Orders of the Day — Bank of England Bill

– in the House of Commons at 12:00 am on 19th December 1945.

Alert me about debates like this

As amended, on recommittal, considered.

CLAUSE 3. —(Consequential provisions as to constitution and powers of the Bank.)

3.20 p.m.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

1 beg to move, in page 2, line 39, leave out "other charters," and insert "statutory instruments."

The next two Amendments on the Paper are consequential, and the three together would make the Subsection (3) read: such statutory instruments as may from time to time be granted by Order in Council, with the proviso that a draft of any such Order in Council shall be laid before this House, and the Order shall not be sub- mitted unless an Address is presented to His Majesty by this House praying that the Order be made.

I agree that there is still a difficulty about this Amendment because at the moment there is no such thing as a "statutory instrument." That is, unfortunately, the case, because at present there are two Bills, running on parallel lines through this House. There is the Bill to which we gave the Third Reading —the Statutory Instruments Bill—which lays down the procedure for dealing with a statutory instrument. If, in the Parliamentary race, that Bill gets home before this one, then, before Parliament has finally finished with this Bill, the words "statutory instrument" will have a meaning which they have not got at the moment. I hope that the Chancellor of the Exchequer will not turn down the Amendment on that ground. My hon. Friends and I think that there would be an advantage if this proposal were. accepted instead of having a charter, which is, of course, not discussible in this House and is not seen by this House, with one possible exception and that is, should the Government of the day think it right to produce a draft charter in the form of a White Paper. That procedure has sometimes been adopted. So far as I can remember, that was done in the case of the B.B.C., but it is a rather cumbrous procedure, and it would be simpler, now that we shall have this new arrangement for dealing with statutory instruments, if the charter could be brought before the House and discussed here.

We think this is of importance because, as I said the day before yesterday, we are moving into new ground in this Bill with regard to the relationship between the Government and the Bank of England and the other banks; and we think that it would be advantageous for this House to be able to see what is proposed in the instrument under which the Bank itself will be working. The Chancellor may again raise the point why should it be a statutory instrument to be laid before this House. I said when we were considering another Amendment to this Bill that this might be a Money Bill and that the other place would not in that case be concerned with it.

Whether we were right or wrong in that, we cannot say. If it were not such a Bill it would be quite easy, if so desired, to insert "both Houses of Parliament" when that particular question has been solved. I hope that the Chancellor of the Exchequer will look with a kindly eye on this proposal, and give the House an opportunity, before the charter becomes effective, of seeing it, and of presenting an Address that it should be made. In other words, this House should have the authority to see the charter is in its right form for the purposes which the Government have in mind.

Photo of Mr Hugh Dalton Mr Hugh Dalton , Bishop Auckland

I am not clear why the right hon. and gallant Gentleman attaches importance to this Amendment. In general, Royal charters are not subject to any such procedure as he indicates. As I understand it, the proposal is that, apart from the provisions of this Bill in other respects, the Bank should be regulated in future by Orders in Council which would not be effective until the House of Commons had, by an Address on each occasion, approved the draft. I must say that I do not think that would be a very appropriate procedure, because the subjects which will be dealt with in these charters— and the right hon. Gentleman no doubt will have studied the subject matter of the charters—are internal matters arising out of the day to day conduct of the business of the Bank; for instance, such matters as the power of the court of directors to appoint and pay staff; to act, notwithstanding the fact that there may be, for the moment, some vacancies on the court; to deal with questions of quorum and disqualifications—obvious disqualifications like lunacy and bankruptcy and so on. I should not have thought that this was the sort of subject-matter on which the House of Commons would desire to have a Debate. I should have thought that these were matters with which the Bank should be enabled to deal largely within its own discretion.

3.30 p.m.

As I have said on previous occasions, we hope that under the new regime which the Bill will inaugurate the Bank will still retain substantial freedom of action on all this class of matter. It would be a pity to have undue Parliamentary intervention. It would be more suitable that the charters should continue to be issued in the form common to Royal charters. If, however, any particular matter arose which it seemed to any considerable number of hon. Members of the House—Members of the Opposition in particular— should be brought before the House there are many possibilities under Parliamentary procedure of securing a Debate. In any case of that sort I should not wish to stand between the House and discussion of any item in the charter which seemed suitable for discussion here. Future charters, of course, will be published— there will be no secrecy about them—after they have been granted by the Crown and accepted by the court, and I should have thought it would be better to leave the matter as it is. In view of these assurances I hope that the right hon. and gallant Gentleman will not feel it necessary to press the Amendment in this form.

Photo of Hon. Oliver Stanley Hon. Oliver Stanley , Bristol West

May I ask whether there has ever been a case where a Royal charter has been applied to an organisation which is completely under the control of the Government? Surely the machinery of Royal charters has, up to now, been reserved for independent bodies. It seems to me there is a danger if we extend that procedure to something which will be in fact a part of the executive machine of the Government. The right hon. Gentleman said that the machinery we propose would mean Parliamentary intervention. That is because there is a good deal of Ministerial intervention. I should feel happier in accepting the procedure of the Bill if the right hon. Gentleman could give some assurance that what has been regarded hitherto as the province of the Royal Charter is not going to be extended.

Photo of Mr Hugh Dalton Mr Hugh Dalton , Bishop Auckland

Of course it is a new precedent. The status and constitution of the Bank is being changed by the Bill, but I do not think that touches the major part at any rate of the charter. I do not personally wish to intervene and this is not a question in which the Government would wish over much to intervene. Conditions affecting the staff, by-laws and so forth we should wish to leave within the discretion of the Governor and Deputy-Governor and court of the Bank, and we should follow—not slavishly, of course—the advice of the Governor and the court. I do not think it would be proper to discuss such matters here, subject to the undertaking I have given that if there is any particular point which seemed to make Parliamentary discussion desirable we would not stand in the way. I suggest that we might leave it there and let events develop, and if hon. Members opposite think when the charter is published that it contains something which they would like to discuss we would not stand in the way.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

After what the right hon. Gentleman said I feel inclined to accept these assurances, but I would like to point out that some things which he has mentioned, like bylaws and so on, are often included in the Schedule of a Bill but in this case they are not. There is a further point that a Royal Charter cannot be altered. Therefore any discussion would have to be in the light of the charter as it was drafted. However, after the assurance given by the right hon. Gentleman I ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

CLAUSE 4. —(Treasury directions to the Bank and relations of the Bank with other banks.)

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

I beg to move, in page 3, line 4, after "Bank," insert: including the management of any funds operated on behalf of the staff of the Bank. This Clause provides that the affairs of the Bank shall be managed by the court, and what we want to make clear by this Amendment is that the affairs of the Bank which shall be managed by the court of directors, include the management of funds operated on behalf of the staff of the Bank. We want to make quite certain that there will be no possibility of the Treasury interfering with these particular funds. There are pension funds, staff superannuation funds, and I think some sort of educational funds, which have been operated amicably by the staff and the Bank executive jointly. Some of them may be on a contributory basis and some not, but it would be a great pity in any case if the Treasury had any authority over such funds or could in any way interfere with them. It may be that the wording of the Clause as it stands leaves the position right, but we would like to make doubly sure by putting in the words of this Amendment and I hope the Chancellor of the Exchequer may be able to accept the Amendment.

Photo of Mr Hugh Dalton Mr Hugh Dalton , Bishop Auckland

I do not think this Amendment is necessary to carry out the object which the right hon. and gallant Gentleman has in mind. This matter was mentioned in the proceedings of the Committee, and he himself took part in the discussion of the point. I will quote from page 20 of the Minutes of Proceedings of the Select Committee on the Bill. The right hon. Gentleman asked the Governor of the Bank: Is there anything in the way of a pension or superannuation fund for the staff? — Yes, in all cases.How is that going to be safeguarded on the transfer? —That is safeguarded on the transfer because the pension funds of the Bank do not form part of the assets of the Bank at all; they are quite separate. Then my hon. Friend the Member for Brigg (Mr. Williamson) asked: They are separate funds? " and the Governor of the Bank replied: They have been built up over a period of time and kept quite separate from other assets of the Bank. They are not an asset of the Bank at all; they are nothing to do with the Bank: they are quite separate. The right hon. and gallant Gentleman pursued the matter and asked: Under the new arrangements the Bank will still be able to pay its contributions without any reference to the Treasury. … The Governor of the Bank replied: I anticipate that that is so … it has not occurred to me that there would be any interference with anything of that kind. In fact these funds are not now administered by the court. They are administered by trustees. I have checked this in view of the Amendment on the Paper. They are kept entirely separate, as the Governor stated in evidence, from the other assets of the Bank and I have no intention of interfering in any way with this regime. I do not even know who are the trustees and I do not even seek to inquire. I am sure the thing is properly arranged and I have never heard any complaint on the part of the staff about the present arrangements or that they have any ground for apprehension of any change. I think we might leave it exactly in status quo.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Photo of Mr Hugh Dalton Mr Hugh Dalton , Bishop Auckland

I beg to move, in page 3, Subsection (3), at end, insert: and before authorising the issue of any such directions the Treasury shall give the banker concerned, or such person as appears to them to represent him, an opportunity of making representations with respect thereto. I have put down this Amendment following a discussion in Committee when the question was raised whether, under Subsection (3), it was clear that there would be proper consultation with representatives of the clearing banks before any direction was issued under the Subsection. I think I made it abundantly clear that it would never be my wish, nor could I imagine it would be the wish of any successor of mine, suddenly to issue a direction without proper consultation with those concerned, but it was suggested that the matter should be made clear on the face of the Bill and I said I would consider it. The point which I had to look at carefully was how in any such Amendment as this we should define the persons who should be consulted. I have taken advice and it seems to me that the form of words on the Paper will best give effect to the general desire of the Committee. I had first thought of providing for consultation with the chairman of the committee of the clearing banks, but on consideration it was felt that that would not do, because there are Scottish clearing banks and they of course have a nationalist structure. They are not co-operative with banks South of the Tweed, and I can quite imagine that if we wanted to issue directions, say, to some bank in Aberdeen, the bankers in Aberdeen might not regard the admirable chairman of the National Provincial Bank, who is chairman of the clearing banks committee, as a suitable person for consultation.

Photo of Mr Hugh Dalton Mr Hugh Dalton , Bishop Auckland

For that reason we thought the words on the Paper better than those which I originally thought might meet the case. The Amendment does give a certain elasticity. If an improbable sudden direction were issued to some Scottish bank, and the Treasury wished to consult the chairman of the bank, they would, very likely, invite him to travel up to London. He would probably expect us to pay his fare. At any rate we could invite him to come to London and have a chat. On the other hand, if it were a purely English matter I am quite sure that the clearing banks in the City of London would be quite happy that the chairman, for the time being, of their committee should represent them. This form of words leaves open both these possibilities, and I hope that the House will feel that the Amendment I am now moving carries out in the best way possible the undertaking which I gave during the Committee Stage.

3.45 p.m.

Photo of Hon. Oliver Stanley Hon. Oliver Stanley , Bristol West

I should like to express, on behalf of my hon. Friends on this side of the House, our gratitude to the right hon. Gentleman for meeting us on this point. I agree with him that the form the Amendment has taken is the correct one. It would, obviously, be unfair to expect him, if he issued directions to bankers as a whole, to see all bankers, especially in view of the new custom—I understand that when bankers come to see him, he offers them tea There is one thing I should like to point out. This suggestion was made to the right hon. Gentleman, I think by myself, and he was strongly advised by the hon. Member for Nelson and Colne (Mr. S. Silverman) to resist it. I can only say to the right hon. Gentleman that, provided he sticks to this fundamental principle of accepting my advice and rejecting that of the hon. Member for Nelson and Colne, he will complete his term of office as Chancellor of the Exchequer with credit to himself, and benefit to the country.

Amendment agreed to.

Photo of Mr Nigel Birch Mr Nigel Birch , Flintshire

I beg to move, in page 3, line 16, after the words last inserted, insert: No person shall be prohibited from disclosing the terms of any direction issued under this subsection provided that it shall be lawful to prohibit such disclosure for a period not exceeding three months if the First Lord of the Treasury certifies that such prohibition is necessary in the public interest. I shall be very brief. I think this matter was given a fairly good run during the Committee stage, and the Amendment arises out of that discussion. The point of the Amendment is that proper publicity should be given to all directions issued by the Bank. Our difficulty in this Bill, as I see it, is that Clause 4 is really an attempt to define intangibles. It is very difficult, therefore, to say exactly what is meant so that it is absolutely clear and is not subject to abuse. I feel that it is the duty of an Opposition to try to get the greatest degree of precision possible into legislation like this. In discussing this Amendment in another form previously, the Chancellor referred to what any reasonable successor of his would be expected to do. It is wrong to assume that he will be succeeded by a line of angels. That is improbable. Therefore we must get the greatest possible precision into this Measure.

When the question of people not being able to publish the fact that they had been given directions was challenged, the main defence was that in a state of war or approaching war, it might be necessary to keep it quiet, at any rate for a period of time. This Amendment is a reasonable attempt to meet that idea. On general principles, it is fair to say that in the atomic age, crises are liable to be rather shorter than they used to be. This Amendment gives three months, in which time it would clearly be possible to introduce the emergency legislation that was necessary. It is, I feel, wrong that we on this side of the House should acquiesce in legislation which, under a Chancellor with a Star Chamber type of mind, would be capable of serious abuse.

Photo of Mr Hugh Dalton Mr Hugh Dalton , Bishop Auckland

I doubt very much whether any such Amendment as this is necessary, or whether, if such an Amendment should be necessary, this particular Amendment is apt for the purpose. Let us look at the legal aspect of the matter. A direction is issued to a banker, or a number of bankers. Before it is issued, discussions take place, and it is known that there is an intention to issue a direction. What I tried to make clear I had hoped by way of reassurance in the Committee, was that, normally, in the vast majority of likely cases there would be no legal prohibition upon the directions, whether issued or intended to be issued, being mentioned. I said that normally, in the vast majority of cases, the Official Secrets Act would not apply, and if it did not apply, no other Act, so far as I am aware, would apply to make it in any way an offence to give some publicity to this matter.

I do not think that the Amendment really carries that any further. It is still true, Amendment or no Amendment, that it would be quite possible for some banker who felt that the Treasury had it in mind to issue a direction about which he felt strongly, or any person to whom the banker had spoken and who felt strongly about it—perhaps a Member of Parliament or a journalist—to ventilate such a matter. There is no legal prohibition. It could be ventilated by a Question in the House. I can well imagine that I or some successor of mine might be asked whether it was intended to issue a direction in such a sense, or if it was known to be pending, whether the Chancellor had in mind any direction under this Clause.

