§ 10.28 p.m.
§ Mr. Terence L. Higgins (Worthing)
I beg to move,That an humble Address be presented to Her Majesty, praying that the Exchange Control (Gold Coins Exemption) Order, 1966 (S.I., 1966, No. 438), dated 19th April, 1966, a copy of which was laid before this House on 26th April, be annulled.On 26th April the Government took three measures. First of all, the Bank of England introduced a measure to prevent the use of gold in the manufacture of gold medallions. Secondly, the Board of Trade introduced an amendment of the open general import licence—
§ Sir Douglas Glover (Ormskirk)
On a point of order, Mr. Speaker. May I ask who on the Government benches is dealing this Order?
§ Mr. Higgins
I was saying that the Government introduced three measures—the first of them a measure by the Bank of England to prevent the use of gold coins in the manufacture of gold medallions.
The second measure by the Board of Trade amended the open general import licence, which had the effect of prohibiting, from 27th April, the importation of gold coins, medallions and other gold pieces, except for items that were over 100 years old. Thirdly, there was a measure, which we are considering now, which was laid before Parliament, and this imposes restrictions on the buying, holding and selling of gold coins minted after 1837.
I am delighted to see that the Financial Secretary has now joined us and will be able to consider the points with which I am now going to deal.
In the Treasury announcement of 26th April, it was said that the purpose of the three measures was to prevent the loss to the reserves caused by the increasing use of gold for the manufacture of medals and medallions, by the free import of gold coins and medals and by the hoarding of gold coins. We on this side of 1174 the House want to make it abundantly clear that we should support any measure which is necessary to protect the reserves and the balance of payments.
We should do this even if the measures had been made necessary by the Government's own mismanagement of the economy. It is relevant to ask why is it that the importation of gold has tended to increase and why it is that people have been encouraged to hoard gold. We should be perfectly clear that this is because the Government have failed, lamentably, to stabilise the cost of living and slow down the rate of inflation.
§ Mr. Speaker
Order. The hon. Gentleman may refer incidentally to the point that he is making, but he must debate the Order.
§ Mr. Higgins
My point was that because the Government have failed to halt the rise in the cost of living people are encouraged to hoard gold coins and this Order has been necessary for this reason. This is an important point.
I was also saying that we should support the Government, even though this Order has been made necessary by their own mismanagement of the economy. But we on this side of the House believe that the Order before us is unnecessary, in our opinion, to secure the objectives which the Government have said it is necessary to achieve. It is very difficult to understand why the Government should have introduced this measure at all. It is difficult to avoid the conclusion that this has been yet another ill-thought-out measure, introduced in a hurry, and that its implications have not been fully examined.
We feel that it is unnecessary and, for reasons which I shall mention later, likely to have very undesirable results. This measure is concerned purely with internal transactions and, in particular, with the hoarding of gold. These clearly have no direct impact upon our balance of payments which are looked after by the first two measures introduced by the Government. This measure goes far beyond what is necessary to protect the balance of payments and sterling; we do not feel that it deserves our support and are calling for it to be annulled. The only possible benefit which this Order might have as far as the position of sterling 1175 is concerned is that it calls into the reserves a small number of gold coins which have been hoarded by certain individuals.
On 17th May I asked the Chancellor of the Exchequer if he would estimate the total value of the hoardings of gold coins and what proportion he anticipated would be given up as a result of this Order. He replied that no estimate was possible, but said that there was evidence that the hoarding of gold coins was developing on a substantial scale. It is significant to note that no attempt was made to answer the second part of the Question. This is not surprising, because it is clear that this measure is not likely to be effective and it is impossible to say what proportion of the hoardings are likely to be given up.
The next point which arises is that the Order is likely to prove unworkable in practice. Almost without exception future transactions will need prior Treasury sanction and all existing collections which have not been given permission by the Bank of England will be broken up. This will involve a tremendous amount of paper work and will mean that the Bank of England must spend time and money on the valuation of individual gold coins.
A further point is that even if the Order is made to work in practice by taking rigorous action, it will prove unenforceable. Quite simply, how is the Treasury or the Bank of England to discover who has more than four gold coins dated after 1834? They will have no means of ascertaining this, so that the law will fall into disrepute because it will be unenforceable. This is clearly a major objection to the measure. It is not only unnecessary, but it will, we suggest, prove to be unenforceable.
It would appear that the Government will rely largely on individuals coming forward and offering to give up the gold coins which they hold. The unfortunate point about this is that the terms on which the Government offer to take over the gold coins which are surrendered will include an element of confiscation, in the sense that the value of the assets which people hold would he greater if they did not do what the Government are asking 1176 them to do. This element of confiscation is another objection to this proposal.
In addition, however, we will have a situation in which the Bank of England is asking people to come forward and, if they are said to be genuine coin collectors, to go to the Bank of England and prove that they are genuine coin collectors and, therefore, entitled under this new Order to hold more than four coins after the date of 1834.
But people are not merely asked to register, as it were, the gold coins in the category which I have just mentioned. They are also asked to give information on pre-1838 gold coins, silver coins before 1816, silver coins 1816 to 1919, silver coins 1920 and later, base metal coins pre-1860 and base metal coins 1860 and later. In short, it is quite apparent that information will be required which goes far beyond what seems to be necessary for the purposes of the Order.
On top of all this, the question arises of whether the Bank of England is competent to evaluate whether someone is a genuine collector. Is the Bank of England sufficiently expert in this matter? It seems quite possible that some genuine collector will be denied the right to continue as genuine collectors simply because the Bank of England happens to feel that they are not.
