HC Deb 05 May 1925 vol 183 cc765-97

Resolution reported,

" That for the purposes of any Act of the present Session to facilitate the return to a Gold Standard and for purposes connected therewith it is expedient to authorise the charge on the Consolidated Fund of the principal and interest of any money raised under the said Act and any sums payable by the Treasury in fulfilling any guarantee given there under, together with any expenses incurred by the Treasury in connection with or with a view to the exercise of the powers conferred on them by the said Act of raising or guaranteeing loans."

Resolution read a Second time.


I beg to move, in line 4, after the word "money," to insert the words" not exceeding sixty million pounds."

We had the opportunity of moving this Amendment when this Resolution came before the Committee rather late last night, but, owing to the course of the Debate, we thought that it would be more convenient to the House if we waited until the Resolution came up on Report, and, therefore, we have reserved our Amendment until now. The Resolution before the House arises out of the fact that the Chancellor of the Exchequer, for the purpose of returning to the gold standard, has taken power to obtain credits from the United States. The Chancellor of the Exchequer explained in his Budget speech, that in order to secure himself against certain contingencies, he had obtained credit from the United States amounting to 300,000,000 dollars—for our purpose we have translated this in our Amendment into £60,000,000—and the Financial Secretary gave us further information yesterday, and explained that of this £60,000,000, £40,000,000 was obtained from the Federal Reserve Board and £20,000,000 from J. P. Morgan and Company

We propose, briefly, to take the £60,000,000, which has already been obtained as credits, as a limit, and to make it impossible for the Government to obtain credits in addition to that £60,000,000 without coming to the House for fresh authority. The reason for this is as follows: This power is generally recognised as the most dangerous and the most treacherous of the powers contained in this particular proposal, and it is, I think, a very significant fact that the Currency Committee, on whose Report this Bill is founded, had evidently, at the time of its report not made up its mind to recommend this proposal to the Government. You will not find in the Report of the Currency Committee any specific proposal that the Government shall take power to obtain credit from the United States. All that the Currency Committee did was to issue a very grave warning of the difficulties which might arise if any such power were utilised. We regard that power of one of the most dangerous and, possibly, of the most treacherous character. If we are in such difficulties that we have to obtain credits in the United States, then that is only postponing the time when we shall have to meet those difficulties for ourselves. If the position becomes so bad, the exchanges so adverse to us, trade movements an unfavourable, and there is the possibility of a drain of gold to this amount out of this country to the United States, then—as we were pointing out yesterday—it will be essential, either by the raising of the Bank rate, or by other methods, to reverse the exchanges, and to alter those trade movements to meet the position for ourselves. The power of borrowing from the United States merely means that we are putting off the day when we shall have to meet them, and that we arc creating fresh difficulties for ourselves when that day shall come.

There can—I can conceive—only be two possible contingencies under which it might be necessary to use such a power as this. One is to frighten speculators. I can imagine—I think it is conceivable—that there might be some sudden and very temporary crisis: that there might be for a limited period a drain of gold. Under those conditions it might he better to obtain credits for a very short period from the United States than to raise the Bank rate. Those appear to me to be the only conceivable conditions under which such a power should he utilised. Therefore we say that there ought to be a distinct limit to the extent to which this machinery can be operated without coming back again for the fresh authority of this House. The Financial Secretary to the Treasury, in opening his speech yesterday, I think intended to indicate that, in fact, there is such a limit imposed in this Bill. I suppose he will tell us. But I gather the limit is laid down by the fact that we cannot obtain, through this means, credit to a greater extent than are now allowed by the Supply Services and the ordinary Consolidated Fund Bill. That, I gather, is the explanation; it seems to meet with the assent of the right hon. Gentleman. That is the limit. But I submit to the Chancellor that for this particular purpose it is a limit so high as to be absolutely fanciful in its character. I think he ought to accept the reasonable limit we have taken from his own figures.