Or, if a direction had been issued, there is no reason why a Question should not be put in this House, or why a comment could not quite properly be made in the Press upon the matter. The freedom of the Press and freedom of speech are sufficiently safeguarded by ordinary law in normal times, for that to be unobjectionable in principle. I do not think there is anything to safeguard. On the other hand, during the Committee stage, I explained that there should not be any misunderstanding about an extreme situation. I gave the case of a state of war, or a state of serious international tension, in which it might be felt by all responsible people that these matters were best kept quiet for the time being. I would argue that, generally speaking, no such Amendment as this is necessary.

Passing from that general argument to the particular terms of the Amendment, I do not think that the period of three months is appropriate. It is true that in the atomic age perhaps we move faster than in the pre-atomic age. But we are not proposing to drop any atom bombs on the City. That is far from our intention.

Photo of Mr Hugh Dalton Mr Hugh Dalton , Bishop Auckland

This mild and moderate Measure which we are now discussing does nothing except regularise, and make logical, certain arrangements which have for a long time been accepted by all reasonable people. It is not the sort of revolution which need terrify hon. Members opposite. If they want revolutions we shall be able to do much better than this later on. I do not think that the period of three months is appropriate, even in the atomic age. It is too long in the full atomic age, and too short in all normal circumstances. I repeat that I do not think there is anything to safeguard. The hon. and gallant Member desires to safeguard freedom of expression and communication. These are amply safeguarded under the present law, and in the circumstances I hope that he will not press the Amendment.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

With all due respect, I cannot accept that. The Chancellor has really brought this trouble upon himself. On Monday he said: Directions such as we are here contemplating would not normally of themselves, and by their essential nature, fall within the scope of the Official Secrets Act." —[OFFICIAL REPORT, 17th December, 1945; Vol. 417, c. 1014.] We cannot see how, in any circumstances, the Official Secrets Act could come into the matter. The fact that the Chancellor had that possibility in mind, is what has put us particularly on our guard.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

One has to be suspicious when one looks at the right hon. Gentleman. Behind that bland smile he hides a multitude of sins, and this is not one of the least of them. He has just said that, normally, the Official Secrets Act would not apply. Does it not follow from that that, abnormally, it could apply?

Photo of Mr Hugh Dalton Mr Hugh Dalton , Bishop Auckland

Certainly, in a state of war or near war.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

How can it? The Official Secrets Act is not a rubber stamp which can be put on a document and used at will—at least I do not think it is. It is not a reasonable proposition to say that, at will, the Official Secrets Act can be turned on and off like a hot water tap. I wish the right hon. Gentleman would not look at the future of the world as one of perpetual tension. We know only too well from recent experience that war emergency powers can deal with these problems when the time arises. If for any reason there is a state of tension, this is in order to make sure that the fact that there are considerations which should not be made public, should be made the subject of the certificate of the First Lord of the Treasury. Surely that is a reasonable proposition.

The Chancellor spoke of Questions in the House, and said that of course nothing could prevent the recipient of a direction from making it public. Then let us be quite clear and say so. The direction might say "This is a secret," and therefore the recipient would be stopped from giving any publicity. In that case, we say that a certificate should accompany it, with the full authority of the Government, to say that that prohibition is necessary in the public interest. In those circumstances, we should all know where we were. Recipients of directions may be left in considerable dubiety about the point. The right hon. Gentleman also said that there is no point in the period of three months. When my hon. and gallant Friend was drafting this Amendment, he had to put in some figure, and three months seemed to be a reasonable one. But we are not attached to that, and if, on further consideration, the Chancellor accepts the view which we are putting forward, that the operation of the Official Secrets Act should only be the result of a direct certificate by the Government, he might, in another place, alter the words "three months" to others more suitable, and we could look at it again when the Lords Amendments come down to us. I agree that in the normal case the question would not arise, but as he brought in the Official Secrets Act as a possibility, we were naturally suspicious, and we ask that if there is any recourse to that it should only be as a result of a certificate issued by the First Lord of the Treasury and then we should all know where we are. We recognise that this Amendment was put down only last night, and that the right hon. Gentleman has obviously not had very much time to consider it, but I hope that he will give it further thought, and in any case, I must tell him that it is a matter to which we attach considerable importance.

Photo of Mr Hugh Dalton Mr Hugh Dalton , Bishop Auckland

My present view is that this Amendment is quite unnecessary. It adds nothing to the legal safeguards which we had introduced for all His Majesty's subjects, but, as the right hon. and gallant Gentleman truly says, there has not been very much time to consider this since the Committee stage, and I will look at it again; but that must not be taken to be a commitment to changing my view, which is that the Amendment is unnecessary and that we might leave the law as it is. If this Amendment is now withdrawn then, without prejudice, I will think about it again, but I am inclined to think that it is better to leave the Clause unamended, because in itself it contains all the safeguards which would be desired by hon. Members opposite in reason and general law.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

Perhaps the right hon. Gentleman would like to have a talk with one or two of us while he is thinking about it, because he will remember that the Official Secrets Act has very strange repercussions, almost as wide as those which arise on questions concerning offices of profit under the Crown.

Photo of Mr Hugh Dalton Mr Hugh Dalton , Bishop Auckland

I shall be very happy to consult hon. Members between now and the next stage.

Photo of Mr Nigel Birch Mr Nigel Birch , Flintshire

;On that understanding I beg to ask leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

4.3 p.m.

Photo of Mr George Hall Mr George Hall , Merthyr Tydfil Aberdare

I beg to move, "That the Bill be now read the Third time."

I think it is generally known that about six months ago the electors of this country were invited by the Labour Party to give it power to carry through a programme designed to bring a specified number of industries and services under public control. In that programme to bring the Bank of England, as the central financial institution of the country, under public control figured very prominently. I know, and I think my experience was that of other Members on this side of the House, that the suggestion that the Bank of England should be nationalised did arouse very widespread interest and a great deal of support. The country did give—there is no doubt about this—a mandate to the present Government to carry through its programme in no uncertain fashion. So far as the Government's promise to nationalise the Bank of England is concerned the passage of this Bill through the House today will fulfil one of the promises which those of us on this side did make to the electorate.

This is a short Bill. It has had a relatively speedy and, I think, easy passage through all its stages up to now. I venture to suggest that there are four reasons for this. The first is the simplicity and brevity of the Bill itself. I think great credit is due to the "back room boys" who as the Parliamentary draftsmen elaborated this Measure. They have in my view done a very good job of work. The second reason why we have had such a pleasant time on the whole with this Bill has been the felicity and clarity with which my right hon. Friend the Chancellor of the Exchequer has on all occasions commended its virtues to this House, and to the good humoured patience with which he has resisted the errors of judgment and the attempts of the party opposite to mar it in its passage through its various stages. The third is the public spirit shown by the present Governor of the Bank of England, who, whatever his private views may be—and I do not know what they are on this matter—has realised that this Bill is in accord with the general wishes of the country, and has done his best to see that the will of the people should not be frustrated. Fourthly, I think the fundamental justice of making the proposed change to public ownership is one which does now commend itself to large numbers of people in all parts of the country and, I think too, in all parts of this House.

The passage of this Bill does mark an epoch. It is or will be the first Socialist Measure of its kind to reach the Statute Book. Its importance cannot in my view be over estimated. It is true that in the course of the war far-reaching financial restriction and control have had to be imposed, and that as a result there has been during the last six years, a very close relationship between the Bank of England and the Treasury. The relationship between the two have been exceedingly cordial, but we must not forget that thought his has been so, and though the Treasury can exercise, even in normal times, extensive pressure on the Bank, such pressure has been largely permissive and has had no legal sanction behind it. This Bill gives the Treasury and the country through the Government, that legal sanction. All of us in this House have lived through the period of the Norman conquest. We know and remember that the unemployment and the misery, the uncertainty and the dislocation of the prewar years were largely due to the power which the City could and did exercise to frustrate the work of any Government which called itself progressive.

Photo of Hon. Oliver Stanley Hon. Oliver Stanley , Bristol West

How about Snowden's Commission?

Photo of Mr George Hall Mr George Hall , Merthyr Tydfil Aberdare

With the passing of this Bill never again can the work of a Labour Government be nullified in the same way by the City. It will end for ever that power and remove that fear. I think Mr. Gladstone, for one, would have approved of the provisions of this Bill, and would have gone into the Lobby with us today in support of it. May I remind hon. Members that he was Chancellor of the Exchequer and that he did on one occasion say this: From the time I took office as Chancellor of the Exchequer I began to learn that the State held, in the views of the Bank and the City, an essentially false position as to finance. I was tenaciously opposed by the Governor and Deputy-Governor of the Bank. I had the City for antagonist on almost every occasion.

Photo of Hon. Oliver Stanley Hon. Oliver Stanley , Bristol West

What year was that, may I ask?

Photo of Mr George Hall Mr George Hall , Merthyr Tydfil Aberdare

I do not think it was 1866. I have not the actual date by me, but the passage I have quoted does appear in the Appendix to Morley's "Life of Gladstone," and I would willingly turn up the reference for my right hon. Friend.

Photo of Hon. Oliver Stanley Hon. Oliver Stanley , Bristol West

It is not less than 70 years out of date.

Photo of Mr George Hall Mr George Hall , Merthyr Tydfil Aberdare

I am only trying to show how long this reform has been overdue.

Photo of Mr Nigel Birch Mr Nigel Birch , Flintshire

Mr. Gladstone said, referring to Income Tax, that no tax so much degrades the people. Will the Government take that to heart?

Photo of Mr George Hall Mr George Hall , Merthyr Tydfil Aberdare

Let me give a brief quotation from another ornament of this House, now dead, the late Lord Horne, who also became Chancellor of the Exchequer. It will be, I am sure, within the recollection of some, at any rate, of the hon. Members of this House, that in March, 1933, he moved a Motion which among other things asked that a controlled monetary policy should be instituted. You cannot have a controlled monetary policy unless you have control and it is only through a Measure of the kind with which we are now dealing that you can get that control. The provisions in this Bill do ensure that Parliament shall be no longer in the dark as to what is going on. There is a story told by the late Dr. Leaf, who was chairman of the Westminster Bank, in his book entitled "Banking," that on one occasion he was talking to Mr. Montagu Norman, as he then was, about the weekly Bank Return. He said that he thought there was at least one line in it which he understood and that was "Gold Coin and Bullion." The Governor, with a twinkle in his eye, so Dr. Leaf relates, turned to him and said, "Mr. Leaf, I don't think you understand even that." Hon. Members will in future be able to ask Parliamentary Questions and to discover for themselves just what some of these things mean.

Some changes, they are relatively minor ones, have been made during the passage of this Bill. For example, words have been inserted to make it plain that my right hon. Friend has no intention whatever of interfering with the day-to-day work of the Bank and its customers. The inclusion of this limitation of course makes no difference. There never was on the part of the Government any intention of interfering between the Bank and its customers in this way. One is reminded of the early days of railways, when all sorts of fears, which now appear to us rather humorous, were voiced. Farmers, for example, believed that if a railway ran through their fields it would prevent their cows from giving milk. People said, when tunnels were first projected, that no-one who went through one in a train would live to come out on the other side. I think future generations will go back over the Debates on this Bill and will find some of our fears equally absurd and certainly equally quite groundless.

The late Earl Lloyd George, who was another Chancellor of the Exchequer, once said that "no Government will ever get a big programme through unless it is prepared to face up to the reactionary monetary interests in the City of London." This Government has, during the next four or five years, a very big programme to get through. It is essential, therefore, that it should begin at the right end. In putting through this Bill dealing as it does with the central financial structure of the country it has in my view begun at the right end. The reason for this Bill is not that any one questions the integrity of those who run the Bank of England. It is that it is fundamentally wrong, in our view, that the centre of finance and credit of this great democratic nation should be in the hands of a small group accountable to none except themselves. Parliament will now for the future take its financial destiny into its own hands and direct its own financial policy. Mr. Montagu Norman, in an expansive mood some years ago, said, "The dogs bark but the caravan moves on." During the passage of this Bill we have had a certain amount of barking by Members on the other side which has been on the whole friendly and not antagonistic. What is certain is that when this Bill reaches the Statute Book, as it will, the caravan will continue to move on but it will move on in a new direction. The City and the Bank will be the servant of the people and not, as it has been in the past, its master.

4.15 p.m.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

It may be that some new Members of the House have had rather a revelation in the conduct of this Bill. It is a Bill to which those of us who sit on this side of the House—with the exception of my hon. Friend the Member for East Aberdeen (Mr. Boothby) —are completely opposed, but the discussion has been carried on in a spirit very different from that of discussions which take place outside. I am sure the Chancellor must toe very gratified by the appreciation expressed to him by the Financial Secretary to the Treasury, seeing that the Chancellor did not do anything of the kind for the Financial Secretary to the Treasury on the Finance Bill. However, we have opposed this Bill at every stage, and we oppose it still, and shall divide the House against it.

No real argument has been put up by the Government for this Bill. We have had a selection of dead Chancellors of the Exchequer quoted to us, tout no arguments. The Bill is a bad one for this reason, that it puts into the straitjacket of legislative form, what has been a peculiarly loose but eminently flexible and workable arrangement between the Bank of England and the Treasury. The only reason given is that the Socialists have long advocated it. They have advocated a lot of nonsense in their time, and I have no doubt they will go on doing so. It must be admitted that the Bill has received careful consideration. Certainly more time has been devoted to it than to the American loan, Bretton Woods and the future commercial arrangements all put together. We had the Second Reading in one day; Select Committee upstairs; Committee of the Whole House one day and so much of today's proceedings as the Report stage and Third Reading will consume.

We sent it up to the Select Committee because it was a hybrid Bill, and it was necessary to see whether private rights and public rights were both safeguarded. There, it was Clause 1 which was mostly at issue, because that was the Clause which most directly affected any private rights. The Clause decrees that the whole existing stock is to be transferred to a nominee of the Treasury, and that Government stock will be issued, redeemable at par, on Government option, in 20 years or later. This is what the Chancellor of the Exchequer called '' merely an exchange of bits of paper." So far as the existing stockholders are concerned, for the next 20 years they will receive the same income as they had received for Bank of England stock, in the last 22 years.

