Clause 1. — (Power of Treasury in certain circumstances to set up Clearing Offices.)

Orders of the Day — Debts Clearing Offices and Import Restrictions Reprisals Bill. – in the House of Commons on 26th June 1934.

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3.39 p.m.

Photo of Mr David Mason Mr David Mason , Edinburgh East

I beg to move, in page 1, line 6, after "if," to insert: at any time prior to the first day of July, nineteen hundred and thirty-five. This Amendment seeks to limit the duration of the Bill to a period of one year. Some of my colleagues were disposed to oppose the Bill yesterday, but out of respect to the appeal of the Chancellor of the Exchequer, supported by my right hon. Friend, that it is necessary that something should be done at this stage to mark the crisis in regard to debts owing by Germany we abstained from taking any action and not from any love for the Bill. There was not a single speech yesterday, with the exception of that of the Chancellor of the Exchequer, which expressed support of the Bill. He himself hoped that the Bill would not become operative. It might reasonably be asked why should a body like this support a Bill for which no one has any love and many regard as not calculated to advance the object which the Bill is supposed to have in view, namely, to increase our trade and to be assured of the probability of the interest on the debt being paid. Therefore, it seems right to many of us that we should try and limit the mischief by asking the Committee to support-an Amendment limiting the operation of the Measure to the period of one year.

It may be of interest to the Committee, as showing that it should not have been possible for this Bill to be brought in with the object of ensuring the possibility of Germany resuming the payment of debt, to know that the Dawes Loan, for example, may be refunded next year. Assuming that a satisfactory solution is arrived at in these negotiations, as we hope will be the case, I look to a considerable rise in the price of that loan and an improvement in the credit of Germany. Instead of a Bill of this character being brought in at this stage something might have been done to help to bring nearer increased trade relations with Germany which we all desire and also to help to ensure that there will be no question in the future of the service of the loan being short. It is most important that this Committee should give an indication of that desire by limiting the period to 12 months as a gesture to Germany that this country does not wish to engage in reprisals and to use weapons to retard trade, but rather to do everything possible to get rid of restrictions on all sides, quotas and so forth, in order to facilitate and increase our trade with Germany.

With reference to the question of the conversion of the debt, Germany is naturally very anxious to reduce, if she can, the interest on that debt, and negotiations will take time. Therefore, it is essential to facilitate that matter by creating a state of affairs which will enable her possibly to bring about a conversion scheme. I believe many investors who hold the bonds would much rather have a certain 5 per cent. than an un- certain 7 per cent., and when Germany sees other countries converting their debt she feels very much aggrieved at the very heavy burden of the 7 per cent. loan. It may possibly be argued that she attempted in the most stupid way to improve her credit by threatening default and proceeding by this clumsy method to precipitate a crisis by default. I recently visited Germany and I had an opportunity of meeting authorities there. I met Dr. Schacht and I discussed the problem with him, and it may interest the Committee to know that the two things he desired were, increased trade with this country, and a conversion scheme for the debt. I suggested to him—I was not there in an official capacity but as an ordinary Member of Parliament—that the method Germany had adopted of seeking to bring about the conversion of debt was the least calculated to effect that purpose.

There were three things she ought to do to facilitate a better atmosphere. There ought to be a cessation of her anti-Jewish campaign. No country anxious to convert her debt could afford to go out of her way to antagonise that very important financial power, and I was assured by authorities there that the campaign would cease. I hear some hon. Members scoff at that, but the impression conveyed to me—and I tried to appeal to their sense of right—was that it was essential to try and conciliate that Jewish power and cease their foolish policy, come in with us on disarmament, and return to the League of Nations. All these things are possible if we can limit the duration of the operation of this Bill for 12 months. I believe that there is a disposition of the best opinion in Germany to come to an amicable settlement. It was pointed out to me that any proposal should come from the creditor. If some proposal had been made to reduce the rate of interest possibly a settlement might have been arrived at and default avoided, and the Bill would not have become necessary. I appeal to the Financial Secretary to the Treasury to be good enough to consider the idea of the limitation of time. It is not a great concession. If it should become necessary to extend the time it would be a simple matter to bring in the Measure again. The Chancellor of the Exchequer expressed the opinion that it might not be necessary even for the Bill to operate, and if the British Government at this stage could make a gesture that we did not propose to proceed with the operation of the Measure beyond the year, I believe that it would help very considerably to bring about an honourable and an amicable settlement.

3.49 p.m.

Photo of Captain Richard Evans Captain Richard Evans , Carmarthen

I urge the acceptance of the Amendment on the ground that the clearing office arrangements are obviously intended for a specific purpose. I would not lend support to an Amendment of this character limiting the duration of the operation of the Bill were it proposed to set up a whole system of clearing houses in order to facilitate trade under the exchange conditions of the present moment. Some of us have felt for a considerable time that some sort of system of this kind would have to be implemented if international trade were to be carried on at all. You have a whole tangle of debts, and, apart from cutting away completely from that tangle and starting afresh, it is clear that some sort of system will have to be devised. That is not the object of this Bill. It has a restricted object; it is meant to deal with the Anglo-German situation. I am certain that some hon. Members would not have given it their support yesterday if it had been aimed at Russia. We ought not to legislate according to our prejudices.

In view of the possible repercussions Parliament ought to retain control. One can envisage all sorts of entanglements and dangerous reactions. If Germany, for example, at the conference refuses to operate a bilateral clearing house system great harm may be done to traders in this country; they may have their property in Germany impounded. This is an experiment, and I have no objection to it on that ground, but I feel that there is a real danger in the Government, on the plea of an emergency, taking powers which they can exercise long after the emergency has passed. Let us make no mistake. With the exchange situation as it is, with tariffs and quotas, and all sorts of restrictions being placed on international trade, we are in this Bill asking for a new weapon in economic armaments. We were told yesterday that 29 countries have imposed exchange restrictions and 23 countries have imposed discriminatory duties, and, therefore, with the world situation what it is, I can understand a weapon of this kind becoming a real menace.

We are not asking too much by the Amendment. We do not want to hamper the Government. This country has been generous to other countries almost to the point of being quixotic. Germany is not the only country that has defaulted, but she has done so in a way with which it is easier to effect reprisals. British bondholders were rather shabbily treated by France when she wiped off four-fifths of her indebtedness. It is clear that the Government must take strong action. I hold no brief for the German Government, I am not asking for easy terms. Britain must put up a stand for her rights. But I do want Parliament to assert its claim to review these terms in the light of our experience of the operation of the Bill.

3.53 p.m.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

I desire to support the Amendment, but first of all I must ask the Financial Secretary a question as regards our procedure. I want to ask whether, in view of the fact that the Report stage and Third Reading are to be taken this evening, it is possible for the Government to accept any Amendments to the Bill? Are we not merely exercising the futile function of discussing the Bill when the Government cannot accept any Amendments whether they are desirable or not. It would assist the Committee if we could have an answer to that point. As regards the Amendment, it is an attempt to limit the period of operation of the machinery of the Bill. It appears to me that where you are setting up machinery avowedly to deal with an emergency it should be limited to the emergency with which it is required to deal. You have no right to force arbitrarily through this House a Bill of a general character in order to deal with a specific event. It is a precedent of considerable danger, if merely because some particular action is required as a result of a particular event, the Government adopt special means of getting a Bill through the House covering a wide area quite unconnected with the particular emergency.

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

The hon. and learned Member is elaborating his point at some length, the answer to it will presumably be equally long. I think there- fore it would be better for him to move to report Propress if he requires an answer to it.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

I desire the Bill to be limited by the insertion of the Amendment. Wide powers are being given to the Government under Clause 1—

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

I understood that the hon. and learned Member was dealing with the point which he has raised, as to the further stages of the Bill; if he is not going to say any more on that, I do not propose to intervene.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

I am sorry that I did not make it clear that I had departed from that Parliamentary point. As regards the other and more important question, I was dealing with the necessity for limiting the operation of this Clause to the immediate period of time in which the emergency is likely to arise, and the danger of passing a general resolution on the excuse that an emergency of a particular character has arisen, may be taken as a precedent for future Parliamentary action. A future Government, whatever it may be, will be able to say: "Here is an emergency of a particular kind, and we propose to legislate perfectly generally, not merely to cover the emergency but to cover all other matters which may conceivably be useful "—Clause 2 of the Bill admittedly has no connection with the emergency at all; it gives general powers—and, having said that, to force a Bill through the House of Commons without proper or full opportunity for the House to consider it or for people outside to allow their views to be reflected within the House. I ask the Financial Secretary to consider that aspect of the case, and, as a matter of precedent, not to allow a general Bill of this kind to go on the Statute Book in order to deal with a specific emergency.

Photo of Viscount  Turnour Viscount Turnour , Horsham and Worthing

While I do not agree with hon. Members who have supported the Amendment, I do think it is a very grave disadvantage to embark on a parliamentary discussion on a Bill of this kind, which has some provisions which can be regarded as emergency provisions and others which are of a less emergency character, if we are met by the situation that it is impossible for mechanical reasons or under the Rules of Procedure, to move Amendments. As an old Member of the House, I fear the effect of certain things which have grown up in recent years. Could the Financial Secretary give us an assurance that, if there be any Amendment which the Government are prepared to accept, the Report stage and Third Reading will be taken to-morrow?

4 p.m.

Photo of Sir Geoffrey Mander Sir Geoffrey Mander , Wolverhampton East

I want to say a word in support of this Amendment from the point of view of one who thinks that this Bill is absolutely necessary, and that the Government were right to introduce it., I hope to be permitted to elaborate the reasons why I think it is necessary to bring in this Bill on the Question "That the Clause stand part," but it does seem to me that as we are dealing now with a specific and definite case without which the Bill would never have been introduced, the effect would be much more dramatic on this occasion and on other occasions if a special Bill had to be brought in for the purpose. Cases of this sort are not often likely to arise in the history of this country, but when they do I should have thought that we could have obtained our object better by introducing a Bill for that definite purpose, with all the publicity and debate which would take place. The effect on Germany, I should have thought, would be far more likely to be affected by introducing the Bill in a dramatic way, rather than relying on a Clause in an old Act. It is because I want to see the weapon of economic sanction used in specific cases that I think it would strengthen the object we have at heart if this Amendment were accepted.

4.2 p.m.

Photo of Mr Neville Chamberlain Mr Neville Chamberlain , Birmingham, Edgbaston

The hon. and learned Member has spoken of an emergency, but I think that we must distinguish between what we commonly call an emergency and the special circumstances, as I should prefer to call them, which have induced us to introduce this Bill. Emergency in the ordinary acceptation of the term, or, at any rate, in its ordinary use, is something which has occurred, but is not expected to occur again. But can we assure ourselves that, in the absence of any powers such as we propose to take in this Bill, similar circumstances may not arise in the future which would require similar treatment? I confess that I feel no such confidence either in respect of the powers required in Clause 1 or those required in Clause 2, and although the hon. Member who has just spoken has suggested that it is much more effective and dramatic to introduce ad hoc legislation as occasion arises, I think he would agree that it is very much better that the occasion should not arise, and the reason for taking these powers is that I believe by being armed with such powers we are giving notice to all the world that we are armed with these powers, and we shall in that way make it less likely that the circumstances will arise which will require the use of these powers.

Photo of Mr Clement Attlee Mr Clement Attlee , Stepney Limehouse

I understand this Bill is to be got through in two days of Parliamentary time, and the emergency surely is that it has to be got through very quickly. But if the right hon. Gentleman now tells us that it is only for the purpose of being armed with these powers, there can be no reason why the House of Commons should not have the full right of amendment.

Photo of Mr Neville Chamberlain Mr Neville Chamberlain , Birmingham, Edgbaston

The hon. Member is attempting to twist my words into a meaning which they will not bear. I do not deny that in the present case the matter is urgent. That, of course, is agreed on all hands. The only question that I understood was raised by the hon. and learned Member was whether the powers which are undoubtedly required now were likely to be required hereafter, and whether it was not very much better to limit the powers to the case now before us, and, if necessary, take further powers on some future occasion when similar circumstances arose.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

If this Bill were passing through ordinary stages in ordinary time, there would be no argument on the point, but if this is only to deal with an urgent matter, and therefore has to be passed urgently, I was suggesting that the provisions should be limited to that urgent matter, and that they can be passed through in an urgent manner.

Photo of Mr Neville Chamberlain Mr Neville Chamberlain , Birmingham, Edgbaston

On the question of procedure, about which my Noble Friend put a question, I think the situation is this: We desire that this Bill should become law at the earliest possible moment, and, of course, if Amendments are accepted that means having a Report stage, and we cannot get the Third Reading of the Bill to-night. I do not say that it is impossible to have the Third Reading to-morrow and a Report stage, but I say that it would be better to have the Bill to-night, unless there are Amendments of such substance and importance as to outweigh the disadvantages of that further delay. As far as I have had an opportunity of studying the Amendments—and I confess that I have not had much opportunity—I have not seen any Amendments which appear to me of such weight and importance as to justify the delay; but I am quite willing to hear anything said on any particular Amendment.

Photo of Mr Clement Attlee Mr Clement Attlee , Stepney Limehouse

The right hon. Gentleman's arguments, of course, apply only to Clause 1 and the other Clauses ancillary to it which he must have now; but he pointed out that he did not require Clause 2 now specially, and, therefore, I take it that he will be quite prepared, in these circumstances, to drop Clause 2, and to give the Committee full right of discussion.

4.7 p.m.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

The Chancellor of the Exchequer has now exposed to the Committee that he stands on the horns of a dilemma. Yesterday, in introducing this Bill, he gave an account of the Notes addressed to the German Government by the British Government, and used these words: That very brief account of the circumstances—I refer hon. Members to the British Note for further detail—is the justificatoin for the Bill that I am now presenting. and ho proceeded to say that he hoped that the negotiations now to be undertaken will ensure fair treatment for British bondholders and British traders before 1st July."—[OFFICIAL REPORT, 25th June, 1934; col. 807 Vol. 291.] If it be the case that the justification for the Bill is the situation which has arisen with Germany, and only that, and if it be the case that the object of the Bill is to give powers to the Government to ensure fair treatment for British bondholders before 1st July, then there is great force in the arguments of the Chancellor of the Exchequer that he must have his Bill, and have it now. But, also, there is support for the argument that it must be limited to the necessities of the situa- tion which he himself has expressly stated to the House as being the justification, and, as far as his speech went, the only justification for the Bill which we are now considering. I earnestly hope that the Chancellor of the Exchequer will accede to the view either that the Bill should be limited to the particular instance of Germany—

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

It is obvious that if we are to have this discussion on something which has really nothing to do with the Amendment, it must be based on a Motion to report Progress.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

I beg to move, That the Chairman do report Progress, and ask leave to sit again. Naturally, I bow to your Ruling, Sir Dennis. I was endeavouring to follow the remarks which have been made by the speakers who preceded me, but to put myself in order I move to report Progress. I believe that I shall be in order if I now continue the speech I was making. I have pointed out one horn of the dilemma on which the Chancellor of the Exchequer finds himself, namely, immediate emergency, and, therefore, immediate and urgent legislation requires that it should be limited for the purpose for which it is needed. But the Chancellor of the Exchequer said a few moments ago that other occasions may arise, and that he requires to have powers extending over a far wider field than anything he now specifically contemplates. If this House is to be asked to give wide powers to the Government— and wide powers are asked by the Government in both parts of this Bill—surely the House should have an ample opportunity of considering such grave matters in detail—matters so grave that the Chancellor of the Exchequer has brought the Bill before the House after very short notice. If I understood him correctly—he will correct me if I am wrong—it was at such short notice that he himself has not even been able to read the Amendments set down to the Bill.