If you take the limit of the possibilities of borrowing by the Supply Services, and the Consolidated Fund Bill, you get a limit of S200,000,000, £250,000,000 or £300,000,000. That is a limit which, for this purpose, is so fanciful as not to be within the bounds of reasonable discussion. Therefore, our position is this: that if ever the occasion arises in which you have to obtain from the United States credit to as large a sum as £60,000,000, it would represent a situation so serious that you would be bound to come back to the House of Commons and explain the facts before going beyond that sum. It is for that reason that we propose this limit as a reasonable amount to be introduced into the Resolution.


I beg to second the Amendment.

The two chief points have already been mentioned by my hon. Friend. If the Chancellor of the Exchequer is correct in hoping that the Bank rate will never be raised and that we shall get through this change satisfactorily, then that would appear to be the more reason for adopting the proposal we are putting forward. In addition, there still remain two reasons; one is, I think, a perfectly sound one, that you should put a limit upon the borrowing powers of any Government asking for those powers, and the second is that if at any time we arrive at the stage where we have to obtain a credit of £60,000,000 sterling from New York in order to help our financial position here, then there can be no objection—mid I think the House will agree with me in this —that the House of Commons, at any rate, should have the opportunity of discussing the whole position and very carefully considering the next step that ought to be taken. I hope the Chancellor of the Exchequer will see his way to accept the Amendment.

The CHANCELLOR of the EXCHEQUER (Mr. Churchill)

There is nothing unreasonable in the proposal that has been made. Still, I hope it will not be insisted upon. I could not say that we should, in all human probability, be exposed to any very grave inconvenience if this Amendment were inserted in the Bill. I, frankly, do not believe the contingencies we are guarding against will ever arise. At the same time I shall ask the House to give us the full latitude which we have contemplated as necessary. What is the position? I have at the present time under the law and long practice the power of borrowing up to the limit of the Supply Services, as the hon. Gentleman who has moved the Amendment very correctly explained. The limit of the Supply Services is £407,000,000. If we deduct the Consolidated Fund Charges from the Budget, we have left a Supply total of £407,000,000. We provided in March for Votes on Account of £163,000,000. Therefore the total limit of the Supply Services up to which I have borrowing powers is, approximately, £2244,000,000, and that, again, is reduced by the ordinary necessities of financial procedure—by the borrowing at different times during the year of something like £100,000,000 for the purpose of defraying the expenditure which has accrued in advance of the collection of the taxes. Consequently, you may say that, broadly speaking, the borrowing powers for which I am asking a greater latitude are limited to £150,000,000. I should not have to ask the House at all for powers in this matter but for two circumstances. The power which the Exchequer has of borrowing up 4.0 P.M. to the limit of the Supply Services is governed by two conditions. Any money so borrowed must be paid into the Exchequer, and the debt incurred must be cancelled within periods named in the Appropriation Act. What I am seeking is discretionary power in the special circumstances that exist to do no more than I am entitled to do in the ordinary course of events so far as the amount is concerned, but not necessarily to devote the proceeds immediately payment into the Exchequer or to be bound to cancel the debt within those precise periods. That is the relief that I seek, and that is the purpose of this Clause in the Bill. I think the House ought in all the circumstances to give me that relief.

We are carrying through an operation which, if successful, will, not next year or the year after, but in future years be regarded as a very memorable event in the financial history not only of this country but of the whole world, and we have been trying to do it in a way that will avoid any shock to our normal trade or finance or employment, ward off the risks attendant upon it, calm fears, allay doubts, and, above all, warn off the speculators who might easily, if we had not taken tremendous precautions, have made this reversion to the gold standard, so much talked about—it could not help being talked about—over the last few months, the occasion for large speculations which would have resulted in their unloading their purchases upon the market to take their profits and affect the exchange. We have endeavoured to put ourselves in a position where it is quite clear that anyone who thinks that Great Britain is not capable of maintaining the gold parity which she has established, and who proposes to risk his money by bearing the British exchange, will come into contact with enormous reserves, and reserves, not only enormous, but almost indefinite in their extent. From that point of view, I am rather anxious to keep the element of vagueness a part of the American counterpoise, a part of the credits which we are establishing in the United States.

