Czecho-Slovakia (Assets).

Oral Answers to Questions — Military Training. – in the House of Commons at on 5 June 1939.

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Photo of Sir John Mellor Sir John Mellor , Tamworth

asked the Chancellor of the Exchequer the aggregate amount of the assets so far ascertained to be subject to the Czecho-Slovakia (Restrictions on Banking Accounts, etc.) Act and of claims against such assets; and whether he has now obtained sufficient particulars to enable him to form an approximate estimate of the total amount covered by the Act?

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

The estimated amount of the assets so far ascertained to be subject to the Czecho-Slovakia (Restrictions on Banking Accounts, etc.) Act and available for meeting claims is between £14,000,000 and £15,000,000. The claims include the repayment to the Treasury of the advance of £6,000,000, the transfer to a Czech Refugee Trust Fund of the unexpended balance of the Free Gift, namely, £3,250,000, claims from British holders in respect of bank balances, etc., amounting to about £3,500,000, and in respect of bonds to a face value of about £2,500,000. Claims have also been received from British holders in respect of participation in industry, real estate, etc., which cannot conveniently be expressed as a capital sum. A notice has been issued in the Press that 17th June is the final date for registering claims, and that no forms would be accepted after that date unless the reasons for the delay are satisfactory to the Treasury. Until all the claims have been received and until they have been examined, the figures given cannot, of course, be regarded as even an approximately accurate estimate of the claims of British holders.

Photo of Mr George Strauss Mr George Strauss , Lambeth North

Can the Financial Secretary make any statement about the Czech gold held by the Bank of England under the Bank for International Settlements?

Photo of Mr Frederick Bellenger Mr Frederick Bellenger , Bassetlaw

Will all these claims, if accepted as genuine, be dealt with on an equal basis, without any discrimination between any classes of claimants?

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

I should like notice of any question as to how the claims will be dealt with; this is only a question of how much they were.

Photo of Mr Arthur Greenwood Mr Arthur Greenwood , Wakefield

(by Private Notice)asked the Chancellor of the Exchequer whether he can now give to the House the result of the inquiries he undertook to make and of the advice he intended to seek on the subject of Czecho-Slovakian assets entrusted to the Bank for International Settlements and alleged to be deposited with the Bank of England?

Photo of Mr John Simon Mr John Simon , Spen Valley

In the Debate which took place ten days ago, on the Motion for the Adjournment, it was assumed by several speakers that the Bank of England, when dealing with gold or cash balances held by it to the order of the Bank for International Settlements, would be aware of the party to whom such assets belonged, and in particular that gold entrusted by the National Bank of Czecho-Slovakia to the Bank for International Settlements and deposited by the latter with the Bank of England would be held by the Bank of England with the knowledge that it belonged to the National Bank.

As soon as the Debate was over I made inquiries of the Bank of England as to the facts, and it is plain that the assumption to which I have referred is incorrect. The Bank of England states that it holds from time to time amounts of gold in safe custody for the Bank for International Settlements, and holds such gold to the order of the Bank for International Settlements, but that the Bank of England has no knowledge whether gold so held is in fact the absolute property of the Bank for International Settlements or is held by the latter in whole or in part for the account of others. The Bank of England is, therefore, not aware whether gold held by it at any time in the name of the Bank for International Settlements is the property of the National Bank of Czecho-Slovakia.

The same situation exists as regards cash balances held by the Bank to the order of the Bank for International Settlements.

Now that the correct position is understood, a good many questions which were raised in the Debate are disposed of. But, in addition to making inquiry of the Bank of England, I at the same time sought the advice of the Law Officers on a number of points. What I am about to say is in accordance with their advice. His Majesty's Government are precluded by the terms of the Protocols of 1930 and 1936 from taking any steps, by way of legislation or otherwise, to prevent the Bank of England from obeying the instructions given to it by its customer the Bank for International Settlements to transfer gold as it may be instructed; the Czecho-Slovakia (Restrictions on Banking Accounts, etc.) Act, 1939, does not operate to prohibit the Bank of England from making such a transfer without the consent of the Treasury. Even if it did, it would be a breach of treaty obligations to withhold Treasury consent. There is no validity in any of the suggestions made in the recent Debate that the Bank of England would be entitled to refuse to obey the instructions given to it by the Bank for International Settlements; and there are no means by which the Treasury could obtain a ruling of the courts as to whether they have the power to prevent the Bank of England from making a transfer when ordered to do so until the question of the true ownership of the gold is finally determined.

Photo of Mr Frederick Pethick-Lawrence Mr Frederick Pethick-Lawrence , Edinburgh East

Are not the Governor of the Bank of England and another director of the Bank of England directors of the Bank for International Settlements—and not only directors, but on the executive of that body—and do not they in that capacity know the true facts? Further, is the right hon. Gentleman now prepared to give an assurance to this House that the British representatives on the Bank for International Settlements in matters of high international policy will not act contrary to the policy of His Majesty's Government?