Photo of Mr Neville Chamberlain Mr Neville Chamberlain , Birmingham, Edgbaston

I did not say that. I said that I have not had time to study them.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

I should be the last person in the world to do the Chancellor of the Exchequer the injustice of mis representing him. He has not had much time to study the Amendments, nor, it may be assumed, have other hon. Members who received them this morning. Yet the Amendments touch vital questions of principle. Opinions may differ as to the relative importance of this Amendment or that Amendment, but he would be a rash Member of this House who would say that there is upon the Order Paper no Amendment which is worthy of serious consideration and incorporation in this Bill. I will give only one instance. There is an Amendment on the Paper for incorporating in the terms of the Bill a declaration made by the Financial Secretary yesterday. If it were sufficiently important for my hon. Friend to make to the world a statement on behalf of His Majesty's Government as to how the Bill was to be operated, it cannot be said to be unimportant that hon. Members should seek to have that undertaking incorporated in the Bill itself. I only give that as one instance.

I do press upon the Chancellor of the Exchequer, not only in the interests of Parliamentary procedure and orderly conduct of Bills through the House of Commons, but in the interest also of the good standing of this country in the eyes of the world in its international industrial relations, that it should maintain the dignity required in dealing with matters of this kind, and give that consideration and deliberation which are essential before a decision can be reached with full knowledge of all the facts and with appreciation of all the circumstances. The Bill, I think, has been hurriedly drawn. It has certainly not been as fully considered either in its terms or its implications as it might have been. If the right hon. Gentleman will limit it to Germany and to the particular emergency in which he finds himself, I think he will probably find the Committee very willing to let the Bill go with far less discussion than if he insists upon pressing the Bill forward, extending over a far wider field of activity than anything which is justified by anything the right hon. Gentleman or his colleague said yesterday in this House.

4.14 p.m.

Photo of Mr Herbert Samuel Mr Herbert Samuel , Darwen

I understand, Sir Dennis, that you are of opinion that this discussion would take place better on a Motion to report Progress than on the Amendment, for the reason that it raises the whole point whether this Bill should be proceeded with in this manner, in view of the fact that it is not wholly an emergency Bill, but introduces various matters of permanent, standing legislation intended to be operative over a period of years. To that point I would, therefore, now address myself, and not specifically to the Amendment which was previously before the Committee. The procedure which the House of Commons and this Committee have been asked to adopt is undoubtedly a very exceptional one. The announced business of Parliament was suddenly put aside, and, although the Session was crowded with business, this Bill was brought forward unexpectedly as a matter of such great urgency that we are asked to pass it through all its stages in two days.

That, in itself, is a procedure which should only be adopted in very urgent and exceptional cases. It gives exceedingly little time for the preparation of Amendments and the Government and their draftsmen have not time to consider adequately the Amendments which are put down. The Bill raises all kinds of technical points of great importance to the commercial and financial community. It is nearly novel legislation as far as this country is concerned and yet Parliament is expected to pass it through all its stages at this exceedingly short notice. The Chancellor of the Exchequer when asked whether the Government were prepared to accept any Amendments—such acceptance involving a Report stage, and therefore a prolongation of the proceedings on the Bill—could not, of course, get up in his place and say, "No, we are not proposing to accept any Amendments of any kind." That would be so disrespectful to the House, that no Minister could do it. But, in substance, he has said that he does not see any Amendment on the Paper which is worthy of such consideration as would involve holding over the Report stage and Third Reading until to-morrow. That is a very clear hint that we shall find ourselves at the end of the Committee stage to-day without any Amendment having been accepted by the Government.

Taking all these circumstances together, the character of the Bill, the exceedingly short time that has been available for preparing Amendments and the fact that the Government have indicated that they are, shall I say, indisposed to accept any Amendments which would involve a prolongation of the proceedings on the Bill, it seems to me and I submit it strongly to the Committee, that the Bill ought to assume a character which would justify this exceptional procedure, namely, that of an emergency Bill intended to deal with an urgent case. In order to secure that, in some degree, that element should be imported into the Bill, we have proposed that its operations should be limited to one year and that Parliament should then have an opportunity of reviewing the whole situation, if necessary, in the light of the experience gained during that year. The commercial community have had no opportunity of considering the terms of the Bill. We have had no opportunity of receiving representations from chambers of commerce, bankers or others who would be vitally affected by the terms of the Bill. Yet we are asked to put upon the Statute Book a Measure which is not intended merely to deal with the controversy now pending with Germany, but is intended to stand on the Statute Book for all time and to deal with any possible future case which may arise, not only with regard to duties, but with regard to any commercial war between ourselves and other countries arising out of quotas. These are matters which, as the Chancellor of the Exchequer said yesterday, have nothing to do with the German dispute.

For these reasons I strongly urge that the procedure which has been adopted in this case cannot be justified. The Government must make up their minds whether this is an urgent emergency Bill to deal with a question which brooks no delay, in which case exceptional Parliamentary procedure might be justified, and the House, I am sure, would be willing to take an exceptional course. The alternative is to say that this is not an exceptional emergency Bill to deal with this particular case, but that it is to include general provisions which the Government consider useful. In that case more time ought to be allowed for consideration of the matter by the House and the country, and the Bill ought not to be passed under a procedure which will involve hurried and scamped legislation, not worthy of the traditions and dignity of this House.

4.20 p.m.

Photo of Sir Richard Denman Sir Richard Denman , Leeds Central

Hon. and right hon. Gentlemen who have spoken hitherto have voiced the common feeling that we are in an awkward position, owing to the procedure adopted in connection with this Bill. If it is an emergency Bill, the full discussion of all these Amendments would be inappropriate because we cannot, in the time available, seek for that consultation with the people who are affected which one would normally wish to have when dealing with a Bill touching so many different interests. I believe that the prevailing opinion of the Committee is clear on one point. It wishes us to place in the hands of the Chancellor of the Exchequer a complete weapon with which he can negotiate in the next few days. The Committee desires the right hon. Gentleman to have that weapon in his hands. It seems to me that it would be possible to satisfy both points of view if the suggestion made by the right hon. Gentleman the Member for Darwen (Sir H. Samuel) were adopted, and the Bill limited as to time, even though it be in no way limited in scope.

I should have liked to see incorporated in the Bill the pledge that was given to us last night, but I deliberately refrained from putting down an Amendment in that form, because I was content to accept the pledge as a pledge, and to leave it at that. As we cannot usefully discuss the Bill in all its details and implications, what I should like the Committee to say is: "We accept the Bill; we give the Chancellor these powers, but we limit the period." The period of one year is rather exiguous. Supposing we were to say three years? There would then be ample time to gain experience of the use of the weapon, if we require to use it, and if necessary the Bill could subsequently be included in the Expiring Laws Continuance Act.

4.22 p.m.

Photo of Viscount  Turnour Viscount Turnour , Horsham and Worthing

I rise to deal only with the question of procedure. Personally in view of what the Chancellor of the Exchequer has said, I am satisfied. I have no arrière pensée in the matter. I do not care whether, in this Parliament, I vote for or against the Government in any matter. I do not think that the right hon. Gentleman the Member for Darwen (Sir H. Samuel) was wholly fair to the Chancellor of the Exchequer. I do not think the answer of the. Chancellor of the Exchequer as to the Government's attitude towards the Amendments was quite that suggested by the right hon. Gentleman the Member for Darwen. It is all a question of tone but I understood that the Chancellor's reply to the point which I put to him earlier was that he would, if the circumstances justified it, be prepared to consider Amendments. But I intervene really for the purpose of pointing out to the Committee a process which has been going on throughout this Parliament and previous Parliaments, and on which I think it necessary that the Committee should be fully advised.

I agree with the right hon. Gentleman the Member for Darwen that the process of passing emergency legislation by getting a Measure through all its stages in two days, is one which should only be applied in very rare circumstances. It ought not to be applied to any legislation unless that legislation is (a) non-controversial, (b) unimportant, or (c) of a nature which shows a grave emergency to exist, involving either the safety of the realm or the prevention of grave injustice to some individual. No other legislation ought to be pressed in that way. I am sorry that my right hon. and gallant Friend the Parliamentary Secretary to the Treasury is not at the moment on the Front Bench. I am speaking with complete sincerity when I say that I am really terrified at the precedents which subsequent Parliaments—of which I at any rate hope to be a Member, possibly in Opposition—will be able to quote in regard to what has been done in this Parliament in the way of passing Bills through all stages in a short time.

I am not going to vote for the Motion because of the answer given by the Chancellor of the Exchequer. But I venture without disrespect to utter that warning and I would add this. If there were Members now sitting on these benches or on the benches opposite, of the type which we used to have in this House, Members who took a real interest in procedure—unfortunately there are few today—they would have been horrified by what is being done nowadays by Governments, not one Government but all Governments. This is all because of what I would call the insane desire to get through all the business by a certain date. That is the real trouble. It is not a case of emergency. Every Chief Whip says, "I must get through all the business by 21st July"—or whatever the date may be. "If I do not I cannot keep my people here." That is the real reason why Bills are pushed through in this way. I respectfully suggest to the Committee that this power of emergency legislation is one which it ought to exercise only with the greatest discrimination since otherwise when similar circumstances arise in the future, they may find difficulties in resisting an abuse of their privileges.

4.24 p.m.

Photo of Viscount  Cranborne Viscount Cranborne , Dorset Southern

The discussion has centred round the question of whether this Bill is an emergency Bill or not, and it seems to me that there has been a little loose thinking about it. It is possible to have an emergency which is an enduring emergency, an emergency which may recur, and therefore we might have to pass an emergency Measure in a great hurry without binding ourselves to use it only on a specific occasion, because it might be needed again. Such a Bill as that might be justified. At the same time I think it essential that in a Bill of that kind every provision should have some connection with the immediate emergency and that you ought not to put something into the Bill which has nothing to do with it. For that reason I was surprised as I think a good many other Members were to hear the Chancellor of the Exchequer say yesterday that Clause 2 had nothing to do with this emergency.

I would submit diffidently that it might be used for this emergency, and that this emergency might require it. I do not know if hon. Members have read the speech of Dr. Schacht reported in the "Times" on 22nd June, in which he declared that Germany would reply to any such measures as this Bill by breaking off further intercourse with this country. I do not know exactly what Dr. Schacht meant by "further intercourse," but I imagine he meant some form of embargo or quota restriction. If that were intended I think, even under the emergency legislation, Clause 2 would be entirely justified. If that was not the explanation of the introduction of Clause 2 then I hardly feel that it is justified under emergency legislation. In any case, this is a Bill of such wide scope that I very much hope that the Chancellor may see his way to limit the period of its operation in some such way as has been suggested by the right hon. Gentleman the Member for Darwen (Sir H. Samuel). It is not because the Bill has any objectionable features in itself but because it opens up a wide scope for action by Governments in the future, that it seems to me that it should be in some such way limited.

4.27 p.m.

Photo of Sir Ian Horobin Sir Ian Horobin , Southwark Central

I had not intended to speak at any stage of the proceedings on this Bill but as this discussion has arisen I should like to put to the Chancellor of the Exchequer the difficulty in which a good many supporters of the Government who take a special interest in questions of this kind, find themselves. There is scarcely anything that can be said, by way of criticism or of warning at any stage of this Bill, or on any Amendment to the Bill, which might not handicap the Government in the very difficult negotiations which they have in hand. Therefore, it would seem best to me, and I am sure to other Members of the Committee, who have a special interest in these matters, to say nothing. But that is not to say that very grave considerations do not arise and that many of us are not very perturbed. If it turns out that an opportunity has arisen to separate from other matters involved, the particular negotiations which are on hand now—as to which there is no difference of opinion anywhere in the House—and to make it unnecessary for us even to speak upon Amendments on which it is very difficult to give even an indication of the sort of consideration which arises, without the possibility of handicapping the Government, it would remove very great difficulties which are felt, I feel certain, by many Members of the Committee and by those whom they represent. If the Chancellor of the Exchequer could see his way to separate these two issues, it would meet the views of very great interests in the City of London and the country generally, and the grave and genuine anxiety among supporters of the Government, on the one hand not to say anything which might in any way handicap them at the present moment, and yet not to appear to support or pass without having raised any objection to permanent measures which may easily have repercussions of an undesirable nature.

4.31 p.m.

Photo of Mr Neville Chamberlain Mr Neville Chamberlain , Birmingham, Edgbaston

I think there is no one in this Committee who would be likely to see, more than myself, the danger of introducing new precedents or attempting in any way to limit the rights and powers of the House to examine as carefully as they deserve all Measures on their merits; and I recognise the force of the suggestions that have been made that, while this Bill is introduced on account of circumstances which have suddenly arisen, it contains provisions which are not immediately applicable to those circumstances, and, further, that it is proposed to preserve these as a part of the permanent or semi-permanent weapons at the disposal of the Government of the day. With regard to the point made by my Noble Friend the Member for Southern Dorset (Viscount Cranborne), he is perfectly correct that Clause 2 might in certain circumstances be required to deal with further developments arising perhaps originally out of those circumstances which are the justification for Clause 1, and, while I was careful to state that Clause 2 was not directed against any particular country, yet I must reserve the observation that Clause 2 might be found exceedingly necessary in certain circumstances, whether Germany or any other country was the country in question.

With regard to this particular piece of legislation here, I object to the observation of the right hon. Member for Darwen (Sir H. Samuel) that it is scamped legislation. Hurried it may be, but hurried does not necessarily mean scamped. A great deal of care has been expended on the preparation of the Bill, and I do not think it deserves an epithet of that kind. But, in view of the observations that have been made, I would like, if I can, to meet the fears of, and the very legitimate criticisms that have been made by, hon. Members in different parts of the Committee. In its present form the Amendment limits the operation of the Bill to one year. I agree with my hon. Friend the Member for Central Leeds (Mr. Denman) that a year is rather short. He has suggested three years, which, on the other hand, may be considered rather long. I will be prepared, if the Amendment can be altered, to make it two years instead of one year, and I very much hope that, by putting in that limitation, I may appeal to hon. and right hon. Members in all parts of the Committee not to press the large number of Amendments on the Paper, the force of which, I think, will be very much mitigated by the fact that I have accepted this limitation of the period.

4.35 p.m.

Photo of Mr Herbert Samuel Mr Herbert Samuel , Darwen

I am sorry the Chancellor of the Exchequer has not acceded to the original request for one year, which I should think was amply long enough to see the working of this Measure and is obviously more than enough to cover the immediate emergency with respect to Germany. However, he has big battalions behind him, and if he will not go further and accept the one year, we shall be compelled to accept the two years, but I do so very reluctantly, because I feel convinced that one year would have been ample for this purpose, and there is no reason whatever for extending it to two years, particularly since at the end of one year it would be quite possible, if the House thought it desirable and if the circumstances justified it, to extend the operation of what would then be an Act, under the Expiring Laws Continuance Bill.

With respect to the change in the Bill that is now to be made affecting Amendments on the Paper, it may affect some of them, but it cannot affect the questions of principle which are raised particularly with regard to Clause 2 and one very important question of principle which arises on the Schedule, and there are other Amendments which will necessarily require careful consideration by the Committee, though there has been no intention from the beginning in any quarter of raising any obstructive opposition and no desire to prolong the Debate upon any of these Amendments. I think there are, however, a considerable number of Amendments on the Paper which will still require most careful consideration, even though the Act is to be limited in its operation to two years. So far as that concession extends, we are grateful for it, but our gratitude would have been greater if the original Amendment had been accepted.

4.38 p.m.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

I am sure the Committee is grateful to the Chancellor of the Exchequer for having accepted what he considers a sensible form of the Amendment. Naturally nobody expects a Government with great powers like this Government completely to adopt the views put forward by the Opposition, but I am sure the right hon. Gentleman has eased the situation considerably by making this temporary and not a piece of permanent legislation. I do not think it will be possible not to move any of the remaining Amendments, because there are points which we think, genuinely, the Chancellor of the Exchequer would like to have drawn to his attention with regard to the possible administration of the Bill, but I dare say, in the circumstances, it will not be necessary for us to divide on many of the Amendments.

Photo of Mr David Mason Mr David Mason , Edinburgh East

Before I ask leave to withdraw—

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

The hon. Member has nothing to withdraw.