I have made arrangements for 300,000,000 dollars. I could quite easily have made arrangements for 500,000,000. I do not believe it will be necessary to use any of them, but the whole object of this is to act as a decisive deterrent to purely speculative attempts at making money by breaking down the arrangement, and, from that point of view, the insertion of this particular limit would, I will not say seriously, because I am not over—arguing the question, but to a certain extent, diminish the efficiency of the deterrent upon speculation. That is why I ask the House in these special circumstances for this special latitude. It is quite certain if we had to use these credits at all it would only be after a very serious situation had arisen in this country, necessitating not only heavy gold exports but an alteration in the Bank rate here. It is not for use, but as a final warning and safeguard, and I ask the House to let me have that safeguard in circumstances which will render it as effective and as impressive as possible.

Lieut.—Commander KENWORTHY

I am nearly persuaded by the Chancellor, but not quite. He tells us that it is necessary to preserve this atmosphere of secrecy, these secret negotiations behind the scenes


I never said any such thing.

Lieut.-Commander KENWORTHY

-for these unknown and undetermined sums up to, but not more, according to himself, than about £150,000,000 at a time owing to his necessity of having to find money for public purposes, and so on. As I say, I am not quite persuaded by the right hon. Gentleman, and I rather support my hon. Friend the Member for Keighley (Mr. Lees Smith) who moved the Amendment. I think the thing could have been done quite naturally and normally without all this reclame and without this Bill. But in this difficult time of change over all the right. hon. Gentleman has thought fit to provide is 155,000,000 dollars, which he tells us that at the present rate of exchange is equal to about £34.500,000. My hon. Friend suggests that he should have the latitude of about twice that amount. Surely that is ample. If it he necessary at this time to provide only £34,500,000, £60,000,000 would be all sufficient. I think it is necessary to put some check on the Treasury in this pro cedure. It is a new thing to do. This pegging of the exchanges and securing credits abroad is in our time comparatively novel, and I do not think that the matter can be safely left without some measure of House of Commons control. I am fortified in that view when I consider what has happened in reference to this very question of purchasing dollar credits in New York.

During the few minutes that I spoke yesterday I raised a matter which I think is very pertinent to this Resolution, but I got no reply. Probably, it was my own fault, because I was called out of the House. I asked what was the average price at which the credits were purchased. I believe the purchase price of the 155,000,000 dollars which the right hon. Gentleman has got from New York was about 4.70 cents to the £. today the dollar stands at 4.84 cents, that shows that we have made a considerable loss, at any rate in theory. There may be some explanation. The right hon. Gentleman the Member for Newcastle—under—Lyme (Colonel Wedgwood) raised this question at Question Time, but I was somewhat diffident about putting supplementary questions. I always have to force myself to do these things. But I would press the right hon. Gentleman to tell us the average price at which these 155,000,000 dollars of credit were secured. Am I right in saying that it was about 4.70 cents? If that be the case, I think the Treasury has been over cautious and over prudent and has lost money in consequence. A little more faith in British credit would have saved a considerable amount of money to this country. However, it is not for me to blame the right hon. Gentleman for over caution. I never thought that I would stand here and accuse him of that. Apparently. that is going to be his métier as Chancellor of the Exchequer, and we ought to welcome it.

But there should be some House of Commons control. The history of these transactions makes that very clear, and I congratulate my hon. Friend on this Amendment, which I am glad to support. The right hon. Gentleman talks about warding off speculators. He has not warned off speculators. It was his colleague in the French Ministry of Finance last year when the attempted bear was made on francs. A much smaller credit in New York stopped it

and the speculators received a well—deserved lesson. I do not think that this warning was very necessary on behalf of British sterling. However, these are facts on which one should not lay down the law, and I only make these suggestions to the House. In view of all the circumstances of the case, the novelty of the whole situation, and the necessity of the House of Commons maintaining some sort of control over the Treasury powers of borrowing and arranging credits with New York, I think that this £60,000,000 is a very reasonable sum, and I hope that my hon. Friend will go to a Division in the matter


I think that, as a matter of business, any Bill that comes before this House should have in it some limit as to the amount for which the nation is responsible. I quite appreciate the fact that this does not increase the total amount in any way. I remember, when the Gold and Silver Embargo Act went through in 1920, the present Prime Minister introduced the Bill without a limit as to the time that gold should be controlled. There was an Amendment put down by Sir Donald Maclean who suggested that the limit should be three years. Eventually, the Prime Minister agreed to a five years' limit, which comes to an end at the end of December, 1925. I do think that in this Bill there should be some sort of amount, such as £60,000,000, put in, and I humbly suggest that the Chancellor of the Exchequer should agree, as I hope he will agree as a matter of principle, that that amount should be put into the Bill.

