§ 3.38 p.m.
§ Mr. J. W. Rooker (Birmingham, Perry Barr)
I beg to move,That leave be given to bring in a Bill to prohibit speculation in currencies or commodities; and for connected purposes.If this Bill had been law last March, the result of the Bank of England's treasonable mismanagement of the money markets would not have led to the run on the pound caused by the speculators and leading to the present crisis which, as we all know, is not a new one but simply an extension of what has gone on before.
Speculation fuels inflation, it causes unemployment and in many countries it causes extreme poverty and starvation on a large scale. Decent and honourable financial journalists—there are some—admit that inflation in recent years has been largely fuelled by speculators.
Indeed, John Palmer, the Business Editor of The Guardian, writing in the middle of the June election in 1974, said:Alarming evidence is emerging that the activity of speculators on the London commodities market has played a major role in worsening both the rate of inflation and the balance of payments deficit. One estimate in the City suggested that in some cases as much as half the increase in prices of some commodities in the previous year was caused by speculative buying of futures contracts.He said that the uncontrolled access to the City commodity markets of large investors anxious to seek a hedge against inflation and currency uncertainties caused prices to rise twice as fast as they would have done without the speculators there. The Economist in March 1975 claimed also that uncontrolled commodity markets of the previous two years had contributed handsomely to our hair-raising inflation.
I know that some economists argue that currency speculation is far more damaging than commodity speculation and it is this which makes the Government's constant attempts to persuade speculators to buy sterling all the more unforgiveable. The value of a currency, even in a capitalist free market system, should depend on the buying and selling of currency and commodities for legiti- 432 mate trade purposes only—not on operators making a living selling the pound and Britain short constantly as they do. There is something sick about the major opposition party in that it supports and advocates such activities in the City of London.
It was announced yesterday in the Financial Times that the Stock Exchange is to seek to engage in what will be the ultimate casino operation of all time—the opening up of a market in trading options. This is a system which has been used in the United States of America for the past few years to perpetuate large-scale frauds on small investors, rendering many of them penniless. The American Government have taken action to control the activities of that market. In the past, my right hon. Friend the Member for Huyton (Sir H. Wilson) has accused the City of operating a gigantic casino where the nation is the only loser. It was 25 years ago that he made that accusation. I hope that he will seek to ban any new speculative markets until his official inquiry into the City of London has reported.
My right hon. Friend's inquiry will be strengthened by the action of this House in granting me leave to introduce the Bill. After a quarter of a century of criticism my right hon. Friend now has a great chance to take some action and change the City from the casino that it undoubtedly is. My Bill would outlaw the situation whereby the modern speculator with no factory, no warehouse and no transport facilities but with a telex machine and the co-operation of the banks can use the highly sophisticated markets in this country and abroad to buy commodities he does not need and to sell currencies he does not have. That situation only fuels inflation in the long term.
The Bill will outlaw such action by stopping all agreements where legitimate trade is not involved and will impose penalties in line with the scale of the offence. I accept that futures markets play an important part in manufacturing industry. The City of London attempted to educate me during the recess when it saw my motion on the Notice Paper in late July. I fully accept that manufacturers wish to buy commodities and goods in advance of production so that they may plan their marketing and pricing policies. 433 They will not be affected by my Bill as long as they intend to produce something and not just buy and sell without the intention of ever producing anything.
The same will apply to currencies. There is no good purpose served, for the country, the workers, or this Government, in allowing the present casino situation to exist for much longer. I hope therefore—given this short outline of my Bill, which is extremely simple—that speculation can ultimately be outlawed by making sure that agreements that do not contain legitimate trade clauses are not agreements that can be enforced in the courts. It is as simple as that. I hope that the House will give me leave to introduce the Bill.
§ 3.44 p.m.
§ Mr. Bottomley
I do. I rise with not much hope of convincing the hon. Member for Birmingham, Perry Barr (Mr. Rooker) that he is wrong-headed in putting forward this proposed Bill. If he has failed to benefit from the education which has been offered to him in the past few months, a little bit more from me might just help.
I want to take up the two bases on which he has built his argument. The first was that speculation is a major cause of inflation and that it has led to a major part of the balance of payments deficit. It is now commonly agreed, certainly between the Chancellor and many of my colleagues, that Government action leads to inflation and that often such Government action is a reaction to pressures imposed on them by trade unions, manufacturers or whoever.