Photo of Sir Richard Denman Sir Richard Denman , Leeds Central

May I add my thanks to the Chancellor of the Exchequer, but I doubt if the acceptance of the Amendment will be the best way of treating the matter. When we come—

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

I was about to make the suggestion to the Committee that the proposal of the Chancellor of the Exchequer might perhaps come better in the form of a new Clause. There is an Amendment to that effect on the Paper, and, while I am not suggesting that the Government's Amendment should necessarily be in those words, that form might be the more satisfactory method of dealing with the question.

Photo of Sir Richard Denman Sir Richard Denman , Leeds Central

Thank you, Sir Dennis, for making my point.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

May I be allowed to withdraw my Motion?

Motion, by leave, withdrawn.

Question again proposed, "That those words be there inserted."

Photo of Mr David Mason Mr David Mason , Edinburgh East

I beg to ask leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

4.40 p.m.

Photo of Mr David Grenfell Mr David Grenfell , Gower

I beg to move, in page 1, line 19, after the second "due," to insert: to a national of that foreign country. We are anxious in this Clause that debts due to be paid shall be debts due to be paid to nationals of the country against which the Order is to apply, and we have in mind the possibility of a debt being contracted in regard to goods grown, produced, or manufactured, or consigned from any foreign country which did not, in the last transaction, belong to a national of that country, and because of the possibility of a national of another country acquiring goods grown or produced in the country to which the Order relates, we wish to protect that individual exporter of goods to this country from having to suffer the loss of the payment which has been made to the Clearing Office. The hon. and gallant Member for North-East Bethnal Green (Major Nathan) referred last night to the case of a Dutchman who might have acquired a consignment of German produce, which was later sold to this country and which required to be paid for from this country, and unless special protection were made in such a case, he would be subject to a reduction of 20 per cent. at the Clearing Office, leaving him with only 80 per cent. of the value of the goods exported or of the debt due to him. One could multiply such cases, but I will content myself with mentioning that one and moving my Amendment.

4.43 p.m.

Photo of Mr Neville Chamberlain Mr Neville Chamberlain , Birmingham, Edgbaston

I am not sure that the hon. Member has quite appreciated what would be the result of accepting his Amendment, which would confine the operation of the Clause to a national of the country in question and, therefore, to a German. The first result would be that every German exporter would appoint an agent in another country, and the whole purpose of the Clause would be destroyed. With regard to the fears which he expressed in the latter part of his speech, I think that point will be raised again by an Amendment in the name of the hon. and gallant Member for North-East Bethnal Green (Major Nathan), in page 2, line 16, which proposes a system of indemnity, and I would suggest to the hon. Member that his point can be dealt with on that Amendment, when I think he will find that my hon. and learned Friend has a satisfactory answer to make.

Photo of Mr David Grenfell Mr David Grenfell , Gower

In view of the possibility of the point being met later, I ask leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

4.45 p.m.

Sir S. GRIPPS:

I beg to move, in page 1, line 22, to leave out from "Kingdom" to the end of the Subsection.

This Amendment raises the whole question of how many and what classes of indebtedness are intended to be dealt with under the Clearing Office arrangement. Sub-section (2) divides itself into two halves. The first half deals with debts due or to become due, in respect of goods, or any class or description of goods, grown, produced or manufactured in, a foreign country and imported into the United Kingdom. The second half, which I am moving to omit, deals with debts due, or to become due to, or for the benefit of, persons ordinarily resident or ordinarily carrying on business in a foreign country, or to any class of any such debts as aforesaid.

That second class of debts are debts which do not arise in respect of what, roughly, may be called the commercial transaction in the export and import of goods. They will include all that class of debts which the Financial Secretary stated yesterday were not intended to be dealt with under the scheme in the first section. They also include a number of other debts and payments, including payments by trustees to beneficiaries ordinarily resident in Germany, and a great many other cases of that kind. The reason why we are moving to omit these words is in order that the Chancellor of the Exchequer may have an opportunity of giving to the Committee an explanation of the real scope which it is intended to give to the collection of debts by the clearing house. We think that, on the whole, unless the scope can be better defined, it would be better to limit it to the debts due in respect of goods in the first part of the Sub-section, and to omit the debts in the second part, a large portion of which it is already admitted by the Financial Secretary will not be subject to a charge, owing to the extraordinary commercial and other inconveniences that would arise.

4.48 p.m.

Photo of Mr Neville Chamberlain Mr Neville Chamberlain , Birmingham, Edgbaston

It is perfectly true that my hon. Friend the Financial Secretary made a definite statement that it was not proposed to include within the clearing, if we had to adopt a clearing office, anything but the particular value of German goods imported into this country, and that all financial remittances, bank balances, insurance payments and so forth would be excluded from the operation of the clearing. That declaration still stands, but I do not want to put that declaration into the Bill, because although it represents the position at the present time, we do not quite know what may be the position at some later date. We have to bear in mind that in Germany, as in many other foreign countries, there are the most drastic powers of control of exchange, and I do not like the idea of depriving ourselves of the power of retaliating in kind, if we must do so, in circumstances which I hope may never arise but which one cannot positively say will never arise. Therefore, I hope the Committee will be content with the statement of the position as it stands to-day and will not press upon us any further to diminish the powers we are taking in the Bill in a way which might perhaps hamper us at a later stage.

4.50 p.m.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

The Amendment is really related to the statement made by my hon. Friend the Financial Secretary to the Treasury on behalf of the Government, first at Question Time yesterday, and, secondly, at the end of his speech last night. At Question Time, in answer to a question put by me, he gave information on a question of fact, and then, although it had no relation to the question I asked, he took the opportunity, to use his own words, to make it clear that there is no intention of treating bank balances as debts to be cleared or to use the powers of the Debts Clearing Office and Imports Restrictions Reprisals Bill so as to interfere with them in any way. That statement having been made, and realising at once the importance of it, and with the hope of resolving any possible ambiguity, I put a supplementary question, to clear up the situation as well as I could, and my hon. Friend went on to say, in reply to my supplementary: There is no intention to deal with the matter in the way which he fears. It is permissive. I was rather persistent, and I asked for a reassurance. The Financial Secretary replied: If the hon. Gentleman desires that reassurance, I can solemly inform him that what I have said once is true but I will say it again, and what I say twice is equally true."—[OFFICIAL REPORT, 25th June, 1934; cols. 773–4, Vol. 291.] From what the Chancellor of the Exchequer has said just now, if I understood him correctly, it is not equally true. The Chancellor of the Exchequer has declined, for the reason he has given to the House, to accept an Amendment which would exclude these bank balances. Without such an Amendment bank balances will be included within the purview of any order which may be made, subject to the operations of the Bill. The Financial Secretary, at the conclusion of his speech last night, said: We do not intend to include in the clearing, bankers' balances, insurance payments, or financial remittances, but merely debts due in regard to German goods exported after the 1st July."—[OFFICIAL REPORT, 25th June, 1934; col. 867, Vol. 291.] This Amendment is framed as nearly as possible in the very words of the commitment accepted by the Financial Secretary yesterday. That commitment the Chancellor of the Exchequer, if I understood him aright, declines to put into the terms of the Bill, for the reason that, although he is prepared to accept that commitment so far as prevailing circumstances are concerned, circumstances may arise at some later date in which he may feel that these powers should be exercised. That is not a commitment at all, except of a most limited and restricted character. We are, therefore, justified in the Amendment after the broad statement made not once but twice by the Financial Secretary yesterday, and repeated in the Second Beading Debate, that bank balances will not come under the operation of the Bill, and after the statement of the Chancellor of the Exchequer that he is not prepared to implement that statement by putting it into the terms of the Bill, because he thinks, or he fears, or he apprehends that a time may come in the future, be it near or remote, when this Bill will be required to operate so as to cover these particular classes of property. I say to the Chancellor of the Exchequer that any persons engaged in business or in the commerce of everyday trading will be placed at the peril of having their bank balances estreated by virtiue of an Order overnight, and that includes insurance policies and other classes of property in the nature of investment. That is a very grave situation in which the Chancellor of the Exchequer places the commercial community in this country and abroad. It will have grave repercussions internationally.

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

There is another Amendment later at the bottom of page 1556, to which I understand the hon. and gallant Member attaches some importance. That Amendment, which stands in the name of the hon. and gallant Member and other hon. Members—In page 2, line 38, at the end to insert: but no such order shall apply to debts due or to become due arising out of the relationship of banker and customer or insurer and insured or out of any transactions other than commercial transactions,"— deals with the matter which the hon. and gallant Member is now discussing. After listening to the hon. and gallant Member, I was almost obliged to think that he had anticipated the point at which the Committee had arrived and was speaking to that Amendment. We cannot have the discussion now and again on the hon. and gallant Member's later Amendment. If we discuss the matter now I do not think I should be able to select the later Amendment.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

I am much obliged to you for drawing attention to the other Amendment. I had put it down later than I intended. I am in your hands and in the hands of the Committee, but, in view of what you have said, I suggest that we should debate the matter now, and it may be that the other Amendment can be moved formally at a later stage.

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

I do not think that course is open to the hon. and gallant Member. I make a proposal for his consideration that this Amendment might be withdrawn and the point discussed on the second one when we come to it.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

In those circumstances I should withdraw this Amendment.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

Having regard to what the Chancellor of the Exchequer has said, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

4.58 p.m.

Photo of Captain Richard Evans Captain Richard Evans , Carmarthen

I beg to move, in page 2, line 1, to leave out "ordinarily resident or."

I move this Amendment mainly to provide the Government with an opportunity of giving an explanation. We have a certain amount of difficulty in regard to the classification of certain foreign nationals in this country. We find it rather difficult to grasp the precise significance of "ordinarily resident." Take the position of those refugees, who have found asylum in this country and are temporarily employed at our universities. There is nothing in the Bill which will prevent the sequestration of 20 per cent. of the salaries of those persons. I have no doubt that it is not the intention of the Treasury to act in any fatuous or spiteful way, but I should like to be told whether Such people would come within the category of "ordinarily resident." There are other classes of people and I should like to know whether they come within that category. I refer to those Germans who reside in this country but whose normal domicile is in Germany. They spend the greater part of their time here. Would any debts due to them on account of transactions in this country, without any reference at all to the importation of goods from Germany, but ordinary commercial transactions in this country, be subject to a charge of 20 per cent., or whatever percentge may be fixed as the clearing house rate? There is much that needs elucidation. I do not move the Amendment in order to weaken the hands of the Government. Certain elasticity is necessary in a matter like this. But there is a good deal of apprehension amongst various classes of people, and I would like a statement from the Government to elucidate the position.

5.1 p.m.

Photo of Mr Leslie Hore-Belisha Mr Leslie Hore-Belisha , Plymouth, Devonport

This is really in one form a continuation of the discussion that was just abbreviated. The words "ordinarily resident" are necessary, as otherwise persons would be appointed as agents to receive payment and thus would deprive us of the means of redress. But I can repeat the assurance given by my right hon. Friend that clearing will be operative on the basis of 20 per cent. of the Customs value of the goods in the first instance, and will not in the first instance be applied to bank debts or any other kind of debts. So far as that is 'a reassurance to the hon. Gentleman I beg to give it.

5.2 p.m.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

That is a most unsatisfactory answer, because this part of the Clause is not dealing with the ordinary commercial side. The hon. Gentleman said that this was to deal with the case where goods were sold through a third party—

Photo of Mr Leslie Hore-Belisha Mr Leslie Hore-Belisha , Plymouth, Devonport

I said that the wider words were being taken, that this was the part of the Clause which gives the wider powers of which the hon. and learned Gentleman and the hon. and gallant Member for North-East Bethnal Green (Major Nathan) are afraid. It gives the power over debts, whether bank debts or otherwise; but I gave the assurance asked for, that in the first instance the clearing would only be applied in respect of goods.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

That does not in the least answer the question which was asked, namely, what is meant by persons "ordinarily resident"? Take the case of a German who comes to this country, who plays bridge with the Financial Secretary at the Ritz, and the hon. Gentleman loses. Is the hon. Gentleman to settle that claim less 20 per cent.? Take the case of a waiter who comes over for a short period of time in order to learn English. He is "ordinarily resident" in Germany. When one tips him, has 20 per cent. to be sent up to the clearing house? Those are the sorts of questions that we have in mind. They can be put in more commercial terms. Is it intended to cover by this, first of all, the German who is out of Germany but is still "ordinarily resident" in Germany, though he may be here for a year or a couple of years? He may carry on a business here. He may have a business in the city of London, not a limited company but a business which he owns. But he is "ordinarily resident" in Germany. That business collects payment for him. Has he to pay 20 per cent. of it to the clearing house? Then take another case. Suppose you have an Englishman who is the agent of a British firm in Berlin and has resided there five or six or seven years— the agent for some big English firm who has become "ordinarily resident" in Germany. The English company transmit his salary from this country to Germany. Have they to send 20 per cent of it every time to the clearing house as being a debt payable to a person "ordinarily resident" in Germany?

There are a great number of cases of that type which clearly have not been thought of and as to which there is great uncertainty amongst those people who have had an opportunity of looking at this Bill, though very few in the country generally have had that opportunity. People are disturbed to know whether they will be caught by this Clause. The Financial Secretary will notice that all that the order can do is to distinguish between "any class of any such debts as aforesaid". He can only classify in his order as he has classified in the Schedule. He cannot introduce any fresh classification into the debts. Therefore he cannot exclude the payments, for instance, of the English firm to its agent who is "ordinarily resident" in Germany. He has to include them if he includes generally debts which are payable to persons "ordinarily resident" in Germany. After this Bill is passed it will be no good for him to say, "We propose to make an order which will exclude this particular type, because it is a hardship." He will not be able to do that because he has no power under the Bill to do it. All he can do is to apply the Clause to "any class of any such debts as aforesaid." If it is not in one of the classifications which precede these words he has not power to include or exclude it by the order. I beg the Financial Secretary to give a more lucid explanation of what it is intended to cover. There are a great many people who are anxious to know.

5.8 p.m.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

This matter gravely affects a considerable number of people. Hon. Members are familiar with the deplorable situation of the Jews, my coreligionists, in Germany. A number of Jews from Germany have been permitted to take refuge in this country. They have a certain amount of money which has been invested or put into banks or into businesses, or is in the hands of persons. Also a number of Jews who have left Germany have found refuge in other countries of Europe, but have nevertheless put money into English banks and English businesses. I ask the Financial Secretary whether those who have left Germany in such circumstances would be deemed to be persons "ordinarily resident" in Germany. They have left Germany as refugees and they are perhaps unlikely to return within measurable time.

5.9 p.m.

Photo of Mr Leslie Hore-Belisha Mr Leslie Hore-Belisha , Plymouth, Devonport

This Sub-section of the Clause, of course, falls into two parts. It is concerned with debts due in respect of goods and it is concerned with other kinds of debts. In both cases we are concerned with the remittance of money to Germany. The refugees to whom the hon. and gallant Gentleman refers presumably do not intend to send money to Germany.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

The second leg of the Clause refers not to where they are but only to "ordinarily resident." That term is very well known to lawyers. For instance it is in the Income Tax Acts. One is liable for Income Tax if "ordinarily resident" in this country, though one may be outside this country at any particular time. I may be putting a very limited case as regards the German refugees who may or may not come within the description of "ordinarily resident," but what is the Government view in regard to that?

Photo of Mr Leslie Hore-Belisha Mr Leslie Hore-Belisha , Plymouth, Devonport

I quite agree, and there never has been any concealment of the fact, that this is drawn in the widest possible terms. It is possible for the hon. and learned Member for East Bristol (Sir S. Cripps) to devise a number of hypothetical instances and to ask how they will be the subject of an Order. If hon. Members will look at Clause 3 they will see that An Order made under either of the fore-going sections may contain such provisions as appear to the Treasury or, as the case may be, to the Board of Trade, to be necessary or expedient for securing the due operation and enforcement of this Act and Of the Order and in particular, but without prejudice to the generality of the foregoing words, may contain provisions with respect to any of the matters or for any of the purposes specified in the Schedule to this Act. The Order may contain such provisions as are necessary for securing the due operation and enforcement of this Act, but, without prejudice to the generality of the foregoing words, may contain provisions with respect to any of the matters or for any of the purposes specified in the Schedule to this Act. I am advised that the Order will define the circumstances in which the clearing is to take place and will contain all the necessary provisions. It is useful to be warned of the kind of cases that the hon. and learned Gentleman has in mind, but surely the Committee is prepared to accept the assurance that in the first instance the clearing is only to apply in respect of goods and will not apply in respect of other matters. Any Order which takes the procedure of the clearing further than that will be the subject of discussion in this House.