Question put, "That those words be there inserted."

The House divided: Ayes, 106; Noes, 265.

Division No. 80.] AYES. [4.13 p.m.
Alexander, A.V.(Sheffield, Hillsbro') Cove, W. G. Hall, G. H. (Merthyr Tydvil)
Adamson, W. M.(Staff., Cannock) Cowan, D. M. (Scottish Universities) Hamilton, Sir R.(Orkney Shetland)
Attlee, Clement Richard Dalton, Hugh Hartshorn, Rt. Hon. Vernon
Baker, J.(Wolverhampton, Bliston) Davies, Rhys John (Westhoughton) Hayes, John Henry
Barker, G. (Monmouth, Abertillery) Day, Colonel Harry Henderson, Right Hon. A. (Burnley)'
Barnes, A. Duncan, C. Henderson, T. (Glasgow)
Barr, J. Dunnico, H. Hirst, G. H.
Batey, Joseph Fenby, T.D. Hirst, W.(Bradford, South)
Beckett, John (Gateshead) Garro-Jones, Captain G. M. Jones, Morgan (Caerphilly)
Briant, Frank Gillett, George M. Kelly, W. T.
Bromfield, William Greenall, T. Kennedy, T.
Bromley, J. Greenwood, A. (Nelson and Colne) Kenworthy, Lt-Com. Hon. Joseph M-
Brown, James (Ayr and Bute) Grenfell. D. R. (Glamorgan) Lawson, John James
Cape, Thomas Griffiths, T. (Monmouth, Pontypool) Lee, F.
Cluse, W. S. Groves, T. Lowth, T.
Clynes, Rt. Hon. John R. Grundy, T. W. Lunn, William
Compton, Joseph Guest, J. (York, Hemsworth) MacDonald, Rt. Hon. J. R. (Aberavon)
Mackinder, W. Scrymgeour, E. Webb, Rt. Hon. Sidney
MacLaren, Andrew Snort, Alfred(Wednesbury) Wedgwood, Rt. Hon. Josiah
Maclean, Nell(Glasgow, Govan) Smith, Ben(Bermondsey, Rotherhithe) Welsh, J.C.
March, S. Smith, H. B. Lees-(Keighley) Westwood, J.
Maxton, James Smith, Rennie(Penistone) whiteley, W.
Montague, Frederick Snell, Harry Wignall, James
Morris, R.H. Spoor, Rt. Hon. BenjaminCharles Wilkinson, EllenC.
Morrison, R.C.(Tottenham, North) Stamford, T.W. Williams, David(Swansea, E.)
Murnin, H, Stephen, Campbell Williams, Dr. J.H.(Llane'lly)
Nelson, SirFrank Sutton, J.E. Williams, T.(York, DonValley)
Palin, JohnHenry Thomas, Rt. Hon. JamesH.(Derby) Wilson, C.H.(Sheffield, Atterclitte)
Paling, W. Thomson, Trevelyan(Middlesbro. W.) Wilson, R.J.(Jarrow)
Pethick-Lawrence, F.W. Thorne, G.R.(Wolverhampton, E. Windsor, Walter
Potts, JohnS. Thorne, w.(WestHam, Plalstow) Wise, SirFredric
Richardson, R.(Houghton-le-Spring) Thurtle, E. Young, Robert(Lancaster, Newton)
Riley, Ben Tinker, JohnJoseph
Roberts, Rt. Hon. F.O.(W. Bromwlch) Trevelyan, Rt. Hon. C.P. TELLERSFORTHEAYES.
Robinson. W.C.(Yorks, W.R., Elland) Viant, S.P. Mr. AllenParkinsonandMr.
Rose, FrankH. Watson, W.M.(Dunlermilne) Warne.
Runciman, Rt. Hon. Walter Watts-Morgan, Lt.-Col. D.(Rhondda)
Acland-Troyte, Lieut.-Colonel' Davies, A.V.(Lancaster, Royton) Holland, SirArthur
Agg, Gardner, Rt. Hon. SirJamesT. Davies, Maj. Geo. F.(Somerset. Yeovil) Holt, CaptainH. P.
Albery, IrvingJames Davies, SirThomas(Cirencester) Homan, C.W.J.
Alexander, E.E.(Leyton) Davison, SirW. H.(Kensington, S.) Hopkins, J.W.W.
Applin, Colonel R. V.K. Doyle, SirN. Grattan Hopkinson, A.(Lancaster, Mossley)
Astbury, Lieut.-CommanderF. W. Drewe, C. Horne, Rt. Hon. SirRobertS.
Atkinson, C. Eden, CaptainAnthony Hudson, Capt. A.U.M.(Hackney, N.)
Baldwin, Rt. Hon. Stanley Edmondson, MajorA. J. Hudson, R.S.(Cumberland, Whiteh'n)