The difficulty about this transaction is that none of us can say whether it is a good or a bad bargain, either for the stockholders or for the State, for the simple reason that, at no stage in the proceedings has any disclosure been made of the reserves held by the Bank. The Chancellor of the Exchequer in the Second Reading Debate said that, in his view, the terms of compensation are … fair to the shareholders, and, on the other hand, undoubtedly a good bargain for the State." —[OFFICIAL REPORT, 29th Oct. 1945, Vol. 4T5, c 47.] But on Monday he changed his mind and said that, on second thoughts, they were perhaps a shade too generous to the stockholders. He gave us no reason why his opinion between October and December should have changed, and, of course, for all we know, in the absence of full knowledge, it may be that the terms are too generous to the State. The unfortunate fact is that on this point Parliament has to decide the issue without knowing all the facts. But I think we can take it that perhaps the most important view on this subject is the view which was expressed by the Governor of the Bank who stated his own private opinion to the Select Committee. He said: In my- opinion the price stated in this Bill (and I only give this to you as my own personal opinion) is a fair and reasonable price for both sides. Well, the Governor knows the full position, the Chancellor of the Exchequer knows the full position, but the Commons of England do not. They are invited to pass this Bill without being fully aware of all the considerations. That, in itself, is a flaw. But we recognise that under this first Clause, which is the nationalisation Clause—provided the terms of Subsection (4) are carried out, that is that an annual sum of £873,180 is paid by the Bank to the State and neither more nor less, and provided that the same sum is paid out by the State to the holders of Government stock—there will be no financial gain to the State, unless, of course, it is the deliberate intention eventually to exact from the Bank—as can be done under the Bill—a greater sum than is necessary for servicing the Government stock, so taking advantage of a possibility which my hon. Friend the Member for St. George's, Westminster (Mr. Howard) pointed out, of making the Bank become, in a way, a help to the Exchequer, in the same way as the telephones and other public services are used for taxation purposes.

The Financial Secretary to the Treasury has been good enough to give us quotations from Mr. Gladstone, Lord Home, Earl Lloyd-George, Lord Norman and Mr. Leaf, but he did not give us anything from his own colleague, Lord Pethick-Lawrence who, in the middle of the Election—not 70 years ago but on 25th June this year, as reported in "The Evening Despatch" of the next day, said in dealing with nationalisation of the Bank: It is already very largely a Department of the Treasury. That was an awkward one for the argument which has been put forward to us. 1 hope the Chancellor will remember this one when he next sees his Noble Friend: If it is nationalised it would not make a pennyworth of difference to the bulk of the people in the country. This is the great reform which is necessary. And in the view of the chief financial expert of the Government—apart from the present Chancellor, of course—it is not going to make a pennyworth of difference. I take "pennyworth" as meaning financial difference and, therefore, all these speeches about how necessary it is to get the Bank in order that the profits should go to the people, do not go far. To Clause 1, therefore, we are opposed. We do not know all the facts, and we do not see that a useful purpose is to be served by this transfer from private to public ownership.

Clauses 2 and 3 I pass over, except to say that I am sorry we inserted Amend- ments in Clause 3 which indicated that the charter might not be ready in time for the Bank to function under the new system and that it might be necessary to keep portions of the old charter in being was disappointed when the Financial Secretary to the Treasury put that Amendment into the Bill because, after all, the Bill is not likely to be enacted before February and there are three months available before deciding upon the Appointed Day. It seems to me that November, December, January, February, March and April ought to be long enough lime in which to draw up a new charter. It would make for tidiness and I hope, therefore, that the Amendments we inserted will, in the end, prove to be a dead letter.

Of course, having dealt with the nationalisation issue, the really contentious part is Clause 4. It is almost by nature a "tacking" Clause, because it has really no relevance to the assets of the Bank. But it is a very dangerous Clause as it now stands. My right hon. Friend the Member for West Bristol (Mr. Stanley) when he was winding up the Debate on the Second Reading, said he was then opposing the Bill, not because it was dangerous, but because it was a sham. He said that, because we were in hopes that it would be possible to improve this Clause. Having failed in our attempts, it remains a dangerous Clause. There is always a risk of formalising something which, in the past, has worked well, and these powers of direction have in them an element of great danger to the banking system of this country. It is true that in Committee, and again this afternoon, certain safeguards have been introduced—I should say about one and a half. One perfectly good safeguard is that the affairs of a particular customer are not to be subject to requests or recommendations. The Chancellor of the Exchequer himself foreshadowed that Amendment on Second Reading, so that quite early in the proceedings he saw the Clause went too far. The Amendment we have inserted today giving an opportunity of representation, I rate at about half a safeguard, because it is one thing to make representations, but another to ensure that they will be successful.

In fact, the Chancellor has adopted a very good technique. He has not followed his colleague the President of the Board of Trade in having working parties but has the chairmen of the banks to a tea party and works on them to such an extent that they accept his assurances. The right hon. Gentleman made a statement on Monday of how he proposed to act, but I cannot help remembering that it is only the right hon. Gentleman's personal assurance, and that his successors may not care about what he said and what is recorded in HANDARD. Indeed, I am all the more nervous when I remember the cavalier way in which he treated. the question of postwar credits in the Finance Bill, contrary, in my view, to the assurances his then colleague in the Coalition Government, Sir Kingsley Wood, gave. However, he has granted the right of representation for what it is worth, and, therefore, to that extent, has slightly improved this Clause.

But, we cannot get away from it, the Clause does give very full powers to the Treasury, and it has been intended to do so, however much the speeches have wrapped up the intention. The Chancellor of the Exchequer may not wish, or intend, to use the power to their fullest extent, though even of that I am not quite so sure. The Treasury can give its directions to the banks, but the banks are brought by this Bill into a very new relationship to the Bank of England. We have failed in all our attempts we tried to insert safeguards, and so, as the Bill leaves us, the position is that the Bank of England can force other bankers to give credit to favoured classes; it can force other bankers to subscribe to shares that they do not want; it can force other bankers to purchase assets that they do not require, and it can force other bankers to sell assets they do not wish to sell. As one of my hon. Friends pointed out, by being able to distinguish between classes of customers, they might be forced to give credit to the co-operative societies and to refuse credit to small shopkeepers as a class.

All this sort of thing, which is inherent in the Bill as we now have it, does interfere with what has hitherto been the relationship of a banker with his shareholders and customers in his fiduciary capacity. It is true, I grant, that in the latter cases the initiative is with the Bank of England, but, on the other hand, it is equally true that the Treasury can give the Bank of England directions, and therefore the Chancellor, as he said earlier, is master of the situation. Here is a great power of interference with our existing banking system. I would only say that some hon. Members do not seem to object to the present system, and I would call in aid the Minister of Fuel and Power who, in his recent book called "The Britain that I Want '' wrote: So far as the great joint stock tanks are concerned, there is a great deal to admire in the precision with which they transact their day to day business. That is going to be interfered with. The hon. Member for East Middlesbrough (Mr. A. Edwards), speaking in this House on 7th July, 1943—much more recent than Mr. Gladstone—said: Whatever system we may have in the future, we have today the soundest and safest banking system in the world, and I do not want to alter it in the slightest unless we discover something much better." — [OFFICIAL REPORT, 7th July, 1943; Vol. 390. c. 2151.] I observe that the hon. Gentleman did not vote on the Second Reading of the Bill. It just shows that this interference is making great changes, and not changes for the better, and that is why we are opposing this Clause. The whole reason for it, and, indeed, the reason for the whole Bill, is to accord with the nostrums of the Socialist Party and the almost Mesopotamian incantation of the word "plan." Indeed, these directions are not necessary. Again, I would like to put on record the evidence of the Governor on this subject to the Select Committee. He was asked by my hon. Friend the Member for St. George's whether, in his experience, any information had ever been refused to him by the Banks. He said: I can reply to that most frankly. I have never been refused. Sometimes it has taken a lot of persuasion, but that is a different matter. I was asked on one occasion how we dealt with the financial community in the great banks of the City, and I said that we tried to persuade them. I was then asked ' Well, supposing your powers of persuasion fail, what happens then? ' I said, ' We just keep at the persuasion and sooner or later they give in '. He was then asked: In fact, your powers of persuasion have not failed? and he replied: No." In reply to the next question he said: Within my experience, the powers of persuasion have always been effective. If, through the difficult days of the war, those powers of persuasion were sufficient, there is no reason to suppose that they will not be adequate in the future. Indeed, no evidence whatever has been produced that the Bank of England has pursued a policy contrary to the Government of the day. On Monday, the Financial Secretary to the Treasury informed us of the various requests which had been made during the war, both by Lord Simon and by my right hon. Friend the Member for the Scottish Universities (Sir J. Anderson). There was no question that those requests were carried out. When, in a slightly ebullient moment just now, the Financial Secretary said never again would the working of the Labour Party be stultified by the City, I would ask, when was it stultified? In 1931 the then Chancellor of the Exchequer and the Governor of the Bank of England were working in perfect harmony in dealing with the problems with which they were faced. It may not have suited some of the extremists in the Labour Party, but, so far as one can judge, with regard to the Governor and the then Chancellor, harmony existed, although it must have been difficult to have harmony with Lord Snowden.

Photo of Mr David Kirkwood Mr David Kirkwood , Dumbarton District of Burghs

Would the right hon. and gallant Gentleman give way for a moment?

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

No. If I may sum up I would say —

Photo of Mr David Kirkwood Mr David Kirkwood , Dumbarton District of Burghs

What the right hon. and gallant Gentleman has said is not true.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

The hon. Gentleman can make a speech afterwards, and contradict what I have said. To sum up, I would say this. As my right hon. Friend pointed out the other day, and as we all agree, the Bank of England is a unique institution. It is not an ordinary central bank. It has an international status far exceeding that of any other bank in the world. All the tradition behind it, and all the flexibility are wiped away by this Bill, and it is brought into a wretched statutory form, with the Chancellor of the Exchequer as the real Governor. All this, for what purpose? It is for one purpose only, and that is to demonstrate to the supporters of the Socialist Party that in the first six months of existence, the Socialist Government have carried out one of their election promises—just one. Are there more houses? No. Has there been quicker demobilisation? No. Such deviations as are now being made are entirely the result of pressure from this side of the House. Is there more food, are there more clothes?

Photo of Mr Hubert Beaumont Mr Hubert Beaumont , Batley and Morley

The right hon. and gallant Gentleman is departing from the Bill.

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

With great respect, I was just coming to an end. I was explaining why this Bill was brought in, and that seemed to me to be very relevant. None of these things have been carried out, but the Chancellor can say to his followers: "You can go home, boys, for Christmas, and tell them that the Bank of England Bill is through the House of Commons." If they get any satisfaction out of that, they can do so, but we on this side of the House entirely reject the Bill. We think it is a bad Bill, and we shall vote against it. It is quite true that our numbers are insufficient to defeat the Bill, but we shall vote against it. We can only hope, for the sake of the nation, that our forbodings will not be realised but, if I may use a colloquialism, "What a hope."

4.38 p.m.

Photo of Mr David Kirkwood Mr David Kirkwood , Dumbarton District of Burghs

I wish to refer to a statement made by the right hon. and gallant Gentleman the Member for Gainsborough (Captain Crookshank), which was, in fact, a misstatement. He said that in 1931 the then Chancellor of the Exchequer was working harmoniously with the Bank of England. He may have been, but at that time we in this House drew attention to the fact—and well the right hon. and gallant Gentleman knows it—that the Bank of England intimated to the Chancellor of the Exchequer, Philip Snowden, that they wanted a rise in their percentage, and that they would not give what they had been asked to give, unless they got that increase. At the same time, we engineers were moving heaven and earth to get an increase in wages, but there was no increase for us. The terms of the Bank of England were an increase of one per cent. The result was that they got it, and Philip Snowden got a gold casket from the City of London.

4.40 p.m.

Photo of Lieut-Commander Joseph Braithwaite Lieut-Commander Joseph Braithwaite , Holderness

I was not able to be present at the Second Reading of this Bill, but I naturally went through the Report of the Debate with great care, studying, in particular, the speech of the Chancellor of the Exchequer on that occasion, and, of course, I also read the graphic descriptions in the Press of the enthusiastic scenes—the flourish of trumpets and the flourish of the election manifesto at what appeared to be an almost episcopal entry on the part of the right hon. Gentleman accompanied by the appropriate escort of acolytes and vestal Fabian virgins, all of whom appeared to be chanting with enthusiasm their processional hymn, "We have a mandate." What a different scene confronts us this afternoon.

Photo of Mr Hugh Dalton Mr Hugh Dalton , Bishop Auckland

The Opposition has collapsed; that is why.

Photo of Lieut-Commander Joseph Braithwaite Lieut-Commander Joseph Braithwaite , Holderness

The massed Socialist brass bands which played the triumphal march on that occasion have today petered out with an untuneful obligato on the Financial Secretary's piccolo. This Third Reading Debate is an occasion of bathos and of pathos, if I may say so. Where arc the serried ranks of cheering Members greeting the passage of this first Measure of nationalisation? The fact is—and hon. Members opposite know it better than anybody else—that the House has been wasting its time completely. The Bill never had much relation to fact, anyhow. After the events of last week it has none at all.

Photo of Mr Charles Gibson Mr Charles Gibson , Lambeth Kennington

What is all the bother about?

Photo of Lieut-Commander Joseph Braithwaite Lieut-Commander Joseph Braithwaite , Holderness

If the hon. Gentleman will listen, I am endeavouring to tell him. I was saying that the Bill never had much relation to reality, and now it has none. My reason for saying it is this. Controlled currency and planned economy, the control of investments and the State direction of credits have been sold down the river— the Potomac River—last week. At this season of good will, I can only sympathise with hon. Members opposite.

Mr. Sydney Silverman (Nelson and Colne): May I ask a question? With regard to the hon. and gallant Gentleman's last sentence, would he tell the House what he would have done on the Second Reading if the events of last week had not occurred? Are we to understand that if this agreement had never been made the hon. and gallant Member would have accompanied us into the Division Lobby on the Government side?

Photo of Lieut-Commander Joseph Braithwaite Lieut-Commander Joseph Braithwaite , Holderness

With your permission, Mr. Deputy-Speaker, if I am in Order —

Photo of Mr Hubert Beaumont Mr Hubert Beaumont , Batley and Morley

The hon. and gallant Gentleman would be out of Order.

Photo of Lieut-Commander Joseph Braithwaite Lieut-Commander Joseph Braithwaite , Holderness

No one regrets that more than I, with the possible exception of the hon. Gentleman. Perhaps he will see me afterwards. When I was interrupted I was endeavouring to introduce a seasonable note into my observations, and to remark that I can only sympathise with hon. Members opposite who came here last August with such high hopes. This, after all, is a fitting financial prelude to the first Socialist Christmas. As the right hon. Gentlemen opposite and their supporters consume on 25th December their meagre rations, huddled over such scanty fuel as they are allowed to use, I hope they will charge their glasses with non-existent wassail and say to one another, in that spirit of comradeship, which so endears them to their supporters: God's in His Heaven— All's right with the world. " The Bank of England has been nationalised, the sign of the almighty dollar has been hoisted in Threadneedle Street. Let us drink and be merry, for tomorrow we die."

