this Measure inquiry into the affairs of particular customers, and it would not be right for me to say that I would look at that again. I think that is right as it is, and as it has been accepted by the Committee, but it does not rule out dealing with the point which my hon. and gallant Friend has raised in another Statute. I am surprised at the ingratitude of my right hon. and gallant Friend opposite. I stretched out both arms to help him and to give him what he wanted; I said that I would look at the possibility of inserting the words "consultation with the joint stock banks "; and I am very much surprised and deeply grieved at the attitude of the right hon. and gallant Gentleman.
  Captain Drayson: I, too, am a little bit uneasy about this Clause. I. do not want to take up the time of the Committee, because I know how anxious the general public are that this Bill should go through—I mean the supporters of hon. Members opposite, because they are all waiting for the great share-out when this Bill becomes law. We have heard this afternoon about this question of greater or less, and I feel apprehension that under this Clause the Government may wish to use powers which are going to limit the possibilities of the joint stock banks and divert their business to the Bank of England itself. The question was raised earlier whether the Bank of England is to be regarded as a revenue producer. Is it to be like the Post Office? Are we to expect to receive £10,000,000 a year for the National Exchequer from the Bank of England? If that is so, it is natural that action might be taken which would divert business that normally would go to the banks to the Bank of England, in particular in connection with the large sums of money that will have to be raised in the near future to finance this country's recovery. The Official Secrets Act has been mentioned this afternoon in connection

  1031
  with the Bank of England business, and the Chancellor himself a short while ago talked about national planning and the broad general part that would play. I do not like that term at all. I think this
  Clause is far too broad and far too general and I shall vote against it.
  Question put, "That the Clause, as amended, stand part of the Bill."
  The Committee divided: Ayes, 261; Noes, 80.

  Division No. 57.]

  AYES.

  [8.42 p.m.

  Adams, Capt. Richard (Balham)

  Edelman, M.

  Marshall, F. (Brightside)

  Adams, W. T. (Hammersmith, South)

  Edwards, N. (Caerphilly)

  Mathers, G.

  Adamson, Mrs. J. L.

  Edwards, W. J. (Whitechapel)

  Mayhew, C. P.

  Allen, Scholefield (Crewe)

  Evans, E. (Lowestoft)

  Messer, F.

  Alpass, J. H.

  Evans, S. N. (Wednesbury)

  Middleton, Mrs. L.

  Anderson, F. (Whitehaven)

  Farthing, W. J.

  Mitchison, Maj. G. R.

  Attewell, H. C.

  Fletcher, E. G. M. (Islington, E.)

  Morgan, Dr. H. B.

  Austin, H. L.

  Folliok, M.

  Morris, P. (Swansea, W.)

  Ayles, W. H.

  Freeman, Maj. J. (Watford)

  Mort, D. L.

  Ayrton Gould, Mrs. B.

  Gaitskell, H. T. N.

  Moyle, A.

  Bacon, Miss A.

  Gallacher, W.

  Murray, J. D.

  Baird, Capt. J.

  Gibbins, J.

  Nally, W.

  Balfour, A.

  Gibson, C. W.

  Naylor, T. E.

  Barstow, P. G.

  Glanville, J. E. (Consett)

  Nichol, Mrs. M. E. (Bradford, N.)

  Barton, C.

  Gooch, E. G.

  Nicholls, H. R. (Stratford)

  Battley, J. R.

  Goodrich, H. E.

  Noel-Buxton, Lady

  Bechervaise, A. E.

  Gordon-Walker, P. C.

  O'Brien, T.

  Belcher, J. W.

  Greenwood, Rt. Hon. A.

  Oldfield, W. H.

  Bellenger, F. J.

  Grenfell, D. R.

  Oliver, G. H.

  Berry, H.

  Grey, C. F.

  Paget, R. T.

  Beswick, Flt.-Lieut. F.

  Grierson, E.

  Paling, Rt. Hon. Wilfred (Wentworth)

  Bevan, Rt. Hon. A. (Ebbw Vale)

  Griffiths, Rt. Hon. J. (Llanelly)

  Paling, Will T. (Dewsbury)

  Bing, Capt. G. H. C.

  Guest, Dr. L. Haden

  Palmer, A. M. F.

  Binns, J.

  Gunter, Capt. R. J

  Pargiter, G. A.

  Blackburn, Capt. A. R.

  Hall, W. G. (Colne Valley)

  Parkin, Flt.-Lieut. B. T.

  Blyton, W. R.

  Hamilton, Lieut.-Col. R.

  Peart, Capt. T. F.

  Boardman, H.

  Hannan, W. (Maryhill)

  Perrins, W.

  Bottomley, A. G.

  Hastings, Dr. Somerville

  Piratin, P.

  Bowden, Flg.-Offr. H. W.

  Haworth, J.

  Platts Mills, J. F. F.

  Braddock, Mrs. E. M. (L'p'l, Exch'ge)

  Henderson, A. (Kingswinford)

  Poole, Major Cecil (Lichfield).

  Braddock, T. (Mitcham)

  Henderson, J. (Ardwick)

  Popplewell, E.

  Brook, D. (Halifax)

  Herbison, Miss M.

  Pritt, D. N.

  Brooks, T. J. (Rothwell)

  Hewitson, Capt. M.

  Proctor, W. T.

  Brown, George (Belper)

  Holman, P.

  Pryde, D. J.

  Brown, T. J. (Ince)

  House, G.

  Pursey, Cmdr. H.

  Bruce, Maj. D. W. T.

  Hudson, J. H. (Ealing, W.)

  Ranger, J.

  Buchanan, G.

  Hughes, Hector (Aberdeen, N.)

  Rees-Williams, Lt.-Col. D. R.

  Burke, W. A.

  Hughes, Lt. H. D. (W'lverh'pion, W.)

  Reeves, J.

  Butler, H. W. (Hackney, S.)

  Isaacs, Rt. Hon. G. A.

  Reid, T. (Swindon)

  Callaghan, James

  Irving, W. J.

  Rhodes, H.

  Champion, A. J.

  Janner, B.

  Robens, A.

  Clitherow, R.

  Jeger, Capt. G. (Winchester)

  Roberts, Sq.-Ldr. Emrys O. (M'rion'th)

  Cluse, W. S.

  Jeger, Dr. S. W. (St. Pancras, S.E.)

  Roberts, Goronwy (Caernarvonshire)

  Cocks, F. S.

  Jones, D. T. (Hartlepools)

  Rogers, G. H. R.

  Coldrick, W.

  Jones, P. Asterley

  Royle, C

  Collick, P.

  Keenan, W.

  Sargood, R.

  Collindridge, F.

  Kenyon, C.

  Scott-Elliot, W.

  Collins, V. J.

  Kinghorn, Sqn.-Ldr. E.

  Sharp, Lt.-Col. G. M.

  Colman, Miss G. M.

  Kinley, J.

  Shawcross, C. N. (Widnes)

  Comyns, Dr. L.

  Lang, G.

  Shawcross, Sir H. (St. Helens)

  Cooper, Wing-Comdr. G.

  Lavers, S.

  Shinwell, Rt. Hon. E.

  Cerlett, Dr. J.

  Lawson, Rt. Hon. J. J.

  Shurmer, P.

  Corvedale, Viscount

  Lee, F. (Hulme)

  Silverman, J. (Erdington)

  Cove, W. G.

  Leslie, J. R.

  Silverman, S. S. (Nelson)

  Crossman, R. H. S.

  Levy, B. W.

  Simmons, C. J.

  Daines, P.

  Lewis, A. W. J. (Upton)

  Skeffington-Lodge, Lt. T. C.

  Dalton, Rt. Hon. H.

  Lindgren, G. S.

  Skinnard, F. W.

  Davies, Edward (Burslem)

  Lipson, D. L.

  Smith, Ellis (Stoke)

  Davies, Ernest (Enfield)

  Lipton, Lt.-Col. M.

  Smith, S. H. (Hull, S.W.)

  Davies, Haydn (St. Pancras, S.W.)

  Longden, F.

  Smith, T. (Normanton)

  Davies, R. J. (Westhoughton)

  McAdam, W.

  Snow, Capt. J. W.

  Deer, G.

  McAllisler, G.

  Solley, L. J.

  de Freitas, Geoffrey

  McEntee, V. La T.

  Sorensen, R. W.

  Delargy, Captain H. J.

  McGhee, H. G.

  Soskice, Maj. Sir F.

  Diamond, J.

  Mack, J. D.

  Sparks, J. A.

  Dobbie, W.

  McKie, J. H. (Galloway)

  Stamford, W.

  Dodds, N. N.

  Maclean, N. (Govan)

  Steele, T.

  Douglas, F. C. R.

  McLeavy, F.

  Stephen, C.

  Driberg, T. E. N.

  Mainwaring. W. H.

  Stewart, Capt. Michael (Fulham, E.)

  Dugdale, J. (W. Bromwich)

  Mallalieu, J. P. W.

  Stubbs, A. E.

  Dumpleton, C. W.

  Mann, Mrs. J.

  Summerskill, Dr. Edith

  Dye, S.

  Manning, Mrs. L. (Epping)

  Swingler, Capt. S.

  Symonds, Maj. A. L.

  Walker, G. H.

  Williams, Rt. Hon. T. (Don Valley)

  Taylor, H. B. (Mansfield)

  Watkins, T. E.

  Williams, W. R. (Heston)

  Taylor, R. J. (Morpeth)

  Webb, M. (Bradford, C.)

  Williamson, T.

  Taylor, Dr. S. (Barnet)

  Weitzman, D.

  Willis, E.

  Thomas, I. O. (Wrekin)

  Wells, P. L. (Faversham)

  Wills, Mrs. E. A.

  Thomas, John R. (Dover)

  Wells, Maj. W. T. (Walsall)

  Wilson, J. H.

  Thomas, George (Cardiff)

  White, H. (Derbyshire, N.E.)

  Wise, Major F. J.

  Thomson, Rt. Hn. G. R. (Ed'b'gh, E.)

  Whiteley, Rt. Hon. W.

  Woods, G. S.

  Thorneycroft, H. (Manchester, C.)

  Wigg, Col. G. E. C.

  Wyatt, Maj. W.

  Tiffany, S.

  Wilcock, Group-Capt. C. A. B.

  Yates, V. F.

  Tomlinson, Rt. Hon. G.

  Wilkes, Maj. L.

  Young, Sir R. (Newton)

  Ungoed-Thomas, L.

  Wilkins, W. A.

  Younger, Maj. Hon. K. G.

  Vernon, Maj. W. F.

  Wilkinson, Rt. Hon. Ellen

  Zilliacus, K.

  Viant, S. P.

  Willey, F. T. (Sunderland)

  Wadsworth, G.

  Willey, O. G. (Cleveland)

  TELLERS FOR THE AYES:

  Walkden, E.

  Williams, Rt. Hon. E. J. (Ogmore)

  Mr. Pearson and Captain Blenkinsop.

  NOES

  Agnew, Cmdr. P. G.

  Hollis, Sqn.-Ldr. M. C.

  Poole, O. B. S. (Oswestry)

  Amory, D. Heathcoat

  Hope, Lord J.

  Raikes, H. V.

  Baldwin, A. E.

  Howard, Hon. A.

  Reed, Sir S. (Aylesbury)

  Barlow, Sir J.

  Hulbert, N. J.

  Reid, Rt. Hon. J. S. C. (Hillhead)

  Birch, Lt.-Col. Nigel

  Hurd, A.

  Ropner, Col. L.

  Boyd-Carpenter, Maj. J. A.

  Jeffreys, General Sir G.

  Savory, Prof. D. L.

  Braithwaite, Lt.-Comdr. J. G.

  Legge-Bourke, Maj. E. A. H.

  Shephard, S. (Newark)

  Buchan-Hepburn, P. G. T.

  Lindsay, Lt.-Col. M. (Solihull)

  Shepherd, Lieut. W. S. (Bucklow)

  Bullock, Capt. M.

  Low, Brig. A. R. W.

  Stanley, Rt. Hon. O.

  Carson, E.

  Lucas-Tooth, Sir H.

  Stoddart-Scott, Col. M.

  Clarke, Col. R. S.

  MacAndrew, Col. Sir C.

  Stuart, Rt, Hon. J.

  Clifton-Brown, Lt.Col. G.

  Macmillan, Rt. Hon. Harold

  Studholme, H. G.

  Corbett, Lt.-Col. U. (Ludlow)

  Maitland, Comdr. J. W.

  Sutcliffe, H.

  Crookshank, Capt. Rt. Hon. H, F. C.

  Manningham-Buller, R. E.

  Taylor, C. S. (Eastbourne)

  Cuthbert, W. N.

  Marshall, Comdr. O. (Bodmin)

  Taylor, Vice-Adm. E. A. (P'dd't'n, S.)

  Dodds-Parker, Col. A. D.

  Maude, J. C.

  Thornton-Kemsley, Col. C. N.

  Dower, Lt. Col. A. V. G. (Penrith)

  Mellor, Sir J.

  Touche, G. C.

  Dower, E. L. G. (Caithness)

  Morrison, Rt. Hn. W. S. (Cirencester)

  Turton, R. H.

  Drayson, Capt. G. B.

  Mott-Radclyffe, Maj. C. E.

  Vane, W. M. T.

  Duthie, W. S.

  Neven-Spence, Major Sir B.

  Wakefield, Sir W. W.

  Eccles, D. M.

  Nicholson, G.

  Walker-Smith, Lt.-Col. D.

  Erroll, Col. F. J.

  Nield, B. (Chester)

  Wheatley, Col. M. J.

  Fletcher, W. (Bury)

  Noble, Comdr. A. H. P.

  White, Maj. J. B. (Canterbury)

  Foster, J. G. (Northwich)

  Nutting, Anthony

  Willink, Rt. Hon. H. U.

  Gammans, L. D.

  Peake, Rt. Hon. O.

  Glyn, Sir R.

  Peto, Brig. C. H. M.

  TELLERS FOR THE NOES:

  Grimston, R. V.

  Pitman, I. J.

  Sir Arthur Young and Mr. Drewe.

  Hare, Lt.-Col. Hon. J. H. (W'dbridge)

  Ponsonby, Col. C. E.

  Question put, and agreed to.

  Clause, as amended, ordered to stand part of the Bill.
  Clauses 5 and 6 ordered to stand part of the Bill.
  First Schedule agreed to.
  SECOND SCHEDULE.—(Supplemental provisions as to Court of Directors.)
  Mr. Glenvil Hall: I beg to move, in page 6, line 11, leave out from beginning, to '' or,'' and insert:
  "Minister of the Crown, or a person serving in a Government Department in employment in respect of which remuneration is payable out of moneys provided by Parliament."
  We seek here to delete the words:
  "… person holding an office of profit under the Crown;"
  and to substitute the words proposed in this Amendment. This is little more than a drafting Amendment. Since the Bill was printed certain objections to these words have been raised. The words "office of profit under the Crown" are difficult to interpret, as Members of the
  1034
  Select Committee which has recently been sitting are only too well aware. That being so we have sought for words to take their place which are not open to the same ambiguity, which unfortunately we have discovered these particular words now have. We are informed that if the words in the printed Bill remain quite a number of otherwise qualified people might otherwise be disqualified. For instance, a lord lieutenant, a high sheriff or even an officer in the Territorial Army might be said to be a person holding an office of profit under the Crown. It may very well be that a director appointed to serve on the court might be a Territorial officer or possibly a high sheriff, or someone of that kind. Therefore my right hon. Friend suggests we should make the matter quite clear by deleting the words now in the Bill and putting in the words now on the Order Paper. If that were not done another difficulty might well arise about the Governor and the Deputy Governor. As the Schedule reads it says:
  " … a person holding an office of profit …"

  1035
  It has been pointed out recently that the Governor and the Deputy Governor may themselves be holding an office of profit under the Crown, and we might find that they themselves were disqualified by the wording of this particular Schedule. For these reasons I ask the Committee to agree to this Amendment.
  Captain Crookshank:This seems to be a perfectly reasonable Amendment in view of the difficulties that have lately emerged about offices of profit under the Crown. It is obvious that Ministers or civil servants should not be put upon the directorate or become the Governor or Deputy Governor. I do not know if the Chancellor feels inclined to say anything today of to arrange for a further statement to be made soon by the Government on this whole question. There was a committee of inquiry—I do not know whether it was a Select Committee or not —which produced a report raising the whole issue of offices of profit under the Crown. I have it in mind that the late Coalition Government made some statement that in due course the matter would be brought before Parliament. I would like to be quite clear on this: These words which are proposed for this particular case may not be the final definition which will have to take place of an office of profit under the Crown. I hope the Chancellor will be able to say that this is not necessarily to be treated as a precedent. While we accept it in these circumstances, we want to see the whole question solved, if it can be solved, on a far wider basis, and that the proper differentiation shall be made in future as to what is or what is not an office of profit. If we can have some assurance on the general question—I know it is very wide of this Bill—there is no objection to these words being inserted, so far as I am concerned.
  Mr. Dalton: I think that is reasonable; these difficulties are largely unforeseen difficulties of interpretation that have arisen lately. These words I am seeking to insert will, as the right hon. and gallant Gentleman says, clear up the matter so far as this Bill is concerned, but I readily assure him that this is not intended to be the final solution of the matter. My right hon. and learned Friend the Attorney-General tells me that he has the matter well in hand. The Government intend to take steps at a suitable moment
  1036
  in the New Year to seek to elucidate the whole matter on a broad basis, with a view to the definition of this, as it now seems, ambiguous phrase.
  Amendment agreed to.
  Schedule, as amended, agreed to.
  Third Schedule agreed to.
  Bill reported, with Amendments; as amended, to be considered upon Wednesday, and to be printed [Bill 58].

  EMERGENCY POWERS (DEFENCE) (CHARGES)
  9.0 p.m.
  The Parliamentary Secretary to the Ministry of Food (Dr. Edith Summerskill): I beg to move,
  " That the Potatoes (1945 Crop) (Charges) Order, 1945 (S.R. &., 1945, No. 1493), dated 27th November, 1945, made by the Treasury under Section 2 of the Emergency Powers (Defence) Act, 1939, a copy of which Order was presented on 3rd December, be approved."
  This subject is rather a dull one after the one the Committee has already been discussing. I do not think that potatoes can ever be exciting, but the Motion is one with which hon. Members are familiar. This Order is, in fact, similar to that approved by the House for the 1944 crop. It reimposes levies on certain potato sales which have applied during the last four years and is to ensure, as far as practicable, that all those interested in the sale of potatoes are dealt with equitably. It does, to some extent, redress the comparative trading advantages enjoyed by traders who do not use the normal wholesale channels. The Order imposes charges on sales of ware potatoes, that is, potatoes used for human consumption, with the exceptions set out in the Schedule, and the charges are at the following rates: On sales by licensed grower-salesmen, that is, growers licensed to sell direct to retailers and consumers, and on sales made through licensed auctioneers or under special licence; at is. per ton. On sales by licensed potato buyers—retailers licensed to buy direct from growers—at 2s. 6d. per ton.
  Not more than one charge shall be paid when potatoes pass through the hands of two licensees who are liable to pay. It must be remembered that these levies do not increase the price to the consumer. They are direct impositions on the

  1037
  licensees who are allowed to by-pass the normal wholesale channels. They are deducted from the subsidy due and paid into the Ministry of Food Potato Division Account. They are only collected on sales of main-crop potatoes from 1st December when the subsidy starts. The National Potato Advisory Committee, which is representative of all sections of the industry, has given its approval to the continuance of the levies and, therefore, we can, with confidence, ask the House to approve the Order.

  ELECTIONS
  Motion made, and Question proposed.
  "That a Select Committee be appointed to examine any cases which may be brought to their notice of Members of this House who may have been incapable of election to this House by reason of the fact that at the time of their election they held offices or places of profit under the Crown within the meaning of Section 24 of the Succession to the Crown Act, 1707; and to report whether any such Member was on that account incapable of election to this House, and, if so, what course should be adopted in any such case."—[Mr. Mathers.]
  9.4 p.m.
  Mr. Osbert Peake: Are we not to have even a short explanation of this Order by the learned Attorney- General? There are some unusual points in it. I am informed that there is power taken for this Committee to sit during Adjournments of the House and that is, I think, a little unusual. There is also a provision that the quorum shall be—
  Mr. Deputy - Speaker (Mr. Hubert Beaumont): This Motion is in sections. That will come on a later one.
  9.5 p.m.
  The Attorney-General (Sir Hartley Shawcross): I regret to have to tell the House that several cases have come to light—there are, in fact, four—in which a question has arisen whether or not certain hon. Members may suffer disqualification from Membership owing to the holding of what may possibly be offices of profit within the meaning of the Statute of Anne. I apprehend that as the matter will have, in any event, to be referred to a Select Committee, it would be undesirable and, indeed, improper that I should invite the House to consider the details affecting these particular cases now,
  1038
  or that I should myself enter into any of the merits.
  As an indication of the kind of problem which will have to be considered by the Select Committee, I may perhaps just say this. They will have to consider, for instance, whether the members of a panel, some but not all of whom may occasionally be recruited to form a quasi judicial tribunal, and when sitting as members of such a tribunal may receive more or less nominal remuneration in respect of the days on which they sit, are thereby disqualified from membership of the House owing to the holding of an office of profit under the Crown. That is one case.
  Another case is whether the writing of a formal letter of resignation after the date of the poll, but before the declaration of the result of the election, is effective to terminate the holding of such an office. Another case, again, is whether an oral arrangement made some considerable time before any question of an election arose, but not formally recorded or acted upon by the Government Department concerned, would be sufficient to terminate the holding of what otherwise might constitute an office of profit under the Crown. These are matters of considerable difficulty, and it would not be possible, nor I think would it be appropriate, for me to attempt to express any final opinion as to whether or not in these cases a disqualification has arisen. The House is itself the arbiter of its own constitution in these matters, and the House will have to consider in relation to each case that it takes into consideration, whether or not a disqualification has arisen.
  We therefore propose that this Select Committee should be established; and that the Committee should have power to settle the time of its own meetings, to consider such cases as may be referred to it, and to make such report as appears in the circumstances to be right. I should perhaps add that I am not unmindful of the undertaking which I gave earlier in the Session, that we would in due course consider the possibility of introducing legislation to simplify and clarify this very confused and perplexing branch of the law. We intend to do that, and I hope, at all events before the next election occurs, that this branch of the law will have been simplified in that way.
  Ordered: "That Mr. Clement Davies, Mr. Grenfell, Sir Arnold Gridley, Dr. Haden Guest, Mr. Hector Hughes, General Sir George Jeffreys, Mr. Orr-Ewing, Mr. Sydney Silverman and Mr. Webb, be Members of the Committee.—[Mr. Mathers.]
  Motion made, and Question proposed,
  " That the Committee have power to send for persons, papers and records; to sit notwithstanding any Adjournment of the House; and to report from time to time."—[Mr. Mathers.]
  9.9 p.m.
  Mr. Peake:I am much obliged to the learned Attorney-General for his explanation of the setting-up of the Committee. The more particular question which I wished to address to him and which you, Mr. Deputy-Speaker, indicated would be better raised at this stage, was the rather unusual provision in a Motion of this character for the Committee to have power to sit, notwithstanding any Adjournment of the House. I cannot ever remember on a similar occasion such a power being taken, and perhaps the learned Attorney-General would tell us why it is necessary to treat this matter as one of such urgency that the Committee may have to sit during the Adjournment of the House.
  The Attorney-General: I understand that, in point of fact, the Select Committee which, was appointed at the beginning of the Session to deal with a rather similar problem, was appointed under exactly similar terms of reference, and did sit during the Adjournment of the House in the early part of September. The matter is, of course, of some urgency. Hon. Members on both sides of the House will no doubt be anxious that the position should be clarified with the least possible delay, at least in regard to the four Members whose cases arise for consideration. I understand that the Committee will be able to sit this week before the Recess and will not then sit again until the House has met again.
  Ordered:
  " That Three be the Quorum."—[Mr. Mathers.]

