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I beg to move, in page 6, line 40, after the third word "day" to insert the words
not being earlier than the first day of January, nineteen hundred and twenty-nine.
One of the objects of the Clause as it stands is to fix the date on which this Bill is to come into operation. It says that it
shall come into operation on the appointed day, and the appointed day shall be such day.
Then I propose we should insert the Amendment which I have just read. Our object in moving this Amendment is to postpone the operation of this Measure for at least seven months. We have not put down this Amendment with the idea of delaying the coming into operation of the Measure, but in order to give time for the international meeting of central banks adumbrated at Genoa. We have not put the date later than 1st January, 1929, as we are aware that in an earlier Clause of this Bill there are financial proposals which depend upon the Measure coming into force before the end of the financial year. We believe seven months will allow time for the conference to be held and for the convention which it was proposed should be arrived at by the central banks. There has been a good deal of discussion about the Genoa Conference in the course of these Debates, and I have no wish to go over ground which has been covered perhaps more than once. But I do suggest that at Genoa there were two very important proposals which ought to be implemented before a Bill of this kind comes into operation. The first deals with the hand-
ling of international relationships through the gold exchange standard and, therefore, the husbanding of gold, and the second deals with the attempt to keep a stable level of prices through international banking action. At Genoa the right hon. Gentleman the Secretary of State for War used these words:
The power to influence prices and the responsibility for using that power belong to the great central banks. In currency policy they are the directing intelligence, and therefore the first practical step to be taken will be the meeting of these central banks which is to he called by the Bank of England. It may be hoped that the result of that meeting will be such co-ordination of credit policy throughout the world as will enable the great banks to make the general level of prices more stable.
I would ask the House to notice the words:
The first practical step.
The right hon. Gentleman went on to say his policy presupposed a general return to the gold standard—I want to be quite fair to the right hon. Gentleman—but, as a matter of fact, we have for practical purposes a general return to the gold standard. Very few countries are still outside it, and I do not think that affects the issue. Further, the right hon. Gentleman went on to say:
Nevertheless, in the interval before that general return has been completed the co-operation of the central banks can undoubtedly do much to introduce stability and confidence into the business.
It is our opinion that this conference of central banks ought to have been held long before this. If the coming into operation of this Measure be postponed for some seven months it will allow time for the conference, and for the conference to form a convention which will guide
the Bank of England and other banks in the future with regard to their currency policy. We should regard it as unfortunate, to say the least, if this Bill came into operation before there had been such a meeting of the central banks.
I beg to second the Amendment.
I do not propose to repeat what I said at an earlier stage, or to repeat what has just been said by my hon. Friend the Member for West Leicester (Mr. Pethick-Lawrence). It would be of great value to the House and to all persons who are interested in this discussion to have from the Secretary of State for War an assurance that it is the intention of the Government to call a conference of the central banks. He may have given that assurance, but it has not been given in my hearing. [Interruption.] No; well, that is what I feared, and if the right hon. Gentleman has not given an assurance I think this Amendment is amply justified, quite apart from the question of time, because it is of the utmost importance that the Government should assure us they are proposing to call that conference. I would ask, also, for a further assurance that they are proposing to have an inquiry into the form of our own system of central banking. I hope that the three Government representatives on the Treasury Bench who are consulting at the moment will be able to give us a most definite assurance on this particular point.
I have been asked whether the Government have given an assurance that we would call a convention—such a convention as was contemplated at the Genoa Conference. The Genoa Conference never suggested that the Government should call any such convention; on the contrary, one of its resolutions was that the Government should not interfere with the conduct of the central banks, and we have no intention of interfering with the conduct of the central banks. I have not got by me the actual words, but I think they were "at the opportune time" and they were to be called together by the Bank of England and not by any Government at all. Upon this Amendment a good deal has been said about the Genoa Conference, and certain observa- tions of mine have been quoted. It appears very singular to me how accurately I forecasted the future at that Conference. What did I forecast? I said that in the interval before that formal convention was arrived at there should be co-operation between the heads of the central banks. I see that the Governor of the Bank of England is reported as having only yesterday or the day before met Mr. Strong, the Governor of the Federal Reserve Bank of New York.
