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Orders of the Day — Clause 13. — (Short title, interpretation and repeal.)

Part of the debate – in the House of Commons on 22nd May 1928.

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Photo of Mr Hastings Lees-Smith Mr Hastings Lees-Smith , Keighley

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.