Ballour, George(Hampstead) Edwards, John H.(Accrington) Hume, SirG. H.
Balniel, Lord Elliot, Captain Walter E. Huntingfield, Lord
Banks, Reginald Mitchell Elveden, Viscount Hurd, Percy A.
Barclay-Harvey, C.M. Eiskine, Lord(Somerset, Weston-s.-M.) Hurst, Gerald B.
Barnett, MajorRichardW. Evans, Captain A.(Cardiff, South) Jackson, Lieut.-Colonel Hon. F.S.
Barnston, MajorSirHarry Evans, Capt. Ernest(Welsh Univer.) Jackson, SirH.(Wandsworth, Cen'l)
Bellairs, CommanderCarlyon W Everard, W. Lindsay James. Lieut-Colonel Hon. Cuthbert
Bentinck, LordHenryCavendish- Fairfax, CaptainJ. G. Jephcott, A.R.
Blades, SirGeorgeRowland Falle, SirBertramG. Jones, G.W.H.(StokeNewlngton)
Blundell, F.N. Falls, SirCharlesF. Jones, HenryHaydn(Merioneth)
Boothby, R.J.G. Fanshawe, CommanderG. D. Joynson-Hlcks, Rt. Hon. SirWilliam
Bourne, CaptainRobertCroft Fermoy, Lord Kennedy, A.R.(Preston).
Bowater, SirT. Vansittart Fielden, E.B. Kenyon, Barnet
Bowyer, Capt. G.E.W. Fleming, D.P. Kidd, J.(Linlithgow)
Brass, Captain W. Ford, P.J. Kindersley, Major G.M.
Brassey, Sir Leonard Forrest, W. King, Captain Henry Douglas
Briggs, J. Harold Foster, Sir Harry S. Kinloch-Cooke, Sir Clement
Briscoe, Richard George Foxcroft, Captain C.T. Knox, Sir Alfred
Brocklebank, C.E.R. Fraser, CaptainIan Lamh, JQ.
Brooke, Brigadier-General C.R.I. Frece, Sir Walterde Leigh, SirJohn(Clapham)
Broun-Lindsay, Major H. Fremantle, Lieut.-Colonel Francis E. Lister, Cunliffe-, Rt. Hon. SirPhilip
Brown, Maj. D.C.(N'th'I'd, Hexham) Gadle, Lieut.-Colonel Anthony Loder, J. deV.
Buckingham, Sir H. Ganzoni, SirJohn Lougher, L.
Bull, Rt. Hon. Sir William James Gates, Percy Lucas-Tooth, Sir Hugh Vere
Bullock, Captain M. Gault, Lieut.-Col. Andrew Hamilton Luce, Major-Gen. Sir Richard Harman
Burman, J.B. Gilmour, Lt.-Col. Rt. Hon. SirJohn Lumley, L.R.
Butler, SirGeoffrey Glyn, Major R.G.C. MacAndrew, Charles Glen
Cadogan, Major Hon. Edward Gower, Sir Robert Macdonald, R.(Glasgow, Cathcart)
Campbell, E.T. Grace, John McDonnell, Colonel Hon. Angus
Cayzer, Sir C.(Chester, City) Grant, J.A. Macintyre, Ian
Cayzer, Maj. Sir Herbt. R.(Prtsmth. S) Greene, W. P. Crawford McLean, MajorA.
Cazalet, Captain Victor A. Greenwood, Rt. Hn. SirH.(W'th's'w, E.) Macpherson, Rt. Hon. James I.
Chadwick, Sir Robert Burton Gretton, Colonel John Macquisten, F.A.
Chamberlain, Rt. Hon. N.(Ladywood) Grotrlan, H. Brent MacRobert, Alexander M.
Chapman, Sir S. Guinness, Rt. Hon. Walter E. Maitland, SirArthur D. Steel
Christie, J.A. Gunston, Captain D.W. Makins, Brigadier-General E.
Churchill, Rt. Hon. Winston Spencer Hall, Capt. W.D'A.(Brecon Rad.) Manningham-Buller, Sir Mervyn
Clayton, G.C. Hammersley, S.S. Margesson, Capt. D.
Cochrane, Commander Hon. A.D. Hannon, PatrickJoseph Henry Meller, R.J.
Cockerill, Brigadier-General G.K. Harland, A. Meyer, Sir Frank
Cohen, Major J.Brunel Harrison, G.J.C. Milne, J. S. Wardlaw-
Colfox, Major Wm. Phillips Harvey, MajorS. E.(Devon, Totnes) Mitchell, W. Foot(Saffron Walden)
Cooper, A. Duff Haslam, Henry C. Mitchell, Sir W. Lane(Streatham)
