§ Order for Second Reading read.
§ Major GLYN
I beg to move, "That the Bill be now read a Second time."
It is necessary to give some reasons why the Bill has been introduced in this way. My hon. Friend the Member for Bedford (Mr. Wells) introduced a Bill in regard to this matter and Lord. Carson introduced another Bill in another place. The Bills were considered by a Joint Committee of both Houses, representative of all parties, presided over by the eminent judge, Lord Darling, and the result of their deliberations was to put forward suggestions and this Bill incorporates a good many points both in the Bill of my hon. Friend and also in Lord Carson's Bill. The reason it is introduced by me and not by my hon. Friend is simply that I was fortunate enough to draw a place in the Ballot and, having been myself a member of the Committee, I thought it right to select this Bill as the one to be introduced under the Ballot. I recognise that my hon. Friend and others who had considered the matter have really a prior claim to introduce.
Why is it necessary to have another Bill? I think we must all agree that the evidence given before the Select Committee proves that the existing Moneylenders Acts are not in every respect satisfactory. There is undoubtedly a public demand that the whole question should be gone into. I think it is the business of this House not to take a prejudiced point of view one way or another, but to see that, there is fairness and justice done. The Bill contains one or two new Clauses. On the whole, however, it is the result of the deliberations of that Committee and also certain suggestions which have been proposed by the Home Office and the Board of Trade. Before I agreed to introduce it, I obtained from the Home Secretary the approval of his Department and of the Government, because it is necessary that it should receive the blessing of the Government and that time should be given if it 1542 is to go through all its stages, and I understand my right hon. Friend is willing to accept it on behalf of the Government.
We propose to follow, to a large extent, the recommendations of those moneylenders who have carried on a perfectly legitimate business and have done their part, on the whole, for the good of a great many people who, not having much private means of their own, and not therefore possessing a banking account, should not be deprived of the opportunity of raising money, as frequently occurs in the case of working men, in family emergencies and in equipping themselves for accepting a new outlook and a new opening in life. Therefore I want to make it clear that this Bill is aimed at much at the assistance of those moneylenders who are carrying on their business in a legitimate way as it is aimed at checking the disastrous methods both of the so-called West-End sharks and also of those people who in the slum districts of our great cities are inclined to lend, at the very highest possible rate, small sums to the poorest people and get them into their toils, from which they find it extremely difficult to release themselves. In 1818 the House of Commons introduced legislation which brought to an end the Usury Laws. In 1854 the last trace of the Usury Laws was removed. In 1874 it was prohibited to grant loans to minors, and in 1892 circulars to minors were prohibited. In 1898 that Select Committee sat whose recommendations formed the basis for the Bill that was subsequently introduced in 1900. The Select Committee of 1900 reported as follows:Your Committee have unhesitatingly come to the conclusion that the system of moneylending by professional moneylenders at high rates of interest is productive of crime, bankruptcy, unfair advantage for other creditors of the borrower, extortion from the borrower's family and friends, and other serious injuries to the community, and although your Committee are satisfied that the system is sometimes honestly conducted they are of opinion that only in rare cases is a person benefited by a loan obtained from a professional moneylender and that the evil attendant upon the system far outweighs the good. They therefore consider that there is an urgent need for the intervention of the Legislature with a view to removing the evil.Those are strong words and it is clear, since the evil exists to-day, that the legislation that followed the recommendations of that Committee has not been altogether 1543 productive of the good results that were hoped for. Therefore the first thing we have to do is to see how far we can recognise that this profession of moneylending will always be with us and do all we can to help those moneylenders who are willing to conduct their business on proper lines and do all we can without being unduly vindictive—vindictiveness does no good in legislation—to check those designs of people of evil character, frequently aliens, who wish to prey upon the people of the country. We therefore propose to go in for a system of licensing. A moneylender will have to obtain a licence. He cannot obtain a licence until he has first obtained a certificate. There are various things which qualify him for a certificate and there are various actions which will disqualify him from having a certificate. I know this is a matter upon which a great many people are unable to agree. It is said that by licensing certain moneylenders you will throw a cloak of respectability over them because they may be inclined to say, "Here am I, licensed by His Majesty's Government, a man of great and high repute. Surely you can trust me absolutely and you will not be let down." I think it is rather absurd to suppose that because a man has to obtain a licence, for which every year he will have to pay £15, and thereby help to reduce the burden of debt of the country, he is going to be considered a highly respectable person. In the Committee we were clear that the existing system of legislation is defective. First of all, there is no control as to who should obtain the right to be on the register. Practically anyone can be on the register, and they pay £1 for it. We want to make the good and respectable moneylenders—and there are many of them—realise that theirs is really an honourable profession if honourably conducted, and none of them told us in evidence that they would object to pay a licence of £15. On the other hand, a large number of moneylenders in the slums of our great cities—
§ Major GLYN
Many of them women, who are worse than the usurers mentioned by Shakespeare, are people with- 1544 out any mercy. If those people do not obtain a licence, they will be liable to severe penalties. As far as I can see, it is almost impossible to find out any method other than this which will prevent these small street moneylenders continuing to exercise their profession. The hon. and gallant Member for Central Hull (Lieut.-Commander Kenworthy) says that these small women moneylenders in Liverpool and other great cities will not be affected by this Bill. I do not understand how he can say that; they must be affected if they make a profession of lending money, because they must first obtain a certificate and then a licence.
In the newspaper press the one newspaper which has done more than any other to draw attention to the evils of moneylending is the weekly newspaper "Truth". It has done great service in showing up the evils of moneylending. I understand that it has been felt that the licensing of moneylenders should include the endorsement of the licence. I agree, and upon conviction the licence will be endorsed. That will prevent the magistrate, when a renewal of the certificate is asked for, from granting the application, because it will not be shown that by his conduct the applicant has been worthy of the position of being a moneylender. We put it in that way because we want to elevate the position of the moneylenders and to discourage the sharks and the people who practice these evils on their fellow workmen. We wish to assist in every way we can the proper conduct of the moneylending business. Therefore, although the House will recognise that there may be a slight evil to the borrower in thinking that because a moneylender is licensed that he has respectability put on him, I think the danger is far less than the advantage the borrower will obtain by these people being licensed, and our being able to control and check definitely the persons who practice moneylending in this country.
Another point of importance is that of advertising. We are all flooded with circulars. We all get circulars from wine merchants and every sort of firm. It may be asked, "Why not stop wine merchants from sending circulars"? I agree that we shall never by any legislation prevent the fool and his money from being quickly parted. I do not pretend that any legislation that this House can pass will alter 1545 the character of individuals; of course, it will not. But some circulars are framed in such a way that it would appear the recipient will be considerably more than a fool if he does not take advantage of the philanthropy advertised, and the extraordinary benefits he will obtain, with no cost to himself, by having recourse to these gentlemen. We are, therefore, suggesting that there should be no moneylenders' circulars or documents sent out to anybody, unless the would-be borrower, first of all, applies to the moneylender to have this most illuminating literature sent to him. In response to such request, the would-be borrower is entitled to get the literature of the moneylender sent to him.
The moneylenders will be allowed to advertise in the newspapers, but they must in that advertisement give their name, and it must be their proper name, and not an assumed name. There is one particular firm to which, personally, I have had no recourse, but which has been so good as to adopt my name. They have actually circularised me with the request that I should go to them for money, and in the circular they state that the name of Glyn is a very respectable name. With that statement I entirely agree, but I strongly object to the fact that because one happens to be lucky enough to have a respectable name, that that name should be used in order to induce other people to trade with those who have assumed that name, and that by assuming that name they acquire a respectability which we for many years have, with great difficulty, built up in our own family.
Therefore it seems to me that we must, if we can, incorporate into this legislation the provision with respect to business names in the Registration of Companies Act, 1916, and also the provision in the Companies Act, 1917, which requires the names of directors to be published. These provisions do not appear in the Bill now before the House. I hope that when we reach the Committee stage —it need not be a long Committee stage, because we sat for the whole of last summer on this Bill—we shall meet objections, if they are proved in a friendly and proper manner. Our idea is to make the Bill useful and not further to complicate an already complicated situation. If we have existing legislation which makes it 1546 necessary for people to declare their names, then in this Bill if people choose to usurp somebody else's name, they should be made to state their real name, whether it be Rubinstein or some other such name, and not Glyn, Jones, Brown, or whatever name they choose to assume. No registered name should be used as a cloak, unless we have the real names of the individuals.
A further point is contained in Clause 5. which is a new clause. In this Clause we make it essential that no contract shall be binding unless it is in writing, and unless a copy of that contract remains in the hands of the borrower, and also is fully explained to the borrower, and, further, that it should be done in plain English. Here I wish to say, with all due respect to hon. Members who belong to the legal profession, that I, as a non-lawyer draw a distinction between legal language and plain English. We must have plain English, whether the parties concerned in the transaction are Englishmen and Englishwomen or Scotswomen or Welsh women. The object of the clause is that there should be no dubiety at all in regard to the terms of the contract. If that provision is enforced, and it must be enforced, otherwise severe penalties follow, it will do a very great deal to prevent the tricky language which has done so much harm in the past.
On this point I wish to say something to the right hon. Member for Newcastle-under-Lyme (Colonel Wedgwood). In the original Bill, we had a proposal that the Post Office should be empowered to open letters. I asked my right hon. Friend why he took such objection to the Bill before it was printed. He had on the Order Paper a reasoned Amendment for its rejection. I thought that he might have waited until he saw the Bill. He realised that as I had been a Member of the Committee who had considered the question that I should include in this Bill the Clause for the opening of correspondence by the Post Office. When he told me that that was his objection, I agreed with it, and that provision has conic out of the Bill. I think it was quite unnecessary. The moneylenders are very clever and, if I may use the word, they are also very cunning types of persons. I know that in my case when I was a junior officer in the Army and I 1547 went overseas I felt intense disappointment on receiving a letter in some distant part, the address of which was, obviously, in a lady's handwriting. Although the handwriting was not well known to me, still I had hopes of what that letter might contain, and I burst open the letter only to find that it was a request that I should have recourse to some firm of moneylenders. It is the ordinary practise of the moneylender to make the handwriting on letters as attractive as possible. Therefore, my right hon. and gallant Friend must recognise that there might be considerable embarrassment both to himself, which he obviously felt, and also to me, if our correspondence in ladies' handwriting were subject to being opened by the minions of the Post Office. For that reason, I am glad to take that provision out of the Bill.
A further point on which Lord Carson has laid great emphasis, and a point on which I think we must all be agreed, even those who oppose the bill, is that although there may be evils in regard to moneylenders themselves, the man who is the most pernicious hanger on in that profession is the tout. The tout is disguised in many ways. One thing which has been brought to my notice since I have been associated with this Bill is the fact that there is a common practice in many of our great cities for men employed by moneylenders to make it their business to find out when a death has occurred in a house, a working man's house as a rule. These men go and pose as sympathetic friends. They go to the wife and say, "I am so sorry that your husband has died. I am afraid you are very badly off." They then discover by very clever conversation whether the deceased workman was insured. With a little effort, he finds out the amount for which the man was insured and then he says, "We will help you in your great bereavement. You cannot possibly do what you should: give your husband a proper funeral on the money he has left." These men are associated with undertakers and moneylenders, and not one penny of the insurance money that that man has carefully put by goes to the benefit of his widow and children thanks to the tout, the crocodile who eats upon unhappy things. He arrives there and seizes all that the man had put aside 1548 for the benefit of his widow. It is one of the most dastardly and lowest things a man can do, therefore we have put in this Bill the most severe penalty for touts and commission agents.
I hope the House will recognise that the practice of touts and commission agents is one of the chief causes why many young officers, and young men generally, are led into the way of temptation. These touts are not only associated with moneylenders, they are frequently interested in bookmakers. Betting is a matter of personal opinion. It is perfectly right for a man to make a bet if he wishes, but it is very foolish thing for a man to make bets if he cannot afford to lose, and as he generally loses it is a very lucrative thing for the bookmaker. These touts are not only in close communication with moneylenders, but they are frequently employed by bookmakers, and I hope the House will recognise that it is not wise to reduce the penalty we propose to put on these touts and commission agents. Every person who is found to be in association in what we consider to be an illegitimate way with money-lenders is to be liable to a penalty of £100 or three months imprisonment—not one penny too much, or a day too long. I do not propose to weary the House by going into every detail of this Measure, because there are many hon. Friends who are greatly interested in the question whose legal knowledge enables them to give greater emphasis to the points in the Bill from the legal aspect. There are one or two things in regard to the Bankruptcy Law which, I think, are very rightly inserted in the Bill and which will prevent moneylenders walking off with everything there is.
§ Major GLYN
No, not like the landlord, because the landlord is more frequently a benefactor than a moneylender. I know there are hon. Members in this House who have some proposals to make in regard to the bankruptcy procedure, and an hon. Member opposite, who was a colleague of mine on the Select Committee, has, I know, one or two proposals to make on this point. We are only too anxious in the Committee stage to meet hon. Members in every way. We 1549 want to make this Bill a fair Measure, not a vindictive one, and we believe that when the Committee stage is reached we shall be able to put small points of that sort right.
I wish to come to the crux of the whole question. In the old days it was considered unnecessary to put any standard into a Measure in regard to the rate of interest which should be charged. When we considered this Bill in Select Committee we had not that far-sighted experience which officials of Government Departments have, and, therefore, when we suggested that the standard of interest should be 4 per cent. per month we forgot that there are 28 days in the month of February, 31 days in other months, and 30 days in some other months. That means the most frightful complications if the standard is based on a rate of 4 per cent. per month. It has been changed to "at the rate of 48 per cent. per annum." That is not intended to be a maximum or minimum. It is intended to be a guide. Lord Darling, who has great experience in these matters, told us he was convinced that it was very difficult to say what was harsh and unconscionable if no standard was set, and after most careful consideration, and considering the average rate of interest charged in other transactions, it was agreed that we should put in the rate of 48 per cent. per annum.
§ Major GLYN
No, it is not a maximum; it is put in as a guide. When these cases go to the court the court will hear what are the facts, and if the interest is mere than 48 per cent. it is up to the moneylender to prove that it is not harsh or unconscionable in all the circumstances. We are told that this will be of assistance to the courts and to decent moneylenders, and I hope the House will agree to insert a general standard of that sort in order to assist the court in judging what is harsh and unconscionable. The other point is what courts shall have jurisdiction. This is an important matter. Under the Order in Council, which will have to be laid on the Table of this House, it will be possible to make Regulations as to what courts shall have the right to deal with these matters. That is not a matter for this House to decide but for the Lord Chan- 1550 cellor and those who are responsible in seeing that the law of the country is properly carried out. I think the Lord Chancellor can surely be trusted to make proper rules and regulations in order to see that the proper courts are used for this purpose.
In the Select Committee we had the most amazing evidence regarding certain courts in this country which are quite out of step with modern progress. There is a court called the. Court of Record at Derby, and the Court of Passage at Liverpool. The Court at Derby only meets about four times a year, and about 75 per cent. of its business is moneylending business. The moneylenders found out that this ancient court had great powers, and that if they had a branch office in Derby they could use this court. They did so, and they summon their borrowers to appear at this court at Derby, whose methods are entirely unknown to the ordinary solicitor. The result is that the wretched borrower gets no legal assistance. I have studied some of the records of the cases before this, court. Without mentioning names, I can say that one man associated with this court has informed me by letter that as a result of the actions before this court he has seen more misery created than he ever thought possible. This court is kept going by the business done by moneylenders using this old and ancient procedure with is not really understood. by the modern lawyer. This Bill will make it possible for the Lord Chancellor to make such rules as will prevent justice being made ridiculous in this way.
Last of all I want to say that we have put in a new Clause which deals with pawnbrokers. That is a most thorny and difficult problem. The pawnbroker undoubtedly fills a great need in this country and on the whole the pawnbroking business is conducted very fairly and reasonably. It is not our intention in this Bill to do anything to upset the proper conduct of the pawnbroker's business. But we do want to block every possible hole into which the clever moneylender, finding himself hunted by this Bill and by the minions of the law, who are given new powers under this Bill—we want to prevent him bolting down these holes by stopping them up. One of the most obvious holes is the pawnbroking profession. The moneylender will pop down that hole and 1551 suddenly turn up as a pawnbroker. He will say to a man, "Look here, I am not a moneylender for the purposes of Act; I am a pawnbroker. Have you a collar stud?" The man will reply, "Yes," and he hands over the collar stud, and pawns it.
§ Major GLYN
It might be a diamond stud. The hon. and learned Member for Argyllshire (Mr. Macquisten) knows so many people who can afford to wear diamond studs and I have no doubt they would not be obliged to have recourse to the law. I was thinking of those whose horn stud would be taken as a pledge in order that the moneylender might lend money at an exhorbitant rate of interest.
Pawnbrokers have sent letters to those who are interested in this Bill, and we hope and believe that by the Clause as drawn we have met the objections of the profession. They do not want their profession dragged down by the sudden accession to their ranks of undesirable persons from the moneylending profession, and we recognise that fact. Therefore, the pawnbrokers, as the decent moneylenders, are, I believe, able under this Bill to protect and save their profession from being made a disgrace to this country. Moneylending, I suppose, has brought more sadness and more distress to the homes of the people than any modern practice. The trouble is largely due to the ignorance of people, and also due to the fact that educational methods in the past have not been directed sufficiently to making people aware of the trickery that can be played by the English language when expressed in odd ways. Probably a very large number of persons who have recourse to moneylenders never take the trouble to read the actual terms of a contract. If they did read it through it is very doubtful if they would understand it.
Grandmotherly legislation is a great deal overdone nowadays. What we want to do is to encourage the character of people rather than to protect them from their own follies. I believe it has been proved by modern practice that existing legislation is not adequate, and that new legislation is necessary. This Bill was considered most carefully all last year. If it receives a Second Reading to-day 1552 and goes to a Committee, all of us should unite, irrespective of party, to improve it, recognising that to-day happens to be the 23rd April, which is St. George's Day. I would like to feel that on this day the House of Commons has tried to kill the dragon which has done a great deal of harm in this country. I do not want to harrow the House by mentioning hard cases. We could all give the details of hard cases, for every Member of this House knows the damage that is being done. I ask the House to consider very carefully whether we ought not to do what we can to help people, the borrowers, and the moneylenders who want to carry on their business properly. We also want to prevent aliens coming here from abroad, victimising our people, usurping our names and carrying on business in a way which is not to the good of our people, not to the honour of our country, nor to the future prosperity of children whose interests at any rate we can do something to protect.