I do not know for what purpose he went, but it is clear that there has been co-ordination between the central banks. I cannot give the undertaking that has been asked for; on the contrary I do not intend to interfere in that matter. This Amendment is to provide that the appointed day shall not be earlier than the end of the year. I cannot forecast what the date will be, but I do not suppose it will be until the autumn because there are printing contracts and other things to wind up, and all that will have to be done. No reason has been given for tying the hands of the Government except this Genoa Convention, and I cannot influence that Convention at all. I cannot call it together, and it was not proposed that any Government should call it together. If that is the only reason for moving this Amendment, then I must ask the House to reject it.
On the Second Reading of this Bill, I pointed out that the Genoa Conference referred to a gathering of the central banks and an international convention to be called at a suitable time. We have been given no information on this point, and we have been given no information as to what the Bank of England is doing on this question. I thought the Secretary of State for War might have been able to inform us that the Bank of England were going to forward such a Conference, but evidently we are not going to got any information about it.
|Division No. 147.]||AYES.||[6.52 p.m.|
|Adamson, Rt. Hon. W. (Fife, West)||Hayday, Arthur||Ritson, J.|
|Adamson, W. M. (Staff., Cannock)||Henderson, Right Hon. A. (Burnley)||Roberts, Rt. Hon. F. O. (W. Bromwich)|
|Alexander, A. V. (Sheffield, Hillsbro')||Hirst, G. H.||Sakiatvala, Shapurji|
|Ammon, Charles George||Hirst, W. (Bradford, South)||Salter, Dr. Alfred|
|Attlee, Clement Richard||Hollins, A.||Scrymgeour, E.|
|Baker, J. (Wolverhampton, Bilston)||Hudson, J. H. (Huddersfield)||Shaw, Rt. Hon. Thomas (Preston)|
|Baker, Walter||Jenkins, W. (Glamorgan, Neath)||Shiels, Dr. Drummond|
|Barker, G. (Monmouth, Abertillery)||John, William (Rhondda, West)||Shinwell, E.|
|Barnes, A.||Johnston, Thomas (Dundee)||Short, Alfred (Wednesbury)|
|Barr, J.||Jones, J. J. (West Ham, Silvertown)||Sitch, Charles H.|
|Batey, Joseph||Jones, Morgan (Caerphilly)||Smillie, Robert|
|Bondfield, Margaret||Jones, T. I. Mardy (Pontypridd)||Smith, Ben (Bermondsey, Rotherhithe)|
|Broad, F. A.||Kelly, W. T.||Smith, H. B. Lees- (Keighley)|
|Bromfield, William||Kennedy, T.||Smith, Rennie (Penistone)|
|Bromley, J.||Kirkwood, D.||Snell, Harry|
|Buchanan, G.||Lansbury, George||Snowden, Rt. Hon. Philip|
|Cape, Thomas||Lawrence, Susan||Stamford, T. W.|
|Charleton, H. C.||Lee, F.||Stephen, Campbell|
|Cluse, W. S.||Lindley, F. W.||Sullivan, J.|
|Clynes, Rt. Hon. John R.||Lowth, T.||Sutton, J. E.|
|Compton, Joseph||Lunn, William||Thorne, W. (West Ham, Plaistow)|
|Connolly, M.||MacDonald, Rt. Hon. J. R. (Aberavon)||Thurtle, Ernest|
|Cove, W. G.||Mackinder, W.||Tinker, John Joseph|
|Dalton, Hugh||MacLaren, Andrew||Trevelyan, Rt. Hon. C. P.|
|Davies, Rhys John (Westhoughton)||Maclean, Neil (Glasgow, Govan)||Viant, S. P.|
|Day, Harry||MacNeill-Weir, L.||Wallhead, Richard C.|
|Dennison, R.||Malone. C. L'Estrange (N'thampton)||Watts-Morgan, Lt.-Col. D. (Rhondda)|
|Dunnico, H.||March, S,||Webb, Rt. Hon. Sidney|
|Gardner, J. P.||Maxton, James||Wellock, Wilfred|
|Gillett, George M.||Montague, Frederick||Westwood, J.|