Photo of Mr John Simon Mr John Simon , Spen Valley

With regard to the first question, it is, I believe, a fact that it is laid down in the constitution of the Bank for International Settlements that it should include among its directors, I think, the Governor and, in the case of the Bank of England, a second member of the bank. I am not aware whether they are members of the executive committee.

Photo of Mr John Simon Mr John Simon , Spen Valley

I can only say that I was not aware of it. With regard to the second question, I cannot, I think, add more than to explain to the House, as I have done, what, as the result of the inquiries, the position actually is. I cannot in the circumstances be expected to go beyond that.

Photo of Mr Frederick Pethick-Lawrence Mr Frederick Pethick-Lawrence , Edinburgh East

The right hon. Gentleman is dealing with the second part of the transaction, and I am dealing with the first part, and asking the right hon. Gentleman whether, in future, he cannot undertake to see that when these gentlemen go as British representatives to the Bank for International Settlements their policy on matters of high international importance will be in accord with the policy of His Majesty's Government?

Photo of Mr John Simon Mr John Simon , Spen Valley

I really think that the right hon. Gentleman introduces a little confusion when he speaks of British representatives. These gentlemen are not British representatives in the relevant sense. They do not represent the British Government; they do not represent British policy. They are individuals, who, by virtue of their office, are members of the directorate of the Bank for International Settlements, and I really cannot be asked to indicate what the policy would be.

Photo of Mr Frederick Pethick-Lawrence Mr Frederick Pethick-Lawrence , Edinburgh East

Does the right hon. Gentleman really mean to convey that an important British institution the Bank of England—is to be allowed to have representatives going to act on the Bank for International Settlements in matters of high policy contrary to the views of the Government?

Photo of Mr John Simon Mr John Simon , Spen Valley

I do not know anything about matters of high policy. I know that when an international bank located in Switzerland has its directorate, the members of that directorate must act according to their authority and judgment, and they do not get that authority from the British Government.

Mr. Lloyd George:

Has the right hon. Gentleman had time to ascertain where the gold is? Is it in the Bank of England at the present moment, or has it been transferred to somewhere else; and, if so, to whom? I also ask, in the second place, if it is in the Bank of England, what is the obligation of the Bank of England according to the interpretation of the right hon. Gentleman? Are they to pass it over? Are they bound by the orders of the Bank for International Settlements to transfer it to Germany, to the Reich in some form or other, either to Prague or to Germany?

Photo of Mr John Simon Mr John Simon , Spen Valley

The right hon. Gentleman, I think, will see, if he will be good enough to look at my answer, that really both the questions he has put are answered. If he asks me whether I can tell him where the gold is, he is making the assumption that there is or may be in London, with the knowledge of the Bank of England, a block of gold which belongs to the Bank of Czecho-Slovakia. The answer I have given to the House shows that that is not so. As for the right hon. Gentleman's other question, namely, whether or not the gold is liable to be transferred under an order of the Bank for International Settlements, the answer I have already given shows that it is. I am advised, that unless we are prepared to break treaties that we have signed, no other course is possible.

Mr. Lloyd George:

With regard to the first question, surely there is £6,000,000 of gold somewhere which formerly belonged to Czecho-Slovakia? It was deposited, I understand, here. Where is that gold? Really, we ought to know, that £6,000,000 that formerly belonged to Czecho-Slovakia, and which we still maintain belongs to the same people now. Where is it? Under whose orders is it?

Photo of Mr John Simon Mr John Simon , Spen Valley

The right hon. Gentleman, I am sure, sees that that is a question which neither I nor anybody else could answer. [AN HON. MEMBER: "It is in the Lloyd George Fund."] I have already explained that it was a mistake to suppose that there was a quantity of gold belonging to the Czecho-Slovak authorities which was in London as far as either the Treasury or the Bank of England know. But the Bank of England holds a considerable quantity— I know nothing about £6,000,000—on account of the Bank for International Settlements. Where it comes from is not a matter for them.

Photo of Mr Irving Albery Mr Irving Albery , Gravesend

Is it not the fact that, if such restrictions as are suggested by right hon. Gentlemen and hon. Gentlemen opposite were imposed upon the Bank of England, the only result would be that it would be impossible on future occasions for the Bank for International Settlements to have any account or any deposits with the Bank of England?

Photo of Mr Harold Macmillan Mr Harold Macmillan , Stockton-on-Tees

In view of the fact that Article 2 of the Convention, of 20th January, 1930, to which the right hon. Gentleman has referred, provides for the arbitral settlement of any disputes relating to the interpretation or application of the present Convention, and lays down the international tribunal before which any such matter relating to the Convention should be brought, should not steps be taken for this matter as to the propriety or otherwise of the action of the Bank for International Settlements to be dealt with under Article 2 of the Convention?