4.45 p.m.

Photo of Mr Henry Smith Mr Henry Smith , Nottingham South

I am sorry for the party opposite. Not even the somewhat overdrawn analogies of the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) alter the fact that on this side of the House we have the very best of reasons for desiring this legislation. If the hon. and gallant Member is building his hopes on the events of last week I can assure him that, from my knowledge of the River Potomac, at least five years are going to elapse before the tides of that river are going to flow to the full, and there will be no bore down that river during that time; and meanwhile many defences will be erected by my right hon. Friend the Chancellor of the Exchequer.

Photo of Mr Robert Boothby Mr Robert Boothby , Aberdeenshire and Kincardineshire Eastern

May I ask the hon. Member to what kind of bore he refers?

Photo of Mr Henry Smith Mr Henry Smith , Nottingham South

It was not a reference to the hon. and gallant Member for Holderness. I was saying that I regard this as one of the occasions when my right hon. Friend the Chancellor of the Exchequer is at his very best. When he is good, he is very, very good; but my reputation for balanced judgment requires me to add that when he is bad, he is by no means so good as he might be.

The right hon. and gallant Member for Gainsborough (Captain Crookshank) has abandoned the indefensible position which he used to take up, that the Bill did not make any difference anyhow. Instead of that, we now have it on his authority that the Bill is thoroughly bad and dangerous. He quoted with some effect what was said by Lord Pethick-Lawrence when a Member of this House. I am going to rely upon my memory in quoting also from the present Lord Pethick-Lawrence. It will be a quotation which I am sure the right hon. and gallant Gentleman will remember, because it was made in this House about two years ago on the occasion of a Debate upon a Finance Bill. On that occasion, Lord Pethick-Lawrence told this House that our wartime experience had taught us that the capacity of a country to produce—that is to say the capacity of its industries to produce output—depended not, upon financial considerations but upon physical considerations, that is to say upon the skill of its workers, the technical knowledge of the industry, the raw material and the factory capacity. As Lord Pethick-Lawrence put it, we must cut our coat according to our cloth, but it is an economic cloth and not a financial cloth.

That is the whole reason for the introduction of the Bill. The experience of the country between the two wars, admirably summed up by my hon. Friend the Financial Secretary in the two words "Norman Conquest," was that not merely were workmen in idleness but technical skill was allowed to go without any work and allowed to rot. Factory capacity and land were permitted to be idle. These productive resources were idle because one individual in the City of London was able to say, "There is no money.' That can never happen again, thanks to the application of this Bill.

I want to give the party opposite one consolation. It is that if, in the years to come, when they are still occupying those benches, as they will be, they find that in this country there is a state of affairs in which men or productive capacity are idle for lack of money, they will be able to blame His Majesty's Ministers sitting on the Government Front Bench here, and no one else. The Bill will, at any rate, have done that for them. Their job as critics will be easier than our job was in between the two wars, when the power did not lie in this House but lay elsewhere. The right hon. and gallant Member for Gainsborough has a wonderful genius for talking at considerable length about the less important aspects of whatever Measure happens to be before the House. I can conceive nothing of greater insignificance than the mere question of the profits of the Bank of England. What does it matter if the shareholders get a lot of profit or a little? Who cares? Personally, I do not grudge any bank shareholders their profit. It is not a question of profit being made or not being made. What is important is that there is power under the Bill to regulate the rate of output of the industries of the country, and that the power lies where it ought to have lain long ago, namely, in this democratically elected House of Commons.

I can envisage certain changes happening as the result of Clause 4. I regard the Bill as so important as to be almost revolutionary. It gives tremendous power to the Chancellor of the Exchequer. Why should not the Treasury be able to direct the commercial banks? If any hon. Members opposite care to read the Macmillan Report they will find in paragraph 71 that the Bank of England has power very substantially to increase or to decrease the amount of circulating currency in the country, merely by its open-market operations. If the Bank buys gold, the Bank gets the gold for nothing, merely by writing out a draft on itself. If the Bank buys securities, it gets those securities for nothing in the same way. When the Bank buys securities and it buys them with a draft on itself, that draft becomes cash, so far as the commercial banks are concerned, and they lend at the rate of 10 to 1 on the amount of extra cash brought into existence by the open-market operations of the Bank of England.

In other words, every time the Bank of England creates, out of nothing, £1 and adds it to the circulating currency of the country, the commercial banks proceed to multiply that £1 by 10 and they put £10 of currency into circulation. The law of this country deals very harshly indeed with a forger, but after all, what does the forger do? He merely proposes a little illegal and unauthorised addition to the circulating currency. Much the same thing is done by coiners. Coiners, forgers and bankers are all in the same business. The Bill proposes that the Government should control the operations of bankers, who create out of nothing money which is circulated by cheque from one bank account to another as the currency of the country. It is about time that the Bill came into operation. If the right hon. and gallant Member for Gainsborough still does not appreciate the reasons for the Bill, let him read the melancholy history of the industrial depression in the period between the two wars.

I desire to make two suggestions to my right hon. Friend the Chancellor of the Exchequer before I sit down. Soon the Bill will be an Act of Parliament. The £1 notes and 10s. notes will pass from hand to hand after the Bank of England has been nationalised, just as they do now. I suggest to my right hon. Friend that he should take an early opportunity of arranging, directing or suggesting, it does not much matter how, that the £1 and 10s. notes shall have on the back of them an engraving of this House of Parliament and not of the 18th century Bank of England premises. I further suggest that on the front of those notes there should be a portrait of His Majesty, which the currency of the country ought to have. It was the party opposite which, in 1928, in the Currency and Bank Notes Act, took the effigy of His Majesty from off the £1 and 10s. notes, a change which I personally regretted and one which I hope will be restored.

My second suggestion is that we should put an end to the rather foolish spectacle of a body of guardsmen marching from their barracks to the Bank of England—

Photo of Viscount  Hinchingbrooke Viscount Hinchingbrooke , Dorset Southern

On a point of Order. May I ask what guardsmen marching from their barracks have to do with the Third Reading of the Bank of England Bill?

Photo of Mr Hubert Beaumont Mr Hubert Beaumont , Batley and Morley

I was waiting to see in what way the hon. Member developed his argument and how they came into the picture.

Photo of Mr Henry Smith Mr Henry Smith , Nottingham South

The question is of comparatively little importance. I am afraid I was sharing the guilt of the right hon. and gallant Member for Gainsborough and beginning to discuss something of trifling importance. I could not resist the temptation. If I have done wrong, I withdraw. The Bill is a charter of freedom for the English people. The House of Commons in passing this Bill is doing the right thing. We have been told that hon. and right hon. Gentlemen opposite are going to take this matter to a Division. Very well, we shall then have a black list of Members of this House who want to go back to the bad old days when output in our industries depended, not upon human skill and factory capacity for production, but merely on rows of figures in a book manipulated by private interests to suit themselves.

4.55 p.m.

Photo of Mr Nigel Birch Mr Nigel Birch , Flintshire

I always like to hear the hon. Member for South Nottingham (Mr. N. Smith), although I cannot always agree with some of the things he says. I must confess that the Douglas credit scheme wearies me. I wish the hon. Member would take up the wholemeal bread question. So far as the Bill goes, we probed into all its dismal details in Committee stage, and I must confess that that increased, rather than lessened my distaste for it. It goes against the principle in which we on this side of the House believe, which is that the onus of proof in making a change lies with the Government who are making the change. That is to say, that the Government have to prove that an institution has worked badly, and that what they are proposing to put in its place will work more effectively and better. Such proof has been conspicuously lacking. All we have had has been a mandate and, of course, a mandate is not an argument of any sort whatever. I believe that, as the years go by, hon. Gentlemen opposite will increasingly realise the value of that Conservative principle.

I take a slightly different view from that of some of my hon. Friends here. I believe that Clause 4 will actually reduce the power of the State. The Bank of England now has absolute power in the City provided it acts reasonably. They have only had to express half a wish in the past, and it has been granted. I believe the Bill reduces the power of a reasonable Chancellor and increases the power of a unreasonable Chancellor. I regret that it will decrease those powers because it has been a matter of delicate psychological adjustment in the City. Now it will be a matter of dealing directly with the State. The State always does provoke a certain measure of opposition. If you touch a bunch of grapes, some of the bloom comes off. That is what is going to happen. The real, valuable power that will be needed is going to be given up. The real reason this Bill is being put forward is not so much this matter of the mandate. The reason why this proposal was put into the mandate is that nationalisation of the Bank of England is a ritual punishment of the scapegoat for the errors and misfortunes of 1931. I have no doubt that hon. Gentlemen opposite have great need of psychological displacement of their sense of guilt, I suggest that what they should be looking for is a scapegoat for the errors and misfortunes of 1949.

4.58 p.m.

Photo of Sir Isaac Pitman Sir Isaac Pitman , Bath

I oppose the Bill because it takes away that most precious thing in all British institutions, the free association of people working freely and beneficially together. It seems to me, as my hon. and gallant Friend the Member for Flint (Lieut.-Colonel Birch) said, that it actually reduces the power of the Government in that respect by a double, and very unnecessary, double-locking of the door.

There are two main parts of the Bill. One deals with ownership and the other with management. With regard to ownership there is by Clause 1 an interference with the free association of the proprietors working freely and properly together. The Chancellor of the Exchequer has already pointed out how, by the past wisdom of this Parliament in the granting of Acts of Parliament and Charters, we have ensured that there should not be irresponsible interference by the proprietors with the proper management of the banks. I was a holder voluntarily of the Bank of England Stock and I shall become a holder of the Government Stock, not because I want to but because my freedom has been limited thereby and my holding prescribed for me. I can only either remain a holder of these new shares or I can sell them out in a free market and obtain something else instead.

Not however content with acquiring the powers of controlling the Bank of England which he will enjoy as the sole proprietor under Clause 1, the Chancellor under Clause 4 makes a further and, as I see it, unnecessary and vicious interference with this most precious and truly British principle of the free association of people working freely together. In the control of the Governors and Directors of the Bank which is given under Clause 4 (1), he is seeking to obtain what appears to be a mischievous and unnecessary addition to his powers as sole proprietor. It has already been admitted by the proprietors in Committee, and by the Chancellor himself, that there has been a very close and happy association between the Treasury and the Bank, and indeed there would have to be this close association. I think we might reject as antediluvian history what Gladstone or even Lloyd George said. Ever since this country has ceased working on a gold basis freely, this close association has been absolutely essential because the ultimate validity of the currency has rested solely on authority, which ultimately rests on this House. Accordingly there has since been and had to be a close and very friendly relationship between the Treasury and the Bank of England. At no stage in the proceedings over this Bill has it been authoritatively alleged that such free and proper association between Treasury and Bank has been in conflict with the wishes of the Chancellor of the day in the recent past.

If the Chancellor has been getting his own way in the past and if the Chancellor already has through ownership the control of that institution; if he has a Governor and Deputy-Governor who may be turned out or not re-elected in five years, and similarly a court of directors a quarter of whom will come up for election each year, another quarter in two years and so on, if all this, why does the Chancellor wish for the further control under this Clause? I submit that the only reason is that hon. Members opposite have put the Bank up as "big bogey number one," and that they wish to give justification for the past, a penal kick for the present, and a threat for the future. Secondly I think it arises out of their sheer love of control for control's sake, and out of an envious hatred of anything which is free and working properly under freedom. They dislike to see free association working well and smoothly in freedom. If, in place of an association of free people producing a good result, they cannot substitute forcible direction, they like to put in some power which could be invoked at any time, so that they can say that the good work is being done freely not because of the good sense and motives of those concerned, but rather because there is a power of compulsion in the background. Thirdly, I think it is a matter of personal vanity. The Chancellor likes to be in a position in which, when the Governor of the Bank comes to the Treasury, he must come as one who has no option other than to agree freely or to agree under this compulsion; the Governor's only possible protest is resignation. I listened very carefully during the Committee stage, and the way in which the proposal for laying regulations before Parliament as a half way stage to resignation of Governor and Director was opposed by the Chancellor showed to me quite clearly that the Chancellor wished to force upon the Governors and Directors the position of having no defensive weapon whatsoever other than resignation.

Clause 4 (1) is, I would thus contend, bad in principle. It is also bad in expediency. Under the present dispensations the Chancellor and the Bank got the best of both worlds, but now it seems that they may easily find themselves in international entanglements. The Bank of England acts sometimes as the banker for some nation like Czechoslovakia, or as the banker for some international bank such as the Bank for International Settlements, or Bretten Woods when it comes along. In the past it was quite possible for the Bank and the Treasury to be separate entities and so the Bank could deny the return of gold to Czechoslovakia without embroiling the Government and this nation politically, but under these present proposals the Government by taking power to issue directions are dangerously taking the responsibility on their own shoulders and denying to themselves the opportunity of the Banks independence which they are otherwise maintaining. They will find themselves embroiling the Foreign Office with the Bank of England and the Bank of England with foreign politics and affairs. That, it seems to me, is wholly stupid, very damaging, and potentially dangerous, and it is a point which I should strongly recommend to the Chancellor that he should look at again, and most carefully.

Clause 4 (3) whereby he takes powers to have directions issued to the joint stock banks is to my mind particularly inept, and its presentation to the Committee of this House was very inept also. The Chancellor failed to make the distinction between positive and negative control. He talked about priorities and about the long purse coming first in the affairs of the joint stock banks and other bankers. Let us recognise that if the Government want to pump out money and make it available, there is nothing whatsoever to prevent them from doing it now, through the Bank of England which they will then own. They do not need the clearing banks and smaller banks to do it. Let them realise that they can set up finance corporations and turn out as much money as they want; with their ownership and control of the Bank of England this will clearly be possible even if it was not possible—which it was— when the close association between the Treasury and the Bank were the means of bringing it about. There is no necessity whatsoever for the addition of the joint stock banks to the Bank of England. Do we consider that they will not wish to lend the money if the Bank of England will supply it? After all, there is no shortage of means for credit, and there is not likely to be any shortage of credit for some time, and, if there is, the Bank of England can, freely or under directions from the Treasury, make credit available through the joint stock banks. Are we really suggesting that the latter would not wish to make credit available if the Bank of England gave it to them and asked them to do it? or that the Bank of England could not make it available if in default? No, on the positive issue of making credit available there has been and there will be no difficulty. If however it is suggested that when that has been done there will be securities so rocky or with rate of interest so unattractive that not even the finance corporations formed by the Government or the Bank of England will provide the credit, that the joint stock banks should be forced to provide it—we may surely say that these powers ought not to be used. They appear thus to be wholly wrong.