Cope, Major William Henderson, Capt. R.R.(Oxt'd, Henley] Monsell, Eyres, Com. Rt. Hon. B. M.
Couper, J.B. Heneage, Lieut.-ColonelArthurP. Morrison. H.(Wilts, Salisbury)
Craik,Rt.Hon.Sir Henry Henn, Sir Sydney H. Morrison-Bell, Sir Arthur Clive
Crook, C.W. Hennessy, MajorJ. R.Q. Nail, Lieut.-ColonelSirJoseph
Crooke, J. Smedley(Derltend) Hennlker-Hughan, Vice-Adm. SirA. Neville. RJ.
Crookshank, Col. C. de W.(Berwick) Herbert, Dennis(Hertford, Watford) Newman, SirR. H.S.D.L.(Exeter)
Crookshank, Cpt. H.(Lindsey, Gainsbro) Herbert, S.(York, N.R., Scar. Wh'by) Newton, Sir D.G.C.(Cambridge)
Cunliffe, Joseph Herbert Hilton, Cecil Nicholson, William G.(Petersfield
Curzon, CaptainViscount Hoare, Lt.-Col. Rt. Hon. SirS. J.G. Nield, Rt. Hon. Sir Herbert
Davidson, J.(Hertf'd, KernelHtmpst'd) Hogg, Rt. Hon. SirD.(St. Marylnbone) Nuttall, Ellis
Oakley, T. Shaw, Capt. W.W.(Wilts, Wcstb'y) Warner, Brigadier-GeneralW. W.
Ormsby-Gore, Hon. William Shepperson, E.W. Warrender, Sir Victor
Owen, Major G Simms, Dr. John M.(Co. Down) Waterhouse, Captain Charles
Pennefather, SirJohn Sinclair, Major Sir A.(Caithness) Watson, Sir F.(Pudsey and Otley)
Penny, Frederick George Skelton, A.N. Watson, Rt. Hon. W.(Carlisle)
Percy, Lord Eustace(Hastings) Smith, R.W.(Aberd'n Kinc'dine, C.) Watts, Dr. T.
Perkins, Colonel E.K. Smith-Carington, Neville W. Wells, S.R.
Peto, Basil E.(Devon, Barnstaple) Somerville, A.A.(Windsor) Wheler, Major Granville C.H.
Peto, G.(Somerset, Frome) Spender Clay, Colonel H. White, Lieut.-Colonel G. Dalrymple
Pownall, Lieut. Colonel Assheton Sprot, Sir Alexander Williams, Com. C.(Devon, Torquay)
Preston, William Stanley, Col. Hon. G.F.(Will'sden, E.) Williams, C.P.(Denbigh, Wrexham)
Raine, W. Stanley, Lord(Fylde) Williams, Herbort G.(Reading)
Ramsden, E. Stanley, Hon. O.F.G.(Westm'eland) Wilson, Sir C.H.(Leeds, Central)
Reid, Capt. A.S.C.(Warrlngton) Steel, MalorSamuel Strang Wilson, R.R.(Stafford, Lichfield)
Remnant, Sir James Stott, Lieut.-Colonel W.H. Windsor-Cilve, Lieut.-ColonelGeorge
Rhys, Hon. C.A.U. Strickland, Sir Gerald Winterton, Rt. Hon. Earl
Roberts, E.H.G.(Flint) Stuart, Hon.J.(Morayand Nairn) Womersley, W.J.
Robinson, Sir T.(Lanes., Stretford) Sueter, Rear-Admiral Murray Fraser Wood, B.C.(Somerset, Bridgwater)
Ropner, Major L. Sugden, Sir Wilfred Wood, Rt. Hon. E.(York, W.R., Ripon)
Ruggies-Brise,Major E.A. Sykes, Major-Gen. Sir Frederick H. Wood, E.(Chest'r, Stalyb'geHyde)
Russell. AlexanderWest (Tynemouth) Tasker, Major R. Inigo Wood, Sir Kingsley(Woolwich, W.)
Salmon, Major I. Thompson, Luke(Sunderland) Wood, Sir S. Hill-(HighPeak)
Samuel, A.M.(Surrey, Farnham) Thomson, F.C.(Aberdeen, S.) Woodcock, Colonel H.C.
Sanders, Sir Robert A. Thomson, Sir W. Mitchell-(Croydon, S.) Worthington-Evans, Rt. Hon. Sir L.
Sanderson, Sir Frank Tryon, Rt. Hon. George Clement Yerburgh, Major Robert D.T.
Sassoon, Sir Philip Albert Gustave D. Vaughan-Morgan, Col. K.P.
Savery, S.S. Wallace, Captain D.E. TELLERS FOR THE NOES.
Scott, Sir Leslie(Liverp'l, Exchange) Ward, Lt.-Col. A.L.(Kingston-on-Hull) Colonel Gibbsand Captain Douglas Hacking.