|Gosling, Harry||Morrison, R. C. (Tottenham, N.)||Williams, David (Swansea, East)|
|Greenall, T.||Murnin, H.||Williams, T. (York, Don Valley)|
|Greenwood, A. (Nelson and Colne)||Oliver, George Harold||Wilson, R. J. (Jarrow)|
|Grenfell, D. R. (Glamorgan)||Palin, John Henry||Windsor, Walter|
|Groves, T.||Paling, W.||Wright, W.|
|Grundy, T. W.||Parkinson, John Allen (Wigan)||Young, Robert (Lancaster, Newton)|
|Hall, F. (York. W. R., Normanton)||Pethick-Lawrence, F. W.|
|Hall, G. H. (Merthyr Tydvil)||Potts, John S.||TELLERS FOR THE AYES.—|
|Hardie, George D.||Richardson, R. (Houghton-le-Spring)||Mr. Whiteley and Mr. T. Henderson.|
|Hartshorn, Rt. Hon. Vernon||Riley, Ben|
|Acland-Troyte, Lieut.-Colonel||Burman, J. B.||England, Colonel A.|
|Agg-Gardner, Rt. Hon. Sir James T.||Burney, Lieut.-Com. Charles D.||Erskine, Lord (Somerset, Weston-s.-M.)|
|Albery, Irving James||Burton, Colonel H. W.||Everard, W. Lindsay|
|Alexander, E. E. (Leyton)||Cautley, Sir Henry S.||Fairfax, Captain J. G.|
|Alexander, Sir Wm. (Glasgow, Cent'l)||Cayzer, Sir C. (Chester, City)||Fanshawe, Captain G. D.|
|Allan, J. Sandeman (L'pool, W. Derby)||Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)||Fenby, T. D.|
|Applin, Colonel R. V. K.||Cecil, Rt. Hon Sir Evelyn (Aston)||Fielden, E. B.|
|Ashley, Lt.-Col. Rt. Hon. Wilfrid W.||Cecil, Rt. Hon. Lord H. (Ox. Univ.)||Forestler-Walker, Sir L.|
|Astor, Maj. Hn. John J. (Kent, Dover)||Chamberlain, Rt. Hn. Sir J. A. (Birm., W.)||Forrest, W.|
|Atholl, Duchess of||Chamberlain, Rt. Hon. N. (Ladywood)||Foster, Sir Harry S.|
|Balfour, George (Hampstead)||Charteris, Brigadier-General J.||Fraser, Captain Ian|
|Balniel, Lord||Christie, J. A.||Gadie, Lieut.-Col. Anthony|
|Banks, Reginald Mitchell||Churchman, Sir Arthur C.||Galbraith, J. F. W.|
|Barclay-Harvey, C. M.||Cobb, Sir Cyril||Ganzoni, Sir John|
|Barnett, Major Sir Richard||Cochrane, Commander Hon. A. D.||Garro-Jones, Captain G. M.|
|Bellairs, Commander Carlyon||Cockerill, Brig.-General Sir George||Gates, Percy|
|Bentinck, Lord Henry Cavendish-||Conway, Sir W. Martin||Gilmour, Lt.-Col. Rt. Hon. Sir John|
|Berry, sir George||Cooper, A. Duff||Goff, Sir Park|
|Birchall, Major J. Dearman||Cope, Major William||Grace, John|
|Bird, E. R. (Yorks, W. R., Skipton)||Courthope, Colonel Sir G. L.||Graham, Fergus (Cumberland, N.)|
|Bird, Sir R. B. (Wolverhampton, W.)||Cowan, D. M. (Scottish Universities)||Grant, Sir J. A.|
|Blundell, F. N.||Cowan, Sir Wm. Henry (Islington, N.)||Greenwood, Rt. Hn. Sir H.(W'th's'w, E)|
|Boothby, R. J. G.||Craig, Sir Ernest (Chester, Crewe)||Griffith, F. Kingsley|
|Bourne, Captain Robert Croft||Crooke, J. Smedley (Deritend)||Grotrian, H. Brent|
|Brass, Captain W.||Crookshank, Cpt. H.(Lindsey, Gainsbro)||Guinness, Rt. Hon. Walter E.|
|Brassey, Sir Leonard||Culverwell, C. T. (Bristol, West)||Hacking, Douglas H.|
|Briant, Frank||Curzon, Captain Viscount||Hall, Capt. W. D'A. (Brecon & Rad.)|
|Briggs, J. Harold||Dalkeith, Earl of||Hamilton, Sir George|
|Briscoe, Richard George||Davidson, Rt. Hon. J. (Hertford)||Hamilton, Sir R. (Orkney & Shetland)|
|Brittain, Sir Harry||Davidson, Major-General Sir John H.||Hammersley, S. S.|
|Brocklebank, C. E. R.||Davies, Sir Thomas (Cirencester)||Harmon, Patrick Joseph Henry|
|Broun-Lindsay, Major H.||Davies, Dr. Vernon||Harney, E. A.|