5.12 p.m.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

I am very sorry to be persistent, but the matter is of such great importance that people ought to understand it. The Financial Secretary calls in aid Clause 3, which is the usual Clause dealing with ancillary matters that it is necessary to put in the Order. The Clause which gives him power to make an Order and the thing which can be put into the Order is the Sub-section of Clause 1 which we are now discussing. An Order made under this Sub-section may apply to all debts due. In that case the hon. Gentleman can only make an Order to include everything. As an alternative, the last words of the Sub-section, "or to any class of any such debts as aforesaid," he can either apply to all or to a class. As I understand a class the classification must be some classification which precedes the words "or to any class." The way you can judge what a class is meant to be is to look and see how the things have been classified in the preceding part. The learned Solicitor-General shakes his head, and I shall therefore be glad to hear his views.

How is one to ascertain what was the intention of Parliament as regards classification? The word "class" is used, and the court would have to interpret it. An Order would be ultra vires if it dealt with matters with which it was not entitled to deal. It can either deal with all the debts or with any class. All debts would be quite simple, and anyone could understand it. Any class must mean some method of classification. The Chancellor of the Exchequer will remember the difficulties on the question of the classification of coal in the Act of 1930, where Orders could be made as regards the fixing of prices for different classes of coal. The classes of coal had to be specifically defined in the Act in order to avoid raising a difficulty as to what was meant by "class." As I read this Sub-section the only place in which one can ascertain what Parliament had in its mind when it was passing the Clause, is in the words that precede these words; there is nothing afterwards. The classification that precedes is quite clear. It is the classification of debts arising from goods and debts arising from other matters. Therefore any "class" would mean that you can either make the Act applicable to debts arising from goods or debts arising from other matters.

5.15 p.m.

Photo of Mr Donald Somervell Mr Donald Somervell , Crewe

I think I can remove the apprehensions expressed by the hon. and learned Member for East Bristol (Sir S. Cripps). First of all, if one considers the words of the Sub-section, leaving out for a moment the words "to any class," it is plain that there will be a power to deal with one or all of the various debts because the words are "all debts." The word "all" may apply to all debts due, or to become due, in respect of goods, or any class or description of goods, grown, produced or manufactured in, or consigned from that foreign country and imported into the United Kingdom, or to all debts due or to become due to, or for the benefit of, persons ordinarily resident or ordinarily carrying on business in that foreign country. I will pause there. In my submission, that would enable you to deal with one class, or the other class, or both classes. Now I come to the last words. The hon. and learned Gentleman, I think, reads them as if, instead of being "or to any class of any such debts," they were "or to any such class of the aforesaid debts." The word "such" is not related to class, but to debts.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

Where is the classification?

Photo of Mr Donald Somervell Mr Donald Somervell , Crewe

The classification will appear in the Order. The Sub-section gives powers to deal with two particular classes of debts, one or the other or both. It can be made to apply to any class, and I should have thought that it gave power to classify the debts according to whatever circumstances seemed to the Commissioners to be necessary or expedient under the power which they have under Clause 3. So far as the Amendment is concerned, which, after all, is what we are discussing, I should have thought that it was obvious that words like "ordinarily resident" could be defined in the Order for the purposes of the Order. An Order of this kind would not be bound to take the definitions in other Acts, and these words could clearly be defined in the Order. They would avoid the case of the German waiter and such other cases as are outside the general intention of the Bill, which is to deal with transmissions of money from one currency to another currency.

5.19 p.m.

Photo of Mr Clement Attlee Mr Clement Attlee , Stepney Limehouse

I do not think that either the Financial Secretary or the Solicitor-General has really answered the question. All they have shown are good intentions, but the road to Hell is paved with good intentions, as is the road to bad law. The hon. Gentleman says that we should have an explanation in the order of "ordinarily resident." I do not know where he gets that from at all. The Clause refers to a class of "such debts" and does not say anything about the class of such persons. The point we have been arguing is, who are the persons ordinarily resident? A person may be owed a debt for salary or a gambling debt or anything you like, and you may classify them as certain sorts of debts, but I do not see how you are going to have a long list in the order and say that ordinarily resident persons are not this, that and the other and bring it under the words of this Subsection. That would be all right if it said that it should apply to certain debtors. It does not say that. It is entirely in regard to debts. I do not think our point has been in the least answered. The admirable intentions of the Financial Secretary are very nice, but they do not carry us any further.

5.21 p.m.

Photo of Mr Herbert Samuel Mr Herbert Samuel , Darwen

May I make a suggestion to the Government to enable us to bring this discussion to an end and to get on to other matters? I am not sure that all hon. Members are satisfied with the explanation of the Solicitor-General. We all accept the intention of the Government that the cases of hardship suggested by the hon. and gallant Member for North-East Bethnal Green (Major Nathan) should be avoided, and that refugees from Germany and other such cases should not be penalised in any way under this Bill. The question arises whether, if this Sub-section is passed, the Government will really have legal power to make an Order which will place upon the words "ordinarily resident" such definition as they think would be desirable. They can, of course, define the different classes of debts. The Solicitor-General made that quite clear, and there is power in this Bill to enable them to do so, but can you define different classes of residents? It might be held that if an Act of Parliament says "ordinarily resident" the accepted connotation of that term must be used. You cannot give any fresh definition by an administrative order, because that would mean the executive assuming powers which really belonged to Parliament. The suggestion I desire to make is that, since we are all at one in the purpose we have in view, the Government should look more closely at the points that have been raised, and, if they are advised that it would be desirable that the words "ordinarily resident" should also be open to classification as well as debts, they should put an Amendment in the Bill in another place accordingly.

Photo of Mr Neville Chamberlain Mr Neville Chamberlain , Birmingham, Edgbaston

I am much obliged to the right hon. Gentleman for his suggestion. I certainly accept it and give the assurance that we will look further into the point, and, if necessary, get an Amendment moved in another place.

Photo of Captain Richard Evans Captain Richard Evans , Carmarthen

I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

5.24 p.m.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

I beg to move, in page 2, line 3, at the end, to add the words: Provided that no Order made under this Section shall apply to debts due or to become due to persons ordinarily resident or ordinarily carrying on business in the United Kingdom, or to British subjects wherever resident, or to persons of British domicile (original or acquired), or to corporations incorporated by or under the laws of the United Kingdom, or of a country forming part of the British Empire as denned in the Import Duties Act, 1932, or to persons who are afforded His Majesty's protection and ordinarily reside, or ordinarily carry on business, in such a country. I regret that the Amendment is in manuscript and is not on the Paper, but there has been very little time to consider Amendments. With one exception, to which I will draw the attention of the Committee, the words are taken from the definition in paragraph (i) of Sub-section (6) of the Clause. The addition is the words "to persons of British domicile, original or acquired." It is a rather complicated formula, and I can explain the purpose of it perfectly simply. The Subsection which we are discussing relates to debts which may be due to persons ordinarily resident or carrying on business in a foreign country. My Amendment says, in effect, that if the debts are due to a British subject they shall continue to be payable to him and that the British subject who happens to be ordinarily resident in Germany or carrying on business there shall not for that reason be deprived of payment. If the payment due to him were made to the Clearing Office, he would either have this asset confiscated, as would be the case if there were no agreement with the German Government, or he would have to look to the German Government for compensation and receive German marks instead of British sterling to which he is entitled. I assumed when this Amendment was drafted that the Sub-section would remain as it appears in the Bill, and my Amendment is an addition to the Sub-section on that footing.

In making the addition "persons of British domicile, original or acquired," I had a practical case in mind. I am only dealing with Amendments from the point of view of my own practical experience. It is the case of an English woman benefiting under a British will made by a British testator, who married a German and is ordinarily resident in Germany. Acquiring under British law the domicile of her husband, she is domiciled in Germany and certainly comes within the purview of this Sub-section. The House would hesitate before depriving a British-born subject under such circumstances of the right to receive the income left to her by her British father in a British will derived from British property. Not only should British subjects be exempted, but also those whose domicile of origin is British. Under Sub-section (6) of this Clause, when the money is collected through the Clearing Office, it is distributable among a certain class of persons, and included in that class would be those who come within the scope of my Amendment. It will be absurd to take from them through the Clearing Office and to give to them the possibility merely of receiving under paragraph (i) of Subsection (6).

I cannot think it is the intention of the Government that British subjects who happen to be ordinarily resident or carrying on business in Germany should be subjected to the same disadvantages as German subjects carrying on business or ordinarily resident in Germany. It would be repugnant to hon. Members, and not least to right hon. Members on the Treasury Bench, that British subjects, because they happen to be living in one of 29 countries to which the Bill may be made applicable, should have to run the risk ultimately of not having the money due to them from this country, whether in respect of goods or otherwise, but that it should be paid to the Clearing Office instead of to them direct, and treated as if they were actually subjects of a recalcitrant Government.

5.30 p.m.

Photo of Mr Neville Chamberlain Mr Neville Chamberlain , Birmingham, Edgbaston

The Committee will, I am afraid, be at some disadvantage in considering this rather long Amendment, seeing that it does not appear on the Paper, but the effect of it is to provide that the clearing office shall not be entitled to collect debts which are due to British subjects, wherever they may be resident, or to persons who are in the United Kingdom. I thought the hon. Member did not make out a very convincing case for his Amendment. Surely a person who is resident in a foreign country in order to do business there does not expect to be relieved from the laws of that country and to remain under the laws of his own country; nor can he expect to be relieved from any disabilities which may fall upon that country by reason of the action of its Government. A persons doing business in a foreign country must accept the conditions of that country. In any event, apart from the merits of the case which the hon. Member has put forward, the effect of his Amendment, if carried, would make it perfectly easy for the whole purpose of the Clause to be destroyed, because any German exporter would only have to make his debts due to a British subject, and at once he would be relieved of the operation of the Clause.

5.32 p.m.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

May I point out that His Majesty's representatives in Berlin are liable to the effects of this Clause, because they are ordinarily resident in Germany, and so are the British Consular officials resident there. It applies to all persons and applies to ordinary salaries. It applies to persons sent to Germany by British firms to represent them there. I do not think my right hon. Friend can have appreciated fully the implications of the wide provisions of this Sub-section as it stands.

Photo of Mr Neville Chamberlain Mr Neville Chamberlain , Birmingham, Edgbaston

The hon. Member has not appreciated the fact that the Bill is permissive, and that the operation of the Bill does not begin until an Order is made; and, therefore, although he may invent all sorts of absurdities which he says are possible under the Bill, it does not follow that they will be committed.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

My hon. and learned Friend the Member for East Bristol (Sir S. Cripps) has pointed out, I think conclusively, that although it is true that the making of an Order is permissive what may or may not go in the Order is limited; only that may go in which is defined in the Bill. The class of debt comprised in the Bill is, I think, extremely limited, and there is no possibility of classifying under the terms of the Bill the persons to whom the Order is to apply.

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

Are we not going back to an Amendment which has been already disposed of?

Amendment negatived.

5.35 p.m.

Photo of Mr David Evans Mr David Evans , Cardiganshire

I beg to move, in page 2, line 9, to leave out "that debt, or."

In moving this Amendment I should like at the same time to refer to a subsequent Amendment of mine on the Paper: In page 2, line 9, after "part," insert "not exceeding twenty per cent. of such debt. If those two Amendments were accepted the Sub-section would read: pay such part, not exceeding twenty per cent. of such debt. The object of the Amendment is that the amount to be paid by the importer and be collected should be restricted to 20 per cent. of the debt. Under the other provisions of the Bill it might be that 20 per cent. of the value, as was indicated yesterday, was in the first instance to be collected in order to meet this debt. It is understood that 20 per cent. was fixed probably in order to cover the amount required to meet the interest on these loans. I move this Amendment particularly in order to make the procedure and the machinery of the Bill as little onerous as possible to the trading community, because I am sure the right hon. Gentleman and the Financial Secretary will appreciate that unless this machinery works smoothly it may cause great disturbance to the import trade. One thing it might do would be to put a financial liability on a person before it became due. It may be that the Order will compel an importer to pay this amount in cash, because it is not yet clear, although we shall know later, whether the Order makes any alternative provision. In order to be quite sure on that point I suggest to the Chancellor of the Exchequer that it is only reasonable that this amount should be limited to 20 per cent. That would relieve the trading community of a considerable burden which might be imposed upon them.

5.37 p.m.

Photo of Mr Leslie Hore-Belisha Mr Leslie Hore-Belisha , Plymouth, Devonport

The hon. Member reverts in this Amendment to a subject which occupied a large part of the discussion yesterday. In this Bill we take full power to deal with all contingencies as they arise. We take full power over the debts due. The purpose of this Amendment is to limit the amount paid to the Clearing Office to not more than 20 per cent. of what is due. As was explained yesterday, and as has been reiterated to-day, we intend to exact 20 per cent. only of the Customs value of the goods. That will be paid to the Clearing Office. That should work smoothly, and there should be no interference with normal trade. If, however, Germany were to take certain other steps against us which might embarrass our trade, it might become necessary for us to take more than 20 per cent., and, if this Amendment were accepted, our powers would be extremely limited, and the whole purpose of the Bill would be ineffectual. I cannot do more than explain what the scheme will be in its initial stages and ask the Committee, in view of the fact that the time is now limited, to give us such powers to deal with these cases as other countries have, and I am sure that in these circumstances the hon. Member will not press his Amendment.

Photo of Mr David Evans Mr David Evans , Cardiganshire

In view of that explanation, and particularly in view of the time limit, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

5.40 p.m.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

I beg to move, in page 2, line 11, after "otherwise," to insert: as if in respect thereof the Clearing Office were subrogated to the rights of the person to whom but for such order the debt would be payable. The point of this Amendment can be put quite shortly. Under the Bill as drawn the English debtor becomes liable to pay in accordance with the terms of the Order, and to pay immediately. I do not think it can be the, intention of the House that the Clearing Office or the British Government should be in any better or different position in regard to payment than the person abroad to whom the debt is actually due, and I cannot think that the Government wish to alter the position of the British purchaser of the goods. What the Government want to ensure is that instead of the foreign vendor getting the purchase price the money shall be paid to the Clearing Office. A British purchaser when he buys goods does so upon certain specified terms as to the manner and time of payment. They have all been the subject of bargain and contract. I will put to the Solicitor-General the sort of case with which he and I are very familiar. It may happen that goods are brought on three months terms. Delivery is taken of the goods, and after the goods have been delivered it is found that they are in some respects defective, and an action for damages arises on the part of the British purchaser. What he very often does in such a case is to retain, and properly so, the purchase price or part of it to guard the damages which he has suffered, but under this Bill as drawn the British purchaser will have to pay the money to the Clearing Office. If he has suffered any damage by reason of the defective quality or late delivery of the goods, while it is true that he will have his claim against the German vendor he will be prejudiced in his chance of recovering anything because he will have parted with that which is, in a sense, the security for his damages, and that is the purchase price for the goods, which he is under no obligation to pay for another three months.

Quite shortly, the object of this Amendment is to secure that the British Government are put in the same position, neither better nor worse, towards the British purchaser of the goods as the German vendor of the goods would be in. In other words, the British purchaser is not to be advantaged nor is he to be prejudiced. By subrogation, as the Committee will understand, is meant simply that the Government is to stand in the shoes of the foreign vendor. I do not think the Government mean more than that.

5.45 p.m.