It is significant that in answer to a Question which I asked today, the First Secretary replied that up to 12th June, 1,230 applications had been made, of which 934 had been allowed and 265 had not been allowed. If, however, one makes inquiries among those expert in numismatics, one finds great doubt whether the decisions by the Bank of England have been competent. This is causing grave concern among genuine collectors of gold coins some of those refused permission may be genuine collectors.
That brings us to the final important point, which is concerned with what effect this totally unnecessary and unenforceable measure will have on the operation of the gold coin market in the United Kingdom. On the day on which tonight's Prayer should originally have been heard, a letter appeared in The Times from a number of experienced people in this market who stressed the point which I have made, namely, that 1177 the proposals are unnecessary, and went on to point out that the effect of this Measure will be very bad indeed for the gold coin market in this country. It went on to point out that there were many operators in the gold coin market overseas who would be only too glad to step in and to take the place of the British gold coin market. This means that the external effects on the balance of payments might be adverse rather than favourable. On this ground, too, there are other serious considerations which need to be borne in mind.
This Order means that the gold coin collectors are having to fill in substantial details in the forms which the Bank of England has provided, and this is so even if they hold only a very small proportion of gold coins in their total collection. They are being asked to divulge to the authorities details of personal chattels which are not required in any other field except in respect of actual taxation. One has to ask whether it is fair that coin collectors should have to rive details of their collections in this way when the collectors of pictures, stamps or books do not have to do so.
This leads one to consider why it is that the Treasury is simply considering gold in this context. If people are holding gold because they have no faith in the Government's policy on the stabilisation of the cost of living and on curtailing the rate of inflation, then surely if they are prevented from going into gold it is likely that they will put their money into some other form of asset which may also be a hedge against inflation and against lack of confidence in sterling. We may well find that this provision is extended not only to gold coins but to silver coins.
I am tempted to quote from Oscar Wilde's "Importance of Being Earnest" on a matter which is not unconnected with the Worthing line. Miss Prism says,Cecily, you will read your political economy in my absence. The Chapter on the Fall of The Rupee you may omit. It is somewhat too sensational. Even these metallic problems have their melodramatic side.We should ask ourselves whether the Government will take action against other specific assets which are a hedge against inflation.
§ Mr. Speaker
Order. I regret interrupting the maiden appearance of the hon. Member at the Dispatch Box, but he must not let Oscar Wilde tempt him out of order. He must keep to the Order before the House.
§ Mr. Higgins
I will certainly do so. My point was that the Order is a very dangerous precedent. It controls the holding of gold coins by private individuals, and we do not know whether we shall later face proposals concerning the holding of too many silver coins. It is a dangerous precedent of which we should beware for it may be extended to other real assets, such as diamonds.
If one examines the Order it is apparent that it is not necessary in order to achieve the objectiveness which the Government said they were trying to achieve in the Treasury Press release of 26th April. It is irrelevant to the protection of our gold reserves, and the amount of additional funds or gold assets which it may bring into our reserves will be trivial compared with the cost of collecting it. It has further objections. It is not likely to prove workable, there are grave doubts on whether the Bank of England is qualified to appraise whether someone is a genuine collector and ought to be allowed to hold gold coins and it raises the very real question of why there is no right of appeal. Why is the Bank of England to determine whether people may remain genuine collectors with absolutely no right of appeal whatever? This is surely a situation which the House ought not to allow to be created. The Order is further open to objection, as I have said, in that its effect on the gold coin market may actually be unfavourable to the balance of payments.
For all those reasons, we on this side are frankly puzzled about why the Government have introduced such an Order. It seems to us to be quite unnecessary and we shall look forward to hearing what reasons the Financial Secretary puts forward to justify it. In the absence of any adequate justification and coverage of the issues I have raised, I am sure that it is right to pray to have the Order annulled.
§ 10.46 p.m.
§ Mr. Percy Grieve (Solihull)
I am grateful for the opportunity to support my hon. 1179 Friend the Member for Worthing (Mr. Higgins) against an Order which seems to represent regulation run mad. The Exchange Control Act, 1947, put as stringent restrictions on the ownership of gold in any form by the citizens of this country as are known throughout the world today. We alone of the civilised countries of Western Europe impose these stringent restrictions on the ownership of gold.
The Exchange Control Order made under the 1947 Act was designed to mitigate a little the severity of the Act's provisions. It permitted collectors and other private citizens to own small quantities of gold coin. That was done pursuant to an undertaking given to the House by the then Financial Secretary to the Treasury, Mr. Glenvil Hall, during the Committee stage of the Exchange Control Bill of 1947, when he saidThe Treasury would not dream of making the keeping of a few coins by an individual. either as a museum piece or for sentimental reasons, an offence under the Bill".—[OFFICIAL REPORT, 4th December, 1946; Vol. 431, c. 391.]On the basis of that undertaking, for such it was, by the Government of the day and on the basis of the mitigation of the severity of the 1947 Act which the 1947 Order provided, many people over the last 19 years must have built up collections of gold coins, including coins of a date later than 1837. At those, among other persons, this Order is aimed, and unless they can satisfy the Bank of England in various ways—and the Bank is the final arbiter—those persons will have to give up their coins.
The Order has three vices. First, it is totally unnecessary for the defence of the £, or any purpose for which exchange control could legitimately be used by the Government of the day. How is the currency, the £, or the protection of the £, to suffer in any way because collectors have in their possession coins of a date later than 1837?