§ Mr. Bottomley
If trade unions are speculators, fair enough. Perhaps they will be caught by this proposed Bill, if it is enacted. I have not heard anyone suggest that speculation is either endlessly profitable or a major cause of inflation. Things which are inherently unprofitable in a mixed or free economy are not followed by many people for long. However disastrous the rise in 434 house prices may have been during the time of the last Conservative Government, many people have learned their lesson in the domestic, industrial and commercial property market. The great thing about speculation is that people learn from their mistakes.
One of the unfortunate things about the Labour Party, which has a constitution written in 1918 tied round its neck, is that it does not get the opportunity to learn from its mistakes because it is sufficiently wrong-headed and pig-headed not to understand where it goes wrong. I am directing my remarks generally rather than to anyone in particular.
The hon. Member's second point about speculation leading to a balance of payments deficit seems to be equally wrong. As I understand it, the balance of payments deficit comes about because people do not produce as much as they want to consume and have the opportunity of buying more of what other people are producing without paying directly for those goods. Let me give a simple example concerning the rise in earnings and the production of car workers in this country as compared with their German counterparts over the past 10 or 15 years. Pay increases in this country have been 200 per cent. while in Germany they have been 100 per cent. Yet the value of the paper wages in this country are greatly reduced because production is not sufficiently high. If there could be more speculation about the causes of that and an attempt to tackle the underlying problems perhaps we would get away from the balance of payments deficit.
I refer the hon. Member to page 11 or page 13 of Labour Weekly. There are about nine or ten pages in that publication every week saying how wrong it is for people to speculate. That paper would condemn the hon. Gentleman if he were to set up a bicycle factory and sell bicycles perhaps £5 cheaper than those sold by the Royal Arsenal Co-op or department stores. He might become so successful that he ends up with £500,000. Because of his speculation, or enterprise, everyone else would be better off. Many Labour Members would see that as being wrong, despite the fact that the hon. Member would be helping to lower the retail price index and enable more people to get bicycles. These bicycles could be 435 sold in Germany and would help to put right our balance of payments deficit. Were the hon. Gentleman to do this he would be hit by capital transfer tax, corporation tax, wealth tax and so on.
Yet, on page 11 or page 13 of Labour Weekly, week after week, there appear the words suggesting that to win £500,000 on the football pools people should use
§ Labour Weekly perm No. 7. That condemns the sort of argument the hon. Member is using.
§ Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of Public Business):—
§ The House divided: Ayes 164. Noes 139.437
|Division No. 316.]||AYES||[3.50 p.m.|
|Allaun, Frank||Graham, Ted||Oakes, Gordon|
|Archer, Peter||Grant, George (Morpeth)||Orbach, Maurice|