Photo of Mr Donald Somervell Mr Donald Somervell , Crewe

The Amendment of the hon. Member raises two points. So far as the first point is concerned—and it may be really the only point covered by his Amendment—his question was: Has the Clearing Office under this Clause the right to demand payment when payment would not be due under the contract? As the Clause is drafted, the Clearing Office does not get any right until the debt is or becomes due. The words of the Clause are: Every person from whom any debt to which the order applies is or becomes due shall, subject to such exceptions and conditions, and at such time and in such manner, as may be specified in the order, pay that debt, or such part thereof as may be so specified, to the Clearing Oxce. That is based upon the debt becoming due. To find out whether a debt is or is becoming due you must look at the original transaction out of which the debt arises.

I think that meets the point which is raised with regard to the subrogation of the rights of such persons "to whom, but for such order, the debt would be payable." It is true that under the next Sub-section there is power to demand payment or security, in order to get goods through the Customs, and the point which the hon. and gallant Member has in mind arises more under that Sub-section than under this. The hon. and gallant Member will see that there is power for the importer to get his goods cleared if the Clearing Office give him a certificate that they claim no payment in respect of the goods for that time. As in many other parts of the Bill, the powers taken are very wide. There is a point which is worth bearing in mind on this and upon the next Amendment. So far as the future is concerned, all transactions will be entered into with the knowledge that part of the debt may be claimed. The cases where there will be hardships will be those where contracts have been entered into in the past before the provisions of this Bill were foreseen. What we can do is to see that there is administratively the necessary power to give proper relief in hard cases, in respect to which the power which may exist in the Bill is not and shall not be exercised.

The second point which the hon. and gallant Member made was with regard to a possible claim for damages. That will have to be litigated of course, as between the vendor and the purchaser, by arbitration or by the courts, or by whatever it may be. It is hoped that even if this machinery has to be resorted to, that will he done under agreement. If, as the result of litigation of that kind, it became clear that although payment had been made there was a counterclaim for damages, that matter would certainly need adjusting. There are express words in the Clause making the necessary adjustments in regard to overpayments, and there is the wider discretion under which repayments can be made in proper cases. Where a man paid £1,000 as the purchase price of goods which, not being in accordance with the contract, were worth only £400, for the purposes of this Bill there would have been an over-payment; the Clearing Office would have had a sum equal to 20 per cent. of £600 more than on balance is due from the British importer to the German exporter. I hope that in view of these considerations the hon. and gallant Member may withdraw his Amendment.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

In view of the very full and courteous explanation which has just been given by the Solicitor-General, I beg to ask leave the withdraw my Amendment.

Amendment, by leave, withdrawn.

5.48 p.m.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

I beg to move, in page 2, line 16, at the end, to insert and the Clearing Office shall indemnify such person against all claims, demands damages, costs, charges, and expenses which such person shall be adjudged by a court of competent jurisdiction in the United Kingdom or any other country to be liable to pay or suffer by reason of or arising directly or indirectly out of failure by reason of compliance with au order under this Act to pay a debt due to the person to whom but for such order the same would have been payable. On a point of Order. Before I speak to this Amendment, may I ask how the position stands in regard to the manuscript Amendment on the same point?

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

The manuscript Amendment, being later than the Amendment on the Order Paper, will come on later.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

I was only wishing to preserve it.

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

Both Amendments are additions and, if made, would follow each other.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

The Amendment which I am now moving is the one to which the Chancellor of the Exchequer made some reference earlier. It provides that the Clearing Office shall indemnify against a second payment any person who has paid money to the Clearing Office and has been forced to pay it over again elsewhere. That is putting it broadly. I hope the Solicitor-General will think that I am putting it fairly. The Amendment is designed to meet the case which I placed before the House yesterday. You have your German who has sold goods to a merchant in this country, and the merchant thereupon becomes indebted to Germany in respect of the goods. That debt has to be paid to the Clearing Office. On my assumption, which is based upon actual cases, the English firm is at the risk of having its property arrested in certain foreign countries, of which Germany is one, and of being mulcted in the price of the goods over again. The object of the Sub-section is to see that he does not pay twice, and that, if a court of competent jurisdiction abroad should award against him, and he has to pay a second time, to suffer damages or pay any cost in the matter, it shall be collected out of the Clearing Office fund from British debtors. That loss has to be made good to the British purchaser.

In an earlier part of the Debate the Chancellor of the Exchequer made a reference, which I did not quite follow, in regard to this Amendment as satisfying the object of an Amendment moved by the hon. Member for Gower (Mr. D. Grenfell). The Chancellor's observation must have been based upon a misapprehension, because the hon. Member for Gower dealt with the position in which the debt was due to a German national. [Interruption.] I am using the term "German" because it is so much simpler to say "a German national." The Chancellor of the Exchequer said that the Amendment which I am now moving covered that case, but that must have been a misapprehension because it does not cover that case at all. My Amendment is merely designed to protect the British purchaser who happens to be in this country, has paid money to the Clearing Office and, for some reason or another, is ordered by a court of competent jurisdiction elsewhere to pay again. I do not think the Government will wish to put a purchaser to that risk.

5.56 p.m.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

Would the Solicitor-General be good enough to tell us what would be the position, if a judgment were obtained in, let me say, Germany against such a person, as regards recovery in this country on that foreign judgment? I think that under the Foreign Judgments Act it is now possible to obtain recovery of a judgment in Germany given by a duly authorised court of competent-jurisdiction upon a claim made in Germany against a British national. Suppose that as a result of the Clearing House taking 20 per cent.—or let us presume 100 per cent., and take an extreme case—the German national takes proceedings in Germany and recovers judgment. With his judgment, he comes to these courts and says, "I demand the execution of my judgment against the British citizen." What would be the position? The words of the Clause seem to absolve the British national from the effects of the German judgment, and from any action in this country.

5.57 p.m.

Photo of Mr Donald Somervell Mr Donald Somervell , Crewe

May I reply to the point made by the hon. and learned Member for East Bristol (Sir S. Cripps)? Although the Foreign Judg ments Act is on the Statute Book, it does not come into operation until a convention has been made. No convention has been made, and, in these circumstances, the hon. and learned Member will agree, the point is academic. It is one which nevertheless will be borne in mind.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

I am much obliged to the Solicitor-General. I was not aware of that in regard to Germany, but I believe there are countries with which conventions have been made.

The SOLICITOR-GENERAL indicated dissent.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

I was under the impression that there were. A convention obviously might be made, because that is the object of the Act. The Germans might bring the action in France and get a judgment there, if the debtor has business in many countries. The judgment could then be enforced in this country. It might not necessarily arise with Germany itself, but with any of the surrounding countries with whom we had a convention. If we have no convention, the point will not immediately arise, but I am glad that the Solicitor-General will bear it in mind.

Photo of Mr Donald Somervell Mr Donald Somervell , Crewe

I have in mind various grounds on which a judgment could be enforced and an Order obtained, but the hon. and learned Gentleman would not expect me be to be able to answer straight away in regard to various and complicated cases on a somewhat new situation. So far as this Amendment is concerned, the point was very clearly put by the hon. and gallant Member for North-East Bethnal Green (Major Nathan). May I again remind the Committee of the point which I made on the last Amendment that, so far as the future is concerned, contracts can and will be made having regard to the position created either by the possibility of an Order or by an Order. It would be perfectly possible for people in their business dealings to safeguard their position with regard to this 20 per cent., so as to make it clear on the face of the contract that no action could be brought under the contract because the 20 per cent. is, in accordance with the law of the country where the debtor lives, paid to the Clearing Office.

Therefore, the scope of this Amendment, which raises, of course, an im- portant point, is, I think, confined to contracts entered into in ignorance of this Bill. The Bill says that payment to the Clearing Office is a good discharge; that is to say, by the law of the country where the debt is payable, 20 per cent. of it has been discharged. I do not want to go into the subleties of what is called private international law, but undoubtedly the principle applied by the courts of all these countries is to recognise that debts are discharged if, by the laws of the country where they are payable, they have been discharged in whole or in part.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

Suppose the debt is payable in Germany?

Photo of Mr Donald Somervell Mr Donald Somervell , Crewe

That point will, no doubt, arise. One objection to accepting this Amendment is that it would expressly contemplate—and I do not think the Committee would desire this for a moment—that the courts of other countries would not recognise as a good discharge what we are saying by our law shall be a good discharge. I think it would be quite improper and wrong to put on our own Statute Book words which definitely contemplated a position of that kind. Although I am prepared to admit that the laws of some countries in certain circumstances, or, indeed, as a result of special legislation by way of reprisals, might refuse to recognise the discharge of this 20 per cent., it would be quite wrong for us to put any words of this kind on our Statute Book. I can only repeat to the hon. Member what I said in substance on the earlier Amendment, namely, that we are grateful to him and other hon. Members for raising points and cases of this kind which require consideration, and which, if they should occur, will require proper administrative elasticity. There is the difficulty about this, as about some other Amendments, that to put them in would be to some extent inviting or making possible evasion, which is undesirable. I should like to assure the hon. Member and the Committee that it is no intention of the Government that, under this Bill, bondholders should in effect be financed by traders paying their debts twice over, and that we are satisfied that there will be a sufficient elasticity of administration under the Bill as drafted, and under an Order if it be made, to enable in appropriate circum stances repayments to be made and hard cases to be considered, so that that very undesirable result may not arise. I hope that with this explanation my hon. Friend may be willing to withdraw his Amendment.

6.4 p.m.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

Surely the Solicitor-General will agree that, if a contract were made in Germany for payment in German marks by someone in this country, that would be a debt arising in Germany and would be subject to the domestic law of Germany, and that in a case of that kind the courts in Germany would accept jurisdiction and English courts would not. Therefore, this sort of case would arise wherever contracts were made in Germany involving payment in German marks, which is, of course, a fairly common case. But I understand now that the Government are giving an assurance or an undertaking that, in any such cases where a person has a claim made against him as a result of which he is bound to pay costs, expenses and so on, with regard to any money which has been paid into the Clearing Office, that money will be made good to him, and he will not suffer as a result.

6.6 p.m.

Photo of Mr Donald Somervell Mr Donald Somervell , Crewe

The hon. and learned Gentleman must not put into my mouth words which I did not utter. I said that it was not our intention in any sense that bondholders should benefit in effect by traders having to pay part of their debts twice over, and we were satisfied that there was sufficient elasticity in the Bill to enable hard cases of this kind to be dealt with administratively. I do not want to allow to pass without comment the words which the hon. and learned Gentleman has used, because I think they may have gone further and into rather more detail than I intended. So far as the point of law is concerned, I yield to him his superiority of knowledge of that branch of the law, but I think he will agree that in a great many cases the ordinary rule that the law applies where payment is to be made is applicable, and we want to preserve the implication to that effect.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

Does that mean that the Government, broadly speaking, are going to indemnify British purchasers against any ill result that may follow, as a result of a foreign judgment, by reason of their having paid the Clearing House?

Photo of Mr Donald Somervell Mr Donald Somervell , Crewe

It is, as the hon. and gallant Member knows, extremely undesirable to use words of such generality that they may be fixed upon afterwards as covering cases without a certain degree of investigation and so on. I hope he will be satisfied with my statement that it is not our intention that we should secure money as a result of British traders having to pay their debts twice over, and we are satisfied that there is sufficient elasticity to prevent that.

Amendment, by leave, withdrawn.

6.9 p.m.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

I beg to move, in page 2, line 16, at the end, to insert: Provided that no person shall be called upon to pay to the Clearing Office under an Order made by virtue of this Section an amount greater than the balance appearing after setting off against any debts due or to become due as aforesaid from him the amount of any debts due or to become due to him from persons ordinarily resident or ordinarily carrying on business in the foreign country to which the Order applies. I have made a number of efforts this afternoon, to say nothing of yesterday, to bring to the notice of the Government the risks and dangers to which British subjects are exposed by this Bill. The Government have conceded most of my points, but have refused to do anything to ameliorate these difficulties and dangers. I hope I may be more successful this time. The object of this Amendment, the phraseology of which is necessarily rather long and unwieldy, is simply to ensure that, where a British subject is a debtor to Germany and is also a British creditor of Germany, he shall not have to pay what he owes and whistle for what is owed to him, but shall only have to pay the balance. In other words, it is a provision for a set-off between credits and debits. The position is perfectly clear, and I will not detain the Committee by arguing it further.

6.11 p.m.

Photo of Mr Leslie Hore-Belisha Mr Leslie Hore-Belisha , Plymouth, Devonport

This Amendment has a certain ingenious attraction, but it would be quite impossible to administer it in practice. The United Kingdom importer could in every case refuse to pay the 20 per cent. of the Customs value of the goods which he has im ported, on the plea that persons in Germany owed him money. The hon. Gentleman will see that he would be imposing upon us a very difficult task if he thinks it would be possible to verify every claim put forward in such circumstances. I am sure that, with his Vast legal experience, he will realise the impossibility of such a course of action, and on administrative ground", if on no other, I must ask the Committee to reject the Amendment.

6.12 p.m.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

Really, my hon. Friend has done himself much less than justice. This is not a new suggestion; it is one that his Department or the Board of Trade has actually administered in connection with a London clearing office—a clearing office with Germany. Under the Treaty of Peace Order of 1919 or 1920—I forget which—a clearing office was established between this country and Germany, and debits and credits were dealt with. My hon. Friend the Member for Cambridge University (Sir J. Withers) has had great experience of these matters, as I myself have had, and hon. Members know that the system has been operated as a matter of everyday business organisation by the clearing office between the same two countries, and administered by either the Board of Trade or the Treasury. This suggestion, therefore, is taken from the Government's own procedure.

As for the practical difficulty to which my hon. Friend refers, surely, there again, not only experience but common sense shows that he is mistaken. You have, for instance, the position of a British importer of raw materials from Germany becoming indebted to Germany in respect of those raw materials. Those raw materials are made up into manufactured goods, and, as manufactured goods, are exported to Germany. In respect of the raw material that has been bought from Germany there is a British debt to Germany, and in respect of the manufactured goods which have been exported to Germany there is a debt due from Germany to this country; it is possible that the debts may be actually between the same people. If my hon. Friend's answer were to be taken literally, it might mean that, while a British importer of raw materials would have to pay the clearing house for the raw materials, if he were to export to Germany as manufactured products the result of work on those raw materials he might not be able to obtain payment for them. Common sense is opposed to the answer of my hon. Friend, if I may respectfully say so, business practice is opposed to it, it would work great hardship, and, most of all and above all, the actual procedure which I now suggest has, as a matter of practical business, been followed for years under the Treaty of Peace Order by the clearing office established thereunder, in the everyday practice, of which I myself have had some part.

6.15 p.m.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

Really the time has come, has it not, when the Government might pay some attention to the difficulties of commerce? Apparently at all costs, whatever happens, whatever inconveniences are caused, however it cuts across commercial practice and everything else, these powers are to be insisted upon in order that the bondholders may get their pound of flesh. Surely hon. and right hon. Gentlemen will not give the impression to the commercial community that they are going to close their eyes entirely to these considerations and are going to set up a system which, whatever the inconveniences caused, has got to operate because they have to get the maximum amount. The hon. Gentleman says it is difficult administratively. Lots of things are difficult administratively, but it does not mean that because things are difficult you cannot ever do them. It, surely, is a perfectly reasonable request, that a trader who has a counter-claim against someone in Germany for a sum of money which otherwise he may not be able to recover unless he can set it off against money that he owes to Germany, should be allowed to make that set off before making his contribution towards the bondholders' interest. There are many acceptance companies which have cross transactions with German exporters or importing firms and which may, as a matter of custom, have running accounts where things are automatically set off one against the other, and they pay only the balances. It is all that they are ever accustomed to pay. Under this procedure they will have to pay when the goods are exported irrespective of this custom of dealing with balances. They will have to pay the full price of the imported article, and they may find themselves in the position of being unable to recover the price of the goods that they are selling.

6.19 p.m.