|Brown, Col. D. C. (N'th'l'd., Hexham)||Davison, Sir W, H. (Kensington, S.)||Hartington, Marquess of|
|Brown, Brig.-Gen. H. C. (Berks, Newb'y)||Dean, Arthur Wellesley||Harvey, G. (Lambeth, Kennington)|
|Brown, Ernest (Leith)||Dixey, A. C.||Harvey, Major S. E. (Devon, Totnes)|
|Buchan, John||Edge, Sir William||Haslam, Henry C.|
|Buckingham, Sir H.||Edmondson, Major A. J.||Headlam, Lieut.-Colonel C. M.|
|Bull, Rt. Hon. Sir William James||Edwards, J. Hugh (Accrington)||Henderson, Lieut.-Col. Sir Vivian|
|Bullock. Captain M.||Elliot, Major Walter E.||Heneage, Lieut.-Colonel Arthur P.|
|Hennessy, Major Sir G. R. J.||Morrison-Bell, Sir Arthur Clive||Smith, R. W. (Aberd'n & Kinc'dine, C.)|
|Herbert, Dennis (Hertford, Watford)||Nail, Colonel Sir Joseph||Smith-Carington, Neville W.|
|Hilton, Cecil||Nelson, Sir Frank||Smithers, waldron|
|Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.||Neville, Sir Reginald J.||Somerville, A. A. (Windsor)|
|Hohler, Sir Gerald Fitzroy||Newman, Sir R. H. S. D. L. (Exeter)||Spender-Clay, Colonel H.|
|Hope, Capt. A. O. J. (Warw'k, Nun.)||Newton, Sir D. G. C. (Cambridge)||Stanley, Lieut.-Colonel Rt. Hon. G. F.|
|Hopkinson, Sir A. (Eng. Universities)||Nield, Rt. Hon. Sir Herbert||Stanley, Lord (Fylde)|
|Hopkinson, A. (Lancaster, Mossley)||Nuttall, Ellis||Stanley, Hon. O. F. G. (Westm'eland)|
|Hudson, Capt. A. U. M.(Hackney, N.)||O'Connor, T. J (Bedford, Luton)||Steel, Major Samuel Strang|
|Hume, Sir G. H.||Owen, Major G.||Strauss, E. A.|
|Hurd, Percy A.||Penny, Frederick George||Stuart, Crichton-, Lord C.|
|Hurst, Gerald B.||Percy, Lord Eustace (Hastings)||Stuart, Hon. J. (Moray and Nairn)|
|Hutchison, Sir Robert (Montrose)||Perkins, Colonel E. K.||Sugden, Sir Wilfrid|
|Inskip, Sir Thomas Walker H.||Perring, Sir William George||Templeton, W. P.|
|James, Lieut.-Colonel Hon. Cuthbert||Peto, G. (Somerset, Frome)||Thorn, Lt.-Col. J. G. (Dumbarton)|
|Jones, Sir G. W. H. (Stoke New'gton)||Pilcher, G.||Thomas, Sir Robert John (Anglesey)|
|Kennedy, A. R. (Preston).||Pilditch, Sir Philip||Thompson, Luke (Sunderland)|
|King, Commodore Henry Douglas||Pownall, Sir Assheton||Thomson, F. C. (Aberdeen, South)|
|Kinloch-Cooke, Sir Clement||Preston, William||Thomson, Rt. Hon. Sir W. Mitchell-|
|Knox, Sir Alfred||Price, Major C. W. M.||Thorne, G. R. (Wolverhampton, E.)|
|Lamb, J. Q.||Radford, E. A.||Tinne, J. A.|
|Lane Fox, Col. Rt. Hon. George R.||Raine, Sir Walter||Titchfield, Major the Marquess of|
|Locker-Lampson, G. (Wood Green)||Ramsden, E.||Tomlinson, R. P,|
|Loder, J. de V.||Rawson, Sir Cooper||Tryon, Rt. Hon. George Clement|
|Looker, Herbert William||Reid, D. D. (County Down)||Turton, Sir Edmund Russborough|
|Lougher, Lewis||Remer, J. R.||Vaughan-Morgan, Col. K. P.|
|Luce, Maj.-Gen. Sir Richard Harman||Rentoul, G. S.||Waddington, R.|
|Lynn, Sir R. J.||Rhys, Hon. C. A. U.||Warner, Brigadier-General W. W.|
|MacAndrew, Major Charles Glen||Richardson, Sir P. W. (Sur'y, Ch'ts'y)||Warrender, Sir Victor|
|Macdonald, Sir Murdoch (Inverness)||Robinson, Sir T. (Lanes., Stretford)||Watson, Sir F. (Pudsey and Otley)|
|Macdonald, Capt. P. D. (I. of W.)||Rodd, Rt. Hon. Sir James Rennell||Watson, Rt. Hon. W. (Carlisle)|
|Macdonald, R. (Glasgow, Cathcart)||Ropner, Major L.||Wayland, Sir William A.|
|McDonnell, Colonel Hon. Angus||Ruggles-Brise, Lieut.-Colonel E. A.||Wells, S. R.|
|Macintyre, Ian||Russell, Alexander West (Tynemouth)||Wiggins, William Martin|