§ Mr. WELLS
I beg to second the Motion.
I would like to congratulate my hon. and gallant Friend the Member for Abingdon (Major Glyn) not only on his luck in the Ballot, but on the very able way in which he has explained this Bill. He has told the House that he is not a lawyer, but he has made a very close and reasoned speech in support of the Bill. I believe the country is very much in favour of some restrictive legislation against moneylending, When the Bill was introduced last Session in this House, with the exception perhaps of two, three or four Members, it received the approval of the whole House. It received a Second Reading and was sent to a Joint Committee of both houses with another Bill which had been introduced by Lord Carson. Both the Bills received very close attention. In fact the Bill as it left the Joint Committee was substantially the same as the Bill that we have before us to-day.
§ Mr. WELLS
There are slight alterations, as the hon. and gallant Member has pointed out, but. the Bill is substantially the same. That Bill went through all its stages in another place last Session, and has passed all its stages 1553 in another place this Session. It is very seldom that a Member of this House has the opportunity of bringing forward a Bill that has been so critically examined in another place. I think that the public conscience has been awakened to the evils that have become a public scandal in connection with moneylending. In spite of the greater facilities for education to-day, people, not only inexperienced and poor, but people in every walk of life are taken advantage of and are led astray by the glowing circulars and misleading statements pretending to show how easy it is to borrow money, but with no indication of the pitfalls or of the advantages that may be taken of the unwary.
I will mention a case that came before the Shoreditch County Court in October last. A man was summoned for not keeping up the monthly instalment of 6s. due to a firm of moneylenders. Judge Cluer said, "You have been caught by that iniquitous advertisement which Parliament in its unwisdom refuses to forbid, and ought to forbid altogether." The man's wage was £2 16s. a week. For £5 he had already paid the moneylender £12. I claim that this Measure, first of all, is a. great protection of the poor—the poor who borrow in shillings and pay very exorbitant rates of interest. There was an inquiry undertaken by the Social and Industrial Welfare Committee of the Women's Association at Liverpool. They found that in Liverpool and in Birkenhead there were 1,380 registered moneylenders, of whom over 1,100 were women. The usual interest charged was one penny in the shilling per week. That charge amounts to 433⅓ per cent. per annum. Sometimes the lenders charged twopence in the shilling, and even as much as three-pence. Let us see how that works out.
I have here the case of a woman, a superior type of woman, who got into difficulties after an illness following confinement, and borrowed 30s. from a woman moneylender in a neighbouring street. She was to pay one penny in the shilling weekly as interest. No receipts were given until the last payment was made. In eight months the debt was cleared, but this woman had repaid £5 17s. for the 30s. That shows how the penny in the shilling interest works out. In another case, a woman borrowed 30s. from a woman moneylender and after 1554 paying 3s. weekly for a considerable period, found that she had paid only the interest. In a third case, a woman borrowed £2 from a moneylender who gave no receipts, had no book and who charged l½d. per 1s. per week. This woman did not know how much she had repaid, but she still owed 30s. and states that the lender comes and bullies her. I think that illustrates the evil of the system of charging ld. or 2d. or 3d. as the case may be in the ls. per week. There are many other cases which I could give to the House but I content myself with the three I have mentioned. All these occurred in Liverpool and Birkenhead. We have no knowledge or cases in other great cities, but we may be quite sure the same thing is occurring in places like London, Glasgow and Birmingham. There are people who have little knowledge of percentages and still less knowledge of compound interest. In fact, I think the general public, taken as a whole, have no knowledge at all of compound interest.
I believe this Bill will cleanse this business of existing evils and will enable the old-established and genuine moneylenders to carry on their work and to strengthen their associations. I attach great importance to these associations. If there are strong associations in connection with moneylending, and if the moneylenders work with the associations they will be anxious to fall in with the law, to carry out what the law directs and to avoid any of the odium now attaching to the business. This Bill is a comprehensive Measure but its main points may be divided into three groups. The first two Clauses are concerned with certificates and licences. It is provided that before a moneylender can commence business he will have to take out a certificate and produce evidence of good character before the magistrates to show that he is a fit and proper person to carry on that business. That is no unusual thing. There are other businesses working successfully to-day, in which it is necessary to apply for certificates of this kind. This rule applies to pawnbrokers to-day. They get their certificates and they apply for licences and the licence in their case costs £7 10s. annually. Under this Bill it is proposed that the moneylender should pay £15 for his licence. On that point I might say that on many 1555 occasions during the sitting of the joint Committee, it was suggested that £20 and even £25 should be the annual license charge but the Committee thought £15 a fair amount. Under the present law the moneylender has only to register himself once in three years and pays a fee of £1. In reference to that registration it may interest the House to know that in 1914–15 there were 839 new registrations, while in 1922 there were 1243, in 1923 there were 1542 and in 1924 there were 1862 registrations of moneylenders at Somerset House. The licence places a real responsibility on the lender because if he commits an offence his licence will be endorsed and he is also liable to have it suspended or to forfeit it.
Clause 3 deals with circulars about which my hon. and gallant Friend the mover has said a good deal. I think the people of this country object strongly to the indiscriminate broadcasting of circulars. These have now become a public nuisance, and cause a good deal of apprehension to many people who are responsible for the rising generation. We all know so well that among our letters at breakfast time will often be found a specimen of expensive stationery, sometimes with a crest or a monogram, from which we find that Mr. So-and-So is willing to lend £5 to £50,000, on note of hand alone, at 5 per cent. In other cases it is a long rigmarole about how Smith helped Jones—though I think it would be much more interesting to know how Smith helped himself. It has been said that if we prohibit moneylenders' circulars, we ought to prohibit all circulars, but I think there is a big difference between moneylenders' circulars and general circulars offering goods. If you buy the goods your liability is limited to the amount of the cost and, even if the amount be not paid at the time, you can only be sued for the value of the goods. If you borrow money, however, and it is not repaid in due time the amount increases by leaps and bounds, and creates a great danger to the borrower who is often induced to plunge deeper and deeper. There are various associations and societies which do not issue any circulars at all. I do not think the pawnbrokers issue circulars or advertise, and what applies to them might very well apply to the moneylenders also. By this Clause agents and 1556 touts are prohibited. We had evidence on this question of agents that it has been customary for some moneylenders to circularise those engaged in business of a confidential or semi-confidential nature—such as insurance companies and so forth —offering them commission for business introduced. I am sure the House will agree that this is a most undesirable practice and ought to be stopped.
Clause 10 provides that where the interest exceeds 48 per cent. per annum it shall be regarded as excessive and the transaction as harsh and unconscionable. That is perhaps the keystone of the Bill and is probably the most difficult Clause in the Measure to carry out although I think it is also the most vital. May I remind the House of how this point has been dealt with in America. In America they have what is known as the Uniform Small Loans Law. The lender, under this law, takes out an annual license which costs between £20 and £21 and has to find a bond for something over £200 before he can start business. A loan is limited to £60, for a reason which I shall explain later and the interest is limited to 3½ per cent. per month, all other charges being prohibited, while misleading advertisements are also forbidden, This law has been taken up in 19 States, representing more than half the population of the United States, and in none of the States in which the law has been adopted, has it been repealed or materially changed. Concerning the limit of £60 on the loan, it is agreed that small loans are far more costly to run than big loans and therefore, it would not be fair to charge the high rate of 3½ per cent. per month for a loan exceeding £60. I favoured a percentage of 4 per cent. per month, but I am told that it is not possible because it creates fractions and splits up pennies and halfpennies. That was given in evidence, and other evidence showed how it was possible to create tables by which people could work, and I believe tables could be got out reasonably to show how these loans could be worked at 4 per cent. per month.
The chief points in this Bill are to reduce unnecessary borrowings, to lighten the burden on deserving borrowers, and to reduce the losses of lenders and it substitutes respect for disrepute for the lending business. In America this busi- 1557 ness is attracting capital, and the earnings of the companies and societies, which are very numerous there, are stated to be from 10 to 12 per cent. per annum. In America there is also what is known as the "loan sharks," who are being put out of business by this small loan law. When these Bills were introduced last Session in this House, the interest was limited to 20 per cent., and in Lord Carson's Bill to 15 per cent. per annum, but after the evidence given in Committee there was an earnest desire that we should have an agreed and workable measure, and, therefore, this rate that we are considering to-day was accepted. Clause 12 deals with preliminary charges. I think it is known to the House that it is a general rule in the business of moneylending that where a sum of money, say, £10, is lent, £12 is made the loan; where £8 is lent, the loan is £10, and if £16 is lent, the loan is £20. That is to be stopped. Then there are some people in this business who make charges for inquiries; they send out circulars and then charge for inquiries. They charge a substantial amount, two or three guineas, and no money is forthcoming, and that is the way a part of the business is carried on. I daresay occasionally they may lend sums of money, but their general way of carrying on that business is by charges made for inquiries, which is to be stopped.
There are many other important Clauses in this Bill, with which my hon. and gallant Friend has dealt, but, to my mind, the most important Clauses are the licensing, the prohibition of circulars, and what I might call the limitation of interest Clauses. I claim, myself, that this Measure is a very important measure of social reform, much more so than many Measures that have recently come before this House. I have received letters from all kinds of people, some tragic, some pathetic, and others merely foolish, but I do not propose to read them, because I know so well that there are hon. and learned Members in this House who will tell me that I am making a one-sided statement, and the case for this Bill is so strong and so serious that it needs no holstering of that sort. I propose to give one case only that occurred recently. On April 16th, at the County Court of Southend, Mr. Justice Crawford said:Writs are all too frequently issued in the High Court for comparatively small 1558 sums, and the moneylenders particularly prefer the back rooms there to the open light of day we have in these places, which also have the great advantage of the presence of the Press.In this case the debtor was sued for £28 and costs and said that originally he borrowed £16 and had been paying 250 per cent. interest. I do not propose to read any other cases, but I have numerous eases here showing the hardships that are occurring to-day. I think this Bill deserves to receive the very serious attention and consideration of this House, and if it receives that and passes by a substantial majority, I think it will encourage the Government to give it every facility and so put it on the Statute Book.
§ Mr. RHYS DAVIES
I intervene in this debate for two reasons. One is that when I spent a few months at the Home Office I had a. fleeting glimpse at the doubtful methods employed by moneylenders The other is that it would be proper before the debate proceeds much further that we should know the attitude of the Government towards this important Measure. As far as I understand, there are two Bills. One is waiting for admission from the other place to this House. That Bill is printed, and then there is the Bill which we are now discussing. I do not know what the Government will have to say in regard to any difficulties which might arise from these two Measures, meeting each other, as it were, and probably finding themselves lost in the lobby between the two Houses. I hope the Government will rescue the main principles contained in both Bills. The right hon. Gentleman, I feel sure, will this morning be able to tell us what is the attitude of the Government towards both Measures. I hope, of course, that the Government will give the necessary Parliamentary facilities either to one or both these Measures combined, or will bring in a Bill themselves. I think the latter would probably be the better course.
I stand here to say, so far as I am personally concerned, that I favour the main principles contained in the two Measures now before both Houses. I am satisfied, after reading what has been published on moneylending, that this House would not be doing its duty unless it came to the rescue of those very poor, 1559 ignorant people who are undoubtedly being exploited by some moneylenders. The moneylenders themselves are, I suppose, the best judges of the situation. I have read very carefully the evidence that was submitted by them before the Joint Select Committee, and I will quote the words of one of the chief moneylenders in this country, who, I think, is carrying on his work in a very respectable way. But we are not legislating for those men. We are supporting this Bill in order to deal with that type of individual who is doing things of which respectable lenders would be ashamed. This is what that gentleman said:I suppose that we are called ugly names because it is contended that moneylending has been the cause of unlimited misery in the country, but there are other things which are the cause of unlimited misery, and which are permitted. We deny this, but is the misery at all comparable to the misery which is caused by drink or which is caused by gambling? And yet these trades are allowed to carry on their business, and they are allowed to circularise.Two blacks, however, do not make a white; and the admission of the moneylenders that in some cases great misery is caused is sufficient for my purpose in supporting the Measure before the House. The argument has been used that moneylending is a proper trade to carry on, and that it is not at all wrong on their part to make a profit of even 40 per cent. or 60 per cent., and they use as an illustration several other companies which make huge profits as shown in recent annual returns. They quote the "Daily Mirror," which makes 38 per cent. profits, and the "Yorkshire Post," which shows 75 per cent. I agree that it is quite a proper argument for them to use. "If these trading concerns are allowed to make 40, 50 and 75 per cent. on their turnover, why should they not make 75 per cent. on their business? "[An Hon. MEMBER:" Not on their turnover."] I will come to the difference between gross and net profit later on. It is quite a proper argument for the moneylender; but I venture to declare that it is wrong even for the "Yorkshire Post" to make 75 per cent. profit. It is wrong for anybody to make 75 per cent. profit; but it is wicked for people to make profit out of the weaknesses of the community. Moneylending in the very nature of the case is a process 1560 whereby people can play on the ignorance and the weakness of individuals more so than in most other businesses; that is the main reason why I support this Measure. I have been trying to find out what attempts have been made in the past in this country to deal with this problem, and I find that as far back as the twelfth century there was an attempt to regulate the amount of interest to be paid on loans.
If all persons were sufficiently educated to understand the difference between simple and compound interest, between weekly, monthly and annual interest, then they would not probably suffer misery consequent upon these transactions. But the fact is, that when the moneylenders themselves declare that the amount of interest sometimes runs as high as 200 per cent., or even 300 per cent., this House ought really to come to the aid of or to defend these poor people who are the victims of usury. The smaller the amount of the loan, the greater the exploitation of the borrower; the poorer the individual borrower, the greater the difficulty in which he finds himself in connection with these loans.
The moneylenders apparently make out a strong case on their side, and say, in effect, that they lend without security and that their losses are colossal. I agree that they have no security of any kind; and they make another statement —quite a proper statement—that the interest charged is in the nature of gross income, out of which they have to meet overhead and other charges. And when they say that they are charging 200 shillings interest per month on a loan of £200, it does not mean that they receive a net interest of 200 shillings, because they meet all their office expenses out of that sum. That is quite a proper statement to make. All this, of course, is quite familiar to those who have read the Report of the Joint Select Committee, and who see the wiles of capitalism from day to day. But this is capitalism in excelsis. We are living within the capitalist system, and must try to understand its doubtful ways and dark methods. The moneylenders try, as I said, to make out a strong case for themselves; but I have yet to learn that they are opposed to something being done by Act of Parliament to regulate their business. 1561 The best among the moneylenders I suppose—and there are some more respectable than others among them as there are among politicians—but the best section of the money-lending fraternity are not at all unwilling to have their business regulated. That, I should say, ought to be one of the strongest arguments in favour of passing this Measure.
As far as I understand the present law, the borrower has a great deal of support in the Courts at the present moment, under an Act of Parliament passed by this House, if I remember rightly, in 1900. But I do not think it is sufficient to say that when a bad transaction has been entered into, a borrower can go into a Court of Law to prove—and these are the words—that he has been treated in a harsh and unconscionable way by the moneylender. Something must be done to prevent bad transactions. I do not think that all borrowers are angels and all moneylenders scoundrels. I do not think that is so for a moment. I believe there are bad borrowers and good lenders and vice versa. I have been neither a borrower nor a lender, I am glad to say, and it is a great trait of my race neither to lend nor borrow, except may be for political purposes.
I stand for a compromise between the two extreme points of view in this connection. I do not want to condemn the moneylender as though he were not doing some good service on occasion; but to call attention to another statement made by one of the gentlemen representing the moneylending fraternity before the Joint Select Committee in which, as far as I understood him, said that unless there were advertisements and circulars issued inviting persons to borrow, there would be neither moneylending nor borrowing going on at all. That statement was made by one of the witnesses before the Select Committee. If it really be true that persons are only induced to borrow by the mere tact that they see alluring advertisements in favour of borrowing, the whole business ought to be prohibited altogether. But I do not think that statement is actually true. I believe there are occasions when some men might find themselves in difficulties, and, consequently, I say that I take the middle course and support this Measure.
1562 I have here the statement to which I have just referred made by a gentleman, Mr. Moss Freeman, who said:If the proposal were earned it would stop the general moneylending, if not all moneylending, if circulars and advertisements were stopped.That is rather a strong statement to make; and if that be absolutely true, this House ought not to-day be discussing this Measure, but it ought to be passing a. Bill to prohibit moneylending altogether.
The other extreme point of view in this connection was well put by Lord Carson, when he said that "moneylending is a pestilential evil." I do not know sufficient about the subject to agree or disagree with the noble lord, but I do agree with the great philosopher Lessing, when he said that borrowing money is nothing but begging, and that lending at a high rate of interest is nothing short of stealing.
I want the House to pass this Bill, nut because it is perfect, but upstairs it can be amended. I trust the Government will be able to tell us this morning that they, at any rate, favour the principles contained in this Measure, that they will allow it to go upstairs, and that they will help to amend it, because, after all, the gross transactions carried on by moneylenders in this country must be simply colossal. Approximately there are 30,000 of them, and we are assured by those who ought to know that at least 27,000 conduct their business in a respectable manner. For these reasons I am going to give my support to the Bill before the House.
§ The SECRETARY of STATE for the HOME DEPARTMENT (Sir William Joynson-Hicks)
I have been asked to state the views of the Government on behalf or this Measure.
§ Colonel WEDGWOOD
Is it usual for the Government to make their declaration on a Bill before a single speech has been made in opposition to it?
§ Sir W. JOYNSON-HICKS
If the right hon. and gallant Gentleman desires to speak, and will not take up much time I am willing to throw myself on the indulgence of the House, but I have to get away early in order to make another 1563 speech to-day in the country. I will gladly give way to the hon. and gallant Gentleman.
That would not meet the situation at all, because there are others who wish to speak.
§ Colonel WEDGWOOD
I would like to point out to the Home Secretary that the rejection of the Bill has not yet been moved.