  NATIONAL INSURANCE (FRIENDLY SOCIETIES)
  Motion made, and Question proposed, "That this House do now adjourn."— [Mr. Mathers.]
  9.12 p.m.
  Major Boyd-Carpenter: I desire to invite the attention of the House to the subject of friendly societies, with particular reference to the work which they have done and are doing in respect of national insurance. It is not my intention, if only for the very good reason that I understand that I should not be permitted to do so were it my intention, in any way to comment upon forthcoming legislation. It would seem that this is a convenient moment for the House to discuss this matter. Perhaps I might be permitted to say that its relevance and urgency have not been diminished in any way by the answer given on 22nd November by the Minister of National Insurance to a Question put to him by the hon. Member for Norman-ton (Mr. T. Smith). The House will recollect that, in reply to the hon. Member's Question, the Minister gave a perfectly clear statement that it was his intention to exclude the friendly societies from any participation in the future scheme of national insurance.
  I approach this subject with the more confidence from the knowledge that the valuable work done by the friendly societies has been drawn to the attention of hon. Members opposite from a source far more authoritative than can be found on this side of the House. I will refresh their memory with certain words which will be familiar to some of them:
  " The Labour Party is of the view that, in our future social insurance scheme, the system of approved societies shall be abolished, with the exception of bona fide friendly societies and trade unions, who have a long and honourable record of work in both public and voluntary health insurance, and should be free to come in if they wish."
  Those words, which will no doubt bring a reminiscent echo into the minds of hon. Members opposite, arc part of the instructions issued to all Labour candidates at the last Election. I call them in aid, without any intention of transgressing any Rule of Order, but of giving an exposition, far more lucid and convincing than any I could give, of the very valuable work which is done by those societies. I am sure that that admirable exposition commands the loyalty of hon. Members opposite, just as no doubt, its exposition by hon. Members commanded a certain

  1041
  loyalty among some sections of their constituents.
  It being a quarter past Nine o'Clock, the Motion for the Adjournment of the House lapsed, without Question put.
  Motion made, and Question proposed, "That this House do now adjourn."— [Mr. R. J. Taylor.]
  Major Boyd-Carpenter: It may be of assistance to the House in considering this matter in all its aspects to bear in mind the facts with regard to these societies at the present moment. I am assured that the present membership of the societies is in the neighbourhood of 8,500,000—a very significant and important section of the population. In the latest year for which figures were available, they distributed in benefits something in excess of £13 million, and their total accumulated funds exceeded £146 million. That solid stake in our national affairs has been, as the House is well aware, the product of solid growth, and the figures, when contrasted with those for 1910, show that growth to have been steady and continuous. The amount of benefits paid in the last year for which figures were available is precisely double that of 1910; the membership has increased by 1,700,000, and the assets have increased by the appreciable amount of £96,000,000.
  The societies—and I would emphasise this point—axe democratically-managed and operated societies, of a very wide variety, democratically controlled, which have been administering health insurance benefits for a very considerable number of years. At this particular moment it may not be wholly irrelevant to invite the attention of the House to the fact that, when the late Mr. Lloyd George was introducing his National Health Insurance Act, it was his original intention to exclude the friendly societies from participation in the scheme, but that, for reasons which it will perhaps be unnecessary to enter into, Mr. Lloyd George, when the Act came before the House, took another view and decided to include them. There is sometimes a value in historical precedent.
  It may assist the House in appreciating the very wide variety of these societies if I give one or two names, selected at random, of the societies whose fate may, it is possible, be decided in the near future. There is, for example—I quote from their annual Conference—the Hearts
  1042
  of Oak Benefit Society, of the Committee of which, I notice, the hon. Member for Southampton is a member; there is the Sheffield Equalised Independent Druids, the National Equalised Druids Friendly Society, the United Order of the Total Abstainent Sons of the Phoenix, there is —and this will perhaps appeal quite solidly to hon. Members opposite—the Northumberland and Durham Miners' Approved Society; the Sincere Second Burial Collecting Society, the Sincere and Humane Perseverance Approved Society and, which will no doubt appeal to certain other hon. Members, the Grand Independent Order of Loyal Caledonian Corks.
  These few extracts show the width, and variety of these societies, and how widely they are spread over the community. At this particular moment the vital question in connection with all of them which it is appropriate should be in the minds of hon. Members of this House, whatever pledges they may or may not have given, is the part which the societies have played in the administration of National Health Insurance. The fact that 45 percent. of the insured population have elected to have their benefits so administered is perhaps not without significance, and for this reason, that the agents of these societies, who, on the whole, go into the homes of the people and discuss these matters in a friendly and kindly manner, have had their work appreciated by the people with whom they deal, and many such people would be horrified at the idea of having to go and discuss intimate matters affecting their bodies and their health in some Government office before some Government official.
  Mr. Callaghan: On a point of Order, Mr. Deputy-Speaker. Is it in Order on the grounds of anticipation, for the hon. and gallant Member to bring up a matter which, as he says, may conceivably prejudice the futuree organisation of friendly societies?
  Mr. Deputy-Speaker (Major Milner):The hon. and gallant Member is in Order so far.
  Mr. Callaghan: Further to the point of Order, may I submit to you, Sir, that the whole reason for having this discussion is that the future of the friendly societies is shortly to be discussed? Therefore I respectfully suggest that it is anticipation of legislation under Standing Order No. 9.
  Mr. Deputy-Speaker: Perhaps the hon. Member will tell me what there is on the Order Paper which the hon. and gallant Member's speech might anticipate? I know of nothing.
  Mr. Callaghan: I seek your guidance, Mr. Deputy-Speaker. Is it in Order for a matter to be discussed now which is clearly leading up to later legislation?
  Mr. Deputy-Speaker: Perhaps the hon. Member will be good enough to leave the conduct of the Debate in my hands.
  Major Boyd-Carpenter:I regret if the possible relevance of my historical reminiscences should cause the hon. Member any inconvenience, and I do not propose to speculate about the causes of any undue sensitivity he may feel on the matter. Before the hon. Member's helpful intervention, the point I was attempting to make was that the administration of the national health benefit as it is and has been carried out in the homes of the people, is warmly appreciated by many millions of our fellow countrymen who dislike intensely the idea of any change in that state of affairs, and that, I submit, is a matter upon which public opinion is already abundantly clear.
  One of the most valuable parts of the administration of national health benefit by the societies has been the link which that system provides between national insurance and voluntary insurance. It has been the case, and so far as it is possible to anticipate, it will always be the case, that a section of the higher paid and more prudent of our population will desire to augment by voluntary insurance any amount of benefit obtainable from national sources, and it has proved of manifest convenience in the working of such a system that both the voluntary and the State insurance should be administered through the same organisation. It is evident that a saving in expense and in trouble follows from one medical certificate serving to clarify and decide the payment of benefit from both sources, and were it at any time to be intended to change that system, it would surely strike a blow against the provision by individuals of voluntary insurance against sickness.
  I do not believe that any responsible person who is concerned with the welfare of our people would wish to do anything in any way to diminish the working of a
  1044
  system of voluntary insurance in addition to State insurance. In support of that, I would call in aid an authority whose opinion, not very long ago, it was almost an impertinence to question—Sir William Beveridge. Sir William Beveridge, at that time the Member for Berwick-upon-Tweed, but no longer the Member, on 3rd November, 1944, in column 1130 of the Official Report, said as follows:
  " I do not believe we can have industrial life offices in the administration of social insurance, and I do not see any reason for doing so in their present form, but we can and should keep the friendly societies as responsible agents. If voluntary insurance is to continue as well as compulsory insurance we must make it easy for people to insure, we must avoid that duplication and overlapping which otherwise would take place in the home of every person who joins friendly societies."—[Official Report, 3rd November, 1944; Vol. 404, c. 1130.]
  I call in aid the speeches made by hon. Members opposite denouncing any person who was so rash as to question the dicta of Sir William Beveridge, and I ask those hon. Members to recollect the observations which some of them, without any doubt, made upon that subject. I now call Sir William Beveridge in aid in support of the matters I have been attempting to lay before the House. There is only one other matter I would say. The question of the position of these societies is one of urgency and of relevancy, and I appeal to hon. Members opposite to search their consciences on the subject.
  9.28 p.m.
  Mr. Paget: I wish to ask the Minister most earnestly to reconsider this matter. I know that the Circular is subject to different interpretations. I do not say that what it actually said mattered so much as its timing. When that Circular came out, whatever else it may have been understood to mean, I do not think it was understood by the friendly societies to mean that the Government were proposing to adopt the 1944 plan in toto, on the ground that there was not time to devise anything else. I personally feel that my honour with regard to the friendly societies is somewhat involved in this matter, and that may apply to some other hon. Members, and I ask the Minister to reconsider the matter.
  9.29 p.m.
  The Minister of National Insurance (Mr. James Griffiths): This is a very important matter and one which, obviously, cannot

  1045
  be fully or adequately discussed in the time available on the Adjournment. I will do my best in the time that is available to give the House the considerations which led me and the Government to the decision that we made. Perhaps I may be allowed to say a personal word? This is not the first time upon which I have spoken upon this matter in this House. I took part in the Beveridge Debate more than two years ago and in the Debate on the White Paper a year ago, and I gave, with my colleagues, most earnest consideration to this matter then. The view which I and the Government form now is also the view which I formed 12 months ago and two years ago, from which I have not departed. The hon. and gallant Member for Kingston-on-Thames (Major Boyd-Carpenter) called in aid 1911 and the late Earl Lloyd-George, and it is perfectly true that Mr. Lloyd George as he was in 1911, called in the services of the friendly societies, and, later on, as the result of Questions in this House, was obliged to call in the services of the insurance companies too, and the approved society system was set up.
  When it was set up in 1911, the approved society system served the Government more than one purpose. For example, what had to be administered then was the new National Health Insurance Act, which provided for sickness and disablement benefits at certain rates, and also provided maternity benefits, and, by creating the system of approved societies and, making it possible for friendly societies and for the industrial life offices to become approved societies for the administration of the new benefits provided under the new Act, the Government of the day were enabled to avoid creating a machine of their own. In other words, and this is very important, the Government in 1911 were able to hand over the administration of health insurance completely to other bodies. Those are the circumstances in which the approved societies were created. They were made into independent financial units, and, as a result of that over 30 years, the approved society system has grown up and that system has had great advantages for the insured contributors, for the country and for the Government, and no word that I want to say detracts for one moment from the high appreciation which I and everybody has for the
  1046
  work of the friendly and approved societies.
  But the approved societies have one defect, which, I think, makes their retention as approved societies impossible in the type of scheme I have devised for the Government. They fail to provide equal benefits for equal contribution. These contributions are imposed by this House, and, when we impose equal contributions on men and women in this country, we have an obligation to see that the equal contribution which we compel them to pay provide equal benefits for all. The approved societies fail to do that. The approved societies provide minimum benefits for some sections of the population and additional benefits for others, and, by and large, they provide additional benefits for those among whom the incidence of sickness is least.
  Mr. Goodrich: On a point of Order. May I ask if the Minister is talking of friendly societies as distinct from approved societies?
  Mr. Griffiths: I have to deal with both, and I say that, if the friendly societies have to go,' the approved societies must go. I have provided for that, and I think it is agreed on all sides of the House that such a system must go.—[Hon. Members: "No."]— I must ask what the hon. and gallant Member is pleading for—that the friendly societies or the others shall come in as approved societies in the existing system or not?
  Major Boyd-Carpenter: If the right hon. Gentleman challenges me, I can give him the answer in one sentence. My plea was for the inclusion of friendly societies to help to administer the scheme.
  Mr. Speaker: I must say that that is out of Order, because it involves legislation.
  Mr. Griffiths: I wanted to get clear what was the proposal of the hon. and gallant Member regarding whether they should help us, and under what terms and conditions, in approved societies or in any other way. I can explain the position best by referring to 1911. The new scheme which I shall bring forward, in the form to which the Government is committed—
  Commander Agnew: That requires legislation.
  Mr. Griffiths: I do not think it is possible for me to explain why we made this decision unless I refer to the legislation.
  Mr. Callaghan: There was no point about the speech.
  Mr. Griffiths: Let me set out briefly what are the essential differences in structure between the new scheme and the existing scheme. The first is this: the new scheme will cover virtually the whole of the population—the whole of the population will be an insured population. Secondly, it will be a unified scheme— one contribution, one stamp, one fund. It will provide benefits—
  Mr. Osbert Peake: On a point of Order, Mr. Speaker. As I understood your Ruling just now, when my hon. and gallant Friend the Member for Kingston-upon-Thames (Major Boyd-Carpenter) intervened, you ruled that we could not discuss the inclusion of friendly societies in the scheme. It now appears that the Minister is giving us a description of the new scheme, and I respectfully ask whether it is in Order.
  Mr. Speaker: The hon. Gentleman should not have put down a matter of this sort for discussion on the Adjournment. I was not here. I agree that the Minister is in a state of great difficulty.
  Mr. Griffiths: I take your Ruling upon it, Mr. Speaker. I am indeed in very great difficulty. What I have decided, and what I announced to the House the other day, was that, when the new scheme came forward before this House, it would come upon the basis that all approved societies, including friendly societies, would be excluded. I have to explain why I and the Government have arrived at that decision. I cannot explain that decision unless I am allowed to relate it to the new scheme from which they are excluded. I ask your Ruling upon it, Sir.
  Mr. Speaker: I am not quite sure, but I rather feel myself that the matter having been raised like this, the right hon. Gentleman ought to say that the whole thing is out of Order and that he cannot reply, unless he feels strongly that some reply should be given.
  Mr. Tom Smith: Further to that point of Order. As the decision was announced in answer to a Question a few weeks ago, would it be in Order
  1048
  for the Minister to justify why he gave that answer?
  Mr. Speaker: Not without breaking the Rules of Order.
  Mr. Griffiths: If I may deal with that point, Sir, I made the statement the other day—I made it clearly—announcing the decision of the Government without prejudicing the rights of Parliament when we come to discuss the matter, but I said it was essential that I should make an announcement then because it was desirable that certain negotiations should begin at once. Obviously, they could not begin before the announcement had been made in the House, but I made it perfectly clear that that announcement was made without prejudice to future discussion in the House. But I must say this if I may: this is an important matter and what I want to say about it involves references to legislation that is contemplated. I do not think I could do justice to the Government's case, certainly not to the friendly societies, unless I was free to discuss our decision and to relate it to the context of the new scheme which we are putting forward.
  Mr. Speaker: Yes, I think the right hon. Gentleman might do that, although we are breaking the Rule for the time being. The matter is one which should not have been brought up on the Adjournment.
  Mr. Griffiths:Thank you very much, Mr. Speaker. In the five minutes that remain to me I will do my best to make the case briefly and shortly. Here is the position. The new scheme will bring in virtually everybody in the population. It will be a unified scheme with one contribution, one stamp, one fund. It will cover the whole of a wide series of benefits. It is, therefore, a comprehensive scheme and a unified scheme.
  Let me come to what is the ground upon which we stand in this matter. The Government have to provide comprehensive machinery for the administration of this new scheme. They cannot possibly delegate this work to any other agency, for no other agency covers the whole of the insured population, and no other agency provides this wide variety of benefits. We shall have to create our own machinery, covering the whole of this country, by which and through which we shall administer the benefits

  1049
  provided under this new scheme to all those who will be compelled to contribute. We cannot, therefore, do what the Government did in 1911; we cannot delegate this work to some other body. Since we have to administer it ourselves, what we have to consider is this: is it desirable that we should, in addition to providing our own machinery for the administration of this scheme, have dual administration? That is clearly what it means. We must have our network of offices throughout the length and breadth of this country; that will be essential in order to administer these benefits for all the people covered by it—employed people, self-employed people, and everyone else. It is clear that we must do that. I therefore have to look at it from that standpoint—not whether I should find another agency that would be able to do this job for us, for no agency can. I have to realise that we shall have to provide our own comprehensive machinery and that if any other agency were brought in it would mean dual administration which would not be justified except on the soundest grounds.
  There are other reasons too. The suggestion has been made that the administration of some of these benefits should be delegated to the friendly societies as agents. This is a co-ordinated scheme providing benefits of various kinds, some of which are co-ordinated together. The hon. Member opposite has sat with me in Standing Committee A discussing the Industrial Injuries Bill, and in the consideration of that Bill I have indicated that at certain stages and in certain circumstances those who are entitled to industrial injuries' benefits will also be entitled to sickness benefits under the new proposals. It is a part of this scheme.
  Lieut.-Colonel Martin Lindsay: Surely all those facts were known to the right hon. Gentleman and his party before the General Election.
  Mr. Griffiths:Yes, that is true, and reference has been made to a circular issued by the Labour Party, but more than one circular was issued, and I would ask hon. Members who are interested to read both together. I am in difficulties, speaking with only a minute or two left, but my point is that it is essential that these benefits shall be co-ordinated and they cannot be co-ordinated if their administration is separate, and clearly any
  1050
  proposal for bringing in an agent involves the separation of the administration of benefits, for example, sickness benefits and industrial injury benefits. Surely it is not proposed by the hon. Member that the friendly societies or approved societies or anybody else shall be brought in to administer the Industrial Injuries Bill and yet it is clear that its administration must be co-ordinated.
  Mr. Goodrich: Will the right hon. Gentleman tell the House at what point the friendly societies have ever asked to administer the Industrial Injuries Bill?
  Mr. Griffiths: I did not say they had. That was not my point. My point was that I had to administer both and coordinate both, my point was that both are in certain circumstances payable to the same recipient, and therefore it is essential that their administration should be in the same hands.
  Major Boyd-Carpenter: If the object of the right hon. Gentleman is to secure that there is no duplication, how can—
  Dr. Morgan: On a point of Order. Seeing that the whole of this discussion is grossly irregular, you, Mr. Speaker, having given permission to the Minister to make his statement as a special concession, should he not be allowed to make it without interruption?
  Mr. Speaker: As the Minister did not give way, the hon. and gallant Member cannot intervene.
  Major Boyd-Carpenter: The right hon. Gentleman gave way to me.
  Mr. Speaker: When the Minister is speaking the hon. and gallant Member cannot rise to his feet unless the Minister gives way.
  Mr. Griffiths:Let me in the minute that is left to me say this. What I have to consider is not the interest of any section of this nation but the interest of the whole nation and the interest of the scheme. I am satisfied, and I have been all along, that a single comprehensive scheme needs a single comprehensive system of administration.
  It being a Quarter to Ten o'Clock, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

  JAPAN (BRITISH PENSIONERS' CLAIMS)
  JAPAN (BRITISH PENSIONERS' CLAIMS)
GERMANY
  Internal Organisation
  Internal Organisation
  Ukrainians and Baltic States Nationals (Repatriation)
  Ukrainians and Baltic States Nationals (Repatriation)
  INDONESIA (SITUATION)
  INDONESIA (SITUATION)
  THE SUDAN (CONSTITUTIONAL STATUS)
  THE SUDAN (CONSTITUTIONAL STATUS)
  POLAND (BRITISH PARLIAMENTARY MISSION)
  POLAND (BRITISH PARLIAMENTARY MISSION)
  ITALY (PEACE TREATY)
  ITALY (PEACE TREATY)
  YUGOSLAVIA(CONSTITUTIONAL CHANGES)
  YUGOSLAVIA(CONSTITUTIONAL CHANGES)
ROADS
  Accidents
  Accidents
  Transport Vehicles (Empty Running)
  Transport Vehicles (Empty Running)
  Passenger Services
  Passenger Services
  Reconditioned Service Cars (Allocation)
  Reconditioned Service Cars (Allocation)
  New Vehicles (Licensing)
  New Vehicles (Licensing)
  White Lines
  White Lines
  Waterloo Bridge (Ceremonial Opening)
  Waterloo Bridge (Ceremonial Opening)
  HUMBER ESTUARY (TRANSPORT)
  HUMBER ESTUARY (TRANSPORT)
SHIPPING
  Policy and Conditions of Service
  Policy and Conditions of Service
  British West Indies
  British West Indies
  German m.v. "Salzburg "
  German m.v. "Salzburg "
  Trooping Service (Loan of Danish Ships)
  Trooping Service (Loan of Danish Ships)
RAILWAYS
  Beer Transport
  Beer Transport
  Suburban Services
  Suburban Services
  Marylebone-Manchester
  Marylebone-Manchester
  U.N.R.R.A. (VEHICLES)
  U.N.R.R.A. (VEHICLES)
  POLICE (EMPLOYMENT AND OFFENCES) ORDER
  POLICE (EMPLOYMENT AND OFFENCES) ORDER
  ELECTRICITY SUPPLIES (ST. AUSTELL)
  ELECTRICITY SUPPLIES (ST. AUSTELL)
TRADE AND COMMERCE
  Exports to Spain
  Exports to Spain
  Footwear
  Footwear
  Airfield, Worcester (Storage)
  Airfield, Worcester (Storage)
  Requisitioned Property
  Requisitioned Property
  Newsprint
  Newsprint
  Toys
  Toys
  Safety Boots
  Safety Boots
MINISTRY OF SUPPLY
  Damaged Radio Sets (Dumping)
  Damaged Radio Sets (Dumping)
  Penicillin (Public Sale)
  Penicillin (Public Sale)
  Surplus Radio Material
  Surplus Radio Material
  Utility Radio Sets
  Utility Radio Sets
  Motor Vehicle Spare Parts (Disposal)
  Motor Vehicle Spare Parts (Disposal)
  Surplus Government Vehicles
  Surplus Government Vehicles
  Telecommunications Research
  Telecommunications Research
BRITISH ARMY
  Flame Throwers (Public Use)
  Flame Throwers (Public Use)
  Overseas Tours
  Overseas Tours
  Ordnance Factories, Swynnerton and Radway Green
  Ordnance Factories, Swynnerton and Radway Green
  Repatriated Officers, India(Accounts)
  Repatriated Officers, India(Accounts)
  Leave Trains, Germany
  Leave Trains, Germany
  Demobilisation
  Demobilisation
  Port Establishments, Europe
  Port Establishments, Europe
  Repatriation Leave
  Repatriation Leave
  Repatriation, Far East
  Repatriation, Far East
  B.A.O.R. (Christmas)
  B.A.O.R. (Christmas)
  Home Guard (Disposal)
  Home Guard (Disposal)
  Far East Casualties (Prisoners)
  Far East Casualties (Prisoners)
  Personal Cases
  Personal Cases
  DEMOBILIZATION SUITS (OUTSIZES)
  DEMOBILIZATION SUITS (OUTSIZES)
  COMPASSIONATE RELEASE
  COMPASSIONATE RELEASE
  MEDAL RIBBONS
  MEDAL RIBBONS
ROYAL NAVY
  Demobilisation
  Demobilisation
  "Scharnhorst" and "Gneisenau "(Inquiry Report)
  "Scharnhorst" and "Gneisenau "(Inquiry Report)
  Pensioners (Discharge Leave)
  Pensioners (Discharge Leave)
ROYAL AIR FORCE
  Trooping Aircraft (Maintenance)
  Trooping Aircraft (Maintenance)
  Demobilisation
  Demobilisation
AGRICULTURE
  Output per Head
  Output per Head
  Carrots
  Carrots
  Training Schemes.
  Training Schemes.
  Animal Feedingstuffs
  Animal Feedingstuffs
  Mine Ballotees (Release)
  Mine Ballotees (Release)
  FISHING INDUSTRY (ESSEX)
  FISHING INDUSTRY (ESSEX)
HOUSING
  Temporary Houses (Man-hours)
  Temporary Houses (Man-hours)
  Slates and Guttering
  Slates and Guttering
  Edinburgh (Bricklayers)
  Edinburgh (Bricklayers)
POST OFFICE
  Telephone Service (South Africa)
  Telephone Service (South Africa)
  Parcel Mails (Northern Ireland)
  Parcel Mails (Northern Ireland)
BURMA
  Private Individuals (Entry)
  Private Individuals (Entry)
  REFUGEES (REPATRIATION)
  REFUGEES (REPATRIATION)
  HOUSE OF COMMONS REFRESHMENT STAFF (FUND)
  HOUSE OF COMMONS REFRESHMENT STAFF (FUND)
  SUGAR SHIPMENTS (FRANCE)
  SUGAR SHIPMENTS (FRANCE)
  BRITISH COUNCIL (COLONIES)
  BRITISH COUNCIL (COLONIES)
  TEACHERS (NON-TEACHING WORK)
  TEACHERS (NON-TEACHING WORK)
  GAS PRESSURE, LONDON
  GAS PRESSURE, LONDON

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

WALLASEY CORPORATION BILL. [H.L.]
Returned from the Commons, agreed to, with Amendments: the said Amendments considered and agreed to.

JOHN AMERY'S MENTAL CONDITION.
THE EARL OF LYTTON: My Lords, I beg to ask His Majesty's Government a question of which I have given them private notice—namely, whether the Medical Commission appointed by the Home Secretary to investigate the mental condition of John Amery, under sentence of death to be executed on Wednesday, have personally consulted Lord Horder and Dr. Glover, whose report on the history of the case was submitted to them, or whether permission has been given to Lord Horder and Dr. Glover to make a personal investigation into John Amery's present condition.
THE LORD CHANCELLOR (LORD JOWITT): My Lords, the two medical practitioners whom the Home Secretary appointed to hold an examination into the mental condition of John Amery did not think it necessary to consult Lord Horder or Dr. Glover personally, though they had before them the opinion of these two doctors. The answer to the second part of the question is in the negative.

BUSINESS OF THE HOUSE.
THE SECRETARY OF STATE FOR DOMINION AFFAIRS (VISCOUNT ADDISON): My Lords, I think it may be convenient if I remind your Lordships

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that in consequence of the very large number of speakers on the Resolution which will shortly be before the House, it has been arranged that we should meet to-morrow at 11.30 a.m. instead of 2.30 p.m.