§ Sir Harmar Nicholls (Peterborough)
Is my hon. and learned Friend saying that the final arbiter is the Bank of England? If one of our constituents wrote to us because his case had not been approved by the Bank and we got in touch with the Chancellor of the Exchequer, could not the Chancellor himself, if satisfied our constituent is a bona fide collector, override the decision of the Bank?
§ Mr. Grieve
I am not aware that that is the case. I have no doubt the Financial Secretary will tell us if that is so. As I understand the position, the Bank is the final arbiter in this matter.
Then, in addition, this Order makes a grave inroad into the liberty of the subjects who own small quantities of gold. It is not pretended that coins of a date later than 1837 exist in any vast quantity which will upset the £ or which are going to enable anybody to drive a coach and horses through the exchange control Regulations. Secondly, if brought into force, it will enable the Bank and a vast number of officials to pry, as my hon. Friend the Member for Worthing suggested. into the private affairs of ordinary individual citizens. If they have to declare gold coins of a later date than 1837, where are we to stop? The day will come when hon. Members opposite and the Government of the day will say people must declare jewellery, pictures, works of art. Then where do we stop?
§ Mr. F. A. Burden (Gillingham)
Many ladies, as my hon. and learned Friend probably realises, have bangles on which they have gold coins. So if a lady has five gold coins on a bangle and does not declare them, will she be committing an offence.
§ Mr. Grieve
Indeed. By taking an example one can test Orders of this kind, by showing to what ridiculous lengths they will go, and the ridiculous powers which are given under them. Suppose a child is given four gold coins—if he is lucky—by his godparents. He will have to declare them, or his parents on his behalf will have to declare them, and not only that, but if there is a collection of pennies dated after 1837 they will have to declare those as well. It is really absurd.
But it does not stop there, because the vice of this Order is much worse than that. It really is unenforceable. People will be disposed to say, "I have got five gold coins; I will leave them at the bank where they are, or in drawer at home." Or a person may say, "I have got six, but I shall not declare two." That is the sort of temptation to which some people will be subjected by this Order, and that is to destroy 1181 moral respect for the law, and in trying to force through the House an Order of this kind, which has that effect of destroying respect for the law, the Government of the day are doing, I submit, very grave disservice to the cause of Law and order in the country. For these reasons, among many others, I support my hon. Friend in praying against this Order.
§ 10.54 p.m.
§ Mr. R. B. Cant (Stoke-on-Trent, Central)
I want to be a little more lighthearted, because I think this a very useful Order. I do not think it will have the appalling effects on the integrity of people the Opposition have tried to make out. I would say, even more briefly than the hon. and learned Member for Solihull (Mr. Grieve), that there are three reasons why this Order should be approved. The first one is that, quite simply, we are committed in balance of payments terms, whatever the Opposition may say, because according to noless an authority than the Tories' bible, the Economist, in an extremely disrespectful article headed "No medals for Jim"—
§ Mr. Cant
That may be so. The article estimated that in 1965 the import of gold for this particular purpose under discussion tonight rose by 50 per cent. and amounted to no less than £7½ million.
I am quite prepared to accept that £7½ million may be a bagatelle to hon. Gentlemen opposite, but it is still a large item. When we consider that the use of gold in home-produced coins amounted to a figure of well over £1 million, it may be that that will not break the country, hut the Order is something which should not only be done but should have been done earlier. It is something of which we should approve, because the whole thing is assuming the proportions of a racket. The public should be protected as consumers, and the Order is a simple piece of consumer protection.
It has been confessed that the gold content of these coins varies between 21 and 51 per cent. of the resale value, and that on average it is something in the region of 29 per cent. However much importance one might attach to 1182 aesthetics, I still believe that the gullibility of the public is being exploited. One member of the honourable profession of merchant bankers who was asked to comment on the trade said that, for the most part, these coins were nothing but junk, and he would certainly not give more than the gold content, plus 2 per cent. It is rather interesting that there is not a single producer of these medals who is prepared to repurchase them, which is significant.
§ Sir D. Glover
As the Order is dealing with gold coins, presumably it is in fact dealing with gold coins. If a coin is only 21 per cent. gold, perhaps the Financial Secretary can tell us whether that is a gold coin within the meaning of the Order.
§ Mr. Cant
I will accept that, and I come to my final point, which links both medallions and coins. This is pandering to the element of irrationality which is developing in the public, for one reason or another. It is all very well to talk about a hedge against inflation. That may be true, in part. But in no sense—medallions or coins—can one concede the fact that people in this country are acquiring coins in the same sense as people in India—that great necropolis of the East, as Keynes put it—or in the same sense as French peasants. In that development, we have a considerable element of the mysticism which is attached to gold, and, as we have done so much since 1931 to banish gold from our monetary system—
§ Mr. Speaker
Order. The hon. Gentleman is now getting quite wide of the Order that we are discussing.
§ 10.59 p.m.
§ Mr. Robert Cooke (Bristol, West)
I am grateful to have an opportunity to contribute a short speech on the subject, and I must congratulate my hon. Friend the Member for Worthing (Mr. Higgins) on his first appearance at the Dispatch Box. You will recall, Mr. Speaker, that on the first occasion on which I appeared at the Dispatch Box, you had to interrupt me no less than six times. I hope that I shall not stray out of order too often tonight.
I support the Government in trying to deal with the racket in gold medallions which has been mentioned. 1183 They are worth very little in gold value, and, in buying them, the public are being considerably exploited.