|McLean, Major A.||Salmon, Major I.||Williams, A. M. (Cornwall, Northern)|
|Macnaghten, Hon. Sir Malcolm||Samuel, A. M. (Surrey, Farnham)||Williams, C. P. (Denbigh, Wrexham)|
|Macpherson, Rt. Hon. James I.||Samuel, Samuel (W'dsworth, Putney)||Williams, Herbert G. (Reading)|
|Macquisten, F. A.||Sandeman, N. Stewart||Wilson, Sir C. H. (Leeds, Central)|
|Makins, Brigadier-General E.||Sanders, Sir Robert A.||Wilson, R. R. (Stafford, Lichfield)|
|Margesson, Captain D.||Sanderson, Sir Frank||Windsor-Clive, Lieut.-Colonel George|
|Marriott, Sir J. A. R.||Sassoon, Sir Philip Albert Gustave D.||Winterton, Rt. Hon. Earl|
|Merriman, Sir F. Boyd||Scott, Rt. Hon. Sir Leslie||Withers, John James|
|Meyer, Sir Frank||Shaw, R G. (Yorks, W.R., Sowerby)||Womersley, W. J.|
|Milne, J. S. Wardlaw-||Shaw, Lt.-Col. A. D. Mcl. (Renfrew, W)||Wood, B. C. (Somerset, Bridgwater)|
|Mitchell, S. (Lanark, Lanark)||Sheffield, Sir Berkeley||Wood, E. (Chest'r, Stalyb'dge & Hyde)|
|Mond, Rt. Hon. Sir Alfred||Shepperson, E. W.||Wood, Rt. Hon. Sir Kingsley|
|Monsell, Eyres, Com. Rt. Hon. B. M.||Simms, Dr. John M. (Co. Down)||Worthington-Evans, Rt. Hon. Sir L.|
|Moore, Sir Newton J||Simon, Rt. Hon. Sir John|
|Morris, R. H.||Sinclair, Major Sir A. (Caithness)||TELLERS FOR THE NOES.—|
|Morrison, H. (Wilts, Salisbury)||Slaney, Major P. Kenyon||Captain Bowyer and Captain Wallace.|
I feel that the discussions in Committee and on the Report stage have justified the hostility we have shown to this Bill, and I propose to take this opportunity of explaining where we think that these Debates have shown the central weakness of this Bill to be. We can explain it now more easily than over an extended series of Amendments. As the Secretary of State for War has pointed out, the purpose of a gold reserve is two-fold. It is a reserve for the internal note circulation, and it is a reserve against the possibility of a demand for gold from abroad. For the purpose of the reserve against our internal note circulation, the amount we require is legally and logically nothing at all, and, in fact, a comparatively small amount, because the withdrawal of gold in return for notes is forbidden by law; whereas the real and effective demand for gold that may be made is the demand that may come from abroad, and has to be met by the sending of gold abroad. The question is, of this total gold holding of £160,000,000 which we possess, how much have we set aside for these two purposes? The figures, which have been quoted from the Government Bench, enable one to answer that question. The figures broadly are these. The note circulation at any moment is roughly £370,000,000 to £380,000,000. The fiduciary circulation is £260,000,000. That leaves £110,000,000, which the fiduciary circulation does not cover, and against that, of course, there has to be a holding of gold, so that the result is, that out of the total holding of £160,000,000, £110,000,000, or more than two-thirds, is set aside to meet the contingency which will not occur, and only between £40,000,000 and £50,000,000 of gold is set aside to meet the demand from abroad which can occur, may occur and inevitably will occur. That is the weakness of the Bill, and it is on account of that weakness that it has shown all the confusions and difficulties which the series of Amendments that have been moved have in vain tried to untangle.