ANGLO-AMERICAN FINANCIAL ARRANGEMENTS
2.40 p.m.
THE SECRETARY OF STATE FOR INDIA AND BURMA (LORD PETHICKLAWRENCE)THE SECRETARY OF STATE FOR INDIA AND BURMA (LORD PETHICKLAWRENCE) rose to move to resolve, That this House approves the financial arrangements between His Majesty's Government and the Government of the United States, including the final settlement of Lend-Lease and other claims arising out of the war, as set out in Cmd. 6708; welcomes the initiative of the Government of the United States in making "Proposals for an International Trade Organization," Cmd. 6709, and approves the participation of His Majesty's Government in the discussions proposed with a view to arriving at an international agreement upon the basis of the suggestions put forward; and approves the proposals for setting up an international Monetary Fund and an International Bank for Reconstruction and Development as set out in Cmd. 6546 of 1944.
The noble Lord said: My Lords, in moving the Resolution which stands in my name on the Order Paper, I am conscious of a deep sense of responsibility. I have in fact a Herculean task to perform. First of all, I have in brief to expound and justify to your Lordships three complicated Agreements, one of which is the Loan Agreement, another the Bretton Woods Agreement, and the third the Trade Treaty, which I propose to touch upon only briefly, and to leave to my noble friend Lord Pakenham later in the debate to handle at greater length. But that is not all. I conceive it to be my duty, so far as I can, also to help to build a bridge between the Old World and the New, which are separated geographically by three thousand miles of ocean, and which might, if we were not careful, become grievously divided by commercial and economic antagonism.
It would be idle to pretend that the settlement I am asking you to accept today is in full accord with the desires of the British people and of His Majesty's Government. We had hoped to secure
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acceptance by the Government of the United States and later by Congress, of our claim that, as we had thrown into the common struggle all our resources, and had stripped ourselves bare in the process, the generous help known as Lend-Lease would be extended for the whole period, right up to the restoration of the peace economy of our country, and not merely for the period of the "shooting war" alone. We failed, and further, we had to make many and various concessions which we should have preferred not to make.
But, having said this, I feel that it is only right to put before your Lordships how the matter appears to our neighbours on the other side of the Atlantic. They regard the settlement as an exceedingly generous one from their point of view. -First and foremost, they note that they have written off the main body of Lend-Lease, amounting to something of the order of £4,000,000,000 to £5,000,000,000 net, and further, that the objects of Lend-Lease which have accrued since the end of hostilities have been treated on the same basis as the fresh credit which they are according to us in this Agreement. Secondly, they are making to us a loan on terms which in their view are far more liberal than would be justified merely on a commercial basis. In this respect they point in particular to the waiver clause, about which I shall have something to say before I sit down. In the third place, they have made at our request many important concessions, and the final terms of the document at the end are in many respects very different from, and much more in our favour than those which they put forward at the beginning, and to which they pinned their faith. It is true that they have attached certain conditions—so-called strings—to the Agreement, but in their view these are mutual engagements designed to promote the widest measure of general international commercial prosperity. That view may be right or it may be wrong, but at least we ought to understand their point of view on this matter.
This Agreement, therefore, is a compromise; and, like all compromises, it falls far short of what either party set out to obtain. It has been reached by hard bargaining, and personally I am convinced that at the end there was no margin on either side for further concessions. Nevertheless, your Lordships will have heard with approval that our able,

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devoted and patient negotiators parted from their opposite numbers who represented the United States in a spirit of personal friendship and complete good will.
After that brief introduction, I will turn to the Agreements themselves, and begin with Bretton Woods. The so-called Final Act of Bretton Woods proposes the setting up of two pieces of machinery; the first is the International Monetary Fund and the second is the International Bank. The main purpose of the Fund is to promote exchange stability. The Fund must be set up before December 31 of the present year, and our signature is necessary for this end. Members of the Fund have to contribute their quotas and will be entitled, under certain specified conditions, to borrow currency from the Fund. Each currency has at the start a parity exchange value which is expressed in terms of gold or of United States dollars. It is this provision, of course, which arouses the greatest controversy on this part of the Agreements. There are those who violently oppose this proposal, and there are those who support it. Many of those who oppose it say that this is a return to the gold standard. Some even go so far as to say that by this Agreement, if we accept it, the pound is anchored to gold. I venture to suggest that both those statements are entirely inaccurate, and I should like to make this personal reference with regard to the matter. In the middle 'twenties, when the gold standard was being restored by the then Chancellor of the Exchequer, Mr. Winston Churchill, I was one of a very small band of members of the other House who opposed that return. I have never changed my point of view; and if in fact this was a return to the gold standard as we understood it in days gone by, I for my part would not be standing here to defend it. What is true of myself is, of course, equally true of that great economist who has been one of the negotiators, Lord Keynes, who, understand, is likely to be here to-morrow and to take part in this debate.
What is true, of course, is that by this Agreement sterling is related to gold. I should like your Lordships to face this fact. If there is to be any stability in exchanges, if, in fact, there is to be any relation between our currency and other currencies, and if at the same time one
680
or more of those currencies is in fact related to gold we cannot escape from relating our currency to gold. And that is precisely what this Agreement does. Inevitably, at any time, under the circumstances, there must be a relation between our currency and gold. The only question is the degree of flexibility which attaches to that parity. I venture to suggest that under the Bretton Woods Agreement there is considerable flexibility. I am not going to read to you the terms of the Article which refers to this, for I feel sure that nearly everyone here has those terms in his mind. Broadly speaking, they are these. We have an absolute right, at any time, to change our parity up or down by not less than ten percent. We have a right, subject to concurrence by those who are in charge of the Fund, to make a further alteration of ten per cent. and, over and above that, there is the possibility that we may secure approval for a further change in the parity value. It is expressly laid down that the Fund shall not prevent these additional changes in parity value if the equilibrium and the position of the finances of the country that is seeking this alternation are at stake.
I cannot, myself, see how, short of throwing over the whole basis of exchange stability, you could have much greater flexibility than that. I would like to remind your Lordships of how the trouble, in the inter-war years, arose. It arose from two causes. First of all, there was the competitive depreciation of many of the currencies of the world, and this Agreement, this Monetary Fund, in its terms, will do a very great deal, when it comes into effect, to prevent a recurrence of what happened in that respect in the inter-war years. The other cause of trouble was deflation. I should like to remind your Lordships of this. I do not think we can escape responsibility in this country. The country which first set out to deflate was not the United States, not the countries on the Continent of Europe, but this country of ours, which, at the, dictation of the Bank of England, deflated its currency and returned to an old parity of gold, at a time when it was most injurious to do so for our own interests, and thereby brought us into great trouble. It was not until after that that the United States started a spiral of deflation which, first of all, drove us off the gold standard, and, later, drove the United States also

681
off the gold standard. Or rather, it forced the United States to change its parity; it did not, exactly, drive the United States off the gold standard, because the United States preferred to take that alternative course.
Looking at these facts, with regard to the future, and considering the possibility of deflation, I say that I should think there is reason to believe that the nations concerned have learnt their lesson; that a nation which sees a deflatory process threatening to take place, will take steps to prevent it occurring. I have never departed from my view that, though our currency may be related to gold, goods are the real measure on the question of value. As I have expressed it in times gone by, the value of money has got, ultimately, to be construed in terms of baskets full of goods.
I say there is nothing in this Agreement to prevent that ultimate conclusion being reached. Supposing it does not happen, suppose the worst takes place—I do not believe it will, I believe that humanity will be wise enough, having gone into error in years gone by, not to repeat that mistake—but suppose this whole system fails. Well then, there is an escape clause. Any member is entitled to break away entirely from the Fund, and, though I should certainly hope that that would not occur, and I should not advocate our entering this Fund lightly with that escape clause in mind, if the worst comes to the worst, and human beings show themselves so incapable that they cannot make use satisfactorily of that Agreement, that course is open to us to take. So the issue seems to me to be this. Do we want order and stability in the exchanges or do we want chaos and individual scrambling? With constantly fluctuating exchanges, international trade is bound to be exceedingly difficult and dangerous. I suggest to your Lordships that this country, this great maritime nation, depending, as it does, so largely upon foreign trade, not only for its prosperity but for its very existence, is bound to take any chance that offers itself of getting stability and order.
I ought, perhaps, to make allusion to one or two other matters in regard to the Monetary Fund. In Article XIV of the original document we are provided with a period during which we are free to deal with currency questions. It is quite true
682
that in the Agreement with the United States this period is cut down to a shorter period. I regret this, but I am bound to point out that one of the reasons for this long period was the fact that our nation, in common with others, would not have means of purchasing foreign currency so essential to carry on during the interval. The fact that America is providing us with this credit does enable us to carry through without the discriminatory practice which it was contemplated might have to last for a longer period. On the other hand, in Article VII of the Fund Agreement, there is a provision which places difficulties in the way of any nation whose currency is in short supply, and it may well be that the difficulties we experienced in exporting to the United States in the inter-war period will be rendered very much less in the days to come owing to the operation of the Fund in bringing to book a country whose currency is in short supply. So much for the Monetary Fund.
The other instrument is the International Bank, which has for its purposes—and I had perhaps better read from those which are mentioned in the document itself—the following:
"To assist in the reconstruction and development of territories of members. …"
and
"to promote the long-range balanced growth of international trade.."
In other words, the International Bank is for long-term credit, whereas the Monetary Fund is mainly for dealing with short-term difficulties in exchange.I need not go over in detail the provisions set out in the Articles relating to the Bank. They are those which are requisite for the purposes for which it exists. So far as I know, no exception has been taken to this very important instrument, which will, I hope, prove of very great value. It is not possible to predict the precise, direct use that this country will make of the International Bank, but it would seem to me that anything which restores the economic prosperity of the nations of the world cannot fail to be of great value, of essential value, to us.
I turn from these monetary agreements, concluded at Bretton Woods, to the trade proposals. I am not going to deal with them at any length because my noble friend Lord Pakenham will give you details. But I should like to draw your

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Lordships' attention to this. The title of this White Paper is "Proposals for Consideration by an International Conference …" I wish to draw your attention to the first three words. It is, of course, quite true that His Majesty's Government expressed their general agreement with the ideas lying at the back of this document, and I know that there are certain members of your Lordships' House who do not view with favour all the proposals in this White Paper. I will therefore content myself with saying this: none of these proposals binds us to any final decisions. The final decisions await the negotiations. Still less do they bind any other member of the Commonwealth. Quite clearly we could not do that. We could not hind them, nor any of the other self-governing members of the Commonwealth, and it is only if we get a consideration which seems to us adequate that we are obliged to take any steps at all to do what is requisite on our side.
I turn from that to the Loan or Credit Agreement itself. The main lines of it are very well known—the amount, the rate of interest, the delay for five or even six years before the first repayment has got to he made and the unique waiver clause. I should like to draw your Lordships' attention to the fact that that is not merely a postponement of interest, but a cancellation of interest for those years for which the waiver clause exists. Further, with regard to the waiver, I should like your Lordships to appreciate that the criterion on which the waiver depends is such that it will not involve an inquest into our economic position in this country by an outside agency.
I have already mentioned the fact that by the Agreement we wipe out the whole of the Lend-Lease engagements during the war, and that the amount borrowed since the ending of hostilities is put on the same terms as the new money credit which is the main object of the document. Of course, there are strings attached to this proposal, and some of them we would very much rather have been without. One is the limited amount of time permitted for us before the current dollar receipts in the sterling area 'are freed for purchase of other currencies. With regard to that I can only say that noble Lords must remember that this sterling area is a voluntary matter, and quite apart from this Agreement I very much doubt
684
whether we could impose on holders of sterling balances in other parts of the world an indefinite arrangement by which all the current dollars that they earn are paid into our pool and never allowed to be used for the purposes for which they would like to use them. In the second place, there is the point of the abrogation after some fifteen months of the latitude for discrimination in Article XIV. I have already given a partial answer to that. In the third place, there is the obligation to negotiate with our sterling creditors for some adjustment of our sterling debts. Of this I will only say that we have not committed them in any way; they are not bound and it is for us to see how far they will go, in return for the greater flexibility which this instrument gives to currency, to make some adjustment of the sterling credit.
That is the picture, the picture of these Agreements and the question that we have to ask ourselves is: What are we going to do about them? We can accept. them or we can reject them. The Chancellor of the Exchequer in another place pointed out quite truly and cogently that if anybody proposes to reject, it is up to him to say what is the alternative which he suggests should be adopted. So far as I am aware, there were only two positive alternatives—if you can call them so—suggested in the other place or which I have seen suggested anywhere. The first one seemed to be a very lighthearted one. It was that we should have none of these Agreements and that we should earn our own way by taking off all controls and freeing industry to do exactly what it liked. I can only say that if anyone imagines that by allowing all sorts of luxuries to be imported, involving foreign, currency, and all sorts of practices to be adopted which would not help us towards an export balance, that is going to relieve cur present anxieties, it is flying in the face of all economic and reasoned commercial understanding. The other proposal which was made needs more careful consideration. It was that in place of these Agreements, with all the strings attached, with all the Bretton Woods and the other things, we should have gone for a purely commercial loan. If anybody takes that view, I would like him to realize that that possibility was not overlooked by those negotiating this settlement with the United States, and I do not think anyone who knows the facts will

685
attempt to deny that it was quite impossible to obtain a commercial loan of sufficient magnitude to meet our essential requirements.
The whole amount of the French loan, I need hardly remind your Lordships, was a comparatively insignificant sum, and though we might have obtained a loan a little larger than that, there is an immense gap between the figures of that loan and the figures which would have been required to meet our contingent liabilities for the next few years. But, even had we been able to secure a commercial loan of the magnitude required on anything like the French terms, it would have involved an annual burden on this country which we should be quite unable to meet. Therefore, though at the first flush there may be something plausible about that proposal, I can assure your Lordships that it was investigated and the investigation yielded no positive result.
If we lay aside those two positive proposals, there remains the negative one, that we should leave matters alone ha the hope and belief that after a limited period of time, a different settlement would have been reached. I do not shut out: the possibility that had we done nothing now the logic of circumstances might have forced both nations into agreement; but if your Lordships think that after that interval we should have got a proposal far more favourable to us then, I think, you are in a dream world. Remember the comparative bargaining powers of the two countries, and remember that at the present time, at any rate, the demand for American goods by all countries will be enormous. I do not think there is the prospect of our reaching a settlement in a reasonable amount of time more favourable than that which we have secured in these proposals, or that we should be in the least likely to secure it.
To put that out of account, what would be our position in the meantime? What about the interval? I am not going to lay the principal stress upon the austerity it would have imposed on this country. That would have been grievous. Anyone who knows the facts, which I am not going to enumerate now, cannot doubt that the austerity would have been such as very few people in this country realize—far more grievous than (luring the war.
VISCOUNT CRANBORNE: Could the noble Lord give any details? That is the one question about which the House is most anxious to know.
LORD PETHICK-LAWRENCE: I will certainly see that an answer is given to that question, and if it were the principal point of my speech I would have prepared myself on it, but, as it is not, I am laying it aside. The austerity which would have been imposed is not the main burden of my objection, nor do I base even the main burden upon the fact that unless our industrial pump is primed, our industry will not be able to recover in a reasonable amount of time. The loan is essential to us in order that our industries may be started up again. I want to place it on somewhat less material considerations than that. I base it on the same consideration as Lord Halifax who, in a speech a few days ago to the English Speaking Union in the United States, used the following words:
"Were these Agreements to fail, could we hope that the relations between our two countries would escape continuing and dangerous strain which you and I should view with great anxiety? On this decision the pattern of world economy during the coming years will be largely shaped. For good or ill, we are now all members one of another. No single country or group of countries can expect to enjoy peace, prosperity or security alone. The world has grown top small."
Therefore, my Lords, we are confronted today with two alternatives. One is to come into agreement with the United States to build up a new world order of finance and trade. The scheme admittedly an experiment which without good will will fail. So, in fact, will any scheme, however good on paper, fail if good will is not present, but with patience and with mutual understanding there is a real chance that it can be made to work, and, where it falls short, it can be amended and improved. The other alternative is to stand outside and fight a financial and economic battle with America, the outcome of which, for ourselves, no one can foresee. But the issue, I suggest, goes further even than that. I would beg any of your Lordships who contemplate voting against this Agreement to weigh very carefully before doing so what will be the consequence of its rejection. It would mean not merely a quarrel with America, but the end of all co-operation. We should destroy all immediate hope of building up a world

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order and we should be putting ourselves into a position of isolation. On the military field there were many people in the United States, before that country came into the war, who thought the prosperity of that great country and its vast internal resources could be built up on isolation. They learnt that that was impossible. I say to your Lordships, isolation is an impossible creed for any nation in the middle of this twentieth century. We dare not fail the future generation in this our country and the future generation throughout the world by embarking on so ruinous a course. I beg to move.
Moved to resolve, That this House approves the financial arrangements between His Majesty's Government and the Government of the United States, including the final settlement of Lend-Lease and other claims arising out of the war, as set out in Cmd. 6708; welcomes the initiative of the Government of the United States in making "Proposals for an International Trade Organization," Cmd. 6709, and approves the participation of His Majesty's Government in the discussions proposed with a view to arriving at an international agreement upon the basis of the suggestions put forward; and approves the proposals for setting up an International Monetary Fund and an International Bank for Reconstruction and Development as set out in Cmd. 6546 of 1944.—(Lord Pethick-Lawrence.)
3.21 p.m.
VISCOUNT SIMON: My Lords, the noble Lord who has just sat down began by saying that he felt he had a difficult and a very responsible task, and I am sure that all your Lordships will be grateful to him for the exposition which he has placed before us of these very complicated documents which were presented to Parliament only five days before they had to be discussed. I think we shall agree with the noble Lord on the advantage which is gained by having a settlement of accounts for Lend-Lease and Reciprocal Aid, a settlement, I think, which in the document which has been signed is declared to be complete and final. I was a little taken aback that the noble Lord did not dwell more upon the consequences to this country, its life and prospects, if this large amount of dollar credit is not now made available, and I
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think before this long debate closes we may be glad to have some information about that.
Studying the thing as impartially as I can, I do myself very clearly sec that there is an imperative demand for a large dollar credit, not merely to save this country from very severe austerities but for the purpose of enabling us to get going with our export trade. But whatever may be said as to the urgency of dollar provision, and however persuasively the noble Lord puts these documents before us, here is the plain fact: that I do not suppose there ever has been a very important international Agreement put before Parliament for acceptance in which it was found that the conditions which attached to the Agreement aroused in this country such deep anxiety and such widespread mistrust. I should doubt whether it has ever happened before. You may say of it, as Wordsworth said about the lonely village maiden, that it is a case where
"… there are none to praise, And very few to love."
Now we are told that some of our American friends are surprised at our disappointment. The noble Lord has just told us that from their point of view this is a very good thing for us. Well, we must all choose our words carefully, but between friends—and I refuse to agree that the friendship between the United States and this country is in quite so fragile a condition as the noble Lord opposite seemed to imply—it is better to speak candidly as long as we do it in moderate terms. In these two days' debate, though many of your Lordships will take part and express, no doubt, many anxieties and criticisms, there is one thing on which we shall all be agreed and which I think the noble Lord conceded: that this is a very different Agreement from the sort of Agreement which Lord Keynes and his companions went across the Atlantic to try to get. Nevertheless, I want to say at once that I associate myself with the advice which I know the Leader of the Opposition will give, that the House of Lords should abstain from rejecting this Motion and from bringing about the consequences that would then ensue.
The Financial Agreement itself is, of course, already signed. If the Lord Chancellor takes part later on he will tell us how far such an Agreement—a Treaty really—operates without Parliamentary

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sanction. In principle that is certainly true in the Constitution of our country, though of course it is not true in the Constitution of the United States. But partly because of the undertaking which the Government made to bring these matters 'before Parliament, and partly because the passing of the Bretton Woods Bill is necessary to implement the arrangement, here the whole matter is before us, and, as the noble Lord said just now, we have to decide what to do about it.
As I have said, this is not at all the sort of Agreement for which we had hoped, and in this great bundle of White Papers, which it is very difficult completely to master, there is one—Command Paper 6707, Statistical Material Presented During the Washington Negotiations—which shows what our case was when our negotiators went to Washington. They sought an agreement which would give fuller effect to the contrast—for it is a surprising contrast—between our situation and that of America at the end of a war in which we were allies and joint victors. I do not think there is any ground for saying that in making reflections on this subject we are doing any injury to Anglo-American relations. No one fails to realize the immense contribution that America made in securing victory. We gratefully acknowledge, every one of us, that it was the stalwart help of America in every field—men, munitions, Lease-Lend, and all the rest of it—that made possible the final overthrow of Nazi domination. Every one of us counts Anglo-American co-operation now, and in the future, as an outcome of the war, as something which is more precious than anything else except the rescue of liberty for the world and except the new proof of the close-knit unity of the British Commonwealth and Empire. There is no harm in saying to America that we Britons, who are conscious of what Britain has done, yet readily acknowledge that American effort was like to our own.
But—and this is the point— likeness of effort is not the same thing as equal sacrifice. We think history will not forget that we, with our British friends across the seas, stood alone for a year; that we scraped together every dollar we could find; that we requisitioned and sold every foreign security which could produce more dollars; that we diverted all our factories to work on munitions; that we sacrificed
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the prospects of a quickly recovering export trade, and endured the destruction of our homes. As a result, at the end of the war (this, I am sure, is the case that Lord Keynes went to America to make) we have lost dollars, gold, readiness to export, and almost everything a victor might hope for except our own liberty and determination to hold fast. That is the case, I apprehend from this official document, which our negotiators went to America to present. It is no reproach to the United States to say that, splendid as their contribution has been, they have not met with the same fate. America loaded herself with heavy burdens indeed, but she came out of the war with increased power to produce and with unlimited resources, whilst our effort has left us enfeebled by sacrifice. The reason why the ultimate burden is so unequal is not only that we were engaged in the war for its whole duration; it is that this was a small country engaged in a war extending all over the world and compelled to incur frightful liabilities if it was going to make good its unalterable resolve to fight on even when alone.
Therefore we utter no reproaches. The Americans are a free and proud people who can never be induced to go beyond what they are prepared to give. We value their friendship as a buttress, a support, and a solace in a world which is rather dark for us, but it is, I think no disservice to Anglo-American friendship to state, with the candour that is expected between friends, how it comes about, to the surprise of many Americans, that we regard this Agreement, which is the best our negotiations can secure—and I am sure they did their very best—as a disappointing adjustment and, as some would say, a hard bargain. I am very conscious that anyone who speaks first after the opener is tempted to occupy a great deal of time, and certainly if he went over the whole ground that would be inevitable. I do not desire to do so, because many speakers will have, I hope, an opportunity to make their contributions. I should like to take, merely as an example of our disappointment or anxiety, two features which give many of us special concern. The first, to which the noble Lord has made a reference, though I think a rather slight one, is this prompt convertibility of sterling for current transactions. The second is the phraseology employed in a most impor-

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tant matter, in the relations between tariffs and preference.
Clause 7 of the Financial Agreement, as the noble Lord said, imposes a condition attached to the loan. I do not think this, at least, could be described as a mutual condition. That was the expression the noble Lord used in describing the American view. There is nothing mutual about this, which is that the Government of the United Kingdom will complete arrangements as early as practicable, and in any case not later than one year after the effective date of the Agreement, after which sterling balances from the sterling area held here in London are to be convertible into other exchange and not, as they are at the moment, regarded as largely inconvertible.
LORD PETHICK-LAWRENCE: May I interrupt?
VISCOUNT SIMON: I know what the noble Lord wants to say. I mean in respect of current transactions. It is the sterling which will arise in current transactions between members of the sterling area who bank in London and who up to the present, though only as a war arrangement, have been prepared to treat that sterling as, for the time being, unconvertible. I did not for a moment suppose it applied to past balances. That is a very serious provision, as the noble Lord, I thing, recognizes. The, solidity of the sterling group before the war did not depend on any such provision. I think I am right when I say that before the war the sterling group, a group of countries consisting not only of members of the British Empire but of others too, banked its credits in London on terms that were freely convertible. The solidarity of the group largely depended upon that, because the members felt they were free to leave by taking other currency, and just because they were free to do so, they did not do so. It is not altogether unlike the way in which the British Empire is held together; its members remain closely knit exactly because of that freedom which they enjoy.
When the war came recourse to convertibility was dropped, not so much, I believe, by definite bargain, as by what may be called a consensus of practice based on the recognition of the extreme need, as the head of resist-
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ance, of this country. I quite understand—and I think the point was well made—that we cannot expect that inconvertibility to go on indefinitely; indeed, if we attempted to exact it, members of the sterling area might be disposed to break away. That is true enough, but limiting this idea entirely to current transactions does make the great difference that we are bound to restore convertibility in current transactions in a very short time. You cannot pass to the practices of normal health instantly when you are recovering from a severe strain.
Let me take a simple illustration. Let us suppose that in two years' time we buy tea from India. That is a current transaction. The payment for it would be a sterling credit here in London. Let us also assume that a Maharaja in the next year or two wants to buy a motor car. Although it might be difficult to find one for him in this country, none the less so long as sterling remains inconvertible there is a definite trend towards the British market, which is very seriously modified if it is said that this new money, arising from transactions in the sterling area, must be declared to be convertible into dollars within twelve or fifteen months. I feel sure that this was one of the conditions inserted in this Agreement very unwillingly indeed on the side of the British negotiators. It seems to me that that clause gives ground for saying that the conditions are hard; and, as far as it goes, I cannot but think that the effect of it is to give a further encouragement to American export, and to put a further difficulty in the way of British competition.
The other matter on which I want to say a word is that of tariffs and preferences. Here it is very important to follow the documents. I think that the documents before us leave the issue in a confused state; and I think, therefore, that they call for an interpretation by which our Government will stand. Let us take the two or three documents in turn, to see just how we trace them through. If you take Cmd. 6709 and turn to page 5, you find in it a sentence which refers to entering into arrangements "for the substantial reduction of tariffs and for the elimination of tariff preferences." Now, it is perfectly obvious that a high tariff might be substantially reduced and yet leave a barrier to imports from the British Empire which could not fairly be equated

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with the abolition of preferences: That is perfectly clear.
I venture to give a very simple example. Jamaica produces sugar, and so does Porto Rico. Porto Rico for this purpose counts as part of the United States; it is inside the tariff wall, and therefore sells its sugar in the American market without any tariff to surmount. Jamaica, on the other hand, is kept out by a high tariff. She disposes of her sugar—she could not dispose of it other-wise—with the assistance of a preference given by Britain and other parts of the British Commonwealth. Suppose that as a result of negotiations a number of rows of bricks at the top of the American tariff wall are taken down, what will happen? Will that be a quid pro quo for abolishing the preference to Jamaican sugar? It would not, indeed; for the result would be that, while the Porto Rico sugar would now have equal entry into our market with sugar from Jamaica, on the other hand Jamaican. sugar would not have equal entry into the American market with sugar from Porto Rico. It is therefore a matter of the greatest importance to know what is meant by this particular juxtaposition of words. The poet Clough wrote a line (which happens to be a very good English hexameter) on the subject of propinquity between the sexes leading to affection. The line is this:
"Juxtaposition in short, and what is juxtaposition? "
I have to put the same question; what is this juxtaposition between the elimination of preference on the one hand and the substantial reduction of tariffs on the other?
I am bound to say that there is something to be said which may relieve our anxieties to some extent. In the first place, as the Secretary of State pointed out, this document in which that phrase occurs is not really an agreement: it consists of proposals for consideration put forward by the Secretary of State of the United States, Mr. Byrnes. It is what I may call an argumentative agenda. On the other hand, on page 18 of this document there is an endorsement, which I shall not pause to read, by the Government of the United Kingdom which seems to express full agreement on important points in the agenda and to accept them "as a basis for international discussion." I regard that language as ambiguous, and I want it to be cleared up. I have not
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overlooked either the fact that this juxtaposition may be said to have an earlier origin, because in the Mutual Aid Agreement of 1942, which was negotiated between Mr. Churchill and President Roosevelt, there is an article, Article 7, which uses the word "discrimination," although Mr. Churchill very wisely at the same time secured with President Roosevelt.— I do not know whether by letter or otherwise—an agreement that it was to remain perfectly clear that the result of all that was not to mean either that we were bound to drop any of our preferences or that America was bound to drop any of her tariffs. The whole matter was left to the future.
But the matter has now gone further than that, and this is a point on which I want a little help from ay: Front Bench opposite. Ten days ago, when this great bundle of White Papers was first presented to Parliament, the Prime Minister made a statement which is to be found in the House of Commons Hansard of Friday, December 7, column 2718. What he said with reference to this matter was this, and it is very important:
"It is recognized that reduction or elimination of preferences can only he considered in relation to and in return for reductions of tariffs and other barriers to world trade in general which would make for mutually advantageous arrangements for the expansion of trade. There is thus no question of any unilateral surrender of preferences. There must be adequate compensation for all parties affected."
He went on to point out that some preferences are of particular importance to the economy of certain areas, and he said:
"The elimination of all preferences would be such a step as would require a most substantial and widespread reduction of tariffs and other trade harriers by a large number of countries."
By that I suppose. he meant more than America—for instance, the French Empire.
I think that this House is entitled to have that assurance given here and now. We ought not to be required to hunt out a copy of Hansard giving the proceedings of the House of Commons to get comfort, as I do get comfort, front that assurance. I venture to ask my noble friend opposite, the Leader of the House, whether he will, in this House, here and now, give us the full confirmation of the Government by saying that that declaration is the declaration by which they will stand.
VISCOUNT ADDISON: My Lords, I am obliged to the noble and learned Viscount for giving me notice that he would ask me this question. I must, in making this statement, read a later sentence to the one which he read:
"All negotiated reductions in most-favoured-nation tariffs will operate automatically to reduce or eliminate margins of preference."
That is the sentence. I have to say, with regard to this statement that the Prime Minister made, as to the interpretation which His Majesty's Government place on it, that that statement was most carefully made; it was communicated to all the Dominions, and we stand by it absolutely.
LORD KEYNES: My Lords, may I as one who has been present at the discussions, be allowed to give further confirmation of that? Not only is this known to the Dominions, but there is not, in my judgment, the smallest misapprehension on the part of the States. As you may suppose, something a little more drastic may have been in their minds at one time, but the exact position, which the noble Leader has outlined, was before their minds emphatically on many occasions. There is not the smallest room for doubt about it.
VISCOUNT SIMON: My Lords, I am very glad to have confirmation from both in front of me and from behind. I should think that the two, taken together, will give a great deal of satisfaction to many people in this House who were sincerely anxious on the subject—and not without reason.
I am going to resist the temptation of making several criticisms, because I wish not to make any unfair claim on the time of the House. There is, however, one matter upon which I should like to make an observation. It is said that this Agreement is unacceptable because some people feel great doubts as to whether it can be literally performed. The noble Lord who opened the debate called attention to provision. designed, no doubt, to meet any case of extreme need that might possibly arise, but I want to make a different observation. As it seems to me, with regard to these obligations—the obligations to repay by instalments with interest stretching over a long period— that while, of course, there is a British undertaking on the subject, and it is only entered into in good faith, still it is not
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the borrower alone, but it is the lender also who has a part to play in connexion with repayment. To put it in its simplest terms—and I hope that I am not putting it too inaccurately, speaking as I do in the presence of great economic authorities—this repayment, which we bind ourselves to make, must be made either in gold or in goods. Gold could only be available if and when we recover a substantial balance of payments in our favour. In the ultimate analysis, our power to repay depends on our ability to export.
It seems to me—brought up as I was in an old school on this subject—that it is a fallacy to assume that any State, however wealthy and powerful, can go on everlastingly lending abroad and exporting abroad without making provision for an intake in exchange. It is useful to recollect the position in which this country found itself at the end of the last century, when we were a great creditor nation. We then lent money abroad on terms which required repayment and interest. But we lived under a system which permitted the entry into this country of the debtor's produce in exchange. I do not know if there is a new economic theory which gets away from these simple propositions. I am not sufficiently instructed to know. But it seems to me that they are propositions which lie very much at the basis of this question as to whether we have an adequate power to repay.
I am not going to detain your Lordships on the subject of Bretton Woods. It so happened that on May 23, 1944—even in the presence of so great an authority as Lord Keynes—I had the duty, which I discharged as well as I could, of explaining the scheme of Bretton Woods. Much can be said about it, no doubt, but I leave it now to others. It is perhaps only right, though, that I should say—for what it may be worth—that I share the view that the scheme of Bretton Woods is not, properly speaking, a return to a rigid gold standard. It is not. I appreciate that the object, the broad object, of it is to discourage unilateral depreciation of currency merely at the will of a Power that feels embarrassed—of which we had many examples in the case of France not so many years ago—and to substitute for it, if possible, an orderly adjustment by international discussion and negotiation. I will say no more on this, because I am sure that we shall hear a great deal more