On the negative side, again I think the Chancellor was inept in his presentation and did not make the House or the Committee fully understand the position. Banks are for the service of the community; they only reflect, they do not create, the atmosphere of that community. Their desire is the desire of Eve, their desire is of their customers. If customers do not come in and want to borrow they are powerless. The negative function of restricting credit can operate only when the customers are trying to borrow more than the banks and the Government think ought to be lent out. The Banks then have to restrict an over optimistic community. In times of boom everybody is optimistic or over-optimistic and they are the electors; it is the bankers and the Government who wish to restrict credit. In the past this restriction has been very difficult and to place squarely on the shoulders of the Government powers to direct the banks to resist restrictions is not making restriction easier but more difficult. Remember that this power to direct makes this House subject to pressure from vocal optimists who do not want to leave credit restricted at a time when there will be no support from the non-vocal pessimists. The addition of this power of direction when the whole electorate is watching is not in any way adding to the control over the financial machine. It is actually taking away from it, because the customer, as a result, has not only the power which he has as a customer over a bank, but also the power which he has as an elector to influence the House of Commons to direct the Bank. Just as in relation to financial arrangements between the Bank and foreign Governments or international banking institutions, the interposition of the political element is clearly wrong. Does the Bank need these powers? The right hon. and gallant Member for Gainsborough (Captain Crookshank) read out not the best bit from the Minutes of Evidence in Select Committee. I think one of the most effective bits was the reply of Lord Catto to the hon. Member for South Leeds (Mr. Gaitskell): We have never failed to get the banks to do what was wanted. I think it would not be very easy for me to go into details of these matters. Clearly, that is the case. It has never been difficult for the Bank of England to get the other bankers to co-operate. It ought indeed to be certain that the Banks will freely do what they are asked. After all, we have to remember that they know much better than the investing public that a slump is likely to follow a boom. If people are trying to borrow money from them and they are seeking to restrict that borrowing, they have always had in the Bank a very strong ally. More than that, they have to look to the Bank to help them through the stormy period which follows. The natural strength of the Bank is very great indeed in enforcing its action in this negative direction and there is thus as little need in the negative as there is in the positive for any directing powers. Credit control has been in the hands of the Treasury and with ownership by the Treasury of the Bank of England the further directing powers are solely harmful.

The final point I want to emphasise is that the Chancellor seems to be determined to force this double locking of the door. Not content with owning and controlling the financial machine, he wishes to doublelock it, and as I see it, to get himself in a very bad mess in the process. The hon. Member for Rugby (Mr. W. J. Brown) has said that Bills can never fall at one time into the three categories of being wrong in principle, being unnecessary, and being inexpedient in practice. All I can say is that this Bill must therefore be a very bad one, because it is all those three things.

Photo of Mr William Gallacher Mr William Gallacher , Fife Western

Is the hon. Member against the Bill?

Photo of Sir Isaac Pitman Sir Isaac Pitman , Bath

I am against the Bill. In the first place, the Bill is wrong in principle because it takes away something good, the freedom of people to work freely and do a good job because they wish to do it. Secondly, the Bill is unnecessary because on all sides it is agreed that the full powers which the Treasury has had have worked in such a way that the country has had the financial policy of the Chancellors of the Exchequer whom it has put into power. Thirdly, the Bill will work badly in practice because not content with matters of policy it injects politics into the working of the financial machine and the financial detail into the political machine.

5.17 p.m.

Photo of Mr Robert Boothby Mr Robert Boothby , Aberdeenshire and Kincardineshire Eastern

Having addressed the House recently on two occasions and detained hon. Members for over 30 minutes on each occasion, I propose to confine my speech now to three minutes. I rise only for the purpose of saying '' Hail and fare-well." Because I believe that the power to create and issue money should be formally vested in the State, I voted for the Second Reading of this Bill. In the present circumstances, it seems hardly to have been worth while. In the Debate on the Motion of Censure the Prime Minister referred to the fact that he was agreeably surprised by the quietness with which this transfer of economic power had been made; and that it had passed through the House so easily from Threadneedle Street to Whitehall. Although the party to which I belong has put up quite an effective opposition against the formal transfer of power, that transfer of power has admittedly gone through, with the assistance of the Government's large majority, comparatively smoothly and with great celerity, and with comparative quietude; but I would like to point out that the subsequent transfer of power from Whitehall to Washington has gone through with even greater celerity, although there have been a certain number of squawks from both sides. It remains only for me to express my regret that the sojourn of economic power in Whitehall should have been so brief and so uneventful. We on this side of the House will now watch with considerable interest how it fares on the other side of the Atlantic.

Photo of Mr David Jones Mr David Jones , Hartlepools, The

Is the hon. Member proud of the part his party played in the alleged transfer of power to Washington?

5.20 p.m.

Photo of Mr Arthur Howard Mr Arthur Howard , Westminster St George's

If any excuse were required for intervening in this Debate, it would be the words used by the Financial Secretary that the passage of this Bill marks an epoch, and that its importance cannot be over-estimated. The Bill does not cause me undue dismay—it would require more than this Bill to cause me dismay—but it does fill me with genuine and profound disappointment. My disappointment arises for this reason. There was considerable controversy during the General Election about the type of Measure that might be produced to deal with the Bank of England. In the Debate on the Address after Parliament had met, my right hon. Friend the Member for Woodford (Mr. Churchill) said that in his opinion the national ownership of the Bank of England did not raise any matter of principle. I subscribed wholly to that statement and I had hoped that that being agreed, all that we would have had to deal with would have been the question of the test method and manner of achieving the change of ownership. The reason I am so disappointed is that I honestly believe that, the matter of principle being out of the way, if the Chancellor had paid a little more attention to the genuine fears expressed on this side and had given rather more consideration to the constructive suggestions we put forward for improving the Bill, there could have been an agreed Measure. It would have been in the highest national interest if what had started out as a highly controversial Measure could have gone forward as practically an agreed Bill. I believe that was possible, and I believe the only reason it was not attained was the rigidity and obstinacy with which the Chancellor, while paying lipservice to the points that were made, refused, or found himself unable, to translate them into suitable words in the Bill.

If I may be forgiven for coming to the Bill itself, and not be ruled out of Order for so doing—I have noticed that a great many words have been used in this Debate which did not appear to arise directly from the Bill—I think we need not worry any more about the case put forward regarding the mandate for this Bill, because that is not in the Bill. The other case that has been put forward for the Bill is that it is logical. Perhaps insufficient attention has been paid to the merits of the Clauses of the Bill, particularly in relation to the extent to which they carry out the alleged reasons for the Bill as set out in the Preamble. In my opinion, the Clauses of the Bill go far beyond the Preamble. As to logic, the case that has been made for the Bill has been "Here is a state of affairs in existence; let us now translate it into legislative form." That really has been the whole case for the Bill.

With regard to Clause 1, which deals with compensation, I think the basis on which the Government have decided to arrange compensation is reasonable, as is also the manner in which it is applied. I regret that the Chancellor did not see his way to exclude that portion of the Subsection dealing with the rise and fall in payments from the Bank to the Treasury, but as that matter has already been mentioned in the Debate, I need not elaborate upon it. On Clause 2, which deals with the new directorate of the Bank, I think it is unfortunate that the Chancellor has not yet told us what are the intentions of the Government with regard to the appointment of the whole-time directors. These whole-time directors will necessarily occupy key positions, and it is very difficult to determine whether it would be better for them to be appointed by the Treasury or by the Court of the Bank. The Chancellor has failed entirely to tell us which of those courses it is proposed to follow.

As for Clause 3, which deals with the charters, I deeply regret that apparently the Government have not found it possible to consolidate these measures. What new Members unaccustomed to legislation by reference suffer from in this respect is almost indescribable. Here was an opportunity of getting into one document all that was necessary, and apparently the opportunity is to go by default.

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

On a point of Order, Mr. Deputy-Speaker. Is there not a Rule of Order about what it is possible to refer to in a Third Reading Debate? I thought that an hon. Member could only talk about what is in the Bill, and not what ought to be in it.

Photo of Mr Hubert Beaumont Mr Hubert Beaumont , Batley and Morley

That is true, but it is open to the Chair to allow a certain amount of latitude.

Photo of Mr Arthur Howard Mr Arthur Howard , Westminster St George's

I bow to your Ruling, Mr. Deputy-Speaker, but the hon. Member for Nelson and Colne (Mr. Silverman) will notice that the charter is referred to in the Clause.

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

Was not the hon. Member talking about what was not in the Clause?

Photo of Captain Harry Crookshank Captain Harry Crookshank , Gainsborough

Is it not the case that my hon. Friend was referring to Clause 3, Subsection 3, where there is a reference to So much of the said charters as remains unrcvoked.

Photo of Mr Hubert Beaumont Mr Hubert Beaumont , Batley and Morley

I think the hon. Member might be allowed to continue his speech, and I will call him to Order if necessary.

Photo of Mr Arthur Howard Mr Arthur Howard , Westminster St George's

The point I was making was that I think the position is unsatisfactory. The Financial Secretary to the Treasury, when dealing with this Clause in Committee, dealt with it in his usual manner of somewhat bewildered innocence. Within five minutes he made three distinct and contrary statements as to what were the intentions of the Government. He said that the charter: is now being drafted, and it will come into operation on the appointed day. A few seconds later he said: It might be that the Charter will not come into operation on the appointed day. And a minute and a half later, he said: The expectation is that it will be ready, but perhaps it will not." —[OFFICIAL REPORT, 17th December, J945; Vol. 417, c. 969–970.] All those statements are recorded on one page of the Official Report. I submit that when a statement of that character is made in Committee from the Front Bench in support of a Clause, the Committee are not being treated with the respect to which they are entitled. Clause 4 contains the real brunt of the Bill. I think it would be ungracious not to welcome the fact that the Chancellor saw his way to bring forward an Amendment which went some Way towards meeting our criticisms, although it did not go the whole way. This Clause provides that the Treasury shall have powers to issue directions to the Bank of England and that the Bank of England, if authorised by the Treasury, shall have powers to issue directions to other bankers. I was unable to catch the eye of Mr. Speaker on a previous occasion, and, therefore, I was unable to raise the point of, what is another banker. There is a definition Clause in this Bill which leaves it entirely open to the Treasury to determine who, and what, is a banker for this purpose. That seems to me undesirable and rather dangerous and I should have thought that it was possible to have had some statement from the Chancellor on what a banker is.

I am not a lawyer nor a banker, but I believe that there are, in existing Statutes, definitions of what a banker is, and we are entitled to ask why a new, completely wide-open door is introduced which allows the Treasury to define a banker for the purpose of this Bill. Why is that power introduced, if a definition of a banker is already in existence in some existing Statute. [Interruption.] I am afraid that I did not hear that observation, and, as I. am not a learned Gentleman I would probably have been unable to cope with it. No doubt there are learned Gentlemen in the House who would have been able to cope with it. I suggest that the main case for this Bill was based on alleged logic. The Chancellor has claimed that he is getting powers to do this and that. He has said that he needs those powers, and he has strongly resisted any attempt to restrict those powers. To what do those powers amount? Counsel presenting the case for the proposals of the Government before the Selection Committee used these words: There is no sanction brought in by the Bill to say that if such a request or direction is not complied with any legal consequences are to follow to the person who does not comply with it. I suggest, with due respect, that here is a complete fraud. The Chancellor is re-fusing to accept any diminution of powers. He is claiming for the benefit of his supporters and the public at large, that he is obtaining wide powers and that he needs them. Learned counsel briefed for the Government informs the Select Committee that there is no legal sanction behind these powers at all. Where is the logic of such a case? In a previous Debate the Chancellor, in referring to the private stockholder, used the phrase that the private stockholder was either "an absurdity "or "a menace," and he left it to hon. Members to select which of those terms they cared. The Chancellor, in this Bill, has founded himself on logic. He has asked for powers. Counsel for the Government have said that there is no legal sanction behind the powers contained in this Bill.

In those circumstances it is fair to describe these particular Clauses as both absurd and a menace. Obviously they are absurd, and the menace lies in the fact that there can be no purpose in them, unless that purpose is something which has not as yet been disclosed to the House. I think that the case for logic goes entirely by the board. I do not, however, wish to base myself on logic entirely; there are more important things than that. The Chancellor may say that economics are more important, but that does not matter. To remind him of that charming book of Stevenson's, "An Inland Voyage," he may remember that at one of those villages where the writer stopped, he came across a very talkative Frenchman, who was perhaps almost as talkative as I am, who concluded every dogmatic statement by saying, "It is logic." Stevenson's comment on that—if I can remember it, and I am quoting from memory—was," It is not a strong thing to rely on logic, and particularly one's own logic, because it is usually wrong." He then added, "There is an upright stock in a man's own heart which is trustier than any syllogism."

I think that after the passage of this Bill we shall have to rely mainly upon hope; upon the hope that the Chancellor and his advisers, in their administration of this Bill, will show greater wisdom and consideration than they have in its preparation and passage through this House. I hope that in that process of administration, in spite of his blunt and somewhat obstinate exterior, which sometimes appears almost menacing, he will not allow that to overrule his finer feelings and he will be guided by the "upright stock" which perhaps is hidden somewhere within him.

5.38 p.m.

Photo of Lieut-Colonel Roland Hamilton Lieut-Colonel Roland Hamilton , Sudbury

When this Bill was discussed on Second Reading, hon. Members opposite spoke with two voices. One voice said, "It is a most pernicious Bill," and the other voice said, "This Bill makes no difference whatsoever to anything and it is a waste of time considering it." In other words, they were sitting there carefully balanced on a fence, and did not know on which side to come down. Since that time, the Bill has been through many processes. No doubt all of them are necessary, though they are somewhat puzzling to new Members like myself. One would have thought that in all those processes, the Opposition would have had time to make up their mind on which side of the fence they really were going to come down.

It is interesting that here at the very last stage we still find the same two voices coming to us from the other side. In fact, judging also by last week, this habit of carefully balancing on a fence and being unable to take any decisive step, positive or negative, seems to me to be becoming almost a habit. It will be unfortunate for hon. Members opposite if they let that habit become permanent. Broadly speaking, they simply say that they dislike nationalisation of the banking system. They dislike the idea that the nation should own and control the whole of it, even the part that it does not yet own, or is not going to own, rather to my regret. Of course, they dislike that, and, of course, we like it, because it is the system for which we stand. The existing system concentrates the whole economic resources and power of the country in the hands of a small minority which in no way represents the broad mass of citizens of this country, and, naturally enough, they use that power largely for their own benefit, and, in any case, such a system definitely involves a state of artificial security. Therefore, we are out to supplant that system with an entirely different one.