§ Sir W. JOYNSON-HICKS
I was hoping that the rejection was not going to be moved. But if the right hon. and gallant Gentleman wishes to move the rejection, my hon. Friend the Under-Secretary of State for the Home Department and my hon. and learned Friend the Solicitor-General are here, and they will do their best to deal with the right hon. Gentleman's objections. The hon. Member for Westhoughton (Mr. Rhys Davies) has endeavoured to show that Welshmen are not particular offenders in this matter, but I do not myself remember it having been saidTaffy was a Welshman,Taffy was a moneylender.I believe some other word was used. I only propose to make a few observations with regard to this Bill, in order to express the support which the Government intend to give to the general terms of the Measure. I congratulate the Mover and Seconder of this Bill on their speeches in support of it, and I think this Debate shows the importance of private Members Bills. It has been suggested that this might have been made a Government Bill, and I have been urged to request that it should be withdrawn in order to bring in a Government Measure dealing with this subject. There is, however, no need to do that, because both my hon. Friends very kindly consulted with myself and the officials at the Home Office in regard to these proposals, and we have done all in our power to assist them.
There are one or two observations which I think I ought to make. First of all, there is the question of the acceptance of the suggestion of licensing instead of registration. I think if you are going to deal with moneylenders at all, a mere licence is perfectly useless, because it might be obtained just like a dog 1564 licence or a gun licence, and that would be of no use in dealing with this question. This is a Measure which represents the considered opinion of Lord Carson and a Select Committee, and I believe it represents the views of a majority of Members of the House of Commons.
§ Sir W. JOYNSON-HICKS
There was a Joint Select Committee on which the hon. and gallant Member (Lieut.-Colonel Watts-Morgan) sat, along with three Members from this side of the House, the hon. and gallant Member for Abingdon (Major Glyn); the hon. Member for Bedford (Mr. Wells), and the hon. and gallant Member for the Bosworth Division of Leicester (Captain Gee), and the hon. Member for King's Norton (Mr. Dennison). I am sure we are very much indebted to them for the great care they took in regard to the whole question. They took evidence, and it is largely due to the care and the evidence taken by that Committee that we have been able to formulate some suggestions in regard to this Bill. The first Clause of the Bill is printed in italics, and this of course means that the Clause cannot be considered upstairs until the House has passed a Money Resolution. If this Bill be passed by a considerable majority, I shall endeavour to arrange with the Chief Whip to put a Money Resolution on the Paper.
The provisions of this Measure have been dealt with very fully by the Mover and Seconder, but I should like to say a word in regard to a suggestion which was made that there should be power given to open letters by the Post Office. I should most strongly object to any extension whatever of that power as far as dealing with private peoples correspondence is concerned, because at present the Post Office have no power to open any letters. That power rests in the hands of the Secretary of State, and no letters to or from anybody in this country can be opened without the personal signature of the Secretary of State, who is responsible to Parliament for the exercise of that very great power, which has to be exercised with much care and consideration, and it is only in very rare cases that it is exercised at all. I think it would be a very great pity if this House inserted any extension of that 1565 power in this Bill, because I think it is the right of every British subject not to have his letters tampered with. This power is never exercised unless it is considered to be essential in the public interest. With regard to the rate of interest it is clear in the Bill that 48 per cent. is not the maximum and it is a question of transferring the onus of proof, and if the interest be more than 48 per cent. the moneylender must satisfy the Court that it is reasonable to charge more than that amount
There is one Clause which will have to be a little more carefully considered, that is the one dealing with the question of the name and particularly in regard to companies. My hon. and gallant Friend was very properly concerned because somebody had adopted the respectable name of Jix, and he said that a moneylender might register himself as "Jix, Ltd." I think that Clause will require a little more consideration to make it clear and to ensure that the person responsible for the conduct of the business must be of good character. I know something of the wiles of the company promoter, and it might be possible to get a perfectly respectable person of the name of Jix to be the manager of the business, and yet it might be possible to find out afterwards that the man behind the business was named Rubenstein. In Committee I shall do my best to stop up any of the holes in the Bill.
In regard to Clause 11, which gives powers to make orders regarding the Courts to which proceedings on moneylending transactions are to be taken, there was a discussion in the House of Lords. Hon. Members are aware that the County Court has jurisdiction up to £100, and above that sum the cases come before the High Court. In the Debate in another place it was suggested that we should give a higher limit to the County Court, but that suggestion was not agreed to. Then proposals were made to give the County Court jurisdiction to an unlimited amount, but I do not think that would hardly be possible or in accordance with the position which the County Court holds. What is more, if we did that we should be doing something entirely unprecedented; and it would be very inconvenient as affecting the jurisdiction of the High Court. I am, however, authorised by the 1566 Lord Chancellor to say that he has been considering these points and will be prepared to accept an Amendment to the Bill fixing the increased jurisdiction of the County Courts. If the House likes in Committee to insert a Clause extending the jurisdiction of County Courts in regard to moneylending cases up to £200 or £300, I think the Lord Chancellor will be prepared, as the custodian or guardian of the Law Courts, to accept that, position.
§ Sir W. JOYNSON-HICKS
That would do away with the need of it on that point. On the other hand, if the House likes to leave the decision to the Lord Chancellor, he will ask His Majesty to make an Order in Council and suggest something like that sum. There is bound to be an Order in Council dealing with the point raised as to some of these queer Courts which at present exist and which have jurisdiction in some parts of the country concurrently with, and even more extensively than, the County Courts. Some of them are good Courts and some of them are bad Courts. The Court of Passage at Liverpool is quite a good Court.
Sir W. JOYNSO N-HICKS
It is doing live work. It deals with other cases beside moneylending cases, and, as my hon. and learned Friend the Member for the Exchange Division of Liverpool (Sir L. Scott) says, it does quite good work. There is the Court of Hundred at Sad-ford, which is also a live Court. It is quite true that the Derby Court of Record is not a live Court, and that will have to be dealt with. I am authorised by the Lord Chancellor to say that he will consider very carefully, before permitting these Courts to deal with moneylending cases, whether he cannot by the terms of the Order in Council determine that they must bring their practice and their mode of carrying on their business up to modern and model standards of legal administration. I think it will be a good opportunity of dealing with some of these Courts, and the Lord Chancellor will be prepared to 1567 do it. I need not trouble the House with my views on some of the other Clauses of the Bill. Suffice it to say that the Government regard this as a Measure that has been long needed. They regard, and I am sure the whole House will regard, Friday as an occasion when we can deal with non-party questions, and this is a non-party question. The hon. Gentleman who is leading the Opposition to-day has supported the Bill. I believe there is support for it on all sides of the House. It is very desirous that these matters should be debated and discussed in a non-party manner. We are all concerned to see an improvement in these matters. I have been asked how far the Government can give time for the Bill. I am afraid that I shall have to reply, as I replied to the Leader of the Opposition last Friday, with regard to a similar Bill which received almost unanimous support, that the Government are in favour of the Bill, and they will do their utmost to assist its passage. My hon. Friend the Under-Secretary and, I think, my hon. and learned Friend the Solicitor-General will be prepared to go on the Committee and give every possible help and assistance to the Committee in passing the Bill, as indeed will members of my own staff.
§ Sir W. JOYNSON-HICKS
Lord Carson's Bill probably will not go forward in this House. The matter has been so fully considered in the other House that, if this Bill pass with fair unanimity, I feel quite satisfied that the other House will pass it into law, without any trouble whatever.
Will the right hon. Gentleman give us assurance that some of the features in Lord Carson's Bill will not be inserted in this Bill in the House of Lords?
§ Sir W. JOYNSON-HICKS
Of course, it is impossible for me to give any undertaking. The House of Lords, as the hon. and gallant Gentleman knows, is not in my pocket. All I can say is that I have been in communication with Lord Carson, and I think and have every reason to believe—I cannot say more—that, if the House pass this Bill more or less in its present form, with such Amend- 1568 meats as are deemed desirable, it will be passed in that form by another place. Everyone knows that there is a grave shadow overhanging the country, and there may be needed legislation within the next month or two which may take up a great deal of the time of the House. But, if that necessity be removed, I hope time will be found for the passage of this Bill.
§ Sir W. JOYNSON-HICKS
I should prefer it if the hon. Gentleman would raise that point in Committee, where it will have very full consideration.
§ Mr. WOMERSLEY
I beg to move to leave out the word "now" and, at the end of the Question, to add the words upon this day six months."
I should like to say, in the first place, that the hon. Member for Hartlepools (Sir W. Sugden) who was to have moved the rejection of the Bill has had to go home, having received a message that his mother is dangerously ill. Naturally, his duty is by her bedside, and I am sure the sympathy of the whole House will go out to the hon. Member in those circumstances. I should like to congratulate the hon. and gallant Member for Abingdon (Major Glyn) and the hon. Member for Bedford (Mr. Wells) on the able manner in which they have presented their case for the Bill, and, further, on the very moderate language which they have used in support of it. I did not expect to hear such moderate language because it is the custom to castigate moneylenders as dishonourable and dishonest men. I am glad to know that the hon. Members do not regard moneylenders altogether in that light. There is one question I should like to answer, and it is in regard to the moneylenders in Liverpool and other cities. Perhaps I have had as much experience of that type of person as any Member in this House, and I cannot for the life of me see where this Bill is going to stop the operations of that class of moneylender. Ninety-eight per cent, of them never dream of going to a Court of Law to recover money lent under such conditions. Perhaps many Members are not aware that these people charge for the loan of the goods which are afterwards pawned far more than the pawnbroker charges 1569 for lending the money. This Bill, in my opinion, speaking as a man who knows something of this question, is not going to help us with regard to that particular class. If it could be strengthened in any way to deal with that class I should be prepared to support it in Committee.
I have not risen in my place to oppose the principle of this Bill, because I am of the opinion that the principle of the Bill is right. There is an admitted evil in this question of lending money. There is also a great danger in bringing in legislation of any kind dealing with any such subject. In my opinion, there are certain things in this Bill that would be injurious to honest moneylenders, and. also injurious to borrowers, and I hope that, if the Bill goes forward, Amendments will be proposed in Committee which will remedy those difficulties that I can see in the Bill. It is the old story with regard to the moneylender—give a dog a bad name and hang him; and this applies to other people than moneylenders. I have heard people speak very deprecatingly of Members of Parliament, as regards their intelligence and so on. I have never heard any question with regard to their honesty, but there arc some other attributes as to which I have. The moneylender is not quite so bad as some people make out, and, therefore, we must not take the orthodox view that moneylenders are of necessity dishonest men.
I have had experience both as a lender and as a borrower. Unlike my hon. Friend the Member for Westhoughton (Mr. R. Davies), I have had experience both ways, and I say there are honest and straightforward moneylenders, conducting their business on straightforward lines, but at the same time I know that there are undoubtedly crooks in the profession. I would like to submit, however, that there are dishonest borrowers also, and these people need to be dealt with just as drastically as dishonest lenders. In the course of my social work among the poor people of my own town, I have had to try and settle many cases, and in some of these it has come out that the borrower has been a very dishonest person—that he has gone to every moneylender in the town and by dishonest means succeeded in borrowing money. I say that that type of man does not need 1570 to be protected by law, but rather that what is needed is that the law should protect the lender against him.
Moneylenders, of course, as we have been told by the hon. Member for Westhoughton, have existed from the first day when money was introduced as a means of exchange. The poor old moneylender has been pilloried in literature and drama, but the talk is always about the usurer—you never hear anything about the honest moneylender, who can be helpful to people in temporary financial difficulties. This is a point that I want to make, because I think it will be appreciated by Members of the House that no moneylender, honest or dishonest, is of any use to a borrower who is in a chronic state of impecuniosity; he is only useful to the man who wants a temporary loan and who will be in a position some day to pay it back. As regards the man who is always hard up, it is no use his going to a moneylender; it is not going to help him, because he has to repay that money and the interest on it, and the chances are that he will not be able to do so.
I want the House to remember also that the type of borrower who usually resorts to a moneylender is the man who has tried every other source of borrowing money—even, in many cases, his Member of Parliament—before he actually goes to the moneylender, and he has tried in vain. Therefore, it cannot be said that the average moneylender gets any of the cream of the moneylending business. He does not; he gets the skim milk, and it is often very thin skim milk at that. I have heard with great interest what the Home Secretary has told us with regard to the attitude of the Government, and I was very pleased to hear him say, in answer to the hon. and gallant Member for East Rhondda (Lieut.-Colonel Watts-Morgan), that, so far as Lord Carson's Bill is concerned, that will be dropped out altogether, because, of the two Bills, I think the one we are discussing this morning is by far the better. Lord Carson's Bill is not a Bill that would have been of any use as a remedy for this evil. In many of its Clauses it might be described as vindictive, and it. would do far more harm than good.
I see many things in this Bill that really warrant the support of Members in all quarters of the House, but I should like to point out one or two respects in 1571 which, I think, it ought to be amended. With Clause 1, which makes provision with regard to licenses, I quite agree with the hon. and gallant Gentleman, who moved the Second Reading, that licenses are necessary. As has been said, licenses are in operation in connection with the pawnbroking business, and in that case have proved helpful in keeping undesirable people out of the business. I am also in agreement with the provision with regard to certificates. I believe that that is a safeguard in the interests of all concerned, because a man will not be granted a certificate unless he can prove that he is of good character. As regards Clause 3, which prohibits circulars and so on, this is rather a drastic Clause, and, I think, it will have to receive careful consideration in Committee. We have been told this morning that people do not like these circulars to be sent to them. It is quite a common thing, in the suburban districts at any rate, to see a little sign on the gatepostsNo circulars; no canvassers; savage dog kept.I quite agree that circulars are a nuisance, but I submit that there is a type of circular which is just as pernicious as a moneylender's circular—the type that sometimes come from some of the drapers' shops, with illustrations that are possibly not very desirable. It is entering upon a rather drastic principle, or, at any rate, a new principle, to prohibit the sending of circulars, unless it can be proved that they are not desirable from the moral standpoint, and it is questionable whether that can be said of moneylenders' circulars. One point that strikes me in regard to moneylenders' circulars is that you are going to compel the moneylender to put his name and address on his advertisements and circulars, but you do not allow him in addition to put even his telephone number, because it says that nothing more shall be put on. I submit, and I have no doubt the promoters of the Bill will agree with me, that he ought to be allowed to put his telephone number on his circulars—
§ Mr. WOMERSLEY
I should not mind so much about that. In regard to Clause 1572 7 I should like to say a word in favour of that Clause, although I am apparently opposing the Bill. That Clause places upon the moneylender the obligation of supplying information as to the state of the loan and copies of documents relating thereto. It might be argued that it is difficult for the moneylender to do that, but it is not. In America, in those States where the Small Loans Associations operate, a printed copy of the terms and conditions is given on the back of the contract, and the regulation in regard to pawnbrokers' tickets issued under the Act of 1872, which is carried out by the trade, lays it down that the terms on which the money is lent shall he clearly printed on the back of that ticket. The same thing should be done as regards moneylenders' contracts. With regard to Clause 10, I should like to say a word or two. It contains a provision as to the rate of interest being 48 per cent. where any proceedings are taken. We have had an explanation of what exactly that Clause means, which has afforded us a little enlightenment, but at the same time it is not a minimum or a maximum, and I maintain that the proper way to deal with this question would have been to fix a maximum rate of interest and let that stand, making it illegal to charge more.
I am told by men in the moneylending business, who, I am not ashamed to say, are friends of mine and are decent, honest men, carrying on a regular, honest business, that this Clause, which says that the rate shall not exceed 48 per cent. where proceedings are taken, is not going to protect the borrower at all, because the person who is dealt with most harshly as regards charges for interest is the type of man who never dares to allow the case to come into court, and who will pay any amount before he will allow it to come into court. If you want to do the right thing by the honest moneylender and protect people against, these sharks and bloodsuckers, you ought to fix a maximum rate of interest and not allow anyone to go beyond that. In the case of the borrower who is in a position of trust, and who is very much afraid of its being known that he has even borrowed money from a moneylender, it will jeopardise his position, because he will pay anything rather than that the case should come into Court. Although cases have been quoted 1573 this morning in which proceedings had been taken in the Courts, I venture to submit to the House that the eases which never go to the Courts show more clearly what the sharks and bloodsuckers of this trade are doing, and I would not defend them for one moment.
Clause 13 is another Clause which I hope will be amended in Committee. This limits the time to six months within which proceedings can be taken. I submit that this is not equitable either to the lender or to the borrower. The pawnbrokers' rate was fixed by Parliament at 12 months. There was a reason for that. Parliament realised that people who are in certain businesses or professions, who have to borrow money to carry on, very often are in what are known as seasonal trades. At certain seasons they require a large amount of capital, and therefore they have to borrow. Six months would not be suitable to that class of borrowers, and it would mean that the man who really requires money for 12 months would be faced with a document asking him to repay at the end of six months, or otherwise the moneylender could take him into court. On behalf of the pawnbrokers I want to say that I speak with some knowledge, because in the business I am connected with we have a. pawnbrokers' licence. Generally, the trade approve of the Clause inserted on their behalf by the promoters of the Bill, with the exception of Sub-section (1). The pawnbrokers submit that pawnbrokers' who have to pay £15 for a licence in addition to the heavy licence they already pay are not quite reasonably and fairly treated, and we hope that in Committee the promoters wi11 accept the Amendment reducing that amount to a reasonable sum, because I think it can be rightly said that the pawnbroker is indeed the poor man's banker, and therefore should receive some consideration.
It was stated by the hon. and gallant Member for Abingdon (Major Glyn) that the reason why the promoters had to take great care about the Clause relating to pawnbrokers was that the moneylender might use the cloak of a pawnbroker's licence to get over certain provisions in this Bill. We who understand this special business are not at all afraid of that, because, under the present law, when it comes to a question of loans of over £10, the moneylender is the pawn- 1574 broker. More money is being lent on security than on notes of hand, in spite of all the advertisements which say that the money will be sent by return. We must bear in mind the close scrutiny of a man's character which is made before he is granted a licence as a pawnbroker, and that would make it impossible for the moneylending fraternity to get the licence. Pawnbroking is carried on at reasonable rates of interest. There are thousands of pawnbrokers, particularly in the provinces, who very rarely lend over £10. The Pawnbrokers Act only applies to sums up to £10. Before there was a Moneylenders Act on the Statute Book, the pawnbroker had to conform only to the common law in respect to amounts over £10, as the Act did not apply when the amount was over that sum. But when the question of moneylenders came up for discussion and the Acts of 1900 and 1911 were passed, it was then stated by legal gentlemen who interpreted the Acts that the pawnbroker, if he wished to lend over £10, must register as a moneylender. If that had been foreseen at the time the Acts were before the House, a provision could have been inserted in the Act which would have made it unnecessary for the pawnbroker to do so.