Bill read the Third time, and passed.

Question proposed, "That this House doth agree with the Committee in the said Resolution."

Lieut.-Commander KENWO RTHY

I would like to ask the Chancellor of the Exchequer for an answer to the question I raised on the last Amendment. think it is apposite to this Resolution, which gives him power to make large purchases of dollar securities. Will he give us the average price at which the dollars were purchased? If he cannot do it without notice, of course I am quite prepared to raise the question on another occasion, but I think we are entitled to know the price at which these 165,000,000 dollars were bought. To state the price now can make no difference, as we have the dollars, we have the credits arranged. I quite realise they were credits that accrued to us from payments for stores, and one thing and another, but there must be book transactions showing at what price they were purchased. My point is that we have made a loss on think I am right that we have a loss, it is now an inevitable loss, of 14 cents on the dollar; and on that large sum that would work out at round about 1,000,000 sterling.


indicated dissent.

Lieut.-Commander KENWORTHY:

Well, then, can we have the. figures? I think this is a matter of sufficient substance to jutisfy me in asking the right hon. Gentleman to give me what information he has.


I tried to give an answer on this subject at Question Time and to give reasonable information to the House upon it. We are under obligations to make very large annual payments to the United States, and in order to economise as far as possible, to make the most thrifty bargain for the public that is possible, we are continuously, as occasion serves, when good opportunities present themselves, purchasing dollars. In the ordinary course of events we should not have purchased as many dollars as we have, but in order to lighten the burden on the exchange next autumn, and to give the very best chance to our new project, we accumulated, as it were, a double dose of dollars. We increased our purchases. We purchased them over considerable periods of time from the funds in the Exchange account; we had other assets in the account, some of which were securities which were surplus; and it is very difficult to say exactly which dollars purchased at which time should be earmarked as making up this 165,000,000 dollars as these transactions have taken place over considerable periods of time. But perhaps the House will be interested to know what is our estimate of the cost. There are many different bases on which one can calculate it, but, broadly speaking, we think that if we had been able to purchase these dollars at par instead of of at the various rates we did, then—on the basis on which we calculate matters, though I agree there may be other bases of calculation—about £400,000 would have been saved if the pound had been at par with the dollar, but it would not have been at par unless we had taken the action we have taken.