|Ashton, Joe||Grocott, Bruce||Orme, Rt Hon Stanley|
|Atkins, Ronald (Preston N)||Hamilton, James (Bothwell)||Ovenden, John|
|Atkinson, Norman||Hardy, Peter||Park, George|
|Bain, Mrs Margaret||Harrison, Walter (Wakefield)||Pavitt, Laurie|
|Bales, Alf||Hatton, Frank||Price, C. (Lewisham W)|
|Benn, Rt Hon Anthony Wedgwood||Henderson, Douglas||Price, William (Rugby)|
|Bennett, Andrew (Stockport N)||Hoyle, Doug (Nelson)||Richardson, Miss Jo|
|Bidwell, Sydney||Huckfield, Les||Robinson, Geoffrey|
|Bishop, E. S.||Hughes, Rt Hon C. (Anglesey)||Roderick, Caerwyn|
|Blenkinsop, Arthur||Hughes, Robert (Aberdeen N)||Rodgers, George (Chorley)|
|Booth, Rt Hon Albert||Hughes, Roy (Newport)||Rooker, J. W.|
|Bottomley, Rt Hon Arthur||Hunter, Adam||Roper, John|
|Bray, Dr Jeremy||Irvine, Rt Hon Sir A. (Edge Hill)||Ryman, John|
|Brown, Hugh D. (Provan)||Jeger, Mrs Lena||Sandelson, Neville|
|Brown, Ronald (Hackney S)||Jenkins, Hugh (Putney)||Sedgemore, Brian|
|Buchan, Norman||Johnson, James (Hull West)||Shaw, Arnold (Ilford South)|
|Callaghan, Jim (Middleton & P)||Jones. Dan (Burnley)||Short, Mrs Renée (Wolv NE)|
|Cant, R. B.||Judd, Frank||Sillars, James|
|Carter-Jones, Lewis||Kaufman, Gerald||Silverman, Julius|
|Cartwright, John||Kilroy-Silk, Robert||Small, William|
|Clemitson, Ivor||Kinnock, Neil||Smith, John (N Lanarkshire)|
|Cocks, Rt Hon Michael (Bristol S)||Lambie, David||Snape, Peter|
|Cohen, Stanley||Lamborn, Harry||Spriggs, Leslie|
|Coleman, Donald||Lamond, James||Stallard, A. W.|
|Colquhoun, Ms Maureen||Latham, Arthur (Paddington)||Stoddart, David|
|Concannon, J. D.||Leadbitter, Ted||Summerskill, Hon Dr Shirley|
|Conlan, Bernard||Lewis, Ron (Carlisle)||Swain, Thomas|
|Cook, Robin F. (Edin C)||Lipton, Marcus||Thomas, Ron (Bristol NW)|
|Cox, Thomas (Tooting)||Litterick, Tom||Thompson, George|
|Crawford, Douglas||Loyden, Eddie||Thorne, Stan (Preston South)|
|Crowther, Stan (Rotherham)||Lyon, Alexander (York)||Tierney, Sydney|
|Cryer, Bob||McCartney, Hugh||Torney, Tom|
|Davies, Bryan (Enfield N)||McCusker, H.||Urwin, T. W.|
|Deakins, Eric||McDonald, Dr Oonagh||Wainwright, Edwin (Dearne V)|
|Dempsey, James||McElhone, Frank||Walker, Harold (Doncastsr)|
|Doig, Peter||MacFarquhar, Roderick||Walker, Terry (Kingswood)|
|Dormand, J. D.||Maclennan, Robert||Watkins, David|
|Dunlop, John||McMillan, Tom (Glasgow C)||Welsh, Andrew|
|Eadie, Alex||McNamara, Kevin||White, Frank R. (Bury)|
|Edge, Geoff||Madden, Max||White, James (Pollok)|
|Edwards, Robert (Wolv SE)||Mahon, Simon||Whitehead, Phillip|
|Ellis, John (Brigg & Scun)||Mallalieu, J. P. W.||Whitlock, William|
|Ennals, David||Marshall, Dr Edmund (Goole)||Willey, Rt Hon Frederick|
|Evans, Fred (Caerphilly)||Maynard, Miss Joan||Williams, Rt Hon Shirley (Hertford)|
|Evans, Gwynfor (Carmarthen)||Mendelson, John||Wilson, Alexander (Hamilton)|
|Evans, Ioan (Aberdare)||Miller, Dr M. S. (E Kilbride)||Wilson, Gordon (Dundee E)|
|Ewing, Harry (Stirling)||Miller, Mrs Millie (Ilford N)||Wilson, William (Coventry SE)|
|Fernyhough, Rt Hon E.||Moonman, Eric||Wise, Mrs Audrey|
|Flannery, Martin||Morris, Alfred (Wythenshawe)||Wrigglesworth, Ian|
|Fletcher, Ted (Darlington)||Morris, Charles R. (Openshaw)||Young, David (Bolton E)|
|Foot, Rt Hon Michael||Moyle, Roland|
|Forrester, John||Murray, Rt Hon Ronald King||TELLERS FOR THE AYES|
|George, Bruce||Newens, Stanley||Mr. Russell Kerr and|