§ Mr. Speaker Yes, I am grateful to the hon. Member for Ormskirk (Sir D. Glover) for already making this point. We are discussing gold coins. I am an ignoramus in financial matters, but I do not think that medallions, which have been referred to twice tonight, are coins in the sense of this Order.
§ Mr. Cooke
If medallions are not covered by the Order, they ought to be, because it is in respect of these that the major racket is being conducted.
If by this Order the Government are seeking to stop the racket of trade in current coins of the realm and ordinary gold coins that were at one time in circulation, I would support them, because one has seen the most outrageous advertisements inviting people to speculate in these coins. The point that I want to make is that this Order seems to be detrimental to the genuine collector, and it is on this aspect that I should like to explore the Government's mind.
The Government surely would not wish to get collectors to surrender proof sets of coins, proof coins which could probably never be replaced, or at any rate only with great difficulty, and not without paying outrageous sums of money in the future. We are told that if a person is a collector—and I, alas, am not, certainly not of gold coins—he is allowed to hold only four gold coins.
There are a number of sets of gold coins issued after 1837 which are of interest to collectors. Gold coins issued after that year—and indeed for every reign, and certainly there are three coinages of Queen Victoria which could come into this category—and proof coins which are of principal interest only to collectors, are very difficult to obtain in absolutely first-class condition, and certainly when they have been through the hands of anyone but an expert are likely to be damaged, and if they have been seriously damaged would be very difficult to replace.
1184 We have been told that the Bank of England is to be the arbiter to decide who is a genuine collector. I think that the Government should make it clear that any person who holds one only of every proof gold coin minted after 1837—one only of each one; in other words a complete collection—should, as of right, be regarded as a genuine collector of gold coins, and there should be no nonsense about it, because that person surely has an unchallengeable right to be treated as a collector.
I do not want to detain the House any longer. If medallions are not included, they ought to be.
§ Mr. Cooke
I am sorry if I did not make it clear. I meant coins of this realm, and I was dealing with coins of the realm—coins issued during the reign of Queen Victoria, Edward VII, and so on. The genuine collector holding no more than one of each of the proof coins of this realm after 1837 should be protected, and if medallions are not included they certainly should be, and there should be no question of the genuine collector having to surrender coins which he got with great difficulty, and which he can have no possible opportunity of replacing in the future.
§ 11.3 p.m.
§ Mr. W. R. Rees-Davies (Isle of Thanet)
In his attractive maiden speech at the Opposition Dispatch Box my hon. Friend the Member for Worthing (Mr. Higgins) had the temerity to refer to Oscar Wilde. I have neither the wit nor the other propensities of that gentleman, save only that I hope I can be as lucid in trying to put briefly what I want to say.
I rise almost entirely because in the fine arts I have collected almost everything except gold coins, but I have been in very close touch with the authorities on this matter—Sotheby's, Christie's, and elsewhere—before rising to say what I do tonight, which I do almost entirely for the fine art trade and for the tourist trade.
I rise to speak because I believe that I can see an effective way whereby the Government can achieve what they want to achieve, and, at the same time, the 1185 House can achieve it. I think that this Order arises from not perhaps quite as deep thought as the Treasury would have liked to have given to it, and I hope that after recent further consultations the Treasury may come to the conclusion that it can find another way of achieving the purposes which it seeks.
Although I concede what my hon. Friend the Member for Bristol, West (Mr. Robert Cooke) said about medallions, the racket which arose and which prompted the Treasury to move in this direction was this this country exports a large amount of gold coins. The racketeers were exporting them one morning to Switzerland and buying them back in the afternoon under open general license. They were thus defeating the purpose of the export by building up a substantial sum of money for heir own benefit in this country. That s what we are trying to prevent.
I think that we would all agree that this is not a good thing for the nation. The question arises, if one wants therefore to prevent people from importing into this country gold bullion in the form of gold coins, what is the best way of achieving that? One way, of course, is to do as the Government have done. They have done three things—first, they have introduced measures to prevent the use of gold for the manufacture of gold medallions, second, they have prohibited altogether the importation of gold coins, gold medallions and other gold pieces into the country, and, thirdly, and this is the point—[Interruption.] I should be grateful if the barracking from the Left would stop.
Thirdly, they have imposed a complete restriction in this country on buying, holding or selling gold coins minted after 1837. We need take no objection to the first two of these measures. It is the third which concerns me. In the United States of America, the Government also prevent the import of gold coins minted after 1837, but they do not prevent the free circulation of those coins within the United States. We do not need to stop the circulation of gold coins in this country.
It does not matter if the Financial Secretary and I want to swap coins or anything else which may be our hobby. 1186 What matters is that we should not allow the loss to our gold reserves by the import into this country of gold coins from overseas, with one exception, where they are of numismatic value.
If they come into this country to form part of collections, there is no reason why they should not come in. The whole matter turns upon whether we can define what is of numismatic value. The Treasury's difficulty on this matter is that when they considered this before they were unable to decide whether they could define what is of numismatic value. I see no reason why this House should be concerned with deciding what is of numismatic value, because the trade, the auctioneers and the collectors are content to accept the decision of the Treasury on this matter—
§ Mr. Robert Cooke rose—
§ Mr. Rees-Davies
I will give way in a moment, but I want to develop this theme.