My hon. Friend the Financial Secretary to the Treasury mentioned the mandate which we have received on this subject, and I would like to comment on that, because I represent one of the most rural of constituencies, and it might be thought that perhaps there a subject of this kind attracted no interest. Some of us remember the very entertaining speech made by, I think, the hon. Member for Oxford University (Sir A. Herbert) who drew a picture of yokels shouting from hedge to hedge the glad news of the nationalisation of the Bank of England. For my part I found that the question of nationalising the banking system was one of the best weapons in my armoury when I was talking to farm workers—the farm workers who put me in. I do not mean that I tried to explain all the detailed workings of our financial system but it was easy to explain the broad principles, the fact that money is actually created by the banking system, that the banking system directs the channel along which money is made to flow, and that very naturally, whoever owns the banking system, will direct it into channels and will create money to the same degree that is likely to make the best possible profits for himself.

Photo of Mr Brendan Bracken Mr Brendan Bracken , Bournemouth

Did the hon. Member tell his constituents who actually owned the Bank?

Photo of Lieut-Colonel Roland Hamilton Lieut-Colonel Roland Hamilton , Sudbury

At the present moment the Bank of England, until this Bill is nally passed, is owned by its shareholders, and it is the same with the joint stock banks. Am I not right?

Photo of Mr Brendan Bracken Mr Brendan Bracken , Bournemouth

There are over 200,000 shareholders in the four joint stock banks. Do they today control the banking system of the country?

Photo of Lieut-Colonel Roland Hamilton Lieut-Colonel Roland Hamilton , Sudbury

Yes, I quite follow that, and I think that the population of this United Kingdom of ours is in the region of 40,000,000, so that I think I was correct in saying that a small minority own the national resources.

Photo of Mr Hubert Beaumont Mr Hubert Beaumont , Batley and Morley

I was under the impression that this was a maiden speech and I therefore allowed the hon. and gallant Member a good deal of latitude. I now suggest that he should try to keep to the subject.

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

On a point of Order, Mr. Deputy-Speaker. May I ask you whether you have forgotten the calendar? Is not the right hon. Gentleman speaking in the same season of the year as the hon. and gallant Member?

Photo of Mr Hubert Beaumont Mr Hubert Beaumont , Batley and Morley

Only a certain degree of latitude is desirable.

Photo of Lieut-Colonel Roland Hamilton Lieut-Colonel Roland Hamilton , Sudbury

I offer my apologies, Mr. Deputy-Speaker, if I transgressed in any way. I have not a great deal more to say but I wanted to make the point that this mandate is a very general one from the whole nation. The people who gave it to us know exactly why they gave it to us, and, for my part, I am grateful to the Opposition for having the opportunity to emphasise the fact that they badly want to continue the bad old system, which has brought this artificial scarcity and concentrated power in an entirely undemocratic way into the hands of private individuals.

5.30 p.m.

Photo of Sir William Darling Sir William Darling , Edinburgh South

I had not intended to speak on this subject but the hon. and gallant Member for Sudbury (Lieut.-Colonel Hamilton) has given me the cue which enables me to introduce the remarks I have to make. The hon. and gallant Member says that this matter of the nationalisation of the Bank of England was of the weightiest importance to the electorate, and he tells us that, in the rural solitude of Sudbury, he found it a very important subject to discuss with the voters. I found that also. I found that hon. and right hon. Gentlemen opposite, during the recent election campaign, when they won a mandate from the nation, preferred to talk to the electors about the nationalisation of the Bank of England rather than the realities of the situation. I am not surprised that constituents in an agricultural community were regaled with the somewhat dull logic and questionable economics of the hon. Member opposite.

Photo of Mr David Kirkwood Mr David Kirkwood , Dumbarton District of Burghs

Is not the Bank of England a reality?

Photo of Sir William Darling Sir William Darling , Edinburgh South

The subject was not understood by the electorate, and, with all respect, it is not understood by the Government. I think it is deplorable that, after the first six months of this Parliament, this piece of legislation should be practically our sole Christmas gift. The subject of this Bill is a great institution which has passed into proverbial language, and has been referred to throughout the world in the phrase, "As safe as the Bank of England." I think we are saying "Goodbye" today to that piece of English speech. I am not at all sure that that safety, which it characterised in the days when it was proverbial, will remain with it under the plans set forth in this Bill. This Bank, which was the subject of intimate discussion between the hon. and gallant Member for Sudbury and his constituents—may I tell him, and, perhaps, he will then tell his constituents? —is an intricate, delicate and wonderful piece of commercial and financial mechanism. [Interruption.] It was built up, let me remind the hon. Member for Dumbarton Burghs (Mr. Kirkwood) by a great Scotsman, and, in its long record of successful management, it has often been associated with his country. This institution, which, I believe, will be finished tonight by the votes of hon. Members opposite, has grown up in the greatest period of British history. In its standard of credit and in the expansion of Britain's greatness this banking institution has done much for British commerce, and, if hon. Members opposite, when the day comes for their achievements to be written on the pages of history, can say that they put on the Statute Book something as valuable as the Bank of England, they can, indeed, count it no small triumph.

I feel that this is an historic occasion. Some of the observations we have heard from the other side of the House make me feel that hon. Members do not appreciate what they are doing and on what they intend to cast their votes. Very few members of the public and, indeed, a small number of Members of Parliament, know very much about financial operations. It is the great boast of the Socialist Party that they know nothing about finance. It is their proud boast and the basis of their case that they know nothing about this subject.

Photo of Mr George Jeger Mr George Jeger , Winchester

On a point of Order. Is it in Order, Mr. Deputy-Speaker, for an hon. Member to ascribe ignorance to us?

Photo of Mr Hubert Beaumont Mr Hubert Beaumont , Batley and Morley

I have been giving the hon. Member a good deal of latitude. I suggest that these constant interruptions will only encourage the hon. Member to carry on.

Photo of Sir William Darling Sir William Darling , Edinburgh South

I accept your guidance, Mr. Deputy-Speaker, and I shall endeavour to resist following these disorderly interruptions. I ask whether even from the point of view of the Government, with their deep convictions, its policy, to which this Bill seeks to give effect, is the wisest policy? Is it desirable that the State should be the sole authority, and the sole scapegoat for anything that goes amiss in this new type of organisation which they are building up—and, believe me, if it is in the interests of the country, I hope they will be successful in building it up—and should it be the final court of appeal? Is there not a better organisation in which the State, while directing and controlling, should not necessarily own and manage? Would the Government not be better off with the Bank of England outside their control? Is it desirable to eliminate all independent critical opinion on matters of public finance? Is it desirable that the Treasury should have another office in the City of London made up of "yes men," who have learned its language and speak its thoughts? Is that the kind of Government we want in a great, free, democratic community? Do we want bankers all of whom think absolutely alike? Is there to be only one theory of public finance and public banking in the days to come? If that is so, I think this will be an unhappy community.

We have today a great Chancellor of the Exchequer, but what guarantee have we that we shall have a succession of great Chancellors? So far as I know, angels do not have any progeny. The Chancellor has been spoken of as the guardian angel of the Treasury, but he cannot have any legitimate successor—

Photo of Mr Hubert Beaumont Mr Hubert Beaumont , Batley and Morley

I fail to see where angels come into the Bill.

Photo of Sir William Darling Sir William Darling , Edinburgh South

In this discussion, the Chancellor was referred to as a guardian angel, and I was following up that permitted observation by suggesting that, while he may be so described, not even the present Government can guarantee a succession of persons of angelic origin. This Bill deals with the price to be paid for this institution. There are a number of agricultural proverbs which remind me of the speech of the hon. and gallant Member for Sudbury. There is one about not killing the goose which lays the golden eggs, which is a suitable subject for agricultural workers to discuss in Sudbury. But that is not the principle followed by the Chancellor of the Exchequer in this Bill. The right hon. Gentleman has indicated that he is fully intent on buying a pig in a poke. As I said on Second Reading, I am disappointed not to know what we are getting for our £58,000,000. The Chancellor could not tell us. Is it too much or too little? I do not know, but has the Chancellor the right to say that we should tell our constituents that he has bought the Bank for £58,000,000, and if they ask whether it was worth it, we are to say, "Of course it was worth it; otherwise the Chancellor would not have bought it? "He has not condescended to give the details. What is the value of the assets of the Bank of England? I do not know. Here, beside me, is the hon. Member for Bath (Mr. Pitman) who is a director of the Bank of England, and he does not know. This House has a right to know. We are taking on a big banking industry. What are we getting for our money? Is this a false prospectus, because, as the right hon. Gentleman knows, there have been many in the past. I want to know, but I suppose I shall never know.

Photo of Lieut-Colonel Roland Hamilton Lieut-Colonel Roland Hamilton , Sudbury

I suggest that we are getting financial control of our own finances.

Photo of Sir William Darling Sir William Darling , Edinburgh South

I am grateful to the hon. and gallant Member. If he proceeds with his little country chats, he may be able to instruct other hon. Members as well as myself. If the Government will not tell me what they are getting for their £58,000,000, I would suggest an alternative proposal. They are taking over the Bank of England. It is not a very daring or gallant or adventurous thing to take over a long established, well-managed capitalist institution. Let me direct the attention of the House to another country in which they have made Socialistic experiments. The Commonwealth of Australia did not take over an existing bank. They set up an independent bank.

Photo of Mr Hubert Beaumont Mr Hubert Beaumont , Batley and Morley

The hon. Member should not be led astray so easily. Will he please get back to the Bill?

Photo of Sir William Darling Sir William Darling , Edinburgh South

The roads back to the Bill are so many, Mr. Deputy-Speaker

Photo of Mr Hubert Beaumont Mr Hubert Beaumont , Batley and Morley

If the hon. Member keeps to the strait and narrow path, he will not get into trouble.

Photo of Sir William Darling Sir William Darling , Edinburgh South

I shall endeavour to do so. The Commonwealth of Australia, I say, did not take over an existing bank, but courageously, and with initiative and character, set up a bank of their own, the Commonwealth Bank. That has not been done here. English Socialism travels rather slowly behind the Socialist experiments of the great Dominion, and I regret it, because there would have been some advantage in leaving the Bank of England as it was and setting up a State bank of their own creation and coming into being under this Bill.

Then there is the matter of directors. Like the hon. Member for Bath, I am dissatisfied with what I understand is the intention of the Government, to appoint 18 directors. Is this the fulfilment of the policy or jobs for all, because it indicates that 18 very good jobs will certainly be going? I hope hon. Members will not be discouraged by the fact that they are not available to Members of Parliament though they could easily resign their membership if they had the promise of a glittering directorship of the Bank of England as compensation, and I hope that will not discourage anybody. I feel that these undefined directors, who are to control the banking policy of the country in future, will have a great reaction upon the existing banking system. We have had a very fine banking system in this country—so good, so strong, and so stable that people in this country did not know that we had a banking system. That banking system is known to Continental people and to the United States. That banking system has never caused a moment's anxiety within the lifetime of anybody in this House. That cannot be said of the banking system of any other country In the world.

This new Bank of England will have intimate relations with the joint stock banking system of this country. What will those relations be? Will they strengthen the confidence of the depositors in the joint stock banks or will they weaken that confidence? Will they strengthen the confidence of the management of the joint stock banks and their sense of public responsibility, or weaken it? I am inclined to think that unless these directors are chosen with very great care and from conventional banking circles, it is extremely unlikely. I am gravely concerned as to the future of the joint stock banks in this country. Hon. Members opposite will have their answer, of course; they will say, "We have nationalised the Bank of England, we will nationalise the joint stock banks too." There is no limit to the rake's progress; the rake does not stop progressing until he lies flat on his face, drunk.

Photo of Sir William Darling Sir William Darling , Edinburgh South

As the hon. Member says, it will indeed be a sad Hogmanay. This is not a very happy gift to take home to Scotland, or, indeed, to any constituency. When I remember that this Measure is being associated in this very week with a loan of a most unfortunate character to this country—

Photo of Mr Hubert Beaumont Mr Hubert Beaumont , Batley and Morley

The hon. Member is fully aware that he cannot discuss that subject.

Photo of Sir William Darling Sir William Darling , Edinburgh South

I am reminded, Sir, that you have ruled it out of Order already, and consequently I will not pursue it. I will conclude by reading a very interesting little pamphlet which seems fairly to sum up the policy of His Majesty's Government. This pamphlet speaks of their plans in finance and in industry: It shall bring science and modern technique to rebuild our broken economic system. It shall bring also new values and a new morality to rebuild that broken faith of a nation. Public service and private liberty shall be its twin pillars. All shall serve the interests of the nation in their public life. All shall receive from the nation in return a real liberty in private life. These are sentiments which hon. Members opposite will agree. [An Hon. Member: "Hear, hear."] I am glad to hear at least one honest cheer. I do not blame the rest of the hon. Members opposite for being slightly doubtful, for these are sentiments of Fascism in Britain contained in a pamphlet written by a late member of the Socialist Party, Sir Oswald Mosley. I am against this Bill because it is part of that totalitarian build-up which I believe— I see much of it in this House—will go far to destroy the ancient liberties of our people.

6.4 p.m.

Photo of Mr Hugh Dalton Mr Hugh Dalton , Bishop Auckland

As the hon. Gentleman the Member for South Edinburgh (Sir W. Darling) has said, in his most agreeable, though not always strictly relevant observations, we must all face the future— that was one of his wisecracks. Therefore the Government are asking this House to pass this Bill. The hon. and gallant Member for Sudbury (Lieut.-Colonel Hamilton) was one of the sensations of the last Election. He was what Oliver Cromwell would have called "one of our crowning mercies," because not even the gloomiest Tory thought before the election that they could lose Sudbury. It is indeed remarkable that my hon. and gallant Friend has emphasised to the House this afternoon that one of the great factors which turned the Tory stronghold of Sudbury into a Labour seat was my hon. and gallant Friend's clear exposition of the policy lying behind this Bill. It is evident that this Bill has behind it a great mass of informed public opinion throughout the country. It was in the forefront of our programme in the election; it is in the forefront of our legislative proposals in this first great Session of this new Parliament, and I compliment the Opposition on having been able for so long to continue the Debate, in view of the evident, overwhelming weight both of public opinion outside this House and of logical argument within it, in favour of the Bill.

I have been pressed by many hon. Members to announce what it is we are getting in exchange for £58,000,000, which has been placed as the value to be paid in compensation to the present stockholders of the Bank. Hitherto I have resisted the temptation to answer the question but I feel, in view of the many requests that have been made to me from the other side of the House, that the time has come when it is due to the Opposition to tell them. The answer is, for £58,000,000 we are getting much more than £58,000,000 of value.