The reason there was no great agitation at the time was that the fee was so small and the conditions so easy that the pawnbroking business did not make any great effort to have it altered. Now we have a different position entirely. The pawn broker's licence is £7 10s., but it was not stated that in addition he has to take our a plate-dealer's licence at the same figure. If he has to pay on top of that a £15 licence to enable him to carry on business and lend sums of over £10, it will mean that many of the smaller pawnbrokers in the provinces will be severely penalised. They take in thousands of pledges from small borrowers. They serve a useful purpose in so doing, because even working men, and at times working women, require a little assistance, and they get it at a low and reasonable rate of interest, so that the pawnbroker plays an important part in the industrial life of this country That was proved when there was a certain dispute between certain people, and the pawnbrokers decided to close. After a week people came and asked them to reopen, because a great number of landlords did not get their rents and many of 1575 the shopkeepers did not sell so much goods. It might happen that a man might come along and want to pledge a piano for over £10, and it would not pay the pawnbroker to take it if he required to have a moneylenders' licence. He simply wants to deal with any business that comes along. Something should be done in Committee with regard to this question.
I agree that some action should be taken to regulate this particular matter. Whether this Bill is the best Bill that could have been produced, I am somewhat doubtful, but if we can get an assurance from the promoters—and the Government are now backing this Bill—that they are prepared to consider a reasonable Amendment in Committee, I am prepared to assist the Bill along as much as I possibly can. I say again that if you have, as we have heard, an undoubted evil, the best way is to take into consideration all the points for and against and not to go forward with legislation which probably will not do what the promoters are hoping it will, to remedy the evil, but will cause greater evils to arise in their place.
§ Lieut.-Commander KENWORTHY
I beg to second the Amendment.
I congratulate the hon. Member for Grimsby (Mr. Womersley) on the case that he has made out, and I think it will be agreed that he has made a very moderate case. He has shortened the remarks I intended to make by his careful survey of the situation as regards the pawnbrokers. The hon. and gallant Gentleman who is in charge of this Bill must realise that he will not get the Bill through the House easily so long as the £15 licence on the pawnbrokers remains. While this Government is in office, the pawnbrokers are an actual necessity in the industrial districts of this country. They are the only people who very often enable the landlords who support this Government to collect their rents, and why they should be singled out in this way for this additional taxation I do not for the life of me understand. I would like to point this out, that the pawnbroker who does a big business may say he can afford to pay this additional £15, but the pawnbrokers have to pay Income Tax at 4s. in the £ and to pay 1576 their rents, and their business is not so lucrative as some people think. Very often a son is carrying on the family business and he does not like to refuse to take pledges from people because he feels they need money very badly, and he has. to take stock which he knows will be unsalable or unrealisable except at a very heavy depreciation. I do hope the hon. and gallant Gentleman the Member for Abingdon (Major Glyn), who moved the Second Reading, is going to take out this Clause providing for pawnbrokers having to be licensed. I do not think he will get his Bill through without doing so.
The hon. and gallant Member in his very eloquent speech rather changed his mentality as he went on. He began by giving a fox-hunting metaphor and talked about "stopping earths" and "hunting him," and he spoke in the role of Jorrocks. Then he remembered that this was St. Georges Day and he assumed the halo of that international saint, who was the patron saint not only of this country, and he talked of the moneylender as a dragon. Throughout his speech and throughout that of the Seconder and of the late Under-Secretary for the Home Office (Mr. Rhys Davies) ran the whole suggestion that all moneylenders were scoundrels and all borrowers were poor innocent victims. The hon. and gallant Gentleman told a story of when he was a young officer serving in India, and he received a beautiful letter and thought it looked very intriguing, and on opening it found it was a moneylender's circular, and how he was tempted to fall to its wiles, but was too wise. He then drew a picture of the poor innocent young curate or young farmer who went to one of these harpies having his blood sucked. Do hon. Gentlemen really think the borrowers are the only honest people? There are three classes of borrowers, broadly speaking. The first is the class who go to the Bond Street moneylenders and the big West End moneylenders. They are people usually highly connected, who appear in the stud book, but who are bare-faced rascals who have no intention of repaying. They are spendthrifts, wastrels and people against whom, more than anyone else, moneylenders should be protected. Under the Bill this sort of spendthrift and rascal would escape the proper penalties of the law.
1577 The third class—I will come to the second class later—are the poor people in poor districts. There are the slum moneylenders, and the hon. Member for Grimsby has pointed out undoubtedly-some of them are very unscrupulous and hard-hearted people, especially the women, and as there has been a good deal of anti-Semetism brought into this question, not by the hon. and gallant Gentleman, and the whole atmosphere has been worked up because of a few hard cases, I may say that most of these people are not Jews or Jewesses. They are theoretical Christians, and some of them are undoubtedly very harsh usurers, but this Bill is not going to touch them at all. They do it privately, and they hardly ever go to Court, but they lend perhaps a shilling a time. Among these are certainly some usurers and grasping people, but some of them are necessities in a district where there is a lot of casual labour. It is a fact, and I have made investigations in my own constituency, that many of these women and men who lend small sums to the poor are highly respected and they give time for repayment. When there is no food for the children and a wife has got to borrow a shilling and pay back ls. 2d. at the end of the week, it may work out on the table given by the hum and gallant Member for Abingdon at an enormous rate of interest, but in view of the insecurity of repayment it is not unreasonable really, and it does mean all the difference between hunger and sustenance for the children.
Take the other class, the man and wife who get drunk on Saturday night and wake up on Sunday morning without a penny in their pockets. They have got to borrow somehow, and they borrow 5s. from one of these slum money lenders and they pay 5s. 6d. back at the end of the week. It sounds an enormous interest per annum, but one must take into consideration the length of time. These moneylenders are not all rascals, but really they help their neighbours, and they have to rely a good deal on public opinion, because everyone knows what happens in crowded back streets if they are unfair. They very soon go out of business. There are, however, bad cases among them, but this Bill will not touch them because they are not licensed now 1578 and they, and the worst bloodsuckers, will be absolutely immune under the provisions of the Bill.
Then there is another class of borrower —not very much in London perhaps but in the great provincial cities. There are old-established moneylenders who lend to small business men and young business men trying to make their way in the world and their whole business depends on their reputation for fair dealing. Their whole business and goodwill depends upon it. They cater for the man who needs money urgently and is not in a position to go to the bank. The hon. and gallant Member for Abingdon and the hon. Member for Bedford (Mr. Wells), the hon. Member for Grimsby and myself can go to our banks and borrow money at 1 per cent. over bank rate arid can get a considerable amount. I expect the hon. and gallant Member for Abingdon and myself could go to our bank to-morrow and without depositing any security arrange for an overdraft of several hundred pounds, and most Members could. Anyone in the position say of a clergyman or doctor can do the same. Those holding the King's Commission can always arrange with Cox's Bank or Naval officers with the Westminster Bank for a considerable overdraft, and men with property can without security borrow money on the same terms. But the small struggling tradesman, who sees a great chance of expansion, or who finds debts piling up which have to be met, finds it absolutely necessary to borrow money, but he can offer no adequate security, and such men have to be trusted on the moneylenders' judgment of human character. That class of borrower is quite legitimate. Some of them make good arid build up great businesses, and become successful people, and the moneylenders who lend money to these people, with a few exceptions, carry on business in a legitimate way. This class would he very seriously hit by the Bill, and I hope with my hon. Friend, who moved the rejection that most drastic Amendments will be made in Committee. Those who deal with this class of borrowers me going really under the provision of the Bill if it goes through in its present form to be driver out of business, and only the sharks will remain.
I have dealt in very broad outline with the objections to the Bill as ii is at 1579 present drawn. There are one or two points I would like to deal with. Let me say to the hon. Member for Bedford, with regard to Clause 5, that I think it is a very good Clause, which lays it down that a document is to be drawn up and signed. I quite agree with that and with some other provisions in the Bill as well. Clause 1 will drive out, or drive underground, most of the smaller lenders—the third class. It is going to be made impossible for poor people to borrow money at all, except by pawning or pledging their household goods. I hope the hon. and gallant Gentleman, when he has slain this dragon—if he succeeds in doing so—will turn his attention to other people who make enormous sums by lending—possibly to some of the hire-purchase systems, where the profits are terrific, and I hope he will also turn his attention to another class who are going to be tremendously helped by the Bill, and who will bless him, and that is the people who only lend money on bills of sale and who are very harsh indeed. It will allow them to charge approximately 48 per cent., and the people who otherwise would go to provincial moneylenders who have been known for generations will have to be driven to people who only deal with bills of sale, and there will be more misery caused, as is usally the case when you attempt to bring in cotton-wool legislation to make people wise by Act of Parliament. Perhaps the hon. and gallant Gentleman by next St. George's Day will have found this and a few other dragons.
With regard to circulars, it is ridiculous to attempt to prevent people sending out circulars. I have never heard such a ridiculous proposal. Lord Carson's Bill was perfectly absurd. Already the law protects minors, and why on earth this particular class should be prevented from sending out circulars and not bookmakers and people who deal in contraceptives and objectionable kinds of medicine are not dealt with, I do not know. If the hon. and gallant Gentleman would bring in a Bill to prevent any circulars at all being sent to Members of Parliament, I would support him every time. The hon. and gallant Gentleman, the Member for Bournemouth (Sir H. Croft), suggested that they should open my letters. The official who had to open 1580 mine would have to get assistance and be paid a good deal of overtime. However, I am glad to have the assurance that the cabinet noir is not going to be further extended. We have quite enough as it is. With regard to touts and canvassers, there is a good deal to be said for that, but a good many moneylenders, who the hon. and gallant Gentleman admits serve a useful purpose, have to employ collectors, and I hope he will bear that in mind, and see that he does not create a new class of criminal by having these people punished also. Why compound interest should be prohibited, I really do not understand. The man who goes to a moneylender really has no credit and no security, and the moneylender makes his money by being able to judge whether the man is worth the risk, and he has to charge a high rate of interest. I am told 5 per cent. a month is not an unreasonable charge in view of the losses, and all the circumstances of the case, and when a man really needs money and cannot possibly allow any publicity, I do not think he is averse from paying 5 per cent. and it might be well worth it if he can save his business, which may bring him in 100 per cent. profit. It is all a matter of circumstances and the man's position, and you cannot say in some cases that 48 per cent, is an unreasonable interest. In some cases it would be extortionate and in others it might be too little. I think the matter will have to be left to the judgment of the Courts as at present and we shall have to oppose that limit.
I think Clause 8 is iniquitous. Why this class should be picked oat to be prohibited from taking proceedings in bankruptcy I do not know. There are scoundrelly borrowers, highly connected men, men connected with respectable people of good family, who absolutely trade on moneylenders in the West End of London, and they are some of the most plausible rogues alive. The hon. and gallant Gentleman is making them absolutely immune by, at any rate, making it difficult to initiate bankruptcy proceedings. Why outstanding accounts should only bear interest at 5 per cent. I do not for the life of me know, when the ordinary bank on commercial bills will charge nearly as much with absolute security. I am glad the Orders in Council are probably going. To give the Lord 1581 Chancellor power to use Orders in Council to say what courts should deal with what cases is an extraordinary suggestion, and it would be very wrong for the House of Commons to agree to it. There has been too much legislation since the, War by Orders in Council. It has been thoroughly objectionable from the point of view of the general public, and the House will be surrendering superlative powers if it permits Clause 11 to go through. Clause 13 prevents a man giving a little more time to his client to pay.
§ Lieut.-Commander KENWORTHY
He has to start proceedings within six months, if I read the Clause aright.
§ The SOLICITOR-GENERAL
I do not want the hon. and gallant Gentleman to discuss the Bill under a misapprehension. If the borrower desire further time, he has to make an acknowledgment in writing immediately before the six months begins to run.
§ Lieut.-Commander KENWORTHY
I do not know why the six months should have been put in at all. You ought to encourage the man to give more time to the borrower to repay. Very often he knows the man can pay. However, the Solicitor-General assures me on the point, and naturally I accept it, as his knowledge of the law is greater than mine will ever be, although I have as good a knowledge of human nature as he or the hon. and gallant Gentleman. You cannot put down moneylending in the present state of the world. There is some Amendment of the law required, but you cannot make people wise, prudent or thrifty by Act of Parliament, even on St. George's Day. Borrowers and lenders will go on. If this were a perfect world you could attempt to put down moneylending, drink, prostitution, gambling and everything else. As things are you can only regulate it, and the hon. and gallant Gentleman in attempting to regulate it has made serious errors and has gone much too far.
§ Lieut.-Colonel POWNALL
I take a rather special kind, or semi-paternal, interest in this Bill because some of its Clauses I have brought in on more than 1582 one occasion under the Ten-Minutes Rule, notably those dealing with the rate of interest and also the question of circulars and advertisements. I will say to the hon. and gallant Gentleman who has just spoken, and who, while opposing the Bill, also found a good many points in his favour, that I do not think anyone can accuse my hon. and gallant Friend of bringing in panic legislation. This question was very carefully considered for many weeks last summer by a Committee of the Lords and Commons, and this Bill will, obviously, if it obtains a Second Reading to-day, be referred to—
On a point of Order. I object to that statement being made. It has been made twice already. It is not true and I hope the hon. and' gallant Member will refrain from making it.
§ Mr. DEPUTY-SPEAKER (Mr. James Hope)
That is not a point of Order, but I was about to call the Hon. Member's attention to it.
§ Lieut.-Colonel POWNALL
It is true that this Bill is not exactly word for word as it came from the Select Committee, but anyone who goes through it carefully will find that 17 or 18 of the Clauses are almost word for word as they came from the Select Committee. It. is not unfair to say that the Bill comes almost entirely from the Select Committee of Lords and Commons which met last year.
In connection with the Bills which I introduced, I received a large volume of correspondence which made me realise for the first time how widespread is this particular evil. I never appreciated before that circulars were sent to teachers in schools, to all ranks of the clergy, to junior officers in the Army and to practically every class which could be found in any sort of directory. In that correspondence, I had brought before my notice many cases showing the appalling ills that have resulted to those who have replied to these circulars. I did not hear of a single case where good had resulted. I heard of many cases where it had led to financial disaster, and in others where suicide bad resulted from replies to these moneylenders' advertisements, which are most alluring and in many cases very misleading.
1583 This is the first time for a generation that any serious attempt has been made to cope with this evil. There was a Select Committee on the subject 28 years ago, and it is interesting to note, as showing how the personnel of this House changes, that the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) is the only survivor. A great deal of valuable evidence was given before that Select Committee, and arising out of it the Bill of 1900 was brought in. Although we cannot suppress moneylending altogether, we find that after a lapse of 20 or 25 years it is necessary to bring in fresh legislation to cope with the evils that arise from time to time. The hon. and gallant Member for Central Hull (Lieut.-Commander Kenworthy) said that in certain circumstances he could imagine a business man considering that it was well worth his while to pay 100 per cent. in order to get temporary accommodation to carry him over some special crisis.
§ Lieut.-Commander KENWORTHY
The hon. and gallant Member has misunderstood me, I was speaking rather quickly, against the clock. I said that a certain small type of business man might be prepared to pay 5 per cent, per month in order to save his business, out of which he might be making 100 per cent.
§ Lieut.-Colonel POWNALL
That means that he would be prepared to pay 60 per cent. Mr. Daniel Williams, in giving evidence before the Select Committee last year, dealt with that point. Mr. Williams occupies the position of Official Receiver in Bankruptcy, and he had been asked a question with regard to cases of traders where help had been forthcoming from moneylenders. He said:I cannot recall a single case where the borrowing of money by a trader from a moneylender was likely to result in any useful purpose at all. It only serves to postpone the actual date of the failure.He went on to say:I cannot recollect a single case where it would have served any useful purpose.
§ Lieut. - Commander KENWORTHY
He only hears of the cases when they come to the Court of Bankruptcy; he only hears of the failures. He would be the last person to hear of the other cases.
§ Lieut.-Colonel POWNALL
A great many of these cases end in bankruptcy. Mr. Williams was speaking from many years' experience, and he said that he did not know of a single case where a useful purpose had been served. One further evil of this system is that of blackmail. It is a common thing for these people who find themselves in the hands of moneylenders to be liable to blackmail for fear of exposure. Mr. Williams gave valuable evidence on that point. On page 41 of the Select Committee's Report on the Moneylenders Bill, he said that many of the Statutory declarations which are taken from borrowers are deliberately made misleading, not by the borrowers so much as by the persons who are going to lend the money, in order that they may have a document on which they can threaten criminal proceedings unless the victim is prepared to pay anything the moneylender asks for in the form of interest. He mentioned a certain case, in respect of which he said:The moneylender took a declaration in that case which was full of inaccuracies, and if he had believed the statements, in my view, he would not have expected to find a man borrowing at such an enormous rate of interest as that charged. I came to the conclusion in that case that the moneylender was relying rather on the inaccuracy of the statements than on the truth of the statements, and I personally declined to take any steps against that debtor to prosecute him.I am afraid that in many cases it is not only a question of usury but of blackmail of the unfortunate victims. There are two or three Clauses of the Bill which may have to be modified in Committee. I should prefer that no Press advertisements be allowed. Only two of the large London newspapers take moneylenders' advertisements, for which they charge a considerably higher rate than is charged for other advertisements in parallel columns. If the Press in London, with these two exceptions, have thought it right not to take a very profitable source of income in this way, surely we can debar the other two newspapers from taking these advertisements? I should very much prefer to see that newspaper advertisements of moneylenders were stopped altogether. With respect to circulars, the hon. and gallant Member for Central Hull may remember that during the war moneylenders' circulars were entirely prohibited. Circulars to minors 1585 are not allowed. Clause 3 is only one step towards the total prevention of these circulars being sent out, and I welcome that part of the Bill.