The whole matter therefore turns on what is of numismatic value. Who will decide it? What will happen is that when the coins arrive in this country to go for sale at Christie's, Sotheby's, or Baldwin's, or one of the big dealers in this field, those are the very dealers who will advise the Treasury at the port of entry. Therefore, provided that it is decided to allow this subject to a restriction on import licences, the desired object can be achieved by means of an import licence instead of by the Order.
§ Mr. Robert Cooke
I am sure that my hon. Friend would concede that the only coins of this realm which could conceivably be of any numismatic value would be proof coins minted after 1837.
§ Mr. Rees-Davies
My hon. Friend is quite right that after 1837 they are extremely limited. But there is and has been for some time a considerable auction trade in coins after 1837—the proof sets to which he referred. What happened? The Order came into effect and the immediate result, at the very next auction at Christie's, was a drop of 15 per cent. in value.
I assure the House that they have completely knocked the bottom out of the fine art market in respect of gold coins minted after 1837. This is of concern not only to the trade. The Treasury has 1187 always shown great care in its desire to protect the fine art trade and I am sure that the Financial Secretary also has this matter very much at heart.
What is the true picture? One really cannot have the Treasury deciding who is and who is not a collector. If one went tomorrow to try to purchase a gold coin minted after 1837, unless one produced a licence the auctioneer concerned would not be able to sell one. Furthermore, he does not know whether or not he can sell a person's collection. He not only does not know whether he may sell the collection, but he does not know whether he can permit the person to buy. This is, therefore, a ludicrous situation.
If one is an old and established collector of many years standing one might be able to get permission, but a great many collectors are only just beginning. Is the Treasury to say, "If you have not got a collection built up over the years you are not entitled to become a collector"? Many people, including hon. Members, are becoming collectors in the fine art field. They are being encouraged to do so and it is a good thing that they should become collectors.
If we must stop the importation of gold generally, that is one thing. Therefore, the Treasury should put this matter under licence—not open general licence as existed before, so that one could buy back the gold coins one sent out in the morning—and apply a form of licence which says that the only gold coins minted after 1837 which will be permitted entry into this country are those which are licenced by the Treasury. That would give complete discretion to the Treasury to say, "You are permitted to undertake a transaction only for coins of numismatic value".
If the Government take this course they will achieve their object fairly and effectively and we will not need to have a lot of involved restrictions which affect the liberty of the subject, trying to decide whether or not a person is a collector, considering a right of appeal from the Treasury, and so on. All these things could be swept aside and the Government would achieve their aim. I trust that the Financial Secretary will 1188 give very careful consideration to this matter, because along these lines we could permit the free circulation of these coins, protect the rights and hobbies of collectors and, at the same time, secure the aims of the Government.
§ 11.14 p.m.
§ The Financial Secretary to the Treasury (Mr. Niall MacDermot)
The hon. Member for Worthing (Mr. Higgins) asked why the Order had been introduced. It is necessary to go back a little into the history of this sphere of exchange control to understand the need for the Order in its present form.
The object of the Order is to put a stop to an unnecessary and undesirable strain on our reserves resulting, first, from the large-scale importation of gold coins, a very large number of them being our own sovereigns, and, secondly, the manufacture of gold medallions, which is not the subject of the Prayer.
As the hon. and learned Member for Solihull (Mr. Grieve) pointed out, we have had exchange control since 1939. The 1947 Act required all United Kingdom residents to offer for sale any gold coins or bullion they owned. An Order was made at the same time which was intended to exempt and protect genuine coin collectors, numismatists, which exempted all gold coins minted before 1816 and also post-1816 coins which had.. a numismatic value greater than the value of the gold content which would have been received had the coin been sold to an authorised dealer.This was intended to draw the very distinction which the hon. Member for Thanet (Mr. Rees-Davies) sought to draw between coins of numismatic value and coins of bullion value—bullion material, whose value is determined solely by the gold content, as opposed to numismatic material.
For a time that Order worked well, and gold came into the reserves as a result of those measures, but early in the 1950s it became apparent that every gold coin, even those of no interest to numismatists, could be sold at more than the gold content price. I throw that back at the hon. Member for Worthing if he suggests that our measures have led to people wanting to hoard coins for their capital appreciation. This started in the early 1950s.
1189 Unfortunately, the very coin dealers whom the hon. Member for Thanet is asking me to accept as our guides and mentors in this matter lent the weight of their expert authority to classifying this additional value as being numismatic value. As a result of the evidence which they gave in the courts, the courts, in effect, decided that this value qualified for exemption under what was intended to be an exemption Order purely for numismatists.
The result was that the Exchange Control (Collectors' Pieces Exemption) Order drove a coach and horses through the Exchange Control Act. The previous Government did nothing about it. Perhaps that is not quite fair, for they did one thing about it. A circular was sent from the Home Office to chief constables, telling them that the Order was a dead letter, and that they need not try to enforce it any more.
It is interesting to have some figures to see what happened as a result of the previous Administration's allowing this part of the exchange control to become a dead letter. The other day the hon. Lady the Member for Finchley (Mrs. Thatcher) asked my right hon. Friend the Chancellor of the Exchequer the estimated loss to the reserves from the import of gold coins and medallions in each of the last five years, and I answered this question.
In 1960, imports of gold coins were worth £62,000; in 1961, the figure was £152,000; in 1962, it was £7,682,000; in 1963, it was £5,757,000; in 1964, it was £6,400,000; and in 1965, it was £8,582,000. This is a remarkable increase in interest in numismatics.
Let me be quite fair about it. A large part of that increase included imports on behalf of non-residents, which would not have been reflected in our balance of payments. But it is estimated that imports by residents have averaged £1½ million a year since 1962, compared with the very small sums before.