Photo of Mr Leslie Hore-Belisha Mr Leslie Hore-Belisha , Plymouth, Devonport

I am sure the Committee was not unimpressed by the grievance as stated, and I am sure it will equally appreciate that, if a right is given to every importer to refuse to hand over his 20 per cent. to the Customs upon the plea that he has a debt due to him from Germany, it would be extremely difficult to work this scheme. However, it is not our desire to do any patent injustice. We will look very carefully into the complaint that is made and, if it should be found to have substance and to be capable of being dealt with by way of an Amendment to the Bill, my right hon. Friend is willing to see what can be done in another place. Amendment, by leave, withdrawn.

6.20 p.m.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

I beg to move, in page 2, line 25, to leave out "on importation" and to insert: at the date when in accordance with the conditions of the transaction out of which the debt arises the debt becomes payable. This Amendment deals with another question which was raised yesterday by my hon. Friend—the question of the date at which payment must be made by the importer of German goods. According to the Bill as it stands, it must be made at the moment of importation. But there are many cases where the importer has made his financial arrangements with a view to paying not at the moment of importation but at some later date, three or six months or whatever it may be. This proposal is to substitute for the time of importation a date when, in accordance with the conditions of the transaction under which the debt arises, it becomes payable, that is to say, not to put the importer in any worse financial position than he would have been in if the Bill had not become law. I suppose the hon. Gentleman will tell us that it is not practicable, because once the goods get away from the Customs quay there will be the difficulty of collection. Surely, even that is a matter where the difficulty can be overcome, and it does not seem to be a sufficient answer to say to the importer, "We cannot help your trouble. We have to pay these people their money and, though it may upset your entire business, you have to do it." Is that a sufficient answer to a commercial man whose business you have seriously upset for the benefit of someone else? He is not going to get any benefit at all out of the Bill. He is going to risk, possibly, the whole of his business and, if you are doing that, surely it is not quite reasonable to make him pay sums of money long before they are clue in the ordinary course of his commercial transactions.

6.23 p.m.

Photo of Mr Neville Chamberlain Mr Neville Chamberlain , Birmingham, Edgbaston

This is a difficulty which has been foreseen, and for which I think I can give the hon. and learned Gentleman an assurance which will satisfy him. The proposal which he has made would give rise to the difficulty which he himself has anticipated, that the goods would go straight through the Customs house and we should have to depend upon the good faith and voluntary action of the debtor afterwards to make the clearing house acquainted with the time when the debt became due. Our method of dealing with that is to provide that all importers will be able to give a bankers' guarantee that 20 per cent. of the value of the goods will be paid to the Clearing Office on the date when the debt becomes due under the contract with the German exporters. The importer will be able to agree with the local Customs officer that security has been given, and he will not have to correspond with the Clearing Office in London.

Amendment, by leave, withdrawn.

6.25 p.m.

Photo of Mr David Evans Mr David Evans , Cardiganshire

I beg to move, in page 2, line 34, at the end, to insert "at his option."

The object of this Amendment is to get some little further explanation from the Chancellor of the Exchequer in regard to the effect of an Order made under this Clause. The object is that the importer should have the option of providing what is necessary either under paragraph (a) or (b)—(a) without (b) or (b) without (a).

Photo of Mr Neville Chamberlain Mr Neville Chamberlain , Birmingham, Edgbaston

I quite appreciate the point. I have looked into the matter, and4 I am advised that the true interpretation of the Clause is that the importer has the option that the hon. Member desires.

Amendment, by leave, withdrawn.

6.26 p.m.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

I beg to move, in page 2, line 38, at the end, to insert: but no such order shall apply to debts due or to become due arising out of the relationship of banker and customer or insurer and insured or out of any transactions other than commercial transactions. The object of the Amendment is to put in terms into the Bill the undertaking given by the Financial Secretary last evening as regards bank balances. He gave the undertaking three or four times in terms which were certainly unlimited in point of time, but to-day the Chancellor of the Exchequer has eaten into that undertaking and made it, for all practical business purposes, nugatory. The Financial Secretary said yesterday: we do not intend to include in the clearing, bankers' balances, insurance payments, or financial remittances, but merely debts due in regard to German goods exported after the 1st July. I trust that that assurance will assuage any fears that may have been entertained on the point.—[OFFICIAL REPOET, 25th June, 1934; col. 868, Vol. 291.] To-day he has so whittled away that undertaking and so restored the fears, which yesterday he almost relieved, that he said the undertaking only applies to the position in the first instance. Three or four times he has qualified, by the words "in the first instance," the undertaking which he gave yesterday. It is now clear that the undertaking is for all practical purposes worthless, and that words must be included for the purpose of enabling the trading community to be able to operate on the footing that their bank balances, insurance policies and the like will be free from the risk of being estreated. The words of the Amendment do not travel outside, but, on the contrary, keep strictly within the meaning, and indeed the terminology of my hon. Friend the Financial Secretaiy yesterday. The Chancellor of the Exchequer has said to-day that he cannot agree to being restricted in this way because he may need to use the powers at some future date. He has given from his place on the Treasury Bench in this House of Commons, notice to the citizen" of 29 countries to whom an Order under this Bill might be made to apply. At any moment overnight, without notice, an Order may be made in which their bank balances, insurance policies, whether marine, life, fire, burglary or whatever it may be, their every property may be taken from them either in whole or in part.

I hesitate to use a word which comes most readily, but it seems to me irresponsible for any representative of the British Government to stand at the Treasury Bench and make an announcement of that kind to the world. I say with great respect, sincerely believing it, that the result will be to bring upon industry in this country repercussions which the right hon. Gentleman cannot, I feel sure, fully have considered. If the right hon. Gentleman were to accept this Amendment and thereby to make a statement to the world, that this particular kind of indebtedness should be free from interference, as the Financial Secretary yesterday on the part of the Government represented—as it now appears, wrongly represented—would be the case, then a great deal of the difficulty which may arise, and the ill-effects which may ensue from this Bill, I am sure, would be relieved.

6.33 p.m.

Photo of Mr Neville Chamberlain Mr Neville Chamberlain , Birmingham, Edgbaston

The hon. and gallant Member has addressed his observations to me with a solemnity and portentousness as to be almost staggering. I am sure that the whole 29 countries to whom he so often alludes must be seething with emotion to know what my reply is going to be. It is more simple than perhaps he makes out. In the first place, the observation of my hon. Friend the Financial Secretary stands. There is no present intention to apply the clearing to anything except a portion of the value of German goods imported into this country. It is perfectly true that if we do not specify in the Bill that we intend for ever to limit the operation of the Bill to these very partial measures, there remains the possibility that we may have to extend it at some future time. That, of course, applies to debts whether commercial or otherwise. The hon. Gentleman thinks that the danger and risks will be so frightful and terrifying for the members of the 29 nations that, one and all, they will withdraw at once from London all their bank balances and cease to make any more insurance payments unless we make it clear that there is no possibility of their being at some future time, in circumstances which we hope may never arise, made subject to this Bill. I doubt very much whether their fears will be as great as the hon. Member believes.

But I would point out to the Committee that we cannot escape from this dilemma; either you must absolutely relieve all these fears, in which case you deprive yourselves of a weapon of retaliation which you may need in the future, or you must leave your weapon as it is and suffer whatever inconvenience may arise from the fears which have been so whipped up by the hon. and gallant Member opposite. I would point out that the Amendment of the hon. and gallant Member would go a good deal further than, I think, he would desire, in that a commercial debt might be incurred or made through a bank, and in that case would come under the ban of his Amendment; since it would be a debt arising out of the relationship of the banker and the customer. However that is only a drafting point which could easily be put right but the main point is the one which the hon. Member raised, and hon. Members have to make a choice between the two alternatives which I have put before them.

6.37 p.m.

Photo of Mr Dingle Foot Mr Dingle Foot , Dundee

I would make one comment on what the right hon. Gentleman has said. It shows how entirely worthless is the undertaking which was given yesterday by the Financial Secretary. I will quote again the words used by the Financial Secretary: we do not intend to include in the clearing, bankers' balances, insurance payments, or financial remittances, but merely debts due in regard to German goods exported after the 1st July."—[OFFICIAL REPORT, 25th June; col. 867, Vol. 291.] These words are perfectly clear and any hon. Member who heard them yesterday or who read them in the OFFICIAL REPORT this morning must have come to the conclusion that it was the intention of the Government that in any event these measures should apply only to commercial debts and not to the other classes of debt we have been considering. Today the Chancellor of the Exchequer tells us that the Government have no present intention—I took down his words—to apply Orders under this Act to bankers balances, insurance payments and so forth. It is impossible to tell when the intentions of the Government are going to change in this matter, but the right hon. Gentleman gave us no indication as to the length of time for which the guarantee of the Financial Secretary is to remain good. I would remind the Committee of one thing which was said yesterday in what I think was the very remarkable speech of my hon. and gallant Friend the Member for North-East Bethnal Green (Major Nathan). He spoke of the advice that he himself had had to give to his clients in the course of his professional business, and he said: I may tell him that I have myself had to consider the question of whether bank balances were affected by the terms of the Bill, and I have been under the reluctant compulsion of advising that they were, and to my knowledge in a number of cases bank balances have already been withdrawn from this country in view of the provisions of the Bill.—[OFFICIAL REPORT, 25th June, 1934; col. 836, Vol. 291.] These fears which were felt by my hon. and gallant Friend, and by the people to whom he referred, were apparently set at rest by the Financial Secretary in his speech yesterday, but they have inevitably been revived by the partial withdrawal which we have heard from the right hon. Gentleman this afternoon. Does this Committee think that it is something to be taken lightly, that it should be necessary for my hon. and gallant Friend or for anybody else who is giving professional advice to those who have money which they wish to deposit in London that it is no longer safe to bank in London? I do not pretend to have any expert knowledge of these matters, but to me, speaking as an ordinary Member of this House, it seems to be a very serious matter that anybody should be under the obligation of giving advice of this kind. I hope that my hon. and gallant Friend will take the Amendment to a Division.

6.40 p.m.

Photo of Sir Richard Denman Sir Richard Denman , Leeds Central

I hope, on the contrary, that the hon. and gallant Gentleman will not take the Amendment to a Division. I cannot help thinking that his speech and the one to which we have just listened are rather more calculated to create precisely that lack of confidence which the City of London might fear as a result of the working of the Bill. I believe that the commercial community will be well content to accept the assurance of the Chancellor of the Exchequer and will realise that it is likely to last at least for the duration of the Act. I recognise that the Chancellor of the Exchequer must have a complete weapon, and in those circumstances I hope that the Committee will unanimously let him have that weapon.

6.41 p.m.

Photo of Sir Percy Harris Sir Percy Harris , Bethnal Green South West

I am very sorry that the right hon. Gentleman could not have given an unqualified instead of a qualified assurance. Undoubtedly the statement made by the Financial Secretary met the point raised by my hon. and gallant Friend, but the Chancellor of the Exchequer, unfortunately, has thought fit, I think, unnecessarily, to limit the undertaking.

Photo of Mr Neville Chamberlain Mr Neville Chamberlain , Birmingham, Edgbaston

In justice to my hon. Friend the Financial Secretary, I wish to point out that the context of the observation so often quoted made it perfectly clear that he was expressing the present intention of the Government, and that the indications which I have made to-day were in no way inconsistent with anything which my hon. Friend said.

Photo of Sir Percy Harris Sir Percy Harris , Bethnal Green South West

I realise that fact. I was not for a moment suggesting any lack of good faith. On the contrary, I was expressing regret that he could not have done away with those qualifying words. I do not want to take an alarmist view of the situation, but one cannot forget that for years London has been the financial centre, and above all, the insurance centre of the world. That particularly applies to Lloyds, who have given security to insurers in every part of Europe and in America. That fact has been a national asset and of great assistance to this country and produced an immense amount of business, and it has helped our shipping, and, not least, our merchants and our traders. Now, the right hon. Gentleman says—it really amounted to this—that he is going to use the fact that we are the financial and insurance centre of the world as a potential weapon in cases of emergency for commercial bargaining. I do not want to use exaggerated terms or to be alarmist, but, to put it at the lowest, it is not going to assist the insurance companies and our bankers in seeking business and insurance policies in competition with other countries. We have always, especially in regard to insurance, had a supreme position as. opposed to continental and American companies and any other organisations offering insurance operations. A1 at Lloyds applies not merely to shipping, but to an insurance policy undertaken by any of the big insurance companies and any of the members of that great institution of Lloyds. I really think that it is unnecessary for the Chancellor of the Exchequer to say that he might at some future date within two years extend his operations from commercial debts, and, if there is further trouble on the Continent, to insurance policies. For this purpose it is quite unnecessary to say that. It is much better to give an undertaking to the House, to the country and to the commercial world; and that is all that we are asking.

8.45 p.m.

Photo of Mr John Withers Mr John Withers , Cambridge University

No one realises more than I do the importance of the Amendment, and if it could be accepted it would be an admirable thing. But I also realise the difficulties of the Chancellor of the Exchequer. He must keep up his sleeve a potential weapon; chat is absolutely essential. The question is whether the commercial community, and especially the insurance community, will be satisfied with the assurance which the Chancellor of the Exchequer has given to-day and which the Financial Secretary gave yesterday. I heard the undertaking given by the Financial Secretary, and I understood it to relate to the present and not to the future. I attended a meeting of insurance directors this afternoon at which this question was specially raised, because they have large German branches, which insure from Germany to England, and they were interested as to whether the insurances payable would come under the Bill. I am glad to say that when I explained the matter to them, the difficulties which the Chancellor of the Exchequer and the importance of his having this weapon, together with the fact that it was clearly the intention at the present time not to extend the operation of the Bill beyond debts due in respect of goods, they were satisfied, and were of the opinion that this should be made perfectly clear to everybody concerned so that there should be no possible misunderstanding in the matter.

6.47 p.m.

Photo of Mr Herbert Samuel Mr Herbert Samuel , Darwen

I think that the Chancellor of the Exchequer is making a mistake and that it should be made clear beyond any possible misunderstanding that neither at the present time nor at any future time, in any circumstances, will policies of insurance taken out in British companies by foreign subjects be attached by measures of this character. The right hon. Gentleman may say that he must have a weapon in reserve in case these controversies are pushed to extremes, but this is not a legitimate weapon; it is not a weapon which ought to be kept in reserve in any circumstances. It has been said that some of the speeches made in this House are, more than anything in the Bill, calculated to shake confidence. That is not so. We cannot assume that people will judge these matters by the speeches made in this House. Our insurance companies, which have a world-wide business of the highest possible standard, are subjected to constant competition by insurance companies in the countries in which they operate and in other countries which compete with them for world-wide business, and you may be certain that these competing bodies will not be slow to use any weapon which may be placed in their hands by legislation passed in this House. If an insurer in Germany, France, Italy or South America, China or Japan, who has been accustomed to deal with a British insurance company is told by a foreign company that there is exceptional British legislation which makes it possible, in certain circumstances, that the money he has insured for will not be paid, it will be a most detrimental factor in competition.

The particular case which is in mind is this. A man may insure his life with a British company. He may die, and his widow is entitled to payment of the policy. At that moment there may be a measure of this sort in operation and the sum which then becomes payable is a debt. It is a debt, under this Bill, to a person ordinarily resident in a foreign country, and may be legally attached. It is possible that this is a most distant eventuality but, nevertheless, it is an eventuality. Everyone was satisfied by the assurance given yesterday by the Financial Secretary, which was understood to mean that the Government would not put this into effect. It is not in the Bill, and to-day it has been made clear that this is not to be put into effect here and now, but that circumstances might arise in which it would be put into effect. The Chancellor of the Exchequer is, I think, making a mistake in reserving this particuar weapon. He should surrender it, and in the interests of our insurance companies say definitely that if a certain sum of money has been insured for in a British company by a person abroad that obligation will be

honoured in all circumstances. That is essential, in my view, to maintain the high standard of reputation of British insurance companies throughout the world, and I think the Committee should make it clear that they desire that this should be done, and that words should be put into the Bill which will make it certain beyond the possibility of doubt.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 55; Noes, 226.