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about it later. The House, in the debate of May, 1944, resolved that
"the statement of principles in Cmd. 6519 provides a suitable foundation for further International consultation with a view to improving monetary co-operation after the war".
In our decision to-morrow we shall carry that matter a step further. I confess that, in my studies on the subject, I am rather led to regret that the essential provision of dollars should have been thus tied up with all these other proposals. I cannot help thinking that it might have led to greater clearness had it been possible to keep the two things separate. But, no doubt, there are very important answers to be given to that.
I conclude by facing the practical questions that are before us. I suppose there are two. The first, I take it, is: Should noble Lords so vote as to reject this whole scheme with the consequence that we deprive ourselves of immediate dollar resources imperatively needed to buy essential supplies—food, raw material and machinery—untilwe can once more export enough to pay our way? It is the revival of our export trade, in every sense, which is an issue in this debate. I hold that we should not vote for rejection. If these essential dollars can only be obtained on these severe terms, then, to use a phrase which I saw in one of our great newspapers, that is a reason for regret and disappointment but it is not a reason for rejection. With these dollars, and with the further loan which Canada has promised to add to her generous war contributions—and to which Canada attaches no such conditions—we must struggle to get through. I, therefore, conclude by saying that, for my part, I think the loan is essential though the conditions fill me with anxiety.
And here comes the second and last question. It is a very delicate one. Should the general body of your Lordships actively support the Resolution? Some of your Lordships may be prepared to do so. I should not be surprised if my noble friend Viscount Samuel, who follows me, tells us that he intends to do so. There is a view that by promoting this subject you are making a movement towards free trade. Originally it was thought that if this country went free trade the rest of the world was bound to follow. That did not turn out to be true, and I mast say that I hold the view that
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for Britain herself to return to free trade without corresponding action on the part of the rest of the world, is an impossible course. It will be said: "Well, if you think that the loan must be accepted even on these terms, you ought to vote with the Government." Really, those who say that are trying some of us a little too hard. After all, it is the Government that has taken the whole responsibility for negotiating and for making this Agreement. The Cabinet has been in close touch during these months, but the rest of us, and the most important leaders of the Opposition, have had this series of White Papers thrown at us live days before the discussion began. wonder how many of us can lay our hands on our hearts even now and say that we have read every word of them, and., what is more, understood them?
This is not a case in which the Government, in view of the vast importance of what they were going to do, something which would affect the future, have sought to take into confidence, and secure the counsel of, the leaders of the Opposition. That has been done; it was done before the war. For good or for evil, the result here is entirely brought about by the Government through their experts. I must add an observation which is relevant but which is not intended as a severe rebuke, that there has never been, about this all-important matter, so far as I can ascertain, any personal contact at the highest level, nothing at all corresponding to the meetings which took place, let us say, before the Atlantic Charter or Mutual Aid. I do not think that any member of. the Cabinet has gone over in order to meet the heads of the American Executive on this particular subject. The result is achieved by the unwearied patience and skill of experts whose services we gladly acknowledge, and I must say that it would go very much against the grain that some of us should appear to take the direct responsibility for results which are so disappointing and so provocative of anxiety. On the other hand, let me make it equally clear that if this Financial Agreement, which is in the nature of a treaty, already signed by the Government of the day, becomes effectively operative, it binds not merely this Government but this country, and binds all who come after. Any abstentions should never he regarded as indicating any claim to disavow this bargain hereafter.

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What will acceptance of this loan really involve? This is my last reflection. It seems to me that the acceptance of the loan under these conditions must evoke a greater resolve than ever before to develop and use British powers of production. Let no one suppose that because there is no alternative available, because we escape some more drastic austerities, acceptance of this loan is going to justify "going slow," stoppage of work, and easier conditions in the life of the nation. It is going to do nothing of the kind. We are, as I conceive it, endeavouring to climb along an uphill road, which is very rough and stony. This essential provision of dollars, which the Financial Agreement would give, will remove an immediate obstacle which blocks our advance, which might throw us into the ditch, but the uphill road is there all the same. Long and unremitting toil will have to be continued before the burden which is cast upon us by war, in spite of victory, can be lifted from the shoulders of our indomitable people.
4.7 P.m.
VISCOUNT SAMUEL: My Lords, I had wished at this stage of the debate that the House would have had the opportunity of listening to my noble friend Lord Keynes. It is he whom the House would wish to hear, and he can speak with an authority unrivalled by any of us, but at his own desire he has postponed his contribution till to-morrow. We are, all of us, however, exceedingly glad to see him back in his place for this discussion, and we would testify to him our gratitude for the invaluable and untiring services which he and his colleagues have rendered to the country in these strenuous negotiations at Washington.
Speaking on behalf of noble Lords on these Benches, I would say that we regard this complex of Agreements and proposals as promoting primarily three purposes. First, to secure the fullest, closest and friendliest co-operation in world affairs, political and economic, with the United States of America; secondly, to ensure the speedy stabilization of the currencies and international exchanges; and thirdly, the lessening of restrictions that obstruct the channels of international trade. We regard these three purposes as of dominant importance, and all other matters as subordinate. We think that
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these Agreements are on the whole well calculated to promote these purposes and therefore we shall give them our firm support. I must say that there seem no grounds whatsoever for the course which is being taken by noble Lords on the other side of this gangway, and the defence for their proposed action presented by the noble and learned Viscount who has just spoken appears to me strangely unconvincing. After all, abstention is itself an act and these noble Lords cannot evade responsibility for any consequences that might ensue from their abstention.
I speak as one who for a number of years was leader of a Party which has suffered from time to time from internal dissension and has been the object occasionally of derision and even of contumely! So I confess a certain sardonic satisfaction in watching what is happening in a neighbouring quarter of this House. The public observe that a few days ago in another place one half of the Conservative Party followed the advice of their illustrious leader, but another half followed the promptings of their own froward hearts. I rather suspect it may be that the action proposed to be taken here to-morrow by noble Lords who are my neighbours, is dictated not solely by dissatisfaction with minor clauses in this Agreement, but possibly, perhaps, in some slight degree, by knowledge of the fact that if they went into the Lobbies, a large number of their members would vote one way and a large number the other. But that could easily be avoided if they were to retire to one of the larger Committee rooms and were to arrange to pair with one another, when the result would be the same without the public scandal.
I was glad that the noble Lord who introduced this Motion had the courage, at the outset of his observations, to remind the House of what has been the American point of view. We shall not arrive at a sound and sober judgment unless we bear that in mind. I hope that in the debates in the Capitol at Washington there will be found some who will express to the American Representatives and Senators what has been the British point of view in this discussion. Let us remember that there might well have been no Lend-Lease at all in the early stages of the war unless the American people had been willing to follow the wise and

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strong lead of President Roosevelt. There might have been no pooling of ideas and resources before Pearl Harbour. Let us remember, after all, that we have received in Lend-Lease the value of a sum of the order of £5,000,000,000 and that America ends the war with an internal debt of the order of £65,000,000,000—not dollars. At the present time we need a loan from America. The sum of £1,000,000,000 could easily have been raised in this country; there would have been no difficulty about that. But that would not have served our purpose because we need dollars for the purpose of buying food, machinery and materials. I know of nothing in the order of the universe which makes it obligatory on the United States to lend us £1,000,000,000, or £100,000,000, or even £1,000,000; or anything that makes it compulsory on them to lend free of interest, or even at the interest of 1.62 per cent. which is the effective rate charged under this Agreement. Nor do know of any reason in the nature of things why they should consent to suspend the receipt of any interest for the period of five years and, after that, to allow the waiver of any interest at all in any particular year in which it would cause grave inconvenience and disturbance for this country to pay the sum across the exchanges.
The reasons why they are taking the course of giving us the facilities that they are—which are far short, it is true, of those we would have desired—are partly altruistic and partly egoistic. In the first place, the Americans recognize that we made a tremendous and exhausting effort in what proved to be the common cause. They remember that for two years, from 1939 to 1941, while we were struggling with our backs to the wall against terrible odds, with all our European Allies overthrown, they were still enjoying peace and prosperity and the benefits of non-participation. They recognize, therefore, out of good will, that they do owe us some further assistance, but they have interests of their own which would lead them to the same conclusion. They recognize that economic isolation has been disastrous to themselves. Any historian describing the events of this century would certainly find and declare that of the great depression that overspread the world in the years from 1929 onwards, the main cause—the principal cause that
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would have to be picked out from among all the rest—was the American policy of the Hawley-Smoot tariff. The Americans said to Europe: "You must pay our debts to us and we will not accept your goods." The consequence was they sucked up most of the gold of the world and then suffered themselves from the gravest depression; like Midas, the King of Phrygia, who obtained his request from the gods that everything he touched should turn to gold, who would himself have died of starvation for lack of edible food unless the gods had relieved him from what had proved to be a curse.
So, now, the Americans realize that they should not again fall into that error of policy and, just as the American economic collapse of 1929 was a disaster not only to them but to Great Britain and Europe, so, in 1946 or 1947, an economic or financial collapse of Great Britain and Europe would be a disaster not only to us, but to the United States as well. Consequently, they have been forthcoming and ready to give this assistance. They have attached to this loan what appears to us mistrustful conditions of a very elaborate character. Let us realize, looking at it from the point of view of the American taxpayer, producer and merchant, that they wish to be assured if they lend us £1,000,000,000 of their money, that it will not be used, either directly or indirectly, to subsidize or assist in any way the British export trade in competition with the American. One can well understand that a body like the Congress of the United States—the two Houses of the American Legislature—and their constituents should wish to be assured that after two or three years the situation would not arise when they would be saying to one another: "We lent them £1,000,000,000 and now they are using it to undercut our own trade in the markets of the world." So these particular restrictions can safeguard us against a grave misunderstanding and mutual ill-will.
I want to deal briefly with two grounds of attack upon this Agreement. In the first place, it has been represented in the popular Press—in the Daily Express in particular, and we are to-morrow to have the noble Lord, Lord Beaverbrook, on the rampage—that this means the restoration of the gold standard. I do not wish to go into technicalities, but only to quote

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four authorities which, I believe, will be accepted by your Lordships. The first is Lord Keynes himself—no doubt he will say something to this effect tomorrow—who, speaking in your Lordships' House when the proposals for the Bretton Woods Conference were under consideration, described himself, as we all know he was, as a strong opponent of the restoration of the gold standard of 1925, declaring that these proposals were the exact opposite of the old gold standard.
It is true, of course, that gold has a place in this scheme; gold is not altogether devalued. But, if you want to have a scheme which is to have the assent of the United States and Russia, how would it he possible to devise any plan which would leave gold without any international value at all? The Americans have a vast accumulation of gold in their stores, gold which they have obtained mainly from us in payment for value received. Are we now to go and tell them: "We have paid you our gold and now it should be devalued altogether, universally; let it be of no future use except for gilding picture frames or making wrist watches or artificial dentures"? Similarly with regard to Russia. Russia depends upon her great gold output and her vast export of gold to enable her to purchase machinery and all kinds of commodities in all parts of the world. How can she put her signature to an agreement which would say that in future gold is to be treated merely as dross and to have no place at all in the currencies of the world?
The other authorities which I intended to quote are one Chancellor of the Exchequer and one ex-Chancellor of the Exchequer. Mr. Dalton, in another place, said:
"This is not a return to the gold standard or anything like it, but is quite a different order of things altogether."
The ex-Chancellor of the Exchequer is Sir John Anderson, who said:
"I take the view that this scheme does not involve any return to the gold standard."
Now we have had a further ex-Chancellor of the Exchequer, the noble Viscount who has just spoken, who again declares that this is not a restoration of the old gold standard or anything at all of a similar character.
VISCOUNT SIMON: I said so last year.
VISCOUNT SAMUEL: And said so last year: that is a double affirmation. Consequently, I hope your Lordships will not accept at its face value any declaration, however emphatic, that this is the gold standard and that we are returning to the old evils which beset our steps in 1925 to 1932.
The other main line of attack is that this is the destruction of the sterling area which we have built up with so much pains and the maintenance of which is essential to our prosperity and well-being. Neither the sterling area nor the dollar area can fully prosper if they are isolated from one another and from the world. Again I quote my noble friend Lord Keynes who, in the speech to which I have referred, said:
"With our own resources so greatly impaired and encumbered, it is only if sterling is firmly placed in an international setting that the necessary confidence in it can be sustained."
"Firmly placed in an international setting"—that is what is to happen to sterling under the scheme.
When we survey generally the whole world situation we are all agreed—and it has been repeated again and again from all quarters—that the hope of mankind depends upon the close co-operation in political and economic matters of the three great Powers, the British Commonwealth, the United States of America and Russia. We can all see that there are two great and formidable dangers which threaten that trinity. One is political and the other is economic. The political danger is that Europe should be divided into two blocs—the Eastern and the Western—one under the leadership of Russia, and the other under the leadership, perhaps, of Great Britain. The other danger is that in economics the world again should be divided into two blocs, one the sterling bloc under the leadership of Great Britain and the other the dollar bloc under the leadership of the United States. If that were to come about and if those two were placed in sheer opposition to one another or competition with one another, inevitably there would be a chronic rivalry which would engage in manœuvres in order to get the support of the rest of the world, the third parties. There would be alienation, there would be antagonism, and when some crisis arose, as crises always have done and will do in the history of the world, then man-

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kind might find itself powerless, through the United Nations Organization or in any other way, to bring about pacification, because already the nations would have aligned themselves in hostile array.
The first question—that of the political groups, the Eastern and Western blocs—is not a subject for our consideration to-clay. I say nothing upon it. But the second, the danger of dividing the world into dollar and sterling areas, is a matter which is being settled at our meeting at this very moment. And let me add this with regard to the relation of the dollar bloc to the sterling bloc: that if they are not reconciled to one another, the Dominion of Canada would be placed in an utterly impossible position economically, and a position that might lead to the very structure, the very cohesion, of the Commonwealth itself being put under a serious strain.
As to the three purposes in view, I have spoken on the first one, the relations between Britain and the United States. On the second, the stabilization of the currencies and exchanges, I need say nothing, because everyone, I think, is agreed as to the vital importance and urgency of it. What other prospect is there of ensuring that stabilization which is absolutely essential to success, with which our merchants cannot dispense, unless along the lines of the Monetary Fund and the international Bank? We all know that the hest hope of promoting employment in the highly industrialized countries of the world is to promote the prosperity and welfare of the backward half of mankind, the peoples of countries such as India, China, and other countries of the world. How can that be done unless by some conscious, deliberate, international effort, those of them who are credit worthy being provided with credits? And how can that be done except through the Monetary Fund and the International Bank?
The third and last of these three purposes is the removal of hindrances to trade. For thirty years that has been one of the main controversies in this country, from the early years of this century to the middle of the thirties, and how often have I heard it said, since I had some part in that controversy almost from first to last: "Well, of course, we all agree that freedom of international trade is an ideal if only it could be obtained, but you Free Traders are living in an unreal
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world; you cannot get it nowadays." How many of your Lordships who have taken part in that discussion have said, "We would readily agree to universial free trade, but not to one-sided free trade. France is protectionist, Germany is protectionist, the United States, above all, is protectionist. We must retaliate. We must: protect our own markets and preserve them to ourselves since other countries are doing the like." I always suspected that to many that was a plausible facade for sheer crude Protection, the desire to get rich by reserving certain markets, establishing monopolies and quasi-monopolies and fixing prices at will. However, that was the argument. But what is the position we are discussing here to-day, in this House, in December, 1945? The position now is almost inverted. We have the United States coming forward with the most comprehensible proposals for clearing the channels of trade.
LORD CROFT: For complete free trade?
VISCOUNT SAMUEL: Not complete, but towards clearing the channels of trade, to a great extent. Their tendency is that way. And we have noble Lords, like Lord Beaverbrook and others who think with him, who now are holding back, forgetting all that they said about their desire for freeing the conditions of trade if only other countries would do the same. Nowhere has that crude protectionism been more rib than in the United States and nowhere has it engendered more completely trusts, cartels, combines, high costs of living for the people, and great fortunes for the semi-monopolists, the multi-millionaires. This change of view in the United States is clue to long and bitter experience. They find that protectionism does not succeed, that they are losing more than they are gaining. Consequently they come forward with the proposals now before your Lordships' House in the White Paper, putting forward a complete change of view, urging that we should all agree to a rapid reduction of all these hindrances and signifying their readiness to begin negotiations at once with a view to an international conference on trade and employment next year to carry out that purpose.
I agree with my noble friend Lord Croft that all depends upon the extent to which the United States proceed in these

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negotiations and in action. They certainly will have great difficulty with their own interests. To declare general principles is easy, but to translate them into practice is often very hard, particularly if there are individual groups which combine together to bring pressure on Congress when they consider themselves to be damnified, even in a small degree. They can bring very strong pressure to bear. It has been made perfectly plain in these negotiations that this Government is not committed in any way to modifying any of our arrangements unless the proposals made by the United States, viewed on the whole, are to the general benefit not only of ourselves but of our Dominions and Colonies as well as to the United States.
To those of us who sit on these Benches the case appears to be not one for continuing ' the crude and ineffective eighteenth century method of tariffs; nor, on. the other hand, do we consider it possible in the present conditions of the world to go back to the old system of laissez-faire, to the automatic self-regulating exchanges, to the Ricardian economics of one hundred years ago. The right policy in general terms, apart from details and particular applications, seems to be just the kind of policy which is embodied in these Papers now before your Lordships—a rational well-considered plan of world action, not going back to the crude, imperfect, inefficient and unsuccessful methods such as protectionist tariffs, but rather working out point by point a solution of particular problems one by one.
With regard to one matter in which your Lordships' House is particularly interested, as has been shown by many recent debates—namely, the effect of this measure upon British agriculture—we have had certain very emphatic assurances. British agriculture is an industry which has to be upheld, not purely for economic reasons, but for broader national reasons. The policy which should be adopted in the case of an industry such as that is not ineffective and crude tariffs, but rather the kind of policy which has been laid before this House and the other House by the present Government and by the Coalition Government, and which commands a general measure of assent in all Parties. In another place the President of the Board of Trade, Sir Stafford Cripps, said with regard to the position of
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British agriculture under this scheme now before you that "the position had been examined with extreme care and the Government were perfectly satisfied that these proposals would allow them to carry out to the full the agricultural policy which had been announced by the Minister of Agriculture."
To sum up, this is a case of a bargain between two parties who have certain interests in common which they wish to promote and who, at the same time, have certain interests which are mutually competitive. They want. both of them, to secure those they have in common and they are obliged, if they wish to come to an agreement, to compromise on the others. So there comes about a state of bargaining in which the parties endeavour to give away as little as possible of their own interests in order to secure general agreement. Then there comes a moment when that bargaining must cease and when the negotiators must, viewing the matter as a whole, say Yes or No. The consequence has been the Papers which are now before you. If at that stage either party says: "We have done very well out of this," the other party will at once say: "We must, therefore, have been deceived." If either party says "We are heavy losers in -this deal," then its supporters in the country will say, whether here or in America, "If you confess you are heavy losers, you must be very bad negotiators and we will not ratify this agreement." But if both parties say: "We have been lured into giving too much and getting too little, but better this than nothing at all"—and that I think is the situation at this moment in Westminster and Washington—it may be hoped that the deal will go through in both places. I am hopeful of that.
Having regard to the extreme complexity and difficulty of all these problems, it would be, I think, a great achievement if a single Government had come to an agreement within itself over a vast scheme such as this which secured the unanimity of all its members. How much greater an achievement has it been when not one but two great Governments have had to come to an understanding; and how much more remarkable is it when those two Governments have had to go to forty or fifty others and secure the assent of all of them. No wonder that the negotiations have been strenuous; no wonder the debates here and elsewhere have been

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difficult, but at the end there is no doubt what is the right course to take.
As other speakers have said, and as we all agree, there arc risks in this scheme, but those risks may not be realized. To accept this scheme is to accept the possibility of grave future troubles; to refuse it is to bring the certainty of immediate disaster. If this scheme were rejected to-day, what would be the effect on the World Economic Conference which is to meet next summer to achieve a wider measure of international co-operation? That Conference would be impossible; it could never meet. If these preliminaries were abortive, the Conference itself could not sit. Within the next few weeks the United Nations Organization is to hold its first meeting here in London. Suppose your Lordships were to reject this measure; in what an atmosphere of gloom and hopelessness the United Nations Organization would meet if this first attempt at wide international co-operation had failed. In the stabilization of world affairs after this prolonged and widespread upheaval: all depends on the steadiness and the firmness of the legislative bodies in all countries. I feel convinced that this Parliament, that this House will not fail in its duty.
4.40 p.m.
LORD WOOLTON: My Lords, I always enjoy, as I am sure your Lordships do, listening to the oratory of the noble Viscount who has just sat down. I generally find him persuasive; I generally find arguments carrying me along with him. But to-day, somehow or other, I thought that he got off on the wrong foot.
VISCOUNT SAMUEL: It was on your toes!
LORD WOOLTON: He looked across with, I thought, a certain pleasure in his eves at the prospect of some disunion on these Benches, and he then advised us how we should proceed. I will accept advice from the noble Viscount on many things, but he is not competent to advise us on how to keep a Party together! As I have listened to this debate, one of the things which has impressed me has been how the noble Lord, Lord Pethick-Lawrence, and subsequently the noble Viscount who has just sat down, have been most anxious to explain to us what
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the position of the United States was. They have told us a great deal about American opinion. In fact, the noble Viscount began to talk in almost, I thought, lyrical terms about altruism and about the abolition of restrictions and conditions. I wondered whether he was talking about this loan, because I had not observed in it anything that is likely to do away with restrictions.
VISCOUNT SAMUEL: I do not remember using those words.
LORD WOOLTON: I hope that I am not misinterpreting the noble Viscount; I took down what he said. We have heard this Agreement recommended to us this afternoon with much idealism, with many remarks about a new world in which it was important: that all of us should cooperate together. We had an almost pathetic scene painted of a coming conference meeting in a condition of gloom. My Lords, we are talking about a commercial Agreement. I want to say at once that I think it is a bad Agreement. It is a bad Agreement into which the Government have entered. Since the question of these Benches has been raised, let me say that I am not speaking on behalf of any Party to-day, and nobody else is in the least involved in the things that I say. But I do say this, that I could not have stood at that box and recommended this loan to the public of this country; I should, had I been in office, have been compelled to leave office rather than recommend this loan.
I feel this very deeply. I feel that this really is the hour of disillusion and of degradation. The Times the other day wrote about our arriving at our financial Dunkirk. No, my Lords; we fought at Dunkirk, but to-day we are surrendering what I conceive to be our just rights. We are surrendering them to the power of the dollar, because those responsible for the affairs of this country do not dare to retreat on the economic fastnesses of the Empire. They fear that the British Empire might not support them. What right have they to come to that conclusion? I wish that the present Government, before they committed us to this loan, had withdrawn their emissaries. I should like to join with others in speaking in terms of the highest praise of those emissaries, but it is policy which is involved here, and that is a subject for His Majesty's Ministers. I wish they had asked the emissaries

