27 May, 1924.]

[Continued.

It is

established, and you reserve for those whose claims are still outstanding. the ordinary process in bankruptcy.

Colonel Penry Williams.

1701. You say you could not pay claims under £200 because that would be giving preferential treatment to those claimants? -I could not do it unless I reserved for those whose claims are still outstanding an equal amount.

1702. But you did it in the case of claims under £50?—I reserved £50, as 1 said.

1703. There is no reason why you should not extend that principle?-Not a bit, if I had sufficient funds in hand.

1704 But you have not got sufficient money in hand?—No, I have not got sufficient money in hand

Sir William Mitchell-Thomson.

1705. Supposing it were a question of saying to the man who has an award under £200" We will not pay you in full, but if you like you can either (a) hang on till the whole thing is settled and then receive your award or such part of your award as the money will run to, or (b) be setled with now under a discount." What would you say to that?-I should say that would lead to considerable complication and a great deal of friction.

1706. Why? Because the man who has settled his claim under a discount when eventually I paid in full the other creditors would come to me and say "You misled me, I gathered from you that I should not get paid in full and, therefore, I was willing to take this amount."

Mr. A. M. Samuel.

The

1707. It does not follow at all. man will get his money so many years in front of the time when he otherwise would have got it. You say to the man "You may wait some months, there is no compulsion, we owe you £200, it has been awarded, you are entitled to that money later on when the money is available, but if you like to take a sum of £175, let us say, you want the money, you may have it if you like, and the whole thing shall be settled." What grievance can that man have against the Clearing Office? None that I can see?-He would certainly come and ventilate his grievance. If you sat in my chair you would

realise the grievances that are put forward. Most of them are, in my opinion, ill-founded.

Chairman.

1708. At any rate you would object to making that offer?-I should see objections to it, yes.

Sir William Mitchell-Thomson.

1709. Administrative objections? Partly administrative. The policy is really outside my ken. I think it would lead to considerable complaint and irritation hereafter. The same thing happened in the case of Bulgaria. In the case of Bulgaria creditors settled their claims, many of them, in levas, for very much less than they would have got through the Clearing Office. I have now paid everybody in full in Bulgaria, as I shall do in the case of Germany, and they have come to me and put up a grievous complaint against me; they have aired their grievances through their Chambers of Commerce (and I am painted in very dark colours) that I ought to have told them they would have got paid in full.

Mr. A. M. Samuel.

1710. You were not to be blamed? -Those are complaints that I should meet with in the case of Germany.

1711. You would be in a perfectly strong position. You would say: "You have no grievance against me; I did not compel you to take the money, you had the option, you thought it better to take the money in hand (a bird in the hand is worth two in the bush) so that you might trade with the money," and if any man came to the head of the Association of Chambers of Commerce and complained against you we should tell that man he was utterly unjustified in his complaint? -I do not think so. You would send the letter on to me for my observations.

Mr. Pethick-Lawrence.

1712. I should like to put another point on this question. Putting aside for the moment the desirability or undesirability of offering a discount for payment, you are, I understand, gradually increasing the amount in hand which is available owing to the falling off of certain claims that you thought might be substantiated? -Yes.

27 May, 1924.]

1713. The time will come when you will be able to use that balance, and you might use it in one or two ways. You might either increase the 7s. 6d. by a further 2s. 6d. or you might devote it to paying off small claims under, say, £200 or £250, subject to discount or not, and getting them out of the way. Have you any observations to make as to the desirability, when you have amassed a little balance, of using it in those alternative ways? No.

1714. Do you think it would be perfectly legitimate, instead of paying a further 2s. 6d. on the whole of the claims, to pay off all the small claims in full, those under £200 or £250, keeping the others?—Until I could estimate what that would involve I could not say whether there would be any objection to it, for this reason. The big man whose claim was £10,000 would say, "I am not getting my proportion. The £250 man has been paid in full; I am only getting £250 of my £10,000." As regards the £50 claims, we did take the risk of argument in favour of the little man. I think we had in view the sailor who was very hardly treated, and we stretched a point, and we said, "Well, a dividend of 2s. 6d. on his claim of £30 or £40 is very little to him." That was the case of a man whose ship had been detained in port prior to the war, and immediately war broke out he was interned, and many of them have died in prison. They were pitiful cases. We thought we were justified on that; at any rate, we were prepared to stand criticism on it; but I do not think I could equally justify the criticism if I opened the purse to the man who has already been treated very well and gave him something at the expense of others which we really could not strictly in law justify. In the vast majority of these claims for compensation the claims are complementary to the proceeds of liquidation. The process is this. Their business was liquidated during the war by the Germans under exceptional war measures; the proceeds of liquidation represent the actual price that the Germans sold his business for in marks converted into sterling at the pre-war rate of exchange; on top of that he is entitled to compensation if he can show that his business was sold for less than its value, and in addition he is entitled to damages for the loss of use of his money, which is taken at 5 per cent. The majority of these compensation claims are claims of that nature. The man has already had the proceeds of