Photo of Mr Hugh Dalton Mr Hugh Dalton , Bishop Auckland

My right hon. Friend must not press me too far. I have gone a considerable distance in meeting the very reasonable demand of the Opposition, but he must not turn reasonable demands into unreasonable ones.

Photo of Mr Brendan Bracken Mr Brendan Bracken , Bournemouth

What possible reason can there be for not giving us this figure? I can well understand that, when the Bank was a private institution, it was probably undesirable to disclose its hidden reserves, but now that the State has control of the Bank of England—or will shortly get control—the credit of the State is at least as good as the Bank's, and there can be no question but that the Chancellor should tell the House what we have got for the £58,000,000. After all, the Socialist Party have always talked about publicity and finance. They have gone all over the country talking about it.

Photo of Mr Hugh Dalton Mr Hugh Dalton , Bishop Auckland

We have not yet passed the Bill into law. Who knows but that in another place there may be a great challenge to the will of the people, and I will reserve the right, in relation to the circumstances of the time that may be involved, to answer, perhaps at a later date, with slightly more precision. For the moment, however, I go far beyond anything that has hitherto been revealed to the Opposition when I say that we are getting in return for £58,000,000 substantially more than £58,000,000 worth of public assets, and that ought to satisfy the Opposition.

Passing away from this reasonable matter of compensation, and since the hon. Member for Bath (Mr. Pitman) is a great graph addict, he will, I am sure, have been the first to observe the great significance of the graphs published in the Report of the Select Committee

Photo of Viscount  Turnour Viscount Turnour , Horsham

What is a graph addict?

Photo of Mr Hugh Dalton Mr Hugh Dalton , Bishop Auckland

A graph addict is a person who is addicted to the use of graphs, in the same way as a drug addict is a person addicted to the use of drugs. The graphs which are displayed in the Report of the Select Committee very greatly shook my confidence in some of the advice that I received earlier on as to what was fair compensation. It really seemed that we had, as I said the other day, been a shade too generous, but His Majesty's Government is by nature generous and we do not wish to drive too hard or unconscionable a bargain with our fellow citizens who happen to own this particular stock. Therefore, in spite of the very interesting results shown in this graph, I have not thought it right to make any Amendments in the compensation terms. We stand by our bargain even if that bargain was perhaps a little more favourable to the stockholders than we had supposed.

I will speak briefly on Clause 4 which has been much debated. I am quite confident that the working of this Clause will be satisfactory to the public interest. I am quite confident that, on the one hand the Governor of the Bank and those associated with him and, on the other hand, the clearing banks, will be prepared to co-operate one with another and with the Treasury in enabling this Bill to be a real instrument for coherent financial planning of the resources of the country. That is what the Bill is for. At the present time we have a Bank of England institutionally most eccentric. We have a. Bank of England owned by a number of private stockholders and organically detached from the Government machine and from the control of this House. It is impossible now to get past the table, as the phrase goes, any question relating to anything done by, or on behalf of, the Bank of England. We think that that is wrong from the democratic point of view —and references have been made to democratic control in this Debate. We think it should be possible for hon. Members of this House to put questions and to raise debates regarding the central monetary and banking policy of the country. As the result of this Bill, for the first time that will become possible. We give the House of Commons new opportunities for the discussion of these free and fundamental matters, new opportunities hitherto denied them by reason of the constitution of the Bank and the past Rulings of the Chair which have, of course, Mr. Deputy-Speaker, been perfectly proper in the light of the existing legal situation. All that is changed for the better and in a democratic direction.

Furthermore, so far as the joint stock banks arc concerned, we are asking them to come into a partnership with the Bank of England, with the Treasury, with the Government, and with the House of Commons in working out to the best advantage according to a continuing plan, extending over years, developed and elaborated as we go on, for fixing priorities, for guiding the credit of the country into directions most conducive to the public interest. We arc asking them to enter into this partnership and they, at any rate, have taken no part in any raging, tearing propaganda against the Bill. They are by no means committed to agreement with it or to controversy on it, but they have played a very proper and patriotic part in so far as they, too, have recognised the mandate given by the country to us, not only to transfer the Bank of England into public ownership, but also to take the necessary steps to harmonise the operations of the other banks with national needs and with industrial requirements. I pay my tribute to the chairmen of the joint stock banks, with whom I have been in friendly conversation over a cup of tea—because they came at tea time; at another hour of the day it might have been something else.

I hope this close relationship will continue. I see no reason whatever why it should not, and I regret very much any attempt by any hon. Member opposite to stir up ill-feeling and bad blood between His Majesty's Government, the Governor of the Bank of England, and the chairmen of the clearing banks. It is very wrong to raise such thoughts or to seek to sow such suspicions between those who, till now at any rate, have co-operated most harmoniously. This Bill, in Clause 4, provides a framework within which such co-operation can continue. I agreed in the discussions in Committee to insert Amendments in the Clause to make abundantly clear that there will be consultation with those concerned before directions—if ever they should be needed —are actually issued.

Such consultations there shall certainly be, and it maybe that those directions will be so rare, so unusual, as to be practically a dead letter in the strictly legal sense. If, however, need should be, it must be clear who is master, and it must be clear on the face of the Statute, without ambiguity or shuffling, that in the last resort this Government, supported by a majority in this House—themselves sent here by a majority in this country—are to be masters of the great decision in its favour. It is on that democratic principle that we stand, reinforced by the judgment of the country, and therefore I ask that this Bill shall now be read a Third time.

6.16 p.m.

Photo of Mr William Brown Mr William Brown , Rugby

Mr. W. J. Brown(Rugby) rose

Hon. Members:

Divide.

Mr. Brown:

I will not detain the House long, but I think I ought to say with some bluntness at the outset that if there was anything calculated to make me do so, it is opposition from the other side of the House, more especially in view of the fact that I am about to support the Government. In this House every Member has his own rights, and so far as I am concerned I shall exercise those rights. I spoke on the Second Reading of this Bill, and I gave it very strong support. I want now to support the Third Reading, and, in doing so, to dispose of two or three of the arguments advanced from above the Gangway, and to state what I conceive to be conclusive reasons why this Bill should go forward. It is obvious from the Debate today that there are Members on this side of the House suffering from schizophrenia or split personalities. They cannot make up their minds whether to regard this Bill as an item in a large-scale plan of nationalisation, of which every item has got to be resisted—because if they do not resist the parts they cannot resist the whole—or whether this Bill is to be considered on its own merits and to be judged on its advantages or disadvantages. That is the fundamental division in the minds of the Opposition today.

Photo of Mr Robert Boothby Mr Robert Boothby , Aberdeenshire and Kincardineshire Eastern

I want to know whether I am included in the category of split personalities.

Photo of Mr William Brown Mr William Brown , Rugby

It will be within the experience of the House that a solitary star shines brightest in the darkest sky.

Photo of Colonel Alan Gandar-Dower Colonel Alan Gandar-Dower , Penrith and Cockermouth

The hon. Member was addressing the House and referring to one solitary star, but there arc two stars—one is behind me.

Photo of Mr William Brown Mr William Brown , Rugby

The trouble about the second star is that its brilliance is being overshadowed by passing clouds. First, we are said, in the language of the hon. Gentleman who spoke from the back bench, to be dealing with the Bank of England when we ought to be dealing with the "realities of the situation." Now let me make it plain that I am not an advocate of unrestrained nationalisation. I think that it would be a misfortune if we ever reached a stage where the majority of the people of this country were employed by the State. I think that there must always be sufficient industry and enterprise outside the range of the State to prevent the State becoming the sole regulator of the life of the people, from the cradle to the grave. But whether it is a Socialist Government or whether it is a Conservative Government, which is in question, I cannot conceive how a Government can govern without the powers contained in this Bill. That is a matter which ought to interest the entrepreneurs of industry and the captains of industry, just as much as it does the workmen of industry, because the former have been the victims of our old banking system, as much as the latter. A little later on I will quote my own experience, as a capitalist, of the banking system.

I hold that we are dealing with realities here and fundamental realities at that. I will quote two of them. One is the effect that the releasing or restriction of credit can have on putting millions of men into work, or millions of men out of work, within a matter of a very few weeks. That may not be a fundamental reality to my hon. Friends on the Back Bench, but it is to millions of people in this country. The power of so regulating credit, by a private-owned institution, that can put millions of men in work or out of work according to the way it expands credit or restricts it, is not a power which we ought to allow to remain in the hands of any private group of individuals whatever. We know that this has happened in our lifetime.

We know that another great reality happened too. There was a fundamental distortion, with tremendous social consequences, in the direction of investments in this country by the banks because for them the test was not social good, but profit. In the interwar years you would have found it very difficult to raise money for shipbuilding in Britain, difficult to get money for producing coal or for agriculture. But you could get all the money in the world for cinemas, pubs, and dog race tracks. We have paid dearly for this distortion during the war. I remember once conceiving the idea of starting a holiday camp and this brought me into contact with the banks. I conceived the holiday camp idea, and I built the first modern holiday camp in Britain. I went to the bank to borrow money. Now that idea of mine was socially a very good idea. But it had not been tried out, and there was no assurance that it would succeed or make a profit, and so I could raise no money from the banking system of Britain except on the basis of "collateral security." Those words are written on my heart. What they meant, in my vocabulary, was that if you had not got any money you could not have any; but if you had some you could have some more. Not having any money, and not being able to get any from the bank, I borrowed right, left and centre from my friends.

I raised enough money to get this interesting experiment going. It was an immediate success. It was imitated all over the country. And now it is a substantial industry in Britain. What happened when war came? When war came my company had an overdraft—not because we had spent money injudiciously, but because we had spent it in expanding the business. The Government took over our companies. We had a protracted, emphatic and somewhat vehement discussion as to the amount of compensation the Government were to pay. They took a long time to come to a conclusion. In the meantime I got letters from my bank talking about our overdraft, and referring to the necessity of "reducing "—another word written on my heart! Ultimately I was compelled to be stern with the bank.

Photo of Mr Hubert Beaumont Mr Hubert Beaumont , Batley and Morley

I must be stern with the hon. Member. Will he please keep to the Bill?

Photo of Mr William Brown Mr William Brown , Rugby

I submit that it will be found that this story has very great relevance.

Photo of Mr Hubert Beaumont Mr Hubert Beaumont , Batley and Morley

Will the hon. Member make it applicable at once then?

Photo of Mr William Brown Mr William Brown , Rugby

At this festive season, Sir, you would not have the heart—

Photo of Mr Hubert Beaumont Mr Hubert Beaumont , Batley and Morley

There are limits to my endurance.

Photo of Mr Samuel Silverman Mr Samuel Silverman , Nelson and Colne

On a point of Order, Mr. Deputy-Speaker. Surely the hon. Member is entitled to give illustrations about how credit is controlled. That is what he was doing. That Bill proposes in Clause 4 to direct the Bank in circumstances of this kind.

Photo of Mr William Brown Mr William Brown , Rugby

I want to bring the story to a conclusion. I had to be very stern with these fellows. I said that if I had any more trouble with them they should not continue to look after my overdraft for a day longer. I have had no trouble since.

Now all this does illustrate that the principles which guided the banking system of Britain were not what were socially desirable or necessary. It was not—Will, this redound to public good? None of the tests of social desirability were applied. What was applied was this: Can you pay so much per cent. interest and pay back the principle within a given number of years, and give us security in the meantime by means of "collateral security." The result was that there was an immense disbalance in our internal economy in Britain. The How of money went in a socially undesirable direction, away from the industries most necessary to our survival, especially in time of war. We paid in this country in agricultural shortage, shortage of food; in coal, shortage of fuel; and in shipping for the errors that permeated the whole of the banking morality of this country in the inter war period. I say that there are two great realities. They are the control of credit, with its effects on employment and unemployment, and the control of the flow of money affecting the balance or disbalance of the whole social economy. From these two realities it is apparent that the Government cannot govern in Britain unless it has the powers that this Bill gives it.

Next, it is disgraceful, in my view, that operations of that magnitude should be out with the control of this House of Commons. The Chancellor of the Exchequer is perfectly right on this. In the 1929–31 Parliament I tried to table three questions. I wanted to know who were the directors of the Bank of England. I wanted to know what was the amount of their holdings in the Bank of England. And I wanted to know what was the amount of their holdings in foreign financial houses—three questions to which, I think, every Member in this House is entitled to know the answer. I was told that the Bank of England was a "private institution." I said that I thought that it was a "public nuisance." I submit that is intolerable. This is a matter which does not only affect the workmen. I marvel that long ago there has not been combination between the captains of industry and the workmen against the parasitical, financial institutions of this country, which thrive on capitalist enterprise and labour alike.

It is said that the Bank of England has been "wonderful." I would have said "fearful and wonderful." And as for being as "safe as the Bank of England," the blessed thing was founded on the bankruptcy of a Monarch and it has gone "bust" six times. Safe? It is unsafe that these powers should rest in hands other than those of responsible Government, answerable to Members of this House. I cannot see how the Government can plan any kind of ordered community in Britain if this power is not in their hands. There are other items which I will not support in the proposals for nationalisation. There are others I will support. I think that these things have to be considered on their merits. The answer to some will be "aye" and the answers to others will be "nay." But I am clear that Government must have the powers asked for in this Bill. For these reasons I shall vote for the Third Reading, as I voted for the Second Reading, with the firm conviction that I am doing good not only for the workmen of this country, and for enterprise in this country, but doing good for the idea of a balanced community, in making the money power answerable to the great democracy of this country.

6.30 p.m.

Photo of Captain Albert Blackburn Captain Albert Blackburn , Birmingham King's Norton

I desire to make a few comments and I have decided to make them only because of the speech which the hon. Gentleman the Member for Rugby (Mr. W. J. Brown) has just made. I may be unpopular as the result of making them, but I still propose to make them. I welcome this Act of Parliament, and I welcome the general principle which everybody has approved, but I am convinced the only real criticism of this Measure should have come from the Left in this House and not from the Right. There is no power, whatever, under this Bill for the Chancellor of the Exchequer or this House to deal with the granting or withholding of credits in relation to big business such as Austin's and Cadbury's in my part of the country, or Imperial Chemical Industries, or Lever Brothers.

Photo of Mr William Brown Mr William Brown , Rugby

There is another Bill which the Government is bringing forward which does deal with investments in this way, and this present Bill is essential to the functioning of that.