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to come back when they could not get reasonable conditions, and I wish that they had then quite frankly consulted the Parliament of this country and the Governments of the Empire; and then, fortified with that knowledge, they would have been able at least to speak for a united country.
They have not made that democratic approach. A transaction of this kind, spreading as it does over a matter of half a century, is not one for a Party, a Party that represents but a moiety of the country; it is one in which I should have liked to sec the Government speaking for the nation. To-day they arc not entitled to do that; they have had no consultation that would enable them to speak for the nation. That consultation would very willingly have been forthcoming. This unseemly haste with which they pressed these measures on our judgment results from fear, fear on both sides of the Atlantic, fear of the force of public opinion. Why do they do it? Fear is a bad guide to wise conduct. The noble Lord, Lord Mottistone, who is not here to-day, placed many of us and our children in his debt some years ago, when he produced a book with the stimulating title Fear and Be Slain. It ought to be in every schoolroom in the country, and it ought to be before the eyes of those who are responsible for the government of the country.
We are entering on this undertaking because we are fearful of the immediate consequences of rejecting the American offer. I have tried in vain to find out what those consequences arc. It is no use painting a gloomy picture and saying: "Ah, you will have austerity; you will not be able to do this or that." The noble Lord, Lord Pethick-Lawrence, was, if I may say so, the first person that I have heard speak on this subject who put austerity properly in the background and did not make it a major issue. I am sure that he was right. Let us know what the facts are before we enter into this Agreement. What is it that we are not going to be able to get? When we know the facts, Parliament will be in a position to judge what to do. My Lords, I am fearful of accepting this bond, and I am fearful of it because I admit that I am a financial puritan. I was brought up in the school which regarded financial probity as a matter of the greatest import-
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ance. For generations it has been one of the characteristics and the glories of the City of London. I am very fearful of the name of my country being placed on a bond which we may not be able to honour. I am more fearful of that than I am of the consequences of refusing to sign such a document. I could not sign a bond unless I knew that I could redeem the pledge. The Government have signed this bond without knowledge that they will be able to redeem it. The very conditions involved in the transactions deny such knowledge to them. They rely upon some nebulous scarce-currency clause in Article 12.
I shall not occupy your Lordships' time to-day with any political argument. Issues involving tariff policy and the British Commonwealth and its freedom to conduct its own affairs in its own interests are undoubtedly involved in these transactions, but my noble friend Lord Swinton can speak on these issues with more authority than I possess. Noble Lords who have spoken so far have tried to explain what the views of the Americans are on this subject. I am trying, if I may, to explain what the views of the British are on this subject and therefore I shall confine myself to the stark realism of the facts of this credit.
Let me say at once that, to my mind, there is no doubt as to the immediate importance of such a dollar credit to us. We need it; but let us remember, too. that America in her own interests ought to make it. Indeed they would be compelled, by economic circumstances, to make credit available to us sooner or later. They will find that the making of credits is an obligation of the trading necessities of a creditor country. We can say these things—as the noble Viscount, Lord Simon, has already mentioned—because for generations we, in this country, have fulfilled these obligations. And it has been to our great advantage to do it. But it has contributed to the prosperity of the world and it has contributed considerably to the development of the American continent. Now, we have become a debtor nation, seeking credit so that we can trade. The roles are reversed but the rules remain the same. America will have to grant credits in the interests of her own economy.
I think it is a fair question—if one is looking at this problem from the point of

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view of the British people and not from that of the American people—to ask this: Why do we need this credit from America so urgently at the present time? The answer is clear; and whatever rights we have given up, we have the right, at any rate to state this, and we can state with pride. It is because, in 1940 and 1941, we paid to the United States of America every dollar that we could collect from our accumulated resources. We paid those dollars for ammunition, for the building of factories—which still exist in America—to make munitions of war so that we could fight for the freedom of the world. We reduced ourselves to the miserable, poverty-stricken position of having only £3,000,0oo in gold and in dollars in this country. The American Government still holds those securities in pawn. We fought, we paid on the barrel "for the means to wage that fight. At the same time, and in agreement with America, and as a condition, we deliberately abandoned and sacrificed our own export trade—which was then earning for us much-needed dollars—in order that we might release men from that trade to undertake the obligations of war. The nation, and the men and women in it, abandoned markets and lucrative employment in order that they might go to fight the enemy. Those are the causes—and let us record them with pride—that have put us into this poverty-,stricken condition so that we have to seek dollar credits from, America. Those are the causes of our discontent. and the stories of our bereaved homes, the sight of our shattered towns bear witness to our sacrifices and our sufferings in those years.
I think that these things should be said. I do not wish any words of mine to embitter the relationship with a country which I, personally, esteem through knowledge; but America can have, in retrospect, no pride in her years of hesitation. Later, she varied her policy. When we had no more dollars left she embarked on that great and magnificent act of statesmanship the Lend-Lease Act, which will live in history to her credit. And let this be said also; the conditions in these Papers for the wiping out of all war debts, for the final act of settlement of Lend-Lease, are greatly to the credit of the United States of America.
Then we come to the post-Pearl Harbour period. When America had been
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disastrously attacked, there came the great brotherhood between the two nations, and we in this country—and rightly—have never been backward in praising the valour of her fighting men Or the prodigal generosity with which she threw her life and her wealth into the conflict to achieve victory. But America came into the war not to save Britain, but so that we might together—and do not forget this—and with the aid of our Empire, defeat the nations that assailed us. Together, in alliance and friendship, we triumphed, but the war has left us poor. It has left us the largest debtor nation in history. America, on the other hand, has been left by the war with no external debt, and rich beyond her dreams. I ask the American people whether, in justice and in honour, they ought not to return to us, and without conditions, those securities that we were compelled to deposit with them in 1940. I do not ask for a loan. That is why I oppose this loan. I do not ask for a gift. I ask for rightful restitution of the dollars we paid in advance of what became a common cause. The noble Lord, Lord Pethick-Lawrence, talked about "we are one of another." It cannot be a case of "one of another" when they keep possession of something that we sent at a period of such trial and then come and talk about letting us have a loan on terms such as those which are now before your Lordships' House.
There is another aspect of this problem which I should like to bring to public notice. It is so elementary that I believe it has almost escaped notice in the United States of America. The problem is this. We are not borrowing "dollars"; we are borrowing credit that will be expended on goods. If repayment is to be made, it must be made, either directly or indirectly, in goods. I ask the Government what provision had they made before they entered into this Agreement, before putting the name of Britain to it, to ensure that those goods will enter the United States of America? They have taken the money; have they, at the same time, made the means available so that we are going to be able to pay it back? During the years between the wars I was in America and wherever I went I heard the story of our default on the Baldwin loan. It was a subject of much bitter comment. It was greatly to the detriment of British

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commercial interest and prestige, and an Englishman hearing it constantly, began to hate it and to feel somehow that we were being depreciated. I venture the opinion that our failure to repay our contractual debts had much to do with American insistence that we should pay on the nail for the munitions we got in 1940. In entering into that loan, I am prepared to admit that Mr. Baldwin and his Government in 1923 sinned in ignorance, but if we repeat the process, then indeed we shall be sinning against the light.
How can any competent body of people on either side of the Atlantic enter into a loan agreement without at the same time having satisfied themselves that with good will on both sides, repayment can be made? Instead, the Americans have said this: "We want your endorsement of Bretton Woods. We must have it." America has said to this country: "We must have that endorsement of Bretton Woods before the 31st December of this year. Otherwise there will be no loan." That is not the way that I like to think of this country being treated. They say it because if it is not endorsed before December 31 they must consult their own country again. That is as may be. That is their point. I do not like this tacking of a loan on to Bretton Woods. It is not a respectable way in which to treat a great country. They say: "Of course, we will give you credit. We will insert generous waiver clauses with regard to the payment of interest, but the capital must be repaid and subsequently, in the summer, we will enter into discussions as to our mutual tariff policies and we will pay particular regard to the elimination of Empire preferences."
The noble Lord, Lord Pethick-Lawrence, with what is surely extraordinary optimism, talks in his speech about our bringing America to book if we have difficulties on the scarce-currency clause. In view of the way they have talked to us it does not look as though you would ever have much influence when you tried to bring them to book. And meanwhile Britain's name has gone on to that bond. We have signed it knowing full well that unless America lowers her tariffs we cannot meet the obligations of the bond. That is not my idea of a good commercial agreement. I wonder how many members of this House would pledge their own
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credit on such a basis? I believe that our financial reputation is being put in Chancery. For fifty years we are faced with this prospect of labouring to pay toll to America for her financial transactions in munitions. For fifty years we are going to face the prospect of possible default because our credits may not allow us to pay our debts with our labour. That is the position in which His Majesty's Government have placed us, and I venture with great respect to them to say that they have served us ill.
Let me say this to America: a wise creditor has regard to his customer's interests. We are the largest and the best market for American goods. America has much to gain or to lose in this market. At the moment she is on the top of the world, a position of very great peril. I have spent the last few days in my anxiety about this loan collecting commercial opinion. I have been mixing with the business men accustomed to trade with America, the business men in the Midlands and in the North. I find some surprise expressed at the American commercial short-sightedness in regard to this credit. That is what I find among business men. As to the general public, I find them angry. I find them in a mood to say: "Cannot we do without America?" That is a loose statement, and it is a foolish remark, but I am telling you what they have said. They go on: "Cannot we get our cotton from the Empire? Cannot we use the cotton we have got stored away and that we bought during the war?" Then they say: "Cannot we make our own films in this country? Do we want American motorcars? "
I tell America that a loan of this nature will create a sales resistance here which will, in my opinion, be a bad thing. I do not want a trade war, but I know the value of the British Empire to America. I know the value of the Lancashire cotton market to America, and America is not in a position in which we need to be so frightened. I deplore the fearful attitude of the Government. American traders need us as much as we need them, and there is neither need nor justification for this cringing policy of appeasement to her immediate power. I think it is time there was some plain speaking. We lost the habit between the wars; unless we are prepared to surrender our place in the world, we had better get that habit back.

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The Government are afraid of America, afraid of the decision of Congress, so afraid that they have entered into obligations on our behalf which, in My opinion, show no proper estimate of their consequences. They have pledged our inheritance in order to relieve them from the pressing needs of the time.
Of the details, many of which I believe spell disaster to the quick recovery of the trade of Britain, I will not speak, because I know them to be in the minds of others. I have dealt only with the broad commercial aspects of the problem. I believe I am speaking for the trading community of this country when I say that I believe this Agreement to be harsh, unjust, and commercially unwise. I know that I speak for a wider public when I say that they resent this dollar dictation, and as long as this loan lasts it will carry the memory that in the days of our need America seemed to forget the sacrifices we have made and to forget her own obligations. That is a state I regret. I regret it because, like many others, I had looked for an era when the two countries would work together for the expansion of the trade of the world. This is an Agreement whereby we are going to jeopardize our own trade expansion, even within the space of a year, in order that we may purchase an immediate relief. I want to go on record in your Lordships' House in condemnation of these proposals. I declare this bargain to be unworthy of either nation. It will ease the task of this Government while it lasts, and they will hand on to their successors and to the country a very heavy burden.
A NOBLE LORD: What is the alternative?
LORD WOOLTON: It is my belief that it is made without conscience and with a disregard of commercial consequences and of the high prestige of the country. I have spoken very briefly. I feel very strongly about this loan, but I realize there are other issues involved. In spite of many weaknesses, I think the Bretton Woods proposals are for the general benefit of the world, and I shall vote for them. We ought to support them. Then there is, of course, this very embarrassing domestic issue which faces those of us who sit on this side of the House. This loan is not, to my mind, an issue on which
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battles should be fought. The people have elected their combatants. The Government of this country have accepted this loan and, with it, all the responsibilities it involves. For my part, I can support them on Bretton Woods, but I cannot support them on the loan. I shall follow the advice which the noble Viscount, who leads the Opposition, with vast knowledge and great political experience, may give to us at the close of the debate. I believe wise statesmanship lies in declaring our views frankly and then abstaining from further responsibility in the matter.
5.12 p.m.
LORD BALFOUR OF BURLEIGH: My Lords, I want to say a word first about the Financial Agreement. The war which has just concluded was, in the fullest sense of the words, a joint war by the United States and ourselves. Our aims were joint aims and our comradeship in arms was such, I believe, as has never before been achieved between two Allies in the field. The spirit of partnership inspired everything we did jointly with the Americans in the war. I can only say the Financial Agreement does not reflect that spirit of partnership; it reflects the absolute diversity of our points of view. Let me tell your Lordships my point of view about this financial transaction.
Lend-Lease was passed by Congress in March, 1941, nine months before the United States came into the war. Surely, it would not have been an excess of generosity if its effects had continued for no shorter period after VJ Day? As the noble Lord on the other side of the House has already said, it would not have been a great stretch of magnanimity if there could be included the dollars which were spent by us between September, 1939, and the passing of Lend-Lease. I have observed with interest in the reports of the Nuremberg trial that the American prosecutor has been at pains to trace the sources of Nazi aggression for many years before 1939 and, indeed, for many years before 1933. If we carry that thought to a logical conclusion, we have to go back to the last war. One of the things I regret most about this settlement is that there is no reference to the old war debt. That is passed in silence, as one passes in silence a social solecism which may be

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committed by a friend; one thinks it kinder to say nothing about it.
It is a matter for profound regret that the truth about that old debt was not placed on record in these transactions because, as history has proved and as the efforts of the United States to bring about better conditions are now proving every day, the fault was not with us but with the failure on the part of the United States to receive the goods with which alone we could pay the debt. Yet we let it be passed over in silence so that if, again, difficulties occur the Amercians— or millions of them—will say, "There you are, they arc at it again." From my point of view it would have been but justice had the Americans said: "We recognize our share in your failure to implement the old debt obligations. We hand you back, as an act of grace, the dollars you paid in a vain attempt to fulfil those obligations."Then the matter would have been plain and on record for posterity to see. But is such a suggestion as that practical politics? Obviously not. If the war had been fought in the Middle West it might have been a different thing, but, unfortunately, the war was fought a long way from the Middle West—in the East and on the West.
I would like to spend a moment in comparing the terms of the financial arrangements this time with those made after the last war. I do so because a Member of Parliament in another place—one of the prominent supporters of the Amendment which I believe is to be moved by the noble Lord to-morrow in your Lordships' House—ventured the opinion that the 1923 terms were princely compared with these. Just think! Last time, no Lend-Lease—the "most un-sordid act in history," as it has been called. And do not forget we are always glad to speak in terms of relative contributions. We talk of sacrifice according to our resources. We must not be surprised, therefore, if the Americans prefer to look at the absolute financial contribution they have made which, necessarily, compared with ours, is greater. Last time, the rate of interest was 4 per cent. and was in respect of a fixed loan of dollars which had been blown away into the air and which were represented by no assets. There was no new money, no five years' pause, no provision of waiver and no
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recognition of exchange difficulties. I hope the noble Lord opposite, when he moves his Amendment, will produce some better argument. than that.
LORD BEAVERBROOK: It is not my intention to move an Amendment tomorrow. I mean to speak and vote on the Resolution.
LORD STRABOLGI: Would the noble Lord say which way he will vote and thus put us out of our agony?
LORD BALFOUR OF BURLEIGH: I am glad the noble Lord is not going to move his Amendment, but, at the same time, I hope that does not mean, as it is on the Order Paper, that I shall be precluded from referring to it, because I look forward with pleasure to referring to it a little later on. Another difference from last time is the fact that we have before us the International Monetary Fund and all that that implies. I welcome that for its own sake because I am certain it is a genuine attempt to return to freer trade. I must admit I was astonished to hear the noble and learned Viscount, Lord Simon, say, in reference to that, it would be a mistake for Britain to return to free trade without a corresponding action by others. In fact he said that was impossible. But who is suggesting it? The whole point of Bretton Woods is that we are all to go back to freer trade together. If the noble and learned Viscount will forgive me, I fail to see the point of that remark.
In addition to the International Monetary Fund, there are the proposals regarding trade and employment which we have heard a good deal about. I wish to read your Lordships just the headings because they encourage me very much. Heading A, "Need for International Economic Co-operation"; B, "Proposals concerning Employment"—and that refers to high and stable levels of employment—and C, "Proposals concerning an International Trade Organization." It may well be that that paper has an American flavour. I think it has, but then it is an American paper. It is only an agenda, but what would we not have given for an American agenda of that character at the Economic Conference of 1933?
My Lords, we have had misgivings, a great many misgivings about the juxtaposition of the phrases "elimination of preference" and "reduction of tariffs."

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Like the noble Viscount, I have devoted a good deal of attention to the documents, and I was going to take your Lordships through them, but in view of the happy intervention of the noble Lord, Lord Keynes, I hope we may regard that subject as disposed of. We take it that we enter into the negotiations on these proposals with a completely free hand. Our hands are free. We take the loan and we enter the discussion without any implied or absolute obligation unilaterally to destroy Imperial preference. Now we have got that clear and I think it is a great relief to a good many of your Lordships.
I want to say a word on why, we must accept this credit. The first point, of course, is the immediate driving need of dollars. What do we want dollars for? We want the dollars for immediate needs because we have been told on good authority—Government authority—that our food will be cut, our clothing will be cut and, above all, our power of industrial reconstruction will be crippled. That is the real difficulty. One noble Lord asked, why cannot we use Empire cotton in Lancashire? I am told half the Lancashire mills cannot run on Empire cotton, and if they have to be converted the process may take two years. We cannot wait two years to get our textile industry going and our exports re-established. May I, in passing, just interject this remark. We have spent £15,000,000 a day on the war, and there were those enthusiasts who said: "There is the proof, that if you want to spend £15,000,000 a day on social reform you can do it." Was the hollowness of any claim ever more clearly illustrated than by the straits in which we are at the present time? I trust we shall never more hear any absurd claims of that sort.
The other reason why we have got to take these dollars and these arrangements is that there is no constructive alternative. Or is there, my Lords? I am just a little disappointed that the noble Lord is not going to move his Amendment, because I thought that behind that Amendment he was going to offer us a constructive alternative. I do not think it is an' use destroying this Resolution unless you can put something in its place. The noble Lord's Amendment offers three objections: (1) That it is a return to gold; (2) that it abolishes the sterling area; and (3) that it is a destruction of Imperial preference. The return to gold has been
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adequately dealt with and I would only ask the noble Lord to answer this question before he proposes the rejection of the Motion: Are stable international exchanges desirable in the interests of world trade in general and Empire trade in particular? It stable exchanges are desirable for international trade, what alternative is there except something of the nature which is now proposed?
What would, in fact, happen so far as the Empire is concerned, if we turned down this arrangement? Would your Lordships just think first of the position of South Africa. South Africa has a huge idle purchasing power in the form of bank balances. South Africa has no external debt to speak of. She has repatriated practically all her debt to the United Kingdom. She owes no dollars. She has her gold to sell. She has no experience of austerity so far as her civilian population is concerned. South Africa has no need to borrow; she has her gold to sell. All she has to do to get the American goods and dollars of which she has tremendous need is to give first offer of her gold to New York instead of to London, and who could blame her if she did it? Why should she, at this time of the day, when the war is over, embark upon what would be serious austerity, simply for the benefit of the people of these islands?
Then India. India has supplied during the war substantial quantities of dollars to the dollar pool. Our indebtedness to her is very considerable. She has urgent need of goods—capital goods and consumer goods. We can supply only a small fraction of the capital goods which India needs and none of the consumer goods in the immediate future. How can we expect India, in those circumstances, not to conclude commercial credits with America? And what about Canada? Canada, if we do not conclude this arrangement, will be torn between the interests of the United Kingdom, her mother, and the United States, her brother with whom she has such close ties of friendship and of commerce.
I do not believe there is a practical alternative. Is it possible the noble Lord is going to offer us, as an alternative, Empire free trade? Of course, Empire free trade is a most effective title. We all respond with loyalty and enthusiasm to the mention of the Empire, and I

723
confess that I am unrepentant enough to say that the words "free trade" have something of a similar association for myself, and I am not ashamed to admit it. Consequently I think it is a most ingenious title. "Empire multilateral trade" would not have sounded nearly as good, though we have to call free trade "multilateral trade" in these days. I think the title is one which does great credit to the ingenuity of the noble Lord opposite. But unfortunately the resonance of the title corresponds exactly to its pretensions. Empire free trade is the quintessence of the suggestio falsi; it is the apotheosis of the false prospectus. Perhaps the noble Lord is going to offer us a closed sterling area. The point has (already been made that that is isolationism, and isolationism is restrictive. If we are going to have a world based on an expansive economy we cannot have isolation; we have got to have some international arrangement such as has been proposed.
Now a word about the question of convertibility. Industrial competition has got to be faced sooner or later. The greatest strength of sterling has always been its convertibility, and, in fact, one of the great benefits we get out of the dollar loan and one of the great objects we have in the long run is the restoration of that convertibility. I think those people who look on non-convertibility as a, protection have got the whole conception of this matter of international trade all wrong. But the early date of convertibility is the hardest part of the bargain which we are asked to accept; compared to that, the £35,000,000 on the exchanges is, in my opinion, a flea-bite. I am bound to say that I think in this matter the export-mindedness of the United States negotiators has got the better of their magnanimity.
Can it be done? We do not like to assume obligations which we are not sure we can fulfil. We are like a good borrower at the end of his resources, but whose credit is still perfectly good. Your Lordships remember perhaps what Omar said on the subject. He said: "Take the cash and let the credit go; nor heed the rumble of the distant drum." That is not the spirit in which we should undertake this bargain. I want to refer to what the noble Lord, Lord Woolton, said
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with regard to the financial probity of the City of London. I share with him the view that it would be damaging to our financial reputation if we were to undertake any bargain we did not think we could carry out. The only thing which enables me to support this Agreement is Article 12 of the Financial Agreement. With great respect to the noble Lord, Lord Woolton, I do not think he got it quite right. He said there was in Article 12 some nebulous statement with regard to scarce currency. I am sorry the noble Lord is not in his place, but I think what he was thinking of was Section vii of Bretton Woods, which is entirely concerned with "scarce currencies" and is a very valuable section. Article 12 of the Financial Agreement, which is what gets us out if the conditions become intolerable, reads:
"Either Government shall be entitled to approach the other for a reconsideration of any of the provisions of this Agreement, if in its opinion the prevailing conditions of international exchange justify such reconsideration with a view to agreeing upon modifications for presentation to their respective Legislatures.…"
I hope it is perfectly clearly understood that that is not only an integral part of the Agreement but a thing which is meant to be worked. What I am trying to guard against is this. If and when difficulties arise America must not be in a position to say: "There they are; they are trying to dodge the bargain which they undertook."
There are immense difficulties to be overcome. The greatest of them is the tremendous excess of exports which America enjoys. I see no real sign that she is prepared to undertake the long-term obligations of a creditor. We must not forget America's difficulties. Her productivity is enormous. Do not forget that the United States has superimposed the whole of her war production on practically 100 per cent. of her peace production. Our peace production, of course, was severely cut owing to the exigencies of the war, and that, as the noble Lord opposite said, is one of the additional reasons why early convertibility is so cruel. But American production is colossal; they have their whole war production superimposed on their whole peace production. Consequently they are bound to have a colossal surplus of goods to dispose of. Can your Lordships wonder that they are export-minded?

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This loan is made, as the noble Lord opposite said, in the interests of the United States, and it has been made on commercial terms; but never forget there are millions of people in the United States who wish it could have been made with greater magnanimity. Consequently. I feel that this has got to be accepted and, what is much harder, accepted gratefully. We have got to rely on the friendship, the magnanimity and, above all, the continued education of the United States to see us through the difficulties which lie ahead. The education of the United States has proceeded a long way since, 1918, as a recital of Bretton Woods and all the rest proves; yet, complete as is their underwriting of the full conditions of world trade, I still cannot help doubting whether the full implications of her creditor position are understood in America.
Two things are necessary if these arrangements are not to break down. The United States must take full responsibility as a creditor nation, and that involves not only lending abroad but importing. That is the critical point; she has got to learn to import far more than she does at present. That is a responsibility which she has voluntarily taken upon her shoulders, and which she must never be allowed to forget. The other condition necessary is that our own industry shall become efficient enough to share in a competitive way the common task of supplying the immense amount of goods which will be necessary to raise the standard of living in the whole of the world. Above all, these arrangements must be accepted in the interest of Anglo-American co-operation. It was Anglo-American co-operation which saved civilization in the world of yesterday, and it is Anglo-American co-operation alone which offers a hope of peace, plenty, and happiness in the world of to-morrow.
5.39 p.m
LORD STRABOLGI: My Lords, in view of the very interesting and the powerful speech that has been made by the noble Lord, Lord Balfour, I hope we shall see him in the Division Lobby with us to-morrow. So far we have only had one indication from a Conservative Peer as to what he is going to do, and that is from the noble Lord, Lord Beaverhrook. I ventured to interrupt the noble Lord, Lord Balfour of Burleigh, and ask him how he was going to vote, but he did not
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reply. I see the noble Lord, Lord Altrincham, is very anxious to intervene. I shall not detain the House for long, but there are one or two things which I think ought to be said, The first thing which I think ought to be said is this. We have had a most extraordinary speech, if I may say so, from Lord Woolton. I am sorry the noble Lord is not in his place, but I believe when he comes to read that speech he will himself regret it. If I had made that speech, it would have been described as mischievous.
LORD ALTRINCHAM: It would have been, if you had made it.
LORD STRABOLGI: The noble Lord says it would have been if I had made it. ''O, Jew, I thank you for that word." Apparently Lord Woolton is not taken very seriously, and I am. At the end of all this the noble Lord, Lord Woolton, is not, apparently, going to cast a vote one way or the other. I hope for more boldness from Lord Balfour, and I do not despair. As for the noble and learned Viscount, Lord Simon, I admired his references to the long, hard and uphill road which we have to tread and along which we have to battle our way forward. Apparently his contribution to this great struggle ahead of us is to sit on the fence.
We are to have neither the advantage of his support nor the encouragement of his opposition. I do not congratulate the Party opposite on their leadership or on their political courage. The truth of the matter is that the Conservative Party are eager to wound but afraid to strike. They want to have the opportunity later on, when there are economic difficulties in this country and when people are suffering privations and austerities—as they will undoubtedly have to do, whether this loan goes through Congress or not—to cash in on that position and make political capital out of it by saying "We were not responsible." The Conservatives, therefore, will riot vote for us; and they will not vote against us, because they are afraid of a political crisis between the two Houses. If that is the state that the Conservative Party have come to, they may well resign themselves to a sojourn in the political wilderness for the next generation, or even longer.
I should like very respectfully to congratulate my noble friend Lord Pethick-