|Golding, John||Noble, Mike||Mr. Dennis Skinner|
|Adley, Robert||Blaker, Peter||Bulmer, Esmond|
|Aitken, Jonathan||Boscawen, Hon Robert||Burden, F. A.|
|Alison, Michael||Bowden, A. (Brighton, Kemptown)||Chalker, Mrs Lynda|
|Beith, A. J.||Boyson, Dr Rhodes (Brent)||Churchill W. S.|
|Bell, Ronald||Brittan, Leon||Clarke, Kenneth (Rushclifle)|
|Berry, Hon Anthony||Brotherton, Michael||Cooke, Robert (Bristol W)|
|Biggs-Davison, John||Brown, Sir Edward (Bath)||Cope, John|
|Corrie, John||Jopling, Michael||Rathbone, Tim|
|Costain, A. P.||Kaberry, Sir Donald||Ronton, Rt Hon Sir D. (Hunts)|
|Craig, Rt Hon W. (Belfast E)||Kershaw, Anthony||Ridsdale, Julian|
|Crouch, David||King, Evelyn (South Dorset)||Roberts, Michael (Cardiff NW)|
|Davies, Rt Hon J. (Knutsford)||Kitson, Sir Timothy||Roberts, Wyn (Conway)|
|Douglas-Hamilton, Lord James||Knight, Mrs Jill||Rossi, Hugh (Hornsey)|
|Durant, Tony||Lamont, Norman||Rost, Peter (SE Derbyshire)|
|Eden, Rt Hon Sir John||Langford-Holt, Sir John||Royle, Sir Anthony|
|Eyre, Reginald||Latham, Michael (Melton)||Shaw, Giles (Pudsey)|
|Fairbairn, Nicholas||Lawrence, Ivan||Shepherd, Colin|
|Fairgrieve, Russell||Le Marchant, Spencer||Shersby, Michael|
|Fletcher-Cooke, Charles||Lester, Jim (Beeston)||Silvester, Fred|
|Fry, peter||Lewis, Kenneth (Rutland)||Sinclair, Sir George|
|Gardiner, George (Reigate)||Lloyd, Ian||Skeet, T. H. H.|
|Gilmour, Rt Hon Ian (Chesham)||Luce, Richard||Smith, Cyril (Rochdale)|
|Glyn, Dr Alan||McCrindle, Robert||Smith, Dudley (Warwick)|
|Goodhart, Philip||Macfarlane, Neil||Speed, Keith|
|Goodhew, Victor||Marshall, Michael (Arundel)||Spence, John|
|Goodlad, Alastair||Marten, Neil||Spicer, Michael (S Worcester)|
|Gorst, John||Mather, Carol||Sproat, Iain|
|Gow, Ian (Eastbourne)||Mawby, Ray||Stanley, John|
|Gower, Sir Raymond (Barry)||Maxwell-Hyslop, Robin||Steel, David (Roxburgh)|
|Gray, Hamish||Mayhew, Patrick||Steen, Anthony (Wavertree)|
|Grimond, Rt Hon J.||Miller, Hal (Bromsgrove)||Stradling Thomas, J.|
|Hamilton, Michael (Salisbury)||Mills, Peter||Tebbit, Norman|
|Hannam, John||Moate, Roger||Townsend, Cyril D.|
|Harvie Anderson, Rt Hon Miss||Monro, Hector||Tugendhat, Christopher|
|Hawkins, Paul||More, Jasper (Ludlow)||Vaughan, Dr Gerald|
|Hayhoe, Barney||Morgan-Giles, Rear-Admiral||Warren, Kenneth|
|Higgins, Terence L.||Morris, Michael (Northampton S)||Weatherill, Bernard|
|Holland, Philip||Morrison, Hon Peter (Chester)||Whitelaw, Rt Hon William|
|Howe, Rt Hon Sir Geoffrey||Mudd, David||Wiggin, Jerry|
|Howell, David (Guildford)||Neave, Alrey||Winterton, Nicholas|
|Howells, Geraint (Cardigan)||Neubert, Michael||Wood, Rt Hon Richard|
|Hunt, John (Bromley)||Newton, Tony||Young. Sir G. (Ealing, Acton)|
|Hurd, Douglas||Onslow, Cranley||Younger, Hon George|
|Hutchison, Michael Clark||Page, John (Harrow West)|
|James, David||Page, Rt Hon R. Graham (Crosby)||TELLERS FOR THE NOES:|
|Jenkin, Rt Hon P. (Wanst'd & W'df'd)||Pardoe, John||Mr. Peter Bottomley and|
|Jessel, Toby||Pattie, Geoffrey||Mr. Peter Hordern.|
|Jones, Arthur (Daventry)||Penhaligon, David|
§ Question accordingly agreed to.
§ Bill ordered to be brought in by Mr. J. W. Rooker, Mr. Dennis Skinner, Mrs. Audrey Wise, Mr. Max Madden, Mr. Neil Kinnock, Mr. John Evans, Mr. Geoff Edge, Mr. Dennis Canavan, Mr. Robert Kilroy-Silk, Mr. Martin Flannery, Mr. Joan Evans and Mr. Andrew F. Bennett.