On the Third Reading, I would like to go for a few moments into those questions where figures are not required, and to ask the attention of the Government about some suggestions which have been made from the other side of the House as frequently as they have been made from this. Practically every speaker who has dealt with the subject at all has agreed that it is not right to give these enormously extended powers to the Bank of England without an inquiry, if not before the passage of the Bill as we have suggested, at any rate after the passage of the Bill as has been suggested from the opposite benches, to determine whether the constitution of the Bank is such as to enable it to carry out these functions with fairness to all sides concerned. The right hon. Member for Norwich (Sir H. Young) asked for an inquiry, because he said he thought it would be very unsuitable to have a court merely consisting of a collection of interests, and that the present constitution of the Bank gave us a body which was almost ideally impartial between different interests. It is not a question of interests; it is a question of points of view. I do not very often have to go into the City, but, when I do, I get the impression that I am seeing a point of view of those who seem to live in a world of their own, which is alien—whether you are talking of capital or labour—to the great. productive forces which are active in the creation of our actual wealth. The point of view of finance ought to be represented, but there ought to be an expression of the point of view of industrialists, which, I see, the right hon. Member for Carmarthen (Sir A. Mond) has come here to express, to whom these decisions will mean the difference between profits and loss, and the point of view of the workers, to whom these decisions will mean the difference between penury and employment. I add what, I believe, will be above all in a few years, the point of view of the State, to whom it is important, when the supply of credit is limited, that that credit should be concentrated on purposes which are a national advantage and not wasted, dissipated and diverted for purposes which are useless or even socially noxious.
May I take up an observation made by the Secretary of State for War during a discussion on the last Amendment but one? My right hon. Friend the late Chancellor of the Exchequer suggested that these requisites would be met if the Bank were a public corporation from which every element of private profit would be eliminated, and which would act simply as a trustee for the nation as a whole. The Secretary of State for War attempted to prove that this was a view on which there was a division on this side of the House. He said it was not nationalisation, and that quite other opinions were expressed as you got further up the benches on this side of the House. I really think he does not understand the proposals which we put forward on this side of the House. I am really not very much concerned about what names you call various proposals. To my mind, wherever you have a body owning an industry on behalf of the State, that is what I call nationalisation and, if once that is the case, the question whether that body should be a Department, like the Post Office, or a public corporation, like the British Broadcasting Corporation, is simply a question of adjusting your mechanism to the service you are dealing with at the moment, and it, raises no question on which there is the slightest difference of principle anywhere on the benches on this side of the House.
There was one further remark which the Secretary of State for War made when he was dealing with the last Amendment. He said that there must be no Government interference, and I deal with that for a moment, because I notice that his statement was received with a good deal of obvious sympathy from the hon. Members who are supporting him. Nobody supposes that, under any scheme, the Government or this House would interfere with the ordinary administration of the Bank of England, but, when it comes to the decision of great issues on which the future of industry depends, obviously the Government and this House are entitled, and must be allowed, to exercise control and supervision. This very Bill acknowledges it. Look at this Bill. What does it propose? If the Bank of England wishes to increase its fiduciary issue, it has gut to obtain the permission of the Treasury represented by a Minister responsible to this House. Government interference! Papers have to be laid on the Table of the House, and can be debated at the instance of any one Member of the House. More Government interference! If the system lasts for two years a Bill in all its Clauses must be carried through all its stages in this House. Government interference to a supreme degree! This slogan about Government interference is answered in the terms of the Bill itself. No, the question which divides us, although it is a deep question, is not a question of Government interference. It is a question which goes practically to the foundations of our political beliefs. We are now beginning to see what people as a whole are beginning to see, that these decisions about national credit are decisions of life and death. They are decisions which affect the fate of industry for years. These decisions made in the parlour of the Bank are more important than the majority of Bills we spend days in carrying through this House. Therefore, our attitude is that these decisions must be in the hands not of this House but of some body which contains some of the elements which this House are here to represent, whereas the attitude which the party opposite insists on maintaining, is that these decisions should be left in the hands of an oligarchy representing merely finance, an oligarchy self-contained, self-renewing, self-satisfied, which refuses to acknowledge that it has anything to learn from the co-operation of the great productive elements on which the wealth of this nation depends.