In Clause 4, the question of dummy limited liability companies is raised. The Home Secretary mentioned this matter briefly. As the Bill stands, I do not think that point is adequately dealt with. The hon. and gallant Member for Abingdon (Major Glyn) mentioned the case of a firm trading in his name. I have the particulars of a firm who trade under the name of B. Lipton, Ltd., who are not related to the well-known firm of that name. The person behind that firm is a Mr. Lipshitz who is of Russian origin. Quite recently, this firm were trying to extort interest at the rate of 393 per cent. from a victim, and Mr. Lipton said that that was the ordinary rate they charged. A firm of this nature will not, I understand, come within the provisions of this Bill: I think they ought. I think that the Business Names Act which was passed in 1911, is a better safeguard than Clause 4 of the Bill with regard to names. The position of pawnbrokers has been dealt with by the hon. and gallant Member for Central Hull. A certain amount of modification will be required in that direction. Generally speaking, I welcome the Bill most heartedly, although it will require Amendment in Committee. I am the more glad that the Bill has been introduced to-day, in view of the fact that I read a statement in the "Times" that St. George had given his life on behalf of persecuted Christians. I am glad that on this day we are discussing a Bill in which we are trying to do something to relieve Christians from persecution.
I have already this afternoon protested against the way in which the proceedings of the Select Committee have been described to the House, but I must congratulate the Mover and the Seconder of this Bill upon the way they have performed their task. I have no complaint to make in that respect; they have been very temperate and very fair in the presentation of their case. I want to say that this Bill, and also tie one that has been on the stocks awaiting presentation to his House—the Bill promoted by the Noble Lord in the other House—is not 1586 in regard to some of its main provisions the same Bill to which the Select Committee agreed. There have been radical changes and additions made in the present Bill which were not before the Select Committee. We are not here this afternoon to defend the bad moneylenders, the people who are dishonest; and we are not here to defend the abuses that have arisen in relation to moneylending. For some time I have persistently prevented some of the Measures going through this House. I pursued these tactics in regard to this Bill last Session, and the reason I did so was because I was at that time pressing for an inquiry into this matter. It is 28 years since an inquiry was last held. That was in 1898—and we had the Bill of 1900. It is true there was a small Amendment in 1911, but the main provisions which govern the moneylending business are in the Act of 1900. What I protest against is that in this Bill no material protection is being afforded the poorer classes of the people of the country against some of the abuses that have been cited by hon. Members who are promoting this Bill. There is nothing at all in this Bill that will prevent those abuses, and it was for that reason that I was very anxious in the Select Committee to find ways and means of doing so. I think the Select Committee should have devoted more time to this part of the problem. I am much concerned with this question, and I could cite a number of eminent Judges, members of the House of Lords, who have made repeated declarations, bearing out largely what I am trying to say at the moment.
My sole desire is to find ways and means by which the poorer section of our working classes shall not be penalised by any harsh provisions that are brought in and at the same time shall be given a fair measure of protection. I am totally against—and I want an assurance on this point—any legislation being passed by Parliament in which there is incorporated any provisions to protect special and distinct sections of society in this country. We are told on all sides of the House that the intention of the Bill is to protect the poorer and uneducated people of the country. If that be the case, I should like to point out that the Select Committee would have little to do with a Clause in Lord Carson's Bill which deals 1587 with officers of the Services. I have had only a slight connection with the Service for a short time, but I think it is a very retrograde step to put anything in an Act. of Parliament for the special protection of any class in this way. We have had an assurance from the Home Secretary that no attempt is to be made to introduce some of the objectionable features of Lord Carson's Bill into the present Measure.
These are the two points on which I have raised some objection. In the first place, I desire an inquiry, a full inquiry, into the whole problem. In the second place, I object to the class legislation in the Bill promoted by Lord Carson, which I hope will not be incorporated in this Measure. I also object to Clause 11 of the present Bill, which gives the Lord Chancellor power to make rules and regulations with regard to the Courts that are to try these cases. I have consistently opposed this proposal, and if the Bill goes to a Committee upstairs, I hope we shall have a chance of fighting the matter over again. We have had little chance so far of entering our protest against legislation by Order in Council. The authority of the Houses of Parliament ought not to be washed out altogether. I would not mind if the Bill said that the Courts which were to deal with these cases were to be the County Courts. That is not the point which I am raising. But I do say that it ought to be definitely stated in the Bill what Court or Courts are to decide these cases. If the promise of the Home Secretary, that cases up to a certain amount will be tried in the County Court, and that more important actions will be left to the High Court, is carried out, that will satisfy me, but I persist in ray objection to the Lord Chancellor or anyone else deciding by rules and regulations how these cases are to be tried. Should the Bill receive a Second Reading and go to a Committee, I hope that none of the features to which I took exception in the Select Committee, and am taking exception now, will be allowed to remain in the Bill. I certainly hope that the Order in Council form of legislation wilt be resisted to the end.
§ Major MacANDREW
I am in favour of the Bill. There has been a certain amount of talk about restricting the 1588 maximum rate of interest which should be charged. My hon. Friend the Member for Grimsby (Mr. Womersley), who moved the rejection of the Bill, thought that a maximum rate should be fixed. The tendency of that would be that people whose security is below a certain point would not be able to borrow money, for it is obvious that the rate of interest has to vary in respect of the security which the borrower has to offer. Though theoretically desirable, it would be very difficult to have a maximum rate of interest to suit certain people who have really no security to offer. The strong point of this Bill is Clause 5. What happens now in a great many cases is that people borrow money and they do not understand the conditions under which they are entering into their contract. I happen to be a member of a Territorial unit, and a great many circulars come to me, re-directed from headquarters, my name having no doubt been found in the Army List. I am certain that many of these moneylenders use such things as the Army List and the List of Clergy as a means of approaching possible clients who are not business men and with whom they hope to make an advantageous bargain. Clause 5 provides that any person entering into a contract with a moneylender must have the contract written out and made plain. That will do a great deal to make the position of the borrower clear.
I would like to mention an experience I had lately. with a moneylender. A friend of mine asked me to see the moneylender and to square up a mess he had stupidly got into. I then got an insight into the moneylender's business, and the facts may be of interest to others. I went to the moneylender and explained that I had come to try to make a settlement for my friend. He first asked me whether I was a solicitor. When he heard that I was not I did not know whether he was pleased or not. I went on with my business. The case was very complicated. My friend had been borrowing money from time to time, and die procedure on each borrowing was that the last note was torn up and a new one issued, including the accrued interest and the terms for settlement as the thing went on. When I went to my friend and asked, "How much have you actually had from the moneylender?" he could 1589 not tell me. He knew how much he owed the moneylender, but not how much he had had, except that the last time he had borrowed it was a loan of £25, and the arrangement was that in a month he was to pay back £32 10s. That was 360 per cent. per annum. That was the only information which my friend was able to give me.
I said to the moneylender "There is this large sum of money which is owed. I am paying you before the day arranged, and I have no doubt that you will give me a rebate at the rate of 360 per cent., which is what you have been charging." At once he replied, that to quote a rate of interest was extraordinarily deceitful and unfair. He said that a great many people did not understand that. He added that when a borrower came to him he would say to him, "I will lend you £25, and in a month you pay £32 10s. That is a perfectly simple proposition. There is no interest and nothing to confuse the issue, and the man goes away." What happens is that such an arrangement is extraordinarily misleading to any borrower who is not in the habit of working out rates of interest. £32 10s. for £25 in a month does not sound very much, but it is nearly 1 per cent. per day. Under Clause 5, that sort of thing will be made impossible; the ignorant borrower will know what rate of interest he has been charged. I made a fairly satisfactory settlement with this moneylender, and got back the documents bearing my friend's signature. One which I have here is a bill. At the end of it appear these words:Should default be made in any one payment or part payment, then the whole amount, or as much as shall remain unpaid, will become due and payable, together with interest thereon at the rate of £5 per cent. per month until payment thereof.That is, roughly speaking, 60 per cent. interest per year, to be charged in case of default. Before the default the lender had charged my friend 360 per cent. But the 360 per cent. never appeared as a rate of interest at all. When the moneylender had to put the rate of interest in black and white he naturally did not care to put down such an enormous rate, and he put dawn 60 per cent. That is the way the moneylenders work. There is an old saying that "Fools and their money are soon parted." It is the duty of this 1590 House to give the fools as good a chance as possible to look after themselves. One of the greatest merits of this Bill is that it makes the issuing of a contract compulsory. This same moneylender's Bill which I have in my hand and which is signed by my friend, bears on the back the typed words:I agree to allow a rebate of (a sum mentioned) for prompt repayment.That, of course, is not signed. It is the duty of this House to support the Bill. There may be things in the Bill with which we do not agree, but the general principle of it and the making of a contract compulsory warrant our support of the proposal.
§ Mr. DENNISON
As one of the members of the Joint Select Committee I think I can say that the evidence given before us convinced us that legislation in this matter is essential. The members of the Committee are, I believe, unanimous in the view that moneylending is a necessary factor in our commercial system, and I have good reason for believing that the more respectable and reputable of the moneylending fraternity welcome legislation, so long as it is, equitable, so long as it removes the worst features of the present system and so long as it ensures that all concerned in moneylending, whether as borrowers or lenders, know precisely where they are. I happen to be one who endeavours to, obey the injunction,Neither a borrower nor a lender be.I am not a borrower because I have no assets and I am not a lender because of my nationality, but of this I am sure, that the Select Committee who heard evidence on this subject at considerable length will agree that the moneylender is not always the shark he is supposed to be and the borrower is not always so simple-minded as we might be led to believe. May I go so far as to say that propaganda in the press and the obvious prejudice in some quarters on the Bench, has made the moneylending profession one of considerable difficulty. It should be remembered that the professional borrower has grown up alongside the professional moneylender and I am inclined to think that the professional borrower has taken undue advantage of that prejudice to which I have referred as existing in the Press and on the Bench. He enters into contracts which 1591 to all intents and purposes are binding upon him, but taking advantage of that prejudice he evades his obligations. Evidence was submitted to us of borrowers who made a practice of borrowing money on two sets of bille and leaving the moneylenders to fight the matter out among themselves, knowing that because of the prejudice which at present exists, the moneylender hesitates considerably before he goes to court. However, I am satisfied, as I say, that the best section of the moneylending professior. welcome legislation.
I think it would have been better had the promoters of the Bill called together all those who formed the Select Committee and endeavoured to make this an agreed Bill rather than the Bill of one or two individuals. I feel sure that had this course been taken many of the flaws which are now in the Bill would have been avoided. I am going to support the Bill, but I wish to make one or two observations on certain of its Clauses and to express what appears to me to be an equitable view of those Clauses. Clause 10 lays down a guide to the judges in regard to what ought to be and what ought not to be regarded as a "harsh and unconscionable" contract. It also lays down a guide as to the rate of interest. Up to now the judges in our courts have had practically nothing to guide them but their prejudices, or, on the other hand, their generosity. Not only does this Clause, however, lay down the rate of interest which should be regarded as fair for the future, but it permits the borrower at any period to ask that his case should be reopened in the light of this legislation.
§ Mr. DENNISON
I believe it to be wrong, and I think I can prove it to be wrong. Surely this Bill is not intended to rectify historical grievances. If it is, how far back are we to go? Are the Courts to be open to claims by borrowers that rates of interest charged 50 years ago should be reviewed now? If that is a fair proposition, then it should be open to the moneylenders to review contracts where the rate of interest was less than that laid down in this Clause. We should not have retrospective legislation in this matter. It is neither desirable nor prac- 1592 ticable. I was glad to hear the Home Secretary state that on reconsideration of Clause 11, the Lord Chancellor and the Home Office considered it unwise to enact that the only place where cases of default could be tried was the County Court. I think it reasonable that where the sums are small, say, £100 or £150, the County Court should try the cases, but obviously serious cases should be tried in the more experienced Court and the High Court, to my mind, is the place in which to deal with claims involving sums of over £100. We are assured, however, by the Home Secretary that this point will be open to amendment in Committee.
There is one more important point—and I am putting first, the equity of the case as I see it after sitting on the Committee and hearing the evidence. I refer to Clause 8. I feel sure that the promoters of the Bill and those associated with them on the Select Committee desire that this Bill should purge the moneylending profession of iniquities which are now well known. There is no object in the Bill unless it has that intention. Assuming that the Bill, having become law, has done all that the promoters intended, then the moneylender in bankruptcy proceedings should stand on precisely the same footing as any other creditor. Assuming that we have made him an honest man—leaving aside the question of whether he is an honest man now or not —and carried. out the intentions of the Bill, we must consider his position in this respect. At present the moneylender can only receive a certificate from the Registrar in Bankruptcy, where the sum involved is more than £50 of his own actual cash. I emphasise that it must be his own cash. He can get a grant in respect of a dividend of 5 per cent. per annum on the actual cash lent. But "the butcher, the baker, the candlestick maker" who may have spent £75 in purchasing goods to supply them to the same debtor and who has sold those goods for £100, ranks for dividend in the bankruptcy proceedings for £100 and not £75.
We will assume that this Bill purges, as I say, all the undesirable features from moneylending, and places the moneylender in the position of an honest man following an honest living. In that 1593 case, he ought to stand with others in respect not only of this, but other things as well, and I trust that in Committee this thing will be thoroughly thrashed out, that we will have an open mind in the matter, and that we will not have, as is the case to-day, a considerable amount of prejudice against moneylenders as such. I support the Bill, because I believe it can be amended to make it a considerably better Bill. The statement has been made to-day that there is no difference between Lord Carson's Bill and this Bill, but those who say that can never have examined the two Bills. The Carson Bill has some of the most vindictive features about it, and I am not fully satisfied that we are not contaminated by it to some extent. in this Bill, and I am equally certain that when the Bill is dealt with upstairs, those with whom I am associated will at least not do anything to make this Measure vindictive.
There is one weakness in this Bill which has not yet been touched upon to-day, and that is that there is no provision in it for dealing with what I call the "dud" firms, that is to say, firms professing to be moneylenders, but who have not got two "jinks" in their pockets, firms who merely act between the moneylenders and the borrowers. I suggest that the Clause dealing with agents and touts will not eliminate them from this profession. Those who advertise to loan sums of money ought to have some money to loan, but we have such cases on record. One was referred to in "Truth" the other week where a firm was known to have only 2s. subscribed capital, yet it was offering to loan anything from £50 upwards. Where they get it from I leave the House to imagine. Again, there are firms who can be found in the files of Somerset House, whose subscribed capital does not exceed £3, and who are offering to lend money from £100 to £5,000, and there is no doubt about it that they are there to deceive the public and the more reputable and respectable section of the moneylenders' profession would, I am sure, agree.
I speak with some knowledge of and association with one particular moneylender, with whom I have been proud to be associated socially for upwards of 25 years, and I can say that he undoubtedly, from my own personal knowledge and 1594 long association with him, is one of the most respectable individuals walking on the face of this earth to-day. Speaking for him—and there are many more associated with him in that profession—I can say that they are as anxious as we are to clear it from its undesirable elements, but we shall not do it by approaching it from a prejudiced point of view. As a Socialist—and I understand that the right hon. Member for Newcastle-under-Lyme (Col. Wedgwood) will speak against the Bill—I am going to commend the Measure with all its defects, particularly in view of the promise that we will have it reconsidered in Committee, but I cannot understand my right hon. Friend opposing legislation which will regularise, if not abolish, interest altogether. I am going to encourage the promoter of this Bill and his party to introduce more legislation of this kind, and I am hoping that very soon he will promote a Bill that will regulate the profits of the banking and the brewery interests, and even the newspaper interests. For these and other reasons, I have pleasure, with the reservations I have made, in supporting the Bill, in the hope that it will be amended in a proper form when it goes upstairs to Committee.
§ 2.0 P.M.
§ Mr. ATKINSON
Like most hon. Members of this House, I approve this Bill, and am going to support it, but with reservations. In the first place, I should like to say that I do not agree with the hon. and gallant Member for Central Hull (Lieut.-Commander Ken-worthy), who said that this Bill will not get at the class of moneylenders whom he described as "bloodsuckers." I do not know what more a Bill can do than make a course of conduct a criminal offence. If they carry on their business without obtaining a licence under the Bill, they will be committing an offence, and it is difficult to suppose that a bloodsucking business can be carried on for very long without coming into conflict with the police. I think there are two things that ought to be remembered in approaching a Bill of this sort. One has been referred to constantly, and that is the fact that there are a considerable number of perfectly honest moneylenders. In particular, there are discount companies which have carried on business for many years. I know of one that has carried on business 1595 for 70 years, and of another for 50 years, who are known to be carrying on a big business in a perfectly legitimate and proper way, and it seems to me that that class of moneylender ought to be helped.
The other thing to remember is that the more expensive you make the carrying on of the business, the more you increase the risk of loss, the more onerous are you going to make the terms of business for future borrowers. In every business, if the expenses are increased, they are handed on to those with whom you do business, and one ought to be very careful not to make the carrying on of this business more expensive than it is now, because the borrowers in the long run will have to pay. With reference to the first Clause, where it is provided that a licence has to be obtained for every place in which a business is carried on, with a fee or duty of £15 in respect of every licence, to one of these companies that means that they will have to pay £675 licence duty. That seems to me somewhat vindictive, but I am not so concerned with the interests of the lenders as with those of the borrowers, who in the long run are going to have to pay that £675. It is perfectly obvious that if you increase the expense of that concern to that extent, it has got to be handed on to someone, and I suggest that the Clause should be amended by inserting some proviso that no moneylender should be called upon to pay a sum in excess of £50 notwithstanding how many branches he is carrying on.
Then, two or three Clauses seem to me to want further consideration. Subsection (la) of Clause 3 I have read several times, and I cannot make up my mind at all whether the word "inviting" is intended to apply to the word "advertisement" or merely to "any circular or other document." Grammatically I do not think it applies to the word "advertisement," and yet, if it does not, a person is forbidden to send out any plain business card containing his name and address. If the word "inviting" is meant to apply to advertising. the wording ought to be changed, because I think the grammatical construction is that it does not apply to advertising, and I do not know which is intended. At any rate, whichever is 1596 intended, it ought to be made clear. Then paragraph (b) permits advertisements to contain "only the following particulars," which is contradicted by Clause 4, which imposes an obligation to insert in every advertisement certain other particulars. If those two Clauses be compared by those in charge of this Bill, they will see that they cannot be read together, and that Clause 4 is proposing the insertion of something which would be a breach of Clause 3.