Division No. 305.]AYES.[6.53 p.m.
Acland, Rt. Hon. Sir Francis DykeHall, George H. (Merthyr Tydvil)Milner, Major James
Adams, D. M. (Poplar, South)Hamilton, Sir R. W. (Orkney & Zetl'nd)Nathan, Major H. L.
Banfield, John WilliamHarris, Sir PercyOwen, Major Goronwy
Brown, C. W. E. (Notts., Mansfield)Holds worth, HerbertParkinson, John Allen
Buchanan, GeorgeJenkins, Sir WilliamRathbone, Eleanor
Cape, ThomasJones, Henry Haydn (Merioneth)Rea, Walter Russell
Cocks, Frederick SeymourJones, Morgan (Caerphilly)Roberts, Aled (Wrexham)
Cove, William G.Kirkwood, DavidSalter, Dr. Alfred
Cripps, Sir StaffordLawson, John JamesSamuel, Rt. Hon. Sir H. (Darwen)
Daggar, GeorgeLeonard, WilliamSinclair, Maj. Rt. Hn. Sir A. (C'thness)
Davies, David L. (Pontypridd)Lunn, WilliamSmith, Tom (Normanton)
Dobbie, WilliamMacdonald, Gordon (Ince)Tinker, John Joseph
Edwards, CharlesMcEntee, Valentine L.White, Henry Graham
Evans, David Owen (Cardigan)McGovern, JohnWilliams, David (Swansea, East)
Evans, R. T. (Carmarthen)Maclean, Neil (Glasgow, Govan)Williams, Edward John (Ogmore)
Foot, Dingle (Dundee)Mainwaring, William HenryWilliams, Dr. John H. (Llanglly)
Foot, Isaac (Cornwall, Bodmin)Mallalieu, Edward LancelotWilliams, Thomas (York, Don Valley)
George, Major G. Lloyd (Pembroke)Mason, David M. (Edinburgh, E.)
Grenfell, David Rees (Glamorgan)Maxton, JamesTELLERS FOR THE AYES.—
Mr. D. Graham and Mr. John.
NOES.
Acland-Troyte, Lieut.-ColonelCazalet, Capt. V. A. (Chippenham)Glyn, Major Sir Ralph G. C.
Agnew, Lieut.-Com. P. G.Chamberlain, Rt. Hon. N. (Edgbaston)Goff, Sir Park
Allen, William (Stoke-on-Trent)Christie, James ArchibaldGoodman, Colonel Albert W.
Applin, Lieut.-Col. Reginald V. K.Clarke, FrankGrattan-Doyle, Sir Nicholas
Aske, Sir Robert WilliamCobb, Sir CyrilGreene, William P. C.
Astbury, Lieut.-Com. Frederick WolfeColville, Lieut.-Colonel J.Grimston, R. V.
Atholl, Duchess ofCooke, DouglasGuinness, Thomas L. E. B.
Baillie, Sir Adrian W. M.Cooper, A. DuffGunston, Captain D. W.
Baldwin, Rt. Hon. StanleyCranborne, viscountGuy, J. C. Morrison
Balfour, Capt. Harold (I. of Thanet)Croft, Brigadier-General Sir H.Hales, Harold K.
Balniel, LordCrooke, J. SmedleyHanley, Dennis A.
Barclay-Harvey, C. M.Crookshank, Col. C. de Windt (Bootle)Hannon, Patrick Joseph Henry
Beaumont, Hon. R.E.B. (Portsm'th, C.)Croom-Johnson, R. P.Hartington, Marquess of
Belt, Sir Alfred L.Cruddas, Lieut.-Colonel BernardHarvey, George (Lambeth, Kenningt'n)
Benn, Sir Arthur ShirleyCulverwell, Cyril TomHaslam, Henry (Horncastle)
Betterton, Rt. Hon. Sir Henry B.Davies, Edward C. (Montgomery)Haslam, Sir John (Bolton)
Blindell, JamesDavison, Sir William HenryHeneage, Lieut.-Colonel Arthur P.
Borodale, ViscountDenville, AlfredHerbert, Major J. A. (Monmouth)
Boulton, W. W.Dickie, John P.Hills, Major Rt. Hon. John Waller
Bower, Commander Robert TattonDoran, EdwardHore-Belisha, Leslie
Bowyer, Capt. Sir George E. W.Drewe, CedricHorobin, Ian M.
Braithwaite, J. G. (Hillsborough)Drummond-Wolff, H. M. C.Horabrugh, Florence
Brass, Captain Sir WilliamDuggan, Hubert JohnHudson, Capt. A. U. M. (Hackney, N.)
Broadbent, Colonel JohnDuncan, James A. L. (Kensington, N.)Hudson, Robert Spear (Southport)
Brocklebank, C. E. R.Dunglass, LordHume, Sir George Hopwood
Brown, Col. D. C. (N'th'l'd., Hexham)Eady, George, H.Hunter, Dr. Joseph (Dumfries)
Brown, Ernest (Leith)Eden, Rt. Hon. AnthonyHunter, Capt. M. J. (Brigg)
Brown, Brig.-Gen.H.C.(Berks., Newb'y)Edmondson, Major Sir JamesJames, Wing-Com. A. W. H.
Buchan-Hepburn, P. G. T.Ellis, Sir R. GeoffreyJamieson, Douglas
Burghley, LordElmley, ViscountJennings, Roland
Burgin, Dr. Edward LeslieEmmott, Charles E. G. C.Jesson, Major Thomas E.
Burnett, John GeorgeEmrys-Evane, P. V.Joel, Dudley J. Barnato
Butt, Sir AlfredEntwistle, Cyril FullardJones, Lewis (Swansea, West)
Cadogan, Hon. EdwardEssenhigh, Reginald ClareKer, J. Campbell
Campbell, Sir Edward Taswell (Brmly)Evans, Capt. Arthur (Cardiff, S.)Keyes, Admiral Sir Roger
Caporn, Arthur CecilFox, Sir GiffordLamb, Sir Joseph Quinton
Carver, Major William H.Fremantle, Sir FrancisLambert, Rt. Hon. George
Castlereagh, ViscountGalbraith, James Francis WallaceLaw, Sir Alfred
Cayzer, Sir Charles (Chester, City)Gillett, Sir George MastermanLeighton, Major B. E. P.
Lennox-Boyd, A. T.Procter, Major Henry AdamSpencer, Captain Richard A.
Liddall, Walter S.Pybus, Sir Percy JohnSpender-Clay, Rt. Hon. Herbert H.
Little, Graham-, Sir ErnestRaikes, Henry V. A. M.Spens, William Patrick
Llewellin, Major John J.Ramsay, T. B. W. (Western Isles)Stanley, Rt. Hon. Lord (Fylde)
Lloyd, GeoffreyRamsbotham, HerwaldStanley, Hon. O. F. G. (Westmorland)
Locker-Lampion, Com. O. (Handsw'th)Ramsden, Sir EugeneStevenson, James
Loder, Captain J. de VeraRay, Sir WilliamStewart, J. H. (Fife, E.)
MacAndraw, Capt. J. O. (Ayr)Reid, David D. (County Down)Storey, Samuel
Macdonald, Sir Murdoch (Inverness)Reid, William Allan (Derby)Strauss, Edward A.
McKie, John HamiltonRenwick, Major Gustav A.Strickland, Captain W. F.
Macquisten, Frederick AlexanderRickards, George WilliamStuart, Hon. J. (Moray and Nairn)
Magnay, ThomasRoss Taylor, Walter (Woodbridge)Sueter, Rear-Admiral Sir Murray F.
Maitland, AdamRuggles-Brise, Colonel E. A.Sugden, Sir Wilfrid Hart
Margesson, Capt. Rt. Hon. H. D. R.Runciman, Rt. Hon. WalterTempleton, William P.
Martin, Thomas B.Runge, Norah CecilThomas, James P. L. (Hereford)
Mayhew, Lieut.-Colonel JohnRussell, Hamer Field (Sheffield, B'tside)Thompson, Sir Luke
Mills, Major J. D. (New Forest)Russell, R. J. (Eddisbury)Thorp, Linton Theodore
Milne, CharlesRutherford, John (Edmonton)Train, John
Mitchell, Harold P. (Br'tf'd & Chisw'k)Rutherford, Sir John Hugo (Liverp'l)Tree, Ronald
Molson, A. Hugh ElsdaleSalmon, Sir IsldoreTryon, Rt. Hon. George Clement
Monsell, Rt. Hon. Sir B. EyresSalt, Edward W.Wallace, John (Dunfermline)
Morris-Jones, Dr. J. H. (Denbigh)Samuel, Sir Arthur Michael (F'nham)Ward, Lt.-Col. Sir A. L. (Hull)
Morrison, G. A. (Scottish Univer'ties)Sandeman, Sir A. N. StewartWard, Irene Mary Bewick (Wallsend)
Morrison, William ShepherdSavory, Samuel ServingtonWarrender, Sir Victor A. G.
Moss. Captain H. J.Shaw, Helen B. (Lanark, Bothwell)Water house, Captain Charles
Nation, Brigadier-General J. J. H.Shaw, Captain William T. (Forfar)Weddorburn, Henry James Scrymgeour-
Nicholson, Godfrey (Morpeth)Simmonds, Oliver EdwinWhyte, Jardine Bell
Normand, Rt. Hon. WilfridSkelton, Archibald NoelWilliams, Herbert G. (Croydon, S.)
Ormsby-Gore, Rt. Hon. William G. A.Smiles, Lieut.-Col. Sir Walter D.Willoughby de Eresby, Lord
Palmer, Francis NoelSmith, Sir J. Walker- (Barrow-In-F.)Wills, Wilfrid D.
Patrick, Colin M.Smith, Louis W. (Sheffield, Hallam)Windsor-Clive, Lieut.-Colonel George
Pearson, William G.Smith, Sir Robert (Ab'd'n & K'dlne, C.)Wolmer, Rt. Hon. Viscount
Peat, Charles U.Smithers, Sir WaldronYoung, Rt. Hon. Sir Hilton (S'v'noaks)
Penny, Sir GeorgeSomervell, Sir Donald
Perkins, Walter R. D.Somerville, Annesley A. (Windsor)TELLERS FOR THE NOES.—
Petherick, M.Somerville, D. G. (Willesden, East)Sir Frederick Thomson and Major
Peto, Geoffrey K. (W'verh'pt'n, Bliston)Sotheron-Estcourt, Captain T. E.George Davies.
Pike, Cecil F.Southby, Commander Archibald R. J.

Question, "That the Clause, as amended, stand part of the Bill," put, and agreed to.

7.0 p.m.

Photo of Mr Henry White Mr Henry White , Birkenhead East

I beg to move, in page 3, line 22, after "discharging," to insert "rateably."

This Amendment and the subsequent consequential Amendment raise a point which we think of considerable substance which the Committee will wish to consider, and I do hope that the Government will give their assent to it. The Subsection dealing with the method of payment of moneys collected through the Clearing Office appears to introduce an entirely novel principle in the distribution of assets which have been collected for a number of creditors. We see no reason at all why there should be any priority in favour of any creditors. The payments to creditors might be made haphazard by taking names out of a hat, or might be made by specifying certain classes of creditors, as for instance, bondholders, or those who have claims arising out of other matters. It appears to me to be an entirely novel procedure. The whole object, the whole origin of this Bill arises from the fact that the Government are unable to tolerate discrimination of treatment against certain classes of British creditors, and the House is with them and affords them support. Here they appear to have certain discrimina- tions against the same class of creditors. They appear to contemplate differentiation of treatment between the same creditors. My hon., and gallant Friend the Member for North-East Bethnal Green (Major Nathan), in the course of a speech yesterday afternoon—a most illuminating speech of service to the whole Committee in these discussions—pointed out that any delay in the treatment in the case of the same class of debtors might cause serious inconvenience ranging even to bankruptcy and loss of business. We do not feel that there should be any possibility of discrimination in this matter. We do not feel that any creditor should be in a position of special favour under this Clause and, therefore, I beg to move the Amendment.

7.5 p.m.

Photo of Mr Neville Chamberlain Mr Neville Chamberlain , Birmingham, Edgbaston

I think the hon. Member is unnecessarily suspicious, if I may say so. There is no question of exercising favouritism in the case of particular creditors, but I think he will see that the effect of his Amendment would mean that all debts, all German obligations due, would be affected, and would include, for example, the Sinking Fund on loans and short-term debts and all British Empire direct exports through Germany, and the sum total of all these obligations would be very large—indeed, larger than that covered by the full Clearing Fund. Therefore it will be seen that we cannot contemplate this step. That is the reason why we are obliged to put in these words in giving priority.

Photo of Mr Henry White Mr Henry White , Birkenhead East

I see the difficulty, and welcome the explanation given, but I do think that here is a point of substance. There is another real difficulty from another point of view. There are people, who have claims on this fund, who do not know what order of priority they are going to get. Every other speaker in the discussion has expressed anxiety that there should be no interruption of business or trade. There is nothing more likely to interfere with the course of business than any thought or knowledge that people expecting to receive money may have doubting the order of priority in which they will get it. I listened to the Chancellor of the Exchequer and realised his points fully, but I do think there is a danger.

Photo of Mr Neville Chamberlain Mr Neville Chamberlain , Birmingham, Edgbaston

I do not think there is any danger owing to doubt at the time the Order is made. Already it has been stated what the first Order would be. They know exactly what the priority will be there. If further Orders were made, it would be made equally clear what class of debts would be affected, and, therefore, I think there is no ground for the hon. Member's fear.

7.9 p.m.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

The proceeds of the collection under the first Order are merely to be distributed among holders of the Dawes and Young loans. The Chancellor of the Exchequer said so, but I thought I misunderstood him. It sounds incredible. The position will be that money due to the British trader will be taken from him and paid to holders of the Young and Dawes Loans. The German creditor will have to take at the best German marks instead of English sterling which he prefers, but in the case when, money is due not only from a British subject but to a British subject, as the right hon. Gentleman has refused my Amendment, the British trader will be fined any money to pay bondholders without any machinery being provided. The collections are to be made from traders; the distributions are to be made in the first instance to bondholders. That will only work equitably or fairly provided there are no cross accounts between the British trader and the German trader; otherwise great hardship may easily result, and, indeed, will result.

Is there not a further complication? How in the world does the right hon. Gentleman think that the British trader, who has sold goods to Germany, is going to get payment if there is any interruption or difficulty arising in trade and traffic between this country and Germany? I can understand the right hon. Gentleman saying, "I am going to collect all the money which is due from this country to Germany, and I am going to apply it to distribute it among people who are owed money by Germany." One may think it wise or unwise, but it is intelligible. But to take money from the British trader alone and to leave the British trader out in the cold, seems to me to require a great deal more explanation than we have had. The explanation given by the Chancellor of the Exchequer only seemed one more reason for some Amendment to provide that some funds collected from British debtors to Germany should be distributed equitably between the British creditors of Germany. To prefer one particular class of creditor among your own subjects, and to make your own subjects find the money, seems an entirely novel procedure that needs more justification than we have had.

Amendment negatived.

7.13 p.m.

Photo of Mr Morgan Jones Mr Morgan Jones , Caerphilly

I beg to move, in page 3, line 29, after "persons," to insert "of British nationality."

The Amendment explains itself. As the Clause now stands, it seems to me that it might cover Germans resident in Great Britain, or Americans, French or any other foreigners. If there is to be priority at all it should be given to those of British nationality. I need not detain the Committee, because the object of the wording is quite clear.

7.14 p.m.

Photo of Mr Leslie Hore-Belisha Mr Leslie Hore-Belisha , Plymouth, Devonport

The Amendment has a more restrictive purpose than we have in view. It would mean that a Frenchman resident in London or carrying on business in London would have no claim upon the moneys to be distributed. We have thought it proper to include all persons ordinarily resident here or carrying on business here. If we accepted this Amendment it might put to some inconvenience those performing useful service in this country. I hope that the Committee will be satisfied with this explanation.