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Lawrence on the way in which he introduced this Motion. It was, if he will allow me to say so, the most positive recommendation that has yet been made by any member of the Government, and was all the more acceptable for that reason. I myself had intended to use some of the arguments which he employed. This is a difficult and complicated matter, but thought that my noble friend made it very clear. The noble and learned Viscount, Lord Simon, complained of the difficulty of understanding all the documents in five days. I can sympathize with that, but he is not alone; there are forty million people in this country, and I am afraid that the great majority of them do not as yet understand these issues. Lord Balfour of Burleigh spoke of the education needed in America for the enlightenment of the American public. There is a great deal of information and education required for the enlightenment of our own public. Perhaps it will comfort the noble and learned Viscount, Lord Simon, if I tell him that two young ladies waiting in a bus queue were heard discussing the matters now before your Lordships, and one said to the other, "What puzzles me is, who is this Sir Bretton Woods?" I think that that is typical of many.
My noble friend Lord Pethick-Lawrence did not make a great deal of possible austerities, and apparently on that account disappointed some noble Lords on the Front Bench opposite. I agree with him. I think there is a much better recommendation for these Agreements than the avoidance of further austerities. After all, we are spending in dollars the equivalent of £18,000,000 a year to pay for American films, which are not necessities, however entertaining they may be. It may be said that it is necessary to keep up morale and provide some mental escape for our people, but these films are not necessities. I do not know what is the present bill for Virginian tobacco, but it is very heavy. That is not a necessity. People get very irritated if they cannot get Virginian tobacco nowadays, but before the last war, when Lord Croft and I were dashing young officers, we did not smoke Virginian tobacco; our tobacco came from Turkey and Egypt. We could do without Virginian tobacco.
LORD CROFT: I agree with the noble Lord that the British Empire could produce all the tobacco that we require.
LORD STRABOLGI: That is what I am saying; not for the first time, the noble Lord and I are in complete agreement. To say to our people that the rejection of this loan would mean a tightening of belts and a giving up of luxuries is not a very strong argument. Our people, if properly appealed to, will face any hardship for what they believe to be right and just. I prefer the way in which the matter has been put by my noble friend Lord Pethick-Lawrence.
I should like, if I may, to try to put before your Lordships the case as I see it from this side of the House. I ask you to imagine the effect of the rejection of this series of Agreements in the House of Commons last week, or this week in your Lordships' House, on the present meeting which is taking place in Moscow, where Mr. Byrnes and Mr. Bevin and Mr. Molotov have a very difficult and complicated task. It would not help Mr. Bevin and it certainly would not help Mr. Byrnes, if these Agreements were rejected, and I think that that is a consideration which must be borne in mind. I think that one of the great functions which your Lordships' House can perform at the present time is to explain these Agreements to our people. Your Lordships will be listened to by the masses of the people. I think that we should emphasize that there are, after all, certain very favourable items in these Agreements. A great deal can be made of the final settlement of Lend-Lease, which is a great advantage, on terms on which I think we can congratulate our negotiators and their American colleagues. To wind up Lend-Lease cleanly and for a not extravagant payment is, I think, a tremendous gain for the future.
I understand that one line that the Opposition have taken is that they could have got better terms. In fact, Mr. Churchill said in another place that if he or his colleagues had been doing the negotiations they would have got better terms. I venture to suggest to your Lordships that that is a complete fallacy. I have been reading the American newspapers for the last three months, ever since these negotiations began, and I have carefully read the epitome of the whole of the American comment both in the Press and on the wirelesss on these financial conversations; I am very doubtful indeed whether better terms could have

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been secured in the present temper of the American Congress and the American people.
I do suggest, however—and this is no sort of reflection on the noble Viscount, Lord Halifax, our Ambassador in Washington, and no sort of reflection on Lord Keynes and the team of experts that accompanied him—that they might have been in a rather stronger position on certain aspects of the negotiations if their delegation had been headed by one or two Cabinet Ministers from this country. Although Lord Halifax has held very high offices in the State, he is regarded in the United. States as a diplomat. Lord Keynes, although he has held very high positions in the City and as adviser to the Government, is not of Ministerial rank. On the other hand, the two principal negotiators on the other side were members of the United States Administration or Cabinet. I am inclined to think that the more political side of the matter could have been better emphasized by Cabinet Ministers from this side. Those who heard Lord Pethick-Lawrence speak this afternoon will, I am certain, agree with me that it is a pity he was not there.
There is one point which has not been mentioned in the very interesting speeches this afternoon. This again is, I think, a partial explanation of the American point of view, which we cannot ignore. It is no use scolding the noble Viscount, Lord Samuel, because he put the American point of view. We have to consider it when we are weighing the rights and wrongs of these transactions. The loan over all attracts an interest of 1.62 per cent. but at the present moment the American Treasury borrows from Ls own public at 1.92 per cent. It is perfectly true that it gets part of that back in Income Tax and so on, but as the case can be presented to the American Congress by our ill-wishers—and we have illwishers—they can say: "You are charging these wealthy and clever British less than you are paying our own citizens who lend to the Government.
There are other arguments which have been put forward this afternoon which tend to show that these Agreements will not necessarily have an easy passage through Congress, and here I want to put a question to my noble friend Lord Pakenham, or whoever is going to reply at the end of the debate. I have given
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notice of this question, and it is this: Are we going to be caught unprepared again? Let me put it in another way. Are we making the necessary preparations in case this loan is rejected by Congress? Congress has accepted Bretton Woods and, presumably, the American Government can carry through the proposals that are going to be brought forward at this great economic international conference. But the loan might be rejected by Congress. Are we prepared for that eventuality? It is not only physical preparation that will be required—though that is most important—hut spiritual preparation as well. Are we spiritually preparing our people
The end of Lend-Lease obviously caught us unprepared. For that I blame the Caretaker Government, of which I see several ornaments on the Benches opposite, and the Coalition Government which preceded it. They should have known that Lend-Lease was coming to an end, and yet its cessation was received with dismay and apparently without any adequate preparation. We cannot afford to be caught in that way again. I would beg that some answer to this question may be given in the course of this debate. It is not just a matter of my curiosity. I assure your Lordships that it is not that which has led me to put this question. But I think that the British public are entitled to an answer; they are entitled to know not exactly what is being clone but that preparations are in hand
I venture to say that those of your Lordships—and I hope that everyone who is listening to me now will be included—who are alive in twenty or thirty years' time will probably look back on all our great trepidation and our doubts about this loan with calm amusement. Then it will not appear as such a tremendous lot of money— £,1,100,000,000 or 4,400,000,000 dollars—as it does to us now. That would have been the cost of fifteen days of full warfare by the United States. If the war had gone on for another fifteen days, the United States would have spent on their war effort the amount of this loan. And the amount expressed in terms of our war effort would be about sixty days' expenditure. Now it is quite obvious that, if this country had not been in the war from the beginning, to achieve victory would have taken the United States longer than fifteen days. Perhaps it might have taken fifteen

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months, or even fifteen years. Therefore, looking at this with a sense of proportion, I think that these matters fall into their proper place
There is another consideration. For the last five hundred years or so there has been in the world a tendency towards an inflation of prices. There has been a steady rise in price levels all over the world. What may seem a very heavy burden at the present time, this matter of £36,000,000 a year may, in consequence of the inevitable rise in prices, a general expansion of productive power, the utilization, possibly, twenty years hence of atomic energy for commercial and industrial purposes, appear very much lighter to our grandchildren
I notice that State trading is recognized. I think there is a very clear answer to that question relating to sugar from Jamaica which has been raised in this debate, and which, indeed, I have heard many many times over a number of years. I think it concerns Jamaica, San Domingo and Porto Rico. The answer to the question, of course, will not have occurred to the noble Viscount, Lord Simon, who put it. It is simply that State trading is permitted under this Agreement, so that the Government can buy Jamaican sugar in bulk, and they will not. be accused of discrimination. I may say that I have raised this matter with the Government and these are the answers which I have been given. The same will apply with regard to bulk purchases made in New Zealand and Australia—to bulk purchases of foodstuffs. That is not discrimination at all.
LORD ALTRINCHAM: If the noble Lord will allow me to intervene, may I say that we shall be very greatly interested to have that confirmed by the noble Lord, Lord Pakenham?
LORD STRABOLGI: There is no need to wait for confirmation from Lord Pakenham. You will find it set out in the Commons edition of Hansard for last Wednesday in the report of a statement by the President of the Board of Trade. I can assure the noble Lord that I am not speaking without the book. I have read Hansard. The truth is that the whole of this, as my noble friend Lord Pethick-Lawrence has suggested, should be taken together. The loan, itself, is not in isolation. The Bretton Woods proposals
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are not in isolation. They are all part of a whole. There is the loan itself, the proposed International Bank under the Bretton Woods arrangements, the International Monetary Fund, the forthcoming international conference on economics, trade and commerce, and the United Nations Organization, itself, which meets next month and which has an economic section. All these, I suggest, should be taken together. They all point in the same direction, and that is to a coming together of the nations of the world; not only of the so-called "Big Three," but of the fifty-two members whose representatives will assemble in three or four weeks' time in this City of Westminster. It is a tendency towards a working together, a co-operation. The alternative to such a policy, which alternative, I hope, is going to be discredited, is cutthroat competition and international anarchy in commerce and industry, which has so often led to strained relations and even to wars in the past.
I suggest that the key to the whole situation lies chiefly in one thing. I refer now only to the question of the service of the loan, which is, naturally, exercising the minds of so many of your Lordships. If the United States of America are prepared, as Lord Balfour has suggested, to behave as a creditor nation should behave, and must behave, then there should be no difficulty in maintaining the service of the loan, and no question of repudiation or default—which seems so to worry Lord Woolton—can arise. A creditor nation, as we have learnt in the past from our experience and the French nation when it was a creditor, has to accept an import surplus, otherwise its debtors cannot pay it. What does that mean? It means, among other things, a higher standard of living; and in the present case, this will apply particularly to the great working masses of the United States, especially those in the Southern States of America who are, in many cases, miserably poor and underpaid. It is not very encouraging to see that there have been attempts on the part of some American employers deliberately to bring down the high wage rates which their work-people earned in war time. I notice that the Administration is resisting this. If it is persisted in, however, if the lesson of how a creditor nation must behave in the present world has not been learnt, the results cannot fail to be most regret-

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table. As I have said, there must be an import surplus. I hope that the people of the United States as a whole will benefit from this culturally as well as materially. I hope that a second generation, the children of rich men, will show a desire to go into the professions instead of all trying to get into business or commerce and do better at making fortunes than their fathers. I hope that we can rely upon America to behave as we did when we were a creditor nation, and as the French and every other creditor nation has had to do in the past.
If the lobbying by vested interests in Washington can be curbed, checked and discouraged by the better-instructed -sections of the American public, this debt can be repaid. I am sure the general result will be to confer great benefit on humanity. And in saying that, I am not only thinking of this country, for I feel that this transaction will tend to encourage closer co-operation between the Governments of all right-minded people and will help towards the establishment of that world government which is inevitable and which must come.
6.0 p.m.
LORD ALTRINCHAM: My Lords, the noble Lord who has just addressed your Lordships, spoke, I think, in one part of his speech of the great importance of American public opinion. I entirely share his view as to the importance of American public opinion, and I will come to that at a later stage in my speech. I think, if I may say so, that he showed less sense of realism when he suggested that we should accept obligations which will last to the year 2001, in order to make certain that they do not interfere in any way with the Moscow Conference which may last two or three weeks. I do not think that that is a contribution in favour of the argument which would carry very much weight in your Lordships' House. I am also a little doubtful whether he did justice to the fact that our unpreparedness in the face of the end of Lend-Lease was really due to the sudden and unexpected end of the Japanese war. The noble Lord, almost alone in the world, I believe, must hive forgotten the atomic bomb. I hope he may long continue in that state; it is a nightmare day and night to most of us.
Many members of your Lordships' House are better qualified than I am
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to deal with the matter of these Agreements, and it is not about that subject that I am going to venture to occupy a short time in the debate in your Lordships' House. I would only say two things about the matter. The first is to reinforce what my noble friend Lord Woolton said, about the way in which these Agreements deal with what the Chancellor of the Exchequer in another place called "the legacy from the past." I think it is perfectly true that the settlement of Lend-Lease, to quote the language of the Agreement, "the complete and final settlement "of Lend-Lease, is, I would not say the most satisfactory, but the least unsatisfactory feature of these Agreements. It is perfectly true that we received a great deal from the United States, but we gave even more, and that is why I cannot regard even that part of the Agreement as an adequate and generous arrangement between two great nations who have been Allies in a great war. I have the text of the Lend-Lease Act here. It was not an Act which was passed for our benefit. Its very title recites:
"Be it enacted by the Senate and House of Representatives of 'the United States of America in Congress assembled that this Act may be cited as an Act to promote the defence of the United States."
Much of our contribution to the defence of the United States was made before the United States was our actual ally in this war, and I feel very strongly, as my noble friend Lord Woolton said, that that ought to have been taken into consideration in the arrangement which has been made. I am not in the least afraid of speaking frankly on this matter to anybody who may hear my words on the other side of the Atlantic. I have spent a great deal of time in the United States, and have always found they appreciate frank speech. They do not like diplomatizing or seeking to disguise what is the real point. I think, therefore, we should speak with absolute frankness, and that we should be much better friends if we did.
As to the matter of the Agreements, there is only one other comment I wish to make. That deals with the future, what the Chancellor of the Exchequer very properly called "the question marks for the future" which distinguish these Agreements. The questions are many and complex, and they certainly cause me the

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liveliest apprehension, but I welcome the statement which was made by the noble Viscount, the Secretary of State for Dominion Affairs and the Leader of His Majesty's Government in this House, which was evoked by my noble friend Lord Simon on the question of Imperial preference, and which was supported to our great satisfaction by Lord Keynes, who has actually been engaged in these negotiations. That goes a long way to my being reconciled to the fact that our Government have accepted this Agreement, although in my opinion they should never have accepted it. To speak of the reduction of Customs and the elimination of preferences—
VISCOUNT ADDISON: You must remember that that was from Article VII which was drafted long before this Government came into existence.
LORD ALTRINCHAM: I am sorry to differ from the noble Viscount. There is nothing about elimination of preferences in Article VII. It speaks of the elimination of discriminatory practices, and we have never in the British Empire or in this country allowed it to be said that preferences given to members of our family within the Empire are discriminatory practices as against those outside. I do not think that that should ever have been accepted by a British Government. In spite of the reassurance which has been given us, and which, as I say, I welcome, I must say I am desperately afraid as to whether the qualifications, the explanations, and the clarifications given to us in Parliament arc appreciated on the other side of the Atlantic. There is danger, I think, of deep misunderstanding, because the way in which we interpret these things is not reaching the public ear in America. I, too, study the American Press and I am bound to say that our point of view aril the kind of interpretation which we are determined to put on the obligations we are undertaking, is not at all well understood over there.
It may be understood in official circles. Lord Keynes assures us that it was, but it is certainly not understood by the general public. I fear, therefore, that these obligations may be the cause of grave misunderstanding in the future, and that the people of the United States should understand this, which is absolutely fundamental to these Agreements.
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They do not understand that the conditions attaching to our acceptance of this line of credit—the only conditions on which we can pay for this credit if we take it up—involves a complete transformation and indeed a transfiguration of the American economic system if they arc not to compel default. The Foreign Secretary in another place said very truly that what this is going to depend upon is not an argument as to whether or not the Customs have been sufficiently reduced. It is going to be answered by the practical, the concrete, unavoidable test of whether our goods are actually going into the United States. The whole thing turns on that. I honestly wish I could feel that the American public understood that.
I pass from the matter of the Agreements to the manner in which they were negotiated and presented to Parliament, and here, like the noble Lord who preceded me in this debate, I should like to emphasize the importance of American public opinion. The outstanding fact, the lamentable fact, about American public opinion is at the moment its surprise and its astonishment at the fact that these Agreements are not being well received in the British Parliament. There is no question about that. They are genuinely astonished. How can that astonishment have come about? It is surely a reflection on those who were responsible for conducting those negotiations and seeing that our case was put across.
I know of the difficulties. Anybody who is familiar with American public opinion knows there are perpetually articles about Uncle Sam not being a Santa Claus and about being played for a sucker by wily diplomatists from the other side of the Atlantic, and so on. The anxiety they express is very widespread and, therefore, the importance of dealing with the American public and its opinion should, I think, have been recognized from the very first. I cannot absolve His Majesty's Government from a very grave responsibility owing to the manner in which these negotiations were conducted and these Agreements reached.
When Lend-Lease was first established the British case was stated to the American public with matchless eloquence and persuasiveness. I quite agree that events were then helping us and that the situation

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was so grave that it was difficult to mistake it. I agree that the Empire was standing alone against the world and that the peril to civilization was manifest, but events would not have spoken so effectively for us if they had not been adequately interpreted by a great man and understood by a great man on the other side of the Atlantic. At that time our most representative figures; our weightiest men, our guns of the longest range and heaviest calibre, were sent across the Atlantic to conduct the arguments on our behalf. Compare the procedure in this case. In the first place, the negotiations were entrusted entirely to officials and experts reporting, of course, to the Cabinet in London, but, all the same, entrusted on the spot entirely to officials and experts.
Heaven knows I am not in any way disparaging the magnificent work which those experts did. Your Lordships are all looking forward to hearing one of them to-morrow in your Lordships' House, but officials and experts cannot carry the weight that Ministers carry. I entirely agree with what the noble Lord said about that. It is an outstanding point. It is true that they issued a statement. The statement they issued is very like one of the White Papers published now, but everybody who knows how difficult it is to deal with public opinion knows that hand-outs are useless, especially hand-outs full of statistics arid tables. A national case must be put across in a different way; it must be done by personal presentation by men who are known and who carry weight. That is what counts in critical negotiations and issues of this kind between great peoples.
For months, the veil of secrecy has hung over these negotiations at Washington. We heard they were breaking down, that they were going on, but we have never known exactly where they stood nor what the difficulties were, and neither has the American public. Now we are being told something about them. The only American argument I have heard used is not an argument on the merits of a single point; it is simply the argument that they cannot do it, although it may be right, because Congress will not accept it. That is the only argument so far advanced and that, in itself, is a damning commentary on the way 'in which these negotiations were carried on. The Prime Minister went to Washington
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at the invitation of the Government of the United States while these negotiations were in progress. He addressed Congress. When a Prime Minister goes abroad, it does not matter to us to what Party he belongs; he represents the nation, and we want him to state the national case. Did he do so? So far as I know, he never referred to this, the greatest issue between the American and British peoples at the present moment. He confined himself to explaining and defining, not the national, but the Party case. That was a lamentable thing. If the common man or the average elector—of whom we have been hearing so much recently—is going to be able to do what he wants to do, to ensure good will and peace among nations, his interest must be enlisted in negotiations of this sort, and he must he given a chance of understanding and making his influence felt. In this case, I do not believe he has ever been given that chance on the other side of the Atlantic. In consequence, this is a sorry business. Parliament is deeply divided, and more deeply divided in another place than even the Division lists indicate. The nation is profoundly disturbed. It is impossible to go anywhere, as my noble friend Lord Woolton said, without realizing that. But even that is not all. After this hole-and-corner method of negotiation, the Agreements are being rushed through Parliament. The Papers were only presented ten clays ago. They are immensely complicated Papers, and we have had no time for careful consideration, and there has been even less time in another place. We have had no time for adequate debate and, again, that is especially true in another place.
The way in which the Bretton Woods Bill has been rushed—it is not one to which I object, but for which I am prepared to vote—is, as a matter of fact, a direct breach of a promise given to Parliament. That was perfectly clear when it was introduced and discussed at a much earlier date. Never has an Executive used its power with such disregard for public opinion and such undemocratic contempt for Parliament. J. say that advisedly, and I challenge noble Lords opposite to contest the truth of what I have said. Compare the regard which is being shown for Congress. Congress is to have all the time it requires. It is not to begin this discussion until after the Christmas

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recess and, we are told, it may continue discussing this matter until the end of March. There may, perhaps, not be a decision until even a later date still. That is in striking contrast with the treatment accorded in this country to the Mother of Parliaments.
What, then, are your Lordships to do? The noble Lord opposite seems anxious for information on that point. I shall answer him direct. He may not like the answer, but it is what he is going to get. Your Lordships' responsibility is great. The virtue of a Second Chamber resides not in any power to thwart the people's will, but in the power, if need be, to bring about delay for reconsideration and to give time for deliberate thought. That, I believe, is the right and main function of the Second Chamber. Can your Lordships exercise that virtue in this case? In present conditions, I submit, with great humility, your Lordships cannot. I believe if your Lordships attempted to do so you would make the situation, bad as it is at the present moment, much worse. I believe the Government would divide the nation still further at a moment when national unity is of the utmost importance.
I pause to observe that this is indeed a strange situation. Half the nation—a little more than half, I believe—is gravely under-represented in the lower House and that House itself is divided on this issue, and not divided on Party lines. In one important matter the Executive at this moment is breaking faith with Parliament. If ever there was an occasion when the role of a Second Chamber was important, it is this. But owing to historical causes on which I do not propose to dilate, this Second Chamber is not able to play its proper constitutional part at this time—this very critical time in the history of the nation and the Empire. I fear that is the fact. Clearly, sheer conservatism is not always the best way of conserving the stately fabric of constitutional principle upon which our democratic system rests. In my opinion, attention will have to be given to that aspect of our Parliamentary situation before too long is past. But we must face facts. A challenge to the majority in another place by this House at the present moment would greatly stimulate Party feeling, no doubt to the noble Lord's delight. It would plunge the nation into
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greater disunity, when common effort towards recovery is the most essential thing.
LORD STRABOLGI: Will the noble Lord be good enough to permit me to intervene? He is referring to me. I think it was his Party which started Party strife, and not myself. Why does he pick me out?
LORD ALTRINCHAM: Because the noble Lord particularly asked for information on this point. He said he did not understand exactly where noble Lords stood.
LORD STRABOLGI: I do not understand now.
LORD ALTRINCHAM: I am telling him, and am endeavouring to answer the question which he asked. I am quite prepared to ignore him if he prefers that.
I am convinced, then, that a vote against this Motion would not advance, and might indeed gravely prejudice, the Imperial interests which we all have at heart. I shall therefore abstain from voting. I cannot vote for this Motion, for indeed, like Lord Woolton, if I had been a member of a Government which had undertaken these obligations, I would have resigned my place in that Government. I feel as strongly about it as that. I therefore cannot vote for this Agreement but I will abstain from voting, because that seems to me, in present conditions, the wisest course from the point of view of national interests. I am convinced that both His Majesty's Government and the Government of the United States will, before long, find reconsideration of these Agreements imperative as the situation develops. Fortunately, as the noble Lord, Lord Balfour of Burleigh, and others have pointed out, there is full provision for that in Clause 12 of the Financial Agreement which Lord Balfour of Burleigh read out.
While we should never sabotage these Agreements, while we should do our utmost to carry out our undertakings, whether we like them or not, we must make it plain that our power to carry them out depends on the United States and not on ourselves. That is the point that has to be hammered in all the time. I do not believe, as a matter of fact, that the United States will learn that lesson in time. There is no sign of that

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change in public opinion, in the Press, in Congress, or in the whole framework of that great economic system at the present moment. I trust—and this is my last word—that when the time comes under Clause 12 to seek a reconsideration of what may not be working in these Agreements, a full national delegation and, indeed, better still, an Empire delegation, will be entrusted with that important national and Imperial task.
6.26 p.m.
LORD PAKENHAM: My Lords, I rise to introduce to the House the commercial side of these proposals. I do so in no apologetic spirit and not at all in the attitude of a man who recommends a friend a drink on the grounds that it has not got much poison in it and that at any rate a stomach pump is close at hand. That is not at all the spirit in which 1 bring before you these very complicated proposals. I have, however, one word of apology for your Lordships. I desire to be very brief as so many other noble Lords are anxious to speak, and it may be that 1 shall proceed somewhat too rapidly. If so, I hope noble Lords will not hesitate to intervene and inform me that I am not making myself altogether clear.
I would like to ask and try to answer three questions that are certainly agitating the mind of the ordinary man, and I hope I may include your Lordships in that category. The ordinary man is asking, first of all, where do these commercial proposals—the ones set out in Cmd. Paper 67o9—come from; to what do they commit us; and what do they offer us? I shall try to deal, therefore, with their origins, their obligations and their benefits. The question of origins need not detain us long. These commercial proposals, this declaration of commercial policy as it was happily called by Mr. Churchill, flow directly from Article 7 of the P4Utual Aid Agreement of 1942. They simply carry a stage further the declared commercial policy to which this country has been committed for nearly four years under three separate Governments. I do not think I need say more about that, because although there was a certain amount of discussion about it in another place, at the end Mr. Churchill declared himself, as I understand it, completely satisfied with regard to that point.
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And now for the question of commitments. In an absolute sense we are committed to one thing only: to consultation with a view to trying to find agreement along certain definite lines. The Dominions are not even committed to that. To quote the statement attached to the three documents on behalf of the Prime Minister:
"The recent talks in Washington were of course conducted on of the United Kingdom alone and I am not in a position to speak for our partners in the Commonwealth, none of whom an in any way committed. I would only say now that, while we have kept closely in touch with them during the conversations, it is quite understood that each of the Governments concerned will be able to approach the inter-nation, international discussions with full freedom of action."
So there is no obligation whatever on the Governments of the Dominions. The United Kingdom, on the other hand, is committed to a search for an agreement, but, of course, we cannot be committed to finding an agreement. We are the absolute judges, when the time arrives, of whether an agreement is available that suits our interests and complies with our ideals. But we do not intend this conference to fail. We are riot putting this document before you as though to say: "My dear fellow, it does not really amount to very much in the end; it does not signify anything." That is not our attitude; we mean this conference to succeed, and we are determined that it shall. We mean these commercial proposals to amount to something solid and substantial in the form of benefits for the people of the world.
Let us first look at what commitments are involved if this conference does succeed. Of course, they are hypothetical, contingent and inevitably very imprecise, but their general character is foreshadowed in the Command Paper before us. Let us look at that Command Paper. I will not say anything about two very important aspects of it—namely, the provisions for economic co-operation and full employment—but I venture to say in passing that a future generation may well consider that the most significant sentences in all these documents not only in this one but in all these documents—are contained on page 2 of Command Paper No. 6709, where it is said that each of the signatory nations will take action

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designed to achieve and maintain full employment within its own jurisdiction. That is now common ground between us in this country, as is the idea of economic cot-operation, so I pass to the international trade organization which occupies the great bulk of the Paper.
Perhaps the House will allow me to read Clause 4 of the purposes set out in Chapter I. The clause in question announces that the intention is
"to promote national and international action for the expansion of the exchange and consumption of goods, for the reduction of terms and other trade barriers, and for the elimination of all forms of discriminatory treatment in international commerce…".
That is the pith and kernel of the whole thing, and, as you will see, it follows very closely Article 7 of the Mutual Aid Agreement. For the present purpose, perhaps the most crucial sections are B, C, D and E of Chapter III, the chapter on General Commercial Policy. These sections deal respectively with (1) tariffs and preferences, (2) quantitative trade restrictions (including, of course, quotas and embargoes), (3) subsidies and (4) State trading. I will have to say a word about each of those in a moment, but putting it very broadly—and, I am afraid, rather loosely—one can say that the document aims at the reduction of tariffs and preferences by a process of mutual bargaining. It prohibits quantitative import restrictions, with certain very important exceptions; it permits subsidies with certain, only less important, exceptions, which on balance should tell heavily. in our favour; and it affords the widest possible range of State trading provided certain rules are observed.
With regard to tariffs and preferences, I will not say quite as much as I had intended to say, because the matter has been cleared up so carefully by the noble Viscount, Lord Simon, and the Leader of the House. Therefore I need not worry your Lordships with a very detailed exposition of that matter. The noble Viscount, Lord Simon, has quoted relevant words of the Prime Minister, and I need not quote him again. I think however that one observation of my right honourable friend the President of the Board of Trade, in another place, may be added. He pointed out that the trade of this
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country is so exceptionally diversified and widespread that it would not be enough for us to secure, as against the discarding of a preference, the reduction of merely one country's tariff; we might want twenty-six countries to reduce their tariffs before we were prepared to discard a preference.
As regards the very important question which was raised relating to Jamaica and other countries placed in her position, I think that even our bitterest critics on the other side must take it that we should not be mad enough or so lacking in regard for the Empire as to overlook the fact that the removal of a certain preference might ruin an entire community. In this process of mutual bargaining that might count for a great deal. It is extremely unlikely that any arrangement would be reached which would be such as to bring an entire community to destitution. I do not know whether I am in order in saying this, but I seem to remember an illustration which my right honourable friend the President of the Board of Trade used on another occasion, though not, I think, in another place. He said at the Bar one could never refuse a brief, but one could mark it with an impossible fee. I suggest that in the kind of case which the noble Lord, Lord Altrincham, has in mind, though it is not for me to speak with authority here, an almost prohibitive fee might be imposed.
I should add, as the President of the Board of Trade pointed out in another place, that we arc in no danger of forgetting the fact that the benefits from the preferences we impose flow not to us directly, but to others. There can be no question, where we have a preference agreement with a Dominion, of sweeping away that preference without consultation or agreement with the Dominion concerned; there can be no question of unilateral action even if it appears to suit the book of this country regarded in isolation. I feel it was those and similar assurances which were given in another place which enabled Mr. Churchill to say, near the end of the debate, "I cannot see that there is the slightest justification for suggesting that we are compromised and fettered in any way in respect of Imperial preference." Those were the words of Mr. Churchill in another place, and they were accepted by implication by the Foreign Secretary, who replied to him.