[Continued.

liquidation of his business, not in marks at which it was sold, but in pounds sterling at the pre-war rate of exchange paid in full immediately the credit comes through, and he has had 7s. 6d. on his claim for compensation. So that really he is not a person entitled to exceptional treatment.

Chairman.

1715. You appreciate the fact that we on this Committee are in a sense less concerned with the equities of these people than with the public expense of clearing off the whole of this business. That is our function?-Yes. I do not think it would interfere with the life of the Clearing Office if you pay the £250 claims, because the process of payment would be much the same whether you pay him his dividend or pay him his amount in full.

Mr. Pethick-Lawrence.

1716. As far as I can make out, the total number of claims against Germany under 297 is in the neighbourhood of 12,658?-Yes, for 64 millions.

1717. That is the total number of claims under 297?-Under 297, yes.

1718. On all of those which have been adjudicated upon £50 has been paid?— Yes.

1719. And on all of those which may be adjudicated upon £50 is allowed for? -Yes.

1720. Further than that, you have paid 7s. 6d. in the £ in addition on all those that have been adjudicated upon? -Yes.

1721. And reserved 7s. 6d. for all those that may be adjudicated upon?—Yes.

1722. Then to pay off all the claims under £200 at the maximum could not amount to more than £90 on each one of those 12,000?-I do not follow that.

1723. There has been, first of all, £50 paid, leaving £150, and on that 7s. 6d. is available. Assuming they were all claims for £200 the maximum is about £90 on each one of those 12,000, about £1,000,000 altogether. The total maximum which would pay in full claims up £200 could not be more than £1,000,000 or thereabouts? 12,000 claims of £150 is the maximum.

to

1724. But you have already paid 7s. 6d.? The £50 is in addition to the 7s 6d., so if you increase the £50 to £200 they would then get another £150 in addition on all claims, assuming the claims all came to £200. They would not, as a matter of fact.

27 May, 1924.]

[Continued.

Mr. Hannon.

1725. Why did you fix the limit of the small man at £50? Would not there be a great number of poor and hardly-hit people whose claims would run up to £200?—No, I do not think so. Most of them are small. We thought £50 would cover the majority of them, plus the dividend. They get the dividend in addition to that.

1726. You came to that conclusion on your own experience of the quality of the claims. Is that so?—Yes. It was a roughand-ready calculation.

1727. You say now, having regard to your experience of the nature of the claims, you do not think there are any really hard cases below the £250 limit?Above

1728 No. I am following the questions that have been put as to whether it would be possible to do something to meet the case of persons whose awards are below £250. Do you say there are no hard cases below that limit?

Chairman.

1729 I think the witness has answered that question. His answer, as I understood him, was this. Those people have already been paid in full on the proceels of liquidation, they have already received 7s. 6d. in the £ on compensation, and there are, therefore, very few hard cases imaginable. Was not that your answer? -Not quite that, because I know of some hard cases far and away above £250. 1 have one extremely hard case in mind of about £3,000.

1730. I thought you said this was only a complementary payment?—Yes, in the majority of cases. That does not apply to all cases. The majority of trade cases are complementary. That does not apply to the class of case such as the sailor, which is really not complementary. That is a case which stands by itself. His whole claim is for compensation.

Mr. Hannon.

1731. That being so, there are hard cases in claims of all sizes?—Yes.

1732. You do not think it would be wise, from a Departmental point of view, to undertake to do for the £250 claim what you have done for the £50 claim?--I think it would be a little dangerous; .!¡ fact, too dangerous.

Mr. Franklin.