Photo of Captain Albert Blackburn Captain Albert Blackburn , Birmingham King's Norton

There are two perfectly separate questions and issues here. One, as the hon. Gentleman knows, is that of bank credits and the other con-

cerns the flow of investments. They are perfectly separate subjects, and as far as the meaning of credits is concerned there is no power under this Bill whatsoever to inquire into the affairs of Imperial Chemical Industries or Lever Brothers. I am not making an attack on the Front Bench; I am simply trying to say that in future, when Measures come forward, I would like hon. Members to know that, in my opinion, the people of this country are not being fully represented on the Floor of the House of Commons, or even on the benches from which I am speaking. The mass of the people of this country would be prepared for further action even in relation to the granting of credits. I look forward to the further matters to which the hon. Gentleman has referred with the greatest interest. I hope my right hon. Friend on the Front Bench will believe that I have made these unpopular observations only because I desire, so far as I can, to fulfil the spirit of the Blackpool Conference.

Question put, "That the Bill be now read the Third time."

The House divided: Ayes, 306; Noes, 126.

Division No. 59.]AYES.[6.35 p.m.
Adams, Capt. Richard (Balham)Brown, T. J. (Ince)Driberg, T. E. N.
Adamson, Mrs. J. L.Brown, W. J. (Rugby)Dugdale, J. (W. Bromwich)
Alexander, Rt. Hon. A. V.Bruce, Maj. D. W. T.Dumpleton, C. W.
Allen, A. C. (Bosworth)Buchanan, G.Durbin, E. F. M.
Allen, Scholefield (Crewe)Burden, T. W.Dye, S.
Allighan, GarryBurke, W A.Ede, Rt. Hon. J. C.
Alpass, J. H.Butler, H. W. (Hackney, S.)Edelman, M.
Anderson, A. (Motherwell)Byers, Lt.-Col. F.Edwards, Rt. Hon. Sir C. (Bedwellty)
Anderson, F. (Whitehaven)Callaghan, JamesEdwards, John (Blackburn)
Attewell, H. C.Champion, A. J.Edwards, N. (Caerphilly)
Austin, H. L.Chater, D.Edwards, W. J. (Whitechapel)
Ayles, W. H.Chetwynd, Capt. G. R.Evans, E. (Lowestoft)
Ayrton Gould, Mrs. B.Clitherow, R.Evans, S. N. (Wednesbury)
Bacon, Miss A.Cluse, W. S.Fairhurst, F.
Baird, Capt. J.Cobb, F. A.Farthing, W. J.
Balfour, A.Cocks, F. S.Foot, M. M.
Barstow, P. G.Collick, P.Forman, J. C.
Barton, C.Collins, V. J.Foster, W. (Wigan)
Battley, J. R.Colman, Miss G. M.Freeman, Maj. J. (Watford)
Bechervaise, A. E.Comyns, Dr. L.Gaitskell, H. T. N.
Belcher, J. W.Cooper, Wing-Comdr. G.Gallacher, W.
Bellenger, F. J.Corlett, Dr. J.George, Lady M. Lloyd (Anglesey)
Berry, H.Corvedale, ViscountGibbins, J.
Beswick, Flt.-Lieut. F.Cove, W. G.Gibson, C. W.
Bing, Capt. G. H. C.Crawley, Flt.-Lieut. A.Gilzean, A.
Binns, J.Daggar, G.Glanville, J. E. (Consett)
Blackburn, Capt. A. R.Daines, P.Gooch, E. G.
Blenkinsop, Capt. A.Dalton, Rt. Hon. H.Gordon-Walker, P. C.
Blyton, W. R.Davies, Edward (Burslem)Granville, E. (Eye)
Boothby, R.Davies, Clement (Montgomery)Grenfell, D. R.
Bottomley, A. G.Davies, Ernest (Enfield)Grey, C. F.
Bowden, Flg.-Offr. H. W.Davies, Haydn (St. Pancras, S.W.)Grierson, E.
Bowen, R.Davies, S. O. (Merthyr)Griffiths, Capt. W. D. (Moss Side)
Bowles, F. G. (Nuneaton)Deer, G.Gruffydd, Prof. W. J.
Braddock, Mrs. E. M. (L'p'l, Exch'ge)de Freitas, GeoffreyGuest, Dr. L. Haden
Braddock, T. (Mitcham)Delargy, Captain H. J.Gunter, Capt. R J.
Brook, D. (Halifax)Diamond, J.Guy, W. H.
Brooks, T. J. (Rothwell)Dodds, N. N.Hall, W. G. (Colne Valley)
Brown, George (Belper)Douglas, F. C. R.Hamilton, Lieut.-Col. R.
Hannan, W. (Maryhill)Montague, F.Smith, H. N. (Nottingham, S.)
Hardman, D. R.Moody, A. S.Smith, S. H. (Hull, S.W.)
Hastings, Dr. SomervilleMorgan, Dr. H. B.Smith, T. (Normanton)
Haworth, J.Morley, R.Snow, Capt. J. W.
Herbison, Miss M.Morris, P. (Swansea, W.)Sorensen, R. W.
Hobson, C. R.Morrison, Rt. Hon. H. (Lewisham, E.)Soskice, Maj. Sir F.
Holman, P.Moyle, A.Sparks, J. A.
Horabin, T. L.Murray, J. D.Steele, T.
House, G.Nally, W.Stephen, C.
Hoy, J.Naylor, T. E.Stokes, R. R.
Hubbard, T.Nichol, Mrs. M. E. (Bradford, N.)Strachay, J.
Hudson, J. H. (Ealing, W.)Nicholls, H. R. (Stratford)Stubbs, A. E.
Hughes, Hector (Aberdeen, N.)Noel-Baker, Capt. F. E. (Brentford)Swingler, Capt. S.
Hughes, Lt. H. D, (W'lverh'pton, W.)Noel-Buxton, LadyTaylor, H. B. (Mansfield)
Hynd, H. (Hackney, C.)O'Brien, T.Taylor, R. J. (Morpeth)
Hynd, J. B. (Attercliffe)Oldfield, W. H.Taylor, Dr. S. (Barnet)
Isaacs, Rt. Hon. G. A.Oliver, G. H.Thomas, I. O. (Wrekin)
Irving, W. J.Orbach, M.Thomas, John R. (Dover)
Jeger, Capt. G. (Winchester)Paling, Rt. Hon. Wilfred (Wentworth)Thomas, George (Cardiff)
Jeger, Dr. S. W. (St. Pancras, S.E.)Paling, Will T. (Dewsbury)Thomson, Rt. Hn. G. R. (Ed'b'gh, E.)
Jones, D. T. (Hartlepools)Palmer, A. M. F.Thorneycroft, H. (Manchester, C.)
Jones, P. AsterleyPargiter, G. A.Thurtle, E.
Keenan, W.Parker, J.Tiffany, S.
Kenyon, C.Parkin, Fit-Lieut. B. T.Timmins, J.
Key, C. W.Paton, Mrs. F. (Rushcliffe)Tolley, L.
King, E. M.Paton, J. (Norwich)Ungoed-Thomas, L.
Kinghorn, Sqn.-Ldr. E.Pearson, A.Usborne, Henry
Kinley,JPeart, Capt. T. F.Vernon, Maj. W. F.
Kirkwood, D.Perrins, W.Viant, S. P.
Lavers, S.Piratin, P.Walkden, E.
Lawson, Rt. Hon. J. J.Platts-Mills, J. F. F.Walker, G. H.
Lee, F. (Hulme)Porter, E. (Warrington).Wallace, G. D. (Chislehurst)
Leonard, W.Pritt, D. N.Wallace, H. W. (Walthamstow, E.)
Leslie, J. R.Proctor, W. T.Warbey, W. N.
Levy, B. W.Pryde, D. J.Watkins, T. E.
Lewis, A. W. J. (Upton)Pursey, Cmdr. H.Watson, W. M.
Lewis, J. (Bolton)Randall, H. E.Webb, M. (Bradford, C.)
Lipson, D. L.Ranger, J.Weitzman, D.
Lipton, Lt.-Col. M.Rankin, J.Wells, P. L. (Faversham)
Logan, D. G.Rees-Williams, Lt.-Col. D. R.Wells, Maj. W. T. (Walsall)
Longden, F.Reeves, J.,Whiteley, Rt. Hon. W.
McAdam, W.Reid, T. (Swindon)Wigg, Col. G. E. C.
McAllister, G.Rhodes, H.Wilcock, Group-Capt. C. A. B.
McEntee, V. La T.Ridealgh, Mrs. M.Wilkes, Maj. L.
McGhee, H. G.Roberts, Sq.Ldr. Emrys O. (M'rion'th)Wilkins, W. A.
McGovern, J.Roberts, W. (Cumberland, N.)Wilkinson, Rt. Hon. Ellen
Mack, J. D.Robertson, J. J. (Berwick)Willey, F. T. (Sunderland)
McKay, J. (wallsend)Rogers, G. H. R.Willey, O. G. (Cleveland)
McKinlay, A. S.Royle, C.Williams, Rt. Hon. E. J. (Ogmore)
Maclean, N. (Govan)Salter, Rt. Hon. Sir J. A.Williams, J. L. (Kelvingrove)
McLeavy, F.Sargood, R.Williams, Rt. Hon. T. (Don Valley)
Macpherson, T. (Romford).Segal Sq.-Ldr. S.Williams, W. R. (Heston)
Mainwaring. W. H.Sharp, Lt.-Col. G. M.Williamson, T
Mann, Mrs. J.Shawcross, C. N. (Widnes)Willis, E.
Manning, Mrs. L. (Epping).Shawcross, Sir H. (St. Heiens)Wills, Mrs. E. A.
Marshall, F. (Brightside).Shinwell, Rt. Hon. E.Wilson, J. H.
Mathers, G.Silverman, J. (Erdington)Woods, G. S.
Maxton, J.Silverman, S. S. (Nelson)Wyatt, Maj. W.
Mayhew, C. P.Simmons, C. J.Yates, V. F
Medland, H. M.Skeffington A. M.Young, Sir R. (Newton)
Messer, Skeffington-Lodge, Lt. T. C.Zilliacus, K.
Middleton, Mrs. L.Skinnard, F. W.
Mitchison, Maj. G. R.Smith, Capt. C. (Colchester)TELLERS FOR THE AYES:
Monslow, W.Smith, Ellis (Stoke)Capt. Michael Stewart and Mr. J. Henderson
NOES.
Aitken, Hon. M.Clarke, Col. R. S.Erroll, Col. F. J.
Amory, D. HeathcoatClifton-Brown, Lt.-Col. G.Fletcher, W. (Bury)
Assheton, Rt. Hon. R.Conant, Maj. R. J. E.Fraser, Lt.-Col. Sir I. (Lonsdale)
Baldwin, A. E.Cooper-Key, E. M.Galbraith, Cmdr. T. D.
Barlow, Sir J.Crookshank, Capt. Rt. Hon. H. F. C.Gammans, L. D.
Baxter, A. B.Crowder, Capt. J. F. E.Gates, Maj. E. E.
Beamish, Maj. T. V. H.Cuthbert, W. N.Gomme-Duncan, Col. A. G.
Bennett, Sir P.Darling, Sir W. Y.Gridley, Sir A.
Bireh, Lt.-Col. NigelDavidson, ViscountessGrimston, R. V.
Boles, Lt.-Col. D. C. (Wells)De la Bère, R.Hannon, Sir P. (Moseley)
Bower, N.Dodds-Parker, Col. A. D.Hare, Lt.-Col. Hon. J. H. (W'dbridge)
Boyd-Carpenter, Maj. J. A.Dower, Lt.-Col. A. V. G. (Penrith)Haughton, S. G.
Bracken, Rt. Hon. BrendanDrayson, Capt. G. B.Hinchingbrooke, Viscount
Braithwaite, Lt.-Comdr. J. G.Drewe, CHogg, Hon. Q.
Butcher, H. W.Duthie, W. S.Hope, Lord J,
Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n)Eccles, D. M.Howard, Hon. A.
Carson,E.Eden, Rt. Hon. A.Hudson, Rt. Hon. R. S. (Southport)
Hulbert, N. J.Maude, J. C.Sutcliffe, H.
Hurd, A.Mellor, Sir J.Taylor, Vice-Adm. E. A. (P'dd't'n, S.)
Hutchison, Lt.-Cdr. Clark (Edin'gh, W.)Moore, Lt.-Col. Sir T.Teeling, Fit.-Lieut. W.
Hutchison, Lt.-Col. J. R. (G'gow, C.)Morrison, Maj. J. G. (Salisbury)Thomas, J. P. L. (Hereford)
Jeffreys, General Sir G.Neven-Spence, Major Sir B.Thorneycroft, G. E. P. (Monmouth)
Joynson-Hicks, Lt.-Cdr. Hon. L. W.Nicholson, G.Thornton-Kemsley, Col. C. N.
Lancaster, Col. C. G.Noble, Comdr. A. H. P.Thorp, Lt.-Col. R. A. F.
Law, Rt. Hon. R. K.Nutting, AnthonyTouche, G. C.
Lindsay, Lt.-Col. M. (Solihull)Orr-Ewing, I. L.Vane, W. M. T.
Linstead, H. N.Peake, Rt. Hon. O.Wakefield, Sir W W.
Lloyd, Maj. Guy (Renfrew, E.)Pitman, I. J.Walker-Smith, Lt.-Col. D.
Low, Brig. A. R. W.Ponsonby, Col. C. E.Ward, Hon. G. R.
Lucas, Major Sir J.Poole, O. B. S. (Oswestry).Webbe, Sir H. (Abbey)
Lucas-Tooth, Sir H.Raikes, H. V.Wheatley, Col. M. J.
Lyttelton, Rt. Hon. O.Reed, Sir S. (Aylesbury) White, D. (Fareham)
McKie, J. H. (Galloway)Renton, D.White, Maj. J. B. (Canterbury)
MacLeod, Capt. J.Sanderson, Sir FWilliams, C. (Torquay)
Macmillan, Rt. Hon. HaroldSavory, Prof. D. L.Williams, Lt.-Comdr. Gerald (T'nbr'ge)
Macpherson, Maj. N. (Dumfries)Scott, Lord W.Willink, Rt. Hon. H. U.
Maitland, Comdr. J. W.Shepherd, Lieut. W. S. (Bucklow)Winterton, Rt. Hon. Earl
Manningham-Buller, R. E.Smith, E. P. (Ashford)York, C.
Marlowe, A. A. H.Spearman, A. C. M.Young, Sir A. S. L. (Partick)
Marples, Capt. A. E.Spence, Maj. H. R.
Marsden, Capt. A.Stanley, Rt. Hon. O.TELLERS FOR THE NOES:
Marshall, Comdr. D. (Bodmin).Stoddart-Scott, Col. M.Commander Agnew and Mr. Studholme
Marshall, S. H. (Sutton).Stuart, Rt. Hon. J.

Question put, and agreed to.

Bill accordingly read the Third time, and passed.