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I hope that in this House also the matter has now been thoroughly cleared up.
I must pass over more rapidly than they deserve the elaborate provisions regarding quantitative trade restrictions. These restrictions, quotas, and so forth, are to be abolished in principle, but this principle is subject to a number of very important exceptions. The ones I have selected as most important are these. Import quotas on agricultural products under prescribed conditions of glut will be still permitted; quantitative trade restrictions in face of an adverse trade balance will be still permitted, as long as they do not discriminate against one foreign producer more than another. There may be some slight misunderstanding there, As I understand the matter, if it were a question of quantitative restrictions imposed under those conditions, we should not be bound to say to each country, "We are going to cut your total expert to us by the same amount as the imports of every other country." One country might be sending us luxuries—I mention American films simply for the purposes of illustration—and another country might be sending us necessities. We should not be forced to go on taking a considerable portion of luxuries and at the same time cutting necessities. Clearly, what would have to be borne in mind would be that we should not discriminate between sources of supply for the same commodity.
VISCOUNT SWINTON: if a quantitative restriction were put on, and if we were going to buy only 100,000 tons and there were five sources of supply, does that mean we should have to distribute our purchases equally between the five sources? That is quite inconsistent with the statement—I am not suggesting that Lord Strabolgi speaks with any authority—that by combined purchase we should be able to place orders where we wish, in which case we could do it where less damage was done to the exchanges. What is the position? Do I make myself clear?
LORD PAKENHAM: Perfectly clear. I would hasten to say that I am not aware, having listened to the noble Lord, Lord Strabolgi, of his having said anything with which I feel His Majesty's Government wishes to disagree.
LORD ALTRINCHAM: Would the noble Lord forgive me? Lord Strabolgi
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said he had the authority of His Majesty's Government to say that if the Government went in for State trading, it would riot be subject to limitations or restrictions of any kind under these Agreements. Is that the fact?
LORD PAKENHAM: I am afraid that until I have seen Hansard I would not like to become involved in an argument as to the precise words used by my noble friend Lord Strabolgi. May I deal with the point raised by the noble Lord, repeating that in my recollection Lord Strabolgi said nothing which was in any way inconsistent with Government policy? The question of State trading. is the question which the noble Lord, Lord Altrincham, has most in mind, but the noble Viscount, Lord Swinton, asked whether we were bound to distribute our purchases equally. It would have to he by reference to a standard year. If we had previously taken 80 per cent. from one and 20 per cent. from another, we should not, if we had to cut them down, be forced to adopt a measure of equality.
VISCOUNT SWINTON: I think that it is clear. If you put on a restriction it has to be applied pro rata on some agreed basis over your sources of supply. Whether the purchases are made by a hundred-and-one different buyers in the country or by one single buyer, the State trading agency, makes no difference; the State trading agency would be just as much bound to place its orders pro rata as individuals would be. Is that right? I am sorry, but this is most important.
LORD PAKENHAM: I agree that it is most important, but I should like to finish dealing with this matter under my four headings, and then, perhaps, the noble Viscount will tell me whether his question has or has not been answered. State trading is a specific heading in the documents, and that is the way in which I am handling it here, because in Cmd. 6709 the discussion of quantitative restrictions is separate from that of State trading. I am going later on to deal with State trading in seine detail. Still under the heading of quantitative import restrictions, I would point cut that discrimination is permitted in one case at least, and that is where a particular country—which might, of course, be the United States—was certified as having a scarce currency. In that case discrimination is permitted. Subsidies are in general permitted, pro-

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vided that they do not do serious damage to international trade, but export subsidies are restricted by certain rules, which should benefit us considerably, bearing in mind the unfortunate experience which we had before the war at the hands of other countries who adopted these export subsidies. The provisions about subsidies should on balance permit us to Have such subsidies as we desire in this country, while at the same time discouraging certain foreign subsidies from which we might suffer damage.
Coming to State trading, it may be said, in the first place, that State trading is given the broadest possible scope, remembering that the degree of protection given in this way is subject to negotiation in the same fashion as tariffs and preferences. Noble Lords have the documents before them, and, since we seem to be getting down to what I might almost call the Committee stage of the matter, I would refer you to Cmd. 6709, pages 8 and 9, Section E, State Trading, paragraphs 1 and 2. It is worth informing your Lordships that in the course of the discussions in Washington it was made quite clear that the United Kingdom would wish to be free to continue its experiments with State trading in food products, and it was pointed out that other countries might also engage in State trading. The proposals in Section E were framed accordingly. They were framed in the light of our known and declared agricultural policy. They will require members of the International Trade Organization engaged in State trading to accord equality of treatment to all other members, and it is provided that Government transactions should be influenced solely by commercial considerations. That is a matter, no doubt, of definition.
LORD BEAVERBROOK: World price.
LORD PAKENHAM: Not necessarily, no. It says nothing about world price. I am sticking to the documents, and I cannot seek to make an improvement in them.
LORD BEAVERBROOK: What do you think "commercial considerations" means?
LORD PAKENHAM: I do not think that it is for a Lord in Waiting to improve on the language of this document!
LORD BEAVERBROOK: I thought that you were here to give us advice.
LORD PAKENHAM: No, my humble function is only to provide entertainment. There is nothing here which would rule cut bulk purchases or long-term contracts, and it is very important that that should be emphasized. What this does is to say that all such bulk purchases and long-term contracts shall be made on a commercial basis, and that political considerations shall not be taken into account in making such purchases and contracts. State trading has to be on a commercial basis, and not on political considerations. If you require a more authoritative interpretation, it may be necessary to ask for one from the Lord Chancellor.
LORD BEAVERBROOK: It is quite clear.
LORD PAKENHAM: I hope the House will realize that the Government's agricultural policy is specifically safeguarded. The essential methods are negotiated tariffs, quotas in certain cases, subsidies, and State trading. Those are the four ways in which agriculture is, or may be, protected under this scheme. I must go on somewhat rapidly. There is one real weapon which we do discard. I want to be quite frank about this, and not to try to prove too much. If we decide that an agreement is forthcoming which we can accept, we do discard the weapon associated with Dr. Schacht, the weapon of going to the sources of supply and saying: "We will buy from you only if you buy from us," and bullying each country in turn. That is one weapon which we do discard, but surely it is not a weapon which could be very easily employed without becoming involved in something like a trade war with America, and surely we are not going to suggest that that is the spirit in which we should enter the new era.
I come finally to the benefits, which, of course, are very substantial. We all know, if we have studied the statistical abstract accompanying these documents, that this country requires to increase its exports by between 50 and 75 per cent. Does any noble Lord seriously believe that it would be possible to increase our exports by something between 50 and 75 per cent. compared with pre-war and effect a huge advance of that kind by

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snatching some advantage from under the nose of America out of a diminishing total of world trade? More than other countries it is essential for us, whose markets are so far-flung and diversified, that world trade should expand if we are ever going to attain that level of exports which we are all agreed is essential if we are going to return to, much less improve, our pre-war standard of living.
We believe in the ideal behind this document. We believe that trade barriers on anything like the scale which would otherwise confront the world are a thoroughly evil thing, and we believe that here is a unique chance of getting rid of them to a large extent. This is not the old controversy between free trade and protection, in which so many noble Lords have played such a distinguished part on both sides. If you go back to the famous pamphlet on this question written at the beginning of this century by the Conservative Prime Minister of the day—Mr. Balfour, as he was then—or if you look at the brilliant article in today's Daily Telegraph written by Richard Law, the son of another Conservative Prime Minister, you will find it stated that the protectionist case in this country has always been based solely on the idea that it is necessary to impose tariffs in this country in order to force other tariffs clown. This country has often been faced with a choice between free trade and protection for this country, as against a background of world protection but that is not the choice which is before us this time. The choice which is before us this time is between world trade expansion under these proposals and world trade restriction if they fail. An eminent orator in another place described some of these proposals as representing an "economic Munich." The Times newspaper has improved their state to "an economic Dunkirk." May we not see in them rather an economic El Alamein—the first chance which we have had this century to break through from the waste lands of fear arid restriction into the fields of opportunity and hope?
6.51 p.m.
LORD CROFT: My Lords, in following the very interesting speech which has been made by the noble Lord who has just sat down, I make no apology, even at this hour, for offering a few remarks. We have a clay and a half, practically, to decide—after only ten days' notice that
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it would be raised—a question which may vitally affect the whole future of this country and the Commonwealth and Empire. I think it so happens that alone of all those who have addressed your Lordships' House this afternoon I have been for forty years associated with those who, sincerely believing that the British Commonwealth and Empire is the greatest force for world good, desire to see the closest promotion of trade through Imperial preferences.
Now these great issues which we have to decide here, it appears to me, find favour with very few. Certainly no one greets the proposals with enthusiasm. I can I find no one of any Party who is really keen on this thing. "Rarely has the nation entered with more misgiving into any international agreement," said the News Chronicle of last Thursday. That newspaper, I believe, speaks very largely—or it used to do so—for the Liberal Party, with which it had very close and intimate associations. The Chancellor of the Exchequer himself, in another place, appeared to me to be delivering something more like a funeral dirge than a trumpet blast heralding a new and hopeful dawn, whilst millions of those who have associated themselves over a long period of time with movements to build up comradely fraternity between the countries of the Commonwealth and Empire view these proposals—if they are as stated in the White Paper—with abhorrence.
The only answer I can get from any one of my friends when I put it to them whether they accept the plan under duress, is to have the question asked of me: "What is the alternative?" The short reply to that seems to me to be, even after hearing all the eloquent speeches which have been made in defence of the. Government, that if we were compelled to seek a loan, why did not we face up to it fearlessly and honestly like men seeking relief from a temporary embarrassment, incurred in the common cause, by a loan which we were determined to honour, in the honouring of which we would make all reasonable sacrifices, and the terms of which we knew we could carry out? What is detestable to the British people, I believe, is that, whilst we believe the British Commonwealth and Empire when fighting alone in their solitary glory, in 1940, saved the world, we should be granted a loan to which conditions are attached

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which make the full honouring of our obligations most dubious, unless, indeed, we find ourselves in a truly miraculous industrial and financial recovery; conditions which also definitely propose to surrender the principle of Empire economic unity which is, after all, so far as we know, the accepted policy of our people, and for the destruction of which there was certainly no mandate at the time of the General Election.
VISCOUNT ADDISON: My Lords, the noble Lord must forgive my interrupting him, and I am sure he will understand that I am very sorry to do so. But really there is nothing of the kind which he is now suggesting in this proposal. There is nothing resembling it in the most remote degree.
LORD CROFT: I wish I could really believe that. But I am basing what I say on the terms of the White Paper itself. I will come to that Paper in a moment—that I promise the noble Lord. But I do not want to be deflected at the moment. What then was the alternative? I admit that I am not a financial pundit; I ask this question as an ordinary common-or-garden business man. Why on earth should we not have sought a loan somewhat on the same terms as the loan that the United States has granted to France? I know that France is paying 2⅜ per cent., but believe a thousand times that we should and could pay an additional ⅜ths per cent. rather than accept for the rest of our lives economic thraldom in the loss of our fiscal liberty in dealing with the sister countries of the British Empire. Do not tell me that we could not pay an additional⅜ths per cent. or 1 per cent. to preserve this great freedom. All know that, in the prosecution of ideological politics our present Government are already pledged to social luxuries far exceeding such additional cost of the loan interest as I have suggested. I must ask, Was the war contribution of France, of whom I am a well-wisher, so much greater than ours that she gets a loan free of conditions whilst we are placed in "strings"? I think "strings" was the word used by the noble Lord who opened this debate, but I would prefer to say "whilst we are placed in chains."
When we are told that we could not carry on without this aid, I answer, as
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my noble friend Lord Woolton has already clone, that we have no evidence to prove that assertion. Some people forget that this is, after all, the greatest import market in the whole world, and the greatest bargaining factor for mutual trade relations that has ever been known. They also forget that the British Colonial Empire has vast potentialities for development which—if we set to work to tighten our belts and win through—can bring us a tremendous return. Many thought that we were down and out in 1931, but we refused to be beaten. We rallied all our friends, and in six short years, from 1932 to 1938, we were striding to prosperity. Yes—striding to prosperity. In that short time, in the first effort at reciprocal Imperial preference, we increased our exports to the countries concerned in the Ottawa Agreements alone by 70 per cent or £69,000,000. In that short time we reached the highest degree of employment ever known in our history in this country.
Nor did any foreign country suffer from the fact that we had set up a healthy economic condition within the British Commonwealth and Empire; in fact, the foreign world sold more to the countries which enjoyed our preference after the duties were lowered than ever they had before. No one of any Party will deny—and I am sure of this after to-day's debate—that unless me can bridge the adverse balance of trade, we can never completely recover, and our whole standard of life will degenerate. In other words, we must restrict all but vital imports and we must vastly increase our export trade. The whole basis of this Agreement. however, is in the direction not of increasing our exports, but of doing the reverse—namely, to increase our imports from the United States. As I read it, the United States is not only to get the interest but with the very loan on which she charges interest to secure increased imports into our market and all the markets of the British Empire.
Now it is evident that in very many branches of our industry, the very goods which the United States would seek increasingly to export to this country, to the Colonial Empire, the Dominions, and India, are those goods which we are most fitted to produce. I do not refer, of course, to cotton and tobacco, which have been mentioned. These we are ready to

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buy. I submit that these it is vital for the United States to sell. If we cannot buy, and they will not sell these commodities, we must greatly stimulate our production within the Commonwealth and Empire, which is by no means impossible. Twenty-six different countries in the British Commonwealth and Empire can produce tobacco. Let the word go out, and in four years' time you would have a great increase of production. If we so stimulate American imports within the Commonwealth area as the United States intends, in five years' time we shall see the United States dug firmly into all those markets which were so precious to us, where we have enjoyed a preferential good will for fifty years, and which were buying from us over 50 per cent. of our manufactures up to the outbreak of war. He is an optimist who thinks that starting so late in the race we shall ever recover that vast trade which this Agreement is to throw open to the highly geared American production before we have got our wheels turning at all.
I submit, therefore, that it is bad business. It is bad for the traders, bad for the workers, bad for shipping, bad financially, bad for the Dominions, and perhaps fatal to great areas of the vast Colonial Empire where it is our fixed purpose as trustees to endeavour to uplift the standard of living of the natives. Worse things follow. One condition is not only that there shall be a reduction of tariffs. No one will quarrel with that if the reduction is mutual and complete, and the United States and all other countries will adopt free trade. That is an argument I agree that you cannot resist. It is something worthy of an entirely new outlook on world trade, but there is not the slightest evidence of that anywhere. The noble Lord who, in his optimism, suggested we had something entirely new where we were not against foreign tariffs, but we were up against the suggestion that there would be free trade from every country in the world, but that is not likely to be the position, believe me. Everyone in those countries of an industrial nature—
LORD PAKENHAM: Would the noble Lord be in favour of a general reduction in tariffs if it were possible?
LORD CROFT: I have always said so, all my life. Cobden told us that as surely as the sun rose in the heavens to-morrow
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all the other countries would follow. But not one country followed. That is the kind of platitude we often hear from those Benches, but it is something of which there is not the remotest chance. Supposing Australia was lured along this. path of universal free trade, how long could she live under the extraordinarily efficient export of United States industry? I venture to think you would find it very difficult for her to go along that path with you, and you would find the same with every other industrial country in the world. I want to suggest that apart from the question of the reduction of tariffs, we have something like a dictate in this White Paper, that there is to be an elimination of all forms of discriminatory treatment. I beg your Lordships to consider for one moment whether it is not a fact that Imperial preference never was discriminatory, because under it we treated every foreign country equally. What we did was to lower our tariff rate against our own kith and kin and our other fellow-subjects, and that alone is the extent of our crime.
We have reduced the duties and I resent the lecture to my noble friend Lord Beaverbrook, when it was suggested by the dismal Micawber who supported the loan from the I3enches opposite, Lord Balfour of Burleigh, that it was dishonest to speak of Empire free trade as a worthy ideal. Of course it is a worthy ideal. Is not the economic union of the U.S.A. inside its tariff wall regarded as a worthy ideal? I think you will find that Soviet Russia has also free trade within her own boundaries. That to secure this onerous loan we should surrender the right to do as the original Colonies of America slid—namely, to prefer the products of our own people within an economic union, is an interference with sovereign rights and internal fiscal affairs hitherto unheard of in any country or group of countries in the world.
What is the heavy lasting grudge of the United States against this old country in spite of the reasons for great, real and. lasting friendship? It is that we, who at least at that time—the War of Independence—were the sovereign power, interfered with the fiscal liberty of British colonists in America. But this to-clay is the Boston Tea Party in reverse, and an interference with the freedom of our country to manage its own affairs, an inter-

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ference that I regard as unparalleled in the history of the world. We have just emerged from a mortal struggle in which we must almost have suffered defeat but for the stupendous contribution in life and treasure of all parts of this Commonwealth and Empire when no other ally remained in the field. Yet the demand goes forth, when their blood is hardly dry, that we are to tell those who fought so brilliantly and died so gloriously by our side, that an ally will not lend us money unless we forego permanently all hope of Empire economic unity.
I sought consolation from what was said by Government spokesmen in another place, but I confess to confusion. Sir Stafford Cripps said:
"Nothing could happen at all unless members were prepared willingly to agree with one another to reduce tariffs or preferences."
I admit the importance of that statement—and this is of moment—if the United States understand it. It means we go into conference absolutely free and unfettered to continue to grant preference to all our sister countries in the Commonwealth and the Empire if we and our partners so desire. I must, however, point out that the document which we have been discussing to-day—the White Paper jointly agreed to—speaks of the "proposals." I underline the word "proposals." If the proposals for consideration included, let us say, the elimination of the British Fleet, that, surely, could only mean that we were going into conference prepared to contemplate the end of British sea power? But the same must be true of the elimination of preference if you agree to go in on that proposal. If the Government were not prepared to eliminate, why was this fateful document ever signed? It goes further, and on page 4 in Chapter I I find the heading "Purposes." Purposes include all forms of discriminatory treatment. Later on, in Section B of Chapter 3 it specifies: Import tariffs and preferences." His Majesty's Government, seeing the "atmosphere of gnawing doubt," if I might again quote the Bible of the Liberal Party, the News Chronicle, now says through Sir Stafford Cripps:
"Therefore, it was not enough for us to get, as against the preference, the reduction of merely one person's tariff; we might want
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twenty-six countries to reduce their tariffs before we were prepared to drop a preference.''
I was partly consoled by that, but it does not square with the White Paper. Therefore, I solemnly invite the Government, with the White Paper before us, to reiterate what Mr. Ernest Bevin declared, when seeking a mandate at the election, when he said that "we would not abandon preference so long as other countries continued to use tariffs against us." Is that really the meaning? I should like to know. Sir Stafford Cripps said: "We are absolute masters." Mr. Churchill has declared that preference was definitely reserved by himself with President Roosevelt. That sentences with a contrary meaning were ever included in the White Paper was, I submit, a grave and tragic blunder. Let the Government, on whom the whole responsibility rests, state now explicitly before our decision is reached that, whilst we will seek—as we all desire—the closest co-operation and explore any proposals for mutual trade agreements between our two great countries, Imperial preference is a purely domestic concern and the economic unity of the Empire is not regarded by Great Britain as a condition in acceptance of the loan. The proposals and conditions in the White Paper can do nothing to promote what we all desire—permanent friendship with our great ally so that as co-operators we can become joint architects in a lasting world peace. As the White Paper stands to-day the loan is such as is described in Polonius's advice—it "oft loses both itself and friend." I ask the Government to make it explicitly clear and then my conscience will at least be clear. I would say to them I believe that most noble Lords who agree with me, if they could have an assurance of that description, would find they were able to adopt a very different course.
7.14 p.m.
LORD LLOYD: My Lords, I should like to ask your Lordships for the indulgence usually shown in this House to maiden speakers. After listening to all the many eloquent and well-informed speeches on this highly complicated subject this afternoon, it seems to me that the ground has been very fully covered. Therefore if my speech is unlikely to be very brilliant, I can assure your Lordships it will have the advantage of brevity. As regards the

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necessity for this loan, I feel I am hardly in a position to speak. We are assured by His Majesty's Government that failure by this country to obtain this loan on the present occasion must inevitably plunge the British people into even greater austerity than they are at present called upon to endure. Without full access to the facts and figures relating to our stocks of foodstuffs and raw materials, our shipping position and all the other innumerable factors that must affect a decision of this magnitude, I do not see that we can do otherwise than accept His Majesty's Government's assurance that every alternative was fully considered before the nation was asked to accept a loan on what seemed to me such melancholy terms.
I must confess I should have expected we could have obtained better terms than these. Even if we discount all sentiment regarding our war efforts, it still remains a fact that in 1937 Great Britain alone was buying no less than 20 per cent. of the world's total exports. It seems me that if we do not buy those exports who else is likely to buy from the United States on a comparable scale? Surely, the maintenance and indeed the expansion of this country's power as a consumer must always be one of the main planks of. any American economic policy. The fact that the United States have not seer fit to put us on our feet free of charge, seems to me to imply not so much any lack of gratitude or any lack of generosity on the part of our American friends, but a very great misunderstanding of this country's economic position and, if I may say so, of their own best interests. As it is, from 1950 onwards we' shall have to shoulder an annual financial burden at least as great as that which we had to shoulder after the last war, and I must confess I can see no factor in the present situation to encourage us in the belief that our task in the future is likely to be any easier than it was then. It is true that we have the waiver clause, but constant recourse to this concession is hardly calculated to improve Anglo-American relations. As before, we shall do our best to fulfil our obligations, but I do not think it would be right to deceive either ourselves or our American friends as to the very real magnitude of our task.
Nor can I welcome our enforced adherence to the Bretton Woods Agreement
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compelling us, as it does, to return to a dollar standard, and, worse still, to a free convertibility of sterling in such a very short time. This seems to me to expose our export trade to all the hazards of another American slump and, surely, the lessons of 1925 to 1931 should not so soon be forgotten—that only the constant flow of dollars from the United States to the rest of the world can ensure the success of such a scheme. We must hope this flow will, in fact, take place, but it is not without misgiving that I accept our adherence to the Bretton Woods Agreement, for only by expansion of our export trade can we ever hope to repay this loan.
For all these reasons I cannot do otherwise than consider this Agreement unfortunate and one which is likely to impair rather than improve our relations with the United States. In view of the importance of a continuance of this friendship forged in the years of war, I cannot possibly support this Agreement. On the other hand I find it difficult to vote against it for want of a real workable alternative, an alternative which is not merely a possibility within six months' time or a year's time but which is here ready now. For this reason I feel myself compelled to abstain.
At the same time, I would like to say one brief word on a matter which is particularly dear to my heart, and that is the question of Imperial preference. It was indeed a family interest for very many years. I am. glad to say that we have received very substantial reassurances in this House to-night from the noble Lord, Lord Pakenham, and other members of His Majesty's Government regarding this international conference on which we are shortly to embark. All the same, I am still not entirely happy about the situation, for It seems to me that His Majesty's Government are committed not only to the conference itself but, according to the joint statement issued by His Majesty's Government and the Government of the United States, to accept the agenda of this conference as a basis for international discussion and, what is more, to use their best endeavour to bring these discussions to a successful conclusion—a point which I think the noble Lord, Lord Pakenham, reiterated in your Lordships' House a few moments ago.
Now if we are ever to repay this loan, we have got to have exports and we