1733 Taking the cash you have available, if you paid full in respect of all claims under £250, you would not be able to pay the 7s. 6d. that you have reserved for dividend; there would be an amount considerably less?-Yes. Assuming that the claims outstanding are good claims, I should have to eat into my reserve in order to pay £250.

1734 If you paid a certain number of claims at 7s. 6d. in the £, and the balance of those claims under £200 or £250 in full, you would not have sufficient for a 7s. 6d. dividend upon the bigger claims? -No, not with making the necessary

reserves.

1735. Would you be able at any time to give us an estimate of what it would mean, having, first of all, considered the amount of cash you have in hand and the amount (which is a definite amount) of those under £250, and the amount (which is an estimated amount) of those not yet admitted, and then show how much is available upon balance, the amount being somewhat less than 7s. 6d. ?-I am afraid it would be impossible for me to give you any estimate that would be worth consideration of the amount of claims of £250 still outstanding, because that must depend entirely on the awards of the Tribunal. I am quite unable to say what course the Tribunal would take as regards claims. It is really impossbile for me to give you any figure that is in the least reliable.

27 May. 1924.]

1740. You paid him his first £50?Yes.

1741. Is there any objection to extending that process to, say, £100, in order to get rid of a large body of very small claims? It only renders me insolvent; that is the trouble.

1742. You do not mind overdrawing your account?-It is no use my going to the Treasury and saying, "I have overspent myself, will you give me money?" They will say, "No, not one farthing."

[Continued.

1751. But we do not want to present absolutely colourless report to the House of Commons?-A recommendation to pay another 5s. would not embarrass There are so many ins and outs, I cannot take you into my confidence without possibly prejudicing the very result which I am striving to attain.

me.

1752. You have made one suggestion of 5s. Can you help us by making a further suggestion which would not embarrass you?-I do not like the other suggestion of £200, and I do not think it will be necessary when I come to make the announcement. I would much rather have a recommendation to pay 5s. in the £.

1753. Forthwith ?-If you will be content to wait till July. 1754. You are now talking of 297 (e)? -297 (e).

Colonel Penry Williams.

1755. You said the proposal with regard to claims under £200 you would prefer did not go forward?—Yes. I find that rather embarrassing.

1756. With regard to discount?-With regard to discount it would be very difficult for me to justify it if I had information in my own possession which I did not give to the man who wanted to settle his claim.

Mr. A. M. Samuel.

1757. Now we understand. That is a moral obligation which has to be taken into account. You say "I could not ask the public to take less than 20s. in the £, knowing myself that I have every hope from information which I have secretly that I shall be able to pay 20s. in the £." If you say that, that is another matter?-You are putting it a little high. What I said was this. I think a creditor who was willing to accept payment of his claim on discount would have a grievance against me if at the very time when he was accepting this lesser amount I knew I was going to pay a larger amount. I should find it very difficult to justify. I think it would be better to wait till I have made the announcement.

27 May, 1924 ]

[Continued.

Chairman.

are SO

1758. The fact is that you sanguine at being able to pay in full very soon that you think it would be dishonest to offer a discount now?—I do not say pay in full very soon, but to make an announcement which will satisfy everybody.

Mr. Pethick-Lawrence.

1759. One question with regard to that. If we are to recommend the payment of a further 5s. do you suggest that we should say there is ground to suppose that a further 5s. can be paid soon, or what do you suggest with reference to that? You might suggest on the basis that it is obvious that these claims outstanding in respect of which I am making this reserve of 7s. 6d. will not rank for their face value

Mr. Black.] Would it be very satisfactory if we were to recommend 5s., and then immediately after that you were to arrange to pay 7s. 6d. or 10s.? It would make us look somewhat foolish.

Chairman.

1760. We could say "Not less than 5s."? I am not recommending 5s. I am only saying that would not embarrass

me.

1761. One more question, Mr. Grey. Do you agree that the settlement of a large number of claims of a simple character might be expediated by arranging for their consideration by a representative of the British Clearing Office, a representative of the German Clearing Office, under a neutral Chairman, thus leaving only the more contentious cases to be dealt with by the Mixed Arbitral Tribunal?-Certainly. The proposal I put forward is the appointment of a Third Division, a summary division, to deal with these claims.

1762. I mean in addition to the Third Division? No, as the Third Division.

1763. You would not agree to what I have just said, in addition to the third Court? No, I should suggest that in substitution for the Third Division constituted as the other two Divisions are. Chairman.] Thank you.