§ 45.Colonel WEDGWOODasked the Chancellor of the Exchequer what was the average price at which the reserve of dollars was purchased by the Treasury; and what is the present value of this reserve of dollars bought as security against a gold drain?
§ Mr. CHURCHILLAt the present rate of exchange the $166,000,000 accumulated by the Treasury to cover debt payments to the United States of America are worth about 34¼million pounds. As the dollars represent the balance resulting from purchases, from interest on purchases, and from sales of securities acquired during the War after making periodic payments to the United States of America, it is not possible to give a precise figure of the average price of this residue.
It is obvious that these dollars having been bought before gold parity was reached cost more than what they would cost at par. To the extent that this is so, it is an indication of one of the advantages which the Exchequer will reap from the return to the gold standard.
§ Colonel WEDGWOODCan the right hon. Gentleman give us a rough estimate as to the amount of loss on these dollar purchases?
§ Mr. CHURCHILLI have explained that it is extremely difficult to calculate. Of course, we are continually making these payments to America, every half-year, and we are continually accumulating dollars in order to be able to make our payments, and the estimate of the loss would require minute calculations in regard to many individual purchases of dollars which have been made from time to time in America, and that result would have to be measured against the actual value of the assets of exchange reserve at the time they were originally accumulated.
§ Colonel WEDGWOODAre we to understand, then, that there have been no special purchases such as the right hon. Gentleman alluded to in his Budget speech of 166,000,000 dollars in order to acquire this large reserve? Has that not involved special purchases at expensive prices?
§ Mr. CHURCHILLOh, yes. Special purchases have been made. In the ordinary course of events we should have accumulated now for the June payment, but we have not merely accumulated for the June payment, but for the December payment as well, and that has entailed a greater amount of purchase of dollars during the last few months than would otherwise have taken place.
§ Colonel WEDGWOODWhy could not the right hon. Gentleman wait to make the purchases for the December payment?
§ Mr. CHURCHILLThe answer is that I was very anxious to secure the transition to gold being made under the most favourable circumstances. I wished to get out of the way beforehand as many of those obligations to purchase dollars as possible, because in the autumn we have to buy our cotton and our wheat and many other things, and if we were going on the market to buy many millions of dollars for the purposes of debt payment, that would hamper our traders and put an undue strain on the Exchequer. It may have been, and very likely will prove to be, an unnecessary precaution, 760 but it is a precaution which we thought necessary in order to meet the debt payments.
§ Mr. SPEAKERWe had all this in debate yesterday.