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have got to have markets, and where are we going to find those markets? On the one hand, we have the markets of the British Empire and the markets of those foreign countries who were our best customers before the war and with whom, in many cases, we had bilateral commercial agreements. From the year 1932 onwards, when we first started Imperial preference on a large scale, as my noble friend Lord Croft has already said, we did show remarkably rapid recovery in cur export and import trade. And, what is more, this was no mere selfish scheme, for it did give very substantial benefits to many foreign countries as well, whose trade increased commensurately with ours. So, on the one hand, we have a system which has proved its worth, not only to ourselves but also to foreign countries. This is not a selfish system; It is a workable system and it is a system which works for other people besides ourselves.
As against this, we have the alternative of multilateral free trade which, in the past, has equally proved itself a failure. This alternative system seems to me to rest entirely on one thing and on one thing only, and that is whether the world's greatest producer (that is to say, the United States of America) is prepared at the same time to become the world's greatest importer—and is not only prepared but is able to become the world's greatest importer. If she does, then it is possible that the new era to which the noble Lord, Lord Pakenham, referred in such glowing terms, may indeed come to pass, but I am sure he will forgive me if I express my misgivings and do not share his confidence in this event. For, after all, as I think the noble Lord, Lord Balfour of Burleigh, pointed out, America's war production had been physically superimposed on her peace production, and I am extremely doubtful as to her capacity to import, if she is to avoid widespread unemployment. For all these reasons I do feel most strongly that the successful outcome of this conference can only lead to the failure of our economic recovery and dangerously impair the future prosperity not only of this country but also of the whole British Empire.
7.28 p.m.
LORD SEMPILL: My Lords, it is a high privilege, on your behalf, to endea-
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vour to express congratulations to the noble Lord who has just sat down. We were privileged to know his father well and to hear him often speaking in your Lordships' House. He was certainly one of the greatest Empire figures of our day. I am sure your Lordships would wish me, on your behalf, to congratulate his son, the noble Lord who has just sat down, and to hope that he will very often come here and that we shall hear speeches from him.
I have listened with very great care to the speeches which have been made during the course of this debate, and I wish particularly to express agreement with the speech made by my noble friend Lord Wootton, which was followed by a powerful speech by the noble Lord, Lord Altrincham. Those two speakers appealed to me as touching the realities of the situation as I see them, and had I been in any doubt in my own thoughts in regard to this Resolution, on which. personally, if your Lordships' House is to vote, I shall vote against, I should have come to that conclusion, I think, after listening to the speeches of the noble Lords to whom I have referred. It has been made very clear in the interesting speech we heard in the earlier part of this debate from the noble Lord, Lord Pethick-Lawrence, and others speaking for His Majesty's Government in your Lordships' House and in another place, that the high ideals of service in a common cause that animated international affairs as between the United Nations during the period of hostilities, have given way now to ideas of commerce. We must clearly face up to this altered situation, realizing at the same time, as has been well stressed by other noble Lords, chat together with the four great Dominions and the Colonial Empire we stood alone in the world against the aggressors for a year; and more.
Now the main points advanced in your Lordships' House and in another place in regard to this affair seem to be, first, that it does not mean a return to the gold standard—and I say specifically the gold standard as referring to the standard in use between the wars. Also that there is no alternative, and furthermore that there is an escape clause. We have heard to-day, and have read in the report of the debate in another place, of the interpretation of His Majesty's Government

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and others on this issue with regard to gold, but surely the important thing is to know the interpretation and intentions of the senior partner in this affair, the United States of America. Your Lordships will remember that Mr. Morgenthau, who retired a short time ago from the position of Secretary of the United States Treasury, in presenting his report on international finance to Congress, said: "The Bretton Woods plan marks the fruition of the American Treasury's gold policy." In addition, Mr. Aldrich, the President of the Chase National Bank, the largest bank in the world, said: "In the United States the proposal is termed a further application of the gold standard." So whatever our ideas may be, those quite clearly are the ideas of the United States, and, as they are the senior partner in this" affair, it is all important that we should realize that fact.
Reference has been made to whether there is an alternative. May I submit that there is one, which, in a debate in your Lordships' House in November, 1941, I was privileged to advance. It is called A Twentieth Century Economic System. I submit that those ideas then advanced in your Lordships' House stand as good for application to-day as they did then. Perhaps it might be convenient at some later stage to-morrow for the noble Lord who will reply for His Majesty's Govern-mint to tell your Lordships what are the Government's views on this matter, seeing that the Coalition Government went into the question in some detail, and no doubt a report is available. I will give an example of the interest taken in these matters. Copies of that Hansard went, as all other Hansards do, to various parts of the Empire. Just two hours ago a telegram was handed to me which, with your Lordships' permission I will read, a; it is addressed to your Lordships' House, my own name being merely tagged on as an appropriate person to submit it to your Lordships:
"Australian Women's Part believe that American Loan to Britain and Bretton Woods Agreement if accepted would result in economic slavery and disintegration of British Empire. Pauline Budge, President."
That shows how people Down Under are thinking on these matters.
In order to alleviate the anxiety of the Dominions and the sterling area, so that they will not be held up for urgent equipment by the present inability of the United
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Kingdom to supply it, I think they might be encouraged to negotiate their own commercial loans with the United States for such equipment as they may desire. In so doing there would be no question of their sterling balances in London being converted into dollars, but the United Kingdom market for the products of those countries would be safeguarded for the years to come, by which time the United Kingdom would be able to liquidate the sterling balances.
In the debate in another place on Wednesday, December 12, the Chancellor of the Exchequer referred to the fact that before the war certain countries were very anxious to export but very unwilling to import, and very often refused to take payment for goods sent abroad in the form of imports into their own country. They used to combine high tariffs with an export drive, winch is not, as a rule, a good combination. The Chancellor said: "In such conditions the whole process of international trade is frustrated. We must seek to prevent any recurrence of those conditions." He then stated that the scarce-currency clause—Article VII of the White Paper—was designed to meet that situation and to prevent its continuance or repetition. He went on to say that Article VII provided that, if the Fund pronounced any particular currency to he scarce, any member of the Fund might take action against that currency and against exports from that country, on a discriminatory basis.
That is quite true, hut what the Chancellor of the Exchequer omitted to mention was that the currency of a creditor nation which had a persistent excess of exports over imports would not become scarce so long as the country was prepared to use the proceeds of its sales abroad to buy up the existing fixed assets of other nations. It could sell motor-cars, refrigerators, and vacuum cleaners abroad, and use the proceeds of those sales to buy up land, industries, hotels, cinemas, theatres, and other fixed assets of that country. There is nothing in Bretton Woods to compel it to use the proceeds of its own exports to pay for return imports. Only when such a country got tired of buying up the fixed assets of other nations would its currency become scarce, and only then could the Fund authorize the victims to use discriminatory tariffs against the goods of that exporter. In fact, the scarce currency clause will en-

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able a nation to lock the stable door, but only after the horse has been stolen.
I should like to make it clear that I have no objection to a country putting new fixed assets, which did not exist before, into another country, but I do suggest there is every objection to their selling current consumer goods, refusing to accept imports of current consumer goods in return, and, instead, acquiring the fixed assets of the country to which they sell. To exchange the wealth-producing assets of your country for refrigerators, vacuum cleaners and the like is not a good bargain; it is literally selling your birthright for a mess of pottage. If you will turn to Article 6, Section 1. (b) (ii) and Section 2, you will find that this very undesirable form of capital in-vestment is open to the surplus, but not the deficit, countries. I submit to your Lordships that a country which exports the products of its estate is entitled in return to claim the products from the estates of other nations, but it is not entitled in equity, although it is entitled under Bretton Woods, to refuse to take these products and then foreclose on the estate itself. As my noble friend Lord Woolton and others have emphasized, goods and services must be paid for by goods and services and not by the remitting of gold or by creating debt. The situation that we are facing is indeed a serious one.
My final remark is that what might be called the Bretton Woods final act, the Financial Agreement and the Proposals for an International Conference on Trade and Employment, are all designed to strengthen the power of the United States, which is, as I said before, the senior partner in this arrangement, and the world's biggest seller, lender and creditor, and to undermine the very strong position, which we had and which they fear we might have again, as the world's largest buyer. I think the situation is an extremely serious one, and perhaps I may quote a few lines which fix this matter in my mind, and which I hope may fix it in your Lordships' too:
"Now when our land to ruin's brink is verging,
In God's name, let us speak while there is time !
Now, when the padlocks for our lips are forging,
Silence is crime."
7.40 p.m.
THE DUKE OF BEDFORD: My Lords, I find myself to-day in the rather unusual position, for me, of being on the side of the majority, if not in this House anyhow, I believe, in the country, because find that opposition to the Bretton Woods scheme, which is one of the conditions of this loan, is almost universal among people of widely different political and economic outlook. I think that the Government are making the very gravest mistake in involving us in this loan in. such conditions. Their motto, indeed, seems to me to be "After us, the deluge." As long as the goods are coming in from America, everything in the garden will be more or less lovely; but when the long and difficult time of repayment begins it will be a very different story indeed. We shall find that under more unfavourable conditions than existed after the last war we have saddled ourselves with a burden which last time we found it impossible to carry.
I am sure that a good many Labour Members who voted in favour of this proposal did so against their own better judgment, because they had promised to accept the orders of the Party Whips; and that, to my political inexperience, seems to be a very inadequate reason indeed. We have been told that if we reject Bretton Woods it will imperil good relations between this country and America, but I find that the really fine and enlightened people in America are as much against Bretton Woods and all that it stands for as I am. With regard to the very large number of America citizens who, like our own citizens, are not well versed in these matters, I think that a great deal could be done by informing them of the true position. America, fortunately, is not one of those countries in which it is a penal offence to, listen to a British broadcast.
If a loan had to be obtained from America at all—which personally I doubt—I am not convinced that there was not a case for trying to negotiate a commercial loan for those goods, and those goods. only, which we could not possibly obtain from anywhere else and yet which were-vital to our country's needs. If the proposal was turned down, I think that it should still have been left on offer, and I believe that, for reasons with which I shall deal a little later, in time, perhaps with a certain amount of grumbling, the.

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American Government would have come to accept our proposal. I am convinced that if as much time and energy had been devoted to trying to mobilize the resources of the Empire and of other countries not under Wall Street domination as has been devoted to trying to negotiate the American loan, we should have ended up in a far more satisfactory position. The British Empire, armed with a thoroughly sound financial and economic system, could, I believe, produce sufficient to meet its own needs.
That is not the only point. It is almost certain that, even if we turned down the proposal for the loan and did not receive an official continuation of Lend-Lease, the American Government would soon have found itself compelled to make large gifts of goods to other countries, and especially to ourselves The reasons for this are slightly technical, but they are so important and are so universally overlooked, both by statesmen and by economists, that I should like very briefly to explain them. In America, as in any other great civil zed country, there are two very important factors in the country's economic life, and they are increasing mechanization and investment. Whenever a country's industries arc being increasingly mechanized, then during any given period more money is being put into depreciation funds for future renewals of the increasing amount of machinery than is being paid out of such funds for current renewals, and the difference between the smaller amount being paid out and the larger amount being put in constitutes a shortage of consumer money, leading to bad trade and unemployment.
The other important cause of shortage is investment. Whenever you take money distributed in the form of wages, salaries, interest or profits by existing industries, and use either to set up a new industry, or to extend an old one, then as soon as the new industry or the extension gets going and puts new goods on the market there will he a shortage of consumer money, for the simple reason that you cannot buy the increased amount of goods with a fixed amount of money. Some years ago I put this point to one of our leading economists—if my memory has not failed me, it was the noble Lord, Lord Keynes—and, when he discovered that it was not the usual Social Credit ninepin which he was in the habit of diverting himself by knocking over, he fled incon-
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tinently from the field of economic discussion.
Short of a reform of the financial system which the American Government and American financiers are not likely to attempt, one of the favourite devices for overcoming this shortage is a bank loan of new money to finance an export trade which brings in no equivalent value of imports. I hope your Lordships will believe me when I say that a bank loan is a. creation of new money; if you are doubtful about that, you will find it substantiated in the Encyclopædia Britannica, and in the chapter on banking in the Report of the Macmillan Committee. To give a simple example, and take very small imaginary figures for the sake of convenience, suppose the amount of goods on the American home market to be 1,000 dollars' worth, and suppose that, owing to increasing mechanization and investment, only 800 dollars are distributed in a form free to buy the goods. If a bank loan of 200 dollars is made for an export trade which. brings back no equivalent value of imports, that will fill up the gap. If, however, the export trade brought back 200 dollars' worth of imports the problem would still remain, because, although there would he 1,000 dollars in money, there would be 1,200 dollars' worth of goods on the American market.
Actually, of course, in real life the position is not quite as simple as in my example, since the American banks would require interest on their loan of, say, 10 dollars, which would have to be provided in the form of British exports; but 10 dollars' worth of British exports would be a very modest price to pay for 100 dollars worth of gift goods from America. There would also, of course, be a slight disproportion between money and goods on the American market—1,000 dollars in money and 1,000 dollars in goods; but a 10 dollar shortage would be a far less serious business than a shortage of 200 dollars.
The Bretton Woods Agreement is objectionable because it runs counter to the very practical recommendations for enlightened foreign trade which were laid down some time ago by the experts of the London Chamber of Commerce. The experts of the London Chamber of Commerce are perfectly well aware of the need to maintain stability between the exchanges, and they recommend that no private individual should be allowed to

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buy, sell or own foreign currencies, and also that currency rates of exchange should be fixed permanently by countries desiring to trade with one another without any reference to gold. That can perfectly easily be done, either by taking a number of articles in common use in the two countries and working out an average, or by taking the amount of money which is needed in the two countries to give a citizen in each of those countries approximately the same standard of living. They also recommended that if one country exported goods to another it should he paid by receiving a credit on that other country's goods or services to the value of the exports; and, if within a certain period that credit was not used, the debt should be regarded as cancelled. That is a perfectly business-like arrangement, but it is one which Bretton Woods would not allow.
There is also what I may term the "moral objection" to the American Loan which is very keenly felt in this country. If, in the future, we had to make tremendous sacrifices in order to help some nation much poorer than ourselves, there might be something to be said for it. But we are to make those sacrifices to help a nation which is, potentially, the richest nation in the world. It is, therefore, a very different matter indeed. Another objectionable feature in the Bretton Woods scheme is that not only will it involve us breaking our backs, in the future, sending away goods which our own citizens badly need, but, as an alternative, it offers payment in gold. In order to obtain that gold, again, our citizens would have to break their backs, sending goods to a gold-producing country—for example, Russia. When we got the gold and sent it over to America it would be of no use or value to American citizens, and in all probability it would merely be sterilized. Incidentally, to get the gold we might well be involved in cut-throat, wage-lowering competition with other debtor countries also striving to pay off their debts to America.
The Bretton Woods scheme would also tend to perpetuate a very unhealthy state of affairs with regard to British exports. Far too much importance is being attached, at the present time, to the question of exports. A country does not
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grow prosperous on the goods which it sends away, but on the goods which it produces for home consumption and on the goods which it imports. The point may perhaps be raised that exports are necessary to obtain imports, but that is only a part truth, because it overlook the "gift" goods situation, which I have just outlined, as a feature of the present economic system. Ideally, a nation would only export goods surplus to the requirements of its own citizens, and the Government should be careful, and more than careful, before they involve themselves in any undertaking which will force the people of this country to send away choice goods which they have made, and which, again, they themselves sadly need. Then we were told that one of the aims of the Bretton Woods scheme is to secure full employment. Full employment is impossible in an age of labour-destroying inventions. You can only get full employment during a war. If the Bretton Woods experts said they were out -to get maximum production and maximum satisfaction of human needs they would be showing more intelligence.
Then there is the very grave objection indeed that we are proposing to hand over the control of our economic life, in a very large measure, to a gang of representatives of Wall Street finance who are responsible to no one and are above every Government. America will have more votes on the Bretton Woods board of management, as it were, even than all the component parts of the British Empire put together and, either by economic bribery or by economic intimidation, it is obvious that her representatives will always be able to sway that body in whichever direction they desire.
Two rather contradictory points of view have been put forward in this House this afternoon. Sometimes we have been told that the American financial representatives are keen to do away with all trade barriers and to establish prosperity in every corner of the world. At other times, we are assured that they have driven a very hard bargain with us. Is it really reasonable to assume that the same men who drive a very hard bargain with us will not drive an equally hard bargain with all other countries of the world when they have got their heads into the Bretton Woods noose? The addiction of the Bretton Woods Fund to gold gives the lie to

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their claims to be world philanthropists. Even if you admit that Bretton Woods is not a return to the ordinary gold standard, in that we are not obliged to restrict our domestic money supplies by gold, the use of gold in regard to foreign trade is highly objectionable if a country exports goods and receives payment in gold it means that its citizens will have worked hard to produce useful goods for export and that all they will have got back in exchange is some useless yellow metal which they never see or own. Even if gold is used to purchase goods from another country, the citizens of that other country will have to hold the baby.
A very undesirable situation can also arise if a country imports goods, pays with gold and then exports other goods to that same country. Those exports give her a right to a claim on the other country's money, and she can use that claim to buy up the other country's industries or its newspapers, or to finance propaganda, possibly of a singularly poisonous kind. In other words, it gives a country the power to interfere in a wholly reprehensible way in the political and economic life of another nation. I greatly hope, therefore, that your Lordships will reject this plan. It has been suggested that if this House should do so it would provoke a constitutional crisis of the first magnitude. Possibly; I do not know. The Labour Government might feel tempted to punish us by political extermination, but even in that dire event, I would say that we at any rate will have gone down fighting for the deliverance of our country from economic servitude, and indeed for the protection of the whole world from the most impudent attempt history has ever known to establish an economic and financial dictatorship.
May I make one other point in conclusion? A good many members of this House apparently feel that while they cannot support Bretton Woods, yet for reasons' of national unity they ought not to oppose it here. There are occasions, and this is one of them, when the economic life of this country and the economic prosperity of this 'country are at stake for many years to come, and also, I fully believe, the economic freedom of the world, when even considerations of unity ought not to be held to be too important. We should do the right thing—take sides.
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If the scheme is a sound one, it should be supported. If it is an unsound one, it should be opposed.
8.0 p.m.
LORD KENILWORTH: My Lords, I rise to speak as one who has been engaged for many years in business. Examining these documents, and particularly the Agreement, it seems to me that they are the products of economists and financial experts lacking the touch of practicability which would have been given to them had business men of the capacity of the noble Lord, Lord Woolton. and others like him, been occupied in their preparation. In saving this, I appreciate, of course, the difficulties under which our representatives have had to work, and particularly the great services rendered by the British Ambassador, Lord Halifax, and Lord Keynes. But I feel that they were tackling an extremely difficult job.
The people with whom they were negotiating are the sort of people who, in the early difficult days, took over the Courtauld interest in America for a sum of money which was so ridiculous in comparison with the value of the business that it cost the British taxpayer nearly £30,000,000 to compensate Courtauld's for their property—nearly a year's payment of this new loan. It is also true that they are the same people who took over all our best securities in Canada and America, as has been mentioned by the noble Lord, Lord Woolton, and who gave us practically half their value. On reading through the Agreement, the word "loan" is always used in connexion with it, but it seems to me to be perfectly clear that they are opening a line of credit. As I understand it, you use it up as you go on, and therefore to say that we are only going to pay 1.62 per cent. interest, is, I can only imagine, based on the assumption that we get the whole sum of money immediately, and because we do not pay interest for five years, the real rate of interest comes to less than two per cent.
Turning to the terms of the Agreement, Clause 3 sets out the purpose of the Agreement, "to facilitate purchases by the United Kingdom of goods and services in the United States." This is the main condition. To my mind this entirely overlooks the fact that while we wish to buy the goods from the United States, the Americans also have to sell their goods, and for a great part of their export trade

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we are their best customers. In fact, where could they sell these goods unless they sell them to us—that is a great point which we want to bear in mind—or perhaps to some other country much less credit-worthy? Business is a many-sided affair. Manufacture and production is difficult and requires great enterprise and skill, but selling is also very difficult and troublesome. I find that in the years 1936 to 1938—and this bears on a question asked. this afternoon and upon which the Government has promised some information— the imports from the United States ran in this way: grain and flour, £6,700,000; fresh fruit £3,000,000; tobacco, £15,000,000; and cotton, £16,000,000. The way I look at it is this. We might have had to put up with difficulties at first, but in the course of time our own Colonies and Dominions could have produced the cotton and tobacco which we require. That has been emphasized in the debate this afternoon. Of course, we have taken a good quantity of goods from Canada, and in that respect the grain and flour figure is £23,000,000. From other British countries the figure for grain and flour is £18,000,000, for fresh fruit £16,000,000, and for cotton—here is one good point—£8,700,000. I ask, where could the United States sell these goods except to us? Again, large quantities of agricultural products have been brought into the country. We are turning ourselves into a first-class agricultural country again, and I think we ought to continue in that course. We created a wonderful industry in the rubber field in Malaya. Why cannot we create these other industries which to-day tie us hand and foot to the United States?
Mention has been made of machinery. As I see it, we have imported vast quantities of machinery, and our own machine tool trade has grown extremely strong. I think that the necessity for importing machinery will not exist in the future as it has done in the past. Mention has been made of the backward state of the cotton trade, and that it ought to be using new machinery. If it requires new machinery it could be produced here, because our industry makes the very best machinery which can be obtained. The same is true of coal-mining machinery. We are told that some of the best that can be produced is produced in this country, and that it is
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better suited to our conditions. I do not take a very bleak view of these matters.
LORD QUIBELL: Let us cheer up a bit !
LORD KENILWORTH: That is what I am trying to suggest is the proper way—to produce everything we can and reduce our imports. On this point I think a challenge should be definitely issued to the distributor trades. The distributing industry in this country has grown to an enormous extent, and I think we should insist on it selling British goods and not importing so much from abroad. That would certainly help. As I have tried to say, we should take our courage in our hands, and bear in mind the wonderful developments which are taking place in this country. Imperial Chemical Industries are spending £10,000,000, Dorman Long are spending over £8,000,000, and we know that Courtaulds are building works in various parts of the country. I feel quite certain that with a good effort, whereas the situation to-day looks bleak and difficult we can overcome it and not be slaves of the United States of America in perpetuity.
So far as the Bretton Woods Agreement is concerned, I should like to ask the Government and their experts if they can avoid the sort of thing which happened after the last war. I can remember going to America and being given three and a half dollars for one pound sterling. The teller in the bank who gave it to me said it was a rotten shame that I should be given that much money for a pound. Again, you went to Canada and were given a very little more. If the Bretton Woods Agreement will forbid that kind of thing in the future it is particularly welcome. I hope the Bretton Woods Agreement will scotch the international speculators in exchange. They are a dreadful lot of people; they take a currency and say, "We will put it down." They do so until they think it is at the right price, then they buy again and sell. That has been one of the features of the inter-war period. Take the differences that took place in the franc. It was not due to trade circumstances in the main, but to what I call international speculators in exchange. Therefore, if I can get a satisfactory answer in regard to the Bretton Woods scheme, I should be prepared to vote for it and to say it is one of the best things we could do in the circumstances.
8.11 p.m.
LORD TEYNHAM: My Lords, I have listened to a great number of long speeches, but I can assure your Lordships that I will be very brief and I hope to touch on one or two points not already raised. I cannot help thinking that the whole question of financial aid to this country must have been in the minds of the late Government some time before the end of the war. We have never heard what their proposals might have been, but it is inconceivable that some financial arrangement had not been considered a long time ago to tide the country over the difficult period after the cessation of Lend-Lease and the reduction in our export trade. I cannot see why the sudden cessation of Lend-Lease was considered by some people as a great shock and an unexpected happening. The position has always been quite clear, and I do not think its sudden cessation should have been considered as a contributory factor towards the financial difficulties in which we find ourselves at present.
I should like to know whether any approach was made by the late Government or by this Government to our partners in the Empire for financial assistance and arrangements. No doubt it was considered that we should receive very generous treatment from the United States, but, surely, it was considered necessary to have an alternative plan in case a good arrangement with the United States was not possible. It might have been possible to have devised a means by which the raw materials of the Empire might have been traded against a commercial loan. I do not know, but the! noble Lord, Lord Pethick-Lawrence, tells us that a straight loan was, in fact, requested.
LORD PETHICK-LAWRENCE: I did not say that; I said the matter was explored.
LORD TEYNHAM: It is true, of course, that without this proposed credit which we are now asked to vote for, the conversion of the bloc sterling of many members of the Empire would be delayed. But rather than face the possibility of the loss of Imperial preference—and I am not at all convinced, in spite of all the assurances we have had, that we shall not lose Imperial preference—the Empire would have rallied round us if an approach had been made to them many months. ago. In fact, Canada has offered
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her willing help. Owing to the lack of an alternative plan, we have now been forced into a tight corner, and I do not see we can do otherwise that accept this Financial Agreement. The only way in which this credit can be repaid is by America taking goods in exchange, but I see nothing in the Agreement to warrant that assumption. The only bright spot in it is the final settlement of the Lend-Lease account on terms which are very favourable to us. It is only fair to say that I believe the United States consider that in this settlement they have generously discharged their obligations to us, and that this Financial Agreement is a new factor which will stand on its own basis and must show substantial benefits to themselves apart from any assistance it may give to us.
Let us be frank about these matters. Consciously or unconsciously, there is a tendency in the United States to prefer to deal with the constituent members of the Empire rather than with the Empire as a whole, and to feel, perhaps, through this method, that there is a better outlet for their resources. Although friendly towards us and fully appreciative of our great efforts, I cannot help feeling that the people of the United States now have a tendency to consider this country of very small account. Their minds have turned towards the great problems in Asia and the rise of the new great Power in Eastern Europe. I cannot help feeling that this Financial Agreement, together with the Bretton Woods Commercial and Monetary Plan, is bound to cause a weakening of the bonds of Empire: If we are thrown into the vortex of free trade in our present condition, our standard of living in these islands may be depressed far more than if we had decided to weather the storm in our own family circle. The Liberals will no doubt hasten to cast their votes in favour of this Financial Agreement which brings to them the vision of world free trade. There is no doubt that these credit arrangements are a hard bargain for us, but the sands have run out and there is now no time left to consider an alternative plan. But I suggest it should not be lost sight of that an alternative plan may yet be necessary because we have no certainty that Congress is going to agree.
I do not propose to vote against the Motion because I feel that without an alternative plan this country might now

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be led into a catastrophe from which it might be difficult, or even impossible, to recover. Neither do I feel justified in voting for an Agremeent which I dislike and consider a bad bargain. Also, I wish to retain the right to criticize and endeavour to amend the various commercial and trade agreements which are bound to arise from this Agreement. To vote for this Motion would be to accept fully the monetary policy set forth. Mighty Empires of the past have been swept away through weaknesses which have developed after great wars, and hope we are not on the threshold of a similar catastrophe which might still be hastened by the financial and commercial agreements causing a strain on the financial link that binds our Empire together. Without the Empire we are certainly of very small account. I hope the people will realize the danger that exists before it is too late.
VISCOUNT MERSEY: My Lords, on behalf of my noble friend Lord Keynes, I beg to move that this debate be now adjourned.
Moved, That the debate be now adjourned.—(Viscount Mersey.)
On Question, Motion agreed to, and debate adjourned accordingly.

BUILDING MATERIALS AND HOUSING BILL.
Amendments reported. (according to Order). Then, Standing Order No. XXXIX having been suspended (in pursuance of the Resolution of December II) Bill read 3a, with the Amendments, and passed, and returned to the Commons.
ELECTIONS AND JURORS BILL.
Amendments reported (according to Order). Then, Standing Order No. XXXIX having been suspended (in pursuance of the Resolution of December II) Bill read 33, with the Amendments, and passed, and returned to the Commons:

WORKMEN'S COMPENSATION (PNEUMOCONIOSIS) BILL.
Read 3a (according to Order), and passed.
House adjourned at twenty minutes past eight o'clock.