7.15 p.m.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

I am sure the hon. Gentleman does not think that that will satisfy anybody. The question is whether this money is to be distributed for the benefit of British nationals. I understand that it is not. British nationals, so far as they have any money left will have some share in it. Where it is a matter of putting British nationals to enormous inconvenience, surely the proceeds should be limited to British nationals. This is a matter between this country and Germany, and presumably this clearing house is being imposed for the benefit of our nationals. This is a measure by which the National Government is to use the strong right arm to protect the national interest. Why should some American who is ordinarily resident in this country, who lives here, say, seven months in the year and lives five months of the year in America and who happens to own some Dawes Loan get a part of this money? What has he done to deserve it? Nothing! Why should the strong right arm of the British Government be utilised for his protection? Surely his protection is the function of the American Government. If they want to set up a Clearing Office to protect their own nationals they can do so.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

He might be, but I do not see that that has anything to do with the point. It would not mean that any debt was due to him from anyone in Germany. It is the other way round I think. My hon. Friend means that he might have imported goods, but that still shows no justification for this proposal. The people under the protection of this Government are primarily British nationals and if this inconvenience is to be suffered—and the greater the number of people who get a dip into the pot the greater the inconvenience to the trader, because the more he will have to con- tribute—surely the proceeds ought to be limited to British nationals

Amendment negatived.

7.17 p.m.

Photo of Sir Geoffrey Ellis Sir Geoffrey Ellis , Winchester

I beg to move, in page 3, line 38, after "country" to insert: and debts due to any person in respect of such securities as may be specified in the order and which were on the date so specified in the beneficial ownership of any such person or corporation as aforesaid. The object of the Amendment is to remove what appears to be a clog on the negotiability of bonds. Under the Clause as it is drawn, there is only power to pay debts due to persons in the United Kingdom and British subjects. It would not be possible to get any payment made to a foreigner in respect of a bond which had passed from a British subject and which was British owned on 15th June. I cannot think that is the object of the Clause and the point has probably been overlooked.

Photo of Mr Neville Chamberlain Mr Neville Chamberlain , Birmingham, Edgbaston

As I understand that the Amendment which my hon. Friend has proposed would be an improvement in the procedure and would save a good deal of trouble, I have pleasure in accepting it.

Amendment agreed to.

7.20 p.m.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

I beg to move, in page 3, line 38, to leave out from "country" to the end of the Subsection.

I feel that a somewhat hopeful atmosphere now pervades the Committee, though I would draw attention to the fact that the parties on whose behalf the last Amendment was moved are the rentiers. The paragraph which I move to omit seems to envisage some sort of agreement with the Government of another country that we should do their debt collecting for them. That seems to me to be a highly undesirable form of enterprise for His Majesty's Government. The paragraph says that the money may be utilised in such manner as may be provided for in any agreement entered into between His Majesty's Government in the United Kingdom and the government of any foreign country. Presumably that means that His Majesty's Government might enter into an agreement with France that French debts should be paid out of the collections made from British traders and apparently such agreements can be made without any authorisation from the House of Commons. Such an agreement can be made at any moment, and the moment it is made it becomes effective without any order. It immediately becomes payable in accordance with the first part of the Clause. We do not see why the extremely dangerous and difficult procedure embodied in this Bill should be adopted for the benefit of other people. The Financial Secretary told me on a previous Amendment that he could not limit it to persons of British nationality because there might be people of other nationalities residing here and carrying on business, but surely it is not necessary to have a provision in the Bill that we should make this debt-collecting system available for other Governments and not merely other nationals.

7.22 p.m.

Photo of Mr Neville Chamberlain Mr Neville Chamberlain , Birmingham, Edgbaston

The purpose of the paragraph is to enable us to make an agreement with the German Government in respect of the Clearing Office. I think it would be in the interests of trade, if we have to set up a Clearing Office, that it should be done as amicably as possible and that we should do it by an agreement with the Germans which would enable us to interefere as little as possible with the normal course of things. It might possibly be a feature of such an agreement that we should take certain steps to facilitate payments due to us by the Reichsbank. The hon. and learned Gentleman doubtless knows that the Reichsbank is responsible for interest and commission on the stand-still loans. That, of course, has to be paid in sterling, and it might be a feature of an agreement of this kind that the Clearing Office should release to the Reichsbank the sterling necessary for the payment of that interest and commission. That is all that there is in the paragraph, and I hope the hon. and learned Gentleman is now satisfied that it is in the interest of trade.

Photo of Sir Stafford Cripps Sir Stafford Cripps , Bristol East

I suggest that instead of the words "any foreign country" the right hon. Gentleman should insert "the foreign country." Those are the words used in the preceding Sub-section re- ferring to the country with which the Clearing Office arrangement is made.

Amendment, by leave, withdrawn.

Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."

7.24 p.m.

Photo of Mr Dingle Foot Mr Dingle Foot , Dundee

What will be the position of a British merchant who is under contract to deliver to customers in the United Kingdom goods which are either specified in the contract to be German goods or goods which can only be obtained from Germany? What will his position be in relation to those customers in the United Kingdom? It seems obvious that if an Order is made under this Clause the trader may be unable to obtain the goods which he has contracted to deliver. If an Order is made under this Clause impounding the whole of the debts due, obviously the German exporter is not going to send here goods for which he knows he will not be paid. Even if there is only a 20 per cent. deduction as is now proposed and intended by the Government, the German exporter may not think it worth while to send his goods here under that very considerable deduction. To illustrate the point which I have in mind, may I refer the Solicitor-General to a. case which arose following the outbreak of the War. The position of the importer in that case was similar it seems to me to what the position of an importer may be under this Clause. I refer to the case of the Blackburn Bobbin Company, Limited versus T. W. Allen and Sons, Limited, heard in the Court of Appeal in 1918. I quote the headnote from the King's Bench Division Law Reports, Volume II, 1918: By a contract made in the early part of 1914 the defendants who were timber merchants at Hull sold to the plaintiffs 70 standards of Finland birch timber to be delivered to the plaintiffs free on rail at Hull, deliveries to commence in June or July, 1914, and to continue during the season which would terminate in November, 1914. The contract contained no war, or force majeure, or suspension provisions. Before the outbreak of war in August, 1914, the practice was to load timber into vessels at Finnish ports for direct sea carriage to England, but this practice was not known to the plaintiffs, nor did they know, as the fact was, that timber merchants in England do not keep Finland timber in stock. Up to the outbreak of the war the defendants had not delivered any of the timber and after that date, owing to the disorganisation of transport caused by the war, it became impossible for the defendants to obtain any Finland timber for delivery to the plaintiffs.In an action by the plaintiffs, claiming damages from the defendants for failure to deliver the timber, the defendants contended that the contract had been dissolved by the outbreak of war:Held, that the contract had not been dissolved, and that the defendants were liable in damages for the non-delivery of the timber. I may be wrong, and, if so. I hope the Solicitor-General will correct me, but on the face of it it seems not improbable that importers who have contracted to deliver German goods or goods which they can only obtain from Germany to customers in this country and who find themselves, as the result of an order made under the Clause, unable to effect that delivery, may be open to actions for damages. It would not be due to any fault of theirs. It would be due to this Measure and the circumstances which have given rise to it. If that be so, it would be an obvious hardship and I ask the hon. and learned Gentleman to clear up that point.

7.29 p.m.

Photo of Mr Donald Somervell Mr Donald Somervell , Crewe

The hon. Member has raised a point which I think is to some extent outside, though it no doubt arises from the general purview of this Clause. It refers to a case which would only, I think, arise, in the circumstances which he has suggested, under a contract entered into before the passage of this Bill. In contracts made subsequent to the passage of the Bill, these eventualities could be provided for. The case which he puts is one of an English importer who has undertaken to sell to someone here goods which he has contracted to obtain from Germany. Clearly, so far as this Bill is concerned, there is nothing in it which relieves the German exporter, so far as our law is concerned, from delivering the goods. If the German exporter does not deliver the goods on grounds not recognised by our law, the English importer will be in the same position as any other person who, having made a contract to deliver goods, finds that he is unable to do so. It does not seem to me that it is really an eventuality which can be related to this Clause. There is nothing in this Bill which would entitle a German exporter to refuse to deliver his goods. The hardship which the hon. Member suggested might arise as a result of the Bill is, of course, an eventuality which might arise as a result of all kinds of measures which are taken to-day, such as exchange restrictions and quotas imposed by one country or another. They may in fact prevent, or be used as a pretext to prevent, somebody fulfilling a contract.

Photo of Mr Dingle Foot Mr Dingle Foot , Dundee

The point which I was endeavouring to make is the position, not between the importer and someone in Germany, but between the importer and his customer in this country. Does the hon. and learned Gentleman not agree that an action for damages brought by customers in this country would lie against the importer?

Photo of Mr Donald Somervell Mr Donald Somervell , Crewe

I must have been more obscure than I thought I was. I thought I was dealing with the case of an English importer who has engaged himself to another English trader, and I was pointing out that there are many circumstances in which a man in that position, owing to the original seller defaulting, finds himself unable to deliver the goods and, it may be, exposed to an action for damages. So far as this Bill is concerned, there is nothing in it which in our law, or, so far as I can see, in any law, would entitle the German exporter to say, "This Bill having been passed, I am no longer bound to fulfil my contract." I was also pointing out that there are many measures taken by Governments to-day, in the general troubled circumstances of the world, such as quota restrictions and so on, which may either in fact bring about, or be used as a pretext for bringing about, a result which the hon. Gentleman deplores. Such a case is one which, one would have thought, is not a matter which can be dealt with in this Bill, or which it would be right to deal with in this Bill, because this Bill does not relieve the German exporter of his liability to deliver the goods. The case put is a very common case, which may arise in all sorts of circumstances, and one deplores it whenever it arises, whether it be due to the fact that the original seller has entered into a contract which he is unable or does not want, owing to the turn of the market, to fulfil, or whether it arises by reason of some quota or trade restriction. While one appreciates the point, I feel that it is impossable to deal with such cases in this Bill.

7.36 p.m.

Photo of Mr Herbert Samuel Mr Herbert Samuel , Darwen

The position is not left in a very satisfactory state by the observations of the learned Solicitor-General. This is an instance of the un-desired and possibly unforeseen consequences which may result from legislation of this character, and an example of how detrimental it may be to engage in proceedings of this sort. Here you have two business men in England, one of whom makes a contract with the other, and has every intention of fulfilling it. Then there intervenes an event which is not of a commercial character at all. It is not that the persons from whom. he is buying goods default, or that he has gone to the wrong people and has not properly safeguarded his own interests. It is the British Government which steps in and, with the approval of Parliament, says that the German who has contracted to supply the goods is to be paid only 80 per cent. of what he has been entitled to receive, whereupon, it may be, the German will say, "In these circumstances I shall not deliver these goods." The German law may support him in that. Then, the Solicitor-General says, "Ah, but that is not in the Bill." No, of course it is not in the Bill, but it may be a direct consequence of the Bill, and here you have something which is plainly unjust, namely, that the man in this country who cannot obtain the goods from Germany as a consequence of this Bill is still under a legal obligation to supply them to his customer, and apparently his customer can sue him for damages and, on the precedent of the case cited by my hon. Friend the Member for Dundee (Mr. Dingle Foot), to which I think the Solicitor-General accedes, the customer could obtain damages.

That is obviously an unjust thing as regards the merchant in England who has undertaken to supply the goods, and I think the Government should give this matter their attention. There are in many Acts of Parliament safeguarding Clauses which provide that in certain eventualities as a consequence of the Acts people are unable to fulfil their contracts, and that they should not be held liable if the default is not due to them, but is directly a consequence of the legislation passed by Parliament. Whether that is practicable in this case I cannot say. I am not a lawyer, and I should not presume to make a suggestion, but it seems to me, as a layman, that the point is one which requires attention. The learned Solicitor-General said he would deplore consequences such as this occurring, but if consequences are going to occur which are deplorable, we ought, if possible, to prevent them, and if by any means this point can be met, surely it is one which the Government should endeavour to meet, since it would be in such an event as that suggested a plain injustice that would be done against an individual, which the Government would not desire, and he would naturally hold Parliament accountable for possibly great financial loss which he has suffered, not from his own fault, but from ours.

7.39 p.m.

Photo of Colonel Harry Nathan Colonel Harry Nathan , Bethnal Green North East

I suggest to the learned Solicitor-General that he put the case rather too high when he said that cases of breach of contract would not flow naturally from the operation of this Bill. I will give him an actual instance. The Chancellor of the Exchequer accused me of speaking with a solemnity which I hope was more apparent than real, and he indicated that he thought I was taking a number of exaggerated instances, but I hope I have been careful—I have tried to be—to give no instances except those that have come before me for actual consideration, and I will give an actual case now, the sort of case which arises every day. It is the case where an English importer of machinery from Germany sells that machinery to a British manufacturer. The machinery is delivered, not all at one time, but bit by bit, until the whole of the plant is put up—perhaps a new factory. The English importer has obligated himself towards the builder of the new factory to supply him with this machinery, and he has also entered into a contract to buy it from a particular German firm. One of the terms of the contract is that as the machinery is delivered the relative proportion of the price be paid.

Part of the machinery is delivered, and this Bill comes into operation. The English importer has to say to the German, "I cannot in future pay you your price; I can only pay you 80 per cent. of your price." The German manufacturer then says, "That is a repudiation of your contract, and I am under no further obligation to deliver at all. You have repudiated your contract by saying you do not intend to pay for the future deliveries in accordance with the terms of our contract." The English importer then makes some kind of excuse to the manufacturer in this country who has bought the plant, but he says, "No, I cannot now complete my plant in accordance with all my arrangements, and I am put to great loss by reason of that fact. I have got to start all over again, buy the machinery elsewhere, and pay more for it, and I sue you, the British importer, for damages for your breach of contract." That is an action which flows more closely than the case put by my hon. Friend the Member for Dundee (Mr. Dingle Foot) out of this Bill, I do not say as its legally inevitable consequence, but as its logically inevitable consequence, and there is nothing in the Bill to protect the English merchant from an action for damages at the suit of the English manufacturer.

There are other cases that I might give, such as instalment contracts and the like, but I would suggest, even at this late stage, when we have had so many discussions on points of detail, that really your English importer is entitled to be protected by Parliament when an alteration is made in his situation, not by reason of any act of his own, whether of commission or of omission, not by reason of anything which he might reasonably have been called upon to insert in the terms of the transaction or the conditions of the contract, but by reason of sudden emergency legislation introduced in Parliament to meet an unexpected situation, as unexpected to the importer as to Parliament itself. It is difficult to devise a phrase or a Clause, I say quite frankly, but I suggest that the learned Solicitor-General should consider whether some provision is not possible saving the position of those who may be placed in jeopardy by an action for damages by reason of the kind of circumstance which I have placed before the Committee. I think it would ameliorate the position considerably if he could do that.

7.45 p.m.

Photo of Mr John Tinker Mr John Tinker , Leigh

The speech to which we have just listened strikes me as revealing a lack of trust in what I would call the moral code of business. Surely, if there are two business people in this country and one realises the difficulty in which his business friend has been placed and that owing to German default he cannot get the order completed, he will not sue him in a court of law. If he does, it is contrary to the moral code of business people. If that is the standard of business people and they take advantage of each other in that way, I should think that it is a very queer position. I should have thought that in the case of business people of standing when it was recognised that, owing to a German merchant refusing to carry out an order, the business man in this country could not complete his part of the bargain, the other business man in this country would say: "It is not your fault, and I will not take advantage of a position over which you have no control." If I claimed to be a member of the Liberal party and the representative of business people I would not appeal to the Government as they have done. They stand for free intercourse of trade, without restrictions. If I believed as they believe I would trust my fellow business man and deal fairly with him. Instead of that, they are saying that unless protection can be given business men will be fighting each other in the law courts. I should have thought that they would have trusted each other.