Photo of Mr John Simon Mr John Simon , Spen Valley

I am speaking only from memory. I have not the Article before me. I think it had to do with a dispute as to the construction of the Articles of the Convention. So far as I know there is no such dispute, and no competent authority doubts what I have just stated.

Photo of Mr Brendan Bracken Mr Brendan Bracken , Paddington North

The right hon. Gentleman said that he was most anxious to keep this gold in London, and will he make representations to the British directors of the Bank for International Settlements that they should go to Basle and ask for a reconsideration of that decision, and, if reconsideration is not given, will he cancel the special privileges granted to the Bank for International Settlements by His Majesty's Government?

Photo of Mr John Simon Mr John Simon , Spen Valley

I entirely share the view which others, I am sure, hold, that we do not want to see additional assets going to Germany out of the conquest of Czecho-Slovakia—I am as anxious about that as anybody—but the methods proposed are not effective for the purpose. It is not for me to cancel the authority which is given to the Bank for International Settlements. It is the creation of an international conference and of international treaties. If we were ourselves to refuse to take further part in it, it would not alter the fact that the Bank for International Settlements exists under those treaties. I can assure my hon. Friend that I have considered this with every sympathy from his point of view. I am not seeking to escape by any subterfuge at all. If right hon. and hon. Gentlemen will face the facts as I have given them, they will see that I have stated the position correctly.

Photo of Mr Philip Noel-Baker Mr Philip Noel-Baker , Derby

Is not the fundamental fact that under international law Germany has no claim to any Czech assets until she has received de jure recognition for the conquest of Czechoslovakia, and will the Chancellor consult with the Governor of the Bank of England to find means by which Germany can be prevented from taking stolen goods?

Sir J. Simons:

I am very ready to take into consideration what is suggested, but I am afraid that it will not be found lo be easy.

Photo of Mr George Strauss Mr George Strauss , Lambeth North

Does the right hon. Gentleman want the House to understand that the Governor of the Bank of England does not know whether this gold is in London or not, and, if he does know, has he been asked to give an explanation to the Treasury; and if he has been asked, has he refused to do so?

Photo of Mr John Simon Mr John Simon , Spen Valley

I have every reason to believe that the information I have been given is completely candid and honourable, and I accept it.

Photo of Mr Arthur Greenwood Mr Arthur Greenwood , Wakefield

Is it the case that, if Mr. Montagu Norman, as Chairman of the Bank of England, was at the meeting of the Bank for International Settlements which took this decision, he does not know his other half and does not know where the money really is? Can the right hon. Gentleman say whether the Executive Committee at that meeting which took this very important decision was fully representative of the members of the bank.

Photo of Mr John Simon Mr John Simon , Spen Valley

I really cannot answer on matters that have to do with the conduct of the Bank for International Settlements. It is not for me to say how a decision of this sort would be taken.

Photo of Mr Arthur Greenwood Mr Arthur Greenwood , Wakefield

If the right hon. Gentleman were to declare that that meeting, which took that decision, was in his view not properly representative, would it not be his duty to press on the board of the Bank for International Settlements the British Government's views on the matter?

Photo of Mr John Simon Mr John Simon , Spen Valley

No I do not believe there is any ground for thinking that there was any irregularity. But I must most respectfully submit that I cannot be expected to answer for the Bank for International Settlements.

Photo of Mr Campbell Stephen Mr Campbell Stephen , Glasgow Camlachie

Will the right hon. Gentleman not agree that the difficulty arose from the fact that the Governor of the Bank of England wants Germany to get this money?

Photo of Mr Harold Macmillan Mr Harold Macmillan , Stockton-on-Tees

Would my right hon. Friend be prepared to consider, as a pure matter of international law, whether under Article 2 of the 1930 Convention it is not possible for His Majesty's Government to bring this dispute with the Swiss Government, for having allowed this action on the part of the Bank for International Settlements, before the Tribunal laid down in this Article, or alternatively whether it is not competent under the terms of the Convention for the Bank of England to bring the dispute with the Bank for International Settlements before the Tribunal so laid down in the Convention?

Photo of Mr John Simon Mr John Simon , Spen Valley

I do not like to offer an opinion on a complicated legal matter across the Floor of the House, but as far as I am aware there is no dispute as to whether the action of the Bank for International Settlements was contrary to law.

Photo of Sir Charles Taylor Sir Charles Taylor , Eastbourne

Has my right hon. Friend seen a statement issued from Basle by the Bank for International Settlements that they had come to this decision with very great reluctance?

Mr. De la Bère:

Does not the whole matter still remain highly unsatisfactory?