I do not want, at this stage of the proceedings on the Bill, to detain the House for very long, but I do think that it is important that one of the joint signatories of the resolutions which were passed by the Industrial Committee of the General Council of the Trades Union Congress and the committee of the employers' group, who are now considering the important question of the relations of labour and capital, should emphasise the memorandum which they submitted to the Chancellor
of the Exchequer some time before the Bill was introduced. The hon. Member for Keighley (Mr. Lees-Smith) laid great stress on a point which also formed the subject of our concurrence and of our joint resolutions. The resolution at which we arrived was:
That under the special conditions in which the gold standard operates at the present time we are not convinced that it is either practicable or desirable that the credit policy of the country should be determined more or less automatically by gold movements as in pre-War days.
That it is highly undesirable that the Bank of England should be so tied down by the provisions of a gold reserve law as to be unable fully and freely to co-operate in the plans adopted by this country and the rest of Europe at Genoa in 1922, for international co-operation in economising the use of gold, regulating its distribution, and preventing undue fluctuations in its value in terms of wealth.
That it is therefore essential to hold a full inquiry into the best form of credit policy for this country before steps are taken by the Government.
The Government in their wisdom have chosen to present this Bill, and it will undoubtedly be passed. All of us are, of course, well aware of the necessity for settling the currency question. The resolution which I have just read represents a very carefully considered opinion, and one which I think is unique, for I think that this is the first time that representatives of employers and workmen have considered a question which used to be regarded as the sole prerogative of financial experts and bankers, and have deliberately laid down their view that it is necessary, having regard to the state of industry, to inquire fully and completely into the whole of our banking system and the operation of the Bank Charter Act, 1844; and I hope that the Government will reconsider the view that they have taken on this matter. I heard it suggested during the Second Reading Debate that, if we began to throw doubts on the operation of the gold standard, we should begin to throw doubts on our financial stability, but I think that that is a very foolish kind of fear for a financially powerful nation like Great Britain to entertain in connection with a matter that is most vital for the solution of our industrial difficulties and social problems.
Perhaps only slowly, the realisation has come to those who have had to deal with these difficulties, and with all the questions connected with the expansion of trade, the relief of unemployment, the regaining of markets, and all the operations of commerce, which are inextricably bound up with the financial policy pursued by the central institution, the Bank of England; but it is useless to ask the employer or the technician to reorganise his works and improve his processes, and it is perfectly idle to ask the worker to make sacrifices or to redouble his efforts, if, every time a movement comes along or an improvement is made, there are people who, as the hon. Member for Keighley has just said, visualise the matter from an entirely different angle, who seem to be possessed rather by a terror of improving trade than by a desire to improve it, and you find credits contracted just at the time when they ought to be extended. That renders it almost impossible to conduct a policy with any continuity. I certainly think that an inquiry should be held into the whole question of the constitution of those who control what is, after all, the nerve system of industrial and commercial life.
The Chancellor of the Exchequer, in his Budget speech, did refer to the greater elasticity which this Bill would allow, and I take it that he was then referring to Clause 3 of the Bill, which does allow the holding of securities by the Issue Department to a value sufficient to cover the fiduciary note issue for the time being. I see that in Committee on the Bill some discussion took place as to what the term "securities" meant, and from the Government side the statement was made that mercantile bills would be included among those securities. I think it is extremely important that that statement, which was made in Committee, should be repeated by my right hon. Friend when he speaks on the Third Reading in this Debate in the House. It is an important point which to some extent goes to meet some of the criticisms which have been, not unfairly, lodged against this Bill on the ground of its too narrow measure and its too great exhaustion of our gold reserves, and that statement, which was made by a representative of the Government in Committee, would come with much greater force from my right hon. Friend on the Floor of the House. It has some hearing on the statement made by the hon. Member for Keighley with regard to the question of the future size of our gold reserve. It is obvious that, if an increased fiduciary note issue were covered by securities which were not gold, it would automatically increase our gold reserve.