Much of this consisted of current sovereigns. This country manufactures sovereigns and exports them to maintain the value of and the respect for our sovereigns, which are still held widely abroad. It was suggested that the number which were manufactured was trivial, but in the last year under the previous 1190 Administration—1963–10,405,000 were manufactured, and in 1965 the figure was 5,400,000. They are sold abroad largely to keep down and prevent counterfeiting. There is no loss to our revenues or reserves as a result; in fact, there is a slight gain to them.
But there is an immediate loss when these coins return and are purchased by United Kingdom residents. One month after being exported, sovereigns have been reappearing on sale here at prices representing a premium of 27 to 36 per cent. above the gold content value. In some cases, they have been advertised for sale here in lots of 1,000 at a time. Clearly, this has not been a numismatic interest.
§ Mr. Rees-Davies rose—
§ Mr. MacDermot
I am coming to the hon. Member's point. I hope that he will hear me out first.
I will not deal with the question of medallions, except to say that equally there has been a substantial increase in the use of gold and a drain on our reserves in this trade, which the hon. Member for Bristol, West (Mr. Robert Cooke) also criticised. We took the view that firm action must be taken to stop this hoarding, not only in our national interest, but to comply with our international duty to check hoarding and the misuse of gold. We felt that the action to be taken must be effective this time, and that while allowing the buying and selling of coins of genuine numismatic interest to continue we must not allow the numismatic exemption to open the door to all the abuses it did before.
The Order allows the holding, buying and selling of gold coins minted in or before 1837 to continue unrestricted. Coins after that date are still legal tender. That is why that date was chosen, and not the 1816 date of the earlier Order. It allows a United Kingdom resident to continue to hold up to four post-1837 coins which he already holds. It requires United Kingdom residents to obtain permission to hold more than four post-1837 coins. It is not right to say that it forbids people to hold them; it requires them to obtain a licence to do so. That is the crux of the whole Order. Permission will be readily granted by the 1191 Bank of England to genuine collectors in respect of genuine collections.
I can illustrate this point by saying that one application was recently received from someone who was accepted as being a genuine collector but who had also done something which was not quite so genuine; he had acquired no less than 500 gold sovereigns of one minting—1959 English gold sovereigns. The House may think that that was an unusual degree of specialisation for a numismatist. He was required to reduce his holding of those 500 coins, but otherwise he was granted an open licence to con-tine to acquire fresh coins.
An application is not required to be made each time one wants to buy a coin; the genuine numismatist will get a general licence leaving him free to buy from any authorised dealer—Seaby's, Baldwin's, and so on—and he can go to the auctions as before and buy. This practice will continue to be allowed. The vast majority of the permissions which have already been given are of this general kind, leaving these collectors quite free to add to their holdings. The applicants who were unsuccessful did not establish themselves as being coin collectors.
This exemption is intended for numismatists and coin collectors and not for people who seek to put forward the argument that they hold coins on sentimental or other grounds, which could lead to a completely unworkable form of control, wide open to abuse.
§ Mr. Rees-Davies
If the hon. and learned Gentleman can answer this question it will clear up the whole matter—
§ Mr. MacDermot
I am coming to the hon. Member's point. I beg him to be patient.
Any United Kingdom resident who does not obtain permission to retain more than four post-1837 coins must offer the remainder to an authorised dealer in gold, namely, a bank or a gold bullion dealer, or an authorised coin dealer or trader in coins. This will ensure that he gets the genuine numismatic value of a coin over and above its bullion value. This may answer the 1192 allegations of confiscation made in the letter in The Times.
The so-called surrender price includes the genuine numismatic value, and the authorised price is the London market price and the price promulgated by the previous Administration in the London Gazette of 23rd March, 1954. I reject the criticism that this destroys the open market. There are no restrictions on dealings by non-residents. Genuine collectors will be able to establish their position and will get a general licence which will enable them to continue to trade. Of course, the dealers themselves are authorised.
It has been suggested that there is no right of appeal. I agree with the intervention of the hon. Member for Peterborough (Sir Harmar Nicholls). The responsibility is that of the Treasury. The Bank of England is acting as the agent of the Treasury and it is open to anyone who feels that he has not had a fair deal from the Bank of England to take the matter up with his Member of Parliament who will then take it up with Treasury Ministers. There is nothing new in this. This prevails in the whole field of exchange control, and it is generally felt that in this field the Bank of England operates very humanely and fairly.
The Bank of England has received two main deputations since the Order has come into force. One was received from the main dealers and auctioneers to whom the hon. Member for the Isle of Thanet referred. They argued for what the hon. Member argued, namely, that it would be sufficient to rely only on the control of imports and controlling the use of gold in the making of medallions and medals, but to leave a free market in the country. My answer is, first, that to do that would lead to a premium on the gold coin market here within this country. Because of the artificial restriction, the coins would acquire a higher price here than their world numismatic price. This in itself would be a very strong incentive to smuggling and, as a result, would result in a loss to our reserves.
A further practical difficulty is that we would be back on the horns of the old dilemma which we experienced under 1193 the exemption Order of 1947, namely, of determining what is numismatic material and what is bullion material. The hon. Gentleman says that we can rely on the advice of the experts such as Messrs. Baldwin, Spink, Seaby and so on, but it is. those very experts who in the evidence that they gave helped to make the previour order unworkable.
