§ Mr. SNOWDEN(by Private Notice) asked the Chancellor of the Exchequer whether a rise in the Bank rate is contemplated and, if so, whether the Government have taken into account the effect on trade and employment?
§ The CHANCELLOR of the EXCHEQUER (Mr. Churchill)It seems to be generally anticipated that in view of the increase in market rates, which has already been in operation since Friday last, the Bank rate will now be raised. This is a matter for the decision of the Bank, whose duty it is to take into consideration all relevant factors, including those mentioned by the right hon. Gentleman.
§ Mr. SNOWDENArising out of the reply, while agreeing that this is directly a matter in the hands of the Bank of England, may I ask whether the Treasury have been consulted about this matter, view of the great importance of this question and its effect, for good or evil, on trade and on the financial position of the country; and if the Treasury have been consulted, have the Treasury approved of this course?
§ Mr. CHURCHILLAs the right hon. Gentleman knows perfectly well, it is not the practice for the Treasury to be formally consulted in these matters. The Treasury is naturally in close touch with the Bank of England, and I should cer- 442 tainly not suggest that Chancellors of the Exchequer, from time to time, are not fully aware of the general trend of the policy being pursued by the Bank of England, but nothing in the nature of formal consultation is usual or necessary, and nothing in the nature of formal consultation has taken place on this occasion.
§ Mr. J. JONESIs it the case that the only time when the Bank consults the Government is when they want guarantees in the event of possible collapse?
§ Mr. SNOWDENMay I ask the right hon. Gentleman for a reply to that part of the supplementary question which I put as to whether or not this step is being taken with the approval of the Treasury?
§ Mr. CHURCHILLI think it would be an inconvenient practice if the Chancellor of the Exchequer were to set the precedent of expressing approval or disapproval of decisions taken at any time by the Bank of England.
§ Mr. G. BALFOURIs it not the fact that in the past it has always been the case that the Bank rate has advanced as we gradually drew nearer to trade prosperity, and that we always had a low rate in times of depression and a high rate in times of prosperity?
§ Mr. CHURCHILLI have not made the statistical inquiries which will enable me to give a full answer to that question.
§ Colonel WEDGWOODThe right hon. Gentleman in his answer has said that the rate of interest started going up on Friday last. May I ask him in that connection whether it was not the rumour that the Bank rate was going to be put up next Thursday—to-morrow—which started this rise; whether the question of consultation with the Government has not come about since we have left the gold standard; and whether it is not the case that as long as we are off the gold standard, it is a question for the Government as well as for the Bank to decide what the rate is to be?
§ Mr. CHURCHILLI think there are great difficulties in discussing matters of this extraordinary complexity, by question and answer at Question Time. I certainly admit they are matters that might well be the subject of Parliamentary discussion on some of the 443 numerous opportunities which the financial business of the year affords.
§ Mr. MAXTONCan the right hon. Gentleman make any estimate as to what burden this change will cast upon the Treasury
§ Mr. CHURCHILLIt would be impossible to make any estimate of the burden which this change would cast upon the Treasury unless you considered also the possible burden which adopting any other course would cast upon the Treasury.