During these Debates, as is not infrequently the case when matters are very much interwoven, there has been at times some mental confusion on the question of credit based on gold reserves and on the question of currency restriction. Of course, they are not the same. Currency restriction may be an inconvenience, but it does not necessarily mean restriction of credit. Credit undoubtedly, under our present system, which many of us think is little adapted to our present commercial life, depends upon gold reserves, and the more, therefore, the fiduciary note issue is increased, thereby bringing into play securities in place of gold, the more the gold reserve is increased, and, therefore, the more credit the Bank has at its disposal, and the more easily it is able to withstand any drain of gold. It does seem extraordinary that, with a commerce extending into thousands of millions, we should be discussing in this House to-day the question of £10,000,000 more or less in connection with the note issue. It is out of all proportion to the commercial transactions that we are undertaking.
I am glad that the Government have not seen their way to accept some of the Amendments which have been put down, particularly those which appear to suggest the limitation of the fiduciary note issue at a point even below what experience has shown to be necessary. We can only hope that the assurance which has been given that the Bank will consider an application for permission to increase the fiduciary issue will not be looked upon as some exceptional and quite extraordinary occurrence, which is only to be used in a time of great crisis. By doing that we are more likely to produce a crisis. We hope that this power will be used in such a manner as to meet the necessary requirements of the banks for currency needs.
Although this Bill will undoubtedly go on to the Statute Book, it cannot be the end of this great problem, nor can the Government entirely disembarrass itself of responsibility on the matter by handing it over to the Governor of the Banff: of England. I am by no means an advocate of government interference in business matters, but this is not a matter of private concern; it is a matter which really goes to the root of our whole commercial existence, and, although nominally the Bank of England is a private corporation, which makes profits in the ordinary way, and although it is inadvisable for many reasons that the State should be a bank, the relations between the Treasury and the Bank of England are as a matter of fact notoriously so close that it is quite impossible to regard them as in fact two entirely separate entities. I, therefore, hope that, before we part with this Bill, the right hon. Gentleman will be able to give us some kind of assurance that this very vital problem is not going to be lost sight of, and that we need not be afraid, as many seem to be, that our financial structure is so weak that anything that may be done in this direction will cause a panic. It is most vital that there should be such elastic conditions as will enable the Bank of England to play its proper part in what we all hope to see coming, namely, revival of prosperity in the industries of Great Britain.
I am sure that the House will welcome the speech which we have just heard from the right hon. Gentleman the Member for Carmarthen (Sir A. Mond). His support of the point of view which has been pressed from this side of the House does, I think, constitute the complete case for the inquiry for which we have been asking. During the Committee stage I did endeavour to produce high financial authority for the statement that the figure of £260,000,000 which has been chosen was insufficient for our present purposes. I do not want to go over that ground again to-night, nor do I want to attempt to dogmatise with regard to the figure, but I do once more express the hope that the Government will see the desirability of having the most thorough-going inquiry into our central Bank. The point, however, that I want to submit to the Financial Secretary to the Treasury at this moment is with regard to a- matter which, though it may not be of major importance, is one of considerable importance to the poor people with whom I am associated.
As I understand it, under the existing arrangement which is being discontinued by this Bill, some thousands of Treasury notes are handed in to the Post Office owing to their mutilated condition, and claims in respect of mutilated and lost notes are dealt with by the Accountant-General's Department at the General Post Office. I am assured that many of these claims are dealt with on the basis of an ex gratia payment, and that such ex gratia payments are subsequently made under a Treasury Vote which I believe deals with Inland Revenue matters. It seems to be perfectly clear that most of these cases refer to what might be called losses on the part of very poor persons, who do not hold accounts with the joint stock banks, and whose only contact with the central Bank will be through the local post office. The point that I want to submit to the Financial Secretary is a simple one. In any case in which a poor man or woman is unfortunate enough to mutilate or lose a note in circumstances which to-day would lead to a complete refundment by the Accountant-General of the Post Office, is there any proposal to set up or continue such machinery as will place that poor person in a position of equality with the more fortunately placed man or woman who happens to be a customer of one of the joint stock banks, through which, presumably, future contact with the Bank of England will be made? I know that it does not amount to a large sum of money in the total, but I do think that, having regard to the poverty of the persons concerned, and to the great social advantages of the present arrangement, some steps should be taken to continue such an arrangement.