§ Mr. Rees-Davies
With respect to the hon. and learned Gentleman, the decision would always be that of the Treasury, and, therefore, the Treasury would only give the import licence if it were satisfied that a coin was of numismatic value.
§ Mr. MacDermot
Surely the hon. Gentleman can see that if the highest numismatic experts in the land say on oath that they are unable to draw a distinction between numismatic value and hoarder's value—for that is what it is—it is impossible for the Treasury to fly in the face of what they say. This is the simple reason why that proposal is unworkable. The proof of the pudding will be in the administration by the Bank of England.
The other deputation received by the Bank of England was from the editor and managing editor of the numismatic journal Coins and Medals. They put a lot of questions to the Treasury and they have published the answers for the assistance of coin collectors. I should
like to read what they said in their leading article:
Hindsight suggests that some such move"—
as this Order—
could have been expected, for the vogue for these pieces attracted many new buyers for whom capital appreciation, from being one legitimate factor in collecting, came to be virtually the whole motive.
The end result of their interview was this:
…no good citizen would wish to oppose the basic aim of national financial stability, and we advise readers to accept the control in a responsible and co-operative spirit. We are satisfied that the authorities intend to administer it with common sense, sympathy and understanding. Bone fide collectors will suffer a little nuisance, but the vast majority not much more than that suffered by the ten per cent. of the population selected for the recent census. There should be very little interference with collecting in so far as it is a hobby, serious or light-hearted, and not purely an investment in a lightly tax-burdened type of security.
§ I ask the House to accept that advice and to help in putting this Order into practice. It is a necessary Order that safeguards the interests of numismatists and helps to protect our reserves. It will be operated fairly and humanely. I suggest that there is no reason to pray against it.
§ Question put:—
§ The House divided: Ayes 94, Noes 169.1195
|Division No. 19.1]||AYES||[11.30 p.m.|
|Alison, Michael (Barkston Ash)||Gower, Raymond||Pike, Miss Mervyn|
|Astor, John||Grant, Anthony||Pink, R. Bonner|
|Atkins, Humphrey (M't'n & M'd'n)||Grieve, Percy||Quennell, Miss J. M.|
|Baker, W. H. K.||Griffiths, Eldon (Bury St. Edmunds)||Rees-Davies, W. R.|
|Batsford, Brian||Gurden, Harold||Renton, Rt. Hn. Sir David|
|Berry, Hn. Anthony||Harris, Reader (Heston)||Ridley, Hn. Nicholas|
|Biggs-Davison, John||Hastings, Stephen||Rippon, Rt. Hn. Geoffrey|
|Black, Sir Cyril||Higgins, Terence L.||Roots, William|
|Blaker, Peter||Hill, J. E. B.||Rossi, Hugh (Hornsey)|
|Bossom, Sir Clive||Holland, Philip||Russell, Sir Ronald|
|Boyd-Carpenter, Rt. Hn. John||Howell, David (Guildford)||Scott, Nicholas|
|Boyle, Rt. Hn. Sir Edward||Hunt, John||Sharpies, Richard|
|Braine, Bernard||Hutchison, Michael Clark||Shaw, Michael (Sc'b'gh & Whitby)|
|Brinton, Sir Tatton||Jenkin, Patrick (Woodford)||Sinclair, Sir George|
|Buck, Antony (Colchester)||Johnson Smith, G. (E. Grinstead)||Taylor, Frank (Moss Side)|
|Burden, F. A.||Kimball, Marcus||Thatcher, Mrs. Margaret|
|Chichester-Clark, R.||King, Evelyn (Dorset, S.)||Turton, Rt. Hn. R. H.|
|Cooke, Robert||Knight, Mrs. Jill||Vickers, Dame Joan|
|Corfield, F. V.||Legge-Bourke, Sir Harry||Walker, Peter (Worcester)|
|Crosthwaite-Eyre, Sir Oliver||Lewis, Kenneth (Rutland)||Wall, Patrick|
|Crowder, F. P.||Loveys, W. H.||Ward, Dame Irene|
|Cunningham, Sir Knox||Maclean, Sir Fitzroy||Wells, John (Maidstone)|
|Currie, G. B. H.||Marten, Neil||Whitelaw, William|
|Dalkeith, Earl of||Maxwell-Hyslop, R. J.||Wilson, Geoffrey (Truro)|
|Dean, Paul (Somerset, N.)||Mills, Stratton (Belfast, N.)||Wolrige-Gordon, Patrick|
|Doughty, Charles||Mitchell, David (Basingstoke)||Worsley, Marcus|
|du Cann, Rt. Hn. Edward||More, Jasper||Wylie, N. R.|
|Elliot, Capt. Walter (Carshalton)||Morgan, W. G. (Denbigh)||Younger, Hn. George|