Coming to Clause 12, it seems to me that that Clause is an unfortunate one, and is an unfair one. Take, for example, the case of bills of sale. Inevitably there will be expense incurred where security is being given, such as a bill of sale—the document, the drawing of it, the stamp, and the supplying of a copy to the borrower. I cannot see why the moneylender should not be permitted to charge the borrower with the reasonable cost of preparing and putting in legal form the bill of sale. I suggest there ought to be some proviso there, excepting costs necessarily and properly incurred in connection with bills of sale and other securities: When we come to Clause 13, we reach a Clause which, to my mind, is the most objectionable in the Bill, namely, the limitation to six months for the recovery of money. To begin with, it is made to apply to all existing debts. Take a case. There has been a promise to pay in instalments. There was default five months ago, but it has been put right since, and the matter is going on quite smoothly. Yet the effect of this Clause is that the moneylender will have to issue his writ at once, because the money became due some five months ago, and if he waits another six months he will be debarred from ever recovering
We have been told that this Bill has been carefully considered, but we must doubt whether the real effect of some of these Clauses has been considered. One is told by those who have a good deal to do with this class of work, that one of the chief sources of loss to moneylenders is the absconding or disappearance of borrowers. A borrower has disappeared or stopped payment. The moneylender cannot find him, and the six months are getting on. He must, therefore issue a writ within six months or lose all his rights. He has got to incur an 1597 expense which may be perfectly useless, and which he never would have incurred but for this Bill. I am told by those who know that it will be a very serious source of expense to moneylenders to be forced to incur legal costs in initiating proceedings in cases where otherwise they would never incur the expense. Then, why should the moneylender have his right cease at the end of six months? We are now going on the assumption that only those who obtain licences will prove themselves to be fit and proper persons to carry on the business, and if a man has proved himself to be such a one, I cannot see the justice of compelling him to start proceedings within six months or forfeit his right, when others have six years in which to press their claims. Another objection, not pointed out before, is with regard to Clause 15, which prevents the assignment by a moneylender of a. debt or any security. There are two cases which ought to be excepted from that. In many cases of borrowing, terms are easier if the borrower will obtain a guarantor, and if the guarantor pays off the debt, he is entitled to an assignment of any security the creditor has got. But a guarantor is debarred from getting the benefit of the security under this Clause. There ought to be a proviso excepting cases of guarantors. Then, again, I am told it is quite common for borrowers to wish to change their creditors. They come along with another moneylender or some friend who will take over the debt, and they are perfectly willing for the debt to be assigned to the would-be creditor. Cases of that sort ought to be excepted here, and assignments made with the written consent of the debtor, along with the assignment made to the guarantors who have paid off the debt. These are some of the points not previously mentioned, so far as I know, and I take occasion to bring them to the attention of those in charge of the Bill.
§ Colonel WEDGWOOD
I wish first of all to thank the hon. and gallant Member for Abingdon (Major Glyn) who introduced this Bill—this much more moderate and sensible Bill than the one which was perpetrated in the House of Lords last year—for the large measure in which he has met my objections to the Bill. Certainly, the elimination of the 1598 Clause which was to authorise all our letters being opened by the Post Office, in order to discover whether we were getting illicit communications from moneylenders has made the Measure a good deal more tolerable as far as I am concerned. I want, also, to say how deeply I regret finding myself on this issue at variance with my hon. Friend the Member for King's Norton (Mr. Dennison), for I do not think there is in the Labour party any man for whose commonsense and political honesty I have more respect. When he tells me that this Bill is Socialistic, and that. therefore, I ought to support it, I must respectfully inform him that if this Bill is Socialism, then I am not a Socialist, for there is a wide gulf and difference between grandmotherly legislation, designed to perpetuate the existing system and make it work, and Socialism as I understand it.
There is a tendency for our Friday afternoon legislation to become well-intentioned shop-window stuff, which will please the public outside as being directed towards improving society, but which, when passed into legislation, too often becomes a dead letter. We have too much of this well-intentioned, grandmotherly legislation designed to make people moral by Act of Parliament, or designed, as in this case, to prevent a fool being parted from his money. We pass these laws; we think we are reforming society, and then we find a coach-and-four is driven through our amateur Act of Parliament, and society remains very much as it was before. In this particular case I do not. think any hon. Member who supports this Bill really thinks it will prevent people being charged an extortionate rate of interest when they have got no security to offer for the loan, or prevent a, woman in the East End or in Liverpool lending a shilling at the rate of interest of 1d. a week. You will still have people who must have money at any price getting that money; only you are making it more difficult for them to get it. I remember we have passed legislation through this House, generally on Fridays, making it illegal for prostitutes to ply their trade in the streets, and then we made it illegal for them to ply their trade in their own flats. Still the thing goes on. In 1599 fact, you cannot, however well intentioned, by Act of Parliament change the nature of human beings.
My next is an economic objection. Every argument we have heard to-day has been in favour of making it more difficult for the moneylender to carry on his business. You are going to charge him £15 a year for a licence knowing that that must reduce the number of legal moneylenders. You cannot reduce the number of lenders, making it more difficult to lend money, without hitting the borrowers. The immediate effect of this legislation is to make moneylending more difficult, and that will result almost immediately in making it more difficult for people to borrow. I am not speaking for the moneylenders or the pawnbrokers, but for the people who use the moneylenders and the pawnbroker, and unfortunately they are people who are not in the same position as we are in this House because we are able to borrow money on good and adequate security. We can go to our bankers and say, "You know my name is good for anything; you have all my securities in your bank." The banker says, "How much do you want?" and you say, "How much have you got?" It is the people who have got no security to offer who are hit by this kind of legislation, and those are the people we ought to bear in mind when we are considering legislation.
I cannot help feeling that this Bill is based on prejudice and it is unworthy that this House should carry through legislation which is so inspired. Of course, I acquit the hon. and gallant Member who moved the Second Reading of any sign of prejudice, but it is the pressure of public opinion, through the Press, which is very largely responsible for reviving this age-long hatred of usury. But is that prejudice justified? With the exception perhaps of one or two sitting on these benches we are all moneylenders. Nearly all of us in a sense make our living by lending money.
§ Colonel WEDGWOOD
I should be very much surprised if even the hon. Member for Gorbals had not got a banking account. We may go to Messrs. Glyn Mills and Co. with our surplus, and they 1600 will give us 2½ per cent., and lend it to somebody else, perhaps at 6 per cent. interest.
§ Colonel WEDGWOOD
It is a perfectly legitimate operation to take money from us, and to lend it to other people. We are all moneylenders, and therefore we are not in a very strong position to hold up to scorn and ignominy the unfortunate people who are being dealt with in this Bill. The extraordinary thing is that lending money on security is considered to be a most respectable trade and consequently the banker is at the top of respectability. Lending money on bills of sale is a habit at which we shake our heads, but lending money without security is to be regarded as being immoral, even criminal.
In the course of my existence I have lent people money without security. suppose that under this Bill I shall not be allowed to do that, and there will be this advantage in the future if this Bill is passed, that when I am touched for a, "fiver" I shall now be able to say, "Sir, it is illegal." There have been occasions in my past life when I have been successfully touched, and I remember two cases, and two only, when I got my money back. Therefore I am in the same position as the ordinary moneylender, and if they have no better luck with their clients than I had with mine I am not surprised that they have to charge a stiff rate of interest to cover the risk. [An HON. MEMBER "What interest did you charge?"] I shall know better what to charge in future after. taking part in this Debate. If you lend money without security you have to charge a high rate of interest, and in no other way can the business be carried on. It is because of this high rate of interest that this prejudice has arisen against moneylenders. Not only have they to charge a high rate of interest, but being without security they have to be hard-hearted in the opinion of the vast majority of people of this country, but they are carrying on a, particular business in which hardheartedness plays a very prominent part. Because they charge these high rates of interest and because you see occasionally a shocking case in the Court a prejudice has arisen against moneylenders.
1601 We shall shortly hear the ex-Solicitor-General speak, and I wonder when he addresses this House which side he is going to take up. I know him very well, and a more stubborn defender of individual liberty does not exist in this House except myself. There is no man in the House who hates grandmotherly legislation more than he does. [An HON. MEMBER: "That is a Liberal principle !"] We are the sole repository of all the old sound Liberal principles. But the ex-Solicitor-General is not merely a hater of State meddling and interference, but he is also an Anglo-Catholic, and his Mother Church century after century has denounced usury. What will the hon. and learned Gentleman say to-day when he gets up to speak? What will his view be to-day? Will it be for prejudice? Will he join in the atack which has been made upon these bloodsuckers and sharks who throughout the ages are said to have robbed innocent people? King John had summary methods when he dealt with these people. He took their teeth out. What we propose to do is to charge them 15 guineas a year. There is not only this prejudice against moneylenders, although we are all moneylenders; there is behind it, as was shown by the hon. and gallant Member who moved the Second Reading, a prejudice against the sort of people who take part in moneylending. They are usually referred to as Jews and Shylocks. We all remember the man who had his pound of flesh. After all, Shylock was only trying to get his own money back, only trying to do what we are trying to do in the case of the French Debt.
§ Colonel WEDGWOOD
I only wish that we could be as lucky with the French. I only wish we could get a third, not to say three times that debt. We are trying to do the same thing. We are trying to get back what we are legally entitled to. I do not think it is in the least desirable that we should have this question whether or not aliens engage in this trade introduced in order to sway our judgment on the character of the people who carry on this business, which unfortunately is essential to our present civilisation. The House will remember that this trade of money lending was very largely forced upon the Jews, because under the old Canon Law 1602 no Christian with any regard for his religion could be a moneylender. I think I am right in saying that the old Catholic Church positively encouraged the settlement of Jews in order that there might be Jews to lend money where Christians could not do it. We also had indicated by the hon. and gallant Member the final prejudice against people who will change their names. There perhaps I might quote from Belloc an admirable example of the prejudice which I fear the share with the hon. and gallant Gentleman. You remember how Dives and Belloc go down and come to "that dear river of forgetfulness," Lethe, and drop their burdens overboard, and how, bearing a load of airy weight upon his shoulders, Belloc goes on to say that his burden consists of a little honour and a quantity of debts, andWhat will seem to you extremely strange,His father's grandfer's father's father's name,Unchanged, unhyphened, even spelt the same.We all feel that it is preferable to pass on your fathers name unhyphened and even spelt the same. I would point out to hon. Members opposite who share this prejudice, quite rightly, that their own Front Bench is a shocking example. We have Worthington - Evans, Locker-Lampson, Cunliffe-Lister—[HON. MEMBERS: "Order !"]—I am referring to the surnames, not to the persons. Smithson becomes Percy, Steel becomes Steel-Maitland, Hicks becomes Jix. They are full of this immoral act of changing a surname. What was Lord Ashfield's name before it became Stanley? This custom, I assure you, is not confined to moneylenders. It extends to everybody who wants to progress. I think this matter should be particularly interesting to the Upper House. The suggestion came from the Upper House. The House will remember that remarkably fine sample of footman Jeames Yellowplush who became James De La Pluche arid Mr. Snooks who became Sevenoaks. The House of Lords is determined to stamp this business out in moneylending. Yet I remember how Bear became de Beauchamp, Hunt became de Vere, Samuel became Montagu, Robinson became De Grey and Marquess of Ripon, Bailey became Paget and Marquess of Anglesea, Adams became Anson arid Earl of Lichfield, Aldworth became Neville, Smithson. 1603 became Percy. De Winton once was Wilkis, de Burgh was once Lill. De Moleyns was, of course, Mullins. De Freville was merely Green, and as for Smith, when it gets to the House of Lords, it blossoms out into Carington, Pauncefote, de Heriz, and, I think, Vernon. Lytton, I think, was once Robinson. There is also that beautiful, ancient, respectable Irish family of Morres, which took the name of de Montmorency, the name of the proudest house in Christendom, without the slightest right or title. I can quite understand the position of the hon. and also gallant Member for Central Hull (Lieut.-Commander Kenworthy) who opposes this Bill. He has a. conscience. The last preceding holder of the title of Strabolgi before it became Strabolgi, before it went into abeyance in the fourteenth century, was not, I feel certain, the honoured name of Kenworthy, and I quite appreciate his scouting the idea that we ought to make a law preventing moneylenders changing their names and passing over in silence and oblivion the fact that most other respectable people have already done it.
Apart from this question of names, I have one other objection, which is purely a Labour party objection. I think it will secure the unanimous approval of the Labour party. The fact is that moneylending is all very well if you are going to lend to the rich; it is lending money to the poor that you want to stop. I cannot help thinking that behind all this is a sort of feeling that the poor men—the clerks and servants and so on—ought not to borrow money. Not only is it bad for their morals, but it encourages dishonesty, gambling, and all the vices. We look after our servants in a way we never look after ourselves, and by this Measure, apparently directed in the interests of society, we do make it much more difficult for these common people to borrow money. I daresay the workers in this country would be much better workers if they gave up drink; I think they might be much better workers if they gave up borrowing money; I think they would be better workers if they gave up gambling. But detest this habit of superior people trying to make the workers moral, industrious, virtuous and dry, in order to 'secure more efficient labour in the markets of the world. In this Bill I see 1604 just another effort to put some of these people, and to keep them, in a position in which they have got to go right and cannot go wrong. All I want is that they should have the opportunity of going right. or going wrong so that they may learn themselves ultimately how to go right instead of going wrong.
There are times when clerks and such people must have a little money. I am afraid the working man does not have much of a chance with the moneylender anyhow at any time, but, in the case of the man who is a clerk on two or three pounds a week, there are occasions—death in the family, the wife ill and the doctor saying she must go to the seaside, children who require expensive foodstuffs in order to make them thrive—there are occasions when he does feel it absolutely necessary that he should have a little more money. Very often he is a man who has bought his furniture on the instalment system, and will lose it all unless he has money for the next instalment. These people are driven to seek someone who will let them have a little advance for a short period. I do not want, and the House does not want, to make it more difficult for these people to get that money, but I fear that in passing this Bill, although you will nominally be hitting at a class you do not like, you will really be hitting these men whom we ought to do all we can to help to get that money cheaply and in the best possible way. As one last word as a Labour man on the Socialist Benches may I point out that when we are dealing with this problem we ought to consider at the same time the system that is adopted in France and, I think, most countries on the Continent, of making the pawnbroker's business a national monopoly in the hands of the State. That is a method whereby the poor man, when he has a pledge or security to offer, can get his advance at a reasonable price. I do not think it would be fair to conclude the discussion on the Second Reading of this Bill without pointing out that, if you want to make it easier for the poor man to get money without being swindled by these sharks and bloodsuckers, the best way to do it would be to adopt the practice that has been found successful in other countries, and put the business of lending money on security and pledges into the hands of the municipality or the State, where you 1605 could eliminate this bloodsucking and really make more tolerable this particular blot in our beautiful civilisation.
§ Sir LESLIE SCOTT
If there were anything in this Bill to justify the attack of the right hon. Member for Newcastle-under-Lyme (Colonel Wedgwood), many on this side of the House would agree with his criticism. If it were the fact that this Bill were an attempt to educate the working classes of this country merely into being better pieces of machinery in our industries, if the Bill were not directed to the sole purpose of helping them in the difficulties they have to face in life, then I could share the view the right hon. Gentleman has just expressed in criticising, as he has criticised, that type of legislation. But there is not one scintilla of a provision in this Bill to justify any such criticism. The Bill, as I see it, is a Bill to meet a grievance—an evil, a canker that affects this country to-day to an infinitely greater extent than most of us realise. A good deal of the discussion to-day, as it seems to me, has been addressed to the House from the point of view of the members of what are sometimes called the upper classes, who may be wanting large sums of money, who may be improvident and stupid and not deserving of assistance, who may well be fools, to be parted from their money without raising any sympathy in our hearts; but that is an infinitely smaller side of the, evil with which this Bill is intended to cope than is the side of the poorer classes in our great industrial cities. The evil there is an evil of a tragic character. Daily tragedy is going on—-the tragedy of fear, of shame, of ignorance, of inability to get out of difficulties into which people who in many cases are utterly uneducated have got, and do not know how to avoid. It is that kind of evil that this Bill is intended to remedy.
I venture to deprecate very much the suggestion that this Bill is anything but a Bill intended to help those who are unable without the assistance of Parliament to help themselves. There are certain aspects of the question in which those who have education may need assistance—questions, for instance, of the fear of publicity, particularly; and it may be—and I put this forward as a suggestion for consideration in Committee—it may be possible to provide 1606 for hearing all cases of the kind in camera, in the same way as certain proceedings in bankruptcy can be heard without publicity. I believe those who borrow and get into such money difficulties, and are afraid of making them known to their families and their friends, are the prey of unscrupulous moneylenders, just because they are afraid to take cases into Court; and 1 believe that if some relief of that kind to prevent publicity were possible—I express no opinion at the moment; I think it is a very difficult question, but it ought to be considered—i f some such relief were possible, I believe that borrowers of that class would be helped.
They certainly will be helped if the provisions of the Bill with regard to bankruptcy are accepted. If the evil which to-day exists, and which was referred to by several witnesses before the Select Committee, of many petitions being put upon the file, not for the proper purpose of a bankruptcy petition, namely, dividing the assets of the bankrupt equally among his creditors, but solely in order to put pressure upon and blackmail his family or friends in order to get the claim squared; if that type of mischief in bankruptcy proceedings could be prevented, as I think it will be largely prevented by the provisions of this Bill, borrowers of that class would be greatly relieved. Having said that about borrowers of comparatively large sums, usually men or women of education who ought to know better, and who can get advice, I want, if I may, to devote the rest of my few remarks to the position of the poorer classes.