I do not think the House ought to grudge that sum in view of the enormous consequences of the Measure which is being put forward. There has been very deep anxiety about it. Many of the ablest men in the country have different opinions. Many of the ablest economists have been in doubt. Some of our most influential journals have expressed the strongest views. There has been a great deal of balancing and weighing in the balance. We have not had any doubt. We have had a perfectly clear conviction as to what the course should be, but, naturally, we have done everything in our power to make that course smooth, and to achieve this result of a reversion to the gold standard, which nobody challenges in principle, free from any seriously—adverse reactions upon the ordinary day—today business of the country, or upon the conditions of wages and employment amongst the labouring masses of the population.

That has been our aim, and while it is much too early to prophesy about it, we are not, so far, dissatisfied with the result: and in view of the size of the operation, the commission which is paid upon credits in the United States, or the loss involved in purchasing a, larger number of dollars before they are actually required to be used, form inconceivably small items to set in the opposite account. Moreover, the question which the hon. and gallant Member asked is really a hypothetical question. He starts on the basis of the pound now being at par with the dollar, and asks how much have you lost by making these earlier purchases? if we had not taken the steps we have clone, and of which these purchases were on integral part, the pound would not have been on a par with the dollar, and the basis of his calculation, on which he is seeking to found his reproach, albeit a very mild reproach, I admit—

Lieut.-Commander KENWORTHY

On the contrary, if the right hon. Gentleman will forgive me interrupting, in making these purchases you were delaying the return of the pound to par.


It is perfectly true that the purchases we made of an extra quantity of dollars were, pro tanto, an adverse weight on our exchange; that is quite true, and it only shows the sincere and honest strength of our own financial position that in spite of it the upward rise has been maintained. That is a point I am very glad to have had an opportunity of bringing out. Broadly speaking, I am sure the House feels that this large operation has been well conducted—conducted, according to the best information and advice, as well as anything can be done in this world so full of error and disappointment, and I am sure the House will not be very meticulous in its criticism of the Government for the inconceivably small charges which were required for the facilitating of so great a transaction.


May I be allowed to say a word or two in commendation of this transaction. It has been extremely difficult to carry through for a long time, because it was attended with the many dangers to which the Chancellor of the Exchequer has referred this afternoon. The managing of any market operations is a very delicate task for a Government Department or its agents to undertake, for however much disguise may be applied, the Government agents are known and some of their transactions naturally leak out. If I may express my own judgment, I think the right hon. Gentleman's Department and his agents made a cheap purchase at £400,000, which is not very much premium to pay against such heavy risks he was insuring. No doubt the operation and the negotiations were conducted with such skill as not to disturb the market, but if £400,000 is really the figure, then it is not too large a sum to pay, and it has done something to ensure the success of this operation. In making these remarks, I do so as one who is warmly in favour of the return to the gold standard in the early future. I do not sympathise with those who look upon this return with great apprehension. I am not going to fortify my views with any arguments, because I find that on this subject those who know the least about it talk with the greatest assurance and those who know a little more about it are cautious in expressing their views, and those who are first rate specialists say little or nothing. If I may put my own conclusions in a single sentence, I think the right hon. Gentleman has been right in taking the course he has taken in regard to the return to the gold standard and that is the view practically of the whole of my hon. Friends here on these benches, in spite of what was said by the right hon. Baronet the Member for Carmarthen (Sir A. Mond) yesterday. That is the view I hold. I think the banking community is very well satisfied with the steps which have been taken, and although they do not always agree with the speeches of the right hon. Gentleman, they are satisfied with the statement of the case he made yesterday. It is in view of that general support that I certainly say that in my judgment the agents of the Government and the right hon. Gentleman have done well to insure themselves against undue risk on the other side of the Atlantic and they have done so in a way which we can warmly commend.

Question. "That this House doth agree with the Committee in the said Resolution," put, and agreed to.