|Eyre, Reginald||Munro-Lucas-Tooth, Sir Hugh|
|Fletcher-Cooke, Charles||Nicholls, Sir Harmar||TELLERS FOR THE AYES:|
|Gilmour, Sir John (Fife, E.)||Noble, Rt. Hon. Michael||Mr. Francis Pym and|
|Glover, Sir Douglas||Nott, John||Mr. R. W. Elliott.|
|Glyn, Sir Richard||Osborn, John (Hallam)|
|Allaun, Frank (Salford, E.)||Gourlay, Harry||Newens, Stan|
|Alldritt, Walter||Gray, Dr. Hugh||Norwood Christopher|
|Anderson, Donald||Gregory, Arnold||Ogden, Eric|
|Archer, Peter||Grey, Charles||Orme, Stanley|
|Armstrong, Ernest||Griffiths, David (Rother Valley)||Oswald, Thomas|
|Atkinson, Norman (Tottenham)||Griffiths, Rt. Hn. James (Lianally)||Owen, Dr. David (Plymouth, S'tn)|
|Barnes, Michael||Hamilton, James (Bothwell)||Palmer, Arthur|
|Baxter, William||Hamilton, William (Fife, W.)||Pardoe, J.|
|Beaney, Alan||Hazell, Bert||Park, Trevor|
|Benn, Rt. Hn. Anthony Wedgwood||Henig, Stanley||Parkyn, Brian (Bedford)|
|Bidwell, Sydney||Herbison, Rt. Hn. Margaret||Peart, Rt. Hn. Fred|
|Bishop, E. S.||Hilton, W. S.||Pentland, Norman|
|Blackburn, F.||Hooley, Frank||Perry, George H. (Nottingham, S.)|
|Booth, Albert||Horner, John||Prentice, Rt. Hn. R. E.|
|Boston, Terence||Houghton, Rt. Hn. Douglas||Price, Christopher (Perry Barr)|
|Braddock, Mrs. E. M.||Howarth, Robert (Bolton, E.)||Price, William (Rugby)|
|Brown, Hugh D. (G'gow, Provan)||Howie, W.||Pursey Cmdr. Harry|
|Brown,Bob(N'c'tle-upon-Tyne,W.)||Hoy, James||Redhead, Edward|
|Butler, Mrs. Joyce (Wood Green)||Hughes, Hector (Aberdeen, N.)||Reynolds, G. W.|
|Cant, R. B.||Hughes, Roy (Newport)||Roberts, Goronwy (Caernarvon)|
|Coe, Denis||Jackson, Peter M. (High Peak)||Roberts, Gwilym (Bedfordshire, S.)|
|Coleman, Donald||Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)||Robertson, John (Paisley)|
|Concannon, J. D.||Johnson, Carol (Lewisham, S.)||Robinson, W. 0. J. (Walth'stow, E.)|
|Corbet, Mrs. Freda||Johnson, James (K'ston-on-Hull, W.)||Roebuck, Roy|
|Cousins, Rt. Hn. Frank||Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)||Ross, Rt. Hn. William|
|Crossman, Rt. Hn. Richard||Judd, Frank||Rowland, Christopher (Meriden)|
|Cullen, Mrs. Alice||Kerr, Mrs. Anne (R'ter & Chatham)||Rowlands, E. (Cardiff, N.)|
|Davies, Dr. Ernest (Stretford)||Kerr, Dr. David (W'worth, Central)||Sheldon, Robert|
|Davies, G. Elfed (Rhondda, E.)||Kerr, Russell (Feltham)||Shore, Peter (Stepney)|
|Davies, Ednyted Hudson (Conway)||Lawson, George||Short,Rt.Hn.Edward(N'c'tle-u-Tyne)|
|Davies, Ifor (Gower)||Leadbitter, Ted||Silkin, John (Deptford)|
|Davies, Robert (Cambridge)||Lee, Rt. Hn. Frederick (Newton)||Silverman, Julius (Aston)|
|Delargy, Hugh||Lee, John (Reading)||Slater, Joseph|
|Dempsey, James||Lestor, Miss Joan||Steel, David (Roxburgh)|
|Dewar, Donald||Lever, L. M. (Ardwick)||Swain, Thomas|
|Dobson, Ray||Lewis, Arthur (W. Ham, N.)||Symonds, J. B. Varley, Eric G.|
|Doig, Peter||Mabon, Dr. J. Dickson||Walker, Harold (Doncaster)|
|Dunnett, Jack||McBride, Neil||Wallace, George|
|Dunwoody, Mrs. Gwyneth (Exeter)||McCann, John||Watkins, David (Consett)|
|Dunwoody, Dr. John (F'th & C'b'e)||MacColl, James||Weitzman, David|
|Edwards, William (Merioneth)||MacDermot, Niall||Wellbeloved, James|
|Ellis, John||Macdonald, A. H.||Wells, William (Walsall, N.)|
|English, Michael||McKay, Mrs. Margaret||Whitaker, Ben|
|Ennals, David||Mackintosh, John P.||Whitlock, William|
|Ensor, David||McMillan, Tom (Glasgow, C.)||Willey, Rt. Hn. Frederick|
|Faulds, Andrew||McNamara, J. Kevin||Williams, Alan Lee (Hornchurch)|
|Fernyhough, E.||MacPherson, Malcolm||Williams, Clifford (Abertillery)|
|Fletcher, Raymond (Ilkeston)||Marquand, David||Wilson, William (Coventry, S.)|
|Fletcher, Ted (Darlington)||Mendelson, J. J.||Winnick, David|
|Floud, Bernard||Mikardo, Ian||Woodburn, Rt. Hn. A.|
|Forrester, John||Milian, Bruce||Woof, Robert|
|Fowler, Gerry||Moonman, Eric||Zilliacus, K.|
|Fraser, John (Norwood)||Morgan, Elystan (Cardiganshire)|
|Freeson, Reginald||Morris, Alfred (Wythenshawe)|
|Galpern, Sir Myer||Morris, Charles R. (Openshaw)||TELLERS FOR THE NOES:|
|Gardner, A. J.||Moyle, Roland||Mr. Joseph Harper and|
|Garrow, Alex||Mulley, Rt. Hon. Frederick||Mr. Alan Fitch.|
|Ginsburg, David||Murray, Albert|