In Liverpool, as has already been stated, we have over 1,300 registered moneylenders, and over 1,100 of these are women; and the extent to which the practices of a large proportion of these moneylenders impose upon the poor of Liverpool is almost incredible. I agree, of course, that moneylending is an essential need in any modern community; I agree that moneylending under satisfactory conditions is to be encouraged, because it supplies real needs; I agree that there are many moneylenders of perfect probity and human sympathy. But the fact remains that the Act of 1900, which had been expected by the Select Committee of 1898 to achieve great results, has in a large measure failed in 1607 its purpose. That is the fundamental fact before us to-day. For the last 26 years there has been no legislation, and the existing legislation has failed to meet the needs.
Let me read to the House extracts from a letter from 'Miss Keeling, who is the secretary of the Liverpool Personal Service Society, and was one of the witnesses who gave evidence before the Select Committee of last year. That society is doing extremely good work in Liverpool. They followed up their investigations of two years ago by further investigations last year, and, in conjunction with the Liverpool Women's Citizens' Association, they actually set up a Loan Fund of their own in order to lend money to poor people in need of loans. They lent at a rate of interest which was obviously insufficient to provide for their bad debts, and they did not expect to make any profit in lending that. money. In fact, up to date, they have incurred a small loss. They lend at a ridiculously low rate of interest, somewhere about 5 per cent., perhaps a little more in some cases. Through that fund, they have gained much experience, and the extracts which I shall read from Miss Keeling's letters to me summarise the position as the result of that experience and Miss Keeling's words are words that this House can accept as recording the real position. What she says is this:All of the women and a certain number of the men carry on their business in small streets in their own houses and cater for the borrowers of small stuns, often charging exorbitant rates of interest, many acting as terrible bullies of their clients. Some of these bullies carry on subsidiary trades, for instance, clothing shops, greengrocery businesses and the like, and insist on their debtors becoming also their customers, thereby causing them through fear to buy articles they do not want, or that they cannot afford.Let me give the House one illustration of a case which occurred in Liverpool within the last 18 months, as recorded by Miss Keeling. It is a case of a Mrs. "G," who borrowed £2 because her child was ill. The moneylender charged 4s. in the per week. As Mrs. "G" could not keep up her payments, in 12 months she owed £8 on the original debt. She. did not tell her husband, and for five years she was living in constant dread of his finding out until, rather than tell him, she was driven to continual borrowing from 1608 one moneylender to pay another. Finally she decided that she could face life no longer, and she committed suicide, leaving four young children, the youngest only four years of age. I have dozens of cases which have been given to me of that type. Fortunately there are only one or two cases of suicide, but hundreds of cases could be quoted of that sort of tragedy, and it is vital that it should be. stopped. It is going on day after day, week after week in our great cities. Is this House going to allow it to go on any longer? That is the broad appeal of this Bill. I am sure the right hon. and gallant Member for Newcastle-under-Lyme will appreciate the position and will give the full sympathy of his generous heart—and we all know that his heart is generous—to a Bill which gives a reasonable chance of bringing about the result we want. That is the direct question which we have to face, and that is really the only question upon which to-day's Debate depends. I believe the House already has knowledge as to the extent of this evil, and as to the extent of the degradation and the continual fear and the continual misery of the people who get into the toils of these financial meshes from which they cannot escape. There is no doubt about that. We are all agreed upon it. We may know more or less of the details of the case, but I am perfectly certain that the House will accept the evidence of the Select Committee and the evidence that has been accumulated on this subject. I submit that, from that point of view, there is a very great evil crying out for remedy, and one which there is a reasonable chance of remedying.
At this stage of the Bill where there has been so little attack on its main principles, I do not think the House desires to hear any detailed exposition of the Clauses of the Bill, but I would ask hon. Members, particularly those who are going to be on the Committee which deals with this Bill, if we are fortunate enough to get time for it upstairs, to bear in mind certain broad aspects of the matter. They were very clearly stated by Miss Keeling, and her evidence can be relied on not only because it revealed very much experience, but also because I know her personally and I know her work, and I know that she is a person who is careful and free from exaggeration. She said in her 1609 evidence, which will be found on page 77 of the Report of the Select Committee of last year that there are four main evils: (1) The vague character of the agreements between lender and borrower; (2) the exhorbitant rate of interest charged; (3) the unsatisfactory method of licensing moneylenders; and (4) the practice of signing judgment in default. There are one or two others on which I should like to say a word, but first of all let me deal with each of these four heads. On the first, the vague character of the agreement between lender and borrower, the real source of the evil is one of education. It is more that than anything else, and, that being so, the vital thing is to make sure that you achieve two results. The first is that the borrower, at the time he borrows, really knows what the contract is upon which he is entering and what the terms are, before he accepts any money.
§ Sir L. SCOTT
I am glad to hear that. Those provisions are valuable. In addition, the power to get from a moneylender on any subsequent date. a statement of what the true financial position is with regard to the money lent and borrowed, is an equally important provision. I would suggest for the consideration of the Committee, that as an addition to this Clause it should be made clear that all conditions of the contract have to be stated in the written document at the start, including any conditions about purchasing goods from the shop belonging to the moneylender and so on, and any other conditions directly or indirectly attached; and that when any securities are realised in the course of the transaction then the amount realised by their disposal should also be stated in the particulars which have to be given at a later stage on demand. With those suggested additions I believe that the documents provided for by the Bill will give the necessary information.
There is only one other suggestion I have to make on this aspect, and that is that, as it is so essentially a question of education, the terms of the Act ought to be summarised in the simplest and shortest possible form and made available either by putting them up at Post Offices, as the conditions 1610 for licences are to-day put up in other matters, or that, as in the case of health —where hand bills are distributed in the pourer quarters of our great cities on simple elementary rules of health, as, for instance, the feeding of children in hot weather and that sort of thing—so they should be distributed among the poorer community in order that they may know what the legal position is and what their rights are when they go to moneylenders to borrow money.
On the next head, the question of the rate of interest charged, I think there has been some little misapprehension as to the provisions of Clause 10. That Clause is not retrospective except where a new contract is entered into in respect of the pre-existing loan. I do not think any of the provisions of the Bill, except that, are of a retrospective kind to which serious objection can be taken. I am not personally quite satisfied as to the drafting of Clause 10 from one point of view, namely, that the 48 per cent. is quite clearly merely a guide in regard to the burden of proof. If it is over 48 per cent. the lender has to prove that the rate is reasonable, but if it is below 48 per cent. it is assumed that it is reasonable. I think it would be well, if you keep the 48 per cent.—and I myself would rather have had 36 per cent.—but if the Committee thinks 48 per cent. is the right rate to keep, I think that an addition should be made at the end of the Clause to make it quite clear that the intention of the Clause is not to interfere with the discretion of the Court to say that a rate lower than 48 per cent. may still be an unreasonable and improper rate. I think it is worth while adding those words in order to make it clear. I have nothing further to say upon that particular matter. The third point is the question of the licensing of moneylenders. I do not think there is anything to add upon that except this, that it is perfectly plain that mere registration has not served its purpose. It has not really protected the public at all, and what is wanted is a certificate of the magistrates, as in the case of licensing for public-house purposes, that the applicant is a fit and proper person to have a licence. It is a question of character rather than anything else, and if you have that, coupled with the pro- 1611 vision in regard to an offence, namely, the provision that where an offence has been committed the certificate should be withheld, I think the public will then be protected.
Lastly, as to the question of signing judgment in default. The Court of Passage of Liverpool has been referred to, I think without realisation of its virtues, by an hon. Member to-day. That Court is one that has jurisdiction very similar to that of the High Court, and the only reason why that procedure is relevant is that in the High Court and Court of Passage a writ can be issued for a liquidated amount of debt, and judgment signed much more easily than a judgment could be obtained in a County Court. I agree that that procedure ought not to be permitted in respect of moneylending debts to moneylenders, because, as was stated by several Noble Lords in another place, and as, indeed, most lawyers think, in these cases there is so considerable a chance of the defendant either not knowing what his rights are or being afraid to come forward, that the chance of judgment being allowed wrongly to go by default is undoubtedly increased. The Judge ought to have a duty to satisfy himself in every case that it is one where the rate of interest and the conditions of the loan have not been harsh or unconscionable.
The only other evil to which I would refer is one in connection with the signing of documents, such as promisory notes, on moneylending transactions as surety on behalf of the borrower. There is a very large number of cases in which poor and uneducated people put their name to a document in which they are, in effect, assuming all the obligations of a contract of suretyship without in the least knowing what they are doing.
§ Sir L. SCOTT
Yes, certainly, bills of sale too. In the report of the Committee which investigated this matter in Liverpool two or three years ago there is this short passage which I will read. It was there said that:Many of the cases visited,"—1612 and they were cases of persons signing as sureties—seemed surprisingly ready to sign sureties on behalf of others who were hardly known to them. Sometimes they confess they have not read and do not know the meaning of the document signed. Take this as one illustration. Mrs. I—signed a £15 guarantee for a lodger who paid £2 and then went away. She had to pay £20 for the £15. The moneylender's solicitors advised her to borrow from other lenders, which she did, and became involved in great difficulties. The bailiffs were sent and everything was sold. She paid £45 in the end.That is merely an illustration. I do not want to weary the House with other illustrations but it is the sort of almost inconceivable folly that is habitually committed by uneducated persons signing as sureties, and I suggest for the consideration of the promoters of this Bill that they should consider the particular point in regard to sureties and do something in committee to deal with it.
The position of pawnbrokers and of persons who now, I understand, cad themselves "pledge-brokers "—they being pawnbrokers whose operations are not within the meaning of the Act of 1872, because they are above £10, which is the limit of that Act—has raised certain questions about the Bill. Prima-facie there is a good deal to be said for the claim put forward on their behalf by the hon. and gallant Gentleman the Member for Hull, that the licence duty in their case ought; not to he added on to the top of the pawnbrokers' duty so as to make them pay more than the moneylender has to pay under the Bill, and I would suggest that those in charge of the Bill might consider the possibility of at least reducing the payment to be made by pawnbrokers or pledge-brokers to the level of the moneylenders' amount. That it should be below does not seem to me to be reasonable, but that mean point would seem to be a reasonable compromise. I very much hope the Government may find it possible somehow or another to get the Bill through this Session so that it may become law, and if I may make an appeal to the Committee that deals with it, it is this. It would be very much better to have this Bill almost unaltered in Committee rather than not have it at all, and, therefore, I suggest that the proceedings, 1613 having regard to the amount of discussion there has already been on the subject, might be very short.
§ Sir HENRY SLESSER
We have heard from the hon. and learned Gentleman who has just sat down a very careful discussion and consideration of the main principles of the Bill, as indeed we always hear when he favours the House with a contribution. I do not, therefore, propose to follow him in detail but, speaking for myself, I think the Bill, generally speaking, has everything to commend it, and that we ought, as I hope we shall, unanimously give it a Second Beading. I am much impressed by the fact that the hon. Member for Grimsby (Mr. Womersley), who is closely associated with the problem that gives rise to the Bill, was far less stringent in his denunciation than the right hon. Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood), who spoke from a rather more theoretical angle. The hon. Member for Grimsby said he was content that the Bill should have a Second Reading, and I did not even understand the hon. and gallant Gentleman the Member for Central Hull (Lieut.-Commander Kenworthy) to say he was going to oppose the Second Beading. Therefore my right hon. Friend stands alone in the House, so far as I know, as an intransigeant and unconvertible opponent of the Measure, at any rate as far as concerns those who have spoken in the Debate. But there are one or two points to which I wish to draw attention. Clause 10, if it is not seriously amended, might actually be construed so as to weaken the provisions contained in the existing Moneylenders Act, 1900.
§ Sir H. SLESSER
It is now, I understand, a matter of discretion for the Court in a particular ease to decide whether the circumstances do or do not fall within the definition of harsh and unconscionable. But here we have inserted a definite statement that where the amount charged exceeds 48 per cent. it shall be deemed to be harsh and unconscionable, and my fear is that there will be a great temptation to counsel to argue and for the Court to accept the view, if this Clause becomes law, that, in so far as the 1614 Legislature has indicated that that is the kind of thing that constitutes a harsh: and unconscionable bargain, anything less is not a harsh and unconscionable. bargain. Without the experience of the hon. and learned Gentleman, that is the way I should certainly be inclined to argue the point, and possibly, if I were a Judge, to interpret it. I do not think that is the intention of the drafters of the Bill. I think they were merely concerned with the question of the onus of proof. I am sure the Government, if they take an interest in the Bill, as I believe they do, will consider the redrafting of the Clause.
Another matter is Clause 11. I share with the hon. and gallant Gentleman the objection to directions being given by Order in Council as to what particular Court should entertain these proceedings. I think the specific tribunal which is to consider the matter should be stated in the Statute, and there I agree with my right hon. Friend the member for Newcastle-under-Lyme that one of the ways in which individual liberty and the rights of the House are menaced is tins growing method of giving power by Order in Council to decide the structure, the powers and the place where Courts shall sit.. I hope, therefore, we shall get rid of Clause 11, and if it is thought wise that certain claims under a certain amount should be brought in humbler Courts, the limit of the amount should be specifically stated in the Bill, and not left to some gentleman to draw up by means of an Order.
My other criticism is one of omission. I cannot understand why the question of lending at interest on bills of sale has been omitted. There we are dealing with a matter which, I agree, is not touched directly in the original Statute, but when we are considering the question of charging harsh and unconscionable interest, surely all the gaps and dangers should be stopped up in one piece of legislation, and not merely limited to the case of moneylenders as such. I do not know whether the title of the Bill will allow of its extension or modification to include eases of bills of sale, but I do suggest that if the principle be right, and I think it is right, that these matters should be limited by legislation, then the question of a bill of sale ought to receive consideration.
§ Sir L. SCOTT
My impression was that lending at an excessive rate of interest on bills of sale was not excluded from but included in the Bill. I have not a very clear opinion about it, but perhaps my hon. and learned Friend will be so good as to inform the House of his reason for thinking that it is excluded. Obviously, it ought to be included.
§ Sir H. SLESSER
As I read the Bill, I cannot say that it is included. At any rate, it is a matter of very considerable doubt. It is arguable, particularly having regard to the earlier Statute, whether lending on a bill of sale is a moneylending transaction. The point ought to be cleared up, and, if possible, it ought to be dealt with in this Bill. It is a point which could be cleared up in Committee. That is all that I had intended to say on the Bill, but my right hon. and gallant Friend the Member for Newcastle-under-Lyme has intervened in the Debate, and made a statement suggesting that people who happen to hold the political or theological opinions that I hold might find themselves in a dilemma with regard to this Bill. I am not conscious of any dilemma. The principle embodied in the Bill was considered at the time of the passing of the Moneylenders Act in 1900. It was then argued with great force that it was highly improper for this House to interfere with any contract of trade, but having regard to the fact that moneylending is a peculiar kind of contract., and that there were harsh and unconscionable transactions in the charging of interest, Parliament passed a law dealing with the matter. Therefore, the complaint of my right hon. and gallant Friend should have been made in 1900 and not in 1926, because this Bill is merely a Bill amending a principle which is already embodied in a Statute.
What is that principle on the Statute Book.? I think my right hon. and gallant Friend was altogether unfair when he said that it was a question of the character of the person who lends money. It is nothing of the sort. It is a question whether the lending of money at interest is not in itself a peculiar kind of transaction which is unlike any other ordinary contract of trade. I do not take the view that because from the very earliest times some of the very wisest men and some of the most saintly men have held that this was a transaction which required careful 1616 control, either by the Church or the State, that that is a reason why we should reject the tradition and the view that has lasted so long. This legislation is no reflection upon the character of any individual. It is a view which my right hon. and gallant Friend will find in the old Canon Law. It is said that Members of this House are influenced in their views by Karl Marx. I do not know much about his exact views, but I am rather concerned with the views of St. Thomas Aquinas, St. Bernard and Thomas Smith, the eminent economist in the time of Queen Elizabeth, who wrote a discourse on usury. All these authorities said that moneylending transactions were of a peculiar type which ought to be controlled, in the earlier days by the Church and later by the State.
The Act of 1900 recognises that, and this is merely an extension. It. is no reflection on any individual whatever. Many operations, contractual operations, are regulated by Statute. If a man has a factory there are special laws dealing with it. If a man owns a coal mine, there are special reglations dealing with mines, and all kinds of special trades call for special legislation. Among others we say that moneylending, because of its many peculiarities, calls for regulation, and although moneylending calls for regulations by reason of the circumstances which are pointed out in the report of the Committee, to which reference has already been made, I would also point out that it has been the wisdom of the ages that this particular trade has always called for regulation. Where I may disagree with some hon. Members is that I take the view that the same economic principles which were worked out by the early fathers in regard to moneylending can be applied to many other money transactions. I content myself by saying that this is an excellent Measure and I hope it will receive a Second Beading without any Division at all. If the points which have been made in the course of the Debate this afternoon need correction they will receive proper consideration in the Committee upstairs.
§ Mr. MACQUISTEN
I only want to draw the attention of the House to one point because there are other Members who desire to speak on this Bill. This Bill certainly needs some amendment, 1617 possibly due to the fact that the promoters of it have tried to set out its provisions in what they describe as plain English. If they had used legal phraseology a little more the provisions of the Bill might have been a little clearer. It is the case again of the man who makes his own will. It always leads to endless trouble. There are no doubt a good many sound and decent moneylenders in the moneylending profession who would be very glad indeed if we could chase the Shylocks out of the business, but I do not think you are going to do that by the provisions of this Bill. The hon. Member for Grimsby (Mr. Womersley) referred to a particularly harsh ease. Those are the cases which we very rarely hear of; the people are too terrified to come into Court. My point is this. A good many of these moneylenders have a clearing house or exchange where they exchange the names of their clients between themselves. They know who is who, and if a man goes, say, to Mr. Rosenbaum he may say, "I am tired of lending you money, you had better go to Mr. Fincklestein, but do not tell him I. sent you." And the man goes to the same firm carrying on business under another name. Of course, most of the people who borrow money are fools. It is said we ought not to legislate for folly, but if we do not legislate for folly we shall exclude a large proportion of the population. The man goes to a second moneylender, who gets him to sign a statement to the effect that he is not owing money to any other moneylender. Then he has the borrower tight. There may be a respected mother or a clergyman, father, or a next-of-kin in the background, or the borrower may be a youth. The moneylender says to the borrower in due course, "This is a criminal case. You have obtained money under false pretences and you will have to go to prison. All the time that you told me you did not owe money to anyone else, you knew that you were deceiving me, and you signed a document that deceived me." It is all very well to say that we are protecting a man who has signed a written lie, but we do that in a lot of things. We protect the rustic who is deceived by what is known as chain-dropping. I suggest that when the Bill goes to a Standing Committee it should 1618 contain a Clause to something like the following effect:That no person shall take or exact from any proposed borrower any written statement as to whether such borrower is or is not indebted to any other moneylender.Getting the borrower to sign a statement that he does not owe money to any other moneylender is one of the principal methods by which the moneylender puts pressure on his clients. I have come across cases of the kind repeatedly. It is most extraordinary that in all the evidence that was taken before the framing of this Bill, that fact never came out. It is not the wretched and foolish borrower that we are dealing with in most cases, but the man's next of kin. When a man starts borrowing from moneylenders the relatives may come to his rescue again and again, but he will always go back to the moneylender; borrowing becomes a perfect mania with him. We have to protect the man's relatives; they are the people concerned.
§ Mr. BUCHANAN
I intend to support the Second Reading of the Bill. I listened with interest to the very informative speech of my right hon. Friend the Member for Newcastle-under-Lyme (Colonel Wedgwood). In criticisms which we have heard of the Bill, it has been said that the proposals of the Bill were directly hitting poor people and preventing them from getting loans. But poor people do not now get loans. I know moneylenders fairly intimately, because I have been brought into contact with them on behalf of my constituents. What is the procedure? It is not correct to say that they have no security. It may be true that they have not the security of such things as title deeds. The only people to whom they lend money among the working classes are those who have steady and secure occupations. From such people they have the greatest guarantee that a man can give, namely, the fact that, if found out in connection with moneylending, he will lose his situation. What greater guarantee can a man offer? If one reads their advertisements in the Glasgow newspapers, one finds that school teachers, corporation employés and railway servants are the three classes of people to whom they lend money. The really poor people do not get any loans at all. 1619 There is one aspect of moneylending which I would like to see dealt with in this Bill. It is often the case that a person who borrows £10 is asked to sign a bill not for £10 but for £15, to be paid up in weekly instalments of 10s. a week. That is a point which should be taken into consideration. We are told that this is a Bill to defend fools, but as a matter of fact it might better be described as a Bill to defend the fool's relatives. I had a relative who borrowed from a moneylender. The unfortunate borrower was pursued almost to the point of blackmail because the moneylender knew that if the case came into Court, I, as a Member of Parliament, might be brought into it as a relative of the borrower. This Bill is not merely to protect the man who borrows, but to protect every person associated with him. I do not want to be egotistical, but I think I can claim that I have had more dealings with moneylenders than most lawyers in this House, because I act as a "go-between" for my constituents with moneylenders, and I find that very often when a borrower has to pay, say, £15, and has paid £12, the moneylender comes along and says "You have missed one or two payments, and we have the right to take you to Court, because you have not kept strictly to your contract." As a matter of fact the moneylender deliberately has not pressed the borrower for the instalments during two or three weeks, and then, holding over his head the threat of bringing him into Court, they say, "We will lend you another and you can clear off the present debt." The result is that the original debt grows like a snowball, and is perhaps never paid off.
The moneylenders purposely refrain from demanding payment for the first month of the instalments, and then all through the transaction they can hold over the borrower this threat of being taken into Court. Thus when a person gets into their clutches it is very difficult for him to get out. I am surprised to hear Members of the Labour party asking why we should control the rate of interest in these transactions. Is it not part of our party propaganda to secure control of food prices and in other ways to control the usury of capitalism? Why should we not lend an ear to a proposal 1620 for controlling exorbitant interest in the case of moneylenders. 'One of the greatest menaces which is growing up in connection with this matter, is the number of unofficial moneylenders in our crowded cities. What is happening in Glasgow? There are people who will lend small sums such as £1, and if the borrower fails to keep his bargain, the lender has paid bullies who threaten the borrower with drastic penalties, should he fail to pay.
I would like this Bill to have made some attempt to protect the poorer people against this terrible evil of borrowing, and some 12 months ago I went on a deputation to the Lord Advocate asking him to get the Glasgow police, if they could under the present Act, to do something to stop this terrible canker which is growing up amongst the working people in Scotland. I regret the feeling that was engendered by the hon. and gallant Member who moved the Second Reading of the Bill, almost of an anti-Jewish spirit in connection with this matter. I know the Jewish community fairly intimately, and they are much like the Irish, Scotch and English, with good and bad among them. In their general characteristics they are no worse and no better than the general population, and it is not fair to say that moneylending is confined to the Jewish people. I know of Irish and of Scottish moneylenders, some of the worst and some of the best, and it is not fair to say that moneylending—
§ Major GLYN
I am not aware that I said anything like that. I said I objected to aliens coming over here, and using British names. To that I stick.
§ Mr. BUCHANAN
To be quite fair to the moneylenders, I do not know that they act very much under assumed names.
§ Mr. BUCHANAN
They do and they do not. As a matter of fact, many people take assumed names in business. It is not uncommon for assumed names to be taken in many businesses, but I think it was rather unfair if there were any anti-Jewish or anti-Semitic feeling, and my own view is that the Jewish community, most of them, would join in getting this Bill passed. I think the Jewish people do not like to see their race and their 1621 religion called down in this connection. I am glad the Bill is brought forward, and I hope that in Committee, far from modifying its provisions, we will make them even more stringent than they are already. I welcome the Bill because I feel at the present time that this is a fearful evil. I may quote a personal experience. I had a brother-in-law, who was in corporation employment, and who borrowed money. The curious thing is that among these people who borrow money they will not tell even their friends that they have borrowed. That chap actually died without confessing to his nearest relatives that he had borrowed from a moneylender, and a contributing factor to his death was the fearful worry going on for months and years.
When a man who has borrowed from moneylenders dies, the whole of his little belongings that he has left behind to his widow can be taken to repay his debts. I had a case in my own division where a man borrowed actually £13, but signed for £15. He had paid £13 10s. in instalments when he died, and then the moneylender came along and threatened, although be had received 10s. more than he lent, to take an action in the Court to get part of the furniture so as to make up the difference between the £13. and the £15. I would like to see the Bill strengthened rather than weakened by doing something to protect people who have paid the main principal of their debt and by providing that such debt should end at their death. I am glad this Bill is brought in, and the only thing with which I do not associate myself is any anti-foreign feeling in connection with it, because I believe that the Jewish people are as anxious as we all are that something should be done to end this terrible and fearful evil which has grown up amongst the common people.
§ Sir ELLIS HUME-WILLIAMS
It seems to me that the House is practically of one mind on this Bill. I entirely agree with the hon. Member for Grimsby (Mr. Womersley), who moved the rejection of the Bill, in thinking that it is an extremely good Bill and one which certainly ought to have our support. It certainly will have mine, and, judging from the speech which the hon. Member made in moving its rejection, I cannot help thinking it will also have his. We 1622 are dealing with something which, I think, the promoters of this Bill must have found by no means easy to deal with, because the problem they had to solve was this. The profession of moneylenders is a very ancient profession, not the oldest in the world but very nearly, and although, in itself, obviously one which deserves encouragement, because there are a great number of people who require temporary advances, there have undoubtedly been terrible abuses. The real abuse has been that the moneylender has penetrated into the uneducated and ignorant classes of the community, and used what we are accustomed to call usurious methods, undoubtedly getting mach more than he was really entitled to.
The great difficulty of those who drew up this Bill was how to protect the ignorant from the ravages of the moneylenders, without doing injury to those who legitimately turn to them and to the moneylenders themselves, who aided in real commercial difficulties. I think this Bill has very largely solved the difficulty, and I find the solution chiefly in Clause 5, because if that stood alone it would induce me to vote for the Bill. It provides that in future any loan made by a moneylender is to be in writing, and is to be signed by the person who is charged. In practice the result of that will be that if a moneylender or moneylender's tout goes into a small working-class home, and does what now he is in the practice of doing, namely, advance a small sum to the wife when the husband is away, and on entirely usurious and oppressive terms, he will have to put it into writing if this Bill be passed.
What happens at present—no doubt hon. Members have experience of this in complaints which reach them from their own constituents—is that very often after some misfortune in a household a. man arrives and advances some small sum to the wife, upon terms which are not reduced to writing. She does not in the least understand, and if she does not pay, which is very likely, the man comes down on the husband and says the wife was acting as agent for the husband. This Bill, if passed, would put an end to the whole of that., and I think that is a most useful provision. It goes a little further than that, because Clause 7 also provides that, the transaction having been reduced 1623 to writing, the moneylender must, on any reasonable demand, and on payment by the borrower of 1s., supply the borrower, or any person acting on his behalf, with the particulars of the loan and the rates of interest. It is a most useful Clause. In the case of these poor, ignorant people, in nine cases out of 10 a woman who borrows does not remember the amount, and certainly does not remember how much she has to pay in instalments, and still less how much is due. That seems to me to be a most useful provision.
With reference to the fixing of the rates of interest in Section 10, I am very much inclined to agree with the view of the hon. and learned Gentleman the Member for South-east Leeds (Sir H. Slesser). I am not at all sure that the fixing of a specific rate of 48 per cent. is a very useful provision. I am rather afraid that if this Clause is passed in its present form providing that no contract where the interest exceeds 48 per cent. is to be considered an unconscionable bargain, the court may be inclined to think anything under that is not such a bargain. That is a very dangerous thing. The suggestion has been made to have it provided that any contract which bore 48 per cent. interest would of necessity be an unconscionable bargain, but one can conceive occasions where a moneylender is called upon to make a substantial advance with comparatively no security in the case of a man who thoroughly understands the bargain he is making, and it may be that under those circumstances 48 per cent. would not be sufficient. In such circumstances the man might be prepared to run the risk and he should be allowed to make his bargain to pay even more than 48 per cent. if need be.
The best course to pursue is to leave the Courts very much in the position in which they are at the present time, namely, that they can investigate every question, see what the security actually is, and then judge whether the interest is fair and reasonable. If it is not, and even if it is above or below 48 per cent., then they would have a right to say whether the bargain is an unconscionable one, and they would be able to fix the rate. That is the commonsense way to deal with the question. If you fix it at anything over 48 per cent. ipso facto the 1624 case would have to be reopened and that would be very bad for all the parties. I doubt whether we are wise in putting in 48 per cent, at and we should consider whether it would not be better to leave the Courts a free discretion as to the security and the risk that was being run, and then allow the Court to say whether the bargain was a harsh and unconscionable one or not. I know that is a minor criticism and one which can easily be put right during the Committee stage.
There are other very useful provisions in the Bill. One is that the moneylender is not to be allowed to charge the preliminary expenses, and that is an extremely useful provision. We know the kind of gentleman who comes down and says, "The expenses are so heavy that you will have to pay half the loan." Probably he advances a valuable picture or something else as security and he has to take the moneylender's valuation of it. I am glad that the Government have taken up this Measure, and have given us the help of their expert advisers because that will tend to make it a good Bill. I submit to the House that the idea and the motive underlying this Bill are very excellent in the extreme. The Bill is wanted and is long overdue, and I hope the House will give it a Second Reading, if possible without a Division.
§ Major CRAWFURD
In common with almost every other Member who has spoken, I heartily welcome this Bill, but I want to point out what I think may be an omission. The part of the moneylending profession or occupation which has been brought to my notice is chiefly that which is carried on among poor employés in factories and workshops in the East End, and I am not sure that the provisions of this Bill will really reach that particular part of the evil. Of course, there are provisions in the first Clause that a moneylender has to take out a licence, and is punished if a licence is not taken out. But I submit that in the kind of case of which I am speaking, where there is touting by moneylenders actually inside factories and workshops, it is hard to detect who is the moneylender and who is not, and it would be extremely difficult to enforce this particular kind of provision. I merely make the suggestion that this point should be 1625 considered very carefully by those who have charge of the Bill, and by the representatives of the Home Office.
I make the suggestion that it might help, in dealing with what I am describing, if there were a similar provision put in with regard to that kind of case as is contained in Clause 13, which says that no proceedings will lie with regard to the recovery by a moneylender of money lent by him unless proceedings are taken within six months of the date when the cause of action accrues. My suggestion is that, where you have these small sums lent by unregistered moneylenders, there should be no cause of action for recovery of the loan at any time. I think, although drastic, that would do a great deal towards putting an end to what is a very widespread form of activity on the part of moneylenders. Like the hon. Member for Gorbals (Mr. Buchanan) I have these cases brought to my notice by constituents. I cannot agree with him that these cases are confined to certain well-defined classes of workers, such as teachers or railway servants. I have no doubt that the moneylender does his or her best to find out whether there is a reasonable chance of getting the money back, but that is not universally so. I think every wage-earner is subject to this kind of exaction. I make that suggestion, and, in doing so, I may say that I am glad that this Bill has been brought forward and that this Session will not have been wasted if legislation of this kind can be carried into law.
§ Mr. DENNIS HERBERT
Apparently, there is no need to say very much in favour of this Bill. The junior branch of the legal profession to which I have the honourable misfortune to belong, sees a good deal of what happens in regard to these moneylending transactions. My hon. and learned Friend who represents the Exchange Division of Liverpool (Sir L. Scott) has quoted cases which were brought before the Committee of what one can only describe as real torture to many of the poorer classes. The lower branch of the legal profession knows of these cases, and knows also of cases no less horrible among what are generally known as the better-off classes. The Council of the Law Society has had this Bill under consideration. It is not a kind of Bill with which they consider 1626 they ought unduly to interfere, but they see no objection whatever, as a body, to the Bill, subject, possibly, to come slight Amendments in Committee, with which, of course, I need not deal at the moment. That is their attitude as a body representing the profession, and, as a member of the profession myself, I think I speak the mind of by far the great majority of the profession when I say we regard this Bill as very long overdue and very much wanted.
It has been said that you are not to condemn all moneylenders, and I have had very good reason to realise that, and to realise that a Bill of this kind must be drafted and carried into law with very great care, and not in what one might describe as a vindictive frame of mind, because, odd as' it may seem to some of those who have never had occasion to borrow money, the borrowing of money, even at very high rates of interest, is very often justifiable, is very aften for the benefit of the borrower, and is certainly a thing which at any Pate ought not to be made illegal. What we do want to do is to protect the borrower, whether ignorant or not, against proceedings which are repulsive to the decent good sense of the inhabitants of a civilised country generally.
My experience, in negotiations which I have had with those in charge of this Bill, has been that they have endeavoured to meet all the criticisms brought. against the Bill by those who realise the necessity of the moneylender, as long as he is a person of respectable character. I think, in these circumstances, that the sympathetic treatment of all criticisms in the Committee stage may be relied upon, and I sincerely hope that the Bill will go through without any very serious alterations. I would like to say one word about the suggestion made by my hon. and learned Friend the Member for the Exchange Division of Liverpool. He made the very valuable suggestion that there should be some summary of the provisions of this Measure put in plain language which could be understood by almost everyone; but I think suggestion as to how that should be distributed was, if I may so with all respect to him, a mistake. I do not quite like the idea of the arrangements under which you can borrow money being advertised, 1627 either by the Ministry of Health or in any other way; perhaps the less that is known of the facilities for borrowing the better. I would, however, suggest that, if anything of that sort is done, it might be a very useful provision to put into the Bill that every moneylender, when lending money, should be bound to hand such a summary to the borrower. I do think that that would be a very useful provision and possibly the promoters may be prepared to consider it.
I was asked some time ago to consider certain questions on behalf of those who are known as pledge brokers and pawnbrokers. There, again, I think the promoters of the Bill have met the criticisms in a very fair way, and I believe that, in the main, they have satisfied those who carry on business in that way. I only want further, just as a matter of precaution, perhaps, to mention that there is one matter in which certain members of the solicitors' profession are, perhaps, indirectly interested. In the provinces, I understand, limited companies are sometimes established for the purpose of carrying on mortgage business. That, of course, is a perfectly legitimate form of moneylending, which is generally done at something like 1 per cent. above bank rate, and nothing more. I believe it is the case at the present time that they would be moneylenders within the meaning of this Bill, and that they would be put in a very difficult position, but I have no doubt it will be possible to deal with that satisfactorily in Committee. I am very glad indeed, on behalf of myself and a great many—the majority, I believe—of my profession, to welcome this Bill, and express the hope that it will pass into law.
§ Mr. H. WILLIAMS
In the few minutes which are available I am afraid I cannot compress all the notes which I have made after listening to practically the whole of this Debate. But I would like to draw the attention of those hon. Members who are now in the House to the fact that, while there has been no serious onslaught on the principles of the Bill except that delivered by the right hon. and gallant Gentleman (Colonel Wedgwood)—who proclaimed himself anew to be a philo- 1628 sophical anarchist—on the other hand no one who has spoken, with the exception of the Mover and the Seconder, has spoken without drawing attention to some Amendment or other which they would desire to see inserted on the Committee stage. Having regard to the manner in which the various suggestions have been supported, I hope that the promoters of this Bill in Committee upstairs will consider Amendments in the most friendly spirit, because it is quite evident that the attitude towards the Bill of those who have spoken, and who have suggested these Amendments, is an attitude showing that they desire the Bill to become law, but that they desire also that it should be as perfect as it can possibly be made. In connection with Clause 5—which lays it down that where repayments are made by instalments there shall be a note showing how much of each instalment is principal and how much is interest, there would be no difficulty—I think, in having tables prepared showing, in connection with any repayment, how much of the instalment is principal and how much is interest. It would, I think, be an admirable proposition if a provision could be inserted in the Bill requiring any moneylender to have in his office an official table of this kind so that the people, when they receive the memorandum, would be able to satisfy themselves that it was accurate and that there were no misleading calculations with regard to the rate of interest or the distribution of any instalment as between principal and interest. Time does not permit me to make those further observations which I had in my mind, and I will conclude by saying that I support with very great pleasure the provisions of this Bill.
§ Mr. WOMERSLEY
I beg leave to withdraw the amendment. My hon. and gallant Friend (Lieut.-Commander Ken-worthy) and I are quite satisfied with the assurances that have been given.
§ Amendment, by leave, withdrawn.
§ Main Question put and agreed to.
§ Bill accordingly read a Second time, and committed to a Standing Committee.